International Tower Hill Mines Ltd.: Exhibit 99.2 - Filed by newsfilecorp.com
| INTERNATIONAL TOWER HILL MINES LTD. |
| (An Exploration Stage Company) |
| |
| FORM 51-102F1 |
| MANAGEMENT DISCUSSION & ANALYSIS |
| |
November 10, 2011
This Management Discussion & Analysis (“MD&A”) for
International Tower Hill Mines Ltd. (the “Company” or “ITH”) for the three
months ended August 31, 2011 has been prepared by management, in accordance with
the requirements of National Instrument 51-102, as of November 10, 2011 and
should be read in conjunction with the Company’s unaudited condensed
consolidated interim financial statements for the three month period ended
August 31, 2011 and the audited consolidated financial statements for the years
ended May 31, 2011, 2010 and 2009. Except where otherwise noted, all dollar
amounts are stated in Canadian dollars.
Caution Regarding Forward Looking Statements
This MD&A contains forward-looking statements and
forward-looking information (collectively, “forward-looking statements”) within
the meaning of applicable Canadian and US securities legislation. These
statements relate to future events or the future activities or performance of
the Company. All statements, other than statements of historical fact are
forward-looking statements. Information concerning mineral resource estimates
also may be deemed to be forward-looking statements in that it reflects a
prediction of the mineralization that would be encountered if a mineral deposit
were developed and mined. Forward-looking statements are typically identified by
words such as: believe, expect, anticipate, intend, estimate, postulate, plans
and similar expressions, or which by their nature refer to future events. These
forward looking statements include, but are not limited to, statements
concerning:
-
the Company’s strategies and objectives, both generally and specifically in
respect of the Livengood project;
-
the potential for the expansion of the estimated resources at Livengood;
-
the potential for a production decision concerning, and any production at,
the Livengood project;
-
the completion of a Pre-feasibility Study for the Livengood project;
-
the potential for higher grade mineralization to form the basis for a
starter surface mine shell in any production scenario at Livengood;
-
the potential overburden geometry of the Livengood deposit being amenable
for a low cost surface mine that could support a high production rate and
economies of scale;
-
the potential for cost savings due to the high gravity gold concentration
component of some of the Livengood mineralization;
-
the timing of decisions regarding the timing and costs of exploration
programs with respect to, and the issuance of the necessary permits and
authorizations required for, the Company’s ongoing exploration program at
Livengood;
-
the Company’s estimates of the quality and quantity of the resources at
Livengood;
-
the timing and cost of the planned future exploration programs at
Livengood, and the timing of the receipt of results therefrom;
-
the Company’s future cash requirements;
-
general business and economic conditions;
-
the Company’s ability to meet its financial obligations as they come due,
and to be able to raise the necessary funds to continue operations;
-
the use of the proceeds from the financing which closed November 10, 2010;
and
-
the ability of the Company to continue to refine the project economics for
the Livengood project, including by increasing proposed production and
shortening the proposed mine life.
Although the Company believes that such statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Inherent in forward looking statements are risks and uncertainties
beyond the Company’s ability to predict or control, including, but not limited
to, risks related to the Company’s inability to identify one or more economic
deposits on its property, variations in the nature, quality and quantity of any
mineral deposits that may be located, variations in the market price of any
mineral products the Company may produce or plan to produce, the Company’s
inability to obtain any necessary permits, consents or authorizations required
for its activities, to produce minerals from its property successfully or
profitably, to continue its projected growth, to raise the necessary capital or
to be fully able to implement its business strategies, and other risks
identified herein under “Risk Factors”.
The Company cautions investors that any forward-looking
statements by the Company are not guarantees of future performance, and that
actual results are likely to differ, and may differ materially, from those
expressed or implied by forward looking statements contained in this MD&A.
Such statements are based on a number of assumptions which may prove incorrect,
including, but not limited to, assumptions about:
-
the level and volatility of the price of gold;
-
general business and economic conditions;
-
the timing of the receipt of regulatory and governmental approvals, permits
and authorizations necessary to implement and carry on the Company’s planned
exploration and potential development program at Livengood;
-
conditions in the financial markets generally;
-
the Company’s ability to secure the necessary consulting, drilling and
related services and supplies on favourable terms in connection with not only
its ongoing exploration program at Livengood but also in connection with the
completion of its pre-feasibility study and in connection with any feasibility
study that may be commissioned;
-
the Company’s ability to attract and retain key staff, particularly in
connection with the carrying out of a feasibility study and the development of
any mine at Livengood;
2
-
the accuracy of the Company’s resource estimates (including with respect to
size and grade) and the geological, operational and price assumptions on which
these are based;
-
the timing of the ability to commence and complete the planned work at
Livengood;
-
the anticipated terms of the consents, permits and authorizations necessary
to carry out the planned exploration and development programs at Livengood and
the Company’s ability to comply with such terms on a safe and cost-effective
basis;
-
the ongoing relations of the Company with its underlying lessors and the
applicable regulatory agencies;
-
that the metallurgy and recovery characteristics of samples from certain of
the Company’s mineral properties are reflective of the deposit as a whole;
-
the continued development of and potential construction of any mine at the
Livengood property not requiring consents, approvals, authorizations or
permits that are materially different from those identified to date by the
Company;
-
the ability of the Company to predict how the net proceeds of the financing
which closed on November 10, 2010 will be used; and
-
the timetables for the completion of a pre-feasibility study at Livengood
and for any feasibility study that may be commissioned.
These forward looking statements are made as of the date hereof
and the Company does not intend and does not assume any obligation, to update
these forward looking statements, except as required by applicable law. For the
reasons set forth above, investors should not attribute undue certainty to or
place undue reliance on forward-looking statements.
Historical results of operations and trends that may be
inferred from the following discussion and analysis may not necessarily indicate
future results from operations. In particular, the current state of the global
securities markets may cause significant reductions in the price of the
Company’s securities and render it difficult or impossible for the Company to
raise the funds necessary to continue operations. See “Risk Factors –
Insufficient Financial Resources/Share Price Volatility”.
Caution Regarding Adjacent or Similar Mineral Properties
This MD&A contains information with respect to adjacent or
similar mineral properties in respect of which the Company has no interest or
rights to explore or mine. The Company advises US investors that the mining
guidelines of the US Securities and Exchange Commission (the “SEC”) set forth in
the SEC’s Industry Guide 7 (“SEC Industry Guide 7”) strictly prohibit
information of this type in documents filed with the SEC. As a foreign private
issuer preparing this MD&A pursuant to Canadian disclosure requirements
under the Canada-U.S. Multi-Jurisdictional Disclosure System, this MD&A is
not subject to the requirements of SEC Industry Guide 7. Readers are cautioned
that the Company has no interest in or right to acquire any interest in any such
properties, and that mineral deposits on adjacent or similar properties, and any
production therefore or economics with respect thereto, are not indicative of
mineral deposits on the Company’s properties or the potential production from,
or cost or economics of, any future mining of any of the Company’s mineral
properties.
3
Cautionary Note to US Investors Concerning Reserve and
Resource Estimates
The terms “mineral reserve”, “proven mineral reserve” and
“probable mineral reserve” are Canadian mining terms as defined in accordance
with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and
Petroleum (the “CIM”) - CIM Definition Standards on Mineral Resources and
Mineral Reserves, adopted by the CIM Council, as amended (“CIM Standards”).
These definitions differ from the definitions in SEC Industry Guide 7 under the
United States Securities Act of 1933, as amended (the “Securities Act”). Under
SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is
required to report reserves, the three-year historical average price is used in
any reserve or cash flow analysis to designate reserves and the primary
environmental analysis or report must be filed with the appropriate governmental
authority.
In addition, the terms “mineral resource”, “measured mineral
resource”, “indicated mineral resource” and “inferred mineral resource” are
defined in and required to be disclosed by NI 43-101 and the CIM Standards;
however, these terms are not defined terms under SEC Industry Guide 7 and are
normally not permitted to be used in reports and registration statements filed
with the SEC. Investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into reserves.
“Inferred mineral resources” have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will ever
be upgraded to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. Investors are cautioned not to assume that all or
any part of an inferred mineral resource exists or is economically or legally
mineable. Disclosure of “contained ounces” in a resource is permitted disclosure
under Canadian regulations; however, the SEC normally only permits issuers to
report mineralization that does not constitute “reserves” by SEC Industry Guide
7 standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this MD&A and the
documents incorporated by reference herein contain descriptions of the Company’s
mineral deposits that may not be comparable to similar information made public
by U.S. companies subject to the reporting and disclosure requirements under the
United States federal securities laws and the rules and regulations thereunder.
All of the Company's public disclosure filings, including its
most recent Annual Information Form, management information circular, material
change reports, press releases and other information, may be accessed via
www.sedar.com and readers are urged to review
these materials, including the technical reports filed with respect to the
Company’s Livengood project.
| Current
Business Activities |
General
During the quarter ended August 31, 2011, and to the date of
this MD&A, the Company advanced its Livengood Gold Project in Alaska with
the continuation of activities in support of the Pre-feasibility Study (“PFS”).
This included ongoing drill programs, the advancement of engineering and
environmental studies, and the build-up of its team in Fairbanks, Alaska and
Englewood, Colorado.
4
Highlights of activities during the quarter include:
-
An updated NI 43-101 report and revised preliminary economic assessment
directed at evaluating a 91,000 tonnes/day milling only concept for the
project was completed and results released in August 2011.
-
The PFS work proceeded with substantial progress in the metallurgical
testing, process design and infrastructure site selections. The PFS is on
schedule for completion in November 2011.
-
The commencement of the 2011 summer drill program at the Livengood project.
A total of nine drill rigs (seven diamond and two reverse circulating (RC))
are operating. The drill program is designed to:
| |
1) |
evaluate the shape and continuity of mineralization away
from the Core and Sunshine zones using close-spaced (15 metres) RC
drilling; |
| |
|
|
| |
2) |
confirm the continuity of mineralization and increase the
confidence level of the resource in the Tower and Core zones with infill
drilling to 50 metre spacing; |
| |
|
|
| |
3) |
confirm the correlation of grade in the center of the
Sunshine Zone between core and RC drilling and the effect of drilling
direction on the estimated grade of the block with close-spaced (37.5
metre), alternating core and RC drilling of a 150 x 150 x 150m block (Area
50); |
| |
|
|
| |
4) |
evaluate potential downhole contamination in a few areas
of RC drilling with additional RC and core drilling; |
| |
|
|
| |
5) |
develop surface mine geotechnical and hydro-geologic
data; and |
| |
|
|
| |
6) |
develop geotechnical data in areas identified as
potential infrastructure sites. |
Corporate Personnel
Mr. Tom S. Q. Yip was appointed as the Company’s new Chief
Financial Officer, effective September 7, 2011. Mr. Yip succeeded Michael
Kinley, CA, who will remain with the Company as a consultant through a
transition period before leaving to pursue other opportunities. Mr. Yip has over
25 years of experience in all aspects of financial management including
strategic planning, mergers and acquisitions, treasury and capital structure,
reporting and risk management with both private and publicly traded resource
companies.
Most recently, Mr. Yip served as the Chief Financial Officer
for Silver Standard Resources Inc., a mining company with a substantial
portfolio of silver properties in the Americas. Since 2007, he was a key member
of the leadership team to transition from an exploration and development company
to a producer. Prior to that, he served as the Chief Financial Officer for
Asarco, LLC, a copper mining, smelting and refining company, from 2006 to 2007.
He began his career in the mining industry with Echo Bay Mines Ltd., where he worked for 20 years holding various financial roles of
increasing responsibility, including Principal Accounting Officer and then Chief
Financial Officer, before the company merged with Kinross Gold Corporation in
2003. Mr. Yip is a Chartered Accountant and holds a Bachelor of Commerce
degree in Business Administration from the University of Alberta.
5
Mr. Harold A. “Hal” Galbraith was appointed as the Company’s
new Mining Manager, effective September 7, 2011. Mr. Galbraith has over 28 years
of experience in all aspects of mining operations, maintenance systems,
technical services and industrial engineering support, holding positions with
mining companies such as Rio Tinto, Kennecott, Glamis Marigold Mining Company
and Drummond Ltd.
Most recently, Mr. Galbraith served as the
Mine Manager for Asarco, LLC at the Mission Mine in Sahuarita, Arizona, where he
was responsible for annual mine production of 56.4 million tonnes of material as
well as maintenance of all rolling stock. Mr. Galbraith also specified and
directed the acquisition of $190 million worth of equipment since 2007. Prior to
that, he served as the Mine Superintendent for Glamis Marigold Mining Company
where he oversaw the production of 48 million tonnes of material annually from
2005 to 2006. From 2001 to 2005, he held increasingly senior roles with Drummond
Limited in South America, including Production Engineer, Senior Production
Engineer and Assistant Superintendent of production at the LaLoma, Caesar and
Colombia mines. From 1990 to 2001, he held multiple roles including Senior
Projects Engineer as well as Short and Long Range Planning Engineer with Rio
Tinto, Kennecott, Barneys Canyon Mining Company and Rawhide Mining Company. Mr.
Galbraith has a Bachelor of Science degree in Mining Engineering from the
Pennsylvania State University.
Livengood Project
Pre-feasibility Study
A PFS for the Livengood mineral resource is currently underway
and scheduled to release results in November, 2011. The Livengood PFS will
provide an update of the anticipated project configuration, and an overview of
the geological, exploration, metallurgical test work, process plant and
infrastructure engineering, and surface mine planning work that has been
completed to date. The PFS will update and confirm the previously released
updated PEA which was based on a surface mining operation supplying mineralized
material to a processing plant with average throughput of 91,000 tonnes per day.
The processing plant would produce gravity and flotation concentrates with gold
recovered by Carbon-in-Leach processing of the concentrates.
The Company will continue its investigations and studies at
Livengood with a projected FY 2011-2012 budget of US$ 68.1M ($67M CAD). The
continuing PFS work accounts for approximately 75% of the expenditure, with the
remaining 25% allocated to 2012 early season field work and technical studies to
support feasibility engineering.
During the summer 2011 field program, completion of several
studies to demonstrate grade continuity and confirm precision of modeling with
increased drill density will provide important verification of the resource
estimation.
Drill Results
The 2011 summer drill program at the Livengood Project, with a
total of nine drill rigs operating, was focused on:
- deposit drilling including: (1) extending the shape and continuity of
mineralization beyond the Core and Sunshine zones using close-spaced (15m) RC;
(2) confirming the continuity of mineralization and increase the confidence
level of the resource in the Tower and Core zones via infill drilling to 50m
spacing; (3) evaluating the correlation of grade between core and RC drilling
and the effect of drilling direction on the estimated grade of the block with
close- spaced (37.5m), alternating core and RC drilling of a 150 x 150 x 150m
block (Area 50) in the heart of the Sunshine Zone in two directions (north and northeast); (4) evaluating
potential downhole contamination a few areas of RC drilling with additional
RC and core drilling; and
6
- district drilling including: (5) developing surface mine geotechnical and
hydro-geologic data; and (6) developing geotechnical data in areas identified
as potential infrastructure sites.
Deposit Drilling
Core and Sunshine Crosses
Close-spaced (15 m) RC drilling on intersecting north-south and
east-west sections in two locations marginal to higher grade mineralization, the
Core and Sunshine Crosses (Figure 3), to evaluate the shape and continuity of
mineralization away from the Core and Sunshine zones.
With assays for 32 of the 36 drill holes received, the grade
and thickness of mineralization confirms previous drilling with continuity of
mineralization in the Core Cross and above cutoff grade mineralizaton in the
Sunshine Cross.
