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SECURITIES AND EXCHANGE COMMISSION
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act: None | ||
Securities to be registered pursuant to Section 12(g) of the Act:common shares | ||
(Title of Class) |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
U.S. GAAPo | International Financial Reporting Standards as issued | Otherþ | ||
By the International Accounting Standards Boardo |
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Following is a glossary of terms used throughout this Annual Report. | ||
artisanal mining | mining at small-scale mines (and to a lesser extent quarries) that are labor intensive, with mechanization being at a low level and basic. Artisanal mining can encompass all small, medium, large, informal, legal and illegal miners who use rudimentary processes to extract valuable rocks and minerals from ore bodies. | |
bitumen | known as asphalt or tar, bitumen is the brown or black viscous residue from the vacuum distillation of crude petroleum. | |
breccia | a rock in which angular fragments are surrounded by a mass of finer-grained material. | |
C-horizon soil | the soil parent material, either created in situ or transported into its present location. Beneath the C horizon lies bedrock. | |
concentrate | a concentrate of minerals produced by crushing, grinding and processing methods such as gravity, flotation or leaching. | |
exploration stage | the search for mineral deposits which are not in either the development or production stage. | |
Form 43-101 | technical report issued pursuant to Canadian securities rules, the objective of which is to provide a summary of scientific and technical information concerning mineral exploration, development and production activities on a mineral property that is material to an issuer. The NI 43-101 Report is prepared in accordance with the National Instrument 43-101 Standards of Disclosure for Mineral Projects [“NI 43-101”]. The 43-101 Form sets out specific requirements for the preparation and contents of a technical report. | |
feasibility study | a comprehensive study of a mineral deposit in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production. | |
gneiss | a coarse-grained, foliated rock produced by regional metamorphism. The mineral grains within gneiss are elongated due to pressure and the rock has a compositional banding due to chemical activity. | |
grade | the metal content of rock with precious metals. Grade can be expressed as troy ounces or grams per tonne of rock. | |
granodiorite | a medium to coarse-grained intrusive igneous rock, intermediate in composition between quartz diorite and quartz monzonite. | |
gold deposit | a mineral deposit mineralized with gold. |
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hydrothermal | the products or the actions of heated waters in a rock mass such as a mineral deposit precipitating from a hot solution. | |
igneous | a primary type of rock formed by the cooling of molten material. | |
inferred mineral resource | that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and reasonable assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes. | |
intrusion | intrusive-molten rock which is intruded (injected) into spaces that are created by a combination of melting and displacement. | |
mafic | igneous rocks composed mostly of dark, iron- and magnesium-rich minerals. | |
metallurgical tests | scientific examinations of rock/material to determine the optimum extraction of metal contained. Core samples from diamond drill holes are used as representative samples of the mineralization for this test work. | |
mineral resource | a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. | |
ore | a naturally occurring rock or material from which minerals, such as gold, can be extracted at a profit; a determination of whether a mineral deposit contains ore is often made by a feasibility study. | |
open pit | a mining method whereby the mineral reserves are accessed from surface by the successive removal of layers of material usually creating a large pit at the surface of the earth. | |
ounce or oz. | a troy ounce or 20 pennyweights or 480 grains or 31.103 grams. | |
petrology | a field of geology which focuses on the study of rocks and the conditions by which they form. There are three branches of petrology, corresponding to the three types of rocks: igneous, metamorphic, and sedimentary. | |
pre-feasibility study | a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining methods, in the case of underground mining, or the pit configurations, in the case of an open pit, has been established, where effective methods of mineral processing has been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, and economic factors and evaluation of other relevant factors which are sufficient for a Qualified |
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Person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve. | ||
probable reserve | the economically mineable part of an indicated and, in some circumstances, a measured mineral resource demonstrated by a least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. | |
prospect | an area prospective for economic minerals based on geological, geophysical, geochemical and other criteria. | |
production stage | all companies engaged in the exploitation of a mineral deposit (reserve). | |
proven reserve | the economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. | |
qualified person | an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and any technical reports; and is a member or licensee in good standing of a professional association. | |
reserve | that part of a mineral deposit, which could be economically and legally extracted or produced at the time of the reserve determination. Reserves are customarily stated in terms of “ore” when dealing with metalliferous minerals such as gold or silver. | |
schists | a metamorphic rock containing abundant particles of mica, characterized by strong foliation, and originating from a metamorphism in which directed pressure plays a significant role. | |
shaft | a vertical or inclined tunnel in an underground mine driven downward from surface. | |
shear | a tabular zone of faulting within which the rocks are crushed and flattened. | |
skarn | a lime-bearing silicate derived from nearly pure limestone and dolomite with the introduction of large amounts of silicon, aluminum, iron, and magnesium. | |
stoping | the act of mining in a confined space. | |
stratigraphic units | sequences of bedded rocks in specific areas. | |
strike | the direction of line formed by intersection of a rock surface with a horizontal plane. Strike is always perpendicular to direction of dip. | |
thrust fault | a particular type of fault, or break in the fabric of the Earth’s crust with |
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resulting movement of each side against the other, in which a lower stratigraphic position is pushed up and over another. This is the result of compressional forces. | ||
trenching | the surface excavation of a linear trench to expose mineralization for sampling. | |
vein | a tabular body of rock typically of narrow thickness and mineralized occupying a fault, shear, fissure or fracture crosscutting another pre-existing rock. |
1 mile (mi) | = 1.609 kilometres (km) | 2,204 pounds (lbs) | = 1 tonne | |||
1 yard (yd) | = 0.9144 meter (m) | 2,000 pounds/1 short ton | = 0.907 tonne | |||
1 acre | = 0.405 hectare (ha) | 1 troy ounce | = 31.103 grams | |||
1 kilometre (km) | = 1,000 meters |
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Year | Year | Year | Year | Year | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
December | December | December | December | December | ||||||||||||||||
(CAD$) | 31, 2008 | 31, 2007 | 31, 2006 | 31, 2005 | 31, 2004 | |||||||||||||||
CANADIAN GAAP | ||||||||||||||||||||
Revenue | 7,755,495 | 6,996,257 | 1,644,040 | Nil | Nil | |||||||||||||||
Income (Loss) for the Period | (8,474,733 | ) | (8,941,689 | ) | (9,478,887 | ) | (2,768,461 | ) | (2,182,459 | ) | ||||||||||
Basic & Diluted Earning (Loss) Per Share | (0.04 | ) | (0.04 | ) | (0.06 | ) | (0.02 | ) | (0.02 | ) | ||||||||||
Dividends Per Share | Nil | Nil | Nil | Nil | Nil | |||||||||||||||
Period-end Shares | 232,423,101 | 232,377,011 | 164,678,791 | 131,846,200 | 97,748,660 | |||||||||||||||
Cash | 5,096,418 | 26,656,146 | 4,101,536 | 404,987 | 5,597,628 | |||||||||||||||
Working Capital | 6,642,509 | 25,342,329 | 1,720,050 | (1,862,041 | ) | 717,921 | ||||||||||||||
Mineral Properties | 9.564,422 | 9,818,923 | 10,015,755 | 10,060,904 | 10,060,904 | |||||||||||||||
Deferred Development and Exploration | 30,708,439 | 21,707,466 | 13,724,846 | 13,089,242 | 8,375,473 | |||||||||||||||
Long-term Liabilities | 1,282,002 | 721,686 | 890,322 | 351,428 | 1,231,119 | |||||||||||||||
Capital Stock | 104,206,522 | 104,159,423 | 66,074,507 | 49,709,671 | 38,749,225 | |||||||||||||||
Shareholders’ Equity | 59,931,771 | 67,241,595 | 35,963,859 | 27,386,599 | 18,105,269 | |||||||||||||||
Total Assets | 66,473,613 | 71,650,159 | 41,556,694 | 30,510,086 | 24,418,374 | |||||||||||||||
US GAAP | ||||||||||||||||||||
Net Income (Loss) | (13,957,382 | ) | (16,924,309 | ) | (10,231,323 | ) | (7,434,680 | ) | (6,720,137 | ) | ||||||||||
Income (Loss) Per Share — basic & diluted | (0.06 | ) | (0.08 | ) | (0.06 | ) | (0.06 | ) | (0.08 | ) | ||||||||||
Mineral Properties | 9,526,922 | 9,781,423 | 9,978,255 | 10,060,904 | 10,060,904 | |||||||||||||||
Deferred Development and Exploration | 3,518,324 | Nil | Nil | Nil | Nil | |||||||||||||||
Shareholders’ Equity | 27,264,318 | 45,417,297 | 22,122,181 | 14,297,357 | 9,729,796 | |||||||||||||||
Total Assets | 39,166,667 | 49,825,861 | 27,228,479 | 17,420,844 | 16,042,901 |
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Average | High | Low | Close | |||||||||||||
February 2009 | — | 1.2710 | 1.2190 | 1.2710 | ||||||||||||
January 2009 | — | 1.2749 | 1.1822 | 1.2365 | ||||||||||||
December 2008 | — | 1.2971 | 1.1962 | 1.2240 | ||||||||||||
November 2008 | — | 1.2850 | 1.1502 | 1.2360 | ||||||||||||
October 2008 | — | 1.2942 | 1.0607 | 1.2158 | ||||||||||||
September 2008 | — | 1.0797 | 1.0338 | 1.0597 | ||||||||||||
Fiscal Years Ended: | ||||||||||||||||
12/31/2008 | 1.0713 | — | — | 1.2240 | ||||||||||||
12/31/2007 | 1.0748 | — | — | 0.9913 | ||||||||||||
12/31/2006 | 1.1341 | — | — | 1.1528 | ||||||||||||
12/31/2005 | 1.2115 | — | — | 1.1656 | ||||||||||||
12/31/2004 | 1.3017 | — | — | 1.2034 | ||||||||||||
12/31/2003 | 1.4008 | — | — | 1.2923 |
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Toronto, Ontario, M5C 1C3
Canada
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Number of | ||||||||||
Fiscal Year | Nature of Issuance | Shares | Capital Raised | |||||||
December 31, 2000 | Private Placement(1) | 6,625,000 | $ | 1,840,000 | ||||||
December 31, 2001 | Private Placement(2) | 10,964,500 | $ | 3,944,000 | ||||||
December 31, 2002 | Nil | Nil | Nil | |||||||
December 31, 2003 | Private Placement(3) | 21,163,459 | $ | 6,832,063 | ||||||
December 31, 2004 | Private Placement(4) | Nil | Nil | |||||||
December 31, 2005 | Private Placement (5) | 32,645,000 | $ | 11,063,500 | ||||||
December 31, 2006 | Private Placement(6) | 27,000,000 | $ | 15,660,000 | ||||||
December 31, 2007 | Private Placement and Public Offering(7) (8) | 60,106,503 | $ | 37,153,601 |
(1) | In 2000, the Company raised a total of $1,840,000 through two separated financings: |
(i.) | In March 2000, 4,500,000 units were sold for $0.22/unit. Each unit was comprised of one common share and one two-year share purchase warrant entitling the holders to acquire up to 4,500,000 shares at $0.30/unit during the first year and at $0.40/unit during the second year; | ||
(ii.) | In August 2000, 2,125,000 common shares were issued at $0.40/share to various holders. |
(2) | In 2001, the Company completed three financings and raised a total of $3,944,000: |
(i.) | In February, 1,200,000 units were sold for $0.60/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.75/warrant for a one-year period, and $1.00/warrant for the second year; | ||
