UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of December, 2014
Commission File Number: 001-31799
ROUGE RESOURCES
INC.
(Translation of Registrants Name into English)
#203-409 Granville St, Vancouver, British Columbia,
Canada, V6C 1T2
(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)]
Yes [
] No [X]
[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)]
Yes
[ ] No [X]
[Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12-g-3-3(b) under the Securities
Exchange Act of 1934]
Yes [ ] No [X]
If Yes is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b):
82-_______________
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 behalf of the
Company by the undersigned, thereunto duly authorized.
|
Rouge Resources Ltd. |
Dated: December 9, 2014 |
By: |
/s/ Linda Smith |
|
|
|
|
|
Linda Smith |
|
Title: |
Chief Executive Officer
|
ROUGE RESOURCES LTD.
(An Exploration Stage Company)
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
NINE MONTHS ENDED OCTOBER 31, 2014
(Expressed in Canadian Dollars)
|
Statements of Financial Position
|
|
Statements of Comprehensive Loss
|
|
Statements of Changes in Equity
|
|
Statements of Cash Flows |
|
Notes to Financial Statements
|
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)
(a), if an auditor has not performed a review of the condensed interim financial
statements, they must be accompanied by a notice indicating that the financial
statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim financial
statements of the Company have been prepared by management and approved by the
Audit Committee and Board of Directors of the Company. They include appropriate
accounting principles, judgement and estimates in accordance with IFRS for
interim financial statements.
The Companys independent auditors have not performed a review
of these condensed interim financial statements in accordance with the standards
established by the Canadian Institute of Chartered Accountants for a review of
condensed interim financial statements by an entitys auditors.
Rouge Resources Ltd. |
Condensed Interim Statements of Financial Position |
(Expressed in Canadian dollars unaudited)
|
|
|
Notes |
|
|
October 31, |
|
|
January 31, |
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
$ |
3,261 |
|
$ |
146,990 |
|
$ |
96,466 |
|
GST receivable |
|
|
|
|
1,713 |
|
|
603 |
|
|
1,425 |
|
|
|
|
|
|
4,974 |
|
|
147,593 |
|
|
97,891 |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Credit card security deposit |
|
|
|
|
6,900 |
|
|
6,900 |
|
|
6,900 |
|
Equipment |
|
4 |
|
|
997 |
|
|
1,229 |
|
|
1,268 |
|
Exploration and evaluation assets |
|
5 |
|
|
304,441 |
|
|
291,007 |
|
|
291,007 |
|
|
|
|
|
|
312,338 |
|
|
299,136 |
|
|
299,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
|
$ |
317,312 |
|
$ |
446,729 |
|
$ |
397,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and accrued liabilities |
|
6 |
|
$ |
19,113 |
|
$ |
9,220 |
|
$ |
25,607 |
|
Loan payable |
|
7 |
|
|
39,676 |
|
|
39,676 |
|
|
39,676 |
|
Related party payables |
|
8 |
|
|
84,341 |
|
|
49,978 |
|
|
46,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILIITES |
|
|
|
|
143,130 |
|
|
98,874 |
|
|
111,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
9 |
|
|
3,953,590 |
|
|
3,953,590 |
|
|
3,953,590 |
|
Convertible debt reserve |
|
10 |
|
|
53,357 |
|
|
53,357 |
|
|
53,357 |
|
Deficit |
|
|
|
|
(3,832,765 |
) |
|
(3,659,092) |
|
|
(3,721,719 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
|
|
174,182 |
|
|
347,855 |
|
|
285,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
|
|
|
$ |
317,312 |
|
$ |
446,729 |
|
$ |
397,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Going concern |
|
1 |
|
|
|
|
|
|
|
|
|
|
Subsequent event |
|
15 |
|
|
|
|
|
|
|
|
|
|
Approved on behalf of the Board of Directors: |
|
|
Linda
Smith |
|
Ronald McGregor |
Director |
|
Director |
The accompanying notes are an integral part of these
financial statements |
2 |
Rouge Resources Ltd. |
Condensed Interim Statements of Comprehensive Loss |
(Expressed in Canadian dollars unaudited)
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
Year ended |
|
|
|
Notes |
|
|
October
31, |
|
|
October
31, |
|
|
January 31, |
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
88 |
|
$ |
194 |
|
|
271 |
|
$ |
582 |
|
$ |
543 |
|
Consulting fees
|
|
8 |
|
|
1,000 |
|
|
2,800 |
|
|
1,600 |
|
|
5,800 |
|
|
5,800 |
|
Listing application expenses |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
402 |
|
|
402 |
|
Management
services |
|
8 |
|
|
15,000 |
|
|
15,000 |
|
|
45,000 |
|
|
45,000 |
|
|
60,000 |
|
Office administration and travel
|
|
8 |
|
|
12,735 |
|
|
16,440 |
|
|
40,288 |
|
|
57,886 |
|
|
74,694 |
|
Professional
fees |
|
8 |
|
|
4,479 |
|
|
3,687 |
|
|
9,348 |
|
|
16,213 |
|
|
44,368 |
|
Transfer agent and filing fees |
|
|
|
|
2,624 |
|
|
3,861 |
|
|
14,539 |
|
|
21,114 |
|
|
23,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive loss |
|
|
|
$ |
(35,926) |
|
$ |
(41,982) |
|
$ |
(111,046) |
|
$ |
(146,997) |
|
$ |
(209,624 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted |
|
9 |
|
$ |
(0.00) |
|
$ |
(0.00) |
|
$ |
(0.00) |
|
$ |
(0.00) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted |
|
|
|
|
44,633,171 |
|
|
44,633,171 |
|
|
44,633,171 |
|
|
44,633,171 |
|
|
44,633,171 |
|
The accompanying notes are an integral part of these
financial statements |
3 |
Rouge Resources Ltd. |
Condensed Interim Statement of Changes in Equity |
(Expressed in Canadian dollars unaudited)
|
|
|
|
|
|
|
|
|
|
Convertible |
|
|
|
|
|
|
|
|
|
|
Common
Shares |
|
|
Debt |
|
|
|
|
|
|
|
|
Notes |
|
Number |
|
|
Amount |
|
|
Reserve |
|
|
Deficit |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2013 (audited) |
|
|
44,633,171 |
|
$ |
3,953,590 |
|
$ |
53,357 |
|
$ |
(3,512,095 |
) |
$ |
494,852 |
|
Comprehensive loss for nine months ended
October 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
(146,997 |
) |
|
(146,997 |
)
|
Balance at October 31, 2013 |
|
|
44,633,171 |
|
|
3,953,590 |
|
|
53,357 |
|
|
(3,659,092 |
) |
|
347,855 |
|
Comprehensive loss for three months ended
January 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
(62,627 |
) |
|
(62,627 |
)
|
Balance at January 31, 2014 (audited) |
|
|
44,633,171 |
|
|
3,953,590 |
|
|
53,357 |
|
|
(3,721,719 |
) |
|
285,228 |
|
Comprehensive loss for nine months ended
October 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
(111,046 |
) |
|
(111,046 |
) |
Balance at October 31, 2014 |
|
|
44,633,171 |
|
$ |
3,953,590 |
|
$ |
53,357 |
|
$ |
(3,832,765 |
) |
$ |
174,182 |
|
The accompanying notes are an integral part of these
financial statements |
4 |
Rouge Resources Ltd. |
Condensed Interim Statements of Cash Flows |
(Expressed in Canadian dollars unaudited)
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
Year ended |
|
|
|
October
31, |
|
|
October
31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive loss |
$ |
(35,926 |
) |
$ |
(41,982) |
|
$ |
(111,046 |
) |
$ |
(146,997) |
|
$ |
(209,624 |
) |
Adjustment for non-cash item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
88 |
|
|
194 |
|
|
271 |
|
|
582 |
|
|
543 |
|
Changes in non-cash working
capital items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GST receivable |
|
(711 |
) |
|
1,127 |
|
|
(288 |
) |
|
3,519 |
|
|
2,697 |
|
Prepaid expenses
|
|
|
|
|
|
|
|
|
|
|
1,625 |
|
|
1,625 |
|
Trade payables and accrued liabilities |
|
773 |
|
|
(1,684) |
|
|
(6,494 |
) |
|
(29,662) |
|
|
(13,276 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities |
|
(35,776 |
) |
|
(42,345) |
|
|
(117,557 |
) |
|
(170,933) |
|
|
(218,035 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation expenditures |
|
(934 |
) |
|
|
|
|
(13,434 |
) |
|
(22,434) |
|
|
(22,433 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities |
|
(934 |
) |
|
- |
|
|
(13,434 |
) |
|
(22,434) |
|
|
(22,433 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in related party payables |
|
14,488 |
|
|
11,018 |
|
|
37,786 |
|
|
38,512 |
|
|
35,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from financing activities |
|
14,488 |
|
|
11,018 |
|
|
37,786 |
|
|
38,512 |
|
|
35,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
(22,222 |
) |
|
(31,327) |
|
|
(93,205 |
) |
|
(154,855) |
|
|
205,379 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning |
|
25,483 |
|
|
178,317 |
|
|
96,466 |
|
|
301,845 |
|
|
301,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, ending |
$ |
3,261 |
|
$ |
146,990 |
|
$ |
3,261 |
|
$ |
146,990 |
|
$ |
96,466 |
|
The accompanying notes are an integral part of these
financial statements |
5 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
1. |
Nature and continuance of
operations |
Rouge Resources Ltd (the Company) was incorporated on March
31, 1988 under the laws of the province of British Columbia, Canada, and its
principal activity is the acquisition and exploration of mineral properties in
Canada. The Companys shares are traded on the TSX Venture Exchange (TSX-V)
under the symbol ROU and quoted on the OTC:BB in the United States.