Infill Drilling
Infill drilling to 50 metre spacing in the Tower Zone and the
Core Zone were completed to assess the continuity of mineralization and increase
the confidence level of the resource in those areas.
Results for the six infill holes in the Tower Zone confirmed
the 75m-spaced grid drilling (see grade thickness contours in Fig. 3). Hole
MK-RC-0537 with a cumulative grade thickness of 225 gxm, appears to extend the
thick zone of mineralization in BAF-7 to the west approximately 50m.
In the southern Core Zone, MK-RC-0522 provided well mineralized
intervals; 76.20m at 1.56 g/t gold (272.80 to 349.00m) and 106.68m at 0.87 g/t
gold (350.52 to the bottom of the hole at 457.2m) .
Area 50
All RC drilling (14 holes) is complete and assays have been
received for all but one of the holes. Core drilling is complete for 14 of the
19 planned holes with final assays pending for all holes. The data from RC
drilling north, RC drilling northeast, core north, and core northeast, will
enable confirmation of block grade and tonnage.
Contamination
Three RC drill holes tested areas of potential RC downhole
contamination; results of these holes confirmed prior RC drilling. In addition,
MK-RC-0578 extends the well mineralized zone on the east side of Money Knob
another 75m to the south (51.82m at 0.81 g/t gold from 114.30 to 166.12m; 67.05m
at 0.68 g/t from 170.69 to 237.74 g/t; and 25.91m at 1.51 g/t from 291.08 to
316.99m) . Additional core drilling is planned to determine the extent of the
mineralization.
Geophysical Program
As part of its assessment of district exploration potential,
the Company carried out a district-wide IP/Resistivity geophysical program
(lines shown in Figure 1 and Figure 2). Data acquisition is complete, evaluation
and review of the data will be used to define district exploration targets in
the remainder of the geophysical survey area.
7
District Drilling
The majority of the drilling conducted outside of the deposit
(Figure 1 and Table 1) was directed at the geotechnical evaluation of potential
infrastructure sites (condemnation drilling). There were a number of holes that
showed mineralization: MK-10-97 (1.57m at 4.82 g/t gold) located over two
kilometers southeast of the Money Knob deposit; MK-11-119 (1.68m at 5.72 g/t),
MK-11-120 (1.22m at 5.00 g/t), and MK-123 (9.77m at 0.83 g/t) indicate an area
of dike-related mineralization north and east of the Money Knob deposit; in
addition, assay results for four additional holes in the area are pending.
Three exploration drill holes tested for possible expansion or
satellite deposits to the southwest of Money Knob (Figure 1). MK-11-147
intersected 22.1m at 0.38 g/t gold (Table 1) and favorable volcanic
stratigraphy, suggestive of possible additional resources in that area.
Additional drilling will be completed in the vicinity.
Figure
1: Location of geophysical survey lines, site evaluation geotechnical drill
holes, and regional exploration holes.
8
Figure
2: Cross section 428895E in the Core Zone looking west illustrating the
relationship between geophysical resistivity highs (warmer colors) and
alteration associated with gold mineralization (red on drill hole traces).
Figure
3: Summer 2011 collar locations and cumulative grade thickness map for drilling
within the Money Knob Deposit (for Table 1 area reference).
9
Table 1: Significant new intercepts*
*Intercepts are calculated using a 0.25g/t gold cutoff and a
maximum of 3 metres of internal waste. Intervals are
approximate true widths.
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
|
|
|
|
|
| MK-RC-0522 |
19.66 |
21.34 |
1.68 |
5.72 |
Core Zone
Infill |
| |
182.88 |
199.64 |
16.76 |
1.21 |
|
| |
207.26 |
237.74 |
30.48 |
1.17 |
|
| |
243.84 |
262.13 |
18.29 |
0.68 |
|
| |
272.80 |
349 |
76.20 |
1.56 |
|
|
includes |
277.37 |
281.94 |
4.57 |
8.00 |
|
|
includes |
291.08 |
306.32 |
15.24 |
1.83 |
|
|
includes |
315.47 |
329.18 |
13.71 |
1.82 |
|
| |
350.52 |
457.2 |
106.68 |
0.87 |
|
| |
|
|
|
|
|
| MK-RC-0523 |
50.29 |
124.97 |
74.68 |
1.31 |
Area 50
|
|
Includes |
79.25 |
91.44 |
12.19 |
3.11 |
|
| |
138.68 |
164.59 |
25.91 |
1.62 |
|
|
Includes |
143.26 |
152.4 |
9.14 |
2.67 |
|
| |
|
|
|
|
|
| MK-RC-0524 |
225.55 |
231.65 |
6.10 |
0.58 |
Core Zone |
| |
233.17 |
257.56 |
24.39 |
0.66 |
|
| |
316.99 |
330.71 |
13.72 |
0.40 |
|
| |
|
|
|
|
|
| MK-RC-0525 |
13.72 |
62.48 |
48.76 |
0.98 |
Area 50 |
| |
65.53 |
73.15 |
7.62 |
0.97 |
|
| |
79.25 |
140.21 |
60.96 |
1.04 |
|
| |
146.30 |
164.59 |
18.29 |
1.25 |
|
| |
|
|
|
|
|
| MK-RC-0526 |
30.48 |
41.15 |
10.67 |
0.97 |
Area 50
|
| |
50.29 |
60.96 |
10.67 |
0.58 |
|
| |
64.01 |
114.3 |
50.29 |
0.90 |
|
| |
120.40 |
164.59 |
44.19 |
0.81 |
|
| |
|
|
|
|
|
| MK-RC-0527 |
0.00 |
30.48 |
30.48 |
0.59 |
Area 50 |
| |
67.06 |
112.78 |
45.72 |
0.76 |
|
| |
114.30 |
164.59 |
50.29 |
0.75 |
|
| |
|
|
|
|
|
| MK-RC-0528 |
28.96 |
50.29 |
21.33 |
0.59 |
Sunshine Cross |
| |
59.44 |
73.15 |
13.71 |
0.56 |
|
| |
89.92 |
103.63 |
13.71 |
0.65 |
|
| |
108.20 |
143.26 |
35.06 |
0.85 |
|
| |
|
|
|
|
|
| MK-RC-0529 |
33.53 |
42.67 |
9.14 |
0.69 |
Sunshine Cross
|
10
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
48.77 |
54.86 |
6.09 |
1.00 |
|
| |
59.44 |
99.06 |
39.62 |
0.78 |
|
| |
103.63 |
150.88 |
47.25 |
0.83 |
|
| |
|
|
|
|
|
| MK-RC-0530 |
64.01 |
114.3 |
50.29 |
1.07 |
Sunshine Cross
|
|
Includes |
71.63 |
80.77 |
9.14 |
2.91 |
|
| |
137.16 |
152.4 |
15.24 |
0.39 |
|
| |
|
|
|
|
|
| MK-RC-0531 |
50.29 |
80.77 |
30.48 |
3.34 |
Sunshine Cross
|
|
Includes |
67.06 |
71.63 |
4.57 |
17.27 |
|
| |
96.01 |
123.44 |
27.43 |
0.71 |
|
| |
|
|
|
|
|
| MK-RC-0532 |
35.05 |
88.39 |
53.34 |
0.68 |
Sunshine Cross
|
| |
105.16 |
118.87 |
13.71 |
0.86 |
|
| |
126.49 |
135.64 |
9.15 |
0.65 |
|
| |
|
|
|
|
|
| MK-RC-0533 |
7.62 |
19.81 |
12.19 |
0.69 |
Core Zone
Infill |
| |
92.96 |
103.63 |
10.67 |
1.62 |
|
| |
184.40 |
192.02 |
7.62 |
1.10 |
|
| |
196.60 |
216.41 |
19.81 |
1.11 |
|
| |
|
|
|
|
|
| MK-RC-0534 |
15.24 |
30.48 |
15.24 |
0.81 |
Tower Zone Infill |
| |
265.18 |
284.99 |
19.81 |
0.51 |
|
| |
286.51 |
303.28 |
16.77 |
0.39 |
|
| |
|
|
|
|
|
| MK-RC-0535 |
64.01 |
71.63 |
7.62 |
0.71 |
Core Zone |
| |
85.34 |
91.44 |
6.10 |
1.07 |
|
| |
106.68 |
118.87 |
12.19 |
1.45 |
|
| |
190.50 |
207.26 |
16.76 |
0.50 |
|
| |
217.93 |
233.17 |
15.24 |
0.80 |
|
| |
288.04 |
298.7 |
10.66 |
0.55 |
|
| |
|
|
|
|
|
| MK-RC-0536 |
120.40 |
129.54 |
9.14 |
0.70 |
Tower Zone
Infill |
| |
316.99 |
324.61 |
7.62 |
0.96 |
|
| |
333.76 |
349 |
15.24 |
0.40 |
|
| |
|
|
|
|
|
| MK-RC-0537 |
85.34 |
89.92 |
4.58 |
2.62 |
Tower Zone
Infill |
| |
92.96 |
121.92 |
28.96 |
0.80 |
|
| |
126.49 |
131.06 |
4.57 |
5.90 |
|
|
Includes |
128.02 |
131.06 |
3.04 |
8.70 |
|
| |
135.64 |
143.26 |
7.62 |
0.98 |
|
| |
184.40 |
193.55 |
9.15 |
1.77 |
|
| |
248.41 |
259.08 |
10.67 |
1.87 |
|
11
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
271.27 |
291.08 |
19.81 |
0.55 |
|
| |
326.14 |
368.81 |
42.67 |
0.80 |
|
| |
373.38 |
377.95 |
4.57 |
2.85 |
|
| |
397.76 |
411.48 |
13.72 |
0.93 |
|
| |
|
|
|
|
|
| MK-RC-0538 |
59.44 |
64.01 |
4.57 |
2.99 |
Tower Zone Infill |
| |
126.49 |
137.16 |
10.67 |
0.59 |
|
| |
150.88 |
169.16 |
18.28 |
0.64 |
|
| |
227.08 |
228.6 |
1.52 |
4.26 |
|
| |
233.17 |
237.74 |
4.57 |
0.61 |
|
| |
265.18 |
303.28 |
38.10 |
0.38 |
|
| |
304.80 |
321.56 |
16.76 |
0.47 |
|
| |
327.66 |
333.76 |
6.10 |
1.01 |
|
| |
|
|
|
|
|
| MK-RC-0539 |
21.34 |
22.86 |
1.52 |
7.55 |
Core Cross
|
| |
53.34 |
65.53 |
12.19 |
2.28 |
|
|
Includes |
54.86 |
57.91 |
3.05 |
7.88 |
|
| |
129.54 |
137.16 |
7.62 |
0.80 |
|
| |
163.07 |
195.07 |
32.00 |
0.71 |
|
| |
211.84 |
225.55 |
13.71 |
0.41 |
|
| |
|
|
|
|
|
| MK-RC-540 |
135.64 |
149.35 |
13.71 |
1.59 |
Tower Zone Infill |
| |
150.88 |
156.97 |
6.09 |
0.99 |
|
| |
164.59 |
182.88 |
18.29 |
1.67 |
|
|
Includes |
166.12 |
170.69 |
4.57 |
4.58 |
|
| |
234.70 |
240.79 |
6.09 |
1.68 |
|
| |
|
|
|
|
|
| MK-RC-0541 |
123.44 |
150.88 |
27.44 |
1.69 |
Core Cross |
| |
164.59 |
199.64 |
35.05 |
0.95 |
|
| |
204.22 |
228.6 |
24.38 |
0.82 |
|
| |
|
|
|
|
|
| MK-RC-0542 |
56.39 |
91.44 |
35.05 |
0.56 |
Core Cross |
| |
103.63 |
121.92 |
18.29 |
1.16 |
|
| |
169.16 |
207.26 |
38.10 |
0.70 |
|
| |
|
|
|
|
|
| MK-RC-0543 |
1.52 |
32 |
30.48 |
0.46 |
Sunshine Cross |
| |
36.58 |
121.92 |
85.34 |
0.71 |
|
| |
|
|
|
|
|
| MK-RC-0544 |
21.34 |
28.96 |
7.62 |
1.06 |
Core Cross
|
| |
89.92 |
100.58 |
10.66 |
0.86 |
|
| |
132.59 |
143.26 |
10.67 |
0.70 |
|
| |
161.54 |
198.12 |
36.58 |
0.75 |
|
12
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| MK-RC-0545 |
74.68 |
83.82 |
9.14 |
2.51 |
Core
Cross |
| |
106.68 |
126.49 |
19.81 |
0.83 |
|
| |
137.16 |
149.35 |
12.19 |
0.54 |
|
| |
158.50 |
187.45 |
28.95 |
0.57 |
|
| |
192.02 |
195.07 |
3.05 |
1.76 |
|
| |
201.17 |
213.36 |
12.19 |
1.19 |
|
| |
|
|
|
|
|
| MK-RC-0546 |
68.58 |
117.35 |
48.77 |
0.48 |
Core Cross |
| |
124.97 |
132.59 |
7.62 |
1.65 |
|
| |
144.78 |
181.36 |
36.58 |
0.54 |
|
| |
192.02 |
213.36 |
21.34 |
0.50 |
|
| |
222.50 |
228.6 |
6.10 |
1.93 |
|
| |
|
|
|
|
|
| MK-RC-0547 |
79.25 |
121.92 |
42.67 |
0.98 |
Sunshine Cross |
| |
|
|
|
|
|
| MK-RC-0548 |
0.00 |
12.19 |
12.19 |
0.77 |
Sunshine Cross |
| |
16.76 |
28.96 |
12.20 |
0.84 |
|
| |
44.20 |
59.44 |
15.24 |
0.78 |
|
| |
67.06 |
149.35 |
82.29 |
0.63 |
|
| |
|
|
|
|
|
| MK-RC-0549 |
0.00 |
3.05 |
3.05 |
3.63 |
Sunshine
Cross |
| |
10.67 |
62.48 |
51.81 |
1.00 |
|
| |
65.53 |
141.73 |
76.20 |
0.76 |
|
| |
|
|
|
|
|
| MK-RC-0550 |
28.96 |
35.05 |
6.09 |
1.21 |
Sunshine Cross
|
| |
86.87 |
121.92 |
35.05 |
0.78 |
|
| |
|
|
|
|
|
| MK-RC-0551 |
24.38 |
41.15 |
16.77 |
0.65 |
Sunshine Cross |
| |
59.44 |
100.58 |
41.14 |
0.51 |
|
| |
131.06 |
147.83 |
16.77 |
0.36 |
|
| |
|
|
|
|
|
| MK-RC-0552 |
1.52 |
18.29 |
16.77 |
0.42 |
Sunshine Cross |
| |
25.91 |
38.1 |
12.19 |
0.88 |
|
| |
47.24 |
57.91 |
10.67 |
0.52 |
|
| |
77.72 |
117.35 |
39.63 |
0.45 |
|
| |
|
|
|
|
|
| MK-RC-0555 |
67.06 |
79.25 |
12.19 |
0.48 |
Core Cross
|
| |
103.63 |
114.3 |
10.67 |
0.65 |
|
| |
173.74 |
201.17 |
27.43 |
0.62 |
|
| |
214.88 |
225.55 |
10.67 |
0.68 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| MK-RC-0556 |
35.05 |
39.62 |
4.57 |
1.93 |
Core Cross
|
13
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
62.48 |
83.82 |
21.34 |
0.73 |
|
| |
132.59 |
156.97 |
24.38 |
0.55 |
|
| |
181.36 |
201.17 |
19.81 |
0.81 |
|
| |
|
|
|
|
|
| MK-RC-0557 |
0.00 |
7.62 |
7.62 |
0.44 |
Area 50 |
| |
33.53 |
47.24 |
13.71 |
1.10 |
|
| |
54.86 |
92.96 |
38.10 |
0.78 |
|
| |
111.25 |
164.59 |
53.34 |
0.53 |
|
| |
|
|
|
|
|
| MK-RC-0559 |
9.14 |
19.81 |
10.67 |
0.86 |
