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Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 1
The following Management’s Discussion and Analysis (“MD&A”) of Oro Gold Resources Ltd. (“Oro
Gold” or the “Company”) has been prepared as of October 23, 2009 and is intended to be read in
conjunction with the Company’s unaudited consolidated financial statements for the nine months
ended August 31, 2009 together with the notes thereto and the Company’s audited Consolidated
Financial Statements and Notes for the years ended November 30, 2008 and 2007.
The interim financial statements for the nine months ended August 31, 2009 have been prepared by
management in accordance with Canadian generally accepted accounting principles. The MD&A has
not been reviewed by the Company’s auditors. This MD&A constitutes an update to the November 30,
2008 Annual MD&A.
Throughout this report we refer to “Oro Gold”, the “Company”, “we”, and “us”, “our” or “its”. All these terms
are used in respect of Oro Gold Resources Ltd. Additional information relating to the Company is
available on the SEDAR website at www.sedar.com. All the financial information in this MD&A and all
dollar amounts in the tables, including comparatives, are expressed in Canadian dollars, unless
otherwise noted.
Cautionary Statement on Forward-Looking Information
This MD&A is based on a review of the Company’s operations, financial position and plans for the future
based on facts and circumstances as of October 23, 2009. Except for historical information or statements
of fact relating to the Company, this document contains assumptions, estimates, and other forwardlooking
statements regarding future events. Such forward-looking statements involve inherent risks
and uncertainties and are subject to factors, many of which are beyond the Company’s control that
may cause actual results or performance to differ materially from those currently anticipated in such
statements. Important factors that could cause actual results to differ materially from those expressed
or implied by such forward-looking statements include among others metal price volatility, economic
and political events affecting metal supply and demand, fluctuations in ore grade, tonnes of ore milled,
geological, technical, and mining or processing problems. Readers are cautioned not to put undue
reliance on these forward-looking statements.
BUSINESS DESCRIPTION
Oro Gold is an exploration stage company involved in the acquisition and exploration of mineral properties
in Mexico and Central America. The Company does not have any producing mineral properties at this time.
The Company directly and indirectly holds several mining concessions in Mexico. The level of exploration
operations has been determined by the availability of capital resources. To date, equity financing,
consisting of the Initial Public Offering, private placements, and subsequent warrants and options exercises
have provided the main source of funding. The Company is a reporting issuer in British Columbia, Alberta
and Ontario. Commencing April 18, 2005, the Company began trading on the TSX Venture Exchange
under the symbol “OGR”.
Oro Gold has various properties located in Mexico and generative properties located in Panama, with 3 of
the properties optioned to joint venture partners. The district-scale Trinidad property continues to be the
Company’s top priority project and the main focus of exploration and resource definition efforts. Ongoing
generative activity and a joint venture strategy will continue to be a fundamental part of Oro Gold’s growth.
The Company’s mission is to build shareholder value by making discoveries and developing low-cost gold
resources through early and advanced stage exploration.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 2
CORPORATE REORGANIZATION
On February 8, 2007, Oro Gold completed the transfer of its Mexican silver holdings to its 100% owned
subsidiary Minera Oro Silver de Mexico S.A. de C.V. (“Oro Silver de Mexico”). The ownership of this
subsidiary was then transferred to another subsidiary, Oro Silver Resources Ltd. (“Oro Silver”). Oro Gold
then distributed its ownership of Oro Silver to the existing Oro Gold shareholders pursuant to a corporate
spinout/restructuring transaction (“Plan of Arrangement”).
Under the Plan of Arrangement (“Arrangement”), Oro Gold shareholders received Oro Silver units on the
basis of one unit of Oro Silver for every four common shares held in Oro Gold. Each Oro Silver unit
consisted of one common share and one half-warrant. Each whole warrant was exercisable at $0.35 per
share with an expiry date of June 8, 2007. As a result, Oro Gold shareholders received 4,633,086 common
shares and 2,316,543 share purchase warrants in Oro Silver under the Arrangement. Also pursuant to the
same Arrangement, upon exercise of an Oro Gold option or warrant outstanding at the date of the
Arrangement, the holder or shareholder is entitled to receive an additional Oro Silver unit on the same one
unit of Oro Silver for each four common shares of Oro Gold acquired on exercise of Oro Gold options or
warrants. Oro Silver is then entitled to receive 25% of the proceeds of such option or warrant exercises
from Oro Gold as its share of the proceeds of such exercises.
