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UNITED STATES FORM 6-K Report of Foreign Private Issuer For the month of May, 2009 Commission File Number 001-32748 Indicate by check mark whether
the registrant files or will file annual reports under cover of Form 20-F or
Form 40-F. Form 20-F _____ Form 40-F X 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-_______________ DOCUMENTS INCLUDED AS PART OF THIS REPORT CORRIENTE RESOURCES INC. MANAGEMENTS DISCUSSION & ANALYSIS
For the Three-Month Period Ended March 31, 2009
May 11, 2009 Introduction This Managements Discussion and Analysis (MD&A)
supplements, but does not form part of, the unaudited interim consolidated
financial statements of Corriente Resources Inc. (Corriente or the company)
and the notes thereto for the three-month period ended March 31, 2009. This
MD&A provides managements comments on Corrientes operations and financial
condition as at and for the three-month period ended March 31, 2009, as compared
with preceding years. In this MD&A, Corriente, the company, or the words
we, us or our, refer to Corriente Resources Inc. and its subsidiaries.
For a complete understanding of our business environment, risks
and uncertainties and the effect of accounting estimates on our results of
operations and financial condition, this MD&A should be read together with
the companys: unaudited interim consolidated financial statements and related
notes thereto for the three-month period ended March 31, 2009 ; audited
consolidated financial statements and related notes thereto for the years ended
December 31, 2008 and 2007; and Managements Discussion and Analysis for the
year ended December 31, 2008; the financial statements of which have been
prepared in accordance with Canadian generally accepted accounting principles
(GAAP). The companys stated accounting policies have also been consistently
followed in the preparation of the above-noted financial statements. All amounts are in Canadian dollars unless otherwise stated.
The unaudited consolidated financial statements and notes
thereto and this MD&A were reviewed and approved by Corrientes Audit
Committee. Additional information about Corriente, including our 2008
Annual Information Form, is available on our website at
www.corriente.com, on the SEDAR website at www.sedar.com , and on
the EDGAR section of the U.S. Securities and Exchange Commission website (which
includes the companys Annual Report on Form 40-F) at www.sec.gov. This document contains forward-looking statements, which are
qualified by reference to, and should be read together with the Cautionary
Statement on Forward-Looking Statements on page 21 of this MD&A. Qualified Person John Drobe, P.Geo., the companys Chief Geologist, is the
Qualified Person as defined by National Instrument 43-101 of the Canadian
Securities Administrators (NI 43-101) and is responsible for the preparation
and/or verification of the technical disclosure in this document, unless
otherwise noted. Outlook Management continues to focus on completion of a transaction as
part of the Citi/Canaccord marketing process, work with the Government of
Ecuador to develop the Regulations to the new Mining Law which was enacted on
January 29, 2009, and obtain the permits necessary for further development of
our projects in Ecuador. Page 1 of 23 Business of the company Corriente is a junior resource company focused on advanced
exploration and development of copper and copper-gold mineral resources in South
America. Over the past 10 years, the company has advanced the development of 2
copper-gold projects in the Rio Zamora copper porphyry district (known as the
Corriente Copper Belt), in the Morona-Santiago and Zamora-Chinchipe provinces
of southeast Ecuador. Corriente holds a 100% interest in four known copper and
copper-gold porphyry deposits that are being strategically developed as the
Mirador Project (which includes our Mirador Norte deposit) and the Panantza-San
Carlos Project, for which NI 43-101 Technical Reports have been filed on SEDAR.
Overall, the company holds 100% of concession interests covering approximately
430 square kilometers, in which six additional copper exploration targets have
been identified. Taken together, the known project deposits and exploration
targets represent a potential long-term district development opportunity for
large-scale copper-gold mining in southeast Ecuador. For those concessions acquired by the company from BHP Billiton
(BHP), BHP chose to convert its back-in rights to a 2% net smelter royalty
interest (NSR), with the company having the option to reduce this NSR to 1% for
each of the concessions previously acquired, upon the payment of US$2 million
for each such concession to BHP Billiton. Presently, this would apply to two
concessions within each of the Mirador and Panantza-San Carlos Projects. During the transition period between the old and new
presidential administrations of November 2006 to January 2007, a series of
protests took place in the Morona-Santiago and Zamora-Chinchipe provinces of
Ecuador against mining resource development. In order to secure the safety and
security of local communities, the Ecuador Government imposed a suspension of
fieldwork activities for the companys Mirador and Panantza-San Carlos Projects.
This suspension was subsequently formalized in December 2006 by a suspension
order from the Sub-Secretary of Environments office within the Ministry of
Mining and Petroleum (the MMP) covering the companys Mirador and Panantza-San
Carlos Projects concessions. Subsequently, and as a result of the Mining
Mandate (more fully explained below), a suspension of all of the fieldwork
activities of all mining companies in Ecuador was imposed as of April 18, 2008
by the MMP. Despite these fieldwork suspensions being in place from
December 2006 to March 2009, the company was able to continue offsite
development work on enhancements to various engineering and environmental
aspects of the Projects, as well as community relations activities. To March 31, 2009, the company has recorded acquisition,
exploration and development costs of approximately $84 million for the Mirador
Project, and completed an updated feasibility study in April 2008 (Mirador FS)
for a first phase 30,000 tonnes per day concentrator operation. The Mirador FS
shows a projected initial capital cost of approximately US$399 million and
approximately US$19 million in working capital, which would be spent over a two
year construction period prior to the start of production. Additionally, the company has recorded acquisition, exploration
and development costs of approximately $9 million for the Panantza-San Carlos
Project, and completed a preliminary assessment study for a 90,000 tonnes per
day concentrator operation in November 2007. With estimated capital costs in the
order of US$1.3 billion for the Panantza San Carlos Project, management
determined that this project is better suited for advancement by a large company
having the financial and technical resources required to fast-track its
development to production. Consequently, Corriente announced in January 2008 that it had
started the process of contacting potentially interested parties to become
majority strategic partners in the Panantza-San Carlos Project, with assistance
from Citigroup Global Markets (Citi) and CanaccordAdams. In October 2008, the
company completed conducting in-country due diligence visits from a number of
interested industry parties from around the world. On March 31, 2009, the
company announced that negotiations were continuing with the selected party
regarding the potential sale of the company. Page 2 of 23 Should these sale negotiations not be successful, the company
has sufficient financial resources to continue advanced development of the
Mirador and Panantza San Carlos Projects through 2009 and 2010, subject to new
or unforeseen regulatory conditions being imposed by the Government of
Ecuador. Significant Events for the Past Twelve Months, and to
date (more fully described herein) April 2008 The completion of an updated NI 43-101 compliant
Feasibility Study Technical Report for the Mirador Project (Mirador FS)
was announced. The Mirador FS projects an average of almost 130 million
pounds of annual copper production for the Project and shows a projected
initial capital cost of approximately US$ 399 million and approximately
US$ 19 million in working capital, which would be spent over a two year
construction period prior to the start of production. The Mirador FS calls
for daily throughput of the concentrator facility of approximately 30,000
tonnes per day, which is a material improvement over the original Mirador
Project Feasibility Study released by the company in April 2005, which
planned for 25,000 tonnes per day. The Constitutional Assembly of Ecuador passed a Mining
Mandate (the Mandate) into law on April 18, 2008, which established a
number of conditions and restrictions on metallic mining concessions
previously issued by the Government of Ecuador, which included
the: immediate suspension of all of the fieldwork activities
of all mining companies in Ecuador, except for activities specifically
allowed by the MMP; and revocation of concessions: for which concession patent
fees had not been paid by the established deadline; which were in the
process of being granted or transferred; concessions covering protected
natural zones, protected forests and those which affect the origin and
sources of water; those concessions granted to officials and former
officials of the MMP and predecessor ministries, or any members of their
family; for which the Environmental Impact Assessment application process
had not yet been completed or initiated; and for which no development
investments had been recorded with the State. September 2008 October 2008 December 2008 Page 3 of 23 January 2009 March 2009 April 2009 President Correa, and the elected National Assembly
members and provincial / city officials will begin their 4-year terms of office
on August 14, 2009 and August 4, 2009, respectively. Legal framework issues affecting Ecuadors mining
industry Mining Law The new Mining Law enacted on January 29, 2009 contains
provisions which are generally consistent with the companys expectations,
though it contains some contradictory and vague articles that are expected to be
clarified by accompanying Regulations, which are to be developed by the MMP
within 120 days from the Mining Laws enactment. The Mining Law places no limits on the number of mining
concessions held by a single company, with concession terms limited to 25 years
but which are renewable. It also imposes a government royalty of not less than
5% on sales revenues, however, no specific details have yet been provided. Clear
timelines are also established for concession exploration and exploitation
(development) phases. The Mining Law also mandates the creation of a National
Mining Company, though no details have been provided regarding the nature and
scope of its intended activities. The new Mining Law is considered to be a significant milestone
for the country and the nascent large-scale mining industry, and is expected to
provide the new legal framework for mining. However, much work remains to be
done in developing the Regulations to the Mining Law and finalizing the terms
and conditions that could foster feasible mining investments in Ecuador. Mandate Corriente currently holds 24 concessions in Ecuador, including
the Mirador Project and Panantza-San Carlos concession blocks. Prior to the
Mining Law coming into effect, 5 early exploration-stage concessions considered
to be immaterial and unrelated to our Mirador and Panantza-San Carlos Projects
were revoked by the MMP under the terms of the Mandate which was enacted on
April 18, 2008. Page 4 of 23 According to the MMP, these revocation notices were issued
because Environmental Impact Assessments for these concessions had not been
approved by or related public consultations held prior to the April 18, 2008
implementation of the Mandate. The company plans to appeal the revocation of
these concessions, and under current Ecuador law has 3 years to do so. In the earlier-referenced formal letter received by the company
from Minister Palacios of the MMP, the governments position was represented
that the Articles of the Mandate have been complied with, and that the Mandate
is no longer in effect as of the enactment of the Mining Law. However, to date,
no clear or formal legal confirmation of this has been provided by the judiciary
of Ecuador. Corporate Infrastructure The companys shares trade on the Toronto Stock Exchange (TSX)
and the New York Stock Exchange Amex (NYSE Amex), and as at May 11, 2009 had a
market capitalization of approximately $582 million. The companys executive head office is located in Vancouver,
Canada while its Ecuador operations are run from regional offices located in
Gualaquiza and Quito, Ecuador. The company also has camp locations at its major
projects in southeast Ecuador. With the exception of short-term operational
requirements for its Ecuador operations, funds are maintained and controlled in
Vancouver, in both Canadian and US dollars. In addition to its staff located in Vancouver and Ecuador, the
company engages consultants as necessary, to provide geological, mine
development and construction consulting, design, engineering, and other
services. Overhead costs and efficiencies in Ecuador continue to compare
favourably with other South American exploration areas. At May 11, 2009, the company had increased its employee count
to 195 employees (March 31, 2009 95; December 31, 2008 98) with the hiring
of local workers as explained above. Strategies and Key Drivers Government Relations Since December 2006, Corrientes management has continually
sought to work closely with the Ecuador Government in realizing an objective of
developing a responsible mining industry for the benefit of all
stakeholders. In this regard, we believe that recent developments, such as
the Presidents consistent support for large-scale mining and his stewardship in
the creation of a new Mining Law in the face of a vocal anti-mining movement
provides evidence that this objective is being achieved. This has been further
validated by President Correa and his partys election victories in the April
26, 2009 national elections. Community Relations and Sustainable Development Corrientes approach to business and sustainable development
involves implementing strategies beneficial to the community, environment and
the country and its economy. The companys commitment and obligation to these
strategies extend beyond standard compliance with national and international
guidelines and involve building relationships based on honesty, openness and
mutual trust. This is the essence of Corrientes community relations and
sustainable development theme: El Trato Justo or A Fair Deal. The company has designed and implemented a number of community
relations (CR) plan strategies after identifying local and regional
communities needs as well as the related impacts of the companys future mining
activities on these communities. The companys CR plans focus on the critical
needs of the local and regional communities and the provincial and federal
governments, and are regularly reviewed to ensure appropriateness and
effectiveness. Page 5 of 23 The company continues to be committed to local communities in
all aspects of its mining and economic development activities. Since 2004, the
company has actively initiated and provided financial, equipment and manpower
resources in the areas of education, employment, health, building assistance,
environmental preservation and cultural and economic development programs. Sustainable development is a process that aims to maintain and
improve the quality of life not only for the present generation in areas and
communities in which the company works but also for future generations. It
involves the integration of three main components: environmental protection,
social sustainability and economic sustainability. Development of the CCB All of the companys projects in the CCB that have defined
resources are open to expansion at depth, and in come cases additional resources
may be defined beyond some of the current edges of these identified deposits.
