ROXGOLD INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2011
(unaudited)
NOTICE OF NO AUDITOR REVIEW OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements of the Company have been
prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in
accordance with standards established by the Canadian Institute of Chartered Accountants for a review of
interim financial statements by an entity’s auditor.
ROXGOLD INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED BALANCE SHEETS
(unaudited)
October 31,
2010
January 31,
2011
ASSETS
Current
Cash and cash equivalents
HST recoverable and other receivables
Prepaid expenses and advances
$
1,561,559
36,458
18,079
$
2,068,706
2,638
2,971,128
1,616,096
2,440
3,646,931
Equipment – net of accumulated amortization of $198; 2010 - $nil
Mineral properties – Note 4 and Schedule 1
2,043,523
17,329
7,854
$
5,265,467
$
5,042,472
$
421,603
$
133,836
LIABILITIES
Current
Accounts payable and accrued liabilities – Note 6
Future income tax liability
421,603
778,000
133,836
778,000
1,199,603
911,836
13,909,806
2,196,653
(12,040,595)
13,663,689
1,646,376
(11,179,429)
4,065,864
4,130,636
SHAREHOLDERS’ EQUITY
Share capital – Note 5
Contributed surplus – Note 5
Deficit
$
5,265,467
$
5,042,472
Nature of Operations and Ability to Continue as a Going Concern - Note 1
Commitments – Notes 4, 5 and 11
Subsequent Events – Notes 5 and 11
APPROVED BY THE DIRECTORS
“Robert Sibthorpe”
Robert Sibthorpe
Director
“Rick Mazur”
Rick Mazur
Director
ROXGOLD INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
for the three months ended January 31, 2011 and 2010
(unaudited)
2010
2011
General and administrative expenses
Accounting and audit fees – Note 6
Amortization
Bank charges and interest
Legal fees
Management fees, salaries and benefits – Note 6
Office and miscellaneous
Regulatory and transfer agent fees
Stock-based compensation – Note 5
Travel and accommodation
$
Loss for the period before other items
Other income (expense) items
Interest and other income
Gain on forgiveness of debt – Note 6
General exploration – Note 6
20,778 $
198
771
17,474
21,069
49,784
4,454
721,444
27,834
17,147
1,086
39
14,571
18,908
6,397
978
-
(863,806)
(59,126)
3,781
(1,141)
61,515
(6,605)
Net loss and comprehensive loss for the period
$
(861,166) $
(4,216)
Basic and diluted loss per share
$
(0.02) $
(0.00)
Weighted average number of shares outstanding
34,532,610
11,665,198
ROXGOLD INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended January 31, 2011 and 2010
(unaudited)
2010
2011
Operating Activities
Net loss for the period
Add (deduct) items not involving cash:
Amortization
Gain on forgiveness of debt
Stock-based compensation
$
(861,166) $
(4,216)
198
721,444
1,086
(61,515)
-
(139,524)
(64,645)
(19,129)
(10,225)
9,147
1,326
993
59,846
(159,731)
(2,480)
(397,183)
(4,379)
(397,183)
(4,379)
74,950
-
74,950
-
Decrease in cash and cash equivalents during the period
(481,964)
(6,859)
Cash and cash equivalents, beginning of the period
2,043,523
12,350
Changes in non-cash working capital items related to operations:
HST recoverable and other receivables
Prepaid expense and advances
Accounts payable and accrued liabilities
Investing Activities
Deferred exploration expenditures
Financing Activities
Issuance of securities, net of issue costs
Cash and cash equivalents, end of the period
$
1,561,559 $
5,491
Cash and cash equivalents is comprised of:
Cash
Short-term investments
$
294,309 $
1,267,250
5,491
-
$
1,561,559 $
5,491
$
$
- $
- $
-
Supplemental disclosure of cash flow information:
Cash paid for:
Interest
Income taxes
Non-cash Transactions – Note 8
ROXGOLD INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
for the three months ended January 31, 2011 and 2010
(unaudited)
Issued Share Capital
Number of
Shares
Balance, October 31, 2009
Net loss for the period
Contributed
Surplus
Amount
11,628,524 $ 9,578,550 $ 1,285,905
Deficit
Total
Shareholders’
Equity
$(8,557,382) $ 2,307,073
-
-
-
(4,216)
(4,216)
Balance, January 31, 2010
11,628,524
9,578,550
1,285,905
(8,561,598)
2,302,857
Balance, October 31, 2010
34,325,758
13,663,689
1,646,376
(11,179,429)
4,130,636
249,834
-
74,950
171,167
-
(171,167)
721,444
-
(861,166)
74,950
721,444
(861,166)
Issued during the period:
Pursuant to exercise of options
Transfer of value on exercise of options
Stock-based compensation
Net loss for the period
Balance, January 31, 2011
34,575,592 $ 13,909,806 $ 2,196,653 $(12,040,595) $ 4,065,864
SEE ACCOMPANYING NOTES
ROXGOLD INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three months ended January 31, 2011
(unaudited)
Note 1
Nature of Operations and Ability to Continue as a Going Concern
Roxgold Inc. (the “Company”) is in the business of acquiring, exploring and evaluating mineral
properties, and either joint venturing or developing these properties further or disposing of them
when the evaluation is completed. The Company is listed for trading on the TSX Venture Exchange
(the “TSXV”) under the symbol “ROG.” At January 31, 2011, the Company was in the exploration
stage and had interests in properties located in Canada and Burkina Faso, West Africa.
On October 27, 2010, the Company acquired all of the issued and outstanding common shares of
0877148 BC Ltd., a private British Columbia Company (“PrivateCo”) (Note 3). The consolidated
financial statements include the results of operations of PrivateCo from October 28, 2010.
The Company is currently exploring its mineral properties and has not yet determined the existence
of economically recoverable reserves. The recoverability of amounts shown for mineral properties
is dependent upon the existence of economically recoverable reserves in its mineral properties,
confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company
to obtain the necessary financing to complete its development, and the attainment and
maintenance of future profitable production or disposition thereof.
These consolidated financial statements have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which assumes that the Company will be able to
meet its obligations and continue its operations for the next fiscal year. Realization values may be
substantially different from carrying values as shown and these financial statements do not give
effect to adjustments that would be necessary to the carrying values and classification of assets and
liabilities should the Company be unable to continue as a going concern. At January 31, 2011, the
Company had not yet achieved profitable operations, had accumulated losses of $12,040,595 since
inception and expects to incur further losses in the development of its business. The Company’s
ability to continue as a going concern is dependent upon its ability to generate future profitable
operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due.
