THREE MONTHS ENDED JUNE 30, 2010
MANAGEMENT'S DISCUSSION AND ANALYSIS
| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
1.1 Date
This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited interim consolidated financial statements of Amarc Resources Ltd. ("Amarc", or the "Company") for the period ended June 30, 2010 and the audited consolidated financial statements for the year ended March 31, 2010, which are publicly available on SEDAR atwww.sedar.com.
This MD&A is prepared as of August 24, 2010.
This discussion includes certain statements that may be deemed "forward-looking statements". All statements in this discussion, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. |
1.2 Overview
Amarc is focused on mineral exploration in south-central British Columbia ("BC"). It is the aim of the Company to discover and develop a bulk-tonnage gold-copper deposit that has the potential to deliver both substantial growth and value to the Company.
In order to achieve its objective, the Company has assembled a capable and experienced mineral exploration team.
Through its property evaluation efforts, Amarc has acquired, by option agreement, the Newton gold-copper property located in south-central BC. In late 2009, the Company completed a successful discovery drill program at Newton. In addition, Amarc has acquired, by staking, a 100% interest over approximately 3,300 square kilometres in the prospective Plateau Gold-Copper Belt, which extends both to the south and to the northwest from the Newton property.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
Figure 1. Location of Amarc's Newton project.
The Newton Property
The Newton property is located approximately 110 kilometres southwest of the City of Williams Lake, BC (see Figure 1). Core drilling by previous operators at the Newton property tested for porphyry-style copper mineralization and, in general, returned low grade copper results. However, four drill holes (06-12, 06-03, 92-04 and 06-11) positioned in the easternmost part of the area drilled, intercepted 105 metres of 1.20 g/t gold (including 49 metres at 2.33 g/t gold), 95 metres at 0.51 g/t Au, 60 meters of 0.69 g/t gold and 46 meters of 0.54 g/t gold, respectively. Holes 06-12 and 06-03 also bottomed in mineralization. Geological interpretation by Amarc suggests the presence of a bulk-tonnage gold environment.
An initial 14-hole diamond drill program, completed by Amarc in late 2009, returned broad continuous intervals of bulk-tonnage style gold, silver, copper and zinc mineralization. Significant assay results from drill hole sampling are tabulated below. The gold system remains open in all directions.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
NEWTON PROJECT
ASSAY RESULTS FROM 14-HOLE, 2009 DRILL PROGRAM
Drill
Hole
ID | Incl. | Hole
Dip
(degrees) | Hole
Direction
(degrees) | From
(m) | To
(m) | Int.
(m) | Au
(g/t) | Ag
(g/t) | Cu
(%) | Zn(%) | AuEQ1
(g/t) |
| 9001 | | -45 | 90 | 3.0 | 39.0 | 36.0 | 0.60 | 0.9 | 0.01 | 0.00 | 0.63 |
