Aurizon Mines Ltd.: Third Quarter Report-September 30, 2005.VANCOUVER Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography -- In the Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. financial table, under the headers TOTAL ASSETS and TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. for September September: see month. 30, 2005, the number should read 111,284,739 (sted 111,084,739). The corrected release reads: AURIZON MINES LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability .: THIRD QUARTER REPORT-SEPTEMBER 30, 2005 Aurizon Mines Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :ARZ ARZ Allgemeines Rechenzentrum GmbH (Innsbruck, Austria) ARZ Auto-Restricted Zone ARZ Aquatic Ruin Zone (Sonic 2 level) )(AMEX AMEX See: American Stock Exchange :AZK AZK Artikel Zur Krankenpflege (German: articles on health care; Willich, Germany) ) - Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations Aurizon reports financial results for the third quarter of 2005, which have been prepared on the basis of available information up to November November: see month. 1, 2005. Management's Discussion and Analysis should be read in conjunction with the most recent annual financial statements of the Company. The third quarter was highlighted by the following activities at the Casa Berardi Project: - Receipt of an updated feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. from Roscoe Postle Associates Inc. - Headframe construction more than 80% complete. - Mechanical and electrical hoist hoist: see winch. installation completed. - Shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. slashing slash·ing adj. 1. Bitingly critical or satiric: slashing wit. 2. Dashing; pelting: a slashing hailstorm. 3. and sinking initiated. - Underground ramp extended down to the 630 metre metre In poetry, the rhythmic pattern of a poetic line. Various principles have been devised to organize poetic lines into rhythmic units. Quantitative verse, the metre of Classical Greek and Latin poetry, measures the length of time required to pronounce syllables, level. - Mill rehabilitation rehabilitation: see physical therapy. work initiated. - Continued exploration drilling of the West Mine area. At September 30, 2005, Aurizon had cash and working capital in excess of $15 million and was debt free. FINANCIAL RESULTS On May 11, 2005 Aurizon completed the sale of its 50% interest in Sleeping Giant Sleeping Giant may refer to: In geology:
A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. costs associated with the operation and ultimate closure of the mine have been assumed by the purchaser. For accounting purposes, the disposition of Sleeping Giant is considered a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Consequently, all of the 2005 Sleeping Giant operating results, as well as prior year's results, are presented as a single line on the Statements of Operations and Cash Flow. In addition, the Balance Sheet has segregated the comparative 2004 Sleeping Giant assets and liabilities from Aurizon's other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and liabilities. THIRD QUARTER 2005 Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the With the sale of Sleeping Giant, Aurizon does not have any operating mining assets, pending the commencement of commercial production of Casa Berardi anticipated in the fourth quarter of 2006. Consequently, the Statement of Operations See Income statement. and Cash Flow reflects the ongoing administrative expenditures of the Company, net of royalty and interest income. Aurizon incurred a net loss from continuing operations of $0.8 million, or ($0.01) cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to a net loss of $0.4 million, or $0.00 cents per share, in the third quarter of 2004. Corporate costs increased in the third quarter of 2005 over the same period of 2004 due to increased activity and costs associated with the Casa Berardi project financing Project financing A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. and Sarbanes-Oxley related activities. A net cash outflow associated with the net corporate and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by a reduction of non-cash working capital in the third quarter of 2005, resulted in a net cash outflow from operating activities of $391,000. In the same period of 2004, cash flow from operating activities provided $108,000. During the third quarter of 2005, capital expenditures of $11.8 million were incurred, of which $11.6 million was incurred at Casa Berardi for surface infrastructure related to the new shaft, underground development and continued exploration of the West Mine area. During the same period of 2004, $7.3 million was invested at Casa Berardi. Financing activities during the third quarter of 2005 totaled $1.4 million which was provided from provincial refundable Refundable Eligible for refunding under the terms of a bond indenture. tax credits. NINE MONTHS 2005 Continuing Operations For the first nine months of 2005, Aurizon incurred a net loss from continuing operations of $0.7 million, or ($0.01) cents per share, compared to a loss of $1.3 million, or ($0.01) cent per share for the same period of 2004. Excluding the recognition of a $2.06 million flow through tax benefit gain in the first quarter of 2005, Aurizon incurred a net loss of $2.7 million in the first nine months of 2005. Corporate and administrative costs and changes in non-cash working capital during the first nine months of 2005 resulted in a decrease of cash from continuing operating activities of $1.0 million compared to a decrease of $0.4 million for the same period of 2004. Year to date 2005, $28 million was invested at Casa Berardi, compared to $18 million for the same period of 2004. Proceeds from the sale of Sleeping Giant provided $5.2 million in the second quarter of 2005. Year to date 2005, financing activities total $27.4 million, of which $24 million was provided by equity financings Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. , $0.6 million from the exercise of incentive stock options and $2.8 million from provincial refundable tax credits. Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. Operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. at Sleeping Giant in the first quarter of 2005 together with one month's operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and the gain on sale of the mine in the second quarter, have resulted in net earnings from discontinued operations of $3.8 million in the first nine months of 2005, compared to earnings of $0.5 million in the same period of 2004. For the first nine months of 2005, Sleeping Giant consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. $0.2 million cash compared to cash inflows of $0.5 million in 2004. Combined Operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
