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As Of Filer Filing For·On·As Docs:Size Issuer Agent 7/14/06 Augusta Resource Corp 40FR12B 7/13/06 61:4.7M Newsfile Corp/FA |
Document/Exhibit Description Pages Size 1: 40FR12B Registration Statement HTML 69K 2: EX-99.1 Annual Information Form for the Year Ended HTML 180K December 31, 2005 11: EX-99.10 MD&A for the Six Months Ended June 30, 2005 HTML 120K 12: EX-99.11 First Quarter Report HTML 144K 13: EX-99.12 MD&A for the Three Months Ended March 31, 2005 HTML 80K 14: EX-99.13 Management Information Circular HTML 129K 15: EX-99.14 Form of Proxy HTML 34K 16: EX-99.15 Preliminary Assessment and Economic Evaluation HTML 373K 17: EX-99.16 Mineral Resource Estimate HTML 257K 18: EX-99.17 News Release Dated June 30, 2006 HTML 27K 19: EX-99.18 Material Change Report Dated June 26, 2006 HTML 22K 20: EX-99.19 Material Change Report Dated June 14, 2006 HTML 48K 3: EX-99.2 Annual Information Form for the Year Ended HTML 254K December 31, 2004 21: EX-99.20 Material Change Report Dated June 5, 2006 HTML 21K 22: EX-99.21 Material Change Report Dated June 2, 2006 HTML 19K 23: EX-99.22 Material Change Report Dated May 18, 2006 HTML 25K 24: EX-99.23 Material Change Report Dated May 5, 2006 HTML 26K 25: EX-99.24 Material Change Report Dated April 27, 2006 HTML 19K 26: EX-99.25 Material Change Report Dated April 11, 2006 HTML 18K 27: EX-99.26 Material Change Report Dated April 7, 2006 HTML 26K 28: EX-99.27 Material Change Report Dated March 17, 2006 HTML 23K 29: EX-99.28 Material Change Report Dated March 6, 2006 HTML 20K 30: EX-99.29 Material Change Report Dated February 16, 2006 HTML 23K 4: EX-99.3 Audited Annual Financial Statements HTML 534K 31: EX-99.30 Material Change Report Dated January 26, 2006 HTML 31K 32: EX-99.31 Material Change Report Dated January 16, 2006 HTML 26K 33: EX-99.32 Material Change Report Dated January 16, 2006 HTML 30K 34: EX-99.33 Material Change Report Dated November 22, 2005 HTML 21K 35: EX-99.34 Material Change Report Dated November 11, 2005 HTML 28K 36: EX-99.35 Material Change Report Dated October 13, 2005 HTML 26K 37: EX-99.36 Material Change Report Dated September 29, 2005 HTML 22K 38: EX-99.37 Material Change Report Dated September 20, 2005 HTML 20K 39: EX-99.38 News Release Dated September 9, 2005 HTML 18K 40: EX-99.39 News Release Dated August 25, 2005 HTML 21K 5: EX-99.4 MD&A for the Years Ended December 31, 2005 and HTML 169K 2004 41: EX-99.40 Material Change Report Dated August 25, 2005 HTML 18K 42: EX-99.41 Material Change Report Dated July 12, 2005 HTML 23K 43: EX-99.42 Material Change Report Dated July 5, 2005 HTML 20K 44: EX-99.43 News Release Dated June 23, 2005 HTML 20K 45: EX-99.44 Material Change Report Dated June 14, 2005 HTML 20K 46: EX-99.45 News Release Dated June 9, 2005 HTML 19K 47: EX-99.46 Material Change Report Dated June 8, 2005 HTML 27K 48: EX-99.47 Material Change Report Dated May 13, 2005 HTML 23K 49: EX-99.48 Material Change Report Dated May 13, 2005 HTML 22K 50: EX-99.49 Material Change Report Dated March 29, 2005 HTML 21K 6: EX-99.5 First Quarter Report HTML 198K 51: EX-99.50 Material Change Report Dated March 4, 2005 HTML 22K 52: EX-99.51 News Release Dated March 4, 2005 HTML 24K 53: EX-99.52 News Release Dated March 1, 2005 HTML 26K 54: EX-99.53 News Release Dated February 17, 2005 HTML 18K 55: EX-99.54 News Release Dated February 11, 2005 HTML 18K 56: EX-99.55 News Release Dated February 8, 2005 HTML 21K 57: EX-99.56 Material Change Report Dated January 27, 2005 HTML 22K 58: EX-99.57 Consent of Expert in Connection With the Paee HTML 18K Report 59: EX-99.58 Consent of Expert in Connection With the Rosemont HTML 18K Property Report 60: EX-99.59 Auditor's Consent (Ernst & Young LLP) HTML 17K 7: EX-99.6 MD&A for the Three Months Ended March 31, 2006 HTML 99K 61: EX-99.60 Auditor's Consent (Deloitte & Touche LLP) HTML 17K 8: EX-99.7 Third Quarter Report HTML 244K 9: EX-99.8 MD&A for the Nine Months Ended September 30, 2005 HTML 135K 10: EX-99.9 Second Quarter Report HTML 239K
Filed by Automated Filing Services Inc. (604) 609-0244 - Augusta Resource Corporation - Exhibit 11 |
First Quarter Report
Notice to Readers
The interim unaudited consolidated financial statements of Augusta Resource Corporation (the “Company”) for the three months ended March 31, 2005 (“Financial Statements”) have been prepared by management and have not been reviewed by the Company’s auditors. The Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2004 which are available at the SEDAR website at www.sedar.com.
