[ ]
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12 (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[X]
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended
|
August 31, 2011
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ]
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Date of event requiring this shell company report
|
A.
|
Consolidated Statements and Other Financial Information
|
67 | ||
B.
|
Significant Changes
|
67 | ||
Item 9.
|
The Offering and Listing | 68 | ||
A.
|
Offering and Listing Details
|
68 | ||
B.
|
Plan of Distribution
|
70 | ||
C.
|
Markets
|
70 | ||
D.
|
Selling Shareholders
|
70 | ||
E.
|
Dilution
|
70 | ||
F.
|
Expenses of the Issue
|
70 | ||
Item 10.
|
Additional Information | 70 | ||
A.
|
Share Capital
|
70 | ||
B.
|
Articles of Association and Bylaws
|
70 | ||
C.
|
Material Contracts
|
74 | ||
D.
|
Exchange Controls
|
74 | ||
E.
|
Taxation
|
76 | ||
F.
|
Dividends and Paying Agents
|
83 | ||
G.
|
Statement by Experts
|
83 | ||
H.
|
Documents on Display
|
83 | ||
I.
|
Subsidiary Information
|
83 | ||
Item 11.
|
Quantitative and Qualitative Disclosures About Market Risk | 83 | ||
Item 12.
|
Description of Securities Other than Equity Securities.. | 84 | ||
Part II
|
84 | |||
Item 13.
|
Defaults, Dividend Arrears and Delinquencies | 84 | ||
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds | 84 | ||
Item 15.
|
Controls and Procedures | 84 | ||
Item 16 A
|
Audit Committee Financial Expert
|
85 | ||
Item 16 B.
|
Code of Ethics
|
85 | ||
Item 16 C.
|
Principal Accountant Fees and Services
|
86 | ||
Item 16 D.
|
Exemptions from the Listing Standards for Audit Committees
|
86 | ||
Item 16 E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
86 | ||
Item 16 F.
|
Change in Registrant's Certifying Accountant
|
86 | ||
Item 16 G.
|
Corporate Governance
|
86 | ||
Part III
|
87 | |||
Item 17.
|
Financial Statements | 87 | ||
Item 18.
|
Financial Statements | 87 | ||
Item 19. | Exhibits | 88 | ||
|
Ag
|
The elemental symbol for silver.
|
alteration
|
Mineralogical change at low pressures due to invading fluids or the influence of chemical reactions in a rock mass resulting from the passage of hydrothermal fluids.
|
anomaly
|
Any concentration of metal noticeably above or below the average background concentration.
|
assay
|
An analysis to determine the presence, absence or quantity of one or more components.
|
Au
|
The elemental symbol for gold.
|
background
|
Traces of elements found in sediments, soils, and plant material that are unrelated to any mineralization and which come from the weathering of the natural constituents of the rocks.
|
Barrick
|
Barrick Gold Corp.
|
BEAL
|
Barrick Exploration Africa Limited.
|
BLEG
|
Acronym for “bulk leach extractable gold” sampling.
|
Cu
|
The elemental symbol for copper.
|
dyke
|
A tabular body of igneous rock that has been injected while molten into a fissure.
|
exploration information
|
Means geological, geophysical, geochemical, sampling, drilling, trenching, analytical testing, assaying, mineralogical, metallurgical and other similar information concerning a particular property that is derived from activities undertaken to locate, investigate, define or delineate a mineral prospect or mineral deposit.
|
fault
|
A planar fracture or discontinuity in a volume of rock, across which there has been significant displacement.
|
Fe
|
The elemental symbol for iron.
|
feasibility study
|
Is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study.
|
fracture
|
Any local separation or discontinuity plane in a geologic formation, such as a joint or a fault that are commonly caused by stress exceeding the rock strength.
|
grade
|
The concentration of each ore metal in a rock sample, usually given as weight percent. Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t or gpt) or ounces per ton (oz/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
|
hectare or ha
|
An area totalling 10,000 square metres.
|
hydrothermal
|
Hot fluids, usually mainly water, in the earth's crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration.
|
IP
|
Induced polarization survey, a form of geophysical survey used in the exploration for minerals.
|
intrusive
|
A rock mass formed below earth's surface from magma which has intruded into a pre-existing rock mass.
|
Jinchuan Mining
|
Jinchuan Mining, a Chinese metals company.
|
JV
|
A joint venture, which is a term for a contractual relationship between parties, usually for a single purpose, which is not a partnership.
|
Kazakh
|
Kazakh Africa Mining Ltd.
|
kilometres or km
|
Metric measurement of distance equal to 1,000 metres (or 0.6214 miles).
|
mill
|
A facility for processing ore to concentrate and recover valuable minerals.
|
mineral reserve
|
That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
|
mineralization
|
The hydrothermal deposition of economically important metals in the formation of ore bodies or "lodes”.
|
net smelter or NSR royalty
|
Payment of a percentage of net mining profits based on returns from the smelter, after deducting applicable smeltering charges.
|
Newmont
|
Newmont Overseas Exploration Corporation.
|
NI 43-101
|
National Instrument 43-101, “Standards of Disclosure for Mineral Projects”, as adopted by the Canadian Securities Administrators, as the same may be amended or replaced from time to time, and shall include any successor regulation or legislation.
|
ore
|
A mineral or an aggregate of minerals from which a valuable constituent, especially a metal, can be profitably mined or extracted.
|
outcrop
|
An exposure of rock at the earth's surface.
|
overburden
|
A general term for any material covering or obscuring rocks from view.
|
Pb
|
The elemental symbol for lead.
|
porphyry
|
A variety of igneous rock consisting of large-grained crystals, such as feldspar or quartz, dispersed in a fine-grained feldspathic matrix or groundmass
.
|
ppm or parts per million
|
A unit of measurement which is 1000 times larger than parts per billion (i.e. ppb); 1 ppm is equivalent to 1000 ppb, and is also equivalent to 1 gram/tonne.
|
prefeasibility study and preliminary feasibility study
|
Each mean a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Nineral Resource may be classified as a Mineral Reserve.
|
Pyrrhotite
|
A bronze coloured mineral of metallic lustre that consists of ferrous sulphide and is attracted by a magnet.
|
pyrite
|
Iron sulphide mineral.
|
Qualified Person
|
An individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and the technical report; and is a member or licensee in good standing of a professional association.
|
quartz
|
Silica or SiO
2
, a common constituent of veins, especially those containing gold and silver mineralization.
|
RAB
|
Rotary air blast drilling.
|
RC
|
Reverse circulation drilling.
|
reef
|
A geological discontinuity which served as a trap or conduit for hydrothermal mineralizing fluids to form an ore deposit.
|
Sb
|
The elemental symbol for antimony (stibnite).
|
silicification
|
Replacement and or impregnation of the constituent of a rock by quartz rich hydrothermal fluids or (silica).
|
Sloane
|
Sloane Developments Ltd., a corporation based in the United Kingdom.
|
Songshan
|
Songshan Mining Co. Ltd., a corporation based in the People’s Republic of China.
|
Stamico
|
State Mining Corporation of Tanzania.
|
Tancan
|
Tancan Mining Company Limited, a wholly-owned Tanzanian subsidiary of the Company.
|
Tanzam
|
Tanzania American International Development Corporation 2000 Limited, a wholly-owned Tanzanian subsidiary of the Company.
|
test pits
|
Shallow holes dug at spots along the strike of any mineralization or, if it is disseminated, anywhere in the area where the shallow holes might reach mineralized bedrock.
|
ton
|
Imperial measurement of weight equivalent to 2,000 pounds (sometimes called a “short ton”).
|
Measured Mineral Resource
|
That part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological grade and continuity.
|
Mineral Reserve
|
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.
Mineral resources are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve. The term “mineral reserve” need not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals.
|
Mineral Resource
|
A concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals 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.
A Mineral Resource is an inventory of mineralization that under realistically assumed and justifiable technical and economic conditions might become economically extractable.
|
Probable Mineral Reserve
|
Is the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
|
Proven Mineral Reserve
|
Is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.
The term should be restricted to that part of the deposit where production planning is taking plce and for which any variation in the estimate would not significantly affect potential economic viability.
|
For the Fiscal Year ended August 31
|
||||||||||||||||||||
2011 |
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
||||||||||
Operations:
|
||||||||||||||||||||
Revenues
|
$ | -- | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||||
Net loss
|
(10,221,226 | ) | (3,427,655 | ) | (4,731,836 | ) | (3,698,045 | ) | (3,921,469 | ) | ||||||||||
Basic and diluted
loss per share
|
(0.11 | ) | (0.04 | ) | (0.05 | ) | (0.04 | ) | (0.05 | ) | ||||||||||
Balance sheet:
|
||||||||||||||||||||
Working Capital
|
30,391,005 | 1,113,969 | 943,219 | 1,264,534 | 1,546,075 | |||||||||||||||
Total Assets
|
68,113,986 | 32,783,560 | 29,285,205 | 26,956,294 | 25,421,472 | |||||||||||||||
Net Assets
|
62,684,749 | 30,321,539 | 28,601.035 | 26,380,456 | 24,742,582 | |||||||||||||||
Share Capital
|
110,671,701 | 72,855,310 | 68,111,716 | 61,705,400 | 54,113,279 | |||||||||||||||
Number of Shares
|
99,758,753 | 91,415,459 | 89,782,544 | 88,114,352 | 86,748,493 | |||||||||||||||
Deficit
|
(54,105,351 | ) | (43,884,125 | ) | (40,456,470 | ) | (35,724,634 | ) | (32,026,589 | ) |
|
U.S. GAAP
|
For the Fiscal Year ended August 31
|
||||||||||||||||||||
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
||||||||
Operations:
|
||||||||||||||||||||
Revenues
|
$ | -- | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||||
Net loss
|
(15,331,447 | ) | (6,472,311 | ) | (7,720,030 | ) | (5,738,430 | ) | (6,071,773 | ) | ||||||||||
Basic and diluted loss per share
|
(0.16 | ) | (0.07 | ) | (0.09 | ) | (0.07 | ) | (0.07 | ) | ||||||||||
Balance sheet:
|
||||||||||||||||||||
Working Capital
|
24,282,855 | 1,113,969 | 943,219 | 1,264,534 | 1,546,075 | |||||||||||||||
Total Assets
|
40,383,955 | 8,879,270 | 8,289,169 | 9,044,354 | 9,540,917 | |||||||||||||||
Net Assets
|
$ | 29,319,356 | 6,494,100 | 7,399,383 | 8,459,516 | 8,862,027 | ||||||||||||||
Share Capital
|
114,316,361 | 76,484,387 | 71,339,854 | 64,460,328 | 59,213,178 | |||||||||||||||
Number of Shares
|
99,758,753 | 91,415,459 | 89,782,544 | 88,114,352 | 86,748,493 | |||||||||||||||
Deficit
|
(85,885,643 | ) | (70,679,742 | ) | (64,207,431 | ) | (56,400,502 | ) | (50,662,072 | ) |
Year Ended:
August 31
|
Average |
Period End |
|
|
High |
|
|
Low |
||||||||
2011
|
0.988 | 0.9783 | 1.052 | 0.9448 | ||||||||||||
2010
|
1.044 | 1.064 | 1.106 | 0.996 | ||||||||||||
2009
|
1.177 | 1.0967 | 1.2995 | 1.0338 | ||||||||||||
2008
|
1.006 | 1.0631 | 1.0677 | 0.9168 | ||||||||||||
2007
|
1.120 | 1.0560 | 1.1852 | 1.0372 |
Month
|
High |
|
|
Low |
||||
October 2011
|
1.0605 | 0.9942 | ||||||
September 2011
|
1.0389 | 0.9751 | ||||||
August 2011
|
0.9909 | 0.9577 | ||||||
July 2011
|
0.9667 | 0.9448 | ||||||
June 2011
|
0.9859 | 0.9642 | ||||||
May 2011
|
0.9809 | 0.9489 |
·
|
Prospecting Licence annual rental increases to US$40/sq.km for initial period, $50/sq.km. for first renewal and $60/sq.km. for second renewal;
|
·
|
Prospecting licence renewals must be submitted a minimum of one month before expiry;
|
·
|
Relinquished half of prospecting licence is retained by the Government, cannot immediately be applied for and will only be open for new applications after a 4 month period as determined by the Mining Commissioner;
|
·
|
Prospecting licences with an area < 20 sq.km. are no longer required to be halved on renewal;
|
·
|
Prospecting licence mineral categories are redefined to 6 categories that may be applied for separately;
|
·
|
Uranium, and fossil fuels (oil& gas) have been declared as Strategic minerals and Gold is excluded from this critical category.
|
·
|
No more than 20 prospecting licences will be granted to a company unless total area of prospecting licences is <2,000 sq.km.
|
·
|
quartz veins within minor brittle lineaments, most commonly worked on a small scale by artisanal workers, due to their limited extent and erratic gold distribution;
|
·
|
mineralisation within major ductile shear zones;
|
·
|
mineralisation associated with replacement of iron formation and ferruginous sediments; and
|
·
|
felsic (porphyry) hosted mineralisation, such as within the Rwamagaza Greenstone Belt.
|
·
|
structural lineaments trending at 120º;
|
·
|
flexures and splays to the 120º trend (such as at Golden Pride);
|
·
|
structural lineaments at 70º (such as at Golden Ridge); and
|
·
|
granite-greenstone contacts (such as at the Ushirombo and RGB).
|
|
(a)
|
undertake a preliminary economic assessment on the Buckreef Project and subject to a successful outcome, proceed to a definitive feasibility study;
|
|
(b)
|
exploration work,
|
|
(b)
|
new property investigations, and
|
|
(c)
|
general and administrative costs.
|
On November 5, 2010 the Company completed a $4,841,600 private placement with arm’s length third parties for an aggregate 800,000 common shares at the price of $6.052/share and an aggregate 200,000 common share purchase warrants exercisable at the price of $7.309 per share and expiring on October 20, 2012. In addition, the Company paid a finder’s fee payable in 64,000 common shares at the subscription price of $6.052/share.
|
On November 23, 2010 the Company completed a private placement with an arm’s length third party and 851,209 common shares at the price of $5.874 per share were issued for proceeds of $5,000,000. 212,802 common share purchase warrants exercisable at the price of $7.05 per share and expiring on November 9, 2012 were issued and 68,097 common shares at the subscription price of $5.874 were issued to arm’s length third parties in respect of the finder’s fee.
|
On January 31, 2011 the Company completed a private placement with an arm’s length third party and 690,150 common shares at the price of $5.867 per share were issued for proceeds of $4,049,110. 172,528 common share purchase warrants exercisable at the price of $6.903 per share and expiring on December 22, 2012 were issued and 58,663 common shares at the subscription price of $5.867 was issued to an arm’s length third party in respect of the finder’s fee.
|
On August 12, 2011 the Company completed a US$30 million bought deal offering and 5,263,158 Units at a price of US$5.70 per Unit were issued. Each Unit consists of one common share and one common share purchase warrant exercisable at a price of US$6.25 per warrant expiring on August 12, 2013. The Undewriter received a cash commission of 7% of the gross proceeds and 368,421 compensation warrants exercisable at a price of US$5.91 per share expiring on August 12, 2013.
|
As of November 23, 2011 the Board resolved that the Company authorize for issuance up to a maximum of 115,000,000 common shares, subject to further resolutions of the Company’s board of directors.
