Forsys Metals Corp.
Condensed Interim Consolidated Financial Statements
March 31, 2024
(expressed in Canadian dollars) (unaudited)
Management's Comments on Unaudited Condensed Interim Consolidated Financial Statements
These unaudited condensed interim consolidated financial statements of Forsys Metals Corp. (the "Company") have been prepared by management and approved by the Board of Directors of the Company.
These unaudited condensed interim consolidated financial statements have not been reviewed by the Company's external auditors.
Forsys Metals Corp.
Consolidated Statement of Financial Position
(expressed in Canadian dollars) (unaudited)
March 31, | December 31, | |
2024 | 2023 | |
Notes | $ | $ |
Assets | |||
Current | |||
Cash and cash equivalents | 4 | 10,299,292 | 12,405,165 |
Receivables | 200,981 | 352,385 | |
Prepaid expenses and other assets | 139,589 | 152,838 | |
10,639,862 | 12,910,388 | ||
Non-current | |||
Exploration and evaluation | 5 | 12,435,708 | 11,363,621 |
Total assets | 23,075,570 | 24,274,009 | |
Liabilities | |||
Current | |||
Accounts payable and accrued liabilities | 569,093 | 125,443 | |
Income taxes payable | 6 | 921,294 | 1,909,582 |
1,490,387 | 2,035,025 | ||
Shareholders' equity | |||
Share capital | 7 | 174,210,964 | 174,210,964 |
Contributed surplus | 51,551,158 | 51,207,780 | |
Equity reserve | 33,364 | 33,364 | |
Accumulated loss | (182,955,099) | (182,089,125) | |
Accumulated other comprehensive loss | (21,255,203) | (21,123,999) | |
Total shareholders' equity | 21,585,183 | 22,238,984 | |
Total liabilities and shareholders' equity | 23,075,570 | 24,274,009 |
On behalf of the Board: | |
Martin Rowley | Mark Frewin |
Director | Director |
The above consolidated statement should be read in conjunction with the accompanying notes. | 1 |
Forsys Metals Corp.
Consolidated Statement of Loss and Comprehensive Loss
(expressed in Canadian dollars) (unaudited)
3 months ended March 31, | ||
2024 | 2023 | |
Notes | $ | $ |
Expenses | |||
Professional fees | 67,327 | 91,871 | |
Directors' fees | 11 | 151,939 | 151,845 |
Consulting fees | 11 | 201,814 | 171,722 |
Stock-based compensation | 8 and 11 | 343,378 | - |
Advisory fees | 20,000 | 10,000 | |
Public company costs | 115,845 | 77,918 | |
General and administrative | 76,016 | 9,294 | |
Foreign exchange loss (gain) | 75 | (31,401) | |
Other income | (3,697) | - | |
Interest income | (106,723) | (97,078) | |
865,974 | 384,171 | ||
Net loss | (865,974) | (384,171) | |
Other comprehensive loss, net of taxes | |||
Item that may be reclassified subsequently to loss | |||
Foreign currency translation | (131,204) | (620,413) | |
Comprehensive loss | (997,178) | (1,004,584) | |
Net loss per share - basic and diluted | - | - | |
Weighted average number of Class A common shares outstanding | 195,169,467 | 195,169,467 |
The above consolidated statement should be read in conjunction with the accompanying notes. | 2 |
Forsys Metals Corp.
Consolidated Statement of Changes in Equity
(expressed in Canadian dollars) (unaudited)
3 months ended March 31, | |
2024 | 2023 |
$ | $ |
Share capital | ||
Balance, beginning and end of period | 174,210,964 | 174,210,964 |
Warrants | ||
Balance, beginning and end of period | - | 6,097,115 |
Contributed surplus | ||
Balance, beginning of period | 51,207,780 | 46,987,780 |
Stock-based compensation | 343,378 | - |
Balance, end of period | 51,551,158 | 46,987,780 |
Equity reserve | ||
Balance, beginning and end of period | 33,364 | 33,364 |
Accumulated loss | ||
Balance, beginning of period | (182,089,125) | (182,362,736) |
Net loss | (865,974) | (384,171) |
Balance, end of period | (182,955,099) | (182,746,907) |
Accumulated other comprehensive loss | ||
Balance, beginning of period | (21,123,999) | (19,797,105) |
Currency translation differences on foreign operations | (131,204) | (620,413) |
Balance, end of period | (21,255,203) | (20,417,518) |
The above consolidated statement should be read in conjunction with the accompanying notes. | 3 |
Forsys Metals Corp.
