TIDMMOE
RNS Number : 3537S
Moto Goldmines Limited
15 May 2009
"Not for dissemination in the United States or through any US newswire
service"
NEWS RELEASE
FOR IMMEDIATE RELEASE
TSX Code - MGL
MAY 15, 2009
AIM Code - MOE
ISSUE OF MARCH 31, 2009 INTERIM QUARTER FINANCIAL
STATEMENTS
AND
MANAGEMENTS DISCUSSION AND ANALYSIS
PERTH, WESTERN AUSTRALIA -
Moto Goldmines Limited ("Moto") has today issued consolidated financial
statements and management's discussion and analysis for the quarter ended March
31, 2009.
The management's discussion and analysis and the Consolidated Balance Sheets,
Consolidated Statements of Operations, Comprehensive Loss and Deficit and
Consolidated Statements of Cash Flows are included below. Complete copies of
these documents will be made available on the Company's website
www.motogoldmines.com and under the Company's profile on SEDAR at www.sedar.com.
For further information in respect of the Company's activities, please contact:
+-----------------------------------------+--------------------------------------+
| Andrew Dinning | Mark Arnesen |
+-----------------------------------------+--------------------------------------+
| President and Chief Operating Officer | Financial Director and Chief |
| | Financial Officer |
+-----------------------------------------+--------------------------------------+
| Tel: +61 8 9273 4222 | Tel: +61 8 9273 4222 |
+-----------------------------------------+--------------------------------------+
| email: adinning@motogoldmines.com | email: marnesen@motogoldmines.com |
| | |
+-----------------------------------------+--------------------------------------+
Moto Goldmines Limited website: www.motogoldmines.com
+-----------------------------------------+--------------------------------------+
| Nominated advisor for the purposes of | RFC Corporate Finance Ltd |
| AIM: | Steve Allen |
| | Tel: +61 8 9480 2508 |
| | email: Steve.Allen@rfc.com.au |
+-----------------------------------------+--------------------------------------+
| AIM Broker | GMP Securities Europe LLP |
| | James Hannon |
| | Tel: +44 207 647 2803 |
| | email: james.hannon@gmpeurope.com |
+-----------------------------------------+--------------------------------------+
Management's Discussion and Analysis
The following is a discussion and analysis of the financial position and results
of operations of Moto Goldmines Limited (the "Company") and its subsidiaries
(the "Group" or "Moto") for the quarter ended March 31, 2009. This information
is presented as of May 15, 2009. The discussion should be read in conjunction
with the unaudited consolidated financial statements of the Company as at and
for the quarter ended March 31, 2009 and the audited consolidated financial
statements of the Company as at and for the year ended December 31, 2008 and the
notes thereto. The Company's consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting principles.
The Company uses the Australian dollar as its reporting currency. References
below to "$" or "A$" refer to Australian dollars. Certain financial information
relating to the Company set out below originates in Canadian dollars ("C$") or
US dollars "("US$") and has been translated into Australian dollars based on
prevailing exchange rates.
The Company is continued under the Business Corporations Act (British Columbia).
The Company's securities are listed for trading on the Toronto Stock Exchange
(the "TSX") and the AIM market of the London Stock Exchange plc ("AIM").
Additional information about the Company and its business activities, including
the Company's most recent amended and restated annual information form and
technical report prepared in accordance with Canadian National Instrument
43-101("NI 43-101") regarding the Moto Gold Project, is available under the
Company's profile on SEDAR at www.sedar.com.
Cautionary Statement Regarding Forward-Looking Statements and Material
Assumptions
Certain statements contained in this discussion and analysis that are not
historical facts constitute "forward-looking statements", including but not
limited to those statements with respect to the development of mineral deposits,
the price of mineral commodities and the Company's financial resources. These
statements involve known or unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company to be
materially different from those projected by such forward-looking statements.
Such factors include, among others, the actual results of current exploration
activities, access to capital and future prices of gold. Often, but not always,
forward-looking statements can be identified by the use of words such as
"plans", "expects", "is expected", "budget", "scheduled", "estimates",
"forecasts", "projects", "seeks", "intends", "anticipates", or "believes", or
variations (including negative variations) of such words and phrases, or state
that certain actions, events or results "may", "could", "would", "might ", or
"will" be taken, occur or be achieved. Forward-looking statements involve known
or unknown risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Group to be materially different
from those projected by such forward looking statements. Such factors include,
among others, the actual results of current exploration activities, access to
capital and future prices of gold, as well as those factors disclosed in the
Company's Annual Information Form, under the heading "Risk Factors", which is
available under the Company's profile on SEDAR at www.sedar.com. See also item
15, "Risks and Uncertainties", below. There can be no assurance that the
forward-looking statements contained in this discussion and analysis will prove
to be accurate as actual results and future events could differ materially from
those anticipated in such statements.
The material factors or assumptions used to develop certain forward-looking
information contained in this Management's Discussion and Analysis are that (1)
the transfer of the portions of the 10 Exploitation Permits that cover the area
that relate to the Project (the "Exploitation Permits") will be registered with
the mining registry in the Democratic Republic of Congo ("DRC Mining Registry")
(2) the Moto Gold Project will be successfully developed, mineralisation
previously disclosed in respect of the Moto Gold Project will be proven to be
economic, anticipated metallurgical recoveries will be achieved, future
evaluation work will confirm the viability of deposits identified in the Project
and future required regulatory approvals will be obtained.
1. Summary of Key Business Activities and Achievements
The Company is a mineral exploration and development company. The Company's
principal asset is its interest in the Moto Gold Project (the "Moto Gold
Project" or "Project"), details of which are set out in section 2 below. During
the three month period ended March 31, 2009, the principal focus of the Company
was to progress the Project and finalise the remaining issues resulting from the
mining contracts review process (the "DRC Mining Contracts Review") undertaken
by the government of the Democratic Republic of Congo ("DRC") and the recent
joint venture negotiations between Moto and L'Office des Mines d'Or de Kilo-Moto
("Okimo"), a DRC state-owned entity.
As previously disclosed, Moto released the results of an optimised feasibility
study (the "Optimised Feasibility Study" or "OFS") for the Moto Gold Project in
March 2009. The Company's most recent Technical Report in respect of the Project
can be found under the Company's profile on SEDAR at www.sedar.com.
In January 2009, the Company and its wholly owned subsidiary, Borgakim Mining
s.p.r.l. (now named Kibali Goldmines s.p.r.l. ("Kibali Goldmines")),
successfully concluded negotiations and entered into amendment agreements (the
"Amendment Agreements") with Moto's joint venture partner, Okimo. This enabled
the consolidated lease (the "Consolidated Lease") for the area of the Project,
which Okimo and Kibali Goldmines entered into in July 2008, to be registered
with the DRC Mining Registry. The Amendment Agreements provided, among other
things, that the joint venture company to carry out the Moto Gold Project would
be Kibali Goldmines, to be owned as to 70 per cent. by the Company and 30 per
cent. by Okimo, consistent with the historical respective interest of the
parties in the Project.
On March 13, 2009 the Company, its subsidiary, Border Energy Pty Ltd ("Border"),
and Okimo concluded the joint venture agreement ("Joint Venture Agreement")
governing the day to day management of the joint venture company (Kibali
Goldmines). The Amendment Agreements and the Joint Venture Agreement have been
approved by the Board of Okimo and by Okimo's umbrella authorities, which are
the DRC Minister of Mines and Minister of Portfolio (the "Umbrella
Authorities").
Okimo is being issued its 30 per cent. equity interest in Kibali Goldmines and
the registration of the Exploitation Permits in the name of Kibali Goldmines
with the DRC Mining Registry is being progressed. The issue of this equity is,
in part, consideration for the transfer of the Exploitation Permits for no
additional payment. Moto anticipates that the process for the transfer of the
Exploitation Permits will be completed during the second quarter of 2009.
