Precious & Other Metals Exploration. For the three month period ended March 31, 2012

Transcription

1 Precious & Other Metals Exploration ILLUSTRATIVE IFRS CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) For the three month period ended March 31, 2012

2 ILLUSTRATIVE IFRS CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) For the three month period ended March 31, 2012 The purpose of this publication is to assist precious and other metals exploration companies in preparing International Financial Reporting Standards (IFRS) quarterly interim financial statements. Significant judgment is required in preparing condensed interim financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). IAS 34 prescribes the minimum content of an interim financial report the principles for recognition and measurement in condensed financial statements for an interim period. A greater use of estimation may be required in preparation of condensed interim statements than annual financial statements. The interim financial report is intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported. An entity needs to determine if disclosures in addition to the minimum content are required. For example key management personnel and risk management policies are not included in this sample. An entity with material change from previously reported information may need to include disclosure of these. Financial Statement Preparation Assumptions The illustrative financial statements are based on the following assumptions: All investments were classified as available-for-sale under IFRS. All property, plant and equipment will be accounted for using the cost model. The Company has no complex financing arrangements such as convertible debt. The going concern disclosures are considered appropriate for this company, which we assume has sufficient cash resources to meet its obligations for a minimum of twelve months from the end of the reporting period. The appropriate disclosure may be different based on facts and circumstances of each individual company. The publication is based on standards and interpretations that have been issued by the International Accounting Standards Board (IASB) by December 31, The sample financial statements should not be used as a substitute for referring to standards and interpretations themselves. This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees agents and affiliates do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

3 CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) For the three month period ended March 31, 2012 CONTENTS CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED)... 2 CONDENSED INTERIM STATEMENT OF COMPREHENSIVE LOSS/INCOME (UNAUDITED)... 3 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)... 4 CONDENSED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) Corporate Information Basis of Preparation and Summary of Significant Accounting Policies Critical Accounting Estimates and Judgments Available-For-Sale Investment Exploration and Evaluation Assets Property, Plant and Equipment Other Liabilities Provisions Share Capital and Reserves Share-Based Payments Income Taxes Related Party Transactions Loss Per Share Events After the Reporting Date PAGE 2 OF 17

4 CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED) March 31, 2012 References: IAS 34.8(a), IAS 34.20(a) Reference: March 31, 2012 December 31, 2011 IAS 1.54 IAS 1.80A Assets Current assets Cash and cash equivalents $ xxx $ xxx Prepaid expenses and deposits xxx xxx Available-for-sale investment (Note 4) xxx xxx Total current assets $ xxx $ xxx Non-current assets Reclamation deposits $ xxx $ xxx IFRS 6.23(c) Exploration and evaluation assets (Note 5) xxx xxx Property, plant and equipment (Note 6) xxx xxx Total non-current assets $ xxx $ xxx Total assets $ xxx $ xxx IAS 1.54 IAS 1.69 Liabilities and shareholders' equity Current liabilities Trade and other payables $ xxx $ xxx Other liabilities (Note 7) - xxx Total current liabilities $ xxx $ xxx Non-current liabilities Provisions (Note 8) xxx xxx Total non-current liabilities $ xxx $ xxx Total liabilities $ xxx $ xxx IAS 1.54 IAS 1.78 Shareholders' equity IAS 1.55 Share capital (Note 9) $ xxx $ xxx Contributed surplus xxx xxx Accumulated other comprehensive loss/income xxx xxx IAS 1.55 Accumulated deficit (xxx) (xxx) Total shareholders' equity $ xxx $ xxx Total liabilities and shareholders equity $ xxx $ xxx Signed on behalf of the Board of Directors by: The accompanying notes form an integral part of these condensed interim financial statements PAGE 3 OF 17

