Pacific Booker 20-F Annual Report



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


FORM 20-F



[   ]

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2012

OR

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________

OR

[   ]

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ………………………………


Pacific Booker Minerals Inc.

(Exact name of Registrant as specified in its charter)


British Columbia

(Jurisdiction of incorporation or organization)


#1702-1166 Alberni Street, Vancouver, B.C. V6E 3Z3, Canada

(Address of principal executive offices)


Securities to be registered pursuant to Section 12(b) of the Act:

Common Shares, without par value

(Title of Class)


Securities to be registered pursuant to Section 12(g) of the Act:

None


Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None


Indicate the number of outstanding shares of each of the Company’s classes of capital or common stock as of the close of the period covered by the annual report.                                           12,201,289


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ___     No   X

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes [  ] No [X]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.            Yes _X_  No ___


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ___      No  ___


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.


Large accelerated filer __  Accelerated filer  _X_  Non-accelerated filer  __


Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


U.S. GAAP [  ]

International Financial Reporting Standards as issued

Other [  ]

by the International Accounting Standards Board [X]


Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 _X_  Item 18 ___


If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ___    No  _X_ N/A __


Page 2 of 126

Index to Exhibits on Page 90






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Pacific Booker Minerals Inc.

Form 20-F Annual Report

Table of Contents


 

PART I

Page

 

 

 

Item 1.

Identity of Directors, Senior Management and Advisors

8

Item 2.

Offer Statistics and Expected Timetable

8

Item 3.

Key Information

8

Item 4.

Information on the Company

15

Item 5.

Operating and Financial Review and Prospects

42

Item 6.

Directors, Senior Management and Employees

58

Item 7.

Major Shareholders and Related Party Transactions

64

Item 8.

Financial Information

65

Item 9.

The Offer and Listing

65

Item 10.

Additional Information

72

Item 11.

Quantitative and Qualitative Disclosures about Market Risk

86

Item 12.

Description of Other Securities Other Than Equity Securities

86

 

 

 

 

PART II

 

 

 

 

Item 13.

Defaults, Dividend Arrearages and Delinquencies

86

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

86

Item 15.

Controls and Procedures

86

Item 16.

Reserved

89

Item 16A.

Audit Committee Financial Expert

89

Item 16B.

Code of Ethics

89

Item 16C.

Principal Accountant Fees and Services

89

Item 16D.

Exemptions from Listing Standards for Audit Committees

89

Item 16E.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

89

 

 

 

 

PART III

 

 

 

 

Item 17.

Financial Statements

90

Item 18.

Financial Statements

90

Item 19.

Exhibits

90




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METRIC EQUIVALENTS


For ease of reference, the following factors for converting metric measurements into imperial equivalents are provided:


To Convert from Metric

To Imperial

Multiply by

 

 

 

Hectares

Acres

2.471

Meters

Feet (ft.)

3.281

Kilometers (km)

Miles

0.621

Tonnes

Tons (2000 pounds)

1.102

Grams/tonne

Ounces (troy/ton)

0.029



Glossary of Terms


Alteration – any change in the mineral composition of a rock brought about by physical or chemical means.


Andesite - A dark-colored, fine-grained extrusive rock that, when porphyritic, contains phenocrysts composed primarily of zoned sodic plagioclase and one or more of the mafic minerals.


Argillite - A compact rock, derived either from mudstone or shale.


Assaying - laboratory examination that determines the content or proportion of a specific metal (ie: silver) contained within a sample.  Technique usually involves firing/smelting.


Biotite - a common rock-forming mineral in crystalline rocks, either as an original crystal in igneous rocks or as a metamorphic product in gneisses and schists.


Bornite – A copper ore found in hypogene and contact metamorphic deposits and mafic rocks.


Breccia - A rock in which angular fragments are surrounded by a mass of fine-grained minerals.


Bulk Sample – A collection of representative mineralized material whose location, geologic character and metal assay content can be determined and then used for metallurgical or geotechnical testing purposes.


Chalcopyrite - A sulphide mineral of copper and iron.


Clastic - Fragments of minerals and rocks that have been moved individually from their places of origin.


Copper Oxide & Copper Sulphide - There are two major divisions of copper classes found in copper porphyry deposits - oxides and sulphides. Copper oxide, often referred to as "supergene", are the more highly concentrated material generally found at the top of a deposit. Copper sulphide, often referred to as "hypogene", is the copper mineralization generally found at the bottom of a deposit.


Core Samples - the cylindrical form of rock called “core” that is extracted from a diamond drill hole.  Mineralized sections are separated and these samples are sent to a laboratory for analysis.


Diamond Drilling – a type of rotary drilling in which diamond bits are used as the rock-cutting tool to produce a recoverable drill core sample of rock for observation and analysis.


Diorite - An intrusive igneous rock.


Disseminated – where minerals occur as scattered particles in the rock.




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Dyke - A tabular igneous intrusion that cuts across the bedding or foliation of the country rock.


Epithermal – low temperature hydrothermal process or product.


Exploration – work involved in searching for ore, usually by drilling or driving a drift.


Fault – a fracture or break in rock along which there has been movement.

 

Feasibility Study – is a definitive study of the viability of a mineral project by a qualified professional which defines: (1) mining methods, pit configuration, mine scheduling, mine equipment and all related costing, (2) method of mineral processing and all related plant, equipment and costing, (3) necessary determination of all infrastructure required and relevant costs and (4) all requirements of government and markets for mine operation. A definitive financial analysis of the mineral project taking into consideration all relevant factors, which will establish the presence of a Mineral Reserve and the details of its economic viability.


Felsic – an adjective describing an igneous rock having mostly light colored minerals and rich in silica, potassium and sodium.


Fire Assay - The assaying of metallic minerals by use of a miniature smelting procedure with various agents.


Galena - A lead and silver ore that occurs in hydrothermal veins and as replacement deposits in sedimentary rocks.


Geochemistry - The study of the chemical properties of rocks.


Geophysical Survey - A scientific method of prospecting that measures the physical properties of rock formations. Common properties investigated include magnetism, specific gravity, electrical conductivity and radioactivity.


Graben – A depressed crustal unit or block that is bounded by faults on its long sides.


Grade – The metal content of rock with precious metals, grade can be expressed as troy ounces or grams per tonne of rock.


Greywacke - a dark gray, firmly indurated, coarse-grained sandstone that consists of poorly sorted, angular to subangular grains of quartz and feldspar, with a variety of dark rock and mineral fragments embedded


Hornblende - A felsic plutonic rock.


Horst - An uplifted crustal unit or block that is bounded by faults on its long sides.


Igneous – a primary type of rock formed by the cooling of molten material.


Induced Polarization (I.P.) - A type of geophysical survey where electrical current is passed through rock and the polarization is measured to estimate the content of metallic sulphide minerals.


Indurated - rock or soil hardened or consolidated by pressure, cementation, or heat.


Intrusion; Intrusive – molten rock that is intruded (injected) into spaces that are created by a combination of melting and displacement.


Lapilli - Pyroclastics that may be essential, accessory, or accidental in origin, of a size range that has been variously defined within the limits of 2 mm and 64 mm.


LT - long tons.


Mafic - Igneous rocks composed mostly of dark, iron-and magnesium-rich minerals.




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Magnetite - An iron ore that occurs in banded iron formations and as an accessory mineral in many igneous rocks.


Marcasite - An iron pyrite that is bronze-yellow to white and is a supergene mineral from acid solutions.


Metallurgy – the study of the extractive processes which produce minerals from their host rocks.


Metallurgical Tests - are scientific examinations of rock/material to determine the optimum extraction of metal contained.  Core samples from diamond drill holes are used as representative samples of the mineralization for this test work.


Mineral – a naturally formed chemical element or compound having a definitive chemical composition and, usually a characteristic crystal form.


Mineralization – a natural concentration in rocks or soil of one or more metalliferous minerals.


MLT - thousands of long tons.


Net Smelter Return ("NSR") - revenue available from the concentrate produced. It does not include the processing costs associated with producing the concentrate.  NSR is an imput to the determination of cut-off grade.


Net Smelter Return Royalty/ NSR Royalty – A phrase used to describe a royalty payment made by a producer of metals based on gross metal production from the property, less deduction of certain limited costs including smelting, refining, transportation and insurance costs.


Outcrop - An exposure of rock or mineral deposit that can be seen on surface.


Phenocryst - A term for large crystals or mineral grains floating in the matrix or groundmass of a porphyry.


Plagioclase - Any of a group of feldspars containing a mixture of sodium and calcium feldspars.


Plug - A vertical, pipelike body of magma that represents the conduit to a former volcanic vent.


Pluton - A body of igneous rock that formed beneath the surface by crystallization of magma.


Porphyritic - the texture of an igneous rock in which larger crystals (phenocrysts) are set in a finer-grained groundmass, which may be crystalline or glassy or both.


Porphyry - Any igneous rock in which relatively large crystals, are set in a fine-grained groundmass.


Prefeasability Study – is a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and where an effective method of mineral processing had been determined.  This Study must include a financial analysis based on reasonable assumptions of technical engineering, operating, and economic factors, which are sufficient for a Qualified Person acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.


Pyrite - an iron sulphide mineral (FeS2), the most common naturally occurring sulphide mineral.


Pyroclastic - Produced by explosive or aerial ejection of ash, fragments, and glassy material from a volcanic vent. Applied to the rocks and rock layers as well as to the textures so formed.


Pyrrhotite - A bronze-colored, often magnetic iron sulphide mineral.


Quartz – crystalline silica; often forming veins in fractures and faults within older rocks.


Reclamation - Restoration of mined land to original contour, use, or condition.




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Resource – a concentration of mineral material in such form and amount that economic extraction of a commodity from the concentration is currently or potentially feasible.  Locations, grade, quality or quantity are estimated from specific geologic evidence.


Reverse Circulation Drilling (RC) – a drilling method used in geological appraisals whereby the drilling fluid passes inside the drill stem to a down-the-hole percussion bit and returns to the surface outside the drill stem carrying the drill chip samples.


Scoping Study - A scoping study is the first level of study that is performed on a mineral deposit to determine its economic viability. This is usually performed to determine whether the expense of a full pre-feasibility study and later full feasibility study is warranted.


Sedimentary - Formed by the deposition of sediment or pertaining to the process of sedimentation.


Sediments - Solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the Earth's surface at ordinary temperatures in a loose, unconsolidated form; e.g., sand, gravel, silt, mud, alluvium.


Shale - A fine-grained sedimentary rock formed by the consolidation, particularly by compression, of clay, silt, or mud.


Showing - Surface occurrence of mineral.


Silicified - The process of introducing silica into a non-siliceous rock, either by filling pore spaces or as a replacement of calcite in limestone.


Siltstone – An indurated silt having the texture and composition of shale but lacking its fine lamination or fissility; a massive mudstone in which the silt predominates over clay.


SphaleriteA zinc sulphide that occurs with galena in veins and irregular replacement in limestone.


Stockwork - A mineral deposit consisting of a three-dimensional network of planar to irregular veinlets close enough that the entire mass can be mined.


Stratigraphy – the sequence of bedded rocks in a particular area.


Talus - Rock fragments derived from and lying at the base of a cliff or slope, or the accumulated mass of such loose broken rock.


Tonne – A metric ton, or 2,204 pounds.


Trenching - the process of exploration by which till is removed from a trench cut from the earth’s surface.


Tuff - A general term for all consolidated pyroclastic rocks.


Vein – a thin, sheet-like, crosscutting body of hydrothermal mineralization, principally quartz.


Volcanics – those originally molten rocks, generally fine grained, that have reached or nearly reached the Earth’s surface before solidifying.


Wacke - A dirty sandstone that consists of a mixed variety of angular and unsorted or poorly sorted mineral and rock fragments, and of an abundant matrix of clay and fine silt.


Waste – barren rock in a mine, or mineralized material that is too low in grade to be mined and milled at a profit.




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Part I


Item 1.  Identity of Directors, Senior Management and Advisors


Table No. 1

Company Directors and Officers



Name

Position

Business Address

 

 

 

William Deeks

Chairman and Director

2773 Coyote Place, Millers Pond

Whistler, B.C. V0N 1B2

 

 

 

Gregory R. Anderson

President, CEO and Director

7608 East Cliff Rose Trail,

Gold Canyon, AZ  85218

 

 

 

Ruth Swan

Chief Financial Officer

#1702 – 1166 Alberni Street,

Vancouver, B.C. V6E 3Z3

 

 

 

John Joseph Plourde

Director

#1702 – 1166 Alberni Street

Vancouver, B.C. V6E 3Z3

 

 

 

Erik Tornquist

Director

#1702 – 116 Alberni Street,

Vancouver, B.C. V6E 3Z3

 

 

 

Mark Gulbrandson

Director

P.O. Box 240299

Apple Valley, MN  55124

 

 

 

Dennis Simmons

Director

8977 Hunters Way

Apple Valley, MN 55124

 

 

 

William Webster

Director

8 Relmar Road

Toronto, ON M5P 2Y5


The Company’s auditor for the fiscal years of 2012 and 2011 was MNP LLP (formerly Meyers Norris Penny LLP), Chartered Accountants, Suite 2300 - 1055 Dunsmuir Street, Vancouver, British Columbia, Canada, V7X 1J1.


The Company’s legal advisor is Dale A. Rondeau, Barrister & Solicitor, of Thomas, Rondeau LLP, Suite 300, 576 Seymour Street, Vancouver, British Columbia, Canada, V6B 3K1.


Item 2.  Offer Statistics and Expected Timetable


Not Applicable

 

Item 3.  Key Information


As used within this Annual Report, the terms “Pacific Booker”, “the Company”, “Issuer” and “Registrant” refer collectively to Pacific Booker Minerals Inc, its predecessors, subsidiaries and affiliates.




- 8 -



SELECTED FINANCIAL DATA


The selected financial data of the Company for Fiscal Years 2012 and 2011 ended January 31 were derived from the financial statements audited by MNP LLP (formerly Meyers Norris Penny LLP), Chartered Accounts, as indicated by its audit reports which are included elsewhere in this annual report.


The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.


The Company has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.


Table No. 2 is derived from the financial statements of the Company, which have been prepared in accordance with International Financial Reporting Standards for fiscal years ended January 31, 2012 & 2011.


Table No. 2

Selected Financial Data

(CDN$ in 000, except per share data)


 

Year

Year

 

Ended

Ended

 

1/31/12

1/31/11

 

 

 

Revenue

$0

$0

Net Income (Loss)

($3,789)

($2,120)

Net Income (Loss) Per Share

($0.31)

($0.18)

Dividends Per Share

$0

$0

Wtg. Avg. Shares (000)

12,129

11,780

Working Capital

$470

$1,529

Mineral Properties

$28,630

$27,497

Long-Term Debt

Nil

Nil

Shareholder’s Equity

$29,266

$29,213

Total Assets

$29,521

$29,596


In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).


Table No. 3 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent years ended December 31st, the average rates for the period, and the range of high and low rates for the period. Table No. 3 also sets forth the rate of exchange for the Canadian Dollar at the end of the six most recent months, and the range of high and low rates for these periods.



- 9 -



For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The table sets forth the number of U.S. dollars required under that formula to buy one Canadian Dollar.  The average rate means the average of the exchange rates on the last day of each month during the period.


Table No. 3

Canadian Dollar/U.S. Dollar


Period

 Average

    High

     Low

   Close

 

 

 

 

 

Year Ended 12/31/11

$   0.99

$    1.06

$   0.94

$   1.02

Year Ended 12/31/10

1.04

1.08

1.00

1.00

Year Ended 12/31/09

1.14

1.30

1.03

1.05

Year Ended 12/31/08

1.08

1.30

0.97

1.22

Year Ended 12/31/07

1.07

1.19

0.92

0.99

 

 

 

 

 

Three Months Ended   3/31/12

$  1.00

$   1.03

$   0.98

$   1.00

Three Months Ended   12/31/11

1.01

1.06

0.99

1.02

Three Months Ended   9/30/11

0.99

1.04

0.94

1.04

Three Months Ended   6/30/11

0.96

0.99

0.95

0.96

Three Months Ended   3/31/11

0.98

1.00

0.97

0.97

Three Months Ended 12/31/10

1.02

1.03

1.00

1.00

Three Months Ended   9/30/10

1.04

1.06

1.02

1.03

Three Months Ended   6/30/10

1.04

1.08

1.00

1.06

Three Months Ended   3/31/10

1.05

1.07

1.01

1.02

Three Months Ended 12/31/09

1.06

1.08

1.03

1.05

Three Months Ended   9/30/09

1.08

1.17

1.06

1.07

Three Months Ended   6/30/09

1.15

1.26

1.08

1.16

 

 

 

 

 

April 2012

 

$   1.00

$   0.98

$   0.99

March 2012

 

1.00

0.98

1.00

February 2012

 

1.00

0.99

0.99

January 2012

 

1.03

1.00

1.01

December 2011

 

1.04

1.01

1.02

November 2011

 

1.05

1.01

1.02


The exchange rate was $0.99 at noon on April 30, 2012.


Forward Looking Statements


Certain Statements presented herein are forward-looking statements which may include conclusions of prefeasibility and feasibility studies, estimates of future production, capital and operating costs, prices of silver and gold and other known and unknown risks.  These and other factors and uncertainties may cause material differences from future results as expressed or implied by these forward-looking statements.  These risks, uncertainties and other factors include but are not limited to the risks involved in the exploration, development and mining business.




- 10 -



Statement of Capitalization and Indebtedness


Not Applicable



Risk Factors


An investment in the Common Shares of the Company must be considered speculative due to the nature of the Company’s business and the present stage of exploration and development of its non producing mineral properties. In particular, the following risk factors apply:


Risks Associated with Mineral Exploration


The Company is Involved in the Resource Industry which is Highly Speculative and has Certain Inherent Exploration Risks which Could have an Negative Effect on the Company

Resource exploration is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production.  The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environment protection, the combination of which factors may result in the Company not receiving an adequate return on investment capital.


All of the Company’s Mineral Properties are at the Exploration Stage and all of the Company’s Property Expenditures May Be Lost

The Company is currently focusing all of its efforts and funds on the Morrison Project, which is at the exploration stage. If the Company is successful in obtaining the required environmental certificates and mining permits, substantial additional work and funds will be required in order to bring the Company through the development stage. Mineral Exploration is highly risky, and most exploration properties do not contain any economic deposits of minerals. If a property is determined to not contain any economic reserves of minerals, the entire amount spent on exploration will be lost.


The Company's Mineral Reserve Disclosure are Estimates Only, and May Not Be Economic

The calculation of mineral reserves on the Morrison Property are estimates, and there is no certainty that the mineral deposits will be brought into commercial production. The commercial viability of a mineral deposit is also dependent on a number of factors, some of which are particular attributes of the deposit, such as size, grade, metal recoveries, and proximity to infrastructure, as well as metal prices.  Most of these factors are beyond the control of the Company. Even if the Company’s properties are brought into production, operations my not be profitable. The Company is an exploration stage company with no history of pre-tax profit and no income from its operations.

 


- 11 -



The Company Has Not Surveyed Any of Its Properties and the Company Could Lose Title to Its Properties

The Company has only done a preliminary legal survey of the boundaries of any of these properties, and therefore, in accordance with the laws of the jurisdictions in which these properties are situated, their existence and area could be in doubt. The Company has not obtained formal title reports on any of its properties and title may be in doubt.  If title is disputed, the Company will have to defend its ownership through the courts.  In the event of an adverse judgment, the Company would lose its property rights.


The Mining Industry is Highly Competitive

The Company will be required to compete in the future directly with other corporations that may have greater resources.  Such corporations could outbid the Company for potential projects or produce minerals at lower costs which would have a negative effect on the Company’s operations.


Mineral Operations are Subject to Market Forces Outside of the Company’s Control

The marketability of minerals is affected by numerous factors beyond the control of the entity involved in their mining and processing.  These factors include market fluctuations, government regulations relating to prices, taxes royalties, allowable production, import, exports and supply and demand.  One or more of these risk elements could have an impact on costs of an operation and if significant enough, reduce the profitability of the operation and threaten its continuation.


The Company is Subject to Substantial Government Regulatory Requirements

The Company’s exploration operations are affected to varying degrees by government regulations relating to resource operations, the acquisition of land, pollution control and environmental protection, safety, production and expropriation of property.  Changes in these regulations or in their application are beyond the control of the Company and may adversely affect its operations, business and results of operations.  Failure to comply with the conditions set out in any permit or failure to comply with the applicable statutes and regulations may result in orders to cease or curtail operations or to install additional equipment.  The Company may be required to compensate those suffering loss or damage by reason of its operating or exploration activities. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, foreign exchange controls, income taxes, expropriation of property, environmental legislation and mine safety.


Currently, the Company’s Canadian properties are subject to the jurisdiction of the federal laws of Canada and the provincial laws of British Columbia.


On the Federal and Provincial level, the Company must comply with exploration permitting requirements which require sound operating and reclamation plans to be approved by the applicable government body prior to the start of exploration. Depending upon the type and extent of the exploration activities, the Company may be required to post reclamation bonds and/or assurances that the affected areas will be reclaimed. If the reclamation requires funds in addition to those already allocated, the Company could be forced to pay for the extra work and it could have a significant negative effect upon the Company’s financial position and operations.



- 12 -



The Company is Subject to Substantial Environmental Requirements

In connection with its operations and properties, the Company is subject to extensive and changing environmental legislation, regulation and actions.  The Company cannot predict what environmental legislation, regulation or policy will be enacted or adopted in the future or how future laws and regulations will be administered or interpreted.  The recent trend in environmental legislation and regulation generally is toward stricter standards and this trend is likely to continue in the future. The recent trend includes, without limitation, laws and regulations relating to air and water quality, mine reclamation, waste handling and disposal, the protection of certain species and the preservation of certain lands.  These regulations may require obtaining permits or other authorizations for certain activities.  These laws and regulations may also limit or prohibit activities on certain lands lying within wetland areas, area providing for habitat for certain species or other protected areas.  Compliance with more stringent laws and regulations, as well as potentially more vigorous enforcement policies or stricter interpretation of existing laws, may necessitate significant capital outlays, may materially affect the Company’s results of operations and business, or may cause material changes or delays in the Company’s intended activities.


Currently, the Company has $123,600 on deposit as a reclamation bond for exploration work and site disturbance at the Morrison property.  These allocated funds have been deposited for the benefit of the Province of British Columbia until released upon approval from the Province after all necessary reclamation work on the property has been performed.  If the reclamation is more prolonged and requires funds in addition to those already allocated, Pacific Booker could be forced to pay for the extra work and it could have a significant negative impact upon the Company’s financial position and operations.


Financing Risks


The Company is Likely to Require Additional Financing which Could Result in Substantial Dilution to Existing Shareholders

The Company, while engaged in the business of exploiting mineral properties, has sufficient funds to undertake its planned current exploration projects.  The Company has completed a positive Full Feasibility Study at its Morrison project and will require further financing to develop the Morrison project and to place it into commercial production.  The development of the Company’s mineral properties is, therefore, dependent upon the Company’s ability to obtain financing through the joint venturing of projects, debt financing, equity financing or other means. Such sources of financing may not be available on acceptable terms, if at all.  Failure to obtain such financing may result in delay or indefinite postponement of exploration work on the Company’s mineral properties, as well as the possible loss of such properties. Any transaction involving the issuance of previously authorized but unissued shares of common or preferred stock, or securities convertible into common stock, could result in dilution, possibly substantial, to present and prospective holders of common stock. These financings may be on terms less favorable to the Company than those obtained previously.



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The Company Has a History of Net Losses and Expects Losses to Continue for the Foreseeable Future

The Company has had a history of losses and there is no assurance that it can reach profitability in the future.  The Company will require significant additional funding to meet its business objectives.  Capital will need to be available to help maintain and to expand work on the Company’s Morrison Property.  The Company may not be able to obtain additional financing on reasonable terms, or at all.  If equity financing is required, as expected, then such financings could result in significant dilution to existing shareholders.  If the Company is unable to obtain sufficient financing, the Company might have to dramatically slow exploration efforts and/or lose control of its projects. The Company has historically obtained the preponderance of its financing through the issuance of equity and the Company has no current plans to obtain financing through means other than equity financing.


The Company has a Deficit and a Lack of Cash Flow to Sustain Operations and Does Not Expect to Begin Receiving Operating Revenue in the Foreseeable Future

As of January 31, 2012, the end of the Company’s most recent fiscal year, the Company had a deficit of $28,047,406.  None of the Company’s properties have advanced to the commercial production stage and the Company has no history of earnings or cash flow from operations.  The Company has paid no dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future.  Historically, the only source of funds available to the company has been through the sale of its common shares.  Any future additional equity financing would cause dilution to current stockholders.  If the Company does not have sufficient capital for its operations, management would be forced to reduce or discontinue its activities which would likely have a negative effect on the stock price.


Risks Relating to an Investment in the Securities of the Company


The Market for the Company’s Stock has Been Subject to Volume and Price Volatility which Could Negatively Effect a Shareholder’s Ability to Buy or Sell the Company’s Shares

The market for the common shares of the Company may be highly volatile for reasons both related to the performance of the Company or events pertaining to the industry (ie, mineral price fluctuation/high production costs/accidents) as well as factors unrelated to the Company or its industry.  In particular, market demand for products incorporating minerals in their manufacture fluctuates from one business cycle to the next, resulting in change of demand for the mineral and an attendant change in the price for the mineral.  The Company’s common shares can be expected to be subject to volatility in both price and volume arising from market expectations, announcements and press releases regarding the Company’s business, and changes in estimates and evaluations by securities analysts or other events or factors.  In recent years the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly small-capitalization companies such as the Company, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values, or prospects of such companies.  For these reasons, the shares of the Company’s common shares can also be expected to be subject to volatility resulting from purely market forces over which the Company will have no control.  Further, despite the existence of a market for trading the Company’s common shares in Canada, stockholders of the Company may be unable to sell significant quantities of common shares in the public trading markets without a significant reduction in the price of the stock.



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The Company Could be Deemed a Passive Foreign Investment Company Which Could have Negative Consequences for U.S. Investors

The Company could be classified as a Passive Foreign Investment Company (“PFIC”) under the United States tax code. If the Company is declared a PFIC, then owners of the Company’s Common Stock who are U.S. taxpayers generally will be required to treat any so-called "excess distribution" received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the Company’s shares. A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of the Company’s net capital gain and ordinary earnings for any year in which the Company is classified as a PFIC, whether or not the Company distributes any amounts to its shareholders.


U.S. Investors May Not Be Able to Enforce Their Civil Liabilities Against The Company or Its Directors, Controlling Persons and Officers

It may be difficult to bring and enforce suits against the Company.  The Company is a corporation incorporated in Canada under the laws of British Columbia. The majority of the Company’s directors and officers are residents of Canada and all of the Company’s assets and its subsidiaries are located outside of the United States.  Consequently, it may be difficult for United States investors to effect service of process in the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under United States securities laws.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities under the U.S. Securities Act.


As a “Foreign Private Issuer”, the Company is Exempt From the Section 14 Proxy Rules and Section 16 of the 1934 Securities Act

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result is shareholders having less complete and timely data. As a Foreign Private Issuer, the Company’s officers, directors and principal shareholders are exempt from Exchange Act Section 16’s short-swing insider disclosure and profit recovery provisions. The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.


