INTERNATIONAL TOWER HILL MINES LTD. CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in US Dollars)
Years Ended December 31, 2023 and 2022
Corporate Office
2710 - 200 Granville Street
Vancouver, British Columbia, Canada
V6C 1S4
Tel: 604-683-6332
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INTERNATIONAL TOWER HILL MINES LTD.
December 31, 2023 and 2022
INDEX | Page |
Audited Consolidated Financial Statements | |
Report of Independent Registered Public Accounting Firms | 3-4 |
Consolidated Balance Sheets | 5 |
Consolidated Statements of Operations and Comprehensive Loss | 6 |
Consolidated Statement of Changes in Shareholders' Equity | 7 |
Consolidated Statements of Cash Flows | 8 |
Notes to the Consolidated Financial Statements | 9-20 |
Disclosure Controls and Procedures | 21 |
Management's Annual Report on Internal Control over Financial Reporting | 21 |
Changes in Internal Control over Financial Reporting | 21 |
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Directors of International Tower Hill Mines Ltd.
Opinion on the consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of International Tower Hill Mines Ltd. (the "Company"), as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Assessment of Impairment Indicators of Mineral Property
As described in Note 4 to the financial statements, the carrying amount of the Company's mineral property was $55,375,124 as of December 31, 2023. As more fully described in Note 2 to the financial statements, management assesses its mineral property for indicators of impairment at each reporting period.
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The principal considerations for our determination that the assessment of impairment indicators of the Company's mineral property is a critical audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the mineral property, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate its asset. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the mineral property.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. Our audit procedures included, among others:
- Obtaining an understanding of the key controls associated with evaluating the mineral property for indicators of impairment.
- Obtained and assessed management's impairment analysis.
- Evaluating the intent for the mineral property through discussion and communication with management.
- Reviewing the Company's recent expenditure activity and expenditure budgets for future periods.
- Assessing compliance with agreements and expenditure requirements including vouching cash payments.
- Obtaining, on a test basis through government websites, confirmation of title to ensure mineral rights underlying the mineral property are in good standing.
We have served as the Company's auditor since 2017.
Vancouver, Canada | Chartered Professional Accountants |
March 7, 2024
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INTERNATIONAL TOWER HILL MINES LTD.
CONSOLIDATED BALANCE SHEETS
As at December 31, 2023 and 2022
(Expressed in U.S. Dollars)
Note | December 31, | December 31, | |||
2023 | 2022 | ||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | 1 | $ | 1,687,690 | $ | 4,847,429 |
Prepaid expenses and other | 304,726 | 152,572 | |||
Total current assets | 1,992,416 | 5,000,001 | |||
Property and equipment | 7,465 | 7,465 | |||
Mineral property | 4 | 55,375,124 | 55,375,124 | ||
Total assets | $ | 57,375,005 | $ | 60,382,590 | |
LIABILITIES AND SHAREHOLDERS' | |||||
EQUITY | |||||
Current liabilities | |||||
Accounts payable | $ | 92,855 | $ | 53,539 | |
Accrued liabilities | 5 | 142,096 | 234,846 | ||
Total liabilities | 234,951 | 288,385 | |||
Shareholders' equity | |||||
Share capital, no par value; unlimited number of authorized | |||||
shares; 195,885,531 and 195,313,184 shares issued and | |||||
outstanding at December 31, 2023 and December 31, | 7 | 288,866,139 | 288,484,901 | ||
2022, respectively | |||||
Contributed surplus | 7 | 36,309,865 | 36,275,917 | ||
Accumulated other comprehensive income | 1,528,828 | 1,500,196 | |||
Deficit | (269,564,778) | (266,166,809) | |||
Total shareholders' equity | 57,140,054 | 60,094,205 | |||
Total liabilities and shareholders' equity | $ | 57,375,005 | $ | 60,382,590 |
General Information, Nature of Operations and Going Concern (Note 1)
Commitments (Note 9)
The accompanying notes are an integral part of these consolidated financial statements.
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INTERNATIONAL TOWER HILL MINES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Years Ended December 31, 2023 and 2022
(Expressed in U.S. Dollars)
December 31, | December 31, | ||||
Note | 2023 | 2022 | |||
Operating Expenses | |||||
Consulting fees | 7 | $ 562,498 | $ 551,163 | ||
Insurance | 209,314 | 202,893 | |||
Investor relations | 7 | 51,520 | 65,591 | ||
Mineral property | 4 | 1,200,975 | 1,138,134 | ||
Office | 31,899 | 28,529 | |||
Other | 16,071 | 16,130 | |||
Professional fees | 267,056 | 226,439 | |||
Regulatory | 144,571 | 137,947 | |||
Rent | 10 | 135,183 | 135,200 | ||
Travel | 45,925 | 29,935 | |||
Wages and benefits | 7 | 821,489 | 914,078 | ||
Total operating expenses | (3,486,501) | (3,446,039) | |||
Other income (expense) | |||||
Gain (loss) on foreign exchange | (30,754) | 348,207 | |||
Interest income | 97,126 | 5,739 | |||
Other income | 22,160 | 50,400 | |||
Total other income (expense) | 88,532 | 404,346 | |||
Net loss for the year | (3,397,969) | (3,041,693) | |||
Other comprehensive income (loss) | |||||
Exchange difference on translating foreign operations | 28,632 | (327,925) | |||
Total other comprehensive income (loss) for the year | 28,632 | (327,925) | |||
Comprehensive loss for the year | $ (3,369,337) | $ (3,369,618) | |||
Basic and diluted net loss per share | $ | (0.02) | $ | (0.02) | |
Weighted average number of shares outstanding - basic and | |||||
diluted | 195,615,822 | 195,221,951 |
The accompanying notes are an integral part of these consolidated financial statements.
