EX-2 3 financialstatement.htm AUDITED FINANCIAL STATEMENTS Financial Statement 2006-2007

  PricewaterhouseCoopers
LLP/s.r.l./s.e.n.c.r.l.
Chartered Accountants
Place de la Cité, Tour Cominar
2640 Laurier Boulevard, Suite 1700
Québec, Quebec
Canada G1V 5C2
Telephone +1 (418) 522 7001
Facsimile +1 (418) 522 5663

Auditors' Report


To the Shareholders of
Virginia Mines Inc.


We have audited the balance sheets of Virginia Mines Inc. (an exploration company) as at February 28,
2007 and 2006 and the statements of earnings, deficit and cash flows for the twelve-month period
ended February 28, 2007, the twelve-month period ended February 28, 2006 and the nine-month period
ended February 28, 2005. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial statements based on our
audits.


We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.


In our opinion, these financial statements present fairly, in all material respects, the financial position
of the company as at February 28, 2007 and 2006 and the results of its operations and its cash flows for
the twelve-month period ended February 28, 2007, the twelve-month period ended February 28, 2006
and the nine-month period ended February 28, 2005 in accordance with Canadian generally accepted
accounting principles.

Chartered Accountants
Quebec, Quebec, Canada
May 14, 2007

PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l. and the other member firms of
PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

Virginia Mines Inc.
(an exploration company)
Balance Sheets

(expressed in Canadian dollars)

   
As at February 28,
   
2007
2006
   
$
$
   
Assets
   
Current assets
Cash and cash equivalents
6,139,543
10,455,911
Short-term investments (Note 4)
34,304,806
21,129,909
Amounts receivable (Note 5)
9,113,525
8,902,156
Prepaid expenses (Note 6)
96,935
85,863
Current assets of the discontinued operation (Note 3b)
-
1,233,825
Future income tax assets (Note 12)
-
5,886,318
   
   
49,654,809
47,693,982
   
Property, plant and equipment, at cost less accumulated depreciation of
  $18,695 ($15,283 as at February 28, 2006)
11,471
11,217
   
Mining properties (Note 7)
9,738,536
6,567,312
 
Intangible asset, at cost less accumulated amortization of
  $4,963 ($4,091 as at February 28, 2006)
2,035
2,907
   
Deferred charges (Note 2)
-
341,722
   
Long-term asset of the discontinued operation (Note 3b)
-
11,397,457
   
   
59,406,851
66,014,597
   
Liabilities
   
Current liabilities
Accounts payable and accrued liabilities
  Related companies
30,685
94,033
  Others
3,191,435
430,051
Current liabilities of the discontinued operation (Note 3b)
-
4,435,716
   
   
3,222,120
4,959,800
   
Long-term liabilities of the discontinued operation (Note 3b)
-
86,318
   
   
3,222,120
5,046,118
   
Shareholders' Equity
   
Share Capital
94,447,526
85,471,959
Authorized
  Unlimited number of common shares, voting and participating, whitout par value
Issued and fully paid
  26,425,698 common shares (24,078,286 as at February 28, 2006)
Warrants (Note 8)
261,114
446,117
Stock options (Note 9a)
2,895,074
-
Unit options (Note 9b)
-
101,178
Contributed surplus (Note 9a)
26,028
1,274
Deficit
(41,445,011)
(25,052,049)
   
   
56,184,731
60,968,479
   
   
59,406,851
66,014,597
   
   
Subsequent events (Note 15)
   
The accompanying notes are an integral part of these financial statements.
   
 

Approved by the Board, (s) André Gaumond, Director(s) André Lemire , Director

Page1

Virginia Mines Inc.
(an exploration company)
Statements of Earnings

(expressed in Canadian dollars)

 
Periods Ended February 28,
 
2007
2006
2005
 
$
$
$
 
(12 months)
(12 months)
(9 months)
 
Revenues
Dividends and interest
1,703,103
1,301,133
588,163
Fees
293,869
106,599
147,880
Option payments received as financial instruments in excess of cost ofmining property (Note 7d)
4,338,141
-
-
Gain on sale of investments
1,009,767
680,021
430,589
Gain on sale of mining properties
319,198
429,961
-
 
7,664,078
2,517,714
1,166,632
Expenses
Professional and maintenance fees (Note 9)
2,691,814
449,157
347,301
Management fees
182,144
53,812
101,536
Rent, office expenses and bonus
1,039,500
658,763
390,825
Employee benefits - stock options
3,078
975,472
6,210
Advertising and exhibitions
93,236
173,626
137,365
Travelling
80,648
107,398
64,952
Depreciation of property, plant and equipment
3,412
4,470
3,268
Amortization of the intangible asset
872
1,245
1,104
General exploration costs (Note 9)
1,319,369
474,205
440,498
Grants, credit on duties refundable for loss and refundable tax credit for resources
(176,870)
(126,676)
(149,371)
Cost of mining properties abandoned or written off (Note 7)
1,909,273
1,124,145
4,694,495
Writedown of short-term investments
298,960
-
-
 
7,445,436
3,895,617
6,038,183
Earnings (loss) before income taxes and discontinued operation
218,642
(1,377,903)
(4,871,551)
Income taxes (Note 12)
-
(5,405,455)
(332,076)
Net earnings (net loss) from continuing operations
218,642
4,027,552
(4,539,475)
Net earnings (net loss) from the discontinued operation
(637,494)
151,157
(165,740)
Net earnings (net loss) for the period
(418,852)
4,178,709
(4,705,215)
Basic net earnings (net loss) per share from continuing operations (Note 13)
0.009
0.177
(0.243)
Basic net earnings (net loss) per share from the discontinued operation (Note 13)
(0.025)
0.007
(0.009)
Total basic net earnings (net loss) per share (Note 13)
(0.016)
0.184
(0.252)
Diluted net earnings (net loss) per share from continuing operations (Notes 13)
0.009
0.171
(0.243)
Diluted net earnings (net loss) per share from the discontinued operation (Note 13)
(0.025)
0.006
(0.009)
Total diluted net earnings (net loss) per share
(0.016)
0.177
(0.252)

The accompanying notes are an integral part of these financial statements.

Page 2

Virginia Mines Inc.
(an exploration company)
Statement of Changes in Shareholder's Equity
For the period ended February 28, 2007
(expressed in Canadian dollars)
Contri-buted surplus

 

 

Share capital

 

 

 

Warrants (units)

 

Stock options

 

Unit options

 

 

Deficit

 

Total

 

common shares

Warrants

 

 

Number

 

$

 

Number

 

$

 

Number

 

$

 

Number

 

$

 

Number

 

$

 

$

 

$

 

$

Balance as at March 1, 2006

 

48,156,570

 

85,471,959

 

835,425

 

446,117

 

-

 

-

 

-

 

-

 

95,730

 

101,178

 

1,274

 

(25,052,049)

 

60,968,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit optionse exercised

 

95,730

 

431,468

 

-

 

-

 

23,932

 

62,203

 

-

 

-

 

(95,730)

 

(101,178)

 

-

 

-

 

392,493

Warrants (units) exercised

 

1,800

 

14,398

 

-

 

-

 

(1,800)

 

(4,678)

 

-

 

-

 

-

 

-

 

-

 

-

 

9,720

Warrants exercised

 

1,525

 

9,049

 

(1,525)

 

(814)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

8,235

Stock options granted

 

-

 

-

 

-

 

-

 

-

 

-

 

20,000

 

234,000

 

-

 

-

 

-

 

-

 

234,000

Stock option exercised

 

20,000

 

239,610

 

-

 

-

 

-

 

-

 

(20,000)

 

(234,000)

 

-

 

-

 

-

 

-

 

5,610

 

 

48,275,625

 

86,166,484

 

833,900

 

445,303

 

22,132

 

57,525

 

-

 

-

 

-

 

-

 

1,274

 

(25,052,049)

 

61,618,537

Exchange of each share of Virginia Gold Mines for 0.5 share of the company as part of the plan of arrangement (Note 3)

 

(24,137,812)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange of each warrant and warrant (unit) of Virginia Gold Mines for 0.5 warrant and warrant (unit) of the company as part of the plan of arrangement (Note 3)

 

-

 

-

 

(416,950)

 

-

 

(11,066)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfer of Eleonore property's net assets and elimination of future income tax assets (Note 3)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(15,974,110)

 

(15,974,110)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants granted (Note 8)

 

-

 

-

 

484,162

 

