Management
Discussion and Analysis
Year ended December 31, 2002
Financial Analysis
This Management Discussion and Analysis (MD&A) for the year
ended December 31, 2002 should be read in conjunction with the
audited financial statements for the twelve-month period ended
December 30, 2002. The MD&A is an assessment of the financial
affairs of the Company for the most recent fiscal period. All
figures are in $US.
Since its incorporation the Company has endeavored to secure
valuable mineral properties that in due course could be explored,
developed and brought into production to provide the Company with
positive cash flow. To that end, the Company has expended its
funds exploring and developing mineral properties each year since
incorporation. As a result, the Company has incurred losses during
each of its fiscal years since incorporation. Losses are typical
of development-stage exploration and mining companies and are
expected to continue until positive cash flow is achieved.
The Company knows of no trends, demands, commitments, events
or uncertainties outside of the normal course of business that
may result in the Company’s liquidity either materially
increasing or decreasing at the present time or in the foreseeable
future. Material increases or decreases in the Company’s
liquidity are substantially determined by the success or failure
of the Company’s exploration programs and overall market
conditions for smaller resource companies. The Company is not
aware of any seasonality in the business that have a material
effect upon its financial condition, results of operations or
cash flows other than those normally encountered by public reporting
smaller resource companies. The Company is not aware of any changes
in it’s the results of its operations that are other than
those normally encountered in its ongoing business.
Liquidity and Capital Resources
The Company had positive working capital of $621,000 at December
31, 2002 as compared to $366,000 at December 31, 2001. Current
assets rose 38% to $652,000 and current liabilities dropped 71%
to $31,000 during the fiscal year 2002. The Company’s principal
sources of funds in 2002 included the sale of marketable securities
derived from a shares-for-cash payment from our partner on the
Bellavista project in Costa Rica and the raising of capital from
two private placements resulting in proceeds of $433,000.
Results of Operations
The Company experienced a loss of $7,477,000 ($0.17 per share)
for the 12-month period ending December 31, 2002 as compared to
a loss of $3,660,000 ($0.09 per share) for the 12-month period
ended December 31, 2001. The Company incurred cash expenditures
totalling $493,000 on general, administrative, and other costs
in the fiscal year 2002 as compared to $280,000 in the fiscal
year 2001. The use of capital during the period was mainly directed
towards the company’s operating expenses and the resumption
of work on the New Polaris and Benzdorp projects.
Management elected to take write downs of $5,486,286 on the New
Polaris property and $1,717,000 on the Sara Kreek property to
reflect the impairment of these project values due to the lack
of recent development activity, the depressed gold price and capital
markets for gold shares, and the reduced values of comparable
projects in the junior resource sector. The Company also incurred
a $182,000 expense for stock-based compensation attributable to
the adoption of new accounting principles for stock-based compensation
plans effective January 1, 2002.
