SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of SEPTEMBER , 2003.
------------------
IMA EXPLORATION INC.
-------------------------------------------
(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of 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.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
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 of the
undersigned, thereunto duly authorized.
IMA Exploration Inc.
(Registrant)
Date September 08, 2003 By /s/ William Lee
------------------------------ -------------------------------------
(Signature)
William Lee, Director and Chief Financial Officer
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1 Print the name and title of the signing officer under his signature.
BC Form 51-901F
QUARTERLY REPORT
Incorporated as part of: X Schedule A
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X Schedules B & C
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(place x in appropriate category)
ISSUER DETAILS:
NAME OF ISSUER IMA EXPLORATION INC.
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ISSUER ADDRESS #709 - 837 WEST HASTINGS STREET
VANCOUVER, BC V6C 3N6
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ISSUER TELEPHONE NUMBER (604) 687-1828
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ISSUER FAX NUMBER (604) 687-1858
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CONTACT PERSON MR. NIKO CACOS
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CONTACT'S POSITION CORPORATE SECRETARY
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CONTACT'S TELEPHONE NUMBER (604) 687-1828
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CONTACT'S E-MAIL ADDRESS info@imaexploration.com
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WEBSITE www.imaexploration.com
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FOR QUARTER ENDED JUNE 30, 2003
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DATE OF REPORT AUGUST 29, 2003
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CERTIFICATE
THE THREE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED
AND THE DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF
DIRECTORS. A COPY OF THIS REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO
REQUESTS IT.
JOSEPH GROSSO /s/ Joseph Grosso 03/08/29
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NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
WILLIAM LEE /s/ William Lee" 03/08/29
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NAME OF DIRECTOR SIGN (TYPED) DATE SIGNED (YY/MM/DD)
(Signatures for this Form should be entered in TYPED form)
BC FORM 51-901F SCHEDULE A
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IMA EXPLORATION INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 2003
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited - Prepared by Management)
June 30, December 31,
2003 2002
$ $
(Audited)
A S S E T S
CURRENT ASSETS
Cash and cash equivalents 4,068,005 1,436,124
Amounts receivable and prepaids 89,307 79,661
Marketable securities (Note 3) 23,460 23,460
------------- -------------
4,180,772 1,539,245
EQUIPMENT 44,866 45,517
MINERAL PROPERTIES AND DEFERRED COSTS (Note 4) 6,862,460 5,847,727
------------- -------------
11,088,098 7,432,489
============= =============
L I A B I L I T I E S
CURRENT LIABILITIES
Accounts payable and accrued liabilities 68,936 108,351
------------- -------------
S H A R E H O L D E R S ' E Q U I T Y
SHARE CAPITAL (Note 6) 25,776,499 21,354,823
CONTRIBUTED SURPLUS 118,026 128,260
DEFICIT (14,875,363) (14,158,945)
------------- -------------
11,019,162 7,324,138
------------- -------------
11,088,098 7,432,489
============= =============
APPROVED BY THE BOARD OF DIRECTORS
/s/ Joseph Grosso , Director
-----------------------------
/s/ William Lee , Director
-----------------------------
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30
(Unaudited - Prepared by Management)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ----------------------------
2003 2002 2003 2002
$ $ $ $
EXPENSES
Administrative and management services 57,900 57,715 117,150 116,415
Bank charges and interest 2,692 3,838 5,969 5,337
Corporate development and investor relations 97,524 72,272 170,666 123,212
Depreciation 5,546 4,892 11,092 9,784
General exploration 63,369 37,775 121,593 52,702
Office and sundry 18,058 9,510 26,033 18,300
Printing 7,646 13,380 14,682 17,935
Professional fees 20,322 72,051 48,266 75,058
Rent, parking and storage 13,244 17,922 27,106 35,802
Salaries and employee benefits 48,990 47,496 97,934 96,459
Telephone and utilities 9,382 6,480 19,806 13,319
Transfer agent and regulatory fees 30,807 20,234 35,345 26,756
Travel and accommodation 21,775 63,006 32,770 74,794
------------- ------------- ------------ ------------
LOSS BEFORE THE FOLLOWING (397,255) (426,571) (728,412) (665,873)
FOREIGN EXCHANGE (22,066) (12,873) (4,717) (9,462)
INTEREST AND MISCELLANEOUS INCOME 11,935 3,093 16,711 6,305
------------- ------------- ------------ ------------
LOSS FOR THE PERIOD (407,386) (436,351) (716,418) (669,030)
DEFICIT - BEGINNING OF PERIOD (14,467,977) (12,951,518) (14,158,945) (12,718,839)
------------- ------------- ------------ ------------
DEFICIT - END OF PERIOD (14,875,363) (13,387,869) (14,875,363) (13,387,869)
============= ============= ============ ============
BASIC AND DILUTED LOSS
PER COMMON SHARE $(0.01) $(0.02) $(0.02) $(0.03)
============= ============= ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 31,783,473 22,061,878 29,484,164 20,530,196
============= ============= ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(Unaudited - Prepared by Management)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ----------------------------
2003 2002 2003 2002
$ $ $ $
OPERATING ACTIVITIES
Loss for the period (407,386) (436,351) (716,418) (669,030)
Item not involving cash
Depreciation 5,546 4,892 11,092 9,784
------------- ------------- ------------ ------------
(401,840) (431,459) (705,326) (659,246)
Decrease (increase) in amounts
receivable and prepaids 72,537 (1,657) (9,646) 1,810
Increase (decrease) in accounts payable
and accrued liabilities (73,188) (79,340) (39,415) (33,344)
------------- ------------- ------------ ------------
(402,491) (512,456) (754,387) (690,780)
------------- ------------- ------------ ------------
INVESTING ACTIVITIES
Expenditures on mineral properties
and deferred costs (402,589) (366,847) (1,014,733) (711,200)
Purchase of equipment (8,487) (557) (10,441) (1,348)
------------- ------------- ------------ ------------
(411,076) (367,404) (1,025,174) (712,548)
------------- ------------- ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares 3,449,435 2,298,388 4,578,743 2,540,448
Share issue costs (167,301) (101,680) (167,301) (157,233)
------------- ------------- ------------ ------------
3,282,134 2,196,708 4,411,442 2,383,215
------------- ------------- ------------ ------------
INCREASE IN CASH
AND CASH EQUIVALENTS 2,468,567 1,316,848 2,631,881 979,887
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 1,599,438 418,804 1,436,124 755,765
------------- ------------- ------------ ------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD 4,068,005 1,735,652 4,068,005 1,735,652
============= ============= ============ ============
CASH AND CASH EQUIVALENTS COMPRISED OF:
Cash 1,263,136 935,652 1,263,136 935,652
Term Deposits 2,804,869 800,000 2,804,869 800,000
------------- ------------- ------------ ------------
4,068,005 1,735,652 4,068,005 1,735,652
============= ============= ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
CONSOLIDATED SCHEDULE OF DEFERRED EXPLORATION COSTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
Argentina
-------------------------------------------------
Valle de
Cura Gualcamayo NW San Juan
---------- ---------- -----------------------
Other Other Mogote Other
$ $ $ $
Balance, beginning of period 1,879,040 16,240 68,514 33,317
---------- ---------- ---------- ----------
Expenditures during the period
Assays - - 7,823 -
Drilling - - - -
Environmental - - - -
Field supplies - - 9,355 -
Field workers - - - -
Geological - - 46,287 -
Geological supplies - - 4,014 -
Geophysics - - - -
Geophysics supplies - - 1,758 -
Officer - - 1,947 -
Other 1,490 1,413 2,610 221
Project management - - - -
Staking and statutory fees - - - -
