Last checked at 29 May 2009 15:00
GALANTAS GOLD CORPORATION
("Galantas" or the "Company")
Consolidated Financial Statements For The
Three Months Ended March 31, 2009
(Unaudited)
29 May 2009
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying unaudited interim consolidated financial statements of Galantas Gold Corporation were prepared by management in accordance with Canadian generally accepted accounting principles. The most significant of these accounting principles have been set out in the December 31, 2008 audited consolidated financial statements. Only changes in accounting policies have been disclosed in these unaudited interim consolidated financial statements. Management acknowledges responsibility for the preparation and presentation of the unaudited interim consolidated financial statements, including responsibility for significant accounting judgments and estimates and the choice of accounting principles and methods that are appropriate to the Company's circumstances.
Management has established processes, which are in place to provide them sufficient knowledge to support management representations that they have exercised reasonable diligence that (i) the unaudited interim consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the unaudited interim consolidated financial statements and (ii) the unaudited interim consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the unaudited interim consolidated financial statements.
The Board of Directors is responsible for reviewing and approving the unaudited interim consolidated financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the unaudited interim consolidated financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the unaudited interim consolidated financial statements together with other financial information of the Company for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.
NOTICE TO READER
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these unaudited interim consolidated financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
Enquiries:
Galantas Gold Corporation
Jack Gunter P.Eng - Chairman
Roland Phelps C.Eng - President and CEO
Email : info@galantas.com
Website : www.galantas.com
Telephone : +44 (0) 2882 241100
Blomfield Corporate Finance Limited
Nick Harriss
Telephone : +44 (0) 207 489 4500
Lewis Charles Securities Limited
Kealan Doyle & Nicholas Nicolaides
Telephone : +44 (0) 207 456 9100
INTERIM CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian Dollars)
(Unaudited)
March 31, December 31,
2009 2008
Assets
Current
Cash $ 377,159 $ 587,489
Accounts receivable and advances 502,760 330,467
Inventory (Note 6) 718,568 652,306
1,598,487 1,570,262
Property, plant and equipment (Note 7) 5,994,384 6,152,874
Long-term deposit 101,900 101,900
Deferred development and exploration costs (Note 8) 10,458,357 10,601,856
Future income taxes 2,094,043 2,094,043
$ 20,247,171 $ 20,520,935
Liabilities
Current
Accounts payable and accrued liabilities $ 2,105,765 $ 2,298,303
Current portion of financing facility (Note 9) 274,426 309,043
Due to related party (Note 11) 2,676,554 2,504,275
5,056,745 5,111,621
Asset retirement obligation 447,400 447,400
Due to related party (Note 11) 372,880 418,161
Long-term portion of financing facility (Note 9) 136,742 199,864
6,013,767 6,177,046
Shareholders' Equity
Share capital (Note 10(a)) 26,530,787 26,435,998
Warrants (Note 10(b)) 227,650 180,640
Contributed surplus 3,686,017 3,648,288
30,444,454 30,264,926
Deficit (16,211,050) (15,921,037)
14,233,404 14,343,889
$ 20,247,171 $ 20,520,935
Going concern (Note 1)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2009 2008
Revenues
Gold sales $ 1,143,004 $ 621,787
Cost and expenses of operations
Cost of sales 813,384 702,479
Amortization and depreciation 303,878 344,999
1,117,262 1,047,478
Income (loss) before the undernoted 25,742 (425,691)
Other expenses and (income)
Other operating expenses 154,801 313,880
Accounting and corporate 13,793 15,460
Legal and audit 14,393 14,607
Stock-based compensation (Note 10(c)) 37,729 131,052
Shareholder communication and public relations 29,341 29,529
Transfer agent 1,276 2,873
General office 8,936 13,100
Bank charges and interest 31,636 44,178
Foreign exchange loss 23,850 155,811
Interest income - (262)
315,755 720,228
Net loss and comprehensive loss for the period $ (290,013) $ (1,145,919)
Basic and diluted loss per share $ (0.00) $ (0.01)
Weighted average number of shares outstanding - basic 189,576,257 175,675,855
Dilutive effect of stock options and warrants - -
Weighted average number of shares outstanding - diluted 189,576,257 175,675,855
INTERIM CONSOLIDATED STATEMENTS OF DEFICIT
