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RNS Number:6361M
Mano River Resources Inc
23 June 2003
MANO RIVER RESOURCES INC.
NEWS RELEASE
23 June 2003
No: 2003/11
TSX-Venture Exchange (Trading Symbol: MNO)
London Stock Exchange - AIM (Trading Symbol: MANA)
PUBLICATION OF 2002/03 YEAR END ACCOUNTS
The Board of Mano River Resources Inc. is pleased to release the Accounts of the
Company for the financial year ended January 31st 2003, together with the
Management Discussion & Analysis and a statement letter from the co-chairman,
Guy Pas.
On behalf of the Board of Mano River Resources Inc.
Tom Elder
President and CEO
For further information on Mano River Resources and its exploration programme,
you are invited to visit the Company's website at www.manoriver.com or contact
one of the following:
Tom Elder President and CEO UK +44 (0) 1235 810 740
Guy Pas Co-Chairman Switzerland +41 22 758 2151
Anthony Rhatigan Co-Chairman Mobile +44 (0) 7785 297 348
Raz Hussein Controller Canada +1 (604) 689 1700
Gary Middleton Britton Financial PR UK +44 (0) 20 7251 2544
The TSX Venture Exchange has not reviewed and does not take responsibility for
the adequacy or accuracy of this release
MANO RIVER RESOURCES INC.
Consolidated Balance Sheets
January 31
(Stated in U.S. Dollars)
2003 2002
_____________ _____________
ASSETS
CURRENT
Cash and cash equivalents $ 184,116 $ 125,098
Accounts receivable 2,139 2,778
_____________ _____________
186,255 127,876
INVESTMENTS (Note 3) 34,496 134,496
RESOURCE PROPERTIES (Note 4) 4,045,090 3,955,000
DEFERRED EXPLORATION COSTS (Note 4) 7,647,211 6,878,104
RECLAMATION BONDS (Note 5) 340,610 340,610
_____________ _____________
$ 12,253,662 $ 11,436,086
_____________ _____________
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 97,664 $ 144,002
Due to related parties (Note 9) 305,195 712,997
_____________ _____________
402,859 856,999
PROVISION FOR RECLAMATION (Note 5) 340,610 340,610
CONVERTIBLE DEBENTURE (Note 7) 138,723 -
_____________ _____________
882,192 1,197,609
_____________ _____________
SHAREHOLDERS' EQUITY
Share capital (Note 6) 15,867,323 14,357,213
Equity component of convertible debenture (Note 7) 96,000 -
Subscriptions - 120,900
Cumulative translation adjustment (21,755) (21,755)
Deficit (4,570,098) (4,217,881)
_____________ _____________
11,371,470 10,238,477
_____________ _____________
$ 12,253,662 $ 11,436,086
_____________ _____________
CONTINUING OPERATIONS AND CONTINGENCIES (Note 1)
CONTINGENCY (Note 5)
APPROVED BY THE BOARD
(Signed) Tom G. Elder
Tom G. Elder, Director
(Signed) Guy E. Pas
Guy E. Pas, Director
MANO RIVER RESOURCES INC.
Consolidated Statements of Loss and Deficit
For the years ended January 31
(Stated in U.S. Dollars)
2003 2002
_____________ _____________
REVENUE
Interest income $ 8,183 $ 17,056
_____________ _____________
EXPENSES
Administrative and office 4,847 11,029
Bank and interest charges 43,792 18,170
Directors' fees 26,000 23,000
Foreign exchange (gain) loss (2,340) 2,375
Management fees 75,000 181,500
Mine maintenance expenses 45,182 68,744
Professional fees 126,651 94,413
Transfer agent and filing fees 32,088 24,115
Travel and promotion 3,612 13,500
_____________ _____________
354,832 436,846
_____________ _____________
NET LOSS BEFORE UNDERNOTED ITEMS (346,649) (419,790)
LOSS ON SALE OF INVESTMENT (5,568) -
WRITE-OFF OF RESOURCE PROPERTY
ACQUISITION AND EXPLORATION COSTS - (1,863,333)
_____________ _____________
NET LOSS FOR THE YEAR (352,217) (2,283,123)
DEFICIT AT BEGINNING OF YEAR (4,217,881) (1,934,758)
_____________ _____________
DEFICIT AT END OF YEAR $ (4,570,098) $ (4,217,881)
_____________ _____________
BASIC AND DILUTED LOSS PER SHARE (Note 2 (f)) $ (0.003) $ (0.023)
_____________ _____________
MANO RIVER RESOURCES INC.
Consolidated Statements of Cash Flows
For the years ended January 31
(Stated in U.S. Dollars)
2003 2002
_____________ _____________
OPERATING ACTIVITIES
Net loss for the year $ (352,217) $ (2,283,123)
Items not involving cash:
Loss on sale of investment 5,568 -
Write-off of resource property acquisition and
exploration costs - 1,863,333
Accretion of liability component of convertible debenture 34,723 -
Interest payable on convertible debenture 8,500 -
Change in non-cash working capital items:
Accounts receivable 639 1,180
Accounts payable and accrued liabilities (46,338) 32,399
_____________ _____________
(349,125) (386,211)
_____________ _____________
FINANCING ACTIVITIES
Issuance of share capital (net of costs) 1,094,815 555,793
Proceeds from sale of investment 94,432 -
Due to related parties 78,093 538,370
_____________ _____________
1,267,340 1,094,163
_____________ _____________
INVESTING ACTIVITIES
Acquisition of resource properties (90,090) -
Deferred exploration expenditures (769,107) (804,174)
_____________ _____________
(859,197) (804,174)
_____________ _____________
NET CASH INFLOW (OUTFLOW) 59,018 (96,222)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 125,098 221,320
_____________ _____________
CASH AND CASH EQUIVALENTS, END OF YEAR $ 184,116 $ 125,098
_____________ _____________
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
AND INVESTING ACTIVITIES:
During the year ended January 31, 2003, the Company issued 6,427,545 common shares for the
settlement of debt of $415,295 due to related parties.
During the year ended January 31, 2003, the Company issued a $200,000 convertible debenture
in settlement of $200,000 of debt due to related parties.
During the year ended January 31, 2002, the Company issued 2,323,230 common shares for the
settlement of debt of $232,555 due to related parties and 2,500,000 common shares for the
acquisition of 68,750 shares of Resources Investment Trust.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
1. CONTINUING OPERATIONS AND CONTINGENCIES
The Company, which commenced operations on July 10, 1996, is engaged in
the acquisition, exploration and development of gold and diamond
properties. The Company is in the development stage and has no source of
cash flows other than loans from related parties or equity offerings.
The Company also has a working capital deficiency and does not have
sufficient funds to satisfy its liabilities.
These consolidated financial statements are prepared on a going concern
basis which assumes that the Company will be able to realize assets and
discharge liabilities in the normal course of business. The Company's
ability to continue on a going concern basis depends on its ability to
successfully raise additional financing. If the Company cannot obtain
additional financing the Company may be forced to realize its assets at
amounts significantly lower than the current carrying value.
Uncertainty also exists with respect to the recoverability of the
carrying value of certain resource properties. The ability of the
Company to realize on its investment in resource properties is
contingent upon resolution of the uncertainties and continuing
confirmation of the Company's title to the resource properties.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with
generally accepted accounting principles in Canada and reflect the
following significant accounting policies. The United States dollar has
been identified as the Company's currency of measurement and is used for
external reporting purposes.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a) Principles of consolidation
These financial statements include the accounts of Mano River
Resources Inc. and its principal subsidiary, Mano River
Resources Ltd. These financial statements also include a number
of subsidiaries as detailed in the following list:
Percentage
Company Place of Incorporation Ownership
_________________________________ ____________________ ________
Equinox Resources (Wash) Inc. Washington, United States 100%
Mano River Resources Limited and British Virgin Islands 100%
its subsidiaries:
Golden Limbo Rock Resources
Limited and its 100% owned
subsidiary Tortola, British Virgin Islands 91%
Golden Limbo Rock Ressources SA Conakry, Guinea
Golden Leo Resources Limited Tortola, British Virgin Islands 93.8%
Lofa Goldiam, Inc. and its 100% owned
subsidiaries: Tortola, British Virgin Islands 97.6%
Bea Mountain Mining Corporation Monrovia, Liberia
Kpo Resources Incorporated Monrovia, Liberia
The shares not legally owned by the Company in the listed
subsidiaries are held by one third party company. This third
party has no beneficial interest in the shares and is holding
the shares until the Company and the third party agree on their
ultimate distribution. As the Company retains the beneficial
interest in these shares no non-controlling interest exists at
January 31, 2003.
(b) Cash and cash equivalents
Cash and cash equivalents consists of cash on hand, deposits in
banks and highly liquid investments with an original maturity of
ninety days or less.
(c) Investments
Investments are recorded at cost, subject to a provision for any
impairment that is determined to be other than temporary.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Resource properties and deferred exploration costs
The Company follows the method of accounting for its mineral
properties whereby all costs related to acquisition, exploration
and development are capitalized by property. The carrying value
of pre-production and exploration properties is reviewed
periodically and either written off when it is determined that
the expenditures will not result in the discovery of
economically recoverable ore reserves or transferred to
producing mining property, plant and equipment when commercial
development commences.
The recoverability of amounts shown for pre-production and
exploration properties is dependent upon the discovery of
economically recoverable reserves, confirmation of the Company's
interest in the underlying mineral claims, the ability of the
Company to finance the development of the properties and on the
future profitable production or proceeds from the disposition
thereof.