|
Option Payments Due by Period (US$)
|
|||||
Total
|
Less than 1 year
|
2-3 years
|
4-5 years
|
More than
5 years
|
|
Option Agreement Obligations
|
$414,000
|
$209,000
|
$205,000
|
$Nil
|
$Nil
|
Name, Municipality of Residence and Position With the Company |
Principal occupation or employment and, if not a previously elected director, occupation during the past 5 years
|
Served as a Director Continuously Since
|
James E. Sinclair
Sharon, Connecticut
President, Chief Executive Officer and Director
|
President and CEO of the Company |
April 30, 2002 |
Joseph Kahama
Dar es Salaam, Tanzania
Chairman and Chief Operating Officer (Tanzania) and Director
|
Chairman and COO (Tanzania) of the Company; President, Tanzania American International Development Corporation 2000 Limited |
February 29, 2008 |
Dr. Norman Betts
Fredericton,
New Brunswick
Director
|
Associate Professor, Faculty of Business Administration, University of New Brunswick and a Chartered Accountant |
January 4, 2005 |
Anton Esterhuizen
Johannesburg, South Africa
Director
|
Managing Director, Pangea Exploration (Pty) |
January, 2002 |
William Harvey
Sharon, Connecticut
Director
|
Psychologist |
April 30, 2002 |
Rosalind Morrow
Toronto, Ontario
Director
|
Lawyer; Partner, Borden Ladner Gervais LLP |
October 20, 2003 |
Abdulkarim Mruma
Dar es Salaam, Tanzania
Director
|
Professor of Geology, University of Dar es Salaam |
February 22, 2011 |
Ulrich E. Rath
Toronto, Ontario
Director
|
Formerly President and CEO and Director of Chariot Resources Ltd. |
October 7, 2003 |
Steven Van Tongeren
Yorktown Heights, New York
Chief Financial Officer
|
Chief Financial Officer of the Company |
Not a Director Officer |
Peter T. Zizhou
Zimbabwe
Exploration Manager
|
Exploration Manager of the Company |
Not a Director |
|
(i)
|
was subject to an order (as defined below) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer, or chief financial officer; or
|
|
(ii)
|
was subject to an order (as defined below) that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer, or chief financial officer.
|
(i)
|
a cease trade order;
|
(ii)
|
an order similar to a cease trade order; or
|
(iii)
|
an order that denied the relevant company access to any exemption under securities legislation;
|
(a)
|
any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority; or
|
(b)
|
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
|
(i)
|
is at the date hereof, or has been within the last ten (10) years, a director or executive officer of any company that while the person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets; or
|
(ii)
|
has, within the last ten (10) years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder
|
(a)
|
the Company’s chief executive officer (“CEO”);
|
(b)
|
the Company’s chief financial officer (“CFO”);
|
(c)
|
each of the Company’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year and whose total compensation will be, individually, more than $150,000 for that financial year; and
|
(d)
|
each individual who would be a NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of the most recently completed financial year.
|
Summary Compensation Table
|
Name and Principal Position
|
Year
|
Salary
($)
|
Share-based awards
($)
|
Option-based awards
($)
|
Non-equity incentive plan compen-
sation
($)
|
Pension Value
($)
|
All other compensation
($)
|
Total compensation
($)
|
|
Annual incentive plans
(RSU)
|
Long term incen-
tive plans
(ESOP)
|
||||||||
James
Sinclair,
President and
CEO
|
2011
2010
2009
|
22,459
(8)
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
None
None
None
|
None
None
None
|
None
None
None
|
Nil
Nil
Nil
|
22,459
Nil
Nil
|
Joseph
Kahama,
(7)
Chairman and
COO
(Tanzania)
|
2011
2010
2009
|
108,327
(1)(8)
75,240
(2)
56,540
|
Nil
168,750
(3) (5) (6)*
25,000
(4)
|
Nil
Nil
Nil
|
None
None
None
|
None
None
None
|
None
None
None
|
2,328
Nil
Nil
|
110,655
243,990
81,540
|
Steven
Van Tongeren
Chief
Financial
Officer
|
2011
2010
2009
|
75,665
(8)
N/A
N/A
|
Nil
N/A
N/A
|
8,612
Nil
N/A
|
None
None
None
|
None
None
None
|
None
None
None
|
Nil
N/A
N/A
|
84,277
N/A
N/A
|
Peter Zizhou,
Exploration
Manager
|
2011
2010
2009
|
155,318
(1)(8)
159,631
(1)(2)
N/A
|
34,375
Nil
N/A
|
12,603
12,720
N/A
|
None
None
None
|
None
None
None
|
None
None
None
|
3,236
Nil
N/A
|
205,532
172,351
N/A
|
N/A = Not Applicable
|
(1)
Includes taxes paid in Tanzania and statutory deductions.
|
(2)
USD exchange = 1.045
|
(3)
Valued at $5.58 per RSU granted on April 26, 2007.
|
(4)
Valued at $7.18 per RSU granted on April 11, 2006.
|
(5)
Valued at $5.54 per RSU granted on May 20, 2008.
|
(6)
Valued at $3.84 per RSU granted on May 27, 2009.
|
* Total is combination of 5600 RSUs at $5.58 per RSU, 12,410 RSUs at $5.54 per RSU and 17,903 RSUs at $3.84 per RSU.
|
(8) USD exchange = 0.9893
|
Outstanding share-based awards and option-based awards
|
Option-based Awards
|
Share-based Awards
|
||||||
Name |
Number of securities underlying
unexercised options
(#)
|
Option exercise price
($)
|
Option expiration
date |
Value of unexercised
in-the-money RSUs
($)
|
Number of shares or units of shares that have not vested
(#)
|
Market or payout value of share-based awards that have not vested
($)
|
|
James Sinclair, CEO
|
2011
2010
2009
|
None
None
None
|
None
None
None
|
Not
Applic-
able
|
187,500
Nil
Nil
|
29,857
Nil
Nil
|
187,500
Nil
Nil
|
Joseph Kahama, President
|
2011
2010
2009
|
None
None
None
|
None
None
None
|
Not
Applic-
able
|
193,750
89,515
Nil
|
30,852
19,086
Nil
|
193,750
89,515
Nil
|
Steven Van Tongeren
|
2011
2010
2009
|
None
None
None
|
None
None
None
|
Not
Applic-
able
|
325,500
Nil
Nil
|
49,857
None
None
|
325,500
None
Non
|
Peter Zizhou
|
2011
2010
2009
|
None
None
None
|
None
None
None
|
Not
Applic-
able
|
64,000
41,090
34,375
|
10,191
8,761
8,952
|
64,000
41,090
34,375
|
Name |
Option-based awards –
Value vested during the year
($)
|
Share-based awards –
Value vested during the year
($)
|
Non-equity incentive plan compensation –
Value earned during the year
($)
|
James Sinclair, CEO
|
None
|
Nil
|
None
|
Joseph Kahama, President
|
None
|
Nil
|
None
|
Steven Van Tongeren
|
None
|
Nil
|
None
|
Peter Zizhou
|
None
|
34,375
|
None
|
Name |
Date of Grant
|
No. of RSUs
(1)
|
Cash Compensation Election
|
Vesting Period
(3)
|
Expiration Date
|
Norman Betts
|
May 6, 2011
|
13,429
|
Nil
|
1 year
|
May 6, 2012
|
Anton Esterhuizen
|
May 6, 2011
|
13,429
|
Nil
|
1 year
|
May 6, 2012
|
William Harvey
|
May 6, 2011
|
12,845
|
Nil
|
1 year
|
May 6, 2012
|
Joseph Kahama
|
May 6, 2011
|
30,852
|
N/A
|
3 years
|
May 6, 2014
|
Rosalind Morrow
|
May 6, 2011
|
11,677
|
Nil
|
3 years
|
May 6, 2014
|
Abdulkarim Mruma
|
February 24, 2011
|
4,783
(2)
|
Nil
|
1 year
|
February 24, 2012
|
Abdulkarim Mruma
|
May 6, 2011
|
8,061
|
$25,000
|
1 year
|
May 6, 2012
|
Ulrich Rath
|
May 6, 2011
|
8,028
|
$25,208
|
1 year
|
May 6, 2012
|
James Sinclair
|
May 6, 2011
|
29,857
|
N/A
|
3 years
|
May 6, 2014
|
Steven Van Tongeren
|
Feruary 24, 2011
|
20,000
(2)
|
N/A
|
3 years
|
February 24, 2014
|
Steven Van Tongeren
|
May 6, 2011
|
29,857
|
N/A
|
3 years
|
May 6, 2014
|
Peter Zizhou
|
May 6, 2011
|
10,191
|
N/A
|
3 years
|
May 6, 2014
|
RSUs granted to directors and executive
officers as a group: 193,009
|
(1)
|
Valued at $6.28 per RSU
|
(2)
|
Valued at $6.90 per RSU
|
(3)
|
Subject to the conditions of the Amended RSU Plan with respect to earlier vesting.
|
Name |
Date of Grant
|
No. of Shares
(1)
|
Cash Compensation Election
|
Vesting Period
|
Expiration Date
|
Norman Betts
|
June 2, 2010
|
17,981
|
Nil
|
1 year
|
June 2, 2011
|
Anton Esterhuizen
|
June 2, 2010
|
17,200
|
Nil
|
1 year
|
June 2, 2011
|
William Harvey
|
June 2, 2010
|
17,200
|
Nil
|
1 year
|
June 2, 2011
|
Ulrich Rath
|
June 2, 2010
|
17,200
|
Nil
|
1 year
|
June 2, 2011
|
(1)
|
Valued at $4.69 per RSU.
|
Name |
No. of Shares
(1)
|
Date of Grant
|
Vesting Period
|
Expiration Date
|
Rosalind Morrow
|
12,410
|
May 20. 2008
|
Vested
|
May 20, 2011
|
|
(1)
Valued at $5.54 per RSU.
|
Name |
Director/Officer Contribution
($)
|
Company Contribution
($)
|
Number of Common
Shares Purchased |
Rosalind Morrow
|
10,000
|
10,000
|
3,004
|
Steven Van Tongeren
|
12,123
|
8,612
|
3,298
|
Peter Zizhou
|
20,165
|
12,603
|
5 018
|
|
Pension Plan Benefits
|
|
The Company has not set aside or accrued any funds for pension, retirement or similar benefits.
|
Number of securities to be issued upon exercise of outstanding RSUs
|
Weighted average exercise price of outstanding RSUs
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
Plan Category
|
(a)
|
(b)
|
(c)
|
Equity compensation plans approved by security holders (Restricted Stock Unit Plan)
|
440,932
|
$5.551
|
250,813
|
Total
|
440,932
|
$5.551
|
250,813
|
Name
|
Fees Earned
($)
|
RSUs granted
(1)
(#)
|
Cash Compensation Election
($)
|
All Other Compensation
(US$)
|
Total
($)
|
Norman Betts
|
84,333
|
13,429
|
Nil
|
Nil
|
84,333
|
Anton Esterhuizen
|
80,666
|
13,429
|
Nil
|
100,800
(3)
|
181,466
|
William Harvey
|
80,666
|
12,845
|
Nil
|
Nil
|
80,666
|
Rosalind Morrow
|
73,333
|
11,677
|
Nil
|
Nil
|
73,333
|
Abdulkarim Mruma
|
108,625
(1)(2)
|
12,844
|
25,000
|
Nil
|
108,625
|
Ulrich Rath
|
75,625
|
8,028
|
25,208
|
48,000
(3)
|
123,625
|
Name
|
Period
|
Monthly Retainer
(US$)
|
Total paid to August 31, 2010
(US$)
|
Anton Esterhuizen
|
September 2010 – August 2011
|
$8,400
|
$100,800
|
Ulrich Rath
|
September 2010 – August 2011
|
$4,000
|
$48,000
|
|
Pension Plan Benefits
|
|
The Company has not set aside or accrued any funds for pension, retirement or similar benefits.
|
|
1.1
|
The purpose of the Audit and Compensation Committee is to assist the Board in its oversight of the integrity of the Company's financial statements and other relevant public disclosures, the Company's compliance with legal and regulatory requirements relating to financial reporting, the external auditors' qualifications and independence and the performance of the internal audit function and the external auditors.
|
|
2.1
|
The adequacy and form of director and officer compensation is reviewed on an annual basis by the Board. The Audit and Compensation Committee recommends to the Board any adjustments to the compensation payable to directors, officers, and senior staff. The Audit and Compensation Committee meet to discuss salary and bonus incentive matters as required.
|
|
3.1
|
All of the members of the Audit and Compensation Committee must be "financially literate" as defined under NI 52-110,
Audit Committees
, having sufficient accounting or related financial management expertise to read and understand a set of financial statements, including the related notes, that present a breadth and level of complexity of the accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements.
|
|
3.2
|
The Audit and Compensation Committee shall consist of no less than three Directors.
|
|
3.3
|
All of the members of the Audit and Compensation Committee shall be "independent" as defined under NI 52-110.
|
|
4.1
|
The external auditors are the independent representatives of the shareholders, but the external auditors are also accountable to the Board of Directors and the Audit and Compensation Committee.
|
|
4.2
|
The external auditors must be able to complete their audit procedures and reviews with professional independence, free from any undue interference from the management or directors.
|
|
4.3
|
The Audit and Compensation Committee must direct and ensure that the management fully co-operates with the external auditors in the course of carrying out their professional duties.
|
|
4.4
|
The Audit and Compensation Committee will have direct communications access at all times with the external auditors.
|
|
4.5
|
The Audit and Compensation Committee will ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law.
|
|
4.6
|
The Audit and Compensation Committee will recommend to the Board of Directors policies for the Company’s hiring of employees or former employees of the external auditors who participated in any capacity in the audit of the Company.
|
|
5.1
|
The external auditors are prohibited from providing any non-audit services to the Company, without the express written consent of the Audit and Compensation Committee. In determining whether the external auditors will be granted permission to provide non-audit services to the Company, the Audit and Compensation Committee must consider that the benefits to the Company from the provision of such services, outweighs the risk of any compromise to or loss of the independence of the external auditors in carrying out their auditing mandate.
|
|
5.2
|
Notwithstanding section 5.1, the external auditors are prohibited at all times from carrying out any of the following services, while they are appointed the external auditors of the Company:
|
|
(i)
|
acting as an agent of the Company for the sale of all or substantially all of the undertaking of the Company; and
|
|
(ii)
|
performing any non-audit consulting work for any director or senior officer of the Company in their personal capacity, but not as a director, officer or insider of any other entity not associated or related to the Company.
|
|
6.1
|
The external auditors will be appointed each year by the shareholders of the Company at the annual general meeting of the shareholders.
|
|
6.2
|
The Audit and Compensation Committee will nominate the external auditors for appointment, such nomination to be approved by the Board of Directors.
|
|
7.1
|
The Audit and Compensation Committee will review the performance of the external auditors on at least an annual basis, and notify the Board and the external auditors in writing of any concerns in regards to the performance of the external auditors, or the accounting or auditing methods, procedures, standards, or principles applied by the external auditors, or any other accounting or auditing issues which come to the attention of the Audit and Compensation Committee.
|
|
8.1
|
The remuneration of the external auditors will be determined by the Board of Directors, upon the annual authorization of the shareholders at each general meeting of the shareholders.
|
|
8.2
|
The remuneration of the external auditors will be determined based on the time required to complete the audit and preparation of the audited financial statements, and the difficulty of the audit and performance of the standard auditing procedures under generally accepted auditing standards and generally accepted accounting principles of Canada.
|
|
9.1
|
The Audit and Compensation Committee has the power to terminate the services of the external auditors, with or without the approval of the Board of Directors, acting reasonably.
|
|
10.1
|
Auditing expenses will be funded by the Company. The auditors must not perform any other consulting services for the Company, which could impair or interfere with their role as the independent auditors of the Company.
|
|
11.1
|
At this time, due to the Company's size and limited financial resources, the Chief Financial Officer of the Company shall be responsible for implementing internal controls and performing the role as the internal auditor to ensure that such controls are adequate.
|
|
12.1
|
The Audit and Compensation Committee will have the oversight responsibility for ensuring that the internal controls are implemented and monitored, and that such internal controls are effective.
|
|
13.1
|
At this time, due to the Company's size and limited financial resources, the Chief Financial Officer of the Company is responsible for ensuring that the Company's continuous reporting requirements are met and in compliance with applicable regulatory requirements.
|
|
14.1
|
The Audit and Compensation Committee may meet with the Auditors independently of the management of the Company at any time, acting reasonably.
|
|
14.2
|
The Auditors are authorized and directed to respond to all enquiries from the Audit and Compensation Committee in a thorough and timely fashion, without reporting these enquiries or actions to the Board of Directors or the management of the Company.
|
|
15.1
|
The Audit and Compensation Committee Charter will be reviewed annually by the Board of Directors and the Audit and Compensation Committee to assess the adequacy of this Charter.
|
|
16.1
|
The Audit and Compensation Committee shall have the power to retain legal, accounting or other advisors to assist the Committee.
|
|
17.1
|
The Audit and Compensation Committee will review, investigate and evaluate all reports of fraud and misconduct. Refer to the Company’s
Whistle Blower Policy and Procedures.
