Sales of copper concentrate are in US dollars and the majority of the Group's expenses are incurred in Canadian dollars. The Group's principal exchange rate risk relates to movements between the Canadian and US dollar. The Gold Loan is repayable in US dollars from future sales of gold mitigating the exchange risk. Management will closely monitor exchange fluctuation and consider the use of forward exchange contracts as required.
Interest rates on the capital leases and short term borrowings are fixed, eliminating interest rate risk.
Cash flows utilised in investing activities amounted to $2.1 million in the quarter. Cash of $1.8 million was spent on the Group's Mineral Property and $0.3 million was spent on property, plant and equipment.
Cash flows utilized in financing activities during the quarter amounted to $1.4 million reflecting gold loan repayments of $0.3 million, payment of $0.5 million against the credit facility and finance lease repayments of $0.6 million.
The group is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in respect of the reclamation and closure liability at the existing Nugget Pond Mill and Ming Mine. At period end the Group holds bearer deposit notes totalling $3.2 million.
The Group's ability to continue as a going concern, and the recoverability of its mineral properties, is dependent on future trends in copper and gold prices, and its ability to continue generating positive cash flows from current operations. Through the use of current cash reserves and continued production management is satisfied that the Group has sufficient working capital for the forthcoming 12 months. However, there are risks associated with the commencement of a new mining and processing operation, which may give rise to the possibility that additional working capital may be required to fund unanticipated delays at the copper concentrator and continued mine production and the repayment of loans falling due for repayment in March 2014. Should additional working capital be required, the Directors consider that further sources of finance could be secured in the required timescale; however, there is no certainty that these funds will be forthcoming. On this basis, the Directors have concluded that the Group is a going concern. These financial statements do not reflect the adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate, and these adjustments could be material.
See further comments in the Commitments and Loan section, page 16.
At 27 June 2013 the Group had $6.0 million in cash and cash equivalents. A further $3.0 million is available under the Group's Credit Facility Agreement.
The Group's financial instruments as at 30 April 2013 comprised of financial assets, comprising available for sale investments, cash and cash equivalents and trade and other receivables and financial liabilities comprised of trade payables, other payables, accrued expenses and interest bearing loans and borrowings.
All of the Group's financial liabilities are measured at amortised cost.
The Board of Directors determines, as required, the degree to which it is appropriate to use financial instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be appropriate are foreign currency risk, liquidity risk, credit risk, interest rate risk and commodity price risk each of which is discussed in note 13 of the financial statements for the quarter ended 30 April 2013.
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