TIDMBCN
RNS Number : 5643P
Bacanora Minerals Ltd
18 November 2016
Bacanora Minerals Ltd
("Bacanora" or the "Company")
1st Quarter Financial Statements
Bacanora, the London and Canadian listed (AIM: BCN and TSX-V:
BCN) lithium and borates company focused on Mexico, is pleased to
announce its unaudited condensed consolidated financial statements
for the three month period ended 30 September 2016, together with
the accompanying notes.
QUARTERLY HIGHLIGHTS
Operational
-- The infill drilling programme to upgrade the resource
classifications was completed in July of 2016:
o A total of 3,896 metres in 31 NQ-Core infill holes for
resource estimations were drilled in the La Ventana area.
o A total of 1,870 samples were collected from the drill
core.
o Analyses received indicate that lithium content in the Upper
Clay Unit varies from 25 ppm to 6,900 ppm Li with a weighted
average of 1,791 ppm Li; for the Lower Clay Unit lithium content
varies from 172 ppm to 10,000 ppm with a weighted average of 4,345
ppm Li.
-- The Company is continuing to work with the same consultants
that prepared the Pre-Feasibility Study, in preparing a Feasibility
Study ("FS") for a two stage mine and processing facility to
produce up to 35,000 tonne per annum ("tpa") of lithium
carbonate
o As part of this study we have completed an infill reserve
drilling programme, provided lithium carbonate samples to potential
end-users, appointed international engineering and technical
consultants to undertake geological resource modeling,
metallurgical testwork, mine designs and process engineering, as
well as recruited additional technical personnel with lithium
development and operating expertise.
o Ausenco Limited has now completed approximately 35% of the FS
and is scheduled to have the FS completed in late calendar Q1
2017.
o The Company is fully financed through to the FS, initial
project development and the start of the construction stages.
Corporate
-- On October 28(th) , 2016, the Company confirmed the
appointment of Mr. Jamie Strauss as a non-executive independent
director. Mr. Strauss is the founding partner of Strauss Partners
Ltd. He has worked as a stockbroker in the City of London for over
25 years, specialising in the natural resources sector for nearly
20 years. He was previously Managing Director of UK Equity product
at BMO Capital Markets, prior to which he was a director of
Hargreave Hale Ltd. where he founded, developed and then sold a
mining institutional sales and research department. Mr. Strauss has
experience in sales, research, transaction structuring, IPOs and
syndication.
-- On September 28, 2016, the Company held its General and
Special Annual Meeting, at which the shareholders voted amongst
other resolutions, on the Company's previously announced plans to
re-domicile its governing corporate jurisdiction from Canada to the
UK by means of a Plan of Arrangement. All resolutions were dully
passed with the exception of the re-domicile resolution.
Accordingly, the proposed re-domicile did not proceed and the
Company will remain a Canadian registered company and pursue its
corporate objectives as such. The Company's common shares will
continue to be traded on TSX-V and AIM stock exchanges.
-- On September 30, 2016, the Company announced that it has
received an unsolicited non-binding indicative proposal (the
"Proposal") from Rare Earth Minerals plc ("REM"), an AIM listed
investment vehicle with a 19.1% shareholding in the Company, and
the Company's 30% partner in its Mexilit and Megalit subsidiaries.
The Proposal was for an all-share merger of Bacanora and REM with
REM acting as the acquiring entity (via a reverse takeover) and
issuing newly issued REM shares to Bacanora's shareholders. The
merger exchange ratio proposed by REM was between 135 and 141 REM
shares for each outstanding Bacanora share. The Board of Bacanora
strongly rejected the Proposal, believing that it significantly
undervalued the Company and jeopardized the development of the
Company's Sonora Lithium Project.
Financial
-- During the quarter ended September 30, 2016, the Company had
issued 2,925,000 common shares as a result of warrants exercise.
The gross proceeds from the exercise were $3,938,211.
Lithium property outlook
The Company's strategy is to position itself to satisfy ongoing
strong growth for lithium carbonate in the fast growing sectors of
electric vehicles and energy storage. The Company is fully financed
with approximately $25 million in the bank at the date of this
MD&A and is therefore fully funded through to the initial
project development and the start of the construction stages. In
the immediate term, a number of activities are underway to support
this future development, as set forth below
-- Ongoing refinement and optimisation of the lithium carbonate
flow sheet and the developed at the pilot plant operations in
Hermosillo will continue over the next 18 months.
-- Completion of the FS in late calendar Q1 of 2017.
-- Ongoing distribution of additional lithium samples to
potential off-takers over the next 12 months.
Recent reports in the press have indicated strengthening of
lithium carbonate pricing in the Chinese spot market, with some
research revealing battery grade spot pricing above $10,000/t. The
Company expects to be able to support a sales price of $7,500/t in
its upcoming FS.
