LEXAM EXPLORATIONS INC. (TSX VENTURE: LEX) reports financial
results for the Fourth Quarter and twelve months, 2009. The Company
recorded net earnings of $6,225,543 ($0.13 per share) and
$14,573,538 ($0.30 per share) for the three and twelve month
periods versus a net loss of $3,440,742 ($0.07 per share) and
$2,705,730 ($0.06 per share) for the respective periods, 2008. The
market value of securities, cash and other monetary assets minus
liabilities was approximately $35.5 million at the end of the
Fourth Quarter, 2009 versus $10.3 million in the respective period,
2008 and $36 million at the end of the Third Quarter, 2009.
FINANCIAL RESULTS
For the three and twelve months ending December 31, 2009, Lexam
reported a profit of $6,225,543 ($0.13 per share) and $14,573,538
($0.30 per share). This compares with a loss of $3,440,742 ($0.07
per share) and a loss of $2,705,730 ($0.06 per share) in the
respective periods, 2008. Net profit (or loss), due to accounting
standards, will fluctuate from quarter-to-quarter. Lexam
anticipates this to continue in future.
The market value of securities, cash and other monetary assets
minus liabilities increased to approximately $35.5 million during
the Fourth Quarter 2009 versus $10.3 million in the respective
period 2008 and $36 million at the end of the Third Quarter 2009.
As of April 28, 2010 this figure was approximately $26.4 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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Q4 Q1 Q2 Q3 Q4 April 28
2008 2009 2009 2009 2009 2010
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Total Assets minus Total
Liabilities (in millions) $10.3 $12.6 $16.5 $36 $35.5 $26.4
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Per Share Basis $.21 $0.26 $0.34 $0.74 $0.73 $0.54
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The profit during the Fourth Quarter was due to the combination
of Lexam recognizing a $3.6 million unrealized gain on the VG Gold
warrants treated as derivative instruments for accounting purposes,
selling certain securities at a price that exceeded book value,
which resulted in a $3 million gain. This amount was offset by
operating losses at VG Gold ($0.2 million) and administrative
expenses ($0.1 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 operating losses
(or gains). Lexam's share of operating losses is determined by its
percentage ownership in VG Gold. Lexam also recognized an
unrealized gain on the warrants, which relates to the warrants
being treated as derivative instruments for accounting purposes.
The unrealized gain is included as a component of the investment
cost.
For example, if Lexam owns 40% of VG Gold it will assume 40% of
VG Gold's operating 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 December 31, 2009 was approximately
$10.7 million compared to $9.6 million at December 31, 2008. The
Company's cash balance at December 31, 2009 increased to $7.9 from
$2.0 million at December 31, 2008. The Company has no significant
contractual obligations. At December 31, 2009 and December 31,
2008, Lexam's outstanding common shares remained unchanged at
48,499,287.
The complete Fourth Quarter and Annual 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
VG Gold is an exploration company focused on the Timmins mining
camp in Ontario, Canada.
During the Fourth 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 December 31, 2009 Lexam's investment in VG Gold had a market
value of $27.8 million. As of April 28, 2010 Lexam's investment in
VG Gold has a current market value of $18.4 million.
Table 1 - Change in VG Gold Investment
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VG Gold Investment VG Gold Investment VG Gold Investment
(Q3-Sep 30, 2009) (Q4-Dec 31, 2009) (Apr 28, 2010)
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Number of Shares 37.5 million 75.0 million 75.0 million
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Number of
Warrants 37.5 million - -
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Market Value $23.6 million $27.8 million $18.4 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.
Table 2 - Paymaster West
Significant Drill Results
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Grade Interval Length Grade Interval Length
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Hole Number (gpt) (m) (opt) (ft)
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VGP-09-07 14.31 2.7 0.42 8.9
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VGP-09-10 41.67 1.8 1.22 5.9
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And 5.25 10.6 0.15 34.8
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VGP-09-19 11.6 2.0 0.34 6.6
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VGP-09-20 1,390.0 0.9 40.54 3.0
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VGP-09-23 9.4 4.6 0.27 15.1
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VGP-09-36 32.0 1.5 0.93 5.0
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VGP-09-37 52.8 0.8 1.54 2.7
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VGP-09-45 2.29 37.3 0.07 122.4
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VGP-09-58 129.50 0.9 3.78 3.0
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In addition to the Paymaster West Project, VG Gold has
identified a number of prospective gold targets on other projects
that it controls. Drilling has now commenced on the
Davidson-Tisdale property, which is 68.5% owned by VG Gold and
31.5% by San Gold Corporation. Deeper drilling is scheduled to
occur on Buffalo Ankerite and Paymaster West during the second
quarter.
