Financial Statements - Levon Resources Ltd.

Transcription

R E S O U R C E S
L T D.
Cordero: Mexico’s Newest Mineral District
2012 ANNUAL REPORT
LEVON RESOURCES LTD. 2012 ANNUAL REPORT
Exploring one of Mexico’s Largest Undeveloped Porphyry Targets
Levon Resources is exploring its 100%-owned, 20,000-hectare (49,400-acre) Cordero Project in
northwest Mexico. Cordero represents an outstanding and rapidly-growing target for porphyry
silver, gold, zinc and lead, and it is one of the largest undeveloped projects of its kind in Mexico.
Our discovery in 2009 in Phase 1 drilling led to expanded Phase 2 and 3 grid drilling campaigns
that identified an unusually large resource that remains open to expansion on strike and at depth.
Starting in mid 2011, Phase 4 continued exploration to determine the outer strike and depth
extensions of the resource, define and test outlying targets and advance engineering studies
(metallurgy, water, power, mine design) to quantify and remove risk factors for future mine
development. Phase 4 is now focusing on the engineering aspects of the project.
364 Million Ounces of Silver Indicated
The Cordero Project NI 43-101 Resource as of June 2012*
Resource
Class
Million
Tonnes
Ag
g/t
Au
g/t
Pb
%
Zn
%
Ag Oz
Million
Au Oz
Million
Pb Lbs
Million
Zn Lbs
Million
Indicated
Inferred
547.70
134.33
20.67
21.12
0.054
0.035
0.27
0.23
0.51
0.41
363.9
91.2
0.945
0.152
3.3
0.7
6.1
1.2
* As reported June 19, 2012. Prepared under the direction of Herb Welhener (SME registered member #3434330), Vice President of
Independent Mining Consultants, Inc. Mr. Welhener is a qualified person under NI 43-101.
For detailed information about the Cordero resource, please refer to pages 11 and 12 (Management’s Discussion and Analysis).
UNITED STATES
CORDERO
Chihuahua
M
E
X
I
C
The Cordero Project is situated in north-central Mexico approximately
180 kilometers south-southeast of the city of Chihuahua.
O
Mexico City
GUATEMALA
INVESTMENT HIGHLIGHTS 1
Investment Highlights
n Controls 100% of the Cordero Project, considered the largest silver/multimetal resource in North America held by a junior exploration company
n Initial discoveries led to Positive Preliminary Economic Assessment (PEA)
in 36 months; PEA published in March 2012;
n Cordero project situated in the same geological belt as Goldcorp’s
Penasquito deposit and hosts similar geological and metallurgical
Levon’s geological and field team at Cordero.
characteristics
n Current Indicated resource = 363.9M oz Ag, 0.945M oz Au, 3.3B lbs Pb,
6.1B lbs. Zn
n Current resource associated with just two of six mineralized intrusive
centers Identified to date
n Additional targets exist within a belt at least 15 kilometers long and threeto-five kilometers wide
n With over $55M in cash, Phase 4 is fully funded
Some of the 113,000 meters of core drilled to date
at Cordero.
Looking Ahead
n Complete Phase 4 Exploration and generate an updated NI 43-101 resource
n Explore outlying mine-scale targets and deeper systems
n Continue engineering and metallurgical studies towards Pre-feasibility
It’s unusual for a company like ours to have
what may be the largest undeveloped resource
of its kind in Mexico or possibly North America.
— Ron Tremblay
2
TO OUR SHAREHOLDERS
Exceptional Progress in a Difficult Market
As resource markets struggled through a sustained and protracted downturn, Levon continued
advancing its Cordero Project in Mexico. We completed a positive Preliminary Economic
Assessment (PEA), expanded the property’s silver-gold-lead-zinc resource and kept the drills
turning nearly 24/7. With the market downturn we are using our cash to focus on the
engineering aspects of the project to quantify the water, power supply and metallurgical
characteristics of the resource which will help improve the conceptual mine design.
Phase 4 Exploration: Drilling, Engineering and Mine Planning
We began our broad-based, Phase 4 exploration program at Cordero in August of 2011. The
$25M program includes the following key goals:
1) Continue drilling and expanding the resource;
2) Expand the engineering studies to better characterize metallurgy and other engineering
aspects of the resource;
3) Continue to de-risk the project.
Since exploration began at Cordero, we have completed 113,000m of core drilling. The
program continues to advance, and we are evaluating the results to further identify and
delineate other targets. Working with M3 Engineering & Technology (M3) and International
Mining Consultants (IMC) of Tucson, Arizona, we continue to expand the engineering and mine
planning studies (metallurgy, water, power and infrastructure) to de-risk the project.
Thinking Big at Cordero
Junior exploration companies rarely discover and delineate NI 43-101 resources of Cordero’s
magnitude. Cordero is one of the largest, undeveloped open pit Ag, Au, Zn, Pb resources of its
type in Mexico, and it is mostly open to expansion on strike and at depth. Cordero is a relatively
early stage exploration project. The exploration has accelerated due to the recognition of largescale porphyry mineralization controls on the resource and on mineralization in outlying areas of
the property. This recognition has led to a large-scale assessment of the property that we believe
offers potential for a major new bulk tonnage mining district in Mexico.
Initial PEA Successful
We reached a key milestone in January, 2012 with release of our first PEA at Cordero. This
study, conducted by M3 and IMC, returned a favorable 19.85% Internal Rate of Return (IRR)
projected on mining the upper part of the resource in the initial four stages of the proposed pit
design. These results are very encouraging for an early stage exploration project. We are now
using this information to advance Cordero toward a Prefeasibility Study.
Ron Tremblay, President & CEO
PRESIDENT’S LETTER
3
Economies of Scale
The PEA examined the economics of mining just the first 30% of the
resource with a 40,000 tpd, four-stage open pit operation that would
produce a yearly average of 8.7 million ounces of silver, 91 million
pounds of zinc, 68.8 million pounds of lead and 12,660 ounces of
gold. This first stage alone is projected to support a mine life of 15
years with the remaining 70% of the resource yet to be evaluated.
While these are clearly positive figures, we believe the project can
support a much larger operation and provide significant economies
of scale that would improve profitability. A portion of the work we’re
doing in Stage 4 is to examine the possibility of building a 120,000
tpd operation.
TSX listing ceremony, February 13, 2012
Listing on the TSX—a World-Class Marketplace
In February of 2012, Levon’s shares began trading on the Toronto Stock Exchange. This marked
a significant milestone for Levon, and it’s a reflection of our rapid growth and development. The
TSX is a world-class marketplace and we look forward to having access to the number one
mining exchange in the world as we continue the company’s growth.
A Senior Approach to News
One of the concerns expressed to me throughout the year has been a lack of regular news
from Cordero. Certainly we recognize that shareholders and investors want to stay informed
about exploration progress. News is the lifeblood of any exploration company. However,
Cordero has reached a point where the ongoing release of drill holes is less important than
what the accumulated and analyzed results mean for the project’s resources and economics.
In other words, Cordero’s scope and bulk tonnage characteristics, along with a large amount
of drilling, require a more senior and macro approach to news dissemination. The news we
report in 2012 and beyond will primarily concern resource expansion, project economics and
any new mine-scale discoveries.
In closing, I want to thank our outstanding team for its hard work and commitment to the
company’s collective goals. We have enjoyed a watershed year at Levon, and it has been the
unified effort of our board, employees and consultants who have made this possible. I look
forward to even greater achievements in the coming year.
Ron Tremblay
President & CEO
“Cordero is a massive,
multi-target play with
district-scale potential.”
— Ron Tremblay
4
CORDERO PROJECT
Location:
NEW MEXICO
ARIZONA
220 km south of the city of Chihuahua, Mexico, 35
km north of the mining town of Hidalgo Del Parral.
M
E
X
I
C
O
TEXAS
San Antonio
Chihuahua
Cordero
Minerals:
Silver, gold, zinc, lead
Area:
20,400 ha (49,400 acres)
Ownership:
100%
San Agustin (Silver Std.)
Status:
Phase 4 exploration with preliminary PEA completed.
NI 43-101 resource defined.
La Preciosa (Orko Silver)
Hidalgo del Parral
Pitarilla (Silver Std.)
Penasquito (Goldcorp.)
Project Overview
The Cordero Project holds the potential for a new mineral District
Camino Rojo (Canplats)
0
0
100
200
100
300 Km
200 Mi
Cordero lies within an emerging, world-class porphyry belt in
north-central Mexico
with large-scale, porphyry-style silver, gold, zinc and lead mineralization. Exploration to date has defined the Cordero Porphyry
Belt along a 15-kilometer strike length across widths of three-tofive kilometers. At least six mineralized intrusive centers have
been identified within the belt, including an initial NI 43-101 resource and three, high-level diatreme centers.
Infrastructure
The infrastructure setting at Cordero is ideal for a future mine.
Topography is gently rolling, low relief, open valley ranch land
with room for waste dumps and tailings impoundments. The
setting is ideal for mine support and mill facilities. A main trunk
power line cuts across the property three kilometers south of
A main trunk powerline runs just three kilometers south of the
Cordero resource. The Cordero resource includes the peaked hill in
the background, which could be transformed into one large-scale
open pit about three kilometers long, two kilometers wide and at
least 600 meters deep.
the resource area. The mining town of Hidalgo Del Parral, with
abundant supplies and skilled labor, lies 35 kilometers south by
paved road.
Cordero Porphyry Zone area of the resource looking SW. We are standing on
the NE rim of the modeled Stage 8 open pit looking about half way across it.
The entire hill and this view is within the Stage 8 modeled open pit.
THE CORDERO PROJECT
5
An Expanding Project: Two Porphyry Belts and a Third Mineralized Volcanic Center to the South
Cordero represents a vast area of
addition to the Cordero Porphyry Belt
(area of the current resource), we are
exploring key targets situated south of
Mesa Au Target
Area of initial 43-101
Resource
Valle Au Target
2009 - 2012 Core Drilling
B
te
or
aN
Tertiary felsic volcanic
intrusive centers & diatremes
Pozo de Plata and in the Dos Mil Diez
r
Po
Perla property is another mineralized
felsic dome staked five kilometers
Claim Boundary
and Molina de Viento Diatremes. The
Cordero Porphyry Target
fid
CORDERO PROJECT
Levon Resources Ltd. 100%
south of the Cordero claims. These
targets have been drill tested in Phase 4
elt
Claim Boundary
mineralized, mine-scale targets. In
20,000 hectares
Cordero Felsic Dome
with mineralization of geologic
significance encountered. Follow-up
La Ceniza
Porphry Target
Pozo de Plata Diatreme
Sanson Stock
=
15
km
)
exploration is required.
(C
ur
re
nt
St
ri
ke
Le
n
gt
h
Dos Mill Diez Diatreme
Area of Current
NI 43-101 Resource
Molina de Viento Caldera
Diatreme Complex
CO
RD
E
RO
Perla Rhyolite
Volcanic Dome
PO
RP
R
HY
Y
BE
LT
Claim Boundary
5km Grid
6
The Preliminary Economic Assessment (PEA)
A favorable PEA, announced January 30, 2012 was developed by considering the uppermost 30% portion of the first
resource and mining through the Stage 4 open pits. The longitudinal section below (looking NW) shows a comparison
of the first Cordero Resource , the PEA Stage 4 Pits Resource and the Stage 8 Pit (to a depth of 600 meters).
Note that the resource crops out at surface with minimal pre-mine stripping. Figure C shows the additional 70% of the
resource in the Stage 8 Pit.
Comparisons of First Cordero Resource & PEA Stage 4 and Stage 8 Pits Resource
A
B
First Resource block model using
$6.00/tonne NSR cutoff
PEA Stage 4 Pits (in black), comprising
only 30% of first resource
C
First Resource block model - Stage 8
pit @ 600 meters deep
It’s important to note that the First Resource has not been drilled off and remains open to the north, south and to depth.
Undrilled areas within the Stage 4 Pits (B) were modeled as waste for the PEA. The Phase 4 infill drilling program is
designed to further improve Stage 4 economics.
PEA Highlights
The PEA projected 15 years to complete the first four stages of open pit
mining. Here are the projected production highlights:
Metal Production, first 15 years:
131,156,000 ounces silver
190,000 ounces gold
1,373,359,000 pounds zinc
1,033,407,000 pounds lead.
Pre-tax Internal Rate of Return (IRR) of 19.5 %, based on the following
metal prices:
Preparing to drill a commercial-scale production water well.
Silver: $25.15/oz.
Gold: $1,384.77/oz.
Zinc:
$0.91 per pound
Lead: $0.96 per pound
Mill feed production rates were estimated at 40,000 tonnes per day (Tpd)
or 14.6 million tonnes per year.
Capital cost of the project is estimated to be $646,800,000 with operating
costs (mine, mill, process plant operating, general and administration,
treatment and transportation charges) estimated at $13.82 per tonne.
The PEA projects a 5.5 year payback on the base case.
“The PEA projects a
5.5-year payback on
the base case.”
THE CORDERO PROJECT
7
Beyond Stage 4: The Bigger Picture
We have used a full array of the latest geophysical survey
techniques to explore the Cordero porphyry and diatreme
systems and associated similar showings—all with the
goal of maximizing targeting and exploration success. The
techniques include airborne magnetics, electromagnetics
(EM) and radiometrics, ground gravity, 3D induced
polarization surveys and the latest high resolution ground
magneto tellurics (MT).
We have drilled the upper reaches of the mineralized
systems to depths of 1,000 meters, and the mineralization
is open at depth in several areas. The MT survey in
particular is designed to see to depths of about three
kilometers and provide insight into the 3D geologic
The First Cordero Resource has not been drilled off and remains open to
the north, south and at depth.
architecture of the Cordero Porphyry Belt. This information
helps us identify the deep feeders for the mineralizing
porphyries and help focus future exploration. The MT
results are now being integrated with the resource and
other exploration results to consider the larger target picture
of the property.
“The latest technology
has been applied to
maximize exploration
success at Cordero.”
Community Support
Levon takes great pride in being a supportive and active member of the
community. We rely on local ranchers, suppliers, contractors and service
providers in nearby Hidalgo del Parral. We enjoy celebrating with our
neighbors on occasion and host traditional Mexican fiestas under the
mesquite trees with our entire crew, the ranchers and their families
included. We are happily becoming part of the community. Our objective is
to bring a new and long-lived mining district to the region with many years
of prosperity.
Enjoying a traditional Mexican fiesta under the mesquite
trees with local ranchers and their families.
8
MANAGEMENT DISCUSSION & ANALYSIS
For the Year Ended March 31, 2012
The following discussion and analysis of the results of operations and
financial position of Levon Resources Ltd. (the “Company” or “Levon”)
for the year ended March 31, 2012 should be read in conjunction with
the March 31, 2012 Audited Consolidated Financial Statements (“the
Financial Statements”) and the notes thereto.
isolation or construed as alternatives to their most directly comparable
measure calculated in accordance with IFRS, or other measures of financial
performance calculated in accordance with IFRS. The non-GAAP measures
are unlikely to be comparable to similar measures presented by other issuers.
This Management Discussion and Analysis (“MD&A”) is dated June 29,
2012 and discloses specified information up to that date. Levon is
classified as a “TSX issuer” for the purposes of National Instrument 51102. The Financial Statements are prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards (“IASB”) and IFRS 1, First Time
Adoption of IFRS. Previously, the Company prepared its interim and annual
consolidated financial statements in accordance with Canadian generally
accepted accounting principles (“Canadian GAAP”). The Company’s 2011
comparatives and the statement of financial position as of April 1, 2010
in this MD&A have been presented in accordance with IFRS. Unless
otherwise cited, references to dollar amounts are in Canadian dollars.
BUSINESS DESCRIPTION
Throughout this report we refer to “Levon”, the “Company”, “we”, “us”,
“our” or “its”. All these terms are used in respect of Levon Resources
Ltd. We recommend that readers consult the “Cautionary Statement”
on the last page of this report. Additional information relating to the
Company is available on SEDAR at www.sedar.com and the Company’s
website at www.levon.com.
ADOPTION OF INTERNATIONAL FINANCIAL REPORTING
STANDARDS (IFRS)
The Company’s financial statements have been prepared in accordance with
IFRS as issued by the International Accounting Standards Board. These are
the Company’s first annual financial statements to be presented in accordance
with IFRS and IFRS 1 First-time adoption of International Financial Reporting
Standards has been applied. Previously, the Company prepared its annual and
interim financial statements in accordance with Canadian GAAP. Note 17 of
the March 31, 2012 financial statements contains reconciliations and
descriptions of the effect of the transition from Canadian GAAP to IFRS on the
statements of financial position as at April 1, 2010 and March 31, 2011 and
the statements of operations and comprehensive loss and cash flows for the
year ended March 31, 2011.
The most significant impacts of the adoption of IFRS, together with details
of the IFRS 1 exemptions and IFRS policy choices taken, are described in
the “First Time Adoption of International Financial Reporting Standards”
section of this MD&A. Comparative information has been restated to
comply with IFRS requirements, unless otherwise indicated.
NON GAAP MEASURES
In this document “Loss before other items per Share, basic and diluted” and
“Working capital” are non-GAAP measures, as they do not have any
standardized meanings as prescribed by IFRS. They are used to assist
management in measuring the Company’s ability to finance operations and
meet financial obligations. Non-GAAP measures should not be considered in
Levon is an exploration stage public company listed on the Toronto Stock
Exchange (“TSX”) under the symbol LVN and on the Frankfurt Stock Exchange
under the symbol L09. Levon commenced trading on the Toronto Stock
Exchange on February 13, 2012, and concurrently de-listed its shares from
the TSX-V. The Company is a reporting issuer in each of the Provinces of
Canada, except Quebec, and its international ISIN number is CA 5279011020.
