Celtic Minerals Ltd. (an exploration stage company) Condensed Interim Financial Statements

Transcription

1 Condensed Interim Financial Statements For the three and six months ended, 2013 and 2012 (unaudited prepared by Management)

2 Notice of No Auditor Review of Condensed Interim Consolidated Financial Statements In accordance with National Instrument released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed these unaudited condensed interim consolidated financial statements as at and for the three and six months ended, 2013 and 2012.

3 Condensed Interim Statements of Financial Position December Assets Current assets Cash $ 623 $ 65,887 Prepaid expenses and deposits Mineral properties held for sale (Note 3) 110, ,000 Total current assets 110, ,977 Non-current assets Mineral property deposits 19,653 Property and equipment (Note 4) 14,961 16,735 Total non-current assets 34,614 16,735 Total assets $ 145,327 $ 192,712 Liabilities and deficit Current liabilities Trade and other payables $ 160,612 $ 158,915 Other current liabilities (Note 5) 860, ,424 Total liabilities 1,021,036 1,019,339 Deficit Share capital (Note 6) 34,585,021 34,585,021 Deficit (35,460,730) (35,411,648) Total deficit (875,709) (826,627) Total liabilities and deficit $ 145,327 $ 192,712 Going concern (Note 1) Subsequent events (Note 15) Approved by the Board: ( Signed ) David Grand ( Signed ) Ken Johnston See accompanying notes to these condensed interim financial statements. 2

4 Condensed Interim Statements of Changes in Deficit Accumulated Other Share Comprehensive Total Capital Deficit Loss Deficit Balance at December 31, 2011 $ 34,506,211 $ (34,999,713) $ (9,098) $ (502,600) Issuance of common shares 7,140 7,140 Share-based payments 71,670 71,670 Loss for the period (183,919) (455) (184,374) Balance at, 2012 $ 34,585,021 $ (35,183,632) $ (9,553) $ (608,164) Loss for the period (228,016) 9,553 (218,463) Balance at December 31, 2012 $ 34,585,021 $ (35,411,648) $ $ (826,627) Loss for the period (49,082) (49,082) Balance at, 2013 $ 34,585,021 $ (35,460,730) $ $ (875,709) See accompanying notes to these condensed interim financial statements. 3

5 Condensed Interim Statements of Loss and Comprehensive Loss For the three months ended For the six months ended Operating expenses General and administrative (Note 12) $ 25,622 $ 72,615 $ 46,983 $ 162,355 Exploration and evaluation 25,988 25,988 Mineral property license fees 3,775 3,775 Depreciation (Note 4) 887 1,135 1,774 2,271 Gain on settlement of mineral property interest (83,968) Share-based compensation (Note 8 and 12) 71,670 71,670 Loss from operations (26,509) (175,183) (48,757) (182,091) Net finance expense (Note 10) (325) (1,837) (325) (1,828) Net loss for the period (26,834) (177,020) (49,082) (183,919) Other comprehensive loss Exchange differences on translating foreign operations 770 (455) Net loss and comprehensive loss for the period $ (26,834) $ (176,250) (49,082) (184,374) Net loss per share Basic and diluted (Note 9) $ $ $ $ See accompanying notes to these condensed interim financial statements. 4

6 Condensed Interim Statements of Cash Flows For the three months ended For the six months ended Cash flows used in operating activities Net loss $ (26,834) $ (176,250) $ (49,082) $ (184,374) Add back (deduct) non-cash items: Depreciation 887 1,135 1,774 2,271 Share-based compensation 71,670 71,670 Change in non-cash working capital (Note 11) 7,294 72,331 1,697 84,255 Total cash used in operating activities (18,653) (31,114) (45,611) (26,178) Cash flows used in investing activities Mineral property security deposits (19,653) Exploration and evaluation expenditures (21,119) (62,254) Change in non-cash working capital (Note 11) (471) (3,602) Total cash used in investing activities (21,590) (19,653) (65,856) Change in cash (18,653) (52,704) (65,264) (92,034) Cash, beginning of period 19,276 53,811 65,887 93,141 Cash, end of period $ 623 $ 1,107 $ 623 $ 1,107 See accompanying notes to these condensed interim financial statements. 5

