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Form 51-102F1
Management’s Discussion and Analysis
Dated March 27, 2009
This management’s discussion and analysis (MD&A) regarding Cooper Minerals Inc. (the “Company”) is a
review of the Company’s financial and operating results and should be read in conjunction with the audited
financial statements and the accompanying notes for the years ended November 30, 2007 and November 30,
2008. The results reported therein have been prepared in accordance with Canadian generally accepted
principles (“GAAP”) and are presented in Canadian dollars unless otherwise stated.
All monetary amounts in this MD&A and in the Company’s consolidated financial statements are
expressed in Canadian dollars, unless otherwise stated. The Company’s financial statements include the
results of the operations of the Company’s wholly owned subsidiary Namura Finland Ltd. for the years
ended November 30, 2007 and November 30, 2008.
This MD&A may contain forward-looking statements. Such statements are subject to known and unknown
risks and uncertainties that may cause actual results in the future to differ materially from those anticipated in
forward-looking statements.
Description of Business and Overall Performance
Cooper Minerals Inc. (the “Company”) is a Canadian junior resource company engaged in the acquisition,
exploration and development of properties with the potential for uranium and mineral commodities. The
Company was incorporated in the Yukon Territories and continued its business in British Columbia. It,
either directly or through joint venture partnerships, holds exploration interests in mineral properties located
in Canada and Finland. The common shares of the Company are listed for trading on the TSX Venture
Exchange under the trading symbol “CQ” and on the Frankfurt Stock Exchange under the symbol “JM6”.
The objective of the Company is to develop mineral properties to a stage where they can be operated
profitably.
Heron Lake Uranium Property
By agreement dated September 16, 2005, the Company acquired a 100% interest in the Heron Lake
Uranium Property entailing approximately 3,357 acres located 270 kilometres southwest of Yellowknife
in the Northwest Territories. Upon commencement of commercial production, the optionor will be
entitled to a net smelter royalty of 2% on all minerals. The Company can buy down to a 1% net smelter
royalty at a cost of $1,000,000. The purchase price of $247,500 was paid by issuance of 1,550,000
shares of the Company and payment of $15,000 cash. Included in the purchase price are 150,000 shares
issued for finder’s fees.
The property is located approximately 270 kilometers southeast of Yellowknife, Northwest Territories. It
consists of two claim blocks, with a total area of approximately 1,356 hectares (3,350 acres). The
property includes a shear-hosted radioactive zone 600 meters long and at least 200 meters deep. This
zone ranges up to 15 meters wide. Work by Uranerz Exploration and Mining Ltd. between 1977 and
1982 produced grab samples grading up to 0.370% U3O8 and minimal diamond drilling produced a best
intersection of 0.211% U3O8 over a 5 meter width.
During the fiscal year 2008, the Company did not undertake any exploration work on the property. Due to
the recent global economic downturn, the Company will delay the exploration program on this property to
future years to conserve cash resources for its core businesses. The Company’s strategy is to maintain the
property in good standing and review opportunities as circumstances demand.
Contact Lake Uranium Property
By agreement dated October 4, 2005, the Company acquired a 100% interest in the Contact Lake Property
entailing approximately 74,505 acres located 423 kilometres north of Yellowknife in the Northwest
Territories. Upon commencement of commercial production, the optionor will be entitled to a net smelter
royalty of 2% on all minerals. The Company can buy down to a 1% net smelter royalty at a cost of
$2,000,000. The purchase price of $1,033,437 was paid by issuance of 2,208,594 shares of the
Company and payment of $150,000 cash. Included in the purchase price are 208,594 shares issued for
finder’s fees.
By agreement dated March 12, 2007, the Company acquired a 100% interest in the Contact Lake Property
entailing 45 claims and covering approximately 98,800 acres located 423 kilometres north of Yellowknife
in the Northwest Territories. Upon commencement of commercial production, the optioneer will be
entitled to a net smelter royalty of 2% on all minerals. The Company can buy down to a 1.5% net
smelter royalty at a cost of $2,000,000. The purchase price of $1,897,294 was paid by issuance of
3,223,529 shares of the Company and payment of $350,000 cash. Included in the purchase price are
223,529 shares issued for finder’s fees.
