Q3 - 2002
CONSOLIDATED BALANCE SHEETS
As at Sep 30 (in thousands of dollars)
|
Sep 30, 2002
(unaudited)
|
Dec 31, 2001 |
ASSETS |
Current |
|
|
Cash |
$
32 |
$ 114 |
Accounts receivable |
5 |
134 |
Prepaid expenses |
23
|
20 |
Total current
assets |
60
|
268 |
|
|
|
Cash for Exploration Expenditures |
- |
116 |
Exploration and
development projects (note 2) |
17,514
|
17,260 |
Other Assets |
147 |
156 |
|
$
17,721 |
$17,800
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY |
Current |
|
|
Accounts payable and
accrued liabilities |
497
|
288 |
Mortgage
Payable (note 4) |
- |
500
|
|
497
|
788 |
Long-term |
|
|
Convertible notes (note 3) |
200 |
- |
|
697 |
788 |
|
|
|
SHAREHOLDERS'
EQUITY |
Share capital |
54,731
|
53,858
|
Special
Warrants |
-
|
197 |
Contributed
surplus |
759
|
759 |
Deficit |
(38,466) |
(37,797) |
Net shareholders' equity |
17,024 |
17,012 |
|
|
|
|
$
17,721 |
$17,800
|
GOING CONCERN (NOTE 1(B)) |
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited in thousands of dollars)
|
2002 |
2001 |
2002 |
2001 |
|
Three mo ended Sep 30 |
Nine mo Sep 30 |
Operating activities |
Net loss for the
period |
$
(84) |
$
(88) |
$
(669) |
$ (677) |
Item not affecting
cash - depreciation |
3 |
5 |
9 |
15 |
Write-down E&D projects |
- |
- |
300 |
- |
|
(81) |
(83) |
(360) |
(662) |
|
|
|
|
|
Changes in non-cash
working capital |
2 |
(111) |
39 |
64 |
Cash used by
operating activities |
(79) |
(194) |
(321) |
(598) |
|
|
|
|
|
Financing activities |
Convertible notes/mortgage funds received |
- |
500 |
200 |
500 |
Issue of common shares |
181
|
- |
181 |
100 |
Cash provided by
financing activities |
181
|
500 |
381 |
600 |
|
|
|
|
|
Investing activities |
Cash for exploration expenditure |
- |
- |
116 |
- |
Additions to
exploration and development projects |
(75) |
(385) |
(258) |
(1,379) |
Equipment purchases |
- |
-
|
- |
(2) |
Cash used by
investing activities |
(75) |
(385) |
(142) |
(1,381) |
|
|
|
|
|
Net
increase/(decrease)
in cash during period |
27 |
(79) |
(82) |
(1,379)
|
|
|
|
|
|
Cash beginning of
period |
5
|
419 |
114 |
1,719 |
Cash end of period |
$
32 |
$340
|
$
32 |
$340 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(unaudited in thousands of dollars, except per share amounts)
|
2002 $ |
2001 $ |
2002 $ |
2001$ |
|
Three mo ended Sep 30 |
Nine
mo Sep 30 |
Revenue |
Interest income |
$ - |
$
5 |
$
3 |
$
28 |
|
|
|
|
|
Costs
and Expenses |
General/administrative |
81 |
88 |
363 |
690 |
Depreciation |
3
|
5 |
9 |
15 |
Write-down
of E&D projects |
- |
- |
300 |
- |
|
84 |
93 |
672 |
705 |
|
|
|
|
|
Net loss for
period |
84 |
88 |
669 |
677 |
Deficit, beginning of period |
38,382
|
34,297
|
37,797 |
33,708
|
Deficit, end of period |
$
38,466 |
$ 34,385 |
$ 38,466 |
$ 34,385 |
|
|
|
|
|
Loss - basic and
fully diluted |
$ 0.001 |
$0.002 |
$0.012 |
$ 0.013 |
|
|
|
|
|
Average outstanding
common shares |
57,205,731 |
51,940,906 |
55,246,322 |
51,743,516 |
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
September 30, 2002
(unaudited)
1(a) General
The
consolidated interim financial statements of the Company are prepared by management using
accounting principles generally accepted in Canada for interim financial statements and
reflect the accounting principles set out in the notes to the Company's consolidated
financial statements as of December 31, 2001, appearing in the Company's 2001 Annual
Report. These interim financial statements should be read in conjunction with those annual
financial statements and the notes thereto.
The results of operations and cash flows for the
current periods are not necessarily indicative of the results to be expected for the
full year.
1(b) Going Concern
These consolidated financial statements have
been prepared using accounting principles applicable to a going concern
entity, which assume that the entity will continue operating in the
future and be able to realize its assets and discharge its liabilities
in the normal course of its business. The Company's
exploration and development projects are in their early stages and,
consequently, the Company, having no operating revenues to sustain its
activities, has been wholly dependent on equity financings and the
optioning of resource properties for its funds.