Augusta Resource Corporation |
Directors’ Report to Our Shareholders
The first quarter of 2005 has been a busy, but rewarding time for your Company. With the strategic acquisition of mining properties, the raising of capital and the appointment of new executives, you – our shareholders have finally been rewarded with a positive trend in our stock price.
Properties
In December 2004, the Company announced it had entered into an agreement to acquire a 100% interest in the Mount Hamilton Gold Project, located in White Pine County, Nevada. The acquisition closed May 6, 2005. The property was in production from 1995 to 1997 by Rea Gold Corporation, prior to their declaring bankruptcy in September 1997, producing 83,260 ounces of gold. The property is located at the south end of the Battle Mountain Gold Trend. The Company requested Roscoe Postle Associates Inc. to prepare an Independent Technical Report compliant with NI 43-101 and a Valuation on the property. The report has classified the historical resources to be an Indicated resource of 12 million tons grading 0.034 ounces per ton gold, or 405,000 ounces, and 0.18 ounces per ton silver, or 2,153,000 ounces, using a cut-off grade of 0.016 ounces per ton gold. Prior exploration data available indicates the property also contains significant molybdenum, tungsten and copper mineralization. Drilling by Phillips Petroleum Company in the late 70’s early 80’s identified (non NI 43-101 compliant) resources of approximately 4.2 million tons grading 0.52 % molybdenum, 0.37% tungsten and 0.6% copper. There also appears to be excellent exploration potential at Mt. Hamilton.
In January 2005, the Company announced it had entered into agreements to acquire the molybdenum-tungsten-gold mineral claims known as the Shell Deposit, which is located approximately 1,000 meters from our Mount Hamilton property. Historical estimates, calculated in 1981 by Union Carbide, (non NI 43-101 compliant) indicate the property contains resources of 1.1 million tons grading 1.2% molybdenum, 0.01 ounces per ton gold and 0.12% tungsten, and a further 0.5 million tons grading 0.17% molybdenum, 0.24 ounces per ton gold and 0.17% tungsten. Both resources were compiled using a cut-off grade of 0.35% molybdenum and 0.10 ounces per ton gold. Similar to the Mount Hamilton property, the Shell Deposit offers multiple exploration targets.
During March 2005, the Company entered into an agreement to acquire 100% working interest in the Lone Mountain copper-zinc-silver property, located in Grant County, New Mexico, U.S.A. A historical resource compiled in 1983 by Chevron Resources (non NI 43-101 compliant) indicates 7.4 million tons grading 2.2% copper, 5.0% zinc and 1.2 ounces per ton silver, and a further 17.5 million tons grading 1.36% copper, with both resources based on a cut-off grade of 1.0% copper. The acquisition has received regulatory approval and is in the process of closing.
Throughout the balance of 2005, your Company plans to undertake drilling programs on all three U.S. properties, to confirm prior exploration results and test new targets.
Augusta Resource Corporation |
Financing
During the first quarter, the Company was successful in closing a previously announced private placement generating proceeds of $1,050,000, and announced two private placements, which closed in April 2005, generating aggregate proceeds totaling $5,042,750. These funds are being used for property acquisitions, exploration expenditures and general working capital purposes.
Personnel
Your Company is pleased to announce new management personnel to provide leadership and direction for our enhanced assets.
In March, Gil Clausen joined our Company as President, Chief Executive officer and as a Member of the Board of Directors. Mr. Clausen has a Masters in Mining Engineering and brings to the Company over 22 years of executive and operating experience in mining and mines management.
Prior to joining the Company, Mr. Clausen was Executive Vice President, Mining for Washington Group International, Inc. where he was responsible for developing new business, executing the business unit growth strategy, and supporting domestic and international operations for several large open pit coal, metals and industrial minerals mines over a four year period. Annual new work awards more than quadrupled during his tenure. Prior to this, Mr. Clausen was Vice President Operations at Stillwater Mining Company for four years where he led the team that continuously achieved record-low costs and record-low accident frequency rates. He led an operating team that developed and implemented a three-year growth plan; doubling mining production and increasing developed reserves. While at Stillwater, Mr. Clausen managed a $75 million mine expansion, which was brought in on budget and ahead of schedule. Mr. Clausen has held various capacities at Place Dome Inc. beginning as Mine Superintendent for Gibraltar Mines Ltd., then General Manager of the Endako Mines Division and later General Manager for the Detour Lake Mine. Mr. Clausen’s career began in 1983 as a Mine Engineer at Noranda’s Brenda Mines. His early career experience includes operating and engineering positions with Fording Coal Limited and Cleveland Cliffs Inc. Mr. Clausen is a Registered Professional Engineer in the Province of British Columbia.
