CAPELLA MINERALS LIMITED CAPELLA MINERALS LIMITED
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2023
(Expressed in Canadian Dollars)
NOTICE TO READER
The accompanying unaudited condensed interim consolidated financial statements have been prepared by and are the responsibility of the management of Capella Minerals Limited. Capella Minerals Limited independent auditor has not performed a review of these unaudited condensed interim consolidated financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of condensed interim financial statements by an entity's auditor.
Capella Minerals Limited
Condensed Interim Consolidated Statements of Financial Position
Expressed in Canadian Dollars
As at
Note | August 31, 2023 | May 31, 2023 | |||||||||
$ | $ | ||||||||||
ASSETS | |||||||||||
Current | |||||||||||
Cash | 75,367 | 57,973 | |||||||||
Receivables | 3 | 40,665 | 40,747 | ||||||||
Prepaid expenses | 39,143 | 37,431 | |||||||||
155,175 | 136,151 | ||||||||||
Non-current | |||||||||||
Property, plant and equipment | 1,411 | 1,519 | |||||||||
Exploration and evaluation assets | 6 | 6,553,162 | 6,258,999 | ||||||||
Investment | 5 | 34,500 | 75,000 | ||||||||
Investment in Associate | 93,369 | 96,568 | |||||||||
6,682,442 | 6,432,086 | ||||||||||
TOTAL ASSETS | 6,837,617 | 6,568,237 | |||||||||
LIABILITIES | |||||||||||
Current | |||||||||||
Accounts payable, accrued & other liabilities | 4 | 1,015,637 | 1,005,928 | ||||||||
Contractual obligation payable | 7 | 45,010 | 45,157 | ||||||||
Deferred consideration payable | 8 | 90,318 | 90,418 | ||||||||
1,150,965 | 1,141,503 | ||||||||||
Non-current | |||||||||||
Contractual obligation payable | 7 | 114,742 | 114,555 | ||||||||
Deferred consideration payable | 8 | 135,258 | 132,646 | ||||||||
250,000 | 247,201 | ||||||||||
TOTAL LIABILITIES | 1,400,965 | 1,388,704 | |||||||||
SHAREHOLDERS' EQUITY | |||||||||||
Share capital | 9 | 22,643,814 | 22,643,814 | ||||||||
Reserves - warrants | 9 | 442,554 | 442,554 | ||||||||
Reserves - options | 9 | 2,036,815 | 2,023,667 | ||||||||
Deferred Equity | 9 | 421,200 | - | ||||||||
Reserves - foreign currency translation | (123,087) | (186,396) | |||||||||
Accumulated deficit | (20,106,611) | (19,870,181) | |||||||||
Non-controlling interests | 121,967 | 126,075 | |||||||||
5,436,652 | 5,179,533 | ||||||||||
TOTAL LIABILITIES AND | |||||||||||
SHAREHOLDERS' EQUITY | 6,837,617 | 6,568,237 | |||||||||
Nature of operations and going concern | 1 | ||||||||||
Basis of presentation | 2 | ||||||||||
Commitments and contingencies | 14 | ||||||||||
Subsequent events | 15 | ||||||||||
APPROVED ON BEHALF OF THE BOARD ON October 30, 2023: | |||||||||||
Eric Roth | Glen Parsons | ||||||||||
Director | Director | ||||||||||
- See accompanying notes to the condensed interim consolidated financial statements - | |||||||||||
2 |
Capella Minerals Limited
Condensed Interim Consolidated Statements of Net Income or Loss and Comprehensive Income or Loss
Expressed in Canadian Dollars
For the three months ended
August 31, 2023 | August 31, 2022 | |||
$ | $ | |||
General and administrative expenses | ||||
Management and administrative fees | 135,660 | 100,820 | ||
Share-based payments | 9 | 13,148 | 64,808 | |
Regulatory and transfer agent fees | 9,075 | 8,656 | ||
Shareholder information and meetings | 8,910 | 38,938 | ||
Travel | 6,048 | 7,499 | ||
Office and general | 5,007 | 7,368 | ||
Professional fees | - | 423 | ||
(177,848) | (228,512) | |||
Loss on sale of financial assets | 5 | (2,450) | (114,622) | |
Share of losses- investment in associate | (3,200) | (8,192) | ||
Write off of deferred exploration and | ||||
evaluation costs and other | 6 | (22,686) | (4,156) | |
Foreign exchange gain/(loss) | 583 | (13,981) | ||
Deferred consideration payable interest | 8 | (2,735) | (2,629) | |
Contractual obligation payable interest | 7 | (40) | (78) | |
Unrealized income/(loss) on financial | ||||
assets | 5 | (26,750) | - | |
Other | (1,304) | - | ||
Loss for the year | (236,430) | (372,170) | ||
Other comprehensive loss | ||||
Foreign currency translation | 63,309 | 50,764 | ||
Comprehensive loss for the year | (173,121) | (321,406) | ||
Attributable to: | ||||
Owners of the company | (169,014) | (319,970) | ||
Non-controlling interests | (4,107) | (1,436) | ||
(173,121) | (321,406) | |||
Loss per share - basic and diluted | 0.0 | 0.0 | ||
