HELIO RESOURCE CORP.

Transcription

1 HELIO RESOURCE CORP. INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three month period ended June 30, 2008 Expressed in Notice to Reader: As required by National Instrument subsection 4.3(3)(a), readers are advised that an auditor has not performed a review of these interim financial statements.

2 Interim Consolidated Balance Sheets Canadian Dollars Unaudited - Prepared by Management As at As at ASSETS June 30, 2008 March 31, 2008 Current Cash and cash equivalents $ 452,722 $ 270,135 Short-term deposits 8,676,413 5,036,762 Receivables and prepaids 375, ,923 9,504,664 5,677,820 Marketable Securities 34,000 40,000 Security Deposits 42,000 40,000 Property and Equipment (Note 6) 586, ,232 Mineral Properties (Note 7) 450, ,311 $ 10,617,961 $ 6,723,363 LIABILITIES Current Accounts payable and accrued liabilities $ 954,788 $ 695, , ,406 SHAREHOLDERS' EQUITY Share Capital (Note 8) 19,564,490 15,627,342 Contributed Surplus 4,066,686 2,654,245 Accumulated Other Comprehensive Income (Loss) (49,600) (43,600) Deficit (13,918,403) (12,210,030) Contingencies and commitments (Note 7) Subsequent Events (Note 11) ON BEHALF OF THE BOARD OF DIRECTORS: 9,663,173 6,027,957 $ 10,617,961 $ 6,723,363 signed "Richard Williams" Director signed "Cliff T. Davis" Director - See accompanying notes -

3 Interim Consolidated Statements of Loss and Comprehensive Loss Canadian Dollars Unaudited - Prepared by Management For the three For the three months ended months ended June 30, 2008 June 30, 2007 Expenses Amortization $ 29,161 $ 24,391 Bank charges and interest 1, Exploration costs, net - schedule 1,307, ,572 Filing and transfer agent 29,990 1,850 Professional fees 66,833 23,971 Marketing 47,690 42,223 Office and miscellaneous 18,158 35,448 Salaries and consulting 108,432 75,074 Shareholder communication - 1,440 Stock-based compensation (Note 8.c) 56,353 60,237 Travel, meals and entertainment 14,851 33,796 Loss Before the Undernoted: (1,680,427) (1,218,961) Other income: Interest income 48,832 27,837 Foreign exchange gain (loss) 3,604 (448) Allowance for doubtful accounts (65,852) - (Loss) on disposition of fixed assets (14,530) - (27,946) 27,389 Loss for the period (1,708,373) (1,191,572) Other comprehensive (loss) income (6,000) 7,400 Comprehensive loss for the period $ (1,714,373) $ (1,184,172) Loss per Share - Basic and Diluted $ (0.04) $ (0.03) Weighted Average Number of Common Shares 44,306,336 35,104,256 - See accompanying notes -

4 Interim Consolidated Statements of Shareholders' Equity Canadian Dollars Unaudited - Prepared by Management Accumulated Other Number of Share Capital Contributed Comprehensive Common Shares (Note 8) Surplus Income (Loss) Deficit Balance at March 31, ,990,300 $ 10,705,170 $ 1,507,006 $ - $ (6,939,574) Initial recognition of cumulative unrealized gain on available-for-sale investments Issuance of shares as private placement Issuance of shares as property payment Issuance of shares for options and warrants exercised ,400-7,000,000 4,154,867 1,014, ,750 55, , ,994 (149,244) - - Stock based compensation , Unrealized loss on available-for-sale investments (70,000) - Loss for the year (5,270,456) Balance at March 31, ,959,050 15,627,342 2,654,245 (43,600) (12,210,030) Issuance of shares as private placement Issuance of shares for options and warrants exercised 6,000,000 3,355,245 1,398, , ,903 (76,816) - - Stock based compensation , Unrealized loss on available-for-sale investments (6,000) - Loss for the period (1,708,373) Balance as at June 30, ,519,888 $ 19,564,490 $ 4,066,687 $ (49,600) $ (13,918,403) - See accompanying notes -

