UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2015
Commission File Number: 001-35404
EURASIAN MINERALS INC.
(Translation of registrants name into English)
Suite 501 543 Granville Street
Vancouver,
British Columbia V6C 1X8
Canada
(Address of principal
executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
[ ] Form 20-F [X]
Form 40-F
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SUBMITTED HEREWITH
Exhibits:
SIGNATURES
Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
|
EURASIAN MINERALS INC. |
|
|
|
(Registrant) |
|
|
Date: May 15, 2015 |
By: |
/s/ Valerie Barlow |
|
|
|
|
Name: |
Valerie Barlow |
|
Title: |
Corporate Secretary |
EURASIAN MINERALS INC.
CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
March 31, 2015
EURASIAN MINERALS INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL
POSITION |
(Unaudited -
Expressed in Canadian Dollars) |
ASSETS |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents
|
$ |
4,059,948 |
|
$ |
6,450,308 |
|
Investments (Note 3) |
|
801,861 |
|
|
743,786 |
|
Receivables (Note 4)
|
|
1,109,915 |
|
|
838,837 |
|
Prepaid expenses |
|
152,056 |
|
|
52,209 |
|
Total current assets |
|
6,123,780 |
|
|
8,085,140 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Restricted cash (Note 5) |
|
232,869 |
|
|
230,144 |
|
Property and
equipment (Note 6) |
|
715,472 |
|
|
751,229 |
|
Investment in associated companies
(Note 7) |
|
3,899,124 |
|
|
4,072,737 |
|
Strategic investments
(Note 3) |
|
317,143 |
|
|
299,524 |
|
Exploration and evaluation assets
(Note 8) |
|
2,472,861 |
|
|
2,379,886 |
|
Royalty interest
(Note 9) |
|
31,520,535 |
|
|
29,327,960 |
|
Reclamation bonds (Note 10) |
|
938,221 |
|
|
823,447 |
|
Goodwill (Note 11)
|
|
8,645,488 |
|
|
8,217,542 |
|
Other assets |
|
104,484 |
|
|
104,484 |
|
Total non-current assets |
|
48,846,197 |
|
|
46,206,953 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
54,969,977 |
|
$ |
54,292,093 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable and accrued
liabilities (Note 14) |
$ |
702,552
|
|
$ |
559,049
|
|
Advances from joint venture partners
(Note 12) |
|
217,496 |
|
|
429,175 |
|
Total current liabilities |
|
920,048 |
|
|
988,224 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Deferred income tax liability |
|
8,645,488 |
|
|
8,217,542 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
9,565,536 |
|
|
9,205,766 |
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Capital stock (Note 13) |
|
116,823,702 |
|
|
116,766,102 |
|
Commitment to issue
shares |
|
297,747 |
|
|
306,999 |
|
Reserves |
|
18,373,028 |
|
|
15,443,247 |
|
Deficit |
|
(90,090,036 |
) |
|
(87,430,021 |
) |
TOTAL SHAREHOLDERS' EQUITY |
|
45,404,441 |
|
|
45,086,327 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
54,969,977 |
|
$ |
54,292,093 |
|
Nature of operations and going concern (Note 1)
Event after the reporting date (Note 18)
Approved on behalf of the Board of Directors on May 13,
2015
Signed:
David M Cole |
Director |
|
Signed:
Larry Okada |
Director |
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
Page 1
EURASIAN MINERALS INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS |
(Unaudited -
Expressed in Canadian Dollars) |
|
|
Three month period
|
|
|
Three month period
|
|
|
|
ended |
|
|
ended |
|
|
|
March 31, 2015 |
|
|
March 31, 2014 |
|
|
|
|
|
|
|
|
ROYALTY INCOME |
$ |
362,991
|
|
$ |
654,718
|
|
Cost of sales |
|
|
|
|
|
|
Gold tax |
|
(18,150 |
) |
|
(32,736 |
) |
Depletion |
|
(342,619 |
) |
|
(387,457 |
) |
Net royalty income |
|
2,222 |
|
|
234,525 |
|
|
|
|
|
|
|
|
EXPLORATION EXPENDITURES
(Note 8) |
|
1,685,722 |
|
|
1,663,425 |
|
Less: recoveries |
|
(411,124 |
) |
|
(432,226 |
) |
Net exploration expenditures |
|
1,274,598 |
|
|
1,231,199 |
|
|
|
|
|
|
|
|
GENERAL AND ADMINISTRATIVE
EXPENSES |
|
|
|
|
|
|
Administrative and office |
|
282,342 |
|
|
254,158 |
|
Depreciation (Note 6) |
|
30,322 |
|
|
34,889 |
|
Investor relations and shareholder
information |
|
78,614 |
|
|
95,224 |
|
Professional fees |
|
52,676 |
|
|
48,967 |
|
Salaries and consultants |
|
361,426 |
|
|
335,589 |
|
Share-based payments (Note
13) |
|
45,794 |
|
|
51,752 |
|
Transfer agent and filing fees |
|
72,370 |
|
|
80,736 |
|
Travel |
|
66,255 |
|
|
88,785 |
|
Total general and administrative expenses |
|
989,799 |
|
|
990,100 |
|
|
|
|
|
|
|
|
Loss from operations |
|
(2,262,175 |
) |
|
(1,986,774 |
) |
|
|
|
|
|
|
|
Change in fair value of fair value throught
profit or loss investments |
|
(78,657 |
) |
|
160,451 |
|
Gain on acquisition and sale
of exploration and evaluation assets |
|
132,286 |
|
|
- |
|
Equity loss in associated companies (Note 7)
|
|
(173,613 |
) |
|
(272,400 |
) |
Foreign exchange gain (loss)
|
|
(40,949 |
) |
|
(116,519 |
) |
Realized loss on sale of investments |
|
- |
|
|
(19,049 |
) |
Other (Note 14) |
|
(236,907 |
) |
|
29,146 |
|
Writedown of goodwill (Note 11) |
|
(283,490 |
) |
|
- |
|
Gain on derecognition and
sale of property and equipment |
|
- |
|
|
11,577 |
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
(2,943,505 |
) |
|
(2,193,568 |
) |
Deferred income tax recovery |
|
283,490 |
|
|
26,043 |
|
|
|
|
|
|
|
|
Loss for the period |
$ |
(2,660,015 |
) |
$ |
(2,167,525 |
) |
|
|
|
|
|
|
|
Basic and diluted loss per share |
$ |
(0.04 |
) |
$ |
(0.03 |
) |
|
|
|
|
|
|
|
Weighted average number of common shares outstanding |
|
73,409,043 |
|
|
72,990,876 |
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
Page 2
EURASIAN MINERALS INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE
LOSS |
(Unaudited -
Expressed in Canadian Dollars) |
|
|
Three month period
|
|
|
Three month period
|
|
|
|
ended |
|
|
ended |
|
|
|
March 31, 2015 |
|
|
March 31, 2014 |
|
Loss for the period
|
$ |
(2,660,015 |
)
|
$ |
(2,167,525 |
)
|
|
|
|
|
|
|
|
Other comprehensive gain
(loss) |
|
|
|
|
|
|
Change in fair value of available-for-sale
investments |
|
17,619 |
|
|
(25,000 |
) |
Currency translation adjustment |
|
2,912,162 |
|
|
1,246,692 |
|
|
|
|
|
|
|
|
Comprehensive loss for the period |
$ |
269,766 |
|
$ |
(945,833 |
) |
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
Page 3
EURASIAN MINERALS INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
|
(Unaudited -
Expressed in Canadian Dollars) |
|
|
Three
month period ended |
|
|
Three
month period ended |
|
|
|
March 31, 2015 |
|
|
March 31, 2014 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
Loss for the period |
$ |
(2,660,015 |
) |
$ |
(2,167,525 |
) |
Items not affecting operating
activities: |
|
|
|
|
|
|
Interest income
received |
|
(10,753 |
) |
|
(29,146 |
) |
Unrealized
foreign exchange effect on cash and cash equivalents |
|
159,158 |
|
|
76,593 |
|
Items not affecting cash: |
|
|
|
|
|
|
Change in fair
value of fair value throught profit or loss investments |
|
78,657 |
|
|
(160,451 |
) |
Commitment to
issue shares |
|
48,348 |
|
|
67,616 |
|
Deferred income
tax recovery |
|
(283,490 |
) |
|
(26,043 |
) |
Depreciation |
|
36,736 |
|
|
114,499 |
|
Depletion |
|
342,619 |
|
|
387,457 |
|
Writedown of
goodwill |
|
283,490 |
|
|
- |
|
Realized loss on
sale of investments |
|
- |
|
|
19,049 |
|
Gain on
acquisition and sale of exploration and evaluation assets |
|
(42,754 |
) |
|
- |
|
Gain on
derecognition and sale of property and equipment |
|
- |
|
|
(11,577 |
) |
Derecognition of property and equipment
on sale of exploration and evaluation assets |
|
6,490 |
|
|
- |
|
Derecognition of
property and equipment in exploration and evaluation costs |
|
12,518 |
|
|
|
|
Equity loss in
associated companies |
|
173,613 |
|
|
272,400 |
|
Unrealized
foreign exchange (gain) loss |
|
376,470 |
|
|
101,556 |
|
Shares received
from joint venture partners included in exploration recoveries |
|
(115,000 |
) |
|
(25,000 |
) |
Changes in non-cash working
capital items: |
|
|
|
|
|
|
Receivables |
|
(270,948 |
) |
|
7,560 |
|
Prepaid expenses
|
|
(98,346 |
) |
|
(56,481 |
) |
Accounts payable
and accrued liabilities (Note 14) |
|
122,025 |
|
|
150,467 |
|
Advances from joint venture partners |
|
(211,679 |
) |
|
(84,218 |
) |
Total cash used in operating activities |
|
(2,052,861 |
) |
|
(1,363,244 |
) |
|
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
|
|
Acquisition of
exploration and evaluation assets, net option payments received |
|
(130,589 |
) |
|
- |
|
Interest
received on cash and cash equivalents |
|
10,753 |
|
|
29,146 |
|
Conversion
feature on promissory notes |
|
(21,234 |
) |
|
- |
|
Purchase and
sale of fair value through profit and loss investments, net |
|
- |
|
|
252,908 |
|
Purchase of
available-for-sale financial instruments |
|
- |
|
|
(150,000 |
) |
Restricted cash
|
|
(2,725 |
) |
|
99,845 |
|
Purchase and
sale of property and equipment, net |
|
(12,973 |
) |
|
43,700 |
|
Reclamation bonds |
|
(21,573 |
) |
|
(101,147 |
) |
Total cash provided by (used in) investing
activities |
|
(178,341 |
) |
|
174,452 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
|
(159,158 |
) |
|
(76,593 |
) |
Change in cash and cash
equivalents |
|
(2,390,360 |
) |
|
(1,265,385 |
) |
Cash and cash equivalents, beginning |
|
6,450,308 |
|
|
12,683,069 |
|
Cash and cash equivalents, ending |
$ |
4,059,948 |
|
$ |
11,417,684 |
|
Supplemental disclosure with respect to cash flows (Note 17)
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
Page 4
EURASIAN MINERALS INC. |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF SHAREHOLDERS
EQUITY |
(Unaudited -
Expressed in Canadian Dollars) |
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive
gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue
shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
Balance as at December 31,
2014 |
|
73,371,710
|
|
$ |
116,766,102 |
|
$ |
306,999 |
|
$ |
9,562,905
|
|
$ |
5,880,342 |
|
$ |
(87,430,021 |
) |
$ |
45,086,327 |
|
Shares issued as incentive stock grants
|
|
48,000 |
|
|
57,600 |
|
|
(57,600 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Commitment to issue
shares |
|
- |
|
|
- |
|
|
48,348 |
|
|
- |
|
|
- |
|
|
- |
|
|
48,348 |
|
Foreign currency translation adjustment
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,912,162 |
|
|
- |
|
|
2,912,162 |
|
Change in fair value of
financial instruments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
17,619 |
|
|
- |
|
|
17,619 |
|
Loss for the period |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(2,660,015 |
) |
|
(2,660,015 |
) |
Balance as at March 31, 2015 |
|
73,419,710 |
|
$ |
116,823,702 |
|
$ |
297,747 |
|
$ |
9,562,905 |
|
$ |
8,810,123 |
|
$ |
(90,090,036 |
) |
$ |
45,404,441 |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive
gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue
shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
Balance as at December 31,
2013 |
|
72,980,209
|
|
$ |
116,151,675 |
|
$ |
544,877
|
|
$ |
8,569,269
|
|
$ |
2,694,881
|
|
|
($69,981,980 |
) |
$ |
57,978,722
|
|
Shares issued as bonus shares |
|
48,000 |
|
|
57,600 |
|
|
(57,600 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Commitment to issue
shares |
|
- |
|
|
- |
|
|
67,616 |
|
|
- |
|
|
- |
|
|
- |
|
|
67,616 |
|
Foreign currency translation adjustment
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,246,692 |
|
|
- |
|
|
1,246,692 |
|
Change in fair value of
financial instruments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(25,000 |
) |
|
- |
|
|
(25,000 |
) |
Loss for the period |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(2,167,525 |
) |
|
(2,167,525 |
) |
Balance as at March 31, 2014 |
|
73,028,209 |
|
$ |
116,209,275 |
|
$ |
554,893 |
|
$ |
8,569,269 |
|
$ |
3,916,573 |
|
$ |
(72,149,505 |
) |
$ |
57,100,505 |
|
The accompanying notes are an integral part of these condensed
consolidated interim financial statements.
Page 5
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
1. NATURE OF OPERATIONS AND GOING CONCERN
Eurasian Minerals Inc. (the Company or Eurasian) and its
subsidiaries are engaged in the acquisition, exploration and evaluation of
mineral assets in Turkey, Haiti, Europe, U.S.A. and the Asia Pacific region, and
the investment in a royalty income stream in Nevada, U.S.A. The Companys common
shares are listed on the TSX Venture Exchange (TSX-V) under the symbol of
EMX and on the NYSE MKT under the symbol of EMXX. The Companys head office
is located at 501 - 543 Granville Street, Vancouver, British Columbia, Canada
V6C 1X8.
These condensed consolidated interim financial statements have
been prepared using International Financial Reporting Standards (IFRS)
applicable to a going concern, which assumes that the Company will be able to
realize its assets, discharge its liabilities and continue in operation for the
following twelve months.
With its current plans for the year and the budgets associated
with those plans, in order to continue funding its administrative and
exploration expenditures from the date of these condensed consolidated interim
financial statements, the Company will need to obtain additional cash and
anticipates either financing or selling one or more of its assets. These
material uncertainties may cast significant doubt upon the Companys ability to
continue as a going concern.
