Financial Statements |
TRS.TSX Venture Financial Statements |
| NOTES
TO THE FINANCIAL STATEMENTS November 30, 2002
(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. To date, the Company has not earned significant revenues and is considered to be in the development stage.
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 equity financings, or generate profitable operations in the future.
| November 30, 2002 | February 28, 2002 | |
Deficit |
$ (3,699,810) | $ (3,550,462) |
Working capital |
42,916 | 26,946 |
2. SIGNIFICANT ACCOUNTING POLICIES
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.
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 on an aggregate basis.
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 or where management has determined there to be an impairment. These costs will be amortized on the basis of units produced in relation to the estimated reserves of the related property following commencement of production, or written off if the mineral interests are sold or determined to be impaired.
Deferred exploration costs
The
Company defers all exploration expenses directly attributable to the exploration
and development of mineral properties, pending a decision as to the commercial
viability of a property. Such amortization will be computed on the
basis of units produced in relation to the estimated reserves. All
deferred costs relating to the project will be expensed in the period of the
sale or where management has determined there to be an impairment.
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. At this time, the Company does not foresee the necessity to make any material expenditures.
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 grants stock options pursuant to the TSX Venture Exchange ("TSX") as described in Note 7. 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.
Loss per share
In accordance with the
revised recommendations of the Canadian Institute of Chartered Accountants, the
Company changed from the imputed earnings approach to the treasury stock method,
to compute the dilutive effect of options, warrants and similar instruments. Under this method the dilutive effect on earnings per share
is recognized on the use of the proceeds that could be obtained upon exercise of
options and warrants. It assumes
that the proceeds would be used to purchase common shares at the average market
price during the period. The new
standard has been applied on a retroactive basis and had no material impact on
the amounts presented.
Loss per share is calculated using the weighted-average number of shares
outstanding during the year. For
earnings and loss per share, the dilutive effect has not been presented
separately as it proved to be anti-dilutive.
Comparative
figures
Certain comparative figures have been reclassified to
conform with the current year's presentation.
3.
MARKETABLE SECURITIES
Marketable securities held at November 30, 2002 consist of 150,000 (2001 – 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. As at February 28, 2002, the Broadlands shares were written down to the market value of $4,500 (2001 - $24,000).
4.
CAPITAL ASSETS
| November 30, 2002 | February 28, 2002 | |||||
| Cost | Accumulated Amortization |
Net
Book Value
|
Cost | Accumulated Amortization |
Net
Book Value
|
|
Computer equipment |
$2,871 |
$ 1,439 | $ 1,432 |
$2,871 |
$ 1,439 | $ 1,432 |
5. MINERAL PROPERTIES
|
|
Balance
February
28, 2002 |
Write-off |
Additions |
Cost Recoveries |
Balance 2002 |
|
|
|
|
|
|
|
|
Shallow River, |
|
|
|
|
|
|
Mann Project,
Porcupine, Canada |
|
|
|
|
|
|
Temagami Diamond,
North, Canada |
|
|
|
|
|
|
Temagami East Diamond, Canada |
- |
- |
137,000 |
(13,000) |
124,000 |
|
Temagami Diamond Project, Canada |
629,650 |
- |
276,500 |
(90,000) |
816,150 |
|
|
|
|
|
|
|
|
|
$
821,025 |
$
- |
$
473,500 |
$ (108,000) |
$
1,186,525 |
Shallow River Project, Larder Lake Mining Division, Canada
The
Company has earned a 100% interest in 113 units located in the Shallow River,
Larder Lake Mining Division of Ontario, Canada.
The Company paid cash of $18,000, issued 200,000 common shares at an
agreed value of $33,875 and expended $200,000 in exploration work on the
property. As at September 28, 2002, the Company dropped
13 claims (40 claim units) and transferred them to the vendors. The Company holds 100% interest in the remaining
34 units.
