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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
As at June 30, 2003
CIK Number 1175596
AMARC RESOURCES LTD.
800 West Pender Street, Suite 1020
Vancouver, British Columbia
Canada V6C 2V6
Indicate by check mark whether the registrant files or
will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F...X.... Form 40-F.........
Indicate by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): ____
Note:Regulation S-T Rule 101(b)(1)only permits the submission in paper
of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws
of the jurisdiction in which the registrant is incorporated, domiciled or
legally organized (the registrant's "home country"), or under the rules of
the home country exchange on which the registrant's securities are traded,
as long as the report or other document is not a press release, is not
required to be and has not been distributed to the registrant's security
holders, and, if discussing a material event, has already been the subject
of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained
in this Form, the registrant is also thereby furnishing the information to
the Commission pursuant to rule 12g3-2(b) under the Securities Exchange
Act of 1934.
Yes [ ] No [ X ]
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-______
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
By: /s/ Jeffrey R. Mason
Director and Chief Financial Officer and Secretary
Date: June 30, 2003
* Print the name and title of the signing officer under his signature.
AMARC RESOURCES LTD.
QUARTERLY REPORT
June 30, 2003
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Amarc Resources Ltd. ("Amarc" or the "Company") is a mineral exploration
company. Amarc carried out exploration programs on its main project, the Inde
Property in Durango, Mexico in fiscal 2003.
Inde Property
The Inde Property covers approximately 279 hectares and consists of five
claims-three are owned by the Company and two are held under option. The Company
acquired the property in November 2001 from Hunter Dickinson Group Inc. ("HDGI")
for US$475,000, representing the cost that had been incurred for property
acquisitions and investigations to date, and a purchase option requiring
payments aggregating US$3,775,000 to a third-party property vendor. The current
schedule of payments comprises a payment from Amarc to the vendor of US$125,000
every six months commencing in December 2003 and a balloon payment of
US$3,000,000 in June 2006. A 4% net smelter royalty, capped at US$2 million over
the project life, is also payable on the two claims under the purchase option.
Gold mineralization at Inde occurs in tabular massive sulphide replacement
bodies, situated at or near the contact of limestone country rocks and later
intrusive rocks. The prospective contact zone extends for approximately 3,300
meters across the property. Mining by previous operators occurred along 1,300
meters of the southeasterly trending monzonite/limestone contact zone, and also
along the contacts of a younger, northeasterly trending, quartz-feldspar
porphyry dyke. This historic production was derived from near-surface oxide
mineralization, to about 150 meters depth, within the massive sulphide bodies
along both trends. Amarc's work targeted the sulphide component of the
replacement bodies both along strike and down dip of previous mining.
Ground surveying and geological mapping were carried out in February and March
2002, and drilling was done during the period of late May to mid-August 2002.
Fourteen holes, totaling 4,360 metres, were drilled to test a 600-meter portion
of the contact zone in the central part of the property in the area of the
Pleyades, Descubridora and Guadalupe workings. Holes encountered open stopes in
the Pleyades area, and some sections of oxide and sulphide mineralization,
containing interesting gold and silver values. These were described in detail in
the report for the quarter ending September 30, 2002.
The Company is continuing to target sources of additional funding through
alliances with financial, exploration and mining entities for further
exploration programs at Inde.
Canadian Properties-Yukon Territory and Saskatchewan
The Company has a 5% net profits interest (NPI) in the 46 mineral claims
comprising the Ana Property in the Yukon, and a 2.5% NPI in a mineral lease
comprising the Mann Lake Property in Saskatchewan. The Company has no active
exploration programs on these properties, nor does it plan to undertake any new
programs on them, at the present time.
Metal Price Trends
The outlook for Amarc's assets primarily relate to the results of exploration
and the outlook for gold. Gold prices have improved in 2003, averaging about
US$350/oz for the year to date.
Financial Review
Historically, Amarc's source of funding has been the sale of equity securities
for cash primarily through private placements to institutions and sophisticated
investors. Amarc has no assurance of continued access to equity funding.