Some of the Companys activities for exploration and evaluation
assets are located in emerging nations and, consequently, may be subject to a
higher level of risk compared to other developed countries. Operations, the
status of mineral property rights and the recoverability of investments in
emerging nations can be affected by changing economic, legal, regulatory and
political situations.
At the date of these consolidated financial statements, the
Company has not identified a known body of commercial grade mineral on any of
its exploration and evaluation assets. The ability of the Company to realize the
costs it has incurred to date on these exploration and evaluation assets is
dependent upon the Company identifying a commercial mineral body, to finance its
development costs and to resolve any environmental, regulatory or other
constraints which may hinder the successful development of the exploration and
evaluation assets.
These consolidated financial statements of the Company are
presented in Canadian dollars unless otherwise noted, which is the functional
currency of the parent company and its subsidiaries except as to Bullion Monarch
Mining, Inc., the holder of a royalty income stream whose functional currency is
the United States (US) dollar.
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Statement of Compliance
These condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard 34, Interim
Financial Reporting (IAS 34) using accounting policies consistent with IFRS as
issued by the International Accounting Standards Board (IASB) and
interpretations of the International Financial Reporting Interpretations
Committee (IFRIC).
These interim results do not include all the information
required for the full annual financial statements, and should be read in
conjunction with the consolidated financial statements of the Company for the
year ended December 31, 2014.
Summary of Significant Accounting Policies
The accounting policies applied by the Company in these
unaudited condensed consolidated interim financial statements are consistent
with those applied in its audited consolidated financial statements as at and
for the year ended December 31, 2014.
Page 6
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(continued)
Accounting pronouncements not yet effective
In May 2014, the IASB issued IFRS 15 Revenue from Contracts
with Customers ("IFRS 15"), which supersedes IAS 11 Construction Contracts, IAS
18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the
Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and
SIC 31 Revenue - Barter Transactions involving Advertising Services. IFRS 15
establishes a single five-step model framework for determining the nature,
amount, timing and uncertainty of revenue and cash flows arising from a contract
with a customer. The standard is effective for annual periods beginning on or
after January 1, 2017, with early adoption permitted. The Company is currently
evaluating the impact the final standard is expected to have on its consolidated
financial statements.
The IASB intends to replace IAS 39 Financial Instruments:
Recognition and Measurement in its entirety with IFRS 9
Financial Instruments (IFRS 9) which is
intended to reduce the complexity in the classification and measurement of
financial instruments. The IASB has determined that the revised effective date
for IFRS 9 will be January 1, 2018. The Company is currently evaluating the
impact the final standard is expected to have on its consolidated financial
statements.
Significant Judgments and Estimates
The critical judgments and estimates applied in the preparation
of the Companys unaudited condensed interim consolidated financial statements
for the three months ended March 31, 2015 are consistent with those applied in
the Companys December 31, 2014 audited consolidated financial statements.
3. INVESTMENTS
At March 31, 2015, the Company had the following investments:
|
|
|
|
|
Accumulated |
|
|
|
|
March 31, 2015 |
|
Cost |
|
|
unrealized loss |
|
|
Fair value |
|
Fair value through profit
or loss |
|
|
|
|
|
|
|
|
|
Marketable securities |
$ |
2,067,424 |
|
$ |
(1,286,797 |
) |
$ |
780,627 |
|
Conversion feature on promissory notes (Note
7) |
|
21,234 |
|
|
- |
|
|
21,234 |
|
Total Fair value through profit
or loss |
|
2,088,658 |
|
|
(1,286,797 |
) |
|
801,861 |
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
Marketable securities |
|
980,000 |
|
|
(662,857 |
) |
|
317,143 |
|
Total investments |
$ |
3,068,658 |
|
$ |
(1,949,654 |
) |
$ |
1,119,004 |
|
At December 31, 2014, the Company had the following
investments:
|
|
|
|
|
Accumulated |
|
|
|
|
December 31, 2014 |
|
Cost |
|
|
unrealized loss |
|
|
Fair value |
|
Fair value through profit
or loss |
|
|
|
|
|
|
|
|
|
Marketable securities |
$ |
1,952,424 |
|
$ |
(1,208,638 |
) |
$ |
743,786 |
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
Marketable securities |
|
980,000 |
|
|
(680,476 |
) |
|
299,524 |
|
Total investments |
$ |
2,932,424 |
|
$ |
(1,889,114 |
) |
$ |
1,043,310 |
|
Page 7
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
4. RECEIVABLES
The Companys receivables arise from royalty receivable, goods
and services tax and harmonized sales taxes receivable from government taxation
authorities, and recovery of exploration expenditures from joint venture
partners, as follows:
Category |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Royalty income
receivable |
$ |
132,211 |
|
$ |
142,864 |
|
Refundable taxes |
|
275,885 |
|
|
243,503 |
|
Recoverable exploration
expenditures and advances |
|
335,009 |
|
|
274,085 |
|
Promissory notes (Note 8) |
|
230,106 |
|
|
- |
|
Other |
|
136,704 |
|
|
178,385 |
|
Total |
$ |
1,109,915 |
|
$ |
838,837 |
|
The carrying amounts of the Companys receivables are
denominated in the following currencies:
Currency |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Canadian Dollars |
$ |
176,010 |
|
$ |
102,952 |
|
US Dollars |
|
813,180 |
|
|
588,829 |
|
Turkish Lira |
|
101,042 |
|
|
133,440 |
|
Swedish Krona |
|
18,528 |
|
|
12,574 |
|
Other |
|
1,155 |
|
|
1,042 |
|
Total |
$ |
1,109,915 |
|
$ |
838,837 |
|
5. RESTRICTED CASH
At March 31, 2015, the Company classified $232,869 (December
31, 2014 - $230,144) as restricted cash. This amount is comprised of $148,334
(December 31, 2014 - $148,334) held as collateral for its corporate credit
cards, $50,960 (December 31, 2014 - $50,960) held as a security deposit for the
Companys Haiti exploration program, and $33,575 (December 31, 2014 - $30,850)
cash held by wholly-owned subsidiaries of the Company whose full amount is for
use and credit to the Companys exploration venture partners in USA.
Page 8
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
6. PROPERTY AND EQUIPMENT
During the three month period ended March 31, 2015,
depreciation of $6,414 (2014 - $79,610) has been included in exploration
expenditures.
|
|
Computer |
|
|
Field |
|
|
Office |
|
|
Vehicles |
|
|
Building |
|
|
Land |
|
|
Total |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2014 |
$ |
91,713 |
|
$ |
177,352 |
|
$ |
6,023 |
|
$ |
84,651 |
|
$ |
572,443 |
|
$ |
414,526 |
|
$ |
1,346,708 |
|
Additions |
|
23,564 |
|
|
7,098 |
|
|
12,552 |
|
|
- |
|
|
22,055 |
|
|
- |
|
|
65,269 |
|
Disposals and derecognition |
|
- |
|
|
(2,152 |
) |
|
(3,059 |
) |
|
(17,133 |
) |
|
- |
|
|
- |
|
|
(22,344 |
) |
As at March 31, 2015 |
$ |
115,277 |
|
$ |
182,298 |
|
$ |
15,516 |
|
$ |
67,518 |
|
$ |
594,498 |
|
$ |
414,526 |
|
$ |
1,389,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2014 |
$ |
91,713 |
|
$ |
132,031 |
|
$ |
3,958 |
|
$ |
50,594 |
|
$ |
317,183 |
|
$ |
- |
|
$ |
595,479 |
|
Additions |
|
20,134 |
|
|
3,899 |
|
|
12,401 |
|
|
- |
|
|
45,584 |
|
|
- |
|
|
82,018 |
|
Disposals and derecognition |
|
- |
|
|
(1,680 |
) |
|
(1,656 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(3,336 |
) |
As at March 31, 2015 |
$ |
111,847 |
|
$ |
134,250 |
|
$ |
14,703 |
|
$ |
50,594 |
|
$ |
362,767 |
|
$ |
- |
|
$ |
674,161 |
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2014 |
$ |
- |
|
$ |
45,321 |
|
$ |
2,065 |
|
$ |
34,057 |
|
$ |
255,260 |
|
$ |
414,526 |
|
$ |
751,229 |
|
As at March 31, 2015 |
$ |
3,430 |
|
$ |
48,048 |
|
$ |
813 |
|
$ |
16,924 |
|
$ |
231,731 |
|
$ |
414,526 |
|
$ |
715,472 |
|
During the three month period ended March 31, 2015, the Company
acquired and sold certain exploration and evaluation assets for a net gain of
$132,286. Included in this gain was the disposal of property and equipment with
a net book value of $6,490. Also, during the three month period ended March 31,
2015 the Company disposed of property and equipment with a net book value of
$12,518 in lieu of cash severance payments to former employees of the Company.
The amount has been included in exploration and evaluation expenses.
7. INVESTMENTS IN ASSOCIATED COMPANIES
The Company has a 42.34% equity investment in IG Copper, LLC
(IGC). At March 31, 2015, the Company has paid an aggregate of $7,892,345
towards its investment (December 31, 2014 - $7,892,345). At March 31, 2015, the
Companys investment less its share of accumulated equity losses was $3,899,124
(December 31, 2014 - $4,072,737). The Companys share of the net loss for the
three month period ended March 31, 2015 was $173,613 (2014 - $272,400).
On February 5, 2015, the Company entered into a convertible
loan agreement with IGC allowing IGC to borrow up to US$100,000 per month to a
maximum of US$500,000. The loan carries an interest rate of 8% per annum and the
full amount of the principal and interest is due February 5, 2016. At any time
prior to the maturity date, the Company has the right to convert all or any part
of the principal sum and accrued interest into membership units at US$6.00 per
unit. If IGC completes a financing at less than US$6.00 per unit, the conversion
price will be adjusted to the price used in the financing. Each membership unit
represents a single membership interest in IGC. As at March 31, 2015 the Company
has advanced US$200,000 which is included in receivables. Subsequent to March
31, 2015 the Company has advanced an additional US$200,000.
The Company has a minority position on the Board of IGC, and
does not control operational decisions. The Companys judgment is that it has
significant influence, but not control and accordingly equity accounting is
appropriate.
At December 31, 2014, the Company had a 49% equity investment
in a private Turkish company with Chesser Resources Ltd, an Australian Stock
Exchange listed Exploration Company. During the three month period ended March
31, 2015, the Company purchased the remaining 51% interest in the Turkish
company (Note 8). As such, the books and records of the Turkish company are
consolidated as a 100% owned Subsidiary of the Company. The carrying value of
the investment prior to the purchase and as at December 31, 2014 was $Nil and
the Companys share of the net loss of the joint venture for the three month
period ended March 31, 2015 was $Nil (2014 - $Nil).
Page 9
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
7. INVESTMENTS IN ASSOCIATED COMPANIES (Continued)
As at March 31, 2015, associated companies aggregate assets,
aggregate liabilities and net loss for the period are as follows:
March 31, 2015 |
|
IGC |
|
Aggregate assets |
$ |
4,984,597 |
|
Aggregate liabilities |
|
(1,373,206 |
) |
Income (loss) for the period
|
|
(410,045 |
) |
The Company's ownership % |
|
42.34% |
|
The Company's share of loss for the period |
|
(173,613 |
) |
As at December 31, 2014, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31, 2014 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
101,315 |
|
$ |
4,841,462 |
|
Aggregate liabilities |
|
(271,424 |
) |
|
(809,260 |
) |
Income (loss) for the period
|
|
(154,215 |
) |
|
(2,606,384 |
) |
The Company's ownership % |
|
49.00% |
|
|
42.34% |
|
The Company's share of loss for the period |
|
- |
|
|
(1,086,649 |
) |
8. EXPLORATION AND EVALUATION ASSETS
Acquisition Costs
At March 31, 2015 and December 31, 2014, the Company has
capitalized the following acquisition costs on its exploration and evaluation
assets:
Region |
|
Properties |
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Asia Pacific |
|
Various
|
|
$ |
81,124 |
|
$ |
81,124 |
|
Haiti |
|
Various |
|
|
56,085 |
|
|
56,085 |
|
Sweden |
|
Various |
|
|
16,671 |
|
|
16,671 |
|
|
|
Viad royalties |
|
|
421,084 |
|
|
421,084 |
|
Turkey |
|
Alankoy |
|
|
153,960 |
|
|
153,960 |
|
|
|
Sisorta |
|
|
114,126 |
|
|
- |
|
|
|
Trab |
|
|
78,587 |
|
|
78,587 |
|
United States |
|
Superior West, Arizona |
|
|
1,158,129 |
|
|
1,179,280 |
|
of America |
|
Yerington, Nevada |
|
|
393,095 |
|
|
393,095 |
|
Total |
|
|
|
$ |
2,472,861 |
|
$ |
2,379,886 |
|
Page 10
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
8. EXPLORATION AND EVALUATION ASSETS (Continued)
Changes During the Three Months Ended March 31, 2015
On February 10, 2015, the Company amended an option agreement
originally entered into on June 30, 2013 to sell its 100% interest in AES
Madencilik A.S., a Turkish corporation that controls the Akarca property, for a
combination of cash payments, gold bullion, work commitments, and a royalty
interest to Çolakoglu Ticari Yatirim A.S. ("Çolakoglu"), a privately owned
Turkish company. Among other conditions, the agreement required Çolakoglu to
make payments totaling US$500,000 within 18 months and meet certain cumulative
expenditure requirements over a period of three years from the date of the
agreement. The Company received US$100,000 and extended the payment term from 18
months to 24 months to meet the remaining payment requirements.
On April 2, 2012, the Company and Chesser Resources Ltd
(Chesser) executed an agreement to sell the Sisorta property to
Colakoglu for a combination of option payments and expenditure
requirements. Colakoglu terminated the option effective March 21, 2013, leaving
Chesser and the Company with a 51% and 49% interest in the Sisorta project,
respectively. Until March 2015, the Company accounted for its 49% interest as an
Investment in Associated Company (Note 7) and had written down the value of the
investment to $Nil due to the pick-up of its share of net losses in the
associated company. On March 20, 2015, Chesser and the Company signed definitive
agreements pursuant to which the Company acquired all of Chessers interest in
the Sisorta project for a total purchase price of AU$162,092. The purchase price
was accounted for as an asset acquisition. As a result of the purchase, the
Company recorded a gain on acquisition of $42,754, and $114,126 was allocated to
exploration and evaluation assets.
