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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bacanora Lithium Plc | LSE:BCN | London | Ordinary Share | GB00BD20C246 | ORDS 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 67.00 | 67.00 | 67.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBCN
RNS Number : 7464G
Bacanora Minerals Ltd
31 May 2017
BACANORA MINERALS LTD.
Condensed Consolidated Interim Financial Statements
March 31, 2017
(Unaudited)
Management's Comments on the Unaudited Condensed Consolidated Interim Financial Statements
The accompanying unaudited condensed consolidated interim financial statements of Bacanora Minerals Ltd. as at and for the three and nine months ended March 31, 2017 and 2016 have been prepared by management and approved by the Audit Committee and the Board of Directors of the Company. These statements have not been reviewed by the Company's external auditors.
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BACANORA MINERALS LTD.
Condensed Consolidated Statements of
Financial Position
Unaudited
Expressed in Canadian Dollars
----------------------------------------------------- -------------
As at March 31, June 30,
2017 2016
-------------------------------------- ------------- -------------
Assets
Current
Cash $ 13,741,332 $ 28,730,168
Other receivables (Note 4a) 590,004 265,342
Deferred costs 79,121 102,607
Total current assets 14,410,457 29,098,117
-------------------------------------- ------------- -------------
Non-current assets
Investment in jointly controlled
entity (Note 6) 9,858,582 -
Long-term derivative asset
(Note 6) 2,600,000 -
Property and equipment (Note
7) 2,057,258 2,364,371
Exploration and evaluation
assets (Note 8) 25,030,947 17,816,713
-------------------------------------- ------------- -------------
Total non-current assets 39,546,787 20,181,084
-------------------------------------- ------------- -------------
Total assets 53,957,244 49,279,201
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable and accrued
liabilities 378,581 1,041,117
Warrant liability (Note 9(b)) - 897,323
Joint Venture obligation (Note
6) 2,321,964 -
Total current liabilities 2,700,545 1,938,440
-------------------------------------- ------------- -------------
Non-current liabilities
Joint Venture obligation (Note
6) 1,018,991 -
Deferred tax liability 135,000 135,000
Total non-current liabilities 1,153,991 135,000
-------------------------------------- ------------- -------------
Total liabilities 3,854,536 2,073,440
Shareholders' Equity
Share capital (Note 9) 61,535,296 57,058,924
Contributed surplus (Note
9(e)) 6,526,622 3,528,990
Foreign currency translation
reserve 483,777 574,478
Deficit (17,295,498) (13,150,873)
-------------------------------------- ------------- -------------
Attributed to Shareholders
of Bacanora Minerals Ltd. 51,250,197 48,011,519
Non-controlling interest (1,147,489) (805,758)
-------------------------------------- ------------- -------------
Total shareholders' equity 50,102,708 47,205,761
-------------------------------------- ------------- -------------
Total Liabilities and Shareholders'
Equity $ 53,957,244 $ 49,279,201
-------------------------------------- ------------- -------------
Commitments and Contingencies (Note 13) Subsequent Events (Note 14)
Approved by the Board of Directors:
(signed) "Jamie Strauss" (signed) "Ray Hodgkinson"
Jamie Strauss Ray Hodgkinson
Director Director
See accompanying notes to the condensed consolidated financial statements.
BACANORA MINERALS LTD.
Condensed Consolidated Statements of Comprehensive
Loss
Unaudited
Expressed in Canadian Dollars
---------------------------------------------------------------------------------------
Three months Nine months
ended ended
Mar. Mar. Mar. Mar.