Sunshine Cross |
| |
42.67 |
67.06 |
24.39 |
0.58 |
|
| |
77.72 |
89.92 |
12.20 |
0.74 |
|
| |
94.49 |
106.68 |
12.19 |
0.52 |
|
| |
128.02 |
146.3 |
18.28 |
0.83 |
|
| |
|
|
|
|
|
| MK-RC-0560 |
4.57 |
32 |
27.43 |
0.48 |
Sunshine Cross |
| |
44.20 |
53.34 |
9.14 |
0.88 |
|
| |
106.68 |
128.02 |
21.34 |
0.44 |
|
| |
|
|
|
|
|
| MK-RC-0561 |
19.81 |
32 |
12.19 |
0.64 |
Sunshine Cross |
| |
41.15 |
51.82 |
10.67 |
0.53 |
|
| |
54.86 |
65.53 |
10.67 |
1.46 |
|
| |
67.06 |
86.87 |
19.81 |
1.09 |
|
| |
89.92 |
115.82 |
25.90 |
0.83 |
|
| |
134.11 |
141.73 |
7.62 |
0.73 |
|
| |
|
|
|
|
|
| MK-RC-0562 |
47.24 |
54.86 |
7.62 |
0.90 |
Core Cross
|
| |
64.01 |
73.15 |
9.14 |
0.67 |
|
| |
77.72 |
85.34 |
7.62 |
1.13 |
|
| |
120.40 |
143.26 |
22.86 |
0.49 |
|
| |
146.30 |
163.07 |
16.77 |
0.79 |
|
| |
178.31 |
201.17 |
22.86 |
0.77 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| MK-RC-0563 |
7.62 |
36.58 |
28.96 |
0.69 |
Sunshine Cross
|
| |
47.24 |
56.39 |
9.15 |
0.83 |
|
| |
74.68 |
80.77 |
6.09 |
0.44 |
|
| |
92.96 |
111.25 |
18.29 |
0.49 |
|
| |
115.82 |
129.54 |
13.72 |
0.63 |
|
| |
135.64 |
152.4 |
16.76 |
0.41 |
|
| |
|
|
|
|
|
| MK-RC-0564 |
32.00 |
41.15 |
9.15 |
0.79 |
Sunshine Cross |
| |
70.10 |
83.82 |
13.72 |
0.77 |
|
14
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
85.34 |
97.54 |
12.20 |
0.48 |
|
| |
128.02 |
140.21 |
12.19 |
0.88 |
|
| |
150.88 |
155.45 |
4.57 |
1.24 |
|
| |
175.26 |
195.07 |
19.81 |
0.65 |
|
| |
196.60 |
222.5 |
25.90 |
0.49 |
|
| |
|
|
|
|
|
| MK-RC-0565 |
1.52 |
24.38 |
22.86 |
0.57 |
Area 50 |
| |
30.48 |
50.29 |
19.81 |
0.43 |
|
| |
54.86 |
68.58 |
13.72 |
0.69 |
|
| |
77.72 |
92.96 |
15.24 |
0.83 |
|
| |
103.63 |
152.4 |
48.77 |
0.71 |
|
| |
|
|
|
|
|
| MK-RC-0566 |
35.05 |
48.77 |
13.72 |
0.92 |
Core Cross
|
| |
100.58 |
114.3 |
13.72 |
0.39 |
|
| |
131.06 |
178.31 |
47.25 |
1.07 |
|
| |
185.93 |
195.07 |
9.14 |
0.68 |
|
| |
204.22 |
219.46 |
15.24 |
0.41 |
|
| |
|
|
|
|
|
| MK-RC-0567 |
50.29 |
53.34 |
3.05 |
1.79 |
Area 50 |
| |
74.68 |
79.25 |
4.57 |
1.29 |
|
| |
112.78 |
131.06 |
18.28 |
0.58 |
|
| |
153.92 |
164.59 |
10.67 |
1.30 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| MK-RC-0568 |
3.05 |
57.91 |
54.86 |
0.55 |
Area 50
|
| |
62.48 |
92.96 |
30.48 |
1.56 |
|
|
Includes |
65.53 |
68.58 |
3.05 |
9.76 |
|
| |
99.06 |
129.54 |
30.48 |
1.10 |
|
| |
134.11 |
152.4 |
18.29 |
0.61 |
|
| |
|
|
|
|
|
| MK-RC-0569 |
1.52 |
10.67 |
9.15 |
0.79 |
Area 50 |
| |
89.92 |
92.96 |
3.04 |
2.09 |
|
| |
111.25 |
117.35 |
6.10 |
0.85 |
|
| |
121.92 |
164.59 |
42.67 |
0.99 |
|
|
Includes |
144.78 |
164.59 |
19.81 |
1.56 |
|
| |
|
|
|
|
|
| MK-RC-0571 |
1.52 |
30.48 |
28.96 |
0.48 |
Area 50 |
| |
65.53 |
74.68 |
9.15 |
0.59 |
|
| |
89.92 |
100.58 |
10.66 |
0.41 |
|
| |
111.25 |
114.3 |
3.05 |
1.55 |
|
| |
143.26 |
152.4 |
9.14 |
1.37 |
|
| |
|
|
|
|
|
| MK-RC-0572 |
32.00 |
39.62 |
7.62 |
0.91 |
Core
Cross |
15
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
45.72 |
51.82 |
6.10 |
1.06 |
|
| |
64.01 |
82.3 |
18.29 |
1.51 |
|
|
Includes |
68.58 |
76.2 |
7.62 |
2.95 |
|
| |
83.82 |
91.44 |
7.62 |
1.08 |
|
| |
94.49 |
131.06 |
36.57 |
1.12 |
|
| |
135.64 |
152.4 |
16.76 |
0.77 |
|
| |
172.21 |
188.98 |
16.77 |
0.47 |
|
| |
202.69 |
228.6 |
25.91 |
0.52 |
|
| |
|
|
|
|
|
| MK-RC-0575 |
56.39 |
68.58 |
12.19 |
0.81 |
Core Cross |
| |
123.44 |
128.02 |
4.58 |
0.86 |
|
| |
134.11 |
179.83 |
45.72 |
0.82 |
|
| |
199.64 |
228.6 |
28.96 |
0.81 |
|
| |
|
|
|
|
|
| MK-RC-0576 |
79.25 |
92.96 |
13.71 |
0.79 |
Tower Zone
Infill |
| |
150.88 |
158.5 |
7.62 |
1.06 |
|
| |
318.52 |
329.18 |
10.66 |
0.49 |
|
| |
|
|
|
|
|
| MK-RC-0577 |
9.14 |
10.67 |
1.53 |
4.04 |
Core Cross
|
| |
18.29 |
35.05 |
16.76 |
0.61 |
|
| |
47.24 |
54.86 |
7.62 |
0.96 |
|
| |
76.20 |
82.3 |
6.10 |
0.71 |
|
| |
85.34 |
94.49 |
9.15 |
0.48 |
|
| |
102.11 |
105.16 |
3.05 |
1.95 |
|
| |
144.78 |
155.45 |
10.67 |
0.33 |
|
| |
160.02 |
164.59 |
4.57 |
0.87 |
|
| |
172.21 |
193.55 |
21.34 |
0.78 |
|
| |
199.64 |
228.6 |
28.96 |
0.97 |
|
| |
|
|
|
|
|
| MK-RC-0578 |
114.30 |
166.12 |
51.82 |
0.81 |
Sunshine Zone |
| |
170.69 |
237.74 |
67.05 |
0.68 |
|
| |
242.32 |
262.13 |
19.81 |
0.54 |
|
| |
266.70 |
268.22 |
1.52 |
3.36 |
|
| |
281.94 |
284.99 |
3.05 |
2.07 |
|
| |
291.08 |
316.99 |
25.91 |
1.51 |
|
|
Includes |
313.94 |
316.99 |
3.05 |
7.53 |
|
| |
332.23 |
341.38 |
9.15 |
1.70 |
|
| |
|
|
|
|
|
| MK-RC-0579 |
4.57 |
50.29 |
45.72 |
0.67 |
Area 50 |
| |
|
|
|
|
|
| MK-RC-0580 |
1.52 |
3.05 |
1.53 |
23.27 |
Area 50
|
| |
18.29 |
19.81 |
1.52 |
23.26 |
|
| |
25.91 |
50.29 |
24.38 |
1.33 |
|
16
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
|
Includes |
33.53 |
39.62 |
6.09 |
3.18 |
|
| |
74.68 |
76.2 |
1.52 |
14.20 |
|
| |
80.77 |
82.3 |
1.53 |
9.18 |
|
| |
114.30 |
126.49 |
12.19 |
0.43 |
|
| |
134.11 |
135.64 |
1.53 |
6.61 |
|
| |
138.68 |
155.45 |
16.77 |
0.48 |
|
| |
|
|
|
|
|
| MK-RC-0581 |
10.67 |
67.06 |
56.39 |
0.58 |
Sunshine Cross |
| |
76.20 |
117.35 |
41.15 |
0.77 |
|
| |
135.64 |
152.4 |
16.76 |
0.54 |
|
| |
|
|
|
|
|
| MK-RC-0582 |
30.48 |
54.86 |
24.38 |
1.14 |
Sunshine Cross |
|
Includes |
30.48 |
38.1 |
7.62 |
2.66 |
|
| |
97.54 |
129.54 |
32.00 |
0.51 |
|
| |
|
|
|
|
|
| MK-RC-0583 |
64.01 |
80.77 |
16.76 |
0.86 |
Area 50 |
| |
108.20 |
115.82 |
7.62 |
4.19 |
|
| Includes
|
111.25 |
114.3 |
3.05 |
10.08 |
|
| |
120.40 |
135.64 |
15.24 |
0.36 |
|
| |
152.40 |
164.59 |
12.19 |
0.99 |
|
| |
|
|
|
|
|
| MK-RC-0584 |
4.57 |
16.76 |
12.19 |
0.84 |
Area 50 |
| |
82.30 |
94.49 |
12.19 |
1.71 |
|
| |
144.78 |
152.4 |
7.62 |
0.90 |
|
| |
|
|
|
|
|
| MK-10-93 |
24.40 |
28.19 |
3.79 |
1.45 |
Geotech/Condemnation |
| |
|
|
|
|
|
| MK-10-94 |
geotechnical/condemnation hole, no significant
intercepts |
| |
|
|
|
|
|
| MK-10-95 |
geotechnical/condemnation hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-10-96 |
geotechnical/condemnation hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-10-97 |
12.19 |
13.72 |
1.53 |
4.82 |
Geotech/Condemnation |
| |
|
|
|
|
|
| MK-10-98 |
geotechnical/condemnation hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-10-99 |
geotechnical/condemnation hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-10-100 |
geotechnical/condemnation hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-10-101 |
geotechnical/condemnation hole, no significant
intercepts |
|
17
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| MK-10-102 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-10-106 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-107 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-109 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-111 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-112 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-113 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-115 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-117 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-118 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-119 |
19.66 |
21.34 |
1.68 |
5.72 |
Geotech/Condemnation |
| |
|
|
|
|
|
| MK-11-120 |
7.92 |
9.14 |
1.22 |
5.00 |
Geotech/Condemnation |
| |
|
|
|
|
|
| MK-11-122 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-123 |
25.74 |
35.51 |
9.77 |
0.83 |
Geotech/Condemnation |
| |
|
|
|
|
|
| MK-11-125 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-126 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-127 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-128 |
geotechnical/condemnation hole,
no significant intercepts |
|
| |
|
|
|
|
|
| MK-11-129 |
lost hole, no significant intercepts
|
SW Exploration |
| |
|
|
|
|
|
| MK-11-130 |
geotechnical hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-11-131 |
geotechnical hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-11-132 |
no significant intercepts |
SW Exploration |
18
| Hole ID |
From |
To |
Length |
Gold |
Area and Comments |
| |
(metres) |
(metres) |
(metres) |
(g/t) |
|
| |
|
|
|
|
|
| MK-11-135 |
no significant intercepts |
SW Exploration |
| |
|
|
|
|
|
| MK-11-139 |
geotechnical hole, no significant
intercepts |
|
| |
|
|
|
|
|
| MK-11-147 |
261.80 |
263.35 |
1.55 |
3.21 |
SW Exploration |
| |
306.20 |
328.27 |
22.07 |
0.38 |
|
| |
|
|
|
|
|
| MK-11-155 |
geotechnical hole, no significant intercepts
|
|
Use of Financing Proceeds
The Company closed a bought deal short form prospectus and a
private placement financing on November 10, 2010. The Company intends to use the
net proceeds from the two financings for continued work on its Livengood Gold
project in Alaska and for general working capital purposes. The “Use of
Proceeds” plan contained in the Company’s short form prospectus dated November
5, 2010, projected total Livengood project expenditures dating from September 1,
2010 (beginning of Q2 for the Fiscal Year ending May 31, 2011) to May 31, 2014.
The use of proceeds plan totalled $136,575,000 for the period ending May 31,
2014. Table 2 shows the expenditures to August 31, 2011 compared with the
intended use of proceeds.
Table 2
| |
|
|
|
|
|
|
|
|
|
|
Variance |
|
| |
|
Total Budget |
|
|
Total Plan |
|
|
Actual* |
|
|
(Plan – Actual |
|
| |
|
Year ended May |
|
|
(Years Ended |
|
|
Sept 1, 2010 |
|
|
through |
|
| Project Cost |
|
2011 to Year |
|
|
May 31, 2011 |
|
|
thru August |
|
|
August 31, |
|
| Center
|
|
ended May 2014 |
|
|
and 2012) |
|
|
31, 2011 |
|
|
2011) |
|
| Project administration |
$ |
31,101,700
|
|
$ |
13,813,500
|
|
$ |
3,932,437
|
|
$ |
9,881,063
|
|
| Geological and field operations |
|
67,136,000 |
|
|
37,748,800 |
|
|
38,353,732 |
|
|
(604,932 |
) |
| Metallurgical studies |
|
6,883,400 |
|
|
5,369,500 |
|
|
2,515,245 |
|
|
2,854,255 |
|
| Infrastructure and engineering |
|
8,887,400 |
|
|
4,721,900 |
|
|
5,011,764 |
|
|
(289,864 |
) |
| Environmental and community engagement |
|
14,431,300 |
|
|
5,352,100 |
|
|
3,536,170 |
|
|
1,815,931 |
|
| Mining studies |
|
2,415,400 |
|
|
1,094,200 |
|
|
415,588 |
|
|
678,612 |
|
| Project integration |
|
1,882,300 |
|
|
600,000 |
|
|
178,831 |
|
|
421,169 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Subtotal |
|
132,737,500 |
|
|
68,700,000 |
|
|
53,943,767 |
|
|
14,756,233 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Offering costs |
|
3,837,500 |
|
|
- |
|
|
502,208 |
|
|
(502,208 |
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
136,575,000 |
|
$ |
68,700,000 |
|
$ |
54,445,975 |
|
$ |
14,254,025 |
|
*Unaudited Livengood Project Reporting
19
Table 2 shows a variance of approximately $14.3M from the
$68.7M for the total plan period ending May 31, 2012 or nominally 21% below
plan.
