Exhibit 99.1
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Consolidated Interim Financial Statements
For the nine-months ended June 30, 2010 and 2009
(Expressed in Canadian Dollars)
(Prepared by Management)
Contents
Consolidated Financial Statements
Consolidated Balance Sheets
2
Consolidated Statements of Operations and Comprehensive Loss
3
Consolidated Statements of Shareholders’ Equity
4
Consolidated Statements of Cash Flows
5
Notes to Consolidated Financial Statements
6 – 30
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Consolidated Balance Sheets
(Canadian Dollars)
|
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| ||
June 30 2010 | September 30 2009 (Audited) | |||
|
|
|
| Restated Note 3 |
Assets |
|
|
|
|
Current |
|
|
|
|
Cash and cash equivalents (note 4) | $ | 10,946,821 | $ | 15,553,239 |
Amounts receivable |
| 1,014,992 |
| 688,976 |
Due from related parties (note 9(a)(i)) |
| 44 |
| 19,419 |
Prepaid expenses and deposits (note 9(b) and 7(a)(i)) |
| 374,063 |
| 126,556 |
|
|
|
|
|
Total current assets |
| 12,335,920 |
| 16,388,190 |
Prepaid expenses and deposits(note 7(a)(i)) |
| 79,952 |
| - |
Property and equipment (note 6) |
| 1,216,704 |
| 307,237 |
Mineral properties (note 7 and Schedule 1) |
| 4,884,122 |
| 4,716,904 |
|
|
|
|
|
Total assets | $ | 18,516,698 | $ | 21,412,331 |
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|
|
|
|
Liabilities |
|
|
|
|
Current |
|
|
|
|
Accounts payable and accrued liabilities | $ | 245,017 | $ | 227,517 |
Due to related parties (note 9(a)(ii)) |
| 66,397 |
| 26,380 |
|
|
|
|
|
|
| 311,414 |
| 253,897 |
|
|
|
|
|
Shareholders’ Equity |
|
|
|
|
Share capital (note 8) |
| 61,863,896 |
| 61,393,374 |
Contributed surplus |
| 7,502,867 |
| 7,215,180 |
Deficit accumulated in the exploration stage |
| (51,161,479) |
| (47,450,120) |
|
|
|
|
|
Total shareholders’ equity |
| 18,205,284 |
| 21,158,434 |
|
|
|
|
|
Total liabilities and shareholders’ equity | $ | 18,516,698 | $ | 21,412,331 |
Nature of operations (note 1)
Commitments (notes 7 and 12)
Approved on behalf of the Board:
“Chris Theodoropoulos” (signed)
“Gary Freeman” (signed)
Chris Theodoropoulos, Director
Gary Freeman, Director
The accompanying notes are an integral part of these consolidated financial statements.
2
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Consolidated Statements of Operations and Comprehensive Loss
(Canadian Dollars)
(unaudited)
| Three Months Ended June 30 | Nine Months Ended June 30 | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
|
| Restated Note 3 | Restated Note 6, 7(a)(i) | Restated Note 3 | |||||||||
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| ||||||||
Expenses |
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|
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| |||||||||
Stock-based compensation (note 8(g)) | $ | 48,972 | $ | 424,476 | $ | 474,794 | $ | 1,142,115 | |||||
| Consultants |
| 172,022 |
| 229,687 |
| 688,771 |
| 816,162 | ||||
Salaries |
| 130,295 |
| 43,467 |
| 234,027 |
| 197,769 | |||||
| Legal and audit |
| 2,657 |
| 27,366 |
| 70,584 |
| 84,103 | ||||
| Office and administration |
| 90,108 |
| 113,932 |
| 261,042 |
| 244,362 | ||||
Investor Relations |
| 64,820 |
| 89,465 |
| 196,037 |
| 212,754 | |||||
Travel |
| 59,439 |
| 53,217 |
| 180,911 |
| 171,236 | |||||
Transfer agent, and filing fees |
| 2,592 |
| 23,248 |
| 48,541 |
| 127,624 | |||||
Exploration expenses (note 8(g) and schedule 2) |
| 722,944 |
| 314,985 |
| 1,697,582 |
| 1,162,286 | |||||
Amortization |
| 5,566 |
| 2,826 |
| 16,124 |
| 8,565 | |||||
|
| (1,299,415) |
| (1,322,632) |
| (3,868,413) |
| (4,166,976) | |||||
|
|
|
|
| |||||||||
Other Income (Expenses) |
|
|
|
| |||||||||
| Investment and other income |
| 17,012 |
| 83,503 |
| 105,058 |
| 275,825 | ||||
| Foreign exchange gain (loss) |
| 26,869 |
| 75,819 |
| 52,000 |
| 416,923 | ||||
Write-off of mineral properties |
| - |
| - |
| (4) |
| - | |||||
|
| 43,881 |
| 159,132 |
| 157,054 |
| 692,748 | |||||
Net Loss and Comprehensive |
|
|
|
| |||||||||
Loss for Period |
| (1,255,534) |
| (1,163,310) |
| (3,711,359) |
| (3,474,228) | |||||
Deficit, Beginning of Period |
| (49,905,945) |
| (44,766,231) |
| (47,450,120) |
| (42,455,313) | |||||
|
|
|
|
| |||||||||
Deficit, End of Period | $ | (51,161,479) | $ | (45,929,541) | $ | (51,161,479) | $ | (45,929,541) | |||||
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Loss per Share | $ | (0.03) | $ | (0.03) | $ | (0.08) | $ | (0.08) | |||||
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Weighted Average Number of |
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|
|
| |||||||||
Common Shares Outstanding |
| 47,411,557 |
| 43,330,611 |
| 47,411,557 |
| 43,330,611 |
The accompanying notes are an integral part of these consolidated financial statements.