Also pursuant to the Arrangement, Oro Gold acquired 1,000,000 shares of Oro Silver at a price of $0.25 per
share for a total investment of $250,000. As at August 31, 2009, these shares had a fair value at $0.09 per
share. As of the date of this MD&A, 150,000 of these Oro Silver shares remain in escrow and will be
released on February 22, 2010.
HIGHLIGHTS
Property Agreements and Exploration
• The Company obtained title for two properties: Tigra Negra and El Salto, both in the State of
Nayarit, in Mexico. Both properties are adjoining the Company’s Trinidad property.
• A 10,000 metre drill program is ongoing at the Trinidad project.
Financing and Corporate:
• The Company closed its brokered private placement announced on June 17, 2009 for gross
proceeds of $12,040,000. (Press Release dated July 7, 2009).
• Mr. Frank Powell was appointed to the Board of Directors. Mr. Powell is Oro Gold’s Vice President
and brings with him over 20 years experience in the exploration industry. During the same period,
Mr. William Threlkeld stepped down as a director.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 3
RESULTS OF OPERATIONS
Summary of Financial and Operational Results
The Company’s net loss for the nine months ended August 31, 2009 totalled $3,095,693, a loss of $0.08
per share (nine months ended August 31, 2008 - $3,430,318 a loss of $0.15 per share). These results
include interest income and other income of $10,829 and foreign exchange loss of $136,140 (2008 –
interest and other income of $52,892 and foreign exchange gain of 127,727).
During the year ended November 30, 2008, the Company retrospectively changed its accounting policy for
exploration expenditures to more appropriately align itself with policies applied by other comparable
companies at a similar stage in the mining industry. Prior to the year ended November 30, 2008, the
Company capitalized all such costs to mineral properties held directly or through an investment and only
wrote down capitalized costs when the property was abandoned or if the capitalized costs were not
considered to be economically recoverable.
Exploration expenditures are now charged to earnings as they are incurred until the mineral property
reaches the development stage. Significant costs related to property acquisitions, including allocations for
undeveloped mineral interests, are capitalized until the viability of the mineral interest is determined. When
it has been established that a mineral deposit is commercially mineable and an economic analysis has been
completed, the costs subsequently incurred to develop a mine on the property prior to the start of mining
operations are capitalized.
The impact of this change on the previously reported August 31, 2008 interim consolidated financial
statements is as follows:
As previously
reported Restatement As restated
Resource Property Costs at Aug 31, 2008 5,402,979 (4,992,372) 410,607
Exploration expenses for the period ended Aug 31, 2008 167,546 2,446,393 2,613,939
Stock Compensation Expense for the period ended Aug 31, 2008 109,277 55,500 164,777
Loss for the period ended Aug 31, 2008 927,021 2,503,297 3,430,318
Loss per share for the period ended Aug 31, 2008 0.04 0.11 0.15
Deficit at Aug 31, 2008 5,584,831 5,204,752 10,789,583
Deficit at Aug 31, 2007 2,650,161 3,217,222 5,867,383
As a result of the restatement, cash outflows from operations for the nine months ended August 31, 2008
increased from $767,526 to $3,215,324 and cash inflows related to investing activities increased from an
outflow of $1,167,260 to an inflow of $673,268.
Summary of Quarterly Results
The following table summarizes selected financial data reported by the Company for the quarters ended
August 31, 2009 May 31, 2009, February 28, 2009, November 30, 2008, August 31, 2008, May 31, 2008,
February 29, 2008 and November 30, 2007.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 4
(Restated) (Restated) (Restated) (Restated)
For the quarters ended: Aug 31,
2009
May 31,
2009
Feb. 28,
2009
Nov. 30
2008
Aug. 31,
2008
May 31,
2008 Feb. 29, 2008 Nov. 30,
2007
$ $ $ $ $ $ $ $
Interest and other income 2,733 4,529 3,568 566 2,643 9,910 10,485 5,619
Loss 1,494,817 1,120,658 480,218 1,366,124 1,375,773 872,555 1,181,991 1,451,438
Net loss per common share, basic
and diluted 0.03 0.03 0.02 0.05 0.06 0.04 0.06 0.07
For the three month period ended August 31, 2009 (“2009 Q3”), the Company reported a consolidated
loss of $1,494,817 or $0.03 per share as compared with the corresponding period in the prior year
(“2008 Q3”) of $1,375,773 or $0.06 per share.
