UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of NOVEMBER, 2006.
Commission File Number: 001-32558
IMA EXPLORATION INC.
--------------------------------------------------------------------------------
(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
--------------------------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: FORM 20-F [X] FORM 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
IMA EXPLORATION INC.
-------------------------------------
Date: November 30, 2006 /s/ Joseph Grosso
----------------------------- -------------------------------------
Joseph Grosso,
President & CEO
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2006 and 2005
(EXPRESSED IN CANADIAN DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
MANAGEMENT'S COMMENTS ON UNAUDITED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements of IMA
Exploration Inc. for the nine months ended September 30, 2006 have been prepared
by management and are the responsibility of the Company's management. These
statements have not been reviewed by the Company's external auditors.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEETS
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
SEPTEMBER 30, DECEMBER 31,
2006 2005
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 9,968,669 7,731,395
Accounts receivable, prepaids and deposits (Note 9) 869,971 548,492
Marketable securities (Note 2 and 5) 186,000 186,000
------------ ------------
11,024,640 8,465,887
MINERAL PROPERTIES AND
DEFERRED COSTS (Note 1, 2 & 6) 19,979,070 15,032,107
------------ ------------
31,003,710 23,497,994
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 618,559 976,811
FUTURE INCOME TAX LIABILITIES (Note 2) 2,215,549 1,760,110
------------ ------------
2,834,108 2,736,921
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 7) 59,849,509 50,414,672
CONTRIBUTED SURPLUS (Note 8) 6,282,929 5,854,445
DEFICIT (37,962,836) (35,508,044)
------------ ------------
28,169,602 20,761,073
------------ ------------
31,003,710 23,497,994
============ ============
NATURE OF OPERATIONS AND CONTINGENCY (Note 1)
MEASUREMENT UNCERTAINTY AND SUBSEQUENT EVENT (Note 2)
COMMITMENTS (Note 9)
APPROVED BY THE BOARD
/s/DAVID HORTON , Director
------------------------
/s/ ROBERT STUART ANGUS , Director
------------------------
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2006 2005 2006 2005
$ $ $ $
EXPENSES
Administrative and management services 63,636 39,870 296,978 112,184
Corporate development and investor relations 51,999 142,589 299,830 465,315
General exploration 4,009 32,210 7,748 127,276
Office and sundry 55,369 41,366 144,825 118,539
Professional fees 568,616 656,337 738,826 1,244,654
Rent, parking and storage 24,836 34,140 72,318 75,203
Salaries and employee benefits 157,319 168,056 543,202 431,661
Stock based compensation (14,400) - 393,120 1,800,000
Telephone and utilities 3,537 7,480 13,280 23,228
Transfer agent and regulatory fees 1,289 87,252 131,216 192,697
Travel and accommodation 23,353 68,343 87,392 214,332
------------ ------------ ------------ ------------
939,563 1,277,643 2,728,735 4,805,089
------------ ------------ ------------ ------------
LOSS BEFORE OTHER ITEMS (939,563) (1,277,643) (2,728,735) (4,805,089)
------------ ------------ ------------ ------------
OTHER EXPENSE (INCOME)
Foreign exchange (3,916) (14,619) 6,428 9,095
Interest and other income (99,511) (29,632) (280,371) (90,428)
------------ ------------ ------------ ------------
(103,427) (44,251) (273,943) (81,333)
------------ ------------ ------------ ------------
LOSS FOR THE PERIOD (836,136) (1,233,392) (2,454,792) (4,723,756)
DEFICIT - BEGINNING OF PERIOD (37,126,700) (33,233,534) (35,508,044) (29,597,304)
DISTRIBUTION OF EQUITY ON
SPIN-OFF OF ASSETS TO GOLDEN ARROW(Note 3) - - - (145,866)
------------ ------------ ------------ ------------
DEFICIT - END OF PERIOD (37,962,836) (34,466,926) (37,962,836) (34,466,926)
============ ============ ============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE $(0.02) $(0.03) $(0.05) $(0.10)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 51,989,152 46,095,667 51,009,402 45,315,439
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2006 2005 2006 2005
$ $ $ $
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Net loss for the period (836,136) (1,233,392) (2,454,792) (4,723,756)
Items not affecting cash
Stock-based compensation (14,400) - 393,120 1,800,000
------------ ------------ ------------ ------------
(850,536) (1,233,392) (2,061,672) (2,923,756)
Change in non-cash working capital balances (598,502) (335,079) (679,731) 161,178
------------ ------------ ------------ ------------
(1,449,038) (1,568,471) (2,741,403) (2,762,578)
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Expenditures on mineral properties and
deferred costs (1,122,300) (1,823,131) (4,491,524) (5,153,602)
Purchase of equipment - (1,371) - (9,629)
------------ ------------ ------------ ------------
(1,122,300) (1,824,502) (4,491,524) (5,163,231)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares 80,000 10,000,020 10,308,450 14,215,165
Share issue costs (2,347) (726,445) (838,249) (726,445)
------------ ------------ ------------ ------------
77,653 9,273,575 9,470,201 13,488,720
------------ ------------ ------------ ------------
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (2,493,685) 5,880,602 2,237,274 5,562,911
CASH TRANSFERRED TO GOLDEN
ARROW (Note 3) - - - (145,866)
------------ ------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (2,493,685) 5,880,602 2,237,274 5,417,045
CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD 12,462,354 4,763,797 7,731,395 5,227,354
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS
- END OF PERIOD 9,968,669 10,644,399 9,968,669 10,644,399
============ ============ ============ ============
CASH AND CASH EQUIVALENTS
