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UNITED STATES FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 For the period of June 22, 2005 - December 31, 2005 Commission File Number: 000-51570 SUTCLIFFE RESOURCES LTD. 420-625 Howe Street, Vancouver Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. x Form 20-F ¨
Form 40-F Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934. Yes ¨ No x If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b): 82- _________
SUBMITTED HEREWITH Exhibits SIGNATURES Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized. Press Release SR #09-05 December 30, 2005 PRIVATE PLACEMENT FINANCING COMPLETED
Sutcliffe Resources Ltd. (the Company)
announced today that it has completed the private placement announced on December
12, 2005 as follows: 2,444,000 flow-through common shares at a price of $0.40
per share for total gross proceeds of $977,600; and 437,500 units at a price of $0.40 per unit for total
gross proceeds of $175,000, each unit consisting of one common share and
one common share purchase warrant, each common share purchase warrant
entitling the holder thereof to acquire one common share at a price of
$0.60 per share for a period of two year from the closing of the private
placement. All securities issuable under the private placement are subject
to a four month hold period and are subject to restrictions on resale prior to
May 1, 2006. The funds raised will be used for exploration on the Companys
Harrison Lake and Beale Lake properties and for working capital purposes. In connection with the private placement, the Company paid a
Finders fee in the amount of $61,860 to Carl Jones, an arms length party. On behalf of the Board of Directors Laurence Stephenson Laurence Stephenson, Forward-looking statements - statements included in this
news release that are not historical facts may be considered "forward-looking
statements". All estimates and statements that describe the Company's
objectives, goals or future plans are forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties where actual
results could differ materially from those currently anticipated. The TSX Venture Exchange has not reviewed and does not
420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6 Press Release SR #08-05 December 22, 2005 MAJOR LAND ACQUISITION CONDITIONALLY Sutcliffe Resources Ltd. (the Company) has received
notification that the TSX Venture Exchange (the Exchange) has conditionally
accepted the Companys arms length proposal to acquire a 100% interest in 53
mining claims representing approximately 22,800 hectares surrounding the
Companys Beale Lake property. The proposed agreement calls for a cash payment
of $200,000, the issuance of 2,500,000 shares and is subject to a 2% net smelter
royalty. The Company has received drilling permits for 4,000 meters of
diamond drilling on its core Beale Lake claims and anticipates drilling to
commence by mid January, 2006. On behalf of the Board of Directors Laurence Stephenson Laurence Stephenson, 420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6 Press Release SR #07-05 December 12, 2005 PRIVATE PLACEMENT FINANCING Sutcliffe Resources Ltd. (the Company) announces a
Flow-through and non Flow-through private placement in an aggregate amount up to
$1,400,000. The Flow-through portion will consist of up to 3,000,000
flow-through common shares at $0.40 per share and the non Flow-through portion
will consist of up to 500,000 units at $0.40 per unit. Each unit will consist of
one common share and one share purchase warrant. Each share purchase warrant
will entitle the warrant holder to purchase an additional share at $0.60 per
share for a period of two years from closing. The funds raised will be used for exploration on the Companys
Harrison Lake and Beale Lake projects and for working capital purposes. Finders fees will be paid, where applicable, commensurate with
TSX Venture Exchange policies. On behalf of the Board of Directors Laurence Stephenson Laurence Stephenson, 420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6 Yours Truly Stacey McGlynn SUTCLIFFE RESOURCES LTD. INTERIM FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED
(Exploration Stage Company)
(Unaudited Prepared by Management)
To the Shareholders of Sutcliffe Resources Ltd. These interim financial statements for the third quarter ended
September 30, 2005 and 2004, comprised of the balance sheet and the statements
of operations and deficit as well as changes in cash flows, have been compiled
by management. These interim financial statements, along with the accompanying
notes, have been reviewed and approved by the members of the Companys audit
committee. In accordance with Canadian Securities Administrators National
Instrument 51-102, the Company discloses that these unaudited interim financial
statements have not been reviewed by the Companys auditors. SUTCLIFFE RESOURCES LTD. INTERIM BALANCE SHEET SEPTEMBER 30, 2005 (Unaudited Prepared by Management) (Exploration Stage Company) SUTCLIFFE RESOURCES LTD. (Exploration Stage Company) See accompanying notes to the interim financial statements
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Translation of registrant's name into English)
British Columbia, Canada V6C 2T6
(Address of principal executive offices)
Sutcliffe Resources Ltd.
(Registrant)
Date: February 17, 2006
By:
/s/ Laurence Stephenson
Laurence Stephenson
Title:
Chairman, President & CEO
(i)
(ii)
President
accept responsibility for the adequacy or accuracy of this release.
Tel.: 604.608.0223 • Fax:
604.608.0344 • North
America Toll-free: 1.877.233.2244
ACCEPTED BY TSX VENTURE EXCHANGE
President
Tel.: 604.608.0223 • Fax:
604.608.0344 • North
America Toll-free: 1.877.233.2244
President
Tel.: 604.608.0223 • Fax:
604.608.0344 • North
America Toll-free: 1.877.233.2244
Computershare Trust Company of Canada
510 Burrard Street, 3rd floor
Vancouver, BC V6C 3B9
Tel: 604.661.9400
Fax: 604.661.9401
December 8, 2005
Dear Sirs:
All applicable Exchanges and Commissions
Subject:
SUTCLIFFE RESOURCES LTD.
We advise the following with respect to the
upcoming Meeting of Shareholders for the subject Corporation:
1. Meeting Type
: Annual General Meeting
2. CUSIP/Class of Security entitled to receive
notification
: 86932E101/CA86932E1016/COMMON
3. CUSIP/Class of Security entitled to vote
: 86932E101/CA86932E1016/COMMON
4. Record Date for Notice
: 30/12/2005
5. Record date for Voting
: 30/12/2005
6. Beneficial Ownership determination date
: 30/12/2005
7. Meeting Date
: 30/01/2006
8. Meeting Location
: Vancouver, BC
Assistant Account Manager
Stock
transfer Department
Tel: 604.661.9400 Ext 4204
Fax: 604.661.9401
SEPTEMBER 30, 2005 AND 2004
(Presented in Canadian Dollars)
Vancouver, B,C.
November 28, 2005
MANAGEMENT
(Presented in Canadian Dollars)
(Unaudited)
(Audited)
Sep 30,2005
Dec 31,2004
$
$
ASSETS
CURRENT
Cash
466,466
50,248
Accounts receivable
48,509
14,438
Prepaid
expenses and deposits
324,182
50,000
839,157
114,686
MINERAL INTERESTS
(Note 3)
973,589
357,680
1,812,746
472,366
LIABILITIES
CURRENT
Accounts payable and accrued
liabilities
39,858
115,095
Loans
payable
-
336,843
39,858
451,938
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5)
7,884,173
5,753,710
CONTRIBUTED SURPLUS (Note 5)
226,230
122,500
DEFICIT
(6,337,515
)
(5,855,782
)
1,772,888
20,428
1,812,746
472,366
APPROVED BY THE DIRECTORS:
Laurence Stephenson
Glen Indra
Laurence Stephenson, Director
Glen Indra, Director
See accompanying notes to the interim financial statements
INTERIM STATEMENT OF
OPERATIONS AND DEFICIT
FOR THE THIRD QUARTER ENDED SEPTEMBER 30
(Unaudited Prepared by Management)
(Presented in Canadian Dollars)
Third Quarter ended
Year to date ended
Sep 30
Sep 30
Sep 30
Sep 30
2005
2004
2005
2004
$
$
$
$
GENERAL AND ADMINISTRATIVE EXPENSES
Automotive and travel
449
2,324
1,362
3,452
Bank charges
and interest
122
1,201
1,378
1,339
Consulting
27,000
-
43,308
-
Financing
fees
30,575
-
84,449
-
Interest on demand loans
9,155
-
54,927
-
Investor
relations and communications
18,564
-
18,888
-
Management fees
19,500
7,500
34,500
22,500
Office and
rent
3,743
2,093
16,460
3,309
Professional fees
36,652
10,602
77,651
10,602
Regulatory
and transfer agent fees
5,417
3,890
42,080
12,623
Stock-based compensation
108,834
-
108,834
-
Interest income
(1,918
)
-
(2,104
)
-
NET LOSS BEFORE THE FOLLOWING
258,093
27,610
481,733
53,825
Mineral interests abandoned
-
3,000
-
3,000
NET LOSS FOR THE PERIOD
258,093
30,610
481,733
56,825
DEFICIT, beginning of period
6,079,422
5,759,850
5,855,782
5,733,635
DEFICIT, end of
period
6,337,515
5,790,460
6,337,515
5,790,460
Loss per share
0.0118
0.0026
0.0310
0.0066
Weighted average number of shares
21,913,870
11,633,900
15,539,421
8,604,975
SUTCLIFFE RESOURCES LTD.