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INTERNATIONAL TOWER HILL MINES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Years Ended December 31, 2023 and 2022
(Expressed in U.S. Dollars)
Accumulated | |||||||||||||
Other | |||||||||||||
Number of | Share | Contributed | Comprehensive | ||||||||||
Shares | Capital | Surplus | Income | Deficit | Total | ||||||||
Balance, December 31, 2021 | 194,908,184 | $ | 288,032,132 | $ | 35,989,922 | $ | 1,828,121 | $ | (263,125,116) | $ | 62,725,059 | ||
Stock based compensation-option | - | - | 135,451 | - | - | 135,451 | |||||||
Stock based compensation-DSU | - | - | 313,023 | - | - | 313,023 | |||||||
Exchange difference on translating | - | - | - | (327,925) | - | (327,925) | |||||||
foreign operations | |||||||||||||
Exercise of options | 405,000 | 290,290 | - | - | - | 290,290 | |||||||
Reallocation from contributed surplus | - | 162,479 | (162,479) | - | - | - | |||||||
Net loss | - | - | - | - | (3,041,693) | (3,041,693) | |||||||
Balance, December 31, 2022 | 195,313,184 | 288,484,901 | 36,275,917 | 1,500,196 | (266,166,809) | 60,094,205 | |||||||
Stock based compensation-option | - | - | 91,382 | - | - | 91,382 | |||||||
Stock based compensation-DSU | - | - | 323,804 | - | - | 323,804 | |||||||
Exchange difference on translating | - | - | - | 28,632 | - | 28,632 | |||||||
foreign operations | |||||||||||||
Share issuance | 572,347 | 381,238 | (381,238) | - | - | - | |||||||
Net loss | - | - | - | - | (3,397,969) | (3,397,969) | |||||||
Balance, December 31, 2023 | 195,885,531 | $ | 288,866,139 | $ | 36,309,865 | $ | 1,528,828 | $ | (269,564,778) | $ | 57,140,054 |
The accompanying notes are an integral part of these consolidated financial statements.
INTERNATIONAL TOWER HILL MINES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2023 and 2022 (Expressed in U.S. Dollars)
December 31, 2023 | December 31, 2022 | |||
Operating Activities | ||||
Loss for the year | $ | (3,397,969) | $ | (3,041,693) |
Add items not affecting cash: | ||||
Stock-basedcompensation-option | 91,382 | 135,451 | ||
Stock-basedcompensation-DSU | 323,804 | 313,023 | ||
Changes in non-cash working capital items: | ||||
Accounts receivable | (22,951) | 5,794 | ||
Prepaid expenses | (126,741) | (22,076) | ||
Accounts payable and accrued liabilities | (55,470) | (287,457) | ||
Cash used in operating activities | (3,187,945) | (2,896,958) | ||
Financing Activities | ||||
Issuance of common shares | - | 290,290 | ||
Cash provided by financing activities | - | 290,290 | ||
Effect of foreign exchange on cash and cash equivalents | 28,206 | (326,574) | ||
Decrease in cash and cash equivalents | (3,159,739) | (2,933,242) | ||
Cash and cash equivalents, beginning of year | 4,847,429 | 7,780,671 | ||
Cash and cash equivalents, end of year | $ | 1,687,690 | $ | 4,847,429 |
Non-cash transactions:
- Reallocation from contributed surplus from issuance of stock $381,238 (December 31, 2022 - $nil)
- Reallocation from contributed surplus from exercise of stock options $nil (December 31, 2022 - $162,479)
The accompanying notes are an integral part of these consolidated financial statements.
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INTERNATIONAL TOWER HILL MINES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
-
GENERAL INFORMATION, NATURE OF OPERATIONS, AND GOING CONCERN
International Tower Hill Mines Ltd. ("ITH" or the "Company") is incorporated under the laws of British Columbia, Canada. The Company's head office address is 2710-200 Granville Street, Vancouver, British Columbia, Canada.
International Tower Hill Mines Ltd. consists of ITH and its wholly owned subsidiaries Tower Hill Mines, Inc. ("TH Alaska") (an Alaska corporation), Tower Hill Mines (US) LLC ("TH US") (a Colorado limited liability company), and Livengood Placers, Inc. ("LPI") (a Nevada corporation). The Company is in the business of acquiring, exploring and evaluating mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. At December 31, 2023, the Company has a 100% interest in its Livengood Gold Project in Alaska, U.S.A.