31, 31, 31, 31,
2017 2016 2017 2016
------------------------------- ------------ ------------ ------------ ------------
Revenue
Interest income $ 22,771 $ 45,242 $ 85,009 $ 89,870
------------------------------- ------------ ------------ ------------ ------------
Expenses
General and administrative
(Note 10) 914,684 1,068,083 3,420,053 2,500,700
Depreciation (Note 7) 104,772 17,233 147,603 78,612
Stock-based compensation
(Note 9(f)) 1,658,030 1,347,749 3,039,412 2,723,081
2,677,486 2,433,065 6,607,068 5,302,393
------------------------------- ------------ ------------ ------------ ------------
Loss before other items (2,654,715) (2,387,823) (6,522,059) (5,212,523)
Foreign exchange gain
(loss) 1,804,303 819,573 500,111 (312,160)
Warrant liability valuation - - 348,964
Joint Venture investment
gain (loss) 70,235 - 70,235 -
------------------------------- ------------ ------------ ------------ ------------
Loss (780,177) (1,568,250) (5,602,749) (5,524,683)
Foreign currency translation
adjustment (1,042,288) (953,850) (91,701) (373,358)
------------------------------- ------------ ------------ ------------ ------------
Total comprehensive
loss (1,822,465) (2,522,100) (5,694,450) (5,898,041)
------------------------------- ------------ ------------ ------------ ------------
Loss attributable to
shareholders of Bacanora
Minerals Ltd. (117,642) (1,496,568) (4,144,625) (5,264,707)
Loss attributable to
non-controlling interest (662,536) (71,682) (1,458,124) (259,976)
------------------------------- ------------ ------------ ------------ ------------
(780,178) (1,568,250) (5,602,749) (5,524,683)
------------------------------- ------------ ------------ ------------ ------------
Total comprehensive
loss attributable to
shareholders of Bacanora
Minerals Ltd. (1,159,930) (2,450,418) (4,236,326) (5,638,065)
Total comprehensive
loss attributable to
non-controlling interest (662,536) (71,682) (1,458,124) (259,976)
------------------------------- ------------ ------------ ------------ ------------
(1,822,466) (2,522,100) (5,694,450) (5,898,041)
------------------------------- ------------ ------------ ------------ ------------
Net loss per share (basic
and diluted) $ (0.01) $ (0.02) $ (0.05) $ (0.06)
------------------------------- ------------ ------------ ------------ ------------
See accompanying notes to the condensed consolidated financial statements.
BACANORA MINERALS LTD.
Condensed 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
Brokered
placements 11,476,944 17,461,167 - - - - 17,461,167
Shares issued
on
exercise of
options 850,000 302,840 (86,840) - - - 216,000
Stock-based
compensation
expense - - 2,723,081 - - - 2,723,081
Foreign
currency
translation
adjustment - - - (373,358) - - (373,358)
Loss for the
period - - - - (5,264,704) (226,016) (5,490,723) -------------- ------------ ------------ ------------ -------------- -------------- ---------------- ------------ Balance, March 31, 2016 97,274,353 $42,591,918 $3,293,495 $1,321,975 $(8,120,104) $(906,297) $38,180,987 Brokered placements 9,750,000 13,720,966 - - - - 13,720,966 Shares issued on exercise of options 850,000 746,040 (319,039) - - - 427,001 Stock-based compensation expense - - 554,534 - - - 554,534 Foreign currency translation adjustment - - - (747,497) - (747,497) Loss for the period - - - - (5,030,769) 100,539 (4,930,230) 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 Share issue costs - (111,978) - - - - (111,978) Shares issued on exercise of options 200,000 101,780 (41,780) - - - 60,000 Stock-based compensation expense - - 3,039,412 - - - 3,039,412 Foreign currency translation adjustment - - - (90,701) - - (90,701) Loss for the period - - - - (4,144,625) (341,731) (4,486,356) Balance, March 31, 2017 110,999,353 $61,535,296 $6,526,622 $483,777 $(17,295,498) $(1,147,489) $50,102,708 -------------- ------------ ------------ ------------ -------------- -------------- ---------------- ------------
See accompanying notes to the condensed consolidated financial statements.
BACANORA MINERALS LTD.
Condensed Consolidated Statements of Cash Flows
Unaudited
Expressed in Canadian Dollars
-----------------------------------------------------------------------------------------------------
Three months
ended September Nine months
30, ended
Mar.
Mar. 31, 31,
Mar. Mar.
