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Condensed Interim Consolidated Financial Statements for the Three and Six Month Period Ended June 30, 2011
(Expressed in Canadian Dollars) (Unaudited Prepared by Management)
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of interim consolidated financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying unaudited condensed interim consolidated financial statements of the company have been prepared by and are the responsibility of the Company's management. These condensed interim consolidated financial statements reflect management's best estimates and judgment based on information currently available as of August 19, 2011. The Company's independent auditor has not performed a review of these condensed interim consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim consolidated financial statements by an entity's auditor.
ASSETS
Current Assets Cash and cash equivalents Prepaids and sundry receivables 1,919 705 2,624 Other Assets Investment (Notes 3(b) and 11) Investment in Global Mineral Investments, LLC (Notes 3 (c) and 14) Total Assets 200,000 485,400 688,024
(5,551) $
(6,959) $
(12,594) $
(0.00002)
(0.00003)
(0.00005)
(0.0001)
239,171,893
239,171,893
239,171,893
239,171,893
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements
Share Capital # of Shares Balance January 1, 2010 Net loss and comprehensive loss for the six month period ended June 30, 2010 Balance June 30, 2010 Net loss and comprehensive loss for the six month period ended December 31, 2010 Balance December 31, 2010 Net loss and comprehensive loss for the six month period ended June 30, 2011 Balance June 30, 2011 239,171,893 $ 17,268,966 $ 890,684 239,171,893 $ 17,268,966 $ 890,684 239,171,893 $ 17,268,966 $ 890,684 $ 239,171,893 Amount $ 17,268,966 Contributed Surplus $ 890,684 $ Deficit (17,346,907) $ Total 812,743
(26,171) (17,373,078) $
(26,171) 786,572
(128,542) $ (17,501,620) $
(128,542) 658,030
(12,594) $ (17,514,214) $
(12,594) 645,436
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements
Management anticipates that the above standards will, where applicable, be adopted in the Companys financial statements for the period beginning January 1, 2013, and has not yet considered the impact of the adoption of these standards. 5. EXPLANATION OF TRANSITION TO IFRS
The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles as set out in the Handbook of Canadian Institute of Chartered Accountants (CICA Handbook). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (IFRS), and require publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011. Accordingly, commencing the three months period ended March 31, 2011 and continuing in these condensed unaudited consolidated interim financial statements, the Company has commenced reporting on this basis. This is therefore the first year that the Corporation has presented its condensed consolidated financial statements in accordance with IFRS. In the year ended December 31, 2010, the Corporation reported under previous Canadian GAAP and therefore in these condensed interim consolidated financial statements, the term Canadian GAAP refers to Canadian GAAP before the adoption of IFRS. The accounting policies set out in Note 6 of the condensed consolidated financial statements of the Corporation for the three months ended March 31, 2011 have been applied in preparing the condensed consolidated financial statements for the three and six months ended June 30, 2011.
These condensed interim consolidated financial statements have been prepared by the Company in accordance with
IFRS applicable to the preparation of interim financial statements, including IAS 34 - Interim Financial Reporting. Subject to certain transition elections disclosed in Note 6(a), the Company has consistently applied the same accounting policies in its opening IFRS statement of financial position at January 1, 2010 and throughout all periods presented, as if these accounting policies had always been in effect. Note 6(b) discloses the impact of the transition to IFRS on the Companys reported financial position, financial performance and cash flows, including, if any, the nature and effect of significant changes in accounting policies from those used in the Companys annual financial statements for the year ended December 31, 2010. The policies applied in these condensed interim consolidated financial statements are based on IFRS issued and outstanding as of August 19, 2011, the date that the Board of Directors approved the financial statements. Any subsequent changes to IFRS that are given effect in the Company's annual financial statements for the year ending December 31, 2011 could result in restatement of these condensed interim consolidated financial statements, including the transition adjustments recognized on change-over to IFRS. IFRS employs a conceptual framework that is similar to Canadian GAAP. The adoption of IFRS has not changed the Company's Statement of Financial Position, Statement of Comprehensive Loss, Statement of Changes in Equity and Statement of Cash Flows as previously reported under GAAP. As noted below, no transitional adjustments were made when converting from GAAP to IFRS. These condensed interim consolidated financial statements should therefore be read in conjunction with the Company's audited Canadian GAAP annual financial statements for the year ended December 31, 2010 and the accompanying notes as well as the Company's condensed interim consolidated financial statements for the period ended March 31, 2011.
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Application of exemption The Company has applied the business combinations exemption in IFRS 1. It has not restated business combinations that took place prior to January 1, 2010 transition date. No adjustment was required.