In addition, during April, Mike Clarke joined the Company as Vice President Exploration. Mr. Clarke has a Ph. D. in Geology and over thirty years of international industry experience in the US, Mexico, Russia, Canada, Saudi Arabia and western Africa.
For the past year, Mr. Clarke was Country Manager, Exploration for First Quantum Minerals Ltd. in Mauritania where he was responsible for exploration for the Guelb Moghrein Copper-Gold deposit. Prior to this, he was Director of Exploration for the Saudi Arabian Mining Company where, under his direction, the company made several large discoveries totalling in excess of several million ounces of contained gold. Prior to this, over a period of almost 10 years, Mr. Clarke was Senior Geologist, District Manager - Mexico and District Manager - Western Canada for Cyprus Exploration Co. evaluating acquisition opportunities and carrying out exploration projects worldwide. While at Cyprus, Mr. Clarke headed the geological section of the Cyprus team that evaluated and acquired the Kubaka Gold Deposit in the Russian Far East and then guided the geologic section through feasibility leading Cyprus to becoming one of the first western mining companies to develop a new mine in the former CIS. Mr. Clarke’s career began in 1969 as an underground labourer, mine surveyor and Assistant Geologist. From 1976 to 1983 he was with the San Luis Mining Co./Luismin - initially as a Mine Geologist, District Geologist and later as Director of Exploration managing exploration for precious and base metal deposits throughout Mexico.
Augusta Resource Corporation |
With these additions to our management team and our new property acquisitions, we look forward to continued progress.
On behalf of the Board,
Gil Clausen
President & Chief Executive Officer
Augusta Resource Corporation |
AUGUSTA RESOURCE CORPORATION
BALANCE SHEETS
March 31, 2005 and December 31, 2004
March 31 | December 31 | ||||||||
Notes | 2005 | 2004 | |||||||
ASSETS | |||||||||
CURRENT | |||||||||
Cash | 3 | $ | 585,895 | $ | 989,799 | ||||
Accounts receivable | 9 | 80,587 | 70,546 | ||||||
Marketable securities | 4 | 500,000 | - | ||||||
1,166,482 | 1,060,345 | ||||||||
MINING ASSETS | 3,4 | ||||||||
Mining properties | 310,057 | 285,064 | |||||||
Deferred exploration expenses | 48,743 | 19,785 | |||||||
358,799 | 304,849 | ||||||||
$ | 1,525,281 | $ | 1,365,194 | ||||||
LIABILITIES | |||||||||
CURRENT | |||||||||
Accounts payable and accrued liabilities | 8 | $ | 275,288 | $ | 534,183 | ||||
Loans payable | 7 | 23,288 | 23,288 | ||||||
298,576 | 557,471 | ||||||||
LONG-TERM | |||||||||
Loans and advances | 32,997 | 32,997 | |||||||
331,573 | 590,468 | ||||||||
(CAPITAL DEFICIENCY) | |||||||||
SHAREHOLDERS' EQUITY | |||||||||
Share capital | 5 | 5,721,331 | 4,611,331 | ||||||
Contributed surplus | 1,041,702 | 104,500 | |||||||
Subscriptions received | 5d | 727,500 | 1,050,000 | ||||||
Deficit | (6,296,825 | ) | (4,991,105 | ) | |||||
1,193,708 | 774,726 | ||||||||
$ | 1,525,281 | $ | 1,365,194 |
On Behalf of the Board of Directors | ||
/s/ Richard W. Warke | /s/ Gil Clausen | |
Richard W. Warke – Director | Gil Clausen - Director |
Augusta Resource Corporation |
AUGUSTA RESOURCE CORPORATION
INCOME STATEMENTS
For the period of January 1 to March 31, 2005 and 2004
March 31 | March 31 | |||||
2005 | 2004 | |||||
EXPENSES | ||||||
Accounting and audit | $ | - | $ | - | ||
Administration | 7,500 | 7,500 | ||||
Consulting | - | - | ||||
Filing and regulatory | 38,495 | 3,440 | ||||
Fiscal and advisory services | 517 | - | ||||
Foreign exchange (gain) | 192 | 673 | ||||
Interest and finance charges | (3,063 | ) | 2,576 | |||
Legal fees | 105 | - | ||||
Office and sundry | 29,949 | 653 | ||||
Promotion | 193,331 | - | ||||
Recruitment fees | 45,174 | - | ||||
Salaries and benefits | 56,320 | 43,907 | ||||
Stock based compensation | 937,202 | - | ||||
Travel | - | 1,755 | ||||
Loss from operations | (1,305,722 | ) | (60,504 | ) | ||
LOSS FOR THE PERIOD | (1,305,722 | ) | (60,504 | ) | ||
Deficit, beginning of the period | (4,991,103 | ) | (4,012,048 | ) | ||
DEFICIT, END OF PERIOD | $ | (6,296,825 | ) | $ | (4,072,552 | ) |
BASIC & DILUTED LOSS PER SHARE | $ | (0.06 | ) | $ | (0.01 | ) |
WEIGHTED AVERAGE NUMBER | ||||||
OF SHARES OUTSTANDING | 23,455,944 | 7,288,203 |
Augusta Resource Corporation |
AUGUSTA RESOURCE CORPORATION
STATEMENT OF CASH FLOWS
For the period ending March 31, 2005 and 2004
March 31 | March 31 | |||||
2005 | 2004 | |||||
NET INFLOW (OUTFLOW) | ||||||
OF CASH RELATED TO | ||||||
