FOR THE NINE-MONTH PERIOD
ENDED NOVEMBER 30, 2012
MANAGEMENT’S DISCUSSION AND ANALYSIS
Any statement or reference to dollar amounts herein shall mean lawful money of Canada unless otherwise indicated.
SCOPE OF MANAGEMENT’S FINANCIAL ANALYSIS
The following analysis should be read in conjunction with the unaudited condensed interim financial statements of Virginia
Mines Inc. (the "Company") and the accompanying notes for the three-month and nine-month periods ended November 30,
2012, and 2011. The financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The reader should also refer to the annual
Management’s Discussion and Analysis of financial position as at February 29, 2012, and results of operations, including the
section describing the risks and uncertainties.
The information contained herein is dated as of January 14, 2013, date of the approval by the Board of the Management’s
Discussion and Analysis and the Financial Statements.
This document contains forward-looking information and statements, which constitute “forward-looking information” under
Canadian securities law and which may be material regarding, among other things, the Company’s beliefs, plans, objectives,
estimates, intentions and expectations. Forward-looking information and statements are typically identified by words such as
“anticipate”, “believe”, “expect”, “estimate”, “forecast”, “goal”, “intend”, “plan”, “will”, “may”, “should”, “could” and
similar expressions. Specific forward-looking information in this document includes, but not limited to, statements with
respect to the Company’s future operating and financial results, its exploration activities, its capital expenditure plans and the
ability to execute on its future operating, investing and financing strategies.
These forward-looking information and statements, by their nature, necessarily involve risks and uncertainties that could
cause actual results to differ materially from those contemplated by these forward-looking statements. We consider the
assumptions on which these forward-looking statements are based to be reasonable, but caution the reader that these
assumptions regarding future events, many of which are beyond our control, may ultimately prove to be incorrect since they
are subject to risks and uncertainties that affect us.
NATURE OF ACTIVITIES
The Company, incorporated under the Canada Business Corporations Act, is in the business of acquiring and exploring
mining properties. It has not yet determined whether its properties contain ore reserves that are economically recoverable.
The recoverability of the amounts shown for mining properties is dependent upon the existence of economically recoverable
ore reserves, the ability of the Company to obtain necessary financing to complete the exploration and development of its
properties, and upon future profitable production or proceeds from the disposal of properties.
The Company specializes in searching for gold and base metal deposits in mostly unexplored territories of Quebec. Most of
its activities take place in the central part of Quebec, particularly in the James Bay area, which comprises several Achaean
greenstone belts known as being very favourable to the presence of economic gold and base metal deposits. This region
differentiates from others by its accessibility and by the existence of explicit agreements governing the access to the territory.
The Company is among the most active exploration companies in Quebec with a large portfolio of properties.
During the three-month period ended November 30, 2012, exploration costs rose to $2,085,000 compared to $1,796,000 for
the corresponding period of the preceding year. The Company’s cumulative exploration costs for the first nine months of the
current year totalled $11,493,000 compared to $8,682,000 for the same period in 2011. During the recent quarter the
Company was mainly active on the Anatacau-Wabamisk and Poste Lemoyne Extension projects.
During the current period, the Company completed the surface exploration campaign on the Anatacau-Wabamisk, located in
the area of the Opinaca Reservoir, on the Quebec Middle-North territory. The property is located 30 kilometres southwest of
the Opinaca Reservoir, about 290 kilometres north of the town of Matagami, province of Quebec. The property consists of
1,154 designated claims covering a surface area of 60,675 hectares split on two adjoining portions: the Anatacau part, with
207 claims constituting the southeastern portion of the property, and the Wabamisk part, with 947 claims constituting the
main part of the property. The Company owns a 100% interest in the Wabamisk portion (with the exception of the royalties
related to the 69 claims of the former Lac H property) while IAMGOLD Corporation (“IAMGOLD”) owns a 100% interest
in the Anatacau portion. As per an agreement entered into in May 2007, the Company has the option of acquiring a 100%
interest in the Anatacau portion in consideration of a $25,000 payment (made upon signing of the agreement) and $3 million
in exploration work to be carried out before December 31, 2015. Should the Company acquire a 100% interest in the
property, IAMGOLD will retain a 2% NSR on this portion of the property. The Company may buy back half (1%) of this
royalty for $1.5 million.