The Companys registered and records office is located at Suite
203 - 409 Granville St., Vancouver, British Columbia, V6C 1T2.
These condensed interim financial statements have been prepared
on the assumption that the Company will continue in operation for the
foreseeable future and will be able to realize assets and discharge liabilities
in the ordinary course of business. As at October 31, 2014, the Company had not
advanced any of its properties to commercial production and is not able to
finance day-to-day activities through operations. The Companys continuation as
a going concern is dependent upon the successful results from its mineral
property exploration activities; its ability to attain profitable operations and
generate funds therefrom; and its ability to raise equity capital or borrowings
sufficient to meet current and future obligations. These factors indicate the
existence of a material uncertainty that may cast significant doubt about the
Companys ability to continue as a going concern. Management intends to finance
operating costs over the next twelve months with existing cash on hand, loans
from directors and companies controlled by directors, and/or private placement
of common shares. Should the Company be unable to continue as a going concern,
the net realizable value of its assets may be materially less than the amounts
on its Statements of Financial Position.
2. |
Significant accounting policies and basis of
preparation |
These condensed interim financial statements were authorized
for issue on December 8, 2014 by the directors of the Company.
Statement of compliance and conversion to International
Financial Reporting Standards
These condensed interim financial
statements comply with International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB) and with
interpretations of the International Financial Reporting Interpretations
Committee (IFRIC). Therefore, these financial statements also comply with
International Accounting Standard (IAS) 34, Interim Financial
Reporting.
This interim financial report does not include all of the
information required of a full annual financial report and is intended to
provide users with an update in relation to events and transactions that are
significant to an understanding of the changes in financial position and
performance of the Company since the end of the last annual reporting period. It
is therefore recommended that this financial report be read in conjunction with
the audited annual financial statements of the Company for the year ended
January 31, 2014 filed on SEDAR and EDGAR. However, this interim financial
report provides selected significant disclosures that are required in the annual
financial statements under IFRS.
Basis of preparation
These condensed interim
financial statements have been prepared on an accrual basis; are based on
historical costs, modified where applicable; and are presented in Canadian
dollars unless otherwise noted.
Significant estimates and assumptions
The preparation of financial statements in accordance with IFRS requires
the Company to make estimates and assumptions concerning the future. The
Companys management reviews these estimates and underlying assumptions on an
ongoing basis, based on experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Revisions to estimates are adjusted prospectively in the period in which the
estimates are revised.
The accompanying notes are an integral part of these
financial statements |
6 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
Estimates and assumptions where there is significant risk of
material adjustments to assets and liabilities in future accounting periods
include: the useful lives of equipment, the recoverability of the carrying value
of exploration and evaluation assets, fair value measurements for financial
instruments, recoverability and measurement of deferred tax assets, and
provisions for restoration and environmental obligations and contingent
liabilities.
Significant judgments
The preparation of
financial statements in accordance with IFRS requires the Company to make
judgments, apart from those involving estimates and assumptions, in applying
accounting policies. The most significant judgments in preparing the Companys
financial statements include:
- |
assessment of the Companys ability to continue
as a going concern and whether there are events or conditions that may
give rise to significant uncertainty; and |
- |
classification / allocation of expenditures as
exploration and evaluation assets or operating expenses.
|
Foreign currency translation, transactions and
balances
The functional currency of a Company is measured using the
currency of the primary economic environment in which it operates. These
financial statements are presented in Canadian dollars which is the Companys
functional and presentation currency.
Foreign currency transactions, where applicable, are translated
into the functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are translated at the
period-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at
the date when fair values were determined.
Exchange differences arising on the translation of monetary
items or on settlement of monetary items are recognized in the Statement of
Comprehensive Loss in the period in which they arise, except where deferred in
equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary
items are recognized in other comprehensive income to the extent that gains and
losses arising on those non-monetary items are also recognized in other
comprehensive income. Where the non-monetary gain or loss is recognized in
profit or loss, the exchange component is also recognized in profit or loss.
Exploration and evaluation assets
Costs
incurred before the Company has obtained the legal rights to explore an area are
expensed as incurred. Exploration and evaluation expenditures include the costs
of acquiring licenses and costs associated with exploration and evaluation
activity. Option payments are considered acquisition costs provided that the
Company has the intention of exercising the underlying option.
Property option agreements are exercisable entirely at the
option of the optionee. Therefore, option payments (or recoveries) are recorded
when payment is made (or received) and are not accrued.
Exploration and evaluation expenditures are capitalized. The
Company capitalizes costs to specific blocks of claims or areas of geological
interest. Government tax credits received are recorded as a reduction to the
cumulative costs incurred and capitalized on the related property.
Exploration and evaluation assets are tested for impairment if
facts or circumstances indicate that impairment exists. Examples of such facts
and circumstances are as follows:
- |
the period for which the Company has the right
to explore in the specific area has expired during the period or will
expire in the near future, and is not expected to be renewed; |
- |
substantive expenditure on further exploration
for and evaluation of mineral resources in the specific area is neither
budgeted nor planned; |
The accompanying notes are an integral part of these
financial statements |
7 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
- |
exploration for and evaluation of mineral resources in
the specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to discontinue
such activities in the specific area; and |
- |
sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying amount
of the exploration and evaluation asset is unlikely to be recovered in
full from successful development or by sale. |
After technical feasibility and commercial viability of
extracting a mineral resource are demonstrable, the Company stops capitalizing
expenditures for the applicable block of claims or geological area of interest
and tests the asset for impairment. The capitalized balance, net of any
impairment recognized, is then reclassified to either tangible or intangible
mine development assets according to the nature of the asset.
Development expenditures
Costs arising from
the construction, installation or completion of infrastructure facilities are
capitalized within mine development assets until the mine achieves commercial
production at which point accumulated costs are transferred to producing mine
assets.
Share-based payments
The Company has a stock
option plan. Share-based payments to employees are measured at the fair value of
the instruments issued and amortized over the vesting periods. Share-based
payments to non-employees are measured at the fair value of goods or services
received or the fair value of the equity instruments issued, if it is determined
the fair value of the goods or services cannot be reliably measured, and are
recorded at the date the goods or services are received. Compensation expense is
recognized and the corresponding amount is recorded in the share option reserve.
The fair value of options is determined using the BlackScholes pricing model.
The number of shares and options expected to vest is reviewed and adjusted at
the end of each reporting period such that the amount recognized for services
received as consideration for the equity instruments granted shall be based on
the number of equity instruments that eventually vest. When the options are
exercised, share capital is credited for the consideration received and the
related share option reserve is decreased.
Loss per share
Basic loss per share is
calculated by dividing the loss attributable to common shareholders by the
weighted average number of common shares outstanding in the period. For all
periods presented, the loss attributable to common shareholders equals the
reported loss attributable to owners of the Company. Diluted loss per share is
calculated by the treasury stock method. Under this method, the weighted average
number of common shares outstanding for the calculation of diluted loss per
share assumes that the proceeds to be received on the exercise of dilutive share
options and warrants are used to repurchase common shares at the average market
price during the period. Any stock options or share purchase warrants
outstanding cause the calculation of diluted loss per share to be anti-dilutive
and are therefore not included in the calculation.
Financial instruments
The Company
classifies its financial instruments in the following categories: fair value
through profit or loss (FVTPL), loans and receivables, held-to-maturity
investments, available-for-sale and financial liabilities. The classification
depends on the purpose for which the financial instruments were acquired.
Management determines the classification of its financial instruments at initial
recognition.
Fair value through profit or loss investments are either
held-for-trading for the purpose of short-term profit taking, derivatives not
held for hedging purposes, or held on fair value basis with a documented risk
management or investment strategy. when designated as such to avoid an
accounting mismatch or to enable performance evaluation where a group of
financial assets is managed by key management personnel. Such assets are
subsequently measured at fair value with unrealized changes in carrying value
being included in profit or loss.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market and are
subsequently measured at amortized cost. They are included in current assets
except for maturities greater than 12 months after the end of the
reporting period. These are classified as non-current assets.
The accompanying notes are an integral part of these
financial statements |
8 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
Held-to-maturity investments are non-derivative financial
assets that have fixed maturities and fixed or determinable payments with
Companys intention to hold these investments to maturity. They are subsequently
measured at amortized cost. Held-to-maturity investments are included in
non-current assets, except for those instruments that are expected to mature
within 12 months after the end of the reporting period.
Available-for-sale
financial assets are non-derivative financial assets that are designated as
available-for-sale or are not suitable to be classified as financial assets at
fair value through profit or loss , loans and receivables or held-to-maturity
investments and are subsequently measured at fair value. These are included in
current assets to the extent they are expected to be realized within 12 months
after the end of the reporting period. Unrealized gains and losses are
recognized in other comprehensive income, except for impairment losses and
foreign exchange gains and losses on monetary financial assets which are
recognized in profit or loss.
Non-derivative financial liabilities (excluding financial
guarantees) are subsequently measured at amortized cost.
Regular purchases and sales of financial assets are recognized
on the trade-date, ie. the date on which the group commits to purchase the
asset.
Financial assets are derecognized when the rights to receive
cash flows from the investments have expired or have been transferred and the
Company has transferred substantially all risks and rewards of ownership.