(ii.) | In July, 552,000 units were sold for $0.50/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.65/warrant for a one-year period, and $1.00/warrant for the second year; | ||
(iii.) | In December, 9,212,500 units were sold for $0.32/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.32. |
(3) | In 2003, a total placement, raising $6,832,063 was completed in three closings: |
(i.) | In February, 1,562,750 units were sold for 0.40/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.40/unit for a one-year period; | ||
(ii.) | In March, 3,267,500 units were sold for $0.40/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.50/warrant for a one-year period; | ||
(iii.) | In October, 16,333,209 units were sold for $0.30/unit. Each unit consists of one common share and one-half of one common share purchase warrant, each whole purchase warrant exercisable at an exercise price of $0.40/unit for a one-year period and thereafter at a price of $0.50/unit for a one-year period. |
(4) | On June 29, 2004, the Company closed a “Vend-In Agreement”, whereby it acquired the remaining 42.82% interest in the NVMC joint venture. The acquisition resulted in the issuance of 13,483,133 common shares of the Company of which Zedex received 3,205,467 shares and Ivanhoe received 10,277,646 shares. No capital was raised in this transaction. |
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(5) | In 2005, a total placement, raising $11,063,500 was completed in two closings: |
(i.) | In January, the Company closed a $5,080,000 private placement with Dragon Capital Markets Limited (“Dragon Capital”) by issuing 12.7 million common shares priced at $0.40/unit. In consideration for its service, Dragon Capital was paid a finders’ fee of US$261,471 and was granted 1,270,000 warrants exercisable at $0.40/unit for a period of one year from the date of closing; | ||
(ii.) | In September, the Company received $5,983,500 from the closing of a private placement and issued 19,945,000 common shares priced at $0.30/share. |
(6) | On March 31, 2006, a private placement closed where the Company issued 27,000,000 shares at $0.58 raising $15,660,000. | |
(7) | On March 19, 2007, the Company completed a non-brokered private placement, of 21,428,571 shares at a price of $0.56 per share, for gross proceeds of $12,000,000 and net proceeds of $11,967,772. The net proceeds were used for ongoing exploration, feasibility studies and development work on the Company’s mineral projects and for general corporate purposes. | |
(8) | On August 10, 2007, the Company closed an offering (the “Offering”) of units of the Company (“Units”) for aggregate gross proceeds of $25,000,000 (the “Closing”). Pursuant to the Offering, the Company issued and sold a total of 38,461,538 Units at a price of $0.65 per Unit. Each Unit was comprised of one common share of the Company (a “Share”) and one-half of one common share purchase warrant (“Warrant”). Each whole Warrant will be exercisable at $0.80 until August 10, 2009. The Company granted the Agents an over-allotment option (the “Over-Allotment Option”) exercisable in whole or in part at the sole discretion of the Agents, for a period of 30 days from closing of the Offering, to purchase up to an additional 5,769,230 Shares (“Additional Shares”) at a price of $0.62 per Additional Share and up to an additional 2,884,615 Warrants (“Additional Warrants”) at a price of $0.06 per Additional Warrant, for further gross proceeds of up to $3,750,000, if exercised in full. In consideration for their services, the Corporation paid a fee of $1,500,000 to the Agents (equal to 6% of the gross proceeds realized from the sale of Units). The Agents were also granted non-transferable options (the “Compensation Options”) to acquire 2,307,692 Units (each an “Agents’ Unit”) (equal to 6% of the number of Units issued pursuant to the Offering). Each Compensation Option is exercisable to acquire one Agents’ Unit at $0.65 until August 10, 2009. Each Agent’s Unit consists of one common share of the Company and one-half of one common share purchase warrant (“Agents’ Warrants”). Each whole Agents’ Warrant will be exercisable to acquire one common share of the Company (a “Agents’ Warrant Share”) at a price of $0.80 per Agents’ Warrant Share until August 10, 2009. On September 7, 2007,the over-allotment option granted to the agents in connection with the Company’s public offering of units (the “Offering”), was exercised in respect of 216,394 common shares (“Additional Shares”) at a price of $0.62 per Additional Share and 323,947 warrants (“Additional Warrants”) at a price of $0.06 per Additional Warrant, resulting in additional gross proceeds of $153,601. Each whole Warrant will be exercisable at $0.80 until August 10, 2009. The partial exercise of the over-allotment options brings the aggregate gross proceeds to the Company under the Offering to $25,153,601. The net proceeds from the Offering are being used for further exploration and feasibility studies at the Company’s Bong Mieu Gold and Phuoc Son Gold properties in Vietnam and the Capcapo property in the Philippines and for working capital and general corporate purposes. |
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Capital Assets, Mineral Properties and Deferred | ||||
As at December 31 | Exploration and Development Costs | |||
2000 | $ | 11,304,325 | ||
2001 | 11,241,723 | |||
2002 | 7,830,889 | |||
2003 | 8,735,520 | |||
2004 | 18,618,467 | |||
2005 | 29,600,068 | |||
2006 | 35,134,131 | |||
2007 | 42,620,952 | |||
2008 | 54,571,264 |
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1. | The amount of mineralization which has been established, and the likelihood of increasing the size of the mineralized deposit through additional drilling; | ||
2. | The expected mining dilution; | ||
3. | The expected recovery rates in processing; | ||
4. | The cost of mining the deposit; | ||
5. | The cost of processing the ore to separate the gold from the host rocks, including refining the precious or base metals; | ||
6. | The costs to construct, maintain, and operate mining and processing activities; | ||
7. | Other costs associated with operations including permit and reclamation costs upon cessation of operations; | ||
8. | The costs of capital; | ||
9. | The costs involved in acquiring and maintaining the property; and | ||
10. | The price of the precious or base minerals. For example, the price of one ounce of gold for the years 2001-2008 ranged from a low of $271 U.S. in 2001, to a high of US$1,011.25 in 2008. At March 19, 2009, the price of gold was $956.50 U.S. per ounce1. |
1 | Based upon the Average Spot Price of Gold, London PM fix. |
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• | seeking to sell the deposit or the Company to third parties; | ||
• | entering into a joint venture with larger mining company to mine the deposit; or | ||
• | placing the property into production ourselves. |
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(1) | Following the grant of an investment license Phuoc Son Gold Company Limited was formed with Mien Trung Industrial Company holding 15% and NVMC holding 85%. | |
(2) | BM Holdings was deregistered in Thailand due to non-filing. BM Holdings was reinstated on November 5, 2007 by the Thai government. | |
(3) | Presently non-operating. |
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GRANT | ||||||||||||||||||||||||||||
PROJECT | OWNER | LICENSE | AREA | STATUS | DATE | TERM | EXPIRY DATE | |||||||||||||||||||||
1. Bong Mieu | BOGOMIN | IL 140/GPDC2 | 30 Sq Km | Granted | 5/3/91 | 25 years | 5/3/2016 | |||||||||||||||||||||
2. Phuoc Son | PSGC | IL 2355/GP | 70 Sq Km | Granted | 20/10/2003 | 30 years | 20/10/2033 |
PROJECT | MINE | OWNER | LICENSE | AREA | STATUS | GRANT DATE | TERM | EXPIRY DATE | ||||||||||||||||||||||||
1. Bong Mieu | Ho Gan (VN220) | BOGOMIN | ML592/CNNg | 358 Ha | Granted | 22/7/92 | 25 years | 22/7/2017 | ||||||||||||||||||||||||
Bong Mieu | Nui Kem (VN230) | BOGOMIN | ML592/CNNg | 358 Ha | Granted | 22/7/92 | 25 years | 22/7/2017 | ||||||||||||||||||||||||
Bong Mieu | Ho Ray | BOGOMIN | Proposed new MLA | Not yet defined | Proposed | — | — | — | ||||||||||||||||||||||||
2. Phuoc Son | Dak Sa Bai Dat | PSGC | ML116/GP-BTNMT | 1.00 Ha | Granted | 23/1/2006 | 3.5 years | 23/7/2009 | ||||||||||||||||||||||||
2. Phuoc Son | Dak Sa Bai Go | PSGC | ML116/GP-BTNMT | 0.52 Ha | Granted | 23/1/2006 | 3.5 years | 23/7/2009 |
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Phuoc Son | PSGC | EL 67/GP-BTNMT | 42 Sq Km | Granted | 10/01/2008 | 2 years | 10/01/2010 | |||||||||||||||||||||
Bong Mieu | BOGOMIN | EL 2125/GP-BTNMT | 30 Sq Km | Granted | 24/10/2008 | 2 years | 24/10/2010 |
COMPANY | TYPE OF CERTIFICATE | DATE GRANTED | TERM | EXPIRY DATE | ||||
Bong Mieu Gold Mining Company | Gold export certificate | December 31, 2008 | 1 year | Dec 31, 2009 | ||||
Phuoc Son Gold Mining Company | Gold export certificate | December 31, 2008 | 1 year | Dec 31, 2009 | ||||
Bong Mieu Gold Mining Company | Land Use Certificate | October 9, 1993 | 25 years | September 2017 |
PROJECT | E.L. REG. # | REG. HOLDER | ||
1. Phuoc Son | 67/GP-BTNMT | PSGMC | ||
2. Bong Mieu | 2125/GP BTNMT | BOGOMIN | ||
3. Capcapo | MPSA#141, EXPA#085 | AMIC | ||
4. Khau Pum | — | OPVL | ||
5. Phuoc Thanh | — | PSGC | ||
6. Sanakham | MEAPA | OYM |
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• | Stage 1 (October 1998 – March 1999): reconnaissance surveying of the then 100 square kilometres license area, identification of the three major mineralized shear structures, and commencement of detailed exploration over the first of these structures (the Dak Sa shear zone); | |
• | Stage 2 (April 1999 – December 1999): continuation of detailed exploration over the southern end of the Dak Sa shear zone (including mapping/sampling and diamond drilling six holes at Bai Dat) and follow-up exploration at other sites (particularly at K7) within the balance of the license area; | |
• | Stage 3 (January 2000 to June 2000): grid soil sampling in the Dak Sa & K7 shear zones, rock sampling, geological mapping, pan concentrate survey, diamond drilling of 29 holes at Bai Dat, Bai Cu, Bai Chuoi and Bai Go, within the Dak Sa shear zone; | |
• | Stage 4 (July 2000 to December 2000): detailed geological mapping, nine square kilometres soil survey north of Bai Go, rock geochemistry, petrology and diamond drilling of 17 holes at Bai Dat, Bai Cu, Bai Chuoi and Bai Go; |
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• | Stage 5 (January 2001–December, 2001): continuation of drilling with 31 additional holes at the Bai Go, Bai Gio and Bo prospects, as well as geological mapping, rock and soil geochemistry, pitting, surface and underground channel sampling, petrology, and gridding at other prospects including K7, Hoa Son, Tra Lon, Suoi Cay, Vang Nhe, Khe Rin, Khe Do and Khe Cop; | |
• | Stage 6 (January 2002 to December, 2002): scout drilling at the Khe Rin, North Khe Do, Khe Do, Bai Buom, Tra Long and K7 prospects (32 drillholes), as well as pitting at Nui Vang, geological mapping/sampling, soil geochemistry, ground magnetometer surveying at Khe Rin-Khe Do and Bai Buom, reconnaissance mapping elsewhere, including Vang Nhe, Tra Long, K7 and Hoa Son; commencement of mine scoping studies at Dak Sa; and | |
• | Stage 7 (January 2003 to December 31, 2003): in-fill, step-out and geotechnical diamond drilling at Bai Dat, Bai Go, Bai Chuoi and Bai Cu (27 holes); preparation of mineral resource estimates for the Bai Dat and Bai Go deposits; continuation of the scoping studies. A diamond drilling program was completed at Bai Chuoi sector (between the Bai Dat and Bai Go deposits) and soil geochemical surveys were being conducted elsewhere on the property. |
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OF MEASURED AND INDICATED MINERAL RESOURCES
INFERRED MINERAL RESOURCES
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Gold Grade | Contained | |||||||||||
Category | Tonnes | (g/t) | Gold (oz) | |||||||||
Proven | 235,650 | 8.72 | 66,070 | |||||||||
Probable | 694,740 | 7.48 | 167,080 | |||||||||
