BRAZILIAN DIAMONDS LIMTIED
("Brazilian Diamonds" or "the Company")
HALF YEAR RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2009
The continuing uncertainty in international capital markets has had a
demonstrable and negative impact on the ability of junior resource
exploration companies to finance their activities. As at June 30,
2009, the Company has a net working capital deficiency. In order to
manage liquidity requirements, the Company is reviewing its plans for
future activities which may require the further sale or disposal of
assets, the relinquishment of exploration licenses, suspension or
termination of exploration activities and/or the search for joint
venture partners as part of a rationalisation plan to meet the
challenges posed by this difficult environment. The Company is
waiting for the completion of the sale of its wholly owned
subsidiary, Cobre Sul Mineracao Ltda., subsequent to the quarter end.
To conserve its cash reserves, the Company's projects are currently
on care and maintenance.
The Company remains encouraged by the publication of the Brazilian
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 which excludes the Company's projects in the Serra
da Canastra region from any new proposed 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 and is maintaining them in good standing
while waiting for the trial mining permits. The Company hopes to
commence trial mining at its Canastra 1 project once the bill has
final approval. To conserve cash reserves, the projects in the Serra
da Canastra region have been placed 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. To conserve cash
reserves, the Santo Antonio do Bonito River project has been placed
on care and maintenance.
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.
Enquiries:
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 six months ended June 30, 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 August 24, 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.
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 TSX Venture Exchange and
Alternative Investment Market ("AIM") of the London Stock Exchange
under the symbol BDY.
Corporate Developments
As at June 30, 2009, the Company owes $142,000 (June 30, 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 June 22, 2009 at the close of market, the Company's shares were
delisted from the TSX. The Company's shares commenced trading on the
TSX Venture Exchange at the opening of the market on June 23, 2009
under the trading symbol "BDY".
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 pink diamond valued at $398,000
($350,000USD) was received June 17, 2009 as payment for the first
installment. The Company is in the process of selling the pink
diamond. 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 or in cash. As at August 24, 2009, the balance of $516,000
($400,000 USD) was outstanding. The Company is in discussion with
the purchasers to ensure the sale will be completed as soon as
possible.
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 was received in June 2009.
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 June 30, 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 June 30, 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 Mineração Ltda. was written down to reflect
the sale proceeds subsequent to the period ending June 30, 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 during
the period ended June 30, 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
Second Quarter
The loss for the three months ended June 30, 2009 was $248,000 as
compared to a loss of $1,071,000 (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 $699,000, amortization
expenses of $43,000 and corporate administrative services of
$21,000. Increase in expenses over same period last year is due
mainly to an increase in office costs of $43,000 and foreign exchange
loss of $70,000. The Company also recognized a gain on sale of
assets of $150,000.
Cash and cash equivalent balances increased by $75,000 to $84,000 at
June 30, 2009. At June 30, 2009, the Company had a working capital
deficiency $560,000 (2008 - net working capital of $1,041,000).
Year-to-date
The loss for the six months ended June 30, 2009 was $603,000 as
compared to a loss of $2,055,000 (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 $1,319,000, amortization
expenses of $117,000, regulatory expenses of $29,000, investor
relations of $51,000 and travel expenses of $23,000. Increase in
expenses over same period last year is due mainly to an increase in
office costs of $60,000 and foreign exchange loss of $78,000. The
Company also recognized a gain on sale of assets of $156,000.
Cash and cash equivalent balances increased by $1,000 to $84,000 at
June 30, 2009. At June 30, 2009, the Company had a working capital
deficiency $560,000 (2008 - net working capital of $1,041,000).
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.
June
($000) 30, Restated Restated Restated Restated Restated
Mar.31, Dec.31, Sept.30, June 30, Mar.31, Dec.31, Sept.30,
2009 2009 2008 2008 2008 2008 2007 2007
Financial
results
Net
loss(income)
for period 248 1,065 355 1,065 4,845 1,065 1,071 984
Comprehensive
(income)
loss (22) (34) (28) 231 120 367 (9) 317
Basic and
diluted loss
(income) per
hare 0.00 0.00 0.02 0.01 0.00 0.01 0.01 0.01
Exploration
costs 107 89 272 666 806 709 1,000 554
Balance sheet
data
Cash and
short term
deposits 84 226 9 226 83 226 1,039 701
Resource
properties 1,492 1,492 1,492 3,763 3,763 3,763 3,763 3,763
Total
assets 3,030 2,857 2,945 7,505 8,730 8,539 8,835 9,015
Shareholders'
equity 1,671 1,897 2,218 7,035 8,337 8,064 8,395 8,395
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).
