(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Expressed in Canadian Dollars)
(Unaudited)
These financial statements have not been reviewed by the Company's auditors
DETOUR GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
(Unaudited - Expressed in Canadian Dollars)
September 30 | December 31 | |||||
2007 | 2006 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and equivalents | $ | 24,870,990 | $ | 8,022,023 | ||
Amounts receivable and prepaids | 830,637 | 72,225 | ||||
25,701,627 | 8,094,248 | |||||
Deferred transaction costs | – | 453,800 | ||||
Equipment(note 4(b)) | 88,361 | – | ||||
Equipment under capital leases(note 4(a)) | 139,121 | – | ||||
Mineral property interests(note 5) | 108,194,080 | 1,000,000 | ||||
$ | 134,123,189 | $ | 9,548,048 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | 2,579,506 | $ | 611,842 | ||
Amounts due to related parties (note 7) | 11,510 | 24,225 | ||||
Current portion of capital lease obligation (notes 4(a) and 9) | 28,393 | – | ||||
2,619,409 | 636,067 | |||||
Capital lease obligation (notes 4 and 9) | 112,956 | – | ||||
Future income tax liability (note 8) | 31,815,000 | – | ||||
31,927,956 | – | |||||
Shareholders' equity | ||||||
Share capital (note 6) | 112,592,122 | 5,000 | ||||
Subscription receipts, net of costs | – | 9,494,141 | ||||
Contributed surplus (note 6(d)) | 1,695,085 | – | ||||
Deficit | (14,711,383 | ) | (587,160 | ) | ||
99,575,824 | 8,911,981 | |||||
Nature and continuance of operations (note 1) | ||||||
Commitments (note 9) | ||||||
Subsequent events (note 10) | ||||||
$ | 134,123,189 | $ | 9,548,048 |
The accompanying notes are an integral part of these financial statements
Approved by the Board of Directors
/s/ Gerald S. Panneton | /s/ Ronald W. Thiessen |
Gerald S. Panneton | Ronald W. Thiessen |
Director | Director |
DETOUR GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations
(Unaudited - Expressed in Canadian Dollars)
Three months | Nine months | |||||
ended | ended | |||||
September 30 | September 30 | |||||
2007 | 2007 | |||||
Expenses | ||||||
Amortization | $ | 850 | $ | 1,700 | ||
Conference and travel | 50,157 | 158,416 | ||||
Consulting | 27,389 | 60,883 | ||||
Exploration (schedule) | 5,105,617 | 12,450,997 | ||||
Interest expense | 4,360 | 10,741 | ||||
Legal, accounting and audit | (228,629 | ) | 169,694 | |||
Office and administration | 315,879 | 807,711 | ||||
Regulatory, trust and filing | 3,560 | 50,278 | ||||
Shareholder communications | 53,839 | 211,270 | ||||
Stock-based compensation - exploration (note 6(c)) | 60,125 | 466,582 | ||||
Stock-based compensation - operations and administration (note 6(c)) | 687,788 | 1,107,357 | ||||
6,080,935 | 15,495,629 | |||||
Other expenses (income) | ||||||
Foreign exchange loss | 386 | 456 | ||||
Interest income | (304,713 | ) | (881,862 | ) | ||
(304,327 | ) | (881,406 | ) | |||
Loss for the period before income taxes | (5,776,608 | ) | (14,614,223 | ) | ||
Income tax benefit (note 8) | – | 490,000 | ||||
Loss for the period | $ | (5,776,608 | ) | $ | (14,124,223 | ) |
Basic and diluted loss per common share | $ | (0.14 | ) | $ | (0.39 | ) |
Weighted average number of | ||||||
common shares outstanding | 40,316,432 | 36,190,394 |
Statement of Deficit
(Unaudited - Expressed in Canadian Dollars)
Nine months | |||
ended | |||
September 30 | |||
2007 | |||
Deficit, beginning of period | $ | (587,160 | ) |
Loss for the period | (14,124,223 | ) | |
Deficit, end of period | $ | (14,711,383 | ) |
The accompanying notes are an integral part of these financial statements
DETOUR GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
(Unaudited - Expressed in Canadian Dollars)
Three months | Nine months | |||||
ended | ended | |||||
September 30 | September 30 | |||||
Cash provided by (used for) | 2007 | 2007 | ||||
Operating activities | ||||||
Loss for the period | $ | (5,776,608 | ) | $ | (14,124,223 | ) |
Items not involving cash | ||||||
Amortization | 8,358 | 24,134 | ||||
Future income tax benefit (note 8) | – | (490,000 | ) | |||
Stock-based compensation | 747,913 | 1,573,939 | ||||
Changes in non-cash working capital items | ||||||
Amounts receivable and prepaids | (295,384 | ) | (758,412 | ) | ||
Accounts payable and accrued liabilities | 1,714,325 | 1,967,664 | ||||
Balances due to (from) related parties | (519,042 | ) | (12,715 | ) | ||
(4,120,438 | ) | (11,819,613 | ) | |||
Investing activities | ||||||
Acquisition of mineral property interests | – | (4,750,000 | ) | |||
Purchase of equipment | (69,660 | ) | (90,061 | ) | ||
(69,660 | ) | (4,840,061 | ) | |||
Financing activities | ||||||
Common shares issued for cash | 255,255 | 36,334,603 | ||||
