FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the period of September 30, 2005
GETTY COPPER INC.
(Translation of registrant's name into English)
1000 Austin Avenue, Coquitlam, BC V3K 3P1
(Address of principal executive offices)
Attachments:
1.
News Releases dated November 15, 2005
2.
November 29, 2005.
3.
Interim Financial Statements (Unaudited) For The Nine Months Ended September 30, 2005.
4.
Interim MD&A.
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F __________
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized.
| | GETTY COPPER INC. |
| | (Registrant) |
| | |
Date: November 25, 2005 | | By: /s/“Donald Willoughby” |
| | Name |
| | |
| | Its: Director, Chief Financial Officer |
| | (Title) |
GETTY COPPER INC.
Trading Symbol TSX Venture: GTC
November 15, 2005
GETTY LAUNCHES LAWSUIT
The Company advises that, on November 10, 2005, it initiated a lawsuit in the Supreme Court of British Columbia against former directors Robert Gardner and Vittorio Preto. The lawsuit claims that, contrary to the existing board approved banking resolution, Gardner and Preto certified a false banking resolution with the Company¹s bank in August of 2004, which falsely stated that Gardner and Preto had bank signing authority and then subsequently caused monies to be removed from the Company¹s bank account without the knowledge or authorization of the board. The lawsuit alleges that Gardner and Preto breached their fiduciary duties to the Company and claims special and general damages.
The foregoing statements are forward-looking statements but reflect the current expectations of management with respect to future events and performance. Wherever used, the words "may," "will," "anticipate," "intend," "expect," "plan," "believe," and similar expressions identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at which, such performance or results will be achieved.
Forward-looking statements are based on information available at the time they are made, assumptions made by management, and management's good faith belief with respect to future events, and are subject to the risks and uncertainties of mineral exploration.
For further information please contact:
John Parks, Secretary
GETTY COPPER INC.
1000 Austin Avenue
Coquitlam, BC V3K 3P1
Phone: 604-931-3231 Fax: 604-931-2814
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED THE CONTENTS OF THIS RELEASE AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OF THE CONTENTS OF THIS RELEASE.
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Getty Copper Inc.
FINANCIAL RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
November 29, 2005 – Coquitlam, B.C. –Getty Copper Inc.[TSX Venture Exchange: GTC](the “Company”), announces the financial results for the Company’s 3rd Quarter ending September 30, 2005.
For the nine months ending September 30, 2005, the Company’s Net loss for the period is $56,832 less than the nine months ending September 30, 2004 due to the recording of stock option compensation $5,691 (Sept. 2004-$63,830). The Company recorded $187,182 (Sept. 2004 - $235,213) in share issue costs as the tax benefit given up on the issuance of flow-through shares. The income statement reflects this recovery and the benefit is charged to cost of shares issued. During the nine months ending September 30, 2005, professional fees decreased $283,647 (Sept. 2004; $294,500) which includes $266,345 (Sept. 2004 - $220,491) for legal expenses and fees incurred by various law firms including, $121,000 which was paid to John M Parks, Barrister & Solicitor, a related party who has also been advising the Company on legal issues related to the Getty South acquisition and corporate matters. The Company’s rent expe nse has decreased significantly during the nine months ending September 30, 2005 $4,500 (Sept. 2004 $27,844) due to closing of the Vancouver Office.
Financial and Operating Highlights (Unaudited), provided by management |
Nine Months Ended September 30,
| 2005 | 2004 |
Rent Revenue | $ 748 | $ 1,682 |
Expenses | $ 399,919 | $ 521,574 |
Interest Earned | $ 8,108 | $ 23,966 |
Future Income Tax Recovery | $ 187,182 | $ 235,213 |
Net Loss | $ 203,881 | $ 260,713 |
Condensed Balance Sheets (Unaudited) |
As at, | Sept. 30, 2005 | Dec. 31, 2004 | % change |
Assets | $ 4,023,816 | $ 4,402,135 | (8.6%) |
Liabilities | $ 523,817 | $ 710,408 | (26.27%) |
Shareholders’ Equity | $ 3,499,999 | $ 3,691,727 | (5.2 %) |
The foregoing statements are forward-looking statements but reflect the current expectations of management with respect to future events and performance. Wherever used, the words "may," "will," "anticipate," "intend," "expect," "plan," "believe," and similar expressions identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at which, such performance or results will be achieved.
Forward-looking statements are based on information available at the time they are made, assumptions made by management, and management's good faith belief with respect to future events, and are subject to the risks and uncertainties of mineral exploration.
On Behalf of
Getty Copper Inc. [TSX-V: GTC]
Getty Copper Inc.
1000 Austin Avenue
Coquitlam, British Columbia
Don Willoughby
Canada, V3K 3P1
Contact: Don Willoughby
Chief Finance Officer
Phone:
(604) 931-3231 Fax: (604) 931-2814
The TSX Venture Exchange has not reviewed the contents of this release, and does not accept responsibility for the accuracy of the contents of this release
GETTY COPPER INC.
FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2005
(stated in Canadian dollars)
Contact: 1000 Austin Avenue
Coquitlam, British Columbia
Canada V3K 3P1
Tel: 604-931-3231
GETTY COPPER INC.
