(All amounts expressed in Canadian dollars)
LEXAM EXPLORATIONS INC. (TSX VENTURE: LEX)(PINK SHEETS: LEXEF)
today reported financial results for the Third Quarter, 2009. The
Company recorded net earnings of $1,664,740 ($0.03 per share) as
compared to $588,263 ($0.01 per share) for the Third Quarter, 2008.
The market value of securities, cash and other monetary assets
minus total liabilities increased to approximately $38.6 million
during the Third Quarter, 2009 versus $11.0 million in the
respective period, 2008 and $16.5 million at the end of the Second
Quarter, 2009.
FINANCIAL RESULTS
Third Quarter - 2009
For the three and nine months ended September 30, 2009, Lexam
reported a profit of $1,664,740 ($0.03 per share) and $1,593,931
($0.03 per share), respectively. This compares with a profit of
$588,263 ($0.01 per share) and $735,012 ($0.02 per share) in the
respective periods, 2008. Net profit (or loss), due to accounting
standards, will fluctuate from year-to-year. Lexam anticipates this
to continue in future quarters.
The market value of securities (including all VG Gold warrants
with an exercise price of $0.15), cash and other monetary assets
minus total liabilities increased to approximately $38.6 million
during the Third Quarter 2009 versus $11.0 million in the
respective period, 2008 and $16.5 million at the end of the Second
Quarter 2009. As of November 25, 2009 this figure had increased to
approximately $39.7 million. Lexam believes this figure provides
the best overview of the Company's financial health. For a
quarter-over-quarter comparison, please see Table 1.
Table 1.
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Nov 25
2008 2008 2008 2008 2009 2009 2009 2009
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Total Assets minus
Total Liabilities
(in millions) $10.5 $10.1 $11.0 $10.3 $12.6 $16.5 $38.6 $39.7
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Per Share Basis $0.22 $0.21 $0.23 $0.21 $0.26 $0.34 $0.80 $0.82
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The profit during the Third Quarter was due to realized gains
made on the sale of certain Available-for-sale securities ($4.0
million). This amount was partially offset by foreign exchange
losses ($0.9 million), administrative expenses ($0.1 million),
exploration expenses ($0.1 million) and income tax expense ($1.3
million).
Unlike the shares Lexam holds in Rubicon, which are held on the
Company's Balance Sheet at fair market value, the VG Gold shares
are equity accounted and held at cost, subject to quarterly
adjustments based on Lexam's share of VG Gold's reported losses (or
gains). Lexam's share of reported losses is determined by its
percentage ownership in VG Gold.
For example if Lexam owns 40% of VG Gold it will assume 40% of
VG Gold's reported losses. Assuming VG Gold reports a loss, Lexam
will lower its cost of investment by this amount and record the
same amount against its earnings. These losses have no direct
impact on Lexam's cash balances or the value of its security
holdings.
Lexam's working capital at September 30, 2009 was approximately
$16.7 million compared to $9.6 million at December 31, 2008. The
Company's cash balance at September 30, 2009 has decreased to $1.4
million from $2.0 million at December 31, 2008. The Company has no
significant contractual obligations. At September 30, 2009 and
December 31, 2008, Lexam had 48,499,287 common shares
outstanding.
The complete Third Quarter report, including management's
discussion and analysis, financial statements, and notes can be
found on the Company's website at www.lexamexplorations.com and on
SEDAR at www.sedar.com.
VG GOLD CORP INVESTMENT
Timmins, Ontario, Canada
On July 21, 2009 Lexam announced that it agreed to make a $3.0
million strategic investment in VG Gold Corp. for an aggregate
subscription of 37.5 million units issued by way of a private
placement. VG Gold is an exploration company focused on the Timmins
mining camp in Ontario, Canada. Each unit was priced at $0.08 and
included one common share and one common share purchase warrant
exercisable at $0.15 per share for a period of eighteen months.
Under terms of the agreement Lexam was granted the right to
nominate a director and the right to participate pro-rata in future
VG Gold financings, provided Lexam's aggregate interest remains
above 10% of common shares outstanding. Lexam completed the
investment in two tranches with the first tranche closing on July
21, 2009 and the second tranche closing on September 1, 2009.
Subsequent to the end of the Third Quarter Lexam exercised its
right to nominate a director. Mr. John Drake's nomination was
submitted by Lexam and accepted by the VG Gold board on October 5,
2009. In addition, Lexam exercised 37.5 million warrants on October
21, 2009 for total consideration of $5.6 million in order to help
fund VG Gold's ongoing exploration. The warrant exercise increased
Lexam's ownership from 27% (37.5 million common shares) to 42% (75
million common shares) of VG Gold's outstanding common shares.
At September 30, 2009 Lexam's investment in VG Gold (including
an intrinsic value for warrants outstanding at that date) had a
market value of $23.6 million. As of November 25, 2009 Lexam's
investment in VG Gold had a current market value of $31.1
million.