To expedite the process of bringing a partner to Ecuador who
can finance the large capital expenditures required for the development of the
CCB, Corriente is continuing with the Citi/Canaccord marketing process that
started in January 2008. On March 31, 2009 Corriente announced the extension of
negotiations with a selected party that could extend to the purchase of the
entire company. However, there can be no assurance that any such negotiations
will result in an agreement for the sale of the company. Properties in Advanced Development - Mirador Project
In November 2006, a series of protests took place in the
Morona-Santiago and Zamora-Chinchipe provinces of Ecuador against mining
resource development. After a number of ineffective negotiating sessions were
held with the protesters, the Government of Ecuador requested the company to
temporarily suspend its Mirador Project activities to aid in the negotiating
process. In order to secure the safety and security of local communities and
supporters, this suspension was subsequently formalized in December 2006 by a
suspension order from the Sub-Secretary of Environments office within the MMP
covering the companys Mirador and Panantza-San Carlos Projects concessions.
Despite the suspension of fieldwork activities at the Mirador
Project site, the company was able to continue offsite work through March 2009
on enhancements to various engineering and environmental aspects of the Mirador
Project, as well as community relations programs. The additional engineering and
feasibility work was completed in the first quarter of 2008, with the result
that the Mirador FS was announced on April 3, 2008 and subsequently made
available on SEDAR. This report also includes a summary of the economic model
for a first phase 30,000 tonnes per day concentrator operation for the Mirador
Project. The Mirador FS projects an average of almost 130 million pounds
of annual copper production for the Project and shows a projected initial
capital cost of approximately US$399 million and approximately US$19 million in
working capital. The Mirador FS calls for daily throughput of the concentrator
facility of 30,000 tonnes per day, which is a material improvement over the
original feasibility study results released by the company in April 2005, which
had a planned capacity of 25,000 tonnes per day. The Mirador FS Base Case Net Present Value (NPV), after-tax,
is US$265 million, with an after-tax Internal Rate of Return (IRR) of 17.7%
(using metal prices of US$1.75/lb Cu, US$7.50/oz Ag, US$550/oz Au, 8% discount
rate, US$75/tonne and US$0.075/lb treatment and refining charges, respectively,
for Cu). The Base Case mine plan only utilizes 41% of the Measured and
Indicated Resources at Mirador and none of the 235 Million tonnes of Inferred
Resources. In addition, the Base Case did not consider the 171 Million tonnes of
Measured and Indicated Resources or the 46 Million tonnes of Inferred Resources
at the nearby Mirador Norte deposit. Page 6 of 23 The Mirador Norte deposit is located less than one kilometre
from the planned Mirador Project milling facility. Confirmation of copper
resources at Mirador Norte provides additional options for the development of
the Mirador Project, including access to higher-grade enriched material from the
shallow parts of Mirador Norte and the flexibility of being able to shift
production from one pit to another. As disclosed above, the fieldwork suspension orders that
applied to the companys Mirador, Panantza and San Carlos concessions were
lifted by the MMP, as announced by the company on March 17, 2009. The resources that have been identified for the Mirador Project
are summarized below: Table of Resources Mirador Project 0.4% Copper Cut-off
Measured and Indicated Resources Au Ag Project Category Tonnes Cu% Cu (lbs) (ppb) Au oz (ppm) Ag oz Mirador Measured 52,610,000 0.65 753,000,000 210 360,000 1.6 2,770,000 Indicated 385,060,000 0.60 5,134,000,000 190 2,380,000 1.5 18,760,000 Measured & Indicated 437,670,000 0.61 5,887,000,000 200 2,740,000 1.5 21,530,000 Mirador Norte Indicated 171,410,000 0.51
1,921,000,000 89
489,000 -
-
Total
Measured & Indicated 609,080,000 0.58 7,808,000,000 169 3,229,000 1.5 21,530,000 Inferred Resources Au Ag Project Category Tonnes Cu% Cu (lbs) (ppb) Au oz (ppm) Ag oz Mirador Inferred 235,400,000 0.52 2,708,000,000 170 1,250,000 1.3 9,900,000 Mirador Norte
Inferred 45,820,000 0.51
513,000,000 68
101,000 -
-
Total Inferred 3,221,000,000 The Qualified Person under NI 43-101 for the resource estimates
quoted above is John Drobe, P.Geo, Chief Geologist for Corriente For the three-month period ended March 31, 2009, the company
incurred deferred development costs for the Mirador Project of $2,643,000 (2008
$2,788,000). Properties in Advanced Development - Panantza San
Carlos Project The Panantza and San Carlos project concessions are located
approximately 40 km north of the Mirador Project. Corriente was approximately
halfway through the first phase of a planned 16000 metres of drilling on the Panantza project when these activities were suspended as part of the Mirador
Project suspension order referenced above. The drilling was the start of a
planned two-year program to complete a feasibility study at Panantza and San
Carlos, designed to incorporate the Panantza and San Carlos concessions into a
single large copper development opportunity. Current Inferred Resources at Panantza, which incorporate the
2006 drilling results into a block-model using updated geology models, and at a
0.4% copper cut-off, are approximately 463 million tonnes grading 0.66% copper,
containing 6.7 billion pounds of copper. The 2006 drilling added close to a
billion pounds of copper to the previous Panantza resource. San Carlos is believed to be the largest copper-molybdenum
mineralized porphyry system in the CCB, with dimensions of about 2 kms x 2.5
kms. The mineralization has been tested with 25 diamond drill holes at variable
spacing, drilled by BHP Billiton in 1997 and 1998. The current block-model
based, Inferred Resource estimate, at a 0.4% copper cut-off, is 600 million
tonnes grading 0.59% copper, containing 7.7 billion pounds of copper. Page 7 of 23 A Preliminary Assessment Technical Report (the Report), dated
October 30, 2007, for a 90,000 tonnes per day combined Panantza-San Carlos
copper mining operation was completed and made available on SEDAR in December
2007. Highlights from the Report are: Management feels that the Panantza-San Carlos concessions
represent a rare opportunity to capitalize on six years of community work,
project engineering and management development expertise that has been built
around the companys Mirador Project. This body of knowledge will significantly
assist in the project development process and at the same time allow the company
to take economic advantage of infrastructure that is being put in place for the
Mirador Project. The Project has been recommended to proceed to the Feasibility
Study stage, which has an estimated budget requirement of approximately US$12
million. The work includes detailed diamond drilling at both deposits to fully
delineate mineralization and provide core for metallurgical and geotechnical
studies. This work is planned to extend over a two year period. In addition, a
program of extensive community dialogue is planned to ensure that the voice of
local residents is reflected in any planned development ideas. Part of this
dialogue will include several public consultations, which will form part of the
on-going permitting process. As disclosed above, the fieldwork suspension orders that
applied to the companys Mirador, Panantza and San Carlos concessions were
lifted by the MMP, as announced by the company on March 17, 2009. Page 8 of 23 Following is a summary Table of Resources setting out the
companys mineral property resources for its Panantza-San Carlos concession
blocks in the Corriente Copper Belt. Table of Resources Panantza San Carlos Project Inferred Resources
Project
Category Tonnes Cu% Cu (lbs) Panantza Inferred* 463,000,000 0.66 6,688,000,000 San Carlos** Inferred* 600,000,000 0.59
7,738,000,000 Total Panantza-San Carlos 1,063,000,000 0.62
14,426,000,000 * does not include copper oxide mineralized
material that was previously included in resource estimate ** resources are calculated at 0.4% copper
cut-off using data previously released in June 2001 at a 0.65% copper cut-off
The Qualified Person under NI 43-101 for the
resource estimates quoted above is John Drobe, P.Geo, Chief Geologist,
Corriente
During the three-month period ended March 31, 2009, the company
incurred exploration and development costs of $619,000 (2008 $315,000) for the
Panantza-San Carlos project. The company focused its development efforts for the
Panantza-San Carlos Project on its community relations programs in the district,
and review of the status of all exploration-based EIAs and associated
audits. Other Exploration Projects and Machala Port For the three-month period ended March 31, 2009, expenditures
to develop the companys concentrate shipping port facility in Machala, Ecuador
totalled $48,000 (2008 $59,000). To March 31, 2009, the company has
capitalized development costs for the port totalling $2,214,000. For the three-month period ended March 31, 2009, deferred
exploration costs of $81,000 (2008 $3,000) were attributed to the companys
remaining copper exploration targets in the Corriente Copper Belt, comprised of
the La Florida, San Luis, San Marcos, San Miguel and Sutzu concessions. To March
31, 2009, the company has capitalized development costs for its remaining copper
exploration targets totalling $2,068,000. Environmental Environmental Impact Assessments (EIA) On May 4, 2006, the Mirador Projects EIA was approved by the
MMP. This EIA covers both the environmental aspects of proposed mining
operations in Mirador and community and social plans associated with the same
project. During the lengthy preparation of the EIA, the company worked closely
with the MMP to ensure that the report met all required government guidelines
and regulations. The Mirador EIA is one of the most comprehensive documents on
social and environmental issues ever submitted to the MMP in Ecuador for a
mining project. The submission of the EIA and subsequent approval followed an
extensive consultation process with local communities carried out in late
November and early December 2005. As a requirement of the MMPs approval of the Mirador EIA, the
company was required to post US$3,022,000 (amortized cost at March 31, 2009
C$3,812,000) in favour of the MMP as a security deposit against the companys
obligations under the EIA. The required security deposit amount is
reviewed on an annual basis by the MMP and is expected to be subject to
adjustment as the project progresses to completion. In September 2006, the company filed an amendment to the
Mirador EIA (EIAA) to allow for mill, tailings and dump location changes to
the original mine plan. While subsequent public consultations were successful, the EIAA was rejected by authorities in May 2007
and is being revised for re-submittal now that the new Mining Law is in
place. Page 9 of 23 For the company to receive a mine operating permit for the
Mirador Project, approvals for the EIAA and construction and operating-related
permit applications must be received from the MMP and other Ecuador governmental
authorities during the course of development of the Mirador Project, prior to
the beginning of mine operations. On July 26, 2007, the EIA covering the Panantza-San Carlos
concessions were approved by the MMP. As a requirement of the MMPs approval of
the Panantza-San Carlos concession EIA, the company was required to post
US$63,000 in favour of the MMP as a security deposit against the companys
obligations under the EIA. Since the amount was relatively small, the company
was able to obtain a surety bond with a local insurance company for this amount.