Consolidated Statement of Cash Flows
(expressed in Canadian dollars) (unaudited)
3 months ended March 31, | |||
2024 | 2023 | ||
Notes | $ | $ | |
Cash from (used in) | |||
Operating activities | |||
Net loss | (865,974) | (384,171) | |
Interest income | (106,723) | (97,078) | |
Item not affecting cash | |||
Stock-based compensation | 343,378 | - | |
Changes in non-cash operating working capital | |||
Receivables | 151,404 | (123,652) | |
Prepaid expenses and other assets | 13,249 | 43,671 | |
Accounts payable and accrued liabilities | 443,645 | 93,306 | |
Income taxes payable | (970,389) | (91,786) | |
Total cash outflow from operating activities | (991,410) | (559,710) | |
Investing activities | |||
Interest income | 106,723 | 97,078 | |
Exploration and evaluation | 5 | (1,166,943) | (238,911) |
Total cash outflow from investing activities | (1,060,220) | (141,834) | |
Net decrease in cash | (2,051,630) | (701,543) | |
Cash and cash equivalents, beginning of period | 12,405,165 | 16,923,009 | |
Effect of exchange rate changes on cash | (54,243) | (185,182) | |
Cash and cash equivalents, end of period | 4 | 10,299,292 | 16,036,285 |
The above consolidated statement should be read in conjunction with the accompanying notes. | 4 |
Forsys Metals Corp.
Notes to Condensed Interim Consolidated Financial Statements
March 31, 2024
(expressed in Canadian dollars) (unaudited)
1. Nature of operations
Forsys Metals Corp. and its subsidiary companies (collectively the "Company") are engaged in the acquisition, exploration and development of mineral properties located in Namibia, Africa. The Company's principal focus is on bringing its wholly owned Norasa Uranium Project ("Norasa") into production. Norasa is the consolidation of the Valencia uranium project ("Valencia") and Namibplaas uranium project ("Namibplaas").
As an exploration stage company, the Company's income is limited to interest income and other incidental income. The recoverability of the amount shown for mineral properties, exploration and evaluation costs is dependent upon, but not limited to the existence and economic recovery of mineral reserves in the future; the ability to obtain necessary permits and financing to complete the exploration and development of these properties; government policies and regulations; and attaining profitable production or proceeds from the disposition of properties. The Company may be adversely affected by governmental amendments or changes to mining laws, regulations and requirements in Namibia.
The Company is incorporated under the Business Corporations Act (Ontario) and the primary listing of its common shares is on the Toronto Stock Exchange, with secondary listings on the Namibian Stock Exchange and Frankfurt Stock Exchange. The Company's registered office is at 20 Adelaide Street East, Suite 200, Toronto, Ontario, Canada, M5C 2T6.
2. Going concern
These consolidated financial statements are prepared on the going concern basis which assumes the continuity of normal business activity and the realization of assets and settlement of liabilities in the normal course of business.
3. Basis of presentation
Statement of compliance
These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, using accounting policies consistent with International Financial Reporting Standards and its interpretations adopted by the International Accounting Standards Board.
The accounting policies used in these condensed interim consolidated financial statements are consistent with those disclosed in the Company's audited consolidated financial statements for the year ended December 31, 2023.
These condensed interim consolidated financial statements do not include certain information and disclosures normally included in annual financial statements prepared in accordance with IFRS and should be read in conjunction with the Company's annual financial statements for the year ended December 31, 2023.
These condensed interim consolidated financial statements were approved and authorized for issue by the Board of Directors on May 13, 2024.
4. Cash and cash equivalents
March 31, December 31,
20242023
$$
Cash at bank | 3,468,962 | 3,597,195 |
Cash on deposit | 6,830,330 | 8,807,970 |
10,299,292 | 12,405,165 |
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5. | Exploration and evaluation | $ |
Norasa | ||
Balance, December 31, 2023 | 11,363,621 | |
Additions to exploration and evaluation | 1,166,943 | |
Foreign exchange movement | (94,856) | |
Balance, March 31, 2024 | 12,435,708 |
Norasa Uranium Project
The Norasa Uranium Project is the consolidation of the Valencia Uranium Project and the Namibplaas Uranium Project in Namibia.
Valencia Uranium Project
Through its wholly owned subsidiary Valencia Uranium (Proprietary) Limited, the Company holds Mining Licence 149 for the Valencia Uranium Project ("ML149"). ML149 was granted effective June 23, 2008 for a period of 25 years until June 22, 2033.
Namibplaas Uranium Project
Through its wholly owned subsidiary Valencia Uranium (Proprietary) Limited, the Company holds Exclusive Prospecting Licence 3638 for Namibplaas ("EPL 3638"). On February 1, 2024, the Ministry of Mines and Energy of the Republic of Namibia renewed EPL 3638 until February 1, 2026.
