TREASURY METALS INC. 2023
CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEARS ENDED
DECEMBER 31, 2023 AND 2022
(Expressed in Canadian dollars)
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Treasury Metals Inc.
Opinion
We have audited the consolidated financial statements of Treasury Metals Inc. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of operations, other comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.
Basis for Opinion
We conducted our audit 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 incurred a net loss of $13,386,211 during the year ended December 31, 2023 and, as of that date, the Company has a cumulative deficit of $143,974,139. 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.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matter to be communicated in our auditor's report.
Evaluation of Impairment Indicators of Mineral Properties
Refer to consolidated financial statement Note 2 - Summary of material accounting policies, and Note 9 - Mineral properties.
The carrying value of the Company's mineral properties is $103,379,208 as at December 31, 2023. At each reporting period, management assesses whether there is an indication that mineral properties are impaired. If such indicators exist, the asset's recoverable amount is estimated. Impairment indicators include internal and external factors, such as (i) evidence indicating that the Company's right to explore the area has expired or will expire in the near future, (ii) management does not have any plans to continue exploration expenditures, (iii) lack of evidence to support technical feasibility or commercial viability, and (iv) facts and circumstances that suggest that the carrying amount exceeds recoverable amount. No impairment indicators were identified by management
as at December 31, 2023.
We considered this a key audit matter due to the significance of the mineral properties in the consolidated financial statements and the level of auditor judgement required in applying and evaluating the results of audit procedures to assess the factors considered by management in its assessment of impairment indicators.
How our audit addressed the Key Audit Matter
- For a sample of claims we obtained, by reference to government registries, evidence to support the right to explore the area and claim expiration dates;
- Evaluated management's assumptions related to continued and planned expenditures which included evaluating the results of current year work programs and inspecting board meeting minutes and budget approvals to evidence continued and planned exploration expenditures;
- Assessed whether there are facts and circumstances that could indicate that the carrying values of the exploration and evaluation assets may not be recoverable, based on evidence obtained in other areas of the audit; and
- Assessed the Company's market capitalization to net assets ratio at December 31, 2023 and the change in the price of gold from December 31, 2022 to December 31, 2023.
Other Information
Management is responsible for the other information. The other information comprises the information included in the Management's Discussion and Analysis (MD&A), but does not include the 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 identified above 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.
We obtained the MD&A prior to the date of this auditor's report. If, based on the work we have performed, we 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 are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or 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 Stephen McCourt.
Chartered Professional Accountants
Licensed Public Accountants
March 21, 2024
Toronto, Ontario
TREASURY METALS INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed In Canadian Dollars)
December 31 | December 31 | ||||||
($) | 2023 | 2022 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents (Note 5) | 9,430,567 | 16,020,110 | |||||
Accounts receivable and prepaid expenses (Note 6) | 1,586,990 | 864,263 | |||||
Investments (Note 7) | 665,911 | 664,433 | |||||
Total current assets | 11,683,468 | 17,548,806 | |||||
Non-current assets | |||||||
Property and equipment (Note 8) | 2,620,606 | 2,809,429 | |||||
Mineral properties (Note 9) | 103,379,208 | 103,379,208 | |||||
Total non-current assets | 105,999,814 | 106,188,637 | |||||
Total assets | 117,683,282 | 123,737,443 | |||||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable and accrued liabilities (Note 10) | 1,118,576 | 1,219,369 | |||||
Current portion of long-term debt (Note 11) | 109,951 | 6,881,843 | |||||
Current portion of SRSR payment obligation (Note 12) | 1,860,845 | 1,729,207 | |||||
Derivative liability (Note 11) | - | 22,738 | |||||
Flow-through premium (Note 13) | 102,578 | - | |||||
Total current liabilities | 3,191,950 | 9,853,157 | |||||
Non-current liabilities | |||||||
Long-term debt (Note 11) | 7,508,736 | 251,837 | |||||
Derivative liability (Note 11) | 59,544 | - | |||||
SRSR payment obligation (Note 12) | 7,462,089 | 9,547,090 | |||||
Total non-current liabilities | 15,030,369 | 9,798,928 | |||||
Total liabilities | 18,222,319 | 19,652,085 | |||||
Shareholders' Equity | |||||||
Capital stock (Note 14) | 216,257,231 | 209,595,606 | |||||
Warrants (Note 15) | 918,209 | - | |||||
Contributed surplus | 27,283,223 | 26,102,719 | |||||
Deficit | (143,974,139) | (130,587,928) | |||||
Accumulated other comprehensive loss | (1,023,561) | (1,025,039) | |||||
99,460,963 | 104,085,358 | ||||||
Total liabilities and shareholders' equity | 117,683,282 | 123,737,443 | |||||
Nature of Operations and Going Concern (Note 1) | |||||||
Commitments and Contractual Obligations and Contingencies (Note 20) | |||||||
Subsequent Events (Note 22) | |||||||
SIGNED ON BEHALF OF THE BOARD | |||||||
(Signed) | "Margot Naudie" | (Signed) | "James Gowans" | ||||
Director | Director |
The accompanying notes are an integral part of these consolidated financial statements.