The required security deposit amount is reviewed on an annual basis by the MMP
and is subject to adjustment as the Projects development progresses. In December 2007, the Ministry of Environment (the MOE) in
Ecuador approved the EIA for the companys port operation in Machala (the
Machala EIA), which is designed to act as a shipping facility for copper
concentrates sent to overseas smelters. In October 2008, the Ministry of
Environment in Ecuador approved the Environmental License for Corriente to build
and operate this dedicated port. The company owns a 27 hectare port site on the
Santa Rosa Channel in Machala, which is connected to the Mirador Project by a
400 km paved highway. Receipt of the Machala EIA is an important part of the
overall Mirador Project approval process and provides the key access for a
Pacific shipping route for the companys copper concentrates. As a requirement
of the MOEs approval of the Machala Port EIA, the company was required to post
US$243,000 (amortized cost at March 31, 2009 C$306,000) in favour of the MMP
as a security deposit against the companys EIA obligations. Financial Results of Operations The information provided below highlights the companys
quarterly results for the past 8 quarters. All of the financial information
referenced below is expressed in Canadian dollars (unless otherwise noted) and
has been prepared in accordance with Canadian GAAP. The accounting policies
followed by the company are set out in note 2 to the audited consolidated
financial statements of the company for the fiscal year ended December 31, 2008
and have been consistently followed in the preparation of the current periods
consolidated financial statements. Financial Data for Last Eight Quarters In
thousands of Canadian dollars, except for per share amounts
Three-month period Mar-09 Dec-08 Sep-08 Jun-08 Mar-08 Dec-07 Sep-07 Jun-07 ended
Total revenues $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 General and administrative
expenses $ 1,257
$ 824
$ 713
$ 823
$ 931
$ 961
$ 877
$ 973
Other expenses (income) $ (3,078 ) $ (10,886 ) $ (3,664 ) $ 15 $ (3,514 ) $ (560 ) $ 4,555
$ 6,600
Loss (earnings)
$ (1,821 ) $ (10,062 ) $ (2,951 ) $ 838
$ (2,583 ) $ 401
$ 5,432
$ 7,573
Basic and diluted loss (earnings) per
share $ (0.02 ) $ (0.14 ) $ (0.04 ) $ 0.01
$ (0.03 ) $ 0.01
$ 0.07
$ 0.10
As the company has not had any revenue-producing mineral
properties to date, no mining revenues are reflected in the above table. In recent years, the companys net earnings and losses largely
reflect the impact of foreign exchange gains or losses on its holdings of US
dollars, and the interest income earned from Canadian and US cash and cash
equivalents on hand. Page 10 of 23 Since January 2007, the companys funds have been held
predominantly in US dollars, producing earnings from large foreign exchange
gains in the first quarter of 2009 and the first, third and fourth quarters of
2008, and a loss in the second quarter of 2008 due mainly to a modest foreign
exchange loss and reduced interest income. The significant losses in the second
and third quarters of 2007 were also due to large foreign exchange losses. In periods of loss, basic and diluted loss per share amounts
are the same because the effect of potential issuances of shares would be
anti-dilutive. First Quarter For the three months ended March 31, 2009, the company had net
earnings of $1,821,000 (or $0.02 per share), compared with net earnings of
$2,584,000 (or $0.03 per share) for the same period in 2008. The largest effect
on earnings came from a weakening of the Canadian dollar from US$1.2180 at
December 31, 2008 to US$1.2613 at March 31, 2009, which led to a foreign
exchange gain of $2,747,000 in the three months ended March 31, 2009 (2008
$2,706,000). As previously noted, the companys cash and cash equivalents and
investments are predominantly in US dollars. Interest income earned during the
three months ended March 31, 2009 decreased to $301,000 from $778,000 in the
same period in 2008 due to mainly to much lower yields on deposits and also
lower cash, cash equivalents and investments balances. Total administration expenses in the first quarter of 2009
increased to $1,257,000 (2008 $930,000) due primarily to a bonus to senior
management that was approved and accrued in the first quarter after certain
performance milestones were achieved, and increased stock-based compensation
expense. The company operates within a single operating segment, which
is the exploration and development of copper-gold mineral properties. The
companys mineral property interests are in Ecuador, South America. The
consolidated statements of loss, comprehensive loss and deficit for the periods
presented reflect the companys Canadian operations only. All other Ecuador
operating expenses are capitalized to mineral properties, in accordance with the
companys accounting policy. Liquidity, Investing and Capital Resources Generally, a non-GAAP financial measure is a numerical measure
of a companys performance, financial position or cash and cash equivalents
flows that either excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and presented in
accordance with GAAP. Working capital calculations or changes are not measures
of financial performance (nor do they have standardized meanings) under either
Canadian or US GAAP. In evaluating these measures, readers should consider that
the methodology applied in calculating such measures may differ among companies
and analysts. Working capital (defined as current assets minus current
liabilities) as at March 31, 2009 was $92,196,000, compared to $93,223,000 at
December 31, 2008. The main cash and cash equivalents flow during the three-month
period ended March 31, 2009 were from investing activities including a maturity
of a promissory note of $28,612,000 (2007 $Nil) and cash applied to mineral
property expenditures mainly associated with development of the Mirador Project
of $3,448,000 (2007 $3,686,000). A foreign exchange gain in the three-month
period ended March 31, 2009 of $2,747,000 (2007 $2,706,000) was the main
reason for the positive cash flow from operating activities, despite a decrease
in interest income to $301,000 (2007 $778,000). At March 31, 2009, the companys cash equivalents are invested
in overnight bank deposits with R1-High investment ratings (DBRS) and as they
mature daily, are easily liquidated. The company has no investments in
asset-backed commercial paper. As at March 31, 2009, the amortized cost of the
companys investments is $46,626,000 (December 31, 2008 $75,237,000). The company has no long-term debt obligations or off-balance
sheet arrangements. Page 11 of 23 Historically, the companys capital requirements have been met
by equity subscriptions and from the proceeds of sale of certain mineral
property interests. The companys continuing operations as intended are
dependent on managements ability to raise required funding through future
equity issuances, debt financing, asset sales or a combination thereof (refer to
Risks Factors below). While the companys current working capital is considered
sufficient to fund the companys administrative overhead for the next several
years, substantial capital is required to complete the companys Mirador Project
and other Corriente Copper Belt resource developments. Actual funding
requirements may vary from those planned due to a number of factors, including
the progress of exploration and project development activity and foreign
exchange fluctuations. Outstanding Share Data The companys authorized capital consists of an unlimited
number of common shares without par value. As at May 11, 2009, there were 75,302,393 common shares issued
and outstanding, and options to purchase an aggregate of 3,095,000 common
shares, of which 1,607,820 had vested in accordance with the vesting provisions
discussed below. Incentive Stock Option Plan Under the companys Incentive Stock Option Plan (the Plan),
the number of shares that may be reserved for grant under the Plan is a rolling
maximum of 10% of the number of common shares actually outstanding immediately
prior to the grant of any particular option. The exercise price established for options granted under the
Plan is equal to the closing market price of the companys shares on the Toronto
Stock Exchange on the trading day immediately prior to the grant of the
option. Options granted generally have expiry dates five years from the
date of grant and the following vesting provisions, which were implemented as of
February 2006: The following summarizes the stock options granted during the
three months ended March 31, 2009: Page 12 of 23 The following is a summary of stock option transactions during
the three months ended March 31, 2009: The following table shows additional information for stock
options outstanding and exercisable at March 31, 2009: Related party transactions In June 2007, the company completed the spin-off of the
companys Caya 36 (Tundayme) and Piedra Liza gold assets into a new company, Q2
Gold Resources Inc. (Q2 Gold) by means of a Plan of Arrangement (the
Arrangement). In connection with the Arrangement, and to assist Q2 Gold with
its business objectives, Corriente and Q2 Gold entered into a collateralized,
interest-bearing convertible loan agreement dated April 23, 2007, pursuant to
which Corriente agreed to lend Q2 Gold up to $750,000 including accrued
interest, to be advanced in instalments (the Convertible Loan). The
Convertible Loan maximum facility was increased from $750,000 to $1,500,000 and
the maturity date extended to December 31, 2009, by an amendment dated September
25, 2008. Corriente also provides certain non-technical management
services including, but not limited to, office, general accounting,
administrative and shareholder services, pursuant to a management services
agreement dated September 1, 2007, effective July 1, 2007 (the Agreement). The
Agreement provides for a fee of $10,000 per month for such services, which is
accrued pursuant to the Convertible Loan. Included in management fees and interest income are $30,000
(2007 $30,000) and $14,000 (2007 $11,000), respectively, for the three-month
period ended March 31, 2009 in respect of administrative services and accrued
interest on the Convertible Loan provided by Corriente to Q2 Gold. Page 13 of 23 As at March 31, 2009, a total of $1,050,000 was owed by Q2 Gold
to the company, consisting of $950,000 of principal and $100,000 of accrued
interest. The Convertible Loan principal and unpaid interest are due on the
earlier of December 31, 2009 and the first date on which Q2 Gold obtains a
prospectus filing receipt with respect to any of its securities in any province
of Canada. At any time prior to maturity, Corriente can require Q2 Gold to
convert, in whole or in part, the principal amount outstanding and accrued
interest of the Convertible Loan into Q2 Gold Shares at a conversion price equal
to $0.10 per share. Q2 Gold can repay any portion of the outstanding Convertible
Loan at any time prior to maturity or conversion. The company believes the
conversion feature of the Convertible Loan is not material, therefore
recognition and measurement of the embedded derivative is not being presented.