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2009 2008
Deficit, beginning of period $ (15,921,037) $ (13,959,943)
Net loss for the period (290,013) (1,145,919)
Deficit, end of period $ (16,211,050) $ (15,105,862)
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Expressed in Canadian Dollars)
(Unaudited)
Share Contributed
Capital Warrants Surplus Deficit Total
Balance, December 31, 2007 $ 26,134,279 $ 2,417,700 $ 844,247 $ (13,959,943) $ 15,436,283
Shares issued under private placements 496,760 - - - 496,760
Warrants issued (180,640) 180,640 - - -
Share issue costs (14,401) - - - (14,401)
Warrants expired - (2,417,700) 2,417,700 - -
Stock-based compensation - - 386,341 - 386,341
Net loss - - - (1,961,094) (1,961,094)
Balance, December 31, 2008 26,435,998 180,640 3,648,288 (15,921,037) 14,343,889
Shares issued for debt (Note 10(a)) 141,799 - - - 141,799
Warrants issued (47,010) 47,010 - - -
Stock-based compensation (Note 10(c)) - - 37,729 - 37,729
Net loss - - - (290,013) (290,013)
Balance, March 31, 2009 $ 26,530,787 $ 227,650 $ 3,686,017 $ (16,211,050) $ 14,233,404
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2009 2008
CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES
Net loss for the period $ (290,013) $ (1,145,919)
Adjustments for non-cash items:
Amortization and depreciation 303,878 344,999
Stock-based compensation (Note 10(c)) 37,729 131,052
Foreign exchange 2,504 8,583
Net change in non-cash working capital (Note 12(a)) (289,294) 307,038
(235,196) (354,247)
INVESTING ACTIVITIES
Purchase of property, plant and equipment - (244,556)
Deferred development and exploration costs (1,889) -
(1,889) (244,556)
FINANCING ACTIVITIES
Net repayments of financing facility (97,739) (76,393)
Advances from related party 126,998 882,300
29,259 805,907
NET CHANGE IN CASH (207,826) 207,104
Effect of exchange rate changes on cash held in foreign currencies (2,504) (8,583)
CASH, BEGINNING OF PERIOD 587,489 21,308
CASH, END OF PERIOD $ 377,159 $ 219,829
SUPPLEMENTAL CASH FLOW INFORMATION (Note 12)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
(Unaudited)
THREE MONTHS ENDED MARCH 31, 2009
1. GOING CONCERN
These unaudited interim consolidated financial statements have been prepared on a going concern basis which contemplates that Galantas Gold Corporation (the "Company") will be able to realize assets and discharge liabilities in the normal course of business. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. The Company's future viability depends on the consolidated results of the Company's wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"), the ability of the Company to obtain future financing and to recover its investment in Omagh Minerals Limited ("Omagh"). Cavanacaw has a 100% shareholding in Omagh which is engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland.
As at December 31, 2001, studies performed on Omagh's mineral property confirmed the existence of economically recoverable reserves. As at July 1, 2007, the mineral property was in the production stage and the directors believe that the capitalized development expenditures will be fully recovered by the future operation of the mine. The recoverability of Omagh's capitalized development costs is thus dependent on the ability to secure financing, future profitable production or proceeds from the disposition of the mineral property.
Management is confident that it will be able to secure the required financing to enable the Company to continue as a going concern. However, this is subject to a number of factors including market conditions. These unaudited interim consolidated financial statements do not reflect adjustments to the carrying value of assets and liabilities, the reported expenses and balance sheet classifications used that would be necessary if the going concern assumption was not appropriate. Such adjustments could be material.
2. INCORPORATION AND NATURE OF OPERATIONS
The Company was formed on September 20, 1996 under the name Montemor Resources Inc. on the amalgamation of 1169479 Ontario Inc. and Consolidated Deer Creek Resources Limited. The name was changed to European Gold Resources Inc. by articles of amendment dated July 25, 1997. On May 5, 2004, the Company changed its name from European Gold Resources Inc. to Galantas Gold Corporation. The Company was incorporated to explore for and develop mineral resource properties, principally in Europe. In 1997, it purchased all of the shares of Omagh which owns a mineral property in Northern Ireland, including a delineated gold deposit. Omagh obtained full planning and environmental consents necessary to bring its property into production.