COMPRISED OF:
Cash 468,669 644,399 468,669 644,399
Term deposits 9,500,000 10,000,000 9,500,000 10,000,000
------------ ------------ ------------ ------------
9,968,669 10,644,399 9,968,669 10,644,399
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
NAVIDAD
NAVIDAD AREAS IVA TAX TOTAL
$ $ $ $
Balance, beginning of period 13,466,957 113,426 1,451,724 15,032,107
------------ ------------ ------------ ------------
Expenditures during the period
Acquisition costs 110,807 - - 110,807
Assays 63,985 - - 63,985
Communications 53,793 - - 53,793
Drilling 1,400,714 - - 1,400,714
Engineering 43,832 - - 43,832
Environmental and social 305,989 - - 305,989
Metallurgy 325,457 - - 325,457
Office and other 201,408 - - 201,408
Salaries and Contractors 599,049 - - 599,049
Supplies and Equipment 162,645 - - 162,645
Transportation 243,360 - - 243,360
Project Development 442,402 - - 442,402
IVA Tax - - 538,083 538,083
------------ ------------ ------------ ------------
3,953,441 - 538,083 4,491,524
------------ ------------ ------------ ------------
Future income tax 455,439 - - 455,439
------------ ------------ ------------ ------------
Balance, end of period 17,875,837 113,426 1,989,807 19,979,070
============ ============ ============ ============
The accompanying notes are an integral part of these interim
consolidated financial statements.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
1. NATURE OF OPERATIONS AND CONTINGENCY
The Company is a natural resource company engaged in the business of
acquisition, exploration and development of mineral properties in
Argentina. The Company presently has no proven or probable reserves and
on the basis of information to date, it has not yet determined whether
these properties contain economically recoverable ore reserves.
Consequently the Company considers itself to be an exploration stage
company. The amounts shown as mineral properties and deferred costs
represent costs incurred to date, less amounts amortized and/or written
off, and do not necessarily represent present or future values. The
underlying value of the mineral properties and deferred costs is
entirely dependent on the existence of economically recoverable
reserves, securing and maintaining title and beneficial interest in the
properties, the ability of the Company to obtain the necessary
financing to complete development, and future profitable production.
The Company considers that it has adequate resources to maintain its
ongoing operations for the balance of the year.
On July 14, 2006 the Supreme Court of British Columbia released its
judgment in Aquiline Resources Inc.'s ("Aquiline") lawsuit against the
Company. The Company was not successful in its defense and the court
found in Aquiline's favour.
The Order reads in part:
"(a) that Inversiones Mineras Argentinas SA ("IMA SA") transfer the
Navidad Claims and any assets related thereto to Minera
Aquiline or its nominee within 60 days of this order;
(b) that IMA take any and all steps required to cause IMA SA to
comply with the terms of this order;
(c) that the transfer of the Navidad Claims and any assets related
thereto is subject to the payment to IMA SA of all reasonable
amounts expended by IMA SA for the acquisition and development
of the Navidad Claims to date; and
(d) any accounting necessary to determine the reasonableness of
the expenditures referred to in (c) above shall be by
reference to the Registrar of this court."
The Company has filed an appeal of this judgment. While the Company is
confident of a favourable result from its appeal it recognizes that
this will take a substantial period of time and the costs will be
significant, with no guarantee of a successful outcome for the Company.
The Company has not provided for any future legal costs and will
expense the legal costs of the appeal as they occur (see Note 2).
2. MEASUREMENT UNCERTAINTY AND SUBSEQUENT EVENT
On October 18, 2006, the Company and Aquiline reached a definitive
agreement for the orderly conduct of the Navidad Project pending the
determination of the appeal by the Company against the judgment of the
trial court. The transactions outlined in the agreement will constitute
due compliance by both parties with the Order referenced in Note 1
above. The principal terms and conditions of the agreement are as
follows:
(a) control of the Navidad project will be transferred to Aquiline
in trust for the ultimately successful party in the appeal;
(b) the Company and Aquiline have agreed to the costs spent to
date developing the Navidad Project in the amount of
$18,500,000. Upon transfer of control of the Navidad project,
Aquiline will pay $7,500,000 of the costs into trust and the
balance will be expended by Aquiline in developing the Navidad
Project during the period of the appeal and secured under the
terms of the trust conditions;
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
2. MEASUREMENT UNCERTAINTY AND SUBSEQUENT EVENT (continued)
(c) in the event that the Company is unsuccessful on appeal, the
Company will be paid such $18,500,000 amount, less legal costs
Aquiline would be entitled to in relation to the trial and the
appeal.
(d) in the event that the Company's appeal is successful, it will
pay Aquiline's qualifying costs expended on developing the
Navidad Project during the period of the appeal, less legal
costs the Company would be entitled to in relation to the
trial and the appeal, and control of the Navidad Project will
then revert to the Company; and
(e) pending the finalization of the appeal process, neither party
will attempt a hostile takeover of the other.
The effective date of the transfer of the Navidad project is
anticipated to occur on November 15, 2006. A copy of the agreement has
been posted on the SEDAR website as one of the Company's public
documents and is titled "Interim Project Development Agreement".