During fall, Virginia focused mechanical stripping, geological mapping and channel sampling on the gold-bearing quartz
vein, which had returned up to 9.66 g/t Au over 4 metres in trench WB2012TR011. Work proved that this vein, now called
the Mustang Vein, displays a good continuity and an important lateral extension at surface. The vein was followed almost
continuously in the extension of trench WB2012TR011 and in new trenches WB2012TR081, TR045-049 and TR046, and its
lateral extension is now confirmed over 425 metres. It remains entirely open under the overburden at both ends. The Mustang
Vein and its alteration envelope (silica-sericite-biotite) form a slightly sigmoidal structure of metric to plurimetric thickness.
The vein is WSW-ENE oriented with a steep dip (75°- 80°) to the north. Many visible gold grains, some of which were very
coarse in places, were found in several locations all along the Mustang Vein. The vein has a low content of sulphides but its
alteration envelope contains up to 5% disseminated arsenopyrite and, at times, a few gold grains locally.
The recently-stripped parts of the Mustang Vein were systematically channel sampled along regularly-spaced lines whose
location was not biased by the presence of numerous visible gold grains. The results obtained are thus variable because of the
free nature of gold in the Mustang Vein. The best result was 23.28 uncut (11.14 cut) g/t Au over 4.6 metres in channel R6 of
trench TR045-049. Several other channels also yielded encouraging results with 18.15 g/t Au over 1.7 metres (R5-TR011),
8.47 g/t Au over 2.4 metres (R12-TR011), 4.46 g/t Au over 2.7 metres (R7-TR011), 3.71 g/t Au over 3 metres (R8-TR011),
10.15 g/t Au over 0.85 metres (R2-TR081), 3.6 g/t Au over 5 metres (R13-TR081), 7.65 g/t Au over 1.7 metres (R15-TR081)
and 3.29 g/t Au over 2 metres (R16-TR081). It is interesting to note that many of these results are concentrated in the area
where the Mustang Vein curves and changes direction. The other channels returned results generally varying between
1.05 g/t Au over 7.3 metres and 1.42 g/t Au over 0.5 metres.
Mapping and prospecting carried out outside the main stripped zone also led to the discovery of other interesting gold
showings in several locations on the Wabamisk grid. Most of these showings consist of centimetric to decimetric quartz veins
locally containing visible gold and hosted within variably silicified and chloritized metasediments (wackes) with traces of
sulphides (arsenopyrite and pyrrhotite). Grab samples collected to characterize these new showings returned values varying
between 1.6 and 27.6 g/t Au while channel samples yielded results ranging from low values to values of up to 6.73 g/t Au
over 2 metres. These gold showings are similar to those of the main stripped zone and are all part of the same field of
auriferous quartz veins now traced over 7 kilometres and where it remains totally open within the folded, meta-wacke
The Company is quite encouraged by these new developments. The discovery of the Mustang Vein confirms the potential of
the gold system for hosting good size veins. This multi-kilometre vein field remains largely unexplored and constitutes a very
promising target. In the months ahead, Virginia will integrate and interpret all results and will commence, in the winter of
2013, a first 3,000-metre diamond drilling program with the purpose of testing this system at depth.
In the recent quarter, the Company spent $594,000 on the Anatacau-Wabamisk property.
POSTE LEMOYNE EXTENSION PROPERTY
In the recent quarter, the Company completed limited surface exploration on the Poste Lemoyne Extension property, located
in the James Bay area, province of Quebec, 10 kilometres west of the Hydro-Québec Poste Lemoyne substation, on the
Trans-Taïga road. The project consists of 605 map-designated claims covering 30,964.78 hectares. The claims are held 100%
by the Company, but the 112 claims acquired before October 2005 are subject to a 1% NSR to Globestar Mining
Corporation. The Company may buy back half of this NSR (0.5%) for $500,000.