Weighted average number of shares | ||||
outstanding | 195,210,195 | 151,137,862 |
- See accompanying notes to the condensed interim consolidated financial statements -
3
Capella Minerals Limited
Condensed Interim Consolidated Statements of Cash Flows
Expressed in Canadian Dollars
For the three months ended
August 31, 2023 | August 31, 2022 | |||
Note | $ | $ | ||
Cash provided by (used in): | ||||
Operating activities | ||||
Loss for the year | (236,430) | (372,170) | ||
Items not affecting cash: | ||||
Realised loss on sale of financial assets | 5 | 2,450 | - | |
Share-based payments | 9 | 13,148 | 64,808 | |
Foreign exchange | (583) | 13,980 | ||
Share of losses in investment in associate | 3,200 | 8,192 | ||
Unrealized movement on financial asset | 5 | 26,750 | 114,622 | |
Deferred consideration payable interest | 8 | 2,735 | 2,629 | |
Contractual obligation payable interest | 7 | 40 | 78 | |
Write off deferred exploration and evaluation costs | - | 4,156 | ||
Changes in non-cash working capital | 12 | 79,910 | 81,609 | |
(108,780) | (82,096) | |||
Investing activities | ||||
Net proceeds from sale of financial assets | 5 | 7,000 | 216,338 | |
Exploration and evaluation costs | (274,468) | (182,762) | ||
(267,468) | 33,576 | |||
Financing activities | ||||
Proceeds from issue of shares/deferred equity | 9 | 421,200 | - | |
Short term payable proceeds | 17,284 | - | ||
438,484 | - | |||
Change in cash | 62,236 | (48,520) | ||
Effect of fluctuations in exchange rates on cash | (44,842) | (2,875) | ||
Cash - beginning of year | 57,973 | 96,507 | ||
Cash - end of year | 75,367 | 45,112 |
Supplemental cash flow information
- See accompanying notes to the condensed interim consolidated financial statements -
4
Capella Minerals Limited
Condensed Interim Consolidated Statement of Changes in Shareholders' Equity/(Deficiency)
For the Three Months Ended August 31, 2023
Expressed in Canadian Dollars
Share capital | Share | Reserves- | Deferred | Non- | |||||
(Number of | capital | Reserves - | Reserves - | Foreign | Accumulated | controlling | |||
Equity | |||||||||
Shares) | (Amount) | Warrants | Options | Currency | Deficit | interests | Total | ||
Translation | |||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||
May 31, 2021 | 151,137,862 | 20,102,141 | 419,702 | 1,607,742 | 83 | - | (16,131,935) | - | 5,997,733 |
Loss for the year | - | - | - | - | - | - | (2,285,195) | - | (2,285,195) |
Share-based payments | - | - | - | 228,661 | - | - | - | - | 228,661 |
Acquisition of subsidiary | - | - | - | - | - | - | - | 129,576 | 129,576 |
Foreign currency translation | - | - | - | - | (76,035) | - | - | - | (76,035) |
Movement in non-controlling interest | - | - | - | - | - | - | - | (1,953) | (1,953) |
May 31, 2022 | 151,137,862 | 20,102,141 | 419,702 | 1,836,403 | (75,952) | - | (18,417,130) | 127,623 | 3,992,787 |
Net loss for the year | - | - | - | - | - | - | (372,170) | - | (372,170) |
Share-based payments | - | - | - | 64,808 | - | - | - | - | 64,808 |
Foreign currency translation | - | - | - | - | 50,764 | - | - | - | 50,764 |
Movement in non controlling interest | - | - | - | - | - | - | - | (879) | (879) |
August 31,2022 | 151,137,862 | 20,102,141 | 419,702 | 1,901,211 | (25,188) | - | (18,789,300) | 126,744 | 3,735,310 |
Loss for the year | - | - | - | - | - | - | (1,080,881) | - | (1,080,881) |
Share-based payments | - | - | - | 122,456 | - | - | - | - | 122,456 |
Issue of shares | 26,893,333 | 1,613,600 | - | - | - | - | - | - | 1,613,600 |
Share issue costs | - | (102,667) | 22,852 | - | - | - | - | - | (79,815) |
Acquisition of subsidiary | 15,100,000 | 906,000 | - | - | - | - | - | - | 906,000 |
Issue of shares- property payment | 2,079,000 | 124,740 | - | - | - | - | - | - | 124,740 |
Foreign currency translation | - | - | - | - | (161,208) | - | - | - | (161,208) |
Movement in non-controlling interest | - | - | - | - | - | - | - | (669) | (669) |
May 31, 2023 | 195,210,195 | 22,643,814 | 442,554 | 2,023,667 | (186,396) | - | (19,870,181) | 126,075 | 5,179,533 |
Loss for the year | - | - | - | - | - | - | (236,430) | - | (236,430) |
Share-based payments | - | - | - | 13,148 | - | - | - | - | 13,148 |
Shares to be issued | - | - | - | - | - | 421,200 | - | - | 421,200 |
Foreign currency translation | - | - | - | - | 63,309 | - | - | - | 63,309 |