Operating expenses for the 2009 Q3 totalled $1,417,865 (2008 Q3 - $1,417,578). Significant expenses for
this period are as follows:
• Exploration expenses totalled $924,475 (2008 Q3 - $991,847). Exploration costs relate to
generative exploration in Mexico, Panama and other areas of Latin-America, as well as project
exploration costs.
• Management and consulting fees - $103,531 (2008 Q3 - $62,946). The increase is due to payment
of $28,140 in bonuses.
• Salary expenses totalled $215,422 (2008 Q3 - $71,104) and increased due to $31,510 in bonuses
paid and an increase in number of employees including the hiring of an Accountant, Resources
Evaluation Manager, IR Manager and Corporate Secretary.
• Foreign exchange loss totalling $77,970 (2008 Q3 - gain $16,169). The increased loss relates to
the depreciation of the Canadian dollar relative to the US dollar and Mexican peso during the
period.
• Accounting and legal costs totalled $42,454 (2008 Q3 - $20,828). Costs are mainly related to
external accounting and taxation services, most of which were done in-house during the same
period last year; and include accruals for current year’s audit.
• Investor relations expenses, which include costs of investor dissemination, investment shows and
consulting expenses for marketing and strategy, were $34,019 and increased, compared to those in
2008 Q3 - $22,466. This is due to increased investor relations and marketing initiative activities for
the period.
Stock-based Compensation
There were no stock options issued during the current quarter.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 5
PROPERTIES SUMMARY
Trinidad Property, México
The 651 km2 Trinidad property was originally staked by Oro Gold and is located in an area of good
infrastructure, 90 kilometres east of Mazatlan. The Company received the Trinidad’s exploration title in
2007. The property includes the former Taunus open-pit gold mine, previously owned by Eldorado Gold
Corporation and in production from 1996 to 1998. The expected mine life was 4 years; however, the mine
was shut down in 1998 due to low gold price. The Company obtained feasibility study data for the pastproducing
mine located on the property and completed its resource estimate using the historical drill data as
well as surface work completed by Oro Gold. This resource estimate indicated that 1,624,000 tonnes
grading 1.76 g/t for a total of 91,915 ounces of gold remained in the Taunus Pit and Colinas areas. The
resource estimate was later increased by 119% to 200,930 ounces of gold representing 4,491,800 tonnes
at 1.39 g/t gold at a 0.5 g/t gold cut-off (press releases dated May 29, 2008 and July 2, 2008).
In July 2008, the Company commenced a reverse circulation (RC) and core drill program at Trinidad which
was completed in October 2008 (press releases dated October 6 and 15, 2008). The drill results indicated
good potential to increase the gold grade and expand the new zone discovered by Oro Gold.
The drill intersection of 8.5 g/t gold over 61 metres was significant since it was the first core hole into the
heart of a new discovery area. In addition, on October 15, 2008 Oro Gold reported gold assay results for a
third twin core hole which intersected 5.3 g/t gold over 7.8 metres and 9.7 g/t gold over 7.0 metres. The
core hole was a twin of an RC hole which had two corresponding intervals: 1.7 g/t gold over 8.0 metres
compared to 5.3 g/t gold over 7.8 metres in the core hole, and 1.8 g/t gold over 8.0 metres compared to 9.7
g/t gold over 7.0 metres in the core hole. This confirmed a significant increase in gold grade in the core
interval for the same mineralized interval in the RC hole.
A core drilling program of 2,500 metres commenced in April 2009. Drilling defined and expanded the new
high-grade breccia zone discovered. The results of this drill program exceeded expectations with
demonstration of a much higher grade in core than in RC drill holes with intercepts such as 5.3 g/t gold over
65.9 metres in 09TR015, 5.2 g/t gold over 36.5 metres in 09TR016, 5.3 g/t gold over 65.9 metres in
09TR019 or 8.6 g/t gold over 20.9 metres in 09TR022 as well as the expansion of the high-grade zone that
is now known over 350m strike length (press releases: May-20-09 Hole 15; May-26-09 hole 16/17A; Jun-
11-09 Holes 18-20; and Jul-16-09 holes 21-22).