Item 4.  Information on the Company


DESCRIPTION OF BUSINESS


Introduction


The Company’s executive office is located at:

#1702-1166 Alberni Street, Vancouver, B.C. V6E 3Z3 Canada

Telephone: (604) 681-8556

Facsimile: (604) 687-5995

E-Mail: info@pacificbooker.com

Website: www.pacificbooker.com



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The Contact persons in Vancouver are Ruth Swan, Chief Financial Officer, and John Plourde, Director.


The Company currently leases its executive offices in Vancouver The lease covers approximately 1,966 square feet and runs through October 31, 2012.  The terms of rent are as follows:


February 1, 2012 to October 31, 2012

$67,318


The premises are considered adequate for the Company’s current needs. However, the Company may seek to lease additional office space in the future to meet its requirements as it transitions into development of its mineral property.


The Company's fiscal year ends January 31st.


The Company's common shares trade on the TSX Venture Exchange under the symbol "BKM", and on the NYSE Amex Exchange under the symbol “PBM”.


The authorized share capital of the Company consists of 100,000,000 common shares without par value. As of January 31, 2012, the end of the most recent fiscal year, there were 12,201,289 common shares issued and outstanding.


Corporate Background


The Company was originally incorporated under the Company Act of British Columbia under the name of Booker Gold Explorations Ltd. on February 18, 1983.  On February 8, 2000, the Company conducted a 1 for 5 reverse split and changed its name to Pacific Booker Minerals Inc.  At the Company’s Annual General Meeting held on July 16, 2004, shareholder’s approved new Articles of Incorporation under the new British Columbia Business Corporations Act which replaced the Company Act of British Columbia.


The Company presently has no subsidiaries.


Currently, the Company conducts all of its operations Canada and all of its assets are located in Canada.


History and Development of the Business


Since inception, the Company has been involved in mineral exploration. The majority of the Company’s efforts since inception have been conducted on properties in Canada, particularly the Morrison and Hearne Hill copper/gold properties.  The Company originally entered into an option agreement to earn a 100% interest in the Hearne Hill property in December, 1992, subject to a 4% Net Smelter Royalty (“NSR”).  The Company met the option requirements until December 2004.  During the year ended January 31, 2006, the Company wrote-off the entire capitalized value of the Hearne Hill property which totaled $7,851,288.



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In October 1997, the Company optioned the adjacent Morrison Property from Noranda (now Falconbridge Ltd., a unit of Xstrata Plc.).  The Noranda option agreement allowed the Company to earn a 50% interest in the Morrison Property upon the expenditure of $2,600,000 on exploration over five years and delivery of a bankable feasibility study.  If Noranda decided not to proceed with development of the Morrison Property, the Company could acquire a 100% interest (subject to a 3% NSR) in the property.  The Company met the expenditure requirement under the Noranda agreement.


In April 2004, the Company announced that it had signed a purchase agreement with Noranda on the Morrison property whereby Pacific Booker can acquire a 100% interest in the property by paying Noranda $3,500,000 cash over 36 months and issuing to Noranda 250,000 common shares and 250,000 warrants, as well as 250,000 additional common shares upon commencement of commercial production.  The Company’s final cash payment of $1,500,000 was due to Falconbridge Ltd., the successor company to Noranda, on or before April 17, 2007.  In September 2006, the final cash payment was made to Falconbridge, less a $50,000 discount for early payment.


Since the acquisition of the Morrison project in 1997, the Company has concentrated its efforts on exploring the project and initiated a Full Feasibility Study on the Morrison project in January 2004.


In 1995, the Company acquired 100% interests in the Copper and CUB mineral claims located near the Morrison project.  During the year ended January 31, 2005, the value of the Copper and CUB claims were written off.


On August 7, 2007, the Company’s common shares began trading on the NYSE Amex (formerly the American Stock Exchange) under the symbol “PBM”.


On March 12, 2009, the Company released the positive full Feasibility Study on the Morrison Project as completed by Wardrop Engineering Ltd. The study describes the scope, design features and financial viability of a conventional open pit mine with a 30,000 tonnes per day mill.


Business Overview


All of the Company’s mineral operations are located in Canada.  The Company and all of its properties are at the exploration stage.  Currently, the Company is completing the required permitting of its Morrison Project.  Based upon the positive full Feasibility Study, the Company intends to proceed with development of a mine at Morrison once the required permits are received.



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Operations are not seasonal as the Company can conduct certain types of work at its properties year-round.  To date, the Company’s revenue has been limited to interest on its cash balances and therefore it is not currently dependent upon market prices for its operations, nor is it dependent upon any patents, licenses or manufacturing processes.  The Company’s operations are dependent upon mining exploration rights and claims as well as the terms of option and/or joint venture agreements on those properties.  Please see the individual property descriptions below for the details of each of the Company’s mineral exploration projects.


The mineral operations of the Company are subject to regulation by several government agencies at the Federal, Provincial and local levels.  These regulations are well documented and a fundamental aspect of operations for any resource company in Canada.  Management believes it is in compliance with all current requirements and does not anticipate any significant changes to these regulations which will have a material effect on the Company’s operations.


Mineral Properties


The Company currently operates in the mineral exploration sector.  All of the Company’s properties are located in British Columbia, Canada and are at the exploration stage.  Currently, the Company’s only active project is the Morrison project in British Columbia. The individual mineral properties are described below.  


Morrison Project


The Morrison Project is a copper/gold exploration project and, including the adjacent Hearne Hill project, covers an area of approximately 65 square kilometers in British Columbia, Canada. Morrison is subject to a purchase agreement between the Company and Falconbridge, a unit of Xstrata Plc., where the Company can acquire a 100% interest in the Morrison property. Under the acquisition agreement, the Company has made all the required cash payments to Falconbridge, and is only required to issue Falconbridge 250,000 additional common shares upon commencement of commercial production.


The project is currently at the exploration stage. In March 2009, the Company received a positive Full Feasibility Study on the project and is currently in the process of obtaining the environmental certificates and permits necessary to proceed to the development stage.


Location and Access


The project is located in the Omineca District approximately 65 kilometers northeast of the town of Smithers in the Babine Lake region of north-central portion of British Columbia, Canada.  The project lies 30 kilometers north of the town of Granisle which was originally built to service several mines in the area.  Access is via paved British Columbia Provincial Highway 321 from Topley to Granisle to Michelle Bay, then by barge across Babine Lake to Nosebay.  A network of logging roads provides access to the Morrison Project approximately 38 kilometers from the barge landing.



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Mineral Claims and Land Title


The Morrison Property is represented by the Erin #1 mineral claim which is covered under the Mineral Tenure Act of British Columbia (“Mineral Tenure Act”).  The Company is acquiring the Morrison Property from Falconbridge Ltd, and has completed all the required cash payments under the agreement and must issue an additional 250,000 common shares to Falconbridge upon commencement of commercial production.  The Claim is 500 hectares in size is in good standing until September 15, 2016.


The Company does not believe there are any conflicting claims of ownership on any of the underlying claims.  Copies of the acquisition agreements, including a list of the various claims underlying the property, have been filed as exhibits to the Company 20-F Registration Statement.  A list of the Company’s claims is also available on-line at the British Columbia Government’s Mineral Titles Online database located at www.mtonline.gov.bc.ca.


Under the Mineral Tenure Act, claim holders may apply for additional 20 year terms as long as the extension is required for mining purposes.  Annual rental fees payable to British Columbia is $10 per hectare.


Under the purchase agreement with Noranda (now Falconbridge) dated April 19, 2004, Noranda indicated that to the best of its knowledge, there is no claim or challenge to its ownership or title to the mineral claims by any other party.  A copy of that agreement was filed as an exhibit to the Company’s 20-F Registration Statement.


Although the project lies within the traditional Lake Babine First Nations region, the project area is not under any native claim, nor is any claim anticipated based upon currently available information.  The Company has endeavored to appraise the Lake Babine First Nations on its planning and results of its studies, including environmental, wildlife, and fish studies.



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How Acquired


The Company originally signed an agreement with Noranda Mining and Exploration Inc. (“Noranda”) dated October 22, 1997 regarding the underlying claims.  Under the agreement, Pacific Booker can earn a 50% interest in the Morrison claims by spending $2,600,000 over a period of five years and delivery of a bankable feasibility study by October 31, 2003.  If Pacific Booker has met the expenditure requirement, Noranda may, under the agreement and upon receipt of a written request from Pacific Booker, extend the date for completion and delivery of the bankable feasibility study for up to an additional two years.  The agreement with Noranda also allowed the Company to recover from Noranda 15% of its total exploration expenditures on the Morrison Property in order to offset additional overhead and administration costs associated with financing and administration of the exploration program.


In April 2004, the Company announced that it had signed a new purchase agreement with Noranda Inc. (now Falconbridge Inc., a unit of Xstrata Plc.) regarding the Morrison Property which would replace the original agreement signed in October 1997 as described above.  Under the agreement, the Company would acquire a 100% interest in the project from Noranda in exchange for the payment of $3,500,000 cash and issuance of 250,000 common shares and 250,000 common share purchase warrants under the following schedule:


Cash Amount

Due Date of Payment

 

 

$1,000,000

Within 60 days of signing the Agreement (Paid)

$1,000,000

18 months from the date of the signing of the Agreement (Paid)

$1,500,000

36 months from the date of the signing of the Agreement (Paid)


Upon Commencement of any commercial production from the property, the Company must issue to Falconbridge an additional 250,000 common shares.  If at the time of issuance the Company’s common share price is below $4.00 per share, the Company is obligated to pay, in cash, the difference between $1,000,000 and the value of the 250,000 common shares issued.  This amount is figured by the average trading price which is less than $4.00 per share multiplied by 250,000 common shares.


If the Company is unable to comply with the terms of the above agreement, it will be required to execute a re-transfer of its interest in the project to Falconbridge which would result in Falconbridge holding a 100% interest in the Morrison claims.


The final cash payment of $1,500,000 was due to Falconbridge on or before April 19, 2007.  In September 2006, the Company satisfied this payment by paying Falconbridge $1,450,000 after negotiating a $50,000 early payment discount.  In addition to the cash payments, the Company issued 250,000 common shares and 250,000 warrants exercisable until June 5, 2006 at an exercise price of $4.05.


During 2005, Noranda amalgamated with Falconbridge and continued as Falconbridge Limited. In August 2006, Falconbridge was acquired by Xstrata Plc.  There were no changes to the Company’s agreement with Noranda/Falconbridge as a result of either merger



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Regional Geology


The properties are situated on the northern edge of the Skeena Arch in a region underlain by volcanic, clastic and epiclastic rocks. This sequence of rocks has been cut by a northwest trending series of faults that have created a long linear sequence of horsts and grabens. The rocks have been intruded by a variety of intermediate to felsic stocks, plugs and dykes of Eocene age.


During the Tertiary-Eocene period, Biotite Feldspar Porphyry (“BFP”) plugs and stocks of the Babine Igneous Suite were emplaced along major faults in a continental magmatic arc. Porphyry copper deposits in the area are temporally and spatially associated with the Babine Igneous Suite intrusions.


Property Geology


The Morrison copper-gold porphyry deposit is an elongated 600 by 1,500 m long northwesterly-trending deposit. The main BFP pluton at Morrison is a faulted plug, with nearly vertical contacts, which occupies a northwesterly oriented elliptical area. The Morrison plug is known to contain a large number of phases of BFP. There are numerous offshoots of the plug, many of which are northerly trending dykes or sills. The offshoots vary in width from less than 1 meter to greater than 500 meters.


The mineralization at Morrison occupies the central part of a major graben that is a component of the regional northwesterly trending block-fault system of the Babine area.  The western bounding fault is believed to be along Morrison Lake, and the eastern fault is about 0.8 kilometers east of the property.  The most prominent structure at Morrison is the north-northwest trending East Fault, which bisects the BFP plug and copper zone.  The Morrison copper zone conforms to the shape of the BHP plug and is disrupted by the East and West faults.  The copper zone is defined by external and internal boundaries that mark the limits of lithologic units with copper content consistently greater than 0.2% copper.  In most places, the external boundary is relatively sharp and copper content declines outward to less than 0.1% copper within about 40 meters.  The low-grade core averages between 0.15-0.2% copper.  All copper sulphides are primary, with chalcopyrite the main copper-bearing mineral.  A pyrite halo is developed in the chlorite-carbonate altered wallrock that spatially bounds the copper zone.  Copper mineralization is weakly developed in the pyrite halo.


Current Infrastructure


Only minimal facilities currently exist on the property.  An exploration camp is on site, and can accommodate 20 persons.  Other, smaller buildings are on site, including a permanent core shack.  Most exploration supplies are brought in via barge across Babine Lake and stored on site for the duration of the exploration program.  Access from the barge landing to the camp and the exploration area is by heavy logging road.  This network of logging roads is maintained by Canfor, a separate company that has logging rights over the area, including the Company’s property.



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Water is available from the lakes and watercourses adjacent to the property.  This water can be used for both potable and process water.  A large source of electrical power is not currently available on the project site.  An existing BC Hydro substation is located on the west side of Babine Lake near Granisle Township.  An existing 138 kV line served the Bell mine site south of the property.  In June 2008, the Company confirmed the availability of power from the Bell mine electrical facility which is now energized at 25 kV and can be re-energized to its design voltage.  A new 24.7 km 138 kV overhead line will be constructed to link from the former Bell mine site to the proposed Morrison mine site substation. BC Hydro has completed a study regarding the system load for the new line.


The economy of the region is based upon resource production, primarily mining and logging.  The town of Granisle on Babine Lake was built to support the mines in the area, and offers housing and basic support services.  An experienced workforce lives in the area of the property, and it is anticipated that most would commute to the property daily via barge or boat.


Previous Exploration History


The Morrison Lake area was first explored for minerals in the early 1960’s.  Regional stream sediment sampling in 1962 by Noranda Exploration Ltd. led to the discovery of the Morrison deposit in 1963.  Between 1963 and 1973, Noranda conducted exploration at Morrison and drilled 95 diamond holes.  By 1968, a sub-economic copper deposit had been outlined at Morrison that consisted of two zones.  The zones are immediately northwest and southeast of a small central pond, and their positions correspond closely to strong geochemical and magnetic anomalies.  Geological mapping done in 1963 and 1967 indicated the possibility that the two zones might be part of a single faulted deposit.  Drilling in 1970 to test the central areas succeeded in joining the portions of the faulted copper zone. In total, Noranda drilled 95 diamond drill holes totaling 13,893 meters.


Following the completion of the 1973 drill program, Noranda conducted no further field work at Morrison, although pit design studies were conducted in 1988 and 1990 in order to determine if the deposit could economically supply feed to the operating mill at its Bell Mine located approximately 15 kilometers south.  Noranda determined that the deposit would not be economical to mine and process at Bell at that time.


Prior Exploration by Pacific Booker


The Company acquired an option to acquire the Morrison property in 1997. The Company initiated Phase I exploration shortly after finalizing the option agreement. Work including a property wide geochemical survey, trenching, mapping, and diamond drilling was conducted from 1997 to July 2000.  Eleven diamond drill holes of large size NQ core totaling 3,818 meters were used to confirm and validate Noranda’s previous work as well as to test and define the mineralization at depth.  Based upon the results of the Phase 1 program, the Company initiated Phase 2 of exploration, which included the drilling of 13 additional diamond drill holes totaling 3,181 in order define the configuration and potential economic limits of the deposit.  The Company also completed an IP survey over the northwest sector of the deposit area to search for possible extensions to the known deposit and to possibly define the boundary between the copper zone and the pyrite halo.



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In 2001, the Company initiated Phase III exploration at Morrison.  The program was designed to delineate the deposit both laterally and to depth by completing a series of diamond drill holes at 60-meter centers.  The program was also designed to determine the copper and gold distribution of the deposit and identify potentially higher grade zones of mineralization in order to complete a resource study of the deposit and provide data for a full feasibility study.  From June 2001 to July 2002, the Company drilled 58 holes totaling 15,284 meters.  The review of the prior work conducted by Noranda as well as the 3 exploration phases conducted by Pacific Booker has allowed the Company to identify three main zones of mineralization for the deposit.  These are the Central, Southeast and Northwest Zones.


The Central Zone forms the main segment of the Morrison deposit.  It is largely bounded by the East and West Faults with part of the southwesterly margin of the zone conforming to the transitional contact with the pyrite halo.  The Phase III drilling defined and confirmed three significant copper-gold mineralization domains within the Central Zone.  Drilling has confirmed the dimensions, configuration and continuity of higher grade copper and gold domains within the Central Zone.


The Southeast Zone occurs as a 300 m wide semi-circular-shaped zone east of the East Fault.  The copper-gold mineralization abruptly weakens along the eastern margin where it transitionally changes to the pyrite halo style of mineralization.  The zone remains open to the south.


The Northwest Zone is interpreted as an apparent faulted off-set of the Central Zone and lies west of the West Fault and is bounded by the pyrite halo to the west.  The zone is 75 by 400 meters long and drilling to date extends the zone to a depth of 170 meters.


Several areas of mineralization at the Morrison deposit remain open and require additional drilling to test for extensions or further definition.  These include southern and southeastern portions of the deposit, where mineralization remains open and the boundaries of the copper/gold mineralization remain undefined; and at depth, where drill hole MO-99-04, the deepest drilled on the property to date, ended in mineralization at a depth of 454.46 meters.  There are also several areas of interest on the property around the main Morrison deposit which have also been identified for drilling to test for possible satalitic mineralization, particularly to the northwest and southeast of the known mineralization.


Current Exploration and Morrison Feasibility Study


The Phase III drill program totaled 82 holes of about 23,000 meters which succeeded in substantially delineating the Morrison deposit.  The Company engaged SNC Lavalin of Toronto, Ontario, to prepare a scoping study for Morrison which included a geostatistical block model and a resource estimate.  Snowden Mining Industry Consultants of Vancouver, British Columbia was engaged to incorporate SNC’s work into generating optimized pit designs and manual geological polygonal block models for further developing resource estimates for the Morrison deposit. Snowden completed and delivered its report to Booker’s management in early May, 2003.



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Upon receipt of the Snowden Resource Estimation and Preliminary Pit Optimisation Study, Booker initiated a Feasibility Study on the Morrison property.  In December 2003, the company engaged Beacon Hill Consultants to prepare a full feasibility study on the Morrison project.  The Study includes geotechnical, waste management and environmental studies, as well as studying potential waste and tailings sites.  The feasibility study will also include a further 4000 meters of drilling to obtained geotechnical data as well as further delineate the higher grade mineralization in the central copper zone, explore mineralization to the south-east and close off the deposit to the north and south.  In September 2003, the Company released assay results from 5 holes drilled along the known northern limits of the Morrison deposit and which management believes has successfully closed off the northern edge of the deposit.


Beacon Hill completed a draft of a Preliminary Assessment Report on the feasibility of the claims, and continued the work to bring the draft report to the Final Feasibility Report.  During the second half of 2004, work at the property site was primarily composed of environmental studies, including surface water quality sampling and flow rate monitoring, fish habitat studies, acid-rock drainage potential, and wildlife impact studies.


Fieldwork resumed in January 2005 after a winter break. 4 large (PQ) diameter drill holes totaling 700 meters were drilled as part of the metallurgical test program.  These holes were twinned from smaller holes drilled between 1998 and 2002 and were designed to obtain representative bulk samples of potential mill feed material.  Process Research Associates of Vancouver was retained to conduct the material test program including comminution and flotation tests on these samples in order to determine an optimal ore treatment process.  The testwork indicated the metallurgy of the deposit was relatively straightforward.  The results will be reviewed to establish a metallurgical database which will be used to establish design criteria in conjunction with other test work to determine potential mining and resource estimates.  The design criteria will also be used to develop preliminary capital and operating cost estimates at a range of potential rates of tonnes mined to enable optimization of the proposed mine.  These cost estimates are critical components of establishing a mine cut-off grade, optimized mill throughput and the overall mining plan. Following the review of the optimization studies, design activities for the mill and concentrator plant will proceed. Core from the metallurgical drill holes are also used for Acid Rock draining studies. Waste rock intersected in two holes is being used in humidity cell tests, which are used to determine the long term effects of the environment on the waste rock materials in regards to future potential environmental impact.


Environmental baseline studies continued for Surface Water Hydrology, Groundwater Hydrology, Wildlife and Wildlife Habitat, Fisheries and Aquatic Habitat, Trace Metals in Vegetation and Acid Rock Drainage studies.  Digital water pressure monitors were installed in three drill holes for modeling pit hydrogeology, and static groundwater monitoring in old drill holes is continuing in order to test for seasonal changes in water levels.  A Preliminary Hydrology Report was submitted which will be used for the planning and design of the mine infrastructure and facilities.



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A drill program was completed during the winter of 2005 to finalize ore delineation and to determine geo-technical criteria for the design of the pit. Detailed design of the pit and updated mineral resource estimates will be completed which incorporate the drilling results.  On October 14, 2005, a “Draft Terms of Reference” document was developed and submitted to the British Columbia Environmental Assessment Office (“BCEAO”) for an Application for an Environmental Assessment Certificate for the construction, operation, maintenance, decommissioning and reclamation of an open-pit mine on the Morrison property.  The final “Terms of Reference” document was developed in consultation with government agencies, First Nations, and the public.  A revised Project Description was also submitted to the British Columbia Environmental Assessment Office.


A geotechnical investigations program was completed on the proposed open pit.  The main purpose of the site investigation program was to collect the geotechnical information for the open pit slope design for the feasibility study.  Seven oriented core drill holes were drilled to provide geotechnical information for the rock mass in the vicinity of the proposed final pit walls and to intersect the major structures that were identified in previous investigations.  In addition to detailed geotechnical logging, core sample collection and packer permeability tests were completed on the drill holes.  Laboratory test work on selected samples included point load tests, unconfined compressive strength tests and direct shear tests.  Detailed geotechnical logs were compiled along with the field and laboratory tests results to establish a complete geotechnical database for the open pit area.


The geotechnical drill program commenced on the proposed waste management site and plant site included drilling 14 short geotechnical and condemnation drill holes, and 35 test pits.  The purpose of the drill holes is to test the foundations of the waste retaining dam, to test the foundations for the plant site, and to monitor ground water.  Standard Penetrometer Testing (“SPT”) was used for overburden intervals and Packer Testing for rock foundations.  Soil samples for laboratory geotechnical tests were collected from the SPT process.  The primary purpose of the test pits is to test waste dam, plant site and waste conveyor foundation and slope stability.  Another purpose of the test pits is to determine locations of potential construction material, i.e. till, sand, or gravel.  One geotechnical drill hole was drilled in the proposed open pit to monitor groundwater quality in the mineralized zone and two drill holes were drilled downstream of the waste management site to monitor groundwater quality.


During fiscal 2007, work continued on the full Feasibility Study. The following consulting firms have been retained to perform these specific work programs as part of the Feasibility Study.


·

Wardrop Engineering Inc – to complete the Feasibility Study.

·

Geo-Sim Services Inc – to update the 43-101 compliant Resource Estimate.

·

Nilsson Mine Services – to update the Open Pit Optimization and schedule.

·

Rescan Environmental Services Ltd. – to complete the Environmental Assessment.

·

SGS Canada Inc. – to complete the grinding and floatation test work and circuit design.

·

Klohn Crippen Burger Ltd. – to complete the Geotechnical Engineering and Design for tailings and waste rock management, surface water management and infrastructure foundation design.



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During fiscal 2007, work on the project included:


·

Commenced work on the Open Pit Optimization.  This work includes mine plan, resource reserves, mill size, equipment requirements, equipment costs, and haulage costs.

·

Feasibility level Open Pit Geo-technical investigations, to provide the geo-technical information required for the feasibility level open pit slope design;

·

Feasibility level Open Pit Slope Design, to determine the steepest practical slope angles for the open pit mine;

·

Waste Management Site and Plant Site Geo-technical Investigations, to provide geo-technical information for the design of the Waste Management Facility and the proposed plant.

·

Completed a waste management site alternative study.

·

Geo-chemical analysis of geologic samples for Acid Base Accounting and assaying of samples for molybdenum.

·

Commenced with metallurgical (grindability) testing.

·

Additional Environmental Baseline Studies.

·

Continued to develop the Decommissioning, Reclamation, and Closure Plan.

·

Continued work to complete an NI 43-101 compliant Resource Estimate.


In April 2007, the updated Resource Estimate for the Morrison project was completed by Geosim Services Ltd. and filed.  The estimate was prepared using a cut-off grade of 0.3% Equivalent Copper.  The copper equivalent was calculated using relative recovery and metal prices of $1.78/lb copper, $465/oz gold, and $10/lb molybdenum.  Composited intervals from 98 drill holes representing 22,982 meters of core were used in the block model estimation.  Block size was 20x20x12 meters and grade estimation was carried out by the ordinary kriging using 6 meter downhole drill composites.  Gold grades were capped at 1.5 g/t prior to compositing.


Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources

This section uses the terms “measured” and “indicated resources”.  We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.  U.S. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.


 

Average Grade

Contained Metal

Class

Tonnes

Cu EQ

(%)

Cu

(%)

Au

(g./t)

Mo

(%)

Cu (lb)

000,000’s

Au(oz)

000’s

Mo(lb)

000’s

 

 

 

 

 

 

 

 

 

Measured

96,516

0.47

0.40

0.20

0.004

851.13

614.4

8,511

Indicated

110,353

0.46

0.39

0.20

0.005

936.66

691.8

12,164

 

 

 

 

 

 

 

 

 

Total Measured/

Indicated


206,869


0.46


0.39


0.20


0.005


1,787.78


1,306.3


20,676



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Cautionary Note to U.S. Investors concerning estimates of Inferred Resources

This section uses the term “inferred resources”.  We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it.  “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category.  Under Canadian rules estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies.  U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.  


 

Average Grade

Contained Metal

Class

Tonnes

Cu EQ

(%)

Cu

(%)

Au

(g./t)

Mo

(%)

Cu (lb)

000,000’s

Au (oz)

000’s

Mo (lb)

000’s

 

 

 

 

 

 

 

 

 

Inferred

56,524

0.47

0.40

0.21

0.005

494.72

374.4

6,231


Sample Protocols


All project samples are covered under a quality control program which commenced in the Phase II program beginning with drill hole Mo-00-17.  There was no systematic quality control program implemented for samples from the first 16 drill hole samples.


All drill core is delivered to the core shack by the diamond drillers at the end of each shift. The core shack is a permanent, insulated and locking structure.  All drill core is photographed prior to any disruption by geologists and geotechnicians before logging.  Detailed core logs are compiled in 3.05 meter intervals.  All core is split with a diamond saw into two halves.  The first half is packaged and bagged and tagged in plastic bags for shipment to the laboratory, and the second half is replaced in the core box for reference and storage in the core shack.


Samples are organized into 20-sample batches with inclusion of quality control samples into the sample sequence of each batch.  The suite of 17 core samples in the batch are complemented with one Booker Standard prepared by CDN Resource Laboratories of Delta, B.C., one Blank Standard from barren Morrison drill core, and one certified reference standard from Rocklabs Ltd. in Auckland, New Zealand in every second sample batch.  One sample in the batch is prepared as a duplicate.  The sample batches are transported by Company personnel to a shipping point where they are carried by private trucking company to independent certified assay laboratories.  Check assays are submitted to a separate independent assay laboratory.



- 29 -



All of the Company’s work on the property is supervised by a Qualified Person as defined under National Instrument 43-101 in Canada.  National Instrument 43-101 is a set of rules developed and administered by the Canadian securities regulators to govern how Canadian resource companies handle and disclose technical information regarding their mineral project operations to the general public.  It requires all disclosure be based on advice by a “Qualified Person”, which is defined as an individual that is an engineer or geoscientist with at least 5 years of experience in mineral exploration, mine development or operation or mineral project assessment; has experience relevant to the mineral project and technical report; and is a member in good standing of a relevant professional association.


