Final Results
Medoro Resources Announces 2005 Year-End Results
TORONTO, May 9 /CNW/ - Medoro Resources Ltd. (TSX-V/AIM: MRL) announced
today results for the year ended December 31, 2005.
For the year ended December 31, 2005, Medoro reported a net loss of
$11.0 million or $0.10 per share as compared to a loss of $10.3 million or
$0.15 per share in the previous year. The 2005 loss largely reflects the
writedown of the Pestarena property and a provision for the potential
non-collectability of amounts receivable. At December 31, 2005 the company had
cash and short-term investments of $5.3 million and no debt. Subsequent to the
end of the year, the company completed two private placements for net proceeds
of $9.3 million and $3.1 million, respectively.
Medoro Resources is a gold exploration and development company focused on
acquiring properties of merit for potential joint ventures with senior
producers.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE
Management's discussion and analysis and financial statements follow
MEDORO RESOURCES LTD.
Consolidated Balance Sheets
December 31
(Expressed in Canadian dollars)
-------------------------------------------------------------------------
2005 2004
-------------- --------------
ASSETS
CURRENT
Cash and cash equivalents $ 118,572 $ 2,448,813
Accounts receivable 64,898 75,981
Short-term investments 5,180,000 -
Current portion of note receivable
(Note 3) - 747,908
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5,363,470 3,272,702
NOTE AND SHARES RECEIVABLE (Note 3) 515,498 5,882,880
MINERAL PROPERTIES (Note 4) 1,000,000 5,979,873
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$ 6,878,968 $ 15,135,455
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LIABILITIES
CURRENT
Accounts payable and accrued
liabilities $ 53,437 $ 401,534
FUTURE INCOME TAXES (Note 6) 292,000 2,130,031
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345,437 2,531,565
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SHAREHOLDERS' EQUITY
Share capital (Note 5) 34,111,117 29,161,976
Contributed surplus (Note 5) 587,392 584,622
Deficit (28,164,978) (17,142,708)
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6,533,531 12,603,890
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$ 6,878,968 $ 15,135,455
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APPROVED BY THE DIRECTORS
(Signed) Neil Woodyer
-----------------------------------------
Neil Woodyer, Director
(Signed) Miguel de la Campa
-----------------------------------------
Miguel de la Campa, Director
MEDORO RESOURCES LTD.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
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Fourteen
Year ended months ended
December 31, December 31,
2005 2004
-------------- --------------
OPERATING EXPENSES
Bank charges and interest $ 4,886 $ 5,730
Consulting fees 941,763 922,425
Director fees 357,963 119,409
Investor relations, transfer agent and
filing fees 142,996 168,921
Legal and accounting fees 121,261 537,145
Office and administration 249,964 26,330
Salaries and benefits 48,014 -
Stock-based compensation 2,770 160,269
Telephone 4,462 2,080
Travel and promotion 164,593 527,348
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2,038,672 2,469,657
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OTHER INCOME (EXPENSES)
Accreted interest on note and shares
receivable 785,359 162,593
Foreign exchange gain (loss) (555,728) 208,575
Interest income 50,073 44,846
Loss on disposal of mineral property (5,353,748) -
Provision on notes and shares receivable
from Sargold (5,566,830) -
Other income 38,276 3,805
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(10,602,598) 419,819
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NET LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (12,641,270) (2,049,838)
FUTURE INCOME TAX RECOVERY 1,619,000 -
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NET LOSS FROM CONTINUING OPERATIONS (11,022,270) (2,049,838)
NET LOSS FROM DISCONTINUED OPERATIONS
(Note 3) - (8,228,907)
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NET LOSS FOR THE PERIOD (11,022,270) (10,278,745)
DEFICIT, BEGINNING OF PERIOD (17,142,708) (6,863,963)
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DEFICIT, END OF PERIOD $ (28,164,978) $ (17,142,708)
-------------------------------------------------------------------------
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LOSS PER SHARE FROM CONTINUING
OPERATIONS $ (0.10) $ (0.03)
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LOSS PER SHARE FROM DISCONTINUED
OPERATIONS $ - $ (0.12)
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BASIC AND DILUTED LOSS PER SHARE $ (0.10) $ (0.15)
-------------------------------------------------------------------------
BASIC AND DILUTED WEIGHTED-AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING 115,705,490 68,590,779
-------------------------------------------------------------------------
-------------------------------------------------------------------------
MEDORO RESOURCES LTD.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