At June 30, 2003, Amarc had working capital of $619,995, as compared to $615,880
at the end of the previous quarter. The Company also had 15,468,890 common
shares issued and outstanding.
Operating Results
Operating expenses for the first quarter of the 2004 fiscal year are $74,595, as
compared to $1,133,794 in the first quarter of the previous fiscal year when
exploration programs were getting underway at Inde and Fox River. The agreement
on Fox River project was terminated during the fourth quarter of fiscal 2003.
The main decrease is in exploration expenditures as no new programs have yet
been initiated in fiscal 2004.
Administrative costs decreased in fiscal 2004 to $68,092 from $349,545 in the
same period in the previous fiscal year. The main costs in the current quarter
were $22,081 in salaries and benefits and $19,504 in office and administration,
related to normal day-to-day operations, and $12,094 in management and
consulting costs for targeting new sources of financing for exploration
programs.
Related Party Transactions
Pursuant to an agreement dated December 31, 1996, Hunter Dickinson Inc. ("HDI")
of Vancouver, British Columbia, a private company with certain directors in
common with Amarc, carries out geological, exploration, corporate development,
administration, and management services for, and incurs costs with third-party
vendors on behalf of, Amarc on a full cost-recovery basis. In the period ending
June 30, 2003, Amarc paid HDI $56,750, as compared to $26,511 in the prior
quarter. The Company had a balance payable to HDI of $190,857, as compared to a
balance payable of $258,534 at the end of the prior quarter.
AMARC RESOURCES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2003
(Expressed in Canadian Dollars)
(Unaudited)
AMARC RESOURCES LTD.
Consolidated Balance Sheets
(Expressed in Canadian Dollars)
(Unaudited)
================================================================================
June 30, 2003 March 31, 2003
(unaudited) (audited)
--------------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents ........................... $ 157,995 $ 9,849
Marketable securities (note 3(b)) .............. 591,850 605,050
Amounts receivable and prepaids ................ 90,323 256,982
--------------------------------------------------------------------------------
840,168 871,881
Equipment (note 4) ............................... 72,736 77,225
Reclamation deposit (note 9) ..................... - 70,000
--------------------------------------------------------------------------------
$ 912,904 $ 1,019,106
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities ....... $ 25,892 $ 90,451
Balances payable to related parties (note 8) ... 194,281 165,550
--------------------------------------------------------------------------------
220,173 256,001
--------------------------------------------------------------------------------
Shareholders' equity
Share capital (note 7(b)) ...................... 8,635,675 8,635,675
Contributed surplus ............................ 5,805 5,805
Deficit ........................................ (7,948,749) (7,878,375)
--------------------------------------------------------------------------------
Nature of operations (note 1) 692,731 763,105
--------------------------------------------------------------------------------
$ 912,904 $ 1,019,106
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements
Approved by the Board of Directors
/s/ Ronald W. Thiessen /s/ Jeffrey R. Mason
Ronald W. Thiessen Jeffrey R. Mason
Director Director
AMARC RESOURCES LTD.
Consolidated Statements of Operations
(Expressed in Canadian Dollars)
(Unaudited)
================================================================================
Three months ended June 30
-----------------------------
2003 2002
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Expenses
Conference and travel ...................... $ - $ 3,016
Depreciation ............................... 4,489 5,420
Exploration (note 6) ....................... 6,503 784,249
Legal, audit, and accounting ............... 9,645 56,120
Management and consulting .................. 12,094 25,189
Office and administration .................. 19,504 115,689
Salaries and benefits ...................... 22,081 124,526
Shareholder communication .................. 851 18,659
Trust and filing ........................... (572) 926
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74,595 1,133,794
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Other items
Foreign exchange loss ...................... (4,660) (28,173)
Gain on sale of marketable securities ...... 1,174 -
Interest ................................... 7,707 2,193
--------------------------------------------------------------------------------
4,221 (25,980)
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Loss for the period .......................... $ (70,374) $(1,159,774)
================================================================================
Basic and diluted loss per share $ (0.00) $ (0.08)
================================================================================
Weighted average number
of common shares outstanding 15,468,890 14,816,291
================================================================================
Consolidated Statements of Deficit
(Expressed in Canadian Dollars)
================================================================================
Three months ended June 30
--------------------------
2003 2002
--------------------------------------------------------------------------------
Deficit, beginning of period $ (7,878,375) $ (6,023,654)
Loss for the period (70,374) (1,159,774)
--------------------------------------------------------------------------------
Deficit, end of period $ (7,948,749) $ (7,183,428)
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements
--------------------------------------------------------------------------------
AMARC RESOURCES LTD.