By agreement dated November 12, 2007, the Company acquired a 100% interest in the Contact Lake
Property entailing 131 claims and covering approximately 306,027 acres located 423 kilometres north of
Yellowknife in the Northwest Territories. This property is adjacent to the two properties already held by
the Company. Upon commencement of commercial production, the Vendor will be entitled to a net
smelter royalty of 2.5% on all minerals. The Company can buy down to a 1.5% net smelter royalty at a
cost of $2,000,000. The purchase price included cash payment of $900,000 and 4,000,000 common shares
of the Company.
The Company has acquired the Contact Lake properties for their IOCG (iron-oxide, copper, gold and
uranium) potential. Some of this land adjoins the Alberta Star (TSX-V Symbol: ASX) Contact Lake
project and its newly acquired Port Radium-Crossfault Lake Property, which are being explored for iron
oxide, copper, gold, silver and uranium targets. These polymetallic targets have the potential to host
billions of tons of copper, gold, and uranium mineralization (Olympic Dam-type).
The Contact Lake claims are in the vicinity of two past producing silver and uranium mines, the Echo
Bay Mine and the Port Radium Eldorado Mine. This area has been under-explored and has lacked
advanced exploration geophysics. The Contact Lake Mineral Belt is approximately 15 kilometers long
and is the northern extension of the same mineral belt that hosts Fortune Minerals NICO
Gold-Cobalt-Bismuth deposit.
During the 2007 and 2008 field season, the Company completed a 2 million exploration program on the
property. The program included airborne surveys, surface grab samples and core drilling. Sample
collection was designed to follow up on the previously reported widespread mineralization and
geophysical targets in a historic mining camp. A suite of 50 samples representing the different types of
alternation, mineralization, structures and host rocks were collected and submitted for assay. Four drill
holes were completed in the vicinity of near surface underground workings to test the alternation system
observed in association with the mined conjugate vein system. The surface samples and drill core were
collected to test the possibility that much larger systems of alternation and polymetallic mineralization
indicative of IOCG type deposits occur in close association to previously mined high-grade bonanza-type
veins.
Details of the assays results have been released in the Company’s news release dated November 21, 2007,
December 3, 2007 and March 25, 2008. The reported drill core and surface sample results confirm that a
much wider zone of alternation and high-grade polymetallic mineralization is present at the Terra Mine site
than was previously known. The Company had anticipated a phase 2 exploration program on the Contact
Lake Property upon completion of the phase 1 program. However due to unfavourable market conditions
and high field costs, the Company currently plans to delay its 2009 program to the fall of 2009 or beginning
of 2010, thereby providing the Company with increased financial flexibility to continue its businesses. The
Company intends to monitor and provide updates on its future exploration programs as market conditions
change.
As at November 30, 2008, the Company had invested a total $8,234,513 in the Contact Lake Property.
The major components of the expenditures incurred and deferred to-date are as follows:
November 30 November 30
2008 2007
$ $
Acquisition costs
5,630,732 2,930,731
Exploration costs
Assaying, fees and general 320,042 147,126
Camp, labour and field equipments 244,658 11,469
Drilling 274,344 274,344
Geological and geophysical 1,012,752 963,987
Survey, evaluation, mapping 751,985 739,539
Total Exploration Costs
2,603,781 2,136,465
Total Deferred Costs - Contact Lake Property 8,234,513 5,067,196
Paukkajanvaara Uranium Deposit, Eastern Finland
By an option agreement dated February 14, 2006, the Company entered into a joint venture with Agricola
Resources PLC (“Agricola”) of United Kingdom to acquire an undivided 50% interest in the
Paukkajanvaara uranium project (the “Property”) located in the Joensuu magistrate, Eastern Finland. The
project area is made up of ten claim reservations totaling 90 square kilometers. These claims include the
only previously operated uranium mine in Finland, called Paukkajanvaara. Consideration is a commitment
by the Company to spend $500,000 in exploration expenditures on the property over two years and the
Company’s commitment to subscribe 1,650,000 ordinary shares of Agricola at a subscription price of £0.03
per share. Since the shares of Agricolar were trading at £0.0194 at the time of purchase the excess amount of
£0.0106 was allocated to the purchase price of the mineral property.
