UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2007.
Commission File Number: 001-32558
IMA EXPLORATION INC.
--------------------------------------------------------------------------------
(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
--------------------------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: FORM 20-F [X] FORM 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
IMA EXPLORATION INC.
-------------------------------------
Date: May 14, 2007 /s/ Joseph Grosso
------------------------------ -------------------------------------
Joseph Grosso,
President & CEO
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2007 and 2006
(EXPRESSED IN CANADIAN DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
MANAGEMENT'S COMMENTS ON UNAUDITED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements of IMA
Exploration Inc. for the three months ended March 31, 2007 have been prepared by
management and are the responsibility of the Company's management.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEETS
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
MARCH 31, DECEMBER 31,
2007 2006
$ $
ASSETS
CURRENT ASSETS
Cash 411,052 391,420
Short-term investments (Note 4) 8,133,479 8,500,000
Other receivables, prepaids and deposits (Note 7) 300,324 405,205
------------ ------------
8,844,855 9,296,625
NAVIDAD INTEREST (Note 2) 17,949,521 17,949,521
------------ ------------
26,794,376 27,246,146
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 271,048 236,612
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5) 58,664,727 58,664,727
WARRANTS (Note 5) 1,281,946 1,281,946
CONTRIBUTED SURPLUS (Note 6) 6,152,265 6,152,265
DEFICIT (39,575,610) (39,089,404)
------------ ------------
26,523,328 27,009,534
------------ ------------
26,794,376 27,246,146
============ ============
NATURE OF OPERATIONS AND CONTINGENCY (Notes 1 and 10)
MEASUREMENT UNCERTAINTY AND NAVIDAD INTEREST (Note 2)
COMMITMENTS (Note 7)
APPROVED BY THE BOARD
/s/ DAVID HORTON , Director
------------------------
/s/ ROBERT STUART ANGUS , Director
------------------------
The accompanying notes are an integral part of these
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2007 2006
$ $
EXPENSES
Administrative and management services 86,428 63,232
Corporate development and investor relations 27,399 81,478
General exploration 3,466 3,794
Office and sundry 31,738 43,786
Professional fees 220,956 60,511
Rent, parking and storage 14,472 29,011
Salaries and employee benefits 74,786 148,273
Telephone and utilities 2,469 6,078
Transfer agent and regulatory fees 63,915 80,802
Travel and accommodation 6,757 44,639
Navidad holding costs (Note 2) 40,860 -
------------ ------------
573,246 561,604
------------ ------------
LOSS BEFORE OTHER ITEMS (573,246) (561,604)
------------ ------------
OTHER INCOME (EXPENSE)
Foreign exchange (1,124) (3,226)
Interest and other income 88,164 58,510
------------ ------------
87,040 55,284
------------ ------------
LOSS FOR THE PERIOD (486,206) (506,320)
DEFICIT - BEGINNING OF PERIOD (39,089,404) (35,508,044)
------------ ------------
DEFICIT - END OF PERIOD (39,575,610) (36,014,364)
============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE (0.01) (0.01)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 52,013,064 49,131,397
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2007 2006
$ $
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Net loss for the period (486,206) (506,320)
Change in non-cash working capital balances 139,317 140,977
------------ ------------
(346,889) (365,343)
------------ ------------
INVESTING ACTIVITIES
Expenditures on mineral properties
and deferred costs - (1,357,718)
(Increase) Decrease in short-term investments 366,521 (6,920,000)
------------ ------------
366,521 (8,277,718)
------------ ------------
FINANCING ACTIVITIES
Issuance of common shares and special warrants - 10,200,400
Share issuance costs - (763,093)
------------ ------------
- 9,437,307
------------ ------------
INCREASE (DECREASE) IN CASH 19,632 794,246
CASH - BEGINNING OF PERIOD 391,420 151,395
------------ ------------
CASH - END OF PERIOD 411,052 945,641
============ ============
SUPPLEMENTARY CASH FLOW INFORMATION (Note 9)
The accompanying notes are an integral part of these
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
1. NATURE OF OPERATIONS AND CONTINGENCY
IMA Exploration Inc. (the "Company") is a natural resource company
engaged in the business of acquisition, exploration and development of
mineral properties in Argentina. The Company presently has no proven or
probable reserves and on the basis of information to date, it has not
yet determined whether these properties contain economically
recoverable ore reserves. Consequently the Company considers itself to
be an exploration stage company. The amounts that were shown as mineral
properties and deferred costs represent costs incurred to date, less
amounts amortized and/or written off, and do not necessarily represent
present or future values. As at March 31, 2007 the Company had no
mineral property interests other than the Navidad Interest. The Company
considers that it has adequate resources to maintain its core
operations for the balance of the fiscal year.
On March 5, 2004, Aquiline Resources Inc. ("Aquiline"), through its
subsidiary, Minera Aquiline Argentina SA, filed a claim in the Supreme
Court of British Columbia against the Company seeking a constructive
trust over the Navidad properties and damages. On July 14, 2006 the
court released its judgment on the claim. The Company was not
successful in its defense and the court found in Aquiline's favour.