3
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Consolidated Statements of Shareholders’ Equity
(Canadian Dollars)
|
|
|
| Deficit accumulated in the exploration stage |
| |
| Share Capital | Contributed Surplus | Total | |||
| Shares | Amount | Shareholders' Equity | |||
|
|
|
|
| ||
| Restated – Note 2(a) | |||||
| ||||||
Balance, September 30, 2008 | 41,382,069 | $57,856,097 | $6,010,303 | $ (42,455,313) | $21,411,087 | |
Shares issued during the year | ||||||
For cash | ||||||
Private placements, net of share issue costs (note 8(c)(ii)) | 3,223,000 | 2,147,074 | 117,194 | - | 2,264,268 | |
Exercise of options | 132,500 | 78,250 | - | - | 78,250 | |
For mineral property (note 7(a)(ii)) | 75,760 | 65,745 | - | - | 65,745 | |
In relation to acquisition of subsidiary (note 7(a)(i)) | 2,500,000 | 1,175,000 | - | - | 1,175,000 | |
Transfer of contributed surplus to share capital on exercise of options | - | 71,208 | (71,208) | - | - | |
Stock-based compensation for the year | - | - | 1,158,891 | - | 1,158,891 | |
Net loss for the year | - | - | - | (4,994,807) | (4,994,807) | |
| ||||||
Balance, September 30, 2009 | 47,313,329 | $61,393,374 | $7,215,180 | $(47,450,120) | $21,158,434 | |
Shares issued during the year | ||||||
For cash | ||||||
Exercise of options | 335,000 | 223,500 | - | - | 223,500 | |
For mineral property (note 7(a)(ii)) | 40,483 | 59,915 | - | - | 59,915 | |
Transfer of contributed surplus to share capital on exercise of options | - | 187,107 | (187,107) | - | - | |
Stock-based compensation for the year (note 8(g)) | - | - | 474,794 | - | 474,794 | |
Net loss for the year | - | - | - | (3,711,359) | (3,711,359) | |
Balance, June 30, 2010 | 47,688,812 | $61,863,896 | $7,502,867 | $(51,161,479) | $18,205,284 |
The accompanying notes are an integral part of these consolidated financial statements.
4
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(Canadian Dollars)
(Unaudited)
|
|
|
|
| ||||
| Three Months Ended June 30 |
| Three Months Ended June 30 | |||||
|
| 2010 |
| 2009 |
| 2010 |
| 2009 |
|
|
| Restated Note 3 |
| Restated Note 6, 7(a)(i) |
| Restated Note 3 | |
Operating Activities |
|
|
|
| ||||
Net loss for the period | $ | (1,255,534) | $ | (1,163,310) | $ | (3,711,359) | $ | (3,474,228) |
Items not involving cash: |
|
|
|
| ||||
Amortization |
| 5,566 |
| 2,826 |
| 16,124 |
| 8,565 |
Stock-based compensation |
| 48,972 |
| 452,447 |
| 474,794 |
| 1,170,086 |
Write off of mineral properties |
| - |
|
| 4 |
| ||
Future income tax expense |
| - |
| (280) |
| - |
| (5,656) |
Unrealized loss/(gain) |
|
|
|
| ||||
on foreign exchange |
| 99 |
| 44,810 |
| (2,534) |
| 60,970 |
Changes in operating assets |
|
|
|
| ||||
and liabilities: |
|
|
|
| ||||
Amounts receivable |
| (127,502) |
| (89,000) |
| (326,016) |
| (60,150) |
Prepaid expenses |
| (180,965) |
| (23,010) |
| (247,507) |
| 86,947 |
Long-term prepaid expense |
|
|
|
| ||||
and deposits |
| 14,109 |
| - |
| (79,952) |
| - |
Accounts payable and |
|
|
|
| ||||
accrued liabilities |
| 223,857 |
| (81,503) |
| 17,500 |
| (95,733) |
Total cash flows used in |
|
|
|
| ||||
Operating Activities |
| (1,271,398) |
| (857,020) |
| (3,858,946) |
| (2,309,199) |
Investing Activities |
|
|
|
| ||||
Expenditures on property |
|
|
|
| ||||
and equipment |
| (83,414) |
| - |
| (925,591) |
| (276,040) |
Expenditures and advances |
|
|
|
| ||||
on mineral properties |
| (4,047) |
| - |
| (107,307) |
| (822,987) |
Total cash flows used in |
|
|
|
| ||||
Investing Activities |
| (87,461) |
| - |
| (1,032,898) |
| (1,099,027) |
Financing Activities |
|
|
|
| ||||
Proceeds from issuance of |
|
|
|
| ||||
Common shares, net of issue costs |
| 175,500 |
| - |
| 223,500 |
| 36,255 |
Due from related parties |
| 59,270 |
| (4,259) |
| 59,392 |
| (13,028) |
Cash Provided by Financing |
|
|
|
| ||||
Activities |
| 234,770 |
| (4,259) |
| 282,892 |
| 23,227 |
Foreign exchange effect on cash |
| (99) |
| (44,810) |
| 2,534 |
| (60,970) |
Increase / (Decrease) in Cash |
|
|
|
| ||||
and Cash Equivalents |
| (1,124,188) |
| (906,089) |
| (4,606,418) |
| (3,445,969) |
Cash and Cash Equivalents, |
|
|
|
| ||||
Beginning of Period |
| 12,071,009 |
| 15,509,901 |
| 15,553,239 |
| 18,049,781 |
Cash and Cash Equivalents, |
|
|
|
| ||||
End of Period | $ | 10,946,821 | $ | 14,603,812 | $ | 10,946,821 | $ | 14,603,812 |
Supplemental disclosure with respect to cash flows (note 11)
The accompanying notes are an integral part of these consolidated financial statements.
5
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
1.
NATURE OF OPERATIONS
Pediment Gold Corp (the “Company”) is governed under theBusiness Corporations Act(British Columbia) and is a natural resource company engaged in the evaluation, acquisition, exploration and development and ultimately is working towards commercial production of gold and silver in Mexico.
On February 25, 2009, the Company changed its name from Pediment Exploration Ltd. to Pediment Gold Corp. As of March 2, 2009, the Company’s shares were delisted from the TSX Venture Exchange (“TSX-V”) and commenced trading on the Toronto Stock Exchange (“TSX”).
The Company reported a net loss of $3,711,359 (2009 - $3,474,228) for the nine months ended June 30, 2010 and has an accumulated deficit of $51,161,479 as at June 30, 2010 (2009 - $45,929,541). As at June 30, 2010, the Company had $12,104,458 (2009 - $15,360,032) in working capital, which is sufficient working capital to fund its 2010 operating and exploration expenditures and to continue its operations through fiscal 2011. The Company relies on financing through the issuance of additional shares of its common stock until such time as it achieves sustained profitability through profitable mining operations, or the receipt of proceeds from the disposition of its mineral property interests.