| 9001 | | -45 | 90 | 228.0 | 297.0 | 69.0 | 1.41 | 10.9 | 0.12 | 0.05 | 1.85 |
| 9001 | incl. | -45 | 90 | 233.1 | 234.0 | 0.9 | 11.19 | 22.2 | 0.21 | 0.87 | 12.49 |
| 9001 | incl. | -45 | 90 | 252.8 | 297.0 | 44.2 | 1.74 | 15.9 | 0.17 | 0.02 | 2.34 |
| 9001 | | -45 | 90 | 441.0 | 477.0 | 36.0 | 0.34 | 0.6 | 0.03 | 0.01 | 0.42 |
| 9002 | | -90 | 0 | 222.0 | 255.2 | 33.2 | 0.96 | 2.8 | 0.07 | 0.01 | 1.16 |
| 9002 | incl. | -90 | 0 | 234.0 | 252.0 | 18.0 | 1.10 | 3.3 | 0.09 | 0.01 | 1.33 |
| 9003 | | -90 | 0 | 3.0 | 224.5 | 221.5 | 0.60 | 5.6 | 0.07 | 0.08 | 0.87 |
| 9003 | incl. | -90 | 0 | 18.0 | 39.0 | 21.0 | 0.71 | 2.3 | 0.01 | 0.00 | 0.77 |
| 9003 | incl. | -90 | 0 | 96.0 | 224.5 | 128.5 | 0.84 | 8.9 | 0.10 | 0.13 | 1.26 |
| 9003 | and | -90 | 0 | 156.0 | 198.0 | 42.0 | 1.25 | 16.8 | 0.20 | 0.11 | 1.98 |
| 9004 | | -90 | 0 | 6.0 | 195.0 | 189.0 | 1.56 | 7.9 | 0.08 | 0.17 | 1.95 |
| 9004 | incl. | -90 | 0 | 54.0 | 195.0 | 141.0 | 2.01 | 10.0 | 0.10 | 0.22 | 2.49 |
| 9004 | and | -90 | 0 | 96.0 | 195.0 | 99.0 | 2.76 | 12.2 | 0.12 | 0.26 | 3.36 |
| 9004 | and | -90 | 0 | 126.0 | 195.0 | 69.0 | 3.79 | 9.1 | 0.08 | 0.30 | 4.26 |
| 9004 | and | -90 | 0 | 129.0 | 132.0 | 3.0 | 13.47 | 14.4 | 0.17 | 0.12 | 14.10 |
| 9004 | and | -90 | 0 | 168.9 | 195.0 | 26.1 | 5.54 | 12.5 | 0.07 | 0.31 | 6.08 |
| 9005 | | -90 | 0 | 12.0 | 27.0 | 15.0 | 0.32 | 1.4 | 0.04 | 0.02 | 0.43 |
| 9005 | | -90 | 0 | 41.0 | 54.0 | 13.0 | 0.44 | 4.4 | 0.06 | 0.30 | 0.81 |
| 9005 | | -90 | 0 | 76.0 | 163.2 | 87.2 | 0.50 | 7.1 | 0.03 | 0.55 | 1.01 |
| 9005 | incl. | -90 | 0 | 88.0 | 89.0 | 1.0 | 16.56 | 221.6 | 0.30 | 2.55 | 22.38 |
| 9005 | | -90 | 0 | 279.0 | 303.0 | 24.0 | 0.34 | 0.8 | 0.07 | 0.01 | 0.48 |
| 9006 | | -90 | 0 | 9.0 | 306.5 | 297.5 | 0.26 | 2.3 | 0.03 | 0.13 | 0.44 |
| 9006 | incl. | -90 | 0 | 78.0 | 192.2 | 114.2 | 0.32 | 3.7 | 0.03 | 0.25 | 0.60 |
| 9006 | incl. | -90 | 0 | 264.0 | 306.5 | 42.5 | 0.43 | 0.6 | 0.05 | 0.01 | 0.53 |
| 9007 | | -90 | 0 | 48.0 | 252.0 | 204.0 | 0.33 | 4.5 | 0.05 | 0.11 | 0.57 |
| 9007 | incl. | -90 | 0 | 48.0 | 66.0 | 18.0 | 0.49 | 1.9 | 0.04 | 0.02 | 0.60 |
| 9007 | incl. | -90 | 0 | 135.0 | 216.0 | 81.0 | 0.46 | 8.0 | 0.07 | 0.20 | 0.85 |
| 9007 | and | -90 | 0 | 183.0 | 216.0 | 33.0 | 0.62 | 13.4 | 0.12 | 0.16 | 1.17 |
| 9008 | | -90 | 0 | 18.0 | 42.0 | 24.0 | 0.44 | 6.4 | 0.07 | 0.07 | 0.73 |
| 9008 | | -90 | 0 | 123.7 | 129.0 | 5.3 | 0.44 | 8.0 | 0.08 | 0.44 | 1.00 |
| 9009 | | -90 | 0 | 15.0 | 147.9 | 132.9 | 0.25 | 5.9 | 0.02 | 0.28 | 0.55 |
| 9009 | incl. | -90 | 0 | 66.0 | 114.0 | 48.0 | 0.36 | 6.3 | 0.02 | 0.28 | 0.68 |
| 9010 | | -90 | 0 | 35.4 | 189.0 | 153.6 | 0.29 | 3.0 | 0.03 | 0.23 | 0.52 |
| 9010 | incl. | -90 | 0 | 35.4 | 69.0 | 33.6 | 0.52 | 3.2 | 0.05 | 0.06 | 0.72 |
| 9011 | | -90 | 0 | 83.4 | 207.0 | 123.6 | 0.44 | 2.3 | 0.04 | 0.11 | 0.62 |
| 9011 | incl. | -90 | 0 | 149.0 | 207.0 | 58.0 | 0.60 | 2.4 | 0.04 | 0.06 | 0.75 |
| 9011 | and | -90 | 0 | 186.0 | 207.0 | 21.0 | 1.13 | 2.9 | 0.05 | 0.01 | 1.28 |
| 9012 | No reportable intercepts |
| 9013 | No reportable intercepts |