Table 1 - Change in VG Gold Investment
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VG Gold Investment VG Gold Investment
(Q3-Sept 30, 2009) (Nov 25, 2009)
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Number of Shares 37.5 million 75.0 million
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Number of Warrants 37.5 million -
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Market Value $23.6 million $31.1 million
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Early results from VG Gold's drilling have intersected
favourable gold mineralization (Table 2). Drilling to date has been
focused on the Paymaster West Project, where VG Gold has an option
to earn 60% from Goldcorp Inc., by making $6.0 million in
exploration expenditures by June 2012. Once VG Gold has given
notice that it has earned its 60%, Goldcorp has six months to
decide if it wishes to increase its ownership from 40% to 70% by
paying VG Gold $710,000 and spending $8.25 million on the property
within two years and also completing a feasibility study by the end
of year three. Drilling is expected to continue at the Paymaster
West Project until the end of the year.
Table 2 - Paymaster West
Significant Drill Results
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Hole Grade Interval Grade Interval Qualified
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Number (gpt) Length (m) (opt) Length (ft) Person Note
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VGP-09-07 14.31 2.7 0.42 8.9 i
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VGP-09-10 41.67 1.8 1.22 5.9 i
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And 5.25 10.6 0.15 34.8 i
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VGP-09-19 11.6 2.0 0.34 6.6 ii
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VGP-09-20 1,390.0 0.9 40.54 3.0 ii
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VGP-09-23 9.4 4.6 0.27 15.1 iii
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In addition to the Paymaster West Project, VG Gold has
identified a number of gold targets that appear very prospective on
other projects that it controls. Drilling is scheduled to commence
on the Fuller, Davidson-Tisdale and Buffalo Ankerite projects in
late 2009/early 2010. VG Gold has indicated that they anticipate
having two drills continuously working over the next twelve
months.
Qualified Person
All of VG Gold's exploration work was conducted under the
supervision of Kenneth Guy, P. Geo., a full-time employee of VG
Gold and their designated Qualified Person as defined in Canadian
National Instrument 43-101. Mr. Guy has reviewed, approved and
taken responsibility for the contents of all of VG Gold's technical
information appearing in this release and the original
dissemination of the same information publicly released by VG Gold
as per the following Notes:
Note i) Press Release dated September 8, 2009. Gold analysis of
samples collected by VG Gold was assayed by Laboratoire Expert in
Rouyn-Noranda, Quebec. Analysis consisted of a fire assay of a
30-gram sample with an atomic absorption finish. Samples assaying
over 1.0 gram per tonne Au are re-assayed with gravimetric finish.
Samples noted to contain visible gold are analyzed via total
metallic assay method. A rigorous Quality Control and Assurance
program (QA/QC) is in place, using control samples such as Blanks
and Rocklabs Standards and duplicate checks. In addition, duplicate
analyses of 10% of the samples were corroborated by check assays on
sample performed by Bourlamaque Laboratory of Val D'Or, Quebec.
Note ii) Press Release dated October 19, 2009. Gold analysis of
samples collected by VG Gold was assayed by ALS Chemex. Analysis
consisted of a fire assay of a 30-gram sample with an atomic
absorption finish. Samples assaying over 10.0 gram per tonne Au are
re-assayed with gravimetric finish. Samples noted to contain
visible gold are analyzed via total metallic assay method. A
rigorous Quality Control and Assurance program (QA/QC) is in place,
using control samples such as Blanks and duplicate checks. In
addition, duplicate analyses of 10% of the samples are corroborated
by check assays on sample performed at a third party
Laboratory.
Note iii) Press Release dated November 9, 2009. All drilling was
completed using NQ size core. Gold analysis of the samples
collected by VG Gold was assayed by ALS Chemex. Analysis consisted
of a fire assay of a 30-gram sample with an atomic absorption
finish. Samples assaying over 10.0 gram per tonne Au are re-assayed
with gravimetric finish. Samples noted to contain visible gold are
analyzed via total metallic assay method. A rigorous Quality
Control and Assurance program (QA/QC) is in place, using control
samples such as Blanks and duplicate checks. In addition, duplicate
analyses of 10% of the samples are corroborated by check assays on
sample performed at a third party Laboratory.
RUBICON MINERALS INVESTMENT
Red Lake, Ontario, Canada
In early 2007 Lexam traded its Nevada properties for Rubicon
common shares. Since then, Rubicon has announced exciting drill
results from its Phoenix Gold Project, located in the Red Lake gold
district of Ontario, Canada.
At September 30, 2009 Lexam owned approximately 2.3 million
shares of Rubicon. Subsequent to the end of the Third Quarter Lexam
sold a further 1.2 million shares in order to exercise its warrants
in VG Gold Corp. Lexam currently owns 1.1 million shares of Rubicon
with a current market value of $5.1 million (as of November 25,
2009). Lexam is only required to pay capital gains on sales that
exceed US$2.00 per share (for example, if a share is sold for
US$4.50, capital gains would only be applied to the US amount that
exceeded US$2.00. In this example the taxable amount would be
US$2.50).