Fiscal 2008 Work


Work on the full Feasibility Study and the environmental assessment continued during Fiscal 2008.  The environmental assessment will be used to apply for a mining permit for the construction, operation and maintenance, and decommissioning and reclamation of an open-pit mine on the property.  On January 18, 2008, a Section 11 Order under the BC Environmental Assessment Act was issued to the Company, which permits the Company to conduct a formal environmental assessment in support of the Morrison Project Permit to construct application.


A Geotechnical and Hydrogeology Drill program was completed, as 15 geotechnical and 16 water monitoring holes were drilled in the proposed impoundment area, the open pit, and the plant site. This concluded the fieldwork, although environmental monitoring will continue.


Wardrop Engineering completed a Trade-off Study to evaluate the application of High Pressure Grinding Rolls (“HGPR”) as an alternative technology to the conventional semi-autogenous milling process for the project.  The results of the Study indicate the application of HPGR would result in significant operating costs savings amounting to more than 23%, including the reduction of power of 3.67 megawatts, or $0.08/t, and reduction of consumables of $0.59/t.  As a result, HGPR was incorporated into the project design.


Floatation and grinding testwork was completed by SGS Canada.  The testing recoveries were Copper of 84.4%, Molybdenum of 79%, Gold of 59.4%, and Silver of 55.6%, with a concentrate grade of 25.1%.


For the fiscal year ended January 31, 2008, the Company incurred $3,346,755 in expenditures on the Morrison property.



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Fiscal 2009 Work


Work on the full Feasibility Study and the environmental assessment continued during Fiscal 2009 and was completed early in Fiscal 2010.  Nilsson Mine Services finalized the mine plan based on the four year trailing average metal prices of Copper $2.75, Gold $658.32 and Molybdenum $29.23, resource reserves, haulage costs, and pit optimization.  As a result of the increase in the mineable reserve, the plan for disposal of Waste Rock (PAG/NAG) was revised.  The revised plan is to store the waste rock near the Open Pit rather than inside the Tailings Storage Facility to reduce both Capital and Operating Costs, requiring a revision of the General Site Arrangement including the relocation of the primary crusher, process plant, on-site administration facilities, waste rock storage, low-grade ore stock-pile and organic material storage.  Also required was a Geotechnical, Hydrogeology and Condemnation Drill program; and test-pitting program, including : the drilling of four geotechnical and six water monitoring drill holes in the proposed plant site, waste storage and low grade ore stockpile areas; one condemnation drill hole in the plant site area; seven test-pits for soil characterization in the open pit area; and fourteen test-pits in the proposed plant site, waste rock storage, low grade ore stock pile, and over-burden storage areas; and an update of the Capital and Operating costs.  


The Feasibility Study was completed by Wardrop Engineering Ltd. (a Tetra Tech Company), on March 12, 2009. The study describes the scope, design features and financial viability of a conventional open pit mine with a 30,000 tonnes per day mill.  Updated Project Description was completed and submitted to British Columbia Environmental Assessment Office in September 2008.  During the fiscal year, meetings and communication with key government people and agencies (including Hon. Gordon Hogg, Minister of State for Mining (MEMPR); John Cavanagh, Assistant Deputy Minister (EAO, MEMPR) and Robin Junger, Associate Deputy Minister Environment) continued.  


On November 9, 2008, the Company and the Lake Babine Nation (“LBN”) signed a Capacity Funding agreement for the LBN to participate in the Environmental Assessment and for community engagement.  On December 30, 2008, in response to an unexpected and allegedly defamatory press release issued by Chief Betty Patrick on October 14, 2008, the Company filed a Statement of Claim against the Lake Babine Nation (“LBN”). The Company requested a public retraction of the press release but no response was received from the LBN. On October 22, 2009, in the spirit of cooperation and in consideration of the election of a new Chief and Council, the Company discontinued the legal proceedings. The Company is providing the LBN with capacity funding to enable effective consultations in the environmental assessment process, as well as developing a communications protocol.


For the fiscal year ended January 31, 2009, the Company incurred $4,813,818 in expenditures on the Morrison property.



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Fiscal 2010 Work


Work on the full Feasibility Study was completed and the environmental assessment work continued during Fiscal 2010 and continued into Fiscal 2011.  The Feasibility Study was completed by Wardrop Engineering Ltd., a Tetra Tech Company, on March 12, 2009.  The study describes the scope, design features and financial viability of a conventional open pit mine with a 30,000 tonnes per day mill.


The total mineable reserves from the Feasibility Study are given below:



Category


Tonnes

Cu

(%)

Au

(g/t)

Mo

(%)

 

 

 

 

 

Proven

115,121,000

0.355

0.173

0.004

Probable

109,130,000

0.304

0.152

0.004

Total Proven and Probable

224,241,000

0.330

0.163

0.004


Cut-off grade was determined by combining mining, processing, disposal and overhead costs of the ore, as well as the Net Smelter Return ("NSR") from the concentrate produced. Estimates used include Operating Costs of CDN$8.15 per tonne milled over the life of the mine, and the overburden and waste total is 184.12 Mt for a strip ratio of 0.82:1.  NSR cut-off-value is $CDN5.60/t, based upon the geo-spatial location of the ore within the mine design. The cut-off grade is determined when the cost of processing a block as ore equals the cost of handling the block as waste.


Metal prices used in the study were a four year trailing average (as of January 12, 2009) of $2.75/lb Copper, $658.32/oz Gold, and $29.23/lb Molybdenum, at an exchange rate of US$0.87. Metallurgical test-work to date has reported silver present in the concentrate, but silver was not included in the financial analysis.  Recovered metal is estimated at 1.37 billion lb Cu, 658,090 oz Au and 10.05 million lb Mo. Metal recoveries are estimated at 84% Cu, 56% Au, and 50% Mo. Mine life is estimated to be 21 years, and capital costs are estimated at CDN$516.68 million (including a CDN$59.92 million contingency allocation). Pre-Income Tax Internal Rate of Return (IRR) of 20.05%, based on Net Present Value (NPV) at 8.0% discount rate is CDN$495.9M; and the Payback period on capital is 4.2 years.  A copy of the Feasibility Study was filed on EDGAR under Form 6-K on April 23, 2009.



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With the receipt of the positive Feasibility Study, the Company focused its efforts on permitting issues for the planned development of the Morrison project. On May 22, 2009, the British Columbia Environmental Assessment Office ("BCEAO") issued the Final Terms of Reference for an Environmental Assessment Certificate application.  An Application for an Environmental Assessment Certificate was submitted by the Company to the BCEAO on September 28, 2009.  The Application was evaluated to determine if the Application addressed all the items in the Application Terms of Reference.  On October 27, 2009, the EAO issued a letter to the Company accompanied by a list of deficiencies in the Application itemized in a Screening Evaluation Table.  The Screening Evaluation Table identified information or clarification requests to be addressed by the Company for the Application to progress to the Review stage.  In addition, the Company submitted Licenses and Permits, including Mining Lease (MEMPR), Crown Lease for mineral tenure 520519 (tailings storage facility) (ILMB), Statutory Right-of-Way Crown Land Tenure for a transmission line (ILMB), Occupant License to Cut for the mine site (MOFR), Special Use Permit (MOFR), Road Permits and Road Use Agreements (MOFR),and Forest License to Cut for the transmission line (MOFR), for Concurrent Review with the Application for an Environmental Assessment Certificate.


On July 14, 2009, pursuant to the Canadian Environmental Assessment Act (CEAA), Fisheries and Oceans (DFO), Natural Resources (NRCan), Transport Canada (TC) issued a Notice of Commencement to conduct a comprehensive study.  The BCEAO and the Canadian Environmental Assessment Agency will coordinate their respective review processes to ensure that joint steps are undertaken wherever that can appropriately be done consistent with the Canada-British Columbia Agreement for Environmental Assessment.  The Morrison Copper/Gold Project was accepted as an MPMO project by Major Project Management Office (MPMO) who oversee and track the federal review and Aboriginal engagement and consultation for major resource projects.  


For the fiscal year ended January 31, 2010, the Company incurred $3,182,035 in expenditures on the Morrison property.


Fiscal 2011 Work


Work to support the environmental assessments continued during Fiscal 2011.


From January to March 2010, the Company completed a drill program around the perimeter of the proposed open pit in order to better characterize the Acid Rock Drainage and Metal Leaching ("ML-ARD") potential of waste rock and pit walls.  The hydraulic conductivity of the rock and faults was also tested and the geotechnical characteristics of the rock observed.  This work was requested by Ministry of Environment to address information gaps in the EAC Application.  Results from the drilling indicated that waste rock and pit walls contain less pyrite than had been predicted in preliminary assessments.  ABA testing of the rock was included in the assessment of the ML-ARD potential of the waste rock and pit walls.



- 33 -



In May 2010, an Addendum to address the deficiencies in the EAC Application to the BCEAO was submitted.  On July 12th, the BCEAO announced that they had accepted the Company’s Application for an EAC for Review.  The BCEAO also informed the Company that it had met the requirements of the Section 11 Order with respect to both public and First Nations Consultation and was satisfied with the Consultation Plans proposed by the Company for the Application Review period.  Therefore, the 180-day Application Review Period commenced on July 12, 2010.


On October 28, 2010, the Company requested a temporary timeline suspension of EAC Application review period, to allow the Company the opportunity to respond thoroughly to the comments and issues raised by the reviewers of the Application.  The Company submitted its responses to all comments and issues on November 19, 2010 in the Review Response Report and requested that the timeline suspension be lifted and that the review period resume starting at day 109 of the 180-day review period.


On December 16, 2010, the Company met with BCEAO, and Canadian Environmental Assessment Agency (“CEAA”) to discuss reviews of tracking tables (this table tracks the comments and responses to the comments raised during the review process), the Table of Commitments and the BCEAO draft Assessment Report.  During the meeting, BCEAO requested that the Company consider changes to the project design, mainly dealing with changes to the closure phase of the project and water management.  The changes were intended to significantly reduce the risk of long term residual and cumulative effects and in the potential magnitude of effects associated with the operating and closure plan.


As per the Project Terms of Reference and Canadian legislation, the Company must devise a Fish Habitat Compensation Plan ("FHCP") to replace fish-bearing and aquatic habitat that will be lost as a result of the Project.  The amount of fish-bearing habitat lost is 0.125 ha resulting from partial dewatering of some streams, the freshwater intake pipe-line and effluent discharge pipeline.  Maintaining fish productivity is a key objective so compensation ratios may, to ensure adequate compensation, require more habitats be created than is lost.  In general, new habitat is required to replace lost habitat at a 2:1 ratio however the submitted FHCP provides new habitat at a 3:1 ratio.  An approved FHCP is required to obtain Fisheries Act authorizations that are prerequisites for Project approval.  The Company submitted a FHCP to DFO and EAO on December 8, 2010.


The Lake Babine Nation (“LBN”) completed a Salmon Spawning Survey in October/November 2010.  The total salmon escapement for the Morrison watershed was 10,132 Sockeye and 1,002 Coho.  This compares with historical averages.


LBN completed a study with respect to relocating the location of the Overburden Stockpile from Morrison Point as it was considered to being a barrier to wildlife migration, potentially too close to Morrison Lake with the potential to contribute dust and drainage to the lake which would impact salmon spawning.  As a result, the Overburden Stockpile was relocated inland 700 meters from Morrison Lake.



- 34 -



The Morrison Copper/Gold Project has been identified as a major natural resource project.  The federal Major Projects Management Office ("MPMO") will track and monitor the progress of the Project through the federal EA and ensure service standards and timelines are met.  On May 10, 2010, MPMO completed the Project Agreement and posted the document on their website: (http://www.mpmo.gc.ca/project-projet/morrison-eng.php).  The Agreement describes the federal review process and outlines the key roles, responsibilities and service standards required of the Proponent and federal agencies.  The federal review includes environmental assessment, regulatory reviews, aboriginal engagement and consultation activities.  Federal agencies signatory to the Agreement include: Canadian Environmental Assessment Agency, Natural Resources Canada, Fisheries and Oceans Canada, Environment Canada, Transport Canada and Indian and Northern Affairs Canada.


For the fiscal year ended January 31, 2011, the Company incurred $1,876,149 in expenditures on the Morrison property.


Fiscal 2012 Work


As a result of the December 16, 2010 meeting with the BC Environmental Assessment Office (EAO), and Canadian Environmental Assessment Agency (“CEAA”) the Company proceeded with incorporating the changes into a conceptual design, which was subsequently discussed with the EAO and other reviewers on January 25, February 21 and February 25, 2011.  Feedback from these meetings was used prepare a Review Response Report.  The Review Response Report was submitted to the EAO on March 30, 2011.  The Company also submitted an Application Information Key (“AIK”) identifying the order of precedence guiding how the various documents submitted should be considered by order of precedence addressing any potential ambiguities between documents, such as variations in results or assessments, by identifying the more current documents that take precedence over prior documents.


EDI Environmental Inc. along with participation of the Lake Babine Nation completed a Moose and Mule Deer winter survey in January 2011 to determine habitat use within the Project area during a typical winter activity.


As a result of comments received from the Department of Fisheries and Oceans (DFO), Canada, the Company submitted an updated Fish Habitat Compensation Plan (FHCP) to DFO and EAO on March 23, 2011.  The FHCP is intended to compensate for fish-bearing and aquatic habitat that will be lost as a result of the Project.  The amount of fish-bearing habitat lost is 0.125 ha resulting from partial dewatering of some streams, the freshwater intake pipe-line and effluent discharge pipeline.


Further comments were received from the EAO on April 15, 2011 that dealt mainly with the segregation of waste rock.  The Company expanded on the waste segregation plan and submitted this plan to the EAO and CEAA for review on April 26, 2011.  Additional comments from the Federal agencies, Environment Canada and Natural Resources Canada were then received on May 25, 2011.



- 35 -



Considering all the comments received as well as additional data acquired from field work during spring break-up the Review Response Report Rev. 2 ("RRR Rev. 2") was submitted to the EAO on July 4, 2011 along with the request that the EAC Application Review timeline suspension be lifted and that the Review period would resume starting at day 109 of the 180-day review period.  The suspension was lifted on July 18, 2011


On August 25, 2011, the Company again requested a one-week suspension in order to respond to additional questions and provide clarification on commitments coming from the RRR Rev. 2.  The 180 day review was suspended as of August 25 and started again on September 1, 2011 with the EAO referral date to the Ministers also shifted back until October 4, 2011.


On September 6, 2011, the EAO issued copies of their draft Environmental Assessment Report to the Working Group for review.  Subsequent to receiving comments from the Working Group, the EAO determined that it could not come to a conclusion regarding the significance of Project effects.  The EAO, therefore, sought a 3rd party assessment of the Project effects to confirm and inform them.  As such, to accommodate EAO acquiring 3rd party input on Hydrogeology and Water Quality, and Aquatic Resources and Fisheries, the Company agreed to a temporary suspension of the 180-day Application Review Period on September 29, 2011.


In September 2011 the Company collected additional baseline and freshet data.  Baseline data was collected for Streams 7, 8 and 10, Morrison Lake, Nakinilerak Lake and leach barrels for ML/ARD.  Additionally salmon spawning study was continued using Lake Babine Nation as the contractor.


On November 13, 2011 Robertson Geoconsultants Inc. (RGC) submitted the 3rd party review on Hydrogeology and Water Quality.  They concluded that no additional field work was required.  In fact, they concluded that the scope of hydrogeological site characterization work completed to date may exceed baseline data collected for Environmental Assessment Certificate applications of other mining Projects in B.C.  They also concluded that any uncertainties could be addressed by way of sensitivity analysis.


On November 21, 2011 Solander Ecological Research Ltd. submitted the 3rd party review of the Aquatic Resources and Fisheries.  They concluded that if the proponent is able to demonstrate with reasonable confidence that seepage and effluent discharges will not exceed BC Water Quality Guidelines (BCWQGs), then only minimal fisheries work appears to be required for the Environmental Assessment, although additional work may be required for permitting.


Note: The 3rd Party Aquatic Effects review focused to a large degree on the requirements for potential technical studies if the water quality modeling indicated the potential for significant adverse effects on Morrison Lake.  The Company stressed that the Environmental Design Basis for the effect on Morrison Lake is to meet BCWQGs for Morrison Lake and site specific water quality objectives for potential localized effects on the receiving streams near the TSF.  The use of site specific water quality objectives for locally affected water and the use of mixing zones for discharge of treated water are standard procedures in BC.



- 36 -



On December 16, 2011 the Company met with the EAO, the CEAA, RGC and the Company consultants Klohn Crippen Berger Ltd. and Minesite Drainage Assessment Group to review the scope of work to address the recommendations made in the 3rd party review reports of November 2011.


On December 21, 2011 the EAO requested that the Company commit to lining the TSF with a geomembrane or equivalent with a permeability of 10-10(m/s).  Alternatives to a lined TSF would be considered if the Company could demonstrate sufficient knowledge of spawning habitat and fish use in Morrison Lake and its tributaries and develop an alternative to the satisfaction of the Permitting agencies.


The Company responded that the Company would commit to lining the TSF with an engineered soil barrier and/or geo-membrane with an average permeability of 10-9m/s to limit seepage to the receiving streams and Morrison lakebed to meet water quality objectives that are protective of salmon spawning habitat and stream aquatic habitat.  The water quality objectives would be developed to the satisfaction of the Permitting agencies.  Alternatives to a lined TSF would be considered if the Company could demonstrate sufficient knowledge of hydrogeologic properties and hydrogeology modeling, aquatic toxicity, and spawning habitat in Morrison Lake and aquatic habitat in the receiving streams to the satisfaction of the Permitting agencies.


On January 31, 2012, the Company submitted the 3rd Party Review Response Report, which incorporated the scope of work agreed to in the December 16, 2011 meeting.  The Report was directed towards hydrogeology, water balance, geochemistry and aquatic habitat with respect to the potential for significant adverse effects on Morrison Lake; adaptive management plans that would be further developed in the detail design and permitting stage to ensure that operations will be managed to mitigate potential effects; and additional commitments to include physical lake behavior, fish populations and distribution, spawning surveys, and salmon escapement.  The report also included Preliminary Proposed Water Quality Objectives (PPWQOs) to be used primarily for emergent groundwater that may surface in the Tailings Storage Facility receiving streams and the Morrison lakebed.  The final selection of the WQOs will be developed in detail during Permitting.  Site specific water quality objectives are effluent permit requirements for the Environmental Management Act, not the Environmental Assessment Act.


The 3rd Party Review Response Report was provided to RGC and the Ministry of Environment for review.  In addition the EAO commissioned Dr. Laval of the University of British Columbia (UBC) to review the results of the Lake Effects section of the 3rd Party Review Response Report completed by Dr. Lawrence of UBC.  Dr. Lawrence is Professor and Canada Research Chair in Environmental Fluid Mechanics.  Dr. Laval is an Associate Professor in the same department (Civil Engineering) as Dr. Lawrence.


The result of the review of the 3rd Party Review Response Report was a request by EAO to provide Tailings Storage Facility (TSF) seepage estimates for a full geo-membrane liner, i.e. water quality estimates as they relate to impacts on stream 7 and emergent water quality.  In addition the EAO commented that BCWQG are the objectives that Company should be striving to achieve, and if this can be done through design or commitments, that is the EAO’s strong first preference.



- 37 -



Anticipated Fiscal 2013 Work


On March 19, 2012, the Company announced that PBM had published a Notice for an Application for a Mining Lease, as follows:


MINING LEASE APPLICATION

Take notice that Pacific Booker Minerals Inc., 1702-1166 Alberni Street, Vancouver, British Columbia, V6E 3Z3, free miner certificate client number 102758, has applied to the Chief Gold Commissioner for the Province of British Columbia, for a mining lease of minerals identified by the mineral claim listed below.  The mineral claim has been surveyed by Mark McGladrey, BCLS, whose field notes and plans have been approved by the Surveyor General.


The following mineral claims are subject to the mining lease application:

*

Tenure Numbers 625123, 625143, 625183

*

Mineral Titles Map Numbers 093M.019, 093M.029

*

Plan Number EPC415

*

Cassiar District


Posted at the Chief Gold Commissioner's Office in Vancouver, British Columbia, this 15th day of March, 2012.


The notice has been published in the BC Gazette, the Vancouver Sun, and the Lakes District News as required under Section 42(1)(c) of the Mineral Tenure Act.


The result of the review of the 3rd Party Review Response Report was a request by EAO to provide TSF seepage estimates for a full geo-membrane liner, i.e. water quality estimates as they relate to impacts on stream 7 and emergent groundwater quality.


In addition EAO commented that the BCWQO are the objectives that PBM should be striving to achieve, and if this can be done through project design or commitments, that is the EAO’s strong first preference.


On April 27, 2012, PBM submitted a 3rd Party Review Response Report - Addendum 1, which provided the results of lining the TSF with a geo-membrane liner; leakage through the geo-membrane liner, geo-chemical loading in streams and emerging groundwater and Morrison Lake effects.  The results of lining the TSF with a geomembrane liner and some modifications to the water treatment plant are that the water quality in Morrison Lake will meet BCWQGs; and confirms that the project will not have any significant adverse effect on the receiving environment.


During the detail design and permitting phase the aerial extent of the geomembrane liner may be reduced if it can be demonstrated to the satisfaction of the Permitting Agency that the incremental increase in seepage does not have a significant adverse effect on the receiving environment, and that such discharges meet agreed upon site specific WQOs.



- 38 -



Subject to receiving the EAC and CEAA posting the Course of Action Decisions as well as the receipt of all required permits and authorizations, mine construction will proceed with the following activities:

·

Prepare applications for  permits and other authorizations and licenses;

·

Finalize our contracting strategy for Pre-production;

·

Tender Pre-Production Contracts (EPC);

·

Proceed with procurement including ordering long lead time items (i.e. HPGR, Ball Mills, etc);

·

Site Engineering Survey; and

·

Detailed Engineering and Design.


The Company estimates its expenditures for the anticipated work on the Morrison project for the year ended January 31, 2013 will be CDN$600,000 without receiving the EAC or CDN$3,000,000 if the EAC is received during the fiscal year.


Hearne Hill Property


The Hearne Hill property lies adjacent to the Company’s Morrison project as described above. Hearne Hill is represented by various mineral claims covered by the Mineral Tenure Act which were acquired from Arms-length individuals.  The Company has a 100% interest in the Hearne Hill property, subject to a 4% NSR,


How Acquired


The Hearne Hill property was originally acquired by the Company in 1992.  The Company agreed to purchase a 100% interest in the Hearne Hill claims from three arms-length individuals under the following terms:


1)

$60,000 in total option payments;

2)

$100,000 in royalty payments per year;

3)

Issuance of 40,000 common shares in 4 tranches of 10,000 shares each as certain milestones were met.


All option payments have been made and all the common shares have been issued.  The Company currently has a 100% interest in the property, subject to a 4% NSR to the vendors and required royalty payments of $100,000 per year.  The annual royalty payments may offset any net smelter royalty obligations, and the NSR may be purchased by the Company for a cash payment of $2,000,000 at any time.



- 39 -



During fiscal 2007, the Company was named in an action filed with the British Columbia Supreme Court by Lorne Spence, one of the original optionors of the Hearne Hill property.  Mr. Spence’s action sought the return of certain mineral claims, or unspecified damages in the alternative.  Mr. Spence also sought to include the return of the Company’s Morrison property as part of the suit.  In June 2007, the Supreme Court of British Columbia dismissed the application to include the Morrison property.  On April 20, 2009, the Company announced that a settlement had been reached in the action filed against the Company in the BC Supreme Court.  Pursuant to the settlement, the Company will retain the right, title and interest in and to all claims that were the subject of the action, with the exception of Mineral Tenure No. 242812 (the “Hearne 1 Claim”) and Mineral Tenure No. 242813 (the “Hearne 2 Claim”), which were transferred to the plaintiff optionors.  Pursuant to the settlement, no cash payment was made to the plaintiffs and all claims in the action have been dismissed.


Property Geology – Hearne Hill


The property is underlain by volcanic rocks of the Lower to Middle Jurassic Hazelton Group rocks which are intruded by porphyritic rocks in a series of northeasterly trending dykes.  The intrusive composition is that of diorite or quartz diorite.  Several phases of intrusions are known, including some post mineral dykes.


Chalcopyrite, bornite and molybdenite occur as fracture fillings and disseminations in the biotite feldspar porphyry and the surrounding wallrock.  The mineralization is due to a large porphyry copper system.  The erratic nature of the copper distribution is caused by late stage intrusions.  The volcanic rocks, in contrast to the late stage BFP, are higher in grade.


There are two known bodies of mineralized breccia.  The southern body, known as the Chapman zone, has been known for several years, and the northern body, known as the Peter Bland zone, was found by Pacific Booker during its 1995 drill program.  These are dilational zones of brecciation which are surrounded by areas of fracturing which carry high grade mineralization.  Gold is enriched in the breccia relative to the stockwork mineralization.


The breccias in the Bland zone are also related to a principal fracture system which dips steeply to the east.  As in the Chapman zone, copper/gold/silver mineralization occurs infilling what were originally voids between the breccia casts, but areas of high grade fracture filling mineralization also occurs in altered volcanic rocks in close proximity to the breccia zones.  The width of the enriched core of the Hearne Hill porphyry system averages approximately 50 meters at surface and appears to widen at depth.



- 40 -



Exploration History


Tro-Buttle Exploration undertook a large scale soil sampling and magnetometer survey east of Morrison Lake on Hearne Hill.  In 1967, while excavating a bulldozer trench on the most prominent anomaly on the western flank of Hearne Hill, a 1.5 meter boulder of brecciated rock cemented with chalcopyrite was unearthed.  Based upon that discovery, Texas Gulf Sulphur optioned the property that year and undertook a systematic geological assessment of Hearne Hill.  The program included 12 diamond drill holes totaling 1942 meters.  Although drilling intersected only a small section of mineralized breccia, a low-grade porphyry deposit was partially delineated.  As the copper grades were considered sub-economic, Texas Gulf declined to pay a large option payment and returned the property to Tro-Buttle in early 1968.  Canadian Superior Exploration then acquired an option on the property and performed magnetometer, IP, geological and geochemical surveys, followed by a percussion drill program in 1969.  Results were not sufficient for either Canadian Superior or Tro-Buttle to maintain the property, and the property reverted back to the government.


No exploration was conducted at Hearne Hill from 1969 to 1989.  In 1989, prospectors Chapman and Bland staked the property and optioned it to Noranda as part of Noranda’s search for additional ore for processing at the Bell Mine.  Noranda conducted an exploration program on Hearne Hill including a small diamond drill program which succeeded in discovering a small breccia pipe, but the potential copper and gold resource did not meet Noranda’s current requirements and the property option was dropped in 1990.  Chapman and Bland continued to explore the property on their own and continued to drill the breccia pipe.  Results were good, and the property holders were in the process of permitting the property for production when Noranda closed the Bell Mine in April 1992.


In December 1992, Pacific Booker optioned the Hearne Hill property.  In 1993, the Company began its exploration at Hearne Hill with a magnetometer survey, geological mapping, trenching and follow-up percussion drilling.  From 1993 to 1997, the Company completed several phases of exploration on the property, including drilling 143 diamond drill holes.  The Company was successful in discovering the higher-grade Chapman and Bland zones, as well as the lower grade porphyry envelope.  In 1997, the Company engaged Giroux Consultants to prepare a preliminary resource estimate for the project.  Additional drilling will be necessary in order to upgrade the indicated resource to the Proven category for a feasibility study.  Since 1997, Pacific Booker has concentrated most of its exploration efforts on the adjacent Morrison property.  Because the Company is currently focused on the feasibility study at Morrison and the Hearne Hill resource has not been determined to be economic, management wrote down the remaining value of the Hearne Hill property during the fiscal year ended January 31, 2006.