31, 2017 2016 2017 31, 2016
-------------------------------------- ------------- -------------- -------------- --------------
Cash provided by (used
in)
Operating activities
Net loss $ (780,177) $ (1,568,250) $ (5,602,749) $ (5,524,683)
Depreciation 104,772 17,233 147,603 78.612
Warrant liability revaluation - - (348,964) -
Unrealized foreign exchange
adjustment - (1,722,929) - (1,204,569)
Share based compensation 1,658,030 1,347,749 3,039,412 2,723,081
982,625 (1,926,197) (2,764,698) (3,927,559)
Changes in non-cash
working capital
Other receivables (135,112) 291,900 (324,662) (78,898)
Prepaid 68,512 (58,804) 23,486 (122,380)
Accounts payable and
accrued liabilities (1,264,657) 186,070 (1,662,149) 188,466
-------------------------------------- ------------- -------------- -------------- --------------
(348,632) (1,507,031) (4,728,023) (3,940,371)
-------------------------------------- ------------- -------------- -------------- --------------
Financing activities
Issue of shares, net
of expenses 186,758 - 101,780 17,461,167
Related party (payments)/advances - 46,863 - 91,969
Options exercise proceeds - - - 216,000
Warrant exercise proceeds,
net of expenses - - 2,925,616 -
186,758 46,863 3,027,396 17,769,136
-------------------------------------- ------------- -------------- -------------- --------------
Investing activities
Investment in jointly
controlled entity (7,104,782) - (7,104,779) -
Additions to mineral
properties (Note 8) (2,430,040) (1,507,200) (6,179,438) (3,674,000)
Additions to property
and equipment (Note
7) (359,325) 112,285 (3,992) 229,128
(9,894,147) (1,394,915) (13,288,209) (3,444,872)
-------------------------------------- ------------- -------------- -------------- --------------
Increase in cash position (10,056,021) (2,855,083) (14,988,836) 10,383,893
Cash, beginning of the
period 23,797,353 23,230,013 28,730,168 9,991,037
-------------------------------------- ------------- -------------- -------------- --------------
Cash, end of the period $ 13,741,332 $ 20,374,930 $ 13,741,332 $ 20,374,930
-------------------------------------- ------------- -------------- -------------- --------------
See accompanying notes to the condensed consolidated 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 dual 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 and development 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 audited 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 May 30, 2017. 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 March 31, 2017, 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 condensed consolidated interim 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.
a) 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 8.
b) Joint Arrangements
Certain of the Company's activities are conducted through joint venture in which it has joint control.
Joint ventures arise when the Company has rights to the net assets of the arrangement. For these arrangements the Company uses the equity method of accounting and recognizes initial and subsequent investments at cost, adjusting for the Company's share of the joint venture's income or loss, less dividends received thereafter. The transactions between the Company and the joint venture partner are assessed for recognition in accordance with IFRS.
Under the equity method, losses from the joint venture are applied against the carrying amount of the investment and any loans to the associate that are considered part of the net investment. When the Company's share of losses in a jointly controlled entity exceeds the Company's interest, the Company discontinues recognizing its share of future losses. The Corporation does not recognize further losses unless a legal or constructive obligation exists. If the joint venture subsequently reports profits, the entity resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized. Revenue is only recorded when collection is reasonably assured.
Joint ventures are tested for impairment whenever objective evidence indicates that the carrying amount of the investment many not be recoverable under the equity method of accounting. The impairment amount is measured as the difference between the carrying amount of the investment and the higher of its fair value less costs of disposal and its value in use. Impairment losses are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.
c) 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.
d) 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.
e) 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.
f) 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.
g) Income taxes
Income tax expense is recognised in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Amounts accrued for income tax expense in one interim period may have to be adjusted in a subsequent interim period of that financial year if the estimate of the annual income tax rate changes.