Under the Agreement, the Company is to also contribute in equal shares to the costs of converting the
Property to full exploration licence in May 2006 (such costs being estimated to be €100,000 in aggregate).
Test mining of the Paukkajanvaara Uranium Deposit in 1960 and 1961 by the Finnish company
Atomienergia Oy at Paukkajanvaara produced about 30 tonnes of yellowcake (U3O8) from 30,700 tonnes
of ore assaying 0.12 per cent U3O8. The mineralization at Paukkajanvaara shows similarities to the
well-known unconformity-type uranium deposit. Approximately 53 drill holes have been drilled in the
immediate vicinity of the Paukkajanvaara uranium deposit.
Uraniferous boulders are found throughout the area but are especially prevalent down ice from the
Paukkajanvaara uranium deposit. During a recent radon survey Agricola identified six radioactive
boulders; these boulders contained abundant yellowish uranophane and pitchblende. Samples of these
boulders were sent to Chemex in Vancouver for analysis. Results received from Chemex indicate that the
uranium content of the boulders are as follows, 0.170, 0.303, 0.471, 0.711, 0.745 and 1.170 per cent
U3O8.
As at November 30, 2008, the Company had spent a total of $84,382 exploration cost on the property. These
costs were incurred in 2007 and chiefly related to the geological consulting fees, permits fees and legal fees.
For the year 2008, the Company had not contributed any exploration costs as Agricolar, the joint-venture
partner was unable to obtain an exploration licence. The Company is currently reviewing and assessing the
joint venture with Agricolar with an objective to negotiate revised terms to the Option Agreement.
As at November 30, 2008, the Company had invested a total $135,849 in Paukkajanvaara property. The
major components of the expenditures incurred and deferred to-date are as follows:
November 30 November 30
2008 2007
$ $
Acquisition costs
51,467 51,467
Exploration costs
Application fees, legal and general 26,662 26,662
Geological and geophysical 25,000 25,000
Survey, evaluation, mapping 32,720 32,720
Total Exploration Costs
84,382 84,382
Total Deferred Cost - Paukkajanvaara Property 135,849 135,849
Acquisition of Namura Finland Ltd
In January 2007, the Company acquired a 100-per-cent of the issued and outstanding shares of Namura
Finland Ltd.(“Namura”), a private company based in Finland. Consideration for the purchase was to make
cash payment of $335,000 and to issue 6,000,000 common shares to the vendors. Namura Finland Ltd. is
now a wholly-owned subsidiary of the Company based in Finland.
Namura Finland Ltd. currently holds 33 claim reservations over 27 known uranium occurrences. These
are all located in central and southern Finland. The Company intends to examine each of these uranium
occurrences and to decide whether or not to apply for a full mineral exploration licence. All of these claim
areas have been covered by airborne radiometric surveys carried out by the Geological Survey of Finland
(“GTK”). Most of these surveys were carried out using a line spacing of 200 metres. This radiometric
data is available from the Geological Survey and the Company has purchased the data sets for
examination. Cooper’s planned exploration program will be directed towards determining the extent and
depth of the uranium mineralisation at Kouvervaara.
The Company believes that this portfolio of uranium projects in Finland represents an opportunity to
acquire a full spectrum of uranium projects, ranging from a “blue-sky” scenario to a number of projects
with “historically inferred resources”. These new projects will supplement Cooper’s current
Paukkajanvaara uranium project.