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Item 5.  Operating and Financial Review and Prospects


Overview


The Company's financial statements are stated in Canadian Dollars (C$) and are prepared in accordance with International Financial Reporting Standards for fiscal years ended January 31, 2012 & 2011.  The value of the U.S. Dollar in relationship to the Canadian Dollar was $1.00 as of January 31, 2012.


The Company has since inception financed its activities through the distribution of equity capital.  The Company anticipates having to raise additional funds by equity issuance in the next several years, as all of the Company’s properties are at the exploration stage.  The timing of such offerings is dependent upon the success of the Company’s exploration program and feasibility study as well as the general economic climate.


As a mineral explorer in the Province of British Columbia, the Company was eligible to receive British Columbia Mining Tax Credits for “grass-roots” exploration expenditures.  These credits are a percentage of the Company’s eligible exploration expenditures made each year.  The credits are refundable annually, and application for reimbursement is made along with the Company’s annual Federal tax return.  After a review by the tax authorities, the Canadian Federal government, on behalf of the British Columbia Provincial government, issues a check for those credits.  Since the refund process typically takes about a year, the Company accounts for these tax credits as a Receivable on its balance sheet upon the Company attaining reasonable assurance of collection from the Canadian Federal Government.  At January 31, 2012, the Company had no receivable on its Balance Sheet for the mining tax credit because the exploration work done is no longer considered “grass-roots” exploration.


The Company typically contracts with outside suppliers for the majority of its exploration work.  In order to ensure the availability of these contractors, the Company in the past has maintained cash deposits with some of these suppliers as an advance against anticipated payments for exploration work performed.  The Company accounts for these payments when made as Exploration Advances on its balance sheet.  As these contractors perform the exploration work, the amounts of the advances are deducted from any amounts owed to the contractors and are recorded by the Company as deferred exploration costs.


Results of Operations


Year Ended 1/31/2012 vs. Year Ended 1/31/2011


During the year, the Company continued work on the environmental assessment and permitting requirements on the Morrison project.



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The net loss for the year ended January 31, 2012 was ($3,788,641), or ($0.31) per share, compared to a loss of ($2,119,915), or ($0.18) per share for the year ended January 31, 2011.  The increased loss in the current year included an increase in Share based payment expense (previously called Stock-based Compensation expense) of ($2,877,142) compared to ($1,104,405) in the prior year, with the increase due to an increased cost for stock options granted during the year;  an increase in Filing and transfer agent fees of ($72,236) from ($66,360) in the prior year due to an increase in the TSX fee;  an increase in Directors fees to ($18,500) from ($12,500) in the previous year due to an increase in the number of meetings held;  an increase in Office rent to ($91,705) from ($85,487) in the previous year due to a extension of the existing lease agreement;  a reduction in Professional Fees to ($238,895) from ($313,395) due to less legal fees related the Rescan Civil claim;  a decrease in Office and miscellaneous to ($69,512) from ($81,822) mostly due to a decrease in insurance costs;  a decrease in Shareholder information and promotion to ($74,576) from ($85,949) due to a decrease in outside promotional assistance and a reduction in media costs;  a decrease in Travel costs to ($43,860) from ($46,250) due to the reduction in travel required;  Wages and Benefits and Telephone remained about the same as in Fiscal 2011.


Finance (previously called Interest) income for the year was $11,390 which was lower than the $14,610 recorded in the prior fiscal year due to the decrease in the prime interest rate and the amount of cash held during the current year.  All of the Company’s funds are held by the Company’s chartered bank in Canada, and all deposit certificates currently held are fully redeemable at any time, with the interest rates tied to the prime interest rate of the bank.



Critical Accounting Policies and Estimates


The accounting policies set out below have been applied consistently, to all periods presented in these financial statements.  The significant accounting policies adopted by the Company are as follows:


(a)

Foreign currency translation

The monetary assets and liabilities of the Company that are denominated in foreign currencies are translated to functional currency at the rate of exchange at the reporting date and non-monetary items are translated using the exchange rate at the date of the transaction.  Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions.  Exchange gains and losses arising on translation are included in the statement of profit or loss.


(b)

Cash and cash equivalents

Cash includes cash on hand and demand deposits.  Cash equivalents includes short-term, highly liquid investments that are readily convertible to known amounts of cash and have a maturity date of less than 90 days and are subject to an insignificant risk of change in value.


(c)

Mineral property interests and Exploration and evaluation assets

All costs related to the acquisition of mineral properties are capitalized as Mineral Property interest.  The recorded cost of mineral property interests is based on cash paid and the value of share consideration issued for mineral property interest acquisitions.



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All pre-exploration costs, i.e. costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on an area of interest, are expensed as incurred.  Once the legal right to explore has been acquired, exploration and evaluation expenditures are capitalized in respect of each identifiable area of interest until the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.  Costs incurred include appropriate technical and administrative overheads.  Exploration and evaluation assets are carried at historical cost, less any impairment losses recognized.


When technical feasibility and commercial viability of extracting a mineral resource are demonstrable for an area of interest, the company stops capitalizing exploration and evaluation costs for that area, tests recognized exploration and evaluation assets for impairment and reclassifies any unimpaired exploration and evaluation assets either as tangible or intangible mine development assets according to the nature of the assets.  Mineral properties are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  If, after management review, it is determined that the carrying amount of a mineral property is impaired, that property is written down to its estimated net realizable value.  When a property is abandoned, all related costs are written off to operations.


(d)

Impairment


(i)

Financial assets

Financial assets are assessed at each reporting date to determine whether there is objective evidence that they are impaired.  A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.


An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.  Losses are recognized in profit or loss and reflected in an allowance account against receivables.  Interest on the impaired asset continues to be recognized through the unwinding of the discount.  When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.


(ii)

Non-financial assets

The carrying amounts of equipment are reviewed at each reporting date to determine whether there is any indication of impairment.



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The carrying amounts of mining properties and exploration and evaluation assets are assessed for impairment only when indicators of impairment exist, typically when one of the following circumstances applies:

·

Exploration rights have / will expire in the near future;

·

No future substantive exploration expenditures are budgeted;

·

No commercially viable quantities discovered and exploration and evaluation activities will be discontinued;

·

Exploration and evaluation assets are unlikely to be fully recovered from successful development or sale.  If any such indication exists, then the asset’s recoverable amount is estimated.


Mining properties and exploration and evaluation assets are also assessed for impairment upon the transfer of exploration and evaluation assets to development assets regardless of whether facts and circumstances indicate that the carrying amount of the exploration and evaluation assets is in excess of their recoverable amount.


The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU").  The level identified by the group for the purposes of testing exploration and evaluation assets for impairment corresponds to each mining property.


An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.  Impairment losses are recognized in profit or loss.  Impairment losses recognized in respect of CGUs are allocated to the assets in the unit (group of units) on a pro rata basis.


Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.  An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.  An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.



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(e)

Restoration and close down provision

The Company records the present value of estimated costs of legal and constructive obligations required to restore locations in the period in which the obligation is incurred with a corresponding increase in the carrying value of the related mining asset.  The obligation is generally considered to have been incurred when mine assets are constructed or the ground environment is disturbed at the production location.  The discounted liability is adjusted at the end of each period to reflect the passage of time, based on the discount rates that reflect current market assessments and the risks specific to the liability, and changes in the estimated future cash flows underlying the obligation.


The Company also estimates the timing of the outlays, which is subject to change depending on continued operation or newly discovered reserves.


The periodic unwinding of the discount is recognized in earnings as a finance cost.  Additional disturbances or changes in restoration costs will be recognized as changes to the corresponding assets and asset retirement obligation when they occur.


The Company has determined that it has no restoration obligations as at January 31, 2012.


(f)

Equipment, vehicles and furniture

Equipment, vehicles and furniture are recorded at cost.  Depreciation is calculated on the residual value, which is the historical cost of an asset less the allowances made.  Depreciation methods, useful life and residual value are reviewed at each financial year-end and adjusted, if appropriate.  Where an item of equipment, vehicles and furniture is comprised of major components with different useful lives, the components are accounted for as separate items.  The Company currently provides for depreciation annually as follows:


 

Automobile

30% declining balance

 

Computer equipment

30% to 45% declining balance

 

Office furniture and equipment

20% declining balance

 

Trailers

30% declining balance


(g)

Share based payments

The Company has an equity settled share based compensation plan that grants stock options to buy common shares of the Company to directors, officers, employees and consultants.  The fair value of stock options is estimated at the grant date, using the Black-Scholes option pricing model and recorded as share based payments expense in statement of profit and loss and credited to contributed surplus within shareholders’ equity, over the vesting period of the stock options, based on the Company’s estimate of the number of stock options that will eventually vest.



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(h)

Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments.  Under this method, the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments.  It assumes that the proceeds would be used to purchase common shares at the average market price during the year.  The weighted average number of common shares outstanding for the period ended January 31, 2012 do not include the nil (2011 – nil) warrants outstanding and the 2,198,057 (2011 – 2,008,057) stock options outstanding as the inclusion of these amounts would be anti-dilutive.  Basic loss per share is calculated using the weighted-average number of common shares outstanding during the period.


(i)

Income taxes

Income tax expense comprises current and deferred income tax.  Income tax is recognized in the statement of comprehensive loss except to the extent it relates to items recognized in other comprehensive income or directly in equity.


(i)

Current income tax

Current income tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current income tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period.  Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.  Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.


(ii)

Deferred income tax

Deferred income taxes are the taxes expected to be payable or recoverable between the carrying amounts of assets in the statement of financial position and their corresponding tax bases used in the computation of taxable profit, and are accounted for using the statement of financial position liability method.  Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases.  Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized.  Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.



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Deferred income tax liabilities:

·

are generally recognized for all taxable temporary differences;

·

are recognized for taxable temporary differences arising on investments in subsidiaries except where the reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future; and

·

are not recognized on temporary differences that arise from goodwill which is not deductible for tax purposes.


Deferred income tax assets:

·

are recognized to the extent it is probable that taxable profits will be available against which the deductible temporary differences can be utilized; and

·

are reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of an asset to be recovered.


(j)

Financial Instruments


(i)

Financial assets

The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired.  Management determines the classification of its financial assets at initial recognition.


Fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition.  Financial assets at fair value through profit or loss are initially recognized at fair value with changes in fair value recorded through the statement of comprehensive loss.  Cash and cash equivalents are included in this category of financial assets.


Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  They are classified as current assets or non-current assets based on their maturity date, and are carried at amortized cost, using the effective interest method, less any impairment.  Loans and receivables are comprised of amounts receivable and security deposits and due from related parties.


All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date.  Financial assets are impaired when there is any objective evidence that a financial asset or group of financial assets is impaired.  Different criteria to determine impairment are applied for each category of financial assets, which are described above.


Financial assets are de-recognized when the contractual rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred.



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Gains or losses related to impairment or de-recognition are recognized in the statement of comprehensive loss in the period in which they occur.


(ii)

Financial liabilities

The Company classifies its financial liabilities as other financial liabilities.  Management determines the classification of its financial liabilities at initial recognition.  Other financial liabilities are non-derivatives and are recognized initially at fair value, net of transaction costs incurred and are subsequently stated at amortized cost.  Any difference between the amounts originally received, net of transaction costs, and the redemption value is recognized in the profit and loss statement over the period to maturity using the effective interest method.


Other financial liabilities include accounts payable and accrued liabilities, convertible debentures, and long term debt.


Financial liabilities are classified as current liabilities if payment is due within one year or less.  If not, they are presented as non-current liabilities.


(k)

Equity Instruments

Equity instruments issued by the Company are recorded at the proceeds received net of direct issuance costs.


(l)

Leases

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.  Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.  Leases in terms of which the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases, which are recognised as an expense on a straight-line basis over the lease term.


(m)

Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.  Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability.  The unwinding of the discount is recognized as a finance cost.


(n)

Finance costs

Finance costs comprise interest expense on borrowings and unwinding of the discount on provisions. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in the income statement using the effective interest method.



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TRANSITION TO IFRS


For all periods up to and including January 31, 2011, the Company prepared its financial statements in accordance with Canadian GAAP. These financial statements for the year ended January 31, 2012 are the first annual financial statements the Company has prepared in accordance with IFRS as in effect as at January 31, 2012, as detailed in the accounting policies described in Note 3.  In preparing these financial statements, the Company's opening statement of financial position was prepared as at February 1, 2010, the Company's date of transition to IFRS.


IFRS 1 First-time Adoption of International Financial Reporting Standards sets forth guidance for the initial adoption of IFRS.  Under IFRS 1 the standards are applied retrospectively at the transitional statement of financial position date with all adjustments to assets and liabilities taken to deficit unless certain exemptions are applied.


This note explains the principal adjustments made by the Company in restating its Canadian GAAP consolidated statements of financial position as at February 1, 2010 and its previously published Canadian GAAP financial statements for the year ended January 31, 2011.


The transition from Canadian GAAP to IFRS had no impact on cash flows generated by the Company.  Therefore, a reconciliation of cash flows has not been presented.


(a)  

IFRS transition elections


The Company has elected to apply the following optional exemptions from full retrospective application:


(i)

Share-based payments

IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2, Share-based Payments ("IFRS 2"), to equity instruments that were granted on or before November 7, 2002, or equity instruments granted after November 7, 2002 and vested before the later of the date of transition to IFRS and January 1, 2005.  The Company has elected to avail itself of the exemption provided under IFRS 1 and has not applied IFRS 2 for all equity instruments granted after November 7, 2002 that had not vested by its transition date.


Under Canadian GAAP, awards with graded vesting provisions are treated as a single award for both measurement and recognition purposes.  IFRS 2 requires that such awards be treated as a series of separate grants, with fair value measured and recognized separately for each tranche within a grant that has a different vesting date



- 50 -



The adjustments for IFRS 2 on the share based payments (previously called stock based compensation expense) and contributed surplus results in a change of balances as follows:


 

 


Contributed

Surplus

increase/(decrease)


Operating expense/

Deficit

(increase)/decrease

 

For periods ended January 31, 2010

$           329,275

$          (329,275)

 

Impact for period ended January 31, 2011

169,207

(169,207)

 

As at January 31, 2011

$           498,482

$          (498,482)



(ii)

Property, plant and equipment

IAS 16 provides the option for an entity to use the cost model for the valuation of property, plant, and equipment, or the revaluation model. The revaluation model requires the restatement of property, plant and equipment to fair market values on an annual basis. The Company has elected to use the cost model for valuation.


IFRS 1 also outlines specific guidelines that a first-time adopter must adhere to under certain circumstances.  The Company has applied the following guidelines to its opening statement of financial position dated February 1, 2010:


(iii)

Estimates

In accordance with IFRS 1, an entity's estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under previous GAAP, unless there is objective evidence that those estimates were in error. The Company's IFRS estimates as of February 1, 2010 are consistent with its Canadian GAAP estimates for the same date.



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Reconciliation of statement of financial position as at February 1, 2010


 

 

Canadian

GAAP

as at

February 1,

2010



Effect of

Transition to

IFRS





IFRS

 

 

 

 

 

 

ASSETS

 

 

 

 

Current Assets

$     3,459,576

$                 -

$    3,459,576

 

Mineral property interests

4,832,500

 

4,832,500

 

Exploration and evaluation assets

20,788,465

 

20,788,465

 

Equipment, vehicles and furniture

89,415

 

89,415

 

Reclamation deposits

123,600

 

123,600

 

 

 

 

 

 

Total assets

$   29,293,556

$                -  

$  29,293,556

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

$        606,163

$                 -

$       606,163

 

Amounts owing to related parties

22,873

 

22,873

 

 

 

 

 

 

 

629,036

-  

629,036

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

Share Capital

45,489,248

 

45,489,248

 

Contributed surplus (i)

4,984,847

329,275

5,314,122

 

Deficit (i)

(21,809,575)

(329,275)

(22,138,850)

 

 

 

 

 

 

 

28,664,520

 -  

28,664,520

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$   29,293,556

$                -  

$  29,293,556


(i)

Under Canadian GAAP, the Company recognized an expense related to share-based payments on a straight-line basis through the date of full vesting.  Under IFRS, the Company is required to recognize the expense over the individual vesting periods for the graded vesting awards.



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Reconciliation of statement of financial position as at January 31, 2011


 

 


Canadian

GAAP

as at

January 31,

2011




Effect of

Transition to

IFRS






IFRS

 

 

 

 

 

 

ASSETS

 

 

 

 

Current assets

$    1,911,368

$              -  

$    1,911,368

 

Mineral property interests

4,832,500

 

4,832,500

 

Exploration and evaluation assets

22,664,614

 

22,664,614

 

Equipment, vehicles and furniture

63,708

 

63,708

 

Reclamation deposits

123,600

 

123,600

 

 

 

 

 

 

Total assets

$   29,595,790

$              -  

$  29,595,790

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

$       355,451

$               -

$       355,451

 

Amounts owing to related parties

27,329

 

27,329

 

 

 

 

 

 

 

382,780

-  

382,780

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

Share Capital

47,367,605

 

47,367,605

 

Contributed surplus (i)

5,605,688

498,482

6,104,170

 

Deficit (i)

(23,760,283)

(498,482)

(24,258,765)

 

 

 

 

 

 

 

29,213,010

 -  

29,213,010

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$   29,595,790

$              -  

$  29,595,790


(i)

Under Canadian GAAP, the Company recognized an expense related to share-based payments on a straight-line basis through the date of full vesting.  Under IFRS, the Company is required to recognize the expense over the individual vesting periods for the graded vesting awards.



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Reconciliation of statement of comprehensive loss for the year ended January 31, 2011


 

 


Canadian

GAAP

as at

January 31,

2011




Effect of

Transition to

IFRS






IFRS

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

Consulting fees-Share based payments (i)

$     211,290

$      15,390

$     226,680

 

Depreciation

29,115

 -  

29,115

 

Directors fees

12,500

 -  

12,500

 

Directors fees-Share based payments (i)

446,285

105,103

551,388

 

Filing and transfer agent fees

66,360

 -  

66,360

 

Foreign exchange (gain)loss

7,102

 -  

7,102

 

Finance income

(14,610)

 -  

(14,610)

 

Investor relations–related party

255,864

 -  

255,864

 

Investor relations fees-Share based payments (i)

239,301

38,414

277,715

 

Office and miscellaneous

81,822

 -  

81,822

 

Office rent

85,487

 -  

85,487

 

Professional fees

313,395

 -  

313,395

 

Professional fees-Share based payments (i)

33,887

9,534

43,421

 

Shareholder information and promotion

85,949

 -  

85,949

 

Telephone

17,542

 -  

17,542

 

Travel

46,250

 -  

46,250

 

Wages and benefits

28,734

 -  

28,734

 

Wages and benefits-Share based payments (i)

4,435

766

5,201

 

 

 

 

 

 

Loss from operations

(1,950,708)

(169,207)

(2,119,915)

 

 

 

 

 

 

Income tax expense

-  

-  

-  

 

 

 

 

 

 

Loss and comprehensive loss for the year

(1,950,708)

(169,207)

(2,119,915)


(i)

Under Canadian GAAP, the Company recognized an expense related to share-based payments on a straight-line basis through the date of full vesting.  Under IFRS, the Company is required to recognize the expense over the individual vesting periods for the graded vesting awards.



Liquidity and Capital Resources


The Company’s working capital position as of January 31, 2012, the end of the most recent fiscal year, was $470,464.  Subsequent to the year end through May 1st, the Company has issued 15,000 common shares pursuant to the exercise of stock options, but has not issued any common shares pursuant to the exercise of warrants.  Combined with the Company’s current working capital, the funds raised by the anticipated exercises of options are expected to be sufficient for the fiscal 2013 unless the Company does begin the planning and or construction phase of the Morrison project.  Budgeted amounts of $600,000 for the ongoing work on the Morrison project and fiscal 2013’s estimated General and Administrative expenses of $3,500,000 (of which approximately $2,500,000 are non cash items).



- 54 -



Although the Company expects to have sufficient working capital for its planned property expenditures and general and administrative expenses for fiscal 2013, the Company has no cash flow from operations, and additional funds will likely be required for fiscal 2013 when the Company proceeds with the next phase in the Morrison project.  The Company’s ability to continue as a going concern depends upon its ability to raise additional funds to meet its business objectives.  If the Company is unable to raise additional funds to meet its requirements, it may be forced to suspend the work process, or cease operations altogether.


Additional funding will be necessary to fund any development on the Morrison Project.  Specific funding requirements are dependent upon the mine plans of the feasibility study and at this time management cannot predict the amount of funds needed or the timing of any equity and/or debt financings.


The Company has financed its operations through the issuance of common shares. The following private placements have been completed in the last 5 fiscal years.


Table No. 4

Private Placements


Fiscal Year

Ended

January 31



Type of Share Issuance

Number of

Common Shares

Issued



Price



Total Proceeds

 

 

 

 

 

2008

None

Nil

Nil

Nil

 

 

 

 

 

2009

None

Nil

Nil

Nil

 

 

 

 

 

2010

None

Nil

Nil

Nil

 

 

 

 

 

2011

None

Nil

Nil

Nil

 

 

 

 

 

2012

None

Nil

Nil

Nil

 

 

 

 

 


Year Ended January 31, 2012


The Company’s Working Capital as of January 31, 2012 was $470,464.  During the year, Operating Activities used cash of ($870,451).  In addition to the fiscal year’s net loss of ($3,788,641), other non-cash charges included Stock-based Compensation of ($2,877,142) and Amortization of $20,007.  Changes in non-cash working capital items included decrease in Receivables of $33,224, decrease in amounts owing to related parties of ($5,024), decrease in Prepaids and Deposits of $1,089, and decrease in Accounts Payable and Accrued Liabilities of ($8,248).  Investing Activities used cash of ($1,246,578), which included cash used for Deferred Exploration of ($1,248,137), and disposal of Equipment, Vehicles or Furniture of $1,559.  Financing Activities provided cash of $964,750, with the entire amount from the Issuance of Capital Stock.


During the year, the Company issued 181,000 common shares. pursuant to the exercise of stock options for proceeds of $964,750.



- 55 -


Year Ended January 31, 2011


The Company’s Working Capital as of January 31, 2011 was $1,528,588.  During the year, Operating Activities used cash of ($965,130).  In addition to the fiscal year’s net loss of ($1,950,708), other non-cash charges included Stock-based Compensation of ($935,198) and Amortization of $29,115.  Changes in non-cash working capital items included decrease in Receivables of ($12,919), increase in amounts owing to related parties of $4,713, increase in Prepaids and Deposits of $8,035, and increase in Accounts Payable and Accrued Liabilities of $11,668.  Investing Activities used cash of ($2,142,194), which included cash used for Deferred Exploration of ($2,137,956), and Purchase of Equipment, Vehicles or Furniture of ($4,238).  Financing Activities provided cash of $1,564,000, with the entire amount from the Issuance of Capital Stock.


During the year, the Company issued 380,000 common shares. pursuant to the exercise of stock options for proceeds of $1,564,000.


Variation in Operating Results


The Company derives finance (previously called interest) income on its bank deposits, which depend on the Company's ability to raise funds.


Management periodically, through the exploration process, reviews results both internally and externally through mining related professionals.  Decisions to abandon, reduce or expand exploration efforts is based upon many factors including general and specific assessments of mineral deposits, the likelihood of increasing or decreasing those deposits, land costs, estimates of future mineral prices, potential extraction methods and costs, the likelihood of positive or negative changes to the environment, permitting, taxation, labor and capital costs.  There cannot be a pre-determined hold period for any property as geological or economic circumstances render each property unique.


The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with International Financial Reporting Standards for fiscal years ended January 31, 2012 & 2011. The value of the Canadian Dollar in relationship to the US Dollar was $1.00 as of January 31, 2012.


Research and Development


The Company conducts no Research and Development activities, nor is it dependent upon any patents or licenses.


Trend Information


The Company knows of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s operations or financial condition.



- 56 -



Off-Balance Sheet Arrangements


Under the Agreement with Noranda (now Falconbridge Ltd., a unit of Xstrata Plc.) dated April 19, 2004, the Company is obligated to issue 250,000 common shares at a minimum fair-value of $1,000,000 to Falconbridge on or before commencement of commercial production.  If at the time of issuance the Company’s common share price is below $4.00 per share, the Company is obligated to pay, in cash, the difference between $1,000,000 and the value of the 250,000 common shares issued.  This amount is figured by the average trading price which is less than $4.00 per share multiplied by 250,000 common shares.


The Company has signed an agreement with a hunting lodge in the area of the project, which, conditional on the receipt of applicable permits and licences, requires the Company to pay $100,000 (plus sales tax if required) as full and final compensation for any loss of business which the lodge may suffer in connection with the construction, development and overall operation of the mine.  This payment is required to be made three months prior to commencement of construction.



Tabular Disclosure of Contractual Obligations


The Company currently owns a 100% interest in the Morrison Property.  The Company’s remaining contractual obligation to Falconbridge is to issue 250,000 common shares at a minimum fair-value of $1,000,000 to Falconbridge on or before commencement of commercial production as discussed under “Off-balance Sheet Arrangement” above.


The Company leases its Vancouver office, which runs through October 31, 2012.


Table No. 5

Contractual Obligations

As of February 1, 2012


 

 

Payments due by period

 

 

 

 

 

 

 

 

 

 

 



Total

less

than 1

 year


1 – 3

years


3 – 5

 Years

more

 than 5

 years

 

 

 

 

 

 

 

 

 

Long-Term Debt Obligations

 

None

None

None

None

None

 

Capital Lease Obligations

 

None

None

None

None

None

 

Operating Lease Obligations

 

$67,318

$67,318

None

None

None

 

Purchase Obligations

 

None

None

None

None

None

 

Other Long-Term Liabilities

 

None

None

None

None

None



- 57 -



Item 6.  Directors, Senior Management and Employees


Table No. 6 lists as of May 1, 2012 the names of the Directors of the Company.  The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.  At the Annual and Extra-Ordinary General Meeting of Shareholders held on May 30, 2011, all the Directors were reelected for the next year.  All Directors are citizens of Canada except Gregory Anderson, Mark Gulbrandson, and Dr. Dennis Simmons, who are citizens of the United States.


Table No. 6

Directors


 

Name

Age

Date First Elected/Appointed

 

Gregory Anderson

56

June 24, 2005

 

William Deeks

79

March 17, 1997

 

Mark Gulbrandson

59

June 24, 2005

 

John J. Plourde

68

December 30, 1999

 

Dr. Dennis Simmons

60

November 29, 2006

 

Erik Tornquist

64

June 24, 2005

 

William F. Webster

68

June 24, 2005


Table No. 7 lists, as of May 1, 2012, the names of the Executive Officers of the Company.  The Executive Officers serve at the pleasure of the Board of Directors.  All Executive Officers are citizens of Canada except Gregory Anderson, who is a citizen of the United States.


Table No. 7

Executive Officers


 

Name

Position

Age

Date of Appointment

 

Gregory Anderson

President and CEO

56

June 24, 2005

 

Ruth Swan

Chief Financial Officer

55

April 20, 2006


Gregory Anderson was named President, Chief Executive Officer and a Director of the Company at the Annual & General Meeting held on June 24, 2005.  Mr. Anderson’s background includes corporate finance, investment and brokerage experience, including the last 23 years in mining company finance.  From 1997 until his appointment as an officer and director with the Company, he owned GR Consulting, a private corporate consulting business, and assisted the Company with corporate finance and investor relations.  Mr. Anderson spends approximately 100% of his time on the Company’s affairs.