Impairment
At December 31, 2023 and March 31, 2024, the Board reviewed the carrying value of the capitalized exploration and evaluation of Norasa. The Board considered the impairment indicators contained within IFRS 6 and concluded that no impairment indicators have been identified.
6. | Income taxes payable | $ |
Balance, December 31, 2023 | 1,909,582 | |
Payments | (970,389) | |
Foreign exchange movement | (17,899) | |
Balance, March 31, 2024 | 921,294 | |
7. | Share capital |
Authorized
An unlimited number of Class A common shares without par value
An unlimited number of redeemable, voting non-participating Class B shares
An unlimited number of Class C shares with rights and privileges to be determined by the Company's Board of Directors
Issued
Number of
Class A
common Amount
shares$
Balance, December 31, 2023 and March 31, 2024 | 195,169,467 | 174,210,964 |
The Company has not issued any Class B or Class C shares.
8. Incentive plan
The Company has an Amended and Restated Omnibus Incentive Plan (the "Plan") that permits the Board to make awards of stock options, restricted share units, performance share units and deferred stock units. The maximum number of Class A common shares for issuance under the Plan will not exceed 10% of the Company's then issued and outstanding shares. At March 31, 2023, the maximum number of Class A common shares for issuance under the Plan is 19,516,946.
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Stock options
All stock options granted under the Plan have an exercise price determined and approved by the Board at the time of grant, which shall not be less than the closing price of the Class A common shares on the TSX on the trading day immediately preceding the date of the granting of the option. Subject to any vesting conditions set forth in a participant's grant agreement, options vest in equal portions in successive annual periods over a period of three years after they are granted. Options are exercisable during a period established by the Board which shall not be more than 10 years from the grant of the option.
A summary of the activity in the Company's stock options is presented below: | Number of | |
Weighted- | stock options | |
average | outstanding | |
exercise price | and | |
$ | exercisable | |
Balance, December 31, 2023 | 0.57 | 12,900,000 |
Granted | 0.79 | 150,000 |
Balance, March 31, 2024 | 0.58 | 13,050,000 |
A summary of the Company's stock options outstanding and exercisable as at March 31, 2024 is presented below:
Number of | ||
stock options | ||
outstanding | ||
and | ||
Exercise price | Expiry date | exercisable |
$0.17 | October 9, 2024 | 3,700,000 |
$0.93 | May 20, 2026 | 4,000,000 |
$0.59 | September 20, 2027 | 5,200,000 |
$0.79 | January 9, 2029 | 150,000 |
13,050,000 |
On January 9, 2024, the Company granted 150,000 stock options to a consultant. Each stock option entitled the holder to purchase one common share for $0.79 until January 9, 2029. A summary of the stock options granted and the assumptions for the calculation of the fair value of those stock options using the Black-Scholes option pricing model is presented below:
Date of grant | January 9, 2024 |
Expiry date | January 9, 2029 |
Stock options granted | 150,000 |
Exercise price | $0.79 |
Share price | $0.79 |
Risk-free interest rate | 3.32% |
Expected volatility based on historical volatility | 79% |
Expected life of stock options | 5 years |
Expected dividend yield | 0% |
Forfeiture rate | 0% |
Vesting | On date of grant |
Fair value | $84,000 |
Fair value per stock option | $0.56 |
Performance share units, restricted share units and deferred stock units
A summary of the number of the Company's performance share units outstanding at March 31, 2024 is presented below:
Vested | Unvested | Total | |
Balance, December 31, 2023 | - | 4,450,000 | 4,450,000 |
Vested | 3,800,000 | (3,800,000) | - |
Balance, March 31, 2024 | 3,800,000 | 650,000 | 4,450,000 |
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On September 20, 2023, the Company granted 4,450,000 performance share units to directors, officers and consultants. The performance share units vest as follows:
Number of | ||
PSU 1 | Vesting condition | PSUs |
Vest in full upon the Company's share price reaching $0.80 | 2,950,000 | |
PSU 2 | Vest in full upon granting of an EPL for Namibplaas | 650,000 |
PSU 3 | Vest in full upon the granting of a Mining Licence for Namibplaas | 650,000 |
PSU 4 | Vest in full when upon the achievement of certain milestones related to the accounting and | 200,000 |
administration of the Company's Namibian subsidiaries | ||
4,450,000 |
PSU 1
As the Company's share price has exceeded $0.80 since January 8, 2024, the Company assessed that 2,950,000 PSUs vested effective January 8, 2024. A summary of the assumptions for the calculation of the fair value of those PSUs using the Up-and-in trinomial option pricing model is presented below:
Valuation date | September 20, 2023 |
Commencement of performance period | September 20, 2023 |
End of performance period | December 30, 2026 |
Performance period | 3.25 years |
PSUs granted | 2,950,000 |
Share price | $0.59 |
Risk-free interest rate | 4.68% |
Expected volatility based on historical volatility | 89% |
Expected life of PSUs | 3 years |
Expected dividend yield | 0% |
Fair value | $1,788,000 |
Fair value per PSU | $0.61 |
The fair value of the PSUs of $1,788,000 has been recorded as stock-based compensation over the vesting period from the grant date of September 20, 2023 to the estimated vesting date of January 8, 2024, with $1,657,964 recorded in the year ended December 31, 2023 and the remaining $130,036 recorded on January 8, 2024.