261,114

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

261,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options granted (Note 9a)

 

-

 

-

 

-

 

-

 

-

 

-

 

1,146,000

 

3,056,637

 

-

 

-

 

-

 

-

 

3,056,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants exercised (Note 8)

 

414,664

 

935,491

 

(414,664)

 

(442,861)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

492,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exercised (Note 9a)

 

52,500

 

349,277

 

-

 

-

 

-

 

-

 

(52,500)

 

(143,152)

 

-

 

-

 

-

 

-

 

206,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants (units) exercised (Note 9c)

 

10,316

 

65,879

 

-

 

-

 

(10,316)

 

(53,624)

 

-

 

-

 

-

 

-

 

-

 

-

 

12,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants expired (Note 8)

 

-

 

-

 

(2,286)

 

(2,442)

 

-

 

-

 

-

 

-

 

-

 

-

 

2,442

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options expired (Note 9a)

 

-

 

-

 

-

 

-

 

-

 

-

 

(7,000)

 

(18,411)

 

-

 

-

 

18,411

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants (units) expired (Note 9c)

 

-

 

-

 

-

 

-

 

(750)

 

(3,901)

 

-

 

-

 

-

 

-

 

3,901

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares for a cash consideration

 

1,210,405

 

4,786,279

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

4,786,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of a mining property

 

600,000

 

2,168,769

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2,168,769

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share issue expenses

 

-

 

(24,653)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(24,653)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(418,852)

 

(418,852)

Balance as at February 28, 2007

 

26,425,698

 

94,447,526

 

484,162

 

261,114

 

-

 

-

 

1,086,500

 

2,895,074

 

-

 

-

 

26,028

 

(41,445,011)

 

56,184,731

The accompanying notes are an integral part of these financial statements.

Page 3

Virginia Mines Inc.
(an exploration company)
Statement of Changes in Shareholders' Equity
For the period ended February 28, 2006
(expressed in canadian dollars)
Contri-buted surplus
Share capital
Warrants (units)
Stock options
Unit options
Deficit
Total
common shares
Warrants
                   
Number
$
Number
$
Number
$
Number
$
Number
$
$
$

$
Balance as at March 1, 2005 19,479,539 56,253,306 994,011 554,380 - - 1,106,655 460,466 - - 1,274 (29,230,758) 28,038,668
Warrants granted - - 501,749 550,771 - - - - - - - - 550,771
Option units granted - - - - - - 106,500 341,068 117,900 249,301 - - 590,369
Warrants (units) granted - - - - 17,509 91,024 - - - - - - 91,024
Warrants exercised 1,078,048 5,648,018 (1,078,048) (659,034) - - - - - - - - 4,988,984
Stock options exercised 1,213,155 4,519,684 - - - - (1,213,155) (801,534) - - - - 3,718,150
Unit options exercised 70,035 631,386 - - - - - - (70,035) (148,123) - - 483,263
Warrants (units) exercised 17,509 280,117 - - (17,509) (91,024) - - - - - - 189,093
Issuance of shares for a cash consideration 2,140,000 18,826,110 - - - - - - - - - - 18,826,110
Acquisition of a mining property 80,000 1,040,000 - - - - - - - - - - 1,040,000
Share issue expenses - (1,726,662) - - - - - - - - - - (1,726,662)
Net earnings for the period -   -   -   -   -   -   -   -   -   -   -   4,178,709   4,178,709
Balance as at February 28, 2006
24,078,286
85,471,959
417,712
446,117
-
-
-
-
47,865
101,178
1,274
 
(25,052,049)
  
60,968,479

The accompanying notes are an integral part of these financial statements.

Page 4

Virginia Mines Inc.
(an exploration company)
Statement of Changes in Shareholders' Equity
For the period ended February 28, 2005
                           
(expressed in Canadian dollars)
Conti-buted surplus
Share capital
Warrants (units)
Stock options
Unit options
Deficit
Total
common shares
Warrants
                   
Number
$
Number
$
Number
$
Number
$
Number
$
$
$
$
Balance as at June 1, 2004 18,319,457 52,159,266 1,599,033 883,255 - - 1,374,971 214,439 - - - (24,525,543) 28,731,417
Warrants granted - - 12,000 12,984 - - - - - - - - 12,984
Stock options granted - - - - - - 152,000 312,494 - - - - 312,494
Warrants exercised 540,099 2,344,655 (540,099) (341,859) - - - - - - - - 2,002,796
Stock options exercised 419,816 692,764 - - - - (419,816) (65,193) - - - - 627,571
Unit options exercised - - - - - - - - - - - - -
Warrants expired - - (76,923) - - - - - - - - - -
Stock options cancelled - - - - - - (500) (1,274) - - 1,274 - -
Issuance of shares for a cash consideration 200,167 1,501,249 - - - - - - - - - - 1,501,249
Share issue expenses - (444,628) - - - - - - - - - - (444,628)
Net loss for the period -   -   -   -   -   -   -   -   -   -   -   (4,705,215)   (4,705,215)
Balance as at February 28, 2005 19,479,539   56,253,306   994,011   554,380   -   -   1,106,655   460,466   -   -   1,274   (29,230,758)   28,038,668

he accompanying notes are an integral part of these financial statements.

Page 5

Virginia Mines Inc.      
(an exploration company)      
Statements of Cash Flows      
         
(expressed in Canadian dollars)      
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
Cash flows from operating activities from continuing operations      
Net earnings (net loss) from continuing operations for the period
218,642
4,027,552
(4,539,475)
Items not affecting cash and cash equivalents
  Cost of mining properties abandoned or written off
1,909,273
1,124,145
4,694,495
  Depreciation and loss on sale of property, plant and equipment
4,284
6,198
4,372
  Stock-based compensation costs
3,290,637
341,068
312,494
  Writedown of short-term investments
298,960
-
-
  Option payments received as financial instruments in excess of cost of mining property
(4,338,141)
-
-
  Gain on sale of investments
(1,009,767)
(680,021)
(430,589)
  Gain on sale of mining properties
(319,198)
(429,961)
-
  Future income taxes
-
(5,405,455)
(332,076)
   
54,690
(1,016,474)
(290,779)
 
Net change in non-cash working capital items (Note 10a)
3,092,476
252,991
(834,148)
 
3,147,166
(763,483)
(1,124,927)
Cash flows from operating activities from the discontinued operation (Note 3e)
(1,802,127)
(581,859)
(165,740)
   
1,345,039
(1,345,342)
(1,290,667)
Cash flows from financing activities from continuing operations
Issuance of share capital and warrants
6,174,461
28,821,013
4,476,676
Share issue expenses
(24,653)
(1,300,019)
(444,628)
   
6,149,808
27,520,994
4,032,048
Cash flows from financing activities from the discontinued operation (Note 3e)
-
3,000,000
-
   
6,149,808
30,520,994
4,032,048
Cash flows from investing activities from
  continuing operations
Change in short-term investments
(7,801,315)
(11,805,485)
4,855,844
Change in deposit on exploration costs
-
49,430
100,570
Change in long-term investments
-
-
34,973
Acquisition of mining properties
(4,291,531)
(5,866,656)
(2,614,739)
Change in credit on duties refundable for loss and refundable tax credit
  related to exploration costs applied against mining properties
652,485
-
-
Grants cashed
-
-
40,000
Acquisition of property, plant and equipment
(3,666)
-
(8,062)
Proceeds from disposal of mining properties
15,000
1,300
-
Option payments received
90,001
-
-
Change in deferred charges
-
(341,722)
-
  Acquisition of an intangible asset
-
-
(700)
   
(11,339,026)
(17,963,133)
2,407,886
Cash flows from investing activities from the
  discontinued operation (Note 3e)
(472,189)
(8,074,910)
(2,459,869)
   
Change in cash and cash equivalents
(4,316,368)
3,137,609
2,689,398
Cash and cash equivalent-Beginning of period
10,455,911
7,318,302
4,628,904
Cash and cash equivalents- End of period
6,139,543
10,455,911
7,318,302

The accompanying notes are an integral part of these financial statements.

Page 6

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

1

Incorporation and nature of operations

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 continue the exploration and development of its properties, and upon future profitable production or proceeds from the disposal of properties.

2 Summary of significant accounting policies

Basis of presentation
These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These principles conform, in all material respects, with United States generally accepted accounting principles, except as described in note 16. The significant accounting policies, which have been consistently applied, are summarized as follows.