The activities planned for the total plan period are on
schedule and the completion of the PFS is expected in November 2011 as planned.
Project administration expenditures are below the plan rate but are adequate for
the needs of the project; during the period of reported results the Company has
added several key employees in both the Alaska and corporate offices. Geological
and field operations have been accelerated to support detailed evaluation and
increased confidence in the resource. Metallurgical studies were nominally below
plan and have advanced as necessary to support the PFS. Field programs in
support of infrastructure geotechnical investigations have been expanded and
accelerated, helicopter supported drills were increased from two to six working
outside the resource area during the June 1 to August 31, 2011 period. The
acceleration has added confidence in the infrastructure characterization, which
is a critical path item in the PFS. Engineering expenditures were nominally on
plan. Environmental and community engagement is on schedule, but has required
less expenditure than planned. Expenditure for mining studies was nominally on
plan for the period ending August 31, 2011. Project integration is below plan,
as the technical components of the PFS were just beginning to be compiled near
the end of the period. Offering costs were higher than expected due to the
length of time in filing the short form prospectus incurred in the quarter ended
February 2011.
Qualified Person and Quality Control/Quality Assurance
During the quarter, development work at the Livengood Project
was directed by Carl E. Brechtel (Colorado PE 23212, Nevada PE 8744). He is a
graduate geological engineer with an MS degree in mining engineering. He is a
Registered Member of the Society for Mining, Metallurgy and Exploration. Mr.
Brechtel has supervised the preparation of some of the technical and economic
information that forms the basis for this MD&A and has approved the
disclosure herein. Mr. Brechtel was not independent of ITH, as he was the
President and COO until October 24, 2011, and holds incentive stock options.
The geologic work program at Livengood was designed and is
supervised by Chris Puchner, Chief Geologist (CPG 07048) of the Company who is a
qualified person as defined by National Instrument 43-101. Mr. Puchner is
responsible for all aspects of the work, including the quality control/quality
assurance program. On-site personnel at the project photograph the core from
each individual borehole prior to preparing the split core. Duplicate reverse
circulation drill samples are collected with one split sent for analysis.
Representative chips are retained for geological logging. On-site personnel at
the project log and track all samples prior to sealing and shipping. All sample
shipments are sealed and shipped to ALS Chemex in Fairbanks, Alaska, for
preparation and then on to ALS Chemex in Reno, Nevada, or Vancouver, B.C., for
assay. ALS Chemex’s quality system complies with the requirements for the
International Standards ISO 9001:2000 and ISO 17025:1999. Analytical accuracy
and precision are monitored by the analysis of reagent blanks, reference
material and replicate samples. Quality control is further assured by the use of
international and in-house standards. Finally, representative blind duplicate
samples are forwarded to ALS Chemex and an ISO compliant third party laboratory
for additional quality control.
20
Due to the nature of the Company’s proposed business and the
present stage of exploration of its Livengood property interests (which is an
advanced stage exploration project, but with no known reserves), the following
risk factors, among others, will apply:
Resource
Exploration and Development is Generally a Speculative Business: Resource
exploration and development is a speculative business and involves a high degree
of risk, including, among other things, unprofitable efforts resulting both from
the failure to discover mineral deposits and from finding mineral deposits
which, though present, are insufficient in size and grade at the then prevailing
market conditions to return a profit from production. The marketability of
natural resources which may be acquired or discovered by the Company will be
affected by numerous factors beyond the control of the Company. These factors
include market fluctuations, the proximity and capacity of natural resource
markets, government regulations, including regulations relating to prices,
taxes, royalties, land use, importing and exporting of minerals and
environmental protection. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in the Company not
receiving an adequate return on invested capital.
While
the Livengood project has estimated measured, inferred and indicated resources
identified, there are no known reserves on any of the Company’s properties.
The majority of exploration projects do not result in the discovery of
commercially mineable deposits of ore. Substantial expenditures are required to
establish ore reserves through drilling and metallurgical and other testing
techniques, determine metal content and metallurgical recovery processes to
extract metal from the ore, and construct, renovate or expand mining and
processing facilities. No assurance can be given that any level of recovery of
ore reserves will be realized or that any identified mineral deposit will ever
qualify as a commercial mineable ore body which can be legally and economically
exploited.
Fluctuation
of Metal Prices: Even if commercial quantities of mineral deposits are
discovered by the Company, there is no guarantee that a profitable market will
exist for the sale of the metals produced. The Company’s long-term viability and
profitability depend, in large part, upon the market price of metals which have
experienced significant movement over short periods of time, and are affected by
numerous factors beyond the control of the Company, including international
economic and political trends, expectations of inflation, currency exchange
fluctuations, interest rates and global or regional consumption patterns,
speculative activities and increased production due to improved mining and
production methods. The supply of and demand for metals are affected by various
factors, including political events, economic conditions and production costs in
major producing regions. There can be no assurance that the price of any
minerals produced from the Company’s properties will be such that any such
deposits can be mined at a profit.
Permits
and Licenses: The operations of the Company will require licenses and
permits from various governmental authorities. There can be no assurance that
the Company will be able to obtain all necessary licenses and permits that may
be required to carry out exploration, development and mining operations at its
projects, on reasonable terms or at all. Delays in obtaining, or a failure to
obtain, any such licenses and permits, or a failure to comply with the terms of
any such licenses and permits that the Company does obtain, could have a
material adverse effect on the Company.
Acquisition
of Mineral Claims under Agreements: The agreements pursuant to which the
Company has the right to acquire interests in a number of its properties at
Livengood provide that the Company must make a series of cash payments over
certain time periods and/or expend certain minimum amounts on the exploration of
the properties. Failure by the Company to make such payments or make such
expenditures in a timely fashion may result in the Company losing its interest
in such properties. There can be no assurance that the Company will have, or be
able to obtain, the necessary financial resources to be able to maintain all of
its property agreements in good standing, or to be able to comply with all of its obligations thereunder,
with the result that the Company could forfeit its interest in one or more of
its mineral properties.
21
Proposed
Amendments to the United States General Mining Law of 1872: In recent years,
the United States Congress has considered a number of proposed amendments to the
U.S. General Mining Law of 1872 (“Mining Law”). If adopted, such
legislation, among other things, could impose royalties on mineral production
from unpatented mining claims located on United States federal lands (which
includes certain of the mining claims at Livengood), result in the denial of
permits to mine after the expenditure of significant funds for exploration and
development, reduce estimates of mineral reserves and reduce the amount of
future exploration and development activity on United States federal lands, all
of which could have a material and adverse effect on the Company’s cash flow,
results of operations and financial condition.
Uncertainties
Relating to Unpatented Mining Claims: Some of the mining claims at the
Livengood property are federal or Alaska State unpatented mining claims. There
is a risk that a portion of such unpatented mining claims could be determined to
be invalid, in which case the Company could lose the right to mine any minerals
contained within those mining claims. Unpatented mining claims are created and
maintained in accordance with the applicable US federal and Alaska state mining
laws. Unpatented mining claims are unique to United States property interests,
and are generally considered to be subject to greater title risk than other real
property interests due to the validity of unpatented mining claims often being
uncertain. This uncertainty arises, in part, out of the complex federal and
state laws and regulations under the Mining Law. Unpatented mining claims are
always subject to possible challenges of third parties or contests by the United
States federal or Alaska State governments. The validity of an unpatented mining
claim, in terms of both its location and its maintenance, is dependent on strict
compliance with a complex body of federal and state statutory and decisional
law. Title to the unpatented mining claims may also be affected by undetected
defects such as unregistered agreements or transfers. The Company has not
obtained full title opinions for the majority of its mineral properties. Not all
the mineral properties in which the Company has an interest have been surveyed,
and their actual extent and location may be in doubt.
Surface
Rights and Access: Although the Company acquires the rights to some or all
of the minerals in the ground subject to the mineral tenures that it acquires,
or has a right to acquire, in most cases it does not thereby acquire any rights
to, or ownership of, the surface to the areas covered by its mineral tenures. In
such cases, applicable mining laws usually provide for rights of access to the
surface for the purpose of carrying on mining activities, however, the
enforcement of such rights through the courts can be costly and time consuming.
It is necessary to negotiate surface access or to purchase the surface rights if
long-term access is required. There can be no guarantee that, despite having the
right at law to access the surface and carry on mining activities, the Company
will be able to negotiate satisfactory agreements with any such existing
landowners/occupiers for such access or purchase of such surface rights, and
therefore it may be unable to carry out planned mining activities. In addition,
in circumstances where such access is denied, or no agreement can be reached,
the Company may need to rely on the assistance of local officials or the courts
in such jurisdiction the outcomes of which cannot be predicted with any
certainty. The inability of the Company to secure surface access or purchase
required surface rights could materially and adversely affect the timing, cost
or overall ability of the Company to develop any mineral deposits it may locate.
No
Assurance of Profitability: The Company has no history of production or
earnings and due to the nature of its business there can be no assurance that
the Company will be profitable. The Company has not paid dividends on its shares
since incorporation and does not anticipate doing so in the foreseeable future.
All of the Company’s properties are in the exploration stage and the Company has
not defined or delineated any proven or probable reserves on any of its
properties. None of the Company’s properties are currently under development.
Continued exploration of its existing properties and the future development of
any properties found to be economically feasible, will require significant funds. The only present source of funds available
to the Company is through the sale of its equity shares, short-term, high-cost
borrowing or the sale or optioning of a portion of its interest in its mineral
properties. Even if the results of exploration are encouraging, the Company may
not have sufficient funds to conduct the further exploration that may be
necessary to determine whether or not a commercially mineable deposit exists.
While the Company may generate additional working capital through further equity
offerings, short-term borrowing or through the sale or possible syndication of
its properties, there is no assurance that any such funds will be available on
favourable terms, or at all. At present, it is impossible to determine what
amounts of additional funds, if any, may be required. Failure to raise such
additional capital could put the continued viability of the Company at risk.
22
Uninsured
or Uninsurable Risks: Exploration, development and mining operations involve
various hazards, including environmental hazards, industrial accidents,
metallurgical and other processing problems, unusual or unexpected rock
formations, structural cave-ins or slides, flooding, fires, metal losses and
periodic interruptions due to inclement or hazardous weather conditions. These
risks could result in damage to or destruction of mineral properties, facilities
or other property, personal injury, environmental damage, delays in operations,
increased cost of operations, monetary losses and possible legal liability. The
Company may not be able to obtain insurance to cover these risks at economically
feasible premiums or at all. The Company may elect not to insure where premium
costs are disproportionate to the Company’s perception of the relevant risks.
The payment of such insurance premiums and of such liabilities would reduce the
funds available for exploration and production activities.
Government
Regulation: Any exploration, development or mining operations carried on by
the Company will be subject to government legislation, policies and controls
relating to prospecting, development, production, environmental protection,
mining taxes and labour standards. The Company cannot predict whether or not
such legislation, policies or controls, as presently in effect, will remain so,
and any changes therein (for example, significant new royalties or taxes), which
are completely outside the control of the Company, may materially adversely
affect to ability of the Company to continue its planned business within any
such jurisdictions.
Recent
market events and conditions: From 2007 into 2011, the U.S. credit
markets have experienced serious disruption due to a deterioration in
residential property values, defaults and delinquencies in the residential
mortgage market (particularly, sub-prime and non-prime mortgages) and a decline
in the credit quality of mortgage backed securities. These problems have led to
a slowdown in residential housing market transactions, declining housing prices,
delinquencies in non-mortgage consumer credit and a general decline in consumer
confidence. These conditions caused a loss of confidence in the broader U.S. and
global credit and financial markets and resulting in the collapse of, and
government intervention in, major banks, financial institutions and insurers and
creating a climate of greater volatility, less liquidity, widening of credit
spreads, a lack of price transparency, increased credit losses and tighter
credit conditions. Notwithstanding various actions by the U.S. and foreign
governments, concerns about the general condition of the capital markets,
financial instruments, banks, investment banks, insurers and other financial
institutions caused the broader credit markets to further deteriorate and stock
markets to decline substantially. In addition, general economic indicators have
deteriorated, including declining consumer sentiment, increased unemployment and
declining economic growth and uncertainty about corporate earnings.
While
these conditions appear to have improved slightly in 2011, unprecedented
disruptions in the credit and financial markets have had a significant material
adverse impact on a number of financial institutions and have limited access to
capital and credit for many companies. These disruptions could, among other
things, make it more difficult for the Company to obtain, or increase its cost
of obtaining, capital and financing for its operations. The Company’s access to
additional capital may not be available on terms acceptable to it or at all.
23
General
economic conditions: The recent unprecedented events in global financial
markets have had a profound impact on the global economy. Many industries,
including the gold and base metal mining industry, are impacted by these market
conditions. Some of the key impacts of the current financial market turmoil
include contraction in credit markets resulting in a widening of credit risk,
devaluations and high volatility in global equity, commodity, foreign exchange
and precious metal markets, and a lack of market liquidity. A continued or
worsened slowdown in the financial markets or other economic conditions,
including but not limited to, consumer spending, employment rates, business
conditions, inflation, fuel and energy costs, consumer debt levels, lack of
available credit, the state of the financial markets, interest rates, and tax
rates may adversely affect our growth and profitability. Specifically:
-
The global credit/liquidity crisis could impact the cost and availability
of financing and the Company’s overall liquidity
-
the volatility of gold and other base metal prices may impact the Company’s
future revenues, profits and cash flow
-
volatile energy prices, commodity and consumables prices and currency
exchange rates impact potential production costs
-
the devaluation and volatility of global stock markets impacts the
valuation of the Common Shares, which may impact the Company’s ability to
raise funds through the issuance of Common Shares
These
factors could have a material adverse effect on the Company’s financial
condition and results of operations.
Insufficient
Financial Resources: The Company does not presently have sufficient
financial resources to undertake by itself the preparation of a feasibility
study and, if a production decision is made, the construction of a mine at
Livengood. The completion of a feasibility study, and any construction of a mine
at Livengood following the making of a production decision, will therefore
depend upon the Company’s ability to obtain financing through the sale of its
equity securities, a possible joint venturing of the project or the securing of
significant debt financing. There is no assurance that the Company will be
successful in obtaining the required financing to complete a feasibility study
or construct and operate a mine at Livengood (should a production decision be
made). Failure to raise the required funds could result in the interest of the
Company in the Livengood project being significantly diluted or lost altogether
or the Company being unable to complete a feasibility study or construct a mine
at Livengood (following any production decision that may be made).
Financing
Risks: The Company has limited financial resources, has no source of
operating cash flow and has no assurance that additional funding will be
available to it for further exploration and development of the Livengood project
or to fulfil its obligations under any applicable agreements. Although the
Company has been successful in the past in obtaining financing through the sale
of equity securities, there can be no assurance that it will be able to obtain
adequate financing in the future or that the terms of such financing will be
favourable. Failure to obtain such additional financing could result in delay or
indefinite postponement of further exploration and development of Livengood with
the possible loss of its interest in such property.
24
Dilution
to the Company’s existing shareholders: The Company may require additional
equity financing be raised in the future. The Company may issue securities on
less than favourable terms to raise sufficient capital to fund its business
plan. Any transaction involving the issuance of equity securities or securities
convertible into Common Shares would result in dilution, possibly substantial,
to present and prospective holders of Common Shares.
Increased
costs: Management anticipates that costs at the Company’s projects will
frequently be subject to variation from one year to the next due to a number of
factors, such as changing ore grade, metallurgy and revisions to mine plans, if
any, in response to the physical shape and location of the ore body. In
addition, costs are affected by the price of commodities such as fuel, rubber
and electricity. Such commodities are at times subject to volatile price
movements, including increases that could make production at certain operations
less profitable. A material increase in costs at any significant location could
have a significant effect on the Company’s profitability.
