GEODEX MINERALS LTD. INTERIM FINANCIAL STATEMENTS JUNE 30, (Expressed in Canadian Dollars)

Transcription

1 INTERIM FINANCIAL STATEMENTS (Expressed in Canadian Dollars)

2 NOTICE TO READER Pursuant to National Instrument , Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor. The interim financial statements of the Company for the first quarter ended June 30, 2013 have been prepared by and are the responsibility of the Company's management. The Company's independent auditors have not performed a review of these unaudited interim financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity s auditor.

3 INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited Expressed In Canadian Dollars) June 30, 2013 March 31, 2013 ASSETS Current Cash (Note 3) $ 600,675 $ 559,601 Receivables (Note 4) 19,130 9,098 Prepaid expenses 31,227 22,613 Marketable securities (Note 5) 500 1, , ,312 Equipment (Note 6) 28,580 30,261 Exploration and evaluation assets(note 7) 1,518,961 1,575,843 $ 2,199,073 $ 2,198,416 LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities (Note 9) $ 124,050 $ 58,047 Shareholders equity Share capital (Note 10) 31,310,902 31,018,152 Reserve (Note 10) 4,049,154 4,046,662 Deficit (33,285,033) (32,924,445) Nature of operations and going concern (Note 1) Commitments (Note 16) Subsequent Events (Note 18) On behalf of the Board: 2,075,023 2,140,369 $ 2,199,073 $ 2,198,416 Jack Maris Director Mark Fields Director The accompanying notes are an integral part of these interim financial statements.

4 INTERIM STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED JUNE 30 (Unaudited Expressed In Canadian Dollars) EXPENSES Accounting and audit $ 13,000 $ 37,500 Consulting fees 10,600 25,925 Depreciation 1,681 1,687 Exploration expenditures (Note 8) 188,604 70,361 Insurance 4,266 - Investor relations 16,710 17,201 Legal 69 33,333 Management fees 10,500 7,500 Office and miscellaneous 8,877 10,246 Property investigation 5,732 14,913 Rent 10,982 13,665 Salaries and benefits 34,482 42,034 Transfer agent and regulatory fees 5,145 4,332 Travel and promotion 1,039 2,080 (311,687) (280,777) Interest income 5,151 1,056 Unrealized loss on marketable securities (Note 5) (500) (160,037) Gain on sale of exploration and evaluation asset (Note 7) - 4,020,841 Write-off of exploration and evaluation assets (Note 7) (53,552) - (48,901) 3,861,860 Income (loss) and comprehensive income (loss) for the period $ (360,588) $ 3,581,083 Earnings (loss) per common share -Basic and diluted $ (0.03) $ 0.33 Weighted average number of common shares outstanding -Basic and diluted 14,419,902 10,676,850 The accompanying notes are an integral part of these interim financial statements.

5 INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited Expressed In Canadian Dollars) Number of shares Common shares Amount Share compensation reserve Deficit Total Balance, March 31, ,370,531 $ 39,492,863 $ 3,236,378 $ (35,082,857) $ 7,646,384 Shares returned to treasury (Note 7) (333,333) (1,000,000) 750,000 - (250,000) Return of capital (Note 7) - (7,681,776) - - (7,681,776) Income and comprehensive income ,581,083 3,581,083 Balance, June 30, ,367,198 $ 30,811,087 $ 3,986,378 $ (31,501,774) $ 3,295,691 Balance March 31, ,367,198 $ 31,018,152 $ 4,046,662 $ (32,924,445) $ 2,140,369 Private placement 5,078, , ,700 Share issue costs - (11,950) 2,492 - (9,458) Income and comprehensive income (360,588) (360,588) Balance, June 30, ,445,531 $ 31,310,902 $ 4,049,154 $ (33,285,033) $ 2,075,023 The accompanying notes are an integral part of these interim financial statements.