(e) Use of estimates
The preparation of financial statements in conformity with
Canadian generally accepted accounting principles 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. Actual results could differ from
those estimates.
(f) Loss per share
The basic loss per share is computed by dividing the net loss by
the weighted average number of common shares outstanding during
the year. The fully diluted loss per share reflects the
potential dilution of common share equivalents, such as
outstanding stock options and share purchase warrants, in the
weighted average number of common shares outstanding during the
year, if dilutive. For this purpose, the "treasury stock method"
is used for the assumed proceeds upon the exercise of stock
options and warrants that are used to purchase common shares at
the average market price during the year.
(g) Foreign currency translation
The Company's foreign currency transactions are translated into
U.S. dollars using the temporal method. Under this method
monetary items are translated at the exchange rate in effect at
the balance sheet date. Non-monetary items are translated at
historical rates and revenue and expense items are translated at
exchange rates prevailing when such items are recognized in the
statement of operations. Gains and losses on foreign exchange
translation are credited or charged to income.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Stock-based compensation
The Company has adopted the recommendations of the new CICA
Handbook section 3870, Stock-Based Compensation and Other
Stock-Based Payments, effective February 1, 2002. This section
establishes standards for the recognition, measurement and
disclosure of stock-based compensation and other stock-based
payments made in exchange for goods and services. The standard
requires that all stock-based awards made to non-employees be
measured and recognized using a fair value based method. The
standard encourages the use of a fair value based method for all
awards granted to employees, but only requires the use of a fair
value based method for direct awards of stock, stock
appreciation rights, and awards that call for settlement in cash
or other assets. When the fair value method is not used,
disclosure is required of the pro forma impact of using the fair
value of stock options on the reported results of operations.
Awards that a company has the ability to settle in stock are
recorded as equity, whereas awards that the entity is required
to or has a practice of settling in cash are recorded as
liabilities. This policy applies to all stock options granted
subsequent to February 1, 2002. The Company has elected not to
adopt the fair value method and pro forma disclosure is provided
in Note 6 (f).
Compensation expense is recognized when stock options are issued
to employees and directors using the intrinsic value based
method whereby compensation cost is recorded for the excess, if
any, of the quoted market price at the date granted over the
exercise price. Any consideration paid by employees and
directors on exercise of stock options is credited to share
capital. If stock options are repurchased from employees and
directors, the excess of the consideration paid over the
carrying amount of the stock options is charged to deficit.
Compensation expense is determined when stock options are issued
to non-employees and is recognized over the vesting period of
the option. The compensation expense is determined as the fair
value of the option at the date of grant using an option pricing
model.
(i) Income taxes
The Company accounts for income taxes whereby future income tax
assets and liabilities are computed based on differences between
the carrying amount of assets and liabilities on the balance
sheet and their corresponding tax values using the enacted
income tax rates at each balance sheet date. Future income tax
assets also result from unused loss carry-forwards and other
deductions. The valuation of future income tax assets is
reviewed annually and adjusted, if necessary, by use of a
valuation allowance to reflect the estimated realizable amount.
Although the Company has tax loss carry-forwards (see Note 8),
there is uncertainty as to utilization prior to their expiry.
Accordingly, the future income tax asset amounts have been fully
offset by an uncertainty provision.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j) Comparative figures
Certain prior year figures have been reclassified to conform to
the current year's presentation.
3. INVESTMENTS
2003 2002
___________ ___________
Royal Victoria Minerals Ltd. $ 34,496 $ 34,496
Resources Investment Trust - 100,000
___________ ___________
$ 34,496 $ 134,496
___________ ___________
The Royal Victoria Minerals Ltd. investment consists of 260,000 common
shares with a quoted market value at January 31, 2003 of $75,925 (2002 -
$24,570).
During the year the Company disposed of 68,750 shares at #0.915 ($1.38)
per share of Resources Investment Trust for net proceeds of #62,590
($94,432).
4. RESOURCE PROPERTIES AND DEFERRED EXPLORATION COSTS
2003 2002
__________ ____________
Acquisition costs
Liberia, West Africa $ 320,000 $ 320,000
Guinea, West Africa 1,940,000 1,940,000
Sierra Leone, West Africa 1,695,000 1,695,000
Casa Berardi, Canada 90,090 -
Washington, United States (Note 5) - -
__________ ____________
Closing balance $ 4,045,090 $ 3,955,000
__________ ____________
Deferred exploration costs
Liberia, West Africa $ 5,264,521 $ 4,964,208
Guinea, West Africa 1,573,733 1,554,678
Sierra Leone, West Africa 808,957 359,218
__________ ____________
Closing balance - see Schedule $ 7,647,211 $ 6,878,104
__________ ____________
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
4. RESOURCE PROPERTIES AND DEFERRED EXPLORATION COSTS (Continued)
(i) Liberia
The Company holds two Mineral Development Agreements ("MDA") in
Liberia for gold and diamond development. These MDAs are in
Western Liberia and consist of the Bea Mountains and Kpo Range,
are valid for 25 years with an option to renew for another 25
years. Both these MDAs are dated November 28, 2001 and were
approved on March 14, 2002. The MDAs will allow the Company to
start pre-feasibility work and bankable feasibility work
including, if required, pilot mining.
(ii) Guinea
The Company holds 498 square kilometers of exploration permits
in eastern Guinea through the contiguous Missamana and Gueliban
properties.
(iii) Sierra Leone
The Company holds five prospecting licenses for diamonds, gold
and base metals. Three of the licenses are located in the
eastern province of the country and consist of Njaiama Nimikoro,
Yengema East and Nimini Hills. The remaining two licenses are
located in the northern province and consist of Lake Sonfon and
South Pampana.
(iv) Canada
During the year ended January 31, 2003, the Company entered into
a Heads of Agreement ("HOA") to earn a 61% interest in certain
mineral properties in the Casa Berardi area of Quebec, Canada.
To earn this interest, the Company is required to:
* pay $16,385 (Cdn.$25,000) upon signing of the HOA (paid);
* incur a minimum of $32,344 (Cdn.$50,000) in exploration
expenditures during Phase 1;
* pay $16,600 (Cdn.$25,000) upon signing a full scale joint
venture agreement (the "Agreement");
* incur a minimum of approximately $800,000 (Cdn.$1.2 million)
in exploration expenditures during the first two years of the
Agreement (Phase 2); and
* issue that number of common shares in the Company equal to
$65,725 (Cdn$100,000) and incur approximately $1.6 million
(Cdn.$2.5 million) during the two-year period following
commencement of Phase 3.
Additional acquisition costs may be incurred as further areas of
interest are identified in the Casa Berardi area.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
5. RECLAMATION BONDS AND CONTINGENCY
During the year ended January 31, 2002, the Company re-evaluated the
prospective viability of the Van Stone property (located in Stevens
County, Washington State, U.S.A.) and has concluded that given the
continued low commodity prices that the mine will remain closed. The
Company is taking steps to dispose of the mill and mine assets.
At January 31, 2003, term deposits totalling $340,610 (2002 - $340,610)
have been pledged to the State of Washington as security for reclamation
costs on the Van Stone property. A reclamation provision has been
accrued in the amount of $340,610. The Company has completed an
assessment of the reclamation and closure costs and it is anticipated
that costs incurred will not exceed this provision. The Company will
continually monitor the costs related to the Van Stone mine and will
make further provisions if it is determined necessary.
6. SHARE CAPITAL
(a) Authorized
Unlimited common shares without par value
(b) Issued
Shares Amounts
___________ ___________
Balance at January 31, 2001 90,339,441 $ 13,468,865
Shares issued on private placement (net of costs) (c) 6,000,000 555,793
Shares issued for investments 2,500,000 100,000
Shares issued for settlement of debt (d) 2,323,230 232,555
___________ ___________
Balance at January 31, 2002 101,162,671 14,357,213
Shares issued on private placement (net of costs) (c) 26,300,000 1,094,815
Shares issued for settlement of debt (d) 6,427,545 415,295
___________ ___________
Balance at January 31, 2003 133,890,216 $ 15,867,323
___________ ___________
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
6. SHARE CAPITAL (Continued)
(c) Private placements
(i) During the year ended January 31, 2003, the
Company:
* concluded a private placement of 2,100,000 shares at
#0.0325 per share ($0.046 or Cdn.$0.073) for proceeds
net of costs of $97,570;
* concluded a private placement of 6,100,000 shares at
#0.04 per share ($0.06 or Cdn.$0.096) for proceeds net
of costs of $368,129;
* concluded a private placement of 3,000,000 shares at
#0.04 per share ($0.055 or Cdn.$0.088) for proceeds net
of costs of $165,713; and
* concluded a private placement of 15,100,000 units at
#0.02 per unit ($0.031 or Cdn.$0.049) for proceeds net
of costs of $463,403. Each unit consisted of one common
share and 0.5 share purchase warrants. Each whole share
purchase warrant is exercisable into one common share
for a period of two years at an exercise price of #0.03
($0.047 or Cdn.$0.075) for the first year and #0.04
($0.063 or Cdn.$0.10) for the second year. As at January
31, 2003, no share purchase warrants had been exercised.
(ii) During the year ended January 31, 2002, the
Company concluded one private placement of 6,000,000
shares at #0.07 per share ($0.10 or Cdn.$0.15) for
proceeds net of costs of $555,793.