Movement in non-controlling interest | - | - | - | - | - | - | - | (4,108) | (4,108) |
August 31,2023 | 195,210,195 | 22,643,814 | 442,554 | 2,036,815 | (123,087) | 421.200 | (20,106,611)) | 121,967 | 5,436,652 |
- See accompanying notes to the condensed interim consolidated financial statements -
5
Capella Minerals Limited
Condensed Interim Consolidated Financial Statements
For the Three Months Ended August 31, 2023
Expressed in Canadian Dollars
1. Nature of Operations and Going Concern
Capella Minerals Limited (the "Company" or "Capella") is incorporated under the laws of the Province of British Columbia, Canada. The Company's corporate office and registered address and records office being located at 8681 Clay Street, Mission, British Columbia.
The Company engages primarily in the acquisition, exploration and development of base and battery metals projects in Scandinavia (copper-cobalt projects in Norway and lithium-rare earth element projects in central Finland) together with copper-gold projects in northern Finland. In addition, the Company also retains exposure to exploration success in precious metals projects through two gold Joint Ventures in Canada and a silver-gold Joint Venture in Argentina.
These condensed interim consolidated financial statements for the three months ended August 31, 2023 (the "interim financial statements") have been prepared on the assumption that the Company is a going concern, meaning that it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations. The Company has incurred an accumulated deficit of $20,106,611 at August 31, 2023 and has no current source of revenue. The Company's continuation as a going concern is dependent on its ability to attain profitable operations and generate funds therefrom and/or raise funds sufficient to meet current and future obligations and exploration expenditure. There can be no assurances that management's future plans for the Company will be successful. The Company will require additional financing in order to fund working capital requirements and conduct additional acquisitions, exploration and evaluation of mineral properties. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on acceptable terms. These material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of assets and liabilities that might be necessary, should the Company be unable to continue as a going concern.
2. Basis of Presentation
These condensed interim consolidated financial statements for the three months ended August 31, 2023, and August 31, 2022 ("interim financial statements") have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim financial statements do not include certain information and disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") and should be read in conjunction with the Company's annual financial statements for the year ended May 31, 2023, which were prepared in accordance with IFRS as issued by the International Accounting Standards Board.
Historical cost
These interim financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value. These financial statements have been prepared using the accrual method for cash flow transactions.
Approval
These interim financial statements of the Company and its subsidiaries for the three months ended August 31, 2023, were approved and authorized for issue by the Board of Directors on October 30, 2023
6
Capella Minerals Limited
Condensed Interim Consolidated Financial Statements
For the Three Months Ended August 31, 2023
Expressed in Canadian Dollars
2. Basis of Presentation- continued Principles of Consolidation
The interim consolidated financial statements include the accounts of the Company and its controlled entities as follows:
Entity | Country of | Ownership | Functional |
Incorporation | Currency | ||
NDR Guernsey Limited | Guernsey | 100% | Canadian dollar |
Dimension Resources (USA) Inc. | U.S.A. | 100% | Canadian dollar |
Capella Minerals Sweden AB (previously known | 100% | ||
as Bastutrask Holdings AB) | Sweden | Swedish kroner | |
Capella Minerals Norway AS (previously known | 100% | ||
as Norra Metals 1 AS) | Norway | Norwegian kroner | |
Cullen Finland Oy | Finland | 70% | Euro |
Eurolithium Oy (previously known as Element X | |||
Finland Oy) | Finland | 100% | Euro |
Significant Accounting Estimates and Judgments
The preparation of the interim financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the period.
