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## a. Financial Assets and Liabilities 

## 1.14 Financial Instruments and Other instruments 

For the period ended June 30, 2010 

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, forward contracts, accounts receivable (excluding refundable taxes) and accounts payable and accrued liabilities. 

The Company has classified its cash and cash equivalents and restricted cash as held-for-trading. Accounts receivable (excluding refundable taxes) are classified as loans and receivables. Accounts payable and accrued liabilities are classified as other liabilities. 

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable (excluding refundable taxes) and accounts payable and accrued liabilities are considered to be reasonable approximations of their fair values due to the short- term nature of these instruments. 

The value of the forward contract has been adjusted to fair value based on quoted market prices. 

The carrying values of financial assets by category at June 30, 2010 and 2009 are as follows: 

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The Company’s cash equivalents bear interest at rates between 0.60% to Prime less 2.00% (2009 – Prime less 2.00% to 2.65%) and mature between July 14, 2010 and September 12, 2010 (2009 – July 16, 2009 and September 11, 2009). The instrument maturing July 14, 2010 in the amount of $34,500 was renewed to July 13, 2011 bearing interest at Prime less 1.85% and the remaining instruments were redeemed subsequent to year-end. 

The carrying values of financial liabilities by category at June 30, 2010 and 2009 are as follows: 

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## b. Financial Instrument Risk Exposure 

The Company’s financial instruments are exposed to certain financial risks, including market risk, credit risk, and liquidity risk. 

## (i) Market risk 

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of three types of risk: foreign currency risk, price risk and interest rate risk. 

## Currency risk 

The Company is exposed to foreign currency risk to the extent expenditures incurred or funds received by the Company are not denominated in Canadian dollars. Proceeds from gold sales are in US dollars. The majority of the Company’s expenditures related to the mine operations and mineral property interests are in Malaysian ringgit, US dollars and Australian dollars. The Company’s ability to generate revenue and to make payments to satisfy its obligations will be affected by foreign currency rate fluctuations. The Company is also exposed to foreign currency risk to the extent that it holds cash in Malaysian ringgit and US dollars. 

