OCEANIC IRON ORE CORP. CONSOLIDATED FINANCIAL STATEMENTS
For the years ended
December 31, 2023 and 2022
Expressed in Canadian Dollars, unless otherwise noted
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Oceanic Iron Ore Corp.
Opinion
We have audited the consolidated financial statements of Oceanic Iron Ore Corp. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of income (loss) and comprehensive income (loss), changes in shareholders' equity, and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company had no revenues, and had negative cash flows from operations during the year ended December 31, 2023 and, as of that date, the Company had a working capital deficit of $841,766 and an accumulated deficit of $33,871,487. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Except for the matter described in the Material Uncertainty Related to Going Concern section of our report, we have determined that there are no key audit matters to communicate in our report.
Other Information
Management is responsible for the other information. The other information comprises the information included in the Management's Discussion and Analysis, but does not include the consolidated financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit 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 Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure, and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter of when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Henry Chow.
Saturna Group Chartered Professional Accountants LLP
Vancouver, Canada
April 25, 2024
Oceanic Iron Ore Corp.
Consolidated Statements of Financial Position
As at December 31, 2023 and 2022
As at | As at | ||||
Notes | December 31, 2023 | December 31, 2022 | |||
Assets | |||||
Current | |||||
Cash | $ | 269,513 | $ | 662,818 | |
Receivables | 6,319 | 5,869 | |||
Prepaid expenses and deposits | 13,552 | 6,976 | |||
289,384 | 675,663 | ||||
Mineral properties | 4 | 44,453,858 | 44,178,442 | ||
Total assets | $ | 44,743,242 | $ | 44,854,105 | |
Liabilities | |||||
Current | |||||
Accounts payable and accrued liabilities | $ | 343,279 | $ | 346,651 | |
Due to related parties | 9 | 475,690 | 197,149 | ||
Current portion of advance royalty payable | 4 | 219,529 | 169,529 | ||
Current portion of convertible debentures | 5 | 92,652 | 1,075,996 | ||
1,131,150 | 1,789,325 | ||||
Non-current portion of advance royalty payable | 4 | 423,652 | 423,221 | ||
Non-current portion of convertible debentures | 5 | 3,357,095 | 3,433,997 | ||
Total liabilities | 4,911,897 | 5,646,543 | |||
Shareholders' equity | |||||
Share capital | 6 | 62,367,906 | 61,886,678 | ||
Reserves | 6 | 11,334,926 | 11,243,969 | ||
Deficit | (33,871,487) | (33,923,085) | |||
Total shareholders' equity | 39,831,345 | 39,207,562 | |||
Total liabilities and shareholders equity | $ | 44,743,242 | $ | 44,854,105 | |
Nature of operations and going concern | 1 | ||||
Commitments | 8 | ||||
Subsequent events | 12 | ||||
Approved by the Board: | |||||
" Steven Dean " | Director | ||||
" Gordon Keep " | Director |
The accompanying notes are an integral part of these consolidated financial statements | 5 |
Oceanic Iron Ore Corp.
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) For the years ended December 31, 2023 and 2022
Year ended | Year ended | ||||
Notes | December 31, 2023 | December 31, 2022 | |||
Expenses | |||||
Consulting and management fees | 9 | $ | 295,000 | $ | 235,000 |
Directors' fees | 9 | 30,000 | 30,000 | ||
License and insurance | 25,481 | 27,831 | |||
Office and general | 25,470 | 28,118 | |||
Professional fees | 33,161 | 102,286 | |||
Rent | 9 | 10,670 | 10,484 | ||
Share-based compensation | 6 | 109,270 | 50,388 | ||
Transfer agent and regulatory | 33,439 | 23,860 | |||
Wages and benefits | 9 | 8,645 | 72,927 | ||
Loss from operations | (571,136) | (580,894) | |||
Other income (expenses) | |||||
Gain (loss) on change in fair value of derivative liabilities | 5 | 1,162,015 | (24,558) | ||
Convertible debenture accretion expense | 5 | (539,281) | (454,455) | ||
Total other income (expenses) | 622,734 | (479,013) | |||
Net income (loss) and comprehensive income (loss) | $ | 51,598 | $ | (1,059,907) | |
Income (loss) per common share | |||||
Basic | $ | 0.00 | $ | (0.01) | |
Diluted | $ | 0.00 | $ | (0.01) | |
Weighted average number of common shares outstanding | |||||
Basic | 103,263,539 | 97,134,682 | |||
Diluted | 103,263,539 | 97,134,682 |
The accompanying notes are an integral part of these consolidated financial statements | 6 |
Oceanic Iron Ore Corp.
