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Share Name | Share Symbol | Market | Type |
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Rumbu Holdings Ltd | TSXV:RMB | TSX Venture | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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-0.025 | -16.67% | 0.125 | 0.125 | 0.15 | 0.13 | 0.125 | 0.13 | 25,000 | 21:00:11 |
The Directors of CIC Mining Resources (AIM:CICR) (CNSX:RRR) (FRANKFURT:31C), the consulting and advisory firm operating primarily in the mining and energy infrastructure sectors, informs Shareholders that the Company filed its interim financial statements for the 3 and 9 month periods ended 31 October 2010 on SEDAR on 31 December 2010 in line with Canadian public company regulatory reporting requirements. A full copy of the Interim Financial Statements and the Management's Discussion and Analysis documents can be downloaded from SEDAR website (www.SEDAR.com) - copies of which are set out below. SEDAR is the official site that provides access to most public securities documents and information filed by public companies and investment funds with the Canadian Securities Administrators (CSA) in the SEDAR filing system. Forward-Looking Statements This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with the Company's business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts, but reflect management's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risk Factors" in the Company's Admission Document which can be found at the Company's profile on SEDAR www.sedar.com. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements. The Directors of CIC Mining Resources Ltd accept responsibility for the content of this announcement. INTERIM FINANCIAL STATEMENTS For The Three Months and Nine Months Ended October 31, 2010 (Unaudited - Prepared by Management) Notice to Reader The accompanying financial statements of CIC Mining Resources Ltd., comprised of the Consolidated Balance Sheets as at October 31, 2010 and January 31, 2010, and the Interim Consolidated Statements of Operation and Deficit, Consolidated Statements of Cash Flows and Consolidated Statements of Shareholders' Equity for the three and nine month periods ended October 31, 2010 and 2009 are the responsibility of the Company's management. The independent external auditors of the Company have not reviewed these financial statements. CIC MINING RESOURCES LTD. INTERIM CONSOLIDATED BALANCE SHEETS (In Canadian Dollars) (Unaudited - Prepared by Management) October 31, January 31, 2010 2010 (Unaudited) (Audited) ASSETS Current Assets Cash and cash equivalents 2,421 45,280 Accounts receivable 15,541 15,541 Marketable securities - 14,788 Prepaid expenses 67,114 124,485 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 85,076 200,094 Non-current Assets Investment in associate (Note 5) - - Property and Equipment (Note 6) 11,562 18,973 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total Assets 96,638 219,067 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Accounts payable and accrued liabilities 468,167 849,877 Income taxes payable 244,471 86,559 Due to related parties (Note 7) 1,008,170 293,571 Deferred Revenue (Note 5) - - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1,720,807 1,230,007 Shareholder's Equity Share capital (Note 8) 27,491,066 27,491,066 Contributed surplus 1,457,391 1,457,391 Deficit (30,922,762) (30,228,835) Accumulated other comprehensive income (loss) 350,136 269,438 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1,624,169) (1,010,940) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total Liabilities and Shareholder's Equity 96,638 219,067 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Nature of Operations and Going Concern (Note 1) Commitments (Note 9) Contingencies (Note 10) APPROVED ON BEHALF OF THE BOARD Stuart J. Bromley Hu Ye See Accompanying Notes to the interim financial statements CIC MINING RESOURCES LTD. INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (In Canadian Dollars) (Unaudited - Prepared by Management) Three months ended Nine months ended October 31 October 31 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 2010 2009 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue Consulting and advisory service 266,030 - 266,030 25,577 General and administrative costs Amortization 2,809 118,134 7,411 $ 355,912 Bank charges and interest 2,372 89 2,587 837 Consulting fees 25,000 (39,479) 28,000 (29,555) Filing fees and transfer agent 8,665 - 11,665 9,127 Management fees 75,000 150,000 225,000 224,088 Meals and entertainment - 177 2,626 13,219 Office and miscellaneous 170,364 58,047 191,157 155,529 Professional fees 183,870 164,800 183,870 234,592 Rent 44,900 134,595 120,317 386,215 Salaries 69,951 34,671 184,565 147,568 Stock based compensation - - - 35,507 Travel and promotion 2,800 460 2,800 20,848 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total general and administrative costs 585,731 $ 623,552 959,998 $ 1,555,945 Loss before other items (319,701) $ (623,552) (693,968) $ (1,530,368) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Other income (expense) Interest Income 40 4 41 14 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net loss for the period (319,661) $ (623,548) (693,927) $ (1,530,353) Other comprehensive income (loss) (11,969) $ (354,725) 80,698 $ 31,985 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Comprehensive income (loss) (331,630) $ (978,273) (613,229) $ (1,498,368) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic and fully diluted loss per share 0.00 0.00 0.00 (0.01) Weighted average number of shares outstanding 144,807,492 144,807,492 144,807,492 122,920,200 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See Accompanying Notes to the interim financial statements. CIC MINING RESOURCES LTD. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (In Canadian Dollars) (Unaudited - Prepared by Management) Three months ended Nine months ended October 31 October 31 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 2010 2009 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating Activities Net loss for the year (319,661) $(623,548) (693,927) $(1,530,353) Items not effecting cash: Revenue - - Amortization 2,809 118,134 7,411 355,912 Stock options issued to consultants - - 1,265 Stock based compensation - - 35,507 Write down of resource properties - - - - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (316,852) (505,414) (686,516) (1,137,669) Changes in non-cash working capital items: Amounts receivable - (3,198) Prepaid expenses (18,946) (51,050) 57,371 97,202 Accounts payable and accrued liabilities (309,881) 317,424 (137,240) (379,536) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash used in operating activities (645,679) (239,040) (766,385) (1,423,201) Financing Activities Sale of marketable securities - - - Increase (decrease) due to related parties 600,524 604,153 714,599 1,047,999 Short term loans payable (365,113) 370,650 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash provided by financing activities 600,524 239,040 714,599 1,418,649 Investing Activity Resource property expenditures - - - - Intangible assets - - - - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash provided by investing activities - $ - - $ - Effects of exchange rate change in cash (12,473) 8,927 Increase (decrease) in cash and cash equivalents during the period (57,628) - (42,859) (4,552) Cash and cash equivalents, beginning of the period 60,049 (1,947) 45,280 2,605 Cash and cash equivalents (overdraft) at end the period 2,421 $ (1,947) 2,421 $ (1,947) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid for: Interest $ - $ - $ - $ - Income taxes $ - $ - $ - $ - See Accompanying Notes to the interim financial statements CIC MINING RESOURCES LTD. INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (In Canadian Dollars) (Unaudited - Prepared by Management) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Accumulated Number of Other shares Share Contributed Accumulated Comprehensive (number) Capital Surplus Deficit Loss ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance January 31, 2009 110,045,322 24,014,849 1,392,432 (27,289,686) (204,597) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance January 31, 2010 144,807,492 27,491,066 1,457,391 (30,228,835) 269,438 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net income (loss) for the period - - - (693,927) - Foreign exchange translation - - - - 80,698 ---------------------------------------------------------------------------- Balance, October 31, 2010 144,807,492 27,491,066 1,457,391 (30,922,762) 350,136 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- See Accompanying Notes to the interim financial statement 1. NATURE OF OPERATIONS AND GOING CONCERN CIC Mining Resources Ltd. (the "Company") is a public company incorporated on June 20, 2003 under the Canada Business Corporations Act listed on the Canadian National Stock Exchange (CNSX) and is a resource sector royalty and investment company. Its strategy is to acquire interests in natural resource and energy sector companies primarily in the Peoples Republic of China ("PRC"). The recoverability of amounts shown for resource properties costs and intangible assets is dependent upon the ability of the Company to use those assets to generate compensation for its services in the form of cash, interests in development stage resource companies and projects, or royalty interests, the ability of the Company to obtain financing to support its activities, and the ability of the company to profitably dispose of the ownership or royalty interests it receives for performing its services. These unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realized values may be substantially different from carrying values shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. These interim statements should be read together with the audited financial statements and the accompanying notes included in the Company's latest annual report. In the opinion of the Company, its unaudited interim consolidated financial statements contain all adjustments necessary in order to present a fair statement of the results of the interim presented. At July 31, 2010, the Company has accumulated deficit of $30,922,762 since its inception, and working capital deficit of $1,635,731 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. 2. SIGNIFICANT ACCOUNTING POLICIES Investments in significantly influenced investees The Company carries its investments in significantly influenced investees under the equity method of accounting for investments whereby the investment is initially recorded at cost and the carrying value, adjusted thereafter to include the investor's pro rata share of post-acquisition earnings of the investee, computed by the consolidation method. The amount of the adjustment is included in the determination of net income by the investor, and the investment account of the investor is also increased or decreased to reflect the investor's share of capital transactions (including amounts recognized in other comprehensive income) and changes in accounting policies and corrections of errors relating to prior period financial statements applicable to post-acquisition periods. Profit distributions received or receivable from an investee reduce the carrying value of the investment." Recently Adopted Accounting Pronouncements Effective February 1, 2008, the Company adopted the following accounting standards updates issued by the Canadian Institute of Chartered Accountants ("CICA"). Capital Disclosures - CICA Section 1535 This new pronouncement establishes standards for disclosing information about an entity's capital and how it is managed. Section 1535 also requires the disclosure of any externally-imposed capital requirements, whether the entity has complied with them, and if not, the consequences. Financial Instruments Disclosures and Presentation - CICA Sections 3862 & 3863 These new Sections 3862 (on disclosures) and 3863 (on presentation) replace Section 3861, revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation requirements. Section 3862 complements the principles recognizing measuring and presenting financial assets and financial liabilities in Financial Instruments. Section 3863 deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset. General Standards of Financial Statement Presentation - CICA Section 1400 The CICA accounting standards board amended Section 1400 to include requirements for management to assess and disclose an entity's ability to continue as a going concern. This section applies to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008. Business Combinations - CICA Section 1582 In January 2009, the CICA issued Section 1582, Business Combinations, which replaces former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combination and related disclosures. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 2011 with earlier adoption permitted. The Corporation is currently evaluating the impact of this standard on the consolidated financial statements. Consolidation and Non-Controlling Interests - CICA Section 1601 In January 2009, the CICA issued Section 1601, Consolidated Financial Statements, and 1602, Non-controlling interests, which replaces existing guidance. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period on or after January 2011 with earlier adoption permitted. The Corporation is currently evaluating the impact of this standard on the consolidated financial statements. Goodwill and Intangible Assets - CICA Section 3064 In February 2008, the CICA issued Section 3064 which replaces Section 3062, "Goodwill and Other Intangible Assets". This new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with the adoption of this standard, EIC 27, Revenue and Expenditures in the Pre-Operating Period"' will be withdrawn. International financial reporting standards ("IFRS") In 2006, AcSB published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada's own GAAP. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time. 3. CAPITAL MANAGEMENT The Company's objectives for the management of capital are to safeguard the Company's ability to continue as a going concern including the preservation of capital and to achieve reasonable returns on invested cash after satisfying the objective of preserving capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company considers its cash to be its manageable capital. The Company's policy is to maintain sufficient cash to cover operating costs over a reasonable future period. There are no external restrictions on management of capital. 4. FINANCIAL INSTRUMENTS AND FINANCIAL RISK Fair Value of Financial Instruments The Company's financial instruments include cash, and amounts payable. The carrying value of these instruments approximates their fair values due to the relatively short periods of maturity of these instruments. Liquidity Risk The Company manages liquidity risk by maintaining adequate cash balance. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial assets and liabilities. Country Risk The principle business of the Company is in China. The Company is subject to the political risks and economic considerations of operating in China. Currency Risk By virtue of its international operations, the Company incurs costs and expenses in foreign currencies other than the Canadian dollar. The exchange rates covering such currencies, including the RMB, are subject to fluctuation which gives rise to foreign currency exposure, either favorable or unfavorable. The Company does not hedge the RMB against its functional currencies. Sensitivity analysis The Company has completed a sensitivity analysis to estimate the impact on net income for the period which a change in foreign exchange rate during the year ended January 31, 2009 would have had. The sensitivity analysis includes the assumption of changes in individual foreign exchange rates do not cause foreign exchange rates in other countries to alter. The result of sensitivity analysis shows an increase (decrease) of 10% in RMB exchange rate could have no impact on the Company's net income but could have increased (decreased) the comprehensive income by approximately $300,000. The above result arises primarily as a result of the Company having RMB denominated trade accounts payable and accrued liabilities balances and bank account balances. The financial position of the Company may vary at the time that a change of the foreign exchange rate occurs, causing the impact on the Company's results to differ from that shown above. 5. INVESTMENT IN ASSOCIATES SL MINERALS LIMITED Under a trust agreement, the Company owns 48% of the issued capital of SL Minerals Limited. SL Minerals Limited is an early stage private exploration company with mineral rights in Sierra Leone. As consideration for the shares, the Company has agreed to provide SL Minerals Limited with certain consultancy services. At 31 October 2010, the Company had not fully provided these services to SL Minerals Limited. Due diligence conducted by the Company covers issues relating to mineral titles held by SL Minerals Limited not being renewed and any prior shareholder rights. The Company has decided to limit is services until title is properly confirmed by legal opinion as covered in the agreement between the parties. Since the Company did not pay consideration to acquire the shares in SL Minerals Limited, no value was ascribed to the investment. 6. PROPERTY AND EQUIPMENT OFFICE, FURNITURE & EQUIPMENT ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Accumulated Net Book Net Book Cost amortization Value Value ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Office, furniture & equipment $ 36,905 $ 25,343 $ 11,562 $ 21,585 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 7. RELATED PARTY TRANSACTIONS The Company incurred the following expenses with companies related by way of officers in common and with a company with whom a director is associated. These costs were measured at the amounts agreed upon by the parties. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Nine months ended October 31 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Management fees 225,000 223,889 Professional fees - legal and interest - - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- $ 225,000 $ 223,889 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- The outstanding balances are non-interest bearing, unsecured and have no fixed terms of repayment. 8. SHARE CAPITAL Authorized: Unlimited common shares without par value. Issued: ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Number of shares Amount ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance, January 31, 2010 110,045,322 24,014,850 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance, April 30, 2010 144,807,492 27,491,067 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Issued for cash - - Pursuant to private placement - - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance, October 31, 2010 144,807,492 $ 27,491,067 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Escrow: At October 31, 2010 18,000,000 (January 31, 2010: 18,000,000) common shares were held in escrow. Under the terms of the escrow agreement dated July 2005, 40,000,000 common shares were placed in escrow to be released over a period of three years, with 10% of the escrow shares being released immediately and 15% of the remaining escrow shares to be released every six months thereafter. According to the escrow agreement, escrowed securities that have not been released from escrow will be cancelled and returned to