Total Proven & Probable Reserve Estimates | 930,390 | 7.79 | 233,150 | |||||||||
Gold Grade | Contained | |||||||||||
Category | Tonnes | (g/t) | Gold (oz) | |||||||||
Measured | 163,320 | 12.76 | 67,000 | |||||||||
Indicated | 546,350 | 10.16 | 178,470 | |||||||||
Total Measured plus Indicated Resources | 709,670 | 10.76 | 245,470 | |||||||||
Gold Grade | Contained | |||||||||||
Category | Tonnes | (g/t) | Gold (oz) | |||||||||
Total Inferred | 1,884,200 | 6.63 | 401,640 | |||||||||
Notes: | ||
(1) | Employed a lower 3.0 g/t grade cutoff. These Resource estimates were prepared by Olympus in October 2007 and validated by Terra Mining Consultants and Stevens and Associates (“TMC/SA”) in October 2007 and were prepared in accordance with National Instrument 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definition standards. A copy of the report titled “Preliminary Assessment of the Phuoc Son Project in Quang Nam Province, Vietnam”, dated December, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com. | |
(2) | The mineral reserve and mineral resource estimates contained in this table have been prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). The NI 43-101 standards are similar to those used by the United States Securities and Exchange Commission’s (“SEC”) Industry Guide No. 7. However, the definitions in NI 43-101 differ in certain significant respects from those under Industry Guide No. 7. Accordingly, mineral reserve and mineral resource information contained herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. As of December 31, 2008, $3,518,324 of the Company’s deferred exploration and development costs would qualify for capitalization as mineral reserves under Industry Guide No. 7. There are also uses of the terms “indicated resources” and “inferred resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. |
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(d) | History of Exploration on Bong Mieu Gold Property |
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(e) | Main mineral occurrences |
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Gold Grade | Contained | |||||||||||
Category/Deposit | Tonnes | (g/t) | Gold (oz) | |||||||||
Proven(1) | ||||||||||||
Probable (1) | 289,000 | 2.90 | 26,900 | |||||||||
Proven plus Probable(1) | 289,000 | 2.90 | 26,900 |
Notes: | ||
(1) | The Ho Gan remaining reserve was estimated by deducting the official mined out tonnage — the year-end depletion (which was estimated by reconciling the mining tonnage (truck count) with the official mill tonnage (weightometer) and has not been re-calculated at the yearend. The remaining mineral reserve is placed in the Probable category. Employed a lower 0.8 g/t grade cutoff and 10 g/t grade upper cutoff and 10% dilution (0.3 g/t Au). Proven and probable reserve estimates were prepared by Olympus in September 2005 and validated by Terra Mining Consultants and Stevens & Associates (“TMC/SA”) in August 2007 and were prepared in accordance with National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions standards. A copy of the report titled Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam, dated August 31, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com. |
Measured & Indicated Resources | Inferred Resources (3) | |||||||||||||
Gold | Contained | Gold | Contained | |||||||||||
Category/ | Grade | Gold | Category/ | Grade | Gold | |||||||||
Deposit | Tonnes | (g/t) | (oz) | Deposit | Tonnes | (g/t) | (oz) | |||||||
Measured (1) | 1,071,900 | 2.13 | 73,400 | Inferred (1) | 4,739,800 | 1.40 | 213,340 | |||||||
Indicated (1) | 2,511,600 | 1.75 | 141,310 | Historical Inferred | 1,220,000 | 8.10 | 317,700 | |||||||
(Underground) (2) |
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Measured & Indicated Resources | Inferred Resources (3) | |||||||||||||
Gold | Contained | Gold | Contained | |||||||||||
Category/ | Grade | Gold | Category/ | Grade | Gold | |||||||||
Deposit | Tonnes | (g/t) | (oz) | Deposit | Tonnes | (g/t) | (oz) | |||||||
Historical M&I | 216,700 | 6.51 | 45,350 | |||||||||||
(Underground) (2) | ||||||||||||||
Tungsten and Fluorine as Gold Equivalent (4) | ||||||||||||||
Measured | 32,340 | Inferred | 85,390 | |||||||||||
Indicated | 52,380 |
Notes: | ||
1. | The Ho Gan remaining reserve was estimated by deducting the official mined out tonnage — the year-end depletion (which was estimated by reconciling the mining tonnage (truck count) with the official mill tonnage (weightometer) and has not been re-calculated at the yearend. The remaining mineral reserve is placed in the Probable category. Employed a lower 0.8 g/t grade cutoff and 10 g/t grade upper cutoff and 10% dilution (0.3 g/t Au). Proven and probable reserve estimates were prepared by Olympus in September 2005 and validated by Terra Mining Consultants and Stevens & Associates (“TMC/SA”) in August 2007 and were prepared in accordance with National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions standards. A copy of the report titled Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam, dated August 31, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com. | |
2. | Ho Ray and Thac Trang Deposit mineral resources: Employed a lower 0.5 g/t grade cutoff and 10 g/t grade upper cutoff. Updated by Olympus (March 2007) and validated by Terra Mining Consultants and Stevens & Associates (“TMC/SA”) in August 2007 from the prior mineral resource estimates prepared by Watts, Griffis and McOuat (‘WGM”) in accordance with National Instrument 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions standards. A copy of the report titled Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam, dated August 31, 2007 by TMC/SA can be found in the Company’s filings at www.sedar.com. A recalculation of the Ho Ray -Thac Trang Resource following drilling during 2008, was completed by Olympus staff and validated by TMC/SA. | |
3. | Nui Kem Underground Historical Resources. Employed a lower 3.0 g/t grade cutoff and 30 g/t grade upper cutoff. The Technical Report to accompany these historical resource estimates was the pre-feasibility study compiled in 1996 These estimates have been reviewed by an independent consultant in 1997 and were found to have been carried out in a manner consistent with standard practice in the industry at the time. These historical estimates are relevant as they are the most recent estimate completed for the project. | |
4. | Using values of US$210/MTU (2007 $250) for Tungsten and US$880/oz (2007 $700) for gold, the value of the Tungsten in the Bong Mieu East Resource is equal to 170,110 ounces. | |
5. | The mineral reserve and mineral resource estimates contained in this table have been prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI43-101”). The NI43-101 standards are similar to those used by the United States Securities and Exchange Commission’s (“SEC”) Industry Guide No. 7. However, the definitions in NI 43-101 differ in certain respects from those under Industry Guide No. 7. Accordingly, mineral reserve and mineral resource information contained herein may not be comparable to similar information disclosed by U.S. companies. Under the requirements of the SEC, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. None of the Company’s mineral reserves as determined under NI 43-101 to date would qualify as mineral reserves under Industry Guide No. 7. There are also uses of the terms “indicated resources” and “inferred resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. | |
6. | Inferred resources are in addition to measured and indicated. | |
7. | Mining losses and dilution (estimated separately for each of three deposits) are fully accounted when calculating remaining reserve/resources. | |
8. | The Bong Mieu process plant is still being optimized and has not yet reached designed steady-state metallurgical recovery. The Phuoc Son process plant is yet to be constructed. Once steady-state metallurgical recovery has been achieved, metallurgical recovery factors for both mines will be reported by YE average. | |
9. | Commodity prices used over the last three years (in USD) were as follows: |
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Commodity | 2007 Price | 2008 Price | 2009 Price | |||
Gold | US$700/oz | US$880/oz | US$1,120/oz | |||
Tungsten | US$250/MTU | US$210/MTU | US$150/MTU |
10. | The Company currently operates two mines (Bong Mieu and Phuoc Son), company ownership of which is 80% and 85%, respectively. The quantities disclosed relate to the whole mines. | |
11. | The resource estimates are inclusive of the reserve estimates. |
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Q4 Fiscal | Q3 Fiscal | Q2 Fiscal | Q1 Fiscal | |||||||||||||||||||||
2008 | 2008 | 2008 | 2008 | 2008 | 2007 | |||||||||||||||||||
Tonnes of ore milled | 34,562 | 43,724 | 45,040 | 41,996 | 165,322 | 155,500 | ||||||||||||||||||
Grade (g/t Au) | 4.48 | 2.92 | 2.82 | 3.28 | 3.31 | 3.16 | ||||||||||||||||||
Mill recoveries (percent) | 69 | % | 57 | % | 63 | % | 65 | % | 64 | % | 62 | % | ||||||||||||
Gold production (ounces) | 3,422 | 2,322 | 2,580 | 2,866 | 11,191 | 9,737 | ||||||||||||||||||
Gold sales (ounces) | 2,876 | 2,388 | 2,625 | 3,021 | 10,910 | 9,198 | ||||||||||||||||||
Sales | $ | 2,831,848 | $ | 2,163,781 | $ | 2,327,742 | $ | 2,889,616 | $ | 10,212,987 | $ | 6,996,257 | ||||||||||||
Cost of sales | $ | 2,782,088 | $ | 2,255,149 | $ | 1,807,184 | $ | 1,650,724 | $ | 8,495,143 | $ | 5,523,193 | ||||||||||||
Amortization | $ | 959,500 | $ | 911,215 | $ | 568,266 | $ | 560,941 | $ | 2,999,922 | $ | 1,863,354 | ||||||||||||
Royalties | $ | 19,462 | $ | 37,594 | $ | 44,014 | $ | 36,071 | $ | 137,141 | $ | 112,336 |
(a) | A total of 10,910 ounces of gold were sold for proceeds of CAD$10,212,987 during 2008 of which 2,826 ounces with proceeds of CAD$2,457,492 were netted against deferred development costs for projects that were not in commercial production. |
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1. | Gold price volatility could impact profitability at the current operating mine and economic viability at development and exploration projects; | ||
2. | The ability of the Company to continue its activities is dependent upon obtaining the necessary funding and/ or generating funds to continue its exploration and development programs and/or the realization of proceeds from the sale of one or more of its properties and/or assets. Management has determined that in the current economic circumstances, and because of the uncertainty of raising funds in the capital markets, self funding of the development of the Phuoc Son mine is the preferred option. Accordingly, the Company has commenced toll treatment of the Phuoc Son ore at the Bong Mieu plant to enable self funding; | ||
3. | As a result of the Company’s decision to fund its Phuoc Sun operations internally, and in order to conserve cash, the Company’s current policy is to ensure the Company operations are cash positive before it expands its exploration programs. The Company has approved a budget of U.S. $150,000 that will be predominantly dedicated to developmental drilling, resource updates and feasibility studies. The key focus of the Company in 2009 and 2010 is to increase production output to ensure the Company operations are cash flow positive. This will enable non-production related exploration and infill drilling programes to be completed to increase its gold reserves and resources at Bong Mieu and Phuoc Son; | ||
4. | Refer to Item 3D for a complete list of risks the Company faces. |
% | ||||||||||||||
2008 | 2007 | Change | Comments on variances | |||||||||||
Sales | $ | 7,755,495 | $ | 6,996,257 | 11 | The Bong Mieu central plant sold 8,084 oz of gold during the 2008 year(at an average realized price of US$883 per ounce) compared to 9,198 oz of gold in the same period last year (at an average realized price of US$708 per ounce). | ||||||||
Cost of sales | 6,204,527 | 5,523,193 | 12 | Costs per ounce of gold produced were higher in the last two quarters of 2008 mainly due to lower recovery rates as a result of high base metal content and processing of development ore. The 2007 costs per ounce were also considered high due to lower recovery rates and lower mill tonnage. |