Use of estimates
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported in the financial statements. Those estimates and assumptions also affect the disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses for the reporting periods. Significant estimates include the carrying amount of mining properties, the credit on duties refundable for loss, the refundable tax credit for resources and certain accrued liabilities. Actual results could differ from those estimates.

Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, exploration funds, balances with banks and highly liquid short-term investments with original maturities of three months or less at the acquisition date.

Exploration funds consist of cash, term deposits and short-term investments and represent the unexpended proceeds of financings under the terms of which the company must spend the amounts on the exploration of mining properties.

Short-term investments
Short-term investments are valued at the lower of cost and market value.

Page 7

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Property, plant and equipment and depreciation

Property, plant and equipment are recorded at cost less accumulated depreciation, and are depreciated using the declining balance method at the rates of 20% for office equipment and 30% for field equipment.

Mining properties

The company records its interests in mining properties and areas of geological interest at cost less option payments received and other recoveries. Exploration costs related to these interests and projects are capitalized on the basis of specific claim blocks or areas of geological interest until the mining properties to which they relate are placed into production, sold or abandoned. Management reviews for impairment the carrying amount of mining properties on a regular basis. These costs will be amortized over the estimated useful life of mining properties following commencement of production or written off if the mining properties are sold or projects are abandoned. General exploration costs not related to specific mining properties are expensed as incurred.

Although management has taken actions to verify the ownership rights for mining properties in which the company owns an interest in accordance with industry standards for the current exploration phase of these properties, these procedures give no assurance to the company as to title. The title to property may be subject to unrecognized prior agreements and not compliant with regulatory requirements.

Intangible asset

The intangible asset, which consists of Web site development expenses, is recorded at cost less accumulated amortization, and is amortized using the declining balance method at a rate of 30%.

Deferred charges

Deferred charges consist of expenses incurred with respect to the arrangement entered into on March 31, 2006 between the company, Goldcorp Inc. and Virginia Gold Mines Inc.

Credit on duties refundable for loss and refundable tax credit for resources

The company is entitled to a credit on duties refundable for loss under the Mining Duties Act. This credit on duties refundable for loss on mining exploration expenses incurred in the province of Quebec at a rate of 12% has been applied against the costs incurred.

Furthermore, the company is entitled to a refundable tax credit for resources for mining companies on qualified expenditures incurred. The refundable tax credit for resources may reach 38.75%. This tax credit has been applied against the costs incurred.

Page 8

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Share capital

Shares issued for non-monetary consideration are generally recorded at the quoted market price of the shares over a reasonable period of time before and after the agreement to issue the shares was announced.

Shares issued pursuant to flow-through financing agreements are recorded at their fair value. Upon the acquisition of mining properties, the carrying value may exceed the tax basis since the company renounces the deductions in favour of the investors concerned. Future income taxes arising from the difference between the carrying amount and the tax basis are recorded as share issue expenses.

Share issue expenses and future income taxes arising from the difference between the carrying value and the tax basis of exploration costs are applied against share capital.

Government grants

Government grants are recorded as revenue when the company has reasonable assurance that it has complied and will continue to comply with all the conditions related to the grant. Grants related to working capital are included in earnings when the related expenses are incurred. Grants related to exploration costs are deducted from the related mining properties.

Income taxes

The company provides for income taxes using the liability method. Under this method, future income tax assets and liabilities are determined based on deductible or taxable temporary differences between financial statement values and tax values of assets and liabilities using enacted or substantively enacted income tax rates expected to be in effect for the period in which the differences are expected to reverse.

The company establishes a valuation allowance against future income tax assets if, based on available information, it is more likely than not that some or all of the future income tax assets will not be realized.

Basic and diluted earnings per share

Basic earnings per share are calculated using the weighted average number of participating shares outstanding during the period.

Diluted earnings per share are calculated using the weighted average number of participating shares outstanding during the period, plus the effects of dilutive potential participating shares outstanding during the period. The calculation of diluted earnings per share is made using the treasury stock method, as if all dilutive potential shares had been issued at the later of the beginning of the year or the date of issuance, as the case may be, and as if the funds obtained thereby had been used to purchase participating shares of the company at the average quoted market value of the participating shares during the period.

Page 9

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Stock-based compensation plan

The company has established a stock-based compensation plan, which is described in Note 9. Any consideration received from plan members upon the exercise of stock options is credited to share capital. The company accounts for compensation costs for all forms of stock-based compensation awarded to employees and non-employees, including stock options, using a fair value based method.

New accounting standards

In January 2005, the CICA issued four new accounting standards relating to financial instruments: Section 3855, “Financial Instruments — Recognition and measurement”, Section 3865, “Hedges”, Section 1530, “Comprehensive Income”, and Section 3251, “Equity”.

Section 3855 expands on Section 3860, “Financial Instruments — Disclosure and Presentation”, by prescribing when a financial instrument is to be recognized on the balance sheet and at what amount. It also specifies how financial instrument gains and losses are to be presented.

Section 3865 provides alternative treatments to Section 3855 for entities that choose to designate qualifying transactions as hedges for accounting purposes. It replaces and expands on Accounting Guideline 13, “Hedging Relationships”, and the hedging guidance in Section 1650, “Foreign Currency Translation”, by specifying how hedge accounting is applied and what disclosures are necessary when it is applied.

Section 1530, “Comprehensive Income”, introduces a new requirement to temporarily present certain gains and losses outside net income.

Accordingly, Section 3250, “Surplus” has been revised as Section 3251, “Equity”.

Recognition of financial assets and liabilities

Short-term investments

The short-term investments will be classified as available-for-sale investments. The company will continue to
recognize transactions on the settlement date.

These investments will be recognized at fair value. Unrealized gains and losses will be recognized, net of
income taxes, if any, in "Accumulated other comprehensive income". Upon the disposal or impairment of these
investments, these gains or losses will be reclassified in earnings.

Transition

The recognition, derecognition and measurement methods used as well as the hedge accounting policies used to
prepare the financial statements of periods prior to the effective date of the new standards were
unchanged and, therefore those financial statements will not be restated.

Sections 1530, 3251, 3855 and 3865 will be adopted by the Company on March 1, 2007. As of that date, the
company will recognize all of its financial assets and liabilities in the balance sheet according to their classification. Any adjustment made to a previous carrying amount will be recognized as an adjustment to the balance of deficit at that date or as the opening balance of a separate item in "Accumulated other comprehensive income", net of income taxes, if any.

Page 10

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

The difference between the carrying amount and the fair value of investments classified as available for sale will be recognized as an adjustment to the opening balance of "Accumulated other comprehensive income", net of income taxes.

Effective interest rate method

The impact of the use of the effective interest rate method will be recognized as an adjustment to the opening
balance of deficit, net of income taxes, if any.

Page 11

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

3 Discontinued operation  

At a special shareholders' meeting held on March 24, 2006, a majority of Virginia Gold Mines shareholders voted in favour of the plan of arrangement (effective March 31, 2006) involving Goldcorp Inc. ("Goldcorp"), Virginia Gold Mines Inc. ("Virginia Gold Mines") and the company. The transaction was completed on March 31, 2006.

Further to this plan of arrangement, the following events occured :

Virginia Gold Mines became a wholly-owned subsidiary of Goldcorp, and holds the Eleonore property and assumed the liabilities related to the Eleonore property. Effective April 25, 2006, the name Virginia Gold Mines was changed to "Les Mines Opinaca Ltée".

Virginia Gold Mines transferred to the company the assets not related to the Eleonore property at fair market value for a consideration consisting of the issuance of 18,017,817 shares by the company and the assumption by the company of the liabilities not related to the Eleonore property, with the effect of increasing the deficit of $15,974,110 corresponding to the net assets of Eleonore property and future income taxes assets of Virginia Gold Mines. Furthermore, the company has assumed the continuing operations of Virginia Gold Mines, except for the Eleonore property.

The company acquired from Virginia Gold Mines a production royalty on the Eleonore property for a consideration consisting of a cash payment of $16,099,000 and the issuance of 400 shares of the company. The stated value of the production royalty acquired by the company from Virginia Gold Mines was null, since they were entered into by related parties.

Virginia Gold Mines then subscribed for 6,119,595 shares of the company for a cash consideration of $16,099,000.

The reduction of Virginia Gold Mines' stated capital was paid in kind through a distribution of the shares of the company to its shareholders. Each shareholder of Virginia Gold Mines received 0.5 share of the company for each share of Virginia Gold Mines.

