Financial Statements |
TRS.CDNX Consolidated Financial Statements |
| NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 2001
(unaudited) |
1. NATURE AND CONTINUANCE OF OPERATIONS
The Company is incorporated under the laws of British Columbia and its principal business activities include the acquiring and developing of mineral properties.
The Company is in the process of exploring and developing its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable. The recoverability of the amounts shown for mineral properties and related deferred costs is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development and upon future profitable production.
These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles with the assumption that the company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. Continued operations of the Company are dependent on the Company's ability to receive continued financial support, complete public equity financing, or generate profitable operations in the future.
| August 31, 2001 | February 28, 2001 | |
Deficit |
$ (3,622,384) | $ (3,571,022) |
Working capital |
33,247 | 27,763 |
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary Minera Tres-Or S.A. de C.V., a company incorporated in Mexico.
Use
of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the year. Actual results could differ from these estimates.
Financial instruments
The Company's financial instruments consist of cash, accounts receivable, note
receivable, due to related parties, accounts payable and accrued liabilities.
Unless otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks arising from these
financial instruments. The fair
value of these financial instruments approximate their carrying values, unless
otherwise noted.
Capital
assets and amortization
Capital assets, being computer equipment, are recorded
at cost less accumulated amortization.
Amortization is being provided for using the declining balance method at
the rate of 30% per annum.
Marketable securities
Marketable securities are recorded at the lower of cost and quoted market value.
Mineral
properties
The
Company records its interests in mineral properties and areas of geological
interest at cost. All
direct and indirect costs relating to the acquisitions of these interests are
capitalized on the basis of specific claim blocks or areas of geological
interest until the properties to which they relate are placed into production,
sold or abandoned. These
costs will be amortized over the estimated useful life of the related property
following commencement of production.
Using the units of production method based on proven and probable
reserves, or written-off if the mineral properties are sold or abandoned.
Deferred exploration costs
The
Company defers all exploration expenses relating to mineral properties and areas
of geological
interest until the properties to which they relate are placed into production,
sold or abandoned. These
costs will be amortized over the proven reserves available on the related
property following commencement of production.
Values
The amounts shown for mineral properties and deferred exploration costs represent costs to date, and do not necessarily represent present or future values as they are entirely dependent upon the economic recovery of current and future reserves.
Cost of maintaining mineral properties
The Company does not accrue the estimated future costs of maintaining its mineral properties in good standing.
Environmental protection and rehabilitation costs
Liabilities related to environmental protection and rehabilitation costs are accrued and charged to income when their likelihood of occurrence is established. This includes future removal and site restoration costs as required due to environmental law or contracts.
Future income taxes
Future income taxes are calculated using the asset and liability method. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it to be more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.
Stock based compensation
The Company periodically grants stock options to executive officers and directors, employees and consultants pursuant to the Canadian Venture Exchange Policy as described in Note 8. No compensation expense is recognized for this plan when stock options are granted or extended. Any consideration received on exercise of stock options is credited to capital stock.
Segmented information
The Company conducts substantially all of its operations in Canada in one business segment.
Comparative
figures
Certain comparative figures have been reclassified to
conform with the current year's presentation.
3.
MARKETABLE SECURITIES
Marketable securities held at August 31, 2001 include 150,000 common
shares of Broadlands Resources Ltd. received as an option payment at an agreed
value of $27,000 to acquire a 50% interest in the Mann mineral property.
At February 28, 2001, the marketable securities were written down to the market
value of $24,000.
4.
CAPITAL ASSETS
| August 31, 2001 | August 31, 2000 | |||||
| Cost | Accumulated Amortization |
Net
Book Value
|
Cost | Accumulated Amortization |
Net
Book Value
|
|
Computer equipment |
$2,345 |
$ 942 | $ 1,383 | $2,345 | $ 349 | $ 1,976 |
5. NOTE RECEIVABLE
| August 31, 2001 | August 31, 2000 | |
| Note receivable from a company controlled by a former director, interest at 10% per annum. | $ 6,000 | $ 6,000 |
Less: payment - return of 15,425 common shares of the Company |
(2,314) | (2,314) |
| $ 3,686 | $ 3,686 |
6. MINERAL PROPERTIES
|
|
Balance February
28, 2001 |
Write-off |
Additions |
Cost Recoveries |
Balance August
31, 2001 |
|
|
|
|
|
|
|
|
Shallow River, Ontario,
Canada |
$ 97,375 |
$
- |
$ - |
$
- |
$ 97,375 |
|
Mann Project, Ontario
Canada |
- |
- |
- |
(2,500) |
(2,500) |
|
Temagami Diamond, Canada |
40,000 |
- |
325,750 |
- |
365,750 |
|
|
|
|
|
|
|
|
|
$ 137,375 |
$ - |
$ 325,750 |
$ (2,500) |
$ 460,625 |
Title
to mineral properties
Title
to mining properties involves certain inherent risks due to the difficulties of
determining the validity of certain claims as well as the potential for problems
arising from the frequently ambiguous conveyancing history characteristic of
many mining properties. The Company
has investigated title to all of its mineral properties and, to the best of its
knowledge, title to all of its properties are in good standing.