The Company currently has recorded net Navidad related assets of
$17,949,521, the components of which are as follows:
$
Mineral properties and deferred costs (Note 6) 19,979,070
Marketable securities (Note 5) 186,000
Future income tax liabilities (2,215,549)
------------
Navidad related assets (net) 17,949,521
============
As noted above, in the event that the Company is unsuccessful on
appeal, the Company will be paid $18,500,000 as consideration for these
assets, less legal costs Aquiline would be entitled to in relation to
the trial and the appeal. In the event that the legal costs that
Aquiline may become entitled to are significant, the recoverability of
the costs reflected as net Navidad related assets may be impaired. Such
impairment may be material. However, at the current time, the Company
is unable to determine with any degree of certainty what the final
outcome of the appeal process may be, and if the company is
unsuccessful, what Aquiline's quantum of legal costs may be awarded to
it. Accordingly, the Company has not made any adjustments to the
carrying value of the components of net Navidad related assets at
September 30, 2006.
The carrying value of the components of net Navidad related assets will
be reviewed in subsequent periods and adjusted if circumstances suggest
that the full amount may not be recoverable and an appropriate amount
expensed for impairment when such amounts can be reasonably determined.
3. SPIN-OFF OF ASSETS
On July 7, 2004, the Company completed a corporate restructuring plan
(the "Reorganization") which resulted in dividing the Company's assets
and liabilities into two separate companies. Following the
Reorganization the Company continued to hold the Navidad Area
properties, while all other mineral property interests, certain
marketable securities and cash were spun-off to Golden Arrow Resources
Corporation ("Golden Arrow"), a newly created company. The Navidad
project, located in the province of Chubut Argentina, was staked by the
Company in late 2002 and continues to be the focus of the Company's
activities. The Reorganization of the Company was accomplished by way
of a statutory plan of arrangement. The shareholders of the Company
were issued shares in Golden Arrow on the basis of one Golden Arrow
share for ten shares of the Company.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
3. SPIN-OFF OF ASSETS (continued)
During the nine months ended September 30, 2005 the Company paid
$145,866 to Golden Arrow from the exercise of warrants of the Company
that resulted in the issue of Golden Arrow shares as required by the
terms of the Reorganization. As all warrants that were outstanding as
of the effective date of the Reorganization were exercised by March 31,
2005 the Company has no further obligation to pay amounts to Golden
Arrow for the issue of its shares on the exercise of the Company's
warrants.
4. SIGNIFICANT ACCOUNTING POLICIES
(a) The interim consolidated financial statements of the Company
have been prepared by management in accordance with Canadian
generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted
accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes.
Actual results could differ from those estimates. The
consolidated financial statements have, in management's
opinion, been properly prepared using careful judgement within
reasonable limits of materiality. These interim consolidated
financial statements should be read in conjunction with the
most recent annual consolidated financial statements. The
significant accounting policies follow that of the most
recently reported annual consolidated financial statements.
(b) Certain comparative figures have been reclassified to conform
to the current year's presentation.
5. MARKETABLE SECURITIES
At September 30, 2006, marketable securities had a quoted market value
of $250,500 (December 31, 2005 - $270,000). The Company holds these
marketable securities as a result of entering into option and sale
agreements for certain of its non-core mineral property holdings
relating to the Navidad Project for which the Company received common
shares of publicly traded companies as partial consideration. These
marketable securities are considered "Navidad related assets" subject
to transfer to Aquiline (see Note 2 above).
6. MINERAL PROPERTIES AND DEFERRED COSTS
(a) Under the terms of the July 14, 2006 court order the Company's
ownership of the Navidad project must be transferred to
Aquiline and the Company accordingly cautions readers that
until the British Columbia Court of Appeal rules on the matter
the Company may only recover the costs incurred in the
development of the Navidad project. On October 18, 2006, the
Company and Aquiline reached an agreement in respect to the
recoverable costs. See Note 2 above for details of this
agreement. The Company's position is that it will be
successful in its appeal and will recover all or a significant
portion of its ownership interest in the Navidad project.
(b) Direct costs related to the acquisition and exploration of
mineral properties held or controlled by the Company are
deferred on an individual property basis until the viability
of a property is determined. Administration costs and general
exploration costs are expensed as incurred. When a property is
placed in commercial production, deferred costs will be
depleted using the units-of-production method. Management of
the Company periodically reviews the recoverability of the
capitalized mineral properties. Management takes into
consideration various information including, but not limited
to, results of exploration activities conducted to date,
estimated future metal prices, and (b)
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
6. MINERAL PROPERTIES AND DEFERRED COSTS (CONTINUED)
reports and opinions of outside geologists, mine engineers and
consultants. When it is determined that a project or property
will be abandoned then the costs are written-off, or if its
carrying value has been impaired, then the mineral properties
and deferred costs are written down to their estimated fair
value. In the event that the Company's appeal against the
Aquiline court decision is unsuccessful, fair value will be
determined by reference to the $18,500,000 to be paid to the
Company by Aquiline, less legal costs Aquiline would be
entitled to in relation to the trial and the appeal (see Note
2 above).
The Company accounts for foreign value added taxes paid as
part of mineral properties and deferred costs. The recovery of
these taxes will commence on the beginning of foreign
commercial operations. Should these amounts be recovered they
would be treated as a reduction in carrying costs of mineral
properties and deferred costs.
From time to time, the Company acquires or disposes of
properties pursuant to the terms of option agreements. Options
are exercisable entirely at the discretion of the optionee
and, accordingly, are recorded as mineral property costs or
recoveries when the payments are made or received. After costs
are recovered, the balance of the payments received are
recorded as a gain on option or disposition of mineral
property.
