Coniagas Resources Limited Files Restated 2007 Financial Statements and Amended Management Discussion and Analysis



    TORONTO, Oct. 17 /CNW/ - Coniagas Resources Limited (the "Company")
announced today that the Ontario Securities Commission ("OSC") has completed
its continuous disclosure review of the Company and of its financial
statements for the periods up to and including June 30, 2008. The Company has
indicated restated 2007 financial statement comparative figures included in
the interim consolidated June 30, 2008 financial statements. The Management
Discussion & Analysis ("MD&A") reported at that date also contains the
restated figures related to the December 31, 2007 financial statements. Copies
of these documents have been posted to www.sedar.com.
    The financial statements were restated to address the prior period errors
(See "Changes in Accounting Policies" and "Amendments to Financial Statements
and MD&A - Prior Period Errors" below). The Company had not adopted the
standards set out below when they became effective as it was determined at the
time to be unpractical. These standards have now been implemented as of
June 30, 2008 and have been applied retrospectively such that the December 31,
2007 balances included in the interim consolidated financial statements at
June 30, 2008 included these restated amounts. As per Handbook Section 1506,
Accounting Changes, "when an entity changes an accounting policy upon initial
application of a primary source of GAAP that does not include specific
transitional provisions applying to that change, or changes an accounting
policy voluntarily, it shall apply the change retrospectively." As such,
Coniagas has applied the changes in accounting policies retrospectively, as
prescribed by Canadian GAAP, with an adjustment to "the opening balance of
each affected component of equity for the earliest prior period presented, and
the other comparative amounts disclosed for each prior period presented as if
the new accounting policy had always been applied."
    The MD&A was revised to reflect the changes to the financial statements,
and to expand and rectify the overall presentation and disclosure contained
therein.

    Changes in Accounting Policies

    
    (a) Capital Disclosures and Financial Instruments - Disclosures and
        Presentation
    

    On December 1, 2006, the Canadian Institute of Chartered Accountants
(CICA) issued three new accounting standards for adoption relating to fiscal
years beginning on or after October 1, 2007: Capital Disclosures (HB s.1535),
Financial Instruments - Disclosures (HB s.3862), and Financial Instruments -
Presentation (HB s.3863). These new standards became effective for the Company
on January 1, 2008.

    Capital Disclosures

    Handbook Section 1535 specifies the disclosure of (i) an entity's
objectives, policies and processes for managing capital; (ii) quantitative
data about what the entity regards as capital; (iii) whether the entity has
complied with any capital requirements; and (iv) if it has not complied, the
consequences of such non-compliance. The Company has included disclosures
recommended by the new Handbook Section in Note 12 to the June 30, 2008
interim consolidated financial statements.

    Financial Instruments - Disclosure and Presentation

    Handbook sections 3862 and 3863 replace HB s.3861, Financial Instruments
- Disclosure and Presentation, revising and enhancing its disclosure
requirements, and carrying forward unchanged its presentation requirements.
These new sections place increased emphasis on disclosures about the nature
and extent of risks arising from financial instruments and how the entity
manages those risks. The Company has included disclosures recommended by the
new Handbook section in Note 11 to the June 30, 2008 interim consolidated
financial statements.

    
    (b) Comprehensive Income and Financial Instruments - Recognition and
        Measurement
    

    The following accounting standards, issued by the CICA, became effective
for interim and annual financial statements relating to fiscal years beginning
on or after October 1, 2006, and relate to the accounting for and disclosure
of financial instruments and comprehensive income:

    Comprehensive Income

    Section 1530 introduces the concept of comprehensive income to Canadian
GAAP. Comprehensive income is the change in equity (net assets) of the Company
during a reporting period from transactions and other events and circumstances
from non-owner sources. It includes all changes to equity during a period
except those resulting from investments by owners and distributions to owners.
Comprehensive income is comprised of net income for the period and other
comprehensive income.