INTERIM STATEMENT OF
CHANGES IN CASH FLOWS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30
(Unaudited Prepared by Management)
(Exploration Stage Company)
(Presented in Canadian Dollars)
Third Quarter ended | Year to date ended | |||||||||||
Sep 30 | Sep 30 | Sep 30 | Sep 30 | |||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
$ | $ | $ | $ | |||||||||
OPERATING ACTIVITIES | ||||||||||||
Net Loss | (258,093 | ) | (30,610 | ) | (481,733 | ) | (56,825 | ) | ||||
Add non cash items: | ||||||||||||
Stock-based compensation: | 108,834 | - | 108,834 | - | ||||||||
Increase (Decrease) in non-cash working | ||||||||||||
capital items: | - | (16,585 | ) | - | 1,122,131 | |||||||
Accounts receivable | (33,688 | ) | - | (34,071 | ) | - | ||||||
Prepaid expenses | (188,182 | ) | - | (274,182 | ) | - | ||||||
Accounts payable and accrued liabilities | (192,624 | ) | - | (75,237 | ) | - | ||||||
(563,753 | ) | (47,195 | ) | (756,389 | ) | 1,065,306 | ||||||
FINANCING ACTIVITIES | ||||||||||||
Subscriptions payable | - | - | - | (1,000,710 | ) | |||||||
Issuance of shares net of issue costs | 44,056 | - | 2,125,359 | - | ||||||||
Loans payable | (191,844 | ) | 54,980 | (336,843 | ) | (20,020 | ) | |||||
(147,788 | ) | 54,980 | 1,788,516 | (1,020,730 | ) | |||||||
INVESTING ACTIVITIES | ||||||||||||
Mineral interests (Note 3) | (499,810 | ) | (32,496 | ) | (615,909 | ) | (88,044 | ) | ||||
(499,810 | ) | (32,496 | ) | (615,909 | ) | (88,044 | ) | |||||
INCREASE (DECREASE) | (1,211,351 | ) | (24,711 | ) | 416,218 | (43,468 | ) | |||||
CASH, beginning of period | 1,677,817 | 31,002 | 50,248 | 49,759 | ||||||||
CASH, end of period | 466,466 | 6,291 | 466,466 | 6,291 |
See accompanying notes to the interim financial statements
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(Exploration Stage Company)
(Presented in Canadian Dollars)
Note 1 |
NATURE OF OPERATIONS AND GOING CONCERN |
| |
The Company was incorporated in British Columbia on February 6, 1996. By Articles of Continuances effective June 3, 1996, the Company was continued in Ontario under the Business Corporation Act (Ontario). On November 4, 1996, the Company was continued in Alberta under the name Latin American Mining Investment Corporation. On February 18, 1997, the Company was extra-provincially registered in British Columbia. | |
| |
The Companys financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The continued operation of the Company is dependent, also, upon continued creditor support, the acquisition and discovery of economically recoverable mineral properties and reserves, confirmation of the Company's interest in underlying mineral claims, the ability of the Company to obtain necessary financing to complete property development and upon further profitable production. The Company is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful, without sufficient financing it would be unlikely for the Company to continue as a going concern. | |
| |
The officers and directors are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such person may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. | |
| |
Note 2 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| |
a) Foreign Currency Translation | |
| |
Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the period end exchange rate, non-monetary assets are translated at historical exchange rates and all income and expenses are translated at average exchange rates prevailing during the period. Foreign currency translation adjustments are included in income. | |
| |
b) Loss Per Share | |
| |
Loss per share has been calculated based on the weighted average number of shares outstanding. | |
| |
c) Fair Value of Financial Instruments | |
| |
The respective carrying value of certain on-balance sheet financial instruments approximate their fair values. These financial statements include cash, receivables, advances receivable, cheques issued in excess of cash, accounts payable and property obligations payable. | |
| |
Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Unless otherwise noted, fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. | |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE - 2 -
Note 2 |
SUMMARY OF SIGNIFICANT ACOUNTING POLICIES (continued) |
| |
d) Deferred Costs | |
| |
The company follows the practice of capitalizing all costs related to exploration projects, until such time as the project is put into commercial production, sold or abandoned. If commercial production commences, capitalized costs will be amortized on a unit-of-production basis. When mineral properties are abandoned, the related capitalized costs are expensed. | |
| |
e) Future Income Taxes | |
| |
The company recognizes income taxes using an asset and liability approach. Future income tax assets and liabilities are computed annually for differences between the financial statements and tax bases using enacted tax laws and rates applicable to the periods in which the differences are expressed to affect taxable income, and where there is relative certainty the losses will be realized. | |
| |
f) Use of Estimates | |
| |
The preparation of financial statements in accordance with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates. | |
| |
g) Stock-based Compensation | |
| |
The company recognizes and values stock-based compensation on the Black-Scholes model of option pricing, as recommended by the CICA Handbook Section 3870. | |
| |
Note 3 |
MINERAL PROPERTIES |
| |
a) Beale Lake Property, Liard Mining District, British Columbia | |
| |
By a Letter of Intent dated February 5, 2003 and amended by addendum on 15 September 2004, the Company received an option to acquire a 100% undivided interest in 2 mineral claims known as the Beale Lake property located in the Liard District of British Columbia, subject to a 2 1/2% net smelter return royalty payable to the vendor, and for the following payments and share issuances: | |
Date | Payment | Share Issuance | |
On signing Letter of Intent | $ 7,500 (paid) | nil | |
September 30, 2003 | $15,000 (paid) | nil | |
June 30, 2004 | $17,500 (paid) | nil | |
Closing of Prospectus Offering | nil | 150,000 common shares (issued) | |
June 30, 2005 | $30,000 (paid) | 100,000 (issued) | |
June 30, 2006 | $50,000 | 100,000 |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE 3
Note 3 |
MINERAL PROPERTIES (continued) |
| |
An exploration program totaling $1,550,000 is to be completed as follows: |
Date | Expenditure | Expended todate | |
October 31, 2005 | $300,000 | $ 300,000 | |
October 31, 2006 | $350,000 | $ 12,150 | |
October 31, 2007 | $400,000 | ||
October 31, 2008 | $500,000 |
A bonus of 650,000 common shares are payable to the vendor in the event that a positive feasibility study is completed and/or commercial production is attained. The Company, upon the payment of $1,000,000, also has the option to buyout 1% of the net smelter return royalty (40% of the total net smelter return royalty).
b) Harrison Property, New Westminster Mining District, British Columbia
By a Sale, Purchase and Assignment Agreement dated March 7, 2003 and amended on November 5, 2004, the company received the exclusive right to purchase a 50% interest in 92 contiguous mineral claims comprising 906 claim units, situated in the New Westminster Mining District near Harrison Lake, British Columbia, subject to a 2% net smelter royalty as well as other royalties to the vendor. The terms required an initial payment of $5,000 by September 5, 2003 (paid), additional payment of $20,000 by November 30, 2004 (paid), the issuance of 200,000 common shares by March 15, 2005 (issued) and a minimum work program of $300,000 plus filing fees for assessment purposes to be completed by December 31, 2005.
c) Mineral Interest expenditure breakdown:
Beale Lake $ | Harrison $ | Total $ | ||||||||
Balance, December 31, 2004 | 112,673 | 245,007 | 357,680 | |||||||
Property Acquisition Costs (cash) | 51,000 | - | 51,000 | |||||||
Property Acquisition Costs (shares) | 37,500 | 30,000 | 67,500 | |||||||
Assays and Reports | 11,931 | 1,249 | 13,180 | |||||||
Consulting and Engineering | 12,891 | 18,608 | 31,499 | |||||||
Equipment Rental and Supplies | 82,402 | 107,475 | 189,877 | |||||||
Field Personnel | 70,221 | 81,017 | 151,238 | |||||||
Filing Fees | 2,363 | - | 2,363 | |||||||
Geophysical Survey | 30,150 | 39,120 | 69,270 | |||||||
Mobilization/Demobilization | 29,519 | 10,463 | 39,982 | |||||||
Net Mineral Interest Costs for the Period | 327,977 | 287,932 | 615,909 | |||||||
Balance, September 30, 2005 | 440,650 | 532,939 | 973,589 |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE 4
Note 4 |
LOANS PAYABLE |
| |
The loans payable are unsecured amounts owing to unrelated parties with variable interest rates and are due on demand. | |
Note 5 | SHARE CAPITAL |
||
a) Authorized
unlimited number of common shares without nominal or par value
|
|||
b) Issued
22,010,125 common shares as follows: |
|||
# Shares | $ | ||
Balance, December
31, 2004 |
11,633,900 | 5,753,710 | |
Issued pursuant to Initial Public Offering (net of issue costs)
|
9,700,000 | 2,001,303 | |
Issued for cash, exercise of options |
50,000 | 12,500 | |
Issued for cash, exercise of warrants |
176,225 | 44,056 | |
Issued pursuant to property agreements |
450,000 | 67,500 | |
Reclassification of contributed surplus due to exercise of |
- | 5,104 | |
share purchase options |
|||
Balance, September
30, 2005 |
22,010,125 | 7,884,173 | |
c) Shares Held In Escrow |
A total of 2,100,000 common shares issued at nominal cost to the directors of the Company and, an additional 1,572,000 common shares beneficially owned, directly or indirectly, by directors and officers are subject to escrow agreements. As of September 30, 2005, 367,200 shares of the total 3,672,000 shares have been released from escrow and 3,304,800 shares remain in escrow.
d) Stock Options
The following share purchase options are outstanding:
Date of Grant |
Price |
Balance Dec. 31, 2004 |
Granted |
Exercised |
Balance Sep. 30, 2005 |
Expiration date |
Dec 31, 2003 | $0.25 | 1,200,000 | - | 50,000 | 1,150,000 | Dec 30, 2008 |
July 11, 2005 | $0.25 | - | 3,200,000 | - | 3,200,000 | July 11, 2010 |
Total | 1,200,000 | 3,200,000 | 50,000 | 4,350,000 |
The Company accounts for its stock option plan under the fair value method and uses the Black-Scholes Model for calculating the fair value of the options based on the following; |
- Risk-free interest rate | 5% | |
- Expected life of options | 5 years | |
- Expected volatility | 30% |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE 5
Note 5 | SHARE CAPITAL (continued) |
Contributed Surplus |
Sep 30, | Dec 31, | ||||||
2005 $ | 2004 $ | ||||||
Balance beginning | 122,500 | 122,500 | |||||
• Stock options granted and vested | 108,834 | - | |||||
• Stock options exercised | (5,104 | ) | - | ||||
103,730 | - | ||||||
Balance ending | 226,230 | 122,500 |
e) Warrants
Share purchase warrants outstanding:
Date of Financing |
Price |
Granted |
Exercised |
Expired |
Balance Sep 30, 2005 |
Expiration
date |
Mar 31, 2004 | $0.25 | 6,771,400 | 167,000 | - | 6,604,400 | Mar 31, 2006 |
Jun 21, 2005 | $0.35 | 4,850,000 | - | - | 4,850,000 | Jun 21, 2007 |
Jun 21, 2005 | $0.25 | 1,104,000 | 9,225 | - | 1,094,775 | Jun 21, 2007 |
Total | 12,725,400 | 176,225 | - | 12,549,175 |
f) Flow-through Shares
As part of the initial public offering, the Company issued 3,000,000 flow-through shares to finance some of its exploration activities. The Company will renounce the tax deductions arising from these flow-through expenditures to the flow-through subscribers.