Ruth Swan was named Chief Financial Officer of the Company on April 20, 2006.  She has over 25 years of bookkeeping experience, with more than 20 years in the resource sector.  She has operated a bookkeeping service since 1986 and since 1996 has provided bookkeeping & financial reporting services to Pacific Booker, and spends approximately 60% of her time on the Company’s affairs.



- 58 -



William Deeks, B.A.Sc., P.Eng., has extensive experience in the mining industry.  He is a former senior vice-president of Noranda, Inc. and retired from Noranda in 1992 as Senior Vice-President, Global Business, although he continued as a part-time consultant for Noranda for International Affairs until 1996.  He is a past Chairman of the Business Industry Advisory Committee to the Organization for Economic Cooperation and Development, Paris and Chairman of Charles Tennant & Company (Canada) Limited, a chemical distributor.  He also serves as the Company’s representative to the Mining Association of Canada, and served on the Association’s 2004 “Towards Sustainable Mining (TSM) Governance” Committee, and was Chair of the 2005 “Trade Policy” Committee.  Mr. Deeks is retired, but spends approximately 20% of his equivalent time on the Company’s affairs.


Mark Gulbrandson is the Owner and Chief Executive Officer of Apple Auto Group, a multi-location car dealership located in the Twin Cities area of Minnesota.  Mr. Gulbrandson has owned Apple Auto since 1993.  It currently employs over 300 people and is one of the top 100 Ford dealers in the United States.  Mr. Gulbrandson spends approximately 10% of his time on the Company’s affairs, with the remainder of his time spent on Apple Auto Group business.


John Plourde has over 30 years of investor relations and fund raising experience with various public companies.  Mr. Plourde handles investor relations for the Company.  Mr. Plourde spends approximately 100% of his time on the Company’s affairs.


Dr. Dennis Simmons is Dentist in private practice, General Dentistry.  He received his BS, D.D.S from the University of Minnesota in 1972.  He is a member of the American Dental Association, Academy of General Dentistry, American Academy of Cosmetic Dentistry, American Academy of Implant Dentistry, International Congress of Oral Implantology, and Academy of Laser Dentistry.  Dr. Simmons spends approximately 5% of his time on the Company’s affairs.


Erik A. Tornquist is an Applied Science Technologist with over 30 years of experience in Natural Gas Operations, Engineering, International Project Management, Human Resources and Training.  He has held various management positions with Terasen Gas and Terasen International, most recently as Vice-President of Human Resources and Training for Canadian Energy Services in the Sultanate of Oman.  Mr. Tornquist has completed the PUBCO course for establishing and managing public companies at Simon Fraser University.  He is currently working on the Company’s Morrison project, and devotes approximately 100% of his time to the Company’s affairs.


William F. Webster has 40 years of experience in financial management, investment sales and corporate finance.  He held financial positions with several major Canadian bank and brokerage firms from 1965 to 1997.  Since 1997, he has been self-employed with his own private companies, including market investor, resource developer and property manager.  He devotes approximately 5% of his time to the Company’s affairs, with the remainder of his time spent on his self-employed business pursuits.



- 59 -



No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.


There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he was selected as a Director or Executive Officer.  No members of the Board of Directors are related.


COMPENSATION


At the Annual Meeting held on June 26, 2006, the Company agreed to compensate those directors “not actively involved” with Company operations $500 per meeting which they attend, retroactive to June 24, 2005, in their capacity as Directors.  Certain Directors have been compensated for consulting and expert services during the most recently completed fiscal year.


At the Company’s Annual and Extra-Ordinary General Meeting of Shareholder’s held on May 30, 2011, shareholders approved the adoption of the Company’s new Stock Option Plan dated 2011 (the “Plan”).  The purpose of the Plan is to assist the Company in compensating, attracting, retaining and motivating personnel, including directors, officers and service providers.  The Plan is discussed in ITEM #10, "Stock Options".



- 60 -



Table No. 8 sets forth the compensation paid to the Company’s executive officers and members of its administrative body during the last three fiscal years.


Table No. 8

Summary Compensation Table

All Figures in Canadian Dollars unless otherwise noted




Name

Fiscal

Year


Salary


Options Granted

Directors’

Fees


Other Compensation

 

 

 

 

 

 

Gregory Anderson

CEO, President and Director

2012

2011

2010

None

None

None

128,400

49,400

20,000

None

None

None

$  118,804 (1)

$  123,864 (1)

$  135,910 (1)

 

 

 

 

 


William Deeks

Chairman and Director

2012

2011

2010

None

None

None

101,500

49,400

20,000

$5,000

$3,000

$3,500

None

None

None

 

 

 

 

 


Ruth Swan,

Chief Financial Officer

and Corporate Secretary

2012

2011

2010

None

None

None

71,827

14,900

10,000

N/A

N/A

N/A

$    30,893 (2)

$    31,913 (2)

$    28,208 (2)

 

 

 

 

 


John Plourde,

Director

2012

2011

2010

None

None

None

136,800

49,400

20,000

None

None

None

$  132,000 (3)

$  132,000 (3)

$  132,000 (3)

 

 

 

 

 

 

Mark Gulbrandson,

Director

2012

2011

2010

None

None

None

101,500

49,400

20,000

$5,000

$3,000

$3,500

None

None

None

 

 

 

 

 

 

Dr. Dennis Simmons,

Director

2012

2011

2010

None

None

None

201,500

49,400

20,000

$3,500

$3,000

$3,500

None

None

None

 

 

 

 

 

 

Erik Tornquist,

Director

2012

2011

2010

None

None

None

136,800

49,400

20,000

None

None

None

$    96,000 (4)

$    96,000 (4)

$  116,000 (4)

 

 

 

 

 

 

William Webster,

Director

2012

2011

2010

None

None

None

101,500

49,400

20,000

$5,000

$3,500

$3,500

None

None

None


(1)

The “Other Compensation” for Gregory Anderson, President and CEO, is for investor relations services performed for the Company.

(2)

The “Other Compensation” for Ruth Swan, Chief Financial Officer, is for accounting and management services.

(3)

The “Other Compensation” listed for John Plourde, Director, relates to investor relations work performed for the Company.

(4)

The “Other Compensation” listed for Erik Tornquist, Director, is for consulting services related to the Feasibility Study on the Morrison project.


No funds were set aside or accrued by the Company during Fiscal 2012 to provide pension, retirement or similar benefits for Directors or Executive Officers.



- 61 -



Staffing


The Company currently has one employee and 2 executive officers.  The Company’s employee is a Receptionist/Office Assistant in the Vancouver office who provides reception and clerical assistance.


The Company contracts for certain services, including investor relations and bookkeeping, as well as exploration personnel and camp support services, as needed.


Share Ownership


The Registrant is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Registrant is not controlled by another corporation as described below.


Table No. 9 lists, as of May 1, 2012, Directors and Executive Officers who beneficially own the Registrant's voting securities and the amount of the Registrant's voting securities owned by the Directors and Executive Officers as a group.


Table No. 9

Shareholdings of Directors and Executive Officers


 


Title

of

Class




Name of Beneficial Owner

Amount and

Nature

of Beneficial

Ownership


Percent

of

Class

 

 

 

 

 

 

Common

Gregory Anderson (1)

458,850

3.69%

 

Common

Ruth Swan (2)

126,865

1.03%

 

Common

William Deeks (3)

375,645

3.03%

 

Common

Mark Gulbrandson (4)

473,330

3.82%

 

Common

John Plourde (5)

833,579

6.70%

 

Common

Dennis Simmons (6)

690,389

5.54%

 

Common

Erik Tornquist (7)

454,660

3.65%

 

Common

William Webster (8)

472,330

3.81%

 

 

 

 

 

 

 

Total Directors/Officers

3,885,648

28.66%


(1)

Of these shares, 226,100 represent currently exercisable share purchase options.  An additional 64,200 options have been granted but not yet vested.

(2)

Of these shares, 70,843 represent currently exercisable share purchase options.  An additional 35,914 options have been granted but not yet vested.

(3)

Of these shares, 190,150 represent currently exercisable share purchase options.  An additional 50,750 options have been granted but not yet vested.

(4)

Of these shares, 190,150 represent currently exercisable share purchase warrants.  An additional 50,750 options have been granted but not yet vested.

(5)

Of these shares, 230,300 represent currently exercisable share purchase options.  An additional 68,400 options have been granted but not yet vested.



- 62 -



(6)

Of these shares, 240,150 represent currently exercisable share purchase options.  An additional 100,750 options have been granted but not yet vested.

(7)

Of these shares, 230,300 represent currently exercisable share purchase options.  An additional 68,400 options have been granted but not yet vested.

(8)

Of these shares, 190,150 represent currently exercisable share purchase options.  An additional 50,750 options have been granted but not yet vested.

.

#   Based upon 12,216,289 shares outstanding as of May 1, 2012 and stock options and warrants held by each beneficial holder exercisable within sixty days as detailed in Table Number 12, “Stock Options Outstanding” below.


Board Practices


The Board of Directors currently has 4 committees.  These are the Audit and Finance Committee, the Corporate Governance Committee, the Disclosure Committee, and the Compensation Committee.


The Audit and Finance Committee assists the Board in fulfilling its responsibility for the oversight and quality and integrity of the accounting, auditing, reporting practices, systems of internal accounting and financial controls, the annual independent audit, and the legal and compliance and ethics programs of the CFO as established by management and the Board.  The Committee is required to meet once per quarter, and shall consist of at least three directors, the majority of whom will be non-officers.  The Committee currently consists of William Deeks, Mark Gulbrandson, Dennis Simmons, and William Webster.


The Corporate Governance Committee identifies individuals qualified to become board members, recommend director nominees for each annual meeting, recommend to the Board a set of corporate governance standards in the conduct and the business and affairs of the Company, and develop and oversee the annual Board and Board Committee evaluation process.  The Committee shall consist of at least 2 Directors, and currently consists of William Deeks, Mark Gulbrandson, Dennis Simmons, and William Webster.


The Disclosure Committee reviews the required disclosure documents and that the Company is meeting all applicable disclosure rules and regulations within the time periods specified.  The Committee’s duties include the review and completion of the Form 20-F Annual Report to be filed 4 months after the Company’s fiscal year end.  The Disclosure Committee currently consists of William Webster and John Plourde.


The Compensation Committee recommends and reviews the amount of compensation paid to management and directors.  The Committee also administers the equity compensation plans and proposes the granting of incentive stock options for review and approval by the Board.  The Committee prepares the report on annual compensation for the proxy statement and any other report required by law.  The Compensation Committee currently consists of William Deeks, Mark Gulbrandson, Dennis Simmons, and William Webster.



- 63 -



Item 7.  Major Shareholders and Related Party Transactions


The Company is aware of two persons/companies who beneficially own 5% or more of the Registrant's voting securities. Table No. 10 lists as of May 1, 2012, the persons and/or companies holding 5% or more beneficial interest in the Company’s outstanding common stock.


Table No. 10

5% or Greater Shareholders


 


Title

of

Class




Name of Beneficial Owner

Amount and

Nature

of Beneficial

Ownership


Percent

of

Class

 

 

 

 

 

 

Common

John Plourde (1)

833,579

6.70%

 

Common

Dennis Simmons (2)

690,389

5.54%


(1)

Of these shares, 230,300 represent currently exercisable share purchase options.  An additional 68,400 options have been granted but not yet vested.

(2)

Of these shares, 240,150 represent currently exercisable share purchase options.  An additional 100,750 options have been granted but not yet vested.


Based on 12,216,289 shares outstanding as of May 1, 2012 and stock options and warrants held by each beneficial holder exercisable within sixty days.


No shareholders of the Company have different voting rights from any other shareholder.


INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS


Gregory Anderson, President, CEO and Director, was paid $118,804 in fiscal 2012 (2011 - $123,864; 2010 - $135,910) for investor relations activities.  


Erik Tornquist, Director, was paid $96,000 in fiscal 2012 (2011 - $96,000; 2010 - $96,000) for consulting services on the Morrison Project.  During Fiscal 2010, he also received a $20,000 bonus.


Guo-rong Wang, spouse of Erik Tornquist, Director, was paid $312 in fiscal 2012 (2011 - $1,092; 2010 - $780) as an Administrative Assistant.


John Plourde, Director, was paid $132,000 in fiscal 2012 (2011 - $132,000; 2010 - $132,000) for Investor Relations activities.



- 64 -



Item 8.  Financial Information


The financial statements as required under ITEM #8 are attached hereto and found immediately following the text of this Annual Report.  The audit report of MNP LLP (formerly Meyers Norris Penny LLP), Chartered Accountants, is included herein immediately preceding the financial statements and schedules.


There have been no significant changes of financial condition since the most recent financial statements dated January 31, 2012, other than described below:


During Fiscal 2013 (up to and including May 1st), the Company has issued 15,000 common shares pursuant to the exercise of stock options for proceeds of $105,750


Item 9.  Offer and Listing of Securities


As of January 31, 2012, the authorized capital of the Company consisted of 100,000,000 common shares.  There were 12,216,289 common shares issued and outstanding as of May 1, 2012.


NATURE OF TRADING MARKET


The Company's common shares are issued in registered form and the following information is taken from the records of Computershare Trust Company of Canada.  Computershare is located at 510 Burrard Street, 3rd Floor, Vancouver, British Columbia, V6C 3B9.

 

On April 30, 2012,  the shareholders' list for the Company's common shares showed 99 registered shareholders, including depositories, and 12,216,289 shares issued and outstanding.  Of the total shareholders, 58 are resident in Canada holding 8,348,645 common shares representing 68.34% of the total shares outstanding; 41 shareholders are resident in the United States holding 3,867,644, or 31.66% of the total shares outstanding; and no shareholders are resident in other nations.


The Company's common shares are not registered to trade in the United States in the form of American Depository Receipts (ADR's) or similar certificates.


The Company has not declared any dividends on its common shares for the last five years and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.


The Company's common shares trade on the TSX Venture Exchange in Vancouver, British Columbia, Canada under the stock symbol is “BKM”, and on the NYSE Amex Stock Exchange in New York, New York, under the symbol “PBM”.  The CUSIP number is 69403R108.



- 65 -



Table No. 11a lists the volume of trading and high, low and closing sales prices on the TSX Venture Exchange for the Company's common shares for the last sixteen fiscal quarters.  There have been no significant trading suspensions of the Company’s common stock during the prior three years.


Table No. 11a

TSX Venture Exchange

Common Shares Trading Activity


 

 

- Sales -

 

 

Canadian Dollars

 

Period

High

Low

Close

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 2012

$ 15.00

$   9.10

$ 11.05

 

March 2012

$   9.40

$   8.47

$   9.25

 

February 2012

$   9.25

$   8.11

$   8.45

 

January 2012

$   9.25

$   8.04

$   9.25

 

 

 

 

 

 

Three Months Ended   4/30/12

$ 15.00

$   8.11

$ 11.05

 

Three Months Ended   1/31/12

$   9.59

$   7.60

$   9.25

 

Three Months Ended   10/31/11

$ 10.00

$   7.10

$   8.50

 

Three Months Ended   7/31/11

$   8.65

$   6.90

$   8.53

 

 

 

 

 

 

Three Months Ended   4/30/11

$   9.30

$   7.21

$   7.50

 

Three Months Ended   1/31/11

$ 10.12

$   8.40

$   9.05

 

Three Months Ended 10/31/10

$   9.25

$   7.06

$   9.20

 

Three Months Ended   7/31/10

$   8.75

$   6.85

$   7.66

 

 

 

 

 

 

Three Months Ended   4/30/10

$ 10.00

$   5.80

$   8.70

 

Three Months Ended   1/31/10

$   8.28

$   6.06

$   6.75

 

Three Months Ended 10/31/09

$   8.45

$   5.74

$   8.20

 

Three Months Ended   7/31/09

$   6.99

$   5.01

$   6.26

 

 

 

 

 

 

Three Months Ended   4/30/09

$   7.25

$   5.40

$   5.90

 

Three Months Ended   1/31/09

$   6.70

$   3.87

$   6.70

 

Three Months Ended 10/31/08

$   7.04

$   3.23

$   4.15

 

Three Months Ended   7/31/08

$   8.87

$   6.20

$   6.85

 

 

 

 

 

 

Three Months Ended   4/30/08

$ 11.10

$   8.25

$   8.75

 

Three Months Ended   1/31/08

$ 12.09

$   9.50

$ 10.70

 

Three Months Ended 10/31/07

$ 13.00

$   9.75

$ 11.50

 

Three Months Ended   7/31/07

$ 12.21

$   9.10

$ 11.15

 

 

 

 

 

 

Fiscal Year Ended 1/31/12

$ 10.00

$   6.90

$   9.25

 

Fiscal Year Ended 1/31/11

$ 10.12

$   5.80

$   9.05

 

Fiscal Year Ended 1/31/10

$   8.45

$   5.01

$   6.75

 

Fiscal Year Ended 1/31/09

$ 11.10

$   3.23

$   6.70

 

Fiscal Year Ended 1/31/08

$ 13.00

$   7.40

$ 10.70

 

Fiscal Year Ended 1/31/07

$   8.80

$   3.95

$   8.10



- 66 -



Table No. 11b lists the volume of trading and high, low and closing sales prices on the American Stock Exchange for the Company's common shares since its listing on August 8, 2007.


Table No. 11b

NYSE Amex Stock Exchange

Common Shares Trading Activity


 

 

- Sales -

 

 

United States Dollars

 

Period

High

Low

Close

 

 

 

 

 

 

April 2012

$  15.40

$  9.19

$ 11.44

 

March 2012

$    9.40

$  8.42

$   9.30

 

February 2012

$    9.06

$  8.12

$   8.48

 

January 2012

$    9.12

$  8.00

$   9.11

 

 

 

 

 

 

Three Months Ended   4/30/12

$  15.40

$  8.12

$ 11.44

 

Three Months Ended   1/31/12

$    9.23

$  7.45

$   9.11

 

Three Months Ended 10/31/11

$  10.10

$  6.98

$   8.55

 

Three Months Ended   7/31/11

$  10.25

$  7.20

$   9.05

 

 

 

 

 

 

Three Months Ended   4/30/11

$    9.27

$  7.60

$   7.91

 

Three Months Ended   1/31/11

$  10.75

$  8.30

$   9.00

 

Three Months Ended 10/31/10

$    9.00

$  6.66

$   8.94

 

Three Months Ended   7/31/10

$    8.45

$  6.40

$   7.50

 

 

 

 

 

 

Three Months Ended   4/30/10

$    9.90

$  5.07

$   8.61

 

Three Months Ended   1/31/10

$    7.75

$  5.94

$   6.28

 

Three Months Ended 10/31/09

$    9.50

$  3.97

$   7.63

 

Three Months Ended   7/31/09

$    6.00

$  4.25

$   6.00

 

 

 

 

 

 

Three Months Ended   4/30/09

$    5.94

$  4.38

$   4.65

 

Three Months Ended   1/31/09

$    5.61

$  2.71

$   5.61

 

Three Months Ended 10/31/08

$    6.91

$  2.20

$   3.49

 

Three Months Ended   7/31/08

$    9.20

$  5.40

$   6.60

 

 

 

 

 

 

Three Months Ended   4/30/08

$  11.00

$  7.40

$   8.60

 

Three Months Ended   1/31/08

$  12.60

$  9.52

$ 10.75

 

Three Months Ended 10/31/07

$  12.70

$  9.80

$ 12.00

 

 

 

 

 

 

Fiscal Year Ended 1/31/11

$  10.75

$  5.07

$   9.00

 

Fiscal Year Ended 1/31/10

$    9.50

$  3.97

$   6.28

 

Fiscal Year Ended 1/31/09

$  11.00

$  2.20

$   5.61

 

Fiscal Year Ended 1/31/08

$  12.70

$  9.52

$ 10.75



- 67 -



Table No. 12 lists, as of May 1, 2012, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.


Table No. 12

Share Purchase Warrants Outstanding


 

Number of Share Purchase

Warrants Outstanding


Exercise Price/share


Expiration Date

 

 

 

 

No Warrants Outstanding

 


American Depository Receipts.  Not applicable.

Other Securities to be Registered. Not applicable


The TSX Venture Exchange


The TSX Venture Exchange (“TSX-V”) is a result of the acquisition of the Canadian Venture Exchange by the Toronto Stock Exchange.


The Canadian Venture Exchange was a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange which took place on November 29, 1999.  On August 1, 2001, the Toronto Stock Exchange completed its purchase of the Canadian Venture Exchange from its member firms and renamed the Exchange the TSX Venture Exchange.  The TSX-V currently operates as a complementary but independent exchange from its parent.


The initial roster of the TSX-V was made up of venture companies previously listed on the Vancouver Stock Exchange or the Alberta Stock Exchange and later incorporated junior listings from the Toronto, Montreal and Winnipeg Stock Exchanges.  The TSX-V is a venture market as compared to the Toronto Stock Exchange which is Canada’s senior market and the Montreal Exchange which is Canada’s market for derivatives products.


The TSX-V currently has five service centers: Calgary, Toronto, Vancouver, Winnipeg and Montreal.  These service centers provide corporate finance, surveillance and marketing expertise.  The corporate office for the TSX-V is located in Calgary and the operations office is located in Vancouver.


The TSX-V is a self-regulating organization owned and operated by the TSX Group.  It is governed by representatives of its member firms and the public.


The TSX Group acts as a business link between TSX Venture Exchange members, listed companies and investors.  TSX Venture Exchange policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established.  Listings are predominately small and medium sized companies.



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Regulation of the TSX Venture Exchange, its member firms and its listed companies is the responsibility of Market Regulation Services Inc. (“RS”) which was created as a joint initiative of The Toronto Stock Exchange Inc. and the Investment Dealers Association of Canada.


RS is recognized as a self-regulatory entity in the provinces of British Columbia, Alberta, Manitoba, Ontario and Quebec.  As a Regulation Service Provider, RS provides independent regulation services to marketplaces (existing exchanges, quotation and trade reporting systems (QTRSs) and alternative trading systems (ATSs) and their participants in Canada that contract with RS Inc. for the provision of regulation services.  As a national regulator for the Canadian marketplace, it is the first independent regulator of its kind for the Canadian securities market.


RS administers, oversees and enforces the Universal Market Integrity Rules (“UMIR”).  To ensure compliance with UMIR, RS monitors real-time trading operations and market-related activities of marketplaces and participants.  RS also enforces compliance with UMIR by investigating alleged rule violations and administering any settlements and hearings that may arise in respect of such violations.


RS's areas of responsibility include Market Surveillance; Operations and General Counsel (Market Policy); and Investigations and Enforcement.


The Market Surveillance division monitors all securities trading for compliance with the Universal Market Integrity Rules and marketplace specific rules. Market Surveillance also investigates irregularities and complaints relating to trading on marketplaces for which RS acts as regulation services provider to ensure a fair and orderly marketplace for all participants.  This division is responsible for market supervision, which includes monitoring trading activity and timely disclosure, as well as preliminary investigations and trade desk compliance.


The market surveillance department issues TSX-V notices to inform the public of halts, suspensions, delistings, and other enforcement actions.  All TSX-V notices can be found on the TSE/TSX website at www.tse.com.  In the public interest, trading halts or suspensions are maintained until the surveillance department is satisfied that there is adequate disclosure of the company’s affairs and a level playing field for investors.  By Exchange policy, the department also reviews and approves certain types of transactions for all TSX listed companies.  These types of transactions includes option grants, private placements and other share issuances, mergers and acquisitions, property-asset acquisitions and dispositions, loans, bonuses and finder’s fees, changes of business, name changes, stock splits, and related party transactions.  If the Exchange’s review of such transactions finds them to be contrary to the public interest or is in violation of policy, approval for the transaction will be denied and any action taken by the company towards the completion of the transaction must be reversed.


The Operations and General Counsel division is responsible for the development and implementation UMIR as well as providing interpretations of, or exemptions from, UMIR with the goal of promoting market integrity.  This division also coordinates all operational activities of RS including strategic planning and overall organizational matters.  Finally, the General Counsel's office of this division is responsible for all legal services and matters relating to RS's Board of Directors.



- 69 -



The Investigation and Enforcement division is responsible for conducting investigations and prosecutions of violations of the UMIR and Policies and market integrity and market quality rules specific to the TSX Venture Exchange.  Functions of this division include Investigations, Enforcement and Investigative Research.

 

a) Investigations

Investigations focus on activities that may be in breach of the UMIR and/or the rules of the TSX Venture Exchange.  The types of violations frequently investigated include high closings, market manipulation, client priority trading violations, unapproved trading, trading in restricted securities and conduct inconsistent with the just and equitable principles of trade.


Requests for investigations come primarily from the Market Surveillance division of RS.  Other sources include the provincial securities commissions, the Operations and General Counsel division, marketplaces, and in some instances, the general public.  Investigators also lend assistance to investigations conducted by provincial securities commissions.


b) Enforcement

Once an investigation is complete and a decision has been made to proceed with a prosecution a statement of allegations is served upon the concerned party which references the rule or rules alleged to have been in violation.  An Offer of Settlement is also presented to the concerned party, who can either accept or reject the Offer of Settlement.  If accepted, the Offer of Settlement must be approved by a hearing panel of RS.  The hearing panel may accept the Offer of Settlement or reject it.  If the Offer of Settlement is rejected by either the concerned party or by a settlement hearing panel, a Notice of Hearing is issued and served upon the concerned party and the matter proceeds to a hearing before a hearing panel.  If the hearing panel determines that an applicable requirement has been violated, it may impose a range of penalties, including a reprimand, a fine, or the restriction, suspension or revocation of access to a marketplace.  After all hearings, there is an official public notification concerning the outcome of the hearing and the penalty or remedy imposed.


c) Investigative Research

The Investigative Research Division performs in-depth corporate research relating to officers, directors, and significant shareholders of organizations applying to list securities on the TSX Venture Exchange, or applying to obtain access to the marketplace's trading systems.  Due diligence is a major function of the Enforcement division.  The overall goal is to improve communication and to raise the standards of compliance in the securities trading industry.


Investors in Canada are protected by the Canadian Investor Protection Fund (“CIPF”).  The CIPF is a private trust fund established to protect customers in the event of the insolvency of a member of any of the following Self-Regulatory Organizations: the TSX Venture Exchange, the Montreal Exchange, the Toronto Stock Exchange, the Toronto Futures Exchange and the Investment Dealers Association of Canada.


United States Market


The Company’s common shares trade on the NYSE Amex Exchange under the symbol “PBM”. The shares began trading on the American Exchange on August 8, 2007.



- 70 -



LEGAL PROCEEDINGS


In April 2006, the Company was served with notice that a suit was filed against the Company in the British Columbia Supreme Court for breech of contract by Lorne Spence, an original optionor of the Hearne Hill property to the Company.  Mr. Spence's action seeks the return of certain mineral claims, or unspecified damages in the alternative.  Mr. Spence also sought to include the return of the Company’s Morrison property as part of the suit.  In June 2007, the Supreme Court of British Columbia dismissed the application to include the Morrison property.  On April 20, 2009, the Company announced that a settlement had been reached with certain optionors of mineral claims in the Hearne Hill area, who had commenced an action against the Company in the BC Supreme Court in April 2006.  Pursuant to the settlement, the Company will retain the right, title and interest in and to all claims that were the subject of the action, with the exception of Mineral Tenure No. 242812 (the “Hearne 1 Claim”) and Mineral Tenure No. 242813 (the “Hearne 2 Claim”), which were transferred to the plaintiff optionors.  Pursuant to the settlement, no cash payment was made to the plaintiffs and all claims in the action have been dismissed.