The Company, through the normal course of business and in line with its annual
work programs, closed the Project site down in early December 2008 for the
annual Christmas break. With the completion of critical path work related to the
OFS, the Company deemed it prudent, for commercial and risk mitigation reasons,
to delay re-commencement of major site activities by around six to seven weeks,
the most significant of these reasons being the completion of negotiations with
the government of the DRC to finalize the Joint Venture Agreement with Okimo (as
noted above) and the sporadic incidents of unlawful activity being carried out
by remnants of the Lord's Resistance Army ("LRA") within the area of influence
of the Project site, with such activity consisting primarily of banditry and
looting of local villages.
Since early February 2009, the Company has progressively mobilized several small
teams of expatriate workers to site to carry out rig maintenance, construct
fencing around the site, perform works on the Doko to Arua road and generally
prepare for the resumption of drilling and usual activities at site. There are
also approximately 131 Congolese workers on site. Drilling recommenced on site
in April 2009 and the site is currently fully operational.
Other key achievements during the quarter and up to the date of this report
include:
* Despite the delay in the commencement of activities on site, the site based
Project pre-development activities that began in 2008 continued to be advanced
where possible. In particular, the Project team continued to advance the
community development and resettlement plan, as this is a key critical path
item.
* Moto's social and community programs remained ongoing. Although minimal
construction related works have been performed in this quarter, Moto has
continued to work on other programs, which include the multi phase malaria
management program, as well as general health and HIV education and awareness
programs.
* On April 27, 2009, the Company completed an equity raising, through a short form
prospectus offering on a "bought deal" basis with a syndicate of brokers co-led
by GMP Securities L.P. and BMO Capital Markets. As a result of the equity
raising, the Company issued 17,860,000 Common Shares at C$2.80 per share for
gross proceeds of approximately C$50 million. On May 15, 2009, the
over-allotment option to purchase up to an additional 2,679,000 Common Shares to
cover over-allotments, if any, and for market stabilization purposes (the
"over-allotment option") was exercised in full by the Underwriters. The
over-allotment option has raised additional gross proceeds of approximately
C$7.5 million and net proceeds of approximately C$7.1 million.
2. The Moto Gold Project
Overview
The Moto Gold Project is located in the Moto goldfields in the north-east of the
DRC, some 560 kms north east of the city of Kisangani and 150 kms west of the
Ugandan border town of Arua. The Project covers an area of approximately 1,841
sq. kms and is a joint venture between the Company and Okimo with Kibali
Goldmines being the joint venture company.
Tenure
On January 7, 2009 Moto announced the successful completion of a series of
meetings with Okimo, which were conducted in the presence of experts appointed
by the DRC Minister of Mines (the "Review Meetings") to conclude the work of the
DRC Mining Contracts Review in relation to the Project. The Review Meetings led
to the partners entering into the Amendment Agreements to reflect the agreed
terms and to the registration of the Consolidated Lease with the DRC Mining
Registry. The Amendment Agreements became effective following approval by the
Okimo Board, notification to the Umbrella Authorities and specific approval from
the Minister of Mines. Separately, the DRC Prime Minster has also confirmed that
the Council of Minsters has examined the report of the Minister of Mines on the
DRC Mining Contracts Review and has approved the continuance of the
Okimo/Moto/Kibali Goldmines partnership.
On March 13, 2009 Moto announced the signing of the Joint Venture Agreement
between Moto, Border, Okimo and Borgakim Mining s.p.r.l (now Kibali Goldmines
s.p.r.l.). The Joint Venture Agreement is immediately effective as Okimo had
previously received the requisite approvals from its Umbrella Authorities.
The Joint Venture Agreement confirms Kibali Goldmines as the joint venture
company carrying out the Project, owned as to a 70 per cent. equity interest by
Moto and as to a 30 per cent. non-dilutable equity interest by Okimo. The
issuance to Okimo of its 30 per cent. equity interest in Kibali Goldmines is, in
part, as consideration for the transfer of the Exploitation Permits to the joint
venture company for no additional payment. Moto is working with the Ministry of
Mines and the DRC Mining Registry to ensure that the Exploitation Permits are
properly registered and expects that this process will be completed during the
second quarter of 2009.
Additional information regarding Moto's contractual relationships in the DRC can
be found in the Company's most recent Annual Information Form, which is
available on the Company's website, www.motogoldmines.com and under the
Company's profile on SEDAR at www.sedar.com.
Exploration
As noted in Section 1, Summary of Key Business Activities and Achievements,
drilling on site on recommenced in April 2009. Moto will continue to concentrate
on refining and enhancing the underground resource model and upgrade of inferred
mineral resources to support underground mine design and increase the
underground mining reserve.
Following the completion of the OFS (as published in March 2009), the Moto Gold
Project's mineral reserves now stand at 42.3 million tonnes grading 4.0g/t for
5.5 million ounces of gold (all probable mineral reserves). Cube Consulting
(open pit mining) and SRK Consulting Pty Ltd (underground mining) calculated
these mineral reserves using the Australian standard of resource
classifications, JORC, which are equivalent to the CIM classifications used in
Canada in accordance with NI 43-101.
Operational Activities
An optimization scope of work for the 2007 Feasibility Study was commissioned in
early 2008 and continued for the full year with the completion of the OFS
announced in early March 2009. The objectives of the OFS were to reduce
pre-production capital expenditure and improve the economics of the Project. The
inclusion of underground mining and a reconfiguration of the Project's feed
schedule are the key areas that were assessed as part of the exercise. The
reconfiguration of the Project enabled the engineering team to focus on value
rather than throughput which in turn has resulted in the mining schedule now
being grade rather than tonnes driven. Social and community planning consultants
were appointed to undertake social and community baselines and impact
assessments for the OFS. This work will be used to build a community development
and resettlement action plan for the construction phase in line with
international standards and will also be used in the Company's long term
sustainability planning.
During the quarter, reconstruction works on the Doko to Arua road, a 160 km
section of road linking the Project site to Ugandan service infrastructure,
remained suspended, though some minor works continued to maintain the sections
already completed. Moto hopes to recommence the construction of this road
shortly. During this calendar year, the Project development activities at site
are likely to include construction of additional accommodation facilities,
necessary infrastructure works and community development and resettlement works
(in line with the community development and resettlement plan currently being
finalised).
Moto continued to advance its social and community development programs, despite
the delays in the re-opening of site operations. Moto will be reviewing the
social and community development programs shortly in order to prioritise key
projects that will return the most value to the local communities, however, Moto
is committed to continuing the ongoing educational programs including HIV and
personal health and hygiene campaigns, and ongoing work and interaction with
local NGOs and women's groups. Moto continued with the implementation of a multi
phase malaria management program.
With the delays to the Project resulting from uncertainties created by the DRC
Mining Contracts Review Process, there have been considerable delays to key
critical path items. Moto is working towards key financing activities, project
approvals and the commencement of critical path development items, including the
community development and resettlement plan.
As previously reported, Moto has an obligation to its joint venture partner,
Okimo, to provide assistance under the Revised Technical and Financial
Assistance Contract (the "Revised ATF Contract") to enable Okimo to generate
income from its own exploitation activities. Works on the rehabilitation of the
N'Zoro hydro-electrical plant and the exploitation of the "Durba Tailings" were
commenced early in 2009.
3.Selected Financial Information
The table below sets forth selected financial data relating to the quarters
ended March 31, 2009, and March 31, 2008. This financial data is extracted from
the Company's unaudited consolidated financial statements, which are prepared in
accordance with Canadian GAAP. All amounts in the discussion are in Australian
dollars unless otherwise stated.
