Miramar Announces Year End Results.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 -- Year End Financial Results Show Healthy Financial Position Miramar Miramar (mĭr`əmär'), city (1990 pop. 40,663), Broward co., SE Fla.; inc. 1955. It is a residential community in the rapidly growing I-75 corridor between Miami and Fort Lauderdale. Mining Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :MAE (1) (Metropolitan Area Exchange) Originally known as Metropolitan Area Ethernets, MAEs are junction points on the Internet where data is exchanged between carriers. See IXP and NAP. )(AMEX AMEX See: American Stock Exchange :MNG MNG Multiple-image Network Graphics (PNG-like image format supporting multiple images, animation and transparency) MNG Mongolia (ISO Country code) MNG Multinodular Goiter MNG Meet 'n Greet ) today announced its consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 2005 annual financial results that report a loss of $11 million for the year, primarily related to an adjustment for reclamation Reclamation 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. activities at the Con Mine The Con Mine was a large gold mine located in the Northwest Territories, at Yellowknife. The property was staked by Cominco in September 1935 in response to the discovery of visible gold nearby. . The Company ended 2005 with consolidated working capital of $64.3 million, which includes cash and equivalents and short term investments of $68.7 million. The Company does not have any long term debt. "With a positive NIRB NIRB Near Infrared Background NIRB NIMA-IMINT Review Board recommendation received in March 2006 as a result of the hard work done on the Doris Doris, small mountainous district, central Greece, inland between the Gulf of Corinth and the Malian Gulf. It was the traditional homeland of the Dorians, who may, in fact, have paused there during their invasion of Greece. North environmental assessment, and with the very successful drilling reported throughout the year at Hope Bay, 2005 has been one of the most successful years in Company history," said Tony Walsh Tony Walsh was an Irish soccer player during the 1950s and 1960s in the League of Ireland. Walsh was a forward who spent 1 season (1959/60) at Bohemians where he made 8 appearances, scoring just once. , President & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , "The identification of certain additional activities required at the Con Mine was unexpected, however, the Company has opportunities available to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. some of the costs of these activities," he said.The Company is now in a position to launch economic studies to evaluate some opportunities for extended and expanded production levels on the Hope Bay belt. The Company intends to deliver a feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. at the end of 2006 for the second step in the phased development of the Hope Bay belt. Over the past year, internal studies have indicated that there may be opportunities for larger scale production at Hope Bay and work in 2006 will include examining the viability of larger scale operations. Details on the 2006 program at Hope Bay will be released next week. The 2006 program has begun and drills are turning at Hope Bay. It is anticipated that the first drill results will be available by the end of April. The Company had also hoped to release the 2005 resource calculation sometime in January January: see month. . However, industry wide delays in obtaining consultant time have postponed this date. The 2005 resource calculation will be released when available. Financial Results For the year ended December December: see month. 31, 2005, the Company reported a consolidated net loss of $11 million or $0.07 per share compared to a loss of $32.5 million of $0.21 per share in 2004. The loss reported in 2005 includes an adjustment of $8.1 million to increase the asset retirement obligation Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. ("ARO") for the Con Mine. Excluding this adjustment, the loss would be $2.9 million or $0.02 per share. During 2005, the Company commenced reclamation activities at the Con Mine. Activities were focused on the reclamation of historic mill roaster roaster a young fowl for eating; weighs 5 to 7 lb at 6 months of age. tailings Tailings (also known as tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction of an ore. . In the fourth quarter of 2005, the Company recorded an adjustment to the liability for asset retirement obligation of $8.1 million. This adjustment is a result of management's re-assessment of cost estimates and is comprised of three components; (a) the impact of additional mill roaster tailings which were excavated in 2005 which make up the majority of the adjustment (b) changes in site closure activities and, (c) the impact of an estimated one year delay in receiving approval of the final remediation plan. This adjustment also includes contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. for future potential cost increases. The Company believes that the majority of the cash impact of this adjustment (which the Company expects will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6 million) will be borne over the next two years. Overall the Company believes that this will not have a significant impact on its financial resources or its ability to fund its current planned activities. At December 31, 2005, the Company has recorded the fair value of the ARO for the Con Mine to be $19.2 million (which includes the adjustment discussed above) for the expected closure costs to be incurred from 2006 to 2033. A significant portion of the funding for the reclamation activities will be provided by the $10.5 million currently held within two Con Mine reclamation security trusts as well as the proceeds from any assets sales at the Con Mine that will be added to the trusts. Details of the calculation of the ARO are provided in the notes to the Consolidated Audited Financial Statements and in the Management Discussion and Analysis of the Company for the year ended December 31, 2005. Miramar Mining Corporation Miramar is 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 mining company that controls the Hope Bay project, one of the largest, best-grade undeveloped gold deposits in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . The Hope Bay project extends over 1,000 sq. km. and encompasses one of the most prospective undeveloped greenstone belts Greenstone belts are zones of variably metamorphosed mafic to ultramafic volcanic sequences with associated sedimentary rocks that occur within Archaean and Proterozoic cratons between granite and gneiss bodies. in Canada. Miramar's goal is to build an intermediate gold production profile by maximizing the development potential of the substantial gold resources defined on the Hope Bay belt while continuing to increase the total gold resources on the belt through the expansion of the known deposits and discoveries of new ones. Any proposal to extend and expand mining operations at Hope Bay would be subject to successful completion of additional drilling, economic studies and permitting procedures. For more information on Miramar Mining Corporation and its projects, visit our website at www.miramarmining.com. 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. Statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc permitting, exploration activities and the expected results thereof, and the production potential at the Hope Bay project and the expected results of this work, the Company's goals to develop the Hope Bay property and its expenditures concerning reclamation activities and costs at the Con Mine are forward-looking statements within the meaning of 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. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Information inferred from the interpretation of drilling results and information concerning mineral resource estimates may also be deemed to be forward looking statements, as it constitutes a prediction "Prediction is very difficult, especially if it's about the future." - Niels Bohr A prediction is a statement or claim that a particular event will occur in the future in more certain terms than a forecast. of what might be found to be present when and if a project is actually developed. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: risks related to fluctuations in gold prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation , technical or other factors; the possibility that results of work will not fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. expectations and realize the perceived per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. potential of the Company's properties; uncertainties involved in the estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of gold reserves and resources; the possibility that required permits may not be obtained on a timely manner or at all; the possibility that capital and operating costs operating costs npl → gastos mpl operacionales may be higher than currently estimated and may preclude pre·clude tr.v. pre·clud·ed, pre·clud·ing, pre·cludes 1. To make impossible, as by action taken in advance; prevent. See Synonyms at prevent. 2. commercial development or render (1) To make visible; to draw. The term comes from the graphics world where a rendering is an artist's drawing of what a new structure would look like. In computer-aided design (CAD), a rendering is a particular view of a 3D model that has been converted into a realistic image. operations uneconomic; the possibility that the estimated recovery rates may not be achieved; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor or unanticipated expenses in the work program; the risk of environmental contamination contamination /con·tam·i·na·tion/ (kon-tam?i-na-shun) 1. the soiling or making inferior by contact or mixture. 2. the deposition of radioactive material in any place where it is not desired. or damage resulting from Miramar's operations uncertainties as to the timing, results and costs of reclamation activities at the Con Mine and possible need to secure the remediation plan in the light of future development and other risks and uncertainties, including those described in the Miramar's Annual Report on Form 40-F for the year ended December 31, 2005 and Reports on Form 6-K filed with the Securities and Exchange Commission. Forward-looking statements are based on the beliefs, estimates and opinions of Miramar's management on the date the statements are made. Miramar undertakes no obligation to update these forward-looking statements management's beliefs, estimates or opinions, or other factors, should change. This news release has been authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by the undersigned un·der·signed adj. 1. Having signatures or a signature at the bottom or end. Used of documents. 2. Signed or having signed at the bottom or end of a document: on behalf of Miramar Mining Corporation. Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge (Expressed in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents ) MIRAMAR MINING CORPORATION Years ended December 31, 2005 and 2004 AUDITORS' REPORT TO THE SHAREHOLDERS We have audited 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. of Miramar Mining Corporation as at December 31, 2005 and 2004 and the consolidated statements of operations and deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 auditing standards Generally Accepted Auditing Standards, or GAAS, are ten auditing standards, developed by the AICPA, consisting of general standards, standards of field work, and standards of reporting, along with interpretations. . Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement mis·state tr.v. mis·stat·ed, mis·stat·ing, mis·states To state wrongly or falsely. mis·state ment n. . An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2005 and 2004 and the results of its operations and its cash flows for the year then ended in accordance 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 . KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm) KPMG Kaiser Permanente Medical Group KPMG Keiner Prüft Mehr Genau (German) KPMG Kommen Prüfen Meckern Gehen LLP LLP - Lower Layer Protocol (signed) Chartered Accountants char·tered accountant n. Chiefly British Abbr. CA A member of one of the institutes of accountants granted a royal charter. Vancouver, Canada March 1, 2006 KPMG LLP, a Canadian limited liability partnership is the Canadian member firm of KPMG International, a Swiss cooperative.
MIRAMAR MINING CORPORATION
Consolidated Balance Sheets
(Expressed in thousands of Canadian dollars)
December 31, 2005 and 2004
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2005 2004
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Assets
Current assets:
Cash and cash equivalents $ 48,723 $ 30,215
Short term investments 20,000 -
Accounts receivables 1,135 2,340
Inventory (note 5) 4,782 7,178
Prepaid expenses 355 267
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74,995 40,000
Power credits receivable 1,557 1,945
Property, plant and equipment (note 6) 5,569 5,766
Mineral properties (note 7) 170,817 160,003
Cash collateral deposits (note 8) 14,980 14,674
Investment in Northern Orion
Explorations Ltd. (note 3) 8,505 9,182
Other assets (note 9) 1,574 707
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$ 277,997 $ 232,277
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 4,748 $ 7,131
Current portion of site reclamation
and closure costs (note 10) 5,947 7,485
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10,695 14,616
Deferred gain (note 2(p)) 1,557 1,945
Provision for site reclamation
and closure costs (note 10) 14,536 12,274
Future income tax liability (note 12) 22,801 19,120
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49,589 47,955
Shareholders' deficiency:
Share capital (note 11) 433,990 380,734
Contributed surplus 6,846 5,025
Deficit (212,428) (201,437)
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228,408 184,322
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$ 277,997 $ 232,277
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Nature of operations (note 1)
Commitments and contingencies (notes 11 and 15)
See accompanying notes to consolidated financial statements.
