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Eskay Mining Corp — Interim / Quarterly Report 2025
Oct 29, 2024
43802_rns_2024-10-29_5434cf43-f1a6-4f19-a54e-595da29ca56c.pdf
Interim / Quarterly Report
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ESKAY MINING CORP. CONDENSED INTERIM FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED AUGUST 31, 2024 AND 2023 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)
Notice to Reader
The accompanying unaudited condensed interim financial statements of Eskay Mining Corp. (the "Company") have been prepared by and are the responsibility of management. The unaudited condensed interim financial statements have not been reviewed by the Company's auditors.
Eskay Mining Corp. Condensed Interim Statements of Financial Position (Expressed in Canadian Dollars) (Unaudited)
| As at | As at | |||
|---|---|---|---|---|
| August 31, | February 29, | |||
| 2024 | 2024 | |||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 2,125,900 | $ | 2,839,947 |
| Amounts receivable (note 6) | 927,551 | 977,571 | ||
| Prepaid expenses and other deposits(note 3) | 132,313 | 25,530 | ||
| Total current assets | 3,185,764 | 3,843,048 | ||
| Non-current assets | ||||
| Deposits (note 4) | 63,070 | 99,503 | ||
| Investment in associate (note 9) | 1,816,177 | 1,896,156 | ||
| Equipment(note 5) | 192,284 | 213,649 | ||
| Total assets | $ | 5,257,295 | $ | 6,052,356 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Current liabilities | ||||
| Amountspayable and other liabilities(note 8) | $ | 396,800 | $ | 302,167 |
| Total current liabilities | 396,800 | 302,167 | ||
| Non-current liabilities | ||||
| Provision for reclamation(note 7) | 79,264 | 76,917 | ||
| Total liabilities | 476,064 | 379,084 | ||
| Shareholders' equity | ||||
| Share capital (note 10) | 113,693,197 | 113,693,197 | ||
| Reserves (notes 11 & 12) | 14,849,732 | 14,728,845 | ||
| Accumulated deficit | (123,761,698) | (122,748,770) | ||
| Total shareholders' equity | 4,781,231 | 5,673,272 | ||
| Total shareholders' equity and liabilities | $ | 5,257,295 | $ | 6,052,356 |
| Nature of operations and going concern (note 1) | ||||
| Commitments and contingencies (note 16) | ||||
| Subsequent events (note 18) |
Approved on behalf of the Board of Directors:
"Hugh M. (Mac) Balkam", Director
"J. Gordon McMehen", Director
The accompanying notes to the financial statements are an integral part of these statements.
- 1 -
Eskay Mining Corp.
Condensed Interim Statements of Loss and Comprehensive Loss (Expressed in Canadian dollars) (Unaudited)
| Three | Months | Months | Six Months | Six Months | Six Months | |||
|---|---|---|---|---|---|---|---|---|
| Ended | Ended | |||||||
| August 31, | August 31, | |||||||
| 2024 | 2023 | 2024 | 2023 | |||||
| Operating expenses | ||||||||
| Exploration and evaluation expenditures (note 4) | $ | 248,117 | $ | (1,236,727) | $ | 303,774 | $ | (1,047,159) |
| General and administrative(note 14) | 298,492 | 367,413 | 871,192 | 1,381,976 | ||||
| Total operating expenses | (546,609) | 869,314 | (1,174,966) | (334,817) | ||||
| Other items | ||||||||
| Interest income | 7,532 | 14,463 | 12,141 | 36,623 | ||||
| Amortization (note 5) | (10,683) | (8,750) | (21,365) | (17,502) | ||||
| Gain on termination of Seabridge loan | - | 3,158,353 | - | 3,158,353 | ||||
| Loss from investment in associate(note 9) | (49,413) | (74,306) | (79,979) | (118,990) | ||||
| Net income (loss) and comprehensive | ||||||||
| income(loss) for theperiod | $ | (599,173) | $ | 3,959,074 | $ | (1,264,169) | $ | 2,723,667 |
| Net income (loss) per share - Basic and | ||||||||
| Diluted (note 13) | $ | (0.00) | $ | 0.02 | $ | (0.01) | $ | 0.01 |
| Weighted average number of common | ||||||||
| shares outstanding - Basic(note 13) | 183,617,123 | 183,492,123 | 183,617,123 | 183,617,123 | ||||
| Weighted average number of common shares | ||||||||
| outstanding - Diluted(note 13) | 183,617,123 | 188,713,013 | 183,617,123 | 188,378,965 |
The accompanying notes to the financial statements are an integral part of these statements. - 2 -
Eskay Mining Corp. Condensed Interim Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited)
| Six Months | Six Months | Six Months | ||
|---|---|---|---|---|