5 Interim Consolidated Statements of Cash Flows Canadian Dollars Unaudited - Prepared by Management For the three For the three months ended months ended June 30, 2008 June 30, 2007 Operating Activities Loss for the period $ (1,708,373) $ (1,191,572) Items not affecting cash: Amortization 29,161 24,391 Loss on disposition of fixed assets 14,530 - Unrealized interest on short-term deposits (39,038) (3,786) Stock-based compensation 90,535 50,729 (1,613,185) (1,120,238) Changes in non-cash working capital: - Receivables and prepaids (4,606) (246,253) - Accounts payable 259,382 (101,435) - Security deposits (2,000) (20,000) Cash used in operating activities (1,360,409) (1,487,926) Investing Activities Purchase of property and equipment (115,445) (130,080) Purchases of short-term deposits (3,600,613) 818,765 Cash provided by investing activities (3,716,058) 688,685 Financing Activities Proceeds from the issuance of shares and share purchase warrants, net of cash issuance costs 5,259, ,000 Cash provided by financing activities 5,259, ,000 Net Decrease in cash and cash equivalents Cash and cash equivalents - Beginning of period Cash and cash equivalents - End of period 182,587 (470,241) 270, ,277 $ 452,722 $ 307,036 Non-Cash Financing and Investing Transactions Fair value of stock options and warrants exercised $ 76,816 $ 59,643 Share issuance costs paid in warrants 234, See accompanying notes -

6 1. Nature of Operations and Going Concern Helio Resource Corp. (the Company or Helio ) was incorporated on November 8, 1998 under the Business Corporations Act of British Columbia under the name of Helio Capital Corp. Effective November 2004, after a reverse take-over transaction, the Company changed its name to Helio Resource Corp. The principal business of the Company is the exploration for, and development of, precious and base metal deposits in Tanzania and Namibia. At June 30, 2008, the Company has no source of operating cash flow and has an accumulated deficit of $13,918,403. In addition, the Company incurred a loss of $1,708,373 for the period ended June 30, Operations for the period ended June 30, 2008, have been funded primarily from the issuance of shares. The Company is in the process of exploring its mineral property interests and has not yet determined whether its mineral property interests contain mineral reserves that are economically recoverable. The Company s continuing operations and the underlying value and recoverability of the amounts shown for mineral properties are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its mineral property interests and on future profitable production or proceeds from the disposition of the mineral property interests. The Company s current cash flow forecast indicates that, based on the Company s plans to continue rapid exploration activity, the Company s ability to continue operations is contingent on its ability to obtain additional financing. Management is confident that it will be able to secure the necessary financing; however, there is no assurance that management will be successful in achieving this objective. Management is continually monitoring its treasury position and has plans in place to ensure that the Company remains a going concern in the event that it is temporarily unable to secure the necessary financing to continue its current activities. These consolidated financial statements do not reflect adjustments to the amounts of assets and liabilities, the reported revenues and expenses and balance sheet classifications that would be necessary if the going concern assumption were not appropriate. Such adjustments could be material. 2. Basis of Presentation These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada ( Canadian GAAP ) and are unaudited but follow the same accounting policies and methods used in the preparation of the most recent annual audited consolidated financial statements, except for the changes in accounting policies described in Note 3. These interim consolidated financial statements do not include all information and note disclosures required by Canadian GAAP for annual financial statements, and therefore should be read in conjunction with the Company s audited consolidated financial statements for the year ended March 31, 2008.

7 3. Changes in Accounting Policies Changes in Accounting Standards The Company has adopted the following new accounting policies for the fiscal year beginning April 1, 2008, as issued by the Canadian Institute of Chartered Accountants ( CICA ). Section 1400 General Standards of Financial Statement Presentation This section has been amended to include requirements for management to assess and disclose an entity's ability to continue as a going concern, effective for interim and annual financial statements for years beginning on/after January 1, Refer to Note 1 for this disclosure. Section 1535 Capital Disclosures This section 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 internally to the entity's key management personnel: (i) information about its objectives, policies and processes for managing capital, (ii) summary quantitative data about what it manages as capital. (iii) whether during the period it complied with any externally imposed capital requirements to which it is subject. (iv) when the Company has not complied with such externally imposed capital requirements, the consequences of such non-compliance. Refer to Note 4 for this disclosure. Section 3031 Inventories This section replaces Section 3030 Inventories, and has no effect on the Company, as the Company does not carry inventory. Section 3862 Financial Instruments Disclosures This section provides standards for disclosures about financial instruments, including disclosures about fair value and credit, liquidity and market risks associated with the financial instruments. In addition, this section requires specific disclosures, including criteria for determining impairments, and criteria for designating financial instruments as held for trading or available for sale. Refer to Note 5 for this disclosure. Section 3863 Financial Instruments Presentation This section carries forward the presentation related requirements of Section As such the adoption of Section 3863 had no effect on the consolidated financial statements.

