IGC Resources Inc

focused on gold and copper, Western Australia, Zambia & Ontario

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1

IGC RESOURCES INC.

MANAGEMENT DISCUSSION AND ANALYSIS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2009

INTRODUCTION

This discussion and analysis of financial position and results of operations is prepared as at December 17 2009 and

should be read in conjunction with the unaudited interim consolidated financial statements for the three month ended

October 31, 2009 of IGC Resources Inc. (the “Company” or “IGC”) with the related notes thereto. Those unaudited

interim consolidated financial statements have been prepared in accordance with Canadian generally accepted

accounting principles for interim financial statements. All dollar amounts included therein and in the following

management discussion and analysis (“MD&A”) are expressed in Canadian dollars except where noted.

FORWARD-LOOKING INFORMATION

This discussion contains forward-looking statements that involve risks and uncertainties. Such information, although

considered to be reasonable by the Company’s management at the time of preparation, may prove to be inaccurate and

actual results may differ materially from those anticipated in the statements made. Additional information on the

Company is available for viewing on the

System for Electronic Data Retrieval (“SEDAR”) at www.sedar.com

.

DESCRIPTION OF THE BUSINESS

The Company was incorporated under the laws of British Columbia in 1992 and continued into the Yukon Territory

under the

Business Corporations Act

(Yukon) on March 3, 2000. Effective July 21, 2004, the Company was continued

out of the Yukon Territory back into British Columbia and changed its name from “International Green Ice Inc.” to

“IGC Resources Inc.”.

The Company is a reporting issuer in British Columbia and Alberta and trades on the TSX Venture Exchange (the

“Exchange”) under the symbol

IGC

. IGC is engaged in the acquisition, exploration and development of mineral

resource properties as funds allow.

OVERVIEW

The Company’s principal business activities are the exploration, development and, if warranted, mining of the

Blackburn Gold Project and of the Fraser Range Copper/Gold Project (the “Fraser Range Project”) located in Western

Australia. In the Shebandowan Area of Ontario, Canada, the Company holds a 100% interest in the Narrows Claims, a

gold/platinum/palladium prospect.

IGC also owns 16.53% (down from 28.55% at July 31, 2009) of the issued and outstanding shares of Atomic Resources

Limited (“Atomic”), a uranium and coal-focused Australian company listed on the Australian Stock Exchange (“ATQ”)

that holds mineral property licenses in Tanzania and Western Australia, including a mineral property license to explore

and develop and, if warranted, mining of uranium and coal. Atomic’s directors include Clive Hartz, who is also a

director of IGC, and who holds less than 10% of the outstanding common shares of Atomic.

Through the Company’s wholly-owned subsidiary, IGC (AUST) Pty Ltd. (“IGCA”), and subsequently through IGCA’s

wholly-owned subsidiary, Goldport Pty Ltd. (“Goldport”), the Company holds the right to sub-lease and sub-licence

both the Blackburn Gold Project and the Fraser Range Project for varying terms of up to 21 years from 2005, from Great

Southern Resources Pty Ltd. (“GSR”). GSR is a private Australian corporation whose directors include Clive Hartz,

Chairman of the Company.

The

Blackburn Gold Project

comprises mineral tenements of various types, including Mining Leases, Exploration

Licenses, Prospecting Licenses and applications for Exploration Licenses covering an area of approximately 441 sq km.

The

Fraser Range Project

comprises Exploration Licenses covering an area of approximately 146 sq km and the

Uaroo Project

comprises Exploration Licences covering an area of approximately 346 sq km.

For complete descriptions of the Blackburn Gold Project and the Fraser Range Project, see

Management’s Discussion &

Analysis for the fiscal year ended July 31, 2004

and Management’s Proxy Circular

for the Company’s Annual and

Special General Meeting held January 13, 2005, as filed on SEDAR.

For a full description of the Uaroo tenements, see the Company’s Annual Report 2006, as well as our news release dated

July 19, 2006, as filed on SEDAR.

2

For a full description of the Narrows Claims and the work performed thereon, see page 1 of the Company’s Annual

Information Form for the fiscal year ended July 31, 2003 as filed on SEDAR.