|
|
18.1
|
The Audit and Compensation Committee will review and maintain Accounting Policies including the selection, documentation and changes in Accounting Policies.
|
|
19.1
|
The Nominating Committee considers the size of the Board of Directors each year when it considers the number of directors to recommend to shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board’s duties effectively and to maintain a diversity of view and experience. When a vacancy on the Board arises, the independent directors of the Nominating Committee will be encouraged to bring forward any potential nominees that have the necessary skills and knowledge to serve on the Company’s Board.
|
Norman Betts (Chair)
|
Independent
(1)
|
Financial expert
(3)
|
Ulrich Rath
|
Independent
(1)
|
Financially literate
(2)
|
William Harvey
|
Independent
(1)
|
Financially literate
(2)
|
|
(1)
|
A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company, which could, in the view of the Board of Directors, reasonably interfere with the exercise of a member’s independent judgment.
|
|
(2)
|
An individual is financially literate if he has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
|
|
(3)
|
An Audit Committee Financial Expert must possess five attributes: (i) an understanding of GAAP and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing auditing, analyzing 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 registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.
|
Financial Year Ending August 31
|
Audit Fees
|
Audit Related Fees
|
Tax Fees
|
Non-Audit Fees
|
2011
|
Canada - $234,500
Tanzania - $8,000
|
Nil
Nil
|
$15,000
$308,000
|
Nil
Nil
|
2010
|
Canada - $133,500
Tanzania - $8,000
|
Nil
Nil
|
$15,000
Nil
|
Nil
Nil
|
Name of Owner |
Number of Shares Owned
|
Percentage
(1)
|
Norman Betts
|
33,362
|
<0.01%
|
Anton Esterhuizen
|
76,412
|
<0.01%
|
William Harvey
|
326,013
|
0.32%
|
Joseph Kahama
|
5,000
|
<0.01%
|
Rosalind Morrow
|
392,070
|
0.39%
|
Abdulkarim Mruma
|
0
|
0%
|
Ulrich E. Rath
|
53,677
|
<0.01%
|
James E. Sinclair
|
2,040,143
|
2.04%
|
Steven Van Tongeren
|
21,757
|
<0.01%
|
Peter Zizhou
|
1,583
|
<0.01%
|
All directors and named executive officers as a group
|
2,950,017
|
2.95%
|
(1)
|
calculation based on 99,992,071shares of common stock outstanding as of October 31, 2011
|
Title of Class |
Identity of Holder
(2)
|
Amount Owned |
Percent of Class (1) |
Common Shares
|
Platinum Partners Liquid Opportunity Master Fund L.P.
/ Platinum Partners Value Arbitrage Fund L.P.
|
5,263,158
|
5.26%
|
Common Share Purchase Warrants
(3)
|
Platinum Partners Liquid Opportunity Master Fund L.P. /
Platinum Partners Value Arbitrage Fund L.P.
|
5,263,158
|
5.26%
|
(3)
|
Common Share Purchase Warrants entitle the holder to acquire one common share at an exercise price of US$6.25 expiring on August 12, 2013
|
Jurisdiction Shareholders of Record |
Number of Shareholders |
Number of Common Shares |
Percentage of Total Issued Shares |
Percentage of Total Holders |
United States
|
1,102
|
39,673,281
|
40%
|
84%
|
Canada
|
136
|
58,589,638
|
59%
|
10%
|
Other Countries
|
80
|
1,495,834
|
1%
|
6%
|
TOTAL
|
1,318
|
99,758,753
|
100%
|
100%
|
|
(a)
|
Consolidated Balance Sheets as of August 31, 2011 and 2010;
|
|
(b)
|
Consolidated Statements of Operations, Comprehensive Loss and Deficit for the years ended August 31, 2011, 2010 and 2009;
|
|
(c)
|
Consolidated Statements of Cash Flows for the years ended August 31, 2011, 2010 and 2009; and
|
Toronto Stock Exchange
(Canadian Dollars)
|
|||
Last Six Months
|
High
|
Low
|
Volume
|
October 2011
|
4.14
|
3.37
|
751,945
|
September 2011
|
5.87
|
3.47
|
1.796,658
|
August 2011
|
6.09
|
5.32
|
1,569,129
|
July 2011
|
6.56
|
5.81
|
978,591
|
June 2011
|
7.55
|
5.83
|
1,,799,396
|
May 2011
|
7.40
|
6.02
|
1,405,139
|
2010-2011
|
High
|
Low
|
Volume
|
Fourth Quarter ended August 31, 2011
|
7.55
|
5.32
|
4,347,116
|
Third Quarter ended May 31, 2011
|
7.40
|
5.88
|
4,305,338
|
Second Quarter ended February 28, 2011
|
7.39
|
5.93
|
4,424,588
|
First Quarter ended November 30, 2010
|
7.79
|
5.74
|
4,882,585
|
2009-2010
|
High
|
Low
|
Volume
|
Fourth Quarter ended August 31, 2010
|
5.98
|
4.51
|
2,819,382
|
Third Quarter ended May 31, 2010
|
5.16
|
4.02
|
4,017,954
|
Second Quarter ended February 28, 2010
|
5.15
|
3.20
|
6,038,868
|
First Quarter ended November 30, 2009
|
4.20
|
2.91
|
13,235,199
|
Last Five Fiscal Years
|
High
|
Low
|
|
2011
|
7.82
|
5.38
|
|
2010
|
5.63
|
2.69
|
|
2009
|
5.29
|
1.58
|
|
2008
|
7.25
|
3.55
|
|
2007
|
7.24
|
4.44
|
|
B. Plan of Distribution
No. of Shares |
Amount |
|
Total Outstanding as of August 31, 2008
|
88,114,352
|
$61,705,400
|
Add:
Issued for private placements
|
1,456,801
|
$5,240,000
|
Issued pursuant to share subscription agreements
|
141,809
|
$750,000
|
Issued pursuant to Restricted Stock Unit Plan
|
69,582
|
$416,316
|
Total Outstanding as of August 31, 2009
|
89,782,544
|
68,111,716
|
Add:
Issued for private placements, net
|
1,462,584
|
3,984,479
|
Issued pursuant to Restricted Stock Unit Plan
|
148,165
|
664,115
|
Issued for Commitment and Agent’s Fees
|
22,166
|
95,000
|
Total Outstanding as of August 31, 2010
|
91,415,459
|
72,855,310
|
Add:
Issued for private placements, net
|
2,532,119
|
12,912,783
|
Issued pursuant to share subscriptions agreement
|
144,430
|
800,000
|
Issued pursaunt to Restricted Stock Unit Plan
|
136,408
|
681,339
|
Issued on conversion of convertible debt agreement
|
247,173
|
971,107
|
Issued for acquisition of property
|
20,006
|
97,035
|
Issued for Prospectus
|
5,263,158
|
22,354,127
|
Total Outstanding as of August 31, 2011
|
99,758,753
|
110,671,701
|
·
|
the name of the Company was changed to “
Tan Range Exploration Corporation”;
|
·
|
the restriction on the transfer of shares was removed; and
|
·
|
a new paragraph regarding the appointment of additional directors was added as follows:
|
|
“(b)
|
The Directors, may, between annual general meetings, appoint one or more additional directors of the Company to serve until the next annual general meeting, but the number of additional Directors shall not at any time exceed one-third (1/3) of the number of Directors who held office at the expiration of the last annual meeting of the corporation.”
|
·
|
the provisions of the Articles authorizing the issue of Class “B” Voting shares, Class “C”
Non-Voting shares and Class “D” Preferred shares were deleted;
|
·
|
Class “A” voting shares were redesignated as common shares; and
|
·
|
a provision was added to allow meetings of shareholders to be held outside Alberta in either of the cities of Vancouver, British Columbia or Toronto, Ontario.
|
·
|
the name of the Company was changed to its present name, “
Tanzanian Royalty Exploration Corporation”.
|
·
|
Pursuant to Section 173(1)(l) of the Business Corporations Act
(Alberta)
, Item 5 of the Articles of the Company was amended by changing the maximum number of directors from 9 to 11.
|
Date |
Names of Parties
|
Description of General Nature of the Contract
|
Consideration Paid; Terms and Conditions
|
October 25, 2011
|
State Mining Corporation (Stamico) and the Company
|
Joint Venture Agreement for the development of the Buckreef Gold Project
|
Through its wholly-owned subsidiary, Tanzania American International Development Corporation 2000 Limited (Tanzam), the Company will hold a 55% interest in the joint venture company, Buckreef Gold Company Limited, with Stamico holding the remaining 45%.
|
December 16, 2010
|
State Mining Corporation and the Company
|
Heads of Agreement
|
$3,000,000 for 55% interest in the Buckreef Project
|
August 24, 2010
|
James E. Sinclair and the Company
|
Subscription Agreement for purchase of 144,430 common shares
|
$5.539 per share for a total of $800,000
|
March 27, 2009
|
James E. Sinclair and the Company
|
Subscription Agreement for purchase of 248,139 common shares
|
$6.05 per share for a total of $1,500,000
|
February 23, 2009
|
James E. Sinclair and the Company
|
Subscription Agreement for purchase of 189,036 common shares
|
$5.29 per share for a total of $1,000,000
|
February 1, 2009
|
James E. Sinclair and the Company
|
Subscription Agreement for purchase of $3,000,000 worth of common shares over a two year period.
|
The pricing of each quarterly tranche will be based on the weighted average trading price of the Company’s common shares for the last five consecutive trading days of each quarterly period, or the closing price on the last trading day of each quarterly period, whichever is greater.
|
(i)
|
maximum Corporate Tax Rate of 30% (Residents and Non Residents)
|
(ii)
|
Withholding Tax on Dividends = 10%
|
(iii)
|
Withholding Tax on Interest = 10%
|
(iv)
|
50% write – off of capital expenditure incurred during the year of expenditure of the project.
|
(v)
|
Carry forward of losses for unlimited period of time.
|
-
|
an insurance company;
|
-
|
a tax-exempt organization;
|
-
|
a financial institution;
|
-
|
a person subject to the alternative minimum tax;
|
-
|
a person who is a broker-dealer in securities;
|
-
|
an S corporation;
|
-
|
an expatriate subject to Section 877 of the Code;
|
-
|
an owner of, directly, indirectly or by attribution, 10% or more of the outstanding common shares; or
|
-
|
an owner holding common shares as part of a hedge, straddle, synthetic security or conversion transaction.
|
Taxable Supplies
|
Rate
|
Supply of goods and services in Mainland Tanzania
|
18%
|
Import of goods and services in Mainland Tanzania
|
18%
|
Export of goods and services from Mainland Tanzania
|
0%
|
Resident
|
Non-Resident
|
|
Dividend
|
10%
|
10%
|
Interest
|
10%
|
10%
|
Royalties
|
0%
|
15%
|
Management Fees
|
0%
|
15%
|
Professional Fees
|
5%
|
15%
|
Rent, Premium for Use of Property
|
10%
|
15%
|
Pension/Retirement Annuity
|
10%
|
15%
|
Resident
|
Non-Resident
|
|
Technical Services to Mining Operations
|
5%
|
15%
|
Management Fee
|
5%
|
15%
|
Interest on Loans*
|
0%
|
0%
|
Companies listed on the Dar es Salaam Stock Exchange enjoy a preferential withholding tax on 5% on dividends.
|
|
*
|
In respect of mining companies having loans acquired at arm’s length before July 1, 2001. 10% applies to interest on all other loans.
|
(i)
|
100% write off of capital expenditure in the year of Income of expenditure.
|
(ii) | Indefinite carry forward of losses. |
(iii)
|
15% additional Capital Expenditure on unredeemed qualifying Capital Expenditure for Mining Operators who had entered into Agreement with the Government before 1
st
July 2001, under the Mining Acts.
|
(iv)
|
Withholding tax on dividends and branch profits at 10%
|
(v)
|
Withholding tax on interest at 10%
|
(vi)
|
Corporate tax rate maximum at 30%
|
|
Not Applicable.
|
2011 |
|
Canadian Dollar
|
25%
|
U.S. Dollar
|
50%
|
Tanzanian Schilling
|
25%
|
Total:
|
100%
|
2007
|
2008
|
2009
|
2010 |
2011
(Average to August 31)
|
$695.39
|
$871.96
|
$972.35
|
$1,224.53
|
$1,499.33
|
Fiscal Year Ending August 31
|
Audit Fees
|
Audit Related Fees
|
Tax Fees
|
All Other Fees
|
2011
|
Canada – $234,500
Tanzania – 8,000
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
2010
|
Canada - $133,500
Tanzania - $8,000
|
Nil
Nil
|
$15,000
Nil
|
Nil
Nil
|
Exhibit No.
1.1
|
Name
Articles and Bylaws of Tan Range Exploration Corporation, as amended.
(1)
|
|
1.2
|
Certificate of Amendment for Change of Name dated February 28, 2006
(6)
|
|
1.3
|
Certificate of Amendment and Registration of Restated Articles dated March 7, 2008 for increase in the maximum number of directors to eleven
(6)
|
|
2.1
|
Employee Share Ownership Plan (2003)
(1)
|
|
2.2
|
2001 Stock Option Plan
(1)
|
|
2.3
|
Shareholder Rights Plan
(2)
|
|
2.4
|
Restricted Stock Unit Incentive Plan
(4)
|
|
2.5
|
||
4.1
|
Subscription and Property Option Agreement dated May 31, 1999 between the Company and Barrick Gold Corporation
(2)
|
|
4.2
|
Option Agreement dated December 14, 2001 between Tanzam 2000 Limited and Barrick Exploration Africa Limited
(2)
|
|
4.3
|
Letter of Intent dated January 20, 2003 between the Company and Northern Mining Explorations Ltd., as amended by Letter Agreement dated March 18, 2003
(2)
|
|
4.4
|
Letter of Intent dated July 21, 2003 between the Company and Ashanti Goldfields (Cayman) Limited
(2)
|
|
4.8
4.9
|
Option Agreement dated September 7, 2004 between the Company and Northern Mining Explorations Ltd.
(3)
Purchase and Sale Agreement dated September 26, 2006 between the Company and Ashanti Goldfields (Cayman) Limited
(4)
|
|
4.10
|
Option and Royalty Agreement dated January 25, 2007 between the Company and Sloane Developments Ltd.