8 3. Changes in Accounting Policies (continued) Changes in Accounting Standards Not Yet Adopted Section 3064 Goodwill and Intangible Assets Effective for annual or interim periods beginning on or after January 1, 2009, this section will replace Section 3062 Goodwill and Other Intangible Assets. This new section establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets by profit-oriented enterprises. In particular, Section 3064 requires the expensing of start-up costs unless those costs satisfy specific capitalization criteria. International Financial Reporting Standards The CICA has adopted International Financial Reporting Standards for implementation on January 1, The Company is currently considering the impact of these pending changes. 4. Capital Disclosures The Company manages its common shares, options and warrants as capital. As the Company is in the Exploration stage, its principal source of funds is from the issuance of common shares. When managing the capital structure, the Company s competing objectives are to minimise the number of shares issued while ensuring sufficient cash availability to allow the Company to continue to actively pursue the exploration and development of its projects for the benefit of its stakeholders. The Company is not subject to any externally imposed capital requirements. 5. Financial Instruments and Risk Management a) Categorization and Valuation The Company has categorized its financial instruments as follows: i) Cash and cash equivalents and short term deposits are categorized as held for trading, and are recorded at their fair value. Due to the short term nature of cash and cash equivalents, and due to the restricted nature of short term deposits, the Company estimates that their fair value approximates their face value; ii) Receivables and prepaids and security deposits are categorized as loans and receivables, and are recorded at amortized cost using the effective interest rate method. The Company s accounts receivable balances include Value Added Tax ( VAT ) receivable from Tanzania, and Namibia. The VAT receivables have been partially provided for as the total amount recoverable is subject to final approval by the relevant authorities. The Company believes that any amounts collectible will be received within twelve months and therefore the Company has not discounted this receivable;

9 5. Financial Instruments and Risk Management (continued) a) Categorization and Valuation (continued) iii) Marketable securities are categorized as available for sale and are recorded at their fair value based on the closing bid price on the last day of trading prior to the balance sheet date; iv) Accounts payable and accrued liabilities are categorized as other financial liabilities and are recorded at their amortized cost using the effective interest rate method. b) Risk Management These financial instruments are subject to credit risk, interest rate risk, currency risk and other price risk. i) Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Amounts exposed to credit risk include: June 30, 2008 March 31, 2008 Cash and cash equivalents $ 452,722 $ 270,135 Short term deposits 8,676,413 5,036,762 Receivables and prepaids 375, ,923 Security deposits 42,000 40,000 $ 9,546,664 $ 5,717,820 The maximum exposure to credit risk at June 30, 2008 is $9,546,664 (the entire balance) ($5,717, ). One receivable amount is past due, and has been partially provided for, based on the Company s expectation of the likely outcome. The Company expects to be able to fully realize the net amounts exposed to credit risk. Credit risk is minimized by concentrating cash and cash equivalents with a Canadian bank that has a strong credit rating as determined by rating agencies. Similarly, short term deposits are held as fixed-rate cashable Guaranteed Investment Certificates (GIC s) issued by a major Canadian bank. Due primarily to the stability of the Canadian banking system, the 90-day term of the short term deposits and the guarantee provided by the bank, the fair value of the amounts exposed to credit risk has not changed significantly as a result of changing credit risk. ii) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Amounts subject to interest rate risk are primarily the short term deposits held in fixed-rate cashable GIC s. A decrease (increase) in the market interest rate of 10 basis points (0.1%) results in an increase (decrease) in the fair value of $6,000 at June 30, Notably, as these instruments are cashable with interest, the net present value of this instrument cannot decline below face value plus accrued interest.

