CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED
MARCH 31, 2024
(in thousands of United States Dollars unless stated otherwise)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited - in thousands of United States dollars)
March 31 | September 30 | ||||
2024 | 2023 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 80,824 | $ | 95,233 | |
Trade receivables | 4,032 | 2,925 | |||
Input tax recoverable | 3,250 | 1,228 | |||
Prepaid expenses | 484 | 399 | |||
Inventories (Note 3) | 15,521 | 14,593 | |||
104,111 | 114,378 | ||||
Non-current assets: | |||||
Input tax recoverable | 19,644 | 18,690 | |||
Inventories (Note 3) | 40,374 | 32,731 | |||
Property, plant and equipment (Note 4) | 47,315 | 48,607 | |||
Exploration and evaluation assets (Note 6) | 92,952 | 88,017 | |||
Total assets | $ | 304,396 | $ | 302,423 | |
LIABILITIES | |||||
Current liabilities: | |||||
Trade and other payables | $ | 6,428 | $ | 6,978 | |
Current portion of long-term obligations (Note 7) | 514 | 604 | |||
Current portion of onerous contract provision | 490 | 460 | |||
Income taxes | 4,830 | 4,624 | |||
12,262 | 12,666 | ||||
Non-current liabilities: | |||||
Long-term obligations (Note 7) | 947 | 1,115 | |||
Onerous contract provision | 3,826 | 3,855 | |||
Derivative liability (Note 11(d)) | 1,102 | 1,176 | |||
Provision for site restoration | 1,890 | 1,705 | |||
Deferred tax liability | 493 | 349 | |||
Total liabilities | 20,520 | 20,866 | |||
EQUITY | |||||
Share capital (Note 8) | 311,130 | 310,905 | |||
Contributed surplus | 14,282 | 13,688 | |||
Accumulated other comprehensive loss | (8,603) | (8,640) | |||
Deficit | (32,933) | (34,396) | |||
Total equity | 283,876 | 281,557 | |||
Total liabilities and equity | $ | 304,396 | $ | 302,423 | |
Commitments (Note 12)
See accompanying notes to the unaudited condensed consolidated interim financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited - in thousands of United States dollars, except per share amounts)
Three months ended | Six months ended | |||||||||||
March 31 | March 31 | March 31 | March 31 | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Revenue from mining operations | $ | 8,940 | $ | 7,607 | $ | 15,739 | $ | 16,085 | ||||
Cost of sales: | ||||||||||||
Production costs, except amortization and depletion | 6,468 | 4,979 | 11,604 | 10,288 | ||||||||
Inventory net realizable value adjustment (Note 3) | (683) | 7,962 | (319) | 10,500 | ||||||||
Amortization and depletion | 732 | 819 | 1,299 | 1,737 | ||||||||
6,517 | 13,760 | 12,584 | 22,525 | |||||||||
General and administrative | 2,546 | 1,999 | 4,887 | 3,955 | ||||||||
Operating loss | (123) | (8,152) | (1,732) | (10,395) | ||||||||
Finance costs | (149) | (149) | (299) | (323) | ||||||||
Foreign exchange gain | 253 | 797 | 1,102 | 740 | ||||||||
Gain (loss) on derivative liability | 58 | 40 | 74 | (410) | ||||||||
Interest income | 1,246 | 883 | 2,668 | 1,481 | ||||||||
1,408 | 1,571 | 3,545 | 1,488 | |||||||||
Net income (loss) before income taxes | 1,285 | (6,581) | 1,813 | (8,907) | ||||||||
Current income tax expense | (62) | - | (206) | (1,942) | ||||||||
Deferred income tax recovery (expense) | 45 | 3,273 | (144) | 4,652 | ||||||||
(17) | 3,273 | (350) | 2,710 | |||||||||
Net income (loss) | 1,268 | (3,308) | 1,463 | (6,197) | ||||||||
Other comprehensive income: | ||||||||||||
Foreign currency translation differences which may | ||||||||||||
subsequently be cycled through net income | (170) | 138 | 37 | 886 | ||||||||