Note 6 |
INCOME TAXES |
The Company has non-capital income tax losses, which may be applied against future taxable income. The potential income tax benefits arising from these losses carry forward and expire between 2005 and 2009 and have not been reflected as future income tax assets on these financial statements. | |
Note 7 |
RELATED PARTY TRANSACTIONS |
For the year to date ended September 30, 2005, the Company paid $34,500 for management services to a company controlled by a director. | |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE 6
Note 8 | SUBSEQUENT EVENTS |
In November, 2005, the Company completed a purchase agreement with 606896 B.C. Ltd. to acquire the Bloom 1-10 mineral claims, located west of and adjoining the Harrison Lake Massive Sulphide Project, for cash payment of $40,000, the issuance of 500,000 common shares and a 2% Net Smelter Return (NSR). | |
| |
The Company has also signed a letter agreement to acquire a 100% interest in 53 mining claims totaling approximately 22,800 hectares that encircle the current Beale Lake property. The purchase agreement requires a cash payment of $200,000, the issuance of 2,500,000 shares and is subject to a 2% NSR. | |
Note 9 | UNITED STATES ACCOUNTING PRINCIPLES |
These financial statements have been prepared in accordance with generally accepted accounting principles in Canada (CDN GAAP) which, in these financial statements, conform in all material respects with those in the United States (US GAAP), except as follows: | |
a) |
Exploration Expenditures | |
| ||
Under CDN GAAP, exploration expenditures are capitalized until the property is sold or abandoned. If developed, the deferred expenditures are amortized over the expected benefit period. There can be no assurance of the commencement of operations. US GAAP requires that exploration expenditures be expensed as incurred until it is determined that commercially viable operations exist and the expenditures then incurred are recoverable. | ||
| ||
b) |
Flow-through Shares and Future Income Tax Recovery | |
| ||
Under Canadian GAAP flow-through shares are recorded at the value of compensation received less an amount equal to future income tax liability resulting from the related renunciation of qualified exploration expenditures as a reduction in share capital. The Company also recognizes in operations the realization of future income tax benefits of previously unrecorded future income tax assets on the date of renouncement of the expenditures to the flow-through share investors. Under US GAAP flow-through shares have a carrying value equal to that of non flow-through shares and the difference between the fair value of the shares and the value of compensation received is reported as a recovery of deferred tax benefit on the statement of operations. As the value of the compensation received for flow-through shares issued during the year was equal to the fair value of non flow-through shares on the date issued, no recovery of deferred tax benefit is required for US GAAP purposes. |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE 7
NOTE 9 | UNITED STATES ACCOUNTING PRINCIPLES (continued) | |
c) | Comprehensive Income | |
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Under US GAAP, SFAS No. 130 requires that companies report comprehensive income as a measure of overall performance. Comprehensive income includes all changes in equity during a year except those resulting from investments by owners and distribution to owners. There is no similar concept under Canadian GAAP. The Company has determined that it had no comprehensive income other than the loss in any of the years presented. |
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d) | Interest expense on related party debt |
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Under US GAAP, in the absence of an established interest rate, the present value of the loan is determined by discounting the loan using an imputed rate of interest. The imputed interest rate used is one that approximates the rate that an independent borrower and lender would have negotiated in a similar transaction. Any difference between the face amount of the loan and its present value is accounted for as a discount or premium and amortized over the term of the loan. The Company had no interest expense on related party debt. |
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e) | Escrow Shares |
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Under CDN GAAP shares issued with escrow restrictions are recorded at their issued price and are not revalued upon release from escrow. Under US GAAP escrow shares which are released upon the Company meeting certain criteria (performance-based) are considered to be contingently issuable. These shares are excluded from the weighted average shares calculation and the difference between the fair market value of the shares at the time of their release from escrow and the shares original issue price (being the market price at that time) is accounted for as a compensation expense and share capital at the time shares are released from escrow. The release of the Companys escrow shares is not performance-based and therefore no adjustments have been made to the calculation of loss per share. |
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f) | The following summarizes the balance sheet items with material variations under US GAAP: |
September 30 | December 31 | ||||||
2005 $ | 2004 $ | ||||||
Share capital | 7,884,173 | 5,753,710 | |||||
Additional paid-in capital | 226,230 | 122,500 | |||||
Deficit | (7,311,104 | ) | (6,213,462 | ) |
SUTCLIFFE RESOURCES LTD.
NOTES TO THE INTERIM
FINANCIAL STATEMENTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2005
AND 2004
(Unaudited Prepared by Management)
(An Exploration Stage Company)
(Presented in Canadian
Dollars)
PAGE 8
NOTE 9 | UNITED STATES ACCOUNTING PRINCIPLES (continued) |
g) |
The following table summarizes the effect on net loss after considering the US GAAP adjustments: |
Nine months ended | ||||||
September 30 | September 30 | |||||
2005 $ | 2004 $ | |||||
Net loss under CDN GAAP | (481,733 | ) | (53,825 | ) | ||
US GAAP material adjustments: | ||||||
• Resource property expenditures | (497,409 | ) | (60,544 | ) | ||
• Shares for resource property | (67,500 | ) | - | |||
• Cash payments for resource property | (51,000 | ) | (27,500 | ) | ||
Net Loss under US GAAP | (1,097,642 | ) | (141,869 | ) | ||
Loss per share under US GAAP | (0.0706 | ) | (0.0165 | ) |
h) |
The following table summarizes the effect on shareholders equity (deficiency) after considering the US GAAP adjustments: |
Share | Additional | Accumulated | Total Shareholders | ||||||
Capital | paid-in | Deficit | equity (Deficiency) | ||||||
$ | Capital $ | $ | $ | ||||||
Balance December 31, 2004 | 5,753,710 | 122,500 | (6,213,462 | ) | (337,252 | ) | |||
Share capital issued under CDN GAAP | 2,125,359 | - | - | 2,125,359 | |||||
Contributed surplus under CDN GAAP | - | 108,834 | - | 108,834 | |||||
Reduction in contributed surplus due to | |||||||||
exercise of stock options under CDN | |||||||||
GAAP | 5,104 | (5,104 | ) | - | - | ||||
Net loss under CDN GAAP | - | - | (481,733 | ) | (481,733 | ) | |||
US GAAP material adjustments: | |||||||||
• Resource property costs expensed | - | - | (615,909 | ) | (615,909 | ) | |||
Balance September 30, 2005 | 7,884,173 | 226,230 | (7,311,104 | ) | 799,299 |
FORM 52-109FT2
CERTIFICATION OF INTERIM FILINGS
I, Laurence Stephenson, Chief Executive Officer, certify that:
1. |
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings) of Sutcliffe Resources Ltd. (the Issuer) for the interim period ending September 30, 2005; |
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2. |
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; |
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3. |
Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings. |
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4. |
The Issuers other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Issuer, and we have: |
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(a) |
designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; |
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(b) |
designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Issuers GAAP; |
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(c) |
evaluated the effectiveness of the Issuers disclosure controls and procedures as of the end of the period covered by the interim filings and have caused the Issuer to disclose in the interim MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the interim filings based on such evaluation. |
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5. |
I have caused the Issuer to disclose in the interim MD&A any change in the Issuers internal control over financial reporting that occurred during the Issuers most recent interim period that has materially affected, or is reasonably likely to materially affect, the Issuers internal control over financial reporting. |
Date: November 28, 2005 | |
Laurence Stephenson | |
Chief Executive Officer |
FORM 52-109FT2
CERTIFICATION OF INTERIM FILINGS
I, Susan Wong, Chief Financial Officer, certify that:
1. |
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings) of Sutcliffe Resources Ltd. (the Issuer) for the interim period ending September 30, 2005; | |
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2. |
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; | |
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3. |
Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings. | |
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4. |
The Issuers other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Issuer, and we have: | |
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(a) |
designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; | |
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(b) |
designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Issuers GAAP; | |
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(c) |
evaluated the effectiveness of the Issuers disclosure controls and procedures as of the end of the period covered by the interim filings and have caused the Issuer to disclose in the interim MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the interim filings based on such evaluation. | |
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5. |
I have caused the Issuer to disclose in the interim MD&A any change in the Issuers internal control over financial reporting that occurred during the Issuers most recent interim period that has materially affected, or is reasonably likely to materially affect, the Issuers internal control over financial reporting. |
Date: November 28, 2005 | |
Susan Wong | |
Chief Financial Officer |
SUTCLIFFE RESOURCES LTD.
Managements Discussion & Analysis
For the third quarter
ended September 30, 2005
Form 51-102F1 as at November 28, 2005
DESCRIPTION OF BUSINESS
The Company is in the business of acquiring and developing mineral exploration projects. The Company has interests in the Harrison Lake nickel-copper and precious metal project in southwestern British Columbia and in the Beale Lake gold property located in northern British Columbia.
The Harrison Lake Project is a belt of ultramafic and metavolcanics and metasediments which extend from the site of the former B.C. Nickel Mine, 7 kilometres north of Hope, B.C., over 60 kilometres along the east side of Harrison Lake. The Company had previously identified 15 high priority sulphide related Airborne ElectroMagnetic (AEM) targets. Field crews were on the property preparing grids for detailed ground geophysical surveying to assist in selecting drill hole locations. Two grids were prepared at the north end of a 4.3 kilometre long AEM target and another highly prospective AEM target to the northeast. A recent property investigation revealed a wide zone of gossanous sulphide material associated with the long AEM target and sulphide bearing boulders on the target immediately to the northeast.
The Beale Lake Project, 75 kilometers northeast of Dease Lake, B.C., is a sheeted stockwork quartz-sulphide-scheelite vein and siliceous replacement mineralization system that has characteristics of both the Alaska Fort Knox and Pogo intrusion related gold deposits. Field crews have prepared the Beale project grounds for an Induced Polarization (IP) survey which is designed to follow up on high grade gold samples as reported on by G.E. Nicholson, P.Geo. in his November 2004 report. The data from the IP 3D array survey and subsequent detailed geological mapping and geochemical sampling will be used to define drill target locations.
OPERATIONS AND EXPENDITURES
During the third quarter ended September 30, 2005, field programs for both the Beale Lake and Harrison Lake projects were initiated. The Harrison Lake program involved geophysical surveys using University of Toronto Electro-Magnetics (UTEM) conducted on 4 of the 15 high priority sulphide related AEM targets that were identified in the 2004 survey by Aeroquest of Toronto, Ontario. These surveys included a 1.2 km portion of the 4.3 km AEM target and established the dip and depth character of the anomalies allowing the identification of potential drill target sites. The Company is in the process of permitting for a proposed 10 hole, 1500 metre diamond drilling program to commence as soon as weather conditions and water availability allows. The Company also intends to continue airborne MAG and EM geophysical surveying over the balance of the northwestern section of its property. To secure the balance of favourable geology related to this area, the Company has negotiated to acquire a 100% interest in approximately 1,000 additional hectares on the western portion of its claim boundary.
A $250,000 ground IP geophysical survey was completed over the Beale Lake property, and the resulting data confirms results of previous detailed rock and soil geochemical surveys. Large zones of strong chargeability were directly correlative with delineated multi-element gold, silver and base metal soil anomalies and the chargeability is flanked by strong resistivity. The main anomaly measures approximately 400m by 1400m and is open to the south with a second anomaly measuring approximately 350m by 700m and a third of approximately 200m by 650m. The Company is applying for a 24 hole, 4,000 metre diamond drilling permit and will commence the drilling program as soon as the permit is received. The Company has negotiated an acquisition of 53 claims totaling approximately 22,800 hectares that encircle the present Beale Lake property.