treasury if the requisite approvals of the transfer of the 90% interest in the Golden Harvest property (formerly Tao Jin property) to the Company are not obtained from the applicable government agencies in the People's Republic of China and a legal opinion to that effect has not been delivered to the Company by July 5, 2008. The remaining shares held in escrow were to be cancelled as the terms of release were not met. The escrow shares were cancelled November 2010. Warrants: The following is the summary of the changes in the Company's outstanding warrants at October 31, 2010 and January 31, 2010: ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- October 31, 2010 January 31, 2010 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price ---------------------------------------------------------------------------- Balance of warrants at beginning of period 50,382,170 $ 0.18 17,482,545 $ 0.24 Issued - - 34,762,170 0.15 ---------------------------------------------------------------------------- Exercised - - - - Expired (15,620,000) - (1,862,545) 0.15 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance of warrants at end of period 34,762,170 0.15 50,382,170 $ 0.18 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- At October 31, 2010, the Company had 34,762,170 (January 31, 2010 -50,382,170) warrants outstanding. Each warrant entitles the holder thereof the right to purchase one common share for each warrant held as follows: ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- October 31,2010 January 31, 2010 Expiry date Exercise Price Number of Shares Number of Shares ---------------------------------------------------------------------------- July 13, 2011 $0.15 34,762,170 50,382,170 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Share Purchase Options The Company has a stock option plan which authorizes the board of directors to grant incentive stock options to directors, officers and employees. The exercise price and vesting provisions of the options are determined by the board based on the market values of the shares using the closing price on the date prior to date of the grant. The continuity of options outstanding is as follows: ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- October 31, 2010 January 31, 2010 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted Weighted Average Average Stock Exercise Stock Exercise Options Price Options Price ---------------------------------------------------------------------------- Balance of warrants at beginning of period 5,175,000 $ 0.32 5,175,000 $ 0.32 Granted - - - - ---------------------------------------------------------------------------- Expired/Cancelled - - - - Exercised - - - - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance of options at end of period 5,175,000 $ 0.32 5,175,000 $ 0.32 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Exercisable 5,062,500 5,062,500 On February 7, 2008, the Company granted share purchase options to directors, officers and consultants to purchase 1,700,000 common shares at US$0.10 per share, exercisable until February 7, 2013. On October 13, 2008 the company granted 150,000 share purchase options to one of its consultants at CAD$0.10 per share, exercisable October 13, 2009. As at January 31, 2009, there were 5,175,000 employee, director and consultant options outstanding. These options contain vesting provisions allowing 25% of the options being granted to vest immediately and 25% to vest at 6, 12 and 18 months following grant. The weighted average life remaining for outstanding options is 3.43 years. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average remaining Exercise Options Options Expiry date life price Outstanding Exercisable ---------------------------------------------------------------------------- August 9, 2011 1.27 $0.75 1,625,000 1,625,000 May 23, 2012 2.06 $0.68 100,000 100,000 October 17, 2012 2.46 $0.10 1,600,000 1,200,000 September 24, 2012 2.41 $0.10 150,000 - February 7, 2013 2.23 $0.10 1,700,000 850,000 ---------------------------------------------------------------------------- 2.18 5,175,000 3,775,000 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model, recognizing forfeitures as they occur, using the following assumptions and resulting in the following weighted average grant date fair value: ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Risk-free interest rate (%) - 3.49% Expected dividend yield - 0.00% Expected stock price volatility - 130% Expected life of options (years) - 5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Weighted average grant date fair value - $0.00 9. COMMITMENTS The Company has entered into operating leases expiring in February, 2011 for office premises and equipment located in China. Minimum annual lease payments required are approximately as follows: Year Ending January 31, 2011 $ 33,000 Year Ending January 31, 2012 0 Year Ending January 31, 2013 0 10. CONTINGENCIES At October 31, 2010 18,000,000 (January 31, 2010: 18,000,000) common shares were held in escrow. Under the terms of the escrow agreement dated July 2005, 40,000,000 common shares were placed in escrow to be released over a period of three years, with 10% of the escrow shares being released immediately and 15% of the remaining escrow shares to be released every six months thereafter. According to the escrow agreement, escrowed securities that have not been released from escrow will be cancelled and returned to treasury if the requisite approvals of the transfer of the 90% interest in the Golden Harvest property (formerly Tao Jin property) to the Company are not obtained from the applicable government agencies in the People's Republic of China and a legal opinion to that effect has not been delivered to the Company by July 5, 2008. The remaining shares held in escrow were to be cancelled as the terms of release were not met. The escrow shares were cancelled November 2010 during the final cource of the Company's listing on the AIM market of the London Stock Exchange. The Company continues to incur costs in various litigation matters detailed in the AIM Admission Document available on the Company's web site www.cicresources.com to defend these actions and is unable to predict its outcome. All costs associated with defending this action are expensed as incurred and the Company has not recorded any accruals for damages after those direct costs incurred to date. MANAGEMENT'S DISCUSSION AND ANALYSIS For The Nine Month Ended October 31, 2010 The following Management Discussion and Analysis ("MD&A") of CIC Mining