Share issuance costs | (305,876 | ) | (2,805,756 | ) | ||
Principal payments on capital leases | (6,689 | ) | (20,206 | ) | ||
(57,310 | ) | 33,508,641 | ||||
Increase (decrease) in cash and equivalents during the period | (4,247,408 | ) | 16,848,967 | |||
Cash and equivalents, beginning of period | 29,118,398 | 8,022,023 | ||||
Cash and equivalents, end of period | $ | 24,870,990 | $ | 24,870,990 | ||
Non-cash items | ||||||
Common shares issued pursuant to acquisition of Detour Lake Property (note 5(a)) | $ | – | $ | 70,000,000 | ||
Warrants issued as share issuance costs (note 6(e)) | $ | – | $ | 395,000 | ||
Contributed surplus on exercise of stock warrants (note 6(d)) | $ | 273,854 | $ | – | ||
Future income tax arising from acquisition of Detour Lake Property (note 5(a)) | $ | – | $ | 32,305,000 | ||
Equipment acquired under capital lease (note 4(a)) | $ | – | $ | 161,555 |
The accompanying notes are an integral part of these financial statements
DETOUR GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)
Schedule of Exploration Expenses
(Unaudited - Expressed in Canadian Dollars)
Three months | Nine months | ||||||||||||||
Massicotte, | Detour Lake, | Block A, | ended | ended | |||||||||||
Quebec, | Ontario, | Ontario, | September 30, | September 30, | |||||||||||
Canada | Canada | Canada | 2007 | 2007 | |||||||||||
Expenses | |||||||||||||||
Air transport | $ | 12,434 | $ | 26,794 | $ | – | $ | 39,228 | $ | 83,743 | |||||
Amortization | – | 7,508 | – | 7,508 | 22,434 | ||||||||||
Assay and analysis | – | 597,016 | 18,834 | 615,850 | 1,210,566 | ||||||||||
Drilling | – | 2,926,724 | (45,586 | ) | 2,881,138 | 7,252,796 | |||||||||
Engineering | – | 44,026 | – | 44,026 | 97,020 | ||||||||||
Environmental | – | 88,308 | – | 88,308 | 140,237 | ||||||||||
Equipment rentals and leases | – | 4,438 | 2,918 | 7,356 | 30,317 | ||||||||||
Freight | – | – | – | – | 18,600 | ||||||||||
Geological | 39,777 | 239,211 | 34,185 | 313,173 | 945,031 | ||||||||||
Graphics | – | 10,921 | – | 10,921 | 58,884 | ||||||||||
Property fees and assessments | – | 119,484 | 5,147 | 124,631 | 409,733 | ||||||||||
Site activities | – | 938,780 | 17,254 | 956,034 | 2,083,909 | ||||||||||
Travel and accomodation | – | 7,166 | 10,278 | 17,444 | 97,727 | ||||||||||
Incurred during the period | 52,211 | 5,010,376 | 43,030 | 5,105,617 | 12,450,997 | ||||||||||
Stock-based compensation | – | 60,125 | – | 60,125 | 466,582 | ||||||||||
52,211 | 5,070,501 | 43,030 | 5,165,742 | 12,917,579 | |||||||||||
Cumulative exploration expenses, beginning of the period | – | 7,336,035 | 938,802 | 8,274,837 | 523,000 | ||||||||||
Cumulative exploration expenses, September 30, 2007 | $ | 52,211 | $ | 12,406,536 | $ | 981,832 | $ | 13,440,579 | $ | 13,440,579 |
The accompanying notes are an integral part of these financial statements
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
1. | NATURE AND CONTINUANCE OF OPERATIONS |
Detour Gold Corporation (the "Company") was incorporated on July 19, 2006 under the Canada Business Corporations Act as 6600964 Canada Inc. On August 21, 2006, the Company's name was changed to Detour Gold Corporation. The principal business of the Company is the acquisition, exploration and development of mineral properties. | |
These financial statements are prepared on the basis that the Company will continue as a going concern. Management recognizes that the Company will need to generate additional financial resources in order to meet its planned business objectives. However, there can be no assurance that the Company will continue to obtain additional financial resources, achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will need to curtail operations and exploration activities. Failure to continue as a going concern would require that the Company's assets and liabilities be restated on a basis which could differ significantly from the going concern basis. | |
Operating results for the three month and nine month periods ended September 30, 2007 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2007, or for any other period. |
2. | BASIS OF PRESENTATION |
These interim financial statements are prepared in accordance with Canadian generally accepted accounting principles and are presented in Canadian dollars. They do not include all the disclosures as required for annual financial statements under generally accepted accounting principles. However, these interim financial statements follow the same accounting policies and methods of application as the Company's most recent annual financial statements. These interim financial statements should be read in conjunction with the Company's annual financial statements for the period from inception (July 19, 2006) to December 31, 2006, which have been filed on SEDAR at www.sedar.com. | |