Note 2
Significant Accounting Policies
These unaudited interim consolidated financial statements have been prepared by the Company in
accordance with Canadian generally accepted accounting principles, following accounting policies
consistent with the Company’s audited consolidated financial statements and notes thereto for the
year ended October 31, 2010. These consolidated financial statements do not include all the
disclosures required by generally accepted accounting principles for annual financial statements and
should be read in conjunction with the most recent audited consolidated financial statements of the
Company. Because a precise determination of many assets and liabilities is dependent upon future
events, the preparation of financial statements for a period necessarily involves the use of estimates
which have been made using careful judgement. Actual results may vary from these estimates.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 2
Note 2
Significant Accounting Policies – (cont’d)
These consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries, Wave Mining Inc., a company incorporated under the laws of the State of Nevada,
U.S.A., and 0877148 BC Ltd., a company incorporated under the laws of the Province of British
Columbia, Canada.
Recently Adopted Accounting Pronouncements
Business combinations, consolidated financial statements and non-controlling interest
Effective November 1, 2010, the Company adopted CICA Handbook Section 1582, “Business
Combinations”, Section 1601, “Consolidated Financial Statements”, and Section 1602, “Noncontrolling Interests”. These sections replace the former CICA Handbook Section 1581, “Business
Combinations” and Section 1600, “Consolidated Financial Statements” and establish a new section
for accounting for a non-controlling interest in a subsidiary.
CICA Handbook Section 1582 establishes standards for the accounting for a business combination
and states that all assets and liabilities of an acquired business will be recorded at fair value.
Obligations for contingent consideration and contingencies will also be recorded at fair value at the
acquisition date. The standard also states that acquisition-related costs will be expensed as incurred
and that restructuring charges will be expensed in the periods after the acquisition date. It provides
the Canadian equivalent to International Financial Reporting Standard (“IFRS”) 3, “Business
Combinations” (January 2008).
CICA Handbook Section 1601 establishes standards for the preparation of consolidated financial
statements.
CICA Handbook Section 1602 establishes standards for accounting for a non-controlling interest in a
subsidiary in the preparation of consolidated financial statements subsequent to a business
combination. It is equivalent to the corresponding provisions of International Financial Reporting
Standard IAS 27, “Consolidated and Separate Financial Statements” (January 2008).
To date there has been no impact on the Company’s consolidated financial statements as a result of
the adoption of these sections.
Recent Accounting Pronouncements
i)
International Financial Reporting Standards (“IFRS”)
In 2006, 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 Canada’s own GAAP.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 3
Note 2
Significant Accounting Policies – (cont’d)
The date is for interim and annual financial statements relating to fiscal years beginning on or
after January 1, 2011. The transition date of November 1, 2011 will require the restatement for
comparative purposes of amounts reported by the Company for the year ended October 31,
2011. 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.
Note 3
Acquisition of PrivateCo
By an agreement dated August 6, 2010, effectively closed on October 27, 2010, the Company
acquired 100% of the issued and outstanding shares of PrivateCo in consideration for the issuance of
5,625,000 common shares of the Company (the “Acquisition”). The Company issued 250,000
common shares to a third party as a finders’ fee in connection with the Acquisition. The aggregate
5,875,000 common shares issued were valued at the fair value on the date of TSXV approval, $0.335
per common share, for an aggregate fair value of $1,968,125.
The transaction has been accounted for using the purchase method of accounting as an acquisition
of assets by the Company. The allocation of the purchase price is based on the assets acquired,
measured at the fair values at the date of the Acquisition. The allocation of the purchase price to
the net assets acquired is as follows:
Cash
HST recoverable
Other assets
Equipment
Mineral properties
Accounts payable and accrued liabilities
Future income tax liabilities
$
33,356
10,556
7,854
2,638
2,740,128
(32,218)
(778,000)
Fair value of net assets acquired
$
1,984,314
$
1,884,375
83,750
16,189
$
1,984,314
Consideration paid:
Value of common shares issued
Value of common shares issued as a finders’ fee
Transaction fees
Total consideration paid
Transactions undertaken by PrivateCo are included in the consolidated financial statements from
October 28, 2010.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 4
Note 4
Mineral Properties – Schedule 1
Title to mineral properties involves certain inherent risks due to the difficulties of determining the
validity of certain claims as well as the potential for problems arising from the frequently ambiguous
conveyancing history characteristic of many mineral properties. The Company has investigated title
to all of its mineral properties and, to the best of its knowledge, title to all of its properties is in good
standing.
Solna, Bissa West and Yaramoko Properties, Burkina Faso, Africa
Pursuant to the acquisition of PrivateCo (Note 3), the Company acquired all rights and obligations
that PrivateCo had with respect to agreements it had previously entered into. On July 5, 2010,
PrivateCo entered into three separate option agreements with Riverstone Resources Inc.
(“Riverstone”) to acquire a 60% interest in three gold properties located in Burkina Faso, West
Africa. The three properties acquired are as follows: the Solna Property located in the Province of
Yahga, the Bissa West Property located in the Province of Passoré, and, the Yaramoko Property
located in the Province of Basle.
Consideration to earn a 60% interest in the Solna and Yaramoko properties is as follows:
i)
make cash payments of $90,000 (aggregate of $180,000) and issue 360,000 common shares
(aggregate of 720,000 common shares) of the Company as to:
A. 200,000 common shares (aggregate of 400,000 common shares) on closing of the
acquisition of PrivateCo (issued at the aggregate fair value of $154,000 on October 27,
2010);
B. $30,000 (aggregate of $60,000) and an additional 60,000 common shares (aggregate of
120,000 common shares) on or before July 5, 2011;
C. an additional $60,000 (aggregate of $120,000) and 100,000 common shares (aggregate of
200,000 common shares) on or before July 5, 2012.
ii) conduct work programs of $1,500,000 (aggregate of $3,000,000) as to:
A. $350,000 (aggregate of $700,000) on or before July 5, 2011;
B. an additional $500,000 (aggregate of $1,000,000) on or before July 5, 2012; and,
C. an additional $650,000 (aggregate of $1,300,000) on or before July 5, 2013.
Consideration to earn a 60% interest in the Bissa West property is as follows:
i)
make cash payments of $90,000 and issue 360,000 common shares of the Company as to:
A. 200,000 common shares on closing of the acquisition of PrivateCo (issued at the fair value of
$77,000 on October 27, 2010);
B. $90,000 and an additional 60,000 common shares on or before July 5, 2011; and,
C. an additional 100,000 common shares on or before July 5, 2012.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 5
Note 4
Mineral Properties – Schedule 1 – (cont’d)
ii) conduct work programs of $1,500,000 as to:
A. $350,000 on or before July 5, 2011; and,
B. an additional $1,150,000 on or before July 5, 2012.
Riverstone is the operator of exploration activities on the Solna, Bissa West and Yaramoko
Properties. Riverstone will receive operator fees of 5% on all exploration expenditures incurred by
the Company, except for expenditures incurred internally by Riverstone, which will be subject to
operator fees of 10%.
