UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-49869
AMARC RESOURCES LTD.
(Exact
name of Registrant as specified in its charter)
BRITISH COLUMBIA, CANADA
(Jurisdiction
of incorporation or organization)
Suite 1020, 800 West Pender Street
Vancouver,
British Columbia, Canada, V6C 2V6
(Address of principal
executive offices)
Paul Mann, Chief Financial Officer
Facsimile No.:
604-684-8092
Suite 1020, 800 West Pender Street
Vancouver, British Columbia, Canada, V6C 2V6
(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class: Not applicable
Name of each exchange on which registered: Not applicable
Securities registered or to be registered pursuant to Section
12(g) of the Act:
Common shares, no par value
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the
issuer's classes of capital or common stock as of the close of the period
covered by the annual report:
83,839,473 common shares as of March 31, 2010
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
[
] Yes [X] No
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If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.
[ ]
Yes [X] No
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities
Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X]
Yes [ ] No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
[ ] Yes [X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S.GAAP [ ] | International Financial Reporting Standards as issued | Other [X] |
by the International Accounting Standards Board [ ] |
If "Other" has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant
has elected to follow:
Item 17 [X] Item 18
[ ]
If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
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T A B L E O F C O N T E N T S
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GENERAL
In this Annual Report on Form 20-F, all references to "we", "Amarc" or the "Company" refer to Amarc Resources Ltd. and its consolidated subsidiaries.
The Company uses the Canadian dollar as its reporting currency. All references in this document to "dollars" or "$" are expressed in Canadian dollars, unless otherwise indicated. See also Item 3 "Key Information" for more detailed currency and conversion information.
Except as noted, the information set forth in this Annual Report is as of September 22, 2010 and all information included in this document should only be considered correct as of such date.
GLOSSARY OF TERMS
Certain terms used herein are defined as follows:
Epithermal Deposit |
Deposit of mineralization formed by natural processes in the earth at low temperature, 50-200 o C often within structurally controlled veins. Low sulphidation deposits are developed near-to the surface of the earth, at depths of ~1 km to surficial hotspring settings, and are characterized by quartz veins, vein stockworks and breccias. Mineralization includes gold, silver, electrum, argentite and pyrite with lesser and variable amounts of other sulphide minerals. |
Induced Polarization (IP) Survey |
A geophysical survey used to identify a feature that appears to be different from the typical or background survey results when tested for levels of electro-conductivity; IP detects both chargeable, pyrite-bearing rock and non-conductive rock that has a high content of quartz. |
Magnetic Survey |
Magnetic surveys detect sulphide-bearing rocks by inducing magnetic fields, then identifying a feature that appears to be different from the typical or background survey results. |
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Mineral Reserve
|
Securities and Exchange Commission Industry Guide 7
Description of
Property by Issuers Engaged or to be Engaged in
Significant Mining
Operations
(under the United States
Securities Exchange Act of 1934, as amended) defines a 'reserve' as that
part of a mineral deposit which could be economically and legally
extracted or produced at the time of the reserve determination. Reserves
consist of:
|
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Mineral Resource
|
National Instrument 43-101
Standards of Disclosure for
Mineral Projects
of the Canadian Securities Administrators defines a
"Mineral Resource" as a concentration or occurrence of natural, solid,
inorganic or fossilized organic material in or on the Earth's crust in
such form and quantity and of such a grade or quality that it has
reasonable prospects for economic extraction. The location, quantity,
grade, geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence and
knowledge.
|
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Mineral Symbols |
As arsenic; Au gold; Ag silver; Cu copper; Fe iron; Hg mercury; Mo molybdenum; Na sodium; Ni nickel; O oxygen; Pd - palladium; Pt platinum; Pb lead; S sulphur; Sb antimony; Zn zinc. |
Net Smelter Return (NSR) |
Monies received for concentrate delivered to a smelter net of metallurgical recovery losses, transportation costs, smelter treatment-refining charges and penalty charges. |
Polymetallic |
Pertaining to more than one, or many, metals. |
Porphyry Deposit |
Mineral deposit characterized by widespread disseminated or veinlet- hosted sulphide mineralization, characterized by large tonnage and moderate to low grade. |
Pluton, sill, dyke |
A body of igneous rock that has been formed beneath the surface of the earth by consolidation of magma. A pluton is a rounded to irregularly- shaped plug-like body. A sill is a horizontal intrusion. A dyke cross cuts the country rocks. |
Quartz-feldspar
|
A quartz-feldspar porphyry dyke is a linear intrusion in which large quartz and feldspar crystals occur in a fine groundmass of quartz, feldspar and other minerals. |
Sulphide |
A compound of sulphur with another element, typically a metallic element or compound. |
Volcanogenic Massive
|
Mineral deposits, with a high content of sulphide minerals, formed by volcanic processes. |
Vein |
A tabular or sheet-like mineral deposit with identifiable walls, often filling a fracture or fissure. |
Currency and Measurement
All currency amounts in this Annual Report are stated in Canadian dollars unless otherwise indicated.
Conversion of metric units into imperial equivalents is as follows:
Metric Units | Multiply by | Imperial Units |
hectares | 2.471 | = acres |
meters | 3.281 | = feet |
kilometers | 0.621 | = miles (5,280 feet) |
grams | 0.032 | = ounces (troy) |
tonnes | 1.102 | = tons (short) (2,000 lbs) |
grams/tonne | 0.029 | = ounces (troy)/ton |
FORWARD LOOKING STATEMENTS
This Annual Report on Form 20-F contains statements that constitute "forward-looking statements". Any statements that are not statements of historical facts may be deemed to be forward-looking statements. These statements appear in a number of different places in this Annual Report and, in some cases, can be identified by words such as "anticipates", "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words. The forward-looking statements, including the statements contained in Item 3D "Risk Factors" , Item 4B "Business Overview" , Item 5 "Operating and Financial Review and Prospects" and Item 11 "Quantitative and Qualitative Disclosures About Market Risk" , involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such statements. Forward-looking statements include statements regarding the outlook for the Company's future operations, plans and timing for the Company's exploration programs, statements about future market conditions, supply and demand conditions, forecasts of future costs and expenditures, the outcome of legal proceedings, and other expectations, intentions and plans that are not historical facts.
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You are cautioned that forward-looking statements are not guarantees. The risks and uncertainties that could cause the Company's actual results to differ materially from those expressed or implied by the forward-looking statements include:
general economic and business conditions, including changes in interest rates;
prices of natural resources, costs associated with mineral exploration and other economic conditions;
natural phenomena;
actions by government authorities, including changes in government regulation;
uncertainties associated with legal proceedings;
changes in the resources market;
future decisions by management in response to changing conditions;
the Company's ability to execute prospective business plans; and
misjudgments in the course of preparing forward-looking statements.
The Company advises you that these cautionary remarks expressly qualify, in their entirety, all forward-looking statements attributable to Amarc or persons acting on the Company's behalf. The Company assumes no obligation to update the Company's forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements. You should carefully review the cautionary statements and risk factors contained in this and other documents that the Company files from time to time with the Securities and Exchange Commission.
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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
A. DIRECTORS AND SENIOR MANAGEMENT
Not applicable.
B. ADVISERS
Not applicable.
C. AUDITOR
Not applicable.
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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
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ITEM 3. KEY INFORMATION
A. Selected Financial Data
The following tables summarize selected financial data for Amarc extracted from the Company's audited consolidated financial statements for the last five years ended March 31, 2010, 2009, 2008, 2007 and 2006.
The Company's annual financial statements have been audited by its current independent registered public accounting firm, De Visser Gray LLP, Chartered Accountants. The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). Additional information is presented to show the differences which would result from the application of United States generally accepted accounting principles ("US GAAP") to the Company's financial information. Note 13 to the audited annual consolidated financial statements for the year ended March 31, 2010 included in this Annual Report provides descriptions of the material measurement differences between Canadian GAAP and US GAAP as they relate to Amarc, and a reconciliation to US GAAP of Amarc's consolidated financial statements.
The following selected financial data is presented in thousands of Canadian dollars.
BALANCE SHEET DATA
(C$000) | As at March 31, | ||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||
Plant and Equipment, Net | |||||||||||||||
Canadian and US GAAP | $ | 38 | $ | 54 | $ | 20 | $ | 25 | $ | 37 | |||||
Mineral Property Interests | |||||||||||||||
Canadian and US GAAP | $ | | $ | | $ | | $ | | $ | 98 | |||||
Total Assets | |||||||||||||||
Canadian and US GAAP | $ | 4,688 | $ | 3,427 | $ | 7,984 | $ | 8,768 | $ | 5,007 | |||||
Total Liabilities | |||||||||||||||
Canadian and US GAAP | $ | 33 | $ | 33 | $ | 225 | $ | 78 | $ | 38 | |||||
Working Capital | |||||||||||||||
Canadian and US GAAP | $ | 4,617 | $ | 3,339 | $ | 7,738 | $ | 8,665 | $ | 4,834 | |||||
Share Capital | |||||||||||||||
Canadian and US GAAP | $ | 36,474 | $ | 31,247 | $ | 30,747 | $ | 27,287 | $ | 23,997 | |||||
Contributed Surplus | |||||||||||||||
Canadian and US GAAP | $ | 1,852 | $ | 1,714 | $ | 1,470 | $ | 2,295 | $ | 488 | |||||
Accumulated Other Comprehensive Income | |||||||||||||||
Canadian and US GAAP | $ | (2 | ) | $ | | $ | | $ | | $ | | ||||
Accumulated Deficit | |||||||||||||||
Canadian and US GAAP | $ | (33,669 | ) | $ | (29,568 | ) | $ | (24,459 | ) | $ | (20,892 | ) | $ | (19,515 | ) |
Net Assets | |||||||||||||||
Canadian and US GAAP | $ | 4,655 | $ | 3,393 | $ | 7,758 | $ | 8,690 | $ | 4,969 | |||||
Shareholders' Equity | |||||||||||||||
Canadian and US GAAP | $ | 4,655 | $ | 3,393 | $ | 7,758 | $ | 8,690 | $ | 4,969 |
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STATEMENT OF OPERATIONS DATA
(C$000, except per share amounts) | Year Ended March 31, | ||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||
Interest and other income | $ | (24 | ) | $ | (323 | ) | $ | (385 | ) | $ | (334 | ) | $ | (130 | ) |
General and administrative expenses | 891 | 951 | 746 | 615 | 819 | ||||||||||
Exploration expenditures | 3,195 | 4,619 | 3,067 | 1,033 | 3,012 | ||||||||||
Stock based compensation (recovery) | | | | | (16 | ) | |||||||||
Foreign exchange (gain) loss | 40 | (219 | ) | 138 | (38 | ) | 3 | ||||||||
Loss (gain) on marketable securities | |||||||||||||||
Canadian GAAP | | | | | (92 | ) | |||||||||
US GAAP | | | | | (84 | ) | |||||||||
Loss on sale of equipment | | | | 2 | | ||||||||||
Tax related to flow-through financing | | 81 | | | | ||||||||||
Write down of accounts receivable | | | | | 45 | ||||||||||
Write down of mineral property interest | | | | 98 | 10 | ||||||||||
Write down of marketable securities | | | | | 190 | ||||||||||
Net loss (income) for the year | |||||||||||||||
Canadian GAAP | $ | 4,102 | $ | 5,109 | $ | 3,566 | $ | 1,376 | $ | 3,841 | |||||
US GAAP | 4,102 | 5,109 | 3,566 | 1,376 | 3,849 | ||||||||||
Other Comprehensive Income | |||||||||||||||
Canadian GAAP | $ | 2 | $ | | $ | | $ | | $ | | |||||
US GAAP | |||||||||||||||
Total Comprehensive Income | |||||||||||||||
Canadian GAAP | $ | 4,104 | $ | 5,109 | $ | 3,566 | $ | 1,376 | $ | 3,841 | |||||
US GAAP | 4,104 | 5,109 | 3,566 | 1,376 | 3,849 | ||||||||||
Basic and diluted net income (loss) per share | |||||||||||||||
Canadian GAAP | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.06 | ) | $ | (0.03 | ) | $ | (0.08 | ) |
US GAAP | (0.05 | ) | (0.07 | ) | (0.06 | ) | (0.03 | ) | (0.08 | ) | |||||
Weighted average number of common shares outstanding | 75,376,733 | 68,465,500 | 63,434,763 | 54,557,473 | 49,880,651 |
Reconciliation to US GAAP
As indicated above, note 13 of the audited annual consolidated financial statements included in this Annual Report provides descriptions of the material differences between Canadian GAAP and US GAAP for the fiscal years ended March 31, 2010, 2009, and 2008.
Currency and Exchange Rates
On September 22, 2010, the rate of exchange of the Canadian dollar, based on the daily noon rate in Canada as published by the Bank of Canada, was U.S.$1.00 = Canadian $1.0411. Exchange rates published by the Bank of Canada are available on its website, www.bankofcanada.ca , are nominal quotations not buying or selling rates and are intended for statistical or analytical purposes.
The following tables set out the exchange rates, based on the daily noon rates in Canada as published by the Bank of Canada for the conversion of Canadian Dollars into U.S. Dollars.
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B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
An investment in the Company's common shares is highly speculative and subject to a number of risks. Only those persons who can bear the risk of the entire loss of their investment should participate. An investor should carefully consider the risks described below and the other information that the Company furnishes to, or files with, the Securities and Exchange Commission and with Canadian securities regulators before investing in the Company's common shares. The risks described below are not the only ones faced by the Company. Additional risks that management is aware of or that the Company currently believes are immaterial may indeed become important factors that affect the Company's business. If any of the following risks occur, or if others occur, the Company's business, operating results and financial condition could be seriously harmed and the investor may lose all of his investment.
The Company does not currently have any properties on which mineral resources or mineral reserves have been outlined.
All of the Company's mineral projects are in the exploration stage as opposed to the development stage, and have no known body of economic mineralization. The known mineralization at these projects has not been determined to be economic ore. There is no certainty that the expenditures to be made by Amarc in the exploration of the Company's mineral properties will result in discoveries of commercially recoverable quantities of ore. There can be no assurance that a commercially mineable ore body exists on any of the Company's properties.
The exploration for and development of mineral deposits involves significant risks.
It is impossible to ensure that the current exploration programs planned by Amarc will result in a profitable commercial mining operation. Resource exploration is a speculative business and involves a high degree of risk. The exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. Although the discovery of an ore body may result in substantial rewards, few properties explored are ultimately developed into producing mines.
The commercial viability of any mineral deposit that is identified will be dependent upon a number of factors. These include deposit attributes such as size, grade and proximity to infrastructure, current and future metal prices (which can be cyclical), and government regulations, including those relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and necessary supplies, and environmental protection. The complete effect of these factors, either alone or in combination, cannot be entirely predicted, and their impact may result in Amarc not receiving an adequate return on invested capital.
Even if exploration efforts are successful, significant capital investment will be required to achieve commercial production.
Significant expenditures may be required to locate and establish ore reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. Therefore, even if exploration efforts are successful, significant capital investment will be required to achieve commercial production. Among other things, it will be necessary to complete final comprehensive feasibility studies and, possibly, further associated exploration and other work that concludes a potential mine is likely to be economically viable. In order to carry out exploration and development programs of any economic ore body and place it into commercial production, the Company will be required to raise substantial additional funding.
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As the Company does not have revenues, the Company will be dependent upon future financings to continue the Company's plan of operation.
Amarc has not generated any significant revenues since inception. The Company's plan of operations involves the completion of exploration programs on the Company's mineral properties. Even if commercially exploitable mineral deposits are discovered, the Company will require substantial additional financing in order to carry out the full exploration and development of the Company's mineral properties before the Company is able to achieve revenues from sales of any mineral resources that the Company is able to extract.
The loss of management or other key personnel could harm the Company's business.
The Company's success depends on its management and other key personnel. The loss of the services of one or more of such key personnel could have a material adverse effect on the Company's business. The Company's ability to execute its plan of operations, and hence its success, will depend in large part on the efforts of these individuals. The Company cannot be certain that it will be able to retain such personnel or attract a high caliber of personnel in the future.
The Company has a history of losses and no foreseeable earnings.
Amarc has a history of losses and expects to incur losses in the foreseeable future. There can be no assurance that the Company will ever be profitable. The Company anticipates that the Company will retain any future earnings and other cash resources for the future operation and development of the Company's business. The Company has not paid dividends since incorporation and the Company does not anticipate paying dividends in the foreseeable future. Payment of any future dividends is at the discretion of the Company's board of directors after taking into account many factors including the Company's operating results, financial conditions and anticipated cash needs.
The Company's consolidated financial statements have been prepared assuming the Company will continue on a going concern basis, but there can be no assurance that the Company will continue as a going concern.
Although at March 31, 2010 the Company had working capital of approximately $4.6 million, the costs required to complete exploration and development of the Company's projects may be well in excess of this amount. Accordingly, unless additional funding is obtained, the going concern assumption may have to change. If Amarc is unable to obtain adequate additional financing, the Company will be required to curtail operations and exploration activities. Furthermore, failure to continue as a going concern would require that Amarc's assets and liabilities be restated on a liquidation basis which could differ significantly from the going concern basis.
A substantial or extended decline in the prices of the minerals for which the Company explores would have a material adverse effect on the Company's business.
The Company's business is, to an extent, dependent on the prices of gold, copper, zinc, and other metals, which are affected by numerous factors beyond the Company's control. Factors tending to put downward pressure on the prices of these metals include:
Sales or leasing of gold by governments and central banks;
A strong U.S. dollar;
Global and regional recession or reduced economic activity;
Speculative trading;
Decreased demand for industrial uses, use in jewellery or investment;
High supply from production, disinvestment and scrap;
Sales by producers in forward transactions and other hedging transactions; and
Devaluing local currencies (relative to metal priced in U.S. dollars) leading to lower production costs and higher production in certain regions.
In addition, sustained low metal prices can:
Reduce revenues further through production cutbacks due to cessation of the mining of deposits or portions of deposits that have become uneconomic at the then-prevailing gold or copper price;
Halt or delay the development of new projects;
Reduce funds available for exploration, with the result that depleted reserves are not replaced; or
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Mining operations generally involve a high degree of risk.
Amarc's current exploration activities are, and any future mining operations will be, subject to all the hazards and risks normally encountered in the exploration, development and production of minerals. These include unusual and unexpected geological formations, rock falls, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Future mining operations will also be subject to hazards such as equipment failure or failure of retaining dams which may result in environmental pollution and consequent liability. Although precautions to minimize risk in accordance with industry standards will be taken, such hazards and risks cannot be completely eliminated. Such occurrences could have a material adverse effect on the Company's business and results of operation and financial condition.
The Company's business could be adversely affected by government regulations related to mining.
Amarc's exploration activities are regulated in all countries in which the Company operates under various federal, state, provincial and local laws relating to the protection of the environment, which generally includes air and water quality, hazardous waste management and reclamation. Environmental hazards may exist on the properties in which the Company holds interests which are unknown to Amarc at present and which have been caused by previous or existing owners or operators of the properties. Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. Delays in obtaining or failure to obtain government permits and approvals may adversely impact the Company's operations. The regulatory environment in which the Company operates could change in ways that would substantially increase costs to achieve compliance, or otherwise could have a material adverse effect on the Company's operations or financial position. In particular, the Company's operations and exploration activities in British Columbia are subject to national and provincial laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. There can be no certainty that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and operations at the Company's projects.
Although the Company has no reason to believe that the existence and extent of any of the Company's properties is in doubt, title to mining properties is subject to potential claims by third parties claiming an interest in them.
Amarc's mineral properties may be subject to previous unregistered agreements or transfers, and title may be affected by undetected defects or changes in mineral tenure laws. The Company's mineral interests consist of mineral claims, which have not been surveyed, and therefore, the precise area and location of such claims or rights may be in doubt. The failure to comply with all applicable laws and regulations, including the failure to pay taxes or to carry out and file assessment work, may invalidate title to portions of the properties where the Company's mineral rights are held.
The Company is not able to obtain insurance for many of the risks that the Company faces.
In the course of exploration, development and production of mineral properties, several risks and, in particular, unexpected or unusual geological or operating conditions, may occur. It is not always possible to fully insure against such risks, and the Company may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise they could reduce or eliminate any future profitability and result in an increase in costs and a decline in value of the Company's securities.
The Company is not insured against environmental risks. Insurance against environmental risks (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) has not been generally available to companies within the industry. The Company will periodically evaluate the cost and coverage of the insurance against certain environmental risks that is available to determine if it would be appropriate to obtain such insurance. Without such insurance, and if the Company becomes subject to environmental liabilities, the payment of such liabilities would reduce or eliminate the Company's available funds or could exceed the funds the Company has to pay such liabilities and result in bankruptcy. Should the Company be unable to fund fully the remedial cost of an environmental problem, the Company might be required to enter into interim compliance measures pending completion of the required remedy.
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The Company may be dependent on its joint venture partners for the development of certain of the Company's properties.
Amarc may choose to hold a portion of the Company's assets in the form of participation interests in joint ventures. The Company's interest in these projects is subject to the risks normally associated with the conduct of joint ventures. The existence or occurrence of one or more of the following circumstances and events could have a material adverse impact on the Company's profitability or the viability of the interests held through joint ventures, which could have a material adverse impact on the Company's future cash flows, earnings, results of operations and financial condition: (i) disagreement with joint venture partners on how to proceed with exploration programs and how to develop and operate mines efficiently; (ii) inability of joint venture partners to meet their obligations to the joint venture or third parties; and (iii) litigation between joint venture partners regarding joint venture matters.
The industry in which the Company operates is highly competitive.
The mineral exploration and mining business is competitive in all of its phases. The Company competes with numerous other companies and individuals, including competitors with greater financial, technical and other resources, in the search for and the acquisition of attractive mineral properties. Amarc's ability to acquire properties in the future will depend not only on the Company's ability to develop its present properties, but also on the Company's ability to select and acquire suitable producing properties or prospects for mineral exploration. There is no assurance that the Company will continue to be able to compete successfully with its competitors in acquiring such properties or prospects.
The Company's share price has historically been volatile.
The market price of a publicly traded stock, especially a junior resource issuer like Amarc, is affected by many variables not directly related to the Company's exploration success, including the market for junior resource stocks, the strength of the economy generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of the common shares on the stock exchanges on which the Company trade, suggest the Company's shares will continue to be volatile.
Amarc's directors and officers are part-time and serve as directors and officers of other companies.
Some of the Company's directors and officers are engaged, and will continue to be engaged, in the search for additional business opportunities on their own behalf and on behalf of other companies, and situations may arise where these directors and officers will be in direct competition with us. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations Act (British Columbia). In order to avoid the possible conflict of interest which may arise between the directors' duties to Amarc and their duties to the other companies on whose boards they serve, the Company's directors and officers have agreed that participation in other business ventures offered to them will be allocated between the various companies on the basis of prudent business judgment, and the relative financial abilities and needs of the companies to participate.
There is no assurance that the Company will be successful in obtaining the funding required for the Company's operations.
Amarc's operations consist almost exclusively of cash consuming activities given that the Company's main mineral projects are in the exploration stage. The further exploration and development of the various mineral properties in which the Company holds interests is dependent upon the Company's ability to obtain financing through debt financing, equity financing or other means - the availability of which, on terms acceptable to the Company, cannot be assured.
If the Company raises additional funding through equity financings, then the Company's current shareholders will suffer dilution.
The Company will require additional financing in order to complete full exploration of the Company's mineral properties. Management anticipates that the Company will have to sell additional equity securities including, but not limited to, its common stock, share purchase warrants or some form of convertible security. The effect of additional issuances of equity securities will result in the dilution of existing shareholders' percentage ownership interests.
Amarc's status as a passive foreign investment company has consequences for U.S. investors.
Potential investors who are U.S. taxpayers should be aware that the Company expects to be a passive foreign investment company ("PFIC") for the current fiscal year, and may also have been a PFIC in prior years and may also be a PFIC in future years. If the Company is a PFIC for any year during a U.S. taxpayer's holding period, then such U.S. taxpayer, generally, will be required to treat any so-called
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"excess distribution" received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the Company's shares. In certain circumstances, the sum of the tax and the interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the taxpayer. A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of the Company's net capital gain and ordinary earnings for any year in which the Company is a PFIC, whether or not the Company distributes any amounts to the Company's shareholders. A U.S. taxpayer who makes the mark-to-market election, generally, must include as ordinary income in each year, the excess of the fair market value of the common shares over the taxpayer's tax basis therein. U.S. taxpayers are advised to seek advice from their professional tax advisors.
The Company's shareholders could face significant potential equity dilution.
As of September 22, 2010, Amarc had 1,725,200 share purchase options outstanding and 5,000,000 share purchase warrants outstanding. Amarc has a share purchase option plan which allows the management to issue options to its employees and non employees based on the policies of the Company. If further options are issued, they will likely act as an upside damper on the trading range of the Company's shares. As a consequence of the passage of time since the date of their original sale and issuance, none of the Company's shares remain subject to any hold period restrictions in Canada or the United States. The unrestricted resale of outstanding shares from the exercise of dilutive securities may have a depressing effect on the market for the Company's shares.
Penny stock classification could affect the marketability of the Company's common stock and shareholders could find it difficult to sell their stock.
The penny stock rules in the United States require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.
Further, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These additional broker-dealer practices and disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the Company's common shares in the United States, and shareholders may find it more difficult to sell their shares.
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ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Incorporation
Amarc Resources Ltd. was incorporated on February 2, 1993, pursuant to the Company Act (British Columbia Canada) (the "BCCA"), as "Patriot Resources Ltd." and changed its name on January 26, 1994 to "Amarc Resources Ltd." The BCCA was replaced by the Business Corporations Act (British Columbia) (the "BCA") in March 2004 and the Company is now governed by the BCA.
Amarc became a public company or "reporting issuer" in the Province of British Columbia on May 30, 1995. The common shares of Amarc were listed (symbol AHR) on the Vancouver Stock Exchange ("VSE") on August 4, 1995 and continue to trade on the TSX Venture Exchange ("TSX Venture"), formerly the Canadian Venture Exchange, the successor stock exchange to the VSE.
Amarc commenced trading on the OTC Bulletin Board ("OTCBB") in the United States in June 2004 under the symbol AXREF.
Offices
The head office of Amarc is located at Suite 1020, 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6, telephone (604) 684-6365, facsimile (604) 684-8092. The Company's registered office is in care of its attorneys, Lang Michener, 1500 Royal Centre P.O. Box 11117, 1055 West Georgia Street, Vancouver, British Columbia, Canada V6E 4N7, telephone (604) 689-9111, fax (604) 685-7084.
Company Development
Amarc has been engaged in the acquisition and exploration of mineral properties since its incorporation. The Company is currently actively exploring a number of properties located in British Columbia, Canada. All of the Company's mineral properties are at the exploration stage.
B. BUSINESS OVERVIEW
Amarc is in the business of exploring and developing mineral properties. The Company's exploration activities are primarily focused in British Columbia, Canada, where it has assembled a portfolio of projects through ground staking and option agreements. Exploration on these properties is aimed at ascertaining whether the properties host commercially viable mineral deposits.
British Columbia Mineral Tenure
On January 12, 2005, the Province of British Columbia adopted an on-line mineral tenure system that includes mineral tenure acquisition and tenure maintenance procedures, as well as a method of converting previous format claims (legacy claims) to new format claims (cell claims). All of the Company's mineral tenures have been converted to cell claims resulting in new tenure numbers and marginally larger claim boundaries. The mineral leases are maintained through the completion of exploration activities referred to as "Assessment Work". The financial requirements related to these exploration works remain the same as previous, but are stated as $4 per hectare per year during the first three years following location of the mineral claim, and $8 per hectare per year in the fourth and succeeding years. If the assessment work is not completed the mineral leases may be maintained by a cash payment, but if this payment is not made before the forfeiture date the tenure is relinquished.
