Medoro Announces 2007 Second Quarter Results



    TORONTO, Aug. 30 /CNW/ - Medoro Resources Ltd. (TSX-V: MRS/AIM: MRL)
announced today results for the three and six-months periods ended June 30,
2007. For the quarter, Medoro reported a net loss of $1.0 million or $0.02 per
share as compared to a loss of $0.7 million or $0.02 per share in the second
quarter of last year. For the six months ended June 30, 2007 the company
reported a loss of $2.0 million or $0.04 per share as compared to a loss of
$0.8 million or $0.03 per share in the same period last year.
    The 2007 loss in the quarter largely reflects general and administrative
costs of $1.0 million to support the increased exploration activities compared
to the previous year. At June 30, 2007 the company had cash and short-term
investments of $7.6 million and no debt.
    The company is continuing its diamond drilling program at the La Cruz, La
Sofia and El Tapon prospects in Venezuela, which will provide the basis for
reclassifying the existing historical resources and identifying additional
reserves and resources. The company has also completed a geochemical sampling
program that will allow it to start testing new drilling target areas within
the properties. In addition, the company is completing the due diligence phase
of the previously announced option agreement relating to Medoro's acquisition
of rights to nine gold exploration and exploitation areas in Mali. As part of
its due diligence, the company has performed extensive geochemical sampling on
all nine properties and based upon the results has identified at least three
targets. Upon exercise of its option, Medoro anticipates commencing a drill
program in the fourth quarter of this year.
    The complete financial statements and management and discussion analysis
for the second quarter ended June 30, 2007 are available on the Company's
web-site at www.medororesources.com.

    Medoro Resources is a gold exploration and development company focused on
acquiring properties of merit for potential joint ventures with senior
producers. The company holds a 100% interest in the Lo Increible 4A and 4B
concessions in Venezuela. Additional information on Medoro Resources can be
found by visiting the company's website at www.medororesources.com. Medoro's
Nominated Adviser for the purposes of AIM is Canaccord Adams Ltd. (Ryan
Gaffney), +44 (0) 20 7050 6500.

    THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE

    Financial Statements follow


    
    Medoro Resources Ltd.
    Consolidated statements of operations and deficit
    three and six month periods ended June 30,
    (Expressed in thousands of Canadian dollars, except share and per share
    amounts)
    (Unaudited)

                                 Three months ending       Six months ending
                                             June 30,                June 30,
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
                                       $           $           $           $

    Operating expenses
    General and administrative
     (Schedule)                    1,048         908       2,030       1,226
    Stock-based compensation
     (Note 5)                          -           -          33           -
    -------------------------------------------------------------------------
                                   1,048         908       2,063       1,226
    -------------------------------------------------------------------------

    Other income (expenses)
      Accreted interest on note
       and shares receivable           -          17           -          34
      Foreign exchange (loss) gain   (33)        (37)       (106)        103
      Interest income                  1         122           4         130
      Other income                    87         103         205         116
    -------------------------------------------------------------------------
                                      55         205         103         383
    -------------------------------------------------------------------------

    Net loss for the period         (993)       (703)     (1,960)       (843)
    Deficit, beginning of
     period                      (31,229)    (28,305)    (30,262)    (28,165)
    -------------------------------------------------------------------------
    Deficit, end of period       (32,222)    (29,008)    (32,222)    (29,008)
    -------------------------------------------------------------------------

    Basic and diluted loss per
     share                         (0.02)      (0.02)      (0.04)      (0.03)
    -------------------------------------------------------------------------

    Basic and diluted weighted
     average number of common
     shares outstanding       49,423,293  44,230,844  49,411,287  27,629,510
    -------------------------------------------------------------------------

    These unaudited interim consolidated financial statements of the Company
have been prepared by and are the responsibility of the Company's management. 
The Company's independent auditor has not performed a review of these
financial statements in accordance with standards established by the Canadian
Institute of Chartered Accountants for a review of interim financial
statements by an entity's auditor.