Page 2
PROPOSED AND ACTUAL EXPENDITURES
The proposed initial phase work program and associated costs as set out in the Companys prospectus dated May 27, 2005 and the actual expenditures incurred to September 30, 2005 are as follows:
Work Program | Projected Cost | Actual Expenditure | ||||||||||
Beale L. | Harrison L. | Beale L. | Harrison L. | |||||||||
Assays and Reports | $ | 10,000 | $ | 12,000 | $ | 9,908 | $ | 949 | ||||
Consulting and Engineering | 20,000 | 26,500 | 12,891 | 18,608 | ||||||||
Diamond Drilling | 150,000 | 180,000 | - | - | ||||||||
Equipment Rental and Supplies | 45,000 | 22,500 | 82,402 | 101,902 | ||||||||
Field Personnel | 30,000 | 30,000 | 70,221 | 78,497 | ||||||||
Filing Fees | - | - | 2,363 | - | ||||||||
Geophysical Surveying | 30,000 | 32,500 | 30,150 | 30,937 | ||||||||
Mobilization and Demobilization | 15,000 | 26,500 | 29,519 | 10,463 | ||||||||
Total cost for initial stage (Actual | ||||||||||||
expenditures incurred to Sept. 30, 2005) | $ | 300,000 | $ | 330,000 | $ | 237,454 | $ | 241,356 |
The actual expenditures have generally followed the projected cost except for diamond drilling which has been delayed due to a late start and inclement weather conditions, and equipment rental and supplies and field personnel, both of which have exceeded the projected cost.
USE OF PROCEEDS
The gross proceeds, after deduction of the agents commission, that was derived from the IPO offering amounted to $2,116,000. After allowing for a working capital deficiency of $337,252 as of December 31, 2004, the principal purposes for which the gross proceeds of the IPO offering were utilized during the nine month period ending September 30, 2005 compared to the uses budgeted in the IPO offering are as follows:
Budgeted as per IPO | Actual Expenditures | |||||
(to Sept. 30, 2005) | ||||||
To pay the costs of the Offering | $ | 85,000 | $ | 114,697 | ||
To pay the cost of Stage 1 of the Harrison Lake | 330,000 | 241,356 | ||||
mineral exploration program | ||||||
To pay the cost of Stage 1 of the Beale Lake | 235,000 | 237,454 | ||||
mineral exploration program | ||||||
To pay Administration costs for 12 months | 198,000 | 372,899 | ||||
Unallocated working capital | 930,748 | 812,342 |
The use of proceeds for the nine month period ending September 30, 2005 varied in a number of categories from the budgeted usage as indicated in the IPO offering document. The costs of the offering was greater than expected and the Stage 1 exploration programs for both Harrison Lake and Beale Lake do not include diamond drilling which will come later. Also, administration expenses have been higher than budgeted as the Company encounters higher costs in its corporate development.
Page 3
SUMMARY OF QUARTERLY RESULTS
2005 | 2004 | 2003 | ||||||||||||||
Sep 30 $ | Jun 30 $ | Mar 31 $ | Dec 31 $ | Sep 30 $ | Jun 30 $ | Mar 31 $ | Dec 31 $ | |||||||||
Total revenue | nil | nil | nil | nil | nil | nil | nil | nil | ||||||||
Gen & Adm Exp. | 149,259 | 177,188 | 46,452 | 16,806 | 27,610 | 10,688 | 15,527 | 42,159 | ||||||||
Stock-based Comp | 108,834 | nil | nil | nil | nil | nil | nil | 122,500 | ||||||||
Loss | (258,093 | ) | (177,188 | ) | (46,452 | ) | (16,806 | ) | (27,610 | ) | (10,688 | ) | (15,527 | ) | (164,659 | ) |
Net Loss | (258,093 | ) | (177,188 | ) | (46,452 | ) | (49,018 | ) | (30,610 | ) | (10,688 | ) | (15,527 | ) | (164,659 | ) |
Loss/share | (0.0118 | ) | (0.0137 | ) | (0.0040 | ) | (0.0042 | ) | (0.0026 | ) | (0.0009 | ) | (0.0062 | ) | (0.0683 | ) |
Def Min Prop Costs | 499,810 | 72,588 | 43,511 | 140,051 | 32,496 | 37,098 | 18,450 | 60,560 | ||||||||
Total Assets | 1,812,746 | 2,302,417 | 490,281 | 472,366 | 316,812 | 337,192 | 268,251 | 263,838 |
GENERAL AND ADMINISTRATIVE EXPENSES | ||||||
3 months ended | 3 months ended | |||||
Sep 30, 2005 | Sep 30, 2004 | |||||
Professional fees | $ | 36,652 | $ | 10,602 | ||
Consulting | 27,000 | - | ||||
Management and administration fees | 19,500 | 7,500 | ||||
Financing fees | 30,575 | - | ||||
Office, rent & supplies | 3,743 | 2,093 | ||||
Investor relations and communications | 18,564 | - | ||||
Regulatory and transfer agent fees | 5,417 | 3,890 | ||||
Automotive and travel | 449 | 2,324 | ||||
Interest on demand loans | 9,155 | - | ||||
Bank charges and interest (net) | (1,796 | ) | 1,201 | |||
Total general and administrative expenses | ||||||
for the third quarter | $ | 149,259 | $ | 27,610 |
The administrative expenditures made during the quarter were indicative of the Companys activities after completion of its public offering. The categories of professional fees, consulting, financing fees, investor relations and communications and interest on demand loans are all much higher compared to the previous fiscal period due to the ancillary costs of the prospectus financing and the costs involved in corporate developments such as preparation of materials for filing a 20-F document with the U.S. Securities and Exchange Commission.
RELATED PARTY TRANSACTIONS
For the third quarter ended September 30, 2005, management fees charged by a company controlled by a director totaled $19,500.
Page 4
LIQUIDITY AND SOLVENCY
The Company had working capital for the third quarter ending September 30, 2005 of $799,299 compared to a deficiency of $337,252 for the year ended December 31, 2004. The continued operations of the Company are dependent upon its ability to raise adequate financing. To this end the Company will be seeking future funding through private placement offerings as well as the exercise of outstanding share purchase warrants to maintain adequate working capital and to raise funds for exploration expenditures.
Sep 30, 2005 | Sep 30, 2004 | |||||
Working Capital (Deficiency) | $ | 799,299 | $ | (171,879 | ) | |
Deficit | $ | (6,337,515 | ) | $ | (5,790,460 | ) |
There have been no changes in accounting policies and the Company has made no off-balance sheet arrangements and none are contemplated in the future. The Company does not utilize financial or other instruments in its operations.
CAPITALIZED EXPLORATION AND DEVELOPMENT COSTS | |||||||||
Beale Lake $ | Harrison $ | Total $ | |||||||
Balance, June 30, 2005 | 182,196 | 291,583 | 473,779 | ||||||
Property Acquisition Costs (cash) | 21,000 | - | 21,000 | ||||||
Assays and Reports | 9,908 | 949 | 10,857 | ||||||
Consulting and Engineering | 12,891 | 18,608 | 31,499 | ||||||
Equipment Rental and Supplies | 82,402 | 101,902 | 184,304 | ||||||
Field Personnel | 70,221 | 78,497 | 148,718 | ||||||
Filing Fees | 2,363 | - | 2,363 | ||||||
Geophysical Survey | 30,150 | 30,937 | 61,087 | ||||||
Mobilization/Demobilization | 29,519 | 10,463 | 39,982 | ||||||
Mineral Interest Costs for the Three Month Period | 258,454 | 241,356 | 499,810 | ||||||
Balance, September 30, 2005 | 440,650 | 532,939 | 973,589 |
DISCLOSURE OF OUTSTANDING SHARE DATA as of November 28, 2005
Share Capital Authorized unlimited common shares
Share Capital Issued 22,510,125
Shares held in escrow
- - 3,304,800
Options Outstanding
- - 4,350,000 exercisable for 4,350,000 common shares at
$0.25 per share
Warrants Outstanding
- - 6,604,400 warrants exercisable for 6,604,400 common
shares at $0.25 per share
- - 4,850,000 warrants exercisable for 4,850,000 common
shares at $0.35 per share
- - 1,094,775 agents warrants exercisable for 1,094,775
common shares at $0.25 per share
Press Release SR #06-05
IR Steve Johnston
Toll Free 1-877-233-2244
steve@sutclifferesources.com
September 30, 2005
MAJOR LAND ACQUISITION
Several Mineral Targets Identified
Sutcliffe Resources Ltd. has signed a letter agreement with the Beale Lake Syndicate pursuant to which the Company will acquire a 100% interest in 53 mining claims representing approximately 22,800 hectares surrounding its Beale Lake property. The agreement calls for a cash payment of $200,000 and the issuance of 2,500,000 shares, and is subject to a 2% NSR. A finders fee of 300,000 shares is payable to Yorkville Capital.
The successful exploration program to date (New Release #05-05, September 19, 2005) at Beale Lake has demonstrated that the area is a potential host for intrusion related precious metal mineralization. A BC Geological Survey publication, Geological Fieldwork 2001, Paper 2002-1 by Joanne Nelson M.Sc.P.Geo documents the mineral potential in the area covered by this acquisition:
The Beale Lake map
area is host to a diverse set of mineral occurrences and exploration
possibilities, many of them documented here for the first time.
Types of deposits represented include the following: |
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1. | Intrusion-related gold-silver-polymetallic veins. |
2. | Epithermal gold-silver-polymetallic veins. |
3. | Porphyry-style copper mineralization associated with zones of Intrusive breccias and silicification in the Nizi pluton. |
In addition, geological evidence supports the possible occurrence of the following deposit types in the area: |
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1. | Syngenetic massive Sulphide occurrences associated with pyrite-garnet-bearing (exhalative?) metachert in lower Dorsey assemblage. |
2. | Syngenetic massive Sulphide occurrences associated with felsic volcanics and pyrite-garnet-bearing (exhalative?) metachert in upper Dorsey assemblage. |
3. | Mesothermal gold-quartz veins associated with quartz- Carbonate-mariposite alteration in Slide Mountain ultramafic rocks. |
420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6
Tel.: 604.608.0223 • Fax: 604.608.0344 • North America Toll-free:
1.877.233.2244
Numerous showings are located in the newly acquired claims including the 1000 meter outcrop and sub-outcrop YURSO vein with assays of grab samples of 1142 ppb gold and 1842 grams per tonne silver; also the Gunsight showing had chalcopyrite rich boulders that returned best values of 27 grams per tonne silver and 2.79% copper and a quartz vein that returned a 20 centimeter sample of .09 grams per tonne gold, 110 grams per tonne silver, 8.36% lead and 3.09% zinc (As reported in BCGS Paper 2002-1 by Joanne Nelson M.Sc.P.Geo.)