    Financial Instruments - Recognition and Measurement

    Section 3855 - "Financial Instruments - Recognition and Measurement"
prescribes when a financial asset, financial liability, or non-financial
derivative should be recognized on the balance sheet as well as its
measurement amount. This section also specifies how financial instruments
gains and losses are to be presented.
    Under Section 3855, financial instruments must be classified into one of
these five categories: held-for-trading, held-to-maturity, loans and
receivables, available-for-sale financial assets or other financial
liabilities. All financial instruments, including derivatives, are measured in
the balance sheet at fair value except for loans and receivables,
held-to-maturity investments and other financial liabilities, which are
measured at cost. Subsequent measurement and changes in fair value will depend
on their initial classification, as follows: held-for-trading financial assets
are measured at fair value and changes in fair value are recognized in net
income; available-for-sale financial instruments are measured at fair value
with changes in fair value recorded in other comprehensive income until the
investment is derecognized or impaired at which time the amounts would be
recorded in net income.
    Upon adoption of these new standards, the Company designated cash and
cash equivalents as held-for-trading and has recorded them at market value.
Receivables are classified as loans and receivables and are recorded at
amortized cost. Accounts payable and accrued liabilities are classified as
other financial liabilities which are also recorded at amortized cost.
Investments include securities held in other public companies and are
designated as available-for-sale. They are recorded at their fair value with
the unrealized gain or loss related to changes in market value being accounted
for in other comprehensive income (OCI). The Company had no held-to-maturity
instruments during the year ended December 31, 2007 or during the six months
ended June 30, 2008.

    
    (c) Stock-based Compensation and Other Stock-based Payments
    

    The Company has a stock option plan and had issued warrants prior to
January 1, 2008. As such, the CICA Handbook Section 3870, "Stock-based
Compensation and Other Stock-based Payments," which became effective on
January 1, 2002 was adopted retrospectively, with restatement to prior-period
comparative financial statements. This standard prescribes that stock options
be accounted for using the fair value method. Under this method, compensation
expense for stock options and warrants, that are direct awards of stock
granted since January 1, 2002, is measured at the fair value as of the grant
date using the Black-Scholes valuation model and, for options, is recognized
over the vesting period of the options granted. The offset to the recorded
cost is to contributed surplus.
    Coniagas first issued stock options in January 2004, and warrants were
issued in fiscal 2007. The standard for valuing stock-based compensation was
not implemented in 2004 as it was determined that, due to a low stock price
and low trading volume combined with past trading history, a value
determination at that time was impractical.

    Amendments to Financial Statements and MD&A - Prior Period Errors

    The Company has restated the December 31, 2007 financial statement
comparative figures in its financial statements and its MD&A in the interim
consolidated financial statements for the period ended June 30, 2008. A
section was added to the June 30, 2008 interim financial statements entitled
"Adjustment for Retrospective Change in Accounting Policy", which sets out the
errors that were made and their quantitative effect on the financial
statements for the six months then ended.
    The MD&A as filed for the six months ended June 30, 2008 reflects revised
figures related to the year ended December 31, 2007 as outlined in this press
release due to changes in accounting policies applied retrospectively.

    These restatements and amendments address the following:

    
    (a) Issuance of Stock Options and Warrants
    

    The Company corrected errors in warrant and stock option valuation and
recognition. In 2004, the Company, under the terms of its existing incentive
stock option plan, granted 275,000 options to purchase stock at $0.50 per
share for a five-year period to January 15, 2009. Another 800,000 stock
options were granted on November 2007 at an exercise price of $0.65 per share
and expire in three years. No options were granted during the six months ended
2008 and, as such, no stock based compensation would have been recorded in the
reported results for the three months ended March 31, 2008 or for the six
months ended June 30, 2008. All of the stock options were granted pursuant to
Coniagas' stock option plan. At June 30, 2008, a total of 1,075,000 options
were outstanding.
    During the first quarter of 2007 the Company completed a private
placement of $150,000 through the sale of 1,000,000 units ("the units") at
$0.15 per unit to two arms length parties. Each unit is comprised of one
common share and one common share purchase warrant. Each share purchase
warrant entitles the holder to purchase one common share of the Company on an
exercise price of $0.175 per share for two years from March 9, 2007.
    During the second quarter of 2007 the Company completed a private
placement of $1,200,000 through the sale of 3,000,000 units ("the units") at
$0.40 per unit. Each unit is comprised of one common share and one half common
share purchase warrant. Each share purchase warrant entitles the holder to
purchase one half of one additional common share of the Company on an exercise
price of $0.50 in the first year following the closing (May 8, 2007) and for
$0.60 in the second year following the closing after which they expire. The
proceeds will be used for technical evaluations of possible acquisitions of
mineral projects and for general corporate purposes.
    In connection with this private placement Coniagas issued 87,500
compensation warrants (equal to 5% of the number of units sold) to certain
arm's length persons by way of finder's fees. Each Compensation Warrant
entitles the holder to purchase for $0.40 one unit consisting of one common
share of the Company and one-half a common share purchase warrant entitling
the holder to purchase one additional common share of the Company for $0.50 in
the first year following closing and for $0.60 in the second year following
closing after which they expire.