On a combined basis, Aurizon earned $3.1 million or three cents per share in the first nine months of 2005, compared to a loss of $0.8 million or one cent per share in 2004. CASA BERARDI At the end of September 2005, Aurizon received an updated feasibility study prepared by Roscoe Postle Associates Inc. integrating the results from the January January: see month. 2005 feasibility study, based on reserves above the 700 metre level, and the January 2005 resources below 700 metres in Zone 113. The updated feasibility study anticipates average annual gold production of 175,000 ounces for more than 6 years at a total cash cost of US$219 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. . Total recovered gold production is forecast at 1,092,000 ounces. Using a Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. gold price of $500 per ounce (US$415 at a 1.20 exchange rate), the study estimated an internal rate of return of 23%. The study noted that there is good potential for further conversion of mineral resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature to mineral reserves. As of September 30, 2005, the majority of the surface construction is complete and remains on budget. The hoist installation is complete and fully commissioned. The headframe construction of the main structure is complete. Cladding The plastic or glass sheath that is fused to and surrounds the core of an optical fiber. The cladding's mirror-like coating keeps the light waves reflected inside the core. The cladding is covered with a protective outer jacket. See fiber optics glossary. of the upper part of the headframe, electrical installation and interior construction are in progress. Shaft sinking shaft sinking, excavation from the surface of an opening in the earth. Shafts, which are generally vertical, are usually distinguished from tunnels, which are horizontal. commenced on schedule at the end of the quarter. Mill rehabilitation was initiated during the third quarter of 2005, focusing on the crushing crushing deaths of newborn animals, especially those in litters, caused by the mother lying on them accidentally. Contributed to by weakness of the neonate or awkward accommodation. A problem in piglets and puppies. Called also overlying. and grinding grinding, process by which surface material is removed from an object, usually metal, by the abrasive action of a rotating wheel or a moving belt that contains abrasive grains. circuits. During the third quarter, more than 1,000 metres of underground development was completed. The Zone 113 service ramp is down to the 630 metre level and work has commenced to extend the Lower Inter Zone access ramp. Development remains on schedule for commercial production to commence in the fourth quarter of 2006. Infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. drilling of Zone 115 in the third quarter provided encouraging results, including 15.6 grams/tonne over 26.9 metres and 14 grams/tonne over 13.5 metres. This narrow, flat lying zone is located less than 250 metres from the planned production shaft at the 550 metre level. This zone remains open to the east and a mineral resource estimate of this zone and Zone 109 is in progress. The exploration track drift drift, deposit of mixed clay, gravel, sand, and boulders transported and laid down by glaciers. Stratified, or glaciofluvial, drift is carried by waters flowing from the melting ice of a glacier. at the 550 metre level has been extended 758 metres in 2005 to permit further exploration and in-fill drilling of the lower portion of Zone 113 and Zones 118-122 situated east of Zone 113. Three drill rigs are currently active in this area. OUTLOOK The majority of the surface infrastructure required for the West Mine shaft is now complete, on budget and on schedule. The shaft slashing and sinking commenced in late September 2005 and is expected to take twelve months to complete down to its 790 metre depth. Underground development is also progressing on schedule, with the objective of having three months of production ore in inventory for start-up Start-up The earliest stage of a new business venture. by late 2006. An equity and debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay will be required to complete the pre-production work necessary to bring Casa Berardi to commercial production, to fund contingent collateral accounts required by the project banks, and for general corporate purposes. BNP Paribas BNP Paribas (Euronext: BNP, TYO: 8665 ) is one of the main banks in Europe and France. It was created on 23 May 2000 through the merger of Banque Nationale de Paris (BNP) and Paribas. has been awarded an exclusive mandate An exclusive mandate is a government's assertion of its legitimate authority over a certain territory, part of which another government controls with stable, de facto sovereignty. It is also known as a claim to sole representation or an exclusive authority claim. to arrange and underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. a debt financing facility of up to $75 million. As at November 1, 2005, the issued and fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares of the Company were 118,791,298 and 120,543,798, respectively. Aurizon is a Canadian-based gold exploration company, with activities in the Abitibi Abitibi may mean:
Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. , one of the world's most prolific gold and base metal regions. Aurizon has recently completed a positive Feasibility Study on its' one hundred percent (100%) owned Casa Berardi Project. Pre-production construction is currently underway and production at the Project is anticipated to commence in late 2006. Casa Berardi is accessible by road, has mining permits in place and is on the Hydro Quebec power grid. Aurizon shares trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol "ARZ" and on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. under the symbol "AZK".