The 2006 exploration program on the new claims will commence with the flying of a helicopter airborne magnetic, electromagnetic and radiometric geophysical survey to define potential target areas and to establish signature patterns for follow up.
Sutcliffe is presently waiting for drilling permits on its core Beale Lake claims. Application was made for 4000 meters in 24 drillhole locations. This initial drilling is anticipated to be completed in 2005.
On behalf of the board of directors,
Laurence Stephenson
Laurence Stephenson P.Eng, MBA
President
For further information please visit our website www.sutclifferesources.com or contact L. Stephenson at 604-608-0223 or Steve Johnston at toll free 1-877-233-2244.
The TSX Venture Exchange has neither approved nor disapproved of the information contained herein. The statements that are not historical facts are forward-looking statements involving known and unknown risk factors and uncertainties which may cause actual results to vary considerably from these statements.
420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6
Tel.: 604.608.0223 • Fax: 604.608.0344 • North America Toll-free:
1.877.233.2244
Press Release SR #05-05
September 19, 2005
Beale Lake Update
I.P. Geophysical Survey Confirms Large Anomalous
Zones Coincident with Soil
and Rock Geochemical
Surveys
Sutcliffe Resources Ltd. (TSX.V:SR) has recently completed a $250,000 ground I.P. geophysical survey over its Beale Lake property, confirming the results of detailed rock and soil geochemical surveys. Large zones of strong chargeability were directly correlative with delineated multi-element gold, silver and base metal soil anomalies flanked by strong resistivity. The main anomaly measures approximately 400m × 1400m and is open to the south, the second anomaly measures approximately 350m × 700m while the third is approximately 200m × 650m. Numerous other chargeability highs occur, clustered around these principal areas.
At Beale Lake the association of gold & silver with arsenic, tungsten and bismuth suggest an intrusive related stockwork of gold-silver mineralization similar to Fort Knox & Pogo, in east-central Alaska, which belong to a class of intrusion related gold deposits recognized worldwide. Sheeted, stockwork, and replacement styles of auriferous quartz-arsenopyrite-pyrite-scheelite mineralization at Beale Lake imply a relatively deep, intrusion proximal geological setting. Results to date suggest the possibility of near surface emplacement.
Sutcliffe is applying for a 24 hole, 4000 metre diamond drilling permit and will commence the drilling program as soon as permits are received.
The company is evaluating a proposal to acquire claims that encircle the current Beale Lake property which exhibit several mineral and geological occurrences with strong similarities to the targets defined for drilling.
For further information please visit our website www.sutclifferesources.com or contact L. Stephenson at 604-608-0223.
Laurence Stephenson
Laurence Stephenson, President
Sutcliffe Resources Ltd.
Vancouver, B.C.
420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6
Tel.: 604.608.0223 • Fax:
604.608.0344 • North
America Toll-free: 1.877.233.2244
Press Release SR #04-05
September 16, 2005
Harrison Lake Massive Sulphide Update
Sutcliffe Resources Ltd. (TSX.V:SR) announces that having recently completed UTEM ground geophysics over 4 of its 15 identified airborne EM anomalies, it is proceeding with permitting for a proposed 10 hole, 1500 metre diamond drilling program targeting a portion of a 4.3 km long anomaly. This geophysical anomaly corresponds favourably with earlier completed geology and geochemistry and is in the north-western portion of the Harrison Lake property. Geophysical surveying and mapping suggests either parallel anomalous geological belts exist or the system is exhibiting bimodal features. The areas of interest continue northwest outside the original airborne geophysical surveying.
Upon receipt of drilling permits, Sutcliffe will prepare all drillsites for either a fall or spring drilling program subject to weather conditions and availability of water. Also, the Company intends to continue airborne MAG and EM geophysical surveying over the balance of the north-western corner of its claims.
To secure the balance of favourable geology related to this area, the company has negotiated with 606896 BC Ltd. to acquire a 100% interest in approximately 1000 additional hectares on the western claim boundary. The purchase price is $40,000, the issuance of 500,000 shares, and a 2% N.S.R. The shares will be subject to TSX-Venture exchange policies.
For further information please visit our website www.sutclifferesources.com or contact L. Stephenson at 604-608-0223.
Laurence Stephenson, President
Sutcliffe Resources Ltd.
Vancouver, B.C.
This communication to shareholders and the public contains certain forward-looking statements. Actual results may differ materially from those indicated by such statements. All statements, other than statements of historical fact, included herein, including, without limitations statements regarding future production, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
420-625 Howe Street, Vancouver, British Columbia CANADA V6C
2T6
Tel.: 604.608.0223 • Fax:
604.608.0344 • North
America Toll-free: 1.877.233.2244
SUTCLIFFE RESOURCES LTD. | |
INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED | |
JUNE 30, 2005 and JUNE 30, 2004 | |
(Unaudited Prepared by Management) | |
To the Shareholders of Sutcliffe Resources Ltd.
These financial statements for the second quarter ended June 30, 2005, comprised of the balance sheet and the statements of operations and deficit as well as changes in cash flows, have been compiled by management. These financial statements, along with the accompanying notes have been reviewed and approved by the members of the Companys audit committee. In accordance with Canadian Securities Administrators National Instrument 51-102, the Company discloses that these unaudited financial statements have not been reviewed by the Companys auditors.
Vancouver, B.C. | |
22 August 2005 | MANAGEMENT |
SUTCLIFFE RESOURCES LTD.
INTERIM BALANCE SHEET
JUNE
30, 2005
(Unaudited Prepared by Management)
(Unaudited) | (Audited) | |||||
June 30, 2005 $ | Dec 31, 2004 $ | |||||
ASSETS | ||||||
CURRENT | ||||||
Cash | 1,677,817 | 50,248 | ||||
Accounts receivable | 14,821 | 14,438 | ||||
Prepaid expenses | 136,000 | 50,000 | ||||
1,828,638 | 114,686 | |||||
MINERAL INTERESTS (Note 3) | 473,779 | 357,680 | ||||
2,302,417 | 472,366 | |||||
LIABILITIES | ||||||
CURRENT | ||||||
Accounts payable and accrued liabilities | 232,482 | 115,095 | ||||
Loans payable (Note 4) | 191,844 | 336,843 | ||||
424,326 | 451,938 | |||||
SHAREHOLDERS' EQUITY | ||||||
SHARE CAPITAL (Note 5) | 7,840,117 | 5,753,710 | ||||
CONTRIBUTED SURPLUS | 117,396 | 122,500 | ||||
DEFICIT | (6,079,422 | ) | (5,855,782 | ) | ||
1,878,091 | 20,428 | |||||
2,302,417 | 472,366 |
(See accompanying notes to the interim financial statements)
APPROVED BY THE DIRECTORS:
Laurence Stephenson | Director | Glen Indra | Director |
SUTCLIFFE RESOURCES LTD.
INTERIM STATEMENT OF
OPERATIONS AND DEFICIT
FOR THE SECOND QUARTER ENDED JUNE 30
(Unaudited
Prepared by Management)
Second Quarter ended | Six months ended | |||||||||||
June 30 | June 30 | June 30 | June 30 | |||||||||
2005 $ | 2004 $ | 2005 $ | 2004 $ | |||||||||
GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||||||
Professional fees | 31,249 | - | 40,999 | - | ||||||||
Consulting fees | 16,308 | - | 16,308 | - | ||||||||
Management fees | 7,500 | 7,500 | 15,000 | 15,000 | ||||||||
Financing fees | 53,874 | - | 53,874 | - | ||||||||
Office and rent | 9,717 | - | 12,717 | 1,216 | ||||||||
Investor relations and communications | 324 | - | 324 | - | ||||||||
Regulatory and transfer agent fees | 29,830 | 2,557 | 36,663 | 8,733 | ||||||||
Automotive | 450 | 564 | 913 | 1,128 | ||||||||
Bank charges and interest | 398 | 67 | 1,256 | 138 | ||||||||
Interest on demand loans | 27,647 | - | 45,772 | - | ||||||||
Interest income | (109 | ) | - | (186 | ) | - | ||||||
NET LOSS FOR THE PERIOD | 177,188 | 10,688 | 223,640 | 26,215 | ||||||||
DEFICIT, beginning of period | 5,902,234 | 5,765,466 | 5,855,782 | 5,749,939 | ||||||||
DEFICIT, end of period | 6,079,422 | 5,776,154 | 6,079,422 | 5,776,154 | ||||||||
Loss per share | 0.0137 | 0.0009 | 0.0182 | 0.0037 | ||||||||
Weighted average number of shares | 12,920,264 | 11,633,900 | 12,299,470 | 7,074,165 |
(See accompanying notes to the interim financial statements)
SUTCLIFFE RESOURCES LTD.
INTERIM STATEMENT OF
CHANGES IN CASH FLOWS
FOR THE SECOND QUARTER ENDED JUNE 30
(Unaudited
Prepared by Management)
Second Quarter ended | Six months ended | |||||||||||
June 30 | June 30 | June 30 | June 30 | |||||||||
2005 $ | 2004 $ | 2005 $ | 2004 $ | |||||||||
OPERATING ACTIVITIES | ||||||||||||
Net Loss | (177,188 | ) | (10,688 | ) | (223,640 | ) | (26,215 | ) | ||||
Increase (Decrease) in non-cash working | ||||||||||||
capital items | ||||||||||||
Accounts receivable | (12,685 | ) | (1,285 | ) | (383 | ) | (27,472 | ) | ||||
Prepaid expenses | (86,000 | ) | - | (86,000 | ) | (40,000 | ) | |||||
Related party transactions | - | 26,500 | - | 59,409 | ||||||||
Accounts payable and accrued liabilities | 83,020 | (51,871 | ) | 117,387 | 24,469 | |||||||
(192,853 | ) | (37,344 | ) | (192,636 | ) | (9,809 | ) | |||||
FINANCING ACTIVITIES | ||||||||||||
Subscriptions payable | - | (1,000,710 | ) | |||||||||
Issuance of shares net of issue costs | 2,051,303 | - | 2,081,303 | 1,122,310 | ||||||||
Loans payable | (144,999 | ) | 105,000 | (144,999 | ) | (75,000 | ) | |||||
1,906,304 | 105,000 | 1,936,304 | 46,600 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Mineral interests (Note 3) | (72,588 | ) | (37,098 | ) | (116,099 | ) | (55,548 | ) | ||||
(72,588 | ) | (37,089 | ) | (116,099 | ) | (55,548 | ) | |||||
INCREASE (DECREASE) IN CASH | 1,640,863 | 30,558 | 1,627,569 | (18,757 | ) | |||||||
CASH, beginning of period | 36,954 | 444 | 50,248 | 49,759 | ||||||||
CASH, end of period | 1,677,817 | 31,002 | 1,677,817 | 31,002 |
(See accompanying notes to the interim financial statements)
SUTCLIFFE RESOURCES LTD. |
NOTES TO THE INTERIM FINANCIAL STATEMENTS |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 |
(Unaudited Prepared by Management) |
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a) Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the period end exchange rate, non-monetary assets are translated at historical exchange rates and all income and expenses are translated at average exchange rates prevailing during the period. Foreign currency translation adjustments are included in income.