    Medoro Resources Ltd.
    Consolidated balance sheets
    (Expressed in thousands of Canadian dollars)
    (Unaudited)

                                                       June 30,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------
                                                             $             $

    Assets
    Current assets
      Cash                                               2,646           910
      Short-term investments                             4,962        12,520
      Prepaid and other assets                           1,072           583
    -------------------------------------------------------------------------
                                                         8,680        14,013

    Property, plant and equipment, net (Note 4)         22,421        19,677
    -------------------------------------------------------------------------
                                                        31,101        33,690
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities             579           760

    Future income taxes                                  5,250         5,759
    -------------------------------------------------------------------------
                                                         5,829         6,519
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital (Note 5)                              53,691        53,663
    Contributed surplus (Note 5)                         3,803         3,770
    Deficit                                            (32,222)      (30,262)
    -------------------------------------------------------------------------
                                                        25,272        27,171
    -------------------------------------------------------------------------
                                                        31,101        33,690
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nature of operations (Note 1)                            -



    Medoro Resources Ltd.
    Consolidated statements of cash flows
    three and six month periods ended June 30,
    (Expressed in thousands of Canadian dollars)
    (Unaudited)
                                               Three                     Six
                                              months                  months
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
                                       $           $           $           $
    Operating activities
      Net loss                      (993)       (703)     (1,960)       (843)
      Items not affecting cash
        Depreciation                  43           -          89           -
        Stock-based compensation       -           -          33           -
        Foreign exchange loss       (446)          -        (509)          -
          Accreted interest on
           note and shares
           receivable                  -         (17)          -         (34)
      Changes in non-cash working
       capital items
        Accounts receivable            -        (106)          -        (414)
        Prepaid and other assets     333          13        (489)          -
        Accounts payable and
         accrued liabilities         (65)        112        (181)        186
    -------------------------------------------------------------------------
                                  (1,128)       (701)     (3,017)     (1,105)
    -------------------------------------------------------------------------

    Investing activities
      Short-term investments       4,922         873       7,558      (6,897)
      Cash held in escrow                     (3,130)                 (3,130)
      Acquisition of property,
       plant and equipment        (1,982)       (642)     (2,833)       (711)
    -------------------------------------------------------------------------
                                   2,940      (2,899)      4,725     (10,738)
    -------------------------------------------------------------------------

    Financing activity
      Shares to be issued                      3,099                   3,099
      Issuance of common shares
       for cash                       28         (98)         28       9,200
    -------------------------------------------------------------------------
                                      28       3,001          28      12,299
    -------------------------------------------------------------------------

    Net (decrease) increase in
     cash                          1,840        (599)      1,736         456
    Cash, beginning of period        806       1,174         910         119
    -------------------------------------------------------------------------
    Cash, end of period            2,646         575       2,646         575
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     information
      Interest paid                    -           -           -           -
      Income taxes paid                -           -           -           -



    Medoro Resources Ltd.
    Notes to the consolidated financial statements
    June 30, 2007
    (Tabular amounts expressed in thousands of Canadian dollars, except share
    and per share amounts)

    1.  Nature of operations

        The Company is currently engaged in the exploration and development
        of mineral properties; as such, the Company is considered to be in
        the development stage.

        On May 24, 2006, the Company completed a share consolidation whereby
        7 pre-consolidation shares were exchanged for 1 post-consolidation
        share. All information related to common shares for the current and
        prior period has been restated to give effect to the share
        consolidation.

        These financial statements have been prepared under the assumption
        that the Company will be able to realize its assets and discharge its
        liabilities in the normal course of business rather than through a
        process of forced liquidation. Continued operations of the Company
        are dependent on the Company's ability to receive continued financial
        support, complete equity financings, and successfully acquire an
        interest in assets or a business and the ability to generate
        profitable operations in the future.

        These financial statements have been reviewed by the Company's audit
        committee and approved by its Board of Directors.

    2.  Basis of presentation

        These unaudited interim financial statements have been prepared in
        accordance with Canadian generally accepted accounting principles for
        interim financial statements. Accordingly, they do not include all of
        the information and footnotes required by generally accepted
        accounting principles for complete financial statements. In the
        opinion of management, the accompanying financial information
        reflects all adjustments, consisting primarily of normal recurring
        adjustments, which are necessary for a fair presentation of results
        for the interim periods. Operating results for the three month period
        ended June 30, 2007 are not necessarily indicative of the results
        that may be expected for the year ending December 31, 2007. These
        interim consolidated financial statements follow the same accounting
        policies as the audited consolidated financial statements of the
        Company for the year ended December 31, 2006, except for the new
        policies disclosed below. Accordingly, these interim consolidated
        financial statements should be read in conjunction with the Company's
        2006 annual audited consolidated financial statements and notes
        thereto.