Common Shares
(TSX - ARZ/AMEX - AZK)
------------------------------------------------
September 30, December 31,
2005 2004
------------------------------------------------
Issued 118,791,298 103,421,522
Fully-diluted 120,543,798 111,306,392
Weighted average 113,741,595 100,577,055
------------------------------------------------
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Summary of Quarterly Results:
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3rd 2nd 1st
Quarter Quarter Quarter
2005 2005 2005
--------------------------------------------------------------------
Revenue $209,058 $ 233,323 $ 134,574
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Net Earnings (Loss) from
continuing operations ($794,404) ($1,265,074) $1,373,098
Net Earnings (Loss) ($794,404) $2,740,190 $1,153,359
Earnings (Loss) per share
from continuing operations
- basic and diluted ($ 0.01) ($ 0.01) $ 0.01
Earnings (Loss) per share
- basic and diluted ($ 0.01) $ 0.02 $ 0.01
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4th 3rd 2nd 1st 4th
Quarter Quarter Quarter Quarter Quarter
2004 2004 2004 2004 2003
--------------------------------------------------------------------
Revenue $ 227,520 $179,587 $205,593 $224,460 $ 253,783
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Net Earnings
(Loss) from
continuing
operations ($4,880,193) ($402,697) ($582,591) ($353,435)($1,021,369)
Net
Earnings
(Loss) ($4,898,827) ($272,678) ($228,190) ($296,191)($ 90,662)
Earnings
(Loss)
per share
from
continuing
operations
- basic
and
diluted ($ 0.05) ($ 0.00) ($ 0.01) ($ 0.00)($ 0.01)
Earnings
(Loss)
per share
- basic
and
diluted ($ 0.05) ($ 0.00) ($ 0.00) ($ 0.00)($ 0.00)
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This report contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ", including, but not limited to, statements regarding the Company's expectations as to the market price of gold, strategic plans, future commercial production, production targets and timetables, mine operating costs operating costs npl → gastos mpl operacionales , capital expenditures, work programs, exploration budgets and mineral reserve and resource estimates. Forward-looking statements express, as at the date of this report, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, factors associated with fluctuations in the market price of precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. , mining industry risks and hazards, environmental risks and hazards, uncertainty as to calculation of mineral reserves and resources, requirement of additional financing, risks of delays in construction and other risks more fully described in Aurizon's Annual Report on Form 20-F filed as an alternative form of AIF AIF Annual Information Form AIF Apoptosis-Inducing Factor AIF Agence Intergouvernementale de la Francophonie (French: Intergovernmental Agency for Francophony) AIF Australian Imperial Force with the Securities Commissions of the provinces of British Columbia, Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. and Quebec, with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission, and with the Toronto Stock Exchange. This 20-F document is available on Sedar at www.sedar.com. U.S. Registration: Form 20-F (File #0-22672)
Aurizon Mines Ltd.