One other type of mineral tenure exists, called crown-granted mineral claims, on which the perimeter has been physically surveyed. Crown-granted mineral claims are maintained by paying taxes on an annual basis. Unlike mineral claims, the taxes can be paid late with penalties and interest. If the taxes remain unpaid after a specified period of time, the claims will revert to the Crown and will be subsequently made available for acquisition by normal procedures.
Environmental Matters
Environmental matters related to mineral exploration companies in British Columbia are administered by the Ministry of Energy, Mines and Petroleum Resources. The Company files notice of its work programs with the Ministry, and a bond is determined that will set aside sufficient cash to reclaim the exploration sites to their pre-exploration land use. Typically, no bond is required for exploration activities such as surface geological, geochemical and geophysical surveys. However, a bond is required for blasting, machine work and drilling. The required level of reclamation usually involves leaving the sites in a geotechnically stable condition, and grooming the sites to both prevent forest fire hazards and to ensure that natural regeneration of indigenous plant species can progress within a reasonable period of time.
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Mineral Properties and Exploration Activities and Plans
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 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. Amarc also acquired, by staking, a 100% interest over approximately 3,300 square kilometers in the prospective Plateau Gold-Copper Belt, which extends both to the south and to the northwest from the Newton property (see Figure 1 ).
The Newton Property
The Newton property is located approximately 110 kilometers 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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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 (%) |
AuEQ 1 (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%.
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
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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 are to 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 favorable 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 Taseko Mines Limiteds Prosperity gold-copper project, which is at the advanced permitting-stage..
Amarc has completed a 7,000 line kilometer 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 which provides unparalleled resolution and depth of investigation and can detect conductors more than one kilometer 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.
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 center 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 which has been in operation since 1973, the Mount Polley copper-gold mine which commenced production in 2008, and late-stage development projects notably the Prosperity gold-copper project described above.
The Sitlika Copper-Zinc Belt
Amarc has suspended 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 which was acquired over the period of 2005 to 2007. The Tulox property is underlain by Mesozoic volcanic and sedimentary rocks which 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 Amarc's 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 the $10,000 cash payment and issued 350,000
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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 a 60% interest in the Tulox Property by completing an additional $10 million in 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.
Other Property Interests BC, Yukon, Saskatchewan
Amarc also has a 5% net profits interest ("NPI") in the 46 mineral claims that comprise the Ana Property in Yukon, and a 2.5% NPI in a mineral lease over the Mann Lake Property in Saskatchewan. The Company has no plans to undertake any programs on either of these properties in 2010.
C. ORGANIZATIONAL STRUCTURE
The Company had two wholly-owned subsidiaries, Compania Minera Amarc SA de CV and Amarc Exploraciones Mineras SA de CV, both of which were incorporated in Mexico. These subsidiaries were liquidated on February 8, 2010. The Company also controls and has primary beneficial ownership of the Precious Exploration Limited Partnership. However, the Company operates directly, and does not consider either of its subsidiaries or the limited partnership to be material at this time.
D. PROPERTY, PLANT AND EQUIPMENT
All of the Company's active properties are located in British Columbia. The nature of the Company's interest in various mineral properties is described above (see item 4B Business Overview). None of the properties have any material tangible fixed assets located thereon. The locations of the currently active properties and details of mineral exploration claims within British Columbia are shown on Figure 1 and Table 1 respectively (below).
Figure 1. Location of Amarc's Newton project.
Table 1: Claim Information for Amarc's BC Properties.
Program | Claim Numbers | Size (km 2 ) |
Plateau Gold Including Newton |
208327, 414743, 507905, 507914, 511965, 511967, 514976, 514979, 514981, 606674, 606675, 606676, 606677, 606678, 606679, 606680, 606681, 606682, 606683, 606684, 606685, 606686, 606687, 606688, 606689, 606690, 606691, 606692, 606693, 606694, 606695, 606696, 606697, 606698, 606699, 606700, 606701, 606702, 606703, 606704, 606705, 606706, 606707, 606708, 606709, 606710, 606711, 606712, 606713, 606714, 606715, 606716, 606717, 615743, 615803, 615843, 615863, 616023, 681843, 681844, 681863, 681883, 681903, 681904, 681923, 681924, 681925, 681926, 681927, 681928, 681929, 681930, 681931, 681932, 681933, 681943, 681944, 681963, 681964, 681983, 682003, 682004, 682024, 682025, 682043, 682044, 682063, 682065, 682089, 682094, 682095, 682098, 682100, 682104, 682106, 682107, 682111, 682112, 682114, 682116, 682123, 682124, 682143, 682144, 682163, 682164, 682183, 682184, 682185, 682203, 682204, 682205, 682206, 682207, 682208, 682209, 682210, 682212, 682213, 682214, 682223, 682225, 682226, 682227, 682228, 682229, 682230, 682232, 682233, 682234, 682235, 682236, |
3,397 |
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Program | Claim Numbers | Size (km 2 ) |
682243, 682244, 682245, 682246, 682263, 682283, 682284, 682285, 682286, 682287, 682288, 682289, 682290, 682291, 682303, 682304, 682305, 682306, 682307, 682308, 682309, 682310, 682311, 682312, 682313, 682315, 682316, 682317, 682318, 682319, 682320, 682321, 682323, 682324, 682326, 682327, 682328, 682329, 682330, 682331, 682332, 682333, 682334, 682335, 682336, 682337, 682338, 682343, 682344, 682345, 682346, 682347, 682348, 682349, 682350, 682351, 682352, 682353, 682354, 682363, 682364, 682365, 682366, 682367, 682368, 682369, 682370, 682371, 682372, 682373, 682374, 682375, 682376, 682377, 682383, 682384, 682403, 682404, 682405, 682406, 682407, 682408, 682411, 682413, 682414, 682416, 682417, 682418, 682423, 682424, 682425, 682426, 682427, 682428, 682443, 682444, 682463, 682464, 682483, 682484, 682503, 682504, 682505, 682506, 682507, 682508, 682509, 682510, 682511, 682513, 682514, 682515, 682516, 682517, 682518, 682519, 682520, 682521, 682522, 682523, 682524, 682543, 682563, 682583, 682603, 682604, 682605, 682606, 682608, 682609, 682610, 682611, 682613, 682614, 682615, 682616, 682617, 682618, 682619, 682620, 682621, 682622, 682643, 682644, 682645, 682663, 682684, 682685, 682687, 682704, 682723, 682743, 682744, 682763, 683343, 684043, 684044, 684045, 684046, 684047, 684048, 684843, 684863, 684883, 685023, 685025, 685683, 685684, 685685, 685686, 685687, 685703, 685704, 685705, 685706, 685707, 685708, 685709, 685723, 685724, 685743, 685763, 685764, 685765, 685767, 685783, 685784, 685785, 685786, 685803, 685823, 685843, 685844, 685845, 686143, 686323, 686343, 686363, 686383, 686384, 686385, 686386, 686387, 686388, 686403, 705129, 705131, 705132, 705134, 705135, 705136, 705137, 705138, 705139, 705140, 705142, 705143, 705144, 705145, 705146, 705147, 705148, 705149, 705150, 705151, 705152, 705153, 705154, 705155, 705156, 705157, 705158, 705159, 705187, 705188, 705189, 705190, 705191, 705192, 705193, 705194, 705195, 705196, 705197, 705198, 705199, 705200, 705201, 705202, 705203, 705204, 705205, 705206, 705207, 705208, 705209, 705210, 705211, 705239, 705241, 705244, 705504, 705505, 705506, 705507, 705508, 705509, 705510, 705512, 705513, 705514, 705516, 705518, 705520, 705522, 705564, 705566, 705567, 705569, 705570, 705571, 705572, 705574, 705575, 705577, 705578, 705580, 705581, 705582, 705583, 705584, 705596, 705597, 705598, 705599, 705600, 705602, 705603, 705604, 705605, 705606, 705607, 705608, 705609, 705610, 705611, 705612, 705613, 705614, 705615, 705616, 705617, 705619, 705620, 705622, 705623, 705624, 705625, 705626, 705627, 705767, 705779, 705780, 705781, 705782, 705783, 705784, 705785, 705786, 705787, 705788, 705789, 705790, 705822, 705823, 705824, 705962, 705963, 705964, 705965, 705966, 705967, 705968, 705969, 705970, 705971, 705972, 705973, 705974, 705975, 705976, 705977, 705978, 705979, 705980, 705981, 705982, 705983, 705985, 705986, 705987, 705988, 705989, 705990, 705991, 705992, 705993, 705994, 705995, 705996, 705997, 705998, 705999, 706001, 706002, 706003, 706004, 706005, 706006, 706007, 706008, 706009, 706010, 706012, 706013, 706014, 706015, 706016, 706017, 706018, 706019, 706020, 706021, 706022, 706023, 706024, 706025, 706026, 706027, 706028, 706029, 706030, 706031, 706032, 706033, 706034, 706036, 706038, 706039, 706040, 706041, 706042, 706043, 706045, 706046, 706047, 706048, 706049, 706050, 706055, 706056, 706057, 706058, 706059, 706060, 706061, 706062, 706063, 706064, 706065, 706067, 706068, 706069, 706070, 706071, 706072, 706073, 706074, 706076, 706077, 706078, 706079, 706080, 706081, 706082, 706084, 706085, 706087, 706088, 706089, 706090, 706091, 706092, 706093, 706094, 706096, 706097, 706098, 706099, 706100, 706101, 706102, 706104, 706105, 706107, 706143, 706144, 706146, 706150, 706165, 730662, 730682, 730702, 730722, 730742, 730762, 730782, 742582, 742602, 742622, 742642, 742662, 742682, 760682, 760702, 760722, 760762, 760782, 760802, 760822, 760842, 760882, 760902, 760922, 760942, 760962, 760982, 761002, 761022, 761042, 761062, 761082, 761102, 761122, 761142, 761162, 761182, 762342, 762362, 762382, 762402, 762422, 762442, 762462, 762482, 762502, 762522, 762542, 762562, 762582, 762602, 762622, 762642, 762662, 762682, 762702, 762722, 762742, 762762, 762782, 762802, 762822, 762842, 762862, 763162, 763202, 763222, 763242, 763262, 763282, 763302, 763322, 763342, 763362, 763382, 763402, 763422, 763442, 763462, 763482, 763502, 763522, 763542, 763562, 763582, 763602, 763622, 763642, 763662, 763682, 763702, 763722, 763742, 763762, 763782, 763802, 763822, 763842, 763862, 763882, 763902, 763922, 763942, 763962, 763982, 764002, 764022, 764042, 764062, 764082, 764102, 764122, 764142, 764162, 764182, 765302, 765322, 765342, 765362, 765402, 765422, 765442, 765462, 765482, 765502, 765522 | ||
Sitlika | 542768, 542769, 544623, 544646, 544648, 544649, 545669, 545670, 545672, 546157, 546160, 574571 | 16 |
Tulox
Others |
519088, 519090, 519420, 519421, 524206, 524207, 530948, 542443,
542488, 542489, 542490
516565, 545760, 545762, 556348, 560228, 560236, 560238, 580114, 580119, 580181, 580182, 580314, 639323, 639397, 704852 |
54
33 |
- 24 -
ITEM 4A UNRESOLVED STAFF COMMENTS
None
- 25 -
ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS
OVERVIEW
Amarc is a mineral exploration company with a portfolio of active exploration projects located in British Columbia, Canada. The Company's business strategy is the acquisition and exploration of mineral properties. None of the Company's properties have any mineral reserves or have been proven to host mineralized material which can be said to be "ore" or feasibly economic at current metals prices. The Company incurs significant exploration expenditures as it carries out its business strategy. As Amarc is an exploration stage company, it does not have any revenues from its operations to offset its exploration expenditures. Accordingly, the Company's ability to continue exploration of its properties will be contingent upon the availability of additional financing.
Amarc's financial statements are prepared on the basis that it will continue as a going concern. The Company has incurred losses since inception and the ability of the Company to continue as a going concern depends upon its ability to continue to raise adequate financing and to develop profitable operations. Amarc's financial statements do not reflect adjustments, which could be material, to the carrying values of assets and liabilities, which may be required should the Company be unable to continue as a going concern.
The following discussion should be read in conjunction with the audited annual consolidated financial statements for the years ended March 31, 2010, 2009 and 2008 and the related notes accompanying this Annual Report. The Company prepares its consolidated financial statements in accordance with Canadian generally accepted principles ("GAAP"). Refer to note 13 to the audited annual consolidated financial statements which provides a reconciliation of material measurement differences between Canadian GAAP and US GAAP and their effect on the consolidated financial statements.
Critical Accounting Policies and Estimates
The Company's accounting policies are presented in note 3 of the accompanying audited consolidated annual financial statements for the years ended March 31, 2010, 2009 and 2008, and a reconciliation of material measurement differences between these principles and US GAAP principles is presented in note 13.
The preparation of consolidated financial statements in accordance with Canadian GAAP requires management to select accounting policies and make estimates. Such estimates may have a significant impact on the financial statements. These include:
the carrying values of mineral properties,
the carrying values of future income tax assets and liabilities, and
the measurement of stock-based compensation expense.
Actual amounts could differ from the estimates used and, accordingly, affect the results of operation.
Mineral property interests and related asset retirement obligations
The acquisition costs of mineral properties are deferred until the properties are placed into production, sold or abandoned. These costs are amortized on a unit-of-production basis over the estimated useful life of the related properties following the commencement of production, or written off if the properties are sold, allowed to lapse or abandoned, or when impairment has been determined to have occurred. If the deferred mineral property costs are determined not to be recoverable over the estimated useful life or are greater than the estimated fair market value, the unrecoverable portion is charged to operations in that period.
Mineral property acquisition costs include the cash consideration and the fair market value of common shares, based on the trading price of the shares, on the date of issue or as otherwise provided under the agreement terms for the mineral property interest. Costs for properties for which the Company does not possess unrestricted ownership and exploration rights, such as option agreements, are expensed in the period incurred or until a feasibility study has determined that the property is capable of commercial production.
Exploration costs and option payments are expensed in the period incurred. Option payments which are solely at the Company's discretion are recorded as they are made.
Administrative expenditures are expensed in the period incurred.
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The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected from the asset. If the carrying amount of the long-lived asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.
The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company also records a corresponding asset value which is amortized over the same basis as the asset being retired. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).
The Company has no material asset retirement obligations as the disturbance at the exploration sites as at March 31, 2010 has been minimal.
Future income tax assets and liabilities
The Company uses the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are computed based on differences between the carrying amount of assets and liabilities on the balance sheet and their corresponding tax values, generally using the enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Future income tax assets also result from unused loss carry-forwards and other deductions. Future tax assets are recognized to the extent that they are considered more likely than not to be realized. The valuation of future income tax assets is adjusted, if necessary, by the use of a valuation allowance to reflect the estimated realizable amount.
Under the Canadian Income Tax Act, a company may issue securities referred to as flow-through shares whereby the investor may claim the tax deductions arising from the qualifying expenditure of the proceeds by the company. When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, future income tax liabilities are recognized (renounced expenditures multiplied by the effective corporate tax rate), thereby reducing share capital. Previously unrecognized tax assets may then offset or eliminate the liability recorded.
Stock-based compensation expense
The Company accounts for all non-cash stock-based payments to non-employees, and employee awards that are direct awards of shares that call for settlement in cash or other assets, or that are share appreciation rights which call for settlement by the issuance of equity instruments, using the fair value method.
Under the fair value method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of non-cash stock-based payments is periodically re-measured until counterparty performance is complete, and any change therein is recognized in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of non-cash stock-based payments to service providers that are fully vested and non-forfeitable at the grant date is measured and recognized at that date. For awards that vest at the end of a vesting period, compensation cost is recognized on a straight-line basis; for awards that vest on a graded basis, compensation cost is recognized on a pro-rata basis over the vesting period.
Consideration received by the Company upon the exercise of share purchase options and warrants, and the stock-based compensation previously credited to contributed surplus related to such options and warrants, is credited to share capital.
A. RESULTS OF OPERATIONS
Year Ended March 31, 2010 ("2010") versus Year Ended March 31, 2009 ("2009")
The net loss for the year ended March 31, 2010 decreased to $4,102,000 compared to a net loss of $5,109,000 for the previous year. The decrease in loss was mainly due to a decrease in exploration expenditures in the current year compared to the previous year.
During the year ended March 31, 2010, the Company received BC mineral exploration tax credits ("METCBC") in the amount of $252,000, compared to receipts totaling $1,435,000 in the previous year. These amounts were credited to "exploration expenses" in the statement of operations.
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Exploration expenses, excluding METCBC, decreased to $3,447,000 in the 2010 fiscal year, compared to $6,054,000 in the previous year. The major exploration expenditures during the year were geological (2010 $1,755,000; 2009 $2,536,000), drilling (2010 $670,000; 2009 $807,000), assay and analysis (2010 $252,000; 2009 $596,000), transportation (2010 $118,000; 2009 $600,000), site activities (2010 $255,000; 2009 $490,000) and environmental (2010 $108,000; 2009 $15,000).
The major administrative costs during the year were salaries and benefits (2010 $312,000; 2009 $209,000), office and administration (2010 $154,000; 2009 $178,000), conference and travel (2010 $48,000; 2009 $54,000), management and consulting (2010 $23,000; 2009 $58,000), and shareholder communication (2010 $104,000; 2009 $123,000).
Stock-based compensation expense of $138,000 was charged to operations during fiscal 2010, compared to $244,000 for fiscal 2009. This is mainly due to the amortization of a greater number of options granted in fiscal 2009.
A foreign exchange loss of $40,000 was recorded during the year ended March 31, 2010, compared to a gain of $219,000 in the previous year. The loss during the current year is primarily attributable to the Company's US dollar denominated financial assets mainly held in cash and cash equivalents and due to appreciation of Canadian dollar against the US dollar. At March 31, 2010 the Company held approximately US$100,000 (2009 US$100,000).
During the current year, interest income decreased to $24,000, compared to $309,000 in the previous year. Interest income in the previous year was substantially higher than the current year mainly due to interest on the mineral exploration tax credit received in the previous year.
Year Ended March 31, 2009 ("2009") versus Year Ended March 31, 2008 ("2008")
The net loss for the year ended March 31, 2009 increased to $5,109,000 compared to a net loss of $3,566,000 for the previous year. The increase in loss was mainly due to an increase in exploration activities in current year compared to the previous year.
During the year ended March 31, 2009, the Company received $ 1,435,000 in respect of Mineral Exploration Tax Credit ("METCBC"), which amount was credited to exploration expense. The METC initiative was introduced by the BC Government to stimulate new economic activity in the province and includes an enhanced credit for mineral exploration in areas affected by the mountain pine beetle infestation. There was no such credit received in the prior year.
Exploration expenses, excluding METCBC, for the year ended March 31, 2009 increased to $6,054,000, compared to $3,067,000 for the previous year. This increase was due to a greater number of exploration programs being carried out in British Columbia. The major exploration expenditures during the year were geological (2009 $2,536,000; 2008 $1,721,000), drilling (2009 $807,000; 2008 $nil), transportation (2009 $600,000; 2008 $392,000), assay and analysis (2009 $596,000; 2008 $283,000), site activities (2009 $490,000; 2008 $372,000) and engineering (2009 $371,000; 2008 $8,000).
The major administrative costs during the year were salaries and benefits (2009 $209,000; 2008 $257,000), office and administration (2009 $178,000; 2008 $184,000), conference and travel (2009 $54,000; 2008 $96,000), management and consulting (2009 $58,000; 2008 $49,000), and shareholder communication (2009 $123,000; 2008 $73,000).
Stock-based compensation expense of $244,000 was charged to operations during fiscal 2009, compared to $nil for fiscal 2008. This is mainly due to the amortization of a greater number of options granted in fiscal 2009.
Interest and other income decreased to $309,000 for fiscal 2009 compared to $316,000 for the previous year. Interest and other income in 2009 and 2008 mainly consisted of interest on METC-BC and input tax credit, and interest earned on a $5,500,000 loan to Rockwell Diamonds Inc., respectively.
During the year ended March 31, 2009, the Company paid $81,000 on account of tax related to the 2008 flow-through financing. There was no such tax recorded during the prior year.
There was a gain of $14,000 on sale of equipment to a related party during the fiscal year of 2009. There was no gain on the sale of equipment during the prior year.
A foreign exchange gain of $219,000 was recorded during the year ended March 31, 2009, compared with a loss of $138,000 in the previous year. The gain was due primarily to appreciation in value of the Company's US dollar assets, mainly held in cash and cash equivalents, against the Canadian dollar.
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B. LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $4,310,000 and working capital of $4,617,000 at March 31, 2010, compared to cash and cash equivalents of $2,972,000 and working capital of $3,339,000 at March 31, 2009.
The Company did not have any long term liabilities at March 31, 2010 or 2009 and does not have any long term liabilities as of the date of this Annual Report.
Planned Exploration Activities
The Company plans to apply its available cash and working capital to continue exploration of the Company's mineral properties. These planned exploration activities are summarized in Item 4.B of this Annual Report. At September 22, 2010, the Company had cash of approximately $2.2 million.
The Company anticipates that its cash and working capital will be sufficient to enable it to carry out the Company's currently planned exploration activities as well as for property maintenance requirements and administrative overhead for the twelve months without obtaining additional financing.
Cash Used in Operating Activities
Cash used in operating activities was $3,895,000 in fiscal 2010, compared to $5,181,000 in 2009 and $3,555,000 in 2008. Cash used in operating activities was attributable primarily to exploration programs carried out on its British Columbia mineral properties. The Company anticipates continuing to use cash in its operating activities to carry out its exploration programs.
Cash Flows from Investing Activities
Cash provided by investing activities was $34,000 in 2010, compared to cash used in investing activities of $74,000 in 2009, and cash provided by investing activities of $5,815,000 in 2008. Cash provided by investing activities during the current year represents proceeds from sale of equipment. Cash used in investing activities in 2009 represents purchase of equipment. Cash provided by investing activities in 2008 related to repayment of a loan of $5,500,000 by a related party pursuant to a 90-day promissory note and proceeds from sale of marketable securities of a related party representing payment of interest on the 90-day promissory note.
Cash Flows from Financing Activities
Cash provided by financing activities in 2010 was $5,210,000, compared to $500,000 in 2009, and $2,634,500 in 2008. Cash provided by financing activities in the current year represents receipts from issuance of 11,000,000 common shares at a price of $0.50 per share pursuant to a private placement, comprising 4,800,000 flow-through shares and 6,200,000 non-flow-through shares (refer to Item 5.F ). Cash provided by financing activities in 2009 represents cash received from issuance of 5,000,000 common shares at $0.10 per share pursuant to a private placement. Cash provided by financing activities in 2008 was attributable to issuance of 4,790,000 common shares at $0.55 per share pursuant to exercise of share warrants.
Requirement of Financing
Historically, Amarc's sole source of funding has been the sale of equity securities for cash, primarily through private placements to sophisticated investors and institutions. The Company has issued common share capital in each of the past three fiscal years pursuant to private placement financings and exercise of warrants. The Company's ability to obtain additional financing to fund its exploration programs is always uncertain. There can be no assurance of continued access to significant equity funding.
Development of any of the Company's mineral properties beyond feasibility will require additional equity and possible debt financing, both of which involve significant risks and have been referred to previously in this Annual Report. As Amarc is an exploration stage company, it does not have revenues from operations and, except for interest income from its cash and cash equivalents and short-term investments, the Company relies on equity funding for its continuing financial liquidity. The Company does not have any arrangements or commitments in place for any additional financing that would enable it to complete development of a project, even in the event of positive feasibility studies.
The Company presently does not have any material commitments for capital expenditures and accordingly, can remain somewhat flexible in directing its exploration activities to the availability of funds.
The Company has no lines of credit or other sources of financing which have been arranged but are as yet unused.
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Financial Instruments
Amarc keeps its financial instruments denominated in Canadian dollars and US dollars. The Company does not engage in any hedging operations with respect to currency or in-situ minerals. Funds which are excess to Amarc's current needs are invested in short term near-cash investments.
Amarc does not have any material, legally enforceable, obligations requiring it to make capital expenditures and accordingly, can remain relatively flexible in gearing its activities to the availability of funds.
C. Research Expenditures
Amarc does not carry out any research or development activities. Please refer to Item 5.A and Item 5.B above for a discussion of the exploration expenditures that the Company has incurred in connection with the exploration of the Company's mineral properties.
D. Trend Information
As a natural resource exploration company, Amarc's activities reflect the traditional cyclical nature of metal prices. Consequently, Amarc's business is primarily an "event-driven" business based on exploration results.
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.
E. Off-Balance Sheet Arrangements
Amarc has no off-balance sheet arrangements.
As used in this Item 5E , the term "off-balance sheet arrangement" means any transaction, agreement or other contractual arrangement to which an entity, unconsolidated with the Company, is a party, under which the Company has:
(a) |
any obligation under a guarantee contract that has any of the characteristics identified in paragraph 3 of FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (November 2002) ("FIN 45"), as may be modified or supplemented, excluding the types of guarantee contracts described in paragraphs 6 and 7 of FIN 45; |
(b) |
a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets; |
(c) |
any obligation under a derivative instrument that is both indexed to the company's own stock and classified in stockholders' equity, or not reflected, in the company's statement of financial position; or |
(d) |
any obligation, including a contingent obligation, arising out of a variable interest (as referenced in FASB Interpretation No. 46, Consolidation of Variable Interest Entities (January 2003), as may be modified or supplemented) in an unconsolidated entity that is held by, and material to, the company, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, the company. |
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F. Tabular Disclosure of Contractual Obligations
As at fiscal year end March 31, 2010, the Company had the following contractual obligations:
Payment due by period | |||||
Type of Contractual Obligation | Total |
Less
than 1 Year |
1 - 3
Years |
3 - 5
Years |
More
than 5 Years |
Long-Term Debt Obligations | | | | | |
Capital (Finance) Lease Obligations | | | | | |
Operating Lease Obligations (Office Lease) | | | | | |
Purchase Obligations | | | | | |
Other Long-Term Liabilities Reflected on the Company's Balance Sheet under Canadian GAAP | | | | | |
Total | | | | | |
During the year ended March 31, 2010, the Company arranged a private placement of 11,000,000 of its common shares at a price of $0.50 per share, consisting of 4,800,000 flow-through shares and 6,200,000 non-flow-through shares for aggregate gross proceed of $5,500,000. In accordance with the terms of flow-through share agreements, the Company is obligated to spend the proceeds from the flow-through shares issuance on Canadian Exploration Expenses ("CEE") by December 31, 2010. At March 31, 2010, approximately $1,659,000 remained to be spent on eligible exploration activities.
G. Safe Harbor
The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act applies to forward-looking information provided pursuant to Item 5.E and Item 5.F above.
- 31 -
ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Name (1) |
Year
born |
Position
|
Director or
Officer Since |
Rene G. Carrier | 1944 | Director | May 2008 |
David J. Copeland | 1948 | Director | September 1995 |
Scott D. Cousens | 1964 | Director | September 1995 |
T. Barry Coughlan | 1945 | Director | February 2009 |
Robert A. Dickinson | 1948 | Chairman of the Board and Director | April 1993 |
Paul Mann | 1964 | Chief Financial Officer | July 2008 |
Jeffrey R. Mason | 1957 | Director | September 1995 |
Diane Nicolson | 1965 | Vice President Corporate Development | February 2008 |
Ronald W. Thiessen | 1952 | President, Chief Executive Officer and Director | September 1995 |
Trevor Thomas | 1967 | Secretary | February 2008 |
1. |
To the best of the Company's knowledge, none of such persons has any family relationship with any other and none were elected as a director or appointed as an officer as a result of an arrangement or understanding with a major shareholder, customer, supplier, or any other party. |
The following is biographical information on each of the persons listed above.