During the year 2008, the Company’s major activity on the property was to obtain exploration licenses
through its Finland subsidiary. The Company found that this was a time consuming and expensive
process which involved numerous parties such as environmental concern groups, land-holders, native
people and various local regulatory authority. The Company will only provide an exploration budget on
the property when the exploration licenses have been granted. The Company hopes to get the licenses
before the year ended November 2009.
As at November 30, 2008, the Company had invested a total $3,189,288 in Namura Finland Ltd. The
major components of the expenditures incurred and deferred to-date are as follows:
November 30 November 30
2008 2007
$ $
Acquisition costs
2,455,600 2,455,600
Exploration costs
Application fees, legal and general 96,563 26,662
Geological Consulting 637,125 358,208
Total Exploration Costs
733,688 384,870
Total Deferred Costs - Namura Finland Ltd. 3,189,288 2,840,470
Selected Annual Information
The following financial date, which has been prepared in accordance with Canadian generally accepted
accounting principles, is derived from the Company’s audited financial statements for the year ended
November 30, 2008, 2007 and 2006.
As at and for the financial year ended November 30
2008 2007 2006
(a) Net sales or total revenues Nil Nil Nil
(b) Net Income (loss)
In total ($238,542) ($1,342,461) ($620,518)
On a per share basis ($0.01) ($0.04) ($0.03)
© Other Comprehensive income(loss)
(See changes in Accounting policies)
($53,566) $32,550 Nil
(c) Total Assets $15,714,629 $14,266,157 $4,432,537
(d) Total long term financial liabilities Nil Nil Nil
(e) Cash dividends declared per share Nil Nil Nil
Results of Operations
The Company had no producing properties, and consequently no sales or revenues. The only source of
income during the year was from interest earned on bank deposits. The amount fluctuates from period to
period depending on the Company’s cash balance and interest rates. The Company’s excess cash reserves
are held in short term flexible GIC’s with a major bank.
The net loss for the year ended November 30, 2008 was $238,542 or $0.01 per share as compared to the
net loss of $1,342,461 or $0.04 per share for the year ended November 30, 2007. The decrease of
$1,103,919 in net loss was a result of substantial reduction in the operating expenses.
Operating expenses in the twelve months of fiscal 2008 were $363,119 (2007 - $1,543,736), a decrease of
$1,180,617. The most important category attributed to the decrease was stock based compensation
expense. Stock-based compensation, a non-cash expense, is comprised of the fair value of stock options
granted to directors, officers and consultants that vest in the period. The Company did not grant any stock
options during the year 2008 and therefore no stock compensation expense was recorded. In comparison,
the Company recognized $973,112 stock based compensation expense during the year 2007. Another
factor for the changes during the year arose from the reduction $187,374 in marketing & promotion
expenses when compared to the prior year. The reason was that the Company did not participate in certain
marketing activities such as trade shows and mining conference in Europe. Moreover, transfer agent and
exchanges fees had decreased from $76,089 in 2007 to $19,383 in 2008 because the Company did not
complete any financing and thereby reduced the associated fees during the year. Certain categories of the
operating expenses had increased to reflect the on-going activities of the Company. Consulting fees had
increased by $75,490 (2008 - $174,490, 2007 - $99,000) largely due to the engagement of an independent
advisor for corporate communication. Rent for the office had increased (2008 - $15,000, 2007- $12,000)
as the monthly rent had increased by $500 since June 2008.
Summary of Quarterly Results
The following tables summarize information derived from the Company’s financial statements for each of the
eight most recently completed quarters:
Quarter Ended Nov 30 Aug 31 May 31 Feb 29 Nov 30 Aug 31 May 31 Feb 28
Year 2008 2008 2008 2008 2007 2007 2007 2007
Revenues Nil Nil Nil Nil Nil Nil Nil Nil
Net Income (Loss) $45,254 $(117,761) $(99,389) $(66,646) $(919,768) $(175,502) $(190,813) $(56,378)
Basic & Diluted
Income(Loss) per
share
(0.00) (0.00) (0.00) (0.00) (0.04) (0.00) (0.01) (0.00)
Significant variances in the Company’s report loss from quarter to quarter are largely due to the granting of
stock options, which results in the recording of amounts for stock-based compensation expense. The large
increase in net loss from the third quarter to the fourth quarter 2007 was due to a $973,112 stock based
compensation expense being recorded. As there were no stock options granted in each quarter of 2008, there
was no stock based compensation expense incurred during the respective quarters.