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% | ||||||||||||||
2008 | 2007 | Change | Comments on variances | |||||||||||
Amortization | 2,630,938 | 1,925,458 | 37 | Increased as a result of increased investment in Capital Assets. | ||||||||||
Management fees and salaries | 3,092,628 | 2,770,770 | 12 | Increased as a result of new expenses for deferred share units issued under a new deferred share unit plan for non-executive directors and higher independently assessed salaries. | ||||||||||
Professional fees | 397,183 | 782,058 | -49 | Decreased as a result of lower regulatory activity and fees in 2008 when compared to 2007 which had more audit and SOX review fees, US registration costs and fees related to the 2007 proposed Zedex merger that was withdrawn. | ||||||||||
Travel | 644,390 | 574,569 | 12 | Increase in number of flights taken by senior management to Vietnam and Toronto. | ||||||||||
Investor relations and promotion | 373,857 | 527,466 | -29 | Lower for the 2008 year due to change in marketing plans in the second half of the year to reduce costs. | ||||||||||
Stock-based compensation | 1,063,160 | 2,272,717 | -53 | Increased earlier in 2008 due to the retention of a compensation consultant (see salaries above) however over the year less stock-based compensation has been awarded | ||||||||||
Interest expense (income) | (587,390 | ) | (694,985 | ) | -16 | Interest income decreased in 2008 due to the decreased cash balance held. | ||||||||
Foreign exchange loss (gain) | $ | (352,756 | ) | $ | 566,894 | 162 | Exchange gain mainly as a result of the foreign exchange rate fluctuations impacting the value of investments denominated in US dollars. |
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Payment Due by Period | ||||||||||||||||||||
Less than | ||||||||||||||||||||
Contractual Obligations at December31 2008 | Total | One Year | 1-3 Years | 3-5 Years | >5 Years | |||||||||||||||
Payments Due By | ||||||||||||||||||||
Capital lease obligations | $ | 698,281 | $ | 698,281 | $ | — | $ | — | $ | — | ||||||||||
Operating lease obligations | 488,188 | 234,634 | 172,517 | 81,037 | — | |||||||||||||||
Purchase obligations — supplies and services | 2,371,582 | 2,185,629 | 185,953 | — | — | |||||||||||||||
Purchase obligations — capital | 355,342 | 355,342 | — | — | — | |||||||||||||||
Asset retirement obligations | 1,420,407 | 138,405 | 511,185 | 646,885 | 123,932 | |||||||||||||||
Total | $ | 5,333,800 | $ | 3,612,291 | $ | 869,654 | $ | 727,922 | $ | 123,932 |
Date of First | ||||||||
Election or | Term of Office | |||||||
Name | Title | Date of Birth | Appointment | of the Directors | ||||
David A. Seton | Executive Chairman, Chief Executive Officer and Director | Dec. 13, 1955 | Aug. 23, 1996 | 3 year | ||||
Jon Morda | Director | Jan. 13, 1952 | Aug. 16, 2005 | 3 years | ||||
John A.G. Seton | Director | Jan. 10, 1963 | July 7, 1999 | 2 years | ||||
T. Douglas Willock | Director | Jan. 8, 1953 | Feb. 16, 2006 | 2 years | ||||
Peter Tiedemann | Chief Financial Officer | Sept 18,1942 | July 25, 2006 | n/a | ||||
Charles Barclay | Chief Operating Officer | Dec. 18, 1950 | July 13, 2006 | n/a | ||||
T. Rodney P. Jones | VP — Exploration | Aug. 26, 1944 | Aug. 6, 2007 | n/a | ||||
Jim Hamilton | VP — Investment Relations | Oct. 7, 1951 | Mar. 17, 2008 | n/a | ||||
Russell Graham | VP — Finance Vietnam | May 21, 1965 | Aug. 6, 2007 | n/a | ||||
Huong Le-Dao | VP — Human Resources | Jan 1, 1970 | Sept. 1, 2008 | n/a | ||||
Louis Montpellier | Corporate Secretary | Nov 13, 1953 | Mar. 17, 2008 | n/a |
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Annual Compensation | Long Term Compensation | |||||||||||||||||||||||||||||
Awards | Payouts | |||||||||||||||||||||||||||||
Restricted | ||||||||||||||||||||||||||||||
Other | Securities | Shares or | All | |||||||||||||||||||||||||||
Name and | Annual | Under Options/ | Restricted | LTIP | Other | |||||||||||||||||||||||||
Principal | Salary | Bonus | Compensation | SARs Granted | Share Units | Payouts | Compensation | |||||||||||||||||||||||
Position | Year | ($)(1) | ($) | ($) | (#)(2) | ($) | ($) | ($) | ||||||||||||||||||||||
David A. Seton(3) Executive Chairman | 2008 | 240,000 | 12,000 | N/A | 1,809,000 | N/A | N/A | N/A | ||||||||||||||||||||||
John Seton(4) Director | 2008 | 25,000 | Nil | 35,000 | Nil | N/A | N/A | $ | 110,653 | |||||||||||||||||||||
Jon Morda Director | 2008 | 30,000 | Nil | 35,000 | Nil | N/A | N/A | N/A | ||||||||||||||||||||||
Kevin Flaherty Director | 2008 | 30,000 | Nil | 35,000 | Nil | N/A | N/A | N/A | ||||||||||||||||||||||
Douglas Willock Director | 2008 | 30,000 | Nil | 35,000 | Nil | N/A | N/A | N/A | ||||||||||||||||||||||
Louise Montpellier Corporate Secretary | 2008 | Nil | Nil | N/A | 250,000 | N/A | N/A | N/A | ||||||||||||||||||||||
Peter Tiedemann CFO(7) | 2008 | 160,000 | 8,000 | N/A | 426,000 | N/A | N/A | N/A | ||||||||||||||||||||||
Charles Barclay(5) VP Operations | 2008 | 175,000 | 8,750 | N/A | 426,000 | N/A | N/A | N/A | ||||||||||||||||||||||
Huong Le-Dao(9) VP Human Resources | 2008 | 50,000 | Nil | N/A | 153,850 | N/A | N/A | N/A | ||||||||||||||||||||||
James Hamilton VP Investor Relations | 2008 | 132,000 | 6,600 | N/A | 319,000 | N/A | N/A | N/A | ||||||||||||||||||||||
Russell Graham VP Finance Vietnam | 2008 | 142,000 | 7,100 | N/A | 319,000 | N/A | N/A | N/A | ||||||||||||||||||||||
Colin Patterson | 2008 | 220,305 | Nil | N/A | Nil | N/A | N/A | N/A |
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Annual Compensation | Long Term Compensation | |||||||||||||||||||||||||||||
Awards | Payouts | |||||||||||||||||||||||||||||
Restricted | ||||||||||||||||||||||||||||||
Other | Securities | Shares or | All | |||||||||||||||||||||||||||
Name and | Annual | Under Options/ | Restricted | LTIP | Other | |||||||||||||||||||||||||
Principal | Salary | Bonus | Compensation | SARs Granted | Share Units | Payouts | Compensation | |||||||||||||||||||||||
Position | Year | ($)(1) | ($) | ($) | (#)(2) | ($) | ($) | ($) | ||||||||||||||||||||||
Pamela Campagnoni(8) | 2008 | 170,380 | 10,950 | N/A | Nil | N/A | N/A | N/A | ||||||||||||||||||||||
Rodney Jones(6) VP Exploration | 2008 | 155,000 | 7,750 | N/A | 319,000 | N/A | N/A | N/A |
NOTES: | ||
(1) | Amounts converted to Canadian dollars using Bank of Canada exchange rates at end of December 2008 rounded to the nearest dollar. | |
(2) | Figures represent options granted during a particular year; see “Aggregate Option” table for the aggregate number of options outstanding at year end. | |
(3) | Mr. Seton was appointed as CEO on February 4, 2008, | |
(4) | During 2008 the Company paid or accrued $110,653 for consulting and legal fees to entities associated with John Seton, a director of the Company. These entities included (i) Jura Trust, which is associated with John Seton, and (ii) Claymore Law, a law firm in which John Seton is a principal | |
(5) | Mr. Barclay was appointed Chief Operating Officer on March 17, 2008. | |
(6) | Mr. Jones joined as VP — Exploration on August 6, 2007. | |
(7) | Mr. Tiedemann was appointed VP — Corporate Affairs of the Company on March 17, 2008. Prior to that, he was the CFO and Corporate Secretary. He was reappointed to the role of CFO in October 2008. | |
(8) | Ms. Campagnoni ceased employment with the Company in October 2008. | |
(9) | Ms. Le-Dao joined as VP- Human Resources in September 2008. |
1) | a receiver or liquidator is appointed in respect of the Company; or |
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2) | the Company fails to pay any moneys payable hereunder within fourteen (14) calendar days of the due date and shall further fail to pay such moneys within fourteen (14) calendar days of receiving written notice of such failure from the Executive. |
(i) | the Executive’s full fee through to the date of termination at the amount in effect at the time the Company’s Notice of Termination was given, the amount of any allowable expenses reimbursable, plus an amount equal to the amount, if any, of any bonuses previously made to the Executive which have not been paid; | ||
(ii) | in lieu of further fees for periods subsequent to the date of the Company’s Notice of Termination, a payment: |
equal to three (3) months of the Executive’s then existing annual fees should termination occur within the first twelve (12) months from the date the Executive commenced providing services to the Company; or | |||
equal to six (6) months of the Executive’s then existing annual fees should termination occur after the first twelve (12) months from the date the Executive commenced providing services to the Company; and |
(iii) | the Executive’s options on shares of the Company shall remain in full force and effect for the earlier of the expiry date of such options or twelve (12) months following the Company’s Notice of Termination and the option agreements shall be deemed to have been amended, to the extent required, to the effect that any provision which would otherwise terminate such options as a result of the termination of the Executive’s services shall be null and void. |
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(i) | the Executive’s fees through to the Date of Resignation at the amount of the Executive’s then existing annual fee at the time notice of termination or notice of resignation was given, the amount of any reimbursable expenses, plus an amount equal to the amount, if any, of any bonuses previously made to the Executive which have not been paid, accrued vacation and any other amounts due upon termination or resignation; | ||
(ii) | in lieu of further fees for periods subsequent to the Date of Resignation, a payment equal to the number of months set out in Schedule “B” at the rate of the Executive’s then existing annual fee and incentive bonus pursuant to Schedule “B”; and | ||
(iii) | in lieu of common shares of the Company issuable upon exercise of options, if any, previously granted to the Executive under the Company’s incentive programs and remaining unexercised at 5:00 p.m. (Toronto time) on the fourth calendar day following the Date of Resignation, which options shall be cancelled upon the payment referred to herein, a cash amount equal to the aggregate difference between the exercise price of all options held by the Executive, whether or not then fully exercisable, and the higher of (i) the average of the closing prices of the Company’s common shares as reported on the Toronto Stock Exchange (or such other stock exchange on which the Company’s shares may be listed) for thirty (30) calendar days preceding the Date of Resignation or (ii) the average price actually paid for the most highly priced one percent (1%) of the Company’s common shares, however and for whatever reason by any person who achieves control of the Company as such term is defined in Section 2(g); and | ||
(iv) | the Executive shall have the right, exercisable up to the fourth calendar day following the Date of Resignation, to elect to waive the application of the provisions regarding stock options, |
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following the Date of Resignation. The Executive may exercise this election on or before 5:00 p.m. Toronto time on such fourth calendar day by delivering a notice in writing to the Company of such waiver whereupon: |
in accordance with the Company’s stock option plan, the Executive’s unvested options on shares of the Company shall immediately vest and the Executive’s vested options on shares of the Company will expire within ninety (90) days of the Date of Resignation; and | |||
the Company shall be relieved of any obligation in connection with termination of the Executive’s engagement to make the payment in Section 5(h)(iii). |
(v) | The Executive agrees to accept such compensation in full satisfaction of any and all claims the Executive has or may have against the Company and the Executive agrees to execute and deliver a full and final release in writing of the Company with respect to the same upon payment of said sum, except monies owing by either party to the other up to the Date of Resignation. |
6B.2.Stock Option Plan |