Although management uses historical experiences and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period or in the period of the revision and further periods if the revision affects both current and future periods.
The most significant accounts that require estimates and judgements as the basis for determining the stated amounts include the valuation of exploration and evaluation assets, the valuation of share-based payments, the valuation of the contractual obligation payable, non-cash transaction and functional currency.
Significant estimates and critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:
(i) Economic recoverability and probability of future benefits of exploration and evaluation costs.
Management has determined that exploration, evaluation and related costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including geologic and other technical information, history of conversion of mineral deposits with similar characteristics to its own properties to proven and probable mineral reserves, the quality and capacity of existing infrastructure facilities, evaluation of permitting and environmental issues and local support for the project.
(ii) Valuation of share-based payments
The determination of the fair value of stock options or warrants using stock pricing models requires the input of highly subjective variables, including expected price volatility. Wide fluctuations in the variables could materially affect the fair value estimate; therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock options and warrants. Option pricing models require the input of subjective assumptions including expected price volatility, interest rates and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and Company's earnings and equity reserves.
(iii) Non-cash transactions
Generally, the valuation of non-cash transactions is based on the value of the goods or services received. When this cannot be determined, it is based on the fair value of non-cash consideration. When non-cash transactions are entered into with employees and those providing similar services, the non-cash transactions are measured at the fair value of the consideration given up using market prices.
7
Capella Minerals Limited
Condensed Interim Consolidated Financial Statements
For the Three Months Ended August 31, 2023
Expressed in Canadian Dollars
2. Basis of Presentation- continued
- Functional currency
The Company has evaluated the economic environment in which its entities operate in and determined that the functional currency of its incorporated entities Capella Minerals Sweden AB and Capella Minerals Norway AS is the Swedish kroner and Norwegian kroner respectively. The functional currency of its recently acquired subsidiary Cullen Finland Oy and Eurolithium Oy (formerly elementX Finland Oy) has been determined to be the Euro. The functional currency of its other entities, including the parent is the Canadian dollar.
(v) Contractual obligation payable
The Company has a contractual obligation to pay up to $50,000 per year for a period of up to 15 years (from inception) to acquire certain assets in Argentina. The terms of this payable were amended on June 4, 2020. The Company has assessed the contractual obligation payable for the acquisition of the Argentinean assets. As part of the finalisation of the Cerrado Gold Inc ("Cerrado" "TSXV CERT") deal on January 22, 2021, the annual payments of the Company owing to Sandstorm Gold Limited ("SSL") were extinguished in respect of the Las Calandrias and Los Cisnes projects under a share purchase agreement dated February 19, 2018, as amended and assigned. The remaining annual payment obligation is in relation to the Sierra Blanca project and is subject to, amongst other considerations, the Company's market capitalization on the anniversary date of the agreement. Refer Note 7.
3. | Receivables | ||
August 31, 2023 | May 31, 2023 | ||
$ | $ | ||
HST/GST receivable | 18,113 | 20,532 | |
Other receivables | 22,552 | 20,215 | |
40,665 | 40,747 |
4. Accounts payable, accrued & other liabilities
August 31, 2023 | May 31, 2023 | ||||
$ | $ | ||||
Accounts payable | 768,983 | 836,841 | |||
Accrued liabilities | 198,131 | 117,721 | |||
Other | 48,523 | 51,366 | |||
1,015,637 | 1,005,928 | ||||
5. | Financial Instruments | ||||
Categories of financial instruments | |||||
August 31, 2023 | May 31, 2023 | ||||
$ | $ | ||||
Financial assets | |||||
Fair value through profit or loss ("FVTPL") | |||||
Cash | 75,367 | 57,973 | |||
Investments | 34,500 | 75,000 | |||
Amortized Cost | |||||
Receivables | 40,665 | 40,747 | |||
150,532 | 173,720 | ||||
Financial liabilities | |||||
Amortized cost | |||||
Accounts payable, accrued & other | |||||
liabilities | 1,015,637 | 1,005,928 | |||
Contractual obligation payable | 159,752 | 159,712 | |||
Deferred consideration payable | 225,576 | 223,064 | |||
1,400,965 | 1,388,704 | ||||
8 |
Capella Minerals Limited
Condensed Interim Consolidated Financial Statements
For the Three Months Ended August 31, 2023
Expressed in Canadian Dollars
5. Financial Instruments (continued)
During the year ended May 31, 2022, Prospector Metals announced the completion of a 3:1 share consolidation and a name change from Ethos Gold Corp. (TSX.V: ECC) ("Ethos"). The terms of future share payments to Capella as part of the Savant Gold Property earn-in agreement were modified to reflect both the share consolidation and name change.