Approved on behalf of the Board:
Anthony P. Walsh, Director David A. Fennell, Director
MIRAMAR MINING CORPORATION
Consolidated Statements of Operations and Deficit
(Expressed in thousands of Canadian dollars,
except per share amounts)
Years ended December 31, 2005 and 2004
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2005 2004
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Revenue:
Sales $ 407 $ 7,567
Interest 1,156 1,562
Other income 1,003 3,136
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2,566 12,265
Expenses:
Cost of sales 535 22,872
Depreciation, depletion and accretion 1,088 1,979
General and administration 1,520 1,748
Salaries 1,217 1,486
Professional services 592 707
Investor relations 119 171
Interest 241 133
Stock-based compensation 985 2,250
Foreign exchange 2 39
Severances and closure 264 1,583
Write-down of assets 108 4,515
Write-down of capitalized value
assigned by asset retirement
obligation (note 10) 8,085 10,508
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14,756 47,991
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Loss from operations before undernoted (12,190) (35,726)
Equity loss (227) (294)
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Loss before income taxes (12,417) (36,020)
Income tax recovery (expense) (note 12):
Current (34) (298)
Future 1,460 3,859
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1,426 3,561
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Loss for the year (10,991) (32,459)
Deficit, beginning of year (201,437) (168,978)
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Deficit, end of year $ (212,428) $ (201,437)
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Basic and diluted loss per share $ (0.07) $ (0.21)
Weighted average number of common
shares outstanding 163,744,437 153,524,708
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See accompanying notes to consolidated financial statements.
MIRAMAR MINING CORPORATION
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
Years ended December 31, 2005 and 2004
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2005 2004
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Cash provided by (used in):
Operations:
Loss for the year $ (10,991) $ (32,459)
Items not involving cash:
Depreciation, depletion and accretion 1,088 1,979
Stock-based compensation 985 2,250
Write-down of assets 8,193 15,023
Equity loss 227 294
Future income taxes (1,460) (3,859)
Other 18 (408)
Changes in non-cash working capital:
Accounts receivable 1,205 (763)
Inventory 595 (2,225)
Prepaid expenses (88) 287
Accounts payable and accrued liabilities (3,165) (3,063)
Payments made on site reclamation (note 10) (8,138) -
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(11,531) (22,944)
Investments:
Expenditures on plant, equipment and
deferred exploration, net (18,413) (34,295)
Purchase of securities (300) -
Proceeds on sale of assets (notes 3 and 7) 10,769 900
Purchase of collateral deposits, net (306) (8,400)
Purchase of short-term investments (20,000) -
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(28,250) (41,795)
Financing:
Issue of common shares for cash 58,289 15,033
Proceeds from note receivable (note 2(p)) - 10,000
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58,289 25,033
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Increase (decrease) in cash
and cash equivalents 18,508 (39,706)
Cash and cash equivalents,
beginning of year 30,215 69,921
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Cash and cash equivalents, end of year $ 48,723 $ 30,215
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Supplementary information:
Income taxes paid $ 34 $ 431
Non-cash investing and financing activities:
Fair value of stock options allocated
to shares issued on exercise 107 89
Stock-based compensation included in
deferred exploration 944 1,087
Asset retirement obligations capitalized
to property, plant and equipment and
subsequently written off 8,085 10,508
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See accompanying notes to consolidated financial statements.
MIRAMAR MINING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts expressed in thousands of Canadian dollars)
Years ended December 31, 2005 and 2004
1. Nature of operations: Miramar Mining Corporation (the "Company") was incorporated under the laws of the Province of British Columbia. In December 2004, the Company made the decisions to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. all mining activities at its Con Mine and Giant mine operations and to commence planned reclamation activities. At December 31, 2005 the Company's principal business activity is the exploration and development of mineral property interests. The Company's principal mineral property interest is the Hope Bay Project located in Nunavut Nunavut (n  `nəvt') [Inuktituk,=our land], territory (2001 pop. 26,745), 772,260 sq mi (2,000,671 sq km), NE Canada. , Canada.The Company is in the process of exploring its mineral property interest and has not yet determined whether its mineral property interest contains economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: recoverable mineral reserves. The underlying value and the recoverability of the amounts shown for mineral property is entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of the mineral property, and future profitable production or proceeds from the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of the mineral property interest. 2. Significant accounting policies: (a) Basis of presentation: These financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material inter-company balances and transactions have been eliminated. (b) Cash and cash equivalents: Cash and cash equivalents include investments with terms to maturity of 90 days or less when purchased. (c) Short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments: Short-term investments with terms to maturity of greater than 90 days but not more than one year are recorded at the lower of cost and market determined on an aggregate portfolio basis. (d) Revenue recognition and inventory: Revenue from sale of the Company's product is recorded when pervasive pervasive, adj indicates that a condition permeates the entire development of the individual. evidence of an arrangement exists, title and risk passes to the buyer and the sales price is fixed and determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. . Gold and silver inventory are valued at the lower of net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. and cost. Materials and supplies inventory are valued at average cost less appropriate allowances for obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. . (e) Property, plant and equipment and mineral properties: Property, plant and equipment, which includes mine plant and equipment and mineral properties, is recorded at the lower of cost and estimated net recoverable amount. Buildings and equipment are depreciated Depreciated may refer to:
adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis over their estimated useful lives, not to exceed the period of anticipated recovery of estimated proven and probable ore reserves. Mining equipment and vehicles are depreciated on a straight line basis over estimated useful lives of two to 15 years. Office furniture and computer equipment are depreciated using the declining balance method Declining Balance Method A common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in at 20% and 30%, respectively. Leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. are amortized straight-line over their estimated useful life. The cost of mineral properties and related exploration and development costs are deferred until the properties are placed into production, sold or abandoned. Capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs are amortized over the estimated useful life of the properties following the commencement of production or written off if the properties are sold, allowed to lapse (language) LAPSE - A single assignment language for the Manchester dataflow machine. ["A Single Assignment Language for Data Flow Computing", J.R.W. Glauert, M.Sc Diss, Victoria U Manchester, 1978]. or abandoned. (f) Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets: Long-lived assets, which consist primarily of property, plant and equipment and mineral properties, are reviewed for impairment whenever events or changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or indicate that the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of an asset may not be recoverable. Recoverability of assets to be held and used are measured by a comparison of the carrying value of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired See assistive technology. , the amount of the impairment is measured by the amount by which the carrying amount of the asset exceeds its fair value. (g) Provision for site reclamation and closure costs: The Company recognizes the fair value of a future asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. long-lived assets that results from the acquisition, construction, development and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. normal use of the assets. The Company concurrently con·cur·rent adj. 1. Happening at the same time as something else. See Synonyms at contemporary. 2. Operating or acting in conjunction with another. 3. Meeting or tending to meet at the same point; convergent. recognizes a corresponding increase in the carrying amount of the related long-lived asset and is amortized over the life of the asset. The fair value of the asset retirement obligation is estimated using the expected cash flow approach that reflects a range of possible outcomes discounted at a credit-adjusted risk-free interest rate Risk-Free Interest Rate Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensataes the investor for the temporary sacrifice of consumption. . Subsequent to the initial measurement, the asset retirement obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. Changes in the obligation due to the passage of time are recognized in income as an operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. using the interest method. Changes in the obligation due to changes in estimated cash flows are recognized as an adjustment of the carrying amount of the related long-lived asset and is amortized over the remaining life of the asset. (h) Pension expenses and obligation: The Company maintains defined benefit pension plans and provides certain non-pension post-retirement benefits consisting of extended health and other benefits. The cost of providing pension and other post-retirement benefits is actuarially determined and charged to operations using the projected unit credit actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin method based upon management's best estimate assumptions. Pension fund assets Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. are valued at fair value. The pension expense for the year includes adjustments for plan amendments, curtailments, experience gains and losses, and changes in assumptions that are being amortized on a straight-line basis over the expected average remaining service lives of the plan members. Any differences between the cumulative amounts expensed and the funding contributions are reflected as either an asset or a liability. (i) Stock-based compensation: The Company has a stock option plan which is described in note 11(c). The Company records all stock-based payments using the fair value method. Under the fair value method, stock-based payments are measured at the fair value of the consideration received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably measurable, and are charged to operations over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period. The offset is credited to contributed surplus. Consideration received on the exercise of stock options is recorded as share capital and the related contributed surplus is transferred to share capital. (j) Translation of foreign currency: The accounts of foreign operations are translated into Canadian dollars as follows: - monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. at the rates of exchange prevailing at the balance sheet date - 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 at applicable historical exchange rates - revenue and expenses at the average rate of exchange for the period covering the statement of operations See Income statement. except for expenses related to non-monetary assets which are at the rates used for the translation of the related assets Translation gains and losses are included in the statement of operations. (k) Derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments: The Company has used forward sales forward sales npl → ventas fpl a término agreements and options for the purpose of managing price and currency exposures on its anticipated gold sales. The Company assesses, both at the hedge's inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. and on an ongoing basis, whether the derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. that are used in hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. transactions are highly effective. Gains and losses relating to hedging instruments are recorded in income the same period as gold is produced to meet the hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. commitment. Realized and accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. or losses associated with derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. which have been terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: or cease to be effective prior to maturity, are deferred under other current, or non-current, assets or liabilities on the balance sheet and recognized in income in the period in which the underlying transaction is recognized. In the event a designated hedged item is sold, extinguished ex·tin·guish tr.v. ex·tin·guished, ex·tin·guish·ing, ex·tin·guish·es 1. To put out (a fire, for example); quench. 