(5)
|
|
4.12
|
March 27, 2009 Subscription Agreement for purchase of 248,139 common shares with James E. Sinclair
(6)
|
|
4.13
|
February 23, 2009 Subscription Agreement for purchase of 189,036 common shares with James E. Sinclair
(6)
|
|
4.14
|
February 1, 2009 Subscription Agreement for purchase of $3,000,000 of common shares with James E. Sinclair
(6)
|
|
4.15
|
August 24, 2010 Subscription Agreement for purchase of 144,430 common shares with James E. Sinclair
(7)
|
|
4.16
|
||
4.17
|
||
8.1
|
List of Subsidiaries
(6)
|
|
12.1
|
||
12.2
|
||
13.1
|
||
15.1
|
||
15.2
|
(1)
|
Previously filed on Form 20-F filed with the SEC on March 15, 2004
|
(2)
|
Previously filed on Amendment No. 1 to Form 20 with the SEC on June 28, 2004
|
(3)
|
Previously filed on Form 20-F with the SEC on February 10, 2005
|
(4)
|
Previously filed on Form 20-F with the SEC on November 30, 2006
|
(5)
|
Previously filed on Form 20-F with the SEC on November 30, 2007
|
(6)
|
Previously filed on Form 20-F with the SEC on November 25, 2009
|
(7)
|
Previously filed on Form 20-F with the SEC on November 30, 2010
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
|
|||
Date December 12, 2011
|
By:
|
/s/ “James E. Sinclair” | |
James E. Sinclair,
|
|||
President and Chief Executive Officer
|
|||
(Principal Executive Officer) |
|
(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 Company's 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
|
|
(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 Company's 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 Company's internal control over financial reporting.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
|
RESTRICTED STOCK UNIT INCENTIVE PLAN
|
Page
|
|||
1.
|
PURPOSE
|
1
|
|
2.
|
DEFINITIONS
|
1
|
|
3.
|
ADMINISTRATION OF THE PLAN
|
3
|
|
3.1
|
Board.
|
3
|
|
3.2
|
Committee.
|
4
|
|
3.3
|
Terms of Awards
|
4
|
|
3.4
|
No Liability.
|
5
|
|
3.5
|
Book Entry.
|
5
|
|
4.
|
SHARES SUBJECT TO THE PLAN
|
5
|
|
5.
|
EFFECTIVE DATE, DURATION AND AMENDMENTS
|
6
|
|
5.1
|
Effective Date.
|
6
|
|
5.2
|
Term.
|
6
|
|
5.3
|
Amendment and Termination of the Plan.
|
6
|
|
6.
|
AWARD ELIGIBILITY AND LIMITATIONS
|
6
|
|
6.1
|
Service Providers and Other Persons.
|
6
|
|
6.2
|
Successive Awards
|
6
|
|
6.3
|
Stand-Alone, Additional, Tandem, and Substitute Awards.
|
7
|
|
7.
|
AWARD AGREEMENT
|
7
|
|
8.
|
TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS
|
7
|
|
8.1
|
Grant of Restricted Stock Units.
|
7
|
|
8.2
|
Restrictions and Vesting.
|
7
|
|
8.3
|
Restricted Stock Unit Accounts.
|
8
|
|
8.4
|
Rights of Holders of Restricted Stock Units.
|
8
|
|
8.5
|
Termination of Service.
|
8
|
|
8.6
|
Delivery of Shares.
|
8
|
|
9.
|
TERMS AND CONDITIONS OF AWARDS
|
9
|
|
9.1
|
Performance Conditions
|
9
|
|
9.2
|
Written Determinations.
|
10
|
|
10.
|
REQUIREMENTS OF LAW
|
10
|
|
10.1
|
General.
|
10
|
|
11.
|
EFFECT OF CHANGES IN CAPITALIZATION
|
10
|
|
11.1
|
Changes in Shares.
|
10
|
|
11.2
|
Change of Control.
|
11
|
|
11.3
|
Adjustments.
|
11
|
|
11.4
|
No Limitations on Corporation.
|
11
|
|
12.
|
GENERAL PROVISIONS
|
11
|
|
12.1
|
Disclaimer of Rights.
|
11
|
|
12.2
|
Nonexclusivity of the Plan.
|
11
|
|
12.3
|
Withholding Taxes.
|
12
|
|
12.4
|
Captions.
|
12
|
|
12.5
|
Other Provisions
|
12
|
|
12.6
|
Number and Gender.
|
12
|
|
12.7
|
Severability.
|
12
|
|
12.8
|
Governing Law.
|
12
|
3.2 Committee.
(vi)
|
amend, modify, or supplement the terms of any outstanding Award. Such authority specifically includes the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to modify Awards to eligible individuals who are foreign nationals or are individuals who are employed outside Canada to recognize differences in local law, tax policy, or custom.
|
|
(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 Company's 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
|
|
(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 Company's 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 Company's internal control over financial reporting.
|
|
(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 Company's 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
|
|
(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 Company's 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 Company's internal control over financial reporting.
|
|
(1)
|
the Form 20-F fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
the information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
KPMG LLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
|
Telephone
(604) 691-3000
Fax
(604) 691-3031
Internet
www.kpmg.ca
|
INDEPENDENT AUDITORS' REPORT OF REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders of Tanzanian Royalty Exploration Corporation
We have audited the accompanying consolidated balance sheets of Tanzanian Royalty Exploration Corporation as at August 31, 2011 and 2010 and the related consolidated statements of operations, comprehensive loss and deficit, and cash flows for each of the years in the three-year period ended August 31, 2011. These consolidated financial statements are the responsibility of Tanzanian Royalty Exploration Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tanzanian Royalty Exploration Corporation as of August 31, 2011 and 2010 and its consolidated results of operations and its consolidated cash flows for each of the years in the three-year period ended August 31, 2011 in conformity with Canadian generally accepted accounting principles.
Canadian generally accepted accounting principles vary in certain significant respects from US generally accepted accounting principles. Information relating to the nature and effect of such differences is presented in note 14 to the consolidated financial statements.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Tanzanian Royalty Exploration Corporation's internal control over financial reporting as of August 31, 2011, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated December 9, 2011 expressed an unqualified opinion on the effectiveness of Tanzanian Royalty Exploration Corporation's internal control over financial reporting.
//s// KPMG LLP
Chartered Accountants
Vancouver, Canada
December 9, 2011
|
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
|
KPMG LLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
|
Telephone
(604) 691-3000
Fax
(604) 691-3031
Internet
www.kpmg.ca
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
To the Board of Directors of Tanzanian Royalty Exploration Corporation
We have audited Tanzanian Royalty Exploration Corporation's (the Company) internal control over financial reporting as of August 31, 2011, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Controls and Procedures. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed 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. A Company's 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 generally accepted accounting principles, 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2011, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of August 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive loss and deficit, and cash flows for each of the years in the three-year period ended August 31, 2011, and our report dated December 9, 2011 expressed an unqualified opinion on those consolidated financial statements. |
//s// KPMG LLP
Chartered Accountants
|
Vancouver, Canada
|
December 9, 2011
|
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
("KPMG
International"), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Consolidated Balance Sheets
(Expressed in Canadian dollars)
August 31, 2011 and 2010
|
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 32,428,471 | $ | 1,325,708 | ||||
Short-term investment
|
29,400 | 40,425 | ||||||
Accounts receivable
|
157,134 | 79,073 | ||||||
Inventory
|
223,518 | 229,196 | ||||||
Prepaid expenses
|
83,855 | 60,362 | ||||||
32,922,378 | 1,734,764 | |||||||
Mineral properties and deferred exploration costs (note 3)
|
33,744,578 | 29,956,026 | ||||||
Equipment and leasehold improvements (note 4)
|
1,447,030 | 1,092,770 | ||||||
$ | 68,113,986 | $ | 32,783,560 | |||||
Liabilities and Shareholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued liabilities (note 9)
|
$ | 2,471,199 | $ | 620,795 | ||||
Convertible debt (note 6)
|
2,958,039 | 1,841,226 | ||||||
Shareholders’ equity:
|
||||||||
Share capital (note 8(b))
|
110,671,701 | 72,855,310 | ||||||
Share subscriptions received (note 13(a))
|
- | 874,149 | ||||||
Contributed surplus (note 8(e))
|
706,988 | 476,205 | ||||||
Warrants (note 8(b))
|
5,411,410 | - | ||||||
Deficit
|
(54,105,351 | ) | (43,884,125 | ) | ||||
62,684,748 | 30,321,539 | |||||||
Nature of operations (note 1)
|
||||||||
Commitments (notes 3 and 10)
|
||||||||
Subsequent event (note 13)
|
||||||||
$ | 68,113,986 | $ | 32,783,560 |
See accompanying notes to consolidated financial statements.
|
|||||
Approved on behalf of the Board:
|
|||||
“James E. Sinclair”
|
Director
|
“Norman Betts”
|
Director
|
||
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Consolidated Statements of Operations, Comprehensive Loss and Deficit
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2011
|
2010 | 2009 | ||||||||
Expenses: | ||||||||||
Amortization
|
$ | 463,169 | $ | 202,229 | $ | 100,563 | ||||
Annual general meeting
|
73,304 | 66,509 | 64,214 | |||||||
Consulting and management fees
|
287,885 | 262,532 | 276,514 | |||||||
Directors’ fees
|
461,484 | 381,690 | 446,927 | |||||||
Insurance
|
92,173 | 95,375 | 101,798 | |||||||
Memberships, courses and publications
|
17,058 | 7,806 | 9,262 | |||||||
Office and administration
|
141,884 | 131,743 | 91,263 | |||||||
Office rentals
|
72,273 | 68,575 | 76,545 | |||||||
Press releases
|
6,099 | 5,074 | 1,260 | |||||||
Printing and mailing
|
7,079 | 29,671 | 26,217 | |||||||
Professional fees
|
632,317 | 346,966 | 481,179 | |||||||
Promotions and shareholder relations
|
65,373 | 2,616 | 22,292 | |||||||
Salaries and benefits
|
1,601,832 | 1,025,309 | 1,373,991 | |||||||
Stock-based compensation
|
368,161 | 283,450 | 62,401 | |||||||
Telephone and fax
|
40,003 | 31,767 | 17,274 | |||||||
Transfer agent and listing
|
261,114 | 200,762 | 228,023 | |||||||
Travel and accommodation
|
199,631 | 76,032 | 87,820 | |||||||
Other
|
- | - | 8,563 | |||||||
4,790,839 | 3,218,106 | 3,476,106 | ||||||||
Other expenses (earnings):
|
||||||||||
Foreign exchange
|
518,794 | 98,213 | 10,738 | |||||||
Interest, net
|
(18,805 | ) | 7,592 | 14,786 | ||||||
Interest accretion
|
181,076 | 23,010 | - | |||||||
Loss on fair value of short-term
investments
|
11,025 | 24,925 | - | |||||||
Property investigation costs
|
36,542 | 45,345 | 22,797 | |||||||
Withholding tax
|
856,191 | - | - | |||||||
Write-off of mineral properties and deferred exploration costs (note 3)
|
3,845,564 | 10,464 | 1,207,409 | |||||||
5,430,387 | 209,549 | 1,255,730 | ||||||||
Loss and comprehensive loss for the year
|
(10,221,226 | ) | (3,427,655 | ) | (4,731,836 | ) | ||||
Deficit, beginning of year
|
(43,884,125 | ) | (40,456,470 | ) | (35,724,634 | ) | ||||
Deficit, end of year
|
$ | (54,105,351 | ) | $ | (43,884,125 | ) | $ | (40,456,470 | ) | |
Basic and diluted loss per share
|
$ | (0.11 | ) | $ | (0.04 | ) | $ | (0.05 | ) | |
Weighted average number of shares outstanding
|
93,839,466 | 90,892,870 | 89,041,180 | |||||||
See accompanying notes to consolidated financial statements.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2011 |
2010 | 2009 | ||||||||||
Cash provided by (used in): | ||||||||||||
Operations:
|
||||||||||||
Loss for the year | ||||||||||||
Items not affecting cash:
|
$ | (10,221,226 | ) | $ | (3,427,655 | ) | $ | (4,731,836 | ) | |||
Amortization | 463,169 | 202,229 | 100,563 | |||||||||
Stock-based compensation |
368,161 | 283,450 | 62,401 | |||||||||
Non-cash directors' fees
|
453,845 | 299,314 | 323,622 | |||||||||
Loss on short- term investments held
for sale
|
11,025 | 24,525 | - | |||||||||
Interest accretion
|
181,076 | 23,010 | - | |||||||||
Write-off of mineral properties and deferred exploration costs
|
3,845,564 | 10,464 | 1,207,409 | |||||||||
(4,898,386 | ) | (2,584,663 | ) | (3,037,841 | ) | |||||||
Changes in non-cash working capital:
|
||||||||||||
Accounts receivable and
other receivables
|
(78,062 | ) | (35,557 | ) | 31,505 | |||||||
Inventory
|
5,678 | 118,211 | 104,932 | |||||||||
Prepaid expenses
|
(23,493 | ) | 10,358 | 17,620 | ||||||||
Accounts payable and accrued liabilities
|
1,850,404 | (23,682 | ) | 141,700 | ||||||||
(3,143,859 | ) | (2,515,333 | ) | (2,742,084 | ) | |||||||
Investing:(CP)
|
||||||||||||
Mineral properties and exploration
expenditures (note 3)
|
(7,762,870 | ) | (3,333,206 | ) | (4,110,628 | ) | ||||||
Option payments received and recoveries
|
279,244 | 274,055 | 416,313 | |||||||||
Proceeds on short-term investment
|
- | 11,830 | - | |||||||||
Equipment and leasehold improvement expenditures
|
(817,429 | ) | (587,613 | ) | (13,935 | ) | ||||||
(8,301,055 | ) | (3,634,934 | ) | (3,708,250 | ) | |||||||
Financing:
|
||||||||||||
Share capital issued - net of issuance costs
|
13,742,177 | 3,511,268 | 5,990,000 | |||||||||
Issuance of convertible debt
|
2,033,304 | 1,964,535 | - | |||||||||
Issuance from prospectus
|
26,846,345 | - | - | |||||||||
Repayment of subscription received
|
(74,149 | ) | - | - | ||||||||
Share subscriptions received
|
- | 874,119 | 473,211 | |||||||||
Repayment of obligations under
capital lease
|
- | (39,693 | ) | - | ||||||||
42,547,677 | 6,310,229 | 6,420,843 | ||||||||||
Increase (decrease) in cash and cash equivalents
|
31,102,763 | 159,962 | (29,491 | ) | ||||||||
Cash and cash equivalents, beginning of year
|
1,325,708 | 1,165,746 | 1,195,237 | |||||||||
Cash and cash equivalents, end of year
|
$ | 32,428,471 | $ | 1,325,708 | $ | 1,165,746 |
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Consolidated Statements of Cash Flows (continued)
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2011 |
2010 | 2009 | ||||||||||
Supplementary information:
|
||||||||||||
Interest received, net
|
$ | (18,805 | ) | $ | 7,952 | $ | (14,786 | ) | ||||
Non-cash transactions:
|
||||||||||||
Mineral property recoveries by
way of marketable securities
|
- | 73,750 | - | |||||||||
Stock-based compensation capitalized to mineral properties
|
53,455 | 30,659 | 103,181 | |||||||||
Shares issued pursuant to RSU plan
|
681,338 | 664,115 | 416,316 | |||||||||
Shares issued in current year for subscriptions received in prior year
|
800,000 | 473,211 | - | |||||||||
Warrants issued for prospectus
|
4,492,217 | - | - | |||||||||
Shares issued as fees on convertible debt (note 6)
|
- | 95,000 | - | |||||||||
Warrants issued for private placement
|
919,193 | - | - | |||||||||
See accompanying notes to consolidated financial statements.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
||
1.
|
Nature and continuance of operations:
|
|
The Company is in the process of exploring its mineral properties and has not yet determined whether these properties contain mineral deposits that are economically recoverable. The recoverability of the amounts shown for mineral properties and related deferred costs are dependent upon the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, the ability of the Company to obtain necessary financing to explore and develop the properties, and upon future profitable production or proceeds from disposition of the mineral properties. The amounts shown as mineral properties and exploration costs represent net costs to date, less amounts recovered, amortized and/or written off, and do not necessarily represent present or future values.
|
||
2.
|
Significant accounting policies:
|
|
These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (GAAP). A reconciliation of material measurement differences to accounting principles generally accepted in the United States and practices prescribed by the Securities and Exchange Commission is provided in note 14.
|
||
(a)
|
Principles of consolidation:
|
|
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany amounts are eliminated on consolidation.
|
||
(b)
|
Translation of foreign currencies:
|
|
The measurement currency of the Company in these consolidated financial statements is the Canadian dollar. The Company’s subsidiaries are considered integrated foreign subsidiaries and their accounts are translated using the temporal method. Under this method, monetary assets and liabilities are translated at the prevailing year-end exchange rates. Non-monetary assets are translated at historical exchange rates. Revenue and expense items are translated at the average rate of exchange for the year except for those arising from non-monetary assets which are translated at the historical exchange rate. Translation gains and losses are included in the statement of operations, comprehensive loss and deficit.
|
||
(c)
|
Cash and cash equivalents:
|
|
Cash and cash equivalents consist of cash on deposit with banks or highly liquid short-term interest-bearing securities with maturities of three months or less when acquired.
|
||
(d)
|
Short-term investments:
|
|
Short-term investments are comprised of common shares held in a publicly traded company received as proceeds of mineral property option transactions. Short-term investments have been classified as held-for-trading and are carried at fair value based on Level 1 hierarchy input of quoted market prices.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2.
|
Significant accounting policies (continued):
|
|
(e)
|
Inventory:
|
|
Inventory consists of supplies for the Company’s drilling rig to be consumed during the course of exploration development and operations. Cost represents the delivered price of the item.
|
||
(f)
|
Mineral properties and deferred exploration costs:
|
|
The Company holds various positions in mineral property interests, including prospecting licences, reconnaissance licences, and options to acquire mining licences or leases. All of these positions are classified as mineral properties for financial statement purposes.
