The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective interest rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end based on management's best estimates of the time of delivery of payable gold, the total amount of gold expected to be produced over the mine life and the timing of that production. Interest charged in Q3 2010 has been capitalised and included in exploration and evaluation expenditure. SUBSEQUENT EVENT On 27 May 2010 the Minster of Environment and Conservation informed the company that, under authority of Section 67(3)(a) of the Environmental Protection Act, the Lieutenant-Governor in Council has released the Ming Copper-Gold Mine from further environmental assessment, subject to a number of terms and conditions. On 1 June 2010 the Company announce it has received final environmental approval and project release from the Government of Newfoundland and Labrador for its Ming Copper-Gold Mine on the Baie Verte Peninsula, Newfoundland, Canada. COMMITMENTS The Group will have a commitment of GBP 889,335 (CAD$1.364 million) and will inherit an environmental bond with the Government of Newfoundland and Labrador in connection with the acquisition of the Nugget Pond Facility on 1 July 2010. In addition to the environmental commitment the Group has commitments totalling GBP 1 million (CAD$1.5 million) with various vendors relating to the purchase of equipment for the Nugget Pond Mill upgrade. These commitments together with the ongoing evaluation and development of the mine will be in part financed from existing equity funding and an agreement with Sandstorm Resources Ltd to sell a portion of the life-of-mine gold production from its Ming Copper-Gold Mine, located in Baie Verte, Newfoundland. Under the terms of this agreement Sandstorm Resources Ltd. will make staged upfront cash payments for the gold to the Group totalling US$20 million. Payment milestones are as follows: -- US$5 million available immediately and received on 10 March 2010; -- US$2 million on completion of a NI43-101 feasibility study; and -- US$13 million when Rambler is awarded all permits required for the Ming mine to start production. For this, the Group has agreed to sell 25% of the first 175,000oz of payable gold and thereafter 12% of all further payable gold up to 40 years, renewable in 10 year blocks. During negotiations Casimir Capital LP acted as agent for Rambler and is entitled to a 4.5% cash commission to be paid with each payment milestone. There are certain circumstances in which the gold loan may be repaid earlier than by the delivery of payable gold as follows: (i) If within 18 months of 4 March 2010 (the date of the agreement) the Ming mine has not started producing gold any amounts advanced will become repayable on demand together with interest at a rate of 8% per annum. (ii) If within 24 months of the date that gold is first produced, the Ming mine has not produced and sold a minimum of 24,000oz of payable gold then a portion of the US$20 million will be repayable based on the shortfall of payable gold. (iii) Within the first 36 months of Commercial production of gold any shortfall in payable gold below the following amounts will be required to be paid in cash: -- within the first 12 months - US$3.6 million -- within the second 12 months - US $3.6 million -- within the third 12 months - US$3.1 million FINANCIAL INSTRUMENTS The Board of Directors determines, as required, the degree to which it is appropriate to use financial instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are foreign exchange risk, interest rate risk, credit risk and liquidity risk. With effect from July 2007, the Group has held the majority of its cash resources in Canadian Dollars given that the majority of the Group's outgoings are denominated in this currency. During Q3, 2010 the Group entered into a financing agreement in US Dollars as described above. Should any payment milestones not be reached the amounts advanced under the agreement would be repayable in cash giving rise to a foreign exchange gain or loss, however the directors consider that the milestones are achievable and payments under the agreement in the long term will be made in payable gold which is sold in US Dollars and will eliminate the foreign exchange risk. The directors take a very risk averse approach to management of cash resources and continue to closely monitor events and associated risks. There were no derivative instruments outstanding at 30 April 2010. RELATED PARTY TRANSACTIONS The parent company has a related party relationship with its subsidiary, and with its Directors and executive officers. A total of GBP 59,879 (2009: GBP 65,974) was payable to key management personnel during the quarter including share-based payments of GBP 3,036 (2009: GBP 14,048). Directors' fees of GBP 12,000 remained outstanding at 30 April 2010 (31 July 2009: GBP 29,767). GOING CONCERN The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on the copper and gold prices, its ability to fund its development and exploration programs, and to manage and generate positive cash flows from operations in the future. These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate, and these adjustments could be material. The Group raises finance for its exploration and development activities in discrete tranches. Following the successful completion of the Sandstorm Resources Ltd. financing of US$20 million during the quarter the Directors and management are concentrating on achieving the payment milestones in the financing agreement which will enable the drawdown of the remaining US$ 15 million balance and are currently evaluating a number of debt financing proposals to meet anticipated working capital requirements in the late pre-production/early production stages. The Directors are confident the Company has sufficient funds to maintain ongoing operations for the forthcoming 12 months and therefore have concluded that the Group is a going concern. IMPAIRMENT ASSESSMENTS OF DEVELOPMENT PROJECTS AND EXPLORATION PROPERTIES The Directors have assessed whether the exploration and evaluation costs have suffered any impairment by considering the Group's business plan which includes resource estimates, future processing capacity, the forward market and longer term price estimates for copper and gold. Management's estimates of these factors are subject to risk and uncertainties affecting the recoverability of the Group's exploration and evaluation costs. Any changes to these estimates may result in the recognition of an impairment charge with a corresponding reduction in the carrying value of such assets. STOCK BASED COMPENSATION In the three months ended 30 April 2010 the parent company granted 300,000 employee stock options (no employee stock options were issued in the three months ended 31 January 2010). The number of share options being granted is considered by the directors to be consistent with companies of a similar size and profile to Rambler. The parent company is likely to grant employee stock options again in the future. The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in respect of the expected option life and the volatility are subject to management estimate and any changes to these estimates may have a significant effect on the cost. CHANGES IN ACCOUNTING POLICIES International Financial Reporting Standards that have recently been issued or amended have been adopted for the reporting period ended 30 April 2010: IFRS/Amendment Title Nature of change Application Application to accounting date of date for policy standard Group ---------------------------------------------------------------------------- IAS 1 Presentation of No change to 1 January 1 August revised/amended financial accounting 2009 2009 statements policy, therefore, no impact ---------------------------------------------------------------------------- IAS 16 amendment Property, plant No change to 1 January 1 August and equipment accounting 2009 2009 policy, therefore, no impact ---------------------------------------------------------------------------- IAS 23 amendment Borrowing costs Finance costs 1 January 1 August directly related 2009 2009 to non-current assets will be capitalised ---------------------------------------------------------------------------- IAS 27 amendment Consolidated No change to 1 January 1 August and separate accounting 2009 2009 financial policy, (MORE TO FOLLOW) Dow Jones Newswires June 21, 2010 09:30 ET (13:30 GMT)