Consolidated Statements of Changes in Shareholders' Equity
For the years ended December 31, 2023 and 2022
Notes | Shares | Share capital | Reserves | Deficit | Total equity | |||||
Balance - January 1, 2023 | 99,727,021 | $ | 61,886,678 | $ | 11,243,969 | $ | (33,923,085) | $ | 39,207,562 | |
Share-based payments - stock options | 6c | - | - | 109,270 | - | 109,270 | ||||
Shares issued on settled restricted share units | 6b | 227,491 | 18,313 | (18,313) | - | - | ||||
Shares issued on settled debenture interest | 5 | 5,195,010 | 372,915 | - | - | 372,915 | ||||
Shares issued on redemption of convertible debenture | 5 | 214,285 | 15,000 | - | - | 15,000 | ||||
Settlement of advance royalty payment | 4 | 1,153,846 | 75,000 | - | - | 75,000 | ||||
Net income for the year | - | - | - | 51,598 | 51,598 | |||||
Balance - December 31, 2023 | 106,517,653 | $ | 62,367,906 | $ | 11,334,926 | $ | (33,871,487) | $ | 39,831,345 | |
Shares | Share capital | Reserves | Deficit | Total equity | ||||||
Balance - January 1, 2022 | 96,672,967 | $ | 61,633,048 | $ | 11,205,166 | $ | (32,863,178) | $ | 39,975,036 | |
Share-based payments - stock options | 6c | - | - | 50,388 | - | 50,388 | ||||
Shares issued on settled restricted share units | 6b | 132,669 | 11,585 | (11,585) | - | - | ||||
Shares issued on settled debenture interest | 5 | 838,052 | 67,045 | - | - | 67,045 | ||||
Settlement of advance royalty payment | 4 | 2,083,333 | 175,000 | - | - | 175,000 | ||||
Net loss for the year | - | - | - | (1,059,907) | (1,059,907) | |||||
Balance - December 31, 2022 | 99,727,021 | $ | 61,886,678 | $ | 11,243,969 | $ | (33,923,085) | $ | 39,207,562 |
The accompanying notes are an integral part of these consolidated financial statements | 7 |
Oceanic Iron Ore Corp.
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and 2022
Notes | Year ended | Year ended | |||
December 31, 2023 | December 31, 2022 | ||||
Operating activities | $ | 51,598 | $ | (1,059,907) | |
Net income (loss) | |||||
Adjustments for: | 109,270 | 50,388 | |||
Share-based payments | 6c | ||||
(Gain) loss on change in fair value of derivative liabilities | 5 | (1,162,015) | 24,558 | ||
Convertible debenture accretion expense | 5 | 539,281 | 454,455 | ||
Net changes in non-cash working capital balances: | |||||
Receivables | (212) | (1,873) | |||
Prepaid expenses and deposits | (607) | 7,269 | |||
Accounts payable and accrued liabilities | (46,984) | 53,706 | |||
Due to related parties | 278,541 | (148,172) | |||
Cash used in operating activities | $ | (231,128) | $ | (619,576) | |
Investing activities | |||||
Mineral property expenditures | 4 | (87,177) | (62,254) | ||
Cash used in investing activities | (87,177) | (62,254) | |||
Financing activities | |||||
Interest paid on convertible debenture | 5 | - | (134,090) | ||
Proceeds from convertible debentures | 5 | - | 1,220,000 | ||
Transaction costs on convertible debentures | 5 | - | (9,424) | ||
Settlement of advance royalty payable | 4 | (75,000) | (25,000) | ||
Cash (used in) provided by financing activities | (75,000) | 1,051,486 | |||
Change in cash | (393,305) | 369,656 | |||
Cash, beginning of year | 662,818 | 293,162 | |||
Cash, end of year | $ | 269,513 | $ | 662,818 | |
Non-cash investing and financing activities | |||||
Accretion of advance royalty payable | 123,752 | 120,497 | |||
Recognition of additional advance royalty payable | 76,678 | 76,678 | |||
Settlement of convertible debenture interest | 372,915 | 67,045 | |||
Settlement of advance royalty payable in shares | 75,000 | 175,000 | |||
Issuance of common shares for settlement of restricted share units | 18,313 | 11,585 | |||
Transaction costs on convertible debentures included in accounts payable | 49,597 | 83,458 |
The accompanying notes are an integral part of these consolidated financial statements | 8 |
Oceanic Iron Ore Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
1. NATURE OF OPERATIONS AND GOING CONCERN
Oceanic Iron Ore Corp. ("Oceanic" or the "Company") is an exploration-stage company engaged in the acquisition and exploration of iron ore properties in Québec, Canada. The Company was incorporated on March 8, 1986 under the British Columbia Business Corporations Act. The Company maintains its head office at 595 Burrard Street, Suite 3083, Vancouver, British Columbia. The Company's registered/records office is located at 1500 - 1055 West Georgia Street, Vancouver, British Columbia. Its common shares are traded on the TSX Venture Exchange under the symbol "FEO".