Liquidity and Capital Resources
As at November 30, 2008 the Company had net working capital of $3,772,611 compared to $5,653,488 as at
November 30, 2007 representing a decrease in working capital by $1,880,877. The decrease was primarily
due to cash used for exploration activities. The Company had net cash on hand of $3,689,956. The
Company believes that it has sufficient cash on hand to finance its expected level of operations and
working capital requirements through 2009.
The Company has no operations that generate cash flow. In the event that the Company’s plans change, its
assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any,
prove to be insufficient to fund operations, the Company may be required to seek additional financing.
Although the Company has been successfully in raising the above funds, there is no assurance that equity
funding will be accessible to the Company at the times and in the amounts required to fund the Company’s
activities.
The Company is not exposed to any significant liquidity risk at this time. Given the global financial and
economic turmoil, it has been increasingly difficult for early stage exploration companies to raise required
financing. The Company continues to monitor its overhead and look for additional avenues to conserve its
working capital with the intent to continue to develop or acquire economic mineral deposit.
Off-Balance Sheet Arrangement
The Company has no debt, does not have any used lines of credit or other arrangements in place to
borrow funds, and has no off-balance sheet arrangements.
Transaction with related parties
During the fiscal year ended November 30, 2008, the Company entered into the following transactions
with related parties:
a) Paid or accrued $60,000 (2007 - $57,500) to a company owned by one of the directors for consulting
services.
b) Paid or accrued $15,000 (2007 - $12,000) to a company related to a director for rental fees.
c) Paid or accrued $30,000 (2007 - $20,000) to a company related to a director for accounting services.
d) Paid or accrued $nil (2007 - $10,000) to a former director of the Company for consulting services.
These transactions are in the normal course of operations and are measured at the exchange amount, which is
the amount of consideration established and agreed to by the related parties, unless otherwise noted.
Fourth Quarter and subsequent events
On November 20, 2008, the Company announced that it had entered into a Joint Venture Agreement with
Rochester Resources Ltd. (“Rochester”) whereby the Company has an Option to acquire 10% equity
interest in the Mina Real Mexico S.A. de C.V. and thereby acquire indirect interests in the Mina Real and
Santa Fe gold and silver properties. In consideration, the Company is required to make payments of
$1,475,000 and subscribing for 3,500,000 common shares of Rochester at a deemed price of $0.15 per
share equaling $525,000.
Upon the exercise of the Option all Net Profit received by Rochester from the Properties shall be divided
on a 90% / 10% basis, between Rochester and the Company. The Company will also be subject to a
"Gross Overriding Advance Royalty" of $25,000 per month paid free and clear of any and all cost or
expense incurred in connection with the operation of the Mina Real Property payable by Rochester to the
Company. Furthermore, upon exercise of the Option, the Company shall be deemed to have granted
Rochester a Back-In-Option, to re-acquire in whole and not in part the Equity Interest in Mina Real
Mexico S.A. de C.V. The Back-In Option shall have a term of 3 years wherein:
- During year 1 the Back-In Option shall not be exercisable;
- During year 2 the Back-In Option shall be exercisable by a cash payment of $2,075,000; and
- During year 3 the Back-In Option shall be exercisable by a cash payment of $2,000,000.
-
.
The Company has been searching for a strategic partner and project that fulfilled its objectives of
generating revenue streams and potential for significant mineral discovery. With the Joint Venture
Agreement with Rochester Resources Ltd., the Company feels that it has secured an agreement that
achieves this objective.
As at the date of report, the Company concluded the transaction upon receiving regulatory approval. The
Company had made the required payments and bought 3,500,000 common shares of Rochester. The
common shares of Rochester are listed on the TSX Venture Exchange and are subject to a resale
restriction for a period of four months expiring April 23 2009. The Company believes the investments in
the Mexico properties will diversify the Company’s operation and generate some cash flows.