2. To put an end to (hopes, for example); destroy. See Synonyms at abolish. 3. or matures prior to the termination of the related derivative instrument Noun 1. derivative instrument - a financial instrument whose value is based on another security derivative legal document, legal instrument, official document, instrument - (law) a document that states some contractual relationship or grants some right , any realized or unrealized gain or loss on such derivative instrument is recognized in income at that time. The fair value changes in ineffective hedges are recognized in the statement of operations. (l) Income taxes: The Company uses the asset and liability method of accounting for future income taxes. Under the asset and liability method, future income tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences) and loss carry forwards. Future income tax assets and liabilities are measured using substantively sub·stan·tive adj. 1. Substantial; considerable. 2. Independent in existence or function; not subordinate. 3. Not imaginary; actual; real. 4. enacted or enacted tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in the results of operations in the period in which the change is substantively enacted. Future income tax assets also result from unused loss carry forwards, resource related pools and other deductions. The amount of future tax assets recognized is limited to the amount that management considers more likely than not to be realized. (m) Loss per share: Basic loss per share is calculated by dividing loss available to common shareholders by the weighted average number of common shares outstanding in the period. For all periods presented loss available to common shareholders equals the reported loss. 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. loss per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive stock options are applied to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. common shares at the average market price for the period. For the years ended December 31, 2005 and 2004, diluted loss per share is the same as basic loss per share as the affect of all outstanding options and warrants would be anti-dilutive. (n) Use of estimates: The preparation of financial statements requires management to make estimates that affect the reported values of assets and liabilities and the disclosure of contingent assets Contingent Asset An asset in which the possibility of ownership depends solely upon future events uncontrollable by the company. Notes: An example might be a settlement from a lawsuit. See also: Asset, Balance Sheet, Contingent Liability, Liability and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the determination of impairment of assets, site reclamation and closure obligations, assumptions used in determining stock-based compensation, future income taxes and rates for amortization of property, plant and equipment. Actual results could differ from these estimates. (o) Variable interest entities: Effective January 1, 2005, the Company adopted the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. ("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 Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. 15, "Consolidation of Variable Interest Entities" ("AcG-15") on a prospective basis. AcG-15 prescribes the application of consolidation principles for entities that meet the definition of a variable interest entity ("VIE"). An enterprise holding other than a voting interest Voting interest in business and accounting is a percentage of voting stock owned. This notion is different from economic interest that refers to a percentage of all the equity issued, including preferred stock, warrants, and so on. in a VIE could, subject to certain conditions, be required to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the VIE if it is considered its primary beneficiary beneficiary Person or entity (e.g., a charity or estate) that receives a benefit from something (e.g., a trust, life-insurance policy, or contract). A primary beneficiary receives proceeds from a trust or insurance policy before any other. whereby it would absorb absorb To offset sell orders or a new security offering with buy orders. the majority of the VIE's expected losses, receive the majority of its expected residual returns Residual Return Return independent of the benchmark. The residual return is the return relative to beta times the benchmark return. To be exact, an asset's residual return equals its excess return minus beta times the benchmark excess return. , or both. The adoption of this new standard had no effect on the consolidated financial statements as management has determined the Company does not have variable interests in any VIE's. (p) Power credits and deferred gain: On April 4, 2003, the Company completed the sale of the Bluefish bluefish, voracious marine fish of the family Pomatomidae, resembling the pompano but more closely related to the sea basses. Bluefish are found in the warm waters of the Indian Ocean, the Mediterranean Sea, and the Atlantic. They average 30 in. hydroelectric power hydroelectric power: see power, electric; water power. hydroelectric power Electricity produced from generators driven by water turbines that convert the energy in falling or fast-flowing water to mechanical energy. plant ("Bluefish") to Northwest Territories Power Corporation The Northwest Territories Power Corporation (NTPC) was established about 1988 to acquire and operate the former Northern Canada Power Commission (NCPC) assets within the Northwest Territories, which at that time also included Nunavut. . Bluefish is a 7.0 mega volt-ampere volt-am·pere n. A unit of electric power equal to the product of one volt and one ampere, equivalent to one watt. volt-ampere hydroelectric power generating facility, located 25 miles of Yellowknife Yellowknife, city (1991 pop. 15,179), capital of the Northwest Territories, Canada, on the north shore of Great Slave Lake, at the mouth of the Yellowknife River. , which supplies power to the Company's Con Mine. Sale consideration included a non-interest bearing note for $10 million which was paid on December 31, 2004, the supply of power to the Con Mine, free of charge, equal to the historic generation profile of Bluefish until December 31, 2004 and the supply of power to the Con Mine, free of charge, at an annual rate of 5 million kilowatts and 18,000 kilo Thousand (10 to the 3rd power). Abbreviated "K." For technical specifications, it refers to the precise value 1,024 since computer specifications are based on binary numbers. For example, 64K means 65,536 bytes when referring to memory or storage (64x1024), but a 64K salary means $64,000. volt-ampere of demand for a five year period from 2005 to 2009, (the "Power Credits"). The Company recorded a deferred gain of $7.0 million relating to the fair value consideration of the Power Credits. As the Power Credits are 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. , the Company recognizes a corresponding gain in the statement of operations. During the year ended December 31, 2005, approximately $0.4 million (2004 - $2.4 million) of the fair value of the Power Credits were consumed and has been recorded in site closure and reclamation costs incurred in 2005. In 2004, the fair value of the Power Credits consumed were recorded in cost of sales with a corresponding gain in other income. 3. Investment in Northern Orion Orion, in Greek mythology Orion (ōrī`ən), in Greek mythology, Boeotian hunter. When Oenopion delayed giving his daughter Merope to him, Orion, when drunk, violated her. Explorations Ltd.: At January 1, 2005, the Company had 200,247 shares of Northern Orion Explorations Ltd. ("Northern Orion") and a 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). interest royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. ("NPI NPI National Provider Identifier, see there ") in certain Northern Orion mineral properties which it acquired pursuant to a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). agreement with Northern Orion. The NPI entitles the Company to receive the economic equivalent of a 2.5% net smelter return on certain of Northern Orion's mineral properties as well as 50% of the proceeds from the disposition of certain Northern Orion mineral properties, all to a maximum of $15 million. During 2005, the Company sold all remaining shares of Northern Orion and recorded the proceeds as a reduction of the carrying value. Recovery of the remaining carrying value of $8.5 million is dependant upon Adj. 1. dependant upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, contingent upon, dependant on, dependent on, dependent upon, depending on, contingent the receipt of net proceeds from eventual production from the properties or their sale by Northern Orion. 4. Related parties: The Company holds 7.2% of Maximus Maximus is a name formed from the Latin term for "greatest" or "largest." It is therefore also a common noun, and may refer to any of the following: People in the Ancient World Politicians During the year ended December 31, 2005, the Company's investment in Sherwood Copper Corporation ("Sherwood") was reduced from 38.3% to 13.3% as a result of Sherwood issuing shares to outside interests. During the period in 2005 the Company had significant influence over Sherwood, the Company supplied services on a cost recovery basis to Sherwood totaling $122,344 (2004 - $366,769). These transactions are recorded at their exchange amount in these consolidated financial statements which is the amount of consideration received as established and agreed to by the Company and, as appropriate, Maximus or Sherwood. 5. Inventory:
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2005 2004
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Gold and silver $ 1,162 $ 1,570
Materials and supplies 3,620 5,608
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$ 4,782 $ 7,178
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6. Property, plant and equipment:
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2005 2004
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Accumulated
depreciation
and
depletion and Net book Net book
Cost write-downs value value
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Mine plant and
equipment $ 118,008 $ 115,903 $ 2,105 $ 2,261
Exploration equipment 2,060 446 1,614 1,506
Construction in progress 1,217 - 1,217 1,216
Computer equipment 1,366 861 505 566
Leasehold and office 534 406 128 123
Other 94 94 - 94
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Total $ 123,279 $ 117,710 $ 5,569 $ 5,766
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During the year ended December 31, 2005, the Company returned the Giant Mine property back to the Department of Indian Affairs and Northern Development. 7. Mineral properties: The following is a summary of exploration and development costs incurred to December 31, 2005:
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Back River Hope Bay Total
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Balance, December 31, 2004 $ 8,292 $ 151,711 $ 160,003
Additions:
Drilling - 3,997 3,997
Sample analysis - 532 532
Personnel and contracts - 3,336 3,336
Stock-based compensation - 944 944
Supplies and equipment 132 799 931
Other exploration costs - 627 627
Title and claim management - 317 317
Transportation and freight - 2,908 2,908
Camp and infrastructure - 1,531 1,531
Environmental and permitting - 3,157 3,157
Feasibility and studies - 958 958
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132 19,106 19,238
Disposition of mineral property (8,424) - (8,424)
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Balance, December 31, 2005 $ - $ 170,817 $ 170,817
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On February February: see month. 18, 2005, the Company assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to Dundee Dundee, city (1991 pop. 172,294) and council area, E central Scotland, on the Firth of Tay. It is a port and manufacturing city. Dundee is historically known for its manufacture and processing of jute. Its marmalade is also famous. 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. Inc. its option to purchase from Kinross Gold Kinross Gold Corporation (TSX: K, NYSE: KGC) is a Canadian gold mining company. It is the seventh largest primary gold producer in the world.[1] See also
1. ^ Kinross Gold. Corporation 60% of the Back River project, including the Goose and George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). Lakes deposits. The Company received proceeds of approximately $10 million for the reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. of past exploration costs and inventory acquisition incurred by the Company on the Back River Project plus 5%. 8. Cash collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although deposits: The Company has established the following cash deposits with chartered banks Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission to serve as collateral for letters of credit pledged pledge n. 1. A solemn binding promise to do, give, or refrain from doing something: signed a pledge never to reveal the secret; a pledge of money to a charity. 2. a. in favour Favor or favour (see spelling differences) may be
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2005 2004
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Con Mine reclamation security trust $ 10,506 $ 10,000
Giant Mine water license - 200
Con Mine road permit 50 50
Golden Eagle reclamation 341 341
Talapoosa reclamation 233 233
Hope Bay water licenses and land permits 3,850 3,850
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$ 14,980 $ 14,674
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9. Other assets:
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2005 2004
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Investments $ 134 $ 134
Investment in Sherwood 180 -
Pension asset (note 13) 1,260 573
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$ 1,574 $ 707
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10. Site reclamation and closure: The Company has recorded provisions for site reclamation and closure costs for the estimated cost of site closure and reclamation relating to past mining activities at the Con Mine. The following is a reconciliation of the changes in the provision for site reclamation and closure during the year:
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2005 2004
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Balance, beginning of year $ 19,759 $ 8,528
Change in estimate for site closure
and reclamation costs 8,085 10,508
Site closure and
reclamation costs incurred (8,138) -
Accretion expense 777 723
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Balance, end of year $ 20,483 $ 19,759
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Allocated between:
Current portion $ 5,947 $ 7,485
Non-current portion 14,536 12,274
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$ 20,483 $ 19,759
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The Company's operations are affected by federal and local laws and regulations concerning environmental protection. Under current regulations, the Company is required to meet performance standards to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. environmental impact and to perform site restoration and other closure activities. The Company's provisions for future site closure and reclamation costs are based on known requirements. It is not currently possible to estimate the impact on financial results, if any, of future legislative or regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. developments. In the fourth quarter of 2005, the Company recorded an adjustment to the liability for asset retirement obligation by $8.1 million. This adjustment is a result of management's re-assessment of cost estimates and is comprised of three components: (a) the impact of additional mill roaster tailings which were excavated in 2005 and will be treated before they are placed in the tailings ponds, which adjustment represents the majority of the adjustment as it extends the arsenic arsenic (är`sənĭk), a semimetallic chemical element; symbol As; at. no. 33; at. wt. 74.9216; m.p. 817°C; (at 28 atmospheres pressure); sublimation point 613°C;; sp. gr. (stable form) 5.73; valence −3, 0, +3, or +5. processing phase of reclamation to 2007 rather than completion in 2006; (b) changes in site closure activities, including the impact of a lengthened length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length en·er n. period of post-closure water treatment and monitoring,
now assumed to be 25 years rather than 12 years, and the addition of
rock cover to the tailings ponds rather than vegetation vegetation /veg·e·ta·tion/ (vej?e-ta´shun) any plantlike fungoid neoplasm or growth; a luxuriant fungus-like growth of pathologic tissue. alone; and (c)
the impact of an estimated one year delay in receiving approval of the
final remediation plan, which results in the Company incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. certain holding costs to maintain personnel required for closure activities and additional monitoring and environmental studies. The Company has $10.5 million on deposit in Con Mine reclamation security trusts that will be applied, in part, to offset the reclamation costs as they are incurred. The Company is required by regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. to post security for the site closure and reclamation activities, excluding the arsenic processing activities, and, based on the Company's estimate for these costs, the Company does not currently anticipate that the regulatory agencies will require additional funds to be contributed to the reclamation security trusts. Although the ultimate amount to be incurred is uncertain, the liability for site closure and reclamation for the Con Mine and the Hope Bay exploration camps has been estimated to be $24.9 million on an undiscounted basis ($20.5 million discounted) and is to be expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. from 2006 to 2033. For purposes of determining the fair value of the obligation, a discount rate of 9.8%, an inflation factor of 2.0% and a market risk premium of 8% have been applied. As required by regulatory agencies and GAAP, cost estimates include contractor markups, provision for administration and engineering and a provision for unforeseeable Un`fore`see´a`ble a. 1. Incapable of being foreseen. Adj. 1. unforeseeable - incapable of being anticipated; "unforeseeable consequences" unpredictable - not capable of being foretold circumstances. However, the Company expects to use its employees wherever possible to complete the reclamation activities, which could reduce actual costs below the accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. liability. 11. Share capital: (a) Authorized: 500,000,000 common shares without par value (b) Issued:
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Common shares
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Number
of shares Amount
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Balance, December 31, 2003: 151,634,893 $ 371,309
Issued:
Common shares for cash,
net of issue costs 7,600,000 14,271
Future income tax effect
of flow-through shares - (5,696)
On exercise of warrants 211,437 412
On exercise of stock options 328,500 438
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Balance, December 31, 2004 159,774,830 380,734
Issued:
Common shares for cash,
net of issue costs 26,070,000 57,679
Future income tax effect
of flow-through shares - (5,140)
On exercise of stock
options 456,600 717
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Balance, December 31, 2005 186,301,430 $ 433,990
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On October October: see month. 18, 2004, the Company completed a private placement of 7,600,000 flow-through common shares at a price of $2.00 per common share for gross proceeds of $15.2 million. In consideration for their services, the underwriters received commissions of $0.8 million and brokers' warrants exercisable to purchase 375,000 common shares at $2.00 per common share until October 18, 2005. The fair value of these warrants at the grant date was $0.1 million and has been shown on a net basis in share capital. Pursuant to the financing agreement, the Company must 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. Canadian exploration expenditures as defined in the Income Tax Act (Canada) in the amount of $15.2 million by December 31, 2005, which amount has been incurred. On September September: see month. 30, 2005, the Company completed a private placement of 7,320,000 flow-through common shares at a price of $2.05 per common share for gross proceeds of approximately $15 million. In consideration for their services, the underwriters received commissions of $0.8 million and brokers' warrants exercisable to purchase 366,000 common shares at $2.05 per common share until September Until September is a 1984 romantic drama set in France. It stars Karen Allen as an American tourist in Paris who falls in love with a married Frenchman (Thierry Lhermitte). External links 30, 2006. The fair value of these warrants at the grant date was $0.1 million and has been shown on a net basis in share capital. Pursuant to the financing agreement, the Company must incur Canadian exploration expenditures as defined in the Income Tax Act (Canada) in the amount of $15.0 million by December 31, 2006. On October 14, 2005, the Company completed a private placement of 250,000 flow-through common shares at a price of $2.05 per common share for gross proceeds of $512,500. Pursuant to the financing agreement, the Company must incur Canadian exploration expenditures as defined in the Income Tax Act (Canada) in the amount of $512,000 by December 31, 2006. On November November: see month. 22, 2005, the Company completed a private placement to Newmont Mining Newmont Mining Corporation NYSE: NEM, based in Denver, Colorado, USA, is one of the world's largest producers of gold, with active mines in, Nevada, Indonesia, Australia/New Zealand, Ghana, and Peru. Some smaller operations include Bolivia, Mexico, and Canada. Corporation of Canada Limited of 18.5 million common shares at a price of $2.35 per unit for gross proceeds of approximately $43.5 million. Each unit consists of one common share and one warrant to purchase an additional common share at $2.75 per common share until November 22, 2009. (c) Stock options: Stock options are granted at the closing market price of the common shares on the last trading day Last Trading Day The final day that a futures or options contract may trade or be closed out before delivery of the underlying asset must occur. Notes: If the buying and selling parties do not arrange an alternate agreement, the physical commodity must be delivered from before the date of grant. Options have a maximum term of ten years and usually terminate 30 days following the termination of the optionee's employment. The vesting periods of stock options granted vary with terms determined by the Board of Directors. At December 31, the Company had stock options outstanding as follows:
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2005 2004
------------------------ ----------------------
Average Average
Share exercise Share exercise
options price options price
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Outstanding,
beginning of year 6,263,578 $ 2.18 4,107,339 $ 1.54
Granted 3,054,706 1.32 3,273,060 2.96
Exercised (456,600) 1.33 (328,500) 1.07
Forfeited or expired (1,412,000) 2.24 (788,321) 2.55
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Outstanding, end
of year 7,449,684 $ 1.87 6,263,578 $ 2.18
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Exercisable 6,921,684 1.83 5,483,578 $ 2.02
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The stock-based compensation costs reflected in the consolidated financial statements were estimated using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following weighted average assumptions: a risk-free interest rate of 3.61% (2004 - 3.4%), a dividend yield of 0% (2004 - 0%), an expected volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of 60% (2004 - 55%) and expected lives of stock options of 4.85 years (2003 - 4.3 years). The weighted average fair value of options granted in 2005 was $1.38 (2004 - $1.55). As at December 31, 2005, 6,921,684 options were fully vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) and expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. as follows:
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Exercise
Year Number price
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2006 1,087,421 $ 1.19
2007 430,000 1.22
2008 1,063,997 1.96
2009 2,007,560 2.86
2010 2,332,706 1.29
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(d) Warrants and brokers compensation options: At December 31, the Company had warrants and brokers' compensation options outstanding and exercisable as follows:
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2005 2004
-------------------- --------------------
Average Average
Warrants exercise Warrants exercise
and options price and options price
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Outstanding,
beginning of year 1,316,267 $ 2.26 1,361,204 $ 2.26
Granted 18,866,000 2.74 375,000 2.00
Exercised - (211,437) 1.95
Forfeited or expired (1,316,267) 2.26 (208,500) 2.10
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Outstanding, end of year 18,866,000 $ 2.74 1,316,267 $ 2.26
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12. Income and resource taxes: At December 31, 2005, the Company has unused tax loss carry forwards in Canada of $46.2 million (2004 - $42.5 million) expiring 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. between the years 2006 and 2015 which are available to reduce taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. and capital losses of $68.2 million (2004 - $55.6 million) which are available indefinitely in·def·i·nite adj. Not definite, especially: a. Unclear; vague. b. Lacking precise limits: an indefinite leave of absence. c. , but can only be utilized against capital gains. The Company has investment tax credits totaling approximately $1.8 million (2004 - $1.5 million). The tax effect of the significant components within the Company's future tax asset (liability) at December 31 was as follows:
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2005 2004
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Loss carry forwards $ 14,509 $ 15,284
Capital losses 12,752 9,896
Property, plant and equipment 19,561 16,081
Canadian resource deductions 3,745 4,458
Reclamation liabilities 7,368 6,664
Other 1,517 4,535
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59,452 56,918
Valuation allowance (54,508) (54,875)
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Net future tax asset 4,944 2,043
Future income tax liability of Hope Bay Gold (8,382) (8,382)
Future income tax liability on
flow-through shares (19,363) (12,781)
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Net future income tax liability $ (22,801) $ (19,120)
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The income tax expense differs from the amounts computed by applying the combined federal and provincial Provincial has several meanings and may refer to:
pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta losses as a result of the following:
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2005 2004
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Earnings (losses) before equity
