Medoro Resources Announces First Quarter Results
Medoro Resources Announces First Quarter Results
TORONTO, May 26 /CNW/ - Medoro Resources Ltd. (TSX-V/AIM:MRL) announced
today its 2005 first quarter results for the period ending March 31, 2005.
For the quarter ended March 31, 2005, Medoro reported a loss of
$0.5 million or $0.01 per share as compared to a loss of $1.1 million or
$0.02 per share in the first quarter of 2004. The loss in the quarter largely
reflects ongoing general and administrative costs, which are approximately
half the amount in the same period last year as a result of the disposal of
the majority of the former Gold Mines of Sardinia assets. At March 31, 2005
the company had cash of $2.6 million, undiscounted receivables of
$10.6 million and no debt. Subsequent to the end of the quarter, Medoro
completed a private placement for gross proceeds of $3.9 million.
At Monte Ollasteddu, a geophysical survey to follow up on last year's
drilling results and help better identify targets for this year's program was
completed. Gold Fields expects to commence a 2,000 metre diamond drilling
program in July, subject to the receipt of a Research Permit. Drill targets
include previously identified geophysical anomalies as well as high-grade
veins to the south which were not tested in last year's drill program.
The company continues to seek a joint venture partner for its Pestarena
project and is actively pursuing other opportunities elsewhere in Europe.
Financial Statements follow
MEDORO RESOURCES LTD.
(formerly Full Riches Investments Ltd.)
Consolidated Balance Sheets
(Expressed in Canadian dollars)
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March 31, December 31,
2005 2004
------------- -------------
(Unaudited) (Audited)
ASSETS
CURRENT
Cash and cash equivalents $ 2,563,986 $ 2,448,813
Accounts receivable 77,720 75,981
Prepaid and deposits 28,808 -
Current portion of note receivable 743,473 747,908
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3,413,987 3,272,702
NOTE AND SHARES RECEIVABLE (Note 2) 5,868,942 5,882,880
MINERAL PROPERTIES 5,979,873 5,979,873
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$ 15,262,802 $ 15,135,455
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 40,587 $ 401,534
FUTURE INCOME TAXES 2,130,031 2,130,031
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2,170,618 2,531,565
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SHAREHOLDERS' EQUITY
Share capital (Note 3) 30,161,976 29,161,976
Contributed surplus (Note 3) 584,622 584,622
Deficit (17,654,414) (17,142,708)
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13,092,184 12,603,890
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$ 15,262,802 $ 15,135,455
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These unaudited interim consolidated financial statements for the period
ended March 31, 2005 have not been reviewed by the Company's auditors.
See accompanying Notes to the unaudited interim Consolidated Financial
Statements.
MEDORO RESOURCES LTD.
(formerly Full Riches Investments Ltd.)
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)
(Unaudited)
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Three Two
months ended months ended
March 31, March 31,
2005 2004
------------- -------------
OPERATING EXPENSES
General and administration $ 505,448 $ 990,276
Exploration - 117,412
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505,448 1,107,688
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OTHER INCOME (EXPENSES)
Accreted interest on note receivable 214,580 -
Foreign exchange gain (loss) (232,566) 26,705
Interest income 11,727 16,967
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(6,259) 43,672
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NET LOSS FOR THE PERIOD (511,707) (1,064,016)
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DEFICIT, BEGINNING OF PERIOD (17,142,708) (6,708,811)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
POLICY - (245,000)
DEFICIT, END OF PERIOD $(17,654,415) $ (8,017,827)
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BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.02)
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BASIC AND DILUTED WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 93,176,513 51,533,596
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See accompanying notes to the unaudited interim Consolidated Financial
Statements.
MEDORO RESOURCES LTD.
(formerly Full Riches Investments Ltd.)