The foregoing related party transactions are recorded at the
exchange amount, which is the amount of consideration paid or received as
established and agreed to between the parties. Q2 Gold has common officers and a
common Board of Directors, except that Q2 Gold has one additional independent
director. The current state of financial markets makes it uncertain that
Q2 Gold will be able to raise the necessary debt or equity capital to repay the
Convertible Loan at maturity. In the event of any default of the repayment of
the Convertible Loan, the Q2 Gold assets which collateralize the Convertible
Loan would become property of the company in accordance with the terms of the
agreement. Management believes that the Q2 Gold assets would have a fair value
greater than or equal to the current carrying value of the Convertible Loan.
Significant changes in the fair value of the underlying Q2 Gold assets could
have an impact on the company up to a maximum of the carrying value of the
Convertible Loan. Accounting Estimates, Policies and Standards When a new Canadian accounting standard is released, the Chief
Financial Officer undertakes a review and evaluation to determine if it is
applicable. If there is any uncertainty in its applicability, Corriente solicits
the input of its professional advisors and the Audit Committee. If the new
standard is applicable to Corriente, it is then analyzed and summarized in a
manner that effectively documents and evaluates the impact on Corriente, and to
determine the immediate action, if any, Corriente would need to undertake in
order to comply with the new standard. Quarterly, the documented standards are
reviewed, and updated as required, to ensure that a standard is still
applicable, and that Corriente remains in compliance. The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates and assumptions are used in
determining possible impairment of mineral property costs, the fair values of
stock options and financial instruments, asset retirement obligations and future
income tax assets. The company evaluates its estimates on an on-going basis and
bases them on various assumptions that are believed to be reasonable under the
circumstances. The companys estimates form the basis for making judgments about
the carrying value for assets and liabilities that are not readily apparent from
other sources. Actual results may differ from those estimates. Should the
company be unable to meet its ongoing obligations, the realizable value of its
assets may decline materially from current estimates. The details of the companys significant accounting policies
are presented in note 2 of the companys audited consolidated financial
statements for the year ended December 31, 2008, which can be found on
SEDAR. International Financial Reporting Standards (IFRS)
In February 2008, the CICAs Accounting Standards Board
confirmed that IFRS will replace Canadian GAAP in 2011 for profit-oriented
Canadian publicly accountable enterprises. Corriente will be required to report
its results in accordance with IFRS beginning in 2011. The company has developed
a changeover plan to complete the transition to IFRS by January 1, 2011,
including the preparation of required comparative information. Page 14 of 23 There are three key stages to Corrientes transition plan: Identification of a project work plan outlining potential
conversion issues applicable to our industry. This phase assigns
responsibilities for each of the identified issues, estimates the time,
duration and costs associated with each major deliverable within the plan,
and presents an overall project timeline and percentage of completion
reporting from key responsible persons. Identification of the significant accounting policies
that relate to each of the major conversion issues applicable to the
company. This stage identifies the changes to the accounting policies that
will be required with IFRS and adjusts the plan identified in Stage One
accordingly. Management of dual reporting under Canadian GAAP and
IFRS. This phase determines the mapping between the different accounts
identified in our chart of accounts and applies this mapping to generate
reporting under IFRS. To date, management has made the conversion project a high
priority and committed to a structured approach to the required changes.
Transition team members have been identified and responsibilities are being
determined. At this stage, key areas of consideration are primary conversion
requirements, conversion requirements at both the parent and subsidiary levels,
responsibilities of team leaders, task owners and responsibilities, start and
end dates for tasks, estimations of time requirements and measurement and
reporting of percentage of completion of task requirements. Currently, management is in the process of identifying the
technology changes and tools required to ensure the success of the conversion,
as well as the external consultants needed to advise throughout the project. To
date, management has identified the need for a staged transition approach. Disclosure Controls and Procedures Management is responsible for establishing and maintaining
disclosure controls and procedures and internal control over financial reporting
for the company. Corriente has regularly-applied procedures that, when
considered in the aggregate and in conjunction with current internal controls,
are considered to be effective disclosure controls. In addition, Corriente
utilizes a Corporate Disclosure Committee (the CD Committee), comprised of the
Chief Executive Officer, Senior Vice-President and Chief Financial Officer, to
supplement these periodic processes. The Chief Executive Officer and the Chief Financial Officer
have evaluated whether there were any material changes to the companys
disclosure controls and procedures during the most recent interim period ended
March 31, 2009 that have materially affected, or are reasonably likely to
materially affect the companys disclosure controls and procedures. No material
changes were identified from their evaluation. Internal Controls Over Financial Reporting
(ICFR) Management has designed, established and is maintaining a
system of ICFR to provide reasonable assurance that the financial information
disclosed in this MD&A and the related financial statements that was
prepared by the company for external purposes is reliable and has been recorded,
processed, summarized and reported to the companys Board of Directors and Audit
Committee in an accurate and timely manner in accordance with Canadian GAAP and
reconciled to US GAAP on an annual basis. The Chief Executive Officer and the Chief Financial Officer
have evaluated whether there were any material changes to the companys ICFR
during the most recent interim period ended March 31, 2009 that have materially
affected, or are reasonably likely to materially affect the companys ICFR. No
material changes were identified from their evaluation. As in prior quarters, the companys Audit Committee reviewed
this MD&A and the unaudited interim consolidated financial statements for
the period ended March 31, 20009, prior to their release. Page 15 of 23 Risk Factors Companies operating in the mining industry face many and varied
kinds of risks. While risk management cannot eliminate the impact of all
potential risks, the company strives to manage such risks to the extent possible
and practical. It should be noted that this list is not exhaustive and that
other risk factors may apply. Few exploration projects successfully achieve
development and production. Due in some cases to factors that cannot be
predicted or foreseen, an investment in the company may not be suitable for all
investors. Following are the risk factors which the companys management
believes are most important in the context of the companys business. Foreign Country and Political Risk The mineral properties on which the company is actively
pursuing its exploration and development activities are all located in Ecuador,
South America. As a result, the company is subject to certain risks, including
currency fluctuations and possible political or economic instability in Ecuador,
which may result in the impairment or loss of mineral concessions or other
mineral rights. In recent history, Ecuador has undergone numerous political
changes at the national executive branch, legislative branch and judicial branch
levels. Also, mineral exploration and mining activities may be affected in
varying degrees by political instability and government regulations related to
the mining industry. Any changes in regulations or shifts in political attitudes are
beyond the control of the company and may adversely affect its business.
Exploration may be affected in varying degrees by government regulations with
respect to restrictions on future exploitation and production, price controls,
export controls, foreign exchange controls, import duties, royalties, income
taxes, expropriation of property, environmental legislation and mine and/or site
safety. Despite the April 29, 1996 Agreement between the Government of
Canada and the Government of the Republic of Ecuador for the Promotion and
Reciprocal Protection of Investments, the companys mineral properties could
conceivably be expropriated by the Ecuador Government, which could result in a
significant or total loss for the company without compensation. In November 2006, Rafael Correa won the Ecuador Presidential
run-off election over Alvaro Noboa and officially took office on January 15,
2007. During the intervening (transition) period, the administration of
President Alfredo Palacio experienced a number of indigenous protests in
southeast Ecuador which eventually resulted in the suspension of the companys
exploration and development activities (see Properties in Advanced
Development - Mirador Project) and a delay in the Mirador Projects
development timeline. Since President Correas January 15, 2007 inauguration, his
administration has focused primarily on exacting electoral and governmental
reforms. In April 2007, a National Referendum approved the creation of a
Constitutional Assembly to replace Congress. On September 30, 2007,
Constitutional Assembly elections were held in which President Correas Allianza
Pais party had elected 80 of the 130 members of the Constitutional Assembly,
thereby giving the President a clear majority in the Assembly. On April 18, 2008, the Constitutional Assembly of Ecuador
passed the Mandate into law on April 18, 2008, which established a number of
conditions and restrictions on metallic mining concessions previously issued by
the Government of Ecuador (see Significant Events for the Period Ended March
31, 2009 and to date). According to the Ministry of Mines and Petroleum
(the MMP), the new Mining Law (note 15 of the audited consolidated financial
statements for the years ended December 31, 2008 and 2007) enacted on January
29, 2009 establishes the new legal framework for mining. However, the
Regulations underlying the Mining Law have yet to be developed, creating some
uncertainty regarding the mining industry in Ecuador. To date, the companys
discussions with the MMP and legal counsel have not resulted in a determination
of any material impairment in the carrying value of the companys concessions as
a result of the lack of defined Regulations or clear governmental confirmation
that the Mandate is no longer in effect. Page 16 of 23 While the new Mining Law is considered to be a significant
milestone for the country, much work remains to be done in developing the
Regulations to the Mining Law and finalizing the terms and conditions that would
foster feasible mining investments in Ecuador. To mitigate such risk, the company funds its Ecuador operations
on an as-needed basis and works closely with federal and territorial governments
and community groups. The company does not presently maintain political risk
insurance for its foreign exploration and development projects. Economic Instability May Affect the Companys Business
Since the middle of 2008, macroeconomic events, including
global economic uncertainty, reduced confidence in financial markets, bank
failures and credit availability concerns have negatively affected prices for
commodities, including copper. Within this timeframe, the companys market
capitalization has fluctuated significantly. Although circumstances may improve
over the longer term, the impact upon the companys liquidity and its ability to
raise the capital required to execute its business plans going forward may be
negative. As a result, the company will consider its business plans and options
carefully going forward into 2009. The company intends to preserve its cash
balances to the greatest extent possible by curtailing capital and operational
expenditures where possible. The company has assessed the carrying values of its mineral
properties as a result of the market downturn in copper prices and based on
current and expected metals prices and cost structures, management has
determined that the values of the companys mineral properties have not been
impaired at this time. However, should current market conditions and commodity
prices significantly become worse, recognition of an impairment of mineral
properties may be required. Exploration and Mining Risks The business of exploring for minerals and mining involves a
high degree of risk. Due in some cases to factors that cannot be foreseen, only
a small proportion of the properties that are explored are ultimately developed
into producing mines. There is no assurance that the companys mineral
exploration activities will result in any discoveries of new bodies of
commercial ore. At present, only the companys Mirador Project property has
proven or probable reserves while any planned exploration programs for the
companys other properties are exploratory searches for proven or probable
reserves. The mining areas presently being assessed by the company may not