Several adverse conditions cast substantial
doubt on the validity of the Company's application of the going concern
principle. The conditions include ongoing losses and property
write-downs, working capital deficiencies and insufficient cash reserves
to meet the Company's minimum commitments. Therefore, the
Company's ability to continue its operations, its planned development
activities, and maintain its interest in its projects, is dependent upon
the satisfactory completion of a financing or optioning or sale of
property interests to provide the required funds. Should the
Company not be able to obtain the necessary financing and should the
Company not be able to continue as a going concern, then adjustments
would be required with respect to the carrying value of the Company's
assets and liabilities, reported net loss, and the balance sheet
classification used.
2. Exploration and Development Projects
Project |
Sep
30, 2002 |
Dec
31, 2001 |
|
(in
thousands) |
Rainy River |
$ 11,684 |
$ 11,429 |
Lac
Rocher |
4,607 |
4,066 |
Mel
Properties |
1,453 |
1,265 |
Strong/
Moak Lakes |
- |
300 |
Prairie
Lake & Other |
310 |
200 |
|
$ 17,514 |
$
17,260 |
3.
Convertible Notes
During the period $200,000 of convertible notes were issued which are
secured by a pledge of the Minago Property leases. The notes
bear interest at 9% per year, payable annually and mature July 9,
2007. The notes may be converted into common shares of the
Company based on $0.19 per share.
4.
Share Capital
(a)
During the period, 4,783,334 common shares were issued as follows:
i)
1,333,334 upon exchange of Special Warrants
ii)
2,500,000 upon conversion of $500,000 mortgage
iii)
600,000 upon exercise of stock options for proceeds of $111,000
iv)
350,000 upon exercise of warrants for proceeds of $70,000
(b) During the
period, 1,400,000 stock options were granted under the stock option
plan, at prices between $0.185 and $0.20, 325,000 options expired and
600,000 were exercised, resulting in outstanding options totalling
3,345,400.
(c) Subsequent to the end of the
period, a further 156,500 warrants were exercised for proceeds of
$31,300. At November 5, 2002, the issued and outstanding common
shares of the Company totalled 57,954,490 and on a fully diluted basis
there would be 63,925,606 common shares outstanding.
MANAGEMENT DISCUSSION AND ANALYSIS
Nine months Ended September 30, 2002
This MD&A reflects the period ended September 30,
2002 and should be read in conjunction with the MD&A included in the
2001 Annual Report.
RESULTS OF OPERATIONS
During
the three months and the nine months ended September 30, 2002, the Company incurred losses
of $84,000 and $669,000, respectively, compared to losses of $88,000 and $677,000 in the
corresponding periods of 2001. Interest
income on excess cash
balances continued to decline. General and
administrative expense have been lower due to reduced activity and cut
backs.
Expenditures on
exploration projects for
the three months and the nine months ended September 30, 2002 were $75,000 and
$258,000, respectively, compared to expenditures of $385,000 and $1,379,000 in the
corresponding periods of 2001. The
significant reduction in project expenditures in 2002 is principally due
to the Company's limited cash resources and adverse equity market
conditions. In view of these conditions, the Company is currently
evaluating its financing alternatives and reviewing the priorities of
the various projects. Under the Mel Property Agreement terms, the
Company is required to fund exploration of $808,000 prior to August
2003.
LIQUIDITY AND CAPITAL RESOURCES
Having no
producing properties, the Company has financed its activities through sales of its equity
securities and debt. In the first nine months of 2002, operating activities used $321,000 and $142,000 was spent on
exploration projects offset by financings received of $200,000 in
convertible notes and the exercise of warrants and options for $181,000
resulting in cash balances of $32,000 at Sept. 30, 2002. The
$500,000 mortgage loan repayable in November 2002, was repaid by the
issuance of 2,500,000 common shares of the Company. Subsequent to
the end of the period, a further 156,500 warrants were exercised resulting in proceeds of $31,300.
OUTLOOK
Following
is a brief commentary on the status of active exploration and development
projects and prospects of new discoveries over the near term:
Since August 1999, Nuinsco has spent over $1.5
million for nickel exploration work on the Mel project at Thompson,
Manitoba and, working with Inco, has advanced the project to the
drill-ready stage. Seven high priority drill targets will be
further defined with state-of-the-art geophysics prior to diamond
drilling by Nuinsco. At the same time, a small fieldwork program
on the Prairie Lake carbonatite complex near Marathon, Ontario has
yielded high grade tantalum values in pyrochlore, suggesting that future
follow-up exploration may produce mineable tantalum and niobium.
The Company's Rainy River property with drill-ready
base and precious metal targets is still on hold awaiting only funds to
drill test excellent MT geophysical anomalies. Also, the Cameron
Lake gold property, with its proven gold resource is being maintained in
inventory awaiting a rise in the price of gold.
Your Company goes to great effort and expense to
maintain and constantly update its website. Shareholders are urged
to keep themselves informed of ongoing news of our affairs by
periodically checking the website. Since early September, four
press releases posted on our website have been disseminated broadly
through CNNMathews, a major newswire service. These releases
provide full and true disclosure of our activities. Exploration
will be starting shortly on the winter work program with Inco at the Mel
project in Thompson, Manitoba. Shareholders should pay careful
attention to the four releases mentioned and watch out for future
releases.
Nuinsco has initiated discussions with potential
flow-through share investors to arrange financing for its projects.
November 26, 2002
|