Consolidated Statements of Cash Flow
(Expressed in Canadian Dollars)
(Unaudited)
================================================================================
Three months ended June 30
--------------------------
Cash provided by (applied to): 2003 2002
--------------------------------------------------------------------------------
Operating activities
Loss for the period $ (70,374) $ (1,159,774)
Items not involving cash
Depreciation 4,489 5,420
Gain on sale of marketable securities (1,174) -
Changes in non-cash working capital items
Accounts payable and accrued liabilities (128,296) 32,410
Amounts receivable and prepaids 181,760 (52,319)
Balances receivable from and payable to
related parties 77,367 842,653
--------------------------------------------------------------------------------
63,772 (331,610)
--------------------------------------------------------------------------------
Investing activities
Proceeds from sale of marketable securities 14,374 -
Purchase of equipment - (76,984)
Reclamation deposit 70,000 -
--------------------------------------------------------------------------------
84,374 (76,984)
--------------------------------------------------------------------------------
Financing activities
Issuance of share capital - 35,000
--------------------------------------------------------------------------------
- 35,000
--------------------------------------------------------------------------------
Increase (decrease) in cash and equivalents 148,146 (373,594)
Cash and equivalents, beginning of period 9,849 1,028,274
--------------------------------------------------------------------------------
Cash and equivalents, end of period $ 157,995 $ 654,680
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements
AMARC RESOURCES LTD.
Notes to Consolidated Financial Statements
For the period ended June 30, 2003
(Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS
Amarc Resources Ltd. (the "Company") is incorporated under the laws of
the Province of British Columbia, and its principal business activity
is the exploration of mineral properties. Its principal mineral
property interests are located in Durango State, Mexico.
These consolidated financial statements have been prepared using
Canadian generally accepted accounting principles assuming a going
concern. The Company has incurred losses since inception and its
ability to continue as a going concern depends upon its capacity to
develop profitable operations and to continue to raise adequate
financing. These financial statements do not reflect adjustments, which
could be material, to the carrying values of assets and liabilities
which may be required should the Company be unable to continue as a
going concern.
2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. These consolidated
financial statements include the accounts of the Company and its wholly
owned subsidiaries, Compania Minera Amarc, S.A. de C.V. and Amarc
Exploraciones Mineras, S.A. de C.V., which are incorporated in Mexico.
Also included are the accounts of the Precious Exploration Limited
Partnership, which is subject to the Company's control and primary
beneficial ownership (note 5).
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and equivalents
Cash and equivalents consist of cash and highly liquid investments,
having maturity dates of three months or less from the date of
purchase, which are readily convertible to known amounts of cash.
(b) Marketable securities
Marketable securities are recorded at the lower of cost and quoted
market value. Marketable securities held at June 30, 2003, consist of
5,918,500 shares of Expatriate Resources Ltd.
(c) Equipment
Equipment is recorded at cost and is depreciated over its estimated
useful life using the declining balance method at various rates ranging
from 20% to 30% per annum.
(d) Reclamation deposits
Reclamation deposits are recorded at cost (note 9).
(e) Mineral property interests
The acquisition costs of mineral properties are deferred until the
properties are placed into production, sold or abandoned. These
deferred costs are amortized on a unit-of-production basis over the
estimated useful life of the related properties following the
commencement of production or written off if the properties are allowed
to lapse or are abandoned. If the deferred mineral property costs are
determined not to be recoverable over the estimated useful life or are
less than estimated fair market value, the unrecoverable portion is
charged to earnings in that period.