BALANCE SHEET
(Unaudited)
(stated in Canadian dollars)
| |
| September 30 | December 31 |
ASSETS | 2005 | 2004 |
Current | | |
Cash and short-term investments | $ 588,630 | $ 1,529,401 |
Goods and services tax recoverable | 23,614 | 25,933 |
Prepaid expenses | 31,689 | 12,698 |
| | |
| 643,933 | 1,568,032 |
| | |
Mineral rights (note 3) | 3,212,296 | 2,660,434 |
| | |
Property, building and equipment (note 4) | 167,587 | 173,669 |
| | |
| $ 4,023,816 | $ 4,402,135 |
| | |
LIABILITIES | | |
| | |
Current | | |
Accounts payable | $ 428,261 | $ 613,384 |
Current portion of mortgage payable | 1,552 | 1,976 |
| | |
| 429,813 | 615,360 |
| | |
Mortgage payable (note 5) | 94,004 | 95,048 |
| | |
| 523,817 | 710,408 |
| | |
| | |
SHAREHOLDERS’ EQUITY | | |
| | |
Share capital (note 7) | 16,594,121 | 16,587,659 |
| | |
Contributed surplus (note 7) | 860,726 | 855,035 |
| | |
Deficit | (13,954,848) | (13,750,967) |
Commitments and Contingencies (Note 8) | | |
Subsequent Events (Note 10) | 3,499,999 | 3,691,727 |
| | |
| $ 4,023,816 | $ 4,402,135 |
| | |
Approved by the Directors
“Donald R. Willoughby”, Director, CFO
“John M. Parks”, Corporate Secretary
See accompanying notes to the financial statements
GETTY COPPER INC.
STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(stated in Canadian dollars
| Three Months | Nine Months | Three Months | Nine Months |
| Ending | Ending | Ending | Ending |
| Sept. 30, 2005 | Sept. 30, 2005 | Sept. 30, 2004 | Sept. 30, 2004 |
Revenue | | | | |
Rent | $ ─ | $ 748 | $ 561 | $ 1,682 |
| | | | |
Expenses | | | | |
Amortization | 838 | 2,500 | 1,096 | 3,297 |
Bank charges & interest | 1,812 | 5,365 | 6,378 | 15,174 |
Filing fees | 1,747 | 8,462 | 8,867 | 17,594 |
Insurance | 419 | 1,256 | 558 | 1,256 |
Management fees | 7,500 | 22,500 | 7,500 | 22,500 |
Marketing & promotion | 411 | 2,882 | 310 | 14,613 |
Office & miscellaneous | 1,864 | 14,536 | 3,473 | 16,432 |
Professional fees | 128,812 | 283,647 | 83,220 | 294,500 |
Property tax | ─ | 4,448 | − | 4,151 |
Rent | 1,500 | 4,500 | 9,282 | 27,844 |
Stock option compensation | ─ | 5,691 | 13,186 | 63,830 |
Telephone | 1,748 | 5,836 | 1,991 | 6,328 |
Transfer fees | 1,407 | 5,662 | 989 | 7,918 |
Travel | 992 | 12,104 | 120 | 6,307 |
Wages & benefits | 5,639 | 20,530 | 6,663 | 19,830 |
| | | | |
Interest | (304) | (8,108) | (6,751) | (23,966) |
Future income tax recovery (Note 2 (g)) | (60,045) | (187,182) | (167,682) | (235,213) |
| 94,340 | 204,629 | 30,800 | 262,395 |
| | | | |
Net profit (loss) for the period | (94,340) | (203,881) | 31,361 | (260,713) |
| | | | |
Deficit, beginning of period | (13,750,967) | (13,750,967) | (13,104,383)7) | (13,104,383) |
| | | | |
Deficit, end of period | $ (13,845,307) | $ (13,954,848) | $ (13,073,022) | $ (13,365,096) |
| | | | |
Loss per share | $ (0.003) | $ (0.006) | $ 0.001 | $ (0.009) |
Weighted-average common shares outstanding | 34,078,657 | 34,078,657 | 28,343,657 | 28,343,657 |
See accompanying notes to the financial statements.
GETTY COPPER INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(stated in Canadian dollars)
| Three Months | Nine Months | | Three Months | | Nine Months |
| Ending | Ending | | Ending | | Ending |
| Sept. 30, 2005 | Sept. 30, 2005 | | Sept. 30, 2004 | | Sept. 30, 2004 |
Cash flows used in operating activities | | | | | | |
Net loss for the period | $ (94,340) | $ (203,881) | | $ 31,361 | | $ (260,713) |
Add: Items not involving cash | | | | | | |
Amortization – administration | 838 | 2,500 | | 1,096 | | 3,297 |
Stock option compensation expense | ─ | 5,691 | | 13,186 | | 63,830 |
| | | | | | |
Net change in non-cash working | | | | | | |
capital balances | | | | | | |
Decrease (increase) in goods and services | | | | | | |
tax recoverable | (9,996) | 2,319 | | (27,767) | | (41,481) |
Decrease (increase) in prepaid expenses | 72,881 | (18,991) | | (167,334) | | (170,623) |
Increase in accounts payable | 117,135 | (185,123) | | (39,254) | | 301,163 |
| | | | | | |
| 86,518 | (397,485) | | (188,712) | | (104,527) |
| | | | | | |
Cash flows from financing activities | | | | | | |
Loan from Freeway Properties Inc. | ─ | ─ | | (1,442) | | 3,400 |
Mortgage principal repayments | (498) | (1,468) | | (463) | | (1,364) |
Subscriptions received | ─ | 200,250 | | (61,250) | | — |
Warrants exercised | | | | 137,500 | | 163,000 |
Share issue costs | (60,045) | (193,788) | | (167,682) | | (235,213) |
| | | | | | |
| (60,543) | 4,994 | | (93,337) | | (70,177) |
| | | | | | |
Cash flows used in investing activities | | | | | | |
Acquisition & disposal of equipment | ─ | (2,241) | | — | | (5) |
Exploration costs | (179,564) | (546,039) | | (486,736) | | (699,717) |
| | | | | | |
| (179,564) | (548,280) | | (486,736) | | (699,722) |
| | | | | | |
| | | | | | |
Increase (decrease) in cash during the period | (153,589) | (940,771) | | (768,785) | | (874,426) |
| | | | | | |
Cash and short-term investments, | | | | | | |
Beginning of the period | 742,219 | 1,529,401 | | 1,978,281 | | 2,083,922 |
| | | | | | |
Cash and short-term investments, | | | | | | |
End of the period | $ 588,630 | $ 588,630 | | $ 1,209,496 | | $ 1,209,496 |
Supplemental disclosure:
| 2005 | 2004 | |
Cash used in operating activities includes: | | | |
Interest paid | $ 5,337 | $ 5,443 | |
Interest received | $ 8,108 | $ 23,966 | |
See accompanying notes to the financial statements.