The Company was incorporated in July 2006; consequently, no comparative figures are presented. | |
3. | SIGNIFICANT ACCOUNTING POLICIES |
Except as disclosed below, these financial statements are prepared using the same accounting policies and methods of application as those disclosed in note 3 to the Company's financial statements for the period from inception to December 31, 2006. |
(a) | Equipment |
Equipment is stated at cost less accumulated amortization. Amortization is provided on a straight-line basis over three to five years, which represents the estimated useful lives of the |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
related equipment. Amortization on equipment used directly on exploration projects is included in exploration expenses. | ||
(b) | New accounting pronouncements | |
On January 1, 2007, the Company adopted the Canadian Institute of Chartered Accountants ("CICA") Handbook Sections 1530,Comprehensive Income; Section 3251,Equity; Section 3855,Financial Instruments - Recognition and Measurement; Section 3861,Financial Instruments - Disclosure and Presentation; and Section 3865,Hedges. These new standards resulted in no changes to amounts previously reported. | ||
(i) | Financial Instruments | |
Under the new standards, financial assets and liabilities, including derivative instruments, are initially recognized and subsequently measured based on their classification as "held- for-trading", "available-for-sale" financial assets, "held-to-maturity", "loans and receivables", or "other" financial liabilities. Held-for-trading financial instruments are measured at their fair value with changes in fair value recognized in net income for the period. Available-for-sale financial assets are measured at their fair value and changes in fair value are included in other comprehensive income until the asset is removed from the balance sheet. Held-to-maturity investments, loans and receivables and other financial liabilities are measured at amortized cost using the effective interest rate method. Derivative instruments, including embedded derivatives, are measured at their fair value with changes in fair value recognized in net income for the period, unless the instrument is a cash flow hedge and hedge accounting applies, in which case changes in fair value are recognized in other comprehensive income. | ||
(ii) | Comprehensive Income | |
Section 1530 establishes standards for reporting and presenting comprehensive income. Comprehensive income, composed of net income and other comprehensive income, is defined as the change in shareholders' equity from transactions and other events from non-owner sources. Other comprehensive income for the Company includes unrealized gains and losses on available-for-sale securities and changes in the fair market value of derivatives designated as cash flow hedges, all net of related income taxes. The components of comprehensive income are disclosed in the statement of operations and comprehensive income. Cumulative changes in other comprehensive income are included in accumulated other comprehensive income ("AOCI") which is presented as a new category in shareholders' equity. | ||
(iii) | Hedging | |
Section 3865 specifies the circumstances under which hedge accounting is permissible and how hedge accounting may be performed. As at and during the three month and nine month periods ended September 30, 2007, the Company had no hedges. |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
The application of these new standards has had no impact on the Company's financial statements as at and for the three month and nine month periods ended September 30, 2007, and as such, a statement of comprehensive income has not been included in these financial statements. | |
4. | EQUIPMENT AND EQUIPMENT UNDER CAPITAL LEASE |
(a) | Equipment under capital lease |
September 30, 2007 | ||||||||||
Accumulated | ||||||||||
Cost | amortization | Net book value | ||||||||
Vehicles | $ | 161,555 | $ | 22,434 | $ | 139,121 |
December 31, 2006 | ||||||||||
Accumulated | ||||||||||
Cost | amortization | Net book value | ||||||||
Vehicles | $ | – | $ | – | $ | – |
In January and February 2007, the Company leased four vehicles for the exploration activities at its properties. These capital leases each have three-year terms, expiring in 2009, with imputed interest rates of approximately 10.4% per annum. The leased vehicles are amortized on a straight-line basis over the lease term.
