Doubloon, jfmurk, got some yesterday at .057 and looking to pick up some more at .04. Have a question on interpreting the 10Q, I have highlighted the text... what does it mean when they wrote off the investment due to uncertainty of establishing proven and probable reserves? TIA
3. Mineral Properties
a) On February 27, 2007, the Company entered into a vend-in agreement whereby they agreed to acquire a 90% interest in four mineral licenses in central Labrador, Canada, comprised of 516 mineral claims covering an area of 33,111 acres. On February 28, 2007 the Company issued a $34,000 promissory note and 34,000,000 in common shares with a fair value of $340,000 to acquire this 90% interest. The purchase price included a total of $26,100 in refundable staking security deposits. These deposits were refunded to the Company in February 2008. As at May 31, 2009, the Company wrote off the mineral property acquisition costs of $348,000 due to the uncertainty of establishing proven and probable reserves.
Under the terms of the vend-in agreement, the Company is committed to incurring mineral exploration expenditures of approximately $151,000 (Cdn$150,000) on or before March 1, 2008 (spent), $156,719 (Cdn$171,615) on or before March 1, 2009, and $195,899 (Cdn$214,519) on or before March 1, 2010 with the provision that any excess amount spent in one year may be carried forward and applied towards fulfilment of the expenditure requirements of a later year. As at August 31, 2009, the Company has spent $221,898 (Cdn$242,989) on exploration expenditures. These expenditures also qualify as exploration expenditures under the terms of the Company’s mineral exploration licenses.
On August 27, 2009, the vend-in agreement was amended in that the optionor has agreed to waive the remaining required work commitments on the mineral properties subject to the Company incurring sufficient exploration expenditures on the properties to keep them in good standing with the local government.
b) On May 17, 2007, the Company purchased a 90% interest in one mineral license in central Labrador, Canada, comprised of 6 claims covering an area of 371 acres for $329 (Cdn$360). As at May 31, 2009, the Company wrote off the mineral property acquisition costs of $321 due to the uncertainty of establishing proven and probable reserves.
c) The mineral exploration licenses on the Company’s properties are for a term of five years commencing at various dates from August 18, 2006 to May 17, 2007. These licenses may be renewed every five years for up to a maximum of twenty years provided annual assessment work is completed and reported, and license renewal fees of $23 (Cdn$25), $46 (Cdn$50) and $91 (Cdn$100) per claim are paid after five, ten and fifteen years, respectively. In order to maintain the property in good standing, the Company is required to spend from $183 (Cdn$200) per claim in the first year to $1,096 (Cdn$1,200) per claim in the twentieth year.