The recent HSBC Lithium Global Sector Playbook of October 2016
includes a comprehensive overview of the various operating costs of
the major lithium producers. The report indicates that operating
costs worldwide are continuing to rise as consumable costs
increase, with brine production costs now between $3,000/t and
$4,500/t Li2CO3 for the producers that were studied, with
Australian hard rock conversion costs significantly higher.
For further information, please contact:
Bacanora Minerals Peter Secker, CEO info@bacanoraminerals.com
Ltd.
--------------------- ----------------------- --------------------------
Cairn Financial
Advisers LLP, Sandy Jamieson / +44 (0) 20
Nomad Liam Murray 7213 0880
--------------------- ----------------------- --------------------------
Numis Securities
Ltd, John Prior/James +44 (0) 20
Broker Black/Paul Gillam 7260 1000
--------------------- ----------------------- --------------------------
St Brides Partners, Hugo de Salis / Frank
Financial PR Buhagiar / Elisabeth +44 (0) 20
Adviser Cowell 7236 1177
--------------------- ----------------------- --------------------------
Consolidated Statements of Financial
Position
Unaudited
Expressed in Canadian Dollars
As at June 30,
September
30, 2016 2016
Assets
Current
Cash $ 24,833,849 $ 28,730,168
Other receivables 367,735 265,342
Deferred costs 117,972 102,607
Subscriptions receivables
(Notes 8 and 16) 3,892,459 -
Total current assets 29,212,015 29,098,117
Non-current assets
Property and equipment (Note
6) 2,370,977 2,364,371
Exploration and evaluation
assets (Note 7) 19,415,111 17,816,713
Total non-current assets 21,786,088 20,181,084
Total assets 50,998,103 49,279,201
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable and accrued
liabilities 1,465,779 1,041,117
Warrant liability (Note 8(b)) - 897,323
Total current liabilities 1,465,779 1,938,440
Non-current liabilities
Deferred tax liability 135,000 135,000
Total non-current liabilities 135,000 135,000
Total liabilities 1,600,779 2,073,440
Shareholders' Equity
Share capital (Note 8) 61,545,494 57,058,924
Contributed surplus (Note
8(e)) 4,313,733 3,528,990
Foreign currency translation
reserve 61,151 574,478
Deficit (15,355,779) (13,150,873)
Attributed to Shareholders
of Bacanora Minerals Ltd. 50,564,599 48,011,519
Non-controlling interest (1,167,275) (805,758)
Total shareholders' equity 49,397,324 47,205,761
Total Liabilities and Shareholders'
Equity $ 50,998,103 $ 49,279,201
Consolidated Statements of Comprehensive Loss
Unaudited
Expressed in Canadian Dollars
----------------------------------------------------------------------
Three months ended
September 30,
2016 2015
--------------------------------------- ------------ ------------
Revenue
Interest income $ 38,720 $ 24,110
---------------------------------------- ------------ ------------
Expenses
General and administrative (Note
10) 1,283,089 523,363
Depreciation (Note 6) 39,695 34,010
Stock-based compensation (Note
9(f)) 784,743 -
2,107,527 557,373
--------------------------------------- ------------ ------------
Loss before other items (2,068,807) (533,263)
Foreign exchange loss (846,580) (956,377)
Warrant liability valuation 348,964 -
Loss (2,566,423) (1,489,640)
Foreign currency translation
adjustment (513,327) 950,290
---------------------------------------- ------------ ------------
Total comprehensive loss (3,079,750) (539,350)
---------------------------------------- ------------ ------------
Loss attributable to shareholders
of Bacanora Minerals Ltd. (2,204,906) (1,376,273)
Loss attributable to non-controlling
interest (361,517) (113,367)
---------------------------------------- ------------ ------------
(2,566,423) (1,489,640)
--------------------------------------- ------------ ------------
Total comprehensive loss attributable
to shareholders of Bacanora Minerals
Ltd. (2,718,233) (425,983)
Total comprehensive loss attributable
to non-controlling interest (361,517) (113,367)
---------------------------------------- ------------ ------------
(3,079,750) (539,350)
--------------------------------------- ------------ ------------
Net loss per share (basic and
diluted) $ (0.03) $ (0.01)
---------------------------------------- ------------ ------------
See accompanying notes to the consolidated financial
statements.