The mining industry was hit very hard with the global economic downturn and declining commodities prices in 2008-

2009. The Company, along with most other juniors, has not been successful in raising funds to advance its mineral

projects and; therefore, no work was conducted on the projects during the three months ended October 31, 2009 and no

work is planned until such time as the markets turn around and funding is available

SIGNIFICANT EVENTS, TRANSACTIONS AND ACTIVITIES

Personnel

Effective August 10, 2009, Linda Holmes resigned as a director and officer of the Company.

Atomic

On August 11, 2009, Atomic completed a private placement of 8,670,000 common shares at AUS$0.105 per share. The

Company did not participate in this placement, and therefore, its holdings in Atomic declined from 28.55% to 24.82%.

As a result of this dilution in the Company’s holdings of Atomic, the Company would have realized a dilution loss of

$332,228; however, as the Company had already written down the investment at July 31, 2009 by $993,771, the dilution

loss was not recorded, but reduced the amount of the write down to $661,543

On September 20, 2009, Atomic issued a further 33,235,000 common shares at AUS$0.105 per share pursuant to a

prospectus issue. The Company did not participate in this placement, and saw its holdings in Atomic decline further to

16.53%. Due to the Company’s dilution of holdings in Atomic to 16.55%, the Company ceased to have significant

influence over Atomic, and therefore, changed its method of accounting for its investment in Atomic. As of September

20, 2009, the investment in Atomic is classified as “held for trading” current asset, whereby the investment is recorded

at its fair value, based on quoted closing bid price at the balance sheet date, or the closing bid price on the last day the

security traded if there were no trades at the balance sheet date, with both realized and unrealized gains and losses

recorded in the statement of operations and deficit.

Stock options

On September 28, 2009, 200,000 stock options with a January 7, 2012 expiry date and $0.25 exercise price were

cancelled without being exercised.

On September 29, 2009, 400,000 stock options with a December 1, 2011 expiry date and $0.35 exercise price, and

50,000 stock options with a January 13, 2010 expiry date and $0.45 exercise price were also cancelled without being

exercised

.

SUBSEQUENT EVENTS

Annual General Meeting (“AGM”)

The Company has set its AGM for Friday, January 29, 2010 at 4:00 pm PST, at Suite 700 – 585 Burrard Street,

Vancouver, BC, V7X 1S8. Among resolutions tabled on the agenda for the AGM, is a proposed special resolution to

consolidate the outstanding shares of the Company on a one for five basis, in order to provide greater flexibility in any

future acquisitions and financings the Company may wish to complete. In particular, in light of the current market

conditions, management believes it will be beneficial to the current shareholders to have the issued share capital made more

attractive to future investors. As at December 17, 2009, a total of 26,164,428 common shares in the capital of the Company

were issued and outstanding and, upon effecting the share consolidation, a total of 5,232,886 common shares in the capital

of the Company would be issued and outstanding.

Sale of Atomic shares

On November 30, 2009, the Company sold ten million of its 16,500,000 shares of Atomic at $0.1015 per share

(AUS$0.105 per share). The net proceeds, after brokerage fees of $1,012,000 (aus$1,047,000) were used to repay

related party debts.

3

MINERAL PROJECTS

Blackburn Gold Project

The mineralization seen at Blackburn is intrusive-related and geologically may well be part of a very large mineralising

system. The exploration target is seen to be a similar genetic model to the nearby Boddington Mine owned by

AngloAshanti and Newmont where resources are reported in excess of 16 million ounces gold. Like Boddington,

Blackburn also has an elevated copper geochemical signature and exploration is focused on delineating the orebody in

terms of both copper and gold over several km of strike length and width.

In the spring of 2008, the Company completed a campaign of reverse circulation drilling testing on a number of

electromagnetic targets highlighted in the previous geophysical survey along the main corridor. The intention of the

drilling was to identify and extend resources outside the bounds of the known mineralisation. Assay results from 3,300

metres of reverse circulation drilling confirmed that gold mineralisation continues to be present away from the known

deposit at Jinkas Hill. These results extend the potential envelope to the south and to the west of the current resource.