7. SHARE CAPITAL
Authorized - unlimited common shares without par value
- 100,000,000 preferred shares without par value
NUMBER $
Issued - common shares
Balance, December 31, 2004 43,816,207 36,982,307
Private placement 3,333,340 10,000,020
Exercise of options 10,000 31,000
Exercise of agents' options 168,000 546,000
Contributed surplus reallocated on exercise of options - 131,270
Exercise of warrants 1,485,517 3,784,011
Proceeds collected and paid on behalf of Golden Arrow shares - (145,866)
Less share issue costs - (914,070)
------------ ------------
Balance, December 31, 2005 48,813,064 50,414,672
Private placement 2,865,000 10,027,500
Exercise of options 335,000 280,950
Contributed surplus reallocated on exercise of options - 74,800
Less share issue costs - (948,413)
------------ ------------
Balance, September 30, 2006 52,013,064 59,849,509
============ ============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
7. SHARE CAPITAL (continued)
(a) On March 21, 2006 the Company completed a syndicated brokered
private placement financing of 2,865,000 special warrants at
$3.50 per warrant for gross proceeds of $10,027,500. Each
special warrant entitled the holder to acquire one unit
consisting of one common share and one half common share
purchase warrant. All special warrants were converted into
common shares on May 25, 2006. Each full warrant entitles the
holder thereof to purchase one additional common share in the
capital of the Company at a price of $3.80 per share until
March 21, 2010. In addition to a cash commission of 6% the
underwriters were granted 171,900 agents' warrants,
representing 6% of the number of special warrants issued. Each
agents' warrant is exercisable for one share at a price of
$3.80, for a period of twenty four months, expiring on March
21, 2008. The underwriter's warrants were valued using the
Black-Scholes Pricing Model. The warrants were valued at $0.64
per warrant for a total value of $110,164 and have been
recorded as share issue costs with a corresponding increase to
contributed surplus. At September 30, 2006, no underwriter's
warrants had been exercised.
(b) Stock Options and Stock-Based Compensation
The Company grants stock options in accordance with the
policies of the TSX Venture Exchange ("TSXV"). During the nine
months ended September 30, 2006, the Company granted 283,000
stock options.
The fair value of stock options granted is estimated on the
dates of grants using the Black-Scholes Option Pricing Model
with the following assumptions used for the grants made during
the period:
Risk-free interest rate 4%
Estimated volatility 70%
Expected life 2.5 years
Expected dividend yield 0%
The weighted average fair value per share of stock options,
calculated using the Black-Scholes Option Pricing Model,
granted during the period was $1.44 per share. Option-pricing
models require the use of estimates and assumptions including
the expected volatility. Changes in the underlying assumptions
can materially affect the fair value estimates and, therefore,
existing models do not necessarily provide reliable measure of
the fair value of the Company's stock options.
A summary of the Company's outstanding stock options at
September 30, 2006, and the changes for the nine months ended
September 30, 2006, is presented below:
OPTIONS WEIGHTED
OUTSTANDING AVERAGE
AND EXERCISE
EXERCISABLE PRICE
$
Balance, beginning of period 4,881,000 2.54
Granted 283,000 3.21
Exercised (335,000) 0.84
Cancelled / Expired (65,000) 2.77
------------
Balance, end of period 4,764,000 2.70
============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
7. SHARE CAPITAL (continued)
Stock options outstanding and exercisable at September 30,
2006 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
119,000 0.50 May 2, 2007
115,000 0.50 September 23, 2007
40,000 0.84 March 7, 2008
300,000 0.90 May 30, 2008
1,220,000 1.87 August 27, 2008
1,372,000 3.10 March 24, 2009
50,000 4.20 December 1, 2009
865,000 4.16 March 16, 2010
410,000 2.92 November 16, 2010
273,000 3.21 June 22, 2011
------------
4,764,000
============
(c) Warrants
A summary of the number of common shares reserved pursuant to
the Company's outstanding warrants and agents warrants
outstanding at September 30, 2006 and the changes for the nine
months ended September 30, 2006, is as follows:
NUMBER
Balance, beginning of period 1,900,004
Issued 1,604,400
------------
Balance, end of period 3,504,404
============
Common shares reserved pursuant to warrants and special
warrants outstanding at September 30, 2006 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
1,666,670 3.45 September 14, 2009
233,334 3.25 September 13, 2007
171,900 3.80 March 21, 2008
1,432,500 3.80 March 21, 2010
------------
3,504,404
============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
8. CONTRIBUTED SURPLUS
A continuity summary of contributed surplus is presented below:
$
Balance, December 31, 2005 5,854,445
Contributed surplus reallocated on exercise of stock options (74,800)
Contributed surplus as a result of stock options granted 393,120
Contributed surplus as a result of brokers' warrants issued 110,164
------------
Balance, September 30, 2006 6,282,929
============
9. RELATED PARTY TRANSACTIONS
(a) Effective January 1, 2005 the Company engaged the Grosso Group
Management Ltd. (the "Grosso Group") to provide services and
facilities to the Company. The Grosso Group is a private
company now owned by the Company, Golden Arrow, Amera
Resources Corporation, Astral Mining Corporation and Gold
Point Energy Corp., each of which owns one share. The Grosso
Group provides its shareholder companies with geological,
corporate development, administrative and management services.
The shareholder companies pay monthly fees to the Grosso
Group. The fee is based upon a reasonable pro-rating of the
Grosso Group's costs including its staff and overhead costs
among each shareholder company with regard to the mutually
agreed average annual level of services provided to each
shareholder company. During the nine months ended September
30, 2006, the Company incurred fees of $574,677 to the Grosso
Group: $554,335 was paid in monthly payments and $21,563 is
included in accounts payable as a result of a review of the
allocation of the Grosso Group costs to the member companies
for the period. In addition, included in accounts receivable,
prepaids and deposits is a $205,000 deposit to the Grosso
Group for the purchase of equipment and leasehold improvements
and for operating working capital.
