Unaudited Condensed Interim Financial Statements of
ISOENERGY LTD.
For the three and nine months ended September 30, 2023 and 2022
1
ISOENERGY LTD.
CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited)
(Expressed in Canadian Dollars)
As at
Note | September 30, | December 31, | |||||
2023 | 2022 | ||||||
ASSETS | |||||||
Current | $ | 6,965,713 | |||||
Cash | $ | 19,912,788 | |||||
Accounts receivable | 194,861 | 46,061 | |||||
Prepaid expenses | 910,045 | 167,279 | |||||
Marketable securities | 6 | 7,240,440 | 5,774,617 | ||||
15,311,059 | 25,900,745 | ||||||
Non-Current | 37,260 | ||||||
Property and equipment | 48,927 | ||||||
Exploration and evaluation assets | 7 | 81,391,676 | 71,165,630 | ||||
TOTAL ASSETS | $ | 96,739,995 | $ | 97,115,302 | |||
LIABILITIES | |||||||
Current | $ | 1,839,720 | |||||
Accounts payable and accrued liabilities | $ | 552,957 | |||||
Flow-through share premium liability | 8 | - | 2,068,785 | ||||
1,839,720 | 2,621,742 | ||||||
Non-Current | 46,010,193 | ||||||
Convertible debentures | 9 | 27,405,961 | |||||
Deferred income tax liability | 1,379,216 | 866,909 | |||||
TOTAL LIABILITIES | $ | 49,229,129 | $ | 30,894,612 | |||
EQUITY | |||||||
Share capital | 11 | $ | 91,514,061 | $ | 90,640,338 | ||
Share option and warrant reserve | 11 | 19,789,645 | 15,405,672 | ||||
Accumulated deficit | (65,040,993) | (41,721,615) | |||||
Other comprehensive income | 1,248,153 | 1,896,295 | |||||
TOTAL EQUITY | 47,510,866 | 66,220,690 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 96,739,995 | $ | 97,115,302 |
Nature of operations (Note 2)
Commitments (Note 8)
Subsequent events (Note 16)
The accompanying notes are an integral part of the condensed interim financial statements
These financial statements were authorized for issue by the Board of Directors on November 1, 2023
"Tim Gabruch" | "Trevor Thiele" | |
Tim Gabruch, CEO, Director | Trevor Thiele, Director | |
2 |
ISOENERGY LTD.
CONDENSED INTERIM STATEMENTS OF INCOME/(LOSS) AND COMPREHENSIVE INCOME/(LOSS) (Unaudited)
(Expressed in Canadian Dollars)
For the three and nine months ended September 30
For the three months ended | For the nine months ended | ||||||||||
September 30 | September 30 | ||||||||||
Note | 2023 | 2022 | 2023 | 2022 | |||||||
General and administrative costs | |||||||||||
Share-based compensation | 11,12 | $ | 1,392,364 | $ | 2,740,281 | $ | 3,617,817 | $ | 5,476,731 | ||
Administrative salaries, contract and director | 12 | 320,924 | 281,014 | 930,540 | 1,025,536 | ||||||
fees | |||||||||||
106,004 | 321,757 | ||||||||||
Investor relations | 164,538 | 383,125 | |||||||||
Office and administrative | 39,316 | 52,434 | 138,740 | 184,422 | |||||||
Professional and consultant fees | 107,052 | 141,386 | 445,815 | 499,112 | |||||||
Travel | 42,903 | 41,887 | 122,836 | 92,305 | |||||||
Public company costs | 59,522 | 42,247 | 250,110 | 169,203 | |||||||
Total general and administrative costs | (2,068,085) | (3,463,787) | (5,827,615) | (7,830,434) | |||||||
Interest income | 91,343 | 26,870 | 367,271 | 53,025 | |||||||
Interest expense | - | - | (20) | (386) | |||||||
Interest on convertible debentures | 9 | (305,100) | (166,464) | (918,350) | (490,702) | ||||||
Fair value loss on convertible debentures | 9 | (19,979,385) | (7,446,319) | (18,418,157) | (4,581,532) | ||||||
Loss on disposal of assets | 7 | - | (85,386) | - | (85,386) | ||||||
Foreign exchange gain/(loss) | 46,862 | 85,168 | (6,870) | 105,906 | |||||||
Loss from operations | (22,214,365) | (11,049,918) | (24,803,741) | (12,829,509) | |||||||
Deferred income tax recovery | 10 | 226,311 | 231,609 | 1,484,363 | 746,033 | ||||||
Loss | $ | (21,988,054) | $ | (10,818,309) | $ | (23,319,378) | $ | (12,083,476) | |||
Other comprehensive gain/(loss) | |||||||||||
Change in fair value of convertible | (98,002) | (186,075) | |||||||||
debentures attributable to the change in credit | 9 | (34,487) | 90,499 | ||||||||
risk | 33,171 | (534,182) | |||||||||
Change in fair value of marketable securities | 6 | 871,911 | (2,410,655) | ||||||||
Deferred tax recovery/(expense) | 10 | (4,478) | (117,708) | 72,115 | 325,438 | ||||||
Total comprehensive loss for the period | $ | (22,057,363) | $ | (10,098,593) | $ | (23,967,520) | $ | (14,078,194) | |||
Income/(loss) per common share | |||||||||||
- basic | $ | (0.20) | $ | (0.10) | $ | (0.21) | $ | (0.11) | |||
- diluted | $ | (0.20) | $ | (0.10) | $ | (0.21) | $ | (0.11) | |||
Weighted average number of common | |||||||||||
shares outstanding | |||||||||||
- basic | 111,322,330 | 106,835,914 | 110,987,341 | 106,666,359 | |||||||
- diluted | 111,322,330 | 106,835,914 | 110,987,341 | 106,666,359 |
The accompanying notes are an integral part of the condensed interim financial statements
3
ISOENERGY LTD.
CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited)
(Expressed in Canadian Dollars)
Number of | Share option | Accumulated | ||||
Accumulated | other | Total | ||||
Note | common | Share capital | and warrant | |||
deficit | comprehensive | |||||
shares | reserve | |||||
income/(loss) | ||||||
Balance as at January | 105,908,770 | $ | 78,901,944 | $ | 6,469,143 | $(34,346,954) | $ | 4,889,536 | $ | 55,913,669 | |
1, 2022 | |||||||||||
Shares issued on the | |||||||||||
exercise of stock | 11 | 897,500 | 1,005,344 | (396,884) | - | - | 608,460 | ||||
options | |||||||||||
Shares issued to settle | 11 | 29,644 | 96,047 | 96,047 | |||||||
interest | |||||||||||
Share-based payments | 11 | - | - | 7,025,644 | - | - | 7,025,644 | ||||
Loss for the period | - | - | - | (12,083,476) | - | (12,083,476) | |||||
Other comprehensive | 6,9 | - | - | - | - | (1,994,718) | (1,994,718) | ||||
loss for the period | |||||||||||
Balance as at | 106,835,914 | $ | 80,003,335 | $ | 13,097,903 | $(46,430,430) | $ | 2,894,818 | $ | 49,565,626 | |
September 30, 2022 | |||||||||||
Balance as at January | 110,392,130 | $ | 90,640,338 | $ | 15,405,672 | $(41,721,615) | $ | 1,896,295 | $ | 66,220,690 | |
1, 2023 | |||||||||||
Shares issued on the | |||||||||||
exercise of stock | 11 | 797,500 | 707,057 | (287,669) | - | - | 419,388 | ||||
options | |||||||||||
Shares issued to settle | 11 | 57,870 | 166,666 | - | - | - | 166,666 | ||||
interest | |||||||||||
Share-based payments | 11 | - | - | 4,671,642 | - | - | 4,671,642 | ||||
Loss for the period | - | - | - | (23,319,378) | - | (23,319,378) | |||||
Other comprehensive | 6,9 | - | - | - | - | (648,142) | (648,142) | ||||
loss for the period | |||||||||||
Balance as at | 111,247,500 | $ | 91,514,061 | $ | 19,789,645 | $(65,040,993) | $ | 1,248,153 | $ | 47,510,866 | |
September 30, 2023 | |||||||||||
The accompanying notes are an integral part of the condensed interim financial statements
4
ISOENERGY LTD.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
(Expressed in Canadian Dollars)
For the nine months ended September 30
Note | 2023 | 2022 | ||
Cash flows used in operating activities | ||||
Loss for the period | $ | (23,319,378) | $ | (12,083,476) |
Items not involving cash: | ||||
Share-based compensation | 3,617,817 | 5,476,731 | ||
Deferred income tax recovery | (1,484,363) | (746,033) | ||
Interest on convertible debentures | 918,350 | 490,702 | ||
Fair value loss on convertible debentures | 18,418,157 | 4,581,532 | ||
Loss on disposal of asset | - | 85,386 | ||
Foreign exchange (gain)/loss | 5,408 | (114,972) | ||
Changes in non-cash working capital | ||||
Accounts receivable | (148,800) | (16,412) | ||
Prepaid expenses | (220,966) | (36,561) | ||
Accounts payable and accrued liabilities | (327,351) | (143,057) | ||
$ | (2,541,126) | $ | (2,506,160) | |
Cash flows used in investing activities | $ | (8,372,458) | ||
Additions to exploration and evaluation assets | $ | (7,869,598) | ||
Acquisition of exploration and evaluation assets | (3,362) | (4,271) | ||
Acquisition of marketable securities | (2,000,005) | - | ||
$ | (10,375,825) | $ | (7,873,869) | |
Cash flows from financing activities | 419,388 | |||
Shares issued for option exercise | 608,460 | |||
Interest on debentures | (436,921) | (232,551) | ||
$ | (17,533) | $ | 375,909 | |
Effects of exchange rate changes on cash | (12,591) | 123,272 | ||
Change in cash | $ | (12,947,075) | $ | (9,880,848) |
Cash, beginning of period | 19,912,788 | 13,617,066 | ||
Cash, end of period | $ | 6,965,713 | $ | 3,736,218 |
Supplemental disclosure with respect to cash flows (Note 15)
The accompanying notes are an integral part of the condensed interim financial statements
5
ISOENERGY LTD.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)
(Expressed in Canadian Dollars)
For the three and nine months ended September 30, 2023 and 2022
-
REPORTING ENTITY
IsoEnergy Ltd. ("IsoEnergy", or the "Company") is an exploration stage entity engaged in the acquisition, exploration and evaluation of uranium properties in Canada. The Company's registered and records office is located on the 10th Floor, 595 Howe Street, Vancouver, BC, V6C 2TS. The Company's common shares are listed on the TSX Venture Exchange (the "TSXV").
