PRECIOUS & OTHER METALS EXPLORATION ILLUSTRATIVE IFRS CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Transcription

1 PRECIOUS & OTHER METALS EXPLORATION ILLUSTRATIVE IFRS CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) For the three month period ended March 31, 2013

2 PRECIOUS & OTHER METALS EXPLORATION ILLUSTRATIVE IFRS CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) For the three month period ended March 31, 2013 The purpose of these interim condensed financial statements is to assist precious and other metals exploration companies in preparing International Financial Reporting Standards (IFRS) quarterly condensed interim financial statements. Precious and Other Metals Exploration prepares its interim condensed consolidated financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Significant judgment is required in preparing condensed interim financial statements in accordance with IAS 34. IAS 34 prescribes the minimum content of an interim financial report, including the principles for recognition and measurement in condensed financial statements for an interim period. A greater use of estimation may be required in preparation of condensed interim statements than annual financial statements. The interim financial statements are intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported. An entity needs to determine if disclosures in addition to the minimum content are required. For example key management personnel and risk management policies are not included in this sample. An entity with material change from previously reported information may need to include disclosure of these. Financial Statement Preparation Assumptions The illustrative financial statements are based on the following assumptions: All investments are classified as available-for-sale. All property, plant and equipment are accounted for using the cost model. The Company has no complex financing arrangements such as convertible debt. The going concern disclosures are considered appropriate for this company, which we assume has sufficient cash resources to meet its obligations for a minimum of twelve months from the end of the reporting period. The appropriate disclosure may be different based on facts and circumstances of each individual company. For more information, please contact: National Leader Michael Madsen mmadsen@bdo.ca BC Leader Bryndon Kydd bkydd@bdo.ca Western Leader Lorraine Walker lwalker@bdo.ca Eastern Leader Tammy Thompson tthompson@bdo.ca The publication is based on standards and interpretations that have been issued by the International Accounting Standards Board (IASB) by December 31, The sample financial statements should not be used as a substitute for referring to standards and interpretations themselves. This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees agents and affiliates do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

3 CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) For the three month period ended March 31, 2013 CONTENTS CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED)... 3 CONDENSED INTERIM STATEMENT OF COMPREHENSIVE LOSS/INCOME (UNAUDITED)... 4 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)... 5 CONDENSED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) Corporate Information Basis of Preparation and Summary of Significant Accounting Policies Critical Accounting Estimates and Judgments Available-For-Sale Investment Exploration and Evaluation Assets Property, Plant and Equipment Other Liabilities Provisions Share Capital and Reserves Share-Based Payments Income Taxes Related Party Transactions Loss Per Share Events After the Reporting Date PAGE 2 OF 16

4 CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED) March 31, 2013 References: IAS 34.8(a), IAS 34.20(a) March 31, 2013 December 31, 2012 IAS 1.54 IAS 1.80A Assets Current assets Cash and cash equivalents $ xxx $ xxx Prepaid expenses and deposits xxx xxx Available-for-sale investment (Note 4) xxx xxx Total current assets $ xxx $ xxx Non-current assets Reclamation deposits $ xxx $ xxx IFRS 6.23(c) Exploration and evaluation assets (Note 5) xxx xxx Property, plant and equipment (Note 6) xxx xxx Total non-current assets $ xxx $ xxx Total assets $ xxx $ xxx IAS 1.54 IAS 1.69 Liabilities and shareholders' equity Current liabilities Trade and other payables $ xxx $ xxx Other liabilities (Note 7) - xxx Total current liabilities $ xxx $ xxx Non-current liabilities Provisions (Note 8) xxx xxx Total non-current liabilities $ xxx $ xxx Total liabilities $ xxx $ xxx IAS 1.54 IAS 1.78 Shareholders' equity IAS 1.55 Share capital (Note 9) $ xxx $ xxx Contributed surplus xxx xxx Accumulated other comprehensive income xxx xxx IAS 1.55 Accumulated deficit (xxx) (xxx) Total shareholders' equity $ xxx $ xxx Total liabilities and shareholders equity $ xxx $ xxx Signed on behalf of the Board of Directors by: The accompanying notes form an integral part of these condensed interim financial statements PAGE 3 OF 16