Rene Carrier Director
Rene Carrier is a past Vice-President of Pacific International Securities Inc. where he worked for ten years, until 1991. Since that time he has been President of Euro-American Capital Corporation, a private company which specializes in restructuring, administration, and raising venture capital funds for junior companies.
Mr. Carrier currently is, or was within the past five years, an officer and/or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | May 2008 | Present |
Chartwell Technology Inc. | Director | June 1991 | April 2007 |
Continental Minerals Corporation | Director | February 2001 | Present |
Frontera Copper Corporation | Director | February 2009 | June 2009 |
Heatherdale Resources Inc. | Director | November 2009 | Present |
International Royalty Corporation | Lead Director | June 2003 | February 2010 |
Quartz Mountain Resources Ltd. | Director | January 2000 | Present |
President | June 2005 | Present | |
Rockwell Diamonds Inc. | Director | April 1993 | November 2008 |
David Copeland, P.Eng. Director
David Copeland is a geological engineer who graduated in economic geology from the University of British Columbia. With over 30 years of experience, Mr. Copeland has undertaken assignments in a variety of capacities in mine exploration, discovery and development throughout the South Pacific, Africa, South America and North America. His principal occupation is President and Director of CEC Engineering Ltd., a consulting engineering firm that directs and co-ordinates advanced technical programs for exploration on behalf of companies for which Hunter Dickinson Services Inc. provides services. He is also a director of Hunter Dickinson Services Inc.
Mr. Copeland is, or was within the past five years, an officer and/or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | September 1995 | Present |
Continental Minerals Corporation | Director | November 1995 | Present |
President & CEO | January 2008 | Present |
- 32 -
Company | Positions Held | From | To |
Farallon Mining Ltd. | Director | December 1995 | April 2009 |
Great Basin Gold Ltd. | Director | February 1994 | March 2008 |
Heatherdale Resources Inc. | CEO, President & Director | November 2009 | Present |
Northern Dynasty Minerals Ltd. | Director | June 1996 | June 2010 |
Rockwell Diamonds Inc. | Director | September 2006 | Present |
Chief Executive Officer | September 2006 | September 2007 | |
Chairman | September 2007 | Present | |
Taseko Mines Limited | Director | March 1994 | June 2010 |
Barry Coughlan, B.A. Director
Barry Coughlan is a self-employed businessman and financier who over the past 23 years has been involved in the financing of publicly traded companies. His principal occupation is President and Director of TBC Investments Ltd., a private investment company.
Mr. Coughlan is, or was within the past five years, an officer and or a director of the following companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | February 2009 | Present |
Continental Minerals Corporation | Director | May 2006 | December 2006 |
Creso Exploration Inc. | Director | June 2010 | Present |
Farallon Mining Ltd. | Director | March 1998 | Present |
Great Basin Gold Ltd. | Director | February 1998 | Present |
ICN Resources Ltd.
(formerly Icon Industries Ltd.) |
President, CEO and Director | September 1991 | February 2010 |
Quartz Mountain Resources Ltd. | Director | January 2005 | Present |
Taseko Mines Limited | Director | February 2001 | Present |
Quadro Resources Ltd. | President and Director | June 1986 | Present |
Scott Cousens Director
Scott Cousens provides management, technical and financial services to a number of publicly traded companies. Mr. Cousens' focus since 1991 has been the development of relationships within the international investment community. Substantial financings and subsequent corporate success has established strong ties with North American, European and Asian investors. He is also a director of Hunter Dickinson Services Inc.
Mr. Cousens is, or was within the past five years, an officer and/or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | September 1995 | Present |
Anooraq Resources Corporation | Director | September 1996 | June 2009 |
Continental Minerals Corporation | Director | June 1994 | Present |
Farallon Mining Ltd. | Director | December 1995 | April 2007 |
Great Basin Gold Ltd. | Director | March 1993 | November 2006 |
Heatherdale Resources Inc. | Chairman and Director | November 2009 | Present |
Northern Dynasty Minerals Ltd. | Director | June 1996 | Present |
Rockwell Diamonds Inc. | Director | November 2000 | November 2008 |
Taseko Mines Limited | Director | October 1992 | Present |
Robert Dickinson, B.Sc., M.Sc. Chairman of the Board and Director
Robert Dickinson is an economic geologist who serves as a member of management of several mineral exploration companies, primarily those for whom Hunter Dickinson Services Inc. provides services. He holds a Bachelor of Science degree (Hons. Geology) and a Master of Science degree (Business Administration - Finance) from the University of British Columbia. Mr. Dickinson has also been active in mineral exploration over 40 years. He is a director of Hunter Dickinson Services Inc. He is also President and Director of United Mineral Services Ltd., a private resource company.
Mr. Dickinson is, or was within the past five years, an officer and/or director of the following public companies:
- 33 -
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | April 1993 | Present |
Chairman | April 2004 | Present | |
Anooraq Resources Corporation | Director | October 2004 | June 2009 |
Co-Chairman | October 2004 | June 2009 | |
Continental Minerals Corporation | Director | June 2004 | Present |
Chairman | June 2004 | January 2006 | |
Co-Chairman | January 2006 | December 2006 | |
Detour Gold Corporation | Director | August 2006 | February 2009 |
Farallon Mining Ltd. | Director | July 1991 | April 2007 |
Co-Chairman | September 2004 | April 2006 | |
Great Basin Gold Ltd. | Director | May 1986 | November 2006 |
Chairman | April 2004 | December 2005 | |
Co-Chairman | December 2005 | November 2006 | |
Heatherdale Resources Ltd. | Director | November 2009 | Present |
Northern Dynasty Minerals Ltd. | Director | June 1994 | Present |
Chairman | April 2004 | Present | |
Rockwell Diamonds Inc. | Director | November 2000 | September 2006 |
Chairman | November 2000 | September 2006 | |
Taseko Mines Limited
|
Director | January 1991 | Present |
Chairman | April 2004 | July 2005 | |
Co-Chairman | July 2005 | May 2006 |
Paul Mann, CA Chief Financial Officer
Paul Mann has over 15 years of progressive experience in the mining sector, as Controller of Dayton Mining and De Beers Canada Mining Ltd., Corporate Controller at Eldorado Gold Corporation and at Hunter Dickinson, as Vice President Finance for Crew Gold Corporation, and as Chief Financial Officer of North Pacific Geopower.
Since 2007 he has served as Executive Manager of Finance and Reporting for the Hunter Dickinson group of companies, overseeing all accounting, regulatory and securities compliance and reporting, as well as treasury and taxation for the group.
Jeffrey Mason, B.Comm., CA Director
Jeffrey Mason holds a Bachelor of Commerce degree from the University of British Columbia and obtained his Chartered Accountant designation while specializing in the mining, forestry and transportation sectors at the international accounting firm of Deloitte & Touche. Following comptrollership positions at an international commodity mercantilist and Homestake Mining Group of companies including responsibility for North American Metals Corp. and the Eskay Creek Project, Mr. Mason has spent the last several years as a corporate officer and director to a number of publicly-traded mineral exploration companies. Until early 2008, Mr. Mason was employed as Chief Financial Officer of Hunter Dickinson Inc. and his principal occupation was the financial administration of the public companies to which Hunter Dickinson Inc. provided services.
Mr. Mason is, or was within the past five years, an officer and or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | September 1995 | Present |
Secretary | September 1995 | February 2008 | |
Chief Financial Officer | September 1998 | July 2008 | |
Anooraq Resources Corporation | Director | April 1996 | September 2004 |
Secretary | September 1996 | September 2007 | |
Chief Financial Officer | February 1999 | June 2007 | |
Coastal Contacts Inc. | Director | October 2006 | Present |
Continental Minerals Corporation | Director | June 1995 | February 2008 |
Secretary | November 1995 | February 2008 | |
Chief Financial Officer | June 1998 | February 2008 |
- 34 -
Company | Positions Held | From | To |
Detour Gold Corporation | Chief Financial Officer and Secretary | July 2006 | December 2007 |
Farallon Mining Ltd. | Director | August 1994 | February 2008 |
Secretary | December 1995 | December 2007 | |
Chief Financial Officer | December 1997 | December 2007 | |
Great Basin Gold Ltd. | Director | February 1994 | November 2006 |
Secretary | February 1994 | November 2006 | |
Chief Financial Officer | June 1998 | November 2006 | |
Northern Dynasty Minerals Ltd. | Director | June 1996 | July 2008 |
Secretary | June 1996 | July 2008 | |
Chief Financial Officer | June 1998 | July 2008 | |
Quartz Mountain Resources Ltd. | Principal Accounting Officer | January 2005 | February 2008 |
Rockwell Diamonds Inc. | Director | November 2000 | September 2007 |
Chief Financial Officer | November 2000 | April 2007 | |
Slater Mining Limited | Director | July 2008 | Present |
Taseko Mines Limited
|
Director | February 1994 | July 2008 |
Secretary | February 1994 | June 2008 | |
Chief Financial Officer | November 1998 | June 2008 |
Diane Nicolson, PhD Executive Vice President
Diane Nicolson has a B.Sc. degree in geology from the University of London, a PhD in economic geology from the University of Wales and 20 years international experience in the exploration and mining industry. She has worked for both major and junior mining companies, including Rio Tinto, Minera Antamina, Noranda and Cambior. Over the past 10 years, she has been involved primarily with business development and new project assessment and acquisitions, with a particular focus on Latin America where she was based for 13 years.
Dr. Nicolson joined Hunter Dickinson in 2007 as a member of the global business development team; her broad international experience has significantly assisted the advancement of the company's efforts.
Dr. Nicolson was appointed Executive Vice President in February 2008 and is responsible for management, strategic planning and new project development for Amarc Resources Ltd.
Ronald Thiessen, CA President, Chief Executive Officer and Director
Ronald Thiessen is a Chartered Accountant with professional experience in finance, taxation, mergers, acquisitions and re-organizations. Since 1986, Mr. Thiessen has been involved in the acquisition and financing of mining and mineral exploration companies. Mr. Thiessen is a director of Hunter Dickinson Services Inc., a company providing management and administrative services to several publicly-traded companies and focuses on directing corporate development and financing activities.
Mr. Thiessen is, or was within the past five years, an officer and/or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | September 1995 | Present |
President and Chief Executive Officer | September 2000 | Present | |
Anooraq Resources Corporation | Director | April 1996 | Present |
President and Chief Executive Officer | September 2000 | August 2007 | |
Continental Minerals Corporation | Director | November 1995 | Present |
President and Chief Executive Officer | September 2000 | January 2006 | |
Co-Chairman | January 2006 | Present | |
Detour Gold Corporation | Director | July 2006 | Present |
Chairman | July 2006 | March 2009 | |
Farallon Mining Ltd. | Director | August 1994 | Present |
Co-Chairman | September 2004 | December 2005 | |
Chairman | December 2005 | Present | |
Great Basin Gold Ltd. | Director | October 1993 | Present |
- 35 -
Company | Positions Held | From | To |
President and Chief Executive Officer | September 2000 | December 2005 | |
Co-Chairman | December 2005 | November 2006 | |
Chairman | November 2006 | Present | |
Northern Dynasty Minerals Ltd. | Director | November 1995 | Present |
President and Chief Executive Officer | November 2001 | Present | |
Rockwell Diamonds Inc. | Director | November 2000 | September 2007 |
President and Chief Executive Officer | November 2000 | September 2006 | |
Chairman | September 2006 | September 2007 | |
Taseko Mines Limited | Director | October 1993 | Present |
President and Chief Executive Officer | September 2000 | July 2005 | |
Co-Chairman | July 2005 | May 2006 | |
Chairman | May 2006 | Present | |
Quadro Resources Ltd. | Director | July 1992 | December 2006 |
Trevor Thomas, LLB Secretary
Trevor Thomas has practiced in the areas of corporate commercial, corporate finance, securities and mining law since 1995, both in private practice environment as well as in-house positions and is currently in-house legal counsel for Hunter Dickinson Services Inc. Prior to joining Hunter Dickinson Services Inc., he served as in-house legal counsel with Placer Dome Inc.
B. Compensation
During the Company's financial year ended March 31, 2010, the aggregate cash compensation paid or payable by the Company or its subsidiaries to its directors and senior officers, all of whose financial statements are consolidated with those of the Company, was $164,250.
Ronald W. Thiessen, President and Chief Executive Officer, and Paul Mann, Chief Financial Officer are each a "Named Executive Officers" of the Company for the purposes of the following disclosure.
The compensation paid to the NEOs during the Company's most recently completed financial year of March 31, 2010 is as set out below and expressed in Canadian dollars unless otherwise noted:
Name and principal position |
Salary ($) |
Share- based awards ($) |
Option-based awards(1) ($) |
Non-equity incentive plan
compensation ($) |
Pension value ($) |
All other compensation ($) |
Total compensation ($) |
|
Annual
incentive plans |
Long-term
incentive plans |
|||||||
Ronald Thiessen
Chief Executive Officer |
36,250 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
36,250 |
Paul Mann
Chief Financial Officer |
20,000 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
20,000 |
During the fiscal year ended March 31, 2010, Messrs. Thiessen and Mann did not serve the Company solely on a full-time basis, and their compensation from the Company is allocated based on the estimated amount of time spent providing services to the Company.
Pension Plan Benefits
The Company has no pension or deferred compensation plans for its directors, officers or employees.
Termination and Change of Control Benefits
There are no compensatory plan(s) or arrangement(s), with respect to the Named Executive Officer resulting from the resignation, retirement or any other termination of employment of the officer's employment or from a change of the Named Executive Officer's Responsibilities following a change in control.
Director Compensation
The compensation provided to the directors, excluding a director who is already set out in disclosure for a NEO for the Company's most recently completed financial year of March 31, 2010 is as set out below:
- 36 -
Name |
Fees earned ($) |
Share-
based awards ($) |
Option-based awards (3) ($) |
Non-equity
incentive plan compensation ($) |
Pension value ($) |
All other compensation ($) |
Total ($) |
Rene G. Carrier (1) | 15,000 | Nil | Nil | Nil | Nil | Nil | 15,000 |
David Copeland | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
Barry Coughlan (1) | 15,000 | Nil | 3,360 | Nil | Nil | Nil | 18,360 |
Scott Cousens (2) | 31,250 | Nil | Nil | Nil | Nil | Nil | 31,250 |
Robert Dickinson (2) | 46,750 | Nil | Nil | Nil | Nil | Nil | 46,750 |
Jeffrey Mason | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
Notes:
1. |
Independent directors receive an annual fee of $15,000 for their services. |
2. |
Pursuant to the Corporate Services Agreement with Hunter Dickinson Services Inc., compensation for Messrs. Cousens and Dickinson are allocated to the Company on the basis of time spent in respect of the Company's business. |
3. |
The options granted in fiscal 2010 were granted pursuant to the Share Option Plan. For compensation purposes, the Black- Scholes option valuation model has been used to estimate the fair value on the date of grant. The Black-Scholes option valuation is calculated using the expected life of the share option, expected volatility of the Company's Common Share price, expected dividend yield, and the risk-free interest rate. The weighted average Black-Scholes grant date fair value for awards granted on April 28, 2009 was $0.05, which was 7% of the option exercise price. |
C. Board Practices
All of the Company's directors were elected at the annual general meeting of shareholders held on September 15, 2010. All directors have a term of office expiring at the next annual general meeting of the Company's shareholders. All officers have a term of office lasting until their removal or replacement by the board of directors (the "Board").
There were no arrangements, standard or otherwise, pursuant to which directors were compensated by Amarc or its subsidiaries for their services in their capacity as directors, or for committee participation, involvement in special assignments or for services as consultants or experts during the most recently completed financial year.
General
The Board believes that good corporate governance improves corporate performance and benefits all shareholders. The Canadian Securities Administrators (the "CSA") have adopted National Policy 58-201 Corporate Governance Guidelines , which provides non-prescriptive guidelines on corporate governance practices for reporting issuers such as the Company. In addition, the CSA have implemented National Instrument NI 58-101 Disclosure of Corporate Governance Practices , which prescribes certain disclosure by the Company of its corporate governance practices. This section sets out the Company's approach to corporate governance and addresses the Company's compliance with NI 58-101.
1. Board of Directors
Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Company's board of directors, be reasonably expected to interfere with the exercise of a director's independent judgment.
The Board facilitates its independent supervision over management in a number of ways including: by holding regular meetings without the presence of management; by retaining independent consultants; and by reviewing corporate developments with larger shareholders, analysts and potential industry partners, where it deems necessary.
The directors of the Company, except Messrs. Coughlan and Carrier, are not independent. The Company is taking steps to ensure that the duties generally performed by independent directors are being performed by the current directors. The Board members have extensive experience as directors of public companies and are sensitive to the related corporate governance and financial reporting obligations associated with such positions. Thus the Board members are reasonably well versed in the obligations of directors and the expectations of independence from management.
2. Other Directorships
The section entitled Item 6 Directors, Senior Management and Employees in this Annual Report gives details of other reporting issuers of which each director is a director or officer.
- 37 -
3. Orientation and Continuing Education
The Company has traditionally retained experienced mining people as directors and hence the orientation needed is minimized. When new directors are appointed, they are acquainted with the Company's mineral project and the expectations of directors. Board meetings generally include presentations by the Company's senior management and project staff in order to give the directors full insight into the Company's operations.
4. Ethical Business Conduct
The Board has adopted an ethics policy which is available on the Company's website, www.amarcresources.com . The Board also understands that the fiduciary duties placed on individual directors by the Company's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director's participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.
5. Nomination of Directors
The Board considers its size each year when it considers the number of directors required, taking into account the number required to carry out the Board's duties effectively and to maintain a diversity of views and experience.
The Board does not have a nominating committee, and these functions are currently performed by the Board as a whole. However, if there is a change in the number of directors required by the Company, this policy will be reviewed.
6. Compensation
The Board determines the compensation for independent directors and executives.
7. Other Board Committees
The Board has no compensation or other committees, other than the audit committee.
8. Assessments
The Board monitors the adequacy of information given to directors, communication between the Board and management and the strategic direction and processes of the Board and its audit committee.
AUDIT COMMITTEE
The Audit Committee's Charter
The audit committee has adopted a charter that sets out its mandate and responsibilities. A copy of the audit committee charter is available at www.sedar.com and the Company's website, www.amarcresources.com .
Composition of the Audit Committee
The members of the audit committee are Rene Carrier, Barry Coughlan and Robert Dickinson. All members are financially literate. Mr. Carrier and Mr. Coughlan are independent.
Relevant Education and Experience
As a result of their education and experience, each member of the audit committee has familiarity with, an understanding of, or experience in:
the accounting principles used by the Company to prepare its financial statements, and the ability to assess the general application of those principles in connection with estimates, accruals and reserves;
reviewing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, and
an understanding of internal controls and procedures for financial reporting.
Audit Committee Oversight
The audit committee has not made any recommendations to the Board to nominate or compensate any external auditor that was not adopted by the Board.
- 38 -
The Company's auditor De Visser Gray LLP has not provided any material non-audit services during the most recently completed fiscal year.
Pre-Approval Policies and Procedures
The Company has procedures for the review and pre-approval of any services performed by its auditors. The procedures require that all proposed engagements of its auditors for audit and non-audit services be submitted to the audit committee for approval prior to the beginning of any such services. The audit committee considers such requests, and, if acceptable to a majority of the audit committee members, pre-approves such audit and non-audit services by a resolution authorizing management to engage the Company's auditors for such audit and non-audit services, with set maximum dollar amounts for each itemized service. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered "prohibited services" as contemplated by the regulations of the US Securities and Exchange Commission, and whether the services requested and the fees related to such services could impair the independence of the auditors.
Exemptions From Certain Canadian Audit Committee Requirements
Pursuant to section 6.1 of National Instrument 52-110 Audit Committees ("NI 52-110"), as adopted by the Canadian Securities Administrators (including the British Columbia and Alberta Securities Commissions which have jurisdiction over the Company, the "CSA"), the Company is exempt from the requirements of Parts 3 and 5 of NI 52-110 for the year ended March 31, 2010, by virtue of the Company being a "venture issuer" (as defined in NI 52-110).
Part 3 of NI 52-110 prescribes certain requirements for the composition of audit committees of non-exempt companies that are reporting issuers under Canadian provincial securities legislation. Part 3 of NI 52-110 requires, among other things that an audit committee be comprised of at three directors, each of whom, is, subject to certain exceptions, independent and financially literate in accordance with the standards set forth in NI 52-110.
Part 5 of NI 52-110 requires an annual information form that is filed by a non-exempt reporting issuer under National Instrument 51-102 Continuous Disclosure Obligations, as adopted the CSA, to include certain disclosure about the issuer's audit committee, including, among other things: the text of the audit committee's charter; the name of each audit committee member and whether or not the member is independent and financially literate; whether a recommendation of the audit committee to nominate or compensate an external auditor was not adopted by the issuer's board of directors, and the reasons for the board's decision; a description of any policies and procedures adopted by the audit committee for the engagement of non-audit services; and disclosure of the fees billed by the issuer's external auditor in each of the last two fiscal years for audit, tax and other services.
D. Employees
At March 31, 2010, Amarc had no direct employees. Amarc's administrative and exploration functions are primarily administered through Hunter Dickinson Services Inc. (See Item 7- Major Shareholders and Related Party Transactions ).
E. Share Ownership
Security Holdings of Directors and Senior Management
As at September 22, 2010, the directors and officers of Amarc, and their respective affiliates, directly and indirectly, own or control as a group an aggregate of 18,867,217 common shares (22.5%), or 23,757,217 (20.8%) on a diluted basis.
As at September 22, 2010, the Company's directors and senior management beneficially own the following number of the Company's common shares, options and warrants:
- 39 -
Securities Beneficially Owned or | As a % of the outstanding | |
Name of Insider | Controlled | Common Shares |
Scott D. Cousens
|
148,300 Common shares
70,000 Options |
0.18%
|
Robert A. Dickinson
(3)(5)
|
10,196,409 Common shares
(2)
70,000 Options 4,250,000 Warrants (3) |
12.16%
|
Paul Mann
|
50,000 Common shares
50,000 Options |
0.06%
|
Jeffrey R. Mason
|
4,246,000 Common shares
70,000 Options |
5.06%
|
Diane Nicolson
|
563,000 Common Shares
50,000 Options |
0.67%
|
Ronald W. Thiessen
|
2,369,008 Common shares
70,000 |
2.82%
|
Trevor Thomas
|
120,000 Common Shares
50,000 Options |
0.14%
|
Total
|
18,867,217 Common Shares
640,000 Options 4,250,000 Warrants |
22.5%
|
Notes:
1. |
The information as to principal occupation, business or employment and Common Shares beneficially owned or controlled is not within the knowledge of the management of the Company and has been furnished by the respective individuals as filed on SEDI. |
|
2. |
Certain of these shares are beneficially owned through a private company controlled by Mr. Dickinson, and a Registered Retirement Saving Plan (RRSP) owned by Mr. Dickinson. |
|
3. |
Mr. Dickinson holds 4,250,000 share warrants that expire on February 9, 2011. Each warrant entitles Mr. Dickinson to purchase one Common Share at $0.10 per share. |
|
4. |
Member of the Audit Committee. |
Share Option Plan
At September 22, 2010, 1,725,200 options were outstanding pursuant to the Company's share option plan (the "Plan"), described below, and an aggregate of 6,658,747 common shares were available for issuance pursuant to the Plan, described below.
(a) Incentive Options
1. Share Incentive Plan
In order to provide incentive to directors, officers, employees, management and others who provide services to the Company to act in the best interests of the Company, the Company has adopted a Share Incentive Plan (the "Plan").
In order to increase the Company's flexibility and to bring the Company's share option incentive program in line with the current regulatory regime, the Board approved a new rolling share option plan (the "New Plan") on August 13, 2010 to replace the plan previously approved and confirmed by the shareholders on September 21, 2004 and September 29, 2009, respectively. The New Plan was approved by shareholders at the Company's annual general meeting (the "Meeting") held on September 15, 2010.
Subject to certain restrictions described below, the Plan is based on the maximum number of eligible shares equaling a rolling percentage of up to 10% of the Company's outstanding common shares, calculated from time to time. Pursuant to the Plan, if outstanding options are exercised, or expire, or the number of issued and outstanding common shares of the Company increases, the number of options available to grant under the Plan increases proportionately. At the date of approval of the New Plan, all outstanding options were rolled into and deemed to be granted under the New Plan.
The exercise price of each option is set by the board of directors at the time of grant based on the market price on the date preceding the date of grant. Options can have a maximum term of ten years and typically terminate one year following the termination of the optionee's employment or engagement, except in the case of retirement or death. Vesting of options is at the discretion of the board of directors at the time the options are granted.
- 40 -
Eligible Optionees
Under the policies of the TSX Venture, to be eligible for the issuance of a stock option under the Plan an optionee must either be a director, officer or employee of the Company or its affiliates, or a consultant or an employee of a company providing management or other services to the Company, or its subsidiaries, at the time the option is granted.
Options may be granted only to an individual or to a company that is wholly-owned by individuals eligible for an option grant. If the option is granted to a non-individual, the company must provide the TSX Venture with an undertaking that it will not permit any transfer of its securities, nor issue further securities, to any other individual or entity as long as the incentive stock option remains in effect without the consent of the TSX Venture.
Insider Limitations
The aggregate number of Common Shares reserved for issuance under options granted to Insiders must not exceed ten percent (10%) of the outstanding shares (in the event that the New Plan is amended to reserve for issuance more than ten percent (10%) of the outstanding shares) unless the Company has obtained Disinterested Shareholder Approval to do so;
The number of optioned shares issued to Insiders in any twelve (12) month period must not exceed ten percent (10%) of the outstanding shares (in the event that the New Plan is amended to reserve for issuance more than ten percent (10%) of the outstanding shares) unless the Company has obtained Disinterested Shareholder Approval to do so;
The exercise price of an option previously granted to an Insider must not be reduced, unless the Company has obtained Disinterested Shareholder Approval to do so.
Other Limitations
The Company must not grant an option to a director, employee, consultant, or consultant company (the "Service Provider") in any twelve (12) month period that exceeds five percent (5%) of the outstanding shares, unless the Company has obtained approval by a majority of the votes cast by the shareholders of the Company eligible to vote at a shareholders' meeting, excluding votes attaching to shares beneficially owned by Insiders and their Associates (defined below) ("Disinterested Shareholder Approval");
The aggregate number of options granted to a Service Provider conducting Investor Relations Activities in any twelve (12) month period must not exceed two percent (2%) of the outstanding shares calculated at the date of the grant, without the prior consent of the TSXV;
The Company must not grant an option to a Consultant in any twelve (12) month period that exceeds two percent (2%) of the outstanding shares calculated at the date of the grant of the option; and
The issuance to any one Optionee within a twelve (12) month period of a number of Common Shares must not exceed five percent (5%) of outstanding Common Shares unless the Company has obtained Disinterested Shareholder Approval to do so.
Disinterested Shareholder Approval
In accordance with the requirements of the TSX Venture and the terms of the Plan, disinterested shareholder approval was received at the Meeting.
"Disinterested Shareholder Approval" means the approval by a majority of the votes cast by all shareholders of the Company at the Meeting excluding votes attached to listed shares beneficially owned by insiders of the Company to whom the options have been granted under the existing plan and associates of those insiders.
- 41 -
ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
Major Shareholders
Amarc is a publicly-held corporation, with its shares held by residents of Canada, the United States of America and other countries. To the best of Amarc's knowledge, other than as noted below, no person, corporation or other entity beneficially owns, directly or indirectly, or controls more than 5% of the common shares of Amarc, the only class of securities with voting rights. For these purposes, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security.
As of September 22, 2010, Amarc had authorized unlimited common shares without par value, of which 83,839,473 were issued and outstanding. Amarc's authorized share structure also includes a class of preferred shares without par value and without a maximum number. The preferred shares may be issued in series on such terms as determined by the Company's directors in accordance with the class rights and restrictions. No series of preferred shares has been designated by the board of directors, and no preferred shares are outstanding.