6 INTERIM STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30 (Unaudited Expressed In Canadian Dollars) CASH FLOWS FROM OPERATING ACTIVITIES Net income/(loss) for the period $ (360,588) $ 3,581,083 Items not affecting cash: Depreciation 1,681 1,687 Gain on sale of exploration and evaluation assets - (4,020,841) Loss on disposal of marketable securities - 160,037 Unrealized loss on marketable securities Write-off exploration and evaluation assets 53,552 - Changes in non-cash working capital items: Decrease (increase) in receivables (10,032) (36,224) Decrease (increase) in prepaid expenses (8,614) 11,803 (Decrease) increase in accounts payable and accrued liabilities 66,003 17,354 Net cash used in operating activities (257,498) (285,101) CASH FLOWS FROM FINANCING ACTIVITIES Common shares issued for cash 304,700 - Share issue costs (9,458) - Net cash provided by financing activities 295,242 - CASH FLOWS FROM INVESTING ACTIVITIES Exploration and evaluation assets (720) (9,000) Proceeds from sale of exploration and evaluation assets - 1,000,000 Recovery on exploration and evaluation expenditures 4,050 - Net cash provided by (used in) investing activities 3, ,000 Change in cash during the period 41, ,899 Cash, beginning of period 559, ,655 Cash, end of period $ 600,675 $ 1,122,554 Cash paid during the period for: Income taxes $ - $ - Interest - - Supplemental disclosure with respect to cash flows (Note 13) The accompanying notes are an integral part of these interim financial statements.

7 1. NATURE OF OPERATIONS AND GOING CONCERN Geodex Minerals Ltd. (the Company ) was incorporated under the British Columbia Business Corporations Act. The Company s head office is located at Suite 880, 800 West Pender Street, Vancouver, BC, V6C 2V6 and it is listed on the TSX-Venture and Frankfurt exchanges under the symbol GXM and G2W, respectively. On September 4, 2012, all of the issued common shares and equity instruments of the Company were consolidated on the basis of 10 pre-consolidation common shares/equity instruments for 1 post-consolidation common share/equity instrument. As a result of the consolidation, all share and per-share information in the interim financial statements has been restated to reflect the consolidation. The Company is in the process of acquiring its exploration and evaluation assets and has not yet determined whether the properties contain reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production. As at June 30, 2013, the Company has working capital of $527,482 (March 31, 2013 $534,265) and an accumulated deficit of $33,285,033 (March 31, 2013 $32,924,445). The Company expects to incur further losses in the development of its business. These material uncertainties may cast significant doubt on the Company s ability to continue as a going concern. The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. These interim financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and thus be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these interim financial statements. 2. SIGNIFICANT ACCOUNTING POLICIES Statement of compliance These interim financial statements have been prepared and presented in Canadian dollars in accordance with International Accounting Standard 1: Presentation of Financial Statements ( IAS 1 ) as issued by the International Accounting Standards Board ( IASB ) and interpretations of the IFRS Interpretations Committee ( IFRIC ). The interim financial statements were authorized for issue by the Board of Directors on August 20, Basis of preparation These interim financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit or loss which are stated at their fair-value. In addition these financial statements have been prepared using the accrual basis of accounting, except for cash flow information. The accounting policies set out below have been applied consistently to all periods presented in these interim financial statements. The significant accounting policies for the quarter are consistent with those disclosed in the audited annual financial statements for the year ended March 31, 2013 except as specified below. The accompanying interim financial statements should be read in conjunction with the Company s audited financial statements for the year ended March 31, 2013.

8 2. SIGNIFICANT ACCOUNTING POLICIES (cont d ) New standards, amendments and interpretations not yet effective Certain new standards, interpretations and amendments to existing standards have been issued by the International Accounting Standards Board (IASB) or International Financial Reporting Interpretations Committee (IFRIC) that are mandatory for accounting periods beginning after April 1, 2014, or later periods. Some updates that are not applicable or are not consequential to the Company may have been excluded from the list below. Financial instruments IFRS 9 - Financial Instruments: Classification and Measurement, effective for annual periods beginning on or after January 1, 2015, with early adoption permitted, introduces new requirements for the classification and measurement of financial instruments. Management anticipates that this standard will be adopted in the Company's financial statements for the period beginning January 1, 2015, and has not yet considered the potential impact of the adoption of IFRS CASH The Company s cash consists of the following: June 30, 2013 March 31, 2013 Cash held with banks $ 600,138 $ 559,064 Cash held in foreign currencies Total $ 600,675 $ 559, RECEIVABLES The Company s receivables consist of HST receivable. The Company does not have any significant balances that are past due. All receivables are current, and the Company does not have any allowance for doubtful accounts. 5. MARKETABLE SECURITIES On November 29, 2012, the Company received 50,000 shares in Cache Exploration Inc. ( Cache ) as part of a property option agreement. The shares have been re-valued at June 30, 2013 to their fair market value of $500 (March 31, 2013 $1,000).