The Order reads in part:
" (a) that Inversiones Mineras Argentinas SA ("IMA SA") transfer the
Navidad Claims and any assets related thereto to Minera
Aquiline or its nominee within 60 days of this order;
(b) that IMA take any and all steps required to cause IMA SA to
comply with the terms of this order;
(c) that the transfer of the Navidad Claims and any assets related
thereto is subject to the payment to IMA SA of all reasonable
amounts expended by IMA SA for the acquisition and development
of the Navidad Claims to date; and
(d) any accounting necessary to determine the reasonableness of
the expenditures referred to in (c) above shall be by
reference to the Registrar of this court."
On October 18, 2006, the Company and Aquiline reached a definitive
agreement for the orderly conduct of the Navidad Project pending the
determination of the appeal by the Company against the judgment of the
trial court. The parties have agreed that the transactions outlined in
the agreement are in satisfaction of the Order referenced above. The
principal terms and conditions of the agreement are as follows:
(a) control of the Navidad Project will be transferred to Aquiline
in trust for the ultimately successful party in the appeal;
(b) the Company and Aquiline have agreed to the costs spent to
date developing the Navidad Project in the amount of
$18,500,000. Upon transfer of control of the Navidad Project,
Aquiline paid $7,500,000 of the costs into trust and the
balance will be expended by Aquiline in developing the Navidad
Project during the period of the appeal and secured under the
terms of the trust conditions;
(c) in the event that the Company is unsuccessful on appeal, the
Company will be paid such $18,500,000 amount, less legal costs
Aquiline would be entitled to in relation to the trial and the
appeal.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
1. NATURE OF OPERATIONS AND CONTINGENCY (continued)
(d) in the event that the Company's appeal is successful, it will
pay Aquiline's qualifying costs expended on developing the
Navidad Project during the period of the appeal, less legal
costs the Company would be entitled to in relation to the
trial and the appeal, and control of the Navidad Project will
then revert to the Company; and
(e) pending finalization of the appeal process, neither party will
attempt a hostile takeover of the other.
The effective date of the transfer of the Navidad project was November
16, 2006. A copy of the agreement has been posted on the SEDAR website
as one of the Company's public documents and is titled "Interim Project
Development Agreement".
The Company's appeal of this judgment was heard by the British Columbia
Court of Appeal between April 10 and April 12, 2007 (see Note 10). The
Company is currently unable to determine either the outcome or timing
of the appeal decision. The Company's factum and reply to Aquiline's
factum have been posted to the Company's public documents on the SEDAR
website.
The costs associated with this litigation have been and may continue to
be significant, with no guarantee of a successful outcome for the
Company. The Company has not provided for any future legal costs and
will expense the legal costs as they occur (see Note 2).
2. MEASUREMENT UNCERTAINTY AND NAVIDAD INTEREST
As discussed in Note 1 above, under the terms of the July 14, 2006
court order the Company's ownership of the Navidad project has been
transferred to Aquiline and the Company accordingly cautions readers
that until the British Columbia Court of Appeal rules on the matter the
Company may only recover the costs incurred in the development of the
Navidad project.
As at March 31, 2007, the Company had recorded a Navidad interest
balance of $17,949,521, the components of which are as follows:
$
Mineral properties and deferred costs (i) 17,763,521
Marketable securities (ii) 186,000
------------
Navidad interest 17,949,521
============
(i) The mineral property and deferred costs represent the carrying
value of the acquisition and exploration costs the Company has
incurred in the development of the Navidad project.
(ii) Marketable securities represents the carrying value of the
common shares of publicly traded companies the Company
received as partial consideration for entering into option and
sale agreements for certain of its non-core mineral property
holdings relating to the Navidad Project. Accordingly, these
marketable securities were subject to transfer to Aquiline in
relation to the July 2006 court order.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
2. MEASUREMENT UNCERTAINTY AND NAVIDAD INTEREST (continued)
As discussed in Note 1 above, in the event that the Company is
unsuccessful on appeal, the Company will be paid $18,500,000 as
consideration for these assets, less legal costs Aquiline would be
entitled to in relation to the trial and the appeal. In the event that
the legal costs that Aquiline may become entitled to are significant,
the recoverability of the costs reflected as Navidad interest may be
impaired. Such impairment may be material. However, at the current
time, the Company is unable to determine with any degree of certainty
what the final outcome of the appeal process may be, and if the Company
is unsuccessful, what legal costs may be awarded to Aquiline by the
court. Accordingly, the Company has not made any adjustments to the
carrying value of the Navidad interest balance at March 31, 2007.
The carrying value of the components of the Navidad interest balance
will be reviewed in subsequent periods and adjusted if circumstances
suggest that the full amount may not be recoverable and an appropriate
amount expensed for impairment when such amounts can be reasonably
determined.
The Company expensed Navidad holding costs of $40,860 in the period
ended March 31, 2007. These are costs the Company incurred in order to
maintain basic operations in Argentina subsequent to the transfer of
control of the Navidad project to Aquiline. The Company expects to
incur additional costs until the Aquiline litigation is settled.
