Astorius Resources Ltd.
ASTORIUS RESOURCES LTD.
FOR THE YEARS ENDED
SEPTEMBER 30, 2015 AND 2014
INDEPENDENT AUDITORS’ REPORT To the Shareholders of Astorius Resources Ltd. We have audited the accompanying financial statements of Astorius Resources Ltd. which comprise the statements of financial position as at September 30, 2015 and 2014, and the statements of comprehensive loss, cash flows and changes in equity for the years then ended and the related notes comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Astorius Resources Ltd. as at September 30, 2015 and 2014, its cash flows and financial performance for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Emphasis of Matter Without qualifying our opinion, we draw attention to Note 2(b) to these financial statements which describes the existence of a material uncertainty that may cast significant doubt about the ability of Astorius Resources Ltd. to continue as a going concern.
CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, British Columbia January 18, 2016
ASTORIUS RESOURCES LTD. STATEMENTS OF FINANCIAL POSITION AS AT SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars)
ASSETS CURRENT ASSETS Cash GST recoverable
RECLAMATION DEPOSIT MINERAL PROPERTIES (Note 4)
11,984 5,681 17,665
LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities (Note 6) GST payable
SHAREHOLDERS’ EQUITY Share capital (Note 5) Contributed surplus Deficit $
1,259,388 196,429 (1,218,674)
1,177,678 173,429 (1,142,962)
CORPORATE INFORMATION AND NATURE OF OPERATIONS (Notes 1 and 2b) SUBSEQUENT EVENT (Note 10) Approved on behalf of the Board on November 26, 2015:
/s/ “Malcolm Powell”
/s/ “Carl Jonsson”
Malcolm Powell, Director
Carl Jonsson, Director
The accompanying notes form an integral part of these financial statements 3
ASTORIUS RESOURCES LTD. STATEMENTS OF COMPREHENSIVE LOSS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars)
EXPENSES Office and miscellaneous (Note 6) Accounting and audit fees Filing and transfer agent fees Legal fees (Note 6) Management fees (Note 6)
23,498 22,750 12,326 12,138 –
26,741 22,327 14,334 13,023 60,000
OTHER INCOME (EXPENSE) Write-down of mineral properties (Note 4) Interest expense Gain on forgiveness of debt (Note 6) Other recovery (Note 6)
(5,000) – – –
(108,033) (94) 96,488 9,700
NET LOSS AND COMPREHENSIVE LOSS
LOSS BEFORE OTHER ITEMS
LOSS PER COMMON SHARE – BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
The accompanying notes form an integral part of these financial statements 4
ASTORIUS RESOURCES LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 2015
CASH PROVIDED BY (USED IN): OPERATING ACTIVITIES Net loss
Add items not involving cash: Impairment of mineral properties Gain on forgiveness of debt and other recovery
(941) – 568 (5,681)
182 2,691 89,388 5,681
Changes in non-cash working capital balances: Taxes receivable Prepaid expenses Accounts payable and accrued liabilities Taxes payable
INVESTING ACTIVITIES Mineral property expenditures Mineral exploration tax credit received FINANCING ACTIVITIES Proceeds from issuance of common stock Share issuance costs
INCREASE (DECREASE) IN CASH CASH, BEGINNING OF YEAR CASH, END OF YEAR
SUPPLEMENTAL INFORMATION: Cash paid for interest Cash paid for income taxes
The accompanying notes form an integral part of these financial statements 5
ASTORIUS RESOURCES LTD. STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars)
Number of Common Shares
Amount of Common Shares
As at September 30, 2013 Private placement of shares Share issuance costs Net loss for the year
10,300,000 1,460,000 – –
1,092,475 $ 87,600 (2,397) –
173,429 $ (1,004,598) $ – – – – – (138,364)
261,306 87,600 (2,397) (138,364)
As at September 30, 2014
173,429 $ (1,142,962) $
Private placement of shares Share issuance costs Net loss for the year
1,800,000 – –
As at September 30, 2015
85,000 (3,290) – $
23,000 – –
– – (75,712)
196,429 $ (1,218,674) $
The accompanying notes form an integral part of these financial statements 6
108,000 (3,290) (75,712) 237,143
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars)
1. CORPORATE INFORMATION AND NATURE OF OPERATIONS Astorius Resources Ltd. (the “Company”) was incorporated under the Business Corporation Act of British Columbia on May 4, 2007 and is listed on the TSX Venture Exchange (“TSX-V”) and trades under the symbol ASQ. The address of the Company’s corporate office and its principal place of business is 9131 Jaskow Gate, Richmond, British Columbia, Canada. The Company is in the exploration stage and its principal business activity is the sourcing and exploration of mineral properties in North America. The Company is in the process of exploring and evaluating its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable. The recoverability of amounts shown for mineral properties and related capitalized exploration expenditures is dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the development, and upon future profitable production or proceeds from the disposition thereof. These financial statements do not give effect to adjustments that would be necessary to the carrying amounts and classifications of assets and liabilities should the Company be unable to continue as a going concern. 