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 projects 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 $44,723,575 at March 31, 2017 (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. INVESTMENT IN JOINT VENTURE
The Company holds 50% interest in a jointly controlled entity, Deutsche Lithium GmbH, located in southern Saxony, Germany. The Company acquired its interest in February of 2017 for a cash consideration of EUR5 million (approximately $7,105,000) from SolarWorld AG ("SolarWorld") and an undertaking to contribute up to EUR5 million toward the costs of completion of a Feasibility Study, which is anticipated to take approximately 18-24 months. The Company, alone or together with any reasonably acceptable third party, has an option to acquire the remaining 50% of the jointly controlled entity within a 24 month period for EUR30 million. In the event that the Company is unable to complete the purchase of the remaining 50%, alone or together with any reasonably acceptable third party, by the end of the 24 month period, then SolarWorld has the right but not the obligation to purchase the Company's 50% interest for EUR1.
The Company's undertaking to contribute up to EUR5 million toward the costs of completion of a Feasibility Study is being recorded as a liability, reported accordingly with its due dates, between current and non-current portions. At March 31, 2017, the current portion of the obligation was $2,321,964 and the non-current portion was $1,018,991. The Company used a discount rate of 20% in its calculations of future values.
The option to purchase the remaining 50% interest is a derivative asset and is recorded at its fair value of $2,600,000. The fair value of the investment in joint venture was determined based on the fair value of the resources acquired with the residual consideration allocated to the derivative asset. The derivative asset has been classified as long-term due to its realization being in line with the completion of the Feasibility Study.
The statement of financial position of SolarWorld includes accounts receivables and accounts payables which are not significant in value. Current value of SolarWorld is substantially attributed to the exploration and evaluation assets.
7. 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 3,562 - 430 - 3,992
Foreign exchange (298,961) - - - (298,961)
------------------ --------------- --------------- ----------- --------------- ------------
Balance, March
31, 2017 $ 2,478,168 $ 3,147 $ 10,969 $ 188,263 $ 2,680,547
------------------ --------------- --------------- ----------- --------------- ------------
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 11,139 - - 1,005 12,144
Balance, March
31, 2017 $ 503,766 $ 3,147 $ 10,539 $ 105,837 $ 623,289
---------------- --------------- --------------- ----------- --------------- ----------
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 Mar. 31,
2017 $ 1,974,402 $ - $ 430 $ 82,426 $ 2,057,258
------------- --------------- --------------- ----------- --------------- ------------
8. EXPLORATION AND EVALUATION ASSETS
The Company's mining claims consist of mining concessions located in Mexico and Germany. 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 located in the State of Sonora, Mexico, 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 late Chairman of the Company on sales of borate produced from this property.
b) Sonora Lithium property
The Sonora Lithium Project located in the state of Sonora, Mexico 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 Cadence Minerals PLC ("Cadence"), formally known as Rare Earth Minerals.
The remaining three concessions, Buenavista, Megalit and San Gabriel, cover 89,235 hectares, and are subject to a separate agreement between the Company and Cadence. Under the agreement, Megalit is owned 70% by Bacanora and 30% by Cadence. As at March 31, 2017, Buenavista and San Gabriel concessions were transferred from MSB to Megalit, while the Megalit concession was in the process of being transferred to Minera Megalit S.A. de C.V..
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 late Chairman of the Company.
The balance of investment in mining claims as of March 31, 2017 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 30,189 6,123,842 14,302 11,105 6,179,438
Foreign exchange 293,604 578,608 124,792 37,792 1,034,796
Balance, March
31, 2017 $ 8,048,534 $ 13,079,938 $ 3,122,676 $ 779,799 $ 25,030,947
------------------ ------------ ------------- ------------ ----------- -------------
9. 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
Share issue costs - (111,978) Shares issued on exercise of options 200,000 101,780 --------------------------------------- ------------ ------------- Balance, March 31, 2017 110,999,353 $ 61,535,296 --------------------------------------- ------------ -------------
(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 March 31, 2017.
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, 2016 4,975,000 $ 1.52
Exercised (200,000) 0.30
Issued 2,912,400 1.39
------------------------- ------------ -----------------
Balance, March 31, 2017 7,687,400 $ 1.50
------------------------- ------------ -----------------
Weighted
Number average Number
outstanding remaining exercisable
at Mar. Exercise contractual Expiry at Mar.