At each reporting date, the Company assesses whether there is
objective evidence that a financial instrument has been impaired. In the case of
available-for-sale financial instruments, a significant and prolonged decline in
the value of the instrument is considered to determine whether an impairment has
arisen.
Transaction costs related to financial instruments include
professional, consulting, regulatory, agency commissions and other costs that
are incremental to the acquisition, issuance or disposition of financial assets,
liabilities or equity instruments. Transaction costs are initially charged to
the related financial instrument or equity instrument, except where the
financial instrument is classified as fair value through profit or loss , in
which case transaction costs are expensed to the Statement of Comprehensive Loss
immediately.
The Company does not have any derivative financial assets and
liabilities.
Impairment of assets
The carrying amount of
the Companys non-current assets, which include equipment and exploration and
evaluation assets, is reviewed at each reporting date to determine whether there
is an indication of impairment. If such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the
impairment loss. An impairment loss is recognized in the Statement of
Comprehensive Loss whenever the carrying amount of the asset, or its
cash-generating unit, exceeds its recoverable amount.
The recoverable amount is the greater of an assets fair value
less costs to sell and its value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. For an asset that does not
generate cash flows largely independent of those from other assets, the
recoverable amount is determined for the cash-generating unit to which the asset
belongs.
A cash-generating unit is the smallest identifiable group of
assets that generates cash inflows largely independent of the cash flows from
other assets or groups of assets. Impairment losses recognized in respect of
cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the cash-generating unit and then to reduce the carrying
amount of the other assets in the unit on a pro-rata basis.
An impairment loss is only reversed if there is an indication
that the impairment loss may no longer exist and there has been a change in the
estimates used to determine the recoverable amount. However, any reversal of
impairment cannot increase the carrying value of the asset to an amount higher
than the carrying amount that would have been determined had no impairment loss been
recognized in previous years. An impairment loss with respect to goodwill is
never reversed.
The accompanying notes are an integral part of these
financial statements |
9 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
Assets that have an indefinite useful life are not subject to
amortization and are tested annually for impairment.
Cash
Cash includes cash on hand and deposits
held at call with banks.
Income taxes
Current income
tax
Current income tax assets and liabilities for the current
period are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at the reporting date, in the
countries where the Company operates and generates taxable income.
Current income tax relating to items recognized directly in
other comprehensive income or equity is recognized in other comprehensive income
or equity and not in profit or loss. Management periodically evaluates positions
taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred income tax
Deferred income
tax is recognized using the asset and liability method on temporary differences
at the reporting date arising between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
The carrying amount of deferred income tax assets is reviewed
at the end of each reporting period and recognized only to the extent that it is
probable that sufficient taxable profit will be available to allow all or part
of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.
Deferred income tax assets and deferred income tax liabilities
are offset, if a legally enforceable right exists to set off current tax assets
against current income tax liabilities and the deferred income taxes relate to
the same taxable entity and the same taxation authority.
Flow-through shares
On the issuance of
flow-through shares, any premium received in excess of the closing market price
of the Companys common shares is initially recorded as a liability
(flow-through tax liability). Provided that the Company has renounced the
related expenditures, or that there is a reasonable expectation that it will do
so, the flow-through tax liability is reduced on a pro-rata basis as the
expenditures are incurred. If such expenditures are capitalized, a deferred tax
liability is recognized. To the extent that the Company has suitable
unrecognized deductible temporary differences, an offsetting recovery of
deferred income taxes would be recorded.
Restoration and environmental obligations
The
Company recognizes liabilities for statutory, contractual, constructive or legal
obligations associated with the retirement of long-term assets, when those
obligations result from the acquisition, construction, development or normal
operation of the assets. The net present value of future restoration cost
estimates arising from the decommissioning of plant and other site preparation
work is capitalized to the related asset along with a corresponding increase in
the restoration provision in the period incurred. Discount rates using a pre-tax
rate that reflects the time value of money are used to calculate the net present
value.
The Companys estimates of restoration costs could change as a
result of changes in regulatory requirements, discount rates and assumptions
regarding the amount and timing of the future expenditures. These changes are
recorded directly to exploration and evaluation assets with
corresponding entries to the related asset and the restoration provision. The
Companys estimates are reviewed annually for changes in regulatory
requirements, discount rates, effects of inflation and changes in estimates.
The accompanying notes are an integral part of these
financial statements |
10 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
Changes in the net present value, excluding changes in the
Companys estimates of restoration costs, are charged to the Statement of
Comprehensive Loss for the period. The net present value of restoration costs
arising from subsequent site damage that is incurred on an ongoing basis during
production are charged to the Statement of Comprehensive Loss in the period
incurred. These changes are recorded directly to the related asset with a
corresponding entry to the provision. The increase in the restoration provision
due to the passage of time is recognized as interest expense.
The net present value of restoration costs arising from
subsequent site damage that is incurred on an ongoing basis during production
are charged to the statement of comprehensive loss in the period incurred.
The costs of restoration projects that were included in the
provision are recorded against the provision as incurred. The costs to prevent
and control environmental impacts at specific properties are capitalized in
accordance with the Companys accounting policy for exploration and evaluation
assets.
At present, the Company has not identified any significant
restoration and environmental obligations in its operations. Accordingly, no
provision has been made.
Equipment
Equipment is stated at historical
cost less accumulated amortization and accumulated impairment losses.
Subsequent
costs are included in the assets carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can
be measured reliably. The carrying amount of the replaced part, if applicable,
is derecognized. All other repairs and maintenance are charged to the Statement
of Comprehensive Loss during the financial period in which they are
incurred.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized in the Statement of
Comprehensive Loss.
Amortization is calculated on a declining balance method to
write-off the cost of the equipment to its residual value over its estimated
useful life at the rate of 30% per year.
Comparative figures
Certain
comparative figures have been reclassified to conform with the current periods
presentation.
3. |
Accounting standards issued
recently |
New standard IFRS 9 Financial Instruments
This new standard is a partial replacement of IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 uses a single approach to
determine whether a financial asset is measured at amortized cost or fair value,
replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how
an entity manages its financial instruments in the context of its business model
and the contractual cash flow characteristics of the financial assets.
The new standard also requires a single impairment method to be
used, replacing the multiple impairment methods in IAS 39. The proposed
effective date for IFRS 9 is for annual periods beginning on or after January 1,
2018.
Amendments to IAS 32 Financial Instruments:
Presentation
These amendments address inconsistencies when applying
the offsetting requirements, and is effective for annual periods beginning on or
after January 1, 2014.
The accompanying notes are an integral part of these
financial statements |
11 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
The Company has not early adopted these standards and is
currently assessing the impact that these standards will have on its financial
statements.
Other accounting standards or amendments to existing accounting
standards that have been issued but have future effective dates are either not
applicable or are not expected to have a significant impact on the Companys
financial statements.
|
|
|
|
|
Accumulated |
|
|
Net book |
|
|
|
Cost |
|
|
amortization |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2013
(audited) |
$ |
8,710 |
|
$ |
(6,899 |
) |
$ |
1,811 |
|
Amortization expense for
nine months ended October 31, 2013 |
|
- |
|
|
(582 |
) |
|
(582 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2013 |
|
8,710 |
|
|
(7,481 |
) |
|
1,229 |
|
Amortization expense for three months ended
January 31, 2014 |
|
|
|
|
(39 |
) |
|
(39 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2014
(audited) |
|
8,710 |
|
|
(7,442 |
) |
|
1,268 |
|
Amortization expense for
nine months ended October 31, 2014 |
|
|
|
|
(271 |
) |
|
(271 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at October 31, 2014 |
$ |
8,710 |
|
$ |
(7,713 |
) |
$ |
997 |
|
The accompanying notes are an integral part of these
financial statements |
12 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
5. |
Exploration and evaluation
assets |
As at October 31, 2014, we held a 100% interest in 18 claims in
the Thunder Bay Mining District of North Central Ontario area, called the Dotted
Lake Property, following our final payment of $12,500 in April 2014 for 2
additional claims pursuant to the exclusive Lampson Lake option agreement dated
April 20, 2010.
The following table summarizes the amounts expended on
exploration and evaluation assets for the nine months ended October 31, 2014 and
the year ended January 31, 2014:
|
|
|
|
|
|
|
|
Total for nine |
|
|
Total for year |
|
|
|
North-Central Ontario |
|
|
months ended |
|
|
ended |
|
|
|
Dotted Lake |
|
|
Lampson Lake |
|
|
October 31, |
|
|
January 31, |
|
|
|
mining claims |
|
|
mining claims |
|
|
2014 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property acquisition
costs |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
$ |
24,607 |
|
$ |
49,533 |
|
$ |
74,140 |
|
$ |
61,640 |
|
Additions |
|
- |
|
|
12,500 |
|
|
12,500 |
|
|
12,500 |
|
Balance, ending |
|
24,607 |
|
|
62,033 |
|
|
86,640 |
|
|
74,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation costs |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
|
216,867 |
|
|
- |
|
|
216,867 |
|
|
206,934 |
|
Additions |
|
|
|
|
|
|
|
|
|
|
|
|
Field and camp
costs |
|
|
|
|
|
|
|
- |
|
|
- |
|
Geological consulting and
reporting |
|
|
|
|
|
|
|
- |
|
|
- |
|
Geo-referencing
|
|
|
|
|
|
|
|
|
|
|
9,933 |
|
Project administration |
|
934 |
|
|
|
|
|
934 |
|
|
- |
|
Soil sample analysis |
|
|
|
|
|
|
|
- |
|
|
- |
|
|
|
934 |
|
|
|
|
|
934 |
|
|
9,933 |
|
Balance, ending |
|
217,801 |
|
|
- |
|
|
217,801 |
|
|
216,867 |
|
Total balance, ending |
$ |
242,408 |
|
$ |
62,033 |
|
$ |
304,441 |
|
$ |
291,007 |
|
Payment under the Lampson Lake option agreement totaled $60,000
as follows: $7,000 when the agreement was signed on April 20, 2010; $12,000 on
April 20, 2011; $16,000 on April 20, 2012; and a final $25,000 due on April 20,
2013. However on March 1, 2013, the Optioners agreed with the Company to split
the final payment into two equal amounts of $12,500. The first was paid on April
20, 2013 and the second and final payment was made this year on April 20,
2014.