Twenty-eight holes were completed, with 20 intercepting gold grades above the cutoff of 1.0 g/t.

Whilst the majority of the drilling intercepted grades of a similar nature to the already identified mineralised corridor,

the higher grade shoots anticipated are yet to be struck. Further work is required to identify the orientation, nature and

extent of the zones, which are assumed from these results to be oblique to the trend of the main mineralised corridor.

(

See our news release of May 21, 2008 on SEDAR

.)

The tenements have been reduced by about 50% to the immediate area of the defined targets in accordance with the

Department of Industry and Resources exploration licence regulations.

During the year ended July 31, 2009, the Company wrote-down the mineral property costs of $4,253,017 and the

deferred exploration costs of $1,259,226 spent to that date on the Blackburn Gold Project for a total write-down at July

31, 2009 of $5,512,243 due to the economic market environment for exploration stage entities, the Company’s inability

to raise funds and in accordance with the Company’s accounting policy for mineral properties and deferred exploration

costs. During the three months ended October 31, 2009, the Company wrote-down the mineral property and deferred

exploration costs of the Blackburn Gold by a further $20,337, for a total write down of $5,532,580 at October 31, 2009.

Despite the write-down in the value of the Blackburn Gold Project, the Company still intends on furthering its

exploration program when, and if, funding allows.

Fraser Range Project

There are two identified prospects at the Fraser Range Project, the Endurance and the Iron Duke. The Company

considered that the gravity high and elevated copper (up to 32 parts per million) and gold (up to 9 parts per billion) of

the Endurance prospect provides a geological target requiring further investigation, while the Iron Duke target may have

a geochemical signature masked by the overlying Eocene paleochannel. The tenements have been reduced by about

50% to the immediate area of the defined targets in accordance with the Department of Industry and Resources

exploration licence regulations. Exploration licence E63/886 has been relinquished.

During the year ended July 31, 2009, the Company also wrote-down the mineral property costs of $82,318 and the

deferred exploration costs of $299,082 spent to that date on the Fraser Range Project for a total write-down of $381,400

for the same reasons in writing down the Blackburn Gold Project. During the three months ended October 31, 2009, the

Company wrote-down the mineral property and deferred exploration costs of the Blackburn Gold by a further $3,768,

for a total write-down of 385,168 at October 31, 2009. Despite the write-down in the value of the Fraser Range Project,

the Company also still intends on furthering its exploration program when, and if, funding allows.

Uaroo Project

The Company has an agreement with Atomic whereby IGC has licensed to Atomic the rights to any uranium discovered

within the Uaroo Project tenement. The Company retained ownership of the Uaroo tenements and rights to explore the

tenements for copper and gold mineralization; however, during the year ended July 31, 2009, the Company relinquished

the majority of the copper and gold target areas of the Uaroo Project to the State of Western Australia and; therefore,

wrote-off the mineral property costs of $8,433 and deferred exploration costs of $14,850 capitalized on the balance

sheet with respect to the Uaroo Project, for a total write-off of $23,283 at July 31, 2009.

4

Narrows Claims

IGC holds a 100% interest in the Narrows Claims, a gold, platinum and palladium exploration project consisting of 23

units covering approximately 1.4 square miles, located in the Shebandowan Area of Ontario, about 90 km northwest of

Thunder Bay. The Narrows Claims were acquired by the Company in 1993 and are in good standing with the Ontario

Ministry of Northern Development and Mines until the spring of 2011 The property is subject to a 1.5% net smelter

royalty.

To the east-southeast of the prospect lies the INCO Shebandowan Mine and adjoining the Narrows Claims to the south

are the advanced exploration tenements held by North American Palladium (NAP). The property to the immediate west

has had strong exploration results in the past reporting up to 13.01g/t palladium and 3.76 g/t platinum in grab samples

(North American Gems Inc.).

The Company has not conducted any exploration and development activity on the Narrows Claims in the past four years

as it was focusing its resources towards its Western Australian mineral properties. In accordance with the Canadian

Institute of Chartered Accountants Handbook (“CICA”) Recommendations, during the year ended July 31, 2006, it

wrote down the $550,606 spent on mineral properties and deferred exploration expenditures to that date to zero. Despite

a cessation in exploration activity on the Narrows Claims, management believes it is a valuable project and plans to

resume exploration activity at a later date

.