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
1.
General information and continuing operations
The Company has not yet determined whether its mineral rights contain ore reserves that are economically recoverable. In addition, the Company is dependent upon external sources of financing in order to fund the exploration of its mineral rights. The recoverability of amounts shown for mineral rights and the ability of the Company to meet its obligations is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the exploration and development of the mineral rights and future profitable production or proceeds from the disposition thereof.
As of December 31, 2004, approximately 930,000 has been incurred on qualifying expenditures in respect to the proceeds of a December 2003 flow-through share issuance of $2,015,000. The Company anticipates incurring qualifying expenditures in 2005 which will result in the balance of the flow through funds raised in 2003 being spent.
2.
Significant accounting policies
These financial statements are prepared in accordance with accounting principles generally accepted in Canada applicable to a going-concern. The financial statements do not give effect to adjustments that would be necessary should the Company be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business.
a)
Mineral rights
Costs of acquisition and exploration expenditures are allocated to specific groups of mineral rights as work is performed on or for the benefit of those rights and are capitalized until such time as the extent of mineralization has been determined and mineral rights are either developed, sold, or abandoned. If there is an indication of impairment the mineral rights are written-down to the estimated net recoverable amount. The Company does not accrue the estimated future cost of maintaining, in good standing, its mineral rights.
Capitalized costs are amortized over the useful life of the rights upon commencement of commercial production, or written-off if the rights are sold or abandoned.
b)
Administrative costs
Administrative costs are expensed as incurred.
c)
Property, building and equipment
Property, building and equipment are recorded at cost. Amortization is provided on the declining balance basis at the following annual rates:
Automotive equipment
30%
Building
4%
Computer equipment
45%
Computer software
100%
Office equipment
20%
Portable buildings
30%
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
2.
Significant accounting policies - continued
d)
Stock option plan
The Company records compensation expense when stock or stock options are issued to employees in accordance with any vesting terms.
e)
Future income taxes
The Company follows the liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Future income tax assets and liabilities are recognized for temporary differences between tax and accounting bases of assets and liabilities and for unused tax losses. Future income tax assets are recorded in the financial statements if their realization is considered to be more likely than not.
f)
Exploration tax credits
Exploration tax credits are recorded as a reduction in exploration costs as those costs are incurred.
g)
Flow-through financing
Under the CanadianIncome Tax Act a company may issue securities referred to as flow-through shares, whereby the investor may claim the tax deductions arising from the qualifying expenditure of the proceeds by the company. When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, future income tax liabilities are recognized (renounced expenditures multiplied by the effective corporate tax rate), thereby reducing share capital. Previously unrecognized tax assets may then offset or eliminate the liability recorded.
h) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Specific areas involving management estimates include the variables used to derive stock-based compensation, the valuation of mineral rights and the determination of useful lives of property, building and equipment for purposes of calculating amortization.
Loss per share
Loss per share has been calculated using the weighted-average number of common shares outstanding during each fiscal year. Diluted loss per share has not been calculated as it is anti-dilutive when the numerator used in the calculation is a net loss. For purposes of the calculation of the weighted-average number of common shares outstanding, share consolidations are considered to have occurred on the first day of the earliest fiscal year presented.
j)
Financial instruments
The Company's financial instruments consist of cash and short-term investments, goods and services tax recoverable, accounts payable, and mortgage payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair values of these financial instruments approximate their carrying values, unless otherwise noted.
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
3.
Mineral rights
The Getty mineral rights are contiguous and are located within the Highland Valley, British Columbia mining district covering an area of approximately 200 square kilometres.
| September 30, 2005 | December 31, 2004 |
| | |
Getty Northwest mineral rights, acquisition costs | $ 33,210 | $ 33,210 |
Exploration and development costs | 11,588 | 6,759 |
| 44,798 | 39,969 |
| | |
Getty Central mineral rights, acquisition costs | 111,846 | 111,846 |
Exploration and development costs | 132 | 50 |
| 111,978 | 111,896 |
| | |
Getty North mineral rights, acquisition costs | 352,398 | 352,398 |
Exploration and development costs | 1,466,026 | 968,680 |
| 1,818,424 | 1,321,078 |
| | |
Getty South mineral rights, 50% interest, acquisition costs | 1,069,134 | 1,069,134 |
Exploration and development costs | 52,632 | 3,651 |
| 1,121,766 | 1,072,785 |
| | |
Getty Southwest mineral rights, acquisition costs | 113,883 | 113,883 |
Exploration and development costs | 1,447 | 823 |
| 115,330 | 114,706 |
| | |
| $ 3,212,296 | $ 2,660,434 |
Historical and current exploration costs are comprised of:
| Sept. 30, 2005 | Dec. 31, 2004 |
| | |
Assay | $ 605,476 | $ 540,235 |
Drilling | 4,715,326 | 4,594,299 |
Environmental | 254,454 | 254,454 |
Feasibility study | 166,709 | 166,709 |
Geology | 2,937,274 | 2,766,245 |
Metallurgy | 456,414 | 317,610 |
Other | 1,911,015 | 1,855,254 |
Provision for impairment of deferred costs | (9,514,843) | (9,514,843) |
| | |
| $ 1,531,825 | $ 979,963 |
Property, building and equipment amortization included in exploration costs during the nine months ending September 30, 2005 amounted to $5,823 (2004 - $6,039).
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
3.