loss and income taxes $ (12,190) $ (35,726)
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Computed "expected" tax expense (recovery) $ (4,157) $ (12,183)
Adjustment to income taxes resulting
from change in valuation allowance (367) 7,514
Adjustment to future tax assets and
liabilities for enacted changes in tax rates 1,200 -
Permanent differences 1,158 767
Share issue costs (453) (331)
Capital taxes 34 298
Other 1,159 374
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Income taxes (recovery) $ (1,426) $ (3,561)
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13. Pension plan and other post-retirement benefits: The Company has four defined benefit pension plans covering substantially all of the employees at the Con Mine and the Giant Mine. These plans are funded on an ongoing basis, based on periodic actuarial valuations and statutory requirements. In addition, the Company, by practice, provides for other post-retirement benefits. The ultimate liability for these benefits is estimated for accounting purposes on an ongoing basis using periodic actuarial calculations. Summary information related to the defined benefit pension plans and other benefits are as follows:
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Pension benefit plans Other benefit plans
--------------------- --------------------
2005 2004 2005 2004
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Accrued benefit
obligation $ 18,880 $ 17,182 $ 176 $ 158
Fair value of plan
assets 15,790 16,282 - -
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Funded status -
plan deficit (3,090) (900) (176) (158)
Unamortized actuarial
loss (gain) 4,350 1,681 20 (138)
Unamortized experience
loss - 88 - -
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Accrued benefit asset
(liability) $ 1,260 $ 869 $ (156) $ (296)
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Reconciliation of accrued benefit obligation:
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Pension benefit plans Other benefit plans
--------------------- --------------------
2005 2004 2005 2004
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Balance, beginning
of year $ 17,182 $ 16,621 $ 158 $ 142
Current service cost 230 275 - -
Interest cost 998 1,024 7 7
Benefits paid (3,023) (1,243) (78) (73)
Actuarial losses 3,425 981 89 82
Loss (gain) due to
curtailment 68 (476) - -
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Accrued benefit
obligation, end of year $ 18,880 $ 17,182 $ 176 $ 158
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Reconciliation of plan assets:
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Pension benefit plans Other benefit plans
--------------------- --------------------
2005 2004 2005 2004
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Fair value,
beginning of year $ 16,282 $ 14,927 $ - $ -
Expected return on
plan assets 1,063 1,109 - -
Employer contributions 847 952 - -
Benefits paid (3,023) (1,243) - -
Actuarial gains 621 537 - -
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Fair value of plan
assets, end of year $ 15,790 $ 16,282 $ - $ -
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Pension expense during the year for the pension plans is $458,000 (2004 - $469,000). Other benefit plans recovery for the year is $61,800 (2004 - $101,300). Pension expense for the year was comprised of the following:
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2005 2004
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Current service cost $ 230 $ 275
Interest cost 998 1,024
Expected return on plan assets (1,063) (1,109)
Amortization of experience gains 136 165
Amortization of past service costs 89 89
Loss due to curtailment 68 26
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$ 458 $ 470
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The measurement date for the plan assets and the benefit obligation was December 31, 2005. Payments are being made to fund the excess of the accrued benefit obligation over the fair value of plan assets in accordance with applicable legislation. For purposes of measuring other benefits, benefits are assumed to be terminated in two years due to mine closure. In two of the plans, the effective date of the last actuarial valuation was January 1, 2005 and the next valuation will be January 1, 2006. In one plan the effective date of the last actuarial valuation was June June: see month. 30, 2005, and this plan was terminated on June 30, 2005. The significant actuarial assumptions used in 2005 and 2004 in the measurement of the Company's benefit obligation are shown in the following table:
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Pension Other
benefits benefits
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Discount rate used for accrued
benefit obligation 6.00% 6.00%
Discount rate used for benefit costs 5.00% 5.00%
Expected long-term rate of return on plan assets 7.00% N/A
Weighted average rate of compensation increase N/A N/A
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The actual allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of plan assets is shown in the following table:
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2005 2004
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Cash and short-term $ 139 $ 129
Bonds 5,879 5,980
Canadian Equity Pension Trust 2,478 2,967
Dividend Income Fund 7,082 6,942
Overseas equities 212 262
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$ 15,790 $ 16,280
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14. Financial instruments: Fair value estimates are made at the balance sheet date, based upon relevant market information and information about the financial instrument. These estimates are, in part, subjective subjective /sub·jec·tive/ (sub-jek´tiv) pertaining to or perceived only by the affected individual; not perceptible to the senses of another person. sub·jec·tive adj. 1. in nature and involve uncertainties in significant matters of judgment. Changes in assumptions and market conditions could significantly affect these estimates. The carrying values of all financial instruments approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. fair values, except for investments presented in other assets. In addition, the fair value of the investment in Northern Orion is not determinable due to the inherent difficulty in the determination of the fair value of such an instrument. The fair value of other assets and the fair value based on the quoted market value of the investment in Sherwood, Maximus and other at December 31 are as follows:
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2005 2004
-------------------- ---------------------
Carrying Fair Carrying Fair
value value value value
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Investment in Sherwood $ 180 $ 3,634 $ - $ 2,300
Other investments 134 974 134 1,730
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15. Commitments and contingencies: (a) Miramar Con Mine Ltd. ("MCML MCML Media Center Markup Language (Microsoft) MCML MOS Current Mode Logic MCML Master Consolidated Management List MCML Missile Compartment Middle Level (compartment of a US Navy nuclear submarine) ") is committed to the purchase of $780,000 of liquid oxygen per annum Per annum Yearly. through 2007 subject to an ongoing purchase option in the Company's favour at the discounted value of the remaining payments. (b) As part of the arrangement to sell a previously owned hydro hy·dro adj. Hydroelectric. n. pl. hy·dros 1. Hydroelectric power. 2. A hydroelectric power plant. electric asset, the Company entered into an indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. agreement with NERCO NERCO North East Recorder Orchestra (England) Minerals Company ("NERCO"), the previous owner of the Con Mine, in which the Company agreed to hold NERCO harmless The term harmless may be taken in several ways:
The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the or otherwise, for the obligations under the guarantee. The Company granted the indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from in order to allow NERCO to release a similar guarantee provided by Red Lion Red Lion may refer to:
(c) On August 8, 2000, MCML received a renewal water licence for the Con Mine issued under the Northwest Territories Northwest Territories, territory (2001 pop. 37,360), 532,643 sq mi (1,379,028 sq km), NW Canada. The Northwest Territories lie W of Nunavut, N of lat. 60°N, and E of Yukon. Waters Act. This licence expires on July July: see month. 29, 2006. As a condition of a water license held by the MCML, the Company maintains security deposits for the cost of future reclamation. In 2004, the Company completed an agreement with DIAND DIAND Department of Indian Affairs and Northern Development (Government of Canada) to fund security deposits by depositing $10 million into two reclamation security trusts established by the Company. The reclamation security trusts will be used to fund the reclamation of the site on completion of operations. (d) In 1995, the Company entered into a joint exploration transaction with an investor that resulted in the sale of an interest in the assets comprising the Con Mine. The transaction was based upon an independent valuation prepared for the Company. In 2000, Canada Revenue Agency The Canada Revenue Agency (CRA) administers:
The process of re-determining the value of property or land for tax purposes. Notes: Property is usually reassessed on an annual basis. You may request a "reassessment" if you disagree with your assessment. does not give rise to any taxes payable by the Company. However, as part of the transaction in 1995, the Company agreed to compensate the investor for any shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in the value of the assets transferred to a maximum of $2.7 million plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. , which amounts to approximately $2.3 million at December 31, 2005, such amounts to be payable should a ruling denying the transfer of certain tax pools be made against the Company. In 2004, the Company received notification that CRA had recently reviewed the re-assessment and re-confirmed the original reassessment. The Company filed a notice of appeal in March 2005. The Company subsequently received notification from the Tax Court of Canada The Tax Court of Canada, established in 1983 by the Tax Court of Canada Act, is a superior court which deals with matters involving companies or individuals and tax issues with the Government of Canada. that this case should proceed and the discovery process is scheduled to commence in April 2006. While management intends to strenuously stren·u·ous adj. 1. Requiring great effort, energy, or exertion: a strenuous task. 2. Vigorously active; energetic or zealous. defend the independent valuation, the outcome of this issue is not yet determinable. No provision for these costs has been recorded at December 31, 2005. (e) The Company has a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. lease for office space for its corporate and exploration office. The Company has minimum commitments under operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. for its premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person totaling approximately $305,000 per annum until 2012. The Company has a number of operating leases for mobile and other equipment used at its exploration properties, which in aggregate result in commitments of $293,000 per annum and lease terms ranging from one to two years. MIRAMAR MINING CORPORATION 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 This Management's Discussion and Analysis ("MD&A") provides an analysis of the financial results of Miramar Mining Corporation (the "Company") for the year ended December 31, 2005 and compares them with the previous year. In order to better understand the MD&A, it should be read in conjunction with the Consolidated Financial Statements and related notes. The Company's consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and expressed in thousands of Canadian dollars, except share amounts. In addition, the Company files annual reports on Form 40-F with the United States Securities and Exchange Commission, which includes the Company's consolidated financial statements and a supplementary note reconciling the material differences between Canadian GAAP and United States GAAP, and their effect on the Company's financial information. This MD&A is dated as of March 30, 2006. All amounts are expressed in Canadian dollars, except as otherwise indicated. OVERVIEW The Company's mining and exploration assets are primarily gold assets in the Canadian Arctic Arctic area of constant cold. [Geography: WB, A:600] See : Coldness (language, music) Arctic - A real-time functional language, used for music synthesis. ["Arctic: A Functional Language for Real-Time Control", R.B. . The Company has developed considerable experience in operations, exploration and logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. in the Canadian Arctic where the Company has focused its activities for more than ten years. In 2004, the Company determined that gold production was no longer economically viable at its Con and Giant mines in Yellowknife, Northwest Territories and terminated all mining activities. Since then, the Company's business is focused on the exploration and development of the Hope Bay gold mineral project in Nunavut. The Hope Bay project is 100% owned by the Company, extends over 1,000 square kilometers and we believe encompasses one the most prospective undeveloped greenstone belts in Canada. The belt contains a number of significant gold deposits including the Doris North Project which is anticipated to become the first new gold mine in Nunavut. The Company's goal is to become an intermediate gold producer through the phased development of the Hope Bay gold