5 CONDENSED INTERIM STATEMENT OF COMPREHENSIVE LOSS (UNAUDITED) References: IAS 34.8(b), IAS 34.20(b) March 31, 2013 March 31, 2012 IAS 1.82 Interest and other income $ xxx $ xxx IAS 1.99 Depreciation xxx xxx Employee costs xxx xxx Finance expense xxx xxx Other expenses xxx xxx Total expenses xxx xxx Loss before income tax (xxx) (xxx) IAS Income tax expense (Note 11) xxx xxx Loss after income tax for the period $ (xxx) $ (xxx) Other comprehensive income Items which may subsequently be recycled through profit or loss IFRS 7.20 Fair value gain on available-for-sale investments xxx xxx IAS 1.90 Income tax relating to fair value gain on available-for-sale investment (xxx) (xxx) Total other comprehensive income, net of tax $ xxx $ xxx Total comprehensive loss for the period $ (xxx) $ (xxx) IAS Loss per common share, basic and diluted (Note 13) $ (x.xx) $ (x.xx) The accompanying notes form an integral part of these condensed interim financial statements PAGE 4 OF 16

6 Reference Precious & Other Metals Exploration CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED) Share capital References: IAS 34.8(c), IAS 34.20(c) Contributed surplus Accumulated other comprehensive loss Deficit Total IAS 1.82 IAS IFRS 7.20 Balance at January 1, 2012 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) Comprehensive loss for the period Loss for the period (xxx) (xxx) Available-for-sale investment (net of tax) xxx xxx Total comprehensive loss for the period xxx (xxx) xxx Contributions by owners Share capital issued (Note 9) xxx xxx Stock options issued xxx xxx Options exercised xxx (xxx) xxx Warrants issued (Note 9) xxx xxx Warrants exercised xxx (xxx) xxx Share issue costs (xxx) xxx (xxx) Total contributions by owners xxx xxx - - xxx IAS Balance at March 31, 2012 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) IAS Balance at January 1, 2013 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) Comprehensive loss for the period Loss for the period (xxx) (xxx) Available-for-sale investment (net of tax) xxx xxx Total comprehensive loss for the period xxx (xxx) xxx Contributions by owners Share capital issued (Note 9) xxx xxx Stock options issued xxx xxx Options exercised xxx (xxx) xxx Warrants issued (Note 9) xxx xxx Warrants exercised xxx (xxx) xxx Share issue costs (xxx) xxx (xxx) Total contributions by owners xxx xxx - - xxx IAS Balance at March 31, 2013 $ xxx $ xxx $ xxx $ (xxx) $ (xxx) The accompanying notes form an integral part of these condensed interim financial statements PAGE 5 OF 16

7 CONDENSED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) References: IAS 34.8(d), IAS 34.20(d) March 31, 2013 March 31, 2012 IAS Cash flows from operating activities Loss for the period $ (xxx) $ (xxx) Adjustments to reconcile loss to net cash used in operating activities: Depreciation of property, plant and equipment xxx xxx Interest income xxx xxx Finance expense xxx xxx Share-based payment expense xxx xxx Income tax expense xxx xxx Changes in non-cash working capital balances: Prepaid expenses xxx xxx Trade and other payables xxx xxx Other liabilities xxx xxx Provisions xxx xxx Cash generated from operations xxx xxx IAS 7.35 Income taxes paid (xxx) (xxx) IAS 7.10 Net cash inflows from operating activities $ xxx $ xxx Cash flows from investing activities Acquisition of property, plant and equipment (xxx) (xxx) Investment in exploration and evaluation assets (xxx) (xxx) Change in reclamation deposits xxx xxx IAS 7.31 Interest received xxx xxx IAS 7.10 Net cash inflows / (outflows) from investing activities $ (xxx) $ (xxx) IAS 7.17 Cash flows from financing activities Proceeds from share issuance xxx xxx Costs of issue of shares (xxx) (xxx) Proceeds from exercise of stock options xxx xxx IAS 7.31 Interest paid (xxx) (xxx) IAS 7.10 Net cash inflows/(outflows) from financing activities $ xxx $ xxx Net increase in cash during the period $ xxx $ xxx Cash and cash equivalents at beginning of period $ xxx $ xxx IAS 7.45 Cash and cash equivalents at end of period $ xxx $ xxx The accompanying notes form an integral part of these condensed interim financial statements PAGE 6 OF 16