Mineral rights - continued
The Company originally entered into an agreement to acquire a 50% interest in the Getty Central, Getty South and Getty Southwest mineral rights from Robak Industries Ltd. (“Robak”) under certain terms which were not met. On November 8, 2002 the Company and Robak terminated the original agreement and entered into an agreement for the Company to acquire a 100% interest in the Getty Central and Getty Southwest and a 50% interest in the Getty South mineral rights from Robak in exchange for 6,000,000 common shares of the Company at a deemed value of $1,200,000, the Company agreeing to pay 100% of the costs to place the Getty South mineral rights into production, and a 1-1/2% net smelter royalty in favour of Robak.
In 2004, the Board of Directors considered acquiring the remaining 50% of Getty South from Robak. The board commissioned a valuation of the Robak interest from the same party who carried out the 2002 valuation. The valuator presented information about his 2002 report that caused the board to re-examine the 2002 transaction. A committee of the whole of the directors, with the exception of John Lepinski, as an independent review committee, has initiated a thorough review of the historical geological data of the Getty South Property. To date the board has received nothing that would suggest that the Getty South acquisition should be rescinded. The board expects the report of the independent review committee will be received before the end of the year.
In December 2004 Highland Valley Copper terminated its participation in a joint venture signed December 19, 2003.
The Company is pursuing approaches to further develop its mineral rights. Although it is uncertain whether the Company will determine that it has economically recoverable reserves and whether it will be able to obtain the necessary financing to complete the exploration and development of the mineral rights, the Company believes that it may be able to economically develop the mineral rights. However, Canadian generally accepted accounting principles require that exploration costs related to mineral rights be written-down for impairment unless there is persuasive evidence that impairment has not occurred. Accordingly, at December 31, 2003 the Company had recorded provisions for impairment of exploration costs in the amount of $9,500,933 and of rights acquisition costs of $13,910. With the flow though financing obtained in December 2003, funds are available to proceed with the exploration work on the Getty North rights. Such costs will be deferred from January 2004 until such time as the Company determines if it has economically recoverable reserves, or until exploration ceases and the mineral rights are abandoned.
In December 2003, the Company entered into an agreement in principle with Genco Resources Ltd. to purchase from Genco, subject to a Net Smelter Returns Royalty, nine crown granted mineral rights, known as the “Transvaal Rights” located in the Kamloops Mining District of British Columbia. The purchase price of $275,000 CDN was to be payable in common shares of the Company with a value of $0.60 CDN per share. The TSX Venture Exchange has conditionally approved this acquisition.
The Getty mineral rights are subject to a 1-1/2% net smelter return royalty in favour of Robak Industries Ltd. ("Robak"), which is controlled by a director of the Company.
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
4.
Property, building and equipment
| September 30, 2005 |
| | Accumulated | |
| Cost . | Amortization | Net . |
| | | |
Automotive equipment | $ 29,318 | $ 28,098 | $ 1,220 |
Computer equipment | 95,859 | 92,213 | 3,646 |
Computer software | 74,359 | 74,359 | -- |
Office equipment | 74,303 | 61,366 | 12,937 |
Portable buildings | 12,112 | 11,790 | 322 |
Building | 178,124 | 50,984 | 127,140 |
Land | 22,322 | -- | 22,322 |
| | | |
| $ 486,397 | $ 318,810 | $ 167,587 |
| December 31, 2004 |
| | Accumulated | |
| Cost . | Amortization | Net . |
| | | |
Automotive equipment | $ 29,318 | $ 27,745 | $ 1,573 |
Computer equipment | 95,859 | 90,355 | 5,504 |
Computer software | 74,359 | 74,359 | -- |
Office equipment | 72,062 | 59,280 | 12,782 |
Portable buildings | 12,112 | 11,697 | 415 |
Building | 178,124 | 47,051 | 131,073 |
Land | 22,322 | -- | 22,322 |
| $ 484,156 | $ 310,487 | $ 173,669 |
5.
Mortgage payable
The mortgage payable is secured by a first mortgage on land and building and requires monthly payments of $756 including interest at 7.5% per annum, and is repayable on October 1, 2007.
Principal repayments required are as follows:
September 30, 2005
2005 | $ 1,552 | |
2006 | 2,207 | |
2007 | 91,797 | |
| | |
| $ 95,556 | |
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
6.
Income taxes
Significant components of the Company's future income tax assets are as follows:
| Sept. 30, 2005 | Dec. 31, 2004 |
| | |
Tax value of mineral rights in excess of book value | $ 1,780,000 | $ 1,760,000 |
Tax value of capital assets in excess of book value | 124,000 | 122,000 |
| | |
| 1,904,000 | 1,882,000 |
Valuation allowance | (1,904,000) | (1,882,000) |
| | |
| --- | --- |
| | |
Net operating loss carryforwards | 837,000 | 812,000 |
Valuation allowance | (837,000) | (812,000) |
| | |
| --- | --- |
| | |
Net future income tax assets | $ --- | $ --- |
The Company has determined that realization is not more likely than not and therefore a valuation allowance against all future income tax assets has been recorded.
A reconciliation between the Company's statutory and effective tax rates is as follows:
| 2005 | 2004 |
| | |
Statutory rate | 37% | 37% |
Tax rate change | (2) | (2) |
Unrecognized benefit of current year's losses | (35) | (35) |
| | |
Effective rate of tax recovery | --- | --- |
At September 30, 2005, the Company has approximately $2,349,000 of loss carryforwards which may be available to reduce taxable income in future years. These losses expire as follows:
| | |
2005 | $ 99,000 | |
2006 | 236,000 | |
2007 | 195,000 | |
2008 | 188,000 | |
2009 | 228,000 | |
2010 | 289,000 | |
2011 | 720,000 | |
2012 | 394,000 | |
| $ 2,349,000 |
|
7. Share capital
| | |
a) Authorized | | |
Unlimited number of common shares | | |
| Shares . | Amount . |
b) Issued | | |
Balance at December 31, 2004 | 32,743,657 | $ 16,587,659 |
| | |
Shares issued for cash | 1,335,000 | 200,250 |
Share issue costs | -- | (193,788) |
Balance, June 30, 2005 | 34,078,657 | $ 16,594,121 |
| | |
On April 15, 2005, the Company issued 1,900,000 incentive share options at $0.15 for the period April 15, 2005 to April 14, 2006: $0.20 for the period April 15, 2006 to April 14, 2007 and $0.25 for the period April 15, 2007 to April 14, 2008.