| Ended | ||||
| August 31, | ||||
| 2024 | 2023 | |||
| Operating activities | ||||
| Net (loss) income for the period | **$ ** | (1,264,169) | $ | 2,723,667 |
| Adjustments for: | ||||
| Share-based payments (note 11) | 372,128 | 771,677 | ||
| Gain on seabridge loan termination | - | (3,158,353) | ||
| Amortization (note 5) | 21,365 | 17,502 | ||
| Accretion (notes 7) | 2,347 | 2,752 | ||
| Loss from investment in associate (note 9) | 79,979 | 118,990 | ||
| Changes in non-cash working capital items: | ||||
| Amounts receivable | 50,020 | (2,086,847) | ||
| Prepaid expenses and other deposits | (70,350) | (390,988) | ||
| Amountspayable and other liabilities | 94,633 | 1,249,676 | ||
| Net cash used in operating activities | (714,047) | (751,924) | ||
| Net change in cash and cash equivalents | (714,047) | (751,924) | ||
| Cash and cash equivalents, beginning ofperiod | 2,839,947 | 3,024,574 | ||
| Cash and cash equivalents, end ofperiod | $ | 2,125,900 | $ | 2,272,650 |
| Supplemental information | ||||
| Proceeds received from mineral claim sales | $ | - | $ | 2,000,000 |
| Cash and cash equivalents | ||||
| Cash | $ | 375,900 | $ | 2,172,650 |
| GIC | $ | 1,750,000 | $ | 100,000 |
The accompanying notes to the financial statements are an integral part of these statements.
- 3 -
Eskay Mining Corp. Condensed Interim Statements of Changes in Shareholders' Equity (Expressed in Canadian Dollars) (Unaudited)
Equity attributable to shareholders
| Share | Accumulated | ||||
|---|---|---|---|---|---|
| capital | Reserves | deficit | Total | ||
| Balance, February 28, 2023 | $113,693,197 | $ 14,900,884 | $ (122,757,263) | $ | 5,836,818 |
| Expiry of stock options | - | (31,081) | 31,081 | - | |
| Expiry of warrants | - | (375,028) | - | (375,028) | |
| Share-based payments (note 14) | - | 771,677 | - | 771,677 | |
| Net loss for the period | - | - | 2,723,667 | 2,723,667 | |
| Balance, August 31, 2023 | $113,693,197 | $ 15,266,452 | $ (120,002,515) | $ | 8,957,134 |
| Balance, February 29, 2024 | $113,693,197 | $ 14,728,845 | $(122,748,770) | $ | 5,673,272 |
| Expiry of stock options | - | (251,241) | 251,241 | - | |
| Share-based payments (note 11) | - | 372,128 | - | 372,128 | |
| Net loss for the period | - | - | (1,264,169) | (1,264,169) | |
| Balance, August 31, 2024 | $113,693,197 | $ 14,849,732 | $ (123,761,698) | $ | 4,781,231 |
The accompanying notes to the financial statements are an integral part of these statements. - 4 -
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
Eskay Mining Corp.
1. Nature of operations and going concern
Eskay Mining Corp. (the "Company" or "Eskay") is a Canadian company incorporated in British Columbia and listed for trading on the TSX Venture Exchange ("TSXV"), the Frankfurt Stock Exchange and the OTCQB Venture Market in the United States. The Company is primarily engaged in the acquisition and exploration of mineral properties. The primary office is located at The Canadian Venture Building, 82 Richmond Street East, Toronto, Ontario, M5C 1P1.
These unaudited condensed interim financial statements were approved by the board of directors on October 29, 2024.
These unaudited condensed interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The Company has incurred losses in prior periods, and had a net loss of $1,264,169 during the six months ended August 31, 2024 (six months ended August 31, 2023 - net income of $2,723,667), has an accumulated deficit of $123,761,698 (February 29, 2024 - $122,748,770). These conditions indicate that material uncertainties exist that cast significant doubt on the Company's ability to continue as a going concern.
The Company’s ability to continue to meet its obligations and carry out its planned exploration activities is uncertain and dependent upon the continued financial support of its shareholders and securing additional financing. While the Company has been successful in securing financing in the past, there is no assurance that it will be able to do so in the future. If the going concern assumption was not used, then the adjustments required to report the Company’s assets and liabilities on a liquidation basis could be material to these unaudited condensed interim financial statements.
Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of operations of such properties, these procedures do not guarantee the Company's title. Property title may be subject to social and government licensing requirements or regulations, unregistered prior agreements, unregistered claims, aboriginal claims, and noncompliance with regulatory and environmental requirements. The Company's mineral exploration property interests may also be subject to increases in taxes and royalties, renegotiation of contracts, and political uncertainty.
2. Significant accounting policies
(a) Statement of compliance
The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”). These unaudited condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements.
The policies applied in these unaudited condensed interim financial statements are based on IFRSs issued and outstanding as of October 29, 2024, the date the Board of Directors approved these unaudited condensed interim financial statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim financial statements as compared with the most recent annual financial statements as at and for the year ended February 29, 2024, except as noted below. Any subsequent changes to IFRS that are given effect in the Company’s annual financial statements for the year ending February 28, 2025 could result in restatement of these unaudited condensed interim financial statements.
- 5 -
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
Eskay Mining Corp.
2. Significant accounting policies (continued)
- (b) New accounting policies
IAS 1 Classification of Liabilities as Current or Non-Current (Amendment)
The IASB has published Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) which clarifies the guidance on whether a liability should be classified as either current or non-current. The amendments:
-
clarify that the classification of liabilities as current or non-current should only be based on rights that are in place "at the end of the reporting period"
-
clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability
-
make clear that settlement includes transfers to the counterparty of cash, equity instruments, other assets or services that result in extinguishment of the liability.
This amendment was adopted March 1, 2024 and there was no impact on the adoption of this amendment.
3. Prepaid expenses and other deposits
| As at | As at | |||
|---|---|---|---|---|
| August 31, | February 29, | |||
| 2024 | 2024 | |||
| Prepaid expenses(1) | $ | 32,313 | $ | 25,530 |
| Deposits(2) | 100,000 | - | ||
| $ | 132,313 | $ | 25,530 |
(1) As at August 31, 2024, included in prepaid expenses are $2,063 (February 29, 2024 - $2,063), for an advance to the CEO of the Company.
(2) As at August 31, 2024, there are deposits of $100,000 (February 29, 2024 - $nil), related to services to P2Gold Inc.
4. Exploration and evaluation expenditures
| Three | Three | Months | Six Months | Six Months | Six Months | |||
|---|---|---|---|---|---|---|---|---|
| Ended | Ended | |||||||
| August 31, | August 31, | |||||||
| 2024 | 2023 | 2024 | 2023 | |||||
| ESKAY-Corey | ||||||||
| Surveying, sampling and analysis | $ | 53,253 | $ | 290,256 | $ | 68,589 | $ | 308,891 |
| Geological and consulting | 164,186 | 1,009,591 | 200,873 | 1,167,816 | ||||
| Camping procurement and expediting | - | 473,875 | 100 | 484,886 | ||||
| Claims | - | 19,827 | 360 | 19,827 | ||||
| Transportation | 29,505 | 968,348 | 31,505 | 968,669 | ||||
| Accretion (note 7) | 1,173 | 1,376 | 2,347 | 2,752 | ||||
| Sale of mineral claims | - | (4,000,000) | - | (4,000,000) | ||||
| Total exploration and evaluation | ||||||||
| expenditures (recovery) | $ | 248,117 | $ | (1,236,727) | $ | 303,774 | $ | (1,047,159) |
- 6 -
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
Eskay Mining Corp.
4. Exploration and evaluation expenditures (continued)
ESKAY-Corey
The ESKAY-Corey property is comprised of the following:
St. Andrew (SIB)
Pursuant to an option agreement dated May 7, 2008 and amending option agreement dated January 17, 2013 with St. Andrew Goldfields Ltd., the Company earned an 80% interest in the SIB Property at Eskay Creek, British Columbia (the “Property”) by expending an aggregate of $3.98 million on exploration of the Property and issuing further 265,000 common shares. On January 26, 2016, Kirkland Lake Gold Inc. ("Kirkland Lake") announced it completed the acquisition of St. Andrew. St. Andrew is a wholly-owned subsidiary of Kirkland Lake and continued to hold a 20% interest in the SIB Property. St. Andrew and the Company entered into an agreement with an effective date of November 25, 2016 for the further exploration and development of the Property. Pursuant to a Royalty Agreement dated March 8, 2021, the Company acquired the remaining 20% interest in SIB from Kirkland Lake, to hold a 100% working interest, in consideration for the granting of a 2% Net Smelter Returns Royalty on the SIB in favour of Kirkland Lake.
