January 9, 2004
|Third Quarter Report Has Been Released
International Northair Mines Ltd. (TSXV:INM) has released its BC Form 51-901F Third Quarter Report containing financial statements in Canadian funds, prepared without audit, for the nine months ended November 30, 2003 (the “Quarterly Report”). Pursuant to the requirements of National Instrument 54-102, this news release provides a reasonable summary of the information contained in the Quarterly Report. Concurrently with this news release the Company is filing the Quarterly Report with the regulatory authorities through SEDAR ( www.sedar.com ) and has mailed it to shareholders whose names appear on the Company's Supplemental List. A copy of the Report is available upon request.
During this reporting period, Northair commenced an intensified exploration program including trenching and road construction at the El Tesoro Project , located in the state of Durango , Mexico . Northair controls a contiguous land package of approximately 1000 hectares via staking and option agreements that cover seven currently identified zones of gold and silver mineralization. Mineralization occurs in classic low sulfidation epithermal veins, ranging from ~1 to over 15 metres in true width. The current program includes road construction to provide access to mineralized zones as well as to serve for future drilling stations. The Company has initiated a second phase of trenching and detail sampling using a track mounted excavator for exposing zones of mineralization. Minor additional hand trenching is occurring concurrently with this program. During this reporting period, an additional 284 samples have been taken, yielding a total of 758 samples taken from the project by the Company. These recent samples include eight separate lines of sampling reported from the A zone of mineralization, which were publicized in the Company's press release of December 23rd (#03-16). The current program is designed to provide Northair the data and infrastructure necessary to initiate a first phase drilling program intended to commence early in 2004. This program is being managed by an experienced senior geologist, under the supervision of James R. Robinson, Vice President of the Company, who is a Qualified Person as defined by NI 43-101.
Last October, the Company acquired the Las Moras Project , located in the state of Durango Mexico . Northair controls 450 hectares via staking and an option agreement covering at least two distinct types of mineralization currently recognized within the property. Low sulfidation gold veins have been discovered in limited outcrops, with four samples taken to date averaging 18.39 g/t gold and 7.88 g/t silver. A separate zone of copper-lead-zinc mineralization averaging about 30 meters in width was also discovered within the property, with four representative grab samples averaging 0.35% copper, 0.26% lead, and 0.96% zinc. During the next quarter, the Company plans to commence detail exploration at Las Moras, including reconnaissance mapping and sampling, and hand trenching in the gold zone.
The Company granted additional incentive stock options under its Stock Option Plan (the “Plan”) to directors and employees exercisable for 685,000 shares at $0.69 until October 21, 2008 . The Company amended its Plan to increase the number of shares reserved for issuance pursuant to options under the Plan to 1,705,992 as well as to put the Plan into a form as required pursuant to the current policies of the TSX Venture Exchange. The amendments to the Plan were approved by disinterested shareholders of the Company at its last annual general meeting held on July 21, 2003.
Results of Operations
Northair sustained a loss of $71,619 for the nine months ended November 30, 2003 or $0.02 loss per share, compared to a loss of $211,780, or $0.03 loss per share, for the comparative 2002 period. Despite increased general and administrative expenses after recoveries, which totaled $78,847 (2002 – net recovery of general and administrative expenses - $25,034), the decrease in the current nine months' loss compared to 2002 was primarily the result of a gain on the sale of marketable securities of $144,652 (2002 – nil), a decrease in resource property cost write-offs (2003- $141,795; 2002- $228,472) and a slight improvement in interest income (2003 - $11,115; 2002 - $10,011).
Resource costs written off in the current period ($141,795) related to costs associated with property investigations in Mexico ($129,138) and Canada ($12,657).
Northair provides management and administrative services to each of Troon Ventures Ltd., Tenajon Resources Corp., Stornoway Ventures Ltd., Stornoway Diamond Corporation, Sherwood Mining Corporation and NDT Ventures Ltd. (collectively the “Northair Group” or the “Group'). Each company within the Group is related to Northair through directors and/or shareholders in common. Pursuant to various agreements, Northair recovers administrative fees (fixed annually and paid monthly) from the Group. During the current nine months, Northair recovered an aggregate of $289,650 (2002- $293,000), which formed part of the total recoveries of $303,396 (2002 – $304,690). Northair's net general and administrative expenses, after recoveries from the Group, of $78,847 (2002 – net recovery - $25,034) were higher than in the comparative period in 2002. All expense categories, except for salaries and benefits (2003 - $95,921; 2002 - $102,495), experienced increases .