The Company reset the exercise price and reduced the term of 850,000 outstanding incentive share options to $0.15 for the period April 15, 2005 to April 14, 2006; $0.20 for the period April 15, 2006 to April 14, 2007 and $0.25 for the period April 15, 2007 to April 14, 2008. Regulatory approval was received May 9, 2005. Disinterested shareholder approval was received at the Company’s annual general meeting which was held on June 27, 2005.
On May 12, 2005, the company completed a private placement of 1,335,000 units. Each unit consisted of 1 share valued at $0.15 and a full warrant to purchase a further share of common stock for a period of 2 years at a price of $0.20 in the first year and $0.25 in the second year.
On December 7, 2004, the company completed a private placement for gross proceeds of $1,100,000. Each unit consisted of one share valued at $0.25 and a full warrant to purchase a further share of common stock for a period of two years at a price of $0.30 in the first year and $0.35 in the second year.
Contributed Surplus in the amount of $5,691 (2004-$63,830) was recorded as a result of the Company recognizing stock option compensation expense.
The Company recorded $187,182 (2004-$235,213) in share issue costs as the tax benefit given up due to the recognition of previously unrecorded tax assets to offset the future tax liability recorded on the issuance of flow-through shares.
On December 31, 2003, the Company closed a private placement of 3,100,000 flow-through units at a price of $0.65 per unit. Each unit comprises one flow-through common share and one-half of one share purchase warrant. Each whole warrant is exercisable to purchase an additional flow-through share at a price of $0.75 per share until December 30, 2005. In connection with this private placement, the Company issued 155,000 agent’s share purchase warrants exercisable at a price of $0.75 for a two year period.
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
7.
Share capital - continued
Warrants outstanding at September 30, 2005:
Number of Warrants | | Exercise Price | |
Expiry Date |
1,550,000 | | 0.75 | | December 30, 2005 |
155,000 | | 0.75 | | December 30, 2005 |
4,400,000 | | 0.25 | | December 7, 2006 |
1,335,000 | | 0.20 ($0.25) | | May 12, 2006 (May 12, 2007) |
7,440,000 | | | | |
c)
Stock options
Stock option activity for the period ending September 30, 2005:
|
Number of Option | | Weighted-Average Exercise Price | |
Expiry Date Range |
Options outstanding at December 31, 2004 | 2,050,000 | | 0.15* | | November 14, 2008 |
Options added | 2,100,000 | | 0.15* | | April 14, 2008 |
Cancelled | (1,100,000) | | 0.61 | | November 14, 2008 |
Options outstanding at September 30, 2005 | 3,050,000 | |
0.15* | |
November 14, 2008 |
7.
Share capital - continued
c) Stock options cont..
During 2003, the Company granted 1,950,000 common share incentive options to directors and employees exercisable at $0.61 per share to November 14, 2008. The options vest over the 18
month period following the date of grant. Based upon the Black-Scholes option valuation model,
a risk-free market rate of 3% and a volatility of 7%, the estimated compensation cost related to
the options ranted is approximately $100,000 of which $5,691 (2004 – $63,830) was recognized the nine months ended September 30, 2005.
*
The options issued are exercisable at a price of $0.15 per share until April 14, 2006, from April 15, 2006 to April 14, 2007, these options are exercisable at a price of $0.20 per share. From April 15, 2007 to and including April 14, 2008, these options are exercisable at a price of $0.25 per share.
Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the stock and expected life of the option. Changes in these
assumptions an materially affect the fair value estimate and therefore it is management’s view
that the existing models do not necessarily provide a single reliable measure of the fair value of
the Company’s stock option grants and warrant issuances.
GETTY COPPER INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
SEPTEMBER 30, 2005
(stated in Canadian dollars)
8.
Commitments and contingencies
The Company is committed to make aggregate monthly payments of $13,000 (2004 - $3,000) to related parties for management fees, rent and legal fees.
In the first quarter of 2005, former directors, Robert Gardner and Vittorio Preto filed a Third Party action against the Company claiming an indemnity in respect of all costs, charges and expenses reasonably incurred by them in defence of a lawsuit brought November 24, 2004 against them by Robak. The Company filed a Defence to the claim insisting that Gardner and Preto are not entitled to indemnification, asserting that these directors did not act with a view to the best interests of the Company and otherwise did not discharge the fiduciary and other duties they owed to the Company as a directors. (See note 10)
9.
Related party transactions
In addition to the transactions described elsewhere in the financial statements, the Company had the following transactions and balances with officers and directors of the Company and companies or professional firms with which officers or directors are associated.
| Sept. 30, 2005 | Sept. 30, 2004 |
| | |
Exploration costs incurred | $ Nil | $ 48,938 |
Accounts payable | $ 25,876 | $ 254,516 |
Loan from Freeway Properties Inc. | $ Nil | $ 70,021 |
| | |
Expenses: | | |
Interest | $ Nil | $ 7,580 |
Management fees | $ 22,500 | $ 22,500 |
Professional fees | $ 141,193 | $ 15,001 |
Rent | $ 4,500 | $ 4,500 |
These transactions are in the normal course of operations and are measured at fair value as determined by
management.
10. Subsequent events
In addition to items disclosed elsewhere in these notes, the following has occurred during the period subsequent to September 30, 2005:
·
The Company may be faced with significant legal fees in the future as a result of events related to the review of the 2002 Mineral Property Interest Sales Agreement.
