SEC Info℠ | Home | Search | My Interests | Help | Sign In | Please Sign In | ||||||||||||||||||||
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 7 |
Third Quarter Report
(Restated)
Notice to Readers
The interim restated unaudited consolidated financial statements of Augusta Resource Corporation (the “Company”) for the nine months ended September 30, 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.
Directors’ Report to Our Shareholders
During the first half of the year management acquired three new properties, secured the financing required to close those acquisitions and provided the capital for work expenditures. For the third quarter of the year we have focused on drilling and development of these properties and announced our results. We are committed to completing the announced drilling programs and to aggressively pursue new programs when regulatory approval is received. We have also added further executive talent with the appointment of a Vice President of Projects and Environment, further strengthening our team and enabling advancement of the Company’s objectives.
Properties
The Company has acquired the Rosemont copper property located in Arizona, the Lone Mountain copper/zinc property in New Mexico, the Mount Hamilton gold/molybdenum property in Nevada, and the Shell tungsten/molybdenum property in Nevada.
Financing
$16,480,921 has been raised through private placements, options, warrants and a convertible debenture.
Personnel
The Company has engaged the services of James Sturgess as the Vice President of Projects and Environment, responsible for all environmental permitting and oversight of project development activities. Mr. Sturgess works in our Denver office.
Work Programs
The new executive personnel and technical team have focused the Company on advancing the properties through drilling and project development.
Rosemont Property – After the Company reviewed the historic geologic model and drill data and constructed an electronic database, including updated structure and lithology, a modern resource estimate and initial pit-optimization were completed and used to design a 3,000 metre drill program. The 3,000 metre program is designed to carry out confirmation and in-fill drilling of previous programs. In September the Company announced expansion of the drill program to approximately 10,000 metres and currently three drilling rigs are working on site. Initial results were promising and the first three drill holes designed to confirm the down dip extension were announced on October 13, 2005. On November 10, 2005 results of an additional 1139.3 meters were announced. These additional drill intersections compare favorably to the historic resource results completed by Anamax and Asarco. A pre-feasibility study and corresponding technical report are planned for completion by the first quarter of 2006.
Lone Mountain Property - Data from previous programs has been acquired and has been compiled in an electronic database. The geological model has been refined, and was used to design a drill program. Permit applications for a 3,100 metre drill program have been submitted for approval. Negotiations with the private property surface owners for access to this site are being finalized.
Mount Hamilton Properties – Compilation of data from prior programs has been completed and an updated geological model developed. The Company plans to complete a 3,000 metre diamond drill program to verify previously discovered molybdenum and tungsten mineralized bodies and explore their extensions. Permit applications, including environmental review for public comment, have been submitted to the U.S. Forest Service.
As the work programs continue we will announce the results as available. We are looking forward to further encouraging results and appreciate your support.
On behalf of the Board,
/S/ Gil Clausen | |
Gil Clausen | November 23, 2005 |
President & Chief Executive Officer |
Augusta Resource Corporation | 2 |
AUGUSTA RESOURCE CORPORATION
CONSOLIDATED BALANCE SHEETS
As at September 30, 2005 and December 31, 2004
September 30 | December 31 | ||||||||
Notes | 2005 | 2004 | |||||||
ASSETS | (restated, note 2) | ||||||||
CURRENT | |||||||||
Cash | 4 | $ | 5,487,009 | $ | 989,799 | ||||
Accounts receivable | 12 | 35,525 | 32,979 | ||||||
Marketable securities | 4,5 | 89,596 | - | ||||||
Prepaid expenses | 12 | 17,330 | 37,567 | ||||||
Deferred debt issuance costs | 214,519 | - | |||||||
5,843,979 | 1,060,345 | ||||||||
FIXED ASSETS | 4,6 | 9,888 | - | ||||||
MINING ASSETS | 4,7 | ||||||||
Mining properties | 15,533,126 | 285,064 | |||||||
Deferred exploration expenses | 1,315,741 | 19,785 | |||||||
16,848,867 | 304,849 | ||||||||
$ | 22,702,734 | $ | 1,365,194 | ||||||
LIABILITIES | |||||||||
CURRENT | |||||||||
Accounts payable and accrued liabilities | 12 | $ | 987,441 | $ | 534,183 | ||||
Current portion of convertible debenture | 9 | 4,483,281 | - | ||||||