Grant date 31, 2017 price life (Years) date 31, 2017
--------------- ------------- --------- -------------- ---------- -------------
September Sept.
28, 2012 50,000 0.25 0.8 28, 2017 50,000
September Sept.
11, 2013 525,000 0.30 1.5 11, 2018 525,000
December 2, Dec. 2,
2015 1,200,000 1.58 3.7 2020 1,200,000
January 22, Jan. 22,
2016 1,000,000 1.56(1) 0.9 2018 1,000,000
April 27, May 27,
2016 2,000,000 1.94(2) 2.2 2019 -
March
March 1, 2017 400,000 1.39(3) 4.9 1, 2022 400,000
March
March 1, 2017 2,512,400 1.39(3) 2.9 1, 2020 829,092
--------------- ------------- --------- -------------- ---------- -------------
7,687,400 4,004,092
--------------- ------------- --------- -------------- ---------- -------------
(1) Exercise price of GBP0.77 per share
(2) Exercise price of GBP0.96 per share
(3) Exercise price of GBP0.85 per share
d) Warrants
The following tables summarize the activities and status of the Company's warrants as at and during the period ended March 31, 2017.
Weighted
Remaining Average
Number contractual Exercise
of warrants life (Years) Expiry date price
---------------- ------------- -------------- ------------ ----------
Balance, June March 26,
30, 2015 833,333 1.0 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, March
31, 2017 833,333 1.0 $ 0.45
---------------- ------------- -------------- ------------ ----------
Weighted
average
Number remaining
outstanding contractual
at Mar. Exercise life Financing
Grant date 31, 2017 price (Years) Expiry date warrants
------------ ------------- --------- ------------- ------------ ----------
March 26, March 26,
2013 833,333 $ 0.45 1.0 2018 833,333
March 31,
2017 833,333 - - - 833,333
------------ ------------- --------- ------------- ------------ ----------
e) Contributed surplus
The following table presents changes in the Company's contributed surplus.
March 31, June 30,
2017 2016
---------------------------- ------------ ------------
Balance, beginning of the
period $ 3,528,990 $ 657,254
Exercise of stock options (41,780) (405,879)
Stock-based compensation
expense 3,039,412 3,277,615
Balance, end of the period $ 6,526,622 $ 3,528,990
---------------------------- ------------ ------------
f) Stock-based compensation expense
During the period ended March 31, 2017, the Company recognized $3,039,412 (2015 - $2,723,081) 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 March 31, 2017 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 $1.08. 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 110,923,797 for the three month period ended March 31, 2017 and 109,858,112 for the nine month period ended March 31, 2017 (2016 - 97,274,353 and 91,201,755 respectively). Options and warrants were excluded from the dilution calculation as they were anti-dilutive.
10. GENERAL AND ADMINISTRATIVE EXPENSES
Three months ended Nine months ended
---------------------- ------------------------- --------------------------
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2017 2016 2017 2016
Management fees
(Note 14) $ 344,443 $ 435,982 $1,117,806 $1,161,623
Legal and accounting
fees 53,463 410,002 1,054,864 650,777
Investor relations 226,172 95,463 509,802 322,130
Office expenses 15,837 38,181 197,538 177,008
Travel and other
expenses 274,769 88,455 540,043 189,162
---------------------- ----------- ------------ ------------ ------------
Total $ 914,684 $ 1,068,083 $ 3,420,053 $ 2,500,700
---------------------- ----------- ------------ ------------ ------------
11. SEGMENTED INFORMATION
The Company is pursuing the exploration and development of mineral properties in Mexico and Germany. 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. Summary of the identifiable assets are as follows:
Exploration and
Evaluation Activities Consolidated
------------------------ ---------------------------- -----------------------------
March 31, June 30, March
2017 2016 31, 2017 June 30, 2016
------------------------ ------------- ------------- ------------- --------------
Property and equipment
- Mexico $ 2,057,258 $ 2,364,371 $ 2,057,258 $ 2,364,371
Exploration and
evaluation assets
- Mexico $ 25,030,947 $ 17,816,713 $ 25,030,947 $ 17,816,713
Investment in jointly
controlled entity
- Germany $ 9,858,582 $ - $ 9,858,582 $ -
------------------------ ------------- ------------- ------------- --------------
12. 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 three and nine months ended March 31, 2017, directors and management fees in the amount of $347,989 and $1,013,096 respectively (2016 - $344,252 and 857,117 respectively) were paid to directors and officers of the Company. All of these costs were recorded as general and administrative. Of the total amount incurred as directors and management fees, $68,069 (June 30, 2016 - $38,075) remains in accounts payables and accrued liabilities on March 31, 2017.
