UNITED STATES
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 NOVEMBER, 2004.
Commission File Number: 0-30464
IMA EXPLORATION INC.
--------------------------------------------------------------------------------
(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
--------------------------------------------------------------------------------
(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): _______
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): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, 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.
-------------------------------------
Date: NOVEMBER 30, 2004 /s/ Joseph Grosso
------------------------------ -------------------------------------
Joseph Grosso,
President & CEO
--------------------------------------------------------------------------------
IMA EXPLORATION INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2004 and 2003
(UNAUDITED - PREPARED BY MANAGEMENT)
--------------------------------------------------------------------------------
MANAGEMENT'S COMMENTS ON UNAUDITED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements of IMA
Exploration Inc. for the nine months ended September 30, 2004 have been prepared
by management and are the responsibility of the Company's management. These
statements have not been reviewed by the Company's external auditors.
IMA EXPLORATION INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(UNAUDITED - PREPARED BY MANAGEMENT)
SEPTEMBER 30, DECEMBER 31,
2004 2003
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 6,718,622 4,422,334
Amounts receivable and prepaids 209,249 174,938
Marketable securities (Note 3) 195,000 -
Spin-off assets transferred (Note 2) - 568,199
------------ ------------
7,122,871 5,165,471
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Note 5) 110,777 36,186
MINERAL PROPERTIES AND DEFERRED COSTS (Note 6) 5,025,244 1,291,226
SPIN-OFF ASSETS TRANSFERRED (Note 2) - 5,596,701
------------ ------------
12,258,892 12,089,584
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 778,509 418,234
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 7) 36,402,832 27,707,597
REDUCTION OF SHARE CAPITAL DUE TO
TRANSFER OF SPIN-OFF ASSETS (Note 2) (7,173,864) -
CONTRIBUTED SURPLUS 3,319,336 1,541,116
DEFICIT (21,067,921) (17,577,363)
------------ ------------
11,480,383 11,671,350
------------ ------------
12,258,892 12,089,584
============ ============
APPROVED BY THE BOARD OF DIRECTORS
/s/ JOSEPH GROSSO , Director
--------------------------------
/s/ ART LANG , Director
--------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(UNAUDITED - PREPARED BY MANAGEMENT)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2004 2003 2004 2003
$ $ $ $
EXPENSES
Administrative and management services 91,855 31,666 184,113 89,357
Bank charges and interest 2,741 1,731 10,201 7,700
Corporate development and investor relations 42,683 48,491 180,539 132,537
Depreciation 4,536 2,732 10,284 8,194
General exploration 70,817 30,376 185,853 151,969
Office and sundry 21,503 8,569 49,246 21,389
Printing 1,159 14,444 21,532 21,674
Professional fees 84,713 58,870 392,171 82,639
Rent, parking and storage 29,533 6,676 64,086 20,025
Salaries and employee benefits 84,664 24,623 221,818 72,851
Stock based compensation - 346,080 1,871,360 346,080
Telephone and utilities 7,635 4,451 21,704 14,205
Transfer agent and regulatory fees 16,412 29,875 56,068 65,220
Travel and accommodation 63,700 8,124 139,469 24,262
Cost recoveries (58,525) - (91,746) -
------------ ------------ ------------ ------------
463,426 616,707 3,316,698 1,058,102
------------ ------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (463,426) (616,707) (3,316,698) (1,058,102)
------------ ------------ ------------ ------------
OTHER ITEMS
Provision on marketable securities - - (132,000) -
Foreign exchange (61,665) 2,760 41,039 437
Gain on disposition of mineral property
and deferred costs - - 313,801 -
Interest and other income 24,543 27,790 76,134 44,501
Reorganization costs 7,986 - (341,603) -
Income (loss) allocated to spin-off assets - 22,655 (131,231) (266,756)
------------ ------------ ------------ ------------
(29,136) 53,205 (173,860) (221,818)
------------ ------------ ------------ ------------
LOSS FOR THE PERIOD (492,562) (563,502) (3,490,558) (1,279,920)
DEFICIT - BEGINNING OF PERIOD (20,575,359) (14,875,363) (17,577,363) (14,158,945)
------------ ------------ ------------ ------------
DEFICIT - END OF PERIOD (21,067,921) (15,438,865) (21,067,921) (15,438,865)
============ ============ ============ ============
BASIC AND DILUTED LOSS
PER COMMON SHARE $(0.01) $(0.02) $(0.08) $(0.04)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 42,346,541 34,278,040 40,189,505 31,082,130
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2004 2003 2004 2003
$ $ $ $
OPERATING ACTIVITIES
Loss for the period (492,562) (563,502) (3,409,896) (1,279,920)
Items not involving cash
Depreciation 4,536 2,741 10,284 8,194
Stock based compensation - 346,080 1,871,360 346,080
Gain on disposition of mineral
properties and deferred costs - - (313,801) -
Provision on marketable securities - - 132,000 -
Non-cash portion of allocation to
spin-off assets (105,594) (232,043) (39,024) (226,404)
------------ ------------ ------------ ------------
(593,620) (446,724) (1,749,077) (1,152,050)
Decrease (increase) in amounts
receivable and prepaids 144,528 (40,868) (34,312) (50,514)
Increase (decrease) in accounts payable
and accrued liabilities 70,841 54,556 360,275 15,141
------------ ------------ ------------ ------------
(378,251) (433,036) (1,423,114) (1,187,423)
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Proceeds from disposition of spin-off mineral
properties and deferred costs - 108,665 - 108,665
Expenditures on mineral properties and
deferred costs (1,051,919) (196,990) (3,892,742) (565,172)
Expenditures on spin-off mineral properties - (278,714) (155,077) (925,265)
Purchase of equipment and leasehold
improvements 2,081 (3,078) (84,875) (13,519)
------------ ------------ ------------ ------------
(1,049,838) (370,117) (4,132,694) (1,395,291)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares 1,440,493 1,088,943 9,116,392 5,667,686
Share issue costs - (7,500) (411,237) (174,801)
Portion of warrants paid to Golden Arrow (103,059) - (103,059) -
Capital contribution to Golden Arrow (750,000) (750,000)
------------ ------------ ------------ ------------
587,434 1,081,443 7,852,096 5,492,885
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (840,655) 278,290 2,296,288 2,910,171
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 7,559,277 4,068,005 4,422,334 1,436,124
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS
- END OF PERIOD 6,718,622 4,346,295 6,718,622 4,346,295
============ ============ ============ ============
CASH AND CASH EQUIVALENTS
COMPRISED OF:
Cash 1,918,622 1,546,295 1,918,622 1,546,295
Term deposits 4,800,000 2,800,000 4,800,000 2,800,000
------------ ------------ ------------ ------------
6,718,622 4,346,295 6,718,622 4,346,295
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(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 twelve months.