Current portion of notes and advances | 8 | 1,093,239 | 23,288 | ||||||
6,563,961 | 557,471 | ||||||||
LONG -TERM | |||||||||
Future income taxes | 9 | 2,200,000 | - | ||||||
Notes and advances | 8 | 1,390,052 | 32,997 | ||||||
10,154,013 | 590,468 | ||||||||
SHAREHOLDERS' EQUITY | |||||||||
Share capital | 10 | 15,880,582 | 4,611,331 | ||||||
Contributed surplus | 10 | 5,726,918 | 104,500 | ||||||
Subscriptions received | - | 1,050,000 | |||||||
Foreign currency translation | 11,944 | - | |||||||
Deficit | (9,070,723 | ) | (4,991,105 | ) | |||||
12,548,721 | 774,726 | ||||||||
$ | 22,702,734 | $ | 1,365,194 |
On Behalf of the Board of Directors | ||
/S/ Richard W. Warke | /S/ Gil Clausen | |
Richard W. Warke – Director | Gil Clausen - Director |
See accompanying Notes to the Consolidated Financial Statements
Augusta Resource Corporation | 3 |
AUGUSTA RESOURCE CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
For the period of January 1 to September 30, 2005 and 2004
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
(restated, note 2) | (restated, note 2) | |||||||||||
EXPENSES | ||||||||||||
Accounting and audit | $ | - | $ | - | $ | - | $ | (500 | ) | |||
Amortization | 748 | - | 748 | - | ||||||||
Administration | 7,500 | 7,500 | 22,500 | 22,500 | ||||||||
Consulting and communication | 3,421 | - | 42,173 | - | ||||||||
Debt issue costs | 135,534 | - | 180,712 | - | ||||||||
Filing and regulatory | (7,932 | ) | 993 | 106,914 | 13,672 | |||||||
Fiscal and advisory services | 5,437 | - | 22,460 | - | ||||||||
Foreign exchange (gain) | (240,268 | ) | (328 | ) | (237,828 | ) | 1,413 | |||||
Interest and finance charges | 991,785 | (3,614 | ) | 1,335,412 | 1,677 | |||||||
Investor relations | 3,489 | - | 36,725 | - | ||||||||
Legal fees | (1,367 | ) | 59,199 | 3,884 | 59,199 | |||||||
Office and sundry | 57,396 | - | 188,110 | 3,295 | ||||||||
Recruitment fees | - | - | 45,174 | - | ||||||||
Salaries and benefits | 180,900 | 43,750 | 392,327 | 131,407 | ||||||||
Stock based compensation | 336,005 | 22,815 | 681,530 | 22,815 | ||||||||
Travel | 14,867 | (2 | ) | 35,037 | 3,509 | |||||||
Loss from operations | (1,487,515 | ) | (130,313 | ) | (2,855,878 | ) | (258,987 | ) | ||||
Interest and other income | 29,021 | - | 36,441 | - | ||||||||
Gain from settlement of debt | - | - | 8,847 | - | ||||||||
Write-off of mining assets | - | - | - | (509,154 | ) | |||||||
LOSS FOR THE PERIOD | (1,458,494 | ) | (130,313 | ) | (2,810,590 | ) | (768,141 | ) | ||||
Deficit, beginning of the period | (7,533,376 | ) | (4,649,876 | ) | (4,991,105 | ) | (4,012,048 | ) | ||||
Change in accounting policy (note 3) | - | (32,500 | ) | - | (32,500 | ) | ||||||
Restated deficit, beginning of period, as restated | (7,533,376 | ) | (4,682,376 | ) | (4,991,105 | ) | (4,044,548 | ) | ||||
Share issue expenses | (78,853 | ) | - | (1,269,028 | ) | - | ||||||
- | - | |||||||||||
DEFICIT, END OF PERIOD | $ | (9,070,723 | ) | $ | (4,812,689 | ) | $ | (9,070,723 | ) | $ | (4,812,689 | ) |
BASIC & DILUTED LOSS PER SHARE | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | (0.06 | ) |
WEIGHTED AVERAGE NUMBER | ||||||||||||
OF SHARES OUTSTANDING | 35,122,731 | 16,584,555 | 30,331,680 | 12,629,446 |
See accompanying Notes to the Consolidated Financial Statements
Augusta Resource Corporation | 4 |
AUGUSTA RESOURCE CORPORATION
CONSOLIDATED STATEMENT OF
CASH FLOWS
For the period of January 1 to September 30, 2005 and 2004
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||
(Restated, Note 2) | (Restated, Note 2) | |||||||||||
NET INFLOW (OUTFLOW) OF CASH RELATED TO | ||||||||||||
THE FOLLOWING: | ||||||||||||
OPERATING | ||||||||||||
Net loss for the period | $ | (1,458,494 | ) | $ | (130,313 | ) | $ | (2,810,590 | ) | $ | (768,141 | ) |
Items not affecting cash: | ||||||||||||
Discount interest on debt | 855,943 | - | 1,153,886 | - | ||||||||
Amortization | 748 | - | 748 | - | ||||||||
Unrealized foreign exchange | (205,824 | ) | - | (205,824 | ) | - | ||||||
Debt issue costs | 135,534 | - | 180,712 | - | ||||||||
Accrued interest and loan bonus | - | - | - | 643 | ||||||||
Gain on settlement of debt | - | - | (8,847 | ) | - | |||||||
Write-off of mining assets | - | - | - | 509,154 | ||||||||
(672,093 | ) | (130,313 | ) | (1,689,915 | ) | (258,344 | ) | |||||
Net changes in non-cash | ||||||||||||
working capital items: | ||||||||||||
Accounts receivable | (67,349 | ) | 10,000 | (2,546 | ) | (604 | ) | |||||
Prepaid items | 34,838 | - | 20,237 | - | ||||||||
Stock based compensation | 336,005 | 22,815 | 681,530 | 22,815 | ||||||||
Accounts payable & accrued liabilities | (83,997 | ) | (36,736 | ) | (397,320 | ) | (102,510 | ) | ||||
(452,596 | ) | (134,234 | ) | (1,388,014 | ) | (338,642 | ) | |||||
FINANCING | ||||||||||||
Issuance of common shares | 707,260 | 138,000 | 10,480,921 | 383,000 | ||||||||
Repayment of notes and advances | - | - | (14,950 | ) | - | |||||||
Issuance of convertible debt security | - | - | 6,000,000 | - | ||||||||