Surveying - - 1,539 -
Travel - - 274 -
Vehicles - - 516 -
Extension payment (94,803) - - -
---------- ---------- ---------- ----------
(93,313) 1,413 76,122 221
---------- ---------- ---------- ----------
Balance, end of period 1,785,727 17,653 144,636 33,538
========== ========== ========== ==========
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
CONSOLIDATED SCHEDULE OF DEFERRED EXPLORATION COSTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
Argentina Peru Total
-------------------------------------------------------------- ---------- ----------
Rio
Chubut Other Tabaconas
------------------------------------------------- ---------- ----------
Laguna de
Navidad La Bayas Los Toros Other
$ $ $ $ $ $ $
Balance, beginning of period 5,090 112,190 139,703 97,890 30,972 1,966,404 4,349,360
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenditures during the period
Assays 18,218 13,344 - - - 1,580 40,965
Drilling - 199,197 - - - - 199,197
Environmental 7,228 312 - - - 163,445 170,985
Field supplies 5,125 3,931 - - - 4,558 22,969
Field workers - - - - - 8,702 8,702
Geological 129,738 27,249 - 2,397 - 73,921 279,593
Geological supplies 6,832 4,245 - - - - 15,090
Geophysics 68,620 - - - - - 68,620
Geophysics supplies 42,000 - - - - - 43,758
Officer 2,222 2,942 - 4,639 - - 11,750
Other - - - - 2,355 - 8,089
Project management 4,389 - - - - - 4,389
Staking and statutory fees 4,458 - - 86,992 - - 91,450
Surveying 35,731 18,961 - - - - 56,230
Travel 19,235 9,614 - - - 17,808 46,930
Vehicles 12,124 8,407 - 3,900 - - 24,948
Extension payment - - - - - - (94,803)
---------- ---------- ---------- ---------- ---------- ---------- ----------
355,920 288,202 - 97,928 2,355 270,014 998,862
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, end of period 361,010 400,392 139,703 195,518 33,327 2,236,418 5,348,222
========== ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these interim
consolidated financial statements.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
1. NATURE OF OPERATIONS
The Company is in the process of exploring its mineral properties in South
America and evaluating other mineral properties. The Company presently has
no proven or probable reserves and on the basis of information to date, it
has not yet determined whether these properties contain economically
recoverable ore reserves. The amounts shown as mineral properties and
deferred costs represent costs incurred to date, less amounts amortized
and/or written off, and do not necessarily represent present or future
values. The underlying value of the mineral properties and deferred costs
is entirely dependent on the existence of economically recoverable
reserves, securing and maintaining title and beneficial interest in the
properties, the ability of the Company to obtain the necessary financing to
complete development, and future profitable production.
The Company considers that it has adequate resources to maintain its core
operations for the next year.
2. SIGNIFICANT ACCOUNTING POLICIES
The interim consolidated financial statements of the Company have been
prepared by management in accordance with Canadian generally accepted
accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates. The consolidated
financial statements have, in management's opinion, been properly prepared
using careful judgement with reasonable limits of materiality. These
interim consolidated financial statements should be read in conjunction
with the most recent annual consolidated financial statements. The
significant accounting policies follow that of the most recently reported
annual consolidated financial statements.
3. MARKETABLE SECURITIES
At June 30, 2003, the Company held 195,000 common shares of Viceroy
Resources Corp. ("Viceroy"), a mining company with whom the Company had a
joint venture. The Company received shares of Viceroy on termination of the
joint venture with Viceroy. Subsequent to June 30, 2003, Viceroy completed
a plan of arrangement with Quest Capital Corp. ("Quest") and the 195,000
shares of Viceroy were exchanged for 65,166 Class A common shares of Quest,
6,516 common shares of Spectrum Gold Inc. and 19,550 common shares of
Viceroy Exploration Inc., all public companies.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
4. MINERAL PROPERTIES AND DEFERRED COSTS
June 30, 2003 December 31, 2002
------------------------------------ ------------------------------------
Deferred Deferred
Acquisition Exploration Acquisition Exploration
Costs Costs Total Costs Costs Total
$ $ $ $ $ $
(see
schedule)
Argentina:
Valle de Cura 661,635 1,785,727 2,447,362 661,635 1,879,040 2,540,675
Gualcamayo 85,621 17,653 103,274 85,621 16,240 101,861
NW San Juan 66,936 178,174 245,110 51,065 101,831 152,896
Chubut - 1,096,923 1,096,923 - 354,873 354,873
Other - 33,327 33,327 - 30,972 30,972
---------- ---------- ---------- ---------- ---------- ----------
814,192 3,111,804 3,925,996 798,321 2,382,956 3,181,277
Peru:
Rio Tabaconas 700,046 2,236,418 2,936,464 700,046 1,966,404 2,666,450
---------- ---------- ---------- ---------- ---------- ----------
1,514,238 5,348,222 6,862,460 1,498,367 4,349,360 5,847,727
========== ========== ========== ========== ========== ==========
During the six months ended June 30, 2003, the Company entered into
agreements with Amera Resources Corporation ("Amera") to:
(i) farm out its Mogote Property in the NW San Juan Region of Argentina to
Amera, whereby Amera has the option to earn a 51% interest in the
8,009 hectare Mogote Property by issuing 1,650,000 common shares of
Amera to the Company and by incurring US$1.25 million of expenditures,
including work programs and underlying option payments, all over a
five year period.
On August 26, 2003, the Company and Amera amended the terms of the
option whereby Amera has agreed to reimburse the Company, on a
non-refundable basis, $192,952 for payments made and expenditures
which had been incurred by the Company on the Mogote Property; and
(ii) sell a 100% undivided interest in three mineral properties, comprising
24,280 hectares (the "Chubut Properties"), located in Chubut Province,
Argentina, for 500,000 common shares of Amera. In addition, in the
event that a decision is made to place the Chubut Properties into
commercial production, Amera will pay the Company a bonus of
US$250,000 and a 3% net smelter returns royalty.
Amera is a private company, of which the President is also a director of
the Company. In addition, certain directors and officers of the Company are
also shareholders of Amera. Completion of the agreements with Amera is
subject to final regulatory approvals and completion by Amera of its
initial public offering.
The Company has also entered into other agreements to farm out minor
properties acquired or held under option by the Company.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
5. STOCK BASED COMPENSATION
During the six months ended June 30, 2003, the Company granted stock
options to its employees and directors to purchase up to 523,500 shares of
the Company. The options are exercisable at prices ranging from $0.84 per
share to $0.90 per share and have a 5 year term to expiry.
As the Company did not adopt the fair value method of accounting for stock
options granted to employees and directors, Section 3870 requires
disclosure of pro forma amounts that reflect the impact as if the Company
had adopted the fair value based method of accounting. Had compensation
costs for the Company's stock options granted to employees and directors
been accounted for under the fair value method, the Company's net loss and
loss per share would have increased as follows:
$
Net loss for the period
- as reported (716,418)
- compensation expense (250,863)
----------
- pro-forma (967,281)
==========
Basic and diluted loss per share
- as reported $(0.02)
- pro-forma $(0.03)
The fair value of stock options granted to employees and directors was
estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions used for the grants made during the period:
Risk-free interest rate 3.69% - 4.37%
Estimated volatility 82% - 104%
Expected life 2.5 years
The weighted average fair value per share of stock options, calculated
using the Black-Scholes option pricing model, granted during the period to
the Company's employees, directors and consultants was $0.48 per share.
