2011 Annual Illustrative IFRS Financial Statements - BDO Canada

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Precious & Other Metals ExplorationNOTES TO THE FINANCIAL STATEMENTSExpressed in Canadian DollarsFor the year-ended December 31, 2011Reference:IAS 12.81Deferred Tax Assets and LiabilitiesThe nature and tax effect of the temporary differences giving rise to the deferred tax assets and liabilities atDecember 31, 2011 and 2010 are summarized as follows:January 1, 2011$’000Recognizedin netincomeRecognizeddirectly inequityRecognized inaccumulated othercomprehensiveincomeDecember 31,2011$’000Property, plant and equipment $ xxx $ xxx $ xxxShare issue costs xxx xxx xxxNon-capital losses carried forward xxx xxx xxxCapital losses carried forward xxx xxx xxx$ xxx $ xxx $ xxx $ xxxOffset against deferred tax liabilities (xxx) (xxx) (xxx) (xxx)Unrecognized deferred tax asset (xxx) (xxx) (xxx) (xxx)Deferred tax assets $ - $ xxx $ - $ - $xxxExploration and evaluation $ (xxx) $ (xxx) $ (xxx)Available-for-sale investment (xxx) (xxx) (xxx)Offset against deferred tax assets xxx xxx XxxDeferred tax liabilities $ - $ - $ - $ (xxx) $(xxx)Net deferred tax balance $ - $ xxx $ - $ (xxx) $ -January 1, 2010$’000Recognize innet incomeRecognizedirectly inequityRecognized inaccumulated othercomprehensiveincomeDecember 31, 2010$’000Property, plant and equipment $ xxx $ xxx $ xxxShare issue costs xxx Xxx xxxNon-capital losses carried forward xxx xxx xxxCapital losses carried forward xxx xxx xxx$ xxx $ xxx $ xxx $ xxxOffset against deferred tax liabilities (xxx) (xxx) (xxx) (xxx)Unrecognized deferred tax asset (xxx) (xxx) (xxx) (xxx)Deferred tax assets $ - $ xxx $ - $ - $ xxxExploration and evaluation $ (xxx) $ (xxx) $ (xxx)Available-for-sale investment (xxx) (xxx)Offset against deferred tax assets xxx xxx XxxDeferred tax liabilities $ - $ - $ - $ (xxx) $ (xxx)Net deferred tax balance $ - $ xxx $ - $ (xxx) $ -As at December 31, 2011, the Company had estimated capital losses for Canadian tax purposes of $xxx(December 31, 2010: $xxx). These losses do not expire and may be utilized to reduce future capital gains, ifany.PAGE 24 OF 35BDO CANADA LLP
Precious & Other Metals ExplorationNOTES TO THE FINANCIAL STATEMENTSExpressed in Canadian DollarsFor the year-ended December 31, 2011Reference:IAS 12.81IAS 12.81(e)IAS 12.81As at December 31, 2011, the Company has estimated non-capital losses for Canadian income tax purposesthat may be carried forward to reduce taxable income derived in future years. A summary of these tax lossesis provided below.Tax LossesThese tax losses will expire as follows:Year of Expiry20xx20xx20xxTotalTaxable Losses$ xxxxxxxxx$ xxxIAS 12.81The potential benefits of these carry-forward non-capital losses, capital losses and deductible temporarydifferences has not been recognized in these financial statements as it is not considered probable thatsufficient future taxable profit will allow the deferred tax asset to be recovered.16. F INANCIAL INST RUMENT S AND RISK MANAGEMENTThe company is exposed through its operations to the following financial risks:• Market Risk• Credit Risk• Liquidity RiskIn common with all other businesses, the company is exposed to risks that arise from its use of financialinstruments. This note describes the Company’s objectives, policies and processes for managing those risksand the methods used to measure them. Further quantitative information in respect of these risks ispresented throughout these financial statements.IFRS 7.33There have been no substantive changes in the Company’s exposure to financial instrument risks, itsobjectives, polices and processes for managing those risks or the methods used to measure them fromprevious years unless otherwise stated in the note.General Objectives, Policies and Processes:The Board of Directors has overall responsibility for the determination of the Company’s risk managementobjectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authorityfor designing and operating processes that ensure the effective implementation of the objectives andpolicies to the Company’s finance function. The Board of Directors receive monthly reports from theCompany’s Financial Controller through which it reviews the effectiveness of the processes put in place andthe appropriateness of the objectives and policies it sets.The overall objective of the Board is to set policies that seek to reduce risk as far as possible without undulyaffecting the Company’s competitiveness and flexibility. Further details regarding these policies are set outbelow.a) Market RiskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate becauseof changes in market prices. Market prices are comprised of four types of risk: foreign currency risk, interestrate risk, commodity price risk and equity price risk.PAGE 25 OF 35BDO CANADA LLP
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2011 Annual Illustrative IFRS Financial Statements - BDO Canada

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