There
are three other option agreements in which the Company has earned a 100%
interest in the Shallow River mineral properties, Larder Lake mining
division of Ontario, Canada. These
option agreements are as follows.
May
20, 1998 Option Agreement
This
option agreement consists of 20 mineral claims in which the Company has paid
cash of $5,000, issued 100,000 common shares at an agreed value of $15,000 and issued
the final 50,000 common shares at a value of $15,000 on Exchange approval.
May
21, 1998 Option Agreement
This
option agreement consists of 32 mineral claims, in which the Company has paid
cash of $3,000 (by issuing 20,000 common shares), issued 50,000 common shares at
an agreed value of $7,500 and issued the final 50,000 common shares in two
allotments of 25,000 shares each at a value of $15,000 on Exchange approval.
September 1, 1999 Option Agreement
This
option agreement consists of 26 units in which the Company has issued 100,000
common shares at an agreed value of $15,000.
The final issuance of 100,000 common shares at a value of $30,000
on Exchange approval.
April
10, 2000 Option Agreement
The
Company has an option to acquire up to a 100% interest in the Mann
Platinum/Palladium project, Porcupine Mining Division, Ontario.
The option agreement consists of 19 mineral claims in which the Company
has paid cash of $20,000, issued 50,000 common shares at an agreed value of
$7,500, and will issue a further 100,000 common shares in allotments of 50,000
common shares each, subject to filing an acceptable geological report on
exploration work done on the mineral claims to the TSX.
The
optionor will retain a 3% NSR royalty, in which the Company can purchase 1% for
$1,000,000 at any time prior to commercial production.
In addition, the Company will issue 100,000 common shares to the optionor
one day prior to commercial production subject to further exchange approval.
On
October 31, 2000, the Company optioned out its Mann property to Broadlands
Resources Ltd. ("Broadlands"). Under
this option agreement, Broadlands may acquire a 50% interest in the Mann
property from the Company if the following obligations are fulfilled:
i)
pay $3,000 (paid) upon signing the option agreement;
ii) pay
$5,000 (paid) and issue 150,000 (issued) common shares of Broadlands;
iii)
pay $5,000 on April 30, 2001(paid);
iv)
$5,000 on October, 2001(paid);
v)
$15,000 on April 30, 2002 (not paid);
vi)
$15,000 on October 30, 2002 (not paid); and
vii)
$20,000 on April 30, 2003.
The
Company is the operator of the Mann project until Broadlands is vested with
respect to earning its 50% interest. Once
Broadlands has earned its 50% interest, the parties will form a management committee represented by a
minimum of two individuals from each company and a joint venture agreement will
be completed. In the formal joint
venture agreement, Broadlands will be granted by the Company a one time right to
earn an additional 25% interest for a payment of $1,200,000 any time up to the
first anniversary date of regulatory approval of the joint venture agreement.
The joint venture requires equal participation and should one of the
parties fail to participate, that party's interest will be diluted on a standard
dilution formula to be incorporated into the joint venture agreement. If either
party's working interest in the project is reduced below 10%, then their
interest will automatically convert to a 10% net profits interest.
In
addition to the above cash payments, Broadlands has agreed to incur the
following exploration expenses:
i) $100,000
in exploration expenses by April 30, 2001completing phase 1 and 2 (completed);
ii) $100,000
in exploration expenses by April 30, 2002 (not completed);
iii) $200,000
in exploration expenses by April 30, 2003 (not in progress); and
iv) $350,000
in exploration expenses or feasibility study by April 30, 2004.
Temagami
North Diamond Project, Larder Lake Mining Division of Ontario, Canada
During
the year ended February 28, 2002, the Company staked 14 claim units and
purchased a 100% interest in 120 mining claim units located within the Larder
Lake Mining Division of Ontario. The
Company purchased these claims for a payment of $50,000 and issued 200,000
common shares at an agreed value of $44,000.
