Six Months Ended June 30, 2009
MANAGEMENT DISCUSSION AND ANALYSIS
August 27, 2009 – The following discussion and analysis of financial status and results is
provided by the management of IBI Corporation and should be read in conjunction with
the audited consolidated financial statements for the year ended December 31, 2008, the
unaudited interim consolidated financial statements for the six months ended June 30,
2009 and the management discussion and analysis for the year ended December 31,
Table of Contents…
PROFILE AND STRATEGY
Business of the Company
Minerals Exploration and Investment Strategy
Uranium Industry and Markets
Gold Mining and Markets
Business Goals for the Year
2008 Goals and Achievements
2009 Goals and Objectives
Restructuring Operations in Uganda
Sale of Namekara Vermiculite Mine
SIGNIFICANT RESOURCES AND COMPETENCIES
Exploration Licenses in Uganda
Uganda Sustainable Management of Mineral Resources Project
Uganda Aerial Geophysical Minerals Survey
Lunyo/ Lumino Property
NI 43-101 Report for Uranium
Venus Joint Venture
Busia Gold Properties
NI 43-101 Report for Gold
Grey Crown Resources Limited
Mica Peak, Nevada Vermiculite Property
Nuclear Energy Strategy
Other Mineral Projects
Technical Support – Qualified Persons
Operations – Corporate
Related Party Transactions
Liquidity and Capital Resources
Disclosure and Internal Controls and Procedures
Harmonization of Canadian and International Accounting Standards
UNCERTAINTIES AND RISK FACTORS
Outstanding and Settled Matters
• James and Amy Stephenson
Hans Hansen and Nathan Wolukawu
All references herein are in Canadian dollars, unless otherwise specified.
PROFILE AND STRATEGY
Business of the Company…
IBI Corporation (the “Company”) is an investment company with an international scope
The Company’s mission has been to combine technology and capital to develop
international resources. This is most aptly reflected in our current statement of focus:
Exploring and Harvesting the Mineral Wealth of Uganda and East Africa, adopted in
late 2006. The Company’s new focus reflects developments regarding gold and uranium
properties and related opportunities in Uganda and Tanzania, which initially occurred late
in 2006 and 2007 and certain of which took a major step forward in early 2009 with the
support and encouragement of His Excellency, Yoweri Museveni, President of the
Republic of Uganda.
Historically, and following initial development work, the Company started commercial
operations at its Namekara vermiculite mine as of January 1, 2003. However,
subsequently, as a result of escalating oil prices and global freight costs and the inherent
impact on profitability, the Company determined it should change its focus from an
industrial mineral producer to high value minerals exploration and development.
Accordingly, in December 2006 the Company announced the sale of the Namekara
vermiculite mine to Rio Tinto Uganda Limited (“Rio Tinto”) for US$5 million cash. The
initial closing thereof took place on March 30, 2007 and the final closing occurred on
March 26, 2008.
Concurrent with the sale negotiations and finalization, in 2004, 2006 and 2007 the
Company applied for and secured exploration permits granted by the Department of
Geological Survey and Mines (“DGSM”) of Uganda for:
Gold 955.0 sq. km
Uranium 1,931.5 sq. km
In early 2009 the Company added a 90% option on a uranium property in Tanzania of
82.2 sq. km and a 20% carried joint venture interest in a portfolio of 12 properties in
Uganda comprised of 3,442 sq. km prospective for gold, uranium and rare earth minerals.
During the quarter, the company acquired four new exploration licenses (the
"Properties") in the Mubende District of Uganda, thereby increasing the Company's
uranium land position by 37%.
The Properties comprise an area of 782.9 sq. km in which IBI's consulting geophysicists,
Paterson, Grant & Watson ("PGW") under the supervision of Dr. James Misener, P.Eng,
president of PGW, previously identified a number of uranium anomalies as part of
PGW's interpretation for IBI of data from Block 2 of the Uganda Aerial Minerals Survey
Starting in 2004, the Company initiated certain preliminary gold exploration on its lands,
and throughout 2007 to date it initiated ground exploration on its uranium lands.
Interpretation of the aerial survey in Uganda for radiometric readings was completed as
January 2008, on the Lunyo uranium prospect
February 2009, on the Mubende uranium prospect
As of late April/May 2007 the Company sponsored and invested in the formation of Grey
Crown Resources Limited, a new initially private company with a mandate to become a
significant integrated gold company focused initially in south-east Uganda.
In the first half of 2008, the Company farmed out a working interest in its gold properties
to African Mineral Fields Limited and to Grey Crown Resources Limited (through its
Uganda Operating subsidiary, Busitema Mining Cie. Ltd.), allowing each farmee to earn
up to an 80% interest in their respective properties, with IBI Corporation retaining a 20%
carried interest in each property.
Overall, the Company’s focus has undergone a change from vermiculite mining to
prospecting and exploring for uranium, and other high value minerals, and strategic
investing in gold-focused assets.
In late 2002, the Company was recognized for its achievements and was granted the
Investor of the Year Award by the Ugandan government. This is a reflection of the
Company’s objective, which is to position itself as a dominant developer in the minerals’
sector of Uganda.
Also, in January 2006, the Company was featured in a publication prepared by the
Government of Uganda in cooperation with the World Bank-led syndicate, entitled
Uganda: Opportunities for Mining Investment.
Several mining-related magazines and newspapers have published feature articles in
2005, 2006 and 2009 on the Company’s achievements. These publications have
highlighted the Company’s vermiculite project and other projects in Uganda and in 2009
editorial coverage was related to the Company’s uranium and nuclear energy strategy,
which is focused on a contemplated private/ public partnership with the Government of
The corporate office is located near Toronto, Ontario, Canada. The Company is a
reporting issuer under securities legislation in Ontario, British Columbia and Alberta,
Canada and trades on Tier 2 of the TSX Venture Exchange under the symbol “IBI”.
Based on the funds received in 2007 and 2008, at December 31, 2008 the Company has
282,454,350 shares outstanding. No shares were issued in the year, 2008. In early January
2009, 4 million additional shares were issued, at $0.05 each $200,000, with 4 million
warrants exercisable until December 31, 2010 at $0.10 each.
Minerals Exploration and Investment Strategy...
The Company’s focus is on the exploration and development of high-value minerals in
Uganda and East Africa, particularly gold and uranium. Both of these minerals have
witnessed tremendous upward mobility in the commodities markets in the last two years.
In both of the gold and uranium markets, demand considerably exceeds supply and is
expected to continue to do so for at least the medium-term future. Propitiously for IBI,
the cost of both exploration for and extraction of minerals is markedly less in Uganda
than in North American and other global jurisdictions, which gives IBI a flexible range in
which operations can be profitable, even with fluctuations in market prices for uranium
Uranium Industry and Markets:
Until relatively recently, the spot price of uranium was less than $10 per pound as a result
of two major and inter-related historical factors. Because of safety concerns prompted by
major nuclear reactor incidents at Chernobyl in Russia and Three Mile Island in the
United Sates, nuclear energy for electrical power generation took on a very negative
image with consumers. As a result, the building of new nuclear reactors for electrical
power generation was generally curtailed. Coupled with this was a large increase in the
supply of enriched uranium for existing reactors, which came on the market as nuclear
material from highly enriched weapons-grade nuclear material and which appeared with
the lessening, and then the ending, of the cold war. The surplus of supply versus demand
resulted in low prices. This meant that it was no longer profitable for the vast majority of
uranium mines to remain viable, and accordingly, most were shut down and abandoned.
Today, with the green movement and increased environmental awareness, fossil fuels for
electrical power generation are no longer considered acceptable because of their resulting
greenhouse gases. Uranium is now the new green fuel, and many new reactors are
coming on stream and/ or in the planning stages throughout the world. With the existing
new demand and even greater anticipated demand, the supply of uranium is insufficient
and is forecast to be insufficient for at least a decade or more. Prices are now in the $50
per pound range, which makes the exploration for, the development of, and the mining of
uranium a profitable undertaking.
To illustrate the future enhancement of the demand/ supply balance, China has reported
that over 100,000,000 Chinese citizens are without a source of electricity, and
accordingly the country has committed as much as $40 billion to the construction of new
nuclear power facilities to meet this unprecedented demand. Also, the USA, Sweden and
Italy are now lifting their moratoriums on nuclear power and are planning construction of
new reactors. Two years ago the world used 180 million pounds of uranium, while
global mines produced just 115 million pounds.
Although the uranium spot price is currently down to US$50.00/lb, experts in the
industry believe that prices will again reach higher levels with the anticipated recovery
from the current bear market in commodity prices and the global credit crunch.
Gold Mining and Markets:
The price of gold is driven both by supply and demand in consumer and industrial
markets and by speculative trading, as gold is increasingly assuming the characteristics of
currency. With the instability of some major currencies today, such as the recent decline
of the US dollar, gold is seen as a hedge against devaluations resulting from fluctuating
confidence levels in money markets. It is thought that long-term supply will remain tight
because gold mine output is expected to be flat and central banks will play a lesser role as
Historically, gold is considered to have an unalterable intrinsic value. Gold recently
exceeded $1,000 per ounce and it is widely held that it will not go below the high
hundreds. One of the biggest demand areas for gold is consumer jewelry with demand
also being high for many industrial, electronics, and a variety of specialty applications.