Option-pricing models require the use of estimates and assumptions
including the expected volatility. Changes in the underlying assumptions
can materially affect the fair value estimates and therefore, existing
models do not necessarily provide reliable measure of the fair value of the
Company's stock options.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
6. SHARE CAPITAL
Authorized: 99,708,334 common shares without par value
Issued and allotted:
June 30, 2003 December 31, 2002
----------------------- -----------------------
Shares Amount Shares Amount
$ $
Balance, beginning of period 26,550,606 21,354,823 18,592,219 18,090,497
---------- ---------- ---------- ----------
Issued during the period for:
Private placements 2,900,000 2,610,000 5,703,026 2,552,870
Exercise of warrants 3,090,012 1,563,343 2,085,361 837,512
Exercise of options 950,750 415,634 170,000 68,000
Less: Share issue costs - (167,301) - (194,056)
---------- ---------- ---------- ----------
6,940,762 4,421,676 7,958,387 3,264,326
---------- ---------- ---------- ----------
Balance, end of period 33,491,368 25,776,499 26,550,606 21,354,823
========== ========== ========== ==========
(a) During the six months ended June 30, 2003, the Company completed a
brokered private placement for 2,900,000 units at a price of $0.90 for
cash proceeds of $2,442,699, net of share issue costs of $167,301.
Each unit consisted of one common share of the Company and one-half
non-transferable common share purchase warrant. One whole warrant
entitles the holder to purchase one common share for the exercise
price of $1.10 on or before April 28, 2004. In addition, the Company
granted the agent an option to purchase 195,750 units on the same
terms as the private placement. Certain officers and directors of the
Company have purchased 445,000 units of the private placement.
(b) Stock Options
A summary of the Company's outstanding stock options at June 30, 2003
and the changes for the six months ended June 30, 2003, is presented
below:
Options Weighted
Outstanding Average
and Exercisable Exercise Price
$
Balance, beginning of period 2,465,500 0.44
Granted 523,500 0.88
Exercised 950,750 0.43
----------
Balance, end of period 2,038,250 0.57
==========
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
6. SHARE CAPITAL (continued)
Stock options outstanding and exercisable at June 30, 2003, are as
follows:
Number Exercise Price Expiry Date
$
715,750 0.40 July 19, 2006
409,000 0.50 May 2, 2007
390,000 0.50 Sept. 23, 2007
223,500 0.84 March 7, 2008
300,000 0.90 May 30, 2008
---------
2,038,250
(c) Warrants
A summary of the number of common shares reserved pursuant to the
Company's outstanding warrants and agents warrants outstanding at June
30, 2003 and the changes for the six months ended June 30, 2003, is as
follows:
Number
Balance, beginning of period 9,511,550
Issued 1,450,000
Expired (3,001)
Exercised (3,070,012)
----------
Balance, end of period 7,888,537
==========
Common shares reserved pursuant to warrants outstanding at June 30,
2003 are as follows:
Number Exercise Price Expiry Date
$
1,622,222 0.60 May 23, 2004
1,344,915 0.55 / 0.60 Sept. 27, 2003 / 2004
36,166 0.50 Sept. 27, 2003
1,401,067 0.75 Sept. 15, 2004
1,397,167 0.90 Mar. 16, 2005
637,000 0.75 Apr. 19, 2005
1,450,000 1.10 Apr. 28, 2004
(d) See also Note 11.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
7. RELATED PARTY TRANSACTIONS
During the six months ended June 30, 2003, the Company:
(i) paid a total of $165,000 to officers and directors of the Company for
salaries, management and consulting services provided;
(ii) paid $30,462 for rent to a company owned by the President of the
Company and his wife; and
(iii) received $12,000 from Amera for shared rent and administration.
Other related party transactions are disclosed elsewhere in these interim
consolidated financial statements.
8. SEGMENTED INFORMATION
The Company's principal activities are the exploration of mineral
properties in Argentina and Peru. Management reviews the financial results
according to expenditures by property.
Segment assets by geographical location are as follows:
June 30, 2003
---------------------------------------------------
Canada Argentina Peru Total
$ $ $ $
Equipment 33,918 5,817 5,131 44,866
Mineral properties
and deferred costs - 3,925,996 2,936,464 6,862,460
---------- ---------- ---------- ----------
33,918 3,931,813 2,941,595 6,907,326
========== ========== ========== ==========
December 31, 2002
---------------------------------------------------
Canada Argentina Peru Total
$ $ $ $
Equipment 34,323 5,817 5,377 45,517
Mineral properties
and deferred costs - 3,181,277 2,666,450 5,847,727
---------- ---------- ---------- ----------
34,323 3,187,094 2,671,827 5,893,244
========== ========== ========== ==========
9. FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments consisting of cash
and cash equivalents, amounts receivable and accounts payable and accrued
liabilities approximate their carrying values. As of June 30, 2003, the
market value of marketable securities was $113,390.
BC FORM 51-901F SCHEDULE A
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(Unaudited - Prepared by Management)
10. SUPPLEMENTARY CASH FLOW INFORMATION
Non-cash financing activities were conducted by the Company as follows:
Six Months Six Months
Ended Ended
June 30, 2003 June 30, 2002
$ $
Issuance of common shares on
exercise of options 10,234 -
Contributed surplus (10,234) -
Issuance of common shares for agent's fee - 5,000
Share issue costs - (5,000)
---------- ----------
- -
========== ==========
Interest paid in cash - -
========== ==========
Income taxes paid in cash - -
========== ==========
11. SUBSEQUENT EVENTS
Subsequent to June 30, 2003, the Company:
(i) issued 972,167 shares for $684,629 on the exercise of stock options
and warrants; and
(ii) granted stock options to employees, directors and consultants to
acquire 1,315,000 common shares, at an exercise price of 1.87 per
share, for a period of five years.
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
1.(a) GENERAL AND ADMINISTRATIVE EXPENSES
$
Administrative and management services 117,150
Bank charges and interest 5,969
Corporate development and investor relations 170,666
Depreciation 11,092
Office and sundry 26,033
Printing 14,682
Professional fees 48,266
Rent, parking and storage 27,106
Salaries and employee benefits 97,934
Telephone and utilities 19,806
Transfer agent and regulatory fees 35,345
Travel and accommodation 32,770
----------
606,819
==========
1.(b) MINERAL PROPERTIES AND DEFERRED COSTS
Argentina
-------------------------------------------------
Valle de
Cura Gualcamayo NW San Juan
---------- ---------- -----------------------
Other Other Mogote Other
$ $ $ $
Balance, beginning of period 2,540,675 101,861 107,940 44,956
---------- ---------- ---------- ----------
Expenditures during the period
Assays - - 7,823 -
Drilling - - - -
Environmental - - - -
Field supplies - - 9,355 -
Field workers - - - -
Geological - - 46,287 -
Geological supplies - - 4,014 -
Geophysics - - - -
Geophysics supplies - - 1,758 -
Office - - 1,947 -
Option payment - - 15,871 -
Other 1,490 1,413 2,610 221
Project management - - - -
Staking and statutory fees - - - -
Surveying - - 1,539 -
Travel - - 274 -
Vehicles - - 516 -
Extension payment (94,803) - - -
---------- ---------- ---------- ----------
(93,313) 1,413 91,993 221
---------- ---------- ---------- ----------
Balance, end of period 2,447,362 103,274 199,933 45,177
========== ========== ========== ==========
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
1.(b) MINERAL PROPERTIES AND DEFERRED COSTS (continued)
Argentina Peru Total
-------------------------------------------------------------- ---------- ----------
Rio
Chubut Other Tabaconas
------------------------------------------------- ---------- ----------
Laguna de
Navidad La Bayas Los Toros Other
$ $ $ $ $ $ $
Balance, beginning of period 5,090 112,190 139,703 97,890 30,972 2,666,450 5,847,727
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenditures during the period
Assays 18,218 13,344 - - - 1,580 40,965
Drilling - 199,197 - - - - 199,197
Environmental 7,228 312 - - - 163,445 170,985
Field supplies 5,125 3,931 - - - 4,558 22,969
Field workers - - - - - 8,702 8,702
Geological 129,738 27,249 - 2,397 - 73,921 279,593
Geological supplies 6,832 4,245 - - - - 15,090
Geophysics 68,620 - - - - - 68,620
Geophysics supplies 42,000 - - - - - 43,758
Officer 2,222 2,942 - 4,639 - - 11,750
Option payment - - - - - - 15,871
Other - - - - 2,355 - 8,089
Project management 4,389 - - - - - 4,389
Staking and statutory fees 4,458 - - 86,992 - - 91,450
Surveying 35,731 18,961 - - - - 56,230
Travel 19,235 9,614 - - - 17,808 46,930
Vehicles 12,124 8,407 - 3,900 - - 24,948
Extension payment - - - - - - (94,803)
---------- ---------- ---------- ---------- ---------- ---------- ----------
355,920 288,202 - 97,928 2,355 270,014 1,014,733
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance, end of period 361,010 400,392 139,703 195,518 33,327 2,936,464 6,862,460
========== ========== ========== ========== ========== ========== ==========
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
1.(c) GENERAL EXPLORATION EXPENSES
$
Bank fees 6,841
Consulting 56,730
Insurance 8,044
Geological 28,058
Office 8,909
Vehicle rentals 13,011
----------
121,593
==========
2.(a) RELATED PARTY TRANSACTIONS
During the six months ended June 30, 2003, the Company:
(i) paid a total of $165,000 to officers and directors of the Company
for salaries, management and consulting services provided;
(ii) paid $30,462 for rent to a company owned by the President of the
Company and his wife;
(iii) received $12,000 from Amera Resources Corporation ("Amera"), a
private company with a common director for shared rent and
administration;
(iv) entered into a number of agreements with Amera whereby the Company
agreed to option and sell certain of its mineral properties to
Amera. Details of the terms are described in Note 4 of the
Company's interim consolidated financial statements; and
(v) conducted a private placement in which certain officers and
directors of the Company purchased 445,000 units for $400,500.