Mineral property acquisition costs include the cash consideration and
the fair market value of common shares, based on the trading price of
the shares, on the date of issue or as otherwise provided under the
agreement terms for the mineral property interest. Costs for properties
for which the Company does not possess unrestricted ownership and
exploration rights, such as option agreements, are expensed in the
period incurred or until a feasibility study has determined that the
property is capable of commercial production.
Exploration costs and option payments are expensed in the period
incurred.
Administrative expenditures are expensed in the period incurred.
(f) Share capital
Common shares issued for mineral property interests are recorded at the
fair market value based upon the trading price of the shares on the TSX
Venture Exchange on the date of issue or as otherwise provided under
the agreement terms to issue the shares.
The proceeds from common shares issued pursuant to flow-through share
financing agreements are credited to share capital as the tax benefits
of the exploration expenditures incurred pursuant to these agreements
are transferred to the purchaser of the flow-through shares.
Share issue costs are deducted from share capital.
(g) Stock-based compensation (see also note 3(h))
The Company has a stock option plan which is described in note 7(c).
The Company accounts for all non-cash stock-based payments to
non-employees, and employee awards that are direct awards of stock,
that call for settlement in cash or other assets, or that are stock
appreciation rights which call for settlement by the issuance of equity
instruments, granted on or after April 1, 2002, using the fair value
based method.
Under the fair value based method, stock-based payments to
non-employees are measured at the fair value of the consideration
received, or the fair value of the equity instruments issued, or
liabilities incurred, whichever is more reliably measurable. The fair
value of non-cash stock-based payments to non-employees is periodically
re-measured until counterparty performance is complete, and any change
therein is recognized over the period and in the same manner as if the
Company had paid cash instead of paying with or using equity
instruments. The cost of non-cash stock-based payments to service
providers that are fully vested and non-forfeitable at the grant date
is measured and recognized at that date. For awards that vest at the
end of a vesting period, compensation cost is recognized on a
straight-line basis; for awards that vest on a graded basis,
compensation cost is recognized on a pro-rata basis over the vesting
period.
No compensation cost is required to be recorded for all other non-cash
stock-based employee compensation awards. Consideration paid by
employees upon the exercise of stock options is credited to share
capital. If applicable, the Company presents in the notes to the
financial statements the pro forma net income (loss) and earnings
(loss) per share had the fair value method been used to account for
employee non-cash stock-based compensation awards.
Under the fair value based method, compensation cost attributable to
awards to employees that are direct awards of stock, or stock
appreciation rights which call for settlement by the issuance of equity
instruments, is measured at fair value at the grant date and recognized
over the vesting period. Compensation cost attributable to awards to
employees which call for settlement in cash or other assets is measured
at fair value at the grant date and recognized over the vesting period.
(h) Change in Accounting Policy - Stock-Based Compensation
Effective April 1, 2002, the Company adopted the new Recommendations of
the Canadian Institute of Chartered Accountants relating to the
accounting for stock-based compensation and other stock-based payments.
Under the new standard, payments to non-employees, and to employee
awards that are direct awards of stock, that call for settlement in
cash or other assets, or that are stock appreciation rights which call
for settlement by the issuance of equity instruments, are accounted for
using the fair value method and is included in operations, with an
offset to contributed surplus. No compensation expense is recorded for
all other non-cash stock-based employee compensation awards; however
pro forma disclosure of net income and earnings per share, had the
Company used the fair value method, is presented if applicable.
Prior to the adoption of the new standard, no compensation expense was
recorded for the Company's stock-based incentive plans when the options
were granted. Any consideration paid by those exercising stock options
was credited to share capital upon receipt.
The new Recommendations were applied prospectively. The adoption of
this new standard has resulted in no changes to amounts previously
reported.
(i) Foreign currency translation
All of the Company's foreign subsidiaries are considered integrated.
Monetary assets and liabilities of the Company's integrated foreign
operations are translated into Canadian dollars at exchange rates in
effect at the balance sheet date. Non-monetary assets and liabilities
are translated at historical estimated exchange rates unless such items
are carried at market, in which case they are translated at the
exchange rates in effect on the balance sheet date. Revenues and
expenses, except depreciation, are translated at average exchange rates
for the period. Depreciation is translated at the same exchange rates
as the assets to which it relates.