(b) On May 6, 2005, on the signing of an Administration Services
Agreement, the Company transferred its corporate equipment and
leasehold improvements to Grosso Group at their carrying
values of $93,177 as of December 31, 2004. As of September 30,
2006 the Company has received $46,589 from the Grosso Group
for these assets. The remaining balance due from the Grosso
Group is included in accounts receivable.
(c) The President of the Company provides his services on a
full-time basis under a contract with a private company
controlled by the President. On April 12, 2006 the Board
accepted the recommendation from the Compensation Committee to
increase the monthly fee, effective May 1, 2006, to $20,833
(previously $8,500) and to pay a bonus of $150,000. The total
compensation paid to the President during the period was
$288,167.
In the event the contract is terminated by the Company or as a
result of a change of control, a payment is payable to the
President consisting of (i) any monthly compensation due to
the date of termination, (ii) options as determined by the
board of directors (iii) three years of monthly compensation
(which may be adjusted annually) and (iv) bonus of $461,500.
If the termination had occurred on September 30, 2006, the
amount payable under the contract would be $1,211,500.
In the event the contract is terminated by the Company as a
result of the President's death or permanent disability while
providing services to the Company, a bonus in the amount of
$461,500 is payable.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(UNAUDITED - PREPARED BY MANAGEMENT)
(EXPRESSED IN CANADIAN DOLLARS)
9. RELATED PARTY TRANSACTIONS (continued)
(d) During the nine months ended September 30, 2006, the Company
paid $154,750 to directors and officers or companies
controlled by directors and officers of the Company, for
technical, management and consulting services provided.
(e) The Company has agreements with a company controlled by the
wife of the President of the Company for the rental of office
premises. Effective January 1, 2005 the Company subleased the
office premises to the Grosso Group.
10. SEGMENTED INFORMATION
The Company is involved in mineral exploration and development
activities, which are conducted principally in Argentina. The Company
is in the exploration stage and, accordingly, has no reportable segment
revenues or operating results for the nine months ended September 30,
2006.
The Company's total assets are segmented geographically as follows:
--------------------------------------------
SEPTEMBER 30, 2006
--------------------------------------------
CORPORATE ARGENTINA TOTAL
$ $ $
Current assets 10,940,636 84,004 11,024,640
Mineral properties and deferred costs - 19,933,270 19,933,270
------------ ------------ ------------
10,940,636 20,017,274 30,957,910
============ ============ ============
--------------------------------------------
DECEMBER 31, 2006
--------------------------------------------
CORPORATE ARGENTINA TOTAL
$ $ $
Current assets 8,331,000 134,887 8,465,887
Mineral properties and deferred costs - 15,032,107 15,032,107
------------ ------------ ------------
8,331,000 15,166,994 23,497,994
============ ============ ============
11. SUPPLEMENTARY CASH FLOW INFORMATION
Non-cash financing activities were conducted by the Company as follows:
NINE MONTHS
ENDED SEPTEMBER 30,
----------------------------
2006 2005
$ $
Financing activities
Share issue costs (110,164) (177,333)
Contributed surplus 110,164 177,333
------------ ------------
- -
============ ============
IMA EXPLORATION INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
INTRODUCTION
The following management discussion and analysis and financial review, prepared
as of November 14, 2006, should be read in conjunction with the Company's
unaudited interim consolidated financial statements for the nine months ended
September 30, 2006 and audited annual consolidated financial statements and
related notes for the year ended December 31, 2005. The consolidated financial
statements have been prepared in accordance with Canadian generally accepted
accounting principles ("Canadian GAAP"). Except as otherwise disclosed all
dollar figures in this report are stated in Canadian dollars. Additional
information relevant to the Company can be found on the SEDAR website at
WWW.SEDAR.COM.
FORWARD LOOKING STATEMENTS
Certain of the statements made and information contained herein is "forward-
looking information" within the meaning of the Ontario Securities Act or
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 of the United States. Forward-looking statements are
subject to a variety of risks and uncertainties which could cause actual events
or results to differ from those reflected in the forward-looking statements,
including, without limitation, risks and uncertainties relating to foreign
currency fluctuations; risks inherent in mining including environmental hazards,
industrial accidents, unusual or unexpected geological formations, risks
associated with the estimation of mineral resources and reserves and the
geology, grade and continuity of mineral deposits; the possibility that future
exploration, development or mining results will not be consistent with the
Company's expectations; the potential for and effects of labour disputes or
other unanticipated difficulties with or shortages of labour; the inherent
uncertainty of future production and cost estimates and the potential for
unexpected costs and expenses, commodity price fluctuations; uncertain political
and economic environments; changes in laws or policies, foreign taxation, delays
or the inability to obtain necessary governmental permits; and other risks and
uncertainties, including those described under Risk Factors Relating to the
Company's Business in the Company's Annual Information Form and in each
management discussion and analysis. Forward-looking information is in addition
based on various assumptions including, without limitation, the expectations and
beliefs of management, the assumed long term price of silver and lead; that the
Company can access financing, appropriate equipment and sufficient labour and
that the political environment within Argentina will continue to support the
development and operation of mining projects. Should one or more of these risks
and uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in forward-looking
statements. Accordingly, readers are advised not to place undue reliance on
forward-looking statements.