A prospecting and mapping program of about two weeks had the purpose of evaluating at surface the gold showings
discovered during the past summer in the surrounding area and to the east of the Charlie showing. These showings consist of
centimetric to metric quartz veins hosted by various rocks including basalts, diorites, granodiorites, gabbros, pyroxenites and
wackes. The samples taken by hand to characterize these showings returned in general gold values varying between 0.5 g/t
Au and 7.8 g/t Au, with a few significantly higher results comprising, in particular, 47.04 g/t Au, 93.7 g/t Au and 119.2 g/t
Au. Follow-up work carried out this fall led to the discovery in the vicinity of these known showings of a few new auriferous
quartz veins, which yielded in grab samples values varying in general between 1.14 g/t and 4.63 g/t Au, with two higher
results at 52.27 g/t and 76.29 g/t Au. Channel results varied between 1.95 g/t Au over 1.1 metres and 4.29 g/t Au over 0.65
metres. These results are comparable with those obtained in the past summer and suggest that all these veins are part of the
same network. Work including line cutting and induced polarization survey will be carried out in the winter of 2013 on this
network of auriferous quartz veins.
In the recent quarter, the Company spent $149,000 on the Poste Lemoyne Extension property.
FORECAST FOR THE COMING QUARTER
In the coming quarter, the Company will conduct three diamond drilling campaigns. Aside from the 3,000-metre previously
announced on the Anatacau-Wabamisk project, the Company will carry out on its Coulon property a diamond drilling
program of about 12,000 metres as well as borehole geophysical surveys (InfiniTEM). Drilling will test mainly the
extensions of lenses 257, 44 and 201 as well as many geological and geophysical targets within the favourable volcanic
stratigraphy. The Company hopes to significantly increase the resources on the Coulon project, which are currently
established at 3,675,000 tonnes at an average grade of 3.61% Zn, 1.27% Cu, 0.4% Pb, 37.2 g/t Ag and 0.25 g/t Au in the
indicated category, and at 10,058,000 tonnes at an average grade of 3.92% Zn, 1.33% Cu, 0.19% Pb, 34.5 g/t Ag and
0.18 g/t Au in the inferred category.
The Company and its partner IAMGOLD have also scheduled a diamond drilling campaign of about 3,000 metres on the
Lac Pau property, located in the north part of the Caniapiscau Reservoir, in James Bay. Once again the program will test
mainly the Lac Pau auriferous corridor.
The Nichicun, Éléonore Régional, Poste Lemoyne Extension and Ashuanipi project will also be the object of shorter winter
exploration programs comprising mainly induced polarisation surveys.
On September 27, 2012, the Company acquired from CBay Minerals Inc., jointly with Franco-Nevada Corporation, a
2% NSR royalty on the initial 250,000 ounces produced from the Eastmain Property. The acquisition was made for a total
cash consideration of $450,000.
SELECTED FINANCIAL INFORMATION
Three-Month Periods Ended Nine-Month Periods Ended
Expenses 1,656,000 1,210,000 4,372,000 3,770,000
Other income 374,000 322,000 1,426,000 1,145,000
Net loss (847,000) (357,000) (1,241,000) (1,007,000)
Basic and diluted net loss per share (0.026) (0.011) (0.039) (0.032)
RESULTS OF OPERATIONS
COMPARISON BETWEEN THE THREE-MONTH AND NINE-MONTH PERIODS ENDED NOVEMBER 30, 2012
For the three-month and nine-month periods ended November 30, 2012, expenses totalled $1,656,000 and $4,372,000,
respectively, representing increases of $446,000 and $602,000, respectively, compared to the corresponding periods of last
year. Variations are detailed below.
For the three-month and nine-month periods ended November 30, 2012, salaries totalled $307,000 and $827,000,
respectively, representing increases of $99,000 and $211,000 compared to the corresponding periods of last year. These
variations are due mainly to the addition of employees that previously acted as service providers to the Company, to an
increase in annual salaries paid to the employees of the Company, to the hiring of an employee in charge of sustainable
development and to the implementation of a group insurance.
For the current period, professional and maintenance fees totalled $70,000, representing an increase of $6,000 compared to
the corresponding period of last year, and for the nine-month period ended November 30, 2012, they totalled $217,000,
representing a decrease of $21,000 compared to the corresponding period of the previous year. The decrease results mainly
from costs related to IFRS consultation within the context of the 2011 transition to IFRS and other consultation services.