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TREASURY METALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed In Canadian Dollars)
For the years ended | ||
December 31 | December 31 | |
($) | 2023 | 2022 |
Expenses | ||
Exploration and evaluation (Note 17) | 6,928,131 | 14,114,808 |
Administrative, office and shareholder services | 1,124,337 | 1,533,028 |
Professional fees | 605,031 | 251,383 |
Salary and benefits | 2,312,502 | 2,149,737 |
Amortization (Note 8) | 202,384 | 235,741 |
Share-based payments (Note 16) | 1,314,458 | 1,646,833 |
Accretion of long-term debt (Note 11 & Note 12) | 1,156,111 | 1,186,944 |
Finance expense | 227,942 | 238,923 |
Foreign exchange loss (gain) | (383,584) | 1,084,930 |
Loss on debt extinguishment (Note 11) | 464,995 | - |
Gain on debt and derivative liability (Note 11) | (101,696) | (687,294) |
Write-down of mineral properties (Note 9) | - | 100,000 |
Loss before income tax | (13,850,611) | (21,855,033) |
Income from recognition of flow-through premium (Note 13) | 464,400 | 1,561,508 |
Net Loss for the year | (13,386,211) | (20,293,525) |
Loss per share - basic and diluted | (0.09) | (0.15) |
Weighted average number of shares outstanding (Note 2) | 146,294,318 | 138,054,413 |
The accompanying notes are an integral part of these consolidated financial statements.
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TREASURY METALS INC.
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS (Expressed In Canadian Dollars)
For the years ended | ||
December 31 | December 31 | |
($) | 2023 | 2022 |
Net loss for the year | (13,386,211) | (20,293,525) |
Other comprehensive income (loss) | ||
Items to be reclassified to profit or loss in subsequent years | ||
Fair value on equity investments, net of taxes | 1,478 | (29,392) |
Other comprehensive income (loss) for the year | 1,478 | (29,392) |
Total comprehensive loss for the year | (13,384,731) | (20,322,917) |
The accompanying notes are an integral part of these consolidated financial statements.
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TREASURY METALS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Expressed In Canadian Dollars)
Accumulated | |||||||||
Other | |||||||||
Contributed | Comprehensive | ||||||||
($) | Common Shares | Capital Stock | Warrants | Surplus | Deficit | Loss | Total | ||
Balance, January 1, 2022 | 137,879,334 | 209,453,412 | - | 24,598,080 | (110,294,403) | (995,647) | 122,761,442 | ||
Share-based payments - compensation (Note 16) | - | - | - | 873,720 | - | - | 873,720 | ||
Share-based payments - restricted share units | |||||||||
(Note 16) | - | - | - | 773,113 | - | - | 773,113 | ||
Restricted share units redeemed (Notes 16) | 288,753 | 142,194 | - | (142,194) | - | - | - | ||
Net income for the year | - | - | - | - | (20,293,525) | - | (20,293,525) | ||
Other comprehensive (loss) for the year | - | - | - | - | - | (29,392) | (29,392) | ||
Balance, December 31, 2022 | 138,168,087 | 209,595,606 | - | 26,102,719 | (130,587,928) | (1,025,039) | 104,085,358 | ||
Share-based payments - compensation (Note 16) | - | - | - | 131,350 | - | - | 131,350 | ||
Share-based payments - restricted share units | |||||||||
(Note 16) | - | - | - | 1,183,108 | - | - | 1,183,108 | ||
Restricted share units redeemed (Note 16) | 437,235 | 133,954 | - | (133,954) | - | - | - | ||
Flow-through share issuance (Note 13) | 3,115,265 | 841,122 | - | - | - | - | 841,122 | ||
Issuance of warrants at fair value (Note 15) | - | - | 464,995 | - | - | - | 464,995 | ||
Share issued for repayment of SRSR obligation | |||||||||
(Note 12) | 6,925,456 | 2,011,273 | - | - | - | - | 2,011,273 | ||
Returned shares | (17,144) | - | - | - | - | - | - | ||
Shares issued in private placement | 29,603,572 | 4,144,500 | - | - | - | - | 4,144,500 | ||
Share issue costs | (16,010) | - | - | - | - | (16,010) | |||
Issuance of warrants at fair value (Note 15) | - | (453,214) | 453,214 | - | - | - | - | ||
Net income (loss) for the year | - | - | - | - | (13,386,211) | - | (13,386,211) | ||
Other comprehensive income (loss) for the year | - | - | - | - | - | 1,478 | 1,478 | ||
Balance, December 31, 2023 | 178,232.471 | 216,257,231 | 918,209 | 27,283,223 | (143,974,139) | (1,023,561) | 98,460,963 |
The accompanying notes are an integral part of these consolidated financial statements.