The Company initiated a lawsuit on November 10, 2005 in the Supreme Court of British Columbia against former directors Robert Gardner and Vitorio Preto for the recovery of $120,000 USD which the Company claims was inappropriately, without board approval, and contrary to the Company’s banking resolution removed from the Company’s bank account.
GETTY COPPER INC.
MANAGEMENT DISCUSSION & ANALYSIS
SEPTEMBER 30, 2005
Overall Performance
The Company is engaged in the acquisition and exploration of natural resource properties. Since 1993, the Company has been conducting exploration for copper on its approximately 200 km2, Highland Valley, B.C. mineral property, which adjoins the large porphyry copper mining and milling operation of Highland Valley. The Company continues to seek additional properties worthy of exploration and development. From 1995 to 1998, the Company engaged in the exploration of the Highland Valley mineral property, including a pre-feasibility study by Bateman Engineering, whereby they concluded that “an economic mineable reserve exists in the Getty North Copper Deposit.” Bateman recommended to the Company both limited pre-feasibility work and a full feasibility study.
"The Getty North deposit has pre NI 43-101 resource estimates (KHA Resource Modeling Inc. (1997)) of 6.67 million tonnes drill indicated at a 0.1% Cu cutoff grading 0.522% oxide copper and 27.56 million tonnes grading 0.41% sulphide copper. Drill inferred resources are at a 0.1% copper cutoff, 3.27 million tonnes grading 0.149% oxide copper and 30.65 million tonnes grading 0.223% sulphide copper. W.J. McMillan (2003) referring Bateman, 1998 stated “...the resource modeling performed by KHA is reasonable and was conducted in a manner generally accepted by the industry.”"
The Company announced that no significant mineralization was encountered in the drilling program carried out by the Company during 2004 to test a possible extension of the Getty North Deposit. The completed program, costing $971,547, included a 3.0 km by 2.6 km, 57 line km grid located in the same structural corridor and immediately north of the Getty North Deposit. A total Field Magnetic and Induced Polarization geophysical survey was carried out and B-horizon soil geochemistry is being evaluated.
Due to reduced commodity prices between 1998 and 2003 and a lack of working capital, nominal exploration work was carried out by the Company.
The price of copper has significantly improved in 2004 as a result of increasing consumption and decreasing copper inventory. Recent widely read business journals predict that metal prices in 2005 should continue at current levels due to simple supply and demand dynamics.
Ongoing reviews of previous geological, geophysical and geochemical programs are being conducted to determine future work programs, which include the Getty South.
In December 2004 Highland Valley Copper terminated its option agreement with the Company after spending $1.2 million on exploration, line cutting (220 km), IP (>150 km) and diamond drilling 5,030.2 meters. Diamond drilling on the Getty West (3 holes), Cinder Hill (6 holes), Glossie (1 hole) and North Valley (8 holes) IP and geological targets. No new additions to resources were made. A detailed review is underway. Future exploration is planned by the Company.
The Company announced that no significant mineralization was encountered in the drilling program carried out by the Company during 2004 to test a possible extension of the Getty North Deposit. The completed program, costing $971,547, included a 3.0 km by 2.6 km, 57 line km grid located in the same structural corridor and immediately north of the Getty North Deposit. A total Field Magnetic and Induced Polarization geophysical survey was carried out and B-horizon soil geochemistry is being evaluated.
Increased exploration activity and legal costs will result in higher general and administrative expenses during 2005 and will increase the loss to be reported for that fiscal period.
On May 6, 2005 the Company announced that it has embarked on a metallurgy test program of it’s copper sulphide and copper oxide samples at SGS Lakefield Research Limited in Lakefield, Ontario. The goal of the test program is to determine the leach parameters and optimum chemistry from leaching copper from Getty’s resource samples which have been forwarded to Lakefield. The second part of the program is to confirm the solvent extraction electrowinning (SX-EW) parameters. This is a precondition of the express corporate goal of putting the Company’s copper deposits into production. In anticipation of the test program confirming the efficacy of continuous vat leaching technology, the Company has entered a licence agreement with Innovat Limited of Ontario for use of Innovat’s proprietary Continuous Vat Leaching System.
The Company also announced the appointment of David A. Shaw, PhD to the board of directors. Dr. Shaw is a structural geologist who has worked both in the technical and financial communities within the resource industry, including serving as Senior Mining Analyst, Corporate Finance, at Yorkton Securities Inc. in Vancouver.
GETTY COPPER INC.
MANAGEMENT DISCUSSION & ANALYSIS
SEPTEMBER 30, 2005
Results of Operations
The Company’s working capital decreased to $214,120 for the nine months ending September 30, 2005 from $952,672 at December 31, 2004, the decrease of $738,552 in working capital can be attributed directly to expenditures paid during the period, of which approximately $551,862 was spent on exploration. The Company has no source of income other than interest earned on funds held in a term deposits. The total general and administrative expenditures for the nine months ending September 30, 2005 has decreased to $204,629 compared to $262,395 September 30, 2004. These totals include the recording of share issue costs as the tax benefit given up on the issuance of flow-through shares, during the nine months ending September 30, 2005, $187,182 (2004- $235,213). Actual general and administrative expenditures have decreased, professional fees $283,647 (2004- $294,500) which includes $266, 345 (Sept. 2004 $220,491) for legal expenses and fees incurred by various law firms including $121,000 to John M Parks, Barrister & Solicitor, a related party who have been advising the Company on legal issues related to the Getty South acquisition and various contracts which were signed by Dr. Vic Preto, the previous interim president and Robert Gardner, treasurer, but not approved by the Company’s board of directors. Mr. Parks is also assisting the company in daily corporate matters. Also, $35,577 has been paid to the law firm Stikeman and Elliot who have been retained by the Company to tax the Blake Cassels & Graydon account and to further review the appropriateness of Blake’s actions. The Blake Cassels & Graydon account was incurred by former directors of the Company and is being taxed under the provisions of the Legal Professions Act. The Company received additional invoices from Blakes Cassels for $76,777 which date back to August, September and November of 2004. The existence of these additional Blakes Cassels invoices were not known to the Company until August 24, 2005. The professional fees also include $12,752 (2004- $18,867) accounting and $4,550 (2004- $55,142) consulting fees. During the nine months ending September 30, 2005 travel expenses increased to $12,104 from $6,307 for 2004, in order to allow for out of province directors to attend the Company’s director meetings in person. Rent is $23,344 lower than the nine months ending September 30, 2004 due to the cancelling of the Vancouver office. Marketing and Promotion is $11,731 lower than the nine months ending September 30, 2004 due to a reduction in investor relations activities. The other administration expenses, ie office, telephone, transfer fees, etc are comparable to the previous year end. Interest charges decreased to $5,365 compared to $15,174 due to a reduction in current payables. Interest received duri ng the nine months ending September 30, 2005 has decrease to $8,108 from $23,966 in 2004, as direct result of the decrease in funds held in term deposits.
