BRAZILIAN DIAMONDS LIMTIED
QUARTERLY RESULTS FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2009
As with most other junior resource exploration companies, Brazilian
Diamonds Limited ("Brazilian Diamonds" or the "Company") has been
affected by the continuing uncertainties in international capital
markets which have negatively impacted the ability of junior resource
exploration companies to finance their activities. As a consequence,
as at March 31, 2009, the Company had a net working capital
deficiency of $650,000.
To manage its liquidity requirements, the Company has been reviewing
its strategic plans for the future activities of the business. On
April 22, 2009, the Company announced the signing of formal contracts
for the sale of the Patos de Minas laboratory and associated plant
and equipment to third parties for $452,000 ($350,000 USD) payable in
cash. A non-refundable deposit of $14,000 ($11,000 USD) was received
on March 24, 2009. On May 5, 2009, the Company received a deposit of
$197,000 ($168,000 USD). The balance of payment is due on May 15,
2009.
In addition, on April 22, 2009, the Company announced the signing of
formal contracts for the sale of the Company's wholly owned
subsidiary, Cobre Sul Mineracao Ltda., through which the Company
holds the Santo Antonio do Bonito alluvial diamond project to third
parties for $968,000 ($750,000 USD). A cash payment of $452,000
($350,000 USD) is due on June 15, 2009. At the election of the
purchasers, the balance of $516,000 ($400,000 USD) may be paid in
polished diamonds to be independently valued in New York, USA and
then delivered to the Company by July 15, 2009.
The proceeds of both transactions will be used to repay debt and to
provide working capital to fund the Company's ongoing activities
which are primarily focused on efforts to advance the Canastra 1
kimberlite project towards development.
The Company remains encouraged by the recent publication of the
government's inter-departmental deliberations over the finalization
of permanent boundaries for the Serra da Canastra National Park which
is located in proximity to the Canastra 1 project and the progress
made with respect to the passage of this legislation. A draft bill
(Projeto de Lei # 1448/2007) was submitted in June 2007 to the
Brazilian Congress to formally exclude the Company's projects in the
Serra da Canastra region from any new proposed Canastra National Park
boundary. The draft bill was approved by the Camara dos Deputados
(Lower House) on October 29, 2008 and has moved to the Senado (Upper
House) for final approval which is expected during 2009. The Company
has renewed the Canastra mineral licenses that it holds and is
maintaining them in good standing while waiting for trial mining
permits to be issued which is expected to follow final approval of
this legislation. The Company hopes to commence trial mining at its
Canastra 1 project once the bill has received final approval but in
the meantime the Company's projects in the Serra da Canastra region
will remain on care and maintenance.
The Company has kept its mineral licenses in the Santo Antonio do
Bonito River region in good standing and the Company hopes to
continue work on the project in the future but for the moment, the
Santo Antonio do Bonito River kimberlite exploration project remains
on care and maintenance. Licensing for the Regis and Tucano projects
in the Patos de Minas region has also been renewed and they are being
maintained in good standing while these projects will remain on care
and maintenance.
For further information contact:
Brazilian Diamonds Limited
Ken Judge, Chairman + 44 7733 001 002
Stephen Fabian, CEO + 55 31 9186 4660
Hanson Westhouse Limited (Nomad and Broker to the + 44 113 246 2610
Company)
Tim Feather/Matthew Johnson
Introduction
The following discussion of performance and financial condition
should be read in conjunction with the interim consolidated financial
statements of the Company for the three months ended March 31, 2009.
The Company's financial statements are prepared in accordance with
Canadian GAAP. The accounting policies followed by the Company are
set out in note 3 to the audited consolidated financial statements.
The Company's reporting currency is Canadian dollars. The date of
this Management's Discussion and Analysis is May 13, 2009.
Description of Business
Brazilian Diamonds Limited (the "Company") is a development stage
resource company currently engaged in the acquisition, exploration
and development of kimberlite and alluvial diamond properties in
Brazil. The Company holds 23,107 hectares of alluvial and kimberlite
exploration properties in the Paranaiba and Santo Antonio do Bonito
River Basins and the Patos de Minas region as well as over 51,328
hectares of prospective exploration properties in the Serra da
Canastra Kimberlite Province including the advanced stage
diamondiferous Canastra 1 kimberlite pipe. In addition, the Company
has its own diamond laboratory used in the recovery of kimberlite
indicator minerals and in 2006 the Company received an ISO 17025
rating for the facility.
The Company's head office is located in Belo Horizonte, Brazil and
the corporate office is located in Vancouver British Columbia,
Canada. Exploration headquarters are located in Patos de Minas,
Brazil.
The Company is a reporting issuer in Ontario and British Columbia,
Canada and its common shares trade on the Toronto Stock Exchange and
Alternative Investment Market ("AIM") of the London Stock Exchange
under the symbol BDY.
Corporate Developments
As at May 13, 2009, the Company owes $116,000 (March 31, 2008 - $Nil)
to SAFM Minera��o Inc., a company associated with Stephen Fabian
(director), with accrued interest based on the monthly interest of
the standard Brazilian CDB bank rate for Banco Itau payable on
demand.
As at May 13, 2009, the Company owes $113,000 (March 31, 2008 - $Nil)
to Itapiruba Internacional Ltda., a subsidiary company of Hamilton
Capital Partners Limited and Kenneth Judge (director), with accrued
interest based on the monthly interest of the standard Brazilian CDB
bank rate for Banco Itau payable on demand.
On April 22, 2009, the Company announced the signing of formal
contracts for the sale of the Patos de Minas laboratory and
associated plant and equipment to third parties for $452,000
($350,000 USD) payable in cash. A non-refundable deposit of $14,000
($11,000 USD) was received on March 24, 2009. On May 5, 2009, the
Company received a deposit of $197,000 ($168,000 USD). The balance of
payment is due on May 15, 2009.
On April 22, 2009, the Company announced the signing of formal
contracts for the sale of the Company's wholly owned subsidiary,
Cobre Sul Mineracao Ltda., through which the Company holds the Santo
Antonio do Bonito alluvial diamond project to third parties for
$968,000 ($750,000 USD). A cash payment of $452,000 ($350,000 USD)
is due on June 15, 2009. At the election of the purchasers, the
balance of $516,000 ($400,000 USD) may be paid in polished diamonds
to be independently valued in New York, USA and then delivered to the
Company by July 15, 2009.