3. SIGNIFICANT ACCOUNTING POLICIES
The interim consolidated financial statements of the Company have been
prepared by management in accordance with Canadian generally accepted
accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates. The
consolidated financial statements have, in management's opinion, been
properly prepared using careful judgement within reasonable limits of
materiality. These interim consolidated financial statements should be
read in conjunction with the most recent annual consolidated financial
statements. The significant accounting policies follow that of the most
recently reported annual consolidated financial statements.
NEW ACCOUNTING POLICIES
Effective January 1, 2007, the Company adopted the following new
accounting standards issued by the Canadian Institute of Chartered
Accountants ("CICA").
(a) Section 3855, FINANCIAL INSTRUMENTS - RECOGNITION AND
MEASUREMENT and Section 3861, FINANCIAL INSTRUMENTS -
DISCLOSURE AND PRESENTATION, prescribe the criteria for
recognition and presentation of financial instruments on the
balance sheet and the measurement of financial instruments
according to prescribed classifications. These sections also
address how financial instruments are measured subsequent to
initial recognition and how the gains and losses are
recognized.
The Company is required to designate its financial instruments
into one of the following five categories: held for trading;
available for sale; held to maturity; loans and receivables;
and other financial liabilities. All financial instruments are
to be initially measured at fair value. Financial instruments
classified as held for trading or available for sale are
subsequently measured at fair value with any change in fair
value recorded in net earnings and other comprehensive income,
respectively. All other financial instruments are subsequently
measured at amortized cost.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company has designated its financial instruments as
follows:
(i) Cash and short-term investments are classified as
"AVAILABLE-FOR-SALE". Due to their short-term nature,
their carrying value is equal to their fair value.
(ii) Other receivables, prepaids and deposits are
classified as "LOANS AND RECEIVABLES". These financial
assets are recorded at values that approximate their
amortized cost using the effective interest method.
(iii) Accounts payable and accrued liabilities are
classified as "OTHER FINANCIAL LIABILITIES". These
financial liabilities are recorded at values that
approximate their amortized cost using the effective
interest method.
As a result of adopting Section 3855, interest accrued from
short-term investments in the amount of $133,479 has been
reclassified from other receivables, prepaids and deposits to
short-term investments.
(b) Section 1530, COMPREHENSIVE INCOME, introduces a new
financial statement "Statement of Comprehensive Income" and
provides guidance for the reporting and display of other
comprehensive income. Comprehensive income represents the
change in equity of an enterprise during a period from
transactions and other events arising from non-owner sources
including gains and losses arising on translation of
self-sustaining foreign operations, gains and losses from
changes in fair value of available for sale financial assets
and changes in the fair value of the effective portion of cash
flow hedging instruments. The Company has not recognized any
adjustments through other comprehensive income for the three
months ended March 31, 2007.
(c) Section 3865, HEDGES specifies the criteria under which hedge
accounting may be applied, how hedge accounting should be
performed under permitted hedging strategies and the required
disclosures. This standard did not have an impact on the
Company for the three months ended March 31, 2007.
COMPARATIVE FIGURES
Certain of the prior period comparatives have been reclassified to
conform with the current period's presentation.
4. SHORT-TERM INVESTMENTS
As at March 31, 2007 and December 31, 2006, the Company held short-term
investments comprised of the following:
MARCH 31, 2007
----------------------------
MATURITY FAIR VALUE
$
12 month term deposit
- 4.2% annual interest rate
($8,000,000 principal amount) Nov. 5, 2007 8,133,479
============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
4. SHORT-TERM INVESTMENTS (continued)
DECEMBER 31, 2007
-----------------------------
MATURITY FAIR VALUE
$
12 month term deposit
- 3.7% annual interest rate Mar. 20, 2007 500,000
12 month term deposit
- 4.2% annual interest rate Nov. 5, 2007 8,000,000
------------
8,500,000
============
All term deposits are fully redeemable in full or portion at the
Company's option without penalty. Interest is paid on amounts redeemed
subsequent to 30 days from the date of investment.
5. SHARE CAPITAL
Authorized - unlimited common shares without par value
- 100,000,000 preferred shares without par value
Issued - common shares MARCH 31, 2007 DECEMBER 31, 2006
---------------------------- ----------------------------
NUMBER $ NUMBER $
Balance, beginning of period 52,013,064 58,664,727 48,813,064 50,414,672
------------ ------------ ------------ ------------
Private placement - - 2,865,000 10,027,500
Warrants valuation - - - (1,298,981)
Exercise of options - - 335,000 280,950
Contributed surplus reallocated on
exercise of options - - - 95,300
Share issue costs - - - (854,714)
------------ ------------ ------------ ------------
Balance, end of period 52,013,064 58,664,727 52,013,064 58,664,727
============ ============ ============ ============
(a) Stock options and stock based compensation
The Company has established a rolling stock option plan (the
"Plan"), in which the maximum number of common shares which
can be reserved for issuance under the Plan is 10% of the
issued and outstanding shares of the Company. The exercise
price of the options is set at the Company's closing share
price on the grant date, less allowable discounts in
accordance with the policies of the TSX Venture Exchange. The
stock options granted are subject to a four month hold period
and exercisable for a period of five years.