As with other mineral commodities the profitability of gold mining, and therefore the
acceptable cost of exploring for gold, depends on the difference between the price of gold
per ounce and the cost per ounce of extracting gold from ore bodies. The recent and
current levels of gold prices have resulted in old gold mines being reopened that had been
abandoned when lower gold prices were not high enough to warrant the cost of mining it.
Higher gold prices also means that ore bodies previously considered of too low grade to
be profitable can, and are now, providing good returns on investment for miners. Industry
experts foresee that the price of gold will continue to be high enough to warrant ongoing
exploration with resultant profitable development.
Another important factor influencing supply is the decline in reserves experienced by the
Business Goals for the Year…
2007 marked the transition of IBI from an industrial minerals company to a high value
minerals exploration and development company. 2008 was the year in which the
Company consolidated its operations and began to realize its long held goal of
specifically identifying high-value mineral target areas, and subsequently performing
ground exploration work, with the aim of establishing reserves. The first quarter of 2009
reflected positive momentum and significant progress in exploration and development of
2008 Goals and Achievements
In early 2008, management launched a number of initiatives to help facilitate the
achievement of its corporate goals. Initiatives included the following, with an asterisk *
signifying satisfactory progress on a number of the targets:
Identifying and retaining additional geologists for uranium and gold; *
(Andreas Schumann and his associates are carrying out ground geochemical
work and the firm of Paterson, Grant & Watson is carrying out geophysical
work on Grey Crown properties. Dr James Misener has become IBI’s Qualified
Person, and has carried out various geophysical studies. Gold Finders of
Tanzania is conducting sampling of trenches on the new Ruhuhu property)
Initiating an NI 43-101 report on IBI’s uranium lands;
(Delayed because of late release of aerial survey over Block 2 – Mubende
Completing the Stage 2 dataset interpretation of the Company’s uranium and gold
lands in Aerial Survey Block 1; commencing targeted groundwork follow-up; *
Completed, and ground work started in last quarter of 2008)
Identifying and employing a new mining operations manager for the Tira Gold
(Completed in June 2008)
Beginning the upgrading of gold production throughput at the Tira Gold Mine,
owned by IBI’s affiliate, Grey Crown Resources Limited; *
(Production ramp-up started in mid-December 2008
Announcement of one or more definitive uranium joint ventures; *
(Trimark option on Ruhuhu property completed. JV with Venus Capital for 12
Announcement of one or more definitive gold joint ventures, either in IBI or in its
affiliate, Grey Crown Resources Limited; *
(Farm-out of three IBI gold properties completed. JV with Glencar completed
in Grey Crown. JV between Venus Capital and IBI for a number of gold
Commencing drilling and other advanced groundwork exploration where
considered appropriate on certain of the Company’s uranium and Grey Crown’s
gold lands, *
(Groundwork started on Grey Crown properties)
Advance to a Tier 1 status on the TSX Venture Exchange.
2009 Goals and Objectives
Management has established a number of goals for 2009.
Initiating an NI 43-101 report on IBI’s uranium lands;
Advanced groundwork on all uranium properties;
Add contiguous properties to the Mubende block, based on identified anomalies
from geophysical radiometric interpretation;
Continue study for proposed private/ public partnership Nuclear Energy Program
for Uganda, and submit strategy outline to H.E. Yoweri Museveni, President of
Develop a close working relationship with Venus Capital regarding JV;
Complete Induced Polarization and Resistivity study over mining lease of Grey
Complete ground sampling and geochemical analysis over all Grey Crown
Official launch and promotion of success of artisinal cooperative program;
Drill identified sulphide domal structures on Grey Crown mining lease;
Management believes all of the above comprise an achievable agenda for the coming
year. The Company’s excellent working relationships with the Government of Uganda
and its Department of Geological Survey and Mines will undoubtedly continue to prove
most helpful as IBI advances its mission.
The Company realizes that, in many respects, progress had been slow, which has largely
been the product of a humble cash position. The Rio Tinto purchase of our vermiculite
mine (and with the payment of US$2,400,000 on closing in March 2008 and a further
US$1,000,000 received on March 27, 2009) and IBI’s equity position with Grey Crown
have largely mitigated that dilemma.
Restructuring Operations in Uganda…
The president now carries out executive oversight, negotiations and local administration,
with visits to Uganda every two or three months. The Ugandan office was moved in late
2007 to an upscale neighbourhood, in the same building as Paul Sherwen and Grey
Crown. The office and administrative staff in this building provide certain support from
time to time, as required.
The Honourable Elly Karuhanga, who was appointed a director of IBI and Canmin
Resources Limited in December 2007, has extensive business experience, contacts, and
legal experience both in Uganda and internationally. Elly has recently been appointed
Chairman of the Uganda Chamber of Mines and Petroleum succeeding Paul Sherwen,
president and chief operating officer of IBI’s affiliated company, Grey Crown. His
presence on the Company’s management team in Uganda is proving extremely valuable
as the company evolves.
IBI’s close associate, Paul Sherwen, president and chief operating officer of IBI’s
affiliate company Grey Crown, is providing considerable assistance to IBI. Additionally,
as past Chairman and a current director of the Uganda Chamber of Mines and Petroleum
and as Chairman of the minerals and oil sector committee of the President’s Investment
Roundtable, Paul is a key executive familiar with and connected to all important mining
developments in Uganda.
Additionally, Venus Capital Resources Limited ("Venus"), represented by Gary Watkins,
chief operating officer, is a member of the Uganda Chamber of Mines and Petroleum, and
Mr. Watkins was also elected as a director. IBI has a 20% carried interest in a joint
venture with Venus involving 12 properties comprising 3,442 square kilometres that are
expected to be explored for gold, uranium, and rare earth minerals.
Since September 2007, the Company has retained Kampala Associated Advocates as its
corporate counsel in Uganda. This firm is directly assisting the company in the legal and
regulatory aspects of IBI’s and Grey Crown’s operations in Uganda while also helping to
protect the now substantial assets of both companies in that country.
The Company is sharing the services of a free-lance clerk with Grey Crown, to be
responsible for licensing and corporate filings, in order to keep the companies in good
standing and compliant in Uganda.
There are many local issues involved in exploration, development and mining
undertakings in Uganda, including relationships with village and town councils and
government officials. Local and regional issues require quality on-the-ground individuals
who can help pave the way for efficient, thriving operations. The Company believes that
its new management structure in Uganda will be effective in working with the local and
regional political infrastructure.
One of the numerous positive results of our new Uganda management structure has been
the Company’s ability to work more directly and efficiently with organizations interested
in forming alliances with IBI regarding our uranium properties and our gold land
interests. The Company’s on-the-ground management capabilities have led to serious
discussions with several major mining companies concerning joint venture possibilities
on our uranium and gold prospects.
Our increased on-site presence has also considerably boosted the Company’s ability to
augment our already excellent working relationships with the Government of Uganda and
particularly the Department of Geological Survey and Mines and the Investment
Authority to a new level of even greater interpersonal cooperation. Indicative of this is
the fact that we have made joint presentations at the PDAC mining show in Toronto in
March of the last three years with Uganda’s Minister of State for Energy and Mineral
Development, the Honourable Dr. Kamanda Bataringaya and Joshua Tuhumwire,
Commissioner of the Department of Geological Survey and Mines.
Sale of Namekara Vermiculite Mine...
The final closing took place under amended terms and US$2.4 million was received on
March 26, 2008. Rio Tinto had recently advised that it was unable to complete the sale of
the mine and, instead, completed start-up of production with existing facilities, as a joint
venture with an Australian business group connected with a local east African affiliate.
Accordingly, final payment of US$1 million (Cdn$1,232,600) was made on March 26,
2009, putting the Company into a comfortable cash position, particularly when most
junior companies are suffering from the global credit shrinkage.
SIGNIFICANT RESOURCES AND COMPETENCIES
As outlined in the year-end MD&A, the IBI team of talented and experienced personnel
is growing. This will add significantly to the number of new opportunities and the ability
to execute the Company’s strategic plans.
In addition, this diversity of personnel provides greater security going forward.
Exploration Licenses in Uganda…
The Company has accumulated a considerable land portfolio in Uganda for uranium and
gold, all of which are historically considered to be prospective. Recent interpretation of
data from the Uganda Airborne Geophysical Minerals Survey has been encouraging for
the Company in terms of justifying its confidence in its gold and uranium holdings.
The interpretation of the Mubende block for uranium, for example, provided evidence of
some 30 anomalies, and was the rationale for adding further contiguous lands consisting
of 782.7 square km.