Note 5
Share Capital
a) Authorized:
Unlimited common shares without par value
b) Share Consolidation:
Effective April 27, 2010, the Company consolidated its common shares on the basis of one new
common share for every three old common shares issued and outstanding at that time. The
consolidation of share capital has been reflected in the financial statements for the three
months ended January 31, 2011 and 2010. All references to share and per share amounts have
been retroactively restated to reflect the share consolidation.
c) Escrow:
Pursuant to the terms of the acquisition of the TJ Ridge Property, 1,500,000 common shares
were issued by the Company and placed in escrow, subject to an escrow agreement (“the
Escrow Agreement”). At October 31, 2010, 750,000 shares remained in escrow. Pursuant to the
terms of the Escrow Agreement, shares are to be released from escrow as to 150,000 shares on
January 23, 2011 with a further 150,000 escrow shares to be released every six months
thereafter. Pursuant to the terms of the Escrow Agreement and the write-off of the TJ Ridge
Property during the year ended October 31, 2010, the Company did not release the 150,000
escrow shares on January 23, 2011.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 6
Note 5
Share Capital – (cont’d)
d) Commitments:
i)
Stock-based Compensation Plan
The Company has a stock option plan whereby the maximum number of shares reserved for
issue under the plan shall not exceed 10% of the outstanding common shares of the
Company, as at the date of the grant. The maximum number of common shares reserved
for issue to any one person under the plan cannot exceed 5% of the issued and outstanding
number of common shares at the date of the grant and the maximum number of common
shares reserved for issue to a consultant or a person engaged in investor relations activities
cannot exceed 2% of the issued and outstanding number of common shares at the date of
the grant. The exercise price of each option granted under the plan may not be less than
the Discounted Market Price (as that term is defined in the policies of the TSXV). Options
may be granted for a maximum term of five years from the date of the grant, are nontransferable and expire within 90 days of termination of employment or holding office as
director or officer of the Company and, in the case of death, expire within one year
thereafter. Upon death, the options may be exercised by legal representation or designated
beneficiaries of the holder of the option.
Changes in share purchase options during the three months ended January 31, 2011 are as
follows (adjusted for the three for one share consolidation effected on April 29, 2010):
Number of
Options
Weighted
Average
Exercise Price
Weighted
Average Life
(Years)
516,667
2,383,000
(249,834)
(166)
$0.30
$0.35
$0.30
$0.30
1.64
2,649,667
2,599,667
$0.34
$0.34
4.43
4.52
Balance outstanding, October 31, 2010
Granted
Exercised
Forfeited
Balance outstanding, January 31, 2011
Balance exercisable, January 31, 2011
(1)
(1)
A further 12,500 share purchase options vest on each of February 8, 2011, May 8, 2011,
August 8, 2011 and November 8, 2011.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 7
Note 5
Share Capital – (cont’d)
At January 31, 2011, the following share purchase options were outstanding entitling the
holder thereof the right to purchase one common share for each option held:
Number
166,667
50,000
50,000
2,383,000
Exercise
Price
$0.30
$0.30
$0.30
$0.35
Expiry Date
March 21, 2012
March 25, 2012
July 7, 2013
November 8, 2015
2,649,667
During the three months ended January 31, 2011, the Company recorded stock-based
compensation expense of $721,444 (three months ended January 31, 2010 - $nil). The
weighted average fair value of share purchase options granted during the three months
ended January 31, 2011 was $0.31 (three months ended January 31, 2010 - $nil). During the
three months ended January 31, 2011, the grant date fair value was estimated using the
Black-Scholes option pricing model with the following assumptions: risk-free rate – 1.98%;
expected life – 5 years; expected volatility – 131%; and expected dividends – nil.
ii) Share Purchase Warrants
Changes in share purchase warrants during the three months ended January 31, 2011 are as
follows (adjusted for the three for one share consolidation effected on April 29, 2010):
Number of
Warrants
Weighted
Average
Exercise Price
Weighted
Average Life
(Years)
Balance, October 31, 2010
17,390,000
$0.25
1.91
Balance, January 31, 2011
17,390,000
$0.25
1.66
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 8
Note 5
Share Capital – (cont’d)
At January 31, 2011, the following share purchase warrants were outstanding entitling the
holder thereof the right to purchase one common share for each warrant held:
Number
(1)
826,667
133,333
(2)
16,430,000
Exercise
Price
$0.30
$0.30
$0.25
Expiry Date
May 5, 2011
August 31, 2011
October 27, 2012
17,390,000
(1)
(2)
Note 6
Subsequent to January 31, 2011, 116,666 of these share purchase warrants were
exercised for gross proceeds of $35,000.
Subsequent to January 31, 2011, 1,929,625 of these share purchase warrants were
exercised for gross proceeds of $482,406.
Related Party Transactions
The Company incurred the following expenditures during the three months ended January 31, 2011
and 2010 that were charged by directors and officers of the Company, and companies with common
directors.
2010
2011
Accounting fees
General exploration
Management fees
Mineral property costs
Field expenses and other
Geological consulting
$
10,778
10,718
$
800
1,600
21,182
$
42,678
6,588
2,400
18,500
$
29,888
These expenditures were measured by the exchange amount which is the amount agreed upon by
the transacting parties.
Included in accounts payable and accrued liabilities as at January 31, 2011 is $16,225 (October 31,
2010 - $2,788) due to a director of the Company, a company controlled by a director of the
Company and a former director of the Company.
During the three months ended January 31, 2010, the Company recorded a gain on forgiveness of
debt of $61,515 as the Company wrote-off $61,515 due to a former director which was disputed by
the Company.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 9
Note 7
Financial Instruments
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, other receivables and
accounts payable and accrued liabilities. The Company designated its cash and cash equivalents as
held-for-trading which are measured at fair value. Other receivables are designated as loans and
receivables, which are measured at amortized costs. Accounts payable and accrued liabilities are
designated as other financial liabilities, which are measured at amortized cost.
The Company’s cash and cash equivalents are measured at fair value. The Company classifies the
fair value of these transactions according to the following fair value hierarchy based on the amount
of observable inputs used to value the instrument.
•
Level 1 – Values based on unadjusted quoted prices available in active markets for identical
assets or liabilities as of the reporting date.
•
Level 2 – Level 2 valuation is based on inputs, including quoted forward prices for commodities,
time value and volatility factors, which can be substantially observed or corroborated in the
marketplace. Prices in Level 2 are either directly or indirectly observable as of the reporting
date.
•
Level 3 – Values based on prices or valuation techniques that are not based on observable
market data.
The value of cash and cash equivalents has been assessed based on the fair value hierarchy
described above and is classified as Level 1. Assessment of the significance of a particular input to
the fair value measurement requires judgment and may affect the placement within the fair value
hierarchy.
Discussions of risks associated with financial assets and liabilities are detailed below:
Foreign Exchange Risk
As at January 31, 2011, the Company did not have any financial instruments denominated in foreign
currencies. In connection with the acquisition of PrivateCo on October 27, 2010, the Company will
likely be exposed to transactions denominated in US dollars and Euros based on exploration
activities in Burkina Faso. To date, the Company has not used derivative financial instruments to
reduce its foreign exchange exposure.