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
3.(a) SECURITIES ISSUED DURING THE PERIOD ENDED JUNE 30, 2003
Date Type of Total Type of
of Issue Security Type of Issue Number Price Proceeds Consideration Commission
-------- -------- ------------- --------- ------- ----------- ------------- ----------
$ $ $
Jan. 2003 Common Warrants 13,500 0.45 6,075 Cash N/A
Feb. 2003 Common Options 10,000 0.40 4,000 Cash N/A
Feb. 2003 Common Warrants 400,000 0.45 180,000 Cash N/A
Feb. 2003 Common Warrants 112,015 0.54 60,488 Cash N/A
Mar. 2003 Common Options 25,000 0.40 10,000 Cash N/A
Mar. 2003 Common Warrants 2,000 0.75 1,500 Cash N/A
Mar. 2003 Common Warrants 11,111 0.53 5,889 Cash N/A
Mar. 2003 Common Warrants 1,330 0.50 665 Cash N/A
Mar. 2003 Common Warrants 1,206,500 0.45 542,926 Cash N/A
Mar. 2003 Common Warrants 527,343 0.54 284,765 Cash N/A
Mar. 2003 Common Warrants 60,000 0.55 33,000 Cash N/A
Apr. 2003 Common Private
placement 2,900,000 0.90 2,610,000 Cash $112,752
Apr. 2003 Common Options 142,000 0.40 56,800 Cash N/A
Apr. 2003 Common Options 160,000 0.50 80,000 Cash N/A
Apr. 2003 Common Warrants 275,725 0.54 148,892 Cash N/A
Apr. 2003 Common Warrants 5,000 0.75 3,750 Cash N/A
Apr. 2003 Common Warrants 100,000 0.53 53,000 Cash N/A
Apr. 2003 Common Warrants 40,000 0.55 22,000 Cash N/A
May 2003 Common Warrants 85,000 0.55 46,750 Cash N/A
May 2003 Common Warrants 55,555 0.53 29,444 Cash N/A
May 2003 Common Options 20,500 0.50 10,250 Cash N/A
May 2003 Common Options 4,250 0.40 1,700 Cash N/A
June 2003 Common Warrants 149,933 0.75 112,450 Cash N/A
June 2003 Common Warrants 25,000 0.55 13,750 Cash N/A
June 2003 Common Warrants 20,000 0.90 18,000 Cash N/A
June 2003 Common Options 70,500 0.50 35,250 Cash N/A
June 2003 Common Options 518,500 0.40 207,400 Cash N/A
3.(b) OPTIONS GRANTED DURING THE PERIOD ENDED JUNE 30, 2003
Date Number Type Exercise
Granted of Shares of Option Name Price Expiry Date
------------ --------- --------- -------------- ----- ------------
$
Mar. 7, 2003 50,000 Employee K. Patterson 0.84 Mar. 7, 2008
Mar. 7, 2003 30,000 Employee D. Charchaflie 0.84 Mar. 7, 2008
Mar. 7, 2003 21,500 Employee J.C. Beretta 0.84 Mar. 7, 2008
Mar. 7, 2003 25,000 Employee M. Saldana 0.84 Mar. 7, 2008
Mar. 7, 2003 25,000 Employee N. Demare 0.84 Mar. 7, 2008
Mar. 7, 2003 50,000 Director W. Lee 0.84 Mar. 7, 2008
Mar. 7, 2003 15,000 Employee A. Sanchez 0.84 Mar. 7, 2008
Mar. 7, 2003 7,000 Employee M. Briones 0.84 Mar. 7, 2008
May 30, 2003 150,000 Director R. Angus 0.90 May 30, 2008
May 30, 2003 150,000 Director C. Idziszek 0.90 May 30, 2008
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
4.(a) AUTHORIZED AND ISSUED SHARE CAPITAL AS AT JUNE 30, 2003
Issued
--------------------------------
Authorized
Class Par Value Number Number Amount
------ --------- ---------- ---------- -----------
Common WPV 99,708,334 33,491,368 $25,776,499
4.(b) OPTIONS AND WARRANTS OUTSTANDING AS AT JUNE 30, 2003
Exercise Expiry
Security Number Price Date
-------- --------- -------- --------------
$
Options 715,750 0.40 Jul. 19, 2006
Options 409,000 0.50 May 02, 2007
Options 390,000 0.50 Sept. 23, 2007
Options 223,500 0.84 Mar. 07,2008
Options 300,000 0.90 May 30, 2008
----------
2,038,250
==========
Warrants 1,401,067 0.75 Sept. 15, 2004
Warrants 637,000 0.75 Apr. 19, 2005
Warrants 1,397,167 0.90 Mar. 16, 2005
Warrants 1,622,222 0.60 May 23, 2004
Warrants 1,344,915 0.55/0.60 Sept. 27, 2003/2004
Warrants 36,166 0.50 Sept. 27, 2003
Warrants 1,450,000 1.10 Apr. 28, 2004
----------
7,888,537
==========
Pursuant to the 2,900,000 unit brokered private placement financing, the
Company has granted an option to the agent to acquire 195,750 units at
$0.90 per unit. Each unit will consist of one common share and one-half
non-transferable common share purchase warrant. One whole warrant will
entitle the agent to purchase one common share for the exercise price of
$1.10 per share, on or before April 28, 2004.
4.(c) SHARES IN ESCROW OR SUBJECT TO POOLING AS AT JUNE 30, 2003
There were no shares subject to escrow or pooling as at June 30, 2003.