2.
SIGNIFICANT ACCOUNTING POLICIES
The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada and follow the same accounting policies and methods consistent with those used in preparation of the most recent annual audited consolidated financial statements except as noted below. The interim consolidated financial statements do not include all information and note disclosures required by Canadian GAAP for annual financial statements, and therefore should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended September 30, 2009.
6
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Future changes in accounting policies (Continued)
(i)
International Financial Reporting Standards ("IFRS")
In February 2008, the Canadian Accounting Standards Board ("AcSB") confirmed that January 1, 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canadian Generally Accepted Accounting Principles (“GAAP”). The IFRS standards will be effective for the Company for interim and annual financial statements relating to the Company’s fiscal year beginning on or after October 1, 2011. The effective date of October 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the interim periods and year ended September 30, 2011.
The Company is performing a detailed analysis of the differences between IFRS and the Company’s accounting policies as well as assessing the impact of various alternatives.. The IFRS project plan is being completed in four phases: planning and analysis, identification of changes, solution development and implementation where necessary.
The Company has begun the planning and analysis phase of the transition to IFRS and intends to transition to IFRS financial statements during fiscal 2010.
The Company is in the preproduction stage and therefore has adopted accounting policies for preproduction companies.. In a number of cases, the Company will be adopting IFRS as an initial policy, rather than a change from existing policies to IFRS. The current analysis indicates that there will be very little effect on financial reporting as a result of the adoption of IFRS.
Some of the specific areas reviewed and considered to date are:
7
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, Plant and Equipment: IFRS requires that the Company identify different components of its fixed assets. As this has been the Company’s practice, compliance will not result in a change. Assets have been identified in accordance with their useful lives in order to properly amortize their cost to operations.
In accordance with normal practices within the mining industry, the estimated life of mine will affect the amortization rates in some categories, and this estimate is subject to change as the mine progresses through production, resulting in revised amortization rates from time to time.
IFRS allows the revaluation of assets at fair value. The Company will make the election under IFRS and adopt the cost basis for determining the carrying value of equipment.
The carrying costs of the Company’s mineral properties reflects only the costs of acquisition; the carrying value does not reflect the costs of exploration, drilling, evaluation, testing and independent review. IFRS permits the capitalization of exploration costs prior to the establishment of ore reserves that would support the economic viability of a project. When it has been established that a mineral deposit is commercially mineable and an economic analysis has been completed, the costs incurred to develop a mine on the property prior to the start of mining operations are capitalized, which could potentially result in the understatement of the value of certain mineral properties that do reach the development stage.
Contributed Surplus: There are a number of small presentation and disclosure differences between Canadian GAAP and IFRS. The small differences noted are not expected to have a significant difference on the Company. However, the ‘Contributed Surplus’ should be described as ‘Other reserves’ or ‘Share-based payment reserves’ under IFRS.
Stock-based compensation: There are a number of differences in accounting for stock-based compensation however the differences depend on the contractual nature of the stock based compensation and are not expected to have a material impact on the Company. No significant impact is expected.
Financial Instruments: The Company’s current financial instruments are simple and require no analysis. Should the Company enter into hedging agreements on any future production; the requirements of IFRS will be followed.
8
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment tests: Impairment tests have been applied on the carrying value of projects on a quarterly basis, as required under Canadian GAAP. Although the methodology of testing for impairment under IFRS is slightly different, no complications are expected on the transition to IFRS,
Asset Retirement Obligations: Differences include the basis of estimation for undiscounted cash flows, the discount rate used, the frequency of liability remeasurement and recognition of a liability when a constructive obligation exists. No material impact is anticipated.
Income Taxes: An analysis of IFRS requirements will be done when the new standards become available. With no current revenues or taxable income, and with no anticipated contentious issues regarding the tax value of assets or non-capital losses carried forward, no material impact is anticipated.
Financial Disclosure: Based on publications to date, none of the requirements to comply with reporting under IFRS presents any foreseeable difficulty.
In summary, an analysis of the requirements for making the transition to IFRS and the subsequent compliance for financial reporting purposes indicates there should not be any difficulty, due to the simplicity of the Company’s current operations and the fact that IFRS will be adopted as initial policy in most cases, rather than a change from an existing policy.
9
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
3.
CHANGE IN ACCOUNTING POLICY
Effective October 1, 2009, the Company retrospectively changed its accounting policy for exploration expenditures to more appropriately align itself with policies applied by other comparable companies at a similar stage in the mining industry. Prior to October 1, 2009, the Company capitalized all such costs to mineral properties held directly or through an investment and only wrote down capitalized costs when the property was abandoned or if the capitalized costs were not considered to be economically recoverable.
Exploration expenditures are now charged to operations as they are incurred until the mineral property reaches the development stage. Significant costs related to property acquisitions, including allocations for undeveloped mineral interests, are capitalized until the viability of the mineral interest is determined. When it has been established that a mineral deposit is commercially mineable and an economic analysis has been completed, the costs incurred to develop a mine on the property prior to the start of mining operations are capitalized. The impact of this change on the previously reported June 30, 2009 consolidated financial statements is as follows:
| As previously reported | Restatement | As restated |
Mineral properties – Jun 30, 2009 | 14,205,063 | (9,225,531) | 4,716,904 |
|
|
|
|
Exploration expenses for the period ended Jun 30,2009 | 44,116 | 1,118,170 | 1,162,286 |
|
|
|
|
Loss for the period ended Jun 30, 2009 | 2,356,058 | 1,118,170 | 3,474,228 |
|
|
|
|
Loss per share for the period ended Jun 30, 2009 | 0.05 | 0.03 | 0.08 |
|
|
|
|
Deficit at Jun 30, 2009 | 36,704,010 | 9,225,531 | 45,929,541 |
|
|
|
|
The impact of this change on the previously reported deficits per the consolidated financial statements at September 30, 2009 and 2008 are as follows:
| As previously reported | Restatement | As restated |
|
|
|
|
Deficit at Sept 30, 2008 | 34,347,952 | 8,107,361 | 42,455,313 |
|
|
|
|
Deficit at Sept 30, 2009 | 37,620,962 | 9,829,158 | 47,450,120 |
|
|
|
|
10
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
4.