The Lampson Lake claims are subject to a 2% net smelter royalty
(NSR) in favour of the optionors on one claim and with respect to the other, a
combination of a 2% NSR in favour of the optionors and a 1% NSR on any metals
and/or a 1% NSR payable to Ontario Exploration Company (OEC) on any precious
metals recovered from the property. The Company has the right to buy back 1% of
the NSR in favour of the optionors for $1,000,000 and to buy back three-quarters
of 1% of the royalty vested with OEC over 10 years on an increasing scale from
$15,000 to $750,000.
For updated information on status of the 18 claims, refer to
subsequent event note 15 below.
The accompanying notes are an integral part of these
financial statements |
13 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
6. |
Trade payables and accrued
liabilities |
Trade payables and accrued liabilities included in the
Statements of Financial Position are as follows:
|
|
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
$ |
19,113 |
|
$ |
5,960 |
|
$ |
10,367 |
|
Accrued liabilities |
|
- |
|
|
3,260 |
|
|
15,240 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
19,113 |
|
$ |
9,220 |
|
$ |
25,607 |
|
This $39,676 debt to a former professional advisor is unsecured
and non-interest bearing is a current liability but to date there has been no
demand for repayment.
8. |
Related party payables and
transactions |
Related party payables included in the Statements of Financial
Position are as follows:
|
|
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
Payable to Company directors and companies controlled by
directors |
$ |
84,341 |
|
$ |
49,978 |
|
$ |
46,555 |
|
These amounts are non-interest bearing and unsecured with no
fixed term of repayment.
Related party transactions with directors and companies
controlled by directors included in the Statements of Comprehensive Loss are as
follows:
|
|
Nine months ended October |
|
|
Year ended |
|
|
|
31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
Consulting fees |
$ |
1,600 |
|
$ |
2,800 |
|
$ |
2,800 |
|
Management fees |
|
45,000 |
|
|
45,000 |
|
|
60,000 |
|
Office rent |
|
22,500 |
|
|
22,500 |
|
|
30,000 |
|
Professional fees |
|
6,071 |
|
|
7,757 |
|
|
16,170 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
75,171 |
|
$ |
78,057 |
|
$ |
108,970 |
|
These transactions are recorded at the exchange amount, which
is the consideration agreed to between the related parties.
The accompanying notes are an integral part of these
financial statements |
14 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
Authorized share capital
Unlimited number of
common shares without par value.
Issued share capital
As at October 31, 2014,
there were 44,633,171 issued and fully paid common shares outstanding (January
31, 2014 44,633,171) of which 2,842,200 shares are held in escrow, subject to
release under regulatory approval.
Basic and diluted loss per share
The
calculation of basic and diluted loss per share for nine months ended October
31, 2014 was based on the net and comprehensive loss attributable to common
shareholders of $111,046 (October 31, 2013 - $146,997 ) and the weighted average
number of common shares outstanding of 44,633,171 (October 31, 2013 -
44,633,171). The diluted loss per share will not include the effect of any share
purchase warrants outstanding in the future since the effect would be
anti-dilutive.
Stock options
The Company has adopted an
incentive stock option plan which provides that the Board of Directors of the
Company may from time to time, in its discretion and in accordance with the
TSX-V requirements, grant to directors, officers, employees and technical
consultants to the Company, non-transferable stock options to purchase common
shares, provided that the number of common shares reserved for issuance in any
twelve month period will not exceed 10% of the Companys issued and outstanding
common shares. Such options will be exercisable for a period of up to 5 years
from the date of grant at a price not less than the closing price of the
Companys shares on the last trading day before the grant of such options less
any discount, if applicable, but in any event not less than $0.10 per share In
connection with the foregoing, the number of common shares reserved for issuance
to any one optionee insider in any twelve month period will not exceed ten
percent (10%) of the issued and outstanding common shares and the number of
common shares reserved for issuance to any one employee or consultant will not
exceed two percent (2%) of the issued and outstanding common shares. Options may
be exercised no later than 90 days following cessation of the optionees
position with the Company or 30 days following cessation of an optionee
conducting investor relations activities.
At October 31, 2014, the Company had no issued or outstanding
stock options.
Share purchase warrants
The changes in
warrants outstanding during the six months ended July 31, 2014 and year ended
January 31, 2014 are as follows:
|
|
Nine Months Ended October 31, |
|
|
Year Ended January 31, 2014 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
Number of |
|
|
Exercise price
|
|
|
Number of |
|
|
Exercise price |
|
|
|
warrants |
|
$ |
|
|
|
warrants |
|
$ |
|
|
Balance, beginning |
|
- |
|
|
- |
|
|
4,068,000 |
|
|
0.40 |
|
Warrants issued |
|
|
|
|
|
|
|
|
|
|
|
|
Warrants expired |
|
|
|
|
|
|
|
(4,068,000 |
) |
|
|
|
Balance, ending |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
10. |
Convertible debt reserve |
The convertible debt reserve records the equity component of
convertible debt with liability and equity components. On conversion, the amount
recorded is transferred to share capital.
The accompanying notes are an integral part of these
financial statements |
15 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
As at October 31, 2014 and year ended January 31, 2014, the
Company had various tax pools relating to deductible temporary differences
available to reduce future taxable income which expire as follows:
|
|
Canadian non- |
|
|
|
|
|
|
|
|
|
|
|
|
capital losses |
|
|
Resources pool |
|
|
Equipment |
|
|
Share issue costs |
|
2015 |
$ |
83,521 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
2026 |
|
132,052 |
|
|
- |
|
|
- |
|
|
- |
|
2027 |
|
175,837 |
|
|
- |
|
|
- |
|
|
- |
|
2028 |
|
152,040 |
|
|
- |
|
|
- |
|
|
- |
|
2029 |
|
182,808 |
|
|
- |
|
|
- |
|
|
- |
|
2030 |
|
105,295 |
|
|
- |
|
|
- |
|
|
- |
|
2031 |
|
243,513 |
|
|
- |
|
|
- |
|
|
- |
|
2032 |
|
278,811 |
|
|
- |
|
|
- |
|
|
- |
|
2033 |
|
273,858 |
|
|
|
|
|
|
|
|
|
|
2034 |
|
244,457 |
|
|
|
|
|
|
|
|
|
|
No expiry |
|
- |
|
|
491,007 |
|
|
2,407 |
|
|
105,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,872,192 |
|
$ |
491,007 |
|
$ |
2,407 |
|
$ |
105,059 |
|
A valuation allowance has been used to offset the net benefit
related to the future tax assets arising from these deductible temporary
differences due to the uncertainty associated with the ultimate realization of
both the non-capital losses and the resource pools before expiry.
These tax pools will be updated during year ended January 31,
2015.
12. |
Financial instruments and financial risk
management |
The Company is exposed in varying degrees to financial
instrument related risks. The Board of Directors approves and monitors the risk
management processes, inclusive of documented investment policies, counterparty
limits, and controlling and reporting structures. The type of risk exposure and
the way in which such exposure is managed is as follows:
Credit risk
Credit risk is the risk that one
party to a financial instrument will fail to discharge an obligation and cause
the other party to incur a financial loss. The Companys primary exposure to
credit risk is on its cash held in bank accounts and its credit and security
deposit. The Companys cash and credit card deposit are deposited in bank
accounts held with one major bank in Canada so there is a concentration of
credit risk. This risk is managed by using a major bank that is a high credit
quality financial institution as determined by rating agencies. The Companys
secondary exposure to risk is on its GST receivable is minimal since it is
refundable from the Canadian Government.
Liquidity risk
Liquidity risk is the risk
that the Company will not be able to meet its financial obligations as they fall
due. The Company has a planning and budgeting process in place to help determine
the funds required to support the Companys normal operating requirements on an
on-going basis. The Company ensures there are sufficient funds to meet
short-term business requirements, taking into account its current cash position
and potential funding sources.
Historically, the Company's source of funding has been either
the issuance of equity securities for cash through private placements or loans
from Company directors and officers. The Companys access to financing is always
uncertain and there can be no assurance of continued access to significant
funding from these sources.
The accompanying notes are an integral part of these
financial statements |
16 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
Foreign exchange risk
Foreign currency risk is
the risk that the fair values of future cash flows of a financial instrument
will fluctuate because they are denominated in currencies that differ from the
Companys functional currency. The Company only operates in Canada and is
therefore not exposed to foreign exchange risk arising from transactions
denominated in a foreign currency.
Interest rate risk
Interest rate risk is the
risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Companys exposure to
interest rate risk relates to its ability to earn interest income on cash
balances at variable rates. Changes in short term interest rates will not have a
significant effect on the fair value of the Companys cash account.
