RUSORO MINING LTD. Interim Consolidated Financial ... · Intangible Assets provides guidance on the...
Transcript of RUSORO MINING LTD. Interim Consolidated Financial ... · Intangible Assets provides guidance on the...
Interim Consolidated Financial StatementFOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(
RUSORO MINING LTD.Interim Consolidated Financial Statements (unaudited)
THREE MONTHS ENDED MARCH 31, 2009 AND 2008(Expressed in thousands of US Dollars)
(unaudited)THREE MONTHS ENDED MARCH 31, 2009 AND 2008
RUSORO MINING LTD.CONSOLIDATED BALANCE SHEETS(Expressed in thousands of US Dollars)
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CURRENT ASSETS
Cash and cash equivalents
Short-term investments
Receivables (Notes 3 and 14)
Inventories (Note 4)
Prepaid expenses and deposits (Note
Assets held for sale (Note 21)
NON CURRENT ASSETS
Receivables (Note 3)
Property, plant and equipment (Notes 6 and 14)
Mineral properties (Notes 7 and 14)
CURRENT LIABILITIES
Accounts payable and accrued liabilities (Notes 8 and 14)
Income taxes payable
Note payable (Notes 9 and 14)
NON CURRENT LIABILITIES
Other liabilities
Asset retirement obligation
Convertible loan (Notes 10 and 14)
Future income tax liability
NON-CONTROLLING INTEREST
SHAREHOLDERS' EQUITY
Share capital (Note 11(a))
Equity component of convertible loan (Note 10)
Contributed surplus (Note 11(d))
Accumulated other comprehensive
Deficit
Commitments and contingencies – Note 19
Risks – Note 20
Subsequent events – Note 23
APPROVED BY THE BOARD:
“George Salamis” , Director
George Salamis
CONSOLIDATED BALANCE SHEETSUS Dollars) – unaudited
March 31, 2009
$
61,609
3,999
9,565
11,498
expenses and deposits (Notes 5 and 14) 8,428
-
95,099
8,111
Property, plant and equipment (Notes 6 and 14) 647,257
(Notes 7 and 14) 262,719
1,013,186
Accounts payable and accrued liabilities (Notes 8 and 14) 32,439
4,277
500
37,216
823
2,613
Convertible loan (Notes 10 and 14) 73,022
249,167
362,841
604
736,048
Equity component of convertible loan (Note 10) 6,310
115,292
857,650
Accumulated other comprehensive (loss) income (Note 12) (40,921)
(166,988)
(207,909)
649,741
1,013,186
Note 19
(See Accompanying Notes)
Director “Gordon Keep”
Gordon Keep
December 31, 2008
$
2,245
-
9,089
16,598
9,063
2,771
39,766
6,616
721,938
275,884
1,044,204
34,451
1,671
-
36,122
783
2,631
71,733
280,827
392,096
-
674,556
6,310
114,807
795,673
23,966
(167,531)
(143,565)
652,108
1,044,204
“Gordon Keep” , Director
Gordon Keep
RUSORO MINING LTD.CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICITFOR THE THREE MONTHS ENDED MARCH 31,(Expressed in thousands of US Dollarsunaudited
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REVENUE
COSTS AND EXPENSES
Mining operating expenses (Includes stockof $10 (2008: $18) (Note 11(b)))
Mining amortization
INCOME (LOSS) FROM MINING OPERATIONS
General and administrative (Includes stockof $451 (2008: $1,908) (Notes 11(b) and 14
Amortization
Interest on convertible loan
Foreign exchange (gain) loss
Income (loss) before the undernoted
OTHER (EXPENSES) INCOME
Impairment of mineral properties (Note 7
Interest income
Litigation and unsuccessful acquisition
INCOME (LOSS) BEFORE INCOME TAXESCONTROLLING INTEREST
Current income taxes
Recovery of future income taxes
INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST
Non-controlling interest
NET INCOME (LOSS)
DEFICIT
Beginning of period
End of period
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic
Diluted
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share
Diluted earnings (loss) per share
STATEMENT OF OPERATIONS AND DEFICITFOR THE THREE MONTHS ENDED MARCH 31,
US Dollars, except per share amounts) –
2009
$
30,160
(Includes stock-based compensation18,369
4,381
22,750
OPERATIONS 7,410
(Includes stock-based compensationof $451 (2008: $1,908) (Notes 11(b) and 14)) 2,746
15
3,267
(1,549)
4,479
before the undernoted 2,931
(Note 7) (174)
-
acquisition (Notes 13 and 19(b)(i)) (784)
(958)
BEFORE INCOME TAXES AND NON-1,973
3,905
(3,079)
826
CONTROLLING INTEREST 1,147
604
543
167,531
166,988
NUMBER OF SHARES OUTSTANDING
413,158,970
413,158,970
0.00
0.00
2008
$
11,688
7,932
5,604
13,536
(1,848)
6,930
16
-
7,425
14,371
(16,219)
(238)
124
-
(114)
(16,333)
2,288
(2,139)
149
(16,482)
-
(16,482)
(95,284)
(111,766)
387,033,102
387,033,102
(0.04)
(0.04)
RUSORO MINING LTD.CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS)INCOME
FOR THE THREE MONTHS ENDED MARCH 31,(Expressed in thousands of US Dollars)
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NET INCOME (LOSS)
Unrealized foreign exchange (losses) gains on translation ofself-sustaining foreign operations
COMPREHENSIVE (LOSS) INCOME
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS)
MONTHS ENDED MARCH 31,(Expressed in thousands of US Dollars) – unaudited
2009
$
543
Unrealized foreign exchange (losses) gains on translation of(64,887)
COMPREHENSIVE (LOSS) INCOME (64,344)
2008
$
(16,482)
249,021
232,539
RUSORO MINING LTD.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31,(Expressed in thousands of US Dollars)
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OPERATING ACTIVITIES
Net income (loss) for the period
Items not involving cash
AmortizationStock based compensation (Note 1
Impairment of mineral propertiesAccretion of asset retirement obligation
Accretion of interest of convertible loanUnrealized foreign exchange (gain)
Recovery of future income taxes
Non-controlling interest
Receivables non-current
Other liabilities
Changes in non-cash working capital items
Inventories
Receivables
Prepaid expenses and deposits
Income tax payable
Accounts payable and accrued liabilities
FINANCING ACTIVITIES
Proceeds from shares issued in public offeringShare issue costs (Note 11(a)(iv))
Repayment of short-term borrowingsCash received upon the exercising of share warrants (Note 1
INVESTING ACTIVITIES
Expenditures on mineral properties
Expenditures on property, plant and equipment
Purchase of short term investments
Impact of foreign exchange on cash
INCREASE (DECREASE) IN CASH
Cash and cash equivalents - beginning of period
CASH AND CASH EQUIVALENTS
Cash and cash equivalents is comprised of:
Cash
Cash equivalents
Supplemental cash flow information
Interest paidTaxes paid
Non-cash investing and financing transactions (Note 1
CONSOLIDATED STATEMENTS OF CASH FLOWSMONTHS ENDED MARCH 31,
(Expressed in thousands of US Dollars) - unaudited
2009
$
543
4,396based compensation (Note 11(b)) 461
Impairment of mineral properties (Note 7) 174Accretion of asset retirement obligation 233
Accretion of interest of convertible loan (Note 10) 1,289(gain) loss (1,488)
Recovery of future income taxes (3,079)
604
3,133
(2,532)
135
cash working capital items
3,422
(1,914)
expenses and deposits (717)
3,113
Accounts payable and accrued liabilities 2,172
6,812
shares issued in public offering (Note 11(a)(iv)) 64,636)) (4,394)
term borrowings -Cash received upon the exercising of share warrants (Note 11(a)) -
60,242
mineral properties (2,804)
Expenditures on property, plant and equipment (544
Purchase of short term investments (3,999)
(7,347)
Impact of foreign exchange on cash and cash equivalents (343)
IN CASH AND CASH EQUIVALENTS 59,364beginning of period 2,245
– END OF PERIOD 61,609
Cash and cash equivalents is comprised of:
12,933
48,676
61,609
Supplemental cash flow information
-500
cash investing and financing transactions (Note 16)
2008
$
543 (16,482)
96 5,620461 1,926
174 238233 -
1,289 -(1,488) 6,440
(3,079) (2,139)
604 -
33 (4,397)
(2,532) (501)
135 -
3,422 (7,656)
(1,914) (2,975)
(717) (4,592)
3,113 2,288
2,172 7,394
6,812 (10,439)
64,636 -(4,394) -
- (522)- 354
60,242 (168)
(2,804) (7,290)
44) (2,534)
(3,999) -
(7,347) (9,824)
(343) (121)
59,364 (20,552)2,245 31,352
61,609 10,800
12,933 10,800
48,676 -
61,609 10,800
- -500 -
RUSORO MINING LTD.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
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1. NATURE OF OPERATIONS
These interim unaudited consolidated financial statements have been prepared in accordance with
Canadian Generally Accepted A
follow the same accounting policies and methods of application as the audited consolidated financial
statements of the Company for the year ended December 31, 2008
These interim unaudited consolidated financial statements do not include all the information and note
disclosure required by the generally accepted accounting principles for annual financial statements and
therefore should be read in conjunction with the most recent annual audited consolidated financial
statements.