On April 10, 2023 the Company received 100,000 European Energy Metals (TSXV: FIN) shares as detailed in the Earn-in Agreement (refer Note 6).
During the three months ended August 31, 2023, the Company sold 25,000 Prospector Metals shares for gross proceeds of $11,435 and cash costs to sell of $135, with a total realised loss of $2,450 (including costs to sell) being recorded for the three months ending August 31, 2023. Proceeds of $7,000 were received during the period with a balance of $4,300 being recorded as a receivable as at August 31, 2023. This balance was receipted subsequent to the period. The remaining balance of 75,000 shares were revalued at August 31, 2023 with an unrealized loss of $6,750 being recorded in the Condensed Interim Consolidated Statement of Income or Loss.
Fair value of financial instruments
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and Level 3 - Inputs that are not based on observable market data.
The Company's classifications of financial instruments within the fair value hierarchy are summarized below:
August 31, 2023 | May 31, 2023 | |
$ | $ | |
Financial Assets | ||
Level 1 | ||
Cash | 75,367 | 57,973 |
Quoted shares | 34,500 | 75,000 |
The carrying value of receivables, and accounts payable, accrued and other liabilities approximate their fair value due to their short-term maturity.
Financial Risk Management
The Company's financial instruments are exposed to certain financial risks. The risk exposures and the impact on the Company's financial instruments are summarized below.
- Currency Risk
The Company is primarily exposed to currency fluctuations relative to the Canadian dollar through expenditures that are predominantly denominated in US dollars, Swedish kroner, Norwegian kroner and Euro. Also, the Company is exposed to the impact of currency fluctuations on its monetary assets and liabilities.
9
Capella Minerals Limited
Condensed Interim Consolidated Financial Statements
For the Three Months Ended August 31, 2023
Expressed in Canadian Dollars
5. Financial Instruments (continued)
The Company is exposed to foreign currency risk through the following financial assets and liabilities denominated in currencies other than Canadian dollars:
Accounts payable and | |||||
August 31, 2023 | Cash | Receivables | accrued liabilities | ||
$ | $ | $ | |||
US dollars | 810 | - | 107,932 | ||
Swedish kroner | 126 | 22,427 | 4,713 | ||
Euro | 34,810 | 2,264 | 25,217 | ||
Australian dollars | - | - | 31,370 | ||
Norwegian kroner | 9,683 | - | 626,572 | ||
Great Britain pounds | 64 | - | 1,774 | ||
Accounts payable and | |||
May 31, 2023 | Cash | Receivables | accrued liabilities |
$ | $ | $ | |
US dollars | 836 | - | 86,934 |
Swedish kroner | 561 | 23,006 | 37,650 |
Euro | 23,288 | 6,383 | 6,847 |
Australian dollars | - | - | 8,088 |
Norwegian kroner | 8,930 | - | 640,597 |
Great Britain pounds | 64 | - | 1,355 |
At August 31, 2023 with other variables unchanged a +/- 10% change in exchange rates would decrease/increase comprehensive loss by $72,687 ($2022: $23,680).
b) Interest rate and credit risk
Interest risk is the risk that the value of assets and liabilities will change when the related interest rates change. The Company is not currently exposed to interest rate risk. The Company's current financial assets and financial liabilities are not significantly exposed to interest rate risk because either they are of a short-term nature or because they are non-interest bearing. The Company has a positive cash balance. The Company has no significant concentrations of credit risk arising from operations. The Company's current policy is to invest excess cash in investment-gradeshort-term deposit certificates issued by reputable financial institutions with which it keeps its bank accounts and management believes the risk of loss to be remote. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. As at August 31, 2023 and August 31, 2022 the Company did not hold any short-term investments or cash equivalents.
Receivables primarily consist of goods and services tax and taxes due from the governments of Canada and Sweden. Management believes that the credit risk concentration with respect to receivables is limited.
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Capella Minerals Ltd. published this content on 01 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 November 2023 00:50:11 UTC.
