(The foregoing two paragraphs contain forward-looking statements regarding the scope and anticipated costs of exploration and generative work programs management intends to undertake during fiscal 2013. See Forward-Looking Information.)
As a result of recently adopted measures aimed at reducing staffing expenses, the Company's general and administrative costs are expected to decrease marginally during the remainder of fiscal 2013 and remain stable into the foreseeable future. Expenditures related to the Arbitration claim are expected to be substantial as the case proceeds through the final phase. At January 31, 2013, the Company had accumulated a liability of approximately $1.2 million related to the Arbitration. Additional working capital (likely through equity financing) will be required to fund ongoing general and administrative costs. Though the Company has signed a service and fee agreement with its Arbitration legal counsel (as described in Section 2.1.4 of the Q3 2013 MD&A and elsewhere) that will preclude legal fee cost overruns, ancillary Arbitration-related expenses such as expert witnesses, court costs, etc. are less certain and may be substantial.
(The foregoing paragraph contains forward-looking statements regarding anticipated general and administrative expenses for fiscal 2013, and the requirement for additional financing to fund legal costs and future general working capital expenses. See Forward-Looking Information.)
The business of mining and exploration involves a high degree of risk and there can be no assurance that any of the Company's current exploration projects will result in profitable mining operations. The Company has no source of revenue, and will require additional cash in the future to fund exploration and administrative expenses. As at January 31, 2013, the Company has working capital of $1.4 million, has incurred losses since inception and has an accumulated deficit of $92.6 million. The Company's ability to continue operations and exploration activities as a going concern is dependent upon its ability to obtain future financing. The Company will need to raise additional funds to support exploration and administration expenses and may require additional funds to support expenses related to the Arbitration action that fall outside of its legal services agreement. While the Company has been successful in obtaining financing in the past, there is no assurance that sufficient funds will be available to the Company, or be available on favourable terms in the future. Factors that could affect the availability of financing include fluctuations in the Company's share price, the state of international debt and equity markets, investor perceptions and expectations, global financial and metals markets, progress on any of the Company's exploration properties, and developments, if any, on the El Dorado project permitting application. Additional financing will require, but may not be limited to, the issuance of additional equity. Readers are encouraged to thoroughly review the Risks and Uncertainties outlined in Section 13 of the Q3 2013 MD&A and more thoroughly described in Section 14 of the Company's Fiscal 2012 MD&A.
During the first half of fiscal 2013, the Company applied for and was granted a drill permit to conduct a 10-15 hole (approximately 12,000 meter) Phase 1 drill program at Hog Ranch, which permit allows for expansion of the drill program to 31 holes and is valid for two years from the date of grant. The Company has selected and prioritized drill targets for Hog Ranch but has elected to forestall commencement of this Phase 1 drill program until such time as it can minimize the dilution on the cost of capital necessary to undertake the program (conditions for which are not likely to occur until such time as the El Dorado permit is granted). In addition to being subject to financing, commencement of this drill program is dependent on sourcing of drill contractors at a competitive rate. As such, the Hog Ranch drill program is not likely to occur during fiscal 2013 as was previously anticipated.
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