Page 11
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
8. EXPLORATION AND EVALUATION ASSETS (Continued)
Exploration Expenditures
During the three months ended March 31, 2015, the Company
incurred the following exploration expenditures by projects, which were expensed
as incurred:
|
|
USA |
Turkey |
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scandinavia |
Desert Star |
Other USA |
Total |
Akarca |
Other |
Total |
New Zealand |
Other |
Total |
Other * |
Total |
|
|
Resources |
|
|
|
|
|
|
|
|
|
|
Administration Cost |
$ 42,859 |
$ 519 |
$ 33,701 |
$ 34,220 |
$ 2,277 |
$ 9,558 |
$ 11,835 |
$ 3,765 |
$ - |
$ 3,765 |
$ 15,023 |
$ 107,702 |
Assays |
131 |
- |
9,719
|
9,719
|
14 |
324 |
338 |
- |
- |
- |
- |
10,188 |
Drilling / Trenching |
8,600 |
- |
- |
- |
- |
- |
- |
507 |
1,026 |
1,533 |
- |
10,133 |
Land and Legal |
- |
- |
28,646
|
28,646
|
8,403 |
23,306
|
31,709
|
- |
5,743
|
5,743 |
3,941 |
70,039 |
Logistics |
11,271 |
1,261 |
15,714 |
16,975 |
5,391 |
12,560 |
17,951 |
- |
- |
- |
369 |
46,566 |
Personnel |
184,314
|
10,657 |
315,760
|
326,417
|
42,955 |
205,545
|
248,500
|
26,044 |
44,475
|
70,519 |
18,211 |
847,961 |
Property Cost |
79,801 |
- |
42,406 |
42,406 |
76,848 |
50,764 |
127,612 |
9,537 |
35,288 |
44,825 |
1,025 |
295,669 |
Professional Services |
25,217
|
- |
6,711
|
6,711
|
11,690 |
47,357
|
59,047
|
25,866 |
2,190
|
28,056 |
15,908 |
134,939 |
Share Based Payments |
- |
- |
- |
- |
- |
- |
- |
- |
2,554 |
2,554 |
- |
2,554 |
Technical Studies |
8,506
|
2,477 |
35,970
|
38,447
|
- |
50,033
|
50,033
|
- |
3,736
|
3,736 |
13,688 |
114,410 |
Travel |
14,330 |
- |
14,475 |
14,475 |
- |
9,866 |
9,866 |
- |
5,839 |
5,839 |
1,051 |
45,561 |
Total Expenditures |
375,029 |
14,914
|
503,102 |
518,016 |
147,578 |
409,313 |
556,891 |
65,719
|
100,851 |
166,570 |
69,216 |
1,685,722 |
Recoveries |
- |
(17,456) |
(21,690) |
(39,146) |
- |
- |
- |
- |
- |
- |
- |
(39,146) |
Operator fees |
- |
(1,746) |
(2,169)
|
(3,915)
|
- |
- |
- |
- |
- |
- |
- |
(3,915) |
Option Payments |
- |
- |
- |
- |
(123,829) |
(115,000) |
(238,829) |
- |
- |
- |
- |
(238,829) |
Other Property Income |
(9,830) |
- |
- |
- |
(105,501) |
- |
(105,501) |
- |
(13,903) |
(13,903) |
- |
(129,234) |
Total Recoveries |
(9,830) |
(19,202) |
(23,859) |
(43,061) |
(229,330) |
(115,000) |
(344,330) |
- |
(13,903) |
(13,903) |
- |
(411,124) |
Net Expenditures |
$ 365,199 |
$
(4,288) |
$ 479,243 |
$ 474,955 |
$
(81,752) |
$ 294,313 |
$ 212,561 |
$
65,719 |
$ 86,948 |
$ 152,667 |
$ 69,216 |
$ 1,274,598 |
* |
Significant components of Other exploration
expenditures for the three months ended March 31, 2015 were Austria -
$15,195; Haiti - $32,102; and Slovakia - $7,003. |
Page 12
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
8. EXPLORATION AND EVALUATION ASSETS (Continued)
Exploration Expenditures (continued)
During the three month period ended March 31, 2014, the Company
incurred the following exploration expenditures by projects, which were expensed
as incurred:
|
|
USA |
Turkey |
Asia Pacific |
|
|
|
Sweden |
|
|
|
|
|
|
|
|
|
|
Other * |
Total |
|
|
Vale |
Geonovus |
Other USA |
Total |
Akarca |
Other |
Total |
Koonenbury |
Other |
Total |
|
|
Administration Cost |
$ 33,074 |
$ 125 |
$ 20 |
$ 36,021 |
$ 36,166 |
$ 893 |
$ 11,405 |
$ 12,298 |
$ 1,176 |
$ 3,984 |
$ 5,160 |
$ 57,642 |
$ 144,340 |
Assays |
- |
- |
- |
1,033 |
1,033 |
38 |
- |
38 |
- |
- |
- |
6,743 |
7,814 |
Drilling / Trenching |
11,509 |
86,455 |
- |
- |
86,455 |
- |
- |
- |
- |
- |
- |
- |
97,964 |
Land and Legal |
- |
- |
- |
25,741 |
25,741 |
- |
14,504 |
14,504 |
- |
8,061 |
8,061 |
15,283 |
63,589 |
Logistics |
13,600 |
8,496 |
- |
17,294 |
25,790 |
12,735 |
18,673 |
31,408 |
325 |
26,519 |
26,844 |
8,575 |
106,217 |
Personnel |
188,291 |
18,244 |
3,273 |
263,977 |
285,494 |
78,124 |
141,068 |
219,192 |
11,260 |
61,628 |
72,888 |
39,121 |
804,986 |
Property Cost |
34,109 |
165 |
825 |
42,188 |
43,178 |
64,748 |
8,689 |
73,437 |
6,574 |
5,795 |
12,369 |
473 |
163,566 |
Professional Services |
26,827 |
- |
- |
4,252 |
4,252 |
4,970 |
30,839 |
35,809 |
7,240 |
1,987 |
9,227 |
23,223 |
99,338 |
Share Based Payments |
3,613 |
- |
- |
2,923 |
2,923 |
- |
- |
- |
- |
- |
- |
9,329 |
15,865 |
Technical Studies And |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consultants |
6,994 |
8,643 |
- |
10,941 |
19,584 |
- |
3,083 |
3,083 |
- |
9,380 |
9,380 |
78,620 |
117,661 |
Travel |
13,261 |
- |
- |
7,564 |
7,564 |
- |
3,849 |
3,849 |
183 |
11,651 |
11,834 |
5,578 |
42,086 |
Total Expenditures |
331,278 |
122,128 |
4,118 |
411,934 |
538,180 |
161,508 |
232,110 |
393,618 |
26,758 |
129,005 |
155,763 |
244,587 |
1,663,425 |
Recoveries |
- |
(127,691) |
(5,282) |
(67,478) |
(200,451) |
(146,127) |
- |
(146,127) |
- |
- |
- |
- |
(346,578) |
Operator fees |
- |
(14,614) |
(528) |
(7,198) |
(22,340) |
- |
- |
- |
- |
- |
- |
- |
(22,340) |
Option Payments |
- |
- |
- |
- |
- |
- |
(25,000) |
(25,000) |
- |
- |
|
- |
(25,000) |
Other Property Income |
(27,362) |
- |
- |
- |
- |
- |
(10,946) |
(10,946) |
- |
- |
- |
- |
(38,308) |
Total Recoveries |
(27,362) |
(142,305) |
(5,810) |
(74,676) |
(222,791) |
(146,127) |
(35,946) |
(182,073) |
- |
- |
- |
- |
(432,226) |
Net Expenditures |
$ 303,916 |
$ (20,177) |
$ (1,692) |
$ 337,258 |
$ 315,389 |
$ 15,381 |
$ 196,164 |
$ 211,545 |
$ 26,758 |
$ 129,005 |
$ 155,763 |
$ 244,587 |
$ 1,231,199
|
* |
Included in Other exploration expenditures for the
three months ended March 31, 2014 were Austria - $90,546, Georgia
-$54,784, and Haiti - $39,721. |
Page 13
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
9. ROYALTY INTEREST
Changes in royalty interest for the three month period ended
March 31, 2015:
Balance, December 31, 2014 |
$ |
29,327,960 |
|
Adjusted for: |
|
|
|
Depletion |
|
(342,619 |
) |
Cumulative translation adjustments |
|
2,535,194 |
|
Balance, March 31, 2015 |
$ |
31,520,535 |
|
Carlin Trend Royalty Claim Block
The Company holds an interest in the Carlin Trend Royalty Claim
Block in Nevada which includes the following Royalty Properties:
Leeville Mine: Located in Eureka County, Nevada, the Company is
receiving a continuing 1% gross smelter return royalty (GSRR).
East Ore Body Mine: Located in Eureka County, Nevada, the
property is currently being mined and the Company is receiving a continuing 1%
GSRR.
North Pipeline: Located in Lander County, Nevada. Should the
property become producing, the Company will receive a production royalty of
US$0.50 per yard of ore processed or 4% of net profit, whichever is greater.
During the three month period ended March 31, 2015, $362,991
(2014 - $654,718) in royalty income was included in operations offset by a 5%
direct gold tax and depletion.
Impairment of Non-Current Assets
The Companys policy for accounting for impairment of
non-current assets is to use the higher of the estimates of fair value less cost
of disposal of these assets or value in use. The Company uses valuation
techniques that require significant judgments and assumptions, including those
with respect to future production levels, future metal prices, foreign exchange
rates, discount rates, and Net Asset Value (NAV) multiples.
Non-current assets are tested for impairment when events or
changes in circumstances suggest that the carrying amount may not be
recoverable. As a result of the decline in the production of gold from the
Carlin Trend Royalty Claim Block, in the year ended December 31, 2014 the
Company revised its estimated annual gold production over the expected 11 year
mine life and updated the NAV and cash flow multiples based on observed market
conditions. For the three months ended March 31, 2015, these assumptions
remained reasonable and no further revisions were considered necessary. As a
result the Company did not record an impairment charge for the three month
period ended March 31, 2015 related to the Carlin Trend Royalty Claim Block and
related assets that make up the same cash-generating unit (CGU).
Page 14
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
10. RECLAMATION BONDS
Reclamation bonds are held as security towards future
exploration work and the related future potential cost of reclamation of the
Companys land and unproven mineral interests. Once reclamation of the
properties is complete, the bonds will be returned to the Company. Management
has determined that the Company has no decommissioning or restoration provisions
related to the properties for the periods presented.
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Australia - various
properties |
$ |
77,760 |
|
$ |
75,864 |
|
Sweden - various properties |
|
8,043 |
|
|
7,984 |
|
Turkey - various properties
|
|
346,609 |
|
|
273,097 |
|
U.S.A - various properties |
|
505,809 |
|
|
466,502 |
|
Total |
$ |
938,221 |
|
$ |
823,447 |
|
11. GOODWILL
The Companys goodwill represents the excess of the purchase
price paid during fiscal 2012 for the acquisition of Bullion Monarch Mining Inc.
over the fair value of the net identifiable tangible and intangible assets and
liabilities acquired.
Changes in goodwill for the three month period ended March 31,
2015:
Balance, December 31, 2014 |
$ |
8,217,542 |
|
Adjusted for: |
|
|
|
Impairment charge |
|
(283,490 |
) |
Cumulative translation adjustment |
|
711,436 |
|
Balance, March 31, 2015 |
$ |
8,645,488 |
|
The Company applies a one-step approach to determine if the
Carlin Trend Royalty Claim Block and the related assets within the same CGU are
impaired (Note 10). The impairment loss is the amount by which the CGUs
carrying amount exceeds its recoverable amount. The loss is first applied to
reduce asset component and any excess to goodwill within CGU. As result, the
Company has written down the goodwill by $283,490 (2014 - $Nil).
12. ADVANCES FROM JOINT VENTURE PARTNERS
Advances from joint venture partners relate to unspent funds
received pursuant to approved exploration programs by the
Company and its joint venture partners. The Companys advances
from joint venture partners consist of the following:
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
U.S.A. |
$ |
217,496 |
|
$ |
429,175 |
|
Total |
$ |
217,496 |
|
$ |
429,175 |
|
13. CAPITAL STOCK |
|
Authorized |
|
As at March 31, 2015, the authorized share capital of the
Company was an unlimited number of common and preferred shares without par
value. |
Page 15
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
13. CAPITAL STOCK (Continued)
Common Shares
For the three month period ended March 31, 2015, the Company
issued:
|
|
48,000 shares valued at $57,600 pursuant to an
incentive stock grant program to employees of the Company applied to
commitment to issue shares. |
Stock Options
The Company adopted a stock option plan (the Plan) pursuant
to the policies of the TSX-V. The maximum number of shares that may be reserved
for issuance under the plan is limited to 10% of the issued common shares of the
Company at any time. The vesting terms are determined at the time of the grant,
subject to the terms of the plan.
During the three month period ended March 31, 2015, the change
in stock options outstanding is as follows:
|
|
|
|
|
Weighted Average |
|
|
|
Number |
|
|
Exercise Price |
|
Balance as at December 31, 2014 |
|
5,493,200 |
|
|
2.03 |
|
Cancelled and expired unexercised |
|
(150,000 |
) |
|
1.74 |
|
Balance as at March 31, 2015 |
|
5,343,200 |
|
|
2.04 |
|
Number of options exercisable as at March 31, 2015 |
|
5,343,200 |
|
$ |
2.04 |
|
The following table summarizes information about the stock
options which were outstanding and exercisable at March 31, 2015:
Date Granted |
|
Number of Options |
|
|
Exercisable |
|
|
Exercise Price $ |
|
|
Expiry Date |
|
May 7, 2010* |
|
917,500
|
|
|
917,500
|
|
|
2.18 |
|
|
May 7,
2015 |
|
June 7, 2010 |
|
23,000 |
|
|
23,000 |
|
|
2.05 |
|
|
June 7, 2015 |
|
September 2, 2010 |
|
38,200 |
|
|
38,200 |
|
|
2.21 |
|
|
September 2,
2015 |
|
November 10, 2010 |
|
177,500 |
|
|
177,500 |
|
|
2.51 |
|
|
November 10, 2015 |
|
February 1, 2011 |
|
50,000 |
|
|
50,000 |
|
|
3.21 |
|
|
February 1, 2016 |
|
March 18, 2011 |
|
150,000 |
|
|
150,000 |
|
|
2.91 |
|
|
March 18, 2016 |
|
July 19, 2011 |
|
1,218,000 |
|
|
1,218,000 |
|
|
2.80 |
|
|
July 19, 2016 |
|
August 3, 2011 |
|
10,000 |
|
|
10,000 |
|
|
2.70 |
|
|
August 3, 2016 |
|
August 29, 2011 |
|
50,000 |
|
|
50,000 |
|
|
2.66 |
|
|
August 29, 2016 |
|
September 9, 2011 |
|
40,000 |
|
|
40,000 |
|
|
2.70 |
|
|
September 9, 2016 |
|
December 11, 2011 |
|
20,000 |
|
|
20,000 |
|
|
2.10 |
|
|
December 11,
2016 |
|
July 5, 2012 |
|
80,000 |
|
|
80,000 |
|
|
1.96 |
|
|
July 5, 2017 |
|
August 22, 2012 |
|
951,500 |
|
|
951,500 |
|
|
1.94 |
|
|
August 22, 2017 |
|
October 16, 2012 |
|
67,000 |
|
|
67,000 |
|
|
2.44 |
|
|
October 16, 2017 |
|
April 25, 2014 |
|
1,473,000 |
|
|
1,473,000 |
|
|
1.20 |
|
|
April 24, 2019 |
|
June 26, 2014 |
|
17,500 |
|
|
17,500 |
|
|
0.88 |
|
|
June 26, 2019 |
|
December 22, 2014 |
|
60,000 |
|
|
60,000 |
|
|
0.87 |
|
|
December 22,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
5,343,200 |
|
|
5,343,200 |
|
|
|
|
|
|
|
* expired unexercised subsequent to March 31, 2015
The weighted average remaining useful life of stock options is
2.09 years
Page 16
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
13. CAPITAL STOCK (Continued)
Stock Grants
The Company has received TSX-V approval for the issuance of
certain stock grants as discretionary bonuses earned by the President and CEO,
Chairman, directors, officers, area managers and certain employees of the
Company pursuant to an annual compensation review.