+-----------------------------------------+-------------+-------------+
| | Quarter ended |
+-----------------------------------------+---------------------------+
| | Mar 31, | Mar 31, |
| | 2009 | 2008 |
+-----------------------------------------+-------------+-------------+
| | $ | $ |
+-----------------------------------------+-------------+-------------+
| Revenue | 73,609 | 232,400 |
+-----------------------------------------+-------------+-------------+
| | | |
+-----------------------------------------+-------------+-------------+
| Expenditure | | |
+-----------------------------------------+-------------+-------------+
| Employee and consultants | 839,808 | 837,764 |
+-----------------------------------------+-------------+-------------+
| Amortization | 293,808 | 182,354 |
+-----------------------------------------+-------------+-------------+
| Occupancy | 72,201 | 78,278 |
+-----------------------------------------+-------------+-------------+
| Shareholder and listing costs | 126,723 | 129,803 |
+-----------------------------------------+-------------+-------------+
| Marketing and promotion | 256,942 | 227,682 |
+-----------------------------------------+-------------+-------------+
| Foreign exchange loss / (gain) | 373,013 | (974,672) |
+-----------------------------------------+-------------+-------------+
| Stock based compensation | 425,529 | 556,870 |
+-----------------------------------------+-------------+-------------+
| Interest | 1,004,114 | 793,711 |
+-----------------------------------------+-------------+-------------+
| Other | 111,564 | 105,058 |
+-----------------------------------------+-------------+-------------+
| | 3,503,702 | 1,936,848 |
+-----------------------------------------+-------------+-------------+
| | | |
+-----------------------------------------+-------------+-------------+
| Loss and comprehensive loss for the | 3,430,093 | 1,704,448 |
| period | | |
+-----------------------------------------+-------------+-------------+
| | | |
+-----------------------------------------+-------------+-------------+
| | Cents per share |
+-----------------------------------------+---------------------------+
| Basic loss per share | 3.9 | 2.37 |
+-----------------------------------------+-------------+-------------+
| | | |
+-----------------------------------------+-------------+-------------+
| Balance sheet (millions) | | |
+-----------------------------------------+-------------+-------------+
| Balance Sheet total assets | 245.8 | 197.0 |
+-----------------------------------------+-------------+-------------+
| Total Long-term liabilities | 35.0 | 24.1 |
+-----------------------------------------+-------------+-------------+
| Shareholders' equity | 193.5 | 148.2 |
+-----------------------------------------+-------------+-------------+
| Cash flow (millions) | | |
+-----------------------------------------+-------------+-------------+
| Net cash inflow/(outflow) | (29.9) | (10.3) |
+-----------------------------------------+-------------+-------------+
The Company is at the development stage and has no sales revenue. Expenditure is
funded by equity raisings and is partially offset by interest revenue earned on
interest bearing cash deposits. As at March 31, 2009 the Company had cash and
cash equivalents of A$24.8 million compared to A$54.7 million at December 31,
2008. Cash resources are being used in the exploration and development of the
Project, which resulted in a consistent decrease in cash resources each quarter
prior to the Company's equity raising in April 2008. With a significant portion
of Moto's cash being held in United States and Canadian dollars, any weakening
of the Australian dollar against those currencies will mitigate some of the
normal quarterly cash reduction. At March 31, 2009 the Group held approximately
3.7% of its cash and cash equivalents in Australian dollars, 74.0% in United
States dollars, 20.5% in Canadian dollars and the remaining 1.8% in Pound
Sterling and local currencies in the countries in which the Group operates
(including the Congolese Franc and the Ugandan Shilling).
Cash balances as at March 31, 2009 are held on short-term deposit (up to 60
days) with the National Australia Bank and Barclays Commercial Bank in London.
Cash is also typically held in a variety of bank deposits with Banque
Commerciale du Congo and other national banks of the DRC and Uganda in order to
service short-term operating commitments in these countries (these funds do not
exceed US$1.0 million).
4. Discussion of Operations and Expenditure
Comparison - Quarter ended March 31, 2009 to the quarter ended March 31, 2008
The Company had a net loss for the quarter ended March 31, 2009 of $3,430,093
compared to a net loss of $1,704,448 for the quarter ended March 31, 2008. The
results for the quarter ended March 31, 2009 compared with the quarter ended
March 31, 2008 reflect the following factors:
* Interest income for March 2009 quarter is below that of the March 2008 quarter
due to the fall in interest rates.
* The employee and consultants costs for the March 2009 quarter are consistent
with the March 2008 quarter. The levels of activity that impact these costs are
consistent with the same period in 2008.
* The amortisation expense for the Group is impacted by the level of capital
purchases during the quarter and by foreign currency movements as the majority
of assets are held by Kibali Goldmines, which is required to report in United
States dollars. The amortisation expense for the March 2009 quarter was higher
than the March 2008 quarter as a result of both of these factors. The Australian
dollar weakened significantly during the last quarter of 2008 and has not
recovered. In addition, Kibali Goldmines completed and commissioned a
significant extension to the on-site laboratory facilities, which have now begun
to be depreciated.
* Occupancy costs for the March 2009 quarter are consistent with the March 2008
quarter. These costs represent the office costs for the Perth head office and
there have been no material movements in these costs or the factors that
influence them.
* Shareholder and listing costs for March 2009 quarter are consistent with the
March 2008 quarter. There have been no significant movements in the factors that
impact shareholder or listing costs when compared to the first quarter of the
prior year.
* Marketing and promotional costs for the March 2009 quarter are marginally above
the March 2008 quarter. The first quarter of each year is typically impacted by
the Group's marketing activities at the Indaba Mining Conference, held in Cape
Town, South Africa. Moto's level of presence at this year's Indaba Mining
Conference was consistent with the prior year, however, there was an overall
increase in the cost base, including conference registration costs, marketing
material costs and travel costs.
* The Company incurs the majority of its expenditures in United States dollars,
Canadian dollars and Australian dollars. The Company maintains its cash holdings
in these currencies to match future expenditures and existing liabilities. The
foreign exchange loss of $373,013 for the March 2009 quarter (compared to the
March 2008 quarter's gain of $974,672) primarily reflects the movements in the
rates of exchange in these currencies against the reporting currency (Australian
dollars) on Moto's cash holdings and the loan liabilities owing to Orgaman
(loans which are primarily denominated in United States dollars).
* Stock based compensation costs for the March 2009 quarter are below that of the
March 2008 quarter. The stock based compensation costs for both the March 2009
and 2008 quarters primarily represents the monthly amortisation charges
resulting from the issue of stock options to directors, staff and consultants
that contain vesting conditions. These vesting conditions are time based factors
and as a result the cost of the issue of stock options is spread over this
period. The decrease in the expense is the result of the lower number of new
stock options issued during the 2008 year as compared to the prior two years and
is also due to the bulk of the stock options issued during 2006 and 2007 now
being fully vested and thus not incurring any further amortisation charges.
* Interest accrues on the Okimo Loan at the rate of 8 per cent. per annum. At 31
December each year, the interest for that year is capitalised to the loan
balance. This interest charge and resulting capitalisation to the loan will
result in a higher interest expense each year when compared to the prior year.
As this loan is denominated primarily in United States dollars, on conversion to
Australian dollars these movements can be materially impacted. Whilst the
interest expense for the March 2009 quarter is higher than the March 2008
quarter when compared in United States dollars, this increase does not on its
own explain the movement when compared in Australian dollars. The other factor
influencing this interest charge is the Australian dollar, which was
considerably weaker against the United States dollar during the March 2009
quarter, when compared to the March 2008 quarter, and as a result the interest
expense as translated to Australian dollars is considerably above that of the
prior year's quarter.
* The other expenses for the March 2009 quarter are consistent with the March 2008
quarter. The March 2009 quarter includes immaterial write-offs of capital assets
of $2,966. There are no other factors which would have impacted this expense
when compared to the first quarter of the prior year.
The loss per share for the March 2009 quarter is the result of a higher
operating loss which is only partially offset by the higher number of shares now
on issue.
Proceeds from Capital Raising
April 2008 Capital Raising
The following table provides a summary of the intended use of the net proceeds
of the capital offering that was completed on April 9, 2008. This is a
replication of the use of proceeds table provided in the short form prospectus
dated April 3, 2008 (the "2008 Prospectus"), to which an additional column has
been added to provide the actual and an estimate of expenditures yet to be
incurred on these items (cash remains on hand to cover these estimates), have
been added. Further explanation of the 'Actual and Estimated Expenditure'
column is provided below.