Total comprehensive income (loss) for the period | $ | 1,098 | $ | (3,170) | $ | 1,500 | $ | (5,311) | ||||
Net income (loss) per share (Note 8 (h)) | ||||||||||||
Basic | $ | 0.004 | $ | (0.011) | $ | 0.005 | $ | (0.020) | ||||
Diluted | $ | 0.004 | $ | (0.011) | $ | 0.004 | $ | (0.020) | ||||
See accompanying notes to the unaudited condensed consolidated interim financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands of United States dollars)
Three months ended | Six months ended | |||||||||||
March 31 | March 31 | March 31 | March 31 | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Cash provided by (used in) the following activities: | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) for the period | $ | 1,268 | $ | (3,308) | $ | 1,463 | $ | (6,197) | ||||
Items not involving cash: | ||||||||||||
Amortization and depletion | 732 | 819 | 1,299 | 1,737 | ||||||||
Deferred income taxes | (45) | (3,273) | 144 | (4,652) | ||||||||
Finance costs | 149 | 149 | 299 | 323 | ||||||||
Interest paid | (4) | (5) | (8) | (9) | ||||||||
Inventory net realizable value adjustment (Note 3) | (683) | 7,962 | (319) | 10,500 | ||||||||
Foreign exchange gain | (253) | (797) | (1,102) | (739) | ||||||||
(Gain) loss on derivative liability | (58) | (40) | (74) | 410 | ||||||||
Settlement of onerous contract provision | ||||||||||||
by sale of Off-Take Ounces | (85) | (71) | (150) | (149) | ||||||||
Stock based compensation | 552 | 568 | 1,318 | 1,120 | ||||||||
1,573 | 2,004 | 2,870 | 2,344 | |||||||||
Change in non-cash operating working capital (Note 9) | (6,210) | (4,738) | (10,535) | (9,258) | ||||||||
Net cash used in operating activities | (4,637) | (2,734) | (7,665) | (6,914) | ||||||||
Investing activities | ||||||||||||
Exploration and evaluation expenditures (Note 5) | (2,445) | (3,812) | (5,255) | (10,232) | ||||||||
Purchase of property, plant and equipment (Note 4) | (505) | (9) | (1,157) | (18) | ||||||||
Net cash used in investing activities | (2,950) | (3,821) | (6,412) | (10,250) | ||||||||
Financing activities | ||||||||||||
Net proceeds on equity issuance (Note 8) | - | 45,362 | - | 45,362 | ||||||||
Proceeds on stock option exercises (Note 8) | 37 | 51 | 121 | 56 | ||||||||
Payments of leases (Note 7) | (11) | (406) | (22) | (415) | ||||||||
Payments of long-term obligations (Note 7) | (147) | (147) | (294) | (294) | ||||||||
Net cash (used in) provided by financing activities | (121) | 44,860 | (195) | 44,709 | ||||||||
Effect of exchange rate changes on cash | (255) | (7) | (137) | 52 | ||||||||
Net (decrease) increase in cash and cash equivalents | (7,963) | 38,298 | (14,409) | 27,597 | ||||||||
Cash and cash equivalents, beginning of period | 88,787 | 62,643 | 95,233 | 73,344 | ||||||||
Cash and cash equivalents, end of period | $ | 80,824 | $ | 100,941 | $ | 80,824 | $ 100,941 | |||||
See accompanying notes to the unaudited condensed consolidated interim financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited - in thousands of United States dollars)
Accumulated other | |||||||||||
Number of | Share | Contributed | comprehensive | ||||||||
shares | capital | surplus | loss | Deficit | Total equity | ||||||
Balance at October September 30, 2022 | 295,706,006 | 264,044 | 12,110 | (9,317) | (26,506) | 240,331 | |||||
Net loss | - | - | - | - | (6,197) | (6,197) | |||||
Other comprehensive income | - | - | 886 | - | 886 | ||||||
Options exercised (Note 8) | 915,021 | 237 | (143) | - | - | 94 | |||||
Stock-based compensation (Note 8) | - | - | 873 | - | - | 873 | |||||