9 6. EQUIPMENT The equipment account is broken down as follows: Cost Computer Equipment Furniture and Fixtures Vehicles Total As at March 31, 2012 $ 47,690 $ 47,434 $ 38,936 $ 134,060 Additions - 8,567-8,567 Disposals As at March 31, 2013 $ 47,690 $ 56,001 $ 38,936 $ 142,627 Additions Disposals As at June 30, 2013 $ 47,690 $ 56,001 $ 38,936 $ 142,627 Depreciation Computer Equipment Furniture and Fixtures Vehicles Total As at March 31, 2012 $ 38,069 $ 42,796 $ 24,278 $ 105,143 Additions 2,888 1,403 2,932 7,223 Disposals As at March 31, 2013 $ 40,957 $ 44,199 $ 27,210 $ 112,366 Additions ,681 Disposals As at June 30, 2013 $ 41,462 $ 44,789 $ 27,796 $ 114,047 Net Book Value Computer Equipment Furniture and Fixtures Vehicles Total As at March 31, 2013 $ 6,733 $ 11,802 $ 11,726 $ 30,261 As at June 30, 2013 $ 6,228 $ 11,212 $ 11,140 $ 28, EXPLORATION AND EVALUATION ASSETS Title to exploration and evaluation assets involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history characteristic of many exploration and evaluation assets. The Company has investigated title to all of its exploration and evaluation assets and, to the best of its knowledge, title to all of its properties are in good standing.

10 7. EXPLORATION AND EVALUATION ASSETS (cont d ) March 31, 2013 Additions Recovery Write-off June 30, 2013 Mount Pleasant West, Kedron Property $ 4,190 $ - $ - $ - $ 4,190 Mount Pleasant West 5, ,197 Pershing Property 1,500, ,500,359 $ 1,509,746 $ - $ - $ - 1,509,746 Dungarvon, 53, ,552 - South Dungarvon, 5, ,300 Jake Lee, 2,165-1, Quisibis, 4,800-2,450-2,350 $ 1,575,843 $ 720 $ 4,050 $ 53,552 $ 1,518,961 March 31, 2012 Additions Recovery Write-off March 31, 2013 Mount Pleasant West, Kedron Property $ 9,630 $ - $ - $ 5,440 $ 4,190 Mount Pleasant Ridge 103, ,842 - Mount Pleasant West 25, ,753 5,197 Pershing Property 1,500, ,500,359 Union Property 249, ,413 - Flume Ridge Property 41,438 15,000-56,438 - $ 1,930,632 $ 15,000 $ - $ 435,886 1,509,746 Donnelly, 3, ,440 - Dungarvon, 28,552 25, ,552 South Dungarvon, 4, ,580 Jake Lee, 10,165-8,000-2,165 Quisibis, 1,860 2, ,800 Sisson Property, 5,070,972-5,070, Sisson Area Properties, 127,616 5, ,616 - Watson, 1,391-1, South Dungarvon, New Brunswick $ 7,179,487 $ 48,661 $ 5,080,072 $ 572,233 $ 1,575,843 During the year ended March 31, 2012, the Company acquired the South Dungarvon Property by staking certain mineral claims. Quisibis, New Brunswick During the year ended March 31, 2012, the Company acquired the Quisibis property by staking certain mineral claims. Additional claims were acquired during the year ended March 31, 2013 via staking.