There were no changes in the stock options outstanding and
exercisable during the three months ended March 31, 2007.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
5. SHARE CAPITAL (continued)
(a) Stock options and stock based compensation (continued)
Stock options outstanding and exercisable at March 31, 2007
are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
119,000 0.50 May 2, 2007
115,000 0.50 September 23, 2007
25,000 0.84 March 7, 2008
300,000 0.90 May 30, 2008
1,170,000 1.87 August 27, 2008
1,372,000 3.10 March 24, 2009
865,000 4.16 March 16, 2010
385,000 2.92 November 16, 2010
273,000 3.21 June 22, 2011
------------
4,624,000
============
(b) Warrants
A continuity summary of warrant equity is presented below:
MARCH 31, DECEMBER 31,
2007 2006
------------ ------------
$ $
Balance, beginning of period 1,281,946 -
------------ ------------
Warrant valuation from private
placement warrants granted - 1,298,981
Warrant valuation from agent's
warrants granted - 110,164
Warrant issue costs - (127,199)
------------ ------------
Balance, end of period 1,281,946 1,281,946
============ ============
There were no changes to the number of shares reserved
pursuant to the Company's outstanding warrants and agents
warrants outstanding during the three months ended March 31,
2007.
Common shares reserved pursuant to warrants and agent warrants
outstanding at March 31, 2007 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
233,334 3.25 September 13, 2007
1,666,670 3.45 September 14, 2009
171,900 3.80 March 21, 2008
1,432,500 3.80 March 21, 2010
------------
3,504,404
============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
6. CONTRIBUTED SURPLUS
A continuity summary of contributed surplus is presented below:
MARCH 31, DECEMBER 31,
2007 2006
------------ ------------
$ $
Balance, beginning of period 6,152,265 5,854,445
------------ ------------
Contributed Surplus as a result of
stock options granted - 393,120
Contributed Surplus reallocated on
exercise of stock options - (95,300)
------------ ------------
Balance, end of period 6,152,265 6,152,265
============ ============
7. RELATED PARTY TRANSACTIONS
(a) The Company engages Grosso Group Management Ltd. (the "Grosso
Group") to provide services and facilities to the Company. The
Grosso Group is a private company owned by the Company, Golden
Arrow Resources Corporation, Amera Resources Corporation,
Astral Mining Corporation, Gold Point Energy Corp. and Blue
Sky Uranium Corp., each of which owns one share. The Grosso
Group provides its shareholder companies with geological,
corporate development, administrative and management services.
The shareholder companies pay monthly fees to the Grosso
Group. The fee is based upon a pro-rating of the Grosso
Group's costs including its staff and overhead costs among
each shareholder company with regard to the mutually agreed
average annual level of services provided to each shareholder
company. During the three months ended March 31, 2007, the
Company incurred fees of $105,938 (2006 - $192,923) to the
Grosso Group: $146,400 (2006 - $189,438) was paid in monthly
payments and $40,462 is included in other receivables,
prepaids and deposits (2006 - $3,485 included in accounts
payable) as a result of a review of the allocation of the
Grosso Group costs to the member companies for the period.
Also included in accounts receivable, prepaids and deposits is
a $205,000 (2006 - $205,000) deposit to the Grosso Group for
the purchase of equipment and leasehold improvements and for
operating working capital.
(b) During three months ended March 31, 2007, the Company paid
$80,050 (2006 - $43,050) to companies controlled by directors
and officers of the Company, for accounting, management and
consulting services provided.
(c) The President of the Company provides his services on a
full-time basis under a contract with a private company
controlled by the President for an annual fee of $250,000.
Accordingly, the total compensation paid to the President in
the three months ended March 31, 2007 was $62,500 (2006 -
$25,500). This amount is included in the total amount paid to
directors and officers discussed in Note 7(b) above.
In the event the contract is terminated by the Company or as a
result of a change of control, a payment is payable to the
President consisting of (i) any monthly compensation due to
the date of termination, (ii) options as determined by the
board of directors (iii) three years of monthly compensation
(which may be adjusted annually) and (iv) bonus of $461,500.
If the termination had occurred on March 31, 2007, the amount
payable under the contract would be $1,211,500. In the event
the contract is terminated by the Company as a result of the
President's death or permanent disability while providing
services to the Company, a bonus in the amount of $461,500 is
payable.
All of the related party transactions and balances in these
consolidated financial statements arose in the normal course of
operations and are measured at the exchange amount, which is the amount
of consideration established and agreed to by the related parties.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
8. SEGMENTED INFORMATION
The Company is involved in mineral exploration and development
activities, which are conducted principally in Argentina. The Company
is in the exploration stage and, accordingly, has no reportable segment
revenues or operating results for the three months ended March 31,
2007.