7 For the three and six months ended, REPORTING ENTITY AND GOING CONCERN: Celtic Minerals Ltd. (the Company ) is incorporated under the laws of the Province of Alberta. The Company holds several mineral rights licences in Canada, and is looking toward exploration should financing be obtained. The Company is satisfied that title to all of its properties in all material respects is satisfactory. The Company s registered office is at 41 Esgore Drive, Toronto, Ontario, M5M 3R5. At, 2013, the Company incurred a loss and comprehensive loss of $49,082 (, 2012 $184,374), had a working capital deficiency of $910,323 (December 31, 2012 $843,362) and an accumulated deficit of $35,460,730 (December 31, 2012 $35,411,648). The Company s ability to continue its operations is dependent on the Company s success in developing its mineral interests, obtaining required funds for exploration activities and attaining profitable operations. The Company plans to meet its future expenditures and obligations by raising funds through private placements, the sale of mineral properties and controlling expenditures over the next twelve months. However, there can be no certainty that the Company will be successful with these plans. These conditions indicate the existence of a material uncertainty that casts significant doubt about the Company's ability to continue as a going concern. These financial statements have been prepared on the basis that the Company will be able to discharge its obligations and realize its assets in the normal course of business at the values at which they are carried in these financial statements, and that the Company will be able to continue its business activities. Management believes that steps being taken will enable the Company to obtain additional capital as its commitments become due. However, there is no certainty that the Company will be able to continue as a going concern, in which case the Company may not be able to meet its obligations as they come due or realize its assets at the amounts at which they are carried in these financial statements. Should the going concern assumption not be appropriate, certain assets and liability amounts would require adjustment and reclassification and such adjustments may be significant. 2. BASIS OF PREPARATION: These condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting ( IAS 34 ) as issued by the International Accounting Standards Board. These financial statements do not include all of the information required for full annual financial statements. These condensed interim financial statements have been prepared following the same accounting policies and methods of computation as the financial statements of the Company for the year ended December 31, The disclosures provided herein are incremental to those included with the annual financial statements and certain disclosures, which are normally required to be included in the notes to the annual financial statements, have been condensed or omitted. These financial statements should be read in conjunction with the financial statements and notes thereto in the Company s annual filings for the year ended December 31, These financial statements were authorized for issue by the Board of Directors on August 28,

8 For the three and six months ended, EXPLORATION AND EVALUATION ASSETS: Newfoundland and Labrador, Canada Papua New Guinea Cost Great Burnt Lake Crater Mountain Total E&E Assets As at December 31, 2012 and, 2013 $ 60,000 $ 50,000 $ 110,000 The Company did not capitalize any general and administrative expenses or share-based payments to exploration and evaluation assets in Newfoundland and Labrador - Canada On April 8, 2013, the Company entered into a sale agreement with Pavey Ark Minerals Ltd. for cash consideration of $60,000 and an undertaking to complete sufficient exploration to ensure a mineral property deposit refund of $19,653 prior to February 29, 2014 for a 100% interest in the Great Burnt Lake property. The carrying value at December 31, 2012 and, 2013 is $60,000. Crater Mountain Papua New Guinea On April 15, 2013, the Company entered into a sale agreement with Gold Anomaly Limited ACN for cash consideration of AUD$50,000 for the Company s interest in the Crater Mountain project. The carrying value at December 31, 2012 and, 2013 is $50, PROPERTY AND EQUIPMENT Cost or deemed cost As at December 31, 2012 and, 2013 $ 59,225 Accumulated depreciation As at December 31, ,490 Depreciation 1,774 As at, 2013 $ 44,264 Net book value As at December 31, 2012 $ 16,735 As at, 2013 $ 14, OTHER CURRENT LIABILITIES The Company raised capital through the issuance of flow-through shares in 2008, which provided indemnity to the subscriber for additional taxes payable if the Company was unable to, or failed to, renounce the qualifying expenditures as agreed, without limiting the recourse of the subscriber. The Company was not able to spend $3,728,995 of the flow-through funds raised. The Company is exposed to costs for the indemnification of the subscribers. The Company had estimated a potential liability in the amount of $1,410,353 at December 31, 2010, which was revised from the $1,388,910 7

9 For the three and six months ended, 2013 previously recorded in the year ended December 31, The accrued amount is subject to measurement uncertainty due to the tax filing positions of the subscribers, their tax rates and the amount of personal taxes that may be payable and interpretation of the indemnity agreement, which will not be known until potentially affected subscribers are reassessed for their tax positions by the Canada Revenue Agency and these amounts become known to the Company. During the year ended December 31, 2011, the Company proposed to all subscribers of the 2008 offering of flow-through shares, an additional issuance of 50% of the original number of shares subscribed to in 2008 as settlement of the indemnification provided. Certain of the subscribers have agreed to the proposition and as a result, during the year ended December 31, 2011, the Company issued 1,326,955 common shares at a value of $0.02 per common share and 323,000 common shares at a value of $0.10 per common share for settlement of the estimated indemnity amount of $549,929, reducing the potential liability to $860, SHARE CAPITAL: (a) Authorized Unlimited number of common voting shares without nominal or par value Unlimited number of first preferred shares Unlimited number of second preferred shares (b) Issued and Outstanding Share capital Number of Shares Amount Balance December 31, 2012 and, ,444,631 $ 34,585, WARRANTS: Number of warrants Balance December 31, 2012 and, ,000,000 Warrants outstanding at, 2013 are exercisable at $0.10 per share to November 9, SHARE-BASED PAYMENTS: The Company has a stock option plan, administered by the Board of Directors, for directors, officers, key employees and consultants of the Company. The options expire not more than five years from the date of grant, or earlier if the individual ceases to be associated with the Company, and vest over terms determined at the time of grant. The maximum number of options issuable under the stock option plan will not exceed 10 percent of the issued and outstanding common shares. The Company s policy allows the discounting, within the guideline of the TSX-V Exchange, of the exercise price of the options when granted. 8