Consolidated Statements of Changes in Shareholders' Equity
Unaudited Expressed in Canadian Dollars
Share Capital
-------------- --------------------------
Accumulated
other
Number of Contributed comprehensive Non-controlling
Shares Amount Surplus income Deficit interest Total
-------------- ------------ ------------ ------------ -------------- -------------- ---------------- -------------
Balance, June
30,
2015 84,947,409 $24,827,911 $657,254 $1,695,333 $(2,855,397) $(680,281) $23,644,820
Share issued
on exercise
of options 200,000 101,780 (41,780) - - - 60,000
Foreign
currency
translation
adjustment - - - 950,290 - - 950,290
Loss for the
period - - - - (1,376,273) (177,538) (1,553,811)
-------------- ------------ ------------ ------------ -------------- -------------- ---------------- -------------
Balance,
September
30, 2015 85,147,409 $24,929,691 $615,474 $2,645,623 $(4,231,670) $(857,819) $23,101,299
Brokered
placements 21,226,944 32,099,923 - - - - 32,099,923
Shares issued
on
exercise of
options 1,700,000 1,046,880 (405,879) - - - 641,001
Share issue
costs - (915,790) - - - - (915,790)
Stock-based
compensation
expense - - 3,277,615 - - - 3,277,615
Foreign
currency
translation
adjustment - - - (1,120,855) - - (1,120,855)
Loss for the
period - - - - (10,295,476) (125,477) (10,420,953)
-------------- ------------ ------------ ------------ -------------- -------------- ---------------- -------------
Balance, June
30,
2016 107,874,353 $57,058,924 $3,528,990 $574,478 $(13,150,873) $(805,758) $47,205,761
Shares issued
on
exercise of
warrants 2,925,000 4,486,570 - - - - 4,486,570
Stock-based
compensation
expense - - 784,743 - - - 784,743
Foreign
currency
translation
adjustment - - - (513,327) - - (513,327)
Loss for the
period - - - - (2,204,906) (361,517) (2,566,423)
-------------- ------------ ------------ ------------ -------------- -------------- ---------------- -------------
Balance,
September
30, 2016 110,799,353 $61,545,494 $4,313,733 $61,151 (15,355,779) (1,167,275) $49,397,324
-------------- ------------ ------------ ------------ -------------- -------------- ---------------- -------------
See accompanying notes to the consolidated financial
statements.
BACANORA MINERALS LTD.
Consolidated Statements of
Cash Flows
Unaudited
Expressed in Canadian Dollars
---------------------------------------- -------------- --------------
Three months ended
September 30,
2016 2015
---------------------------------------- -------------- --------------
Cash provided by (used in)
Operating activities
Net loss $ (2,566,423) $ (1,489,640)
Depreciation 39,695 34,010
Warrant liability revaluation (348,964) -
Stock-based compensation expense
(Note 9(f)) 784,743 -
Unrealized foreign exchange
loss - 950,290
(2,090,949) (505,340)
Changes in non-cash working
capital
Other receivables (102,393) 53,665
Prepaid (15,365) (11,300)
Accounts payable and accrued
liabilities 424,662 235,894
(1,784,045) (227,081)
---------------------------------------- -------------- --------------
Financing activities
Related party advances - 172,240
Warrants proceeds 45,752 -
Option proceeds - 60,000
45,752 223,240
---------------------------------------- -------------- --------------
Investing activities
Additions to mineral properties
(Note 7) (1,982,315) (1,374,142)
Additions to property and equipment
(Note 6) (175,711) 20,863
(2,158,027) (1,353,279)
---------------------------------------- -------------- --------------
Increase in cash position (3,896,319) (1,357,120)
Cash, beginning of the period 28,730,168 9,991,037
----------------------------------------- -------------- --------------
Cash, end of the period $ 24,833,849 $ 8,633,917
----------------------------------------- -------------- --------------
See accompanying notes to the consolidated financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Bacanora Minerals Ltd. (the "Company" or "Bacanora") was
incorporated under the Business Corporations Act of Alberta on
September 29, 2008. The Company is dually listed on the TSX Venture
Exchange as a Tier 2 issuer and on the AIM Market of the London
Stock Exchange, with its common shares trading under the symbol,
"BCN" on both exchanges. The address of the Company is 2204 6
Avenue N.W. Calgary, AB T2N 0W9.
The Company is an exploration stage mining company engaged in
the identification, acquisition, exploration and development of
mineral properties located in Mexico. The Company has not yet
determined whether its mineral properties contain economically
recoverable reserves. The recoverability of amounts capitalized is
dependent upon the discovery of economically recoverable reserves,
securing and maintaining title in the properties and obtaining the
necessary financing to complete the exploration and development of
these projects and upon attainment of future profitable production.
The amounts capitalized as mineral properties represent costs
incurred to date, and do not necessarily represent present or
future values.