OVERVIEW
The Company is a natural resource company engaged in the business of
acquisition, exploration and development of mineral properties in Argentina. At
present, the Company has no producing properties and consequently has no current
operating income or cash flows. As of this date the Company is an exploration
stage company and has not generated any revenues. The Company is entirely
dependent on the equity market for its source of funds. There is no assurance
that a commercially viable mineral deposit exists on any of the properties.
Further evaluation and exploration will be required before the economic
viability of any of the properties is determined.
On July 14, 2006 the Supreme Court of British Columbia released its judgment in
Aquiline Resources Inc.'s ("Aquiline") lawsuit against the Company. The Company
was not successful in its defence and the court found in Aquiline's favour.
The Order reads in part:
"(a) that Inversiones Mineras Argentinas SA ("IMA SA") transfer the
Navidad Claims and any assets related thereto to Minera
Aquiline or its nominee within 60 days of this order;
(b) that IMA take any and all steps required to cause IMA SA to
comply with the terms of this order;
- 1 -
(c) that the transfer of the Navidad Claims and any assets related
thereto is subject to the payment to IMA SA of all reasonable
amounts expended by IMA SA for the acquisition and development
of the Navidad Claims to date; and
(d) any accounting necessary to determine the reasonableness of
the expenditures referred to in (c) above shall be by
reference to the Registrar of this court."
The Company has filed an appeal of this judgment. While the Company is confident
of a favourable result from its appeal it recognizes that this will take a
substantial period of time and the costs will be significant, with no guarantee
of a successful outcome for the Company. The Company has not provided for any
future legal costs and will expense the legal costs of the appeal as they occur.
On October 18, 2006, the Company and Aquiline reached a definitive agreement for
the orderly conduct of the Navidad Project pending the determination of the
appeal by the Company against the judgment of the trial court. The transactions
outlined in the agreement will constitute due compliance by both parties with
the Order referenced in Note 1 above. The principal terms and conditions of the
agreement are as follows:
(i) control of the Navidad project will be transferred to Aquiline
in trust for the ultimately successful party in the appeal;
(ii) the Company and Aquiline have agreed to the costs spent to
date developing the Navidad Project in the amount of
$18,500,000. Upon transfer of control of the Navidad project,
Aquiline will pay $7,500,000 of the costs into trust and the
balance will be expended by Aquiline in developing the Navidad
Project during the period of the appeal and secured under the
terms of the trust conditions;
(iii) in the event that the Company is unsuccessful on appeal, the
Company will be paid such $18,500,000 amount, less legal costs
Aquiline would be entitled to in relation to the trial and the
appeal.
(iv) in the event that the Company's appeal is successful, it will
pay Aquiline's qualifying costs expended on developing the
Navidad Project during the period of the appeal, less legal
costs the Company would be entitled to in relation to the
trial and the appeal, and control of the Navidad Project will
then revert to the Company; and
(v) pending the finalization of the appeal process, neither party
will attempt a hostile takeover of the other.
The effective date of the transfer of the Navidad project is anticipated to
occur on November 15, 2006.
SELECTED QUATERLY FINANCIAL INFORMATION
The following selected consolidated financial information is derived from the
unaudited consolidated interim financial statements of the Company. The
information has been prepared in accordance with Canadian GAAP.
------------------------------------ ------------------------------------------------- ----------
2006 2005 2004
------------------------------------ ------------------------------------------------- ----------
SEP 30 JUN 30 MAR 31 DEC 31 SEP 30 JUN 30 MAR 31 DEC 31
$ $ $ $ $ $ $ $
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenues Nil Nil Nil Nil Nil Nil Nil Nil
Net Loss (836,136) (1,112,336) (506,320) (1,041,118) (1,233,392) (972,893) (2,517,470) (1,164,955)
Net Loss per Common Share
Basic and Diluted (0.02) (0.02) (0.01) (0.02) (0.03) (0.02) (0.06) (0.02)
------------------------------------ ------------------------------------------------- ----------
SUMMARY OF FINANCIAL RESULTS
For the nine months ended September 30, 2006, the Company reported a
consolidated loss of $2,454,792 ($0.05 per share), a decrease of $0.05 from the
loss of $4,723,756 ($0.10 per share) for the nine months ended September 30,
2005. The decrease in the loss in 2006, compared to the 2005 amount, was due to
a number of factors of which $2,076,354 can be attributed to decreases in
operating expenses and $192,610 change in other items.
- 2 -
RESULTS OF OPERATIONS
The Company's operating expenses for the nine months ended September 30, 2006,
were $2,728,735, a decrease of $2,076,354 from $4,805,089 in the 2005 period.
In the 2006 period the Company recorded non-cash stock based compensation of
$393,120 compared to $1,800,000 in the 2005 period for the stock options granted
during the periods. Other notable changes in the operating expenses are: (i)
Professional fees decreased $505,828 to $738,826 in 2006 from $1,244,654 in the
2005 period, primarily due to the decrease in legal costs incurred in connection
with the Aquiline legal action. (Legal fees will continue to be substantial as a
result of the appeal of the July 14, 2006 judgment.) (ii) Salaries increased
$111,541 due to increases in staff, increases in salary levels and bonuses of
$100,000. (iii) Administrative and management services increased $184,794 mainly
due to a $150,000 bonus paid to the President during the 2006 period and the
increase in monthly fees. The bonuses were recommended by the Compensation
Committee and approved by the Board of Directors of the Company. (iv) Corporate
development and investor relations decreased $165,485 mainly due to the decrease
in printing costs and decrease in corporate development consulting costs during
the 2006 period. (v) Travel and accommodation decreased $126,940 due to reduced
travel in the 2006 period. (vi) General exploration decreased $119,528 due to
decrease in the Company's general exploration activities during the 2006 period.