Future changes in exchange rates could have a material effect on the Company’s business, financial
condition and results of operations.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 10
Note 7
Financial Instruments – (cont’d)
Credit Risk
Credit risk arises from cash held with banks and financial institutions. The maximum exposure to
credit risk is equal to the carrying value of the financial assets. The majority of the Company’s cash
is held through a major Canadian chartered bank and accordingly, the Company’s exposure to credit
risk is considered to be limited.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Company’s interest bearing financial
instruments are limited to a term deposit and accordingly, the Company had negligible exposure to
interest rate risk.
Commodity Price Risk
The Company’s ability to raise capital to fund exploration or development activities is subject to risks
associated with fluctuations in the market prices of gold and silver.
Liquidity Risk
The Company manages liquidity risk by maintaining sufficient cash balances to enable settlement of
transaction on the due date. Accounts payable and accrued liabilities are all current.
Note 8
Non-cash Transactions
Investing and financing activities that do not have a direct impact on current cash flows are excluded
from the statements of cash flows. During the three months ended January 31, 2011, the following
transactions were excluded from the statement of cash flows:
a) deferred exploration expenditures of $281,408 included in accounts payable and accrued
liabilities at January 31, 2011, less expenditures included in accounts payable at October 31,
2010 of $2,788 (net exclusion of $278,620);
b) the transfer of $171,167, the value of options exercised during the period, from contributed
surplus to share capital.
During the three months ended January 31, 2010, the following transactions were excluded from
the statement of cash flows:
a) deferred exploration expenditures of $147,011 included in accounts payable and accrued
liabilities at January 31, 2009, less expenditures included in accounts payable at October 31,
2008 of $207,125 (net inclusion of $60,114);
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
Three months ended January 31, 2011 (unaudited) – Page 11
Note 9
Segmented Information
The Company’s operations are limited to a single industry segment, being mineral exploration and
development. Geographic segment information of the Company’s assets is as follows:
October 31,
2010
January 31,
2011
Canada
Burkina Faso
$
1,618,536
3,646,931
$
2,071,344
2,971,128
Total assets
$
5,265,467
$
5,042,472
The Company’s loss was confined to the geographic segment of Canada with $nil loss being incurred
in Burkina Faso.
Note 10
Comparative Figures
Certain comparative figures have been reclassified to conform to the current period’s presentation.
Note 11
Subsequent Events
Subsequent to January 31, 2011:
a) the Company granted 200,000 share purchase options to consultants exercisable at $0.25 per
share up to March 1, 2012. The share purchase options vest in four equal tranches of 50,000
stock options on June 1, 2011, September 1, 2011, December 1, 2011 and March 1, 2012; and,
b) certain share purchase warrants were exercised as described in Note 5.
Schedule 1
ROXGOLD INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED SCHEDULE OF MINERAL PROPERTIES
for the three months ended January 31, 2011
(unaudited)
Balance, October 31, 2010
Deferred exploration costs
Drilling
Field expenses and other
Geochemical consulting
Geological consulting – Note 6
Geophysical consulting
Lease, licenses and taxes
Operator fees
Travel and accommodation
Balance, January 31, 2011
Yaramoko,
Burkina
Faso, West
Africa
Solna,
Burkina
Faso, West
Africa
Bissa West,
Burkina
Faso, West
Africa
$
$
$
990,392
990,368
Total
990,368
$ 2,971,128
281,399
45,880
22,018
64,585
38,454
8,050
30,202
42,974
2,911
11,751
67,587
9,655
5,540
425
2,763
4,683
9,564
24,834
2,511
17
281,399
51,554
22,018
81,019
115,605
42,539
38,253
43,416
533,562
97,869
44,372
675,803
$ 1,523,954
$ 1,088,237
$ 1,034,740
$ 3,646,931
(An Exploration Stage Company)
INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
For the Six-Month Periods Ended
April 30, 2011 and 2010
(Unaudited – Prepared by Management)
NOTICE OF NO REVIEW BY AUDITOR
In accordance with National Instrument 51 – 102 Continuous Disclosure Obligations of the
Canadian Securities Administrators WE HEREBY GIVE NOTICE THAT the interim financial
statements that follow this notice have not been reviewed by the Company’s auditors.
2 | P a g e ROXGOLD INC.
Statement 1
(An Exploration Stage Company)
INTERIM CONSOLIDATED BALANCE SHEETS
Unaudited – Prepared by Management
Canadian Funds
April 30,
2011
ASSETS
Current
Cash and cash equivalents
HST recoverable and other receivables
Prepaid expenses and advances
$
Exploration advances
Equipment
Mineral properties – (Note 5 and Schedule 1)
1,763,107
46,218
21,104
1,830,429
October 31, 2010
(Audited)
$
2,043,523
17,329
7,853
2,068,705
2,638
2,971,128
373,845
2,242
3,660,479
LIABILTIES
Current
Accounts payable and accrued liabilities – (Note 7)
Due to related parties - (Note 7)
$
5,866,995
$
5,042,471
$
32,033
22,948
54,981
$
133,836
133,836
Future income tax liability
SHAREHOLDERS’ EQUITY
Share capital – Statement 4 – (Note 6)
Contributed surplus – Options - Statement 4 – (Note 6)
Contributed surplus – Warrants - Statement 4 – (Note 6)
Deficit – Statement 4
$
778,000
778,000
832,981
911,836
15,159,651
1,319,644
772,095
(12,217,376)
13,663,689
749,951
896,424
(11,179,429)
5,034,014
4,130,635
5,866,995
$
5,042,471
Nature of Operations and Going Concern – (Note 1)
Subsequent Events – (Notes 13)
ON BEHALF OF THE BOARD:
“Robert Sibthorpe”
Robert Sibthorpe
Director
“Rick Mazur”
Rick Mazur
Director
The accompanying notes are an integral part of these interim consolidated financial statements
3 | P a g e ROXGOLD INC.