| 9014 | | -90 | 0 | 72.0 | 210.0 | 138.0 | 0.74 | 4.2 | 0.06 | 0.05 | 0.95 |
| 9014 | incl. | -90 | 0 | 147.0 | 210.0 | 63.0 | 1.17 | 6.8 | 0.08 | 0.05 | 1.47 |
| 9014 | and | -90 | 0 | 168.0 | 207.0 | 39.0 | 1.45 | 6.5 | 0.10 | 0.06 | 1.79 |
| 9014 | and | -90 | 0 | 204.0 | 207.0 | 3.0 | 11.70 | 50.8 | 0.45 | 0.06 | 13.44 |
Gold equivalent (AuEQ) is calculated using a gold price of US$900/oz, a silver price of US$15/oz, a copper price of US$2.50/lb and a zinc price of US$0.80/lb. Metal recoveries are assumed to be 100%.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
The most intensively developed mineralization includes disseminated sulphides, and appears to be preferentially localized within pervasively altered volcaniclastic and epiclastic rock units. These host rocks are characterized by both a high permeability and an anticipated wide geographic distribution – a permissive environment for bulk-tonnage style mineralization.
Exploration work in 2010 is aimed at confirming the dimensions and orientation of the mineralized system at Newton. Induced polarization ("IP") geophysical and soil sampling surveys, together with geological mapping, are underway on the property. Initial results from the 2010 IP geophysical survey have identified a second bulk-tonnage gold target measuring approximately 400 metres by 1,500 metres, located some 450 metres to the south of the 2009 discovery drilling, which is open in all directions.
The results of the 2010 exploration work will be combined with information from the 2009 drill program and historical data in order to define the 2010 drill targets. The permit application, which was submitted to the BC provincial government in December 2009 for a 25-hole diamond drill program, has been approved.
Newton Property Agreement
In June 2009, Amarc entered into an Option and Joint Venture Agreement (the "Newton Agreement") with New High Ridge Resources Inc. ("High Ridge") on the Newton property. Under the terms of the Newton Agreement, Amarc has the right to earn an 80% interest in the Newton property by making a $60,000 cash payment (paid) and issuing 100,000 Amarc shares (issued) to the underlying owners, funding $240,000 in exploration expenditures on or before December 31, 2009 (completed) and funding an additional $4.7 million in exploration expenditures over seven years from the effective date of the agreement. On exercise of the option by Amarc, the two parties will enter into a joint venture agreement. The Newton Agreement is subject to an underlying option agreement and accompanying amending agreements with arm's length parties. Pursuant to these underlying agreements, High Ridge has acquired a 100% undivided interest in all claims held under the underlying agreement through a series of staged payments, share issuances and exploration expenditures. The claims held under the Newton Agreement are subject to a 2% net smelter royalty, which may be purchased for $2 million. Advance annual royalty payments of $25,000 are required, starting in 2011.