2. CORPORATE RESTRUCTURING
On July 7, 2004, the Company completed a corporate restructuring plan
(the "Reorganization") which resulted in dividing the Company's assets
and liabilities into two separate companies. Following the
Reorganization the Company continued to hold the Navidad project, while
Golden Arrow Resources Corporation ("Golden Arrow"), a newly created
company, held all other mineral property interests. The Reorganization
of the Company was accomplished by way of a statutory plan of
arrangement.
On completion of the Reorganization, the Company transferred to Golden
Arrow:
i) all of the Company's investment in its mineral properties,
excluding the Navidad project;
ii) the assets and liabilities of IMPSA Resources (BVI) Inc.,
Inversiones Mineras Argentinas Holdings (BVI) Inc., both
wholly-owned subsidiaries of the Company, and IMPSA Resources
Corporation, an 80.69% owned subsidiary of the Company;
iii) marketable securities at their recorded values; and
iv) cash of $750,000, plus nominal cash held by the subsidiary
companies.
The aggregate value of the net assets transferred from the Company to
Golden Arrow is as follows:
$
Cash and cash equivalents 773,886
Amounts receivable and prepaids 1,091
Equipment 1,324
Marketable securities 548,840
Mineral properties and deferred cost 5,850,123
Accounts payable and accrued liabilities (1,400)
------------
7,173,864
============
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
3. 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.
4. MARKETABLE SECURITIES
SEPTEMBER 30, 2004 DECEMBER 31, 2003
---------------------------- ----------------------------
RECORDED FAIR RECORDED FAIR
VALUE VALUE VALUE VALUE
$ $ $ $
Tinka Resources Limited
- 300,000 common shares 96,000 96,000 - -
Consolidated Pacific Bay Minerals Ltd.
- 900,000 common shares 99,000 99,000 - -
------------ ------------ ------------ ------------
195,000 195,000 - -
============ ============ ============ ============
The Company has entered into option and sale agreements on certain of
its non-core mineral property holdings in which the Company received
common shares of publicly traded companies as partial consideration.
See also Note 6(b).
5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS
SEPTEMBER 30, DECEMBER 31,
2004 2003
$ $
Office equipment and computers 267,262 182,387
Leasehold improvements 62,812 62,812
------------ ------------
330,074 245,199
Less accumulated depreciation (219,297) (209,013)
------------ ------------
110,777 36,186
============ ============
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
6. MINERAL PROPERTIES AND DEFERRED COSTS
SEPTEMBER 30, 2004
--------------------------------------------
NAVIDAD OTHER TOTAL
$ $ $
Balance, beginning of period 1,002,211 289,015 1,291,226
------------ ------------ ------------
Expenditures during the period
Assays 338,119 - 338,119
Contractors - access 46,181 - 46,181
Contractors - surveying 113,532 - 113,532
Contractors - environmental 137,481 - 137,481
Drilling 1,676,867 - 1,676,867
Field supplies 85,147 - 85,147
Geological 459,787 - 459,787
Geochemistry 32,277 - 32,277
Geophysics 117,152 - 117,152
Travel 21,578 - 21,578
Office 23,228 - 23,228
Other 120,934 50,891 171,825
Vehicles 85,377 - 85,377
Foreign value added tax - 425,467 425,467
------------ ------------ ------------
3,257,660 476,358 3,734,018
------------ ------------ ------------
Balance, end of period 4,259,871 765,373 5,025,244
============ ============ ============
(a) The Company has either staked, fully paid or holds options to
acquire 100% working interests in mineral properties, located
in Chubut Province in Argentina.
(b) The Company has signed and will continue to sign joint venture
agreements for certain of its non-core properties with other
junior exploration companies. The Company normally receives
shares in these companies as compensation along with their
commitments for exploration expenditures. The issue of these
marketable securities is subject to TSX Venture Exchange
("TSXV") approval. The intent is to sell these securities to
maximize return to the Company.
(c) See also Note 2.