In December 2008, the Company submitted a Statement of Claim against the Lake Babine Nation in response to the October 14, 2008 unexpected, damaging and allegedly defamatory press release by Chief Betty Patrick of the Lake Babine Nation (“LBN”), which followed a letter received by fax in regards to a consultation meeting received less than one hour earlier.  This press release was distributed to a wide array of investment and media outlets on the internet.  PBM requested a public retraction of the press release but no response was received from the LBN.  The Company’s Board saw no way out of the dilemma created by the LBN press release other than to leave the defamation and damages issues to the courts and otherwise act in good faith to consult with the LBN in the ongoing environmental assessment process.  In March 2009, the LBN submitted a Statement of Defence to the court.  In October 2009, The Company announced that the legal proceeding submitted late in December 2008 against the former Chief, Betty Patrick and the Lake Babine Nation has been discontinued by the Company.


In August 2010, the Company was served with a Notice of Civil Claim by Rescan Environmental Services Ltd. (Rescan).  The claim stems from Rescan’s demand for payment of $191,997.54 in outstanding invoices, which the Company disputes.  The Company filed its Response to the Notice of Civil Claim served by Rescan in September 2010.  The Company has filed a Counterclaim against Rescan seeking damages for professional negligence, misrepresentation, and breach of contract.  In December 2010, Rescan and PBM agreed to proceed to mediation.  In consultation with its Attorney, PBM is in the process of completing discovery documents.  During the fiscal year ended January 31, 2012, Rescan submitted an amended response to the counterclaim.  Substantially all of the outstanding invoice amounts claimed by Rescan have been paid into trust with the Company's solicitors pending resolution of this claim.  Subsequent to the end of the fiscal year, all actions in this matter have been resolved.


The Company knows of no other active or pending proceedings against anyone that might materially adversely affect an interest of the Company.



- 71 -



Item 10.  Additional Information


Share Capital


The Company has financed its operations through the issuance of common shares through private placement, the exercise of warrants issued in the private placements, and the exercise of stock options.  The changes in the Company’s share capital during the last 3 fiscal years are as follows:


During Fiscal 2012 ended January 31, 2012, the Company issued no common shares pursuant to the exercise of warrants, and issued 181,000 common shares pursuant to the exercise of stock options for proceeds of $964,750.  There were no private placements completed during Fiscal 2012.


During Fiscal 2011 ended January 31, 2011, the Company issued no common shares pursuant to the exercise of warrants, and issued 380,000 common shares pursuant to the exercise of stock options for proceeds of $1,564,000.  There were no private placements completed during Fiscal 2011.


During Fiscal 2010 ended January 31, 2010, the Company issued no common shares pursuant to the exercise of warrants, and issued 240,000 common shares pursuant to the exercise of stock options for proceeds of $928,800.  There were no private placements completed during Fiscal 2010.


During Fiscal 2009 ended January 31, 2009, the Company issued 1,195,200 common shares pursuant to the exercise of warrants for proceeds of $5,976,150, and issued 101,250 common shares pursuant to the exercise of stock options for proceeds of $406,562.  There were no private placements completed during Fiscal 2009.



Shares Not Representing Capital


-No Disclosure Necessary-


Shares Held By Company


-No Disclosure Necessary-


Stock Options


Stock Options to purchase securities from Registrant can be granted to Directors and Employees of the Company on terms and conditions acceptable to the regulatory authorities in Canada, notably the TSX Venture Exchange (the “Exchange”).



- 72 -



At the Company’s Annual and Extra-Ordinary Meeting held on May 30, 2011, Shareholders approved a new Stock Option Plan dated 2011 (“The Plan”).  Under the Plan, the Company may issue Stock options for up to 20% of the common shares outstanding at the effective date of the Plan, or 2,406,057 common shares.  The Plan provides that eligible persons thereunder include any director, officer, employee (full or part-time), consultant or management company employee of the Company or any affiliate of the Company designated by the directors under the Plan.  The definition of consultant is the same as that contained in the policies of the Exchange.


The Plan will be administered by the board of directors or a committee thereof.  The board of directors will have the authority to determine, among other things, the persons to whom options are granted and the number of such options.  At the time an option is granted, the board will also determine the exercise price of the option which, subject to a minimum price of $0.10, shall be equal to the closing price of the common shares on the Exchange on the day immediately preceding the date of grant, and any vesting criteria or other restrictions with respect to the exercisability of the option.  At a minimum, unless the approval of the Exchange is received, options will vest in equal installments, either monthly, quarterly or bi-annually, at the discretion of the board, over a period of 18 months.  Subject to any restrictions contained in the Plan, the board may also impose such other terms and conditions as it shall deem necessary or advisable at the time of grant.


The term of the options will be determined by the board, but in any case must be no more than ten years from the date of grant.  Options are not transferable other than by will or the laws of descent and distribution.  If an optionee ceases to be an eligible person for any reason whatsoever, other than death or disability, the option (to the extent that it has vested at the time of termination) will terminate at the end of the period of time permitted for exercise of the Option (such period of time to not be in excess of six months), to be determined by the Board at the time of the grant of an Option, and be of no further force and effect.  If an optionee dies or is disabled, the optionee (or the legal representative of the optionee) may exercise the option (to the extent that it has vested) until the earlier of the first anniversary of the date of death or disability and the option’s expiration date.


The Plan provides that the maximum number of common shares which may be reserved for issuance to any participant pursuant to options may not exceed 5% of the common shares outstanding at the time of grant (on a non-diluted basis) less the aggregate number of common shares reserved for issuance to such person under any other option to purchase common shares under any other share compensation arrangement.  Under the Plan, the maximum number of common shares that may be issued to any participant, or to one insider and the insider’s associates, within a one year period pursuant to option exercises may not exceed 5% of the outstanding issue.


The maximum number of common shares which may be reserved for issuance to all the insiders of the Company pursuant to share options is limited to 20% of the common shares outstanding at the time of the grant (on a non-diluted basis) less the aggregate number of common shares reserved for issuance to insiders under any other share compensation arrangement.


A copy of the Plan has been filed as an exhibit to this Annual Report.



- 73 -



The names and titles of the Directors/Executive Officers of the Registrant to whom outstanding stock options have been granted and the numbers of common shares subject to such options are set forth in Table No. 13 as of May 1, 2012, as well as the number of options granted to Directors and all employees as a group.


Table No. 13

Stock Options Outstanding








Name




Total

Number of

Options

Held

Total

Number of

Options

Vested or

Vesting

Within

60 Days





CDN$

Exercise

Price






Expiration

Date

 

 

 

 

 

Gregory Anderson,

President, CEO and Director

92,500

20,000

49,400

76,800

51,600

92,500

20,000

49,400

48,000

32,250

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

Ruth Swan,

Chief Financial Officer

10,030

10,000

14,900

61,827

10,000

10,030

10,000

14,900

38,641

6,250

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

John Plourde, Director

92,500

20,000

49,400

76,800

60,000

92,500

20,000

49,400

48,000

37,500

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

William Deeks, Director

70,000

20,000

49,400

49,900

51,600

70,000

20,000

49,400

31,187

32,250

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

Mark Gulbrandson, Director

70,000

20,000

49,400

49,900

51,600

70,000

20,000

49,400

31,187

32,250

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

Dennis Simmons, Director

70,000

20,000

49,400

149,900

51,600

70,000

20,000

49,400

93,687

32,250

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018



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Erik Tornquist, Director

92,500

20,000

49,400

76,800

60,000

92,500

20,000

49,400

48,000

37,500

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

William Webster, Director

70,000

20,000

49,400

49,900

51,600

70,000

20,000

49,400

31,187

32,250

$ 7.81

$ 5.75

$ 7.70

$ 7.44

$ 7.40

June 23, 2013

July 13, 2014

June 30, 2017

May 16, 2018

June 20, 2018

 

 

 

 

 

Total Officers and Directors

(8 persons)


2,058,057


 

 

Total Employees and Consultants

(6 persons)


140,000

 

 

 

Total Officers/Directors/Employees

And Consultants


2,198,057

 

 

 


Resolutions/Authorization/Approvals


-No Disclosure Necessary-


Memorandum and Articles of Association


The Company was originally incorporated under the Company Act of British Columbia on February 18, 1983. Due to changes to provincial laws, the Company was required to adopt new Articles of Incorporation under the new British Columbia Corporations Act.  At the Annual General Meeting of Shareholders held on July 16, 2004, the Company adopted amended Articles of Incorporation under the B.C. Corporations Act (the “Act”).


There are no restrictions on the business the company may carry on in the Articles of Incorporation.


Under the Company’s articles and bylaws a director is not allowed to vote on any transaction or contract with the Company in which has a disclosable interest unless all directors have a disclosable interest in that transaction.


Part 16 of the Company’s bylaws address the duties of the directors, including the borrowing powers. Directors must manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers which are not required to be exercised by the shareholders, or as governed by the Act.


There are no age limit requirements pertaining to the retirement or non-retirement of directors.



- 75 -



A director need not be a shareholder of the Company.


The rights, preferences and restrictions attaching to each class of the Company’s shares are as follows:


Common Shares


The authorized shares of common stock of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets.  Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders.  Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.


Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities.  No shares have been issued subject to call or assessment.  There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.


The Company may by special resolution, create, define, and attach special rights or restrictions on any shares and by special resolution and by otherwise complying with any applicable provision of its Memorandum or these Articles to vary or abrogate any special rights and restrictions attached to any shares, but no right or special right attached to any issued shares shall be prejudiced or interfered with unless all members holding shares of each affected class consent thereto in writing, or unless a resolution consenting thereto is passed at a separate class meeting of the holders of the shares of each such class by a majority of three-fourths of the rest of such shares.


An annual general meeting shall be held once every calendar year at such time (not being more than 13 months after holding the last preceding annual meeting) and place as may be determined by the Directors.  The Directors may, as they see fit, to convene an extraordinary general meeting.  An extraordinary general meeting, if requisitioned in accordance with the Company Act, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided in the Company Act.


There are no limitations upon the rights to own securities.


There are no provisions that would have the effect of delaying, deferring, or preventing a change in control of the Company.


There is no special ownership threshold above which an ownership position must be disclosed.



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Material Contracts


The Company considers the following as material contracts, which have been entered into by the Company which are currently in effect:


1.

Option Agreement for Hearne Hill and Morrison between Booker Gold (now Pacific Booker Minerals) and Noranda Mining and Exploration (Now Falconbridge Ltd.) dated October 22, 1997.

2.

Agreement between the Company and KCC 167 Holdings Ltd. dated July 4, 1995.

3.

Agreement between the Company and Windbourne International Capital Management Ltd. dated June 15, 1995.

4.

Agreement between the Company and John Paul Stevenson dated November 23, 1998.

5.

Agreement between the Company and Rolland Joseph Menard dated July 9, 2001.

6.

Agreement between the Company and Noranda (Now Falconbridge Ltd.) on the Morrison Property dated April 19, 2004.


All of the Material Contracts have been previously filed as exhibits to the Company’s 20-F Registration Statement.


EXCHANGE CONTROLS AND OTHER LIMITATIONS

AFFECTING SECURITY HOLDERS


Except as discussed in ITEM #9, the Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares.  There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.


The Investment Canada Act (the "IC Act") governs acquisitions of Canadian business by a non-Canadian person or entity.  The IC Act requires a non-Canadian (as defined in the IC Act) making an investment to acquire control of a Canadian business, the gross assets of which exceed certain defined threshold levels, to file an application for review with the Investment Review Division of Industry Canada.  The IC Act provides, among other things, for a review of an investment in the event of acquisition of "control" in certain Canadian businesses in the following circumstances:


1. If the investor is a non-Canadian and is a national of a country belonging to the North American Free Trade Agreement ("NAFTA") and/or the World Trade Organization ("WTO") ("NAFTA or WTO National"), any direct acquisition having an asset value exceeding $179,000,000 is reviewable. This amount is subject to an annual adjustment on the basis of a prescribed formula in the IC Act to reflect inflation and real growth within Canada.  This threshold level does not apply in certain sections of Canadian industry, such as uranium, financial services (except insurance), transportation services and cultural services (i.e. the publication, distribution or sale of books, magazines, periodicals (other than printing or typesetting businesses), music in print or machine readable form, radio, television, cable and satellite services; the publication, distribution, sale or exhibition of film or video recordings on audio or video music recordings), to which lower thresholds as prescribed in the IC Act are applicable.



- 77 -



2. If the investor is a non-Canadian and is not a NAFTA or WTO National, any direct acquisition having an asset value exceeding $5,000,000 and any indirect acquisition having an asset value exceeding $50,000,000 is reviewable.


3. If the investor is a non-Canadian and is NAFTA or WTO National, an indirect acquisition of control is reviewable if the value of the assets of the business located in Canada represents more than 50% of the asset value of the transaction or the business is involved in uranium, financial services, transportation services or cultural services (as set forth above).


Finally, certain transactions prescribed in the IC Act are exempted from review altogether.


In the context of the Company, in essence, three methods of acquiring control of a Canadian business are regulated by the IC Act: (i) the acquisition of all or substantially all of the assets used in carrying on business in Canada; (ii) the acquisition, directly or indirectly, of voting shares of a Canadian corporation carrying on business in Canada; or (iii) the acquisition of voting shares of an entity which controls, directly or indirectly, another entity carrying on business in Canada.


An acquisition of a majority of the voting shares of a Canadian entity, including a corporation, is deemed to be an acquisition of control under the IC Act.  However, under the IC Act, there is a rebuttable presumption that control is acquired if one-third of the voting shares of a Canadian corporation or an equivalent undivided interest in the voting shares of such corporation are held by a non-Canadian person or entity.  An acquisition of less than one-third of the voting shares of a Canadian corporation is deemed not to be an acquisition of control.  An acquisition of less than a majority, but one-third or more, of the voting shares of a Canadian corporation is presumed to be an acquisition of control unless it can be established that, on the acquisition, the Canadian corporation is not, in fact, controlled by the acquirer through the ownership of voting shares. For partnerships, trusts, joint ventures or other unincorporated Canadian entities, an acquisition of less than a majority of the voting interests is deemed not to be an acquisition of control.


In addition, if a Canadian corporation is controlled by a non-Canadian, the acquisition of control of any other Canadian corporation by such corporation may be subject to the prior approval of the Investment Review Division, unless it can be established that the Canadian corporation is not in fact controlled by the acquirer through the ownership of voting shares.


Where an investment is reviewable under the IC Act, the investment may not be implemented unless it is likely to be of net benefit to Canada.  If an applicant is unable to satisfy the Minister responsible for Industry Canada that the investment is likely to be of net benefit to Canada, the applicant may not proceed with the investment.  Alternatively, an acquirer may be required to divest control of the Canadian business that is the subject of the investment.


In addition to the foregoing, the IC Act provides for formal notification under the IC Act of all other acquisitions of control by Canadian businesses by non-Canadian investors.  The notification process consists of filing a notification within 30 days following the implementation of an investment, which notification is for information, as opposed to review, purposes.



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TAXATION


The following summary of the material Canadian federal income tax consequences generally applicable in respect of the common stock reflects the Company’s opinion.  The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder’s particular circumstances.  This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm’s length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada.  Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.


This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act" or “ITA”)and the Canada-United States Tax Convention (the “Tax Convention”) as at the date of the Annual Report and the current administrative practices of Canada Customs and Revenue Agency.  This summary does not take into account provincial income tax consequences.


Management urges each holder to consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.


CANADIAN INCOME TAX CONSEQUENCES

Disposition of Common Stock.


The summary below is restricted to the case of a holder (a “Holder”) of one or more common shares (“Common Shares”) who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arm’s length with the Company.


Dividends


A Holder will be subject to Canadian withholding tax (“Part XIII Tax”) equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares.  Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend.  The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.



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Disposition of Common Shares


A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common Share constituted “taxable Canadian property” as defined by the Tax Act.  Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arm’s length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.


A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada.


A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one half of the capital gain (“taxable capital gain”) in computing his taxable income earned in Canada.  The Holder may, subject to certain limitations, deduct one half of any capital loss (“allowable capital loss”) arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.


UNITED STATES FEDERAL INCOME TAX CONSEQUENCES


The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of common shares of the Company.  This discussion does not cover any state, local or foreign tax consequences.


The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (“the Code”), Treasury Regulations, published Internal Revenue Service (“IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time.  In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.  The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company.  Each holder and prospective holder of common shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company applicable to their own particular circumstances.



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U.S. Holders


As used herein, a (“U.S. Holder”) includes a holder of common shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code.  This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a “functional currency” other than the U.S. dollar, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.  This summary is limited to U.S. Holders who own common shares as capital assets.  This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.


Distribution on Common Shares of the Company


U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s United States Federal Income tax liability or, alternatively, individuals may be deducted in computing the U.S. Holder’s United States Federal taxable income by those individuals who itemize deductions.  (See more detailed discussion at “Foreign Tax Credit” below).  To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder’s adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.


In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.



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Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.  A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a “foreign personal holding company” or a “passive foreign investment company”, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company.  The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.


Under current Treasury Regulations, dividends paid on the Company’s common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax.  However, dividends and the proceeds from a sale of the Company’s common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9.  Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.


Foreign Tax Credit


For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(j), the limitation on credit does not apply.


A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax.  This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year.  There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation.  The various items of income and deduction must be classified into foreign and domestic sources.  Complex rules govern this classification process.  In addition, this limitation is calculated separately with respect to specific classes of income such as “passive income”, “high withholding tax interest”, “financial services income”, “shipping income”, and certain other classifications of income.  Dividends distributed by the Company will generally constitute “passive income” or, in the case of certain U.S. Holders, “financial services income” for these purposes.  The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.



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Disposition of Common Shares of the Company


A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the difference, if any, between (I) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s tax basis in the common shares of the Company.  Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts.  This gain or loss will be capital gain or loss if the common shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.  Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders, which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses.  For U.S. Holders, which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.


Other Considerations


In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Company.


Foreign Personal Holding Company


If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Company’s outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 60% (50% after the first tax year) or more of the Company’s gross income for such year was derived from certain passive sources (e.g. from interest income received from its subsidiaries), the Company would be treated as a “foreign personal holding company.”  In that event, U.S. Holders that hold common shares of the Company would be required to include in gross income for such year their allocable portions of such passive income to the extent the Company does not actually distribute such income.


The Company does not believe that it currently has the status of a “foreign personal holding company”. However, there can be no assurance that the Company will not be considered a foreign personal holding company for the current or any future taxable year.



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Foreign Investment Company


If 50% or more of the combined voting power or total value of the Company’s outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31), and the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a “foreign investment company” as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gains.


Passive Foreign Investment Company


As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (“PFIC”), as defined in Section 1297 of the Code, depending upon the percentage of the Company’s income which is passive, or the percentage of the Company’s assets which is held for the purpose of producing passive income.


Certain United States income tax legislation contains rules governing PFICs, which can have significant tax effects on U.S. shareholders of foreign corporations.  These rules do not apply to non-U.S. shareholders.  Section 1297 (a) of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (I) 75% or more of its gross income is “passive income”, which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the company is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of “passive income” is 50% or more.  The taxation of a US shareholder who owns stock in a PFIC is extremely complex and is therefore beyond the scope of this discussion.  Management urges US persons to consult with their own tax advisors with regards to the impact of these rules.  



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Controlled Foreign Corporation


A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporation’s tax year, owned (directly or indirectly) by U.S. Shareholders. If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the Company could be treated as a “controlled foreign corporation” under Subpart F of the Code.  This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC’s Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFC’s earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation which is or was a United States Shareholder at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was “controlled”) attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.


The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holder’s federal income tax liability.


Filing of Information Returns.  Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255.  In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return.  Other filing requirements may apply, and management urges United States Investors to consult their own tax advisors concerning these requirements.


Statement by Experts


Not Applicable.



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Documents on Display


All documents incorporated and referred by reference in this 20-F Annual Report may be viewed at the Company’s Executive Office located at #1702 – 1166 Alberni Street, Vancouver, British Columbia.


Item 11.  Disclosures about Market Risk


The company’s mineral properties are all currently at the exploration stage and the Company’s operations are limited to exploring those properties.  Therefore, Pacific Booker’s market risks are minimal.


Competitive Environment


The Company competes with other mining companies for exploration properties, joint venture agreements and for the acquisition of attractive gold companies.  There is a risk that this competition could increase the difficulty of concluding a negotiation on terms that the Company considers acceptable.


Item 12.  Description of Other Securities


Not Applicable


Part II


Item 13.  Defaults, Dividend Arrearages and Delinquencies


Not Applicable


Item 14.  Modifications of Rights of Securities Holders and Use of Proceeds


Not Applicable


Item 15.  Controls and Procedures


Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to the Company, including its consolidated subsidiaries, is made known to senior management, including Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.



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We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended) as January 31, 2012.  The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of January 31, 2012, were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f))  to provide reasonable assurance that the financial information prepared by the Company for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with GAAP.  The Board of Directors is responsible for ensuring that management fulfills its responsibilities.  The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements.  Management reviewed the results of their assessment with the Company’s Audit Committee.


Because of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect all possible misstatements or frauds.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

 

To evaluate the effectiveness of the Company’s internal control over financial reporting, Management has used the Internal Control - Integrated Framework, which is a suitable, recognized control framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Management has assessed the effectiveness of the Company’s internal control over financial reporting and, based upon the report of the Company's Independent Public Accounting Firm as included below, concluded that such internal control over financial reporting was not effective as of January 31, 2012.


The following represent material weaknesses in the Company's Internal Controls over Financial Reporting:


§

The Company's controls have not been fully implemented and do not operate effectively;

§

Lack of segregation of duties due to the small number of personnel tasked with general administrative duties and financial matters;

§

A deficiency in access controls to the Company's information systems.



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To remedy these identified weaknesses, The Company is currently revising its financial control policies which are considered to be appropriate for the Company's size and number of personnel.  However, certain deficiencies are expected to continue until such a time as the Company adds additional personnel and upgrades its information systems.  


Limitations on the Effectiveness of Controls

The Company's management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.


Attestation Report of the Registered Accounting Firm.


The attestation report of MNP LLP, the Company's independent registered public accounting firm, is included on page 96 of this Form 20-F annual report.


Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


There have been no changes in the Company's internal controls over financial reporting during the period covered by this annual report that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting with regard to deficiencies or material weaknesses other than the corrective actions to ensure proper disclosure is included in the Company’s filings under the Exchange Act, including the Form 20-F Annual Report.



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Item 16.  Reserved


Item 16A.  Audit Committee Financial Expert


The Company’s Audit Committee currently consists of four members, all of whom are financially literate.  William F. Webster meets the requirements of “audit committee financial expert.  Mr. Webster is “Independent” as defined by the rules of the NYSE Amex Stock Exchange.


Item 16B.  Code of Ethics


The Board of Directors has adopted a written Code of Ethics.  The Code of Ethics and Business Conduct applies equally to all employees, officers, directors, consultants, contractors, suppliers and others acting on behalf of the Company.  The Board also relies upon the selection of persons to and as directors, officers and employees who they consider to meet the highest ethical standards.


A copy of Pacific Booker’s Code of Ethics and Business Conduct has been filed as an exhibit to the Company Fiscal 2006 20-F Annual Report.


Item 16C.  Principal Accountant Fees and Services


Table Number 14 discloses the fees billed to the Company by its independent auditors, MNP LLP (formerly known as Meyers Norris Penny LLP), Chartered Accountants, for Fiscal 2012, 2011, and 2010.


Table No. 14

Audit Fees Paid


 

Fiscal Year Ended

January 31, 2012

Fiscal Year Ended

January 31, 2011

Fiscal Year Ended

January 31, 2010

 

 

 

 

Audit Fees

$    38,000

$    38,000

$    36,250

Audit Related Fees

12,000

Nil

Nil

Tax Fees

Nil

Nil

Nil

All Other Fees

4,059

Nil

752

     Total

$    54,059

$    38,000

$    36,250



Item 16D.  Exemptions from Listing Standards for Audit Committees


Not Applicable


Item 16E.  Purchase of Equity Securities by the Issuer and Affiliated Purchasers


Not Applicable



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Part III


Item 17.  Financial Statements


The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with International Financial Reporting Standards for fiscal years ended January 31, 2012 & 2011.


The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of MNP LLP (formerly Meyers Norris Penny LLP), Chartered Accountants, is included herein immediately preceding the financial statements.


Item 18.  Financial Statements


The Company has elected to provide financial statements pursuant to ITEM #17.


Item 19.  Exhibits


(A1)  The financial statements thereto as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of MNP LLP (formerly Meyers Norris Penny LLP), Chartered Accountants, for the audited financial statements is included herein immediately preceding the audited financial statements.


Audited Financial Statements


Independent Auditors Report, dated May 7, 2012


Balance Sheets at January 31, 2012, January 31, 2011 and February 1, 2010


Statements of Operations for the years ended January 31, 2012, and 2011.


Statements of Cash Flows for the years ended January 31, 2012, and 2011.


Notes to Financial Statements



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(B)  Index to Exhibits:

                                                             

 

 

1.

Certificate of Incorporation, Certificates of Name Change, Articles of Incorporation, Articles of Amalgamation and By-Laws

 

 

 

2.

Instruments defining the rights of holders of the securities being registered

***See Exhibit Number 1***

 

3.

Voting Trust Agreements – N/A

 

4.

Material Contracts (All previously filed)

1.

Option Agreement for Hearne Hill and Morrison between Booker Gold (now Pacific Booker Minerals) and Noranda Mining and Exploration (Now Falconbridge Ltd.) dated October 22, 1997.

2.

Agreement between the Company and KCC 167 Holdings Ltd. dated July 4, 1995.

3.

Agreement between the Company and Windbourne International Capita Management Ltd. dated June 15, 1995.

4.

Agreement between the Company and John Paul Stevenson dated November 23, 1998.

5.

Agreement between the Company and Rolland Joseph Menard dated July 9, 2001.

6.

Agreement between the Company and Noranda (Now Falconbridge Ltd.) on the Morrison Property dated April 19, 2004.

 

5.

List of Foreign Patents – N/A

 

6.

Calculation of earnings per share – N/A

 

7.

Explanation of calculation of ratios – N/A

 

8.

List of Subsidiaries – N/A

 

9.

Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities – N/A

 

10.

Other documents

Copy of Stock Option Plan dated 2011

Certifications of the Chief Executive Officer

Certification of the Chief Financial Officer

 

 

 

 

 



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PACIFIC BOOKER MINERALS INC.



FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)



YEAR ENDED JANUARY 31, 2012









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Contents

Page #

Management’s Responsibility for Financial Reporting

3

Auditor’s Report

4 to 6

Statements of Financial Position

7

Statements of Comprehensive Loss

8

Statements of Changes in Equity

9

Statements of Cash Flows

10

Notes to the Financial Statements

11 to 34






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Management’s Responsibility

To the Shareholders of Pacific Booker Minerals Inc.


Management is responsible for the preparation and presentation of the accompanying financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards and ensuring that all information in the annual report is consistent with the statements. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.


In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of financial statements.


The Board of Directors and the Audit Committee is composed primarily of Directors who are neither management nor employees of Pacific Booker Minerals Inc.  The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report.  The Audit Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues.  The Committee is also responsible for recommending the appointment of Pacific Booker Minerals Inc.’s external auditors.