b) Loss Per Share
Loss per share has been calculated based on the weighted average number of shares outstanding.
c) Fair Value of Financial Instruments
The respective carrying value of certain on-balance sheet financial instruments approximate their fair values. These financial statements include cash, receivables, advances receivable, cheques issued in excess of cash, accounts payable and property obligations payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Unless otherwise noted, fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand.
d) Deferred Costs
The company follows the practice of capitalizing all costs related to exploration projects, until such time as the project is put into commercial production, sold or abandoned. If commercial production commences, capitalized costs will be amortized on a unit-of-production basis. When mineral properties are abandoned, the related capitalized costs are expensed.
e) Future Income Taxes
The company recognizes income taxes using an asset and liability approach. Future income tax assets and liabilities are computed annually for differences between the financial statements and tax bases using enacted tax laws and rates applicable to the periods in which the differences are expressed to affect taxable income, and where there is relative certainty the losses will be realized.
f) Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates. The assets which required management to make significant estimates and assumptions in determining carrying values included interests in mineral properties.
g) Stock-based Compensation
The Company recognizes and values stock-based compensation on the Black-Scholes model of option pricing, as recommended by the CICA Handbook Section 3870.
SUTCLIFFE RESOURCES LTD. | Page 2 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 | |
(Unaudited Prepared by Management) | |
2. |
NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS |
| |
The Company was incorporated in British Columbia on February 6, 1996. By Articles of Continuances effective June 3, 1996, the Company was continued in Ontario under the Business Corporation Act (Ontario). On November 4, 1996, the Company was continued in Alberta under the name Latin American Mining Investment Corporation. On February 18, 1997, the Company was extra-provincially registered in British Columbia. Through Articles of Amendment dated effective January 5, 1999, the Company effected a consolidation of its issued and outstanding share capital on the basis of one (1) new common share for each ten (10) common shares formerly issued and outstanding and changed its name to Sutcliffe Resources Ltd. | |
| |
The continued operation of the Company is dependent upon continued creditor support, the acquisition and discovery of economically recoverable mineral properties and reserves, confirmation of the Company's interest in underlying mineral claims, the ability of the Company to obtain necessary financing to complete property development and upon further profitable production. | |
| |
3. |
MINERAL INTERESTS |
a) Beale Lake Property, Liard Mining District, British Columbia
By a Letter of Intent dated February 5, 2003, and amended by addendum on September 15, 2004, the Company received an option to acquire a 100% undivided interest in 2 mineral claims known as the Beale Lake property located in the Liard Mining District of British Columbia, subject to a 2 ½% net smelter return royalty payable to the vendor, and for the following payments and share issuances:
Date | Payment | Share Issuance | ||
On signing Letter of Intent | $ 7,500 (paid) | nil | ||
September 30, 2003 | $15,000 (paid) | nil | ||
June 30, 2004 | $17,500 (paid) | nil | ||
Closing of Prospectus Offering | nil | 150,000 common shares (issued) | ||
June 30, 2005 | $30,000 (paid) | 100,000 (issued) | ||
June 30, 2006 | $50,000 | 100,000 (issued) | ||
An exploration program totaling $1,550,000 is to be completed as follows: | ||||
Date | Expenditure | Expended todate | ||
October 31, 2005 | $300,000 | $ 74,696 | ||
October 31, 2006 | $350,000 | |||
October 31, 2007 | $400,000 | |||
October 31, 2008 | $500,000 |
A bonus of 650,000 common shares are payable to the vendor in the event that a positive feasibility study is completed and/or commercial production is attained. The 2 ½% net smelter return royalty is payable with a buyout for 1% (40% of the total net smelter return royalty) upon the payment of $1,000,000.
SUTCLIFFE RESOURCES LTD. | Page 3 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 | |
(Unaudited Prepared by Management) | |
3. | MINERAL INTERESTS (continued) |
b) Harrison Property
By a Sale, Purchase and Assignment Agreement dated March 7, 2003 and amended on November 5, 2004, the Company received the exclusive right to purchase a 50% interest in 92 contiguous mineral claims comprising 906 claim units, situated in the New Westminster Mining District near Harrison Lake, British Columbia, subject to a 2% net smelter royalty as well as other royalties to the vendor. The terms required an initial payment of $5,000 by September 5, 2003 (paid), additional payment of $20,000 by November 30, 2004 (paid), the issuance of 200,000 common shares by March 15, 2005 (issued) and a minimum work program of $300,000 plus filing fees for assessment purposes to be completed by December 31, 2005.
c) Mineral Interest expenditure breakdown:
Beale Lake $ | Harrison $ | Total $ | ||||||||
Balance, December 31, 2004 | 112,673 | 245,007 | 357,680 | |||||||
Property Acquisition Costs (cash) | 30,000 | - | 30,000 | |||||||
Property Acquisition Costs (shares) | 37,500 | 30,000 | 67,500 | |||||||
Assays and Reports | 2,023 | 300 | 2,323 | |||||||
Equipment Rental and Supplies | - | 5,573 | 5,573 | |||||||
Field Personnel | - | 2,520 | 2,520 | |||||||
Geophysical Survey | - | 8,183 | 8,183 | |||||||
Net Mineral Interest Costs for the Period | 69,523 | 46,576 | 116,099 | |||||||
Balance, June 30, 2005 | 182,196 | 291,583 | 473,779 |
4. |
LOANS PAYABLE |
| |
The loans payable are unsecured amounts owing to unrelated parties with variable interest rates and are due on demand. |
SUTCLIFFE RESOURCES LTD. | Page 4 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 | |
(Unaudited Prepared by Management) | |
5. |
SHARE CAPITAL | |
|
| |
a) |
Authorized - Unlimited common shares without par value | |
|
| |
b) |
Issued - 21,833,900 common shares as follows: |
SHARES | |||||||
# | $ | ||||||
Balance, December 31, 2004 | 11,633,900 | 5,753,710 | |||||
Issued pursuant to Initial Public Offering | 9,700,000 | 2,425,000 | |||||
(less share issuance costs) | - | (423,697 | ) | ||||
Issued for cash, exercise of options | 50,000 | 12,500 | |||||
Issued pursuant to property agreements | 450,000 | 67,500 | |||||
Reclassification of contributed surplus due | |||||||
to exercise of stock options | - | 5,104 | |||||
Balance, June 30, 2005 | 21,833,900 | 7,840,117 | |||||
c) Shares Held In Escrow
A total of 2,100,000 common shares issued at nominal cost to the directors of the Company and, an additional 1,572,000 common shares beneficially owned, directly or indirectly, by directors and officers are subject to escrow agreements. As of June 30, 2005, 367,200 shares of the total 3,672,000 shares have been released from escrow and 3,304,800 shares remain in escrow.
d) Stock Options
There are 1,150,000 director and employee stock options available which may be exercised to purchase one common share at $0.25 per share until December 30, 2008.
The Company accounts for its stock option plan under the fair value method and uses the Black-Scholes Model for calculating the fair value of the options based on the following;
- Risk-free interest rate | 5% |
- Expected life of options | 5 years |
- Expected volatility | 33.3% |
Contributed Surplus
Jun 30, | Dec 31, | ||||||
2005 $ | 2004 $ | ||||||
Balance beginning | 122,500 | 122,500 | |||||
• Stock options granted and vested | - | - | |||||
• Stock options exercised | (5,104 | ) | - | ||||
(5,104 | ) | - | |||||
Balance ending | 117,396 | 122,500 |
SUTCLIFFE RESOURCES LTD. | Page 5 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 | |
(Unaudited Prepared by Management) | |
5. | SHARE CAPITAL (continued) |
e) Warrants
There are 6,771,400 warrants outstanding from the non-brokered private placement of 6,771,400 units which were issued March 31, 2004. Each warrant is exercisable to purchase one common share at a price of $0.25 for a period of two years from the date of issuance.
There are 4,600,000 warrants outstanding from the units sold pursuant to the initial public offering and an additional 250,000 warrants outstanding from the Corporate Finance Units which were paid to the agents at the closing of the offering, each warrant is exercisable to purchase one common share at a price of $0.35 until June 21, 2007. There are also 1,104,000 agents warrants outstanding which were issued pursuant to the offering, each agents warrant is exercisable to purchase one common share at a price of $0.25 until June 21, 2007.
f) Flow-through Shares
As part of the initial public offering, the Company issued 3,000,000 flow-through shares to finance some of its exploration activities. The Company will renounce the tax deductions arising from these flow-through expenditures to the flow-through subscribers.