project as follows: Phase 1: Short-term: Development of a small scale, high return gold mine at Doris North to commence production as expeditiously ex·pe·di·tious adj. Acting or done with speed and efficiency. See Synonyms at fast1. ex as possible, with the objective of generating significant cash flow, after capital payback Payback The length of time it takes to recover the initial cost of a project, without regard to the time value of money. , to advance the subsequent phases while minimizing equity dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. . Doris North is anticipated to produce 155,000 ounces of gold per year for two years. Phase 2: Medium-term: To extend and expand production levels by developing the higher grade, readily accessible upper portions of the Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. , Doris Central and Madrid Madrid (mədrĭd`, Span. mäthhrēth`), city (1990 pop. 3,120,732), capital of Spain and of Madrid prov., central Spain, and the focus of its own autonomous region, on the Manzanares River. deposits, with a target production level of approximately 250,000 to 300,000 ounces of gold per annum, generating sufficient cash flow to advance to phase three. Phase 3: Longer-term: To further expand gold level by maximizing the potential of the very large Madrid deposit, and the remainder of the Boston and Doris deposits, to a sustained level in the range of 350,000 to 400,000 ounces of gold per annum. Phases 2 and 3 are based on conceptual con·cep·tu·al adj. Relating to concepts or the the formation of concepts. plans which depend on future positive mine engineering and geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. , economic and mine engineering studies as well as permitting and regulatory approval. Internal studies have indicated that there may be opportunities for larger scale production at the Hope Bay Project and work in 2006 will include examining the viability of larger scale operations. In parallel with these development oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. activities, the Company intends to continue its exploration efforts at Hope Bay with the objective of discovering new deposits which could contribute to a sustained intermediate production profile, while also conducting grassroots Adj. 1. grassroots - fundamental; "the grassroots factor in making the decision" basic - pertaining to or constituting a base or basis; "a basic fact"; "the basic ingredients"; "basic changes in public opinion occur because of changes in priorities" 2. exploration in cooperation with strategic partners to identify longer term opportunities. To achieve these objectives, the Company needs to successfully complete, among other things, the current permitting process for the Doris North project, complete a positive 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. in 2006 for the Phase 2 expansion, complete financing for mine construction, successfully construct and place into production the Doris North deposit, complete development and permitting of the Boston, Doris and Madrid deposits and identify additional resources. 2005 Highlights - Exploration programs in 2005 were successful in the objective to upgrade the confidence level in resources to support a feasibility study in 2006 on Phase 2 of the development strategy for Hope Bay. - Exploration at Naartok resulted in resource expansion at depth and to the north; holes drilled in this area include 05PMD (Polarization Mode Dispersion) The type of dispersion that occurs in singlemode fiber due to a lack of perfect symmetry in the fiber and from external pressures on the cable. Light travels over singlemode fiber in two polarization states. 328 which assayed 11.5 g/t over 66.5 meters. - Exploration drilling totaling 33,176 meters was completed during 2005, including 26,310 meters in the Madrid area, 5,325 meters at Doris Central and 1,541 meters in regional belt targets. - A Draft Environmental Impact Study ("DEIS") was submitted on the Doris North project in June 2005 to the Nunavut Impact Review Board ("NIRB"). The Final Environmental Impact Study ("FEIS FEIS Final Environmental Impact Statement FEIS Final Environmental Impact Report FEIS Fugitive Emissions Information System FEIS Fellow of the Educational Institute of Scotland ") was submitted on October 31, 2005. NIRB held public hearings to review the project from January 30 to February 3, 2006. On March 6, 2006, NIRB issued its final hearing report recommending to the Minister of Indian and Northern Affairs Canada The Department of Indian Affairs and Northern Development (FIP: Indian and Northern Affairs Canada, French: Affaires indiennes et du Nord Canada, DIAND that the Doris North Project should proceed. - On November 22, 2005, the Company completed a private placement to Newmont Mining Corporation of Canada Limited of 18.5 million common shares at a price of $2.35 per unit for gross proceeds of $43.5 million. Each unit consists of one common share and one warrant to purchase an additional common share for $2.75 until November 22, 2009. - In September the Company completed a flow-through equity financing 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. of 7,320,000 common shares issued at $2.05 per share for gross proceeds of $15 million. - In February, the sale of the Back River option to Dundee Precious Metals Inc. was completed generating approximately $10 million of cash proceeds. - Consolidated net loss of $11 million or $0.07 per share; included in the loss is an adjustment to increase the asset retirement obligation for the Con Mine by $8.1 million. Excluding this adjustment the loss would be $2.9 million or $0.02 per share. EARNINGS AND CASH FLOW For the year ended December 31, 2005, the Company had a net loss of $11 million or $0.07 per share compared to a net loss of $32.5 million or $0.21 per share in the same period in 2004. The loss reported in 2005 includes an adjustment of $8.1 million to increase the asset retirement obligation for the Con Mine. In 2004, the Company had gold mining operations which were operating at a loss and accounted for $30 million of the reported loss during the year including write downs on assets and asset retirement obligation and closure costs totaling $16.6 million. In December 2004, the Company terminated gold operations at the Con Mine and activities were transitioned into reclamation of the property. Selected Financial Data The following tables summarize sum·ma·rize intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es To make a summary or make a summary of. sum total revenue loss and loss per share over the last three fiscal years and the last eight fiscal quarters (in thousands of dollars expect per share amounts).
2005 2004 2003
-------------------------------------
-------------------------------------
Total Revenue $ 2,566 $ 12,265 $ 46,877
Loss $ (10,991) $ (32,459) $ (18,465)
Per Share $ (0.07) $ (0.21) $ (0.14)
Total Assets $ 277,997 $ 232,277 $ 244,482
2005 2005 2005 2005
Q4 Q3 Q2 Q1
---------------------------------------------------
---------------------------------------------------
Total Revenue $ 375 $ 578 $ 614 $ 999
Loss $ (8,348) $ (1,025) $ (481) $ (1,137)
Per Share $ (0.05) $ (0.01) $ (0.00) $ (0.01)
2004 2004 2004 2004
Q4 Q3 Q2 Q1
---------------------------------------------------
---------------------------------------------------
Total Revenue $ 1,670 $ 2,570 $ 4,057 $ 3,968
Loss $ (12,278) $ (6,259) $ (6,868) $ (7,054)
Per Share $ (0.07) $ (0.04) $ (0.05) $ (0.05)
Note: Loss and loss per share figures for 2004 have been restated to
reflect the changes in accounting for site reclamation and closure
costs and stock-based compensation.
OPERATIONS OVERVIEW Revenue Interest income for the twelve months in 2005 was $1.2 million compared to $1.6 million in the same period of 2004; interest was higher in 2004 because it included imputed interest Imputed Interest A term used to describe interest considered to be paid, even through no interest payment has been made. Notes: Imputed interest is calculated based upon actual payments that are to be paid, but have not yet been paid. on a note received for the sale of the Bluefish hydroelectric facility ("Bluefish"). Other income was $1.0 million for fiscal 2005 and includes management fees received from the Department of Indian and Northern Affairs ("DIAND") for services provided for the Giant Mine, a fee for services provided to Sherwood Copper Corporation and a gain on the sale of the option on the Back River mineral property. For the same period in 2004, other income was $3.1 million which included a gain on the utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of power credits which were received as part of the sale of Bluefish. Power credits utilized in 2005 are credited to the cost of reclamation of the Con Mine which reduces the accrued asset retirement liability for the mine rather than being reported as other income. There are no significant amounts of gold sales revenue reported in 2005 due to termination of mining activity at Con Mine in December 2004; however, in the third quarter of 2005, the Company had revenue on 760 ounces of residual Residual See:Residual value gold recovered and sold from the process plant in the period. Operating Costs As noted above, mining operations ceased in December 2004, however during the third quarter the Company sold 760 ounces of residual gold for which costs were 0.4 million. During 2005, general and administrative expenses, salaries, professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , investor relations Investor relations The process by which the corporation communicates with its investors. and other costs totaled $3.7 million compared to $4.2 million in 2004. Stock-based compensation of $1.0 million in fiscal 2005 compared to $2.3 million in 2004 was lower primarily due to lower fair value per option in 2005 compared to 2004 due to lower average market price per share. In 2005, options to purchase 1,407,143 common shares were granted or vested at an average fair value $0.70 per share option, compared to 1,453,480 options in 2004 at an average fair value of $1.55 per share option. Depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and accretion expense In accounting, accretion expense is the expense created when updating the present value(PV) of a financial instrument. For example, if one originally recognizes the present value of a liability at $650, which has a future value (FV) of $1000, every year one must increase the in 2005 was $1.1 million compared to $2.0 million in the same period of 2004. The decrease results from the closure of Yellowknife operations and elimination of related equipment depreciation. Write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the asset retirement obligation of $8.1 million in 2005 was recorded to increase the liability for the reclamation of the Con Mine and is discussed in greater detail in the section below (Asset Retirement Obligation). CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of the Company's consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as well as the reported expenses during the reporting period. Such estimates and assumptions affect the determination of the potential impairment of long-lived assets, estimated costs associated with reclamation and closure of mining properties, and assumptions in determining stock-based compensation and future income taxes. Management re-evaluates its estimates and assumptions on an ongoing basis; however, due to the nature of estimates, actual amounts could differ. The most critical accounting policies upon which the Company depends are those requiring estimates of gold reserves and resources and future recoverable gold ounces and assumptions of future gold prices. Accounting for Exploration and Development Cost Exploration expenditures related to mineral properties are deferred only if it is probable that these costs will be recovered from future operations. The carrying values of the mineral properties are assessed at the balance sheet date to determine whether any persuasive evidence exists that the properties may be permanently impaired. The Company's progress in its development activities towards its planned operations is a key factor to be considered as part of the ongoing assessment of the recoverability of the carrying amount of capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) and deferred exploration and development costs. If there is persuasive evidence of impairment, the asset is written down to its estimated net recoverable value. Deferred acquisition, exploration and development expenditures totaled $170.9 million for Hope Bay at December 31, 2005. Asset Retirement Obligation Asset retirement obligations are the estimated costs associated with mine closure and reclamation and recorded as a liability at fair value. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value at its initial discounted value and is amortized over the asset's useful life. In the event the actual cost of reclamation exceeds the Company's estimates, the additional liability for retirement and remediation costs may have an adverse effect on the Company's future results of operations and financial condition. During 2005, the Company commenced reclamation activities at the Con Mine. Activities were focused on the reclamation of historic mill roaster tailings. Arsenic contained within this material is rendered inert inert /in·ert/ (in-ert´) inactive. in·ert adj. 1. Sluggish in action or motion; lethargic. 2. by a process which utilizes the pressure oxidation oxidation /ox·i·da·tion/ (ok?si-da´shun) the act of oxidizing or state of being oxidized.ox·idative ox·i·da·tion n. 1. The combination of a substance with oxygen. 