FINANCIAL INSTRUMENTS
The Company classifies its cash and cash equivalents as held-for-trading; amounts receivable (excluding taxes receivable) and due from related parties as loans and receivables; and due to related parties and accounts payable and accrued liabilities as other financial liabilities.
The carrying values of cash and cash equivalents, amounts receivable (excluding taxes receivable), and accounts payable and accrued liabilities approximate their fair values due to the short-term maturity of these financial instruments.
The fair value of financial instruments is summarized as follows:
| June 30, 2010 | September 30, 2009 | |||||||
Financial Assets |
| Carrying Amount |
| Fair Value |
| Carrying Amount |
| Fair Value | |
|
|
|
|
|
|
|
|
| |
Held-for-trading |
|
|
|
| |||||
Cash and cash equivalents | $ | 10,946,821 | $ | 10,946,821 | $ | 15,553,239 | $ | 15,553,239 | |
|
|
|
|
| |||||
Loans and receivables |
|
|
|
| |||||
Amounts receivable (excluding taxes receivable) | $ | 36,464 | $ | 36,464 | $ | 25,726 | $ | 25,726 | |
Due from related parties | $ | 44 |
| 44 | $ | 19,419 |
| 19,419 | |
|
|
|
|
| |||||
Financial Liabilities |
|
|
|
| |||||
Accounts payable and accrued liabilities | $ | 245,017 | $ | 245,017 | $ | 227,517 | $ | 227,517 | |
Due to related parties | $ | 66,397 |
| 66,397 | $ | 26,380 |
| 26,380 |
11
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
4.
FINANCIAL INSTRUMENTS (Continued)
The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below:
(a)
Credit risk
The Company is exposed to credit risk with respect to its cash and cash equivalents. Cash and cash equivalents have been placed on deposit with major Canadian financial institutions and major Mexican financial institutions. The risk arises from the non-performance of counterparties of contracted financial obligations.
The Company is not exposed to significant credit risk on amounts receivable.
The Company manages credit risk, in respect of cash and cash equivalents, by purchasing highly liquid, short-term investment-grade securities held at major financial institutions with strong investment-grade ratings by a primary rating agency in accordance with the Company’s investment policy.
Concentration of credit risk exists with respect to the Company’s cash and cash equivalents as the majority of the amounts are held with only a few Canadian and Mexican financial institutions. The Company’s concentration of credit risk and maximum exposure thereto is as follows:
| June 30, 2010 | September 30, 2009 |
|
|
|
Held at major Canadian financial institutions: |
|
|
Cash | $ 117,317 | $ 5,137,947 |
Cash equivalents | 10,773,000 | 10,271,727 |
|
|
|
| 10,890,317 | 15,409,674 |
Held at major Mexican financial institutions: |
|
|
Cash | 56,504 | 143,565 |
|
|
|
Total cash and cash equivalents | $10,946,821 | $15,553,239 |
Included in cash equivalents at June 30, 2010 are cashable guaranteed investment certificates earning interest between 0.6% and 0.7% (2009 - 2.00% and 3.25%) and maturing at various dates between September 8, 2010 and December 10, 2010 (2009 –
September 8, 2009 and December 10, 2009).
12
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
4.
FINANCIAL INSTRUMENTS (Continued)
(b)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in obtaining funds to meet commitments as they become due. The Company’s approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. The Company believes it has sufficient cash and cash equivalents at June 30, 2010 in the amount of $10,946,821 (2009 - $14,603,812) in order to fund its operating and exploration expenditures and to continue its operations through fiscal 2011. At June 30, 2010, the Company had accounts payable and accrued liabilities of $245,017 (2009 - $161,208) and amounts due to related parties of $66,397 (2009 - $nil), which will become due for payment within three months.
(c)
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk.
(i)
Interest rate risk
Interest rate risk consists of two components:
(a)
To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.
(b)
To the extent that changes in prevailing market rates differ from the interest rate for the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.
The Company’s cash and cash equivalents consists of cash held in bank accounts and guaranteed investment certificates that earn interest at variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have a significant impact on estimated fair values as of June 30, 2010 and 2009. Future cash flows from interest income on cash and cash equivalents will be affected by interest rate fluctuations. The Company manages interest rate risk by maintaining an investment policy that focuses primarily on preservation of capital and liquidity.
13
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
4.
FINANCIAL INSTRUMENTS (Continued)
(c)
Market risk (continued)
(ii)
Foreign currency risk
The Company is exposed to foreign currency risk to the extent that certain monetary assets and liabilities held by the Company are not denominated in Canadian dollars.
The Company is exposed to foreign currency risk with respect to cash and cash equivalents, amounts receivable, and accounts payable and accrued liabilities as a portion of these amounts are denominated in US dollars and Mexican pesos. The Company has not entered into any foreign currency contracts to mitigate this risk.
The sensitivity analysis of the Company’s exposure to foreign currency risk at the reporting date has been determined based upon hypothetical changes taking place at June 30, 2010 and 2009, which includes a hypothetical change in the foreign currency exchange rate between the Canadian dollar and Mexican peso of 9% and 11%, respectively, and the effect on net loss and comprehensive loss.
| Reasonably Possible Changes | |||
| 2010 | 2009 | ||
|
|
| ||
CDN $: MXN peso exchange rate variance | +9% | +11% | ||
|
|
| ||
Net loss and comprehensive loss | $ | 130,929 | $ | 95,416 |
|
|
| ||
CDN $: MXN peso exchange rate variance | -9% | -11% | ||
|
|
| ||
Net loss and comprehensive loss | $ | (156,827) | $ | (134,369) |
(iii)
Other price risk
Other price risk is the risk that the fair or future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company is not exposed to significant other price risk.
14
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
5.
CAPITAL MANAGEMENT
The Company’s primary objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to pursue the development and exploration of its mineral properties. The Company defines capital that it manages as cash and cash equivalents.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company’s primary source of funds comes from the issuance of share capital. The Company does not use other sources of financing that require fixed payments of interest and principal due to lack of cash flow from current operations and is not subject to any externally imposed capital requirements.