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
(Unaudited)
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Three Two
months ended months ended
March 31, March 31,
2005 2004
------------- -------------
OPERATING ACTIVITIES
Net loss from operations $ (511,706) $ (1,064,016)
Items not affecting cash:
Foreign exchange (gain) loss on note
receivable 215,260 (26,705)
Accreted interest on note receivable (196,887) -
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(493,333) (1,090,721)
Changes in non-cash working capital items
Accounts receivable (1,739) (240,853)
Prepaid and deposits (28,808) 9,422
Inventories - 1,633
Other long-term liabilities - 641,858
Accounts payable and accrued liabilities (360,947) 343,441
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(884,827) (335,220)
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INVESTING ACTIVITIES
Acquisition of mineral properties - (1,006,042)
Acquisition of property plant & equipment - (15,875)
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- (1,021,917)
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FINANCING ACTIVITIES
Issuance of common shares for cash 1,000,000 -
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1,000,000 -
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NET INCREASE IN CASH 115,173 (1,357,137)
CASH, BEGINNING OF PERIOD 2,448,813 9,249,605
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CASH, END OF PERIOD $ 2,563,986 $ 7,892,468
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See accompanying notes to the unaudited interim Consolidated Financial
Statements.
MEDORO RESOURCES LTD.
(formerly Full Riches Investments Ltd.)
Notes to the unaudited Consolidated Financial Statements
Three months ended March 31, 2005 and two months ended March 31, 2004
(Expressed in Canadian dollars)
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1. SIGNIFICANT ACCOUNTING POLICIES
The unaudited interim consolidated financial statements are prepared
in accordance with Canadian generally accepted accounting principles
('GAAP') for interim financial statements. These interim financial
statements do not contain all disclosures required under GAAP and,
accordingly, should be read in conjunction with the Company's audited
financial statements for the fourteen month period ended December 31,
2004. These interim consolidated financial statements have been
prepared following the same accounting policies and method of
computations as the Company's audited financial statements for the
fourteen month period ended December 31, 2004.
Stock-based compensation
Effective November 1, 2003, the Company adopted the recommendations
of the amended Handbook Section 3870, 'Stock-based Compensation and
Other Stock-based Payments' ('Section 3870') for stock options issued
on or after November 1, 2002. Section 3870 established standards for
recognition, measurement and disclosure of stock-based compensation
and other stock-based payments made in exchange for goods and
services provided by employees and non-employees. The standard
requires that a fair value-based method of accounting be applied to
all stock-based payments to non-employees and to employee awards that
are direct awards of stock that call for settlement in cash or other
assets or are appreciation rights that call for settlement by the
issuance of equity instruments. Accordingly the Company has restated
and adjusted the opening deficit of the comparative period to reflect
the cumulative effect of the change in 2003.
Previously, the Company provided note disclosure of pro forma net
loss as if the fair value based method had been used on stock options
granted to employees and directors after January 1, 2002. The
amended recommendations have been applied using the retroactive
method without restatement and had the effect of increasing
contributed surplus and opening deficit at November 1, 2003 by
$245,000.
2. NOTES AND SHARES RECEIVABLE
The discounted value as at March 31, 2005 of the notes and
shares receivable from Sargold Resources Corporation
('Sargold') is as follows:
Note receivable (i) $ 6,046,514
Shares receivable (ii) 565,901
---------------------------------------------------------------
6,612,415
Current portion of note receivable (743,473)
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$ 5,868,942
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(i) $8,961,150 ((euro) 5.5 million) discounted using a 3.75%
risk free interest rate and a 10% risk premium.
The following schedule represents the amounts receivable,
discounted at March 31, 2005 and the percentage of shares
to be released upon each individual payment:
March 31, 2005
% of Shares --------------------------
Released Discounted Discounted
Upon Value Value
Date Amount Payment (Euros) ($)
--------------- ---------------- --------- ---------------- ------------
August 30, 2005 (euro) 500,000 8.3% (euro) 473,881 $ 743,472
August 30, 2006 1,000,000 16.7% 833,198 1,307,204
August 30, 2007 1,000,000 16.7% 732,482 1,149,191
August 30, 2008 1,500,000 25.0% 965,569 1,514,881
August 30, 2009 1,500,000 25.0% 848,852 1,331,766
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(euro) 5,500,000 91.7% (euro) 3,853,982 $ 6,046,514
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(ii) Common shares of Sargold to be issued on or by August 30,
2009 for a value equal to $1 million, to be valued at the
market price (as determined according to TSX Venture
Exchange policy) as at August 30, 2009, subject to a
minimum price of $0.225. At March 31, 2005 Sargold shares
had a ten day closing average of $0.302. The discounted
value as at March 31, 2005, using a 13.75% discount rate,
was $565,901.