Giving IBI a “head start” with gold is the Company’s approximate 29.3% strategic
ownership interest in Grey Crown Resources, in turn owner of the producing Tira Gold
Mine. The Mine is located in the highly gold-prospective Greenstone Belt in the Busia
district of Uganda.
The interpretation of the Grey Crown gold lands consisting of 1,242 square kilometres
established that the entire block of eleven properties is situated within the Southeast
Uganda Greenstone belt, which is an extension of the productive Lake Victoria
The relevant applicable licensing regime in Uganda is as follows:
Exploration – an exploration license is granted initially for a three-year term, and it is
renewable subsequently for two two-year terms with a 50% claw-back of size on each
Mining – based on satisfactory exploration results and project feasibility, a mining lease
is then available with a renewable term of 21 years.
Number Registered Holder District Square km Maturity
IBI Corporation (uranium interests)
(1) EL0410 Canmin-Gold Limited Lumino 432 km2 22 Dec 2011
(1) EL0163 Canmin-Gold Limited Lumino 190 km2 22 Apr 2010
(2) EL0164 Canmin Resources Limited Mubende 495 km2 26 Apr 2010
(2) EL0165 Canmin Resources Limited Mubende 498 km2 8 May 2010
(2) EL0192 Canmin Resources Limited Mubende 270 km2 24 Sep 2010
(3) EL0162 Canmin-Gold Limited Mbale -- km2 4 Oct 2010
Four Additional properties Mubende 110 km2 (4) June 2012
Four Additional properties Mubende 143 km2 (4)
Four Additional properties Mubende 249 km2 (4)
Four Additional properties Mubende 280 km2 (4)
Total 2,667 km2
IBI Corporation (property in Tanzania acquired in July 2009)
Gambaro Resources Limited Songea 82 km2 (5)
IBI Corporation (gold interest)
EL0198 Canmin-Gold Limited Ibanda 333 km2 (6) 4 Oct 2010
20% Interest in Simba Resources Ltd.:
EL0180 Bugiri West 310 km2 (7)
EL0178 Bugiri East 368 km2
EL0179 Kumuli 414 km2
EL0186 Queen Elizabeth Park 456 km2
EL0139 Fort Portal 494 km2
EL0132 Rupa-Moroto 108 km2
EL0145 Nakiloro – Moroto 126 km2
20% Interest in Elgon Exploration Ltd.
EL0241 Kojja Peninsula 85 km2
EL0242 Bukwa – Kapchorwa 443 km2
EL0274 Mbale 487 km2
20% Interest in Rhino Resources Ltd.
EL0162 Mbale 46 km2
EL0220 Mbale 220 km2
(1) Title to these properties was transferred into name of Busitema Mining Cie Ltd.
(“Busitema Mining”), but Uranium rights retained by Canmin Resources. It is considered
as one geological block of 622 km2. In August 2008 the EL037 expired, but has been
reestablished as a new license #0410 in the name of Busitema, with an initial three-year
term from December 22, 2008.
These properties are subject to a joint venture agreement with Busitema Mining
Cie. Ltd. wherein Busitema may earn an 80% interest in respect of gold mining activities
in return for completion of defined exploration activities.
(2) Initially, three separate contiguous Exploration Licenses (“EL”), but representing
one geological block consisting of 1,263 km2. Four additional areas have been added. –
(3) Originally known as Mbale Uranium property, but EL was transferred to Busoba
Mining Limited to join together with contiguous property of 105 km2 for pro rata 30%
interest in shares of Busoba. Entire holding of Busoba of 151 km2 transferred to Rhino
Resources Ltd. on March 31, 2008, subject to joint venture funding and exploration
agreement with Venus Capital Resources Limited, with Busoba holding a 20% interest.
This 20% interest was transferred to IBI in February 2009.
(4) In June 2009 the company added four contiguous properties to the Mubende
block, consisting of 782.7 additional square kilometres.
(5) Definitive Agreement signed in February 2009 to acquire option to earn a 90%
interest in this property. Closing completed on July 13, 2009 with delivery of renewal
exploration license for uranium.
(6) A joint venture agreement completed in April 2008 with a third party mining and
exploration company, Magnus International Resources on behalf of its Ugandan
subsidiary, African Mineral Fields Limited, with interests in the general area of this
property, and since this property is in western Uganda and inconsistent with the regional
gold exploration focus of Grey Crown, IBI and Grey Crown agreed that this property and
the joint venture should remain with IBI. After completing exploration in a defined area
of the property, corporate economics restricted their ability to proceed further and
African Mineral Fields relinquished their interest in this property, and all rights reverted
to Canmin Resources.
(7) Twelve property interests in form of 20% carried interest along with Venus
Capital Resources Limited, in each of three operating companies. These properties are
prospective for gold, uranium and base metals with various maturities on initial three-
Grey Crown Resources Limited (gold interests)
Since its inception in April of 2007 Grey Crown has developed a significant land
portfolio of 1,242 km2 comprised of 11 Exploration Licenses (EL) in the South East
Uganda Greenstone Belt, an area which is regarded as an extension of the Lake Victoria
Greenstone Belt in Tanzania and from which majors, such as Barrick Gold and
AngloGold Ashanti, are currently producing gold from significant proven reserves.
Following are Grey Crown EL property details:
Number Registered Holder From District Square km Expiry
(1) EL0029 Busitema Mining DGSM Tororo 10 km2 Apr 22, 2010
(1) EL0030 Busitema Mining DGSM Tororo 5 km2 Apr 22, 2010
(2) EL0410 Busitema Mining Canmin Lumino 432 km2 Dec 22, 2011
(2) EL0163 Busitema Mining Canmin Lumino 190 km2 Apr 23, 2010
(3) EL0190 Busitema Mining Carnegie Bugiri 202 km2 May 22, 2010
(3) EL0191 Busitema Mining Carnegie Bugiri 100 km2 May 22, 2010
(3) EL0197 Busitema Mining Carnegie Busia 172 km2 May 22, 2010
(4) EL0008 Busitema Mining Master Busia 10 km2 Mar 18, 2010
(4) EL0060 Busitema Mining Master Busia 8 km2 Nov 15, 2010
(5) EL0438 Busitema Mining Glencar Busia 108 km2 Mar 25, 2012
(5) EL0071 Centrebind Agency Glencar Busia 5 km2
(1) Original ELs held by Busitema Mining, when Grey Crown acquired Busitema.
The original three-year terms of these ELs matured as of April 22, 2008, and were
renewed for a further term of two years, with a 50% claw-back in size.
(2) Title has been transferred to Busitema Mining, and is to be held in trust for IBI,
subject to Busitema Mining earning an 80% interest on a farm-in. A Joint Venture
Agreement has been completed between IBI/ Canmin and Grey Crown/ Busitema
providing for the reversion of gold/ uranium interests on their respective lands, subject to
retention of a 20% carried interest.
(3) Acquisition by Busitema from Carnegie Mineral Resources Limited closed on
February 18, 2008, and transfers of title to Busitema Mining completed as of that date.
(4) Acquisition of these properties from Master Prospecting completed, with transfer
of registration to Busitema Mining Cie. Ltd. in April 2008.
(5) Option for 30 months to explore on these properties and acquire a 60% interest
therein, obtained by Letter of Intent from Glencar Mining in April 2008. Property
EL0068 renewed for initial 3-year term in name of Busitema from March 25, 2009.
Working to close transaction in August 2009.
Uganda Aerial Geophysical Minerals Survey…
A comprehensive airborne survey has recently been completed over the majority of
Uganda’s lands, using contemporary state-of-the-art technology – 200 m spacing and 80
m clearance, for both magnetic and radiometric readings.
This survey started in late December 2006 and in total was expected to take over a year,
at a budgeted cost of US$10.3 million, and is 100% funded under the World Bank
sustainable development program for the Uganda minerals sector. This survey provides
very significant technical data and specific exploration targets.
The survey data is available to applicants at somewhat nominal cost, intended to cover
the reproduction cost.
The processing and analysis of the digital data was somewhat delayed, but the datasets on
the first two blocks were released on December 13, 2007. Block 1 of southeast Uganda
was included, and constitutes the majority of Grey Crown lands and certain IBI lands.
IBI, along with Grey Crown, and on a cost-sharing basis, immediately appointed the
extensively experienced global geophysicists, Paterson Grant & Watson (“PGW”), as
consultants and advisors. By late January 2008 IBI received the initial geophysical
interpretation of the relevant portion of Block 1. Since the final data sets were released in
mid July 2009, (PGW) are reviewing the data for additional exploration opportunities.
Interpretation in January 2009 of Block 2 by PGW of aerial survey datasets involving
IBI’s large Mubende lands has been completed, and has provided positive feedback, with
the identification of 30 uranium anomalies. Some of the anomalies were beyond the
boundaries of the initial three Mubende properties. As a result of the plotting of the
anomalies, four additional properties totaling 782.7 km2 were secured in June 2009.
Planning is underway for groundwork exploration on the Mubende property utilizing
spectrometer and surface sampling over the identified anomalies.
