Marlowe Regulatory News (MRL)

27 May 2005 06:00

Medoro Resources Announces First Quarter Results TORONTO, May 26 /CNW/ - Medoro Resources Ltd. (TSX-V/AIM:MRL) announcedtoday its 2005 first quarter results for the period ending March 31, 2005. For the quarter ended March 31, 2005, Medoro reported a loss of$0.5 million or $0.01 per share as compared to a loss of $1.1 million or$0.02 per share in the first quarter of 2004. The loss in the quarter largelyreflects ongoing general and administrative costs, which are approximatelyhalf the amount in the same period last year as a result of the disposal ofthe majority of the former Gold Mines of Sardinia assets. At March 31, 2005the company had cash of $2.6 million, undiscounted receivables of$10.6 million and no debt. Subsequent to the end of the quarter, Medorocompleted a private placement for gross proceeds of $3.9 million. At Monte Ollasteddu, a geophysical survey to follow up on last year'sdrilling results and help better identify targets for this year's program wascompleted. Gold Fields expects to commence a 2,000 metre diamond drillingprogram in July, subject to the receipt of a Research Permit. Drill targetsinclude previously identified geophysical anomalies as well as high-gradeveins to the south which were not tested in last year's drill program. The company continues to seek a joint venture partner for its Pestarenaproject and is actively pursuing other opportunities elsewhere in Europe. Financial Statements follow MEDORO RESOURCES LTD. (formerly Full Riches Investments Ltd.) Consolidated Balance Sheets (Expressed in Canadian dollars) ------------------------------------------------------------------------- March 31, December 31, 2005 2004 ------------- ------------- (Unaudited) (Audited) ASSETS CURRENT Cash and cash equivalents $ 2,563,986 $ 2,448,813 Accounts receivable 77,720 75,981 Prepaid and deposits 28,808 - Current portion of note receivable 743,473 747,908 ------------------------------------------------------------------------- 3,413,987 3,272,702 NOTE AND SHARES RECEIVABLE (Note 2) 5,868,942 5,882,880 MINERAL PROPERTIES 5,979,873 5,979,873 ------------------------------------------------------------------------- $ 15,262,802 $ 15,135,455 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES CURRENT Accounts payable and accrued liabilities $ 40,587 $ 401,534 FUTURE INCOME TAXES 2,130,031 2,130,031 ------------------------------------------------------------------------- 2,170,618 2,531,565 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Share capital (Note 3) 30,161,976 29,161,976 Contributed surplus (Note 3) 584,622 584,622 Deficit (17,654,414) (17,142,708) ------------------------------------------------------------------------- 13,092,184 12,603,890 ------------------------------------------------------------------------- $ 15,262,802 $ 15,135,455 ------------------------------------------------------------------------- ------------------------------------------------------------------------- These unaudited interim consolidated financial statements for the period ended March 31, 2005 have not been reviewed by the Company's auditors. See accompanying Notes to the unaudited interim Consolidated Financial Statements. MEDORO RESOURCES LTD. (formerly Full Riches Investments Ltd.) Consolidated Statements of Operations and Deficit (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Three Two months ended months ended March 31, March 31, 2005 2004 ------------- ------------- OPERATING EXPENSES General and administration $ 505,448 $ 990,276 Exploration - 117,412 ------------------------------------------------------------------------- 505,448 1,107,688 ------------------------------------------------------------------------- OTHER INCOME (EXPENSES) Accreted interest on note receivable 214,580 - Foreign exchange gain (loss) (232,566) 26,705 Interest income 11,727 16,967 ------------------------------------------------------------------------- (6,259) 43,672 ------------------------------------------------------------------------- NET LOSS FOR THE PERIOD (511,707) (1,064,016) ------------------------------------------------------------------------- DEFICIT, BEGINNING OF PERIOD (17,142,708) (6,708,811) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY - (245,000) DEFICIT, END OF PERIOD $(17,654,415) $ (8,017,827) ------------------------------------------------------------------------- ------------------------------------------------------------------------- BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.02) ------------------------------------------------------------------------- ------------------------------------------------------------------------- BASIC AND DILUTED WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 93,176,513 51,533,596 ------------------------------------------------------------------------- ------------------------------------------------------------------------- See