As of September 30, 2023, the Company did not have any subsidiaries and NexGen Energy Ltd ("NexGen") holds 49.7% of IsoEnergy's outstanding common shares. - NATURE OF OPERATIONS
As an exploration stage company, the Company does not have revenues and historically has recurring operating losses. As at September 30, 2023, the Company had accumulated losses of $65,040,993 and working capital of $13,471,339 (working capital is defined as current assets less accounts payable and accrued liabilities). The Company depends on external financing for its operational expenses.
The business of exploring for and mining of minerals involves a high degree of risk. As an exploration company, IsoEnergy is subject to risks and challenges similar to companies at a comparable stage. These risks include, but are not limited to, negative operating cash flow and dependence on third party financing; the uncertainty of additional financing; the Company's limited operating history; the lack of known mineral reserves; the influence of a large shareholder; alternate sources of energy and uranium prices; aboriginal title and consultation issues; risks related to exploration activities generally; reliance upon key management and other personnel; title to properties; uninsurable risks; conflicts of interest; permits and licenses; environmental and other regulatory requirements; political regulatory risks; competition; and the volatility of share prices.
These financial statements have been prepared using International Financial Reporting Standards ("IFRS") applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. Although the Company is dependent on its ability to obtain financing to achieve future profitable operations, the Company is expected to have sufficient working capital (assuming the proceeds from the financing that closed on October 19, 2023 are released from escrow during the fourth quarter of 2023 (Note 16)) to meet its obligations for the next twelve months.
The underlying value of IsoEnergy's exploration and evaluation assets is dependent upon the existence and economic recovery of mineral resources or reserves and is subject to, but not limited to, the risks and challenges identified above.
6
ISOENERGY LTD.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)
(Expressed in Canadian Dollars)
For the three and nine months ended September 30, 2023 and 2022
-
BASIS OF PRESENTATION Statement of Compliance
These condensed interim financial statements as at and for the three and nine months ended September 30, 2023 and 2022, have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting. They do not include all of the information required by IFRS for annual financial statements and should be read in conjunction with the audited annual financial statements for the year ended and as at December 31, 2022.
Basis of Presentation
These financial statements have been prepared on a historical cost basis, except for certain financial instruments which have been measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information. All monetary references expressed in these financial statements are references to Canadian dollar amounts ("$"), unless otherwise noted.
These financial statements are presented in Canadian dollars, which is the functional currency of the Company.
Critical accounting judgments, estimates and assumptions
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances. Uncertainty about these judgments, estimates and assumptions could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Information about significant areas of judgement and estimation uncertainty considered by management in preparing the financial statements are set out in Note 3 to the annual financial statements for the year ended December 31, 2022 and have been consistently followed in preparation of these condensed interim financial statements. - SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by the Company are set out in Note 4 to the annual financial statements for the year ended December 31, 2022 and have been consistently followed in the preparation of these condensed interim financial statements.
