4.0 Working Capital
In fiscal years 2006/2007 and 2007/2008, the Company completed private placements yielding approximately $38 million. No further offerings or private placements were undertaken in the fiscal year ended September 30, 20008.
However, the Company is generating additional capital from the exercise of warrants and options outstanding. During the fiscal year recently ended, the Company realized a total of over $245,000 from the exercise of options and just under $600,000 from the exercise of stock warrants. Even under the currently prevailing adverse economic conditions, it is yet expected that net cash from further exercised, although less than the recent past, will be realized in the present fiscal year. In addition to those cash sources, The Company also realized just over $1,430,000 earnings on its cash reserves invested in government and financial institutional instruments.
During the past fiscal year, the Company’s general and administrative expenditures totaled approximately $10,500,000, of which approximately $8,900,000 was paid in the form of stock options, thus reducing the net cash expenditures to range of $1,500,000. During the same period, the Company expended approximately $8,500,000 for property acquisition and mineral exploration. As of the fiscal year ended September 30, 2008, the Company
had working capital on hand in the range of $30,700,000. As its exploration of the Langmuir property is nearing completion, near term future exploratory expenditures will be substantially reduced.
The Company has no long-term debt other than future tax obligations. Given its cash reserves and its ability to control exploratory expenditures, those reserves are more than sufficient to continue and expand the Company’s development of both existing and newly acquired properties well into the future.
From the MD&A
The Company has non-capital losses for Canadian income tax purposes of approximately $4,100,000, which can be carriedf orward to reduce taxable income in future years. Unless utilized, these losses will expire through 2028. The tax benefits of these non-capital losses and other tax assets have not been recognized in the consolidated financial statements except to the extent that they can be used to offset future income tax liabilities that existed at the fiscal year end.
During the year ended September 30, 2007, the Company issued 3,000,000 common shares on a flow-through basis for gross proceeds of $18,000,000. The flow-through agreements require the Company to renounce certain tax deductions for Canadian exploration expenditures incurred on the Company's mineral properties to the flow-through participants. During the year ended September 30, 2008, the Company renounced exploration expenditures of $18,000,000 resulting in a charge to capital stock of $6,148,800 with a related increase in future income tax liability. As of September 30, 2008, the Company has not incurred the required qualifying exploration expenditures, of which approximately $9,240,000 is unexpended, and has recorded a flow-through share tax expense of an estimated amount of $454,665 (2007 - $Nil).
The Company is committed to incurring approximately $9,240,000 in qualifying exploration expenditures in Canada by December 31, 2008. If the Company does not expend these funds in compliance with the government of Canada flow-through regulations, it will be subject to further penalties and interest.
