FIRST POINT MINERALS CORP.
Interim Consolidated Financial Statements
FIRST QUARTER 2006
(Stated in Canadian Dollars)
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited interim financial statements of First Point Minerals Corp. (the “Company”) have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.
FIRST POINT MINERALS CORP.
Consolidated Balance Sheets
As at March 31, 2006
| MARCH 31 |
| DECEMBER 31 |
| 2006 |
| 2005 |
| (UNAUDITED) |
| (AUDITED) |
| $ |
| $ |
A S S E T S | |||
Current |
|
|
|
Cash | 1,256,984 |
| 167,326 |
Amounts receivable | 79,189 |
| 52,732 |
Prepaid expenses | 17,410 |
| 25,803 |
|
|
|
|
| 1,353,583 |
| 245,861 |
|
|
|
|
Equipment (note 3) | 22,542 |
| 23,913 |
Investment (note 4) | 871,374 |
| 871,374 |
Mineral property costs (note 5) | 4,130,085 |
| 3,889,773 |
|
|
|
|
| 6,377,584 |
| 5,030,921 |
|
|
|
|
L I A B I LI T I E S | |||
Current |
|
|
|
Accounts payable and accrued liabilities | 61,766 |
| 120,180 |
|
|
|
|
|
|
|
|
S H A R E H O L D E R S’ E Q U I T Y | |||
|
|
|
|
Share capital (note 6 (a)) | 12,708,342 |
| 11,023,104 |
Contributed surplus (note 6 (d)) | 626,576 |
| 383,520 |
Subscription receivable (note 9) | (175,000) |
| - |
Deficit | (6,844,100) |
| (6,495,883) |
|
|
|
|
| 6,315,818 |
| 4,910,741 |
|
|
|
|
| 6,377,584 |
| 5,030,921 |
Continuing operations (note 1) |
|
|
|
Approved by the Board of Directors: | ||
|
|
|
/s/ J. Christopher Mitchell |
|
/s/ William H. Myckatyn |
J. Christopher Mitchell, Director |
| William H. Myckatyn, Director |
See notes to the consolidated financial statements
FIRST POINT MINERALS CORP.
Consolidated Statements of Operations and Deficit
(Unaudited, Prepared by Management)
For the three months ended March 31
| THREE MONTHS | ||
| 2006 |
| 2005 |
| $ |
| $ |
Expenses |
|
|
|
Accounting, legal and audit | 6,407 |
| 1,529 |
Amortization | 1,371 |
| 1,657 |
Communication | 870 |
| 424 |
Foreign exchange loss (gain) | (595) |
| (8,604) |
General exploration | 22,629 |
| 10,167 |
Insurance | 489 |
| - |
Management fees | 9,197 |
| 20,000 |
Office and administration | 1,805 |
| 1,250 |
Rent | 3,483 |
| 5,536 |
Stock-based compensation | 276,058 |
| - |
Travel and promotion | 10,215 |
| 10,299 |
Trust and filing fees | 5,979 |
| 1,692 |
Wages | 10,309 |
| 23,358 |
|
|
|
|
Loss before other items | (348,217) |
| (67,308) |
|
|
|
|
Other items: |
|
|
|
Interest | - |
| 1,106 |
|
|
|
|
Net loss for the period | (348,217) |
| (66,202) |
Deficit - beginning of period | (6,495,883) |
| (6,110,387) |
Deficit - end of period | (6,844,100) |
| (6,176,589) |
|
|
|
|
Loss per share (note 7) | $ (0.01) |
| $ (0.00) |
Weighted average number of common shares outstanding | 40,257,714 |
| 31,713,454 |
|
|
|
|
See notes to the consolidated financial statements
FIRST POINT MINERALS CORP.
