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Vedron Gold Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2007
Vedron Gold Inc.
Management’s Discussion and Analysis – June 30, 2007
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General
The following discussion of performance, financial condition and future prospects should be read in
conjunction with Vedron Gold Inc. (the “Company” or “Vedron”) financial statements and notes thereto for
the years ended December 31, 2006 and 2005, which were prepared in accordance with generally accepted
accounting principles (GAAP) in Canada. Additional information, including an Annual Information Form
can be found on SEDAR, www.sedar.com. All dollar amounts are in Canadian dollars. This discussion and
analysis is dated July 28, 2007.
Overview
The principal business of Vedron is to explore and develop gold properties in Timmins, Ontario, Canada
and to acquire additional gold properties in the Timmins area. Vedron Gold Inc. was formed on March 10,
1972 by articles of amalgamation under the Ontario Business Corporations Act. Vedron is currently focused
on exploring its properties; the Buffalo Ankerite and the Fuller properties which are 100% owned, and the
Davidson Tisdale property, where Vedron is earning up to a 75% property interest, having earned a 70%
interest in the property as of June 30, 2007.
Vedron’s principal property is the Fuller Property, the initial portion purchased in 1980 and the balance in
1985. The property is 100% owned by the Company and contains the Fuller deposit, which contains gold
zones that have been developed by a decline ramp to a depth of 650 feet with levels at 150, 225, 375, 500 and
650 feet. A National Policy 43-101 property report was filed on www.sedar.com on February 18, 2004, and
an updated 43-101 report was filed May 5, 2006. Vedron is conducting exploration work below the existing
area of known gold mineralization in an effort to increase the gold mineralized zones to greater depths.
Permitting and planning work on the property is being carried for the purpose of preparing the property for
future mining operations.
The Fuller Property is Vedron’s material mineral property. Consequently, unless Vedron acquires additional
properties or projects, any adverse development affecting the Fuller property could have a material adverse
affect on Vedron and would materially and adversely affect Vedron’s potential resource production,
profitability, financial performance and results of operations. Vedron’s other significant development
properties are the Buffalo Ankerite Property and the Davidson Tisdale property.
The Company is now looking beyond the exploration and development stage, and is starting to make
preparations for future production. Vedron may consider possible joint-venture arrangements for a milling
partner once the Company enters the production stage.
The company has also engaged mining industry consultants to assist in applying for the permits and
planning work required for gold mining operations.
Overall Performance
For the six month period ended June 30, 2007 the company increased its cash position, including marketable
securities, from $1,506,965 at December 31, 2006 to $4,676,940, due to a financing closed during the previous
quarter. The company has sufficient cash resources on hand to maintain exploration work on its Ontario
gold properties for the remainder of the year.
The Company will continue to focus on its three central Timmins properties during 2007, with exploration
work, permitting and mine planning activities. The main activities carried out during the quarter were
increasing the quantum of gold resources through exploration drilling on the Buffalo Ankerite property and
completion of the drilling that was started during the first quarter on the Davidson Tisdale property.
Vedron Gold Inc.
Management’s Discussion and Analysis – June 30, 2007
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Selected Financial Information
The following table provides selected financial information that should be read in conjunction with the
financial statements of the Company.
QUARTER ENDED JUNE 30 YEAR ENDED DECEMBER 31
2007 2006 2006 2005
Interest and Other Income
$50,383
$51
$52,647 $435
Loss for the period $166,781 $313,922 $1,262,328 $2,320,484
Loss per share
$0.002
$0.005
$0.02
$0.05
Total assets $25,668,188 $21,289,072 $20,710,491 $17,186,787
Mining interest $19,636,900 $17,136,828 $17,833,602 $16,196,017
Total liabilities $1,283,488 $444,127 $296,152 $250,379
Results of Operations
The Company’s operations involve exploration of its gold properties in Ontario, Canada. The Company has
no income from mining operations. For the period ended June 30, 2007, the Company had a net loss of
$166,781 ($313,871 – June 30, 2006). The decreased loss of $147,090 over the comparable quarter June 30, 2006
was mainly due to a future income tax recovery of $85,000 and an increase in interest earned of $50,332.