Share issue expense | (123,852 | ) | - | (832,520 | ) | - | ||||||
583,408 | 138,000 | 15,633,451 | 383,000 | |||||||||
INVESTING | ||||||||||||
Acquisition of DHI Minerals Ltd. | - | - | (4,000 | ) | - | |||||||
Investment in mining properties, net of related payables | - | - | (8,590,461 | ) | - | |||||||
Investment in marketable securities | (6,035 | ) | - | (89,596 | ) | - | ||||||
Investment in fixed assets | - | - | (10,636 | ) | - | |||||||
Deferred exploration expenses, net of related payables | (830,920 | ) | - | (1,065,478 | ) | (41,400 | ) | |||||
(836,955 | ) | - | (9,760,171 | ) | (41,400 | ) | ||||||
Foreign currency translation | 11,944 | - | 11,944 | - | ||||||||
NET CASH INFLOW (OUTFLOW) | (694,200 | ) | 3,766 | 4,497,210 | 2,959 | |||||||
CASH, BEGINNING OF PERIOD | 6,181,209 | 1,728 | 989,799 | 2,535 | ||||||||
CASH, END OF PERIOD | $ | 5,487,009 | $ | 5,494 | $ | 5,487,009 | $ | 5,494 | ||||
SUPPLEMENTAL INFORMATION | ||||||||||||
Interest paid | $ | - | $ | - | $ | - | $ | 4 | ||||
Interest received | $ | 29,021 | $ | - | $ | 36,441 | $ | - | ||||
Non-cash transactions | ||||||||||||
Acquisition of DHI Minerals Ltd. | $ | - | $ | - | $ | 4,760,601 | $ | - | ||||
Investment in mining properties | $ | - | $ | - | $ | 120,000 | $ | - |
Refer to Notes 7, 8 and 10 for non-cash operating, financing
and investing activities
Augusta Resource Corporation | 5 |
NOTES TO THE FINANCIAL STATEMENTS
1. |
CONTINUING OPERATIONS |
Augusta Resource Corporation (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 deficit of $719,982 (2004 –$502,874), and has a deficit of $9,070,723 (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. |
RESTATEMENT |
During the preparation of the Form 40-F filing document, a requirement of an American Stock and Options Exchange (AMEX) listing the Company is seeking, the Company discovered non- cash errors relating to its financial statements for the year ended December 31, 2005. In the previously released second quarter, third quarter and year end financial statements the Company had not properly accounted for the convertible debenture issued in June of 2005. CICA Handbook Section 3860 requires that the proceeds received from the issuance of convertible debt be allocated between its equity and debt components. The Company had treated all the proceeds as debt. Further, upon review of the option pricing model (Black-Scholes) used for valuing stock options and warrants issued during 2005 the Company concluded that the time period used to calculate the volatility assumption required adjustment. | |
Additional third quarter adjustments (which were properly reflected in the year end consolidated financial statements) relate primarily to the change in the discount rate for the debt incurred in the Mount Hamilton acquisition from 4% to 15% and the recording of the tax gross-up, (see Note 7 to the restated consolidated financial statements for the three and nine months ended September 30, 2005). |
Augusta Resource Corporation | 6 |
NOTES TO THE FINANCIAL STATEMENTS
2. |
RESTATEMENT (continued) |
Through and as at September 30, 2005 the impact of the restatement was: |
As previously | Adjustments | As restated | ||||||||
reported | ||||||||||
September 30,2005 | ||||||||||
Balance Sheet | ||||||||||
Deferred debt issuance costs | 0 | 214,519 | 214,519 | |||||||
Mining properties | 13,760,126 | 1,773,000 | 15,533,126 | |||||||
Convertible debt | 6,000,000 | (1,516,719 | ) | 4,483,281 | ||||||
Notes and advances | 2,812,291 | (329,000 | ) | 2,483,291 | ||||||
Future income taxes | 0 | 2,200,000 | 2,200,000 | |||||||
Share capital | 18,596,689 | (2,716,107 | ) | 15,880,582 | ||||||
Contributed surplus | 6,072,383 | (345,465 | ) | 5,726,918 | ||||||
Deficit | (13,765,533 | ) | 4,694,810 | (9,070,723 | ) | |||||
Statement of operations | ||||||||||
Debt issuance costs | 0 | 180,712 | 180,712 | |||||||
Foreign exchange (gain) | (214,828 | ) | (23,000 | ) | (237,828 | ) | ||||
Interest and finance charges | 233,815 | 1,101,597 | 1,335,412 | |||||||
Stockbased compensation | 5,502,720 | (4,821,190 | ) | 681,530 | ||||||
Loss from operations | (6,417,759 | ) | 3,561,881 | (2,855,878 | ) | |||||
Net loss for the period | (6,372,471 | ) | 3,561,881 | (2,810,590 | ) | |||||
Share issue expenses | (2,401,957 | ) | 1,047,184 | (1,354,773 | ) | |||||
Deficit, end of period | (13,765,533 | ) | 4,609,065 | (9,156,468 | ) | |||||
Loss per share | (0.21 | ) | 0.12 | (0.09 | ) | |||||
Statement of cash flows | ||||||||||
Net loss for the period | (6,372,471 | ) | 3,561,881 | (2,810,590 | ) | |||||
Accrued interest on debt | 52,289 | 1,101,597 | 1,153,886 | |||||||
Debt issuance costs | 0 | 180,712 | 180,712 | |||||||
Unrealized foreign exchange | (182,824 | ) | (23,000 | ) | (205,824 | ) | ||||
Stock based compensation | 5,502,720 | (4,821,190 | ) | 681,530 |
3. |
CHANGE IN ACCOUNTING POLICY 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.
