Excerpts from MD&A:
CORPORATE ACTIVITIES
In May, 2010 the Company expanded its Reed Lake property in the Flin Flon-Snow Lake greenstone belt by staking 11 claims which had become available along the east boundary of the property. Work programs on the property were interrupted by nearby forest fires and prospecting on the new claims was deferred to later in the year.
At the Annual General Meeting of shareholders on June 3, 2010 Edward Yarrow was elected to the board of the Company. Mr. Yarrow brings expertise in gold and base metals exploration gained from more than 35 years in the industry. He recently retired from Anglo American plc where he was V.P. Exploration with responsibility for North America and Europe.
In July, 2010 the Company closed a private placement of units to raise $250,000. Each unit was comprised of one flow through common share of the Company and one-half of one warrant, with each full warrant exercisable to purchase one common share of the Company for $0.14 for 18 months following closing.
LIQUIDITY AND CAPITAL RESOURCES
At the end of June, 2010 the Company had $840,000 in cash and restricted cash. General funds on hand were $598,000 compared to $222,000 at the end of June, 2009. The Company had $241,000 in restricted cash on hand at June 30, 2010 compared to $431,000 as at June 30, 2009. Restricted cash is raised through the issue of flow-through shares and is available to finance specified Canadian exploration activities.
Net cash outflows for the first six months were $254,000 as compared to $128,000 in the same period in 2009. Remuneration of most employees was restored to normal levels in the fourth quarter of 2009 following the end of the work-sharing agreement. The related increase in costs was offset by reductions in legal costs with the settlement of outstanding litigation and working capital changes. The Company’s exploration programs to the end of the second quarter of 2010 reflected higher activity levels than in 2009, and net incurred costs were $439,000 (gross expenditure of $665,000 before option payments and government grants received and before impairments). In the first six months of of 2009 the net cost was $48,000 (gross expenditure of $152,000 before option payments, grants and impairments). During the first six months of 2010, the Company did not raise funds from the issuance of shares, as compared to $665,000 raised in the same period of 2009.