Results of Operations

During the three months ended October 31, 2009, the Company reported a net income of $127,526 ($0.00 per share)

versus a net income of $55,114 ($0.00 per share) during the same period in 2008. Several factors, some routine and

others not so routine, are responsible for the change in net income between the two periods.

As the Company is in the exploration stage, it usually has a moderate net loss rather than a net income result. The

unrealized gain on securities held for trading of $248,721 is largely responsible for the net income result for the three

months ended October 31, 2009; whereas, the foreign exchange gain of $74,342 and stock based compensation recovery

of $47,690 for the period ended October 31, 2008, is largely responsible for the net income result of the prior’s year’s

first quarter.

During the three months ended October 31, 2009, the Company’s holdings in Atomic diluted from 28.55% at July 31,

2009, to 16.55% on September 20, 2009 following Atomic share issuances (see “SIGNIFICANT EVENTS,

TRANSACTIONS AND ACTIVITIES –

Atomic”)

; at this point the Company changed its method of accounting for

Atomic from the equity method to the fair value method. As the investment is now classified as a “held for trading”

current asset, whereby the investment is recorded at its fair value, based on quoted closing bid price at the balance sheet

date, or the closing bid price on the last day the security traded if there were no trades at the balance sheet date, with

both realized and unrealized gains and losses recorded in the statement of operations and deficit. During the three

months ended October 31, 2009, the Company recorded an unrealized gain on securities held for trading of $248,721

(2008 - $nil) on its investment in Atomic; where as in the same period of the prior year, the Company recorded an equity

loss on its investment in Atomic of $21,086,

During the three months ended October 31, 2009, the Company recorded a foreign exchange loss of $48,071, whereas

during the corresponding period the prior year, the Company recorded a foreign exchange gain of $74,342. The

Australian dollar strengthened in relation to the Canadian dollar during the three months ended October 31, 2009. The

environmental bond deposit of $125,082 and the payable to related parties of $1,136,020 are denominated in Australian

dollars, as is a significant portion of the Company’s working capital. With the Company’s Australian dollar balances

being in a net liability position, it experienced a foreign exchange loss this period, while the Canadian to Australian

dollar fluctuated in the opposite direction in the same period of the previous year, resulting in a foreign exchange gain.

During the three months ended October 31, 2009, the Company did not record any stock based compensation expense,

as all of its employee stock options were fully vested; whereas, during the corresponding period the prior year, the

company experienced a $47,690 stock based compensation recovery. Stock-based compensation is re-measured on each

balance sheet date until such options vest. With the collapse of world-wide markets during the three months ended

October 31, 2008, the Company’s share price dropped significantly, which resulted in a downward valuation of the

unvested issued options, and gave rise to the recovery experienced during that period.

Other expense items increasing during the three months ended October 31, 2009, compared to the three months ended

October 31, 2008 are write-down of mineral properties and deferred exploration costs and interest to related parties. At

April 30, 2009, the Company considered it prudent to write-down to zero mineral property and deferred exploration

costs of the Blackburn and Fraser Range Projects due to the economic market environment. Economic conditions have

not improved significantly, and, therefore, the Company continues to write-down mineral property costs during the

5

current quarter, giving rise to a write-down of the $24,106 costs incurred during the three months ended October 31,

2009. As the Company only began writing costs down at April 30, 2009, the Company did not experience any mineral

property and deferred exploration write-downs during the same three month period in 2009. The Company incurred

interest expense to related parties of $21,581 for the three months ended October 31, 2009 ($nil for the three months

ended October 31, 2008), as a net loan from GSR on acquisition of Goldport of $607,841 and a payable to Commercial

Holdings Pty Ltd. (“CHP”), a private Australian corporation controlled by the Company’s Chair, Clive Hartz for unpaid

management fees of $406,873, both included in payable to related parties, commenced bearing interest at 9% per annum

on July 1, 2009.