Augusta Resource Corporation | 7 |
NOTES TO THE FINANCIAL STATEMENTS
4. |
SIGNIFICANT ACCOUNTING POLICIES |
(a) |
Generally accepted accounting principles | |
These interim financial statements should be read in conjunction with the annual financial statements of the Company. These consolidated interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information and accordingly, do not include all disclosures required for annual financial statements. These interim consolidated financial statements follow the same accounting policies and methods of their application as the annual financial statements of the Company. | ||
(b) |
Basis of consolidation | |
These consolidated financial statements include the accounts of the following: | ||
The Company’s wholly owned subsidiary DHI Minerals Ltd., a British Columbia corporation, and it’s 100% owned subsidiary, DHI Minerals (U.S.) Ltd. a Nevada corporation, which holds the Mount Hamilton Property. | ||
Company’s wholly owned subsidiary, Augusta Resource (Arizona) Corporation, an Arizona corporation, which holds the Rosemount Property. | ||
The inter-company transactions and balances have been eliminated for both subsidiaries. | ||
(c) |
Cash and cash equivalents | |
Cash consists of deposits in banks and guaranteed investment certificates. | ||
(d) |
Marketable securities | |
Marketable securities are valued at the lower of cost and market value. | ||
(e) |
Fixed Assets | |
Fixed assets are stated at cost, net of accumulated depreciation. | ||
Depreciation is calculated using the declining balance method, based on the estimated useful lives of the assets as follows: |
Computer hardware 30% declining balance
(f) |
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 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 |
Augusta Resource Corporation | 8 |
NOTES TO THE FINANCIAL STATEMENTS
4. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
(f) |
Mining assets (continued) | |
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 the estimated net realizable value is determined to be insufficient to recover the carrying value of any property, the carrying value will be written down to the estimated fair value. | ||
(g) |
Share issue expenses |
Share issue expenses are recorded as an increase in the deficit in the year in which they are incurred.
(h) |
Loss per share | |
Basic net loss is computed using the weighted average number of common share equivalents outstanding during the period. The Company uses the treasury stock method for the calculation of diluted loss per share. |
(i) |
Foreign currencies | |
The Company’s functional and reporting currency is the Canadian dollar. Translations undertaken in foreign currencies are translated into Canadian dollars at exchange rates prevailing at the time the transaction occurred. Monetary assets and liabilities denominated in foreign currencies are translated into equivalent Canadian dollars at the exchange rates in effect at the balance sheet date with any resulting gain or loss being recognized in the consolidated statement of operation. The effect of fluctuations in exchange rates between the dates of transactions and of settlements are reflected in the statement of operation and deficit. | ||
The consolidated financial statements of DHI Minerals (U.S.) Ltd. and Augusta Resource (Arizona) Corporation are translated into Canadian dollars using the temporal method for integrated operations, as follows: |
Augusta Resource Corporation | 9 |
NOTES TO THE FINANCIAL STATEMENTS
4. |
SIGNIFICANT ACCOUNTING POLICIES (continued) |
(i) |
Foreign currencies (continued) | ||
a. |
monetary assets and liabilities using the exchange rate in effect at the balance sheet date; | ||
b. |
non-monetary assets and liabilities should be translated at historical exchange rates, unless the item is carried at fair market value, in which case the item will be translated at the exchange rate in effect at the balance sheet date; | ||
c. |
revenue and expense items at approximate exchange rates prevailing at the time the transaction occurred; | ||
d. |
depreciation or amortization of assets translated at historical exchange rates should be translated at the same exchange rates as the assets to which they relate; | ||
e. |
translation gains and losses on monetary items or non-monetary items carried at market are included in the current periods statement of operations. |
(j) |
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. |
(k) |
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. |
5. |
MARKETABLE SECURITIES |
The market value of all securities as at September 30, 2005 was $89,596. As of December 31, 2004, the market value was $NIL. |
Augusta Resource Corporation | 10 |
NOTES TO THE FINANCIAL STATEMENTS
6. |
FIXED ASSETS |
September 30, 2005 | December 31, 2004 | ||||||||||||
Accumulated | |||||||||||||
Cost | Depreciation | Net Book Value | Net Book Value | ||||||||||
Computer hardware | $ | 10,636 | $ | 748 | $ | 9,888 | $ | - |
7. |
MINING ASSETS |
Mining PropertiesCost | DeferredExploration Expenses | ||||||||||||
Miningassets: | 2005 | 2004 | 2005 | 2004 | |||||||||
Rosemont property | $ | 8,439,226 | $ | - | $ | 1,121,231 | $ | - | |||||
Mt. Hamiltonproperty | 6,574,757 | 37,157 | 139,497 | 16,191 | |||||||||
LoneMountainproperty | 271,236 | - | 38,630 | - | |||||||||
Shell property | - | - | 12,789 | - | |||||||||
CoronationDiamond District properties | 247,907 | 247,907 | 3,594 | 3,594 | |||||||||
$ | 15,533,126 | $ | 285,064 | $ | 1,315,741 | $ | 19,785 | ||||||
Miningproperties: | 2005 | 2004 | |||||||||||
Balance, beginningof year | $ | 285,064 | $ | 544,706 | |||||||||
Acquisitioncosts | 13,048,062 | 37,157 | |||||||||||
Acquisitiontaxgross-up | 2,200,000 | - | |||||||||||
Write-offs | - | (296,799 | ) | ||||||||||
Balance at September 30, 2005and December 31, 2004 | $ | 15,533,126 | $ | 285,064 | |||||||||