(d) Settlement of debt
(i) During the year ended January 31, 2003, the
Company issued 6,427,545 common shares for settlement of
debt of $415,295.
(ii) During the year ended January 31, 2002, the
Company issued 2,323,230 common shares for settlement of
debt of $232,555.
(e) As at January 31, 2003, there were 2,100,000 shares held
in escrow with their release subject to approval of regulatory
authorities.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
6. SHARE CAPITAL (Continued)
(f) Stock options
The Company is currently implementing a formal stock option
plan. From time to time, the Company grants stock options as an
incentive to employees, directors and consultants. All options
are exercisable from the date of grant.
The changes in stock options were as follows:
2003 Weighted 2002 Weighted
Average Average
Exercise Exercise
Price Price
__________ ________ __________ ________
(Cdn$) (Cdn$)
Balance outstanding,
beginning of year 4,040,000 $ 0.30 2,990,000 $ 0.34
Activity during the year
Options granted 5,905,000 0.11 1,050,000 0.22
__________ ________ __________ ________
Balance outstanding,
end of year 9,945,000 $ 0.19 4,040,000 $ 0.30
__________ ________ __________ ________
As at January 31, 2003, the following stock options were
outstanding:
Exercise price
Number of per share
Common Shares (Cdn$) Expiry date
_____________ ___________ _________________
2,890,000 $ 0.34 February 12, 2004
100,000 0.34 April 14, 2005
1,050,000 0.22 May 1, 2006
905,000 0.10 February 21, 2007
5,000,000 0.11 March 21, 2007
_____________
9,945,000
_____________
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
6. SHARE CAPITAL (Continued)
(f) Stock options (continued)
The following pro forma financial information presents the net
loss for the year and the basic loss per common share had the
Company adopted the fair value method of accounting for stock
options as set out in CICA Handbook Section 3870, Stock-Based
Compensation and Other Stock-Based Payments.
2003
___________
Net loss for the year $ (352,217)
Stock-based compensation cost (161,606)
___________
Pro forma net loss $ (513,823)
___________
Pro forma basic loss per share $ (0.005)
___________
Using the fair value based method for stock-based compensation,
additional costs of approximately $161,606 would have been
recorded for the year ended January 31, 2003. This amount was
determined using an option pricing model assuming no dividends
were paid, a weighted-average volatility of the Company's share
price of 145%, and weighted-average annual risk free rate of
5.22%.
7. CONVERTIBLE DEBENTURE
The Company entered into a convertible debenture agreement with respect
to settling advances from a company controlled by a director. Advances
totaling $200,000 will, under this debenture, be repayable on April 30,
2004 together with accumulated interest at 6% per annum. The principal
amount is convertible by the holder into common shares of the Company at
a conversion price of #0.04 per share at any time prior to maturity.
In accordance with the recommendations of the Canadian Institute of
Chartered Accountants, the convertible debenture issued has been
segregated into its debt and equity components. The financial liability
component, representing the value allocated to the liability at
inception, is recorded as a long-term liability. The remaining
component, representing the value ascribed to the holders' option to
convert the principal balance into common shares, is classified in
shareholders' equity as "Equity component of convertible debenture".
These components have been measured at their respective fair values on
the date the convertible debenture was originally issued.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
7. CONVERTIBLE DEBENTURE (Continued)
The components of the convertible debenture were as follows:
January 31, Issue
2003 Date
___________ ___________
Debt component $ 138,723 $ 104,000
Equity component 96,000 96,000
Over the term of the debt obligation, the debt component will be
accreted to the face value of the instrument by the recording of
additional interest expense.
8. INCOME TAXES
The provision for income taxes reported differs from the amounts
computed by applying the cumulative Canadian Federal and Provincial
income tax rates to the loss before tax provision due to the following:
2003 2002
__________
_________
Statutory tax rate 39.6% 42.6%
Recovery of income taxes computed at standard rates $ (139,500) $ (972,600)
Writeoff of resource property costs - 793,800
Tax losses not recognized in the period that the benefit arose 139,500 178,800
_________ __________
$ - $ -
_________ __________
The approximate tax effect of each type of temporary difference that
gives rise to the Company's future tax assets are as follows:
2003 2002
___________ ___________
Operating loss carry-forwards $ 1,123,488 $ 1,125,319
Less: Valuation allowance (1,123,488) (1,125,319)
___________ ___________
$ - $ -
___________ ___________
The Company has reduced the value of the potential future income tax
asset to $Nil through the application of a valuation allowance as the
Company does not have any current source of income to which the tax
losses can be applied. Further, the Company has not included losses or
benefits available in the United States as the Company has no United
States assets and does not currently have any intention to commence
operations in the United States.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
8. INCOME TAXES (Continued)
At January 31, 2003, the Company had the following loss carry-forwards
available for tax purposes:
Amount Expiry
__________ __________
Country
Canada $ 2,800,000 2004 - 2010
Liberia 120,000 2005
9. RELATED PARTY TRANSACTIONS (in addition to the transaction disclosed in
Note 7)
The following table summarizes the Company's related party transactions
for the year:
2003 2002
__________ __________
(a) incurred management services fees with a
company related by a director in common $ 63,000 $ 73,500
(b) incurred management services fees with a
company associated with a director of
the Company 12,000 108,000
__________ __________
$ 75,000 $ 181,500
__________ __________
(c) incurred professional services fees with a law firm
in which a director of the Company is a partner $ 32,429 $ 26,842
__________ __________
These transactions are in the normal course of operations and are
measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties.
At the end of the year, the amounts due to related entities are as
follows:
2003 2002
__________ __________
Director's companies $ 112,642 $ 581,866
Various directors 177,078 115,968
Director's law firm 15,475 15,163
__________ __________
$ 305,195 $ 712,997
__________ __________
These balances are payable on demand and have arisen from the provision
of services referred to above and provision of short-term bridge
financing.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
10. SEGMENTED INFORMATION
(a) Industry information
The Company operates in one reportable operating segment, being
the acquisition and exploration of resource properties.
(b) Geographic information
Revenues from operations in the year ended January 31, 2003 were
derived from interest income of which $7,162 (2002 - $17,056)
was earned in Canada and $1,021 (2002 - $Nil) was earned in the
British Virgin Islands.
The Company's non-current assets by geographic location are as
follows:
2003 2002
____________ ____________
Canada $ 124,586 $ 34,496
United Kingdom - 100,000
Guinea 3,513,733 3,494,678
Liberia 5,584,521 5,284,208
Sierra Leone 2,503,957 2,054,218
United States 340,610 340,610
____________ ____________
$ 12,067,407 $ 11,308,210
____________ ____________
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial assets and liabilities are cash and cash
equivalents, accounts receivable, investments, accounts payable and
accrued liabilities, and due to related parties. The fair values of
these financial instruments are estimated to approximate their carrying
values due to their immediate or short-term nature except for
investments whose fair value is described in Note 3. Due to the nature
of the Company's operations, there is no significant credit or interest
rate risk. As at January 31, 2003, the Company held approximately
$163,385 cash in bank accounts denominated in U.K. pounds. The Company
has taken no action to reduce its exposure to foreign currency risk.
MANO RIVER RESOURCES INC.
Notes to the Consolidated Financial Statements
For the years ended January 31, 2003 and 2002
(Stated in U.S. dollars)
MANO RIVER RESOURCES INC.
Schedule of Deferred Exploration Costs
For the years ended January 31
(Stated in U.S. Dollars)
2003 2002
_____________ _____________
Accommodation and meals $ 36,043 $ 15,467
Assays including shipment 1,906 102,876
Communications 28,352 45,446
Community relations 17,677 10,665
Consultants 132,066 132,661
Data, images, reports and maps 3,128 12,013
Geologists' support 7,565 11,550
License, permit fees 144,584 45,649
Project/field costs, other 73,522 134,790
Recon and geochem 12,409 17,221
Salaries and wages 245,358 217,718
Transportation 66,497 58,118
_____________ ____________
NET EXPENDITURES DURING THE YEAR 769,107 804,174
COSTS WRITTEN OFF - (23,639)
BALANCE, BEGINNING OF YEAR 6,878,104 6,097,569
_____________ _____________
BALANCE, END OF YEAR $ 7,647,211 $ 6,878,104
_____________ _____________
Management Discussion and Analysis
for the Year Ending January 31, 2003
The Consolidated Financial Statements for Mano River Resources Inc. ("Mano" or
the "Company") covering the year ending January 31st, 2003 are provided herein
for your review.
Description of Business
Mano River Resources Inc is engaged in the acquisition, exploration and
development of gold and diamond properties. The Company, through its
subsidiaries, holds interests in properties located in Liberia, Sierra Leone,
and Guinea.
Operations and Financial Condition
The Company incurred a net loss of $352,217 or $0.003 per share for the year
ended January 31, 2003 as compared to a net loss of $2,283,123 or $0.023 per
share in 2002. This is a $1,930,906 decrease in net loss compared to fiscal year
2002. The decrease was primarily due to there having been no write-off of
mineral properties in the year ended January 31, 2003, as compared to $1,863,333
of write-offs in fiscal year 2002. The operating expenses were $354,832 for
2003, compared with $436,846 for 2002. The decrease of $82,014 over 2002 was
mainly due to a reduction in management fees and mine maintenance expenses. The
increase in transfer agent and filing fees of $32,088 (2002 - $24,115) and
professional fees of $126,651 (2002 - $94,413) was mainly due to costs
associated with filing various agreements and transactions with the regulatory
authorities. Revenue for the year was $8,183 of interest income, as compared to
$17,056 in 2002, a decrease of $8,873. Total assets on January 31, 2003 were
$12,253,662 as compared to $11,436,086 in 2002. As at January 31, 2003, the
Company had total current liabilities of $420,859 as compared to $856,999 for
the same period in 2002. During the year the Company was able to convert
$200,000 of advances from a company controlled by a director into a convertible
debenture due April 30, 2004. The Company was also able to settle outstanding
debts with directors or companies with which they are associated in the amount
of $294,395 by issuing 5,219,759 common shares. This reduction in current
liabilities improved the Company's working capital position significantly. As at
January 31, 2003, current liabilities include $305,195 due to related parties
for management fees, bridging loan and reimbursable expenses.