The Plateau Gold-Copper Belt
Amarc has staked approximately 3,300 square kilometres of additional minerals claims over the under-explored and prospective Plateau Gold-Copper Belt. The belt extends primarily to the south, and also to the north, from the Newton property. The Plateau Gold-Copper Belt claims are owned 100% by Amarc. Public domain information indicates that the region has favourable geology and geochemistry for Newton-style gold deposits and porphyry gold-copper deposits. Amarc's ground, to the south of Newton, is bordered on the west by the advanced permitting-stage Prosperity gold-copper project. The Prosperity deposit is one of the largest known porphyry deposits in BC, containing 4.2 billion pounds of copper and 11 million ounces of copper in 830 million tonnes of proven and probable reserves grading 0.43 g/t gold and 0.22% copper at a C$5.50 NSR/t cut-off (Taseko Mines Limited).
Amarc has completed a 7,000 line kilometre ZTEM (Z-axis Tipper Electromagnetic system) airborne geophysical survey over the Newton property, other regional anomalies and the sector of the Plateau Gold-Copper Belt that extends south of the Newton property. The ZTEM technology is an innovative airborne electromagnetic system that provides unparalleled resolution and depth of investigation and can detect conductors more than one kilometre below surface. High-sensitivity magnetometry data is collected concurrently. The geophysical signatures of the Newton mineralization and other known mineral occurrences in the region have been established, and Amarc is utilizing this comparative data to assist in the definition of previously unrecognized targets within the belt.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
Initial field evaluation, including prospecting, soil geochemical sampling and IP geophysical surveys, is underway on selected targets. Soil sampling has to date defined two significant copper-molybdenum multi-element anomalies, each exceeding 1,500 metres in length and ranging up to 1,000 metres in width. Both these targets remain open for expansion and are to be further assessed by ground geophysics. Relevant permit applications submitted to the provincial government have been approved.
The results of these exploration activities will allow the prioritization of targets for drill testing later in the season.
The Newton Property and the Plateau Gold-Copper Belt are located near the City of Williams Lake, a full service regional centre which is approximately 250 kilometres northeast of Vancouver. The region is characterized by low-lying and gently rolling hills. It is well served by existing transportation and power infrastructure, supporting a number of operating mines and late-stage development projects. These include the Gibraltar copper-molybdenum mine (Proven and Probable Reserves of 472 million tonnes grading 0.315 % copper and 0.008 % molybdenum, Taseko Mines Limited) that has been in operation since 1973, the Mount Polley copper-gold mine (Proven and Probable Reserves of 46.2 million tonnes grading 0.34 % copper, 0.29 g/t gold and 0.95 g/t Ag, Imperial Metals Corp.) that commenced production in 2008, and late-stage development projects – notably the Prosperity gold-copper project described above.
The Sitlika Copper-Zinc Belt
Amarc has ceased all exploration activities along the Sitlika Belt in north-central BC in order to focus on the Newton project and the adjacent Plateau Gold-Copper Belt. The Company's land position along the Sitlika Belt has also been reduced to approximately 217 square kilometres.
Other BC Agreements
The Tulox Property Agreement
The Tulox property is located in the Cariboo region and comprises an area of 54 square kilometres that was acquired over the period of 2005 to 2007. The Tulox property is underlain by Mesozoic volcanic and sedimentary rocks that have been intruded by Mesozoic intrusive rocks. These rocks have been overlain by Cenozoic volcanic and pyroclastic rocks. The Tulox property hosts gold and gold indicator element anomalies.