PSU 2
As an EPL for Namibplaas was granted on February 1, 2024, the Company assessed that 650,000 PSUs vested effective February 1, 2024. The fair value of the PSUs of $383,500, based on the share price of $0.59 on the date of grant, has been recorded as stock-based compensation over the vesting period from the grant date of September 20, 2023 to the vesting date of February 1, 2024, with $291,918 recorded in the year ended December 31, 2023 and the remaining $91,582 recorded on February 1, 2024.
PSU 3
The achievement of the vesting condition of granting of a Mining Licence for Namibplaas is dependent on a number of variables being satisfied. As a result, as at the reporting date, given the uncertainty, the Company has assessed the probability of achieving this vesting condition as not probable of being achieved within the required timeframe and no stock- based compensation has been recognized for this tranche.
PSU 4
As certain milestones related to the accounting and administration of the Company's Namibian subsidiaries were achieved on February 17, 2024, the Company assessed that 200,000 PSUs vested effective February 17, 2024. The fair value of the PSUs of $118,000, based on the share price of $0.59 on the date of grant, has been recorded as stock-based compensation over the vesting period from the grant date of September 20, 2023 to the vesting date of February 17, 2024, with $80,240 recorded in the year ended December 31, 2023 and the remaining $37,760 recorded on February 17, 2024.
Restricted share units and deferred stock units
At March 31, 2024, the Company has not issued any restricted share units or deferred stock units.
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9. Fair value measurement
The Company's principal financial instruments are cash and cash equivalents, receivables and accounts payable and accrued liabilities and income taxes payable. Financial instruments are classified into one of five categories: assets and liabilities held at fair value through profit and loss, held-to maturity investments, loans and receivables, available-for-sale financial assets and other financial liabilities. The carrying values of the Company's financial instruments are classified into the following categories:
March 31, | December 31, | |
2024 | 2023 | |
$ | $ | |
Financial assets | ||
Cash and cash equivalents and receivables | 10,500,273 | 12,757,550 |
Financial liabilities | ||
Accounts payable and accrued liabilities and income taxes payable | 1,490,387 | 2,035,025 |
Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:
Level 1 - Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities,
Level 2 - Values based on quoted prices in markets that are not active or model inputs which are observable either directly or indirectly for substantially the full term of the asset or liability,
Level 3 - Values based on prices or valuation techniques that require inputs which are both unobservable and significant to the overall fair value measurement.
The Company applies a fair value measurement hierarchy to assets and liabilities in the consolidated statement of financial position carried at fair value.
A number of the Company's accounting policies and disclosures require the determination of fair values for both financial assets and non-financial assets and liabilities. The fair value has been determined for measurement and/or disclosure purposes based on the methods described below. Where applicable, additional information on the assumptions used to determine fair value is included in the notes related to the specific asset or liability.
Financial risk management
The Company's activities expose it to a variety of risks arising from financial instruments. These risks, and management's objectives, policies and procedures for managing these risks, are discussed below.
- Credit risk
Credit risk is the risk of loss associated with a counter party's inability to fulfil its payment objectives. The Company's credit risk primarily relates to cash and cash equivalents.
The Company manages its credit risk over cash and cash equivalents by purchasing short-term investment grade securities, such as banker's acceptances and bank deposit notes issued by Canadian banks. Under the Company's risk management policy, allowable counterparty exposure limits are determined by the level of the rating unless exceptional circumstances apply. A rating of "A"- grade or equivalent is the minimum allowable rating required as assessed by international credit rating agencies.
ii) Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial liabilities as they come due. The Company's approach to managing its liquidity risk is to prepare company-wide rolling cash forecasts to determine the funding required to support the Company's normal operating activities on an ongoing basis.
At March 31, 2024, the Company had working capital of $9,149,475, calculated as follows:
$ | |
Current assets | 10,639,862 |
Current liabilities | 1,490,387 |
9,149,475 |
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Forsys Metals Corp. published this content on 13 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 19:51:03 UTC.