Capital requirements are driven by the Company’s exploration activities on its mineral properties. To effectively manage the Company’s capital requirements, the Company has a planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals. The Company monitors actual expenses to budget on all exploration projects and overhead to manage costs, commitments and exploration activities.
There have been no changes to the Company’s approach to capital management during the year.
6.
PROPERTY AND EQUIPMENT
| 2010 |
| 2009 | |||||||||
|
| Cost |
| Accumulated Amortization |
| Net Book Value |
| Cost |
| Accumulated Amortization |
| Net Book Value |
|
|
|
|
|
|
| ||||||
Computer equipment | $ | 51,797 | $ | 28,573 | $ | 23,224 | $ | 32,005 | $ | 21,811 | $ | 10,194 |
Office furniture |
| 59,713 |
| 10,652 |
| 49,061 |
| 28,370 |
| 9,508 |
| 18,862 |
Vehicles |
| 92,008 |
| 7,219 |
| 84,789 |
| 18,748 |
| 3,195 |
| 15,553 |
Mining equipment |
| 57,330 |
| - |
| 57,330 |
| 57,330 |
| - |
| 57,330 |
Leaseholds |
| 41,945 |
| 4,194 |
| 37,751 |
|
|
| |||
Land |
| 787,124 |
| - |
| 787,124 |
| 205,298 |
| - |
| 205,298 |
Water Rights |
| 177,425 |
| - |
| 177,425 |
| - |
| - |
| - |
| $ | 1,267,342 | $ | 50,638 | $ | 1,216,704 | $ | 341,751 | $ | 34,514 | $ | 307,237 |
At June 30, 2010, the Company’s mining equipment is under development; therefore, it will be amortized once it is ready for use.
As at December 31, 2009, property and equipment was retroactively restated by $177,425 to capitalize the acquisition costs of the water rights, which were previously expensed.
15
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
7.
MINERAL PROPERTIES
| June 30 2010 | September 30 2009 |
San Antonio | $ 2,529,862 | $ 2,529,862 |
La Colorada | 2,354,260 | 2,187,038 |
Others | - | 4 |
| $ 4,884,122 | $ 4,716,904 |
(a)
The Company’s mineral property holdings consist of mineral concessions located in Sonora State and Baja California Sur, Mexico. Descriptions of specific concession groups are as follows:
(i)
San Antonio Project
The San Antonio project is located in the state of Baja California Sur, Mexico.
On September 29, 2005, the Company acquired 100% of the issued and outstanding shares of Pitalla, which owned the 6 original concessions that made up the San Antonio project.
On March 28, 2008, the San Antonio Project was expanded to include the Triunfo Est. Properties, which consist of five mining exploration concessions located in the state of Baja California Sur, Mexico. The concessions were acquired for a cash payment of $11,250 (paid) and mineral property data related to the concessions were acquired for 25,000 common shares (issued) of the Company valued at $71,500 .
On July 3, 2008, the Company acquired the El Triunfo concession group, a group of adjacent concessions in the San Antonio district. The four concessions were acquired for a cash payment of $1,241,568 (paid) and are subject to a variable 1% to 3% net smelter royalty (“NSR”).
Pursuant to the terms of the Company’s purchase agreement to acquire Pitalla in 2005, if prior to December 31, 2011, an aggregate of one million ounces of gold or gold equivalents were determined to be situated on three or fewer of the properties acquired, of which 500,000 ounces or equivalent must be on a single property, the Company would be required to issue 2,500,000 common shares. On December 4, 2008, the Company issued the 2,500,000 common shares valued at $1,175,000, which has been allocated to the acquisition cost of the San Antonio project (note 8(c)(iv).
On December 13, 2009, the Company entered into a promissory agreement with the Ejido San Antonio to purchase outright the surface rights for the Planes and Colinas mineral targets. Pursuant to the promissory agreement, the Company has acquired 260 hectares for total consideration of 6,500,000 pesos ($581,826 – paid), which has been allocated entirely to land. The Company is currently arranging for the transfer of legal title to the land.
16
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
7.
MINERAL PROPERTIES(Continued)
(a)
(Continued)
(i)
San Antonio Project (continued)
On December 13, 2009, the Company entered into a rental agreement, called a “temporary occupation agreement”, securing long-term surface and access rights for the on-going exploration and operation of the San Antonio project. The agreement has a term of 30 years and includes a one-time payment of 200,000 pesos ($16,230 paid) for access and annual per hectare payments for areas subject to exploration or other disturbance within the Company’s concession holdings, which total approximately 8,100 hectares. Under the terms of the agreement, the minimum annual hectare payments are 600,000 pesos with the agreement stipulating an advance payment of 1,800,000 pesos ($146,070 paid) for the first three years of the agreement.
As at December 31, 2009, prepaid expenses were retroactively restated to include $142,624 relating to the advanced payments pursuant to the temporary occupation agreement, which had been previously expensed.
As at June 30, 2010, the advance payment on the temporary occupation agreement is reported as follows:
Short-term prepaid expenses and deposits | $ 56,537 |
Long-term prepaid expenses and deposits | 79,952 |
| $ 136,389 |
(ii)
La Colorada Project
On October 22, 2007, the Company negotiated the exclusive option to acquire the past producing La Colorada gold-silver mine property located in the state of Sonora, Mexico. The Company has an option to acquire 100% of 18 concessions held by private owners plus 1,130 hectares of surface holdings that include mining equipment and machinery in return for an initial payment of US$1,100,000 ($1,085,518 paid), followed by additional payments of US$1,100,000 on or before October 22, 2008 and US$550,000 on or before October 22, 2009.
On November 26, 2008, the Company amended the original option agreement and entered into two separate agreements, a revised purchase agreement and an option to purchase agreement.
17
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
7.
MINERAL PROPERTIES(Continued)
(a)
(Continued)
(ii)
La Colorada Project (continued)
Pursuant to the revised purchase agreement, the Company acquired all concessions except the Sonora IV concession, land and mining equipment agreed to under the original option agreement by making one further payment of US$825,000 ($964,484 paid), for a total purchase price of US$1,925,000 ($2,050,002 paid), and granted a 3% NSR if open-pit mined or 2% if underground mined. The 2% NSR on underground production can be purchased by the Company at any time for US$300,000.