As at January 31, 2003, the Company had current assets of US$186,255 as compared
to US$127,876 for the same period in 2002. The Company had as at January 31,
2003 working capital deficiency of $216,604 as compared to working deficiency of
$729,123 in 2002. During the year ended January 31, 2003, the Company
successfully raised $1,094,815 net of costs to maintain its working capital,
exploration and development obligations.
Notable variances in the deferred exploration expenditures (DEE) for the
financial year ending 31st January 2003 compared to the previous financial year
are as follows:
2003 2002
_______ ___________
Assays $ 1,906 102,876
Licences 144,584 45,649
Project/field costs 73,522 134,790
Expenditure on assays was significantly lower in the financial year as the
Company concentrated its exploration programme on advancing its earlier stage
gold and diamond projects in Sierra Leone. The amount expended in the previous
financial year related to significant drill core and mini-bulk sample analyses
from Mano's more advanced Liberian gold and diamond programmes respectively.
The major element in the increased expenditure on licences in the 2002/03 period
was the upfront, one-time, signature fee payment of $50,000 for each of the
Company's two Mineral Development Agreements in western Liberia, effectively
25-year renewable mining licences covering the Company's Bea Mountains and Kpo
Range exploration projects.
The recommencement of the Company's exploration programmes in Sierra Leone on
its prospective but earlier stage projects, in comparison to those in Liberia,
resulted in reduced expenditure on associated project costs such as rent,
utilities and general supplies.
The DEE for the period totalled $769,107, which the Company considers to be very
modest in relation to the value created for shareholders.
The Company's ability to continue its operations is dependent on its ability to
secure additional financing in the near term and, while it has been successful
in doing so in the past, there can be no assurance it will be able to do so in
the future. In order to continue developing its mineral properties, management
is actively pursuing such additional sources of financing, including joint
ventures with industry partners.
Exploration and Project Development
During the year under review, exploration activity was primarily focussed on
Sierra Leone and Canada, with little activity in Liberia due to the
deteriorating security situation. Exploration can be summarised as follows:
a. Sierra Leone - DIAMONDS
In February 2002, Mano announced that the company was to recommence its
diamond exploration programme in the highly prospective diamondiferous Kono
District of Sierra Leone, across its three Exclusive Prospecting Licences
("EPLs") originally acquired between 1996 and 1998. The Company's scheduled
work programme followed the official declaration, on the 18th January 2002,
of the cessation of the civil war in the country which had been preventing
exploration and mining development.
The three Mano diamond Licences (Yengema, Njaiama and Nimini) lie
immediately adjacent to the well-known diamondiferous Koidu kimberlite pipes
(see the Company's website http://www.manoriver.com/mano/projects/
diamonds_sl_kono.shtml for location map). These pipes, on which mining
commenced in the 1960s, have reported grades and diamond values of 35cpht
and $200/ct, respectively. In addition, the Koidu and Yengema area has been
extensively mined for alluvial diamonds, mainly by artisans but also by
private and state-owned companies. In 1969, total historical diamond
production from alluvial sources in the immediate Koidu area was estimated
to be 9 million carats (Hall P.K. (1969); The Diamond Fields of Sierra
Leone.). The dyke swarm associated with the Koidu pipes is reported to
extend into Mano's Yengema and Njaiama licences.
Mano considers that the Koidu pipes and associated dykes are unlikely to be
the sole sources for the diamonds produced from the Kono area and believes
that undiscovered kimberlites occur within its licences. Evidence includes
the many artisanal workings that produce diamonds of distinctly different
colour and morphology to those of Koidu, which are mainly coated.
Furthermore, many of the alluvial diamonds are exploited in areas where the
topography suggests new primary sources.
In October, Mano announced that it had received highly encouraging initial
results from its detailed work across a number of kimberlite anomalies,
identified within its Kono EPLs. Kimberlite was located in as many as 18
separate localities, considered to form part of an extensive diamondiferous
kimberlite dyke system. Two previously unmapped kimberlite dykes, designated
Lion-1 and Lion-2, had been discovered with inferred strike lengths of 5km
and 6km, respectively. A mini-bulk sample of approximately 1.7 tons of
diluted kimberlite material from Lion-1 returned a highly encouraging
minimum diamond grade of 49 carats per hundred tonnes (cpht).
As part of the programme, Mano initiated an intensive loam sampling exercise
over the five strong but relatively isolated anomalies identified and
prioritized from the results of the Phase-1 stream sediment reconnaissance
survey (see news release dated May 27th 2002, http://www.manoriver.com/news/
nr02/nr0211_27may.pdf). All five of these anomalous areas show G10 garnets
and contain active artisanal diamond mining. Mano has already identified
kimberlites in three of these areas.
It was the intention of this loam sampling programme to better define the
known kimberlites, including Lion-1 and Lion-2, and locate any further
kimberlite occurrences within the blocks. Approximately 1,000 samples were
collected and processed.
Mano's immediate aim is to seek to repeat, in Sierra Leone, the kimberlite
exploration success it has already amply demonstrated in Liberia.
b. Sierra Leone - GOLD
Elsewhere in Sierra Leone, at the northern end of the Sula Mountains
greenstone belt, the first phase of gold exploration work on the Sonfon
Joint Venture with Golden Prospect got under way in August. Geochemical soil
grids situated over known shear zones, together with litho-geochemical
sampling of trenches and pits, was carried out in order to generate possible
drill targets.
c. Liberia - GOLD
In March, Mano announced that it had signed two Mineral Development Agreements
(MDAs) with the Government of Liberia covering its mineral projects. The MDA is
a key element of the new progressive Liberian Mining Law and Regulations
introduced during 2000 and 2001, granting the holder inter alia, the following
basic rights:
* A three year exploration period, renewable for a further two years for a
reduced area
* Automatic and exclusive right to mine discoveries, by declaring one or
more production areas
* Mining rights valid for 25 years, renewable for a further 25 years
The MDA constitutes a combined exploration and mining licence, eliminating the
often lengthy process seen elsewhere of negotiation of a mining licence only
following the completion of the exploration phase.
The two MDAs which have been granted award Mano exclusive rights to all minerals
(other than hydrocarbons) over 1,000 square kilometres in the Bea Mountains and
a further 200 square kilometres in the Kpo Range, targeting respectively all the
significant gold and diamond prospects to emerge from Mano's exploration
programme in Liberia to date.
The basic fiscal terms of Mano's MDAs, are as follows:
* Corporation Tax limited to 30%
* Production Royalty of 3%, tax deductible
* Free carried interest to the government of 10%, (but with dividends
payable only after recovery of all exploration and construction expenditure
and loans)
* Exemption from import tax and duties on capital equipment
* No withholding tax on dividends paid offshore
* Freedom to operate offshore accounts
In April, the Company appointed ACA Howe International Limited of the UK (Howe)
and Metallurgical Design and Management Pty Limited of South Africa (MDM) to
prepare an independent bankable feasibility study (BFS), for both the KGL and
Weaju gold properties in the Bea Mountains MDA, with the aim of commencing gold
production in 2004 as soon as funding is put in place. The study was to examine
the economics of an operation with an initial production from open pits of
25,000 ounce per year. Studies previously carried out for KGL by Lakefield
laboratories in Toronto, showed up to 96% gold recovery achieved in test work.
Very preliminary estimates, based on initial data supplied by MDM and using a
$275 per ounce gold price, suggest that both projects should have very robust
economics.
Unfortunately, a deteriorating security situation in Liberia, especially during
the second half of 2002, has prevented the company from instigating this study,
which remains on hold.
KGL and Weaju are only two of many gold prospects in Mano's 1,000 sq km Bea
Mountains MDA: hosted by shear zones, which stretch for tens of kilometres
across the Archaean granite-greenstone terrain in western Liberia. Barely 5% of
the measured major mineralised shear structures within the Licence have been
explored to date. As part of KGL's BFS, approximately 2,000m of additional
drilling will be needed to bring part of the resource up to reserve status.
d. Liberia - DIAMONDS
In June, Mano announced the signature of a Heads of Agreement for the creation
of a Diamond Exploration Joint Venture in Liberia with the TRANS HEX GROUP (THG)
of South Africa.
The venture will focus on Mano's Mineral Development Agreement (MDA) covering a
200 square kilometre area of the Kpo Range in western Liberia. THG can earn a 50
percent interest in the MDA, by completing over a period of three years Phases 1
& 2 of a programme involving a total expenditure of approximately US$2 million.
During Phase 1, THG will fund a detailed airborne geophysical survey with the
objective of locating any remaining kimberlites in the cluster first discovered
by Mano in 2001. Phase 2 is to involve bulk sampling over one or more
kimberlites.