IBI’s utilization of the survey data will be as follows: In the first stage, data interpretation
by PGW will identify general areas of geological interest, particularly regarding uranium
and gold. The company is, to a great extent, past this first phase and has moved into
Phase 2 with regard to the Block 1 data. As a result, IBI is now in possession of useful
feedback with regards to certain of IBI’s surveyed lands. As part of the second Phase,
PGW will focus on determining priorities for programming groundwork surveys and the
associated subsequent analysis. This phase will help delineate precise areas where
possible drilling could commence. Under the direction of PGW this second Phase work
has been completed on our known most prospective area, and a significant potential
drilling target has been identified.
As IBI enters into this phase, and as part of the Block 1 data release, the Company also
reports that PGW has recommended further analysis and exploration on IBI’s Lunyo
uranium prospect, which was the only IBI uranium project flown in Block 1.
As for gold, the interpretation of the Block 1 data also showed encouraging results for
IBI’s Lumino gold land interests, confirming that they are situated within a Greenstone
geological structure. This is similar in structure to the Greenstone belt in Tanzania which
hosts an estimated 37 million ounces of gold reserves, from which majors are currently
producing significant volumes of gold. Clearly the data suggests that Grey Crown and the
Company can reasonably expect encouraging outcomes from these lands.
The Airborne Geophysical Survey is proving to be an effective time and cost saving tool
for IBI’s uranium and gold exploration and is a guiding factor in the formulation of the
Company’s exploration and development programs.
The Company’s previous holdings consist of three distinctive parcels of prospective
uranium lands, known as the Lunyo, Mbale and Mubende properties. Each of these has
undergone earlier basic exploration work that indicated uranium potential. All were part
of an airborne radiometric survey around 1980, which showed distinct uranium
signatures, but based on lower level technologies of the day.
Furthermore, the Company carried out some limited ground reconnaissance throughout
2007. Surface rock samples and samples from a number of pits were tested at the
independent laboratory, ALS Chemex laboratory in South Africa, and indicated uranium
Lunyo / Lumino Property (622 km2)
In addition to the 1980 aerial survey results, on-the-ground Geiger counter work in a
specific defined area on the Lunyo property also indicated readings higher than
In January 2008, the current aerial survey interpretation indicated elevated uranium
radiometric readings over this area.
Mbale (151 km2)
A joint venture agreement has been finalized in February 2009 in respect of the Mbale
uranium property with Venus Capital Resources, a U.K. based financial group, which has
an active exploration program in other areas of Uganda and other jurisdictions of Africa.
IBI retains a 20% carried interest in this project.
Venus has carried out scintillometer ground readings, lab sampling of surface materials,
and is proceeding with pitting and trenching on areas of elevated readings. Anomalies on
the property have been confirmed. Venus has provided encouraging feedback on the
results to date of the continuing exploration work on this property.
Mubende (1,263 km2)
The Mubende property is comprised of three contiguous exploration licenses, 0164, 0165,
The current aerial survey interpretation was carried out in February 2009 by Paterson,
Grant & Watson and has provided indications of uranium on the properties.
The purpose of the geophysical interpretation of the magnetic/radiometric data was
twofold; namely, to generate a regional structural/lithological interpretation map and to
select areas of anomalous uranium concentration as targets for further ground follow-up
and investigation. The majority of IBI’s area of interest is underlain by the PreCambrian
Mubende intrusive granitic batholith (“MuGr”).
Approximately 30 areas of anomalous uranium concentration have been detected within the
MuGr complex, and these responses have been grouped into nine targets. It has been
recommended that these targets be investigated on the ground with a spectrometer, visual
prospecting and sample collection, for laboratory analysis.
All of the targets, with the exceptions of T1 and T4 indicated on the mapping, lie within
IBI exploration licenses. The Company has acquired four new exploration licenses (the
"Properties") in June 2009 in the Mubende District of Uganda, thereby increasing the
Company's uranium land position by 37%.
IBI already holds exploration rights for uranium on its 1,263-square kilometre initial
Mubende property. The four new contiguous properties consist of 110.5 square kilometres,
143.2 square kilometres, 249 square kilometres, and 280 square kilometres, for a total of
782.7 square kilometres. This brings the total of the Company's holdings in the Mubende
area to approximately 2,047 square kilometres.
Ruhuhu – Tanzania (82.2 km2)
The Company had executed a Letter of Intent regarding this property in October 2008. In
February 2009, a definitive agreement was signed for a four-year option to earn a 90%
interest in the Ruhuhu 72 km2 uranium property in Tanzania, but final closing had been
deferred, pending delivery of the renewal exploration license from the Government of
Tanzania. The renewal for the exploration license was received on July 13, 2009 and the
EL area has been increased from 72 km2 to 82 km2. IBI made a cash payment to
Trimark of US $35,000 on closing and is to make a further payment of US $40,000 after
one year. Trimark will be vested a 2% Net Smelter Royalty interest (“NSR”) with a
further option in favour of IBI to buy back the NSR upon payment of US $ 1 million to
Trimark. A previous optionee, Uranium Hunter Corporation, forfeited the project for
failure to fulfill the terms of its agreement. IBI takes over the property rights with benefit
of all previous work completed.
A variety of initial exploration undertakings costing in excess of $200,000 had already
been accomplished by the previous optionee concerning the Ruhuhu property:
Geologically, the property is situated within the Karoo sediments in the Ruhuhu
Karoo sedimentary basin. The project is located west-north-west of the town of
Songea in Southern Tanzania.
A May 14, 2007 report on the property by Paterson, Grant & Watson Ltd.,
Consulting Geophysicists, consisted of an interpretation of earlier magnetic and
radiometric aerial survey work. The report identified “anomalous areas of interest
for uranium” and recommended further exploration involving high-resolution
airborne geophysics, geochemistry, and ground follow-up of uranium targets with
gamma-ray spectrometry and gold targets with induced polarization.
A subsequent report dated July 25, 2007.was prepared by Vivian Stuart-Williams
of VP3, South Africa, a geological consultant with specific Karoo uranium
experience. This report notes, “Uranium in the Karoo sediments is derived from
the adjacent basement (generally the granites) and was released during primary
weathering. Uranium was then transported as uranyl carbonates in the ground
water. Deposition within Karoo uranium deposits is generally associated with
reduction/oxidation fronts (REDOX) associated with free organic carbon.”
The report indicates that during limited fieldwork within the concession, three
anomalies were found using a scintillometer. On the basis of these anomalies
within the favourable Karoo sediments, this concession must be viewed as highly
To more specifically locate anomalies in the exploration license area, the Karoo
sediments were walked by the geologist south of the Ruhuhu River on 250 metre
lines controlled by GPS.
An airborne radiometric and magnetic survey over the Ruhuhu property was
commissioned and subsequently conducted by helicopter by the airborne
contractor, New Resolution Geophysics of South Africa.
An interpretive report of October 2007, on the commissioned helicopter
geophysics survey of the property, was prepared by Geoff Campbell, P. Eng,
consulting geophysicist, GAP Geophysics (Pty) Ltd., This report notes that
“Modest resolution aeromagnetic and radiometric surveys along 1,100 km of line
over the Ruhuhu prospect have delineated up to eight outcropping zones of
enhanced uranium activity over which anomalous responses are at least twice the
background level characterizing Karoo sediments underlying the area. As
geochemical indicators, these constitute viable follow-up targets in the search for
uraniferous paleochannels within the Karoo.”
Subsequent to the identification of uranium exploration target areas, the
geological firm Gold Finders of Tanzania, under the direction of Peter Andrew,
managing director, was engaged to further investigate identified anomalous areas
by shallow trenching. Scintillometer readings were taken within the trenches,
which showed further evidence of uranium mineralization. At this point
exploration activity under the previous option holder ceased.
IBI is now working with Gold Finders to continue project exploration, and a sampling
program with the existing trenches has been completed, and samples are at the ALS
Chemex laboratory in Australia. Planning is underway for further trenching and
NI 43-101 Report for Uranium
In early 2009 the Company began planning for a NI 43-101-compliant study and report
on all of the IBI uranium properties and is currently having discussions with prospective
joint venture partners.
Exploration costs on the Company’s uranium properties incurred by IBI to December 31,
2008 were $89,524, and these have been indicated as a write-down in the financial
Venus Joint Venture
As previously disclosed, the Company had a dispute with former senior staff of its
Ugandan subsidiary, Canmin Resources Limited. This followed the discovery by IBI of
certain irregularities related to the operations of Canmin. The result was a criminal
investigation and the preferring of criminal charges against both Messrs. Hansen and
Wolukawu (See section following on Legal Matters). Among the matters otherwise in
dispute, was the acquisition of a total of 11 mineral exploration licenses in Uganda (the
“Licenses”) by three personal holding companies of Messrs. Hansen and Wolukawu (the
“Personal Holding Companies”) during the course of, and in conflict with, their
employment with Canmin.