2. BASIS OF PREPARATION a) Statement of compliance These financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. b) Going Concern These financial statements are prepared on a going concern basis, which assumes that the Company will continue its operations for a reasonable period of time. The Company has incurred losses since its inception and has an accumulated deficit of $1,218,674 at September 30, 2015 which has been funded primarily by issuance of shares; these factors form a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. The Company's ability to continue its operations and to realize assets at their carrying values is dependent upon obtaining additional financing or maintaining continued support from its shareholders and creditors, and generating profitable operations in the future. The Company has been successful in the past in raising funds for operations by issuing shares but there is a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. If the Company is unable to raise the necessary capital and generate sufficient cash flows to meet obligations as they come due, the Company may have to reduce or curtail its activities or obtain financing at unfavourable terms. Furthermore, failure to continue as a going concern would require the Company’s assets and liabilities be restated on a liquidation basis which would differ significantly from the going concern basis. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. c) Measurement basis These financial statements are prepared on the historical cost basis except for certain financial instruments, which are measured at fair value as explained in the accounting policies within Note 3. All amounts are expressed in Canadian dollars unless otherwise stated.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and cash equivalents - The Company considers deposits with banks or highly liquid shortterm interest bearing securities that are readily convertible to known amounts of cash and those that have maturities of 90 days or less when acquired to be cash equivalents. Use of estimates - The preparation of these financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses for the periods reported. Significant areas requiring the use of management judgments and estimates include the determination of recovery or impairment of mineral property exploration assets, the fair value of share-based payments and the recognition of deferred income tax assets. Actual results could differ from these estimates. Mineral property exploration - All expenditures related to the cost of exploration and evaluation of mineral resources including acquisition costs for interests in mineral claims are capitalized as mineral properties exploration and are classified as intangible assets. General exploration costs not related to specific mineral properties are expensed as incurred. If economically recoverable reserves are developed, capitalized costs of the related property are reclassified as mining assets and upon commencement of commercial production, are amortized using the units of production method over estimated recoverable reserves. Impairment is assessed at the level of cash-generating units. Management regularly assesses carrying values of non-producing properties and properties for which events and circumstances may indicate possible impairment. Impairment of a property is generally considered to have occurred if one of the following factors are present; the rights to explore have expired or are near to expiry with no expectation of renewal, no further substantive expenditures are planned or budgeted, exploration and evaluation work is discontinued in an area for which commercially viable quantities have not been discovered, or indications that in an area with development likely to proceed the carrying amount is unlikely to be recovered in full be development or sale. The recoverability of mineral properties and capitalized exploration and development costs is dependent on the existence of economically recoverable reserves, the ability to obtain the necessary financing to complete the development of the reserves, and the profitability of future operations. The Company has not yet determined whether or not any of its future mineral properties contain economically recoverable reserves. Amounts capitalized to mineral properties as exploration and evaluation costs do not necessarily reflect present or future values. Mineral properties are regularly reviewed for impairment or whenever events or changes in circumstances indicate that the carrying amount of reserve properties may exceed its recoverable amount. When an impairment review is undertaken, the recoverable amount is assessed by reference to the higher of a value in use (being the present value of expected future cash flows of the relevant cash-generating unit) and fair value less costs to sell. If the carrying amount of an asset exceeds the recoverable amount an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Government assistance and tax credits - Any federal or provincial tax credits received by the Company, with respect to exploration or evaluation work conducted on any of its properties, are credited as a reduction to the carrying costs of the property to which the credits related. Until such time that there is significant certainty with regard to collections and assessments, the Company will record any recovered tax credits at the time of receipt. No gain or loss is realized during the exploration stage until all carrying costs of the specific interest have been offset.