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
7. SHARE CAPITAL
Authorized: unlimited common shares without par value
100,000,000 preferred shares without par value
Issued: SEPTEMBER 30, 2004 DECEMBER 31, 2003
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
$ $
Balance, beginning of period 36,381,452 27,707,597 26,550,606 21,354,823
------------ ------------ ------------ ----------
Issued during the period for:
Private placements 1,500,000 4,650,000 2,900,000 2,610,000
Exercise of warrants 5,253,635 4,105,466 4,969,066 2,940,428
Exercise of options 331,650 237,710 1,855,850 826,800
Exercise of agent's option 89,820 123,216 105,930 95,337
Less: Share issue costs - (411,238) - (188,850)
Reallocation from contributed
surplus on exercise of options - 93,140 - 69,059
Portion of proceeds from exercise
of warrants paid to Golden Arrow - (103,059) - -
------------ ----------- ------------ ----------
7,175,105 8,695,235 9,830,846 6,352,774
------------ ------------ ------------ ----------
Balance, end of period 43,556,557 36,402,832 36,381,452 27,707,597
============ ============ ============ ==========
(a) During the nine months ended September 30, 2004 the Company
completed a brokered private placement of 1,500,000 units at
$3.10 per unit for proceeds of $4,307,500, net of $279,000
agent's commission and $132,238 of related issue costs. Each
unit consisted of one common share and one half
non-transferable share purchase warrant. Each whole warrant
entitles the holder to purchase a common share for $3.70 per
share on or before February 23, 2005. The Company also issued
an option to the agent to acquire 200,000 units at $3.25 per
unit on or before February 23, 2005. Each unit to be issued on
exercise of the agent's option, will consist of one common
share and one-half non-transferable share purchase warrant,
exercisable on the same terms and basis as the private
placement warrants.
(b) Stock Options
During the nine months ended September 30, 2004, the Company
granted 1,462,000 stock options.
The fair value of stock options granted is estimated on the
dates of grants using the Black-Scholes option pricing model
with the following assumptions used for the grants made during
the period:
Risk-free interest rate 2.38%
Estimated volatility 77%
Expected life 2.5 years
Expected dividend yield 0%
The weighted average fair value per share of stock options,
calculated using the Black-Scholes option pricing model,
granted during the period was $1.28 per share.
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
7. SHARE CAPITAL (continued)
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.
A summary of the Company's outstanding stock options at
September 30, 2004, and the changes for the nine months ended
September 30, 2004, is presented below:
OPTIONS WEIGHTED
OUTSTANDING AVERAGE
AND EXERCISE
EXERCISABLE PRICE
$
Balance, beginning of period 2,528,150 1.32
Granted 1,462,000 3.10
Exercised (331,650) 0.83
------------
Balance, end of period 3,658,500 2.09
============
Stock options outstanding and exercisable at September 30,
2004, are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
205,000 0.40 July 19, 2006
119,000 0.50 May 2, 2007
117,500 0.50 September 23, 2007
90,000 0.84 March 7, 2008
300,000 0.90 May 30, 2008
1,365,000 1.87 August 27, 2008
1,462,000 3.10 March 24, 2009
---------
3,658,500
=========
(c) Warrants
A summary of the number of common shares reserved pursuant to
the Company's outstanding warrants and agents warrants
outstanding at September 30, 2004, and the changes for the
nine months ended September 30, 2004, is as follows:
NUMBER
Balance, beginning of period 6,042,448
Issued 794,910
Exercised (5,253,635)
Expired (21,100)
Cancelled (38,955)
------------
Balance, end of period 1,523,668
============
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
7. SHARE CAPITAL (continued)
Common shares reserved pursuant to warrants outstanding at
September 30, 2004 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
773,668 0.90 March 16, 2005
750,000 3.70 February 23, 2005
---------
1,523,668
=========
The Company pays a portion of the proceeds received from the
exercise of warrants which were outstanding as of July 7,
2004, to Golden Arrow. Golden Arrow will issue one common
share of its share capital on the exercise of every ten shares
pursuant to the exercise of the Company's warrants.
(d) See also Note 12.
8. RELATED PARTY TRANSACTIONS
(a) During the nine months ended September 30, 2004, the Company
was charged $347,178 by current and former directors and
officers and by companies controlled by directors and officers
of the Company, for accounting, management, and consulting
services provided.
(b) The Company leases its office premises from a private
corporation controlled by the President of the Company. During
the nine months ended September 30, 2004, the Company paid
$55,538 for rent.
(c) The Company shares its office facilities with Amera Resources
Corporation ("Amera"), a public company with common
management. During the nine months ended September 30, 2004,
the Company received $79,367 from Amera for shared rent and
administration costs.
(d) The President of the Company provides his services on a
full-time basis under a contract with a private company
controlled by the President. The President is paid an annual
amount of $102,000. The contract also provides that, in the
event the services are terminated without cause or upon a
change in control of the Company, a termination payment would
include a bonus of $6,500 per month, retroactive to July 1,
1999, plus an additional three years of compensation at
$15,000 per month. If the termination had occurred on
September 30, 2004, the amount under the agreement would be
$1,026,000.
(e) Other related party transactions are disclosed elsewhere in
these interim consolidated financial statements.
9. SEGMENTED INFORMATION
The Company is involved in mineral exploration and development
activities, which are conducted principally in Argentina. The Company
is in the exploration stage and, accordingly, has no reportable segment
revenues or operating results for the nine months ended September 30,
2004.