Foreign exchange gains or losses are expensed.
(j) Income taxes
The Company uses the asset and liability method of accounting for
income taxes. Under this method, future income tax assets and
liabilities are computed based on differences between the carrying
amount of assets and liabilities on the balance sheet and their
corresponding tax values, generally using the enacted or substantively
enacted income tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled.
Future income tax assets also result from unused loss carryforwards and
other deductions. Future tax assets are recognized to the extent that
they are considered more likely than not to be realized. The valuation
of future income tax assets is adjusted, if necessary, by the use of a
valuation allowance to reflect the estimated realizable amount.
The Company's accounting policy for future income taxes currently has
no effect on the financial statements of any of the periods presented.
(k) Loss per share
Basic loss per share is calculated by dividing the loss for the period
by the weighted average number of common shares outstanding during the
period.
Diluted loss per share is calculated using the treasury stock method.
Under the treasury stock method, the weighted average number of common
shares outstanding used for the calculation of diluted loss per share
assumes that the proceeds to be received on the exercise of dilutive
stock options and warrants are used to repurchase common shares at the
average market price during the period.
Diluted loss per share has not been presented as the effect of
outstanding options and warrants would be anti-dilutive.
(l) Fair value of financial instruments
The carrying values of cash and equivalents, amounts receivable, and
accounts payable and accrued liabilities approximate their fair value
due to their short term nature. The Company is not exposed to
significant credit risk or interest rate risk.
(m) Use of estimates
The preparation of financial statements in conformity with Canadian
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities
as at the balance sheet date, and the reported amounts of revenues and
expenses during the reporting period. Significant areas requiring the
use of management estimates include the determination of potential
impairments of asset values, and rates for depreciation of equipment,
as well as the assumptions used in determining the fair value of
non-cash stock-based compensation. Actual results could differ from
those estimates.
(n) Comparative figures
Certain of the prior periods' comparative figures have been
reclassified to conform to the financial statement presentation adopted
for the current period.
4. EQUIPMENT
=======================================================================
Accumulated Net Book
Cost Depreciation Value
-----------------------------------------------------------------------
June 30, 2003
Automotive $ 24,514 $ 10,787 $ 13,727
Site equipment 77,551 18,542 59,009
-----------------------------------------------------------------------
$ 102,065 $ 29,329 $ 72,736
=======================================================================
March 31, 2003
Automotive $ 24,514 $ 9,576 $ 14,938
Site equipment 77,551 15,264 62,287
-----------------------------------------------------------------------
$ 102,065 $ 24,840 $ 77,225
=======================================================================
5. MINERAL PROPERTY INTERESTS
(a) Durango State, Mexico
Inde Property
The Inde Property ("the Property") comprises approximately 270 hectares
and consists of five mineral concessions, of which three are owned
outright by the Company and two are held under option. The Company was
assigned its interest in the Property in November 2001 from Hunter
Dickinson Group Inc., ("HDGI"), a private company related by certain
directors in common, in consideration for US$475,000, (paid during the
2002 fiscal year). The Company also assumed the position of HDGI in the
option agreement to acquire two of the claims from the underlying
vendor which, as amended during the current fiscal year, will require
future semi-annual payments of US$125,000 commencing in December, 2003
until a required balloon payment of US$3.0 million in June 2006. These
two claims carry a Net Smelter Returns royalty of 4%, capped at US$2.0
million.
During the 2003 fiscal year, the Company paid finder's fees in
connection with the Property of $43,393 and 265,680 common shares, and
also paid the underlying property vendor US$25,000 (2002 - US$125,000)
in connection with the option agreement assigned from HDGI. No further
finder's fees are owed on this property.
(b) Manitoba, Canada
Fox River Property
By an agreement dated November 15, 2001 (the "November 15, 2001
agreement"), the Company acquired the right to participate in the Fox
River Project by investing in and becoming a general partner of the
Precious Exploration Limited Partnership ("PELP"), which held an option
to acquire property interests comprising four Special Exploration
Permits located near Thompson, Manitoba.