In the opinion of management, all adjustments (including normal recurring adjustments) necessary to
present fairly the financial position
(loss) income and cash flows for all periods presented have been made. The interim results are not
necessarily indicative of results for a full year.
Rusoro Mining Ltd. (“the Company”) was incorporated under the la
on March 1, 2000. The principal business activities of the Company are the acquisition, exploration,
development and operations of gold mineral properties in Venezuela.
The Venezuelan subsidiaries of the Company hav
development and exploitation of alluvial and vein gold. The concessions have been granted by the
Venezuelan Ministry of Mines and Basic Industries (“MIBAM”) or by Corporación Venezolana de Guayana
(“CVG”), maturing in 20 to 25 years, with some concessions extendable for two additional subsequent
periods of 10 years each.
The Company currently holds interest in two producing gold mines in Venezuela. It holds a 95%
ownership interest in the Choco mine (“the C
a 50% ownership interest in the Isidora mine (“the Isidora Mine”) which was acquired on December 23,
2008. The Company operates the Isidora Mine under a joint venture agreement with the Venezuelan
government. The Company also holds various other exploration properties in different stages of
exploration and development in Venezuela and a single exploration property in Honduras.
2. CHANGE IN ACCOUNTING
Accounting Policies Implemented Effective
Goodwill and Intangible Assets
Section 3064, Goodwill and Intangible Assets
Intangible Assets provides guidance on the recognition of intangible assets in accor
definition of an asset and the criteria for asset recognition as well as clarifying the application of the
concept of matching revenues and expenses, whether these assets are separately acquired or internally
developed. Section 1000 – Financ
this new standard. The adoption of Section 3064 did not result in a material impact on the Company’s
consolidated balance sheet or consolidated
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
These interim unaudited consolidated financial statements have been prepared in accordance with
Accounting Principles (“GAAP”) for interim financial information and they
follow the same accounting policies and methods of application as the audited consolidated financial
statements of the Company for the year ended December 31, 2008 except as discussed in Note 2.
These interim unaudited consolidated financial statements do not include all the information and note
disclosure required by the generally accepted accounting principles for annual financial statements and
e read in conjunction with the most recent annual audited consolidated financial
In the opinion of management, all adjustments (including normal recurring adjustments) necessary to
present fairly the financial position as at March 31, 2009 and the results of operations
and cash flows for all periods presented have been made. The interim results are not
necessarily indicative of results for a full year.
Rusoro Mining Ltd. (“the Company”) was incorporated under the laws of the Province of British Columbia
2000. The principal business activities of the Company are the acquisition, exploration,
development and operations of gold mineral properties in Venezuela.
The Venezuelan subsidiaries of the Company have received mining concessions for the exploration,
development and exploitation of alluvial and vein gold. The concessions have been granted by the
Venezuelan Ministry of Mines and Basic Industries (“MIBAM”) or by Corporación Venezolana de Guayana
maturing in 20 to 25 years, with some concessions extendable for two additional subsequent
The Company currently holds interest in two producing gold mines in Venezuela. It holds a 95%
ownership interest in the Choco mine (“the Choco Mine”) which was acquired on November 30, 2007
a 50% ownership interest in the Isidora mine (“the Isidora Mine”) which was acquired on December 23,
. The Company operates the Isidora Mine under a joint venture agreement with the Venezuelan
ernment. The Company also holds various other exploration properties in different stages of
exploration and development in Venezuela and a single exploration property in Honduras.
ACCOUNTING POLICIES
Accounting Policies Implemented Effective January 1, 2009
Goodwill and Intangible Assets
Goodwill and Intangible Assets, which replaces Section 3062,
provides guidance on the recognition of intangible assets in accor
definition of an asset and the criteria for asset recognition as well as clarifying the application of the
concept of matching revenues and expenses, whether these assets are separately acquired or internally
Financial Statement Concepts was also amended to provide consistency with
is new standard. The adoption of Section 3064 did not result in a material impact on the Company’s
consolidated statement of operations.
AND BASIS OF PRESENTATION
These interim unaudited consolidated financial statements have been prepared in accordance with
for interim financial information and they
follow the same accounting policies and methods of application as the audited consolidated financial
except as discussed in Note 2.
These interim unaudited consolidated financial statements do not include all the information and note
disclosure required by the generally accepted accounting principles for annual financial statements and
e read in conjunction with the most recent annual audited consolidated financial
In the opinion of management, all adjustments (including normal recurring adjustments) necessary to
the results of operations, comprehensive
and cash flows for all periods presented have been made. The interim results are not
ws of the Province of British Columbia
2000. The principal business activities of the Company are the acquisition, exploration,
e received mining concessions for the exploration,
development and exploitation of alluvial and vein gold. The concessions have been granted by the
Venezuelan Ministry of Mines and Basic Industries (“MIBAM”) or by Corporación Venezolana de Guayana
maturing in 20 to 25 years, with some concessions extendable for two additional subsequent
The Company currently holds interest in two producing gold mines in Venezuela. It holds a 95%
n November 30, 2007 and
a 50% ownership interest in the Isidora mine (“the Isidora Mine”) which was acquired on December 23,
. The Company operates the Isidora Mine under a joint venture agreement with the Venezuelan
ernment. The Company also holds various other exploration properties in different stages of
exploration and development in Venezuela and a single exploration property in Honduras.
Section 3062, Goodwill and Other
provides guidance on the recognition of intangible assets in accordance with the
definition of an asset and the criteria for asset recognition as well as clarifying the application of the
concept of matching revenues and expenses, whether these assets are separately acquired or internally
ial Statement Concepts was also amended to provide consistency with
is new standard. The adoption of Section 3064 did not result in a material impact on the Company’s
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
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Accounting Policies to be Implemented Effective January 1, 2011
Business Combinations
In December 2008, the CICA issued Section 1582
1581 Business Combinations.
business combination, which are aligned with International Financial Reporting Standard
business combinations. The Section applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting period beginning on or after
January 1, 2011. Early adoption is permitted.
adopting this standard will have on the
International Financial Reporting Standards
The Accounting Standards Board of the CICA announced that
will be replaced with IFRS for fiscal years beginning on or after
IFRS for fiscal years beginning on or after January 1, 2009
Implementing IFRS will have an impact on accounting, financial
processes. It may also have an
clauses, long-term employee compensation plans
Company develops its IFRS implementation plan, it will have to include measures to provide extensi
training to key finance personnel, to review contracts and agreements and to increase the level of
awareness and knowledge amongst management, the Board of Directors and Audit Committee.
Additional resources may be engaged to ensure the timely conversio
the transition to IFRS cannot be reasonably estimated at this time.
3. RECEIVABLES
VAT receivable (a)
Trade receivables (b)
Receivable from mining contractor (c)
Other receivables (d)
Receivables from related companies (Note 1
Total receivables
Non-current VAT receivable (e)
Non-current receivable from mining contractor (f)
Receivables - non-current
Current receivables
a) VAT receivable relates to value
b) Trade receivables relate to the sale
c) Receivable from mining contractor
d) Other receivables consists of GST receivable, sundry receivables and employee advances.
e) Non-current VAT receivable relates to VAT receivable that management estimates will not be recovered for at
least twelve months from the balance sheet date
f) Non-current receivable from mining contractor
management estimates will not be
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
Policies to be Implemented Effective January 1, 2011
the CICA issued Section 1582 Business Combinations which will replace section
This section establishes revised standards for the accounting for a
are aligned with International Financial Reporting Standard
The Section applies prospectively to business combinations for which the
r after the beginning of the first annual reporting period beginning on or after
Early adoption is permitted. The Company has not yet determined what the impact of
adopting this standard will have on the consolidated financial statements.
International Financial Reporting Standards
The Accounting Standards Board of the CICA announced that GAAP for publicly accountable enterprises
for fiscal years beginning on or after January 1, 2011.
IFRS for fiscal years beginning on or after January 1, 2009, may also be permitted.