Statement 2
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Unaudited – Prepared by Management
Canadian Funds
For the threemonth period
Ended April 30,
2010
For the threemonth period
Ended April 30,
2011
General and administrative expenses:
Accounting and audit fees
Amortization
Bank charges and interest
Corporate administration fees
Directors fees
Filing fees
Legal fees
Management fees, salaries and benefits
Office and miscellaneous
Regulatory and transfer agent fees
Rent
Stock-based compensation
Travel and accommodation
Wages and salaries
$
Loss for the period before other items
Other income (expense) items:
Interest and other income
Gain on forgiveness of debt
General exploration
Write-down of mineral properties
(1,686)
1,086
13
10,363
8,110
16,494
3,715
6,077
3,000
-
$
42,897
396
1,063
30,000
1,000
24,379
30,017
73,594
4,209
742,000
76,750
18,000
$
15,461
2,172
52
10,363
22,681
35,402
7,112
7,055
6,000
-
180,499
47,172
1,044,305
106,298
(4,537)
819
(3,718)
(2,703)
41,621
38,918
(8,318)
1,960
(6,358)
(2,703)
(61,515)
6,605
41,621
(15,992)
-
(14,000)
-
(14,000)
$
72,090
8,561,598
8,633,688
$
1,037,947
11,179,429
12,217,376
$
76,306
8,557,392
8,633,698
$
0.01
$
0.03
$
0.01
Loss before income taxes
Future income tax recovery
Loss and comprehensive loss for the
period
Deficit – beginning of period
Deficit – end of period
$
176,781
12,040,595
12,217,376
Loss per share – basic and diluted
$
0.00
Weighted average number of shares
outstanding
$
22,119
198
292
30,000
1,000
6,905
8,948
23,810
(245)
20,556
48,916
18,000
For the sixmonth period
Ended April 30,
2010
For the sixmonth period
Ended April 30,
2011
11,665,198
36,247,409
35,376,941
The accompanying notes are an integral part of these interim consolidated financial statements
4 | P a g e 11,665,198
ROXGOLD INC.
Statement 3
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited – Prepared by Management
Canadian Funds
For the threemonth period
Ended April 30,
2010
For the threemonth period
Ended April 30,
2011
Operating Activities
Net loss for the period:
Add (deduct) items not involving cash:
Amortization
Future income tax recovery
Gain on forgiveness of debt
Write-down of mineral properties
Stock-based compensation
Changes in non-cash working capital:
HST recoverable and other
receivables
Prepaid expense and advances
Due to related parties
Accounts payable and accrued
liabilities
Net cash used in operating activities
$
$
(176,781)
(72,090)
For the sixmonth period
Ended April 30,
2010
For the sixmonth period
Ended April 30,
2011
$
(1,037,947)
$
(76,306)
198
20,556
1,086
(14,000)
41,621
-
396
742,000
2,172
(14,000)
(61,515)
41,621
-
(9,759)
(3,025)
22,948
(3,981)
969
-
(28,888)
(13,251)
22,948
(2,665)
1,962
-
(389,570)
(535,433)
37,713
(8,682)
(101,803)
(416,545)
97,559
(11,162)
(373,845)
-
(373,845)
-
Investing Activities
Exploration advances
Mineral property (expenditures)
recovery
Net cash (used in) provided by investing
activities
(13,549)
36,660
(689,352)
32,281
(387,394)
36,660
(1,063,197)
32,281
Financing Activities
Proceeds from exercise of warrants
Proceeds from exercise of options
Net cash provided by financing activities
1,124,375
1,124,375
-
1,120,000
79,326
1,199,326
-
201,548
27,978
(280,416)
21,119
1,561,559
5,491
2,043,523
12,350
Change in Cash and cash Equivalents
Cash and cash equivalents - Beginning
of Period
Cash and cash equivalents - End of
Period
$
$
1,763,107
33,469
$
1,763,107
$
Supplemental Disclosure of Cash Flow Information – (Note 10)
The accompanying notes are an integral part of these interim consolidated financial statements
5 | P a g e 33,469
ROXGOLD INC.
Statement 4
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Unaudited – Prepared by Management
Canadian Funds
Balance – October 31, 2009
Units issued for cash pursuant to
private placement of units
Share issuance costs
Shares issued for debt settlement
Shares issued pursuant to acquisition
of 0877148 BC Ltd.
Shares issued pursuant to mineral
property agreements
Shares issued pursuant to finders’ fee
Shares issued in exchange of
warrants
Fair value reversal on exercise of
warrants
Future income tax on renouncement
of flow-through shares
Net loss for the year
Balance - October 31, 2010
Issued pursuant to exercise of
warrants
Issued pursuant to exercise of
warrants
Fair value reversal on exercise of
warrants
Fair value reversal on exercise of
options
Stock-based compensation
Net loss for the period
Balance - April 30, 2011
Share capital
(Number of Share capital
Shares)
(Amount)
$
11,628,524
9,578,550
Contributed
Surplus Warrants
$
535,953
Contributed
Surplus Options
$
749,951
Deficit
$
(8,557,382)
Total
$
2,307,072
15,000,000
454,000
2,235,000
(580,584)
52,270
15,000
376,464
-
-
-
2,250,000
(204,120)
52,270
5,625,000
1,884,375
-
-
-
1,884,375
600,000
250,000
231,000
83,750
-
-
-
231,000
83,750
768,234
162,335
-
-
-
162,335
-
30,993
(30,993)
-
-
-
34,325,758
(14,000)
13,663,689
896,424
749,951
(2,622,047)
(11,179,429)
(14,000)
(2,622,047)
4,130,635
4,373,832
1,120,000
-
-
-
1,120,000
262,334
79,326
-
-
-
79,326
-
172,307
-
(172,307)
-
-
-
124,329
-
(124,329)
-
742,000
-
(1,037,947)
742,000
(1,037,947)
38,961,924
15,159,651
772,095
1,319,644
(12,217,376)
5,034,014
The accompanying notes are an integral part of these interim consolidated financial statements
6 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
1.
Nature of Operations and Going Concern
Roxgold Inc. (the “Company”) is in the business of acquiring, exploring and evaluating mineral properties, and
either joint venturing or developing these properties further or disposing of them when the evaluation is completed.
The Company is listed for trading on the TSX Venture Exchange (the “TSXV”) under the symbol “ROG.” At April
30, 2011, the Company was in the exploration stage and had interests in properties located in Canada and Burkina
Faso, West Africa.
On October 27, 2010, the Company acquired all of the issued and outstanding common shares of 0877148 BC Ltd.,
a private British Columbia Company (“PrivateCo”) (Note 4). The consolidated financial statements include the
results of operations of PrivateCo from October 28, 2010.
The Company is currently exploring its mineral properties and has not yet determined the existence of economically
recoverable reserves. The recoverability of amounts shown for mineral properties is dependent upon the existence
of economically recoverable reserves in its mineral properties, confirmation of the Company’s interest in the
underlying mineral claims, the ability of the Company to obtain the necessary financing to complete its
development, and the attainment and maintenance of future profitable production or disposition thereof.
At April 30, 2011, the Company has working capital of $1,775,448 has incurred losses for the six-month period
ended of $1,037,947 and has accumulated deficit of $12,217,376. These conditions give rise to significant doubt
about the Company’s ability to continue as going concern. Its ability to continue as a going concern is dependent
upon the ability of the Company to raise additional financing to meet property commitments and administration
costs. Management plans to continue to secure the necessary financing through a combination of the issue of new
equity instruments. However, there is no assurance that the Company will be successful in these actions.
These interim financial statements do not give effect to adjustments to the carrying values and classification of assets
and liabilities that would be necessary should the Company be unable to continue as a going concern. Such
adjustments could be material.
2.