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Provisions - Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. At each financial position reporting date presented the Company has not incurred any decommissioning costs related to the exploration and evaluation of its mineral properties and accordingly no provision has been recorded for such site reclamation or abandonment. Income taxes - The Company provides for income taxes using the liability method of tax allocation. Under this method deferred income tax assets and liabilities are determined based on temporary differences between the accounting and tax bases of existing assets and liabilities, and are measured using enacted or substantially enacted tax rates expected to apply when these differences reverse. Deferred income tax assets are recognized to the extent that it is probable the asset will be realized. Share capital – The Company records proceeds from the issuance of its common shares as equity. Proceeds received on the issuance of units, consisting of shares and warrants are allocated between the common share and warrant component. The fair value of the common shares issued in a private placement unit of shares and warrants is determined to be the more easily measurable component and are valued at their fair value, as determined by the closing quoted price on the issuance date. The remaining proceeds, if any, are allocated to the attached warrants. Any fair value attributed to the warrants is recorded as contributed surplus. Management does not expect to record a value to the warrant in most equity issuances as unit private placements are commonly priced at market or at a permitted discount to market. If the warrants are issued as share issuance costs, the fair value of agent’s warrants are measured using the Black-Scholes option pricing model and recognized in equity as a deduction from the proceeds. If the warrants are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in contributed surplus. Incremental costs directly attributable to the issue of new common shares are shown in equity as a deduction, net of tax, from the proceeds. Common shares issued for consideration other than cash are valued based on their market value at the date that shares are issued. Share-based payment expenses - The Company records all share-based payment expenses at their fair value. The share-based payment costs are charged to operations over the stock option vesting period and agents’ options and warrants issued in connection with common share placements are recorded at their fair value on the date of issue as share issuance costs. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of stock options expected to vest. On the exercise of stock options and agents’ options and warrants, share capital is credited for consideration received and for fair value amounts previously credited to contributed surplus.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Share-based payment expenses (continued) The Company uses the Black-Scholes option pricing model to estimate the fair value of share-based expense for stock options or warrants granted to employees. Where stock options or warrants are granted to non-employees, they are recorded at the fair value of the goods or services received, at the date the goods or services are received. When the value of goods or services received in exchange for the share-based expense cannot be reliably estimated, the fair value is measured by use of the Black-Scholes option pricing model. Loss per common share - Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. The Company applies the treasury stock method in calculating diluted loss per share. Diluted loss per share excludes all dilutive potential common shares if their effect is anti-dilutive. Share issuance costs - Professional, consulting, regulatory and other costs directly attributable to financing transactions are recorded as deferred share issue costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred share issue costs related to financing transactions that are not completed are charged to expenses. Financial instruments - All financial assets are initially recorded at fair value and classified into one of four categories: held to maturity, available for sale, loans and receivable or at fair value through profit or loss (“FVTPL”). All financial liabilities are initially recorded at fair value and classified as either FVTPL or other financial liabilities. Financial instruments comprise cash and accounts payable. At initial recognition management has classified financial assets and liabilities as follows: a) Financial assets The Company has recognized its cash at FVTPL. A financial instrument is classified at FVTPL if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at FVTPL if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy. Financial instruments at FVTPL are measured at fair value and changes therein are recognized in income. b) Financial liabilities The Company has recognized its accounts payable as other financial liabilities. Accounts payable are recognized at the amount required to be paid less, when material, a discount to reduce the payable to fair value. The Company derecognizes a financial liability when it its contractual obligations are discharged, cancelled or expire.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent accounting pronouncements The mandatory adoption of the following new and revised accounting standards on October 1, 2014 had not significant impact on the Company’s financial statements for the years presented. •
IAS 32 ‘Financial Instruments: Presentation’ was issued the IASB in December 2011 as an amendment to clarify the meaning of the offsetting criterion and the principle behind net settlement, including identifying when some gross settlement systems may be considered equivalent to net settlement.