11 7. EXPLORATION AND EVALUATION ASSETS (cont d ) Jake Lee, New Brunswick During the year ended March 31, 2013, the Company granted Cache the option to acquire a 51% interest in the Jake Lee property in exchange for 50,000 shares (received) and a minimum of $75,000 of exploration expenditures being spent on the property by September 30, The option could be increased to 60% if Cache provided an additional 100,000 common shares and incurring an additional $75,000 of exploration expenditures by September 30, Cache terminated its option subsequent to year end and returned the property to the Company. During the year ended March 31, 2013, the Company also signed a Consulting agreement whereby it agreed to pay a third party $10,000 should the Company, or any other party, drill a minimum of 1,000 metres of exploration drilling while the Company retains any interest in the project and granted a 2% NSR to the same third party. During the year ended March 31, 2012, the Company acquired Jake Lee by staking certain mineral claims. Mount Pleasant West Properties, New Brunswick Kedron Property During the year ended March 31, 2006 the Company acquired by staking, certain mineral claims in the Beech Hill and Mag River properties. Beech Hill with costs of $5,440 were written-off during fiscal Mount Pleasant Ridge Property During the year ended March 31, 2013 all related exploration and evaluation assets for the Mount Pleasant Ridge property in the amount of $103,842 have been written off. Mount Pleasant West Property During the year ended March 31, 2006 the Company acquired by staking, certain mineral claims in the Mount Pleasant West, Little Long Lake, and Main Road Group of properties. During the year ended March 31, 2013, certain claims related to the Mount Pleasant West property not renewed related exploration and evaluation assets of $20,753 were written-off. Pershing Property During the year ended March 31, 2007 the Company entered into an option agreement to earn a 60% interest in certain mineral claims. To earn its interest the Company paid $200,000, issued 2,000,000 common shares valued at $1,284,000 and incurred aggregate exploration expenditures of $500,000. The optionor retains a 2.5% NSR, 1% of which is subject to buyback at $1,000,000. Union Property During the year ending March 31, 2013 all related exploration and evaluation assets for the Union property in the amount of $249,413 have been written off. Flume Ridge Property During the year ending March 31, 2013 all related exploration and evaluation assets for the Flume Ridge property in the amount of $56,438 have been written off.

12 7. EXPLORATION AND EVALUATION ASSETS (cont d ) Dungarvon, New Brunswick During the period ended June 30, 2013, all related exploration and evaluation assets for the Dungarvon property in the amount of $53,552 have been written off. Sisson Property, New Brunswick During the year ended March 31, 2005, the Company acquired an option to earn a 70% interest in certain mineral claims. To earn its interest the Company paid $200,000 and incurred exploration expenditures of $2,000,000. The Company also staked additional claims. During the year ending March 31, 2008, the Company increased its working interest in the Sisson property to 85.7% by acquiring a 52.3% controlling interest in Champlain whose principal asset is a 30% carried interest in the Sisson property, by paying $4,164,250 and issuing 55,000 common shares valued at $544,500. During the year ending March 31, 2011, the Company acquired the remaining 47.7% of Champlain to acquire the remaining Sisson interests by paying total cash consideration of $580,000 and ceding its 100% interest in the Armstrong Brook project. During the year ended March 31, 2011, the Company entered into a joint venture agreement whereby Northcliff Resources Ltd. ( Northcliff ) will have an initial participation interest of 70% and the Company a 30% interest. The Company s initial contribution will be the Sisson properties free and clear of all encumbrances. Northcliff will incur $17,000,000 in expenditures on the property. Included in these expenditures is a completion of a $1,000,000 private placement by Northcliff in the Company. Additionally, cash consideration of $580,000 for the acquisition of the remaining 47.7% of Champlain was paid. During the year ended March 31, 2013, the Company sold its remaining 30% interest in the Sisson project to Northcliff in exchange for $1,000,000 in cash, 16,003,700 common shares of Northcliff, valued at $7,841,813 on the date of receipt, and the return to the Company of 333,333 of its common shares, valued at $250,000. The Northcliff shares received were then distributed to shareholders as a return of capital totalling $7,681,776 while the shares of the Company received were returned to treasury. The transaction resulted in an accounting gain of $4,020,841 on the sale of Sisson, and a loss on disposal of marketable securities of $160,037 as a result of the timing of the distribution of the Northcliff shares. Sisson Area Properties, New Brunswick During the year ending March 31, 2013 all related exploration and evaluation assets for the Sisson Area properties in the amount of $132,616 have been written off. Donnelly, New Brunswick During the year ending March 31, 2013 all related exploration and evaluation assets for the Donnelly property in the amount of $3,440 have been written off. Watson, New Brunswick During the year ending March 31, 2013 all related exploration and evaluation assets for the Watson property in the amount of $291 have been written off.