The Company entered into an agreement on April 17, 2000, approved by shareholders on June 26, 2000, whereby Cavanacaw, a private Ontario corporation, acquired Omagh. Cavanacaw has established an open pit mine to extract the Company's gold deposit near Omagh. Cavanacaw also has developed a premium jewellery business founded on the gold produced under the name Galántas Irish Gold Limited ("Galántas").
As at July 1, 2007, the Company's Omagh mine began production.
The Company's operations include the consolidated results of Cavanacaw and its wholly-owned subsidiaries Omagh and Galántas.
3. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP") for interim financial information. Accordingly, they do not include all of the information and notes to the consolidated financial statements required by Canadian GAAP for annual consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2009 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2009.
The consolidated balance sheet at December 31, 2008 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by Canadian GAAP for annual consolidated financial statements. The unaudited interim consolidated financial statements have been prepared by management in accordance with the accounting policies described in the Company's annual audited consolidated financial statements for the year ended December 31, 2008, except as noted below. For further information, refer to the audited consolidated financial statements and notes thereto for the year ended December 31, 2008.
New accounting policies
Goodwill and Intangible Assets
Effective January 1, 2009, the Company adopted Section 3064, "Goodwill and Intangible Assets" which replaced the Canadian Institute of Chartered Accountants' Handbook ("CICA Handbook") sections 3062 and 3450, EIC-27 and part of Accounting Guideline 11. Under previous Canadian standards, more items were recognized as assets than under International Financial Reporting Standards ("IFRS"). The objectives of CICA 3064 are to reinforce the principle based approach to the recognition of assets only in accordance with the definition of an asset and the criteria for asset recognition and to clarify the application of the concept of matching revenues and expenses such that the current practice of recognizing asset items that do not meet the definition and recognition criteria is eliminated. The portions in the new standard with respect to Goodwill remain unchanged. The provisions relating to the definition and initial recognition of intangible assets intends to reduce the differences with IFRS in the accounting for intangible assets. The new standard also provides guidance for the recognition of internally developed intangible assets (including research and development activities), ensuring consistent treatment of all intangible assets.
The adoption of this standard had no impact on the Company's presentation of its financial position or results of operations as at March 31, 2009.
Credit Risk and the Fair Value of Financial Assets and Financial Liabilities
In January 2009, the Emerging Issues Committee of the CICA issued EIC-173, "Credit Risk and the Fair Value of Financial Assets and Financial Liabilities", which applies to interim and annual financial statements for periods ending on or after January 20, 2009. The adoption of this standard had no impact on the Company's presentation of its financial position or results of operations as at March 31, 2009.
Future Accounting Pronouncements
IFRS
In January 2006, the CICA's Accounting Standards Board ("AcSB") formally adopted the strategy of replacing Canadian GAAP with IFRS for Canadian enterprises with public accountability. On February 13, 2008 the AcSB confirmed that the use of IFRS will be required in 2011 for publicly accountable profit-oriented enterprises. For these entities, IFRS will be required for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company will be required to have prepared, in time for its first quarter of fiscal 2012 filing, comparative financial statements in accordance with IFRS for the three months ended March 31, 2010. While the Company has begun assessing the impact of the adoption of IFRS on its consolidated financial statements, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.
Business Combinations, Consolidated Financial Statements and Non-Controlling Interests
The CICA issued three new accounting standards in January 2009: Section 1582, "Business Combinations", Section 1601, "Consolidated Financial Statements" and Section 1602, "Non-Controlling interests". These new standards will be effective for fiscal years beginning on or after January 1, 2011. Section 1582 replaces section 1581 and establishes standards for the accounting for a business combination. It provides the Canadian equivalent to IFRS 3 - Business Combinations. Sections 1601 and 1602 together replace section 1600, "Consolidated Financial Statements". Section 1601, establishes standards for the preparation of consolidated financial statements. Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of IFRS lAS 27 - Consolidated and Separate Financial Statements. The Company is in the process of evaluating the requirements of the new standards.