In February 2009, the Company was notified by the Toronto Stock
Exchange ("TSX") that it was reviewing the eligibility for continued
listing of the Company's shares on the TSX. The review is being
conducted under the TSX's Remedial Review Process pursuant to which
the Company has been given until June 26, 2009 to satisfy the TSX
that it meets all TSX requirements for continued listing, failing
which the Company's shares will be delisted as of July 26, 2009. The
Company is therefore considering its options in this regard, which
include applying for a transfer of its listing to the TSX Venture
Exchange ("TSXV") or having its listing on the AIM market of the
London Stock Exchange continue as the Company's sole market for its
shares. With the sale, subsequent to the quarter end, of the
Company's wholly owned subsidiary, Cobre Sul Mineracao Ltda, through
which the Company holds the Santo Antonio do Bonito alluvial diamond
projects and the Company's Patos de Minas laboratory and associated
plant and equipment for gross proceeds of approximately $1.4 million,
the Company anticipates that it will be able to meet the requirements
to achieve the transfer of its listing to TSXV. Accordingly the
Company anticipates a definitive decision on the Company's course of
action being made well in advance of the TSX deadline.
Discussion of Operations
Current Year Activity
Amounts have been restated to conform to a change in accounting
policy and also a restatement due to the retroactive treatment of
future income taxes within other comprehensive income as set out in
EIC 172. See "Changes in Accounting Policies" or note 2 of the
audited consolidated financial statements for the year ended December
31, 2008.
Change in accounting policy and restatement regarding exploration
costs:
December 31,
2008 Write-down March 31, 2009
$ $ $
Coromandel 792 - 792
Serra da Canastra 700 - 700
Total 1,492 - 1,492
(Restated-
note 2)
December 31, December 31,
2007 Write-down 2008
$ $ $
Coromandel 1,585 (793) 792
Patos de Minas 312 (312) -
Serra da Canastra 1,400 (700) 700
Salvador 1 466 (466) -
Total 3,763 (2,271) 1,492
During the period ended March 31, 2009, the Company focused on
reorganizing activities and on care and maintenance of its
properties.
Salvador 1
Salvador 1 Kimberlite Testing
The Salvador 1 kimberlite is a six hectare body partly exposed
beneath the sands and gravels of an old alluvial diamond mine in
central Bahia State, Brazil. The testing of the Salvador 1
kimberlite has involved the excavation of a number of pits, with
each pit designed to extract approximately 1,300 tonnes of kimberlite
from different parts of the kimberlite pipe.
Extraction began in the last quarter of 2007 and continued through to
September 2008. The kimberlite is multiphase with as many as six
kimberlite rock types identified in Pit 1, therefore providing
numerous challenges in evaluation process.
Processing of the kimberlite samples began in December 2007 using a
processing plant consisting of a primary disaggregation rotary pan,
followed by x-ray flowsort and grease table for the recovery of
diamonds. The processing plant has recently been augmented with a
roll crusher to better handle harder kimberlite fragments, however,
sample treatment remained slower than excavation.
Quality control and quality assurance of this evaluation process was
undertaken at the Company's certified ISO 17025 indicator mineral
processing laboratory on Patos de Minas, where concentrates were
re-examined for diamonds that may not have been recovered in
processing by the on-site plant.
By September 2008, the Company completed field operations at its pit
sample evaluation of the Salvador 1 kimberlite pipe. The Company
excavated three pits from 8 to 11m deep and processed the extracted
kimberlite in a plant built on-site. In addition, the Company
completed drill holes and conducted microdiamond tests to identify
potentially higher grade zone. Kimberlite weighing 603.5 tonnes from
Pit 1 yielded 12.44 carats of diamonds, demonstrating that the pipe
is diamondiferous although with a low abundance in the portion
tested. Preliminary results from 402 tonnes of kimberlite extracted
from Pit 3 yielded 10.44 carats of diamonds. Additional kimberlite,
mostly from the second and third pits has been shipped to the
Company's mineral processing laboratory in Patos de Minas, Brazil for
final diamond processing and quality control tests following initial
processing steps on-site. All field equipment was moved to the Santo
Antonio do Bonito project site in Minas Gerais State where the
Company was investigating the possibility of re-starting operations.
Salvador 1 Alluvial Sand and Gravel Testing
Concurrent with the kimberlite sampling and processing at Salvador 1,
a separate processing plant was used to recover diamonds from the
sands and gravels overlying the Salvador 1 kimberlite. Approximately
2,300 tonnes of sands and gravels were processed through the jig
plant, yielding 78.93 carats. The two largest recovered diamonds
weighed 3.15 and 2.65 carats respectively. The shallow overlying
alluvial sands and gravels are enriched in diamond content compared
to the kimberlite, although the volumes are smaller. The
confirmation of a diamondiferous kimberlite feeding the alluvial
deposits of central Bahia has positive implications for further
exploration within the Company's extensive land position and database
for the region.
At December 31, 2008, the Company had assessed the recoverability of
its Salvador 1 project and had recorded an asset impairment of
$466,000. The Company had closed down its testing programs and it is
unlikely that the relevant mineral licenses will be renewed. To
conserve cash reserves, the Salvador 1 project is on care and
maintenance.
Coromandel Region
Santo Antonio do Bonito River
In 2008, all field equipment was consolidated at the Santo Antonio do
Bonito project site in Minas Gerais State, where the Company was
investigating the possibility of re-starting operations.
As at December 31, 2008, the Company had assessed the recoverability
of its Santo Antonio do Bonito River project and determined that no
impairment was required as the project was written down to $nil. The
Company has kept its mineral licenses in good standing and hopes to
continue work on the project in the future. To conserve cash
reserves, the Santo Antonio do Bonito River project is on care and
maintenance.
Santo Antonio do Bonito Alluvial Diamond Mining Joint Venture
In 2008, the Company's joint venture partners made a decision to
defer the next phase of studies with regards to developing a large
scale, dredge based mining operation on the Santo Antonio do Bonito
alluvial project.
As at December 31, 2008, the Company had assessed the recoverability
of its Santo Antonio do Bonito alluvial mining project and had
recorded an impairment of $793,000. The fair value of the mineral
properties of Cobre Sul Minera��o Ltda. was written down to reflect
the sale proceeds subsequent to the period ending March 31, 2009.
Patos de Minas
As at December 31, 2008, the Company had assessed the recoverability
of its project in Parima and had recorded an impairment of $312,000.
Only the Regis and Tucano mineral licenses in the Patos de Minas
region have been renewed and maintained in good standing. To conserve
cash reserves, the Patos de Minas projects are on care and
maintenance.
Serra da Canastra
The issue of permits to commence trial mining of the Canastra 1 pipe
has been delayed until a dispute surrounding a possible extension of
the nearby Serra da Canastra National Park boundary is resolved. New
legislation was submitted to the Brazilian Camara of Deputies (Lower
House) in June 28, 2007 which proposed the creation of a new park
boundary but excluded the Canastra 1 and nearby Canastra 1 trend.
