Liquidity
The Company’s cash and cash equivalents decreased from $21.5 million at April 30, 2007 to $9.5 million at April 30, 2008. Proceeds of $15 million from the sale of the Buffalo Head Hills property interest in July 2007 were used to finance the Company’s exploration activities during the Current Year as were proceeds from a $10.05 million “flow-through’ private placement and proceeds from a $15.0 million short-form prospectus offering, both of which closed in April 2007. The Company’s working capital deficit as at April 30, 2008 was $6.5 million (April 30, 2007 - $18.0 million positive working capital), consisting mostly of cash and cash equivalents. During the Current Year, the Company’s cash position decreased by $12.0 million to $9.5 million at April 30, 2008 as compared to the year ended April 30, 2007, where the Company’s cash position increased by $8.4 million to $21.5 million in cash and cash equivalents. Loss on the sale of a property interest ($5.5 million before a future income tax recovery), stock-based compensation ($1.1 million), a future income tax recovery of $8.3 million and write-offs of resource property costs ($26.3 million) represent the largest reconciling items from the statement of loss to the statement of cash flows from operating activities for the year ended April 30, 2008. The Company’s most significant operating expenses during the Current Year included $1.1 million for salaries (Comparative Year - $1.4 million), $708,000 for regulatory and shareholder communication expense (Comparative Year - $735,000) and $678,000 for office and sundry (Comparative Year - $201,000).
The Company’s primary investment activity is the acquisition and exploration of resource property interests. During the Current Year, the Company spent $23.5 million to explore its resource properties (Comparative Year - $27.5 million) with the most significant expenditures on the Foxtrot (Renard) property in Quebec and the Aviat, Qilalugaq and Churchill properties in Nunavut. Included in the Current Year expenditures is a cash payment of $1.25 million, representing part of the consideration paid to increase the Company’s interest in the Churchill property to 41.86% (Shear’s interest in the property increased to 58.14%) and Quebec investment tax credits received of $1.6 million (Comparative Year - $1.0 million). In the Comparative Year, the Company’s major investing activity was the acquisition of Ashton ($59.5 million) and Contact ($1.8 million) common shares. Expenditures on property, plant and equipment (Current Year - $373,000; Comparative Year - $954,000) were the next largest investing activity for the Company in the Current Year.