RMM.L Regulatory News (RMM)

6 Feb 2007 13:20

Rambler Metals & Mining PLC06 February 2007 Rambler Metals & Mining Plc MANAGEMENT'S DISCUSSION AND ANALYSISfor the QUARTER ended OCTOBER 31, 2006 The following management's discussion and analysis ("MD&A") of Rambler Metals &Mining plc (the "Company" or "Rambler") contains forward-looking statements thatinvolve numerous risks and uncertainties. Our actual results could differmaterially from those discussed in such forward-looking statements as a resultof the risks and uncertainties, including those set forth in this MD&A under "Forward-Looking Statements" and "Risk Factors". The following discussion provides information that management believes isrelevant to an assessment and understanding of our consolidated results ofoperations and financial condition for the quarter ended October 31, 2006. Thisdiscussion should be read in conjunction with our un-audited financialstatements for the period ended October 31, 2006 and the related notes thereto.These consolidated statements have been prepared in accordance with U.K. GAAP. This MD&A, which has been prepared as of January 16, 2007, is intended tosupplement and complement our audited consolidated financial statements andnotes thereto for the period ended July 31, 2006 and related annual MD&A. Ourconsolidated financial statements are prepared in accordance with UK GAAP andcontain a reconciliation between UK GAAP and Canadian GAAP. The functionalreporting currency in all instances is British Pounds. OUR BUSINESS The principal activity of the Company is carrying out development andexploration on the Rambler Property a mineral exploration property located onNewfoundland and Labrador's Baie Verte Peninsula. Results from the exploration programme have confirmed the continuity ofmineralisation and have given impetus to begin the process of estimating thecosts, benefits and environmental requirements of dewatering the former mine inorder to facilitate underground exploration. SELECTED FINANCIAL INFORMATION The following selected financial information has been derived from theconsolidated financial statements of the Company for the periods indicated andshould be read in conjunction with such statements and notes thereto. Note thatthe Company's financial statements have been prepared in accordance with U.K.GAAP. Differences between U.K. GAAP and Canadian GAAP are not significant for acompany at the stage of Rambler. Please refer to the GAAP reconciliationcontained in the notes to the financial statements: Selected Annual Financial Information 3 months 3 monthsAll amounts in £, except shares and per share ended endedfigures October31 October 31 2006 2005 Revenue - - Administrative Expenses 94,032 87,968Interest 43,318 67,111Net (loss) (50,714) (20,857)Per share (basic and diluted) (0.13p) (0.09p)Cash Flow (used) for operating activities (79,435) (53,386)Cash Flow from financing activities 35,329 45,543Cash Flow (used) for investing activities (804,786) (264,851)Management of liquid resources ** 839,771 228,813Net increase (decrease) in cash (9,181) (43,881)Liquid resources at end of period 4,581,168 6,660,901Cash at end of period 48,912 (11,715)Total Assets 8,260,810 8,211,593Total Liabilities 581,228 311,835Working Capital 4,166,758 6,486,860Weighted average number of shares outstanding 40,030,000 23,766,465 (**Liquid Resources includes all bank deposits other than cash in hand ordeposits payable on demand within one working day) The Company had no trading activity in the period from April 14, 2004 (date ofincorporation) to February 1, 2005 and had a cash asset of £0.02. Accordinglycomparative statements are not shown above for the three preceding financialyears. OPERATIONS REVIEW During the quarter: • The principal operating activity of the Company was exploration drilling. • The company appointed a new Vice President of Operations. • The company made the final payment to acquire the option over the Ming Property (51190 Newfoundland & Labrador Inc.). • A comprehensive water sampling programme, preliminary designs for a water treatment plant and volumetric calculations were completed. Review of quarters ending October 31, 2006 and October 31, 2005 The Company's only source of income during the quarter was bank depositinterest. The Company reported a net loss for the period ending October 31, 2006 of£50,714 which is an increase of £29,857 from the period ending October 31, 2005.The loss per share increased from 0.09p to 0.13p. Losses were higher asadministration expenses increased £6,064 to £94,032 and interest income was£23,793 lower at £43,318 reflecting the lower sum invested in money marketdeposits. Cash flows used for investing activities increased by £539,935 reflecting anincrease in the amount of exploration activity, final settlement of the optionto acquire the Ming property and the purchase of some office equipment. Nofurther financings were undertaken during the quarter. Total assets include accumulated deferred exploration expenditures whichincreased £2,064,937 to £3,478,194 and office equipment additions of £34,630. A summary of quarterly results is not included in this MD&A as the mainjurisdiction in which the Company is registered does not require quarterlyreporting. Accordingly, no