The purchase price of US$1,925,000 ($2,050,002) was allocated US$200,800 ($205,298) to land, US$56,075 ($57,330) to mining equipment and US$1,668,125 ($1,787,374) to mineral properties pursuant to the terms of the revised purchase agreement.
Pursuant to the option to purchase agreement, the Company was granted the option to acquire the Sonora IV concession for 300,000 common shares of the Company on or before October 16, 2009. The Company did not exercise this option by October 16, 2009.
On February 12, 2008, the Company entered into an option agreement to acquire three additional mineral concessions totaling 400 hectares for a total purchase price of US$800,000.
18
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
7.
MINERAL PROPERTIES(Continued)
(b)
(Continued)
(ii)
La Colorada Project (continued)
On May 12, 2009, the Company amended the terms of the option agreement, dated February 12, 2008 which reduced the total purchase price from US$800,000 to US$600,000 and introduced US$200,000 payable in shares due as follows:
Cash:
US$100,000 – February 8, 2008 ($102,491 paid)
US$100,000 – March 23, 2009 ($121,131 paid)
US$100,000 – March 3, 2010 ($103,260 paid)
US$100,000 – March 3, 2011
Common Shares:
Shares, equivalent to US$50,000 plus 15% VAT – May 31, 2009 (Issued 75,760 common shares valued at $65,745 CND (note 8(c)(iii))
Shares, equivalent to US$50,000 plus 15% VAT – March 3, 2010 (Issued 40,483 common shares valued at $59,915 CDN (note 8(c)(i))
Shares, equivalent to US$100,000 plus 15% VAT – March 3, 2011
The revised option agreement also includes a 3% NSR to be paid to the vendor should the Company complete the transaction. The 3% NSR can be purchased by the Company at any time for a cash payment of US$200,000. The vendor is entitled to annual advance payments of US$50,000 on account of the 3% NSR commencing March 3, 2012.
On August 14, 2008, the Company acquired six mineral concessions totalling 218 hectares for US$100,000 ($109,688 paid) that cover part of the El Creston pit and adjacent ground.
On June 30, 2009, the Company acquired the La Noria concession for $609 (paid).
On May 5, 2010, the Company acquired the Red Norte 1 concession for $4,047 (paid).
19
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL
(a)
Authorized - Unlimited number of common shares without par value
(b)
Escrow shares
During the year ended September 30, 2009, the Company released 442,556 (2008 – nil) common shares from escrow. Accordingly, as at June 30, 2010, there are no common shares held in escrow (2009 – nil).
(c)
Private placements and shares issued for property
(i)
On March 3, 2010 40,483 common shares were issued for the acquisition of mineral concessions (note 7(a)(ii)). The fair value of these shares, based upon the volume weighted average trading price on the TSX for the ten trading days ending seven business days before the date of issue, was $59,915.
(ii)
On September 30, 2009, the Company completed a non-brokered private placement and issued 3,223,000 units at a price of $0.75 per unit, for gross proceeds of $2,417,250. Each unit consisted of one common share and one-half of one share purchase warrant. One whole warrant entitles the holder to purchase one additional common share at a price of $0.90 per share on or before March 30, 2011. As part of the finder’s fee arrangement, $145,035 was paid in cash and 257,840 finder’s warrants were issued with a fair value of $117,194, each exercisable to acquire one unit having the same terms as units issued to investors at a price of $0.83 per unit until March 30, 2011. Other cash share issuance costs of $7,947 were incurred by the Company through the private placement.
(iii)
During the year ended September 30, 2009, 75,760 common shares were issued for the acquisition of mineral concessions (note 7(a)(ii)). The fair value of these shares, based upon the volume weighted average trading price on the TSX for the ten trading days ending seven business days before the date of issue, was $65,745.
20
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL(Continued)
(c)
Private placements and shares issued for property (Continued)
(iv)
During the year ended September 30, 2009, 2,500,000 common shares were issued for the acquisition of the San Antonio Project (note 7(a)(i)). The $0.47 per share fair value of these shares was based on market value at the time of issue for a total value of $1,175,000.
(d)
Stock options
Pursuant to the policies of the TSX, under the Company’s stock option plan, options to purchase common shares have been granted to directors, employees and consultants at exercise prices determined by reference to the market value on the date of grant for a maximum term of ten years. The board of directors may grant options for the purchase of up to a total of 10% of the outstanding shares at the time of the option grant less the aggregate number of existing options and number of common shares subject to issuance under outstanding rights that have been issued under any other share compensation arrangement. Options granted under the plan carry vesting terms determined at the discretion of the board of directors.
21
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL(Continued)
(d)
Stock options (Continued)
A summary of the status of the Company’s outstanding and exercisable stock options at June 30, 2010 and 2009 and changes during the years then ended is as follows:
|
| Outstanding | Exercisable |
| Weighted Average Exercise Price |
|
|
| |||
Balance, September 30, 2008 | 3,642,500 | 3,392,500 | $ | 1.61 | |
Exercised | (62,500) | (62,500) | $ | 0.58 | |
Vested in year | - | 250,000 | $ | 1.88 | |
Cancelled / Forfeited | (1,897,500) | (1,897,500) | $ | 1.90 | |
Expired | (80,000) | (80,000) | $ | 0.85 | |
Granted | 2,240,000 | 2,015,000 | $ | 0.71 | |
|
|
|
|
| |
Balance, June 30, 2009 | 3,842,500 | 3,617,500 | $ | 0.98 | |
|
|
|
|
| |
|
|
|
|
| |
Balance, September 30, 2009 | 3,772,500 | 3,547,500 | $ | 0.98 | |
Exercised | (335,000) | (335,000) | $ | 0.60 | |
Vested in year | - | 50,000 | $ | 1.08 | |
Cancelled / Forfeited | - | - | $ | - | |
Expired | (80,000) | (80,000) | $ | 0.84 | |
Granted | 600,000 | 600,000 | $ | 1.40 | |
|
|
|
|
| |
Balance, June 30, 2010 | 3,957,500 | 3,782,500 | $ | 1.08 |
22
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL(Continued)
(d)
Stock options (Continued)
The following summarizes information about options outstanding at June 30, 2010 and 2009:
| Exercise Price |
| |
Expiry Date | June 30 | June 30 | |
| 2009 | ||
|
| ||
April 4, 2009 | $0.85 | - | - |
February 12, 2010 | $0.60 | - | 50,000 |
July 21, 2010** | $0.50 | 25,000 | 25,000 |
July 21, 2010* | $0.63 | 290,000 | 290,000 |
April 25, 2011 | $0.80 | 415,000 | 415,000 |
August 2, 2011 | $0.55 | 205,000 | 205,000 |
February 12, 2012 | $0.60 | 50,000 | 50,000 |
March 23, 2012 | $0.73 | 37,500 | 37,500 |
April 27, 2012 | $0.78 | 50,000 | 50,000 |
June 17, 2013 | $1.60 | 1,100,000 | 1,100,000 |
December 12, 2013 | $0.60 | 370,000 | 650,000 |
May 4, 2011 | $0.90 | 200,000 | 200,000 |
May 4, 2012 | $0.90 | 25,000 | 100,000 |
May 11, 2010 | $0.84 | - | 80,000 |
May 11, 2014 | $0.84 | 590,000 | 590,000 |
December 9, 2010 | $1.37 | 200,000 | - |
December 9, 2014 | $1.37 | 100,000 | - |
February 12, 2015 | $1.47 | 150,000 | - |
March 18, 2015 | $1.40 | 150,000 | - |
| 3,957,500 | 3,842,500 |
* On July 13, 2010, 290,000 stock options with an exercise price of $0.63 were exercised for total proceeds to the Company of $182,700.