|
||
Acquisition costs and exploration costs, including option payments, relating to mineral properties are deferred until the properties are brought into production, at which time they will be amortized on a unit-of-production basis, or until the properties are abandoned, sold or to be sold or management determines that the mineral property is not economically viable, at which time the unrecoverable deferred costs are written off. Option payments arising on the acquisition of mineral property interests are exercisable at the discretion of the Company and are recognized as paid or payable.
|
||
Amounts recovered from third parties to earn an interest in the Company’s mineral properties are applied as a reduction of the mineral property and deferred exploration costs.
|
||
Overhead costs directly related to exploration are allocated to the mineral properties explored during the year and are deferred and are to be amortized using the same method applied to property-specific exploration costs. All other overhead and administration costs are expensed in the year they are incurred.
|
||
For a mining property, the cost of the asset includes exploration costs if the enterprise considers that such costs have the characteristics of property, plant, and equipment. Emerging Issue Committee Abstract 174,
Mining Exploration Costs
, (EIC-174) states that a mining enterprise that has not established mineral reserves objectively, and therefore does not have a basis for preparing a projection of the estimated cash flow from the property, is not precluded from considering the exploration costs to have the characteristics of property, plant and equipment. Therefore a mining enterprise in the development stage is not required to consider the conditions in Accounting Guideline No. 11,
Enterprises in the Development Stage
,
(AcG 11) regarding impairment in determining whether exploration costs may be initially capitalized.
|
||
With respect to impairment of capitalized exploration costs, a mining enterprise in the development stage has not established mineral reserves objectively, and, therefore, does not have a basis for preparing a projection of the estimated cash flow from the property. However, such an enterprise should consider if the value of the properties are impaired in determining whether a subsequent write-down of capitalized exploration costs related to mining properties is required.
|
||
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2.
|
Significant accounting policies (continued):
|
(f)
|
Mineral properties and deferred exploration costs (continued):
|
|
The Company considers that its exploration costs have the characteristics of property, plant, and equipment, and, accordingly, defers such costs. Furthermore, pursuant to EIC-174, deferred exploration costs are not automatically subject to regular assessment of recoverability, unless conditions, such as those discussed in AcG 11, exist.
|
||
The Company follows these recommendations and therefore the unproven mineral property claim costs are initially capitalized. Mineral properties and deferred exploration costs are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if, at the date it is tested for recoverability, the carrying amount of the mineral property exceeds the sum of the undiscounted cash flows expected to result from its production and/or eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the mineral property exceeds its fair value.
|
||
(g)
|
Equipment and leasehold improvements:
|
|
Equipment and leasehold improvements, other than mineral properties and deferred exploration and development costs, are recorded at cost and amortization is provided for on a declining balance basis using the following rates:
|
Assets
|
Rate
|
|||
Machinery and equipment
|
20% to 30
|
% | ||
Automotive
|
30 | % | ||
Computer equipment
|
30 | % | ||
Drilling equipment and automotive equipment under capital lease
|
6.67 | % | ||
Leasehold improvements
|
20 | % |
(h)
|
Stock-based compensation:
|
|
All stock-based compensation is determined based on the fair value method and expensed over the expected vesting period. The fair value of restricted stock units (RSUs) is determined as the market price of the Company’s shares on the grant date multiplied by the number of RSUs granted.
|
||
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2.
|
Significant accounting policies (continued):
|
(i)
|
Income taxes:
|
|
The Company follows the asset and liability method of accounting for income taxes. Under the asset and liability method, future income tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences) and loss carry forwards, and are measured using the enacted or substantively enacted tax rates expected to be in effect when the temporary differences are likely to reverse. Future tax benefits, such as non-capital loss carry forwards, are recognized if realization of such benefits is considered more likely than not.
|
(j)
|
Asset retirement obligation:
|
|
The Company recognizes the fair value of a future 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 results from the acquisition, construction, development, and/or normal use of the assets if a reasonable estimate of fair value can be made. The Company concurrently recognizes a corresponding increase in the carrying amount of the related long-lived asset that is depreciated over the life of the asset. The fair value of the asset retirement obligation is estimated using the expected cash flow approach that reflects a range of possible outcomes discounted at a credit-adjusted risk-free interest rate. Subsequent to the initial measurement, the asset retirement obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. Changes in the obligation due to the passage of time are recognized in income as an operating expense using the interest method. Changes in the obligation due to changes in estimated cash flows are recognized as an adjustment of the carrying amount of the related long-lived asset that is depreciated over the remaining life of the asset.
|
||
The Company has determined that it has no material asset retirement obligations as at August 31, 2011 and 2010.
|
||
(k)
|
Loss per share:
|
|
Loss per share has been calculated using the weighted average number of common shares issued and outstanding. Shares held in escrow subject to performance conditions for release are considered contingently issuable shares and are excluded from the weighted average number of shares used in calculating loss per share prior to their eligibility for release. All outstanding stock options, restricted stock units, special warrants and share purchase warrants, all of which could potentially dilute basic loss per share, have not been included in the computation of diluted loss per share because to do so would be anti-dilutive.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2.
|
Significant accounting policies (continued):
|
|
(l)
|
Use of estimates:
|
|
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the year. Areas requiring the use of estimates and measurement uncertainties include the valuation and impairment of value of mineral properties and deferred exploration costs and the determination of future income taxes. Actual results may differ from management’s estimates.
|
||
(m)
|
Segmented information:
|
|
The Company’s principal operations are located in Tanzania. The Company conducts its business in a single operating segment being the investment in and exploration of mineral properties. All mineral properties (note 3) and significant equipment and leasehold improvements are situated in Tanzania (note 4).
|
||
(n)
|
Comparative figures:
|
|
Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year.
|
||
(o)
|
Financial instruments - recognition and measurement:
|
|
Financial assets and liabilities, including derivative instruments, are classified into one of the following balance sheet categories:
|
||
·
Held-for-trading financial assets and liabilities are initially measured at fair value with subsequent changes in fair value being recognized in the net earnings;
|
||
·
Available-for-sale financial assets are initially measured at fair value with subsequent changes in fair value being recognized in other comprehensive income until the instrument is derecognized or impaired at which time the amount would be recorded in net earnings; or
|
||
·
Held-to-maturity investments, loans and receivables, or other financial liabilities are initially measured at fair value with subsequent changes measured at amortized cost utilizing the effective interest rate method.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
2.
|
Significant accounting policies (continued):
|
|
(o)
|
Financial instruments - recognition and measurement (continued):
|
|
The Company classified financial instruments as follows:
|
||
·
Cash and cash equivalents and short-term investments are classified as held-for-trading and accordingly carried at their fair values;
·
Accounts and other receivables are classified as loans and receivables; and
·
Accounts payable and accrued liabilities and convertible debt are classified as other financial liabilities.
|
||
As at August 31, 2011 and 2010, the carrying value of cash and cash equivalents, accounts and other receivables and accounts payable and accrued liabilities approximate their fair values due to their short-term to maturity. Cash and cash equivalents and short-term investment fair values are based on Level 1 hierarchy inputs.
|
||
Transaction costs that are directly attributable to the issuance of financial assets or liabilities are accounted for as part of the carrying value at inception, and are recognized over the term of the assets or liabilities using the effective interest method.
|
||
(p)
|
Accounting for units of equity:
|
|
The Company may issue units of equity consisting of common shares and common share purchase warrants. The Company allocates the proceeds received to the common shares and common share purchase warrants, on a relative fair value basis, using the market value of the shares and the fair value of the warrants calculated using the Black-Scholes model.
|
||
(q)
|
Future Canadian accounting standards:
|
|
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, replacing Canadian GAAP. The changeover date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company will therefore adopt IFRS for its August 2012 year end and beginning with the 1st quarter financials ended November 2011. The transition date of September 1, 2010 will require the restatement for comparative purposes of amounts reported by the Company for the year ending August 31, 2011. The impact of the new standards on the Company’s financial statements is currently being evaluated by management.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
3.
|
Mineral properties and deferred exploration costs:
|
The Company explores or acquires gold or other precious metal concessions through its own efforts or through the efforts of its subsidiaries. All of the Company’s concessions are located in Tanzania.
|
|
The Company’s mineral interests in Tanzania are initially held under prospecting licenses granted pursuant to the Mining Act, 2010 (Tanzania) for a period of up to four years, and are renewable two times for a period of up to two years each. Annual rental fees for prospecting licenses are based on the total area of the license measured in square kilometres, multiplied by USD$40/sq.km for the initial period, $50/sq.km for the first renewal and $60/sq.km for the second renewal. With each renewal at least 50% of the licensed area, if greater than 20 square kilometres, must be relinquished and if the Company wishes to keep the relinquished one-half portion, it must file a new application for the relinquished portion. There is also an initial one-time “preparation fee” of USD$200.00 per license. Upon renewal, there is a renewal fee of USD$100.00 per licence.
|
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
3.
|
Mineral properties and deferred exploration costs (continued):
|
The continuity of expenditures on mineral properties is as follows:
|
Itetemia
(a)
|
Luhala
(b)
|
Kigosi
(c)
|
Lunguya
(d)
|
Kanagele
(e)
|
Tulawaka
(f)
|
Ushirombo
(g)
|
Mbogwe
(h)
|
Biharamulu
(i)
|
Buckreef
(j)
|
Other
(k)
|
Total
|
|||||||||||||||||||||||||||||||||||||
Balance, August 31, 2008
|
$ | 6,208,311 | $ | 4,116,047 | $ | 6,031,366 | $ | 2,762,264 | $ | 1,212,978 | $ | 673,612 | $ | 38,553 | $ | 476,974 | $ | 18,519 | $ | - | $ | 2,821,719 | $ | 24,360,343 | ||||||||||||||||||||||||
Exploration expenditures:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Camp, field supplies and travel
|
- | - | 271,912 | 5,476 | - | - | 830 | 4,680 | - | - | 10,375 | 293,273 | ||||||||||||||||||||||||||||||||||||
Exploration and field overhead
|
30,458 | 1,203 | 1,315,001 | 41,178 | 15,968 | 6,100 | 26,758 | 25,661 | 2,743 | - | 230,919 | 1,695,989 | ||||||||||||||||||||||||||||||||||||
Geophysical and geochemical
|
- | - | 266,525 | 12,776 | - | - | 10,375 | 16,577 | - | - | 24,164 | 330,417 | ||||||||||||||||||||||||||||||||||||
Property acquisition costs
|
29,833 | - | 24,866 | - | 47,213 | 14,675 | - | 1,692 | - | - | 354,008 | 472,287 | ||||||||||||||||||||||||||||||||||||
Trenching and drilling
|
- | - | 1,421,843 | - | - | - | - | - | - | - | - | 1,421,843 | ||||||||||||||||||||||||||||||||||||
Recoveries
|
(159,016 | ) | (193,514 | ) | (60,006 | ) | - | - | (1,661 | ) | - | - | (2,116 | ) | - | - | (416,313 | ) | ||||||||||||||||||||||||||||||
(98,725 | ) | (192,311 | ) | 3,240,141 | 59,430 | 63,181 | 19,114 | 37,963 | 48,610 | 627 | - | 619,466 | 3,797,496 | |||||||||||||||||||||||||||||||||||
6,109,586 | 3,923,736 | 9,271,507 | 2,821,694 | 1,276,159 | 692,726 | 76,516 | 525,584 | 19,146 | - | 3,441,185 | 28,157,839 | |||||||||||||||||||||||||||||||||||||
Write-offs
|
- | - | - | - | (246,546 | ) | - | - | (486,919 | ) | - | - | (473,944 | ) | (1,207,409 | ) | ||||||||||||||||||||||||||||||||
Balance, August 31, 2009
|
6,109,586 | 3,923,736 | 9,271,507 | 2,821,694 | 1,029,613 | 692,726 | 76,516 | 38,665 | 19,146 | - | 2,967,241 | 26,950,430 | ||||||||||||||||||||||||||||||||||||
Exploration expenditures:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Camp, field supplies and travel
|
- | - | 272,210 | 10,706 | - | - | 52 | - | 93 | - | 312 | 283,373 | ||||||||||||||||||||||||||||||||||||
Exploration and field overhead
|
1,265 | 1,773 | 998,291 | 114,215 | 12,097 | 3,508 | 169,735 | 42,088 | 190,195 | - | 215,759 | 1,748,926 | ||||||||||||||||||||||||||||||||||||
Geological consulting and field ages
|
- | - | 8,526 | - | - | - | - | - | - | - | - | 8,526 | ||||||||||||||||||||||||||||||||||||
Geophysical and geochemical
|
- | - | 478,520 | 6,748 | - | - | - | - | 35 | - | 518 | 485,821 | ||||||||||||||||||||||||||||||||||||
Property acquisition costs
|
27,343 | - | 24,110 | - | 55,421 | 14,851 | - | - | - | - | 243,796 | 365,521 | ||||||||||||||||||||||||||||||||||||
Trenching and drilling
|
- | - | 471,698 | - | - | - | - | - | - | - | - | 471,698 | ||||||||||||||||||||||||||||||||||||
Recoveries
|
(192,260 | ) | (83,395 | ) | (35 | ) | - | - | (32,042 | ) | - | - | (40,073 | ) | - | - | (347,805 | ) | ||||||||||||||||||||||||||||||
(163,652 | ) | (81,622 | ) | 2,253,320 | 131,669 | 67,518 | (13,683 | ) | 169,787 | 42,088 | 150,250 | - | 460,385 | 3,016,060 | ||||||||||||||||||||||||||||||||||
5,945,934 | 3,842,114 | 11,524,827 | 2,953,363 | 1,097,131 | 679,043 | 246,303 | 80,753 | 169,396 | - | 3,427,626 | 29,966,490 | |||||||||||||||||||||||||||||||||||||
Write-offs
|
- | - | - | - | - | - | - | - | - | - | (10,464 | ) | (10,464 | ) | ||||||||||||||||||||||||||||||||||
Balance, August 31, 2010
|
5,945,934 | 3,842,114 | 11,524,827 | 2,953,363 | 1,097,131 | 679,043 | 246,303 | 80,753 | 169,396 | - | 3,417,162 | 29,956,026 | ||||||||||||||||||||||||||||||||||||
Exploration expenditures:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Camp, field supplies and travel
|
- | - | 321,490 | 64,326 | - | - | - | - | - | - | 35,892 | 421,708 | ||||||||||||||||||||||||||||||||||||
Exploration and field overhead
|
13,957 | 7,408 | 1,255,558 | 152,294 | 2,833 | 971 | 18,052 | 3,821 | 2,300 | 596,202 | 183,972 | 2,237,368 | ||||||||||||||||||||||||||||||||||||
Geological consulting and field ages
|
- | - | 22,331 | - | - | - | - | - | - | - | - | 22,331 | ||||||||||||||||||||||||||||||||||||
Geophysical and geochemical
|
- | - | 191,604 | 66,550 | - | - | - | - | - | - | 39 | 258,193 | ||||||||||||||||||||||||||||||||||||
Property acquisition costs
|
25,870 | - | 219,639 | - | 55,882 | 15,595 | - | - | - | 3,822,521 | 259,706 | 4,399,213 | ||||||||||||||||||||||||||||||||||||
Trenching and drilling
|
- | - | 330,764 | 243,873 | - | - | - | - | - | - | - | 574,547 | ||||||||||||||||||||||||||||||||||||
Recoveries
|
(162,702 | ) | (121,896 | ) | - | - | - | (600 | ) | - | - | - | - | - | (279,244 | ) | ||||||||||||||||||||||||||||||||
(122,875 | ) | (114,488 | ) | 2,341,386 | 526,953 | 58,715 | 15,966 | 18,052 | 3,821 | 2,300 | 4,418,723 | 479,609 | 7,634,113 | |||||||||||||||||||||||||||||||||||
5,823,059 | 3,727,626 | 13,866,213 | 3,480,316 | 1,155,846 | 695,009 | 264,355 | 84,574 | 171,696 | 4,418,723 | 3,896,771 | 37,590,139 | |||||||||||||||||||||||||||||||||||||
Write-offs
|
- | - | - | (68,189 | ) | - | - | - | (2,535 | ) | - | - | (3,774,840 | ) | (3,845,564 | ) | ||||||||||||||||||||||||||||||||
Balance, August 31, 2011
|
$ | 5,823,059 | $ | 3,727,626 | $ | 13,866,213 | $ | 3,412,127 | $ | 1,155,846 | $ | 695,009 | $ | 264,355 | $ | 82,039 | $ | 171,696 | $ | 4,418,723 | $ | 121,934 | $ | 33,744,578 |
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
3.
|
Mineral properties and deferred exploration costs (continued):
|
|
The Company assessed the carrying value of mineral properties and deferred exploration costs as at August 31, 2011 and recorded a write-down of $3,845,564.
|
||
(a)
|
Itetemia Project:
|
|
Through prospecting and mining option agreements, the Company has options to acquire interests in several ltetemia property prospecting licenses. The prospecting licenses comprising the Itetemia property are held by the Company; through the Company's subsidiaries, Tancan or Tanzam. In the case of one prospecting license, Tancan acquired its interest pursuant to the Stamico Venture Agreement, as amended June 18, 2001 and July 2005.
|
||
Stamico retains a 2% royalty interest as well as a right to earn back an additional 20% interest in the prospecting licence by meeting 20% of the costs required to place the property into production. The Company retains the right 10 purchase one-half of Stamico's 2% royalty interest in exchange for USD$1,000,000.
|
||
The Company is required pay to Stamico an annual option fee of USD$25,000 per annum until commercial production.
|
||
As at August 31, 2011, two of the licenses are subject to an Option Agreement with Barrick Exploration Africa Ltd. (BEAL) (note 3(l)).
|
||
In January 2007, the Company concluded an Option and Royalty Agreement with Sloane over a portion of the Company's Itetemia Property. Under the Option Agreement, the Company granted Sloane the right to earn a beneficial interest ranging from 90% to 100% in certain ltetemia prospecting licenses in the Lake Victoria greenstone belt of Tanzania. In December 2010, Sloane returned two Itetemia licences to the Company.
|
||
During the year ended August 31, 2011, the Company did not abandon any licences in the area and no write-off was taken in this area (2010 - nil; 2009 - nil).
|
||
(b)
|
Luhala Project:
|
|
In January 2007, the Company concluded an Option Royalty Agreement with Sloane for its Luhala property. Under the Option Agreement, the Company granted Sloane the right to earn a 100% beneficial interest in the Luhala Project. In December 2009, Sloane returned seven Luhala licences to the Company.
|
||
During the year ended August 31, 2011, the Company did not abandon any licences in the area and no write-off was taken in this area (2010 - nil; 2009 - nil).