Following the initial acquisition of the Licenses, the Personal Holding Companies entered
into joint venture agreements (the “JV Agreement”) with three other companies (the
“Acquisition Companies”), each controlled by a United Kingdom investment and holding
company. Each of the Acquisition Companies acquired certain of the Licenses and in turn
provided the respective applicable Personal Holding Company with a 20% share
ownership interest in such Acquisition Company. The Acquisition Companies are known
as Simba Resources Limited (“Simba”), Elgon Exploration Ltd. (“Elgon”), and Rhino
Resources Ltd. (“Rhino”).
A settlement was reached with Hansen and Wolukawu in February 2009, and the
following property rights were assigned to IBI:
the Personal Holding Companies assigned their rights and obligations under the
JV Agreement, and transferred the 20% interests in each of the Acquisition
Companies, to IBI, such that IBI now has an ongoing indirect financial interest in
each of the Licenses;
IBI paid an aggregate of $110,000 as additional and final consideration to acquire
the 20% interests in the Acquisition Companies from the Personal Holding
The new Licenses comprise 11 mineral exploration licenses covering approximately
3,442 square kilometres in Uganda. The Licenses relate to four general areas of Uganda:
south-east (Bugiri) 1,177 square kilometres; central-east (Mbale) 638 square kilometres;
north-east (Moroto) 677 square kilometres; and west (Fort Portal) 950 square kilometres.
These new licenses are targeted on gold, uranium, and possible carbonatites, which may
involve certain rare earth minerals. The form of several magnetic responses discovered in
the recent airborne geophysical work suggests the presence of previously unknown sub-
The Canmin license 0162 in the Mbale area, and which is targeted for uranium, has been
added to the new Licenses, and accordingly the total project will comprise 12 licenses.
Two of the new Licenses are contiguous to the Canmin prospective uranium property in
Mbale and three are contiguous to the lands held by Grey Crown Resources Limited
(“Grey Crown”) (in which IBI holds a 29% interest), but are focused on carbonatites.
Grey Crown has approximately 1,171 square kilometres of gold prospective lands as an
extension of the established Lake Victoria Greenstone Belt, as well as the TIRA
producing gold mine, in the area.
The Acquisition Companies will consider the block of 12 licenses as a project (the
“Project”), and pursuant to the JV Agreements, the Acquisition Companies will be the
operator of the Project and will fund all exploration and development costs related to the
Project. IBI has met with the exploration team in place in Uganda, which has an
operations office and compound in Kampala, and certain exploration work is underway.
With the Personal Holding Companies having assigned their rights and obligations under
the JV Agreement to IBI, the parties to such agreement are now IBI and each of the three
Acquisition Companies, which collectively own the Licenses. In addition, IBI holds a
20% interest in each of the three Acquisition Companies. Venus Capital Resources
Limited, a mining investment company of the United Kingdom, holds the remaining 80%
interest in each of the Acquisition Companies.
Venus Capital is responsible for the funding of all exploration and operating costs of the
three Acquisition Companies. Venus has indicated to IBI that certain exploration work
has been conducted on the properties as noted in the following general outline:
Fieldwork has been conducted on all the properties to date, although resources have been
concentrated on the most defined and prospective targets.
A ground scintillometer survey has been carried out on the main uranium property.
Pitting and trenching has further confirmed anomalous zones of uranium, which may
lead to future drilling.
Exploration by stream sediment sampling has begun on other license areas for gold.
Ground and airborne geophysics work has been carried out on magnetic anomalies,
which has defined carbonatite targets.
Recent reports on three properties (Mbale, Bugiri and Rupa-Moroto) are encouraging.
During 2004, the Company’s geologist surveyed the availability of prospective gold
properties in Uganda, leading to the acquisition of the Company’s two Busia gold
properties, of 622 sq. km. Subsequently, the Company also secured a 333 sq. km. gold
prospect in the Ibanda area of western Uganda. This property, is reported to be on
regional trend to the prolific Tanzania Greenstone areas and the Kilo Moto areas of
Busia Gold Properties (622 km2)
These properties are part of the gold prospective Greenstone Belt in southeast Uganda,
which is an extension of the established and prolific Greenstone areas in Tanzania and
Kenya. Barrick Gold, AngloGold Ashanti and other majors are producing gold in the area
from approximately 37 million ounces of proven reserves within a resource which is
reported to contain as much as 60 million ounces of gold.
The Company secured a 100% working interest in the Busia and Ibanda exploration
Certain phase 1 and 2 site investigations have been completed on the initial 40 sq km ELs
at the north end of the current Busia property, contiguous to the producing Tira Gold
review of area geology,
investigation of geology and footprint of adjoining Busitema producing gold
magnetic IP surveys at 400 meter spacing across the property and again at 20
meter spacing over apparent anomalies,
independent and local laboratory analysis of surface soil samples,
shallow trenching in areas of apparent anomalies, and
independent laboratory analysis of trenching samples.
Effective May 1, 2005, the Company’s Qualified Person, Ulrich Kretschmar Ph.D of
Exploration Geoscience Associates Inc. of Orillia, Canada completed a technical report
under NI 43-101 in respect of these prospective gold concessions. This report is available
on the Company’s website and SEDAR.
Exploration work appeared to be showing positive results. However, the next exploration
steps had been deferred pending:
Completion of aerial survey over the south east area of Uganda, including the
Company’s concessions and assessment of the data provided;
The outcome of significant strategic negotiations and the inherent financing to be
Further geological investigative work on the ground and stream sediment sampling had
been carried out in the second and third quarters of 2007, and represent additions to the
databank of geological information.
As contemplated in 2007 with the organization of Grey Crown, the Company completed
a conventional farm-out agreement with its affiliate, Grey Crown, in May 2008 for
further exploration and development of the Busia properties. Grey Crown will earn an
80% interest on completing the defined exploration and development thereon within a
defined period. IBI will retain a 20% carried interest in respect of any gold revenues
derived therefrom. Title to the properties has been transferred to Busitema Mining Cie.
Ltd. to be held in trust relative to IBI’s financial interests therein.
IBI will also retain a 100% interest in respect of any uranium opportunities from these
properties. The IBI Lunyo uranium prospect is on these properties, along with other
targets identified from the preliminary interpretation of the Block 1 aerial survey dataset.
The Busia properties will form part of the Nyanzian Greenstone regional gold exploration
play assembled by Grey Crown, as summarized in the section Uganda Exploration
Licenses outlined above. This exploration play potential is tangibly supported in the area
by the results of Grey Crown’s producing Busitema gold mine and the active artisinal
mining in the area.
In respect of this regional gold exploration play, and following certain property
adjustments on renewals, Grey Crown now controls 1,242 square kilometers. In addition
to the properties acquired in the Busitema acquisition and the Canmin farm-in properties,
in the first half of 2008, Grey Crown has added the following properties:
Carnegie Minerals 474 sq. km.
Master Prospecting 27 sq. km.
Glencar 113 sq. km.
Total 614 sq. km
Ibanda Property (333 km2)
IBI also completed in April 2008 a definitive agreement for a farm-out of the Ibanda gold
prospect with Magnus International, another public company active in gold exploration in
western Uganda through its subsidiary, African Mineral Fields Limited (“AMF”). AMF
may earn up to an 80% interest in the property by spending US$2,000,000 on exploration
and development on the property over a period of up to five years. AMF has completed
some initial ground sampling on the property, and the samples did not achieve expected
results in the laboratory analyses and accordingly AMF, has relinquished its interest in
the property back to IBI.
NI 43-101 Report for Gold
Effective January 15, 2008, Brian W. Hester P.Eng. and Martin J. Taylor P.Geo.
completed an extensive NI 43-101 technical report for Grey Crown covering its
properties and including the IBI Busia properties being farmed-out to Grey Crown This
report is available on the Company’s website and SEDAR, since IBI has a material
financial interest in Grey Crown. Grey Crown has engaged Mr. Hester to now complete
an update of this report to add subsequently acquired properties and update subsequent
exploration carried out.
Exploration costs on these properties by IBI to May 31, 2008 were $174,004, and these
costs have been written-off in the financial statement.
Grey Crown Resources Limited…
As of April 2007, the Company spearheaded the formation of Grey Crown Resources
Limited, a new initially private company with a mandate to become a significant
integrated gold company focused initially in the Nyanzian Greenstone Belt area of
Uganda, and subsequently in broader areas of Africa.
The initial foundational step for Grey Crown was the acquisition in August 2007 of
Busitema Mining Cie Ltd. (“Busitema”) which owns and operates the producing Tira
gold mine, and also holds nearby exploration licenses granted by the government of
Uganda covering the Tira Exploration Project and the Amonikakinei Exploration Project,
both in total now comprising 15 square kilometres. In February 2008, Grey Crown
completed the acquisition of 474 sq. km. of additional prospective gold lands, also in the
Nyanzian Greenstone Belt. The next step for Grey Crown was the finalization of a
conventional farm-in agreement with IBI Corporation covering the IBI gold lands of
some 622 square kilometers.