-------------------------------------------------------------------------
Fourteen
Year ended months ended
December 31, December 31,
2005 2004
-------------- --------------
OPERATING ACTIVITIES
Net loss from continuing operations $ (11,022,270) $ (2,049,838)
Items not affecting cash:
Loss on disposal of mineral property 4,979,873 -
Provision on notes and shares
receivable from Sargold 5,566,830 -
Future income tax recovery (1,619,000) -
Stock compensation expense 2,770 160,269
Foreign exchange loss (gain) on note
receivable 746,023 (208,575)
Accreted interest on note receivable (785,359) (162,593)
Changes in non-cash working capital items
Accounts receivable 11,083 (66,513)
Prepaid and deposits - 1,973
Accounts payable and accrued liabilities (348,097) 303,772
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(2,468,147) (2,021,505)
Discontinued operations - (2,506,554)
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(2,468,147) (4,528,059)
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INVESTING ACTIVITIES
Short-term investments (5,180,000) -
Acquisition of mineral properties - (1,006,042)
Proceeds on disposition of subsidiary,
net (Note 3) - 763,130
Proceeds received on note receivable 368,765 -
Repayment of promissory note - 50,000
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(4,811,235) (192,912)
Discontinued operations - (144,733)
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(4,811,235) (337,645)
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FINANCING ACTIVITIES
Issuance of common shares for cash 4,949,141 7,528,485
Discontinued operations - (3,435,307)
-------------------------------------------------------------------------
4,949,141 4,093,178
-------------------------------------------------------------------------
NET DECREASE IN CASH FROM CONTINUING
OPERATIONS (2,330,241) (772,526)
CASH, BEGINNING OF PERIOD 2,448,813 3,221,339
-------------------------------------------------------------------------
CASH, END OF PERIOD $ 118,572 $ 2,448,813
-------------------------------------------------------------------------
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MEDORO RESOURCES LTD.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
-------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION
Fourteen
Year ended months ended
December 31, December 31,
2005 2004
-------------- --------------
Interest paid $ - $ -
-------------------------------------------------------------------------
The following transactions are not reflected in the consolidated
statement of cash flows:
During the fourteen month period ended December 31, 2004:
(i) 44,171,118 common shares, 5,793,918 share purchase warrants and
1,182,888 share purchase options with a value of $8,895,626 were
issued in connection with the acquisition of Sardinia Gold
Mining SpA.
(ii) 4,000,000 common shares with a value of $2,200,000 were issued in
connection with the acquisition of Miniere di Pestarena srl
(Note 3).
(iii) 1,000,000 common shares with a value of $180,000 were issued in
consideration for services provided in connection with the sale of
GMS Australia (Note 4).
(iv) 140,624 common shares with a value of $70,312 as payment for
certain liabilities.
(v) 75,000 common shares with a value of $15,000 as consideration for
a bridge facility.
(vi) The Company received a long-term note, payable in cash and shares,
with a discounted value of $6,630,788 as consideration on the sale
of GMS Australia (Note 4).
Management's Discussion and Analysis
The following discussion of the operating results and financial position
of Medoro Resources Ltd. should be read in conjunction with the company's
audited consolidated financial statements and related notes for the fiscal
year ended December 31, 2005.
This Management's Discussion and Analysis has been prepared with
reference to National Instrument 51-102 "Continuous Disclosure Obligations" of
the Canadian Securities Administrators. This Management's Discussion and
Analysis has been prepared as of April 26, 2006.
The financial statements and management report have been reviewed by
Medoro's Audit Committee and approved by its Board of Directors. All dollar
amounts are expressed in Canadian dollars unless otherwise indicated.
Background
Medoro Resources Ltd. was created in February 2004 as a result of the
business combination between Full Riches Investments Limited and a subsidiary
of Gold Mines of Sardinia plc (GMS), whose principal assets were the
exploration and formerly-producing gold assets in Sardegna.
The original focus of GMS was the exploration, development and production
of gold on the island of Sardegna in Italy. Having exhausted all readily-
available sources of ore in February 2003, GMS suspended operations and
pursued alternatives that would enable its shareholders to realize some value
for its extensive portfolio of exploration concessions. The Full Riches
transaction achieved this objective.
Following the amalgamation, Medoro management assessed both the potential
for restarting operations at Furtei, as well as the development potential at
Osilo and other exploration prospects relative to ongoing cash requirements.