10 5. Financial Instruments and Risk Management (continued) b) Risk Management (continued) iii) Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Amounts subject to currency risk are primarily those cash and cash equivalents and receivables and prepaids that are held in foreign currencies, offset by those accounts payable denominated in foreign currencies. The Company raises funds in and spends funds in, US dollars, Tanzanian shillings, Namibian dollars and Great British pounds. In order to minimise exposure to currency risk, the Company periodically adjusts the amount of funds held in foreign currencies to approximately equal the amount of any outstanding foreign denominated payables. The Company s largest foreign currency exposure is to the US dollar. If the Canadian dollar had weakened (strengthened) relative to the US dollar by 100 basis points ($0.01) at June 30, 2008, the net loss would have been $3,000 greater (smaller). Other comprehensive loss would have remained unchanged. iv) Other Price Risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The Company is exposed to other price risk through the ownership of marketable securities whose fair value fluctuates with the market price of the underlying equities. If the market value of the underlying equities had increased (decreased) by $0.01 at June 30, 2008, the other comprehensive loss would have been $2,000 lower (higher). Net loss would have remained unchanged. 6. Property and Equipment Details are as follows: Cost June 30, 2008 March 31, 2008 Accumulated Amortization Net Book Value Cost Accumulated Amortization Net Book Value Field equipment $ 56,191 $ (21,230) $ 34,961 $ 55,104 $ (19,678) $ 35,426 Office equipment 172,142 (71,013) 101, ,148 (69,922) 91,226 Leasehold improvements 130,894 (36,257) 94, ,359 (31,201) 98,158 Motor vehicle 496,975 (140,716) 356, ,875 (125,453) 290,422 $ 856,202 $ (269,216) $ 586,986 $ 761,486 $ (246,254) $ 515,232

11 7. Mineral Properties and Exploration Costs Details are as follows: June 30, 2008 March 31, 2008 Capitalized acquisition costs per licence: Saza $ 125,000 $ 125,000 Ilunga 108, ,437 Gap 108, ,437 Kwaheri 108, ,437 Balance of mineral properties end of the period $ 450,311 $ 450,311 a) Saza Licence, Tanzania On December 19, 2005, the Company signed an option agreement with Thorn Tree Minerals Limited ( Thorntree ), a private Tanzanian mining company whereby the Company can earn a 100% interest, subject to a 2% Net Smelter Royalty, in the Saza licence. In order to vest its interest, the Company must spend $2,000,000 on exploration over 4 years, issue 50,000 common shares (issued at a fair value of $25,000) and make cash/share payments totalling $400,000 to Thorntree over the earn-in period (as at June 30, 2008 all required payments have been made in cash for a total of $100,000). b) Ilunga, Gap and Kwaheri (known as the Makongolosi projects), Tanzania On January 9, 2007 the Company signed an option agreement with Dhahabu Resources and Mining Co. Ltd (Dhahabu); whereby Helio has the option to earn 100% interests in three contiguous Prospecting Licences known as Ilunga, Gap and Kwaheri, subject to a 2% Net Smelter Royalty in each licence. These licences are also within the Lupa Goldfields, in southwest Tanzania. In order to earn 100% interests in the licences, Helio must spend a total of $3,000,000 on exploration, issue 150,000 common shares (issued at a fair value of $120,000), and make cash/share payments totalling $1,200,000 to Dhahabu over an earn-in period of four years. At June 30, 2008 all cash/share payments required to date have been made for a total of $150,000 cash plus 93,750 shares. Collectively, the Saza, Ilunga, Gap and Kwaheri licences comprise the SMP Gold project.

12 7. Mineral Properties and Exploration Costs (continued) c) Desert Minerals (UK) Ltd Joint Venture, Namibia On September 24, 2007 the Company announced the signing of a joint venture agreement with Desert Minerals (UK) Ltd ( Desert ). Desert has the right to explore nine licences, and ultimately retain up to 4 four licences and earn a 75% interest in the retained licences by fully funding a bankable feasibility study. Desert has committed to spend at least $1 million total amongst all of the licenses within 18 to 24 months. On completion of this first expenditure commitment, Desert shall select up to six of the nine properties to be transferred to a new project company, owned 80% by BAFEX Exploration (Proprietary) Limited, and 20% by Desert. Desert shall pay $25,000 per license transferred to the project company. Desert has committed to then spend at least an additional $1.5 million total exploring the licenses within 12 months. After meeting this second expenditure commitment, Desert may select up to four of the licenses to retain and the project company shall be owned 51% by Desert and 49% by BAFEX Exploration (Proprietary) Limited. Desert has committed to then spend at least an additional $1 million per license exploring each of the four remaining licenses within 24 months. After meeting this third expenditure commitment, the project company shall be owned 65% by Desert and 35% by Bafex Exploration (Proprietary) Limited. Desert has committed to then fund a bankable feasibility study on each of the retained properties within 24 months. After meeting this final expenditure commitment, the project company shall be owned 75% by Desert and 25% by Bafex Exploration (Proprietary) Limited. d) Otjitombo South, Tevrede North and Others, Namibia On May 22, 2006, the Company signed two option agreements with Teck Cominco in which the Company can earn a 90% interest in the Otjitombo South and Tevrede North licences by spending $250,000 per licence within three years from October 24, These agreements are still in good standing. On March 13, 2008, the Company announced the signing of a joint venture agreement with TransAfrican Minerals Limited on eight licences in Namibia. On August 1, 2008 the Company announced that it had terminated its agreement with TransAfrican Minerals. e) Lokgwabe, Botswana In 2004, the Company entered into an agreement with Jatinga (Pty.) Ltd. ( Jatinga ) (a nonrelated party) to acquire a 100% interest in three licences owned by Jatinga (the Lokgwabe Diamond Project). In fiscal 2007 the Company met the requirements under the option agreement, earning a 100% interest on these licences. Subsequent to year end the Company has returned the property to Jatinga in exchange for a 1% Diamond Royalty.