Deferredexploration expenses: | 2005 | 2004 | |||||||||||
Balance, beginningof year | $ | 19,785 | $ | 174,549 | |||||||||
Geologists, consultantsand professional services | 1,295,956 | 57,591 | |||||||||||
Write-offs | - | (212,355 | ) | ||||||||||
Balance at September 30, 2005and December 31, 2004 | $ | 1,315,741 | $ | 19,785 |
Augusta Resource Corporation | 11 |
NOTES TO THE FINANCIAL STATEMENTS
7. |
MINING ASSETS (continued) |
Property in Pima County, Arizona | |
On June 1, 2005, the Company announced that it had entered into an Option Agreement to purchase 100% of the Rosemont Ranch copper deposits in Pima County, Arizona. The property is approximately 50km southeast of Tucson, situated near a number of large porphyry type producing copper mines operated by Phelps Dodge and Asarco. | |
| |
The property contains three known potentially open-pit mineable copper/molybdenum skarn deposits on patented mining claims. Over 232,000 feet of diamond drilling has been conducted on the property by Anaconda/Amax and Asarco outlining approximately 5 billion pounds of copper. These are historical figures. Augusta has not yet completed the work necessary to verify the classification of the resource and is not treating the resource figure as a NI 43-101 defined resource verified by a Qualified Person at this time and therefore, the resource figures should not be relied upon. The Company has the right to purchase a 100% working interest in the property (which includes patented and unpatented claims, fee land and surface grazing rights) subject to a 3% NSR, for cash payments of US $20,800,000 payable over a three year period. The Company does not retain a liability to make the payments, but it would surrender any claims to the property. The Company has made the first payment of $6,666,666 USD. | |
| |
Properties in White Pine County, Nevada | |
| |
Mount Hamilton Gold Project | |
| |
On December 2, 2004, the Company announced the signing of a heads of agreement to acquire a 100% interest in the Mount Hamilton Gold Project, located in White Pine County, Nevada. The Company purchased the Mount Hamilton Gold Project by purchasing, effective May 6, 2005, 100% of the shares of DHI Minerals Ltd., which owned 100% of DHI Minerals (U.S.) Ltd., holder of the property. The terms of the acquisition include the payment of $3,000,000 USD payable in cash over two years (Net present value of $3,103,438 based on a 15% discount rate), 3,750,000 common shares at $0.16 USD per share with a fair value of $720,000 and 3,750,000 warrants to purchase common shares with an exercise price of $0.16 USD per share for a period of two years with a fair value of $465,163. Under the terms of the acquisition the Company assumed the underlying Net Smelter Royalty (“NSR”) and minimum advance royalty payments to Centennial Minerals Company, LLC. Prior to commercial production, $100,000 USD per annum commencing on November 19, 2005 and continuing until November 19, 2010 when the annual payment amount increases to $300,000 USD per annum. Upon commencement of commercial production, a base rate of 3% NSR is payable, subject to an increase whenever the price of gold is greater than $400 USD per ounce. The NSR shall increase by one half of one percent for each $50 USD increment to a maximum of 8% NSR. The Company has the option to purchase up to one and one half percentage points of the NSR for $2,000,000 USD. | |
| |
With the completion of a definitive agreement, effective May 6, 2005, the Company acquired 100% of the outstanding common shares of DHI Minerals Ltd. The purchase method was used to account for this transaction and the entire purchase consideration was allocated to the mining property acquired. |
Augusta Resource Corporation | 12 |
NOTES TO THE FINANCIAL STATEMENTS
7. |
MINING ASSETS (continued) |
Properties in White Pine County, Nevada (continued) | |
Mount Hamilton Gold Project (continued) |
Purchase price: | ||||
$3,000,000 USD (cash) | $ | 3,103,438 | ||
3,750,000 common shares at $0.16 USD ($0.19 CDN) | 720,000 | |||
3,750,000 warrants for common shares at $0.16 USD | 465,163 | |||
300,000 common shares issued for a finder's fee | 49,000 | |||
Total consideration paid | 4,337,601 | |||
Professional fees | 37,156 | |||
Future income tax liability (acquisition gross-up) | 2,200,000 | |||
Total property value | $ | 6,574,757 |
The purchase price has been allocated on a preliminary basis to the fair value of the consideration provided which equates the fair value of the asset acquired based on management’s best estimates and takes into account all available information at the time these consolidated financial statements were prepared. The process has been conducted in accordance with the recent accounting pronouncement relating to “Mining Assets – Impairment and Business Combinations” (Emerging Issue Committee Abstract 152).
The future income tax liability of $2,200,000 relates to the tax effected difference between the tax bases of the assets acquired and the accounting allocation value.
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.
Shell Deposit
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.
Augusta Resource Corporation | 13 |
NOTES TO THE FINANCIAL STATEMENTS
7. |
MINING ASSETS (continued) |
Property in Grant County, 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 can acquire a 100% working interest, subject to an underlying Net Smelter Royalty ranging from 2.0% - 3.0%, minimum exploration commitments of $4,850,000 USD, $500,000 USD to be completed by February 11, 2006, 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. The Company has the option to purchase half of the NSR for $2,000,000 USD. The agreement is effective on May 11, 2005. The Company has paid $100,000 USD and issued 50,000 common shares to date.