Share-based Payments
During the three month period ended March 31, 2015, the Company
recorded aggregate share-based payments of $48,348 ($67,616) as they relate to
the fair value of stock options granted, fair value of incentive stock grants,
and the accrual for the fair value of stock granted. Share-based payments are
allocated to expense accounts as follows:
|
|
General and |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Three months ended March 31, 2015 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue shares |
$ |
45,794 |
|
$ |
2,554 |
|
$ |
48,348 |
|
|
$ |
45,794 |
|
$ |
2,554 |
|
$ |
48,348 |
|
|
|
General and |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Three months ended March 31, 2014 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue bonus shares |
$ |
51,752 |
|
$ |
15,865 |
|
$ |
67,617 |
|
|
$ |
51,752 |
|
$ |
15,865 |
|
$ |
67,617 |
|
There were no stock options granted during the three month
period ended March 31, 2015 and 2014.
Warrants
During the three month period ended March 31, 2015, the change
in warrants outstanding was as follows:
|
|
|
|
|
Weighted Average |
|
|
|
Number |
|
|
Exercise Price |
|
Balance as at December 31,
2014 |
|
9,175,533 |
|
$ |
4.56 |
|
Expired |
|
(1,919,633 |
) |
|
2.88 |
|
|
|
|
|
|
|
|
Balance as at March 31, 2015 |
|
7,255,900 |
|
$ |
5.00 |
|
Page 17
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
13. CAPITAL STOCK (Continued)
Warrants (continued)
As at March 31, 2015, the following share purchase warrants
were outstanding and exercisable:
|
|
Number of Warrants |
|
|
Exercise Price |
|
|
Expiry Date |
|
Private placement,
November 8, 2010 |
|
6,200,000
|
|
|
5.50 |
|
|
November
8, 2015 |
|
Private placement, November 12, 2010 |
|
800,000 |
|
|
5.50 |
|
|
November 12, 2015 |
|
Finders warrants, November 8, 2010 |
|
255,900 |
|
|
5.50 |
|
|
November 8, 2015 |
|
Total |
|
7,255,900 |
|
|
|
|
|
|
|
14. RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances
relating to key management personnel were as follows:
|
|
|
|
|
Share-based |
|
|
|
|
For the three months ended March 31, 2015 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
482,315
|
|
$ |
4,860 |
|
$ |
487,175
|
|
Outside directors |
|
42,899 |
|
|
- |
|
|
42,899 |
|
Seabord Services Corp. * |
|
104,700 |
|
|
- |
|
|
104,700 |
|
Total |
$ |
629,914 |
|
$ |
4,860 |
|
$ |
634,774 |
|
|
|
|
|
|
Share-based |
|
|
|
|
For the three months ended March 31, 2014 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
218,759
|
|
$ |
34,649 |
|
$ |
253,408
|
|
Outside directors |
|
46,684 |
|
|
2,457 |
|
|
49,141 |
|
Seabord Services Corp. * |
|
104,700 |
|
|
- |
|
|
104,700 |
|
Total |
$ |
370,143 |
|
$ |
37,106 |
|
$ |
407,249 |
|
* Seabord Services Corp. (Seabord) is a management services
company controlled by the Chairman of the Board of Directors of the Company.
Seabord provides a Chief Financial Officer, a Corporate Secretary, accounting
and administration staff, and office space to the Company. The Chief Financial
Officer and Corporate Secretary are employees of Seabord and are not paid
directly by the Company.
Included in the table above for the three months ended March
31, 2015 is $247,660 (2014 - $Nil) in termination payments to a former officer
of the Company. The amount has been included in Other expenses for the
period.
Included in accounts payable and accrued liabilities is $3,071
(December 31, 2014 - $8,064) owed to key management personnel and $23,827
(December 31, 2014 - $29,612) to other related parties.
Page 18
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
15. SEGMENTED INFORMATION
The Company operates within the resource industry. At March 31,
2015 and December 31, 2014, the Company had equipment and exploration and
evaluation assets located geographically as follows:
EXPLORATION AND EVALUATION ASSETS
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Asia Pacific |
$ |
81,124 |
|
$ |
81,124 |
|
Haiti |
|
56,085 |
|
|
56,085 |
|
Sweden |
|
437,755 |
|
|
437,755 |
|
Turkey |
|
346,673 |
|
|
232,547 |
|
U.S.A |
|
1,551,224 |
|
|
1,572,375 |
|
Total |
$ |
2,472,861 |
|
$ |
2,379,886 |
|
PROPERTY AND EQUIPMENT |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Asia Pacific |
$ |
12,694 |
|
$ |
12,694 |
|
Canada |
|
- |
|
|
1,630 |
|
Georgia |
|
- |
|
|
6,490 |
|
Haiti |
|
9,040 |
|
|
9,040 |
|
Sweden |
|
13,626 |
|
|
11,502 |
|
Turkey |
|
18,612 |
|
|
24,723 |
|
U.S.A |
|
661,500 |
|
|
685,150 |
|
Total |
$ |
715,472 |
|
$ |
751,229 |
|
The Companys royalty interest, goodwill, deferred income tax
liability and royalty income and depletion form a cash generating unit located
in the U.S.A, except $200,000 in a royalty interest held in Serbia.
16. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
The Company considers items included in shareholders equity as
capital. The Companys objective when managing capital is to safeguard the
Companys ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders.
The Company currently has continuing royalty revenues to fund a
portion of ongoing costs. In order to fund future projects and pay for
administrative costs, the Company will spend its existing working capital and
raise additional funds as needed. As at March 31, 2015, the Company had working
capital of $5,203,732 (December 31, 2014 - $7,096,916). Management will need
additional sources of working capital to continue its currently planned
programs, by issuing new shares or the sale of assets. The Company manages the
capital structure and makes adjustments in light of changes in economic
conditions and the risk characteristics of the underlying assets.
In order to maintain or adjust the capital structure, the
Company may issue new shares through public and/or private placements, sell
assets, or return capital to shareholders. The Company is not subject to
externally imposed capital requirements.
Fair Value
The Company characterizes inputs used in determining fair value
using a hierarchy that prioritizes inputs depending on the degree to which they
are observable. The three levels of the fair value hierarchy are as follows:
|
|
Level 1: inputs represent quoted prices in active markets
for identical assets or liabilities. Active markets are those in which
transactions occur in sufficient frequency and volume to provide pricing
information on an ongoing basis. |
Page 19
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
16. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
Fair Value (continued)
|
|
Level 2: inputs other than quoted prices that are
observable, either directly or indirectly. Level 2 valuations are based on
inputs, including quoted forward prices for commodities, market interest
rates, and volatility factors, which can be observed or corroborated in
the market place. |
|
|
|
|
|
Level 3: inputs that are less observable, unavoidable or
where the observable data does not support the majority of the
instruments fair value. |
As at March 31, 2015, there were no changes in the levels in
comparison to December 31, 2014. Financial instruments measured at fair value on
the statement of financial position are summarized in levels of the fair value
hierarchy as follows:
Assets |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash
equivalents |
$ |
4,059,948 |
|
$ |
-
|
|
$ |
-
|
|
$ |
4,059,948 |
|
Restricted cash |
|
232,869 |
|
|
- |
|
|
- |
|
|
232,869 |
|
Fair value through profit or
loss investments |
|
801,861 |
|
|
- |
|
|
- |
|
|
801,861 |
|
Strategic Investments |
|
317,143 |
|
|
- |
|
|
- |
|
|
317,143 |
|
Total |
$ |
5,411,821 |
|
$ |
- |
|
$ |
- |
|
$ |
5,411,821 |
|
The carrying value of receivables, reclamation bonds, accounts
payable and accrued liabilities, and advances from joint venture partners
approximate their fair value because of the short-term nature of these
instruments.
The Companys financial instruments are exposed to certain
financial risks, including credit risk, interest rate risk, market risk,
liquidity risk and currency risk.
Credit Risk
The Company is exposed to credit risk by holding cash and cash
equivalents and receivables. This risk is minimized by holding a significant
portion of the funds in Canadian banks. The Companys exposure with respect to
its receivables is primarily related to royalty streams and recovery of
exploration evaluation costs.
Interest Rate Risk
The Company is exposed to interest rate risk because of
fluctuating interest rates. Management believes the interest rate risk is low
given the current low global interest rate environment. Fluctuations in market
rates is not expected to have a significant impact on the Companys operations
due to the short term to maturity and no penalty cashable feature of its cash
equivalents.
Market Risk
The Company is exposed to market risk because of the
fluctuating values of its publicly traded marketable securities and other
company investments. The Company has no control over these fluctuations and does
not hedge its investments. Based on the March 31, 2015 portfolio values,
a 10% increase or decrease in effective market values would increase or decrease
net shareholders equity by approximately $110,000.
Page 20
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
16. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet
its financial obligations as they come due. The Company manages this risk by
careful management of its working capital to ensure the Companys expenditures
will not exceed available resources.
Commodity Risk
The Companys royalty revenues are derived from a royalty
interest and are based on the extraction and sale of precious and base minerals
and metals. Factors beyond the control of the Company may affect the
marketability of metals discovered. Metal prices have historically fluctuated
widely. Consequently, the economic viability of the Companys royalty interests
cannot be accurately predicted and may be adversely affected by fluctuations in
mineral prices.
Currency Risk
Foreign exchange risk arises when future commercial
transactions and recognized assets and liabilities are denominated in a currency
that is not the entitys functional currency. The Company operates in Canada,
Haiti, Turkey, Georgia, Sweden, Australia and the U.S.A. The Company funds cash
calls to its subsidiary companies outside of Canada in U.S. dollars (USD) and
a portion of its expenditures are also incurred in local currencies.
The exposure of the Companys cash and cash equivalents,
receivables, and accounts payable and accrued liabilities to foreign exchange
risk as at March 31, 2015 is as follows:
Accounts |
|
US dollars |
|
Cash and cash
equivalents |
$ |
1,973,375 |
|
Receivables |
|
661,220 |
|
Accounts payable and accrued
liabilities |
|
(179,781 |
)
|
Net
exposure |
|
2,454,814 |
|
Canadian dollar equivalent |
$ |
3,103,376 |
|
The balances noted above reflect the USD balances held within
the parent company and any wholly owned subsidiaries. Balances denominated in
another currency other than the functional currency held in foreign operations
are considered immaterial.
Based on the above net exposure as at March 31, 2015, and
assuming that all other variables remain constant, a 1% depreciation or
appreciation of the Canadian dollar against the US dollar would result in an
increase/decrease of approximately $31,000 in the Companys pre-tax profit or
loss.
17. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Cash |
$ |
2,312,710 |
|
$ |
3,311,196 |
|
Short-term deposits |
|
1,747,238 |
|
|
3,139,112 |
|
Total |
$ |
4,059,948 |
|
$ |
6,450,308 |
|
Page 21
EURASIAN MINERALS INC. |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS |
(Unaudited - Expressed in Canadian Dollars) |
For the Three
Month Period Ended March 31, 2015 |
17. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
(Continued)
The significant non-cash investing and financing transactions
during the three month period ended March 31, 2015 included:
|
a. |
Recorded a loss through accumulated other comprehensive
income of $17,619 related to the fair value adjustments on AFS financial
instruments; |
|
|
|
|
b. |
Issuance of 48,000 bonus shares valued at $57,600 applied
to commitment to issue shares; |
|
|
|
|
c. |
Adjusted non-current assets and liabilities for
$2,912,162 related to cumulative translation adjustments (CTA), of which
$2,535,194 relates to CTA gain on royalty interest, $711,436 relates to
CTA gain on goodwill, $711,436 relates to a CTA loss on deferred tax
liability and $376,968 relates to CTA gain in the net assets of a
subsidiary with a functional currency different from the presentation
currency. |
The significant non-cash investing and financing transactions
during the three month period ended March 31, 2014 included:
|
a. |
Received 500,000 common shares of Pasinex Resources
Limited valued at $25,000 or $0.05 per common share as consideration for
the transfer and royalty interest on the Golcuk property in
Turkey; |
|
|
|
|
b. |
Recorded a loss through accumulated other comprehensive
income of $25,000 related to the fair value adjustments on AFS financial
instruments; |
|
|
|
|
c. |
Issuance of 48,000 bonus shares valued at $57,600 applied
to commitment to issue shares; |
|
|
|
|
d. |
Adjusted non-current assets and liabilities for
$1,246,692 related to cumulative translation adjustments (CTA), of which $1,185,313 relates to CTA gain on
royalty interest, $327,641 relates to CTA gain on goodwill, $385,906
relates to a CTA loss on deferred tax liability and $119,644 relates to
CTA gain in the net assets of a subsidiary with a functional currency
different from the presentation currency. |
18. EVENT AFTER THE REPORTING DATE
Subsequent to March 31, 2015, the Company:
Signed an Exploration and Option to Purchase Agreement, through
its wholly owned subsidiary Bronco Creek Exploration, for the Superior West
project with Kennecott Exploration Company (Kennecott), part of the Rio Tinto
Group. Pursuant to the Agreement, Kennecott can earn a 100% interest in the
project by making a cash payment upon execution of the Agreement of US$149,187
(received), and thereafter completing US$5,500,000 in exploration expenditures
and paying annual option payments totaling US$1,000,000 before the fifth
anniversary of the Agreement. Upon exercise of the option EMX will retain a 2%
NSR royalty on the properties.
