14 May 2012 07:01
Condensed Interim Consolidated Financial Statements (Unaudited)
Aureus Mining Inc.
For the Three Months Ended March 31, 2012
(Stated in US dollars)
Registered office: Suite 2300Toronto-Dominion Centre TD Waterhouse Tower79 Wellington Street WestTorontoOntario M5K 1H1Canada
Company registration number: 776831-1
Company incorporated on: 1 February 2011
| Unaudited March 31, 2012 $
| Audited December 31, 2011 $ |
Assets | ||
Current assets | ||
Cash and cash equivalents | 25,849,316 | 31,044,943 |
Trade and other receivables | 327,031 | 227,582 |
26,176,347 | 31,272,525 | |
Non-current assets | ||
Intangible assets | ||
- Resource properties (Note 3) | 5,519,965 | 5,519,965 |
- Deferred exploration costs (Note 3) | 47,441,542 | 43,358,324 |
Property, plant and equipment (Note 4) | 878,700 | 811,478 |
Available-for-sale investments | 3,510,051 | 1,427,532 |
57,350,258 | 51,117,299 | |
Total assets | 83,526,605 | 82,389,824 |
Liabilities | ||
Current liabilities | ||
Trade and other payables | 2,139,705 | 2,859,746 |
Due to related parties (Note 6) | 113,459 | 28,554 |
2,253,164 | 2,888,300 | |
Total liabilities | 2,253,164 | 2,888,300 |
Equity | ||
Share capital (Note 5b) | 39,362,588 | 39,065,266 |
Capital contribution | 48,234,972 | 48,234,972 |
Share based payment reserve (Note 5c) | 2,454,661 | 2,023,050 |
Available-for-sale investment reserve | (314,290) | (2,396,810) |
Cumulative translation reserve | (70,368) | 74,176 |
Deficit | (8,394,122) | (7,499,130) |
Total equity | 81,273,441 | 79,501,524 |
Total liabilities and equity | 83,526,605 | 82,389,824 |
The accompanying notes are an integral part of these interim consolidated financial statements.
| Unaudited 3 months ended March 31, 2012 | Unaudited February 1 to March 31, 2011 |
$ | $ | |
Expenses | ||
Legal and professional | (142,455) | - |
Depreciation (Note 4) | (64,882) | - |
Wages and salaries | (446,817) | - |
Share based payments (Note 5c) | (431,611) | - |
Foreign exchange gain | 591,522 | - |
Other expenses | (400,905) | - |
Loss from operations | (895,148) | - |
Finance income | 156 | - |
Loss for the period | (894,992) | - |
Other comprehensive (loss)/income | ||
Available-for-sale financial instruments | 2,082,520 | - |
Currency translation differences | (144,544) | - |
Total comprehensive income for the period | 1,042,984 | - |
Weighted average number of shares outstanding, basic and diluted | 117,950,682 | - |
Loss per share, basic and diluted | (0.008) | - |
The accompanying notes are an integral part of these interim consolidated financial statements.
| Unaudited 3 months ended March 31, 2012 | Unaudited February 1 to March 31, 2011 |
$ | $ | |
Operating activities | ||
Loss for the period | (894,992) | - |
Items not affecting cash: | ||
Share-based payments | 431,611 | - |
Depreciation, depletion, and amortization | 64,882 | - |
Unrealized foreign exchange gain | (670,866) | - |
Changes in non-cash working capital | ||
Trade and other receivables | (99,447) | - |
Trade and other payables | (4,047) | - |
Due to related party | 84,905 | - |
| Cash flows from operating activities | (1,087,954) | - |
| Investing activities | ||
Payments for deferred exploration expenditure | (4,799,212) | - |
Payments to acquire property, plant and equipment | (131,474) | - |
| Cash flows used in investing activities | (4,930,686) | - |
Financing activities | ||
Exercise of stock options | 297,322 | - |
| Cash flows from financing activities | 297,322 | - |
Impact of foreign exchange on cash balance | 525,691 | - |
Net decrease in cash and cash equivalents | (5,195,627) | - |
Cash and cash equivalents at beginning of period | 31,044,943 | - |
Cash and cash equivalents at end of period | 25,849,316 | - |
The accompanying notes are an integral part of these consolidated financial statements.