For the three months ended June 30, 2009, the Company incurred a net
loss of $248,000 (June 30, 2008 - $1,071,000 (restated)). For the
six months ended June 30, 2009, the Company incurred a net loss of
$603,000 (June 30, 2008 - $2,055,000 (restated)). At June 30, 2009,
the Company had a net working capital deficiency of $560,000 (June
30, 2008 - net working capital of $1,041,000). The Company is waiting
for the completion of the sale of its wholly owned subsidiary, Cobre
Sul Mineracao Ltda, through which the Company holds the Santo Antonio
do Bonito alluvial diamond projects for gross proceeds of
approximately $1.0 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
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 pink diamond valued at $398,000
($350,000USD) was received June 17, 2009 as payment for the first
installment. The Company is in the process of selling the pink
diamond. 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 or in cash. As at August 24, 2009, the balance of $516,000
($400,000 USD) was outstanding. The Company is in discussion with
the purchasers to ensure the sale will be completed as soon as
possible.
Contractual Commitments
Except as outlined below, the Company has no other contractual
commitments.
2009 2010 2011 Total
Photocopier leases $ 4 $ 9 $ 1 $ 14
Off Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements.
Transactions with Related Parties
During the period June 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 49,000 109,000
(a))
Deposits made (note (c)) 44,000 81,000
Hamilton Capital Partners Limited ("HCPL") -
Kenneth Judge
(director)
Accrued consulting fees and office rent 83,000 87,000
Sale of Hidefield shares - 185,000
Massif Limited - Stephen L. Fabian
Accrued management fees - (note (d)) 73,000 60,000
Lang Michener - David Cowan (partner)
Paid or accrued legal fees - (note (e)) 7,000 11,000
Itapiruba Internacional Ltda. - subsidiary of HCPL
Related party demand loan and interest payable 142,000 -
(note (h))
a) The Company pays a monthly corporate administration fee of
approximately $13,400 (January 2009 - $18,400) before any
reimbursements (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 shares 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. During the
six months ended June 30, 2009, the Company paid or accrued
contractual services of $49,000 (2008 - $109,000) to HRG after
reimbursements of $25,000 for investor relations and $11,000 for
corporate administrative services.
b) At June 30, 2009, HRG owed the Company $1,000 (2008 - $4,000) with
normal trade terms.
c) At June 30, 2009, $39,000 (2008 - $81,000) is included in
accounts receivable, prepaids and deposits to HRG for fixed assets
and services.
d) The Company accrued management fees of $73,000 (2008 - $60,000) to
Massif Limited, a company in which Stephen L. Fabian is interested.
e) The Company paid or accrued professional fees of $7,000 (2008 -
$11,000) to a law firm in which David Cowan, director is a partner.
f) The Company owed $44,000 (2008 - $Nil) to directors of the
Company, $129,000 to Massif (2008 - $Nil), $184,000 to HCPL (2008 -
$Nil), $8,000 to Lang Michener (2008 - $Nil) and $43,000 (2008 -
$Nil) to HRG with normal trade terms.
g) The Company owed $142,000 (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 August
24, 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 as of December 31,
2008. 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 June 30, 2008 consolidated financial statements
is as follows:
June 30, 2008 June 30, 2008
As previously Restatement As restated
reported $ $
$
Intangible assets - 1,981 1,981
Mineral properties 23,152 (19,389) 3,763
Property, plant and 1,173 1,173
equipment
For the six months ended
June 30, 2008
Amortisation - 167 167
Exploration costs - 1,515 1,515
Loss for the period (3,393) 1,338 (2,055)
Loss per share (0.02) 0.01 (0.01)
Deficit at June 30, 2008 (74,229) (16,043) (90,272)
* 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 June
30, 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 June 30, 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 June 30, 2009 that have materially
affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
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.
Other information
Additional information is available on the Company's website at
www.braziliandiamonds.com or on SEDAR at www.sedar.com.