Most other expenses during the three months ended October 31, 2009 decreased in relation to expenses incurred during

the same quarter of the previous year. The Company did not incur an equity loss from long-term investment in Atomic

during the three months ended October 31, 2009, whereas it incurred a loss of $21,086 during the three months ended

October 31, 2008. This is due to the change in the Company’s investment in Atomic, and therefore, accounting

treatment of the investment during the current quarter, on dilution of its shareholdings in Atomic from 28.55%

ownership to 16.55% ownership. The Company no longer has significant control for Atomic, and now classifies the

investment as “available for sale” (see “SIGNIFICANT EVENTS, TRANSACTIONS AND ACTIVITIES –

Atomic

”),

and now only records gains and losses in the statement of operations on disposition or permanent decline in value.

Investor relations costs decreased $12,426 from $14,647 for the three months ended October 31, 2008 to $2,221 for the

three months ended October 31, 2009, as the Company cut all investor relations activities in an effort to reduce costs,

except those to which were contracted to October 2009. Consulting expense decreased $10,405 from $11,438 for the

three months ended October 31, 2008 to $1,033 for the three months ended October 31, 2009 on the departures of the

former President/CEO/Director and former Secretary/Director. They were not replaced, again, in effort to reduce costs.

Interest income decreased $6,730 from $8,110 during the three months ended October 31, 2008 to $1,380 for the three

months ended October 31, 2009 due to cash resources decreasing steadily through the past year, as the Company was

unable to secure further financing.

During the three months ended October 31, 2009, the Company incurred deferred exploration costs of $6,706, the

majority of which relates to the preparation of a report on the Blackburn Project required by the State of Western

Australia. During the three months ended October 31, 2009, the Company also incurred $17,399 in mineral properties

costs for rent, property tax and maintenance costs of the Blackburn and Fraser Range Projects. Both the deferred

exploration costs of $6,706 and mineral property costs of $17,399 were written-down and not capitalized on the balance

sheet.

As the Company is still in the exploration stage, variances in its quarterly losses are not affected by sales or productionrelated

factors. Changes in net loss in the first quarter of 2010 over net income (loss) in each quarter of 2009 and 2008

are generally attributed to foreign exchange fluctuations between the Australian and Canadian dollars, stock-based

compensation expense and unrealized gains and losses on securities held for trading/equity loss in long-term investment

as discussed above in “

Results of Operations

”. The Company’s payable to related parties and environmental deposit, as

well as a significant portion of the Company’s working capital are denominated in Australian dollars and are, therefore,

susceptible to foreign exchange gains and losses. The Canadian and Australian dollars fluctuated throughout the three

months ended October 31, 2009, from a low of A$1.00 = C$0.8986 on August 5, 2009, to a high of A$1.00 = C$0.9788

on October 29, 2009. (

See

Results of Operations”.)

As the Company is in the exploration stage, it usually has a moderate net loss rather than a net income result in each

quarter. Exceptions to this have occurred occasionally. The significant loss the during the the current quarter is due to

unrealized gain on securities available for trading of $248,721; the gain during the three months ended April 30, 2009, is

due to write-downs and write-offs of assets (net of taxes) of $6,234,238 due to the prevailing economic conditions at the

time (net of taxes).(s

ee “April 31, 2009 - MD&A Results of Operations”)

The recovery in the fourth quarter ended July

31, 2008, was a result of a $482,656 future income tax recovery on re-measurement of future income tax liability, while

the recovery of $55,114 during the three months ended October 31, 2008 was a combined result of a $74,342 foreign

SUMMARY OF QUARTERLY RESULTS

Net Income (Loss) for the Quarter Ended

October 31 January 31 April 30 July 31 Total

Fiscal year ended 2010 $ 127,526 $ n/a $ n/a $ n/a $ n/a

Fiscal year ended 2009 $ 55,114 $ (56,415) $(6,545,556) $ (38,180) $ (6,585,037)

Fiscal year ended 2008 $ (190,082) $ (214,692) $ (219,964) $ 103,184 $ (521,554)

6

exchange gain, and a $47,690 stock based compensation recovery during that period, in excess of expenses (

See

“October 31, 2008 – MD&A

Results of Operations”).