8 IAS 34.8(e) IAS CORPORATE INFORMATION Precious & Other Metals Exploration s business activity is the exploration and evaluation of mineral properties in Canada. Precious & Other Metals Exploration (the Company ) was incorporated under the Canada Business Corporations Act on Month DD, YYYY, and has continued as a company under the Business Corporations Act of British Columbia. The Company is listed on the TSX Venture Exchange, having the symbol xxxx-v, as a Tier 2 mining issuer and is in the process of exploring its mineral properties. The address of the Company's corporate office and principal place of business is 123 Any Street, Vancouver, British Columbia, Canada. 2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES IAS IAS IAS 34.16A IAS IAS 34.16A IAS IAS 34.B12 IAS IAS These condensed interim financial statements for the three month period ended March 31, 2013 have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the Company s 2012 annual financial statements which have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). The condensed interim financial statements have been prepared using accounting policies consistent with those used in the Company s 2012 annual financial statements except for new standards, interpretations and amendments mandatorily effective for the first time from January 1, 2013 and income tax expense which is recognized in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Note 2b) sets out the impact of new standards, interpretations and amendments that have had a material effect on the financial statements. The condensed interim financial statements were authorized for issue by the Board of Directors on Month DD, The preparation of condensed interim financial statements in compliance with IAS 34 requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company s accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 3. a) Going Concern of Operations IAS 1.25 The Company has not generated revenue from operations. The Company incurred a net loss of $xxx during the three months-ended March 31, 2013 and, as of that date the Company s deficit was $xxx. However, the Company has sufficient cash resources to meet its obligations for at least twelve months from the end of the reporting period. As the Company is in the exploration stage, the recoverability of the costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties and deferred exploration expenditures. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future. PAGE 7 OF 16

9 b) New Standards, Amendments and Interpretations Effective for the first time from January 1, 2013 IAS 1.31, IAS 8.30, IAS 8.31 Certain pronouncements were issued by the IASB or the IFRS Interpretations Committee that are mandatory for accounting periods beginning before or on January 1, The following new standards, amendments and interpretations, that have been adopted in these interim financial statements, have had an effect on the Company s future results and financial position: IFRS 13 Fair Value Measurement IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. The adoption of IFRS 13 by the Company has had no material impact. The fair value of the available-forsale investment has been determined directly by reference to published price quotations in an active market. Prior to adoption of IFRS 13 the Company measured the available for sale investment on the same basis. Amendment to IAS 1 Presentation of Financial Statements The amendments to IAS 1 revised the presentation of other comprehensive income (OCI). Separate subtotals are required for items which may subsequently be recycled through profit or loss and items that will not be recycled through profit or loss. The Company has updated the presentation of OCI on the face of the Statement of Comprehensive Income. In addition, the following new or amended standards and interpretations that are mandatory for 2013 annual periods have not had a material impact on the Company: IFRS 7 Financial Instruments: Disclosures: Amendments Offsetting Financial Assets and Financial Liabilities IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosures of Interests in Other Entities IAS 19 Employee Benefits (Amendments) IFRIC 20 Stripping Costs in the Production Phases of a Surface Mine Annual Improvements to IFRSs ( Cycle) PAGE 8 OF 16