        Effective January 1, 2007, the Company adopted two new accounting
        standards related to financial instruments that were issued by the
        Canadian Institute of Chartered Accountants ("CICA"). These
        accounting policy changes were adopted on a prospective basis with no
        restatement of prior period financial statements. The new standards
        and accounting policy changes are as follows:

        (a) Comprehensive income (Section 1530)

            Comprehensive income is the change in shareholders' equity during
            a period from transactions and other events and circumstances
            from non-owner sources. In accordance with this new standard, the
            Company now reports a statement of comprehensive income and a new
            category, accumulated other comprehensive income, in the
            shareholders' equity section of the consolidated balance sheet.
            The components of this new category may include unrealized gains
            and losses on financial assets classified as available-for-sale,
            exchange gains and losses arising from the translation of
            financial statements of a self-sustaining foreign operation and
            the effective portion of the changes in fair value of cash flow
            hedging instruments.

            During the three month period ended March 31, 2007, there were no
            changes in shareholders' equity that resulted from the non-owner
            sources and consequently, the adoption of the standard noted
            above had no effect on the presentation of the Company's
            consolidated financial statements.

        (b) Financial instruments - recognition and measurement (CICA
            Handbook Section 3855) and disclosure and presentation (CICA
            Handbook Section 3861)

            In accordance with these new standards, the Company now
            classifies all financial instruments as either held-for-trading,
            available for sale, held-to-maturity, loans and receivables or
            other financial liabilities. Financial instruments classified as
            held-for-trading are measured at fair value with unrealized gains
            and losses recognized in operating results. Financial instruments
            classified as available for sale are measured at fair value with
            unrealized gains and losses recognized in other comprehensive
            income. Financial instruments classified as held-to-maturity,
            loans and receivables or other financial liabilities are measured
            at amortized cost.

            Upon adoption of these new standards, the Company has designated
            its cash and short-term investments as held-for-trading, which
            are measured at fair value. Accounts payable and accrued
            liabilities and notes payable are classified as other
            liabilities, which are measured at amortized cost. As at June 30,
            2007, the Company did not have any financial assets classified as
            available for sale and therefore, the adoption of the standard
            noted above had no effect on the presentation of the Company's
            consolidated financial statements.

    3.  Acquisition

        a)  On April 23, 2007 paid US$720,000 for the option to acquire all
            of the issued and outstanding shares of African Gold Resources,
            S.A ("African Gold"), a Panamanian company, which has the options
            to acquire nine properties in Mali. Upon the exercise of this
            option the Company will pay an additional US$2,430,000 and issue
            6,000,000 shares to Gold Resources S.A., the current shareholder
            of African Gold. The Company will also assume African Gold's
            obligations under the option arrangements it has entered into
            with the current holders of the properties, including cash
            payments totalling US$224,000 and a one time payment of US$9.00
            per ounce of measured gold resources and US$4.00 per ounce of
            indicated gold resources. The agreement also provides that if any
            of the individual properties contain an aggregate of 500,000
            ounces or more of measured and indicated gold resources, then
            Gold Resources will receive a one-time payment of US$6.00 per
            ounce of measured gold resources and US$4.00 per ounce of
            indicated gold resources.

        b)  On July 10, 2006, the Company acquired all of the issued and
            outstanding shares of Panwest Seas Corporation Ltd. ("Panwest",
            (a company incorporated in the British Virgin Islands), which
            holds the right to the Lo Increible 4A and 4B exploration
            properties located in the El Callao area of the State of Bolivar,
            Venezuela for $10,788,545 (including $276,645 in acquisition
            costs). In consideration for the acquisition of Panwest, the
            Company issued 15,140,000 common shares and paid $1,125,000
            (US$1,000,000) in cash and also agreed to pay to the sellers a
            royalty of US$15 per ounce of gold on all production from the Lo
            Increible 4A and 4B mining properties. The properties are held
            under mining contracts granted by Corporacion Venezolana de
            Guayana.

            The common shares issued have been valued at a price of $0.62 per
            common share, being the average closing price of the common
            shares of the Company for the two days before, the day of, and
            two days after the date of announcement of the acquisition
            agreement on June 12, 2006.