The Company has not applied the following exemptions: Exemption Compound financial instruments exemption Cumulative translation differences exemption Designation of financial assets and financial liabilities exemption Reason for not applying the exemption The Company has not issued any compound instruments. This exemption is not applicable. There was no cumulative translation differences previously recorded under Canadian GAAP. This exemption is not applicable. The Company has no securities classified as available-for-sale investments or as financial assets at the fair value through profit and loss. This exemption is not applicable. The Company has no defined benefit plans. This exemption is not applicable. The Company has no hedging relationships or derivatives. This exemption is not applicable. The Company has elected not to measure any items of property, plant and equipment at fair value as at January 1, 2010. This exemption is not applicable. The Company has not applied the exemption offered by the revision of IAS 39 on the initial recognition of the financial instruments measured at the fair value through profit and loss where there is no active market. This exemption is not applicable.
Exemption from restatement of comparatives for IAS 32 and IAS 39 Fair value as deemed cost exemption
The Company has elected not to apply the share-based payment exemption. No adjustment was required.
The Company has applied the following mandatory exceptions from retrospective application:
Description of exception and application to the Company Assets held for sale or discontinued operations are recognized in accordance with IFRS 5. The Company did not have any assets that met the held-for-sale criteria during the period presented. No adjustment was required. Financial assets and liabilities derecognized before January 1, 2010 are not re-recognized under IFRS. The Company has no financial assets and liabilities that were de-recognized thus the application of this exemption has no impact on the Company. Estimates under IFRS at January 1, 2010 should be consistent with estimates made for the same date under previous GAAP, unless there is evidence that those estimates were in error. No adjustments for estimates have been made. The Company has never applied hedge accounting. This exception is not applicable.
Estimates exception
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Reconciliation of Loss and Comprehensive Loss There were no material differences between the Statements of Reconciliation of Loss and Comprehensive Loss presented under IFRS and the Statements of Reconciliation of Loss and Comprehensive Loss presented under Canadian GAAP for the three and six months ended June 30, 2010 and the year ended December 31, 2010 on the Company's adoption of IFRS. Reconciliation of the Statements of Cash Flows There were no material differences between the Statements of Cash Flows presented under IFRS and the Statements of Cash Flows presented under Canadian GAAP for the three and six months ended June 30, 2010 and the year ended December 31, 2010 on the Company's adoption of IFRS.
7. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These condensed unaudited interim consolidated financial statements follow the same accounting policies and methods of application as the Company's most recent annual financial statement. (a) Principles of Consolidation The consolidated unaudited interim financial statements include the accounts of the Company and its subsidiary. b) Basis of Presentation The Company has prepared these comparative financial statements on a consolidated basis which includes its whollyowned subsidiary, Venga Joint Venture Ltd. (c) Use of Estimates The preparation of these condensed interim consolidated financial statements, in conformity with Canadian generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. Significant estimates include prepaid expenses and certain accrued liabilities. (d) Financial Instruments Fair Value The Company's financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and loan from a director. Fair value is the amount at which a financial instrument could be exchanged between willing parties, based on the current markets for instruments with the same risk, principal and remaining maturity. The fair values of these financial instruments approximate their carrying values, unless otherwise noted.
Fair Value Measurements Using Quoted prices in Significant other Significant active markets for unobservable identical instruments observable inputs inputs (Level 1) (Level 2) (Level 3) $ $ $ Cash 1,919 -
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are not observable for the asset or liability, either directly(i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.
The fair values of other financial instruments, which include accounts receivable, accounts payable and accrued liabilities and loan from director approximate their carrying values due to the relatively short-term maturity of these instruments. Risk The Company has exposure to a credit risk; liquidity risk; foreign currency risk and interest risk from its use of financial instruments. The Company's cash is held in major Canadian banks and their subsidiaries. Management approves and monitors the risk management process. There has been no change in the Company's risk management process for the period ending June 30, 2011 or for the year ended December 31, 2010. Credit Risk Credit risk represents the financial loss that the Company would experience if a counterparty to a financial instrument failed to meet its obligations to the Company. Cash consists of cash bank balances held in a major Canadian financial institution. The Company's secondary exposure to risk is on its receivables. This risk is minimal as receivables consist of refundable, government of Canada taxes. As a result, there is no significant credit risk related to the Company's assets. The carrying amounts of this financial asset represent the maximum credit exposure. Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its shortterm business requirements, taking into account its anticipated cash flows and its holding of cash. Historically, the Company's principal sources of funding have been the issuance of equity securities for cash; solely through private
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As of June 30, 2011, the Company had not issued any warrants or options nor were there any outstanding warrants or options.
