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 NOVEMBER, 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: November 13, 2007 /s/ Joseph Grosso
------------------------------ -------------------------------------
Joseph Grosso,
President & CEO
IMA EXPLORATION INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 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 nine months ended September 30, 2007 have been prepared
by management and are the responsibility of the Company's management. These
statements have not been reviewed by the Company's external auditors.
IMA EXPLORATION INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Expressed in Canadian Dollars)
SEPTEMBER 30 DECEMBER 31,
2007 2006
$ $
ASSETS
CURRENT ASSETS
Cash 152,066 391,420
Short-term investments (Note 4) 7,144,040 8,500,000
Accounts receivable, prepaids and deposits (Note 7) 481,424 405,205
------------ ------------
7,777,530 9,296,625
NAVIDAD INTEREST (Note 2) 17,949,521 17,949,521
------------ ------------
25,727,051 27,246,146
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 68,528 236,612
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 5) 58,724,227 58,664,727
WARRANTS (Note 5) 1,281,946 1,281,946
CONTRIBUTED SURPLUS (Note 6) 6,152,265 6,152,265
DEFICIT (40,499,915) (39,089,404)
------------ ------------
25,658,523 27,009,534
------------ ------------
25,727,051 27,246,146
============ ============
NATURE OF OPERATIONS AND CONTINGENCY (Note 1)
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 interim
consolidated financial statements.
IMA EXPLORATION INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
(Expressed in Canadian Dollars)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2007 2006 2007 2006
$ $ $ $
EXPENSES
Administrative and management services (Note 7) 57,457 83,886 210,042 377,728
Corporate development and investor relations 14,531 48,699 46,195 282,130
General exploration 2,707 4,009 6,414 7,748
Office and sundry 83,063 55,369 157,181 144,825
Professional fees 352,894 551,666 835,995 675,776
Rent, parking and storage 9,030 24,836 34,227 72,318
Salaries and employee benefits 45,006 157,319 170,503 543,202
Stock-based compensation - (14,400) - 393,120
Telephone and utilities 1,908 3,537 6,942 13,280
Transfer agent and regulatory fees 2,639 1,289 67,895 131,216
Travel and accommodation 3,977 23,353 17,202 87,392
Navidad holding costs (Note 2) 19,648 - 97,423 -
------------ ------------ ------------ ------------
592,860 939,563 1,650,019 2,728,735
------------ ------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (592,860) (939,563) (1,650,019) (2,728,735)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Foreign exchange gain (loss) (8,466) 3,916 (17,327) (6,428)
Interest and other income 85,539 99,511 256,835 280,371
------------ ------------ ------------ ------------
77,073 103,427 239,508 273,943
------------ ------------ ------------ ------------
LOSS FOR THE PERIOD (515,787) (836,136) (1,410,511) (2,454,792)
DEFICIT - BEGINNING OF PERIOD (39,984,128) (37,126,700) (39,089,404) (35,508,044)
------------ ------------ ------------ ------------
DEFICIT - END OF PERIOD (40,499,915) (37,962,836) (40,499,915) (37,962,836)
============ ============ ============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE $(0.01) $(0.02) $(0.03) $(0.05)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 52,132,064 51,989,152 52,088,474 51,009,402
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in Canadian Dollars)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2007 2006 2007 2006
$ $ $ $
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Net loss for the period (515,787) (836,136) (1,410,511) (2,454,792)
Items not affecting cash
Stock-based compensation - (14,400) - 393,120
------------ ------------ ------------ ------------
(515,787) (850,536) (1,410,511) (2,061,672)
Change in non-cash working capital balances 48,114 (598,502) (244,303) (679,731)
------------ ------------ ------------ ------------
(467,673) (1,449,038) (1,654,814) (2,741,403)
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Expenditures on mineral properties and
deferred costs - (1,122,300) - (4,491,524)
(Increase) decrease in short-term investments 561,002 2,000,000 1,355,960 (1,920,000)
------------ ------------ ------------ ------------
561,002 877,700 1,355,960 (6,411,524)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares - 80,000 59,500 10,308,450
Share issue costs - (2,347) - (838,249)
------------ ------------ ------------ ------------
- 77,653 59,500 9,470,201
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 93,329 (493,685) (239,354) 317,274
CASH - BEGINNING OF PERIOD 58,737 962,354 391,420 151,395
------------ ------------ ------------ ------------
CASH - END OF PERIOD 152,066 468,669 152,066 468,669
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(An Exploration Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(Expressed in Canadian Dollars)