** On July 21, 2010, 25,000 stock options with an exercise price of $0.50 expired unexercised.
23
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL(Continued)
(e)
Warrants
At June 30, 2010, the Company has outstanding warrants to purchase an aggregate 1,611,500 common shares as follows:
Exercise Price | Expiry Date | Outstanding at September 30, 2009 | Issued | Exercised | Expired | Outstanding at June 30, 2010 | |
|
|
|
|
|
|
|
|
$ | 0.90 | March 30, 2011 | 1,611,500 | - | - | - | 1,611,500 |
|
|
|
|
|
|
|
|
|
|
| 1,611,500 | - | - | - | 1,611,500 |
At June 30, 2009, the Company has outstanding warrants to purchase an aggregate 3,237,115 common shares as follows:
Exercise Price | Expiry Date | Outstanding at September 30, 2008 | Issued | Exercised | Expired | Outstanding at June 30, 2009 | |
|
|
|
|
|
|
|
|
$ | 1.05 | November 2, 2008 | 232,000 | - | - | (232,000) | - |
$ | 2.00 | February 21, 2009 | 1,798,059 | - | - | (1,798,059) | - |
$ | 2.05 | February 21, 2009 | 131,174 | - | - | (131,174) | - |
$ | 3.75 | June 3, 2009 | 2,975,150 | - | - | (2,975,150) | - |
$ | 3.80 | June 3, 2009 | 261,965 | - | - | (261,965) | - |
|
|
|
|
|
|
|
|
|
|
| 5,398,348 | - | - | (5,398,348) | - |
(f)
Finder’s warrants
At June 30, 2010, the Company has outstanding finder’s warrants as follows:
Exercise Price | Expiry Date | Outstanding at September 30, 2009 | Issued | Exercised | Expired | Outstanding at June 30, 2010 | |
|
|
|
|
|
|
|
|
$ | 0.83 | March 30, 2011 | 257,840 | - | - | - | 257,840 |
The 257,840 finder’s warrants are exercisable at $0.83 per warrant until March 30, 2011 for regular units where each regular unit consists of one common share and one-half of one share purchase warrant. Each full warrant is exercisable for one common share at a price of $0.90 each for a period of 18 months.
At June 30, 2009, the Company had no finder’s warrants outstanding.
24
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL(Continued)
(g)
Stock-based compensation
The fair value of stock options granted, and which vested to directors, employees and consultants, is broken down as follows:
|
|
|
| 2010 |
| 2009 |
|
|
|
|
|
| |
Salaries – employees/directors |
| $ | 356,144 | $ | 941,356 | |
Consultants |
|
| 71,852 |
| 228,730 | |
Investor relations |
|
| 46,798 |
| - | |
|
| $ | 474,794 | $ | 1,170,086 |
During the nine months ended June 30, 2009, $27,971 in stock-based compensation was included in exploration expenses (schedule 2) and the balance of $1,142,115 is shown as stock-based compensation within the consolidated statement of operations.
The fair value of each option grant was estimated as at the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions and resulting fair value:
|
| 2010 | 2009 |
|
|
|
|
Risk-free interest rate |
| 1.96% | 1.56% |
Expected dividend yield |
| 0.00% | 0.00% |
Expected stock price volatility |
| 86.5% | 100.76% |
Expected option life in years |
| 3.67 | 3.20 |
Fair value at grant date |
| $0.80 | $0.61 |
|
|
|
|
Expected volatilities are based on the Company’s trading history except where there is insufficient trading history and volatilities are based on industry comparables. When applicable, the Company uses historical data to estimate option exercise, employee termination and forfeiture within the valuation model. For non-employees, the expected term of the options approximate the full term of the option.
25
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
8.
SHARE CAPITAL(Continued)
(g)
Shares reserved for issuance at June 30, 2010 and 2009 are as follows:
| 2010 | 2009 |
|
|
|
Outstanding at June 30 | 47,688,812 | 44,020,329 |
Stock options (note 8(d)) | 3,957,500 | 3,842,500 |
Warrants (note 8(e)) | 1,611,500 | - |
Finder’s warrants (note 8(f)) | 386,760 | - |
|
|
|
Fully diluted at June 30 | 53,644,572 | 47,862,829 |
9.
RELATED PARTY TRANSACTIONS
(a)
The amounts due from/to related parties are non-interest bearing, unsecured and due on demand, and are due from/to officers of the Company and companies with common directors.
(i)
As at June 30, 2010, $44 (2009 - $16,344) is due from a company with common directors for its share of rent and improvements for shared office space.
(ii)
As at June 30, 2010, $66,397 (2009 - nil) is due to directors/officers of the Company for director and consulting fees.