General administrative expenses totalled $330,000 for the current period compared to $469,000 for the same period of the
preceding year, representing a decrease of $139,000 that results mainly from the transfer of former service providers to the
Company’s payroll and from a decrease in donations and sponsorships, compensated by the write-off of all remaining
payments of the former office rental lease. For the nine-month period ended November 30, 2012, expenses amounted to
$676,000 compared to $865,000 for the corresponding period of the preceding year, representing a decrease of $189,000 that
also results from the transfer of former service providers to the Company’s payroll and from a decrease in donations and
sponsorships expenses offset by an interest expense related to a notice of assessment from Revenu Québec for the years 2008
to 2011 and by the write-off of all remaining payments of the former office rental lease.
Stock-based compensation totalled $829,000 for the nine-month period ended November 30, 2012, compared to $713,000 for
the corresponding period of the preceding year. The Company granted more stock options this year compared to last year.
For the three-month and the nine-month periods ended November 30, 2012, general exploration costs decreased by $75,000
and increased by $85,000, respectively, compared to the same periods of last year. During the current year, the Company
assigned a higher budget to prospecting of new exploration targets on the James Bay territory.
For the three-month and nine-month periods ended November 30, 2012, write-offs of properties totalled $784,000 and
$1,061,000, respectively. In the current period, the Company proceeded with a write-off of $554,000 on the Murdoch
property and $195,000 on the Pénélope property. For the three-month and nine-month periods of the preceding year, writeoffs
totalled $197,000 and $687,000, respectively. The most significant write-off of last year was done on the Wabamisk
($267,000) and Sakami properties ($182,000).
For the three-month period ended November 30, 2012, other income totalled $374,000 compared to $322,000 for the
corresponding period of the preceding year, representing an increase of $52,000. For the nine-month period ended
November 30, 2012, other income totalled $1,426,000 compared to $1,145,000 for the same period of the preceding year,
representing an increase of $281,000. Variations are detailed below.
For the current period, dividends and interest income totalled $276,000, representing an increase of $62,000 compared to the
same period of the preceding year. For the nine-month period ended November 30, 2012, dividends and interest income
totalled $857,000, an increase of $111,000 compared to the same period of the preceding year. The increases are mainly due
to a higher level in bonds held by the Company as well as to an increase in interest rates on these bonds.
Fees invoiced to partners during the current quarter totalled $62,000, representing a decrease of $38,000 from the
corresponding period of the preceding year. During the current quarter, the Company received fees mainly from KGHM
International Ltd. (KGHM) (Gayot and Bienville) and Goldcorp Inc. (Corvet Est). Last year, significant partnership
exploration work was done with Anglo American Exploration (Canada) Ltd. on the Baie Payne project. For the nine-month
period ended November 30, 2012, fees invoiced to partners totalled $409,000 compared to $335,000 for the same period of
last year. The increase is due mainly to important exploration work carried out with KGHM (Lac Gayot) during the first
quarter of the current year.
For the three-month and the nine-month periods ended November 30, 2012, the Company recognized a gain on sale of
available-for-sale investments of $27,000 and $168,000, respectively, compared to nil and $117,000 for the same periods of
the preceding year. The variations result mainly from the sale of bonds that occurred during the current year.
For the three-month period ended November 30, 2012, the Company recognized a loss on investments designated as held for
trading of $1,000 compared to $2,000 for the same period of the preceding year. For the nine-month period ended
November 30, 2012, a loss of $11,000 was accounted for compared to $62,000 for the same period of the preceding year.
Losses are due to the fair value revaluation of the Company’s convertible debentures.
Deferred Tax Recovery
For the three-month period ended November 30, 2012, the Company recognized a $435,000 deferred tax recovery compared
to $532,000 for the same quarter of the preceding year. The variation is due mainly to a decrease of the favorable tax impact
on flow-through shares, offset by a decrease in deferred tax liabilities. For the nine-month period ended November 30, 2012,
the Company recognized a $1,705,000 deferred tax recovery compared to $1,618,000 for the same period of the preceding
year. The variation is due mainly to an increase in the favorable tax impact on flow-through shares, offset by a lower increase
in deferred tax assets.