Consolidated Statements of Cash Flows
(Unaudited, Prepared by Management)
For the three months ended March 31
| THREE MONTHS | ||
| 2006 |
| 2005 |
| $ |
| $ |
Cash provided by (used for): |
|
|
|
|
|
|
|
Operating activities |
|
|
|
Net loss for the period | (348,217) |
| (66,202) |
Add items not involving cash: |
|
|
|
Amortization | 1,371 |
| 1,657 |
Stock-based compensation | 276,058 |
| - |
|
|
|
|
| (70,788) |
| (64,545) |
Changes in non-cash working capital components: |
|
|
|
Accounts receivable | (26,457) |
| 32,118 |
Prepaid expenses | 8,393 |
| (13,951) |
Accounts payable and accrued liabilities | (58,414) |
| 102,921 |
|
|
|
|
| (147,266) |
| 56,543 |
Financing activities |
|
|
|
Release of trust funds | - |
| 27,000 |
Cash proceeds from shares issued | 1,667,000 |
| - |
Share issue costs | (14,765) |
| - |
Share subscriptions receivable | (175,000) |
| - |
| 1,477,235 |
| 27,000 |
Investing activities |
|
|
|
Mineral property costs | (240,312) |
| (108,167) |
|
|
|
|
| (240,312) |
| (24,624) |
|
|
|
|
Net cash provided (used) during the period | 1,089,657 |
| (24,624) |
Cash - beginning of the period | 167,326 |
| 57,392 |
|
|
|
|
Cash - end of the period | 1,256,983 |
| 32,768 |
See notes to the consolidated financial statements
FIRST POINT MINERALS CORP.
Consolidated Schedule of Mineral Property Costs
(Unaudited, Prepared by Management)
| Balance, |
| Expenditures |
| Disposition |
| Balance |
| Expenditures |
| Balance, |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
HONDURAS |
|
|
|
|
|
|
|
|
|
|
|
Cacamuya Property |
|
|
|
|
|
|
|
|
|
|
|
Acquisition | 299,181 |
| 12,802 |
| - |
| 311,983 |
| 2,448 |
| 314,431 |
Exploration |
|
|
|
|
|
|
|
|
|
|
|
Assays | 89,760 |
| - |
| - |
| 89,760 |
| - |
| 89,760 |
Drilling and trenching | 557,983 |
| - |
| - |
| 557,983 |
| - |
| 557,983 |
Field office expenses | 179,219 |
| 10,120 |
| - |
| 189,339 |
| 1,508 |
| 190,847 |
Geological & geophysical | 155,516 |
| - |
| - |
| 155,516 |
| - |
| 155,516 |
Environmental & reclamation | 2,026 |
| - |
| - |
| 2,026 |
| - |
| 2,026 |
Legal & accounting fees | 3,477 |
| 2,186 |
| - |
| 5,663 |
| - |
| 5,663 |
Property taxes | 6,280 |
| 986 |
| - |
| 7,266 |
| - |
| 7,266 |
Travel & accommodation | 111,119 |
| 1,115 |
| - |
| 112,234 |
| 24 |
| 112,258 |
Wages | 752,720 |
| 6,396 |
| - |
| 759,116 |
| 1,933 |
| 761,049 |
| 2,157,281 |
| 33,605 |
| - |
| 2,190,886 |
| 5,913 |
| 2,196,799 |
|
|
|
|
|
|
|
|
|
|
|
|
Honduras total | 2,157,281 |
| 33,605 |
| - |
| 2,190,886 |
| 5,913 |
| 2,196,799 |
NICARAGUA |
|
|
|
|
|
|
|
|
|
|
|
Rio Luna Property |
|
|
|
|
|
|
|
|
|
|
|
Acquisition | 52,580 |
| - |
| - |
| 52,580 |
| - |
| 52,580 |
Exploration |
|
|
|
|
|
|
|
|
|
|
|
Assays | 46,321 |
| 31,355 |
| - |
| 77,676 |
| 15,592 |
| 93,268 |
Drilling and trenching | 444,032 |
| - |
| - |
| 444,032 |
| 75,888 |
| 519,920 |
Field office expenses | 274,222 |
| 156,436 |
| - |
| 430,658 |
| 52,916 |
| 483,574 |
Geological & geophysical | 71,405 |
| 7,884 |
| - |
| 79,289 |
| 10,065 |
| 89,354 |
Environmental & reclamation | 8,763 |
| - |
| - |
| 8,763 |
| - |
| 8,763 |
Legal & accounting fees | 5,696 |
| 21,424 |
| - |
| 27,120 |
| 290 |
| 27,410 |
18,907 |
| 1,090 |
| - |
| 19,997 |
| 7,902 |
| 27,899 | |
Travel & accommodation | 54,774 |
| 20,040 |
| - |
| 74,814 |
| 6,395 |
| 81,209 |
Wages | 239,513 |
| 171,219 |
| - |
| 410,732 |
| 45,839 |
| 456,571 |
| 1,216,213 |
| 409,448 |
| - |
| 1,625,661 |
| 214,887 |
| 1,840,548 |
|
|
|
|
|
|
|
|
|
|
|
|
Mesas de Cuapa Property |
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
|
|
|
|
|
|
|
|
|
Assays | - |
| 4,339 |
| - |
| 4,339 |
| 1,301 |
| 5,640 |
Field office expenses | - |
| 13,394 |
| - |
| 13,394 |
| 6,734 |
| 20,128 |
Geological & geophysical | - |
| - |