In addition, each shareholder of Virginia Gold Mines has exchanged his/her shares at a rate of 0.4 share of Goldcorp for one share of Virginia Gold Mines.

Virginia Gold Mines' warrants outstanding as at March 31, 2006 ceased to be exercisable for shares of Virginia Gold Mines. Each warrant now entitles the holder to receive, upon exercise in accordance with the agreed-upon terms, the number of shares of Goldcorp and of the company that the holder would have received under the plan of arrangement if, immediately before the effective time, such holder had been the registered holder of the number of shares of Virginia Gold Mines he would have been entitled to upon exercise.

These transactions between the company and Virginia Gold Mines have been recorded at the carrying value since they were entered into by related parties.

Comparative figures are derived from the financial statements of Virginia Gold Mines.

Page 12

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

a)Presented below is a simplified corporate structure of Virginia Mines Inc. before and after the completion of the plan of arrangement with Goldcorp

Structure before the plan of arrangement

Virginia Gold Mines
Shareholders

100%

Virginia Gold Mines

  • Listed company
  • Non-Eleonore Assets and Liabilities
  • Eleonore Assets and Liabilities (discontinued operations)

100%
Virginia Mines Inc.

Structure after the plan of arrangement

Goldcorp
Shareholders

Virginia Mines Inc. Shareholders

(0.4 of a Goldcorp Share in exchange for one Virginia Gold Mines Share)

Virginia Mines Inc. Shareholders

(0.5 of Virginia Mines Share in exchange for one Virginia Gold Mines Share)

100%

Goldcorp Inc.

100%

 

Virginia Gold Mines Inc. 

  • De-listed from TSX
  • Eleonore Assets and Liabilities
  • Became Les Mines Opinaca Ltée

Virginia Mines Inc. 

  • Listed company
  • Non-Eleonore Assets and Liabilities

Page 13

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

b) The assets and liabilities of the discontinued operation shown on the balance sheets are as follows:
         
     
As at February 28,
     
2007
2006
     
$
$
         
  Assets      
  Current assets      
  Refundable tax credit for resources  
-
879,493
  Credit on duties refundable for loss  
-
166,820
  Other accounts receivable  
-
187,512
     
  Current assets of the discontinued operation  
-
1,233,825
     
  Long-term assets of the discontinued operation  
  Mining property abandoned  
-
11,397,457
     
  Total assets of the discontinued operation  
-
12,631,282
     
  Liabilities  
  Current liabilities  
  Advances from Goldcorp Inc., non interest-bearing,  
  and with no terms of repayment  
-
3,000,000
  Other accounts payable and accrued liabilities  
-
1,435,716
     
     
-
4,435,716
Long-term liabilities  
Future income taxes  
-
86,318
     
  Total liabilities of the discontinued operation  
-
4,522,034
         
         
         
c) Earnings of the discontinued operation      
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
         
         
  Loss before income taxes
(637,494)
(394,348)
(165,740)
   
  Income taxes recovery
-
545,505
-
   
  Net earnings (net loss) from the discontinued operation
(637,494)
151,157
(165,740)

Page 14

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

d) The mining property discontinued has changed as follows during the reporting periods:
   
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
         
  Mining property -Beginning of period 192,124 160,994 45,800
         
  Costs incurred (claims and permits) - 31,130 115,194
         
  Mining property discontinued
(192,124)
-
-
   
  Mining property- End of period
-
192,124
160,994
         
  Exploration costs- Beginning of period 11,205,333 2,772,151 427,476
         
  Cost incurred during the period      
         
  Analyses 4,536 795,975 246,494
  Drilling 303,403 7,059,936 1,935,325
  Geophysics - 248,629 53,304
  Geology 107,799 2,003,366 777,781
  Stripping - 206,531 130,877
  Transport 169,304 2,380,411 753,913
  Blasting - - 1,500
  Professional fees 276,770 2,192,219 739,050
  Accomodation
14,234
301,275
122,518
    12,081,379 17,960,493 5,188,238
         
         
  Credit on duties refundable for loss and refundable tax credit      
  for resources (249,673) (6,755,160) (2,416,087)
         
  Exploration costs discontinued
(11,831,706)
-
-
   
  Exploration costs- End of period
-
11,205,333
2,772,151
         
  Total mining property disposed
-
11,397,457
2,933,145

Page 15

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

e) Cash used by the discontinued operation are as follows:      
         
         
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
         
  Cash flows from operating activities      
  Net earnings (net loss) from the discontinued operation (637,494) 151,157 (165,740)
  Items not affecting cash and cash equivalents      
  Future income taxes - (545,505) -
  Defered charges expensed for the period
341,722
-
-
    (295,772) (394,348) (165,740)
  Change in non-cash working capital items      
  Amounts receivable (688,989) (187,511) -
  Other accounts payable and accrued liabilities
(817,366)
-
-
   
(1,802,127)
(581,859)
(165,740)
  Cash flows from financing activities
  Advances from Goldcorp Inc.
-
3,000,000
-
   
  Cash flows from investing activities
  Acquisition of a mining property
(472,189)
(8,074,910)
(2,459,869)
   
  Cash used by the discontinued operation
(2,274,316)
(5,656,769)
(2,625,609)
         
         
f) Items not affecting cash related to investing activities      
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
         
  Credit on duties refundable for loss and      
  refundable tax credit related to exploration costs      
  applied against the mining property disposed - (1,046,314) -
  Acquisition of a mining property included in      
  accounts payable and accrued liabilities - 1,435,716 -

Page 16

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

4 Short-term investments    
       
   
As at February 28,
   
2007
2006
   
$
$
       
  Investments in public companies (Quoted market value: $15,282,359;    
  $6,387,600 as at February 28, 2006) 10,490,837 4,883,109
  Bonds and other securities, bearing interest at annual rates ranging from 3.00 %    
  to 8.25 % (from 3,41 % to 12,75 % as at February 28, 2006), maturing between    
  April 2007 and May 2016 (quoted market value: $24,020,830;    
  $16,324,229 as at February 28, 2006)
23,813,969
16,246,800
   
34,304,806
21,129,909
   
5 Amounts receivable    
   
As at February 28,
   
2007
2006
   
$
$
       
  Refundable tax credit for resources 7,166,994 5,698,499
  Credit on duties refundable for loss 1,370,068 1,914,727
  Interest receivable 191,206 229,593
  Amounts receivable under agreements with mining exploration companies 71,898 54,353
  Commodity taxes receivable 197,284 324,262
  Loans to service providers related to the exercise of stock options,    
  non-interest-bearing, cashed on April 25, 2006 - 664,291
  Others
116,075
16,431
   
9,113,525
8,902,156
       
6 Prepaid expenses    
       
   
As at February 28,
   
2007
2006
   
$
$
       
  Investor relations 31,562 11,360
  Others
65,373
74,503
   
96,935
85,863

Page 17

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

7 Mining properties
Mining properties abandoned, written off, under option or sold, credit on duties refundable for loss, refundable tax credit for resources
     
     
     
     
     
     
     
     
     
   
# claims / # permits
Undivided interest
Balance as at March 1, 2006
Costs incurred
Balance as at February 28, 2007
   
%
$
$
$
             
  Corvet Est 723
       
  Mining property  
100
30,401 - - 30,401
  Exploration costs  
1,037,729
(474)
(29,781)
1,007,474
     
1,068,130
(474)
(29,781)
1,037,875
     
  Coulon Pitaval 368
  Mining property  
100
62,132
10,264
-
72,396
  Exploration costs  
231,800
97,686
(44,695)
284,791
     
293,932
107,950
(44,695)
357,187
     
  Coulon J/V 598
  Mining property  
100
100,940
(15)
-
100,925
  Exploration costs  
376,439
9,599
(28,876)
357,162
     
477,379
9,584
(28,876)
458,087
   
  Eleonore Regional 613
  Mining property  
100
770
55,131
-
55,901
  Exploration costs
45,469
247,160
(124,486)
168,143
   
46,239
302,291
(124,486)
224,044
     
  FCI 121
  Mining property 2
100
12,820
19,871
-
32,691
  Exploration costs
39,649
338,855
(155,942)
222,562
   
52,469
358,726
(155,942)
255,253
     
  Gipouloux 1,613
  Mining property  
100
-
206,432
-
206,432
  Exploration costs
-
115,328
(53,166)
62,162
     