summary of quarterly results is available at thistime. Subsequent Event Since the year end, the board resolved to seek a dual listing for the Company'sshares on a Canadian stock exchange. LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION The Company continues to rely on shareholder funding to finance its operations.With finite cash resources and no material income, the liquidity risk issignificant and is managed by controls over expenditure. Success will dependlargely upon the outcome of ongoing and future exploration and evaluationprogrammes and, in common with many exploration companies, the Company is likelyto raise finance for its exploration and appraisal activities in discretetranches. The majority of the Company's expenses are incurred in Canadian Dollars. TheCompany's principal exchange rate risk is therefore related to movements betweenthe Canadian Dollar and the British Pound. The Company's cash resources are held in British Pounds and Canadian dollars.The Company has a downside risk to any strengthening of the Canadian Dollar asthis would increase expenses in British Pound terms and accelerate depletion ofcash resources. Any weakening of the Canadian Dollar would however result inthe reduction of expenses in British Pound terms and preserve cash resources.Additionally, any such movements would affect the Consolidated Balance Sheetwhen the net assets of the Canadian subsidiary are translated into BritishPounds. The holding of significant cash balances in Canadian Dollars is kept underconstant review and surplus funds are held on deposit on the most advantageousterm of deposit available for up to three month's maximum duration. There areno fixed, floating rate or interest free financial liabilities by way ofborrowing. Floating rate financial assets comprise of interest earning bankdeposits at rates set by reference to the prevailing LIBOR or equivalent primerate. Fixed rate financial assets are cash held on fixed term deposit. Cash and short terms deposits were as follows: At October 31, 2006 Fixed Rate Assets Floating Rate Assets TotalCurrency British Pound 2,804,519 21,342 2,825,861Canadian $ 1,776,649 27,570 1,804,219Total 4,581,649 48,912 4,630,080 At July 31, 2006 Fixed Rate Assets Floating Rate Assets TotalCurrency British Pound 2,850,071 17,176 2,867,247Canadian $ 2,591,989 39,772 2,631,761Total 5,442,060 56,948 5,499,008 At October 31, 2005 Fixed Rate Assets Floating Rate Assets TotalCurrency British Pound 5,450,100 (33,916) 5,416,184Canadian $ 1,210,801 22,201 1,233,002Total 6,660,901 (11,715) 6,649,186 Excluding interest received, the Company utilised £884,221 (2005: £318,237) ofavailable liquid resources during the quarter ended October 31, 2006. Thismaterial increase was primarily a result of a more active drilling programme andsettlement of the final payment to acquire the Ming property No financing activities took place during the quarter. The Company's liquid resources of £4,630,080 are expected to be sufficient tofund the Company's existing level of exploration and development activities tothe end of fiscal 2007. At January 16, 2007, the Company had £3,502,484 incash. Related Party Transactions Brian Dalton and John Baker, directors of the company are also directors ofAltius resources Inc ("Altius"), a 30% shareholder in the company. Altiusprovides the management of the exploration programs at the Rambler property inNewfoundland. According to the terms of a service contract dated March 7, 2005,Altius has agreed to manage approved exploration projects on behalf of Rambler.Altius has therefore carried out all Phase I exploration programs and allsubsequent programs in accordance with such budgets approved by Rambler. Altiuscan employ or engage employees, consultants or contractors to carry out theseexploration programs on commercial terms and must report in a timely manner toRambler on the results of all programs. All costs associated with theexploration programs are recharged to Rambler and Altius receives a 7%management fee on all expenditures. In addition, Altius provides certainaccounting and finance services and some secretarial services to Rambler basedon the same compensation arrangement. This arrangement was entered into asRambler has limited exploration staff and Altius, being the previous owner ofthe Rambler property, had personnel with the necessary knowledge and experienceto conduct the exploration programs. The Company was invoiced £658,012 byAltius and at the end of the period, Altius were owed £503,362. The followingconsultancy fees and expenses were also payable at October 31, 2006: S. Neamontis, expenses (Executive Director) £1,073 (July 31, 2006: £14,407) Altius Mineral Corporation, consultancy fees £8,800 (July 31, 2006: £5,500) Going Concern The Company is in an early stage of development, and while it has significantcash resources, it does not generate any significant revenues and its successwill depend largely upon the outcome of its exploration and evaluationprogrammes. In common with many exploration companies, the Company raises finance for itsexploration and appraisal activities in discrete tranches. Further funding israised as and when required and when any of the Company's projects move to thedevelopment