13 8. EXPLORATION EXPENDITURES Exploration expenditures for the year ended June 30, 2013 are comprised of the following: South Dungarvon, Dungarvon, Mount Pleasant West, Sisson Area Properties, Jake Lee, Quisibis, Other, Total Assays $ - $ 2,678 $ - $ - $ - $ - $ - $ 2,678 Drilling 26,494 74, ,235 Geological ,276 2, ,970 Mapping - 1, ,602 Office and field 8,000 35,910 2, ,280 Renewal 21 4,501 4, ,322 Travel 610 4, ,517 Total for the period ended June 30, 2013 $ 35,275 $ 142,878 $ 9,649 $ 802 $ - $ - $ - $ 188,604 Exploration expenditures for the year ended March 31, 2013 are comprised of the following: South Dungarvon, Dungarvon, Mount Pleasant West, Sisson Area Properties, Jake Lee, Quisibis, Other, Total Assays $ 9,778 $ 37,548 $ 4,502 $ 10,730 $ - $ 8,007 $ 1,408 $ 71,973 Geological 5,010 43,207 20,166 9,660 1,500 5,920 2,250 87,713 Mapping 806 5, ,538 2, ,187 Office and field 11,054 61,205 49,390 16,597 1,802 14, ,979 Renewal 810-8,260 4, ,096 15,456 Travel 1,033 9,820 3,367 1, , ,333 Total for the year ended March 31, 2013 $ 28,491 $ 157,758 $ 86,314 $ 45,700 $ 5,643 $ 31,667 $ 6,068 $ 361,641

14 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES June 30, 2013 March 31, 2013 Trade payables $ 120,050 $ 17,605 Accrued liabilities 4,000 40,442 Total $ 124,050 $ 58, SHARE CAPITAL AND RESERVES Authorized Unlimited common shares without par value Unlimited Class A preference shares without par value Please refer to the Statement of Changes in Equity for a summary of changes in share capital and reserves for the period ended June 30, 2013 and the year ended March 31, On June 12, 2013, the Company completed a private placement of 1,745,000 flow-through shares at a price of $0.06 for gross proceeds of $104,700. As part of the transaction a cash finder s fee of $4,662 was paid and 77,000 agent s warrants exercisable at a price of $0.06 for a period of 12 months were issued. On June 11, 2013, the Company completed a private placement of 3,333,333 units at a price of $0.06 per unit for gross proceeds of $200,000. Each unit consists of one common share and one-half share purchase warrant. Each whole warrant entitles the holder to purchase one additional share at a price of $0.10 for a period of 12 months from closing. On December 19, 2012, the Company completed a private placement of 2,330,000 units at a price of $0.09 per unit for gross proceeds of $209,700. Each unit consists of one common share and one share purchase warrant. Each warrant entitles the holder to purchase one additional share at $0.12 for a period of 24 months from closing. On September 4, 2012, all of the issued common shares and equity instruments of the Company were consolidated on the basis of 10 pre-consolidation common shares/equity instruments for 1 post-consolidation common share/equity instrument. As a result of the consolidation, all share and per-share information in the financial statements has been retrospectively restated to reflect the consolidation. On June 25, 2012, the Company completed the sale of its remaining 30% interest in the Sisson project to Northcliff (Note 7). As part of the transaction, the Company received 333,333 of its own shares, which were originally issued at a value of $1,000,000 to Northcliff. These shares were returned to treasury upon receipt. The difference between the market value of the shares received of $250,000 and the value at issuance was recorded as an increase to reserve. As part of the transaction the Company also completed a return-of-capital by distributing 16,003,700 shares of Northcliff, valued at $7,681,776 on the date the return-of capital was approved by shareholders (the Declaration Date ), to the Company s shareholders.