THE FOLLOWING: | ||||||
OPERATING | ||||||
Net loss for the period | $ | (1,305,722 | ) | $ | (60,504 | ) |
Items not affecting cash: | ||||||
Accrued interest on debt | 1,220 | 333 | ||||
(1,304,502 | ) | (60,171 | ) | |||
Net changes in non-cash | ||||||
working capital items: | ||||||
Accounts receivable | (10,041 | ) | (355 | ) | ||
Stock based compensation | 937,202 | - | ||||
Accounts payable & accrued liabilities | (260,114 | ) | 101,462 | |||
(637,456 | ) | 40,936 | ||||
FINANCING | ||||||
Issuance of common shares | 1,110,000 | - | ||||
Subscriptions for common shares | (322,500 | ) | - | |||
787,500 | - | |||||
INVESTING | ||||||
Investment in mining properties, net of related payables | (24,993 | ) | - | |||
Investment in marketable securities | (500,000 | ) | ||||
Deferred exploration expenses, net of related payables | (28,957 | ) | (41,400 | ) | ||
(553,949 | ) | (41,400 | ) | |||
NET CASH INFLOW (OUTFLOW) | (403,904 | ) | (464 | ) | ||
CASH, BEGINNING OF PERIOD | 989,799 | 2,535 | ||||
CASH, END OF PERIOD | $ | 585,895 | $ | 2,071 | ||
SUPPLEMENTAL INFORMATION | ||||||
Interest Paid | $ | - | $ | 4 |
Refer to Notes 4 and 5 for non-cash operating, financing and investing activities
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
1. |
CONTINUING OPERATIONS |
The Company has interests in mining assets at the exploration stage, the economic viability of which has not been assessed. The realization of the company’s investment in mineral properties is dependent upon various factors, including the existence of economically recoverable mineral reserves, the ability to obtain the necessary financing to complete the exploration and development of the properties, future profitable operations, or, alternatively, upon disposal of the investment on an advantageous basis. | |
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has a history of losses, has working capital of $845,406 (2004 – $502,874), and has a deficit of $6,296,825 (2004 – $4,991,105). Realization values of assets may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. | |
The Company’s ability to meet its obligations and maintain its operations is contingent upon successful completion of additional financing arrangements and the continuing support of its creditors. | |
2. |
CHANGE IN ACCOUNTING POLICY |
(a) |
Stock based compensation | |
Effective January 1, 2004, the Company adopted the CICA Handbook Section 3870, “Stock-based Compensation and Other Stock-based Payments”, which requires fair value accounting for all stock options issued during the year. Compensation expense for options granted is determined based on the estimated fair values of the stock options at the time of grant, the cost of which is recognized over the vesting periods of the respective options. This change in accounting policy was applied retroactively without restatement of prior periods. On January 1, 2004, the company increased the deficit by $32,500 and increased contributed surplus by $32,500. |
3. |
SIGNIFICANT ACCOUNTING POLICIES | |
(a) |
Generally accepted accounting principles | |
These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. | ||
(b) |
Cash | |
Cash consists of deposits in banks. | ||
(c) |
Mining assets | |
Mining assets are comprised of undivided interests in properties and deferred exploration expenses on properties in the exploration stage. They are recorded at acquisition cost or |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
(c) |
Mining assets (continued) | |
at the attributed value in the case of a devaluation caused by a permanent impairment of value. Mining properties, related deferred exploration expenses and options to acquire undivided interests in mining properties are amortized only as these properties are put into production or written off if they are abandoned. | ||
During the normal course of its business, the Company enters into agreements to acquire undivided interests in mining properties, which are normally acquired in exchange for exploration and development expenses to be incurred according to different schedules, issuance of shares and payments subject to feasibility studies. In addition, royalties will be paid on commercial operations of certain mining properties. | ||
The Company is in the process of exploring and developing its various properties. On a regular basis, the Company reviews the carrying values of deferred mineral property acquisition and exploration expenditures with a view to assessing whether there has been any impairment in value. In the event that reserves are determined to be insufficient to recover the carrying value of any property, the carrying value will be written down or written off, as appropriate. |
