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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Moydow Mines | LSE:MOY | London | Ordinary Share | CA62472V1004 | COM SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 49.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Moydow Mines International Inc
04 April 2008
Moydow Mines International Inc.
Consolidated Financial Statements
December 31, 2007 and 2006
(expressed in U.S. dollars, unless otherwise stated)
March 30, 2008
Management's Responsibility for Financial Reporting
The annual report and consolidated financial statements have been prepared by
management who, when necessary, has made informed judgments and estimates of the
outcome of events and transactions, with due consideration given to materiality.
Management acknowledges its responsibility for the fairness, integrity and
objectivity of all information contained in the annual report, including the
consolidated financial statements.
As a means of fulfilling its responsibility, management relies on the company's
system of internal control. This system has been established to ensure, within
reasonable limits, that the assets are safeguarded, transactions are properly
recorded and are executed in accordance with management's authorization and that
the accounting records provide a solid foundation from which to prepare the
consolidated financial statements.
The Board of Directors carries out its responsibility for the consolidated
financial statements principally through its Audit Committee, consisting solely
of non-management directors. This committee meets periodically, reviews the
scope of the external audit, the adequacy of the system of internal control and
the appropriateness of the financial reporting and then makes its
recommendations to the Board of Directors. Based on those recommendations, the
Board of Directors approves the consolidated financial statements.
Brian Kiernan Roma O'Mongain
Chief Executive Officer Chief Financial Officer
March 30, 2008
Auditors' Report
To the Shareholders of
Moydow Mines International Inc.
We have audited the consolidated balance sheets of Moydow Mines International
Inc. as at December 31, 2007 and 2006 and the consolidated statements of loss
and comprehensive loss and deficit and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 2007
and 2006 and the results of its operations and its cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles.
(Signed) "PricewaterhouseCoopers LLP"
Chartered Accountants, Licensed Public Accountants
The accompanying notes to the consolidated financial statements are an integral
part of these financial statements.
Moydow Mines International Inc.
Consolidated Balance Sheets
As at December 31, 2007 and 2006
(expressed in U.S. dollars, unless otherwise stated) 2007 2006
$ $
Assets
Current assets
Cash and cash equivalents 93,733 143,046
Accounts receivable and prepaid expenses 74,614 99,245
Current income taxes recoverable 383,800 101,641
552,147 343,932
Mineral properties (note 4) 11,870,438 7,993,987
Other assets (note 5) 56,250 20,108
12,478,835 8,358,027
Liabilities
Current liabilities
Loan (note 10) 7,717 1,433,601
Accounts payable and accrued liabilities (note 7) 4,004,847 1,148,007
4,012,564 2,581,608
Future income tax liability (note 8) 86,855 -
4,099,419 2,581,608
Shareholders' Equity
Capital stock (note 6) 21,276,980 18,014,363
Contributed surplus 659,078 414,726
Deficit (13,556,642) (12,652,670)
8,379,416 5,776,419
12,478,835 8,358,027
Nature of operations and going concern (note 1)
Moydow Mines International Inc.