The Company's total assets are segmented geographically as follows:
--------------------------------------------
MARCH 31, 2007
--------------------------------------------
CANADA ARGENTINA TOTAL
$ $ $
Current assets 8,798,996 45,859 8,844,855
Navidad interest - 17,949,521 17,949,521
------------ ------------ ------------
8,798,996 17,995,380 26,794,376
============ ============ ============
--------------------------------------------
DECEMBER 31, 2006
--------------------------------------------
CANADA ARGENTINA TOTAL
$ $ $
Current assets 9,217,352 79,273 9,296,625
Navidad interest - 17,949,521 17,949,521
------------ ------------ ------------
9,217,352 18,028,794 27,246,146
============ ============ ============
9. SUPPLEMENTARY CASH FLOW INFORMATION
Non-cash financing activities were conducted by the Company as follows:
THREE MONTHS ENDED MARCH 31,
----------------------------
2007 2006
$ $
Financing activities
Share issue costs - (110,164)
Contributed surplus - 110,164
------------ ------------
- -
============ ============
10. SUBSEQUENT EVENT
Between April 10 and April 12, 2007, the Company's appeal of the July
14, 2006 judgment in relation to the Aquiline litigation (see Notes 1
and 2 above) was heard by the British Columbia Court of Appeal. The
Appeal Court reserved their judgment on the appeal. The Company is
seeking an order from the Appeal Court to allow its appeal, setting
aside the trial judge's order and remitting the claims to the Supreme
Court of British Columbia for a new trial. In the alternative, the
Company is seeking an order to allow its appeal, setting aside the
trial judge's order and awarding monetary damages to Aquiline. The
Company is currently unable to determine either the outcome or timing
of the appeal decision.
IMA EXPLORATION INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
INTRODUCTION
The following management discussion and analysis and financial review, prepared
as of May 14, 2007, should be read in conjunction with the Company's unaudited
interim consolidated financial statements for the three months ended March 31,
2007 and audited annual consolidated financial statements and related notes for
the year ended December 31, 2006. The consolidated financial statements have
been prepared in accordance with Canadian generally accepted accounting
principles ("Canadian GAAP"). Except as otherwise disclosed all dollar figures
in this report are stated in Canadian dollars. Additional information relevant
to the Company can be found on the SEDAR website at WWW.SEDAR.COM.
FORWARD LOOKING STATEMENTS
Certain of the statements made and information contained herein is "forward-
looking information" within the meaning of the Ontario Securities Act or
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 of the United States. Forward-looking statements are
subject to a variety of risks and uncertainties which could cause actual events
or results to differ from those reflected in the forward-looking statements,
including, without limitation, risks and uncertainties relating to foreign
currency fluctuations; risks inherent in mining including environmental hazards,
industrial accidents, unusual or unexpected geological formations, risks
associated with the estimation of mineral resources and reserves and the
geology, grade and continuity of mineral deposits; the possibility that future
exploration, development or mining results will not be consistent with the
Company's expectations; the potential for and effects of labour disputes or
other unanticipated difficulties with or shortages of labour; the inherent
uncertainty of future production and cost estimates and the potential for
unexpected costs and expenses, commodity price fluctuations; uncertain political
and economic environments; changes in laws or policies, foreign taxation, delays
or the inability to obtain necessary governmental permits; and other risks and
uncertainties, including those described under Risk Factors Relating to the
Company's Business in the Company's Annual Information Form and in each
management discussion and analysis. Forward-looking information is in addition
based on various assumptions including, without limitation, the expectations and
beliefs of management, the assumed long term price of silver and lead; that the
Company can access financing, appropriate equipment and sufficient labour and
that the political environment within Argentina will continue to support the
development and operation of mining projects. Should one or more of these risks
and uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in forward-looking
statements. Accordingly, readers are advised not to place undue reliance on
forward-looking statements.
OVERVIEW
The Company is a natural resource company engaged in the business of
acquisition, exploration and development of mineral properties in Argentina. At
present, the Company has no producing properties and consequently has no current
operating income or cash flows. As of this date the Company is an exploration
stage company and has not generated any revenues. The Company is entirely
dependent on the equity market for its source of funds. There is no assurance
that a commercially viable mineral deposit exists on any of the properties.
Further evaluation and exploration will be required before the economic
viability of any of the properties is determined.
In March 2004 Aquiline Resources Inc. ("Aquiline") commenced an action against
the Company seeking a constructive trust over the Navidad properties and
damages. The trial commenced on October 11, 2005 and ended on December 12, 2005.
On July 14, 2006 Justice Koenigsberg issued her reasons for judgment and order.
The Order reads in part:
"(a) that Inversiones Mineras Argentinas SA ("IMA SA") transfer the
Navidad Claims and any assets related thereto to Minera Aquiline
or its nominee within 60 days of this order;
(b) that IMA take any and all steps required to cause IMA SA to
comply with the terms of this order;
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(c) that the transfer of the Navidad Claims and any assets related
thereto is subject to the payment to IMA SA of all reasonable
amounts expended by IMA SA for the acquisition and development of
the Navidad Claims to date; and
(d) any accounting necessary to determine the reasonableness of the
expenditures referred to in (c) above shall be by reference to the
Registrar of this court."
On October 18, 2006, the Company and Aquiline reached a definitive agreement for
the orderly conduct of the Navidad Project pending the determination of the
appeal by the Company against the judgment of the trial court. The parties have
agreed that the transactions outlined in the agreement are in satisfaction of
the Order referenced above. The principal terms and conditions of the agreement
are as follows:
(i) control of the Navidad Project will be transferred to Aquiline in
trust for the ultimately successful party in the appeal;
(ii) the Company and Aquiline have agreed to the costs spent to date
developing the Navidad Project in the amount of $18,500,000. Upon
transfer of control of the Navidad Project, Aquiline will pay
$7,500,000 of the costs into trust and the balance will be
expended by Aquiline in developing the Navidad Project during the
period of the appeal and secured under the terms of the trust
conditions;
(iii) in the event that the Company is unsuccessful on appeal, the
Company will be paid such $18,500,000 amount, less legal costs
Aquiline would be entitled to in relation to the trial and the
appeal.