Specifically, the property comprised two permits covering 285,588
hectares owned 100% by Falconbridge Limited ("Falconbridge") and two
permits covering 28,392 hectares which are subject to an option
agreement between Falconbridge and W. Bruce Dunlop Limited NPL. The Fox
River Project option rights held by PELP entitled it to earn a 60%
interest in the Project by expending an aggregate of $12.5 million
prior to December 31, 2005, subject to Falconbridge's right to back-in
to a 60% interest by completing and financing a bankable feasibility
study and by arranging financing and completion guarantees for mine
development. The expenditures were to be made at the rate of $2.5
million per year, with the completion date of the first year's amount
extended to September 30, 2002, which the Company met.
Pursuant to the November 15, 2001 agreement, the Company agreed that it
would fund PELP with $2.5 million in capital such that PELP could
discharge accounts owing to Hunter Dickinson Group Inc. ("HDGI"), a
private company controlled by certain common directors, which
aggregated to this amount. HDGI had initially funded part of these
expenditures on behalf of PELP subsequent to HDGI's initial acquisition
of the Fox River Option on March 31, 2001. By an amending agreement
dated November 27, 2001, Expatriate Resources Ltd. ("Expatriate"), an
unrelated public company, agreed to participate in PELP by becoming a
general partner and contributing $1.3 million (which was paid) towards
the first year's expenditure commitment (an amount which was refunded
to the Company, thereby reducing its initial contribution to $1.2
million) and to receive the option to earn a maximum 20% interest in
PELP in consideration for agreeing to fund 50% of the first $5.0
million in PELP expenditures. Expatriate subsequently acknowledged that
it would not be paying its share of future project expenditures, and
accordingly surrendered its interest in PELP to HDGI pursuant to the
terms of an agreement between the two parties, which agreement included
the issuance of 7 million shares of Expatriate to HDGI, and HDGI
allotted such shares to the Company.
As the primary general partner of PELP, the Company has accounted for
its investment on the basis of its economic substance, which is that of
mineral property exploration expenses. Accordingly, these financial
statements reflect the Company's pro-rata share (based on the Partners'
respective capital account balances) of PELP exploration expenses
incurred to December 31, 2001, the date Expatriate effectively resigned
its participation in the partnership, plus all PELP exploration
expenses incurred subsequent to that date. The gross PELP expenditures
incurred to date apply to the exploration requirements of the Fox River
Property option and have accrued substantially to the benefit of the
Company as the primary remaining general partner of PELP, subsequent to
December 31, 2001.
In a related arrangement, Rockwell Ventures Inc. ("Rockwell"), which
had originally acquired the Fox River Project option from HDGI and
which is a public company also related by certain common directors, was
unable to complete on the option and quitclaimed its interest in PELP
and the Fox River Project in favor of the Company. In consideration,
the Company agreed to issue to Rockwell up to 1,000,000 share purchase
warrants, issuable as to 200,000 share purchase warrants per $2.5
million in property expenditures, of which on December 31, 2001 the
Company issued 200,000 first year warrants, exercisable at $1.00 for
two years.
During the 2003 fiscal year, the Company sought an extension to earn an
interest in the Fox River property, but it was not agreed to by
Falconbridge. On January 10, 2003, the Company terminated its option to
earn a 60% participating joint venture interest from Falconbridge
Limited on the Fox River Project. Accordingly, no further warrants are
issuable by Amarc to Rockwell relating to this property.
(c) Other
Canadian Properties - Yukon Territory and Saskatchewan
The Company has a 5% net profits interest (NPI) in the 46 mineral
claims comprising the Ana Property in the Yukon, and a 2.5% NPI in a
mineral lease comprising the Mann Lake Property in Saskatchewan. The
Company has neither active exploration programs nor does it plan to
undertake any new programs on these properties at the present time.