The Company acquired a 100% interest in certain mining claims (the "Property") located near Ungava Bay, Québec, Canada, in November 2010. The Company is currently conducting exploration activities on the Property. The Property comprises three project areas: Hopes Advance (also referred to as the "Hopes Advance Project" throughout), Morgan Lake and Roberts Lake, which cover over 35,264 hectares and 844 claim cells with iron formation and are located within 20 to 50 km from tidewater. The Company operates as a single reportable segment, being the exploration of the Property. All of the Company's non-current assets are located in Canada.
While these consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due, certain conditions and events result in a material uncertainty casting significant doubt on the validity of this assumption. For the year ended December 31, 2023, the Company has no revenues and had negative cash flows from operations. As at December 31, 2023, the Company had an accumulated deficit of $33,871,487 and a working capital deficit of $841,766.
The Company's ability to continue on a going concern basis for and beyond the next twelve months depends on its ability to successfully raise additional financing for continued operations and for the necessary capital expenditures required to achieve planned principal operations. The Company continues to pursue a number of options to improve its financial capacity, including securing a strategic partner to further advance the Hopes Advance project. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company.
These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate, and these adjustments could be material.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS"). The accounting policies followed in these consolidated financial statements have been consistently applied in all periods presented.
These consolidated 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 consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiary. Certain prior period amounts have been reclassified to conform to the presentation in the current period. These consolidated financial statements include the accounts of the Company and its inactive subsidiary incorporated in Canada.
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Oceanic Iron Ore Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
-
BASIS OF PRESENTATION (continued)
These consolidated financial statements were approved by the board of directors on April 25, 2024. - MATERIAL ACCOUNTING POLICIES Cash and cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less at the time of issuance that are readily convertible into cash, and which are subject to insignificant risk of changes in value to be cash equivalents.
Earnings (loss) per share
The basic earnings (loss) per share is computed by dividing the earnings by the weighted average number of common shares outstanding during the period.
Provided that they are not anti-dilutive, the diluted earnings per share reflects the potential dilution of common share equivalents, such as convertible debentures, outstanding stock options and share purchase warrants, in the weighted average number of common shares outstanding during the year, if exercised. For this purpose, the treasury stock method is used whereby the assumed proceeds upon the exercise of stock options and warrants are assumed to be used to purchase common shares at the average market price during the period.
Share issue costs
Share issue costs incurred on the issue of the Company's shares are charged directly to share capital. Share-basedpayments
Share-based payments to employees and others providing similar services are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The amount recognized as an expense is adjusted to reflect the number of awards expected to vest. Consideration received on the exercise of stock options and share purchase warrants is recorded as share capital and the related reserves are transferred to share capital. Charges for stock options that are forfeited before vesting are reversed from reserves.
Current and deferred income taxes
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the consolidated statement of income (loss) except to the extent that it relates to items recognized either in other comprehensive income or directly in equity, in which case it is recognized in other comprehensive income or in equity, respectively. Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Deferred income tax assets and liabilities are determined based on the differences between the tax basis of assets and liabilities and the amounts reported in the consolidated financial statements. The deferred income tax assets or liabilities are calculated using the tax rates enacted or substantially enacted for the periods in which the differences are expected to be settled. Deferred income tax assets are recognized to the extent that they are considered more likely than not to be realized.
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Oceanic Iron Ore Corp. published this content on 29 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2024 15:01:27 UTC.