LIQUIDITY AND CAPITAL RESOURCES

The Company is in the development stage and, therefore, has no regular cash flow. At October 31, 2009, the Company

had a working capital of $875,085, inclusive of cash on hand of $214,544. This compares to a working capital

deficiency of $762,279 at July 31, 2009, inclusive of cash on hand of $229,817. The Company now has a positive

working capital rather than deficiency in working capital due to the change in the Company’s holdings of Atomic, and

resulting classification as a current asset, whereas at July 31, 2009 it had been a long term asset accounted for by the

equity method (where the investment was initially recorded at cost, and adjusted to recognize the Company’s shares of

earnings or losses of the investee company and reduced by dividends received).

On August 11, 2009, Atomic completed a private placement of 8,670,000 common shares at AUS$0.105 per share. The

Company did not participate in this placement, and therefore, its holdings in Atomic declined from 28.55% to 24.82%.

As a result of this dilution in the Company’s holdings of Atomic, the Company would have realized a dilution loss of

$332,228; however, as the Company had already written down the investment at July 31, 2009 by $993,771, the dilution

loss was not recorded, but reduced the amount of the write down to $661,543.

On September 20, 2009, Atomic issued a further 33,235,000 common shares at AUS$0.105 per share pursuant to a

prospectus issue. The Company did not participate in this placement, and saw its holdings in Atomic decline further to

16.53%. Due to the Company’s dilution of holdings in Atomic to 16.55%, the Company ceased to have significant

influence over Atomic, and therefore, changed its method of accounting for its investment in Atomic. As of September

20, 2009, the investment in Atomic is classified as a “held for trading” current asset, whereby the investment is recorded

at its fair value, based on quoted closing bid price at the balance sheet date, or the closing bid price on the last day the

security traded if there were no trades at the balance sheet date, with both realized and unrealized gains and losses

recorded in the statement of operations and deficit.

Payable to related parties on the balance sheet of $1,136,020 at October 31, 2009 (July 31, 2009 - $1,018,784) includes

a net loan from GSR on the acquisition of Goldport of $607,841 (July 31, 2009 - $560,624) and a payable to CHP of

$406,873 (July 31, 2009 - $360,052. Both of these payables remained unsecured and non-interest bearing until July 1,

2009, at which time the Company was advised that they will bear interest at nine percent per annum. During the three

months ended October 31, 2009, interest expense of $21,571 (2008 - $nil) was recorded in respect of the nine percent

per annum interest charge on these payables. Both of these payables are denominated in Australian currency and are

subject to foreign exchange fluctuations.

Accounts payable decreased from $35,154 at July 31, 2009 to $29,744 at October 31, 2009, as outstanding mineral

property rent invoices were paid during three months ended October 31, 2009. Receivables increase from $35,927 at

July 31, 2009 to $41,469 at October 31, 2009 primarily due to foreign exchange fluctuations during the period.

The $15,273 decrease in cash balance at October 31, 2009 is a result of payments of accounts payable, cash used in

operations and cash used for mineral property and deferred exploration costs, net of positive foreign exchange

fluctuations on Australian dollar denominated cash balances. The cash balance at October 31, 2009 is sufficient to allow

the company to continue its current level of operations. Management has reduced overheads and has made a concerted

effort to maintain routine expenditures at a minimum; however, recognizes that the Company requires more cash for

working capital purposes and is hoping to procure further funds in order to continue with its planned operations. This

financing will likely be in the form of a private equity financing. No firm commitments are in place as at the date of this

report.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

7

TRANSACTIONS WITH RELATED PARTIES

At October 31, 2009, payable to related parties of $1,136,020 (July 31, 2009 - $1,018,784) is as follows:

October 31,

July 31,

2009

2009

Loan from GSR on acquisition of Goldport

$

632,710 $ 584,675

Less receivable from GSR for reimbursement of rent refunds (24,869) (24,051)