Consolidated Statements of Loss and Comprehensive Loss and Deficit
For the years ended December 31, 2007 and 2006
(expressed in U.S. dollars, unless otherwise stated)
2007 2006
$ $
Expenses
Transaction and due diligence (note 3) - 401,902
General and administrative 1,042,655 917,338
Writedown of mineral properties (note 4) - 404,222
Stock-based compensation (note 6) 244,352 -
Amortization of plant and equipment 1,411 1,996
Foreign exchange gain (23,429) (30,021)
1,264,989 1,695,437
Other income and expenses
Unrealized loss for the year on financial assets held-for-trading (58,300) -
Gain on Newmont common shares, net - 306,882
Interest income 4,192 10,774
Dividend income - 850
Interest expense (note 7) (150,801) -
(204,909) 318,506
Loss before income taxes (1,469,898) (1,376,931)
Income tax recovery (note 8) (480,868) (316,752)
Loss and comprehensive loss for the year (989,030) (1,060,179)
Deficit - Beginning of year (12,652,670) (11,592,491)
Change in fair value of financial assets held-for-trading as at January 1, 85,058 -
2007 ($95,853, net of $10,795 of income taxes)
(note 2)
Deficit - End of year (13,556,642) (12,652,670)
Basic and diluted loss per common share (0.02) (0.03)
Weighted average number of common shares outstanding (basic and diluted) 50,219,747 33,074,415
Moydow Mines International Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2007 and 2006
(expressed in U.S. dollars, unless otherwise stated) 2007 2006
$ $
Cash provided by (used in)
Operating activities
Loss for the year (989,030) (1,060,179)
Adjustments for non-cash items
Writedown of mineral properties - 404,222
Amortization of plant and equipment 1,411 1,996
Gain on Newmont common shares, net - (306,882)
Future income tax liability 86,855 (160,166)
Stock-based compensation 244,352 -
Unrealized loss for the year on financial assets held-for-trading 47,505 -
(608,907) (1,121,009)
Changes in non-cash working capital
Accounts receivable and prepaid expenses 24,631 (31,530)
Accounts payable and accrued liabilities and income taxes 2,574,681 473,047
2,599,312 441,517
1,990,405 (679,492)
Investing activities
Proceeds from sale of Newmont common shares - 2,520,882
Exploration of mineral properties (3,876,451) (4,405,597)
(3,876,451) (1,884,715)
Financing activities
Proceeds from issue of capital stock 3,262,617 1,255,308
Loan (1,425,884) 1,433,601
1,836,733 2,688,909
(Decrease) increase in cash and cash equivalents during the year (49,313) 124,702
Cash and cash equivalents - Beginning of year 143,046 18,344
Cash and cash equivalents - End of year 93,733 143,046
Supplemental information
Income taxes paid - -
Interest paid 150,801 -
Moydow Mines International Inc.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(expressed in U.S. dollars, unless otherwise stated)
1 Nature of operations and going concern
Moydow Mines International Inc. (Moydow or the company) is an international
exploration company with primary interests in precious and industrial minerals
and diamonds. Moydow's common shares are listed on both the Toronto Stock
Exchange and the AIM of the London Stock Exchange.
The company is exploring its mineral properties and, as at December 31, 2007,
had not determined the existence of economically recoverable mineral reserves
(note 4). The recoverability of the amounts shown for mineral properties is
dependent on the existence of economically recoverable mineral reserves, the
preservation of the company's interest in the underlying mineral claims, the
ability to obtain necessary financing, to obtain government approval and to
attain profitable production or, alternatively, on the company's ability to
profitably dispose of its interests.
These consolidated financial statements have been prepared using Canadian
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and settlement of liabilities in the
normal course of business as they come due. As at December 31, 2007, the company
had an excess of current liabilities over current assets of $3,460,417 and had
recorded losses and net cash outflows from operations for the past two years.
The company is also required to make expenditures (as outlined in note 4) in the
near term to keep its mineral property rights in Angola. The company will have
to secure additional financing to meet its required commitments. These
circumstances lend substantial doubt as to the ability of the company to meet
its obligations as they come due and, accordingly, the appropriateness of the
use of Canadian generally accepted accounting principles applicable to a going
concern.
In recognition of these circumstances, the company is exploring various
initiatives to secure capital so that it can continue as a going concern. It is
not possible to determine, with any certainty, the success, adequacy or
sufficiency of these initiatives.
The company's ability to continue as a going concern is dependent on its ability
to fund its working capital and exploration requirements and, eventually, to
generate positive cash flows, either from operations or sale of a mineral
property. These consolidated financial statements do not reflect the adjustments
to the carrying values of assets and liabilities and the reported expenses and
balance sheet classifications that would be necessary were the going concern
assumption inappropriate. These adjustments could be material.
2 Summary of significant accounting policies
Basis of presentation and consolidation
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. The consolidated financial
statements include the accounts of the company, its subsidiaries and a
proportionate share of the company's interests in joint ventures. All
significant intercompany accounts and transactions have been eliminated.
Financial instruments, comprehensive income and hedges
In January 2005, The Canadian Institute of Chartered Accountants (CICA) issued
Handbook Sections 3855, "Financial Instruments - Recognition and Measurement"
(Section 3855); 1530, "Comprehensive Income" (Section 1530); and 3865, "Hedges"
(Section 3865). These new standards are effective for interim and annual
financial statements relating to fiscal years commencing on or after October 1,
2006 on a prospective basis. The company has adopted these new standards
effective January 1, 2007.