Implementing IFRS will have an impact on accounting, financial reporting, and supporting IT systems and
processes. It may also have an impact on taxes, contractual commitments involving GAAP based
term employee compensation plans, and performance metrics. Accordingly, when the
Company develops its IFRS implementation plan, it will have to include measures to provide extensi
training to key finance personnel, to review contracts and agreements and to increase the level of
awareness and knowledge amongst management, the Board of Directors and Audit Committee.
Additional resources may be engaged to ensure the timely conversion to IFRS.
the transition to IFRS cannot be reasonably estimated at this time.
March 31, 2009
$
7,844
4,004
contractor (c) 2,485
3,146
Receivables from related companies (Note 14) 197
17,676
(6,654)
current receivable from mining contractor (f) (1,457)
(8,111)
9,565
alue added tax paid in Venezuela that is recoverable from the requisite authorities.
Trade receivables relate to the sale of gold.
Receivable from mining contractor relates to the sale of mining-fleet spare-part inventories.
Other receivables consists of GST receivable, sundry receivables and employee advances.
relates to VAT receivable that management estimates will not be recovered for at
least twelve months from the balance sheet date.
eceivable from mining contractor relates to the sale of mining-fleet spare
mates will not be collected for at least twelve months from the balance sheet date.
which will replace section
tandards for the accounting for a
are aligned with International Financial Reporting Standards (“IFRS”) on
The Section applies prospectively to business combinations for which the
r after the beginning of the first annual reporting period beginning on or after
The Company has not yet determined what the impact of
for publicly accountable enterprises
January 1, 2011. Early conversion to
may also be permitted.
and supporting IT systems and
impact on taxes, contractual commitments involving GAAP based
and performance metrics. Accordingly, when the
Company develops its IFRS implementation plan, it will have to include measures to provide extensive
training to key finance personnel, to review contracts and agreements and to increase the level of
awareness and knowledge amongst management, the Board of Directors and Audit Committee.
n to IFRS. The financial impact to
December 31, 2008
$
8,124
2,413
2,324
2,793
51
15,705
(5,163)
(1,453)
(6,616)
9,089
recoverable from the requisite authorities.
part inventories.
Other receivables consists of GST receivable, sundry receivables and employee advances.
relates to VAT receivable that management estimates will not be recovered for at
spare-part inventories that
for at least twelve months from the balance sheet date.
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
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4. INVENTORIES
Gold bars
Gold in circuit
Gold – stockpile
Materials and supplies
5. PREPAID EXPENSES AND DEPOSITS
Prepaid expenses (a)
Deposits (b)
a) Included in prepaid expenses at March 31, 2009 is $6,594 (December 31, 2008: $7,431) related to advances to
suppliers for goods and services to be provided at a later date.
b) Deposits include amounts paid in advance for equipment destined for the Company’s sand security deposits for office leases (Note 14).
6. PROPERTY, PLANT AND EQUIPMENT
Mining properties
Facilities
Machinery
Furniture and equipment
Vehicles
Leasehold improvements
Construction in progress
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
March 31, 2009$
3,154
1,859
3,591
2,894
11,498
PREPAID EXPENSES AND DEPOSITS
March 31, 2009
$
8,329
99
8,428
Included in prepaid expenses at March 31, 2009 is $6,594 (December 31, 2008: $7,431) related to advances to
suppliers for goods and services to be provided at a later date.
Deposits include amounts paid in advance for equipment destined for the Company’s sand security deposits for office leases (Note 14).
PLANT AND EQUIPMENT
March 31, 2009$
Cost
AccumulatedAmortizationand Depletion
547,490 (5,025)
93,648 (13,781)
17,143 (4,760)
7,953 (3,272)
2,604 (1,042)
100 (16)
6,215 -
675,153 (27,896)
December 31, 2008$
4,682
4,571
3,634
3,711
16,598
December 31, 2008
$
8,979
84
9,063
Included in prepaid expenses at March 31, 2009 is $6,594 (December 31, 2008: $7,431) related to advances to
Deposits include amounts paid in advance for equipment destined for the Company’s subsidiaries in Venezuela
Net Book Value
542,465
79,867
12,383
4,681
1,562
84
6,215
647,257
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
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Mining properties
Facilities
Machinery
Furniture and equipment
Vehicles
Leasehold improvements
Construction in progress
On November 30, 2007, the Company acquired all the
Netherlands Services BV. The main asset acquired was the Choco
in which the Company acquired a 95% interest.
interest in a joint venture whose main asset is the Isi
Included in property, plant and equipment
mines, mineral properties and corporate head office
Mining Properties
Depletable$
NonDepletable(*)
Choco Mine 50,399 463,348
Isidora Mine 1,845 26,873
Other Venezuelanproperties -
Corporate headoffice -
52,244 490,221
(*) Carrying value of mining properties
Construction in Progress
Construction in progress relates to upgrades to the Choco
Choco mine. Upon completion, such costs
useful life.
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
December 31, 2008$
Cost
AccumulatedAmortizationand Depletion
608,245 (4,470)
104,894 (13,172)
12,853 (2,407)
8,255 (3,048)
2,812 (972)
100 (12)
8,860 -
746,019 (24,081)
On November 30, 2007, the Company acquired all the Venezuelan assets and liabilities of G
The main asset acquired was the Choco Mine, located in the El Callao district,
in which the Company acquired a 95% interest. On December 23, 2008, the Company acquired a 50%
interest in a joint venture whose main asset is the Isidora Mine, located in the El Callao district.
property, plant and equipment is the net book value associated with the Company’s operating
, mineral properties and corporate head office as follows:
Mining Properties Property, Plant andEquipment (excluding
mining properties)$
March 31, 2009$
Non-Depletable(*)
$Total
$
463,348 513,747 90,182 603,929
26,873 28,718 8,814 37,532
- - 5,487 5,487
- - 309 309
490,221 542,465 104,792 647,257
(*) Carrying value of mining properties attributed to mineral resources other than proven and probable reserves
Construction in progress relates to upgrades to the Choco Mine mill and tailing dams being built at the
on completion, such costs net of residual value will be amortized over their estimated
Net Book Value
603,775
91,722
10,446
5,207
1,840
88
8,860
721,938
s and liabilities of Gold Fields
ine, located in the El Callao district,
the Company acquired a 50%
El Callao district.
is the net book value associated with the Company’s operating
March 31, 2009 December 31, 2008$
603,929 672,935
37,532 42,900
5,487 5,775
309 328
647,257 721,938
and probable reserves.
ine mill and tailing dams being built at the
will be amortized over their estimated
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
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7. MINERAL PROPERTIES
SanRafael
El Placer
Emiliaand
Emilia II
Balance,December 31, 2007 16,970 3,431
Acquisition ofpropertiesin Hecla-VenezuelaAcquisition -
Transfer of mineralproperties -
Asset retirementobligation -
Exploration anddevelopment costs 8,967 1,128
Impairment ofmineral properties -
Foreign exchange loss -
Balance,December 31, 2008 25,937 4,
Exploration anddevelopment costs 1,258
Impairment of mineralproperties -
Foreign exchange loss -
BalanceMarch 31, 2009 27,195 4,638
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable
Accrued liabilities
Accrual for termination benefits
Due to related parties (Note 14)
Current portion of asset retirement obligation
9. NOTE PAYABLE
On February 20, 2009, the Company issued a promissory note to an officer and dire
for $500 (Note 14) related to the
promissory note is unsecured, non
and the officer/director. On May 19, 2009, the Company repaid the note payable of $500
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
MINERAL PROPERTIES
Emiliaand
Emilia II Ceiba IIValle
HondoIncreible
6 Yuruan Minoro El Callao
3,431 1,160 20,658 55,464 407 13,500
- - - - - -
- - - - - -
- - - 623 - -
1,128 - 2,508 5,854 3,432 38
- - - - - (13,538)
- - - - - -
4,559 1,160 23,166 61,941 3,839 -
79 - 83 952 88 -
- - - - - -
- - - - - - (15,291)
4,638 1,160 23,249 62,893 3,927 -
BLE AND ACCRUED LIABILITIES
March 31, 2009$
13,356
16,529
1,921
443
Current portion of asset retirement obligation 190
32,439
Company issued a promissory note to an officer and dire
related to the purchase of a plant for the treatment of diamonds
non-interest bearing and is repayable at a time agreeable to the Company
On May 19, 2009, the Company repaid the note payable of $500
El CallaoOther
Properties Total
152,994 5,407 269,991
- 2,385 2,385
- (329) (329)
- - 623
- 698 22,625
(3,700) (2,019) (19,257)
(71) (83) (154)
149,223 6,059 275,884
- 76 2,536
- (174) (174)
(15,291) (236) (15,527)
133,932 5,725 262,719
December 31, 2008$
13,722
17,328
1,828
1,398
175
34,451
Company issued a promissory note to an officer and director of the Company
purchase of a plant for the treatment of diamonds (Note 23(a)). The
greeable to the Company
On May 19, 2009, the Company repaid the note payable of $500 (Note 23(d))
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
10 | P a g e
10. CONVERTIBLE LOAN
On June 10, 2008, the Company entered into a loan agreement with a syndicate of priva
borrow $80,000 (“the Loan”) to fund the
Holdings B.V. (“the Hecla-Venezuela Acquisition
and El Callao Gold Mining Company de Venezuela, SCS from Hecla Min
general corporate purposes. The Loan has a two
per annum, payable semi-annually and is secured by share pledges over the Company’s principal assets
including the Choco Mine (Note
but excluding the Isidora Mine (Note 6
The lenders have the option, at any time and at their sole discret
outstanding principal of the Loan to common shares of the Company at a conversion price
31, 2009 of $1.07 per common share (subject to adjustment depending on future equity financings and
other transactions entered into by the Company). In addition, the Company has granted to the lenders
pro-rata participation in any future equity offerings for the term of the Loan. The Loan may be repaid by
the Company at any time subject to the Company providing the lenders
the outstanding principal in full plus an amount equal to the interest that would have been accrued if the
loan was held for the original two
For accounting purposes, the Loan contains both a liability component
the lender’s conversion option to shares, which have been separately presented on the consolidated
balance sheet. The Company has allocated the $80
equity components by establishing the fair value of the liability component
allocating the remaining balance
liability component was determined by discounting the stream of futu
amounts at the estimated prevailing market rate of 15% for a debt instrument of
quality but without any share conversion option for the lenders.