+-------+------------------------------------------------+------------+-------------+
| | | Per 2008 | Actual and |
| | | Prospectus | Estimated |
| | | | Expenditure |
+-------+------------------------------------------------+------------+-------------+
| Item | | C$ ('000) | C$ ('000) |
| # | | | |
+-------+------------------------------------------------+------------+-------------+
| 1 | Resource drilling at the Moto Gold Project | 15,403 | 10,750 |
| | (US$15 million) | | |
+-------+------------------------------------------------+------------+-------------+
| 2 | Payment of a portion of the indebtedness due | 10,269 | - |
| | to Orgaman (US$10 million) | | |
+-------+------------------------------------------------+------------+-------------+
| 3 | Completion of Doko to Arua Road (US$5 million) | 5,134 | 1,834 |
+-------+------------------------------------------------+------------+-------------+
| 4 | Value engineering and pre-development works | 5,134 | 3,087 |
| | (US$5 million) | | |
+-------+------------------------------------------------+------------+-------------+
| 5 | Payment to Okimo under the November 2006 | 4,108 | 4,720 |
| | Protocol (US$4 million) | | |
+-------+------------------------------------------------+------------+-------------+
| 6 | Surface rentals (US$3 million) | 3,081 | 5,129 |
+-------+------------------------------------------------+------------+-------------+
| 7 | Administrative and general expenses (US$1 | 1,209 | 1,660 |
| | million) | | |
+-------+------------------------------------------------+------------+-------------+
| | | 44,338 | 27,180 |
+-------+------------------------------------------------+------------+-------------+
| 8 | Funds re-allocated to other items not | - | 17,158 |
| | considered above | | |
+-------+------------------------------------------------+------------+-------------+
| | | 44,338 | 44,338 |
+-------+------------------------------------------------+------------+-------------+
The table presented in the 2008 Prospectus was prepared using the estimated net
proceeds of the offering of 11,000,000 Common Shares at C$4.35 per share of
C$44,337,875 and did not include the "over-allotment option", which was
exercised in full and resulted in an additional 1,650,000 Common Shares being
issued at C$4.35 per share. The net proceeds raised from the exercise of the
over-allotment option of C$6,800,681 were added to the Company's working
capital.
The delays and additional costs from the DRC Mining Contracts Review process and
the joint venture negotiations that were completed early this year were not
anticipated when determining the expected use of the proceeds from the 2008
capital raising. As a result of these delays and additional costs, the Company
delayed some of the anticipated Project expenditures, including the Doko to Arua
road construction (Item 3), some drilling activities (Item 1) and some
development works (Item 4). In addition to these Project expenditures, the
definitive transfer agreement for the Okimo Loan has not yet been finalised and
as a result the payment of the first tranche of the Okimo Loan (Item 2), which
is due 7 business days from the signing of this transfer agreement, has not yet
been required to be paid, Funds not expected as anticipated in the 2008
Prospectus have been reallocated to other items, as described below, and the
proceeds of the April 2009 capital raising will be used for these items as the
expenditures are required to be made.
Item 8 of the table above provides an estimate of the total costs that have been
and will be transferred from other items of expenditure, being items 1, 2, 3 and
4, and been used to cover the additional costs that had not been anticipated at
the time of preparing the 2008 Prospectus. Included in these costs are the
US$4.5 million pas de porte payment that is due on registration of the transfer
of the Exploitation Permits to Kibali Goldmines with the DRC Mining Registry,
additional loans and advances made to Okimo (including Okimo's portion of the
outstanding historical surface rentals (US$2.0 million), Okimo's portion of the
2009 surface rentals (US$1.0 million), current payments made in relation to the
Revised ATF obligations (US$1.0 million) and payments for the Okimo employee
provisions obligation (US$0.2 million)) and the consultants and other fees
associated with the DRC Mining Contracts Review process and joint venture
negotiations.
April 2009 Capital Raising
On April 27, 2009, the Company completed a further capital raising by short form
prospectus which raised net proceeds of approximately C$46.7 million (note the
final costs of the capital raising have not been finalised). In addition, on
May 15, 2009, the Underwriters exercised in full the over-allotment option,
which has raised additional net proceeds of approximately C$7.1 million.
5. Summary of Quarterly Results
The financial performance, financial position and operating statistics for the
last eight quarters are shown in the table below. This financial data is
extracted from the Company's audited and unaudited consolidated financial
statements, which are prepared in accordance with Canadian GAAP. All amounts in
the discussion are in Australian dollars unless otherwise stated.
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
| | Mar 09 | Dec 08 | Sep 08 | Jun 08 | Mar 08 | Dec 07 | Sep 07 | Jun 07 |
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
| | Quarter | Quarter |Quarter | Quarter | Quarter | Quarter | Quarter | Quarter |
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
| | $ | $ | $ | $ | $ | $ | $ | $ |
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
| Revenue | 73,609 | 420,988 | 299,835 | 371,162 | 232,400 | 439,607 | 468,880 | 717,635 |
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
| Loss | 3,430,093 | 9,119,607 | 81,069 | 3,233,735 | 1,704,448 | 2,919,549 | 2,740,763 | 3,501,318 |
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
| Basic loss | 3.9 | 10.41 | 0.09 | 3.75 | 2.37 | 4.64 | 4.44 | 5.64 |
| per share | | | | | | | | |
| (cents) | | | | | | | | |
+------------+-----------+-----------+---------+-----------+-----------+-----------+-----------+-----------+
The diluted loss per share is not reported as it is considered
anti-dilutive. Significant factors in respect of the quarterly results are:
* Many of the above quarters are significantly impacted by the movements of the
United States and Canadian dollars against the Australian dollars, which result
in material foreign exchange gains or losses. For example, when comparing the
March 2009 quarter to the March 2008 quarter, the March 2009 had a recorded
foreign exchange loss of $373,013, whereas the March 2008 quarter had a foreign
exchange gain of $874,672. The movements of these currencies can also impact
other costs for the Group when translated to Australian dollars, such as the
interest charged on the Okimo Loan.
* Stock based compensation costs can vary depending on the number of options
issued during a period, the value of the options and the vesting conditions
attached to the options, which results in a varying expense resulting from the
amortisation of these costs.
* General costs of the activities of the Company have steadily increased from
early 2007 till mid 2008, but have stabilised since that time.
* Significantly higher costs in the December 2008 quarter were due to the
treatment of the initial US$2 million consulting fee paid to Générale
Industrielle et Commerciale au Congo ("GICC") and as a result of the one-off
charge made to other costs associated with the write-off of costs previously
capitalised to mineral properties, which was undertaken as part of establishing
Kibali Goldmines as the Moto Gold Project joint venture company.
6. Discussion of Cash Flows, Liquidity and Financial Position
The Company funds its exploration and development activities primarily through
equity fund raisings. As discussed in more detail below, given the Company's
current working capital and contractual commitments, the Company expects it will
require additional funds to be raised within the next year.
+-----------------+--------------+--------------+-------------+-------------+-------------+
| | Quarter ended | |
+-----------------+-----------------------------+-----------------------------------------+
| | Mar 31, | Mar 31, | | | |
| | 2009 | 2008 | | | |
+-----------------+--------------+--------------+-------------+-------------+-------------+
| | $ | $ | | | |
+-----------------+--------------+--------------+-------------+-------------+-------------+
| Operating | (2,302,337) | (1,667,200) | | | |
| activities | | | | | |
+-----------------+--------------+--------------+-------------+-------------+-------------+
| Investing | (27,850,869) | (17,412,444) | | | |
| activities | | | | | |
+-----------------+--------------+--------------+-------------+-------------+-------------+
| Financing | - | 8,775,483 | | | |
| activities | | | | | |
+-----------------+--------------+--------------+-------------+-------------+-------------+
Cash Flows
* Operating cash flows for the March 2009 quarter where largely consistent with
those of the March 2008 quarter. The additional cash outflow as noted above is
primarily the result of the decrease in accounts payable and accrued liabilities
during the March 2009 quarter.
* Investing activities for the March 2009 quarter are above the March 2008 quarter
due to the following:
* The expenditures on mineral properties are approximately $1.1 million higher for
the March 2009 quarter. The March 2008 quarter was impacted by the repayment of
the loan by Orgaman to Kibali Goldmines (then Borgakim) of US$7.5 million as
part of the acquisition of Orgaman's 10 per cent. interest in the Project. On
the other side, the March 2009 quarter was impacted by the payment of the
outstanding historical surface rentals of US$3.1 million owed by Kibali
Goldmines and significant other payments resulting from the completion of the
DRC Mining Contracts Review process.