Section 3855 prescribes when a financial instrument is to be recognized on the
balance sheet and at what amount. It also specifies how financial instrument
gains and losses are to be presented. Section 3855 requires that:
* all financial assets be measured at fair value on initial recognition
and certain financial assets be measured at fair value subsequent to initial
recognition;
* all financial liabilities be measured at fair value if they are
classified as held-for-trading. Other financial liabilities are measured at
amortized cost using the effective interest method; and
* all derivative financial instruments be measured at fair value on the
balance sheet, even when they are part of an effective hedging relationship.
Section 1530 introduces a new requirement to temporarily present certain gains
and losses from changes in fair value in comprehensive income and accumulated
other comprehensive income. Comprehensive income would include unrealized gains
and losses, such as: unrealized gains or losses on available-for-sale
investments and the effective portion of gains or losses on derivatives
designated as cash flow hedges or hedges of the net investment in
self-sustaining foreign operations.
Section 3865 provides alternative treatments to Section 3855 for entities that
choose to designate qualifying transactions as hedges for accounting purposes.
It replaces and expands on Accounting Guideline 13, "Hedging Relationships," and
the hedging guidance in Section 1650, "Foreign Currency Translation," by
specifying how hedge accounting is applied and what disclosures are necessary
when it is applied.
As a result of adopting these new recommendations, the company's financial
assets held-for-trading are now carried at fair value and any unrealized gain or
losses are recognized as part of income (loss) for the year. An adjustment of
$85,058 to opening deficit reflects the change in fair value of the financial
assets held-for-trading as at January 1, 2007.
Disclosure of changes in accounting policies
On January 1, 2007, the company adopted Section 1506 of the CICA Handbook, "
Accounting Changes," which prescribes the criteria for changing accounting
policies, together with the accounting treatment and disclosure of changes in
accounting policies, changes in accounting estimates and corrections of errors.
This standard did not affect the company's consolidated financial position or
results of operations.
Canadian accounting pronouncements issued and not yet adopted
Section 1535
The new Section 1535, "Capital Disclosures," requires that an entity disclose
information that enables users of its financial statements to evaluate an
entity's objectives, policies and processes for managing capital, including
disclosures of any externally imposed capital requirements and the consequences
of non-compliance. The new standard applies to interim and annual financial
statements relating to fiscal years beginning on or after October 1, 2007,
specifically, January 1, 2008 for the company.
This standard will impact the company's disclosures provided but will not affect
the company's results or financial position.
Section 3031
The new Section 3031, "Inventories," relates to the accounting for inventories
and revises and enhances the requirements for assigning costs to inventories.
The new standard applies to interim and annual financial statements relating to
fiscal years beginning on or after January 1, 2008 and will be effective for the
company as of this date.
This standard is not expected to have a significant effect on the company's
consolidated financial statements.
Sections 3862 and 3863
The new Sections 3862 and 3863 replace Handbook Section 3861, "Financial
Instruments - Disclosure and Presentation," revising and enhancing its
disclosure requirements and carrying forward unchanged its presentation
requirements. These new sections place increased emphasis on disclosures about
the nature and extent of risks arising from financial instruments and how the
entity manages those risks. The new standards apply to interim and annual
financial statements relating to fiscal years beginning on or after October 1,
2007, specifically, January 1, 2008 for the company.
These standards will impact the company's disclosures provided but will not
affect the company's results or financial position.
Use of estimates
The preparation of financial statements in accordance with Canadian generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
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 areas requiring the use of management's estimates
are recoverability of mineral property deferred costs, future income taxes,
estimation of the fair value of stock options and the carrying value of
investments. Financial results as determined by actual events could differ
materially from those estimates.
Cash and cash equivalents
Cash and cash equivalents consist of highly liquid investments that are readily
convertible to known amounts of cash and have maturities of three months or less
at acquisition.
Investments
Investments in companies where the company has the ability to exercise
significant influence over the operating, financing and investing activities of
the companies are accounted for using the equity method, whereby the cost of the
investment is adjusted for the company's share of post-acquisition earnings or
losses of these companies.
Current asset investments are carried at fair market value. Long-term
investments in shares of other companies are carried at cost less any provision
for other-than-temporary impairment in value.