5 Reference: Precious & Other Metals Exploration CONDENSED INTERIM STATEMENT OF COMPREHENSIVE LOSS/INCOME (UNAUDITED) For the three months ended March 31, 2012 References: IAS 34.8(b), IAS 34.20(b) March 31, 2012 March 31, 2011 IAS 1.82 Interest and other income $ xxx $ xxx IAS 1.99 Depreciation xxx xxx Employee costs xxx xxx Finance expense xxx xxx Other expenses xxx xxx Total expenses xxx xxx Loss before income tax (xxx) (xxx) IAS Income tax expense (Note 11) xxx xxx Loss after income tax $ (xxx) $ (xxx) Other comprehensive income IFRS 7.20 Fair value gains/(losses) on available-for-sale investments xxx xxx IAS 1.90 Income tax relating to fair value gain on available-for-sale investment (xxx) (xxx) Total other comprehensive income, net of tax $ xxx $ xxx Total comprehensive loss/income for the period $ (xxx) $ (xxx) IAS Loss per common share, basic and diluted (Note 13) $ (x.xx) $ (x.xx) The accompanying notes form an integral part of these condensed interim financial statements PAGE 4 OF 17

6 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED) For the three months ended March 31, 2012 References: IAS 34.8(c), IAS 34.20(c) Reference: IAS 1.82 IAS Share capital Contributed surplus Accumulated other comprehensive loss Deficit Total IFRS 7.20 Balance at January 1, 2011 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) Loss for the period (xxx) (xxx) Available-for-sale investment (net of tax) xxx xxx Share capital issued (Note 9) xxx xxx Stock options issued xxx xxx Options exercised xxx (xxx) xxx Warrants issued (Note 9) xxx xxx Warrants exercised xxx (xxx) xxx Share issue costs (xxx) xxx (xxx) IAS Balance at March 31, 2011 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) IAS Balance at January 1, 2012 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) Loss for the period (xxx) (xxx) Available-for-sale investment (net of tax) xxx xxx Share capital issued (Note 9) xxx xxx Stock options issued xxx xxx Options exercised xxx (xxx) xxx Warrants issued (Note 9) xxx xxx Warrants exercised xxx (xxx) xxx Share issue costs (xxx) xxx (xxx) IAS Balance at March 31, 2012 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) The accompanying notes form an integral part of these condensed interim financial statements PAGE 5 OF 17

7 CONDENSED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) For the three months ended March 31, 2012 References: IAS 34.8(d), IAS 34.20(d) Reference: March 31, 2012 March 31, 2011 IAS Cash flows from operating activities Loss for the period $ (xxx) $ (xxx) Adjustments to reconcile loss to net cash used in operating activities: Depreciation xxx xxx Interest income xxx xxx Finance expense xxx xxx Income tax expense xxx xxx Changes in non-cash working capital balances: Other receivables xxx xxx Prepaid expenses xxx xxx Trade and other payables xxx xxx Other liabilities xxx xxx Provisions xxx xxx Cash generated from operations xxx xxx IAS 7.35 Income tax paid (xxx) (xxx) IAS 7.10 Total cash inflows from operating activities $ xxx $ xxx Cash flows from investing activities Acquisition of property, plant and equipment (xxx) (xxx) Investment in exploration and evaluation assets (xxx) (xxx) Change in reclamation deposits xxx xxx IAS 7.31 Interest received xxx xxx IAS 7.10 Total cash (outflows) from investing activities $ (xxx) $ (xxx) IAS 7.17 Cash flows from financing activities Proceeds from share issuance xxx xxx Costs of issue of shares (xxx) (xxx) Proceeds from exercise of stock options xxx xxx IAS 7.31 Interest paid (xxx) (xxx) IAS 7.10 Total cash inflows from financing activities $ xxx $ xxx Total increase in cash during the period $ xxx $ xxx Cash and cash equivalents at beginning of period $ xxx $ xxx IAS 7.45 Cash and cash equivalents at end of period $ xxx $ xxx The accompanying notes form an integral part of these condensed interim financial statements PAGE 6 OF 17