BC FORM 51-901F SCHEDULE B
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2003
5.(a) LIST OF DIRECTORS AND OFFICERS AS AT JUNE 30, 2003
Directors:
Gerald D. Carlson
Joseph Grosso
William Lee
Sean Hurd
Robert Stuart (Tookie) Angus
Nikolaos Cacos
Chet Idziszek
Officers:
Gerald D. Carlson (Chairman)
Joseph Grosso (President & Chief Executive Officer)
William Lee (Chief Financial Officer)
Nikolaos Cacos (Secretary)
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS
----------------------------------
Introduction
------------
The following management's discussion and analysis and financial review should
be read in conjunction with the Company's consolidated financial statements and
related notes.
Overview
--------
The Company owns outright, or has the right to acquire through various option
agreements, interests in a number of exploration properties in Argentina and one
property in Peru.
The properties on which the Company has concentrated its exploration efforts are
Navidad, Las Bayas, Mogote and Rio Tabaconas. The Company has also acquired,
through staking, interests in a number of properties in Chubut. With its focus
on the Navidad property, the Company is considering farm-outs for some of its
properties as a means by which exploration can be conducted.
At the Navidad property a drilling program, budgeted to cost approximately
US$1.5 million, is scheduled to begin in late September. The Company is also
anticipating that a follow-up program will be required.
The Annual General Meeting was held on June 21, 2003, at which time Messrs.
Joseph Grosso, Gerald D. Carlson, Robert Stuart (Tookie) Angus, Chet Idziszek,
Sean Hurd , Niko Cacos and William Lee were re-elected to the Board of
Directors. The following were appointed officers for the ensuing year: Joseph
Grosso - President and CEO, Gerald D. Carlson -Chairman of the Board, William
Lee - Chief Financial Officer, Niko Cacos - Corporate Secretary and VP Investor
Relations.
In April, 2003, the Company completed a private placement of 2,900,000 units at
$0.90 per unit for a gross proceeds of $2,610,000. The proceeds from the private
placement are intended to be used to fund ongoing exploration at Navidad and for
general working capital. Subsequent to June, the Company received an additional
$685,000 from the exercise of stock options and warrants. The Company currently
has working capital of approximately $4.1 million and believes that it has
sufficient funds to complete the Navidad exploration program and fund corporate
overhead through to 2004.
Property Update
---------------
The Company's mineral property groups are Valle de Cura , Gualcamayo, NW San
Juan and Chubut in Argentina; and, in Peru, Rio Tabaconas. For the quarter ended
June 30,2003, the Company focused mainly in Argentina on staking new grassroots
properties in the Chubut region and completing exploration work on the Mogote
property, within the NW San Juan Group, and on the Las Bayas and Navidad
Properties within the Chubut Group.
a) ARGENTINA
VALLE DE CURA
The Company has no exploration budget commitment for the Valle del Cura region
in Argentina as this group of properties is covered under the existing option
agreement with Barrick Gold Corp.
The selection notice period in the property option agreement between Barrick
Gold Corp. ("Barrick") and the Company was extended to December 31, 2003 to
allow Barrick's technical team to review additional properties of the Company.
In return for the extension, Barrick paid the Company US$65,000 in April, such
funds will be utilized by the Company
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
to fund holding costs of US$15,000 in July 2003 and US$50,000 in December 2003.
No further work will be carried out on these properties until after December 31,
2003 when Barrick makes its election.
GUALCAMAYO
The Company has no exploration budget commitment for the Gualcamayo region in
Argentina.
NW SAN JUAN
A small exploration program was completed at the Mogote property in the first
quarter of 2003. The Company has no further exploration budget committed for the
NW San Juan region.
The results of the exploration program were announced on March 20, 2003. The
work program was successful in that it expanded the gold-copper exploration
potential of the project. Mogote is a copper-gold porphyry target and is located
along the Argentina-Chile border in the Maricunga belt.
Detailed mapping, rock chip sampling, and talus-fines sampling have defined two
intersecting target areas which are defined by coincident >100 ppb gold and >500
ppm copper in talus-fines sampling and have been confirmed by rock chip
sampling. The target areas are Filo Central and Filo Este. Filo Central measures
4,000 metres by 800 metres and trends north-northwest; it includes two
higher-grade (>200 ppb gold) cores measuring 1,400 by 400 metres and 900 by 250
metres. Filo Este is 2,000 metres by 700 metres in size and trends east-west;
within this zone a core of >200 ppb gold in talus fines measures 1,200 by 250
metres. The >100 ppb gold contour in talus fine sampling has been previously
used, with documented success, to define several large gold-copper deposits in
the Maricunga belt. Neither of these targets have been drill tested or trenched.
The exploration work at Mogote was carried out by Linus Keating, D.Sc. under the
supervision of Lindsay Bottomer, P.Geo., IMA's Qualified Person for the project.
Since January 2003, the Navidad project has become the focus of the Company's
exploration program and as a result, the Company's priority for exploration
expenditures was Navidad and accordingly, no further exploration work was
planned for Mogote.
In February, the Company received an offer to joint venture the property from
Amera Resources Corporation ("Amera"). Amera has a common director with IMA and
accordingly an independent committee of the Board of Directors of the Company
was formed to negotiate and settle on the terms of the farm-out agreement with
Amera. After negotiations the Company entered into an agreement to option this
property to Amera, a private company which, as of August 8, 2003, has filed a
preliminary prospectus with the TSX Venture Exchange (the "Exchange") and the BC
Securities Commission. Amera has a common director with the Company and the
farm-out to Amera is also subject to Exchange approval. Under the terms of the
agreement, Amera can earn 51% interest by spending US$1,250,000 in exploration
and development expenditures on the property and issuing 1,650,000 of its common
shares to the Company in varying amounts over 5 years. Included in the
expenditure commitment of Amera is an obligation to reimburse the Company for
all the expenditures it has incurred on the property.
CHUBUT
Early in 2003, the Company staked a number of properties in various areas of the
province of Chubut. Some of the properties staked included Costa, Lago, Pico,
Corcovado, Loma Alto and Nueva Ruta properties. These properties were staked in
order to target geological environments prospective for low sulphidation gold
veins. Other properties staked
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
included Penascudo and Gan Gan and extensions to the previously staked Costa
property. The Company also has rights to other properties through various
staking programs. The Company's inventory of resource exploration properties in
Chubut is an asset which is to be developed through exploration programs or
given the focus of exploration efforts at Navidad through third party
agreements.
On March 6, 2003, the Company entered into an agreement to sell a 100 %
undivided interest in Lago Pico (10,000 ha), Loma Alta (10,000 ha) and Nueva
Ruta (4,180 ha) to Amera. The terms of the agreement were approved by the
independent committee of the Company. Upon approval by the Exchange, Amera will
issue 500,000 common shares to the Company. In addition, in the event that a
decision is made to place any of the properties into commercial production, the
Company will receive a bonus of US$250,000 and a 3 % net smelter return royalty.
On May 28, 2003, the Company granted Ballad Ventures Ltd. ("Ballad"), a public
company listed on the Exchange, an exclusive right to enter into an option
agreement with IMA to earn up to 85 % interest in the Penascudo property. This
right was exercised by Ballad on August 12, 2003 and Ballad's participation is
subject to acceptance for filing with the Exchange. To earn the 85 % interest in
the property, Ballad must complete US$1,800,000 of exploration work by October
31, 2008, issue 500,000 shares to the Company, make a further US$300,000 cash
payment, issue 500,000 shares and complete a feasibility study on or before
October 31, 2008. Ballad is an arm's length junior exploration company.
On August 27, 2003, the Company finalized terms for a farm-out of a 1,000
hectare Chubut property to Consolidated Pacific Bay Minerals ("Pacific Bay"), an
arm's length junior exploration company. Under the terms of the option
agreement, Pacific Bay can earn a 51% interest by funding US$625,000 of
exploration and issuing 900,000 shares. Pacific Bay's participation is subject
to acceptance for filing with the Exchange. Pacific Bay can increase its
interest to 70% by funding costs to prepare a feasibility study.