During the three and nine months ended March 31, 2017, the Company paid $84,879 and $613,357 respectively (2016 - $260,533 and $756,607 respectively) 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 geological exploration. As of March 31, 2017, $30,211 (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:
Three months
ended Nine months ended
--------------------------- ----------------------- ------------------------
Mar. 31, Mar. 31,
Mar. 31, Mar. 31,
2017 2016 2017 2016
Directors' fees:
Colin Orr-Ewing $ - $ 14,732 $ 10,056 $ 63,977
James Leahy 12,000 5,000 37,263 15,000
Shane Shircliff - 4,375 6,462 13,125
Derek Batorowski - 4,375 - 13,125
Kiran Morzaria 1,223 4,375 9,972 12,419
Jamie Strauss 13,558 - 18,673 -
Ray Hodgkinson 13,558 - 18,095 -
--------------------------- ---------- ----------- ------------ ----------
Total directors'
fees: $ 40,339 $ 32,857 $ 100,521 $ 117,646
--------------------------- ---------- ----------- ------------ ----------
Management and consulting
fees:
Mark Hohnen $ 81,679 $ 99,416 $ 254,137 $ 133,416
Peter Secker 98,932 122,040 310,585 378,007
Martin Vidal 84,879 62,171 218,733 187,847
Derek Batorowski 82,499 60,625 229,641 157,847
Total management
and consulting fees $ 347,989 $ 344,252 $ 1,013,096 $ 857,117
--------------------------- ---------- ----------- ------------ ----------
Employee's salary:
----------------------------- ---------- ---------- ------------ ------------
Cordelia Orr-Ewing $ - $ - $ - $ 53,559
----------------------------- ---------- ---------- ------------ ------------
Total employee's
salary $ - $ - $ - $ 53,559
----------------------------- ---------- ---------- ------------ ------------
Total director's,
management's, consultant's
and employee's salaries
and fees $ 388,328 $ 377,109 $ 1,113,617 $ 1,028,322
----------------------------- ---------- ---------- ------------ ------------
Operational consulting
fees:
Grupo Ornelas Vidal
S.A. de C.V. $ 84,879 $ 260,533 $ 613,357 $ 756,607
----------------------------- ---------- ---------- ------------ ------------
Stock-based compensation $ 806,177 $ 777,536 $ 2,050,290 $ 2,152,869
----------------------------- ---------- ---------- ------------ ------------
13. 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.
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.
As per the terms of the SolarWorld purchase agreement, the Company undertook to pay up to EUR5.0 million toward the costs of completing of a Feasibility Study, which is anticipated to take approximately 18 to 24 months.
14. SUBSEQUENT EVENTS
On May 2(nd) , 2017, the Company announced the issuance of 12,333,261 new common shares to Hanwa Co., LTD. The common shares represent 10.0% of the issued and outstanding share capital of the Company and are being issued at a price of GBP0.83 (approximately $1.37) per share to raise approximately GBP10,175,000 (approximately $16,896,000) for Bacanora pursuant to the Company's offtake agreement for battery grade lithium carbonate at its Sonora lithium project in Mexico.
On May 24(th) , 2017, the Company announced the issuance of 8,573,925 new shares at price of GBP0.86 (approximately $1.51) to Capital Research and Management Company, US based investment company that manages in excess of $1.4 trillion, for total gross proceeds of approximately GBP7.4 million (approximately $13 million).
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCABMATMBMJBBR
(END) Dow Jones Newswires
May 31, 2017 11:15 ET (15:15 GMT)
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