The drill results from July 2008 to present demonstrate the significant upside potential at the Trinidad
project and the entire district. The drill results should have a positive impact on the Company’s reported
National Instrument 43-101 inferred oxide gold resource (200,930 ounces at an average grade of 1.4 g/t
gold released July 2, 2008), as the resource estimate does not include the high-grade gold results from this
recent diamond drilling.
Recent Developments
Oro Gold continues core drilling with the objective of updating the resource estimate during the first half of
2010 depending on geologic conditions and drilling success. In July 2009, the Company launched an
Induced Polarization (IP) / Magnetometer / Electro Magnetic (EM) geophysical test in order to identify the
geophysical signature of the mineralized breccia zone. The test was judged positive as it gave indications
on the geology of the Taunus area. The full survey was then carried out from the north of Bocas to the
south of Colinas.
Since July 2009 the Company has continued drilling in the Taunus area, initially with one drill-rig and with
two from August on, while the exploration team reinterpreted the high-quality geological information
gathered in the first phase of the drill program. The first rig was devoted to resource definition at the inferred
category level. The second rig initially drilled a couple of definition holes; though, it is now drilling
exploration holes within 1km of the Taunus area. Due to difficult drilling conditions, two holes were lost
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 6
before target depth. However hole 09TR025 intersected 3.6 g/t gold over 81.8 metres, including 7.1 g/t gold
over 31.9 metres and hole 09TR027A 5.2 g/t gold over 18.7m.
The Company plans to us an RC rig by November 2009 to test exploration targets and pre-collar for deep
holes. .
In addition, during the period, the Company re-appraised the San Miguel area in order to commence drilling
in November/December 2009, and initiated a regional exploration program for the unexplored areas of the
Trinidad property.
Further information on the drill results, the location of the drill holes and the targeted zones can be viewed
on our website at www.orogoldresources.com.
El Habal Property, Mexico
As part of the El Habal package, Oro Gold acquired a 100% interest in the 80 hectare San Pablo property
located approximately 10 km east of the past-producing Rosario gold-silver mine in Sinaloa, Mexico in May
2008. Oro Gold has been consolidating a property position surrounding the San Pablo concession over the
last two years. A total of five concessions have been acquired, two through the Mexican government lottery
process, and three by staking open ground. The acquisition of San Pablo completes the consolidation of a
3,765 hectare El Habal land package which gives Oro Gold a 100% interest in another prospective area
within the Rosario gold belt.
The El Habal property has had a long history of exploration and development dating back to the 1930’s.
Most recently, in 1999, MK Gold Company entered into a joint venture agreement with the previous owner,
Cominco, and drilled seven reverse circulation (RC) holes. Six of the seven holes did not encounter
significant mineralization, however one of the holes intersected 1.3 g/t gold over 261m in historic hole EH-5.
The mineralized interval occurs at 40 metres below surface and continues to the end of the hole and is
described as quartz stockwork veining in altered volcanics. The drilling was completed prior to the
implementation of National Instrument (“NI”) 43-101 standards and therefore, these drill results are noncompliant
with NI 43-101. The results are considered to be indicative of a potential mineralized system at El
Habal. Oro Gold is currently in the process of obtaining the drill data.
A number of historic workings have been identified on the property. Three underground workings were
developed on pipe-shaped silicified zones ranging in size from 500 to 1,200 square metres. The zones are
aligned in a northeast direction and are described as being zones of structural intersections. The sampling
completed by the Mexican Council of Mineral Resources in 1985 indicates grades ranging from 1 to 14 g/t
gold.
Given the historic indications of mineralized intervals and the observed stratigraphic controls of alteration,
Oro Gold considers the El Habal property to have excellent potential to host a bulk tonnage, near surface
gold deposit.
Recent Developments
During the period, the Company completed a mapping and sampling program initiated in October 2008.
Best results include 34.8g/t gold over 1.5m including 3.0g/t gold over 4.4m. A drill program consisting in 5
holes was defined. Drilling started at the El Habal with an attempt to twin historic hole EH-5. The program
is in progress. The last hole will test the area of a second mine, La Española, located 1.3km northwest of El
Habal.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 7
Cimarron Property, Mexico
On April 28, 2008, Oro Gold completed the earn-in of 100% of the Cimarron property by making a one-time
payment of $250,000 plus Mexican value added tax to the underlying vendor. The underlying vendor
retains a sliding scale NSR based on the price of gold.
On November 30, 2007 the Company entered into Formal Agreements with Mazorro Resources Inc.