10 c) Standards, Amendments and Interpretations Not Yet Effective 1 Precious & Other Metals Exploration IAS 1.31, IAS 8.30, IAS 8.31 Certain pronouncements were issued by the IASB or the IFRS Interpretations Committee that are not mandatory for accounting periods beginning on or after January 1, 2013 or later periods. They have not been early adopted in these interim financial statements, and they are expected to affect the Company in the period of initial application. In all cases the Company intends to apply these standards from application date as indicated below: IFRS 9 Financial Instruments IFRS 9 Financial Instruments is part of the IASB's wider project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. The standard is effective for annual periods beginning on or after January 1, The Company has not yet made an assessment of the impact of the amendments. There are no other IFRSs or IFRIC Interpretations that are not yet effective that would be expected to have a material impact on the Company. 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IAS IAS IAS IAS IAS IAS 34.16A IAS There have been no material revisions to the nature of judgments and amount of changes in estimates of amounts reported in the Company s 2012 annual financial statements. 4. AVAILABLE-FOR-SALE INVESTMENT IFRS 7.7 Available-for-sale investment consists of an investment in common shares of XYZ Mine Company Limited, and therefore has no fixed maturity date or coupon rate. The fair value of the listed available-for-sale investment has been determined directly by reference to published price quotations in an active market. 1 Standards, Amendments and Interpretations Not Yet Effective section may need further updating prior to condensed interim financial statement release. PAGE 9 OF 16

11 5. EXPLORATION AND EVALUATION ASSETS IFRS 6.23 Property xxx Property yyy Total $ 000 IFRS 6.24 Balance at January 1, 2012 $ xxx $ xxx $ xxx IFRS 6.25 Exploration costs xxx xxx xxx Acquisition of property xxx xxx xxx xxx Write-off of unsuccessful exploration expenditure - (xxx) (xxx) Balance at December 31, 2012 $ xxx $ xxx $ xxx IFRS 6.24 Exploration costs xxx xxx xxx Acquisition of property xxx xxx xxx xxx Proceeds from farm out agreement (xxx) - (xxx) Write-off of unsuccessful exploration expenditure - (xxx) (xxx) Balance at March 31, 2013 $ xxx $ xxx $ xxx Property xxx is xxx% owned and is located in north-western Québec. Property yyy is 100% owned and is located in northern Ontario. During the current period the Company entered into a farm-out agreement with ABC Limited to share costs and risks associated with exploration activities on property xxx. The cash received has been credited against costs previously capitalized for the whole interest. No gain on disposal was recognized. The impairment assessment of exploration and evaluation assets did not result in amounts being written off the Company s properties. 6. PROPERTY, PLANT AND EQUIPMENT IAS 34.15B During the period the Company acquired assets with a cost of $xxx ( $xxx). Assets with a carrying value of $xxx ( $xxx) were disposed of resulting in a gain/loss of $xxx which is included in other income/other expenses in the condensed statement of comprehensive income. PAGE 10 OF 16

12 7. OTHER LIABILITIES Other liabilities include the liability portion of the flow-through shares issued. The following is a continuity schedule of the liability portion of the flow-through shares issuances. IFRS 7.7 Flow-through Shares Issued on Month DD,2012 Issued on Month DD,2013 Total Balance at January 1, 2012 $ - $ - $ - Liability incurred on flow-through shares issued xxx - xxx Settlement of flow-through share liability on incurring expenditures (xxx) - (xxx) Balance at December 31, 2012 $ - $ - $ - Liability incurred on flow-through shares issued - xxx xxx Settlement of flow-through share liability on incurring expenditures - (xxx) (xxx) Balance at March 31, 2013 $ - $ xxx $ xxx On Month DD, 2013, the Company completed a brokered private placement, consisting of the issue and sale of xxx flow through units at a price of $x.xx per flow through unit and xxx common share units at a price of $x.xx per unit, for aggregate gross proceeds of $xxx. Each flow-through unit consisted of one flow through common share and one half of one common share purchase warrant; each common share unit consisted of one common share and one half of one common share purchase warrant. As at March 2013, the Company had not fulfilled its commitment to incur exploration expenditures in relation to this flow-through share financing. 8. PROVISIONS IAS 34.15B IAS IAS Rehabilitation Other Total Balance at January 1, 2012 $ xxx $ xxx $ xxx Change in liability estimate xxx xxx xxx Accretion of interest xxx xxx xxx Balance at December 31, 2012 $ xxx $ xxx $ xxx Change in liability estimate xxx xxx xxx Accretion of interest xxx xxx xxx Balance at March 31, 2013 $ xxx $ xxx $ xxx Rehabilitation Provision Precious & Other Metals Exploration makes full provision for the future cost of site rehabilitation on a discounted basis at the time exploration and evaluation activities take place. The rehabilitation provision represents the present value of rehabilitation costs relating to exploration and evaluation activities that have occurred to date. The rehabilitation expenditure is expected to be incurred in various stages up to 20YY. PAGE 11 OF 16