6. EXPLORATION EXPENSES
===========================================================================================================================
Inde Fox River Three months ended June 30
Property Property 2003 2002
---------------------------------------------------------------------------------------------------------------------------
Assays and analysis .....................................$ 59 $ - $ 59 $ 17,284
Drilling ................................................ - - - 331,361
Engineering ............................................. - - - 1,854
Equipment rental ........................................ - - - 25,186
Freight ................................................. - - - 13,554
Geological .............................................. 2,419 - 2,419 189,999
Graphics ................................................ - - - 10,421
Helicopter .............................................. - - - 70,097
Property fees/assessment ................................ (13,466) - (13,466) (5,128)
Site activities ......................................... 16,854 662 17,516 105,859
Travel and accommodation ................................ (25) - (25) 23,762
---------------------------------------------------------------------------------------------------------------------------
Incurred during the period .............................. 5,841 662 6,503 784,249
Cumulative exploration expenses,
beginning of period .................................. 2,323,210 1,810,526 4,133,736 3,728,406
---------------------------------------------------------------------------------------------------------------------------
Cumulative exploration expenses,
end of period ........................................$2,329,051 $ 1,811,188 $ 4,140,239 $ 4,512,655
===========================================================================================================================
7. SHARE CAPITAL
(a) Authorized share capital
The Company's authorized share capital consists of 100,000,000 common
shares, without par value.
(b) Issued and outstanding common shares
===========================================================================================================================
Number of
Common shares issued: Price Shares Amount
---------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2000 9,650,000 $ 6,499,359
Options exercised in fiscal 2001 ................................................$0.35 120,000 42,000
---------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2001 ............................................................. 9,770,000 $ 6,541,359
Issued during fiscal 2002
Private placement, January 2002 (net of issue costs) ............................. $0.40 2,500,000 913,649
Private placement, March 2002 (net of issue costs) ............................... $0.40 2,500,000 905,744
---------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2002 ............................................................. 14,770,000 $ 8,360,752
Issued during fiscal 2003
Warrants exercised ............................................................... $0.40 87,500 35,000
Option payment, September 2002 ................................................... $0.42 25,500 10,467
Option payment, October 2002 ..................................................... $0.18 240,180 43,232
Private placement, August 2002 (net of issue costs)(i) ........................... $0.60 345,710 186,224
-------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2003 and June 30, 2003 5,468,890 $ 8,635,675
===========================================================================================================================
(i) On August 27, 2002, the Company closed a private placement of
345,710 units at a price of $0.60 per unit. Each unit was comprised
of one common share and one share purchase warrant (note 7(d)).
(c) Share purchase option compensation plan
The Company has a share purchase option compensation plan approved by
the shareholders that allows it to grant up to 2,970,000 share purchase
options, vesting over up to two years, subject to regulatory terms and
approval, to its employees, officers, directors and consultants. The
exercise price of each option can be set equal to or greater than the
closing market price of the common shares on the TSX on the day prior
to the date of the grant of the option, less any allowable discounts.
Options have a maximum term of five years and terminate 30 days
following the termination of the optionee's employment, except in the
case of retirement or death.
The continuity of share purchase options for the three months ending
June 30, 2003 is:
====================================================================================================================
Exercise Mar. 31 Expired/ June 30
Expiry date Price 2003 Granted Exercised Cancelled 2003
--------------------------------------------------------------------------------------------------------------------
April 5, 2003 $0.56 1,200,000 - - (1,200,000) -
January 30, 2004 $0.48 667,000 - - (10,000) 657,000
December 20, 2004 $0.18 97,000 - - - 97,000
May 9, 2005 $0.17 - 7,000 - - 7,000
--------------------------------------------------------------------------------------------------------------------
1,964,000 7,000 - (1,210,000) 761,000
Weighted average
exercise price $0.51 $ 0.17 $ - $ - 0.56 $ 0.44
====================================================================================================================
The contractual remaining life of share purchase options is 0.54 years.