Plant and equipment
Plant and equipment are stated at cost less accumulated amortization.
Amortization is provided using the straight-line method at rates sufficient to
amortize costs over the estimated useful lives of the assets, which range
between four and six years. Amortization of equipment used in exploration
activities has been included in exploration expenditures.
Mineral properties
Acquisition costs of mineral properties, together with direct exploration and
development expenses incurred thereon, are deferred and capitalized on a
property-by-property basis. Upon reaching commercial production, these
capitalized costs are transferred from exploration properties to producing
properties on the consolidated balance sheets and are amortized into operations
using the unit-of-production method over the estimated useful lives of the
estimated related ore reserves.
In the event that the long-term expectation is that the net carrying amount of
these capitalized exploration expenses will not be recovered, the carrying
amount is written down accordingly and the writedown amount charged to
operations. Such would be indicated when:
* exploration activities have ceased;
* exploration results are not promising, such that exploration will not
be planned for the foreseeable future;
* lease ownership rights expire; or
* insufficient funding is expected to be available to complete the
exploration program.
The amount shown for mineral properties represents costs incurred to date, net
of recoveries from option or joint venture participants and writedowns and does
not necessarily reflect present or future values.
Translation of foreign currency
The consolidated financial statements are presented in U.S. dollars, unless
otherwise stated. Transactions denominated in foreign currencies are translated
into U.S. dollars at the rate prevailing at the dates of the transactions.
At the balance sheet dates, monetary assets and liabilities denominated in
foreign currencies are translated at the year-end rate of exchange. Exchange
gains and losses arising on translation or settlement of foreign currency
denominated monetary items are included in the determination of income (loss)
for the year.
Earnings (loss) per common share
Basic earnings (loss) per common share are computed by dividing the income
(loss) for the year by the weighted average number of common shares outstanding
during the year, including contingently issuable common shares, which are
included when the conditions necessary for issuance have been met, but excluding
contingently returnable common shares until all conditions necessary for their
release from escrow have been satisfied. Diluted earnings (loss) per common
share are calculated in a manner similar to basic earnings (loss) per common
share, except the number of weighted average common shares outstanding is
increased to include potential common shares from the assumed exercise of stock
options and warrants, if dilutive. The number of additional common shares
included in the calculation is based on the treasury stock method for stock
options and warrants and on the as-if-converted method for convertible
securities.
Financial instruments
As at December 31, 2007 and 2006, the carrying values of the company's cash and
cash equivalents, accounts receivable and prepaid expenses and accounts payable
and accrued liabilities approximate their fair values.
Stock-based compensation
Stock options granted to employees or external parties are recognized at fair
value as an expense in equal instalments over the vesting period and an offset
to contributed surplus. The expense is determined using an option pricing model
that takes into account the exercise price, the term of the stock option, the
impact of dilution, the current price and expected volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term
of the stock option.
Cash received from the exercise of stock options for common shares is credited
to capital stock.
Income taxes
The provision for future income taxes is based on the asset and liability
method. Future income taxes arise from the recognition of the income tax
consequences of temporary differences by applying statutory income tax rates
applicable to future years to differences between the consolidated financial
statements' carrying amounts and the income tax amounts of assets and
liabilities. The company records a valuation allowance against any portion of
those future income tax assets that it believes will, more likely than not, fail
to be realized. Future income tax balances relating to expenditures funded by
the issue of flow-through shares are recognized as liabilities and share issue
costs when the income tax benefits are renounced.
3 Due diligence
On March 1, 2006, the company announced that it had reached an agreement with
Diamond Fields International Ltd. (Diamond Fields) effective February 28, 2006,
pursuant to which, Moydow common shareholders would have exchanged their Moydow
securities for securities of Diamond Fields (the acquisition). The acquisition
was subject to, among other things, receipt of all necessary regulatory, court
and stock exchange approvals, Moydow's shareholder approval, a valuation and/or
fairness opinion by each company and lock-up agreements executed by the chairman
and chief executive officer of the company under which they have agreed to vote
in favour of the merger and entry of the parties into a definite agreement. As
all the necessary stipulations required under the terms of agreement were not
reached by May 31, 2006, the agreement was automatically terminated. The company
incurred transaction and due diligence expenses of $401,902 in connection with
this transaction.