Consolidated
Balance Sheet
(expressed in
thousands of
Canadian
Dollars) June 30 December 31
(unaudited) 2009 2008
$ $
Assets
Current assets
Cash and cash
equivalents 84 83
Accounts
receivable,
prepaids and
deposits 614 204
Due from
related parties 1 11
699 298
Investments 124 68
Intangible
assets 251 264
Property, plant
and equipment 464 823
Mineral
properties 1,492 1,492
3,030 2,945
Liabilities
Current
liabilities
Accounts
payable and
accrued
liabilities 311 309
Due to related
parties 550 318
Deposits 398 -
1,259 627
Asset
retirement
obligation 100 100
1,359 727
Shareholders'
Equity
Capital stock 95,326 95,326
Contributed
surplus 3,336 3,336
Deficit (96,785) (96,182)
Accumulated
other
comprehensive
loss (206) (262)
1,671 2,218
3,030 2,945
Nature of
Operations and
Going Concern
(note 1)
Consolidated Statements
of Loss and Deficit
(expressed in thousands
of Canadian dollars, (Restated- (Restated-
except per share note 2) note 2)
amounts) Three Three Six Six
(unaudited) months months months months
ended June ended ended ended
30, June 30, June 30, June 30,
2009 2008 2009 2008
Expenses
Amortization $ 22 $ 65 $ 50 $ 67
Corporate administrative
services 1 22 16 39
Consultants 50 55 98 107
Exploration costs 107 806 196 1,515
Foreign exchange loss
(gain) 48 (22) 56 (22)
Insurance 1 10 12 23
Interest 8 (3) 8 (4)
Investor relations (17) (2) (4) 47
Legal and audit 39 32 70 64
Office costs 73 30 140 80
Regulatory 29 40 45 74
Salaries and management
fees 36 30 73 60
Travel 1 8 (1) 22
Loss before other items (398) (1,071) (759) (2,172)
Other income (expenses)
Unrealized gain on
Hidefield options - - - 19
Gain on sale of
investments - - - 98
Gain on sale of assets 150 - 156 -
Loss for the period (248) (1,071) (603) (2,055)
Deficit - Beginning of
period (96,537) (89,201) (96,182) (88,217)
$
Deficit - End of period $ (96,785) $ (90,272) 96,785) $ (90,272)
Earnings (Loss) per
common share
Basic and diluted $ 0.00 $ 0.00 $ 0.00 $ (0.01)
Weighted average common shares outstanding
(000's)
Basic and diluted 194,371 194,371 194,371 182,248
Consolidated Statements of
Comprehensive Loss
(expressed in thousands of (Restated-
Canadian dollars) note 2) (Restated-
(unaudited) Three Three Six note 2)
months months months Six months
ended ended June ended ended
June 30, 30, June 30, June 30,
2009 2008 2009 2008
Loss for the period $ (248) $ (1,071) $ (603) $ (2,055)
Other comprehensive gain
(loss)
Unrealized gain (loss) on
available-for-sale
securities (note 4(a)) 22 (120) 56 (487)
Comprehensive loss for the
period $ (226) $ (1,191) $ (547) $ (2,542)
Consolidated Statements of Changes in
Shareholders' Equity
(expressed in thousands of Canadian December 31,
dollars) June 30, 2008
(unaudited) 2009 $
$ (audited)
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
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 (603) (7,965)
Balance - end of period (96,785) (96,182)
Accumulated other comprehensive income
(loss)
Balance - beginning of period (262) 428
Unrealized gain (loss) on
available-for-sale securities 56 (690)
Balance - end of period (206) (262)
Total Shareholders' Equity 1,671 2,218
Consolidated Statements
of Cash Flows
(expressed in thousands
of Canadian dollars) (Restated-
Three note 2) Six (Restated-
months Three months months note 2)
ended ended ended Six months
June 30, June 30, June 30, ended June
2009 2008 2009 30, 2008
Cash flows from
operating activities
Loss for the period $ (248) $ (1,071) $ (603) $ (2,055)
Adjustments for non-cash
charges
Amortization 22 65 50 167
Gain on sale of
investments - - - (98)
Gain on sale of assets (150) - (156) -
Unrealized fair value
of Hidefield options - - - (19)
Foreign exchange loss 58 - 58 -
Changes in non-cash
working capital
Increase in accounts
receivable, prepaids and
deposits (418) (41) (410) (66)
Decrease due from
related parties 4 3 10 13
Increase (decrease) in
accounts payable and
accrued liabilities (21) (82) 2 (28)
Increase due to
related parties 22 - 232 -
Increase deposits 398 - 398 -
(333) (1,126) (419) (2,086)
Cash flows from
financing activities
Issue of shares for
private placement - - - 2,596
Subscription receivable - 1,436 - -
Share issue costs - 28 - (112)
- 1,464 - 2,484
Cash flows from
investing activities
Proceeds from disposal
of property, plant and
equipment 408 - 420 -
Proceeds from exercise
of HIF options and
shares - - - 185
408 - 420 185
Increase in cash and
cash equivalents 75 338 1 583
Cash and cash
equivalents - beginning
of period 9 701 83 456
Cash and cash
equivalents - end of
period $ 84 $ 1,039 $ 84 $ 1,039
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.