Shares issued, net of issuance costs (Note 8) | 29,412,500 | 46,120 | - | - | - | 46,120 | |||||
Balance at March 31, 2023 | 326,033,527 | $ | 310,401 | $ | 12,840 | $ | (8,431) | $ | (32,703) | $ | 282,107 |
Balance at September 30, 2023 | 326,488,511 | 310,905 | 13,688 | (8,640) | (34,396) | 281,557 | |||||
Net income | - | - | - | - | 1,463 | 1,463 | |||||
Other comprehensive income | - | - | - | 37 | - | 37 | |||||
Options exercised (Note 8) | 2,098,808 | 201 | (261) | - | - | (60) | |||||
Shares issued, net of issuance costs (Note 8) | 25,000 | 24 | - | - | - | 24 | |||||
Stock-based compensation (Note 8) | - | - | 855 | - | - | 855 | |||||
Balance at March 31, 2024 | 328,612,319 | $ | 311,130 | $ | 14,282 | $ | (8,603) | $ | (32,933) | $ | 283,876 |
See accompanying notes to the unaudited condensed consolidated interim financial statements.
6
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended March 31, 2024
(Unaudited - in thousands of United States dollars unless otherwise stated)
1. NATURE OF OPERATIONS
GoGold Resources Inc. (the "Corporation") is a company domiciled in Canada. The address of the Corporation's registered office is #1301-2000 Barrington Street, Cogswell Tower, Halifax, Nova Scotia, B3J 3K1. The Corporation's common shares are listed on the Toronto Stock Exchange trading under the symbol GGD and the OTCQX market in the United States under the symbol GLGDF. The consolidated financial statements of the Corporation comprise the Corporation and its subsidiaries. The principal business of the Corporation is the exploration, development, and production of silver, gold and copper primarily in Mexico.
2. BASIS OF PREPARATION
These condensed consolidated interim financial statements are prepared in accordance with IAS 34, Interim Financial Reporting ("IAS 34").
These condensed consolidated interim financial statements do not include all disclosures required by IFRS Accounting Standards for annual consolidated financial statements and accordingly should be read in conjunction with the Corporation's audited consolidated financial statements for the year ended September 30, 2023 prepared in accordance with IFRS Accounting Standards.
These condensed consolidated interim financial statements were approved by the directors of the Corporation on May 7, 2024.
Except for the new accounting standard adopted as described below, these condensed consolidated interim financial statements were prepared using the same accounting policies and methods of computation and are subject to the same use of estimates and judgments, as the Corporation's consolidated annual financial statements for the year ended September 30, 2023.
IAS 1 - Presentation of Financial Statements
On January 23, 2020, the IASB issued an amendment to IAS 1 Presentation of Financial Statements providing a more general approach to the classification of liabilities. The amendment clarifies that the classification of liabilities as current or non- current depends on the rights existing at the end of the reporting period as opposed to the expectations of exercising the right for settlement of the liability. The amendments further clarify that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendments were effective for annual periods beginning on or after January 1, 2023 (for the Corporation's annual period ended September 30, 2024) and are to be applied retrospectively, with early adoption permitted. The Corporation adopted the amended standard on October 1, 2023, with no financial impact.