contain economically recoverable volumes of minerals or metals. The operations of the company may be disrupted by a variety of
risks and hazards which are beyond the control of the company, including labour
disruptions, accidents, the inability to obtain suitable or adequate machinery,
equipment or labour and other risks involved in the conduct of exploration
programs. Once economically recoverable volumes of minerals are found,
substantial expenditures are required to establish reserves through drilling, to
develop metallurgical processes, to develop the mining and processing facilities
and infrastructure at any site chosen for mining. Although substantial benefits
may be derived from the discovery of a major mineralized deposit, no assurance
can be given that minerals will be discovered in sufficient quantities or have
sufficient grade to justify commercial operations or that funds required for
development can be obtained on a timely basis. The economics of developing
copper, gold and other mineral properties is affected by many factors including
the cost of operations, variations of the grade of ore mined, fluctuations in
the price of minerals produced, costs of processing equipment and such other
factors as government regulations, including regulations relating to
environmental protection. In addition, the grade of mineralization ultimately
mined may differ from that indicated by drilling results and such differences
could be material. Depending on the price of copper or other minerals produced,
which have fluctuated widely in the past, the company may determine that it is
impractical to commence or continue commercial production. An additional project risk related to the companys development
of its Mirador and Panantza-San Carlos Projects includes the cyclical demand for
major components and resources utilized in a mines construction and operation,
including equipment, parts and qualified employees. These same conditions may
also adversely impact the mines ultimate construction schedule if an inordinate
demand on metals causes shortages or cost increases. Page 17 of 23 Surface Rights and Access Although the company acquires the rights to some or all of the
minerals in the ground subject to the tenures that it acquires, or has a right
to acquire, in most cases it does not thereby acquire any rights to, or
ownership of, the surface to the areas covered by its mineral tenures. In such
cases, applicable mining laws usually provide for rights of access to the
surface for the purpose of carrying on mining activities, however, the
enforcement of such rights can be costly and time consuming. In areas where
there are no existing surface rights holders, this does not usually cause a
problem, as there are no impediments to surface access. However, in areas where
there are local populations or land owners, it is necessary, as a practical
matter, to negotiate surface access. There can be no guarantee that, despite
having the legal right to access the surface and carry on mining activities, the
company will be able to negotiate a satisfactory agreement with any such
existing landowners/occupiers for such access, and therefore it may be unable to
carry out mining activities. In addition, in circumstances where such access is
denied, or no agreement can be reached, the company may need to rely on the
assistance of local officials or the courts in such jurisdiction. Estimates of Mineral Resources and Production Risks The mineral resource estimates disclosed by the company are
estimates only, and no assurance can be given that any proven or probable
reserves will be discovered or that any particular level of recovery of minerals
will in fact be realized or that an identified reserve or resource will ever
qualify as a commercially mineable (or viable) deposit which can be legally and
economically exploited. In addition, the grade of mineralization which may
ultimately be mined may differ from that indicated by drilling results and such
differences could be material. Production can be affected by such factors as
permitting regulations and requirements, weather, earthquakes, fire,
environmental factors, unforeseen technical difficulties, unusual or unexpected
geological formations and work interruptions. Consequently, the companys
estimated mineral resources should not be interpreted as assurances or evidence
of commercial viability or potential or of the profitability of any future
operations. Financing Risks The company has no source of positive operating cash flow and
has no assurance that additional funding that could be needed in addition to its
cash and cash equivalents on hand will be available for further exploration and
project development. Further advanced development of one or more of the
companys properties will be dependent upon the companys ability to obtain
financing through joint venturing, equity or debt financing or other means.
Although the company has been successful in the past in obtaining financing
through the sale of equity securities, there can be no assurance that the
company will be able to obtain adequate financing in the future or that the
terms of such financing will be favourable. Failure to obtain such additional
financing could result in delay or indefinite postponement of further
development of its projects. Additional funds raised by the company through the issuance of
equity or convertible debt securities will cause the companys current
stockholders to experience dilution. Such securities may grant rights,
preferences or privileges senior to those of the companys common stockholders.
Limited Experience with Development-Stage Mining Operations
The company has no previous experience in placing mineral
properties into production and its ability to do so will be dependent upon using
the services of appropriately experienced personnel or entering into agreements
with other major resource companies or contractors that can provide such
expertise. There can be no assurance that the company will have available to it
the necessary expertise when and if it places its mineral properties into
production. Base and Precious Metals Prices The principal activity of the company is the exploration and
development of copper-gold mineral properties. The mineral exploration and
development industry in general is intensely competitive and there is no
assurance that, even if commercial quantities of proven and probable reserves
are discovered, a profitable market may exist for the sale of the same. Factors
beyond the control of the company may affect the marketability of any substances
discovered. Base and precious metals prices have fluctuated widely, particularly in recent years. The feasible development
of such properties is highly dependent upon the price of copper and, to a lesser
extent, gold. A sustained and substantial decline in commodity copper prices
could result in the write-down, termination of exploration and development work
or loss of its interests in identified mineral properties. Page 18 of 23 Competition The company competes with many companies that have
substantially greater financial and technical resources for the acquisition of
mineral properties and mining and processing equipment, the securing of
engineering services and the recruitment and retention of qualified employees
and consultants. Environmental and other Regulatory Requirements The activities of the company are subject to environmental
regulations promulgated by government agencies from time to time. Environmental
legislation generally provides for restrictions and prohibitions on spills,
releases or emissions of various substances produced in association with certain
mining industry operations, such as seepage from tailings disposal areas, which
would result in environmental pollution. A breach of such legislation may result
in imposition of fines and penalties. In addition, certain types of operations
require the submission and approval of environmental impact assessments.
Environmental legislation is evolving in a manner which means stricter
standards, and enforcement, fines and penalties for non-compliance are more
stringent. Environmental assessments of proposed projects carry a heightened
degree of responsibility for companies and directors, officers and employees.
The cost of compliance with changes in governmental regulations has a potential
to reduce the profitability of operations. Companies engaged in exploration and development activities
generally experience increased costs and delays as a result of the need to
comply with applicable laws, regulations and permits. There can be no assurance
that all permits which the company may require for exploration and development
of its properties will be obtainable on reasonable terms or on a timely basis,
or that such laws and regulations would not have an adverse effect on any
project that the company may undertake. The company believes it is in substantial compliance with all
material laws and regulations which currently apply to its activities. However,
there may be unforeseen environmental liabilities resulting from exploration
and/or mining activities and these may be costly to remedy. Failure to comply
with applicable laws, regulations, and permitting requirements may result in
enforcement actions thereunder, including orders issued by regulatory or
judicial authorities causing operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures, installation of
additional equipment, or remedial actions. Parties engaged in exploration
operations may be required to compensate those suffering loss or damage by
reason of the exploration activities and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations and, in
particular, environmental laws. Amendments to current laws, regulations and permits governing
operations and activities of exploration companies, or more stringent
implementation thereof, could have a material adverse impact on the company and
cause increases in expenditures and costs or require abandonment or delays in
developing new mining properties. Corrientes policy is to abide by the regulations and
requirements of Ecuador and the companys Health, Safety and Environmental
Policies, as well as its approved EIAs. Infrastructure Mining, development and exploration activities depend, to one
degree or another, on adequate infrastructure. Reliable roads, bridges, power
sources and water supply are important determinants which affect capital and
operating costs. The lack of availability on acceptable terms or the delay in
the availability of any one or more of these items could prevent or delay
development of the companys projects. If adequate infrastructure is not
available in a timely manner, there can be no assurance that the development of
the companys projects will be commenced or completed on a timely basis, if at
all; the companys operations will achieve anticipated results; or the
construction costs and ongoing operating costs associated with the development
of the companys advanced-stage exploration projects will not be higher than anticipated. In addition, unusual or infrequent
weather phenomena, sabotage, or community, government or other interference in
the maintenance or provision of such infrastructure could adversely affect the
companys operations and profitability. Page 19 of 23 Uninsured or Uninsurable Risks The company may become subject to liability for pollution or
hazards against which it cannot insure or may elect not to insure where premium
costs are disproportionate to the companys perception of the relevant risks.
The payment of such insurance premiums and of such liabilities would reduce the
funds available for exploration, development and production activities. Title Matters Title to and the area of mining concessions may be disputed.
Although the company has taken steps to verify the title to mineral properties
in which it has an interest in accordance with industry standards for the
current stage of exploration of such properties, these procedures do not
guarantee the companys title. Property title may be subject to unregistered
prior agreements or transfers and title may be affected by undetected defects or
the rights of indigenous peoples. Repatriation of Earnings Currently there are no restrictions on the repatriation from
Ecuador of earnings to foreign entities. However, despite the existence of a
Canada Ecuador Tax Treaty there can be no assurance that restrictions on
repatriation of earnings from Ecuador will not be imposed in the future. Foreign Subsidiaries The company conducts operations through foreign subsidiaries
and substantially all of its assets are held in such entities. Accordingly, any
limitation on the transfer of cash or other assets between the parent
corporation and such entities, or among such entities, could restrict the
companys ability to fund its operations efficiently. Any such limitations, or
the perception that such limitations may exist now or in the future, could have
an adverse impact on the companys valuation and stock price. Dependence on Key Personnel The companys development to date has largely depended on, and
in the future will continue to depend on, the efforts of key management, project
management and operations personnel. Loss of any of these people could have a
material adverse effect on the company and its business. The company has not
obtained and does not intend to obtain key-person insurance in respect of any
officers or other employees. Share Price Fluctuations In recent years, the securities markets have experienced a high
level of price and volume volatility, and the market price of securities of many
companies, particularly those considered development-stage companies such as the
company, have experienced wide fluctuations in price which have not necessarily
been related to the underlying asset values or prospects of such companies.