(d) | Share issue expenses |
|
Share issue expenses are recorded as an increase in the deficit in the year in which they are incurred. |
||
(e) | Loss per share |
|
The Company uses the treasury stock method for the calculation of diluted losses per share. |
||
(f) | Foreign currencies |
|
Monetary assets and liabilities in foreign currencies are translated into Canadian dollars at the exchange rate at the end of the year. Items which affect income or expenses are translated at the rate of exchange on each transaction date. Gains or losses upon translation are included in the statement of loss. |
||
(g) | Stock-based compensation plans |
|
Effective January 1, 2004, the Company adopted the revised CICA Handbook Section 3870 Stock -based Compensation and Other Stock -based Payments. The revised standard requires that the fair value of stock options granted after January 1, 2002 be expensed in the statement of earnings. Previously the Company did not record stock options issued to employees as compensation expense and disclosed pro-forma information on the fair value of stock compensation issued during the period in the notes to the financial statements. |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
(h) |
Use of estimates | |
These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles which require management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. |
4. |
MINING ASSETS |
Mining Properties Cost | Deferred Exploration Expenses | ||||||||||||
Mining assets: | 2005 | 2004 | 2005 | 2004 | |||||||||
Mt. Hamilton property | $ | 37,157 | $ | 37,157 | $ | 32,360 | $ | 16,191 | |||||
Lone Mountain property | 24,993 | - | - | - | |||||||||
Shell property | - | - | 12,789 | - | |||||||||
Coronation Diamond District properties | 247,907 | 247,907 | 3,594 | 3,594 | |||||||||
$ | 310,057 | $ | 247,907 | $ | 48,743 | $ | 3,594 | ||||||
Mining properties: | 2005 | 2004 | |||||||||||
Balance, beginning of year | $ | 247,907 | $ | 544,706 | |||||||||
Acquisition costs | 62,150 | - | |||||||||||
Write-offs | - | (296,799 | ) | ||||||||||
Balance, end of year | $ | 310,057 | $ | 247,907 | |||||||||
Deferred exploration expenses: | |||||||||||||
Balance, beginning of year | $ | 19,785 | $ | 174,549 | |||||||||
Geologists, consultants and professional services | 28,958 | 57,591 | |||||||||||
Write-offs | - | (212,355 | ) | ||||||||||
Balance, end of year | $ | 48,743 | $ | 19,785 |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
4. |
MINING ASSETS (continued) |
Properties in White Pine County, Nevada
In late 2004, the Company announced the signing of an agreement to acquire a 100% interest in the Mount Hamilton Gold Project, located in White Pine County, Nevada. The project is located approximately 45 miles east of Eureka, Nevada and 50 miles west of Ely, Nevada and is accessible from Highway 50 over good all-weather gravel roads. The White Pine Mining District has a long history of silver and gold mining, dating back to the first gold discovery in 1865.
Mount Hamilton has multiple exploration targets including surface bulk mineralization as well as high grade vein style mineralization. Six separate high priority areas have been identified. An extensive amount of exploration and drilling information on these areas is included in the acquisition. On March 4, 2005, the Company announced that the TSX Venture Exchange has given conditional approval for the acquisition of the Mount Hamilton Gold Project. The terms of the acquisition are $3,600,000 USD payable in cash over two years ($3,000,000) and stock (3,750,000 units). The units consist of one share and one warrant, with each warrant entitling the holder to purchase one common share at $0.16 for a period of two years. The acquisition closed on May 6, 2005.
On January 26, 2005, the Company announced the signing of agreements to acquire the Shell Deposit in White Pine County, Nevada. The Shell Deposit, located nearby the Mount Hamilton property, was subject to past exploration programs, with results indicating that the property hosted molybdenum and gold mineralization. The Company is acquiring a 100% working interest, subject to an underlying Net Smelter Royalty ranging from 0.5% - 4.5%, for cash payment of $120,000 US, and annual advance royalty payments commencing at $80,000 US on first anniversary increasing by $20,000 per year until production commences.