This new legislation was approved on October 29, 2008 and the bill
will now proceed to the Senate (Upper House) for final approval which
is expected during 2009.
The Company had assessed the recoverability of its project in the
Serra da Canastra region and had recorded an asset impairment of
$700,000 at December 31, 2008. All Canastra mineral licenses have
been renewed and maintained in good standing while the Company is
waiting for the trial mining permits. The Company hopes to commence
trial mining at its Canastra 1 project once approved. To conserve
cash reserves, the Serra da Canastra region projects are on care and
maintenance.
Historical Information
Following the acquisition of several mineral exploration databases
from De Beers, the Company has access to the accumulated results of
more than 30 years of exploration activity in the Canastra, Santo
Antonio do Bonito and Patos de Minas regions in Minas Gerais and the
Chapada Diamantina region in Bahia. Included within the Canastra
data set are indicator mineral samples, microprobe chemical analyses,
and 19,000 line kilometres of proprietary airborne geophysics
covering the entire region. De Beers has also provided details about
35 known kimberlite occurrences and the results of ground geophysics
within the Canastra region. The Chapada Diamantina data set,
acquired in September 2006 from De Beers, includes 194,120 line
kilometres of airborne geophysics, indicator mineral samples,
microprobe analysis and mineral licenses covering the Salvador 1
kimberlite body plus five other kimberlites.
This data complements an already significant database the Company
previously acquired as a result of the purchase of De Beers'
Brazilian subsidiary Mineracao do Sul in August 2002. That
acquisition also included 40,000 hectares of mineral claims in the
Canastra area and the Canastra 1 kimberlite for which licenses are
being sought to commence trial mining. The licencing process has been
complicated by the potential expansion of a nearby National Park.
Although there is every indication that a licence will be granted to
mine Canastra 1, it is not possible to accurately estimate the
timetable for such a grant. While the Company continues to work with
various ministries of the Brazilian federal government in an effort
to hasten the process for the license grant, the Company has been
concentrating the majority of its exploration activity and resources
on its other prospective projects outside the Canastra Region.
The Company has assessed the recoverability of its data sets and has
recorded an asset impairment of $1,583,000. The Canastra data set
has value as long as the project continues. All Canastra mineral
licenses have been renewed and maintained in good standing while the
Company is waiting for trial mining permits.
During the past four years, the Company has committed significant
resources evaluating kimberlite targets in the Santo Antonio do
Bonito River Basin and Patos de Minas regions and subject to the
availability of financing, this is set to remain a part of the
Company's activities.
Salvador 1, Bahia
In 2007, the Company collected 6 replicate samples totaling 6 tonnes
from the Salvador 1 kimberlite in an attempt to confirm results from
a smaller (580 kg) sample taken in 2006. In total, 111 diamonds were
recovered from these new samples which together with original sample
tallied 120 diamonds. Preparations began in the third quarter of
2007 for the collection of six much larger samples of approximately
650 m3 each from different parts of the Salvador 1 kimberlite in
order to better assess its diamond potential. Excavation of the
first pit was completed in the fourth quarter and excavation of the
second and third pits were started. Results from the first of the
bulk sample pits identified at least six different kimberlitic rock
types or "phases".
At December 31, 2008, the Company has assessed the recoverability of
its Salvador 1 project and has recorded an asset impairment of
$466,000. The Company has closed down its testing programs and the
mineral licenses will not be renewed. To conserve cash reserves, the
Salvador 1 project has been placed on care and maintenance.
Serra da Canastra, Minas Gerais
The Company is awaiting final approval before commencing the
environmental licensing process for the development of the Canastra 1
kimberlite body for which mine feasibility work has already been
completed and the required Mines Department approvals are already in
place. The Company hopes to bring Canastra 1 into production once
the environmental licensing process is completed.
The Company has assessed the recoverability of its project in the
Serra da Canastra region and has recorded an asset impairment of
$700,000. All Canastra mineral licenses have been renewed and
maintained in good standing while the Company is waiting for the
trial mining permits. The Company expects to commence trial mining
at its Canastra 1 project once approved. To conserve cash reserves,
the Serra da Canastra region projects has been placed on care and
maintenance.
Coromandel - San Antonio do Bonito River
As at December 31, 2008, the Company has assessed the recoverability
of its Santo Antonio do Bonito River project and determined that no
impairment was required as the amounts were insignificant. The
Company has kept its mineral licenses in good standing and expect to
continue work on the project in the future.
Coromandel, Minas Gerais - San Antonio do Bonito Alluvial Diamond
Mining Joint Venture
The Company with its Joint Venture partners assessed various
alternatives for the possible development of one or more alluvial
mining operations at the Santo Antonio do Bonito alluvial project.
These options included large scale dredging operations on the
broader river flat areas along the Santo Antonio do Bonito river as
well as a smaller scale operation on what are considered to be highly
prospective but narrower river terrace areas. As at September 30,
2008, the Joint Venture partners have made a decision to defer the
next phase of studies. The Company has agreed to sell the mineral
properties in the Santo Antonio do Bonito which were contained
alluvial resources and its assets to a third party subsequent to the
period ended March 31, 2009.
Patos de Minas, Minas Gerais
As at December 31, 2008, the Company has assessed the recoverability
of its project in Parima and has recorded an impairment of $312,000.
Only the Regis and Tucano mineral licenses in the Patos de Minas
region have been renewed and maintained in good standing. To conserve
cash reserves, the Patos de Minas projects have been placed on care
and maintenance.
Financial Performance
First Quarter
The loss for the three months ended March 31, 2009 was $355,000 as
compared to a loss of $984,000 (restated) for the same period last
year. The decrease in losses over the same period last year is due
mainly to a decrease in exploration costs of $620,000, amortization
expenses of $74,000 and investor relations of $36,000.
Cash and cash equivalent balances decreased by $74,000 to $9,000 at
March 31, 2009. At March 31, 2009, the Company had a working capital
deficiency $650,000 (2008 - net working capital of $583,000).
Results of Operations
Summary of Quarterly Results
The table below present's selected financial data for the Company's
eight most recently completed quarters. Amounts have been restated to
conform to a change in accounting policy. See "Changes in Accounting
Policies" or note 2 of the audited consolidated financial statements
for the year ended December 31, 2008.