Having concluded that the company would experience an unacceptable cash drain
for a longer than expected period, management decided to dispose its interest
in Furtei and to focus all of its exploration efforts on Monte Ollastedu and
Pestarena. On October 20, 2004 Sargold Resource Corporation agreed to acquire
all of the company's assets, excluding Monte Ollasteddu and Pestarena in
exchange for (euro) 500,000 ($784,700) in cash, notes receivable with a
nominal value of (euro) 5.5 million payable over 60 months and $1 million in
common shares of Sargold to be issued 60 months after closing at a minimum
issue price of $0.225.
In 2004, the company was successful in obtaining the permits for drilling
at Monte Ollasteddu, which commenced in August 2004. A total of twelve drill
holes totalling 3,014 metres were completed on the western half of the four
kilometre long mineralised zone. Best results included 25 metres grading
1.7 g/t gold including a 5-metre interval grading 5.5 g/t gold, 20 metres with
a gold grade of 1.3 g/t and 1 metre at 9.9 g/t gold and 17 metres grading
1.9 g/t gold.
In 2005, the company was unsuccessful in obtaining further permits to
carry out additional work at Monte Ollasteddu, ultimately leading to Gold
Fields' decision to drop their option on the property with Bolivar Gold Corp.
(However, the subsequent acquisition of Bolivar by Gold Fields has resulted in
Gold Fields effectively re-acquiring an option on the property.) Throughout
2005, Medoro was also unable to find a joint venture partner willing to fund
exploration expenditures at Pestarena and decided to revert the property to
its original owner to avoid further holding costs.
The company remained very active in its search for new opportunities. In
addition, the search radius was broadened to include those areas outside of
Europe where management has long-standing relationships and previous work
experience. This search resulted in the identification of an exciting new
prospect, the Lo Increible 4A and 4B concessions located in the El Callao
district of Venezuela. The company hopes to aggressively expand the previously-
identified open pit gold resource with a view to fast-tracking development of
the property.
Strategy
Medoro Resources' vision is to create a gold-focused exploration and
development company. To achieve this objective, the company has leveraged off
of its existing land position in Sardegna to focus on a smaller number of more
prospective properties. Given the company's current financial and technical
resources, Medoro's strategy will initially be to rely extensively on joint
ventures with highly-qualified, well-financed partners to fund exploration of
Monte Ollasteddu as well as newly-acquired opportunities.
In order to achieve this strategy, the company has eliminated the
negative cash flow associated with the formerly producing GMS assets. In the
longer term, this strategy is only viable if economic quantities of gold are
discovered and developed on at least one of the company's properties and
thereby generate positive cash flow sufficient to cover all corporate costs on
an ongoing basis.
Risk Factors
The following risk factors should be given special consideration when
evaluating trends, risks and uncertainties relating to the company's business.
Any of the following risks could have a material adverse effect upon the
company, its business and future prospects. In addition, other risks and
uncertainties not presently known by management of the company could impair
the company and its business in the future.
- Exploration and Development
Exploration and development of natural resources involve a high
degree of risk and few properties which are explored are ultimately
developed into producing properties. Although the mineral resource
figures set out herein have been carefully prepared and reviewed or
verified by an independent mining expert, these amounts are estimates
only and no assurance can be given that an identified mineral
resource will ever qualify as a commercially mineable (or viable) ore
body which can be legally and economically exploited. Estimates of
mineral resources can also be affected by such factors as
environmental permitting regulations and requirements, fluctuations
in the price of gold, weather, environmental factors, unforeseen
technical difficulties, unusual or unexpected geological formations
and work interruptions. The long term profitability of the company's
operations will be in part directly related to the cost and success
of its exploration programs, which may be affected by a number of
factors.
Substantial expenditures are required to establish reserves through
drilling, to develop processes to extract the resources and, in the
case of new properties, to develop the extraction and processing
facilities and infrastructure at any site chosen for extraction.
Although substantial benefits may be derived from the discovery of a
major deposit, no assurance can be given that resources will be
discovered in sufficient quantities to justify commercial operations
or that the funds required for development can be obtained on a
timely basis.