2. BASIS OF PREPARATION
a) Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") applicable to the preparation of interim
financial statements, including IAS 34, Interim Financial
Reporting. The condensed consolidated interim financial statements
should be read in conjunction with the annual consolidated
financial statements for the year ended June 30, 2016, which have
been prepared in accordance with IFRS as issued by the IASB.
The Company uses the same accounting policies and methods of
computation as in the audited annual consolidated financial
statements for the year ended June 30, 2016.
These condensed consolidated interim financial statements were
authorized for issue by the Board of Directors on November 17,
2016. The Board of Directors has the power and authority to amend
these financial statements after they have been issued.
b) Basis of measurement
These condensed consolidated interim financial statements have
been prepared on a historical cost basis, except for certain
financial instruments that have been measured at fair value.
These consolidated financial statements are presented in
Canadian dollars. The functional currency of the Company is the
British pound sterling ("GBP") and US dollar for its subsidiaries.
The Company's functional currency previously was the Canadian
dollar up until June 30, 2016.
c) New standards and interpretations not yet adopted
A number of new IFRS standards, and amendments to standards and
interpretations, are not yet effective for the period ended
September 30, 2016, and have not been applied in preparing these
condensed consolidated interim financial statements. None of these
standards are expected to have a significant effect on the
condensed consolidated interim financial statements of the
Company.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the Company's financial statements in
accordance with IFRS requires management to make certain judgments,
estimates, and assumptions about recognition and measurement of
assets, liabilities, income and expenses. The actual results are
likely to differ from these estimates. Information about the
significant judgments, estimates, and assumptions that have the
most significant effect on the recognition and measurement of
assets, liabilities, income and expenses are discussed below.
(1) Exploration and evaluation assets
The Company is in the process of exploring its mineral
properties and has not yet determined whether the properties
contain economically recoverable mineral reserves. The
recoverability of carrying values for mineral properties is
dependent upon the discovery of economically recoverable mineral
reserves, the ability of the Company to obtain the financing
necessary to complete exploration and development, and the success
of future operations.
The application of the Company's accounting policy for
exploration and evaluation assets requires judgment in determining
whether it is likely that costs incurred will be recovered through
successful exploration and development or sale of the asset under
review when assessing impairment. Furthermore, the assessment as to
whether economically recoverable reserves exist is itself an
estimation process. Estimates and assumptions made may change if
new information becomes available. If, after expenditures are
capitalized, information becomes available suggesting that the
recovery of expenditures is unlikely, the amount capitalized is
written off in the statement of comprehensive loss in the period
when the new information becomes available. The carrying value of
these assets is detailed in Note 7.
(2) Title to mineral property interests
Although the Company has taken steps to verify the title to the
exploration and evaluation assets in which it has an interest, in
accordance with industry practices for the current stage of
exploration of such properties, these procedures do not guarantee
the Company's title. Title may be subject to unregistered prior
agreements or transfers and title may be affected by undetected
defects.
(3) Rehabilitation provision
Rehabilitation or similar liabilities are estimated based on the
Company's interpretation of current regulatory requirements,
constructive obligations and are measured at fair value. Fair value
is determined based on the net present value of estimated future
cash expenditures for the settlement of decommissioning,
restoration or similar liabilities that may occur upon
decommissioning of the mine. Such estimates are subject to change
based on changes in laws and regulations.
(4) Functional currency
The Company transacts in multiple currencies. The assessment of
the functional currency of each entity within the consolidated
group involves the use of judgment in determining the primary
economic environment each entity operates in. The Company first
considers the currency that mainly influences sales prices for
goods and services, and the currency that mainly influences labour,
material and other costs of providing goods or services. In
determining functional currency the Company also considers the
currency from which funds from financing activities are generated,
and the currency in which receipts from operating activities are
usually retained. When there is a change in functional currency,
the Company exercises judgment in determining the date of
change.
(5) Share-based payments
The Company utilizes the Black-Scholes Option Pricing Model to
estimate the fair value of stock options granted to directors,
officers and employees. The use of the Black-Scholes Option Pricing
Model requires management to make various estimates and assumptions
that impact the value assigned to the stock options, including the
forecast future volatility of the stock price, the risk-free
interest rate, dividend yield and the expected life of the stock
options. Any changes in these assumptions could have a material
impact on the share-based payment calculation value.
The same estimates are required for transactions with
non-employees where the fair value of the goods or services
received cannot be reliably determined and for the warrant
derivative liability.
4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
This note presents information about the Company's exposure to
credit, liquidity and market risks arising from its use of
financial instruments and the Company's objectives, policies and
processes for measuring and managing such risks.
a) Credit risk
Credit risk arises from the potential that a counter party will
fail to perform its obligations. The Company's credit risk relates
solely to Input Tax Credits ("ITC") receivables in Canada and Value
Added Tax ("VAT") receivables in Mexico. Any changes in
management's estimate of the recoverability of the amount due will
be recognized in the period of determination and any adjustment may
be significant. The carrying amount of other receivables represent
the maximum credit exposure.