Summary of Quarterly Results
| Sept. 30 2005 | June 30 2005 | March 31 2005 | Dec. 31 2004 | Sept. 30 2004 | June 30, 2004 | Mar 31, 2004 | Dec. 31, 2003 |
Revenue | 304 | $8,552 | $5,524 | $2,243 | $25,648 | $ 18,336 | $ 8,552 | $ 3,322 |
Loss before Extraordinary items |
$203,881 |
$109,541 |
$70,461 |
$646,584 |
$260,713 |
$359,605 |
$ 82,399 |
$308,276 |
Net loss | $203,881 | $109,541 | $70,461 | $646,584 | $260,713 | $359,605 | $ 82,399 | $403,231 |
Loss per share | $ 0.006 | $ 0.0032 | $ 0.0022 | $0.0197 | $0.0092 | $0.0130 | $0.0030 | $0.0146 |
Loss per share diluted |
$0.0046 |
$ 0.00026 |
$ 0.0018 |
$0.0158 |
$0.0080 |
$0.0111 |
$0.0026 |
$0.0126 |
Total Commitments
less than a year
1-3 years
Rent
$ 1,500
$ 6,000
Management Fees
$ 7,500
$ 30,000
Legal Fees
$ 30,000
$ 120,000
Liquidity of Capital Resources
The Company has no mineral producing properties at this time and receives no revenues from production. All of the Company’s properties are exploration projects, and there is no assurance that a commercially viable ore deposit exists in any such properties until further exploration work and a comprehensive evaluation based upon unit cost, grade, tonnage, recoveries, and other factors conclude economic feasibility.
Based upon the Black-Scholes option valuation model, and a risk-free market rate of 3% and volatility of 7%, the estimated compensation cost related to the options granted is approximately $100,000 of which $5,691 (September 2004-$63,830) was recognized during the period. As of February 24, 2005, a total of 1,100,000 stock incentive options were cancelled. During May 2005, the Company received approval from the TSX Venture Exchange to re-set the price of 850,000 stock incentive options from $0.61 to an exercise price of $0.15 for the period April 15, 2005 to April 14, 2006, $0.20 for the period April 15, 2006 to April 14, 2007 and $0.25 for the period April 15, 2007 to April 14, 2008. This price re-set received shareholder approval at the Company’s Annual General Meeting held June 27, 2005. During April 2005, the Company granted an additional 2,100,000 vested ince ntive stock options at an exercise price of $0.15 for the period April 15, 2005 to April 14, 2006, $0.20 for the period April 15, 2006 to April 14, 2007 and $0.25 for the period April 15, 2007 to April 14, 2008. An additional 100,000 incentive share options remained at $0.30 to November 14, 2008.
As of June 30, 2005, 3,050,000 incentive share options were granted and 295,231 incentive share options remain reserved for issuance under the Company's share option plan. As of the date of this report no options have been exercised.
GETTY COPPER INC.
MANAGEMENT DISCUSSION & ANALYSIS
SEPTEMBER 30, 2005
Financing Activities
On December 31, 2003, the Company closed a private placement of 3,100,000 Flow-Through Units at a price of $0.65 per FT Unit. Each Flow-Through Unit comprises one flow-through common share and one-half of one share purchase warrant. Each whole warrant (two half-warrants) is exercisable to purchase an additional flow-through share at a price of $0.75 until December 30, 2005.
Financing Activities Continued…
On December 7, 2004, the company completed a private placement for gross proceeds of $1,100,000. Each unit consisted of 1 share valued at $0.25 and a full warrant to purchase a further share of common stock for a period of 2 years at a price of $0.30 in the first year and $0.35 in the second year. All securities issued pursuant to this private placement are subject to a four-month hold period until April 8, 2005.
During the year ended December 31, 2004, 750,000 warrants were exercised at $0.22, resulting in 750,000 common shares issued for $165,000. These warrants from the 2002 private placement were due to expire on September 24, 2004. No further warrants remain outstanding at $0.22.
On May 12, 2005, the Company closed a private placement of 1,335,000 units at $0.15. Each Unit comprises one share valued at $0.15 and one warrant to purchase one common at a price of $0.20 for the first year and $0.25 for the second year. All securities issued pursuant to this private placement are subject to a four-month hold period until August 12, 2005.
Outlook
The Company continues its efforts to further develop its mineral properties. Although it is uncertain whether the Company will determine that it has economically recoverable reserves and whether it will be able to obtain the necessary financing to complete the exploration and development of the mineral properties, the Company believes that it may be able to economically develop the mineral properties. However, Canadian generally accepted accounting principles require that development costs related to mineral properties be written down for impairment unless there is persuasive evidence that impairment has not occurred. During the year ending December 31, 2004 funding was available to continue the exploration of the mineral properties, so future exploration development costs will not be written off until such time as the Company determines if it has economical recoverable resources or until exploration and developmen t ceases and/or the mineral claims are abandoned.