| - |
| - |
| 2,615 |
| 2,615 |
Legal & accounting fees | - |
| 13,647 |
| - |
| 13,647 |
| - |
| 13,647 |
Property taxes | - |
| - |
| - |
| - |
| 2,455 |
| 2,455 |
Travel & accommodation | - |
| 9 |
| - |
| 9 |
| 455 |
| 464 |
Wages | - |
| 41,837 |
| - |
| 41,837 |
| 5,952 |
| 47,789 |
| - |
| 73,226 |
| - |
| 73,226 |
| 19,512 |
| 92,738 |
|
|
|
|
|
|
|
|
|
|
|
|
Nicaragua total | 1,216,213 |
| 482,674 |
| - |
| 1,698,887 |
| 234,399 |
| 1,933,286 |
Total mineral property costs | 3,373,494 |
| 516,279 |
| - |
| 3,889,773 |
| 240,312 |
| 4,130,085 |
See notes to the consolidated financial statements
FIRST POINT MINERALS CORP.
Notes to the Unaudited Consolidated Financial Statements (Prepared by Management)
March 31, 2006 and 2005
1. NATURE AND CONTINUANCE OF OPERATIONS
The Company is incorporated under theBusiness Corporations Act (Alberta) and is involved in the acquisition and exploration of property interests that are considered potential sites of economic mineralization. At the date of the financial statements, the Company has not identified a known body of commercial grade ore on any of its properties and the ability of the Company to recover the costs it has incurred to date on these properties is dependent upon the Company being able to identify a commercial ore body, to finance its exploration and development costs and to resolve any environmental, regulatory, or other constraints which may hinder the successful development of the property.
These unaudited interim financial statements have been prepared by management on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. The financial statements have not been audited, reviewed or otherwise verified as to the accuracy or completeness of information. Readers are cautioned that these statements may not be appropriate for their purposes.
| March 31, 2006 | December 31, 2005
|
Deficit | (6,844,100) | (6,495,883) |
Working Capital | 1,291,817 | 125,681 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying unaudited interim financial statements have been prepared by management in accordance with generally accepted accounting principles (“GAAP”) in Canada on a basis consistent with those outlined in the Company’s audited financial statements for the year ended December 31, 2005. They do not include all of the information and disclosures required by Canadian GAAP for audited financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements. These unaudited interim financial statements should be read in conjunction with the most recent audited annual financial statements of the Company, including the notes thereto.
The Company has not changed any of its existing accounting policies, nor has it adopted any new accounting policies since its last fiscal year end.
3. EQUIPMENT
| March 31, 2006 |
| December 31, 2005 | ||||
| Cost |
| Accumulated |
| Net Book |
| Net Book |
|
|
|
|
|
|
|
|
Computer equipment | 37,548 |
| (31,038) |
| 6,510 |
| 7,037 |
Office furniture and equipment | 77,082 |
| (61,050) |
| 16,032 |
| 16,876 |
| 114,630 |
| (92,088) |
| 22,542 |
| 23,913 |
FIRST POINT MINERALS CORP.
Notes to the Unaudited Consolidated Financial Statements (Prepared by Management)
March 31, 2006 and 2005
4. INVESTMENT
The Company entered into an agreement in 2004 with a private company to form Aquila Resources Corp. (“Aquila”) for the purpose of advancing that company’s Back Forty zinc/gold property in Upper Peninsula of Michigan and the Company’s Cedros zinc/silver property in Honduras. Pursuant to that agreement, Aquila issued 2,215,569 of its common shares to the Company. Concurrently, the Company also purchased 253,209 common shares of Aquila at $0.35 per share. During 2004, Aquila issued 37,795 shares to the Company to settle indebtedness of $7,301.