IAS 36 ‘Impairment of Assets’ was issued the IASB in May 2013 to address the disclosure of information about the recoverable amount of impaired assets or a CGU for periods in which an impairment loss has been recognized or reversed. The amendments also address disclosure requirements applicable when and asset’s or a CGU’s recoverable amount is based on fair value less costs of disposal.
IAS 16 ‘Property, Plant and Equipment’ and IAS 38 ‘Intangible Assets’: In May 2014, the IASB issued amendments to IAS 16 and IAS 38. The amendments clarify that the use of revenuebased methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The amendments also clarifies that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances.
IFRIC 21 ‘Levies’ was issued the IASB in May 2013 as an interpretation of IAS 37, Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”), on the accounting for levies imposed by government. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation of a result of a past event (“obligating event”). IFRIC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity descried in the relevant legislation that triggers the payment of the levy.
Accounting Standards and Amendments Issued But Not Yet Effective The following standards have not been adopted by the Company. The Company is currently evaluating the impact these amendments are expected to have on its financial statements. The following standard will be adopted by the Company effective September 1, 2017: •
The amendments to IFRS 10 Consolidated Financial Statements will require a full gain or loss to be recognized when a transaction involves a business (whether it is housed in a subsidiary or not), while a partial gain or loss would be recognized when a transaction involves assets that do not constitute a business, even if the assets are housed in a subsidiary. The amendments are effective for transactions occurring in annual periods beginning on or after January 1, 2016.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following standards will be adopted by the Company effective September 1, 2018: •
IFRS 15 Revenue from Contracts with Customers - In May 2014, the IASB issued IFRS 15 – Revenue from Contracts with Customers ("IFRS 15") which supersedes IAS 11 – Construction Contracts, IAS 18 – Revenue, IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers, and SIC 31 – Revenue – Barter Transactions Involving Advertising Services. IFRS 15 establishes a comprehensive five-step framework for the timing and measurement of revenue recognition.
IFRS 9 Financial Instruments - The IASB intends to replace IAS 39 – Financial Instruments: Recognition and Measurement in its entirety with IFRS 9 – Financial Instruments (“IFRS 9”) which is intended to reduce the complexity in the classification and measurement of financial instruments.
The following standard will be adopted by the Company effective September 1, 2019: •
IFRS 16 Leases will be effective for accounting periods beginning on or after January 1, 2019. Early adoption will be permitted, provided the Company has adopted IFRS 15. This standard sets out a new model for lease accounting.