Changes in accounting policies including initial adoption
Effective December 1, 2007, the Company adopted new recommendations of the Canadian Institute of
Chartered Accountants (CICA) under the CICA Handbook sections as follows:
Going-concern
In June 2007, the CICA amended Handbook Section 1400, “General Standards of Financial Statement
Presentation”, which requires management to make an assessment of a company's ability to continue as a
going concern. When financial statements are not prepared on a going-concern basis that fact shall be
disclosed together with the basis on which the financial statements are prepared and the reason why the
company is not considered a going-concern.
Capital Disclosures
Section 1535 specifies the disclosure of (i) an entity’s objectives, policies and processes for managing capital;
(ii) quantitative date 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 adoption
of this standard has had no material impact on the financial statements as the standard relates to note
disclosure.
Financial Instruments – Disclosure and Presentation
Sections 3862 and 3863 replace Section 3861 Financial Instruments – Disclosure and Presentation, revising
and enhancing 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 adoption of this standard has had no
material impact on the financial statements as the standard relates to note disclosure.
Recent Accounting Pronouncements
Goodwill and Intangibles
In February 2008, the CICA issued Handbook Section 3064, “Goodwill and Intangible Assets”, replacing
Section 3062, “Goodwill and Other Intangible Assets”, and Section 3450, “Research and Development
Costs”. This section establishes standards for the recognition, measurement, presentation and disclosure
of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises.
Standards concerning goodwill are unchanged from the standards included in the previous Section 3062.
The new section is effective for years beginning on or after October 1, 2008. The Company is in the
process of assessing the impact of this new section on its financial statements.
International Financial Reporting Standards (“IFRS”)
In 2006, the Canadian Accounting Standards Board (“AcSB”) published a new strategic plan that will
significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan
outlines the convergence of Canadian generally accepted accounting principles with IFRS over an
expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover
date for publicly-listed companies to use IFRS, replacing Canada's own generally accepted accounting
principles. The date is for interim and annual financial statements relating to fiscal years beginning on or
after January 1, 2011. The transition date of January 1, 2011 will require the restatement for comparative
purposes of amounts reported by the Company for the year ended December 31, 2010. While the
Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the
transition to IFRS cannot be reasonably estimated at this time.
Financial Instruments
The Company’s financial instruments consist of cash, short-term investments, receivables and accounts
payable. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial statements. The fair value of these financial
instruments approximates their carrying values, unless otherwise noted.
Outstanding Share Data as at March 27, 2009
The Company is authorized to issue an unlimited number of common shares without par value. At March 27,
2009, there were 44,019,220 issued and outstanding common shares compared to 44,019,220 issued and
outstanding shares at November 30, 2008. There was no change in the shares capital. As at the date of report,
all warrants exercisable expired and there were no warrants outstanding. There were 3,330,000 stock options
outstanding under the Company’s incentive stock option plan. These stock options are exercisable at price
ranging from $0.30 to $0.80, with expiry dates ranging to November 13, 2012.
Disclosure Controls and Procedures
The Company has established and maintained disclosure controls and procedures and internal control
over financial reporting. The certifying officers carried out an evaluation of the effectiveness of the design
and operation of the Company’s disclosure controls and procedures as of November 30, 2008. The
Company has very limited administrative staffing. As a result, internal controls which rely on segregation
of duties in many cases are not appropriate or possible. Management has implemented certain controls
such as frequent reviews and regular preparations of reconciliations of transactions to ensure absence of
material irregularities. Based on that evaluation, the CEO and CFO have concluded that the Company’s
disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a
timely basis, information required to be disclosed by the Company to satisfy its continuous disclosure
obligations, and are effective in ensuring that information required to be disclosed in the reports that the
Company files is accumulated and communicated to management as appropriate to allow for timely
decisions regarding required disclosure.