Changes in Accounting Policies Including Initial Adoption

Changes in Accounting Policies Including Initial Adoption

Initial Application of Accounting Standards

General Standards on Financial Statement Presentation – Section 1400

Effective May 1, 2008, the Company adopted CICA Handbook Section 1400, “General Standards of Financial Statement Presentation”, which was amended to include a requirement for management to assess and disclose the Company’s ability to continue as a going concern. The adoption of this standard did not have an effect on the Company’s financial statement presentation.

Capital Disclosures – Section 1535

Effective May 1, 2008, the Company adopted CICA Handbook Section 1535, “Capital Disclosures,” which requires disclosure of an entity’s objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital and whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such non-compliance. The adoption of this standard resulted in the additional disclosures as outlined in Note 6of the audited consolidated financial statements for the years ended April 30, 2009 and 2008.

Inventories – Section 3031

Effective May 1, 2008, the Company adopted CICA Handbook Section 3031, “Inventories”. This Section prescribes the accounting treatment for inventories and provides guidance on the determination of costs and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories. The adoption of this new accounting policy did not have any impact on the Company’s consolidated financial statements.

Financial Instruments – Disclosures – Section 3862 and Presentation – Section 3863

Effective May 1, 2008, the Company adopted CICA Handbook Section 3862, “Financial Instruments – Disclosures” and CICA Handbook Section 3863, “Financial Instruments – Presentation”. These Sections require entities to disclose quantitative and qualitative information in their financial statements that enable users to evaluate (a) the significance of financial instruments for the entity’s financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the balance sheet date, and management’s objectives, policies and procedures for managing such risks. Disclosures required by these standards are included in Note 5 of the audited consolidated financial statements for the years ended April 30, 2009 and 2008.

Credit Risk and Fair Value of Financial Assets and Financial Liabilities

In January, the CICA issued EIC – 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities. The guidance requires that an entity’s own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments. This guidance is applicable to fiscal periods ending on or after January 20, 2009. The adoption of this section did not have a material impact on the Company’s consolidated financial statements.

Mining Exploration Costs

On March 27, 2009, the CICA approved EIC-174 “Mining Exploration Costs” effective for financial statements issued after March 27, 2008. This guidance clarified that an entity that has initially capitalized exploration costs has an obligation in the current and subsequent accounting periods to test such costs for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

This standard was effective for the Company beginning with the annual statements for the year-ended April 30, 2009. The Company has evaluated the new section and determined that adoption of these new requirements did not have any impact on the Company’s consolidated financial statements.

New Accounting Developments

Goodwill and Intangible Assets

Effective January 1, 2009, CICA Handbook Section 3064 will replace CICA Handbook Section 3062, “Goodwill and Intangible Assets”. This new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets and will be effective for the Company’s fiscal year beginning May 1, 2009. The new standard also provides guidance for the treatment of pre-production and start-up costs and requires these costs be expensed as incurred unless the costs meet the asset recognition criteria. Management is currently reviewing the potential impact of this section on the Company’s disclosure.

Business Combinations

In January 2009, the CICA issued Section 1582, Business Combinations, which replaces former guidance on business combinations. Section 1582 establishes principles and requirements of the acquisition method for business combinations and related disclosures. In addition, the CICA issued Sections 1601, Consolidated Financial Statements, and 1602, Non-Controlling Interests, which replaces the existing guidance. Section 1601 establishes standards for the preparation of consolidated financial statements, while section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination.

These statements apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011 with earlier application permitted. The Company is currently evaluating the new sections to determine the potential impact on its consolidated financial statements.

International financial reporting standards

In addition to the above accounting pronouncements, the Canadian Accounting Standards Board (“AcSB”) in 2006 published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with International Financial Reporting Standards (“IFRS”) over an expected five-year transition period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada’s own GAAP. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company’s transition date of May 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended April 30, 2011. While the Company has begun assessing the impact of adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.