In April 2009, Amarc entered into an option agreement with Tulox Resources Inc. ("Tulox", formerly named Sitec Ventures Corp.) on the Tulox Property. Tulox can acquire a 100% interest in the Tulox Property by making a cash payment of $10,000, expending $2,000,000 on the Tulox Property and issuing 2,625,000 common shares over four years. Tulox has made a $10,000 cash payment and issued 350,000 common shares to date. Upon preparation of a Preliminary Assessment or a Prefeasibility Study, Amarc may exercise a one-off Back-In Right to obtain 60% interest in the Tulox Property by completing an additional $10 million in Mineral Exploration Expenditures on the Property. The Tulox Property is subject to a 3% net smelter royalty, which is reduced to 1.2% in the event that the Back-In Right is exercised by Amarc.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
Other Property Interests – BC, Yukon, Saskatchewan
Amarc also has a 5% net profits interest ("NPI") in the 46 mineral claims that comprise theAna Property in Yukon, and a 2.5% NPI in a mineral lease over theMann Lake Property in Saskatchewan. The Company has no plans to undertake any programs on either of these properties in 2010.
Market Trends
Although there has been periodic volatility in the gold market, the average annual price has increased for the past four years. The average gold price in 2008 was approximately US$872/oz. In response to the global economic uncertainty that began in mid 2008, gold prices were strong in 2009, with prices ranging from US$802/oz in early January to US$1,200/oz in early December and averaging US$974/oz for the year.
Gold prices remain strong in 2010. The average price to the end of July 2010 is US$1,160/oz.
Copper prices increased significantly between late 2003 and mid 2008, and then declined in late 2008. The average price in 2008 was approximately US$3.16/lb. Prices in 2009 ranged from US$1.39/lb in early January to US$3.33/lb at year end, and averaged US$2.34/lb for the year.
Copper prices generally remain strong in 2010, with a slight weakening to range between US$2.80/lb and US$3.05/lb since mid-May. The average price the end of July 2010 is US$3.21/lb.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
1.3 Selected Annual Information
Not required for interim MD&A.
1.4 Summary of Quarterly Results
The amounts are expressed in thousands of Canadian dollars, except per-share amounts. Small differences are due to rounding.
| | | June 30 | | | Mar 31 | | | Dec 31 | | | Sept 30 | | | June 30 | | | Mar 31 | | | Dec 31 | | | Sept 30 | |
| | | 2010 | | | 2010 | | | 2009 | | | 2009 | | | 2009 | | | 2009 | | | 2008 | | | 2008 | |
| Current assets | $ | 3,704 | | $ | 4,650 | | $ | 4,082 | | $ | 2,931 | | $ | 3,023 | | $ | 3,373 | | $ | 2,025 | | $ | 4,054 | |
| Other assets | | 36 | | | 38 | | | 42 | | | 46 | | | 49 | | | 54 | | | 60 | | | 65 | |
| Total assets | | 3,740 | | | 4,688 | | | 4,124 | | | 2,977 | | | 3,072 | | | 3,427 | | | 2,085 | | | 4,119 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Current liabilities | | 255 | | | 33 | | | 362 | | | 683 | | | 67 | | | 34 | | | 132 | | | 1,040 | |
| Shareholders' equity | | 3,485 | | | 4,655 | | | 3,762 | | | 2,294 | | | 3,005 | | | 3,393 | | | 1,953 | | | 3,079 | |
| Total liabilities & shareholders' equity | | 3,740 | | | 4,688 | | | 4,124 | | | 2,977 | | | 3,072 | | | 3,427 | | | 2,085 | | | 4,119 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Working capital | | 3,449 | | | 4,617 | | | 3,720 | | | 2,248 | | | 2,956 | | | 3,339 | | | 1,893 | | | 3,014 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortization | | 3 | | | 4 | | | 4 | | | 3 | | | 6 | | | 6 | | | 6 | | | 6 | |