Classification of financial
instruments
Financial assets included in the Statements of Financial
Position are as follows:
|
|
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
Fair value through profit and
loss: |
|
|
|
|
|
|
|
|
|
Cash |
$ |
3,261 |
|
$ |
146,990 |
|
$ |
96,466 |
|
Credit card security deposit |
|
6,900 |
|
|
6,900 |
|
|
6,900 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,161 |
|
$ |
153,890 |
|
$ |
103,366 |
|
Other financial liabilities included in the Statements of
Financial Position are as follows:
|
|
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
Non-derivative financial
liabilities: |
|
|
|
|
|
|
|
|
|
Trade payables |
$ |
19,113 |
|
$ |
5,961 |
|
|
10,367 |
|
Loan
payable |
|
39,676 |
|
|
39,676 |
|
|
39,676 |
|
Related party payables |
|
84,341 |
|
|
49,978 |
|
|
46,555 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
143,130 |
|
$ |
95,615 |
|
$ |
96,598 |
|
Fair value
The fair value of the Companys financial assets and
liabilities approximate the carrying amounts. Financial instruments measured at
fair value are classified into one of three levels in the fair value hierarchy
according to the relative reliability of the inputs used to estimate the fair
values. The three levels of the fair value hierarchy are:
|
Level 1 Unadjusted quoted prices in active
markets for identical assets or liabilities; |
|
Level 2 Inputs other than quoted prices that
are observable for the asset or liability either directly or indirectly;
and |
|
Level 3 Inputs that are not based on
observable market data. |
The Company's policy is to maintain a sufficient capital base
so as to maintain investor and creditor confidence, safeguard the Companys
ability to support the exploration and development of its exploration and
evaluation assets and to sustain future development of the business. The capital
structure of the Company consists of share and working capital. There were no
changes in the Company's approach to capital management during the year and the
Company is not subject to any restrictions on its capital.
The accompanying notes are an integral part of these
financial statements |
17 |
Rouge Resources Ltd. |
Notes to the Condensed Interim Financial Statements |
(Expressed in Canadian dollars - unaudited) |
For the nine
months ended October 31, 2014 and 2013 |
14. |
Segmented information |
The Company operates in a single reportable operating segment
being the acquisition, exploration and development of mineral properties,
currently all located in Canada.
Further to the exploration and evaluation assets note 5
above and subsequent to the quarter ended October 31, 2014, the Company allowed
9 of its 18 claims in North-Central Ontario (called the Dotted Lake Property) to
lapse due to the continuation of unstable economic conditions within the junior
mining exploration sector. With respect to this situation, we are presently
reviewing our options as follows: simply drop the lapsed claims from the
Property; apply to the Ontario Ministry of Northern Development and Mines for
relief of forfeiture; or simply re- stake the claims which at this time would be
at significantly lower cost than performing the assessment work required.
The accompanying notes are an integral part of these
financial statements |
18 |
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
ROUGE RESOURCES LTD.
(An
Exploration Stage Company)
MANAGEMENT DISCUSSION AND ANALYSIS
FOR NINE MONTHS ENDED OCTOBER 31, 2014
(Stated in
Canadian Dollars)
1
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
ITEM 1.1 |
DATE AND INTRODUCTION
|
This Management Discussion and Analysis (MD&A) was
prepared as of December 8, 2014 and authorized for issuance by the
directors of the Company effective on this date. This report should be read in
conjunction with both the condensed interim financial statements and notes for
the nine months ended October 31, 2014 and the audited financial statements and
notes for the year ended January 31, 2014. It focuses on events and activities
that affected the Company during the nine months ended October 31, 2014 and to
the date of this report.
The financial information contained herein complies with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB) along with interpretations of
the International Financial Reporting Interpretations Committee (IFRIC).
Therefore, they comply with International Accounting Standard (IAS) 34,
Interim Financial Reporting.
The Company (We) was incorporated under the name Gemstar
Resources Ltd. on March 31, 1988 pursuant to the provisions of the Company
Act (British Columbia). In March 2006, we were transitioned to the
Business Corporations Act (British Columbia). On March 25, 2008, the
Companys name was changed to Rouge Resources Ltd. Our registered and records
office is located at 203-409 Granville Street, Vancouver BC, V6C 1T2.
We have been a reporting issuer in British Columbia and Alberta
since April 3, 1989 and became a foreign private issuer in the United States
pursuant to filings with the US Securities and Exchange Commission in November
2003. Prior to August 30, 2012, our common shares were quoted OTC:BB in the
United States under the symbol ROUGF and now, effective on this date, are also
listed for trading on the TSX Venture Exchange under the symbol ROU.
At October 31, 2014, there were 44,633,171 issued and fully
paid common shares outstanding (January 31, 2014 same) of which 2,842,200
shares are held in escrow, subject to release following regulatory approval.
We have not been involved in any bankruptcy, receivership or
similar proceedings, nor have we been a party to any material reclassification,
merger, consolidation, purchase or sale of a significant amount of assets.
Additional information on the Company is available on both SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.
Description of business
The Company is a Vancouver-based junior mineral exploration
company engaged in the business of acquiring, exploring, evaluating and, if
warranted, developing mineral resource properties in Canada. No revenue has been
generated since inception and there is no assurance that a commercially viable
mineral deposit exists on our exploration and evaluation assets. Further
exploration is required before a final evaluation of the economic feasibility
can be determined. Significant financing and considerable time and effort will
be required before our mineral claims can be further explored and, if warranted,
developed into a commercial enterprise.
As at October 31, 2014, we held a 100% interest in 18 claims in
the Thunder Bay Mining District of North Central Ontario area, called the Dotted
Lake Property, following our final payment of $12,500 in April 2014 for 2
additional claims pursuant to the exclusive Lampson Lake option agreement dated
April 20, 2010.
We continue to monitor claims in North-Central Ontario and plan
to make additional acquisitions in this and other areas when and if the claims
are considered to be strategic or otherwise beneficial to the Company.
2
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
ITEM 1.2 |
OVERALL PERFORMANCE |
During the nine months ended October 31, 2014, the Company
reported a net and comprehensive loss of $111,046 compared to a net and
comprehensive loss of $146,997 for the same period last year. In addition,
$13,434 was expended on our exploration and evaluation assets during the current
nine month period ($22,434 during same period last year) most of which was paid
in April 2014 as final payment pursuant to the exclusive Lampson Lake option
agreement.
Management continues to defer sizable exploration expenditures
on the Dotted Lake Property due to continuation of the unstable economic
conditions within the junior mining exploration business.
Exploration and evaluation assets
The following table summarizes the amounts expended on
exploration and evaluation assets for the nine months ended October 31, 2014 and
year ended January 31, 2014:
|
|
North-Central Ontario |
|
|
Total for nine |
|
|
Total for year |
|
|
|
Dotted Lake |
|
|
Lampson |
|
|
months ended |
|
|
ended |
|
|
|
mining |
|
|
Lake mining |
|
|
October 31, |
|
|
January 31, |
|
|
|
claims |
|
|
claims |
|
|
2014 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property acquisition
costs |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
$ |
24,607 |
|
$ |
49,533 |
|
$ |
74,140 |
|
$ |
61,640 |
|
Additions |
|
- |
|
|
12,500 |
|
|
12,500 |
|
|
12,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, ending |
|
|
|
|
62,033 |
|
|
86,640 |
|
|
74,140 |
|
|
|
24,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation costs |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
|
216,867 |
|
|
- |
|
|
216,867 |
|
|
206,934 |
|
Additions |
|
|
|
|
|
|
|
|
|
|
|
|
Field and camp
costs |
|
|
|
|
|
|
|
- |
|
|
- |
|
Geological consulting and
Reporting |
|
|
|
|
|
|
|
- |
|
|
- |
|
Geo-referencing
|
|
|
|
|
|
|
|
|
|
|
9,933 |
|
Project administration |
|
934 |
|
|
|
|
|
934 |
|
|
- |
|
Soil sample analysis |
|
|
|
|
|
|
|
- |
|
|
- |
|
|
|
934 |
|
|
|
|
|
934 |
|
|
9,933 |
|
Balance, ending |
|
217,801 |
|
|
- |
|
|
217,801 |
|
|
216,867 |
|
Total balance, ending |
$ |
242,408 |
|
$ |
62,033 |
|
$ |
304,441 |
|
$ |
291,007 |
|
Payment under the Lampson Lake option agreement totalled
$60,000 as follows: $7,000 when the agreement was signed on April 20, 2010;
$12,000 on April 20, 2011; $16,000 on April 20, 2012; and a final $25,000 due on
April 20, 2013. However on March 1, 2013, the Optioners agreed with the Company
to split the final payment into two equal amounts of $12,500. The first was paid
on April 20, 2013 and the second and final payment was made this year on April
20, 2014.
The Lampson Lake claims are subject to a 2% net smelter royalty
(NSR) in favour of the Optionors on one claim and with respect to the other, a
combination of a 2% NSR in favour of the Optionors and a 1% NSR on any metals
and/or a 1% Net Sales Return royalty payable to Ontario Exploration Company
(OEC) on any precious metals recovered from the property. The Company has the
right to buy back 1% of the NSR in favour of the Optioners for $1,000,000 and to
buy back three-quarters of 1% of the royalty vested with OEC over 10 years on an
increasing scale from $15,000 to $750,000.
3
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
For updated information on status of the 18 claims, refer to
subsequent event item 1.11 below.