1. | The maximum number of options that can be issued at any one time cannot be higher than 12% of the Company’s issued and outstanding share capital (on a non-diluted basis). | |
2 | Options are subject to an accelerated expiry term (the “Accelerated Term”) for those options held by individuals who are no longer associated with the Company. The Accelerated Term requires that options held by individuals who resign or are terminated from the Company expire on the earlier of: (i) the original expiry term; or (ii) 90 days from the date of resignation or termination; or (ii) the date provided for in the employment or consulting agreement between participant and the Company; however, shareholder approval is required if this would cause the options to extend beyond original expiry. | |
3. | The maximum number of shares that may be reserved for option grant to any one individual insider in any 12 month period may not exceed 5% of the common shares issued and outstanding (on a non-diluted basis) on the date of grant; |
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4. | The maximum number of shares that may be reserved for issuance to insiders of the Company may not exceed 10% of the common shares issued and outstanding (on a non-diluted basis) on the date of grant; | |
5. | The maximum number of shares that may be issued to insiders, as a group, within a one year period may not exceed 10% of the common shares issued and outstanding (on a non-diluted basis) on the date of issuance; | |
6. | The maximum number of shares that may be issued to any non-employee directors, as a group, during any 12 month period shall not exceed 5% of the common shares issued and outstanding (on a non-diluted basis) on the date of grant; | |
7. | Subject to the policies, rules and regulations of any lawful authority having jurisdiction (including Exchange), the Board may, at any time, without further action by its shareholders, amend the Plan or any Option granted hereunder in such respects as it may consider advisable. The Board may not, however, without the consent of the Participant, alter or impair any of the rights or obligations under an Option theretofore granted. No Common Shares shall be issued under any amendment to this Plan unless and until the amended Plan has been approved by the Exchange. The Plan may be abandoned or terminated in whole or in part at any time by the Board, except with respect to any Option then outstanding under the Plan | |
8. | The Option Price of any Option granted shall be determined by the Board but shall not be less than the volume weighted average trading price of the common shares on the Exchange, or another stock exchange where the majority of the trading volume and value of the listed shares occurs, for the 5 trading days immediately prior to the date of grant (or, such other price required by the Exchange) (calculated by dividing the total value by the total volume of securities traded for the relevant period) (“Market Price”). | |
9. | Upon the announcement of any form of transaction (a “Change of Control Transaction”) which, if completed, would constitute a Change of Control and under which Common Shares of the Company are to be exchanged, acquired or otherwise disposed of, including a take-over bid, or tender offer made for all or any of the issued and outstanding common shares, the Company shall, as soon as practicable following the announcement of such Change of Control Transaction, notify each Participant currently holding an Option of the Change of Control Transaction, and all Options of the Participant which have not vested shall be deemed to be fully vested and exercisable solely for purposes of permitting the Participant to exercise such Options in order to participate in the Change of Control Transaction in respect of the Common Shares (the “Optioned Shares”) thereby acquired. |
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2006 | 2007 | 2008 | ||||||||||
Vietnam | 340 | 471 | 539 | |||||||||
Elsewhere Worldwide | 5 | 6 | 8 | |||||||||
Total | 345 | 477 | 547 | |||||||||
Shares of | ||||||||||||||||||
Common | ||||||||||||||||||
Stock | Options Vested | |||||||||||||||||
Title of | Name of Beneficial | (“Shares”) | or Vesting | Beneficial | Percent of | |||||||||||||
Class | Owner | Held | within 60 days | Ownership | Class | |||||||||||||
Common | David A. Seton(1) | 23,334 | 4,603,000 | 4,626,334 | 1.95 | |||||||||||||
Common | John A. G. Seton(2) | Nil | 1,166,667 | 1,166,667 | 0.50 | |||||||||||||
Common | Jon Morda | 19,500 | 413,333 | 432,833 | 0.19 | |||||||||||||
Common | T. Douglas Willock | 91,000 | 492,333 | 583,333 | 0.25 | |||||||||||||
Common | Peter Tiedemann | 20,000 | 908,667 | 928,667 | 0.40 | |||||||||||||
Common | Charles Barclay | Nil | 1,475,333 | 1,475,333 | 0.63 | |||||||||||||
Common | Rod Jones | Nil | 506,333 | 506,333 | 0.22 | |||||||||||||
Common | James Hamilton | 35,090 | 356,333 | 391,423 | 0.17 | |||||||||||||
Common | Huong Le-Dao | Nil | 51,283 | 51,283 | 0.02 | |||||||||||||
Common | Louis Montpellier | Nil | 83,333 | 83,333 | 0.04 | |||||||||||||
Common | Russell Graham | Nil | 206,333 | 206,333 | 0.09 |
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NOTES: | ||
(1) | Mr. David Seton is the beneficial owner of 4,626,334 Shares (i) 23,334 Shares which he owns directly, and (ii) 4,603,000 Shares he may acquire pursuant to the exercise of stock options. In January 2010 it is anticipated that Mr. Seton will be granted otions to acquire an additional 1,573,585 Shares. | |
(2) | Mr. John Seton is the beneficial owner of 1,500,000 Shares, which are the Shares he may acquire pursuant to the exercise of stock options. He owns no Shares directly. This amount does not include the 5,797,105 Shares he will acquire when the pending amalgamation involving the Company and Zedex is completed. Under the terms of the Amalgamation, Mr. Seton, who owns 13,913,052 shares of Zedex, will receive 5,797,105 Shares of the Company in exchange for his Zedex shares. In addition, Mr. Seton who holds options to acquire 1,500,000 shares of Zedex, will exchange those options for options to acquire to acquire 625,000 Shares of the Company, bringing the total number of options he will have in the Company to 2,125,000 Shares. In January 2010 it is anticipated that Mr. Seton will be receiving options to acquire an additional 1,000,000 Shares in the Company, bringing his total number of options to 3,125,000 Shares. |
Number of | ||||||||||||||
Common-voting | ||||||||||||||
Name | Shares | Exercise Price | Grant Date | Expiration Date | ||||||||||
David A. Seton | 1,000,000 | 0.32 | Aug 31, 2005 | Aug 31, 2010 | ||||||||||
1,000,000 | 0.32 | Sept 29, 2005 | Sept 29, 2010 | |||||||||||
3,000,000 | 0.75 | Mar 5, 2007 | Mar 5, 2012 | |||||||||||
1,809,000 | 0.40 | Jun 18, 2008 | Jan 1, 2013 | |||||||||||
John A. G. Seton | 500,000 | 0.32 | Aug 31, 2005 | Aug 31, 2010 | ||||||||||
1,000,000 | 0.75 | Mar 5, 2007 | Mar 5, 2012 | |||||||||||
Jon Morda | 180,000 | 0.32 | Aug 31, 2005 | Aug 31, 2010 | ||||||||||
350,000 | 0.65 | Mar 5, 2007 | Mar 5, 2012 | |||||||||||
T. Douglas Willock | 159,000 | 0.55 | Feb 16, 2006 | Feb 16, 2011 | ||||||||||
500,000 | 0.65 | Mar 5, 2007 | Mar 5, 2012 | |||||||||||
Kevin Flaherty | 250,000 | 0.75 | May 2, 2007 | May 2, 2012 | ||||||||||
Peter Tiedemann | 100,000 | 0.51 | Jul 18, 2006 | Jul 18, 2011 | ||||||||||
1,000,000 | 0.65 | Mar 5, 2007 | Mar 5, 2012 | |||||||||||
426,000 | 0.40 | Jun 12, 2008 | Jan 1, 2013 | |||||||||||
Charles Barclay | 500,000 | 0.36 | Jan 25, 2006 | Jan 25, 2011 | ||||||||||
500,000 | 0.43 | Nov 3, 2006 | Nov 3, 2011 | |||||||||||
500,000 | 0.65 | Aug 15, 2007 | Aug 15, 2012 | |||||||||||
426,000 | 0.40 | Jun 18, 2008 | Jan 1, 2013 | |||||||||||
Rod P Jones | 600,000 | 0.65 | Aug 15, 2007 | Aug 15, 2012 | ||||||||||
319,000 | 0.40 | Jul 23, 2008 | Jan 1, 2013 | |||||||||||
Huong Le-Dao | 153,850 | 0.40 | Sept 1, 2008 | Jan 1, 2013 |
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Number of | ||||||||||||||
Common-voting | ||||||||||||||
Name | Shares | Exercise Price | Grant Date | Expiration Date | ||||||||||
James Hamilton | 150,000 | 0.32 | Nov 22, 2005 | Nov 21, 2010 | ||||||||||
150,000 | 0.65 | Aug 15, 2007 | Aug 13, 2012 | |||||||||||
319,000 | 0.40 | Jun 13, 2008 | Jan 1, 2013 | |||||||||||
Louis Montpellier | 250,000 | 0.62 | May 1, 2008 | Apr 30, 2013 | ||||||||||
Russell Graham | 150,000 | 0.65 | Aug 15, 2007 | Aug 15, 2012 | ||||||||||
319,000 | 0.40 | Jun 13, 2008 | Jan 1, 2013 |
Name | No. of Shares | Percentage | ||||||
Dragon Capital Group Limited | 89,679,601 | (1) | 38.60 | % | ||||
Ho Chi Minh City, Vietnam | ||||||||
Zedex Minerals Limited | 69,174,827 | (2) | 29.77 | % | ||||
Auckland, New Zealand |
Notes: | ||
(1) | Of these securities 39,369,227 shares are registered in the name of Vietnam Growth Fund Limited, 19,708,500 shares are registered in the name of Vietnam Enterprise Investments Limited, 13,000,000 are registered in the name of Vietnam Resource Investment (Holdings) Limited, 16,131,874 are registered in the name of Vietnam Dragon Fund Limited, 1,270,000 shares are registered in the name of Dragon Capital Markets Limited and 200,000 shares are registered in the name of Dragon Capital Management Limited. | |
Management of the Company is unaware of who the beneficial owners of Dragon Capital Group Limited (“Dragon Capital”) are. Based upon information contained on its website,www.dragoncapital.com, Dragon Capital is an investment group focused exclusively on Vietnam’s capital markets. Management is unaware of who are the beneficial owners of the Company’s Shares owned by Dragon Capital. | ||
(2) | Mr. John A. G. Seton, director, is an insider and executive chairman of Zedex Minerals Limited. At a Special General Meeting of Zedex’s shareholders held on December 17, 2009, Zedex’s shareholders approved a merger with the Company. Under the terms of the merger Zedex’s shareholders will receive one share of the Company for every 2.4 Zedex shares owned. |
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(a) | Paid or accrued $889,836 in 2008 for management fees and $301,626 in 2008 in reimbursement of expenses incurred on behalf of the Company to companies controlled by officers of the Company. The companies that were paid for management fees and reimbursement of expenses include the following: Orangue Holdings Limited associated with David Seton; Momentum Resources International Pty Ltd associated with Colin Patterson; Action Management Limited associated with Charles Barclay; Wholesale Products Trading Limited associated with Peter Tiedemann; and Cawdor Holdings Limited associated with Russell Graham. Expenses that were reimbursed include the following costs: airfare, accommodation, meals, car rental, telecommunications, computer, training courses, conferences and licenses. All of these management and consulting fees have been disclosed in “Item 6. B Directors, Senior Management, and Employees. Compensation.” | |
(b) | Paid or accrued $110,653 in 2008 for consulting and legal fees. The companies that were paid for consulting fees include the following: Jura Trust (“Jura”) associated with John Seton, a director of the Company; Claymore Law (“Claymore”) where John Seton is a principal. The services provided are not under contract as the consulting and legal services are provided on an ad hoc basis based on requests by the Company. These fees have been included in “Item 6. B Directors, Senior Management, and Employees. Compensation.” for John Seton under “All Other Compensation.” | |
(c) | On January 1, 2006, Zedex Minerals Limited (Zedex) (a significant shareholder of the Company) was assigned the 2% gross production royalty, on the Bong Mieu sales, less incremental costs when Ivanhoe assigned to Zedex all its rights, title and interest in and to the debt, gross production royalties and royalty agreement. Refer to Exhibit 3.16. The Company paid or accrued $143,031 in 2008 for royalties to Zedex, a shareholder of the Company. The royalty is calculated as 2% of the net sales amount equal to the revenues for gold and silver less refining and delivery costs. |