Resources Ltd. (the "Company") financial position is for the Nine month ended October 31, 2010 and covers information up to the date of this report. This MD&A should be read in conjunction with the audited consolidated financial statements and related notes and schedules for the year ended January 31, 2010, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). This MD&A was prepared as of December 31, 2010. All amounts included in the MD&A are in Canadian dollars unless otherwise specified. Additional information regarding the Company is available on SEDAR at www.sedar.com. In addition the Company's website can be found at www.cicresources.com. Forward Looking Statements This Management's Discussion and Analysis ("MD&A"), contains certain "forward looking statements" which may include, but are not limited. to, statements with respect to future events or future performance, management's expectations regarding the Company's growth, results of operations, estimated future revenues, requirements for additional capital, future demand for and prices of commodities, expected mining sequences, business prospects and opportunities. All statements, other than statements of historical fact, are forward-looking statements. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Often, but not always, forward looking statements can be identified by the use of words such as "plans", "expects"," is expected", "budget", "scheduled", "estimates", "forecasts", "predicts", "projects", "intends", "targets", "aims", "anticipates" or "believes" or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. A number of factors could cause actual events or results to differ materially from the results discussed in various factors, which may cause actual results to differ materially from any forward looking statement, including, without limitation, adverse fluctuations in the prices of the primary commodities that drive the Company's royalty revenue adverse fluctuations in the value of the Canadian and Chinese currency, and any other currency in which the Company conducts business, changes in national and local government legislation, including taxation policies, regulations and political or economic developments in any of the countries where the company holds interests, influence of macroeconomic developments, business opportunities that become available to or are pursued by us, reduced access to debt and equity capital, litigation, title disputes related to our interests or any of the properties underlying the Royalty Portfolio, operating or technical difficulties on any of the properties underlying the Royalty Portfolio, risks and hazards associated with the business of development and mining on any of the properties underlying the Royalty Portfolio, including, but not limited. to unusual or unexpected geological formations, cave-ins, flooding and other natural disasters or civil unrest. The forward looking statements contained in this MD&A are based upon assumptions management believes to be reasonable, including, without limitation, the ongoing operation of the properties underlying the Royalty Portfolio by the owners or operators of such properties in a manner consistent with past practice, the accuracy of public statements and disclosures made by the owners or operators of such underlying properties, no material adverse change in the market price of the commodities that underlie the Royalty Portfolio, and any other factors that cause actions, events or results to differ from those anticipated, estimated or intended. However, there can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company cannot assure investors that actual results will be consistent with these forward looking statements and readers are cautioned that forward-looking statements are not guarantees of future performance. Accordingly, readers should not place undue reliance on forward looking statements due to the inherent uncertainty therein. The forward looking statements herein are made as of the date of this MD&A only and the Company does not assume any obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise, except as required by applicable law. DESCRIPTION OF BUSINESS Nature of Business CIC Mining Resources Ltd. (the "Company") is a public company incorporated on June 20, 2003 under the Canada Business Corporations Act listed on the Canadian National Stock Exchange (RRR). On November 1, 2010 the Company also dual listed on the AIM Market of the London Stock Exchange (CICR). The Company is a consulting and advisory company, operating primarily in the mining and energy infrastructure sectors. The Company seeks to provide consulting and advisory services to entities operating at various stages of resource development, and the exclusive right to control the public listing process of any client company if the client company is an unlisted company. Mining and energy infrastructure companies or projects will include those involved in the exploration for, and extraction of, base metals, precious metals, bulk commodities, thermal and metallurgical coals, industrial metals, hydrocarbons, renewables and new technologies, including single-asset as well as diversified natural resources companies. The core services provided by CIC Mining Resources are: the Advisory Service which provides a range of technical, project management, strategic and commercial services; the Strategic Investment Service which helps companies source investment from industry partners for which the Company will typically receive an equity interest; and Advice on Listings where the Company helps the client realise value by listing on a Stock Exchange. www.cicresources.com The management and directors are significant shareholders, and are dedicated to the sustainable maximization of our share price, holding more than 87.00% of the common shares as of October 31, 2010. FINANCIAL RESULTS Summary of Quarterly Results The following table sets out selected un-audited quarterly financial information of the Company and is derived from the un-audited quarterly financial statements prepared by management. The Company's interim financial statements are prepared in accordance with Canadian generally accepted accounting principles. ---------------------------------------------------------------------------- Oct 31, July 31, April 30, Jan 31, 2010 2010 2010 2010 ---------------------------------------------------------------------------- Revenues - - - - Net profit (loss) (319,661) (131,589) (242,676) (2,282,194) Basic & diluted loss per share 0.00 (0.00) (0.00) (0.02) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Oct 31, July 31, April 30, Jan 31, 2009 2009 2009 2009 ---------------------------------------------------------------------------- Revenues - - - 67,032 Net profit (loss) (623,548) (202,457) (704,359) 376,555 Basic & diluted loss per share (0.00) (0.00) (0.03) 0.00 ---------------------------------------------------------------------------- Variances in net income and loss by quarter in 2010 and 2009 reflect overall corporate activity and factors which do not recur each quarter, such as the fluctuating of foreign exchange rate. During the quarter ended October 31, 2010: The net loss for the quarter was $(319,661) versus a $(623,548) for the same quarter last year. The lower operating costs were attributed to: (i) an internal focus of supporting a secondary listing on AIM Market of the London Stock Exchange; (ii) completion of de-risking projects that will form foundation business for key business streams in Logistics, Precious Metals, Energy and Iron Ore; and (iii) reduction of business development activities. Changes in the quarter: Amortization expense of $2,809 versus $118,134 in the same quarter last year. Q3 amortization expense is now normal verses an accounting adjustment in the same quarter last year. Investor relations were $ Nil in this quarter versus $Nil in the same quarter last year. Investor Relations is expected to increase substantially after a secondary listing on AIM Market of the London Stock Exchange. Management fee was $75,000 in this quarter versus $150,000 in the same quarter last year and remains relatively unchanged from quarter to quarter save last years accounting adjustment in that quarter. Office and miscellaneous expenses was $170,364 in this quarter versus $58,047 in the same quarter last year due to internal activities for secondary listing. Professional fees were $183,870 in this quarter versus 164,800 in the same quarter last year. This is expected to increase substantially in the future quarters in relation to appointment of consultants to support the Company's secondary listing. Rental was $44,900 in this quarter versus $134,595 in the same quarter last year. The reduction due to the lease in China Resources Building was not continued. This is expected to increase when new office is constructed. Salaries were $69,951 in this quarter versus $34,671 in the same quarter last year. The Salaries reflected payments made to reduce accrued fringe benefit liabilities. Stock option compensation was Nil in this quarter versus Nil in the same quarter last year. Travel & promotion, meals was $2,800 in this quarter versus $460 in the same quarter last year. LIQUIDITY Since incorporation in June 2003, the Company's capital resources have been limited. The Company had to rely upon the sale of equity securities to pay it's for capital acquisitions, exploration and development, and administration. Directors and Management are making significant loans at no interest and have informed the Company that in 2009 following the completion of the audit to convert such loans to shares with warrants. The Company has no producing properties. The Company's financial instruments as of October 31, 2010 consisted of cash, amounts receivable, accounts payable and accrual liabilities. As at October 31, 2010, the Company's cash totaled $2,421 compared to $(1,917) as at October 31, 2009. The Company has a working capital of $(30,922,762) as of October 31, 2010 compared to a working capital deficiency $(28,820,039) as of October 31, 2009. As of October 31, 2010, the Company had 5,062,500 options exercisable, which if exercised, the Company's available cash would increase by $1,620,000. CAPITAL RESOURCES The Company generates its income from service fee, royalty income and shares in public companies holding mine company interest purchased by way of the Company. There can be no assurance that funds will be available to the Company in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms satisfactory to the Company. FINANCING The Company shareholders include leading Chinese mine owners with significant cash reserves and have provided funding if needed by the Company. Further the Companies hold shares in other public companies and are freely tradable. It is from these securities that the company will primarily finance itself. The Company has no exclusive agreement with any Securities Company and will not in the future enter into any such agreements. SHARE DATA CIC Mining Resources Ltd. authorized capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. As at October 31, 2010, the Company has 144,807,492 common shares issued and outstanding, 5,175,000 stock options and 34,762,170 warrants outstanding. The following is the summary of outstanding shares, stock options and warrants: ---------------------------------------------------------------------------- October 31, October 31, 2010 2009 ---------------------------------------------------------------------------- Common shares 144,807,492 144,807,492 Warrants 34,762,170 52,244,715 Options 5,175,000 5,175,000 ---------------------------------------------------------------------------- Escrow: At October 31, 2010 18,000,000 (January 31, 2010: 18,000,000) common shares were held in escrow. Under the terms of the escrow agreement dated July 2005, 40,000,000 common shares were placed in escrow to be released over a period of three years, with 10% of the escrow shares being released immediately and 15% of the remaining escrow shares to be released every six months thereafter. According to the escrow agreement, escrowed securities that have not been released from escrow will be cancelled and returned to treasury if the requisite approvals of the transfer of the 90% interest in the Golden Harvest property (formerly Tao Jin property) to the Company are not obtained from the applicable government agencies in the People's Republic of China and a legal opinion to that effect has not been delivered to the Company by July 5, 2008. The remaining shares held in escrow were to be cancelled as the terms of release were not met. The escrow shares were cancelled in October 2010. RESOURCE PROPERTIES SL MINERALS LIMITED Under a trust agreement, the Company owns 48% of the issued capital of SL Minerals Limited. SL Minerals Limited is an early stage private exploration company with mineral rights in Sierra Leone. As consideration for the shares, the Company has agreed to provide SL Minerals Limited with certain consultancy services. At 31 October 2010, the Company had not fully provided these services to