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
9. SEGMENTED INFORMATION (continued)
The Company's total assets are segmented geographically as follows:
SEPTEMBER 30, 2004
--------------------------------------------
MINERAL
CORPORATE OPERATIONS
CANADA ARGENTINA TOTAL
$ $ $
Current assets 7,097,667 25,204 7,122,871
Equipment and leasehold improvements 103,744 7,033 110,777
Mineral properties and deferred costs - 5,025,244 5,025,244
------------ ------------ ------------
7,201,411 5,057,481 12,258,892
============ ============ ============
10. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities were conducted by the
Company as follows:
SEPTEMBER 30, SEPTEMBER 30,
2004 2003
$ $
Investing activities
Proceeds on disposition of
mineral properties 327,000 -
Acquisition of marketable securities (327,000) -
------------ ------------
- -
============ ============
Financing activities
Shares issued on exercise of options 93,140 -
Contributed surplus (93,140) -
------------ ------------
- -
============ ============
Other supplemental cash flow information:
SEPTEMBER 30, SEPTEMBER 30,
2004 2003
$ $
Interest paid in cash - -
============ ============
Income taxes paid in cash - -
============ ============
11. LEGAL
In March 2004, Minera Aquiline Argentina S.A., a wholly-owned
subsidiary of Aquiline Resources Inc., commenced a legal proceeding
against the Company, asserting that the Company unlawfully used
confidential information, and is seeking damages and a constructive
trust over the Navidad Project and other surrounding properties in
Chubut Province, Argentina. The Company is defending this action and
the outcome is not determinable.
IMA EXPLORATION INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED - PREPARED BY MANAGEMENT)
12. SUBSEQUENT EVENT
Subsequent to September 30, 2004, the Company issued 110,000 common
shares for $257,500 on the exercise of stock options and warrants.
IMA EXPLORATION INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
INTRODUCTION
The following management discussion and analysis and financial review should be
read in conjunction with the Company's unaudited interim consolidated financial
statements for the nine months ended September 30, 2004 and the audited
consolidated financial statements dated December 31, 2003 and related notes. The
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). Except as otherwise
disclosed all dollar figures in this report are stated in Canadian dollars.
Additional information relevant to the Company can be found on the SEDAR website
at www.sedar.com.
FORWARD LOOKING STATEMENTS
Certain information included in this discussion may constitute forward-looking
statements. Forward-looking statements are based on current expectations and
entail various risks and uncertainties. These risks and uncertainties could
cause or contribute to actual results that are materially different than those
expressed or implied. The Company disclaims any obligation or intention to
update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
CORPORATE REORGANIZATION
On May 3, 2004 the Company announced a proposed corporate reorganization (the
"Reorganization"). Shareholders approved the Reorganization on June 24, 2004 and
thereafter all necessary court and regulatory approvals were received. The
Reorganization was effective as of July 7, 2004.
The effect of the Reorganization was to transfer the Company's non-Navidad
mineral properties to a newly incorporated company along with $750,000 of
operating cash, marketable securities and the joint venture agreements relating
to the transferred properties (the "Transferred Assets"). The Company retained
the Navidad mineral property and certain other mineral properties located in
central Chubut Province and all other assets and liabilities, except for the
Transferred Assets. The shareholders of the Company received shares in the new
company, Golden Arrow Resources Corporation ("Golden Arrow"), which resulted in
identical ownership by the shareholders before and after the Reorganization.
The restatement of the Company's prior period financial statements is described
in Note 2 to the September 30, 2004 financial statements. Canadian GAAP requires
that the Transferred Assets and certain of the Company's General and
Administrative expenses and Other Items be restated. The Transferred Assets are
described as "Spin-Off Assets Transferred to Golden Arrow' and the allocated
expenses are described as "Loss Allocated to Spin-Off Assets" in the
consolidated financial statements. This restatement did not change previously
reported losses.
OVERVIEW
The Company is a natural resource company engaged in the business of acquisition
and exploration of mineral properties in Argentina. The Company's strategy has
been to acquire properties for the purpose of mineral exploration and
exploitation. In the event the Company discovers mineralization capable of
economic production, it intends to develop or seek a joint venture partner
and/or to sell all or a portion of its interest in the subject property to
finance the development of such property. At present, the Company has no
producing properties and consequently has no current operating income or cash
flow. As of this date the Company is an exploration stage company and has not
generated any revenues. There is no assurance that a commercially viable mineral
deposit exists on any of the properties. Further exploration will be required
before a final evaluation as to the economic and legal feasibility of any of the
properties is determined.
On March 5, 2004 Minera Aquiline Argentina SA, a subsidiary of Aquiline
Resources Inc. ("Aquiline"), commenced an action against the Company seeking
damages and a constructive trust over the Navidad properties. The Company
believes the Aquiline legal action is without merit and is vigorously defending
-1-
itself. A Statement of Defense has been filed. At this date the outcome is not
determinable. The trial has been set for October 11, 2005 in Vancouver, British
Columbia.
At the Company's June 24, 2004 Annual General and Special Meeting Messrs.
Carlson, Grosso, Angus, Idziszek, Hurd, Cacos, Lang, Terry and Horton were
elected to the Board of Directors. The officers appointed by the Board are
Gerald Carlson as Chairman, Joseph Grosso as President, Art Lang as
Vice-President and Chief Financial Officer, David Terry as Vice-President,
Exploration and Nikolas Cacos as Corporate Secretary. On October 6, 2004 Nikolas
Cacos and Sean Hurd resigned as directors. Mr. Cacos continues as the Corporate
Secretary of the Company.