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2007 2006
$ $
SHARE CAPITAL
Balance at beginning of period 58,664,727 50,414,672
Private placements - 10,027,500
Warrant valuation - (1,298,981)
Exercise of options 59,500 280,950
Contributed surplus reallocated
on the exercise of options - 74,800
Share issue costs - (821,214)
------------ ------------
Balance at end of period 58,724,227 58,677,727
------------ ------------
WARRANTS
Balance at 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 at end of period 1,281,946 1,281,946
------------ ------------
CONTRIBUTED SURPLUS
Balance at beginning of period 6,152,265 5,854,445
Contributed surplus as a result of
stock options granted - 393,120
Contributed surplus reallocated on the
exercise of stock options - (74,800)
------------ ------------
Balance at end of period 6,152,265 6,172,765
------------ ------------
DEFICIT
Balance at beginning of period (39,089,404) (35,508,044)
Loss for the period (1,410,511) (2,454,792)
------------ ------------
Balance at end of period (40,499,915) (37,962,836)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 25,658,523 28,169,602
============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(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 South America. 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 September 30, 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.
(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
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND CONTINGENCY (continued)
(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. The Court of
Appeal dismissed the Company's appeal and released their reasons for
judgment on June 7, 2007.
The Company filed an application for leave to appeal to the Supreme
Court of Canada in October 2007. The Company's factum and reply are
available on SEDAR and the Company's website. The Supreme Court of
Canada will review the submissions of the Company and Aquiline. A
decision as to whether to grant leave to hear the Company's appeal is
expected in the first quarter of 2008. The Navidad project will
continue to be operated under the terms of the Interim Project
Development Agreement until there is a determination of this final
appeal.
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. Accordingly, the Company cautions readers that
until there is a final determination on the matter the Company may only
recover the costs incurred in the development of the Navidad project.
As at September 30, 2007, the Company has 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 NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(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 to the Supreme Court of Canada, 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
September 30, 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 $97,423 in the nine
months ended September 30, 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 judgment 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 NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(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) Amounts receivable, 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, on January 1, 2007
interest accrued from short-term investments in the amount of
$65,075 was reclassified from amounts receivable, 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 nine
months ended September 30, 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 nine months ended September 30, 2007.
Comparative Figures
Certain of the prior period comparative figures have been reclassified
to conform with the current period's presentation.
4. SHORT-TERM INVESTMENTS
As at September 30, 2007 and December 31, 2006, the Company held
short-term investments comprised of the following:
SEPTEMBER 30, 2007
----------------------------
MATURITY FAIR VALUE
$
12 month term deposit
- 4.25% annual interest rate
($300,000 principal amount) June 25, 2008 303,443
12 month term deposit
- 4.45% annual interest rate
($6,800,000 principal amount) August 13, 2008 6,840,597
------------
7,144,040
============
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(Expressed in Canadian Dollars)
4. SHORT-TERM INVESTMENTS (continued)
DECEMBER 31, 2006
----------------------------
MATURITY PRINCIPAL
$
12 month term deposit
- 3.7% annual interest rate March 20, 2007 500,000
12 month term deposit
- 4.2% annual interest rate November 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 SEPTEMBER 30, 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 119,000 59,500 335,000 280,950
Contributed surplus reallocated on
exercise of options - - - 95,300
Share issue costs - - - (854,714)
------------ ------------ ------------ ------------
Balance, end of period 52,132,064 58,724,227 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.
