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## 3. Summary of Significant Accounting Policies (Continued) 

## (p) Segment information 

The Company conducts its business as a single segment being the business of exploring and developing mining assets in Canada. All exploration and evaluation assets and equipment are situated in Canada. 

## 4. Financial Instruments and Risk Management 

## (a) Fair value 

The Company has classified its financial instruments as follows: 

Cash and cash equivalents – as FVTPL Investment in securities – as AFS Receivables – as loans and receivables Accounts payable – as other financial liabilities 

The carrying values of cash and cash equivalents, receivables and accounts payable approximate their fair values due to the short-term to maturity of these financial instruments. 

The following table summarizes fair value measurement by level at December 31, 2012 and 2011 for financial assets and liabilities measured at fair value on a recurring basis: 

<img src='content_image/135507.jpg'>

## (b) Liquidity risk 

Liquidity risk is the risk that the Company will encounter difficulty satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. At December 31, 2012, the Company had cash and cash equivalents of $523,110 (2011 - $1,175,776) and accounts payable and accrued liabilities of $46,723 (2011 - $352,953). The Company’s accounts payable are due within 30 days. 

## (c) Credit risk 

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge its contractual obligations. The Company is exposed to credit risk with respect to its cash and cash equivalents, receivables other than Harmonized Sales Tax (“HST”) and government funding receivable. This risk is minimized as cash and cash equivalents have been placed with major Canadian financial institutions. The Company performs ongoing credit evaluations of its receivables. The maximum exposure to loss arising from receivables is equal to their carrying amounts. 

Credit risk with respect to amounts due from related parties, included in receivables, has been assessed as low by management as the Company has strong working relationships with the parties involved. 