PROPERTIES UPDATE
NAVIDAD
On February 3, 2003 the Company announced the discovery of high-grade
silver-lead mineralization at its 100% owned 10,000 hectare (24,700 acres)
Navidad property in north central Chubut, Argentina. A Phase I drilling program
was completed in late March 2004 and a Phase II, $2,100,000 drill program
commenced in late May 2004 and was completed in September 2004. Subsequent to
completion of the Phase II program, a program of surface exploration including
prospecting, geological mapping, ground geophysics and soil sampling was
commenced. A Phase III drilling program commenced November 26, 2004. The Company
has an ongoing program of environmental baseline data collection in the project
area.
The Company announced results of a resource calculation on May 25, 2004. Snowden
Mining Consultants Inc. completed a resource estimation at Galena Hill, the
first systematically drilled target on the Navidad property which includes
Indicated Resource of 207 million ounces of silver and 1.1 million tones of lead
at a 50 g/t silver equivalent cut-off grade including: 117 million ounces of
silver and 495,047 tonnes of lead at a 300 g/t silver equivalent cut-off grade
and Inferred Resource of 36 million ounces of silver and 56,776 tonnes of lead
at a 50 g/t silver equivalent cut-off grade. This includes only the Galena Hill
deposit and portions of the adjacent Connector zone and does not include known
and interpreted mineralization in other areas of the property which were the
primary focus of the Phase II drilling program.
Phase II drilling comprised 9,596 metres of diamond core drilling in 67 holes
and 5,210 core sample analyses, including quality control samples, bringing the
life of the project totals to 18,456 metres in 120 holes and 10,548 core sample
analyses in less than one year since the first hole was drilled. Drilling in the
Phase II program focused on the Esperanza Trend, the Barite Hill target, and on
the Navidad Hill and Connector Zone targets. During Phase II, two drill holes
were completed within the Galena Hill indicated resource to obtain samples for
metallurgy. Results from the Phase II program have been described in News
Releases dated July 8, July 27, September 8, September 15, September 28 and
October 13, 2004, highlights of which are discussed below.
NAVIDAD HILL:
During the Phase II drill program 33 additional holes were drilled on the
Navidad Hill Zone. In addition to the structurally controlled mineralization
previously identified at Navidad Hill, near-surface stratigraphically controlled
silver mineralization has now been identified along the southwest and southeast
flanks of Navidad Hill. This style of mineralization demonstrates potential for
moderate to high grade, bulk-tonnage silver targets around the south, east and
west sides of Navidad Hill and into the Connector Zone.
Intercepts of structurally controlled, near vertical mineralized bodies included
hole NV04-110 which intersected 61.50 metres of 128 grams per tonne silver
including 5.34 metres of 1,006 grams per tonne silver on the top of Navidad
Hill. Highlights of stratigraphically-controlled mineralization include the
exceptional intercept from NV04-90 that returned 35.8 metres of 2,850 grams per
tonne (83.2 ounces per ton) silver including 7.3 metres of 11,995 grams per
tonne (350.3 ounces per ton) silver beginning at 16.5 metres depth. Drill hole
90 was drilled at an inclination of -45(degree) towards the northeast on the
western flank of Navidad Hill, approximately 275 metres northwest of drill holes
1 and 2 and in an area of little or no outcrop. Bonanza-grade mineralization in
drill hole 90 contains semi-massive silver-copper-lead sulphides and/or
sulphosalts. In several locations native silver occurs as fine veinlets and
grains up to 5millimetres in size. Mineralization occurs on the western flank of
the Navidad volcanic dome and, as is common in other zones at the project, is
strongest at the contact between overlying mudstone and trachyandesitic volcanic
rocks. The mineralization is believed to be stratigraphically controlled and to
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be gently dipping to the southwest. Based on this assumption, the true thickness
of this zone is interpreted to be 85-90% of the intersection. Tightly spaced,
follow-up drilling will be required to fully define this very high-grade zone.
Further intercepts in the area include 28.15 metres of 1,115 grams per tonne
silver (32.6 ounces per ton) including 5.97 metres of 4,579 grams per tonne
(133.7 ounces per ton) in hole 117 and 58.68 metres of 208 grams per tonne
silver (6.1 ounces per ton) in hole 112.
CONNECTOR ZONE:
A total of twelve new holes were drilled in the Connector Zone area during the
Phase II drill program. Similarly to the adjacent Navidad Hill Zone, the Phase
II drilling demonstrates that both structurally and stratigraphically controlled
high-grade silver mineralization occurs in this area. In the northwestern part
of the Connector Zone (holes 40, 68, 105, 106, and 107), the control on
mineralization appears to be stratigraphic with the mineralization occurring in
the same stratigraphic position as at the Galena Hill deposit and on the flank
of Navidad Hill (hole 90). Highlights from this mineralization style include
46.7 metres of 334 grams per tonne silver from hole 107 and 13.3 metres of 545
grams per tonne silver from hole 105. In the southeastern Connector Zone (holes
32, 86, 87 and 108), the controls on mineralization and the stratigraphic
correlations are less clear. Hole 108 was drilled towards the east to cross a
northerly trending structural zone partially exposed on surface (most holes in
this area have been drilled towards the northeast to cross the dominant
structural trend) and intersected an impressive 485 grams per tonne silver over
39.0 metres. Mineralization in hole 108 is of a somewhat different style than
that seen on surface and in adjacent holes; it comprises breccia with sulfide
infilling that was not seen in adjacent holes 32 and 87. Additional drilling
will be required to test the extent of these new high-grade intersections at the
Connector Zone which remains open towards the northeast.