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.
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
Augusta Resource Corporation | 14 |
NOTES TO THE FINANCIAL STATEMENTS
7. |
MINING ASSETS (continued) |
Properties in the Coronation Diamond District, Nunavut, Canada (continued) | |
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 September 30, 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. | |
8. |
LONG TERM NOTES AND ADVANCES |
As a result of the acquisition by the Company of the Mount Hamilton property, through DHI Minerals Ltd., the company has additional long-term liabilities outstanding to Diamond Hill Investments Ltd. Total notes and advances outstanding: |
September 30 | December 31 | |||||
2005 | 2004 | |||||
Notes and advances | $ | 32,488 | $ | 56,285 | ||
Long term notes to Diamond Hill Investments Ltd. | 2,450,803 | - | ||||
2,483,291 | 56,285 | |||||
Less: Current portion | (1,093,239 | ) | (23,288 | ) | ||
Total long term notes and advances | $ | 1,390,052 | $ | 32,997 |
The purchase of the Mount Hamilton Gold Property assets from Diamond Hill Investments Ltd. included cash consideration of $3,000,000 USD. The initial installment payment of $500,000 USD was accrued in April 2005. The remaining $2,500,000 USD has been discounted using an interest rate of 15%.
Augusta Resource Corporation | 15 |
NOTES TO THE FINANCIAL STATEMENTS
8. |
LONG TERM NOTES AND ADVANCES (continued) |
Amount | Discounted | Discounted | ||||||||
USD$ | USD$ | CDN$ | ||||||||
April 30, 2006 (current portion of long term note) | $ | 1,000,000 | $ | 940,259 | $ | 1,093,239 | ||||
April 30, 2007 | 1,500,000 | 1,195,538 | 1,390,052 | |||||||
Total long term notes and advances | $ | 2,500,000 | $ | 2,135,797 | $ | 2,483,291 |
In March 2003, the Company received a loan totaling $100,000. This loan was 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 September 30, 2005 as notes payable. | |
Advances do not provide for specific terms of repayment and are unsecured. | |
9. |
CONVERTIBLE DEBENTURE |
On June 1, 2005, in connection with the Rosemont acquisition, the Company issued a convertible debenture for $6,000,000. The debenture has a one-year term, with half due within six-months, and is convertible at the option of the lender into 2,181,818 common shares of the Company at a price of $2.75 per share. The convertible debenture bears an interest rate of 9% annually and the Company has the option to repay the convertible debenture on the specified repayment dates in cash or stock. Any accrued interest owing under the convertible debenture may be converted into common shares at the discretion of the lender. The convertible debenture was issued with 363,363 common shares of the Company to the lender at a fair market value at the date of the transaction of $2.805 per common share (after a discount of 15% to reflect a hold period that expired on October 2, 2005.). | |
In accordance with CICA Handbook Section 3860, and following the fair value allocation approach, the Company allocated the proceeds as follows: |
Common shares | $ | 1,019,233 | |
Convertible debenture | |||
Equity component | 1,478,083 | ||
Debt component | 3,502,684 | ||
$ | 6,000,000 |
The difference between the debt allocation of $3,502,684 and the repayment amount of $6,000,000 is accrued over the term of the debenture. Through September 30, 2005 $980,600 of interest expense had been accrued including $757,651 in the third quarter.
Augusta Resource Corporation | 16 |
NOTES TO THE FINANCIAL STATEMENTS
9. |
CONVERTIBLE DEBENTURE (continued) |
In connection with the issuance of the convertible debenture and common shares, the Company also paid a fee in the amount of 6% cash and 218,181 warrants to Northern Securities Inc. The fair value of the warrants of $247,769, which was allocated to debt ($144,643) and equity ($103,126), was calculated using the Black-Scholes option pricing model for warrant valuation, assuming an average volatility of 72% on the underlying shares, a risk free interest rate of 3.17%, a one year term to expiry and no annual dividends. Each warrant is exercisable to acquire one common share at $2.75 per warrant for a period of one year expiring on June 14, 2006. The warrants had a hold period expiring on October 15, 2005. | |
See Note 16, Subsequent Events for additional information on the renegotiation of certain terms of the convertible debenture. | |
10. |
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 convertible debenture issuer bonus | 363,363 | 1,019,233 | |||||
Issued for property acquisitions | 4,100,000 | 885,000 | |||||
Issued for cash | 8,998,500 | 8,370,551 | |||||
Issued for fractional rounding due to share consolidation | 9 | - | |||||
Issued for options exercised | 395,833 | 46,250 | |||||
Issued for warrants exercised | 3,600,208 | 948,217 | |||||
Common shares, Balance at September 30, 2005 | 37,222,468 | $ | 15,880,582 |
Augusta Resource Corporation | 17 |
NOTES TO THE FINANCIAL STATEMENTS
10. |
SHARE CAPITAL (continued) |
(c) |
Private Placement | |