These consolidated financial statements have been prepared on a going-concern basis, which presumes the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future.
The Company will require significant additional financing to continue its operations (including general and administrative expenses) in connection with advancing activities at the Livengood Gold Project and the development of any mine that may be built at the Livengood Gold Project. There is no assurance that the Company will make a decision to build a mine at the Livengood Gold Project and, if so, that it will be able to obtain the additional financing required on acceptable terms, if at all. In addition, any significant delays in the issuance of required permits for the ongoing work at the Livengood Gold Project, or unexpected results in connection with the ongoing work, could result in the Company being required to raise additional funds to advance permitting efforts. The Company's review of its financing options includes considering a future strategic alliance to assist in further development, permitting and future construction costs, although there can be no assurance that any such strategic alliance will, in fact, be pursued or realized.
Despite the Company's success to date in raising significant equity financing to fund its operations, there is significant uncertainty that the Company will be able to secure any additional financing in the current or future equity markets. Even if the Company is able to secure some additional equity financing, the Company may be unable to raise enough capital to continue its operations in connection with advancing all activities at the Livengood Gold Project through 2024 and beyond. As a result, there is substantial doubt about its ability to continue as a going concern. The amount of funds to be raised and the terms of any proposed equity financing that may be undertaken will be negotiated by management as opportunities to raise funds arise. Specific plans related to the use of proceeds will be devised once financing has been completed and management knows what funds will be available for these purposes. Due to this uncertainty, if the Company is unable to secure sufficient additional financing, the Company may be required to reduce all discretionary activities at the Project to preserve its working capital to fund anticipated non-discretionary expenditures beyond the 2024 fiscal year. As at March 7, 2024, management believes that the Company has sufficient financial resources to maintain its operations for the next twelve months.
The COVID-19 pandemic has resulted in supply chain disruptions, record high inflation and rising interest rates which all have impeded adversely the global economy and tightened the financial markets. It is indeterminable when inflation will be back to a normal level and the economy will recover. These have created uncertainties to whether financing would be available to the Company if the need for funding was to arise.
These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary were the going concern adjustment appropriate. Such adjustments could be material. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation
These consolidated financial statements are presented in United States dollars and have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). On March 7, 2024, the Board approved the consolidated financial statements dated December 31, 2023.
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Basis of consolidation
These consolidated financial statements include the accounts of ITH and its wholly owned subsidiaries TH Alaska, TH US, and LPI. All intercompany transactions and balances have been eliminated.
Significant judgments, estimates and assumptions
The preparation of financial statements in accordance with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. These judgments, estimates and assumptions are regularly evaluated and are based on management's experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.
The areas which require significant judgment and estimates that management has made at the financial reporting date, that could result in a material change to the carrying amounts of assets and liabilities, in the event actual results differ from the assumptions made, relate to, but are not limited to the following:
Significant judgments
- the determination of functional currencies;
- quantitative and qualitative factors used in the assessment of impairment of the Company's mineral property; and
- the analysis of resource calculations, drill results, labwork, etc. which can impact the Company's assessment of impairment, and provisions, if any, for environmental rehabilitation and restoration.
Cash and cash equivalents
Cash equivalents include highly liquid investments with original maturities of three months or less at the date of purchase, and which are subject to an insignificant risk of change in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
Property and equipment
On initial recognition, property and equipment are valued at cost. Property and equipment is subsequently measured at cost less accumulated depreciation, less any accumulated impairment losses, with the exception of land which is not depreciated. Depreciation is recorded over the estimated useful life of the assets at the following annual rates:
Computer equipment - 30% declining balance;
Computer software - 3 years straight line;
Furniture and equipment - 20% declining balance; and
Leasehold improvements - straight-line over the lease term.
Additions during the year are depreciated at one-half the annual rates. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
Mineral property assets
Mineral property costs are expensed as incurred. At such time that the Company determines that a mineral property can be economically developed, subsequent mineral property expenses will be capitalized during the development of such property.
The Company assesses interests in its mineral property assets for impairment at least annually, but will also conduct an assessment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assets that are tested for recoverability are the Company's long-lived assets related to mineral property rights and claims. At December 31, 2023, the Company's mineral property assets totaled approximately $55 million. As these assets are all similar in nature (they represent mining claims or rights to mining claims all within the same area), they are viewed as one asset group for impairment testing purposes. The Company evaluates recoverability of its mineral property assets based on the undiscounted cash flows using the life of mine cash flows beginning with production as stated in the Technical Report Summary (the "TRS") attached as Exhibit 96.1 to the 2022 Annual Report on Form 10-K/A filed with the SEC on October 17, 2023 for the Livengood Gold Project, which uses a life of mine of approximately 21 years. The estimates used in the life of mine cash flows are subject to uncertainty, including as a result of the assumed gold price.
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International Tower Hill Mines Ltd. published this content on 08 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 March 2024 17:37:08 UTC.