As at September 22, 2010, Robert Dickinson, together with companies controlled by him, held 10,196,409 common shares of Amarc, representing 12.16% of the common shares outstanding.
As at September 22, 2010, Jeffrey Mason held 4,246,000 common shares of Amarc, representing 5.06% of the common shares outstanding.
All of the common shares have the same voting rights.
Geographic Breakdown of Shareholders
As of September 22, 2010, Amarc's register of shareholders indicates that Amarc's common shares are held as follows:
Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing house was located.
Note 1 |
Amarc's securities are recorded on the books of its transfer agent, Computershare Trust Company of Canada located at 510 Burrard Street, Vancouver, Canada (604) 661-0271 in registered form. However, the majority of such shares are registered in the name of intermediaries such as brokerage houses and clearing houses (on behalf of their respective brokerage clients). Amarc does not have knowledge or access to the identities of the beneficial owners of such shares registered through intermediaries. |
Control
Amarc is not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person, severally or jointly, other than as noted above under Major Shareholders. There are no arrangements known to Amarc which, at a subsequent date, may result in a change in control of Amarc.
Insider Reports under the Securities Acts of British Columbia and Alberta
Since the Company a reporting issuer under the Securities Acts of British Columbia and Alberta, certain "insiders" of the Company (including its directors, certain executive officers, and persons who directly or indirectly beneficially own, control or direct more than 10% of its common shares) are generally required to file insider reports of changes in their ownership of Amarc's common shares within ten days following the trade (to be reduced to five days for all trades occurring after October 31, 2010) under National Instrument 55-104 Insider Reporting Requirements and Exemptions , as adopted by the CSA. Copies of such reports are available for public inspection at the offices of the British Columbia Securities
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Commission, 9th Floor, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2, (604) 899-6500 or at the British Columbia Securities Commission web site, www.bcsc.bc.ca . In British Columbia, all insider reports must be filed electronically 10 days following the date of the trade at www.sedi.ca . The public is able to access these reports at www.sedi.ca .
B. Related Party Transactions
Except as disclosed below, Amarc has not, since April 1, 2009, and does not at this time propose to:
(1) |
enter into any transactions which are material to Amarc or a related party or any transactions unusual in their nature or conditions involving goods, services or tangible or intangible assets to which Amarc or any of its former subsidiaries was a party; |
|
(2) |
make any loans or guarantees directly or through any of its former subsidiaries to or for the benefit of any of the following persons: |
|
(a) |
enterprises directly or indirectly through one or more intermediaries, controlling or controlled by or under common control with Amarc; |
|
(b) |
associates of Amarc (unconsolidated enterprises in which Amarc has significant influence or which has significant influence over Amarc) including shareholders beneficially owning 10% or more of the outstanding shares of Amarc; |
|
(c) |
individuals owning, directly or indirectly, shares of Amarc that gives them significant influence over Amarc and close members of such individuals families; |
|
(d) |
key management personnel (persons having authority in responsibility for planning, directing and controlling the activities of Amarc including directors and senior management and close members of such directors and senior management); or |
|
(e) |
enterprises in which a substantial voting interest is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. |
Hunter Dickinson Services Inc. ("HDSI"), formerly Hunter Dickinson Inc.
The Company does not have full-time management or employees. Pursuant to a Corporate Services Agreement dated July 2, 2010 with Hunter Dickinson Services Inc. ("HDSI"), HDSI provides services, including geological, corporate development, administrative and management services (collectively the "Services") to the Company. HDSI is a private company with certain directors in common with the Company, namely Messrs. Copeland, Cousens, Dickinson and Thiessen. HDSI provides the Services to several publicly traded companies (one of which is the Company), and is managed by persons who are directors in common with the Company.
HDSI has supervised or conducted mineral exploration projects in Canada (British Columbia, Manitoba, Ontario, Quebec and the Yukon) and internationally in Brazil, Chile, China, the United States (Nevada and Alaska), Mexico, and South Africa. HDSI allocates the costs of staff input into projects based on time records of involved personnel. Costs of such personnel and third party contractors are billed to the participating public companies (inclusive of HDSI staff costs and overhead) for amounts that are considered by the Company's management to be competitive with arm's-length suppliers. During the fiscal year ended March 31, 2010, Amarc paid approximately $1.5 million (2009 $2.6 million; 2008 -$1.6 million), to HDSI for services pursuant to the management and administrative services agreement. Advances pursuant to this agreement were non-interest bearing and due on demand.
Management / Insiders
During the year ended March 31, 2010, the Company arranged a private placement of 11,000,000 of its common shares at a price of $0.50 per share, consisting of 4,800,000 flow-through shares and 6,200,000 non-flow-through shares for aggregate gross proceed of $5,500,000 (see Item 5.F) .
The numbers of shares acquired by the informed persons of the Company were as follow:
Informed Person Participation | Amount | Units |
Rene G. Carrier | $ 25,000 | 50,000 |
David J. Copeland | 90,000 | 180,000 |
Barry Coughlan | 25,000 | 50,000 |
Scott D. Cousens | 100,000 | 200,000 |
Paul Mann | 25,000 | 50,000 |
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Informed Person Participation | Amount | Units |
Jeffrey R. Mason | 25,000 | 50,000 |
Diane Nicolson | 25,000 | 50,000 |
Ronald W. Thiessen | 200,000 | 400,000 |
Trevor Thomas | 25,000 | 50,000 |
Total | $ 540,000 | 1,080,000 |
C. Interests of Experts and Counsel
Not applicable.
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ITEM 8 FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Item 17 of this Form 20-F contains Amarc's audited consolidated annual financial statements as at March 31, 2010 and 2009 and for each of the years ended March 31, 2010, 2009 and 2008.
Legal Proceedings
Amarc is not involved in any litigation or legal proceedings and to Amarc's knowledge, no material legal proceedings involving Amarc or its subsidiaries are to be initiated against Amarc.
Dividend Policy
The Company has not paid any dividends on its outstanding common shares since its incorporation and does not anticipate that it will do so in the foreseeable future. All funds of Amarc are being retained for exploration of its projects.
B. Significant Changes
There have been no significant changes to the accompanying financial statements since March 31, 2010, except as disclosed in this Annual Report on Form 20-F.
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ITEM 9 THE OFFER AND LISTING
A. Offer and Listing Details Trading Markets
Amarc's common shares have been listed in Canada on the TSX Venture Exchange (and its predecessors) since August 1995, under the symbol AHR.
The Company's common shares have been traded in the U.S. on OTC Bulletin Board since June 2004, under the symbol AXREF.
The following tables set forth for the periods indicated the price history of the Company's common shares on the TSX Venture Exchange and on the OTC Bulletin Board.
TSX Venture Exchange | OTCBB | |||
Fiscal Year | ||||
Ended | High | Low | High | Low |
March 31, | (Cdn$) | (Cdn$) | (US$) | (US$) |
2010 | 0.72 | 0.16 | 0.75 | 0.12 |
2009 | 0.77 | 0.07 | 0.76 | 0.05 |
2008 | 0.78 | 0.45 | 0.76 | 0.40 |
2007 | 0.60 | 0.30 | 0.51 | 0.20 |
2006 | 0.47 | 0.22 | 0.38 | 0.20 |
TSX Venture Exchange | OTCBB | |||
High | Low | High | Low | |
Fiscal Quarter | (Cdn$) | (Cdn$) | (US$) | (US$) |
Q4, 2010 | 0.72 | 0.47 | 0.70 | 0.47 |
Q3, 2010 | 0.68 | 0.23 | 0.75 | 0.23 |
Q2, 2010 | 0.27 | 0.17 | 0.24 | 0.14 |
Q1, 2010 | 0.25 | 0.16 | 0.24 | 0.12 |
Q4, 2009 | 0.30 | 0.10 | 0.24 | 0.06 |
Q3, 2009 | 0.31 | 0.07 | 0.37 | 0.05 |
Q2, 2009 | 0.71 | 0.31 | 0.68 | 0.26 |
Q1, 2009 | 0.77 | 0.58 | 0.76 | 0.57 |
TSX Venture Exchange | OTCBB | |||
High | Low | High | Low | |
Month | (Cdn$) | (Cdn$) | (US$) | (US$) |
September 2010 (to September 22, 2010) | 0.65 | 0.44 | 0.62 | 0.41 |
August 2010 | 0.49 | 0.42 | 0.49 | 0.40 |
July 2010 | 0.51 | 0.36 | 0.49 | 0.34 |
June 2010 | 0.49 | 0.40 | 0.47 | 0.30 |
May 2010 | 0.50 | 0.40 | 0.49 | 0.37 |
April 2010 | 0.55 | 0.49 | 0.58 | 0.48 |
B. Plan of Distribution
Not applicable.
C. Markets
The shares of Amarc traded in Canada on the TSX Venture Exchange (formerly the Canadian Venture Exchange and successor to the Vancouver Stock Exchange) since August 1995 under the trading symbol AHR. Amarc's shares have traded on the OTC-BB under the symbol AXREF, since June 2004.
D. Selling Shareholders
Not applicable.
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E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
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ITEM 10 ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
Amarc's original corporate constituting documents comprised of the Memorandum and Articles of Association were registered with the British Columbia Registrar of Companies under Corporation No. 436691. A copy of the Company's original Articles of Association was filed as an exhibit with Amarc's initial registration statement on Form 20-F.
In March 2004, the Company Act (British Columbia) (the "BCCA") was replaced by the Business Corporations Act (British Columbia) (the "BCA"). All companies incorporated under the BCCA were required to complete a transition application to the BCA by March 29, 2006. The directors of the Company authorized the Company to file a transition application with the Registrar of Companies and to comply with the BCA
The Company subsequently filed a Notice of Articles with the Registrar of Companies on October 2, 2004. The Notice of Articles and the Articles constitute the constating documents of the Company, and have superseded the Memorandum and Articles of Association. The Articles of a company, among other things, set out rules for the conduct of its business and affairs; they are no longer required to be filed with the Registrar of Companies, but are required to be kept as part of the company's corporate records.
On October 22, 2004, the Company filed a Notice of Alteration with the Registrar of Companies to remove the former limitation on its authorized share capital of 100,000,000 common shares without par value. As a result, the Company's authorized share capital now consists of an unlimited number of common shares without par value. The Registrar of Companies issued a Notice of Articles dated October 22, 2004 to reflect this change.
Under the BCA, every "pre-existing company' remained subject to certain "Pre-existing Company Provisions" contained in the BCCA unless such provisions were removed with the approval of the shareholders. In order to take full advantage of the flexibility offered by the BCA, the shareholders adopted a special resolution on October 12, 2005 authorizing the removal of the Pre-existing Company Provisions and the adoption by the Company of a new form of Articles that incorporates provisions permitted under the BCA. On January 31, 2006, the Company filed a Notice of Alteration with the Registrar of Companies to remove the Pre-Existing Company Provisions, and the Registrar of Companies issued a Notice of Articles to reflect this change.
As discussed in more detail below, on August 17, 2007, the Company filed a Notice of Alteration with the Registrar of Companies to create a new class of Preferred Shares, and the Registrar of Companies issued a Notice of Articles to reflect this change.
On January 7, 2009 and March 9, 2009, the Registrar of Companies issued new Notices of Articles in response to Notices of Change of Directors filed by the Company on those dates. The Notice of Articles dated March 9, 2009 constitute the current Notice of Articles of the Company.
Set out below is a discussion of the principal changes effected by the adoption of the new Articles by the Company under the BCA, which took effect on January 31, 2006.
Borrowing Powers
Under the original Articles of Association, the Company could borrow money, issue bonds, debentures and other debt obligations and mortgage, charge, or give security on the undertaking, or on the whole or any part of the property and assets, of the Company (both present and future). Under the BCA, companies are also permitted, without restriction (other than general corporate governance principles), to guarantee repayment of money by any other person or the performance of any obligation of any other person. This change reflected the modernization of corporate legislation to effectively respond to increasingly complex financial transactions that companies may enter into in the course of their business. As a result, the Company's Articles now provide that the Company may guarantee the repayment of money by any other person or the performance of any obligation of any other person.
Share Certificates
Under the original Articles of Association, a shareholder was entitled to a share certificate representing the number of shares of the Company held. Under the BCA, a shareholder is entitled to a share certificate representing the number of shares of the Company held or a written acknowledgement of the
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shareholder's right to obtain such a share certificate. As a result, the Articles now provide for this additional right. The addition of the ability to issue a written acknowledgement is very useful for public companies such as the Company, since it permits flexibility in corporate and securities transmissions.
Indemnity Provisions
Under the BCCA, the Company could only indemnify directors where it obtained prior court approval, except in certain limited circumstances. The original Articles of Association provided for the Company to indemnify directors, subject to the provisions of the BCCA. Under the BCA, the Company is permitted (and is, in some circumstances, required) to indemnify a past or present director or officer of the Company or an associated corporation without obtaining prior court approval in respect of an "eligible proceeding". An "eligible proceeding" includes any legal proceeding relating to the activities of the individual as a director or officer of the Company. However, under the BCA, the Company is prohibited from paying an indemnity if:
(a) |
the party did not act honestly and in good faith with a view to the best interests of the Company; |
|
(b) |
the proceeding was not a civil proceeding and the party did not have reasonable grounds for believing that his or her conduct was lawful; and |
|
(c) |
the proceeding is brought against the party by the Company or an associated corporation. |
As a result, the Articles require the Company to indemnify directors, officers and other persons, subject to the limits imposed under the BCA.
Alternate Directors
The original Articles of Association permitted a director to appoint another director as his alternate. The Company's Articles now permit a director to appoint anyone as his alternate, as long as that person is qualified to act as a director.
Amendment of Articles and Notice of Articles
The Articles provide that the general authority required to amend all provisions of the Company's Articles and the Notice of Articles, other than as set out in the BCA as specifically requiring a special resolution, can be effected as an ordinary or by directors' resolution. The Company's Articles provide that the Company may amend provisions of the Articles and Notice of Articles relating to certain aspects of its Shares and authorized share structure by ordinary resolution. A share consolidation or a share split and name change of the Company can only be done by a resolution of the directors. The default provision under the BCA is a special resolution where the Articles are silent as to the type of resolution required.
The Articles also provide that the attachment, variation and deletion of special rights and restrictions to any class of shares may be authorized by ordinary resolution. If the amendment prejudices or interferes with the rights or special rights attached to any class of issued shares, by the provisions of the BCA, the consent of the holders of that class of shares by a "special separate resolution" is required.
All special resolutions of the Company must be adopted by a majority of two-thirds of votes cast; the Company's original Article of Association required special resolutions to be adopted by a majority of three-quarters of the votes cast.
Shareholders' Meetings
In addition to reflecting the present notice and other provisions of the BCA relating to shareholders' meetings, the Articles provide that shareholders' meetings may be held at such place as is determined by the directors.
The Articles permit the giving of notice to shareholders, directors and officers by fax or e-mail in addition to regular mail or personal delivery.
Officers
Under the original Articles of Association, the Company was required to have at least a President and Secretary as officers, and separate individuals were required to hold those positions. In addition, the Chairman and President were required to be directors. However, under the BCA, those requirements no longer exist, and as a result, the Articles do not provide for such restrictions.
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Disclosure of Interest of Directors
The Articles refer to the provisions of the BCA relating to the disclosure of interest by directors, which superseded more the cumbersome and outdated provisions contained under the BCCA.
Creation of Preferred Shares
Under the original Articles of Association, the creation of a new class of shares required the approval of the shareholders of the Company by a special resolution adopted by a majority of three-quarters of votes cast. In contrast, the Articles now provide that the creation of a new class of shares requires the approval of the shareholders of the Company by an ordinary resolution.
On September 26, 2006, the shareholders adopted an ordinary resolution authorizing the creation of a new class of Preferred Shares without par value and without a maximum authorized number, issuable in series, on such terms as may be determined by the Company's directors for each such series. On August 17, 2007, the Company filed a Notice of Alteration with the Registrar of Companies to create the new class of Preferred Shares, and the Registrar of Companies issued a Notice of Articles to reflect this change.
As a result, the authorized share structure of the Company now includes, in addition to a class of common shares without par value and without a maximum number, a class of Preferred Shares without par value and without a maximum number. The Preferred Shares may be issued in series on such terms as determined by the Company's directors in accordance with the class rights and restrictions.
The special rights and restrictions attaching to the Preferred Shares are set forth in Article 26 of the Articles, and effectively provide the directors with wide latitude to create a series of Preferred Shares which may be convertible into Common Shares, and have attached to them rights that rank ahead of common shares in respect of entitlement to assets and dividends.
C. Material Contracts
Amarc's only material contract as of September 9, 2010 is:
(a) |
Corporate Services Agreement between Amarc and Hunter Dickinson Services Inc. dated June 1, 2008. See Item 7B and Exhibit 4.1. |
Other agreements are in the normal course of business.
D. Exchange Controls
Amarc is incorporated pursuant to the laws of the Province of British Columbia, Canada. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares, other than withholding tax requirements. Any such remittances to United States residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. See " Taxation ", below.
There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (Canada) ("Investment Act").
The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire common shares of the Company. It is general only, it is not a substitute for independent legal advice from an investor's own advisor, and it does not anticipate statutory or regulatory amendments.
The Investment Act is a federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts or joint ventures (each an "entity"). Non-Canadians proposing to establish a new Canadian business or acquire control of an existing Canadian business must file either an application for review (before completing the investment) or a post-closing notification (within 30 days of implementation of the investment) to the Director of Investments, who is appointed by the Minister of Industry. Whether a post-closing notification or a full application for review will be required will depend on the type of Canadian business involved and the value of the business. If an investment is reviewable under the Investment Act, the Investment Act prohibits implementation of the investment unless the Minster of Industry is satisfied that the investment is likely to be of net benefit to Canada.
A non-Canadian would acquire control of the Company for the purposes of the Investment Act through the acquisition of common shares if the non-Canadian acquired a majority of the common shares of the Company. Further, the acquisition of less than a majority but one third or more of the common shares of the Company would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer through the ownership of common shares.
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For a direct acquisition that would result in an acquisition of control of the Company, subject to the exception for "WTO-investors" that are controlled by persons who are resident in World Trade Organization ("WTO") member nations, a proposed investment would be reviewable where the value of the acquired assets is CAD $5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada's cultural heritage or national identity, regardless of the value of the assets of the Company.
For a proposed indirect acquisition that would result in an acquisition of control of the Company through the acquisition of a non-Canadian parent entity, the investment would be reviewable where (a) the value of the Canadian assets acquired in the transaction is CAD $50 million or more, or (b) the value of the Canadian assets is greater than 50% of the value of all of the assets acquired in the transaction and the value of the Canadian assets is CAD $5 million or more.
In the case of a direct acquisition by or from a "WTO investor", the threshold is significantly higher, and is adjusted for inflation each year. The 2010 threshold is CAD$299 million. Other than the exception noted below, an indirect acquisition involving a WTO investor is not reviewable under the Investment Act.
The higher WTO threshold for direct investments and the exemption for indirect investments do not apply where the relevant Canadian business is carrying on the following businesses that have been deemed to be sensitive: (i) the production of uranium and the ownership of an interest in a producing uranium property in Canada; (ii) the provision of any "financial service"; (iii) the provision of any "transportation service"; or (iv) a "cultural business".
Certain transactions relating to common shares of the Company are exempt from the Investment Act, including
(a) |
acquisition of common shares of the Company by a person in the ordinary course of that person's business as a trader or dealer in securities, |
|
(b) |
acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions on the Investment Act, and |
|
(c) |
acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged. |
E. Taxation
The following, in management's understanding, summarizes the material Canadian federal income tax consequences generally applicable to the holding and disposition of common shares by a holder (in this summary, a "U.S. Holder") who, (a) for the purposes of the Income Tax Act (Canada) (the "Tax Act"), is not resident in Canada, deals at arm's length with Amarc, holds the common shares as capital property and does not use or hold the common shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) for the purposes of the Canada-United States Income Tax Convention, 1980 (the "Treaty"), is a resident solely of the United States, has never been a resident of Canada, and has not held or used (and does not hold or use) common shares in connection with a permanent establishment or fixed base in Canada. This summary does not apply to traders or dealers in securities, limited liability companies, tax-exempt entities, insurers, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), or any other U.S. Holder to which special considerations apply.
This summary is based on the current provisions of the Tax Act, including all regulations thereunder, the Treaty, all proposed amendments to the Tax Act, the regulations and the Treaty publicly announced by the Government of Canada to the date hereof, and the current administrative practices of the Canada Revenue Agency. It has been assumed that all currently proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or administrative practice, although no assurances can be given in these respects. This summary does not take into account provincial, U.S., state or other foreign income tax law or practice. The tax consequences to any particular U.S. Holder will vary according to the status of that holder as an individual, trust, corporation, partnership or other entity, the jurisdictions in which that holder is subject to taxation, and generally according to that holder's particular circumstances. Accordingly, this summary is not, and is not to be construed as, Canadian tax advice to any particular U.S. Holder.
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Dividends
Dividends paid or deemed to be paid to a U.S. Holder by Amarc will be subject to Canadian withholding tax. Under the Treaty, the rate of withholding tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross amount of the dividend (or 5% if the U.S. Holder is a corporation and beneficially owns at least 10% of Amarc's voting shares). Amarc will be required to withhold the applicable withholding tax from any such dividend and remit it to the Canadian government for the U.S. Holder's account.
Disposition
A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of a common share in the open market unless the share is "taxable Canadian property" to the holder thereof and the U.S. Holder is not entitled to relief under the Treaty. A common share will be taxable Canadian property to a U.S. Holder if, at any time during the 60 months preceding the disposition, the U.S. Holder or persons with whom the U.S. Holder did not deal at arm's length alone or together owned, or had rights to acquire, 25% or more of Amarc's issued shares of any class or series.
A U.S. Holder whose common shares do constitute taxable Canadian property, and who might therefore be liable for Canadian income tax under the Tax Act, will generally be relieved from such liability under the Treaty unless the value of such shares at the time of disposition is derived principally from real property situated in Canada.
United States Tax Consequences
United States Federal Income Tax Consequences
The following is, in management's understanding, a discussion of material United States federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of common shares of Amarc. This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences (see "Taxation Canadian Federal Income Tax Consequences" above). Accordingly, holders and prospective holders of common shares of Amarc should consult their own tax advisors about the specific federal, state, local, and foreign tax consequences to them of purchasing, owning and disposing of common shares of Amarc, based upon their individual circumstances.
The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.
U.S. Holders
As used herein, a "U.S. Holder" means a holder of common shares of Amarc who is a citizen or individual resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or of any political subdivision thereof, an entity created or organized in or under the laws of the United States or any political subdivision thereof which has elected to be treated as a corporation for United States income tax purposes (under Treasury Regulation section 301.7701 -3), an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a "functional currency" other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own common shares as capital assets and who own (directly and indirectly, pursuant to applicable rules of constructive ownership) no more than 5% of the value of the total outstanding stock of Amarc. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.
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In addition, this summary does not address special rules applicable to United States persons (as defined in Section 7701(a)(30) of the Code) holding common shares through a foreign partnership or to foreign persons holding common shares through a domestic partnership.
Distribution on Common Shares of Amarc
In general, U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of Amarc are required to include in gross income for United States federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that Amarc has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of Amarc, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the common shares and thereafter as gain from the sale or exchange of property. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.
In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally, any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed $200 will not recognize that gain, provided that there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.
Dividends paid on the common shares of Amarc generally will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation and which owns shares representing at least 10% of the voting power and value of Amarc may, under certain circumstances, be entitled to a 70% (or 80% if the U.S. Holder owns shares representing at least 20% of the voting power and value of Amarc) deduction of the United States source portion of dividends received from Amarc (unless Amarc qualifies as a "foreign personal holding company" or a "passive foreign investment company," as defined below). Amarc does not anticipate that it will earn any United States income, however, and therefore, does not anticipate that any U.S. Holder will be eligible for the dividends received deduction.
Under current Treasury Regulations, dividends paid on Amarc common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of Amarc common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 28% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder's U.S. federal income tax liability, provided the required information is furnished to the IRS.
Foreign Tax Credit
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of Amarc may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to two specific classes of income: "passive income, and "general income". Dividends distributed by Amarc will generally constitute "passive income" for these purposes. Prior to January 1, 2007, there were nine specific classes of income rather than the two stated here. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and U.S. Holders of common shares of Amarc should consult their own tax advisors regarding their individual circumstances.
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Disposition of Common Shares of Amarc
In general, U.S. Holders will recognize gain or loss upon the sale of common shares of Amarc equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder's tax basis in the common shares of Amarc. Preferential tax rates apply to long-term capital gains of U.S. Holders which are individuals, estates or trusts. In general, gain or loss on the sale of common shares of Amarc will be long-term capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.
Other Considerations
Set forth below are certain material exceptions to the above-described general rules describing the United States federal income tax consequences resulting from the holding and disposition of common shares:
Passive Foreign Investment Company
United States income tax law contains rules governing "passive foreign investment companies" ("PFIC") which can have significant tax effects on U.S. Holders of foreign corporations. These rules do not apply to non-U.S. Holders. Section 1297 of the Code defines a PFIC as a corporation that is not formed in the United States if, for any taxable year, either (i) 75% or more of its gross income is "passive income," which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of "passive income" is 50% or more. In the event that Amarc qualifies as a PFIC for the fiscal year ending March 31, 2010, or in future fiscal years, each U.S. Holder of Amarc is urged to consult a tax advisor with respect to how the PFIC rules affect such U.S. Holder's tax situation.
Each U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to United States federal income taxation under one of three alternative tax regimes at the election of such U.S. Holder. The following is a discussion of such alternative tax regimes applied to such U.S. Holders of Amarc. In addition, special rules apply if a foreign corporation qualifies as both a PFIC and a "controlled foreign corporation" (as defined below) and a U.S. Holder owns, actually or constructively, 10% or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation (See more detailed discussion at "Controlled Foreign Corporation" below).
A U.S. Holder who elects to treat Amarc as a qualified electing fund ("QEF") will be subject, under Section 1293 of the Code, to current federal income tax for any taxable year to which the election applies in which Amarc qualifies as a PFIC on his pro rata share of Amarc's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain, and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income, in each case, for the shareholder's taxable year in which (or with which) Amarc's taxable year ends, regardless of whether such amounts are actually distributed. A U.S. Holder's tax basis in the common shares will be increased by any such amount that is included in income but not distributed.
The procedure a U.S. Holder must comply with in making an effective QEF election, and the consequences of such election, will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which Amarc is a PFIC. If the U.S. Holder makes a QEF election in such first year, i.e., a "timely" QEF election, then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files his tax return for such first year. If, however, Amarc qualified as a PFIC in a prior year during the U.S. Holder's holding period, then, in order to avoid the Section 1291 rules discussed below, in addition to filing documents, the U.S. Holder must elect to recognize under the rules of Section 1291 of the Code (discussed herein), (i) any gain that he would otherwise recognize if the U.S. Holder sold his stock on the qualification date or (ii) if Amarc is a controlled foreign corporation, the U.S. Holder's pro rata share of Amarc's post-1986 earnings and profits as of the qualification date. The qualification date is the first day of Amarc's first tax year in which Amarc qualified as a QEF with respect to such U.S. Holder. For purposes of this discussion, a U.S. Holder who makes (i) a timely QEF election, or (ii) an untimely QEF election and either of the above-described gain-recognition elections under Section 1291 is referred to herein as an "Electing U.S. Holder." A U.S. Holder who holds common shares at any time during a year of Amarc in which Amarc is a PFIC and who is not an Electing U.S. Holder (including a U.S. Holder who makes an untimely QEF election and makes neither of the above-described gain-recognition elections) is referred to herein as a
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"Non-Electing U.S. Holder". An Electing U.S. Holder (i) generally treats any gain realized on the disposition of his Amarc common shares as capital gain; and (ii) may either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of Amarc's annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the U.S. Holder is not a corporation, any interest charge imposed under the PFIC regime would be treated as "personal interest" that is not deductible.