MNP LLP, an independent firm of Chartered Accountants, is appointed by the shareholders to audit the financial statements and report directly to them; their report follows.  The external auditors have full and free access to, and meet periodically and separately with, both the Audit Committee and management to discuss their audit findings.


May 7, 2012




“Greg Anderson”

“Ruth Swan”


Chief Executive Officer

Chief Financial Officer






- 94 -








[pacificbookerform20f_2012004.jpg]

INDEPENDENT AUDITORS' REPORT


To the Shareholders of Pacific Booker Minerals Inc.:


We have audited the accompanying financial statements of Pacific Booker Minerals Inc., which comprise the statements of financial position as at January 31, 2012, January 31, 2011, and February 1, 2010, and the statements of loss and comprehensive loss, changes in equity and cash flows for the years ended January 31, 2012 and 2011, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.


Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.


We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.


Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Pacific Booker Minerals Inc. as at January 31, 2012, January 31, 2011, and February 1, 2010, and the results of their operations and their cash flows for the years ended January 31, 2012 and 2011 in accordance with International Financial Reporting Standards.


Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 2 of these financial statements, which states that Pacific Booker Minerals Inc. incurred significant losses from operations, negative cash flows from operating activities and has an accumulated deficit. This, along with other matters described in Note 2, indicates the existence of a material uncertainty which may cast doubt about the ability of Pacific Booker Minerals Inc. to continue as a going concern.

       [pacificbookerform20f_2012006.gif]


MNP LLP

May 7, 2012

Vancouver, BC

Chartered Accountants

[pacificbookerform20f_2012007.jpg]


- 95 -






[pacificbookerform20f_2012008.jpg]


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of Pacific Booker Minerals Inc. (the “Company”):


We have audited the Company's internal control over financial reporting as of January 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.


Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



- 96 -



In our opinion, based on the criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, the internal control over financial reporting as of January 31, 2012 is not considered effective due to the following material weaknesses:

·

There are elements in the control environment of the Company that have not been fully implemented or do not operate effectively. Management is currently in the process of revising the entity level policies for Board’s approval, and subsequently will be implementing those policies and controls considered appropriate for the Company's business environment and personnel.

·

There is a lack of segregation of duties in the Company due to the small number of personnel dealing with general administrative and financial matters. Management believes that any potential benefits of adding personnel to clearly segregate duties do not justify the additional costs associated with the increase in staffing.

·

Access controls to some of the Company's information systems do not operate effectively. Management expects that some deficiencies will continue into the future, until the necessary upgrade of information systems and control policy are in place.


     [pacificbookerform20f_2012010.gif]


MNP LLP

Chartered Accountants


May 7, 2012

Vancouver, BC




- 97 -




PACIFIC BOOKER MINERALS INC.

STATEMENT OF FINANCIAL POSITION

(Expressed in Canadian Dollars)



 



January 31,

2012


January 31,

2011

(Note 19)


February 1,

2010

(Note 19)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$      647,371

$    1,799,650

$    3,342,974

Receivables

38,004

71,228

84,147

Prepaid expenses and deposits

39,401

40,490

32,455

 

 

 

 


724,776

1,911,368

3,459,576

 

 

 

 

Mineral property interests (Note 5)

4,832,500

4,832,500

4,832,500

Exploration and evaluation assets (Note 6)

23,797,860

22,664,614

20,788,465

Equipment, vehicles and furniture (Note 7)

41,837

63,708

89,415

Reclamation deposits

123,600

123,600

123,600

 

 

 

 

Total assets

$  29,520,573

$  29,595,790

$  29,293,556

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities

$      232,007

$      355,451

$       606,163

Amounts owing to related parties (Note 10)

22,305

27,329

22,873

 

 

 

 

 

254,312

382,780

629,036

 

 

 

 

Shareholders' equity

 

 

 

Share Capital (Note 8)

48,727,168

47,367,605

45,489,248

Contributed surplus (Note 8)

8,586,499

6,104,170

5,314,122

Deficit

(28,047,406)

(24,258,765)

(22,138,850)

 

 

 

 

 

29,266,261

29,213,010

28,664,520

 

 

 

 

Total liabilities and shareholders’ equity

$   29,520,573

$   29,595,790

$  29,293,556



Approved by the Board of Directors and authorized for issue on May 7, 2012:




 

“William Deeks”

 

 

“Greg Anderson”

 

 

William Deeks, Chairman

 

 

Gregory R. Anderson, CEO

 




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



- 98 -




PACIFIC BOOKER MINERALS INC.

STATEMENT OF COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)



 

 

 2012

2011

(Note 19)

 

 

 

 

OPERATING EXPENSES

 

 

 

Consulting fees

 

$            600

$                 -  

Consulting fees - Share based payments (Note 8)

 

484,233

226,680

Depreciation

 

20,007

29,115

Directors fees

 

18,500

12,500

Directors fees - Share based payments (Note 8)

 

1,439,826

551,388

Filing and transfer agent fees

 

72,236

66,360

Foreign exchange (gain)loss

 

(6,340)

7,102

Finance income

 

(11,390)

(14,610)

Investor relations – related party (Note 10)

 

250,804

255,864

Investor relations fees - Share based payments (Note 8)

 

749,746

277,715

Loss on disposal of fixed asset

 

1,059

 -  

Office and miscellaneous

 

69,512

81,822

Office rent

 

91,705

85,487

Professional fees (Note 10)

 

238,895

313,395

Professional fees - Share based payments (Note 8)

 

192,403

43,421

Shareholder information and promotion

 

74,576

85,949

Telephone

 

18,151

17,542

Travel

 

43,860

46,250

Wages and benefits

 

29,324

28,734

Wages and benefits - Share based payments (Note 8)

 

10,934

5,201

 

 

 

 

Loss from operations

 

(3,788,641)

(2,119,915)

 

 

 

 

Income tax expense

 

-  

-  

 

 

 

 

 

Loss and comprehensive loss for the period

 

 

(3,788,641)

(2,119,915)

 

 

 

 

 

Basic and diluted loss per share (Note 9)

 

 

$          (0.31)

$          (0.18)






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




- 99 -




PACIFIC BOOKER MINERALS INC.

STATEMENT OF CHANGES IN EQUITY

(Expressed in Canadian Dollars)



 

 

 

 

 

 

 


Number of

Shares

Share

Capital

Amount

Contributed

Surplus

(Note 19)


Deficit

(Note 19)



Total

 

 

 

 

 

 

Balance, February 1, 2010

11,640,289

45,489,248

5,314,122

(22,138,850)

28,664,520

Exercise of stock options

380,000

 1,564,000

 -   

 -   

 1,564,000

Share based payments

 -   

 314,357

 790,048

 -   

 1,104,405

Loss for the period

 -   

 -   

 -   

 (2,119,915)

 (2,119,915)

 

 

 

 

 

 

Balance, January 31, 2011

12,020,289

47,367,605

6,104,170

 (24,258,765)

29,213,010

Exercise of stock options

181,000

 964,750

 -   

 -   

964,750

Share based payments

 -   

 394,813

 2,482,329

 -   

2,877,142

Loss for the period

 -   

 -   

 -   

(3,788,641)

(3,788,641)

 

 

 

 

 

 

Balance, January 31, 2012

12,201,289

$  48,727,168

 $   8,586,499

$   (28,047,406)

$   29,266,261








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




- 100 -






PACIFIC BOOKER MINERALS INC.

STATEMENT OF CASH FLOWS

(Expressed in Canadian Dollars)



 

 

 

2012

2011

(Note 19)

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Loss for the period

 

 

(3,788,641)

$   (2,119,915)

Items not affecting cash:

 

 

 

 

Depreciation

 

 

20,007

29,115

Share based payments

 

 

2,877,142

1,104,405

 

 

 

 

 

Changes in non-cash working capital items:

 

 

 

(Increase) decrease in receivables

 

 

33,224

12,919

(Increase) decrease in prepaids and deposits

 

1,089

(8,035)

Increase (decrease) in accounts payable and accrued liabilities

(8,248)

11,668

Increase (decrease) in amounts owing to related parties

(5,024)

4,713

 

 

 

 

 

Net cash used in operating activities

 

 

(870,451)

(965,130)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Issuance of Share Capital

 

 

964,750

1,564,000

 

 

 

 

 

Net cash provided by financing activities

 

964,750

1,564,000

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Mineral property interests and Exploration and evaluation costs

(net of recovery)

(1,248,137)

(2,137,956)

Purchase of equipment, vehicles or furniture

-  

(4,238)

Disposal of vehicle

 

 

1,559

-  

 

 

 

 

 

Net cash used in investing activities

 

 

(1,246,578)

(2,142,194)

 

 

 

 

 

Change in cash and cash equivalents during the period

 

(1,152,279)

(1,543,324)

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

1,799,650

3,342,974

 

 

 

 

 

Cash and cash equivalents, end of period

 

$      647,371

$   1,799,650





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



- 101 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



1.

CORPORATE INFORMATION


The Company was incorporated on February 18, 1983 under the Company Act of British Columbia as Booker Gold Explorations Limited.  On February 8, 2000, the Company changed its name to Pacific Booker Minerals Inc.  The address of the Company’s corporate office and principal place of business is located at Suite #1702 - 1166 Alberni Street, Vancouver, British Columbia, Canada.


The Company’s principal business activity is the exploration of its mineral property interests, with its principal mineral property interests located in Canada.  The Company is listed on the TSX Venture Exchange (“TSX-V”) and the NYSE Amex Equities Exchange (“AMEX”) under the symbols “BKM” and “PBM”, respectively.



2.

BASIS OF PRESENTATION


(a)

Statement of compliance


These financial statements represent the first annual financial statements of the Company prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).  The Company adopted International Financial Reporting Standards (“IFRS”) in accordance with IFRS 1, First-Time Adoption of International Financial Reporting Standards.  The first date at which IFRS was applied was February 1, 2010.  In accordance with IFRS, the Company has:

·

provided comparative financial information;

·

applied the same accounting policies throughout all periods presented;

·

retrospectively applied all effective IFRS standards as of February 1, 2010 as required; and,

·

applied certain optional exemptions and certain mandatory exceptions as applicable for first-time IFRS adopters. (Note 19)


The Company’s financial statements were previously prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”).  Canadian GAAP differs in some areas from IFRS.  In preparing these financial statements, management has amended certain accounting and measurement methods previously applied in the Canadian GAAP financial statements to comply with IFRS.  Note 19 contains reconciliations and descriptions of the effect of the transition from Canadian GAAP to IFRS on equity and loss and comprehensive loss along with line by line reconciliations of the statements of financial position as at February 1, 2010 and January 31, 2011, and the statements of loss and comprehensive loss for the ended January 31, 2011.


The significant accounting policies applied in these annual financial statements are based on IFRS issued and outstanding on May 7, 2012, the date on which the Board of Directors approved the annual financial statements.


(b)

Going concern of operations


These financial statements have been prepared on the basis of the accounting principles applicable to a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  These financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern.  The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing.



- 102 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



2.

BASIS OF PRESENTATION (cont’d)


(b)

Going concern of operations (cont’d)


The ability of the Company to realize the costs it has incurred to date on its mineral property interests is dependent upon the Company being able to finance its exploration costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the mineral property interest.  To date, the Company has not earned any revenue and is considered to be in the advanced exploration stage.


There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations.  Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the statement of financial position.


 

 


January 31,

 2012


January 31,

 2011

 (Note 19)


February 1,

 2010

 (Note 19)

 

 

 

 

 

 

Working capital

$        470,464

$     1,528,588

$      2,830,540

 

Deficit

28,047,406

24,258,765

22,138,850



(c)

Basis of Measurement


The financial statements have been prepared under the historical cost convention, except for certain financial instruments which are measured at fair value through profit or loss.



(d)

Functional and presentation currency


The financial statements are presented in Canadian dollars, which is Company’s functional and presentation currency.



(e)

Critical accounting judgements and key sources of estimation uncertainty


The preparation of these financial statements, in conformity with IFRS, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Actual results may differ from these estimates.


Estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions of accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.




- 103 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



2.

BASIS OF PRESENTATION (cont’d)


(e)

Critical accounting judgements and key sources of estimation uncertainty (cont’d)


The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are as follows:


(i)

Recoverability of asset carrying values for equipment, vehicles and furniture

The declining balance depreciation method used reflects the pattern in which management expects the asset’s future economic benefits to be consumed by the Company.  The Company assesses its equipment, vehicles and furniture for possible impairment if there are events or changes in circumstances that indicate that carrying values of the assets may not be recoverable, or at least, at every reporting period as described in Note 3(d).  Such indicators include changes in the Company’s business plans and evidence of physical damage.


(ii)

Share based payments

The Company has an equity-settled share-based compensation plan for directors, officers, employees and consultants.  Services received are measured by reference to the fair value of the equity instruments and are recognized as share-based compensation expense over the vesting period of the equity instruments with a corresponding increase to equity.  The fair value of share options are estimated on the date of grant by using the Black-Scholes option-pricing model, based on certain assumptions.  Those assumptions are described in Note 8 of the annual financial statements and include, among others, expected volatility, expected life of the options and number of options expected to vest.


(iii)

Taxes

Provisions for income taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period.  However, it is possible that at some future date an additional liability could result from audits by taxing authorities.  Where the final outcome of these tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.


(iv)

Exploration and evaluation assets

Although the Company has taken steps to verify title to mineral properties in which it has an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title.  Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.


Recovery of amounts indicated under mining properties and the related exploration and evaluation assets are subject to the discovery of economically recoverable reserves, the Company's ability to obtain the financing required to complete development and profitable future production or the proceeds from the sale of such assets.  At January 31, 2012, management determined that the net carrying value of mining properties represented the best estimate of their net recoverable value.  Significant assumptions and estimates used by management to determine the recoverable value are included in Note 3(c).


(v)

Restoration and close down provisions

The Company recognizes reclamation and close down provisions based on “Best Estimate” which can be based on internal or external costs.  Significant assumptions used by management to ascertain the provision are described in Note 3(e).



- 104 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The accounting policies set out below have been applied consistently, to all periods presented in these financial statements.  The significant accounting policies adopted by the Company are as follows:


(a)

Foreign currency translation

The monetary assets and liabilities of the Company that are denominated in foreign currencies are translated to functional currency at the rate of exchange at the reporting date and non-monetary items are translated using the exchange rate at the date of the transaction.  Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions.  Exchange gains and losses arising on translation are included in the statement of profit or loss.


(b)

Cash and cash equivalents

Cash includes cash on hand and demand deposits.  Cash equivalents includes short-term, highly liquid investments that are readily convertible to known amounts of cash and have a maturity date of less than 90 days and are subject to an insignificant risk of change in value.


(c)

Mineral property interests and Exploration and evaluation assets

All costs related to the acquisition of mineral properties are capitalized as Mineral Property interest.  The recorded cost of mineral property interests is based on cash paid and the value of share consideration issued for mineral property interest acquisitions.


All pre-exploration costs, i.e. costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on an area of interest, are expensed as incurred.  Once the legal right to explore has been acquired, exploration and evaluation expenditures are capitalized in respect of each identifiable area of interest until the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.  Costs incurred include appropriate technical and administrative overheads.  Exploration and evaluation assets are carried at historical cost, less any impairment losses recognized.


When technical feasibility and commercial viability of extracting a mineral resource are demonstrable for an area of interest, the company stops capitalizing exploration and evaluation costs for that area, tests recognized exploration and evaluation assets for impairment and reclassifies any unimpaired exploration and evaluation assets either as tangible or intangible mine development assets according to the nature of the assets.  Mineral properties are reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.  If, after management review, it is determined that the carrying amount of a mineral property is impaired, that property is written down to its estimated net realizable value.  When a property is abandoned, all related costs are written off to operations.


(d)

Impairment


(i)

Financial assets

Financial assets are assessed at each reporting date to determine whether there is objective evidence that they are impaired.  A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.


An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.  Losses are recognized in profit or loss and reflected in an allowance account against receivables.  Interest on the impaired asset continues to be recognized through the unwinding of the discount.  When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.



- 105 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)


(d)

Impairment (cont’d)


(ii)

Non-financial assets

The carrying amounts of equipment are reviewed at each reporting date to determine whether there is any indication of impairment.


The carrying amounts of mining properties and exploration and evaluation assets are assessed for impairment only when indicators of impairment exist, typically when one of the following circumstances applies:

·

Exploration rights have / will expire in the near future;

·

No future substantive exploration expenditures are budgeted;

·

No commercially viable quantities discovered and exploration and evaluation activities will be discontinued;

·

Exploration and evaluation assets are unlikely to be fully recovered from successful development or sale.  If any such indication exists, then the asset’s recoverable amount is estimated.


Mining properties and exploration and evaluation assets are also assessed for impairment upon the transfer of exploration and evaluation assets to development assets regardless of whether facts and circumstances indicate that the carrying amount of the exploration and evaluation assets is in excess of their recoverable amount.


The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.  In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.  For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU").  The level identified by the group for the purposes of testing exploration and evaluation assets for impairment corresponds to each mining property.


An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.  Impairment losses are recognized in profit or loss.  Impairment losses recognized in respect of CGUs are allocated to the assets in the unit (group of units) on a pro rata basis.


Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.  An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.  An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.



- 106 -






PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)


(e)

Restoration and close down provision

The Company records the present value of estimated costs of legal and constructive obligations required to restore locations in the period in which the obligation is incurred with a corresponding increase in the carrying value of the related mining asset.  The obligation is generally considered to have been incurred when mine assets are constructed or the ground environment is disturbed at the production location.  The discounted liability is adjusted at the end of each period to reflect the passage of time, based on the discount rates that reflect current market assessments and the risks specific to the liability, and changes in the estimated future cash flows underlying the obligation.


The Company also estimates the timing of the outlays, which is subject to change depending on continued operation or newly discovered reserves.


The periodic unwinding of the discount is recognized in earnings as a finance cost.  Additional disturbances or changes in restoration costs will be recognized as changes to the corresponding assets and asset retirement obligation when they occur.


The Company has determined that it has no restoration obligations as at January 31, 2012.


(f)

Equipment, vehicles and furniture

Equipment, vehicles and furniture are recorded at cost.  Depreciation is calculated on the residual value, which is the historical cost of an asset less the allowances made.  Depreciation methods, useful life and residual value are reviewed at each financial year-end and adjusted, if appropriate.  Where an item of equipment, vehicles and furniture is comprised of major components with different useful lives, the components are accounted for as separate items.  The Company currently provides for depreciation annually as follows:


 

Automobile

30% declining balance

 

Computer equipment

30% to 45% declining balance

 

Office furniture and equipment

20% declining balance

 

Trailers

30% declining balance


(g)

Share based payments

The Company has an equity settled share based compensation plan that grants stock options to buy common shares of the Company to directors, officers, employees and consultants.  The fair value of stock options is estimated at the grant date, using the Black-Scholes option pricing model and recorded as share based payments expense in statement of profit and loss and credited to contributed surplus within shareholders’ equity, over the vesting period of the stock options, based on the Company’s estimate of the number of stock options that will eventually vest.


(h)

Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments.  Under this method, the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments.  It assumes that the proceeds would be used to purchase common shares at the average market price during the year.  The weighted average number of common shares outstanding for the period ended January 31, 2012 do not include the nil (2011 – nil) warrants outstanding and the 2,198,057 (2011 – 2,008,057) stock options outstanding as the inclusion of these amounts would be anti-dilutive.  Basic loss per share is calculated using the weighted-average number of common shares outstanding during the period.



- 107 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)


(i)

Income taxes

Income tax expense comprises current and deferred income tax.  Income tax is recognized in the statement of comprehensive loss except to the extent it relates to items recognized in other comprehensive income or directly in equity.


(i)

Current income tax

Current income tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible.  Current income tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period.  Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.  Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.


(ii)

Deferred income tax

Deferred income taxes are the taxes expected to be payable or recoverable between the carrying amounts of assets in the statement of financial position and their corresponding tax bases used in the computation of taxable profit, and are accounted for using the statement of financial position liability method.  Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases.  Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized.  Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.


Deferred income tax liabilities:

·

are generally recognized for all taxable temporary differences;

·

are recognized for taxable temporary differences arising on investments in subsidiaries except where the reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future; and

·

are not recognized on temporary differences that arise from goodwill which is not deductible for tax purposes.


Deferred income tax assets:

·

are recognized to the extent it is probable that taxable profits will be available against which the deductible temporary differences can be utilized; and

·

are reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of an asset to be recovered.


(j)

Financial Instruments


(i)

Financial assets

The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. Management determines the classification of its financial assets at initial recognition.


Fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets at fair value through profit or loss are initially recognized at fair value with changes in fair value recorded through the statement of comprehensive loss.  Cash and cash equivalents are included in this category of financial assets.



- 108 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)


(j)

Financial Instruments (cont’d)


(i)

Financial assets (cont’d)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  They are classified as current assets or non-current assets based on their maturity date, and are carried at amortized cost, using the effective interest method, less any impairment.  Loans and receivables are comprised of amounts receivable and security deposits and due from related parties.


All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date.  Financial assets are impaired when there is any objective evidence that a financial asset or group of financial assets is impaired.  Different criteria to determine impairment are applied for each category of financial assets, which are described above.


Financial assets are de-recognized when the contractual rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred.


Gains or losses related to impairment or de-recognition are recognized in the statement of comprehensive loss in the period in which they occur.


(ii)

Financial liabilities

The Company classifies its financial liabilities as other financial liabilities.  Management determines the classification of its financial liabilities at initial recognition.  Other financial liabilities are non-derivatives and are recognized initially at fair value, net of transaction costs incurred and are subsequently stated at amortized cost.  Any difference between the amounts originally received, net of transaction costs, and the redemption value is recognized in the profit and loss statement over the period to maturity using the effective interest method.


Other financial liabilities include accounts payable and accrued liabilities, convertible debentures, and long term debt.


Financial liabilities are classified as current liabilities if payment is due within one year or less.  If not, they are presented as non-current liabilities.


(k)

Equity Instruments

Equity instruments issued by the Company are recorded at the proceeds received net of direct issuance costs.


(l)

Leases

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.  Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.  Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.  Leases in terms of which the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases, which are recognised as an expense on a straight-line basis over the lease term.


(m)

Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.  Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability.  The unwinding of the discount is recognized as a finance cost.



- 109 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)


(n)

Finance costs

Finance costs comprise interest expense on borrowings and unwinding of the discount on provisions. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in the income statement using the effective interest method.



4.

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE


Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or International Financing Reporting Interpretations Committee (“IFRIC”) that are mandatory for accounting periods after January 31, 2012.  Pronouncements that are not applicable or are not expected to have a significant impact on the Company have not been included below.


(a)

IFRS 9, Financial Instruments

The IASB has issued a new standard, IFRS 9, Financial Instruments (“IFRS 9”), which will ultimately replace IAS 39, “Financial Instruments: Recognition and Measurement” (“IAS 39”).  The replacement of IAS 39 is a multi-phase project with the objective of improving and simplifying the reporting for financial instruments and the issuance of IFRS 9 is part of the first phase of this project.  IFRS 9 uses a single approach to determine whether a financial asset or liability is measured at amortized cost or fair value, replacing the multiple rules in IAS 39.  For financial assets, the approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets.  IFRS 9 requires a single impairment method to be used, replacing multiple impairment methods in IAS 39.  For financial liabilities measured at fair value, fair value changes due to changes in an entity’s credit risk are presented in other comprehensive income.  IFRS 9 is effective for annual periods beginning on or after January 1, 2015 with earlier adoption permitted.  The Company has not early-adopted the standard and is currently assessing the impact it will have on the financial statements.


(b)

IFRS 13, Fair Value Measurements

IFRS 13 defines fair value, sets out in a single IFRS framework for measuring value and requires disclosures about fair value measurements.  The IFRS 13 applies to IFRSs that require or permit fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except in specified circumstances.  IFRS 13 is to be applied for annual periods beginning on or after January 1, 2013.  Earlier adoption is permitted.  The Company is currently evaluating the impact of the standard on its financial statements.


(c)

Amendments to IAS 1, Presentation of Financial Statements

The amendments introduce changes to presentation of items of other comprehensive income.  The amendments require that an entity present separately the items of other comprehensive income that would be reclassified to profit and loss in the future if certain conditions are met from those that would never be reclassified to profit and loss.  The amendments are to be applied effective July 1, 2012 and may be early adopted.  The amendments are to be applied retroactively in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.  The Company is currently evaluating the impact of the amendments on its consolidated financial statements.




- 110 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



5.

MINERAL PROPERTY INTERESTS


Title to mineral property interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral claims.  The Company has investigated title to all of its mineral property interests and, to the best of its knowledge, title to all of its interests are in good standing.  The mineral property interests in which the Company has committed to earn an interest are located in Canada.


 



Morrison claims, Canada



2012



2011



2010

 

 

 

 

 

 

Balance, beginning and end of period

$   4,832,500

$   4,832,500

$   4,832,500

 

 

 

 

 



Morrison claims

On April 19, 2004, the Company and Noranda Mining and Exploration Inc, “Noranda" (which was subsequently acquired by Falconbridge Limited, "Falconbridge", which was subsequently acquired by Xstrata LLP, "Xstrata”) signed an agreement whereby Noranda agreed to sell its remaining 50% interest to the Company such that the Company would have a 100% interest in the Morrison claims.  In order to obtain the remaining 50% interest, the Company agreed to:

i)

on or before June 19, 2004, pay $1,000,000 (paid to Noranda), issue 250,000 common shares  (issued to Noranda) and issue 250,000 share purchase warrants exercisable at $4.05 per share until June 5, 2006 (issued to Noranda);

ii)

pay $1,000,000 on or before October 19, 2005 (paid to Falconbridge);

iii)

pay $1,500,000 on or before April 19, 2007 (paid to Falconbridge); and

iv)

issue 250,000 common shares on or before commencement of commercial production.

In the event the trading price of the Company’s common shares is below $4.00 per share, the Company is obligated to pay, in cash, the difference between $1,000,000 and the average trading price which is less than $4.00 per share multiplied by 250,000 common shares.

The Company agreed to execute a re-transfer of its 100% interest to Falconbridge if the Company fails to comply with the terms of the agreement.  This re-transfer is held by a mutually acceptable third party until the final issue of shares has been made.


The Company has also acquired a 100% interest in certain mineral claims adjacent to the Morrison claims, subject to 1.5% NSR royalty.  On January 7, 2005, the Company signed an agreement to acquire an option for a 100% interest in additional claims in the Omineca District of B.C.  As consideration, the Company issued 45,000 common shares at a value of $180,000.


Hearne Hill claims

The Company held a 100% interest in the Hearne Hill claims located in the Omineca District of the Province of British Columbia (“B.C.”).  During the year ended January 31, 2006, management decided not to continue with the Hearne Hill claims and wrote off the property to operations.  The Hearne Hill claims were subject to a legal claim, which was settled in during the year ended January 31, 2009.  Pursuant to the settlement, the Company retains the right, title and interest in and to all claims that were the subject of the action, with the exception of Mineral Tenure No. 242812 (the “Hearne 1 Claim”) and Mineral Tenure No. 242813 (the “Hearne 2 Claim”), which were transferred to the plaintiff optionors.  No cash payment was made to the plaintiffs and all claims in the action have been dismissed.



- 111 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



5.