NAVIDAD PROJECT
On February 3, 2003 the Company announced the discovery of high-grade
silver-lead-copper mineralization on it's 100% owned Navidad Property in
north-central Chubut Province. Since this discovery, the Navidad Project has
become the focus of the Company's exploration efforts. Work performed to date
includes detailed and property scale geological mapping, rock chip sampling,
soil sampling, a large gradient array induced polarization (IP) geophysical
survey, several lines of pole-dipole IP, a ground magnetic survey, and a gravity
survey. To June 30, 2003 approximately $361,000 has been spent at the Navidad
Project and has resulted in the delineation of multiple drill targets.
Rock chip sampling and geologic mapping have defined three distinct yet related
styles of mineralization at the Navidad Project; namely "bonanza-grade
structures", "mineralized carapace breccia", and "galena matrix breccia". These
mineralization styles have been mapped along a linear ridge named "Navidad
Ridge" that is comprised of "Barite", "Galena", and "Navidad Hills". To date,
835 rock chip samples have been collected and analyzed. All primary analytical
work has been preformed by ALS Chemex using fire assay/gravimetric, AA (atomic
absorption) and ICP-MS (inductively coupled plasma - mass spectroscopy)
techniques as appropriate. 120 randomly selected samples (approximately 14% of
all samples) have been submitted for check assay to Alex Stewart (Assayers)
Argentina S.A.; results of these generally agree well with the original results
from ALS Chemex.
Dr. Paul Lhotka, P.Geo. has performed or directly supervised all exploration
work at the Navidad Project and is the Company's "Qualified Person" for the
project.
Bonanza-grade structures have been mapped and sampled at Navidad Hill over an
area of 475 metres long by 60 to 140 metres wide. Within this area 636
cumulative metres of structures have been mapped and sampled in detail with 119
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
measured rock chip samples. Widths of the mapped bonanza-grade structures are
variable, ranging from less than one metre to 3.3 metres. An average width
cannot yet be determined due to soil cover that often obscures the contacts.
Sampling of bonanza-grade structures has returned a length-weighted average of
5,546 g/t silver (162 oz/t), 3.79% copper and 9.84% lead.
Also at Navidad Hill, mapping suggests carapace breccia-hosted mineralization is
the predominant rock type in three areas of 50 by 150 metres, 18 by 20 metres,
and 20 by 25 metres, respectively. 50 measured rock chip samples have returned a
length weighted average grade of 3,785 g/t siler (110.5 oz/t), 3.72% copper, and
2.07% lead.
At Galena Hill, significant zones of galena matrix breccia and mineralized
carapace breccia have been defined. Galena matrix breccia has been defined and
sampled in detail over an area of 475 by up to 90 metres; 101 measured
continuous chip and panel samples have returned a length-weighted average of 147
g/t silver (4.3 oz/t) and 7.69% lead. The true thickness of this mineralized
body is unknown at present, however, pole-dipole IP (discussed below) suggests
that chargeability anomalies which correlate with mapped mineralization on
surface extend to depths of 100 to 300 metres. Mineralized carapace breccia has
been defined over two areas at Galena Hill measuring 118 x 46 metres and 55 x 16
metres; and 23 rock chip samples give a length-weighted average of 2,222 g/t
silver (64.9 oz/t), 0.84% copper, and 2.93% lead. Silver-copper bearing carapace
breccias at Galena and Navidad Hills are separated by 600 metres most of which
is overburden covered. Metal zoning suggests this covered area is the centre of
the mineralized system.
On Barite Hill, numerous zones of galena matrix breccia have been mapped and
sampled. Due to poor exposure, numerous samples of subcrop and float have been
taken and have been used to define the size of mineralized areas, however, only
representative measured chip samples from outcropping and hand trenched areas
have been used to define the length-weighted averages reported here. 67 chip
samples have been taken giving a length weighted average of 109 g/t silver (3.18
oz/t) and 4.73% lead. Several mineralized zones have been defined with a
cumulative strike length of approximately 1,300 metres and a currently unknown
width.
ROCK CHIP SAMPLE RESULTS
NUMBER OF SIZE OF SILVER SILVER COPPER LEAD
MINERALIZATION STYLE SAMPLES MINERALIZED AREA (OZ/T) (G/T) (%) (%)
Navidad Hill Area
=================
Bonanza Grade Structures 119 475 x 60-140m; 162.0 5,546 3.79 9.84
636 cumulative metres
of structures
Mineralized Carapace Breccia 50 50x150, 20x25 and 110.5 3,785 3.72 2.07
18x20m
Galena Hill Area
================
Mineralized Carapace Breccia 23 118x46 and 55x16m 64.9 2,222 0.84 2.93
Galena Matrix Breccia 101 475x90m 4.3 147 0.01 7.69
Barite Hill Area
================
Galena Matrix Breccia 67 Several zones with 3.2 109 0.01 4.73
(Measured chip samples only) cumulative strike
length of approximately
1,300m
Galena-matrix Breccia 15 As above 3.9 132 0.15 7.25
(Subcrop and float samples)
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
A soil sample grid has been completed covering the entire Navidad Ridge area and
encompassing a strike length of 5.8 kilometres. Lines were oriented north-south
and spaced at 100 metres with samples collected at 50 metre intervals along
these lines over most of the grid. In areas of particular interest samples were
collected on a 50 by 50 metre grid. In total, 958 soil samples were collected
including approximately 10% duplicate and blank samples collected in order to
assess laboratory quality. All samples were analyzed by ALS Chemex by ICP and AA
techniques. Sample collection was overseen by Dr. Paul Lhotka, P.Geo., IMA's
Qualified Person on the Navidad Project. Review of the data for blanks and
duplicate samples indicates no contamination or reproducibility problems were
encountered.
Highlights of the soil survey include a 1,700 by 300 metre silver-copper-lead
anomaly over the Navidad Hill and Galena Hill areas. This soil anomaly is
defined by greater than 2 ppm (parts per million) silver and generally greater
than 100 ppm copper. Within this zone there is a central core of greater than 10
ppm silver in soils (includes values of up to 298 ppm Ag) of approximately 600
by 200 metres. Portions of this central core correlate with the outcropping
bonanza-grade structures at Navidad Hill and these soil results demonstrate the
potential to expand this zone significantly. Significant soil anomalies also
exist at Barite and Calcite Hills. Silver values of up to 531 ppm have been
received from outside areas of known high-grade mineralization and show
excellent potential for additional discoveries. Lead values are consistently
elevated and correlate well with silver over the entire 5.8 kilometre survey
length. Samples of greater than 500 ppm lead have been returned from every line
within the survey area.
Induced Polarization (IP) geophysical surveys utilizing both gradient array and
pole-dipole arrays have been completed at the Navidad Project. Gradient IP
totalling 80.3 line kilometres was performed over an area of 2.5 by 6.2
kilometers with 200 metre spaced lines, including the entire Navidad system and
adjacent covered areas. Follow-up time domain Pole-Dipole IP (using dipole
lengths of 20 and 100 metres) was performed over 8.5 line kilometres covering
areas of anomalous chargeability defined by the gradient array survey. The IP
surveys were performed by Quantec Geoscience Ltd.
The IP surveys have identified a chargeability anomaly with a surface footprint
of 1.6 km x 1.3 km that starts near surface in areas of exposed mineralization
at Galena Hill and in some cases extends to depths of approximately 300 metres.
Pole-dipole survey results show an excellent correlation between chargeability
and mapped exposures of more intense examples of galena matrix breccia
mineralization. The large chargeability anomaly extends over 1 km to the
southwest of known mineralization in an area completely obscured by soil cover.