In order for a U.S. Holder to make (or maintain) a valid QEF election, Amarc must provide certain information regarding its net capital gains and ordinary earnings and permit its books and records to be examined to verify such information. Amarc intends to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to Amarc. Amarc urges each U.S. Holder to consult a tax advisor regarding the availability of, and procedure for making, the QEF election.
A QEF election, once made with respect to Amarc, applies to the tax year for which it was made and to all subsequent tax years, unless the election is invalidated or terminated, or the IRS consents to revocation of the election. If a QEF election is made by a U.S. Holder and Amarc ceases to qualify as a PFIC in a subsequent tax year, the QEF election will remain in effect, although not applicable, during those tax years in which Amarc does not qualify as a PFIC. Therefore, if Amarc again qualifies as a PFIC in a subsequent tax year, the QEF election will be effective and the U.S. Holder will be subject to the rules described above for Electing U.S. Holders in such tax year and any subsequent tax years in which Amarc qualifies as a PFIC. In addition, the QEF election remains in effect, although not applicable, with respect to an Electing U.S. Holder even after such U.S. Holder disposes of all of his or its direct and indirect interest in the shares of Amarc. Therefore, if such U.S. Holder reacquires an interest in Amarc, that U.S. Holder will be subject to the rules described above for Electing U.S. Holders for each tax year in which Amarc qualifies as a PFIC.
In the case of a Non-Electing U.S. Holder, special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) of his Amarc common shares and (ii) certain "excess distributions," as defined in Section 1291(b), by Amarc.
A Non-Electing U.S. Holder generally would be required to pro rate all gains realized on the disposition of his Amarc common shares and all excess distributions on his Amarc common shares over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. Holder (excluding any portion of the holder's period prior to the first day of the first year of Amarc (i) which began after December 31, 1986, and (ii) for which Amarc was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. The Non-Electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-Electing U.S. Holder that is not a corporation must treat this interest charge as "personal interest" which, as discussed above, is wholly non-deductible. The balance, if any, of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance. In certain circumstances, the sum of the tax and the PFIC interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the U.S. Holder.
If Amarc is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Amarc common shares, then Amarc will continue to be treated as a PFIC with respect to such Amarc common shares, even if it is no longer by definition a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such Amarc common shares had been sold on the last day of the last taxable year for which it was a PFIC.
Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold (actually or constructively) marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market annually (a "mark-to-market election"). If such an election is made, such U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above. However, if the mark-to-market election is made by a Non-Electing U.S. Holder after the beginning of the holding period for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other amounts taxable with respect to Amarc common shares. A U.S. Holder who makes the mark-to market election will include in income for each taxable year as ordinary income for which the election is in effect an amount equal to the excess, if any, of the fair market value of the common shares of Amarc as of the close of such tax year over such U.S. Holder's adjusted basis in such common shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax basis in the common shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market gains for the common shares in Amarc included by such U.S. Holder for prior tax years, including any amount which would have been treated as a mark-to-market gain for any prior tax year but for the Section 1291 rules discussed above with respect to Non-Electing U.S. Holders, over (B) the mark-to-market losses for shares that were
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allowed as deductions for prior tax years. A U.S. Holder's adjusted tax basis in the common shares of Amarc will be adjusted to reflect the amount included in or deducted from income as a result of a mark-to-market election. A mark-to-market election applies to the taxable year in which the election is made and to each subsequent taxable year, unless Amarc common shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. Because the IRS has not established procedures for making a mark-to-market election, U.S. Holders should consult their tax advisor regarding the manner of making such an election. No view is expressed regarding whether common shares of Amarc are marketable for these purposes or whether the election will be available.
Under Section 1291(f) of the Code, the IRS has issued Proposed Treasury Regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases the basis of Amarc common shares in the hands of the transferee and the basis of any property received in the exchange for those common shares would be increased by the amount of gain recognized. Under the Proposed Treasury Regulations, an Electing U.S. Holder would not be taxed on certain transfers of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferee's basis in this case will depend on the manner of the transfer. In the case of a transfer by an Electing U.S. Holder upon death, for example, the transferee's basis is generally equal to the fair market value of the Electing U.S. Holder's common shares as of the date of death under Section 1014 of the Code. The specific tax effect to the U.S. Holder and the transferee may vary based on the manner in which the common shares are transferred. Each U.S. Holder of Amarc is urged to consult a tax advisor with respect to how the PFIC rules affect his or its tax situation.
Whether or not a U.S. Holder makes a timely QEF election with respect to common shares of Amarc, certain adverse rules may apply in the event that both Amarc and any foreign corporation in which Amarc directly or indirectly holds shares is a PFIC (a "lower-tier PFIC"). Pursuant to certain Proposed Treasury Regulations, a U.S. Holder would be treated as owning his or its proportionate amount of any lower-tier PFIC shares, and generally would be subject to the PFIC rules with respect to such indirectly-held PFIC shares unless such U.S. Holder makes a timely QEF election with respect thereto. Amarc intends to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to each subsidiary of Amarc that is a PFIC.
Under the Proposed Treasury Regulations, a U.S. Holder who does not make a timely QEF election with respect to a lower-tier PFIC generally would be subject to tax (and the PFIC interest charge) on (i) any excess distribution deemed to have been received with respect to his or its lower-tier PFIC shares and (ii) any gain deemed to arise from a so-called "indirect disposition" of such shares. For this purpose, an indirect disposition of lower-tier PFIC shares would generally include (i) a disposition by Amarc (or an intermediate entity) of lower-tier PFIC shares, and (ii) any other transaction resulting in a dilution of the U.S. Holder's proportionate ownership of the lower-tier PFIC, including an issuance of additional common shares by Amarc (or an intermediate entity or the lower tier PFIC). Accordingly, each prospective U.S. Holder should be aware that he or it could be subject to tax even if such U.S. Holder receives no distributions from Amarc and does not dispose of its common shares.
Amarc strongly urges each prospective U.S. Holder to consult a tax advisor with respect to the adverse rules applicable, under the Proposed Treasury Regulations, to U.S. Holders of lower-tier PFIC shares.
Certain special, generally adverse, rules will apply with respect to Amarc common shares while Amarc is a PFIC unless the U.S. Holder makes a timely QEF election. For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.
Controlled Foreign Corporation
If more than 50% of the total combined voting power of all classes of shares entitled to vote or the total value of the shares of Amarc is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporation, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), each of which own, actually or constructively, 10% or more of the total combined voting power of all classes of shares entitled to vote of Amarc ("United States Shareholder"), Amarc could be treated as a controlled foreign corporation ("CFC") under Subpart F of the Code. This classification would affect many complex results, one of which is the inclusion of certain income of a CFC which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC's Subpart F income and are also subject to current U.S. tax on their pro rata shares of increases in the CFC's earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by
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a U.S. Holder of common shares of Amarc which is or was a United States Shareholder at any time during the five-year period ending on the date of the sale or exchange is treated as ordinary income to the extent of earnings and profits of Amarc attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. Special rules apply to United States Shareholders who are subject to the special taxation rules under Section 1291 discussed above with respect to a PFIC. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. Amarc does not believe that it currently qualifies as a CFC. However, there can be no assurance that Amarc will not be considered a CFC for the current or any future taxable year.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
Exhibits attached to this Form 20-F are also available for viewing on EDGAR, or at the offices of Amarc, Suite 1020 - 800 West Pender Street, Vancouver, British Columbia V6C 2V6 or on request of Amarc at 604-684-6365, attention: Shirley Main. Copies of Amarc's financial statements and other continuous disclosure documents required under the British Columbia Securities Act are available for viewing on the internet at www.sedar.com .
I. Subsidiary Information
Not applicable.
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ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(a) Transaction Risk and Currency Risk Management
Amarc's operations do not employ financial instruments or derivatives which are market sensitive and Amarc does not have financial market risks.
(b) Exchange Rate Sensitivity
Amarc's administrative operations are in Canada. The Company typically holds most of its funds in Canadian dollars and typically acquires foreign currency on an as-needed basis and hence it is not significantly affected by exchange rate risk. The Company does however, from time to time, invest in US$ denominated short term investments. The Company is exposed to foreign currency exchange risk on such investments.
The Company currently does not engage in foreign currency hedging.
(c) Interest Rate Risk and Equity Price Risk
Amarc is equity financed and does not have any debt, other than routine accounts payable. As such, the Company is not subject to interest rate change risks.
(d) Commodity Price Risk
While the value of Amarc's resource properties can always be said to relate to the price of copper and gold metals and the outlook for same, Amarc does not have any operating mines and hence does not have any hedging or other commodity based operational risks respecting its business activities.
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ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
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ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
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ITEM 15 CONTROLS AND PROCEDURES
Internal Controls over Financial Reporting Procedures
The management of the Company is responsible for establishing and maintaining adequate internal controls over financial reporting. The Company's internal control system was designed to provide reasonable assurance to the Company's management and the board of directors regarding the preparation and fair presentation of published financial statements. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company's management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of internal control over financial reporting based on the framework and criteria established in Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that internal control over financial reporting was effective as of March 31, 2010, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.
There have been no changes in the Company's internal control over financial reporting during the period covered by this report that could have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.
Disclosure Controls and Procedures
As of the end of the period covered by this report, our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 , as amended (the "Exchange Act")). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed in reports that we file or submit under the Exchange Act 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.
While our Chief Executive Officer and our Chief Financial Officer believe that our disclosure controls and procedures provide a reasonable level of assurance of effectiveness, they do not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met.
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ITEM 16 AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES AND EXEMPTIONS
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ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT
A. Audit Committee Financial Expert
The members of the audit committee are Rene Carrier, Barry Coughlan and Robert Dickinson. The board of directors has determined that Mr. Carrier qualifies as a "financial expert" under the rules of the Securities and Exchange Commission, based on his education and experience. Mr. Carrier is independent, as the term is defined in section 803 of the NYSE Amex Company Guide.
Each audit committee member is able to read and understand fundamental financial statements.
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ITEM 16B CODE OF ETHICS
The Company's board of directors has adopted a Code of Ethics governing directors, officers, employees and contractors. The Code of Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
(a) |
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
|
(b) |
full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, securities regulators and in other public communications made by the Company; |
|
(c) |
compliance with applicable laws, rules and regulations; |
|
(d) |
the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code; and |
|
(e) |
accountability for adherence to the Code of Ethics. |
The board of directors monitors compliance with the Code of Ethics by ensuring that all Company personnel have read and understood the Code of Ethics, and by charging management with bringing to the attention of the board of directors any issues that arise with respect to the Code of Ethics.
The Company's Code of Ethics was filed as Exhibit 11.1 of the Company's Form 20-F filed on October 7, 2008. The Company's Code of Ethics can be viewed at the Company's website The Company will also provide a copy of the Code of Ethics to any person without charge, upon request. Requests can be sent by mail to: Suite 1020 - 800 West Pender Street, Vancouver, British Columbia V6C 2V6 or on request of the Company at 604-684-6365, attention: Investor Relations Department.
During the most recently completed fiscal year, the Company has neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including any implicit waiver) form any provision of its Code of Ethics.
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ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table discloses the aggregate fees billed for each of the last two fiscal years for professional services rendered by the Company's audit firm, De Visser Gray LLP for various services.
Services: |
Year ended
March 31, 2010 |
Year ended
March 31, 2009 |
Audit Fees (1) | $ 25,000 (estimated) | $ 20,000 |
Audit-Related Fees (2) | | |
Tax Fees (3) | | |
All Other Fees (4) | | |
$ 25,000 (estimated) | $ 20,000 |
Notes:
"Audit Fees" include fees necessary to perform the annual audit and quarterly reviews of the Company's consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.
"Audit-Related Fees" include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
"Tax Fees" include fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. The specific services received included a review of the annual corporate tax return for tax compliance, together with a review of the tax structure related to the Company's Chinese operations.
"All Other Fees" include fees billed for products and services provided by the principal accountant, other than the services reported in (1), (2) or (3) above.
From time to time, management of the Company recommends to and requests approval from the audit committee for non-audit services to be provided by the Company's auditors. The audit committee routinely considers such requests at committee meetings, and if acceptable to a majority of the audit committee members, pre-approves such non-audit services by a resolution authorizing management to engage the Company's auditors for such non-audit services, with set maximum dollar amounts for each itemized service. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered "prohibited services" as contemplated by the SEC, and whether the services requested and the fees related to such services could impair the independence of the auditors. No material non-audit services were provided by the Company's auditors during the year ended March 31, 2010.
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ITEM 16D EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
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ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
In the year ended March 31, 2010, the Company did not purchase any of its issued and outstanding common shares pursuant to any repurchase program or otherwise.
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ITEM 16F CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
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ITEM 16G CORPORATE GOVERNANCE
Not applicable.
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ITEM 17 FINANCIAL STATEMENTS
The following attached financial statements are incorporated herein:
(1) |
Report of Independent Registered Public Accounting Firm on the consolidated balance sheets as at March 31, 2010 and 2009, and the consolidated statements of operations and comprehensive loss, shareholders' equity and cash flows for each of the years ended March 31, 2010, 2009 and 2008; |
(2) |
Consolidated balance sheets as at March 31, 2010, and 2009; |
(3) |
Consolidated statements of operations and comprehensive loss for each of the years ended March 31, 2010, 2009 and 2008; |
(4) |
Consolidated statements of shareholders' equity for each of the years ended March 31, 2010, 2009 and 2008; |
(5) |
Consolidated statements of cash flows for each of the years ended March 31, 2010, 2009 and 2008; and |
(6) |
Notes to the consolidated financial statements mentioned above. |
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ITEM 18 FINANCIAL STATEMENTS
Not applicable. See Item 17 .
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ITEM 19 EXHIBITS
The following Exhibits have been filed with the Company's Annual Report on Form 20-F in previous years:
Exhibit
Number |
Description of Exhibit |
4.1 | Amended Share Option Plan of Amarc Resources Ltd. dated for reference September 21, 2004 (1) |
11.1 | Code of Ethics (1) |
4.5 | Corporate Services Agreement between Amarc Resources Ltd. and Hunter Dickinson Services Inc. dated June 1, 2008 |
(1) |
Incorporated by reference to the Company's Annual Report on Form 20-F for the year ended March 31, 2008, filed with the Securities and Exchange Commission on October 7, 2008. |
The following exhibits are included with this Annual Report on Form 20-F:
Exhibit | Description of Exhibit |
Number |
|
|
|
1.2 | |
|
|
12.1 | |
|
|
12.2 | |
|
|
13.1 | |
|
|
13.2 | |
|
|
99.1 |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
AMARC RESOURCES LTD.
/s/ Paul Mann
PAUL MANN, CA
Chief Financial Officer
DATED: September 22, 2010
AMARC RESOURCES LTD.
(the Company)
TABLE OF CONTENTS
Adopted by special resolution passed at the Annual and Special Meeting of shareholders held on September 28, 2006. | |
Effective August 17, 2007, at 03:50 PM Pacific Time (date and time Notice of Alteration to alter Notice of Articles e-filed with the BC Registrar of Companies office. | |
Articles Amended September 15, 2010 by shareholder resolution |
BUSINESS CORPORATIONS ACT
ARTICLES
of
AMARC RESOURCES LTD.
(the Company)
Number: BC0440140
PART 1
INTERPRETATION
Definitions
1.1 In these Articles, unless the context otherwise requires:
(a) Act means the Business Corporations Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;
(b) board of directors , directors and board mean the directors or sole director of the Company for the time being;
(c) Interpretation Act means the Interpretation Act (British Columbia) from time to time in force and all amendments thereto and includes all regulations and amendments thereto made pursuant to that Act;
(d) legal personal representative means the personal or other legal representative of the shareholder;
(e) registered address of a shareholder means the shareholders address as recorded in the central securities register;
(f) seal means the seal of the Company, if any;
(g) share means a share in the share structure of the Company; and
(h) special majority means the majority of votes described in §11.2 which is required to pass a special resolution.
Act and Interpretation Act Definitions Applicable
1.2 The definitions in the Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and except as the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Act will prevail. If there is a conflict or inconsistency between these Articles and the Act, the Act will prevail.
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PART 2
SHARES AND SHARE CERTIFICATES
Authorized Share Structure
2.1 The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.
Form of Share Certificate
2.2 Each share certificate issued by the Company must comply with, and be signed as required by, the Act.
Shareholder Entitled to Certificate, Acknowledgment or Written Notice
2.3 Unless the shares of which the shareholder is the registered owner are uncertificated shares, each shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholders name or (b) a non-transferable written acknowledgment of the shareholders right to obtain such a share certificate, provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate or acknowledgment and delivery of a share certificate or an acknowledgment to one of several joint shareholders or to a duly authorized agent of one of the joint shareholders will be sufficient delivery to all. The Company must send to a holder of an uncertificated share a written notice containing the information required by the Act within a reasonable time after the issue or transfer of such share.
Delivery by Mail
2.4 Any share certificate or non-transferable written acknowledgment of a shareholders right to obtain a share certificate, or written notice of the issue or transfer of an uncertificated share, may be sent to the shareholder by mail at the shareholders registered address or to the shareholders duly authorized agent and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate, acknowledgement or written notice is lost in the mail or stolen.
Replacement of Worn Out or Defaced Certificate or Acknowledgement
2.5 If a share certificate or a non-transferable written acknowledgment of the shareholders right to obtain a share certificate is worn out or defaced, the Company must, on production of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as are deemed fit:
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(a) cancel the share certificate or acknowledgment; and
(b) issue a replacement share certificate or acknowledgment.
Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment
2.6 If a share certificate or a non-transferable written acknowledgment of a shareholders right to obtain a share certificate is lost, stolen or destroyed, the Company must issue a replacement share certificate or acknowledgment, as the case may be, to the person entitled to that share certificate or acknowledgment, if the requirements of the Act are satisfied and it receives:
(a) proof satisfactory to it of the loss, theft or destruction; and
(b) any indemnity the directors consider adequate.
Splitting Share Certificates
2.7 If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholders name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.
Certificate Fee
2.8 There must be paid to the Company, in relation to the issue of any share certificate under §2.5, §2.6 or §2.7, the amount, if any, not exceeding the amount prescribed under the Act, determined by the directors.
Recognition of Trusts
2.9 Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as required by law or statute or these Articles or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.
PART 3
ISSUE OF SHARES
Directors Authorized
3.1 Subject to the Act and the rights, if any, of the holders of issued shares of the Company, the Company may allot, issue, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the consideration (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.
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Commissions and Discounts
3.2 The Company may at any time pay a reasonable commission or allow a reasonable discount to any person in consideration of that persons purchase or agreement to purchase shares of the Company from the Company or any other persons procurement or agreement to procure purchasers for shares of the Company.
Brokerage
3.3 The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.
Conditions of Issue
3.4 Except as provided for by the Act, no share may be issued until it is fully paid. A share is fully paid when:
(a) consideration is provided to the Company for the issue of the share by one or more of the following:
(i) |
past services performed for the Company; |
|
(ii) | property; | |
(iii) |
money; and |
(b) the value of the consideration received by the Company equals or exceeds the issue price set for the share under §3.1.
Share Purchase Warrants and Rights
3.5 Subject to the Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.
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PART 4
SHARE REGISTERS
Central Securities Register
4.1 As required by and subject to the Act, the Company must maintain in British Columbia a central securities register and may appoint an agent to maintain such register. The directors may appoint one or more agents, including the agent appointed to keep the central securities register, as transfer agent for shares or any class or series of shares and the same or another agent as registrar for shares or such class or series of shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.
PART 5
SHARE TRANSFERS
Registering Transfers
5.1 A transfer of a share must not be registered unless the Company or the Companys transfer agent or registrar for the class or series of shares to be transferred has received:
(a) except as exempted by the Act, a written instrument of transfer in respect of the share (which may be a separate document or endorsed on the share certificate for the shares transferred) made by the shareholder or other appropriate person or by an agent who has actual authority to act on behalf of that person;
(b) if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate;
(c) if a non-transferable written acknowledgment of the shareholders right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that written acknowledgment; and
(d) such other evidence, if any, as the Company or the transfer agent or registrar for the class or series of share to be transferred may require to prove the title of the transferor or the transferors right to transfer the share, that the written instrument of transfer is genuine and the right of the transferee to have the transfer registered.
Form of Instrument of Transfer
5.2 The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Companys share certificates for shares of that class or series or in some other form that may be approved by the directors or by the transfer agent or registrar for the share from time to time.
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Transferor Remains Shareholder
5.3 Except to the extent that the Act otherwise provides, the transferor of a share is deemed to remain the holder of it until the name of the transferee is entered in a securities register of the Company in respect of the transfer.
Signing of Instrument of Transfer
5.4 If a shareholder, or a shareholders duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer, or if the shares are uncertificated shares, then all of the shares registered in the name of the shareholder on the central securities register:
(a) in the name of the person named as transferee in that instrument of transfer; or
(b) if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.
Enquiry as to Title Not Required
5.5 Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares transferred, of any interest in such shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.
Transfer Fee
5.6 There must be paid to the Company, in relation to the registration of a transfer, the amount, if any, determined by the directors.
PART 6
TRANSMISSION OF SHARES
Legal Personal Representative Recognized on Death
6.1 In case of the death of a shareholder, the legal personal representative of the shareholder, or in the case of shares registered in the shareholders name and the name of another person in joint tenancy, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholders interest in the shares. Before recognizing a person as a legal personal representative of a shareholder, the Company shall receive the documentation required by the Act.
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Rights of Legal Personal Representative
6.2 The legal personal representative of a shareholder has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Act and the directors have been deposited with the Company. This §6.2 does not apply in the case of the death of a shareholder with respect to shares registered in the name of the shareholder and the name of another person in joint tenancy.
PART 7
PURCHASE, REDEEM OR OTHERWISE ACQUIRE SHARES
Company Authorized to Purchase, Redeem or Otherwise Acquire Shares
7.1 Subject to §7.2, the special rights and restrictions attached to the shares of any class or series and the Act, the Company may, if authorized by the directors, purchase, redeem or otherwise acquire any of its shares at the price and upon the terms determined by the directors.
Purchase When Insolvent
7.2 The Company must not make a payment or provide any other consideration to purchase,+ redeem or otherwise acquire any of its shares if there are reasonable grounds for believing that:
(a) the Company is insolvent; or
(b) making the payment or providing the consideration would render the Company insolvent.
Sale and Voting of Purchased Shares
7.3 If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:
(a) is not entitled to vote the share at a meeting of its shareholders;
(b) must not pay a dividend in respect of the share; and
(c) must not make any other distribution in respect of the share.
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Company Entitled to Purchase, Redeem or Otherwise Acquire Share Fractions
7.4 The Company may, without prior notice to the holders, purchase, redeem or otherwise acquire for fair value any and all outstanding share fractions of any class or kind of shares in its authorized share structure as may exist at any time and from time to time. Upon the Company delivering the purchase funds and confirmation of purchase or redemption of the share fractions to the holders registered or last known address, or if the Company has a transfer agent then to such agent for the benefit of and forwarding to such holders, the Company shall thereupon amend its central securities register to reflect the purchase or redemption of such share fractions and if the Company has a transfer agent, shall direct the transfer agent to amend the central securities register accordingly. Any holder of a share fraction, who upon receipt of the funds and confirmation of purchase or redemption of same, disputes the fair value paid for the fraction, shall have the right to apply to the court to request that it set the price and terms of payment and make consequential orders and give directions the court considers appropriate, as if the Company were the acquiring person as contemplated by Division 6, Compulsory Acquisitions, under the Act and the holder were an offeree subject to the provisions contained in such Division, mutatis mutandis .
PART 8
BORROWING POWERS
8.1 The Company, if authorized by the directors, may:
(a) borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;
(b) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as the directors consider appropriate;
(c) guarantee the repayment of money by any other person or the performance of any obligation of any other person; and
(d) mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.
8.2 The powers conferred under this Part 8 shall be deemed to include the powers conferred on a company by Division VII of the Special Corporations Powers Act being chapter P-16 of the Revised Statutes of Quebec, 1988, and every statutory provision that may be substituted therefor or for any provision therein.
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PART 9
ALTERATIONS
Alteration of Authorized Share Structure
9.1 Subject to §9.2 and the Act, the Company may by ordinary resolution (or a resolution of the directors in the case of §9.1(c) or §9.1(f)):
(a) create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;
(b) increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;
(c) subdivide or consolidate all or any of its unissued, or fully paid issued, shares;
(d) if the Company is authorized to issue shares of a class of shares with par value:
(i) decrease the par value of those shares; or
(ii) if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;
(e) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;
(f) alter the identifying name of any of its shares; or
(g) otherwise alter its shares or authorized share structure when required or permitted to do so by the Act where it does not specify by a special resolution;
and, if applicable, alter its Notice of Articles and Articles accordingly.
Special Rights and Restrictions
9.2 Subject to the Act and in particular those provisions of the Act relating to the rights of holders of outstanding shares to vote if their rights are prejudiced or interfered with, the Company may by ordinary resolution:
(a) create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or
(b) vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued, and alter its Notice of Articles and Articles accordingly.
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Change of Name
9.3 The Company may by resolution of the directors authorize an alteration of its Notice of Articles in order to change its name or adopt or change any translation of that name.
Other Alterations
9.4 If the Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by ordinary resolution alter these Articles.
PART 10
MEETINGS OF SHAREHOLDERS
Annual General Meetings
10.1 Unless an annual general meeting is deferred or waived in accordance with the Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.
Resolution Instead of Annual General Meeting
10.2 If all the shareholders who are entitled to vote at an annual general meeting consent in writing by a unanimous resolution to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this §10.2, select as the Companys annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.
Calling of Meetings of Shareholders
10.3 The directors may, at any time, call a meeting of shareholders.
Notice for Meetings of Shareholders
10.4 The Company must send notice of the date, time and location of any meeting of shareholders (including, without limitation, any notice specifying the intention to propose a resolution as an exceptional resolution, a special resolution or a special separate resolution, and any notice to consider approving an amalgamation into a foreign jurisdiction, an arrangement or the adoption of an amalgamation agreement, and any notice of a general meeting, class meeting or series meeting), in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:
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(a) if the Company is a public company, 21 days;
(b) otherwise, 10 days.
Record Date for Notice
10.5 The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:
(a) if the Company is a public company, 21 days;
(b) otherwise, 10 days.
If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.
Record Date for Voting
10.6 The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.
Failure to Give Notice and Waiver of Notice
10.7 The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive that entitlement or may agree to reduce the period of that notice. Attendance of a person at a meeting of shareholders is a waiver of entitlement to notice of the meeting unless that person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
Notice of Special Business at Meetings of Shareholders
10.8 If a meeting of shareholders is to consider special business within the meaning of §11.1, the notice of meeting must:
(a) state the general nature of the special business; and
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(b) if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:
(i) at the Companys records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and
(ii) during statutory business hours on any one or more specified days before the day set for the holding of the meeting.
Place of Meetings
10.9 In addition to any location in British Columbia, any general meeting may be held in any location outside British Columbia approved by a resolution of the directors.
PART 11
PROCEEDINGS AT MEETINGS OF SHAREHOLDERS
Special Business
11.1 At a meeting of shareholders, the following business is special business:
(a) at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;
(b) at an annual general meeting, all business is special business except for the following:
(i) business relating to the conduct of or voting at the meeting;
(ii) consideration of any financial statements of the Company presented to the meeting;
(iii) consideration of any reports of the directors or auditor;
(iv) the setting or changing of the number of directors;
(v) the election or appointment of directors;
(vi) the appointment of an auditor;
(vii) the setting of the remuneration of an auditor;
(viii) business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;
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(ix) any other business which, under these Articles or the Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.