Including the impact of the costs of issuan
an effective annual interest rate of 18.5%.
Convertible Loan
Principal of the Loan to be repaid in June 2010
Cost of issuance including financial advisory fees
Net proceeds
Equity component at the date of issuanceand at March 31, 2009:
The convertible loan is made up as follows:
Liability component at the date of issu
Accretion of interest
Convertible loan
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
CONVERTIBLE LOAN
On June 10, 2008, the Company entered into a loan agreement with a syndicate of priva
) to fund the acquisition of El Callao Gold Mining Ltd. and Drake
Venezuela Acquisition”) including their wholly-owned subsidiaries Minera Hecla
and El Callao Gold Mining Company de Venezuela, SCS from Hecla Mining Company (
general corporate purposes. The Loan has a two-year term, bears interest at a contractual rate of
annually and is secured by share pledges over the Company’s principal assets
ne (Note 6) and San Rafael El Placer and Increible 6 mineral properties (Note 7
(Note 6). The $80,000 principal portion of the loan is due in June of 2010.
The lenders have the option, at any time and at their sole discretion, to convert all or part of the
of the Loan to common shares of the Company at a conversion price
per common share (subject to adjustment depending on future equity financings and
tered into by the Company). In addition, the Company has granted to the lenders
rata participation in any future equity offerings for the term of the Loan. The Loan may be repaid by
the Company at any time subject to the Company providing the lenders with 30 days notice and repaying
in full plus an amount equal to the interest that would have been accrued if the
loan was held for the original two-year term.
For accounting purposes, the Loan contains both a liability component and an equity component, being
the lender’s conversion option to shares, which have been separately presented on the consolidated
has allocated the $80,000 principal of the Loan to the individual liability and
by establishing the fair value of the liability component at the date of issue
balance of the net proceeds to the equity component.
liability component was determined by discounting the stream of future payments of interest and principal
amounts at the estimated prevailing market rate of 15% for a debt instrument of similar
any share conversion option for the lenders.
Including the impact of the costs of issuance, applying the effective interest rate method, the Loan bears
an effective annual interest rate of 18.5%.
$
Principal of the Loan to be repaid in June 2010 80,000
Cost of issuance including financial advisory fees (4,645)
75,355
Equity component at the date of issuance, at December 31, 2008,6,310
The convertible loan is made up as follows:
March 31, 2009$
component at the date of issuance 69,045
3,977
73,022
On June 10, 2008, the Company entered into a loan agreement with a syndicate of private lenders to
acquisition of El Callao Gold Mining Ltd. and Drake-Bering
owned subsidiaries Minera Hecla
ing Company (“Hecla”) and for
year term, bears interest at a contractual rate of 10%
annually and is secured by share pledges over the Company’s principal assets
neral properties (Note 7)
principal portion of the loan is due in June of 2010.
ion, to convert all or part of the
of the Loan to common shares of the Company at a conversion price as at March
per common share (subject to adjustment depending on future equity financings and
tered into by the Company). In addition, the Company has granted to the lenders
rata participation in any future equity offerings for the term of the Loan. The Loan may be repaid by
with 30 days notice and repaying
in full plus an amount equal to the interest that would have been accrued if the
and an equity component, being
the lender’s conversion option to shares, which have been separately presented on the consolidated
oan to the individual liability and
at the date of issue and then
of the net proceeds to the equity component. The fair value of the
re payments of interest and principal
similar maturity and credit
ce, applying the effective interest rate method, the Loan bears
December 31, 2008$
69,045
2,688
71,733
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
11 | P a g e
11. SHARE CAPITAL
Authorized Share Capital of
Unlimited number of common shares
(a) Issued Capital
Balance, December 31, 2007
Issued pursuant to exercise of warrants
Fair value of warrants exercised
Hecla-Venezuela Acquisition (i)
Working Capital Adjustment (ii)
Balance, December 31, 2008
Shares issued to financial advisor
Shares issued in public offering (iv)
Share issue costs (iv)
Balance, March 31, 2009
i. On July 8, 2008, the Company issued 4,273,504 common shares with a fair value of $1.16 per share as part of
the Hecla-Venezuela Acquisition
ii. Hecla had the option to repay in cash or shares
purchase agreement for the Hecla
working capital purchased by the Company in the Hecla
Adjustment”). Hecla chose to repa
contractually agreed value.
iii. On February 11, 2009, the Company issued 5,733,677 common shares
financial advisor for advisory services related to theincluded in accounts payable and accrued liabilities at December 31, 2008
iv. On March 19, 2009, the Company issued 13
common share for gross proceeds of
proceeds was paid to the underwriter
(b) Stock Options
The Company has a stock option plan
under which the Company may grant options to acquire a maximum number of common shares equal to
up to 10% of the total issued and outstanding common shares of the Company
transferable and may have a term of up to 10 years from the date of issue
terms, conditions, and exercise price are determined by the board of directors at the time of grant.
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
Authorized Share Capital of the Company
Unlimited number of common shares without par value.
Number ofShares
386,835,106
Issued pursuant to exercise of warrants 347,059
-
4,273,504
(677,723)
390,777,946
to financial advisor (iii) 5,733,677
Shares issued in public offering (iv) 133,334,000
-
529,845,623
, 2008, the Company issued 4,273,504 common shares with a fair value of $1.16 per share as part of
enezuela Acquisition.
Hecla had the option to repay in cash or shares of the Company at a value agreed by the
purchase agreement for the Hecla-Venezuela Acquisition, the difference between the estimated and actual
working capital purchased by the Company in the Hecla-Venezuela Acquisition (
). Hecla chose to repay the Working Capital Adjustment of $780 in shares
On February 11, 2009, the Company issued 5,733,677 common shares with a fair value of $1,250
financial advisor for advisory services related to the Company’s unsolicited take-over bid (Note 13)included in accounts payable and accrued liabilities at December 31, 2008.
the Company issued 133,334,000 common shares at Canadian Dollars (“C$”)
oceeds of $64,636 (C$80,000). A cash commission equal to 6.0% of the gross
proceeds was paid to the underwriter and other fees related to the public offering were $516
The Company has a stock option plan available to its directors, officers, consultants and key employees
under which the Company may grant options to acquire a maximum number of common shares equal to
10% of the total issued and outstanding common shares of the Company
e and may have a term of up to 10 years from the date of issue. Amount of options, v
and exercise price are determined by the board of directors at the time of grant.
Amount$
669,252
354
770
4,960
(780)
674,556
1,250
64,636
(4,394)
736,048
, 2008, the Company issued 4,273,504 common shares with a fair value of $1.16 per share as part of
at a value agreed by the parties in the stock
Venezuela Acquisition, the difference between the estimated and actual
Venezuela Acquisition (“the Working Capital
in shares of the Company at the
with a fair value of $1,250 to its
over bid (Note 13) which was
Canadian Dollars (“C$”) 0.60 per
. A cash commission equal to 6.0% of the gross
to the public offering were $516.
its directors, officers, consultants and key employees
under which the Company may grant options to acquire a maximum number of common shares equal to
10% of the total issued and outstanding common shares of the Company. Options are non-
Amount of options, vesting
and exercise price are determined by the board of directors at the time of grant.