Page 22
EURASIAN MINERALS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS
THREE MONTHS
ENDED MARCH 31, 2015
GENERAL
This Managements Discussion and Analysis (MD&A) for
Eurasian Minerals Inc. (the Company, EMX or Eurasian) has been prepared
based on information known to management as of May 13, 2015.
This MD&A is intended to help the reader understand the
consolidated financial statements and should be read in conjunction with the
condensed consolidated interim financial statements of the Company for the three
months ended March 31, 2015 prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB). All dollar amounts included therein and in the following
MD&A are in Canadian dollars except where noted.
FORWARD-LOOKING INFORMATION
This MD&A may contain forward-looking statements that
reflect the Companys current expectations and projections about its future
results. When used in this MD&A, words such as estimate, intend,
expect, anticipate and similar expressions are intended to identify
forward-looking statements, which, by their very nature, are not guarantees of
the Companys future operational or financial performance, and are subject to
risks and uncertainties and other factors that could cause Eurasians actual
results, performance, prospects or opportunities to differ materially from those
expressed in, or implied by, these forward-looking statements. These risks,
uncertainties and factors may include, but are not limited to: unavailability of
financing, failure to identify commercially viable mineral reserves,
fluctuations in the market valuation for commodities, difficulties in obtaining
required approvals for the development of a mineral project, increased
regulatory compliance costs and other factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this MD&A or
as of the date otherwise specifically indicated herein. Due to risks and
uncertainties, including the risks and uncertainties identified above and
elsewhere in this MD&A, and other risk factors and forward-looking
statements listed in the Companys most recently filed Annual Information Form
(AIF), actual events may differ materially from current expectations. More
information about the Company including its AIF and recent financial reports is
available on SEDAR at www.sedar.com. The Companys Annual Report on Form
20-F, including the AIF and recent financial reports, is available on SECs
EDGAR website at www.sec.gov and on the Companys website at
www.EurasianMinerals.com.
Cautionary Note to Investors Concerning Estimates of
Indicated and Inferred Resources
The MD&A may use the terms Inferred and Indicated
resources. Eurasian advises investors that although these terms are recognized
and required by Canadian regulations under National Instrument 43-101 (NI
43-101), the U.S. Securities and Exchange Commission (SEC) does not recognize
these terms. Investors are cautioned that 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 prefeasibility studies. Investors are cautioned not to assume
that part or all of an inferred resource exists, or is economically or legally
mineable. Investors are further cautioned not to assume that any part or all of
an indicated mineral resource will be converted into reserves.
Page 2
COMPANY OVERVIEW
Eurasian is a Tier 1 company that trades on the TSX Venture
Exchange and NYSE MKT. It is principally in the business of exploring for, and
generating royalties from, metals and minerals properties. The Companys royalty
and exploration portfolio mainly consists of properties in North America,
Turkey, Europe, Haiti, Australia, and New Zealand. The Company started receiving
royalty income as of August 17, 2012 when it acquired Bullion Monarch Mining,
Inc. (Bullion or BULM). This royalty cash flow helps to provide a foundation
to support the Companys growth over the long term.
Eurasian operates as a royalty and prospect generator. Under
the royalty and prospect generation business model, Eurasian acquires and
advances early-stage mineral exploration projects and then forms partnerships
with other parties for a retained royalty interest, as well as annual advanced
royalty and other cash or share payments. Through its various agreements,
Eurasian also provides technical and commercial assistance to partner companies
as the projects are advanced. By optioning interests in its projects to third
parties for a royalty interest, Eurasian a) reduces its exposure to the costs
and risks associated with mineral exploration and project development, while b)
maintaining the opportunity to participate in early-stage exploration upside,
and c) developing a pipeline for potential production royalty payments and
associated "brownfields" discoveries in the future. This approach helps conserve
the Companys treasury, which can be utilized for further project acquisitions
and other business initiatives.
Strategic investments are an important complement to the
Companys royalty and prospect generation initiatives. These investments are
made in unrecognized or under-valued exploration companies identified by
Eurasian. EMX helps to develop the value of these assets, with exit strategies
that can include royalty positions or equity sales.
HIGHLIGHTS FOR THE QUARTER
|
|
For the quarter ended March 31, 2015, the Company
received royalty income of $362,991 and recorded a loss from operations of
$2,660,015. Gross exploration expenditures totaled $1,685,722 of which
$411,124 was recovered from partners. |
|
|
|
|
|
In North America, the Company received approximately
US$286,000 in revenue from the Carlin Trend Royalty Claim Block
(Leeville") that covers portions of Newmont Mining Corporation's
(Newmont) underground operations on the Northern Carlin Trend in Nevada.
Newmont's Turf No. 3 Vent Shaft Project, which will impact "greater
Leeville", is on schedule for completion in late 2015 (see Newmont's 10-Q
and 10-K filings for 2014). Also in North America, the Company initiated a
new sediment-hosted copper program. |
|
|
|
|
|
Subsequent to quarters end, EMX announced the execution
of an Exploration and Option to Purchase agreement with Kennecott
Exploration Company, part of the Rio Tinto Group, for the Superior West
copper-molybdenum project near Superior, Arizona (see EMX news release
dated May 4, 2015). Kennecott may earn a 100% interest in the project by
completing US$5,500,000 in exploration expenditures and making cash
payments totaling US$1,149,187, after which EMX will retain a 2% NSR in
addition to annual AMR and certain project milestone payments. |
|
|
|
|
|
In Turkey, partner Çolakoglu Ticari Yatirim A.S.
("Çolakoglu") advised that its 2014 Akarca exploration program further
expanded and defined known zones of epithermal gold and silver
mineralization, and also identified new targets for follow-up. At the
Balya lead-zinc-silver royalty property, where EMX holds an uncapped 4%
net smelter return (NSR) royalty interest, owner and operator Dedeman
Madencilik San ve Tic. A.S. ("Dedeman") advised that it re-initiated shaft
sinking and underground development work in January 2015. |
|
|
|
|
|
In Europe, the Company has a 0.5% NSR royalty that covers
Reservoir Minerals Incs share of minerals and metals mined from the
Cukaru Peki discovery in Serbia. In March, 2015 Reservoir announced that
the project was moving toward completion of a scoping study. In
Scandinavia, Eurasian continued a program of project acquisition at
minimal cost in Norway. |
|
|
|
|
|
EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the
Malmyzh copper-gold porphyry discovery in Far East Russia (51% IGC, 49%
Freeport). IGC submitted Malmyzh project reports for review and approval
by the relevant Russian Federation agencies. |
OUTLOOK
Eurasian Minerals has been generating exploration projects for
over eleven years, and is now focused on entering into agreements to convert
those assets into royalty interests, as well as directly acquiring new royalty
properties. EMX has a portfolio of precious metal, base metal, polymetallic, and
royalty interests that spans five continents and covers approximately 1.6
million acres. These assets provide revenue streams from royalty, advance
royalty and success-based bonus payments, while maintaining continual exposure
to exploration upside as projects advance. Eurasian supplements mineral property
revenue streams and value creation with strategic investments in other companies
or projects that could potentially provide shareholders with additional
upside.
Page 3
As the year 2015 progresses, the Company is taking steps to
increase revenue, reduce expenditures, and identify new early-stage
opportunities to further build portfolio value. The Company is expecting that
production from the Leeville royalty will begin to increase in Q4 of 2015 as the
Turf Vent Shaft project comes online. The Leeville royalty stream will be
complemented by other sources of revenue, including advance royalty payments as
well as cash payments from existing agreements as projects continue to be
advanced by partners.
Recognizing a need to conserve capital given the current market
conditions, the Company has streamlined operations, closed or combined offices,
and worked with our partners to optimize the deployment of exploration capital.
However, given that many of EMXs projects are now being advanced as royalty
properties or by partnerships, the Company is also focusing on new generative
initiatives. Opportunities are continuing to be generated by market conditions
that have adversely impacted the funding of junior exploration companies,
leading to a marked decrease in competition in the exploration sector. Eurasian
is actively reviewing new early-stage exploration and royalty opportunities in
addition to marketing its available projects.
The Company is working to build an income stream that offsets
all of its exploration expenditures. The ultimate goal is to sustain the Company
with royalty cash flows while fostering growth from a royalty pipeline of
quality properties that provide multiple opportunities for exploration success.
ROYALTY OVERVIEW
A key EMX asset is the Leeville royalty property that covers
portions of Newmonts Northern Carlin Trend underground gold mining operations.
The Leeville 1% gross smelter return royalty paid approximately US$286,000
during the three months ending March 31, 2015. These payments were principally
sourced from Newmonts Leeville mine, but also included minor contributions from
other operations. Newmont's Turf No. 3 Vent Shaft Project is on schedule for
commercial production planned for late 2015 (see Newmont's 10K and 10-Q filings
for Q2 and Q3, 2014). Newmont has stated that the project will provide the
ventilation required to "increase production", "unlock" additional resources,
and impact "greater Leeville", which includes portions of EMX's royalty
position.
In addition to EMX's Carlin Trend royalty properties, the
Company has royalty property interests elsewhere in the western U.S., as well as
in Turkey, Serbia, Sweden, Australia, Slovakia, and Peru. The Balya
lead-zinc-silver royalty property in Turkey is undergoing underground
development in a program that commenced in January 2015. EMXs portfolio in
Serbia includes a key royalty purchase that covers Reservoir Minerals Inc.'s
Cukaru Peki copper-gold discovery that is progressing to the "scoping" study
level as announced by Reservoir during the quarter. The Viscaria iron-copper
royalty is being advanced by Avalon Minerals Ltd. with a new drill program that
commenced in late Q1 in preparation for an updated JORC resource estimate and
"scoping" study.
In addition, all of EMX's partnered exploration properties
include a royalty option. Many of these partnered properties provide Advance
Minimum Royalty ("AMR") or Advance Annual Royalty ("AAR") payments that may
generate an early revenue stream to EMX's benefit during earn-in. Additional
details on Eurasians property portfolio are included in the following sections.
TURKEY
Eurasian holds multiple mineral property interests in Turkeys
Western Anatolia and Eastern Pontides mineral belts. The properties include bulk
tonnage gold, gold-silver vein, and porphyry gold-copper targets. Six of the
seven EMX projects in Turkey are being advanced by partner companies, with two
royalty properties and four properties optioned for a retained royalty interest.
The seventh property, the Sisorta epithermal gold project, is 100% controlled by
Eurasian and is currently available for sale or partnership.
Page 4
Akarca Property
The Akarca Property is a Eurasian exploration discovery in
Turkeys Western Anatolia region. The Akarca project area currently has six
drill defined zones of epithermal gold-silver oxide mineralization. Akarca,
wholly-owned by EMX, is covered by an Option Agreement (the "Akarca Agreement")
with Çolakoğlu Ticari Yatirim A.S., a privately owned Turkish company, whereby
Çolakoğlu can earn a 100% interest for a combination of cash payments, work
commitments, and an uncapped 3.5% NSR royalty interest to EMX's benefit (see EMX
news release dated June 20, 2013).
Çolakoglu advised that its 2014 Akarca exploration program
further expanded and defined known zones of epithermal gold and silver
mineralization, and also identified new targets for follow-up. In February 2015,
Çolakoğlu requested, and was granted a six month extension to August 2015 for
exercise of their option as defined by the Akarca Agreement. Çolakoğlu paid EMX
US$100,000 "earnest money" of the US$500,000 payment due at the time of
exercise, with the remaining US$400,000 due upon option exercise in August.
Ongoing programs underway by Çolakoglu include geological and water quality
studies.
Sisorta Property
The Sisorta project, located in the Eastern Pontides mineral
belt, is an epithermal gold deposit with an NI 43-101 mineral resource at a 0.4
g/t cutoff of 3.17 million indicated tonnes averaging 0.89 g/t gold, and 11.38
million inferred tonnes averaging 0.58 g/t gold. An overview of the methodology
used to estimate these resources are described in EMXs news release dated June
26, 2009.
The Sisorta property had been in a joint venture (Chesser 51%,
EMX 49%), with Chesser managing the project. In March 2015, EMX purchased
Chesser's interest in the property, and assumed management of the project. As
Sisorta is now a 100% controlled asset of EMX, the Company is evaluating the
property's exploration upside, while pursuing partnership opportunities.
Balya Royalty Property
The Balya royalty property is located in the historic Balya
lead-zinc-silver mining district in northwestern Turkey. EMX holds an uncapped
4% NSR royalty that it retained from the sale of the property to private Turkish
mining company Dedeman Madencilik San ve Tic. A.S. in 2006 (see EMX news release
dated November 14, 2006). EMX understands that Dedeman reinitiated shaft sinking
and underground development work at the Hastanetepe zone during the quarter.
Other Property Interests
The Sofular royalty property, also held by Dedeman, was dropped
in Q1 2015 due to a lack of encouraging exploration results.
Qualified Person
Michael P. Sheehan, CPG, a Qualified Person as defined by NI
43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Turkey.
NORTH AMERICA
Eurasians portfolio in North America, advanced through
wholly-owned subsidiary Bronco Creek Exploration (BCE), includes porphyry
copper-molybdenum, porphyry copper-gold, bulk tonnage gold, and gold-silver vein
projects. The BCE portfolio is comprised of 24 properties covering more than
35,000 hectares in Arizona, Nevada, Utah, Colorado, and Wyoming. EMX has six
properties partnered through BCE. In addition, there are five properties
acquired in the 2012 merger with Bullion Monarch. Of these, four are EMX royalty
properties, including the Northern Carlin Trend's Leeville royalty (see Leeville
and Royalty Property Overview section), and one is an exploration project
available for partnership.