The future minimum lease payments required under these capital leases consist of:
Remainder of 2007 | $ | 10,405 | |
2008 | 41,622 | ||
2009 | 114,977 | ||
167,004 | |||
Less: Amount representing interest | (25,655 | ) | |
Capital lease obligation | 141,349 | ||
Less: current portion | (28,393 | ) | |
Balance of obligation – long term | $ | 112,956 |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
(b) | Equipment |
September 30, 2007 | ||||||||||
Accumulated | ||||||||||
Cost | amortization | Net book value | ||||||||
Mobile equipment | $ | 69,660 | $ | – | $ | 69,660 | ||||
Furniture & fixtures | 20,401 | 1,700 | 18,701 | |||||||
$ | 90,061 | $ | 1,700 | $ | 88,361 |
December 31, 2006 | ||||||||||
Accumulated | ||||||||||
Cost | amortization | Net book value | ||||||||
Mobile equipment | $ | – | $ | – | $ | – | ||||
Furniture & fixtures | – | – | – | |||||||
$ | – | $ | – | $ | – |
5. | MINERAL PROPERTY INTERESTS |
Balance at | Balance at | |||||||||
December 31, | Acquired during | September 30, | ||||||||
Property Acquisition Costs | 2006 | the period | 2007 | |||||||
Detour Lake and Block A properties (note 5(a)) | $ | 1,000,000 | $ | 107,194,080 | $ | 108,194,080 |
Balance at | Balance at | |||||||||
inception | Acquired during | December 31, | ||||||||
Property Acquisition Costs | (July 19, 2006 | ) | the period | 2006 | ||||||
Detour Lake and Block A properties (note 5(a)) | $ | – | $ | 1,000,000 | $ | 1,000,000 |
(a) | Detour Lake and Block A Properties |
In August 2006, the Company entered into an agreement and subsequent amending agreements (collectively, the "acquisition agreements") with Pelangio Mines Inc. ("Pelangio") pursuant to which Pelangio's Detour Lake and Block A properties would be acquired by the Company. Of the $5,000,000 cash payment to be made as partial consideration for these properties, $1,000,000 was paid in August 2006 in the form of a non-refundable deposit. |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
On January 31, 2007, the Company acquired the Detour Lake and Block A properties. The consideration paid to acquire the Detour Lake and Block A properties was as follows:
Issuance of 20,000,000 common shares, to Pelangio | $ | 70,000,000 | ||
Cash payments, to Pelangio | 5,000,000 | |||
Finders' fees | 750,000 | |||
Related transaction costs | 139,080 | |||
$ | 75,889,080 |
The total acquisition cost was allocated as follows:
Mineral property interests | $ | 108,194,080 | ||
Future income tax liability at acquisition | (32,305,000 | ) | ||
$ | 75,889,080 |
The value of the common shares issued as partial consideration of the acquisition was determined based upon the closing market price of the Company as at the date of closing of the acquisition, January 31, 2007 ($3.50 per share). | |
Pursuant to the acquisition agreements, the Company and Pelangio agreed, for income tax purposes, to elect a transfer price jointly under theIncome Tax Actat an amount of approximately $10,300,000. | |
6. | SHAREHOLDERS' EQUITY |
(a) | Authorized share capital |
The Company's authorized share capital consists of an unlimited number of common shares without par value. |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
(b) | Issued and outstanding common share capital |
Number of | |||||||
common shares | Amount | ||||||
Balance, December 31, 2006 | 5,000,000 | $ | 5,000 | ||||
Shares issued in initial public offering ("IPO") (note 6(f)) | 10,000,000 | 35,000,000 | |||||
Costs related to the initial public offering (note 6(f)) | – | (3,515,476 | ) | ||||
Shares issued to subscription receipt holders, net (note 6(f)) | 5,000,000 | 9,494,141 | |||||
Shares issued to acquire the Detour Lake and Block A properties | 20,000,000 | 70,000,000 | |||||
(note 5(a)) | |||||||
Shares issued upon exercise of warrants | 346,650 | 1,334,603 | |||||
Fair value of stock warrants allocated to shares issued on exercise | – | 273,854 | |||||
Balance, September 30, 2007 | 40,346,650 | $ | 112,592,122 |
The common shares issued to Pelangio to acquire the Detour Lake and Block A properties were held in escrow until July 31, 2007. The 5,000,000 seed capital common shares issued upon inception, on July 19, 2006, were held in escrow until October 23, 2007 (note 10(a)). | |
(c) | Share purchase option plan |