- Operating Hazards and Risks
Exploration for natural resources involves many risks, which even a
combination of experience, knowledge and careful evaluation may not
be able to overcome. Operations in which the company has a direct or
indirect interest will be subject to all the hazards and risks
normally incidental to exploration, development and production of
resources, any of which could result in work stoppages, damage to
persons or property and possible environmental damage. Although the
company intends to obtain liability insurance in an amount which it
considers adequate, the nature of these risks is such that
liabilities might exceed policy limits, the liabilities and hazards
might not be insurable, or the company might not elect to insure
itself against such liabilities due to high premium costs or other
reasons, in which event the company could incur significant costs
that could have a material adverse effect upon its financial
condition.
- Fluctuating Prices
The company's future revenues, if any, are expected to be in large
part derived from the extraction and sale of gold. The price of gold
has fluctuated widely, particularly in recent years, and is affected
by numerous factors beyond the company's control including
international economic and political trends, expectations of
inflation, currency exchange fluctuations, interest rates, global or
regional consumption patterns, speculative activities and increased
production due to new extraction developments and improved extraction
and production methods. The effect of these factors on the price of
precious metals, and therefore the economic viability of any of the
company's exploration projects, cannot accurately be predicted.
- Retention of Key Personnel
The company's business is dependent on retaining the services of a
small number of key personnel of the appropriate caliber as the
business develops. The success of the company is, and will continue
to be to a significant extent, dependent on the expertise and
experience of the directors and senior management and the loss of one
or more could have a materially adverse effect on the company.
- Regulatory Approvals
The operations of the company and the exploration agreements which it
has entered into require approvals, licences and permits from various
regulatory authorities, governmental and otherwise (including project
specific governmental decrees). The company believes that it holds or
will obtain all necessary approvals, licences and permits under
applicable laws and regulations in respect of its main projects and,
to the extent that they have already been granted, believes it is
presently complying in all material respects with the terms of such
approvals, licences and permits. However, such approvals, licences
and permits are subject to change in various circumstances and
further project-specific governmental decrees and/or legislative
enactments may be required. There can be no guarantee that the
company will be able to obtain or maintain all necessary approvals,
licences and permits that may be required and/or that all project
specific governmental decrees and/or required legislative enactments
will be forthcoming to explore and develop the properties on which it
has exploration rights, commence construction or operation of mining
facilities or to maintain continued operations that economically
justify the costs involved.
- Title Matters
While the company has diligently investigated title to all mineral
claims and, to the best of its knowledge, title to all properties is
in good standing, this should not be construed as a guarantee of
title. The properties may be subject to prior agreements or transfers
and may be affected by undetected defects. If a title defect does
exist it is possible that the company may lose all or part of its
interest in properties to which the title defect relates.
- Currency Risk
The company reports its financial results and maintains its accounts
in Canadian dollars and the market for gold is principally
denominated in United States dollars. The company's operations in
Italy make it subject to further foreign currency fluctuations and
such fluctuations may materially affect the company's financial
position and results.
- Economic and Political Factors
The company's most important assets are located in Italy and mineral
exploration and mining activities may be affected in varying degrees
by political stability and government regulations relating to the
mining industry. Any changes in regulations or shifts in political
conditions are beyond the control of the company and may adversely
affect its business.
In addition, if the proposed acquisition of Panwest by the company is
completed as anticipated, the company's primary exploration
activities will occur in Venezuela and, as such, the company could be
affected by political or economic instability in Venezuela. The
risks include, but are not limited to, civil unrest, terrorism,
military repression, extreme fluctuations in currency exchange rates
and high rates of inflation. The security situation in Venezuela is
highly volatile due to ongoing political conflict between the
Venezuelan government and opposition groups. Demonstrations, counter-
demonstrations, and street confrontations in 2002 and early 2003 led
to acts of violence and disorder, resulting in deaths and injuries.
Opposition groups began an indefinite nationwide general strike on
December 2, 2002 which they agreed to partially lift from February 3,
2003. Nevertheless, one-third of the workers of the state-owned oil
companies that joined the strike were laid off and resumption of the
output of oil and related products has not reached pre-strike levels.
In August 2004, a national referendum ratified the mandate to the
President of the Republic and in October 2004 elections of governors
and mayors throughout the country resulted in the ruling group of
parties controlling most of such offices. These events have resulted
in greater political stability, which is expected to last for some
time. Also, oil revenues for the Government have remained high,
which has allowed it to increase public spending and create a
perception of an economic bonanza. Violent crime is prevalent
throughout the country. Kidnapping, smuggling and drug trafficking
occur frequently in remote areas, including Bolivar state.