Property near Silver City, New Mexico
On March 1, 2005, the Company announced the signing of an agreement to acquire the Lone Mountain project in New Mexico. The Property is approximately 5 miles from the town of Silver City, New Mexico, 9 miles southwest of Phelps Dodge’s Chino mine and 5 miles northwest of Phelps Dodge’s Hurley smelter. The Company is acquiring a 100% working interest, subject to an underlying Net Smelter Royalty ranging from 2.0% - 3.0%, minimum exploration commitments of US$4,850,000 and payments of US$1,000,000 cash and 325,000 common shares over a 3 year period. In addition, until the property is in commercial production, the Company will make payment of US$400,000 cash and 100,000 common shares on the fourth and each subsequent anniversary.
Properties in the Coronation Diamond District, Nunavut, Canada
The Company has four separate option agreements with 4763 NWT Ltd. (“NWT”) to acquire working interests (“WI”) of 10% and 20% for 4 properties located in the Coronation Diamond District in Nunavut, Canada, which aggregate about 487,300 acres in the region.
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
4. |
MINING ASSETS (continued) |
Properties in the Coronation Diamond District, Nunavut, Canada
The property agreements for the 4 properties require the Company to pay NWT cash amounts totaling $231,573. The terms of these agreements also require the Company to issue common shares to NWT totalling 116,670 common shares, of which 58,335 shares are to be issued within 10 days of the Approval Date and 58,335 shares by the first anniversary date of the initial share issuance. The Company issued 58,335 shares at a deemed value of $0.28 for a total value of $16,334 to NWT on April 29, 2003.
For the four properties comprising 487,300 acres, in which the Company can earn a 10% or 20% WI, NWT has optioned 85% and 70% WI, respectively, in each of the four properties to various third party exploration companies (“Primary Optionees”), with the balance of the 5% and 10% WI, respectively, to be retained by NWT. The Primary Optionees earn their interests by completing work expenditures over a 3 to 4 year period, whereby the Company will in effect have carried interests in these properties pending the Primary Optionees earning their 85% and 70% WI. The Company has agreed to assume responsibility for NWT’s work expenditures relative to NWT’s 5% and 10% WI in these properties for an amount up to the work expenditures to be completed by the Primary Optionees on each of these four properties to earn their 85% and 70% WI, respectively.
Prior to June 30, 2004, the Company held two additional option agreements with NWT to acquire a 100% working interest in the AW and BH properties, aggregating 241,300 acres. Those agreements required the Company to pay NWT cash amounts totalling $293,132 and to issue 200,000 common shares, of which 33,334 were to be issued within 10 days of the approved sale, 33,334 were to be issued by the first anniversary date of the initial share issuance, and 66,667 shares each by the second and third anniversaries. The Company issued 33,334 at a deemed value of $0.11 per share for a total value of $3,667 on May 7, 2003. In 2002, the Company entered into an option and joint venture agreement on the two properties, with Ashton Mining (Northwest Territories) Ltd. (“Ashton”), a wholly owned subsidiary of Ashton Mining of Canada Inc. Under terms of the agreements, the Company was to fund a Phase 1 exploration program, aggregating $207,000, that Ashton would conduct during the 2003 exploration season. In July 2004, the Company received results from the 2003 summer exploration program conducted on the properties. Ashton notified the Company that it was terminating the agreements on both properties and the Company decided to not proceed any further with the properties and, effective June 30, 2004, has written off $296,799 in Mining Properties and $212,355 in Deferred Exploration Expenses.
As at March 31, 2005, the Company had paid $469,705 to NWT in acquiring working interests in six properties in the Coronation Diamond District, incurred $215,949 in relation to deferred exploration expenditures related to these properties, issued 33,334 shares at a deemed price of $0.11 per share and 58,335 shares at $0.28 per share, and accrued an amount of $55,000 to NWT included in accounts payable, which is to be settled by the issuance of shares of the Company, subject to regulatory approval.
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
5. |
SHARE CAPITAL |
(a) |
Authorized: Unlimited number of common shares without par value. | |
(b) |
Issued: | |
Changes in the Company’s share capital were as follows: |
Number of | |||||||
Shares | Amount | ||||||
Common shares, Balance at December 31, 2003 | 9,164,555 | $ | 4,081,331 | ||||
Issued for finder's fees | 140,000 | 7,000 | |||||
Issued for cash | 10,460,000 | 523,000 | |||||
Common shares, Balance at December 31, 2004 | 19,764,555 | $ | 4,611,331 | ||||
Issued for cash | 3,875,000 | 1,087,500 | |||||
Common shares, Balance at March 31, 2005 | 23,639,555 | $ | 5,698,831 |
(c) |
Private Placement | |
On February 11, 2005, the Company announced a private placement of up to 2,000,000 units at $1.00 for total proceeds of $2,000,000. Each unit is comprised of one common share and one half share purchase warrant, with each full warrant entitling the subscriber to purchase an additional common share for $1.25 for a period of one year. The private placement was closed in April 2005 for a total of 1,954,250 units for proceeds of $1,954,250 with 977,125 warrants issued, expiring April 15, 2006. Finder’s fees of $118,947.50 cash and 30,015 broker’s warrants on the same terms as those issued to the placees, were paid. | ||
On February 17, 2005, the Company announced a private placement of up to 2,000,000 units at $2.00 for total proceeds of $4,000,000. Each unit is comprised of one common share and one half share purchase warrant, with each full warrant entitling the subscriber to purchase an additional common share for $2.50 for a period of one year. The private placement was closed in April 2005 for a total of 1,544,250 units for proceeds of $3,088,500 with 772,125 warrants issued, expiring April 15, 2006. Finder’s fees of $186,795 cash and 60,030 broker’s warrants on the same terms as those issued to the placees, were paid. |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
5. |
SHARE CAPITAL (continued) |
Private Placement (continued)
On March 3, 2005, the Company announced the closing of the private placement of December 10, 2004. The private placement was for 3,500,000 units at $0.30 per unit for proceeds of $1,050,000. Each unit is comprised of one common share and one half of a non-transferable share purchase warrant. One whole share purchase warrant entitles the holder to acquire one common share at a price of $0.45 for a period of one year expiring on March 3, 2006. A finder’s fee of $73,500 was paid for this placement.