| Exploration | | 915 | | | 823 | | | 1,638 | | | 790 | | | 196 | | | 301 | | | 1,515 | | | 2,974 | |
| Tax credits received | | – | | | – | | | – | | | (252 | ) | | – | | | (1,435 | ) | | – | | | – | |
| Legal, accounting and audit | | 21 | | | 23 | | | 2 | | | 5 | | | 6 | | | 31 | | | 2 | | | (4 | ) |
| Management and consulting | | 1 | | | 23 | | | 1 | | | – | | | – | | | 2 | | | 17 | | | 28 | |
| Office and administration | | 44 | | | 43 | | | 23 | | | 46 | | | 41 | | | 35 | | | 39 | | | 50 | |
| Salaries and benefits | | 155 | | | 108 | | | 25 | | | 73 | | | 106 | | | (97 | ) | | 107 | | | 123 | |
| Shareholder communication | | 34 | | | 47 | | | 13 | | | 25 | | | 18 | | | (78 | ) | | 44 | | | 96 | |
| Travel and conference | | 2 | | | 31 | | | 5 | | | 7 | | | 6 | | | 9 | | | 8 | | | 18 | |
| Trust and filing | | 1 | | | 46 | | | 6 | | | 7 | | | 1 | | | 10 | | | 9 | | | 5 | |
| Subtotal | | 1,176 | | | 1,148 | | | 1,717 | | | 704 | | | 380 | | | (1,217 | ) | | 1, 747 | | | 3,297 | |
| Foreign exchange (gain) loss | | (6 | ) | | – | | | (3 | ) | | 30 | | | 13 | | | (6 | ) | | (177 | ) | | (41 | ) |
| Gain on disposal of equipment | | – | | | – | | | – | | | – | | | – | | | | | | – | | | (14 | ) |
| Interest income | | (7 | ) | | (5 | ) | | (4 | ) | | (12 | ) | | (4 | ) | | (232 | ) | | (9 | ) | �� | (32 | ) |
| Tax related to flow-through financing | | – | | | – | | | – | | | – | | | – | | | 16 | | | 65 | | | – | |
| Subtotal | | 1,163 | | | 1,143 | | | 1,710 | | | 722 | | | 389 | | | (1,440 | ) | | 1,626 | | | 3,211 | |
| Stock-based compensation | | – | | | (42 | ) | | 125 | | | 22 | | | 33 | | | 39 | | | 11 | | | 194 | |
| Net loss (income) for theperiod | $ | 1,163 | | $ | 1,101 | | $ | 1,835 | | $ | 744 | | $ | 422 | | $ | (1,401 | ) | $ | 1,637 | | $ | 3,405 | |
| Unrealized loss (gain) on available-for-sale marketable securities | | 7 | | | 3 | | | (5 | ) | | 5 | | | – | | | – | | | – | | | – | |
| Comprehensive loss (income)for the period | $ | 1,170 | | $ | 1,104 | | $ | 1,830 | | $ | 749 | | $ | 422 | | $ | (1,401 | ) | $ | 1,637 | | $ | 3,405 | |
| Basic and diluted net loss (earning) per share | $ | 0.01 | | $ | 0.01 | | $ | 0.03 | | $ | 0.01 | | $ | 0.01 | | $ | (0.02 | ) | $ | 0.02 | | $ | 0.05 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average number of common shares outstanding (thousands) | | 83,839 | | | 83,288 | | | 72,839 | | | 72,783 | | | 72,739 | | | 70,684 | | | 67,848 | | | 67,739 | |
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
1.5 Results of Operations
The Company recorded a net loss of $1,163,517 for the three month period ended June 30, 2010, compared to a net loss of $421,549 for the same period in fiscal 2010. The increase in loss for the period was due primarily to increased exploration expenditures in British Columbia during the current period, compared to the same period of the previous year.
Exploration expenses for the three month period ended June 30, 2010 was $915,252, compared to $196,170 for the same period in the previous year. This increase was due to an increase in exploration activities during the three month period ended June 30, 2010, compared to the same period of the prior year. The major exploration expenditures during the period were for assays and analysis (2011 – $138,081; 2010 – $20,451), geological (2011 – $437,130; 2010 – $69,917), and site activities (2011 – $159,773; 2010 – $8,926).
