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| | August 16, 2004
Summary Report of Second Quarter 2004
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| | Commander Resources Ltd. ("the Company") is an exploration stage company engaged in the acquisition and exploration of prospective gold, nickel and base metals properties primarily in Canada. The Company is currently focusing its exploration activities on Baffin Island and to a lesser extent on properties in Labrador, Newfoundland, British Columbia and New Brunswick. The following is a summary of the interim financial statements and the management discussion and analysis ("MD&A") for the six months ended June 30, 2004 both of which can be found on the Company's website at www.commanderresources.com or on Sedar at www.sedar.com.
Mineral Properties
As at June 30, 2004, the Company's mineral properties carrying value was $6,758,106, an increase of $1,694,321 from December 31, 2003. For the six months ended June 30, 2004, the Company's mineral property expenditures included $19,943 in acquisition costs and $1,681,873 in exploration costs. Deductions from mineral properties expenditures of $7,495 included recoveries from partners and assistance received under the Newfoundland Government's Junior Exploration Assistance Program.
Exploration work commenced on the Qimmiq, Bravo Lake and Dewar Lake Properties on Baffin Island, Nunavut, in late May. To June 30, 2004, approximately 2,800 line kilometres of airborne Magnetic and ElectroMagnetic surveys were completed on Qimmiq and portions of Bravo Lake at a cost of $204,137 and $68,046 respectively. In addition, selective ground geophysics at a cost of $98,047 and 18 diamond drill holes totalling about 1,300 metres at a cost of $887,765 were completed on Qimmiq during the period.
The Company reported assay results from the first nine drill holes of the 2004 drill program on the Malrok Zone, Qimmiq Project, Baffin Island, Nunavut. Intersections included 15.12 g/t Au over 3.0 metres in hole MND-04-04 and 8.41 g/t Au over 4.23 metres in hole MND-04-05. These intersections were 110 metres and 125 metres, respectively, down-dip from the 2003 channel samples and at depths of less than 30 metres from surface. A complete table of drill assay results can be found in the MD&A or the July 6, 2004 press release.
Selected Financial Information
The table below includes selected information from the interim financial statements for the six months ended June 30, 2004 and 2003. The interim financial statements were not reviewed by an Auditor. For more detailed information, please refer to the Company's interim financial statements and notes included therein.
| | For the Six months Ended |
| | June 30, 2004 | June 30, 2003 |
| Revenue | $82,266 | $189,415
| | G&A expenses (less stock compensation expense) | $(474,258) | $(253,792) |
| Stock compensation expense* | $(560,243) | $ - |
| G&A expenses (with stock compensation expense) | $(1,034,501) | $(253,792) |
| Loss for the period | $(535,613) | $(44,320) |
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| Basic and diluted loss per share | $(0.02) | $(0.00) |
| Weighted average number of shares outstanding | 23,687,675 | 17,633,619 |
| Cash flow from operating activities | $1,101,501 | $127,064 |
| Cash flow applied to investing activities | $(1,138,811) | $(473,650) |
| Cash flow from financing activities | $1,364,471 | $92,000 |
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| Cash and cash equivalents end of period | $1,259,411 | $1,089,104 |
*Stock compensation expense is a non-cash expense and is a result of the new CICA accounting standard adopted in the fourth quarter of fiscal 2003.
Revenues for the period were $82,266 (2003 - $189,415) which included $19,250 in production interest and $63,016 in mineral property transactions. The Company's $19,250 (2003 - $189,415) production interest revenue represented the final payment from the Hammerdown/Rumbullion Gold Deposit compared to six months of production revenue received in 2003. Mineral property transaction revenue of $63,016 (2003 - $Nil) was part of an on-going property transaction that should be finalized before year-end.
General and administrative expense of $1,034,501 (2003 - $253,792) represented a $780,709 increase over the comparative fiscal period. The increase was largely due to a $560,243 (2003 - $Nil) stock-based compensation expense.
Investor relations and promotion expense was $125,861 (2003 - $25,155) representing a $100,706 increase over 2003. During the period, the Company attended trade shows in Vancouver, Calgary, Toronto, New York and London. In addition, new corporate brochures were printed at a cost of $7,995 and a media video/interview segment was commissioned at a cost of $18,579.
Rent expense of $8,548 (2003 - $24,673) represented a $16,125 decrease from 2003. On March 1st, 2004, the Company moved into a new office located at 510 -- 510 Burrard Street, Vancouver, B.C. and received free rent until July 1st to cover the Company's moving and other relocation costs. Office and miscellaneous expense of $44,917 (2003 - $22,963) included several one-time costs associated with the move.
For the six months ended June 30, 2004, the Company's loss before taxes was $948,667 (2003 - $44,320). A future income tax credit of $413,054 (2003 - $Nil) was recorded to reflect the renunciation of flow-through expenditures during the period. The resulting loss for the period was $535,613 (2003 - $44,320).
From the Company's statement of cash flow for the period, cash and cash equivalents increased to $1,259,411. The increase in cash was attributed to the $1,364,471 received from share issuances in relation to the exercise of warrants and stock options. Cash requirements for the Company's $1,681,521 in mineral property acquisition and exploration costs was largely funded through a $1,160,263 decrease in cash for exploration (flow through funds) and a $567,563 increase in accounts payable related to mineral properties. Subsequent to the end of the second quarter, these accounts were paid.
Liquidity
At June 30, 2004, the Company had $2,523,038 in working capital, which was sufficient to achieve the Company's original budgeted exploration programs and corporate requirements for fiscal 2004. After evaluating the preliminary mobilization and start-up costs and the drilling progress on Baffin Island, management increased the exploration budget by about $1,000,000. This increase will be funded by a $1.152 million dollar flow-through financing announced after the quarter end. See Subsequent Events.
Subsequent Events
a) On August 6, 2004, the Company completed a non-brokered private placement of 1,920,000 flow-through common shares at $0.60 per share of which 1,620,000 flow-through common shares were issued on August 4, 2004 and 300,000 flow-through common shares were issued on August 6, 2004. Finders' fees of $54,936 were paid in cash. The shares are subject to a four month hold period and may not be traded until December 5, 2004 and December 7, 2004 respectively.
b) Subsequent to June 30, 2004, the Company elected to proceed to the second term of the Big Hill, Newfoundland option agreement and issued 40,000 common shares to Black Bart Prospecting Inc. An interpretation of a recently completed Induced Polarization ("IP") survey and groundwork from 2003 has outlined a prospective gold anomaly that is ready for drill testing. The 2003 groundwork outlined a 250 to 300 metres long gold soil anomaly with gold values ranging from 27 to 657 ppb gold. The IP survey outlined a 350 metres long chargeability anomaly coincident with the gold soil anomaly and extending a further 100 metres to the northeast.
c) Subsequent to June 30, 2004, the Company issued 80,000 common shares for proceeds of $19,000 pursuant to the exercise of stock options.
On behalf of the Board of Directors,
Kenneth Leigh
President
For more information, please contact:
Commander Resources Ltd.
510 - 510 Burrard Street
Vancouver, B.C. V6C 3A8
Tel. (604) 685-5254 Fax (604) 685-2814
info@commanderresources.com
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