Chargeability anomalies are generally caused by minerals such as: base-metal
sulphides, pyrite, graphite, hematite and magnetite. Pyrite, graphite, hematite,
and magnetite have not been observed on surface at Navidad in quantities that
could explain the anomaly.
A magnetic geophysical survey was performed by Quantec Geoscience and covers the
entire Navidad grid (7.2 x 2.5 km) totalling 88.7 line kilometres (including a
6.2km tie line). Data was collected at 10m intervals along lines spaced 200m
apart. Quantec made standard corrections for diurnal variations and produced
plan maps of the total field magnetic data and pole reduced data. Mapped
mineralization at Navidad, Galena, and Barite Hills is not associated with
magnetic anomalies nor is the IP chargeability anomaly. The area of the large
gradient and pole-dipole IP chargeability anomaly is characterized by a low,
flat magnetic response that indicates magnetite is not the source of the
chargeability anomaly.
The final geophysical survey performed at the Navidad Project measured subtle
differences in the earth's gravitational field. Once appropriate corrections
have been applied, results of these gravity measurements are indicative of
contrasting densities in the rock underlying the survey area. Laboratory tests
of mineralized and unmineralized specimens from the Navidad project indicate
that densities of unmineralized rocks range from 2.19 to 2.64 g/cm3 while
mineralized rocks range from 2.63 to 3.95 g/cm3. Gravity data acquisition was
performed by Proingeo S. A., an Argentine geophysical and topographic survey
contractor. Quantec Geoscience provided consulting services to the Company on
survey design and execution, has reviewed data quality, and built a three
dimensional model of the survey results using the University of
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
British Columbia (Canada) inversion software. Quantec Geoscience reports raw
data quality is very good. The gravity survey covers an area of approximately
2.2 by 2.5 km centred on the previously reported IP chargeability anomaly. It
includes 385 gravity stations that were measured on two lines with closely
spaced points and additional points spaced at about 100 by 200m intervals.
In the Galena Hill area, the gravity survey has defined an important anomaly
with multiple peaks approximately 0.8 x 1.1 km in size. This anomaly has a
"donut-like" form with a central low surrounded by higher density values;
amplitude of this anomaly is approximately 0.6 to 0.8 milligals above
surrounding values. This complex anomaly is partly coincident with, but somewhat
smaller in size, than the previously announced Gradient and Pole-Dipole I.P.
chargeability anomaly at Navidad. The anomaly is not reasonably explained by
simple lithologic density variations and is most readily explained by the
presence of sulphide/barite mineralization. Part of the gravity anomaly is
spatially associated with mapped breccia-hosted mineralization on surface and it
correlates very well with potential extensions to this mineralization indicated
by the most intense Pole-Dipole IP chargeability anomaly.
A second gravity high of approximately 260 by 550m in diameter is spatially
associated with mapped Bonanza Grade Structures at Navidad Hill. This anomaly
may be caused by the combination of sulphide mineralization and the denser host
rock of the flow dome at Navidad Hill relative to surrounding sediments. It
covers the portion of the flow dome known to host Bonanza Grade Structures and
their strike extension. Most of the rest of the flow dome is not represented by
a gravity high.
In review, important amounts and grades of silver-copper-lead mineralization are
exposed from Navidad Hill to Barite Hill a distance of over 2,900m. Detailed
mapping and sampling has confirmed the importance of the original discovery
announcement of February 3, 2003. The outcropping mineralization is accompanied
by a soil geochemical anomaly of over 5.8km long and a large IP chargeability
anomaly portions of which show anomalously high gravity values.
Planned work on the Navidad Project includes a significant diamond drill program
and minor additional surface work. The diamond drill program is expected to
commence in late September or early October, 2003 and will include 2 phases of
3,000 metre each of HQ coring predominantly at Navidad and Galena Hills.
US$1,500,000 is budgeted for the Phase I and II drilling at the Navidad Project.
LAS BAYAS PROJECT
In January, 2003 the Company undertook a diamond drill program on it's 100%
owned Las Bayas project. The purpose of this program was to test for potentially
economic grades of gold and silver hosted within low-sulphidation quartz veins
that are well exposed on surface. Prior surface work by the Company had
delineated over 15,000 linear metres of quartz veining within an area of
approximately 1.5 by 4.0 kilometres. Vein widths at surface range from less than
one metre to 22 metres and gold grades range from less than detection limit to
25.8 grams/tonne. The drill program comprised 1,953 metres of NQ core that was
recovered from 19 drill holes targeting six individual veins. Total cost of this
program was CAD $385,000.
Eighteen of the 19 drill holes completed intersected the targeted
low-sulphidation quartz veins; these intersections ranged in width from 0.4 to
22.1 metres of vein material. This drilling tested approximately 900 metres of
the mapped 15,000 metre strike length of veins exposed at Las Bayas Hill.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
Highlights of the assay results are tabulated below:
GOLD
EQUIVALENT
DDH LENGTH GOLD SILVER (g/t)
(m) (g/t) (g/t) (Au+Ag/70)
LB03-01 5.1 0.96 36.9 1.48
including 1.3 2.62 33.0 3.09
LB03-03 1.29 0.68 59.8 1.53
LB03-05 5.0 0.73 51.5 1.47
including 2.0 1.48 101.9 2.93
LB03-07 0.7 1.02 n/a n/a
The remaining drill holes intersected gold grades ranging from below detection
to 0.86 grams/tonne. Although results fell short of expectations, it must be
emphasized that only 900 linear metres of veining were tested by this program
and approximately 14,100 linear metres remain untested. The Company has no
immediate plans for further work on the Las Bayas property, however an
additional surface program is recommended on the outlying portions of the
property that as yet remain completely untested.
OTHER
The Company has no exploration budget commitment for the Other - San Juan region
in Argentina.
ACQUISITIONS AND FARM-OUTS
The Company continues to be quite active in Chubut province reviewing other
properties and conducting due diligence, with the objective of acquiring
additional prospective properties.
The Company has developed a business plan to have exploration work done on its
non-core properties by way of farm- outs. The Company will be able to have
exploration done on its non-core properties, while focusing its exploration
resources on its core Navidad property.
b) PERU
RIO TABACONAS
As a result of extremely encouraging results from the Phase I drill program in
the fall of 2001, a Phase II drill program was developed and $1.2 million was
raised in April 2002, through a Short Form Offering, to fund further exploration
on the property.
In June 2002, the Company announced it would take a more measured approach to
exploration on the project to ensure that local cultural, developmental and
environmental concerns pertaining to mining activities in the region would be
addressed. All exploration activities have been deferred until an agreement with
the local community of Tamborapa can be finalized. The Company has declared
force majeure, as allowed under the property option agreement. A Company-
Community plan has been prepared with the aid of several Peruvian social
economic consultants and has been presented for discussion to the community
leaders, government officials and interested party leaders and as of the date of
this quarterly report no agreement has been reached. Thus the Company will
continue to work with the various social economic consultants to develop a plan
which will be acceptable by all parties in the community of Tabaconas.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
During the six months ended June 30, 2003, no drilling work has been initiated
and the Company has spent $270,014, the majority of which has been for the
maintaining the properties in good standing, legal cost, social economic
consultants and our Peruvian administrative and field staff assisting in
developing the Company's community plan. Until then the Company cannot proceed
with any work programs on the property. Up to December 31, 2002, the Company
spent $862,736 on this property for a total of $1,132,750. The balance of the
funds allocated in the Short Form, of $67,250 have been allocated for general
exploration activities.