Restated Restated Restated Restated Restated Restated
($000) Mar.31, Dec.31, Sept.30, June 30, Mar.31, Dec.31, Sept.30, June 30,
2009 2008 2008 2008 2008 2007 2007 2007
Financial
results
Net
loss(income)
for period 355 1,065 4,845 1,065 1,071 984 1,100 1,533
Comprehensive
(income)
loss (34) (28) 231 120 367 (9) 317 345
Basic and
diluted loss
(income) per
hare 0.00 0.02 0.01 0.00 0.01 0.01 0.01 0.00
Exploration
costs 89 272 666 806 709 1,000 554 669
Balance sheet
data
Cash and
short term
deposits 9 226 83 226 1,039 701 456 1,075
Resource
properties 1,492 1,492 3,763 3,763 3,763 3,763 3,763 3,763
Total
assets 2,857 2,945 7,505 8,730 8,539 8,835 9,015 10,343
Shareholders'
equity
1,897 2,218 7,035 8,337 8,064 8,395 8,395 9,508
Selected Annual Information
The following financial data has been prepared in accordance with
Canadian generally accepted accounting principles in Canadian
currency: Amounts have been restated to conform to a change in
accounting policy. See "Changes in Accounting Policies" or note 2 of
the audited consolidated financial statements for the year ended
December 31, 2008.
Restated Restated
($000) Year ended Year ended Year ended
December 31, December 31, December 31,
2008 2007 2006
Financial
results
Net loss
for period 7,773 3,883 15,957
Other
comprehensive
loss 690 1,037 -
Basic and
diluted loss
per share 0.04 0.03 0.11
Exploration
costs 2,453 3,029 3,606
Balance sheet
data
Cash and
cash
equivalents 83 456 4,514
Mineral
properties 1,492 3,763 3,763
Total
assets 2,945 8,835 13,568
Shareholders'
equity 2,218 8,395 11,881
Liquidity and Capital
The Company does not currently own or have an interest in any
producing mineral properties and does not derive any revenues from
operations. The Company's activities have been funded through equity
financing and loans from companies associated with two of the
Directors of the Company. While the Company remains optimistic that
it will continue to be able to utilize these sources of financing
until it develops cash flow from operations, there can be no
assurance, however, that the Company will be successful in its
efforts. If such funds are not available or other sources of finance
cannot be obtained, then the Company will attempt to curtail its
activities to a level for which funding is available or can be
obtained.
Most of the capital equipment for operations at Canastra 1 has
already been acquired and is included as part of resource properties.
The Company has minimal operating lease commitments (refer to
Contractual Commitments).
During the period ended March 31, 2009, the Company incurred a net
loss of $355,000 (March 31, 2008 - $984,000 (restated)) and at March
31, 2009 has a net working capital deficiency of $650,000 (March 31,
2008 - net working capital of $583,000). These liquidity issues were
alleviated subsequent to the quarter end with the sale of the
Company's wholly owned subsidiary, Cobre Sul Mineracao Ltda, through
which the Company holds the Santo Antonio do Bonito alluvial diamond
projects and the Company's Patos de Minas laboratory and associated
plant and equipment for gross proceeds of approximately $1.4 million.
The Company's ability to continue as a going concern is dependent
upon its ability to fund its ongoing operating costs and exploration
and development of mineral properties. These financial statements do
not reflect the adjustments to the carrying values of assets and
liabilities and the reported expenses and balance sheet
classifications that would be necessary were the going concern
assumption inappropriate, and these adjustments could be material.
Subsequent Events
a) On April 22, 2009, the Company announced the signing of formal
contracts for the sale of the Patos de Minas laboratory and
associated plant and equipment to third parties for $452,000
($350,000 USD) payable in cash. A non-refundable deposit of $14,000
($11,000 USD) was received on March 24, 2009. On May 5, 2009, the
Company received a deposit of $197,000 ($168,000 USD). The balance of
payment is due May 15, 2009.
b) On April 22, 2009, the Company announced the signing of formal
contracts for the sale of the Company's wholly owned subsidiary,
Cobre Sul Mineracao Ltda., through which the Company holds the Santo
Antonio do Bonito alluvial diamond project to third parties for
$968,000 ($750,000 USD). A cash payment of $452,000 ($350,000 USD)
is due June 15, 2009. At the election of the purchasers, the balance
of $516,000 ($400,000 USD) may be paid in polished diamonds to be
independently valued in New York, USA and then delivered to the
Company by July 15, 2009.
Contractual Commitments
Except as outlined below, the Company has no other contractual
commitments.
2009 2010 2011 Total
Photocopier leases $ 6 $ 9 $ 1 $ 16
Off Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements.
Transactions with Related Parties
During the period March 2009 and 2008, the Company entered into the
following transactions with related parties:
2009 2008
$ $
HRG Management Ltd. - Kenneth Judge (director),
Stephen L.
Fabian (director), Kerry Beamish (CFO) (note (a))
Paid or accrued contractual service costs (note 45,000 51,000
(a))
Miscellaneous office recoveries - 7,000
Deposits made (note (c)) 44,000 80,000
Hamilton Capital Partners Limited ("HCPL") -
Kenneth Judge
(director)
Accrued consulting fees and office rent 40,000 43,000
Sale of Hidefield shares - 185,000
Massif Limited - Stephen L. Fabian
Accrued management fees - (note (d)) 37,000 30,000
Lang Michener - David Cowan (partner)
Paid or accrued legal fees - (note (e)) 3,000 3,000
SAFM Mineracao Inc. - Stephen L. Fabian (director)
Related party demand loan and interest payable 114,000 -
(note (g))
Itapiruba Internacional Ltda. - subsidiary of HCPL
Related party demand loan and interest payable 112,000 -
(note (h))
a) During the quarter ended March 31, 2009, the Company paid a
monthly corporate administration fee of approximately $13,400 (2008 -
$17,000) that includes office rent, administration, accounting,
corporate secretarial, chief financial officer, investor relations
and other related services to HRG Management Ltd. ("HRG"). HRG is a
management company that provides shared office space and staff to
certain other public companies on a cost recovery basis. The Company
share directors and officers in common with HRG. The agreement can be
terminated by either party with ninety days written notice. Kenneth
Judge and Stephen L. Fabian are both directors of HRG. Kerry Beamish
is the CFO of HRG.
b) At March 31, 2009, HRG owed the Company $5,000 (2008 - $7,000)
with normal trade terms.
c) At March 31, 2009, $44,000 (2008 - $80,000) is included in
accounts receivable, prepaids and deposits to HRG for fixed assets
and services.
d) The Company accrued management fees of $37,000 (2008 - $30,000) to
Massif Limited, a company in which Stephen L. Fabian is interested.
e) The Company paid or accrued professional fees of $3,000 (2008 -
$3,000) to a law firm in which David Cowan, director is a partner.
f) The Company owed $33,000 (2008 - $Nil) to directors of the
Company, $94,000 to Massif (2008 - $Nil), $134,000 to HCPL (2008 -
$Nil), $3,000 to Lang Michener (2008 - $Nil) and $37,000 (2008 -
$Nil) to HRG with normal trade terms.
g) The Company owed $114,000 (2008 - $Nil) to SAFM Minera��o Inc., a
company associated with Stephen Fabian, with accrued interest based
on the monthly interest rate of the standard Brazilian CDB bank rate
for Banco Itau payable on demand.
h) The Company owed $112,000 (2008 - $Nil) to Itapiruba Internacional
Ltda., a company associated with Kenneth Judge, with accrued interest
based on the monthly interest rate of the standard Brazilian CDB bank
rate for Banco Itau payable on demand.