MINERAL PROPERTY INTERESTS (cont’d)


Copper claims

The Company holds a 100% interest in certain mineral claims located in the Granisle area of B.C., subject to a 3% NSR royalty.  These claims are located near the Morrison claims.  The Company has met its requirements to maintain its recorded interest in the mineral claims with the Province of B.C. until 2016 and there are no other payments required until that year.  During the year ended January 31, 2005, management decided not to continue with these claims and therefore, the amounts were written-off to operations.


CUB claims

The Company holds a 100% interest in certain mineral claims located in the Granisle area of B.C., subject to a 3% NSR royalty.  These claims are located near the Morrison claims.  The Company has met its requirements to maintain its recorded interest in the mineral claims with the Province of B.C. until 2016 and there are no other payments required until that year.  During the year ended January 31, 2005, management decided not to continue with these claims and therefore, the amounts were written-off to operations.


6.

EXPLORATION AND EVALUATION ASSETS


 


Morrison claims, Canada

2012

2011

2010

 

 

 

 

 

 

Balance, beginning of period

$   22,664,614

$   20,788,465

$   17,606,430

 

 

 

 

 

 

Exploration and evaluation costs

 

 

 

 

Additions

 

 

 

 

Depreciation

305

830

1,185

 

Staking and recording

-  

833

-  

 

Supplies and camp

18,195

18,392

18,000

 

Community consultation

 

 

 

 

Geological and geophysical

153

234

783

 

Sub-contracts and labour

20,625

19,575

45,056

 

Supplies and general

-  

4,411

3

 

Travel

-  

2,254

1,610

 

Environmental

 

 

 

 

Assays

65,900

90,018

19,960

 

Geological and geophysical

662,632

1,000,313

247,960

 

Promotion and education

766

4,796

480

 

Sub-contracts and labour

675

11,440

2,465

 

Supplies and general

22,272

104,328

5,534

 

Travel

2,527

7,408

3,873

 

Metallurgical

 

 

 

 

Assays

600

450

-  

 

Geological and geophysical

11,630

6,100

(14,387)

 

Scoping/Feasibility study

 

 

 

 

Assays

-  

10,064

531

 

Drilling

-  

151,284

128,402

 

Geological and geophysical

7,500

18,583

2,175,454

 

Staking and recording

-  

520

1,144

 

Sub-contracts and labour

223,034

317,301

321,457

 

Sub-contracts and labour - related parties

96,000

96,000

118,001

 

Supplies and general

432

3,519

70,510

 

Travel

-  

7,496

34,014

 

 

 

 

 

 

Total Exploration and evaluation costs for the period

$     1,133,246

$     1,876,149

$     3,182,035

 

 

 

 

 

 

Balance, end of period

$   23,797,860

$   22,664,614

$   20,788,465



- 112 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



7.

EQUIPMENT, VEHICLES AND FURNITURE


 

 


Balance

February 1,

2011



Additions

for period



Disposals

for period


Balance

January 31,

2012

 

 

 

 

 

 

 

Trailers

 

 

 

 

 

Value at Cost

$     25,000

$               -  

$                -  

$      25,000

 

Accumulated Depreciation

(24,899)

(30)

-  

(24,929)

 

Net book value

$          101

$            (30)

$                -  

$             71

 

 

 

 

 

 

 

Automobile

 

 

 

 

 

Value at Cost

$     80,160

$               -  

$      (12,840)

$      67,320

 

Accumulated Depreciation

(38,271)

(12,292)

11,281

(39,282)

 

Net book value

$     41,889

$     (12,292)

$        (1,559)

$      28,038

 

 

 

 

 

 

 

Office furniture and equipment

 

 

 

 

 

Value at Cost

$     50,528

$               -  

$               -  

$      50,528

 

Accumulated Depreciation

(43,809)

(1,344)

-  

(45,153)

 

Net book value

$       6,719

$       (1,344)

$               -  

$        5,375

 

 

 

 

 

 

 

Computer equipment

 

 

 

 

 

Value at Cost

$     88,283

$               -  

$               -  

$      88,283

 

Accumulated Depreciation

(73,284)

(6,646)

-  

(79,930)

 

Net book value

$     14,999

$       (6,646)

$               -  

$        8,353

 

 

 

 

 

 

 

Totals

$     63,708

$     (20,312)

$       (1,559)

$      41,837



 

 


Balance

February 1,

2010



Additions

for period



Disposals

for period


Balance

January 31,

2011

 

 

 

 

 

 

 

Trailers

 

 

 

 

 

Value at Cost

$     25,000

$               -  

$              -  

$     25,000

 

Accumulated Depreciation

(24,856)

(43)

-  

(24,899)

 

Net book value

$          144

$            (43)

$              -  

$          101

 

 

 

 

 

 

 

Automobile

 

 

 

 

 

Value at Cost

$     80,160

$               -  

$              -  

$     80,160

 

Accumulated Depreciation

(20,317)

(17,954)

-  

(38,271)

 

Net book value

$     59,843

$     (17,954)

$              -  

$     41,889

 

 

 

 

 

 

 

Office furniture and equipment

 

 

 

 

 

Value at Cost

$     50,528

$               -  

$              -  

$     50,528

 

Accumulated Depreciation

(42,130)

(1,679)

-  

(43,809)

 

Net book value

$       8,398

$       (1,679)

$              -  

$       6,719

 

 

 

 

 

 

 

Computer equipment

 

 

 

 

 

Value at Cost

$     84,045

$        4,238

$              -  

$     88,283

 

Accumulated Depreciation

(63,015)

(10,269)

-  

(73,284)

 

Net book value

$     21,030

$       (6,031)

$              -  

$     14,999

 

 

 

 

 

 

 

Totals

$     89,415

$     (25,707)

$              -  

$     63,708



- 113 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



8.

SHARE CAPITAL, SHARE BASED PAYMENTS AND CONTRIBUTED SURPLUS


Authorized:  100,000,000 common shares without par value


Share based payments


During the fiscal year ended January 31, 2004, the Company adopted an equity settled stock option plan whereby the Company can reserve approximately 20% of its outstanding shares for issuance to officers and directors, employees and consultants.  Under the plan, the exercise price of each option equals the market price of the Company’s stock as calculated on the date of grant.  These options can be granted for a maximum term of 10 years, and are subject to a vesting provision whereby 12.5% are exercisable on the date of the grant and 12.5% become exercisable every three months thereafter.  All options will be vested after twenty one months.


During the period ended January 31, 2012, 181,000 stock options (2011 - 380,000; 2010 - 240,000) with an exercise price of $5.33 (2011 - $4.12; 2010 - $3.87) were exercised for total proceeds of $964,750 (2011 - $1,564,000; 2010 - $928,800).


Stock option transactions are summarized as follows:


 

 


2012

 


2011

 


2010

 

 



Number

of

Options


Weighted

Average

Exercise

Price

 



Number

of

Options


Weighted

Average

Exercise

Price

 



Number

of

Options


Weighted

Average

Exercise

Price

 

 

 

 

 

 

 

 

 

 

 

Outstanding,

 beginning of year

2,008,057

$   8.02

 

2,000,357

$   7.34

 

2,065,357

$   7.08

 

Granted

1,014,827

7.42

 

387,700

7.70

 

190,000

5.75

 

Cancelled

(558,827)

10.40

 

-   

        -

 

(15,000)

7.80

 

Exercised

(181,000)

5.33

 

(380,000)

4.12

 

(240,000)

3.87

 

Expired

        (85,000)

5.81

 

                 -    

-

 

               -    

-

 

 

 

 

 

 

 

 

 

 

 

Outstanding,

 end of year

2,198,057

$   7.44

 

2,008,057

$   8.02

 

2,000,357

$   7.34

 

 

 

 

 

 

 

 

 

 

 

Options exercisable,

 end of year

1,340,511

$   7.44

 

1,741,994

$   8.09

 

1,804,415

$   7.42

 

 

 

 

 

 

 

 

 

 

 

Weighted average fair value

 per option granted


$   3.48

 



$  3.52

 




$   2.12

 

 

 

 

 

 

 

 

 

 

 

Weighted average remaining life of outstanding options granted in years


4.46

 



2.71

 



2.15



- 114 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



8.

SHARE CAPITAL AND CONTRIBUTED SURPLUS (cont’d)


Stock options (cont’d)


The following stock options were outstanding at January 31, 2012:


 


Number of Options Outstanding

 


Number Currently

Exercisable

 



Exercise

Price

 




Expiry Date

 

 

 

 

 

 

 

 


617,530

 

617,530

 

$   7.81

 

June 23, 2013


180,000

 

180,000

 

$   5.75

 

July 13, 2014 (5,000 exercised subsequently)


385,700

 

337,487

 

$   7.70

 

June 30, 2017


606,827

 

227,558

 

$   7.44

 

May 16, 2018


408,000

 

153,000

 

$   7.40

 

June 20, 2018



Share based payment expense


The fair value of stock options granted during the period ended January 31, 2012 was $3,530,914 (2011 – $1,364,869; 2010 - $403,773) which will be recognized as share based payments over their vesting periods.


Total share based payments recognized during the period ended January 31, 2012 was $2,877,142 (2011 – $1,104,405; 2010 - $1,590,297) which has been recorded in the statements of operations as Share based payments with corresponding contributed surplus recorded in shareholders' equity.


The following weighted average assumptions were used for the Black-Scholes valuation of stock options granted during the period:


 

 


2012


2011


2010

 

 

 

 

 

 

Risk-free interest rate

2.36%

2.32%

1.89%

 

Expected life of options

5 years

3 years

3 years

 

Annualized volatility

53.15%

49.98%

52.57%

 

Dividends

0.00%

0.00%

0.00%



Warrants


No share purchase warrants were outstanding at January 31, 2012, 2011 and 2010.



- 115 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



9.

LOSS PER SHARE


The weighted average number of common shares outstanding for the period ended January 31, 2012 do not include the nil (2011 – nil; 2010 - nil) warrants outstanding and the 2,198,057 (2011 – 2,008,057; 2010 - 2,000,357) stock options outstanding as the inclusion of these amounts would be anti-dilutive.  Basic loss per share is calculated using the weighted-average number of common shares outstanding during the period.


 

 

 

 

 

 

2012

2011

2010

 

 

 

 

 

 

Basic and diluted loss per common share

$

(0.31)

$

(0.18)

$

(0.23)

 

 

 

 

 

 

Weighted average number of common shares outstanding

12,129,481

11,799,679

11,438,239



10.

RELATED PARTY TRANSACTIONS AND AMOUNTS OWING TO


The Company entered into the following transactions with related parties:


 

 


2012

 


2011

 


2010

 




Paid to a:


Amounts

paid

or payable


Share

based

payment



Owed at

year end

 


Amounts

paid

or payable


Share

based

payment



Owed at

year end

 


Amounts

paid

or payable


Share

based

payment



Owed at

year end

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

director for investor relations

 

$ 118,804

$ 364,665

$ 5,350

 

$ 123,864

$ 138,858

$ 6,406

 

$ 135,910

$ 140,872

$ 5,792

 

director for investor relations

 

  132,000

  385,081

 9,454

 

  132,000

  138,858

 12,023

 

  132,000

  140,872

 10,212

 

director for consulting services

(a)

  96,000

  385,080

 4,621

 

  96,000

  138,858

 4,480

 

  116,000

  140,872

 4,200

 

spouse of a director

(b)

  312

  12,390

 -  

 

  1,092

  225

 -  

 

  780

  6,421

 -  

 

officer of the company

(c)

  30,893

  192,403

 1,151

 

  31,913

  43,420

 3,057

 

  28,208

  28,746

 2,126

 

owed to a director for expenses

 

  -  

  -  

 1,729

 

  -  

  -  

 1,363

 

  -  

  -  

 543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$378,009

$1,339,619

$22,305

 

$384,869

$460,219

$27,329

 

$412,898

$457,783

$22,873


a)

fees for project management services which have been capitalized to subcontracts on the Morrison claims and stock based payments which have been allocated to operating expenses.

b)

wages for administrative assistant services which have been capitalized to subcontracts on the Morrison claims and stock based payments which have been allocated to operating expenses.

c)

for accounting and management services.


These transactions were in the normal course of operations and have been measured at their exchange amount, which is the amount of consideration established and agreed to by the related parties.  The amounts owing are non-interest bearing, unsecured and have no fixed terms of repayment.



- 116 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



10.

RELATED PARTY TRANSACTIONS AND AMOUNTS OWING TO (cont’d)


Compensation of key management personnel


Key management personnel includes Directors and Executives of the Company.  The compensation paid or payable to key management personnel is as follows:


 

 

 

 

 

2012

2011

 

 

 

 

 

Remuneration or fees

$          396,197

$           396,277

 

Share-based payments

2,767,055

1,011,382

 

 

 

 

 

Total compensation paid to key management personnel

$       3,163,252

$        1,407,659



11.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS


 



2012


2011


2010

 

 

 

 

 

 

Non-cash transactions were as follows:

 

 

 

 

deferred exploration expense recorded as accounts payable

$   158,509

$    273,705

$    536,085

 

deferred exploration expense recorded

as owing to related parties

$       4,000

$        4,000

$        4,257

 

recorded Depreciation expense on property and equipment

as Exploration and evaluation assets

$          305

$           830

$        1,185



12.

INCOME TAXES


The income tax provision differs from income taxes, which would result from applying the expected tax rate to net loss before income taxes.  The difference between the “expected” income tax expense and the actual income tax provision are summarized as follow:


 

 

 


2012


2011

 

 

 

 

 

 

Income/(loss) before income taxes

 

$  (3,788,641)

$  (2,119,915)

 

Canadian statutory income tax rate

 

26.4%

28.3%

 

Computer “expected” income tax expense

 

(1,000,201)

(552,050)

 

 

 

 

 

 

 

 

 

 

 

Differences resulting from:

 

 

 

 

Share based payments

 

759,565

264,661

 

Other non-deductible items

 

3,610

3,352

 

Change in enacted rate

 

10,826

34,262

 

Expiry of loss carryforwards

 

-  

78,775

 

Increase in deferred tax assets not recognized

 

226,200

171,000

 

 

 

 

 

 

Provision for income taxes

 

$                -  

$                -  



- 117 -



PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



12.

INCOME TAXES (cont’d)


The tax effects of deductible and taxable temporary differences that give rise to the Company’s future tax assets and liabilities are as follows:


 

 


2012


2011


2010

 

Deferred income tax assets-Canada

 

 

 

 

 

 

 

 

 

Non-capital loss carry forwards

$   1,518,000

$   1,298,000

$   1,134,000

 

Mineral property interests and

deferred exploration costs

1,723,000

1,723,000

1,723,000

 

Property and equipment

47,000

41,000

34,000

 

 

 

 

 

 

Total deferred income tax asset not recognized

$   3,288,000

$   3,062,000

$   2,891,000


The Company has Canadian non-capital loss carry forwards which expire as follows:


 

2015

$        438,676

 

2026

605,469

 

2027

808,472

 

2028

942,980

 

2029

466,936

 

2030

957,373

 

2031

974,551

 

2032

876,759

 

 

 

 

Total

$     6,071,216


Deferred tax assets have not been recognized because at this stage of the Company’s development, it is not determinable that future taxable profit will be available against which the Company can utilize such deferred income tax assets.



13.

COMMITMENT


The Company has entered into an operating lease agreement for office premises.  The annual lease commitment under the lease is as follows:


 

Year ending January 31,

Amount

 

 

 

 

2013

$      67,318

 

 

 

 

Total

$      67,318


The Company has signed an agreement with a hunting lodge in the area of the project, which, conditional on the receipt of applicable permits and licences, requires the Company to pay $100,000 (plus sales tax if required) as full and final compensation for any loss of business which the lodge may suffer in connection with the construction, development and overall operation of the mine.  This payment is required to be made three months prior to commencement of construction.




- 118 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



14.

SEGMENTED INFORMATION


The Company has determined that it had only one operating segment, i.e. mining exploration.  The Company’s mining operations are centralized whereby the Company’s head office is responsible for the exploration results and to provide support in addressing local and regional issues.  As at January 31, 2012, 2011 and 2010, the Company’s assets are all located in Canada (Notes 5 and 7).



15.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT


The Company's financial instruments include cash and cash equivalents, receivables and deposits, and accounts payable and accrued liabilities and reclamation deposits.  The carrying values of these financial instruments approximate their fair values due to their relatively short periods to maturity.


The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company's activities.  The Company has exposure to credit risk, liquidity risk and market risk as a result of its use of financial instruments.


This note presents information about the Company's exposure to each of the above risks and the Company's objectives, policies and processes for measuring and managing these risks.  Further quantitative disclosures are included throughout these financial statements.  The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework.  The Board has implemented and monitors compliance with risk management policies.


(a)  Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.  The Company's accounts receivable primarily relates to Harmonized Sales Tax input tax credits and accrued interest.  Accordingly, the Company views credit risk on accounts receivable as minimal.


(b)  Liquidity risk

Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due.  The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company's reputation.


The Company anticipates it will have adequate liquidity to fund its financial liabilities through cash on hand and future equity contributions.


As at January 31, 2012, the Company's financial liabilities were comprised of accounts payable and accrued liabilities which have a maturity of less than one year.



- 119 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



15.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont’d)


(c)  Market risk

Market risk consists of currency risk, commodity price risk and interest rate risk.  The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.


(i)

Currency risk--Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates.  Although the Company is considered to be in the exploration stage and has not yet developed commercial mineral interests, the underlying market prices in Canada for minerals are impacted by changes in the exchange rate between the Canadian and United States dollar.  As most of the Company's transactions are denominated in Canadian dollars, the Company is not exposed to foreign currency exchange risk at this time.


(ii)

Commodity price risk--Commodity price risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in commodity prices.  Commodity prices for minerals are impacted by world economic events that dictate the levels of supply and demand as well as the relationship between the Canadian and United States dollar, as outlined above.  As the Company has not yet developed commercial mineral interests, it is not exposed to commodity price risk at this time.


(iii)

Interest rate risk--Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.  As the Company has no debt or interest-earning investments, it is not exposed to interest rate risk at this time.



16.

CAPITAL MANAGEMENT


The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of mineral properties.  The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.  The Company defines capital that it manages as share capital.


Management reviews its capital management approach on an on-going basis and believes that this approach, given the relative size of the Company, is reasonable.


The Company is in the business of mineral exploration and has no source of operating revenue.  Operations are financed through the issuance of capital stock.  Capital raised is held in cash in an interest bearing bank account until such time as it is required to pay operating expenses or resource property costs.  The Company is not subject to any externally imposed capital restrictions.  Its objectives in managing its capital are to safeguard its cash and its ability to continue as a going concern, and to utilize as much of its available capital as possible for exploration activities.  The Company’s objectives have not changed during the year ended January 31, 2012.



- 120 -





PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



17.

CONTINGENCY


During the fiscal year ended January 31, 2011, the Company was served with a Notice of Civil Claim by Rescan Environmental Services Ltd. (Rescan).  The claim stems from Rescan’s demand for payment of $191,997.54 in outstanding invoices, which the Company disputes.  The Company filed its Response to the Notice of Civil Claim served by Rescan in September 2010.  The Company has filed a Counterclaim against Rescan seeking damages for professional negligence, misrepresentation, and breach of contract.  Subsequent to the end of the fiscal year, Rescan submitted an amended response to the counterclaim.  Substantially all of the outstanding invoice amounts claimed by Rescan have been paid into trust with the Company's solicitors pending resolution of this claim.  The ultimate liability or recovery, if any, arising from this claim is not presently determinable and will be recorded at the time of that determination.



18.

EVENTS AFTER REPORTING DATE


Subsequent to the end of the period, the Company has issued 15,000 common shares on exercise of options for total proceeds of $105,750 and a reclassification of Contributed surplus to capital stock in the amount of $45,830.  The Company has not granted any options or announced any private placements.



19.

TRANSITION TO IFRS


For all periods up to and including January 31, 2011, the Company prepared its financial statements in accordance with Canadian GAAP.  These financial statements for the year ended January 31, 2012 are the first annual financial statements the Company has prepared in accordance with IFRS as in effect as at January 31, 2012, as detailed in the accounting policies described in Note 3.  In preparing these financial statements, the Company's opening statement of financial position was prepared as at February 1, 2010, the Company's date of transition to IFRS.


IFRS 1 First-time Adoption of International Financial Reporting Standards sets forth guidance for the initial adoption of IFRS.  Under IFRS 1 the standards are applied retrospectively at the transitional statement of financial position date with all adjustments to assets and liabilities taken to deficit unless certain exemptions are applied.


This note explains the principal adjustments made by the Company in restating its Canadian GAAP consolidated statements of financial position as at February 1, 2010 and its previously published Canadian GAAP financial statements for the year ended January 31, 2011.


The transition from Canadian GAAP to IFRS had no impact on cash flows generated by the Company.  Therefore, a reconciliation of cash flows has not been presented.



- 121 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



19.

TRANSITION TO IFRS (cont’d)


(a)  IFRS transition elections


The Company has elected to apply the following optional exemptions from full retrospective application:


(i)  Share-based payments

IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2, Share-based Payments ("IFRS 2"), to equity instruments that were granted on or before November 7, 2002, or equity instruments granted after November 7, 2002 and vested before the later of the date of transition to IFRS and January 1, 2005.  The Company has elected to avail itself of the exemption provided under IFRS 1 and has not applied IFRS 2 for all equity instruments granted after November 7, 2002 that had not vested by its transition date.


Under Canadian GAAP, awards with graded vesting provisions are treated as a single award for both measurement and recognition purposes.  IFRS 2 requires that such awards be treated as a series of separate grants, with fair value measured and recognized separately for each tranche within a grant that has a different vesting date


The adjustments for IFRS 2 on the share based payments (previously called stock based compensation expense) and contributed surplus results in a change of balances as follows:


 

 


Contributed

Surplus

increase/(decrease)


Operating expense/

Deficit

(increase)/decrease

 

For periods ended January 31, 2010

$          329,275

$        (329,275)

 

Impact for period ended January 31, 2011

169,207

(169,207)

 

As at January 31, 2011

$          498,482

$        (498,482)



(ii)  Property, plant and equipment

IAS 16 provides the option for an entity to use the cost model for the valuation of property, plant, and equipment, or the revaluation model. The revaluation model requires the restatement of property, plant and equipment to fair market values on an annual basis.  The Company has elected to use the cost model for valuation.



IFRS 1 also outlines specific guidelines that a first-time adopter must adhere to under certain circumstances.  The Company has applied the following guidelines to its opening statement of financial position dated February 1, 2010:


(iii)  Estimates

In accordance with IFRS 1, an entity's estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under previous GAAP, unless there is objective evidence that those estimates were in error. The Company's IFRS estimates as of February 1, 2010 are consistent with its Canadian GAAP estimates for the same date.



- 122 -



PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



19.

TRANSITION TO IFRS (cont’d)


Reconciliation of statement of financial position as at February 1, 2010


 

 

Canadian

GAAP

as at

February 1,

2010



Effect of

Transition to

IFRS





IFRS

 

 

 

 

 

 

ASSETS

 

 

 

 

Current Assets

$    3,459,576

$                 -

$    3,459,576

 

Mineral property interests

4,832,500

 

4,832,500

 

Exploration and evaluation assets

20,788,465

 

20,788,465

 

Equipment, vehicles and furniture

89,415

 

89,415

 

Reclamation deposits

123,600

 

123,600

 

 

 

 

 

 

Total assets

$  29,293,556

$                 -  

$  29,293,556

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

$       606,163

$                 -

$       606,163

 

Amounts owing to related parties

22,873

 

22,873

 

 

 

 

 

 

 

629,036

-  

629,036

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

Share Capital

45,489,248

 

45,489,248

 

Contributed surplus (i)

4,984,847

329,275

5,314,122

 

Deficit (i)

(21,809,575)

(329,275)

(22,138,850)

 

 

 

 

 

 

 

28,664,520

-  

28,664,520

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$  29,293,556

$                 -  

$  29,293,556


(i) Under Canadian GAAP, the Company recognized an expense related to share-based payments on a straight-line basis through the date of full vesting.  Under IFRS, the Company is required to recognize the expense over the individual vesting periods for the graded vesting awards.



- 123 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



19.

TRANSITION TO IFRS (cont’d)


Reconciliation of statement of financial position as at January 31, 2011


 

 


Canadian

GAAP

as at

January 31,

2011




Effect of

Transition to

IFRS






IFRS

 

 

 

 

 

 

ASSETS

 

 

 

 

Current assets

$    1,911,368

$                  -  

$    1,911,368

 

Mineral property interests

4,832,500

 

4,832,500

 

Exploration and evaluation assets

22,664,614

 

22,664,614

 

Equipment, vehicles and furniture

63,708

 

63,708

 

Reclamation deposits

123,600

 

123,600

 

 

 

 

 

 

Total assets

$  29,595,790

$                 -  

$  29,595,790

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

$      355,451

$                 -

$       355,451

 

Amounts owing to related parties

27,329

 

27,329

 

 

 

 

 

 

 

382,780

-  

382,780

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

Share Capital

47,367,605

 

47,367,605

 

Contributed surplus (i)

5,605,688

498,482

6,104,170

 

Deficit (i)

(23,760,283)

(498,482)

(24,258,765)

 

 

 

 

 

 

 

29,213,010

-  

29,213,010

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$  29,595,790

$                  -  

$  29,595,790


(i) Under Canadian GAAP, the Company recognized an expense related to share-based payments on a straight-line basis through the date of full vesting.  Under IFRS, the Company is required to recognize the expense over the individual vesting periods for the graded vesting awards.



- 124 -




PACIFIC BOOKER MINERALS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

FOR THE YEARS ENDED JANUARY 31, 2012 and 2011



19.

TRANSITION TO IFRS (cont’d)


Reconciliation of statement of comprehensive loss for the year ended January 31, 2011


 

 


Canadian

GAAP

as at

January 31,

2011




Effect of

Transition to

IFRS






IFRS

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

Consulting fees-Share based payments (i)

$     211,290

$       15,390

$     226,680

 

Depreciation

29,115

-  

29,115

 

Directors fees

12,500

-  

12,500

 

Directors fees-Share based payments (i)

446,285

105,103

551,388

 

Filing and transfer agent fees

66,360

-  

66,360

 

Foreign exchange (gain)loss

7,102

-  

7,102

 

Finance income

(14,610)

-  

(14,610)

 

Investor relations–related party

255,864

-  

255,864

 

Investor relations fees-Share based payments (i)

239,301

38,414

277,715

 

Office and miscellaneous

81,822

-  

81,822

 

Office rent

85,487

-  

85,487

 

Professional fees

313,395

-  

313,395

 

Professional fees-Share based payments (i)

33,887

9,534

43,421

 

Shareholder information and promotion

85,949

-  

85,949

 

Telephone

17,542

-  

17,542

 

Travel

46,250

-  

46,250

 

Wages and benefits

28,734

-  

28,734

 

Wages and benefits-Share based payments (i)

4,435

766

5,201

 

 

 

 

 

 

Loss from operations

(1,950,708)

(169,207)

(2,119,915)

 

 

 

 

 

 

Income tax expense

-  

-  

-  

 

 

 

 

 

 

Loss and comprehensive loss for the year

(1,950,708)

(169,207)

(2,119,915)


(i) Under Canadian GAAP, the Company recognized an expense related to share-based payments on a straight-line basis through the date of full vesting.  Under IFRS, the Company is required to recognize the expense over the individual vesting periods for the graded vesting awards.



- 125 -












Signature Page


Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.



Pacific Booker Minerals Inc.

Registrant



Dated: May 30, 2012

Signed:   /s/  "Gregory Anderson"

Gregory Anderson,

President and CEO






- 126 -