Matamec Explorations Inc.'s MD and A (September 30, 2013)
According to Matamec Explorations Inc.’s Management Discussion and Analysis for the nine month period ended September 30, 2013:
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CASH ASSETS AND SOURCES OF FINANCING
As of September 30, 2013, the Corporation had a working capital of $2,781,726 ($4,292,287 on December 31, 2012) including cash and cash equivalents of $1,714,460 ($1,592,280 at December 31, 2012). The working capital includes $1,793,810 in tax credits receivable on September 30, 2013 ($3,640,379 on December 31, 2012).
The accompanying financial statements have been prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, Management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. Management is aware in making its assessment of material uncertainties related to events and conditions that lend a significant doubt upon the Corporation ability to continue as a going concern and accordingly, the appropriateness of the use of accounting principles applicable to a going concern, as described in the following paragraph. These financial statements do not reflect the adjustment to the carrying values of assets and liabilities, expenses and financial position classifications that would be necessary were the going concern assumption would not be appropriate. These adjustments could be material.
Management estimates that these funds will not be sufficient to meet the Corporation’s obligations and budgeted expenditures through September 30, 2014. Any funding shortfall may be met in the future in a number of ways, including but not limited to, the issuance of new debt or equity instruments, expenditures reductions and/or the introduction of joint venture partners and/or business combinations. While Management has been successful in securing financing in the past, there can be no assurance it will be able to do so in the future or that these sources of funding or initiatives will be available for the Corporation or that they will be available on terms which are acceptable to the Corporation. If Management is unable to obtain new funding, the Corporation may be unable to continue its operations, and amounts realized for assets might be less than amounts reflected in these financial statements.
The Company’s operating activities used $45,239 in the nine-month period ended September 30, 2013 ($98,794 for the same period in 2012).
Investment activities of the Company are mainly used to fund exploration and evaluation details of which are disclosed in the table on page 6, the addition of mineral properties and the acquisition of property.
The Company is entitled to a refundable tax credit for resources up to 38.75% of qualifying expenditures, and a credit on mining duties refundable for losses of 16% of 50% of qualifying expenditures incurred using non tax renounced flow-through funds. During the period ended September 30, the Company has received $2,000,000 in advance on 2012 tax credits.
The Company does not have any investments in asset-backed commercial paper.
FUTURE CORPORATE STRATEGY FOR MINERAL DEVELOPMENT
With the feasibility study now completed for the Kipawa JV, the Company still intends to concentrate on developing its strategic and green energy metal properties namely the Zeus, Tansim, and Vulcain properties. The Company will not yet transfer its gold properties into a 100% owned subsidiary but will wait to further develop them and for stock market conditions to become more favourable for financing. The gold properties are Matheson JV/Matheson-Pelangio, Montclerg, Sakami, Wachigabau, and Valmont.
The main corporate goal in 2013 was achieved by the completion of the feasibility study for the Kipawa JV. The feasibility study cost $16 million to complete. With the feasibility study now completed, we plan to spend approximately $5-$6 million for additional environmental assessments, social acceptability, metallurgical optimization including a second series of pilot plant tests planned for the fall 2013 and Q1 2014 and detailed engineering.
Continuing exploration on the Zeus property will concentrate to evaluate by drilling the lateral extension of the deposit on the claims outside of the Matamec-TRECan joint venture and on the Makwa, Certitude, Surprise and Pakwa showings. These showings show the potential of becoming future deposits and are also located in the Kipawa Alkalic Complex. Dr. Mariano and Tony Mariano Jr. are world experts in rare earth exploration. They will be studying the mineralization of all these showings. Additional work will include ground traverses, mechanical trenching, channel sampling, line cutting, and geophysical and geochemical surveys in order to define future drill targets and determine the relationship between the parallel mineralization trends.
The Company holds several other properties located in Quebec and Ontario unrelated to the rare earth properties. The Company’s focus is on strategic and rare metals and to fulfill this goal, the exploration teams are working on other types of strategic metals. On the Tansim property, located to the north of Belleterre, Quebec, strategic metals such as lithium, niobium, and tantalum were found. Copper, nickel, cobalt and platinum group metals were found on the Vulcain property, located in the region of Maniwaki. Five properties are gold projects, some associated with base metal mineralization.
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