(b)
As at June 30, 2010, $32,500 (2009 - $21,000) of prepaid expenses relates to a one month advance on consulting fees paid to a company with a common director.
(c)
Included in consulting fees is $356,218 (2009 - $317,427) of which $180,000 (2009 - $180,000) was charged by a company owned by a director and $176,218 (2009 - $137,427) by directors for consulting services.
(d)
Included in consulting fees is $69,995 (2009 – $62,000) paid to directors for directors’ fees.
(e)
Rent of $20,700 (2009 - $20,700) was recovered from companies with common directors for their respective share of the rent expense paid by the Company for shared office space.
The above transactions incurred in the normal course of operations and are recorded at the exchange amount, being the amount agreed upon by the related parties.
26
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
10.
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
|
|
|
| 2010 |
| 2009 |
Non-cash transactions for the quarter ended June 30 | ||||||
Shares issued for acquisition of subsidiary |
| $ | - | $ | 1,175,000 | |
Shares issued for mineral properties |
| $ | 59,915 | $ | 65,745 | |
Other supplemental cash flow information | ||||||
Cash paid during the year for | ||||||
Interest expense |
| $ | - | $ | - | |
Income tax expense |
| $ | - | $ | - |
11.
SEGMENT DISCLOSURES
The Company operates in one industry segment, the mineral resource industry, and in two geographical segments, Canada and Mexico. All current exploration activities are conducted in Mexico. The capital assets (including mineral properties) and total assets identifiable with these geographic areas at June 30 are as follows:
|
| 2010 |
| 2009 |
| ||||
Capital assets (including mineral properties) |
|
| ||
Canada | $ | 91,438 | $ | 9,650 |
Mexico |
| 6,009,388 |
| 5,014,256 |
|
|
| ||
| $ | 6,100,826 | $ | 5,023,906 |
|
|
| ||
Total assets |
|
| ||
Canada | $ | 11,117,506 | $ | 14,541,103 |
Mexico |
| 7,399,192 |
| 6,004,043 |
|
|
| ||
| $ | 18,516,698 | $ | 20,545,146 |
27
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
12.
COMMITMENTS
The Company has a commitment with respect to its premises operating lease. The minimum annual lease payments required are payable as follows:
| ||
2010 | $ | 26,529 |
2011 |
| 106,116 |
2012 |
| 106,116 |
2013 |
| 106,116 |
2014 |
| 106,116 |
2015 |
| 35,372 |
|
| |
| $ | 486,365 |
13.
SUBSEQUENT EVENTS
On July 13, 2010, 290,000 stock options with an exercise price of $0.63 were exercised for total proceeds to the Company of $182,700.
28
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Schedule 1 - Mineral Properties
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
As at June 30, 2010 | ||||||||||||
|
| San Antonio Project |
| La Colorada Project |
| Other Projects |
| Total | ||||
|
|
|
|
|
| |||||||
|
|
|
|
| ||||||||
Acquisition costs – September 30, 2009 | $ | 2,529,862 | $ | 2,187,038 | $ | 4 | $ | 4,716,904 | ||||
|
|
|
|
| ||||||||
Acquisition during period |
| - |
| 167,222 |
| (4) |
| 167,218 | ||||
|
|
|
|
| ||||||||
Balance, June 30, 2010 | $ | 2,529,862 | $ | 2,354,260 | $ | - | $ | 4,884,122 | ||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
Restated – Note 2(a) | ||||||||||||
As at June 30, 2009 | ||||||||||||
|
| San Antonio Project |
| La Colorada Project |
| Other Projects |
| Total | ||||
|
|
|
|
|
| |||||||
|
|
|
|
| ||||||||
Acquisition costs – September 30, 2008 | $ | 1,354,862 | $ | 1,297,697 | $ | 4 | $ | 2,652,563 | ||||
|
|
|
|
| ||||||||
Acquisition during period |
| 1,175,000 |
| 889,341 |
| - |
| 2,064,341 | ||||
|
|
|
|
| ||||||||
Balance, June 30, 2009 | $ | 2,529,862 | $ | 2,187,038 | $ | 4 | $ | 4,716,904 |
29
Pediment Gold Corp.
(Formerly Pediment Exploration Ltd.)
(An Exploration Stage Company)
Schedule 2 – Exploration Costs
(Canadian Dollars)
For the nine months ended June 30, 2010, 2009
Exploration Expenses
|
| As at June 30, 2010 | |||||||||||||
|
| San Antonio Project |
| La Colorada Project |
| Other |
| Total | |||||||
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
| ||||||||||
Geological services | $ | 326,746 | $ | 262,471 | $ | - | $ | 589,217 | |||||||
Geophysical |
| 82,186 |
| - |
| - |
| 82,186 | |||||||
Tax on surface rights |
| 44,730 |
| 54,914 |
| 76,058 |
| 175,702 | |||||||
Drilling, sampling and testing |
| 190,444 |
| 255,959 |
| - |
| 446,403 | |||||||
Reports/Studies |
| 241,622 |
| - |
| - |
| 241,622 | |||||||
Miscellaneous |
| 137,862 |
| 24,590 |
| - |
| 162,452 | |||||||
|
|
|
|
|
| ||||||||||
| $ | 1,023,590 | $ | 597,934 | $ | 76,058 | $ | 1,697,582 |
|
| Restated – Note 2(a) | ||||||||||||
|
| As at June 30, 2009 | ||||||||||||
|
| San Antonio Project |
| La Colorada Project |
| Other |
| Total | ||||||
|
|
|
|
|
|
| ||||||||
Geological services | $ | 359,834 | $ | 208,347 | $ | - | $ | 568,181 | ||||||
Tax on surface |
| 32,450 |
| 47,650 |
| 55,435 |
| 135,535 | ||||||
Drilling, sampling and testing |
| 73,857 |
| 148,915 |
| - |
| 222,772 | ||||||
Stock-based compensation |
|
|
|
| ||||||||||
Note 8(g)) |
| 13,985 |
| 13,986 |
| - |
| 27,971 | ||||||
Miscellaneous |
| 124,471 |
| 83,356 |
| - |
| 207,827 | ||||||
|
|
|
|
| ||||||||||
| $ | 604,579 | $ | 502,254 | $ | 55,435 | $ | 1,162,286 |
30