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
3.
|
Mineral properties and deferred exploration costs (continued):
|
(h)
|
Mbogwe:
|
|||||||||||
During the year ended August 31, 2011, the Company abandoned three licences in the area and wrote off $2,535 for this property (2010 - nil; 2009 - $468,919).
|
||||||||||||
(i)
|
Biharamulo:
|
|||||||||||
Three Biharamulo licences are subject to the option agreement with MDN (note 3(m)).
|
||||||||||||
During the year ended August 31, 2011, the Company did not abandon any licences in the area no write off was taken for this property (2010 - nil; 2009 - nil).
|
||||||||||||
(j)
|
Buckreef Gold Project:
|
|||||||||||
On December 21, 2010, the Company announced it was the successful bidder for the Buckreef Gold Mine Re-development Project in northern Tanzania (the Buckreef Project). Pursuant to the terms of the heads of agreement dated December 16, 2010, the Company paid U.S. $3,000,000 to Stamico in consideration of the transaction. On October 25, 2011, a
Definitive Joint Venture Agreement was entered into with Stamico for the development of the Buckreef Gold Project. Through its wholly-owned subsidiary, Tanzania American International Development Corporation 2000 Limited (Tanzam), the Company will hold a 55% interest in the joint venture company, Buckreef Gold Company Limited, with Stamico holding the remaining 45%.
|
||||||||||||
(k)
|
Other properties:
|
|||||||||||
The Company has options to acquire interests in their other properties ranging from 51% to 100%. To maintain these options and licences, the Company must make the following future payments:
|
USD$
|
||||
2012
|
209,000 | |||
2013
|
160,000 | |||
2014
|
45,000 | |||
Thereafter
|
- | |||
During the year ended August 31, 2011, the Company abandoned certain licences in the areas and wrote off $3,774,837 (2010 - $10,464; 2009 - $473,944) of costs related to the abandoned area located within the other properties category.
|
|||
(l)
|
Joint venture with BEAL:
|
||
BEAL had the option to acquire the total rights, titles, and interests of the Company in prospecting licences in various properties, herein called the BEAL project. In exchange for this option, BEAL paid USD$100 to the Company. To maintain and exercise the option, BEAL was required to incur USD$250,000 in exploration and development costs on the BEAL project within a year of closing the agreement (completed), and thereafter, BEAL must expend USD$50,000 each year for each retained prospecting licence. In addition, BEAL must make USD$40,000 annual payments to the Company for each retained prospecting licences in December 2006 and subsequent years.
|
|||
3.
|
Mineral properties and deferred exploration costs (continued):
|
||
(l)
|
Joint venture with BEAL (continued):
|
||
Within thirty days after commercial production, BEAL must pay the Company USD$1,000,000 and an additional USD$1,000,000 on each of the next two years. BEAL will also pay the owner of the licence 1.5% of net smelter returns.
|
|||
The Company has received from BEAL notices of relinquishment for all rights, titles, and interests in all but two prospecting licenses included in the Option Agreement, which are located at Itetemia.
|
|||
(m)
|
Option Agreement with MDN:
|
||
On January 20, 2003, as amended on March 18, 2003 and January 9, 2007, the Company entered into an agreement with MDN granting MDN the exclusive option to acquire the total rights, titles, and interests of the Company in certain prospecting licences. To maintain and exercise the option, MDN has made annual payments for each retained prospecting licence, incurred minimum exploration and development expenditures and certain drilling requirements undertake all obligations of the Company in respect of the licences and complete a feasibility study by December 31, 2009. Upon exercise of the option, the Company shall retain a net smelter return royalty fluctuating between 0.5% to 2.0% depending on the price of gold. On November 11, 2009, the Company was advised by MDN that a feasibility study and production decision would not be made by December 31, 2009. In consideration for a second extension of the feasibility study and production decision date to December 31, 2010, MDN issued 125,000 common shares of MDN to the Company. The prospecting licences under option to MDN are located at Biharamulo and Tulawaka.
|
|||
These 125,000 shares were issued to the Company on November 17, 2009 at a cost basis of $73,750. The Company designed the short-term investment as held-for-trading. On May 31, 2010, the Company sold 10,000 of these shares for proceeds of $4,100 and recognized a loss of $1,800. On June 1, 2010, the Company sold 10,000 of the shares for proceeds of $4,300 and recognized a loss of $1,600. As at August 31, 2011, the remaining 105,000 shares had a fair value of $40,425. The Company recorded a loss of $11,025 during the period.
|
|||
(n)
|
Option Agreement with Kazakh Africa Mining Ltd. (Kazakh):
|
||
In January 2009, the Company signed an Option and Royalty Agreement with Kazakh over the Company’s Mwadui Project area diamond prospecting licenses and applications located in the Lake Victoria Greenstone Belt of Tanzania. Kazakh has the option to acquire a 100% interest in the licenses by fulfilling various option payments over a 72-month period, whereby the Company will then receive a gross overriding royalty of 1.5% on all diamonds sold, and a net smelter returns royalty of up to 2.0% on any other minerals produced. On August 7, 2011 the Company gave Kazakh notice of default for non-payment of overdue amounts under the option and royalty agreement. On September 5, 2011 the option rights of Kazakh were terminated.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
3.
|
Mineral properties and deferred exploration costs (continued):
|
|
(o)
|
Option Agreement with Songshan Mining Co. Ltd., a corporation based in the People's Republic of China (Songshan):
|
|
On February 25, 2009, the Company entered into an Option and Royalty Option Agreement with Songshan, granting Songshan an option to acquire a 100% interest in the Company's 26 Kabanga nickel licenses and applications located in northwestern Tanzania, by completing certain exploration work over a period of three years, and then making a production decision, subject to a 3% net smeller royalty reserved in favor of the Company. In January 2010, Jinchuan Mining, a Chinese metals company, concluded an agreement with Songshan to participate in the exploration and development of the Kabanga nickel properties. Jinchuan Mining has agreed to act as operator and hold complete financial responsibility for all exploration activities on the nickel exploration licences.
|
4.
|
Equipment and leasehold improvements:
|
2011
|
Cost
|
Accumulated
amortization
|
Net book
value
|
|||||||||
Drilling equipment
|
$ | 386,713 | $ | 225,997 | $ | 160,716 | ||||||
Automotive equipment under capital lease
|
144,061 | 75,498 | 68,564 | |||||||||
Automotive
|
293,975 | 116,228 | 177,747 | |||||||||
Computer equipment
|
166,559 | 114,566 | 51,993 | |||||||||
Machinery and equipment
|
1,441,060 | 453,049 | 988,010 | |||||||||
Leasehold improvements
|
4,469 | 4,469 | - | |||||||||
$ | 2,436,837 | $ | 989,806 | $ | 1,447,030 | |||||||
2010
|
Cost
|
Accumulated
amortization
|
Net book
value
|
|||||||||
Drilling equipment
|
$ | 464,487 | $ | 199,997 | $ | 264,490 | ||||||
Automotive equipment under capital lease
|
173,034 | 68,531 | 104,503 | |||||||||
Automotive
|
209,434 | 95,996 | 113,438 | |||||||||
Computer equipment
|
120,597 | 81,715 | 38,882 | |||||||||
Machinery and equipment
|
780,394 | 209,309 | 571,085 | |||||||||
Leasehold improvements
|
5,594 | 5,222 | 372 | |||||||||
$ | 1,753,540 | $ | 660,770 | $ | 1,092,770 |
5.
|
Obligations under capital lease:
|
||||||||
The capital lease has been fully paid for on July 29, 2010. There are no other capital leases.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
6.
|
Convertible debt:
|
Allocation of gross proceeds at inception:
|
|
August 31, 2011:
|
May
2010
|
August
2010
|
September
2011
|
October
2011
|
Total
|
||||||||||||||||
Gross proceeds
|
$ | 1,000,000 | $ | 1,000,000 | $ | 1,000,000 | $ | 1,060,000 | $ | 4,060,000 | ||||||||||
Fair value of liability portion
|
978,997 | 965,375 | 965,375 | 1,023,297 | 3,933,049 | |||||||||||||||
Fair value of equity portion
|
21,003 | 34,625 | 34,625 | 36,703 | 126,956 | |||||||||||||||
Liability portion of convertible debt:
|
||||||||||||||||||||
Opening balance
|
- | - | - | - | - | |||||||||||||||
Initial fair value of debt component
|
978,997 | 965,375 | 965,375 | 1,023,297 | 3,933,044 | |||||||||||||||
Issuance costs
|
(14,996 | ) | (111,160 | ) | (3,359 | ) | (22,413 | ) | (151,928 | ) | ||||||||||
Accretion expense
|
33,137 | 85,534 | 39,369 | 46,022 | 204,062 | |||||||||||||||
Interest paid
|
(26,712 | ) | (30,000 | ) | - | - | (56,712 | ) | ||||||||||||
Conversion into common shares
|
(970,426 | ) | - | - | - | (970,426 | ) | |||||||||||||
Closing balance of liability portion
|
$ | - | $ | 909,749 | $ | 1,001,385 | $ | 1,046,906 | $ | 2,958,039 | ||||||||||
Equity portion of convertible debt:
|
||||||||||||||||||||
Opening balance
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Initial fair value of debt component
|
21,003 | 34,625 | 34,625 | 36,703 | 126,956 | |||||||||||||||
Issuance costs
|
(332 | ) | (3,987 | ) | (120 | ) | (804 | ) | (5,243 | ) | ||||||||||
Conversion into common shares
|
(20,681 | ) | - | - | - | (20,681 | ) | |||||||||||||
Closing balance of equity portion
|
$ | - | $ | 30,638 | $ | 34,505 | $ | 35,899 | $ | 101,032 |
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
6.
|
Convertible debt (continued):
|
Allocation of gross proceeds at inception (continued):
|
|
August 31, 2010:
|
May 2010
|
August 2010
|
Total
|
||||||||||
Gross proceeds
|
$ | 1,000,000 | $ | 1,000,000 | $ | 2,000,000 | ||||||
Fair value of liability portion
|
978,997 | 965,375 | 1,944,372 | |||||||||
Fair value of equity portion
|
21,003 | 34,625 | 55,628 | |||||||||
Liability portion of convertible debt:
|
||||||||||||
Opening balance
|
- | - | - | |||||||||
Initial fair value of debt component
|
978,997 | 965,375 | 1,944,372 | |||||||||
Issuance costs
|
(14,996 | ) | (111,160 | ) | (126,156 | ) | ||||||
Accretion expense
|
12,540 | 10,470 | 23,010 | |||||||||
Interest paid
|
- | - | - | |||||||||
Conversion into common shares
|
- | - | - | |||||||||
Closing balance of liability portion
|
$ | 976,541 | $ | 864,685 | $ | 1,841,226 | ||||||
Equity portion of convertible debt:
|
||||||||||||
Opening balance
|
$ | - | $ | - | $ | - | ||||||
Initial fair value of debt component
|
21,003 | 34,625 | 55,628 | |||||||||
Issuance costs
|
(322 | ) | (3,987 | ) | (4,309 | ) | ||||||
Conversion into common shares
|
- | - | - | |||||||||
Closing balance of equity portion
|
$ | 20,681 | $ | 30,638 | $ | 51,319 |
On May 28, 2010, the Company issued a three-year convertible promissory note to an arm's length third party in the principal amount of $1,000,000 bearing interest at 3% and convertible into 222,173 common shares at a price of $4.501 per share. A bonus of 25,000 common shares will be payable if the note is converted into common shares by October 11, 2011. On April 1, 2011, this Promissory Note was converted into 222,173 common shares at a price of $4.501 per share and the 25,000 bonus common shares were issued.
|
On August 17, 2010, the Company issued a three-year convertible promissory note to an arm’s length third party, in the principal amount of $1,000,000 bearing interest at 3% and convertible into 255,484 common shares at a price of $4.286 per share. The agreement charged finance and commitment fees of $95,000 which was paid by issuing 22,166 common shares. These shares will be refundable to the Company if the remaining principal is not fully converted into common shares by December 9, 2011. Subsequent to August 31, 2011, the Company received notice of conversion - see note 13(a).