-
321,760
(53,166)
268,594
       
    (forward)  
1,938,149
1,099,837
(436,946)
2,601,040

Page 18

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

       
Mining properties abandoned, written off, under option or sold, credit on duties refundable for loss, refundable tax credit for resources
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
   
# claims /# permits
Undivided interest
Balance as at March 1, 2006
Costs incurred
Balance as at Febuary 28, 2007
   
%
$
$
$
$
               
    (brought forward)  
1,938,149
1,099,837
(436,946)
2,601,040
       
  Laguiche 2,213  
  Mining property   100
58,520
188,630
-
247,150
  Exploration costs    
270
76,123
(35,093)
41,300
       
58,790
264,753
(35,093)
288,450
       
  Lac Gayot 116  
  Mining property
3
 100
47,660
2,197,769
-
2,245,429
  Exploration costs    
701,067
91,687
(42,062)
750,692
       
748,727
2,289,456
(42,062)
2,996,121
       
  Saganash 458  
  Mining property 100
31,537
51,258
-
82,795
  Exploration costs  
35,846
211,961
(97,670)
150,137
       
67,383
263,219
(97,670)
232,932
       
  Poste Lemoyne Ext. 211  
  Mining property 100
1,074,205
5,194
-
1,079,399
  Exploration costs  
429,686
641,905
(295,909)
775,682
       
1,503,891
647,099
(295,909)
1,855,081
       
  Wabamisk 734  
  Mining property 100
48,124
93,557
-
141,681
  Exploration costs  
43,820
342,417
(157,802)
228,435
       
91,944
435,974
(157,802)
370,116
       
  Others    
  Mining properties  
568,629
492,014
(412,071)
648,572
  Exploration costs  
1,589,799
1,274,903
(2,118,478)
746,224
     
2,158,428
1,766,917
(2,530,549)
1,394,796
       
6,567,312
6,767,255
(3,596,031)
9,738,536

Page 19

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

   
Mining properties abandoned, written off, under option or sold, credit on duties refundable for loss, refundable tax credit for resources
   
   
   
   
   
   
   
   
# claims /# permits
Undivided interest
Balance as at March 1, 2005
Costs incurred
Balance as at February 28, 2006
   
%
$
$
$
$
  Auclair 240          
  Mining property
100
239,138 12,268 - 251,406
  Exploration costs
146,567
2,921
(1,344)
148,144
   
385,705
15,189
(1,344)
399,550
   
  Corvet Est 723
  Mining property
100
55,401
-
(25,000)
30,401
  Exploration costs
950,271
751
86,707
1,037,729
   
1,005,672
751
61,707
1,068,130
   
  Coulon Pitaval 368
  Mining property
100
41,701
30,312
(9,881)
62,132
  Exploration costs
262,366
13,679
(44,245)
231,800
   
304,067
43,991
(54,126)
293,932
   
  Coulon J/V 598
  Mining property
100
67,728
49,261
(16,049)
100,940
  Exploration costs
426,111
22,186
(71,858)
376,439
   
493,839
71,447
(87,907)
477,379
   
  Lac Gayot 75
  Mining property 4
50
38,731
8,929
-
47,660
  Exploration costs  
682,741
9,248
9,078
701,067
     
721,472
18,177
9,078
748,727
       
    (forward)  
2,910,755
149,555
(72,592)
2,987,718

Page 20

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

   
Mining properties abandoned, written off, under option or sold, credit on duties refundable for loss, refundable tax credit for resources
   
   
   
   
   
   
   
   
# claims /# permits
Undivided interest
Balance as at March 1, 2005
Costs incurred
Balance as at February 28,2006
   
%
$
$
$
$
               
    (brought forward)  
2,910,755
149,555
(72,592)
2,987,718
       
  Poste Lemoyne Ext. 211  
  Mining property 100
15,455
1,058,750
-
1,074,205
  Exploration costs  
417,258
5,858
6,570
429,686
       
432,713
1,064,608
6,570
1,503,891
       
  Megatem 882  
  Mining property 45
23,768
-
-
23,768
  Exploration costs  
696,962
350,887
(128,721)
919,128
       
720,730
350,887
(128,721)
942,896
       
  Megatem III 463  
  Mining property 49
-
-
-
-
  Exploration costs  
207,097
-
-
207,097
       
207,097
-
-
207,097
       
  Wabamisk 667  
  Mining property 100
47,244
880
-
48,124
  Exploration costs  
1,834
77,598
(35,612)
43,820
       
49,078
78,478
(35,612)
91,944
       
  Others    
  Mining properties  
307,047
271,515
(181,461)
397,101
  Exploration costs  
645,311
1,000,289
(1,208,935)
436,665
     
952,358
1,271,804
(1,390,396)
833,766
       
5,272,731
2,915,332
(1,620,751)
6,567,312

Page 21

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Change in mining properties    
  2007 2006
 
$
$
 
 
Balance- Beginning of period
6,567,312
5,272,731
 
Costs incurred during the period
 
Acquisition of a mining property
2,168,769
-
Claims et permits
1,151,336
1,431,915
Analyses
290,252
99,794
Drilling
421,173
406,742
Geophysics
457,406
106,761
Geology
301,911
193,970
Geochemistry
24,393
-
Transport
1,036,784
317,010
Blasting
-
39,577
Professional fees
763,041
290,542
Accomodation
152,190
29,021
 
6,767,255
2,915,332
 
Mining properties under option
(80,424)
(35,000)
Mining properties abandoned, written off or sold
(1,939,285)
(1,130,042)
Credit on duties refundable for loss and refundable tax credit
for resources
(1,576,322)
(455,709)
 
(3,596,031)
(1,620,751)
 
Balance- End of period
9,738,536
6,567,312

a) On May 6, 2005, the company granted Goldcorp Inc. ( formerly Placer Dome (CLA) Limited ) the option to acquire a 50% interest in the Corvet Est property for a consideration consisting of $90,000 in cash and exploration work totalling $4,000,000 to be carried out no later than May 6, 2010. As at February 28, 2007, Goldcorp Inc. had made a cash payment of $55,000 and had spent $1,891,109 on exploration work.

b) On December 9, 2005, the company granted Exploration Matamec Inc. the option to acquire a 50% interest in the La Grande Est property for a consideration consisting of $50,000 in cash and exploration work totalling $600,000 to be carried out no later than October 31, 2008. As at February 28, 2007, Exploration Matamec Inc. had made a cash payment of $25,000 and had spent $116,389 on exploration work.

Page 22

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements  
February 28, 2007, 2006 and 2005
       
(expressed in Canadian dollars)  

c) On April 10, 2006, the company granted Breakwater Resources Ltd. the option to acquire a 50 % interest in the Coulon JV property for a consideration consisting of $180,000 in cash and exploration work totalling $6,500,000 to be carried out no later than April 10, 2014. As at February 28, 2007, Breakwater Resources Ltd. had made a cash payment of $25,000 and had spent $1,697,243 on exploration work.

d) On April 27, 2006, the company granted Uranium Star ( formerly Yukon Resources Corporation ) the option to acquire a 75% interest in the Sagar property for a consideration consisting of 2,000,000 shares and 2,000,000 warrants of its share capital and exploration work totalling $2,000,000 to be carried out no later than August 31, 2008. Moreover, Uranium Star can, at any time, buy the 25 % Virginia interest in consideration of 1,000,000 shares and 1,000,000 warrants. As at February 28, 2007, Uranium Star had issued 3,000,000 shares and 3,000,000 warrants and had spent $1,779,121 in exploration work. The gain of $4,328,564 arising from this transaction is presented in the financial statements under "Option payments received as financial instruments in excess of cost of mining property".

e) On August 29, 2006, the company granted MacDonald Mines Ltd. the option to acquire a 50% interest in the LG 3.5 property for a consideration consisting of $40,000 in cash and exploration work totalling $1,200,000 to be carried out no later than August 29, 2011. As at February 28, 2007, MacDonald Mines Ltd. had made a cash payment of $5,000 and had spent $59,253 on exploration work.

f) On November 20, 2006, the company granted Eloro Resources Ltd. the option to acquire a 50% interest in the La Grande Nord property for a consideration consisting of $50,000 in cash or in shares and exploration work totalling $1,000,000 to be carried out no later than November 20, 2011. As at February 28, 2007, Eloro Resources Ltd. had made a share payment of $15,000 and had not carried out any exploration work.