4. CAPITAL MANAGEMENT
The Company's objective when managing capital is to safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds, in order to support continued production and maintenance at the Omagh Mine and to acquire, explore and develop other precious and base metal deposits in Northern Ireland.
The Company manages its capital structure and makes adjustments to it, based on the level of funds available to the Company to manage its operations. In order to maintain or adjust the capital structure, the Company expects that it will be able to obtain equity financing and generate positive cash flow from operations to maintain and expand its operations. There are no assurances that these initiatives will be successful. Management reviews its capital management approach on an ongoing basis.
There were no changes in the Company's approach to capital management during the three months ended March 31, 2009. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements.
5. FINANCIAL RISK FACTORS
(a) Property risk
The Company's significant project is the Omagh Mine. Unless the Company acquires or develops additional significant projects, the Company will be solely dependent upon the Omagh Mine. If no additional projects are acquired by the Company, any adverse development affecting the Omagh Mine would have a material effect on the Company's financial condition and results of operations.
(b) Financial risk
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk, and market risk (including interest rate, foreign exchange rate and commodity price risk).
Risk management is carried out by the Company's management team with guidance from the Audit Committee under policies approved by the Board of Directors. The Board of Directors also provides regular guidance for overall risk management.
Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to cash, accounts receivable and long-term deposit. Cash and long-term deposit are held with reputable financial institutions and the United Kingdom Crown, respectively, from which management believes the risk of loss to be minimal. Accounts receivable consist mainly of a trade account receivable from one customer and Value Added Tax receivable. The Company is exposed to concentration of credit risk with one of its customers. Management believes that the credit risk is minimized due to the financial worthiness of this Company. Value Added Tax receivable is collectable from the Government of Northern Ireland. The Company does not have derivative financial instruments. No trade accounts receivable balances are past due or impaired.
Liquidity Risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company's liquidity and operating results may be adversely affected if the Company's access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company manages liquidity risk by monitoring maturities of financial commitments and maintaining adequate cash reserves and available borrowing facilities to meet these commitments as they come due. As at March 31, 2009, the Company had negative working capital. All of the Company's financial liabilities have contractual maturities of less than 30 days other than the financing facility and certain related party loans. The Company is using operating cash flows to manage and is seeking additional capital to increase liquidity.
Market Risk
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company has minimal cash balances and significant interest-bearing debt. The Company is exposed to interest rate risk on the term loan facility and certain related party loans which bear interest at variable rates.
Foreign currency risk
Certain of the Company's expenses and revenues are incurred and received in the currencies of Northern Ireland and the United Kingdom and are therefore subject to gains and losses due to fluctuations in these currencies against the Canadian dollar.
Price risk
The Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices, as it relates to gold to determine the appropriate course of action to be taken by the Company.
Sensitivity Analysis
Based on management's knowledge and experience of the financial markets, the Company believes the following movements are "reasonably possible" over a three month period:
(i) The term loan facility and certain related party loans are subject to interest rate risk. As at March 31, 2009, if interest rates had decreased/increased by 1% with all other variables held constant, the loss for the three months ended March 31, 2009 would have been approximately $8,000 lower/higher, as a result of lower/higher interest rates from the term loan facility and certain related party loans. Similarly, as at March 31, 2009, shareholders' equity would have been approximately $8,000 higher/lower as a result of a 1% decrease/increase in interest rates from the term loan facility and certain related party loans.
(ii) The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable and advances, long-term deposit, accounts payable and accrued liabilities, due to related party and financing facility that are denominated in British pounds. As at March 31, 2009, had the British pound weakened/strengthened by 5% against the Canadian dollar with all other variables held constant, the Company's loss for the three months ended March 31, 2009 would have been approximately $238,000 higher/lower as a result of foreign exchange losses/gains on translation of non-Canadian dollar denominated financial instruments. Similarly, as at March 31, 2009, shareholders' equity would have been approximately $238,000 lower/higher had the British pound weakened/strengthened by 5% against the Canadian dollar as a result of foreign exchange losses/gains on translation of non-Canadian dollar denominated financial instruments.