On June 30, 2005, the Company announced the closing of its brokered private placement of 2,000,000 units at $2.50 per unit for gross proceeds of $5,000,000. Each unit is comprised of one common share and one warrant. Each warrant entitles the holder to purchase one common share at a price of $3.00 for a period of two years expiring on June 29, 2007. Finder’s fees of $350,000 cash and 200,000 broker’s warrants on the same terms as those issued under the private placement, were paid. | ||
On March 3, 2005, the Company closed the private placement 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. | ||
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 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 under the private placement, were paid. | ||
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 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 under the private placement, were paid. | ||
(d) |
Options | |
On September 30, 2005, certain directors and officers of the Company held 3,214,333 stock options, and certain employees of the Company held 112,500 stock options to purchase common shares of the Company. | ||
The following table summarizes the status of the Company’s stock option plans as at September 30, 2005: |
Augusta Resource Corporation | 18 |
10. |
SHARE CAPITAL (continued) |
(d) |
Options (continued) |
2005 | |||||||
Average Exercise | |||||||
Number of Shares | Price | ||||||
Outstanding at beginning of year | 1,096,000 | $ | 0.15 | ||||
Granted | 2,910,000 | $ | 1.68 | ||||
Exercised | (395,833 | ) | $ | 0.12 | |||
Expired | (16,667 | ) | $ | 0.45 | |||
Cancelled | (266,667 | ) | $ | 0.15 | |||
Outstanding at end of year | 3,326,833 | $ | 1.35 | ||||
Options exercisable at September 30, 2005 | 766,833 |
The following table summarizes information about stock options outstanding at September 30, 2005:
Number | Number | Weighted | |||
Outstanding at | Weighted Average | Exercisable at | Average | ||
September 30, | Remaining | Weighted Average | September 30, | Exercise | |
Exercise Prices | 2005 | Contractual Life | Exercise Prices | 2005 | Prices |
$ 0.30 | 87,666 | 1.2 Years | $ 0.30 | 87,666 | $ 0.30 |
$ 0.33 | 66,667 | 1.6 Years | $ 0.33 | 66,667 | $ 0.33 |
$ 0.10 | 50,000 | 4.0 Years | $ 0.10 | - | $ 0.10 |
$ 0.10 | 212,500 | 4.1 Years | $ 0.10 | 200,000 | $ 0.10 |
$ 2.05 | 450,000 | 4.5 Years | $ 2.05 | 112,500 | $ 2.05 |
$ 1.96 | 125,000 | 4.5 Years | $ 1.96 | - | $ 1.96 |
$ 2.30 | 100,000 | 4.8 Years | $ 2.30 | 100,000 | $ 2.30 |
$ 1.56 | 2,085,000 | 4.9 Years | $ 1.56 | $ 1.56 | |
$ 1.55 | 150,000 | 5.0 Years | $ 1.55 | 200,000 | $ 1.55 |
3,326,833 | 766,833 |
Augusta Resource Corporation | 19 |
NOTES TO THE FINANCIAL STATEMENTS
10. |
SHARE CAPITAL (continued) |
(e) | Warrants | |
The following table summarizes information about warrants outstanding at September 30, 2005. Each warrant is exercisable into one common share. |
Outstanding at | Outstanding at | ||||||
Currency | Exercise Price | Expiry Dates | January 1, 2005 | Issued | Exercised | Expired | September 30,2005 |
CDN | $ 0.45 | March 3, 2006 | - | 1,750,000 | 360,000 | - | 1,390,000 |
CDN | $ 1.25 | April 15, 2006 | - | 1,007,140 | 240,208 | - | 766,932 |
CDN | $ 2.50 | April 15, 2006 | - | 832,155 | - | - | 832,155 |
CDN | $ 0.10 | May 6, 2006 | 7,660,000 | - | 200,000 | - | 7,460,000 |
CDN | $ 2.75 | June 14, 2006 | - | 218,181 | - | - | 218,181 |
CDN | $ 0.10 | November 7, 2006 | 2,800,000 | - | 2,800,000 | - | - |
USD | $ 0.16 | May 6, 2007 | - | 3,750,000 | - | - | 3,750,000 |
CDN | $ 3.00 | June 29, 2007 | - | 2,200,000 | - | - | 2,200,000 |
10,460,000 | 9,757,476 | 3,600,208 | - | 16,617,268 |
A further 186,625 warrants were exercised between October 1 and November 23, 2005. | ||
(f) |
Contributed Surplus | |
On September 30, 2005, the contributed surplus was as follows: |
2005 | |||
Balance - Beginning of year | $ | 104,500 | |
Stock-based compensation expense for the year | 681,530 | ||
Fair value of warrants issued on acquisition | 465,163 | ||
Fair value of equity component of convertible debenture | 1,478,083 | ||
Fair value of warrants issued on debt issuance | 247,769 | ||
Fair value of warrants issued on private placements | 2,722,199 | ||
Fair value of broker warrants issued | 213,631 | ||
Transfer upon exercise of warrants | (185,957 | ) | |
Balance - June 30, 2005 | $ | 5,726,918 |
Augusta Resource Corporation | 20 |
NOTES TO THE FINANCIAL STATEMENTS
11. |
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 $490,069. The fair value of stock compensation issued to the employee was determined using the Black-Scholes valuation model assuming a volatility factor of 85%, a risk free interest rate of 3.78% and an expected life of three years. | |
| |
In April 2005, 125,000 stock options with an exercise price of $1.96 were issued to a certain officer of the Company resulting in a fair value at the date of grant of $128,647. The fair value of stock compensation issued to the employee was determined using the Black-Scholes valuation model assuming a volatility factor of 51%, a risk free interest rate of 3.42% and an expected life of four years. | |
| |