All of the other receivables represent amounts due from the
Canadian and Mexican governments and accordingly the Company
believes them to have minimal credit risk. The Company considers
all of its other receivables fully collectible, and therefore has
not provided an allowance against this balance nor reclassified the
balance as a non-current asset.
The Company's cash is held in major Canadian, UK and Mexican
banks, and as such the Company is exposed to the risks of those
financial institutions. The Board of Directors monitors the
exposure to credit risk on an ongoing basis and does not consider
such risk significant at this time. The Company considers all of
its accounts receivables fully collectible.
b) Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they become due. The Company's
approach to managing liquidity risk is to ensure, as far as
possible, that it will have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses. Liquidity risk arises
primarily from accounts payable and accrued liabilities and
commitments, all with maturities of one year or less.
c) Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, commodity prices, and interest rates will
affect the value of the Company's financial instruments. The
objective of market risk management is to manage and control market
risk exposures within acceptable limits, while maximizing long-term
returns.
The Company conducts exploration proje
cts in Mexico. As a result, a portion of the Company's
expenditures, accounts receivables, accounts payables and accrued
liabilities are denominated in US dollars and Mexican pesos and are
therefore subject to fluctuation in exchange rates. As at June 30,
2016, a 5% change in the exchange rate between GBP and US dollar
would have an approximate $2,353,000 (2015 - $545,000) change to
the Company's total comprehensive loss.
d) Fair values
The carrying value approximates the fair value of the financial
instruments due to the short term nature of the instruments.
5. CAPITAL MANAGEMENT
The Company's objectives in managing capital are to safeguard
its ability to operate as a going concern while pursuing
exploration and development and opportunities for growth through
identifying and evaluating potential acquisitions or businesses.
The Company defines capital as the Company's shareholders' equity
excluding contributed surplus, of $46,250,866 at September 30, 2016
(June 30, 2016 - $44,482,529). The Company sets the amount of
capital in proportion to risk and corporate growth objectives. The
Company manages its capital structure and makes adjustments to it
in light of changes in economic conditions and the risk
characteristics of the underlying assets. The Company is not
subject to any externally imposed capital requirements.
6. PROPERTY AND EQUIPMENT
Office
Building furniture Computer Transportation
Cost and equipment and equipment equipment equipment Total
------------------ --------------- --------------- ----------- --------------- ------------
Balance, June
30, 2015 $ 2,932,054 $ 3,147 $ 11,464 $ 146,396 $ 3,093,061
Additions 108,777 - 17,840 59,776 186,393
Foreign exchange (267,264) - (18,765) (17,909) (303,938)
------------------ --------------- --------------- ----------- --------------- ------------
Balance, June
30, 2016 $ 2,773,567 $ 3,147 $ 10,539 $ 188,263 $ 2,975,516
Additions 175,711 - - - 175,711
Foreign exchange (129,410) - - - (129,410)
------------------ --------------- --------------- ----------- --------------- ------------
Balance, Sept.
30, 2016 $ 2,819,868 $ 3,147 $ 10,539 $ 188,263 $ 3,021,817
------------------ --------------- --------------- ----------- --------------- ------------
Office
Accumulated Building furniture Computer Transportation
depreciation and equipment and equipment equipment equipment Total
---------------- --------------- --------------- ----------- --------------- ----------
Balance, June
30, 2015 $ 412,036 $ 3,147 $ 7,843 $ 99,232 $ 522,258
Additions 80,591 - 2,696 5,600 88,887
---------------- --------------- --------------- ----------- --------------- ----------
Balance, June
30, 2016 $ 492,627 $ 3,147 $ 10,539 $ 104,832 $ 611,145
Additions 39,695 - - - 39,695
Balance, Sept.
30, 2016 $ 532,322 $ 3,147 $ 10,539 $ 104,832 $ 650,840
---------------- --------------- --------------- ----------- --------------- ----------
Office
Carrying Building furniture Computer Transportation
amounts and equipment and equipment equipment equipment Total
------------- --------------- --------------- ----------- --------------- ------------
At June 30,
2016 $ 2,280,940 $ - $ - $ 83,431 $ 2,364,371
At Sept.