Dependence
Upon Others and Key Personnel: The success of the Company’s operations will
depend upon numerous factors, many of which are beyond the Company’s control,
including (i) the ability of the Company to enter into strategic alliances
through a combination of one or more joint ventures, mergers or acquisition
transactions; and (ii) the ability to attract and retain additional key
personnel in exploration, mine development, sales, marketing, technical support
and finance. These and other factors will require the use of outside suppliers
as well as the talents and efforts of the Company. There can be no assurance of
success with any or all of these factors on which the Company’s operations will
depend. The Company has relied and may continue to rely, upon consultants and
others for operating expertise.
Currency
Fluctuations: The Company maintains its accounts in Canadian and U.S.
dollars, making it subject to foreign currency fluctuations. Such fluctuations
may materially affect the Company’s financial position and results.
Share
Price Volatility: In recent years, the securities markets in the United
States and Canada have experienced a high level of price and volume volatility,
and the market price of securities of many companies, particularly those
considered exploration or development stage companies, have experienced wide
fluctuations in price which have not necessarily been related to the operating
performance, underlying asset values or prospects of such companies. There can
be no assurance that significant fluctuations in the trading price of the
Company’s common shares will not occur, or that such fluctuations will not
materially adversely impact on the Company’s ability to raise equity funding
without significant dilution to its existing shareholders, or at all.
Exploration
and Mining Risks: Fires, power outages, labour disruptions, flooding,
explosions, cave-ins, landslides and the inability to obtain suitable or
adequate machinery, equipment or labour are other risks involved in the
operation of mines and the conduct of exploration programs. Substantial
expenditures are required to establish reserves through drilling, to develop
metallurgical processes, to develop the mining and processing facilities and
infrastructure at any site chosen for mining. Although substantial benefits may
be derived from the discovery of a major mineralized deposit, no assurance can
be given that minerals will be discovered in sufficient quantities to justify
commercial operations or that funds required for development can be obtained on
a timely basis. The economics of developing mineral properties is affected by
many factors including the cost of operations, variations of the grade of ore
mined, fluctuations in the price of gold or other minerals produced, costs of
processing equipment and such other factors as government regulations, including
regulations relating to royalties, allowable production, importing and exporting
of minerals and environmental protection. In addition, the grade of
mineralization ultimately mined may differ from that indicated by drilling
results and such differences could be material. Short term factors, such as the
need for orderly development of ore bodies or the processing of new or different
grades, may have an adverse effect on mining operations and on the results of
operations. There can be no assurance that minerals recovered in small scale laboratory tests will be duplicated in large
scale tests under on-site conditions or in production scale operations. Material
changes in geological resources, grades, stripping ratios or recovery rates may
affect the economic viability of projects.
25
Environmental
Restrictions: The activities of the Company are subject to environmental
regulations promulgated by government agencies in different countries from time
to time. Environmental legislation generally provides for restrictions and
prohibitions on spills, releases or emissions into the air, discharges into
water, management of waste, management of hazardous substances, protection of
natural resources, antiquities and endangered species and reclamation of lands
disturbed by mining operations. Certain types of operations require the
submission and approval of environmental impact assessments. Environmental
legislation is evolving in a manner which means stricter standards, and
enforcement, fines and penalties for non-compliance are more stringent.
Environmental assessments of proposed projects carry a heightened degree of
responsibility for companies and directors, officers and employees. The cost of
compliance with changes in governmental regulations has a potential to reduce
the profitability of operations.
Regulatory
Requirements: The activities of the Company are subject to extensive
regulations governing various matters, including environmental protection,
management and use of toxic substances and explosives, management of natural
resources, exploration, development of mines, production and post-closure
reclamation, exports, price controls, taxation, regulations concerning business
dealings with indigenous peoples, labour standards on occupational health and
safety, including mine safety, and historic and cultural preservation. Failure
to comply with applicable laws and regulations may result in civil or criminal
fines or penalties, enforcement actions thereunder, including orders issued by
regulatory or judicial authorities causing operations to cease or be curtailed,
and may include corrective measures requiring capital expenditures, installation
of additional equipment, or remedial actions, any of which could result in the
Company incurring significant expenditures. The Company may also be required to
compensate those suffering loss or damage by reason of a breach of such laws,
regulations or permitting requirements. It is also possible that future laws and
regulations, or more stringent enforcement of current laws and regulations by
governmental authorities, could cause additional expense, capital expenditures,
restrictions on or suspension of the Company’s operations and delays in the
exploration and development of the Company’s properties.
Limited
Experience with Development-Stage Mining Operations: The Company has limited
experience in placing resource properties into production, and its ability to do
so will be dependent upon using the services of appropriately experienced
personnel or entering into agreements with other major resource companies that
can provide such expertise. There can be no assurance that the Company will have
available to it the necessary expertise when and if it places the Livengood
project into production.
Estimates
of Mineral Reserves and Resources and Production Risks: The mineral resource
estimates included in this MD&A are estimates only and no assurance can be
given that any particular level of recovery of minerals will in fact be realized
or that an identified reserve or resource will ever qualify as a commercially
mineable (or viable) deposit which can be legally and economically exploited.
The estimating of mineral resources and mineral reserves is a subjective process
and the accuracy of mineral resource and mineral reserve estimates is a function
of the quantity and quality of available data, the accuracy of statistical
computations, and the assumptions used and judgments made in interpreting
available engineering and geological information. There is significant
uncertainty in any mineral resource or mineral reserve estimate and the actual
deposits encountered and the economic viability of a deposit may differ
materially from the Company’s estimates. In addition, the grade of
mineralization ultimately mined may differ from that indicated by drilling
results and such differences could be material. Production can be affected by
such factors as permitting regulations and requirements, weather, environmental
factors, unforeseen technical difficulties, unusual or unexpected geological
formations and work interruptions. Short term factors, such as the need for
orderly development of deposits or the processing of new or different
grades, may have a material adverse effect on mining operations and on the
results of operations. There can be no assurance that minerals recovered in
small scale laboratory tests will be duplicated in large scale tests under
on-site conditions or in production scale operations. Material changes in
reserves or resources, grades, stripping ratios or recovery rates may affect the
economic viability of projects. The estimated resources described in this
MD&A should not be interpreted as assurances of mine life or of the
profitability of future operations. Estimated mineral resources and mineral
reserves may have to be re-estimated based on changes in applicable commodity
prices, further exploration or development activity or actual production
experience. This could materially and adversely affect estimates of the volume
or grade of mineralization, estimated recovery rates or other important factors
that influence mineral resource or mineral reserve estimates. Market price
fluctuations for gold, silver or base metals, increased production costs or
reduced recovery rates or other factors may render any particular reserves
uneconomical or unprofitable to develop at a particular site or sites. A
reduction in estimated reserves could require material write downs in investment
in the affected mining property and increased amortization, reclamation and
closure charges.
26
Mineral
resources are not mineral reserves and there is no assurance that any mineral
resources will ultimately be reclassified as proven or probable reserves.
Mineral resources which are not mineral reserves do not have demonstrated
economic viability.
Enforcement
of Civil Liabilities: As substantially all of the assets of the Company and
its subsidiaries are located outside of Canada, and certain of the directors and
officers of the Company are resident outside of Canada, it may be difficult or
impossible to enforce judgements granted by a court in Canada against the assets
of the Company or the directors and officers of the Company residing outside of
Canada.
Mining
Industry is Intensely Competitive: The Company’s business of the
acquisition, exploration and development of mineral properties is intensely
competitive. The Company may be at a competitive disadvantage in acquiring
additional mining properties because it must compete with other individuals and
companies, many of which have greater financial resources, operational
experience and technical capabilities than the Company. The Company may also
encounter increasing competition from other mining companies in efforts to hire
experienced mining professionals. Competition for exploration resources at all
levels is currently very intense, particularly affecting the availability of
manpower, drill rigs and helicopters. Increased competition could adversely
affect the Company’s ability to attract necessary capital funding or acquire
suitable producing properties or prospects for mineral exploration in the
future.
ITH
may be a “passive foreign investment company” under the U.S. Internal Revenue
Code, which may result in material adverse U.S. federal income tax consequences
to investors in Common Shares that are U.S. taxpayers: Investors in Common
Shares that are U.S. taxpayers should be aware that ITH believes that it has
been in prior years, and expects it will be in the current year, a “passive
foreign investment company” under Section 1297(a) of the U.S. Internal Revenue
Code (a “PFIC”). If ITH is or becomes a PFIC, generally any gain recognized on
the sale of the Common Shares and any “excess distributions” (as specifically
defined) paid on the Common Shares must be rateably allocated to each day in a
U.S. taxpayer’s holding period for the Common Shares. The amount of any such
gain or excess distribution allocated to prior years of such U.S. taxpayer’s
holding period for the Common Shares generally will be subject to U.S. federal
income tax at the highest tax applicable to ordinary income in each such prior
year, and the U.S. taxpayer will be required to pay interest on the resulting
tax liability for each such prior year, calculated as if such tax liability had
been due in each such prior year.
Alternatively,
a U.S. taxpayer that makes a “qualified electing fund” (a “QEF”) election with
respect to ITH generally will be subject to U.S. federal income tax on such U.S.
taxpayer’s pro rata share of ITH’s “net capital gain” and “ordinary earnings”
(as specifically defined and calculated under U.S. federal income tax rules), regardless of whether such
amounts are actually distributed by ITH. U.S. taxpayers should be aware,
however, that there can be no assurance that ITH will satisfy record keeping
requirements under the QEF rules or that ITH will supply U.S. taxpayers with
required information under the QEF rules, in event that ITH is a PFIC and a U.S.
taxpayer wishes to make a QEF election. As a second alternative, a U.S. taxpayer
may make a “mark-to-market election” if ITH is a PFIC and the Common Shares are
“marketable stock” (as specifically defined). A U.S. taxpayer that makes a
mark-to-market election generally will include in gross income, for each taxable
year in which ITH is a PFIC, an amount equal to the excess, if any, of (a) the
fair market value of the Common Shares as of the close of such taxable year over
(b) such U.S. taxpayer’s adjusted tax basis in the Common Shares.
27
| Selected
Financial Information |
Selected Annual Information
The Company’s unaudited condensed consolidated financial
statements for the first quarter ended August 31, 2011 (the “Interim Financial
Statements”) have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) and practices. The following selected financial
information is taken from the Company’s audited consolidated financial
statements for the years ended May 31, 2011, 2010 and 2009 and should be read in
conjunction with those statements. Selected annual financial information appears
below.
| |
|
May
31, 2011 |
|
|
May
31, 2010 |
|
|
May
31, 2009 |
|
| |
|
$ |
|
|
$ |
|
|
$ |
|
| |
|
(annual) |
|
|
(annual) |
|
|
(annual) |
|
| Description
|
|
IFRS |
|
|
Canadian GAAP |
|
|
Canadian GAAP |
|
| Operations: |
|
|
|
|
|
|
|
|
|
| Interest Income |
$ |
675,146 |
|
$ |
116,936 |
|
$ |
126,402 |
|
| Consulting fees (including stock-based
compensation) |
|
1,570,146 |
|
|
3,722,579 |
|
|
1,236,468 |
|
| Property investigation |
|
2,557 |
|
|
395 |
|
|
85,739 |
|
| Wages and benefits (including stock- based
compensation) |
|
5,505,589 |
|
|
5,878,461 |
|
|
2,167,850 |
|
| Investor relations (including stock-based compensation) |
|
1,239,208 |
|
|
1,117,835 |
|
|
518,419 |
|
| Foreign exchange gain (loss) |
|
91,552 |
|
|
(76 |
) |
|
127,283 |
|
| |
|
|
|
|
|
|
|
|
|
| Loss from continuing operations |
|
(9,557,685 |
) |
|
(14,264,957 |
) |
|
(6,427,244 |
) |
| Loss from discontinued operations |
|
(934,157 |
) |
|
(3,603,369 |
) |
|
(3,346,679 |
) |
| Net and comprehensive loss |
|
(10,491,842 |
) |
|
(17,868,326 |
) |
|
(9,773,923 |
) |
| |
|
|
|
|
|
|
|
|
|
| Basic and fully diluted loss per share from
continuing operations |
|
(0.12 |
) |
|
(0.24 |
) |
|
(0.14 |
) |
| Basic and fully
diluted loss per share from discontinued operations |
$ |
(0.01 |
) |
$ |
(0.06 |
) |
$ |
(0.07 |
)
|
| Balance sheet: |
|
|
|
|
|
|
|
|
|
| Cash |
$ |
111,165,126 |
|
$ |
43,460,324 |
|
$ |
32,489,341 |
|
| Total Current Assets |
|
112,391,851 |
|
|
44,218,447 |
|
|
32,845,989 |
|
| Mineral Properties – continuing operations |
|
71,103,123 |
|
|
41,849,485 |
|
|
22,363,153 |
|
| Mineral Properties – discontinued
operations |
|
- |
|
|
12,245,690 |
|
|
11,054,413 |
|
| Long term financial liabilities |
|
- |
|
|
- |
|
|
- |
|
| Cash dividends |
$ |
- |
|
$ |
- |
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
28
First Quarter Ended August 31, 2011
The Company ended the first quarter with $94,408,327 of cash
and cash equivalents. The Company spent $14,616,215 in exploration costs of
continuing operations, used $2,651,991 in operating activities of continuing
operations, and raised $229,950 through the issuance of common shares, net of
costs. Share-based payment charges of $5,777,367 from continuing operations in
the three months period ended August 31, 2011 was due to the granting of options
and recognizing the expense associated with the vesting of certain stock options
granted in the quarter and the prior periods to employees and consultants.
Comparison to Selected Prior Quarterly Periods
The following selected financial information is a summary of
quarterly results taken from the Company’s unaudited condensed interim
consolidated financial statements of the Company. The information relates to the
Company’s continuing operations.
| |
|
2011 |
|
|
2010 |
|
| Three months
ended August 31 |
|
(IFRS) |
|
|
(IFRS) |
|
| |
|
|
|
|
|
|
| Interest Income |
$ |
320,563 |
|
$ |
60,537 |
|
| Share-based payment charges |
|
5,777,367 |
|
|
3,063,947 |
|
| Net loss from continuing operations |
|
(8,364,241 |
) |
|
(4,094,290 |
) |
| Basic and diluted
loss per common share from continuing operations |
$ |
(0.09 |
) |
$ |
(0.06 |
) |
| |
|
August 31, |
|
|
May
31, |
|
| |
|
2011 |
|
|
2011 |
|
| As at |
|
(IFRS) |
|
|
(IFRS) |
|
| |
|
|
|
|
|
|
| Working capital from continuing operations
|
$ |
89,084,948 |
|
$ |
108,354,423 |
|
| Total assets from continuing operations |
$ |
187,060,117 |
|
$ |
183,638,545 |
|
| Total liabilities from continuing
operations |
$ |
6,647,743 |
|
$ |
4,037,428 |
|
| Share capital |
$ |
215,865,086 |
|
$ |
215,544,180 |
|
Three Months ended August 31, 2011 Compared to Three Months
ended August 31, 2010
For the three months ended August 31, 2011, the Company had a
loss from continuing operations of $8,364,241, as compared to loss of $4,094,290
in the prior period. The increased loss of $4,269,951 in the current period was
due to a combination of factors discussed below.