(d) |
Options | |
On March 31, 2005, certain directors and officers of the Company hold 979,333 stock options, and certain consultants and employees of the Company hold 125,000 stock options to purchase common shares of the Company. | ||
The following table summarizes the status of the Company’s stock option plans as at March 31, 2005: |
2005 | |||||||
Number of | |||||||
Shares | Exercise Price | ||||||
Outstanding at beginning of year | 1,096,000 | $ | 0.15 | ||||
Granted | 450,000 | $ | 2.05 | ||||
Exercised | (275,000 | ) | $ | 0.12 | |||
Expired | (16,667 | ) | $ | 0.45 | |||
Cancelled | (150,000 | ) | $ | 0.10 | |||
Outstanding at March 31, 2005 | 1,104,333 | $ | 0.87 | ||||
Options exercisable at March 31, 2005 | 716,833 |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
5. | SHARE CAPITAL (continued) | |
(d) | Options | |
The following table summarizes information about stock options outstanding at March 31, 2005: |
Options Outstanding and Exercisable | |||||
Number | Weighted | Weighted | Number | Weighted | |
Outstanding | Average | Average | Exercisable at | Average | |
Exercise | at March 31, | Remaining | Exercise | March 31, | Exercise |
Prices | 2005 | Contractual Life | Prices | 2005 | Prices |
$ 0.30 | 162,666 | 0.8 Years | $ 0.30 | 162,666 | $ 0.30 |
$ 0.33 | 66,667 | 2.1 Years | $ 0.33 | 66,667 | $ 0.33 |
$ 0.10 | 50,000 | 4.5 Years | $ 0.10 | 0 | $ 0.10 |
$ 0.10 | 375,000 | 4.7 Years | $ 0.10 | 375,000 | $ 0.10 |
$ 2.05 | 450,000 | 5.0 Years | $ 2.05 | 112,500 | $ 2.05 |
1,104,333 | 716,833 |
(e) |
Warrants | |
The following table summarizes information about warrants outstanding at March 31, 2005. Each warrant is exercisable into one common share. |
Number of Shares | Exercise Price and Expiry Dates | ||
Outstanding at beginning of period | 2,800,000 | $0.10 until Nov 26, 2005 | |
Exercised | 125,000 | ||
Outstanding at end to period | 2,675,000 | ||
Outstanding at beginning of period | 7,660,000 | $0.10 until May 6, 2006 | |
Exercised | 200,000 | ||
Outstanding at end to period | 7,460,000 | ||
Outstanding at beginning of period | 0 | ||
Issued | 1,750,000 | $0.45 until Mar 3, 2006 | |
Outstanding at end to period | 1,750,000 | ||
Total outstanding at March 31, 2005 | 11,885,000 |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
5. | SHARE CAPITAL (continued) |
(e) |
Warrants | |
The warrants attributable to the Private Placements announced on February 11 and February 17, 2005, which closed in April 2005 are not included. With these accounted for, an additional 1,839,295 warrants would be outstanding. With 1,007,140 exercisable at $1.25 expiring on April 15, 2006 and 832,155 exercisable at $2.50 expiring April 15, 2006. | ||
The warrants attributable for the agreement to purchase Mount Hamilton are also not included. As of the May 6, 2005 closing date, 3,750,000 warrants, exercisable at $0.16 US, expiring May 6, 2007 have been issued. | ||
(d) |
Contributed Surplus | |
On March 31, 2005, the contributed surplus was as follows: |
2005 | |||
Balance - Beginning of year | 104,500 | ||
Stock-based compensation retroactive adjustment (note 2) | - | ||
Stock-based compensation expense for the year | 937,202 | ||
Balance - End of year | 1,041,702 |
6. |
STOCK-BASED COMPENSATION PLANS |
On January 1, 2004, the Company adopted the revised CICA Handbook Section 3870 Stock - based Compensation and Other Stock -based Payments as described in Note 2(l). | |
In March 2005, 450,000 stock options with an exercise price of $2.05 were issued to a certain director and officer of the Company resulting in a fair value at the date of grant of $937,202. The fair value of stock compensation issued to the employee was determined using the Black-Scholes valuation model assuming a volatility factor of 191%, a risk free interest rate of 3.78% and an expected life of five years. | |