Special Majority
11.2 The majority of votes required for the Company to pass a special resolution at a general meeting of shareholders is two-thirds of the votes cast on the resolution.
Quorum
11.3 Subject to the special rights and restrictions attached to the shares of any class or series of shares, and to §11.4, the quorum for the transaction of business at a meeting of shareholders is at least two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 10% of the issued shares entitled to vote at the meeting.
One Shareholder May Constitute Quorum
11.4 If there is only one shareholder entitled to vote at a meeting of shareholders:
(a) the quorum is one person who is, or who represents by proxy, that shareholder, and
(b) that shareholder, present in person or by proxy, may constitute the meeting.
Persons Entitled to Attend Meeting
11.5 In addition to those persons who are entitled to vote at a meeting of shareholders, the only other persons entitled to be present at the meeting are the directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company, any persons invited to be present at the meeting by the directors or by the chair of the meeting and any persons entitled or required under the Act or these Articles to be present at the meeting; but if any of those persons does attend the meeting, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.
Requirement of Quorum
11.6 No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.
Lack of Quorum
11.7 If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:
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(a) in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and
(b) in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.
Lack of Quorum at Succeeding Meeting
11.8 If, at the meeting to which the meeting referred to in §11.7(b) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, two or more shareholders entitled to attend and vote at the meeting shall be deemed to constitute a quorum.
Chair
11.9 The following individual is entitled to preside as chair at a meeting of shareholders:
(a) the chair of the board, if any; or
(b) if the chair of the board is absent or unwilling to act as chair of the meeting, the president, if any.
Selection of Alternate Chair
11.10 If, at any meeting of shareholders, there is no chair of the board or president present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present may choose either one of their number or the solicitor of the Company to be chair of the meeting. If all of the directors present decline to take the chair or fail to so choose or if no director is present or the solicitor of the Company declines to take the chair, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.
Adjournments
11.11 The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
Notice of Adjourned Meeting
11.12 It is not necessary to give any notice of an adjourned meeting of shareholders or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.
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Decisions by Show of Hands or Poll
11.13 Subject to the Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by any shareholder entitled to vote who is present in person or by proxy.
Declaration of Result
11.14 The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under §11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.
Motion Need Not be Seconded
11.15 No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.
Casting Vote
11.16 In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.
Manner of Taking Poll
11.17 Subject to §11.18, if a poll is duly demanded at a meeting of shareholders:
(a) the poll must be taken:
(i) at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and
(ii) in the manner, at the time and at the place that the chair of the meeting directs;
(b) the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and
(c) the demand for the poll may be withdrawn by the person who demanded it.
Demand for Poll on Adjournment
11.18 A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.
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Chair Must Resolve Dispute
11.19 In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and the determination of the chair made in good faith is final and conclusive.
Casting of Votes
11.20 On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.
No Demand for Poll on Election of Chair
11.21 No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.
Demand for Poll Not to Prevent Continuance of Meeting
11.22 The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.
Retention of Ballots and Proxies
11.23 The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.
PART 12
VOTES OF SHAREHOLDERS
Number of Votes by Shareholder or by Shares
12.1 Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under §12.3:
(a) on a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and
(b) on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.
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Votes of Persons in Representative Capacity
12.2 A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.
Votes by Joint Holders
12.3 If there are joint shareholders registered in respect of any share:
(a) any one of the joint shareholders may vote at any meeting of shareholders, personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or
(b) if more than one of the joint shareholders is present at any meeting of shareholders, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.
Legal Personal Representatives as Joint Shareholders
12.4 Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of §12.3, deemed to be joint shareholders registered in respect of that share.
Representative of a Corporate Shareholder
12.5 If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:
(a) for that purpose, the instrument appointing a representative must be received:
(i) at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting or any adjourned meeting; or
(ii) at the meeting or any adjourned meeting, by the chair of the meeting or adjourned meeting or by a person designated by the chair of the meeting or adjourned meeting;
(b) if a representative is appointed under this §12.5:
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(i) the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and
(ii) the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.
Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.
Proxy Provisions Do Not Apply to All Companies
12.6 If and for so long as the Company is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions as part of its Articles or to which the Statutory Reporting Company Provisions apply, then §12.7 to §12.15 are not mandatory, however the directors of the Company are authorized to apply all or part of such sections or to adopt alternative procedures for proxy form, deposit and revocation procedures to the extent that the directors deem necessary in order to comply with securities laws applicable to the Company.
Appointment of Proxy Holders
12.7 Every shareholder of the Company entitled to vote at a meeting of shareholders may, by proxy, appoint one or more (but not more than two) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.
Alternate Proxy Holders
12.8 A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.
Proxy Holder Need Not Be Shareholder
12.9 A proxy holder need not be a shareholder of the Company.
Deposit of Proxy
12.10 A proxy for a meeting of shareholders must:
(a) be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting or any adjourned meeting; or
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(b) unless the notice provides otherwise, be received, at the meeting or any adjourned meeting, by the chair of the meeting or adjourned meeting or by a person designated by the chair of the meeting or adjourned meeting.
A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages, including through Internet or telephone voting or by email, if permitted by the notice calling the meeting or the information circular for the meeting.
Validity of Proxy Vote
12.11 A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:
(a) at the registered office of the Company, at any time up to and including the last business day before the day set for the holding of the meeting or any adjourned meeting at which the proxy is to be used; or
(b) at the meeting or any adjourned meeting by the chair of the meeting or adjourned meeting, before any vote in respect of which the proxy has been given has been taken.
Form of Proxy
12.12 A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:
Amarc Resources Ltd.
(the Company)
The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.
Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if given in respect of all shares registered in the name of the undersigned): _____________________
Signed [month, day, year] | |
[Signature of shareholder] | |
[Name of shareholderprinted] |
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Revocation of Proxy
12.13 Subject to §12.14, every proxy may be revoked by an instrument in writing that is received:
(a) at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting or any adjourned meeting at which the proxy is to be used; or
(b) at the meeting or any adjourned meeting, by the chair of the meeting or adjourned meeting, before any vote in respect of which the proxy has been given has been taken.
Revocation of Proxy Must Be Signed
12.14 An instrument referred to in §12.13 must be signed as follows:
(a) if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or the shareholders legal personal representative or trustee in bankruptcy;
(b) if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under §12.5.
Production of Evidence of Authority to Vote
12.15 The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.
PART 13
DIRECTORS
First Directors; Number of Directors
13.1 The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Act. The number of directors, excluding additional directors appointed under §14.8, is set at:
(a) subject to §(b) and §(c), the number of directors that is equal to the number of the Companys first directors;
(b) if the Company is a public company, the greater of three and the most recently set of:
(i) the number of directors set by a resolution of the directors (whether or not previous notice of the resolution was given); and
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(ii) the number of directors in office pursuant to §14.4;
(c) if the Company is not a public company, the most recently set of:
(i) the number of directors set by a resolution of the directors (whether or not previous notice of the resolution was given); and
(ii) the number of directors in office pursuant to §14.4.
Change in Number of Directors
13.2 If the number of directors is set under §13.1(b)(i) or §13.1(c)(i):
(a) the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors up to that number; or
(b) if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of directors up to that number then the directors, subject to §14.8, may appoint directors to fill those vacancies.
Directors Acts Valid Despite Vacancy
13.3 An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.
Qualifications of Directors
13.4 A director is not required to hold a share as qualification for his or her office but must be qualified as required by the Act to become, act or continue to act as a director.
Remuneration of Directors
13.5 The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders.
Reimbursement of Expenses of Directors
13.6 The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.
Special Remuneration for Directors
13.7 If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, he or she may be paid remuneration fixed by the directors, or at the option of the directors, fixed by ordinary resolution, and such remuneration will be in addition to any other remuneration that he or she may be entitled to receive.
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Gratuity, Pension or Allowance on Retirement of Director
13.8 Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
PART 14
ELECTION AND REMOVAL OF DIRECTORS
Election at Annual General Meeting
14.1 At every annual general meeting and in every unanimous resolution contemplated by §10.2:
(a) the shareholders entitled to vote at the annual general meeting for the election of directors must elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and
(b) all the directors cease to hold office immediately before the election or appointment of directors under §(a), but are eligible for re-election or re-appointment.
Consent to be a Director
14.2 No election, appointment or designation of an individual as a director is valid unless:
(a) that individual consents to be a director in the manner provided for in the Act;
(b) that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or
(c) with respect to first directors, the designation is otherwise valid under the Act.
Failure to Elect or Appoint Directors
14.3 If:
(a) the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by §10.2, on or before the date by which the annual general meeting is required to be held under the Act; or
(b) the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by §10.2, to elect or appoint any directors;
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then each director then in office continues to hold office until the earlier of:
(c) when his or her successor is elected or appointed; and
(d) when he or she otherwise ceases to hold office under the Act or these Articles.
Places of Retiring Directors Not Filled
14.4 If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles but their term of office shall expire when new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.
Directors May Fill Casual Vacancies
14.5 Any casual vacancy occurring in the board of directors may be filled by the directors.
Remaining Directors Power to Act
14.6 The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of calling a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Act, for any other purpose.
Shareholders May Fill Vacancies
14.7 If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.
Additional Directors
14.8 Notwithstanding §13.1 and §13.2, between annual general meetings or by unanimous resolutions contemplated by §10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this §14.8 must not at any time exceed:
(a) one-third of the number of first directors, if, at the time of the appointments, one or more of the first directors have not yet completed their first term of office; or
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(b) in any other case, one-third of the number of the current directors who were elected or appointed as directors other than under this §14.8.
Any director so appointed ceases to hold office immediately before the next election or appointment of directors under §14.1(a), but is eligible for re-election or re-appointment.
Ceasing to be a Director
14.9 A director ceases to be a director when:
(a) the term of office of the director expires;
(b) the director dies;
(c) the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or
(d) the director is removed from office pursuant to §14.10 or §14.11.
Removal of Director by Shareholders
14.10 The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.
Removal of Director by Directors
14.11 The directors may remove any director before the expiration of his or her term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.
PART 15
ALTERNATE DIRECTORS
Appointment of Alternate Director
15.1 Any director (an appointor) may by notice in writing received by the Company appoint any person (an appointee) who is qualified to act as a director to be his or her alternate to act in his or her place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to his or her appointor within a reasonable time after the notice of appointment is received by the Company.
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Notice of Meetings
15.2 Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which his or her appointor is a member and to attend and vote as a director at any such meetings at which his or her appointor is not present.
Alternate for More than One Director Attending Meetings
15.3 A person may be appointed as an alternate director by more than one director, and an alternate director:
(a) will be counted in determining the quorum for a meeting of directors once for each of his or her appointors and, in the case of an appointee who is also a director, once more in that capacity;
(b) has a separate vote at a meeting of directors for each of his or her appointors and, in the case of an appointee who is also a director, an additional vote in that capacity;
(c) will be counted in determining the quorum for a meeting of a committee of directors once for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a directors, once more in that capacity; and
(d) has a separate vote at a meeting of a committee of directors for each of his or her appointors who is a member of that committee and, in the case of an appointee who is also a member of that committee as a director, an additional vote in that capacity.
Consent Resolutions
15.4 Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her appointor any resolutions to be consented to in writing.
Alternate Director an Agent
15.5 Every alternate director is deemed to be the agent of his or her appointor.
Revocation or Amendment of Appointment of Alternate Director
15.6 An appointor may at any time, by notice in writing received by the Company, revoke or amend the terms of the appointment of an alternate director appointed by him or her.
Ceasing to be an Alternate Director
15.7 The appointment of an alternate director ceases when:
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(a) his or her appointor ceases to be a director and is not promptly re-elected or reappointed;
(b) the alternate director dies;
(c) the alternate director resigns as an alternate director by notice in writing provided to the Company or a lawyer for the Company;
(d) the alternate director ceases to be qualified to act as a director; or
(e) the term of his appointment expires, or his or her appointor revokes the appointment of the alternate directors.
Remuneration and Expenses of Alternate Director
15.8 The Company may reimburse an alternate director for the reasonable expenses that would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.
PART 16
POWERS AND DUTIES OF DIRECTORS
Powers of Management
16.1 The directors must, subject to the Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Act or by these Articles, required to be exercised by the shareholders of the Company. Notwithstanding the generality of the foregoing, the directors may set the remuneration of the auditor of the Company.
Appointment of Attorney of Company
16.2 The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.
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PART 17
INTERESTS OF DIRECTORS AND OFFICERS
Obligation to Account for Profits
17.1 A director or senior officer who holds a disclosable interest (as that term is used in the Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Act.
Restrictions on Voting by Reason of Interest
17.2 A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.
Interested Director Counted in Quorum
17.3 A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.
Disclosure of Conflict of Interest or Property
17.4 A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individuals duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Act.
Director Holding Other Office in the Company
17.5 A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.
No Disqualification
17.6 No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.
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Professional Services by Director or Officer
17.7 Subject to the Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.
Director or Officer in Other Corporations
17.8 A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.
PART 18
PROCEEDINGS OF DIRECTORS
Meetings of Directors
18.1 The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.
Voting at Meetings
18.2 Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting has a second or casting vote.
Chair of Meetings
18.3 The following individual is entitled to preside as chair at a meeting of directors:
(a) the chair of the board, if any;
(b) in the absence of the chair of the board, the president, if any, if the president is a director; or
(c) any other director chosen by the directors if:
(i) neither the chair of the board nor the president, if a director, is present at the meeting within 15 minutes after the time set for holding the meeting;
(ii) neither the chair of the board nor the president, if a director, is willing to chair the meeting; or
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(iii) the chair of the board and the president, if a director, have advised the secretary, if any, or any other director, that they will not be present at the meeting.
Meetings by Telephone or Other Communications Medium
18.4 A director may participate in a meeting of the directors or of any committee of the directors:
(a) in person; or
(b) by telephone or by other communications medium if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other.
A director who participates in a meeting in a manner contemplated by this §18.4 is deemed for all purposes of the Act and these Articles to be present at the meeting and to have agreed to participate in that manner.
Calling of Meetings
18.5 A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.
Notice of Meetings
18.6 Other than for meetings held at regular intervals as determined by the directors pursuant to §18.1, 48 hours notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors by any method set out in §24.1 or orally or by telephone.
When Notice Not Required
18.7 It is not necessary to give notice of a meeting of the directors to a director if:
(a) the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or
(b) the director has waived notice of the meeting.
Meeting Valid Despite Failure to Give Notice
18.8 The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director, does not invalidate any proceedings at that meeting.
Waiver of Notice of Meetings
18.9 Any director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director. Attendance of a director or alternate director at a meeting of the directors is a waiver of notice of the meeting unless that director or alternate director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
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Quorum
18.10 The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be a majority of the directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.
Validity of Acts Where Appointment Defective
18.11 Subject to the Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.
Consent Resolutions in Writing
18.12 A resolution of the directors or of any committee of the directors may be passed without a meeting:
(a) in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or
(b) in the case of a resolution to approve a contract or transaction in respect of which a director has disclosed that he or she has or may have a disclosable interest, if each of the other directors who have not made such a disclosure consents in writing to the resolution.
A consent in writing under this Part 18 may be by signed document, fax, email or any other method of transmitting legibly recorded messages. A consent in writing may be in two or more counterparts which together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the directors passed in accordance with this §18.12 is effective on the date stated in the consent in writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.
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PART 19
EXECUTIVE AND OTHER COMMITTEES
Appointment and Powers of Executive Committee
19.1 The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors powers, except:
(a) the power to fill vacancies in the board of directors;
(b) the power to remove a director;
(c) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(d) such other powers, if any, as may be set out in the resolution or any subsequent directors resolution.
Appointment and Powers of Other Committees
19.2 The directors may, by resolution:
(a) appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;
(b) delegate to a committee appointed under §(a) any of the directors powers, except:
(i) the power to fill vacancies in the board of directors;
(ii) the power to remove a director;
(iii) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(iv) the power to appoint or remove officers appointed by the directors; and
(c) make any delegation referred to in §(b) subject to the conditions set out in the resolution or any subsequent directors resolution.
Obligations of Committees
19.3 Any committee appointed under §19.1 or §19.2, in the exercise of the powers delegated to it, must:
(a) conform to any rules that may from time to time be imposed on it by the directors; and
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(b) report every act or thing done in exercise of those powers at such times as the directors may require.
Powers of Board
19.4 The directors may, at any time, with respect to a committee appointed under §19.1 or §19.2:
(a) revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;
(b) terminate the appointment of, or change the membership of, the committee; and
(c) fill vacancies in the committee.
Committee Meetings
19.5 Subject to §19.3(a) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under §19.1 or §19.2:
(a) the committee may meet and adjourn as it thinks proper;
(b) the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;
(c) a majority of the members of the committee constitutes a quorum of the committee; and
(d) questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.
PART 20
OFFICERS
Directors May Appoint Officers
20.1 The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.
Functions, Duties and Powers of Officers
20.2 The directors may, for each officer:
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(a) determine the functions and duties of the officer;
(b) entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and
(c) revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.
Qualifications
20.3 No person may be appointed as an officer unless that person is qualified in accordance with the Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as a managing director must be a director. Any other officer need not be a director.
Remuneration and Terms of Appointment
20.4 All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.
PART 21
INDEMNIFICATION
Definitions
21.1 In this Part 21:
(a) eligible party , in relation to a company, means an individual who:
(i) is or was a director, alternate director or officer of the Company;
(ii) is or was a director, alternate director or officer of another corporation
(A) at a time when the corporation is or was an affiliate of the Company, or
(B) at the request of the Company; or
(iii) at the request of the Company, is or was, or holds or held a position equivalent to that of, a director, alternate director or officer of a partnership, trust, joint venture or other unincorporated entity;
and includes, except in the definition of eligible proceeding, and §163(1)(c) and (d) and §165 of the Act, the heirs and personal or other legal representatives of that individual;
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(b) eligible penalty means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;
(c) eligible proceeding means a proceeding in which an eligible party or any of the heirs and personal or other legal representatives of the eligible party, by reason of the eligible party being or having been a director, alternate director or officer of, or holding or having held a position equivalent to that of a director, alternate director or officer of, the Company or an associated corporation
(i) is or may be joined as a party; or
(ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;
(d) expenses has the meaning set out in the Act and includes costs, charges and expenses, including legal and other fees, but does not include judgments, penalties, fines or amounts paid in settlement of a proceeding; and
(e) proceeding includes any legal proceeding or investigative action, whether current, threatened, pending or completed.
Mandatory Indemnification of Eligible Parties
21.2 Subject to the Act, the Company must indemnify each eligible party and the heirs and legal personal representatives of each eligible party against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each eligible party is deemed to have contracted with the Company on the terms of the indemnity contained in this §21.2.
Indemnification of Other Persons
21.3 Subject to any restrictions in the Act, the Company may agree to indemnify and may indemnify any person (including an eligible party) against eligible penalties and pay expenses incurred in connection with the performance of services by that person for the Company.
Authority to Advance Expenses
21.4 The Company may advance expenses to an eligible party to the extent permitted by and in accordance with the Act.
Non-Compliance with Act
21.5 Subject to the Act, the failure of an eligible party of the Company to comply with the Act or these Articles or, if applicable, any former Companies Act or former Articles does not, of itself, invalidate any indemnity to which he or she is entitled under this Part 21.
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Company May Purchase Insurance
21.6 The Company may purchase and maintain insurance for the benefit of any eligible party (or the heirs or legal personal representatives of any eligible party) against any liability incurred by any eligible party.
PART 22
DIVIDENDS
Payment of Dividends Subject to Special Rights
22.1 The provisions of this Part 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.
Declaration of Dividends
22.2 Subject to the Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.
No Notice Required
22.3 The directors need not give notice to any shareholder of any declaration under §22.2.
Record Date
22.4 The directors must set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months.
Manner of Paying Dividend
22.5 A resolution declaring a dividend may direct payment of the dividend wholly or partly in money or by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company or any other corporation, or in any one or more of those ways.
Settlement of Difficulties
22.6 If any difficulty arises in regard to a distribution under §22.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:
(a) set the value for distribution of specific assets;
(b) determine that money in substitution for all or any part of the specific assets to which any shareholders are entitled may be paid to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and
- 36 -
(c) vest any such specific assets in trustees for the persons entitled to the dividend.
When Dividend Payable
22.7 Any dividend may be made payable on such date as is fixed by the directors.
Dividends to be Paid in Accordance with Number of Shares
22.8 All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.
Receipt by Joint Shareholders
22.9 If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.
Dividend Bears No Interest
22.10 No dividend bears interest against the Company.
Fractional Dividends
22.11 If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.
Payment of Dividends
22.12 Any dividend or other distribution payable in money in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the registered address of the shareholder, or in the case of joint shareholders, to the registered address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.
Capitalization of Retained Earnings or Surplus
22.13 Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any retained earnings or surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the retained earnings or surplus so capitalized or any part thereof.
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PART 23
ACCOUNTING RECORDS AND AUDITORS
Recording of Financial Affairs
23.1 The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Act.
Inspection of Accounting Records
23.2 Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.
Remuneration of Auditor
23.3 The directors may set the remuneration of the auditor of the Company.
PART 24
NOTICES
Method of Giving Notice
24.1 Unless the Act or these Articles provide otherwise, a notice, statement, report or other record required or permitted by the Act or these Articles to be sent by or to a person may be sent by:
(a) mail addressed to the person at the applicable address for that person as follows:
(i) for a record mailed to a shareholder, the shareholders registered address;
(ii) for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class;
(iii) in any other case, the mailing address of the intended recipient;
(b) delivery at the applicable address for that person as follows, addressed to the person:
(i) for a record delivered to a shareholder, the shareholders registered address;
(ii) for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class;
- 38 -
(iii) in any other case, the delivery address of the intended recipient;
(c) sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;
(d) sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class;
(e) physical delivery to the intended recipient.
Deemed Receipt of Mailing
24.2 A notice, statement, report or other record that is:
(a) mailed to a person by ordinary mail to the applicable address for that person referred to in §24.1 is deemed to be received by the person to whom it was mailed on the day (Saturdays, Sundays and holidays excepted) following the date of mailing;
(b) faxed to a person to the fax number provided by that person referred to in §24.1 is deemed to be received by the person to whom it was faxed on the day it was faxed; and
(c) emailed to a person to the e-mail address provided by that person referred to in §24.1 is deemed to be received by the person to whom it was e-mailed on the day that it was emailed.
Certificate of Sending
24.3 A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that capacity on behalf of the Company stating that a notice, statement, report or other record was sent in accordance with §24.1 is conclusive evidence of that fact.
Notice to Joint Shareholders
24.4 A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing such record to the joint shareholder first named in the central securities register in respect of the share.
Notice to Legal Personal Representatives and Trustees
24.5 A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:
(a) mailing the record, addressed to them:
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(i) by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and
(ii) at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or
(b) if an address referred to in §(a)(ii) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.
Undelivered Notices
24.6 If on two consecutive occasions, a notice, statement, report or other record is sent to a shareholder pursuant to §24.1 and on each of those occasions any such record is returned because the shareholder cannot be located, the Company shall not be required to send any further records to the shareholder until the shareholder informs the Company in writing of his or her new address.
PART 25
SEAL
Who May Attest Seal
25.1 Except as provided in §25.2 and §25.3, the Companys seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:
(a) any two directors;
(b) any officer, together with any director;
(c) if the Company only has one director, that director; or
(d) any one or more directors or officers or persons as may be determined by the directors.
Sealing Copies
25.2 For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite §25.1, the impression of the seal may be attested by the signature of any director or officer or the signature of any other person as may be determined by the directors.
Mechanical Reproduction of Seal
25.3 The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and such persons as are authorized under §25.1 to attest the Companys seal may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.
- 40 -
PART 26
SPECIAL RIGHTS AND RESTRICTIONS
PREFERRED SHARES
Special Rights and Restrictions
26.1 The Preferred shares without par value shall have attached thereto the following special rights and restrictions:
(a) The holders of the Preferred shares shall be entitled to receive notices of and to attend and vote at all Meetings of the shareholders of the Company in the same manner and to the same extent as are the holders of the common shares;
(b) The holders of the Preferred shares shall be entitled to receive, and the Company shall pay thereon as and when declared by the board of directors out of the monies of the Company properly applicable to the payment of dividends, dividends which shall be in the amounts and upon the conditions that shall have been agreed upon by the board of directors at the time of issuance and sale of each such share. More specifically, the directors of the Company shall be entitled, upon agreeing to sell a Preferred share, to contract as to the rate of dividend which will be paid on the share, if any, how often the dividends are to be paid, whether they are to be accumulative and whether the rate is fixed for the life of the share or shall be subject to declaration by the board of directors each year;
(c) The holders of the Preferred shares shall be entitled to exchange them for Common shares in the capital of the Company; provided that when the directors agree to the issuance of any Preferred shares they shall be entitled to specify the terms, conditions and rates during which and upon which the holders of these Preferred shares subject to such specifications shall be entitled to exercise these conversion privileges;
- 41 -
(d) The Company may, upon giving notice as hereinafter provided, redeem the whole or any part of the Preferred shares on payment for each share to be redeemed of the amount paid up thereon, together with all dividends declared thereon and unpaid. If part only of the then outstanding Preferred shares is at any time to be redeemed, the shares so to be redeemed shall be selected by lot in such manner as the directors in their discretion shall decide or, if the directors so determine, may be redeemed pro rata, disregarding fractions, and the directors may make such adjustments as may be necessary to avoid the redemption of fractional parts of shares. Not less than thirty (30) days' notice in writing of such redemption shall be given by mailing such notice to the registered holders of the shares to be redeemed, specifying the date and place or places of redemption; if notice of any such redemption is given by the Company in the manner aforesaid and an amount sufficient to redeem the shares is deposited with any trust company or chartered bank in Canada as specified in the notice on or before the date fixed for redemption, dividends on the Preferred shares to be redeemed shall cease after the date so fixed for redemption and the holders thereof shall thereafter have no rights against the Company in respect thereof except, upon the surrender of certificates for such shares, to receive payment therefor out of the money so deposited. After the redemption price of such shares has been deposited with any trust company or chartered bank in Canada, as aforesaid, notice shall be given to the holders of any Preferred shares called for redemption who have failed to present the certificates representing such shares within two (2) months after the date specified for redemption that the money has been so deposited and may be obtained by the holders of the said Preferred shares upon presentation of the certificates representing such shares called for redemption at the said trust company or chartered bank. The Company will redeem such Preferred shares at the price so specified, provided the redemption will not be in breach of any of the provisions of the Act;
(e) The Preferred shares shall rank, both as regards dividends and return of capital, in priority to all other shares of the Company, but shall not be entitled to any further right to participate in the profits or assets of the Company.
(f) In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Preferred shares shall be entitled to receive, before any distribution of any part of the property and assets of the Company among the holders of any other shares, an amount equal to one hundred percent (100%) of the amount paid thereon and any dividends declared thereon and unpaid, and no more; and
(g) The directors of the Company may issue the Preferred shares in one or more series. In addition, the directors may, by resolution, alter the Notice of Articles to fix the number of shares in and to determine the designation of the shares of each series. The directors may also, by resolution, alter the Notice of Articles to create, define and attach special rights and restrictions to the shares of each series, subject to the special rights and restrictions attached to the Preferred shares.
EXHIBIT 12.1
SARBANES-OXLEY CEO CERTIFICATION
I, Ronald W. Thiessen, Chief Executive Officer of Amarc Resources Ltd., certify that:
1. |
I have reviewed this Annual Report on Form 20-F of Amarc Resources Ltd.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
|
4. |
The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and |
|
5. |
The Companys other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the Companys auditors and the audit committee of Companys board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
Date: September 30, 2010
/s/ R.