Page 23

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Cost of mining properties abandoned or written off  
       
    2007 2006
   
$
$
   
  Apple
41,914
-
  Auclair
385,706
-
  Baie Payne
-
65,652
  Chutes Des Passes
-
159,020
  Coulon
-
180,078
  Dieppe
3,764
-
  Duquet
-
14,291
  Eléonore Régional
10,545
-
  EM1
109,694
-
  Gossan JFO
7,599
-
  Grenville
4,273
-
  Guyer Sud
216
4,069
  La Grande Sud
2,908
-
  Eider
60,228
-
  Eakins
40,751
-
  Lac Bonfait
-
65,436
  Lac Fagnant
-
65,587
  Lac Gayot
-
1,052
  Lac Hayot
7,956
-
  Lac Noëlla
-
560,708
  Wahemen
25,581
-
  Lac Watson
4,293
-
  Megatem
943,757
6,703
  Megatem III
247,137
-
  Triestre
4,747
-
  23D
8,199
-
  Others
5
1,549
   
  Total *
1,909,273
1,124,145
       
       
* Mining properties are abandonned or written off in whole or in part because of their low discovery potential.

Page 24

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

8 Warrants      
         
The following tables present the warrant activity since June 1, 2004 and summarize information about outstanding warrants:
         
         
 
Twelve-Month Period Ended February 28, 2007
   
Weighted
   
Carrying
average
   
Number
value
exercise price
   
$
$
         
  Outstanding as at March 1, 2006 *
417,713
446,117
10.80
  Granted **
484,162
261,114
5.84
  Exercised
(415,427)
(443,675)
10.80
  Expired
(2,286)
(2,442)
10.80
  Outstanding as at February 28, 2007 ***
484,162
261,114
5.84
         
         
         
 
Twelve-Month Period Ended February 28, 2006
   
Weighted
   
Carrying
average
   
Number
value
exercise price
   
$
$
         
  Outstanding as at March 1, 2005
994,011
554,380
4.02
  Granted ****
501,750
550,771
10.80
  Exercised
(1,078,048)
(659,034)
4.62
  Outstanding as at February 28, 2006
417,713
446,117
10.80
         
         
         
         
    Nine-Month Period Ended February 28, 2005
   
Weighted
   
Carrying
average
   
Number
value
exercise price
   
$
$
   
  Outstanding as at June 1, 2004
1,599,033
883,255
3.86
  Granted ****
12,000
12,984
7.50
  Exercised
(540,099)
(341,859)
3.70
  Matured
(76,923)
-
3.20
  Outstanding as at February 28, 2005
994,011
554,380
4.02

Page 25

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

*Under the agreement entered into with Goldcorp Inc., 11% of the exercise price of those warrants will be cashed by the
company and the balance will be allocated to Goldcorp Inc.    
**These 484,162 warrants of $5.84 were granted under a private placement with Goldcorp Inc.
***The warrants expire on November 18, 2007      
****These warrants were granted in connection with private placements to common shareholders and to agents as share
issue expenses.      
       
       
The fair value of stock options granted has been estimated using the Black-Sholes model with the following assumptions :
       
 
Periods Ended February 28,
 
2007
2006
2005
 
Risk-free interest rate
4.11%
2.90%
2.94%
Expected volatility
50%
55%
51%
Dividend yield
Nil
Nil
Nil
Weighted average expected life
18 months
12 months
12 months
Weighted average fair value of warrants granted
$0.539
$0.549
$0.541

Page 26

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

9 Stock options, unit options and warrants (units)    
           
  a) Stock option plan      
On March 24, 2006, the company established a new stock option plan under which certain key employees, officers, directors and suppliers may be granted stock options of the company. A maximum of 10% of outstanding shares may be granted (maximum of 5% of the number of common shares outstanding in favour of one person).

Options are exercisable over a maximum period of ten years following the date of grant. All options are vested, except for:

● 90,000 options granted to directors and officers during the period ended February 28, 2007, which vest after one year of
service, being April 6, 2007.
           
  The following tables present the stock option activity since June 1, 2004 and summarize information about stockoptions outstanding and exercisable as at February 28, 2007 :
           
      Twelve-Month Period Ended February 28, 2007
     
Weighted
     
Carrying
average
     
Number
value
exercise price
     
$
$
   
Outstanding and exercisable as at March 1, 2006
-
-
-
   
Granted
1,146,000
-
4.17
   
Exercised
(52,500)
(143,152)
3.93
   
Cancelled *
(7,000)
(18,411)
4.20
   
Stock-base compensation
-
3,076,683
-
   
   
Outstanding as at February 28, 2007
1,086,500
2,915,120
4.18
   
   
Outstanding and exercisable as at February 28, 2007
996,500
2,895,074
4.16
           
           
  * During the period ended February 28, 2007, 7,000 stock options were cancelled.
The fair value of stock options in the amount of $18,411 has been reflected in the contributed surplus.
  The following table summarizes information about stock options outstanding as at February 28, 2007 :
             
   
Options outstanding
   
Weighted average remaining contractual life (years)
Weighted average exercise price $
   
Exercise price
Number
   
   
between $3.89 and $4.44
1,086,500
9.18
4.18

Page 27

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

   
Twelve-Month Period Ended February 28, 2006
   
Weighted
   
Carrying
average
   
Number
value
exercise price
   
$
$
   
 
Outstanding and exercisable as at March 1, 2005
1,106,655
460,466
2.04
 
Granted
106,500
341,068
13.82
 
Exercised
(1,213,155)
(801,534)
3.06
 
 
Outstanding and exercisable as at February 28, 2006
-
-
-
         
         
         
    Nine-Month Period Ended February 28, 2005
   
Weighted
   
Carrying
average
   
Number
value
exercise price
   
$
$
   
 
Outstanding and exercisable as at June 1, 2004
1,374,971
214,439
1.54
 
Granted
152,000
312,494
5.08
 
Exercised
(419,816)
(65,193)
1.50
 
Cancelled *
(500)
(1,274)
7.27
 
 
Outstanding and exercisable as at February 28, 2005
1,106,655
460,466
2.04
         
* During the nine-month period ended February 28, 2005, 500 stock options were cancelled. The fair value of stock options
in the amount of $1,274 has been reflected in the contributed surplus.  
         
The fair value of stock options has been estimated using the Black-Scholes model with the following assumptions:
         
         
   
Periods Ended February 28,
   
2007
2006
2005
   
  Risk-free interest rate
4.29%
2.95%
3.98%
  Expected volatility
63%
57%
56.5%
  Dividend yield
Nil
Nil
Nil
  Weighted average expected life
82 months
12 months
51 months
Weighted average fair value of options granted
$2.685
$1.601
$1.03

Page 28

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

The fair value of stock options granted during the year has been included in the statements of earnings under captions “Professional and maintenance fees” and “General exploration costs”, and in Shareholders’ Equity under caption “Stock options”.

Stock-based compensation costs from stock option grants are included in the following items:
         
   
Periods Ended February 28,
   
2007
2006
2005
  Professionnal and maintenance fees
2,374,315
225,580
196,924
  General exploration costs
916,322
115,488
115,570
   
3,290,637
341,068
312,494
         
         
         
b) Unit options      
The following tables present the unit option activity since March 1, 2005 and summarizes information about unit options outstanding and exercisable as at February 28, 2007:
   
Weighted
   
Carrying
average
   
value
exercise price
   
Number
$
$
   
  Outstanding and exercisable as at March 1, 2006
47,865
101,178
8.20
  Exercised
(47,865)
(101,178)
8.20
   
  Outstanding and exercisable as at February 28, 2007
-
-
-
   
   
   
Weighted
   
Carrying
average
   
value
exercise price
   
Number
$
$
   
  Outstanding and exercisable as at March 1, 2005
-
-
-
  Granted *
117,900
249,301
8.20
  Exercised
(70,035)
(148,123)
8.20
   
  Outstanding and exercisable as at February 28, 2006
47,865
101,178
8.20
         
* Each unit option will entitle its holder, upon exercise, to one common share and one-quarter of one warrant.