* The March 2009 quarter shows an outflow of $3,794,294, which represents payments
made to Okimo in relation to the Revised ATF Contract and the payment of Okimo's
share of the outstanding historical surface rentals of US$2.0 million.
* Moto had agreed to pay Okimo a premium of US$5.0 million (the "Consolidation
Payment") upon registration of the Consolidated Lease with DRC Mining Registry.
The Company pre-paid US$2.25 million of the Consolidation Payment and paid the
balance of the Consolidation Payment during the March 2009 quarter. This payment
resulted in an A$5,432,657 of cash outflow relating to investing activities.
* The March 2009 quarter was also impacted heavily by the weaker Australian dollar
against the United States dollar during this quarter when compared to the March
2008 quarter. As the bulk of the expenditures on mineral properties are made in
United States dollars, the translation to Australian dollars has resulted in
higher expenditures being recorded.
* Financing activities are impacted by the following:
* The March 2008 quarter was impacted by the receipt of net proceeds of
approximately A$8.8 million from the Company's Chairman, Sam Jonah, KBE, from
the private placement to him of Common Shares in the Company which was announced
on December 31, 2007.
* There were no financing activities during the March 2009 quarter.
Liquidity and Capital Resources and Commitments
The Company funds its exploration and development activities primarily through
equity fund raisings. As noted above, in April 2009 the Company raised net
proceeds of approximately C$46.7 million from a short form prospectus offering.
The over-allotment option was exercised in full on May 15, 2009 and has resulted
in additional net proceeds of approximately C$7.1 million.
The Group had working capital as at March 31, 2009 of A$8.2 million (as at
December 31, 2008, working capital was A$24.7 million).
Commitments under the Revised ATF Contract, together with the commitment to
provide a loan to Okimo to fund payment of arrears due to Okimo employees
provide a total capital commitment of approximately US$10 million, which the
Company expects will be incurred and paid over approximately two years.
The Company is also committed to paying a pas de porte payment of US$4.5 million
upon approval of the Joint Venture Agreement (which has occurred) and the
registration in Kibali Goldmine's name of the Exploitation Permits for the Moto
Gold Project with the DRC Mining Registry (which is pending) and the Okimo Loan
of US$31.5 million and Euro 1.6 million, plus interest, in three payments over
two years.
The table below sets forth Moto's contractual obligations, converted to
Australian dollars:
+--------------------------------+-----------+-----------+---------+---------+---------+
| | Principal Payments Due by Period (A$ million) |
| Financial Obligations | |
| | |
+ +-----------------------------------------------------+
| | Total |Less than | 1 - 3 | 4 - 5 |After 5 |
| | | 1 year | years | years | years |
+--------------------------------+--------------------------------+-----------+-----------+---------+---------+
| Payment due to Orgaman in | 50.2 | 15.2 | 35.0 | - | - |
| respect of the Okimo Loan (i) | | | | | |
+--------------------------------+-----------+-----------+---------+---------+---------+
| Lease rental payments (ii) | 28.7 | 6.1 | 11.3 | 11.3 | - |
+--------------------------------+-----------+-----------+---------+---------+---------+
| Surface rental payments (iii) | 8.0 | 1.6 | 3.2 | 3.2 |- (iii) |
| | | | | | |
+--------------------------------+-----------+-----------+---------+---------+---------+
| Okimo Employee Provisions (iv) | 5.4 | 2.9 | 2.5 | - | - |
+--------------------------------+-----------+-----------+---------+---------+---------+
| Revised ATF Contract | 10.1 | 5.1 | 5.0 | - | - |
| Obligations (v) | | | | | |
+--------------------------------+-----------+-----------+---------+---------+---------+
| Pas de Porte (vi) | 6.6 | 6.6 | - | - | - |
+--------------------------------+-----------+-----------+---------+---------+---------+
| GICC (vii) | 2.9 | 2.9 | - | - | - |
+--------------------------------+-----------+-----------+---------+---------+---------+
| Total Contractual Obligations | 111.9 | 40.4 | 57.0 | 14.5 | - |
+--------------------------------+-----------+-----------+---------+---------+---------+
* The first instalment of the Okimo Loan of US$9.7 million and Euro 0.5 million is
payable shortly after Kibali Goldmines and Okimo sign the definitive transfer
agreement for the Okimo Loan, the second instalment of the same amount is due on
the first anniversary of the transfer of the Okimo Loan and the balance, plus
interest accrued to that date, is payable on the second anniversary of the
transfer of the Okimo Loan. The Company has the option to pay up to 50 per
cent. of any instalment by the issue of shares, subject to regulatory approvals.
* Rent under the Consolidated Lease is US$350,000 per month or US$4.2 million per
annum until the commencement of commercial production. The parties have agreed
that during commercial production, OKIMO will continue to receive cashflow of
US$350,000 per month by way of an advance of dividends.
* Surface rental payments are expected to continue for the life of the mine at
approximately US$1.1 million per annum.
* Kibali Goldmines will provide a loan to Okimo to fund arrears due to Okimo
employees, including termination costs, of up to US$3.0 million.
* Kibali Goldmines will provide loans to Okimo pursuant to the Revised ATF
Contract of up to US$7.0 million.
* A pas de porte of US$4.5 million is payable on approval of the Joint Venture
Agreement (which has occurred) and the transfer of the Exploitation Permits for
the Moto Gold Project to Kibali Goldmines being registered with the DRC Mining
Registry (which is pending).
* US$2 million is payable to GICC, which the Company will pay to GICC once the
transfers of the Exploitation Permits are registered with the DRC Mining
Registry.
7. Balance Sheet Discussion and Analysis
+--------------------------------------------+------------+-----------+
| | Mar 31, | Dec 31, |
| | 2009 | 2008 |
+--------------------------------------------+------------+-----------+
| Assets | A$('000) | A$('000) |
+--------------------------------------------+------------+-----------+
| Cash and cash equivalents | 24,790 | 54,690 |
+--------------------------------------------+------------+-----------+
| Receivables and prepayments | 4,833 | 661 |
+--------------------------------------------+------------+-----------+
| Capital assets | 1,426 | 1,597 |
+--------------------------------------------+------------+-----------+
| Mineral properties | 214,786 | 203,082 |
+--------------------------------------------+------------+-----------+
| Total Assets | 245,835 | 260,030 |
+--------------------------------------------+------------+-----------+
| Liabilities | | |
+--------------------------------------------+------------+-----------+
| Accounts payables and accrued liabilities | 2,138 | 12,458 |
+--------------------------------------------+------------+-----------+
| Consolidation payment due to Okimo | - | 5,433 |
+--------------------------------------------+------------+-----------+
| Loan due to former JV partner | 15,165 | 12,715 |
| (Orgaman)(Current) | | |
+--------------------------------------------+------------+-----------+
| Loan due to former JV partner | 35,006 | 36,191 |
| (Orgaman)(Non-Current) | | |
+--------------------------------------------+------------+-----------+
| Total Liabilities | 52,309 | 66,797 |
+--------------------------------------------+------------+-----------+
| Shareholders Equity | 193,526 | 193,232 |
+--------------------------------------------+------------+-----------+
Cash and cash equivalents
The decrease in cash and cash equivalents over the prior period is the result of
the continued operating and development expenditures and the impact of foreign
exchange movements between the Australian dollar and both the United States and
Canadian dollars.
Receivables and prepayments
At March 31, 2009, Kibali Mining had recorded total receivables of A$4,083,855
owing by Okimo. This receivable relates to the US$2.0 million of outstanding
historical surface rentals paid by Kibali Mining on behalf of Okimo, and the
remainder relates to the expenditures to date in relation to the Revised ATF.
The Group does not maintain any other significant receivables or prepayments.
Capital assets
The movement in capital assets during the March 2009 quarter is the result of
some minor capital additions and the continued depreciation of assets.