In 2006 the Company recorded interest income of $280,371 compared to $90,428 in
2005, primarily as a result of an increase in funds on deposit.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at September 30, 2006 was $9,968,669, an increase of
$2,237,274 from December 31, 2005. Total assets increased to $31,003,710 at
September 30, 2006 from $23,497,994 at December 31, 2005. This increase is
mainly due to the increase in Navidad carrying value and in cash balance.
On March 21, 2006 the Company completed a syndicated brokered private placement
financing of 2,865,000 special warrants at $3.50 per warrant for gross proceeds
of $10,027,500. Each special warrant entitles the holder to acquire one unit
consisting of one common share and one half common share purchase warrant. Each
full warrant entitles the holder thereof to purchase one additional common share
in the capital of the Company at a price of $3.80 per share until March 21,
2010. In addition to a cash commission of 6% the underwriters were granted
171,900 agents' warrants, representing 6% of the number of special warrants
issued. Each agents' warrant is exercisable for one share at a price of $3.80,
for a period of twenty four months, expiring on March 21, 2008.
The Company has received $280,950 from the exercise of options from January 1,
2006 to September 30, 2006. As at November 14, 2006, the Company had working
capital of approximately $9,000,000.
Options and warrants were exercised which resulted in cash proceeds of
$4,215,145 from January 1 to September 30, 2005. The Company paid $145,866 to
Golden Arrow Resources Corporation ("Golden Arrow") from the exercise of
warrants that resulted in the issue of Golden Arrow's shares as required by the
terms of the reorganization. As all warrants that were outstanding as of the
effective date of the reorganization have been exercised the Company has no
further obligation to pay amounts to Golden Arrow for the issue of its shares on
the exercise of the Company's warrants.
The Company considers that it has adequate resources to maintain its ongoing
operations for the balance of the year. The Company will continue to rely on
successfully completing additional equity financing. There can be no assurance
that the Company will be successful in obtaining the required financing. The
failure to obtain such financing could result in the loss of or substantial
dilution of its interest in its properties.
Except as disclosed elsewhere in this MD&A the Company does not know of any
trends, demand, commitments, events or uncertainties that will result in, or
that are reasonably likely to result in, its liquidity either materially
increasing or decreasing at present or in the foreseeable future. Material
increases or decreases in liquidity will be substantially determined by the
success of the appeal of the Supreme Court of British Columbia judgement in the
Aquiline lawsuit.
The Company does not now and does not expect to engage in currency hedging to
offset any risk of currency fluctuations.
- 3 -
OPERATING CASH FLOW
Cash outflow from operating activities for the nine months ended September 30,
2006, was $2,741,403, compared to cash outflow for 2005 period of $2,762,578.
FINANCING ACTIVITIES
During the nine months ended September 30, 2006, the Company received
$10,027,500 less costs of $838,249 from a brokered private placement and
$280,950 on the exercise of options, compared to $14,215,165, less costs of
$726,445, for the period ended September 30, 2005.
INVESTING ACTIVITIES
Investing activities required cash of $4,491,524 during the nine months ended
September 30, 2006, compared to $5,163,231 for the 2005 period. These investing
activities were for additions to the Navidad Project in Argentina.
RELATED PARTY TRANSACTIONS
Effective January 1, 2005 the Company engaged the Grosso Group Management Ltd.
(the "Grosso Group") to provide services and facilities to the Company. The
Grosso Group is a private company now owned by the Company, Golden Arrow
Resources Corporation, Amera Resources Corporation, Astral Mining Corporation
and Gold Point Energy Corp., each of which owns one share. The Grosso Group
provides its shareholder companies with geological, corporate development,
administrative and management services. The shareholder companies pay monthly
fees to the Grosso Group. The fee is based upon a reasonable pro-rating of the
Grosso Group's costs including its staff and overhead costs among each
shareholder company with regard to the mutually agreed average annual level of
services provided to each shareholder company. During the nine months ended
September 30, 2006, the Company incurred fees of $574,677 to the Grosso Group:
$554,335 was paid in monthly payments and $21,563 is included in accounts
receivable as a result of a review of the allocation of the Grosso Group costs
to the member companies for the period. In addition, included in accounts
receivable, prepaids and deposits is a $205,000 deposit to the Grosso Group for
the purchase of equipment and leasehold improvements and for operating working
capital.
On May 6, 2005, on the signing of an Administration Services Agreement, the
Company transferred its corporate equipment and leasehold improvements to Grosso
Group at their carrying values of $93,177 as of December 31, 2004. As of
September 30, 2006 the Company has received $46,589 from the Grosso Group for
these assets. The remaining balance due from the Grosso Group is included in
accounts receivable.
The President of the Company provides his services on a full-time basis under a
contract with a private company controlled by the President. On April 12, 2006
the Board accepted the recommendation from the Compensation Committee to
increase the monthly fee, effective May 1, 2006, to $20,833 (previously $8,500)
and to pay a bonus of $150,000. The total compensation paid to the President
during the period was $288,167.
In the event the contract is terminated by the Company or as a result of a
change of control, a bonus is payable to the President consisting of (i) any
monthly compensation due to the date of termination, (ii) options as determined
by the board of directors, (iii) three years of monthly compensation (which may
be adjusted annually) and (iv) bonus of $461,500. If the termination had
occurred on September 30, 2006, the amount payable under the agreement would be
$1,211,500.