Share Capital Information
The table below presents the Company's common share data as of May
13, 2009.
Exercise Number of
Price Expiry date common shares
Common shares, issued and
outstanding 194,370,722
Securities convertible into
common
shares
October 26,
Options $0.45 2009 2,875,000
$0.41 April 5, 2011 2,175,000
$0.25 July 12, 2012 1,750,000
October 12,
$0.25 2012 100,000
201,270,722
Critical Accounting Estimates
Critical accounting estimates upon which the Company's financial
status depends are those requiring estimates of the recoverability of
its capitalized mineral property expenditures and intangible assets,
impairment of long-lived assets and the amount of future reclamation
obligations.
Mineral Properties and Development Costs
During the year ended December 31, 2008, the Company changed its
accounting policy relating to mineral property exploration
expenditures and it now expenses exploration expenditures when
incurred. See "Changes in accounting policies" or note 2 of the
consolidated financial statements for the year ended December 31,
2008 for a description and the effects of the change.
When it has been established that a mineral deposit is commercially
mineable and an economic analysis has been completed, the costs
subsequently incurred to develop a mine on the property prior to the
start of mining operations are capitalized and will be amortized
against production following commencement of commercial production,
or written off if the property is sold, allowed to lapse or
abandoned.
Although the Company has taken steps to verify title to mineral
properties in which it has an interest, in accordance with industry
standards for the current stage of exploration of such properties,
these procedures do not guarantee the Company's title. Property title
may be subject to prior agreements and non-compliance with regulatory
requirements.
Impairment of Long-lived Assets
The Company assesses the possibility of impairment in the net
carrying value of its long-lived assets when events or circumstances
indicate that the carrying amounts of the net asset may not be
recoverable. As outlined before, as of December 31, 2008 the Company
has recorded the amount of $4,097,000 related to impairment for its
mineral properties and property, plant and equipment in the extension
that it is necessary to reflect the recoverable amount.
Intangible assets
Intangible assets which consist of data sets related to the Company's
Brazilian exploration activities, are recorded at cost and are
expensed to operations. Management assess the recoverability of
intangible assets annually and at such times as events or
circumstances indicate that the carrying amounts may not be
recoverable. In the event that an impairment is identified, the
carrying value of the intangible asset is written down to its
estimated fair value.
The Company has assessed the recoverability of its intangible assets
and has recorded an asset impairment of $1,583,000. The Canastra
data set is considered to have significant value as long as the
Company's projects continue.
Asset Retirement Obligations
The Company relied on the results of a professional, engineering firm
and used the discount and inflation rate as at December 31, 2008 to
estimate the fair value of its asset retirement obligations.
Changes in Accounting Policies
Goodwill and Intangible Assets
The Company adopted the new Handbook Section 3064, "Goodwill and
Intangible Assets", which replaced Section 3062, "Goodwill and
Intangible Assets". The new standard establishes revised standards
for the recognition, measurement, presentation and disclosure of
goodwill and intangible assets. The new standard also provides
guidance for the treatment of preproduction and start-up costs and
requires that these costs be expensed as incurred.
Exploration Expenditures
During the year ended December 31, 2008, the Company retrospectively
changed its accounting policy for exploration expenditures to more
appropriately align itself with policies applied by other comparable
companies at a similar stage in the mining industry. Prior to the
year ended December 31, 2008, the Company capitalized all such costs
to mineral properties on the basis of specific claim blocks or areas
of geological interest until the properties to which they relate are
placed into production, sold or management has determined there to be
impairment in value.
Exploration expenditures are now charged to operations as they are
incurred until the mineral property reaches the development stage.
Significant costs related to property acquisitions, including
allocations for undeveloped mineral interests, are capitalized until
the viability of the mineral interest is determined. When it has
been established that a mineral deposit is commercially mineable and
an economic analysis has been completed, the costs subsequently
incurred to develop a mine on the property prior to the start of
mining operations are capitalized. The impact of this change on the
previously reported March 31, 2008 consolidated financial statements
is as follows:
March 31, 2008 March 31,
As previously 2008
reported Restatement As restated
$ $ $
Intangible assets - 2.048 2.048
Mineral properties 22.346 (18.583) 3.763
Property, plant and
equipment - 1.171 1.171
Amortization - 102 102
Exploration costs - 709 709
-
Loss for the period (3.193) 2.209 (984)
Loss per share (0,02) 0,01 (0,01)
Deficit at March 31, 2008 (74.029) (15.172) (89.201)
* The numbers restated in this table do NOT include the adjustments
of EIC 172 following mentioned.
Capital Disclosures
Effective August 1, 2008, the Company adopted CICA Handbook Section
1535 - Capital Disclosures. Section 1535 establishes standards for
disclosing information about an entity's capital and how it is
managed. Under this standard the Company will be required to
disclose the following based on the information provided by the
entity's key management personnel:
1) qualitative information about its objectives, policies and
processes for managing capital;
2) summary quantitative data about what it manages as capital;
3) whether during the period it complied with such externally imposed
capital requirements to which it is subject; and
4) when the Company has not complied with such externally imposed
capital requirements, the consequences of such non-compliance.
The Company has included the disclosures recommended by the new
Handbook section in Note 4 to the audited consolidated financial
statements.
Financial Instruments - Disclosures and Presentation
Effective August 1, 2008, the Company adopted CICA Handbook Sections
3862 (Disclosures) and Section 3863 (Presentation). These standards
replace CICA 3861, Financial Instruments - Disclosure and
Presentation. The increase disclosures will enable users to evaluate
the significance of financial instruments for an entity's financial
position and performance, including disclosures about fair value. In
addition, disclosure is required of qualitative and quantitative
information about exposure to risks arising from financial
instruments, including specified minimum disclosures about credit
risk, liquidity risk and market risk. The quantitative disclosures
must provide information about the extent to which the entity is
exposed to risk, based on information provided by the entity's key
management personnel.
The Company has included the disclosures recommended by the new
Handbook section in Note 5 of the consolidated financial statements.