7
ISOENERGY LTD.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)
(Expressed in Canadian Dollars)
For the three and nine months ended September 30, 2023 and 2022
5. TRANSACTIONS
Proposed Merger with Consolidated Uranium Inc.
On September 27, 2023, the Company and Consolidated Uranium Inc. ("Consolidated Uranium") announced that they have entered into a definitive arrangement agreement for a share-for-share merger of IsoEnergy and Consolidated Uranium (the "Arrangement Agreement"), pursuant to which IsoEnergy will acquire all of the issued and outstanding common shares of Consolidated Uranium not already held by IsoEnergy or its affiliates (the "Consolidated Uranium Shares") by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement" or the "Merger").
Under the terms of the Merger, Consolidated Uranium shareholders (the "Consolidated Uranium Shareholders") will receive 0.500 of a common share of IsoEnergy (each whole share, an "IsoEnergy Share") for each Consolidated Uranium Share held.
The Arrangement will be effected by way of a court-approved plan of arrangement pursuant to the Business Corporations Act (Ontario), requiring (i) the approval of the Ontario Superior Court of Justice (Commercial List), and (ii) the approval of (A) 66 2/3% of the votes cast on the resolution (the "Arrangement Resolution") to approve the Arrangement by the Consolidated Uranium Shareholders; and (B) if required a simple majority of the votes cast on the Arrangement Resolution by Consolidated Uranium Shareholders, excluding Consolidated Uranium Shares held or controlled by persons described in terms (a) through (d) of Section 8.1(2) of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, at a special meeting of the Consolidated Uranium Shareholders to be held to consider the Arrangement (the "Consolidated Uranium Meeting"), which is expected to take place in November 2023.
Each of the directors and executive officers of Consolidated Uranium, together with Energy Fuels Inc. and Mega Uranium Ltd., representing an aggregate of approximately 24% of the issued and outstanding Consolidated Uranium Shares, have entered into voting support agreements with IsoEnergy, pursuant to which they have agreed, among other things, to vote their Consolidated Uranium Shares in favour of the Arrangement Resolution at the Consolidated Uranium Meeting.
The Arrangement Agreement includes customary representations and warranties for a transaction of this nature as well as customary interim period covenants regarding the operation of IsoEnergy and Consolidated Uranium's respective businesses. The Arrangement Agreement also provides for customary deal-protection measures, including a $10.8 million termination fee payable by Consolidated Uranium in certain circumstances. In addition to shareholder and court approvals, closing of the Merger is subject to applicable regulatory approvals, including, but not limited to, TSXV approval and the satisfaction of certain other closing conditions customary for transactions of this nature. Subject to the satisfaction of these conditions, IsoEnergy expects that the Merger will be completed in the fourth quarter of 2023.
Following completion of the Merger, the IsoEnergy Shares will continue to trade on the TSXV, subject to approval of the TSXV in respect of the IsoEnergy Shares being issued pursuant to the Arrangement. The Consolidated Uranium Shares will be de-listed from the TSXV following closing of the Merger.
The Company retained an investment bank to advise on the Merger and provide a fairness opinion to the Company's Board of Directors, for which the investment bank is entitled to a fee customary for this type of transaction, contingent on closing of the Merger.
Details regarding these and other terms of the Merger are set out in the Arrangement Agreement, available under the SEDAR+ profiles of IsoEnergy and Consolidated Uranium at www.sedarplus.ca. Full details of the Merger will also be included in the Consolidated Uranium Circular which will be available under Consolidated Uranium's SEDAR+ profile.
8
ISOENERGY LTD.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)
(Expressed in Canadian Dollars)
For the three and nine months ended September 30, 2023 and 2022
6. MARKETABLE SECURITES
Marketable securities consist of 10,755,000 common shares of 92 Energy Pty Ltd ("92 Energy"), 900,000 common shares of Consolidated Uranium, 5,907,600 common shares of Latitude Uranium Inc. (previously Labrador Uranium Inc.) ("Latitude Uranium") and 2,857,150 warrants of Latitude Uranium. As at September 30, 2023 the Company's shareholding in 92 Energy represents 10.1% of the outstanding capital of 92 Energy.
On February 22, 2022, Consolidated Uranium completed a transaction pursuant to which it transferred its Moran Lake Project and associated liabilities to Latitude Uranium, which trades on the Canadian Securities Exchange, in exchange for 16,000,000 common shares of Latitude Uranium. Consolidated Uranium subsequently distributed the 16,000,000 common shares of Latitude Uranium to its shareholders and the Company received 193,300 Latitude Uranium common shares.