2. circuit at the Con Mine. Reclamation of a significant portion of these materials was completed as planned in the period and costs for the reclamation activities were recorded as a reduction of the liability. In the fourth quarter of 2005, the Company recorded an adjustment to the liability for asset retirement obligation of $8.1 million. This adjustment is a result of management's re-assessment of cost estimates and is comprised of three components; (a) the impact of additional mill roaster tailings which were excavated in 2005 and will be treated before they are placed in the tailings ponds, which adjustment represents the majority of the adjustment as it extends the arsenic processing phase of reclamation to 2007 rather than completion in 2006; (b) changes in site closure activities, including the impact of a lengthened period of post-closure water treatment and monitoring, now assumed to be 25 years rather than 12 years, and the addition of rock cover to the tailings ponds rather than vegetation alone; and, (c) the impact of an estimated one year delay in receiving approval of the final remediation plan, which results in the Company incurring certain holding costs to maintain personnel required for closure activities and additional monitoring and environmental studies. The Company has $10.5 million on deposit and has committed the proceeds from any assets sales at the Con Mine to the Con Mine reclamation security trusts that will be applied to, in part, offset the reclamation costs as they are incurred. The Company is required by regulatory agencies to post security for the site closure activities, excluding the arsenic processing activities. Based on the Company's estimate for these costs; the Company does not currently anticipate that the regulatory agencies will require additional funds to be contributed to the reclamation security trusts (see Liabilities and Contingencies below for additional discussion). The asset retirement obligation for the Con Mine is comprised of two components (1) processing of historic mill roaster tailings. Arsenic contained within this material is rendered inert by a process which utilizes the pressure oxidation circuit; and, (2) site closure and monitoring activities, including building removal and capping of mine openings, restoration of tailings areas, water treatment and post-closure monitoring. Although the ultimate amount to be incurred is uncertain, the fair value of the liability for retirement and remediation has been estimated to be $19.2 million. As required by regulatory and GAAP, cost estimates include contractor markups, provision for administration and engineering, provision for a market risk premium, and a provision for contingencies. However, the Company expects to use its employees wherever possible to complete the reclamation activities, which could reduce actual costs below the accrued liability. The Company has $10.5 million on deposit and has committed the proceeds from any assets sales at the Con Mine to the Con Mine reclamation security trusts that will be applied to, in part offset the reclamation costs as they are incurred. For purposes of determining the fair value of the obligation a discount rate of 9.8%, an inflation factor of 2.0% and a market risk premium of 8% have been applied. Key assumptions in estimating the assets retirement obligation for the Con Mine include: that historic mill roaster tailings are milled in 2006 and processed in 2007 and final wash down and treatment of storage pits completed in 2006; that the final abandonment abandonment, in law, voluntary, intentional, and absolute relinquishment of rights or property without conveying them to any other person. Abandonment also means willfully leaving one's spouse or children, intending not to return (see desertion). and restoration plan is approved and other site closure activities commence in 2007; that all buildings are removed and mine openings capped; that the site is restored to the standard acceptable for commercial-use property; and water treatment and monitoring continues post-closure for a period of 25 years. Key assumptions in estimating the asset retirement obligation for the Hope Bay exploration camps include removal of exploration camps, reclamation of site pad and infrastructure, placement of surface stored waste rock underground at Boston and re-vegetation as needed as needed prn. See prn order. . The estimate of the cost, based on contractor rates is at $1.3 million. Stock-based Compensation Stock-based compensation is accounted for using the fair value based method. Under the fair value based method, compensation cost is measured at fair value of the options at the date of grant and is expensed over the vesting period of the award. The Company estimates the fair value using the Black-Scholes option pricing model. The key assumptions used in 2005 were: a risk-free interest rate of 3.61%, a dividend yield of 0%, an expected volatility of 60% and expected lives of stock options of 4.85 years. The weighted average fair value of options granted in 2005 was $1.38 per share option. EXPLORATION AND DEVELOPMENT ACTIVITIES The focus for the Company continues to be on the Hope Bay project. The Company is committed to a strategy of advancing the Hope Bay project to a production decision while continuing to expand gold resources. The staged development strategy will focus first on the high grade gold Doris North project, with the goal of generating cash flow to pay for site infrastructure and to fund the continued exploration and development of other resources on the Hope Bay belt. The Company plans to pursue extensions and expansions to the initial phase of production through the mining of other resources on the Hope Bay belt. The Company's exploration strategy will focus on expanding and increasing the confidence level of existing deposits and on continued exploration for new gold resources in order to support a sustained intermediate production profile. The Company will continue to conduct grassroots exploration in cooperation with strategic partners, when possible. To achieve these objectives, the Company needs to successfully complete the current regulatory process for the Doris North project, complete a positive feasibility study during 2006 for the Phase 2 expansion, complete financing for mine construction, successfully construct and place into production the Doris North deposit, complete development of the Boston, Doris and Madrid deposits and identify additional resources. During 2005, expenditures at Hope Bay totaled $19.2 million for exploration, including 33,176 meters of core drilling and the advancement A gift of money or property made by a person while alive to his or her child or other legally recognized heir, the value of which the person intends to be deducted from the child's or heir's eventual share in the estate after the giver's death. of permitting and engineering for the Doris North project. Exploration programs for 2005 were designed to upgrade resources at Boston, Doris Central and Madrid to support a feasibility study in 2006; to expand the resource at Madrid; and, to conduct regional exploration work as part of the Company's assessment obligations at Hope Bay. Drilling was focused within the Madrid system “Madrid Agreement” redirects here. For other uses, see Madrid Agreement (disambiguation). The Madrid system for the international registration of marks, also conveniently known as the Madrid system or simply Madrid primarily around the Naartok deposit where 22,036 meters were drilled. Activity at Naartok focused on extending mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the wide, high grade interception of hole 05PMD328 which returned 66 meters grading 11.5 grams of gold per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. . This hole was a 105 meter meter, unit of measure meter, abbr. m, fundamental unit of length in the metric system. The meter was originally defined as 1/10,000,000 of the distance between the equator and either pole; however, the original survey was inaccurate and the meter was later step out from a 2004 hole that intercepted 9.8 grams of gold per tonne over 64.2 meters and suggests potential for significant dimensions and thickness thickness (thik´nes) a measurement across the smallest dimension of an object. triceps skinfold (TSF) thickness . The area of the Naartok resource continues to expand at depth and to the north and it is expected that as a result of 2005 drilling additional ounces will be added to the reported resource in 2006. Drilling within the upper portions of the Naartok East zone has improved continuity and tightened drill density and is also expected to have a positive impact on reported resources in 2006 as well as supporting the Phase 2 feasibility study. Prior to the 2005 work, the Madrid area, which includes Naartok, contained an indicated resource of 838,000 ounces of gold at a grade of 5.5 grams per tonne with an additional 2.6 million ounces of gold at a grade of 5.4 grams per tonne of inferred resources. Exploration outside the main deposits continues to advance with improved target selection. Though no significant intersections were recorded in the 2005 regional programs, programs were successful in providing improved understanding of potential targets. The Company continues to work towards obtaining permits and licences for the Doris North project. As a result of the NIRB recommendation in August 2004 to the Minister of DIAND that the project should not proceed on the basis of the then existing application, the Company submitted a revised preliminary project description on Doris North in February 2005. On March 7, 2005 NIRB recommended to the Minister of DIAND that the project should proceed to a Part 5 review requiring a public hearing. In April 2005, the Minister accepted NIRB's recommendation for a Part 5 review which led the Company to submit a revised draft environmental impact statement ("DEIS") to NIRB in June 2005. In August 2005, NIRB conducted a technical review of the DEIS and issued comments to be addressed before submission of the final document. The Company revised the draft document as requested and submitted the final environmental impact statement ("FEIS") on October 31, 2005. Public hearings to review the project were held the week of January 30 - February 3. On March 6, 2006, NIRB issued its final hearing report recommending to the Minister of Indian and Northern Affairs Canada that the Doris North Project should proceed. The NIRB report requires acceptance by the Minister before NIRB can issue a project certificate. Subject to the Minister accepting NIRB's recommendation, the Company is targeting having all required permits for production at Doris North by the end of 2006, which would permit shipping of construction materials to site in the summer of 2007, construction in the winter of 2007 and production commencing in 2008. CAPITAL PROGRAMS During fiscal 2005, the Company had capital expenditures of $19.2 million for exploration and project activities at Hope Bay and $0.1 million for property, plant and equipment compared to expenditures in 2004 of $34.7 million for exploration and project activities at Hope Bay and Back River. FINANCING AND LIQUIDITY At December 31, 2005, the Company had consolidated working capital of $64.3 million compared to $25.4 million at the end of 2004. At December 31, 2005, the Company had $68.7 million of cash and cash equivalents and short-term investments compared to $30.2 million at the end of 2004. At December 31, 2005, the Company also had $15.0 million in cash collateral deposits for reclamation bonds which are classified outside of working capital. On February 18, 2005, the Company assigned to Dundee Precious Metals Inc. its option from Kinross Gold Corporation to earn a 60% interest in the Back River project. The Company received approximately $10 million representing the reimbursement of costs incurred by the Company on the Back River project plus 5%. Dundee is required to issue to the Company 150,000 common shares, or pay the cash equivalent, if either (i) the total mineral resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature on the Goose Lake Goose Lake may refer to: The United States