A summary of the changes in the number of stock options
outstanding and exercisable for the nine months ended
September 30, 2007 is as follows:
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(Expressed in Canadian Dollars)
5. SHARE CAPITAL (continued)
(a) Stock options and stock-based compensation (continued)
WEIGHTED
AVERAGE
NUMBER EXERCISE PRICE
------------ --------------
$
Balance, beginning of period 4,624,000 2.69
Exercised (119,000) 0.50
Cancelled /expired (120,000) 0.60
------------
Balance, end of period 4,385,000 2.81
============
Stock options outstanding and exercisable at September 30,
2007 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
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
380,000 2.92 November 16, 2010
273,000 3.21 June 22, 2011
------------
4,385,000
============
(b) Warrants
A continuity summary of warrant equity is presented below:
SEPTEMBER 30, 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
============ ============
A summary of the changes in warrants for the nine months ended
September 30, 2007 is as follows:
NUMBER
------------
Balance, beginning of period 3,504,404
Expired (233,334)
------------
Balance, end of period 3,271,070
============
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(Expressed in Canadian Dollars)
5. SHARE CAPITAL (continued)
(b) Warrants (continued)
Common shares reserved pursuant to warrants and agent warrants
outstanding at September 30, 2007 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
1,666,670 3.45 September 14, 2009
171,900 3.80 March 21, 2008
1,432,500 3.80 March 21, 2010
------------
3,271,070
============
6. CONTRIBUTED SURPLUS
A continuity summary of contributed surplus is presented below:
SEPTEMBER 30, 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 nine months ended September 30, 2007, the
Company incurred fees of $392,624 (2006 - $574,677) to the
Grosso Group: $326,437 (2006 - $554,335) was paid in monthly
payments and $66,187 (2006 - $21,563 included in accounts
payable) is included in amounts receivable, prepaids and
deposits as a result of a review of the allocation of the
Grosso Group costs to the member companies for the period.
Also included in amounts 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 nine months ended September 30, 2007, the Company paid
$243,550 (2006 - $442,917) to companies controlled by
directors and officers of the Company, for management and
consulting services provided.
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(Expressed in Canadian Dollars)
7. RELATED PARTY TRANSACTIONS (continued)
(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 nine months ended September 30, 2007 was $187,500 (2006 -
$288,167). 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 September 30, 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.
Effective May 1, 2007, the Company negotiated agreements with
the five other shareholder companies of the Grosso Group for
the President of the Company to provide services for a monthly
fee. The agreements may be terminated at any time at the other
companies' discretion upon 30 days written notice. The Company
reserves its right to restrict services provided by the
President to the other shareholder companies based on its own
requirements for the President's services, at which time the
fee would be adjusted accordingly. For the nine months ended
September 30, 2007, the Company received a total $41,667 from
the other shareholder companies which has been recorded as a
reduction in Administrative and management services expense.
The fees will be reviewed and adjusted on a periodic basis.
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.
The fair value of amounts due to or due from related parties is not
determinable as they have no fixed terms of repayment, do not bear
interest, and are unsecured.
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 nine months ended September 30,
2007.
The Company's total assets are segmented geographically as follows:
SEPTEMBER 30, 2007
--------------------------------------------
CANADA ARGENTINA TOTAL
$ $ $
Current assets 7,775,186 2,344 7,777,530
Navidad interest - 17,949,521 17,949,521
------------ ------------ ------------
7,775,186 17,951,865 25,727,051
============ ============ ============
IMA EXPLORATION INC.
(An Exploration Stage Company)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
(Expressed in Canadian Dollars)
8. SEGMENTED INFORMATION (continued)
DECEMBER 31, 2007
--------------------------------------------
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:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2007 2006
$ $
Financing activities
Share issue costs - (95,893)
Warrant issue costs - (14,271)
Warrants - 110,164
Shares issued on the exercise of options - 74,800
Contributed surplus - (74,800)
------------ ------------
- -
============ ============
IMA EXPLORATION INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
INTRODUCTION
The following management discussion and analysis and financial review, prepared
as of November 13, 2007, should be read in conjunction with the Company's
unaudited interim consolidated financial statements for the nine months ended
September 30, 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. 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;
- 1 -
(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 12, 2007 The Court of Appeal dismissed the
Company's appeal and released their reasons for judgment on June 7, 2007.