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TSX and TSX-V Common — Voting Shares Trading Activity | |||||||||
Low (CAD$) | High (CAD$) | ||||||||
Month and Year | |||||||||
February 28, 2009 | $ | 0.11 | $ | 0.18 | |||||
January 31, 2009 | 0.07 | 0.15 | |||||||
December 31, 2008 | 0.045 | 0.075 | |||||||
November 30, 2008 | 0.045 | 0.06 | |||||||
October 31, 2008 | 0.04 | 0.12 | |||||||
September 30, 2008 | 0.115 | 0.17 | |||||||
Month and Year | |||||||||
October — December 2008 | $ | 0.04 | $ | 0.125 | |||||
July — September 2008 | 0.115 | 0.25 | |||||||
April — June 2008 | 0.205 | 0.39 | |||||||
January — March 2008 | 0.35 | 0.50 | |||||||
October — December 2007 | 0.40 | 0.61 | |||||||
July — September 2007 | 0.44 | 0.78 | |||||||
April — June 2007 | 0.55 | 1.20 | |||||||
January — March 2007 | 0.46 | 0.72 |
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TSX and TSX-V Common — Voting Shares Trading Activity | |||||||||
Low (CAD$) | High (CAD$) | ||||||||
Month and Year | |||||||||
Ended December 31, 2008 | $ | 0.04 | $ | 0.50 | |||||
Ended December 31, 2007 | 0.40 | 1.20 | |||||||
Ended December 31, 2006 | 0.30 | 0.94 | |||||||
Ended December 31, 2005 | 0.215 | 0.45 | |||||||
Ended December 31, 2004 | 0.28 | 0.57 |
otc bulletin Board (US $) | Low | High | ||||||
Month and Year | ||||||||
March 5, 2008 — March 31, 2008 | 0.36 | 0.40 | ||||||
April — June 2008 | 0.20 | 0.38 | ||||||
July — September 2008 | 0.12 | 0.25 | ||||||
October — December 2008 | 0.04 | 0.12 | ||||||
January — February 2009 | 0.06 | 0.16 | ||||||
otc bulletin Board (US $) | Low | High | ||||||
Month and Year | ||||||||
September 2008 | 0.12 | 0.17 | ||||||
October 2008 | 0.05 | 0.12 | ||||||
November 2008 | 0.04 | 0.06 | ||||||
December 2008 | 0.04 | 0.08 | ||||||
January 2009 | 0.06 | 0.12 | ||||||
February 2009 | 0.11 | 0.16 |
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1) | Debt Finance Facility Agreementbetween Olympus Pacific Minerals Inc., Bong Mieu Gold Mining Company Limited, Formwell Holdings Limited and Macquarie Bank Limited, dated February 8, 2006. Refer to Item 5B for details on this agreement. | ||
2) | Agreement for Fulfilment of Contract, dated September 16, 2006, between Phuoc Son Gold Co. Ltd. and Huong Toan Company Ltd. This contract was cancelled on November 26, 2006. Refer to Item 4D.1 for details on this contract and cancellation. | ||
3) | Mining License No 116 / GP- BTNMT— dated January 23, 2006. Refer to Item 4D.1 (a) for details on this license. | ||
4) | Gold Export Certificate —dated January 25, 2006 and January 5, 2007. Refer to Item 4D.2 (a) for details on this license. | ||
5) | Memorandum of Agreement and Supplement —November 24, 2006 — Refer to Item 4A for details on this agreement. |
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ITEM 11: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12: | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
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ITEM 13: | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14: | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15: | CONTROLS AND PROCEDURES |
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ITEM 16: | AUDIT COMMITTEE |
Financial Year | Audit Related | |||||||
Ending | Audit Fees(1) | Fees(2) | Tax Fees(3) | All Other Fees(4) | ||||
2008 | $125,000 | Nil | Nil | Nil | ||||
2007 | $125,000 | $60,000 | Nil | $270,000 |
(1) | The aggregate audit fees billed. | |
(2) | The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements which are not included under the heading “Audit Fees”. | |
(3) | The aggregate fees billed for professional services rendered for tax compliance, tax advice and tax planning. | |
(4) | The aggregate fees billed for products and services other than as set out under the headings “Audit Fees”, “Audit Related Fees” and “Tax Fees”. |
ITEM 17: | FINANCIAL STATEMENTS |
1. | Consolidated Balance Sheets of Olympus Pacific Minerals Inc. as at December 31, 2008 and 2007, Consolidated Statements of Operations and Deficit and Cash Flows for each of the three years ended December 31, 2008, 2007, and 2006, reported on by Ernst & Young LLP, Chartered Accountants. These statements are prepared in accordance with Canadian generally accepted accounting principles, |
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ITEM 18: | FINANCIAL STATEMENTS |
ITEM 19: | EXHIBITS |
1. | Consolidated Balance Sheets of Olympus Pacific Minerals Inc. as at December 31, 2008 and December 31, 2007,Consolidated Statements of Operations and Deficit and Cash Flows for each of the three years ended December 31, 2008, 2007, and 2006, reported on by Ernst & Young LLP, Chartered Accountants. These statements are prepared in accordance with Canadian generally accepted accounting principles, which differ in certain respects from United States generally accepted accounting principles. See Note 16 to the consolidated financial statements. |
19B.Exhibits |
1. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 1. Articles of Incorporation and By Laws |
1.1. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 1.1 Certificates of Status, Amendment, Continuance |
1.2. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 1.2 Bylaws as currently in effect. |
2. | Instruments defining the rights of holders of equity – refer to exhibit 1 under 19B. |
3. | Material Contracts |
3.1. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.1 — Mining Permit – dated July 22, 1992 | ||
3.2. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.2 — Right to Use Land Certificate – dated October 9, 1993 | ||
3.3. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.3 — Investment License – No: 140 / GP, dated March 5, 1991 and Amendments | ||
3.4. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.4 — Debt Finance Facility Agreement – dated February 8, 2006 | ||
3.5. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.5 — Mining License No 116/GP –BTNMT – dated January 23, 2006 | ||
3.6. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.7 — Investment License No. 2355/GP – dated October 20, 2003 | ||
3.7. | �� | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.8 — Joint Venture Agreement — dated March 5, 2003. | |
3.8. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.9 — Agreement for Fulfilment of Contract, dated September 16, 2006 and cancellation of agreement on November 27, 2006. |
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3.9. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.9 — Memorandum of Agreement and Supplement – November 24, 2006 | ||
3.10. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.9 — Stock Option Plan – September 12, 2003 | ||
3.11. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.13 — Management service agreement with Momentum Resources International Pty Ltd. – dated July 16, 2005 and amendment dated January 28, 2008. | ||
3.12. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.17 — Argor Heraeus Refining Contract – dated January 11, 2005 | ||
3.13. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.18 — Dragon Equity and Debt Financing dated December 17, 2004 | ||
3.14. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.19 — Assignment Agreement among Ivanhoe Mines Ltd., Zedex Minerals Limited, and Olympus Pacific Minerals, Inc. dated January 1, 2006 | ||
3.15. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.20 — Certificate of Incorporation and Articles of Incorporation of Kadabra Mining Corp – May, 2007. | ||
3.16. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.22 — Share Placement Documents dated March 19, 2007 | ||
3.17. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.23 — Shareholders Rights Plan – dated June 25, 2007 | ||
3.18. | Stock Option Plan – dated June 7, 2007 | ||
3.19. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.25 — Code of Ethics – September 19, 2006 | ||
3.20. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.27 — Framework of Laos and Cambodia Joint Venture Agreement, July 17, 2007. | ||
3.21. | Reference is made to the 2007 20F Annual Return dated March 28, 2008 exhibit 3.28 — Exploration License dated January 10, 2008 | ||
3.22. | Reference is made to the Amended Registration Statement of Form 20-F-A dated June 29, 2007, submitted to the Securities and Exchange Commission on June 29, 2007 for exhibits 19B.1 – 19B.3.24. | ||
3.23. | Reference is made to the Amended Registration Statement of Form 20-F-A dated July 13, 2007 for exhibit 19B3.25 and November 13, 2007 for exhibits 19B.3.26 and 19B.3.27. | ||
3.24. | Management Service Agreement with Huong Le-Dao dated September 1, 2008. | ||
3.25. | Employment Agreement with Thomas Rodney Pervical Jones dated January 1, 2008. | ||
3.26. | Management service agreement with Orangue Holdings Limited, dated January 1, 2008 to provide the services of David Seton. | ||
3.27. | Management service agreement with Action Management Limited, dated January 1, 2008, to provide the services of Charles Barclay. | ||
3.28. | Management Service Agreement with Wholesale Products Limited, dated January 1, 2008, to provide the services of Peter Tiedemann. | ||
3.29. | Management Service Agreement with Cawdor Holdings Limited, dated January 1, 2008, to provide the services of Russell Graham. |
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3.30. | Employment Agreement with James Hamilton dated January 1, 2008. | ||
3.31. | Bong Mieu Exploration Licence No 2125/GP-BTNMT | ||
3.32. | Gold Export Certificates – dated December 31, 2008 | ||
3.33. | Addendum 3 to the Refining Contract of November 1st 2005 dated December 10, 2008 between Argor-Hearaeus SA and Bong Mieu Gold Mining Company. |
4. | List of Subsidiaries | |
The Company has the following subsidiaries: |
a. | Formwell Holdings Ltd. – incorporated in British Virgin Islands; | ||
b. | Bong Mieu Holdings Ltd. – incorporated in Thailand; | ||
c. | Bong Mieu Gold Mining Company Limited – incorporated in Vietnam (80% owned by Bong Mieu Holdings Ltd.; | ||
d. | Olympus Pacific Vietnam Ltd. – incorporated in British Virgin Islands; | ||
e. | New Vietnam Mining Corporation (NVMC) – incorporated in British Virgin Islands; | ||
f. | Phuoc Sun Gold Company Limited – incorporated in Vietnam (85% owned by New Vietnam Mining Corporation (NVMC); | ||
g. | Olympus Pacific Thailand Ltd. – incorporated in British Virgin Islands; | ||
h. | Kadabra Mining Corp. – incorporated in Phillipines; | ||
i. | Olympus Pacific Minerals Inc Vietnam Ltd. – incorporated in Vietnam |
5. | Consents |
5.1. | Consent of Terra Mining Consultants and Stevens & Associates |
12. | Certifications |
12.1. | Certification of Chief Executive Officer |
12.2. | Certification of Chief Financial Officer |
13. | Certifications Reference is made to 2008 Annual Report dated March 30, 2009 |
13.1. | Certification of Chief Executive Officer |
13.2. | Certification of Chief Financial Officer |
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Olympus Pacific Minerals Inc. | ||||
By: | /s/ Peter Tiedemann | |||
Peter Tiedemann | ||||
Chief Financial Officer | ||||
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Consolidated Balance Sheets
As at | ||||||||
December 31 | December 31 | |||||||
2008 | 2007 | |||||||
(Canadian dollars) | ||||||||
ASSETS | ||||||||
Current | ||||||||
Cash | $ | 5,096,418 | $ | 26,656,146 | ||||
Accounts receivable and prepaid expenses | 3,045,997 | 1,079,598 | ||||||
Inventory (note 12) | 3,759,934 | 1,293,463 | ||||||
11,902,349 | 29,029,207 | |||||||
Long-term | ||||||||
Property, plant and equipment (note 6) | 14,298,403 | 11,094,563 | ||||||
Mineral properties (note 3) | 9,564,422 | 9,818,923 | ||||||
Deferred exploration and development costs (note 3) | 30,708,439 | 21,707,466 | ||||||
54,571,264 | 42,620,952 | |||||||
66,473,613 | 71,650,159 | |||||||
LIABILITIES | ||||||||
Current | ||||||||
Accounts payable and accrued liabilities | 4,423,154 | 3,163,155 | ||||||
Capital lease obligations (note 11) | 698,281 | 388,390 | ||||||
Asset retirement obligation (note 4) | 138,405 | 135,333 | ||||||
5,259,840 | 3,686,878 | |||||||
Long-term | ||||||||
Asset retirement obligation (note 4) | 1,282,002 | 721,686 | ||||||