7. DEFERRED EXPLORATION COSTS
| Temagami, Sudbury | Mann, Porcupine | Shallow River, Larder Lake |
August 31, 2001 |
|
Balance, beginning of period |
$ 2,500 | $ 29,370 | $ 358,760 | $ 390,630 |
Drilling |
- | - | - | - |
Geological and geophysical |
65,209 | 6,450 | 3,337 | 74,996 |
| Travel | 1,890 | 1,890 | ||
Office and miscellaneous |
7,729 | - | - | 7,729 |
Expenditures during the period |
74,828 | 6,450 | 3,337 | 84,615 |
Written-off |
- | - | - | - |
| Cost recoveries | (150) | - | - | (150) |
| 74,678 | 6,450 | 3,337 | 84,465 | |
Balance, end of period |
$ 77,178 |
$ 35,820 | $ 362,097 | $ 475,095 |
8. CAPITAL STOCK
Number of Shares |
Amount |
|
Authorized 100,000,000 common shares without par value |
||
Issued: |
||
As at February 28, 2001 |
8,296,947 | 4,014,059 |
For mineral properties |
219,999 | 44,000 |
For private placement |
500,000 | 100,000 |
For warrants exercised |
735,455 | 147,800 |
As at May 31, 2001 |
9,752,401 | $ 4,305,859 |
For mineral properties |
180,000 | 42,000 |
For private placement |
723,500 | 180,875 |
For options exercised |
394,576 | 59,186 |
For warrants exercised |
735,455 | 147,800 |
As at August 31, 2001 |
11,135,477 | $ 4,596,420 |
Included in issued capital stock are 375,000 common shares currently held in escrow as required by the regulatory authorities.
Stock options
The Company does not have a formal stock option plan in place but follows the
Canadian Venture Exchange policy under which it is authorized to grant options
to directors and employees to acquire up to 10% of issued and outstanding common
stock. Under the plan, the exercise
price of each option equals the market price of the Company's stock as
calculated on the date of grant. The
options can be granted for a maximum term of 5 years.
|
2001 |
2000 |
|||
|
Number of Options |
Weighted Average Exercise Price |
Number of Options |
Weighted Average Exercise Price |
Outstanding, beginning of year |
823,376 | $ 0.13 |
- | $ - |
Granted |
670,000 |
0.14 |
- | |
| Exercised | 394,576 |
0.15 |
||
| Expired/cancelled | - |
- |
||
| Outstanding, end of year | 1,098,800 | 0.13 |
||
| Outstanding exercisable, end of year | 1,098,800 |
$ 0.13 |
$ | |
The following stock options were outstanding and exercisable at August 31, 2001:
Number of Shares |
Exercise Price |
Expiry Date |
| 428,800 | 0.12 | February 6, 2004 |
| 670,000 | 0.14 | July 23, 2004 |
Warrants
The following share purchase warrants were outstanding at August, 2001:
Number of Shares |
Exercise Price |
Expiry Date |
| 1,043,000 | 0.10 | November 20, 2001 |
| then at 0.20 | November 20, 2002 | |
| 750,000 | 0.15 | December 31, 2001 |
| 500,000 | 0.45 | March 27, 2002 |
| 400,000 | 0.50 | May 10, 2002 |
| 323,500 | 0.50 | June 28, 2002 |
9. RELATED PARTY TRANSACTIONS
These financial statements include transactions with related parties as follows:
a) The Company paid or accrued $29,000 (2000 - $22,300) to a company controlled by a director for geological services which have been capitalized to deferred exploration costs. In addition the Company paid or accrued $11,000 (2000 - $7,700) to this Company for management services.
b) A total of 394,576 options were exercised by directors for total consideration of $59,186.
c) As at August 31, 2001, the Company owed $nil (2000 - $42,089) to directors. The fair value of amounts due to related parties cannot be determined as there are no specific terms of repayment.