(iii) Commodity price risk could adversely affect the Company. In particular, the Company's future profitability and viability of development depends upon the world market price of gold. Gold prices have fluctuated widely in recent years. There is no assurance that, even as commercial quantities of gold may be produced in the future, a profitable market will exist for them. A decline in the market price of gold may also require the Company to reduce production of its mineral resources, which could have a material and adverse effect on the Company's value. Net loss would be impacted by changes in average realized gold prices. Sensitivity to a plus or a minus 10% change in average realized gold prices would affect net loss and shareholders' equity by approximately $118,000.
6. INVENTORY
March 31, December 31,
2009 2008
Concentrate inventory $ 70,286 $ 12,796
Finished goods 648,282 639,510
$ 718,568 $ 652,306
7. PROPERTY, PLANT AND EQUIPMENT
March 31, 2009
Accumulated
Cost Amortization Net
Freehold land and buildings $ 3,020,913 $ 408,736 $ 2,612,177
Plant and machinery 5,589,818 2,251,809 3,338,009
Motor vehicles 64,820 46,416 18,404
Office equipment 79,575 53,781 25,794
Moulds 81,802 81,802 -
$ 8,836,928 $ 2,842,544 $ 5,994,384
December 31, 2008
Accumulated
Cost Amortization Net
Freehold land and buildings $ 3,020,913 $ 393,941 $ 2,626,972
Plant and machinery 5,589,818 2,110,532 3,479,286
Motor vehicles 64,820 45,395 19,425
Office equipment 79,575 52,384 27,191
Moulds 81,802 81,802 -
$ 8,836,928 $ 2,684,054 $ 6,152,874
8. DEFERRED DEVELOPMENT AND EXPLORATION COSTS
March 31, 2009
Accumulated
Cost Amortization Net
Deferred development and exploration costs $ 11,448,579 $ 990,222 $ 10,458,357
December 31, 2008
Accumulated
Cost Amortization Net
Deferred development and exploration costs $ 11,446,690 $ 844,834 $ 10,601,856
9. FINANCING FACILITY
Amounts payable on the long term debt are as follows:
March 31, December 31,
Interest 2009 2008
Financing facility (238,700 GBP) 3.71% $ 18,134 $ 44,659
Financing facility (180,000 GBP) 3.97% - 29,602
Financing facility (199,160 GBP) 4.03% 177,454 194,735
Term loan facility (250,000 GBP Bank rate + 2% 215,580 239,911
411,168 508,907
Less current portion 274,426 309,043
$ 136,742 $ 199,864
Principal repayments over the next three years are as follows:
2009 $ 274,426
2010 100,415
2011 36,327
$ 411,168
10. SHARE CAPITAL
(a) Authorized and issued
Authorized
Unlimited number of common and preference shares issuable in Series
Issued common shares
Number of Stated
Shares Value
Balance, December 31, 2008 186,965,855 $ 26,435,998
Shares issued for debt (i) 3,134,200 141,799
Warrants issued - (47,010)
Balance, March 31, 2009 190,100,055 $ 26,530,787
(i) On January 14, 2009, the Company has received consent from the TSX Venture Exchange for the issue of Company shares for debt. The creditor, who supplied drilling services, has exchanged $141,799 (78,355 GBP) of debt for 3,134,200 units. Each unit comprises one common share and one warrant, such warrant being exercisable for one year at a price of $0.09 (0.05 GBP). The shares exchanged for debt are subject to a four month hold period, which will expire May 15, 2009.
The fair value of the 3,134,200 warrants was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield - 0%; volatility - 153%; risk-free interest rate - 0.92% and an expected life of 1 year. The fair value attributed to the warrants was $47,010.