The Companys work focused on advancing partner funded
projects, generative exploration, and business development activities during the
quarter:
Page 5
|
Subsequent to quarters end, EMX announced the execution
of an Exploration and Option to P urchase agreement with Kennecott
Exploration Company, part of the Rio Tinto Group, for the Superior West
copper-molybdenum project near Superior, Arizona (see EMX news release
dated May 4, 2015). Kennecott may earn a 100% interest in the project by
completing US$5,500,000 in exploration expenditures and making cash
payments totaling US$1,149,187, after which EMX will retain a 2% NSR in
addition to annual AMR and certain project milestone payments. |
|
|
|
The Copper King and Red Top properties are porphyry
copper-molybdenum projects located in the Globe-Miami and Superior
(Pioneer) mining districts of Arizona covered by two separate Option
Purchase Agreements with Desert Star Resources Ltd. (Desert Star),
whereby Desert Star could acquire a 100% interest in each of the projects
for cash, shares, and work commitments, after which EMX will retain a 2.5%
NSR royalty (see EMX news release dated September 4, 2013). EMX assisted
Desert Star in Q1 with drill permitting in preparation for reconnaissance
drill programs anticipated for later in 2015. |
|
|
|
The Buckhorn Creek copper-molybdenum project is located
in the Laramide porphyry copper belt of southern Arizona optioned to
Savant Explorations Ltd. (Savant) under an Exploration and Earn-in
Agreements for cash, shares, and work commitments (see EMX news release
dated October 30, 2013). EMX continued in Q1 to work with Savant on drill
permitting for the Buckhorn Creek project. |
|
|
|
EMX's generative programs focused on gold opportunities
in the Great Basin, porphyry copper targets in Arizona, and a new
sediment-hosted copper program led by consulting geologist Dr. Jon
Thorson. Thorson's work resulted in EMX's acquisition of the Copper
Warrior property in southeastern Utah's Lisbon Valley district. |
|
|
|
Eurasian continued in discussions with potential partners
interested in available copper and gold projects in the portfolio.
|
EMX is encouraged by the ongoing funding to advance partnered
projects, third party interest in available copper and gold properties in the
portfolio, and new opportunities generated by the sediment-hosted copper
program.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on North America.
EUROPE
Eurasian continues to emphasize Scandinavia as a highly
favorable jurisdiction for mineral exploration and development, and has
assembled a portfolio of 100% controlled projects in Sweden and Norway that are
available for partnership. The Company has significantly reduced expenditures in
Scandinavia, and continues to examine ways to add value while pursuing strategic
partnerships. In addition to the exploration properties in Sweden and Norway,
EMX also maintains a royalty interest in northern Sweden's Viscaria project, as
well as a portfolio of royalty interests in Serbia that includes Reservoir
Mineral's Cukaru Peki copper-gold discovery.
Sweden
Eurasians portfolio in Sweden includes volcanogenic massive
sulfide ("VMS") and Iron-Oxide-Copper-Gold ("IOCG") properties, in addition to
known areas of copper, gold, and platinum group element-enriched styles of
mineralization. EMX focused on retaining and advancing the most prospective
exploration projects while reducing expenditures during the quarter. In February
2015, Eurasian closed its office in Kiruna with the intention of relocating to a
more accessible and cost effective location in southern Sweden, where much of
Eurasians exploration work is now focused. The Company has been in ongoing
discussions with potential partners regarding the available properties in
Sweden.
EMX holds a 1.0% NSR royalty interest in Avalon Minerals Ltd.'s
Viscaria iron-copper property located in the Kiruna mining district of northern
Sweden. A Finnish company, Outokumpu Oyj, is entitled to receive 0.5% NSR
payable from EMXs royalty, resulting in Eurasian receiving net 0.5% NSR
royalties until Outokumpu has received a total of $12 million in royalty
payments, after which EMX will receive the full 1.0% NSR royalty. Avalon
announced that drilling had commenced to support an updated Scoping Study in a
March 31, 2015 news release.
Page 6
Norway
EMX initiated a program in 2014 to evaluate IOCG, VMS, and
other opportunities in Norway, and initially acquired the Burfjord and
Storbekken properties by acquiring exploration permits on open ground. In
January 2015, the Hattfjelldal, Vaddas, and Melkedalen VMS projects were added
to the portfolio by direct acquisition with minimal cost. The Vaddas and
Melkedalen properties host small tonnage zinc and copper historic resources.
Royalty Properties in Serbia
EMX's portfolio in Serbia initially resulted from early stage
prospect generation and organic royalty growth via the sale of its properties,
including the Brestovac West, Deli Jovan, and Plavkovo projects to Reservoir
Minerals Inc. (Reservoir) in 2006. The terms of the sale included uncapped NSR
royalties payable to EMX at a rate of 2% for gold and silver, and 1% for all
other metals. Subsequently, Eurasian acquired an uncapped 0.5% NSR royalty
covering Reservoir's share of minerals and metals mined from the "Brestovac" and
"Jasikovo" properties (see EMX news release dated February 4, 2014). The
Brestovac, Brestovac West, and Jasikovo properties are included in the Timok
Project joint venture between Reservoir (45%) and Freeport McMoRan Exploration
Corp. (55%).
Brestovac hosts porphyry and epithermal copper-gold
mineralization for the Cukaru Peki deposit, which has an NI 43-101 inferred
resource at a 1% copper equivalent (CuEq% = Cu% + (Au g/t x 0.6)) cut-off
of 65.3 million tonnes averaging 2.6% copper and 1.5 g/t gold, or 3.5% copper
equivalent (see Reservoir news release dated January 27, 2014). Reservoir
announced in a March 12, 2015 news release that a 2015 budget of US$ 18.7
million had been approved by the Timok Project joint venture "to move the
project forward toward the completion of a scoping study". EMX's Timok Project
royalty properties add strategic upside potential for Eurasian in one of the
richest copper-gold mineral belts in Europe.
Qualified Person
Eric P. Jensen, CPG, a Qualified
Person as defined by NI 43-101 and employee of the Company, has reviewed,
verified and approved the above technical disclosure on Europe.
AUSTRALIA AND NEW ZEALAND
The Company's programs in the Australia and New Zealand region
continued to operate with a reduced expenditure rate, and to identify new
early-stage opportunities. The Koonenberry gold project in New South Wales,
Australia is being advanced by partner companies under favorable royalty
agreements with EMX. EMX subsidiaries also submitted applications for two new
copper exploration projects in Western Australia. In New Zealand, the
Neavesville gold-silver project was advanced with the commencement of a partner
funded drill program.
Koonenberry Property
The Koonenberry gold project is positioned along the northwest
trending, regional-scale Koonenberry fault in southeastern Australia. The
distribution of gold occurrences and gold geochemical anomalies are coincident
with prominent structural features related to the Koonenberry fault.
The majority of the project is under an Exploration and Option
Agreement (the NQM Agreement) with North Queensland Mining Pty Ltd. (NQM), a
privately-held Australian company, to earn a 100% interest in the subsidiary
that holds the EMX licenses, with EMX retaining a 3% production royalty upon
earn-in (see EMX news release dated February 19, 2014 for more details). During
the quarter Arastra Exploration relinquished their holdings covering portions of
the Koonenberry project not included in the NQM Agreement and over which EMX
held a 1.0% NSR. EMX and NQM declined to acquire the tenements from Arastra,
thereby reducing the Koonenberry project land holdings to a total of 947 square
kilometers.
Neavesville Property
The Neavesville project consists of a single exploration
permit, totaling over 30 square kilometers, in the Hauraki goldfield of New
Zealand's North Island. EMX acquired Neavesville, which covers a historic JORC
gold-silver resource, on open ground with minimal cost. The property hosts
epithermal gold-silver mineralization that has geologic features similar to
other deposits of the Hauraki goldfield, including Newmont's Martha Hill
gold-silver mine located 25 kilometers to the southeast.
Page 7
The project is under a definitive agreement with Land &
Mineral Limited (L&M), a privately-held Australian company, giving L&M
the right to acquire Hauraki Gold Ltd. (Hauraki), the wholly-owned EMX
subsidiary that controls the Neavesville property. The agreement with L&M
provides for work obligations, staged payments, milestone payments based upon
JORC reserves, and commercial production payments, all to the benefit of
Eurasian (see EMX news release dated November 13, 2014). An L&M funded
drilling program commenced in March with results expected to be released in the
coming quarters.
Qualified Person
Chris Spurway, FAusIMM, MAIG, a Qualified Person as defined by
NI 43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Australia and New Zealand.
HAITI
Eurasian and joint venture partner Newmont Ventures Limited, a
wholly owned subsidiary of Newmont, (collectively, the JV) have a land
position along a 130 kilometer trend of Haitis Massif du Nord mineral belt.
Newmont is funding and managing six joint venture Designated Projects across
northern Haiti. EMXs work on the 100% controlled Grand Bois gold-copper project
is outside of the JV with Newmont.
The Designated Projects with Newmont and EMX's Grand Bois
Project have been on care and maintenance status since 2013, when the Haitian
Government suspended its Mining Convention process while it began working on a
new Mining Law with the help of the World Bank. The JV does not expect further
progress on the new Mining Law until later in 2016.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Haiti.
STRATEGIC INVESTMENTS
IG Copper LLC
EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the Malmyzh
copper-gold porphyry project in Far East Russia. IGC has a 51% ownership
interest in the Malmyzh joint venture, with Freeport retaining a 49% interest.
IGC is operating and managing the project. The Salasinskaya and Shelekhovo
projects, 200 kilometers northeast of Malmyzh, are 100% controlled by IGC and
not subject to the joint venture with Freeport. Eurasian is IGC's largest
shareholder, with 42.34% of the issued and outstanding shares (40.84% equity
position on a fully-diluted basis) from investments totaling US$7.8 million.
Malmyzh is a grassroots, district-scale discovery with fourteen
porphyry copper-gold prospects identified within a 16 by 5 kilometer intrusive
corridor. The project has excellent logistics and infrastructure, and is located
220 kilometers northeast of the Russia-China border at Khabarovsk. IGC advanced
Malmyzh in Q1 by submitting drafts of project reports for review and approval by
the relevant Russian Federation agencies.
Revelo Resources Corp. (formerly Iron Creek Capital
Corp.)
EMX has a strategic investment in Revelo Resources Corp.
(TSX-V: RVL, Revelo), a company focused on the acquisition and exploration of
mineral properties in the prolific metallogenic belts of northern Chile. Revelo
controls approximately 300,000 hectares of 100% owned exploration tenements. The
portfolio is comprised of 16 exploration projects prospective for copper, gold
and silver including three projects under option/JV agreements with Kinross Gold
(Las Pampas Project), Newmont Mining (Montezuma Project), and BHP Billiton
(Block 2 project). In addition, Revelo retains a royalty interest in the
Victoria copper-gold-silver exploration project.
In Q1, Revelo reported that Newmont had completed the Phase 1
earn-in for a 51% interest in the Montezuma copper project by spending in excess
of the US$2.5M (see Revelo news release dated February 23, 2015 for more
information).
Page 8
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Strategic Investments.
RESULTS OF OPERATIONS
Three months ended March 31, 2015
The net loss for the three months ended March 31, 2015
(Q1-2015) was $2,660,015 compared to $2,167,525 for the prior years
comparative quarter (Q1-2014). The loss for Q1-2015 was made up of net
exploration expenditures of $1,274,598 (Q1-2014 - $1,231,199), general and
administrative expenditures of $989,799 (Q1-2014 - $990,100) and other losses
totaling $681,330 (Q1-2014 - $206,794) offset by net royalty income of $2,222
(Q1-2014 $234,525) after depletion and related tax. Some items to note are:
Revenues
In Q1-2015, royalty income was earned for 239 (Q1-2014 467)
ounces of gold totaling $362,991 (Q1-2014 - $654,718) offset by gold tax and
depletion of $360,769 (Q1-2014 - $420,193) for net royalty income of $2,222
(Q1-2014 $234,525). The decrease in royalty income was mainly due to a
decrease in ounces produced and a lower realized gold price per ounce in the
current period. In Q1-2015 the average realized gold price was US$1,219 per
ounce compared to US$1,280 for Q1-2014.
Exploration Expenditures
Exploration expenditures (gross) increased by $22,297 from
$1,663,425 to $1,685,722 in Q1-2015 and recoveries decreased by $21,102 from
$432,266 to $411,124 in Q1-2015 for a net increase in exploration expenditures
of $43,399 in Q1-2015.
General and Administrative
General and administrative expenses
(G&A) of $989,799 were incurred during the quarter. Some of the
significant changes from the comparable quarter were:
|
|
Administrative and office expenses of $282,342 increased
slightly from Q1-2014 ($254,158). The Company has a corporate office in
Vancouver which manages the finance, regulatory and administrative
functions. It also has a regional office in Littleton, Colorado which
supports the exploration, technical, investor relations and deal flow
aspects of the business. |
|
|
|
|
|
Investor relations expenditures decreased by $16,610 to
$78,614 in Q1-2015. The Company attends select industry trade shows and
supports lines of communication to current and potential investors.
|
|
|
|
|
|
Salaries and consultants increased by $25,837 to $361,426
from $335,589 and is the largest expense in G&A. This expense category
encompasses management, administration, project development and marketing
support. It should be noted that many of our personnel expenditures
companywide are denominated in United States dollars (USD) and the
increase in the value of the USD compared to the Canadian dollar, which is
our reporting currency, will increase expenditures.
|
LIQUIDITY AND CAPITAL RESOURCES
The Companys working capital position at March 31, 2015
was $5,203,732 (December 31, 2014 - $7,096,916). With its current plans for
the year and the budgets associated with those plans, in order to continue
funding its administrative and exploration expenditures from the date of this
MD&A, the Company will need to obtain additional cash and anticipates either
financing or selling one or more of its assets. Historically, the Company funds
its cash requirements through the issuance of shares, funding from joint venture
partners, royalty income, attracting additional joint venture partners and the
sale of available investments and marketable securities all of which are used to
finance further property acquisitions, explore and develop its mineral
properties, and obtain strategic investments.
Page 9
Operating Activities
Cash used in operations was $2,052,861 for the three months
ended March 31, 2015 (Q1-2014 - $1,363,244) and represents expenditures
primarily on mineral property exploration and general and administrative expense
for both periods, offset by royalty income received in the period.
Financing Activities
There were no financing activities during the current or
comparative quarters.