In June 2005, 100,000 stock options with an exercise price of $2.30 were issued to a certain director of the Company resulting in a fair value at the date of grant of $151,029. The fair value of stock compensation issued to the director was determined using the Black-Scholes valuation model assuming a volatility factor of 71%, a risk free interest rate of 3.17% and an expected life of four years. | |
| |
In August 2005, 2,085,000 stock options with an exercise price of $1.56 were issued to directors, officers and employees of the Company resulting in a fair value at the date of grant of $2,625,003. The fair value of stock compensation issued to directors, officers and employees was determined using the Black-Scholes valuation model assuming a volatility factor of 78%, a risk free interest rate of 4.21% and an expected life of four years. | |
| |
In September 2005, 150,000 stock options with an exercise price of $1.55 were issued to a certain officer of the Company resulting in a fair value at the date of grant of $164,805. The fair value of stock compensation issued to the officer was determined using the Black-Scholes valuation model assuming a volatility factor of 82%, a risk free interest rate of 4.21% and an expected life of four years. | |
| |
12. |
RELATED PARTY TRANSACTIONS |
| |
As of September 30, 2005, the Company incurred expenses of $22,500 (2004 - $22,500) for administrative services provided by a company in which a director of the Company has a 25% interest. | |
| |
As of September 30, 2005, the Company incurred salaries of $112,500 (2004 - $75,000) to the Chairman of the Company, $123,289 (2004 – $nil) to the President and CEO and $56,250 (2004 - $56,250) to a Director. Also, as of September 30, 2005, included in accounts payable and accrued liabilities is an amount of $56,250 (2004 - $nil) due to a Director of the Company for salaries accrued in the current year. |
Augusta Resource Corporation | 21 |
NOTES TO THE FINANCIAL STATEMENTS
12. |
RELATED PARTY TRANSACTION (continued) |
At September 30, 2005, included in accounts receivable is an amount of $4,349 (2004 – $nil) due from a related company with common directors as a result of a cost sharing arrangement for office rent and operating expenses. | |
Included in prepaid is $12,367 (2004 - $37,567) in advances for expenses to the Chairman. | |
13. |
FINANCIAL INSTRUMENTS |
The carrying values of cash, accounts receivable, marketable securities, accounts payable and accrued liabilities, loans, notes and advances and convertible debenture as reflected in the balance sheet approximate their fair values. The company has no significant concentrations of credit risk. | |
14. |
COMMITMENTS |
The lease for the office space in Canada commenced on April 1, 2003 and ends February 27, 22006. The lease for the office space in Colorado started on June 1, 2005 and ends on May 31, 2008. The future minimum lease payments are as follows: |
Year | |||
2006 | $ | 68,222 | |
2007 | 58,288 | ||
2008 | 39,607 | ||
Total | $ | 166,117 |
15. |
SEGMENTED INFORMATION |
The Company operates in one industry. As at September 30, 2005, the Company’s long-lived assets were in Canada, $251,501 (2004 - $251,501) and in the United States, $16,607,254 (2004 - $53,348). | |
16. |
SUBSEQUENT EVENTS |
On November 18, 2005 the Company announced that it has re-negotiated the terms of its convertible debenture to allow for repayment in the form of cash and stock, as opposed to cash or stock. The Company retired $3,000,000 of the convertible debenture plus interest by payment of $1,620,000 in cash and the issuance of 1,500,000 common shares valued at $1.10 per share. In consideration for the debenture holder amending the terms of the debenture the Company will issue 750,000 warrants with an exercise price of $1.44 expiring in one year. The Company has the right to force conversion of the warrants if the Company’s shares trade over $2.00 for a period of 30 days. The issuance of the warrants are subject to regulatory approval. |
Augusta Resource Corporation | 22 |
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 | ||
W. Durand Eppler | ||
Chris M.H. Jennings | ||
Michael A. Steeves | ||
Robert P. Wares | ||
Richard W. Warke | ||
OFFICERS | Gil Clausen ~ President and Chief Executive Officer | |
Richard Warke ~ Chairman | ||
Mike Clarke ~ Vice President Exploration | ||
James Sturgess ~ Vice President Projects and Environment | ||
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 | 23 |
This ‘40FR12B’ Filing | Date | Other Filings | ||
---|---|---|---|---|
11/19/10 | ||||
5/31/08 | ||||
6/29/07 | ||||
5/6/07 | ||||
4/30/07 | ||||
11/7/06 | ||||
Filed as of: | 7/14/06 | F-X | ||
Filed on: | 7/13/06 | F-X | ||
6/14/06 | ||||
5/6/06 | ||||
4/30/06 | ||||
4/15/06 | ||||
3/3/06 | ||||
2/11/06 | ||||
12/31/05 | ||||
11/23/05 | ||||
11/19/05 | ||||
11/18/05 | ||||
11/10/05 | ||||
10/15/05 | ||||
10/13/05 | ||||
10/2/05 | ||||
9/30/05 | ||||
6/30/05 | ||||
6/1/05 | ||||
5/11/05 | ||||
5/6/05 | ||||
3/3/05 | ||||
3/1/05 | ||||
2/17/05 | ||||
2/11/05 | ||||
1/26/05 | ||||
1/1/05 | ||||
12/31/04 | ||||
12/2/04 | ||||
9/30/04 | ||||
6/30/04 | ||||
1/1/04 | ||||
12/31/03 | ||||
11/20/03 | ||||
5/7/03 | ||||
4/29/03 | ||||
4/1/03 | ||||
1/1/02 | ||||
List all Filings |