(d) Share purchase warrants
The continuity of share purchase warrants (each warrant exercisable
into one common share) for the three months ending June 30, 2003 is:
============================================================================================================
Exercise Mar. 31 Expired/ June 30
Expiry date Price 2003 Issued Exercised Cancelled 2003
------------------------------------------------------------------------------------------------------------
September 8, 2003 $ 0.50 2,500,000 - - - 2,500,000
December 27, 2003 (ii) $ 0.73 345,710 - - - 345,710
December 31, 2003(iii) $ 0.50 200,000 - - - 200,000
January 7, 2004 (i) $ 0.40 2,412,500 - - - 2,412,500
------------------------------------------------------------------------------------------------------------
5,458,210 - - - 5,458,210
Weighted average exercise
price $ 0.47 $ - $ - $ - $ 0.47
============================================================================================================
(i) In December 2002, the TSX Venture Exchange gave approval for
2,412,500 warrants to have their original expiry dates of
January 7, 2003 and July 7, 2003 extended to January 7, 2004.
(ii) Each share purchase warrant entitles the holder to purchase an
additional common share at a price of $0.73 until December 27,
2003. The share purchase warrants are subject to a 45-day
accelerated expiry if the closing price of the common shares
of the Company as traded on the TSX Venture Exchange is at
least $1.10 for ten consecutive trading days.
(iii) In December 2002, the Company amended the exercise price of
200,000 warrants from their original price of $1.00 to $0.50.
The contractual remaining life of share purchase warrants is 0.37
years.
8. RELATED PARTY TRANSACTIONS AND BALANCES
=======================================================================
Three months ended Year ended
Transactions June 30, 2003 March 31, 2003
-----------------------------------------------------------------------
Services rendered and expenses reimbursed
Hunter Dickinson Inc. (a) $ 56,750 $ 973,289
Hunter Dickinson Group Inc. (b) 3,200 20,736
C.E.C. Engineering Ltd. (c) - 10,123
=======================================================================
=======================================================================
As at Year ended
Balances receivable (payable) June 30, 2003 March 31,2003
-----------------------------------------------------------------------
Hunter Dickinson Inc. (a) $ (190,857) $ (258,534)
Hunter Dickinson Group Inc. (b) (3,424) 92,984
-----------------------------------------------------------------------
Total $ (194,281) $ (165,550)
=======================================================================
(a) Hunter Dickinson Inc.("HDI") and its wholly-owned subsidiaries are
private companies with certain directors in common that provide
geological, corporate development, administrative and management
services to, and incur third party costs on behalf of, the Company on a
full cost recovery basis pursuant to an agreement dated December 31,
1996. Balances receivable from (payable to) Hunter Dickinson Inc. have
arisen in the normal course of exploration work on the Company's
mineral properties and operating expenses.
(b) Hunter Dickinson Group
Inc. ("HDGI") is a private company with certain directors in common
that provides consulting services at market rates to the Company. The
balances receivable from HDGI have resulted from working capital
advances in excess of services rendered to the Company.
(c) C.E.C.
Engineering Ltd. is a private company controlled by a director, which
provides engineering management services to the Company based on the
fair market value of those services.
9. RECLAMATION DEPOSIT
In March 2002, the Company deposited $70,000 in trust with Gordon J.
Fretwell Law Corporation as a reclamation deposit related to the Fox
River Property (note 5). On January 10, 2003, the Company terminated
the option with Falconbridge on the Fox River property. The reclamation
deposit in the amount of $70,000 was returned to the Company on June
11, 2003.
10. GOVERNMENT GRANTS
During the year ended March 31, 2003, the Company received $97,438
(year ended March 31, 2002 - $387,880) from the Manitoba Mineral
Exploration Assistance Program, a program which provides financial
assistance for non-fuel mineral exploration in Manitoba, in respect of
its work on the Fox River Property. Under the terms of this program,
the Company is eligible for a rebate of 35% of qualifying expenditures.
As each grant application is subject to government review and approval,
the Company records the proceeds of these grants upon receipt, as a
reduction of exploration expenses.
11. INCOME TAXES
As of March 31, 2003, the Company had approximately $2.0 million in
non-capital losses and approximately $2.0 million in capital losses
available for Canadian tax purposes to reduce taxable income in future
years. These non-capital losses expire in various periods ranging from
2004 to 2010. Future tax benefits, if any, resulting from the
application of these losses have not been reflected in these financial
statements, as it cannot be considered more likely than not that they
will be realized.