(b) Warrants
The following table shows the continuity of warrants for the period ended March 31, 2009:
Weighted
Average
Number of Warrants Price
Balance, December 31, 2008 11,290,000 $ 0.09
Issued (Note 10(a)) 3,134,200 0.09
Balance, March 31, 2009 14,424,200 $ 0.09
As at March 31, 2009, the following warrants were outstanding:
Number Fair Exercise Expiry
of Warrants Value ($) Price ($) Date
11,290,000 180,640 0.09 December 29, 2009
3,134,200 47,010 0.09 January 14, 2010
14,424,200 227,650
(c) Stock options
The following table shows the continuity of options for the period ended March 31, 2009:
Weighted
Average
Number of Options Price
Balance, December 31, 2008 and March 31, 2009 8,650,000 $ 0.14
Stock-based compensation expense includes $37,729 (three months ended March 31, 2008 - $131,052) relating to stock options granted in previous years that vested during the period.
The following table reflects the Company's stock options outstanding and exercisable as at March 31, 2009:
Weighted Weighted
Average Average
Remaining Remaining
Options Contractual Life Exercise Options Contractual Life Exercise Expiry
Outstanding (years) Price ($) Exercisable (years) Price ($) Date
200,000 1.12 0.10 200,000 1.12 0.10 May 13, 2010
500,000 2.20 0.26 500,000 2.20 0.26 June 14, 2011
500,000 3.21 0.23 333,333 3.21 0.23 June 15, 2012
5,700,000 3.73 0.14 3,800,000 3.73 0.14 December 24, 2012
250,000 3.89 0.16 166,667 3.89 0.16 February 20, 2013
1,500,000 4.50 0.10 500,000 4.50 0.10 October 2, 2013
8,650,000 3.69 0.14 5,500,000 3.54 0.15
11. RELATED PARTY TRANSACTIONS
Transactions with related parties were in the normal course of operations and were measured at the exchange amounts.
The Company has the following transactions with related parties:
Director fees of $5,000 (three months ended March 31, 2008 - $9,000) were paid or accrued during the three months ended March 31, 2009.
March 31, 2009 December 31, 2008
GBP CDN$ GBP CDN$
| Amount owing to the President and companies controlled by the President of the Company. $484,397 (268,781 GBP) of the loan is secured by a second charge on the land owned by Omagh and the balance of the loan is unsecured. The loan bears interest at a base rate plus 2%. $706,068 (391,781 GBP) is due over a period of 3 years and the balance due on demand. | 834,746 | 1,504,373 | 869,801 | 1,556,597 |
| Amount owing to the company controlled by a director of the Company for financing of mining equipment. $743,696 (412,660 GBP) of the loan is for a period of 4.25 years, interest bearing at 4.04% and is secured by all of the equipment owned by the Company's wholly-owned subsidiary Omagh. | 647,660 | 1,167,213 | 647,660 | 1,159,052 |
| Amount owing to the President and Chief Executive Officer of the Company who agreed to lend up to a total of $901,100 (500,000 GBP) to the Company for a period of 6 months. The loan is secured by the Company's inventory with cross guarantees provided by the Company's subsidiaries. The loan bears interest at a base rate of 4.5% per annum, such interest to be calculated monthly and compounded until repaid. | 209,659 | 377,848 | 115,549 | 206,787 |
1,692,065 3,049,434 1,633,010 2,922,436
Less: Current portion (2,676,554) (2,504,275)
Long-term portion 372,880 418,161
12. SUPPLEMENTAL CASH FLOW INFORMATION
(a) Net change in non-cash working capital
Three Months
Ended
March 31,
2009 2008
Accounts receivable and advances $ (172,293) $ 57,008
Inventory (66,262) (294,500)
Accounts payable and accrued liabilities (50,739) 281,985
Deferred revenue - 262,545
$ (289,294) $ 307,038
(b) Supplemental information
Interest paid $ 25,108 $ 10,769
Shares issued for debt payment $ 141,799 $ -
Interest paid includes $25,108 (three months ended March 31, 2008 - $10,769) of interest paid on the financing facility during the three months ended March 31, 2009, which was expensed to the statements of operations.
13. SEGMENT DISCLOSURE
The Company, after reviewing its reporting systems, has determined that it has one reportable segment. The Company's operations are substantially all related to its investment in Cavanacaw and its subsidiaries, Omagh and Galántas. Substantially all of the Company's revenues, costs and assets of the business that support these operations are derived or located in Northern Ireland.