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Introduction
This is the management discussion and analysis (“MD&A”) of results, operations and
financial condition of Cadillac Ventures Inc. (“Cadillac” or the “Company”)) (formerly Blue
Power Energy Corporation) the operating and financial results of the Company for the
fiscal year ended May 31, 2007. The MD&A supplements, but does not form part of the
consolidated financial statements of the Company, and should be read in conjunction
with Cadillac’s consolidated financial statements and related notes for the fiscal year
ended May 31, 2007, as well as the results of fiscal years 2006 and 2005. The Company
prepares and files its consolidated financial statements in accordance with Canadian
generally accepted accounting principles (“GAAP”). The currency referred to in this
document is the Canadian Dollar.
During the fiscal year ended May 31, 2007 the Company made numerous
developmental strides. Your Company became listed, and publicly quoted for trading on
the CNQ Exchange, during May of 2007. Additionally the Company acquired an option
on the Burnt Hill Project in New Brunswick, a known historic tungsten occurrence, and
completed the target selection process in preparation for a summer/fall season of activity
at the New Alger Project near Cadillac, Quebec. During April of 2007 Mr. Michael S.
Harrington joined the Board of Cadillac, bringing to the Company over 4 decades of
experience in the mining industry.
Additional Information
The Company incurred a net loss in the period of $423,428 in fiscal 2007 as opposed to
a net loss of $37,001 for fiscal 2006. The increase in the loss during the period is
reflective of the increased level of activity of the Company during the period, and the
issuance of stock options in the capital of the Company to officers, directors and
consultants. The expenses incurred by the Company are detailed under Operations in
Section 1.15. The Company has seen an increase in operating expenses in every
quarter, in addition to the stock based compensation category. During the fourth quarter
the Company paid consulting fees to professionals in conjunction with project acquisition
and program planning for the Company’s exploration program. The Company has
experienced this increase in expenses at the same time that the Company has raised
further funds for operations, and increased the asset base of the Company. The
Company expects that ongoing expenses will continue at these levels at a minimum, but
more likely will increase as the project activity level of the Company increases. The
Company intends to continue to raise equity funds in order to meet these expenses,
should the Company be unable to raise these funds on an ongoing basis its ability to
continue its business could be affected.
Year Year
Selected Annual Information Year Ended Ended Ended
31-May- 31-May-
31-May-07 06 05
Note 1 - Earnings per share reflects a 1 for 5 common share consolidation that occurred during the year
ended May 31, 2006. Comparative earnings per share have been restated accordingly.
Note 1 - Earnings per share reflects a 1 for 5 common share consolidation that occurred
during the year ended May 31, 2006.
Note 1 - Earnings per share reflects a 1 for 5 common share consolidation that occurred
during the year ended May 31, 2006. Comparative earnings per share for 2005 have
been restated accordingly.
In the fourth quarter of 2007 there is a loss to the Company of $388,060, in part due to
the stock based compensation cost of $268,500 and the consulting fees cost of $91,100.
With the exception of the third quarter of 2007, which reflects the renouncement of flow-
through exploration charges, each quarter has reflected a steadily increasing level of
losses, While the expenses detailed in Section 1.15 have fluctuated as against the
same period in 2006, in general the activity level, the financing transactions, and the
shareholder base of the Company have all increased, all of which affect the operating
costs of the Company. The Company has also obtained a listing on the CNQ, which has
incurred legal fees and regulatory filing fees, and will continue to do so on an ongoing
basis. Additionally, as a subsequent event to the period, the Company obtained the
option on the Burnt Hill Project, and the Company will incur expenses related to this
matter as well.
1.6 Liquidity
Cadillac Ventures Inc. had a cash balance of $1,305,811 as at May 31, 2007 compared
with a cash balance of $123,717 as at May 31, 2006. At May 31, 2007 the Company
also held mineral property assets with a cost value of $616,556 compared with $277,842
at May 31, 2006. These are included in total assets of $2,024,066 at May 31, 2007as
compared to $411,914 at May 31, 2006. These amounts are a direct reflection of the
financing activities undertaken by the Company and the acquisition of the Burnt Hill
option. Against this positive cash balance and asset base the Company has liabilities
which total $93,050 at May 31, 2007, increased from $91,977 at May 31, 2006. These
are comprised of various professional fees and costs associated with the ongoing
operations of the Company, and are higher during the period due to the timing of various
invoices and payments.