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
6.
|
Convertible debt (continued):
|
|
Allocation of gross proceeds at inception (continued):
|
||
August 31, 2010:
|
On September 23, 2010 the Company completed a private placement with an arm’s length third party consisting of a three-year convertible promissory note in the principal amount of $1,000,000 bearing interest at 3% and convertible into 221,337 common shares at the price of $4.518 per share.
|
||||||||
On October 4, 2010 the Company completed a private placement with arm’s length third parties consisting of three-year convertible promissory notes in the aggregate principal amount of $1,060,000 bearing interest at 3% and convertible into 204,772 common shares at the price of $5.1765 per share.
|
||||||||
Each of the convertible debentures includes a conversion feature. The Company determined a fair value of the financial liability by obtaining independent bank rates of 3.75% for the May 2010 debt and 4.25% for the August, September and October 2010 debt, assuming a three-year expected life and assigned the residual value of all debts to the equity conversion feature in the amount of $126,956 (2010 - $55,628). Total transaction costs for all debt agreements were $157,171 (2010 - $130,465) of which $5,243 was allocated to the equity component, which aggregated to $101,032 (2010 - $51,319 (note 8(e)).
|
7.
|
Income taxes:
|
|||||||
The tax effects of significant temporary differences which would comprise tax assets and liabilities at August 31, 2011 and 2010 are as follows:
|
2011
|
2010
|
|||||||
Future income tax assets:
|
||||||||
Equipment
|
$ | 65,000 | $ | 63,000 | ||||
Non-capital losses for tax purposes
|
8,157,000 | 6,103,000 | ||||||
Capital losses for tax purposes
|
32,000 | 32,000 | ||||||
Resource amounts
|
(2,105,000 | ) | 445,000 | |||||
Finance costs
|
20,000 | (5,000 | ) | |||||
6,169,000 | 6,638,000 | |||||||
Valuation allowance
|
(6,169,000 | ) | (6,638,000 | ) | ||||
Net future income tax assets
|
$ | - | $ | - |
Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the recoverability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
7.
|
Income taxes (continued):
|
|||||||||
At August 31, 2011, the Company has non-capital losses for Canadian income tax purposes of approximately $11,691,000, which are available to carry forward to reduce future years’ taxable income. These income tax losses expire as follows:
|
2014
|
$ | 914,000 | ||
2015
|
997,000 | |||
2026
|
1,711,000 | |||
2027
|
1,388,000 | |||
2028
|
1,333,000 | |||
2029
|
1,587,000 | |||
2030
|
1,427,000 | |||
2031
|
2,334,000 | |||
$ | 11,691,000 |
The Company has non-capital losses for Tanzania tax purposes of approximately $17,450,000 which have no expiry date.
|
||||||||||
The reconciliation of income tax attributable to continuing operations computed at the statutory tax rates to income tax expense is:
|
||||||||||
2011
|
2010
|
2009
|
||||||||||
Combined basic Canadian federal and
provincial statutory income tax rates
including surtaxes
|
28.9 | % | 30.3 | % | 31.8 | % | ||||||
Statutory income tax rates applied to
accounting income
|
$ | (2,954,000 | ) | $ | (1,040,000 | ) | $ | (1,502,000 | ) | |||
Increase (decrease) in provision for income
taxes:
|
||||||||||||
Valuation allowance
|
(469,000 | ) | (1,457,000 | ) | 1,256,000 | |||||||
Foreign tax rates different from statutory
rate
|
357,000 | 236,000 | 157,000 | |||||||||
Permanent differences and other items
|
564,000 | 1,804,000 | (144,000 | ) | ||||||||
Costs capitalized with no tax basis
|
2,502,000 | |||||||||||
Loss expired in year
|
- | 457,000 | 233,000 | |||||||||
Recovery (provision) for income taxes
|
$ | - | $ | - | $ | - |
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
Number
of shares
|
Amount
|
|||||||
Balance, August 31, 2008
|
88,114,352 | $ | 61,705,400 | |||||
Issued for private placements
|
1,456,801 | 5,240,000 | ||||||
Issued pursuant to share subscriptions agreement
|
141,809 | 750,000 | ||||||
Issued pursuant to Restricted Shares Unit Plan
|
69,582 | 416,316 | ||||||
Balance, August 31, 2009
|
89,782,544 | 68,111,716 | ||||||
Issued for private placements, net
|
1,462,584 | 3,984,479 | ||||||
Issued pursuant to Restricted Shares Unit Plan
|
148,165 | 664,115 | ||||||
Issued for financing and commitment fees in convertible
debt agreements (note 6)
|
22,166 | 95,000 | ||||||
Balance, August 31, 2010
|
91,415,459 | 72,855,310 | ||||||
Issued for private placements, net of share issue costs
|
2,532,119 | 12,912,783 | ||||||
Issued pursuant to share subscriptions agreement
|
144,430 | 800,000 | ||||||
Issued pursuant to Restricted Shares Unit Plan
|
136,408 | 681,339 | ||||||
Issued on conversion of convertible debt agreement (note 6)
|
247,173 | 971,107 | ||||||
Issued for acquisition of property
|
20,006 | 97,035 | ||||||
Issued for prospectus, net of share issue costs
|
5,263,158 | 22,354,127 | ||||||
Balance, August 31, 2011
|
99,758,753 | $ | 110,671,701 |
On September 7, 2010 the Company completed an $800,000 private placement pursuant to a subscription agreement dated August 24, 2010 with the Company’s President and CEO for 144,430 common shares at a price of $5.539 per share.
|
|
On November 5, 2010 the Company completed $4,841,600 private placements with arm’s length third parties for an aggregate 800,000 common shares at the price of $6.052 per share and an aggregate 200,000 common share purchase warrants exercisable at the price of $7.309 per share and expiring on October 20, 2012. In addition, the Company paid a finder’s fee of 64,000 common shares at the subscription price of $6.052 per share to arm’s length third parties.
|
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
8.
|
Share capital (continued):
|
||
(b)
|
Issued common shares, warrants and share subscriptions (continued):
|
On November 23, 2010 the Company completed a $5,000,000 private placement with an arm’s length third party for 851,209 common shares at the price of $5.874 per share and 212,802 common share purchase warrants exercisable at the price of $7.05 per share and expiring on November 9, 2012. In addition, the Company paid a finder’s fee of 68,097 common shares at the subscription price of $5.874 per share to arm’s length third parties.
|
||
On January 31, 2011 the Company completed a $4,049,110 private placement with an arm’s length third party for 690,150 common shares at a price of $5.867 per share and 172,538 common share purchase warrants exercisable at the price of $6.903 per share expiring on December 22, 2012. In addition, the Company paid a finder’s fee of 58,663 common shares at the subscription price of $5.867 per share to an arm’s length third party.
|
||
On August 12, 2011, the Company completed an equity financing with an arm’s length third party for 5,263,158 units at a price of USD$5.70 per unit for gross proceeds of USD$30 million. Each unit consisted of one common share of the company and one common share purchase warrant. Each warrant entitles the holder to acquire one common share at an exercise price of USD$6.25 for a period of two years following the closing date. In addition, the Company issued to the Underwriter 368,421 compensation options, each exercisable to acquire one common share at a price of USD$5.91 for a period of two years.
|
||
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
8.
|
Share capital (continued):
|
|
(b)
|
Issued common shares, warrants and share subscriptions (continued):
|
|
Warrants and compensation options:
|
||
At August 31, 2011, the following warrants and compensation options were outstanding:
|
Number of
Warrants
|
Exercise price
|
Expiry date
|
Value of
Warrants
|
|||||||||||||
Balance,
August 31, 2010
|
- | - | - | - | ||||||||||||
Private placement
November 5, 2010
|
200,000 | $ | 7.309 |
October 20, 2012
|
$ | 345,900 | ||||||||||
Private placement
November 23, 2010
|
212,802 | $ | 7.05 |
November 9, 2012
|
$ | 640,979 | ||||||||||
Private placement
January 31, 2011
|
172,538 | $ | 6.903 |
December 22, 2012
|
$ | 232,314 | ||||||||||
Equity financing
August 12, 2011
|
5,263,158 |
USD$6.25
|
August 12, 2013
|
$ | 4,567,128 | |||||||||||
Equity financing
compensation options
August 12, 2011
|
268,421 |
USD$5.91
|
August 12, 2013
|
$ | 434,798 | |||||||||||
Issuance costs
|
- | - | - | $ | (509,709 | ) | ||||||||||
Balance,
August 31, 2011
|
6,216,919 | - | - | $ | 5,411,410 |
(c)
|
Employee stock ownership plan:
|
||
On May 1, 2003, the Company established a non-leveraged employee stock ownership plan (ESOP) for all eligible employees, consultants, and directors. The Company matches 100 percent of participants’ contributions up to 5 percent of the participants’ salaries and 50 percent of participants’ contributions between 6 percent and 30 percent of the participants’ salaries. All contributions vest immediately. ESOP compensation expense for the year ended August 31, 2011 was $87,330 (2010 - $73,361, 2009 - $83,181) and is included in salaries and benefits expense.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
8.
|
Share capital (continued):
|
|
(d)
|
Restricted share units:
|
|
The Restricted Stock Unit Plan (RSU Plan) is intended to enhance the Company’s and its affiliates’ abilities to attract and retain highly qualified officers, directors, key employees and other persons, and to motivate such officers, directors, key employees and other persons to serve the Company and its affiliates and to expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. To this end, the RSU Plan provides for the grant of restricted stock units (RSUs). Each RSU represents an entitlement to one common share of the Company, upon vesting. As of November 24, 2010 the Board resolved to suspend 1,800,000 of the 2,500,000 common shares previously authorized for issuance under the RSU Plan, such that a maximum of 700,000 shares shall be authorized for issuance under the RSU Plan, until such suspension may be lifted or further amended. RSU awards may, but need not, be subject to performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms of the RSU Plan. Any such performance goals are specified in the Award Agreement.
|
||
The Board of Directors implemented the RSU Plan under which officers, directors, employees and others are compensated for their services to the Company. Annual compensation for directors is $68,750 per year, plus $6,875 per year for serving on Committees, plus $3,437 per year for serving as Chair of a Committee. At the election of each individual director, up to one-third of the annual compensation may be received in cash, paid quarterly. The remainder of the director’s annual compensation (at least two-thirds, and up to 100%) will be awarded as RSUs in accordance with the terms of the RSU Plan and shall vest within a minimum of one (1) year and a maximum of three (3) years, at the election of the director, subject to the conditions of the RSU Plan with respect to earlier vesting. In 2011 outside directors had the option to elect to receive 100% of their compensation in RSUs. If 100% compensation in RSUs elected, the compensation on which the number of RSUs granted in excess of the required two-thirds shall be increased by 20%.
|
||
Of the 700,000 shares authorized for issuance under the RSU Plan, 449,187 shares have been issued as at August 31, 2011.
|
||
Total stock-based compensation expense related to the issue of RSUs was $875,461 (2010 - $650,961; 2009 - $541,633).
|
||
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
8.
|
Share capital (continued):
|
(e)
|
Contributed surplus:
|
Balance, August 31, 2008
|
$ | 399,690 | ||
Stock-based compensation
|
541,633 | |||
Shares issued pursuant to RSU Plan
|
(416,316 | ) | ||
RSU shares forfeited
|
(52,429 | ) | ||
Balance, August 31, 2009
|
472,578 | |||
Stock-based compensation
|
650,961 | |||
Shares issued pursuant to RSU Plan (note 8(d))
|
(664,115 | ) | ||
RSU shares forfeited
|
(34,538 | ) | ||
Equity conversion value for convertible debt (note 6)
|
51,319 | |||
Balance, August 31, 2010
|
476,205 | |||
Stock-based compensation
|
875,461 | |||
Shares issued pursuant to RSU Plan (note 8(d))
|
(681,339 | ) | ||
RSU shares forfeited
|
(13,062 | ) | ||
Equity converted (note 6)
|
(20,681 | ) | ||
Equity conversion value for convertible debt (note 6)
|
70,404 | |||
Balance, August 31, 2011
|
$ | 706,988 |
9.
|
Related party transactions:
|
During the year ended August 31, 2011, $461,484 (2010 - $381,690) was paid or payable by the Company to directors for directors’ fees. Directors were paid $20,701 (2010 - $75,298) in cash and $440,783
(2010 - $299,314) in non-cash equivalent RSUs.
|
|
The Company engages a legal firm for professional services in which one of the Company’s directors is a partner. During the year ended August 31, 2011, the legal expense charged by the firm was $797,146 (2010 - $143,524), of which $419,032 remains payable at year end.
|
|
During the year ended August 31, 2011, $156,119 (2010 - $204,777) was paid or payable by the Company to directors as consulting fee for serving on the Technical Committee.
|
|
During the year ended August 31, 2011, USD$9,600 (2010 - USD$9,600) was paid to a company associated with the Company’s Chairman and COO for office rental.
|
|
On September 7, 2010 the Company completed an $800,000 private placement pursuant to a subscription agreement dated August 24, 2010 with the Company’s President and CEO for 144,430 common shares at a price of $5.539 per share.
|
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
9.
|
Related party transactions (continued):]
|
||
On February 1, 2011 the Audit Committee approved a loan agreement (the Loan Agreement) with Joseph Kahama (Kahama), the Chairman and COO (Tanzania) of the Company, providing for a six month loan from the Company to Kahama in the principal amount of USD$100,000 on arm’s length commercial terms, bearing interest at the prime rate charged by the Company’s bankers, determined monthly (the Loan). Mr. Kahama repaid the loan principal plus interest on August 8, 2011. Upon further review, the Board has determined that the Kahama loan was inadvertently not in compliance with Sarbanes-Oxley. As a result, the Board has reviewed its corporate governance procedures with US counsel and has taken corrective action.
|
|||
At August 31, 2011, the Company has a receivable of $7,214 from the Company’s President and CEO.
|
|||
The above transactions were in the normal course of operations and were measured at the exchange amount which is the amount agreed to by the related parties.
|
|||
10.
|
Commitments:
|
||
In addition to the property payments committed to by the Company to maintain options in certain prospecting and mining option agreements (note 3), the Company is committed to rental payments of approximately $13,860 for premises in 2011.
|
|||
11.
|
Financial risk:
|
||
(a)
|
Credit risk:
|
||
Credit risk is the risk of an unexpected loss if a third party to a financial instruments fails to meet its contractual obligations. The Company is subject to credit risk on the cash balances at the bank, its short-term bank investments and accounts and other receivables. The Company’s cash and cash equivalents and short-term bank investments are with Schedule 1 banks or equivalents. The accounts and other receivables consist of GST/HST receivable from the Custom Revenue Agency and due from the CEO.
|
|||
(b)
|
Liquidity risk:
|
||
The Company manages liquidity risk by maintaining adequate cash balances in order to meet short-term business requirements. Because the Company does not currently derive any production revenue from operations, its ability to conduct exploration and development work on its properties is largely based upon its ability to raise capital by equity funding. Throughout the year, the Company has obtained funding via private placements, public offering and various sources, including the Company’s Chairman. Refer to notes 3 and 8 which discussed payments the Company is committed to funding.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
11.
|
Financial risk (continued):
|
|
(c)
|
Interest rate risk:
|
|
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company’s bank accounts earn interest income at variable rates. The Company’s future interest income is exposed to changes in short-term rates.
|
||
The Company’s convertible debt fair value is based on market interest rate. As at August 31, 2011 the fair value of the convertible debt agreements did not differ materially from their carrying value.
|
||
(d)
|
Currency risk:
|
|
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company has offices in Canada, USA, and Tanzania, but holds cash mainly in Canadian and United States currencies. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar and Tanzanian shillings could have an effect on the Company’s results of operations, financial position, or cash flows. At August 31, 2011, the Company had no hedging agreements in place with respect to foreign exchange rates.
|
||
At August 31, 2011, the Company is exposed to currency risk through the following assets and liabilities denominated in US dollars:
|
2011
|
2010
|
|||||||||
Cash and cash equivalents
|
CAD$
|
329,176 |
CAD$
|
1,028,109 | ||||||
Accounts and other receivables
|
36,433 | 44,932 | ||||||||
Accounts payable and accrued liabilities
|
(154,039 | ) | (196,865 | ) | ||||||
CAD$
|
257,088 |
CAD$
|
876,176 |
A 10% change in the Canadian dollar against the United States dollar at August 31, 2010 would have resulted in a change of $25,709 (2010 - $87,618) to net income.
|
|
12.
|
Capital management:
|
The Company’s objective when managing capital is to maintain adequate funds to support its exploration and development of its projects. The Company considers shareholders’ equity as capital. The adequacy of the capital structure and management approach is assessed on an ongoing basis and is adjusted as necessary after taking into consideration the Company’s strategy, metals markets, the mining industry, economic conditions and associated risks. The Company’s capital management approach is reviewed on an ongoing basis. The Company is not subject to externally imposed capital requirements.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
13.
|
Subsequent events:
|
(a)
|
On September 23, 2011, the Company received notice from an arm’s length third party to convert its Convertible debenture in the remaining principal amount of $1,000,000 bearing interest at 3% and convertible into 233,318 common shares at a price of $4.286 per share. $95,000 of the outstanding principal was converted into 22,166 common shares on closing, which shares were refundable to the Company if the remaining principal balance was not fully converted by December 9, 2011.
|
|
(b)
|
On November 23, 2011, the Company announced it has agreed to amend the exercise price and term of warrants previously issued pursuant to its August 12, 2011 prospectus financing under which it raised USD$30,000,000 in an offering of 5,263,158 units consisting of one common share and one common share purchase warrant. The exercise price of the 5,263,158 common share purchase warrants has been reduced from USD$6.25 to USD$4.00 and the term of the warrants has been extended one year to expire August 12, 2014. In addition, if the weighted average trading price of the common shares increases to USD$6.50 after March 11, 2012, the Company will be entitled to require that the holders exercise the warrants, failing which the warrants will terminate. The 368,421 compensation warrants issued under the prospectus financing have been amended in the same manner and repriced from USD$5.91 to USD$4.00. All of the warrants are held by arm’s length investors. The amendments become effective on December 7, 2011.
|
|
(c)
|
As of November 23, 2011, the Board resolved that the Company authorize for issuance up to a maximum of 115,000,000 common shares, subject to further resolutions of the Company’s Board of Directors.