30, 2016 $ 2,287,546 $ - $ - $ 83,431 $ 2,370,977
------------- --------------- --------------- ----------- --------------- ------------
7. EXPLORATION AND EVALUATION ASSETS
The Company's mining claims consist of mining concessions
located in the State of Sonora, Mexico. The specific descriptions
of such properties are as follows:
a) Magdalena Borate property
Originally referred to as San Francisco and El Represo projects,
Magdalena Borate project consists of eight concessions, with a
total area of 7,105 hectares. The concessions are 100% owned by
MSB. The Magdalena property is subject to a 3% gross overriding
royalty payable to Minera Santa Margarita S.A. de C.V., a
subsidiary of Rio Tinto PLC, and a 3% gross overriding royalty
payable to the estate of the past Chairman of the Company on sales
of borate produced from this property.
b) Sonora Lithium property
The Sonora Lithium Project consists of ten contiguous mineral
concessions. The Company through its wholly-owned Mexican
subsidiary, MSB, has a 100% interest in two of these concessions:
La Ventana and La Ventana 1, covering 1,820 hectares. Of the
remaining concessions, five are owned 100% by Mexilit, El Sauz, El
Sauz 1, El Sauz 2, Fleur and Fleur 1 covering 6,334 hectares.
Mexilit is owned 70% by Bacanora and 30% by Rare Earth Minerals PLC
("REM").
The remaining three concessions, Buenavista, Megalit and San
Gabriel, cover 89,235 hectares, and are subject to a separate
agreement between the Company and REM. Under the agreement, Megalit
is owned 70% by Bacanora and 30% by REM. As at June 30, 2016,
Buenavista and San Gabriel concessions were transferred from MSB to
Megalit, while the Megalit concession was in the process of being
transferred to Megalit.
The Sonora Lithium property is subject to a 3% gross overriding
royalty on production from certain concessions within the Sonora
Lithium property payable to the estate of the past Chairman of the
Company.
The balance of investment in mining claims as of September 30,
2016 and June 30, 2016 corresponds to concession payments to the
federal government, and costs of exploration , and consists of the
following:
Magdalena La Ventana Mexilit Megalit
Borate Lithium Lithium Lithium Total
------------------ ------------ ------------ ------------ ----------- -------------
Balance, June
30, 2015 $ 7,246,158 $ 1,931,837 $ 2,091,527 $ 637,905 $ 11,907,427
Additions 1,015,692 4,505,946 1,078,990 125,575 6,726,203
Foreign exchange (537,109) (60,295) (186,935) (32,578) (816,917)
Balance, June
30, 2016 $ 7,724,741 $ 6,377,488 $ 2,983,582 $ 730,902 $ 17,816,713
Additions - 1,956,908 14,302 11,105 1,982,315
Foreign exchange (252,417) (28,336) (87,851) (15,310) (383,914)
Balance, Sept.
30, 2016 $ 7,472,324 $ 8,306,060 $ 2,910,033 $ 726,697 $ 19,415,114
------------------ ------------ ------------ ------------ ----------- -------------
8. SHARE CAPITAL
a) Authorized
The authorized share capital of the Company consists of an
unlimited number of voting common shares without nominal or par
value.
b) Common Shares Issued
Shares Amount
------------------------------------ ------------ -------------
Balance, June 30, 2015 84,947,409 $ 24,827,911
Shares issued on exercise of
options 850,000 355,410
Shares issued in private placement
for cash(1) 11,476,944 17,871,564
Shares issued on exercise of
options 850,000 691,470
Shares issued in private placement
for cash(2) 9,750,000 14,228,359
Share issue costs - (915,790)
------------------------------------ ------------ -------------
Balance, June 30, 2016 107,874,353 $ 57,058,924
Shares issued on exercise of
warrants 2,925,000 4,486,570
------------------------------------ ------------ -------------
Balance, September 30, 2016 110,799,353 $61,545,494
------------------------------------ ------------ -------------
(1) On November 13, 2015, the Company completed a private
financing of 11,476,944 common shares at a price of $1.56 (GBP0.77)
per share for aggregate gross proceeds of $17,871,564
(GBP8,837,247). The Company paid commission of $354,280 and other
share issue expenses of $56,117. As part of the financing,
1,973,407 common shares were acquired by REM, a company that is a
significant shareholder and has a position in the Company's Board
of Directors.
(2) On May 20, 2016, the Company completed a private financing
that raised approximately $14,681,700 (GBP7,702,500) via the
placing of 9,750,000 units (the "Placing Units") at a price of
approximately $1.48 (GBP0.79) per Placing Unit (the "Placing"). The
Company paid commission of $440,500 and other share issue expenses
of $64,893. Each Placing Unit is comprised of one new common share
of the Company (a "Placing Share") and 0.3 of one common share
purchase warrant, with each whole warrant (a "Placing Warrant")
being exercisable into one common share at a price of approximately
$1.48 (GBP0.79) at any time subsequent to July 25, 2016, but on or
before September 30, 2016. Accordingly, an aggregate of 9,750,000
Placing Shares and 2,925,000 Placing Warrants were issued under
this Placing.