Basis of Presentation
These unaudited interim consolidated financial statements have been prepared by the Company in accordance with
Canadian generally accepted accounting principles, following accounting policies consistent with the Company’s
audited consolidated financial statements and notes thereto for the year ended October 31, 2010. These consolidated
financial statements do not include all the disclosures required by generally accepted accounting principles for
annual financial statements and should be read in conjunction with the most recent audited consolidated financial
statements of the Company.
These unaudited interim consolidated financial statements include the accounts of the Company and its whollyowned subsidiaries, Wave Mining Inc., a company incorporated under the laws of the State of Nevada, U.S.A., and
0877148 BC Ltd., a company incorporated under the laws of the Province of British Columbia, Canada.
In the opinion of management, all adjustments considered necessary for fair presentation have been included in these
financial statements. Interim results are not necessarily indicative of the results expected for the fiscal year.
Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
3.
Recently Accounting Pronouncements
Business combinations, consolidated financial statements and non-controlling interest
Effective November 1, 2010, the Company adopted CICA Handbook Section 1582, “Business Combinations”,
Section 1601, “Consolidated Financial Statements”, and Section 1602, “Non-controlling Interests”. These sections
replace the former CICA Handbook Section 1581, “Business Combinations” and Section 1600, “Consolidated
Financial Statements” and establish a new section for accounting for a non-controlling interest in a subsidiary.
CICA Handbook Section 1582 establishes standards for the accounting for a business combination and states that all
assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent consideration
and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisitionrelated costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the
acquisition date. It provides the Canadian equivalent to International Financial Reporting Standard (“IFRS”) 3,
“Business Combinations” (January 2008).
CICA Handbook Section 1601 establishes standards for the preparation of consolidated financial statements.
CICA Handbook Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in
the preparation of consolidated financial statements subsequent to a business combination. It is equivalent to the
corresponding provisions of International Financial Reporting Standard IAS 27, “Consolidated and Separate
Financial Statements” (January 2008).
To date there has been no impact on the Company’s consolidated financial statements as a result of the adoption of
these sections.
International Financial Reporting Standards (“IFRS”)
In 2006, 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 Canada’s own GAAP.
The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.
The transition date of November 1, 2011 will require the restatement for comparative purposes of amounts reported
by the Company for the year ended October 31, 2011. 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.
3 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
4.
Acquisition of PrivateCo
By an agreement dated August 6, 2010, effectively closed on October 27, 2010, the Company acquired 100% of the
issued and outstanding shares of PrivateCo in consideration for the issuance of 5,625,000 common shares of the
Company (the “Acquisition”). The Company issued 250,000 common shares to a third party as a finders’ fee in
connection with the Acquisition. The aggregate 5,875,000 common shares issued were valued at the fair value on
the date of TSXV approval, $0.335 per common share, for an aggregate fair value of $1,968,125.
The transaction has been accounted for using the purchase method of accounting as an acquisition of assets by the
Company. The allocation of the purchase price is based on the assets acquired, measured at the fair values at the
date of the Acquisition. The allocation of the purchase price to the net assets acquired is as follows:
Cash
HST recoverable
Other assets
Equipment
Mineral properties
Accounts payable and accrued liabilities
Future income tax liabilities
$
33,356
10,556
7,854
2,638
2,740,128
(32,218)
(778,000)
Fair value of net assets acquired
$
1,984,314
$
1,884,375
83,750
16,189
$
1,984,314
Consideration paid:
Value of common shares issued
Value of common shares issued as a finders’ fee
Transaction fees
Total consideration paid
Transactions undertaken by PrivateCo are included in the consolidated financial statements from October 28, 2010.
5.
Mineral Properties
Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain
claims as well as the potential for problems arising from the frequently ambiguous conveyancing history
characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to
the best of its knowledge, title to all of its properties is in good standing.
Solna, Bissa West and Yaramoko Properties, Burkina Faso, Africa
Pursuant to the acquisition of PrivateCo (Note 4), the Company acquired all rights and obligations that PrivateCo
had with respect to agreements it had previously entered into. On July 5, 2010, PrivateCo entered into three separate
option agreements with Riverstone Resources Inc. (“Riverstone”) to acquire a 60% interest in three gold properties
located in Burkina Faso, West Africa. The three properties acquired are as follows: the Solna Property located in the
Province of Yahga, the Bissa West Property located in the Province of Passoré, and, the Yaramoko Property located
in the Province of Basle.
4 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
5.
Mineral Properties - continued
Consideration to earn a 60% interest in the Solna and Yaramoko properties is as follows:
i)
Make cash payments of $90,000 (aggregate of $180,000) and issue 360,000 common shares (aggregate of
720,000 common shares) of the Company as to:
a)
200,000 common shares (aggregate of 400,000 common shares) on closing of the acquisition of
PrivateCo (issued at the aggregate fair value of $154,000 on October 27, 2010);
b) $30,000 (aggregate of $60,000) and an additional 60,000 common shares (aggregate of 120,000
common shares) on or before July 5, 2011;
c) an additional $60,000 (aggregate of $120,000) and 100,000 common shares (aggregate of 200,000
common shares) on or before July 5, 2012.
ii) conduct work programs of $1,500,000 (aggregate of $3,000,000) as to:
a) $350,000 (aggregate of $700,000) on or before July 5, 2011;
b) an additional $500,000 (aggregate of $1,000,000) on or before July 5, 2012; and,
c) an additional $650,000 (aggregate of $1,300,000) on or before July 5, 2013.
Consideration to earn a 60% interest in the Bissa West property is as follows:
i)
Make cash payments of $90,000 and issue 360,000 common shares of the Company as to:
a)
200,000 common shares on closing of the acquisition of PrivateCo (issued at the fair value of $77,000
on October 27, 2010);
b) $90,000 and an additional 60,000 common shares on or before July 5, 2011; and,
c) an additional 100,000 common shares on or before July 5, 2012.
ii) conduct work programs of $1,500,000 as to:
a) $350,000 on or before July 5, 2011; and,
b) an additional $1,150,000 on or before July 5, 2012.
Riverstone is the operator of exploration activities on the Solna, Bissa West and Yaramoko Properties. Riverstone
will receive operator fees of 5% on all exploration expenditures incurred by the Company, except for expenditures
incurred internally by Riverstone, which will be subject to operator fees of 10%.
5 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
6.
Share Capital and Contributed Surplus
Authorized Share Capital: Unlimited common shares without par value.
Share Consolidation:
Effective April 27, 2010, the Company consolidated its common shares on the basis of one new common share for
every three old common shares issued and outstanding at that time. The consolidation of share capital has been
reflected in the financial statements for the three months ended April 30, 2011 and 2010. All references to share and
per share amounts have been retroactively restated to reflect the share consolidation.
Share issuances:
a)
During the six-month period ended April 30, 2011, there were 4,373,832 share purchase warrants exercised for
total proceeds of $1,120,000. The proceeds were added to share capital and $124,329 was allocated from
contributed surplus to share capital representing the fair value of the share warrants exercised.
b) During the six-month period ended April 30, 2011, there were 262,334 share purchase options exercised for
total proceeds of $79,326. The proceeds were added to share capital and $172,307 was allocated from
contributed surplus to share capital representing the fair value of the share options exercised.