Investing Activities
Some of the significant investment activities during the three
months ended March 31, 2015 are:
|
- |
The Company purchased an additional 51% of the shares of
the Company that owns Sisorta in Turkey for AU$162,092 so that it now owns
100% of the project. |
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
QUARTERLY INFORMATION
Fiscal quarter ended |
|
March 31, 2015 |
|
|
December 31, 2014 |
|
|
September 30, 2014 |
|
|
June 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
362,991
|
|
$ |
466,862
|
|
$ |
558,091
|
|
$ |
567,663
|
|
Exploration expenditures |
|
1,685,722 |
|
|
1,116,641 |
|
|
1,723,584 |
|
|
2,566,990 |
|
Exploration recoveries
|
|
(411,124 |
) |
|
(185,924 |
) |
|
(609,039 |
) |
|
(1,651,157 |
) |
Share-based payments |
|
45,794 |
|
|
70,740 |
|
|
80,984 |
|
|
826,935 |
|
Net loss for the period
|
|
(2,660,015 |
) |
|
(11,140,366 |
) |
|
(1,345,463 |
) |
|
(2,794,687 |
) |
Basic and diluted net loss per share |
|
(0.04 |
) |
|
(0.15 |
) |
|
(0.02 |
) |
|
(0.04 |
) |
Fiscal quarter ended |
|
March 31, 2014 |
|
|
December 31, 2013 |
|
|
September 30, 2013 |
|
|
June 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
654,718
|
|
$ |
985,498
|
|
$ |
601,860
|
|
$ |
577,558
|
|
Exploration expenditures |
|
1,663,425 |
|
|
1,508,983 |
|
|
2,298,244 |
|
|
2,929,328 |
|
Exploration recoveries
|
|
(432,226 |
)
|
|
(545,899 |
)
|
|
(1,446,828 |
)
|
|
(2,109,651 |
)
|
Share-based payments |
|
51,752 |
|
|
54,539 |
|
|
150,993 |
|
|
168,403 |
|
Net loss for the period
|
|
(2,167,525 |
)
|
|
(2,140,328 |
)
|
|
(6,635,561 |
)
|
|
(1,973,663 |
)
|
Basic and diluted net loss per share |
|
(0.03 |
) |
|
(0.03 |
) |
|
(0.09 |
) |
|
(0.03 |
) |
Factors that cause fluctuations in the Companys quarterly
results include royalty revenue, market price for gold, production on royalty
properties, the timing of stock option and share grants, foreign exchange gains
and losses related to the Companys holding of United States dollar denominated
working capital items, gains or losses on investments held in its portfolio,
along with varying levels of operations activities on its exploration projects
and due diligence undertaken on new prospects.
Page 10
RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances
relating to key management personnel and directors were as follows:
|
|
|
|
|
Share-based |
|
|
|
|
For the three months ended March 31, 2015 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
President, CEO and Director
|
$ |
124,977
|
|
$ |
- |
|
$ |
124,977
|
|
COO and Director (1) |
|
299,060 |
|
|
- |
|
|
299,060 |
|
Chief Legal Officer |
|
58,279 |
|
|
4,860 |
|
|
63,139 |
|
Directors (2) |
|
42,899 |
|
|
- |
|
|
42,899 |
|
Seabord Services Corp. (3) |
|
104,700 |
|
|
- |
|
|
104,700 |
|
Total |
$ |
629,914 |
|
$ |
4,860 |
|
$ |
634,774 |
|
(1) COO and Director Salary or Fees includes
$247,660 in severance payments.
(2) Directors fees include $5,000 per month paid to
the Companys non-Executive Chairman, who does not receive the fees paid to the
other independent directors.
|
|
|
|
|
Share-based |
|
|
|
|
For the three months ended March 31, 2014 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
President, CEO and Director
|
$ |
110,533
|
|
$ |
13,105 |
|
$ |
123,638
|
|
COO and Director |
|
55,267 |
|
|
5,048 |
|
|
60,315 |
|
CFO |
|
- |
|
|
3,029 |
|
|
3,029 |
|
Corporate Secretary |
|
- |
|
|
1,212 |
|
|
1,212 |
|
Chief Legal Officer |
|
52,959 |
|
|
12,256 |
|
|
65,215 |
|
Directors* |
|
46,684 |
|
|
2,457 |
|
|
49,141 |
|
Seabord Services Corp. (3) |
|
104,700 |
|
|
- |
|
|
104,700 |
|
Total |
$ |
370,143 |
|
$ |
37,107 |
|
$ |
407,250 |
|
Related Party Assets and
Liabilities |
|
Service or Term |
|
|
31-Mar-15 |
|
|
31-Dec-14 |
|
Amounts due from (to):
|
|
|
|
|
|
|
|
|
|
President, CEO and Director |
|
Expense Reimbursement |
|
$ |
3,071 |
|
$ |
7,713 |
|
COO and Director |
|
Expense
Reimbursement |
|
|
- |
|
|
186 |
|
Chief Legal Officer |
|
Expense Reimbursement |
|
|
- |
|
|
165 |
|
Directors |
|
Fees and Expense
Reimbursement |
|
|
23,827 |
|
|
29,612 |
|
Seabord Capital Corp. |
|
Expense Reimbursement |
|
|
- |
|
|
- |
|
|
|
|
|
$ |
26,898 |
|
$ |
37,676 |
|
(3)Seabord Services Corp. (Seabord) is a
management services company controlled by the Chairman of the Board. Seabord
provides a Chief Financial Officer, a Corporate Secretary, accounting staff,
administration staff and office space to Eurasian. The Chief Financial Officer
and Corporate Secretary are employees of Seabord and are not paid directly by
Eurasian.
RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
The Company considers items included in shareholders equity as
capital. The Companys objective when managing capital is to safeguard the
Companys ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders.
The Company currently has continuing royalty revenues to fund a
portion of ongoing costs. In order to fund future projects and pay for
administrative costs, the Company will spend its existing working capital and
raise additional funds as needed. As at March 31, 2015, the Company had working
capital of $5,203,732 (December 31, 2014 - $7,096,916). Management will need
additional sources of working capital to continue its currently planned
programs, by issuing new shares or the sale of assets. The Company manages the
capital structure and makes adjustments in light of changes in economic
conditions and the risk characteristics of the underlying assets.
Page 11
In order to maintain or adjust the capital structure, the
Company may issue new shares through public and/or private placements, sell
assets, or return capital to shareholders. The Company is not subject to
externally imposed capital requirements.
Fair Value
The Company characterizes inputs used in determining fair value
using a hierarchy that prioritizes inputs depending on the degree to which they
are observable. The three levels of the fair value hierarchy are as follows:
|
|
Level 1: inputs represent quoted prices in active markets
for identical assets or liabilities. Active markets are those in which
transactions occur in sufficient frequency and volume to provide pricing
information on an ongoing basis. |
|
|
|
|
|
Level 2: inputs other than quoted prices that are
observable, either directly or indirectly. Level 2 valuations are based on
inputs, including quoted forward prices for commodities, market interest
rates, and volatility factors, which can be observed or corroborated in
the market place. |
|
|
|
|
|
Level 3: inputs that are less observable, unavoidable or
where the observable data does not support the majority of the
instruments fair value. |
As at March 31, 2015, there were no changes in the levels in
comparison to December 31, 2014. Financial instruments measured at fair value on
the statement of financial position are summarized in levels of the fair value
hierarchy as follows:
Assets |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash equivalents |
$ |
4,059,948
|
|
$ |
- |
|
$ |
- |
|
$ |
4,059,948
|
|
Restricted cash |
|
232,869 |
|
|
- |
|
|
- |
|
|
232,869 |
|
Fair value through profit or
loss investments |
|
801,861 |
|
|
- |
|
|
- |
|
|
801,861 |
|
Strategic Investments |
|
317,143 |
|
|
- |
|
|
- |
|
|
317,143 |
|
Total |
$ |
5,411,821 |
|
$ |
- |
|
$ |
- |
|
$ |
5,411,821 |
|
The carrying value of receivables, accounts payable and accrued
liabilities, and advances from joint venture partners approximate their fair
value because of the short-term nature of these instruments. The Company
assessed that there were no indicators of impairment for these financial
instruments.
The Companys financial instruments are exposed to certain
financial risks, including credit risk, interest rate risk, market risk,
liquidity risk and currency risk.
Credit Risk
The Company is exposed to credit risk by holding cash and cash
equivalents and receivables. This risk is minimized by holding a significant
portion of the funds in Canadian banks. The Companys exposure with respect to
its receivables is primarily related to royalty streams and recovery of
exploration evaluation costs.
Interest Rate Risk
The Company is exposed to interest rate risk because of
fluctuating interest rates. Management believes the interest rate risk is low
given the current low global interest rate environment. Fluctuations in market
rates is not expected to have a significant impact on the Companys operations
due to the short term to maturity and no penalty cashable feature of its cash
equivalents.
Market Risk
The Company is exposed to market risk because of the
fluctuating values of its publicly traded marketable securities and other
company investments. The Company has no control over these fluctuations and does
not hedge its investments. Based on the March 31, 2015 portfolio values,
a 10% increase or decrease in effective market values would increase or decrease
net shareholders equity by approximately $110,000.
Page 12
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet
its financial obligations as they come due. The Company manages this risk by
careful management of its working capital to ensure the Companys expenditures
will not exceed available resources.
Commodity Risk
The Companys royalty revenues are derived from a royalty
interest and are based on the extraction and sale of precious and base minerals
and metals. Factors beyond the control of the Company may affect the
marketability of metals discovered. Metal prices have historically fluctuated
widely. Consequently, the economic viability of the Companys royalty interests
cannot be accurately predicted and may be adversely affected by fluctuations in
mineral prices.
Currency Risk
Foreign exchange risk arises when future commercial
transactions and recognized assets and liabilities are denominated in a currency
that is not the entitys functional currency. The Company operates in Canada,
Haiti, Turkey, Georgia, Sweden, Australia and the U.S.A. The Company funds cash
calls to its subsidiary companies outside of Canada in USD and a portion of its
expenditures are also incurred in local currencies.
The exposure of the Companys cash and cash equivalents,
receivables, and accounts payable and accrued liabilities to foreign exchange
risk as at March 31, 2015 is as follows:
Accounts |
|
US dollars |
|
Cash and cash
equivalents |
$ |
1,973,375 |
|
Receivables |
|
661,220 |
|
Accounts payable and accrued liabilities |
|
(179,781 |
) |
Net
exposure |
|
2,454,814 |
|
Canadian dollar equivalent |
$ |
3,103,376 |
|
The balances noted above reflect the USD balances held within
the parent company and any wholly owned subsidiaries. Balances denominated in
another currency other than the functional currency held in foreign operations
are considered immaterial.
Based on the above net exposure as at March 31, 2015, and
assuming that all other variables remain constant, a 1% depreciation or
appreciation of the Canadian dollar against the US dollar would result in an
increase/decrease of approximately $31,000 in the Companys pre-tax profit or
loss.
Critical Accounting Judgments and Significant Estimates and
Uncertainties
The preparation of the consolidated financial statements
requires management to make judgments and estimates and form assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, and the reported revenue and expenses during the periods
presented therein. On an ongoing basis, management evaluates its judgments and
estimates in relation to assets, liabilities, royalty revenues and expenses.
Management bases its judgments and estimates on historical experience and on
other various factors it believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions and
conditions.
The Company has identified the following critical accounting
policies in which significant judgments, estimates and assumptions are made and
where actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results or the financial
position reported in future periods.
|
a) |
Royalty Interest and Related Depletion |
In accordance with the Companys accounting policy, royalty
interests are evaluated on a periodic basis to determine whether there are any
indications of impairment. If any such indication exists, a formal estimate of
recoverable amount is performed and an impairment loss recognized to the extent
that carrying amount exceeds recoverable amount. The recoverable amount of a
royalty asset is measured at the higher of fair value less costs to sell and
value in use. The determination of fair value and value in use requires
management to make estimates and assumptions about expected production and sales
volumes, commodity prices (considering current and historical prices, price
trends and related factors), and reserves. These estimates and assumptions are
subject to risk and uncertainty; hence there is a possibility that changes in
circumstances will alter these projections, which may impact the recoverable
amount of the assets. In such circumstances, some or all of the carrying value
of the assets may be further impaired or the impairment charge reduced with the
impact recorded in profit or loss.
Page 13
Goodwill represents the excess of the price paid for the
acquisition of a consolidated entity over the fair value of the net identifiable
tangible and intangible assets and liabilities acquired. Goodwill is allocated
to the cash generating unit to which it relates.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount. The assessment
of the recoverable amount used in the goodwill impairment analysis is subject to
similar judgments and estimates as described above for property, plant and
equipment and royalty properties.
|
c) |
Exploration and Evaluation
Assets |
Recorded costs of exploration and evaluation assets are not
intended to reflect present or future values of exploration and evaluation
assets. The recorded costs are subject to measurement uncertainty and it is
reasonably possible, based on existing knowledge, that a change in future
conditions could require a material change in the recognized amount.
The Companys accounting policy for taxation requires
managements judgment as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgment is also required in assessing
whether deferred tax assets and certain deferred tax liabilities are recognized
on the statements of financial position.
Deferred tax assets, including those arising from unused tax
losses, capital losses and temporary differences, are recognized only where it
is considered probable that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences caused principally by the expected royalty
revenues generated by the royalty property are recognized unless expected tax
losses applicable to the royalty stream are sufficient to offset the taxable
income and therefore, taxable income is not expected to occur in the foreseeable
future. Assumptions about the generation of future taxable profits depend on
managements estimates of future cash flows. These depend on estimates of future
production and sales volumes, commodity prices, and reserves. Judgments are also
required about the application of income tax legislation in foreign
jurisdictions. These judgments and assumptions are subject to risk and
uncertainty, hence there is a possibility that changes in circumstances will
alter expectations, which may impact the amount of deferred tax assets and
deferred tax liabilities recognized on the balance sheet and the amount of other
tax losses and temporary differences not yet recognized. In such circumstances,
some or the entire carrying amount of recognized deferred tax assets and
liabilities may require adjustment, resulting in a corresponding credit or
charge to profit or loss.
The Company records its interest in associated companies as
equity investments. The Company has a minority position on the Boards of its
associated companies, and does not control operational decisions. The Companys
judgment is that it has significant influence, but not control and accordingly
equity accounting is appropriate.
RISKS AND UNCERTAINTIES
Mineral Property Exploration Risks
The business of mineral exploration and extraction involves a
high degree of risk. Few properties that are explored ultimately become
producing mines. At present, none of the Companys properties has a known
commercial ore deposit.
Page 14
The main operating risks include ensuring ownership of and
access to mineral properties by confirmation that option agreements, claims and
leases are in good standing and obtaining permits for drilling and other
exploration activities.
Eurasian is currently earning an interest in some of its
properties through option agreements and acquisition of title to the properties
is only completed when the option conditions have been met. These conditions
generally include making property payments, incurring exploration expenditures
on the properties and can include the satisfactory completion of pre-feasibility
studies. If the Company does not satisfactorily complete these option conditions
in the time frame laid out in the option agreements, the Companys title to the
related property will not vest and the Company will have to write-off any
previously capitalized costs related to that property.
The market prices for precious and base metals can be volatile
and there is no assurance that a profitable market will exist for a production
decision to be made or for the ultimate sale of the metals even if commercial
quantities of precious and other metals are discovered.
Revenue and Royalty Risks
Eurasian cannot predict future revenues or operating results of
the area of mining activity. Management expects future revenues from the Carlin
Trend Royalty Claim Block, including the Leeville royalty property in Nevada, to
fluctuate depending on the level of future production and the price of gold.
Specifically, there is a risk that the operator of the property, Newmont Mining
Corporation (Newmont), will cease to operate in the Companys area of
interest, therefore there can be no assurance that ongoing royalty payments will
materialize or be received by Eurasian.