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
12 | P a g e
The following stock options were
Number of OptionsOutstanding
Number of OptionsExercisable
17,647 17,647
350,000 297
334,117 334,117
47,060 47,060
94,118 94,118
600,000 600,000
6,505,000 6,505,000
720,000 540
6,050,000 4,162,500
810,000 440,000
2,975,000 2,975,000
50,000 16,667
50,000 16,667
300,000 100,000
100,000 100,000
16,235,000 16,235,000
100,000 100,000
35,337,942 32,581,276
Stock option transactions are summarized as follows:
Outstanding, December 31, 2007
Issued
Expired
Outstanding, December 31, 2008
Outstanding, March 31, 2009
As at March 31, 2009, 32,581,276
$1.58.
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
The following stock options were outstanding at March 31, 2009:
Number of OptionsExercisable
Exercise Price$
ExpiryDate
17,647 0.85 C$ Oct 13, 2009
297,500 1.31 C$ Oct 28, 2009
334,117 1.05 C$ Dec 7, 2009
47,060 1.11 C$ Mar 7, 2011
94,118 1.70 C$ Apr 5, 2011
600,000 1.31 C$ Nov 6, 2016
6,505,000 3.00 US$ Nov 6, 2016
540,000 1.31 C$ Sept 10, 2017
4,162,500 2.12 C$ Sept 10,2017
440,000 1.31 C$ Oct 28, 2017
2,975,000 2.30 C$ Oct 28, 2017
16,667 1.31 C$ Jan 1, 2018
16,667 1.60 C$ Jan 1, 2018
100,000 1.65 C$ Jan 15, 2018
100,000 1.55 C$ Jan 24, 2018
16,235,000 1.31 C$ Jun 26, 2018
100,000 1.31 C$ Jul 20, 2018
2,581,276
Stock option transactions are summarized as follows:
Number ofOptions
18,541,178
16,835,000
(38,236)
35,337,942
35,337,942
32,581,276 stock options were exercisable at a weighted average exercise price of
Weighted AverageRemaining Contractual
Life (Years)
0.54
0.58
0.69
1.93
2.01
7.61
7.61
8.45
8.45
8.58
8.58
8.76
8.76
8.80
8.82
9.24
9.31
Weighted AverageExercise Price
$
2.62
1.30
0.83
1.61
1.58
average exercise price of
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
13 | P a g e
The total fair value of the options grante
Scholes option pricing model and resulted in the following
Assumptions
Dividend yield
Annualized volatility
Risk-free interest rate
Expected life (years)
Weighted average grant date fair value per option
The stock-based compensation included in the
months ended March 31, 2009
mineral expenditures during the three months ended March 31, 2009
(c) Warrants
Share purchase warrant transactions
Outstanding, December 31, 2007
Exercised
Outstanding, December 31, 2008
Outstanding, March 31, 2009
The following warrants were outstandi
Number of WarrantsOutstanding
5,833,336
9,216,793
93,750,000
108,800,129
(d) Contributed Surplus
Balance, December 31, 2007
Reclassification to common shares on exercise of warrants
Stock-based compensation
Balance, December 31, 2008
Stock-based compensation
Balance, March 31, 2009
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
of the options granted for the periods presented was estimated
and resulted in the following amounts:
2009
-
-
-
-
Weighted average grant date fair value per option -
based compensation included in the consolidated statement of operations during the
months ended March 31, 2009 was $461 (2008: $1,926). Stock-based compensation capitalized as
three months ended March 31, 2009 was $24 (200
Share purchase warrant transactions for the three months ended March 31, 2009
Number ofWarrants
109,147,188
(347,059)
108,800,129
108,800,129
The following warrants were outstanding as at March 31, 2009:
Exercise Price$
3.35 US$
5.25 C$
4.00 C$ November 30, 2012
Reclassification to common shares on exercise of warrants
estimated using the Black-
2008
0%
59% to 69%
3.81% to 3.94%
10
1.18
statement of operations during the three
based compensation capitalized as
(2008: $299).
9, were as follows:
Weighted AverageExercise Price
$
4.00
1.02
3.37
3.26
Expiry Date
November 7, 2011
March 4, 2012
November 30, 2012
Amount
$
91,823
(770)
23,754
114,807
485
115,292
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
14 | P a g e
12. ACCUMULATED OTHER COMPREHENSIVE
The components of accumulated other comprehensive
Unrealized foreign exchange (loss)self-sustaining foreign operations
13. GOLD RESERVE INC.
On December 15, 2008, the Company launched an unsolicited
Gold Reserve Inc. (“Gold Reserve
expired and because the conditions to the Company’s offer were not met, the Company did not take up
any securities under the offer. The Company recorded the costs related to the Gold Reserve Bid and t
resulting litigation (Note 19(b)(i)) as an expense
consolidated statement of operations.
14. RELATED PARTY TRANSACTIONS
a) Included in receivables (Note
has significant influence of
interest bearing with no set terms of repayment.
b) Included in prepaid expenses and deposits
security deposit for an office lease entered into with a company
has significant influence.
c) Included in amounts capitalized as
related to the provision of technical services and rental of mining equipment from a company of which
a director of the Company has significant influence.
d) Included in amounts capitaliz
the provision of geological services and machinery rental
Company has significant influence.
e) Included in accounts payable and accrued liabilities
directors of the Company ha
director of the Company and
(December 31, 2008: $1,39
bearing.
f) Included in note payable (Note
of the Company.
g) Included in convertible loan
provision of legal services which were paid to a
partner.
h) Included in general and administrative
the Company’s office of representation in
Company has significant influence
i) Included in general and administrative
Caracas office from a company
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
The components of accumulated other comprehensive (loss) income are as follows:
March 31, 2009$
(loss) gain on translation of(40,921)
GOLD RESERVE INC.
On December 15, 2008, the Company launched an unsolicited take-over bid (“the Gold Reserve Bid
Gold Reserve”). On February 18, 2009, the Company’s offer for Gold Reserve
expired and because the conditions to the Company’s offer were not met, the Company did not take up
under the offer. The Company recorded the costs related to the Gold Reserve Bid and t
(b)(i)) as an expense for litigation and unsuccessful acquisition
consolidated statement of operations.
RELATED PARTY TRANSACTIONS
Included in receivables (Note 3) are amounts owed from companies which a director of the Company
of $197 (December 31, 2008: $51). These amounts are unsecured, non
interest bearing with no set terms of repayment.
id expenses and deposits (Note 5) is $41 (December 31, 200
security deposit for an office lease entered into with a company of which a director of the Company
amounts capitalized as property, plant and equipment is $227 (December 31,
the provision of technical services and rental of mining equipment from a company of which
a director of the Company has significant influence.
zed as mineral properties is $302 (December 31, 200
geological services and machinery rental from companies of
Company has significant influence.
Included in accounts payable and accrued liabilities (Note 8) are amounts due to
of the Company have significant influence, to a company controlled by an officer and
and to a law firm of which a director of the Company is a partner
398). These amounts are unsecured, due on demand and non
(Note 9) is $500 (December 31, 2008: $Nil) owed to
Included in convertible loan is financing costs of $Nil (December 31, 200
provision of legal services which were paid to a law firm of which a director of the Company is a
general and administrative expenses is $103 (2008: $146) related
office of representation in Moscow, from a company of which a director of the
Company has significant influence.
Included in general and administrative expenses is $28 (2008: $Nil) related to the rental of the
Caracas office from a company of which a director of the Company has significant influence.
INCOME
as follows:
December 31, 2008$
23,966
the Gold Reserve Bid”) for
). On February 18, 2009, the Company’s offer for Gold Reserve
expired and because the conditions to the Company’s offer were not met, the Company did not take up
under the offer. The Company recorded the costs related to the Gold Reserve Bid and the
unsuccessful acquisition in the
a director of the Company
These amounts are unsecured, non-
is $41 (December 31, 2008: $41) related to a
which a director of the Company
December 31, 2008: $Nil)
the provision of technical services and rental of mining equipment from a company of which
(December 31, 2008: $1,764) related to
of which a director of the
are amounts due to companies of which
, to a company controlled by an officer and
which a director of the Company is a partner of $443
These amounts are unsecured, due on demand and non-interest
) owed to an officer and director
(December 31, 2008: $97) related to the
which a director of the Company is a
related to the cost of running
, from a company of which a director of the
) related to the rental of the
a director of the Company has significant influence.