Share capital
$
|
Capital contribution
$ |
Share-based payment reserve $
|
Cumulative deficit
$ |
Total equity
$ | |||
Available-for sale investment reserve $ | Currency translation reserve $ | ||||||
Balance at February 1, 2011 | - | - | - | - | - | - | - |
Balance at March 31, 2011 | - | - | - | - | - | - | - |
Balance at January 1, 2012 | 39,065,266 | 48,234,972 | 2,023,050 | (2,396,810) | 74,176 | (7,499,130) | 79,501,524 |
Loss for the period | - | - | - | - | - | (894,992) | (894,992) |
Comprehensive income/(loss) for period | - | - | - | 2,082,520 | (144,544) | - | 1,937,976 |
Share-based payments | - | - | 431,611 | - | - | - | 431,611 |
Exercise of stock options | 297,322 | - | - | - | - | - | 297,322 |
Balance at March 31, 2012 | 39,362,588 | 48,234,972 | 2,454,661 | (314,290) | (70,368) | (8,394,122) | 81,273,441 |
The accompanying notes are an integral part of these consolidated financial statements.
1 Nature of operations and basis of preparation
Aureus Mining Inc. ("Aureus Mining" or the "Company") was incorporated under the Canada Business Corporations Act on February 1, 2011 in order to facilitate the Plan of Arrangement (the "Arrangement" - see Note 2). Following completion of the Arrangement, Aureus Mining holds gold assets and an investment in Stellar Diamonds plc. ("Stellar Diamonds") previously owned by Afferro Mining Inc. ("Afferro Mining", formerly African Aura Mining Inc. ("African Aura")). The focus of Aureus Mining's business is the exploration and development of such gold assets, particularly the New Liberty Gold Project.
These condensed interim consolidated financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting", they do not include all disclosures that would otherwise be required in a complete set of financial statements. They follow accounting policies and methods of their application consistent with the audited consolidated financial statements for the period ended December 31, 2011. Accordingly, they should be read in conjunction with the Company's audited consolidated financial statements for the period ended December 31, 2011.
As the Arrangement only completed on April 13, 2011, there is no comparative quarter end information available for the quarter ended March 31, 2011.
These interim financial statements were authorised by the Board of Directors on May 11, 2012.
2 Plan of Arrangement
On April 13, 2011 African Aura completed the Arrangement under the British Columbia Business Corporation Act pursuant to which it transferred its gold assets, 30,792,770 shares in Stellar Diamonds and $10.6 million cash (the "Transferred Assets") to Aureus Mining and African Aura was renamed Afferro Mining Inc.
The Arrangement was approved by the Board of Directors of African Aura and by African Aura's shareholders at a special meeting held on April 5, 2011.
Under the Arrangement, among other things, the Transferred Assets were acquired by Aureus Mining and each Participating Shareholder received new common shares in Afferro and Aureus Mining in exchange for the African Aura common shares held by such shareholder on the basis of one new Afferro common share and one Aureus Mining common share for each African Aura common share held by such shareholder.
3 Intangible assets
Transferred from Afferro April 13, 2011 $ |
Additions $ |
December 31, 2011 $ |
Additions $ |
March 31, 2012 $ | |
Resource properties: | |||||
Liberia | |||||
Bea | 210,000 | - | 210,000 | - | 210,000 |
Ndablama extension | 141,349 | - | 141,349 | - | 141,349 |
Archaen Gold | - | 60,350 | 60,350 | - | 60,350 |
351,349 | 60,350 | 411,699 | - | 411,699 | |
Sierra Leone | |||||
Sonfon | 1,017,000 | - | 1,017,000 | - | 1,017,000 |
Cameroon | |||||
Batouri | 4,091,266 | - | 4,091,266 | - | 4,091,266 |
5,459,615 | 60,350 | 5,519,965 | - | 5,519,965 | |
Deferred exploration costs: | |||||
Liberia | |||||
New Liberty | 23,767,650 | 13,416,499 | 37,184,149 | 2,987,285 | 40,171,434 |
Weaju | 1,201,561 | 401,656 | 1,603,217 | 91,088 | 1,694,305 |
Gondoja | 34,348 | 1,600 | 35,948 | - | 35,948 |
Silver Hills | 48,107 | - | 48,107 | - | 48,107 |
Ndablama | 452,435 | 710,045 | 1,162,480 | 303,009 | 1,465,489 |
Leopard Rock | - | 617,603 | 617,603 | 903,479 | 1,521,082 |
25,504,101 | 15,147,403 | 40,651,504 | 4,284,861 | 44,936,365 | |
Sierra Leone | |||||
Sonfon | 1,993,865 | 258,686 | 2,252,551 | (258,000) | 1,994,551 |
Cameroon | |||||
Batouri | 426,148 | 28,121 | 454,269 | 56,357 | 510,626 |
27,924,114 | 15,434,210 | 43,358,324 | 4,083,218 | 47,441,542 |
(a) Liberia
The Company holds a mineral development agreement ("MDA") in Liberia for gold development. This MDA is in Western Liberia and is held by Bea Mountain Mining Corporation, Aureus Mining's local subsidiary. The MDA is valid for 25 years with an option to renew for a further 25 years and is dated November 28, 2001 and approved on March 14, 2002. The MDA allows the Company to conduct pre-feasibility and bankable feasibility studies. On July 29, 2009 the Company was granted by the Government of Liberia a Class A Mining License within the Bea MDA. The license allows the Company to explore and mine in a 457 km2 area which encompasses the New Liberty Gold Project, Weaju, Gondoja, Silver Hills and Ndablama.