accompanying notes to the unaudited interim Consolidated Financial Statements. MEDORO RESOURCES LTD. (formerly Full Riches Investments Ltd.) Consolidated Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Three Two months ended months ended March 31, March 31, 2005 2004 ------------- ------------- OPERATING ACTIVITIES Net loss from operations $ (511,706) $ (1,064,016) Items not affecting cash: Foreign exchange (gain) loss on note receivable 215,260 (26,705) Accreted interest on note receivable (196,887) - ------------------------------------------------------------------------- (493,333) (1,090,721) Changes in non-cash working capital items Accounts receivable (1,739) (240,853) Prepaid and deposits (28,808) 9,422 Inventories - 1,633 Other long-term liabilities - 641,858 Accounts payable and accrued liabilities (360,947) 343,441 ------------------------------------------------------------------------- (884,827) (335,220) ------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisition of mineral properties - (1,006,042) Acquisition of property plant & equipment - (15,875) ------------------------------------------------------------------------- - (1,021,917) ------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of common shares for cash 1,000,000 - ------------------------------------------------------------------------- 1,000,000 - ------------------------------------------------------------------------- NET INCREASE IN CASH 115,173 (1,357,137) CASH, BEGINNING OF PERIOD 2,448,813 9,249,605 ------------------------------------------------------------------------- CASH, END OF PERIOD $ 2,563,986 $ 7,892,468 ------------------------------------------------------------------------- ------------------------------------------------------------------------- See accompanying notes to the unaudited interim Consolidated Financial Statements. MEDORO RESOURCES LTD. (formerly Full Riches Investments Ltd.) Notes to the unaudited Consolidated Financial Statements Three months ended March 31, 2005 and two months ended March 31, 2004 (Expressed in Canadian dollars) ------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES The unaudited interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("GAAP") for interim financial statements. These interim financial statements do not contain all disclosures required under GAAP and, accordingly, should be read in conjunction with the Company's audited financial statements for the fourteen month period ended December 31, 2004. These interim consolidated financial statements have been prepared following the same accounting policies and method of computations as the Company's audited financial statements for the fourteen month period ended December 31, 2004. Stock-based compensation Effective November 1, 2003, the Company adopted the recommendations of the amended Handbook Section 3870, "Stock-based Compensation and Other Stock-based Payments" ("Section 3870") for stock options issued on or after November 1, 2002. Section 3870 established standards for recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services provided by employees and non-employees. The standard requires that a fair value-based method of accounting be applied to all stock-based payments to non-employees and to employee awards that are direct awards of stock that call for settlement in cash or other assets or are appreciation rights that call for settlement by the issuance of equity instruments. Accordingly the Company has restated and adjusted the opening deficit of the comparative period to reflect the cumulative effect of the change in 2003. Previously, the Company provided note disclosure of pro forma net loss as if the fair value based method had been used on stock options granted to employees and directors after January 1, 2002. The amended recommendations have been applied using the retroactive method without restatement and had the effect of increasing contributed surplus and opening deficit at November 1, 2003 by $245,000. 2. NOTES AND SHARES RECEIVABLE The discounted value as at March 31, 2005 of the notes and shares receivable from Sargold Resources Corporation ("Sargold") is as follows: Note receivable (i) $ 6,046,514 Shares receivable (ii) 565,901 --------------------------------------------------------------- 6,612,415 Current portion of note receivable (743,473) --------------------------------------------------------------- $ 5,868,942 --------------------------------------------------------------- --------------------------------------------------------------- (i) $8,961,150 ((euro) 5.5 million) discounted using a 3.75% risk free interest rate and a 10% risk premium. The following schedule represents the amounts receivable, discounted at March 31, 2005 and the percentage of shares to be released upon each individual payment: March 31, 2005 % of Shares -------------------------- Released Discounted Discounted Upon Value Value Date Amount Payment (Euros) ($) --------------- ---------------- --------- ---------------- ------------ August 30, 2005 (euro) 500,000 8.3% (euro) 473,881 $ 743,472 August 30, 2006 1,000,000 16.7% 833,198 1,307,204 August 30, 2007 1,000,000 16.7% 732,482 1,149,191 August 30, 2008 1,500,000 25.0% 965,569 1,514,881 August 30, 2009 1,500,000 25.0% 848,852 1,331,766 --------------------------------------------------------- (euro) 5,500,000 91.7% (euro) 3,853,982 $ 6,046,514 --------------------------------------------------------- --------------------------------------------------------- (ii) Common shares of Sargold to be issued on or by August 30, 2009 for a value equal to $1 million, to be valued at the market price (as determined according to TSX Venture Exchange policy) as at August 30, 2009, subject to a minimum price of $0.225. At March 31, 2005 Sargold shares had a ten day closing average of $0.302. The discounted value as at March 31, 2005, using a 13.75% discount rate, was $565,901. 3. SHARE CAPITAL (a) Common shares Authorized: an unlimited number of common shares with no par value Issued and outstanding Number of Contributed Shares Amount Surplus ------------- ------------- ------------- Balance, October 31, 2003 and 2002 5,935,925 $ 6,706,001 $ - Cumulative effect of change in accounting policy 245,000 ---------------------------- ------------- Adjusted balance, October 31, 2003 5,935,925 6,706,001 245,000 Issued prior to amalgamation 75,626,261 19,941,692 117,950 Fair value of options and warrants exchanged - - 61,403 Issued as consideration for services in connection with the amalgamation 319,857 63,971 - Issued in settlement of accrued liabilities 140,624 70,312 - Issued to acquire Miniere di Pestarena srl 4,000,000 2,200,000 - Issued as consideration for services in connection with the sale of GMS Australia 1,000,000 180,000 - Stock-based compensation - - 160,269 ------------------------------------------------------------------------- Closing balance as at December 31, 2004 87,022,667 $ 29,161,976 $ 584,622 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Issued under private placement 7,692,307 1,000,000 - ------------------------------------------------------------------------- Balance at March 31, 2005 94,714,974 $ 30,161,976 $ 584,622 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (b) Escrow shares As at March 31, 2005, there were 963,000 (December 31, 2004 - 1,713,000) common shares of the Company held in escrow. (c) Warrants A summary of the changes in the Company's incentive share option plan for the periods ended March 31, 2005 and December 31, 2004 are as follows: Number Exercise Price --------------------------------------------------------------- Balance, October 31, 2003 - $ - GMS England warrants exchanged 5,793,918 1.14 Agent's warrants 687,000 0.70 -------------------------- Balance, December 31, 2004 6,480,918 1.10 Expired (352,890) 3.30 -------------------------- Balance, March 31, 2005 6,128,028 $ 0.97 -------------------------- (d) Incentive stock option plan March 31, 2005 December 31, 2004 -------------- ------------------ Options Exercise Options Exercise Price Price --------------------------------------------------------------- Outstanding, beginning of period 6,138,790 $ 0.79 2,500,000 $ 0.70 Granted - - 2,475,000 0.25 Cancelled (1,060,592) 1.95 (19,098) 2.76 GMS replacement options - - 1,182,888 2.16 -------------------------------------------- Outstanding, end of period 5,078,198 $ 0.55 6,138,790 $ 0.79 -------------------------------------------- 4. RELATED PARTY TRANSACTIONS During the three month period ended March 31, 2005 and the two month period ended March 31, 2004, the Company paid the following amounts to related parties: (a) Consulting fees of $50,212 (2004 - $5,350) to a company in which two directors of the Company are officers. (b) Consulting fees of $23,930 (2004 - $62,800) to officers of the Company for professional services. (f) Consulting fees of $Nil (2004 - $70,650) to directors of the Company. These transactions are in the normal course of operations and are measured at the exchange amounts, which is the amount of consideration established and agreed to by the related parties. 5. SUBSEQUENT EVENTS On April 15, 2005, the Company announced that it had completed a private placement of 30,000,000 units for proceeds of approximately $3.9 million after payment of agents' fees and expenses. Each unit consisted of a share and one-half of a share purchase warrant, with each whole warrant being exercisable for a period of two years at $0.235. 300,000 agent's warrants were also issued in conjunction with this placement, each agent's warrant entitling the holder to acquire one share and one-half warrant of the Company on the same terms as the units, except that the agent's warrants expire after 18 months. For further information: Peter Volk, Assistant Secretary,(416) 603-4653, info(at)medororesources.com (MRL.) ENDMEDORO RESOURCES LTD