The Company's increasing involvement with its Mexican properties necessitated the use of US currencies, which had been on the decline compared to the Canadian dollars; accordingly the Company's ending investment in US currency experienced a foreign exchange loss conversion, which contributed primarily to the $10,955 loss in 2003. Due to more involvement in conferences and trade shows (2003 - $12,739: 2002 - $2,138) and higher travel and promotions expenses (2003- $10,154; 2002 - $5,587), investor relation's expenses aggregated $44,718 in 2003 (2002 - $11,851). Legal expenses also experienced an increase, from $13,508 in 2002, to $28,405 in 2003 due to an increase in legal representation costs in Mexico and additional legal consultation concerning financing and agreements. There was also an increase in regulatory compliance costs (2003 - $27,432; 2002 - $8,690) resulting from increased filing fee rates, consulting and mailing charges for continuous disclosure. As a result of a change in transfer agent, the Company incurred additional transitional and data base migration expenses, in addition to the completion of the Short Form Offering; accordingly, transfer agent expenses were $11,588 compared to $4,311 in 2002. In addition, office and telephone expenses were higher in the current period (2003 - $68,644; 2002 - $47,067); there were more office supply purchases, approximately $15,000, during the current period; office expenses included premises maintenance costs of $3,683 (2002- nil). Lastly, office rent expenses increased by $5,251 compared to 2002 due to the increase monthly lease rate stemming from the concluded new premise lease agreement in February 2003. Salaries and benefits, however, cost less (2003 – $95,921; 2002 - $102,495) because more salary charges were allocated to investor relations and to resource properties.
During the current period, as a result of the business arrangement between Stornoway Ventures Ltd. (“SWV”) and Stornoway Diamond Corporation (“SWY”), the Company received 113,542 SWY shares in exchange for its 130,000 SWV shares. Northair realized a gain of $144,652 from the sale of marketable securities, which included $165,122 proceeds from Northair Group investments (gain - $139,798). The carrying cost of investments has been written down by $6,744 (2002 - $18,353) to reflect a decline in market value.
Liquidity and Capital Resources
Cash and cash equivalents increased by $1,375,316 during the current nine months (compared to an increase of $67,467 in 2002), resulting in a balance of $2,107,178 (2002 - $673,943).
The Company generated net cash of $1,857,394 from its share capital issuance. $1,797,072 (net of issuance costs) related to the Short Form Offering completed in September 2003.
During the current nine-month period, Northair spent $95,931 on its operating activities (2002 cash provided - $15,649). Northair also incurred $484,481 on net resource property costs (2002 - $219,299), $45,179 on marketable securities (2002 - $2,350) and $33,698 on capital assets (2002 – nil). Northair generated $177,211 of proceeds from the sale of investments (2002 – nil).
At November 30, 2003 , the capitalized resource property costs were $453,790 (2002 - $25,787), comprised of costs on various Mexican properties.
Northair's working capital as at November 30, 2003 was $2,114,575 (2002 - $736,432). This includes $97,824 accounts receivable from the Group for expense reimbursements (2002- $53,915) and $38,272 payable to NDT Ventures Ltd. and $22,453 payable to Stornoway Diamond Corp for future administrative expenses (2002 – nil). These accounts receivable (payable) are non-interest bearing and payable within a year.
At November 30, 2003 , Northair's marketable securities portfolio had a book value of $224,271 (2002 - $177,115) that has been recorded at the lower of cost or market value. These investments represent less than a 10% interest in any one company. Pursuant to an agreement dated August 20, 2003, on September 23, 2003, Northair received 228,947 Troon shares at a deemed value of $0.19 per share with a hold period expiring January 19, 2004, to settle $43,500 of receivable from Troon.
At November 30, 2003 , Northair's issued and paid up share capital was $20,787,133 (2002 - $18,913,239) representing 12,498,974 (2002 – 8,459,964) common shares without par value. The deficit was $18,061,446 (2002 - $18,065,317) at the current period end. After adjusting for contributed surplus of $116,448 and stock based compensation equity of $1,023,shareholders' equity totaled $2,843,158 (2002 – $964,370).