stage, specific financing will be required. Impairment Assessments of Development Projects and Exploration Properties The carrying value of assets are reviewed and tested when events or changes incircumstances suggest that the carrying amount may not be recoverable. Acomparison of the carrying value of the assets of the mine or project iscompared to the expected future cash flows associated with the project.Expected future cash flows are based on a probability-weighted approach appliedto potential outcomes and a reduction of assets is made to fair value as acharge to earnings if the discounted expected future cash flows are less thanthe carrying amount. Fair value is estimated by discounting the expected futurecash flows using a discount factor that reflects the risk free rate of interestfor a term consistent with the period of expected cash flows. Stock Based Compensation In 2007 fiscal year, the Company will grant a number of key individuals employeestock options. The number of share options being granted is considered by thedirectors to be consistent with companies of a similar size and profile toRambler. RISK FACTORS An investment in Rambler should be considered highly speculative due to itspresent stage of development, the nature of its operations and certain otherfactors. An investment in Rambler's securities should only be made by personswho can afford the total loss of their investment. The risk factors whichshould be taken into account in assessing Rambler's activities and an investmentin securities of Rambler include, but are not limited to, those set out below.Should any one or more of these risks occur, it could have a material adverseeffect on the value of securities of Rambler and the business, prospects,assets, financial position or operating results of Rambler, any one of which mayhave a significant adverse effect on the price or value of any securities ofRambler. The risks noted below do not necessarily comprise all those faced by Rambler andare not intended to be presented in any assumed order of likelihood or magnitudeof consequences. Dependence on a Single Property Rambler's activities are focused primarily on the Rambler Property. Any adversechanges or developments affecting this property would have a material andadverse effect on Rambler's business, financial condition, results of operationsand prospects. Success of Current and Future Exploration Cannot be Assured The exploration and development of mineral deposits involves significantfinancial risks over a prolonged period of time, which even a combination ofcareful evaluation, experience and knowledge cannot eliminate. While discoveryof a mineral structure may result in substantial rewards, few properties whichare explored are ultimately developed into producing mines. Major expendituremay be required to establish mineral reserves by drilling and to constructmining and processing facilities at a site. It is impossible to ensure thatexploration will ever result in the discovery of an economically viable mineraldeposit or in a profitable commercial mining operation. Liquidity and Investment Risk The share prices of publicly quoted companies can be volatile. The price ofshares is dependent upon a number of factors some of which are general or marketor sector specific and others that are specific to the Company. Although the Ordinary Shares are traded on AIM, this should not be taken asimplying that there will be a liquid market for them. An investment in theOrdinary Shares may be difficult to realize. Accordingly, each prospectiveinvestor should view his purchase of the Ordinary Shares as a long-terminvestment and should not consider such purchase unless he is certain he willnot have to liquidate his investment for an indefinite period of time. The value of the Ordinary Shares may go down as well as up. Investors maytherefore realise less than their original investment, or sustain a total lossof their investment. The directors, their associates and Altius control approximately 54% of theCompany's share capital. As a result, these shareholders will be able toexercise significant influence or control over matters requiring shareholderapproval, including the election of directors and approval of significantcorporate transactions. Copper Price Volatility Rambler's revenues, if any, are expected to be derived from the extraction andsale of copper concentrate. The price of copper has fluctuated widely,particularly in recent years, and is affected by numerous factors beyondRambler's control including international, economic and political trends,expectations of inflation, currency exchange fluctuations, interest rates,global or regional consumption patterns, speculative activities and increasedproduction due to new extraction developments and improved extraction andproduction methods. In recent years the price of copper has been affected bychanges in the worldwide balance of copper supply and demand, largely resultingfrom economic growth and political conditions in China and other majordeveloping economies. While this demand has resulted in higher prices forcopper in recent years, if Chinese economic growth slows, it could result inlower supplies for copper. The effect of these factors on the price of