On May 1, 2006, the TSX Venture Exchange (the “Exchange”) approved a transaction whereby Aquila completed the reverse take-over of a public company, JML Resources Ltd., whose shares traded on the Exchange. The shares of the resulting entity, named Aquila Resources Inc., commenced trading on the Exchange on May 2, 2006. The Company currently owns an aggregate of 2,506,573 shares of Aquila Resources Inc. (ARI), representing an ownership interest of approximately 6.4%. As a condition of its approval, the Exchange required that a number of ARI shareholders, including First Point, place their ARI shares into escrow, which shares will be released from escrow in accordance with a pre-determined schedule of 10% of the initial number of shares in escrow upon the Exchange listing being approved, and 15% of the original number of shares in escrow every six months thereafter, until all shares have been released. The initial tranche of 250,673 ARI shares was released to First Point on May 2, 2006.
5. MINERAL PROPERTIES
HONDURAS
Cacamuya Property
The Company acquired a 60% interest, subject to a 0.6% NSR, in the Cacamuya Property in southern Honduras from Minera Battle Mountain Gold Company ("BMG") by incurring US$1,000,000 in exploration expenditures and issuing 700,000 common shares of the Company. BMG has subsequently become a wholly-owned subsidiary of Newmont Gold Company.
The Company has an option to earn the remaining 40% interest in this property from a wholly-owned Honduran subsidiary of Breakwater Resources Ltd. by issuing 500,000 common shares at such time as the Honduran government enacts the regulations to the new Honduran mining code and conveys title to the property to the Company. Breakwater Resources Ltd. will retain a sliding scale royalty of 0.4% of the gross sale proceeds starting at US$325 per ounce of gold and rising to a maximum of 1.2% of the gross sale proceeds at US$400 per ounce of gold for all gold production, and 0.4% of the gross sale proceeds starting at US$5.25 per ounce of silver and rising to a maximum of 1.2% of the gross sale proceeds at US$7.00 per ounce of silver for all silver production.
NICARAGUA
Rio Luna Property
The Company entered into an option to purchase agreement to acquire the Rio Luna gold property in December 2002. The option was exercised in October 2004 and the Company now owns a 100% interest in the Rio Luna property.
Mesas de Cuapa Property
The Nicaraguan government granted the Boaco Viejo concession to the Company in 2005. The Company has filed “solicituds” as the initial step in the application process for obtaining additional concessions covering the Mesas de Cuapa and Toreros projects in the same area.
FIRST POINT MINERALS CORP.
Notes to the Unaudited Consolidated Financial Statements (Prepared by Management)
March 31, 2006 and 2005
6. SHARE CAPITAL
a) Authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of first and second preferred shares.
| Number of Common Shares |
| Capital |
| Contributed |
Common shares: |
|
|
|
|
|
Issued at December 31, 2004 | 31,713,455 |
| 10,251,550 |
| 318,028 |
|
|
|
|
|
|
Private placements | 5,595,001 |
| 801,750 |
| - |
Share issue costs | - |
| (26,103) |
| - |
Finders’ fees | - |
| (4,093) |
| 4,093 |
Stock-based compensation expense | - |
| - |
| 61,399 |
|
|
|
|
|
|
| 5,595,001 |
| 771,554 |
| 65,492 |
|
|
|
|
|
|
Issued at December 31, 2005 | 37,308,456 |
| 11,023,104 |
| 383,520 |
|
|
|
|
|
|
Private placements | 11,619,288 |
| 1,626,700 |
| - |
Share issue costs | - |
| (14,764) |
| - |
Stock options exercised | 110,000 |
| 68,970 |
| (32,470) |
Finders’ warrants exercised | 19,000 |
| 4,332 |
| (532) |
Stock-based compensation expense | - |
| - |
| 276,058 |
|
|
|
|
|
|
| 11,748,288 |
| 1,685,238 |
| 243,056 |
|
|
|
|
|
|
Issued at March 31, 2006 | 49,056,744 |
| 12,708,342 |
| 626,576 |
|
|
|
|
|
|
b) Summary of warrants outstanding at March 31, 2006:
Type | Number Outstanding |
| Exercise Price |
| Expiry |
Finders’ warrants | 35,167 |
| 0.20 |
| April 28, 2007 |
| 87,500 |
| 0.20 |
| December 20, 2007 |
| 122,667 |
|
|
|
|
|
|
|
|
|
|
Warrants | 5,190,716 |
| 0.20 |
| March 1, 2007 |
| 6,428,572 |
| 0.20 |
| March 13, 2007 |
| 2,172,499 |
| 0.20 |
| April 28, 2007 |
| 625,000 |
| 0.20 |
| December 20, 2007 |
| 14,416,787 |
|
|
|
|
FIRST POINT MINERALS CORP.