4. MINERAL PROPERTIES Expenditures on interests in mineral properties are considered exploration and evaluation assets. a) The Company owns interest to the mineral claims located in British Columbia, covering an area of 5,586 hectares known as the Babine project. The following is a summary of mineral property acquisition and exploration costs on the Babine project: 2015
Acquisition costs Opening balance of acquisition costs Write-down of mineral properties
Subtotal of acquisition costs
Opening balance of exploration costs Geophysical Less: Mineral exploration tax credit received
193,030 – –
136,376 62,000 (5,346)
Subtotal of exploration costs
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 4. MINERAL PROPERTIES (continued) b) Write-down of mineral properties During the year ended September 30, 2015, the Company recorded an impairment write-down of mineral property in the amount of $5,000 (2014 – 108,033) as a result of the expiry of mineral claims during the year. 5. SHARE CAPITAL a) Authorized: The Company has authorized share capital of an unlimited number of common voting shares without par value. b) Issued: During the year ended September 30, 2015, the Company closed a private placement consisting of 1,800,000 units at $0.06 per unit for the total proceeds of $108,000. Each unit consisted of one share of the Company and one share purchase warrant. Each warrant will entitle the holder to purchase a further share of the Company for $0.08 during the first year ending May 3, 2016 and $0.10 during a second year ending May 3, 2017. Out of total proceeds received from the private placement, $23,000 was allocated to warrants issued as part of the units. The value of warrants was estimated using the Black-Scholes pricing model using the following assumptions: share price at issuance date of $0.03, volatility rate of 128%, expected life of 2 years, risk-free interest rate of 0.96% and dividend yield of 0%. The Company incurred share issuance costs of $3,290 in connection with this private placement. The shares which were issued as part of the units, and any shares which were issued pursuant to the exercise of warrants, were subject to a non-trading holding period which expired on September 1, 2015. During the year ended September 30, 2014, the Company issued 1,460,000 units at $0.06 per unit for the total proceeds of $87,600. Each unit consisted of one common share and one-half of a share purchase warrant. Each full warrant entitled the holder to purchase a further common share of the Company for $0.10, and expired June 3, 2015. The Company incurred share issuance costs of $2,397 in connection with this private placement. c) Stock Options: The Company has established a stock option plan for directors, employees, and consultants. Under the Company's stock option plan, the exercise price of each option is determined by the Board, subject to the pricing policies of the TSX Venture Exchange. Options vest immediately when granted and expire five years from the date of the grant, unless the Board establishes more restrictive terms. The aggregate number of shares issuable pursuant to options granted under the plan is limited to 10% of the Company's issued shares at the time the options are granted. The aggregate number of options the Company's issued shares at the time the options are granted. The aggregate number of options granted to any one optionee in a 12-month period is limited to 5% of the issued shares of the corporation.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 5.
SHARE CAPITAL (continued) c) Stock options (continued) Continuity of stock options for the years ended September 30, 2015 and 2014 is as follows:
Stock options outstanding and exercisable, September 30, 2013, 2014 and 2015
Weighted Average Exercise Price
The following table summarizes the stock options outstanding and exercisable at September 30, 2015 and 2014:
Stock Options Outstanding Expiry Date
September 30, 2015
October 18, 2015 June 5, 2018
September 30, 2014
As at September 30, 2015, the weighted average remaining contractual life of stock options outstanding was 2.22 years, and a weighted average exercise price was $0.11 (see Note 10). d) Warrants Warrant activity for the years ended September 30, 2015 and 2014 are presented below: September 30, 2015 Weighted Average Number of Exercise Warrants Price
September 30, 2014 Weighted Average Number of Exercise Warrants Price
Opening balance Granted Expired
730,000 1,800,000 (730,000)
0.10 0.09 (0.10)
625,000 $ 730,000 (625,000)
0.12 0.10 (0.12)
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 5.
SHARE CAPITAL (continued) d) Warrants (continued) At September 30, 2015 and 2014, the following warrants were outstanding entitling the holders the right to purchase one common share for each warrant held. These warrants are exercisable at $0.08 during the one year period ending May 3, 2016 and during a second year ending May 3, 2017 for $0.10 (2014 – exercisable at $0.10, expired on June 3, 2015). As at September 30, 2015, the following warrants were outstanding: Weighted Average Exercise Price
Number of Warrants
Remaining life (Years) Expiry Date
May 3, 2017
6. RELATED PARTY TRANSACTIONS During the years ended September 30, 2015 and 2014, the Company incurred the following related party transactions: a) The Company incurred office services, facilities and rent of $9,660 (2014 - $18,000) to a corporation with common directors. The Company incurred legal fees of $12,138 (2014 $13,023) and share issuance costs of $nil (2014 - $2,397) from a law firm of which a director is a principal. b) The Company has identified its directors and certain senior officers as its key management personnel and the compensation costs for key management personnel and companies related to them were recorded at their exchange amounts as agreed upon by transacting parties as follows:
2015 Management fees
2014 – $
c) At September 30, 2015, accounts payable and accrued liabilities included $6,066 (2014: $nil) for amounts due to a law firm of which a director is a principal. All amounts payable are non-interest bearing, unsecured and due on demand. d) During the year ended September 30, 3014, the Company settled certain related party payables and accruals for $nil consideration, resulting in a gain on forgiveness of debt and other recovery of $96,488 and $9,700 respectively in other income.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 7. INCOME TAXES The following table reconciles the amount of income tax recoverable on application of the combined statutory Canadian federal and provincial income tax rates:
Combined statutory tax rate Expected income tax recovery Non-deductible expenses and others Rate change Change in unrecognized deferred income tax assets
Income tax recovery
19,685 855 – (20,540) –
35,975 (26,813) (173) (8,989) –
Significant components of the Company’s potential deferred income tax assets are shown below: 2015 Non-capital losses Mineral properties Share issue costs
Unrecognized deferred income tax assets
$ 220,194 69,339 1,317 290,850 (290,850)
Net deferred income tax asset
201,384 68,039 887 270,310 (270,310) –
The Company has non-capital losses for income tax purposes of approximately $847,000 which may be carried forward and offset against future taxable income. The non-capital losses expire as follows: Year 76,000 176,000 165,000 172,000 155,000 31,000 72,000
2029 2030 2031 2032 2033 2034 2035
$ 847,000 As at September 30, 2015, the Company has approximately $478,000 (2014: $478,000) resource expenditures that can be carry-forwarded indefinitely for tax purposes to reduce taxable income for future years. In assessing the realizability of deferred income tax assets, management considers whether it is probable that some portion of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The amount of deferred income tax assets considered realizable could change materially in the near term based on future taxable income during the carry forward period.
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 8. MANAGEMENT OF CAPITAL The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the sourcing and exploration of mineral properties in Canada. The Company does not have any externally imposed capital requirements to which it is subject. As at September 30, 2015 the Company had capital resources consisting of cash. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or adjust the amount of cash and cash equivalents. The Company’s investment policy is to invest its cash in investment instruments in high credit quality financial institutions with terms to maturity selected with regards to the expected time of expenditures from continuing operations. 9.
FINANCIAL INSTRUMENTS AND RISK Classification The Company has classified its cash as fair value through profit or loss. Accounts payable are classified as other financial liabilities. The following table summarizes information regarding the carrying values of the Company’s financial instruments: 2015 Fair value through profit or loss (i) Other financial liabilities (ii) (i) (ii)
Cash Accounts payable
Fair value As at September 30, 2015 the Company’s financial instruments consist of cash and accounts payable. The fair values of these financial instruments approximate their carrying values because of their current nature. IFRS 7 Financial Instruments – Disclosures, establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. IFRS 7 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities. Level 2 – Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs (i.e. quoted prices for similar assets or liabilities).
ASTORIUS RESOURCES INC. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (Expressed in Canadian Dollars) 9.
FINANCIAL INSTRUMENTS AND RISK (continued) Fair value (continued) Level 3 – Prices or valuation techniques that are not based on observable market data and require inputs that are both significant to the fair value measurement and unobservable. The fair values of the Company’s financial assets and liabilities as of September 30, 2015 were calculated as follows: Significant Other Observable Inputs (Level 2) $
Significant Unobservable Inputs
Quoted Prices in Active Markets for Identical Assets (Level 1) $
Balance at September 30, 2015
Financial Assets: Cash
(Level 3) $
Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash. To minimize the credit risk the Company places these instruments with a high credit quality financial institution. Liquidity Risk The Company ensures its holding of cash is sufficient to meet its financial obligations as they fall due. The Company currently settles its financial obligations with cash. The ability to do this relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. As at September 30, 2015, the Company has a working capital of $20,372 and requires additional cash to fund operation and exploration activities (see Note 8). The Company does not have investments in any asset backed deposits. Foreign Exchange Risk The Company does not have foreign currency denominated financial instruments and is not exposed to significant foreign exchange risk. Market risk Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate due to changes in market prices. The sale of the financial instruments can be affected by changes in interest rates, foreign exchange rates, and equity prices. The Company’s ability to raise capital is subject to risks associated with fluctuations in the stock market. Management closely monitors individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. 10. Subsequent Event On October 18, 2015, 170,000 stock options exercisable at $0.15 expired unexercised.