8 For the three months ended March 31, 2012 Reference: IAS 34.8(e) IAS CORPORATE INFORMATION Precious & Other Metals Exploration s business activity is the exploration and evaluation of mineral properties in Canada. Precious & Other Metals Exploration (the Company ) was incorporated under the Canada Business Corporations Act on Month DD, YYYY, and has continued as a company under the Business Corporations Act of British Columbia. The Company is listed on the TSX Venture Exchange, having the symbol xxxx-v, as a Tier 2 mining issuer and is in the process of exploring its mineral properties. The address of the Company's corporate office and principal place of business is 123 Any Street, Vancouver, British Columbia, Canada. 2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES IAS IAS IAS 34.16A IAS IAS 34.16A IAS IAS 34.B12 IAS 1.51 IAS 21.8 IAS IAS IAS These condensed interim financial statements for the three month period ended March 31, 2012 have been prepared in accordance with IAS 34 Interim Financial Reporting. These condensed interim financial statements should be read in conjunction with the Company s 2011 annual financial statements which have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). The condensed interim financial statements have been prepared using accounting policies consistent with those used in the Company s 2011 annual financial statements except for income tax expense which is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. The condensed interim financial statements are presented in Canadian dollars, which is also the Company s functional currency, and all values are rounded to the nearest thousand (CDN ), unless otherwise indicated. The condensed interim financial statements were authorized for issue by the Board of Directors on Month DD, The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company s accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. a) Going Concern of Operations IAS 1.25 The Company has not generated revenue from operations. The Company incurred a net loss of $xxx during the three months-ended March 31, 2012 and, as of that date the Company s deficit was $xxx. However, the Company has sufficient cash resources to meet its obligations for at least twelve months from the end of the reporting period. As the Company is in the exploration stage, the recoverability of the costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties and deferred exploration expenditures. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future. PAGE 7 OF 17

9 Reference: b) Standards, Amendments and Interpretations Not Yet Effective 1 Precious & Other Metals Exploration For the three months ended March 31, 2012 Certain pronouncements were issued by the IASB or the IFRS Interpretations Committee that are mandatory for accounting periods beginning after January 1, 2012 or later periods. IAS 1.31, IAS 8.30, IAS 8.31 The following new standards, amendments and interpretations, that have not been early adopted in these interim financial statements, will or may have an effect on the Company s future results and financial position: IFRS 9 Financial Instruments IFRS 9 Financial Instruments is part of the IASB's wider project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. The standard is effective for annual periods beginning on or after January 1, The Company is in the process of evaluating the impact of the new standard on the accounting for the available-for-sale investment. IFRS 10 Consolidated Financial Statements IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Company is yet to assess the full impact of IFRS 10 and intends to adopt the standard no later than the accounting period beginning on January 1, IFRS 11 Joint Arrangements IFRS 11 describes the accounting for joint arrangements in which two or more parties have joint control; IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers. The Company is yet to assess the full impact of IFRS 11 and intends to adopt the standard no later than the accounting period beginning on January 1, IFRS 12 Disclosures of Interests in Other Entities IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Company is yet to assess the full impact of IFRS 12 and intends to adopt the standard no later than the accounting period beginning on January 1, IFRS 13 Fair Value Measurement IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. The Company is yet to assess the full impact of IFRS 13 and intends to adopt the standard no later than the accounting period beginning on January 1, Standards, Amendments and Interpretations Not Yet Effective section may need further updating prior to condensed interim financial statement release. PAGE 8 OF 17