General Standards on Financial Statement Presentation
CICA Handbook Section 1400, "General Standards on Financial Statement
Presentation" ("CICA 1400"), has been amended to include requirements
to assess and disclose an entity's ability to continue as a going
concern. During the year ended December 31, 2008, the Company has
adopted the disclosure requirements of CICA 1400. The standard
requires that management make an assessment of a company's ability to
continue as a going concern and to use the going concern basis in the
preparation of the financial statements unless management either
intends to liquidate the company or to cease trading, or has no
realistic alternative but to do so. When management is aware, in
making its assessment, of material uncertainties related to events or
conditions that may cast significant doubt upon a company's ability
to continue as a going concern, those uncertainties should be
disclosed.
Income Statement Presentation of a Tax Loss Carryforward Recognized
Following an Unrealized Gain in Other Comprehensive Income
Effective September 30, 2008, the Company adopted EIC-172, "Income
Statement Presentation of a Tax Loss Carryforward Recognized
Following an Unrealized Gain in Other Comprehensive Income"
("EIC-172"). This abstract provides guidance on whether the tax
benefit from the recognition of previously unrecognized tax loss
carryforwards consequent to the recording of unrealized gains in
other comprehensive income, such as unrealized gains on
available-for-sale assets, should be recognized in net income or in
other comprehensive income. Upon adoption, EIC 172 was applied
retrospectively with restatement of prior periods resulting in a
reduction of $658,000 in "opening balance adjustment - transition
adjustment" in accumulated other comprehensive income in order to
record the future income tax liability against deficit. Future income
tax recovery in the same amount was recorded against deficit. As of
December 31, 2007, the amount of $466,000, due to the unrealized gain
reversal, was booked against accumulated other comprehensive income.
Future income tax expense in the same amount was recorded against
operations accordingly.
New Accounting Pronouncements
In 2006, the Canadian Accounting Standards Board ("AcSB") published a
new strategic plan that will significantly affect financial reporting
requirements for Canadian companies. The AcSB strategic plan
outlines the convergence of Canadian GAAP with IFRS over an expected
five-year transitional period. In February 2008, the AcSB announced
that 2011 is the changeover date for publicly listed companies to use
IFRS, replacing Canadian GAAP. The effective date is for the
Company's interim and annual financial statements for the year
beginning January 1, 2011. The transition date of January 1, 2011
will require the restatement for comparative purposes of amounts
reported by the Company for the year ended December 31, 2010. While
the Company has begun assessing the adoption of IFRS for 2011, the
financial reporting impact of the transition to IFRS cannot be
reasonably estimated at this time.
Risk
There are significant risks that might affect further development of
the Company. Although the Company has prospective diamond projects
and has demonstrated that it has the ability to obtain environmental
and trial mining permits, there is a risk that these projects will
not be economically mineable or that the required permits will be
granted in the future. Further, future market prices for diamonds
are not predictable. There is also a risk that should additional
development of the properties be required, financing may not be
obtainable. Repatriation of earnings and capital from Brazil is
subject to compliance with registration requirements. There can be no
assurance that restrictions on repatriation will not be imposed in
the future.
Management's Responsibility for Financial Statements
The information provided in this report, including the financial
statements, is the responsibility of management. In the preparation
of these statements, estimates are sometimes necessary to make a
determination of future values for certain assets or liabilities.
Management believes such estimates have been based on careful
judgments and have been properly reflected in the accompanying
financial statements.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable
assurance that all relevant information is gathered and reported to
senior management, including the President, Chief Executive Officer
("CEO") and the Chief Financial Officer ("CFO"), on a timely basis so
that appropriate decisions can be made regarding public disclosure.
An evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures was conducted as of
March 31, 2009, by and under the supervision of management, including
the CEO and the CFO. Based on this evaluation, the CEO and the CFO
have concluded that the Company's disclosure controls and procedures,
as defined by Multilateral Instrument 52-109, Certification of
Disclosure in Issuers' Annual and Interim Filings, are effective to
ensure that information required to be disclosed in reports filed or
submitted under Canadian securities legislation is recorded,
processed, summarized and reported within the time period specified
in those rules and forms and reported to senior management so that
appropriate decisions can be made regarding public disclosure.
Internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements in accordance with
Canadian GAAP. Management is responsible for establishing and
maintaining adequate internal control over financial reporting for
the Company.
An evaluation of the design of the Company's internal control over
financial reporting was conducted as of March 31, 2009, by and under
the supervision of management, including the CEO and the CFO. Based
on this evaluation, the CEO and the CFO have concluded that the
Company's design of internal control over financial reporting, as
defined by Multilateral Instrument 52-109, Certification of
Disclosure in Issuers' Annual and Interim Filings, is sufficient to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance
with Canadian GAAP.
There have been no changes in internal control over financial
reporting during the period ended March 31, 2009 that have materially
affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
Other information
Additional information is available on the Company's website at
www.braziliandiamonds.com or on SEDAR at www.sedar.com.
Caution Regarding Forward Looking Statements
Except for historical information contained in this discussion and
analysis, disclosure statements contained herein are forward-looking.
Forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from those in
such forward-looking statements. Forward-looking statements are made
based on management's beliefs, estimates and opinions on the date the
statements are made and the Company undertakes no obligation to
update forward-looking statements if these beliefs, estimates and
opinions or other circumstances should change. Investors are
cautioned against attributing undue certainty to forward-looking
statements.