6. |
INCOME TAXES |
| |
The Company has non-capital income tax losses which may be applied against future taxable income. The potential income tax benefits arising from these losses carry forward and expire between 2005 and 2009 and have not been reflected as future income tax assets on these financial statements. | |
| |
7. |
RELATED PARTY TRANSACTIONS |
| |
For the year to date ended June 30, 2005, the Company paid $15,000 for management fees to a company controlled by a director. | |
| |
8. |
FINANCIAL INSTRUMENTS |
| |
The Companys financial instruments consist of cash, receivables, refundable deposits, accounts payable and accrued liabilities, and loans payable. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying value, unless otherwise noted. | |
| |
9. |
SUBSEQUENT EVENTS |
| |
In July, 2005, the Company granted 3,200,000 share purchase options at an exercise price of $0.25 per share to directors, officers and consultants. In August, 2005, the Company received $41,750 pursuant to the exercise of 167,000 share purchase warrants with a March 31, 2006 expiry date. |
SUTCLIFFE RESOURCES LTD. | Page 6 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 | |
(Unaudited Prepared by Management) | |
10. | UNITED STATES ACCOUNTING PRINCIPLES | |
|
| |
These financial statements have been prepared in accordance with generally accepted accounting principles in Canada (CDN GAAP) which, in these financial statements, conform in all material respects with those in the United States (US GAAP), except as follows: | ||
|
| |
a) |
Exploration Expenditures | |
|
| |
Under CDN GAAP, exploration expenditures are capitalized until the property is sold or abandoned. If developed, the deferred expenditures are amortized over the expected benefit period. If there can be no assurance of the commencement of operations, US GAAP requires that exploration expenditures be expensed as incurred until it is determined that commercially viable operations exist and the expenditures then incurred are recoverable. | ||
|
| |
b) |
Flow-through Shares and Future Income Tax Recovery | |
|
| |
Under Canadian GAAP flow-through shares are recorded at the value of compensation received less an amount equal to future income tax liability resulting from the related renunciation of qualified exploration expenditures as a reduction in share capital. The Company also recognizes in operations the realization of future income tax benefits of previously unrecorded future income tax assets on the date of renouncement of the expenditures to the flow-through share investors. Under US GAAP flow-through shares have a carrying value equal to that of non flow-through shares and the difference between the fair value of the shares and the value of compensation received is reported as a recovery of deferred tax benefit on the statement of operations. As the value of the compensation received for flow-through shares issued during the year was equal to the fair value of non flow-through shares on the date issued, no recovery of deferred tax benefit is required for US GAAP purposes. | ||
|
| |
c) |
Comprehensive Income | |
|
| |
Under US GAAP, SFAS No. 130 requires that companies report comprehensive income as a measure of overall performance. Comprehensive income includes all changes in equity during a year expect those resulting from investments by owners and distribution to owners. There is no similar concept under Canadian GAAP. The Company has determined that it had no comprehensive income other than the loss in any of the years presented. | ||
|
| |
d) |
Interest expense on related party debt | |
|
| |
Under US GAAP, in the absence of an established interest rate, the present value of the loan is determined by discounting the loan using an imputed rate of interest. The imputed interest rate used is one that approximates the rate that an independent borrower and lender would have negotiated in a similar transaction. Any difference between the face amount of the loan and its present value is accounted for as a discount or premium and amortized over the term of the loan. The Company had no interest expense on related party debt in any of the years presented. |
SUTCLIFFE RESOURCES LTD. | Page 7 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS | |
FOR THE SECOND QUARTER ENDED JUNE 30, 2005 and 2004 | |
(Unaudited Prepared by Management) | |
10. |
UNITED STATES ACCOUNTING PRINCIPLES (continued) | |
|
| |
e) |
Escrow Shares | |
|
| |
Under CDN GAAP shares issued with escrow restrictions are recorded at their issued price and are not revalued upon release from escrow. Under US GAAP escrow shares which are released upon the Company meeting certain criteria (performance-based) are considered to be contingently issuable. These shares are excluded from the weighted average shares calculation and the difference between the fair market value of the shares at the time of their release from escrow and the shares original issue price (being the market price at that time) is accounted for as a compensation expense and share capital at the time shares are released from escrow. The Companys escrow shares are not performance-based and therefore no adjustments have been made to the calculation of loss per share. | ||
|
| |
f) |
The following summarizes the balance sheet items with material variations under US GAAP: |
June 30 | December 31 | |||||
2005 $ | 2004 $ | |||||
Share capital | 7,840,117 | 5,753,710 | ||||
Additional paid-in capital | 117,396 | 122,500 | ||||
Deficit | (6,553,201 | ) | (6,213,462 | ) |
g) | The following table summarizes the effect on net loss after considering the US GAAP adjustments: |
Six months ended | ||||||
June 30 | June 30 | |||||
2005 $ | 2004 $ | |||||
Net loss under CDN GAAP | (223,640 | ) | (26,215 | ) | ||
US GAAP material adjustments: | ||||||
• Resource property expenditures | (18,599 | ) | (38,048 | ) | ||
• Shares for resource property | (67,500 | ) | - | |||
• Cash payments for resource property | (30,000 | ) | (17,500 | ) | ||
Net Loss under US GAAP | (339,739 | ) | (81,763 | ) | ||
Loss per share under US GAAP | (0.0276 | ) | (0.0116 | ) |
h) |
The following table summarizes the effect on shareholders equity (deficiency) after considering the US GAAP adjustments: |
Share | Additional | Accumulated | Total Shareholders | ||||||||||
Capital | paid-in | Deficit | equity (Deficiency) | ||||||||||
$ | Capital $ | $ | $ | ||||||||||
Balance December 31, 2004 | 5,753,710 | 122,500 | (6,213,462 | ) | (337,252 | ) | |||||||
Share capital issued under CDN GAAP | 2,081,303 | - | - | 2,081,303 | |||||||||
Reduction in contributed surplus due to | |||||||||||||
exercise of stock options under CDN | |||||||||||||
GAAP | 5,104 | (5,104 | ) | - | - | ||||||||
Net loss under CDN GAAP | - | - | (223,640 | ) | (223,640 | ) | |||||||
US GAAP material adjustments: | |||||||||||||
• Resource property costs expensed | - | - | (116,099 | ) | (116,099 | ) | |||||||
Balance June 30, 2005 | 7,840,117 | 117,396 | (6,553,201 | ) | 1,404,312 |
SUTCLIFFE RESOURCES LTD.
Managements Discussion & Analysis
For the second quarter ended June
30, 2005
Form 51-102F1 as at August 22, 2005
DESCRIPTION OF BUSINESS
The Company is engaged in the business of pursuing, acquiring and developing mineral exploration projects. The Company has acquired options to purchase a 50% interest in the Harrison Lake Nickel Copper Project and a 100% interest in the Beale Lake Property, both located in British Columbia. Other exploration properties and projects, both in Canada as well as international, are also being considered. A prospectus offering was recently completed raising a net amount of approximately $2,000,000 which will allow the Company to finance the preliminary work programs on both these properties.
The Beale Lake Project in north western British Columbia, 60 km southeast of Cassiar is a recently identified intrusion-related gold prospect with significant anomalous geochemical values of gold and copper in quartz veins and breccia associated with a Cretaceous intrusive. The target is a multimillion ounce type deposit similar to those in the Tintina Gold belt in the adjacent state of Alaska. The Company has initiated a multi-phase program this summer involving geological mapping and geophysical surveying, to be followed by diamond drilling in the fall.
The Harrison Lake Project located in southwestern British Columbia 130 km east of Vancouver is an advanced exploration stage copper nickel platinum group target with significant geophysical and anomalous geochemical signatures associated with a 60 km long belt. Field work during the past three years has outlined a similar geological environment and identified some similar regional geophysical zones to that found at the B.C. Nickel Mine which is located on the southeast end of this belt. Using data from the airborne geophysical survey completed in 2004, the Company has identified 15 high priority targets associated with both the ultramafic and schist rocks on the property. Detailed geological mapping and geophysical surveying has started, with diamond drilling to follow in the fall of 2005.
OPERATIONS AND EXPENDITURES
During the second quarter ended June 30, 2005, field programs for both the Beale Lake and Harrison Lake projects were initiated. Both programs will involve geological mapping and geophysical surveying to be followed by diamond drilling.
SUMMARY OF QUARTERLY RESULTS
2005 | 2004 | 2003 | ||||||||||||||
Jun 30 $ | Mar 31 $ | Dec 31 $ | Sep 30 $ | Jun 30 $ | Mar 31 $ | Dec 31 $ | Sep 30 $ | |||||||||
Total revenue | nil | nil | nil | nil | nil | nil | nil | nil | ||||||||
Gen & Adm Exp. | 177,188 | 46,452 | 16,806 | 27,610 | 10,688 | 15,527 | 42,159 | 9,954 | ||||||||
Stock-based Comp | nil | nil | nil | nil | nil | nil | 122,500 | nil | ||||||||
Loss | (177,188 | ) | (46,452 | ) | (16,806 | ) | (27,610 | ) | (10,688 | ) | (15,527 | ) | (164,659 | (9,954 | ) | |
Net Loss | (177,188 | ) | (46,452 | ) | (49,018 | ) | (30,610 | ) | (10,688 | ) | (15,527 | ) | (164,659 | (9,954 | ) | |
Loss/share | (0.0137 | ) | (0.0040 | ) | (0.0042 | ) | (0.0026 | ) | (0.0009 | ) | (0.0062 | ) | (0.0683 | (0.0041 | ) | |
Def Min Prop Costs | 72,588 | 43,511 | 140,051 | 32,496 | 37,098 | 18,450 | 60,560 | 20,000 | ||||||||
Total Assets | 2,302,417 | 490,281 | 472,366 | 316,812 | 337,192 | 268,251 | 263,838 | 142,381 |
Page 2
GENERAL AND ADMINISTRATIVE EXPENSES
3 months ended | 3 months ended | |||||
Jun 30, 2005 | Jun 30, 2004 | |||||
Professional fees | $ | 31,249 | $ | - | ||
Consulting | 16,308 | - | ||||
Management and administration fees | 7,500 | 7,500 | ||||
Financing fees | 53,874 | - | ||||
Office, rent & supplies | 9,717 | - | ||||
Investor relations and communications | 324 | - | ||||
Regulatory and transfer agent fees | 29,830 | 2,557 | ||||
Automotive and travel | 450 | 564 | ||||
Interest on demand loans | 27,647 | - | ||||
Bank charges and interest (net) | 289 | 67 | ||||
Total general and administrative expenses | ||||||
for the quarter | $ | 177,188 | $ | 10,688 |
The administrative expenditures made during the quarter were indicative of the Companys activities after completion of its public offering. Expenditures in most categories reflected the costs involved in the preparation of materials for and the successful completion of funding. The categories of professional fees, consulting, financing fees, regulatory and transfer fees and interest on demand loans are all much higher compared to the previous fiscal period due to the ancillary costs of the prospectus financing and also a result of the requirement for additional working capital funding due to the delays in completing the prospectus financing.
RELATED PARTY TRANSACTIONS
For the second quarter ended June 30, 2005, management fees charged by a company controlled by a director totaled $7,500.
LIQUIDITY AND SOLVENCY
The Company had working capital for the second quarter ending June 30, 2005 of $1,404,312 compared to a deficiency of $337,252 for the year ended December 31, 2004. The continued operations of the Company are dependent upon its ability to raise adequate financing. To this end the Company will be seeking future funding through private placement offerings as well as the exercise of outstanding share purchase warrants to maintain adequate working capital and to raise funds for exploration expenditures.
Jun 30, 2005 | Jun 30, 2004 | |||||
Working Capital (Deficiency) | $ | 1,404,312 | $ | (108,773 | ) | |
Deficit | $ | (6,079,422 | ) | $ | (5,776,154 | ) |
There have been no changes in accounting policies and the Company has made no off-balance sheet arrangements and none are contemplated in the future. The Company does not utilize financial or other instruments in its operations.