During the period ended December 31, 2011 the company entered into an agreement to purchase all of the shares of Archaen Gold (Liberia) Inc. ("Archaen Gold"), a company holding the exploration rights to a license area covering 89 km2. The Archaen Gold exploration license is contiguous with and immediately south of the Company's Bea Mountain mining license and currently contains the Leopard Rock property. The transaction was accounted for as an asset acquisition and in addition to the purchase price of $60,350 a 2.5% net profit interest ("NPI") in relation to any future production was granted.
3 Intangible assets (continued)
(b) Sierra Leone
The Sonfon gold project is subject to a joint venture agreement dated June 16, 2010, as amended, with Golden Star Resources Ltd. ("GSR"). The Company has elected not to contribute its share of expenditure on the 2011 work programme and as such the Company's interest in the Sonfon project has reduced from 49% to 43%. The Company records its share of the deferred exploration costs in this project.
(c) Cameroon
The Batouri licence covers an area of 1,000 km2 and targets gold in eastern Cameroon.
Additions to deferred exploration costs for the quarter ended March 31, 2012 are categorised as follows:
3 months ended March 31, 2012 | ||
$ | ||
Deferred exploration costs | ||
Assays incl. shipment | 514,588 | |
Communications | 62,003 | |
Community relations | 32,639 | |
Consultants and professional fees | 476,227 | |
Drilling | 1,015,564 | |
Geophysical | 420,813 | |
Infrastructure incl. roads and bridges | 175,839 | |
Licenses and permit fees | 9,458 | |
Project/field office costs | 649,155 | |
Salaries and wages | 725,532 | |
Subsistence | 172,140 | |
Transportation | 87,260 | |
Joint venture participation | (258,000) | |
Net expenditure during the period | 4,083,218 | |
Balance, beginning of the period | 43,358,324 | |
Balance, end of the period | 47,441,542 |
4 Property, plant and equipment
Machinery and equipment | Vehicles | Total | |
$ | $ | $ | |
Cost | |||
Transferred from Afferro | 288,208 | 528,250 | 816,458 |
Additions | 89,863 | 266,683 | 356,546 |
At December 31, 2011 | 378,071 | 794,933 | 1,173,004 |
Additions | 95,853 | 35,621 | 131,474 |
Foreign exchange | 666 | - | 666 |
At March 31, 2012 | 474,590 | 830,554 | 1,305,144 |
Accumulated depreciation | |||
Transferred from Afferro | 48,238 | 99,558 | 147,796 |
Charge for the period | 68,305 | 145,425 | 213,730 |
At December 31, 2011 | 116,543 | 244,983 | 361,526 |
Charge for the period | 22,145 | 42,737 | 64,882 |
Foreign exchange | 44 | (8) | 36 |
At March 31, 2012 | 138,732 | 287,712 | 426,444 |
Net book value | |||
Transferred from Afferro | 239,970 | 428,692 | 668,662 |
At December 31, 2011 | 261,528 | 549,950 | 811,478 |
At March 31, 2012 | 335,858 | 542,842 | 878,700 |
5 Equity
(a) Authorised
Unlimited number of common shares without par value.
(b) Issued
Shares | Amount $ | |
On incorporation | - | - |
Issued pursuant to the Arrangement | 86,252,592 | - |
Shares cancelled | (444) | - |
Shares issued in public offering | 31,050,000 | 41,485,392 |
Share issuance costs | - | (2,753,408) |
Exercise of stock options | 527,654 | 333,282 |
Balance at December 31, 2011 | 117,829,802 | 39,065,266 |
Exercise of stock options | 452,499 | 297,322 |
Balance at March 31, 2012 | 118,282,301 | 39,362,588 |
5 Equity (continued)
In the quarter ended March 31, 2012, the Company issued 452,499 new common shares in exchange for the exercise of 452,499 stock options at a weighted average exercise price of Cdn$0.65.