13 9. SHARE CAPITAL AND RESERVES IAS 1.79 IAS a) Common Shares The following is a summary of changes in common share capital issued from January 1, 2012 to March 31, 2013: Number of Shares Issue Price Amount 's IAS 34.16A Balance at January 1, 2012 xxx $ xxx Shares issued via private placement xxx $ x.xx xxx Flow-through share issuance xxx $ x.xx xxx Issue of shares on exercise of warrants xxx $ x.xx xxx IAS 1.79(a) Issue of shares on exercise of options xxx $ x.xx xxx Less share issue costs Balance at December 31, 2012 xxx $ xxx Shares issued via private placement xxx $ x.xx xxx Flow-through share issuance xxx $ x.xx xxx Issue of shares on exercise of warrants xxx $ x.xx xxx Issue of shares on exercise of options xxx $ x.xx xxx Less share issue costs Balance at March 31, 2013 xxx $ xxx (xxx) (xxx) b) Contributed Surplus The following is a summary of changes in contributed surplus from January 1, 2012 to March 31, 2013: March 31, 2013 December 31, 2012 Warrants $ xxx $ xxx Share Options xxx xxx Contributed Surplus $ xxx $ xxx PAGE 12 OF 16

14 9. SHARE CAPITAL AND RESERVES (CONTD) c) Share Purchase Warrants The following is a summary of changes in warrants from January 1, 2012 to March 31, 2013: IAS 1.79 IAS Number of Warrants Amount 's Balance at January 1, 2012 xxx $ xxx Issue of warrants xxx xxx Exercised warrants (xxx) (xxx) Balance December 31, 2012 xxx $ xxx Issue of warrants xxx xxx Exercised warrants (xxx) (xxx) Balance as at March 31, 2013 xxx $ xxx As at March 31, 2013, the Company had outstanding warrants as follows: Number of warrants Exercise price Expiry xxx $ x.xx MM/DD/ 20YY xxx $ x.xx MM/DD/ 20YY xxx $ x.xx MM/DD/ 20YY On Month DD, 2013, the Company completed a brokered private placement, consisting of the issue and sale of xxx flow through units at a price of $x.xx per flow through unit and xxx common share units at a price of $x.xx per unit, for aggregate gross proceeds of $xxx. Each flow-through unit consisted of one flow through common share and one half of one common share purchase warrant; each common share unit consisted of one common share and one-half of one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase one additional common share of the Company at a price of $x.xx per share for a period of xx months after the closing of the offering. The Company paid commission of $xxx and issued xxx broker compensation warrants exercisable at $x.xx per share expiring Month DD, 20YY valued at $xxx. Share issuance costs related to the placement totaled $xxx. PAGE 13 OF 16

15 10. SHARE-BASED PAYMENTS IAS 34.16A a) Option Plan Details IFRS 2.44 IFRS 2.45 The following is a summary of changes in options from January 1, 2012 to March 31, 2013: Grant Date Expiry Date Exercise Price Opening Balance During the Period Granted Exercised Forfeited Closing Balance Vested and Exercisable Unvested MM/DD/YY MM/DD/YY $ x.xx xxx xxx (xxx) (xxx) xxx xxx xxx MM/DD/YY MM/DD/YY $ x.xx xx xxx (xxx) (xxx) xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx Weighted Average Exercise Price $ x.xx $ x.xx $ x.xx $ x.xx $ x.xx $ x.xx $ x.xx b) Fair Value of Options Issued During the Period The weighted average fair value at grant date of options granted during the period ended March 31, 2013 was $x.xx per option (year-ended December 31, $x.xx). IFRS 2.45(d) The model inputs for options granted during the period ended March 31, 2013 included: Share Price at Exercise Risk-Free Interest Grant Date Expiry Date Grant Date Price Rate Expected Life Volatility Factor Dividend Yield MM/DD/YY MM/DD/YY $ x.xx $ x.xx x.xx% -x.xx% xx-xx-months x.xx% -x.xx% -% MM/DD/YY MM/DD/YY $ x.xx $ x.xx x.xx% -x.xx% xx-xx-months x.xx% -x.xx% -% The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information. IFRS 2.45(c) IFRS 2.51(a) IFRS 6.23 The weighted average share price at the date of exercise of options during the period ended March 31, 2013 was $x.xx per share (year-ended December 31, $x.xx). c) Expenses Arising from Share-based Payment Transactions Total expenses arising from share-based payment transactions recognized during the period as part of employee benefit expense were $xxx (3 months ended March 31, $xxx). d) Amounts Capitalized Arising from Share-based Payment Transactions Total expenses arising from share-based payment transaction that were capitalized during the period as part of exploration and evaluation activities were $xxx (3 months ended March 31, $xxx). PAGE 14 OF 16