Consolidated Balance Sheet
(expressed in thousands of Canadian Dollars) March 31 December 31
(unaudited) 2009 2008
$ $
Assets
Current assets
Cash and cash equivalents 9 83
Accounts receivable, prepaids and deposits 196 204
Due from related parties 5 11
210 298
Investments 103 68
Intangible assets 257 264
Property, plant and equipment 795 823
Mineral properties 1,492 1,492
2,857 2,945
Liabilities
Current liabilities
Accounts payable and accrued liabilities 332 309
Due to related parties 528 318
860 627
Asset retirement obligation 100 100
960 727
Shareholders' Equity
Capital stock 95,326 95,326
Contributed surplus 3,336 3,336
Deficit (96,537) (96,182)
Accumulated other comprehensive loss (228) (262)
1,897 2,218
2,857 2,945
Nature of Operations and Going Concern (note
1)
Consolidated Statements of Loss and
Deficit
(expressed in thousands of Canadian
dollars) (Restated-note 2)
Three months Three months
ended ended
March 31, March 31,
2009 2008
$ $
Expenses
Amortization 28 102
Corporate administrative services 15 17
Consultants 48 52
Exploration costs 89 709
Foreign exchange loss 8 -
Insurance 11 13
Interest income - (1)
Investor relations 13 49
Legal and audit 31 32
Office costs 67 50
Regulatory 16 34
Salaries and management fees 37 30
Travel (2) 14
(361) (1,101)
Other income (expenses)
Unrealized gain on Hidefield
options - 19
Gain on sale of investments - 98
Gain on sale of assets 6 -
Loss for the period (355) (984)
Deficit - Beginning of period (96,182) (88,217)
Deficit - End of period (96,537) (89,201)
Loss per common share - basic and
diluted 0.00 0.01
Weighted average common shares
outstanding (000's) 194,370 170,125
Consolidated Statements of
Comprehensive Loss
(expressed in thousands of Canadian
dollars)
(Restated-note 2)
Three months Three months
ended ended
March 31, March 31,
2009 2008
$ $
Loss for the period (355) (984)
Other comprehensive loss
Unrealized gain (loss) on
available-for-sale securities 34 (367)
Comprehensive loss for the period (321) (1,351)
Consolidated Statements of Changes in
Shareholders' Equity
(expressed in thousands of Canadian
dollars)
Three months Year
ended ended
March 31, December 31,
2009 2008
$ $
Share capital
Balance - beginning of period 95,326 92,848
Issued pursuant to private placement,
net of share issue costs - 2,478
Balance - end of period 95,326 95,326
Warrants
Balance - beginning of period - 519
Expired during the period - (519)
Balance - end of period - -
Contributed surplus
Balance - beginning of period 3,336 2,817
Fair value of warrants expired - 519
Balance - end of period 3,336 3,336
Deficit
Balance - beginning of period (96,182) (88,217)
Loss for the period (355) (7,965)
Balance - end of period (96,537) (96,182)
Accumulated other comprehensive income
(loss)
Balance - beginning of period (262) 428
Unrealized gain (loss) and reversal of
realized gain on available-for-sale 34 (690)
securities
Balance - end of period (228) (262)
Total Shareholders' Equity 1,897 2,218
Consolidated Statements of Cash
Flows
(expressed in thousands of Canadian
dollars)
(Restated-note 2)
Three months Three months
ended ended
March 31, March 31,
2009 2008
$ $
Cash flows from operating
activities
Loss for the period (355) (984)
Add (deduct) items not affecting
cash
Amortization 28 102
Gain on sale of investments - (98)
Gain on sale of assets (6) -
Unrealized gain on Hidefield
options - (19)
Changes in non-cash working capital
related to operations
Accounts receivable, prepaid and
deposits 8 (25)
Related parties receivable 6 10
Accounts payable and accrued
liabilities 23 54
Related parties payable 210 -
(86) (960)
Cash flows from financing
activities
Issue of shares for private
placement - 2,596
Subscription receivable - (1,436)
Share issue costs - (140)
- 1,020
Cash flows from investing
activities
Proceeds from disposal of property,
plant and equipment 12 -
Proceeds from exercise of Hidefield
options and shares - 185
12 185
Increase (Decrease) in cash and
cash equivalents (74) 245
Cash and cash equivalents -
Beginning of period 83 456
Cash and cash equivalents - End of
period 9 701
Notes to Consolidated Financial Statements
1. Nature of Operations and Going Concern
The Company is engaged in the exploration for and development of
mineral resources. The properties of the Company are without a known
body of commercial ore, the exploration programs undertaken and
proposed constitute an exploratory search, and there is no assurance
that the Company will be successful in its search. The Company has
not earned any revenue to date from its current operations and is
therefore considered to be in the development stage. The business of
exploring for minerals and mining involves a high degree of risk, and
few properties that are explored are ultimately developed into
producing mines. Significant expenses may be required to establish
ore reserves, to develop recovery processes, and to construct mining
and processing facilities at a particular site. It is not possible to
ensure that the current exploration programs planned by the Company
will result in a profitable commercial mining operation.
These financial statements have been prepared using Canadian
generally accepted accounting principles applicable to a going
concern, which contemplates the realization of assets and settlement
of liabilities in the normal course of business as they become due.
The Company has adopted the disclosure requirements of The Canadian
Institute of Chartered Accountants ("CICA") Section 1400 - General
Standards of Financial Statement Presentation. This standard requires
that management make an assessment of a company's ability to continue
as a going concern and to use the going concern basis in the
preparation of the financial statements unless management either
intends to liquidate the company or to cease trading, or has no
realistic alternative but to do so. When management is aware, in
making its assessment, of material uncertainties related to events or
conditions that may cast significant doubt upon a company's ability
to continue as a going concern, such as those set out below, those
uncertainties should be disclosed.
During the quarter ended March 31, 2009, the Company incurred a net
loss of $355,000 (March 31, 2008 - $984,000 (restated)) and at March
31, 2009 had a net working capital deficiency of $650,000 (March 31,
2008 - net working capital of $583,000). These liquidity issues were
alleviated subsequent to the quarter end with the sale of the
Company's wholly owned subsidiary, Cobre Sul Mineracao Ltda, through
which the Company holds the Santo Antonio do Bonito alluvial diamond
projects and the Company's Patos de Minas laboratory and associated
plant and equipment for gross proceeds of approximately $1.4 million.
The Company's ability to continue as a going concern is dependent
upon its ability to fund its ongoing operating costs and exploration
and development of mineral properties. These financial statements do
not reflect the adjustments to the carrying values of assets and
liabilities and the reported expenses and balance sheet
classifications that would be necessary were the going concern
assumption inappropriate, and these adjustments could be material.
2. Change in Accounting Policy and Adoption of Recent Accounting
Pronouncements
Goodwill and Intangible Assets
The Company adopted the new Handbook Section 3064, "Goodwill and
Intangible Assets", which replaced Section 3062, "Goodwill and
Intangible Assets". The new standard establishes revised standards
for the recognition, measurement, presentation and disclosure of
goodwill and intangible assets. The new standard also provides
guidance for the treatment of preproduction and start-up costs and
requires that these costs be expensed as incurred.
Exploration Expenditures
During the year ended December 31, 2008, the Company retrospectively
changed its accounting policy for exploration expenditures to more
appropriately align itself with policies applied by other comparable
companies at a similar stage in the mining industry. Prior to the
year ended December 31, 2008, the Company capitalized all such costs
to mineral properties on the basis of specific claim blocks or areas
of geological interest until the properties to which they relate are
placed into production, sold or management has determined there to be
impairment in value.
Exploration expenditures are now charged to operations as they are
incurred until the mineral property reaches the development stage.