Although our work on the Dotted Lake Property in the past three
years has identified some gold mineralization hosted in sulphide rich shear
bands in granitoid rock, there is no assurance that a commercially viable
mineral deposit exists. Accordingly, we consider the Dotted Lake-Lampson Lake
Property to be an early stage exploration project upon which further exploration
should be conducted in order to gain better understanding of the strike content
and width of the gold mineralization uncovered in past exploration programs.
Significant additional financing and considerable time and effort will be
required before our property can be further explored and, if warranted,
developed into a commercial enterprise.
Our NI 43-101 Technical Report dated late 2010 recommended a
Phase 1 budget for future exploration totaling $226,600 to continue with more
soil sampling, prospecting and trenching on the Property followed by a Phase 2
including diamond drilling depending on results of the first phase. However, due
to the challenging economic conditions still persisting for the Junior Mineral
Exploration business, implementation has been delayed. This delay will continue
until more favorable market conditions return.
ITEM 1.3 |
SELECTED FINANCIAL INFORMATION
|
The following table summarizes selected financial information
as at and for the nine months ended October 31, 2014 and 2013 with comparative
figures as at and for the year ended January 31, 2014:
|
|
Nine Months Ended October 31, |
|
|
Year Ended |
|
|
|
2014 |
|
|
2013 |
|
|
January 31, 2014 |
|
FINANCIAL POSITION |
|
|
|
|
|
|
|
|
|
Total
Assets |
$ |
317,312 |
|
$ |
446,730 |
|
$ |
397,066 |
|
Total
Liabilities |
$ |
143,130 |
|
$ |
98,875 |
|
$ |
111,838 |
|
Accumulated Deficit |
$ |
(3,832,765) |
|
$ |
(3,659,092) |
|
$ |
(3,721,719) |
|
|
|
|
|
|
|
|
|
|
|
OPERATIONS |
|
|
|
|
|
|
|
|
|
Total
Revenues |
|
Nil |
|
|
Nil |
|
|
Nil |
|
Net
and Comprehensive Loss |
$ |
(111,046) |
|
$ |
(146,997) |
|
$ |
(209,624) |
|
Comprehensive Loss per share |
$ |
(0.00) |
|
$ |
(0.00) |
|
$ |
(0.00) |
|
4
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
ITEM 1.4 |
RESULTS OF OPERATIONS
|
The following table summarizes results of operations for the
three and nine months ended October 31, 2014 and 2013 with comparative figures
for the year ended January 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
Three
months ended |
|
|
Nine months
ended |
|
|
January 31, |
|
|
|
October 31, |
|
|
October 31, |
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
$ |
88 |
|
$ |
194 |
|
|
271 |
|
$ |
582 |
|
$ |
543 |
|
Consulting fees |
|
1,000 |
|
|
2,800 |
|
|
1,600 |
|
|
5,800 |
|
|
5,800 |
|
Listing application expenses |
|
- |
|
|
- |
|
|
- |
|
|
402 |
|
|
402 |
|
Management fees |
|
15,000 |
|
|
15,000 |
|
|
45,000 |
|
|
45,000 |
|
|
60,000 |
|
Office administration and travel |
|
12,735 |
|
|
16,440 |
|
|
40,288 |
|
|
57,886 |
|
|
74,694 |
|
Professional fees |
|
4,479 |
|
|
3,687 |
|
|
9,348 |
|
|
16,213 |
|
|
44,368 |
|
Transfer agent/ filing fees |
|
2,624 |
|
|
3,861 |
|
|
14,539 |
|
|
21,114 |
|
|
23,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive loss |
$ |
(35,926 |
) |
$ |
(41,982 |
) |
$ |
(111,046 |
) |
$ |
(146,997) |
|
$ |
(209,624 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.00) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic and diluted
|
|
44,633,171 |
|
|
4,633,171 |
|
|
44,633,171 |
|
|
44,633,171 |
|
|
44,633,171 |
|
The Company is in the exploration stage and has not generated
any revenues since inception.
Nine months ended October 31, 2014
For nine months ended October 31, 2014, a net and comprehensive
loss of $111,046 was recorded versus $146,997 for the same period last year.
This $35,951 decrease in net and comprehensive loss resulted from the
following:
- |
Minor $311 decrease in amortization of
equipment. |
- |
$4,200 decrease in business consulting fees.
|
- |
$403 decrease in listing application fees and
expenses, not applicable this year. |
- |
$17,597 decrease in office administration and
travel expenses due to relatively low level of business activity compared
to last year. |
- |
$6,865 decrease in professional fees (legal,
audit and accounting) due to relatively low level of business activity
compared to last year. |
- |
$6,575 decrease in transfer agent and filing
fees due to relatively low level of business activity compared to last
year. |
5
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
Three months ended October 31, 2014
For three months ended October 31, 2014, a net and
comprehensive loss of $35,926 was recorded versus a comprehensive loss of
$41,982 for the same period last year. This $6,056 decrease in net and
comprehensive loss resulted from the following:
- |
Minor $106 decrease in amortization of
equipment. |
- |
$1,800 decrease in business consulting fees.
|
- |
$3,705 decrease in office administration and
travel expenses due to relatively low level of business activity compared
to last year. |
- |
Minor $792 increase in professional fees
(legal, audit and accounting) |
- |
$1,237 decrease in transfer agent and filing
fees due to relatively low level of business activity compared to last
year. |
ITEM 1.5 |
SUMMARY OF QUARTERLY RESULTS
|
The following table summarizes operating results for the eight
most recently completed quarters:
|
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
|
ended |
ended |
ended |
ended |
ended |
ended |
ended |
ended |
|
Oct. 31 14 |
July
31 14 |
Apr. 30 14 |
Jan.
31 14 |
Oct.
31 13 |
July
31 13 |
Apr. 30 13 |
Jan. 31 13 |
|
|
|
|
|
|
|
|
|
Total revenues |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Net and |
|
|
|
|
|
|
|
|
Comprehensive Loss |
($35,926) |
($34,536) |
($40,584) |
($62,627) |
($41,982) |
($47,429) |
($57,586) |
($73,254) |
Loss per share |
($0.00) |
($0.00) |
($0.00) |
($0.00) |
($0.00) $ |
($0.00) |
($0.00) |
($0.00) |
Operating cash flow (Deficiency) |
($35,776) |
($40,382) |
($46,012) |
($47,102) |
($42,345) |
($60,411) |
($68,177) |
($30,048) |
Our quarterly net and comprehensive losses are lower than
average for nine months ended October 31, 2014 due to relatively low level of
business activity compared to last year. The 4th quarters ended January 31, 2014
and 2013 show higher than normal losses primarily due to year-end audit
adjustments.
The following table summarizes the Companys working capital
position as at October 31, 2014 and 2013 with comparative figures as at year
ended January 31, 2014:
|
|
As at October 31, |
|
|
As at |
|
Working Capital |
|
2014 |
|
|
2013 |
|
|
January 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
$ |
4,974 |
|
$ |
147,593
|
|
$ |
97,891 |
|
Current liabilities |
|
143,130 |
|
|
(98,874) |
|
|
(111,838 |
) |
|
|
|
|
|
|
|
|
|
|
Working capital (deficiency) |
$ |
(138,156 |
) |
$ |
148,719 |
|
$ |
(13,947 |
) |
During the nine months ended October 31, 2014, working capital
(deficiency) increased to $138,156 from $13,947 at year ended January 31, 2014.
This $124,209 increase was due to on-going operating losses and modest capital
expenditures on exploration and evaluation assets.
6
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
Current assets as at October 31, 2014 included cash $3,261
(January 31, 2014 - $96,466) and GST receivable $1,713 (January 31, 2014 -
$1,425). Current liabilities at October 31, 2014 included trade payables and
accrued liabilities $19,113 (January 31, 2014 - $25,607), loan payable $39,676
(January 31, 2013 same), and related party payables $84,341 (January 31, 2014
- $46,555).
The following table summarizes cash flows for nine and three
months ended October 31, 2014 and 2013 with comparative figures for year ended
January 31, 2014:
Cash Flows |
|
Nine Months Ended October 31, |
|
|
Year Ended |
|
|
|
2014 |
|
|
2013 |
|
|
January 31, 2014 |
|
Net cash used in operating activities |
$ |
(117,557) |
|
$ |
(170,933) |
|
$ |
(218,035) |
|
Net
cash used in investing activities |
|
(13,434) |
|
|
(22,434) |
|
|
(22,433) |
|
Net cash provided by financing
activities |
|
37,786 |
|
|
38,512 |
|
|
35,089 |
|
Increase (decrease) in cash |
|
(93,205) |
|
$ |
(154,855) |
|
|
(205,379) |
|
Cash, beginning |
|
96,466 |
|
|
301,845 |
|
|
301,845 |
|
Cash, end |
|
3,261 |
|
$ |
146,990 |
|
$ |
96,466 |
|
At October 31, 2014, the Companys cash position was $3,261
compared to $96,466 at January 31, 2014. This $93,205 decrease in cash for nine
months ended October 31, 2014 (2014 period) and the $154,855 decrease in cash
for same period last year (2013 period) resulted from the following cash flow
activities:
(i) Net cash used in operating activities of $117,557 in 2014
period and $170,933 in 2013 period was due in both periods to on-going operating
losses adjusted for changes in non-cash working capital items.
(ii) Net cash used in investing activities of $13,434 in 2014
period and $22,434 in 2013 period was due to final payment in 2014 period under
the option agreement to purchase the Lampson Lake Property and in 2013 period
due to second last payment on the same option agreement along with cost of
geo-referencing of the Dotted Lake claims to bring location information up to
the new GPS standards now required by the Ontario Ministry of Northern
Development and Mines.