10 Reference: c) Standards, Amendments and Interpretations Not Yet Effective (contd) For the three months ended March 31, 2012 IAS 1.31, IAS 8.30, IAS 8.31 IFRIC 20 Stripping Costs in the Production Phases of a Surface Mine In IFRIC 20, the IFRS Interpretations Committee sets out principles for the recognition of production stripping costs in the balance sheet. The interpretation recognizes that some production stripping in surface mining activity will benefit production in future periods and sets out criteria for capitalizing such costs. While the Company is not yet in the production phase, the Company is currently assessing the future impact of this interpretation. Amendment to IAS 1 Presentation of Financial Statements The amendments to IAS 1 revise the presentation of other comprehensive income (OCI). Separate subtotals are required for items which may subsequently be recycled through profit or loss and items that will not be recycled through profit or loss The standard is effective for annual periods beginning on or after July 1, The Company is in the process of evaluating the impact of the amendments on the presentation of the income statement. There are no other IFRSs or IFRIC Interpretations that are not yet effective that would be expected to have a material impact on the Company. 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IAS IAS IAS IAS IAS IAS IAS 34.16A Precious & Other Metals Exploration makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both. Information about critical judgments in applying accounting policies and sources of estimation uncertainty that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the condensed interim financial statements within the next financial year are the same as those that applied to the Company s 2011 annual financial statements. 4. AVAILABLE-FOR-SALE INVESTMENT IFRS 7.7 Available-for-sale investment consists of an investment in common shares of XYZ Mine Company Limited, and therefore has no fixed maturity date or coupon rate. The fair value of the listed available-for-sale investment has been determined directly by reference to published price quotations in an active market. PAGE 9 OF 17

11 For the three months ended March 31, 2011 Reference: 5. EXPLORATION AND EVALUATION ASSETS IFRS 6.23 Property xxx Property yyy Total $ 000 IFRS 6.24 Balance at January 1, 2011 $ xxx $ xxx $ xxx IFRS 6.25 Exploration costs xxx xxx xxx Acquisition of property xxx xxx xxx xxx Write-off of unsuccessful exploration expenditure (xxx) (xxx) (xxx) Balance at December 31, 2011 $ xxx $ xxx $ xxx IFRS 6.24 Exploration costs xxx xxx xxx Acquisition of property xxx xxx xxx xxx Proceeds from farm out agreement (xxx) - (xxx) Write-off of unsuccessful exploration expenditure (xxx) (xxx) (xxx) Balance at March 31, 2012 $ xxx $ xxx $ xxx Property xxx is xxx% owned and is located in north-western Québec. Property yyy is 100% owned and is located in northern Ontario. During the current period the Company entered into a farm-out agreement with ABC Limited to share costs and risks associated with exploration activities on property xxx. The cash received has been credited against costs previously capitalized for the whole interest. No gain on disposal was recognized. The impairment assessment of exploration and evaluation assets did not result in amounts being written off the Company s properties. 6. PROPERTY, PLANT AND EQUIPMENT IAS 34.15B During the period the Company acquired assets with a cost of $x (2011 $ x). Assets with a carrying value of $x ( $xxx) were disposed of resulting in a gain/loss of $x which is included in other income/other expenses in the condensed statement of comprehensive income. PAGE 10 OF 17

12 For the three months ended March 31, 2011 Reference: 7. OTHER LIABILITIES Other liabilities include the liability portion of the flow-through shares issued. The following is a continuity schedule of the liability portion of the flow-through shares issuances. IFRS 7.7 Flow-through Shares Issued on Month DD,2011 Issued on Month DD,2012 Total Balance at January 1, 2011 $ - $ - $ - Liability incurred on flow-through shares issued xxx - xxx Settlement of flow-through share liability on incurring expenditures (xxx) - (xxx) Balance at December 31, 2011 $ - $ - $ - Liability incurred on flow-through shares issued - xxx xxx Settlement of flow-through share liability on incurring expenditures - (xxx) (xxx) Balance at March 31, 2012 $ - $ xxx $ xxx On Month DD, 2011, the Company completed a brokered private placement, consisting of the issue and sale of xxx flow through units at a price of $x.xx per flow through unit and xxx common share units at a price of $x.xx per unit, for aggregate gross proceeds of $xxx. Each flow-through unit consisted of one flow through common share and one half of one common share purchase warrant. As at December 2011, the Company had fulfilled its commitment to incur exploration expenditures in relation to this flow-through share financing. On Month DD, 2012, the Company completed a brokered private placement, consisting of the issue and sale of xxx flow through units at a price of $x.xx per flow through unit and xxx common share units at a price of $x.xx per unit, for aggregate gross proceeds of $xxx. Each flow-through unit consisted of one flow through common share and one half of one common share purchase warrant; each common share unit consisted of one common share and one half of one common share purchase warrant. As at March 2012, the Company had not fulfilled its commitment to incur exploration expenditures in relation to this flow-through share financing. PAGE 11 OF 17