In April 2008, Grey Crown also acquired title to or rights to additional contiguous lands
from Master Prospecting. Additional lands from Glencar Mining were also acquired by
Letter of Intent, and a definitive agreement is being finalized and closed in August 2009.
Grey Crown has completed a detailed NI 43-101 technical report dated January 15, 2008
covering its properties, and also an initial interpretation of the geophysics from the
Uganda aerial survey, followed by Phase 1 on-the-ground geophysical follow-up work.
This technical report is currently being updated to include additional lands and further
In May 2007, IBI invested $200,000 in subscriptions for the acquisition of 2,000,000
Grey Crown shares at $0.10. In July 2007, IBI invested a further $500,000 in
subscriptions for 1,000,000 Grey Crown shares at $0.50. In 2008 and in the first quarter
of 2009, IBI subscribed for an additional 103,700 shares at $0.40 each for a total of
$40,880 and 1,000,000 shares at $0.50 each for a total of $500,000. The 4,103,700 shares
acquired to March 31, 2009 provide IBI Corporation with approximately a 29.3% equity
interest in Grey Crown, subject to possible subsequent dilution. During the second
quarter loans totaling $254,493 were made to the Affiliate.
Final closing of the share acquisitions was completed in August 2009.
Mica Peak, Nevada Vermiculite Property…
In February 2004, the Company obtained an option to acquire 1,247 acres, comprised of
100 claims, of vermiculite-bearing-lands in southern Nevada, USA in the name of a
newly incorporated subsidiary, North American Vermiculite, Inc. The exclusive option
expired December 31, 2005 and had been extended until September 30, 2008. The
exercise price for the option was US$500,000, and there were no further royalties or
overrides to be paid to the claim-holder.
Considerable exploration, drilling, testing, analysis and permitting work had been
completed on the property by prior interested parties, and this data has been provided to
the Company. The Company’s independent consulting geologists and former technical
staff have made a site visit, met with former geologists involved on the site, and have
reviewed this data.
North American Vermiculite had granted an option on the property rights to Rio Tinto,
which has dropped the option in view of their move to step out of the vermiculite
business. Rio Tinto had made payments of US$50,000 for the option rights they held. In
addition, Rio Tinto had completed various exploration and analysis data on the property,
and these data have been provided to IBI in accordance with the terms of the Agreement
with Rio Tinto.
The Company’s net option and development costs on this property to December 31, 2007
were $107,906, and the up-front option payments received, totaling US$50,000
(Cdn$58,056), have been recorded as a reduction thereof, to a net carrying value of
$49,850. Additional carrying costs during 2008 totaled $31,649, bringing the current
carrying value to $81,499. In view of the expiry of the existing option, and the current
global credit issues, the Company wrote off these accumulated costs at December 31,
The Company is in the process of finalizing a revised arrangement with the claim-holder
and establishing a joint venture with other parties for development and commercialization
of the property.
Nuclear Energy Strategy...
The Company, represented by Gary A. Fitchett, president and CEO and Hon. Elly
Karuhanga, director, was invited to a private meeting at State House, Nakasero, Uganda
on January 30, 2009 between IBI and His Excellency, President of the Republic of
Uganda, Yoweri Museveni, during which the President asked IBI to outline its Uganda
Uranium Development Strategy (“Uranium Strategy”).
IBI’s Uranium Strategy is to develop any viable uranium deposits it discovers, on its
approximately 2,000 square kilometres of lands designated for uranium exploration, with
a view to exploiting the resource within Uganda. The Uranium Strategy anticipates
working with the Government of Uganda towards a nuclear electrical power generation
program to meet the current and future needs in Uganda and with exports to the East
African Region for increased electrical power.
IBI suggested to the President that such an undertaking could best be accomplished by
means of a private/public partnership between private corporations such as IBI and the
Government of Uganda.
President Museveni expressed strong interest and support in the concept, indicating that it
coincides with his Government’s thinking. President Museveni asked IBI for a complete
strategic plan and proposal within some six months.
IBI’s delegation at the meeting included IBI board of directors member, The Honourable
Elly Karuhanga, the current Chairman of the Uganda Chamber of Mines and Petroleum,
who is based in Uganda, and Paul Sherwen, president and COO of IBI’s affiliate
company, Grey Crown Resources Limited, who is also the past Chairman and a current
director of the Uganda Chamber of Mines and Petroleum and a member of the President’s
The Company has labeled the program as the Nuclear Energy Program for Uganda
An Advisory Board for development of the strategic proposal has been assembled by IBI,
and the group has held several meetings to determine bridge technology; financing;
construction and operating costs; public attitudes to nuclear energy; nuclear fuel
cycle/supply chain; environmental factors; types of nuclear reactors; and economic
benefits. The Advisory Board has also developed a number of detailed concept papers,
which will form the basis of a progress report on the proposed partnership and project to
be submitted to president Museveni shortly.
The Advisory Board considers that there are numerous primary driving factors in favour
of the proposed project including:
Uganda needs a cost-effective method, with minimal carbon emissions, for
increasing electrical power generation if Uganda is to grow its economy as
planned. A national Nuclear Power Program for the country would meet this
Throughout Uganda, areas of anomalous uranium concentrations have been
identified by means of interpretation of aerial surveys and other data.
IBI has a significant portfolio of lands in Uganda with possible uranium potential.
IBI recently added four new exploration licenses totaling approximately 782
square kilometres in the Mubende area of Uganda, contiguous to the Company's
existing Mubende property, bringing IBI's prospective uranium land portfolio to
about 2,800 square kilometres in Uganda.
Among the technologies investigated, there are systems that potentially could
reduce the typical timeframe of approximately ten years from the beginning of
construction to start-up to slightly less than five years. These identified
technologies are also cost-effective and have less potential security risk than
typical competing technologies.
There are a now a number of precedents for co-operative uranium programs in
Africa including: the reported deal that the French nuclear giant Areva signed in
March with the Democratic Republic of Congo; Areva's reported agreement on
developing a uranium mine with Niger; and a reported agreement between Russia
and Nigeria to co-operate in building nuclear reactors and jointly exploring for
uranium. South Africa is already involved in nuclear power.
A number of potential partnering participants, including possible partnering
countries, have been identified that could become involved in building the
infrastructure for a nuclear power program for Uganda. Uganda is considered
by global agencies to be stable politically and economically, whereas there is
perceived risk associated with some African and other countries throughout the
world seeking to become involved in national nuclear power projects. Uganda has
the potential to be the economic hub of Sub- Saharan Africa and, with a national
Nuclear Power Program, could be a net exporter of electrical power, particularly
to adjoining East African countries.
The respected UxC uranium information website notes in its First Quarter (2009)
Report, "The topical essay for this quarter's report is "Into Africa" and examines
the key role that Africa is poised to play in the expansion of production that is
necessary to support reactor needs, given not only the drawdown of inventories
that is taking place, but also the nascent nuclear renaissance. Africa and
Kazakhstan together are projected to account for 50% of the world's uranium
production by 2020 and 70% of the production growth between now and then."
Uganda is a member of the International Atomic Energy Agency ("IAEA") and
the Agency, as noted in the IAEA document "Considerations to Launch a Nuclear
Power Program", is "authorized to assist any member state that is considering or
has decided to introduce nuclear power to meet energy needs. For example,
support can be provided for implementing the operational phase of a Nuclear
Power Program to the extent that the State has demonstrated that it has established
the essential elements of a national framework."
Investigations and meetings are also underway to review alternative reactor technologies
to be recommended.
IBI’s NEPU Advisory Board is currently comprised of the following experienced
Joshua Tuhumwire, Commissioner, Uganda Department of Geological Survey
Paul Sherwen, Chairman, Uganda Chamber of Mines
Hon. Elly Karuhanga, Director IBI Corporation
Paul Harricks, Partner, Gowling Lafleur Henderson LLP
A J Coffman, President, Far Country Management Services, Inc.
Dr. James Misener, P.Eng, President, Paterson, Grant & Watson, Geophysical
Gary. A. Fitchett, President and CEO, IBI Corporation
John D. Alton, Vice-President Finance and CFO, IBI Corporation
Dennis C. Mellersh, Director of Communications, IBI Corporation
Other Mineral Projects…
The Government of Uganda, in collaboration and with finance and guidance from the
World Bank (and syndicate partners Africa Development Fund and Nordic Development
Fund), has initiated a significant and far-reaching program (known as the Sustainable
Management of Mineral Resources Project, as outlined in detail above) to develop and
market Uganda’s prolific and varied natural resources to the global mining community.
The Company has demonstrated leadership in the mining community of the country with
the success and achievement of the Namekara vermiculite project, and the award to the
Company by the Ugandan Government as Investor of the Year. These factors provide an
excellent ground-floor opportunity for the Company to be at the forefront of and secure
outstanding prospects in the mining sector.
In view of the extensive “relationship capital” developed by the Company, there are
many ground-floor project development opportunities which the Company is in the
process of identifying, and which are expected to become other targeted mineral
prospects. It is believed these opportunities will allow the Company to become a
diversified mining company.