(iii) Net cash provided by financing activities of $37,786 in
2014 period and $38,512 in 2013 period was due exclusively to partial funding of
operating expenses by related parties.
ITEM 1.7 |
CAPITAL RESOURCES |
Share Capital
Authorized share capital
Unlimited number of
common shares without par value.
Issued share capital
At October 31, 2014,
there were 44,633,171 issued and fully paid common shares outstanding (January
31, 2014 same) of which 2,842,200 shares are held in escrow, subject to
release under regulatory approval.
Basic and diluted loss per share
The
calculation of basic and diluted loss per share for nine months ended October
31, 2014 was based on the net and comprehensive loss attributable to common
shareholders of $111,046 (October 31, 2013 - $146,997 ) and the weighted average
number of common shares outstanding of 44,633,171 (October 31, 2013 same). The diluted loss per share will not include the
effect of any share purchase warrants outstanding in the future since the effect
would be anti-dilutive.
7
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
Stock options
The Company has adopted an
incentive stock option plan which provides that the Board of Directors of the
Company may from time to time, in its discretion and in accordance with the
TSX-V requirements, grant to directors, officers, employees and technical
consultants to the Company, non-transferable stock options to purchase common
shares, provided that the number of common shares reserved for issuance in any
twelve month period will not exceed 10% of the Companys issued and outstanding
common shares. Such options will be exercisable for a period of up to 5 years
from the date of grant at a price not less than the closing price of the
Companys shares on the last trading day before the grant of such options less
any discount, if applicable, but in any event not less than $0.10 per share In
connection with the foregoing, the number of common shares reserved for issuance
to any one optionee insider in any twelve month period will not exceed ten
percent (10%) of the issued and outstanding common shares and the number of
common shares reserved for issuance to any one employee or consultant will not
exceed two percent (2%) of the issued and outstanding common shares. Options may
be exercised no later than 90 days following cessation of the optionees
position with the Company or 30 days following cessation of an optionee
conducting investor relations activities.
At October 31, 2014, the Company had no issued or outstanding
stock options.
Share purchase warrants
The changes in
warrants outstanding during the nine months ended October 31, 2014 and year
ended January 31, 2014 are as follows:
|
|
Nine Months Ended October 31, |
|
|
Year Ended January 31, |
|
|
|
2014 |
|
|
2014 |
|
|
|
Number of |
|
|
Exercise |
|
|
Number of |
|
|
Exercise |
|
|
|
warrants |
|
|
price |
|
|
warrants |
|
|
price |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
Balance, beginning |
|
- |
|
|
- |
|
|
4,068,000 |
|
|
0.40 |
|
Warrants issued |
|
|
|
|
|
|
|
|
|
|
|
|
Warrants expired |
|
|
|
|
|
|
|
(4,068,000 |
) |
|
|
|
Balance, ending |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
The Company's policy is to maintain a sufficient capital base
so as to maintain investor and creditor confidence, safeguard the Companys
ability to support its exploration and evaluation assets and to sustain future
development of the business. The capital structure of the Company consists of
share and working capital. There were no changes in the Company's approach to
capital management during the year and the Company is not subject to any
restrictions on its capital.
With no operating revenues to date, we continue to finance our
operations through the issuance of common shares and advances from related
parties. Although two private placements were completed in late August 2012
raising a net amount of $842,794 after share issue costs, there is no assurance
that additional financing will be available when needed in the future nor, if
available, on commercially reasonable terms. If we are unable to obtain
additional financing on a timely basis, either through issuance of more common
shares or obtaining additional advances from related parties, we may not be able
to meet our obligations as they come due which may impact our ability to
continue as a going concern in the future.
To a significant extent, our ability to continue raising
capital is affected by trends and uncertainties beyond our control. These
include general economic conditions, the market prices for precious metals and
results from our exploration programs. The Companys ability to reach its
business objectives may be significantly impaired if general economic conditions
continue to deteriorate, prices for metals such as zinc, gold, copper and
platinum fall or if results from planned exploration programs are unsuccessful.
8
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
ITEM 1.8 |
OFF-BALANCE SHEET ARRANGEMENTS
|
The Company has no off-balance sheet arrangements.
ITEM 1.9 |
TRANSACTIONS WITH RELATED PARTIES
|
The following amounts are due to related parties as at October
31, 2014 and 2013 with comparative figures at year ended January 31, 2014:
|
|
|
|
|
|
|
|
As At |
|
|
|
As At
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
Payable to Company directors and companies controlled by
directors |
$ |
84,341 |
|
$ |
49,978 |
|
$ |
46,555 |
|
These amounts are non-interest bearing and unsecured with no
fixed term of repayment.
Related party transactions with directors and companies
controlled by directors included in the statements of comprehensive loss are as
follows:
|
|
Nine months ended |
|
|
Year ended |
|
|
|
October
31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
Consulting fees |
$ |
1,600 |
|
$ |
2,800 |
|
$ |
2,800 |
|
Management fees |
|
45,000 |
|
|
45,000 |
|
|
60,000 |
|
Office rent |
|
22,500
|
|
|
22,500 |
|
|
30,000 |
|
Professional fees |
|
6,071 |
|
|
7,757 |
|
|
16,170 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
75,171 |
|
$ |
78,057 |
|
$ |
108,970 |
|
These transactions are recorded at the exchange amount, which
is the consideration agreed to between the related parties.
ITEM 1.10 |
FOURTH QUARTER ENDED JANUARY 31, 2014
|
Not applicable at this time.
ITEM 1.11 |
SUBSEQUENT AND PROPOSED TRANSACTIONS
|
Further to the exploration and evaluation assets item
1.2 above and subsequent to the quarter ended October 31, 2014, the Company
allowed 9 of its 18 claims in North-Central Ontario (called the Dotted Lake
Property) to lapse due to the continuation of unstable economic conditions
within the junior mining exploration sector. With respect to this situation, we
are presently reviewing our options as follows: simply drop the lapsed claims
from the Property; apply to the Ontario Ministry of Northern Development and Mines for relief of forfeiture; or simply re-stake the
claims which at this time would be at significantly lower cost than performing
the assessment work required.
9
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
ITEM 1.12 |
CRITICAL ACCOUNTING ESTIMATES AND
JUDGEMENTS |
Basis of preparation
These condensed interim
financial statements have been prepared on an accrual basis; are based on
historical costs, modified where applicable; and are presented in Canadian
dollars unless otherwise noted.
Significant estimates and assumptions
The preparation of financial statements in accordance with IFRS requires
the Company to make estimates and assumptions concerning the future. The
Companys management reviews these estimates and underlying assumptions on an
ongoing basis, based on experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Revisions to estimates are adjusted for prospectively in the period in which the
estimates are revised.
Estimates and assumptions where there is significant risk of
material adjustments to assets and liabilities in future accounting periods
include: the useful lives of equipment, the recoverability of the carrying value
of exploration and evaluation assets, fair value measurements for financial
instruments, recoverability and measurement of deferred tax assets, and
provisions for restoration and environmental obligations and contingent
liabilities.
Significant judgments
The preparation of
financial statements in accordance with IFRS requires the Company to make
judgments, apart from those involving estimates and assumptions, in applying
accounting policies. The most significant judgments in preparing the Companys
financial statements include:
- |
Assessment of the Companys ability to continue
as a going concern and whether there are events or conditions that may
give rise to significant uncertainty; and |
- |
Classification / allocation of expenditures as
exploration and evaluation assets or operating expenses.
|
ITEM 1.13 |
CHANGES IN ACCOUNTING POLICIES
|
There were no changes in accounting policies during the current
year. However, new accounting standards issued recently are as follows:
New standard IFRS 9 Financial Instruments
This new standard is a partial replacement of IAS 39 Financial
Instruments: Recognition and Measurement. IFRS 9 uses a single approach to
determine whether a financial asset is measured at amortized cost or fair value,
replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how
an entity manages its financial instruments in the context of its business model
and the contractual cash flow characteristics of the financial assets.
The new standard also requires a single impairment method to be
used, replacing the multiple impairment methods in IAS 39. The proposed
effective date for IFRS 9 is for annual periods beginning on or after January 1,
2018.
Amendments to IAS 32 Financial Instruments:
Presentation
These amendments address inconsistencies when applying
the off-setting requirements, and is effective for annual periods beginning on
or after January 1, 2014.
10
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
The Company has not early adopted these revised standards and
is currently assessing the impact that these standards will have on its
financial statements.
Other accounting standards or amendments to existing accounting
standards that have been issued but have future effective dates are either not
applicable or are not expected to have a significant impact on the Companys
financial statements.
ITEM 1.14. |
FINANCIAL INSTRUMENTS, FINANCIAL RISK
MANAGEMENT AND CAPITAL MANAGEMENT |
The Company is exposed in varying degrees to financial
instrument related risks. The Board of Directors approves and monitors the risk
management processes, inclusive of documented investment policies, counterparty
limits, and controlling & reporting structures. The type of risk exposure
and the way in which such exposure is managed by the Company is as follows:
Credit risk
Credit risk is the risk that one
party to a financial instrument will fail to discharge an obligation and cause
the other party to incur a financial loss. The Companys primary exposure to
credit risk is on its cash held in bank accounts and its credit card deposit.