An independent resource estimate for the Navidad Hill and Connrctor Zone target
areas is currently being prepared by Snowden Mining Industry Consultants Inc.
based on the Phase I and II drilling.
CALCITE HILL:
A single hole, NV04-88, was drilled to test favourable stratigraphy on the edge
of Calcite Hill in an area where there are few indications of mineralization or
geochemical anomalies at surface. The hole intersected 72.3 metres averaging 202
grams per tonne silver and 3.45% lead from 70.3 to 142.6 metres depth and
included a higher-grade interval containing 12.4 metres averaging 672 grams per
tonne silver. Hole 88 is located approximately 400 metres west of the nearest
holes on Navidad Hill. The major Calcite Hill silver-lead soil anomaly is
located a further 340 metres to the northwest of hole 88. The mineralization in
NV04-88 is generally similar in character to the stratigraphically controlled
mineralization at Galena Hill and comprises galena and barite with minor amounts
of native silver (native silver had not been observed in any of the drill core
from the Navidad Project prior to hole 88). This opens up significant potential
for extending the blind mineralization discovered in NV04-88 both to the
southeast towards Navidad Hill and northwest towards the soil anomaly.
ESPERANZA TREND:
In total 9 new drillholes were completed in two areas along the 6 kilometre
Esperanza Trend. Highlights include 2.7 metres of 831 grams per tonne silver in
hole 62 and 2.6 metres of 513 grams per tonne silver in hole 79. Interestingly,
hole 79 shows signs of the mineralization being stratigraphically rather than
structurally controlled as had been interpreted to date in this area. Hole 63
intersected 45.8 metres of 94 grams per tonne silver, including 4.0 metres of
246 grams per tonne silver, 800 metres to the northwest. In the same area, hole
82 intersected 54.6 metres of 64 grams per tonne silver, including 26.1 metres
of 106 grams per tonne silver and also 6.0 metres of 140 grams per tonne silver.
These results confirm the high grades and potential for a significant
structurally and/or stratigraphically controlled zone at Esperanza.
Significantly more drilling will be required to evaluate the 6 kilometre
Esperanza Trend.
BARITE HILL:
A total of 8 holes were completed at Barite Hill. Although many of these holes
contain significant near surface intersections of galena matrix breccia similar
in style to that at Galena hill, they have generally lower silver and lead
values. The most significant intercept was from hole NV04-76 that cut 22.1
metres of galena matrix breccia averaging 34 grams per tonne silver and 0.63%
lead in the upper part of the hole and then intersected a different style of
mineralization deeper in the hole that contained 21.7 metres of 88 grams per
tonne silver including 8.4 metres of 191 grams per tonne silver. This deeper
mineralization is associated with calcite veining within a fine-grained muddy
sedimentary rock and is characterized by high silver to base metal ratios.
-3-
LOMA DE LA PLATA:
The surface exploration program launched September 2004 resulted in the
discovery of the Loma de la Plata Zone, approximately 4 kilometres west of the
Galena Hill deposit, through regional soil sampling. The Loma de la Plata zone
is defined by high silver values in rock samples and a silver in soil anomaly
that is similar in magnitude to those that cover both the Galena Hill Deposit
and Navidad Hill Zone. The zone comprises a 350 x 400 metre zone of greater than
10 grams per tonne silver within a 500 x 1,100 metre zone of predominantly
greater than 2 parts per million silver in soil samples. Values from 5.8 to
6,510 grams per tonne silver have been obtained from 12 rock chip and float
samples with 5 of the 12 samples returning greater than 1,000 grams per tonne
silver.
Preliminary geological assessment indicates that silver mineralization is hosted
by a similar sequence of volcanic and sedimentary rocks, and in a similar
stratigraphic position, to those that host the Galena Hill deposit.
Mineralization consists of breccias and zones of calcite-barite veinlets with
minor amounts of lead and copper sulphides and occasional native silver within
andesitic volcanic rocks. Crews are currently on site mapping and sampling this
new zone in greater detail.
The Company has 18 exploration properties in Chubut Province in addition to
Navidad, several of which are the subject of joint venture agreements. The
parties to the joint venture agreements in this region have agreed not to seek
TSXV approval for the agreements until certain legal and political uncertainties
can be resolved. Accordingly the Company does not expect to complete the terms
of the agreements in 2004.
The following discussion and comparison of the Company's general and
administrative expenses and operations does not attempt to compare the restated
prior period expenses and operations which have been restated as a result of the
Reorganization. In the opinion of management the Company's costs and expenses
will not be materially reduced as a result of the Reorganization.
SUMMARY OF FINANCIAL RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
The Company reported a consolidated loss of $3,490,558 ($0.08 per share) in the
current period, an increase of $2,210,638 from the loss of $1,279,920 ($0.04 per
share) in 2003. The increase in the loss in 2004, compared to 2003, was due to a
number of factors of which $2,258,596 can be attributed to operating expenses
while the net of other items decreased by $47,958.
RESULTS OF OPERATIONS
CORPORATE COSTS AND OTHER INCOME
GENERAL AND ADMINISTRATIVE EXPENSES
The Company's operating expenses for the nine months ended September 30, 2004
were $3,316,698 (excluding $339,516 of operating expenses to June 30, 2004 which
have been reclassified as Loss Allocated to Spin-Off Assets). This is an
increase of $2,210,638 from the comparable 2003 period. A significant portion of
the increase for 2004 is attributed to the Company's application of the fair
value method of accounting for stock options granted to its employees and
directors. In the nine months ended September 30, 2004 the Company recorded a
non-cash expense of $1,871,360. During 2003 the Company a non-cash expense of
$346,080 and disclosed a pro-forma charge for stock options granted to its
employees and directors of $910,578. Had the Company applied retroactive
treatment it would have recorded this amount as an expense in the 2003 period.