The parties will co-fund Phase 3, comprising a Feasibility Study and
Construction. Alternatively, at Mano's option, THG may be granted the right to
sole fund Feasibility Studies and Construction, to the start of Production from
one or more kimberlites, to earn an additional 19% equity in the MDA. Trans Hex
is a niche producer of large, gem-quality diamonds,
with annual production exceeding 200,000 carats. Their exploration, mining and
marketing activities are principally focused in Southern Africa.
This joint venture programme is scheduled to get under way as soon as the
security situation in Liberia improves.
GUINEA
There was no activity in Guinea during the period under review, other than to
maintain the exploration licences in good standing. Mano's Guinean geologist was
seconded to Sierra Leone, where he gained valuable experience in both gold and
diamond exploration techniques.
CANADA
In May, Mano announced the signature of a Heads of Agreement for the creation of
a Diamond Exploration Joint Venture in Quebec, Canada, with International Taurus
Resources Inc. of Vancouver ("Taurus").
The venture focuses on a 7,500-square-kilometre area of the James Bay Lowlands,
southwest of the Otish Mountains. Mano can earn 26 percent of the venture by
completing Phases 1 & 2, which require C$1.25 million in expenditures, and may
earn a total of 51 percent with the expenditure of an additional C$2.5 million.
Mano may earn a further ten percent in a particular property by completing a
pre-feasibility study on that property.
The James Bay Lowlands area, underlain by the Archaean Superior craton, already
contains numerous kimberlite and diamond discoveries. The Taurus data included
77,000 line-kilometres of helicopter-borne high-intensity geophysical survey,
together with extensive geological and geochemical data. More than 100 new
targets, including several "clusters" and distinct "bull's-eye" anomalies, which
are consistent with possible kimberlite intrusions, have been identified.
Kimberlites are known at Kirkland Lake, on the western side of the project area,
and near Desmaraisville, on the eastern side.
Mano announced in August that further mineral claims had been staked bringing
the total number to 40 covering more than 15,000 hectares. Detailed ground
magnetic surveys were completed on the 12 most recently staked claims,
confirming the favorable nature of the prospects.
Mano's Canadian diversification is complementary to its exploration portfolio
and was not intended in any way to diminish the company's commitment to its
pioneering hard rock gold and diamond production in the Mano River Union
countries of Sierra Leone, Liberia and Guinea. Having completed Phase 1 of the
JV, ground acquisition, phase 2 is on hold pending the raising of the necessary
financing.
Corporate Developments and Liquidity
On March 21st, 2002, Mano granted incentive stock options ("Options") to the
following directors: A P Rhatigan, two million; G E Pas, two million; T G Elder,
one million; to purchase common shares in the capital stock of the Company.
The Options, exercisable at a price of Cdn$0.11 per share for a period of five
years ending on March 21st 2007, were subsequentlyapproved by the TSX Venture
Exchange.
At the same time, the Company announced that the second part of the previously
announced transaction with Resources Investment Trust PLC ("REIT"), whereby REIT
agreed to purchase 2,100,000 common shares of the Company at a price of
GBP0.0325 per share for total proceeds of GBP68,250 (approximately US$100,000),
closed on March 7, 2002, having received TSX Venture Exchange approval on
February 5, 2002. The proceeds from this transaction were used for general
working capital.
In May, Mano announced that it had arranged a non-brokered Private Placement
under which AIM-listed Golden Prospect plc (GP) invested GBP244,000 in new Mano
shares. At the same time, the two companies concluded a Heads of Agreement (HoA)
under which they combine and jointly explore their contiguous exploration
licences in the Sonfon region of central Sierra Leone.
The placing was at a price of GBP0.04 per share and the 6,100,000 new shares
subsequently received TSX Venture Exchange approval and were admitted to trading
on AIM. Following the placing, Golden Prospect held approximately 5.7% of the
issued share capital of the Company.
Under the HoA signed between Mano and GP, Mano as operator undertook to fund the
initial US$75,000 of an exploration programme for the 50:50 Joint Venture.
Within their adjoining exploration licences totalling 256 square kilometres,
gold targets were to be investigated by geochemical soil grids, trench sampling
and assaying. The licences are located in an area underlain by the pre-eminent
greenstone belt in Sierra Leone.
The proceeds of the Placing were used by Mano to fund the first phase of the
joint venture programme in Sonfon, to continue the Company's exploration
programme over its range of promising hard rock gold and diamond targets
elsewhere in the Mano River Union countries, and for general working capital
purposes.
On May 21st, Mano announced that it had arranged a further brokered Private
Placement in the UK and Europe by Loeb Aron & Company Limited of 3,000,000
common shares at GB#0.04 per share to raise gross GBP120,000. The Placing was
approved by the TSX Venture Exchange and the new shares subsequently admitted to
trading on AIM.
Also on May 21st, Mano announced that it had approved arrangements reached with
a number of parties to satisfy US$294,395 accrued and due for payment as of 31
January 2002 with Mano shares at a price of GB#0.04. The debt settlement, in
combination with the concurrent non-brokered and brokered private placements,
strengthened Mano's financial position as it aggressively pursues exploration of
its promising mineral properties.
Mano also announced that it had been advised by Mining Capital Partners Limited
("MCP"), a wholly-owned entity of the Synergy Asset Management Group of Geneva,
acquired 17,282,233 common shares at an average price of GBP0.066 per share from
various parties on 5 May 2002. This holding represented approximately 16.5 per
cent of the issued share capital of the Company on the date of acquisition.
Synergy Asset Management is engaged in alternative fund management.
Mano also announced that Malcolm Burne had been elected to the Board of
Directors at its AGM held on 19th June 2002. Mr. Burne is Executive Chairman and
director of Golden Prospect Mining Plc., listed on AIM, and has many years of
experience in the mineral exploration and development industry. Mano was pleased
to add that experience to its Board. Roger Haiat, who has served as a director
since 1998, did not go forward for re-election and his term of office ended at
the AGM. The Company expressed its gratitude for Roger's valuable contribution
to Mano's development over the previous four years.
In July, Mano announced that the TSX Venture Exchange (the "TSX-V") and the
disinterested shareholders of the Company had approved an amendment to the
release schedule of its escrow agreement dated July 19, 1995. As a result the
2.8 million escrowed shares will no longer be subject to a release schedule
based on expenditures made by the Company on its Van Stone Mine Property and
will instead be released in increments over the period ended July 10th, 2005.
The total of 2.8 million escrowed shares have already been issued and have
always been included in statements of shares outstanding.
In October, the Company announced that it had completed the issuance of
3,531,016 new common shares at a price of GB#0.07 (approximately Cdn$0.15) per
share in settlement of debts of GB#247,171 owed to a number of parties in Canada
and the United Kingdom and originally announced on September 12, 2001. The final
tranche of 1,207,786 shares of the 3,531,016 common shares have now been issued
in the United Kingdom and are subject to a four month hold (i.e. lock-up) period
which expires on February 8, 2003.
In addition to the above noted shares for debt, the Company announced that it
had also completed the issuance of 5,219,759 new common shares at a price of
GB#0.04 (approximately Cdn$0.08) per share in settlement of debts of GB#208,791
owed to a number of parties in Canada and the United Kingdom as announced on May
21, 2002. Out of the 5,219,759 common shares, 17,730 shares were subject to a 12
month hold period expiring on October 11, 2003, while the remaining 5,202,029
were subject to a 4 month hold period expiring on February 12, 2003.
On November 27th, Mano announced that it had arranged, subject to regulatory
approval, a partially-Brokered Private Placement to raise gross proceeds of up
to GBP310,000.
The brokered Placing was arranged in the UK and Europe of 7,000,000 common
shares at GBP0.02 per share by Loeb Aron & Company Limited for proceeds of
GB#140,000. Each share has one half warrant attached, which can be exercised at
GBP0.03p for the first twelve months following the closing of the Placement and
at GBP0.04p for the subsequent twelve months. Commission of 5% is due to be paid
to Loeb with respect to this GBP 140,000 placing. In a concurrent non-brokered
placing arranged by the Company, a further 8.1 million shares and 4.05 million
warrants were placed on the same terms for gross proceeds of GBP162,000. The
shares were subsequently approved by the TSX Venture Exchange and admitted to
trading on AIM. The proceeds of the Placing were to be used by Mano to continue
the Company's exploration programme over its range of promising gold and diamond
targets in the Mano River Union countries, and for general working capital
purposes. On January 3rd 2003, Mano announced that it had closed the Placement
raising gross proceeds of GB#302,000.
Investor Relations
A total of 24 News Releases were issued during the year under review, recording
material developments affecting the Company. Meanwhile, Mano's very
comprehensive website, www.manoriver.com, was totally re-vamped and continues to
be given high priority.
Investor relations remain of prime importance to the Company, and in May 2003
Mano announced the appointment of Britton Financial PR ("Britton") to handle its
Investor Relations. Britton is a financial PR company based in the City of
London, dealing with a variety of sectors. Its strengths lie in the personal
relationships it has with the media and with the financial community, through
the extensive contacts and experience of its staff. Britton's aim is to lift
Mano's profile so as to achieve a better understanding in the investment
community of the Company's portfolio of gold and diamond exploration projects in
West Africa.
Subsequent Events - Corporate
In May 2003, Mano announced that Seymour Pierce Limited has been appointed as
the Company's Nominated Adviser on the London Stock Exchange - AIM market with
immediate effect. Seymour Pierce Ltd together with Seymour Pierce Ellis Ltd,
Mano River's Nominated Broker, are a leading adviser and broker to AIM, with
some one hundred retained corporate clients. They are specialists in providing
research, corporate broking and corporate finance advice to smaller quoted
companies and have a growing specialism in extractive industries.