4 Mineral properties
The company, either directly or through certain joint ventures, has obligations
to expend various amounts on its mineral properties and projects in order to
keep its mineral property rights in good standing. All agreements are in the
normal course of business.
Mineral properties are described below and are recorded with their carrying
values as follows:
Angola Sierra Leone Ghana Total
$ $ $ $
Balance - December 31, 2005 1,771,567 1,641,128 579,917 3,992,612
Capitalized costs 3,147,686 945,367 312,544 4,405,597
Writedown - - (404,222) (404,222)
Balance - December 31, 2006 4,919,253 2,586,495 488,239 7,993,987
Capitalized costs 3,356,134 452,505 67,812 3,876,451
Balance - December 31, 2007 8,275,387 3,039,000 556,051 11,870,438
a) Angola, Africa
Dala property, Angola
The company is party to two separate exploration projects with the same partners
on the Dala property in Angola, relating to the exploration for alluvial
diamonds and kimberlite diamonds.
Alluvial diamonds
On October 1, 2004, the company signed an agreement with Empressa Nacional De
Diamantes De Angola (Endiama), the Angolan state diamond mining company, and
Cimader-Comercio Geral Limitada (Cimader), a local Angolan company, to explore
for alluvial diamonds on the Dala property, located near the town of Saurimo, in
northeast Angola. To obtain a 33% interest, the company will have to incur
expenditures of not less than $5,000,000 on or before February 2008. Cimader and
Endiama have a free carried interest in the exploration phase of the project.
The company's cumulative expenditures on the alluvial licence to December 31,
2007 amounted to $4,598,063, of which $1,342,453 was incurred during 2007 (2006
- $1,484,043). In addition, Concord Minerals LLC cumulative expenditures as at
December 31, 2007 amounted to $728,051 (2006 - $688,797).
Kimberlite diamonds
On December 16, 2005, the company signed another agreement with Endiama and
Cimader to explore for kimberlite (primary) diamonds on the Dala property. Under
the terms of the agreement, the company can earn 40% interest in the property
with the remaining percentages held by Endiama and Cimader. To obtain its
interest, the company will have to incur expenditures of not less than
$10,000,000 on or before
January 14, 2009. Cimader and Endiama have a free carried interest in the
exploration phase of the project. The granting of the licence was ratified by
the Angolan Council of Ministers on October 18, 2006 and was subject to the
company's making a deposit of $1,000,000 with the Angolan government. The
deposit was made in 2006 and may be refunded, provided that Moydow meets certain
conditions. The deposit has been included as a component of the cost to acquire
an interest in the project.
The company's cumulative expenditures on the kimberlite licence to December 31,
2007 amounted to $3,677,324, of which $2,013,681 was incurred during 2007 (2006
- $1,663,643).
The company also has an agreement with Concord Minerals LLC, whereby Concord
Minerals LLC was granted the right to earn up to 50% of Moydow's interest in the
Kimberlite concession, by funding exploration expenditures under Moydow's
agreement with Endiama and Cimader.
On April 20, 2007, the company agreed to issue 4,000,000 common shares to
Concord Minerals LLC in connection with the acquisition of its interest in the
Dala property in Angola. The common shares will be issued at a price of CA$0.20
per common share, in settlement of the cumulative expenditures incurred by
Concord Minerals LLC on the Dala property in Angola of $728,051. The issue of
these common shares is subject to the receipt of all necessary regulatory
approvals.
b) Sierra Leone, West Africa
Port Loko project, Sierra Leone
The company has a 50% interest in the Port Loko bauxite exploration project in
Sierra Leone, West Africa. The other 50% interest in the project is held by
Gondwana Investments Limited (Gondwana), a company incorporated in Luxembourg.
On January 28, 2008, the company was granted a one-year prospecting licence with
respect to the Port Loko project by the Ministry of Mineral Resources in Sierra
Leone.
Cumulative expenditures by the company to December 31, 2007 amounted to
$3,039,000, of which $452,505 was incurred in 2007.
c) Ghana, West Africa
Ntotoroso property, Ghana
On December 8, 2003, the company sold its wholly owned subsidiary, Moydow
Limited (Isle of Man), which, following an internal restructuring, owned the
company's 50% joint venture interest in the Ntotoroso property but no other
mineral properties, to Newmont Mining Corporation (Newmont).