9. RELATED PARTY TRANSACTIONS A director of the Company advanced the Company the sum of $19,000 as a loan due and payable on demand which loan is non - interest bearing. These funds were to be used by the Company for it's ongoing corporate and business operations.
11. INVESTMENT IN NEW JV The Company, which holds a 30% interest in the New JV has no management rights or ongoing funding requirements or obligations with respect to the New JV. The Company's participation in the management and operation of the New JV is limited to the Company's right to receive 30% of the New JV's net profits or losses as and when such profits or losses are distributed to the joint venturers in accordance with the terms and provisions of the New JV Agreement. The Company is only liable to the extent of its investment and is indemnified from the other joint venturers for any excess losses and liabilities. Upon termination of the New JV, the Company is entitled to its capital account share in net assets of the New JV.
12. VENGA'S LICENCE FEE Pursuant to the terms of the JV Agreement, the Company granted the New JV a licence (the "Venga Licence") during the currency of the JV Agreement to use, market, operate and commercially exploit the business trade name 'CLIK 3D'. In consideration of the Company's granting of the Venga Licence, the New JV agreed to pay Venga, the sum of fifty thousand ($50,000.00) dollars (the "Venga Licence Fee") each year or part year during the currency of the JV Agreement. Notwithstanding the terms of the JV Agreement, the New JV has failed to pay the Company the required Venga Licence Fee for the years 2006 through 2010. The Company has advised the New JV that the Company is not waiving any right to recover any portion of the accumulated, unpaid and outstanding amount for the Venga Licence Fee and that the Company is and continues to regard the accumulated, unpaid and outstanding amount for the Venga Licence Fee a valid, legal debt owed by the New JV to the Company.
13. IMPAIRMENT OF LONG TERM INVESTMENT In fiscal year 2008, as a direct consequence of the accumulated and unexpected delays that the New JV (notes 3(b) and 8) has encountered in becoming operational, management decided to record approximately 50% as a write-down of the Company's investment interest in the New JV. As a result of the further delays that the New JV has experienced in becoming operational Management decided in 2010 to a further $100,00 write-down of the Company's investment in the New JV.
15. INCOME TAX The Company has accumulated losses for income tax purposes totaling approximately $1,041,872 for which the tax benefits have not been recognized in the financial statements. These losses can be deducted from future years' taxable income and expire as follows: $ 345,277 244,780 219,473 82,446 60,824 34,359 54,713 1,041,872
Pursuant to the terms of the Exploration Agreement, GMI, in association with Kiwi, Inc. will actively participate and assist Tawana in the development and operation of the Sinoe Project, retain and independently develop certain identified gold mining sites within the Sinoe Project and continue to pursue GMI's current and planned gold dredging operations in GMI's mining concessions. On August 16, 2011, the Company announced that Tawana Resources NL ("Tawana") had advised GMI that Tawana had successfully completed its due diligence and that Tawana was proceeding with its planned acquisition of the exclusive exploration and development rights to the Sinoe Project and that Tawana had secured an option to purchase outright the mineral exploration licence over the Sinoe Project held by GMI. In an August 16, 2011 press release, Tawana provided the following information and comments on its agreement with GMI to acquire what Tawana described as a 'highly' prospective land package' in Sinoe County Liberia: that GMI's mineral exploration licence covers an area of Birimian aged rocks along probablythe most prospective gold mineralized structure being explored in Liberia today - the Dugbe Shear; that the Sinoe Project is 25 km along strike from Hummingbird's (AIM:HBR) 0.8Moz Dugbe Project and 40 km along strike from NT Resources (ASX: NTR) Bukon Jedeh Project. Both of these projects are hosted along secondary and tertiary order structures adjacent to the main Dugbe Shear. Similar structural targets have been defined in the government regional aeromagnetics data over the Sinoe Project area; that the Sinoe Project area is characterized by numerous artisanal gold workings observed in the field during recent site due diligence activities and the area is characterized by numerous quartzite, graphite and manganese occurrences on the USGS geological map of Liberia all of which favorably indicate gold prospectivity; that an aggressive field sampling and mapping program has been commenced in the Sinoe Project, with field teams currently on site conducting soil sampling traverses over high priority targets areas. Blanket, wide spaced soil traverses within GMI's license area and closer spaced soil traverses over high priority targets including, hard-rock artisanal workings are being planned; that it is expected that initial soil sampling data will delineate high priority targets for drilling in the first quarter of 2012;