The Company’s principal business activities are the exploration and
development of exploration and evaluation assets.
At this time, the Company has no operating revenues, and does not anticipate
any operating revenues until the Company is able to find, acquire, place in
production and operate a mine. Historically, the Company has raised funds
through equity financing and the exercise of options and warrants to fund its
operations.
On March 25, 2011, the Company acquired all of the shares of Valley High
Ventures Ltd. (“VHV”) pursuant to a court-approved plan of arrangement
(the “Arrangement”). Prior to the Arrangement, VHV was a Canadian
based precious and base metal exploration company with projects located
in Mexico, British Columbia and Yukon. Prior to the Arrangement, VHV
owned 49% of the Cordero Property and the Company held the remaining
51% interest. As consideration for the Company’s acquisition of VHV’s
49% interest in the Cordero Property, together with VHV’s cash assets,
VHV shareholders received one Common Share of the Corporation and
0.125 of a share of a new exploration company, Bearing Resources Ltd.
(“Bearing”). In connection with the Arrangement, all of VHV’s exploration
assets other than the Cordero Property and the Perla property were
transferred to Bearing, as well as $1,800,000 in cash. Upon the
Arrangement becoming effective, former VHV shareholders were issued
an aggregate of 73,322,636 Common Shares, representing approximately
43% of the issued and outstanding Common Shares of the Company on
a fully-diluted basis, and 100% of the shares of Bearing. The acquisition
consolidates Levon’s ownership of the Cordero Property to 100% through
their wholly owned Mexico subsidiary company Minera Titan. Levon also
formed an operating company Administración de Proyectos Levon en
México, S.A. de C.V., which is under contract to Minera Titan to complete
the Cordero exploration program.
The Company has a wholly-owned subsidiary named Valley High Ventures
Ltd. incorporated under the laws of British Columbia, Canada, and three
wholly-owned subsidiaries incorporated under the laws of Mexico, namely
Administración de Proyectos Levon en México, S.A. de C.V., Minera Titan
S.A. de C.V.and Minera El Camino, S.A. de C.V. Levon also has three
wholly-owned subsidiaries incorporated under the laws of British Virgin
Islands, namely Aphrodite Asset Holdings Ltd. Turney Assets Limited and
Citrine Investment Holdings Ltd.
2012 HIGHLIGHTS AND SIGNIFICANT EVENTS
• On May 29, 2011, the Company completed a short-form prospectus
financing issuing 20,600,000 common shares at a price of $1.95 per
common share for gross proceeds of $40,170,000.
• During the year ended March 31, 2012, 925,000 stock options were
exercised for proceeds of $366,000, 13,558,723 warrants were
exercised for proceeds of $13,697,750, and 766,720 broker warrants
were exercised for proceeds of $766,720.
• The Company commenced trading on the Toronto Stock Exchange on
February 13, 2012, and concurrently de-listed its shares from the TSX-V.
• A favorable PEA was completed in March 2012 by considering the
uppermost 30% portion of the first resource. The PEA considers mining
through the Stage 4 open pits. The PEA projects a pre-tax Internal Rate
of Return (IRR) of 19.5 % (at a silver price of $25.15/oz., gold price of
$1,384.77/oz., zinc price of $0.91 per pound, and lead price of $0.96
per pound) over a projected 15 years to complete the first four stages
of open pit mining. The potential metal production over the 15 years of
mining is 131,156,000 ounces of silver, 190,000 ounces of gold,
1,373,359,000 pounds of zinc, and 1,033,407,000 pounds of lead. Mill
feed production rates are estimated at 40.0 thousand tonnes per day
(Tpd) or 14.6 million tonnes per year. The capital cost of the project is
estimated to be $646,800,000, with operating costs (mine, mill,
process plant operating, general administration, treatment, and
transportation charges) estimated at $13.82 per tonne. The PEA
projects a 5.5 year payback on the base case. Sensitivity analysis by
M3 projects a 3.8 year payback on the more recent $30 silver price.
Full details are provided in the section below titled Overall Performance.
• Cordero Phase 4 drill results with completed assays from holes C11161 to C12-233 were forwarded to IMC to complete an updated
resource calculation. IMC reports an additional 33,380m of core drilling
(41 holes) were modeled along with holes of the first resource that
shows an increase in the Indicated Resource of 53 million (M) ounces
of silver (Ag), 37 thousand (K) ounces of gold (Au), 0.8 billion (B)
pounds (lbs) of zinc (Zn) and 0.4 billion (B) lbs of lead (Pb) with
improved grades in Ag, Zn and Pb. Table 1 summarizes the current
mineral resource compared to the June 2011 mineral resource at a
$6.00/t NSR cutoff grade. Table 2 shows the current mineral resource
at higher NSR cutoff grades. The NSR inputs and calculation method
used for the current Mineral Resource is the same as used for the 2011
Mineral Resource estimate. Full details are provided in the section below
titled Overall Performance.
OVERALL PERFORMANCE
Cordero Silver, Gold, Zinc, Lead Project, Mexico
The Company’s wholly owned Cordero-Sanson Project (“Cordero”) is
located 35 km northeast of the town of Hidalgo Del Parral, in the southern
part of the state of Chihuahua in north central Mexico. In February of
2009, the Company commenced field work on the Cordero project
exploring for large scale, bulk tonnage, porphyry type Ag, Au, Zn, Pb
deposits, a number of which have been recently discovered in similar
geologic settings in north central Mexico (Penasquito, Pitarrilla, Camino
Rojo and others).
9
The Cordero property consists of contiguous staked and optioned mining
claims that now total about 20,000 hectares.
Levon exploration establishes the property covers two mineralized
porphyry belts and a mineralized volcanic center staked 5 kilometers south
of the main Cordero claim block.
The Company’s exploration has focused mainly within the Cordero
Porphyry Belt in a southern tier of the main claim block. The Cordero
Porphyry Belt is defined through 15 km of strike with widths from 3-5 km,
by six mineralized porphyry and diatreme intrusive centers. Three bulk
tonnage Ag, Au, Zn, Pb discoveries have been made and grid drilled in
the central part of the Belt. The grid drilling confirms that the Pozo de Plata
Diatreme, the Josefina Mine Zone and the Cordero Porphyry Zone
discoveries merge into a single large scale bulk tonnage, open pit mineral
deposit. Initial outlying exploration drilling has also been completed in the
Porfido Norte Belt 10 km to the north and the Perla Volcanic center 5 km
to the south with some future follow up warranted.
Early Phase 3 grid drilling results through hole C11-160 (160 total core
holes) were sufficient to calculate the first NI 43-101 resource, which was
calculated by International Mining Consultants (“IMC”), Tucson, Arizona
and published June 21, 2011. IMC collaborated with M3 Engineering &
Technology (“M3”), Tuscon, Arizona to supply metal price and
metallurgical recovery test results incorporated in the resource calculation.
The mineral resource estimate is within an entire open pit geometry of an
8 Stage open pit, with a preliminary waste to mineral resource strip ratio
of 1.7:1 using a base case USD $6/tonne (T) net smelter return (“NSR”)
cutoff. Most of the “waste” material is in areas around the resource which
have yet to be drilled. The resource is open to expansion. IMC estimates
the mineral resource contains:
• An indicated resource of 521.6 million tonnes (MT) containing: 310.9
million ounces (Moz) silver, 0.908 Moz gold, 5.3 billion pounds (Blbs)
zinc, 2.9 Blbs lead.
• An inferred resource of 200.9 MT containing: 139.9 Moz silver, 0.229
Moz gold, 2.2 Blbs zinc, 1.2 Blbs lead.
Using a USD $15 NSR cutoff, a subset of the total Mineral Resource within
the open pit geometry includes:
• An indicated resource of 170.7 MT containing: 173.9 Moz silver, 0.466
Moz gold, 2.7 Blbs zinc, 1.7 Blbs lead.
• An inferred resource of 65.5 MT containing: 88.4 Moz silver, 0.094
Moz Au, 1.2 Blbs zinc, 0.7 Blbs lead.
Table 1 provides a summary of the mineral resource at various cutoffs.
The mineral resource is based on the assays from 160 core holes as of
June 1, 2011. An ordinary kriged block model was developed from the
drill hole assay data by IMC. The mineral resource is within a floating
cone, open pit geometry. The NSR values (table 1) reflect the value of the
metals recovered after applying estimated milling and smelting recoveries,
transportation, smelting, and refining charges current in July 2011. The
base case metal prices used for NSR values are USD $25 per ounce silver,
USD $1200 per ounce gold, USD $1.00 per pound zinc and USD $1.00
10 LEVON RESOURCES LTD. 2012 ANNUAL REPORT
OVERALL PERFORMANCE (continued)
per pound lead. The mill recoveries, metal distribution, smelting charges, and transportation charges used by IMC are conservative estimates
provided by M3 based on best available information.
Table 1. The mineral resource includes the Pozo de Plata Diatreme, the Josefina Mine Zone, and the Cordero Porphyry Zone discoveries. The
three discoveries remain open to expansion as delineation core drilling continues. The resource has yet to be closed off and requires delineation
Phase 4 delineation grid drilling of the first resource continued during the
resource calculation and PEA studies. The Phase 4 drill program is
designed to delineate the geometry, tenor, and geology of the first Cordero
bulk tonnage silver, gold, zinc, and lead (Ag, Au, Zn, Pb) resource (news
release of June 21, 2011) presenting opportunities to improve economics,
supporting expanded facilities with higher throughput rates, lowering the
capital and operating costs per tonne.
IMC had previously completed an in-house calculation and recommended
the Company contract M3 to complete the initial engineering studies at
Cordero based on IMC’s experience with similar data they had
encountered at Penasquito in its early exploration stages.
M3 and IMC again collaborated on the PEA and first considered modeling
the entire first resource within the original 8 Stage open pit. The first
resource had yet to be completely delineated and was open to expansion
in most directions and at depth. All undrilled areas were modeled as waste
in the analysis.
A favorable PEA, announced January 30, 2012 was derived by
considering the uppermost 30% portion of the first resource. The PEA
considers mining through the Stage 4 open pits. The PEA projects a pretax Internal Rate of Return (IRR) of 19.5 % (at a silver price of $25.15/oz.,
gold price of $1,384.77/oz., zinc price of $0.91 per pound, and lead price
of $0.96 per pound) over a projected 15 years to complete the first four
stages of open pit mining. The potential metal production over the 15
years of mining is 131,156,000 ounces of silver, 190,000 ounces of gold,
1,373,359,000 pounds of zinc, and 1,033,407,000 pounds of lead. Mill
feed production rates are estimated at 40.0 thousand tonnes per day (Tpd)
or 14.6 million tonnes per year. The capital cost of the project is estimated
to be $646,800,000, with operating costs (mine, mill, process plant
operating, general administration, treatment, and transportation charges)
estimated at $13.82 per tonne. The PEA projects a 5.5 year payback on
the base case. Sensitivity analysis by M3 projects a 3.8 year payback on
the more recent $30 silver price.
Cordero Phase 4 drill results with completed assays from holes C11-161
to C12-233 were forwarded to IMC to complete an updated resource
calculation. The drill results included 30 outlying exploration holes not
associated with the resource. IMC recalculated the Cordero resource on the
basis of the latest drill results and released their results on June, 9, 2012
(news release of June 19, 2012). IMC reports an additional 33,380m of
core drilling (41 holes) were modeled along with holes of the first resource
that shows an increase in the Indicated Resource of 53 million (M) ounces
of silver (Ag), 37 thousand (K) ounces of gold (Au), 0.8 billion (B) pounds
(lbs) of zinc (Zn) and 0.4 billion (B) lbs of lead (Pb) with improved grades
in Ag, Zn and Pb. Table 1 summarizes the current mineral resource
compared to the June 201e 2011 Mineral Resource estimate.
Table 1 - Cordero Mineral Resource -- Comparison between the June 2011 Mineral Resource and the Current Mineral Resource Using
a $6.00/t NSR Cutoff
Table 2: Cordero June 2012 Mineral Resource Tabulated at Higher NSR Cutoff Grades
Resource tabulated on Levon Mineral claims within a floating cone open pit geometry which went off the Levon mineral claims for
waste stripping within the cone geometry. The floating cone geometry was defined using the following metal prices and mill recoveries to produce lead and zinc concentrates.
11
Metal
Silver
Lead
Zinc
Gold
Price
25.00/oz
1.00/lb
1.00/lb
1200/oz
Mill Recovery
Pb Conc
Zn Conc
60%
15%
70%
70%
No recovery included to date
The resource is tabulated wholly within a revised open pit geometry that
measures 2,600 m on strike, 2,100 m wide and a maximum of 600 m
deep. An inverse distance block model to the 6th power using 150m
spherical search was developed from the 203 drill holes encompassing
97,769 m of core drilling. The resource remains largely open to expansion
through step out delineation and infill drilling on strike and beneath the
modeled open pit.
To complete the Phase 4 resource delineation program an expanded
environmental permit is required for the 177 planned grid drill sites. M3
has completed the required field studies and submitted the permit
application for approval on behalf of Levon. Delineation and exploration
drilling is possible for part of the expansion and exploration program on
existing roads, agricultural fields and previously disturbed ground, under
the NOM-120 regulations of Mexico.
Proposed Exploration
Phase 4 exploration drilling was a seamless continuation of the Phase 3
program. Phase 4 is a fully funded $25M program with goals to 1)
Complete delineation drilling of the first resource 2) Complete exploration
drilling to make additional outlying discoveries that require grid drilling and
3) To further advance engineering studies on the first resource. Phase 4
has 130,000 m core drilling planned.
SJ Geophysics and CORE Geophysics have completed fieldwork and data
collection for 3D induced polarization (“IP”) and high resolution
magnetotellurics (“MT”) surveys, respectively. The IP and MT results have
been compiled, interpreted and continue to be integrated with Cordero 3D
exploration model for targeting and setting drill priorities. The surveys have
been completed in the Cordero Porphyry Belt, the Porfido Norte Belt , 10
kilometers to the north and the Perla Felsic Dome 5 kilometers to the south.
Levon has defined and initially tested a series of exploration targets south
of Pozo de Plata Diatreme (Pasto del Sur Diatreme) and to the southwest
in the Dos Mil Diez and Molina de Viento Diatremes. Of the Cordero
Porphyry Belt new porphyry controlled gold targets have been defined in
the Porfido Norte Belt. The Perla property is another mineralized felsic
dome we staked 5 km south of the Cordero claims, which is targeted. The
targets have been prioritized for testing and initially drill tested in Phase 4
with mineralization of geologic significance encountered that require follow
up in the future.
Exploration Potential
Cordero geology, metal assemblages and scale of the porphyry controlled
mineralized centers appear to be most analogous with the Penasquito
mine of GoldCorp. We believe Cordero geology, mineralization and
exploration results to date support this analogy and point to this scale of
upside discovery potential at Cordero. Cordero is in the early discovery
stage of exploration. The Phase 4 program is aimed at verifying the
Penasquito scale upside potential and advance the engineering studies
on the project.
For further details and maps of the Cordero project, please see our
website: www.levon.com
For information on other non-material properties held by the Company,
refer to the Company’s AIF, which is available on SEDAR at
www.sedar.com.
Risks
Exploration and development involve a high degree of risk and few
properties are ultimately developed into producing mines. There is no
assurance that the Company’s future exploration and development
activities will result in any discoveries of commercial bodies of ore.
Whether an ore body will be commercially viable depends on a number
of factors including the particular attributes of the deposit such as size,
grade and proximity to infrastructure, as well as mineral prices and
government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of minerals and
environmental protection. The exact effect of these factors cannot be
accurately predicted, but the combination of these factors may result in a
mineral deposit being unprofitable.
The Company’s projections are estimates only based on
management’s assessment of facts at the time of the projections.
Management believes these projections to be reasonable but actual
results may differ.
For more information on risks and uncertainties facing the Company,
refer to the section below named Risk Factors.
SELECTED ANNUAL INFORMATION
The following financial data is derived from the Company’s consolidated
financial statements for the three most recently completed financial years:
Mar 31, 2012
(IFRS)
$
Total Revenues
Loss before other items (13,735,479)
Loss for the year
(13,124,833)
Loss per share
(0.07)
Total assets
184,859,967
Total liabilities
708,372
Working capital
58,048,017
Mar 31, 2011
(IFRS)
$
(24,684,097)
(24,642,101)
(0.31)
145,255,935
861,595
19,608,972
Mar 31, 2010
(CGAAP)
$
(745,785)
(730,892)
(0.01)
2,263,984
208,714
1,864,226
The decrease in net loss before other items and net loss for the year is
mainly attributed to a decrease in share-based payments recognized
during the year. During the year ended March 31, 2012, the Company
recorded share-based payments of $251,082 (2011 - $15,538,692; 2010
- $237,846). The higher balance in prior year is attributed to more stock
options granted relative to the current year, resulting in the options granted
in prior year having a higher black-scholes fair value.
The increase in total assets is mainly attributed to proceeds raised on
share issuance. During the year ended March 31, 2012, the Company
completed a short–form prospectus financing by issuing 20,600,000
common shares at a price of $1.95 per common shares for gross
proceeds of $40,170,000. During the year ended March 31, 2011, the
Company completed a brokered private placement of 13,334,000 units
at a price of $0.75 per unit for gross proceeds of $10,000,500 and a nonbrokered private placement. The overall increase in proceeds raised
resulted in an overall increase in working capital.
RESULTS OF OPERATIONS
Year ended March 31, 2012 compared with the year ended March 31,
2011
During the year ended March 31, 2012, the Company’s net loss decreased
by $11,517,268 from a net loss of $24,642,101 for the year ended March
31, 2011 to a net loss of $13,124,833 for the year ended March 31, 2012.