            The business combination has been accounted for as a purchase
            transaction with the Company as the acquirer of Panwest. The
            allocation of the purchase price based on the consideration paid
            and the fair value of Panwest's net assets acquired is:

        Net assets acquired at fair values is as follows:

                                                                           $
        Mineral properties                                            16,346
        Future income tax liability                                   (5,557)
        ---------------------------------------------------------------------
                                                                      10,789
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Total consideration paid consists of the following:
        Cash                                                           1,125
        Common shares                                                  9,387
        Acquisition costs                                                277
        ---------------------------------------------------------------------
                                                                      10,789
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    4.  Property, plant and equipment

        The following table summarizes the Company's property, plant and
        equipment as at June 30, 2007 and December 31, 2006:

                                                               June 30, 2007
        ---------------------------------------------------------------------
                                                     Accumulated    Net book
                                             Cost   depreciation       value
                                                $              $           $
        Mineral properties
          Lo Increible A and B             20,867              -      20,867
          Mali properties                   1,104              -       1,104
        Plant and equipment                   600            150         450
        ---------------------------------------------------------------------
                                           22,571            150      22,421
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

                                                           December 31, 2006
        ---------------------------------------------------------------------
                                                     Accumulated    Net book
                                             Cost   depreciation       value
        ---------------------------------------------------------------------
                                                $              $           $
        Mineral properties
          Lo Increible A and B             19,180              -      19,180
          Plant and equipment                 558             61         497
        ---------------------------------------------------------------------
                                           19,738             61      19,677
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        During the six months ended June 30, 2007, $44,808 of depreciation of
        plant and equipment used in exploration activities are included in
        mineral properties.

    5.  Share capital

        (a) Common shares

            Authorized: an unlimited number of common shares with no par
            value

           Issued and outstanding:

                                           Number of             Contributed
                                              shares      Amount     surplus
    -------------------------------------------------------------------------
                                                               $           $

        Balance, December 31, 2005        17,816,425      34,111         587
        Issued on acquisition of
         Panwest (Note 3)                 15,140,000       9,387           -
        Private placement (Note 5 (b))    14,285,714       8,305         890
        Private placement (Note 5 (c))     2,150,000       1,852         962
        Exercise of stock options             62,142          36          (2)
        Stock-based compensation                   -           -       1,333
        ---------------------------------------------------------------------
        Balance, December 31, 2006        49,454,281      53,691       3,770
        Stock-based compensation                   -           -          33
        ---------------------------------------------------------------------
        Balance, June 30, 2007            49,454,281      53,691       3,803
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        (b) On February 28, 2006, the Company completed a private placement
            of 14,285,714 common shares at $0.70 per share for net proceeds
            of $9,195,045. In connection with the private placement, 857,143
            agent compensation warrants were issued. Each agent compensation
            warrant entitles the holder to purchase one common share of the
            Company at a price of $0.70 per common share until August 28,
            2007. All securities issued as part of this placement were
            subject to a four-month hold. The agent compensation warrants
            were fair valued using an option pricing model with the following
            assumptions: no dividends are paid, a volatility of the Company's
            share price of 140%, an expected life of the warrants of
            18 months and an annual risk free rate of 3.96%.

        (c) On July 21, 2006, the Company completed a private placement with
            Gold Fields Ltd. of 2,150,000 units at a price of $1.40 for net
            proceeds of $2,813,943. Each unit consisted of a share and one-
            half of a warrant, with each whole warrant being exercisable for
            two years at a price of $2.80. The warrants were fair valued
            using an option pricing model with the following assumptions: no
            dividends are paid, a volatility of the Company's share price of
            134%, an expected life of the warrants of two years and an annual
            risk free rate of 4.16%.

        (d) Warrants

                                             June 30,            December 31,
                                                2007                    2006
        ---------------------------------------------------------------------
                                            Weighted                Weighted
                                             average                 average
                               Number of    exercise   Number of    exercise
                                warrants       price    warrants       price
        ---------------------------------------------------------------------
                                                   $                       $
        Balance, outstanding
         beginning of period   4,628,232        2.14   2,837,089        2.38
        Issued on private
         placement                     -           -   1,932,143        1.87
        Warrants expired
         during the period    (2,142,857)       1.68    (141,000)       3.92
        ---------------------------------------------------------------------
        Balance, end of
         period                2,485,375        2.88   4,628,232        2.14
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

            The following table summarizes information concerning outstanding
            and exercisable warrants at June 30, 2007:

            Outstanding and    Exercise
                exercisable       price        Expiry date
                                      $
            -----------------------------------------------
                    857,143        0.70    August 28, 2007
                    553,232        4.90  December 17, 2008
                  1,075,000        2.80        May 8, 2008
            -----------------------------------------------
                  2,485,375
            -----------------------------------------------
            -----------------------------------------------

        (e) Incentive stock option plan

            The Company has an incentive stock option plan. Under the plan,
            the exercise price of each option should not be less than the
            discounted market price as defined in the policies of the TSX
            Venture Exchange, and an option's maximum term is five years.
            Options may be granted by the board of directors at any time, to
            directors, senior officers or employees of the Company and
            consultants to the Company or any of its designated affiliates,
            who, by the nature of their position or duties are, in the
            opinion of the board, upon recommendation of the Compensation
            Committee, in a position to contribute to the success of the
            Company.