For the three months ended June 30, 2009, the Company incurred a net
loss of $248,000 (June 30, 2008 - $1,071,000 (restated)). For the
six months ended June 30, 2009, the Company incurred a net loss of
$603,000 (June 30, 2008 - $2,055,000 (restated)). At June 30, 2009,
the Company had a net working capital deficiency of $560,000 (June
30, 2008 - net working capital of $1,041,000). The Company is waiting
for the completion of the sale of its wholly owned subsidiary, Cobre
Sul Mineracao Ltda., through which the Company holds the Santo
Antonio do Bonito alluvial diamond projects for gross proceeds of
approximately $1.0 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:
June 30, 2008 June 30, 2008
As previously Restatement As restated
reported $ $
$
Intangible assets - 1,981 1,981
Mineral properties 23,152 (19,389) 3,763
Property, plant and 1,173 1,173
equipment
For the six months ended
June 30, 2008
Amortisation - 167 167
Exploration costs - 1,515 1,515
Loss for the period (3,393) 1,338 (2,055)
Loss per share (0.02) 0.01 (0.01)
Deficit at June 30, 2008 (74,229) (16,043) (90,272)
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"),
Mineração do Sul Ltda. ("Mineração"), and Parimá Mineraçáo Ltda.
("Parimá"); Game Creek Company Ltd. ("Game Creek")and its
subsidiaries, principally Samsul Mineração Ltda. ("Samsul") and Cobre
Sul Mineração 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, Mineração, Parimá 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
June 30, 2009
Number of Carrying Fair
Shares Value Value % Holding
Available-for-sale investments
(a)
Hidefield Gold plc 7,625,000 $ 331 $ 124 2.26%
December 31, 2008
Number of Carrying Fair
Shares Value 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
Cost Acquisition Accumulated June 30, 2009
$ (Disposition) Amortisation Net
$ $ $
Heavy equipment 253 (5) (237) 11
Vehicles 231 (36) (175) 20
Building 438 (284) - 154
Furniture and fixtures 213 (1) (211) 1
Machine and equipment 651 (15) (586) 50
Plant 289 - (219) 70
Computers 165 (10) (153) 2
Computers software 39 - (39) -
Land 156 - - 156
Leasehold improvements 27 - (27) -
2,462 (351) (1,647) 464
Cost Accumulated Write- December 31,
$ Amortization down 2008 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 Write- June 30,
$ down 2009
Coromandel 792 - 792
Serra da Canastra 700 - 700
Total 1,492 - 1,492
(Restated-
note 2)
December 31,
2007 Write- December 31,
$ 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, Write- June 30,
2008 Amortization down 2009
$ $ $ $
Data Sets 264 (13) - 251
(Restated-note 2) December
December 31, Write- 31,
2007 Amortization 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 June 30, 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:
June 30, 2009 December 31, 2008
Weighted
average
Number of Weighted average Number of exercise
options exercise price per options price per
outstanding share outstanding 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 June 30, 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)
Six months ended Six months ended
June 30, June 30,
2009 2008
(Gain) Loss for the period
Canada $ 352 $ 499
Brazil 237 1,672
Other 14 (116)
$ 603 $ 2,055
Identifiable assets
Canada $ 68 $ 940
Brazil 2,838 7,325
Other 124 465
$ 3,030 $ 8,730
---END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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