The overall increase in the net loss as compared to the prior year was due
to the factors discussed below:
2012
Expenses
Consulting and management fees
$ 1,007,640
Depreciation
12,211
Exploration
10,792,719
Foreign exchange loss
154,227
Listing and filing fees
309,261
Office, occupancy and miscellaneous
182,491
Professional fees
338,551
Salaries and benefits
234,249
Share-based payments
251,082
Shareholder relations and promotion
249,556
Travel
203,492
Loss before other items
Other items
Interest income
Net Loss for Year
Other Comprehensive Loss
Unrealized loss on investments
Total Comprehensive Loss for Year
(13,735,479)
610,646
2011
$ 620,000
5,205
7,641,461
61,002
67,286
142,127
271,320
106,281
15,538,692
114,532
116,191
(24,684,097)
41,996
(13,124,833)
(24,642,101)
(15,616)
(554)
$(13,140,449) $(24,642,655)
Consulting fees of $1,007,640 include payments to the CEO and President
of the Company as well as consultants providing investor relation
services. Consulting fees increased by $387,640 during the year from
$620,000 for the year ended March 31, 2011 to $1,007,640 during the
year ended March 31, 2012. The current year balance includes a
$500,000 bonus paid to the CEO and President of the Company compared
to a bonus of $125,000 during the year ended March 31, 2011.
Exploration expenditures
Exploration expenditures of $10,792,719 include $4,260,933 in drilling
and exploration and $4,345,333 in geological and management services.
Exploration expenditures increased by $3,151,258 during the year from
$7,641,461 during the year ended March 31, 2011 to $10,792,719 during
the year ended March 31, 2012. Overall increase is attributed to increased
exploration activities during the year.
13
Foreign exchange loss increased by $93,225 from $61,002 during the
year ended March 31, 2011 to $154,227 during the year ended March
31, 2012. The increase in foreign exchange loss is mainly attributed to
the weakening of the peso on net assets held in Mexico.
Listing and filing fees increased by $241,975 from $67,286 during the
year ended March 31, 2011 to $309,261 for the year ended March 31,
2012. The increase is mainly attributed to additional costs incurred as a
result of graduating from the TSX Venture Exchange to the TSX exchange.
Salaries and benefits increased by $127,968 from $106,281 during the year
ended March 31, 2011 to $234,249 during the year ended March 31, 2012.
Overall increase is attributed to increased business operations during the
year as a result of acquiring 100% interest in the Cordero Property.
Share-based payments decreased by $15,287,610 from $15,538,692 for
the year ended March 31, 2011 to $251,082 for the year ended March 31,
2012. Prior year’s higher balance is attributed to more stock options granted
and vested and each option had a higher black scholes fair value. During
the year ended March 31, 2011, 13,465,000 stock options were granted
compared to 675,000 stock options during the year ended March 31, 2012.
Shareholder relations and promotion increased by $135,024 from
$114,532 during the year ended March 31, 2011 to $249,556 during the
year ended March 31, 2012. Additional shareholder relations and
promotion expenses were incurred as the Company acquired 100%
interest in the Cordero Property and graduated from the TSX Venture
Exchange to the TSX exchange.
Travel
Travel expense increased by $87,301 from $116,191 during the year
ended March 31, 2011 to $203,492 during the year ended March 31,
2012. The increase is attributed to more travelling to promote the
Company upon acquiring 100% interest in the Cordero Property and
graduation from the TSX Venture Exchange to the TSX Exchange.
Interest income
Interest income increased by $568,650 from $41,996 for the year ended
March 31, 2011 to $610,646 for the year ended March 31, 2012. The
increase in interest income is attributed to the investment of cash raised
from current year’s short-form financing whereby the Company issued
20,600,000 common shares at $1.95 per common share for gross
proceeds of $40,170,000. Unused funds were invested in GICs and
treasury bills.
RESULTS OF OPERATIONS (continued)
Three months ended March 31, 2012 compared with the three month ended March 31, 2011
During the three months ended March 31, 2012, the Company’s net loss decreased by $14,672,368 from a net loss of $17,680,838 for the three months
ended March 31, 2011 to a net loss of $3,008,470 for the three ended March 31, 2012. The overall increase in the net loss is mainly attributed to sharebased compensation recognized in the three months ended March 31, 2012.
SUMMARY OF QUARTERLY RESULTS
Expressed in Cdn $
Period Ended
Mar. 31
2012
Q4
Dec. 31
2011
Q3
Sep. 30
2011
Q2
Jun. 30
2011
Q1
Mar. 31
2011
Q4
Dec. 31
2010
Q3
Sep. 30
2010
Q2
Jun. 30
2010
Q1
Loss before other items
(3,405,064) (2,903,779) (3,517,042) (3,909,594) (17,726,825) (1,896,176)
(3,667,086) (1,394,010)
Net Income (Loss)
(3,008,470) (2,848,276) (3,388,093) (3,879,994) (17,680,838) (1,899,205)
(3,671,145) (1,390,913)
Basic Loss per Share
(0.02)
(0.01)
(0.02)
(0.02)
(0.15)
(0.02)
(0.05)
(0.02)
All of the information above is presented in accordance with IFRS.
Quarterly results often fluctuate with changes in exploration and expenses and non-cash items such as share-based payments. In Q2 and Q4 of 2011,
the Company granted 4,150,000 and 8,265,000 stock options respectively, representing two of the largest tranches granted in the last 8 quarters, resulting in significant spikes in the loss before other items. In fiscal 2012, the Company has expanded their operations and as a result have seen substantial increases in exploration and general and administrative costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date through the issuance of
common shares. Currently the Company has sufficient capital to conduct
further exploration on its existing properties. The consolidated financial
statements have been prepared on a going concern basis which assumes
that the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company’s ability to continue as a going concern are dependent upon the
continued support from its shareholders, the discovery of economically
recoverable reserves, the ability of the Company to obtain the financing
necessary to complete development and achieve profitable operations in
the future. The outcome of these matters cannot be predicted at this time.
As at March 31, 2012 the Company had working capital $57,967,027
compared to working capital of $19,608,972 at March 31, 2011.
Working Capital
Deficit
Mar 31, 2012
(IFRS)
$58,048,017
$62,899,323
Mar 31, 2011
(IFRS)
$19,608,972
$50,010,304
Mar 31, 2010
(CGAAP)
$ 1,864,226
$25,385,572
The increase in working capital from March 31, 2011 to March 31, 2012
is mainly attributed to cash raised on issuance of share capital. On May
19, 2011, the Company completed a short-form prospectus financing
issuing 20,600,000 common shares at a price of $1.95 per common
share for gross proceeds of $40,170,000. Total share issue costs of
$3,304,614 were incurred for the private placement, including cash
commission of $2,008,500 and 1,030,000 broker warrants valued at
$950,766. The increase in cash is also attributed to the exercise of options
and warrants for proceeds of $14,830,470. A partial amount of the
proceeds raised was used for ongoing exploration activities. The
remaining unused balance was invested in treasury bills and guaranteed
investment certificates. Currently the Company has sufficient capital to
conduct further exploration on its existing properties.
The increase in working capital from March 31, 2010 to March 31, 2011
is mainly attributed to cash raised on issuance of share capital. On August
31, 2010, the Company completed a brokered private placement of
13,334,000 units at a price of $0.75 per unit for gross proceeds of
$10,000,500 and a non-brokered private placement of 1,471,353 units
at a price of $0.75 per unit for gross proceeds of $1,103,515. Each unit
consists of one common share and one-half of one common share
purchase warrant. One whole warrant is exercisable into one additional
common share at a price of $1.20 until February 29, 2012. Total share
issue costs of $1,052,149 were incurred for the private placement,
including cash commission of $525,026 and 1,066,720 broker warrants
valued at $414,736.
The increase in deficit from March 31, 2011 to March 31, 2012 is mainly
attributed to exploration expense of $11,500,480 recognized during the year.
The increase in deficit from March 31, 2010 to March 31, 2011 is mainly
attributed to share-based payments recognized of $15,538,692 and
exploration expense recognized of $7,623,760. During the year ended
March 31, 2011, the Company granted 13,465,000 stock options to
employees, directors, officers and consultants.
CASH FLOW
Cash used in operating activities
Cash provided by (used in)
investing activities
Cash provided by financing activities
March 31
March 31
2012
2011
$(14,175,475) $(8,596,702)
(20,407,785) 12,097,169
52,646,622 14,329,176
Increase in cash and cash equivalents
Foreign exchange effect on cash
Cash balance, beginning of the year
$18,063,362 $17,829,643
(340,678)
166
19,850,757
2,020,948
Cash balance, end of the year
$37,573,441 $19,850,757
Operating Activities:
Cash used in operating activities for the year ended March 31, 2012 was
$14,175,475 compared to $8,596,702 for the year ended March 31,
2011. The increase in cash used in operating activities is mainly attributed
to an overall increase in business operations resulting in higher exploration
expense, office expense, salaries and benefits and consulting fees.
Investing Activities:
Cash used in investing activities for the year ended March 31, 2012 was
$20,407,785 compared to cash inflow of $12,097,169 for the year ended
March 31, 2011. Cash used in investing activities of $20,407,785 for the
year ended March 31, 2012 includes purchase of investments of
$20,478,548 compared to $Nil in 2011, cash used in equipment
acquisitions of $89,237 compared to $27,391 in 2011, offset by recovery
of expenditures on exploration and evaluation asset of $160,000
compared to $Nil in 2011. During the year ended March 31, 2011, the
Company received net proceeds of $5,178,768 on the acquisition of
Valley High Ventures Ltd., and received advances from Valley High
Ventures Ltd. in the amount of $6,945,792.
Financing Activities:
Cash provided in financing activities for the year ended March 31, 2012
was $52,646,622 compared to $14,329,176 for the year ended March
31, 2011. Cash provided in financing activities for the year ended March
31, 2012 includes the issuance of 20,600,000 common shares at a price
of $1.95 for net proceeds of $37,816,152, and the exercise of stock
options, warrants and broker warrants for $14,830,470.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has not entered into any off-balance sheet transactions.
RELATED PARTY TRANSACTIONS
During the year ended March 31, 2012:
(a) $326,263 (2011 - $159,267) was charged to the Company for office,
occupancy and miscellaneous costs; shareholder relations and
promotion; travel; salaries and benefits; and administrative services
paid on behalf of the Company by Oniva International Services Corp.
(“Oniva”), a private company owned by the Company and five other
reporting issuers having common directors.
(b) $6,291 (2011 - $3,386) was charged to the Company for exploration
costs associated with the Company’s mineral properties in the state
of Nevada from a public company with common directors.
15
(c) $10,000 (2011 - $Nil) was paid for consulting fees to a private
company controlled by a former officer of the Company.
The Company takes part in a cost-sharing arrangement to reimburse
Oniva for a variable percentage of its overhead expenses, to reimburse
100% of its out-of-pocket expenses incurred on behalf of the Company,
and to pay a percentage fee based on the total overhead and corporate
expenses. The agreement may be terminated with one month’s notice by
either party.
Due from related parties consists of the following:
Mar 31,
2012
$5,564
-
Mar 31,
2011
$5,564
504
-
Apr 1
2010
$ 5,564
42,947
$5,564
$6,068
$48,511
Mar 31,
2012
Chevillon Exploration. (ii)
$225,147
Coral Gold Resources Ltd. (iii) 27,926
Oniva Group of Resource
Companies (i)
66,646
Mar 31,
2011
$135,930
57,901
Apr 1
2010
$ 57,698
56,788
34,184
24,426
$319,719
$228,015
$138,912
ABC Drilling (i)
Frobisher Securities Inc. (i)
Stone’s Throw Capital (ii)
Due to related parties consists of the following:
(i) Oniva, ABC Drilling and Frobisher Securities Inc. are private companies
related by way of common management and directors.
(ii) Chevillion Exploration and Stone’s Throw Capital are private companies
controlled by a director and officer of the Company.
(iii)Coral Gold Resources Ltd. is a public company related by way of
common directors.
Accounts payable includes $13,063 (2011 - $6,773) owed to a public
company related by way of common directors and $52,606 (2011 $20,145) owed to a private company related by way of common
management and directors. Accrued liabilities includes $139,500 (2011
- $Nil) owed to a private company controlled by a director and officer of
the Company.
Related party transactions are measured at the estimated fair values of
the services provided or goods received.
Management transactions
The Company has identified its directors and certain senior officers as its
key management personnel. The compensation costs for key
management personnel for the years ended March 31, 2012 and 2011
are as follows:
Mar 31,
Mar 31,
2012
2011
$ 56,262 $ 47,450
1,225,176
626,063
- 13,430,456
$1,281,438 $14,103,969
i.) Consulting and management fees paid to key management personnel
increased by $599,133 from $626,063 during the year ended March
31, 2011 to $1,225,176 during the year ended March 31, 2012. The
increase is mainly attributed to a $500,000 bonus paid to the CEO and
President of the Company during the year compared to a bonus of
$125,000 paid during the year ended March 31, 2011, as well as
$385,176 accrued to an officer of the Company during the year
compared to $211,063 accrued during the year ended March 31, 2011.
ii.) Share-based payments paid to management personnel decreased by
$13,430,456 from $13,430,456 during the year ended March 31,
2011 to $Nil during the year ended March 31, 2012. No stock options
were granted to key management personnel during the year.
PROPOSED TRANSACTIONS
The Company does not have any proposed transactions.
SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of these consolidated financial statements requires
management to make estimates and judgments that affect the reported
amounts of assets and liabilities at the date of the financial statements and
reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates under different assumptions and
conditions.
Significant assumptions about the future and other sources of estimated
uncertainty that management has made at the consolidated statement of
financial position date, that could result in a material adjustment to the
carrying amounts of assets and liabilities, in the event that actual results
differ from assumptions made, relate to, but are not limited to, the following:
• the recoverability of amounts receivable, which are included in the
statements of financial position;
• the carrying value and recoverable amount of exploration and evaluation
assets;
• the recoverability and estimated useful lives of property and equipment;
• the recognition and measurement of deferred tax assets and liabilities;
• the provisions including the estimated reclamation provisions and
environmental obligations;
• the determination of the assumptions used in the calculation of sharebased payments; and
• the allocation of proceeds for unit offerings between share capital and
warrants.
RISK FACTORS
In addition to the other information presented in this MD&A, the following
should be considered carefully in evaluating the Company and its business.
This MD&A contains forward-looking statements that involve risk and
uncertainties. The Company’s actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed
below and elsewhere in this MD&A.
We will be required to raise additional capital to mine our properties. The
Company is currently in the exploration stage of its properties. If the
Company determines based on its most recent information that it is feasible
to begin operations on its properties, the Company will be required to raise
additional capital in order to develop and bring the properties into
production. Our ability to raise funds will depend on several factors,
including, but not limited to, current economic conditions, our properties,
our prospects, metal prices, businesses competing for financing an our
financial condition. There can be no assurance that we will be able to raise
funds, or to raise funds on commercially reasonable terms.
The commercial quantities of ore cannot be accurately predicted. Whether
an ore body will be commercially viable depends on a number of factors
including the particular attributes of the deposit, such as size, grade and
proximity to infrastructure, as well as mineral prices and government
regulations, including regulations relating to prices, taxes, royalties, land
tenure, land use, importing and exporting of minerals and environmental
protection. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may result in a mineral deposit being
unprofitable.
The mining industry is highly speculative and involves substantial risks.
The Company is engaged in mineral exploration and development activities
which, by their nature, are speculative due to the high risk nature of the
business. Any investment in the common shares of the Company should
be considered a highly speculative investment due to the nature of the
Company’s business. Such risk factors could materially affect the
Company’s future financial results and could cause actual results and
events to differ materially from those described in forward looking
statements and forward looking information.
The Company’s properties are all at the exploration stage and have no
proven reserves. All of the Company’s properties are in the exploration
stage only and are without a known body of ore. If the Company does not
discover a body of ore in its properties, the Company will search for other
properties where they can continue similar work.
The Company’s mineral exploration efforts may be unsuccessful. Despite
exploration work on its mineral claims, no known bodies of commercial ore
or economic deposits have been established on any of the Company’s
properties. In addition, the Company is at the exploration stage on all of its
properties and substantial additional work will be required in order to
determine if any economic deposits occur on the Company’s properties.
Even in the event commercial quantities of minerals are discovered, the
exploration properties might not be brought into a state of commercial
production. Finding mineral deposits is dependent on a number of factors,
including the technical skill of exploration personnel involved. The
commercial viability of a mineral deposit once discovered is also dependent
on a number of factors, some of which are particular attributes of the
deposit, such as size, grade and proximity to infrastructure, as well as metal
prices. Most of these factors are beyond the control of the entity conducting
such mineral exploration. The Company is an exploration stage company
with no history of pre-tax profit and no income from its operations.
Competition for mineral land. There is a limited supply of desirable mineral
lands available for acquisition, claim staking or leasing in the areas where
the Company contemplates expanding its operations and conducting
exploration activities. Many participants are engaged in the mining
business, including large, established mining companies. Accordingly,
there can be no assurance that the Company will be able to compete
successfully for new mining properties.
Competition for recruitment and retention of qualified personnel. We
compete with other exploration companies, many of which have greater
financial resources than us or are further in their development, for the
recruitment and retention of qualified employees and other personnel.
Competition for exploration resources at all levels is currently very intense,
particularly affecting the availability of manpower, drill rigs and supplies.
If we require and are unsuccessful in acquiring additional personnel or
other exploration resources, we will not be able to grow at the rate we
desire or at all.