Consolidated Balance Sheets (unaudited) - as at
September 30 December 31
2005 2004
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$ $
ASSETS As Restated
CURRENT (Note 3)
Cash and cash equivalents 15,811,489 12,065,681
Accounts receivable 3,625,527 2,850,841
Refundable tax credits - 1,105,684
Prepaids 1,245,960 586,644
Supplies inventory 763,349 786,048
Current assets of discontinued
operation (Note 4) - 743,994
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21,446,325 18,138,892
REFUNDABLE TAX CREDITS 780,000 -
RECLAMATION DEPOSITS 106,771 106,771
PROPERTY, PLANT & EQUIPMENT 16,683,854 9,480,250
MINERAL PROPERTIES 72,267,789 53,773,864
NON-CURRENT ASSETS OF DISCONTINUED
OPERATION (Note 4) - 4,651,464
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TOTAL ASSETS 111,284,739 86,151,241
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LIABILITIES
CURRENT
Accounts payable and accrued
liabilities 5,906,594 3,570,693
Current liabilities of discontinued
operation (Note 4) - 2,325,597
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5,906,594 5,896,290
ASSET RETIREMENT OBLIGATIONS 1,445,413 1,363,597
FUTURE INCOME TAX LIABILITIES 3,924,974 2,587,974
NON-CURRENT LIABILITIES OF DISCONTINUED
OPERATION (Note 4) - 2,298,421
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TOTAL LIABILITIES 11,276,981 12,146,282
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SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5)
Common shares
issued - 118,791,298
(2004 - 103,421,522) 154,343,340 131,762,523
CONTRIBUTED SURPLUS 742,943 742,943
STOCK BASED COMPENSATION 773,594 450,757
DEFICIT (55,852,119) (58,951,264)
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TOTAL SHAREHOLDERS' EQUITY 100,007,758 74,004,959
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 111,284,739 86,151,241
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The attached notes form an integral part of these consolidated
financial statements
Approved on behalf of the Board,
Robert Normand, Brian Moorhouse,
Director, Chairman of the Audit Committee Director
Aurizon Mines Ltd.
Consolidated Statements of Operations and Deficit (unaudited)
Three months ended Nine months ended
September 30 September 30
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2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
As As
restated restated
(Note 3) (Note 3)
Revenue
Royalty and other
income 209,058 179,587 576,955 596,013
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Expenses
Administrative and
general costs 725,601 480,883 2,516,394 1,774,754
Stock based
compensation
(Note 5(c)) - 33,000 322,837 33,000
Gain on sale of
property, plant
and equipment - (24,261) (115,112) (91,611)
Foreign exchange
(gain) loss 70,439 9,177 131,372 (62,122)
Capital taxes 156,501 72,649 363,974 241,646
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952,541 571,448 3,219,465 1,895,667
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LOSS FOR THE
PERIOD BEFORE
THE FOLLOWING (743,483) (391,861) (2,642,510) (1,299,654)
INCOME TAX EXPENSE (50,921) (10,836) (98,870) (39,069)
TAX BENEFITS NOT
PREVIOUSLY
RECOGNIZED
(Note 3) - - 2,055,000 -
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LOSS FROM
CONTINUING
OPERATIONS (794,404) (402,697) (686,380) (1,338,723)
NET EARNINGS FROM
DISCONTINUED
OPERATION
(Note 4) - 130,019 3,785,525 541,664
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NET EARNINGS (LOSS)
FOR THE PERIOD (794,404) (272,678) 3,099,145 (797,059)
DEFICIT - BEGINNING
OF PERIOD (55,057,715) (53,779,760) (58,951,264) (53,255,379)
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DEFICIT - END
OF PERIOD (55,852,119) (54,052,438) (55,852,119) (54,052,438)
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EARNINGS (LOSS)
PER SHARE -
Basic and
diluted (0.01) 0.00 0.03 (0.01)
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LOSS PER SHARE
FROM CONTINUING
OPERATIONS -
Basic and
diluted (0.01) 0.00 (0.01) (0.01)
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Weighted average
number of
common shares
outstanding 118,791,298 102,446,603 113,741,595 97,769,003
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Aurizon Mines Ltd.