All exploration work is conducted under Kenneth Guy, P. Geo.,
designated Qualified Person for VG Gold, who has reviewed and
approved this section of the news release pertaining to VG Gold's
exploration results. VG Gold has instituted a Quality Control and
Assurance program (QA/QC), 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. For additional information regarding VG
Gold's exploration results and disclosure, please visit
www.vggoldcorp.com.
RUBICON MINERALS INVESTMENT
Red Lake, Ontario, Canada
Rubicon Minerals is an exploration company focused on the Red
Lake Mining Camp in Ontario, Canada.
As of December 31, 2009 and April 28, 2010 Lexam owned
approximately 0.6 million shares of Rubicon. It is important to
note that Lexam has net taxes receivable in relation to these
shares based on Rubicon's share price at the time they were
received (US$2.00 per share). Therefore, 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 $4.50 capital gains would only be
applied to amount that exceeded $2.00. In this example the taxable
amount would be $2.50).
Table 3 - Change in Rubicon Investment
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Rubicon Investment Rubicon Investment Rubicon Investment
(Q3-Sept 30, 2009) (Q4-Dec 31, 2009) (Apr 28, 2010)
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Number of Shares 2.3 million 0.7 million 0.7 million
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Market Value $10.2 million $3.2 million $2.6 million
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BACA OIL & GAS PROJECT
Colorado, USA
The Baca Oil and Gas Project is located in south-central
Colorado, USA. The Company owns 75% of the oil and gas rights. The
remaining 25% is owned by ConocoPhillips.
During the Fourth Quarter of 2008, the Company 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 required
before the Company could move forward with its planned exploration
for oil and gas.
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. A Preliminary Injunction Hearing was held on
May 20, 2009.
On September 4, 2009 the Company announced that the Federal
District Court granted the SLVEC Motion for a Preliminary
Injunction against the USFWS. This decision prohibits any
exploration drilling by the Company until a final ruling is reached
in the litigation.
On November 17, 2009 the parties to the litigation attended a
court mandated Settlement Conference. On January 15, 2010 a second
Settlement Conference was held to discuss a potential settlement
terms and to set a briefing schedule should the settlement be
unsuccessful.
The Company has extended an offer to sell its mineral interests
underlying the Baca Wildlife Refuge and surrounding areas for cash
consideration of US$8,400,000. If a signed agreement of purchase
and sale has not been executed by June 11, 2010, the Company will
proceed with litigation. The plaintiffs' first brief is due July
16, 2010, and the Company's brief is due on August 20, 2010. The
purchase price offered by the Company represents a settlement
proposal to resolve pending litigation and does not represent
management's valuation of the Company's mineral interest on the
Baca property.
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
by Golden Valley Mines. No exploration is currently planned for
this project.
During the Fourth Quarter Lexam received a provincial rebate
totaling approximately $897,220 from the Quebec government, in
connection with 2008 exploration activities. At December 31, 2009
Lexam has an outstanding receivable balance of $22,730 owing from
the Quebec government regarding 2009 exploration expenditures.
About Lexam
Lexam is a North American exploration company. The Company holds
a significant equity stake in VG Gold Corp along with shares in
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.
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 forward looking
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; outcome of on-going or pending litigation 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 Fourth Quarter and Annual 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. Ian J. Ball VP, Corporate
Development (647) 258-0395 or Toll Free: (866) 441-0690 (647)
258-0408 (FAX) info@lexamexplorations.com www.lexamexplorations.com
Corporate Head Office Lexam Explorations Inc. 99 George Street, 3rd
Floor Toronto, ON M5A 2N4
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