Changes in resource development or investment policies or shifts in
political attitude in Venezuela subsequent to the completion of the
proposed acquisition of Panwest by the company could adversely affect
the company's business. Operations may be affected in varying degrees
by government regulations with respect to restrictions on production,
price controls, export controls, income taxes, expropriation of
property, maintenance of claims, environmental legislation, land use,
small miners' activities, land claims of local people, water use and
mine safety. The effect of these factors cannot be accurately
predicted. In the past, Venezuela has imposed exchange controls that
make it difficult for foreign mining companies to repatriate profits.
On February 6, 2003, the National Executive and the Central Bank of
Venezuela enacted Exchange Control Regulations centralizing all
currency exchange transactions through the Central Bank and
implementing a system for application for foreign currency by
Venezuelan companies and individuals in order to repay debt, import
authorized supplies and services, pay for travel expenses and pay
dividends to foreign investors. All foreign currency brought into
Venezuela (as foreign investment) by an investor must be sold to the
Central Bank at the fixed exchange rate at the time of the
transaction. All foreign currency derived from the export of products
from Venezuela, including gold, must be sold to the Central Bank at
the fixed exchange rate at the time of the transaction. Foreign
investors have the right to apply to the Central Bank for foreign
currency at the fixed exchange rate for the purposes of repatriation
of capital, dividends and interest.
The provisions of the Investment Protection Treaty with Canada which
was ratified by Venezuela on January 20, 1998 should provide certain
protections to Canadian based investors (like the company will be
upon completion of the proposed acquisition of Panwest) in Venezuela.
- Environmental And Other Regulatory Requirements
The company's operations are subject to the extensive environmental
risks inherent in the gold mining industry. The current or future
operations of the company, including development activities,
commencement of production on its properties, potential mining and
processing operations and exploration activities require permits from
various governmental authorities and such operations are and will be
governed by laws and regulations governing prospecting, development,
mining, production, exports, taxes, labour standards, occupational
health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. Companies engaged in the
development and operation of mines and related facilities generally
experience increased costs, and delays in production and other
schedules as a result of the need to comply with applicable laws,
regulations and permits.
Existing and possible future environmental legislation, regulations
and actions could cause significant additional expense, capital
expenditures, restrictions and delays in the activities of the
company. Although the company believes that it is in substantial
compliance in all material respects with applicable material
environmental laws and regulations, there are certain risks inherent
in its activities such as accidental spills, leakages or other
unforeseen circumstances, which could subject the company to
extensive liability.
Failure to comply with applicable laws, regulations, and permitting
requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing
operations to cease or be curtailed, and may include corrective
measures requiring capital expenditures, installation of additional
equipment, or remedial actions. Parties engaged in mining operations
may be required to compensate those suffering loss or damage by
reason of the mining activities and may have civil or criminal fines
or penalties imposed for violations of applicable laws or
regulations. Amendments to current laws, regulations and permits
governing operations and activities of mining companies, or more
stringent implementation thereof, could have a material adverse
impact on the company and cause increases in capital expenditures or
production costs or reduction in levels of production at producing
properties or require abandonment or delays in development of new
mining properties.
- Competition
The mineral exploration and mining business is competitive in all of
its phases. The company competes with numerous other companies and
individuals, including competitors with greater financial, technical
and other resources than the company, in the search for and
acquisition of exploration and development rights on attractive
mineral properties. The company's ability to acquire exploration and
development rights on properties in the future will depend not only
on its ability to develop the properties on which it currently has
exploration and development rights, but also on its ability to select
and acquire exploration and development rights on suitable properties
for exploration and development. There is no assurance that the
company will continue to be able to compete successfully with its
competitors in acquiring exploration and development rights on such
properties.
Results of Operations
The following comments identify various issues related to the results of
operations for the twelve months ended December 31, 2005 as compared to the
fourteen months ended December 31, 2004 and management's outlook for 2006.
The company reported a net loss for the year ended December 31, 2005 of
$11.0 million or $0.10 per share, as compared to a net loss of $10.3 million
or $0.15 per share for the 14-month period ended December 31, 2004. The loss
in 2005 reflects the writedown of the Pestarena property and provisions for
the potential non-collectability of amounts receivable. For 2006, it is
expected that exploration expense at the Lo Increible property will be in the
order of $2.2 million.