The
vendors retain a 2.5% NSR. The
Company may, at its option, purchase 1% of the vendors' NSR for $1,000,000 at
any time prior to commercial production of gold, PGE minerals, base metals,
diamonds or any other mineral discovered on the claims.
In addition, the Company agreed to issue in total 120,000 common shares
to the vendors one day prior to commercial production subject to regulatory
approval. No work commitments are
required under the terms of the purchase agreement.
Rock
Resources Inc. Option Agreement
On
May 27, 2002, the Company entered into a letter agreement with Rock Resources
Inc. ("Rock"), whereby, Rock may earn up to two thirds interest in 104
mining claim units in the Temagami North Project. Terms of the agreement are as follows:
a) Upon signing the letter
agreement, pay $5,000 (paid).
b) Rock will issue 100,000
(issued on May 31, 2002) common shares to the Company and will purchase from the
Company a private placement of 290,000 shares at $0.35 per share.
c) Rock will incur exploration
expenses on the claims as follows:
i) $100,000
in exploration expenses by November 30, 2002 and
ii)
$200,000 in exploration expenses by November 30, 2002.
d) Rock shall make two
property payments, $10,000 to be paid by December 31, 2002(paid) and $15,000 to be
paid by December 31, 2003.
e) The Company will be the
operator of the project until Rock has earned its two thirds interest.
The Company will charge a 10% management fee on exploration expenditures.
Once Rock has earned its two thirds interest, the two parties will form a
management committee and complete a joint venture agreement.
Temagami
Diamond Claim Project, Sudbury Mining Division of Ontario, Canada
During
the year ended February 28, 2002, the Company completed several a purchase
agreements with various individuals to purchase an undivided 100% interest in
approximately 4,000 mineral claim units comprising the Temagami Diamond Claim
project, within the Sudbury Mining Division, Ontario.
The purchase price paid for the claims were as follows:
a) Total cash payments of
$507,750.
b) Total issuances of 809,999
common shares to the vendors for an agreed value of $175,900.
As at February 28, 2002, the Company had outstanding on purchase
agreements, the following terms:
i) pay
$15,000 (paid) March 13, 2002.
ii)
pay $15,000 (paid) April 17, 2002.
iii)
pay $42,000 June 30, 2002.
iv)
pay $75,000 August 30, 2002.
v)
issue 249,999 (issued on March 7, 2002) common shares at an agreed value
of $50,000.
vi)
issue 150,000 (issued on April 8, 2002) common shares at an agreed value
of $37,500.
vii) issue
150,000 common shares (issued) on or before July 30, 2002.
The
vendors retained a 2.5% NSR. The
Company may at its option purchase 1% of the vendors' NSR for $1,000,000 at any
time prior to commercial production of gold, PGE minerals, base metals, diamonds
or any other mineral discovered on the claims.
In addition, the Company agreed to issue from 100,000 to 150,000 common
shares depending on which claims are developed into production to the vendors
one day prior to commercial production subject to regulatory approval.
No work commitments are required under the terms of the purchase
agreements.
Rhonda
Corporation Option Agreement
Subsequent to the year end and subject to regulatory approval, the Company entered into a letter agreement with Rhonda Corporation ("Rhonda"), whereby, Rhonda may acquire a 50% interest in 1,626 mining claim units in the Temagami Diamond Claim Project. Terms of the agreement are as follows:
a)
Upon signing the letter agreement, pay $65,000 (paid).
b) Rhonda will issue 200,000 common shares (issued on June 26, 2002) to the Company and will purchase from the Company a private placement of 300,000 units at $0.35 per unit. Each unit will consist of one common share of the Company and one share purchase warrant entitling Rhonda to purchase one common share of the Company at $0.50 per share until March 5, 2003.
c)
Rhonda will incur exploration expenses on the claims as follows:
i) $350,000
within six months from March 31, 2002.
ii) $500,000
within twelve months from September 30, 2002.
iii) $1,200,000 within
twelve months from September 30, 2003.
iv) $2,500,000
either in exploration or feasibility studies within twelve months from September
30, 2004.
d) Rhonda shall make property payments totaling $225,000 to be paid semi-annually to the Company commencing with $25,000 on June 30, 2002 (paid).
e) The Company will be the operator of the project until Rhonda has earned its 50% interest. The Company will charge a 15% management fee on exploration expenditures. Once Rhonda has earned its 50% interest, the two parties will form a management committee and complete a joint venture agreement.