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
15 | P a g e
j) Included in general and administrative
charged by a company of which a director of the Company has significant influence.
general and administrative expenses
included in share capital is share issuance costs of $22 (December 31, 2008: $Nil) related to the
provision of legal services for the shares issued in public
litigation and unsuccessful
services for the Gold Reserve Bid (Note
Company is a partner.
k) Included in general and administrative
services which have been supplied by a company which is
Related party transactions are recorded at
between the parties.
15. CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to:
a) Provide an adequate return to shareholders;
b) Provide adequate and efficient funding for
c) Continue the development and exploration of its mineral properties;
d) Support any expansion plans;
e) Maintain a capital structure, which
In the management of capital, the Company includes
As at March 31, 2009, the Company had no bank indebtedness.
The Company is not subject to any externally imposed capital requirements and there has been no
change with respect to the overall capital risk management stra
March 31, 2009.
16. SUPPLEMENTARY DISCLOSURE OF NON
Non-cash investing and financing transactions
disclosed elsewhere include:
Accounts payable and accrued liabilities
Accounts payable and accrued liabilitiesexpenditures
Amortization capitalized – Mineral properties
Stock-based compensation capitalized to mineral properties (Note 1
Shares issued to financial advisor (Note 11(a)(iii))
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
general and administrative expenses is $57 (2008: $115) related
a company of which a director of the Company has significant influence.
expenses is $20 (2008: $52) related to the provision of legal services
in share capital is share issuance costs of $22 (December 31, 2008: $Nil) related to the
provision of legal services for the shares issued in public offering (Note 11(a)(iv))
acquisition costs is $186 (2008: $Nil) related to the provision of legal
for the Gold Reserve Bid (Note 13) which were paid to a law firm of
general and administrative expenses is $Nil (2007: $365) related to
which have been supplied by a company which is controlled by a director
Related party transactions are recorded at the exchange amount which is the consideration agreed to
MANAGEMENT DISCLOSURES
es when managing capital are to:
Provide an adequate return to shareholders;
Provide adequate and efficient funding for operations;
Continue the development and exploration of its mineral properties;
Support any expansion plans; and
structure, which optimises the cost of capital at acceptable risk.
In the management of capital, the Company includes shareholders’ equity and convertible loan
, the Company had no bank indebtedness.
The Company is not subject to any externally imposed capital requirements and there has been no
change with respect to the overall capital risk management strategy during the
SUPPLEMENTARY DISCLOSURE OF NON-CASH TRANSACTIONS
cash investing and financing transactions that have been excluded from the
Three MonthsEnded March 31,
2009
$
Accounts payable and accrued liabilities – Mineral property expenditures (557)
Accounts payable and accrued liabilities – Property, plant and equipment537
Mineral properties 265
based compensation capitalized to mineral properties (Note 11(b)) 24
Shares issued to financial advisor (Note 11(a)(iii)) 1,250
) related to consulting fees
a company of which a director of the Company has significant influence. Included in
related to the provision of legal services,
in share capital is share issuance costs of $22 (December 31, 2008: $Nil) related to the
offering (Note 11(a)(iv)) and included in
: $Nil) related to the provision of legal
of which a director of the
) related to the provision of travel
by a director of the Company.
the exchange amount which is the consideration agreed to
optimises the cost of capital at acceptable risk.
convertible loan.
The Company is not subject to any externally imposed capital requirements and there has been no
tegy during the three months ended
CASH TRANSACTIONS
have been excluded from the cash flow and are not
Three MonthsEnded March 31,
Three MonthsEnded March 31,
2008
$
849
-
-
299
-
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
16 | P a g e
17. SEGMENTED DISCLOSURE
The Company has two distinct business
a) exploration and development
b) extraction, processing, and sale of gold ore.
In the three months ended March 31, 2009
had six principal customers (200
The customers with significant sales are as follows:
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
Mineral Explorationand Development
Three Months EndedMarch 31, 2009
Revenue
Mining operatingexpenses
Mining amortization
General andadministrative
Amortization
Interest on convertibleloan
Foreign exchange gain(loss)
Impairment of mineralproperties
Interest income
Litigation and unsuccessfulacquisition
Income tax expense
Non-controlling interest
Net income (loss)
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
DISCLOSURE
business segments:
development of mineral properties
and sale of gold ore.
the three months ended March 31, 2009, all revenue was generated in Venezuela
(2008 – seven principal customers).
with significant sales are as follows:
Three Month EndedMarch 31, 2009
$
12,598
5,939
5,480
-
-
-
Mineral Explorationand Development
Three Months EndedMarch 31, 2009
Extraction,Processing and SaleThree Months Ended
March 31, 2009
Total ThreeMonths EndedMarch 31, 2009
$ $ $
- 30,160 30,160
- (18,369) (18,369)
- (4,381) (4,381)
(1,478) (1,268) (2,746)
(3) (12) (15)
- (3,267) (3,267)
1,343 206 1,549
(174) - (174)
- -
- (784) (784)
- (826) (826)
- (604) (604)
(312) 855 543
s generated in Venezuela and the Company
Three Month EndedMarch 31, 2008
$
-
-
-
5,665
2,005
1,264
Total ThreeMonths EndedMarch 31, 2009
Total ThreeMonths EndedMarch 31, 2008
$
30,160 11,688
(18,369) (7,932)
(4,381) (5,604)
(2,746) (6,930)
(15) (16)
(3,267) -
1,549 (7,425)
(174) (238)
- 124
(784) -
(826) (149)
(604) -
543 (16,482)
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
17 | P a g e
The Company’s geographic segment information is as follows:
Mineral Explorationand Development
as at March 31,
Canada
Current assets
Property, plant,and equipment
Venezuela
Current assets
Property, plant,and equipment
Mineral properties 26
Other long-termassets
272,
Honduras
Current assets
Total assets 28
Capital expenditures
18. JOINT VENTURE INTEREST
On July 4, 2008 the Company entered into an agreement (“the Mixed Enterprise Agreement”) with
MIBAM to create a mixed enterprise
Venrus C.A. (“Venrus C.A.”), a Venezuelan corporation was incorporated on December 23, 2008, and is
50% owned by the Company and 50% owned by Empresa de Produccion Social Minera Nacional, C.A
Venezuelan government entity)
venture under which the venturers are bound by the
The Company records its 50% proportionate share of assets, liabilities,
the joint venture.
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
The Company’s geographic segment information is as follows:
Mineral Explorationand Development
March 31, 2009
Extraction,Processing and Saleas at March 31, 2009
Totalas at March 31,
2009$ $ $
12,255 49,016 61,271
62 247 309
12,317 49,263 61,580
2,520 31,272 33,792
5,487 641,461 646,948
262,719 - 262,719
1,883 6,228 8,111
272,609 678,961 951,570
36 - 36
284,962 728,224 1,013,186
2,804 544 3,348
JOINT VENTURE INTEREST
On July 4, 2008 the Company entered into an agreement (“the Mixed Enterprise Agreement”) with
MIBAM to create a mixed enterprise (joint venture). Pursuant to the Mixed Enterprise Agreement,
Venrus C.A. (“Venrus C.A.”), a Venezuelan corporation was incorporated on December 23, 2008, and is
50% owned by the Company and 50% owned by Empresa de Produccion Social Minera Nacional, C.A
Venezuelan government entity). The Company conducts a portion of its business thr
under which the venturers are bound by the articles of incorporation and
proportionate share of assets, liabilities, revenues,
March 31,Total
as at December 31,2008
$
488
328
816
39,244
721,610
275,884
6,616
1,043,354
34
1,044,204
9,824
On July 4, 2008 the Company entered into an agreement (“the Mixed Enterprise Agreement”) with
Pursuant to the Mixed Enterprise Agreement, Minera
Venrus C.A. (“Venrus C.A.”), a Venezuelan corporation was incorporated on December 23, 2008, and is
50% owned by the Company and 50% owned by Empresa de Produccion Social Minera Nacional, C.A (a
n of its business through this joint
ncorporation and by-laws of Venrus C.A.
revenues, and operating costs of
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
18 | P a g e
The following details the Company’s share of its investment in
proportionately consolidated:
Assets
Current assets
Property, plant and equipment
Mineral properties
Liabilities
Current liabilities
Other long-term liabilities
Future income tax liability
Revenue
Expenses
Net (loss) income
Cash Flows
Operating activities
Investing activities
Financing activities
Increase in cash
19. COMMITMENTS AND
(a) Commitments
(i) At March 31, 2009, the Company
vehicles and machinery and to payments under contracts for community relations, security, computer
maintenance, consulting and other services
2009
2010
2011
2012
2013
2014 and Thereafter
(ii) As part of the Mixed Enterprise Agreement
social costs during a period of 18 months from entering
expensed as incurred. The total cost to be incurred has
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
The following details the Company’s share of its investment in the joint venture that has been
March 31, 2009
$
7,671
37,532
2,066
47,269
3,168
70
12,622
15,860
4,649
5,143
(494)
1,593
(622)
-
971
COMMITMENTS AND CONTINGENCIES
Company is committed to payments under operating leases for premises
vehicles and machinery and to payments under contracts for community relations, security, computer
maintenance, consulting and other services as follows:
Related Party$
Non-Related Party$
98 1,884
131 262
131 62
66 62
- 62
- 67
426 2,399
Mixed Enterprise Agreement (Note 18) the Company has committed to incur various
social costs during a period of 18 months from entering into the agreement. These social costs will be
The total cost to be incurred has been estimated as $400
joint venture that has been
December 31, 2008
$
8,500
42,900
2,301
53,701
2,945
71
15,364
18,380
338
180
158
-
-
-
-
is committed to payments under operating leases for premises,
vehicles and machinery and to payments under contracts for community relations, security, computer
Total$
1,982
393
193
128
62
67
2,825
ompany has committed to incur various
These social costs will be
by the Company.