coppercannot be accurately predicted. Any material decrease in the prevailing priceof copper for any significant period of time would have an adverse and materialimpact on the economic evaluations contained in this MD&A and on Rambler'sresults of operations and financial condition. Exploration, Mining and Processing Licences The Company's proposed exploration, mining and processing activities aredependent upon the grant of appropriate licences, concessions, leases, permitsand regulatory consents, which may be withdrawn or made subject to limitations.There is no guarantee that, upon completion of any exploration a mining licenceor lease will be granted with respect to exploration territory. There can be noassurance that any exploration licence will be renewed or if so, on what terms. These licences place a range of past, current and future obligations on theCompany. In some cases there could be adverse consequences for breach of theseobligations, ranging from penalties to, in extreme cases, suspension ortermination of the relevant licence or related contract. Short Operating History The Company does not have a long established trading record. The Company is atan early stage of development and success will depend upon its ability to managethe exploration of the Rambler Property and to identify and take advantage offurther opportunities that may arise. The Company has not earned profits to date and there is no assurance that itwill do so in the future. The Company plans to explore and develop its properties through the use of thirdparty contractors and consultants. However, there can be no assurance that itwill be able to complete its exploration programmes on time or to budget, orthat the current personnel, systems, procedures and controls will be adequate tosupport the Company's operations. Any failure of management to identify problemsat an early stage could have an adverse impact on the Company's financialperformance. Dependence on Key Personnel The Company relies on a limited number of key directors and personnel. However,there is no assurance that the Company will be able to retain such key directorsand personnel. If such personnel do not remain active in the Company's business,its operations could be adversely affected. Dependence on Third Parties The Company makes use of independent consultants and contractors in thedevelopment of its business and operations, and, in particular, has secured theservices of Altius for the management of the initial exploration programme atthe Rambler Property. Accordingly, the success of the Company's operations willbe dependent upon the performance of services by such third parties, and failureto do so may seriously affect or prevent the Company from fulfilling its plannedoperational goals. Acquisition Strategy It is the intention of the Company to grow through the development of theRambler Property and through acquisition. However, there can be no assurancethat the Company will be able to successfully identify and acquire other basemetal properties business beyond the Rambler Property. Although it is the Company's intention to utilize the issuance of new OrdinaryShares to satisfy all or part of any consideration payable for acquisitions,prospective vendors may not be prepared to accept these shares The ability of the Company to make appropriate acquisitions is dependent uponsuitable opportunities becoming available to the Company. Additional Requirement for Capital The Company will need to raise additional capital in due course to fund theCompany's anticipated future operations. Future development of the RamblerProperty, future acquisitions, base metal prices, environmental rehabilitationor restitution, revenues, taxes, capital expenditures and operating expenses andgeological and processing successes are all factors which will have an impact onthe amount of additional capital required. Any additional equity financing may be dilutive to shareholders and debtfinancing, if available, may involve restrictions on financing and operatingactivities. There is no assurance that additional financing will be available onterms acceptable to the Company. If the Company is unable to obtain additionalfinancing as needed, it may be required to reduce the scope of its operations oranticipated expansion, forfeit its interests in some or all of its properties,incur financial penalties and reduce or terminate its operations. Geological Risks Geological conditions can only be predicted with a certain degree of accuracy.Any base metal exploration programme entails risks relating to the location ofeconomic orebodies and the development of appropriate metallurgical processes.While the Company has had the benefit of a review of the Rambler Property by aqualified independent geologist, no assurance can be given that any explorationprogramme on the Rambler Property or on any properties acquired by the Companywill result in any new commercial mining operation or in the discovery of newresources. Currency Fluctuations in currency exchange rates may adversely affect our financialposition. Our management has determined the British pound as our reportingcurrency. Fluctuations in currency exchange rates, particularly equipmentacquisition costs denominated in currencies