The Company has adopted a rolling stock option plan, whereby 10% of the Company's issued and outstanding share capital may be granted to officers, directors, employees and consultants of the Company. In January 2007, the Company granted 1,385,000 options exercisable at $3.50 per share until January 31, 2012. Vesting of these options is 30% on January 31, 2008, 30% on January 31, 2009, and 40% on January 31, 2010. | |
In June 2007, the Company granted 936,000 options exercisable at $6.09 per share until January 31, 2012. Vesting of these options is 30% on January 31, 2008, 30% on January 31, 2009, and 40% on January 31, 2010. A total of 120,000 options were canceled in the three month period ended September 30, 2007. |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
The continuity of share purchase options is as follows:
Weighted | ||||||
average | ||||||
Number of | exercise | |||||
options | price | |||||
Balance, December 31, 2006 | – | $ | – | |||
Granted | 2,321,000 | 4.54 | ||||
Cancelled | (120,000 | ) | 6.09 | |||
Balance, September 30, 2007 | 2,201,000 | $ | 4.46 |
Options outstanding and exercisable at September 30, 2007 were as follows:
Volatility used in | ||||
stock based | Number of | Number of | ||
compensation | Exercise | options | options | |
Expiry date | calculations | price | outstanding | exercisable |
January 31, 2012 | 62% | $ 3.50 | 1,385,000 | Nil |
January 31, 2012 | 53% | $ 6.09 | 816,000 | Nil |
Total | 58% | 2,201,000 | Nil | |
Average exercise price | $ 4.46 | $ n/a |
The exercise prices of all share purchase options granted were at or above the market price at the grant date. Using an option pricing model with the assumptions noted below, the estimated fair value of all options granted during the nine months ended September 30, 2007, which have been reflected in the statement of operations, is as follows:
Three months ended | Nine months ended | ||||||
September 30, 2007 | September 30, 2007 | ||||||
Exploration | |||||||
Engineering | $ | 209,348 | $ | 210,653 | |||
Geological | (149,223 | ) | 255,929 | ||||
Exploration | 60,125 | 466,582 | |||||
Administration | 687,788 | 1,107,357 | |||||
Total compensation cost recognized in | $ | 747,913 | $ | 1,573,939 | |||
operations, credited to contributed surplus |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
The weighted-average assumptions used to estimate the fair value of options vesting during the respective periods were as follows:
Three months | Nine months | |
ended | ended | |
September 30 | September 30 | |
2007 | 2007 | |
Risk free interest rate | 4.15% | 4.15% |
Expected life | 1.9 years | 1.9 years |
Expected volatility | 58% | 58% |
Expected dividends | Nil | Nil |
(d) | Contributed surplus |
Balance, December 31, 2006 | $ | – | ||
Non-cash stock-based compensation (note 6(c)) | 1,573,939 | |||
Warrants issued (note 6(e)) | 395,000 | |||
Warrants exercised (note 6(e)) | (273,854 | ) | ||
Balance, September 30, 2007 | $ | 1,695,085 |
(e) | Warrants |
The Company granted 500,000 common share warrants to agents in relation to the IPO (note 6(f)), with each warrant exercisable into one common share in the Company at an exercise price of $3.85 until January 31, 2008. The warrants have been recorded at an estimated fair value of $395,000, using the following assumptions: risk-free interest rate – 4%; expected life – 1 year; expected volatility – 62%; expected dividends – nil. | |
The continuity of the number of share purchase warrants is as follows: |
Expiry date | January 31, 2008 | |||
Exercise price | $ | 3.85 | ||
Balance, December 31, 2006 | – | |||
Issued | 500,000 | |||
Exercised | (346,650 | ) | ||
Balance, September 30, 2007 | 153,350 |
(f) | Initial Public Offering |
On January 31, 2007, the Company completed an initial public offering of 10,000,000 common shares on the Toronto Stock Exchange. The common shares were issued at a price of $3.50 per common share, for gross proceeds of $35,000,000. The Company paid the agents a cash commission, including expenses of $2,250,588 and 500,000 common share warrants (note 6(e)). In addition, $564,012 transaction costs were incurred in relation to the initial public offering, with |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