General and administrative (operating) expenses for the period
totalled $8,841,189 compared to $3,971,590 in 2010. These figures combine the
Company’s continued and discontinued operations as overall expense categories
and are best understood on a combined basis for the comparative quarter due to
the timing of the Arrangement transaction late in the first quarter on August
25, 2010. As discussed above, operating costs were allocated to Corvus on the
basis of the ratio of Spin-out Properties book values to the book values of all
properties during the quarter and up to the date of the Arrangement transaction.
For the quarter ended August 31, 2010, 19.8% of eligible costs from June 1 to
the date of the Arrangement were allocated to Corvus.
29
|
|
|
|
|
|
Allocated to |
|
|
|
|
| 2010 (IFRS) |
|
Combined |
|
|
Corvus |
|
|
Net to ITH |
|
| |
|
|
|
|
|
|
|
|
|
| Administration |
$ |
9,621 |
|
$ |
(1,780 |
) |
$ |
7,841 |
|
| Charitable donations |
|
27,347 |
|
|
(5,413 |
) |
|
21,934 |
|
| Consulting fees |
|
1,347,868 |
|
|
(265,721 |
) |
|
1,082,147 |
|
| Depreciation |
|
6,406 |
|
|
- |
|
|
6,406 |
|
| Insurance |
|
56,309 |
|
|
(10,099 |
) |
|
46,210 |
|
| Investor relations |
|
640,058 |
|
|
(130,737 |
) |
|
509,321 |
|
| Office and miscellaneous |
|
44,962 |
|
|
(7,214 |
) |
|
37,748 |
|
| Professional fees |
|
206,556 |
|
|
(40,741 |
) |
|
165,815 |
|
| Property investigation |
|
1,098 |
|
|
(291 |
) |
|
807 |
|
| Regulatory |
|
20,625 |
|
|
(3,816 |
) |
|
16,809 |
|
| Rent |
|
29,410 |
|
|
(5,302 |
) |
|
24,108 |
|
| Telephone |
|
13,590 |
|
|
(2,418 |
) |
|
11,172 |
|
| Travel |
|
31,593 |
|
|
(5,625 |
) |
|
25,968 |
|
| Wages and benefits |
|
2,490,622 |
|
|
(475,318 |
) |
|
2,015,304 |
|
| |
|
|
|
|
|
|
|
|
|
| Subtotal |
|
(4,926,065 |
) |
|
954,475 |
|
|
(3,971,590 |
) |
| Foreign exchange loss (gain)
|
|
109,675 |
|
|
(20,318 |
) |
|
89,357 |
|
| Interest income |
|
60,537 |
|
|
- |
|
|
60,537 |
|
| Income from mineral property
earn-in |
|
51,980 |
|
|
- |
|
|
51,980 |
|
| Spin-out (cost) recovery |
|
(452,574 |
) |
|
- |
|
|
(452,574 |
) |
| Unrealized gain on held for trading investment |
|
128,000 |
|
|
- |
|
|
128,000 |
|
| |
|
|
|
|
|
|
|
|
|
| |
$ |
(5,028,447 |
) |
$ |
934,157 |
|
$ |
(4,094,290 |
) |
During the quarter ended August 31, 2011, some expense
categories increased significantly when compared with the prior period.
Consulting fees increased to $1,645,426 (2010 - $1,082,147)
mainly due to share-based payment charges of $1,461,677 during the current
period compared to $1,010,894 in the prior period. The increase of $112,496 is
mainly due approximately $92,000 in consulting fees paid to a recruiting firm
and $35,000 paid to the former CFO as severance in the current period compared
to the prior period.
Investor relations expenses decreased to $146,012 (2010 -
$509,321) due to share-based payment charges of $43,758 during the current
period compared to $312,647 in the prior period. The additional decrease of
$94,420 was due to a combination of a decrease in the number and amount of
mail-outs, printing and reproduction as the Company already made the increased
effort in fully informing the investment community during the Arrangement
process in the prior period.
Professional fees increased to $283,011 (2010 - $165,815) the
increase of $117,196 was due to additional personnel hired to perform
professional services such as legal and accounting during the current period.
Wages and benefits increased to $6,420,625 (2010 – $2,015,304)
as a result of share-based payment charges of $4,260,263 during the current
period compared to $1,667,455 in the prior period. The increase of $1,812,513
was due to employment terms including severance payments as well as higher
labour costs per person combined with additional personnel and officers being
hired in the current period.
30
Regulatory expenses increased to $59,400 (2010 - $16,809)
mainly due to the cost of annual fee of USD 40,000 paid to the NYSE-Amex stock
exchange. Rent increased to $74,623 (2010 - $24,108) and due to additional
expenses incurred in the Alaska office as well as increased rent expense in the
Vancouver office due to the new office location in the current period. Travel
expenses increased to $81,610 (2010 - $25,968) for additional travel to the
Livengood project in Alaska.
Other expenses categories which reflected only moderate change
period over period were administration expenses of $1,881 (2010 - $7,841),
charitable donations of $7,642 (2010 - $21,934), depreciation expenses of $9,745
(2010 - $6,406), insurance expenses of $51,990 (2010 - $46,210), office and
miscellaneous expenses of $56,896 (2010 - $37,748), property investigation
expenses of $nil (2010 - $807) and telephone expenses of $2,328 (2010 -
$11,172).
Other items amounted to a gain of $476,948 compared to a loss
of $122,700 in the prior period. The gain in the current period resulted from an
increase in interest income to $320,563 (2010 – $60,537) due to the Company
having a stronger cash position. In the prior period there was a net expense of
$400,594 related to legal and regulatory expense, off-set by property
facilitation payments and interest from the earn-in of the Chisna spin-out
property due to the Arrangement in the prior period compared to $nil in the
current period. The changes in foreign exchange gain of $37,385 (2010 – $89,357)
and the unrealized gain on held-for-trading investments of $119,000 (2010 -
$128,000) are both the result of factors outside of the Company’s control.
Share-based Payment Charges
Share-based payment charges for the three months period ended
August 31, 2011 of $5,777,367 (2010 - $3,063,947) were allocated as follows:
|
|
Before allocation |
|
|
|
|
|
After Allocation |
|
|
|
of share-based |
|
|
Share-based |
|
|
of share-based |
|
| 2011 (IFRS) |
|
payment charges |
|
|
payment charges |
|
|
payment charges |
|
| |
|
|
|
|
|
|
|
|
|
| Consulting |
$ |
183,749 |
|
$ |
1,461,677 |
|
$ |
1,645,426 |
|
| Investor relations |
|
102,254 |
|
|
43,758 |
|
|
146,012 |
|
| Professional fees |
|
271,342 |
|
|
11,669 |
|
|
283,011 |
|
| Wages and benefits |
|
2,160,362 |
|
|
4,260,263 |
|
|
6,420,625 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
$ |
5,777,367 |
|
|
|
|
|
|
|
Before allocation |
|
|
|
|
|
After Allocation |
|
| |
|
of share-based |
|
|
Share-based |
|
|
of share-based |
|
| 2010 (IFRS) |
|
payment charges |
|
|
payment charges |
|
|
payment charges |
|
| |
|
|
|
|
|
|
|
|
|
| Consulting |
$ |
71,253 |
|
$ |
1,010,894 |
|
$ |
1,082,147 |
|
| Investor relations |
|
196,674 |
|
|
312,647 |
|
|
509,321 |
|
| Professional fees |
|
92,864 |
|
|
72,951 |
|
|
165,815 |
|
| Wages and benefits |
|
347,849 |
|
|
1,667,455 |
|
|
2,015,304 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
$ |
3,063,947 |
|
|
|
|
31
Supplemental Information:
Comparison to Prior Quarterly Periods
The following selected financial information is a summary of
quarterly results taken from the Company’s unaudited quarterly consolidated
financial statements:
| |
|
|
|
|
May
31, |
|
|
February 28, |
|
|
November 30, |
|
| |
|
August 31, |
|
|
2011 |
|
|
2011 |
|
|
2010 |
|
| |
|
2011 |
|
|
(Canadian |
|
|
(Canadian |
|
|
(Canadian |
|
| Description
|
|
(IFRS) |
|
|
GAAP) |
|
|
GAAP) |
|
|
GAAP) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Income |
$ |
320,563 |
|
$ |
317,865 |
|
$ |
269,602 |
|
$ |
27,142 |
|
| Net loss – continuing operations |
|
(8,364,241 |
) |
|
(1,603,186 |
) |
|
(1,363,198 |
) |
|
(2,152,456 |
) |
| Net loss – discontinued operations |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
| Net loss |
|
(8,364,241 |
) |
|
(1,603,186 |
) |
|
(1,363,198 |
) |
|
(2,152,456 |
) |
| Basic and diluted loss per common share |
$ |
(0.09 |
) |
$ |
(0.01 |
) |
$ |
(0.02 |
) |
$ |
(0.03 |
) |
| |
|
|
|
|
May
31, |
|
|
February 28, |
|
|
November 30, |
|
| |
|
August 31, |
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
| |
|
2010 |
|
|
(Canadian |
|
|
(Canadian |
|
|
(Canadian |
|
| Description
|
|
(IFRS) |
|
|
GAAP) |
|
|
GAAP) |
|
|
GAAP) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Income |
$ |
60,537 |
|
$ |
29,643 |
|
$ |
28,488 |
|
$ |
32,077 |
|
| Net loss – continuing operations |
|
(4,094,290 |
) |
|
(7,762,533 |
) |
|
(3,373,101 |
) |
|
(2,507,666 |
) |
| Net loss – discontinued operations |
|
(934,157 |
) |
|
(2,153,063 |
) |
|
(531,654 |
) |
|
(679,950 |
) |
| Net loss |
|
(5,028,447 |
) |
|
(9,915,596 |
) |
|
(3,904,755 |
) |
|
(3,187,616 |
) |
| Basic and diluted loss per common share from continuing
operations |
$ |
(0.06 |
) |
$ |
(0.16 |
) |
$ |
(0.07 |
) |
$ |
(0.05 |
) |
The previous discussion discusses the reasons for some of the
variations in the quarterly numbers but, as with most junior mineral exploration
companies, the results of operations (including interest income and net losses)
are not the main factor in establishing the financial health of the Company. Of
far greater significance are the mineral properties in which the Company has, or
may earn an interest, its working capital and how many shares it has
outstanding. The variation seen over such quarters is primarily dependent upon
the success of the Company’s ongoing property evaluation program and the timing
and results of the Company’s exploration activities on its then current
properties (following the spin-out of its non-Livengood properties to Corvus,
its only mineral property is the Livengood project), none of which are possible
to predict with any accuracy. There are no general trends regarding the
Company’s quarterly results, and the Company’s business of mineral exploration
is not seasonal. Quarterly results can vary significantly depending on whether
the Company has abandoned any properties or granted any stock options or paid
any employee bonuses and these are the factors that account for material
variations in the Company’s quarterly net losses, none of which are predictable.
The write-off of mineral properties can have a material effect on quarterly
results as and when they occur (as, for example in the quarters ended November
30, 2009 and February 28, 2010). Another factor which can cause a material
variation in net loss on a quarterly basis is the grant of stock option due to
the resulting share based payment charges which can be significant when they
arise. The payment of employee bonuses (which tend to be awarded in
November/December), being once-yearly charges can also materially affect
operating losses (as, for example, in the quarters ended February 28, 2010 and
February 28, 2011). General operating costs other than the specific items noted
above tend to be quite similar from period to period, although they will
increase quarter over quarter as the 32 Company increases the number of employees as necessary to meet
the requirements of its increased work at the Livengood project. The variation
in income is related solely to the interest earned on funds held by the Company,
which is dependent upon the success of the Company in raising the required
financing for its activities which will vary with overall market conditions, and
is therefore difficult to predict.
Liquidity and Capital Resources
The Company has no revenue generating operations from which it
can internally generate funds. To date, the Company’s ongoing operations have
been predominantly financed by the sale of its equity securities by way of
private placements and the subsequent exercise of share purchase warrants and
broker warrants and options issued in connection with such private placements.
However, the exercise of warrants/options is dependent primarily on the market
price and overall market liquidity of the Company’s securities at or near the
expiry date of such warrants/options (over which the Company has no control) and
therefore there can be no guarantee that any existing warrants/options will be
exercised. This situation is unlikely to change until such time as the Company
can develop a bankable feasibility study for the Livengood project.
As at August 31, 2011, the Company reported cash and cash
equivalents of $94,408,327 compared to $111,165,126 at May 31, 2011. The
decrease of approximately $17 million resulted from the expenditures on its
Livengood project through the 2011 exploration season. The Company continues to
utilize its cash resources to fund the Livengood project exploration, permitting
and pre-feasibility data compilation and administrative requirements. During the
three months period ended August 31, 2011, the Company had changes in its cash
position as the net result of share issuances in financing activities totalling
$229,950 (2010 - $4,184,301) for the period, being issuances to AngloGold on a
private placement basis for gross proceeds of $nil (2010 - $2,183,116), plus the
issuance of shares upon the exercise of incentive stock options and warrants for
proceeds of $229,950 (2010 - $2,009,842). Share issuance costs for the foregoing
totalled $nil (2010 - $8,657). Offsetting this were investing activities
comprised primarily of exploration and evaluation assets expenditures of
$14,616,215 (2010 - $7,229,710), purchase of property and equipment of $2,964
(2010 - $12,273) and general operating costs of $2,651,991 (2010 - $1,221,088)
during the period.
As at August 31, 2011, the Company had working capital of
$89,084,948 compared to working capital of $108,354,423 at May 31, 2011. The
Company expects that it will operate at a loss for the foreseeable future, but
believes the current cash and cash equivalents will be sufficient for it to
complete the planned exploration programs and pre-feasibility/feasibility study
activities at Livengood, and its currently anticipated general and
administrative costs, for the next 13 months to December 2012. However, the
Company will require significant additional financing to continue its operations
(including general and administrative expenses) beyond that date, particularly
in connection with any post feasibility study activities at Livengood and the
development of any mine that may be determined to be built at Livengood, and
there is no assurance that the Company will be able to obtain the additional
financing required on acceptable terms, if at all. In addition, any significant
delays in the issuance of required permits for the ongoing work at Livengood, or
unexpected results in connection with the ongoing work, could result in the
Company being required to raise additional funds to complete the feasibility
study.
Despite the Company’s success to date in raising significant
equity financing to fund its operations, there is significant uncertainty that
the Company will be able to secure any additional financing in the current or
future equity markets – see “Risk Factors – Insufficient Financial
Resources/Share Price Volatility”. The quantity of funds to be raised and the
terms of any proposed equity financing that may be undertaken will be negotiated
by management as opportunities to raise funds arise. Specific plans related to
the use of proceeds will be devised once financing has been completed and
management knows what funds will be available for these purposes.
33
The Company has no exposure to any asset-backed commercial
paper. Other than cash held by its subsidiaries for their immediate operating
needs in Alaska and Colorado, all of the Company’s cash reserves are on deposit
with a major Canadian chartered bank or invested in Government of Canada
Treasury Bills or Banker’s Acceptances issued by major Canadian chartered banks.
The Company does not believe that the credit, liquidity or market risks with
respect thereto have increased as a result of the current market conditions.
However, to achieve greater security for the preservation of its capital, the
Company has, of necessity, been required to accept lower rates of interest which
has also lowered its potential interest income.