In June 2003, The Company announced that the board of directors had adopted a
stock option plan (the "Plan") pursuant to the policies of the TSX Venture
Exchange. The Plan is subject to TSX Venture Exchange approval and shareholder
approval. The Plan will allow for the reservation of up to 10% of the Company's
issued and outstanding shares as at the date of a particular stock option grant
(the Company currently has 133,890,216 (10% = 13,389,021) shares issued and
outstanding). Options under the Plan may be granted to the Company's directors,
officers, employees, management company employees and consultants. Upon receipt
of all necessary approvals, the Plan will govern any outstanding stock options
previously granted and any new stock options issued.
Also in June 2003, the Company announced that it had arranged, subject to
regulatory approval, a brokered Private Placing to raise gross proceeds of
GBP431,250 from existing and new institutional investors. The brokered Placing
was arranged in the UK of 17,250,000 common shares at GBP0.025 per share through
Seymour Pierce Ltd. Application will be made for approval of the Placing by the
TSX Venture Exchange and for the new shares to be admitted to trading on AIM.
The proceeds of the Placing will be used by Mano to continue the Company's
exploration programme over its range of promising gold and diamond targets in
the Mano River Union countries, and for general working capital purposes.
Subsequent Events - Exploration
In February 2003, Mano announced further very encouraging results from its
mini-bulk sampling of the Lion-1 kimberlite dyke within its EPLs in the Kono
diamond district of Sierra Leone. Macro-diamonds had already been reported by
the Company from a 1.7ton mini-bulk sample of Lion-1, which yielded 5 diamonds
in the +2.0mm size fraction weighing in total 0.85-carats, for a minimum grade
of 49 carats per hundred tonnes (49cpht - see Mano news release dated October
2nd 2002, http://www.manoriver.com /news/nr02/nr0200 02oct.pdf).
Subsequent sorting of the +0.71mm to -2.0mm kimberlite concentrate in South
Africa yielded a further 17 macrodiamonds weighing a total of 49.69mg or 0.25
carats. The calculated grade for the 1.7 tonne mini-bulk sample of Lion-1 is
therefore now 64.6 cpht. These diamonds were weighed and described by John
Gurney's Laboratory, Mineral Services, in Cape Town, the complete results of
which are shown in Table 1.
In summary, the February, 2003 Kono Lion 1 exploration programme highlights are
as follows: -
* The Lion-1 kimberlite dyke has been mapped discontinuously along strike
for approximately 5km.
* A mini-bulk sample of kimberlite material from Lion-1 of approximately 1.7
tons, including significant dilution by granite, was collected, washed and
gravitated on site. The sample yielded 22 diamonds for a total weight of
1.1-carats from the +0.71mm size fraction, suggesting an initial minimum
grade of 64.6 cpht
* The largest stone recovered from the Lion-1 mini-bulk sample weighed 0.32
carats and is of gem quality
* Lion-1 is associated with abundant G10 garnets and a petrographic analysis
of this kimberlite confirms its high interest potential
* Kimberlite has been identified elsewhere throughout the area, many
occurrences coinciding with significant artisanal diamond workings and high
interest indicator mineral chemistry
* Loam sampling and microprobe results from Mano's EPLs are expected by
early February 2003
* Diamonds of 110-carats (officially reported) and 400-carats and
1,400-carats (both unofficially reported) have been recovered during 2002
from the area immediately adjacent to Mano's EPLs in Kono.
In February 2003, Mano also reported highly encouraging results from its Sonfon
Joint Venture gold exploration programme in Sierra Leone. The Sonfon district
contains Sierra Leone's richest and most prolific historic gold fields, across
the country's pre-eminent Sula Mountains greenstone gold belt. (See map
www.manoriver.com/properties/sl_lakesonfon.html.)
A 3 km long northwest trending gold-in-soil anomaly identified by a 25ppb
contour, was defined by a geochemical soil sampling programme and termed the
Yanfarina-Dalakuru-Sende (YDS) gold zone. The programme included 879 samples,
covering an area of approximately 50km2, which were assayed by SGS Laboratories
in Ghana. The YDS zone is coincident with an area of extensive artisanal gold
workings and is within a prominent structure, approximately 9km long by 5km
wide. Trenching within the anomalous zone has identified a series of high grade
gold-bearing narrow veins (stockwork) that could represent a highly significant
bulk tonnage gold target. Results from a previous regional soil geochemical
programme conducted by Mano identified certain gold anomalies assaying up to
3,227ppb (3.2 g/t) coincident with and up to 5km north and 4km south of the YDS
zone.
A series of recent trenches targeting primary vein gold mineralization on the
side of the Yanfarina River north of Dalakuru, returned the following highly
encouraging results.
Phase-1 YDS Zone Trench Samples
Trench Length (m) Grade (g/t) Au
DT-1 3.5 3.6
DT-2 0.9 1.6
DT-3* 1.9 24.9
DT-4 6.0 0.5
DT-5 2.0 0.2
DT-6 7.3 7.4
DT-7 5.9 3.6
*including 0.45 108
The mineralised quartz tourmaline veins trend north westerly and range between
0.1m and 1m wide. The vein stockwork has been traced continuously over a
distance of at least 75m with artisans having masked its continuation through
their mining activities. It is considered likely that the veins exposed in
Trench DT-4 along strike are part of the same system suggesting a minimum length
of 150m. Grab samples from a 3m wide highly silicified outcrop 5km northeast of
the YDS gold zone, range from 1 to 12.6 g/t for an average of 6.3 g/t. A
previous channel sample taken by IMC Mackay & Schnellman (IMC) assayed 3m@10.3 g
/t. IMC reported the area to be "highly prospective for primary gold targets".
Phase-1 Yisangba Grab Samples
Sample No. Gold g/t
50901 5.6
50902 2.9
50903 1.0
50904 12.6
50905 9.1
The Yisangba target is located within the 'Bongone block', where previous
drilling of a geochemical anomaly in the 1960's reportedly intersected an 85m
wide zone of sulphide mineralization (2-3% sulphides).
Previous work has identified gold occurrences related to major shear structures
in areas with extensive artisanal gold workings. The presence of gold in the
Sonfon area has historical reference, with the name of the local river 'Sende',
translating to "gold bearing water". Active artisanal gold workings are found
extensively across the Sonfon district. The prospect has reportedly been
described by independent consultants IMC as hosting the 'potential for the
discovery of gold deposits of significant size'.
In June 2003, Mano announced the acquisition of the 'North Pampana' EPL, which
hosts the high grade Yirisen gold deposit and strategically adjoins Mano River's
'South Pampana' EPL in central Sierra Leone.
The North Pampana EPL contains the well known Yirisen gold deposit and several
further gold anomalies as defined by a 1980's United Nations Development
Programme (UNDP) funded geochemical programme. Mano will be integrating the
extensive results of the UNDP programme in to the Company's Geographical
Information System, which includes satellite imagery and structural analysis of
the Pampana district, with the aim of generating further gold targets and
extensions to the known gold mineralized trend.
In February 2003, Mano River reported grab sample gold results of up to 4.5
grams per tonne (g/t) gold taken from quartz veins within talc schists in the
South Pampana EPL, from a phase-1 reconnaissance survey 3km east of the town of
Massamank, 10km southwest of Yirisen and in a area of active artisanal gold
workings (see www.manoriver.com/mano/investor/nr/nr0305_17feb.pdf). Satellite
imagery and UNDP mapping indicates the mineralization encountered in the South
Pampana EPL lies within the same lithostructural unit as the Yirisen deposit.
Mineralisation was first noted at Yirisen by the Geological Survey of Sierra
Leone in 1958. Seven north easterly trending sub-vertical lodes of quartz
veining, averaging 150m in length were identified and returned gold values of
between 5.5 and 48 g/t over widths of between 0.7 and 6.4 metres. The host rocks
are predominantly talc schists with extensive pervasive sulphide mineralization.
Artisanal miners are currently working the Yirisen gold deposit to depths of up
to 15 metres. In one exceptional instance a narrow (one metre wide) shaft has
been sunk to an estimated depth of over 75 metres. Artisanal gold workings
currently define a strike length of over 1km to the known mineralization, which
remains open in both directions.
The North Pampana licence acquisition completes Mano River's portfolio of gold
targets in Sierra Leone, comprising:
i. The Joint Venture (JV) with Golden Prospect Plc (AIM:GOL) over two contiguous
exploration licences in the Sonfon area, within the northern end of the Sula
Mountains greenstone gold belt. The JV has defined a 3km long gold in soil
anomaly, below which trenching has revealed a gold-bearing stockwork vein
system with a best trench intersection of 7.3m @ 7.4g/t (see
www.manoriver.com/mano/projects/gold_sl_sonfon.shtml).
ii. The two strategically located Nimini Central and Nimini South EPLs within
the Nimini Hills greenstone gold belt (see www.manoriver.com/mano/projects/
gold_sl_nimini.shtml) which host parts of known lode gold deposits shared
with two EPLs held by AfCan Mining (TSX-V:AFK), namely Nimini East and
Nimini West and over which AfCan recently announced the signature of a Heads
of Agreement for a Joint Venture with Ashanti Goldfields
iii. The North and South Pampana EPLs containing the Yirisen gold deposit within
the Yirisen-Massamank mineralised trend, 30km north of the Baomahun gold
deposit where a joint venture was recently announced between Mr Ronald
Winston and Caldera Resources (TSX:CDR)
In the few years since its reverse takeover in 1998, Mano has made considerable
progress in advancing in exploration programme. The fundamental strategy of
being geologically-driven has been fully justified by, for example, the
identification of a potentially major new Archaean gold belt in western Liberia,
and the discovery of the first known diamondiferous kimberlites in that country.