Administrative costs for the three month period ended June 30, 2010 also increased in line with the increase in exploration activities, compared to the same period in the previous year. The major administrative costs during the period were for salaries and benefits (2011 – $156,207, 2010 – $106,186), office and administration (2011 – $43,511, 2010 – $41,268), and shareholder communication (2011 – $33,680, 2010 – $18,166).
There was no stock-based compensation expense charged to operations during the three month period ended June 30, 2010, compared to $32,907 during the same period in the previous year. The stock-based compensation expense in the prior period was mainly due to the amortization of a greater number of options vesting in fiscal 2010.
Interest income increased to $6,830 for the three month period ended June 30, 2010, compared to $3,655 for the same period last year, due mainly to higher average cash balances during the three month period ended June 30, 2010 compared to same period of the prior year.
A foreign exchange gain of $5,678 was recorded during the three month period ended June 30, 2010, compared to a loss of $12,730 in the same period of the prior year. The gain in the current period was attributable to the Company's US dollar denominated financial assets mainly held in cash and cash equivalents and due to depreciation of the Canadian dollar against the US dollar.
1.6 Liquidity
Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company has issued common share capital in each of the past few years, pursuant to private placement financings and the exercise of warrants and options.
The Company has no long term debt, capital lease obligations, operating leases or any other long term obligations.
Development of any of the Company's mineral properties will require additional equity and possibly debt financing. As the Company is an exploration stage company, it does not have revenues from operations and, except for interest income from its cash and cash equivalents, the Company relies on equity funding for its continuing financial liquidity.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
1.7 Capital Resources
The Company has no lines of credit or other sources of financing which have been arranged but are as yet unused.
The Company has no "Purchase Obligations" defined as any agreement to purchase goods or services that is enforceable and legally binding on the Company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
1.8 Off-Balance Sheet Arrangements
None.
1.9 Transactions with Related Parties
The required disclosure is provided in note 8 of the accompanying unaudited interim consolidated financial statements as at and for the period ended June 30, 2010.
1.10 Fourth Quarter
Not applicable.
1.11 Proposed Transactions
There are no proposed transactions requiring disclosure under this section.
1.12 Critical Accounting Estimates
Not required. The Company is a venture issuer.
1.13 Changes in Accounting Policies including Initial Adoption
The required disclosure is provided in note 3 of the accompanying unaudited interim consolidated financial statements as at and for the period ended June 30, 2010.
1.14 Financial Instruments and Other Instruments
The carrying amounts of cash and equivalents, amounts receivable, available-for-sale marketable securities, and accounts payable and accrued liabilities approximate their fair values due to their short-term nature.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
1.15 Other MD&A Requirements
Additional information relating to the Company is available on SEDAR at www.sedar.com.
1.15.1 Additional Disclosure for Venture Issuers without Significant Revenue
(a) capitalized or expensed exploration and development costs;
The required disclosure is presented as a schedule to the unaudited interim consolidated financial statements for the period ended June 30, 2010.
(b) expensed research and development costs;
Not applicable.
(c) deferred development costs;
Not applicable.
(d) general and administration expenses; and
The required disclosure is presented in the unaudited interim consolidated statements of operations.
(e) any material costs, whether capitalized, deferred or expensed, not referred to in (a) through (d);
None.
1.15.2 Disclosure of Outstanding Share Data
The following table details the share capital structure as at August 24, 2010, the date of this MD&A. These figures may be subject to minor accounting adjustments prior to presentation in future consolidated financial statements.
| | Expiry date | Exercise price | Number |
| Common shares | | | 83,839,473 |
| Warrants | February 9, 2011 | $0.10 | 5,000,000 |
| Options | July 19, 2011 | $0.70 | 1,605,200 |
| Options | April 28, 2012 | $0.70 | 70,000 |
| Options | March 30, 2013 | $0.51 | 50,000 |
1.15.3 Internal Controls over Financial Reporting and Disclosure Controls
Internal Controls over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
Disclosure Controls and Procedures
The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized and reported within the applicable time periods and to ensure that required information is gathered and communicated to the Company's management so that decisions can be made about timely disclosure of that information.