Financing and Share Price Fluctuation Risks
Eurasian has limited financial resources, and has no assurance
that additional funding will be available for further exploration and
development of its projects. Further exploration and development of one or more
of the Companys projects may be dependent upon the Companys ability to obtain
financing through equity or debt financing or other means. Failure to obtain
this financing could result in delay or indefinite postponement of further
exploration and development of its projects which could result in the loss of
one or more of its properties.
The securities markets can experience a high degree of price
and volume volatility, and the market price of securities of many companies,
particularly those considered to be development stage companies such as
Eurasian, may experience wide fluctuations in share prices which will not
necessarily be related to their operating performance, underlying asset values
or prospects. There can be no assurance that share price fluctuations will not
occur in the future, and if they do occur, the severity of the impact on
Eurasians ability to raise additional funds through equity issues.
Foreign Countries and Political Risks
The Company operates in countries with varied political and
economic environments. As such, it is subject to certain risks, including
currency fluctuations and possible political or economic instability which may
result in the impairment or loss of mineral concessions or other mineral rights,
opposition from environmental or other non-governmental organizations, and
mineral exploration and mining activities may be affected in varying degrees by
political stability and government regulations relating to the mineral
exploration and mining industry. Any changes in regulations or shifts in
political attitudes are beyond the control of the Company and may adversely
affect its business. Exploration and development may be affected in varying
degrees by government regulations with respect to restrictions on future
exploitation and production, price controls, export controls, foreign exchange
controls, income taxes, expropriation of property, environmental legislation and
mine and site safety.
Notwithstanding any progress in restructuring political
institutions or economic conditions, the present administration, or successor
governments, of some countries in which Eurasian operates may not be able to
sustain any progress. If any negative changes occur in the political or economic
environment of these countries, it may have an adverse effect on the Companys
operations in those countries. The Company does not carry political risk
insurance.
Competition
The Company competes with many companies that have
substantially greater financial and technical resources than it in the
acquisition and development of its projects as well as for the recruitment and
retention of qualified employees.
Page 15
Return on Investment Risk
Investors cannot expect to receive a dividend on an investment
in the Common Shares in the foreseeable future, if at all.
No Assurance of Titles or Borders
The acquisition of the right to exploit mineral properties is a
very detailed and time consuming process. There can be no guarantee that the
Company has acquired title to any such surface or mineral rights or that such
rights will be obtained in the future. To the extent they are obtained, titles
to the Companys surface or mineral properties may be challenged or impugned and
title insurance is generally not available. The Companys surface or mineral
properties may be subject to prior unregistered agreements, transfers or claims
and title may be affected by, among other things, undetected defects. Such third
party claims could have a material adverse impact on the Companys operations.
Currency Risks
The Companys equity financings are sourced in Canadian dollars
but much of its expenditures are in local currencies or U.S. dollars. At this
time, there are no currency hedges in place. Therefore, a weakening of the
Canadian dollar against the U.S. dollar or local currencies could have an
adverse impact on the amount of exploration funds available and work conducted.
Joint Venture and Exploration Funding Risk
Eurasians strategy is to seek exploration and joint venture
partners through options and joint ventures to fund exploration and project
development. The main risk of this strategy is that the funding parties may not
be able to raise sufficient capital in order to satisfy exploration and other
expenditure terms in a particular joint venture agreement. As a result,
exploration and development of one or more of the Companys property interests
may be delayed depending on whether Eurasian can find another party or has
enough capital resources to fund the exploration and development on its own.
Insured and Uninsured Risks
In the course of exploration, development and production of
mineral properties, the Company is subject to a number of risks and hazards in
general, including adverse environmental conditions, operational accidents,
labour disputes, unusual or unexpected geological conditions, changes in the
regulatory environment and natural phenomena such as inclement weather
conditions, floods, and earthquakes. Such occurrences could result in the damage
to the Companys property or facilities and equipment, personal injury or death,
environmental damage to properties of the Company or others, delays, monetary
losses and possible legal liability.
Although the Company may maintain insurance to protect against
certain risks in such amounts as it considers reasonable, its insurance may not
cover all the potential risks associated with its operations. The Company may
also be unable to maintain insurance to cover these risks at economically
feasible premiums or for other reasons. Should such liabilities arise, they
could reduce or eliminate future profitability and result in increased costs,
have a material adverse effect on the Companys results and a decline in the
value of the securities of the Company.
Some work is carried out through independent consultants and
the Company requires all consultants to carry their own insurance to cover any
potential liabilities as a result of their work on a project.
Environmental Risks and Hazards
The activities of the Company are subject to environmental
regulations issued and enforced by government agencies. Environmental
legislation is evolving in a manner that will require stricter standards and
enforcement and involve increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects, and a heightened
degree of responsibility for companies and their officers, directors and
employees. There can be no assurance that future changes in environmental
regulation, if any, will not adversely affect Eurasians operations.
Environmental hazards may exist on properties in which the Company holds
interests which are unknown to the Company at present.
Page 16
Fluctuating Metal Prices
Factors beyond the control of the Company have a direct effect
on global metal prices, which have fluctuated widely, particularly in recent
years, and there is no assurance that a profitable market will exist for a
production decision to be made or for the ultimate sale of the metals even if
commercial quantities of precious and other metals are discovered on any of
Eurasians properties. Consequently, the economic viability of any of the
Companys exploration projects and its ability to finance the development of its
projects cannot be accurately predicted and may be adversely affected by
fluctuations in metal prices.
Extensive Governmental Regulation and Permitting
Requirements Risks
Exploration, development and mining of minerals are subject to
extensive laws and regulations at various governmental levels governing the
acquisition of the mining interests, prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and
other matters. In addition, the current and future operations of Eurasian, from
exploration through development activities and production, require permits,
licenses and approvals from some of these governmental authorities. Eurasian has
obtained all government licenses, permits and approvals necessary for the
operation of its business to date. However, additional licences, permits and
approvals may be required. The failure to obtain any licenses, permits or
approvals that may be required or the revocation of existing ones would have a
material and adverse effect on Eurasian, its business and results of operations.
Failure to comply with applicable laws, regulations and permits
may result in enforcement actions thereunder, including orders issued by
regulatory or judicial authorities requiring Eurasians operations to cease or
be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment or remedial actions. Eurasian
may be required to compensate those suffering loss or damage by reason of its
mineral exploration activities and may have civil or criminal fines or penalties
imposed for violations of such laws, regulations and permits. Any such events
could have a material and adverse effect on Eurasian and its business and could
result in Eurasian not meeting its business objectives.
Key Personnel Risk
Eurasians success is dependent upon the performance of key
personnel working in management and administrative capacities or as consultants.
The loss of the services of senior management or key personnel could have a
material and adverse effect on the Company, its business and results of
operations.
Conflicts of Interest
In accordance with the laws of British Columbia, the directors
and officers of a corporation are required to act honestly, in good faith and in
the best interests of the corporation. Eurasians directors and officers may
serve as directors or officers of other companies or have significant
shareholdings in other resource companies and, to the extent that such other
companies may participate in ventures in which the Company may participate, such
directors and officers may have a conflict of interest in negotiating and
concluding terms respecting the extent of such participation. If such a conflict
of interest arises at a meeting of the Companys directors, a director with such
a conflict will abstain from voting for or against the approval of such
participation or such terms.
Passive Foreign Investment Company
U.S. investors in common shares should be aware that based on
current business plans and financial expectations, Eurasian currently expects
that it will be a passive foreign investment company (PFIC) for the year
ending December 31, 2014 and expects to be a PFIC in future tax years. If
Eurasian is a PFIC for any year during a U.S. shareholders holding period, then
such U.S. shareholder generally will be required to treat any gain realized upon
a disposition of common shares, or any so-called excess distribution received
on its common shares, as ordinary income, and to pay an interest charge on a
portion of such gain or distributions, unless the shareholder makes a timely and
effective qualified electing fund election (QEF Election) or a
mark-to-market election with respect to the common shares. A U.S. shareholder
who makes a QEF Election generally must report on a current basis its share of
Eurasians net capital gain and ordinary earnings for any year in which Eurasian
is a PFIC, whether or not Eurasian distributes any amounts to its shareholders.
For each tax year that Eurasian qualifies as a PFIC, Eurasian intends to: (a)
make available to U.S. shareholders, upon their written request, a PFIC Annual
Information Statement as described in Treasury Regulation Section 1.1295 -1(g)
(or any successor Treasury Regulation) and (b) upon written request, use
commercially reasonable efforts to provide all additional information that such
U.S. shareholder is required to obtain in connection with maintaining such QEF
Election with regard to Eurasian. Eurasian may elect to provide such information
on its website www.EurasianMinerals.com.
Page 17
Corporate Governance and Public Disclosure Regulations
The Company is subject to changing rules and regulations
promulgated by a number of United States and Canadian governmental and
self-regulated organizations, including the United States Securities and
Exchange Commission (SEC), the British Columbia and Alberta Securities
Commissions, the NYSE MKT and the TSX-V. These rules and regulations continue to
evolve in scope and complexity and many new requirements have been created,
making compliance more difficult and uncertain. The Companys efforts to comply
with the new rules and regulations have resulted in, and are likely to continue
to result in, increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities to compliance
activities.
Internal Controls over Financial Reporting
The Company requires an annual assessment by management of the
effectiveness of the Companys internal control over financial reporting. The
Company may in the future fail to achieve and maintain the adequacy of its
internal control over financial reporting, as such standards are modified,
supplemented or amended from time to time, and the Company may not be able to
ensure that it can conclude on an ongoing basis that it has effective internal
control over financial reporting. Future acquisitions of companies may provide
the Company with challenges in implementing the required processes, procedures
and controls in its acquired operations. Acquired companies may not have
disclosure controls and procedures or internal control over financial reporting
that are as thorough or effective as those required by securities laws currently
applicable to the Company.
No evaluation can provide complete assurance that the Companys
internal control over financial reporting will detect or uncover all failures of
persons within the Company to disclose material information otherwise required
to be reported. The effectiveness of the Companys controls and procedures could
also be limited by simple errors or faulty judgments. In addition, should the
Company expand in the future, the challenges involved in implementing
appropriate internal control over financial reporting will increase and will
require that the Company continue to improve its internal control over financial
reporting.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management is responsible for establishing and maintaining
disclosure controls and procedures, which provide reasonable assurance that
material information relating to the Company and its subsidiaries is accumulated
and communicated to management to allow timely decisions regarding required
disclosure. Management has evaluated the effectiveness of its disclosure
controls and procedures as of March 31, 2015 and believes its disclosure
controls and procedures are effective.
Internal Control over Financial Reporting
The Companys management, with the participation of its CEO and
CFO, are responsible for establishing a system of internal control over
financial reporting to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS as issued by the IASB. There have been no
changes in the Companys internal control over financial reporting that occurred
during the interim period being the three months ended March 31, 2015, that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.
OUTSTANDING SHARE DATA
At May 13, 2015, the Company had 73,444,710 common shares
issued and outstanding. There were also 4,425,700 stock options outstanding with
expiry dates ranging from June 7, 2015 to December 22, 2019, and 7,255,900
warrants outstanding with expiry dates ranging from November 8, 2015 to November
12, 2015.
Page 18
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, David M. Cole, Chief Executive Officer of Eurasian
Minerals Inc., certify the following:
1. |
Review: I have reviewed the interim
financial report and interim MD&A (together, the interim filings) of
Eurasian Minerals Inc. (the issuer) for the interim period ended March
31, 2015. |
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|
2. |
No misrepresentations: Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings. |
|
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3. |
Fair presentation: Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings. |
|
|
|
|
4. |
Responsibility: The issuers other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109 Certification of Disclosure in Issuers
Annual and Interim Filings, for the issuer. |
|
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|
5. |
Design: Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuers other certifying
officer(s) and I have, as at the end of the period covered by the interim
filings |
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(a) |
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that |
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(i) |
material information relating to the issuer is made known
to us by others, particularly during the period in which the interim
filings are being prepared; and |
|
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(ii) |
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and |
|
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(b) |
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuers GAAP. |
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|
5.1 |
Control framework: The control framework
the issuers other certifying officer(s) and I used to design the issuers
ICFR is Internal Control Integrated Framework published by the Committee
of Sponsoring Organizations of the Treadway Commission. |
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5.2 |
ICFR material
weakness relating to design: N/A |
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5.3 |
Limitation on scope of design:
N/A |
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6. |
Reporting changes in ICFR: The issuer has
disclosed in its interim MD&A any change in the issuers |
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ICFR that occurred during the period beginning on January
1, 2015 and ended on March 31, 2015 that has materially affected, or is
reasonably likely to materially affect, the issuers
ICFR. |
Date: May 15, 2015
David M. Cole
David M. Cole
President and Chief Executive Officer
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Christina Cepeliauskas, Chief Financial Officer of
Eurasian Minerals Inc., certify the following:
1. |
Review: I have reviewed the interim
financial report and interim MD&A (together, the interim filings) of
Eurasian Minerals Inc. (the issuer) for the interim period ended March
31, 2015. |
|
|
|
|
2. |
No misrepresentations: Based on my
knowledge, having exercised reasonable diligence, the interim filings do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was
made, with respect to the period covered by the interim filings. |
|
|
|
|
3. |
Fair presentation: Based on my knowledge,
having exercised reasonable diligence, the interim financial report
together with the other financial information included in the interim
filings fairly present in all material respects the financial condition,
financial performance and cash flows of the issuer, as of the date of and
for the periods presented in the interim filings. |
|
|
|
|
4. |
Responsibility: The issuers other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109 Certification of Disclosure in
IssuersAnnual and Interim Filings, for the issuer. |
|
|
|
|
5. |
Design: Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuers other certifying
officer(s) and I have, as at the end of the period covered by the interim
filings |
|
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(a) |
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that |
|
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(i) |
material information relating to the issuer is made known
to us by others, particularly during the period in which the interim
filings are being prepared; and |
|
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|
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(ii) |
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and |
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(b) |
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuers GAAP. |
|
|
|
|
5.1 |
Control framework: The control framework
the issuers other certifying officer(s) and I used to design the issuers
ICFR is Internal Control Integrated Framework published by the Committee
of Sponsoring Organizations of the Treadway Commission. |
|
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5.2 |
ICFR material
weakness relating to design: N/A |
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5.3 |
Limitation on scope of design:
N/A |
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6. |
Reporting changes in ICFR: The issuer has
disclosed in its interim MD&A any change in the issuers |
|
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ICFR that occurred during the period beginning on January
1, 2015 and ended on March 31, 2015 that has materially affected, or is
reasonably likely to materially affect, the issuers
ICFR. |
Date: May 15, 2015
Christina Cepeliauskas
Christina Cepeliauskas
Chief Financial Officer
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