Operating expenses for the quarter ending June 30, 2007 of $302,164 (June 30, 2006 - $313,922) remained
consistent with the similar quarter in 2006. There was a recovery of future income taxes of $85,000 in June
30, 2007 (June 30, 2006 – nil). The Company increased its cash and marketable securities from $1,506,965 as
at December 31, 2006 to $4,676,940 as at June 30, 2007.
Revenue
The Company did not earn revenue during the period ended June 30, 2007, other than interest on
investments of $50,383.
Expenses
June 30, 2007 June 30, 2006 % Change
Write down of mineral resource property $ - $ - - %
Office, general and administrative $ 260,861 $ 318,345 (18)%
Stock-based compensation $ - $ - - %
Amortization $ 41,063 $ 22,300 (84)%
Loss (gain) on settlement of note payable $ - $ (30,000) - %
Vedron Gold Inc.
Management’s Discussion and Analysis – June 30, 2007
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Expenses cont’d
General and administrative decreased by $57,484 (-18%), due to reduced corporate activities associated with
property acquisitions, corporate funding, permitting and mine planning activities and investor
communications.
Amortization increased due to the commencement of the amortization of the mill equipment. The note payable
gain of $30,000 in the quarter ended June 30, 2006 related to a one-time payment of an amount previously deemed
uncollectable.
Exploration Expenditures
Drilling and other exploration expenditures are capitalized. Exploration expenditures, excluding acquisition
costs, in the quarter ended June 30, 2007 amounted to $578,948 compared to $450,144 in the quarter ended
June 30, 2006. Exploration and development expenditures in the quarter ended June 30, 2007 included
$220,134 on the Davidson Tisdale Property, $51,946 on the Fuller Property and $300,164 on the Buffalo
Ankerite Property. Limited exploration work was performed on the Windsor Property.
The Company is focused on exploring and developing its three advanced gold properties located in central
Timmins, Ontario; the Davidson Tisdale Property, the Fuller Property and the Buffalo Ankerite Property.
Exploration and Development Expenditures for the Year
(excluding mineral property acquisitions)
Davidson
Tisdale
Fuller Buffalo
Ankerite
Windsor Total
Geological $3,349 $20,293 $64,340 $5,954 $93,936
Engineering $2,500 $990 $14,414 $17,904
Geophysics $750 $750
Drilling $182,055 $185,866 $367,921
Consulting
Permitting $23,359 $22,992 $25,929 $72,280
Other $8,871 $7,671 $9,615 $26,157
Property Total $220,134 $51,946 $300,164 $6,704 $578,948
Summary of Quarterly Results
Selected financial information for the eight fiscal quarters of 2007 and 2006.
Quarterly Financial Information (unaudited)
2007 2007 2006 2006
Q2 Q1 Q4 Q3
(a) Revenue $ 50,383 $ 38,058 $ 37,322 $ 15,224
(b) Net Income (loss) $ (166,781) $ (806,220) $ (99,341) $ (493,457)
(c) Net Income (loss) per share $ (0.002) $ (0.01) $ (0.003) $ (0.006)
(Basic & Fully Diluted)
2006 2006 2005 2005
Q2 Q1 Q4 Q3
(a) Revenue $ 51 $ 50 $ 75 $ 75
(b) Net Income (loss) $ (313,871) $ (355,659) $ (1,775,097) $ (264,188)
(c) Net Income (loss) per share $ (0.005) $ (0.006) $ (0.038) $ (0.005)
(Basic & Fully Diluted)
Vedron Gold Inc.
Management’s Discussion and Analysis – June 30, 2007
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Liquidity and Capital Resources
For the quarter ended June 30, 2007 the company increased its cash position, including marketable
securities, from $1,506,965 at December 31, 2006 to $4,676,940. The Company closed a $5,500,000 private
placement in the first quarter, resulting in 13,750,000 shares being issued. The company has sufficient cash
resources on hand to maintain exploration work on its Ontario gold properties for the remainder of the year
ended December 31, 2007.