15 11. STOCK OPTIONS AND WARRANTS Stock options The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 20% of the issued and outstanding common stock of the Company. Under the plan, the exercise price of each option equals the market price, minimum price or a discounted price, of the Company's stock as calculated on the date of grant. The options can be granted for a maximum term of ten years and vesting is determined by the Board of Directors. As at March 31, 2013 and June 30, 2013, the Company had outstanding stock options as follows: Number of Shares Exercise Price Expiry Date Weighted Average Remaining Life 1,030, January 11, Stock option transactions were as follows: Number of Options Weighted Average Exercise Price Balance March 31, ,000 $ 3.40 Options expired/cancelled (192,500) 7.20 Options granted 607, Balance March 31, 2013 and June 30, ,030,000 $ 0.12 Warrants As at June 30, 2013, the Company had outstanding share purchase warrants, including agent s warrants, enabling the holders to acquire common shares as follows: Number of Shares Exercise Price Expiry Date Weighted Average Remaining Life 1,666,666 $ 0.10 June 11, ,700 $ 0.06 June 12, ,330,000 $ 0.12 December 19, ,074,366

16 11. STOCK OPTIONS AND WARRANTS (cont d ) Warrants (cont d ) Warrant transactions were as follows: Number of Warrants Weighted Average Exercise Price Balance, March 31, , Granted 2,330, Balance, March 31, ,660, Granted 1,744, Expired (330,000) 0.10 Balance, June 30, ,074, RELATED PARTY TRANSACTIONS Key management personnel compensation (including senior officers and directors of the Company) for the three month period ended June 30 is as follows: Short-term benefits paid or accrued $ 56,900 $ 45,900 Share-based compensation - - Total $ 56,900 $ 45,900 As at June 30, 2013, accounts payable and accrued liabilities included $5,550 ( $nil) owing to directors. 13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS The significant non-cash transactions of the Company during the period ended June 30, 2013 consisted of: a) The Company issued 77,700 agent s warrants, valued at $2,492, for share issue costs. The significant non-cash transactions of the Company during the period ended June 30, 2012 consisted of: a) As part of the sale of its 30% interest in the Sisson project, the Company received 3,333,333 of its own shares, valued at $250,000 from Northcliff. The shares were returned to treasury upon receipt. b) As part of the sale of its 30% interest in the Sisson project, the Company declared a return-of-capital of 16,003,700 Northcliff shares which were valued at $8,481,961 on the Declaration Date. When the Company received the 16,003,700 common shares of Northcliff, they were valued at $7,841,813 on the date of receipt. The Northcliff shares were distributed as a return-of-capital to the shareholders of the Company and were valued at $7,861,776 on the date of disposition. The difference in values between the date of receipt and disposal was recorded as a loss on disposal of marketable securities while the difference in values between the Declaration Date and the date of deposition was recorded as a gain on distribution of dividend.

17 14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The fair value of cash and marketable securities are measured based on level 1 of the fair value hierarchy. The fair values of receivables, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Financial risk factors The Company s risk exposures and the impact on the Company s financial instruments are summarized below: Credit risk Credit risk is the risk of loss associated with counterparty s inability to fulfill its payment obligations. The Company s credit risk is primarily attributable to cash and receivables. The Company places its cash in major financial institutions. Management believes that the credit risk concentration with respect to financial instruments included in receivables is remote. Liquidity risk The Company s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As of June 30, 2013 the Company had a cash balance of $600,675 to settle current liabilities of $124,050. All of the Company s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. Market risk Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. Interest rate risk The Company has cash balances and no interest-bearing debt. The Company s current policy is to invest excess cash in investment-grade demand investments issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. Foreign currency risk The Company is nominally exposed to foreign currency risk on fluctuations related to assets and liabilities that are denominated in US Dollars (USD). Price risk The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company s earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company. Fluctuations in value may be significant.

18 15. CAPITAL MANAGEMENT The Company defines capital that it manages as shareholders equity, consisting of issued common shares, stock options and warrants. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of exploration and evaluation assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company s management to sustain future development of the business. The properties in which the Company currently has an interest are in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital restrictions. 16. COMMITMENTS The Company has entered into operating lease agreements for premises. The annual lease payments under these leases are as follows: 2014 $31, $39, $40, $23, SEGMENTED INFORMATION The Company operates in one reporting segment, being the acquisition and exploration of exploration and evaluation assets in Canada. 18. SUBSEQUENT EVENTS Subsequent to the period ended June 30, 2013: The Company entered into an option agreement whereby it could acquire a 100% interest in the Pabineau project by paying $88,000 and issuing 205,000 common shares over a period of 6 years. The Company entered into an option agreement whereby it could acquire a 100% interest in the Benjamin project by issuing 3,305,000 common shares over a period of 66 months.