In 2005, the company provided for a potential loss on the recovery of
amounts receivable related to the sale of the formerly producing properties in
the amount of $5.6 and wrote off its investment in Pestarena, amounting to
$5.4 million. In 2004, the company recorded a loss from continuing operations
of $2.0 million plus a loss of $8.2 million for discontinued operations, being
those assets sold to Sargold Resource Corporation.
After adjusting net income for non-cash items, primarily the provision
against amounts receivable and the loss on the disposal of Pestarena, and
changes in non-cash working capital, cash consumed by operating activities was
$2.5 million. During 2005, the company invested, on a net basis, $4.8 million,
principally represented by short-term deposits. The company also raised
$4.9 million in net proceeds from financing activities. After reflecting the
foreign exchange impact on the company's cash balances, cash decreased by
$2.3 million to $0.1 million during the year. However, short-term investments
increased by $5.2 million during the same period.
Selected Annual Information
Annual results of operations for the previous three years are summarized
below:
-------------------------------------------------------------------------
Three most recent years Dec. 31 Dec. 31(x) Oct. 31
2005 2004 2003
-------------------------------------------------------------------------
a) Revenues $ 0 $ 0 $ 0
b) Income before
discontinued
operations (10,955,301) (2,049,838) (196,683)
- per share (0.10) (0.03) (0.01)
c) Net income (loss) (10,955,301) (10,278,745) (346,683)
- per share (0.10) (0.15) (0.03)
d) Total assets 6,945,937 15,135,455 3,945,705
e) Long term debt 0 0 0
f) Dividends per share 0.00 0.00 0.00
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(x) 14 months
-------------------------------------------------------------------------
Summary of Quarterly
Results Dec. 31 Sept. 30 Jun. 30 Mar. 31
2005 2005 2005 2005
-------------------------------------------------------------------------
a) Revenues $ 0 $ 0 $ 0 $ 0
b) Income (loss)
before dis-
continued
operations (5,928,060) (4,092,718) (422,816) (511,707)
- per share (0.06) (0.03) 0.00 (0.01)
c) Net income (5,928,060) (4,092,718) (422,816) (511,707)
- per share (0.06) (0.03) 0.00 (0.01)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Summary of Quarterly
Results Dec. 31 Sept. 30 Jun. 30 Mar. 31
2004 2004 2004 2004
-------------------------------------------------------------------------
a) Revenues $ 0 $ 0 $ 0 $ 0
b) Income (loss)
before dis-
continued
operations 2,816,964 (1,833,106) (1,879,832) (1,153,864)
- per share 0.04 (0.02) (0.02) (0.03)
c) Net income (5,411,943) (1,833,106) (1,879,832) (1,153,864)
- per share (0.08) (0.02) (0.02) (0.03)
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-------------------------------------------------------------------------
Liquidity and Financial Resources
At December 31, 2005, the company had cash and short-term investments of
$5.3 million and no debt. Subsequent to the end of the year, the company
raised an additional $9.3 million in net proceeds from a private placement.
The company expects to maintain approximately the same level of general and
administrative expenses in 2006 and spend approximately $2.2 million on
exploration expenditures which are expended to funded from available
resources.
Critical Accounting Estimates
The company's financial statements are prepared in accordance with
Canadian generally accepted accounting principles and are reported in Canadian
dollars, which is the company's functional currency. Foreign subsidiaries are
considered to be integrated and accordingly, the company uses the temporal
method to translate the financial statements of its foreign subsidiaries into
Canadian dollars.
Transactions with Related Parties
All transactions with related parties have occurred in the normal course
of operations and are measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties. During the
year ended December 31, 2005 and the fourteen month period ended December 31,
2004, the Company paid the following amounts to related parties:
(a) Consulting fees of $124,508 (2004 - $106,716) and rent of $92,955
(2004 - $4,000) to a company in which a director of the Company is an
officer; and
(b) Consulting fees of $291,888 (2004 - $211,883) to directors of the
Company.
Shares Outstanding
The company currently has 224,714,974 issued and outstanding common
shares, 19,559,626 common share purchase warrants and 5,040,681 share purchase
options that would result, if exercised, in the issuance of an additional
24,600,307 common shares and $9.4 million in cash.
Additional information relating to Medoro Resources Ltd., including the
company's Annual Information Form, is available on SEDAR at www.sedar.com.
For further information: Peter Volk, Secretary, (416) 603-4653,
pvolk(at)medororesources.com
(MRL)
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