SUMMARY OF FINANCIAL RESULTS
For the six months ended June 30,2003, the Company reported a consolidated loss
of $716,418 ($0.02 per share) compared to a loss of $669,030 ($0.03 per share)
for the comparative period in 2002. The increase in the loss experienced by the
Company in 2003, compared to 2002, was attributed to certain operating
expenditures such as $47,454 for increase in Corporate development and Investor
relations, $68,891 for increase in General Exploration and $7,733 increase in
office sundry.
RESULTS OF OPERATIONS
CORPORATE COSTS AND OTHER INCOME
The directors provided services to the Company and were paid $165,000 for the
six months ended June 30, 2003. Mr. W. Lee, the CFO was paid a salary of
$36,000, Mr. N. Cacos, the Corporate Secretary was paid a management fee of
$33,000, Mr. Sean Hurd, director and investor relations manager, was paid a
management fee of $24,000, Mr. R. Brown, a former director, was paid a
consulting fee of $1,200 during his tenure as a director, Mr. G. Carlsen,
Chairman of the Board was paid a consulting fee of $19,800 and Mr. J. Grosso,
the President and CEO, was paid a consulting fee of $51,000.
The significant increases in expenditures this period versus prior period are as
follows: (i) corporate development and investor relations - $47,454 of which
$12,650 was for a 3 month coverage on a website "Savvy Investor.com", $9,900 for
various media advertising, $5,279 was for the Annual General Meeting
presentation, $15,795 for the PDAC in Toronto and $3,800 for the Cambridge House
Gold Conference; (ii) general exploration - $68,891 as a result of additional
examination of grassroots properties ($53,828) in the Patagonia region in
Argentina and ($15,063 ) in Peru; (iii) office and sundry - $ 7,733 of which
$2,300 was for computer software, $2,570 for a laptop computer; (vi) salaries
and benefits - $1,475 due to an increase in the cost of benefits with Canada
Life; (v) telephone and utilities - $6,487 due to the increase in correspondence
within North America and South America; (vi) transfer agent and regulatory fee -
$8,589 mainly due to increase in TSX Venture Exchange filing fees for private
placements and stock option plan.
The following expenses decreased for the year (i) Printing - $3,253 as in the
prior year there were extensive maps and folders printed totalling $14,600; (ii)
Professional fees - $ 26,792 as $33,016 was related to the North America and
Europe Market awareness program in the prior year; (iii) Rent, parking and
storage - $8,589 as a result of cost recovery from a private company sharing
office space; (iv) Travel and accommodation - $42,024 as $41,700 was incurred in
the prior year for the North America and Europe market awareness program.
During the period ended June 30,2003 and 2002 the Company did not write-off any
mineral claims and deferred costs.
Interest and miscellaneous income reported for the period ended June 30,2003 was
$16,711 a increase of $10,406 from $6,305 reported in 2002 as a result of more
funds on deposit.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
During the period ended June 30,2003 and 2002, the Company did not dispose of
any Viceroy common shares. Through a plan of arrangement completed after June
30, 2003, the 195,500 Viceroy common shares held as marketable securites were
converted to 65,166 Quest Capital Corp. Class A shares , symbol QC.A on the TSX
Exchange, 6,516 Spectrum Gold Inc. common shares and 19,550 Viceroy Exploration
Inc. common shares.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2003 the Company had working capital of $4,111,836 compared to
$1,744,819 at June 30, 2002. As at June 30, 2003, the Company had cash and cash
equivalents on hand of $4,068,005 (2002 - $1,735,652). Subsequent to the period
ended June 30,2003 the Company issued 124,000 shares for $50,760 on the
exercises of options and 847,767 shares for $633,869 on the exercises of
warrants.
The Company has accounts receivable and prepaids of $89,307, prepaids comprise
$28,166 and the balance of $61,141 represents receivables all of which are fully
collectible with $25,138 being GST receivable $16,603 accrued interest
receivable, $17,424 deposit in brokerage firm and the balance being
miscellaneous.
The Company considers that it does have adequate resources to maintain its
ongoing operations and property commitments for the year. The Company may
require additional financing if it proceeds with further planned exploration and
property acquisitions for the remainder of fiscal 2003. The Company will
continue to rely on successfully completing additional equity financing and/or
conducting joint venture arrangements to further exploration on its properties.
There can be no assurance that the Company will be successful in obtaining
additional financing or negotiating joint venture agreements.
OPERATING CASH FLOW
Cash outflow from operating activities for the period ended June 30,2003, was
$754,387 compared to cash outflow in 2002 of $690,780. The cash outflows for
2003 were largely due to increases in corporate development and investor
relations, general exploration, telephone and utilities and transfer agent and
regulatory fees as explained above.
FINANCING ACTIVITIES
Cash flow from financing activities for the period ended June 30, 2003,
generated $4,411,442(2002 - $2,383,215) which included $415,634 from the
exercise of 950,750 stock options and $1,563,343from the exercise of 3,090,012
warrants. Subsequent to the period ended June 30, 2003, the Company received
$50,760 from the exercise of 124,000 options and $633,869 from the exercise of
847,767 warrants.
INVESTING ACTIVITIES
Cash flow from investing activities required $1,025,174 for the period ended
June 30,2003 (2002 - $712,548), these investing activities were primarily for
additions of $744,719 (2002 - $100,263) to Chubut and other properties in
Argentina and $270,014 ( 2002 - $610,937 to the Rio Tabaconas project in Peru
and $10,441 (2002 - $1,348) to office equipment.
BC FORM 51-901F SCHEDULE C
IMA EXPLORATION INC.
QUARTERLY REPORT
FOR THE PERIOD ENDED JUNE 30, 2003
MANAGEMENT DISCUSSION AND ANALYSIS (continued)
----------------------------------
CRITICAL ACCOUNTING POLICIES
Reference should be made to the Company's significant accounting policies
contained in note 2 of the Company's consolidated financial statements for the
year ended December 31, 2002. These accounting policies can have a significant
impact of the financial performance and financial position of the Company.
USE OF ESTIMATES
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the period. Significant areas requiring the use of
management estimates relate to the determination of environmental obligations
and impairment of mineral properties and deferred costs. Actual results may
differ from these estimates.
MINERAL PROPERTIES AND DEFERRED COSTS
Consistent with the Company's accounting policy disclosed in Note 3 of the
annual consolidated financial statements, direct costs related to the
acquisition and exploration of mineral properties held or controlled by the
Company have been capitalized on an individual property basis. It is the
Company's policy to expense any exploration associated costs not related to
specific projects or properties. Management of the Company periodically reviews
the recoverability of the capitalized mineral properties. Management takes into
consideration various information including, but not limited to, results of
exploration activities conducted to date, estimated future metal prices, and
reports and opinions of outside geologists, mine engineers and consultants. When
it is determined that a project or property will be abandoned or its carrying
value has been impaired, a provision is made for any expected loss on the
project or property.
RISK FACTORS
The Company's operations and results are subject to a number of different risks
at any given time. These factors, include but are not limited to disclosure
regarding exploration, additional financing, project delay, titles to
properties, price fluctuations and share price volatility, operating hazards,
insurable risks and limitations of insurance, management, foreign country and
regulatory requirements, currency fluctuations and environmental regulations
risks. For a full understanding of these risks and others, reference should be
made to the Company's "Annual Information Form".
INVESTOR RELATIONS
The Company currently does not engage any outside investor relations consultant.
Mr. Sean Hurd, a director, is the Company's Investor Relations Manager and
coordinates investor relations activities. However, during the period ended June
30, 2003 the Company, under a month to month agreement, retained Raven Capital,
a private company owned and managed by Jack Barnes to provide public relations
and consulting primarily targeted to the North American financial and investment
community. Raven Capital has been in the investor relations business since 1999
providing similar services to public companies. Raven Capital was paid $7,500
for January, $3,750 per month for February and March and $7,275 per month for
April and May 2003.