Outstanding Share Data
The authorized capital of the Company is comprised of an unlimited number of common shares. At June 30,
2007 the Company had 86,201,014 common shares outstanding. The Company had 13,825,000 purchase
warrants outstanding as at June 30, 2007, of which 2,500,000 were exercisable at $0.35 until September 6,
2007, 10,362,500 are exercisable at $0.60 until August 13, 2008 and 962,500 are exercisable at $0.40 until
August 28, 2008. The Company has 4,445,000 options outstanding as of June 30, 2007 exercisable at prices
ranging from $0.20 to $0.60 per share.
Commitments
Vedron enters into option agreements with others whereby the Company may earn an interest in certain
mineral properties by making option payments in cash and property work obligations to maintain the
option on properties. Vedron’s current commitments are as follows:
1) The Davidson Tisdale agreement has commitments of up to $550,000, none in 2007 and the
remainder in 2008, including $20,000 in cash payments and the rest in property expenditures.
2) The Windsor Property agreement has commitments of $10,000 and 50,000 shares on October 4th,
2007 and a final $10,000 and 50,000 shares on October 4th, 2008. Vedron is also to maintain the
claims in good standing for the duration of the agreement.
Transactions with Related Parties
Management fees were paid to officers and directors, totalling $45,000 for the quarter.
The Company paid legal fees of $7,247 for the quarter to a firm in which an officer of the Company is also a
partner of the law firm.
The Company has paid/accrued directors’ fees to directors of the Company totalling $9,000 for the quarter.
All related party transactions entered into by the Company are recorded at fair market value as determined
by the Company’s directors with no beneficial interest in respect of a particular transaction.
Off-Balance Sheet Arrangements
As at June 30, 2007, the Company does not have off-balance sheet arrangements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumption that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported amount of expenses during the reporting
period. Actual results could differ from those estimates.
Vedron Gold Inc.
Management’s Discussion and Analysis – June 30, 2007
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Nature of Operations
Vedron is an exploration and development company engaged in the mining business. Some of its mineral
properties are currently being explored and developed, and the Company has not yet determined whether
these properties contain reserves that are economically recoverable. The recoverability of the amount shown
for mineral properties is dependent upon the existence of economically recoverable reserves, as established
in accordance with National Instrument No. 43-101, the ability of Vedron to obtain the necessary financing
to complete exploration and development and upon future profitable production or proceeds from
disposition of such properties.
The Company tries to maximize its exposure to promising exploration and development opportunities, to
manage the risks inherent in exploration and to make appropriate use of financial management resources.
Additional Funding Requirements
As discussed, the mineral properties of Vedron are in the exploration and development stage and, as a
result, the Company has no source of operating cash flow. The Company intends to raise such additional
funds to complete its projects. There is no assurance that Vedron will be able to raise additional funds on
reasonable terms. The development of any ore deposits found on the exploration properties of Vedron
depends on the ability of the Company to obtain financing through debt financing, equity financing or other
means. If the exploration and development programs of Vedron are successful, additional funds will be
required to develop the properties and, if successful, to place them in commercial production. The only
source of future funds presently available to Vedron is the sale of equity capital of Vedron, or the sale by
Vedron of an interest in any of its properties in whole or in part. The ability of Vedron to arrange such
financing in the future will depend in part upon the prevailing capital market conditions as well as the
business performance of the Company.
There can be no assurance that Vedron will be successful in its efforts to arrange additional financing if
needed on terms satisfactory to Vedron. If additional financing is raised by the issuance of shares from the
treasury of the Corporation, control of Vedron may change and shareholders may suffer additional dilution.
If adequate financing is not available, Vedron may be required to delay, reduce the scope of, or eliminate
one or more exploration activities or relinquish rights to certain of its interests. Failure to obtain additional
financing on a timely basis could cause Vedron to forfeit its interests in some or all of its properties and
reduce or terminate its operations.