            A summary of the changes in the Company's incentive share option
            plan for the six months ended June 30, 2007 and the year ended
            December 31, 2006 are as follows:

                                             June 30,            December 31,
                                                2007                    2006
        ---------------------------------------------------------------------
                                            Weighted                Weighted
                                             average                 average
                                            exercise                exercise
                                 Options       price     Options       price
        ---------------------------------------------------------------------
                                                   $                       $
        Outstanding, beginning
         of period             4,638,571        0.92     720,097        3.64
        Options granted           80,000        0.53   3,970,000        0.52
        Options cancelled        (40,714)       0.71     (44,384)       8.05
        Options exercised        (55,000)       0.51      (7,142)       0.77
        ---------------------------------------------------------------------
        Outstanding, end
         of period             4,622,857        0.92   4,638,571        0.92
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

            The following table summarizes information concerning outstanding
            and exercisable options at June 30, 2007:

                                                   Options
                                               outstanding
                                                       and
                                               exercisable
            -----------------------------------------------
                                  Weighted
                                   average        Weighted
                                 remaining         average
                     Number           life        exercise
                outstanding       in years           price
            -----------------------------------------------
                                                         $
                    382,857        1.31               4.90
                      2,144        1.28               2.66
                    272,856        2.13               1.26
                     90,000        4.13               0.82
                     80,000        4.53               0.53
                  3,740,000        4.05               0.51
                     10,000        4.32               0.48
                     45,000        4.30               0.45
            -----------------------------------------------
                  4,622,857        3.73               0.92
            -----------------------------------------------
            -----------------------------------------------

            The fair value of options issued by the Company in 2007 and 2006
            was determined using the Black-Scholes option pricing model using
            the following weighted average assumptions:

                                                        June 30, December 31,
                                                           2007         2006
            -----------------------------------------------------------------
            Weighted average risk-free rate                3.98%        4.10%
            Dividend yield                                  Nil          Nil
            Volatility factor of the expected market
             price of the Company's shares                  147%         110%
            Average expected option life - years            2.5          2.5
            Weighted average grant date fair value
             per share of options issued during the year  $0.41        $0.34

    6.  Related party transactions

        During the six month periods ended June 30, 2007 and 2006, the
        Company paid the following amounts to related parties:

        (a) Consulting fees of $31,668 (2006 - $50,058) to a company in which
            a director of the Company is an officer; and

        (b) Consulting fees of $99,105 (2006 - $168,476) to directors of the
            Company.

        (c) The Company paid $14,060 (2006 - $Nil) to a related party
            controlled by three directors of the Company in respect of its
            office lease in Caracas, Venezuela.

        These transactions are in the normal course of operations and are
        measured at the exchange amounts, which is the amount of
        consideration established and agreed to by the related parties.

    7.  Segmented information

        The Company currently operates in one reportable operating segment,
        being the acquisition and exploration of mineral properties. As at
        June 30, 2007, the Company's mineral properties are in Venezuela and
        Mali. During the year ended December 31, 2006, the Company disposed
        of all its property in Italy.


    Medoro Resources Ltd.
    Consolidated schedules of general and administrative expenses
    three and six month periods ended June 30,
    (Expressed in thousands of Canadian dollars)
    (Unaudited)
                                   Three                     Six
                                   months                 months
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    General and administrative         $           $           $           $
      Office and administration      315         293         421         353
      Consulting fees                254         124         736         261
      Director fees                   20          22          43          31
      Investor relations, transfer
       agent and filing fees          80         188         100         230
      Legal and accounting fees      130         141         200         155
      Salaries and benefits          179          76         322         114
      Travel and promotion            45          61         153          78
      Depreciation                    21           -          44           -
      Bank charges and interest        4           3          11           4
    -------------------------------------------------------------------------
                                   1,048         908       2,030       1,226
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Nelson Lee, Chief Financial Officer at (416)
603-4653, nlee@medororesources.com

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MEDORO RESOURCES LIMITED

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