In light of the above, the Company posted a net loss of $847,000 for the three-month period ended November 30, 2012,
compared to $357,000 for the same period of the preceding year.
For the nine-month period ended November 30, 2012, the Company posted a net loss of $1,241,000 compared to $1,007,000
for the corresponding period of the preceding year.
Balance sheets as at
November 30, February 29,
Working capital 40,327,000 44,811,000
Mining properties 56,820,000 47,960,000
Total assets 102,556,000 102,302,000
Shareholders’ equity 90,952,000 88,169,000
Since its incorporation, the Company has not paid any cash dividends on its outstanding common shares. Any future dividend
payments will depend on the Company’s financial needs to fund its exploration programs and its future financial growth, and
any other factor that the board deems necessary to consider in the circumstances. It is highly unlikely that dividends will be
paid in the near future.
LIQUIDITY AND FINANCING
As at November 30, 2012, cash amounted to $4,438,000 compared to $10,365,000 as at February 29, 2012. As at
November 30, 2012, the Company’s working capital decreased by $4,484,000 to reach $40,327,000. The variation is due
mainly to exploration expenses incurred in the current year.
From management’s point of view, the working capital as at November 30, 2012, will cover current expenditures and
exploration fees in the coming year. However, the Company may, from time to time, when market and financing conditions
are favourable, proceed with fundraising to fund exploration of its most important mining projects.
For the current quarter cash flows used in operating activities totalled $244,000, a decrease of $456,000 compared to the
same period of the preceding year. The variation results mainly from changes in accounts receivable and payable related to
partners. For the nine-month period ended November 30, 2012, cash flows used in operating activities totalled $2,862,000, a
decrease of $2,969,000 compared to the same period of last year. This variation results mainly from changes in accounts
payable related to advances from partners.
Cash flows provided from financing activities for the quarter ended November 30, 2012, amounted to $2,179,000 compared
to $3,192,000 for the same period of the preceding year. At the end of the previous quarter, the Company was in a temporary
overdraft position of $705,000 in one of its broker accounts subsequent to the acquisition of bonds.
For the nine-month period ended November 30, 2012, cash flows provided from financing activities totalled $5,902,000
compared to $6,570,000 for the same period of the preceding year. During the current year the Company completed two
flow-through private placements for gross proceeds of $5,500,000 compared to $6,000,000 for the preceding year.
For the three-month period ended November 30, 2012, cash flows used in investing activities totalled $953,000 compared to
$10,112,000 for the same period of the preceding year.
For the nine-month period ended November 30, 2012, cash flows used in investing activities totalled $8,966,000 compared to
$13,188,000 for the same period of the preceding year.
The Company’s investing activities consist mainly of acquisition of mining properties, capitalization of exploration costs as
well as buying and selling of short-term investments.
For the current quarter, the variation of short-term investments increased liquidities by $2,573,000 compared to a decrease of
$7,702,000 for the same period of the preceding year. The variation is attributable to a transfer of cash in short-term
investments in last year’s same period.
For the nine-month period ended November 30, 2012, the variation of short-term investments increased liquidities by
$2,753,000 compared to a decrease of $4,443,000 for the same period of the preceding year. The variation is attributable to a
greater use of cash to fund the current year’s exploration work.
The acquisition of mining properties and the capitalization of exploration costs required disbursements of $3,417,000 for the
current period compared to $2,406,000 for the same period of the preceding year. For the nine-month period ended
November 30, 2012, disbursements totalled $13,522,000 compared to $9,426,000 for the same period of the preceding year.
These increases result mainly from more important exploration work carried out during the current year, particularly on the
The variation in the acquisition of property, plant and equipment is mainly related to the Company’s recent moving to new
premises (investment in the setup of a larger office space and in new furniture).
In the current quarter, the Company also acquired a royalty interest of $233,000 on the Eastmain property.
The information presented thereafter details the total expenses, other income, net earnings (net loss) and the net earnings (net
loss) per participating share for the last eight quarters.