On April 5, 2023, the Company subscribed to 5,714,300 subscription receipts of Latitude Uranium ("Latitude Subscription Receipts") at a price of $0.35 per Latitude Subscription Receipt for total consideration of $2,000,005.
On June 19, 2023, after completion of Latitude Uranium's acquisition of a 100% interest in the Angilak Uranium Project in Nunavut Territory from ValOre Metals Corp., the Latitude Subscription Receipts were exercised into one unit of Latitude Uranium, consisting of one common share of Latitude Uranium and one-half of one common share purchase warrant, exercisable at a price of $0.50 at any time on or before April 5, 2026.
The carrying value of marketable securities is based on the estimated fair value of the common shares and warrants, respectively determined using published closing share prices and the Black-Scholes option pricing model.
Common shares | Warrants | |||||||||
Consolidated | Latitude | Latitude | ||||||||
92 Energy | Uranium | Uranium | Uranium | Total | ||||||
Balance, January 1, 2023 | $ | 4,252,828 | $ | 1,458,000 | $ | 63,789 | $ | - | $ | 5,774,617 |
Acquired during the period | - | - | 1,581,137 | 418,868 | 2,000,005 | |||||
Change in fair value recorded in | (1,203,812) | 504,000 | 127,354 | 38,276 | (534,182) | |||||
Other comprehensive income | ||||||||||
Balance, September 30, 2023 | $ | 3,049,016 | $ | 1,962,000 | $ | 1,772,280 | $ | 457,144 | $ | 7,240,440 |
The following assumptions were used to estimate the fair value of the Latitude Uranium warrants:
September 30, | June 19, 2023 | |
2023 | ||
Expected stock price volatility | 109.10% | 104.42% |
Expected life of warrants (years) | 2.52 | 2.80 |
Risk free interest rate | 4.68% | 4.20% |
Expected dividend yield | 0% | 0% |
Latitude Uranium share price | $0.30 | $0.29 |
Exercise price | $0.50 | $0.50 |
Fair value per warrant | $0.16 | $0.15 |
9
ISOENERGY LTD.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)
(Expressed in Canadian Dollars)
For the three and nine months ended September 30, 2023 and 2022
7. EXPLORATION AND EVALUATION ASSETS
The following is a summary of the carrying value of the acquisition costs and expenditures on the Company's exploration and evaluation assets:
Note | September 30, | December 31, | |||
2023 | 2022 | ||||
Acquisition costs: | |||||
Acquisition costs, opening | $ | 35,290,505 | $ | 35,322,962 | |
Additions | a | 3,362 | 10,249 | ||
Dispositions and derecognition | b | - | (42,706) | ||
Acquisition costs, closing | $ | 35,293,867 | $ | 35,290,505 | |
Exploration and evaluation costs: | $ | 35,875,125 | |||
Exploration costs, opening | $ | 25,632,628 | |||
Additions: | |||||
Drilling | 4,159,388 | 4,480,515 | |||
Geological and geophysical | 2,585,968 | 1,593,079 | |||
Camp costs | 1,476,996 | 705,447 | |||
Share-based compensation | 11 | 1,053,825 | 1,831,449 | ||
Labour and wages | 649,635 | 836,965 | |||
Extension of claim deposits/(refunds) | (99,749) | 470,021 | |||
Geochemistry and assays | 129,203 | 190,177 | |||
Travel and other | 267,418 | 177,524 | |||
Disposal and derecognition of assets | b | - | (42,680) | ||
Total exploration and evaluation in the period | $ | 10,222,684 | $ | 10,242,497 | |
Exploration and evaluation, closing | $ | 46,097,809 | $ | 35,875,125 | |
Total costs, closing | $ | 81,391,676 | $ | 71,165,630 |
All claims are subject to minimum expenditure commitments. The Company expects to incur the minimum expenditures to maintain the claims.
(a) New claim staking and acquisitions
In the nine months ended September 30, 2023, the Company spent $3,362 to stake several property extensions, adding approximately 4,291 hectares of mineral tenure in the Eastern Athabasca.
In the year ended December 31, 2022, the Company spent $10,249 to re-stake a portion of the Cable project, stake several property extensions and one new property, Rapid River, adding approximately 14,817 hectares of mineral tenure in the Eastern Athabasca.
(b) Derecognitions
In September 2022, the Company lapsed all the mineral claims underlying the Cable, Eagle, Horizon, and Whitewater East properties, as well of one of the five Whitewater mineral claims. These claims were lapsed pursuant to the Company's ongoing property portfolio evaluation process and a loss on disposal of $85,386 was recognized on the lapsing of the claims.
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Isoenergy Ltd. published this content on 02 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2023 17:30:47 UTC.