Thiessen
________________________________
By: Ronald W. Thiessen
Title: Chief
Executive Officer
EXHIBIT 12.2
SARBANES-OXLEY CEO CERTIFICATION
I, Paul Mann, Chief Financial Officer of Amarc Resources Ltd., certify that:
1. |
I have reviewed this Annual Report on Form 20-F of Amarc Resources Ltd.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
|
4. |
The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and |
|
5. |
The Companys other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the Companys auditors and the audit committee of Companys board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
Date: September 30, 2010
/s/ P.
Mann
________________________________
By:
Paul Mann
Title: Chief Financial Officer
EXHIBIT 13.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Ronald W. Thiessen, Chief Executive Officer of Amarc Resources Ltd. (the Company), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(i) the Annual Report on Form 20-F of the Company for the fiscal year ended March 31, 2010 (the Annual Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: September 30, 2010
/s/ Ronald
Thiessen
_________________________
By: Ronald W. Thiessen
Title: Chief Executive
Officer
This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Companys Annual Report on Form 20-F. A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies this Annual Report on Form 20-F pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
EXHIBIT 13.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul Mann, Chief Financial Officer of Amarc Resources Ltd. (the Company), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(i) the Annual Report on Form 20-F of the Company for the fiscal year ended March 31, 2010 (the Annual Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: September 30, 2010
/s/ Paul
Mann
_______________________________
By: Paul Mann
Title:
Chief Financial Officer
This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Companys Annual Report on Form 20-F. A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies this Annual Report on Form 20-F pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED
MARCH 31, 2010, 2009 and 2008
(Expressed in Canadian Dollars, unless otherwise stated)
AUDITORS' REPORT
To the Shareholders of Amarc Resources Ltd.
We have audited the balance sheets of Amarc Resources Ltd. as at March 31, 2010 and 2009 and the statements of operations and comprehensive loss, shareholders equity and cash flows for each of the years in the three year period ended March 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards (GAAS) in Canada and the standards of the Public Company Accounting Oversight Board (United States) (PCAOB). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2010 and 2009 and the results of its operations and its cash flows for each of the years in the three year period ended March 31, 2010 in accordance with Canadian generally accepted accounting principles.
De Vissser Gray LLP
CHARTERED ACCOUNTANTS
Vancouver, British Columbia
July 26, 2010
AMARC RESOURCES LTD. |
Consolidated Balance Sheets |
(Expressed in Canadian Dollars) |
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board of Directors
/s/ Robert A. Dickinson | /s/ Rene G. Carrier |
Robert A. Dickinson | Rene G. Carrier |
Director | Director |
AMARC RESOURCES LTD. |
Consolidated Statements of Operations and Comprehensive Loss |
(Expressed in Canadian Dollars) |
Years ended March 31 | |||||||||
2010 | 2009 | 2008 | |||||||
Expenses | |||||||||
Amortization | $ | 16,228 | $ | 21,704 | $ | 5,092 | |||
Exploration (schedule) | 3,195,315 | 4,619,185 | 3,066,939 | ||||||
Legal, accounting, and audit | 36,289 | 37,120 | 55,162 | ||||||
Management and consulting | 23,241 | 58,464 | 48,795 | ||||||
Office and administration | 153,518 | 178,078 | 183,842 | ||||||
Salaries and benefits | 311,512 | 208,906 | 257,060 | ||||||
Shareholder communication | 103,538 | 122,932 | 72,860 | ||||||
Stock-based compensation (note 8(c)) | 138,385 | 244,061 | | ||||||
Travel and conference | 48,493 | 53,960 | 96,425 | ||||||
Trust and filing | 59,138 | 25,915 | 26,903 | ||||||
4,085,657 | 5,570,325 | 3,813,078 | |||||||
Other items | |||||||||
Foreign exchange loss (gain) | 39,576 | (218,818 | ) | 138,026 | |||||
Gain on sale of marketable securities (note 9(b)) | | | (68,992 | ) | |||||
Gain on disposal of fixed assets (note 9(c)) | | (14,007 | ) | | |||||
Interest and other income | (23,688 | ) | (309,149 | ) | (315,812 | ) | |||
Tax related to flow-through financing | | 80,809 | | ||||||
Loss for the year | $ | 4,101,545 | $ | 5,109,160 | $ | 3,566,300 | |||
Other comprehensive loss: | |||||||||
Unrealized loss on available-for-sale marketable securities (note 5) | 2,625 | | | ||||||
Total comprehensive loss for the period | $ | 4,104,170 | $ | 5,109,160 | $ | 3,566,300 | |||
Basic and diluted loss per share | $ | 0.05 | $ | 0.07 | $ | 0.06 | |||
Weighted average number of common shares outstanding | 75,376,733 | 68,465,500 | 63,343,763 |
The accompanying notes are an integral part of these consolidated financial statements.
AMARC RESOURCES LTD. |
Consolidated Statements of Shareholders' Equity |
(Expressed in Canadian Dollars) |
Year ended | Year ended | Year ended | ||||||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||||||||
Share capital | Number of shares | Number of shares | Number of shares | |||||||||||||||
Balance at beginning of the year | 72,739,473 | $ | 31,247,065 | 67,739,473 | $ | 30,747,065 | 62,949,473 | $ | 27,287,248 | |||||||||
Share issuance pursuant to the Newton property
option
agreement at $0.17 per share (note 8(b)) |
100,000 |
17,000 |
|
|
|
|
||||||||||||
Exercise of share purchase warrants at $0.55 per share | | | | | 4,790,000 | 2,634,500 | ||||||||||||
Fair value of warrants allocated to shares issued on exercise | | | | | | 825,317 | ||||||||||||
Private placement at $0.10 per share, net of issue costs (note 8(b)) | | | 5,000,000 | 500,000 | | | ||||||||||||
Private placement at $0.50 per share, net of issue costs | 11,000,000 | 5,210,298 | | | | | ||||||||||||
Balance at end of the year | 83,839,473 | $ | 36,474,363 | 72,739,473 | $ | 31,247,065 | 67,739,473 | $ | 30,747,065 | |||||||||
Contributed surplus | ||||||||||||||||||
Balance at beginning of the year | $ | 1,713,992 | $ | 1,469,931 | $ | 2,295,248 | ||||||||||||
Fair value of warrants allocated to shares issued on exercise | | | (825,317 | ) | ||||||||||||||
Stock-based compensation | 138,385 | 244,061 | | |||||||||||||||
Balance at end of the year | $ | 1,852,377 | $ | 1,713,992 | $ | 1,469,931 | ||||||||||||
Accumulated other comprehensive loss | ||||||||||||||||||
Balance at beginning of the year | $ | | $ | | $ | | ||||||||||||
Unrealized loss on available-for-sale marketable securities (note 5) | (2,625 | ) | | | ||||||||||||||
Balance at end of the year | $ | (2,625 | ) | $ | | $ | | |||||||||||
Deficit | ||||||||||||||||||
Balance at beginning of the year | $ | (29,567,680 | ) | $ | (24,458,520 | ) | $ | (20,892,220 | ) | |||||||||
Loss for the year | (4,101,545 | ) | (5,109,160 | ) | (3,566,300 | ) | ||||||||||||
Balance at end of the year | $ | (33,669,225 | ) | $ | (29,567,680 | ) | $ | (24,458,520 | ) | |||||||||
TOTAL SHAREHOLDERS' EQUITY | $ | 4,654,890 | $ | 3,393,377 | $ | 7,758,476 |
The accompanying notes are an integral part of these consolidated financial statements.
AMARC RESOURCES LTD. |
Consolidated Statements of Cash Flows |
(Expressed in Canadian Dollars) |
Years ended March 31 | |||||||||
Cash provided by (used in) | 2010 | 2009 | 2008 | ||||||
Operating activities | |||||||||
Loss for the year | $ | (4,101,545 | ) | $ | (5,109,160 | ) | (3,566,300 | ) | |
Items not involving cash: | |||||||||
Amortization | 16,228 | 21,704 | 5,092 | ||||||
Common shares received, included in exploration expenses | (48,001 | ) | | | |||||
Common shares issued, included in exploration expenses | 17,000 | | | ||||||
Foreign exchange loss (gain) | 9,863 | (12,216 | ) | 97,435 | |||||
Stock-based compensation (note 8(c)) | 138,385 | 244,061 | | ||||||
(Gain) on sale of marketable securities | | | (68,992 | ) | |||||
(Gain) on disposal of equipment | | (14,007 | ) | | |||||
Non-cash interest income (note 9(b)) | | | (53,629 | ) | |||||
Changes in non-cash working capital items: | |||||||||
Amounts receivable and prepaid expenses | 2,136 | (17,204 | ) | (136,812 | ) | ||||
Balances due from and due to related parties | 70,799 | (282,902 | ) | 202,079 | |||||
Accounts payable and accrued liabilities | (340 | ) | (11,038 | ) | (33,636 | ) | |||
Cash used for operating activities | (3,895,475 | ) | (5,180,762 | ) | (3,554,763 | ) | |||
Investing activities | |||||||||
Proceeds from sale of equipment | 34,148 | | | ||||||
Proceeds from sale of marketable securities (note 9(b)) | | | 315,499 | ||||||
Purchase of equipment | | (74,097 | ) | | |||||
Repayment of loan provided to a related party (note 9(b)) | | | 5,500,000 | ||||||
Cash provided by (used for) investing activities | 34,148 | (74,097 | ) | 5,815,499 | |||||
Financing activities | |||||||||
Issuance of share capital, net of costs ( note 8(b)) | 5,210,298 | 500,000 | 2,634,500 | ||||||
Cash provided by financing activities | 5,210,298 | 500,000 | 2,634,500 | ||||||
Effect of exchange rate fluctuations on cash held | (9,863 | ) | 12,216 | (97,435 | ) | ||||
Increase (decrease) in cash and cash equivalents | 1,339,108 | (4,742,643 | ) | 4,797,801 | |||||
Cash and cash equivalents, beginning of year | 2,971,352 | 7,713,995 | 2,916,194 | ||||||
Cash and cash equivalents, end of year | $ | 4,310,460 | $ | 2,971,352 | $ | 7,713,995 | |||
Components of cash and cash equivalents are as follows: | |||||||||
Cash | $ | 4,310,460 | $ | 338,242 | $ | 511,900 | |||
Treasury bills and banker's acceptances | | 2,633,110 | 6,255,967 | ||||||
Commercial paper | | | 946,128 | ||||||
Cash and cash equivalents, end of year | $ | 4,310,460 | $ | 2,971,352 | $ | 7,713,995 | |||
Supplementary cash flow information: | |||||||||
Interest paid | $ | | $ | | $ | | |||
Taxes paid | $ | | $ | | $ | | |||
Interest received | $ | 23,688 | $ | 309,149 | $ | 262,942 | |||
Non cash financing and investing activities: | |||||||||
Common shares received, included in exploration expenses (note 5) | $ | 48,001 | $ | | $ | | |||
Common shares received from Rockwell Diamonds Inc. (note 9(b)) | $ | | $ | | $ | 246,507 | |||
Fair value of share warrants transferred to share capital upon exercise | $ | | $ | | $ | 825,317 | |||
Issuance of common shares for property option fees (note 8(b)) | $ | 17,000 | $ | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
AMARC RESOURCES LTD. |
Consolidated Schedules of Exploration Expenses |
(Expressed in Canadian Dollars) |
Newton | Sitlika | ||||||||||||||
program | program | Generative | Other | ||||||||||||
British | British | British | (including | ||||||||||||
Columbia | Columbia | Columbia | METC-BC) | Total | |||||||||||
Exploration expenses for the year ended March 31, 2010 | |||||||||||||||
Assays and analysis | $ | 149,350 | $ | 23,243 | $ | 54,657 | $ | 24,319 | $ | 251,569 | |||||
Drilling | 617,938 | 1,178 | | 51,190 | 670,306 | ||||||||||
Engineering | 1,208 | | | | 1,208 | ||||||||||
Environmental | 1,534 | 106,312 | | 520 | 108,366 | ||||||||||
Equipment rental | 13,244 | 13,738 | | 1,547 | 28,529 | ||||||||||
Geological | 1,373,417 | 143,587 | 211,755 | 26,428 | 1,755,187 | ||||||||||
Graphics | 12,946 | 2,198 | 1,980 | 990 | 18,114 | ||||||||||
Helicopter | | 79,505 | 1,645 | 37,011 | 118,161 | ||||||||||
Mineral Exploration Tax Credit (METC-BC) | | | | (252,086 | ) | (252,086 | ) | ||||||||
Property fees and assessments | 9,339 | 26,837 | 12,258 | 26,185 | 74,619 | ||||||||||
Property option payments | 77,000 | | | | 77,000 | ||||||||||
Site activities | 151,796 | 72,675 | 3,956 | 26,620 | 255,047 | ||||||||||
Socioeconomic | 31,230 | 13,788 | 810 | 2,100 | 47,928 | ||||||||||
Travel and accommodation | 33,096 | 5,362 | 1,270 | 1,639 | 41,367 | ||||||||||
Incurred during fiscal 2010 | 2,472,098 | 488,423 | 288,331 | (53,537 | ) | 3,195,315 | |||||||||
Cumulative expenditures, March 31, 2009 | | 6,797,771 | 3,464,755 | 11,806,233 | 22,068,759 | ||||||||||
Cumulative expenditures, March 31, 2010 | $ | 2,472,098 | $ | 7,286,194 | $ | 3,753,086 | $ | 11,752,696 | $ | 25,264,074 | |||||
Exploration expenses for the year ended March 31, 2009 | |||||||||||||||
Assays and analysis | $ | | $ | 462,881 | $ | 24,415 | $ | 109,053 | $ | 596,349 | |||||
Drilling | | 806,590 | | | 806,590 | ||||||||||
Engineering | | 370,280 | 500 | | 370,780 | ||||||||||
Environmental | | 14,847 | | 628 | 15,475 | ||||||||||
Equipment rental | | 69,988 | 35,953 | 13,203 | 119,144 | ||||||||||
Geological | | 1,496,369 | 549,721 | 496,574 | 2,542,664 | ||||||||||
Graphics | | 6,004 | 10,008 | 2,845 | 18,857 | ||||||||||
Helicopter | | 582,325 | | 18,170 | 600,495 | ||||||||||
Mineral Exploration Tax Credit (METC-BC) | | | | (1,435,072 | ) | (1,435,072 | ) | ||||||||
Property fees and assessments | | 41,435 | 12,361 | 19,059 | 72,855 | ||||||||||
Property option payments | | 50,000 | | 10,000 | 60,000 | ||||||||||
Site activities | | 353,582 | 40,378 | 95,714 | 489,674 | ||||||||||
Socioeconomic | | 835 | 1,895 | | 2,730 | ||||||||||
Travel and accommodation | | 317,731 | 7,039 | 33,874 | 358,644 | ||||||||||
Incurred during fiscal 2009 | | 4,572,867 | 682,270 | (635,952 | ) | 4,619,185 | |||||||||
Cumulative expenditures, March 31, 2008 | | 2,224,904 | 2,782,485 | 12,442,185 | 17,449,574 | ||||||||||
Cumulative expenditures, March 31, 2009 | $ | | $ | 6,797,771 | $ | 3,464,755 | $ | 11,806,233 | $ | 22,068,759 | |||||
Exploration expenses for the year ended March 31, 2008 | |||||||||||||||
Assays and analysis | $ | | $ | 223,521 | $ | 23,113 | $ | 36,647 | $ | 283,281 | |||||
Engineering | | 7,581 | | | 7,581 | ||||||||||
Equipment rental | | 56,066 | 11,993 | 15,874 | 83,933 | ||||||||||
Geological | | 998,736 | 296,571 | 444,768 | 1,740,075 | ||||||||||
Graphics | | 10,728 | 3,218 | 7,182 | 21,128 | ||||||||||
Helicopter | | 380,857 | | 11,020 | 391,877 | ||||||||||
Property fees and assessments | | 51,393 | 2,528 | 13,568 | 67,489 | ||||||||||
Property option payments | | 50,000 | | 10,000 | 60,000 | ||||||||||
Site activities | | 295,404 | 23,997 | 53,090 | 372,491 | ||||||||||
Travel and accommodation | | 30,441 | 2,844 | 5,799 | 39,084 | ||||||||||
Incurred during fiscal 2008 | | 2,104,727 | 364,264 | 597,948 | 3,066,939 | ||||||||||
Cumulative expenditures, March 31, 2007 | | 120,177 | 2,418,221 | 11,844,237 | 14,382,635 | ||||||||||
Cumulative expenditures, March 31, 2008 | $ | | $ | 2,224,904 | $ | 2,782,485 | $ | 12,442,185 | $ | 17,449,574 |
The accompanying notes are an integral part of these consolidated financial statements.
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
1. |
NATURE AND CONTINUANCE OF OPERATIONS |
Amarc Resources Ltd. (the "Company") is incorporated under the laws of the province of British Columbia, and its principal business activity is the acquisition and exploration of mineral properties. Its principal mineral property interests are located in British Columbia. |
|
These consolidated financial statements have been prepared using Canadian generally accepted accounting principles (GAAP) assuming a going concern. The Company has incurred losses since inception and its ability to continue as a going concern depends upon its capacity to develop profitable operations and to continue to raise adequate financing. These consolidated financial statements do not reflect adjustments, which could be material, to the carrying values of assets and liabilities which may be required should the Company be unable to continue as a going concern. |
|
2. |
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION |
These consolidated financial statements are prepared in accordance with Canadian GAAP and are presented in Canadian dollars, and have been reconciled to the United States generally accepted accounting principles in note 13. |
|
These consolidated financial statements include the accounts of the Company and Precious Exploration Limited Partnership, which is subject to the Company's control and primary beneficial ownership. |
|
All material intercompany balances and transactions have been eliminated. |
|
3. |
SIGNIFICANT ACCOUNTING POLICIES |
(a) |
Cash and cash equivalents |
Cash and equivalents consist of cash and highly liquid investments, having maturity dates of three months or less from the date of purchase, which are readily convertible to known amounts of cash. |
|
(b) |
Equipment |
Equipment is recorded at cost and is amortized over its estimated useful life using the declining balance method at various rates ranging from 20% to 30% per annum. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(c) |
Mineral property interests and related asset retirement obligations |
The acquisition costs of mineral properties are deferred until the properties are placed into production, sold or abandoned. These costs are amortized on a unit-of-production basis over the estimated useful life of the related properties following the commencement of production, or written off if the properties are sold, allowed to lapse or abandoned, or when impairment has been determined to have occurred. If the deferred mineral property costs are determined not to be recoverable over the estimated useful life or are greater than the estimated fair market value, the unrecoverable portion is charged to operations in that period. |
|
Mineral property acquisition costs include the cash consideration and the fair market value of common shares, based on the trading price of the shares, on the date of issue or as otherwise provided under the agreement terms for the mineral property interest. Costs for properties for which the Company does not possess unrestricted ownership and exploration rights, such as option agreements, are expensed in the period incurred or until a feasibility study has determined that the property is capable of commercial production. |
|
Exploration costs and option payments are expensed in the period incurred. Option payments which are solely at the Company's discretion are recorded as they are made. |
|
Administrative expenditures are expensed in the period incurred. |
|
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected from the asset. If the carrying amount of the long-lived asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
|
The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company also records a corresponding asset value which is amortized over the same basis as the asset being retired. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost). |
|
The Company has no material asset retirement obligations as the disturbance at the exploration sites as at March 31, 2010 has been minimal. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(d) |
Government assistance |
Due to the uncertainty of approval associated with mineral exploration tax credits and other government grants for which the Company applies, government grants are recorded and credited to exploration expenses when the proceeds of these grants are actually received. |
|
(e) |
Share capital |
Common shares issued for mineral property interests are recorded at their fair market value based upon the trading price of the shares on the TSX Venture Exchange on the date of issue or as otherwise provided under the agreement terms to issue the shares. |
|
The proceeds from common shares issued pursuant to flow-through share financing agreements are credited to share capital and the tax benefits of the exploration expenditures incurred pursuant to these agreements are transferred to the purchaser of the flow-through shares. |
|
Share issue costs are deducted from share capital. |
|
(f) |
Stock-based compensation |
The Company accounts for all non-cash stock-based payments to non-employees, and employee awards that are direct awards of shares that call for settlement in cash or other assets, or that are share appreciation rights which call for settlement by the issuance of equity instruments, using the fair value method. |
|
Under the fair value method, stock -based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of non-cash stock-based payments is periodically re-measured until counterparty performance is complete, and any change therein is recognized in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of non-cash stock-based payments to service providers that are fully vested and non-forfeitable at the grant date is measured and recognized at that date. For awards that vest at the end of a vesting period, compensation cost is recognized on a straight-line basis; for awards that vest on a graded basis, compensation cost is recognized on a pro-rata basis over the vesting period. |
|
Consideration received by the Company upon the exercise of share purchase options and warrants, and the stock-based compensation previously credited to contributed surplus related to such options and warrants, is credited to share capital. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(g) |
Use of estimates |
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates include the determination of potential impairments of asset values, and rates for amortization of equipment, as well as the assumptions used in determining the fair value of non-cash stock-based compensation. Actual results could differ from those estimates. |
|
(h) |
Foreign currency translation |
All of the Company's foreign subsidiaries are considered integrated. |
|
Monetary assets and liabilities of the Company and its integrated foreign operations are translated into Canadian dollars at exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates unless such items are carried at market, in which case they are translated at the exchange rates in effect on the balance sheet date. Revenues and expenses, except amortization, are translated at average exchange rates for the period. Amortization is translated at the same exchange rates as the assets to which it relates. Foreign exchange gains or losses are recognized in the statement of operations. |
|
(i) |
Segment disclosures |
The Company is operating in a single reportable segment the acquisition, exploration and development of mineral properties in British Columbia, Canada. |
|
(j) |
Income taxes |
The Company uses the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are computed based on differences between the carrying amount of assets and liabilities on the balance sheet and their corresponding tax values, generally using the enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Future income tax assets also result from unused loss carry-forwards and other deductions. Future tax assets are recognized to the extent that they are considered more likely than not to be realized. The valuation of future income tax assets is adjusted, if necessary, by the use of a valuation allowance to reflect the estimated realizable amount. |
|
Under the Canadian Income Tax Act, a company may issue securities referred to as flow-through shares whereby the investor may claim the tax deductions arising from the qualifying expenditure of the proceeds by the company. When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, future income tax liabilities are recognized (renounced expenditures multiplied by the effective corporate tax rate), thereby reducing share capital. Previously unrecognized tax assets may then offset or eliminate the liability recorded. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(k) |
Loss per share |
Basic loss per share is calculated by dividing the loss for the period by the weighted average number of common shares outstanding during the period. |
|
Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common shares at the average market price during the period. |
|
When the Company is in a net loss position, diluted loss per share is not presented separately as the effect of the outstanding options and warrants would be anti-dilutive. |
|
(l) |
Impairment of long-lived assets |
The Company reviews and evaluates its long -lived assets, including mineral properties, plant and equipment, for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to its estimated undiscounted future cash flows expected to be generated by the asset. Measurement of an impairment loss is based on the excess of the estimated fair value of the asset over its carrying value. |
|
At each reporting period and whenever events or circumstances indicate that an asset's fair value may not be at least equal to its carrying value, management of the Company reviews the net carrying value. These reviews involve consideration of the fair value of each property to determine whether a permanent impairment in value has occurred and whether any asset write down is necessary. |
|
(m) |
Financial instruments |
All financial instruments, including derivatives, are included on the Companys balance sheet and measured either at fair value or, in certain circumstances when fair value may not be considered most relevant, at cost or amortized cost. Changes in fair value are recognized in the statements of operations or accumulated other comprehensive income, depending on the classification of the related instruments. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
All financial assets and liabilities are recognized when the entity becomes a party to the contract creating the asset or liability. All financial instruments are classified into one of the following categories: held for trading, held-to-maturity, loans and receivables, available-for-sale financial assets, or other financial liabilities. Initial and subsequent measurement and recognition of changes in the value of financial instruments depends on their initial classification:
|
Held-to-maturity investments, loans and receivables, and other financial liabilities are initially measured at fair value and subsequently measured at amortized cost. Amortization of premiums or discounts and losses due to impairment are included in current period net earnings (loss). |
|
|
Available-for-sale financial assets are measured at fair value. Changes in fair value are included in other comprehensive income (loss) until the gain or loss is recognized in net earnings (loss). |
|
|
Held for trading financial instruments are measured at fair value. All changes in fair value are included in net earnings (loss) in the period in which they arise. |
|
|
All derivative financial instruments are measured at fair value, even when they are part of a hedging relationship. Changes in fair value are included in net earnings (loss) in the period in which they arise, except for cash flow hedge transactions which qualify for hedge accounting treatment in which case gains and losses are recognized in other comprehensive income (loss). |
In accordance with this standard, the Company had classified its financial instruments as follows:
(i) |
Marketable securities are classified as available-for-sale securities and are measured at fair market value with unrealized gains or losses recorded in comprehensive income (loss). At the time securities are sold or otherwise disposed of, gains or losses are included in net earnings (loss). |
|
(n) |
Variable interest entities |
|
An enterprise holding other than a voting interest in a variable interest entity ("VIE") could, subject to certain conditions, be required to consolidate the VIE if it is considered its primary beneficiary whereby it would absorb the majority of the VIE's expected losses, receive the majority of its expected residual returns, or both. The Company does not have any VIE's. |
||
(o) |
Going Concern Amendments to Section 1400 |
|
CICA Section 1400, "General Standards of Financial Statement Presentation", was amended to include requirements to assess and disclose an entity's ability to continue as a going concern. The Company has assessed its ability to continue as a going concern and concluded that it will be able to continue as a going concern (note 1). |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(p) |
Comparative figures |
Certain of the prior years' comparative figures have been reclassified to conform to the financial statement presentation adopted for the current year.
4. |
CHANGES IN ACCOUNTING POLICIES |
(a) |
Newly adopted accounting policy |
During 2009, CICA Handbook Section 3862, Financial Instruments Disclosures, was amended to require additional disclosures about fair value measurements. These amendments apply to annual financial statements relating to fiscal years ending after September 30, 2009. |
|
This disclosure requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The three levels of the fair value hierarchy are: |
|
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities |
|
Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly |
|
Level 3 Inputs that are not based on observable market data |
|
A table providing the classification of the Companys investments within the fair value hierarchy is shown in note 11 to the annual consolidated financial statements. |
(b) |
Accounting standards not yet adopted |
|
(i) |
International Financial Reporting Standards ("IFRS") |
|
In 2006, the Canadian Accounting Standards Board ("AcSB") published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011, although early adoption may be permitted. Due to the Company's March 31 fiscal year, the transition date for the Company is April 1, 2011. Therefore, the IFRS adoption will require the restatement for comparative purposes of amounts reported by the Company for the year ended March 31, 2011. The Company is currently in the process of establishing a steering committee, developing a formal project plan, allocating internal resources and engaging expert consultants to monitor the transition from Canadian GAAP to IFRS reporting. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(ii) |
Business Combinations/Consolidated Financial Statements/Non-Controlling Interests |
|
The AcSB adopted CICA sections 1582 "Business Combinations", 1601 "Consolidated Financial Statements", and 1602 "Non-Controlling Interests" which superseded current sections 1581 "Business Combinations" and 1600 "Consolidated Financial Statements". These new sections replace existing guidance on business combinations and consolidated financial statements to harmonize Canadian accounting for business combinations with IFRS. These Sections will be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011. Earlier adoption is permitted. If an entity applies these sections before January 1, 2011, it is required to disclose that fact and apply each of the new sections concurrently. The Company is currently evaluating the impact of the adoption of these changes on its consolidated financial statements. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
5. |
AVAILABLE-FOR-SALE SECURITIES |
As at March 31, 2010, the Company held common shares in the following companies which were classified as available-for-sale securities: |
Estimated Fair | |||||||
Value at March | |||||||
Cost | 31, 2010 | ||||||
Falkirk Resources Corp. (note 7(a)(vi)) | $ | 17,000 | $ | 12,000 | |||
New High Ridge Resources Inc. (note 7(a)(i)) | 5,000 | 2,375 | |||||
Serengeti Resources Inc. | 26,000 | 31,000 | |||||
Tulox Resources Inc. (note 7(a)(iv)) | 1 | 1 | |||||
Total | $ | 48,001 | $ | 45,376 |
As at March 31, 2009, there were no available-for-sale financial assets held by the Company.