Notes to the Unaudited Consolidated Financial Statements (Prepared by Management)
March 31, 2006 and 2005
6. SHARE CAPITAL(continued)
c) Stock Options
Options to purchase common shares have been granted to directors, employees and consultants of the Company at exercise prices determined by their market value on the date of the grant.
|
| Weighted-Average Exercise Price |
| Number |
| Weighted-Average Contractual Remaining Life |
|
|
|
|
|
|
|
Balance, December 31, 2004 |
| 0.375 |
| 2,280,000 |
| 2.87 |
|
|
|
|
|
|
|
Granted |
| 0.15 |
| 1,295,000 |
|
|
Cancelled or expired |
| 0.465 |
| (370,000) |
|
|
|
|
|
|
|
|
|
Balance, December 31, 2005 |
| 0.274 |
| 3,205,000 |
| 3.23 |
|
|
|
|
|
|
|
Granted |
| 0.37 |
| 1,450,000 |
|
|
Exercised |
| 0.332 |
| (110,000) |
|
|
|
|
|
|
|
|
|
Balance, March 31, 2006 |
| 0.303 |
| 4,545,000 |
| 3.60 |
Summary of stock options outstanding at March 31, 2006:
Number Outstanding |
| Exercise Price |
| Expiry |
75,000 |
| 0.19 |
| January 16, 2007 |
300,000 |
| 0.20 |
| January 22, 2007 |
50,000 |
| 0.53 |
| June 4, 2007 |
450,000 |
| 0.55 |
| June 27, 2007 |
150,000 |
| 0.34 |
| November 4, 2008 |
610,000 |
| 0.35 |
| December 12, 2008 |
175,000 |
| 0.20 |
| April 15, 2009 |
1,285,000 |
| 0.15 |
| October 26, 2009 |
1,450,000 |
| 0.37 |
| March 16, 2011 |
|
|
|
|
|
4,545,000 |
|
|
|
|
d) Stock-based compensation
The fair value of options reported as compensation expenses during the period was estimated using the Black-Scholes Option Pricing Model using the following assumptions: a risk-free interest rate of 4% (2005 - nil), an expected life of 3 years; an expected volatility of 75% (2005 - nil) and no expectation for the payment of dividends. The weighted average fair value per option was $0.1904. Based on these variables, stock-based compensation expense of $276,058 (2005 - $nil) was recorded during the period. The offsetting credit was recorded in Contributed Surplus.
Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the stock. Changes in these assumptions can 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.
FIRST POINT MINERALS CORP.
Notes to the Unaudited Consolidated Financial Statements (Prepared by Management)
March 31, 2006 and 2005
7. LOSS PER SHARE
Loss per share has been calculated using the weighted-average number of common shares outstanding during the year. Diluted loss per share has not been calculated as it is anti-dilutive.
8. RELATED PARTY TRANSACTIONS
During the quarter, the Company paid or accrued an aggregate of$9,197 (2005 - $20,000)for management and administrative services provided by companies owned by officers of the Company.
During the quarter, the Company paid or accrued an aggregate of$10,136 (2005 - $nil)for legal and other services to Heenan Blaikie LLP, a law firm. Mr. Rod Kirkham, a director of the Company, is a partner of Heenan Blaikie.
9. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
Supplemental disclosure of non-cash investing and financing activities:
• During the current quarter, the Company granted 1,450,000 employee stock options valued at $276,058. Refer to note 6.
• During the current quarter, the Company issued 1,100,000 common shares for subscriptions receivable totalling $175,000 which was received subsequent to the current quarter.
10. SEGMENTED INFORMATION
The Company has one operating segment, mineral exploration, and all assets of the Company are located in Central America, principally in Honduras and Nicaragua.
11. SUBSEQUENT EVENTS
• 35,000 warrants exercisable at $0.20 were exercised.
• 1,500 finders’ warrants exercisable at $0.20 were exercised.
• 100,000 stock options were granted at an exercise price of $0.37 per share with an expiry date of April 19, 2011.
• J. Christopher Mitchell resigned as CFO of the Company, effective May 1, 2006, and Teresa Cheng was appointed CFO.