Price fluctuations will continue to occur in the future. No Dividends The company has no history of earnings from operations and, due
to the nature of its business, there can be no assurance that the company will
ever be profitable. Investors cannot expect to receive a dividend on their
investment in the company in the foreseeable future, if ever. Investors should
not expect to receive any return on their investment in the companys securities
other than possible capital gains. Page 20 of 23 Financial Risk The companys financial instruments are exposed to certain
financial risks, including credit risk, liquidity risk and market risk
(including interest rate, foreign exchange rate and copper price risk). Credit risk Credit risk is the risk of an unexpected loss if a customer or
third party to a financial instrument fails to meet its contractual payment
obligations. The companys credit risk is primarily attributable to cash and
cash equivalents and investments. The companys cash and cash equivalents and investments are
held at a large Canadian financial institution, which has no known liquidity
problems. Any cash maintained in Ecuador is held in a well-established bank. The
companys cash equivalent investments (presented as part of cash and cash
equivalents) are comprised of financial instruments issued by a Canadian
chartered bank, which carry a R1-High (DBRS) investment rating and are easily
liquidated, as they mature daily. The companys largest concentration of
financial assets, investments, is exclusively in an instrument of a Canadian
Crown corporation and carries an R1-High (DBRS) investment rating and is easily
liquidated. The company has no investments in asset-backed commercial paper. The
company manages counterparty credit risk by regularly monitoring counterparty
credit ratings. The companys accounts receivable consist mainly of GST
receivable due from the Government of Canada. The EIA deposits included in other
assets are held in a major US bank and are comprised of financial instruments
issued by a large US bank. The convertible loan in the amount of $1,050,000 is due from Q2
Gold, a related company, and its subsidiaries. Q2 Golds assets are primarily
made up of concessions located in Ecuador which are believed to have gold
resource potential. The convertible loan is collateralized by the assets of Q2
Gold. Liquidity risk Liquidity risk is the risk that the company will not be able to
meet its financial obligations as they fall due. The company manages liquidity
risk through the management of its capital structure and financial leverage as
outlined in note 12 to the audited consolidated financial statements for the
years ended December 31, 2008 and 2007. Accounts payable relating to mineral properties and other
accounts payable and accrued liabilities are due within the current operating
period. As at March 31, 2009, the company had a total cash, cash equivalents and
investments balance of $92,712,000 to settle current liabilities of $1,617,000.
Market risk Market risk is the risk of loss that may arise from changes in
market factors such as foreign exchange, interest rates and commodity prices.
(a) Currency risk The companys expenditures are predominantly in US dollars and
any future equity raised is expected to be predominantly in Canadian dollars.
The company conducts the majority of its business in Ecuador, which uses the US
dollar as its primary economic currency. Future project development expenditures
are expected to be paid in US dollars. A significant change in the relative
currency exchange rates between the Canadian dollar and the US dollar would have
an effect on the companys balance sheets, statements of earnings (loss) and
cash flows. As such, the company is subject to risk due to fluctuations in
the exchange rates for the US and Canadian dollar. Beginning in 2007, the
company began maintaining balances in Canadian and US dollars in a proportion
related to the magnitude of future mineral property, plant and equipment, and
administrative expenditures, and the jurisdictions in which they will likely be
made. The company has not hedged its exposure to currency fluctuations. Page 21 of 23 At March 31, 2009, the company is exposed to currency risk
through the following financial assets and liabilities denominated in US
dollars: Based on the above net exposures as at March 31, 2009, and
assuming that all other variables remain constant, a 10% depreciation or
appreciation of the Canadian dollar against the US dollar would result in an
increase or decrease of approximately $6,545,000 in the companys net earnings.
(b) Interest rate risk Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The risk that the company will realize a loss as a result of a
decline in the fair value of the investments or EIA deposits included in other
assets is limited because these deposits will be held to maturity, have fixed
interest rates and were issued by a Canadian Crown corporation or major bank.
Changes in interest rates would not have a significant impact on the companys
consolidated statements of earnings (loss). (c) Commodity price risk Commodity price risk is defined as the potential adverse impact
on earnings or economic value due to commodity price movements and volatilities.
The company closely monitors commodity prices of copper, individual equity
movements, and the stock market to determine the appropriate course of action to
be taken by the company. Fluctuations in commodity pricing may be significant,
and the associated price risk cannot be estimated at this stage of the companys
development. The company does not have any hedging or other commodity-based
risks respecting its operations. Cautionary Statement on Forward-Looking
Statements This MD&A contains forward-looking statements that relate
to future events or Corriente's future performance. All statements other than
statements of historical fact are forward-looking statements. These statements
include, but are not limited to, statements concerning the future financial and
operating performance of Corriente, its subsidiaries and its current and
proposed mineral projects; the future price of copper, gold and other precious
and base metals; the estimation of mineral reserves and resources; the
realization of mineral reserve estimates; the timing and amount of estimated
future production; anticipated costs of production; working capital
requirements; capital and exploration expenditures; costs and timing of mine
development, processing facility construction and the development of new
deposits; costs and timing of future exploration; requirements for additional
capital; government regulation of mining operations; environmental risks;
reclamation expenses; title disputes or claims; limitation of insurance
coverage; and the timing and possible outcome of pending litigation and
regulatory matters. Often, but not always, forward-looking statements can be
identified by the use of words such as plans, proposes, expects, is
expected, budget, scheduled, estimates, forecasts, intends,
anticipates, or believes or variations (including negative variations) of
such words and phrases, or state that certain actions, events or results may,
could, would, might or will be taken, occur or be achieved. The forward-looking statements contained herein are based on a
number of assumptions that the company believes are reasonable, but may prove to
be incorrect. These assumptions include, but are not limited to, assumptions
that the current economic uncertainty and financial market volatility will not prevent the timely realization of the company's development
plans; that foreign exchange rates will remain approximately at current levels;
that the supply and demand for copper will develop as expected; that the company
receives regulatory approvals for its exploration and development projects on a
timely basis; that the company is able to obtain financing for the companys
development projects on reasonable terms; that engineering and construction
timetables and capital costs for the companys development projects are not
incorrectly estimated or affected by unforeseen circumstances; that the
companys reserve estimates are within reasonable bounds of accuracy and that
the geological, operational and price assumptions on which they are based are
reasonable; that the company is able to retain or hire the personnel it needs to
carry out its business plan; and that a feasible mining industry environment is
facilitated and fostered by the Ecuador Government.
Page 22 of 23 However, forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Corriente to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, but are not limited to, the
current significant general economic uncertainty and financial market
volatility; exploration and mining risks; uncertainties relating to surface
rights; the actual results of current exploration activities; realization of
resource estimates; ability to obtain financing; the outcome of negotiations;
conclusions of economic evaluations and studies; changes in project parameters
and returns as plans continue to be refined; future prices of copper, gold, and
other by-product credit metals; increased competition in the mining industry for
properties, equipment and qualified personnel; risks associated with
environmental compliance and permitting, including those created by changes in
environmental legislation and regulation; the risk of arbitrary changes in law;
title risks; risks relating to repatriation of earnings; social and political
risks associated with operations in foreign countries; the risk of loss of key
personnel; significant fluctuations in the exchange rates for United States and
Canadian currency; and delays in the completion of development and construction
activities , as well as those factors discussed under the heading Risk Factors
elsewhere in this MD&A. Although the company has attempted to identify important
factors that could cause actual actions, events or results to differ materially
from those described in forward-looking information, there may be other factors
that cause actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking information will prove
to be accurate, as actual results and future events could differ materially from
those anticipated in such statements. Forward-looking statements contained herein are made as of the
date hereof. The company undertakes no obligation to update publicly or
otherwise revise any forward-looking statements or the foregoing lists of
factors and assumptions, whether as a result of new information, future events
or results or otherwise, except as required by law. Because forward-looking
statements are inherently uncertain, readers should not place undue reliance on
them. The forward-looking statements contained herein are expressly qualified in
their entirety by this cautionary statement. Cautionary Note to US Investors All references to mineral reserves and mineral resources
contained in this [MD&A] [annual information form] are determined in
accordance with National Instrument 43-101 -- Standards of Disclosure for
Mineral Projects (NI 43-101), as required by Canadian securities regulations.
While the terms mineral resource, measured mineral resource, indicated
mineral resource and inferred mineral resource are recognized and required by
NI 43-101, they are not defined or recognized by the U.S. Securities and
Exchange Commission (the "SEC). As such, information contained in this MD&A
concerning descriptions of mineralization and resources, as determined in
accordance with NI 43-101, may not be comparable to similar information made
public in accordance with the requirements of the SEC. Indicated mineral
resources and inferred mineral resources have a great amount of uncertainty
as to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of mineral resources
constitutes or will ever be converted into reserves. Page 23 of 23
Corriente Resources Inc.
Interim Consolidated Financial Statements
(Unaudited) Nature of operations note 1 The accompanying notes are an integral part of
these consolidated financial statements. Common Shares
The accompanying notes are an integral part of
these consolidated financial statements. The accompanying notes are an integral part of
these consolidated financial statements. Supplemental cash flow information (note 10)
The accompanying notes are an integral part of
these consolidated financial statements. Nature of operations Corriente Resources Inc. and its
subsidiaries (collectively, Corriente or the company) are engaged in
the exploration and development of mineral properties primarily in
Ecuador, South America. The company considers itself to be a development
stage enterprise. The business of mining and exploring for
minerals involves a high degree of risk and there can be no assurance that
current exploration and development programs will result in profitable
mining operations. The recoverability of amounts shown for mineral
properties is dependent upon the discovery of economically recoverable
reserves, receipt of necessary permits and regulatory approvals, the
ability of the company to obtain financing to complete its development and
future profitable operations or sale of the properties. The investment in
and expenditures on mineral properties comprise a significant portion of
the companys assets. Significant accounting policies Basis of
presentation These unaudited interim consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles (GAAP) in Canada. They do not include all
of the information and disclosures required by Canadian GAAP for annual
financial statements. In the opinion of management, all adjustments
considered necessary for fair presentation have been included in these
financial statements. The unaudited interim consolidated financial
statements should be read in conjunction with the companys audited
consolidated financial statements including the notes thereto for the year
ended December 31, 2008. The accounting policies followed by the
company are set out in note 2 to the audited consolidated financial
statements for the year ended December 31, 2008 and have been consistently
followed in the preparation of these consolidated financial
statements. Investments The following table summarizes the companys
investment in promissory notes of a Canadian Crown corporation as at March 31,
2009: 1 Mineral properties Corriente Copper Belt,
Ecuador Under various agreements signed and
completed with certain Ecuadorian subsidiaries of BHP Billiton Plc ("BHP
Billiton"), the company has earned a 100% interest in BHP Billitons
mineral properties located in the Rio Zamora copper porphyry district (the
Corriente Copper Belt) in Ecuador. This required the issue of shares to
BHP Billiton and the expenditure of exploration funds under the terms of
these agreements. Additionally, these mineral properties are subject to a
2% Net Smelter Royalty (NSR) payable to BHP Billiton, though the company
has options to reduce the NSR to 1% for the Mirador/Mirador Norte,
Panantza and San Carlos mineral properties upon the payment of US$2
million to BHP Billiton for each such option exercised. Following is a summary of the companys
deferred mineral property expenditures for its mineral properties located
in the Corriente Copper Belt in southeast
Ecuador: Other At March 31, 2009, the balance comprises the La
Florida, San Luis, San Marcos, San Miguel and Sutzu copper exploration targets
in the Corriente Copper Belt, and expenditures to develop the companys
concentrate shipping port facility in Machala, Ecuador. Measurement uncertainty On April 18, 2008, the Constitutional Assembly of
Ecuador approved a Mining Mandate (the Mandate) which established a number of
conditions and restrictions on metallic mining concessions previously issued by
the Government of Ecuador. According to the Ministry of Mines and Petroleum (the
MMP), the new Mining Law (note 10) enacted on January 29, 2009
establishes the new legal framework for mining. However, the Regulations underlying the Mining Law have yet to be developed, creating some uncertainty regarding the mining industry in Ecuador. To date, the companys discussions with the MMP and legal counsel have not resulted in a
determination of any material impairment in the carrying value of the companys concessions. 2
Spin-off of gold exploration targets
On April 3, 2007, the company announced that its Board of Directors had approved the spin-off of the companys Caya 36 (Tundayme) and Piedra Liza gold assets into a new company, by means of a Plan of Arrangement (the
Arrangement).