(iv) in the event that the Company's appeal is successful, it will pay
Aquiline's qualifying costs expended on developing the Navidad
Project during the period of the appeal, less legal costs the
Company would be entitled to in relation to the trial and the
appeal, and control of the Navidad Project will then revert to the
Company; and
(v) pending the finalization of the appeal process, neither party will
attempt a hostile takeover of the other.
The effective date of the transfer of the Navidad project was November 16, 2006.
A copy of the agreement has been posted on the SEDAR website as one of the
Company's public documents and is titled "Interim Project Development
Agreement".
The Company's appeal of this judgment was heard by the British Columbia Court of
Appeal between April 10 and April 13, 2007. The Company's factum and reply to
Aquiline's factum are available on SEDAR and the Company's website. While the
Company is confident of a favourable result from its appeal it recognizes that
it may take a substantial period of time for the Court of Appeal to issue their
decision.
The Company is seeking an order from the Appeal Court allowing its appeal,
setting aside the trial judge's order and dismissing Aquiline's claims.
Alternatively the Company is seeking an order allowing the appeal, setting aside
the trial judge's order and remitting the claims to the Supreme Court of British
Columbia for a new trial. As a further alternative, the Company is seeking an
order allowing the appeal, setting aside the trial judge's order and awarding
monetary damages to Aquiline.
The costs have been and may continue to be significant, with no guarantee of a
successful outcome for the Company. The Company has not provided for any future
legal costs and will expense the legal costs as they occur. Until the Appeal
Court's decision is available the Company does not expect to incur further
significant legal costs relating to this litigation subsequent to the appeal
hearing.
SELECTED QUATERLY FINANCIAL INFORMATION
The following selected consolidated financial information is derived from the
unaudited consolidated interim financial statements of the Company. The
information has been prepared in accordance with Canadian GAAP.
---------- ------------------------------------------------- ------------------------------------
2007 2006 2005
---------- ------------------------------------------------- ------------------------------------
MAR 31 DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 SEP 30 JUN 30
$ $ $ $ $ $ $ $
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenues Nil Nil Nil Nil Nil Nil Nil Nil
Net Loss (486,206) (1,126,586) (836,136) (1,112,336) (506,320) (1,041,118) (1,233,392) (972,894)
Net Loss per Common Share
Basic and Diluted (0.01) (0.02) (0.02) (0.02) (0.01) (0.02) (0.03) (0.02)
---------- ------------------------------------------------- ------------------------------------
- 2 -
SUMMARY OF FINANCIAL RESULTS
For the three months ended March 31, 2007, the Company reported a consolidated
loss of $486,206 ($0.01 per share), a decrease of $20,114 from the loss of
$506,320 ($0.01 per share) for the three months ended March 31, 2006. The
decrease in the loss in 2007, compared to the 2006 amount, was due to a number
of factors of which $31,756 can be attributed to a change in other items
partially offset by an $11,642 increase in operating expenses.
RESULTS OF OPERATIONS
The Company's operating expenses for the three months ended March 31, 2007, were
$573,246 an increase of $11,642 from $561,604 in the 2006 period.
Notable changes in the operating expenses are: (i) Administrative and management
services increased $23,196 to $86,428 in 2007 primarily as the result of the
increase in fees paid to a Company controlled by the President (see Related
Party Transactions section below) for management services; (ii) Corporate
development and investor relations decreased $54,079 to $27,399 in 2007 due to
the Company discontinuing its external investor relations services contract in
July 2006 as well as decreased investor relations activity in the period; (iv)
Professional fees increased $160,445 to $220,956 in 2007, primarily due to the
legal costs incurred in connection with the Aquiline appeal heard in April 2007;
(v) Salaries decreased $73,487 to $74,786 in 2007 due to decreases in staff and
activity levels; (vi) Transfer agent and regulatory fees decreased $16,887 to
$63,915 primarily as a result of decreased fees for the Company's listing on the
TSX Venture Exchange; (vii) Travel and accommodation decreased $37,882 due to
reduced travel in the 2007 period; (viii) Navidad holding costs of $40,860 were
incurred in 2007 compared to $Nil in 2006. These are costs incurred in order to
maintain basic operations in Argentina subsequent to the transfer of control of
the Navidad project to Aquiline.
In 2007 the Company recorded interest income of $88,164 compared to $58,510 in
2006, primarily as a result of an increase in funds on deposit.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at March 31, 2007 was $411,052, an increase of
$19,632 from December 31, 2006. Short-term investments decreased $366,521 to
$8,133,479 at March 31, 2007 from $8,500,000 at December 31, 2006. Total assets
decreased to $26,794,376 at March 31, 2007 from $27,246,146 at December 31,
2006. This decrease is mainly due to the decrease in short-term investments
which are used to fund the Company's operations.