Uncertainty of exploration and development programs. The Company’s
profitability is significantly affected by the costs and results of its
exploration and development programs. As mines have limited lives based
on proven and probable mineral reserves, the Company actively seeks to
expand its mineral reserves, primarily through exploration, development,
and strategic acquisitions. Exploration for minerals is highly speculative in
nature, involves many risks and is frequently unsuccessful. Among the
many uncertainties inherent in any gold or silver exploration and
development program are the location of economic ore bodies, the
development of appropriate metallurgical processes, the receipt of
necessary governmental permits and the construction of mining and
processing facilities. Assuming the discovery of an economic deposit,
depending on the type of mining operation involved, several years may
elapse from the initial phases of drilling until commercial operations are
commenced and, during such time, the economic feasibility of production
may change. Accordingly, the Company’s exploration and development
programs may not result in any new economically viable mining operations
or yield new mineral reserves to expand current mineral reserves.
Licenses and permits. The operations of the Company require licenses and
permits from various governmental authorities. The Company believes that
it holds all necessary licenses and permits under applicable laws and
regulations and believes that it is presently complying in all material
respects with the terms of such licenses and permits. However, such
licenses and permits are subject to change in various circumstances. There
can be no guarantee that the Company will be able to obtain or maintain
all necessary licenses and permits as are required to explore and develop
its properties, commence construction or operation of mining facilities and
properties under exploration or development or to maintain continued
operations that economically justify the cost.
Litigation. Although the Company is not currently subject to litigation, it
may become involved in disputes with other parties in the future, which
may result in litigation. Any litigation could be costly and time consuming
and could divert our management from our business operations. In
addition, if the Company is unable to resolve any litigation favorably, it may
have a material adverse impact on the Company’s financial performance,
cash flow and results of operations.
17
Acquisitions. The Company undertakes evaluations of opportunities to
acquire additional mining properties. Any resultant acquisitions may be
significant in size, may change the scale of the Company’s business, and
may expose the Company to new geographic, political, operating, financial
and geological risks. The Company’s success in its acquisition activities
depends on its ability to identify suitable acquisition candidates, acquire
them on acceptable terms, and integrate their operations successfully. Any
acquisitions would be accompanied by risks, such as a significant decline
in the price of gold or silver, the ore body proving to be below expectations,
the difficulty of assimilating the operations and personnel of any acquired
companies, the potential disruption of the Company’s ongoing business,
the inability of management to maximize the financial and strategic position
of the Company through the successful integration of acquired assets and
businesses, the maintenance of uniform standards, controls, procedures
and policies, the impairment of relationships with customers and
contractors as a result of any integration of new management personnel
and the potential unknown liabilities associated with acquired mining
properties. In addition, the Company may need additional capital to finance
an acquisition. Historically, the Company has raised funds through equity
financing and the exercise of options and warrants. However, the market
prices for natural resources are highly speculative and volatile. Accordingly,
instability in prices may affect interest in resource properties and the
development of and production from such properties that may adversely
affect the Company’s ability to raise capital to acquire and explore resource
properties. There can be no assurance that the Company would be
successful in overcoming these risks or any other problems encountered
in connection with such acquisitions.
Conflict of interest. Certain directors and officers of the Company are
officers and/or directors of, or are associated with, other natural resource
companies that acquire interest in mineral properties. Such associations
may give rise to conflicts of interest from time to time. The directors are
required by law, however, to act honestly and in good faith with a view to
the best interests of the Company and its shareholders and to disclose
any personal interest which they may have in any material transaction
which is proposed to be entered into with the Company and to abstain
from voting as a director for the approval of such transaction.
Dependence on management. We are dependent on the services of key
executives including our President and Chief Executive Officer and other
highly skilled and experienced executives and personnel focused on
advancing our corporate objectives as well as the identification of new
opportunities for growth and funding. Due to our relatively small size, the
loss of these persons of our inability to attract and retain additional highly
skilled employees required for our activities may have a material adverse
effect on our business and financial condition.
Uncertainty of continuity as a going concern. The continuation of the
Company depends upon its ability to attain profitable operations and
generate cash flow from operations and/or to raise equity capital through
the sale of its securities. As a result, there is uncertainty about the
Company’s ability to continue as a going concern. The Company’s
financial statements do not include the adjustments that would be
necessary if the Company were unable to continue as a going concern.
RISK FACTORS (continued)
Limited and volatile trading volume. Although the Company’s common
shares are listed on the TSX, the United States Over the Counter Bulletin
Board, referred to as the “OTCBB”, and the Frankfurt Stock Exchange,
referred to as the “FSE”, the volume of trading has been limited and volatile
in the past and is likely to continue to be so in the future, reducing the
liquidity of an investment in the Company’s common shares and making
it difficult for investors to readily sell their shares in the open market.
Without a liquid market for the Company’s common shares, investors
may be unable to sell their shares at favorable times and prices and may
be required to hold their shares in declining markets or to sell them at
unfavorable prices.
FINANCIAL INSTRUMENTS AND RISKS
Volatility of share price. In recent years, securities markets in Canada have
experienced a high level of price volatility. The market price of many
resource companies, particularly those, like the Company, that are
considered speculative exploration companies, have experienced wide
fluctuations in price, resulting in substantial losses to investors who have
sold their shares at a low price point. These fluctuations are based only
in part on the level of progress of exploration, and can reflect general
economic and market trends, world events or investor sentiment, and may
sometimes bear no apparent relation to any objective factors or criteria.
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation. The
Company’s cash is exposed to credit risk.
Market price is highly speculative. The market price of metals is highly
speculative and volatile. Instability in metal prices may affect the interest
in mining properties and the exploration, development and product ion of
such properties. If gold and silver prices substantially decline, this may
adversely affect the Company’s ability to raise capital to explore for
existing and new mineral properties.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in
satisfying financial obligations as they become due.
The Company is subject to foreign currency fluctuations. The Company
operates in more than one country and the Company’s functional currency
is the Canadian Dollar. The Company’s officers are located in Canada, and
certain of its mining exploration properties are located in Mexico and the
United States. The Company’s financial results are reported in Canadian
Dollars. Any appreciation in the currency of the United States, Mexico or
other countries where we may carryout exploration activities against the
Canadian or US Dollar will increase our costs of carrying out operations
in such countries. Fluctuations in and among the various currencies in
which the Company operates could have a material effect on the
Company’s operations and its financial results.
Political or economic instability or unexpected regulatory change. Certain
of our properties are located in countries, provinces and states more likely
to be subject to political and economic instability, or unexpected legislative
change, than is usually the case in certain other countries, provinces and
states. Our mineral exploration activities could be adversely effected by:
• political instability and violence;
• war and civil disturbances;
• expropriation or nationalization;
• changing fiscal regimes;
• fluctuations in currency exchange rates;
• high rates of inflation;
• underdeveloped industrial and economic infrastructure;
• changes in the regulatory environment governing mineral properties;
and
• unenforceability of contractual rights
The Company’s financial instruments consist of amounts receivable,
reclamation deposits, accounts payable and due from/to related parties.
The carrying amounts of amounts receivable (excluding IVA and HST),
reclamation deposits, and accounts payable are a reasonable estimate of
their fair values due to their short term to maturity. All cash equivalents
comprise of cashable GIC’s with a maturity of one year or less and interest
rates that range from 1.07% to 1.20%.
The Company’s financial instruments are exposed to certain financial
risks, credit risk, liquidity risk and market risk.
The Company manages credit risk, in respect of cash, by maintaining the
majority of cash at high credit rated Canadian financial institutions.
Concentration of credit risk exists with respect to the Company’s cash
and reclamation deposits as the majority of the amounts are held with a
Canadian and a Mexican financial institution.
The Company manages its liquidity risk by forecasting cash flows required
by operations and anticipated investing and financing activities. The
Company has cash and cash equivalents at March 31, 2012 in the amount
of $36,846,945 (March 31, 2011 - $19,850,757) in order to meet shortterm business requirements. At March 31, 2012, the Company had
current liabilities of $703,372 (March 31, 2011- $861,595). Accounts
payable have contractual maturities of less than 30 days and are subject
to normal trade terms. Advances payable to related parties are without
interest or stated terms of repayment.
Interest Rate Risk
The Company’s cash and cash equivalents consist of cash held in bank
accounts, fixed income investments and guaranteed investment
certificates that earn interest at variable interest rates. Due to the shortterm nature of these financial instruments, fluctuations in market rates do
not have a significant impact on estimated fair values as of March 31,
2012. Future cash flows from interest income on cash will be affected by
interest rate fluctuations. The Company manages interest rate risk by
maintaining an investment policy that focuses primarily on preservation
of capital and liquidity.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate due to changes in foreign exchange
rates. The Company is exposed to foreign currency risk to the extent that
monetary assets and liabilities are denominated in foreign currency.
The Company is exposed to foreign currency fluctuation related to its
exploration and evaluation assets thereon, and accounts payable in US
dollar balances and Mexican pesos (“MXN”). A significant change in the
exchange rate between the Canadian dollar relative to the US dollar or
Mexican pesos could have an effect on the Company’s financial position,
results of operations and cash flows.
NEW ACCOUNTING STANDARDS
New accounting standards effective April 1, 2012
Amendments to IFRS 7 Financial Instruments: Disclosures - In October
2010, the IASB issued amendments to IFRS 7 that improve the disclosure
requirements in relation to transferred financial assets. The amendments
are effective for annual periods beginning on or after July 1, 2011, with
early adoption permitted. The Company does not anticipate this
amendment to have a significant impact on its financial statements.
IAS 12 Income taxes - In December 2010, the IASB issued an
amendment to IAS 12 that provides a practical solution to determining the
recovery of investment properties as it relates to the accounting for
deferred income taxes. This amendment is effective for annual periods
beginning on or after July 1, 2011, with early adoption permitted. The
Company does not anticipate this amendment to have a significant impact
on its financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
19
with early adoption permitted. The Company has not yet begun the process
of assessing the impact that the new standards will have on its financial
statements or whether to early adopt any of the new requirements.
IFRS 9 Financial Instruments - IFRS 9 was issued in November 2009
and contained requirements for financial assets. This standard addresses
classification and measurement of financial assets and replaces the
multiple category and measurement models in IAS 39 for debt instruments
with a new mixed measurement model having only two categories:
Amortized cost and fair value through profit or loss. IFRS 9 also replaces
the models for measuring equity instruments and such instruments are
either recognized at the fair value through profit or loss or at fair value
through other comprehensive income. Where such equity instruments are
measured at fair value through other comprehensive income, dividends
are recognized in profit or loss to the extent not clearly representing a
return of investment; however, others gains and losses (including
impairments) associated with such instruments remain in accumulated
other comprehensive income indefinitely.
IFRS 13 Fair Value Measurement - IFRS 13 is a comprehensive standard
for fair value measurement and disclosure requirements for use across
all IFRS standards. The new standard clarifies that fair value is the price
that would be received to sell an asset, or paid to transfer a liability in an
orderly transaction between market participants, at the measurement date.
It also establishes disclosures about fair value measurement. Under
existing IFRS, guidance on measuring and disclosing fair value is
dispersed among the specific standards requiring fair value measurements
and in many cases does not reflect a clear measurement basis or
consistent disclosures.
Requirements for financial liabilities were added in October 2010 and they
largely carried forward existing requirements in IAS 39, Financial
Instruments – Recognition and Measurement, except that fair value changes
due to credit risk for liabilities designated at fair value through profit and loss
would generally be recorded in other comprehensive income.
Amendments to IAS 1 Presentation of Financial Statements - The IASB
has amended IAS 1 to require entities to separate items presented in other
comprehensive income (“OCI”) into two groups, based on whether or not
items may be reclassified into profit or loss in the future. Entities that
choose to present OCI items before tax will be required to show the
amount of tax related to the two groups separately.
INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine IFRIC 20 addresses the accounting for overburden waste removal
(stripping) costs in the production phase of a surface mine. Stripping
activity may result in two types of benefits: i) inventory produced and ii)
improved access to ore that will be mined in the future. Stripping costs
associated with inventory production should be accounted for as a current
production cost in accordance with IAS 2 Inventories, and those
associated with improved access to ore should be accounted for as an
addition to, or enhancement of, an existing asset.
Amendments to other standards - In addition, there have been other
amendments to existing standards, including IAS 27 Separate Financial
Statements and IAS 28 Investments in Associates and Joint Ventures. IAS
27 addresses accounting for subsidiaries, jointly controlled entities and
associates in non-consolidated financial statements. IAS 28 has been
amended to include joint ventures in its scope and to address the changes
in IFRS 10 to IFRS 13.
Each of the new standards, IFRS 10 to 13, IFRIC 20 and the amendments
to other standards, is effective for the Company beginning on April 1, 2013
IFRS 9 is effective for the Company beginning on April 1, 2015 with early
adoption permitted. The Company has not yet begun the process of
assessing the impact that the new and amended standards will have on its
financial statements or whether to early adopt any of the new requirements.
The accounting policies in Note 2 of the March 31, 2012 financial
statement have been applied in preparing the consolidated financial
statements for the year ended March 31, 2012, the comparative
information for the year ended March 31, 2011, and the preparation of an
opening IFRS consolidated statement of financial position on the transition
date, April 1, 2010.
In preparing its opening IFRS consolidated statement of financial position
as at April 1, 2010, the Company has adjusted amounts reported
previously in consolidated financial statements prepared in accordance
with Canadian GAAP.
An explanation of how the transition from previous Canadian GAAP to
IFRS has affected the Company’s financial position, financial performance
and cash flows is set out below.
The guidance for the first time adoption of IFRS is set out in IFRS 1 ‘Firsttime Adoption of International Financial Reporting Standards’. Under IFRS
1 the IFRS are applied retrospectively at the transition date with all
adjustments to assets and liabilities as stated under Canadian GAAP
charged to deficit, unless certain exemptions are applied. The Company
has applied the following exemptions to its opening consolidated
statement of financial position dated April 1, 2010:
• IFRS 2 Share-based payment – to apply exemption to equity instruments
that were granted on or before November 7, 2002; and
INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)
(Continued)
• IFRS 3 Business Combinations – to apply exemption to business
combinations that occurred before the transition date; and
• Compound financial instruments – The Company has elected under IFRS
1 not to retrospectively separate the liability and equity components of any
compound instruments for which the liability component is no longer
outstanding at the transition date.
IFRS 1 also outlines specific guidelines that a first-time adopter must adhere
to under certain circumstances. The Company has applied the following
guidelines to its consolidated statement of financial position as at the
transition date, April 1, 2010:
Estimates
In accordance with IFRS 1, an entity’s estimates under IFRS at the date of
transition to IFRS must be consistent with estimates made for the same date
under previous Canadian GAAP, unless there is objective evidence that those
estimates were in error. The Company’s IFRS estimates as of April 1, 2010
are consistent with its Canadian GAAP estimates for the same date.
Notes on GAAP – IFRS Reconciliations
(a) IAS 12 exempts the recognition of a deferred tax liability where a
taxable temporary difference arises on a transaction which is not a
business combination, and at the time of the transaction, affects
neither accounting profit nor taxable profit/loss. Therefore the Future
Income Tax Liability previously recognized under GAAP on the
acquisition of Valley High Ventures on March 25, 2011, which was
capitalized to mineral properties, is reversed to conform with IFRS.
(b)IFRS 2 requires that, in respect of share-based awards with vesting
conditions, each tranche of an award with different vesting dates is
considered a separate grant for the calculation of fair value, and the
resulting fair value is recognized over the vesting period of the
respective tranches. In contrast, the Company recognized share-based
compensation on stock options granted prior to the transition date on
the straight-line method under Canadian GAAP.
In addition, the implementation guidance of IFRS 2 recommends that
the fair value of equity instruments issued to non-employees for
services provided to the Company, where the fair value of the
instruments cannot be directly determined by reference to the fair value
of the services provided, should be measured over the period during
which the services are rendered. Under Canadian GAAP, the Company
measured the fair value of such equity instruments at each vesting and
reporting date, rather than over the period of performance.
As noted earlier, the Company has elected to apply the exemption
allowed by IFRS 1 with respect to equity instruments issued and vested
prior to transition date. However, several adjustments were required
for options not yet fully vested at April 1, 2010 and those options
granted during the year ended March 31, 2011, in order to recognize
share-based compensation arising thereon.
(c) IAS 1 requires an entity to present, for each component of equity, a
reconciliation between the carrying amount at the beginning and end
of the period, separately disclosing each change. The Company
examined its “contributed surplus” account and concluded that as at
the April 1, 2010 transition date and the comparative dates of March
31, 2011, part of the contributed surplus related to the fair value of
options issued as share-based awards, and part to warrants issued
under private placements.
Therefore, at April 1, 2010 the fair value attributable to options and
warrants outstanding at that date was transferred from Contributed
surplus to an “Equity settled share-based payment reserve” and a
“Reserve for warrants”, respectively. The remaining balance of
contributed surplus, which reflected the fair value of options and
warrants no longer outstanding, was transferred to Deficit, as permitted
by IFRS 2.
(d)IAS 16 requires that depreciation of plant, property and equipment be
disclosed. Previously, this expense was included within the “Office,
occupancy and miscellaneous” expense on the face of the statement
of operations. Under IFRS it will now be separately disclosed thereon.
(e) On transition to IFRS, the Company elected to change its accounting
policy to expensing all exploration expenditures, so as to align itself
with policies applied by other comparable companies at a similar stage
in the mining industry.