Net loan from GSR on acquisition of Goldport 607,841 560,624

Amount payable to CHP 406,873 360,052

Amounts payable to CHP for unpaid expenses 85,000 85,000

Amounts payable to CHP and GSR for unpaid interest 30,062 6,978

Amounts payable to Atomic for unpaid expenses 6,244 6,130

$

1,136,020 $ 1,018,784

Net loan from GSR on acquisition of Goldport of $607,841 (July 31, 2009 - $560,624) and amount payable to CHP for

unpaid management fees of $406,873 (July 31, 2009 - $360,052) were non-interest bearing until July 1, 2009, at which

time they commenced bearing interest at nine percent per annum. Interest expense for the three months ended October

31, 2009 on these payables to related parties was $21,571 (2008 - $nil). The remaining amounts payable to related

parties continue to be non-interest bearing.

During the three months ended October 31, 2009, the Company incurred management fees of $15,000 (2008 - $15,000)

paid to CHP.

On August 11, 2009, Atomic completed a private placement of 8,670,000 common shares at AUS$0.105 per share. The

Company did not participate in this placement, and therefore, its holdings in Atomic declined from 28.55% to 24.82%.

On September 20, 2009, Atomic issued a further 33,235,000 common shares at AUS$0.105 per share pursuant to a

prospectus issue. The Company did not participate in this placement, and saw its holdings in Atomic decline further to

16.53% (see “SIGNIFICANT EVENTS, TRANSACTIONS AND ACTIVITIES –

Atomic

”).

During the three months ended October 31, 2009, the Company incurred consulting fees of $nil (2008 - $7,500) paid to

the former Corporate Secretary/Director of the Company and $nil (2008 - $18,175) paid to a company controlled by the

former CEO and President/Director of the Company. These consulting fees were recorded in the financial statements as

follows:

2009 2008

Consulting expenses $ - $ 11,438

Deferred exploration costs - 14,237

$ - $ 25,675

TRANSACTIONS WITH RELATED PARTIES WERE IN THE NORMAL COURSE OF BUSINESS AND

WERE MEASURED AT THE EXCHANGE VALUE, WHICH WAS THE AMOUNT OF CONSIDERATION

ESTABLISHED AND AGREED TO BY THE RELATED PARTIES.

CHANGES IN ACCOUNTING POLICIES

None.

RECENTLY RELEASED CANADIAN ACCOUNTING STANDARDS

Goodwill and Intangible Assets

The Company adopted the new Canadian Institute of Charter Accountants (“CICA”) Handbook Section 3064 which

replaced Section 3062, “Goodwill and Other Intangible Assets”, and Section 3450, “Research and Development Costs”

effective August 1, 2009. This new section establishes standards for the recognition, measurement, presentation and

disclosure of goodwill subsequent to its initial recognition and of intangible assets. Standards concerning goodwill

remain unchanged from the standards included in the previous Section 3062. The section applies to interim and annual

financial statements relating to fiscal years beginning on or after October 1, 2008. The adoption of this new accounting

policy has no impact on these interim unaudited consolidated financial statements.

8

International Financial Reporting Standards (IFRS)

In January 2006, the CICA Accounting Standards Board (AcSB) adopted a strategic plan for the direction of accounting

standards in Canada. As part of that plan, accounting standards in Canada for public companies are expected to converge

with International Financial Reporting Standards (“IFRS”) by the end of 2011. While the Company has begun assessing

the adoption of IFRS for its fiscal year beginning August 1, 2011, the financial reporting impact of the transition to IFRS

cannot be reasonably estimated at this time.

Business combinations, Non-controlling interest and Consolidated Financial Statements

In January 2009, the CICA issued Handbook Sections 1582 “Business Combinations”, 1601 “Consolidated Financial

Statements” and 1602 “Non-controlling Interests” which replace CICA Handbook Sections 1581 “Business

Combinations” and 1600 “Consolidated Financial Statements”. Section 1582 establishes standards for the accounting for

business combinations that is equivalent to the business combination accounting standard under IFRS. Section 1582 is

applicable for the Company’s business combinations with acquisition dates on or after January 1, 2011. Early adoption

of this Section is permitted. Section 1601 together with Section 1602 establishes standards for the preparation of

consolidated financial statements. Section 1601 is applicable for the Company’s interim and annual consolidated

financial statements for its fiscal year beginning August 1, 2011. Early adoption of this Section is permitted and all three