13 For the three months ended March 31, 2011 Reference: IAS 34.15B IAS IAS PROVISIONS Rehabilitation Other Total Balance at January 1, 2011 $ xxx $ xxx $ xxx Change in liability estimate xxx xxx xxx Accretion of interest xxx xxx xxx Balance at December 31, 2011 $ xxx $ xxx $ xxx Change in liability estimate xxx xxx xxx Accretion of interest xxx xxx xxx Balance at March 31, 2012 $ xxx $ xxx $ xxx Rehabilitation Provision Precious & Other Metals Exploration makes full provision for the future cost of site rehabilitation on a discounted basis at the time exploration and evaluation activities take place. The rehabilitation provision represents the present value of rehabilitation costs relating to exploration and evaluation activities that have occurred to date. The rehabilitation expenditure is expected to be incurred in various stages up to 20xx. IAS 1.79 IAS SHARE CAPITAL AND RESERVES a) Common Shares The following is a summary of changes in common share capital issued from January 1, 2011 to March 31, 2012: Number of Shares Issue Price Amount 's IAS 34.16A Balance at January 1, 2011 xxx $ xxx Shares issued via private placement xxx $ x.xx xxx Flow-through share issuance xxx $ x.xx xxx Issue of shares on exercise of warrants xxx $ x.xx xxx IAS 1.79(a) Issue of shares on exercise of options xxx $ x.xx xxx Less share issue costs Balance at December 31, 2011 xxx $ xxx Flow-through share issuance xxx $ x.xx xxx Issue of shares on exercise of warrants xxx $ x.xx xxx Issue of shares on exercise of options xxx $ x.xx xxx Less share issue costs Balance at March 31, 2012 xxx $ xxx (xxx) (xxx) PAGE 12 OF 17

14 For the three months ended March 31, 2011 Reference: b) Contributed Surplus The following is a summary of changes in contributed surplus from January 1, 2011 to March 31, 2012: March 31, 2012 December 31,2011 Warrants $ xxx $ xxx Share Options (Note 13) xxx xxx Contributed Surplus $ xxx $ xxx IAS 1.79 IAS c) Share Purchase Warrants The following is a summary of changes in warrants from January 1, 2011 to March 31, 2012: Number of Warrants Amount 's Balance at January 1, 2011 xxx $ xxx Issue of warrants xxx xxx Exercised warrants (xxx) (xxx) Balance December 31, 2011 xxx $ xxx Issue of warrants xxx xxx Exercised warrants (xxx) (xxx) Balance as at March 31, 2012 xxx $ xxx As at March 31, 2012, the Company had outstanding warrants as follows: Number of warrants Exercise price Expiry xxx $ x.xx MM/DD/ 20YY xxx $ x.xx MM/DD/ 20YY xxx $ x.xx MM/DD/ 20YY On Month DD, 2012, the Company completed a brokered private placement, consisting of the issue and sale of xxx flow through units at a price of $x.xx per flow through unit and xxx common share units at a price of $x.xx per unit, for aggregate gross proceeds of $xxx. Each flow-through unit consisted of one flow through common share and one half of one common share purchase warrant; each common share unit consisted of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase one additional common share of the Company at a price of $x.xx per share for a period of xx months after the closing of the offering. The Company paid commission of $xxx and issued xxx broker compensation warrants exercisable at $x.xx per share expiring Month DD, 20XX valued at $xxx. Share issuance costs related to the placement totaled $xxx. On Month DD, 2011, the Company completed a brokered private placement, consisting of the issue and sale of xxx flow through units at a price of $x.xx per flow through unit and xxx common share units at a price of $x.xx per unit, for aggregate gross proceeds of $xxx. Each flow-through unit consisted of one flow through common share and one half of one common share purchase warrant; each common share unit consisted of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase one additional common share of the Company at a price of $x.xx per share for a period of xx months after the closing of the offering. The Company paid commission of $xxx and issued xxx broker compensation warrants exercisable at $x.xx per share expiring Month DD, 20XX valued at $xxx. Share issuance costs related to the placement totaled $xxx. PAGE 13 OF 17