(“Mazorro”) and its subsidiary, Minera Mazorro S.R.L. de C.V. with regard to the Cimarron concession, and
the Veteranos, Navidad I, Navidad II and Navidad II concessions owned by the Company (the “Oro
Concessions”). Under the term of these agreements, the Company granted Mazorro the exclusive option to
acquire a 60% undivided interest in the Cimarron concession and in the Oro Concessions by paying the
Company $135,000 (received) and by spending US$2,652,500 on the properties in stages by June 30,
2011 and by issuing one million common shares of Mazorro to the Company in stages to June 30, 2010.
These optional expenditures and share issuances include incurring a cumulative expenditure of
US$550,000 by March 31, 2008 (completed), a cumulative expenditure of US$1,392,500 by June 30, 2009
and the issuance of 500,000 shares (received) and a cumulative 700,000 common shares by June 30, 2009
(in default).
In June 2008, Oro Gold and Mazorro commenced the first phase of a 5,000 metre RC drill program. This
program consisted of 2,400 metres of drilling. The drill program was designed to target the kilometre-scale
gold anomaly at the Calerita prospect, as well as drill-test anomalies identified from the soil geochemical
and magnetic surveys covering 326 line-kilometres.
The Company announced the completion of the drill program in September 2008 (press release dated
September 4, 2008). The drilling confirmed the presence of a significant outcropping gold-bearing zone.
Highlights of the drill program included holes CIMRC08-001: 0.6 g/t gold over 84 metres; CIMRC08-002: 0.9
g/t gold over 90 metres (including 1.8 g/t gold over 24 metres); CIMRC08-004: 0.7 g/t gold over 60 metres;
and CIMRC08-006: 0.5 g/t gold over 76 metres.
Based on these encouraging results, two diamond holes were drilled and they confirmed the previous RC
drilling results and provided additional geological data to aid in interpreting the RC results. The Calerita
target is centered on a 1 kilometre by 300 metres northeast trending gold-in-soil anomaly hosted in intrusive
and volcanic rocks. The drilling at Calerita expanded the known gold mineralization at depth. The
dimensions of the zone are now at least 350 metres by 250 metres at surface and to a depth of
approximately 100 metres. Prospecting in the second half of 2008 also identified a few new gold and copper
occurrences in the south of the property and new targets were defined through surface mapping and
sampling.
The results of the first phase of drilling were very encouraging. The good infrastructure of the property in
terms of road access, proximity to power, and location near an international port makes the project
economics potentially very attractive if we continue to discover and define a gold resource.
Recent Developments
Discussions with Mazorro to provide for a revised agreement whereby the terms in default would have been
amended and Mazorro would have been the operator under supervision of Oro Gold’s management staff
failed. As a result, in accordance with the Formal Agreements, in October 21, 2009 the Company delivered
to Mazorro a formal notice of termination (the “Notice”) which will become effective 10 business days after
receipt of the Notice. The Company is currently in discussions with another company in order to joint
venture the Cimarron property.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 8
Tigra Negra, Mexico
On June 10, 2009 the Company announced it staked the 579 square kilometre (57,900 Hectare)
concession Tigra Negra, in the state of Nayarit, Mexico. The land position encompasses two concessions
with historic gold mining areas, Las Cucharas and El Tigre, held by Mexican mining companies.
Government geochemical data indicates broad gold anomalies in stream sediments. The new property is
located approximately 20 kilometres to the southeast of the Trinidad project where Oro Gold is currently
drilling a new high-grade discovery and defining a gold resource.
The 100%-owned property was acquired based on government geochemical data showing highly
anomalous gold (up to 985 ppb gold) over a large area in stream sediments, and the existence of historic
gold workings.
El Salto, Mexico
The Company staked the 426 square kilometre (42,650 Hectare) concession El Salto, in the state of
Nayarit, Mexico and title was awarded on June 29, 2009. The property covers the projected strike
extension of the San Cristobal gold zone located in the south-eastern portion of the Trinidad concession.
San Cristobal is a 12 square kilometre area consisting of hydrothermal breccias and quartz veining in four
target zones (see July 22, 2008 press release). Soil sampling has defined a northwest trending gold- in-soil
anomaly which extends over 3 kilometres onto the newly acquired ground. Anomalous trench and rock chip
sample results range from 0.5 g/t to 62 g/t gold. Geologic mapping and drill target definition is planned for
the end of 2009 with drilling planned in early 2010. The northern limit of this property is located
approximately 13 kilometres south of the Taunus target where Oro Gold is currently drilling.