These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties unless otherwise noted.
10. SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES
|
|
2001 |
2000 |
|
|
|
|
|
Cash
paid during the year for interest |
$
- |
$
- |
|
|
|
|
|
Cash
paid during the year for income taxes |
$
- |
$
- |
Significant non-cash transactions for the period ended August 31, 2001
consisted of:
a) The Company issued 180,000
common shares at an agreed value of $42,000 pursuant to agreements to purchase mineral
property claims.
11.
CONTINGENCIES
As at August 31, 2001, the Company is both plaintiff and defendant in several claims. The outcome of these legal claims cannot be determined at this time. No provision for gains or losses arising from these legal claims have been made in these financial statements. Any losses arising as a result of these legal claims will be recorded in the period the losses are determined.
The following transactions occurred subsequent to August 31, 2001:
a) On September 24, 2001, the Company entered into an agreement to acquire 111mining claim units in the Sudbury Mining Division of Ontario. The claims are contiguous and adjoin the Company's 100% owned 2,100 claim units. Consideration to acquire the 111 claim units includes a cash payment of $25,000 and the issuance of 150,000 shares upon receipt of approval of the purchase agreement by the Canadian Venture Exchange. The Vendors retain a 2.5% NSR. Tres-Or may at its option purchase 1% of the vendors NSR for $1,000,000 at any time prior to commercial porduction of gold, PGE minerals, base metals, diamonds or any other mineral discovered on the claims. Tres-Or has a First Right of Refusal to buy back the remaining 1.5% NSR. The Company is also required to issue an additional 100,000 common shares to the vendor one day prior to commercial production subject to regulatory approval. No work commitment is required under this purchase agreement.
b) On
September 25, 2001 the directors and officers exercised 40,000 warrants at $0.10 for net proceeds
to the Company of $4,000.
c) On September 28, 2001, directors loaned the Company $25,000. There are no specific terms of repayment.
d) On October 11, 2001, the Company received Acknowledgement of payment of $18,000 in full satisfaction of a judgment in Supreme Court of British Columbia on September 4, 1998 between R.A. Jones and Associates Inc. and Sterling Pacific Resources Inc.
Schedule B: SUPPLEMENTARY INFORMATION
1.
Analysis of expenses and deferred costs for the current fiscal year to
date:
Refer to Schedule A Financial Statements – Statement of Deferred
Exploration Costs for expenditures made on property investigations, exploration
and development during the fiscal year.
2.
Related party transactions:
The Company entered into the following transactions with
related parties:
a) The Company paid or accrued
$29,000 (2000 - $22,300) to a company controlled by a director for geological
services which have been capitalized to mineral properties.
In addition the Company paid or accrued $11,000 (2000 - $7,700) to this
Company for management services.
b) A total of 394,576 options were exercised by directors and officers for total consideration of $59,186.
c) As at August 31, 2001, the
Company owed $nil (2000 - $42,089) to directors.
3.
For the quarter under review:
a)
Summary of securities issued during the quarter:
|
Date
of Issue |
Type
of Security |
Type
of Issue |
Number
of Shares |
Price
Per Share |
Proceeds |
Type
of Consideration |
Commission |
|
July
4, 2001 |
Common
Shares |
Option
Exercise |
394,576 |
$0.15 |
$59,186 |
Cash |
Nil |
|
July
5, 2001 |
Common
Shares |
Private
Placement |
723,500 |
$0.25 |
$180,750 |
Nil |
Nil |
|
July
16, 2001 |
Common
Shares |
Property
Payment |
60,000 |
$0.19 |
$11,400 |
Cash |
Nil |
|
July
16, 2001 |
Common
Shares |
Warrant
Exercise |
78,000 |
$0.10 |
$7,800 |
Nil |
Nil |
|
August
2, 2001 |
Common
Shares |
Property
Payment |
60,000 |
$0.28 |
$16,800 |
Cash |
Nil |
|
August
3, 2001 |
Common
Shares |
Warrant
Exercise |
7,000 |
$0.10 |
$700 |
Cash |
Nil |
|
August
31, 2001 |
Common
Shares |
Property
Payment |