15 For the three months ended March 31, 2011 Reference: IAS 34.16A IFRS 2.45 IFRS SHARE-BASED PAYMENTS a) Option Plan Details The Company has an incentive Stock Option Plan ( the Plan ) under which non-transferable options to purchase common shares of the Company may be granted to directors, officers, employees or service providers of the Company. The terms of the Plan provide that the Directors have the right to grant options to acquire common shares of the Company at not less than the closing market price of the shares on the day preceding the grant at terms of up to four years. No amounts are paid or payable by the recipient on receipt of the option, and the options granted are not dependent on any performance-based criteria. In accordance with the Plan, 25% of the options vest immediately, with a further 25% vesting in each of the subsequent three years on the anniversary of the initial grant date. IFRS 2.45 The following is a summary of changes in options from January 1, 2011 to March 31, 2012: Grant Date Expiry Date Exercise Price Opening Balance During the Year Granted Exercised Forfeited Closing Balance Vested and Exercisable Unvested MM/DD/YY MM/DD/YY $ x.xx xxx xxx (xxx) (xxx) xxx xxx xxx MM/DD/YY MM/DD/YY $ x.xx xxx xxx (xxx) (xxx) xxx xxx xxx MM/DD/YY MM/DD/YY $ x.xx xxx xxx (xxx) (xxx) xxx xxx xxx MM/DD/YY MM/DD/YY $ x.xx xx xxx (xxx) (xxx) xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx Weighted Average Exercise Price $ x.xx $ x.xx $ x.xx $ x.xx $ x.xx $ x.xx $ x.xx b) Fair Value of Options Issued During the Period The weighted average fair value at grant date of options granted during the period ended March 31, 2012 was $x.xx per option (year-ended December 31, 2011: $x.xx). IFRS 2.45(d) IFRS 2.45(c) IFRS 2.51(a) IFRS 6.23 The model inputs for options granted during the period ended March 31, 2012 included: Share Price at Exercise Risk-Free Interest Grant Date Expiry Date Grant Date Price Rate Expected Life Volatility Factor Dividend Yield MM/DD/YY MM/DD/YY $ x.xx $ x.xx x.xx% -x.xx% xx-xx-months x.xx% -x.xx% -% MM/DD/YY MM/DD/YY $ x.xx $ x.xx x.xx% -x.xx% xx-xx-months x.xx% -x.xx% -% The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information. The weighted average share price at the date of exercise of options during the period ended March 31, 2012 was $x.xx per share (year-ended December 31, 2011: $x.xx). c) Expenses Arising from Share-based Payment Transactions Total expenses arising from share-based payment transactions recognized during the period as part of employee benefit expense were $xxx (3 months ended March 31, 2011: $xxx). d) Amounts Capitalized Arising from Share-based Payment Transactions Total expenses arising from share-based payment transaction that were capitalized during the period as part of exploration and evaluation activities were $xxx (3 months ended March 31, 2011: $xxx). PAGE 14 OF 17