Table 3 - Change in Rubicon Investment
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Rubicon Investment Rubicon Investment Rubicon Investment
(Q2-June 30, 2009) (Q3-Sept 30, 2009) (Nov 25, 2009)
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Number of
Shares 4.0 million 2.3 million 1.1 million
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Market Value $13.7 million $10.2 million $5.1 million
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BACA OIL & GAS PROJECT
Colorado, USA
The Baca Oil and Gas Project is located in south-central
Colorado, USA. Lexam owns 75% of the oil and gas rights. The
remaining 25% is owned by ConocoPhillips. Lexam's exploration
proposal includes two natural gas wells that will reach depths of
4,265 m.
During the Fourth Quarter of 2008, Lexam announced that the
United States Fish and Wildlife Service (USFWS) had issued a
Finding of No Significant Impact (FONSI). The USFWS' decision was
reached based on the results of an Environmental Assessment (EA)
conducted by the Service under the National Environmental Policy
Act (NEPA). The USFWS environmental review process lasted 15 months
and involved extensive public meetings, participation, and comment
by all interested parties. This decision by the USFWS was the final
approval by the government before Lexam could move forward with its
proposed exploration.
The Baca Project has been consistently challenged by opposition
groups and on November 3, 2008 the San Luis Valley Ecosystem
Council (SLVEC) made a motion to reopen litigation against the
USFWS. The SLVEC maintains that USFWS decision to issue a FONSI
based on the EA does not comply with NEPA.
During the First Quarter of 2009, the District Court of Colorado
ordered that the motion to reopen litigation against the USFWS be
allowed to proceed and scheduled a hearing for May 20, 2009.
On September 4, 2009 Lexam announced that the Federal District
Court granted the SLVEC Motion for a Preliminary Injunction against
the USFWS. This decision prohibits any exploration drilling by
Lexam until a final ruling is reached in the litigation. No date
has been scheduled for the pending litigation. Lexam will notify
shareholders once a date has been established.
OTISH URANIUM PROJECT
Quebec, Canada
The Otish Uranium Project is located in north-central Quebec,
Canada. Lexam owns 50% of the project with the remaining 50% owned
Golden Valley Mines. No exploration is currently planned for this
project.
During the Third Quarter Lexam received a provincial rebate
totaling approximately $897,220 from the Quebec government, in
connection with recent exploration activities. Subsequent to the
Third Quarter an additional $56,374 was received. At September 30,
2009, Lexam expects to receive further provincial rebates from the
Quebec government, in connection with recent exploration
activities.
About Lexam
Lexam is a North American exploration company. The Company holds
significant equity stakes in VG Gold Corp and Rubicon Minerals
Corp. Lexam also owns 75% of the Baca Oil & Gas Project in
south-central Colorado, USA and it has a 50% joint venture interest
in the Otish Basin uranium project located in Quebec, Canada with
Golden Valley Mines.
RELIABILITY OF INFORMATION
VG Gold is responsible for and has supplied to the Corporation
all reported results from their exploration activities. All VG Gold
technical information contained in this release is based entirely
on information provided to Lexam Explorations Inc. by VG Gold. VG
Gold is an entity in which the Corporation has a significant equity
interest only. The Corporation does not accept responsibility for
the use of any VG Gold technical data or the adequacy or accuracy
of VG Gold technical information provided in this release. There
can be no assurance that information reported to the Corporation by
VG Gold is accurate, the Corporation has not independently verified
such information and readers are therefore cautioned regarding the
extent to which they should rely upon such information.
CAUTIONARY STATEMENT
Some of the statements contained in this release are
"forward-looking statements". Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to
differ materially from the anticipated results, performance or
achievements expressed or implied by such forwardlooking
statements. Factors that could cause actual results to differ
materially from anticipated results include risks and uncertainties
such as: ability to raise financing for further exploration and
development activities; risks relating to estimates of reserves,
deposits and production costs; extraction and development risks;
the risk of commodity price fluctuations; political, regulatory and
environmental risks; and other risks and uncertainties in the
reports and disclosure documents filed by Lexam from time-to-time
with Canadian securities regulatory authorities. The Company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. The complete Third Quarter report
including management's discussion and analysis, financial
statements and notes can be found on our Company's website at
www.lexamexplorations.com and on SEDAR at www.sedar.com.
Contacts: Lexam Explorations Inc. Helen Bilhete Director,
Investor Relations (647) 258-0395 or Toll Free: (866) 441-0690
(647) 258-0408 (FAX) Lexam Explorations Inc. Corporate Head Office
99 George Street, 3rd Floor Toronto, ON M5A 2N4
info@lexamexplorations.com www.lexamexplorations.com
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