other than British Pounds, maysignificantly impact our financial position and results. We do not have in placea policy for managing or controlling foreign currency risks since, to date, ourprimary activities have not resulted in material exposure to foreign currencyrisk. Currency fluctuations may affect the cash flow that the Company hopes to realizefrom its operations, as minerals and base metals are sold and traded on theworld markets in United States dollars. The Company's anticipated costs will beincurred primarily in British Pounds sterling and Canadian Dollars. Environmental Regulations We are subject to substantial environmental and other regulatory requirementsand such regulations are becoming more stringent. All phases of our developmentoperations are subject to environmental regulations. Environmental legislationis evolving in a manner which will require stricter standards and enforcement,increased fines and penalties for non-compliance, more stringent environmentalassessments of proposed projects and a heightened degree of responsibility forcompanies and their officers, directors and employees. There is no assurancethat future changes in environmental regulation, if any, will not adverselyaffect our operations. Environmental hazards may exist on the properties inwhich we hold interests which are presently unknown to us and which have beencaused by previous or existing owners or operators of the properties. The Company's operations are subject to environmental regulation inherent in themineral exploration, mining and processing industry (including regularenvironmental impact assessments and permitting). Environmental legislation andpermitting are likely to evolve in a manner which will require stricterstandards and enforcement, increased fines and penalties for non-compliance,more stringent environmental assessments of proposed projects and a heighteneddegree of responsibility for companies and their directors and employees.Ineffective environmental management or accidental spillage of toxic materialscould result in a significant environmental disaster resulting in large clean-upcosts, potential fines or mine closure. The Company is unable to predict the effect of additional environmental law andregulations which may be adopted in the future, and the cost of the Company'soperations may be increased by changes in legislative requirements or increasedlegal liabilities within the jurisdictions in which the Company operates or willoperate. Lack of Earnings and Dividend Record We have no earnings or dividend record. We have not paid dividends on ourOrdinary Shares since incorporation and do not anticipate doing so for theforeseeable future. Payments of any dividends will be at the discretion of theboard of directors after taking into account many factors, including ourfinancial condition and current and anticipated cash needs. Uninsurable Losses The Company as a participant in exploration and mining programmes, may becomesubject to liability for hazards that cannot be insured or against which it mayelect not to be insured because of high premium costs. FORWARD-LOOKING INFORMATION This MD&A contains "forward-looking information" which may include, but is notlimited to, statements with respect to the future financial or operatingperformance of the Company, its subsidiaries and its projects, explorationexpenditures, costs and timing of the development of new deposits, costs andtiming of future exploration, requirements for additional capital, governmentregulation of mining exploration, environmental risks, title disputes or claimsand limitations of insurance coverage. Often, but not always, forward-lookingstatements can be identified by the use of words such as "plans", "expects", "isexpected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) ofsuch words and phrases, or state that certain actions, events or results "may","could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and otherfactors which may cause the actual results, performance or achievements of theCompany and/or its subsidiaries to be materially different from any futureresults, performance or achievements expressed or implied by the forward-lookingstatements. Such factors include, among others, general business, economic,competitive, political and social uncertainties; the actual results of currentexploration activities; conclusions of economic evaluations; fluctuations in therelative value of United States Dollars, Canadian Dollars and British Pounds;changes in planned parameters as plans continue to be refined; future prices ofmetals and commodities; possible variations of ore grade or recovery rates;failure of equipment; accidents and other risks of the mining explorationindustry; political instability, insurrection or war; delays in obtaininggovernmental approvals or financing or in the completion of development orconstruction activities, as well as those factors discussed in the sectionentitled "Risk Factors" in this MD&A. Although the Company has attempted toidentify important factors that could cause actual actions, events or results todiffer materially from those described in forward-looking statements, there maybe other factors that cause actions, events or results to differ from