Page 29

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

The fair value of unit options granted during the twelve-month period ended February 28, 2006 has been estimated using the Black-Scholes model with the following assumptions:

  Risk-free interest rate    
2.77%
  Expected volatility    
56%
    Dividend yield    
Nil
  Weighted average expected life  
12 months
  Weighted average fair value of unit options granted
$1.057
           
           
c) Warrants (units)      
           
The following table presents the warrant activity since March 1, 2005 and summarizes information about warrants outstanding
and exercisable as at February 28, 2007:      
           
     
Weighted
     
Carrying
average
     
value
exercise price
     
Number
$
$
     
    Outstanding and exercisable as at March 1, 2006
-
-
-
    Further to the exercise of unit options*
11,966
62,203
10.80
    Exercised
(11,216)
(58,302)
10.80
    Expired
(750)
(3,901)
10.80
     
    Outstanding and exercisable as at February 28, 2007
-
-
-
           
*Under the agreement entered into with Goldcorp Inc., 11% of the exercise price of those warrants will be cashed by the
company and the balance will be allocated to Goldcorp Inc.    
           
     
Weighted
     
Carrying
average
     
value
exercise price
     
Number
$
$
     
    Outstanding and exercisable as at March 1, 2005
-
-
-
    Further to the exercise of
    unit options
17,509
91,024
10.80
    Exercised
(17,509)
(91,024)
10.80
     
    Outstanding and exercisable as at February 28, 2006
-
-
-

Page 30

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

10 Cash flows      
         
  a) Net change in non-cash working capital items      
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
         
  Income taxes recoverable - - 13,694
  Amounts receivable 712,467 (84,949) (643,649)
  Prepaid expenses (11,072) (21,752) (11,143)
  Accounts payable and accrued liabilities
2,391,081
359,692
(193,050)
   
3,092,476
252,991
(834,148)
         
         
  b) Items not affecting cash and cash equivalents related to financing and investing activities
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
   
(12 months)
(12 months)
(9 months)
   
   
  Long-term investments transferred to short-term investments
-
13,585
110,034
  Credit on duties refundable for loss and refundable
  tax credit receivable with respect to exploration costs
  applied against mining properties
8,537,062
7,613,226
3,878,544
  Acquisition of mining properties included in accounts payable
  and accrued liabilities
351,752
44,797
793,921
  Stock options exercised and included in share capital
377,152
801,534
65,303
  Warrants exercised and included in share capital
443,675
659,034
341,859
  Warrants granted and included in share capital
-
524,389
12,984
  Warrants granted and included in issue expenses
-
26,382
-
  Warrants (units) granted and included in shareholders' equity
62,203
-
-
  Warrants (units) exercised and included in share capital
58,302
-
-
  Unit options granted and included in issue expenses
-
249,301
-
  Unit options exercised and included in share capital
101,178
148,123
-
  Stock options granted and included inshare capital
-
341,068
-
  Mining properties sold in consideration of short-term investments
6,273,269
434,085
-
  Mining property purchased in consideration of the issuance of shares
2,168,769
1,040,000
-
   

Page 31

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

11 Related party transactions      
         
  The company entered into the following transactions with companies owned by a director and an executive:
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
   
  Expenses capitalized in mining properties
362,357
390,139
322,886
  Management fees
169,014
300,000
251,859
  Rent, office expenses and bonus
1,059,142
564,497
335,697
  Professional fees
-
-
3,500
  Travelling
62,532
52,912
33,077
  Advertising and exhibitions
4,314
11,513
1,144
  General exploration costs
156,013
82,175
119,350
   
1,813,372
1,401,236
1,067,513

These transactions are in the normal course of operatins and are measured at the exchange amount, which is the amountof consideration established and agreed to by the related parties.

Page 32

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

12 Future income taxes      
         
The reconciliation of the income tax expense, calculated using the combined federal and Quebec provincial statutory tax rate, to the income tax expense presented in the financial statements is detailed as follows:
     
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
   
(12 months)
(12 months)
(9 months)
         
         
  Earnings (loss) before income taxes from continued operations
218,642
(1,377,903)
(4,871,551)
  Combined federal and provincial income tax rate of33.69% (34.85% as at February 28, 2006 and 35.74% as at February 28, 2005)
74,000
(480,000)
(1,741,000)
   
  Non-taxable credit on duties refundable for loss
(96,000)
(133,000)
5,000
   
  Tax benefit not recognized previously
-
(4,528,000)
(332,076)
   
  Non-deductible stock-based compensation
1,109,000
79,000
112,000
   
  Expiry of operating losses carried forward
-
127,000
285,000
   
  Share issue expenses not affecting earnings
(8,000)
-
(59,000)
   
  Non-taxable portion of capital gain
(16,000)
(90,000)
(92,000)
   
  Change in enacted tax rates
-
(484,000)
-
   
  Future income tax assets generated by the plan of arrangement as describe in Note 3
(5,478,000)
-
-
   
  Others
35,000
103,545
(134,000)
   
  Change in valuation allowance
4,380,000
-
1,624,000
   
  Future income taxes
-
(5,405,455)
(332,076)

Page 33

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

The significant components of future income tax assets and liabilities are detailed as follows:
         
   
Periods Ended February 28,
   
2007
2006
2005
   
$
$
$
         
Future income tax assets    
  Short-term investments
473,000
-
-
  Mining properties
3,899,000
4,532,318
4,144,000
  Losses carried forward
-
855,000
424,000
  Share issue expenses
6,000
560,000
150,000
  Others
2,000
11,000
19,000
   
4,380,000
5,958,318
4,737,000
   
Valuation allowance
(4,380,000)
-
(4,737,000)
   
-
5,958,318
-
   
Future income tax liabilities
  Deferred charges
-
72,000
-
   
Net future income tax assets
-
5,886,318
-

Page 34

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

13 Earnings per share
For the twelve-month period ended February 28, 2007 and for the nine-month period ended February 28, 2005, there was no difference between the basic and diluted loss per share since the dilutive effect of stock options, warrants and unit options was not included in the calculation; otherwise, the effect would have been anti-dilutive. Accordingly, the diluted loss per share for these periods was calculated using the basic weighted average number of shares outstanding (25,724,742 in 2007 and 18,694,887 in 2005).

 
Periods Ended February 28,
 
2007
2006
2005
 
$
$
$
 
(12 months)
(12 months)
(9 months)
       
Basic weighted average number of shares outstanding
25,724,742
22,765,904
18,694,887
Stock options
25,106
503,879
810,435
Unit options
55
51,488
-
Warrants
-
215,541
203,686
 
Diluted weighted average number of shares outstanding
25,749,903
23,536,812
19,709,008
 
Items excluded from the calculation of diluted
earnings per share because the exercise price was greater
than the average quoted value of the common shares
Stock options
616,500
-
83,000
Warrants
484,162
-
12,000

4 Financial instruments

Fair value

Cash and cash equivalents, amounts receivable and accounts payable and accrued liabilities are financial instruments whose fair value approximates their carrying value due to their short-term maturity or the current market rates.

The fair value of short-term investments, determined based on quoted market values, amounts to $39,303,189 and $22,711,829 as at February 28, 2007 and 2006, respectively.

Interest rate risk  
   
As at February 28, 2007 and 2006, the company's exposure to interest rate risk is summarized as follows:
   
Cash and cash equivalents Variable interest rate
Short-term investments As described in Note 4
Amounts receivable Non-interest -bearing
Accounts payable and accrued liabilities Non-interest- bearing

Page 35

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

15 Subsequent events

On March 1, 2007, the company granted Matamec Exploration a 50% option in the Uranium Nord property in considerationof payments totalling $47,532, received on April 2, 2007.

On March 31, 2007, Uranium Star fulfilled its commitment with respect to the Sagar property. All the claims of this propertywere transferred to Uranium Star on April 18, 2007.

On March 31, 2007, the company granted Nunavik Mineral Exploration Fund a 50% option in the Riviere Georges andChampdoré properties in consideration of payments totalling $51,940, received on April 10, 2007.

Page 36

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

16 United States generally accepted accounting principles (U.S. GAAP)

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) which differ, in certain respects, from U.S. GAAP.

Additional disclosures required under U.S. GAAP have been provided in the financial statements and notes. In addition, the following summarizes the principal differences between Canadian and U.S. GAAP and other required disclosures under U.S. GAAP.

Mining properties

Under U.S. GAAP, the acquisition cost of mining properties and exploration costs incurred are expensed in the year in which they are incurred.

Short-term investments

Under U.S. GAAP, short-term investments would be classified as “available for sale” securities. Consequently, these securities would be carried at fair value, with any unrealized holding gains or losses at balance sheet date being reflected in other comprehensive loss, net of income taxes. Under Canadian GAAP, short-term investments are carried at the lower of cost and market value. Gains or losses are determined under the specific identification method for term deposits and the average cost method for shares.