Mineral Properties and Deferred Exploration Costs
The Company defers the costs of exploration and capital assets in existing projects and carries them as assets
until production begins. Mineral properties and deferred exploration expenditures are recorded at cost and
do not necessarily reflect present or future values. If a project is successful, the related mineral properties
and deferred exploration expenditures will be amortized over the estimated economic life of the project. If a
project is unsuccessful, or if exploration ceased because continuation is not economically feasible, the
mineral properties and related exploration expenditures are written off.
Senior management periodically reviews the carrying value of the mineral properties and deferred
exploration expenditures to consider whether there are any conditions that may indicate impairment.
Where estimates of future cash flows are available, a reduction in carrying value is recorded to the extent the
net book value of the investment exceeds the estimated future cash flows. Where estimates of the future
cash flows are not available and where other conditions suggest impairment, management assesses if the
carrying value can be recovered and provides for impairment, if so indicated.
Stock-based Compensation
Effective January 1, 2004, Vedron adopted the amendment to CICA Handbook Section 3870 "Stock-Based
Compensation and Other Stock-Based Payment". The amendment, issued November 2003, requires the
expensing of all stock-based compensation awards for fiscal years beginning on or after January 1, 2004
using the prospective transitional alternative as permitted by the standard, and has therefore used the fair
value method for stock-based compensation awards. Any consideration paid by employees on exercise of
the stock options or purchase of stock is credited to share capital.
Vedron Gold Inc.
Management’s Discussion and Analysis – June 30, 2007
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Risks and Uncertainties
The Company’s business of exploring and developing mineral properties is highly uncertain and risky by its
very nature. In addition, the ability to raise funding in the future to maintain the Company’s exploration
and development activities is dependant on financial markets that often fail to provide necessary capital.
Regulatory standards continue to change making the review process longer, more complex and more costly.
Even if an apparently mineable deposit is developed, there is no assurance that it will ever reach production
or be profitable, as its potential economics are influenced by many key factors such as commodity prices,
foreign exchange rates, equity markets and political interference, which can not be controlled by
management.
Management’s evaluation of disclosure controls and procedures
Management is responsible for establishing and maintaining a system of controls and procedures over the
public disclosure of financial and non-financial information regarding the Company. Such controls and
procedures are designed to provide reasonable assurance that all relevant information is gathered and
reported, on a timely basis, to senior management, including the President and the Chief Financial Officer
(CFO), so that appropriate decisions can be made by them regarding public disclosure.
The system of disclosure controls and procedures includes, but is not limited to, our Disclosure Policy, our
Code of Business Ethics, the effective functioning of our Disclosure and Audit Committees, procedures in
place to systematically identify matters warranting consideration of disclosure by the Disclosure Committee
and verification processes for individual financial and non-financial metrics and information contained in
annual and interim filings, including the financial statements, MD&As, Annual Information Forms and
other documents and external communications.
As required by CSA Multilateral Instrument 52-109, Certification of Disclosure in Issuers' Annual and
Interim Filings, an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures was conducted, under the supervision of Management, including the President and CFO, as of
September 30, 2006. The evaluation included documentation review, enquiries and other procedures
considered by Management to be appropriate in the circumstances.
Based on that evaluation, the President and the CFO have concluded that the design and operation of the
system of disclosure controls and procedures was effective as of June 30, 2007.
The President and CFO are also required, under Multilateral Instrument 52-109, to file certifications of our
annual filings. Copies of these certifications may be found on SEDAR at www.sedar.com.
Forward Looking Statements
This report may contain forward-looking statements that involve a number of risks and uncertainties including
statements regarding the outlook for the Company’s business and operational results. By nature, these risks and
uncertainties could cause actual results to differ materially from what has been indicated. Factors that could cause
actual results to differ materially from any forward-looking statement include, but are not limited to, failure to
establish estimated resources and reserves, the grade and recovery of ore which is mined from estimates, capital and
operating costs varying significantly from estimates, delays in or failure to obtain governmental, environmental or
other project approvals and other factors including those risks and uncertainties identified above. The Company
undertakes no obligation to update publicly or otherwise revise any forward-looking information as a result of new
information, future results or other such factors which affect this information, except as required by law.
Signed
“Alex Falconer” CFO
August 19, 2007
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