There have not been any material changes to the Company’s
contractual obligations for optional mineral property payments and work
commitments and committed office and equipment lease obligations as disclosed in
its annual MD&A to May 31, 2011.
| Transactions
with Related Parties |
During the three months ended August 31, 2011, the Company
incurred the following related party expenditures. These figures do not include
share-based payments.
| Name |
Relationship |
|
Purpose of transaction |
|
Amount |
|
| |
|
|
|
|
|
|
| Anton Drescher |
Director of the Company |
|
Director’s fees |
$ |
6,000 |
|
| Daniel Carriere |
Director of the Company |
|
Director’s fees |
$ |
6,000 |
|
| Ronald Sheardown |
Director of the Company |
|
Director’s fees |
$ |
6,000 |
|
| Steve Aaker |
Director of the Company |
|
Director’s fees |
$ |
6,000 |
|
| Timothy Haddon |
Director of the Company |
|
Director’s fees |
$ |
6,000 |
|
| |
|
|
|
|
|
|
| James Komadina |
Director and CEO of the Company
|
|
Wages & Benefits (including
signing bonus) |
$ |
223,412 |
|
| Jeff Pontius |
Director and former CEO of the
Company (resigned on June 1, 2011 ) |
|
Wages & Benefits (including severance pay)
|
$ |
879,120 |
|
| |
Professional fees |
$ |
44,903 |
| Carl Brechtel |
President & COO of the Company (resigned on
October 24, 2011 ) |
|
Wages & Benefits |
$ |
63,210 |
|
| Lawrence Talbot |
VP & General Counsel of the
Company |
|
Wages & Benefits |
$ |
12,500 |
|
| Winslow Associates Management and Communications Inc. |
Company controlled by the former CFO of the
Company (resigned on September 7, 2011 ) |
|
Consulting (including severance pay) |
$ |
57,500 |
|
| Marla Ritchie |
Corporate Secretary |
|
Consulting |
$ |
3,000 |
|
| Shirley Zhou |
VP Corporate Communications |
|
Investor relations |
$ |
36,000 |
|
| |
|
|
Rent |
$ |
2,400 |
|
| Lawrence W. Talbot Law Corporation |
Company controlled by VP & General Counsel
of the Company |
|
Professional fees |
$ |
20,000 |
|
| Cardero Resource Corp. |
Company with common officers
and directors |
|
Administration |
$ |
1,881 |
|
| Cardero Resource
Corp. |
Company with common officers and directors |
|
Rent
|
$ |
7,719 |
|
The Company has entered into a retainer agreement dated August
1, 2008 with Lawrence W. Talbot Law Corporation (“LWTLC”), pursuant to which
LWTLC agrees to provide legal services to the Company. Pursuant to the retainer
agreement, the Company has agreed to pay LWTLC a minimum annual retainer of
$50,000 (plus applicable taxes and disbursements). The retainer agreement may be
terminated by LWTLC on reasonable notice, and by the Company on one year’s
notice (or payment of one year’s retainer in lieu of notice). An officer of the
Company is a director and shareholder of LWTLC.
34
These transactions with related parties have been valued in the
condensed consolidated financial statements at the exchange amount, which is the
amount of consideration established and agreed to by the related parties.
| Off-Balance
Sheet Arrangements |
The Company has no off-balance sheet arrangements.
As at the date of this MD&A there are no proposed
transactions that the board of directors, or senior management who believe that
confirmation of the decision by the board is probable, have decided to proceed
with and that have not been publicly disclosed, except that management of the
Company, having been granted authority to do so by the board, is currently
negotiating with a number of landowners to acquire additional ground in the
vicinity of the Livengood project and believes that it will be successful in
negotiating one or more of such acquisitions at prices acceptable to the
Company. If this is the case, the Company will proceed with such acquisitions.
However, to date, no agreements regarding any such acquisitions have been
executed and there can be no certainty that any such agreements will be
successfully concluded or executed.
| Critical
Accounting Estimates |
The preparation of the Company’s consolidated financial
statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Areas requiring the use of estimates in the preparation of
the Company’s consolidated financial statements include rates of depreciation
and useful lives of property and equipment, impairment and recoverability of
exploration and evaluation expenditures, amounts of provisions for environmental
rehabilitation and restoration, accrual of liabilities, assumptions used to
determine the fair value of share-based payments, allocation of administrative
expenses to discontinued operations and the determination of the valuation
allowance for deferred income tax assets. Management believes the estimates used
are reasonable; however, actual results could differ materially from those
estimates and, if so, would impact future results of operations and cash flows.
| Changes in
Accounting Policies Including Initial Adoption |
Please refer to Note 3 of the August 31, 2011 unaudited
condensed consolidated interim financial statements for a comprehensive list of
the accounting policies adopted upon transition to IFRS.
| Financial
Instruments and Other Instruments |
The carrying values of the Company’s financial instruments,
which include cash and cash equivalents, marketable securities, accounts
receivable, and accounts payable and accrued liabilities, approximate their
respective fair values due to their short-term maturity. Due to the short term
of all such instruments, the Company does not believe that it is exposed to any
material risk with respect thereto.
The Company’s cash and cash equivalents at August 31, 2011 was
$94,408,327 of which $15,145,757 was held in US dollars.
The Company’s accounts receivables and payables at August 31,
2011 were normal course business items that are settled on a regular basis. The
Company’s investment in Millrock Resources Inc.
35
(‘Millrock”) and Ocean Park Ventures Corp. (“OPV”) were carried
at quoted market value, and were classified as “fair value through profit and
loss” for accounting purposes. The Company has no current plans to dispose of
any significant portion of its investments in Millrock and OPV.
| Management’s
Report on Internal Control Over Financial Reporting
|
The management of the Company is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is a process to provide reasonable assurance
regarding the reliability of the Company’s financial reporting for external
purposes in accordance with International Financial Reporting Standards (IFRS).
Internal control over financial reporting includes maintaining records that in
reasonable detail accurately and fairly reflect the Company’s transactions and
dispositions of the assets of the Company; providing reasonable assurance that
transactions are recorded as necessary for preparation of the Company’s
consolidated financial statements in accordance with IFRS; providing reasonable
assurance that receipts and expenditures are made in accordance with
authorizations of management and the directors of the Company; and providing
reasonable assurance that unauthorized acquisition, use or disposition of
Company’s assets that could have a material effect on the Company’s consolidated
financial statements would be prevented or detected on a timely basis. Because
of its inherent limitations, internal control over financial reporting is not
intended to provide absolute assurance that a misstatement of the Company’s
consolidated financial statements would be prevented or detected.
Management conducted an evaluation of the effectiveness of the
Company’s internal control over financial reporting based on the framework and
criteria established in Internal Control – Integrated Framework, issued
by the Committee of Sponsoring Organizations of the Treadway Commission. This
evaluation included review of the documentation of controls, evaluation of the
design effectiveness of controls, testing of the operating effectiveness of
controls and a conclusion on this evaluation. Based on this evaluation,
management concluded that the Company’s internal control over financial
reporting was effective as of August 31, 2011.
| Changes in
Internal Control Over Financial Reporting |
Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with IFRS. The Chief Executive Officer and Chief Financial Officer have
concluded that there has been no change in the Company’s internal control over
financial reporting during the three months ended August 31, 2011 that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
| Disclosure of
Outstanding Share Data (At November 10, 2011) |
Authorized and Issued capital stock:
| Authorized |
|
Issued |
|
|
Value |
|
| |
|
|
|
|
|
|
| 500,000,000 common shares without par value |
|
86,683,919 |
|
$ |
215,865,086 |
|
36
Incentive Stock Options Outstanding:
| Number |
Exercise Price |
Expiry Date |
| |
|
|
| 250,000 |
$ 7.95 |
January 12, 2012 |
| 2,635,000 |
$ 7.34 |
April 14, 2012 |
| 1,635,000 |
$ 6.57 |
August 19, 2012 |
| 265,000 |
$ 9.15 |
January 10, 2013 |
| 1,000,000 |
$ 8.35 |
May 9, 2016 |
| 950,000 |
$ 7.47 |
July 28, 2013 |
| 650,000 |
$ 8.07 |
August 23, 2016 |
| |
|
|
| 7,115,000 |
|
|
Warrants Outstanding:
There were no share purchase warrants outstanding at the date
of this MD&A.
| International
Financial Reporting Standards |
The Company’s consolidated financial statements for the year
ending May 31, 2012 are the first annual financial statements that will be
prepared in accordance with IFRS. The Company has adopted IFRS on June 1, 2011
with a transition date of June 1, 2010. Under IFRS 1, “First time adoption of
International Financial Reporting Standards” (“IFRS 1”), the IFRS standards
are applied retrospectively at the transition date with all adjustments to
assets and liabilities as stated under Canadian GAAP taken to deficit, and IFRS
1 providing for certain optional and mandatory exemptions to this principle.
Below are the adjustments necessary for the IFRS transition,
including exemptions taken at the transition date:
| |
a) |
Share-based payment transactions |
| |
|
|
| |
|
IFRS 1 allows that a first-time adopter can elect to not
apply IFRS 2 to share-based payments granted after November 7, 2002 that
vested before the later of (a) the date of transition to IFRS and (b)
January 1, 2005. The Company has elected this exemption and will apply
IFRS 2 only to unvested stock options as at June 1, 2010, being the
transition date. |
| |
|
|
| |
|
IFRS 2 and Canadian GAAP are largely converged, with the
exception of two main differences affecting the Company’s stock option
grants. IFRS 2 does not allow straight-line amortization of share-based
payments related to stock options granted with a graded vesting schedule.
The attribution method is required which effectively splits the grant into
separate units for valuation purposes based on the vesting schedule.
Additionally, IFRS 2 requires the incorporation of an estimate of
forfeiture rates. Under Canadian GAAP, the Company’s policy was to account
for forfeitures as they occurred. |
37
Impact on Consolidated Financial
Statements
| |
|
|
May
31, |
|
|
August 31, |
|
|
June 1, |
|
| |
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
Contributed surplus |
$ |
(321,000 |
) |
$ |
- |
|
$ |
- |
|
| |
Adjustment to deficit |
$ |
321,000 |
|
$ |
- |
|
$ |
- |
|
| |
Adjustment to share-based payment charges |
$ |
321,000 |
|
$ |
- |
|
$ |
- |
|
| |
b) |
Business combinations |
| |
|
|
| |
|
IFRS 1 allows that a first-time adopter may elect not to
apply IFRS 3 Business Combinations (IFRS 3) retrospectively to business
combinations prior to the date of transition, avoiding the requirement to
restate prior business combinations. The Company has elected to only apply
IFRS 3 to business combinations that occur on or after June 1,
2010. |
| |
|
|
| |
c) |
Marketable securities |
| |
|
|
| |
|
IAS 39 permits a financial asset to be designated on
initial recognition as available-for-sale or a financial instrument
(provided it meets certain criteria) to be designated as a financial asset
or financial liability at fair value through profit or loss. The Company
has taken this election as at the transition date. |
| |
|
|
| |
d) |
Cumulative translation differences |
| |
|
|
| |
|
IFRS 1 allows first-time adopter to elect to deem all
cumulative translation differences to be zero at the date of transition.
The Company has elected this exemption and as such all cumulative
translations amounts to June 1, 2010 have been included in the
deficit. |
| |
|
|
| |
|
Functional and presentation currency |
| |
|
|
| |
|
The functional currency of the Company’s two significant
subsidiaries, Tower Hill Alaska, Inc. and Tower Hill Mines (US) LLC, is
the US dollar and for all other entities within the Company’s corporate
group (“Group”), the functional currency is the Canadian dollar, as at the
transition date of June 1, 2010. The consolidated financial statements are
presented in Canadian Dollar (“CAD”) which is the Group’s presentation
currency. |
| |
|
|
| |
|
Translation of transactions and balances |
| |
|
|
| |
|
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the dates of
the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at period end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognized in the Statement of Operations and Comprehensive
Loss. |
38
Group companies
The results and financial position of
all the Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
|
• |
Assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the date of that
financial period end; |
|
• |
Income and expenses for each Statement of Operations and
Comprehensive Loss are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions);
|
|
• |
Equity transactions are translated using the exchange
rate at the date of the transaction; and |
|
• |
All resulting exchange differences are recognized in
other comprehensive income and reported as a separate component of equity.
|
On consolidation, exchange differences
arising from the translation of functional to presentation are taken to
Accumulative Other Comprehensive Income.
IAS 21 – “The effects of Changes in
Foreign Exchange Rates” differs from the Canadian GAAP equivalent, applied
by the Group until May 31, 2011. IAS 21 requires an entity to measure its
assets, liabilities, revenue and expenses in its functional currency. It has
been determined that as at the transition date of June 1, 2010, TH Alaska and TH
US is US dollars (“USD”) and for all other entities within the Group, the
functional currency is Canadian dollars. Prior to the adoption of IFRS, the
functional currency of the Group was the CAD.
Under IAS 21, the assets and
liabilities of the Group are translated from TH Alaska and TH US’ functional
currency USD, to the presentation currency at the reporting date. The income and
expenses are translated to the Group’s presentation currency, which is CAD at
the dates of the transactions. Foreign currency differences are recognized
directly in other comprehensive income within the foreign currency translation
reserve.
Impact on Consolidated Financial
Statements
| |
|
|
May
31, |
|
|
August 31, |
|
|
June 1, |
|
| |
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
Exploration and evaluation assets |
$ |
(9,066,545 |
) |
$ |
(3,842,076 |
) |
$ |
(2,349,207 |
) |
| |
Long-term assets related to discontinued
operations |
$ |
- |
|
$ |
- |
|
$ |
(572,982 |
) |
| |
Accumulated other comprehensive income |
$ |
(6,767,665 |
) |
$ |
(1,556,753 |
) |
$ |
2,922,189 |
|
| |
Adjustment to deficit |
$ |
(2,298,880 |
) |
$ |
2,275,323 |
|
$ |
- |
|
39
| |
e) |
Fair value as deemed cost |
| |
|
|
| |
|
The Company may elect among two options when measuring
the value of its assets under IFRS. It may elect, on an asset by asset
basis, to use either historical cost as measured under retrospective
application of IFRS or fair value of an asset at the opening balance sheet
date. The Company has elected to use historical cost for its
assets. |
| |
|
|
| |
f) |
Consolidated and Separate Financial Statements |
| |
|
|
| |
|
In accordance with IFRS 1, if a company elects to apply
IFRS 3 Business Combinations retrospectively, IAS 27 Consolidated and
Separate Financial Statements must also be applied retrospectively. As the
Company elected to apply IFRS 3 prospectively, the Company has applied IAS
27 prospectively. |
| |
|
|
| |
g) |
Estimates |
| |
|
|
| |
|
The estimates previously made by the Company under
pre-changeover Canadian GAAP were not revised for the application of IFRS
except where necessary to reflect any difference in accounting policy or
where there was objective evidence that those estimates were in error. As
a result the Company has not used hindsight to revise
estimates. |
Reconciliation to previously reported financial statements
A reconciliation of the above noted changes is included in the
following Consolidated Statements of Financial Position and Consolidated
Statements of Operations and Comprehensive Loss for the dates and periods noted
below.
- Transitional Consolidated Statement of Financial Position Reconciliation –
June 1, 2010
- Interim Consolidated Statement of Financial Position Reconciliation -
August 31, 2010.
- Interim Consolidated Statement of Operations and Comprehensive Loss
Reconciliation – August 31, 2010.
- Consolidated Statement of Financial Position Reconciliation – May 31,
2011.
- Consolidated Statement of Operations and Comprehensive Loss Reconciliation
– May 31, 2011.
As there have been no adjustments to net cash flows, no
reconciliation of the Statement of Cash Flows has been prepared.