Mineral properties
Mineral properties represent the largest value asset on the Group's balance
sheet. The mineral properties item reflects the expenditure incurred by the
Group on site on exploration and development activities as well as costs
incurred to buy into the Project. During the March 2009 quarter, site based
exploration and development activities have not been significant, averaging
US$2.3 million per month (note the Australian dollar impact is more significant
due to the weak Australian dollar). Mineral properties have also been impacted
by the value of the shares issued to GICC in accordance with their consultancy
arrangement. The issue of 981,193 Common Shares of Moto to GICC had a value of
A$2.7 million which has been recorded against mineral properties.
Accounts payable and accrued liabilities
The balance at December 31, 2008 was impacted by the US$3.1 million payment for
the historical surface rentals and by the recognition of US$3.5 million of
consultants' costs which are associated with the DRC Mining Contract Review
process. These costs were paid subsequent to the year end, and as a result,
accounts payable and accrued liabilities have fallen.
Consolidation payment due to Okimo
The Group made the final payment of US$3.75 million on the US$5.0 million
Consolidation Payment due to Okimo in the first quarter of 2009 on the
registration of the Consolidated Lease with the DRC Mining Registry.
Loans due to former JV partner (Orgaman) - Current
At March 31, 2009 this balance represents the current portion of the Okimo Loan,
being US$9.7 million and Euro 0.5 million, converted to Australian dollars at
the prevailing market rates.
Loans due to former JV partner (Orgaman) - Non-current
At March 31, 2009 this balance represents the non-current portion of the Okimo
Loan. The Okimo Loan incurs interest at the rate of 8 per cent. per annum and is
capitalized annually at December 31. The movement from December 31, 2008 is the
result of both the continued interest charges and the impact of a weaker
Australian dollar against the United States dollar.
8. Proposed Transactions and Transactions Subsequent to March 31, 2009
Moto and Okimo have entered into an agreement to transfer the Exploitation
Permits covering the Consolidated Perimeter to Kibali Goldmines, which transfers
are expected to be registered with the DRC Mining Registry shortly.
On December 31, 2007 (as amended by a letter dated December 4, 2008), the
Company entered into a consultancy agreement with GICC, a DRC-based consultancy
group, under which GICC agreed to assist the Group in obtaining the Consolidated
Lease and negotiating government approvals and consents to enable the
development of the Moto Gold Project. Pursuant to this agreement, Moto has
issued to GICC 981,193 Common Shares in the Company. The agreement provided for
GICC to be issued 1,886,948 Common Shares less such number of Common Share as
have a value equal to US$2 million, where the value is determined based on the
volume weighted average price of the Company's Common Shares on the TSX for the
previous five trading days converted to United States dollars at the noon rate
of exchange published by the Bank of Canada on the last day of the five-day
period.
The Moto Common Shares are being held in escrow pending registration in the DRC
Mining Registry of the formal transfer of the Exploitation Permits for the Moto
Gold Project to Kibali Goldmines, which is expected to be completed shortly. The
US$2.0 million cash compensation that is payable to GICC also will be paid when
the registration of the Exploitation Permits in Kibali Goldmines' name is
completed.
In March 2009, Moto announced it had acquired 7,853,353 common shares
(representing approximately 20 per cent. of the outstanding shares) and
1,297,400 warrants of Kilo Goldmines Inc. ("Kilo")(TSX-V: KGL) issued by Kilo in
connection with it's qualifying transaction and listing on the TSX Venture
Exchange ("TSX-V"). Kilo began trading on the TSX-V on April 21, 2009.
The Company has previously noted a requirement to issue up to 800,000 Common
Shares of the Company in connection with an agreement relating to the
acquisition by the Company of its interest in the Agbarabo licence. In April
2009, the Company entered into a settlement arrangement to extinguish the
obligation to issue these Common Shares. The Company agreed to pay, in cash, the
equivalent value of 25,000 Moto Common Shares, determined with reference to the
five consecutive trading day volume weighted average closing price on the TSX up
to April 30, 2009. The resulting payment amounted to C$69,500.
9. Accounting Policies and Critical Accounting Estimates
The accounting policies that involve significant management judgement and the
critical accounting estimates within the meaning of National Instrument 51-102
are discussed in this section. For a complete list of the significant accounting
policies of the Company, reference should be made to Note 2 of the December 31,
2008 audited consolidated annual financial statements. There were no changes in
accounting policies during the quarter ended March 31, 2009.
Exploration Costs
The Group accumulates certain costs associated with exploration activities on
specific areas of interest where the Group has rights of tenure. The Group's
policy is to expense any exploration and associated costs relating to
non-specific projects/properties. Significant property acquisition, exploration,
evaluation and development costs relating to specific properties for which
economically recoverable reserves are believed to exist are deferred until the
project to which they relate is sold, abandoned or placed into production.
Management reviews the carrying values of its mineral properties on at least an
annual basis to determine whether an impairment should be recognised and no
costs are deferred on a mineral property that is considered to be impaired in
value. As at March 31, 2009, the Group had deferred exploration and acquisition
costs of approximately A$214.8 million (December 31, 2008, A$203.1 million)
associated with the Moto Gold Project.
Valuation of Inventory
Inventory is valued at the lower of cost and realizable value. Management
reviews the inventory regularly and if in the estimation of management the net
realizable value of the inventory is less than cost, a provision is recorded to
reduce the carrying value of the inventory and a corresponding expense is
recognized thereby reducing the net income for the period.
Carrying Value of Capital Assets
Management establishes the rate of amortization for capital assets. Management
assesses the carrying value of these assets based on the estimated useful life
of the asset and the potential salvage or sale value of the asset. This
estimation may result in the reduction of the carrying value of an asset and a
corresponding increase in expenses and a reduction of net income for the period.
International Financial Reporting Standards ("IFRS")
The Canadian Institute of Chartered Accountants plans to converge Canadian GAAP
for public companies with IFRS over a transition period that is expected to end
for accounting periods commencing on or after January 1, 2011. The impact of the
transition to IFRS on the Company's consolidated financial statements has not
yet been determined.
10. Outstanding Share Data
As at May 15, 2009, the Company had 109,105,488 Common Shares on issue. The
Company also had 11,805,100 stock options and 500,000 warrants on issue (with
an exercise price range of C$2.60 to C$7.65), and a commitment to issue further
stock options to Sam Jonah, KBE, subject to compliance with stock exchange rules
and receipt of any required regulatory and shareholder approvals, on the basis
that if the Company makes a material further issuance of shares, the Company
will grant stock options at the prevailing market price expiring 6 years after
grant so that the total number of stock options granted to Sam Jonah, KBE, from
the date of his appointment as a director of the Company is maintained at 5 per
cent of the total number of Common Shares issued by the Company. As a result of
the Underwriters exercising in full the over-allotment option on May 15, 2009,
resulting in the issue of 2,679,000 Common Shares, Mr. Jonah is entitled to be
granted a further 133,950 stock options each to purchase one Common Share of the
Company.
Pursuant to the consultancy agreement between the Company and GICC, if by
November 30, 2009, the price of the Company's Common Shares on the TSX exceeds
C$11.92 or C$15.90, a further 628,982 Common Shares will be issued to GICC on
each such share price level being exceeded as deferred compensation. Certain of
these Common Shares may be issued on a change of control of Moto, whether or not
the share price exceeds this level.
11. Financial Instruments
The Group's financial instruments consist of cash and cash equivalents, employee
advances and GST receivables, sundry receivables, accounts payable and accrued
liabilities, and short-term and long-term loans due to its former joint venture
partner, Orgaman. It is management's opinion that the Group is not exposed to
significant credit risks arising from these financial instruments. The fair
value of these instruments approximates their carrying values. Further details
on the interest rate and credit risks applicable to the Group can be found in
Note 17, Financial Risk Factors, of the audited consolidated financial
statements for the year ended December 31, 2008.
The Group holds the majority of its cash assets in US dollar deposits (and some
Canadian dollar deposits) and incurs a large proportion of its exploration
expenditure in US dollars. It is therefore exposed to foreign currency risk
arising from fluctuations in foreign exchanges rates. The Group does not use
derivative instruments to reduce its exposure to foreign currency risk.