1.16 International Financial Reporting Standards ("IFRS")
Management of the IFRS Convergence Project
The Company is evaluating its overall readiness to transition from Canadian GAAP to IFRS including the readiness of its staff, Board of Directors, Audit Committee and auditors.
The IFRS convergence project consists of three primary phases, which in certain cases will occur concurrently as IFRS is applied to specific areas:
Phase 1 – Initial Scoping and Impact Assessment Analysis: to isolate key areas that will be impacted by the transition to IFRS. This phase is currently in progress.
Phase 2 – Evaluation and Design: to identify specific changes required to existing accounting policies, information systems and business processes, together with an analysis of policy alternatives allowed under IFRS and development of draft IFRS financial statements.
Phase 3 – Implementation and Review: to execute the changes to information systems and business processes, completing formal authorization processes to approve recommended accounting policy changes and training programs across the Company's finance and other staff, as necessary. This will culminate in the collection of financial information necessary to compile IFRS compliant financial statements, including embedding IFRS principles in business processes, and Audit Committee review and approval of the financial statements.
IFRS 1 – First Time Adoption of International Financial Reporting Standards
IFRS 1, First-time Adoption of International Financial Reporting Standards ("IFRS 1"), sets forth guidance for the initial adoption of IFRS. Commencing for the period ending on June 30, 2011, being the first quarter of the 2012 fiscal year, the Company will restate its comparative fiscal 2011 financial statements for annual and interim periods to be consistent with IFRS. In addition, the Company will reconcile equity and net earnings from the then-previously reported fiscal 2011 Canadian GAAP amounts to the restated 2011 IFRS amounts.
IFRS generally requires that first-time adopters retrospectively apply all IFRS standards and interpretations in effect as at the first annual reporting date. IFRS 1 provides for certain mandatory exceptions and certain optional exemptions to this general principle.
The Company anticipates using the following IFRS 1 optional exemptions:
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| AMARC RESOURCES LTD. |
| THREE MONTHS ENDED JUNE 30, 2010 |
| MANAGEMENT'S DISCUSSION AND ANALYSIS |
- to apply the requirements of IFRS 3, Business Combinations, prospectively from the Transition Date;
- to apply the requirements of IFRS 2,Share-based Payments, to equity instruments granted which had not vested as of the Transition Date;
- to elect not to comply with IFRIC 1,Changes in Existing Decommissioning, Restoration andSimilar Liabilities,for changes in such liabilities that occurred before the Transition Date.
Changes to estimates previously made are not permitted. The estimates previously made by the Company under Canadian GAAP will not be revised for application of IFRS except where necessary to reflect any changes resulting from differences in accounting policies.
Other IFRS Considerations
The conversion to IFRS will impact the way the Company presents its financial results. The first financial statements prepared using IFRS, the Company's interim financial statements for the three months ending on June 30, 2011, will include extensive notes disclosing transitional information and disclosure of all new, IFRS-compliant, accounting policies.
The Company has obtained an understanding of IFRS from intensive hands-on training of its finance personnel. Our finance personnel include employees who have experience in preparing financial statements under IFRS.
The Company is currently evaluating the impact of the conversion on its accounting systems and has not determined whether significant changes to its accounting systems are required.
In addition, the Company will evaluate its internal and disclosure control processes as a result of its conversion to IFRS, assess the impacts of adopting IFRS on its contractual arrangements to identify any material compliance issues such as its debt covenants and other commitments and consider the impacts the transition will have on its internal planning process and compensation arrangements.
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