Escrow shares:
Pursuant to the terms of the acquisition of the TJ Ridge Property, 1,500,000 common shares were issued by the
Company and placed in escrow, subject to an escrow agreement (“the Escrow Agreement”). At October 31, 2010,
750,000 shares remained in escrow. Pursuant to the terms of the Escrow Agreement, shares are to be released from
escrow as to 150,000 shares on January 23, 2011 with a further 150,000 escrow shares to be released every six
months thereafter. Pursuant to the terms of the Escrow Agreement and the write-off of the TJ Ridge Property during
the year ended October 31, 2010, the Company did not release the 150,000 escrow shares on January 23, 2011.
Stock options
The Company has a stock option plan whereby the maximum number of shares reserved for issue under the plan
shall not exceed 10% of the outstanding common shares of the Company, as at the date of the grant. The maximum
number of common shares reserved for issue to any one person under the plan cannot exceed 5% of the issued and
outstanding number of common shares at the date of the grant and the maximum number of common shares reserved
for issue to a consultant or a person engaged in investor relations activities cannot exceed 2% of the issued and
outstanding number of common shares at the date of the grant. The exercise price of each option granted under the
plan may not be less than the Discounted Market Price (as that term is defined in the policies of the TSXV). Options
may be granted for a maximum term of five years from the date of the grant, are non-transferable and expire within
90 days of termination of employment or holding office as director or officer of the Company and, in the case of
death, expire within one year thereafter. Upon death, the options may be exercised by legal representation or
designated beneficiaries of the holder of the option.
6 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
6.
Share Capital and Contributed Surplus – continued
Stock options - continued
A summary of the Company’s stock options is as follows:
(adjusted for the three for one share consolidation effected on April 29, 2010):
Number of
Options
Balance - October 31, 2010
Granted
Exercised
Forfeited
Balance - April 30, 2011
516,667
2,583,000
(262,334)
(166)
2,837,167
Weighted
Average
Exercise Price
Weighted
Average Life
(Years)
$0.30
$0.34
$0.29
$0.30
$0.34
1.64
3.89
As April 30, 2011, the following stock options are outstanding:
Number
166,667
50,000
50,000
2,370,500
200,000
Price per share
$0.30
$0.30
$0.30
$0.35
$0.25
Expiry date
March 21, 2012
March 25, 2012
July 7, 2013
November 8, 2015
February 28, 2012
2,837,167
a)
Options
exercisable
166,667
50,000
50,000
2,333,000(1)
- (2)
2,599,667
(1)
A further 12,500 share purchase options vest on each of February 8, 2011, May 8, 2011, August 8, 2011 and
November 8, 2011.
(2)
A further 50,000 share purchase options vest on each of May 28, 2011, August 28, 2011, November 28, 2011
and February 28, 2011.
During the six-month period ended April 30, 2011, the Company granted stock options, with a fair value of $716,881, to
directors, officers, and consultants to purchase up to 2,333,000 common shares at a price of $0.35 per share with an
expiry date of November 8, 2015. The Company also granted stock options with a fair value of $4,563 to an investor
relations firm to purchase up to 50,000 common shares at a price of $0.35 per share with an expiry date of November 8,
2011. The options vest 25% commencing on February 8, 2011.
b) During the six-month period ended April 30, 2011, the Company granted stock options, with a fair value of $59,525 to
an investor relations consultant to purchase up to 200,000 common shares at a price of $0.25 per share with an expiration
date of February 28, 2012. The options vest 25% commencing on May 28, 2011. The portion of stock-based
compensation recorded during the six-month period ended April 30, 2011, $20,556, is based on the vesting schedule of
the options.
7 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
6.
Share Capital and Contributed Surplus – continued
Option pricing models require the input of highly subjective assumptions including the expected price volatility.
Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing
models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options. The
estimated fair value of the stock options granted during the year ended December 31, 2010 was determined using a
Black-Scholes option pricing model with the following assumptions:
Expected dividend yield
Expected stock price volatility
Risk free rate
Expected life of options
2010
2009
Nil
131-142%
1.74-1.98%
1-5
-
Warrants
Share purchase warrants changes during the six-month period ended April 30, 2011 are as follows (adjusted for the
three for one share consolidation effected on April 29, 2010):
Number of
Warrants
Balance -October 31, 2010
Exercised
Balance - April 30, 2011
17,390,000
(4,373,832)
13,016,168
Weighted
Average
Exercise Price
Weighted
Average Life
(Years)
$0.25
$0.26
$0.25
1.91
1.45
At April 30, 2011, the following share purchase warrants were outstanding entitling the holder thereof the right to
purchase one common share for each warrant held:
Number
295,834
133,334
12,587,000
13,016,168
Exercise
Price
Expiry Date
$0.30
$0.30
$0.25
May 5, 2011
August 31, 2011
October 27, 2012
8 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
7.
Related Party Transactions
a)
At April 30, 2011, the Company owed $22,948 (October 31, 2010: $Nil) to companies with directors and officers in
common. There are no repayment terms or interest associated with this balance.
b) The following related party transactions were in the normal course of operations and are measured at fair value
being their exchange amounts:
McMillian LLP – legal services – company with a
director in common
0694926 BC Ltd. – consulting fees – company with an
officer in common
RJG Capital Corporation – management fees –
company with a director in common
Malaspina Consultants – accounting services –
company with a former officer and director in
common
Total
8.
April 30, 2011
April 30, 2010
$
$
$
15,820
-
26,218
-
1,500
39,800
20,876
12,478
64,414
$
52,278
Capital Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure for
its projects for the benefit of its stakeholders. As the Company is in the exploration stage, its principal source of
funds is from the issuance of common shares. Further information relating to liquidity risk is disclosed in Note 9.
In the management of capital, the Company includes the components of shareholders’ equity (through private
placements) as well as cash and cash equivalents, receivables and investment tax credit receivable balances.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may
attempt to issue new shares, enter into joint venture property arrangements, acquire or dispose of assets or adjust the
amount of cash and cash equivalents and investments.
In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets
that are updated as necessary depending on various factors, including successful capital deployment and general
industry conditions. The annual and updated budgets are approved by the Board of Directors.
9 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
9.
Management of Financial Risk
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, other receivables and accounts payable
and accrued liabilities. The Company designated its cash and cash equivalents as held-for-trading which are
measured at fair value. Other receivables are designated as loans and receivables, which are measured at amortized
costs. Accounts payable and accrued liabilities are designated as other financial liabilities, which are measured at
amortized cost.
The Company’s cash and cash equivalents are measured at fair value. The Company classifies the fair value of
these transactions according to the following fair value hierarchy based on the amount of observable inputs used to
value the instrument.