40
Transition Consolidated Statement of Financial Position
Reconciliation – June 1, 2010
| |
|
|
|
|
Effect of |
|
|
|
|
|
|
|
| |
|
Canadian |
|
|
Transition |
|
|
|
|
|
|
|
| |
|
GAAP |
|
|
to IFRS |
|
|
Ref |
|
|
IFRS |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
$ |
43,460,324 |
|
$ |
- |
|
|
|
|
$ |
43,460,324 |
|
| Marketable securities |
|
360,000 |
|
|
- |
|
|
|
|
|
360,000 |
|
| Accounts receivable |
|
110,214 |
|
|
- |
|
|
|
|
|
110,214 |
|
| Prepaid expenses |
|
274,246 |
|
|
- |
|
|
|
|
|
274,246 |
|
| Current assets related to discontinued operations |
|
13,663 |
|
|
- |
|
|
|
|
|
13,663 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
44,218,447 |
|
|
- |
|
|
|
|
|
44,218,447 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Property and equipment |
|
80,040 |
|
|
- |
|
|
|
|
|
80,040 |
|
| Exploration and evaluations assets |
|
41,849,485 |
|
|
(2,349,207 |
) |
|
d) |
|
|
39,500,278 |
|
| Long-term assets related to discontinued operations |
|
12,245,690 |
|
|
(572,982 |
) |
|
d) |
|
|
11,672,708 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
$ |
98,393,662 |
|
$ |
(2,922,189 |
) |
|
|
|
$ |
95,471,473 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued liabilities |
$ |
1,187,865 |
|
$ |
- |
|
|
|
|
$ |
1,187,865 |
|
| Current liabilities of discontinued operations |
|
85,094 |
|
|
- |
|
|
|
|
|
85,094 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
1,272,959 |
|
|
- |
|
|
|
|
|
1,272,959 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders' equity (deficiency) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Share capital |
|
124,277,370 |
|
|
- |
|
|
|
|
|
124,277,370 |
|
| Contributed surplus |
|
14,240,223 |
|
|
- |
|
|
|
|
|
14,240,223 |
|
| Accumulated other comprehensive loss |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| Deficit |
|
(41,396,890 |
) |
|
(2,922,189 |
) |
|
d) |
|
|
(44,319,079 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total shareholders’ equity (deficiency) |
|
97,120,703 |
|
|
(2,922,189 |
) |
|
|
|
|
94,198,514 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and shareholders’ equity (deficiency) |
$ |
98,393,662 |
|
$ |
(2,922,189 |
) |
|
|
|
$ |
95,471,473 |
|
41
Interim Consolidated Statement of Financial Position
Reconciliation – August 31, 2010
| |
|
|
|
|
Effect of |
|
|
|
|
|
|
|
| |
|
Canadian |
|
|
Transition to |
|
|
|
|
|
|
|
| |
|
GAAP |
|
|
IFRS |
|
|
Ref |
|
|
IFRS |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
$ |
35,485,177 |
|
$ |
- |
|
|
|
|
$ |
35,485,177 |
|
| Marketable securities |
|
488,000 |
|
|
- |
|
|
|
|
|
488,000 |
|
| Accounts receivable |
|
107,818 |
|
|
- |
|
|
|
|
|
107,818 |
|
| Due from related parties |
|
38,018 |
|
|
- |
|
|
|
|
|
38,018 |
|
| Prepaid expenses |
|
215,742 |
|
|
- |
|
|
|
|
|
215,742 |
|
| Current assets related to discontinued operations |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
36,334,755 |
|
|
- |
|
|
|
|
|
36,334,755 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Property and equipment |
|
85,907 |
|
|
- |
|
|
|
|
|
85,907 |
|
| Exploration and evaluations assets |
|
51,737,941 |
|
|
(3,842,076 |
) |
|
d) |
|
|
47,895,865 |
|
| Long-term assets related to discontinued operations |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
$ |
88,158,603 |
|
$ |
(3,842,076 |
) |
|
|
|
$ |
84,316,527 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued liabilities |
$ |
4,196,595 |
|
$ |
- |
|
|
|
|
$ |
4,196,595 |
|
| Current liabilities of discontinued operations |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
4,196,595 |
|
|
- |
|
|
|
|
|
4,196,595 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders' equity (deficiency) |
|
|
|
|
|
|
|
|
|
|
|
|
| Share capital |
|
102,814,442 |
|
|
- |
|
|
|
|
|
102,814,442 |
|
| Contributed surplus |
|
15,873,242 |
|
|
- |
|
|
|
|
|
15,873,242 |
|
| Accumulated other comprehensive loss |
|
- |
|
|
(1,556,753 |
) |
|
d) |
|
|
(1,556,753 |
) |
| Deficit |
|
(34,725,676 |
) |
|
(2,275,323 |
) |
|
d) |
|
|
(37,000,999 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total shareholders’ equity (deficiency) |
|
83,962,008 |
|
|
(3,842,076 |
) |
|
|
|
|
80,119,932 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and shareholders’ equity (deficiency) |
$ |
88,158,603 |
|
$ |
(3,842,076 |
) |
|
|
|
$ |
84,316,527 |
|
42
Interim Consolidated Statement of Operations and
Comprehensive Loss Reconciliation – August 31, 2010
| |
|
|
|
|
Effect of |
|
|
|
|
|
|
|
| |
|
Canadian |
|
|
Transition to |
|
|
|
|
|
|
|
| |
|
GAAP |
|
|
IFRS |
|
|
Ref |
|
|
IFRS |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Administration |
$ |
7,841 |
|
$ |
- |
|
|
|
|
$ |
7,841 |
|
| Charitable donations |
|
21,934 |
|
|
- |
|
|
|
|
|
21,934 |
|
| Consulting fees |
|
1,082,147 |
|
|
- |
|
|
|
|
|
1,082,147
|
|
| Depreciation |
|
6,406 |
|
|
- |
|
|
|
|
|
6,406 |
|
| Insurance |
|
46,210 |
|
|
- |
|
|
|
|
|
46,210
|
|
| Investor relations |
|
509,321 |
|
|
- |
|
|
|
|
|
509,321 |
|
| Office and miscellaneous |
|
37,748 |
|
|
- |
|
|
|
|
|
37,748
|
|
| Professional fees |
|
165,815 |
|
|
- |
|
|
|
|
|
165,815 |
|
| Property investigations |
|
807 |
|
|
- |
|
|
|
|
|
807 |
|
| Regulatory |
|
16,809 |
|
|
- |
|
|
|
|
|
16,809 |
|
| Rent |
|
24,108 |
|
|
- |
|
|
|
|
|
24,108
|
|
| Telephone |
|
11,172 |
|
|
- |
|
|
|
|
|
11,172 |
|
| Travel |
|
25,968 |
|
|
- |
|
|
|
|
|
25,968
|
|
| Wages
and benefits |
|
2,015,304 |
|
|
- |
|
|
|
|
|
2,015,304 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before
other items |
|
(3,971,590 |
) |
|
- |
|
|
|
|
|
(3,971,590 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other items |
|
|
|
|
|
|
|
|
|
|
|
|
| Gain on foreign exchange |
|
15,473 |
|
|
73,884 |
|
|
d) |
|
|
89,357
|
|
| Interest income |
|
60,537 |
|
|
- |
|
|
|
|
|
60,537 |
|
| Income from mineral property
earn-in |
|
51,980 |
|
|
- |
|
|
|
|
|
51,980
|
|
| Spin-out cost |
|
(452,574 |
) |
|
- |
|
|
|
|
|
(452,574 |
) |
| Unrealized gain on marketable securities |
|
128,000 |
|
|
- |
|
|
|
|
|
128,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(196,584 |
) |
|
73,884 |
|
|
|
|
|
(122,700 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from continuing operations |
|
(4,168,174 |
) |
|
73,884 |
|
|
|
|
|
(4,091,942 |
) |
| Loss from
discontinued operations |
|
(934,157 |
) |
|
- |
|
|
|
|
|
(934,157 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for
the period |
|
(5,102,331 |
) |
|
73,884 |
|
|
|
|
|
(5,028,447 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
| Cumulative translation
adjustments – exploration and evaluation assets |
|
- |
|
|
(1,492,869 |
) |
|
d) |
|
|
(1,492,869 |
) |
|
Cumulative translation adjustments – foreign subsidiaries |
|
- |
|
|
(73,884 |
) |
|
d) |
|
|
(73,884 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total other
comprehensive loss |
|
- |
|
|
(1,566,753 |
) |
|
|
|
|
(1,566,753 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive
loss for the period |
$ |
(5,102,331 |
) |
$ |
(1,492,869 |
) |
|
|
|
$ |
(6,595,200 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and fully diluted loss per share from
continuing operations |
$ |
(0.06 |
) |
$ |
- |
|
|
|
|
$ |
(0.06 |
) |
| Basic and fully diluted loss per share from
discontinued operations |
$ |
(0.01 |
) |
$ |
- |
|
|
|
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding |
|
66,986,979 |
|
|
- |
|
|
|
|
|
66,986,979 |
|
43
Consolidated Statement of Financial Position Reconciliation
– May 31, 2011
| |
|
|
|
|
Effect of |
|
|
|
|
|
|
|
| |
|
Canadian |
|
|
Transition to |
|
|
|
|
|
|
|
| |
|
GAAP |
|
|
IFRS |
|
|
Ref |
|
|
IFRS |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
$ |
111,165,126 |
|
$ |
- |
|
|
|
|
$ |
111,165,126 |
|
| Marketable securities |
|
662,500 |
|
|
- |
|
|
|
|
|
662,500 |
|
| Accounts receivable |
|
185,733 |
|
|
- |
|
|
|
|
|
185,733 |
|
| Prepaid expenses |
|
378,492 |
|
|
- |
|
|
|
|
|
378,492 |
|
| Current assets related to discontinued operations |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
112,391,851 |
|
|
- |
|
|
|
|
|
112,391,851 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Property and equipment |
|
143,571 |
|
|
- |
|
|
|
|
|
143,571 |
|
| Exploration and evaluations assets |
|
80,169,668 |
|
|
(9,066,545 |
) |
|
d) |
|
|
71,103,123 |
|
| Long-term assets related to discontinued operations |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
$ |
192,705,090 |
|
$ |
(9,066,545 |
) |
|
|
|
$ |
183,638,545 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIENCY) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable and accrued liabilities |
$ |
4,037,428 |
|
$ |
- |
|
|
|
|
$ |
4,037,428 |
|
| Current liabilities of discontinued operations |
|
- |
|
|
- |
|
|
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
4,037,428 |
|
|
- |
|
|
|
|
|
4,037,428 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders' equity (deficiency) |
|
|
|
|
|
|
|
|
|
|
|
|
| Share capital |
|
215,544,180 |
|
|
- |
|
|
|
|
|
215,544,180 |
|
| Contributed surplus |
|
12,967,996 |
|
|
321,000 |
|
|
a) |
|
|
13,288,996 |
|
| Accumulated other comprehensive loss |
|
- |
|
|
(6,767,665 |
) |
|
d) |
|
|
(6,767,665 |
) |
| Deficit |
|
(39,844,514 |
) |
|
(2,619,880 |
) |
|
a) d) |
|
|
(42,464,394 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total shareholders’ equity (deficiency) |
|
188,667,662 |
|
|
(9,066,545 |
) |
|
|
|
|
179,601,117 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and shareholders’ equity (deficiency) |
$ |
192,705,090 |
|
$ |
(9,066,545 |
) |
|
|
|
$ |
183,638,545 |
|
44
Consolidated Statement of Operations and Comprehensive Loss
Reconciliation – May 31, 2011
| |
|
|
|
|
Effect of |
|
|
|
|
|
|
|
| |
|
Canadian |
|
|
Transition to |
|
|
|
|
|
|
|
| |
|
GAAP |
|
|
IFRS |
|
|
Ref |
|
|
IFRS |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Administration |
$ |
31,544 |
|
$ |
- |
|
|
|
|
$ |
31,544
|
|
| Charitable donations |
|
64,637 |
|
|
- |
|
|
|
|
|
64,637 |
|
| Consulting fees |
|
1,570,146 |
|
|
- |
|
|
|
|
|
1,570,146
|
|
| Depreciation |
|
42,375 |
|
|
- |
|
|
|
|
|
42,375 |
|
| Insurance |
|
215,228 |
|
|
- |
|
|
|
|
|
215,228
|
|
| Investor relations |
|
1,148,359 |
|
|
90,849 |
|
|
a) |
|
|
1,239,208 |
|
| Office and miscellaneous |
|
281,840 |
|
|
- |
|
|
|
|
|
281,840
|
|
| Professional fees |
|
667,405 |
|
|
(11,786 |
) |
|
a) |
|
|
655,619 |
|
| Property investigations |
|
2,557 |
|
|
- |
|
|
|
|
|
2,557 |
|
| Regulatory |
|
188,121 |
|
|
- |
|
|
|
|
|
188,121 |
|
| Rent |
|
167,697 |
|
|
- |
|
|
|
|
|
167,697
|
|
| Telephone |
|
49,688 |
|
|
- |
|
|
|
|
|
49,688 |
|
| Travel |
|
210,192 |
|
|
- |
|
|
|
|
|
210,192
|
|
| Wages
and benefits |
|
5,263,652 |
|
|
241,937 |
|
|
a) |
|
|
5,505,589 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before
other items |
|
(9,903,441 |
) |
|
(321,000 |
) |
|
|
|
|
(10,224,441 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other items |
|
|
|
|
|
|
|
|
|
|
|
|
| Gain on foreign exchange |
|
41,225 |
|
|
50,327 |
|
|
d) |
|
|
91,552
|
|
| Interest income |
|
675,146 |
|
|
- |
|
|
|
|
|
675,146 |
|
| Income from mineral property
earn-in |
|
311,312 |
|
|
- |
|
|
|
|
|
311,312
|
|
| Spin-out cost |
|
(593,754 |
) |
|
- |
|
|
|
|
|
(593,754 |
) |
| Unrealized gain on marketable securities |
|
182,500 |
|
|
- |
|
|
|
|
|
182,500 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
616,429 |
|
|
50,327 |
|
|
|
|
|
666,756 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from continuing operations |
|
(9,287,012 |
)
|
|
(270,673 |
)
|
|
|
|
|
(9,557,685 |
) |
| Loss from
discontinued operations |
|
(934,157 |
) |
|
- |
|
|
|
|
|
(934,157 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss for
the year |
|
(10,221,169 |
) |
|
(270,673 |
) |
|
|
|
|
(10,491,842 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
| Cumulative translation
adjustments – exploration and evaluation assets |
|
- |
|
|
(6,717,338 |
)
|
|
d) |
|
|
(6,717,338 |
) |
|
Cumulative translation adjustments – foreign subsidiaries |
|
- |
|
|
(50,327 |
) |
|
d) |
|
|
(50,327 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total other
comprehensive loss |
|
- |
|
|
(6,767,665 |
) |
|
|
|
|
(6,767,665 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive
loss for the year |
$ |
(10,221,169 |
) |
$ |
(7,038,338 |
) |
|
|
|
$ |
(17,259,507 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and fully diluted loss per share from
continuing operations |
$ |
(0.12 |
) |
$ |
- |
|
|
|
|
$ |
(0.12 |
) |
| Basic and fully diluted loss per share from
discontinued operations |
$ |
(0.01 |
) |
$ |
- |
|
|
|
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of shares outstanding |
|
77,550,644 |
|
|
- |
|
|
|
|
|
77,550,644 |
|
45
| Additional
Sources of Information |
Additional disclosures pertaining to the Company, including its
most recent Annual Information Form, financial statements, management
information circular, material change reports, press releases and other
information, are available on the SEDAR website at www.sedar.com or on the Company’s website at www.ithmines.com. Readers are urged to review these
materials, including the technical reports filed with respect to the Company’s
mineral properties.
46