Sections must be adopted concurrently. The Company will be evaluating the impact of the adoption of this new section

on its consolidated financial statements

ADDITIONAL DISCLOSURE

Key Components of Deferred Exploration Costs

Three months ended October 31,

2009 2008

Maps and reports $ 5,373 $ -

Geologist - 14,237

Sampling - 2,044

Other deferred exploration costs 1,332 1,333

Total deferred exploration costs for the period, before

write-down

6,705

17,614

Less write-down (6,705) (17,614)

Total deferred exploration costs capitalized in the period $ - $ -

Key Components of Net Loss (Income) for the Periodr

Three months ended October 31,

2009 2008

Foreign exchange loss (gain) $ 48,071 $ (74,342)

Write-down of mineral properties and deferred

exploration costs

24,106

-

Interest to related parties 21,571 -

Management fees 15,000 15,000

Accounting and audit 8,200 11,725

Investor relations 2,221 14,647

Consulting 1,033 11,438

Equity loss from long-term investment - 21,086

Interest income (1,380) (8,110)

Future income tax recovery - (3,163)

Stock-based compensation recovery - (47,690)

Other items 2,373 4,295

Net loss (income) for the period $ 121,195 $ (55,114)

OUTSTANDING SHARE DATA

The Company has one class of common shares. As at December 17, 2009, there were 26,164,428 common shares

outstanding.

The Company has a stock option plan (the “2007 Plan”). As at December 17, 2009, the following options were

outstanding:

No. of Shares Exercise Price Expiry Date

519,000

(1)

$0.45 Jan 13/10

100,000

(1)

$0.48 Feb 27/12

Total 619,000

(1) These options are fully vested and are non-transferable.

9

As at December 17, 2009, the Company has 3,286,250 non-transferable share purchase warrants outstanding:

No. of Shares Exercise Price Expiry Date

3,286,250

(1)

$0.30 April 4/10

Total 3,286,250

(1) These warrants are non-transferable

RISKS AND UNCERTAINTIES

The Company is in the process of exploring its mineral properties and has not yet determined whether these properties

contain the ore reserves that are economically recoverable.

These accompanying consolidated financial statements have been prepared on a going concern basis, which

contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of

business. As at October 31, 2009, the Company has not yet determined whether its properties contain mineral reserves

that are economically recoverable. The continuation of the Company is dependent upon the continuing financial support

of stockholders and obtaining long-term financing to complete exploration and development.

While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity

will generate sufficient funds that will be available for operations. These consolidated financial statements do not

include adjustments related to the recoverability and classification of recorded asset amounts or the amounts and

classification of liabilities that may be necessary should the Company be unable to continue in existence.

The Company’s business operations are subject to risks and hazards inherent in the mining industry, including but not

limited to unanticipated variations in resource grade and other geological problems, water conditions, surface or

underground conditions, metallurgical and other processing problems, mechanical equipment performance problems, the

unavailability of materials and equipment, accidents, labour force disruptions, force majeure factors, unanticipated

transportation costs and weather conditions, any of which can materially and adversely affect, among other things, the

development of properties, production quantities and rates, costs and expenditures and production commencement dates.

No assurance can be given that the Company will achieve commercial viability through the successful exploration and/or

mining of its tenement interests in Australia, nor for the Narrows Claims in Canada. If the Company’s exploration

programs on the Blackburn Gold Project are successful, additional financing will need to be raised for the development

of an economically mineable deposit and to place it into commercial production.

Some of the directors and officers are engaged, and will continue to be engaged, in the search for additional business

opportunities on behalf of other corporations, and situations may arise where these directors and officers will be in direct

competition with the Company. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the

British Columbia Business Corporations Act

, as applicable.

See the “Risks and Uncertainties” section of

Management’s Proxy Circular

dated June 7, 2004, as filed on SEDAR, for

a complete discussion of risks and uncertainties.

Additional information about the Company may be found on

www.sedar.com

and on the Company’s website at

www.igcresources.com

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