•
Level 1 – Values based on unadjusted quoted prices available in active markets for identical assets or liabilities
as of the reporting date.
•
Level 2 – Level 2 valuation is based on inputs, including quoted forward prices for commodities, time value and
volatility factors, which can be substantially observed or corroborated in the marketplace. Prices in Level 2 are
either directly or indirectly observable as of the reporting date.
•
Level 3 – Values based on prices or valuation techniques that are not based on observable market data.
The value of cash and cash equivalents has been assessed based on the fair value hierarchy described above and is
classified as Level 1. Assessment of the significance of a particular input to the fair value measurement requires
judgment and may affect the placement within the fair value hierarchy.
Currency Risk
As at April 30, 2011, the Company all of the Company’s cash and cash equivalents were held in Canadian dollars,
the Company’s measurement currency. In connection with the acquisition of PrivateCo on October 27, 2010, the
Company will likely be exposed to transactions denominated in US dollars and Euros based on exploration activities
in Burkina Faso. To date, the Company has not used derivative financial instruments to reduce its foreign exchange
exposure.
Future changes in exchange rates could have a material effect on the Company’s business, financial condition and
results of operations.
Credit Risk
The Company has cash balances and no interest-bearing debt. The Company has no significant concentrations of
credit risk arising from operations. The Company's current policy is to invest excess cash in investment-grade shortterm deposit certificates issued by Canadian financial institutions with which it keeps its bank accounts and
management believes the risk of loss to be remote.
Accounts and other receivables consists mainly of goods and services tax due from the Federal Government of
Canada.
10 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
9.
Management of Financial Risk - continued
The Company’s investment policy is to invest its cash in highly liquid short-term interest-bearing investments with
maturities 90 days or less from the original date of acquisition, selected with regards to the expected timing of
expenditures from continuing operations. Management believes the risk to be minimal.
Interest Rate Risk
The Company has non-material exposure at April 30, 2011 to interest rate risk through its financial instruments.
Commodity Price Risk
The Company’s ability to raise capital to fund exploration or development activities is subject to risks associated
with fluctuations in the market prices of gold and silver.
Liquidity Risk
The Company attempts to manage liquidity risk by maintaining sufficient cash and cash equivalent balances.
Liquidity requirements are managed based on expected cash flows to ensure that there is sufficient capital in order to
meet short-term obligations. As at April 30, 2011, the Company had a cash balance of $1,763,107 (October 31, 2010
- $2,043,523) to settle current liabilities of $54,981 (October 31, 2010 - $133,836) Further information relating to
liquidity risk is disclosed in Note 1. Management believes the risk to be minimal.
Sensitivity analysis
Based on management's knowledge and experience of the financial markets, the Company believes the following
movements are "reasonably possible" over a three month period:
10.
Cash and cash equivalents include deposits, which are at variable interest rates. Sensitivity to a plus or
minus 1% change in rates would affect net loss by $17,631 annually.
The Company does not hold any balances in foreign currencies to give rise to exposure to foreign exchange
risk.
Supplementary Disclosure of Cash Flow Information
Supplemental Disclosure of Non-Cash Financing and Investing
Activities include:
Fair value reversal of stock options exercised
Fair value reversal of warrants exercised
Accounts payable included in mineral properties
$
$
$
April 30, 2011
172,307
124,329
-
$
$
$
April 30, 2010
49,318
11 | P a g e Roxgold Inc.
(An Exploration Stage Company)
Notes to the Interim Consolidated Financial Statements
For the Six Month Periods Ended April 30, 2011 and 2010
(Unaudited – Prepared by Management)
(Canadian Funds)
11.
Segmented Information
The Company’s operations are limited to a single industry segment, being mineral exploration and development.
Geographic segment information of the Company’s assets is as follows:
April 30, 2011
October 31, 2010
Canada
Burkina Faso
$ 2,206,516
3,660,479
$
2,071,344
2,971,128
Total assets
$ 5,866,995
$
5,042,472
The Company’s loss was confined to the geographic segment of Canada with $Nil loss being incurred in Burkina
Faso.
12.
Comparative Figures
Certain comparative figures have been reclassified to conform to the current period’s presentation.
13.
Subsequent Events
Subsequent to April 30, 2011:
a)
The Company entered into a new services agreement with White Label Corporate Services Inc. (“WLM”) on May 1,
2011 and has agreed to pay a monthly corporate administration fee of $14,000 that includes office rent,
administration, accounting, corporate secretarial, chief financial officer, executive assistant, IT computer
maintenance and other related services. The agreement can be terminated by either party prior to expiration with 60
days written notice. The Company shares one officer in common with WLM.
b) The Company had 321,833 warrants exercised for total proceeds received of $95,250.
c)
The Company had 50,000 options for total proceeds received of $12,500.
d) The Company closed a brokered private placement with a syndicate of underwriters led by Cormark Securities Inc.
and including Fraser Mackenzie Limited, GMP Securities L.P., PI Financial Corp., Pope & Company Limited and
Toll Cross Securities Inc. (collectively, the “Underwriters”). The Company has raised $7,500,000 through the
issuance of 10,000,000 units (the “Units”) at a price of $0.75 per Unit. Each Unit consists of one common share
(each a “Common Share”) and one-half of one share purchase warrant of the Company (each whole warrant, a
“Warrant”). Each whole Warrant will entitle the holder to purchase one additional Common Share at a price of
$1.00 per Common Share at any time prior to May 10, 2013.
The Underwriters received a cash commission of $525,000 and 700,000 broker warrants, each broker warrant
entitling them to acquire one Common Share at a price of $0.75 per Common Share until May 10, 2013. All
securities issued pursuant to this financing are subject to a four month hold period expiring September 10, 2011. The
net proceeds of the offering will be used for continued exploration of the Company's Burkina Faso joint venture
properties and for general working capital purposes.
12 | P a g e Roxgold Inc.
Schedule 1
(An Exploration Stage Company)
Interim Consolidated Schedule of Mineral Properties
For the Six Month Period Ended April 30, 2011
(Unaudited – Prepared by Management)
(Canadian Funds)
Yaramoko,
Burkina Faso,
West Africa
Balance, October 31, 2010
Deferred exploration costs
Drilling
Field expenses and other
Geochemical consulting
Geological consulting
Geophysical consulting
Lease, licenses and taxes
Operator fees
Travel and accommodation
Balance, April 30, 2011
$
990,392
Solna,
Burkina Faso,
West Africa
$
990,368
Bissa West,
Burkina Faso,
West Africa
$
Total
990,368
$ 2,971,128
281,399
49,448
22,018
73,550
38,454
8,050
30,202
43,989
2,911
11,751
67,587
9,655
5,540
425
2,763
4,683
9,564
24,834
2,511
17
281,399
55,122
22,018
89,984
115,605
42,539
38,253
44,431
547,110
97,869
44,372
689,351
$ 1,537,502
$ 1,088,237
$ 1,034,740
$ 3,660,479
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