10 For the three and six months ended, 2013 The following is a continuity of stock options for which shares have been reserved: Number of options Weightedaverage exercise price Balance December 31, 2012 and, ,094,463 $ 0.09 The following table summarizes information about stock options outstanding as at, 2013: Exercise price Number outstanding Weighted-average remaining contractual life (years) Weighted-average exercise price Number exercisable $ ,500, $ ,500, ,594, ,594,463 7,094, $ ,094, PER SHARE AMOUNTS: Basic net loss per share is calculated as follows: Three months ended Six months ended Net loss $ (26,834) $ (176,250) $ (49,082) $ (184,374) Weighted average number of shares basic: Issued common shares at January 1 88,444,631 88,342,631 88,444,631 88,342,631 Effects of shares issued 102,000 75,099 88,444,631 88,444,631 88,444,631 88,417,730 Loss per share basic: $ $ $ $ The effect of stock options is anti-dilutive in loss periods. 9

11 For the three and six months ended, FINANCE INCOME AND EXPENSES: Finance income (expense): Three months ended Six months ended Interest income $ $ $ $ 9 Interest expense (325) (1,837) (325) (1,837) Net finance expense $ (325) $ (1,837) $ (325) $ (1,828) 11. CHANGE IN NON-CASH WORKING CAPITAL: Change in non-cash working capital Three months ended Six months ended Trade and other receivables $ $ (6,263) $ $ (11,709) Prepaid expenses and deposits 530 (908) 1,780 Trade and other payables 6,764 79,031 1,697 90,582 $ 7,294 $ 71,860 $ 1,697 $ 80,653 Allocation of change in non-cash working capital: Operating activities 7,294 72,331 1,697 84,255 Investing activities (471) (3,602) $ 7,294 $ 71,860 $ 1,697 $ 80, RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION The Company considers its directors and executives to be key management personnel. As at, 2013, key management personnel included 3 individuals (, individuals). Key management personnel compensation is comprised of the following: Three months ended Six months ended Salaries and wages 15,625 Share-based payments 56,716 56,716 $ $ 56,716 $ $ 72,341 10

12 For the three and six months ended, FINANCIAL INSTRUMENTS The Company holds various financial instruments as at, The nature of these instruments and its operations expose the Company to market risk, credit risk and liquidity risks. The Company manages its exposure to these risks by operating in a manner that minimizes this exposure. While management monitors and administers these risks, the Board of Directors has the overall responsibility for the establishment and oversight of the Company s risk management framework. a. Market risk: Market risks are generally those risks that are outside of the control of the Company. These are: commodity prices, foreign exchange rates and interest rates. The objective of the Company is to mitigate exposure to these risks, while maximizing returns to the Company. (i) Commodity price risk Commodity price risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for minerals are impacted by world economic events that dictate the levels of supply and demand as well as the relationship between the Canadian and United States dollar. As the Company has not yet developed commercial mineral interests, it is not exposed to commodity price risk at this time. (ii) Foreign currency exchange risk From time to time, the Company may be exposed to fluctuations of foreign exchange rates for certain expenditures incurred in US dollars. The Company may be exposed to foreign currency exchange risk on its cash, prepaid expenses and deposits, exploration and evaluation assets, and trade and other payables. Historically, the Company has not hedged any exposure to such currency fluctuations. At, 2013, the Company is not exposed to foreign currency exchange risk. (iii) Interest rate risk Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest earned on cash is at nominal rates and therefore, the Company considers this risk to be immaterial. The Company has no interest-bearing financial liabilities. (b) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. All cash is held with financial institutions of reputable credit and may be redeemed upon demand. The maximum exposure to credit risk is as follows:, 2013 December 31, 2012 Cash $ 623 $ 65,887 11

13 For the three and six months ended, 2013 (c) Liquidity risk Liquidity risk relates to the risk the Company will not be able to meet its financial obligations as they fall due. The Company s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient cash to allow it to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company s reputation. The Company has sold properties to meet financial obligations and intends to continue to sell properties to meet financial obligations should they be unable to raise funds via financing (note 1). As at, 2013, the Company s financial liabilities were comprised of trade and other payables and other current liabilities, which is a potential liability relating to unspent flow-through funds. All of the Company s financial liabilities are due on demand. 14. CAPITAL MANAGEMENT The Company monitors its cash, common shares, warrants and share options as capital. The Company s objectives when maintaining capital are to maintain a sufficient capital base in order to meet its short-term obligations and at the same time preserve investor s confidence required to sustain future development and production of the business. The Company is not exposed to any externally imposed capital requirements. 15. SUBSEQUENT EVENTS On August 15, 2013, the Company entered into a non-binding Letter of Intent with Nutri FX Plant Nutrients ( Nutri FX ). The Company will issue Nutri FX 40 million shares on a post rollback in exchange for all of Nutri FX s patent pending assets. 12