3. SHARE CAPITAL
(a) Common shares
Authorized: an unlimited number of common shares with
no par value
Issued and outstanding
Number of Contributed
Shares Amount Surplus
------------- ------------- -------------
Balance, October 31, 2003 and
2002 5,935,925 $ 6,706,001 $ -
Cumulative effect of change
in accounting policy 245,000
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Adjusted balance, October 31,
2003 5,935,925 6,706,001 245,000
Issued prior to amalgamation 75,626,261 19,941,692 117,950
Fair value of options and
warrants exchanged - - 61,403
Issued as consideration for
services in connection with
the amalgamation 319,857 63,971 -
Issued in settlement of accrued
liabilities 140,624 70,312 -
Issued to acquire Miniere di
Pestarena srl 4,000,000 2,200,000 -
Issued as consideration for
services in connection with the
sale of GMS Australia 1,000,000 180,000 -
Stock-based compensation - - 160,269
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Closing balance as at
December 31, 2004 87,022,667 $ 29,161,976 $ 584,622
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Issued under private placement 7,692,307 1,000,000 -
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Balance at March 31, 2005 94,714,974 $ 30,161,976 $ 584,622
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(b) Escrow shares
As at March 31, 2005, there were 963,000
(December 31, 2004 - 1,713,000) common shares of the Company
held in escrow.
(c) Warrants
A summary of the changes in the Company's incentive share
option plan for the periods ended March 31, 2005 and
December 31, 2004 are as follows:
Number Exercise
Price
---------------------------------------------------------------
Balance, October 31, 2003 - $ -
GMS England warrants exchanged 5,793,918 1.14
Agent's warrants 687,000 0.70
--------------------------
Balance, December 31, 2004 6,480,918 1.10
Expired (352,890) 3.30
--------------------------
Balance, March 31, 2005 6,128,028 $ 0.97
--------------------------
(d) Incentive stock option plan
March 31, 2005 December 31, 2004
-------------- ------------------
Options Exercise Options Exercise
Price Price
---------------------------------------------------------------
Outstanding,
beginning of
period 6,138,790 $ 0.79 2,500,000 $ 0.70
Granted - - 2,475,000 0.25
Cancelled (1,060,592) 1.95 (19,098) 2.76
GMS replacement
options - - 1,182,888 2.16
--------------------------------------------
Outstanding, end of
period 5,078,198 $ 0.55 6,138,790 $ 0.79
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4. RELATED PARTY TRANSACTIONS
During the three month period ended March 31, 2005 and the two month
period ended March 31, 2004, the Company paid the following amounts
to related parties:
(a) Consulting fees of $50,212 (2004 - $5,350) to a company in
which two directors of the Company are officers.
(b) Consulting fees of $23,930 (2004 - $62,800) to officers of the
Company for professional services.
(f) Consulting fees of $Nil (2004 - $70,650) to directors of the
Company.
These transactions are in the normal course of operations and are
measured at the exchange amounts, which is the amount of
consideration established and agreed to by the related parties.
5. SUBSEQUENT EVENTS
On April 15, 2005, the Company announced that it had completed a
private placement of 30,000,000 units for proceeds of approximately
$3.9 million after payment of agents' fees and expenses. Each unit
consisted of a share and one-half of a share purchase warrant, with
each whole warrant being exercisable for a period of two years at
$0.235. 300,000 agent's warrants were also issued in conjunction with
this placement, each agent's warrant entitling the holder to acquire
one share and one-half warrant of the Company on the same terms as
the units, except that the agent's warrants expire after 18 months.
For further information: Peter Volk, Assistant Secretary,
(416) 603-4653, info(at)medororesources.com
(MRL.)
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