The Placing Warrants are denominated in a currency different
than the functional currency and are recorded as warrant liability
of $453,299, which was measured using the Black-Scholes option
pricing model with the following assumptions: risk-free interest
rate: 0.39%; expected volatility: 38%; expected life: 4 months;
fair value per warrant: $0.15.
The fair value of the warrant liability was re-measured as at
June 30, 2016 to be $897,323 using the Black-Scholes option pricing
model with the following assumptions: risk-free interest rate:
0.25%; expected volatility: 44%; expected life: 3 months; fair
value per warrant: $0.31.
c) Stock options
The following tables summarize the activities and status of the
Company's stock option plan as at and during the period ended
September 30, 2016.
Number of Weighted average
options exercise price
------------------------ ------------ -----------------
Balance, June 30, 2015 2,475,000 $ 0.38
Exercised (1,700,000) 0.33
Expired (50,000) 1.58
Issued 4,250,000 1.75
------------------------ ------------ -----------------
Balance, June 30, and
September 30, 2016 4,975,000 $ 1.52
------------------------ ------------ -----------------
Weighted
Number average Number
outstanding remaining exercisable
at Sept. Exercise contractual Expiry at Sept.
Grant date 30, 2016 price life (Years) date 30, 2016
------------- ------------- --------- -------------- ---------- -------------
September Sept.
28, 2012 50,000 0.25 1.3 28, 2017 50,000
September Sept.
11, 2013 725,000 0.30 2.0 11, 2018 725,000
December 2, Dec. 2,
2015 1,200,000 1.58 4.2 2020 1,200,000
January 22, Jan. 22,
2016 1,000,000 1.56(1) 1.4 2018 1,000,000
April 27, May 27,
2016 2,000,000 1.94(2) 2.7 2019 -
4,975,000 2,975,000
------------- ------------- --------- -------------- ---------- -------------
(1) Exercise price of GBP0.77 per share
(2) Exercise price of GBP0.96 per share
d) Warrants
The following tables summarize the activities and status of the
Company's warrants as at and during the period ended September 30,
2016.
Weighted
Remaining Average
Number contractual Exercise
of warrants life (Years) Expiry date price
-------------------- ------------- -------------- ------------ ----------
Balance, June March 26,
30, 2015 833,333 2.8 2018 $ 0.45
September
Issued 2,925,000 0.3 30, 2016 $ 1.51
-------------------- ------------- -------------- ------------ ----------
Balance, June
30, 2016 3,758,333 - - $ 1.27
Exercised (2,925,000) - - 1.35
-------------------- ------------- -------------- ------------ ----------
Balance, September
30, 2016 833,333 1.6 $ 0.45
-------------------- ------------- -------------- ------------ ----------
Weighted
average
Number remaining
outstanding contractual
at Sept. Exercise life Financing
Grant date 30, 2016 price (Years) Expiry date warrants
------------ ------------- --------- ------------- ------------ ----------
March 26, March 26,
2013 833,333 $ 0.45 2.8 2018 833,333
September
30, 2016 833,333 - - - 833,333
------------ ------------- --------- ------------- ------------ ----------
e) Contributed surplus
The following table presents changes in the Company's
contributed surplus.
September June 30,
30, 2016 2016
---------------------------- ------------ ------------
Balance, beginning of the
period $ 3,528,990 $ 657,254
Exercise of stock options - (405,879)
Stock-based compensation
expense 784,743 3,277,615
Balance, end of the period $ 4,313,733 $ 3,528,990
---------------------------- ------------ ------------
f) Stock-based compensation expense
During the period ended September 30, 2016, the Company
recognized $784,743 (2015 - $Nil) of stock-based compensation
expense for options granted under the Company's stock option plan.
The fair value of stock options granted during the period ended
June 30, 2016 was estimated on the dates of grant using the
Black-Scholes option pricing model with the following weighted
average assumptions, risk-free interest rate of 0.73%, expected
volatility of 138%, and expected life of 3 years. The fair value of
each stock option was $1.21. Expected volatility is based on
historical volatility of the Company's stock prices and comparable
peers.
g) Per share amounts
Basic loss per share is calculated using the weighted average
number of shares of 102,255,672 for the period ended September 30,
2016 (2015 - 85,049,583). Options and warrants were excluded from
the dilution calculation as they were anti-dilutive.