16 For the three months ended March 31, INCOME TAXES IAS Income tax expense is recognized based on management s best estimate of the weighted average annual income tax rate for the full financial year applied to the pre-tax income of the interim period. The Company s effective tax rate for the period ending March 31, 2012 was x.xx% (March 31, 2011: x.xx%). The difference between tax expense for the period and the expected income taxes based on the statutory tax rate are as follows: March 31, 2012 March 31, 2011 Loss before income taxes $ (xxx) $ (xxx) Tax recovery based on the statutory rate of xx% (2011: xx%) $ (xxx) $ (xxx) Change in tax rates xxx xxx Non-deductible expenses xxx xxx Unrecognized non-capital loss carry-forwards xxx xxx Total income tax expense (recovery) $ xxx $ xxx IAS 12.80(d) IAS IAS 12.81(e) Reference: IAS IAS Changes to the federal and provincial tax rates were announced in 2011 and 2012 which resulted in an adjustment to the opening carrying value of temporary differences. As at March 31, 2012, the Company had estimated capital losses for Canadian tax purposes of $xxx. These losses do not expire and may be utilized to reduce future capital gains, if any. As at March 31, 2012, the Company has estimated non-capital losses for Canadian income tax purposes that may be carried forward to reduce taxable income derived in future years. A summary of these tax losses is provided below. Tax Losses These tax losses will expire as follows: Total Year of Expiry 20XX 20XX 20XX Taxable Losses $ xxx xxx xxx $ xxx The potential benefits of these carry-forward non-capital losses, capital losses and deductible temporary differences has not been recognized in these condensed interim financial statements as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered. PAGE 15 OF 17

17 For the three months ended March 31, RELATED PARTY TRANSACTIONS IAS The following is a summary of the Company s related party transactions during the period: a) Legal Fees Legal fees of $xxx (three months-ended March 31, 2011: $xxx), incurred in connection with the Company s financings as well as general corporate matters, were paid to a law firm of which one partner is a director of the Company. At March 31, 2012, $xxx (December 31, 2011: $xxx) owing to this legal firm was included in accounts payable. b) Rental Payments Rental payments of $xxx (three months-ended March 31, 2011: $xxx) were paid to Office Company, which is controlled by a director of the Company. At March 31, 2012, $xxx (December 31, 2011: $xxx) owing was included in accounts payable. 13. LOSS PER SHARE IAS Weighted Average Number of Common Shares: March 31, 2012 March 31, 2011 Loss attributable to ordinary shareholders $xxx $xxx Weighted average number of common shares xxx xxx Basic and diluted loss per share $x.xx $x.xx Weighted Average Number of Common Shares: Issued common shares at January 1 xxx xxx Effect of shares issued in MONTH 20XX xxx xxx Effect of stock options exercised xxx xxx Effect of stock options on issue xxx xxx Effect of share warrants on issue xxx xxx Weighted average number of common shares (basic and diluted) at March 31 xxx xxx The basic and diluted loss per share are the same as there are no instruments that have a dilutive effect on earnings. The brokered private placement which occurred on Month DD, 2012 consists of one flow-through share and one non-transferrable share purchase warrants exercisable at a price of $x.xx for each warrant. This transaction, which occurred between the reporting date and the date of completion of these financial statements, has an impact on the number of ordinary and potential ordinary shares. 14. EVENTS AFTER THE REPORTING DATE IAS 34.16A IAS Private Placement Financing On Month DD, 2012 the Company obtained a brokered private placement for total proceeds of $xxx consisting of xxx flow-through units at a price of $x.xx. Each flow-through unit consisted of one flow-through share and one non-transferrable share purchase warrant exercisable at a price of $x.xx for each warrant. PAGE 16 OF 17

18 For more information, please contact: Audit and Assurance Vancouver Don de Jersey Michael Madsen Diane Campbell Lynn Watt Glenn Ohlhauser Jefry Jai Joe Ozorio Toronto Tammy Thompson Mark Smith Calgary Lorraine Walker Jonathan Winn Stuart Chalmers Marilyn Kuntz Allan Payne Montreal Anthony Marinelli Advisory Sam Khoury Carlo Mariglia Mark Knight This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.