On October 18, 2004, the Company completed a private placement of 7,600,000 flow-through common shares at a price of $2.00 per common share for gross proceeds of $15.2 million. The Company must incur Canadian exploration expenditures as defined in the Income Tax Act (Canada) for the entire amount by December 31, 2005, which amount has been incurred. On September 30, 2005, the Company completed a private placement of 7,320,000 flow-through common shares at a price of $2.05 per common share for gross proceeds of $15.0 million. In consideration for their services, the underwriters received commissions of $0.8 million and brokers' warrants exercisable to purchase 366,000 common shares at $2.05 per common share until September 30, 2006. The fair value of these warrants at the grant date was $0.1 million and has been shown on a net basis in share capital. The Company must incur Canadian exploration expenditures as defined in the Income Tax Act (Canada) in the amount of $15.0 million by December 31, 2006. On October 14, 2005, the Company completed a private placement of 250,000 flow-through common shares at a price of $2.05 per common share for gross proceeds of $512,000. The Company must incur Canadian exploration expenditures as defined in the Income Tax Act (Canada) in the amount of $512,000 by December 31, 2006. On November 22, 2005, the Company completed a private equity placement to Newmont Mining Corporation of Canada Limited ("Newmont") of 18,500,000 units at $2.35 per unit for gross proceeds of $43.5 million. Each unit consisted of one common share of the Company and a warrant to purchase a common share of the Company at $2.75 for a period of 48 months. The common shares comprised 9.9% of the Company's then issued and outstanding shares and 18% of issued and outstanding if all warrants were exercised. The Company has agreed to provide to Newmont periodic access to technical data, information on permitting progress and future work plans and site visitation rights In a Divorce or custody action, permission granted by the court to a noncustodial parent to visit his or her child or children. Custody may also refer to visitation rights extended to grandparents. in consideration for Newmont providing technical guidance to the Company. The Company believes it has sufficient cash resources and liquidity to sustain its planned activities in 2006. The future exploration and development of the Hope Bay project may require the Company to raise additional capital through a combination of project debt and equity financings. The Company's strategy is to use equity financing for exploration activities and to maximize project debt to build mining infrastructure until sufficient cash flow is generated from mining production. Liabilities and Contingencies The Company has the legal obligation to reclaim properties for which it holds water licenses and exploration and mining agreements. The Company has estimated these asset retirement obligations at December 31, 2005, in accordance with accounting guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. described above, to be an aggregate of $24.9 million on an undiscounted basis. The properties for which these obligations have been estimated are the Con Mine in Yellowknife and the Hope Bay properties in Nunavut. The Company has established cash deposits as collateral for letters of credit pledged in favour of various governmental agencies and others under several water licenses and mineral exploration and mining agreements. The Company has also established two reclamation security trusts for the reclamation of the Con Mine. The Company has cash collateral deposits totaling $15.0 million. The reclamation security trusts for the Con Mine were established on December 31, 2004. The Company deposited $9 million of the $10 million proceeds from the sale of its Bluefish hydro electric facility into a reclamation security trust, in accordance with an agreement with DIAND. The remaining $1 million of the proceeds was, and the proceeds from any subsequent sale of assets will be deposited into a second reclamation security trust. The cost of reclamation was estimated by the Company on the basis of a draft remediation plan which had been submitted to the McKenzie Valley Water Board in February 2003. The final plan is currently under review by the Water Board. Based on comments received to date from the regulatory review process, the Company has estimated the impact of the required changes to the plan and recorded an appropriate increase to the liability. Any further changes upon receiving final approval of the plan could result in an increase to the estimated liability. In 1995, the Company entered into a joint exploration transaction with an investor that resulted in the sale of an interest in the assets comprising the Con Mine. The transaction was based upon an independent valuation prepared for the Company. In 2000, Canada Revenue Agency ("CRA") issued a re-assessment notice challenging the valuation that formed the basis for this transaction. The re-assessment does not give rise to any taxes payable by the Company. However, as part of the original transaction, the Company agreed to compensate the investor for any shortfall in the value of the assets transferred, to a maximum of $2.7 million plus accrued interest, (approximately $2.3 million at December 31, 2005), should a ruling denying the transfer of certain tax pools be made against the Company. In 2004, the Company received notification that CRA has re-confirmed the original re-assessment. As a result, the Company filed a notice of appeal in March 2005. The Company has received notification from the Tax Court of Canada that this case should proceed and the discovery process is scheduled to commence in April 2006. While management intends to strenuously defend the independent valuation, the outcome of this issue is not yet determinable. No provision for these costs has been recorded at December 31, 2005. Contractual Obligations The following table summarizes the contractual obligations as at January 1, 2006 of the Company for each of the five years commencing with 2006 and thereafter, in thousands of dollars.
2006 2007 2008 2009 Thereafter
------------------------------------------------
------------------------------------------------
Oxygen plant $ 822 $ 612 $ - $ - $ -
Office lease costs 306 316 316 316 1,110
Exploration equipment 293 30 - - -
Site reclamation(1) 6,240 3,059 - - 15,635
(1) The Company is obligated to fund reclamation and closure costs
for its mining and exploration operations as a condition of
associated water licenses. However, the timing of the payments has
not been determined with certainty and may change depending upon
future events. The Company is in the process of finalizing its
abandonment and restoration plan with regulatory agencies for the Con
Mine which will establish the extent and timing of site closure
reclamation activities. Reclamation of exploration sites will be
deferred to the extent that the Company continues to be engaged in
actively exploring them.
For additional information related to the Company's obligations and commitments see note 16 in the annual consolidated financial statements. Off Balance Sheet Arrangements The Company does not have any off balance sheet arrangements other than the pension obligations which are described in note 13 of the annual consolidated financial statements. OUTLOOK The outlook for the Company is dependent on the successful exploration and development of the Hope Bay project. The Company controls 100% of the Hope Bay project, which has measured and indicated resources totaling 2.1 million ounces of gold at a grade of 9.6 grams per ton and an additional 4.3 million ounces of gold at a grade of 7.0 grams per ton in the inferred category. The Company plans to continue to work towards making a production decision on the Doris North project, including advancement of the permitting process. The Company is confident that it will be successful in addressing the concerns of the regulatory agencies and, if the permitting process is successfully completed, the Company will make a final decision on a commitment to the construction process. If the project is approved by the Company, production could commence during 2008. However, there can be no assurance that the permitting process will be completed as planned or that the Company will develop Doris North as anticipated. As part of the Company's development strategy for Hope Bay, programs have been completed in 2005 designed to facilitate delivery of a feasibility study in 2006 which, if successful, could demonstrate the opportunity for the development of significant sustained gold production following the Doris North project. As a result of the termination of mining activities at Con and Giant mines, the Company does not expect to generate significant operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. in 2006. The Company anticipates that final approval for the Con Mine abandonment and restoration plan will be received in 2006 which will permit the Company to conduct final reclamation activities in subsequent periods. On June 30, 2005, the Company returned the Giant Mine property to DIAND in accordance with the terms of the acquisition agreement. The Company does not have any ongoing reclamation obligations for the Giant Mine. RISKS AND UNCERTAINITIES The Company will require additional capital to pursue its exploration and development work at Hope Bay. Given the nature of capital market demand for speculative Speculative Securities that involve a high level of risk. speculative Of or relating to an asset or a group of assets with uncertain returns. The greater the degree of uncertainty the more speculative the asset. investment opportunities, there is no assurance that additional financing will be available for the appropriate amounts and at the times required. The Company has developed a cash management plan that will enable it to invest on a priority basis in projects likely to generate favourable results in the near-to-medium term. The impact of fluctuations in the price of gold is a risk to the Company's ability to develop its properties as well as future profitability and cash flow. As the gold price is denominated in U.S. dollars, the Company is also at financial risk as the currency exchange rate between Canadian and U.S. dollars fluctuates. If the Canadian dollar strengthens against to the U.S. dollar, revenue from future gold sales, which is generated in U.S. dollars, would convert to fewer Canadian dollars available to pay for operating costs that are almost entirely incurred in Canadian dollars. Permitting mining projects such as the Doris North project requires the approval of regulatory agencies which are beyond the Company's control. As a result, the receipt of approvals for the project and the timing of grants of necessary permits are inherently uncertain. FORWARD-LOOKING STATEMENTS Statements relating to exploration work at the Hope Bay project and the expected results of this work and strategies and plans for the development of the Hope Bay project, statements related to analyses of financial condition, future results of operations and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "satisfies", "potential", "goal", "objective", "prospective", "strategy", "target", and similar expressions, or that events or conditions "will", "would", "may", "can", "could" or "should" occur. Information inferred from the interpretation of drilling results and information concerning mineral resource estimates may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: risks related to fluctuations in gold prices and currency exchange rates; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company's properties; uncertainties involved in the interpretation of drilling results and other tests and the estimation of gold reserves and resources; the possibility that required permits may not be obtained on a timely manner or at all; the possibility that capital and operating costs may be higher than currently estimated and may preclude commercial development or render operations uneconomic; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; the risk of environmental contamination or damage resulting from Miramar's operations, risks and uncertainties described under "Risks and Uncertainties" and elsewhere in the Management's Discussion and Analysis, and other risks and uncertainties, including those described in the Miramar's Annual Report on Form 40-F for the year ended December 31, 2005 and Reports on Form 6-K filed with the Securities and Exchange Commission. Forward-looking statements are based on the beliefs, estimates and opinions of Miramar's management on the date the statements are made. Miramar undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. All resource estimates reported in this disclosure are calculated in accordance with the National Instrument 43-101 of the Canadian securities administrators Canadian Securities Administrators(CSA) is a forum for the 13 securities regulators of Canada's provinces and territories to coordinate and harmonize regulation of the Canadian capital markets. and the Canadian Institute of Mining and Metallurgy metallurgy (mĕt`əlûr'jē), science and technology of metals and their alloys. Modern metallurgical research is concerned with the preparation of radioactive metals, with obtaining metals economically from low-grade ores, with Classification system. These standards differ significantly from the requirements of the United States Securities and Exchange Commission, which permits U.S. mining companies in their SEC filings to disclose only those mineral deposits that qualify as proven or probable "reserves" because a determination has been made based on an appropriate feasibility study that the deposits could be economically and legally extracted or produced, and, accordingly, resource information reported in this disclosure may not be comparable to similar information reported by United States companies This is a list of companies from the United States:
: . The term "resource(s)" does not equate e·quate v. e·quat·ed, e·quat·ing, e·quates v.tr. 1. To make equal or equivalent. 2. To reduce to a standard or an average; equalize. 3. to "reserves" and normally may not be included in documents filed with the Securities and Exchange Commission, and investors are cautioned not to assume that "resources" will be converted into "reserves" in the future. This disclosure uses the term "inferred resources". While this term is recognized by Canadian securities regulations Canadian securities regulation is managed through laws and agencies established by Canada's 13 provincial and territorial governments. Each province and territory has a securities commission or equivalent authority. concerning disclosures by mining companies, the U.S. Securities and Exchange Commission does not recognize it. "Inferred resources" have a great amount of uncertainty as to their existence and as to their economic and legal feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. . It cannot be assumed that all or any part of the "inferred resources" will ever be upgraded to a high category. Under Canadian securities regulations, estimates of "inferred resources" may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that part or all of an "inferred resource" exist or are economically or legally feasible (algorithm) feasible - A description of an algorithm that takes polynomial time (that is, for a problem set of size N, the resources required to solve the problem can be expressed as some polynomial involving N). . Miramar Mining Corporation (TSX:MAE) (AMEX:MNG) |
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