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Friday, July 22, 2005

Strathmore Minerals (STHJF) 2004 audited results

This company (website) owns uranium mining properties. Incorporated in British Columbia, Canada. Warning: Canadian dollars, not US dollars in use!

Clean auditor statement by "Chartered Accountants" Check up on who it is.

There are no operations, just buying mining properties and doing preparation work. $9 million cash on the balance sheet. Everything else is minor. Equity is about $12 million which is also nearly the total assets.

Expense breakdown (C$2 million total) only significant expenses listed:
stock based compensation: 46.7% (fair value method)
consulting fees: 16.7%
trade shows and conferences: 8.1%
office and misc: 6.0%
business development: 4.7%
property investigation: 3.7%
professional fees: 3.7%
regulatory fees: 3.2%
travel and promotion: 2.6%
actual cash drain was only C$1 million (quarter million in 2003)

Big increases from 2003 (C$441K) are:
consulting fees
office and misc
property investigation
business development
professional fees
regulatory fees
stock based compensation
trade shows and conferences
travel and promotion

Exploration costs are capitalized (at cost). No impairments yet. Estimated future costs of maintaining mineral rights are not accrued. Future tax liabilities (beyond NOL) due to flow-through share arrangements are recorded by a reduction in capital stock (cumulative earnings part of equity?). From the Canadian EIC-146:
Canadian tax legislation permits an enterprise to issue securities to investors whereby the deductions for tax purposes relating to resource expenditure may be claimed by the investors and not by the enterprise. These securities are usually referred to as flow-through shares.
Stock option dilution is computed using the treasury stock method. Evaluate dilution by assuming the proceeds of exercized options are used to purchase shares on the open market, so the net result is that you only count the market price - strike price as dilutive.

The titles to all properties have been investigated.

Properties and total capitalized costs (Canadian dollars!):
"staked properties", CA: $798K
New Mexico properties, US: $618K (plus 450K more shares to be issued over two years)
Wyoming properties, US: $328K (plus 450K more shares to be issued over two years)
Athabasca property, CA: $257K (plus 100K more shares to be issued) some non-U mineral royalties attached
Duddridge Lake property, CA: $191K (plus 100K more shares to be issued during 2005)
Comstock property, CA: $130K (plus 200K more shares to be issued during 2005)
Chord property, US: $125K has 2% gross royalty attached (plus 50K shares or US$10K per year till 2009)
"staked properties", Peru: $70K
Dieter Lake property, CA: $16K (plus an additional 300K shares, another 200K shares if more than 60million pounds of U3O8 is found)
pre-acquisition property costs: $156K (to be assigned to properties under consideration or written off if not purchased)

36.2 million shares existed at the end of 2004
1.8 million shares from above
10.1 million options (68 cent average strike)

Related Party hey, invite your friends and family!
$102K paid to director for consulting fee (understandable given the expertise on the board)
$46K paid to Secretary of Company, consulting
200K shares issued to directors and a company controlled by director
$65K loan paid during 2003

$3.3 million in NOL, expire end of 2014. Other stuff as well related to exploration ($4.4 million). Company issued flow-through shares for $1million.

Subsequent to Dec 31, 2004:
250K options at $1.75, expire Jan 14, 2007
issued 30K flow-through shares, $1.95
issued 10million units at $1.50 (one share + half-a-warrant of $1.75 expiring Feb 21, 2006, thereafter $2.00 expiring 2007).
issued 2.5million shares (exercised options and warrants)
acquired option to buy more Wyoming property for US$30K and 500K shares over 3 years.
issued 575K shares to buy more property

I think I know why the stock has been depressed lately.

[next up, Mgmt Discussion and Analysis]

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