OUTSTANDING SHARE DATA
The following is the Company’s outstanding share data as of March 31,
2012 and June 29, 2012:
Common Shares: 199,754,423 as of March 31, 2012 and 199,754,423
as of June 29, 2012
Stock Options:
Exercise Price
Per Share
September 14, 2012
$0.35
April 28, 2014
$0.25
January 28, 2015
$0.70
June 14, 2012
$0.85
June 14, 2012
$1.25
July 20, 2015
$0.65
September 3, 2015
$1.00
November 15, 2013
$1.25
March 25, 2016
$1.65
October 3, 2013
$1.50
October 3, 2016
$1.50
November 21, 2013
$1.50
May 15, 2017
$1.00
June 7, 2017
$1.00
TOTAL:
Number of Shares Number of Shares
Remaing Subject Remaining Subject
to Options
to Options
(Mar 31/12)
(Jun 27/12)
100,000
100,000
325,000
325,000
200,000
200,000
100,000
0
100,000
0
400,000
400,000
3,450,000
3,400,000
500,000
500,000
8,115,000
8,040,000
200,000
200,000
225,000
225,000
250,000
250,000
750,000
100,000
13,965,000
14,490,000
Broker’s Warrants:
Exercise Price
Per Share
November 19, 2012
$1.95
TOTAL:
Number of
Underlying
Shares
(Mar 31/12)
1,030,000
1,030,000
Number of
Underlying
Shares
(Jun 27/12)
1,030,000
1,030,000
21
COMMITMENT
On May 14, 2012, Mr. David Wolfin resigned as VP Finance of the Company.
The Company has entered into consulting agreements expiring in 2014.
The Company’s commitment for future minimum payments in respect of
these agreements is as follows:
March 31,
March 31
2012
, 2011
Not later than 1 year
$ 129,765
$15,435
Later than one year and no
later than 5 years
1,005,161
43,941
Subsequent to March 31, 2012, the Company granted 250,000 stock options
to an employee providing investor relations services. The stock options are
exercisable at $1.00 for five years and vests 25% every three months over
a twelve month period.
$1,134,926
$59,376
During the period, the Company entered into a three year contract with a
private company controlled by the CEO with a monthly payment of $25,000.
During the period, the Company entered into a three year contract with a
private company controlled by the VP Exploration with a monthly payment
of $15,000.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
Internal controls over financial reporting are designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements in accordance with IFRS. Management
is also responsible for the design of the Company’s internal control over
financial reporting in order to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial
statements for external purposes in accordance with IFRS.
The Company’s internal controls over financial reporting include policies and
procedures that: pertain to the maintenance of records that, in reasonable
detail accurately and fairly reflect the transactions and disposition of assets;
provide reasonable assurance that transactions are recorded as necessary
to permit preparation of the consolidated financial statements in accordance
with IFRS and that receipts and expenditures are being made only in
accordance with authorization of management and directors of the Company;
and provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of assets that could have a
material effect on the consolidated financial statements.
Because of their inherent limitations, internal controls over financial reporting
can provide only reasonable assurance and may not prevent or detect
misstatements. Furthermore, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
The Company’s management, under the supervision of the Chief Executive
Officer and the Chief Financial Officer, has evaluated the effectiveness of the
Company’s internal controls over financial reporting and has concluded that
internal controls over financial reporting were effective as at March 31, 2012.
There has been no change in the Company’s internal controls over financial
reporting that occurred during the most recently completed quarter that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal controls over financial reporting.
SUBSEQUENT EVENTS
On March 26, 2012, Ms. Lisa Sharp resigned as CFO and Ms. Annie Chan
was appointed CFO of the Company.
Subsequent to March 31, 2012, the Company granted 600,000 stock options
to a director, officer and employee of the Company. The stock options are
exercisable at $1.00 for five years and vest 25% every three months over a
year.
Subsequent to March 31, 2012, 325,000 stock options expired unexercised.
APPROVAL
The Board of Directors of the Company has approved the disclosure
contained in this MD&A.
Cautionary Statement
This MD&A is based on a review of the Company’s operations, financial
position and plans for the future based on facts and circumstances as of
June 29, 2012. Except for historical information or statements of fact
relating to the Company, this document contains “forward-looking
statements” within the meaning of applicable Canadian securities
regulations. Forward-looking statements are frequently, but not always,
identified by words such as "expects", "anticipates", "believes", "intends",
"estimates", "potential", "possible" and similar expressions, or statements
that events, conditions or results "will", "may", "could" or "should" occur
or be achieved. There can be no assurance that such statements will prove
to be accurate, and future events and actual results could differ materially
from those anticipated in such statements. Important factors that could
cause actual results to differ materially from our expectations are
disclosed in the Company’s documents filed from time to time via SEDAR
with the Canadian regulatory agencies to whose policies we are bound.
Forward-looking statements are based on the estimates and opinions of
management on the date the statements are made, and we do not
undertake any obligation to update forward-looking statements, except
as required by law. These statements involve known and unknown risks,
uncertainties, and other factor that may cause the Company’s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievement expressed or implied by these forward-looking statements.
For the reasons set forth above, investors should not place undue reliance
on forward-looking statements. Important factors that could cause actual
results, performance or achievements to be materially different from any
future results, performance, or achievements that may be expressed or
implied by forward-looking statements contained in this MD&A, include
but are not limited to risks and uncertainties related to international
operations; actual results of current exploration activities; actual results
of current reclamation activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined; future
prices of gold and other resources; failure of plant, equipment or
processes to operate as anticipated; accidents, labour disputes and other
risks of the mining industry; delays in obtaining governmental approvals
or financing or in the completion of development or construction activities,
as well as those risk factors outlined in the Company's most recent AIF.
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The financial statements of Levon Resources Ltd. are the responsibility of the Company’s management. The financial statements are
prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and reflect management’s best
estimates and judgment based on information currently available.
Management has developed and is maintaining a system of internal controls to ensure that the Company’s assets are
safeguarded, transactions are authorized and properly recorded and financial information is reliable.
The Board of Directors is responsible for ensuring management fulfills its responsibilities. The Audit Committee reviews the
results of the audit and the annual financial statements prior to their submission to the Board of Directors for approval.
The consolidated financial statements as at March 31, 2012 and 2011, and April 1, 2010, and its financial performance and its
cash flows for the years ended March 31, 2012 and 2011 have been audited by Smythe Ratcliffe LLP, Chartered Accountants,
and their report outlines the scope of their examination and gives their opinion on the consolidated financial statements.
“Ron Tremblay”
“Annie Chan”
Ron Tremblay
Annie Chan
CEO
CFO
Vancouver, British Columbia
June 26, 2012
FINANCIAL STATEMENTS 23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS OF LEVON RESOURCES LTD.
We have audited the accompanying consolidated financial statements of Levon Resources Ltd., which comprise the consolidated statements
of financial position as at March 31, 2012, March 31, 2011 and April 1, 2010, and the consolidated statements of operations and
comprehensive loss, change in shareholders’ equity and cash flows for the years ended March 31, 2012 and March 31, 2011, and a summary
of significant accounting policies and other explanatory information.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in
accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Levon Resources Ltd. as at
March 31, 2012, March 31, 2011 and April 1, 2010, and its financial performance and its cash flows for the years ended March 31, 2012 and
March 31, 2011 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Other Matter
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s
internal control over financial reporting as at March 31, 2012, based on the criteria established in Internal Control – Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated June 26, 2012, expressed an
unqualified opinion on the Company’s internal control over financial reporting.
Vancouver, Canada
June 26, 2012
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS OF LEVON RESOURCES LTD.
We have audited Levon Resources Ltd.’s (the “Company”) internal control over financial reporting as of March 31, 2012 based on the criteria
established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risks. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2012, based on
the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
statements of financial position of the Company as of March 31, 2012, March 31, 2011 and April 1, 2010 and the related consolidated statements
of operations and comprehensive loss, shareholders’ equity and cash flows for the years ended March 31, 2012 and March 31, 2011 and our report
dated June 26, 2012 expressed an unqualified opinion.
Chartered Accountants
Vancouver, Canada
June 26, 2012
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
March 31,
2012
March 31,
2011
(Note 17)
April 1,
2010
(Note 17)
ASSETS
Current
Cash and cash equivalents
Amounts receivable
Prepaid expenses
Investments (Note 5)
$ 37,573,441
646,917
49,773
20,486,258
$ 19,850,757
549,748
46,736
23,326
58,756,389
20,470,567
2,072,940
5,564
32,629
1,409,566
124,559,961
95,858
6,068
32,629
124,719,961
26,710
48,511
32,629
105,380
4,524
$ 184,859,967
$ 145,255,935
$
2,263,984
$
$
$
69,802
138,912
Non-current assets
Due from related parties (Note 11)
Reclamation deposits (Note 6)
Amounts receivable
Exploration and evaluation assets (Note 7)
Property and equipment (Note 8)
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities
Due to related parties (Note 11)
Total Liabilities
388,653
319,719
708,372
633,580
228,015
$
861,595
2,020,948
5,289
22,823
23,880
208,714
SHAREHOLDERS’ EQUITY
Share capital (Note 9)
Reserves
Accumulated other comprehensive loss
Deficit
230,608,666
16,464,015
(21,763)
(62,899,323)
169,689,837
24,720,954
(6,147)
(50,010,304)
26,187,285
1,259,150
(5,593)
(25,385,572)
Total Equity
184,151,595
144,394,340
2,055,270
$ 184,859,967
$ 145,255,935
Total Liabilities and Shareholders’ Equity
Approved on behalf of the Board:
“Gary
Robertson”
_______________________________
Director
Gary Robertson
“Ron Tremblay”
_______________________________ Director
Ron Tremblay
The accompanying notes are an integral part of these consolidated financial statements.
$
2,263,984
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Years ended March 31
2012
Expenses
Consulting and management fees (Note 11)
Depreciation
Exploration (Note 7)
Professional fees
Share-based payments (Note 10)
Travel
Loss before other item
$ 1,007,640
12,211
10,792,719
154,227
309,261
182,491
338,551
234,249
251,082
249,556
203,492
(13,735,479)
Other Item
Interest income
2011
(Note 17)
$
620,000
5,205
7,641,461
61,002
67,286
142,127
271,320
106,281
15,538,692
114,532
116,191
(24,684,097)
610,646
Net Loss for Year
41,996
(13,124,833)
(24,642,101)
(15,616)
(554)
Total Comprehensive Loss for Year
$(13,140,449)
$(24,642,655)
Loss Per Share, Basic and Diluted
$
$
Weighted Average Number of Common Shares Outstanding
194,269,099
Other Comprehensive Loss
Unrealized loss on investments (Note 5)
(0.07)
(0.31)
78,689,400
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Number of
Common
Shares
Balance, April 1, 2010 (Note 17)
Common shares issued for cash:
Private placement
Share issuance costs
Exercise of options
Exercise of warrants
Non-cash share issuance costs
Transfer of reserves on exercise of
warrants and options
Transfer of expired warrants and options
Shares issued on acquisition of Valley High
Ventures Ltd. (Note 4)
Net loss for the year
Unrealized loss on available-for-sale securities
Balance, March 31, 2011 (Note 17)
Common shares issued for cash:
Brokered financing
Share issuance costs
Exercise of options
Exercise of warrants
Non-cash share issuance costs
Transfer of reserves on exercise of warrants
and options
Shares issued on acquisition of
Valley High Ventures Ltd. (Note 9)
Transfer of expired warrants and options
Net loss for the year
Unrealized loss on available-for-sale securities
Balance, March 31, 2012
Accumulated
Other
Comprehensive
Income (Loss)
Deficit
Total
Shareholders’
Equity
$(5,593) $(25,385,572)
$2,055,270
Share Capital
Reserve for
Options
Reserve for
Warrants
Total
Reserves
66,547,516
$26,187,285
$ 366,021
$ 893,129
$ 1,259,150
14,805,353
265,000
8,958,484
9,065,037
(637,413)
138,750
3,723,824
-
2,038,978
-
2,038,978
-
-
-
11,104,015
(637,413)
138,750
3,723,824
-
(414,736)
-
414,736
414,736
-
-
-
-
1,112,798
-
(101,058)
(14,073)
(1,011,740)
(3,296)
(1,112,798)
(17,369)
-
17,369
-
73,322,636
-
130,514,292
-
15,538,692
-
6,599,565
-
6,599,565
15,538,692
-
(554)
(24,642,101)
-
137,113,857
(24,642,101)
15,538,692
(554)
163,898,989
$169,689,837
$15,789,582
$8,931,372
$24,720,954
$(6,147) $(50,010,304)
$144,394,340
20,600,000
925,000
14,325,443
-
40,170,000
(2,353,848)
366,000
14,464,470
(950,766)
-
950,766
950,766
-
-
40,170,000
(2,353,848)
366,000
14,464,470
-
-
9,222,973
(291,601)
(8,931,372)
(9,222,973)
-
-
-
4,991
-
-
(235,814)
251,082
-
-
(235,814)
251,082
-
(15,616)
235,814
(13,124,833)
-
251,082
(13,124,833)
(15,616)
199,754,423
$230,608,666
$15,513,249
$950,766
$16,464,015
$(21,763) $(62,899,323)
$184,151,595
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31
2012
Operating Activities
Net loss
Items not involving cash:
Depreciation
Foreign exchange gain
Changes in non-cash working capital items:
Amounts receivable and prepaid expenses
Due from related parties
$ (13,124,833)
20,089
251,082
340,678
2011
(Note 17)
$ (24,642,101)
5,205
15,538,692
(166)
(1,509,772)
(244,927)
92,208
(148,300)
518,422
131,546
Cash Used in Operating Activities
(14,175,475)
(8,596,702)
Investing Activities
Recovery of expenditures on exploration and evaluation asset
Equipment acquisitions
Purchase of investments
Cash acquired on acquisition of Valley High Ventures Ltd., net of transaction costs
Advances from Valley High Ventures Ltd.
160,000
(89,237)
(20,478,548)
-
(27,391)
5,178,768
6,945,792
Cash Provided by (Used in) Investing Activities
(20,407,785)
12,097,169
Financing Activity
Issue of share capital for cash, net of issuance costs
52,646,622
14,329,176
Cash Provided by Financing Activity
52,646,622
14,329,176
Foreign Exchange Effect on Cash
Inflow of Cash
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Supplementary Information
Interest paid
Income tax paid
(340,678)
166
17,722,684
19,850,757
17,829,809
2,020,948
$ 37,573,441
$ 19,850,757
$
$
-
$
$
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 31, 2012 and 2011 (Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS
Levon Resources Ltd. (the “Company”) was incorporated under the laws
of British Columbia on April 9, 1965. The Company is an exploration stage
public company whose principal business activities are the exploration for
and development of exploration and evaluation properties in Mexico. There
have been no significant revenues generated from these activities to date.
The address of the Company’s registered office is Suite 900 – 570 Granville
Street, Vancouver, British Columbia V6C 3P1.
The business of mining and exploring for minerals involves a high degree
of risk and there can be no assurance that current exploration programs will
result in profitable mining operations. The recoverability of the carrying value
of exploration and evaluation assets and the Company's ability to continue
as a going concern is dependent upon the preservation of its interest in the
underlying properties, the discovery of economically recoverable reserves,
the achievement of profitable operations or the ability of the Company to
raise alternative financing.
2. BASIS OF PRESENTATION AND FIRST TIME ADOPTION OF IFRS
Statement of compliance and conversion to International Financial
Reporting Standards
These consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards (“IFRS”), as issued by the
International Accounting Standards Board (“IASB”). These are the
Company’s first IFRS annual consolidated financial statements to be
presented in accordance with IFRS, accordingly IFRS 1 First-time adoption
of International Financial Reporting Standards has been applied. Previously
the Company prepared its consolidated annual and interim financial
statements in accordance with Canadian generally accepted accounting
principles (“GAAP”). Note 17 contains descriptions of the effect of the
transition from Canadian GAAP to IFRS on equity, operations and
comprehensive loss along with reconciliations of the consolidated
statements of financial position as at April 1, 2010 and March 31, 2011 and
the consolidated statements of operations and comprehensive loss and cash
flows for the year ended March 31, 2011.
Basis of presentation
These consolidated financial statements are expressed in Canadian dollars,
the Company’s functional currency, and have been prepared on a historical
cost basis, except for financial instruments that have been measured at fair
value. In addition, these consolidated financial statements have been
prepared using the accrual basis of accounting. The accounting policies set
out in Note 3 have been applied consistently to all years presented in these
consolidated financial statements as if the policies have always been in
effect, subject to certain IFRS transition elections described in Note 17.
Approval of the consolidated financial statements
These consolidated financial statements were reviewed by the Audit
Committee and approved and authorized for issue by the Board of Directors
on June 26, 2012.
Foreign currency transactions
Transactions in currencies other than the functional currency are recorded
at the rates of exchange prevailing on the dates of the transactions. At each
financial position reporting date, monetary assets and liabilities that are
denominated in foreign currencies are translated at the rates prevailing at
the date of the consolidated statement of financial position. Non-monetary
items that are measured in terms of historical cost in a foreign currency are
not re-translated.
Significant accounting judgements and estimates
The preparation of these consolidated financial statements requires
management to make estimates and judgments that affect the reported
amounts of assets and liabilities at the date of the financial statements and
reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates under different assumptions and conditions.
Significant assumptions about the future and other sources of estimated
uncertainty that management has made at the consolidated statement of
financial position date, that could result in a material adjustment to the carrying
amounts of assets and liabilities, in the event that actual results differ from
assumptions made, relate to, but are not limited to, the following:
• the recoverability of amounts receivable;
• the carrying value and recoverable amount of exploration and evaluation
assets;
• the recoverability and estimated useful lives of property and equipment;
• the recognition and measurement of deferred tax assets and liabilities;
• the provisions including the estimated reclamation provisions and
environmental obligations;
• the determination of the assumptions used in the calculation of sharebased payments; and
• the allocation of proceeds for unit offerings between share capital and
warrants.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries.