In neighbouring Sierra Leone, work is still at a very early stage, but Mano's
diamond programme has already produced very promising results and a first class
portfolio of greenstone gold properties is being assembled.
Looking to the future, the Company's strategy will continue to be one of seeking
high quality partners, like Trans Hex, its joint venture partner in Liberia, to
help advance the diamonds programme. For gold, it is already clear that, once
the security problems are resolved, one or more of Mano's discoveries in western
Liberia has the potential to be put into production by the Company at a modest
scale, given the continued support of its investors and access to adequate debt
financing facilities. While contemplating this course of action, due
consideration will also be paid to the alternative strategy of conducting
further exploration in order to increase the resource/reserve to a level where
production of +/-100,000 oz of gold per year becomes a viable proposition. Two
flagship projects discovered to date at KGL and Weaju, display clear potential
for increased resources in both strike and depth extensions. Given that these
projects and several new prospects lie within a central trucking distance (25km)
of each other and may possess the same good (>90%) free milling metallurgy, Mano
have the option of developing several deposits simultaneously using a centrally
placed treatment facility (see www.manoriver.com/properties/liberia_bea.html).
The way forward for Mano will lie in striving to achieve the optimum mix of
joint venture partnerships and self-funding, while adding to the portfolio value
through in-house application of sound exploration methodology in this highly
prospective West African terrain.
Management encourages shareholders and other interested parties to contact the
following individuals at any time for information about the activities of Mano:
Tom Elder President and CEO UK +44 (0) 1235 810 740
Gary Middleton Britton Financial UK +44 20 7251 2544
Guy Pas Co-Chairman Switzerland +41 22 758 2151
Anthony Rhatigan Co-Chairman Mobile +44 (0) 7785 297 348
Co-Chairman's Message
Pre-Pioneering and Early Selection
They were pioneering days when in 1989 I co-founded Samax and we decided to make
Tanzania our principal exploration target or were they in fact even
pre-pioneering days? In 1996 at the very first Indaba African Mining Conference
the only 'pioneering' gold producer willing to team up with Samax was Resolute.
They eventually turned Samax's first discovery into their very own Golden Pride
mine in the space of 12 months and for under $50m. Samax laid claim to a second
discovery (half of Geita) and was successfully taken over by Ashanti in 1998, 9
years after its pre-pioneering beginnings. Much of the success was of course due
to attractive geology and early ground selection.
After the acquisition of SAMAX the construction of the US$165 million Geita mine
began in 1999. The first gold was poured in 2000, about three months after
AngloGold purchased its 50% interest for $205m. Geita is set to produce 600,000
ounces in 2003 alone. As such these Majors themselves were involved in
groundbreaking and pioneering activities in their own right.
The road to Tanzania's first one million ounces was a rather long one, but
afterwards as is typical when a new gold province is opened up, the growth of
resources then mineable reserves is exponential. Geita's resource is now a
staggering 16.2moz, while Barrick's Bulyanhulu is an impressive 12moz. By 2004
the first five gold mines will have injected a total capital investment of
US$600m in to the country.
The Tanzanian turn-around took less than seven years. In which time over 36moz
of gold have been discovered and several of the original pioneers have either
been bought out by the Majors e.g. Cluff by Ashanti (1996; $80m), Samax by
Ashanti (1998;$140m) Sutton by Barrick (1999; US$280), Pangea by Barrick (2000;
US$140) or they simply have a lot more competition today. Tanzania now produces
more than 1.3moz per annum, putting it up there with Mali vying for the number
three spot in terms of gold production after South Africa and Ghana. The
multiparty democracy introduced in 1992 now ranks the country as one of the most
stable in Africa and it's been projected that the government will receive over
$100m per year from the gold mining industry by 2007.
As in Tanzania political turn-arounds can be accelerated by a few geologically
driven pioneers. As increasingly the most politically stable countries have been
explored, even re-explored or simply reinterpreted, the successful juniors of
the future are likely to be those who are first to identify the next political
turn-around on the cards and already start to position themselves within the
most prospective terrain and rapidly start to develop significant resources.
Country risk: barrier or opportunity? (i.e. just another probability?)
Most corporate Boards and their Executive Management would put country risk as a
definite barrier to investment. They would generally refuse to consider that
certain investments under difficult circumstances could be construed like
options, with the price to pay (early stage exploration programs) quantitatively
far closer to an option premium than full mine development undertaking.
Nevertheless in other industries venture capital decisions are part of daily
life and positioning into a new tech (sub)segment, many of which may well be
earmarked to be written down or simply written off is a natural process.
Country risk is not treated like venture risk. 'Ad-venture' risk it is called,
and more recently, reputational risk has often become associated with it. The
'we can't risk our reputation' has become a significant post-cold-war barrier
and the prolific expansion of NGOs during the same period when political,
economic, social ethnico-regional environmental vacuums emerged or expanded, has
clearly caused the emerging market landscape to fill up with obstacles sometimes
justifiably so,
It had to be as attractive as oil in Angola, Nigeria, or gas in Turkmenistan, to
be worth braving certain storms. Obviously the smaller the organization the more
resistant to such illusionary or selective reputational risk as it would turn
out to be.
Private vs. public finance
An argument can be made that, very much like Samax benefited from seven years
(1989-96) of a private equity situation, such mineral exploration adventures are
indeed not suitable for public investment. Like venture capital or distress and
reorganization funding, exploration adventures into new frontiers should be left
to the wealthy or institutional investors' class. The argument goes that
technology is better left to professional investment management, assisted by
intimately experienced technical staff or advisors and that their selection
process of write downs, restructurings and high multiple IPOs to eventually
yield well above average annual returns.
We have witnessed the shipwrecks when the floodgates to public funds were thrown
open to start-up entrepreneurs, as well as the many fly by night and one day
stands when everything was sold under the democratic 'dot.com' slogan by
demagogue gatekeepers, disguised as analysts, at even the most prestigious
investment banks who replaced the venture capitalists' hard-nosed technicians.
Mining's long established public history
However, our mining (and exploration) industry has more than 100 years of public
market expertise, going back to times when technology was restricted to rail,
tramways, and little more. Public issues included such risks as Imperial Russia,
Colonial Africa and South East Asia, Imperial China, Peru and the Ottoman Empire
to cite alternative 'country' situations, were all predominantly fixed income
issuers.
Canada and Australia had since taken over old-Europe's mining venture & finance
role, the latter battered by country risk fall-out and socialist wariness of
speculative capital and liberal entrepreneurship, the former boosted by domestic
discoveries.
South Africa continued its growth as a 'case apart'.
Changing world, country risk outlook and the Mano River Union
The cold war and a communist planned economy severely reduced the world
investment map and socialist even nationalist policies elsewhere did little to
boost investment opportunities.
The world changed again when the Cold War was won and lost. The rights of the
victors are being defined, or further refined. Meanwhile states with poor 1980s
governance imploded in the world political vacuum of the 1990s. That decade was
very much an intermezzo. A new order is being built from the fragmented chaos.
It leaves little doubt that within the Mano River Union ('MRU'), Guinea
continued to be ruled by a democratically elected strongman, possibly in some
ways comparable to Ghana's Rawlings of the 1980s, while both Liberia and Sierra
Leone had imploded under weak governance. Opportunistic forces were well
prepared to fill the vacuum.
Amazingly despite the 1996 elections in Sierra Leone, with military coups now
fully UN sanctioned, lawlessness and banditry replaced them and it took a full 5
years to decide and then get rid of them. As The Guardian pointed out, based on
recent experience in the Balkans, the rule of law is often the first victim of a
power vacuum.
In Liberia despite the 1997 elections, there was too little and dwindling world
support for a government which exacerbated the extremes. Since mid 1999
pressures building around the solution to the Sierra Leone conflict have
increasingly isolated the present (at time of writing) Liberian government,
severely restricting assistance and development finance, and in turn economic
activity. Assisted by smart sanctions, an externally supported rebellion and now
indictment of its President the country eventually slid into a situation of '
pending change'.
Both Sierra Leone and Liberia are cases of a return to fundamental values.
Return possibly meaning 'for the very first time' in their history, with
democracy having not been on the table during colonial times. Fundamental values
are considered to include the rule of law, human rights, transparent governance,
financial accountability, provision of education, basic infrastructure, economic
development and hopefully multilateral defence forces that are neither
ethnically nor nationally biased. One could only speculate what Europe's 20th
century would have looked like had we created a single European Defence force at
its onset.
Nowhere in the world today is there a greater demand or more pressing need for
these fundamental values than in Africa. The British Foreign Secretary on 30th
April 03 described how they have been working with governments from across
Africa to deliver a brighter future for the continent, that three years ago the
people of Sierra Leone lived in a Hobbesian world, their future in the hands of
brutal rebels and that today, thanks largely to British troops, Sierra Leone can
reflect on successful democratic elections held in 2002, and look forward to a
peaceful future.