13 7. Mineral Properties and Exploration Costs (continued) f) Balama, Mozambique 8. Share Capital In northern Mozambique, the Company has been granted the Balama reconnaissance licence which it holds directly. Subsequent to the end of the quarter, the Company decided to relinquish its interest in this project and focus its efforts on exploring the SMP Project in Tanzania and also on finding partners for the Namibian projects. a) Authorized: Unlimited common shares without par value b) Effective June 16, 2008 the Company closed a fully subscribed bought-deal brokered private placement of 6,000,000 units of the Company at a price of $0.85 per unit for gross proceeds of $5,100,000. Each unit comprised of one common share and one half of one common share purchase warrant. One full share purchase warrant entitles the holder to purchase one common share of the Company at a price of $1.10 per share until June 16, 2009 or $1.25 per share until June 16, A 6% cash commission was paid to the Agent. In addition, the Agent received 360,000 Agents Warrants. Each Agent Warrant is exercisable at a price of $0.85 per Agents Warrant into Units of the Company (the Agent's Units). The Agents Units will be comprised of one common share and one half of one common share purchase warrant and the warrant will have terms similar to the warrants issued pursuant to the Units. All securities issued are subject to a hold period expiring October 17, c) Stock Options The Company has established a share purchase option plan whereby the Board of Directors may grant options to directors, officers, employees or consultants. Options granted must be exercised no later than five years from the date of grant or such lesser period as determined by the Company s Board of Directors. The exercise price of an option must be determined in accordance with the share purchase option plan. Options vest after one year unless determined otherwise by the Board of Directors.

14 8. Share Capital (continued) c) Stock Options (continued) Details of stock option activity are as follows: June 30, 2008 March 31, 2008 Weighted average exercise Quantity price Weighted average exercise price Quantity Outstanding Beginning of the period $0.64 3,400,000 $0.62 2,705,000 Granted $0.73 1,060,000 Exercised $0.50 (80,000) Forfeited $0.80 (40,000) $0.76 (285,000) Outstanding - End of the period $0.64 3,360,000 $0.64 3,400,000 The following table summarizes information about stock options outstanding to directors, officers, employees and consultants as at June 30, 2008: Expiry date Weighted average remaining life in years Exercise price $ Number outstanding Number exercisable December 5, $0.50 1,490,000 1,490,000 December 15, $ ,000 25,000 April 24, $ , ,000 April 30, $ , ,000 September 6, $ , December 2, $ , ,360,000 2,500,000 The fair value of the stock options granted for both employees and non-employees has been calculated using the Black-Scholes Option Pricing Model, based on the following weighted average assumptions: June 30, 2008 March 31, 2008 Average risk-free interest rate None granted 3.7% - 4.3% Expected dividend yield in the period 0% Expected stock price volatility -- 99% - 100% Average expected option life in years years