The Company has received $Nil from the exercise of warrants and options from
January 1, 2007 to March 31, 2007. As at May 14, 2007, the Company had working
capital of approximately $8,300,000.
The Company considers that it has adequate resources to maintain its core
operations for the next fiscal year. The Company will continue to rely on
successfully completing additional equity financing to further exploration and
development of mineral exploration projects. There can be no assurance that the
Company will be successful in obtaining the required financing.
Except as disclosed the Company does not know of any trends, demand,
commitments, events or uncertainties that will result in, or that are reasonably
likely to result in, its liquidity either materially increasing or decreasing at
present or in the foreseeable future. Material increases or decreases in
liquidity are substantially determined by the success or failure of the
exploration programs and by the final outcome of the Company's appeal of the
judgment of the Aquiline litigation.
The Company does not now and does not expect to engage in currency hedging to
offset any risk of currency fluctuations.
- 3 -
OPERATING CASH FLOW
Cash outflow from operating activities for the three months ended March 31,
2007, was $346,889, a decrease of $18,454 compared to cash outflow for 2006
period of $365,343 primarily as a result of increased interest income earned in
the 2007 period.
FINANCING ACTIVITIES
During the three months ended March 31, 2007, the Company received $Nil from the
proceeds of private placements and $Nil on the exercise of options. During the
three months ended March 31, 2006, the Company received $10,027,500 less costs
of $763,093 from the issue of special warrants in a brokered private placement
and $172,900 on the exercise of options.
INVESTING ACTIVITIES
Investing activities required cash of $Nil during three months ended March 31,
2007, compared to $1,357,718 for the 2006 period. The 2006 investing activities
were primarily for additions to the Navidad Project in Argentina.
RELATED PARTY TRANSACTIONS
The Company engages Grosso Group Management Ltd. (the "Grosso Group") to provide
services and facilities to the Company. The Grosso Group is a private company
owned by the Company, Golden Arrow Resources Corporation, Amera Resources
Corporation, Astral Mining Corporation, Gold Point Energy Corp. and Blue Sky
Uranium Corp., each of which owns one share. The Grosso Group provides its
shareholder companies with geological, corporate development, administrative and
management services. The shareholder companies pay monthly fees to the Grosso
Group. The fee is based upon a pro-rating of the Grosso Group's costs including
its staff and overhead costs among each shareholder company with regard to the
mutually agreed average annual level of services provided to each shareholder
company. During the three months ended March 31, 2007, the Company incurred fees
of $105,938 (2006 - $192,923) to the Grosso Group: $146,400 (2006 - $189,438)
was paid in monthly payments and $40,462 is included in other receivables,
prepaids and deposits (2006 - $3,485 included in accounts payable) as a result
of a review of the allocation of the Grosso Group costs to the member companies
for the period. Also included in accounts receivable, prepaids and deposits is a
$205,000 (2006 - $205,000) deposit to the Grosso Group for the purchase of
equipment and leasehold improvements and for operating working capital.
During three months ended March 31, 2007, the Company paid $80,050 (2006 -
$43,050) to companies controlled by directors and officers of the Company, for
accounting, management and consulting services provided.
The President of the Company provides his services on a full-time basis under a
contract with a private company controlled by the President for an annual fee of
$250,000. Accordingly, the total compensation paid to the President in the three
months ended March 31, 2007 was $62,500 (2006 - $25,500). This amount is
included in the total amount paid to directors and officers discussed above.
In the event the contract is terminated by the Company or as a result of a
change of control, a payment is payable to the President consisting of (i) any
monthly compensation due to the date of termination, (ii) options as determined
by the board of directors (iii) three years of monthly compensation (which may
be adjusted annually) and (iv) bonus of $461,500. If the termination had
occurred on March 31, 2007, the amount payable under the contract would be
$1,211,500. In the event the contract is terminated by the Company as a result
of the President's death or permanent disability while providing services to the
Company, a bonus in the amount of $461,500 is payable.
CRITICAL ACCOUNTING ESTIMATES AND RECENT ACCOUNTING PRONOUNCEMENTS
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the period. Significant areas requiring the use of
management estimates relate to the determination of environmental obligations
and impairment of mineral properties and deferred costs. Actual results may
differ from these estimates.
Reference should be made to the Company's significant accounting policies
contained in Note 3 of the Company's consolidated financial statements for the
years ended December 31, 2006, 2005 and 2004. These accounting policies can have
- 4 -
a significant impact of the financial performance and financial position of the
Company. As disclosed previously, the Company has not made any provision for any
potential loss in the event of an adverse judgement related to the Aquiline
legal action.
NEW ACCOUNTING POLICIES
Effective January 1, 2007, the Company adopted the following new accounting
standards issued by the Canadian Institute of Chartered Accountants ("CICA").
(a) Section 3855, FINANCIAL INSTRUMENTS - RECOGNITION AND
MEASUREMENT and Section 3861, FINANCIAL INSTRUMENTS -
DISCLOSURE AND PRESENTATION, prescribe the criteria for
recognition and presentation of financial instruments on the
balance sheet and the measurement of financial instruments
according to prescribed classifications. These sections also
address how financial instruments are measured subsequent to
initial recognition and how the gains and losses are
recognized.