The Company is continuing its efforts to raise funds for future developments and
operations and to meet its ongoing obligations as they arise. There is however, no
assurance that the Company will be successful in its efforts, in which case, the Company
may not be able to meet its obligations. The consolidated financial statements have
been prepared on a going concern basis as discussed in Note 1 of the May 31, 2007
consolidated financial statements.
Should the Company be unable to realize on its assets and discharge its liabilities in the
normal course of business, the net realizable value of its assets may be materially less
than the amounts recorded on the consolidated balance sheet.
At May 31, 2007 the Company had the following capital requirements under existing
arrangements.
a) Accounts payable in the normal course of business.
The Company has the following transactions with related parties during the twelve
months ended May 31, 2007
The Company was previously paying $2,000 per month to Harper Capital Inc. ("Harper")
(a company owned by the spouse of the former promoter of the Company) for managing
and supervising the Company's activities. Since August 2005, the Company has no
longer required Harper's services. During the fiscal year of 2007 the Company has paid
no fees in conjunction with this matter, in the fiscal year of 2006 the Company paid
$6,000.
As of May 31, 2007, pursuant to the financing disclosed in Note 6(a)(vi) of the
Consolidated Financial Statements for the year ended May 31, 2007, the following
related parties of the Company participated in the private placement by purchasing
offered units: Nominex Ltd. (of which Neil Novak, a director of the Company, is the
President) - 62,500 units; Nicole Brewster, the former Secretary and a former director of
the Company - 62,500 units; Jim Voisin, the President and a director of the Company -
62,500 units; and Norm Brewster, an insider of the Company - 250,000 units.
The Company has paid Billiken Management Services Inc., a private company, in which
one third of the ownership is held by a spouse of one of the directors of the Company, to
manage the New Alger Property. This company charges a fee of 10% of expenses
incurred on behalf of the Company. The fee totaled $3,089 (2006 - $nil) for the fiscal
year 2007. At May 31, 2007 there was a balance due to the Company of $11,439.
During the year, management and consulting fees for directors, officers and insiders of
the Company were paid or accrued for an aggregate total of $160,600. Management
fees were paid or accrued as follows: Jim Voisin, the President and a director of the
Company - $43,000; and Nicole Brewster, the former Secretary and a former director of
the Company - $27,600. Consulting fees were paid or accrued as follows: Norm
Brewster - $90,000.
The fourth quarter of fiscal 2007 saw and increase over the fourth quarter of fiscal 2006
in the ares of consulting fees and stock based compensation. This is due to the
Company paying cumulative consulting charges related to the design of a program for
NewAlger, and the identification of drill targets for this program, as well as technical
advice regarding the acquisition of additional properties for the Company, which resulted
in the Burnt Hill option acquisition, noted as a subsequent event.
Cadillac did not rely on any critical accounting estimates in the most fiscal year.
The Company’s current financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities. The carrying values
approximate the fair values of these financial instruments due to the short-term maturity
of these items.
Cumulative Since
Balance Balance Inception of the
Development
At At Stage
New Alger Propery 31-May-07 31-May-06 (April 28, 2006)
Cumulative Since
Balance Balance Inception of the
Development
At At Stage
Burnt Hill Property 31-May-07 31-May-06 (April 28, 2006)
Expenses
Accounting and Corporate Services 5,555 8,770 29,445
Consulting fees 91,100 0
Legal and audit 73,363 13,703 17,986
Management fees -73,100 0 6,892
Office and general 11,221 673 3,918
Shareholder relations 19,173 25,489 39,983
Stock based compensation 268,500 0
Flow-through tax expense -7,752
At May 31, 2007 the Company had 23,101,489 common shares outstanding, 5,946,545
warrants to purchase common shares outstanding, and 2,200,000 options outstanding.