3. INVENTORIES | |||||
March 31, 2024 | September 30, 2023 | ||||
Current: | |||||
Supplies inventory | $ | 919 | $ | 1,948 | |
In process inventory | 12,891 | 11,013 | |||
Finished goods inventory | 1,711 | 1,632 | |||
15,521 | 14,593 | ||||
Long term: | |||||
In process inventory | 40,374 | 32,731 | |||
$ | 55,895 | $ | 47,324 | ||
The amount of inventory included in cost of sales for the three and six months ended March 31, 2024 was $6,517 and $12,584 (2023 - $13,760 and $22,525). An assessment of the net realizable value of in process inventory was completed at each period end which resulted in a increase of the carrying value of in process inventory for the three and six months ended March 31, 2024 of $683 and $319 (2023 - reductions of carrying value of $7,962 and $10,500), of which $75 and $36 (2023 - $1,138 and $1,384) was related to previously capitalized amortization and depletion. The calculation of net realizable value of
7
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended March 31, 2024
(Unaudited - in thousands of United States dollars unless otherwise stated)
inventory is sensitive to fluctuations in the consensus future silver and gold prices, a change of 5% in future price would result in an estimated change in carrying value of $2,936.
4. PROPERTY, PLANT AND EQUIPMENT
Plant & | ||||||||||||||||
Cost | Equipment | Mining Properties | Total | |||||||||||||
At September 30, 2023 | $ | 51,285 | $ | 59,153 | $ | 110,438 | ||||||||||
Additions | 1,139 | 18 | 1,157 | |||||||||||||
Reclamation obligation adjustments | - | 8 | 8 | |||||||||||||
At March 31, 2024 | $ | 52,424 | $ | 59,179 | $ | 111,603 | ||||||||||
Plant & | ||||||||||||||||
Accumulated Amortization | Equipment | Mining Properties | Total | |||||||||||||
At September 30, 2023 | $ | 31,116 | $ | 30,715 | $ | 61,831 | ||||||||||
Amortization and depletion | 1,083 | 1,374 | 2,457 | |||||||||||||
At March 31, 2024 | $ | 32,199 | $ | 32,089 | $ | 64,288 | ||||||||||
Plant & | ||||||||||||||||
Net Carrying Value | Equipment | Mining Properties | Total | |||||||||||||
At September 30, 2023 | $ | 20,169 | $ | 28,438 | $ | 48,607 | ||||||||||
At March 31, 2024 | $ | 20,225 | $ | 27,090 | $ | 47,315 |
For the three and six months ended March 31, 2024, amortization and depletion of $572 and $1,158 (2023 - $504 and $228) was capitalized to in process inventory. Disclosures related to right of use assets are shown in the following table:
Plant & | |||||
Right of Use Assets | Equipment | Mining Properties | Total | ||
Net Carrying Value - September 30, 2023 | $ 83 | $ 1,129 | $ 1,212 | ||
Net Carrying Value - March 31, 2024 | 64 | 1,061 | 1,125 | ||
Amortization and depletion expensed - 2023 | 12 | 36 | 48 | ||
Amortization and depletion expensed - 2024 | 18 | 68 | 86 |
5. IMPAIRMENT
In accordance with the Corporation's accounting policy, non-financial assets are reviewed at each reporting date to determine whether there are any indicators of impairment. An impairment loss is recognized when the carrying amount exceeds the recoverable amount. Non-financial assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed.
A review was completed at March 31, 2024, and no indicators of impairment nor impairment reversal were identified.
At September 30, 2023, the Corporation determined that a decline in results at the Parral project, which is a CGU, constituted an indicator of potential impairment. Therefore, the Corporation completed an impairment assessment whereby the carrying value was compared to its recoverable amount. The recoverable amount was determined as the higher of value in use and fair value less costs of disposal ("FVLCD"), which was determined using an after-tax discounted future cash flow valuation model. The Corporation's estimate of the FVLCD is classified as Level 3 in the fair value hierarchy based on the inputs used in the
8
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended March 31, 2024
(Unaudited - in thousands of United States dollars unless otherwise stated)
valuation technique. As a result of the impairment assessment the Corporation recognized a non-cash impairment loss of $2,980 on property, plant and equipment related to the Parral project CGU on September 30, 2023.