The majority of cash is deposited in bank accounts held with one major bank in
Canada so there is a concentration of credit risk. This risk is managed by using
a major bank that is a high credit quality financial institution as determined
by rating agencies. The Companys secondary exposure to risk is on its
harmonized sales tax refundable which is minimal since it is recoverable from
the Canadian Government.
Liquidity risk
Liquidity risk is the risk
that the Company will not be able to meet its financial obligations as they fall
due. The Company has a planning and budgeting process in place to help determine
the funds required to support the Companys normal operating requirements on an
ongoing basis. The Company attempts to ensure there is sufficient access to
funds to meet on-going business requirements, taking into account its current
cash position and potential funding sources.
Historically, the Company's source of funding has been either
the issuance of equity securities for cash through private placements or
advances from directors and officers. The Companys access to financing is
always uncertain and there can be no assurance of continued access to
significant funding from these sources.
Foreign exchange risk
Foreign currency risk is
the risk that the fair values of future cash flows of a financial instrument
will fluctuate because they are denominated in currencies that differ from the
Companys functional currency. The Company only operates in Canada and is
therefore not exposed to foreign exchange risk arising from transactions
denominated in a foreign currency.
Interest rate risk
Interest rate risk is the
risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Companys exposure to
interest rate risk relates to its ability to earn interest income on cash
balances at variable rates. Changes in short term interest rates will not have a
significant effect on the fair value of the Companys cash account.
Commodity Price Risk
The Companys ability to
raise capital to fund exploration or development activities is subject to risks
associated with fluctuations in the market price of precious metals. The Company
closely monitors commodity prices to determine the most appropriate course of
action.
11
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
Classification of financial
instruments
Financial assets included in the Statement of Financial
Position are as follows:
|
|
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
Fair value through profit and
loss: |
|
|
|
|
|
|
|
|
|
Cash |
$ |
3,261 |
|
$ |
146,990 |
|
$ |
96,466 |
|
Credit card security deposit
|
|
6,900 |
|
|
6,900 |
|
|
6,900 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,161 |
|
$ |
153,890 |
|
$ |
103,366 |
|
Other financial liabilities included in the statements of
financial position are as follows:
|
|
October 31, |
|
|
January 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
(audited) |
|
Non-derivative financial
liabilities: |
|
|
|
|
|
|
|
|
|
Trade payables |
$ |
19,113 |
|
$ |
5,961 |
|
$ |
10,367 |
|
Loan payable |
|
39,676
|
|
|
39,676 |
|
|
39,676 |
|
Related party payables |
|
84,341 |
|
|
49,978 |
|
|
46,555 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
143,130 |
|
$ |
95,615 |
|
$ |
96,598 |
|
Fair value
The fair value of the Companys financial assets and
liabilities approximate the carrying amounts. Financial instruments measured at
fair value are classified into one of three levels in the fair value hierarchy
according to the relative reliability of the inputs used to estimate the fair
values. The three levels of the fair value hierarchy are:
Level 1 |
Unadjusted quoted prices in active markets
for identical assets or liabilities; |
Level 2 |
Inputs other than quoted prices that are
observable for the asset or liability either directly or indirectly; and
|
Level 3 |
Inputs that are not based on observable
market data. |
ITEM 1.15 |
OTHER MD&A REQUIREMENTS
|
Managements Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation
of the Companys financial statements in accordance with IFRS, and for such
internal control as management determines is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to
fraud or error.
Conflicts of interest
The Companys directors
and officers may serve as directors or officers, or may be associated with,
other reporting companies, or have significant shareholdings in other public
companies. To the extent that such other companies may participate in business
or asset acquisitions, dispositions, or ventures in which the Company may
participate, the directors and officers of the Company may have a conflict of
interest in negotiating and concluding on terms with respect to the transaction.
If a conflict of interest arises, the Company will follow the provisions of the
Business Corporations Act (BC) (Corporations Act) dealing with conflict of
interest. These provisions state that where a director has such a conflict, that
director must, at a meeting of the Companys directors, disclose his or her
interest and refrain from voting on the matter unless otherwise permitted by the
Corporations Act. In accordance with the laws of the Province of British Columbia, the directors and officers of
the Company are required to act honestly, in good faith, and in the best
interest of the Company.
12
Rouge Resources Ltd.
Management Discussion and
Analysis
Nine Months Ended October 31, 2014
Business and Regulatory Risks
We are engaged
in the mineral exploration business and manage related industry risk directly.
We are potentially at risk for environmental reclamation and fluctuations and
commodity-based market prices associated with resource property interests.
Management is of the opinion that the Company addresses environmental risk and
compliance in accordance with industry standards and specific project
environmental requirements. At present, the Company is not required to provide
for restoration and environmental obligations so no provision has been made.
However, there is no certainty that all environmental risks and contingencies
have been addressed.
Our exploration program will require significant future
expenditures and there is no assurance any commercial mineral quantities will be
found. If we are unable to generate significant revenues from our mineral
claims, continued losses are expected into the foreseeable future. There is no
history upon which to base any assumption as to the likelihood we will prove
successful, and there is no assurance that we will generate any revenues nor
ever achieve profitability. If unsuccessful in addressing these risks, the
business will fail and investors could lose all of their investment in the
company.
Regulatory risks include the possible delays in getting
regulatory approval to the transactions that senior management and the Board of
Directors believe to be in the Companys best interest, increased fees for
statutory filings, and the introduction of increasingly more complex reporting
requirements which must be complied with in order to maintain our public company
position.
Cautionary note regarding forward-looking statements
This Management Discussion and Analysis may contain certain
forward-looking statements, as defined in the United States Private Securities
Litigation Reform Act of 1995, and within the meaning of Canadian securities
legislation, relating to the proposed use of proceeds. Forward-looking
statements are statements that are not historical facts; they are generally, but
not always, identified by the words expects, plans, anticipates,
believes, intends, estimates, projects, aims, potential, goal,
objective, prospective, and similar expressions, or that events or
conditions will, would, may, can, could or should occur.
Forward-looking statements are based on the beliefs, estimates and opinions of
the Companys management on the date the statements are made and they involve a
number of risks and uncertainties. Consequently, there can be no assurances that
such statements will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements. Factors that
could cause future results to differ materially from those anticipated in these
forward-looking statements include, but are not limited to, the following: a
change in the use of proceeds, the volatility of mineral prices, the possibility
that exploration efforts will not yield economically recoverable quantities of
minerals, accidents and other risks associated with mineral exploration and
development operations, the risk that the Company will encounter unanticipated
geological factors, the Companys need for and ability to obtain additional
financing, the possibility that the Company may not be able to secure permitting
and other governmental clearances necessary to carry out the Companys
exploration and development plans, and the other risk factors discussed in
greater detail in the Companys various filings on SEDAR (www.sedar.com) with
Canadian securities regulators and its filings with the U.S. Securities and
Exchange Commission on EDGAR (www.sec.gov). Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. We undertake no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
13
FORM 52-109FV2
CERTIFICATE OF INTERIM FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Linda Smith, Chief Executive Officer for Rouge Resources
Ltd., certify the following:
1. |
Review: I have reviewed the interim
financial report and interim MD&A (together the interim filings) of
Rouge Resources Ltd. (the "Issuer") for the interim period ended
October 31, 2014. |
|
|
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, for 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. |
Date: December 9, 2014
/s/ Linda Smith
_________________________
Linda Smith
Chief Executive
Officer
Rouge Resources Ltd
NOTE TO READER |
|
|
In contrast to the certificate required for non-venture
issuers under National Instrument 52-109 Certification of Disclosure in
Issuer's Annual and Interim Filings (NI 52-109), this Venture Issuer Basic
Certificate does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and
internal control over financial reporting (ICFR), as defined in NI 52-109.
In particular, the certifying officers filing this certificate are not
making any representations relating to the establishment and maintenance
of: |
|
|
i) |
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and |
|
|
ii) |
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer's GAAP.
|
|
|
The issuer's certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate. |
|
|
Investors should be aware that inherent limitations on
the ability of certifying officers of a venture issuer to design and
implement on a cost effective basis DC&P and ICFR as defined in NI
52-109 may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other
reports provided under securities legislation.
|
FORM 52-109FV2
CERTIFICATE OF INTERIM FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Ronald McGregor, Chief Financial Officer for Rouge
Resources Ltd., certify the following:
1. |
Review: I have reviewed the interim
financial report and interim MD&A (together the interim filings) of
Rouge Resources Ltd. (the "Issuer") for the interim period ended
October 31, 2014. |
|
|
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, for 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. |
Date: December 9, 2014
/s/ Ronald McGregor
________________________
Ronald McGregor
Chief
Financial Officer
Rouge Resources Ltd
NOTE TO READER |
|
|
In contrast to the certificate required for non-venture
issuers under National Instrument 52-109 Certification of Disclosure in
Issuer's Annual and Interim Filings (NI 52-109), this Venture Issuer Basic
Certificate does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and
internal control over financial reporting (ICFR), as defined in NI 52-109.
In particular, the certifying officers filing this certificate are not
making any representations relating to the establishment and maintenance
of: |
|
|
i)
|
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and |
|
|
ii)
|
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuer's GAAP.
|
|
|
The issuer's certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate. |
|
|
Investors should be aware that inherent limitations on
the ability of certifying officers of a venture issuer to design and
implement on a cost effective basis DC&P and ICFR as defined in NI
52-109 may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other
reports provided under securities legislation.
|
Fiore Cannabais (CE) (USOTC:FIORF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Fiore Cannabais (CE) (USOTC:FIORF)
Historical Stock Chart
From Jul 2023 to Jul 2024