Period Net Earnings
Net Earnings (Net Loss)
Ended Expenses Other Income (Net Loss) Basic Diluted
$ $ $
11-30-2012 1,656,000 374,000 (847,000) (0.026) (0.026)
08-31-2012 1,698,000 438,000 (668,000) (0.021) (0.021)
05-31-2012 1,018,000 615,000 275,000 0.009 0.008
02-29-2012 1,730,000 384,000 (645,000) (0.021) (0.021)
11-30-2011 1,210,000 322,000 (357,000) (0.011) (0.011)
08-31-2011 1,556,000 465,000 (921,000) (0.030) (0.030)
05-31-2011 1,003,000 358,000 271,000 0.009 0.009
02-28-2011 2,313,000 156,000 (987,000) (0.032) (0.032)
As the Company’s business is in the mining exploration field, it receives no earnings from operations. Quarterly changes in
other income have no specific trend except for interest and dividend income that go along with the working capital value and
the change in the bond market interest rates. Gains on sale of investments or mining properties may vary considerably from
one quarter to another. Fees invoiced to partners vary according to agreements and budgets in connection with these
agreements. There is no trend to be observed.
In November 2012, the Company signed a seven-year rental lease for its administrative office. The rental lease cost is
$155,000 per year with an annual increase of 2.5%.
There was no other material change in the Company’s contractual obligations during the recent quarter.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
On December 12, 2012, the Company entered into an agreement for a private placement of 114,286 flow-through common
shares at a price of $17.50 per share for gross proceeds of $2,000,005. The financing is scheduled to close on or about
January 16, 2013.
RELATED PARTY TRANSACTIONS
During the three-month period ended November 30, 2012, general and administrative expenses required disbursements of
$29,000 compared to $58,000 for the same period of the preceding year. Since the beginning of the current year,
disbursements totalled $87,000 compared to $170,000 for the same period of the preceding year. These amounts have been
paid to companies owned by a director.
These transactions are conducted in the normal course of operations.
CARRYING VALUE OF MINING PROPERTIES
At the end of each quarter, exploration work is reviewed to evaluate the potential of each mining property. Following this
analysis, write-offs are recorded when required.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There has been no significant change in the Company accounting policies and estimates since February 29, 2012. Please refer
to the appropriate section of the financial statements included in our 2012 Annual Report for a complete description of our
FUTURE ACCOUNTING CHANGES
There has been no change in future accounting changes as described in the Company’s 2012 annual Management’s
Discussion and Analysis.
DISCLOSURE OF OUTSTANDING SHARE DATA
The Company is authorized to issue an unlimited number of common shares, without par value. As at January 14, 2013, a
total of 32,377,847 shares were outstanding.
The Company maintains a stock option plan under which stock options may be granted up to a maximum of 10% of the
number of shares outstanding. As at January 14, 2013, a total of 2,026,000 stock options were outstanding. The expiry dates
vary from April 6, 2016 to July 13, 2022.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal control over financial reporting (“ICFR”) is designed to provide reasonable assurance regarding the reliability of the
Company’s financial reporting and its compliance with IFRS in its financial statements. The Company’s Chief Executive
Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls over financial
reporting to the issuers. They established the internal control over financial reporting or had it established under their
supervision in order to obtain reasonable assurance about the reliability of the financial reporting and to make sure that the
financial statements were being prepared in accordance with IFRS.
The Chief Executive Officer and the Chief Financial Officer have evaluated whether there were changes to ICFR during the
quarter ended November 30, 2012, that have materially affected, or that are reasonably likely to materially affect ICFR. No
such changes were identified through their evaluation.
RISK FACTORS AND UNCERTAINTIES
There have been no significant changes in the risk factors and uncertainties the Company is facing, as described in the
Company’s annual Management's Discussion and Analysis as at February 29, 2012.
ADDITIONAL INFORMATION AND CONTINUOUS DISCLOSURE
This Management’s Discussion and Analysis has been prepared as at January 14, 2013. Additional information on the
Company is available through regular filings of press releases, reports on significant changes, financial statements, circulars
and its annual information form on SEDAR (www.sedar.com).
(s) André Gaumond (s) Robin Villeneuve
President and CEO Chief Financial Officer