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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 : 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:
Hot Features
Premium
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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