The addition of El Salto and Tigra Negra gives Oro Gold a controlling land position having 100% ownership
of over 2,600 square kilometres (260,000 hectares) of contiguous concessions in Sinaloa and Nayrit,
Mexico.
PROPERTY AGREEMENTS
Certain concessions of the Trinidad property (namely Nancy, Santa Cesilia and La Poderosa) and the San
Isidro property (San Isidro and El Porvenir) are subject to an agreement whereby the Company has the
right to explore the concessions for up to four years, in exchange for annual payments of US$25,000. The
Company has the option to purchase, at any time during the four year period, a 100% interest in the claims
according to the following schedule: Nancy for US$200,000; San Isidro and El Porvenir for US$200,000;
and Santa Cesilia and La Poderosa for US$200,000. Any payments made will be deducted from the
purchase of the claims. A scaled NSR based on the price of gold is also payable to the owner. The
Company may purchase the NSR for US$1,000,000. The annual payments corresponding to February
2006 to 2009 were satisfied in accordance with the agreement. However, on August 7, 2009 the parties
amended the agreement to replace the US$500,000 final balloon payment due February 6, 2010 with an
escalating schedule of payments of US$5,000 upon signing, US$ 25,000 on March 22, 2010, US$ 30,000
on March 22, 2011, US$ 60,000 on March 22, 2012 and on March 22, 2013, US$ 150,000 on March 22,
2014 and US$ 170,000 on March 22, 2015. The amounts are subject to 15% Value Added Tax (“IVA”).
OUTLOOK
The Company will continue to carry out exploration of its mineral properties, and to evaluate new prospects
and opportunities. The Company expects to obtain financing in the future primarily through further equity
financing, as well as through joint venturing of the Company’s properties to qualified mineral exploration
companies. There can be no assurance that the Company will succeed in obtaining additional financing,
now or in the future. Failure to raise additional financing on a timely basis could cause the Company to
suspend its operation and eventually to forfeit or sell its interest in its mineral properties.
Form 51-102F1
MANAGEMENT’S DISCUSSION & ANALYSIS
For the nine month period ended August 31, 2009
Page 9
Exploration Plans:
• Focusing on advancing the Trinidad property with an emphasis on: (1) expanding the potential upside
of the new high-grade discovery area (HS Zone) at Taunus; (2) finding a new zone within 2km of the
Taunus; and (3) making a new discovery on the property. This will be accomplished through additional
diamond drilling, geological modelling, geophysics and metallurgical testing.
• Increasing the resource estimate on the Taunus area.
• Exploring the other properties of the El Rosario district.
• Increasing shareholder value through the discovery and definition of low-cost and quality gold resource
ounces on our advanced stage properties.
LIQUIDITY AND CAPITAL RESOURCES
The Company is in the exploration stage and therefore has no regular cash flow. The Company had
$654,826 (November 30, 2008 - $691,052) in accounts receivable and refundable taxes of which
approximately $600,000 (November 30, 2008 - $582,200) is IVA paid in Mexico. The Company has applied
for refund of the IVA and expects a resolution from the Mexican authorities during the current fiscal year.
As at August 31, 2009, the Company had cash and cash equivalents of $10,438,180, and a working capital
of $10,546,203.
For the three months ended August 31, 2009 – “2009 Q3”
Cash utilized in operating activities during the quarter ended August 31, 2009 was $1,475,211 (2008 Q3 -
$1,197,755) before any changes in non-cash working capital. After adjusting for cash flows applied to noncash
working capital, cash used in operating activities was $1,452,746 (2008 Q3 - $1,205,858).
Financing Activities
Cash provided by financing activities during the 2009 Q3 was a combination of exercise of options and
warrants and a brokered private placement for a total of $13,500,424, net of share issuance costs (2008 Q3
- $2,278,885).
The brokered private placement financing consisted of the issuance of 17,200,000 units at $0.70; each unit
consists of one common share and one-half of one common share purchase warrant; each whole warrant
entitles the holder to purchase one additional common share of the Company at an exercise price of $1.00
until January 7, 2011. The Company paid a cash commission to the underwriters in the amount of $772,800
and issued to the underwriters 1,104,000 warrants, each |