The discounted future cash flow valuation model used for the impairment assessment is significantly affected by changes in assumptions for future gold and silver prices, operating costs, estimate of recoverable mineral resources and reserves, discount rate, and future foreign exchange rates. The determination of fair value includes the following key applicable assumptions:
- Silver price per ounce based on industry annual consensus future pricing between $23 and $24
- Gold price per ounce based on industry annual consensus future pricing between $1,700 and $1,940
- USD and MXN foreign exchange rates based on publicly available third-party sources between 17.5 and 19.2
- Operating costs based on historical costs incurred and estimated forecasts
- Recoveries based on historical rates and estimated forecasts
- After-taxdiscount rate of 7%
The Corporation performed a sensitivity calculation on the impairment recorded as at September 30, 2023 to quantify the effect of a 5% change in each of the key assumptions on the FVLCD and noted the following impact on the recoverable amount and impairment charge recorded: Silver price - $6,886; Gold price - $4,472; Foreign exchange - $4,920; Operating costs - $9,085; Recovery rates - $10,374; Discount rate - $1,257. The sensitivities have been calculated independently of changes in other key variables.
6. EXPLORATION AND EVALUATION ASSETS
The Corporation's exploration and evaluation assets consist of the Los Ricos property which consists of two projects, the Los Ricos South project and the Los Ricos North project, which are approximately 25km apart.
A summary of the additions to the Los Ricos projects for the six months ended March 31, 2024 are as follows:
LOS RICOS NORTH | LOS RICOS SOUTH | TOTAL | |||||||
Cash | Share | Cash | Share | Cash | Share | ||||
Settled | Settled | Total | Settled | Settled | Total | Settled | Settled | Total | |
At September 30, 2023 | $44,202 | $3,358 | $47,560 | $31,513 | $8,944 | $40,457 | $75,715 | $12,302 | $88,017 |
Concession requirements | 1,013 | - | 1,013 | 499 | 21 | 520 | 1,512 | 21 | 1,533 |
Drilling, exploration and consulting | 500 | 40 | 540 | 2,822 | 40 | 2,862 | 3,322 | 80 | 3,402 |
At March 31, 2024 | $45,715 | $3,398 | $49,113 | $34,834 | $9,005 | $43,839 | $80,549 | $12,403 | $92,952 |
Cash-settled consideration includes amounts capitalized to exploration and evaluation assets which have been or will be settled in cash, while share-settled consideration includes amounts which are settled by the issuance of common shares of the Corporation. Cash-settled consideration includes $346 (September 30, 2023 - $730) in trade and other payables March 31, 2024.
Commitments
The Corporation has entered into multiple option agreements for certain concessions within the Los Ricos projects. During the term of the option agreements the Corporation has exclusive exploration and drilling rights on the concessions, and the Corporation has the right to terminate the agreements at any point with no further payment. The rights to certain concessions transfer to the Corporation after completion of payments under the option agreements. Details of the remaining payments required related to these option agreements are provided in note 12.
The Corporation has entered into certain concession acquisition agreements with payments over a period of time, the details of which are provided in note 7.
9
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended March 31, 2024
(Unaudited - in thousands of United States dollars unless otherwise stated)
7. LONG TERM OBLIGATIONS
Details of the payments during the year, accretion, and remaining long term obligations at March 31, 2024 along with the total annual payments are provided below:
Concession | Leases | Total | ||||||||||||
Discounted | Discounted | Discounted | ||||||||||||
Principal | Amount | Principal | Amount | Principal | Amount | |||||||||
At September 30, 2023 | $ | 1,011 | $ | 944 | $ | 1,093 | $ | 775 | $ | 2,104 | $ | 1,719 | ||
Principal paid | (294) | (294) | (20) | (20) | (314) | (314) | ||||||||
Accretion | - | 29 | - | 27 | - | 56 | ||||||||
At March 31, 2024 | $ | 717 | $ | 679 | $ | 1,073 | $ | 782 | $ | 1,790 | $ | 1,461 | ||
Current: | ||||||||||||||
March 31, 2025 | $ | 492 | $ | 476 | $ | 40 | $ | 38 | $ | 532 | $ | 514 | ||
Long term: | ||||||||||||||
March 31, 2026 | 225 | 203 | 33 | 30 | 258 | 233 | ||||||||
March 31, 2027 | - | - | - | - | - | - | ||||||||
March 31, 2028 | - | - | 500 | 370 | 500 | 370 | ||||||||
March 31, 2029 | - | - | 500 | 344 | 500 | 344 | ||||||||
225 | 203 | 1,033 | 744 | 1,258 | 947 | |||||||||
(a) Concession Agreements
The Corporation has obligations related to various concession agreements which are disclosed in the table above, are non- interest bearing and discounted using the effective interest method with an effective average interest rate of 7%.