thoseanticipated, estimated or intended. Forward-looking statements contained hereinare made as of the date of this MD&A and the Company disclaims any obligation toupdate any forward-looking statements, whether as a result of new information,future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and futureevents could differ materially from those anticipated in such statements.Accordingly, readers should not place undue reliance on forward-lookingstatements. RAMBLER METALS AND MINING PLC.UNAUDITED FINANCIAL STATEMENTSTHREE MONTH PERIOD ENDED OCTOBER 31, 2006(EXPRESSED IN BRITISH POUNDS) The accompanying unaudited financial statements of Rambler Metals and MiningPLC. (the "Company") have been prepared by and are the responsibility of theCompany's management. These statements do not include all of theinformation and disclosures that would be required by UK GAAP for annualaudited financial statements and have been prepared for the sole purpose ofsupporting an application to list the company's shares on the TSX Venture Exchange in Canada.. The quarterly financial statements should be read in conjunction with the Company's audited financial statements including the notes thereto for the year ended July 31, 2006. These statements have been approved by the Audit Committee and the Board ofDirectors of the Company. Balance Sheet(Unaudited)As at October 31, 2006 and July 31, 2006(expressed in British Pounds) October 31 July 31 2006 2006Fixed assets Intangible assets (note 3) £3,478,194 £2,894,278Tangible fixed asset (note 4) 34,630 2,884 £3,512,824 £2,897,162Current assetsCash and cash equivalents 48,912 56,948Investments 4,581,168 5,442,060Prepaid expenses and deposits 117,906 113,490 4,747,986 5,612,498Current liabilitiesAccounts payable and accrued liabilities 581,228 736,431 Net current assets 4,166,758 4,876,067 Total assets less current liabilities £7,679,582 £7,773,229 Capital and reservesShare capital (Note 5)Authorized 1,000,000,000 Ordinary shares of 1p eachIssued 400,300 400,300 40,030,000 (2006 - 40,030,000) ordinary shares Share premium account 7,164,625 7,164,625Merger reserve 120,000 120,000Profit and loss account (5,343) 88,304 £7,679,582 £7,773,229 Operations, going concern (Note 1) Approved by the Board of Directors: Consolidated Profit and Loss account(Unaudited)For the three months ended October 31, 2006 and 2005(expressed in British Pounds) Three Month Three Month Period Period Ended Ended October 31 October 31 2006 2005TurnoverGeneral and administrative - -Operating loss (94,032) (87,968) (94,032) (87,968)Interest and other income 43,318 67,111 (Loss) on ordinary activities before and after taxation £ (50,714) (20,857)Basic and diluted loss per share p (0.13) (0.09) Weighted Average number of shares outstanding 40,030,000 23,766,465 Group statement of Total Recognized Gains and Losses(Loss)/profit on ordinary activities after taxation (50,714) (20,857)Foreign exchange rate differences (42,933) 65,262Total recognized gains and loss for the financial period (93,647) 44,395 Statement of Cash Flows(Unaudited)For the three months ended October 31, 2006 and 2005(expressed in British Pounds) Three Month Three Month Period Ended Period Ended October 31 October 31 2006 2005Cash flows from operating activitiesOperating loss for theperiod £ (94,032) £ (87,968)Items not affecting cashDepreciation 2,467 -Decrease in prepaid expenses and deposits 430 50,337Increase/(decrease) in accounts payable andaccrued liabilities 11,700 (15,755) (79,435) (53,386) Cash flows from returns on investment and servicingof financeBank interest received 35,329 45,543 35,329 45,543Cash flows from (applied to) investing activitiesPurchase of property, plant and equipment (34,213) -Purchase of 51190 Newfoundland & Labrador Inc (138,797) (46,678)Additions to mineral properties (631,776) (218,173) (804,786) (264,851)Cash flows from management of liquid resourcesCash withdrawn from/(placed in) other liquid investments 839,711 228,813 839,711 228,813 Decrease in cash and cash equivalents (9,181) (43,881)Cash and cashequivalents - Beginning of period 56,948 23,337Foreign exchange differences 1,145 8,829Cash and cash equivalents - End of period £ 48,912 £ (11,715) Notes to Financial Statements (Unaudited)For the three months ended October 31, 2006 and 2005 (expressed in British Pounds) 1. NATURE OF OPERATIONS AND GOING CONCERN Operations The Group owns copper and gold mining properties in Baie Verte, Newfoundland,Canada, which were inactive when acquired in February 2005. Going concern These financial statements have been prepared on a going concern basis, whichcontemplates the realization of assets and liquidation of liabilities during thenormal course of business as they come due. At October 31, 2006, the company has working capital of £4.17 million. The fundsrequired to continue operations and exploration activities during this periodhave been financed primarily from the issue of equity. Management estimates that these funds will be sufficient to meet the company'sexisting obligations for the coming year. The Company's ability to continue as a going concern, and the recoverability ofits mineral properties and property, plant and equipment, is dependent on thecopper price, its ability to fund its development and exploration programs, andmanage and generate positive cash flows from operations in the future. Thesefinancial statements do not reflect the adjustments to carrying values of assetsand liabilities and the reported expenses and balance sheet classifications thatwould be necessary should the going concern assumption be inappropriate, andthese adjustments could be material. In common with many exploration companies, the Company raises finance for itsexploration and appraisal activities in discrete tranches. Further funding israised as and when required. When any of the Group's projects move to thedevelopment stage, specific financing will be required. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The accompanying unaudited quarterly financial statements are prepared inaccordance with generally accepted accounting principals ("GAAP") in the UK.These financial statements have been prepared to support an application to listthe company's shares on the TSX-V exchange in Canada and they do not include allof the information and disclosures required by UK GAAP for annual auditedfinancial statements. In the opinion of management, all adjustments considerednecessary for fair presentation have been included in these financialstatements. The quarterly financial statements should be read in conjunctionwith the company's audited financial statements including the notes thereto forthe year ended July 31, 2006. A reconciliation to Canadian GAAP is provided in note 9. 3. MINERAL PROPERTIES OCTOBER 31 JULY 31 2006 2006 Balance - Beginning of period £ 2,894,278 £ 1,096,817Additions:Development costs 616.905 1,734,537Foreign exchange differences (32,989) 62,924Balance - End of period £ 3,478,194 £ 2,894,278 ACCUMULATED OCTOBER 31 JULY 31 COST AMORTIZATION 2006 2006Acquisition allocation £ 268,232 £ - £ 268,232 £ 270,846Underground development 3,209,962 - 3,209,962 2,623,432 £ 3,478,194 £ - £ 3,478,194 £ 2,894,278 4. PROPERTY, PLANT AND EQUIPMENT ACCUMULATED OCTOBER 31 COST AMORTIZATION 2006 NET Office equipment £ 37,443 £ 2,813 £ 34,630 £ 37,443 £ 2,813 £ 34,630 ACCUMULATED JULY 31 COST AMORTIZATION 2006 NET Office equipment £ 3,245 £ 361 £ 2,884 £ 3,245 £ 361 £ 2,884 5. SHARE CAPITAL Number of Stated shares value Balance - Beginning of period 40,030,000 £ 400,030Balance - End of period 40,030,000 £ 400,030 At 31 October 2006 the Company had outstanding warrants to subscribe for 320,000shares of 1p each at a price of 55p per ordinary share exercisable by 8 April2007. At 31 October 2006 the Company had granted an option to subscribe for 100,000shares of 1p each at a price of 32p per share. The option expires on 7 June2016. 6. RELATED PARTY TRANSACTIONS Brian Dalton and John Baker, directors of the company are also directors ofAltius Resources Inc ("Altius"), a 30% shareholder in the company. Altiusprovides the management of the exploration programs at the Rambler property inNewfoundland. According to the terms of a service contract dated March 7, 2005,Altius has agreed to manage approved exploration projects on behalf of Rambler.Altius has therefore carried out all Phase I exploration programs and allsubsequent programs in accordance with such budgets approved by Rambler. Altiuscan employ or engage employees, consultants or contractors to carry out theseexploration programs on commercial terms and must report in a timely manner toRambler on the results of all programs. All costs associated with theexploration programs are recharged to Rambler and Altius receives a 7%management fee on all expenditures. In addition, Altius provides certainaccounting and finance services and some secretarial services to Rambler basedon the same compensation arrangement. This arrangement was entered into asRambler has limited exploration staff and Altius, being the previous owner ofthe Rambler property, had personnel with the necessary knowledge and experienceto conduct the exploration programs. Accordingly, Altius provided themanagement of the exploration programs at the Rambler property in Newfoundlanduntil 31 October 2006. During the period the group were invoiced £658,012 (July31, 2006:£1,814,109) by Altius and at the end of the period, Altius were owed£503,362 (July 31, 2006: £542,230). The following expenses reimbursements were payable to directors at October 31,2006: S Neamonitis £1,073 (July 31, 2006: £14,407) The following consultancy fees were payable at October 31, 2006: Altius Mineral Corporation for the consultancy services of J Baker & B Dalton £8,800 (July 31, 2006: £5,500) These balances were all outstanding at the period end. 7. SEGMENTED INFORMATION The Company has one operating segment consisting of an exploration andevaluation operation located in Baie Verte, Newfoundland, Canada. During theperiods ended October 31, 2006 and 2005 all of the Company's capital assets andoperations were in Canada. 