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
19 | P a g e
(b) Contingencies
(i) Gold Reserve Lawsuit
Gold Reserve claims unquantified damages and punitive damages related to an alleged breach of
confidence and trespass related to Gold Reserve’s property in Venezuela. Also, on February 10, 200
Ontario Superior Court of Justice granted Gold Reserve’s injunction application by which the Company
and Endeavour Financial International Corporation were restrained from making any unsolicited takeover
bid for Gold Reserve. The Company denies the al
defense and counterclaim in respect of losses the Company has sustained as a result of the injunction’s
issuance. The outcome of this matter and estimate of potential damages is not determinable at t
and no amount has been accrued in these financial statements for this claim.
(ii) Other Matters
The Company is involved in various claims and litigation arising in the normal course of business. While
the outcome of these matters is uncertain and
resolved in the Company’s favor, the Company does not currently believe that the outcome of adverse
decisions in any pending or threatened proceedings related to these and other matters or any amount
which it may be required to pay by reason thereof would have a material impact on its financial position,
results of operations or cash flows.
20. FINANCIAL INSTRUMENTS
Cash and cash equivalents are classified as held
investments are classified as available
receivable) are classified as loans and receivables and measured at amortized cost
interest rate method. Accounts payable and
convertible loan are classified as other financial liabilities and measured at amortized cost using the
effective interest rate method.
Management reviewed all significant financial instruments held
material differences between fair value and carrying value existed as at
convertible loan which has a fair value of
financial instrument risks to which it is exposed
Where material, these risks are reviewed and monitored by manag
significant changes from the previous year as to how these risks are re
management. The type of risks
as follows:
Credit Risk
Management does not believe the Company is exposed
Management determines concentration by the percentage of receivables owed and cash
equivalents held by a single party.
The Company’s exposure to credit risk on its
maintaining these assets with high
corporations and government issuances in accordance with its investment policy
exposed to the credit risk of Venezuelan
operations. The Company limits its exposure to t
immediate needs of its Venezuelan subsidiaries. The Company minimizes the credit r
receivables (Note 3) by selling to customers wi
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
Gold Reserve claims unquantified damages and punitive damages related to an alleged breach of
confidence and trespass related to Gold Reserve’s property in Venezuela. Also, on February 10, 200
Ontario Superior Court of Justice granted Gold Reserve’s injunction application by which the Company
and Endeavour Financial International Corporation were restrained from making any unsolicited takeover
The Company denies the allegations made against it and has served a statement of
and counterclaim in respect of losses the Company has sustained as a result of the injunction’s
The outcome of this matter and estimate of potential damages is not determinable at t
and no amount has been accrued in these financial statements for this claim.
The Company is involved in various claims and litigation arising in the normal course of business. While
the outcome of these matters is uncertain and there can be no assurance that such matters will be
resolved in the Company’s favor, the Company does not currently believe that the outcome of adverse
decisions in any pending or threatened proceedings related to these and other matters or any amount
h it may be required to pay by reason thereof would have a material impact on its financial position,
results of operations or cash flows.
FINANCIAL INSTRUMENTS
Cash and cash equivalents are classified as held-for-trading and measured at fair value. Short
investments are classified as available-for-sale and measured at fair value. Receivables (excluding VAT
receivable) are classified as loans and receivables and measured at amortized cost
. Accounts payable and accrued liabilities, note payable
convertible loan are classified as other financial liabilities and measured at amortized cost using the
Management reviewed all significant financial instruments held by the Company and determined that no
material differences between fair value and carrying value existed as at March
which has a fair value of $69,611. The Company thoroughly examines the various
ment risks to which it is exposed, and assesses the impact and likelihood of those risks.
Where material, these risks are reviewed and monitored by management. There have not been any
significant changes from the previous year as to how these risks are reviewed and monitored by
exposures and the way in which such exposure are
ve the Company is exposed to any significant concentration of credit risk
Management determines concentration by the percentage of receivables owed and cash
held by a single party.
The Company’s exposure to credit risk on its C$ and US Dollar cash and cash equivalents
with high-credit quality financial institutions and investing in highly rated
corporations and government issuances in accordance with its investment policy
the credit risk of Venezuelan banks, which hold cash for the Company’s
operations. The Company limits its exposure to this risk by maintaining cash balances to fund
immediate needs of its Venezuelan subsidiaries. The Company minimizes the credit r
) by selling to customers with strong credit histories.
Gold Reserve claims unquantified damages and punitive damages related to an alleged breach of
confidence and trespass related to Gold Reserve’s property in Venezuela. Also, on February 10, 2009 the
Ontario Superior Court of Justice granted Gold Reserve’s injunction application by which the Company
and Endeavour Financial International Corporation were restrained from making any unsolicited takeover
legations made against it and has served a statement of
and counterclaim in respect of losses the Company has sustained as a result of the injunction’s
The outcome of this matter and estimate of potential damages is not determinable at this time
The Company is involved in various claims and litigation arising in the normal course of business. While
there can be no assurance that such matters will be
resolved in the Company’s favor, the Company does not currently believe that the outcome of adverse
decisions in any pending or threatened proceedings related to these and other matters or any amount
h it may be required to pay by reason thereof would have a material impact on its financial position,
trading and measured at fair value. Short-term
sale and measured at fair value. Receivables (excluding VAT
receivable) are classified as loans and receivables and measured at amortized cost using the effective
payable, other liabilities and
convertible loan are classified as other financial liabilities and measured at amortized cost using the
by the Company and determined that no
March 31, 2009, except for the
The Company thoroughly examines the various
and assesses the impact and likelihood of those risks.
There have not been any
viewed and monitored by
are managed is provided
to any significant concentration of credit risk.
Management determines concentration by the percentage of receivables owed and cash and cash
and cash equivalents is limited by
and investing in highly rated
corporations and government issuances in accordance with its investment policy. The Company is
hold cash for the Company’s Venezuelan
cash balances to fund only the
immediate needs of its Venezuelan subsidiaries. The Company minimizes the credit risk on trade
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
20 | P a g e
Liquidity Risk
Liquidity risk is the risk that the Company will be unable to meet its financial obligations
due. The Company manages liquidity risk by ensuring that it has sufficient cash, credit
financial resources available to meet its
The Company forecasts cash flows for a period of 12 months to identify financial requirements. These
requirements are met through a combination of cash flows from operations, credit facilities, disposition of
assets, and accessing capital markets.
and payments related to financial liabilities due as at
contractual undiscounted cash flows
Accounts payable and accrued liabilities
Note payable
Other liabilities
Interest on convertible loan
Convertible loan
Market Risk
The significant market risk exposures to which the Company is exposed are interest rate risk
currency risk.
Interest Rate Risk
Interest rate risk is the risk that the
because of changes in market interest rates.
to changes in market interest rates as the interes
and the note payable is non-interest bearing
comfortable with its exposure given the relatively short term of its
note payable is non-interest bearing
decrease the fair value of convertible loan
the fair value of the convertible loan
Currency Risk
The Company is exposed to currency risk as a majority of its assets and liabilities are denominated in
foreign currencies. Changes in the applicable exchange rate may result in a decrease or increase in
foreign exchange gains or losses. The Company does not use derivative instruments to reduce its
exposure to foreign currency risk.
The Company follows the current rate method
approach, the assets and liabilities
rate at the consolidated balance sheet date with all foreign exchange
recorded as a component in accumulated
sheets. The translation adjustments are realized in the
is a reduction in the Company’s net investment in the respective foreign operations.
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
Liquidity risk is the risk that the Company will be unable to meet its financial obligations
. The Company manages liquidity risk by ensuring that it has sufficient cash, credit
financial resources available to meet its maturing obligations.
