Mining Properties Operating Costs:
During the nine months ended December 31, 2008 the Company has incurred a significant amount in exploration expenditures, principally in its Lowland property. Given the current world economic situation and its impact in the mining industry the Company evaluated the carrying value of its exploration properties for impairment. After evaluating each individual project and the overall Company’s market value it concluded that all or a portion of the carrying value of its exploration properties could not be supported resulting in an impairment charge of $12.5 million.
The following is a description of the activities and evaluation of WPR properties:
i) Tri-Eagle Property:
Under the Tri-Eagle property option agreement entered on November 1, 2007, the Company incurred $0.2 million in acquisition costs. Exploration expenditures incurred during the nine month ended December 31, 2008 were $0.2 million. Given current market conditions and exploration results to date the Company is unable to support the current valuation of this project and has recorded an impairment charge of $0.4 million.
ii) Lowland Property:
Under the Lowland property option agreement entered on November 26, 2007, the Company incurred $1.2 million in acquisition and exploration expenditures in fiscal 2008. During the first nine months of fiscal 2009, the Company incurred on this project $10.9 million in exploration expenditures. The principal items explaining this charge were drilling ($3.8 million), air transportation ($1.5 million) and geophysics ($0.7 million) and management fees ($1.0 million).
As at December 31, 2008 the Company has incurred $12.2 million on this project hence earning a 25% interest in the property; however the Company does not intend to continue with this exploration program until economic conditions are more favourable. Given current market conditions and exploration results to date the Company is unable to support the current valuation of this project and has recorded an impairment charge of $9.3 million.
iii) Big-Mac Property:
Under the Big-Mac property option agreement the Company incurred $1.7 million in acquisition costs and $0.8 million in exploration expenditures during fiscal 2008. During the first nine month of fiscal 2009, $1.2 million was spent on this property. The principal items composing the expenditure were air transportation ($0.7 million) and drilling ($0.2 million). Given current market conditions and exploration results to date the Company is unable to support the current valuation of this project and has recorded an impairment charge of $2.9 million.
iv) Luc Bourdon Property:
On September 11, 2008 WPR entered into an option agreement among Golden Valley, WPR and Noront providing WPR and Noront the option to acquire from Golden Valley an aggregate 70% interest in the Golden Valley property located in the lowland region of James Bay, Ontario.
In order to acquire its 35% interest in the property, WPR made payments to Golden Valley on September 19, 2008 of $175,000, $25,000 in cash and by issuing 34,091 WPR shares with a fair value of $150,000. In addition to these payments, WPR and Noront are required to incur aggregate
exploration expenditures on the property of at least $5.0 million over a three-year period, of which $1.0 million must be incurred in the first year.
At December 31, 2008, the Company had incurred $0.3 million in expenditures, primarily on the construction of the Oval Lake Camp installation.