The Company filed an application for leave to appeal to the Supreme Court of
Canada in October 2007. The Company's factum and reply are available on SEDAR
and the Company's website. The Supreme Court of Canada will review the
submissions of the Company and Aquiline. A decision as to whether to grant leave
to hear the Company's appeal is expected in the first quarter of 2008. The
Navidad project will continue to be operated under the terms of the Interim
Project Development Agreement until there is a determination of this final
appeal.
The costs of the litigation and appeals have been and may continue to be
significant, with no guarantee of a successful outcome for the Company. The
Company continues to pursue all options at court as the potential value of the
Navidad project justifies this course of action. The Company has not provided
for any future legal costs and will expense the legal costs as they occur.
With its present treasury, its experience in the exploration industry, dedicated
management and staff and its many contacts the Company is actively pursuing
business opportunities that will add value to its present position. If this
final appeal is not successful the costs of $18,500,000 will be available to the
Company, less any award of legal costs to Aquiline. Accordingly, the Company is
in a position to acquire a variety of projects that make business and economic
sense.
- 2 -
SELECTED QUATERLY FINANCIAL INFORMATION AND THIRD QUARTER DISCUSSION
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.
------------------------------------ ------------------------------------------------- ----------
FISCAL 2007 FISCAL 2006 FISCAL 2005
------------------------------------ ------------------------------------------------- ----------
SEP 30 JUN 30 MAR 31 DEC 31 SEP 30 JUN 30 MAR 31 DEC 31
$ $ $ $ $ $ $ $
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenues Nil Nil Nil Nil Nil Nil Nil Nil
Net Loss (515,787) (408,518) (486,206) (1,126,586) (836,136) (1,112,336) (506,320) (1,041,118)
Net Loss per Common Share
Basic and Diluted (0.01) (0.01) (0.01) (0.02) (0.02) (0.02) (0.01) (0.02)
------------------------------------ ------------------------------------------------- ----------
For the three months ended September 30, 2007, the Company recorded a net loss
of $515,787, a decrease in loss of $320,349 from the $836,136 loss incurred in
the three months ended September 30, 2006. The decrease in loss is primarily a
result of the following:
(i) A decrease in operating activities subsequent to the November
16, 2006 transfer of control of Navidad project to Aquiline.
(ii) A reduction in legal costs. The legal costs in 2007 relate to
the appeal process to the Supreme Court of Canada and the
costs in 2006 were incurred for drafting the Interim Project
Development Agreement as well as litigation costs in the
appeal process to the British Columbia Court of Appeal.
SUMMARY OF FINANCIAL RESULTS
For the nine months ended September 30, 2007, the Company reported a
consolidated loss of $1,410,511 ($0.03 per share), a decrease of $1,044,281 from
the loss of $2,454,792 ($0.05 per share) for the nine months ended September 30,
2006. The decrease in the loss in 2007, compared to the 2006 amount, was due to
a number of factors of which $34,435 can be attributed to a change in other
items and $1,078,716 to a decrease in operating expenses.
RESULTS OF OPERATIONS
The Company's operating expenses for the nine months ended September 30, 2007,
were $1,650,019 a decrease of $1,078,716 from $2,728,735 in the 2006 period.
Notable changes in the operating expenses are:
(i) Administrative and management services decreased $167,686 to
$210,042 in 2007 primarily as the result of a bonus of
$150,000 paid in 2006;
(ii) Corporate development and investor relations decreased
$235,935 to $46,195 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;
(iii) Professional fees increased $160,219 to $835,995 in 2007,
primarily due to the legal costs incurred in connection with
the Aquiline appeal heard in April 2007;
(iv) Salaries decreased $372,699 to $170,503 in 2007 due to a
decrease in activity levels and bonuses paid in 2006 totalling
$100,000;
(v) Transfer agent and regulatory fees decreased $63,321 to
$67,895 primarily as a result of decreased fees for the
Company's listing on the TSX Venture Exchange and reduced
transfer agent fees;
(vi) Travel and accommodation decreased $70,190 to $17,202 due to
reduced travel in the 2007 period;
(vii) Navidad holding costs of $97,423 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.