$249,292 paid during the three month period ended March 31, 2007 and the remainder paid in 2006. In conjunction with the IPO, subscription receipts were converted into common shares of the Company. | |
7. | RELATED PARTY BALANCES AND TRANSACTIONS |
Due to related parties | September 30 2007 | December 31 2006 | |||||
Hunter Dickinson Inc. (a) | $ | 11,510 | $ | 24,225 | |||
Pelangio Mines Inc. (b) | – | – | |||||
$ | 11,510 | $ | 24,225 |
Reimbursement for expenses and services rendered | Three months ended | Nine months ended | |||||
by third party | September 30, 2007 | September 30, 2007 | |||||
Hunter Dickinson Inc. (a) | $ | 765,575 | $ | 1,586,103 | |||
Pelangio Mines Inc. (b) | |||||||
Exploration costs incurred on behalf of the Company | $ | – | $ | 1,533,840 | |||
Acquisition of Detour Lake and Block A properties | $ | – | $ | 75,000,000 | |||
A director (c) | $ | 2,400 | $ | 2,400 |
(a) | Hunter Dickinson Inc. ("HDI") |
HDI is a private company which has certain directors in common with the Company. HDI provides geological, technical, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company on a full cost recovery basis pursuant to an agreement dated July 19, 2006. Balances receivable from, or payable to HDI, have arisen in the normal course of exploration work on the Company's mineral property and from the provision of ongoing administrative and technical services. | |
(b) | Pelangio Mines Inc. ("Pelangio") |
On January 31, 2007, the Company acquired the Detour Lake and Block A properties from Pelangio through the issuance of common shares of the Company and cash, as described in note 5. Pelangio is a Canadian public company which, as a result of this share issuance, became a significant shareholder of the Company effective January 31, 2007. At December 31, 2006, the Company had a balance owing to Pelangio of $324,681. | |
In addition to the acquisition of these properties, the Company also paid to Pelangio $1,533,840 for exploration work conducted on a cost-recovery-only basis on the Company's behalf at the Detour Lake and Block A properties. | |
(c) | Director |
During the three and nine months ended September 30, 2007, the Company paid $2,400 (2006 – $nil) to a director, for technical consulting services. |
DETOUR GOLD CORPORATION |
(A Development Stage Company) |
Notes to Financial Statements |
For the three and nine months ended September 30, 2007 |
(Unaudited - Expressed in Canadian Dollars) |
8. | INCOME TAXES |
During the period ended June 30, 2007, the federal government substantially enacted a 0.5% reduction in the tax rate applicable to the Company. Consequently, the Company recorded a recovery of future income taxes of $490,000. | |
The Company's exploration-related tax pools at September 30, 2007 total approximately $12 million (December 31, 2006 – $nil) and the Company's non-capital losses total approximately $1.5 million (December 31, 2006 – $nil). The Company has not concluded that it is more likely than not that the future income tax assets resulting from exploration pools and non-capital losses will be realized and has consequently recorded a valuation allowance corresponding to the full amount of these future income tax assets. | |
9. | COMMITMENTS |
The following table lists the Company’s material contractual obligations over the next five years. |
Contractual obligations | Remainder | |||||||||||||||||||||
of | After | |||||||||||||||||||||
(in thousands of dollars) | Total | 2007 | 2008 | 2009 | 2010 | 2011 | 2011 | |||||||||||||||
Long term debt | – | – | – | – | – | – | – | |||||||||||||||
Capital lease obligations | $ | 141 | $ | 7 | $ | 29 | $ | 105 | – | – | – | |||||||||||
Operating leases | $ | 126 | $ | 12 | $ | 49 | $ | 49 | $ | 16 | – | – | ||||||||||
Purchase obligations | – | – | – | – | – | – | – | |||||||||||||||
Other long term obligations | ||||||||||||||||||||||
(excluding future income taxes) | – | – | – | – | – | – | – | |||||||||||||||
Total | $ | 267 | $ | 19 | $ | 78 | $ | 154 | $ | 16 | – | – |
10. | SUBSEQUENT EVENTS |
(a) | Escrowed shares |
Subsequent to September 30, 2007, the 5,000,000 seed capital common shares issued upon inception were released from escrow, on October 23, 2007 (note 6(b)). | |
(b) | Share purchase options |
On October 15, 2007, a total of 100,000 share purchase options, exercisable at $8.91 and expiring on January 31, 2012, were granted to a consultant. |