|
|
(d)
|
On November 25, 2011, the Company announced that the Board of Directors has approved the adoption of a shareholder rights plan (the Rights Plan) designed to encourage the fair and equal treatment of shareholders in connection with any take-over bid for the outstanding common shares of the Company. The Company’s Board is not aware of any specific take-over bid for Tanzanian Royalty that has been made or is contemplated. The Rights Plan is subject to regulatory approval and the Company intends to put the Rights Plan before the shareholders for ratification.
|
|
(e)
|
On December 1, 2011, the Company announced that it received an updated NI 43-101 compliant technical report from Venmyn Rand (Pty) of South Africa for its Kigosi Gold Project in northern Tanzania. In addition, the Company announced that it has entered into a joint venture with Stamico that will enable the state corporation to earn a 15% carried interest in the Kigosi Project.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
14.
|
Reconciliation between Canadian and United States generally accepted accounting principles:
|
These financial statements have been prepared in accordance with Canadian GAAP. A description of United States generally accepted accounting principles (US GAAP) and rules prescribed by the United States Securities and Exchange Commission (SEC) that result in material measurement differences from Canadian GAAP are as follows:
|
(a)
|
Mineral property and deferred exploration cost:
|
||
Under Canadian GAAP, the Company capitalizes mineral property acquisition and exploration costs as described in note 2(f).
|
For US GAAP purposes, exploration and land use costs on mineral properties are expensed as incurred for US GAAP purposes, until commercially minable deposits are determined to exist within a particular property. Property acquisition costs are capitalized as incurred and are subject to impairment analysis on occurrence of a triggering event, which is effectively a negative event that differs from the Company’s original expectations made at the time of the acquisition. Such acquisition costs will be amortized on a unit of production basis once production commences.
|
||
For Canadian GAAP purposes, cash flows relating to mineral property exploration and land use costs are reported as investing activities in the consolidated statements of cash flows. For US GAAP purposes, these costs would be characterized as operating activities in the consolidated statements of cash flows.
|
||
During the years ended August 31, 2011, 2010, and 2009, the Company wrote down mineral property and deferred exploration costs in its consolidated financial statements prepared in accordance with Canadian GAAP (note 3). The mineral property exploration costs incurred would previously have been expensed for US GAAP and, as such, have been added back to loss from operations under US GAAP for the years ended August 31, 2011, 2010, and 2009.
|
As described in note 2(i), the Company follows the asset and liability method of accounting for income taxes. This is consistent with the method used for US GAAP purposes. However, differences to amounts recorded for future income taxes arose in prior years on the application of US GAAP to the financial statements due to the differences in accounting for mineral property exploration and land use costs. The Company recognizes interest expense and penalties related to income tax uncertainty in the statement of operations, comprehensive loss, and deficit.
|
||
|
(b)
|
Stock-based compensation:
|
The Company followed the intrinsic value method up to August 31, 2005, in measuring compensation expense for employee options. Under the intrinsic value method, compensation cost is the excess, if any, of the quoted market value of the stock at the measurement date, which is generally the grant date, over the amount an employee must pay to acquire the stock. The application of the intrinsic value method resulted in compensation expense of $61,850 being recognized for stock-based compensation plans for employees prior to August 31, 2001, and no material expense for any of the other periods presented up to August 31, 2005.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
14.
|
Reconciliation between Canadian and United States generally accepted accounting principles (continued):
|
|
(b)
|
Stock-based compensation (continued):
|
|
On September 1, 2005, the Company adopted the new stock-based compensation for US GAAP purposes, which requires the cost of employee services received in exchange for an award of equity instruments to be based on the grant-date fair value of the award. The accounting for employee awards under US GAAP was now similar to the Company’s accounting policy for Canadian GAAP purposes, and, as such, a GAAP difference does not arise during the year ended August 31, 2006 and there is no cumulative-effect on adoption on September 1, 2005.
|
||
The cumulative-effect of stock options granted to non-employees for the period from implementation of the new US GAAP stock-based compensation rules to August 31, 2002 would have been a $393,078 increase in the deficit and share capital. There were no options granted to non-employees after August 31, 2002.
|
||
With respect to escrowed shares, US GAAP generally considers escrowed shares to be a compensatory arrangement between the Company and the holder of the shares. Accordingly, the difference between the market value of escrowed shares at the time the shares are eligible for release from escrow and the consideration paid or payable on the issue of the shares is recognized and charged to operations as compensation expense in the period the escrowed shares are eligible for release from escrow.
|
||
|
5,000,000 common shares of the Company held in escrow at August 31, 2002 became eligible for release during fiscal 2003. Based on the market price at that time, $2,300,000 was charged to operations for US GAAP purposes in 2003. No charge was made or required under Canadian GAAP.
|
|
(c)
|
Convertible debt:
|
|
The Company entered into four convertible debt agreements during the years ended August 31, 2011 and 2010 (note 6). The accounting for convertible debt under US GAAP is different to the Company’s accounting policy for Canadian GAAP purposes, and, as such, a GAAP difference arises for the years ended August 31, 2011 and 2010. Under US GAAP, the Company assigned a value of $961,499 (2010 - $264,569) to the equity conversion feature in APIC using the intrinsic value method which was $888,638 (2010 - $213,250) higher than that recorded under Canadian GAAP, as described in note 6. Further, US GAAP requires deferred issuance costs to be recorded as an asset and amortized using the effective interest method whereas under Canadian GAAP requires the amount to be netted against the associated debt. Accordingly, a reclassification adjustment to the balance sheet of $88,810 (2010 - $122,792) was included in the reconciliation note. As such, the financial liability component under US GAAP is $2,425,075 (2010 - $1,764,375) which was $532,964 (2010 - $76,851) lower than that recorded under Canadian GAAP and accretion expense under US GAAP is $434,332 (2010 - $36,617) which was $253,256 (2010 - $13,608) higher than under Canadian GAAP.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
14.
|
Reconciliation between Canadian and United States generally accepted accounting principles (continued):
|
|
(d)
|
Foreign currency warrants:
|
|
On August 12, 2011, pursuant to an equity financing completed by the Company with an arm’s length third party, the Company issued warrants and compensation warrants with exercise prices denominated in US dollars (note 8). Under Canadian GAAP, the foreign currency denominated warrants are classified within equity and initially measured using relative fair value (as elected under Canadian GAAP). In accordance with US GAAP, foreign currency denominated warrants are considered a derivative as they are not indexed solely to the entity’s own stock. The Company’s functional currency is the Canadian dollar and the exercise price is denominated in US dollars therefore, the warrants cannot be classified as equity-based on the evaluation of the instruments’ settlement provisions as they were not indexed solely to the Company’s common shares. As a result, these instruments are treated as derivative liabilities and carried at fair value as determined by the Black-Scholes option pricing model, with changes in fair values recorded as gains or losses in the statements of operations. Further, US GAAP requires that the proportionate share of issuance costs relating to the foreign currency warrants be expensed.
|
||
Accordingly, the Company reclassified $5,830,889 to financial liabilities on the balance sheet, recognized proportionate issuance costs of $602,223 and recognized a loss on derivative liability foreign currency warrants of $337,436 for the year ended August 31, 2011. The cumulative impact on total share capital, share subscriptions received and warrants is $5,228,666.
|
||
(e)
|
Reconciliation:
|
|
The effect of the measurement differences between Canadian GAAP and US GAAP on the consolidated balance sheets and statements of operations and cash flows is summarized as follows:
|
||
(
i
)Assets:
|
2011
|
2010
|
|||||||
Assets, under Canadian GAAP
|
$ | 68,113,986 | $ | 32,783,560 | ||||
Adjustment for mineral properties and deferred exploration (note 14(a))
|
(27,818,841 | ) | (24,027,082 | ) | ||||
Adjustment for convertible debt
|
88,810 | 122,792 | ||||||
Assets, under US GAAP
|
$ | 40,383,955 | $ | 8,879,270 | ||||
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
14.
|
Reconciliation between Canadian and United States generally accepted accounting principles (continued):
|
||
(e)
|
Reconciliation (continued):
|
2011
|
2010
|
|||||||
Liabilities, under Canadian GAAP
|
$ | 5,429,238 | $ | 620,725 | ||||
Adjustment for foreign currency warrants (note 14(d))
|
5,830,889 | - | ||||||
Adjustment for loss on foreign currency warrants (note14(d))
|
337,436 | - | ||||||
Adjustment for convertible debt (note 14(c))
|
(532,964 | ) | - | |||||
Liabilities, under US GAAP
|
$ | 11,064,599 | $ | 620,725 |
2011 | 2010 | |||||||
Share capital and share subscriptions
received, under Canadian GAAP
|
$ | 110,671,701 | $ | 73,729,45 | ||||
Contributed surplus, under Canadian GAAP
|
706,988 | 476,205 | ||||||
Warrants, under Canadian GAAP
|
5,411,410 | - | ||||||
Adjustment for stock-based compensation for employees (note 14 (b))
|
61,850 | 61,850 | ||||||
Adjustment for stock-based compensation for non-employees (note 14(b))
|
393,078 | 393,078 | ||||||
Adjustment for escrow shares (note 14(b))
|
2,300,000 | 2,300,000 | ||||||
Adjustment for foreign currency warrants (note 14(d))
|
(5,228,666 | ) | - | |||||
Adjustment for convertible debt (note 14(c))
|
888,638 | - | ||||||
Share capital and share subscriptions
received, contributed surplus, warrants, under US GAAP
|
$ | 115,204,999 | $ | 76,960,592 |
2011
|
2010
|
|||||||
Deficit, under Canadian GAAP
|
$ | (54,105,351 | ) | $ | (43,884,125 | ) | ||
Adjustment for stock-based compensation for employees (note 14(b))
|
(61,850 | ) | (61,850 | ) | ||||
Adjustment for stock-based compensation for non-employees (note 14(b)
|
(393,078 | ) | (393,078 | ) | ||||
Adjustment for escrow shares (note 14(b))
|
(2,300,000 | ) | (2,300,000 | ) | ||||
Adjustment for mineral property exploration costs
(note 14(a))
|
(27,818,841 | ) | (24,027,082 | ) | ||||
Adjustment for convertible debt (note 14(c))
|
(266,864 | ) | (13,607 | ) | ||||
Adjustment for foreign currency warrants (note 14(d))
|
(939,659 | ) | - | |||||
Deficit, under US GAAP
|
$ | (85,885,643 | ) | $ | (70,679,742 | ) |
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
14.
|
Reconciliation between Canadian and United States generally accepted accounting principles (continued):
|
|
(e)
|
Reconciliation (continued):
|
|
(
v
) Loss and loss per share:
|
Years ended August 31
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Loss for the year, under Canadian
GAAP
|
$ | (10,221,226 | ) | $ | (3,427,655 | ) | $ | (4,731,836 | ) | |||
Adjustment for mineral property
exploration costs (note 14(a))
|
(3,917,306 | ) | (3,031,049 | ) | (2,957,512 | ) | ||||||
Adjustment for convertible debt
(note 14(c))
|
(253,256 | ) | (13,607 | ) | - | |||||||
Adjustment for foreign currency warrants (note 14(d))
|
(939,659 | ) | - | - | ||||||||
Loss for the year, under US GAAP
|
$ | (15,331,447 | ) | $ | (6,472,311 | ) | $ | (7,689,348 | ) | |||
Basic and diluted loss per share, under US GAAP
|
$ | (0.16 | ) | $ | (0.07 | ) | $ | (0.09 | ) | |||
Weighted average number of shares outstanding
|
93,839,466 | 90,892,87 | 89,041,180 |
(
vi
) Cash flows:
|
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Cash used in operating activities,
under Canadian GAAP
|
$ | (3,143,859 | ) | $ | (2,515,333 | ) | $ | (2,742,084 | ) | |||
Adjustment for mineral properties
and deferred exploration
(note 14(a))
|
(7,762,870 | ) | (2,835,896 | ) | (3,591,879 | ) | ||||||
Cash used in operating activities,
under US GAAP
|
$ | (10,906,729 | ) | $ | (5,351,229 | ) | $ | (6,333,963 | ) | |||
Cash used in investing activities,
under Canadian GAAP
|
$ | (8,301,055 | ) | $ | (3,634,934 | ) | $ | (3,708,250 | ) | |||
Adjustment for mineral properties
and deferred exploration
(note 14(a))
|
7,762,870 | 2,835,896 | 3,591,879 | |||||||||
Cash used in investing activities,
under US GAAP
|
$ | (538,185 | ) | $ | (799,038 | ) | $ | (116,371 | ) |
Under US GAAP, there would be no subtotal in the operations section of the cash flow statement.
|
TANZANIAN ROYALTY EXPLORATION CORPORATION
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Expressed in Canadian dollars)
Years ended August 31, 2011, 2010 and 2009
|
14.
|
Reconciliation between Canadian and United States generally accepted accounting principles (continued):
|
|||
(f)
|
New accounting pronouncements:
|
(
i
)
|
In August 2009, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2009-05,
Measuring Liabilities at Fair Value
. This update amends ASC 820,
Fair Value Measurements and Disclosure
, in regards to the fair value measurement of liabilities. FASB ASC 820 clarifies that in circumstances in which a quoted price for an identical liability in an active market is not available, a reporting entity shall utilize one or more of the following techniques: (
i
) the quoted price of the identical liability when traded as an asset; (
ii
) the quoted price for a similar liability or for a similar liability when traded as an asset; or (
iii
) another valuation technique that is consistent with the principles of ASC 820. In all instances a reporting entity shall utilize the approach that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. Also, when measuring the fair value of a liability, a reporting entity shall not include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. This update is effective for the Company in the first quarter of the 2011 fiscal year. The adoption of this update did not have any impact on the Company’s consolidated financial statements.
|
(
ii
)
|
In April 2010, the FASB issued ASU 2010-13,
Compensation - Stock Compensation (Topic 718
). The objective of this update is to address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. It provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance or service condition is required to be classified as a liability. 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 Company is currently evaluating the impact of this update on the consolidated financial statements.
|
·
|
There are significant uncertainties regarding the prices of precious and base metals and other minerals and the availability of equity and debt financing for the purposes of mineral exploration and development. Although the prices of precious and base metals have risen substantially over the past several months, the Company remains cautious;
|
·
|
The Company’s future performance is largely tied to the outcome of future drilling results and the development of the Buckreef project; and
|
·
|
Current financial markets are likely to be volatile in Canada for the remainder of the year and potentially into 2012, reflecting ongoing concerns about the stability of the global economy. As well, concern about global growth may lead to future drops in the commodity markets. Uncertainty in the credit markets has also led to increased difficulties in borrowing/raising funds. Companies worldwide have been negatively affected by these trends. As a result, the Company may have difficulties raising equity and debt financing for the purposes of base and precious metals exploration and development.
|
2011
|
2010
|
2009
|
|
Total Revenues
|
$0 |
$0 |
$0 |
Net Loss for the period
|
($10,221,226) |
($3,427,655) |
($4,731,836) |
Basic and diluted loss per share
|
($0.11) |
($0.04) |
($0.05) |
Total assets
|
$68,113,986 |
$32,783,560 |
$29,285,205 |
Total long term financial liabilities
|
2,958,039 |
$1,841,226 |
$0 |
Cash dividends declared per share
|
$0 |
$0 |
$0 |
2011
August 31
|
2011
May 31
|
2011
February 28
|
2010
November 30
|
2010
August 31
|
2010
May 31
|
2010
February 28
|
2009
November 30
|
|
Total Revenues
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Net Loss
|
($6,464,427)
|
($1,493,336)
|
($1,100,311)
|
($1,209,864)
|
($807,927)
|
($934,445)
|
($881,166)
|
($804,117)
|
Basic and diluted loss per share
|
($0.07)
|
($0.016)
|
($0.012)
|
($0.013)
|
($0.011)
|
($0.011)
|
($0.009)
|
($0.009)
|
Option Payments Due by Period (US$)
|
|||||
Total
|
Less than
1 year
|
2-3 years
|
4-5 years
|
over 5 years
|
|
Option Agreement Obligations
|
414,000
|
$209,000
|
$205,000
|
Nil
|
Nil
|
(i)
|
Accounting for Units of Equity:
|
(ii) | International Financial Reporting Standards (IFRS): |