In connection with the sale, the company entered into a royalty agreement,
whereby the company acquired the right to a net smelter return royalty of 2% on
all recovered ounces of gold and silver produced from the Ntotoroso property
after the first 1,200,000 gold equivalent ounces in consideration for $250,000.
No value has been ascribed to the royalty rights acquired by the company.
Kanyankaw property, Ghana
On December 21, 2007, the company was granted a two-year extension to its
prospecting licence with respect to the Kanyankaw property by the Minister for
Lands, Forestry and Mines in Ghana. The carrying value of the Kanyankaw property
was written off in 2005 in the amount of $329,235, as exploration results were
not promising, such that exploration is not planned for the foreseeable future.
Hwidem property, Ghana
On November 23, 2007, the company was granted a one-year extension to its
prospecting licence with respect to the Hwidem property by the Minister for
Lands, Forestry and Mines in Ghana. The licence area adjoins the
Kenyase-Ntotoroso area currently under lease to Rank Mining Company Limited, a
subsidiary of Newmont. The company incurred exploration expenditures on this
property of $67,812 in 2007. The minimum exploration expenditures required to be
spent by the end of the extension in order to maintain the licence are $523,000,
of which $556,051 had been spent as at December 31, 2007. If gold mineralization
does not exist in sufficient quantities in the area to warrant completion of the
work program, the company is not liable for any shortfall of the minimum
exploration expenditures.
Okumpreko property, Ghana
On September 17, 2004, the company signed an agreement with PW Limited, an
international engineering and mining contractor. Under the terms of the
agreement, the company can earn a majority interest in the Nyaduom and Kushea
mining leases, which are collectively known as the Okumpreko gold project. On
January 23, 2007, the Minerals Commission cancelled the mining lease for
non-performance. The company wrote off its investments in the amount of
$404,222.
5 Other assets
2007 2006
$ $
Plant and equipment - at cost 157,623 157,623
Less: Accumulated amortization 156,340 154,929
Net book value 1,283 2,694
Financial assets held-for-trading (at fair value) 54,967 17,414
56,250 20,108
6 Capital stock
Authorized
Unlimited number of common shares
Issued
Number of shares $
Balance - December 31, 2005 30,620,575 16,759,055
Issue of shares - September 6, 2006 7,655,143 1,255,308
Balance - December 31, 2006 38,275,718 18,014,363
Issue of shares - March 29, 2007 9,547,186 1,624,500
Issue of shares - June 18, 2007 8,750,000 1,638,117
Balance - December 31, 2007 56,572,904 21,276,980
In 2006, the company issued 7,655,143 common shares at a price of CA$0.18 per
common share pursuant to a private placement. Of this total, 3,062,057 common
shares have been issued to parties at non-arm's length to the company and
4,593,080 common shares have been issued to parties at arm's length to the
company.
On March 29, 2007, the company issued 9,547,186 common shares at a price of
CA$0.20 per common share in settlement of $1,624,500 of debts owed for loans
made to the company. These shares were issued to parties at non-arm's length to
the company.
On June 18, 2007, the company closed a private placement and issued 8,750,000
common shares of the company at a price of CA$0.20 per common share. Of this
total, 3,075,000 common shares were issued in settlement of debts owed for loans
made to the company. These shares were issued to parties at non-arm's length to
the company.
On April 20, 2007, the company agreed to issue 4,000,000 common shares to
Concord Minerals LLC in connection with the acquisition of its interest in the
Dala property, Angola. The common shares will be issued at a price of CA$0.20
per common share, in settlement of the cumulative expenditures incurred by
Concord Minerals LLC on the Dala property, Angola of $728,051. The issue of
these shares is subject to the receipt of all necessary regulatory approvals.
Stock options
Stock option plan
The company has a stock option plan (the plan), which has been approved by the
shareholders, that allows the company to grant up to 4,000,000 stock options to
officers, directors, employees and consultants. Under the plan, stock options
are non-assignable and may be granted for a term not exceeding ten years. The
number of common shares that may be reserved for issuance to any one person
pursuant to stock options must not exceed 5% of the outstanding common shares.
The exercise price of a stock option may not be lower than the closing price of
the common shares on the Toronto Stock Exchange on the business day immediately
proceeding the date the stock options are granted.