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TREASURY METALS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars)
For the years ended | ||
December 31 | December 31 | |
($) | 2023 | 2022 |
Cash and cash equivalents (used in) provided by: | ||
Operating Activities | ||
Net Loss for the year | (13,386,211) | (20,293,525) |
Adjustments for: | ||
Amortization (Note 8) | 202,384 | 235,741 |
Income from recognition of flow-through premium (Note 13) | (464,400) | (1,561,508) |
Share-based payments (Note 16) | 1,314,458 | 1,646,833 |
Accretion on SRSR Payment obligation (Note 12) | 976,185 | 829,859 |
Accretion on long-term debt (Note 11) | 179,926 | 357,085 |
Loss (gain) on debt extinguishment (Note 11) | 464,995 | - |
Loss (gain) on debt and derivative liability (Note 11) | (101,696) | (687,294) |
Foreign exchange (gain) loss | (383,584) | 1,236,805 |
Finance Expense & income | 710,784 | 616,294 |
Write-down of mineral properties (Note 9) | - | 100,000 |
Net change in non-cash working capital items: | ||
Accounts receivable and prepaid expenses | (722,727) | 262,599 |
Accounts payable and accrued liabilities | (100,793) | (528,144) |
Net cash flows used in operating activities | (11,310,679) | (17,785,255) |
Financing Activities | ||
Proceeds from SRSR obligation | - | 10,958,800 |
Proceeds from flow-through financing (Note 13) | 1,408,100 | - |
Proceeds from private placement, net of issue costs (Note 14) | 4,128,490 | - |
Payment of lease liabilities | (120,843) | (104,485) |
Repayment of SRSR obligation (Note 12) | (681,050) | (1,337,150) |
Net cash flows provided by (used in) financing activities | 4,734,697 | 9,517,165 |
Investing Activities | ||
Acquisition of property and equipment | (13,561) | (21,415) |
Proceeds from sale of royalty (Note 9) | - | 14,219,200 |
Net cash flows provided by (used in) investing activities | (13,561) | 14,197,785 |
Increase (decrease) in cash and cash | ||
equivalents | (6,589,543) | 5,929,695 |
Cash and cash equivalents, beginning of year | 16,020,110 | 10,090,415 |
Cash and cash equivalents, end of year | 9,430,567 | 16,020,110 |
Supplementary cash flow information | ||
Changes in non-cash activities: | ||
Payment of debt with shares (Note 12) | 2,011,273 | - |
Capitalized interest on long-term debt (Note 11) | 727,059 | 602,981 |
The accompanying notes are an integral part of these consolidated financial statements.
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TREASURY METALS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2023 and 2022 (Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Treasury Metals Inc. (the "Company" or "Treasury Metals") is incorporated under the laws of Ontario and listed on the Toronto Stock Exchange under the symbol "TML". The address of the Company's registered office is 15 Toronto Street, Suite 401, Toronto, Ontario, Canada M5C 2E3. The mineral properties of Treasury Metals are all located in Canada, are in the exploration stage. The recoverability of the amounts shown on the consolidated statements of financial position for mineral properties is dependent upon the existence of economically recoverable reserves, maintaining beneficial interest in its properties and the underlying mining claims, obtaining the necessary regulatory approvals and permits, the ability to obtain the necessary financing to fulfill its obligations as they arise, the ability to complete the development of the claims, and achieving profitable production or the proceeds from the disposition of the properties. The Company's success depends on the successful development of the properties and corresponding permitting and feasibility study. Based upon its current operating and financial plans, management of the Company believes that it will have sufficient access to financial resources (debt and equity), in the near term, to fund the Company's planned operations and development of the Goliath Gold Complex.
The consolidated financial statements were prepared on a going concern basis, which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company has not generated revenue from operations. On December 31, 2023, the Company's working capital was $8,594,096 (December 31, 2022 - $7,718,386) excluding the flow-through share premium liability and the derivative liability. For the year ended December 31, 2023, the Company incurred a net loss of $13,386,211 (December 31, 2022 - net loss of $20,293,525), had cash outflows from operations of $11,310,679 (December 31, 2022 - $17,785,255), had not yet achieved profitable operations, had accumulated losses of $143,974,139 (December 31, 2022 - $130,587,928) and expects to incur further losses in the development of its business. Should the Company be unable to raise sufficient financing to maintain operations, the Company may be unable to realize the carrying value of its net assets. These uncertainties cast significant doubt upon the Company's ability to continue as a going concern.
These consolidated financial statements do not reflect the adjustments to carrying amounts of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary if the going concern assumption was deemed inappropriate. Such adjustments could be material.
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board ("IASB") and their interpretations issued by the IFRS Interpretations Committee which have been consistently applied.
The consolidated financial statements have been prepared on a historical cost basis except for financial instruments, as set out in the accounting policies in note 2 of these consolidated financial statements.
These consolidated financial statements were approved by the Company's Board of Directors on March 21, 2024.
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Treasury Metals Inc. published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 12:03:05 UTC.