(c) Stock options
Information relating to stock options outstanding and vested at March 31, 2012 is as follows:
March 31, 2012 | December 31, 2011 | |||
Number of options | Weighted average exercise price per share
per share | Number of options | Weighted average exercise price per share | |
Cdn$ | Cdn$ | |||
Beginning of the period | 9,866,434 | 0.95 | - | - |
Options granted per arrangement | 7,465,994 | 0.70 | ||
Options granted | 1,741,000 | 1.05 | 2,950,000 | 1.52 |
Options exercised | (452,499) | 0.65 | (527,654) | 0.61 |
Options cancelled | - | - | (21,906) | 0.90 |
End of the period | 11,154,935 | 0.98 | 9,866,434 | 0.95 |
Number of stock options outstanding | |||
Expiry date | Exercise price per share Cdn$
| March 31, 2012 | December 31, 2011 |
March 16, 2012 | 0.73 | - | 75,000 |
May 20, 2012 | 0.73 | 37,500 | 37,500 |
January 17, 2013 | 0.64 | 662,500 | 787,500 |
March 1, 2013 | 1.42 | 15,000 | 15,000 |
January 19, 2014 | 0.32 | 507,500 | 554,375 |
January 8, 2015 | 0.49 | 1,148,375 | 1,157,750 |
May 13, 2015 | 0.50 | 1,250,000 | 1,250,000 |
June 6, 2015 | 0.16 | 107,937 | 107,937 |
November 1, 2015 | 0.90 | 240,000 | 240,000 |
December 1, 2015 | 0.33 | 117,749 | 137,374 |
December 1, 2015 | 0.50 | 68,687 | 98,124 |
December 1, 2015 | 0.66 | - | 29,437 |
January 10, 2016 | 1.09 | 2,255,000 | 2,255,000 |
May 23, 2016 | 1.55 | 2,435,000 | 2,435,000 |
August 18, 2016 | 1.27 | 200,000 | 200,000 |
September 1, 2016 | 1.42 | 300,000 | 300,000 |
January 1, 2017 | 0.57 | - | 19,625 |
June 28, 2017 | 0.91 | 68,687 | 166,812 |
January 4, 2017 | 1.05 | 1,741,000 | - |
0.98 | 11,154,935 | 9,866,434 | |
5 Equity (continued)
The fair value of the stock options granted in the three months ended March 31, 2012 was estimated at Cdn$0.55 per option at the grant date based on the Black-Scholes option-pricing model using the following assumptions:
3 months ended March 31, 2012 | Period ended December 31, 2011 | |
Dividend yield | 0% | 0% |
Risk free interest rate | 1.00% | 1.85 - 2.25% |
Expected life | 5 years | 0.5 - 5 years |
Expected volatility | 61.7% | 44 - 78% |
6 Related party transactions
During the three months ended March 31, 2012, the Company incurred management and office service fees of $89,981 (period ended March 31, 2011, $nil) payable to Afferro Mining and environmental consulting fees of $51,158 payable to a Company with a common Director. The payable to related parties as at March 31, 2012 was $113,459 (March 31, 2011, $nil).
Related party transactions are in the normal course of business and occur on terms similar to transactions with non-related parties.
7 Segment information
The Company is engaged in the acquisition, exploration and development of gold properties in the West African countries of Liberia, Cameroon, and Sierra Leone. Information presented to the Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is focused on the geographical location. The reportable segments under IFRS 8 are as follows:
·; Liberia exploration and development;
·; Cameroon exploration;
·; Sierra Leone exploration; and
·; Corporate.
Following is an analysis of the Group's results, assets and liabilities by reportable segment for the three month period ended March 31, 2012:
Liberia exploration and development | Cameroon exploration |
Sierra Leone exploration | Corporate | Total | |
$ | $ |
$ | $ | $ | |
Loss/(gain) for the period | 125,800 | 1,832 | - | 767,360 | 894,992 |
Segment assets | 46,457,559 | 4,692,065 | 3,065,551 | 29,311,430 | 83,526,605 |
Segment liabilities | 1,254,944 | 28,120 | - | 970,100 | 2,253,164 |
Depreciation of property, plant and equipment | 63,050 | 1,832 | - | - | 64,882 |
Capital additions - property, plant and equipment | 30,753 | 58,793 | - | 41,928 | 131,474 |
- intangible assets | 4,284,861 | 56,357 | (258,000) | - | 4,083,218 |