Page 3
CAPITALIZED EXPLORATION AND DEVELOPMENT COSTS
Beale Lake $ | Harrison $ | Total $ | |||||||
Balance, December 31, 2004 | 112,673 | 245,007 | 357,680 | ||||||
Property Acquisition Costs (cash) | 30,000 | - | 30,000 | ||||||
Property Acquisition Costs (shares) | 37,500 | 30,000 | 67,500 | ||||||
Assays and Reports | 2,023 | 300 | 2,323 | ||||||
Equipment Rental and Supplies | - | 5,573 | 5,573 | ||||||
Field Personnel | - | 2,520 | 2,520 | ||||||
Geophysical Survey | - | 8,183 | 8,183 | ||||||
Net Mineral Interest Costs for the Period | 69,523 | 46,576 | 116,099 | ||||||
Balance, June 30, 2005 | 182,196 | 291,583 | 473,779 |
DISCLOSURE OF OUTSTANDING SHARE DATA as of August 22, 2005
Share Capital Authorized unlimited common shares
Share Capital Issued 22,000,900
Shares held in escrow
- - 3,304,800
Options Outstanding
- - 4,350,000 exercisable for 4,350,000 common shares at
$0.25 per share
Warrants Outstanding
- - 6,771,400 warrants exercisable for 6,771,400 common
shares at $0.25 per share
- - 4,850,000 warrants exercisable for 4,850,000 common
shares at $0.35 per share
- - 1,104,000 agents warrants exercisable for 1,104,000
common shares at $0.25 per share
FORM 52-109FT2
CERTIFICATION OF INTERIM FILINGS DURING TRANSITION PERIOD
I, Laurence Stephenson, Chief Executive Officer, certify that:
1. |
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52- 109 Certification of Disclosure in Issuers annual and Interim Filings) of Sutcliffe Resources Ltd. (the Issuer) for the interim period ending June 30, 2005. |
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2. |
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; and |
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3. |
Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the period presented in the interim filings. |
Date: August 30, 2005 | |
Laurence Stephenson | |
Signature | |
Title: Chief Executive Officer |
FORM 52-109FT2
CERTIFICATION OF INTERIM FILINGS DURING TRANSITION PERIOD
I, Susan Wong, Chief Financial Officer, certify that:
1. |
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52- 109 Certification of Disclosure in Issuers annual and Interim Filings) of Sutcliffe Resources Ltd. (the Issuer) for the interim period ending June 30, 2005. |
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2. |
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; and |
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3. |
Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the period presented in the interim filings. |
Date: August 30, 2005 | |
Susan Wong | |
Signature | |
Title: Chief Financial Officer |
August 29, 2005
HARRISON LAKE UPDATE
(VANCOUVER, BC August 26th, 2005) SUTCLIFFE RESOURCES LTD. (SR TSX-V) reports that it has completed its initial orientation ground geophysical program on its Harrison Lake base and precious metal project near Hope, in southern British Columbia.
University of Toronto Electro-Magnetics (UTEM) ground geophysical surveys were conducted, by SJ Geophysics Ltd., on 4 of the 15 high priority sulphide related Airborne Electro- Magnetic (AEM) targets that were identified in the November December 2004 survey by Aeroquest of Toronto, Ontario. The ground survey included a 1.2 km portion of a 4.3 km AEM target. The surveys established the dip and depth character of the anomalies and identified drill target sites.
Given the size and response of the 4.3 km target, the company has initiated discussion to acquire adjacent claims thought to contain at least 2 sub parallel belts of similar geology. The earlier airborne survey identified the trend continuing into this prospective adjacent ground.
Permit application for drill testing is in progress and drilling is expected to start in the Fall of 2005 when sufficient water in the high alpine area is available.
Sutcliffe is exploring along the east side of Harrison Lake, a belt of ultramafic, metavolcanic and medasediments which extend in a northerly direction from the former producing BC Nickel Mine located 7km north of Hope, B.C., for over 60 kilometers.
For further information please visit our website www.sutclifferesources.com or contact L. Stephenson at 604-608-0223.
Laurence Stephenson, President
Sutcliffe Resources Ltd.
Vancouver, B.C.
The TSX Venture Exchange has neither approved nor disapproved of the information contained herein. The statements that are not historical facts are forward-looking statements involving known and unknown risk factors and uncertainties which may cause actual results to vary considerably from these statements.
NEWS RELEASE
July 11, 2005
Sutcliffe Resources Ltd. is proposing to grant options to acquire a total of 3,200,000 shares at an exercise price of $0.25 per share to directors, officers and consultants. These options will be granted according to the terms of the Stock Option Plan approved by disinterested shareholders at the last general meeting of the Company held on December 17, 2004.
The Company also announces that it has entered into an agreement with Steve Johnston to provide investor relations services for the Company at a monthly remuneration of $4,500 and 150,000 of the share purchase options to be granted at an exercise price of $0.25 per share.
On behalf of the Board of Directors
Glen J. Indra
Glen J. Indra
Director
Suite 420 625 Howe Street, Vancouver BC V6C 2T6,
(604)608-0223 Voice (604)608-0344 Fax
SR #05-01
Sutcliffe Resources Ltd.
(SR TSX-V)
Shares outstanding 21,833,900
July 8, 2005 close $0.32
July 11, 2005
NEWS RELEASE
SUTCLIFFE RESOURCES LTD. (SR TSX-V) reports that it has initiated the summer exploration program on its Harrison Lake base and precious metal project in Southern British Columbia and its Beale Lake gold project in Northern British Columbia.
The Harrison Lake Project is a belt of ultramafic and metavolcanics and metasediments which extend from the BC Nickel Mine, 7 kilometres north of Hope B.C. over 60 kilometres along the east side of Harrison Lake. The company has identified 15 high priority sulphide related airborne ElectroMagnetic (AEM) targets in its pre-IPO work. Field crews are now on the property preparing grids for detailed ground geophysical surveying to assist in selecting drill hole locations. Two grids are presently being prepared at the north end of a 4.2 kilometre long AEM target and another highly prospective AEM target to the northeast. A recent property investigation revealed a wide zone of gossanous sulphide material associated with the long AEM target and sulphide bearing boulders on the target immediately to the northeast.
The Beale Lake Project, 75 kilometers northeast of Dease Lake, B.C. is a sheeted stockwork quartz-sulphide-scheelite vein and siliceous replacement mineralization system that has characteristics of both the Alaska Fort Knox and Pogo intrusion related gold deposits. Field crews are currently preparing the Beale project for an Induced Polarization (IP) survey which is designed to follow up on high grade gold samples as reported on by G.E. Nicholson, P.Geo. in his November 2004 report. The IP 3D array survey and subsequent detailed geological mapping and geochemical sampling is intended to define drill target locations.
The company completed its Initial Prospectus Offering (IPO) and was listed on the TSX Venture Exchange on June 27th 2005. The IPO raised $2.3 million which included $750,000 of flow through monies to be spent on the Harrison and Beale projects.
Laurence Stephenson, President
Sutcliffe Resources Ltd.
Vancouver BC
The Canadian Venture Exchange has neither approved nor disapproved of the information contained herein. The statements that are not historical facts are forward-looking statements involving known and unknown risk factors and uncertainties which may cause actual results to vary considerably from these statements. The risks and uncertainties include those described in the companys quarterly filing with the SEC and other period filings.
Suite 420 625 Howe Street, Vancouver BC V6C 2T6,
(604)608-0223 Voice (604)608-0344 Fax
MATERIAL CHANGE REPORT
1. |
Name and Address of Reporting Issuer: |
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Sutcliffe Resources Ltd. ("Sutcliffe") | |
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2. |
Date of Material Change: |
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June 22, 2005 | |
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3. |
News Release |
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A press release disclosing the details outlined in this Material Change Report was issued by Sutcliffe on June 22, 2005 and disseminated through the facilities of Canada Newswire Group and would have been received by the securities commissions where Sutcliffe is a "reporting issuer" in the normal course of its dissemination. | |
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4. |
Summary of Material Change: |
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On June 22, 2005, Sutcliffe completed the closing of a public offering, raising gross proceeds of $2.3 million. | |
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5. |
Full Description of Material Change: |
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On June 22, 2005, Sutcliffe completed the closing of a public offering, raising gross proceeds of $2.3 million. A total of 9,200,000 units (each comprised of one common share and one half of one common share purchase warrant) at $0.25 per unit were sold under the offering. Each warrant is exercisable to acquire an additional common share of Sutcliffe at $0.35 for 24 months. Canaccord Capital Corporation acted as agent for the offering. | |
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Sutcliffe's Shares have been conditionally approved for listing on the TSX Venture Exchange and are expected to begin trading on or about Monday, June 27, 2005, under the symbol SR. | |
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6. |
Reliance on subsection 7.1(2) or (3) of National Instrument 51-102: |
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Not applicable. | |
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7. |
Omitted Information: |
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Not applicable. |
2
8. |
Executive Officer: |
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The name and business numbers of the executive officer of Sutcliffe who is knowledgeable of the material change and this report is: | |
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Laurence Stephenson, President | |
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9. |
Date of Report: June 23, 2005 |
Copy to: TSX Venture Exchange
SUTCLIFFE RESOURCES LTD.
NEWS RELEASE
SUTCLIFFE RESOURCES LTD. ANNOUNCES SUCCESSFUL
CLOSING OF PUBLIC OFFERING
Vancouver, British Columbia, Canada June 22, 2005 - Sutcliffe Resources Ltd. ("Sutcliffe" or the "Company") is pleased to announce that the Company has completed the closing of a public offering, raising gross proceeds of $2.3 million. A total of 9,200,000 units (each comprised of one common share and one half of one common share purchase warrant) at $0.25 per unit were sold under the offering. Each warrant is exercisable to acquire an additional common share of the Company at $0.35 for 24 months. Canaccord Capital Corporation acted as agent for the offering.
Sutcliffe's Shares have been conditionally approved for listing on the TSX Venture Exchange and are expected to begin trading on or about Monday, June 27, 2005, under the symbol SR.
For further information, please contact either:
Laurence Stephenson, President or
Susan Wong, Chief
Financial Officer
Sutcliffe Resources Ltd.
420, 625 Howe Street
Vancouver,
B.C. V6C 2T6
Canada
Telephone: (604) 608-0223
Facsimile: (604) 608-0344
This news release contains forward-looking statements. The forward-looking statements are not guarantees of future performance and undue reliance should not be placed on them. Actual results may differ materially as a result of any number of factors and uncertainties, many of which factors are beyond the Company's control. The forward-looking statements speak only as of the date hereof, and the Company undertakes no obligation to update these statements to reflect subsequent changes in assumptions, the factors underlying them or actual events or experience.
The TSX Venture Exchange does not accept responsibility
for the adequacy or accuracy of this release.
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