16 IAS IAS IAS 12.81(e) IAS IAS INCOME TAXES Income tax expense is charged at x.xx% for the three month period ended March 31, 2013 (March 31, x.xx%) based on management s best estimate of the weighted average annual income tax rate for the full financial year applied to the pre-tax income of the interim period. As at March 31, 2013, the Company has estimated capital losses for Canadian tax purposes of $xxx (3 months ended March 31, $xxx). These losses do not expire and may be utilized to reduce future capital gains, if any. As at March 31, 2013, the Company has estimated non-capital losses for Canadian income tax purposes that may be carried forward to reduce taxable income derived in future years. A summary of these tax losses is provided below. Tax Losses These tax losses will expire as follows: Total Year of Expiry 20YY 20YY 20YY Taxable Losses $ xxx xxx xxx $ xxx The potential benefits of these carry-forward non-capital losses, capital losses and deductible temporary differences has not been recognized in these condensed interim financial statements as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered. 12. RELATED PARTY TRANSACTIONS IAS The following is a summary of the Company s related party transactions during the period: a) Legal Fees Legal fees of $xxx (three months-ended March 31, 2012: $xxx), incurred in connection with the Company s financings as well as general corporate matters, were paid to a law firm of which one partner is a director of the Company. At March 31, 2013, $xxx (December 31, 2012: $xxx) owing to this legal firm was included in accounts payable. b) Rental Payments Rental payments of $xxx (three months-ended March 31, 2012: $xxx) were paid to Office Company, which is controlled by a director of the Company. At March 31, 2013, $xxx (December 31, 2012: $xxx) owing was included in accounts payable. PAGE 15 OF 16

17 IAS LOSS PER SHARE Weighted Average Number of Common Shares: March 31, 2013 March 31, 2012 Loss attributable to ordinary shareholders $xxx $xxx Weighted average number of common shares xxx xxx Basic and diluted loss per share $x.xx $x.xx Weighted Average Number of Common Shares: Issued common shares at January 1 xxx xxx Effect of shares issued xxx xxx Effect of stock options exercised xxx xxx Effect of stock options on issue xxx xxx Effect of share warrants on issue xxx xxx Weighted average number of common shares (basic and diluted) at March 31 xxx xxx The basic and diluted loss per share are the same as there are no instruments that have a dilutive effect on earnings. The brokered private placement which occurred on April DD, 2013 consists of one flow-through share and one non-transferrable share purchase warrants exercisable at a price of $x.xx for each warrant. This transaction, which occurred between the reporting date and the date of completion of these financial statements, has an impact on the number of ordinary and potential ordinary shares. 14. EVENTS AFTER THE REPORTING DATE IAS 34.16A IAS Private Placement Financing On April DD, 2013 the Company obtained a brokered private placement for total proceeds of $xxx consisting of xxx flow-through units at a price of $x.xx. Each flow-through unit consisted of one flow-through share and one non-transferrable share purchase warrant exercisable at a price of $x.xx for each warrant. PAGE 16 OF 16

18 For more information, please contact: National Leader Michael Madsen BC Leader Bryndon Kydd Western Leader Lorraine Walker Eastern Leader Tammy Thompson This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.