The sale of the Namekara vermiculite mine to Rio Tinto, has provided outstanding
visibility and credibility in Uganda for the Company, as well as capital and facilities for
The Company, through direct ownership and affiliate relationships, now participates in
32 properties comprised of approximately 7,400 square kilometers of prospective lands,
most of which are now being actively explored or developed.
Technical Support – Qualified Persons…
The Company’s Qualified Person for purposes of Canadian NI 43-101 in respect of all
previous projects (the Namekara Vermiculite Project, Canmin Gold Projects and Mica
Peak Vermiculite Project) is Ulrich Kretschmar Ph.D of Exploration Geoscience
Associates Inc., Orillia, Ontario
The Grey Crown Qualified Person in respect of its gold projects (and IBI’s interests
therein) is Brian Hester P.Eng. of Vineland, Ontario. Mr. Hester is also the geological
adviser to the IBI Board.
The IBI Qualified Person in respect of its uranium projects is James Misener PhD P.Eng,
President of Paterson, Grant & Watson, consulting geophysicists of Toronto, Ontario.
Operations – Corporate…
Selected Consolidated Annual Information, from the annual financial statements is:
(in ‘000s, except for per-share data)
2008 2007 2006 2005
Total revenues 0 $ 217 $1,027 $ 909
Profit (Loss) 1,789 (832) (1,148) ( 932)
Profit (Loss) per-share
and diluted per-share 0.006 (0.003) (0.004) (0.004)
Total assets 2,620 3,404 2,631 2,865
Total long-term liabilities 1,565 2,148 1,996 1,659
Cash dividends declared, per-share 0 0 0 0
Commercial operations from the Namekara vermiculite mine started in January 2003.
With the sale of this operation to Rio Tinto, with initial closing on March 30, 2007,
operations have ceased as of that date.
New management in 1999 has significantly reduced the corporate operating overhead, as
reflected in the annual financial statements, to approximately 30-40% of previous levels
in the 1990’s, and this cost-efficient operation continues.
2009 – first half $300,338
The increase in 2006 overhead was attributed to legal fees accrued relative to
preparations for the Stephenson trial, which is expected to conclude in 2009 (see Legal -
Outstanding Matters following). The first half of 2009 has been impacted by Director
fees of $30,000 and the annual meeting expenses of $25,482. The directors had not been
reimbursed for services since becoming directors and this is a one-time payment.
The cash cost of overhead to March 31, 2008 was low because Management Fees of
$180,000 for the first quarter of 2008 and the year 2007 (along with each of the preceding
years) were accrued but not paid, and are expected not to be paid within the next twelve
months, thus providing a continuing internal source of quasi-equity financing,
accumulated to $1,526,000 to date. See Related Party Transactions following. Current
Management Fees of $15,000 per month are being paid from April 2008.
With the restructuring of operations in Uganda and the change in management approach,
as outlined above, overhead costs in Uganda will be nominal going forward.
The Company has a six-month investor relations contract with Hawlen Bay Consulting at
the rate of $2,500 per month, which expires June 15, 2009. This contract has not been
Related Party Transactions…
The Company has a management agreement which includes the services of Gary A.
Fitchett CA as President and Chief Executive Officer of the Company and the inclusive
use of his office facilities and equipment, on a month-to-month basis, at the monthly fee
As at December 31, 2008, the following amounts are owing to corporations and entities
controlled by the president and chairman of the Company. Payment of the arrears is not
expected to be made in the next twelve months.
Management fees, accrued from December 1999 to
March 31, 2008, unsecured and without interest 1,526,000 $180,000
Subsequent management fees have been paid
At June 30, 2009 accounts payable include $200,663 owing to a law firm, of which Paul
D. Mack, a director and corporate secretary, is a partner, for legal services, principally in
respect of those matters outlined following under Legal Matters.
One-time directors’ fees totaling $30,000 have been paid by the company for retroactive
services to date.
The Company has no contractual arrangements for payment, directly or indirectly, of
severance payments to any directors or officers.
Operations – Namekara Vermiculite…
An Agreement for sale of the operation of the Namekara Vermiculite Mine was
completed on December 18, 2006, with an initial closing on March 30, 2007, and
cessation of operations on that date. Final closing took place on March 26, 2008, with a
payment received on account of US$2,400,000.
A final balance of US$1,000,000 (Cdn$1,232,600) was paid on March 27, 2009, in
accordance with the terms of the agreement.
Liquidity and Capital Resources…
The cash on hand and cash equivalents at June 30, 2009 was $358,265 and at December
31, 2008 was $410,672, a decrease of $52,407.
The financial statements at June 30, 2009 reflect negative working capital of $207,834, in
contrast to the December 31, 2008 working capital of $906,571, a decrease of working
capital of $1,114,405.
A significant portion of the current liabilities reflected is comprised of accruals, which
are not currently payable, and a provision for potential income taxes liability of $197,891
resulting from the sale of the Namekara vermiculite mine. All day-to-day operating
expenses are current with suppliers.
The major transaction for sale of the Namekara vermiculite mine for US$5,000,000,
which was concluded on December 18, 2006 with an advance payment of US$100,000
and had initial closing on March 30, 2007, provided working capital of US$1,500,000 to
retire a significant amount of the negative working capital and certain exploration
funding for the next year. The further payment from Rio Tinto on March 26, 2008
allowed for the retirement of other liabilities, to put the balance sheet into better status.
Final Payment from Rio Tinto of US$1,000,000 was received on March 27, 2009.
The corporate cash provided from operations for the first half of 2009 was $622,766,
compared to cash used of $(1,877,848) for the first half of 2008.
As a result of the liquidity provided by the payments of US$5,000,000 from Rio Tinto in
March 2007, 2008, and 2009, the Company strengthened its balance sheet and invested
$1,240,880 into shares and equity capital of Grey Crown to June 30, 2009, as outlined
above. An additional $254,493 was also lent to Grey Crown. In addition, the Company
expanded its land positions for uranium and other minerals in Uganda and Tanzania.
At June 30, 2009 the Company had cash and working capital assets of $395,577 to fund
corporate operations at a quarterly cash cost of approximately $90,000. Certain amounts
therefrom will be utilized to carry out further exploration work on its uranium properties,
as outlined in Uranium Exploration above.
Surplus funds are invested in short-term interest bearing securities, with safety and
liquidity being the prime criteria.
At December 31, 2002, all existing incentive options, exercisable at $0.07, for officers
and directors expired without being exercised, and have not been replaced. Based on a
prevailing rule, the Exchange does not allow the options to have a strike price of less than
Although the Board had considered granting conditional options in August 2007, said
contemplated options have unequivocally been revoked in July 2009 pending approval by
the Exchange of the new Stock Option Plan.
An updated Stock Option Plan has been drafted and approved by the directors in April
2009 for submission to the Exchange for approval. Following the approval of the Plan by
the Exchange, the issuance of options is also subject to approval of the Exchange.
Disclosure and Internal Controls and Procedures…
Management has evaluated the effectiveness of the Company’s disclosure controls and
procedures and internal controls over financial reporting as at December 31, 2008 and
thereafter and has concluded, based on its evaluation, that these controls and procedures
are adequate to provide reasonable assurance that material information relating to the
Company and its consolidated subsidiaries is made known to management by others
within those entities.
Because of the limited size of the Company and the limited number of staff, senior
management (which has extensive professional and public company experience) has
direct contact and liaison with staff in order to provide these controls and be aware of
those matters requiring disclosure.
Management is continually reviewing these controls and procedures to ensure an
appropriate reasonable level of assurance. As a result of changes outlined in the section
above, Restructuring Operations in Uganda, the local Managing Director in Uganda had
been discharged in November 2007 and the President has taken over direct
responsibilities for operations in that jurisdiction.
Harmonization of Canadian and International Accounting Standards
In March 2006, the Accounting Standards Board of the Canadian Institute of Chartered
Accountants released a new strategic plan which proposed to abandon Canadian GAAP
as the accounting standard and effect a complete convergence to the International
Financial Reporting Standards (“IFRS”). In April 2008, guidance was issued which
requires the transition to IFRS to occur no later than a company’s fiscal year starting
January 1, 2011.
IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant
differences in recognition, measurement and disclosure requirements.
Accordingly, the Company expects that the first financial statements presented in
accordance with IFRS will be for the interim three months ended March 31, 2011 and the
annual year ended December 31, 2011.
The Company has started the transitional process by apprising the Board of Directors of
the conceptual change to IFRS. During the next periods of 2009, and prior to December
31, 2009, the Company will develop its internal implementation plans to meet the
guidelines of these future reporting requirements and identify certain of the important
IFRS related issues.
Historically the Company has been constrained in its ability to advance its projects
efficiently and at a pace in keeping with the opportunities. Capital was raised from
shareholders by private placement on an ad hoc basis to meet urgent requirements of the
day, rather than to satisfy long-term plans.