7. |
NOTE PAYABLE |
In March 2003, the Company received a loan totaling $100,000. This loan is payable on demand and bears an interest rate of 5% per annum. This loan was repaid on November 20, 2003. Interest of $3,621 and a loan bonus consisting of 100,000 common shares at a deemed value of $0.10 per share and $10,000 cash was accrued for this loan and remains outstanding at March 31, 2005 |
Augusta Resource Corporation |
NOTES TO THE FINANCIAL STATEMENTS
8. | LOANS AND ADVANCES |
Loans and advances do not provide for specific terms of repayment and are unsecured. | |
9. |
RELATED PARTY TRANSACTIONS |
As of March 31, 2005, the Company incurred expenses of $7,500 (2004 - $7,500) for administrative services provided by a company in which a director of the Company has a 25% interest. As of March 31, 2005, the Company incurred salaries of $37,500 (2004 - $25,000) to the Chairman of the Company and $18,750 (2004 - $18,750) to a director. At March 31, 2005, included in accounts receivable is an amount of $74,861 (2004 - $450,946 in accounts payable) due from (2004 – due to) directors and related companies, which share certain common directors with the Company. | |
10. |
FINANCIAL INSTRUMENTS |
The carrying values of cash, accounts receivable, accounts payable and accrued liabilities, note payable and loans and advances as reflected in the balance sheet approximate their fair values. The company has no significant concentrations of credit risk. | |
11. |
SUBSEQUENT EVENTS |
On April 13, 2005, the Company announced the appointment of Mr. Mike Clarke as Vice President Exploration. Mr. Clarke has a Ph.D. in Geology and over thirty years of international industry experience in the US, Mexico, Russia, Canada, Saudi Arabia and western Africa. For the past year, Mr. Clarke was Country Manager, Exploration for First Quantum Minerals Ltd. in Mauritania where he was responsible for exploration for the Guelb Moghrein Copper-Gold deposit. For the prior four and three quarter years, he was Director of Exploration for the Saudi Arabian Mining Company where, under his direction, the company made several large discoveries totalling in excess of several million ounces of contained gold. |
Augusta Resource Corporation |
CORPORATE INFORMATION |
HEAD OFFICE | #400 – 837 West Hastings Street | |
Vancouver, BC, Canada V6C 3N6 | ||
Telephone: (604) 687-1717 | ||
Facsimile: (604) 687-1715 | ||
Website: www.augustaresource.com | ||
E-mail: info@augustaresource.com | ||
DIRECTORS | Donald B. Clark | |
Gil Clausen | ||
Dr. Chris Jennings | ||
Michael Steeves | ||
Robert Wares | ||
Richard Warke | ||
OFFICERS | Gil Clausen ~ President and Chief Executive Officer | |
Richard Warke ~ Chairman | ||
Mike Clarke ~ Vice President Exploration | ||
Purni Parikh ~ Secretary | ||
REGISTRAR AND | Computershare Trust Company of Canada | |
TRANSFER AGENT | #401 - 510 Burrard Street | |
Vancouver, BC V6C 3B9 | ||
AUDITORS | Deloitte & Touche LLP | |
#2800 - 1055 Dunsmuir Street | ||
Vancouver, BC V7X 1P4 | ||
SOLICITORS | Gowling Lafleur Henderson LLP | |
1055 Dunsmuir Street | ||
Vancouver, BC V7X 1J1 | ||
SHARES LISTED | TSX Venture Exchange | |
Trading Symbol ~ ARS |
Augusta Resource Corporation |
This ‘40FR12B’ Filing | Date | Other Filings | ||
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5/6/07 | ||||
Filed as of: | 7/14/06 | F-X | ||
Filed on: | 7/13/06 | F-X | ||
5/6/06 | ||||
4/15/06 | ||||
3/3/06 | ||||
5/26/05 | ||||
5/6/05 | ||||
4/13/05 | ||||
3/31/05 | ||||
3/4/05 | ||||
3/3/05 | ||||
3/1/05 | ||||
2/17/05 | ||||
2/11/05 | ||||
1/26/05 | ||||
12/31/04 | ||||
12/10/04 | ||||
6/30/04 | ||||
3/31/04 | ||||
1/1/04 | ||||
12/31/03 | ||||
11/20/03 | ||||
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1/1/02 | ||||
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