1,282,002 | 721,686 | |||||||
Commitments and contractual obligations (note 9), Income taxes (note 13) | 6,541,842 | 4,408,564 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital (note 7a) | 104,206,522 | 104,159,423 | ||||||
Contributed surplus (note 7a) | 7,600,309 | 6,482,499 | ||||||
Deficit | (51,875,060 | ) | (43,400,327 | ) | ||||
59,931,771 | 67,241,595 | |||||||
$ | 66,473,613 | $ | 71,650,159 | |||||
On behalf of the Board of Directors | “signed” David A. Seton Executive Chairman & Chief Executive Officer | “signed” Jon Morda Director & Chairman of Audit Committee |
F-2
Table of Contents
For the Years Ended December 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Canadian dollars) | ||||||||||||
Sales — Gold | $ | 7,755,495 | $ | 6,996,257 | $ | 1,644,040 | ||||||
Cost and expenses | ||||||||||||
Cost of sales | 6,204,527 | 5,523,193 | 1,535,891 | |||||||||
Amortization | 2,630,938 | 1,925,458 | 596,176 | |||||||||
Management fees and salaries | 3,092,628 | 2,770,770 | 1,515,417 | |||||||||
Professional fees | 397,183 | 782,058 | 353,402 | |||||||||
Travel | 644,390 | 574,569 | 425,895 | |||||||||
Investor relations and promotion | 373,857 | 527,466 | 256,207 | |||||||||
Consulting fees | 634,726 | 393,438 | 315,763 | |||||||||
Office and general administrative | 684,453 | 417,526 | 508,269 | |||||||||
Transfer agent and regulatory fees | 199,480 | 161,409 | 189,237 | |||||||||
Royalty expense | 137,141 | 112,336 | 47,960 | |||||||||
Shareholders’ information | 96,125 | 80,492 | 37,767 | |||||||||
General exploration | 69,295 | 74,442 | 158,700 | |||||||||
Stock-based compensation (note 7b) | 1,063,160 | 2,272,717 | 617,071 | |||||||||
16,227,903 | 15,615,874 | 6,557,755 | ||||||||||
Other (income) expense | ||||||||||||
Interest income | (590,313 | ) | (694,985 | ) | (272,156 | ) | ||||||
Interest expense | 2,923 | 130,615 | 127,262 | |||||||||
Write-off of deferred exploration costs (note 3) | 922,920 | — | 438,931 | |||||||||
Write-off of deferred transaction costs | — | 265,488 | — | |||||||||
Impairment charge (note 3) | — | — | 4,280,000 | |||||||||
Loss on disposal of capital assets | 19,551 | — | — | |||||||||
Debt extinguishment costs (note 5) | — | 54,060 | — | |||||||||
Foreign exchange loss/(gain) | (352,756 | ) | 566,894 | (8,865 | ) | |||||||
2,325 | 322,072 | 4,565,172 | ||||||||||
Loss and comprehensive loss for the year | $ | 8,474,733 | $ | 8,941,689 | $ | 9,478,887 | ||||||
Basic and diluted loss per common share | $ | 0.04 | $ | 0.04 | $ | 0.06 | ||||||
Weighted average number of common shares outstanding | 232,402,999 | 200,364,897 | 164,678,791 |
F-3
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For the Years Ended December 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Canadian dollars) | ||||||||||||
Deficit | ||||||||||||
Balance, beginning of year | $ | 43,400,327 | 34,458,638 | 24,979,751 | ||||||||
Loss for the year | 8,474,733 | 8,941,689 | 9,478,887 | |||||||||
Deficit, end of the year | $ | 51,875,060 | 43,400,327 | 34,458,638 | ||||||||
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Table of Contents
For the Years Ended December 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Canadian dollars) | ||||||||||||
Operating activities : | ||||||||||||
Loss for the year | (8,474,733 | ) | (8,941,689 | ) | (9,478,887 | ) | ||||||
Items not affecting cash | ||||||||||||
Amortization | 2,630,938 | 1,925,458 | 596,176 | |||||||||
Amortization of deferred financing costs | — | — | 81,090 | |||||||||
Stock-based compensation expense | 1,063,160 | 2,272,717 | 617,071 | |||||||||
Write-off of deferred transaction costs | — | 265,488 | — | |||||||||
Loss on disposal of capital assets | 19,551 | |||||||||||
Accretion expense | 52,650 | 37,211 | 29,097 | |||||||||
Write-off of deferred exploration costs | 922,920 | — | 438,931 | |||||||||
Impairment charge | — | — | 4,280,000 | |||||||||
Foreign exchange | (136,974 | ) | 231,101 | 10,286 | ||||||||
Reclamation costs | (177,582 | ) | (79,388 | ) | — | |||||||
Changes in non-cash working capital balances | ||||||||||||
Accounts receivable and prepaid expenses | (1,966,399 | ) | 624,385 | (1,452,499 | ) | |||||||
Accounts payable and accrued liabilities | 1,341,093 | 961,315 | 292,661 | |||||||||
Inventory | (2,242,049 | ) | (676,418 | ) | (357,529 | ) | ||||||
Cash used in operating activities | (6,967,424 | ) | (3,379,820 | ) | (4,943,603 | ) | ||||||
Investing activities : | ||||||||||||
Deferred exploration and development costs | (9,066,810 | ) | (7,612,887 | ) | (5,072,261 | ) | ||||||
Acquisition of property, plant and equipment | (5,210,778 | ) | (1,627,525 | ) | (3,747,249 | ) | ||||||
Deferred transaction costs | — | — | (209,238 | ) | ||||||||
Cash used in investing activities | (14,277,588 | ) | (9,240,412 | ) | (9,028,748 | ) | ||||||
Financing activities : | ||||||||||||
Shares issued | — | 36,829,000 | 16,543,966 | |||||||||
Warrants issued | — | 1,092,963 | — | |||||||||
Shares issued on warrants exercised | — | 2,394,987 | — | |||||||||
Repayment of debt | — | (2,156,497 | ) | — | ||||||||
Repayable loan | — | — | 2,314,200 | |||||||||
Share issue cost | 20,655 | (2,068,049 | ) | (1,195,261 | ) | |||||||
Capital lease payments | (649,329 | ) | (367,800 | ) | — | |||||||
Cash provided by financing activities | (628,674 | ) | 35,724,604 | 17,662,905 | ||||||||
Increase in cash during the year | (21,873,686 | ) | 23,104,372 | 3,690,554 | ||||||||
Cash — beginning of the year | 26,656,146 | 4,101,536 | 404,987 | |||||||||
Effect of foreign exchange rate changes on cash | 313,958 | (549,762 | ) | 5,995 | ||||||||
Cash — end of the year | $ | 5,096,418 | 26,656,146 | 4,101,536 | ||||||||
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1. | Nature of Operations |
2. | Basis of Presentation and Significant Accounting Policies |
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• | Management is required to make an assessment of an entity’s ability to continue as a going concern; | |
• | In making its assessment, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date; | |
• | Financial statements must be prepared on a going concern basis unless management intends to liquidate the entity, to cease trading or cease operations, or has no realistic alternative but to do so; | |
• | Disclosure is required of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern; and | |
• | When financial statements are not prepared on a going concern basis, that fact should be disclosed, together with the basis on which the financial statements are prepared and the reason the entity is not regarded as a going concern. |
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F-8
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F-9
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F-10
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F-12
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3. | Mineral Properties and Deferred Exploration and Development Costs |
Deferred Exploration and | ||||||||||||||||
Mineral Properties | Development Costs | |||||||||||||||
December 31 | December 31 | December 31 | December 31 | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Bong Mieu | $ | 3,944,000 | $ | 3,944,000 | $ | 11,353,606 | $ | 6,535,527 | ||||||||
Phuoc Son | 6,116,904 | 6,116,904 | 19,726,900 | 14,834,584 | ||||||||||||
Capcapo | — | — | 922,920 | 678,541 | ||||||||||||
Other | — | — | 1,120 | — | ||||||||||||
10,060,904 | 10,060,904 | 32,004,546 | 22,048,652 | |||||||||||||
Accumulated amortization(1) | (496,482 | ) | (241,981 | ) | (373,187 | ) | (341,186 | ) | ||||||||
Write-off(2)(3) | (922,920 | ) | ||||||||||||||
Total | $ | 9,564,422 | $ | 9,818,923 | $ | 30,708,439 | $ | 21,707,466 | ||||||||
(1) | Accumulated amortization relates to the Bong Mieu central mine which commenced commercial production on October 1, 2006. | |
(2) | Write-off of $922,920 of Deferred Exploration costs in 2008 relates to the Capcapo property where exploration activities have been halted due to the uncertainty of the current economic climate and the outcome of community consultation. | |
(3) | During the fourth quarter of 2006, management determined that the Bong Mieu Central Gold mine was not reaching originally estimated future throughput. Consequently, an impairment charge of $4,280,000 was taken on the Bong Mieu Central Fold mine deferred exploration and development costs. |
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4. | Asset Retirement Obligation |
December 31, 2008 | December 31, 2007 | |||||||
Balance, beginning of the year | $ | 857,019 | $ | 949,495 | ||||
Liabilities incurred | 492,329 | 94,059 | ||||||
Liabilities settled | (177,582 | ) | (79,388 | ) | ||||
Foreign exchange adjustment | 195,991 | (144,358 | ) | |||||
Accretion | 52,650 | 37,211 | ||||||
Balance, end of the period | 1,420,407 | 857,019 | ||||||
Current portion | 138,405 | 135,333 | ||||||
Non-current portion | $ | 1,282,002 | $ | 721,686 | ||||
5. | Loan Facility |
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6. | Property, Plant & Equipment |
December 31, 2008 | December 31, 2007 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
Cost | Depreciation | Net Book Value | Cost | Depreciation | Net Book Value | |||||||||||||||||||
Building | $ | 1,082,950 | $ | 441,741 | $ | 641,209 | $ | 866,835 | $ | 221,481 | $ | 645,354 | ||||||||||||
Leasehold improvements | 150,189 | 82,170 | 68,019 | 103,005 | 46,088 | 56,917 | ||||||||||||||||||
Machinery and equipment | 8,709,595 | 2,856,755 | 5,852,840 | 6,706,032 | 1,284,822 | 5,421,210 | ||||||||||||||||||
Office equipment, furniture and fixtures | 1,261,520 | 750,836 | 510,684 | 1,097,257 | 509,395 | 587,862 | ||||||||||||||||||
Vehicles | 445,144 | 291,576 | 153,568 | 400,711 | 222,128 | 178,583 | ||||||||||||||||||
Infrastructure | 4,057,445 | 1,277,635 | 2,779,810 | 3,737,315 | 547,073 | 3,190,242 | ||||||||||||||||||
Capital Assets in progress | 4,292,273 | — | 4,292,273 | 1,014,395 | — | 1,014,395 | ||||||||||||||||||
$ | 19,999,116 | $ | 5,700,713 | $ | 14,298,403 | $ | 13,925,550 | $ | 2,830,987 | $ | 11,094,563 | |||||||||||||
7. | Capital Stock |
• | Maintaining a liquidity cushion in order to address the operationaland/or industry disruptions or downturns; | |
• | Preparing detailed budgets by project that are approved by the Board for development, exploration and corporate costs; | |
• | Routine internal reporting and Board meetings to review actual versus budgeted spending; and | |
• | Detailed project financial analysis to determine new funding requirements. |
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a) | Common Shares |
Number of | Amount | |||||||
Shares | $ | |||||||
Common shares, January 1, 2007 | 164,678,791 | $ | 66,074,507 | |||||
Private placement(1) | 21,428,571 | 12,000,000 | ||||||
Prospectus offering(2) | 38,461,538 | 23,846,154 | ||||||
Issued upon exercise of options | 1,978,565 | 1,231,986 | ||||||
Issued upon exercise of warrants | 5,476,092 | 3,393,060 | ||||||
Issued on exercise of over-allotment(2) | 216,394 | 134,164 | ||||||
Bonus common shares issued | 137,060 | 86,090 | ||||||
Share issue costs(3) | — | (2,606,538 | ) | |||||
Common shares, December 31, 2007 | 232,377,011 | $ | 104,159,423 | |||||
Share issue costs | — | 20,654 | ||||||
Bonus common shares issued | 46,090 | 26,445 | ||||||
Common shares, December 31, 2008 | 232,423,101 | $ | 104,206,522 | |||||
December 31, 2008 | December 31, 2007 | |||||||
Balance, beginning of the year | $ | 6,482,499 | $ | 4,347,990 | ||||
Options granted and vested during the year | 1,012,482 | 1,849,504 | ||||||
Bonus common shares vested during the year | 116,580 | 69,309 | ||||||
Bonus common shares issued | (11,252 | ) | (34,379 | ) | ||||
Valuation of Warrants, net of issue costs (2 and 3) | — | 1,092,963 | ||||||
Options and warrants exercised | — | (1,381,376 | ) | |||||
Agents’ compensation options and warrants granted(3) | — | 538,488 | ||||||
Balance, end of the year | $ | 7,600,309 | $ | 6,482,499 | ||||
(1) | On March 19, 2007, the Company completed a non-brokered private placement of 21,428,571 shares at a price of $0.56 per share, for gross proceeds of $12,000,000 and net proceeds of $11,967,772. | |