With the sale of the Namekara vermiculite mine to Rio Tinto, the Company has not only
been able to repay all external loans and financing, but in fact to establish a store of
capital for future requirements. Plans can be established with confidence that the
financing will be available as and when needed.
The outlook and strategy for development of IBI’s projects can be summarized as
Uranium – The plan is to position the Company as a leader in the development of
Uranium resources in Uganda and East Africa, with a focus on satisfying and supplying
nuclear energy for domestic power supply. Uganda is significantly undersupplied with
hydro electricity, and has only limited capacity to expand this supply. Accordingly, clean
and efficient nuclear energy will be an important underpinning for the industrialization
and growth of the country.
A meeting on January 30, 2009 with H.E. Yoweri Museveni, President of Uganda,
established that there is consistency in this IBI strategy with that of the president, and that
the president has expressed interest in the concept of a joint private/ public partnership
between IBI and Uganda. The Company, along with an experienced Advisory Board is
working to prepare a proposal this year to the president. The Advisory Board has had
several meetings and a strategic plan for presentation to the President is being finalized.
(See above). World-class Joint Venture partners will be important allies in this
anticipated large-scale capital-intensive, and high technology enterprise.
The Company’s large Mubende uranium property, which has revealed significant
anomalies for uranium may prove to be the resource underpinning to fulfill this strategy.
The joint venture with Venus Capital Resources involving 12 properties of 3,442 square
kilometers, some of which also target uranium, could supplement the supply of uranium
for domestic purposes.
Gold – Through positioning with Grey Crown, the Company anticipates it will be in a
position to participate in the raising of substantial capital and manpower resources to
effectively explore and develop the gold-prospective Lake Victoria Greenstone Belt that
extends into southeast Uganda. Grey Crown should be in a position to assemble and
exploit a substantial regional gold exploration play, and to contemplate developing a
substantial resource, similar to several major mining projects in Tanzania, Kenya and
Mica Peak – The Company has started to evaluate the project logistics and strategy to
develop this resource, which is strategically located in North America. With the recent
huge cost increases in global freight rates and the restructuring taking place in the
vermiculite supply sector, a domestic supply of Vermiculite in North America will be
critical, particularly for the horticultural industry.
As outlined earlier, the Company has an agreement in principle for a revised arrangement
with the claim-holder and also for establishing a joint venture with other experienced
parties for development and commercialization of the Mica Peak property. The next key
step is to establish the availability of a mining permit..
UNCERTAINTIES AND RISK FACTORS
The mining business is inherently risky in nature. Exploration activities rely on
professional judgments and statistically based tests and calculations and often yield few
rewarding results. Mineral properties are often non-productive for reasons that cannot be
anticipated in advance and operations may be subject to risks including, among others,
environmental hazards, labour strife, safety issues, geological issues, weather conditions,
international economic conditions, and changing regulatory requirements. IBI is subject
to competitive risk as its ability to finance its activities and generate profitable operations
or proceeds from disposal of assets are subject to world prices for metals and the
economic forces that influence capital markets, credit and operating environments.
Exploration and Development…
Exploration for uranium, gold and other minerals is highly speculative in nature, involves
many risks and frequently is unsuccessful. There can be no assurance that exploration
efforts will result in the discovery of mineralization or that any mineralization discovered
will result in the definition of reserves. If reserves are developed, it may take a number of
years and substantial expenditures from the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change. No
assurance can be given that exploration programs will result in the definition of reserves
or that reserves may be economically mined and commercialized.
The long-term profitability of the Company’s operations will be in part directly related to
the cost and success of its exploration programs, which may be affected by a number of
factors, which are beyond the control of the Company.
All exploration and development evaluation expenditures incurred in IBI, prior to
establishing that a property has economically recoverable reserves, had been capitalized,
however, for fiscal prudence, all accumulated amounts to date have been written-off in
the 2008 year.
Outstanding and Settled Matters…
James and Amy Stephenson
The Company had initially been prosecuting a claim against a former president and
director for unpaid amounts for the exercise of stock options in 1997. As a result of new
information received in respect of specific contravention of the Company’s stock option
plan approved by the shareholders, the Company issued a further claim for breach of
fiduciary duty against the defendant and another officer of the Company (the spouse of
the former president) who conspired on this matter. Discoveries in the latter claim took
place in September 2002. In 2005, the Company had obtained additional intelligence
about this matter, which is expected to enhance the Company’s position in this case. The
Company proceeded to have the claims set down for trial and the trial started in October
2007, but was not completed and was adjourned until 2008. It is expected that the trial
will proceed in the fall sittings in 2009.
Hans Hansen and Nathan Wolukawu
In late 2007 the Company uncovered certain irregularities related to the operations in
Uganda of Canmin Resources Limited and Canmin-Gold Limited. As a result, it
discharged Mr. Hans Hansen and Mr. Nathan Wolukawu as employees and Mr. Hansen
as Managing Director, and retained the eminent Kampala law firm of Kampala
Associated Advocates to represent the Company in dealing with this matter. Such legal
counsel had completed a thorough investigation and review of the facts and all potential
legal alternatives. In addition, after a criminal investigation by the Uganda Police
Criminal Investigations Division and completion of an Independent Forensic Audit, the
Director of Public Prosecutions had preferred criminal charges against both Mr. Hansen
and Mr. Wolukawu for embezzlement, forgery, uttering and altering documents with the
intent to deceive.
Not surprisingly, at some stage of the investigations, Messrs. Hansen and Wolukawu
became aware of the potentially serious consequences for them in such situation. The
Company had been advised that, as a result, not only had counsel for both Messrs.
Hansen and Wolukawu taken extreme steps (unsuccessfully) to attempt to stop the
criminal charges from proceeding (although there had been a temporary delay obtained
without notice to anyone), but Mr. Hansen had also seen fit to initiate an action against
IBI Corporation, Canmin Resources Limited and Gary A. Fitchett for $5 million,
including an injunction to delay further payments from Rio Tinto. Uganda counsel
considered such action to be an attempted pre-emptive move, retributive, frivolous, and
fundamentally flawed in law. Defences had been filed. It is the opinion of the Company
that such legal proceedings were commenced for the primary purpose of attempting to
embarrass the Company, rather than with the expectation that there was a justifiable legal
basis for such proceedings.
The Company had subsequently prepared and filed its own civil cases against Messrs
Hansen and Wolkawu, their companies, and other related corporate parties, and these
actions were served, and related injunctive actions filed.
Among the matters otherwise in dispute, was the acquisition of a total of 11 mineral
exploration licenses in Uganda (the “Licenses”) by three personal holding companies of
Messrs. Hansen and Wolukawu (the “Personal Holding Companies”) during the course
of, and in conflict with, their employment with Canmin.
Following the initial acquisition of the Licenses, the Personal Holding Companies entered
into joint venture agreements (the “JV Agreement”) with three other companies (the
“Acquisition Companies”), each controlled by a United Kingdom investment and
holding company. Each of the Acquisition Companies acquired certain of the Licenses
and in turn provided the respective applicable Personal Holding Company with a 20%
interest in such Acquisition Company.
During the course of the legal proceedings, the parties entered into settlement
negotiations. As a result of those negotiations, the parties have settled the dispute on a
basis favourable to IBI Corporation and signed settlement documents which were filed in
court on the following terms:
Messrs. Hansen and Wolukawu have withdrawn their legal proceedings, including the
injunction to delay further payments from Rio Tinto, and provided a full and final
release of any and all claims against IBI, Canmin and others;
the Personal Holding Companies have assigned their rights and obligations under the
JV Agreement, and transferred the 20% interests in each of the Acquisition
Companies, to IBI, such that IBI now has an ongoing indirect interest in each of the
Licenses, on a carried basis;
IBI and Canmin have withdrawn their legal proceedings, including the complaints
which gave rise to the preferred criminal charges, and provided a full and final release
of any and all claims against such individuals and the Personal Holding Companies;
IBI has paid an aggregate of US$110,000 as additional and final consideration to acquire
the 20% interests in the Acquisition Companies (involving the indirect interest in the 11
exploration properties, covering approximately 3,442 square kilometres in Uganda) from
the Personal Holding Companies.
The Company held a general and special meeting of shareholders on March 22, 2007, for
the 2004 and 2005 years. A 2006, 2007 and 2008 annual general meeting was held on
June 10, 2009. There were 56,340,474 shares represented at the meeting, which
comprised 19.7% of the total outstanding shares of 286,454,350. The directors placed in
nomination were elected and MSCM LLP of Toronto were appointed auditors.
Further details and information related to the Company, including quarterly and annual
financial statements, news releases, and other securities filings, can be found on SEDAR
at www.sedar.com and the Company’s website at www.IBInvest.com .
Statements in this document may contain forward-looking information. The reader is cautioned
that assumptions used in the preparation of such information may prove to be incorrect. Events or
circumstances may cause actual results to differ materially from those predicted, a result of
numerous known and unknown risks, uncertainties, and other factors, many of which are beyond
the control of the Company. The reader is cautioned not to place undue reliance on this forward