In the event the contract is terminated by the Company as a result of the
President's death or permanent disability while providing services to the
Company, a bonus in the amount of $461,500 is payable.
During the nine months ended September 30, 2006, the Company paid $154,750 to
directors and officers or companies controlled by directors and officers of the
Company, for technical, management and consulting services provided.
The Company has agreements with a company controlled by the wife of the
President of the Company for the rental of office premises. Effective January 1,
2005 the Company subleased the office premises to the Grosso Group.
- 4 -
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the period. Significant areas requiring the use of
management estimates relate to the determination of environmental obligations
and impairment of mineral properties and deferred costs. Actual results may
differ from these estimates.
Reference should be made to the Company's significant accounting policies
contained in Note 3 of the Company's consolidated financial statements for the
years ended December 31, 2005, 2004 and 2003. These accounting policies can have
a significant impact of the financial performance and financial position of the
Company.
RECENT ACCOUNTING PRONOUNCEMENTS
Reference should be made to the recent accounting pronouncements in Canada and
in United States that are described in Note 10 of the Company's consolidated
financial statements for the years ended December 31, 2005, 2004 and 2003.
MINERAL PROPERTIES AND DEFERRED COSTS
Under the terms of the July 14, 2006 court order the Company's ownership of the
Navidad project must be transferred to Aquiline and the Company accordingly
cautions readers that until the British Columbia Court of Appeal rules on the
matter the Company may only recover the costs incurred in the development of the
Navidad project. As discussed above, on October 18, 2006, the Company and
Aquiline reached an agreement in respect to the recoverable costs. The Company's
position is that it will be successful in its appeal and will recover all or a
significant portion of its ownership interest in the Navidad project.
Consistent with the Company's accounting policy disclosed in Note 3 of the
annual consolidated financial statements, direct costs related to the
acquisition and exploration of mineral properties held or controlled by the
Company have been capitalized on an individual property basis. For certain
acquisitions and related payments for mineral property interests, the Company
records a future income tax liability and a corresponding adjustment to the
related asset carrying amount if the expenditures do not have the corresponding
tax basis. It is the Company's policy to expense any exploration associated
costs not related to specific projects or properties. Management of the Company
periodically reviews the recoverability of the capitalized mineral properties.
Management takes into consideration various information including, but not
limited to, results of exploration activities conducted to date, estimated
future metal prices, and reports and opinions of outside geologists, mine
engineers and consultants. When it is determined that a project or property will
be abandoned or its carrying value has been impaired, a provision is made for
any expected loss on the project or property. In 2006 and in 2005 no impairment
of long-lived assets was identified.
FINANCIAL INSTRUMENTS
The Company's financial instruments consisting of cash and cash equivalents,
accounts receivable and accounts payable and accrued liabilities approximate
their carrying values due to the short-term nature of those instruments. As of
September 30, 2006, the market value of marketable securities was $250,500
(September 30, 2005 - $244,500). These marketable securities are considered
"Navidad related assets" subject to transfer to Aquiline.
RISK FACTORS
The Company's operations and results are subject to a number of different risks
at any given time. These factors, include but are not limited to litigation,
disclosure regarding exploration, additional financing, project delay, titles to
properties, price fluctuations and share price volatility, operating hazards,
insurable risks and limitations of insurance, management, foreign country and
regulatory requirements, currency fluctuations and environmental regulations
risks. Exploration for mineral resources involves a high degree of risk. The
cost of conducting programs may be substantial and the likelihood of success is
difficult to assess. For a more complete discussion of these risks and others,
reference should be made to the December 31, 2005 Management Discussion and
Analysis.
- 5 -
SHARE DATA INFORMATION
As of November 14, 2006 there were 52,013,065 common shares, 3,504,404 warrants
and 4,764,000 stock options outstanding.
INVESTOR RELATIONS
The Company currently does not engage any outside investor relations
consultants. Mr. Sean Hurd is the Company's Vice-President, Investor Relations
and coordinates investor relations activities. The Company also maintains a web
site at www.imaexploration.com .
- 6 -
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Joseph Grosso, President & Chief Executive Officer of IMA Exploration Inc.,
certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of IMA Exploration Inc. (the issuer) for
the interim period ending September 30, 2006;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with the issuer's GAAP; and
5. I have caused the issuer to disclose in the interim MD&A any change in
the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
Date: November 14, 2006
/s/ JOSEPH GROSSO
___________________________________
Joseph Grosso,
President & Chief Executive Officer
FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS
I, Arthur Lang, Chief Financial Officer of IMA Exploration Inc., certify that:
1. I have reviewed the interim filings (as this term is defined in
Multilateral Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings) of IMA Exploration Inc. (the issuer) for
the interim period ending September 30, 2006;
2. Based on my knowledge, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the
period covered by the interim filings;
3. Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of
operations and cash flows of the issuer, as of the date and for the
periods presented in the interim filings;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal control over financial reporting for the issuer, and we have:
(a) designed such disclosure controls and procedures, or caused
them to be designed under our supervision, to provide
reasonable assurance that material information relating to the
issuer, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which the interim filings are being prepared; and
(b) designed such internal control over financial reporting, or
caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with the issuer's GAAP; and
5. I have caused the issuer to disclose in the interim MD&A any change in
the issuer's internal control over financial reporting that occurred
during the issuer's most recent interim period that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
Date: November 14, 2006
/s/ ARTHUR LANG
____________________________________
Arthur Lang, Chief Financial Officer