    
    -------------------------------------------------------------------------
                           Warrants                 Options
    -------------------------------------------------------------------------
    Grant date             February 10,     May 8,  January 15,  November 12,
                                  2007       2007         2004          2007
    No. of
     warrants/options        1,000,000  1,587,500      275,000       800,000
    Exercise price          $    0.175  $    0.50     $   0.50      $   0.65
    Market price            $    0.230  $    0.50     $   0.50      $   0.65
    Expected life in years           2          2            5             3
    Volatility                  129.46%    135.45%      152.72%       119.43%
    Risk-free interest rate       4.11%      4.20%        3.76%         3.99%
    Fair value of options
     granted                $  162,000  $ 537,000     $128,000      $369,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Total stock-based compensation costs for the issuance of stock options
and warrants amounted to $1,196,000 as indicated in the table above. As part
of the Adjustment for Retrospective Change in Accounting Policies
("retrospective adjustment"), this amount was recorded to deficit and
contributed surplus in respect of stock based compensation expense for
warrants and options issued in prior periods.

    
    (b) Financial instruments
    

    The Company has restated the December 31, 2007 balance of Investments to
record changes for fluctuations in their fair market value in accordance with
Handbook Section 3855. Investments include shares held in other public mining
companies and are classified as available-for-sale. As at December 31, 2007,
the investments had not been recorded at their fair value based on the
published, prevailing market price as at that date. Included in the
retrospective adjustment in Note 14 to the June 30, 2008 interim consolidated
financial statements is an amount to bring the recorded value of the asset in
line with its fair value at December 31, 2007. A total of $649,827 was
recorded in investments and in other comprehensive income to bring the
restated balance of investments to $685,345 as at that date. During 2008, the
market value of investments increased by $60,299 to $745,644 for the three
months ended March 31, 2008, and then decreased by $10,450 to $735,194 during
the three months ended June 30, 2008. The fair market value change from
December 31, 2007 to March 31, 2008 had not been reflected in the interim
consolidated financial statements for the period ended March 31, 2008.
    The following table summarizes the adjustments made to December 31, 2007
opening balances of corresponding equity accounts with respect to the
adjustment for retrospective changes in accounting policies:

    
    -------------------------------------------------------------------------
                                                                  Adjustment
    Account              Description                            to 31 Dec 07
    -------------------------------------------------------------------------
    Contributed surplus  Issuance of stock options and warrants  $ 1,196,000
    Deficit              Issuance of stock options and warrants  $(1,196,000)
    Accumulated
     comprehensive
     income              Fair value adjustment to investments    $  (649,827)
    Investments          Fair value adjustment to investments    $   649,827
    -------------------------------------------------------------------------
    

    This press release contains forward-looking statements which reflect the
Company's current expectations regarding future events. The forward-looking
statements involve risks and uncertainties. Actual results could differ
materially from this projected herein. Although we believe that our
expectations are based on reasonable assumptions, we can give no assurance
that our expectations will materialize.

    
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of the content of this
    release.
    





For further information:

For further information: Rebecca Hudson, Chief Financial Officer, (416)
597-0969, Email: coniagas@bellnet.ca

Organization Profile

CONIAGAS RESOURCES LTD.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890