8. FINANCIAL INSTRUMENTS The Group uses financial instruments comprising cash, liquid resources and itemssuch as short-term debtors and creditors that arise from its operations. Thesefinancial instruments are the sole source of finance for the Group's operations. The principal risks relate to currency exposure and liquidity. Short termdebtors and creditors have been excluded from the following disclosures: Currency rate risk The majority of the Group's expenses are incurred in the Canadian Dollar. TheGroup's principal exchange rate exposure is therefore related to movementsbetween the Canadian Dollar and Sterling. The Group's cash resources are held in Sterling and Canadian Dollars. The Grouphas a downside exposure to any strengthening of the Canadian Dollar as thiswould increase expenses in Sterling terms and accelerate the depletion of theGroup's cash resources. Any weakening of the Canadian Dollar would howeverresult in the reduction of the expenses in Sterling terms and preserve theGroup's cash resources. In addition, any such movements would affect theConsolidated Balance Sheet when the net assets of the Canadian subsidiary aretranslated into Sterling. The holding of significant cash balances in Canadian Dollars is kept underconstant review. Liquidity risk To date the Group has relied on shareholder funding to finance its operations.As the Group has finite cash resources and no material income, the liquidityrisk is significant and is managed by controls over expenditure. Interest rate risk The Group's policy is to retain its surplus funds on the most advantageous termof deposit available up to twelve month's maximum duration. There are no fixed,floating rate or interest free financial liabilities by way of borrowing. Financial assets The floating rate financial assets comprise interest earning bank deposits atrates set by reference to the prevailing LIBOR or equivalent to the relevantcountry. Fixed rate financial assets are cash held on fixed term deposit. At the period end the cash and short term deposits were as follows: Average Average interest Fixed Floating period for rate for Rate rate rates are fixed rate Assets assets Total fixed assets £ £ £ Months %31 October 2006Sterling 2,804,519 21,342 2,825,861 1 3.93Canadian $ 1,776,649 27,570 1,804,219 4 3.32Total 4,581,168 48,912 4,630,080 31 July 2006Sterling 2,850,071 17,176 2,867,247 1 3.94Canadian $ 2,591,989 39,772 2,631,761 10 3.85Total 5,442,060 56,948 5,499,008 31 October 2005Sterling 5,450,100 (33,916) 5,416,184 1 4.07Canadian $ 1,210,801 22,201 1,233,002 4 2.45Total 6,660,901 (11,715) 6,649,186 Fair value of financial assets There is no material difference between fair value and book value 9. RECONCILIATION TO CANADIAN GAAP Under Canadian GAAP, the purchase price discrepancy of GBP 228,531 arising onthe 2005 acquisition of 51190 Newfoundland and Labrador Inc. ("51190") isregarded as a temporary difference and tax effected at 51190's combinedeffective Canadian federal and provincial income tax rate of 36.12%, resultingin a future tax liability of GBP 82,545. This purchase price discrepancy will beamortized over the life of the assets to which it relates. The future taxliability recognized under Canadian GAAP is regarded as a monetary liability andis required to be denominated in the local currency, regardless of thefunctional currency in which the subsidiary operates. Under Canadian GAAP, the operations of 51190 would be considered to beintegrated with the operations of Rambler Metals and Mining plc (the "Company").As a result, monetary assets and liabilities would be translated at the exchangerate at the balance sheet date, non-monetary assets and liabilities would betranslated at historical exchange rates, and revenue and expenses would betranslated at the average exchange rate for a period. The Company translatedcapitalized expenditures incurred based on the balance sheet exchange rate,which under Canadian GAAP would be recorded at the historical exchange rate. Asa result, capitalized exploration and evaluation costs would not be translatedat the balance sheet date, and the foreign exchange impact disclosed in thefinancial statements of GBP32,989 (July 31, 2006: GBP (62,924)) would bereversed. In addition, the foreign exchange impact recorded within shareholders' equitywould be recorded in the income statement. Under Canadian GAAP, the issue of warrants on March 31, 2005 and the issue ofshare options during the period ended July 31, 2006 would have been fair valued.No adjustment has been made with respect to these issues, as the impact is notconsidered material. Were these issues to be fair valued, disclosure would berequired of the valuation assumptions, including strike price, share pricevolatility, risk free rate of return, and dividend rate. The application of Canadian GAAP would result in an increase in capitalizedexploration and evaluation costs GBP 82,545 at October 31, 2006 (July 31, 2006 -increase of GBP 82,545) attributable to a future tax liability of GBP 82,545(July 31, 2006 - GBP 82,545). The application of Canadian GAAP would have impacted the Company's reportedresults for 2006 and 2005 as follows: Period from August 1, Period from September 1, Period from August 1, 2006 to October 31, 2005 to July 31, 2006 2005 to October 31, 2005 2006 £ £ £Net loss under UK GAAP (50,714) (72,946) (20,857)Foreign exchange (loss)/gain (9,943) (40,387) 40,255 Net (loss)/profit under (60,657) (113,333) 19,398Canadian GAAPNet loss/(profit) per sharebased on Canadian GAAP (0.15)pence (0.28)pence 0.08pence This information is provided by RNS The company news service from the London Stock Exchange