During the quarter ended March 31, 2009, the Group recorded interest revenue of
A$65,947, recorded foreign exchange gains of A$253,011 on the translation of
cash and cash equivalents from foreign currencies to Australian dollars and
recorded foreign exchange losses of A$846,800 on the translation of the
short-term and long-term loans due to Orgaman.
12. Transactions with Related Parties
Mr. Samuel Jonah, a non-executive director and the Company's Chairman, has a
contractual arrangement that should the Company make any material issuances of
Common Shares, the Company will grant Mr. Jonah stock options at the prevailing
market rate expiring 6 years after the grant date, so that the total number of
stock options granted to Mr. Jonah from the date of his appointment is
maintained at 5 per cent of the total number of Common Shares issued by the
Company. As a result of the equity raising that completed on April 27, 2009,
resulting in the issue of 17,860,000 Common Shares at C$2.80 per share, on April
29, 2009, Mr. Jonah was granted 893,000 stock options each to purchase one
Common Share of the Company at an exercise price of C$2.80. As a result of the
Underwriters exercising in full the over-allotment option on May 15, 2009,
resulting in the issue of 2,679,000 Common Shares at C$2.80 per share, Mr. Jonah
is entitled to be granted a further 133,950 stock options each to purchase one
Common Share of the Company.
13. Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have, or are reasonably likely
to have, a current or future effect on the results of operations or financial
condition of the Company.
14. Additional Notes
The Information in this report that relates to Mineral Resources is based on
information compiled by Rick Adams and Ted Hansen who are members of the
Australasian Institute of Mining and Metallurgy (AusIMM) and are qualified
persons under NI 43-101. Rick Adams and Ted Hansen are directors of Cube
Consulting Pty Ltd and each has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as defined in
the JORC Code. Rick Adams and Ted Hansen consent to the inclusion in this report
of the Information, in the form and context in which it appears.
The Information in this report that relates to the technical aspects of the open
pit mine engineering discipline (including calculation of open pit Mineral
Reserves) is based on information compiled by Cube Consulting Pty Ltd under the
direction of Quinton de Klerk who is a member of the Australasian Institute of
Mining and Metallurgy (AusIMM) and a qualified person under NI 43-101. Quinton
de Klerk is a director of Cube Consulting Pty Ltd and has sufficient experience
which is relevant to the type of deposit and open pit mining methods under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the JORC Code. Quinton de Klerk consents to the
inclusion in this report of the Information, in the form and context in which it
appears.
The Information in this report that relates to the technical aspects of the
underground mine engineering discipline (including calculation of underground
Mineral Reserves) is based on information compiled by SRK Consulting Pty Ltd
under the direction of Paul Kerr who is a member of the Australasian Institute
of Mining and Metallurgy (AusIMM) and a qualified person under NI 43-101. Paul
Kerr is an employee of SRK Consulting Pty Ltd. and has sufficient experience
which is relevant to the type of deposit and underground mining methods under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the JORC Code. Paul Kerr consents to the
inclusion in this report of the Information, in the form and context in which it
appears.
15. Risks and Uncertainties
The Group's future operating and financial performance is subject to a number of
different risks at any given time. These include risks that are widespread risks
associated with any form of business and specific risks associated with Moto's
business and its involvement in the exploration and mining industry generally
and in the DRC in particular. The risk factors include, but are not limited to,
exploration and mining operations risks, government regulations, non assurance
of titles or boundaries, uncertainty of mineral reserve and mineral resource
estimates, uncertainty relating to inferred mineral resources, metal prices, no
company history of mining operations or profitability, joint ventures,
dependence on limited mining properties, financing requirements, including the
current world-wide economic conditions and the resulting uncertain availability
of equity or debt financing, uninsured risks, environmental risks and hazards,
renewal of licences, currency risks, competition, loss and dependence on key
personnel, dividend policy, future sales of common shares by existing
shareholders, repatriation of earnings and stock exchange prices. There are a
number of identifiable risks specific to the Moto Gold Project, including but
not limited to the joint venture negotiation process, ability to raise cash
resources, political instability and changes, risks of international operations,
lack of infrastructure, social instability and militia fighting, impact of local
inflation in the DRC and HIV/AIDS and other health risks. A more detailed
analysis of the risk factors the Group is faced with can be found in the most
recent amended and restated annual information form, which is available under
the Company's profile on SEDAR at www.sedar.com.
16. Internal Controls Over Financial Reporting
The President and Chief Operating Officer (acting as Chief Executive Officer for
this purpose) and the Chief Financial Officer of the Company (the "Certifying
Officers") are responsible for establishing and maintaining disclosure controls
and procedures and internal control over financial reporting, as those terms are
defined in National Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings ("NI 52-109") and for certifying the design of the
Company's disclosure controls and procedures and internal control over financial
reporting as required by NI 52-109.
Internal control over financial reporting is intended to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with
applicable generally accepted accounting principles ("GAAP"). Internal control
over financial reporting should include those policies and procedures that
establish the following:
* maintenance of records in reasonable detail, that accurately and fairly reflect
the transactions and dispositions of assets;
* reasonable assurance that transactions are recorded as necessary to permit
preparation of consolidated financial statements in accordance with applicable
GAAP;
* receipts and expenditures are only being made in accordance with authorizations
of management and the Board; and
* reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Group's assets that could have a material
effect on the consolidated financial statements.
Disclosure controls and procedures are intended to provide reasonable assurance
that (i) material information relating to the Company is made known to the
Certifying Officers by others, particularly during the period in which the
annual filings are being prepared; and (ii) information required to be disclosed
by the Company in its annual filings, interim filings or other reports filed or
submitted by it under applicable securities legislation is recorded, processed,
summarized and reported within the time periods specified in applicable
securities legislation.
Because of its inherent limitations, internal control over financial reporting
may have material weaknesses and may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.
As the Company has a limited number of personnel, management has concluded that
a weakness exists in the design of internal controls over financial reporting
caused by a lack of adequate segregation of duties. Management does not believe
that the segregation of duties deficiencies has resulted in a misstatement to
interim financial statements or the annual financial statements, or other
disclosures made by the Company. This weakness has the potential to result in
material misstatements in the Company's financial statements and should also be
considered a weakness in its disclosure controls and procedures. Management has
concluded that, taking into account the present stage of the Company's
development and the best interest of its shareholders, the Company does not have
sufficient size and scale to warrant the hiring of additional personnel to
correct this weakness at this time. To help mitigate the impact of this weakness
and to ensure quality financial reporting, there are supervisory controls
exercised by management and Audit Committee oversight, and interim financial
statements are reviewed by the Company's Board.
The Certifying Officers have reviewed and evaluated, or caused to be evaluated
under their supervision, the effectiveness of the Company's disclosure controls
and procedures and internal control over financial reporting (as defined in NI
52-109) as of March 31, 2009. The Certifying Officers have concluded that, as of
March 31, 2009, except as stated above, the disclosure controls and procedures
and internal control over financial reporting were effective to provide
reasonable assurance that material information relating to the Company would be
known to them, particularly during the period in respect of which this report
was being prepared.
There have been no changes in the Company's internal control over financial
reporting over the quarter ending March 31, 2009 that have materially affected,
or are reasonably likely to materially affect, the Company's controls over
financial reporting and to the best of the knowledge of the Certifying Officers,
there has been no fraud that involves management or other employees who have a
significant role in the Company's internal control over financial reporting.