* Refer to Notes to the Consolidated Financial Statements for May 31, 2007
The Company is reliant upon additional equity financing in order to continue its’ business
and operations, as the Company is in the business of mineral exploration and at present
does not derive any income from any of it’s mineral assets. There is no guarantee that
future sources of funding will be available to the Company. If the Company is not able to
raise additional equity funding in the future the Company will be unable to carry out its’
business in the future.
The price of various commodities which the Company is exploring for can fluctuate
drastically, and is beyond the Company’s control. The Company is specifically
concerned with the price of Gold, a commodity which fluctuates daily. While the
Company would benefit from an increase in the value of this metal, the Company could
be adversely affected by a decrease in the value of this metal.
Mineral Exploration
Mineral exploration involves a high degree of risk. Few properties that are explored are
ultimately developed into producing mines. Unusual or unexpected formations, formation
pressures, fires, power outages, labour disruptions, flooding, explosions, tailings
impoundment failures, cave-ins, landslides and the inability to obtain adequate
machinery, equipment or labour are some of the risks involved in mineral exploration
and exploitation activities. The Company has relied on and may continue to rely on
consultants and others for mineral exploration and exploitation expertise. Substantial
expenditures are required to establish mineral reserves and resources through drilling, to
develop metallurgical processes to extract the metal from the ore and, in the case of
some properties, to develop the mining and processing facilities and infrastructure at any
site chosen for mining, or to upgrade existing infrastructure. There can be no assurance
that the funds required to exploit any mineral reserves and resources discovered by the
Company will be obtained on a timely basis or at all. The economics of exploiting mineral
reserves and resources discovered by the Company are affected by many factors, many
outside the control of the Company, including the cost of operations, variations in the
grade of ore mined and metals recovered, price fluctuations in the metal markets, costs
of processing equipment, and other factors such as government regulations, including
regulations relating to royalties, allowable production, importing and exporting of
minerals and environmental protection. There can be no assurance that the Company’s
mineral exploration and exploitation activities will be successful.
Country Risk
The Company could be at risk regarding any political developments in the Country in
which it operates. At present the Company is only active in the Province of Quebec,
Canada.
Uninsurable Risks
The Company’s activities are subject to laws and regulations controlling not only mineral
exploration and exploitation activities themselves but also the possible effects of such
activities upon the environment. Environmental legislation may change and make the
mining and processing of ore uneconomic or result in significant environmental or
reclamation costs. Environmental legislation provides for restrictions and prohibitions on
spills, releases or emissions of various substances produced in association with certain
mineral exploitation activities, such as seepage from tailings disposal areas that could
result in environmental pollution. A breach of environmental legislation may result in the
imposition of fines and penalties or the suspension or closure of operations. In addition,
certain types of operations require the submission of environmental impact statements
and approval thereof by government authorities.
The Company’s activities are subject to wide variety of laws and regulations governing
health and worker safety, employment standards, waste disposal, protection of the
environment, protection of historic and archaeological sites, mine development and
protection of endangered and protected species and other matters. The Company is
required to have a wide variety of permits from governmental and regulatory authorities
to carry out its activities. These permits relate to virtually every aspect of the Company’s
exploration and exploitation activities. Changes in these laws and regulations or changes
in their enforcement or interpretation could result in changes in legal requirements or in
the terms of the Company’s permits that could have a significant adverse impact on the
Company’s existing or future operations or projects. Obtaining permits can be a
complex, time-consuming process. There can be no assurance that the Company will be
able to obtain the necessary permits on acceptable terms, in a timely manner or at all.
The costs and delays associated with obtaining permits and complying with these
permits and applicable laws and regulations could stop or materially delay or restrict the
Company from continuing or proceeding with existing or future operations or projects.
Any failure to comply with permits and applicable laws and regulations, even if
inadvertent, could result in the interruption or closure of operations or material fines,
penalties or other liabilities.
Potential Dilution
The issue of common shares of the Company upon the exercise of the options and
warrants will dilute the ownership interest of the Company’s current shareholders. The
Company may also issue additional option and warrants or additional common shares
from time to time in the future. If it does so, the ownership interest of the Company’s
then current shareholders could also be diluted.