Temagami East Diamond Claim Project, Larder Lake and Sudbury Mining
Divisions of Ontario, Canada
On July 29, 2002, the Company completed the purchase of an undivided 100% interest in approximately 795 mineral claim units comprising the Temagami East Diamond Claim project, within the Larder Lake and Sudbury Mining Divisions, Ontario. The purchase price paid for the claims includes a cash payment of $150,000 and 300,000 shares.
The
vendors retained a 2.5% NSR or Gross Override Royalty (GORR).
The Company may at its option purchase 1% of the vendors' NSRor GORR for
$1,000,000 at any time prior to commercial production of gold, PGE minerals,
base metals, diamonds or any other mineral discovered on the claims.
In addition, the Company agreed to issue from 100,000 common shares
depending on which claims are developed into production to the vendors one day
prior to commercial production subject to regulatory approval.
No work commitments are required under the terms of the purchase
agreements.
Rock Resources Inc. Temagami East Option Agreement
On July 29, 2002, the Company entered into a letter agreement with Rock Resources Inc. ("Rock"), whereby, Rock may earn up to two thirds interest in 795 mining claim units in the Temagami East Project. Terms of the agreement are as follows:
a) Upon signing the letter
agreement, pay $13,000 (paid).
b) Rock will issue 200,000 common shares (issued November 15, 2002) to the Company and will
purchase from the Company a private placement of 290,000 shares at $0.35 per
share.
c) Rock will incur $6.5 million in
exploration expenses on the claims as follows:
i)
$400,000 in exploration expenses commencing on January 1, 2003 to
December 31, 2003
ii)
$6,100,000 in exploration expenditures within a four year calendar period
commencing on January 1, 2004 to December 31, 2007
d) Rock shall make property payments semi-annually totaling $225,000
commencing December 31, 2002 to
December 21, 2004.
e) The Company will be the operator of the project until Rock has
earned its two thirds interest. The
Company will charge a 10% management fee on exploration expenditures.
Once Rock has earned its two thirds interest, the two parties will form a
management committee and complete a joint venture agreement.
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.
6. DEFERRED EXPLORATION COSTS
|
|
Temagami/ Sudbury |
North/ Sudbury |
Mann/ Porcupine |
River, Larder
Lake |
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
beginning of year |
$
151,867 |
$
40,442 |
$
34,485 |
$ 388,834 |
$
615,628 |
|
|
|
|
|
|
|
|
Assays,
staking mapping |
13,118 |
3,080 |
- |
161 |
11,119 |
|
Geological
and geophysical |
505,233 |
49,246 |
2,822 |
5,010 |
300,755 |
|
Office,
miscellaneous and travel |
56,344 |
1,580 |
225 |
820 |
27,670 |
|
|
|
|
|
|
|
|
Expenditures
during the year |
574,695 |
53,906 |
3,047 |
5,991 |
339,544 |
|
Cost
recoveries |
(140,318) |
(38,552) |
(5,000) |
- |
296,308 |
|
|
|
|
|
|
|
|
|
434,377 |
15,354 |
(1,953) |
5,991 |
43,236 |
|
|
|
|
|
|
|
|
Balance, November 30, 2002 |
$ 586,244 |
$
55,796 |
$
32,532 |
$
394,825 |
$ 1,069,397 |
7. CAPITAL STOCK
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of Shares |
Amount |
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Authorized | |||