(2) | On August 10, 2007, the Company completed an Offering (the “Offering”) of 38,461,538 Units of the Company at a price of $0.65 per unit for gross proceeds of $25,000,000 and net proceeds of $22,891,000. Each Unit consisted of one common share and one-half of one common share purchase warrant. The Units were separated into common shares [a total of 38,461,538] and common share purchase warrants [a total of 19,230,769] immediately following the closing of the Offering. Of the Offering price of $0.65 per Unit, the Company has, for accounting purposes, allocated $0.62 to each common share and $0.03 to each one-half common share purchase warrant. Each whole common share purchase warrant is exercisable for one common share of the Company at $0.80 and expires August 9, 2009. | |
The Company also granted the Agents an over-allotment option to purchase additional Shares at a price of $0.62 and additional whole common share purchase warrant at a price of $0.06 for a period of 30 days from closing. The over-allotment option was partially exercised on September 7, 2007 and as a result, a total of 216,394 |
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common shares of the Company at $0.62 and 323,947 whole common share purchase warrants at $0.06 were issued for gross proceeds of $153,601 and net proceeds of $144,385. | ||
(3) | Agents for the August 10, 2007, Offering were paid a cash commission equal to 6 percent of the gross proceeds and were granted non-transferable compensation options to acquire 2,307,692 Agent’s units. Each compensation option is exercisable for one Agent’s unit at $0.65 and expires on August 10, 2009. Each Agent’s Unit consists of one common share of the Company and one-half of one common share purchase warrant. Each whole Agent’s common share purchase warrant will entitle the holder to acquire one common share of the Company at a price of $0.80 per common share and will expire on August 10, 2009. |
b) | Stock Options |
December 31, 2008 | December 31, 2007 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Number of | Price | Number of | Price | |||||||||||||
Options | $ | Options | $ | |||||||||||||
Outstanding, beginning of the year | 17,592,334 | 0.53 | 11,477,500 | 0.39 | ||||||||||||
Granted | 4,121,850 | 0.42 | 8,950,000 | 0.70 | ||||||||||||
Exercised | — | — | (1,978,565 | ) | 0.43 | |||||||||||
Forfeited/Expired | (2,125,000 | ) | 0.42 | (856,601 | ) | 0.58 | ||||||||||
Outstanding, end of the period | 19,589,184 | 0.52 | 17,592,334 | 0.53 | ||||||||||||
Options exercisable at the end of the period | 14,789,890 | 0.52 | 14,249,925 | 0.49 | ||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Number | Weighted | Number | Weighted | |||||||||||||||||
Outstanding | Weighted | Average | Exercisable | Average | ||||||||||||||||
As at | Average | Exercise | As at | Exercise | ||||||||||||||||
December 31, | Remaining | Price | December 31, | Price | ||||||||||||||||
Range of Exercise Prices | 2008 | Life (Years) | $ | 2008 | $ | |||||||||||||||
$ 0.30 - 0.36 | 5,530,000 | 1.74 | 0.32 | 5,530,000 | 0.32 | |||||||||||||||
$ 0.40 - 0.45 | 4,350,184 | 3.81 | 0.40 | 577,537 | 0.43 | |||||||||||||||
$ 0.50 - 0.55 | 609,000 | 1.86 | 0.52 | 609,000 | 0.52 | |||||||||||||||
$ 0.60 - 0.65 | 4,850,000 | 3.40 | 0.65 | 4,409,527 | 0.57 | |||||||||||||||
$ 0.75 | 4,250,000 | 3.19 | 0.75 | 3,663,826 | 0.75 | |||||||||||||||
19,589,184 | 0.52 | 14,789,890 | 0.52 | |||||||||||||||||
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c) | Warrants |
December 31, 2008 | December 31, 2007 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Number of | Price | Number of | Price | |||||||||||||
Warrants | $ | Warrants | $ | |||||||||||||
Outstanding, beginning of the year | 21,344,716 | 0.78 | 7,266,092 | 0.47 | ||||||||||||
Granted (see note 7a) | — | — | 19,554,716 | 0.80 | ||||||||||||
Exercised | — | — | (5,476,092 | ) | 0.43 | |||||||||||
Expired(1) | (1,790,000 | ) | 0.58 | — | — | |||||||||||
Outstanding, end of the period | 19,554,716 | 0.80 | 21,344,716 | 0.78 | ||||||||||||
(1) | The warrants that expired related to the March 31, 2006 private placement. |
Number | ||||||||
Outstanding | ||||||||
as at | ||||||||
December 31, | ||||||||
Exercise Prices | 2008 | Expiry Date | ||||||
$0.80 | 19,230,769 | August 10, 2009 | ||||||
$0.80 | 323,947 | September 7, 2009 | ||||||
19,554,716 |
d) | Bonus Share Program for Non-Executive Employees |
e) | Deferred Share Units |
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8. | Related Party Transactions |
Year-to-Date December 31 | ||||||||
2008 | 2007 | |||||||
Consulting and legal fees | $ | 110,653 | $ | 133,839 | ||||
Management fees | $ | 889,836 | $ | 1,228,499 | ||||
Reimbursement of expenses | $ | 301,626 | $ | 249,591 | ||||
Royalties | $ | 143,031 | $ | 112,336 |
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9. | Commitments and Contractual Obligation |
Year 5 | ||||||||||||||||||||||||
Less Than | and | |||||||||||||||||||||||
Payment Due | Total | One Year | Year 2 | Year 3 | Year 4 | Thereafter | ||||||||||||||||||
Capital lease obligations | 698,281 | 698,281 | — | — | — | — | ||||||||||||||||||
Operating leases | 488,188 | 234,634 | 91,422 | 81,095 | 81,037 | — | ||||||||||||||||||
Purchase obligations — supplies & services | 2,371,582 | 2,185,629 | 185,953 | — | — | — | ||||||||||||||||||
Purchase obligations — capital | 355,342 | 355,342 | — | — | — | — | ||||||||||||||||||
Asset retirement obligations | 1,420,407 | 138,405 | 258,399 | 252,786 | 646,885 | 123,932 | ||||||||||||||||||
Total | 5,333,800 | 3,612,291 | 535,774 | 333,881 | 727,922 | 123,932 | ||||||||||||||||||
10. | Financial Instruments |
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11. | Capital Lease Obligations |
December 31, 2008 | December 31, 2007 | |||||||
Total minimum lease payment | $ | 698,281 | $ | 388,390 | ||||
Less: current portion | (698,281 | ) | (388,390 | ) | ||||
$ | — | $ | — | |||||
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Table of Contents
12. | Inventory |
December 31, 2008 | December 31, 2007 | |||||||
Doré Bars | $ | 190,446 | $ | 293,829 | ||||
Ore in stockpiles | 381,302 | 126,311 | ||||||
Gold in circuit | 213,537 | 115,388 | ||||||
Mine operating supplies | 2,974,649 | 757,935 | ||||||
Total | $ | 3,759,934 | $ | 1,293,463 | ||||
13. | Income Taxes |
2008 | 2007 | 2006 | ||||||||||
Loss | $ | (8,474,000 | ) | $ | (8,942,000 | ) | $ | (9,479,000 | ) | |||
Expected tax benefit | (2,838,000 | ) | (3,051,000 | ) | (3,223,000 | ) | ||||||
Issue costs | (294,000 | ) | (345,000 | ) | (215,000 | ) | ||||||
Foreign tax differential | 213,000 | (843,000 | ) | 1,418,000 | ||||||||
Foreign exchange on Vietnam losses | 1,251,000 | — | — | |||||||||
Non deductible expenses | (1,743,000 | ) | 2,129,000 | 116,000 | ||||||||
Other | 866,000 | — | — | |||||||||
Benefit of current year loss not recognized | 2,545,000 | 2,110,000 | 1,904,000 | |||||||||
Total income tax recovery | $ | — | $ | — | $ | — | ||||||
2008 | 2007 | 2006 | ||||||||||
Non-capital losses carried forward | $ | 7,769,000 | $ | 5,731,000 | $ | 4,189,000 | ||||||
Issue costs | 657,000 | 760,000 | 616,000 | |||||||||
Capital assets | 68,000 | 53,000 | 25,000 | |||||||||
Resource related deductions | 610,000 | 636,000 | 692,000 | |||||||||
Future income tax asset | 9,104,000 | 7,180,000 | 5,522,000 | |||||||||
Future income tax liability | (1,825,000 | ) | — | — | ||||||||
Net future income tax asset | 7,279,000 | 7,180,000 | 5,522,000 | |||||||||
Valuation allowance | (7,279,000 | ) | (7,180,000 | ) | (5,522,000 | ) | ||||||
Net future income tax asset | $ | — | $ | — | $ | — | ||||||
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Year of | ||||||||||||||||
Non-Capital Loss Carry Forwards | Loss | Note | Amount | Expiry Date | ||||||||||||
Canada | 2008 | (1 | ) | $ | 3,364,000 | 2028 | ||||||||||
Vietnam | 2008 | (2 | ) | 1,375,000 | 2013 | |||||||||||
Canada | 2007 | (1 | ) | $ | 7,993,000 | 2027 | ||||||||||
Vietnam | 2007 | (2 | ) | 1,411,000 | 2012 | |||||||||||
Canada | 2006 | (1 | ) | 2,789,000 | 2026 | |||||||||||
Vietnam | 2006 | (2 | ) | 8,470,000 | 2011 | |||||||||||
Canada | 2005 | (3 | ) | 1,143,000 | 2015 | |||||||||||
Canada | 2004 | (3 | ) | 2,431,000 | 2014 | |||||||||||
Canada | 2003 | (4 | ) | 858,000 | 2010 | |||||||||||
Canada | 2002 | (4 | ) | 1,225,000 | 2009 | |||||||||||
Total non-capital loss carry forwards | $ | 31,059,000 | ||||||||||||||
(1) | - Loss carry forward of 20 years | |
(2) | - Vietnam has a loss carry forward of 5 years | |
(3) | - Loss carry forward of 10 years | |
(4) | - Loss carry forward of 7 years |
14. | Memorandum of Agreement |
15. | Comparative Consolidated Financial Statements |
16. | Differences from Generally Accepted Accounting Principles |
F-23
Table of Contents
a) | Exploration and development expenditures |
b) | Production Start Date |
c) | Asset Impairment — Long-Lived Assets |
F-24
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2008 | 2007 | |||||||||||||||||||||||||||
Canadian | US | Canadian | US | |||||||||||||||||||||||||
Notes | GAAP | Adjustments | GAAP | GAAP | Adjustments | GAAP | ||||||||||||||||||||||
Current assets | $ | 11,902,349 | $ | — | $ | 11,902,349 | $ | 29,029,207 | $ | — | $ | 29,029,207 | ||||||||||||||||
Long-term assets Mineral properties | (b | ) | 9,564,422 | (37,500 | ) | 9,526,922 | 9,818,923 | (37,500 | ) | 9,781,423 | ||||||||||||||||||
Capital assets(i) | (b | ) | 14,298,403 | (79,332 | ) | 14,219,071 | 11,094,563 | (79,332 | ) | 11,015,231 | ||||||||||||||||||
Deferred exploration and development costs | (a | ) | 30,708,439 | (27,190,115 | ) | 3,518,324 | 21,707,466 | (21,707,466 | ) | — | ||||||||||||||||||
54,571,264 | (27,360,947 | ) | 27,264,318 | 42,620,952 | (21,824,298 | ) | 20,796,654 | |||||||||||||||||||||
Total Assets | $ | 66,473,613 | $ | (27,306,947 | ) | $ | 39,166,667 | $ | 71,650,159 | $ | (21,824,298 | ) | $ | 49,825,861 | ||||||||||||||
Total Liabilities | 6,541,842 | — | 6,541,842 | 4,408,564 | — | 4,408,564 | ||||||||||||||||||||||
Total Shareholders’ equity | 59,931,771 | (27,306,947 | ) | 32,624,824 | 67,241,595 | (21,824,298 | ) | 45,417,297 | ||||||||||||||||||||
Total liabilities and Shareholders’ equity | $ | 66,473,613 | $ | (27,306,947 | ) | $ | 39,166,667 | $ | 71,650,159 | $ | (21,824,298 | ) | $ | 49,825,861 | ||||||||||||||
(i) | Under Canadian GAAP, capitalized interest is recorded as an addition to deferred development costs and under US GAAP, capitalizated interest is recorded as an addition to capital assets. |
d) | Reconciliation of consolidated net income |
For the Years Ended December 31 | ||||||||||||||
Notes | 2008 | 2007 | 2006 | |||||||||||
Net loss under Canadian GAAP | $ | 8,474,733 | $ | 8,941,689 | $ | 9,478,887 | ||||||||
Sales | (b) | — | — | (1,193,954 | ) | |||||||||
Cost and expenses | (a) & (b) | — | — | 1,536,989 | ||||||||||
Exploration and development expenditures | (a) | 6,405,569 | 7,982,620 | 5,128,332 | ||||||||||
Reverse impairment charge | (a) | — | — | (4,280,000 | ) | |||||||||
Reverse write-down | (a) | (922,920 | ) | — | (438,931 | ) | ||||||||
Net loss and comprehensive loss under US GAAP | $ | 13,957,382 | $ | 16,924,309 | $ | 10,231,323 | ||||||||
Basic & diluted loss per share | $ | 0.06 | $ | 0.08 | $ | 0.06 | ||||||||
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Table of Contents
e) | Consolidated statements of cash flow under US GAAP |
For the Years Ended December 31 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Activities | ||||||||||||
Operating | (13,372,993 | ) | (10,992,707 | ) | (10,015,864 | ) | ||||||
Investing | (7,872,019 | ) | (1,627,525 | ) | (3,956,487 | ) | ||||||
Financing | (628,674 | ) | 35,724,604 | 17,662,905 | ||||||||
Cash and equivalents at the beginning of year | 26,656,146 | 4,101,536 | 404,987 | |||||||||
Effect of foreign exchange rate changes on cash | 313,958 | (549,762 | ) | 5,995 | ||||||||
Cash and equivalent at end of year | 5,096,418 | 26,656,146 | 4,101,536 | |||||||||
f) | US GAAP Recent Developments |
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F-27