MOTO GOLDMINES LIMITED
Consolidated Balance Sheets
(Expressed in Australian dollars)
March 31, 2009 (Unaudited)
December 31, 2008 (Audited)
+---------------------------------------+------------------+----------------+
| | Mar 31, | Dec 31, |
| | 2009 | 2008 |
+---------------------------------------+------------------+----------------+
Assets
+---------------------------------------+------------------+----------------+
| Current Assets | | |
+---------------------------------------+------------------+----------------+
| Cash and cash equivalents | 24,789,549 | 54,689,744 |
+---------------------------------------+------------------+----------------+
| Sundry receivables & prepayments | 548,315 | 460,333 |
+---------------------------------------+------------------+----------------+
| Inventories | 200,916 | 201,040 |
+---------------------------------------+------------------+----------------+
| | 25,538,780 | 55,351,117 |
+---------------------------------------+------------------+----------------+
| | | |
+---------------------------------------+------------------+----------------+
| Loan receivable from Okimo (note 3) | 4,083,855 | - |
+---------------------------------------+------------------+----------------+
| | | |
+---------------------------------------+------------------+----------------+
| Capital assets (note 4) | 1,426,204 | 1,596,624 |
+---------------------------------------+------------------+----------------+
| | | |
+---------------------------------------+------------------+----------------+
| Mineral properties (note 5) | 214,786,255 | 203,081,577 |
+---------------------------------------+------------------+----------------+
| | $245,835,094 | $260,029,318 |
+---------------------------------------+------------------+----------------+
Liabilities and
Shareholders' Equity / (Deficiency)
+---------------------------------------+-----------------------+-----------------------+
| Current Liabilities | | |
+---------------------------------------+-----------------------+-----------------------+
| Accounts payable and accrued | 2,137,955 | 12,457,863 |
| liabilities | | |
+---------------------------------------+-----------------------+-----------------------+
| Loan due to former joint venture | 15,164,590 | 12,715,021 |
| partner (note 6) | | |
+---------------------------------------+-----------------------+-----------------------+
| Consolidation payment due to Okimo | - | 5,432,657 |
+---------------------------------------+-----------------------+-----------------------+
| | 17,302,545 | 30,605,541 |
+---------------------------------------+-----------------------+-----------------------+
| | | |
+---------------------------------------+-----------------------+-----------------------+
| Non Current Liabilities | | |
+---------------------------------------+-----------------------+-----------------------+
| Loan due to former joint venture | 35,006,288 | 36,191,518 |
| partner (note 6) | | |
+---------------------------------------+-----------------------+-----------------------+
| | | |
+---------------------------------------+-----------------------+-----------------------+
| Shareholders' Equity | | |
+---------------------------------------+-----------------------+-----------------------+
| Share capital (note 7) | 237,193,961 | 233,895,395 |
| | | |
+---------------------------------------+-----------------------+-----------------------+
| Contributed surplus (note 8) | 23,537,941 | 23,112,412 |
| | | |
+---------------------------------------+-----------------------+-----------------------+
| Deficit | (67,205,641) | (63,775,548) |
| | | |
+---------------------------------------+-----------------------+-----------------------+
| | 193,526,261 | 193,232,259 |
+---------------------------------------+-----------------------+-----------------------+
| | $245,835,094 | $260,029,318 |
+---------------------------------------+-----------------------+-----------------------+
MOTO GOLDMINES LIMITED
Consolidated Statements of Operations, Comprehensive Loss and Deficit
(Unaudited)
(Expressed in Australian dollars)
+------------------------------------+------+-----+-------------+-------------+
| | | Quarter |
+------------------------------------+------------+---------------------------+
| | | | Mar 31, | Mar 31, |
| | | | 2009 | 2008 |
+------------------------------------+------+-----+-------------+-------------+
| | | | | |
+------------------------------------+------+-----+-------------+-------------+
| Revenue | | | 73,609 | 232,400 |
+------------------------------------+------+-----+-------------+-------------+
| | | | | |
+------------------------------------+------+-----+-------------+-------------+
| Operating Expenses | | | | |
+------------------------------------+------+-----+-------------+-------------+
| Employees and consultants | | | 839,808 | 837,764 |
+------------------------------------+------+-----+-------------+-------------+
| Amortization | | | 293,808 | 182,354 |
+------------------------------------+------+-----+-------------+-------------+
| Occupancy | | | 72,201 | 78,278 |
+------------------------------------+------+-----+-------------+-------------+
| Shareholder and listing costs | | | 126,723 | 129,803 |
+------------------------------------+------+-----+-------------+-------------+
| Marketing and promotion | | | 256,942 | 227,682 |
+------------------------------------+------+-----+-------------+-------------+
| Stock based compensation | | | 425,529 | 556,870 |
+------------------------------------+------+-----+-------------+-------------+
| Interest | | | 1,004,114 | 793,711 |
+------------------------------------+------+-----+-------------+-------------+
| Foreign exchange loss / (gain) | | | 373,013 | (974,672) |
+------------------------------------+------+-----+-------------+-------------+
| Other | | | 111,564 | 105,058 |
+------------------------------------+------+-----+-------------+-------------+
| | | | | |
+------------------------------------+------+-----+-------------+-------------+
| Loss and comprehensive loss for | | | 3,430,093 | 1,704,448 |
| the period | | | | |
+------------------------------------+------+-----+-------------+-------------+
| | | | | |
+------------------------------------+------+-----+-------------+-------------+
| Deficit - beginning of period | | | 63,775,548 | 49,636,688 |
+------------------------------------+------+-----+-------------+-------------+
| Deficit - end of period | | | $67,205,641 | $51,341,136 |
+------------------------------------+------+-----+-------------+-------------+
| Basic loss per share | | | $(0.039) | $(0.0237) |
+------------------------------------+------+-----+-------------+-------------+
MOTO GOLDMINES LIMITED
Consolidated Statements of Cash flows (Unaudited)
(Expressed in Australian dollars)
+------------------------------------------------+--+--+--------------+--------------+
| | | Quarter |
+------------------------------------------------+-----+-----------------------------+
| | | | Mar 31, | Mar 31, |
| | | | 2009 | 2008 |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Cash flows used in operating activities | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Loss for the period | | | (3,430,093) | (1,704,448) |
+------------------------------------------------+--+--+--------------+--------------+
| Items not affecting cash: | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Stock based compensation | | | 425,529 | 556,870 |
+------------------------------------------------+--+--+--------------+--------------+
| Amortization | | | 293,808 | 182,354 |
+------------------------------------------------+--+--+--------------+--------------+
| Write-off of mineral properties | | | 2,965 | - |
| and capital assets | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Foreign exchange variances | | | (196,193) | (1,434,451) |
+------------------------------------------------+--+--+--------------+--------------+
| Interest accrued on joint venture loan | | | 1,004,114 | 694,647 |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Changes in non-cash working capital balances | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Increase in inventories | | | 124 | - |
+------------------------------------------------+--+--+--------------+--------------+
| (Increase) / decrease in sundry receivables | | | (101,241) | 82,796 |
+------------------------------------------------+--+--+--------------+--------------+
| Decrease in accounts payable and | | | (301,350) | (44,968) |
| accrued liabilities | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| | | | (2,302,337) | (1,667,200) |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Cash flows used in investing activities | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Expenditures on mineral properties | | | (18,500,529) | (17,387,397) |
+------------------------------------------------+--+--+--------------+--------------+
| Purchases of capital assets | | | (123,389) | (25,047) |
+------------------------------------------------+--+--+--------------+--------------+
| Consolidation payment to Okimo | | | (5,432,657) | - |
+------------------------------------------------+--+--+--------------+--------------+
| Advances made to Okimo under Revised Technical | | | (3,794,294) | - |
| and Financial Assistance Contract and other | | | | |
| arrangements | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| | | | (27,850,869) | (17,412,444) |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Cash flows used in financing activities | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Issue of common shares and warrants for cash | | | - | 8,775,483 |
| (net of issue costs) | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| | | | - | 8,775,483 |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Net decrease in cash and cash equivalents | | | (30,153,206) | (10,304,161) |
+------------------------------------------------+--+--+--------------+--------------+
| Exchange gain on holding foreign currencies | | | 253,011 | - |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Cash and cash equivalents - beginning of | | | 54,689,744 | 26,122,662 |
| period | | | | |
+------------------------------------------------+--+--+--------------+--------------+
| Cash and cash equivalents - end of period | | | $24,789,549 | $15,818,501 |
+------------------------------------------------+--+--+--------------+--------------+
| | | | | |
+------------------------------------------------+--+--+--------------+--------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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