SL Minerals Limited. Due diligence conducted by the Company covers issues relating to mineral titles held by SL Minerals Limited not being renewed and any prior shareholder rights. The Company has decided to limit is services until title is properly confirmed by legal opinion as covered in the agreement between the parties. Since the Company did not pay consideration to acquire the shares in SL Minerals Limited, no value was ascribed to the investment. MATERIAL CHANGES The Company changed the nature of its business from an exploration company to an advisory and investment Company in September 2007. This capitalized on the extensive mining company relationships the Company hold and the establishment over two years of a Company head quarters in Beijing China. OTHER POSSIBLE IMPACTS The Company is monitoring new regulations, policies and laws that change the way it operates commercially. The Company will ensure that all its operations are bound by a domestic registered company. Changes to foreign currency import and export will remain a problem due to Chinese government restriction. In particular, the transfer of money from China to Canada is very difficult under the current Company organization. New Chinese government policy on foreign mining, exploration and processing is came into effect in respect to foreign mine companies on December 1, 2007. The Company operates two companies in China: a. China CIC Mining Resources Ltd. Beijing Company which is a foreign enterprise b. Top Ten Mining Investment Limited, a domestic Chinese enterprise. The Company has established its head office in China and in future intends to operate as a Chinese company that is listed on overseas stock exchanges. Foreign enterprise restrictions will not apply. Effects on Cash Flows Over the next fiscal year the Company will need to sell securities in other public companies, sell investment asset and loans to fund its operations to maintain investment operations. OFF-BALANCE SHEET ARRANGEMENTS None. TRANSACTIONS WITH RELATED PARTIES The Company incurred the following expenses with companies related by way of officers in common and with a company with whom a director is associated. These costs were measured at the amounts agreed upon by the parties. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Nine months ended October 31 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Management fees 225,000 224,088 Professional fees - legal and interest 183,870 234,592 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- $ 408,870 $ 458,680 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- The outstanding balances are non-interest bearing, unsecured and have no fixed terms of repayment. FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS Fair Value of Financial Instruments The Company's financial instruments include cash, marketable securities, accounts payable, and loan payable. The carrying value of these instruments approximate their fair values due to the relatively short periods of maturity of these instruments. DISCLOSURE CONTROLS AND PROCEDURES The Company's Chief Financial Officer and Chief Executive Officer (the "Certifying Officers") are responsible for establishing and maintaining disclosure controls and procedures ("the Procedures") which provide reasonable assurance that information required to be disclosed by the Company under provincial or territorial securities legislation (the "Required Filings") is reported within the time periods specified. Without limitation, the Procedures are designed to ensure that material information relating to the Company is accumulated and communicated to management, including its Certifying Officers, as appropriate to allow for timely decisions regarding the Required Filings. The Company's Certifying Officers are also responsible for establishing and maintaining internal controls over financial reporting ("Internal Controls") and have designed such Internal Controls, or caused it to be designed under their supervision, which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Company's GAAP. Based upon the results of that evaluation, principal executive officer and our principal financial officer have concluded that, as of the end of the fiscal year covered by this annual report, our company's disclosure controls and procedures were not completely effective; however, given significant management oversight, provides reasonable assurance that material information related to our company and our subsidiary is recorded, processed and reported in a timely manner. There were no changes to our company's internal controls or in other factors that could materially affect these controls during the year ended July 31, 2010, including any significant deficiencies or material weaknesses of internal controls that would require corrective action. CRITICAL ACCOUNTING ESTIMATES The preparation of financial statement in conformity with Canadian generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Significant estimates and assumptions are used in determining the application of the going concern concept, assumptions used to determine the fair value of stock-based compensation and the determination of future income taxes. The Company evaluates its estimates on an ongoing basis and bases them on various assumptions that are believed to be reasonable under the circumstances. The Company's estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the policies for going concern, stock based compensation, and future income taxes are critical accounting policies which involve significant judgments and estimates used in the preparation of the Company's financial statements. The Company believes that it has the ability to obtain the necessary financing to meet commitments and liabilities as they become payable. The Company uses the Black-Scholes option pricing method to determine the fair value of stock-based compensation recognized. Estimates and assumptions are required under the model, including those related to the Company's stock volatility, expected life of options granted, and the risk free interest rate. The Company believes that its estimates used in arriving at stock-based compensation are reasonable under the circumstances. CHANGES IN ACCOUNTING POLICY REGARDING FOREIGN CURRENCY TRANSLATION The Company's functional currency is the Canadian dollar. The functional currency of the Company's wholly-owned subsidiaries, CICMR and Top Ten is the PRC Renminbi ("RMB"). On February 1, 2008 the Company changed its foreign currency translation policy from the temporal to the