(b) Lease obligations
The Corporation has an obligation for the land lease for the Parral project, which provides the Corporation the use of the land where the Parral heap leach and processing facilities are located until February 2028, with the Corporation's option to extend until February 2033, which the Corporation intends to exercise. Annual payments of $400 were required to be made until February 2023. Payments of $500 to be paid in February 2028 and $500 to be paid in February 2029 are required to extend the lease until February 2033. The lease is non-interest bearing and discounted using the effective interest method with an effective average interest rate of 7%. There are no restrictions or covenants included in the land lease.
The Corporation had no short-term leases nor low-value leased assets for the six months ended March 31, 2024.
8. SHARE CAPITAL
(a) Authorized
An unlimited number of common shares, without nominal or par value.
10
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended March 31, 2024
(Unaudited - in thousands of United States dollars unless otherwise stated)
(b) Issued
The following table summarizes the changes in issued common shares of the Corporation:
Shares | Value | ||
Balance September 30, 2022 | 295,706,006 | $ | 264,044 |
Shares issued to consultants in exchange for services and agreements | 512,500 | 758 | |
Shares issued, net of issuance costs | 28,900,000 | 45,362 | |
Shares issued on exercise of options | 915,021 | 237 | |
Balance March 31, 2023 | 326,033,527 | $ | 310,401 |
Balance September 30, 2023 | 326,488,511 | $ | 310,905 |
Shares issued on exercise of options | 2,098,808 | 201 | |
Shares issued in exchange for agreements | 25,000 | 24 | |
Balance March 31, 2024 | 328,612,319 | $ | 311,130 |
On February 8, 2023 the Corporation closed a bought deal whereby a syndicate of underwriters purchased 28,900,000 common shares at a price of $2.25 CAD per share for net proceeds of $45,362 after share issuance costs of $3,062.
(c) Omnibus equity incentive plan ("Omnibus Plan")
The Corporation has an Omnibus Plan which provides the Corporation with a share-related mechanism to attract, retain and motivate qualified directors, employees and consultants of the Corporation. Share-related mechanisms include incentive stock options, deferred share units ("DSUs"), restricted share units ("RSUs"), and performance share units ("PSUs"). The Omnibus Plan replaced legacy plans including a rolling 10% incentive stock option plan, DSU plan, and RSU plan (the "Legacy Plans"). Awards granted under these legacy plans remain in place under the terms of their initial issuance.
The Omnibus Plan is a fixed plan which provides that the aggregate number of common shares that may be issued upon the exercise or settlement of awards granted, together with awards outstanding under the Legacy Plans, shall not exceed 27,500,000 common shares. Sections (d), (e), and (f) below provide details on the outstanding awards under the Omnibus Plan and Legacy Plans.
(d) Incentive stock options
The Corporation has options granted under the Omnibus and Legacy Plans. For both, the terms and conditions of each grant of options were determined by the Board of Directors. Options were granted at a price no lower than the market price of the common shares as defined in the Plans which was the five day weighted average of the Corporation's common shares prior to the date of grant rounded up to the nearest cent. Options granted under the plans typically vested over a three year period, although the vesting period is at the Board of Directors' discretion.
11
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GoGold Resources Inc. published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 19:02:06 UTC.