The Arrangement was approved by shareholders at the companys May 24, 2007 Annual and Special General Meeting and closed on June 18, 2007. Under the Arrangement, which was also approved by the British Columbia Supreme Court, the
companys shareholders received shares of a new private company, Q2 Gold Resources Inc. (Q2 Gold) which holds the gold assets, on the basis of one (1) Q2 Gold share for every three (3) common shares of Corriente held by them at the
close of business on June 15, 2007. The company believes the Arrangement and spin-off is not material to the company, therefore note disclosure on discontinued operations is not presented.
Convertible loan to Q2 Gold
In connection with the Arrangement and to assist Q2 Gold with its business objectives, Corriente and Q2 Gold entered into a collateralized, interest-bearing convertible loan agreement dated April 23, 2007, pursuant to which Corriente
agreed to lend Q2 Gold up to $750,000 including accrued interest, to be advanced in installments (the Convertible Loan). The Convertible Loan maximum facility was increased from $750,000 to $1,500,000 and the maturity date
extended to December 31, 2009, by an amendment dated September 25, 2008.
Corriente also provides certain non-technical management services including, but not limited to, office, general accounting, administrative and shareholder services, pursuant to a management services agreement dated September 1, 2007,
effective July 1, 2007 (the Agreement). The Agreement provides for a fee of $10,000 per month for such services, which is accrued pursuant to the Loan. For the three-month period ended March 31, 2009, the company has accrued
$30,000 (2008 $30,000) in management services costs due from Q2 Gold, which is included in the Convertible Loan balance at March 31, 2009.
As at March 31, 2009, a total of $1,050,000 was owed by Q2 Gold to the company, consisting of $950,000 of principal and $100,000 of accrued interest. The Loan principal and unpaid interest are due on the earlier of December
31, 2009 and the first date on which Q2 Gold obtains a prospectus filing receipt with respect to any of its securities in any province of Canada. At any time prior to maturity, Corriente can require Q2 Gold to convert, in whole or in part, the
principal amount outstanding and accrued interest of the Loan into Q2 Gold Shares at a conversion price equal to $0.10 per share. Q2 Gold can repay any portion of the outstanding Loan at any time prior to maturity or conversion. The company
believes the conversion feature of the Loan is not material, therefore recognition and measurement of the embedded derivative is not being presented.
The current state of financial markets makes it uncertain that Q2 Gold will be able to raise the necessary debt or equity capital to repay the Convertible Loan at maturity. In the event of any default of the repayment of the Convertible
Loan, the Q2 Gold assets which collateralize the Convertible Loan would become property of the company in accordance with the terms of the agreement. Management believes that the Q2 Gold assets would have a fair value greater than or equal to
the current carrying value of the Convertible Loan. Significant changes in
the fair value of the underlying assets could have an impact on the
company up to a maximum of the carrying value of the Convertible
Loan.
3 Equipment The following table summarizes information
about equipment as at March 31, 2009:
Other assets The following table summarizes information
about other assets as at March 31,
2009: As a requirement of the MMP of Ecuador to approve
the Mirador projects Environmental Impact Assessment (EIA), the company was
required to post a deposit of US$3,022,000 ($3,812,000) in favour of the MMP as
security against the companys obligations under the Mirador EIA. A similar EIA
security deposit in favour of the MMP of US$243,000 ($306,000) was required as
security against the companys obligations under the Machala Port EIA.
Advances on mineral property expenditures include
payments to contractors and suppliers made pursuant to supply agreements prior
to the contracted goods and services being provided. 4 Share capital Authorized Unlimited common shares, without par value Issued See Consolidated Statements of Changes in Shareholders Equity. Stock options
The company has in place an incentive stock option plan dated November 1996, last amended April 18, 2006 (the Option Plan) for directors, officers, employees and consultants to the company and its subsidiaries. The Option
Plan provides that the directors of the company may grant options to purchase common shares on terms that the directors may determine, within the limitations of the Option Plan. The number of common shares available for the grant of options under
the Option Plan and all other share compensation arrangements of the company is set at a rolling maximum number that shall not be greater than 10% of the companys current number of shares outstanding at any given time. The exercise price of
each option cannot be lower than the closing market price of the shares on the trading day immediately prior to the date of grant of the option. As at March 31, 2009, options to purchase a total of 3,095,000 (December 31, 2008 2,910,000)
shares were outstanding and 1,612,508 (December 31, 2008 1,559,689) of the outstanding options were vested.
Effective February 1, 2006, stock options granted have the following vesting provisions:
Options granted to executive officers, directors and other head office personnel vest on the basis of 1/16th of the total each quarter (from grant date), with such vesting being accelerated based on a change in control of Corriente or the attainment of clearly identified milestones, as determined by the companys Directors.
Options granted to subsidiary personnel vest on a cumulative basis of 50% of the total granted after 12 months from the grant date, 75% of the total granted after 18 months from the grant date and 100% of the total granted after 24 months from grant date, with such vesting being accelerated based on a change in control of Corriente, as determined by the companys Directors.
For the three-month period ended March 31, 2009, the company recognized a stock-based compensation charge of $617,000 (2008 $402,000), of which $340,000 (2008 $242,000) is included in management fees,
wages, benefits & stock-based compensation and $277,000 (2008 $160,000) is capitalized in mineral properties.
5 The weighted average fair value of stock options
granted during the three-month period ended March 31, 2009 was $2.08 (2008
$2.39) and was estimated using the Black-Scholes Option Pricing Model with the
following assumptions: For the three-month
periods ended Option pricing models require the input of highly
subjective assumptions including expected price volatility. Changes in the
subjective input assumptions can materially affect the fair value
estimate. The following table summarizes information about
options granted during the three months ended March 31, 2009: A summary of changes to stock options outstanding
and exercisable is as follows: 6 The following table summarizes information about
stock options outstanding and exercisable at March 31, 2009: Outstanding Exercisable
Related party transactions and balances Included in management fees and interest
income are $30,000 (2008 $30,000) and $14,000 (2008 $11,000),
respectively, for the three-month period ended March 31, 2009 in respect
of administrative services and accrued interest on the Convertible Loan
provided by Corriente to Q2 Gold. Q2 Gold has common officers and a common
Board of Directors, except that Q2 Gold has one additional independent
director. The foregoing related party transactions are
recorded at the exchange amount, which is the amount of consideration paid
or received as established and agreed to between the
parties. At March 31, 2009, the balance of the
Convertible Loan receivable from Q2 Gold (note 4), including management
fees and accrued interest, was $1,050,000 (December 31, 2008
$957,000). 7 Segmented information The company operates within a single
operating segment, which is the exploration and development of copper-
gold mineral properties. The companys mineral property interests are in
Ecuador, as set out in note 4. Geographic segmentation of the companys
assets is as follows: March 31, 2009 Substantially all of the consolidated statements of earnings and
comprehensive income for the three-month period ended March 31, 2009 and 2008 reflect the Canadian
operations. 10 Supplemental cash flow information Cash and cash equivalents comprise the following: At March 31, 2009 and December 31, 2008, the
companys short-term investments are invested in overnight Canadian chartered
bank deposits with R1-High investment ratings (DBRS) that are easily liquidated
and mature daily. The company has no investments in asset-backed commercial
paper. 8 During the three-month periods ended March 31,
2009 and 2008, the companys significant non-cash operating and investing
activities were as follows: 9 Form 52-109F2 I, Kenneth R. Shannon, Chief Executive Officer of Corriente
Resources Inc., certify the following: 1.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
CORRIENTE RESOURCES INC.
(Translation of registrant's name
into English)
520 - 800 West Pender Street,
Vancouver, British Columbia, CANADA V6C 2V6
(Address of principal executive
offices)
(Expressed in Canadian dollars unless otherwise noted)
0.4%
Copper Cut-off
Date of grant
Date of expiry
Exercise
Recipients
Granted
Price
January 1, 2009
January 1, 2014
$3.89
Executive officers
300,000
Total
300,000
Number of
Weighted average
options
exercise price
Balance at December 31, 2008
2,910,000
$
4.52
Granted
300,000
3.89
Forfeited
(115,000
)
4.68
Balance at March
31, 2009
3,095,000
$
4.45
Number of
Number of
Exercise
Years to
options
options
prices
expiry
outstanding
vested and
exercisable
$2.27
1.3
360,000
360,000
4.50
1.8
25,000
25,000
5.25
1.9
400,000
300,000
5.50
2.1
60,000
60,000
5.35
2.2
100,000
68,752
5.37
2.4
85,000
53,125
5.10
2.5
75,000
46,875
4.70
2.5
165,000
165,000
4.59
2.7
10,000
5,625
4.10
2.8
290,000
145,000
3.66
3.2
125,000
54,690
4.90
3.3
295,000
204,375
5.41
3.8
320,000
80,000
4.60
4.2
485,000
44,066
3.89
4.8
300,000
3.0
3,095,000
1,612,508
1.
2.
3.
in thousands of US dollars
March 31,
December 31,
2009
2008
Cash and cash equivalents
$
25,861
$
3,703
Investments
36,966
61,771
Other assets
3,485
3,518
Accounts payable
relating to mineral properties
(857
)
(1,151
)
(A Development Stage Enterprise)
For the three-month period ended March 31, 2009
(expressed in Canadian dollars)
Corriente Resources Inc.
(a development stage enterprise)
Consolidated Balance Sheets
(Unaudited)
(expressed in thousands of Canadian
dollars)
March 31,
December 31,
2009
2008
Assets
Current assets
Cash and cash
equivalents
$
46,086
$
18,540
Investments (note 3)
46,626
75,237
Accounts receivable and
prepayments
51
84
Convertible loan (note 4)
1,050
957
93,813
94,818
Long-term assets
Mineral properties (note
4)
97,975
94,489
Equipment (note 5)
1,409
1,541
Other assets (note 6)
4,396
4,285
103,780
100,315
TOTAL ASSETS
$
197,593
$
195,133
Liabilities
Current liabilities
Accounts payable relating to mineral
properties
$
1,081
$
1,402
Other accounts payable and
accrued liabilities
536
193
1,617
1,595
Shareholders Equity
Share capital
235,996
235,996
Options (note 7 (c))
5,089
4,718
Contributed surplus
1,718
1,472
Deficit
(46,827
)
(48,648
)
195,976
193,538
TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY
$
197,593
$
195,133
Commitments
note 4
Measurement uncertainty note 4
Approved by the Board of Directors
Kenneth Shannon
Dale Peniuk
Director
Director
Corriente Resources Inc.