6. |
EQUIPMENT |
Accumulated | ||||||||||
Cost | Amortization | Net Book Value | ||||||||
March 31, 2010 | ||||||||||
Site equipment | $ | 44,057 | $ | 21,986 | $ | 22,071 | ||||
Computers | 30,607 | 14,815 | 15,792 | |||||||
Total | $ | 74,664 | $ | 36,801 | $ | 37,863 | ||||
March 31, 2009 | ||||||||||
Site equipment | $ | 44,057 | $ | 12,526 | $ | 31,531 | ||||
Computers | 30,607 | 8,047 | 22,560 | |||||||
Total | $ | 74,664 | $ | 20,573 | $ | 54,091 |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
7. |
MINERAL PROPERTY INTERESTS |
The Company has recorded the following interest in royalties in currently non-producing properties at a nominal value on the balance sheet: |
March 31 | March 31 | ||||||
2010 | 2009 | ||||||
British Columbia, Canada | |||||||
Iskut ((a)(ix)) | $ | | $ | 1 | |||
Witch ((a)(ix)) | | 1 | |||||
Other | |||||||
Ana, Yukon Territory (b) | 1 | 1 | |||||
Mann Lake, Saskatchewan (b) | 1 | 1 | |||||
Total | $ | 2 | $ | 4 |
(a) |
British Columbia, Canada |
(i) Newton Property
In June 2009, the Company entered into an option agreement with New High Ridge Resources Inc. ("High Ridge"), formerly named High Ridge Resources Inc., whereby the Company has the right to earn an 80% interest in the Newton property by making a cash payment of $60,000 (paid), issuing 100,000 of the Company's common shares (issued) to the underlying owners and funding exploration expenditures to the amount of $240,000 on or before December 31, 2009 (completed) and an additional $4,700,000 over seven years from the effective date of the agreement.
The agreement is subject to an underlying option agreement with arm's length parties, whereby High Ridge has the right to acquire a 100% undivided interest in all the claims held under the agreement through a series of staged payments and share issuances, which High Ridge warrants have been completed, and exploration expenditures to the amount of $240,000 on or before December 31, 2009. The claims held under the Newton agreement are subject to a 2% net smelter royalty, which may be purchased by High Ridge for $2,000,000. Annual advance royalty payments of $25,000 are required starting in 2011.
In consideration of the Company agreeing to issue to the underlying owners 100,000 common shares, High Ridge has agreed to issue to the Company 100,000 common shares (issued).
(ii) The Plateau Gold-Copper Belt
During the year ended March 31, 2010, the Company acquired, by staking claims, a 100% interest in approximately 2,600 square kilometers of minerals properties over the Plateau Gold-Copper Belt, which extends south from the Newton property.
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(iii) Pinchi Property
In August 2009, the Company entered into an option agreement with Lysander Minerals Corp. ("Lysander") on the Pinchi property. Under the terms of the option agreement, the Company has the right to earn a 60% interest in the Pinchi property by funding $3,151,000 in exploration expenditures on or before December 2012. The Company can earn an additional 15% interest by incurring an additional $4,000,000 in exploration expenditures over the subsequent two calendar years. Upon the earlier of the Company exercising its second option to earn a 75% interest or electing to remain at a 60% interest, the two parties will enter into a joint venture agreement.
Subsequent to March 31, 2010, the Company terminated the Pinchi property option agreement on May 14, 2010.
(iv) Tulox Property
The Tulox property (the "Property") was acquired by the Company in stages by staking between 2005 to 2007.
In April 2009, the Company entered into an agreement with Tulox Resources Inc. ("Tulox") (formerly named Sitec Ventures Corp.), an unrelated British Columbia company, whereby Tulox may acquire a 50% interest in the property for consideration of 1,600,000 Tulox's common shares (250,000 shares issued) and by incurring $1,000,000 in expenditures on the property over three years. Tulox may acquire a 100% interest for additional consideration of 1,100,000 of its common shares and by incurring a further $1,000,000 in expenditures on the property on or before August 1, 2013. The agreement is subject to certain conditions including regulatory approval. Under the agreement, the Company will receive a 3% net smelter returns ("NSR") royalty following the commencement of commercial production on the property. In addition, the Company receives a "back-in right" whereby the Company can acquire a 60% interest in the property by agreeing, within 90 days of the completion of a pre-feasibility study, to fund a further $10,000,000 of exploration expenditures on the property. However, upon exercise of the "back-in right", the Company's entitlement to NSR will reduce to 1.2% from 3%.
In April 2010, pursuant to the Tulox property agreement, the Company received 250,000 common shares of Tulox Resources Inc. (note 5), which the Company has recorded at a nominal value of $1.
(v) Pond Property
Effective August 1, 2008, the Company entered into an agreement with a private arm's-length company for an exclusive option whereby the Company may acquire, over up to a four year period, the right to earn an undivided 100% interest in the Pond property, subject to a 2% NSR, which the Company may acquire for $2,000,000. Consideration for acquiring the 100% undivided interest in the Pond property is to consist of staged payments totaling $215,000 ($5,000 paid) and the incurring of expenditures totaling $225,000 on the property, prior to August 2012.
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
During the year ended March 31, 2010, the Company terminated the Pond agreement.
(vi) Bodine Property
In November 2006, the Company reached an option agreement with an arm's length party to acquire a 100% undivided interest in the Bodine property ("Bodine") which is located in the Omineca Mining Division in central British Columbia. The Company can acquire its interest in Bodine by making staged cash payments totaling $225,000 ($125,000 paid) and expending $2,000,000 (incurred) on the property over four years. Bodine is subject to a 3% NSR, 2% of which may be purchased at the Company's sole discretion for $2,000,000 with the remaining 1% subject to a right of first refusal in favor of the Company. Annual advance royalty payments of $50,000 will be payable beginning from the fifth year of the agreement to the fifteenth year of the agreement. In January 2010, the Company terminated the Bodine property agreement.
In June 2009, the Company reached an agreement (the "Falkirk Agreement") with Falkirk Resources Corp. ("Falkirk"), which was subsequently amended on August 25, 2009. Under the amended option agreement and subject to the underlying Bodine Property Agreement, Falkirk has the right to earn a 50% interest in the Bodine property by issuing 200,000 common shares to the Company (100,000 shares issued) and funding $600,000 in exploration expenditures on or before December 31, 2009 (completed). In January 2010, the Company and Falkirk mutually terminated the Falkirk agreement.
(vii) Sitlika Properties
The Company acquired by staking 100% interests in several mineral properties located in the Omineca, Cariboo and Clinton Mining Divisions of British Columbia, ranging in location from approximately 110 kilometers northeast of Smithers to approximately 35 kilometers southwest of Williams Lake. As of March 31, 2010, these properties included the Aspira, Huge East, Megamine, and Polymet claims and in total comprised 17 square kilometers.
(viii) Rapid Property
In April 2008, the Company acquired, by staking, claims known as the Rapid Property, which is located 27 kilometers northeast of the Aspira Property (part of the Sitlika Properties) and 36 kilometers northwest of the town of Fort St. James. As at March 31, 2010, the Companys claims in Rapid property comprised approximately 5 kilometers.
(ix) Other Properties
The Chona Agreement with an arm's length party, through which the Company retained a 2.5% net smelter royalty in the Chona claims, which were part of the Witch property located in BC, has lapsed.
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
The AA Agreement with an arm's length party, through which the Company retained a 1.5% net smelter royalty interest in the AA claims, which were part of the Iskut properties located in BC, has lapsed. |
|
(b) |
Yukon Territory and Saskatchewan |
The Company has a 5% net profits interest ("NPI") in the 46 mineral claims comprising the Ana Property in the Yukon, and a 2.5% NPI in a mineral lease comprising the Mann Lake Property in Saskatchewan. These net profit interests have been recorded at a nominal value of $1 each. The Company has neither active exploration programs nor does it plan to undertake any new programs on these properties at the present time. |
8. | SHARE CAPITAL |
(a) | Authorized share capital |
The Company's authorized share capital consists of an unlimited number of common shares without par value. |
|
(b) |
Private placements |
Fiscal year ended March 31, 2010. |
|
During the year ended March 31, 2010, the Company arranged a private placement of 11,000,000 of its common shares at a price of $0.50 per share, consisting of 4,800,000 flow-through shares and 6,200,000 non-flow-through shares for aggregate gross proceed of $5,500,000. In accordance with the terms of flow-through share agreements, the Company is obligated to spend the proceeds from the flow-through shares on eligible exploration activities by December 31, 2010. As per certain provisions of the Income Tax Act (Canada), the Company is subject to a tax on the portion of proceeds from this flow-through share issuance unspent after February 2010. As of March 31, 2010, approximately $1,659,000 remained to be spent on eligible exploration activities. |
|
In August 2009, the Company issued 100,000 common shares pursuant to the Newton property agreement (note 7(a)(i)). The Company recorded this issuance and the corresponding property option fees at $17,000, being the estimated fair value of the shares using the quoted market price on the date of issuance. |
|
Fiscal year ended March 31, 2009. |
|
In December 2008, the Company completed a private placement of 5,000,000 units at a price of $0.10 per unit. Each unit consisted of one flow-through common share and one non-flow-through warrant. Each warrant is exercisable to purchase one additional common share at a price of $0.10 for a 24 month period. In accordance with the terms of the flow-through share agreements, the Company has spent total proceeds from the share issuance on eligible exploration expenses and has renounced those expenses to the investors. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
Fiscal year ended March 31, 2008. |
|
During the year ended March 31, 2008, pursuant to exercise of share purchase warrants, the Company issued 4,440,000 flow-through common shares and 350,000 non-flow-through common shares for total proceeds of $2,442,000 and $192,500 respectively. During the year ended March 31, 2009, the Company spent total proceeds from this flow-through share issuance on eligible exploration expenses and renounced those expenses to the investors, in accordance with the terms of the flow-through share agreements. |
|
(c) |
Share purchase option compensation plan |
The Company has a share purchase option compensation plan approved by the shareholders that allows the Company to grant up to 10% of the issued and outstanding shares of the Company at any one time, typically vesting over up to two years, subject to regulatory terms and approval, to its directors, employees, officers, and consultants. The exercise price of each option may be set equal to or greater than the closing market price of the common shares on the TSX Venture Exchange on the day prior to the date of the grant of the option, less any allowable discounts. Options have a maximum term of five years and terminate 90 days following the termination of the optionee's employment, except in the case of retirement or death. |
|
The continuity of share purchase options for the year ended March 31, 2010 was: |
Exercise | March 31 | Expired/ | March 31 | ||||||||||||||||
Expiry date | price | 2009 | Granted | Exercised | Cancelled | 2010 | |||||||||||||
July 19, 2011 | $ | 0.70 | 1,713,600 | | | (98,400 | ) | 1,615,200 | |||||||||||
April 28, 2012 | $ | 0.70 | | 70,000 | | | 70,000 | ||||||||||||
March 30, 2013 | $ | 0.51 | | 50,000 | | | 50,000 | ||||||||||||
Total | 1,713,600 | 120,000 | | (98,400 | ) | 1,735,200 | |||||||||||||
Weighted average exercise price | | $ | 0.70 | $ | 0.62 | | $ | 0.70 | $ | 0.69 |
The continuity of share purchase options for the year ended March 31, 2009 was:
Exercise | March 31 | Expired/ | March 31 | ||||||||||||||||
Expiry date | price | 2008 | Granted | Exercised | Cancelled | 2009 | |||||||||||||
July 19, 2011 | $ | 0.70 | | 1,828,200 | | (114,600 | ) | 1,713,600 | |||||||||||
Weighted average exercise price | $ | | $ | 0.70 | $ | | $ | 0.70 | $ | 0.70 |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
Using an option pricing model with the assumptions noted below, the estimated fair value of all options granted or vesting during the fiscal year 2010, and which have been reflected in the consolidated statements of operations, is as follows:
Year ended March 31 | ||||||||||
2010 | 2009 | 2008 | ||||||||
Exploration | ||||||||||
Engineering | $ | 5,658 | $ | 18,796 | $ | | ||||
Environmental, socioeconomic and land | 2,385 | 3,793 | | |||||||
Geological | 47,961 | 75,889 | | |||||||
Exploration | 56,004 | 98,478 | | |||||||
Operations and administration | 82,381 | 145,583 | | |||||||
Total compensation cost recognized in operations,
credited to contributed surplus |
$ 138,385 |
$ 244,061 |
$ |
|
The assumptions used to estimate the fair value of options vesting during the respective periods were as follows:
Year ended March 31 | ||||||||||
2010 | 2009 | 2008 | ||||||||
Risk free interest rate | 2.48% | 1.96% | | |||||||
Expected life | 3 years | 3 years | | |||||||
Expected volatility | 85% | 83% | | |||||||
Expected dividends | Nil | nil | |
(d) |
Share purchase warrants |
The continuity of share purchase warrants (each warrant redeemable for one common share) for the year ended March 31, 2010 was: |
Exercise | March 31 | Expired/ | March 31 | ||||||||||||||||
Expiry date | Price | 2009 | Issued | Exercised | Cancelled | 2010 | |||||||||||||
February 9, 2011 | $ | 0.10 | 5,000,000 | | | | 5,000,000 | ||||||||||||
Weighted average exercise price | $ | 0.10 | | | | $ | 0.10 |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
The continuity of share purchase warrants (each warrant redeemable for one common share) for the year ended March 31, 2009 was:
Exercise | March 31 | Expired/ | March 31 | ||||||||||||||||
Expiry date | Price | 2008 | Issued | Exercised | Cancelled | 2009 | |||||||||||||
January 17, 2009 | $ | 0.55 | 5,700,000 | | | (5,700,000 | ) | | |||||||||||
February 9, 2011 | $ | 0.10 | | 5,000,000 | | | 5,000,000 | ||||||||||||
Total | 5,700,000 | 5,000,000 | | (5,700,000 | ) | 5,000,000 | |||||||||||||
Weighted average exercise price | $ | 0.55 | $ | 0.10 | $ | | $ | 0.55 | $ | 0.10 |
(e) |
Contributed surplus |
The components of contributed surplus were: |
March 31 | March 31 | ||||||
2010 | 2009 | ||||||
Fair value of warrants | $ | 982,110 | $ | 982,110 | |||
Cumulative stock-based compensation | 1,275,363 | 1,136,978 | |||||
Contributed surplus transferred to share capital relating to options exercised | (405,096 | ) | (405,096 | ) | |||
Balance, end of the year | $ | 1,852,377 | $ | 1,713,992 |
9. |
RELATED PARTY BALANCES AND TRANSACTIONS |
Balances receivable | March 31 | March 31 | |||||
2010 | 2009 | ||||||
Hunter Dickinson Services Inc. (a) | $ | 29,870 | $ | 90,140 | |||
Farallon Minera Mexicana.S.A. de C.V (c) | | 44,675 | |||||
Total | $ | 29,870 | $ | 134,815 |
Transactions | Year ended March 31 | |||||||||
2010 | 2009 | 2008 | ||||||||
Services rendered and expenses reimbursed: | ||||||||||
Hunter Dickinson Services Inc. (a) | $ | 1,526,583 | $ | 2,658,528 | $ | 1,603,106 | ||||
Interest income on loan: | ||||||||||
Rockwell Diamonds Inc. (b) | $ | | $ | | $ | 53,629 | ||||
Sale of equipment: | ||||||||||
Farallon Minera Mexicana.S.A. de C.V (c) | $ | | $ | 32,679 | $ | |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(a) |
Hunter Dickinson Services Inc. ("HDSI") is a private company which until recently was owned equally by several public companies, one of which was the Company. HDSI has certain directors in common with the Company and provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company and its subsidiaries on a full cost recovery basis. |
|
(b) |
Rockwell Diamonds Inc. ("Rockwell"), formerly named Rockwell Ventures Inc., is a public company with certain directors in common with the Company. In January 2007, the Company advanced $5,500,000 to Rockwell pursuant to a 90-day promissory note. Interest on the promissory note was calculated at a rate of 20% per annum, compounded quarterly. Interest was payable in common shares of Rockwell. In April 2007, Rockwell repaid the principal amount of the loan, together with 497,993 common shares of Rockwell at a deemed price of $0.495, representing payment of interest on the 90-day promissory note. |
|
In June 2007, the Company sold its 497,993 common shares of Rockwell for proceeds of $315,499. A gain of $68,992 was recorded on the sale. |
||
(c) |
Farallon Minera Mexicana S.A. de C.V. ("FMM") is a subsidiary of Farallon Resources Ltd., a publicly traded company which has a director in common with the Company. During the year ended March 31, 2009, the Company sold some used equipment with a book value of $18,673 to FMM at market value, for US$30,800 ($32,679). |
10. |
INCOME TAXES |
As at March 31, 2010 and 2009, the estimated tax effects of the significant components within the Company's future income tax assets (liabilities) are as follow: |
March 31 | March 31 | ||||||
2010 | 2009 | ||||||
Future income tax assets (liabilities) | |||||||
Resource pools | $ | 2,707,000 | $ | 2,532,000 | |||
Loss carry forwards | 1,057,000 | 593,000 | |||||
Financing expenses | 65,000 | 15,000 | |||||
Equipment | 9,000 | 5,000 | |||||
Subtotal | 3,838,000 | 3,145,000 | |||||
Valuation allowance | (3,838,000 | ) | (3,145,000 | ) | |||
Net future income tax asset | $ | | $ | |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
Income tax expense differs from the amount that would result from applying the Canadian federal and provincial tax rates to earnings before income taxes. These differences result from the following items:
March 31 | March 31 | ||||||
2010 | 2009 | ||||||
Combined Canadian federal and provincial statutory rate | 29.63% | 30.75% | |||||
Income tax at statutory rates | $ | (1,215,000 | ) | $ | (1,571,000 | ) | |
Permanent differences | 435,000 | 771,000 | |||||
Tax rate differences | 128,000 | 383,000 | |||||
Adjustments of taxes of prior periods | (41,000 | ) | 872,000 | ||||
Change in valuation allowance | 693,000 | (455,000 | ) | ||||
$ | | $ | |
At March 31, 2010, the Company had non-capital losses available for Canadian income tax purposes totaling approximately $2.6 million (2009 $2.4 million) expiring in various periods to 2029, and taxable capital losses of $1.6 million (2009 $nil) that do not expire. |
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11. | CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS |
(a) | Capital Management Objectives |
The Company's primary objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders, and to have sufficient liquidity available to fund suitable business opportunities as they arise.
The Company considers the components of shareholders' equity, as well as its cash and equivalents as capital. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue equity, sell assets, or return capital to shareholders as well as issue or repay debt.
In order to facilitate the management of its capital requirements, the Company prepares annual operating plan that are approved by the Board of Directors.
The Companys investment policy is to invest its cash in highly liquid short-term interest-bearing investments, having maturity dates of three months or less from the date of acquisition and that are readily convertible to known amounts of cash.
There were no changes to the Company's approach to capital management during the year ended March 31, 2010.
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(b) |
Carrying Amounts and Fair Values of Financial Instruments |
The fair value of a financial instrument is the price at which a party would accept the rights and/or obligations of the financial instrument from an independent third party. Given the varying influencing factors, the reported fair values are only indicators of the prices that may actually be realized for these financial instruments. |
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Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are: |
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Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities; |
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Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and |
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Level 3 Inputs that are not based on observable market data |
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The following table illustrates the classification of the Companys financial instruments within the fair value hierarchy as at March 31, 2010. |
Financial assets at fair value as at March 31, 2010 | |||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||
Marketable securities and investments | $ | 45,376 | $ | | $ | | $ | |
(c) |
Financial Instrument Risk Exposure and Risk Management |
|
The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, inclusive of documented treasury policies, counterparty limits, controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows: |
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(i) |
Credit Risk |
|
The Company's credit risk is primarily attributable to its liquid financial assets. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash and equivalents in high quality investments with major financial institutions and in federal government-backed treasury bills. The Company does not have any financial assets that are invested in asset backed commercial paper. |
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(ii) |
Liquidity Risk |
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The Company ensures that there is sufficient cash in order to meet its short term business requirements, after taking into account the Company's holdings of cash and cash equivalents. The Company's cash and equivalents are invested in business accounts, commercial paper and treasury bills, which are immediately available on demand for the Company's use. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
The Company has sufficient cash and cash equivalents to meet commitments associated with its financial liabilities.
(iii) Market Risk
The significant market risk exposures to which the Company is exposed are foreign exchange risk, interest rate risk and price risk.
Foreign exchange risk
The Company incurs substantially all of its expenditures in Canada and a significant portion of its cash and cash equivalents are denominated in Canadian dollars ("CAD"). At March 31, 2010, the Company was exposed to foreign exchange risk to the extent of exchange rate fluctuation and a resultant change in the value of its cash and cash equivalents held in US dollars ("USD").
The exposure of the Company's financial assets to foreign exchange risk is as follows:
March 31 | March 31 | ||||||
Expressed in CAD equivalents | 2010 | 2009 | |||||
Financial assets | |||||||
United States dollars | $ | 118,199 | $ | 117,878 | |||
Mexican pesos | | 37,072 | |||||
Total financial assets | $ | | $ | 154,950 |
Substantially all of the Company's liabilities are denominated in Canadian dollars.
The Company currently does not engage in foreign currency hedging.
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
The following significant exchange rates applied during the year:
2010 | 2009 | ||||||
Canadian dollars per United States dollar | |||||||
Closing rate at March 31 | 1.0158 | 1.2613 | |||||
Average rate during the year | 1.0904 | 1.1274 | |||||
Mexican Peso per Canadian dollar | |||||||
Closing rate at March 31 | 12.171 | 11.227 | |||||
Average rate during the year | 12.037 | 10.641 |
Interest rate risk
The Company is subject to interest rate price with respect to its investments in cash equivalents. The Company's policy is to invest cash in variable rate financial instruments having maturity dates of three months or less from the date of acquisition and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders.
Price risk
The Company is subject to price risk in respect of its investments in marketable securities (note 5).
12. |
SUBSEQUENT EVENTS |
There were no significant events subsequent to March 31, 2010 requiring disclosure in these consolidated financial statements. |
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13. |
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES |
The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which differ in certain material respects from those principles that the Company would have followed had its consolidated financial statements been prepared in accordance with the generally accepted accounting principles in United States of America ("US GAAP"). However, the differences between Canadian GAAP and US GAAP do not have material impact on the consolidated balance sheet as at March 31, 2010 and 2009 and in the consolidated statements of operations and comprehensive loss, and the consolidated statement of cash flows for the years ended March 31, 2010, 2009 and 2008. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(a) |
Mineral property costs |
The Company's policy of expensing all property costs except where an outright property interest has been acquired results in an accounting treatment for these costs which the Company considers to be materially congruent with US GAAP. Accordingly, the Company considers that there are no differences between US and Canadian GAAP with respect to mineral property costs in these consolidated financial statements. |
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(b) |
Stock-based compensation |
Accounting Standard Codification 718, Compensation-Stock Compensation, requires all share- based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. In calculating compensation to be recognized, SFAS 123(R) requires the Company to estimate future forfeitures. For Canadian GAAP purposes, the Company uses the fair value method to account for all stock option grants but accounts for forfeitures as they occur, as permitted by Canadian GAAP. The Company believes that the effect of estimated forfeiture rate is not material. |
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(c) |
Income Taxes |
FASB Codification 740-10 (Codification 740-10) Accounting for Uncertainty in Income Taxes , prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. |
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Codification 740-10 requires that the Company recognize the impact of a tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Codification 740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. In accordance with the provisions of Codification 740-10, any cumulative effect resulting from the initial adoption of Codification 740-10 is to be recorded as an adjustment to the opening balance of deficit. The adoption of Codification 740-10 did not result in a material impact on the Company's consolidated financial position or results of operations. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(d) |
Amounts receivable and prepaid expenses comprise: |
As at March 31 | As at March 31 | ||||||
2010 | 2009 | ||||||
GST receivable | $ | 50,134 | $ | 10,643 | |||
Prepaid expenses | 32,157 | 21,931 | |||||
Other Receivable | 89,932 | 131,578 | |||||
Advances and other | 92,095 | 102,302 | |||||
$ | 264,318 | $ | 266,454 |
(e) Accounts payable and accrued liabilities comprise:
As at March 31 | As at March 31 | ||||||
2010 | 2009 | ||||||
Trade payables | $ | 12,999 | $ | 8,339 | |||
Accrued liabilities | 20,000 | 25,000 | |||||
$ | 32,999 | $ | 33,339 |
(f) |
Impact of recently adopted United States accounting pronouncements: |
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(i) |
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations , (SFAS 141(R)). The revised standard was subsequently incorporated into FASB ASC Topic 805. SFAS 141(R) amends the principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree and the goodwill acquired. It expands the definition of a business and a business combination; requires recognition of assets acquired, liabilities assumed, and contingent consideration at their fair value on the acquisition date; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination and expensed as incurred; requires in-process research and development to be capitalized at fair value as an intangible asset; and requires that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This new standard is effective for the Companys 2010 fiscal year. Upon adoption, the new standard did not have a material effect on the Companys consolidated financial statements since the Company did not have any business combinations during the fiscal year ended March 31, 2010. |
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(ii) |
In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of GAAP (codified within ASC 105). The Accounting Standards Codification ("ASC") establishes the sources of accounting principles and the framework for selecting principles used in the preparation of financial statements of non- governmental entities presented in conformity with US GAAP. The statement establishes two levels of GAAP: authoritative and non-authoritative. An entity must first consider authoritative GAAP for similar transactions or events, and then consider non-authoritative guidance from other sources. The adoption of the ASC did not have an impact on the Company's consolidated financial statements. |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(iii) |
In June 2009, the FASB issued general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before the financial statements are issued or are available to be issued (codified within ASC 855). The update sets forth: (a) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (b) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (c) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of this standard had no impact on the Company's financial position, results of operations or cash flows. |
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(g) |
United States accounting pronouncements to be adopted. |
|
(i) |
In April 2010, the FASB issued ASU 2010-13. This standard provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative- effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. The adoption of this standard is not expected to have a material impact on the Companys financial position and results of operations. |
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(ii) |
In June 2009, the FASB issued new guidance relating to accounting for Variable Interest Entities ("VIE") codified within ASC 810-10. Key changes include: (a) the elimination of the exemption for qualifying special purpose entities ("QSPE"); (b) a new approach for determining who should consolidate a VIE; and (c) changes to when it is necessary to reassess who should consolidate a VIE. This standard is effective for years beginning after November 15, 2009, and for subsequent interim and annual reporting periods thereafter. The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position. |
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(iii) |
In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06 or the ASU). The ASU amends ASC 820 to require a number of additional disclosures regarding fair value measurements. Specifically, the ASU requires entities to disclose: |
AMARC RESOURCES LTD. |
Notes to the Consolidated Financial Statements |
Years ended March 31, 2010, 2009, and 2008 |
(Expressed in Canadian Dollars, unless otherwise stated) |
(a) |
the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers |
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(b) |
the reasons for any transfers in or out of Level 3 |
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(c) |
information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis |
In addition to these new disclosure requirements, the ASU also amends ASC 820 to clarify certain existing disclosure requirements.
Except for the requirement to disclose information about purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 measurements on a gross basis, all the amendments to ASC 820 made by ASU 2010-06 are effective for interim and annual reporting periods beginning after 15 December 2009. The requirement to separately disclose purchases, sales, issuances, and settlements of recurring Level 3 measurements does not become effective until fiscal years beginning after 15 December 2010, including interim periods within those fiscal years.
The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.