Income taxes

Under Canadian GAAP, the tax resulting from carry-forward of a loss recognized in a year subsequent to the year in which the loss was incurred is presented as a component of earnings before discontinued operations, regardless of the classification of the loss in the previous year.

Under U.S. GAAP, the subsequent recognition of the tax effect of items related to share capital must be recognized in the same manner as the transaction that created them.

Page 37

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

New accounting standards

FASB Statement No. 154 - Accounting Changes and Error Corrections (SFAS 154)

In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections". This standard requires that an accounting change be applied retrospectively if the accounting pronouncement adopted does not include specific transition provisions, unless it is impractical to do. This statement is effective for accounting changes and corrections of errors made in fiscal years ended after December 15, 2005.

FASB Statement No. 123R – Share-Based Payment (SFAS 123R)

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued SFAS 123R which replaces FASB Statement No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation" formely used by the company before the adoption of SFAS 123R, and eliminates the ability to account for share-based payment transactions using APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123R covers the accounting requirements for a wide range of share-based compensation arrangements. SFAS 123R requires that compensation cost for employee stock-based compensation be measured based on the grant-date fair value and recognized in the financial statements over the vesting period (fair value method).

The company adopted this statement on March 1, 2006 and this adoption had no significant impact on its financial statements.

FASB Interpretation No. 48 – Accounting for Uncertainty in Income Taxes - An interpretation of FASB Statement No. 109 (FIN 48)

In June 2006, the FASB issued FASB interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), an interpretation of FASB Statement No. 109, "Accounting for Income Taxes". FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company recognize the possible impact of the refusal of a tax position in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle recorded as an adjustment to the opening balance of deficit. The company has not yet evaluated its impact on its financial position or results of operations.

FASB Statement No. 157 – Fair Value Measurements (SFAS 157)

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The company has not yet evaluated its impact on its financial position or results of operations.

Page 38

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Reconciliation of net earnings (net loss) to conform with US GAAP    
       
The following table presents the significant adjustments to net loss (net earnings) and net loss (net earnings) per
share from the company to comform with US GAAP.      
       
 
Periods Ended February 28,
 
2007
2006
2005
 
$
$
$
 
(12 months)
(12 months)
(9 months)
       
Net earnings (net loss) from continuing operations for the period in accordance with Canadian GAAP 218,642 4,027,552 (4,539,475)
Mining properties (3,171,224) (1,294,581) 3,741,419
Repricing of stock options - 2,529,009 (2,096,155)
Tax effect of flow-through shares - (129,264) (82,076)
Income taxes
-
(556,259)
-
 
Net earnings (net loss) from continuing operations for the period in accordance with US GAAP
(2,952,582)
4,576,457
(2,976,287)
 
Net earnings (net loss) from the discontinued operation for the
period in accordance with Canadian GAAP
(637,494)
151,157
(165,740)
Mining properties
-
(8,464,312)
(2,459,869)
Net loss from the discontinued operation for the period in
accordance with US GAAP
(637,494)
(8,313,155)
(2,625,609)
Net loss for the period in accordance with US GAAP
(3,590,076)
(3,736,698)
(5,601,896)
 
Other comprehensive loss
Unrealized gains on short-term investments
3,416,463
113,727
1,038,672
Unrealized losses on long-term investments
-
-
(119,445)
Long-term investment transferred to short-term
investments
-
(28,915)
-
Comprehensive loss
(173,613)
(3,651,886)
(4,682,669)
 
Basic and diluted net earnings (net loss) from continuing
operations per share in accordance with US GAAP
(0.115)
0.201
(0.159)
 
Basic and diluted net loss from the discontinued
operation per share in accordance with US GAAP
(0.025)
(0.365)
(0.140)
 
 
Total basic and diluted net loss per share in accordance with US GAAP
(0.140)
(0.164)
(0.299)

Page 39

Virginia Mines Inc..
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

As a result of the above adjustments to net earnings (loss), differences with respect to shareholders' equity under US GAAP are as follows:
     
     
 
As at February 28,
 
2007
2006
 
$
$
 
Share capital
Share capital in accordance with Canadian GAAP
94,447,526
85,471,959
Stock options
2,895,074
-
Unit options
-
101,178
Warrants
261,114
446,117
Stock-based compensation costs
1,200,092
1,200,092
Tax effect of flow-through shares
-
211,340
Income tax recovery
-
556,259
 
Share capital in accordance with US GAAP
98,803,806
87,986,945
 
Contributed surplus
Contributed surplus in accordance with Canadian GAAP
26,028
1,274
Stock options cancelled
703,756
703,756
Contributed surplus in accordance with US GAAP
729,784
705,030
 
Accumulated deficit
Deficit in accordance with Canadian GAAP
(41,445,011)
(25,052,049)
Mining properties
(9,738,536)
(17,964,769)
Stock-based compensation costs
(1,903,848)
(1,903,848)
Tax effect of flow-through shares
-
(211,340)
Income tax recovery
-
(556,259)
 
Deficit in accordance with US GAAP
(53,087,395)
(45,688,265)
 
Other accumulated comprehensive income
Unrealized gains on short-term investments and exploration funds
Balance - Beginning of period
1,581,920
1,468,193
Unrealized gains arising during the period
3,416,463
113,727
 
Balance - End of period
4,998,383
1,581,920
 
Unrealized gains on long-term investments
Balance - Beginning of period
-
28,915
Long-term investment transferred to short-term investments
-
(28,915)
 
Balance - End of period
-
-
 
Other accumulated comprehensive income
4,998,383
1,581,920

Page 40

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Balance sheets    
     
 
As at February 28,
 
2007
2006
 
$
$
 
Current assets
Cash and cash equivalents
6,139,543
10,455,911
Short-term investments
39,303,189
22,711,829
Amounts receivable
9,113,525
8,902,156
Prepaid expenses
96,935
85,863
Current assets of the discontinued operation
-
1,233,825
Future income taxes
-
5,886,318
 
54,653,192
49,275,902
 
 
Property, plant and equipment
11,471
11,217
Intangible assets
2,035
2,907
Deferred charges
-
341,722
 
54,666,698
49,631,748
 
 
Current liabilities
Accounts payable and accrued lisbilities
Related companies
30,685
94,033
Others
3,191,435
430,051
Current liabilities of the discontinued operation
-
4,435,716
 
3,222,120
4,959,800
 
Long-term liabilities of the discontinued operation
-
86,318
 
Shareholders' Equity
Share capital
98,803,806
87,986,945
Contributed surplus
729,784
705,030
Deficit
(53,087,395)
(45,688,265)
Other accumulated comprehensive income
4,998,383
1,581,920
 
51,444,578
44,585,630
 
54,666,698
49,631,748

Page 41

Virginia Mines Inc.
(an exploration company)
Notes to Financial Statements
February 28, 2007, 2006 and 2005

(expressed in Canadian dollars)

Statements of cash flows      
       
       
 
Periods Ended February 28,
 
2007
2006
2005
 
$
$
$
 
(12 months)
(12 months)
(9 months)
       
       
Operating activities
(491,880)
(6,630,139)
(3,699,666)
Financing activities
6,149,808
27,722,813
8,459,133
Investing activities
(7,699,980)
(12,096,477)
4,982,625
 
Increase (decrease) in cash and cash equivalents
(2,042,052)
8,996,197
9,742,092
 
Cash and cash equivalents used by the discontinued operation
(2,274,316)
(5,656,769)
(2,625,609)
 
Cash and cash equivalents - Beginning of period
10,455,911
7,116,483
-
 
Cash and cash equivalents - End of period
6,139,543
10,455,911
7,116,483
       
       
       
Statements of earnings      
       
 
Periods Ended February 28,
 
2007
2006
2005
 
$
$
$
 
(12 months)
(12 months)
(9 months)
 
Revenues
7,664,078
1,407,732
736,043
Expenses
(10,616,660)
(1,551,207)
(3,962,330)
 
Loss before income taxes and the discontinued operation
(2,952,582)
(143,475)
(3,226,287)
 
Income tax recovery
-
(4,719,932)
(250,000)
 
Net earnings (net loss) from continuing operations
(2,952,582)
4,576,457
(2,976,287)
 
Net loss from the discontinued operation
(637,494)
(8,313,155)
(2,625,609)
 
Net loss for the period in accordance with US GAAP
(3,590,076)
(3,736,698)
(5,601,896)

Page 42