(viii) Stock-based compensation decreased from $393,120 in 2006 to
$Nil in 2007 as no stock options were granted in the current
period.
In 2007 the Company recorded interest income of $256,835 compared to $280,371 in
2006, primarily as a result of a decrease in funds on deposit.
- 3 -
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at September 30, 2007 was $152,066, a decrease of
$239,354 from December 31, 2006. Short-term investments decreased $1,355,960 to
$7,144,040 at September 30, 2007 from $8,500,000 at December 31, 2006. Total
assets decreased to $25,727,051 at September 30, 2007 from $27,246,146 at
December 31, 2006. This decrease is mainly due to the decrease in cash and
short-term investments which are used to fund the Company's operations.
The Company has received $59,500 from the exercise of options and $Nil from the
exercise of warrants from January 1, 2007 to September 30, 2007. As at November
13, 2007, the Company had working capital of approximately $7,400,000.
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 Aquiline litigation.
The Company does not now and does not expect to engage in currency hedging to
offset any risk of currency fluctuations.
OPERATING CASH FLOW
Cash outflow from operating activities for the nine months ended September 30,
2007, was $1,654,814, a decrease of $1,086,589 compared to cash outflow for 2006
period of $2,741,403 primarily as a result of decreased operating activities in
the 2007 period.
FINANCING ACTIVITIES
During the nine months ended September 30, 2007, the Company received $Nil from
the proceeds of private placements and $59,500 on the exercise of options.
During the nine months ended September 30, 2006, the Company received
$10,027,500 less costs of $838,249 from a brokered private placement and
$280,950 on the exercise of options.
INVESTING ACTIVITIES
Investing activities generated cash of $1,355,960 during the nine months ended
September 30, 2007, compared to $6,411,524 of cash used in the 2006 period. The
2007 investing activities resulted from funds being withdrawn from short-term
investments. The 2006 investing activities were primarily for additions to the
Navidad Project in Argentina and increased funds deposited in short-term
investments.
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 nine months ended September 30, 2007, the Company incurred
fees of $392,624 (2006 - $574,677) to the Grosso Group: $326,437 (2006 -
$554,335) was paid in monthly payments and $66,187 (2006 - $13,979) is included
in amounts receivable, prepaids and deposits as a result of a review of the
allocation of the Grosso Group costs to the member companies for the period.
Also included in amounts 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.
- 4 -
During nine months ended September 30, 2007, the Company paid $243,550 (2006 -
$442,917) to companies controlled by directors and officers of the Company, for
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 nine
months ended September 30, 2007 was $187,500 (2006 - $288,167). 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 September 30, 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.
Effective May 1, 2007, the Company negotiated agreements with the five other
shareholder companies of the Grosso Group for the President of the Company to
provide services for a monthly fee. The agreements may be terminated at any time
at the other companies' discretion upon 30 days written notice. The Company
reserves its right to restrict services provided by the President to the other
shareholder companies based on its own requirements for the President's
services, at which time the fee would be adjusted accordingly. For the nine
months ended September 30, 2007, the Company received a total $41,667 from the
other shareholder companies which has been recorded as a reduction in
Administrative and management services expense. The fees will be reviewed and
adjusted on a periodic basis.
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
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 a final adverse outcome 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.
- 5 -
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) Amounts receivable, 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, on January 1, 2007 interest
accrued from short-term investments in the amount of $65,075 was
reclassified from amounts receivable, 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 nine months ended September 30, 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 nine months
ended September 30, 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.
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 September 30, 2007 consist of cash,
short-term investments, amounts receivable, 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 nine
months ended September 30, 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.
- 6 -
SHARE DATA INFORMATION
As of November 13, 2007 there were 52,132,064 common shares, 3,271,070 warrants
and 4,485,000 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 .
- 7 -
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Joseph Grosso, President and 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 September 30, 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: November 13, 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 September 30, 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: November 13, 2007
/s/ Arthur Lang
------------------------------------
Arthur Lang, Chief Financial Officer