Other increases in the operating expenses can be attributed to the Company's
increase in staff and activities driven by Navidad. The Company has added staff
and new office space and has incurred additional operating expenses as a result
of this increase in activity. Administrative and management services increased
$94,756, corporate development and investor relations increased $48,002, office
expense increased $27,857. Travel increased $115,207 due to the attendance and
participation in various conferences. The increase in salaries of $148,967
includes a retiring allowance for the Company's former CFO, William Lee, and the
addition of personnel. The increase of $309,532 in professional fees is
primarily due to legal costs incurred in connection with the Aquiline legal
action and substantially increased costs of compliance with reporting
requirements. General exploration increased $33,884 as activities have been
-4-
focused on areas around the Navidad property. Cost recoveries from Amera
increased $75,062. Cost recoveries from Golden Arrow, which commenced in July
2004, were $27,500. A portion of the operating expenses for the first six months
of 2004 ($339,516) and the nine months in 2003 ($502,054) have been reclassified
as Loss Allocated to Spin-Off Assets as discussed in Note 2. This has had the
effect of reducing the General and Administrative expenses reported in the
September 30, 2004 consolidated financial statements.
OTHER ITEMS
During 2004 the Company recorded a gain of $313,801 from the farm out of
interests in its mineral properties and a provision for the write down of the
carrying value of marketable securities of $132,000 to reflect a reduction in
the current market value. In 2004 the Company received marketable securities
from Tinka Resources Limited (300,000 shares, deemed value $147,000) and
Consolidated Pacific Bay Minerals Ltd. (900,000 shares, deemed value $180,000)
from sale or farm out of its interests in mineral properties. The amounts
reported in the September 30, 2004 consolidated financial statements represent
farm outs which remained with the Company. In 2003 no gains, losses or
provisions for losses were recorded. Marketable securities are received by the
Company as a result of the joint venturing of certain of its non-core
properties. The Company's intent is to sell these securities to maximize return
to the Company, not to trade its holdings. Interest and other income increased
$31,633 primarily as a result of an increase of funds on deposit. The Company
also recorded an increase in a gain from foreign exchange of $41,039 in this
period. Cost of $341,603 for fees and expenses related to the Reorganization
have been recorded in this period. The Loss Allocated to Spin-Off Assets
represents the allocated expenses of the assets transferred to Golden Arrow as
discussed in Note 2.
SELECTED ANNUAL FINANCIAL INFORMATION
The following selected consolidated financial information is derived from the
audited consolidated financial statements and notes thereto. The information has
been prepared in accordance with Canadian GAAP.
--------------------------------------------
YEARS ENDED DECEMBER 31,
(AUDITED)
--------------------------------------------
2003 2002 2001
$ $ $
INCOME STATEMENT DATA:
Total Revenues Nil Nil Nil
General and Administrative Expenses 2,503,041 509,980 283,159
Loss from Continuing Operations (2,449,243) (485,331) (182,731)
Loss from Spin-Off Assets (969,175) (954,775) (699,144)
Net Loss (3,418,418) (1,440,106) (881,875)
Net Loss per Common Share Basic and Diluted (0.11) (0.06) (0.06)
-5-
SELECTED QUARTERLY FINANCIAL INFORMATION
The following selected consolidated financial information is derived from the
unaudited consolidated interim financial statements of the Company. The
information has been prepared in accordance with Canadian GAAP.
------------------------------------ --------------------------------------------------- ---------
2004 2003 2002
------------------------------------ --------------------------------------------------- ---------
SEP. 30 JUN. 30 MAR. 31 DEC. 31 SEP. 30 JUN. 30 MAR. 31 DEC. 31
$ $ $ $ $ $ $ $
OPERATIONS:
Revenues Nil Nil Nil Nil Nil Nil Nil Nil
Loss from continuing
operations (492,562) (466,021) (2,400,744) (1,436,078) (586,158) (243,728) (183,279) (171,465)
Income (loss) allocated
to Spin-off assets (nil) (355,252) 224,021 (702,420) (22,656) (163,658) (125,753) (315,483)
Net loss (492,562) (821,273) (2,176,273) (2,138,439) (563,502) (407,386) (309,032) (486,948)
Loss per share (0.01) (0.02) (0.06) (0.07) (0.02) (0.01) (0.01) (0.02)
Fully diluted loss per
share (0.01) (0.02) (0.06) (0.07) (0.02) (0.01) (0.01) (0.02)
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at September 30, 2004 was $6,718,622, compared to
$4,454,241 at December 31, 2003. The increase in cash is primarily due to the
completion of a financing and exercise of warrants from previous financings. In
February 2004 the Company completed a brokered private placement of 1,500,000
units at $3.10 per unit, for proceeds of $4,238,763 net of costs of $411,237. In
addition, through September 30, 2004, the Company has received $4,466,392 from
the exercise of warrants and stock options. Subsequent to September 30, 2004 the
Company has received a further $257,500 from the exercise of stock options and
warrants.