The Company is required to designate its financial instruments
into one of the following five categories: held for trading;
available for sale; held to maturity; loans and receivables;
and other financial liabilities. All financial instruments are
to be initially measured at fair value. Financial instruments
classified as held for trading or available for sale are
subsequently measured at fair value with any change in fair
value recorded in net earnings and other comprehensive income,
respectively. All other financial instruments are subsequently
measured at amortized cost.
The Company has designated its financial instruments as
follows:
(i) Cash is classified as "FINANCIAL ASSETS HELD FOR
TRADING". Due to its nature, the carrying value
equals its fair value.
(ii) Short-term investments are classified as "FINANCIAL
ASSETS HELD FOR TRADING". These financial assets are
recorded at their fair value which is equal to the
principal balance of the investment and interest
accrued at the balance sheet date.
(iii) Other receivables, prepaids and deposits are
classified as "LOANS AND RECEIVABLES". These
financial assets are recorded at values that
approximate their amortized cost using the effective
interest method.
(iv) Accounts payable and accrued liabilities are
classified as "OTHER FINANCIAL LIABILITIES". These
financial liabilities are recorded at values that
approximate their amortized cost using the effective
interest method.
As a result of adopting Section 3855, interest accrued from
short-term investments in the amount of $133,479 has been
reclassified from other receivables, prepaids and deposits to
short-term investments.
(b) Section 1530, COMPREHENSIVE INCOME, introduces a new financial
statement "Statement of Comprehensive Income" and provides
guidance for the reporting and display of other comprehensive
income. Comprehensive income represents the change in equity
of an enterprise during a period from transactions and other
events arising from non-owner sources including gains and
losses arising on translation of self-sustaining foreign
operations, gains and losses from changes in fair value of
available for sale financial assets and changes in the fair
value of the effective portion of cash flow hedging
instruments. The Company has not recognized any adjustments
through other comprehensive income for the three months ended
March 31, 2007.
(c) Section 3865, HEDGES specifies the criteria under which hedge
accounting may be applied, how hedge accounting should be
performed under permitted hedging strategies and the required
disclosures. This standard did not have an impact on the
Company for the three months ended March 31, 2007.
In addition to the above, reference should be made to the recent accounting
pronouncements in Canada and in United States that are described in Note 11 of
the Company's consolidated financial statements for the years ended December 31,
2006, 2005 and 2004.
- 5 -
RISK FACTORS
The Company's operations and results are subject to a number of different risks
at any given time. These factors, include but are not limited to litigation,
disclosure regarding exploration, additional financing, project delay, titles to
properties, price fluctuations and share price volatility, operating hazards,
insurable risks and limitations of insurance, management, foreign country and
regulatory requirements, currency fluctuations and environmental regulations
risks. Exploration for mineral resources involves a high degree of risk. The
cost of conducting programs may be substantial and the likelihood of success is
difficult to assess. For a more complete discussion of these risks and others,
reference should be made to the December 31, 2006 Management Discussion and
Analysis.
FINANCIAL INSTRUMENTS
The Company's financial instruments as at March 31, 2007 consist of cash,
short-term investments, other receivables, prepaids and deposits and accounts
payable and accrued liabilities. For discussion of the valuation of these
financial instruments for financial reporting purposes, refer to the Critical
Accounting Estimates and Recent Accounting Pronouncements section above.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
Management has designed disclosure controls and procedures, or has caused them
to be designed under its supervision, to provide reasonable assurance that
material information relating to the Company, is made known to management by
others within those entities, particularly during the period in which the annual
filings are being prepared. Management has also designed such internal control
over financial reporting, or caused it to be designed under management's
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and preparation of the financial statements for the three
months ended March 31, 2007 in accordance with Canadian Generally Accepted
Accounting Principles. There has been no change in the Company's disclosure
controls and procedures or in the Company's internal control over financial
reporting that occurred during the most recently completed quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
disclosure controls and procedures or internal control over financial reporting.
SHARE DATA INFORMATION
As of May 14, 2007 there were 52,013,064 common shares, 3,504,404 warrants and
4,624,000 stock options outstanding.
INVESTOR RELATIONS
The Company currently does not engage any outside investor relations
consultants. Mr. Sean Hurd is the Company's Vice-President, Corporate
Communications and coordinates investor relations activities. The Company also
maintains a web site at www.imaexploration.com .
- 6 -
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Joseph Grosso, President & Chief Executive Officer of IMA Exploration Inc.,
certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of IMA Exploration Inc. (the issuer) for
the interim period ending March 31, 2007;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or
caused it 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 the issuer's GAAP; and
5. I have caused the issuer to disclose in the interim MD&A any change in
the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
Date: May 14, 2007
/s/ JOSEPH GROSSO
-----------------------------------
Joseph Grosso,
President & Chief Executive Officer
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Arthur Lang, Chief Financial Officer of IMA Exploration Inc., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of IMA Exploration Inc. (the issuer) for
the interim period ending March 31, 2007;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or
caused it 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 the issuer's GAAP; and
5. I have caused the issuer to disclose in the interim MD&A any change in
the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
Date: May 14, 2007
/s/ ARTHUR LANG
------------------------------------
Arthur Lang, Chief Financial Officer