(a development stage enterprise)
Consolidated Statements of Changes in Shareholders Equity
For the three-month period ended March 31, 2009
(Unaudited)
(expressed in thousands of Canadian
dollars, except for number of shares)
Total
Share
Contributed
Shareholders
Number
Capital
Options
Surplus
Deficit
Equity
Balance at December 31,
2007
74,927,393
234,438
$
3,736
$
1,378
$
(63,406
)
$
176,146
Common shares issued for cash pursuant to exercise of options (note 7
(c))
375,000
1,058
1,058
Grant-date fair value of
options exercised (note 7 (c))
500
(500
)
Grant-date fair value of vested options forfeited (note 7 (c))
(94
)
94
Stock based compensation
on unexercised options (note 7 (c))
1,576
1,576
Earnings for the year ended December 31, 2008
14,758
14,758
Balance at December 31,
2008
75,302,393
235,996
4,718
1,472
(48,648
)
193,538
Grant-date fair value of vested options forfeited (note 7 (c))
(246
)
246
Stock based compensation
on unexercised options (note 7 (c))
617
617
Earnings for the period ended March 31, 2009
1,821
1,821
Balance at March 31,
2009
75,302,393
235,996
$
5,089
$
1,718
$
(46,827
)
$
195,976
Corriente Resources Inc.
(a development stage enterprise)
Consolidated Statements of Earnings and Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars,
except for per share amounts and number of shares)
Three months ended
March 31,
2009
2008
Administration expenses
Salaries, benefits and
stock-based compensation
$
850
$
522
Corporate development and shareholder
expenses
166
162
Legal, accounting and
regulatory
165
140
Office and related
74
68
Other
2
38
1,257
930
Other income
Foreign exchange gain
(2,747
)
(2,706
)
Interest income (note
7)
(301
)
(778
)
Management fees (note 7)
(30
)
(30
)
(3,078
)
(3,514
)
Earnings and comprehensive income for the
period
$
1,821
$
2,584
Earnings per
share
Basic and diluted
$
0.02
$
0.03
Weighted average number of
shares outstanding
Basic
75,302,393
74,929,701
Diluted
75,497,142
75,290,423
Corriente Resources Inc.
(a development stage enterprise)
Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of Canadian
dollars)
Three months ended
March 31,
2009
2008
Cash flows from (applied to) operating
activities
Earnings for the period
$
1,821
$
2,584
Items not affecting cash
Stock-based compensation (note 7 (c))
340
242
Accrued management fees (note 4)
(30
)
(30
)
Accrued interest receivable on convertible loan (notes
4 and 7)
(14
)
(11
)
Depreciation
7
7
Changes in non-cash working
capital
Accounts receivable and prepayments
33
223
Accounts payable and accrued liabilities
343
(161
)
2,500
2,854
Cash flows from (applied
to) investing activities
Investments
28,612
Mineral property costs
(3,448
)
(3,686
)
Other assets
(61
)
(117
)
Convertible loan
(50
)
(87
)
Equipment
(7
)
(18
)
Insurance proceeds
724
25,046
(3,184
)
Cash flows from financing
activities
Proceeds from issuance of common shares, net
of issue costs
30
30
Increase (decrease) in cash and cash
equivalents
27,546
(300
)
Cash and cash equivalents
beginning of period
18,540
93,272
Cash and cash equivalents end of
period
$
46,086
$
92,972
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
1
2
3
in thousands
in thousands
of Canadian
of US dollars
dollars
Purchase
Amortized
Description
cost
Yield
Maturity date
cost
Export Development
Canada
$
36,744
1.65%
April 20,
2009
46,626
$
36,744
46,626
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
4
in thousands of Canadian dollars
Mirador/
Mirador
Panantza/
Norte
San Carlos
Other
Total
Balance December 31,
2007
66,428
7,449
3,902
77,779
Property acquisition
40
47
16
103
Deferred exploration
and development costs net of recoveries
15,007
1,365
235
16,607
Balance December 31, 2008
81,475
8,861
4,153
94,489
Property acquisition
95
95
Deferred exploration and development costs net of recoveries
2,643
619
129
3,391
Balance March 31, 2009
84,213
9,480
4,282
97,975
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month period ended March 31, 2009
(expressed in Canadian dollars unless otherwise noted)
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
5
in
thousands of Canadian dollars
March 31, 2009
December 31, 2008
Accumulated
Accumulated
Cost
Depreciation
Net
Cost
Depreciation
Net
Computer
$
963
764
$
199
$
959
698
$
261
Construction barge facility
640
65
575
640
56
584
Software fees and
licences
412
399
13
412
382
30
Office
411
169
242
409
157
252
Vehicles
366
195
171
383
193
190
Communications
285
120
165
285
107
178
Field equipment
97
53
44
97
51
46
$
3,174
1,765
$
1,409
$
3,185
1,644
$
1,541
6
in thousands of Canadian dollars
March 31,
December
2009
31, 2008
EIA security deposits
$
4,118
$
4,057
Advances on mineral property expenditures
278
228
$
4,396
$
4,285
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
7
a)
b)
c)
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
March 31, 2009
March 31, 2008
Risk-free interest rate
1.55%
3.69%
Expected dividend yield
Expected stock price
volatility
68%
62%
Expected option life in years
4.25
2.75
Number of
Expiry dates
Optionees
options
Exercise Price
January 1, 2014
Executive officers
300,000
$
3.89
Total
granted
300,000
Three-month
period
Year ended
December
ended March 31, 2009
31, 2008
Weighted
Weighted
average
average
Number of
exercise
Number of
exercise
options
price
options
price
Options outstanding
beginning of year
2,910,000
$
4.52
2,702,500
$
4.19
Granted
300,000
3.89
805,000
4.92
Exercised
(375,000
)
2.82
Forfeited
(115,000
)
4.68
(222,500
)
4.83
Options outstanding end of period
3,095,000
$
4.45
2,910,000
$
4.52
Options exercisable end of period
1,612,508
$
4.32
1,559,689
$
4.28
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
Number of
Weighted
Number of
Weighted
options
Weighted
average
options
Weighted
average
Year
Range of
outstanding
average
remaining
exercisable
average
remaining
of
exercise
at March
exercise
contractual
at March
exercise
contractual
Expiry
prices
31, 2009
price
life (years)
31, 2009
price
life (years)
2010
$
2.27
2.27
360,000
$
2.27
1.3
360,000
$
2.27
1.3
2011
4.50 5.50
920,000
5.15
2.1
724,377
5.12
2.1
2012
3.66 4.90
710,000
4.35
3.0
404,065
4.45
3.1
2013
4.60 5.41
805,000
4.92
4.0
124,066
5.12
3.9
2014
3.89 3.89
300,000
3.89
4.8
$
2.27 5.50
3,095,000
$
4.45
3.0
1,612,508
$
4.32
2.3
8
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
9
in thousands of Canadian dollars
December 31, 2008
Canada
Ecuador
Total
Canada
Ecuador
Total
Cash and cash equivalents
$
44,583
$
1,503
$
46,086
$
17,577
$
963
$
18,540
Investments
46,626
46,626
75,237
75,237
Accounts receivable
and prepayments
51
51
84
84
Convertible loan
1,050
1,050
957
957
Mineral properties
97,975
97,975
94,489
94,489
Equipment
115
1,294
1,409
113
1,428
1,541
Other assets
4,396
4,396
4,285
4,285
$
92,425
$
105,168
$
197,593
$
93,968
$
101,165
$
195,133
in thousands of Canadian dollars
March 31,
December 31,
2009
2008
Cash on hand and balances with
banks
$
1,621
$
4,588
Short-term investments, with maturity dates
less than 90 days at acquisition
44,465
13,952
$
46,086
$
18,540
Corriente Resources Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
(Unaudited)
Three-month
period ended March 31, 2009
(expressed in Canadian dollars unless
otherwise noted)
in thousands of Canadian dollars
2009
2008
Stock-based compensation included in mineral
properties
$
277
$
160
Depreciation included in mineral properties
$
133
$
117
Change in other assets and
accounts payable and accrued liabilities relating to
mineral properties
$
(370
)
$
(797
)
Certification of interim filings - full certificate
Review: I have reviewed the interim financial statements and interim MD&A (together, the "interim filings") of Corriente Resources Inc. (the "issuer") for the interim period ended March 31, 2009.
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, 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.
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, 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 of and for the periods presented in the interim filings.
4.
Responsibility: The issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings, for the issuer.
5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuers other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, 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.
5.1
Control framework: The control framework the issuers other certifying officer(s) and I used to design the issuers ICFR is the Internal Control Integrated Framework" issued in September 1992 by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
5.2
N/A.
5.3
N/A.
6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuers ICFR that occurred during the period beginning on January 1, 2009 and ended on March 31, 2009 that has materially affected, or is reasonably likely to materially affect, the issuers ICFR.
Date: May 14, 2009
/s/ Kenneth R. Shannon
Kenneth R. Shannon
Chief Executive Officer
Form 52-109F2
Certification of interim filings - full certificate
I, Darryl F. Jones, Chief Financial Officer of Corriente Resources Inc., certify the following:
1.
Review: I have reviewed the interim financial statements and interim MD&A (together, the "interim filings") of Corriente Resources Inc. (the "issuer") for the interim period ended March 31, 2009.
2.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, 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.
3.
Fair presentation: Based on my knowledge, having exercised reasonable diligence, 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 of and for the periods presented in the interim filings.
4.
Responsibility: The issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers Annual and Interim Filings, for the issuer.
5.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuers other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a)
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii)
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b)
designed ICFR, 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.
5.1
Control framework: The control framework the issuers other certifying officer(s) and I used to design the issuers ICFR is the Internal Control Integrated Framework" issued in September 1992 by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
5.2
N/A.
5.3
N/A.
6.
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuers ICFR that occurred during the period beginning on January 1, 2009 and ended on March 31, 2009 that has materially affected, or is reasonably likely to materially affect, the issuers ICFR.
Date: May 14, 2009
/s/ Darryl F. Jones
Darryl F. Jones
Chief Financial Officer
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.
CORRIENTE RESOURCES INC. | ||
(Registrant) | ||
Date: May 14, 2009 | ||
By: |
/S/ DARRYL F. JONES | |
Name: Darryl F. Jones | ||
Title: Chief Financial Officer |