Consolidated Statements of Cash Flow (unaudited)
Three months ended Nine months ended
September 30 September 30
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2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
As As
restated restated
(Note 3) (Note 3)
OPERATING
ACTIVITIES
Loss for the
period from
continuing
operations (794,404) (402,697) (686,380) (1,338,723)
Add (deduct) items
not requiring
an outlay of
cash:
Depreciation 28,796 20,641 63,754 63,670
Unrealized foreign
exchange
(gain) loss - 29,700 - -
Gain on sale of
property,
plant & equipment - (24,261) (115,112) (91,611)
Stock based
compensation - 33,000 322,837 33,000
Tax benefits not
previously
recognized - - (2,055,000) -
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Cash flow from
operations (765,608) (343,617) (2,469,901) (1,333,664)
Decrease (increase)
in non-cash
working capital
items 374,236 451,491 1,492,773 940,917
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(391,372) 107,874 (977,128) (392,747)
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INVESTING
ACTIVITIES
Property,
plant &
equipment (2,190,479) (30,988) (7,332,236) (341,044)
Reclamation
deposits - - - (59,517)
Mineral
properties (9,592,983) (7,316,901) (20,438,940) (17,964,243)
Proceeds from
sale of
Sleeping Giant
(Note 4) - - 5,201,649 -
Proceeds on
disposal of
property,
plant &
equipment - 70,330 180,000 253,330
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(11,783,462) (7,277,559) (22,389,527) (18,111,474)
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FINANCING
ACTIVITIES
Refundable tax
credits 1,396,350 - 1,396,350 -
Mining duties - - 1,390,091 243,587
Issuance of
shares - - 24,635,817 8,922,548
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1,396,350 - 27,422,258 9,166,135
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INCREASE
(DECREASE)
IN CASH
FROM
CONTINUING
OPERATIONS (10,778,484) (7,169,685) 4,055,603 (9,338,086)
INCREASE
(DECREASE)
IN CASH
FROM
DISCONTINUED
OPERATION
(Note 4) - 1,091,482 (182,268) 526,503
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INCREASE
(DECREASE)
IN CASH
AND CASH
EQUIVALENTS (10,778,484) (6,078,203) 3,873,335 (8,811,583)
CASH AND CASH
EQUIVALENTS -
BEGINNING OF
PERIOD 26,589,973 24,347,459 11,938,154 27,080,839
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CASH AND CASH
EQUIVALENTS -
END OF PERIOD 15,811,489 18,269,256 15,811,489 18,269,256
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Notes to Consolidated Financial Statements (unaudited)
(all figures in Canadian dollars)
1. Basis of Presentation The accompanying unaudited interim financial statements have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting on a basis consistent with those outlined in the Company's audited financial statements for the year ended December December: see month. 31, 2004. These notes do not include all of the information and disclosures required by Canadian generally accepted accounting principles for annual financial statements. These interim financial statements should be read in conjunction with the most recent annual financial statements of the Company. The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company's management. 2. Casa Berardi Project An equity and debt financing will be required to complete the pre-production work necessary to bring Casa Berardi to commercial production, to fund contingent collateral accounts required by the project banks, and for general corporate purposes. BNP Paribas has been awarded an exclusive mandate to arrange and underwrite a debt financing facility of up to $75 million. 3. Income Taxes Effective March 31, 2004, the Company has adopted a new CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Accounting Standard, EIC EIC Editor-In-Chief EIC Euro Info Centre (DIN) EIC Earned Income Credit EIC Excellence in Cities (UK) EIC Enterprise Interaction Center (Interactive Intelligence) 146, in respect of flow through shares. Under this Standard, a future income tax liability must be recognized, and the shareholders' equity reduced, on the date that the Company renounces the tax credits associated with flow through expenditures, provided that there is reasonable assurance that the expenditures will be made. A company with future income tax assets that it has not recognized in previous years as a result of applying the "more likely than not" test, thereby recording a valuation allowance, must recognize the previously unrecorded future income tax assets to the extent of the future income tax liability recognized on remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7. of the flow through tax credits. The net effect of the adoption of this Standard has resulted in the recognition of tax benefits not previously recognized in the statements of operations of $2,055,000 and a corresponding reduction in shareholders' equity. 4. Disposition of Sleeping Giant Mine On May 11, 2005, the Company completed the sale of its 50% interest in the Sleeping Giant Mine for net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $4,984,336. The Company recorded an after-tax gain of $3,954,907 on the transaction. All environmental liabilities and reclamation costs associated with the operation and ultimate closure of the mine have been assumed by the purchaser. For accounting purposes, the disposition of Sleeping Giant is considered a discontinued operation and its results for 2005 and comparative years are presented as a single line item on the Statements of Operations and Cash Flow. The gain on sale, statements of operations, and cash flow from Sleeping Giant are as follows:
a) Gain on Sale:
Total Consideration $ 4,984,336
Less:
Net assets disposed of
Cash overdraft ($ 217,312)
Working capital (1,484,013)
Reclamation deposits 1,097,530
Property, plant and equipment 614,004
Mineral properties 3,350,800
Asset retirement obligations (1,587,287)
Other long term liabilities (744,293) 1,029,429
-----------------------------------------------------------
Gain on sale $ 3,954,907
-----------------------------------------------------------
-----------------------------------------------------------
b) Earnings from discontinued operation:
Three months ended Nine months ended
September 30 September 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
Revenues - 4,244,144 5,218,178 12,821,015
Operating costs - (3,171,239) (4,912,706) (9,553,883)
Depreciation
and depletion - (919,173) (441,695) (2,654,328)
Accretion - (23,713) (33,159) (71,140)
--------------------------------------------------------------------
Net earnings (loss) - 130,019 (169,382) 541,664
Gain on sale - - 3,954,907 -
--------------------------------------------------------------------
Net earnings (loss)
from discontinued
operation - 130,019 3,785,525 541,664
--------------------------------------------------------------------
--------------------------------------------------------------------
c) Cash flow from discontinued operation:
Three months ended Nine months ended
September 30 September 30
--------------------------------------------------------------------
2005 2004 2005 2004
--------------------------------------------------------------------
$ $ $ $
Operating activities - 2,205,850 335,408 3,744,936
Investing activities - (1,114,368) (852,568) (3,427,546)
Financing activities - - 334,892 209,113
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Net increase
(decrease) in cash - 1,091,482 (182,268) 526,503
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--------------------------------------------------------------------
5. Share Capital a) Private Placement On March 31, 2005, the Company completed a private placement of 7,805,555 flow through common shares at a price of $1.80 per share and 3,638,888 common shares at a price of $1.50 per share, resulting in gross proceeds of $19,508,331. On April 21, 2005, the Company issued a further 2,750,000 flow through common shares at a price of $1.80 per share and 583,333 common shares at a price of $1.50 per share for gross proceeds of $5,825,000. At September 30, 2005 the Company has a commitment to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. $19 million of eligible flow through expenditures at Casa Berardi prior to December 31, 2006. b) Warrants As at September 30, 2005, all previously outstanding warrants had expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. . c) Incentive Stock Options During the second quarter of 2005, incentive stock options were granted to officers, directors and employees to purchase up to 805,000 shares at an exercise price of $1.50 per share. The exercise price of the incentive stock options was fixed at a 26% premium over the prevailing market price of the shares at the date of grant. The fair value of the options granted was estimated as $0.40 per share option on the date of grant based on the Black-Scholes option-pricing model Black-Scholes option-pricing model A model for pricing call options based on arbitrage arguments. Uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the expected standard deviation of the stock return. with the following weighted average assumptions: 2005 -------------------------------------- Expected volatility 57% Risk-free interest rate 3.22% Expected lives 3 Years Dividend yield Nil Accordingly, the Company recorded a stock based compensation expense of $322,837 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc these options. The status of stock options granted to officers, directors and employees as at September 30, 2005 and the changes during the periods ended is presented below:
Three months ended Nine months ended
September 30, 2005 September 30, 2005
--------------------------------------------------------------------
Weighted- Weighted-
average average
exercise exercise
Shares price Shares price
--------------------------------------------------------------------
Outstanding at
beginning
of period 1,752,500 $1.75 1,584,500 $1.57
Granted - - 805,000 $1.50
Exercised - - (592,000) $1.00
Expired - - (45,000) $1.00
--------------------------------------------------------------------
Outstanding at
end of period 1,752,500 $1.75 1,752,500 $1.75
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--------------------------------------------------------------------
6. Commitments As at September 30, 2005, the Company has contractual obligations in respect of construction and development activities at Casa Berardi totaling $30 million, of which $11 million is due in the fourth quarter of 2005, and the balance due in 2006. Aurizon Mines Ltd. (TSX:ARZ) (AMEX:AZK) |
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