9. GENERAL AND ADMINISTRATIVE EXPENSES
The Company's general and administrative expenses include the
following:
September 30, September
For the year ended, 2016 30, 2015
Management fees (Note
14) $ 397,380 $ 201,497
Legal and accounting
fees 564,316 132,222
Investor relations 74,941 76,731
Office expenses 124,820 51,271
Travel and other expenses 121,632 61,642
---------------------------- -------------- ----------
Total $ 1,283,089 $ 523,363
---------------------------- -------------- ----------
10. SEGMENTED INFORMATION
The Company currently operates in one operating segment, the
exploration and development of mineral properties in Mexico. The
Company has an office in Calgary, and London but it does not
generate any revenues or hold any non-current assets at these
locations. Management of the Company makes decisions about
allocating resources based on the one geographic operating segment.
A geographic summary of the identifiable assets by country is as
follows:
Exploration and
Evaluation Activities Consolidated
------------------------ ---------------------------- ----------------------------
Sept. 30, June 30, Sept. June 30,
2016 2016 30, 2016 2016
------------------------ ------------- ------------- ------------- -------------
Property and equipment $ 2,370,977 $ 2,364,371 $ 2,370,977 $ 2,364,371
Exploration and
evaluation assets $ 19,415,111 $ 17,816,713 $ 19,415,111 $ 17,816,713
------------------------ ------------- ------------- ------------- -------------
11. RELATED PARTY TRANSACTIONS
a. Related party expenses
The Company's related parties include directors and officers and
companies which have directors in common. Transactions made with
related parties are made in the normal course of business and are
measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties.
During the period ended September 30, 2016, directors and
management fees in the amount of $351,168 (2015 - $254,937) were
paid to directors and officers of the Company. Of this amount, $Nil
(2015 - $Nil) was capitalized to exploration and evaluation assets,
and $351,168 (2015 - $254,937) was expensed as general and
administrative costs. Of the total amount incurred as directors and
management fees, $56,574 (June 30, 2016 - $38,075) remains in
accounts payables and accrued liabilities on September 30,
2016.
During the period ended September 30, 2016, the Company paid
$Nil (2015 - $18,263) to a daughter of the past Chairman of the
Company. These services were incurred in the normal course of
operations for office administrative services. As of September 30,
2016, $Nil (June 30, 2016 - $Nil) remains in accounts payables and
accrued liabilities.
During the period ended September 30, 2016, the Company paid
$257,654 (2015 - $235,541) to Grupo Ornelas Vidal S.A. de C.V., a
consulting firm of which Martin Vidal, director of the Company and
president of MSB, is a partner. These services were incurred in the
normal course of operations for geological exploration and pilot
plant operation. As of September 30, 2016, $107,906 (June 30, 2016
- $77,416) remains in accounts payable and accrued liabilities.
b. Key management personnel compensation
Key management of the Company are directors and officers of the
Company and their remuneration includes the following:
September 30, September
For the period ended, 2016 30, 2015
Directors' fees:
Colin Orr-Ewing $ 10,056 $ 15,000
James Leahy 12,863 5,000
Shane Shircliff 3,546 4,375
Derek Batorowski 3,546 4,375
Kiran Morzaria 4,375 3,750
Mark Hohnen 87,852 -
----------------------------- -------------- ----------
Total directors' fees: $ 122,238 $ 32,500
------------------------------ -------------- ----------
Management and consulting
fees:
Peter Secker 107,118 119,908
Martin Vidal 58,689 62,182
Derek Batorowski 63,125 40,347
Total management and
consulting fees $ 228,932 $ 222,437
------------------------------ -------------- ----------
Employee's salary:
----------------------------- -------------- ----------
Cordelia Orr-Ewing $ - $ 18,263
------------------------------ -------------- ----------
Total employee's salary $ - $ 18,263
------------------------------ -------------- ----------
Total director's,
management's, consultant's
and employee's salaries
and fees $ 351,170 $ 273,200
------------------------------ -------------- ----------
Operational consulting
fees:
Groupo Ornelas Vidal
S.A. de C.V. $ 257,654 $ 235,541
------------------------------ -------------- ----------
Stock-based compensation $ 784,743 $ -
------------------------------ -------------- ----------
15. COMMITMENTS AND CONTINGENCIES
The Company has commitments for lease payments for field offices
with no specific expiry dates. The total annual financial
commitments resulting from these agreements is $10,735.
Additionally, the Company has commitments for lease payments for
its UK office in the amount of $49,000 per year until July,
2018.
The properties in Mexico are subject to spending requirements in
order to maintain title of the concessions. The capital spending
requirement for 2017 is $333,180. The properties are also subject
to semi-annual payments to the Mexican government for concession
taxes.
16. SUBSEQUENT EVENTS
Subsequent to September 30, 2016, the Company received the
remaining balance of the warrants exercise proceeds of
$3,892,459.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFBPBPTMBJBMLF
(END) Dow Jones Newswires
November 18, 2016 03:50 ET (08:50 GMT)
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