During the period ending September 30, 2005, the Company performed its own investor relations including dissemination of press releases to the media, interested shareholders, investors andbrokers.
The Company’s management remains committed to the development of the Company’s Highland Valley mineral claims, subject to a positive feasibility study, production permitting and financing.
Related Party Transactions
For the nine months ending September 30, 2005, Cinnamon Jang Willoughby & Company, a professional accounting firm to which director Don Willoughby, FCA is associated billed the Company $15,643 in accounting fees related to tax filings, and quarterly report review and other professional accounting related matters John M. Parks, General Counsel, Corporate Secretary and director of the Company billed the company $121,000 for legal fees relating to the Getty South transaction and is assisting the company in its investigation of commitments that were entered into by Dr. Vittorio Preto, P.Eng, the Company’s former interim president and Robert Gardner QC., former treasurer, without board approval. Mr. Parks is also assisting the Company on daily corporate matters. Dr. David Shaw, a director for the company, was paid $1,750 for geological consulting services. Jean Jacque Treyvaud, President and director of the company, was paid $2,800 for consulting fees.
GETTY COPPER INC.
MANAGEMENT DISCUSSION & ANALYSIS
SEPTEMBER 30, 2005
Outstanding share data
As of September 30, 2005, there were 34,078,657 common shares outstanding. In addition, there were 3,050,000 outstanding incentive stock options with an exercise prices ranging from $ 0.15 to $0.30. Share purchase warrants outstanding totalled 7,440,000 exercisable at price from $0.20 to $0.75.
Additional Disclosure
In 2002, directors of the Company requested that Robak Industries Ltd. (“Robak”), a company controlled by director John Lepinski, agree to supersede an existing 1995 option granted by Robak which required the Company to spend $5M in order for it to earn a 50% interest in the Getty South. This request was made because the Company was about to lose its interest in Getty South due to an inability to fund the required expenditures. Accordingly an agreement was reached for Robak to sell a 50% interest in Getty South and some nearby claims owned by Robak for 6 million shares valued at $0.20 each. A valuation was obtained from Ross Glanville (“Glanville”) and publicly filed (at WWW.SEDAR.COM February 13th, 2003) which put a value of $2.5M on 50% of Getty South and $500K on the other claims included in the deal. To resolve potential conflicts of interes t that would be inherent in an on-going 50:50 joint venture, Robak agreed to transfer control of its 50% of Getty South to Getty on the basis that Getty would not request any contributions from Robak for exploration and development costs (that is Robak would be “carried”). The carried interest agreement provided that Getty was to recoup 100% of any carried costs (plus interest thereon) from 80% of production income from any commercial mining operations that developed on Getty South. The determination as to when or whether to make any expenditures or commence mining was solely that of Getty. Shareholders approved the transaction be an overwhelming majority in a December 2002 general meeting (information filed at SEDAR, November 13, 2002).
In 2004, the Board of Directors considered acquiring the remaining 50% of Getty South from Robak. The board commissioned a valuation of the Robak interest from the same party who carried out the 2002 valuation. The valuator presented information about his 2002 report that caused the board to re-examine the 2002 transaction. The Company consulted independent geologists and legal counsel who wrote the Board and regulatory authorities letters confirming that in the valuator was mistaken A committee of the whole of the directors, with the exception of John Lepinski, as an independent review committee, has initiated a thorough review of the historical geological data of the Getty South Property. To date the board has received nothing that would suggest that the Getty South acquisition should be rescinded. The board expects the report of the independent revi ew committee, including a resource estimation review, will be received before the end of the year
The Transvaal mineral claims were conditionally acquired in 1996 through an option agreement with Genco Resources Inc. (formerly Globe Resources Inc.), and are subject to a 1-1/2% net smelter royalty. The Company had a commitment to spend no less than $525,000 on exploration and development during the seven years following the acquisition. Once this condition was met, the Company and Genco Resources Inc. were to enter into a joint venture. The Genco agreement expired on December 31, 2003, without the Company meeting its commitments. The Company then entered into an agreement to acquire 100% of the Transvaal claims from Genco for a purchase price of $275,000 to be paid by issuing the Company shares at a price of $0.60 per share (458,333 shares). This transaction has received conditional approval from the TSX Venture Exchange .
Additional Disclosure Continued…
Earlier in 2005, former directors Robert Gardner and Vittorio Preto, respectively, filed Third Party actions against the Company claiming indemnification from any costs and/or damages arising from a lawsuit brought November 24, 2004 against Gardner and Preto. The Company filed a defence to the claim refuting Mr. Gardner and Mr. Preto’s claim for indemnification, as the Company does not believe they are entitled to it under corporate law, asserting that Gardner and Preto did not act in good faith with a view to the best interests of the Company and otherwise, did not discharge the fiduciary and other duties they owed to the Company as directors.
On January 24, 2005 Vanguard Shareholder Solutions Inc. initiated a lawsuit against the Company claiming $23,041.27 for Investor Services allegedly performed between June 22 and September 30, 2004. After the Company advised counsel for Vanguard that the alleged services were never authorized by the Company nor by the TSX Venture Exchange, Vanguard discontinued the lawsuit on March 1, 2005.
On January 26, 2005, the Company caused its counsel, Stikeman Elliott, to initiate an action in the BC Supreme Court taxing the account of Blake Cassels & Graydon. The hearing for the taxation is expected to be heard in the spring of 2006.
The Company initiated a lawsuit on November 10, 2005 in the Supreme Court of British Columbia against former directors Robert Gardner and Vittorio Preto for the recovery of $157,600 which the Company claims was inappropriately, without board approval and contrary to the Company’s banking resolution, removed from the Company’s bank account.