15 8. Share Capital (continued) c) Stock Options (continued) Option pricing models require the input of highly subjective assumptions including the expected price volatility and expected life. 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 at the date of grant. d) Share Purchase Warrants Details of stock purchase warrant activity is as follows: June 30, 2008 March 31, 2008 Weighted average exercise Weighted average exercise price Quantity price Quantity Outstanding Beginning of the period $0.82 7,285,600 $0.83 8,098,100 Issued $1.07 3,540,000 $0.85 3,500,000 Exercised $0.90 (560,838) $0.66 (795,000) Forfeited / Expired - $0.75 (3,517,500) Outstanding End of the period $ ,264,762 $0.82 7,285,600 As at June 30, 2008, the outstanding share purchase warrants were as follows: Expiry Date Exercise Price Number of Warrants August 19, 2008 $ ,762 August 19, 2008 $ ,050,000 January 18, 2010 $ ,500,000 June 16, 2010 $ ,000 June 16, 2010 $ 1.10 / ,180,000 10,264,762 The fair value of the warrants issued has been calculated using the Black-Scholes Option Pricing Model, based on the following weighted average assumptions: June 30, 2008 March 31, 2008 Average risk-free interest rate 3.25% 3.23% Expected dividend yield 0% 0% Expected stock price volatility 96% 97% Average expected option life in years 2 years 2 years Option pricing models require the input of highly subjective assumptions including the expected price volatility and expected life. 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 at the date of grant.

16 9. Segmented Information The Company has one operating segment, which is mineral exploration in Africa. The Company has no revenue. Total assets by geographic segment are as follows: June 30, 2008 March 31, 2008 Canada $ 9,426,853 $ 5,549,575 Namibia 361, ,341 Tanzania 830, ,447 Capital assets by geographic segment are as follows: $ 10,617,961 $ 6,723,363 June 30, 2008 March 31, 2008 Canada $ 331,738 $ 341,785 Namibia 217, ,883 Tanzania 487, ,875 $ 1,037,297 $ 965,543 Net loss by geographic segment is as follows: June 30, 2008 June 30, 2007 Canada $ 303,175 $ 225,742 Namibia 138, ,648 Tanzania 1,266, ,182 $ 1,708,373 $ 1,191, Related Party Transactions During the period, the Company received legal services in the amount of $8,700 (June 30, 2007 $6,200) from a law firm, in which the Corporate Secretary of the Company is a partner. The amounts charged to the Company for the services provided have been determined by negotiation among the parties and, in certain cases, are covered by signed agreements. These transactions were in the normal course of operations and were measured at the exchange value, which is the amount of consideration established and agreed to by the related parties.

17 11. Subsequent Events Subsequent to June 30, 2008, 594,662 warrants were exercised for cash proceeds of $528,763. In addition, 2,630,100 warrants expired unexercised on August 19, 2008, with an average exercise price of $ ,000 options were forfeited on July 10, 2008 with an average exercise price of $0.78. Finally, 1,150,000 options were granted on July 24, 2008 with an exercise price of $0.85. They vest fully after 12 months and are valid for 5 years.

18 Interim Consolidated Schedules of Exploration Costs Canadian Dollars Unaudited - prepared by Management Saza Tanzania Makongolosi Gap Kwaheri Ilunga Namibia Exploration expenses: Geochemical Survey and Assay - 17,531 2,377 16,301 89,602 Other Surveys and Drill Assays 4, Drilling and Geophysics 565, ,908 Field Expenses and Consumables 43,524 1,245 1,245 1,245 7,864 Licence and Permits ,602 Consulting ,678 Transportation and Travel 17,929 3,230 3,178 3,494 1,522 Shipping and Administration 11, Salaries and Wages 93,108 1, ,301 Stock-based Compensation Recovery (7,082) (232) (82) (212) (1,900) Exploration Office Expenses 8, ,106 Recoveries ,377 Total costs for the three months ended June 30, ,419 24,202 8,519 22, , ,572 Saza Tanzania Makongolosi Gap Kwaheri Ilunga Namibia Exploration expenses: Geochemical Survey and Assay 11,484 9, Drilling and Geophysics 465, , Field Expenses and Consumables 16,102 5,154 4,634 4,634 8,456 Licence and Permits ,484 Consulting 3,660 3,660 3,660 3,660 - Transportation and Travel 11,035 11,035 11,035 11, Shipping and Administration 10,991 9, Salaries and Wages 110,900 27,589 5,865 5,881 33,960 Stock-based Compensation 18,230 13, ,400 Exploration Office Expenses 24,271 17, ,541 Total costs for the three months ended June 30, 2008: 672, ,134 26,893 26,910 98,334 1,307,903