The Company considers that it has adequate resources to maintain its ongoing
operations but currently does not have sufficient working capital to fund all of
its planned exploration work and property commitments. A Phase III budget for
the Navidad project has been approved in the amount of $2,200,000. 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 the required financing or negotiating joint venture agreements. The
failure to obtain such financing or joint venture agreements could result in the
loss of or substantial dilution of its interest in its properties.
The Company's management may elect to acquire new projects, at which time
additional equity financing may be required to fund overhead and maintain its
interests in current projects, or may decide to relinquish certain of its
properties. These decisions will be based on the results of ongoing exploration
programs and the response of equity markets to the projects and business plan.
The Company does not know of any trends, demand, commitments, events or
uncertainties that will result in, or that are reasonably likely to result in,
its liquidity either materially increasing or decreasing at present or in the
foreseeable future. Material increases or decreases in liquidity are
substantially determined by the success or failure of the exploration programs
or the acquisition of projects.
The Company does not now and does not expect to engage in currency hedging to
offset any risk of currency fluctuations.
RELATED PARTY TRANSACTIONS
The directors provided services to the Company and were paid $347,178 for the
nine months ended September 30, 2004. Mr. W. Lee, the former CFO, was paid
salary and retiring allowance of $68,769; Mr. A. Lang, director and the current
CFO, was paid salary of $38,670; Mr. D. Terry, director and Vice President,
Exploration, was paid fees of $28,000; Mr. N. Cacos, the Corporate Secretary and
a former director, was paid fees of $13,475; Mr. Sean Hurd, investor relations
manager and a former director, was paid fees of $21,600; Mr. Gerald Carlson,
director and Chairman of the Board was paid fees of $39,800, $60,364 was paid to
-6-
a company with which Mr. Angus, a director of the Company, is associated and Mr.
J. Grosso, the President and CEO, was paid fees of $76,500. The Company leases a
portion of its office premises from a private company controlled by the
President and paid rent of $55,538 during the nine months ended September 30,
2004. Note 8 to the September 30, 2004 interim consolidated financial statements
and Note 7 to the December 31, 2003 consolidated financial statements discusses
the material related party transactions.
OPERATING CASH FLOW
Cash outflow from operating activities in the nine months to September 30, 2004
was $1,423,114 compared to cash outflow in the comparable of 2003 of $1,187,423.
FINANCING ACTIVITIES
In the nine months to September 30, 2004 the Company received $9,116,392, from
the sale of common shares, less costs of $411,237 compared to $5,667,686, less
costs of $174,801 in the 2003 period.
INVESTING ACTIVITIES
Investing activities required cash of $4,132,694 in the nine months to September
30, 2004 (2003 - $1,395,291), these investing activities were for expenditures
on mineral properties of $3,892,742 (2003 - $561,172) on the Navidad property
and $155,077 for expenditures on the spin-off mineral properties (2003 -
$925,265); $84,875 for additions to equipment and leasehold improvements (2003 -
$13,519); in the 2003 period proceeds from the disposal of spin-off mineral
properties were $108,665.
CONTRACTUAL COMMITMENTS
The Company has lease commitments for office premises that require payments of
$77,000 and $26,500 annually. Commitments for payments on mineral properties
have been assumed by Golden Arrow.
CRITICAL ACCOUNTING POLICIES
Reference should be made to the Company's significant accounting policies
contained in Notes 2 and 3 of the Company's consolidated financial statements
for the year ended December 31, 2003 and the interim consolidated financial
statements for the nine months ended September 30, 2004. 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. No write offs were required in the current quarter.
-7-
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 more complete discussion of these risks and others, reference
should be made to the Company's Management Proxy Circular of May 14, 2004.
INVESTOR RELATIONS
The Company currently does not engage the services of outside investor relations
consultants. Mr. Sean Hurd, a director, is the Company's Investor Relations
Manager and coordinates investor relations activities. The Company updates its
website (www.imaexploration.com) on a continuous basis.
OUTSTANDING SHARE DATA
The Company's authorized share capital is an unlimited number of common shares
and 100,000,000 preferred shares all without par value. As at September 30,
2004, there were 43,556,557 outstanding common shares. As at September 30, 2004,
there were 3,658,500 stock options which were outstanding and exercisable, with
exercise prices ranging between $0.40 and $3.10 per share. In addition, on
September 30, 2004, there were 1,523,668 warrants outstanding which expire at
various times until March 16, 2005, with exercise prices ranging between $0.90
and $3.70 per share. More information on these instruments and the terms of
their conversion are set out in Note 7 to the Company's September 30, 2004
interim consolidated financial statements.
-8-
FORM 52-109FT2
CERTIFICATION OF INTERIM FILINGS DURING TRANSITION PERIOD
I, JOSEPH GROSSO, CHIEF EXECUTIVE OFFICER of IMA EXPLORATION INC., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 "Certification of Disclosure in Issuers'
Annual and Interim Filings") of IMA Exploration Inc. the interim period
ending September 30, 2004;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings; and
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings.
Date: November 29, 2004
/s/ Joseph Grosso
-----------------------
Joseph Grosso
Chief Executive Officer
FORM 52-109FT2
CERTIFICATION OF INTERIM FILINGS DURING TRANSITION PERIOD
I, ART LANG, CHIEF FINANCIAL OFFICER of IMA EXPLORATION INC., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 "Certification of Disclosure in Issuers'
Annual and Interim Filings") of IMA Exploration Inc. for the interim
period ending September 30, 2004;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings; and
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings.
Date: November 30, 2004
/s/ Art Lang
-----------------------
Art Lang
Chief Financial Officer