Significant costs related to property acquisitions, including
allocations for undeveloped mineral interests, are capitalized until
the viability of the mineral interest is determined. When it has
been established that a mineral deposit is commercially mineable and
an economic analysis has been completed, the costs subsequently
incurred to develop a mine on the property prior to the start of
mining operations are capitalized. The impact of this change on the
previously reported March 31, 2008 consolidated financial statements
is as follows:
March 31, 2008
As previously March 31, 2008
reported Restatement As restated
$ $ $
Intangible assets - 2,048 2,048
Mineral properties 22,346 (18,583) 3,763
Property, plant and
equipment - 1,171 1,171
Amortization - 102 102
Exploration costs - 709 709
Loss for the year (3,193) 2,209 (984)
Loss per share (0.02) 0.01 (0.01)
Deficit at March 31, 2008 (74,029) (15,172) (89,201)
3. Significant Accounting Policies
Basis of consolidation
These consolidated financial statements have been prepared using
accounting principles generally accepted in Canada ("Canadian GAAP")
for interim reporting and include the accounts of the Company and its
wholly owned subsidiaries: BSG Investments Inc. ("BSGII") and its
subsidiaries, Canastra Investments Holdings Inc. ("Canastra"),
Minera��o do Sul Ltda. ("Minera��o"), and Parim� Minera��o Ltda.
("Parim�"); Game Creek Company Ltd. ("Game Creek")and its
subsidiaries, principally Samsul Minera��o Ltda. ("Samsul") and Cobre
Sul Minera��o Ltda. ("Cobre Sul") Inter-company balances and
transactions are eliminated on consolidation. The Company's
corporate office is located in Vancouver, British Columbia, Canada.
Canastra, Minera��o, Parim� and Samsul are located in Brazil. BSGII
and Game Creek are British Virgin Island incorporated companies.
As these unaudited interim consolidated financial statements do not
contain all of the disclosures required by Canadian GAAP, they should
be read in conjunction with the notes to the Company's audited
consolidated financial statements for the year ended December 31,
2008.
The accounting policies followed by the Company are set out in note 3
to the audited consolidated financial statements for the year ended
December 31, 2008, and have been consistently followed in the
preparation of these consolidated financial statements.
4. INVESTMENTS
March 31, 2009
Number of Carrying
Shares Value Fair Value % Holding
Available-for-sale
investments (a)
Hidefield Gold plc 7,625,000 $ 331 $ 103 2.74%
December 31, 2008
Number of Carrying
Shares Value Fair Value % Holding
Available-for-sale
investments (a)
Hidefield Gold plc 7,625,000 $ 331 $ 68 2.74%
a) Investments classified as available-for-sale are reported at fair
value based on quoted market prices, with unrealized gains or losses
reported as other comprehensive income or loss.
b) During the year ended December 31, 2008, the Company recognized an
unrealized loss, net of future income tax of $613,000 (2007 -
$1,037,000) on marketable securities designated as available-for-sale
in other comprehensive loss.
c) On February 8, 2008, the Company sold 2,000,000 Hidefield Gold plc
("Hidefield") shares at a price of 4.75 pence per share for a total
of $185,000 to Hamilton Capital Partners Limited (note 10(d)) and
recorded a gain of $98,000.
d) On January 25, 2008, the Company's 7,125,000 Hidefield options
expired and the $19,000 unrealized fair value of the Hidefield
options was written off.
5. Property, plant and equipment
Accumulated March 31, 2009
Cost Amortization Net
$ $ $
Heavy equipment 253 (235) 18
Vehicles 217 (172) 45
Building 438 (15) 423
Furniture and fixtures 213 (212) 1
Machine and equipment 651 (585) 66
Plant 289 (216) 73
Computers 165 (152) 13
Computers software 39 (39) -
Land 156 - 156
Leasehold improvements 27 (27) -
2,448 (1,653) 795
December 31,
Accumulated 2008
Cost Amortization Write-down Net
$ $ $ $
Heavy equipment 253 (232) - 21
Vehicles 231 (176) - 55
Building 550 (55) (112) 383
Furniture and fixtures 251 (168) (38) 45
Machine and equipment 686 (581) (35) 70
Plant 323 (211) (34) 78
Computers 176 (150) (11) 15
Computers software 52 (39) (13) -
Land 156 - - 156
Leasehold improvements 27 (27) - -
2,705 (1,639) (243)
823
6. MINERAL PROPERTIES
(December
31, 2008 March 31,
$ Write-down 2009
Coromandel 792 - 792
Serra da Canastra 700 - 700
Total 1,492 - 1,492
(Restated-note 2)
December
31, 2007 December 31,
$ Write-down 2008
Coromandel (a) 1,585 (793) 792
Patos de Minas (b) 312 (312) -
Serra da Canastra
(c) 1,400 (700) 700
Salvador 1 (d) 466 (466) -
Total 3,763 (2,271) 1,492
7. INTANGIBLE ASSETS
Data Sets
December 31, March 31,
2008 Amortization Write-down 2009
$ $ $ $
Data Sets 264 (7) - 257
(Restated-note
2)
December 31, December 31,
2007 Amortization Write-down 2008
$ $ $ $
Data Sets 2,115 (268) (1,583) 264
8. CAPITAL STOCK
a) Authorized
Unlimited common shares without par value
Number of Capital Contributed
shares stock surplus
Balance - December 31,
2007 168,413,722 $ 92,848 $ 2,817
Private placement (i) 25,957,000 2,596 -
Less: Share issue costs - (118) -
Fair value of warrants
expired - - 519
Balance - December 31,
2008 and March 31, 2009 194,370,722 $ 95,326 $ 3,336
i. On March 26, 2008, the Company issued 25,957,000 common shares at
a price of $0.10 per share for net proceeds of $2,478,000.
b) Incentive stock options
A summary of the changes in the Company's stock options for the
period ended is set out below:
March 31, 2009 December 31, 2008
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
outstanding per share outstanding per share
Opening
balance 6,950,000 $ 0.39 10,950,000 $ 0.37
Expired (50,000) 0.65 (4,000,000) 0.34
Ending
balance 6,900,000 $ 0.38 6,950,000 $ 0.39
The following table summarizes information about stock options
outstanding and exercisable at March 31, 2009:
Number of Stock Options Exercise Price Expiry Date
2,875,000 0.45 October 26, 2009
2,175,000 0.41 April 5, 2011
1,750,000 0.25 July 12, 2012
100,000 0.25 October 12, 2012
6,900,000 $ 0.38
9. Segmented information
The Company operates in one operating segment being the exploration
and development of mineral properties located in Brazil. The
Company's head office is located in Canada. Geographical locations
are as follows:
(Restated-note 2)
Three months Three months
ended ended
March 31, March 31,
2009 2008
(Gain) Loss for the period
Canada $ 199 $ 279
Brazil 148 821
Other 8 (116)
$ 355 $ 984
Identifiable assets
Canada $ 73 $ 576
Brazil 2,681 7,379
Other 103 584
$ 2,857 $ 8,539
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