The Company forecasts cash flows for a period of 12 months to identify financial requirements. These
through a combination of cash flows from operations, credit facilities, disposition of
assets, and accessing capital markets. The table below provides a summary of the contractual obligations
and payments related to financial liabilities due as at March 31, 2009. The amount
contractual undiscounted cash flows.
2009$
2010-2011$
Accounts payable and accrued liabilities 32,439 -
500 -
- 823
8,000 4,000
- 80,000
40,939 84,823
The significant market risk exposures to which the Company is exposed are interest rate risk
Interest rate risk is the risk that the future cash flows and fair values of the Company will fluctuate
because of changes in market interest rates. The Company is not exposed to changes in cash flows due
to changes in market interest rates as the interest on the Company’s convertible loan
interest bearing. The Company monitors its exposure to interest rates and is
comfortable with its exposure given the relatively short term of its convertible loan
interest bearing. As at March 31, 2009, a 1% increase in interest rates would
convertible loan by $717 and a 1% decrease in interest rates would increase
le loan by $728.
The Company is exposed to currency risk as a majority of its assets and liabilities are denominated in
hanges in the applicable exchange rate may result in a decrease or increase in
ins or losses. The Company does not use derivative instruments to reduce its
exposure to foreign currency risk.
follows the current rate method for accounting for its self-sustaining operations. Under this
the assets and liabilities acquired are translated according to the prevailing market exchange
balance sheet date with all foreign exchange translation adjustments
accumulated other comprehensive income in the consolidated ba
The translation adjustments are realized in the consolidated statements of operations when there
is a reduction in the Company’s net investment in the respective foreign operations.
Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they become
. The Company manages liquidity risk by ensuring that it has sufficient cash, credit facilities, and other
The Company forecasts cash flows for a period of 12 months to identify financial requirements. These
through a combination of cash flows from operations, credit facilities, disposition of
The table below provides a summary of the contractual obligations
The amounts disclosed are the
Total$
32,439
500
823
12,000
80,000
125,762
The significant market risk exposures to which the Company is exposed are interest rate risk and
of the Company will fluctuate
The Company is not exposed to changes in cash flows due
convertible loan is at a fixed rate
The Company monitors its exposure to interest rates and is
convertible loan and the fact that the
a 1% increase in interest rates would
and a 1% decrease in interest rates would increase
The Company is exposed to currency risk as a majority of its assets and liabilities are denominated in
hanges in the applicable exchange rate may result in a decrease or increase in
ins or losses. The Company does not use derivative instruments to reduce its
sustaining operations. Under this
according to the prevailing market exchange
translation adjustments being
ncome in the consolidated balance
of operations when there
is a reduction in the Company’s net investment in the respective foreign operations.
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
21 | P a g e
Substantially all of the change in the unrealized foreign
sustaining operations is related to the revaluation of the property, plant and equipment
and future income tax liability in the Company’s self
The Company’s Venezuelan operations and cash holdings are currently subject to currency and
exchange controls. These government
controls limit the Company’s ability to flow US
As at March 31, 2009, the Company holds cash of
Bolivar Fuerte’s (“BsF”).
Financial instruments that influence
currency fluctuations include BsF
VAT receivable), accounts payable and accrued liabilities
Company’s net earnings and other comprehensive income from these financial instruments due to
changes in the exchange rate between the Venezuelan
below:
Net earnings
Other comprehensive income
Net earnings
Other comprehensive income
21. ASSETS HELD FOR SALE
As at December 31, 2008, the Company has recorded certain machine
as assets held for sale. As at March 31, 2009 the
and equipment as management no longer believes the Company will receive government approval to sell
these assets. These assets are included in the extraction and processing segment in Note
22. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
Substantially all of the change in the unrealized foreign exchange gain (loss) on translation of self
sustaining operations is related to the revaluation of the property, plant and equipment
and future income tax liability in the Company’s self-sustaining Venezuelan subsidiaries
The Company’s Venezuelan operations and cash holdings are currently subject to currency and
government-imposed controls may adversely affect the Company as such
the Company’s ability to flow US Dollars out of the country.
, the Company holds cash of $3,818 (December 31, 2008: $
influence the Company’s net earnings or other comprehensive income due to
F and C$ denominated cash and cash equivalents
accounts payable and accrued liabilities and other liabilities
Company’s net earnings and other comprehensive income from these financial instruments due to
changes in the exchange rate between the Venezuelan BsF, C$, and the US
As at March 31, 2009
25% Increase in theBsF
$
793
(1,307)
As at March 31, 2009
10% Increase in theC$
$
340
-
ASSETS HELD FOR SALE
the Company has recorded certain machinery with a net book value of $2,771
March 31, 2009 the Company has reclassified this amount to property, plant
management no longer believes the Company will receive government approval to sell
These assets are included in the extraction and processing segment in Note
IVE FIGURES
Certain of the comparative figures have been reclassified to conform to the current period’s
s) on translation of self-
sustaining operations is related to the revaluation of the property, plant and equipment, mineral properties
sustaining Venezuelan subsidiaries and joint venture.
The Company’s Venezuelan operations and cash holdings are currently subject to currency and
controls may adversely affect the Company as such
: $1,721) in Venezuelan
the Company’s net earnings or other comprehensive income due to
and cash equivalents, receivables (excluding
and other liabilities. The sensitivity of the
Company’s net earnings and other comprehensive income from these financial instruments due to
S Dollar are summarized
As at March 31, 2009
25% Decrease in theBsF
$
(635)
1,045
As at March 31, 2009
10% Decrease in theC$
$
(309)
-
ry with a net book value of $2,771
ompany has reclassified this amount to property, plant
management no longer believes the Company will receive government approval to sell
These assets are included in the extraction and processing segment in Note 17.
to conform to the current period’s presentation.
RUSORO MINING LTD.NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009(Expressed in thousands of USunaudited
22 | P a g e
23. SUBSEQUENT EVENT
a) On April 15, 2009, the Company acquired a plant for the treatment of diamonds from an officer and
director of the Company for $2.0 million.
b) On April 24, 2009, the Company granted 15,980,000 stock options
directors, with an exercise price of C$0.60
stock options with exercise price
c) On April 30, 2009, the Central Bank of Venezuela
04-03") mandating that 70% of gold produced
market, of which 60% must be offered for sale to the CBV and 10% must be allocated to the domestic
processing industry. The remaining 30% of the gold produced in Venezuela can be exported or sold
to the CBV, at the option of the gold producer. Although Resolution No. 09
producers to offer the gold for sale to the CBV, it does not mandate the terms of such an offer. The
Company believes that there is uncertainty regarding
resolution of this nature would
formally and legally enacted, it could have a material impact on the Company however, any potential
impact cannot be quantified
d) On May 19, 2009, the Company repaid the note payable of $500 (Note 9).
CONSOLIDATED FINANCIAL STATEMENTS
thousands of US Dollars, except where noted) –
SUBSEQUENT EVENTS
On April 15, 2009, the Company acquired a plant for the treatment of diamonds from an officer and
Company for $2.0 million. The purchase price was based on an independent valuation.
the Company granted 15,980,000 stock options to employees, consultants
with an exercise price of C$0.60 and amended the exercise price
stock options with exercise prices prior to amendment ranging from C$1.31 to
On April 30, 2009, the Central Bank of Venezuela (“CBV”) passed a resolution ("Resolution No. 09
03") mandating that 70% of gold produced in the country must be allocated to the domestic
market, of which 60% must be offered for sale to the CBV and 10% must be allocated to the domestic
processing industry. The remaining 30% of the gold produced in Venezuela can be exported or sold
tion of the gold producer. Although Resolution No. 09
producers to offer the gold for sale to the CBV, it does not mandate the terms of such an offer. The
that there is uncertainty regarding the validity of Resolution N
resolution of this nature would normally require an act of parliament. Should this resolution be
formally and legally enacted, it could have a material impact on the Company however, any potential
at this time.
On May 19, 2009, the Company repaid the note payable of $500 (Note 9).
On April 15, 2009, the Company acquired a plant for the treatment of diamonds from an officer and
based on an independent valuation.
to employees, consultants, and
amended the exercise price to C$0.60 of 3,610,000
to $3.00.
passed a resolution ("Resolution No. 09-
ntry must be allocated to the domestic
market, of which 60% must be offered for sale to the CBV and 10% must be allocated to the domestic
processing industry. The remaining 30% of the gold produced in Venezuela can be exported or sold
tion of the gold producer. Although Resolution No. 09-04-03 requires gold
producers to offer the gold for sale to the CBV, it does not mandate the terms of such an offer. The
the validity of Resolution No. 09-04-03 since a
Should this resolution be
formally and legally enacted, it could have a material impact on the Company however, any potential