Valley High Ventures Ltd. (“VHV”)
Citrine Investment Holdings Limited
Minera Titan S.A. de C.V
Aphrodite Asset Holdings Ltd
Turney Assets Limited
Mineral El Camino S.A. de C.V.
Administracion de Projectos Levon
en Mexico S.A. de C.V.
Jurisdiction
British Columbia; Canada
British Virgin Islands
Mexico
Mexico
Mexico
Nature of Operations
Holding Company
Holding Company
Exploration Company
Holding Company
Holding Company
Holding Company
Mexican operations
administration
Intercompany balances and transactions, including unrealized income and
expenses arising from intercompany transactions, are eliminated in
preparing the consolidated financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Financial instruments
All financial assets are initially recorded at fair value and classified into one
of four categories: held-to-maturity, available-for-sale, loans and receivables
or fair value through profit or loss (“FVTPL”). All financial liabilities are initially
recorded at fair value and classified as either FVTPL or other financial
liabilities. Financial instruments comprise cash and cash equivalents,
investments, due from related parties, due to related parties and accounts
payable. At initial recognition management has classified financial assets
and liabilities as follows.
The Company has classified its cash and cash equivalents as FVTPL.
Certain investments are classified as available-for-sale and changes in fair
value is recorded through other comprehensive income. Certain investments
are classified as held-to-maturity, which is measured at amortized cost
using the effective interest method. Amounts due from related parties are
classified as loans and receivables. Accounts payable and amounts due to
related parties are classified as other liabilities.
Cash and cash equivalents comprises cash, bank deposits, cashable
guaranteed investment certificates (“GIC”) and short-term investments that
are readily converted to known amounts of cash with original maturities of
three months or less.
Exploration and evaluation assets
The Company is in the exploration stage with respect to its mineral
properties. The Company capitalizes all costs relating to the acquisition of
mineral claims, and expenses all costs relating to the exploration and
evaluation of mineral claims.
All exploration and evaluation expenditures are expensed until properties are
determined to contain economically viable reserves. When economically viable
reserves have been determined, technical feasibility has been determined and
the decision to proceed with development has been approved, the subsequent
costs incurred for the development of that project will be capitalized as mining
properties, a component of property, plant and equipment.
All capitalized exploration and evaluation assets are monitored for indications
of impairment. Where a potential impairment is indicated, assessments are
performed for each area of interest. To the extent that an exploration
expenditure and evaluation assets are not expected to be recovered, they
are charged to operations.
Property and equipment
Property and equipment are recorded at historical cost less accumulated
depreciation. Historical costs include expenditures that are directly
attributable to bringing the asset to a location and condition necessary to
operate in a manner intended by management. Such costs are accumulated
as construction-in-progress until the asset is available for use, at which
point the asset is classified as plant and equipment. Once commercial
production has commenced, mine, mill, machinery, plant facilities and
certain equipment will be depreciated using the units of production method,
if sufficient reserve information is available or the straight-line method over
their estimated useful lives, not to exceed the life of the mine to which the
assets related.
Depreciation is calculated on a declining-balance basis at the following
annual rates:
Computer equipment
Furniture and equipment
Vehicles
Machinery equipment
30%
20%
30%
30%
Impairment
At each reporting date, the carrying amounts of the Company’s long-lived
assets are reviewed to determine whether there is any indication that those
assets are impaired. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment,
if any. Where the asset does not generate cash flows that are independent
from other assets, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
An asset’s recoverable amount is the higher of fair value less costs to sell
and value in use. Fair value is determined as the amount that would be
obtained from the sale of the asset in an arm’s length transaction between
knowledgeable and willing parties. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. If the recoverable amount of an
asset or cash generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset is reduced to its recoverable
amount and the impairment loss is recognized in profit or loss for the period.
Where an impairment loss subsequently reverses, the carrying amount of
the asset (or cash-generating unit) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset (or cash-generating unit) in
prior years. A reversal of an impairment loss is recognized immediately in
profit or loss.
Provisions
Provisions are recognized where a legal or constructive obligation has been
incurred as a result of past events; it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation; and a
reliable estimate of the amount of the obligation can be made. If material,
provisions are measured at the present value of the expenditures expected
to be required to settle the obligation. The increase in any provision due to
the passage of time is recognized as accretion expense.
Reclamation provision
The Company records the present value of estimated costs of legal and
constructive obligations required to restore mineral properties in the period
in which the obligation is incurred. The nature of these restoration activities
includes dismantling and removing structures, rehabilitating mines and
restoration, reclamation and re-vegetation of affected areas.
The fair value of the liability for a rehabilitation provision is recorded when
it is incurred. When the liability is initially recognized, the present value of
the estimated cost is capitalized by increasing the carrying amount of the
related exploration and evaluation assets. Over time, the discounted liability
is increased for the change in present value based on the discount rates
that reflect current market assessments and the risks specific to the liability,
which is accreted over time through periodic charges to profit or loss.
Additional disturbances or changes in rehabilitation costs will be recognized
as additions or charges to the corresponding assets and rehabilitation
liability when they occur.
Accounting for equity units
Proceeds received on the issuance of units, consisting of common shares
and warrants, are allocated based on their relative fair values, calculated
using the Black-Scholes option pricing model for warrants and the market
price for common shares.
The share option plan allows Company directors, employees and consultants
to acquire shares of the Company. The fair value of options granted is
recognized as a share-based payments expense with a corresponding
increase in equity. An individual is classified as an employee when the
individual is an employee for legal or tax purposes (direct employee) or
provides services similar to those performed by a direct employee.
The fair value of employee options is measured at the option’s grant date, and
the fair value of non-employee options is measured at the date or over the
period during which goods or services are received. The fair value of each
tranche of options granted, which do not vest immediately on grant, is
recognized using the graded vesting method over the period during which the
options vest. The fair value of the options granted is measured using the BlackScholes option pricing model taking into account the terms and conditions
upon which the options were granted. At each reporting date, the amount
recognized as an expense is adjusted to reflect the actual number of share
options that are expected to vest.
Share-based payments is credited to the reserve for options. If the options are
later exercised, their fair value is transferred from the reserve to share capital.
If the options expire unexercised or are forfeited or cancelled subsequent to
vesting, the initial fair value is transferred from the reserve to deficit.
Loss per share
The Company presents basic and diluted loss per share data for its common
shares, calculated by dividing the loss attributable to common shareholders
of the Company by the weighted average number of shares outstanding
during the period. Diluted loss per share is determined by adjusting the loss
attributable to common shareholders and the weighted average number of
shares outstanding for the effects of all dilutive potential common shares.
In the Company's case, diluted loss per share is the same as basic loss per
share, as the effects of including all outstanding options and warrants would
be anti-dilutive.
Income taxes
Income tax on the profit or loss for the years presented comprises current
and deferred tax. Income tax is recognized in profit or loss, except to the
extent that it relates to items recognized directly in equity, in which case it
is recognized as equity.
Deferred tax is provided using the statement of financial position asset and
liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The amount of deferred tax provided
is based on the expected manner of realization or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively
enacted at the statement of financial position date.
A deferred tax asset is recognized only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilized.
To the extent that the Company does not consider it probable that a deferred
tax asset will be recovered, the deferred tax asset is reduced.
New accounting standards and interpretations not yet adopted
Certain new standards, interpretations and amendments to existing
standards have been issued by the IASB or the International Financial
Reporting Interpretations Committee (“IFRIC”) that are mandatory for
accounting periods beginning after April 1, 2012, or later periods. Some
updates that are not applicable or are not consequential to the Company
may have been excluded from the list below.
Amendments to IFRS 7 Financial Instruments: Disclosures - In October
2010, the IASB issued amendments to IFRS 7 that improve the disclosure
requirements in relation to transferred financial assets. The amendments
are effective for annual periods beginning on or after July 1, 2011, with early
adoption permitted. The Company does not anticipate this amendment to
have a significant impact on its consolidated financial statements.
IAS 12 Income Taxes - In December 2010, the IASB issued an amendment
to IAS 12 that provides a practical solution to determining the recovery of
investment properties as it relates to the accounting for deferred income
taxes. This amendment is effective for annual periods beginning on or after
July 1, 2011, with early adoption permitted. The Company does not
anticipate this amendment to have a significant impact on its consolidated
financial statements.
IFRS 11 Joint Arrangements - IFRS 11 requires a venturer to classify its
interest in a joint arrangement as a joint venture or joint operation. Joint
ventures will be accounted for using the equity method of accounting
whereas for a joint operation the venturer will recognize its share of the
assets, liabilities, revenue and expenses of the joint operation. Under existing
IFRS, entities have the choice to proportionately consolidate or equity
account for interests in joint ventures. IFRS 11 supersedes IAS 31 Interests
in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-monetary
Contributions by Venturers.
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
IFRS 13 Fair Value Measurement - IFRS 13 is a comprehensive standard
for fair value measurement and disclosure requirements for use across all
IFRS standards. The new standard clarifies that fair value is the price that
would be received to sell an asset, or paid to transfer a liability in an orderly
transaction between market participants, at the measurement date. It also
establishes disclosures about fair value measurement. Under existing IFRS,
guidance on measuring and disclosing fair value is dispersed among the
specific standards requiring fair value measurements and in many cases
does not reflect a clear measurement basis or consistent disclosures.
Amendments to IAS 1 Presentation of Financial Statements - The IASB
has amended IAS 1 to require entities to separate items presented in other
comprehensive income (“OCI”) into two groups, based on whether or not
items may be reclassified into profit or loss in the future. Entities that choose
to present OCI items before tax will be required to show the amount of tax
related to the two groups separately.
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine IFRIC 20 addresses the accounting for overburden waste removal (stripping)
costs in the production phase of a surface mine. Stripping activity may result
in two types of benefits: i) inventory produced and ii) improved access to
ore that will be mined in the future. Stripping costs associated with inventory
production should be accounted for as a current production cost in
accordance with IAS 2 Inventories, and those associated with improved
access to ore should be accounted for as an addition to, or enhancement
of, an existing asset.
Amendments to other standards - In addition, there have been other
amendments to existing standards, including IAS 27 Separate Financial
Statements and IAS 28 Investments in Associates and Joint Ventures. IAS
27 addresses accounting for subsidiaries, jointly controlled entities and
associates in non-consolidated financial statements. IAS 28 has been
amended to include joint ventures in its scope and to address the changes
in IFRS 10 to IFRS 13.
Each of the new standards, IFRS 10 to 13, IFRIC 20 and the amendments
to other standards, is effective for the Company beginning on April 1, 2013
with early adoption permitted. The Company has not yet begun the process
of assessing the impact that the new standards will have on its consolidated
financial statements or whether to early-adopt any of the new requirements.
IFRS 9 Financial Instruments - IFRS 9 was issued in November 2009 and
contained requirements for financial assets. This standard addresses
classification and measurement of financial assets and replaces the mult
iple category and measurement models in IAS 39 for debt instruments with
a new mixed measurement model having only two categories: amortized
cost and FVTPL. IFRS 9 also replaces the models for measuring equity
instruments and such instruments are either recognized at the FVTPL or at
fair value through other comprehensive income. Where such equity
instruments are measured at fair value through other comprehensive
income, dividends are recognized in profit or loss to the extent not clearly
representing a return of investment; however, others gains and losses
(including impairments) associated with such instruments remain in
accumulated other comprehensive income indefinitely.
Requirements for financial liabilities were added in October 2010 and they
largely carried forward existing requirements in IAS 39 Financial Instruments
– Recognition and Measurement, except that fair value changes due to credit
risk for liabilities designated at FVTPL would generally be recorded in OCI.
IFRS 9 is effective for the Company beginning on April 1, 2015 with early
adoption permitted. The Company has not yet begun the process of
assessing the impact that the new and amended standards will have on its
consolidated financial statements or whether to early-adopt any of the new
requirements.
4. ACQUISITION
On March 25, 2011, the Company acquired all the shares of VHV pursuant
to a court-approved plan of arrangement (the “Arrangement”) providing the
Company with 100% ownership in the Cordero Property.
Under the terms of the Arrangement, each former VHV shareholder received
1.0 share of the Company and 0.125 of a share of a new exploration
company, Bearing Resources Ltd. ("Bearing"), for each VHV share held. In
accordance with their terms, outstanding warrants of VHV were
automatically adjusted so that upon exercise, subsequent to completion of
the transaction, for each VHV share that would previously have been issued,
the warrant holder will receive one common share of the Company, and
instead of receiving 0.125 of a Bearing share, the exercise price of the
warrant will be reduced by the fair value of 0.125 of a Bearing share.
As consideration for the acquisition, a total of 73,322,636 common shares
were issued to VHV shareholders at a fair value of $130,514,292 based on
the market price of the Company’s common shares on March 25, 2011,
and 6,259,550 warrants were issued to replace the old warrants of VHV on
a one-to-one basis at a fair value of $6,599,565 based on the Black-Scholes
option pricing model. This transaction has been accounted for as an
acquisition of assets. The excess of the consideration given over the fair
value of the assets and liabilities acquired has been allocated to exploration
and evaluation assets. The allocation of the consideration given and net
assets acquired of this transaction are summarized as follows:
Fair value of common shares issued
Fair value of replacement warrants
Transaction costs
Settlement of pre-existing relationship
$ 130,514,292
6,599,565
1,967,388
(6,945,792)
Total consideration
$ 132,135,453
Cash
Amounts receivable
Prepaid expenses
$
Net assets acquired
$ 132,135,453
7,146,156
407,272
12,800
124,614,581
(45,356)
5. INVESTMENTS
6. RECLAMATION DEPOSITS
At March 31, 2012, the Company held investments as follows:
The Company has pledged specified term deposits as security for
reclamation permits, as required by certain government agencies. The
Company has a varying number of deposits on hand ranging from $1,000
to $6,000 with maturity dates ranging from July 27, 2012 to November 1,
2013 and interest rates ranging from 0.70% to 0.75%.
Accumulated
Unrealized
Gains
Cost
(Losses)
Quantity
Available-for-sale
Mill Bay Ventures Inc.
Avino Silver & Gold
Mines Ltd.
Omega Equities Corp.
(at nominal value)
34,897
$
27,918
$(25,126)
$2,792
1,554
3,363
4,917
57,000
197,500
1
-
1
29,473
$(21,763)
$7,710
$20,441,902
$36,646* 20,478,548
$20,486,258
At March 31, 2011, the Company held investments as follows:
Quantity
Accumulated
Unrealized
Gains
Cost
(Losses)
Fair
Value
34,897
$ 27,918 $ (18,495)
$ 9,423
2,200
57,000
1,554
1
$ 29,473
12,348
$ (6,147)
Cordero Sanson
Balance, April 1, 2010
Costs incurred during the year (Note 4)
Costs recovered during the year
1
$23,326
Quantity
Fair
Value
348,978
$ 27,918 $ (6,979)
$ 20,939
57,000
1,554
1
$ 29,473
1,386
-
$124,559,961
Cordero Sanson
(Note 7(c))
$ 1,595,134
4,260,933
591,319
4,345,333
Assays
Drilling and exploration
General supplies and services
Geological and management services
$ 10,792,719
13,902
Accumulated
Unrealized
Gains
Cost
(Losses)
2,200
105,380
124,614,581
124,719,961
(160,000)
The Company incurred the following exploration expenditures, which were
expensed in the consolidated statement of operations for the year ended
March 31, 2011:
Congress
(Note 7(a))
Cordero
Sanson
(Note 7(c))
Total
Assays
Assessment, permits and
filing fees
Drilling and exploration
General supplies and services
Geological and management
services
$ 2,373
$ 530,935
$ 533,308
-
273,894
5,877,712
126,671
273,894
5,877,712
126,671
-
829,876
829,876
$
At April 1, 2010, the Company held investments as follows:
Available-for-sale
Avino Silver & Gold
Mines Ltd.
(at nominal value)
$
The Company incurred the following exploration expenditures, which were
expensed in the consolidated statement of operations for the year ended
March 31, 2012:
* Accrued interest
Available-for-sale
Avino Silver & Gold
Mines Ltd.
(at nominal value)
7. EXPLORATION AND EVALUATION ASSETS
The Company has capitlized the following acquisition expenditures:
2,200
$
Held-to-maturity
T-Bill – 4.50% interest
Fair
Value
2,940
1
$ (5,593) $ 23,880
Avino Silver & Gold Mines Ltd. and Mill Bay Ventures Inc. have common
directors with the Company. During the year ended March 31, 2011, Mill
Bay Ventures Inc. had a 10:1 share consolidation.
2,373
$ 7,639,088 $7,641,461
(a)Congress claims
The Company owns a 50% leasehold interest in 45 claims in the Lillooet
Mining Division, British Columbia.
7. EXPLORATION AND EVALUATION ASSETS (Cont’d)
The Congress claims are subject to a Joint Venture Agreement dated
February 25,1983 between the Company and Veronex Resources Ltd.
(“Veronex”). Veronex has earned a 50% net interest in the claims, net of
a 5% net smelter royalty (“NSR”) held by the Company, by expending
$1,000,000 in a prior year. All subsequent expenditures are to be
contributed equally by the Company and Veronex. The Company is
looking to reacquire Veronex’s interest in the claims, as Veronex had
transferred its interest to another company against the terms of the
original agreement and had not complied with other terms of agreement.
(b)Gold Bridge claims (BRX Project)
The Company owns a 50% interest in 74 mineral claims in the Gold
Bridge area, Lillooet Mining Division, British Columbia. The claims remain
in good standing until December 2014.
(c)Cordero Sanson
The Cordero Sanson Property (“Cordero”) is located near Hidalgo Del
Parral, Chihuahua, Mexico. The Cordero mining claims are comprised of
claims wholly-owned by VHV by agreement with long-standing ranch
families and small local mining companies, and certain other claims that
were staked by the Company.