current rate translation method because the primary business focus of the company had changed and there were significant changes to the facts and circumstances primarily affecting the Company's foreign exchange exposure. Prior to February 1, 2008 the Company considered itself to be an exploration stage resource company focused on acquiring and exploring mineral properties in PRC, and was considered to be dependent on financing from outside PRC to sustain its exploration activities. Effective February 1, 2008, the Company changed its primary focus to being a consultant and facilitator for the negotiation, development, promotion and financing of PRC resource projects in exchange for fees. As a result, the majority of the Company's activities are not only carried out in PRC but it also receives consideration from its PRC clients in the form of cash, equity participation, royalty participation, or other rights, and it is no longer dependent on its Canadian operation for financial backing. In addition, the majority of the Company's costs of operations are primarily local PRC costs and the majority of its consulting services are performed in PRC. Accordingly, management considers these PRC operations to be self-sustaining foreign operations and accordingly, the financial statements of CICMR and Top Ten are translated into Canadian dollars using the current rate method, as follows: i) Assets and liabilities, at the rate of exchange in effect as at the balance sheet date; ii) Revenues and expenses items (including amortization), at the rate of exchange in effect on the dates n which such items are recognized in income during the period. Exchange gains and losses arising from the translation of the financial statements are recognized in a separate component of other comprehensive income. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Effective February 1, 2008, the Company adopted the following accounting standards updates issued by the Canadian Institute of Chartered Accountants ("CICA"). Capital Disclosures - CICA Section 1535 This new pronouncement establishes standards for disclosing information about an entity's capital and how it is managed. Section 1535 also requires the disclosure of any externally-imposed capital requirements, whether the entity has complied with them, and if not, the consequences. Financial Instruments Disclosures and Presentation - CICA Sections 3862 & 3863 These new Sections 3862 (on disclosures) and 3863 (on presentation) replace Section 3861, revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation requirements. Section 3862 complements the principles recognizing measuring and presenting financial assets and financial liabilities in Financial Instruments. Section 3863 deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset. General Standards of Financial Statement Presentation - CICA Section 1400 The CICA accounting standards board amended Section 1400 to include requirements for management to assess and disclose an entity's ability to continue as a going concern. This section applies to interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008. Business Combinations - CICA Section 1582 In January 2009, the CICA issued Section 1582, Business Combinations, which replaces former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combination and related disclosures. The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 2011 with earlier adoption permitted. The Corporation is currently evaluating the impact of this standard on the consolidated financial statements. Consolidation and Non-Controlling Interests - CICA Section 1601 In January 2009, the CICA issued Section 1601, Consolidated Financial Statements, and 1602, Non-controlling interests, which replaces existing guidance. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period on or after January 2011 with earlier adoption permitted. The Corporation is currently evaluating the impact of this standard on the consolidated financial statements. Goodwill and Intangible Assets - CICA Section 3064 In February 2008, the CICA issued Section 3064 which replaces Section 3062, "Goodwill and Other Intangible Assets". This new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with the adoption of this standard, EIC 27, Revenue and Expenditures in the Pre-Operating Period"' will be withdrawn. INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") In February 2008 the Canadian Accounting Standards Board announced 2011 as the changeover date for publicly-listed companies to use IFRS, replacing Canada's own generally accepted accounting principles. The specific implementation is set for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of January 1, 2011 will require restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. The Company expects to adopt IFRS effective the year ending December 31, 2011. The change in accounting polices may have a material effect on Chesapeake's financial results and disclosures. RISKS AND UNCERTAINTIES Liquidity Risk The Company manages liquidity risk by maintaining adequate cash balance. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial assets and liabilities. Country Risk The principle business of the Company is in China. The Company is subject to the political risks and economic considerations of operating in China. Currency Risk By virtue of its international operations, the Company incurs costs and expenses in foreign currencies other than the Canadian dollar. The exchange rates covering such currencies, including the RMB, are subject to fluctuation which gives rise to foreign currency exposure, either favorable or unfavorable. The Company does not hedge the RMB against its functional currencies. CONTINGENCIES a. The Company has been named as a defendant in an action which claims that, among other things, CIC Resources Limited and Stuart Bromley, the vendors of the Golden Harvest Property, do not own or have an interest in the Golden Harvest property and thereby cannot sell them to the Company. Management is of the opinion that this claim is without merit and intends to vigorously defend the action. The amount of potential loss, if any, from this claim is indeterminable. APPROVAL The Board of Directors of CIC Mining Resources Ltd. has approved the disclosure contained in this MD&A. A copy of this MD&A will be provided to anyone who requests it and can be obtained along with additional information, on the Company's website at www.cicresources.com or through the SEDAR website at www.sedar.com.
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