Movements in stock options of the company are set out in the table below:
Number of stock Weighted
options average
exercise price
CA$
Balance - December 31, 2005 2,100,000 0.33
Expired (500,000) 0.31
Balance - December 31, 2006 1,600,000 0.33
Granted - July 13, 2007 2,100,000 0.20
Granted - July 13, 2007 1,200,000 0.33
4,900,000 0.27
The company issued 1,200,000 stock options, which vest on July 13, 2008.
The stock options are exercisable as follows:
Number of stock Exercise Expiry date
options price
exercisable and CA$
outstanding
1,600,000 0.33 August 13, 2009
2,100,000 0.20 July 13, 2012
1,200,000 0.33 July 13, 2012
Stock-based compensation
The estimated fair value of the stock options issued on July 13, 2007 was
$306,000.
The fair value of each stock option granted in 2007 was estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions:
Risk-free interest rate
3.75%
Expected life
5 years
Estimated volatility
80.00%
Dividend yield
nil%
7 Related party transactions
Related party transactions relate primarily to the payment of fees under
contracts for services with companies in which a Moydow director is a
shareholder and director. The company was charged a total of $297,299 during
2007 (2006 - $390,848) with respect to administration services.
The company's primary legal counsel is a firm in which directors of the company
are partners. The company was charged $99,652 during 2007 (2006 - $248,974) for
legal services provided by this firm.
A company controlled by certain insiders of the company advanced money to the
company and interest has been accrued at LIBOR plus 2%. The amount of interest
charged to the company during 2007 was $150,801. Included in accounts payable
and accrued liabilities as at December 31, 2007 is $3,441,972 (2006 - $629,643)
payable to these related parties.
These transactions are made in the normal course of business.
8 Income taxes
The effective rate of income taxes recorded in the consolidated statements of
loss and comprehensive loss and deficit differs from the normal combined rate of
federal and provincial income taxes, as follows:
2007 2006
% %
Combined basic federal and Ontario income tax rate 36.12 36.12
Increase (decrease) in rate resulting from
Currency translation adjustments 1.20 0.97
Foreign tax rate differential (1.62) (2.44)
Tax-free portion of (losses) gains (0.60) 3.95
Effect on statutory tax rate change on future income taxes 1.37 -
Impact resulting from the federal and Ontario amortization of corporate taxes (4.16) -
Prior year's income tax asset recognized 10.26 9.77
Stock-based compensation and other non-deductible items (6.22) (3.70)
Increase in valuation allowance (3.63) (21.75)
Other - 0.10
(3.40) (13.10)
Effective income tax rate 32.72 23.02
2007 2006
$ $
Current income tax recovery (567,723) (156,586)
Future income tax expense (recovery) 86,855 (160,166)
(480,868) (316,752)
Future income taxes are applicable to the following temporary differences:
2007 2006
$ $
Plant and equipment, subject to amortization 2,468 3,007
Mineral properties (122,678) 43,162
Investments (1,742) -
Organizational costs and financing fees 34,779 118,110
Net operating losses 310,114 264,273
Other 318 19,238
Future income tax asset 223,259 447,790
Valuation allowance (310,114) (447,790)
Net future income tax liability (86,855) -
The losses available for carry-forward consist of income tax losses incurred in
Ghana, which will expire between 2009 and 2012. A valuation allowance has been
provided against these losses, based on a current assessment of recoverability
of this future income tax asset. If the company's assessment changes, any
decrease in the valuation allowance will result in an increase in net income.
9 Segmented disclosures
The company has one reportable operating segment, being the exploration of
mineral properties in the geographic areas disclosed in note 4.
10 Loan
During 2006, the company entered into an unsecured loan agreement with certain
parties. The outstanding balance as at December 31, 2007 is $ 7,717 ($1,433,601
as at December 31, 2006 that included $127,685 for related parties), which is
repayable on demand. The loan is non-interest-bearing. On March 29, 2007, the
company reached agreement with its lenders to convert the December 31, 2006
outstanding debt into common shares of the company at CA$0.20 per common share
(note 6).
11 Comparative figures
Certain comparative figures have been reclassified to be consistent with the
current year's consolidated financial statement presentation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IIMBTMMJMBPP
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