During the year ended March 31, 2011, the Company acquired 100%
ownership of the property by way of the acquisition of VHV (Note 4).
(d)Other claims include the Eagle Ruf and Norma Sass and Wayside as
described below:
(i) Eagle claims
The Company holds a 50% interest in 26 lode mining claims located
in Lander County, Nevada. The claims are subject to a 3% NSR.
(ii) Ruf and Norma Sass properties
In 2003, the Company acquired from Coral Resource Inc. (“Coral”),
a public company with common directors and management, an
undivided one-third interest in 54 mineral claims known as the Ruf
and Norma Sass properties located in Lander County, Nevada.
A third party holds a 3% NSR on the production from certain of the
claims, up to a limit of US$1,250,000.
(iii) Wayside claims
The Company owns 24 mineral claims in the Lillooet Mining Division,
British Columbia.
Realization of assets
The investment in and expenditures on exploration and evaluation assets
comprise a significant portion of the Company’s assets. Realization of the
Company’s investment in these assets is dependent upon the establishment
of legal ownership, the attainment of successful production from the
properties or from the proceeds of their disposal.
Mineral exploration and development is highly speculative and involves
inherent risks. While the rewards if an ore body is discovered can be
substantial, few properties that are explored are ultimately developed into
producing mines. There can be no assurance that current exploration
programs will result in the discovery of economically viable quantities of ore.
Title to exploration and evaluation assets
Although the Company has taken steps to verify title to exploration and
evaluation assets in which it has an interest, in accordance with industry
standards for the current stage of exploration of such properties, these
procedures do not guarantee the Company’s title. Property title may be
subject to unregistered prior agreements or transfers and title may be
affected by an undetected defect.
Environmental
Environmental legislation is becoming increasingly stringent and costs and
expenses of regulatory compliance are increasing. The impact of new and
future environmental legislation on the Company’s operations may cause
additional expenses and restrictions. If the restrictions adversely affect the
scope of exploration and development on the mineral properties, the
potential for production on the property may be diminished or negated.
The Company is subject to the laws and regulations relating to environmental
matters in all jurisdictions in which it operates, including provisions relating
to property reclamation, discharge of hazardous material and other matters.
The Company may also be held liable should environmental problems be
discovered that were caused by former owners and operators of its
properties and properties in which it has previously had an interest. The
Company conducts its mineral exploration activities in compliance with
applicable environmental protection legislation. The Company is not aware
of any existing environmental problems related to any of its current or former
properties that may result in material liability to the Company.
8. PROPERTY AND EQUIPMENT
Computer
equipment
$
Furniture
and
equipment
$
COST
Balance at April 1, 2010
Additions
Balance at March 31, 2011
Additions
2,256
4,735
6,991
850
7,841
8,443
8,443
22,072
30,515
22,656
22,656
22,656
66,315
66,315
10,699
27,391
38,090
89,237
127,327
ACCUMULATED DEPRECIATION
Balance at April 1, 2010
Depreciation
Depreciation
338
1,285
1,623
1,738
3,361
5,837
520
6,357
2,621
8,978
3,400
3,400
5,777
9,177
9,953
9,953
6,175
5,205
11,380
20,089
31,469
CARRYING AMOUNTS
At April 1, 2010
At March 31, 2011
At March 31, 2012
1,918
5,368
4,480
2,606
2,086
21,537
19,256
13,479
56,362
4,524
26,710
95,858
Machinery
Vehicles equipment
$
$
TOTAL
$
Of the depreciation balance of $20,089, $12,211 was expensed as depreciation expense and
the remaining balance of $7,878 was expensed as exploration expenditures.
9. SHARE CAPITAL
Authorized
Unlimited number of common shares without par value
Issued
On May 19, 2011, the Company completed a short-form prospectus financing issuing
20,600,000 common shares at a price of $1.95 per common share for gross proceeds of
$40,170,000. The underwriters received a cash commission of 5.0% of the gross proceeds
raised through the financing and common share purchase warrants equal to 5.0% of the number
of common shares issued under the financing. Total share issuance costs of $3,304,614 were
incurred, including cash commission of $2,008,500 and 1,030,000 broker warrants, exercisable
at a price of $1.95 until November 19, 2012, valued at $950,766. The fair value of the broker
warrants was estimated using the Black-Scholes option pricing model with the following
assumptions: risk-free interest rate of 1.59%, dividend yield of nil, volatility of 83.82% and an
expected life of 18 months.
925,000 stock options were exercised for gross proceeds of $366,000. The Company reallocated
the fair value of these options previously recorded in the amount of $291,601 from reserve for
options to share capital.
13,558,723 warrants were exercised for gross proceeds of $13,697,750. The Company
reallocated the fair value of these warrants previously recorded in the amount of $7,801,211
from reserve for warrants to share capital.
766,720 broker warrants were exercised for gross proceeds of $766,720. The Company
reallocated the fair value of these warrants previously recorded in the amount of $298,097 from
reserve for warrants to share capital.
An additional 4,991 common shares were granted to a
former VHV shareholder. The additional shares were
granted to correct and reflect the number of common
shares that the former VHV shareholder should have
received pursuant to the acquisition as described in Note
4. No fair value was assigned to these common shares
on the basis that the fair value of these shares is part of
the $130,514,292 fair value as described in Note 4.
On August 31, 2010, the Company completed a
brokered private placement of 13,334,000 units at a
price of $0.75 per unit for gross proceeds of
$10,000,500 and a non-brokered private placement
of 1,471,353 units at a price of $0.75 per unit for
gross proceeds of $1,103,515. Each unit consisted
of one common share and one-half of one common
share purchase warrant. One whole warrant is
exercisable into one additional common share at a
price of $1.20 until February 29, 2012. The proceeds
of the private placement have been allocated using the
relative fair value method resulting in $9,065,037
recorded as share capital and $2,038,978 as reserve
for warrants. The fair value of the warrants were
valued using the Black-Scholes option pricing model
with the following assumptions: risk-free interest rate
of 1.23%, dividend yield of nil, volatility of 106.80%
and an expected life of 18 months. Total share
issuance costs of $1,052,149 were incurred for the
private placement, including cash commission of
$525,026 and 1,066,720 broker warrants, exercisable
at a price of $1.00 until August 31, 2011, valued at
$414,736. The fair value of the broker warrants were
valued using the Black-Scholes option pricing model
with the following assumptions: risk-free interest rate
of 1.23%, dividend yield of nil, volatility of 96.65% and
an expected life of one year.
8,958,484 warrants were exercised for gross
proceeds of $3,723,824. The Company reallocated
the fair value of these warrants previously recorded in
the amount of $1,011,740 from reserve for warrants
to share capital.
An amount of 265,000 stock options were exercised
for gross proceeds of $138,750. The Company
reallocated the fair value of these options previously
recorded in the amount of $101,058 from reserve for
options to share capital.
9. SHARE CAPITAL (Cont’d)
Share purchase warrants
For the years ended March 31, 2012 and 2011, share purchase warrant activity is summarized
as follows:
Underlying Shares Weighted Average
Exercise Price
Balance, April 1, 2010
8,698,484
$ 0.35
Issued
8,469,393
$ 1.17
Issued on acquisition of VHV
6,259,550
$ 0.78
Exercised
(8,958,484)
$ 0.42
Expired
(55,000)
$ 0.35
14,413,943
$ 1.01
Issued
1,030,000
$ 1.95
Exercised
(14,325,443)
$ 1.01
Expired
(88,500)
$ 0.69
1,030,000
$ 1.95
Details of share purchase warrants outstanding as of March 31, 2012 and 2011 are:
Expiry Date
Exercise Price
per Share
June 21, 2011
June 21, 2011
August 31, 2011
February 29, 2012
April 8, 2012
April 8, 2012
November 19, 2012
$ 0.51
$ 0.60
$ 1.00
$ 1.20
$ 0.79
$ 0.92
$ 1.95
Warrants Outstanding and
Exercisable
March 31, 2012
March 31, 2011
1,030,000
1,030,000
90,000
2,244,750
766,720
7,387,673
844,800
3,080,000
14,413,943
Stock options
The Company established a stock option plan in 2004 under which it may grant stock options
totaling in aggregate up to 10% of the Company’s total number of shares issued and outstanding
on a non-diluted basis. The stock option plan provides for the granting of stock options to
employees and persons providing investor relations or consulting services up to a limit of 5%
and 2%, respectively, of the Company’s total number of issued and outstanding shares per year.
The stock options are fully vested on the date of grant, except those issued to persons providing
investor relations services, which vest over a period of one year. The option price must be greater
than or equal to the discounted market price on the grant date and the option expiry date cannot
exceed five years from the grant date.
For the years ended March 31, 2012 and 2011, stock option activity is summarized as follows:
Underlying Shares
Stock options outstanding, April 1, 2010
Granted
Exercised
Expired
Stock options outstanding, March 31, 2011
Granted
Exercised
Expired
1,900,000
13,465,000
(265,000)
(225,000)
14,875,000
675,000
(925,000)
(660,000)
Stock options outstanding, March 31, 2012
13,965,000
Weighted Average
Exercise Price
$ 0.38
$ 1.40
$ 0.52
$ 0.49
$ 1.30
$ 1.50
$ 0.40
$ 0.95
$ 1.38
A summary of stock options outstanding and exercisable as at March 31, 2012 and 2011 is as follows:
Exercise
Price
April 25, 2011
October 2, 2011
November 15, 2011
November 15, 2011
November 15, 2011
March 15, 2012
May 1, 2012
May 1, 2012
June 14, 2012
June 14, 2012
September 14, 2012
September 14, 2012
October 3, 2013
November 15, 2013
November 21, 2013
April 28, 2014
January 28, 2015
July 20, 2015
September 3, 2015
March 25, 2016
October 3, 2016
$ 0.21
$ 0.10
$ 1.35
$ 1.50
$ 2.00
$ 0.70
$ 0.85
$ 1.25
$ 0.85
$ 1.25
$ 0.35
$ 0.50
$ 1.50
$ 1.25
$ 1.50
$ 0.25
$ 0.70
$ 0.65
$ 1.00
$ 1.65
$ 1.50
Stock Options Outstanding
March 31
March 31,
2012
2011
Stock Options Exercisable
March 31,
March 31,
2012
2011
100,000
100,000
100,000
200,000
500,000
250,000
325,000
200,000
400,000
3,450,000
8,115,000
225,000
350,000
150,000
50,000
50,000
50,000
235,000
100,000
100,000
100,000
100,000
150,000
50,000
500,000
325,000
200,000
700,000
3,450,000
8,215,000
-
100,000
100,000
100,000
50,000
500,000
62,500
325,000
200,000
400,000
3,450,000
8,115,000
56,250
350,000
150,000
18,750
18,750
18,750
235,000
91,667
91,667
79,167
79,167
150,000
50,000
187,500
325,000
200,000
700,000
3,450,000
8,215,000
-
13,965,000
14,875,000
13,458,750
14,410,418
10. SHARE BASED PAYMENTS
During the year ended March 31, 2012, the Company granted
675,000 stock options exercisable at $1.50 ranging from two
to five years to consultants of the Company.
During the year ended March 31, 2011, the Company granted
13,465,000 stock options exercisable at prices ranging from
$0.65 to $2.00, ranging from one to five years, to directors,
officers, employees and consultants.
The Company recorded share-based payments of $251,082
(2011 - $15,538,692) on options issued, which vested
during the year.
Option pricing requires the use of highly subjective estimates
and assumptions including the expected stock price volatility.
Changes in the underlying assumptions can materially affect
the fair value estimates. The fair value of the options re-valued
and granted to officers, directors, consultants and employees
was calculated using the Black-Scholes model with following
weighted average assumptions:
2012
Weighted average assumptions:
Fair value at grant date
Risk-free interest rate
Expected dividend yield
Expected option life (years)
Expected share price volatility
2011
$ 0.54
$1.18
1.02%
2.43%
3.00
4.74
91.25% 114.41%
11. RELATED PARTY TRANSACTIONS
(a)$326,263 (2011 - $159,267) was charged to the
Company for office, occupancy and miscellaneous costs;
shareholder relations and promotion; travel; salaries and
benefits; and administrative services paid on behalf of the
Company by Oniva International Services Corp. (“Oniva”),
a private company owned by the Company and five other
reporting issuers having common directors.
(b)$6,291 (2011 - $3,386) was charged to the Company for
exploration costs associated with the Company’s mineral
properties in the state of Nevada from a public company
with common directors.
11. RELATED PARTY TRANSACTIONS (Cont’d)
12. SEGMENTED INFORMATION
(c)$10,000 (2011 - $Nil) was paid for consulting fees to a private company
controlled by a former officer of the Company.
The Company takes part in a cost-sharing arrangement to reimburse Oniva
for a variable percentage of its overhead expenses, to reimburse 100% of
its out-of-pocket expenses incurred on behalf of the Company, and to pay
a percentage fee based on the total overhead and corporate expenses. The
agreement may be terminated with one month’s notice by either party
Due from related parties consists of the following:
March 31,
2012
March 31,
2011
April 1
2010
$ 5,564
-
$ 5,564
504
-
$ 5,564
42,947
$ 5,564
$6,068
$ 48,511
ABC Drilling (i)
Frobisher Securities Inc. (i)
Stone’s Throw Capital (ii)
The Company operates in one reportable operating segment, being the
acquisition, exploration and development of mineral properties.
The Company has non-current assets, excluding financial instruments, in
the following geographic locations:
March 31,
2012
Canada
Mexico
$
128,487 $
59,339
124,559,961 124,719,961
$124,688,448 $124,779,300
13. COMMITMENTS
The Company has entered into consulting agreements expiring in 2014. The
Company’s commitment for future minimum payments in respect of these
agreements is as follows:
March 31,
2012
March 31,
2011
$ 129,765
$ 15,435
1,005,161
43,941
$ 1,134,926
$ 59,376
Due to related parties consists of the following:
March 31,
2012
Chevillion Exploration. (ii)
$225,147
Coral Gold Resources Ltd. (iii)
27,926
Oniva (i)
66,646
March 31,
2011
$135,930
57,901
34,184
April 1
2010
$57,698
56,788
24,426
$319,719
$228,015
$138,912
(i) Oniva, ABC Drilling and Frobisher Securities Inc. are private companies
related by way of common management and directors.
(ii) Chevillion Exploration and Stone’s Throw Capital are private companies
controlled by a director and officer of the Company.
(iii) Coral Gold Resources Ltd. is a public company related by way of
common directors.
Accounts payable includes $13,063 (2011 - $6,773) owed to a public
company related by way of common directors and $52,606 (2011 $20,145) owed to a private company related by way of common
management and directors. Accrued liabilities includes $139,500 (2011 $Nil) owed to a private company controlled by a director and officer of the
Company.
Related party transactions are measured at the estimated fair values of the
services provided or goods received.
Management Transactions
The Company has identified its directors and certain senior officers as its
key management personnel. The compensation costs for key management
personnel for the years ended March 31, 2012 and 2011 are as follows:
March 31,
2012
$ 56,262
1,225,176
-
March 31,
2011
$
47,450
626,063
13,430,456
$1,281,438
$14,103,969
March 31,
2011
Not later than 1 year
Later than one year and no later
than 5 years
14. INCOME TAXES
A reconciliation of income tax recovery computed at the Canadian statutory
rate of 26.13% (2011 – 28.0%) to income tax recovery (expense) for the
years ended March 31 is as follows:
2012
2011
Expected income tax recovery
Non-deductible expenses and other
Changes in timing differences
Adjustments due to effective tax rate
attributable to income taxes in
other countries
Changes in income tax rates
Changes in unrecognized benefits
$ 3,429,520
(53,906)
440,840
(65,608)
$ 6,899,788
(1,000)
(192,142)
(4,350,834)
284,133
(220,677)
(3,814,302)
126,736
(217,541)
(2,265,007)
Income tax recovery (expense)
$
- $
-
The components of the deferred tax assets (liabilities), after applying
enacted Canadian rates of 25% (2011 - 25%) and enacted Mexico rates of
28% (2011 - 28%), are as follows:
2012
2011
Deferred tax assets
Non-capital loss carry-forwards
$4,581
$ Net deferred tax asset
4,581
Deferred tax liability
Investment securities
(4,581)
Net deferred tax liability
$
-
$ -
As at March 31, 2012 and 2011, no deferred tax assets are recognized on
the following temporary differences, as it is not probable that sufficient future
taxable profit will be available to realize such assets:
2012
2011
Non-capital loss carry-forwards
$31,120,491 $17,717,076
9,257,756
9,020,984
Share issue costs
2,681,008
1,091,881
Other
3,902,278
3,874,386
Unrecognized deductible temporary
differences
$46,961,533
$31,704,327
At March 31, 2012, the Company had, for Canadian tax purposes, noncapital losses aggregating approximately $11,332,000. These losses are
available to reduce taxable income earned by the Canadian operations of
future years and expire as follows:
2014
2015
2016
2027
2028
2029
2030
2031
2032
$
174,000
166,000
257,000
338,000
526,000
296,000
620,000
2,884,000
6,071,000
$
11,332,000
15. FINANCIAL INSTRUMENTS
The carrying amounts of amounts receivable (excluding HST and IVA, being
Mexican value added tax) and accounts payable are a reasonable estimate
of their fair values due to their short term to maturity. Cash equivalents
comprise cashable GICs with a maturity of one year or less and interest
rates that range from 1.07% to 1.20%. Investment securities are accounted
for at fair value based on quoted market prices. The carrying amount of
reclamation deposits approximate their fair value as the stated rates
approximate the market rate of interest.
The Company’s financial instruments are exposed to certain financial risks:
credit risk, liquidity risk and market risk.