New political and economic landscape; MRU Rail and NEPAD
Now therefore is the time to implement radically different long term development
plans. Take as an example the MRU Rail ('Mano River Union Rail') project, to
create a 21st century Panama-Canal-type of free zone to transfer Iron ores mined
in Guinea to the Liberian coast for export. While requiring some rehabilitation
much of the line already exists, stretching as it does the 267km from the former
Iron ore mine at Nimba (Lamco/Liminco) that straddles the border between Liberia
and Guinea, to the deep water Port of Buchanan in Liberia. The MRU Rail free
zone would be monitored by a multilateral peacekeeping force constituted of MRU,
Ecowas/Ecomog, UN and EU forces. Such a stabilizing force would be mandated say
for two consecutive 25 year terms to monitor Buchanan Freeport and the railway,
extended into Guinea.
The MRU Rail would not only allow ''fast-track'' development of the Nimba (part
owned by BHP BIlliton) and Simandou (Rio Tinto) deposits in Guinea (with
estimated reserves of 300-600Mt and 3,000Mt respectively) by avoiding the long
haulage to Guinea's Atlantic coast, but it would also result in the substantial
expansion of the port at Buchanan and improved margins for the mining of lower
grade ores in Liberia. In addition a branch line could possibly run from Liberia
to Sierra Leone. The potential transportation of passengers and goods would be
greatly enhanced. It could even eventually signal the advent of electricity as
cheap west African gas is transported to Buchanan for further transformation and
or distribution.
The transformation to iron, like copper and bronze have often been a solid
foundation of many ancient and recent civilizations. This global world with its
free markets may have shifted cost competitive sources for steel products
elsewhere, but trader-importer margins while substantially adding to the retail
price often replace in-country value added. A case could possibly be made for a
modest trial mill, using new technology and the marginal costs derived from the
MRU Rail project, however anti-global this may all sound.
Building on solid and lasting bi- & multi-lateral foundations such as the World
Bank's MIGA, providing 'first loss' assumption, we should readily convince the
private insurance market that such projects are far better than asbestos,
auditors' liabilities and other hurricanes, allowing these projects the same
credit rating and low fixed rate financing that was available a century ago,
contributing to cost competitiveness and ultimate development.
Though MRU Rail may resemble one of those forward looking project(ion)s, it may
be closer than the eye would catch with good governance and stability not seen
since 50 years or more, a reminder that the 1960s transition to free nations
came on the heels of WW2, itself a successor to WW1, and the severe 1930s world
economic crisis.
Today we witness historically low interest rates. Major projects were developed
on the back of buoyant equity markets and 4-6% long-term bonds, 100 years ago
and before. It seems that the right maturity and conditions have been brought
back to international markets after a century of independent nationalistic and
socialistic views that impeded such large cross border projects.
The time is right for 'Marshall'-like large-scale development, such as the MRU
Rail. It would take just a tiny Marshall Plan to boost the MRU economies.
Eventually such schemes when applied globally should set off an emerging markets
and metals & mining cycle unwitnessed in the last 50 or even 100 years. Under
the New Partnership for Africa's Development (NEPAD), progressive African
governments are embarking on such a path of political and economic reform. http:
//www.avmedia.at/nepad/indexgb.html
We believe the clear turn-around of Sierra Leone, and the imminent arrangements
put in place to establish a showcase in Liberia of what free and fair elections
are really about, combined with smooth transition whenever Guinea's leader
chooses to retire from office, and would clearly move the MRU towards prime
NEPAD candidacy. MRU Rail a long term secure multi-country project would indeed
fit many of NEPAD's stated objectives and long term sustained development goals.
The regional Archaean Craton and its potential
Still it would not have made any sense for Mano to position itself taking MRU
country risks in 1996 if it weren't for the MRU's great geology and Mano's
pre-pioneering entry. Indeed it was at the onset of a downcycle for commodities,
metals and eventually a near-identity crisis for gold, or what appeared like
one. The new ECB, Europe's Central Bank, with fresh forward looking views on the
% role of gold ('if any'), the Swiss selling for continually open-ended reasons,
the IMF giving consideration to the sale of gold to assist non-gold-producing
LDCs, not to mention the Australian treason, then this Thai triggered Asian
tidal currency and confidence wave, followed by Russia's necessary adjustment to
phase one of revolutionary capitalism, and the aforementioned 1990s failures on
the heels of 1980s lack of minimal governance (like DRC's fault line), all those
didn't bode for grassroots gold exploration in the MRU. Anything might have
seemed a better idea: base metals in Spain, tantalite anywhere, virtual mineral
targets in prime countries, or, lightning dotcom exits.
Therefore going for the right geology often has been the wiser long-term advice,
provided short-term survival is possible. Rich geology also allows for sharing
to find compromise. It is tough to incorporate a free carry for the host
government when a marginal project and low commodity prices combine against
reasonable net present values, resulting in zero-development.
Like comparable Archaean terrain across the globe, the MRU sub-region has been
injected with diamondiferous kimberlite rock. Unlike in Canada, which
increasingly seems to monopolize world diamond exploration budgets, the question
is not one of relying solely on indicator minerals. Erosion has delivered from
Sierra Leone, south east Guinea, and west Liberia some of the greatest stars of
the world's diamond collections.
Our diamond exploration is barely three years old, but has already delivered
three diamondiferous kimberlite pipes in west Liberia, which at up to 4ha in
size are regionally significant and our early analytical work suggests that they
are likely to have high tonnage and moderate diamond grade, while many more
occurrences are already singled out to be discovered. The particularly
well-targeted Kono licences next to Koidu, near Yengema, have advanced the
definition of high grade kimberlite dykes in Sierra Leone. The easy access to
reasonably low capex for development should potentially result in very decent
returns for shareholders within a more reasonable time frame comparative to the
extreme north of Canada.
In terms of geology and potential, parallels can be drawn with the Lake Victoria
Goldfields of Tanzania, mentioned earlier. Already, after just three seasons of
limited drilling in Liberia, Mano can lay claim to close to 1 million ounces of
gold within an expanding portfolio of high quality potentially world class
targets with high grades and simple metallurgy, such as KGL and Weaju. The
Archaean greenstone belts which underlie west Liberia, as well as Sierra Leone
and parts of south east Guinea, have been largely unexplored for gold and
diamonds with historical emphasis having been on bauxite, rutile and iron ores.
Breakthrough discoveries especially when supported by cyclical upswings
(following on the heels of industry consolidation) can produce big and small
miracles providing the motivation exists to invest in this business.
A solid partnership with central and local Government
Mano has taken a fully constructive approach and has consistently built solid,
transparent and very professional relationships in the classified as 'risky' MRU
countries of Liberia and Sierra Leone. While, not unlike California in its early
days, adventurers, crooks and preachers are often the first to arrive in new
territories, with the brave and serious waiting along the east coast just
lending some venture money, Mano pioneered undertaking exploration every bit as
professional as in any other explorer in any other country in the world.
Liberia and Sierra Leone have proven to be very friendly environments with
technically able people who are eager to work and contribute to what we hope
will become great achievements for their respective countries.
Mano has worked quite actively with regional and local authorities wherever it
explores and contributed to the well-being and health of its local staff, local
artisanal miners and their extended village families in many ways. Our Mano
Foundation will continue to seek further ways to improve life in the MRU
countries. Increasingly government schemes aim to decentralize revenue receipts
to the regions, for local development; much can be done to build a sustainable
diversified economy around a mine (there are many proven historical examples)
and on the back of such scheme, Mano encourages volunteer work within a joint
community role between elders and mine managers.
A cycle for success-stories and more competitive access to funding
When I first wrote a co-Chairman letter in 1999, I declared Y2K a turn-around
year for our industry to outperform tech stocks. Since 2001 with evaporating
millennophile 'u4ei', it did. Forces conspired against our exploration and
mining industry. A natural conspiracy built of post-cold-war new-order and a
left-of-centre pursuit of liberal policies combined with large capital, flowing
like tsunamis, affected most markets too illiquid to handle such vast hot 'hedge
funds'. Initial political and legal upheavals as to-be-expected in newly free
world territories gave a cold-showering surprise to pioneers. Further an
exaggerated cyclical downturn depressed metal prices and caused majors to cut
back exploration expenditure year on year. Then Bre-X cut off yet another source
of junior exploration money and finally the great internet-telecoms casino,
intertwined with the converging story took all the speculative capital
euphorically for its own account - admittedly some of the speculative overflow
came our way.
As long as the bets were in favour of the street investor and day player, the
techs were formidable competition for risk capital. In this 'chaotech' world,
chaos seemed to continuously create opportunity as long as there was no clear
sign of ultimate victors. This new century's ultimate battle of convergence left
many losers with destruction of 'value', hopefully some of that will be
regained.
Success stories work like big lottery prizes. Lots of cash chases the few
industries where the jackpots may be found. Even if it will forever be tough to
outperform the dotcoms of the late 1990s, we hope there will be several genuine
success stories in the exploration industry over coming few years.
I look forward to a great bull cycle for our industry, continued consolidation
giving way to genuine interest in what companies like Mano have been carefully
and so far quietly assembling and sustained peace and development in our three
MRU countries as they eventually join a politically stable club of west African
nations.
With all that, Mano's portfolio should witness the emerging discovery of high
grade gold and kimberlite diamond mines, for the benefit of all economic agents.
According to a recent analyst statement "The reality is that the better assets
carry some risk".
Guy E. Pas (signed)
Co-Chairman
This information is provided by RNS
The company news service from the London Stock Exchange
END
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