(a) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation. The
Company’s cash is exposed to credit risk.
The Company manages credit risk, in respect of cash, by maintaining the
majority of cash and cash equivalents at high credit rated Canadian financial
institutions. Concentration of credit risk exists with respect to the Company’s
cash and reclamation deposits as the majority of the amounts are held with
a Canadian and a Mexican financial institution. The Company’s
concentration of credit risk, and maximum exposure thereto, is as follows:
Cash and cash equivalents held at major
financial institutions
Canada
Mexico
March 31,
2012
March 31,
2011
$37,561,695
11,746
37,573,441
$19,222,255
628,502
19,850,757
32,629
32,629
$37,606,070
$19,883,386
Reclamation deposits held at major
financial institution
Canada
Total
(b) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
satisfying financial obligations as they become due.
The Company manages its liquidity risk by forecasting cash flows required
by operations and anticipated investing and financing activities. The
Company has cash and cash equivalents at March 31, 2012 in the amount
of $37,573,441 (2011 - $19,850,757) in order to meet short-term business
requirements. At March 31, 2012, the Company had current liabilities of
$708,372 (2011 - $861,595). Accounts payable have contractual maturities
of less than 30 days and are subject to normal trade terms. Advances
payable to related parties are without interest or stated terms of repayment.
(c) Market risk
Market risk consists of interest rate risk and foreign currency risk. The
Company is exposed to interest rate risk and foreign currency risk.
Interest rate risk
Interest rate risk consists of two components:
(i) To the extent that payments made or received on the Company’s monetary
assets and liabilities are affected by changes in the prevailing market
interest rates, the Company is exposed to interest rate cash flow risk.
(ii) To the extent that changes in prevailing market rates differ from the
interest rate in the Company’s monetary assets and liabilities, the
Company is exposed to interest rate price risk.
The Company’s cash and cash equivalents consist of cash held in bank
accounts, fixed income investments and GICs that earn interest at variable
interest rates. Due to the short-term nature of these financial instruments,
fluctuations in market rates do not have a significant impact on estimated
fair values as of March 31, 2012. Future cash flows from interest income
on cash will be affected by interest rate fluctuations. The Company manages
interest rate risk by maintaining an investment policy that focuses primarily
on preservation of capital and liquidity.
15. FINANCIAL INSTRUMENTS (Cont’d)
Level 2 – inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e., as prices) or indirectly
(i.e., derived from prices); and
c) Market risk (cont’d)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate due to changes in foreign exchange rates.
The Company is exposed to foreign currency risk to the extent that monetary
assets and liabilities are denominated in foreign currency.
The Company is exposed to foreign currency fluctuation related to its
exploration and evaluation assets thereon, and accounts payable in US dollar
balances and Mexican pesos (“MXN”). A significant change in the exchange
rate between the Canadian dollar relative to the US dollar or Mexican peso
could have an effect on the Company’s financial position, results of
operations and cash flows, as follows:
March 31, 2012
MXN
USD
March 31, 2011
MXN
USD
463,406 12,479,052 698,949 1,468,309
Amounts receivable
27,685,730
- 1,095,963
Accounts payable and
accrued liabilities
(434,875)
- (305,298)
(2,699)
Amounts due to related
parties
(228,719)
- (184,273)
Net exposure
27,714,261
12,250,333 1,489,614 1,281,337
Canadian dollar equivalent $ 2,161,158 $12,239,808 $ 121,463 $1,242,384
Based on the net US dollar denominated asset and liability exposures as at
March 31, 2012, a 3% (2011 - 3%) fluctuation in the Canadian/US exchange
rates will impact the Company’s earnings by approximately $367,000 (2011
- $221,000).
Based on the net Mexican peso denominated asset and liability exposures
as at March 31, 2012, a 3% (2011 - 5%) fluctuation in the Canadian/MXN
exchange rates will impact the Company’s earnings by approximately
$65,000 (2011 - $6,000).
(d) Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate due to changes in market prices, other than those
arising from interest rate risk or foreign currency risk. The Company is
exposed to other price risk with respect to its investment securities as they
are carried at fair value based on quoted market prices, which is immaterial.
The Company’s ability to raise capital to fund mineral resource exploration
is subject to risks associated with fluctuations in mineral resource prices.
Management closely monitors commodity prices, individual equity
movements, and the stock market to determine the appropriate course of
action to be taken by the Company.
(e) Classification of financial instruments
IFRS 7 Financial Instruments: Disclosures establishes a fair value hierarchy
that prioritizes the input to valuation techniques used to measure fair value
as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 3 – inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The following table sets forth the Company’s financial assets measured at
fair value by level within the fair value hierarchy as at March 31, 2012.
Investments
Level 1
Level 2
Level 3
$20,486,258
$ -
$ -
16.CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to safeguard the
Company’s ability to continue as a going concern in order to pursue the
exploration of its properties and to maintain a flexible capital structure for
its projects for the benefit of its stakeholders. In the management of capital,
the Company includes the components of shareholders’ equity.
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. To maintain or adjust the capital structure, the
Company may attempt to issue new shares or reduce expenditures.
Management reviews the capital structure on a regular basis to ensure that
objectives are met.
There have been no changes to the Company’s approach to capital
management during the year ended March 31, 2012. The Company is not
subject to external restrictions on its capital.
17. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS
As stated in Note 2, these are the Company’s first consolidated financial
statements prepared in accordance with IFRS.
The accounting policies in Note 3 have been applied in preparing the
consolidated financial statements for the year ended March 31, 2012, the
comparative information for the year ended March 31 2011, the
consolidated statement of financial position as at March 31, 2011 and the
opening consolidated statement of financial position on the transition date,
April 1, 2010, subject to IFRS 1 exemptions.
In preparing its opening IFRS consolidated statement of financial position
and comparative information for the consolidated financial statements as at
and for the year ended March 31, 2011, the Company has adjusted amounts
previously reported in accordance with Canadian GAAP.
An explanation of how the transition from previous Canadian GAAP to IFRS
has affected the Company’s financial position, financial performance and
cash flows is described below.
The guidance for the first time adoption of IFRS is set out in IFRS 1. Under
IFRS 1, IFRS is applied retr ospectively at the transition date with all
adjustments to assets and liabilities, as stated under Canadian GAAP
charged to deficit, unless certain exemptions are applied. The Company has
applied the following exemptions to its opening consolidated statement of
financial position dated April 1, 2010:
(a) Business combinations
The Company has elected to not apply IFRS 3 Business Combinations
retrospectively to business combinations that occurred before the transition
date.
(b) Share-based payments
IFRS 1 encourages, but does not require, first-time adopters to apply IFRS
2 Share-based Payment to equity instruments that were granted on or before
November 7, 2002, or equity instruments that were granted subsequent to
November 7, 2002 and vested before the later of the date of transition to
IFRS and January 1, 2005. The Company has elected not to apply IFRS 2
to awards that vested prior to April 1, 2010.
(c)Compound financial instruments
The Company has elected not to retrospectively separate the liability and
equity components of any compound instruments for which the liability
component is no longer outstanding at the transition date.
IFRS 1 also outlines specific guidelines that a first-time adopter must adhere
to under certain circumstances. The Company has applied the following
guidelines to its consolidated statement of financial position dated April 1,
2010:
(d) Estimates
In accordance with IFRS 1, an entity’s estimates under IFRS at the date of
transition to IFRS must be consistent with estimates made for the same date
under previous Canadian GAAP, unless there is objective evidence that those
estimates were in error. The Company’s IFRS estimates as of April 1, 2010
are consistent with its Canadian GAAP estimates for the same date.
IFRS employs a conceptual framework that is similar to Canadian GAAP.
However, some differences exist in certain matters of recognition,
measurement and disclosure. While adoption of IFRS has not changed the
Company’s actual cash flows, it has resulted in changes to the Company’s
reported financial position and financial performance. In order to allow the
users of the consolidated financial statements to better understand these
changes, the Company’s Canadian GAAP consolidated statements of
financial position as at April 1, 2010 and March 31, 2011 and consolidated
statements of operations and comprehensive loss and cash flows as at and
for the year ended March 31, 2011 have been reconciled to IFRS, with the
resulting differences explained below.
Notes on GAAP – IFRS Reconciliations
(a) IAS 12 prohibits the recognition of a deferred tax liability where a taxable
temporary difference arises on a transaction, which is not a business
combination, and at the time of the transaction, affects neither accounting
profit nor taxable profit or loss. Therefore, the deferred income tax liability
previously recognized under GAAP on the acquisition of VHV on March 25,
2011, which was capitalized to exploration and evaluation assets, is
reversed to conform to IFRS.
(b) IFRS 2 requires that, in respect of share-based awards with vesting
conditions, each tranche of an award with different vesting dates is
considered a separate grant for the calculation of fair value, and the resulting
fair value is recognized over the vesting period of the respective tranches.
In contrast, the Company recognized share-based payments on stock
options granted prior to the transition date on the straight-line method under
Canadian GAAP.
In addition, the implementation guidance of IFRS 2 recommends that the
fair value of equity instruments issued to non-employees for services
provided to the Company, where the fair value of the instruments cannot be
directly determined by reference to the fair value of the services provided,
should be measured over the period during which the services are rendered.
Under Canadian GAAP, the Company measured the fair value of such equity
instruments at each vesting and reporting date, rather than over the period
of performance.
As noted earlier, the Company has elected to apply the exemption allowed by
IFRS 1 with respect to equity instruments issued and vested prior to the
transition date. However, several adjustments were required for options not yet
fully vested at April 1, 2010 and those options granted during the year ended
March 31, 2011, in order to recognize share-based payments arising thereon.
(c) IAS 1 requires an entity to present, for each component of equity, a
reconciliation between the carrying amount at the beginning and end of the
period, separately disclosing each change. The Company examined its
“contributed surplus” account and concluded that as at the April 1, 2010
transition date and the comparative dates of March 31, 2011, part of the
contributed surplus related to the fair value of options issued as share-based
awards and part to warrants issued under private placements.
Therefore, at April 1, 2010 the fair value attributable to options and warrants
outstanding at that date was transferred from contributed surplus to
“Reserve for options” and “Reserve for warrants”, respectively. The
remaining balance of contributed surplus, which reflected the fair value of
options and warrants no longer outstanding, was transferred to deficit, as
permitted by IFRS 2.
(d) IAS 16 requires that depreciation of property, plant and equipment be
separately disclosed. Previously, this expense was included within the
“office, occupancy and miscellaneous” expense category on the statement
of operations. Under IFRS it will now be separately disclosed thereon.
(e) On transition to IFRS, the Company elected to change its accounting
policy to expensing all exploration expenditures, so as to align itself with
policies adopted by other comparable companies at a similar stage of
development in the mining industry.
17. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (Cont’d)
Canadian
GAAP
IFRS
Canadian
GAAP
-
$ 2,020,948
5,289
22,823
23,880
$ 19,850,757
549,748
46,736
23,326
2,072,940
-
2,072,940
48,511
32,629
3,059,841
4,524
(2,954,461)
-
$5,218,445
$ (2,954,461)
$
$
Note
ASSETS
Current
Amounts receivable
Prepaid expenses
Investments
$2,020,948
5,289
22,823
23,880
Non-current
Due from related party
Reclamation deposit
Exploration and evaluation assets (a)(e)
Property, plant and equipment
TOTAL ASSETS
LIABILITIES
Current
Accounts payable and accrued
liabilities
Due to related parties
Non-current
Deferred income tax liability
(a)
Share capital
(b)
Reserves (contributed surplus) (b)(c)
Accumulated other
comprehensive loss
Deficit
(b)(c)(e)
TOTAL EQUITY
TOTAL LIABILITIES AND
April 1, 2010
Effect of
Transition
to IFRS
69,802
138,912
$
-
March 31, 2011
Effect
Transition
IFRS
-
$ 19,850,757
549,748
46,736
23,326
20,470,567
-
20,470,567
48,511
32,629
105,380
4,524
6,068
32,629
181,332,777
26,710
(56,612,816)
-
6,068
32,629
124,719,961
26,710
$ 2,263,984
$201,868,751
$(56,612,816)
$145,255,935
$
69,802
138,912
$
$
IFRS
633,580
228,015
-
$
633,580
228,015
208,714
-
208,714
861,595
-
861,595
-
-
-
47,273,250
(47,273,250)
-
208,714
-
208,714
48,134,845
(47,273,250)
861,595
26,187,285
1,360,276
(101,126)
26,187,285
1,259,150
169,682,557
24,912,993
7,280
(192,038)
169,689,837
24,720,955
(5,593)
(22,532,237)
(2,853,335)
(5,593)
(25,385,572)
(6,147)
(40,855,497)
(9,154,808)
(6,147)
(50,010,305)
5,009,731
(2,954,461)
2,055,270
153,733,906
(9,339,566)
144,394,340
$ 5,218,445
$(2,954,461)
$ 2,263,984
$ 201,868,751
$(56,612,816)
$145,255,935
Reconciliation of Consolidated Statement of Operations and Comprehensive Loss
Note
Expenses
Depreciation
Exploration
General exploration
Professional fees
Travel
(d)
(e)
(d)
(b)
Loss before other items and income tax
Other Items
Interest income
Write-down of exploration and
evaluation assets
NET LOSS
Other Comprehensive Income (Loss)
Unrealized gain (loss) on investments in
related companies
TOTAL COMPREHENSIVE LOSS
Year Ended March 31, 2011
Effect of
Canadian
Transition to
GAAP
IFRS
IFRS
$ 620,000
61,002
17,701
67,286
147,332
271,320
106,281
114,532
15,604,956
116,191
$ 5,205
7,623,760
(5,205)
(66,264)
-
$ 620,000
5,205
7,623,760
61,002
17,701
67,286
142,127
271,320
106,281
114,532
15,538,692
116,191
(17,126,601)
(7,557,496)
(24,684,097)
41,996
(e)
-
41,996
(1,238,655)
1,238,655
-
(18,323,260)
(6,318,841)
(554)
$ (18,323,814)
$ (6,318,841)
(24,642,101)
(554)
$ (24,642,655)
17. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (Cont’d)
Reconciliation of Consolidated Statement of Operations and Comprehensive Loss
Note
Year Ended March 31, 2011
Effect of
Canadian
Transition to
GAAP
IFRS
IFRS
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss
(b)(e)
Adjustments for non-cash items:
Depreciation
(b)
Write-down of exploration and evaluation
assets
(e)
Unrealized foreign exchange loss
Changes in non-cash working capital items:
Amounts receivable and prepaid expenses
Accounts payable and accrued liabilities (e)
Due from related parties
INVESTING ACTIVITIES
Exploration and evaluation asset
expenditures incurred
(e)
Purchase of equipment
Cash acquired on acquisition of Valley High
Ventures Ltd., net of transaction costs
Advances from Valley High Ventures Ltd.
FINANCING ACTIVITIES
Issue of capital stock for cash, net of
issuance costs
Effect of exchange rate fluctuations
on cash held
Increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS, Beginning
CASH AND CASH EQUIVALENTS, Ending
$ (18,323,260)
$ (6,318,841)
(66,264)
$ (24,642,101)
1,238,655
(166)
(1,238,655)
-
(166)
(1,474,610)
(7,623,760)
(9,098,370)
(148,300)
518,607
52,872
(185)
78,674
(148,300)
518,422
131,546
(1,051,431)
(7,545,271)
(8,596,702)
(7,545,271)
(27,391)
7,545,271
-
5,205
15,604,956
5,205
15,538,692
(27,391)
5,178,768
6,945,792
-
5,178,768
6,945,792
4,551,898
7,545,271
12,097,169
14,329,176
-
14,329,176
14,329,176
-
14,329,176
166
-
166
17,829,809
-
17,829,809
2,020,948
-
2,020,948
-
$ 19,850,757
$ 19,850,757
$
18. SUBSEQUENT EVENTS
The following events occurred subsequent to March 31, 2012:
(a) The Company granted 250,000 stock options to an employee providing investor relations services.
The stock options are exercisable at $1.00 for five years and vest 25% every three months over a
twelve-month period.
(b) The Company granted 600,000 stock options to a director, officer and employee of the Company.
The stock options are exercisable at $1.00 for five years and vest 25% every three months over a
year.
(c) 325,000 stock options expired unexercised.
CORPORATE DIRECTORY
Shares Traded
Auditors
Toronto Stock Exchange
Smythe Ratcliffe LLP
Symbol: LVN.T
Chartered Accountants
US OTC
7th Floor, Marine Building
Symbol: LVNVF
355 Burrard Street, Vancouver, BC
Frankfurt/Berlin-Bremen
Symbol: LO9
WKN 869769
Officers & Directors
Ron Tremblay, President & CEO
Ron Barbaro, Chairman & Director
Vic Chevillon, V.P. Exploration & Director
Annie Chan, CFO
David Wolfin, Director
Carlos H. Fernandez Mazzi, Director
Gary Robertson, Director
Robert Roberts, Director
William C. Glasier, Director
Dorothy Chin, Corporate Secretary
Canada V6C 2G8
Tel: 604.687.1231
Corporate and Shareholder Communications
Greg Agar
Tel: 604.682.3701
Registrar and Transfer Agent
Valiant Trust Company
#600 - 750 Cambie Street
Vancouver, BC V6B 0A2
Tel: 604.669.4880
Legal Counsel
Strikeman Elliott LLP
1700 - 666 Burrard Street
Vancouver, BC V6C 2X8
Tel: 604.631.1300
Standard & Poor’s Listed
R E S O U R C E S
Head Office
Suite 900, 570 Granville St.
Vancouver, British Columbia
Canada V6C 3P1
Tel: 604.682.3701
Fax: 604.682.3600
www.levon.com
L T D.

Financial Statements - Levon Resources Ltd.

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