Corey claim
In September 1990, the Company acquired a 100% interest in mineral tenures located in the Skeena Mining Division, Province of British Columbia for $30,000 cash and a royalty of 5% of net profits from these claims to a maximum of $250,000.
These mineral exploration properties are located in northwestern British Columbia, 70 km northwest of Stewart. The Company holds a 100% interest in these mineral tenures subject to a 2% net smelter royalty.
On July 7, 2023, the Company sold 5 mining claims in the Golden Triangle area of BC to Skeena Resources Limited ("Skeena") in consideration for aggregate cash payments of $4 million. The initial consideration of $2 million was paid to the Company on closing, a further $1 million was paid on October 31, 2023 and the final $1 million payment was paid on December 31, 2023. Eskay retains a 2% net smelter royalty ("Royalty") in the Claims. Skeena can purchase 50% of the Royalty at any time for $2 million. In addition, Eskay will not be required to pay any road use fees to Skeena for its use of the Eskay Creed Road for the five year period ending December 31, 2027, provided that its road use those years is consistent with its road use in 2022. Four of the claims are north and west of the Skeena Eskay Creek Project and one of the Claims is adjacent to the west side of the Skeena Eskay Creek Project.
Deposits and Exploration Advances
As at August 31, 2024, the Company had $63,070 (February 29, 2024 - $99,503) of deposits and exploration advances held by the provincial government of British Columbia. Such deposits were required by the B.C Ministry of Energy and Mines in order to permit the Company to conduct exploration and evaluation activities in that province.
5. Equipment
Cost
| Balance, February | 28, | 2023 | $ | 224,497 | |||
|---|---|---|---|---|---|---|---|
| Addition | 77,513 | ||||||
| **Balance, February ** | 29, | 2024 | and August | **31, ** | 2024 | $ | 302,010 |
- 7 -
Eskay Mining Corp.
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
5. Equipment (continued)
| Accumulated amortization | ||
|---|---|---|
| Balance, February 28, 2023 | $ | 49,482 |
| Amortization | 38,879 | |
| Balance, February 29, 2024 | $ | 88,361 |
| Amortization | 21,365 | |
| Balance, August 31, 2024 | $ | 109,726 |
| Carrying amounts | ||
| At February 29, 2024 | $ | 213,649 |
| At August 31, 2024 | $ | 192,284 |
6. Amounts receivable
| August 31, | February 29, | ||
|---|---|---|---|
| 2024 | 2024 | ||
| Sales tax recoverable - (Canada) | $ | 66,870 $ | 153,323 |
| Provincial sales tax - BC | 216 | 216 | |
| B.C. Miningtax credit receivable | 860,465 | 824,032 | |
| $ | 927,551 $ | 977,571 |
7. Provision for reclamation
The Company's provision for reclamation costs is based on management's estimated costs to dismantle and remove its facilities as well as an estimate of the future timing of the costs to be incurred. The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the provision for closure and reclamation associated with the dismantling and removal of the Company's camp:
| Balance at February 29, 2024 | $ | 76,917 |
|---|---|---|
| Accretion | 2,347 | |
| Balance at August 31, 2024 | $ | 79,264 |
The Company has estimated its total provision for reclamation to be $79,264 at August 31, 2024 (February 29, 2024 - $76,917) based on an estimated total future liability of approximately $131,152 and an inflation rate of 2.60% (February 29, 2024 - 2.6%) and a discount rate of 3.49% (February 29, 2024 - 3.49%).
- 8 -
Eskay Mining Corp.
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
8. Amounts payable and other liabilities
Amounts payable and other liabilities of the Company are principally comprised of amounts outstanding for purchases relating to exploration and evaluation expenditures and general operating and administrative activities:
| August 31, | February 29, | |||
|---|---|---|---|---|
| 2024 | 2024 | |||
| Accounts payable | $ | 169,704 | $ | 211,791 |
| Accruals and others | 227,096 | 90,376 | ||
| Total amounts payable and other liabilities | $ | 396,800 | $ | 302,167 |
| The following is an aged analysis of amounts payable and other liabilities: | ||||
| August 31, | February 29, | |||
| 2024 | 2024 | |||
| Less than 1 month | $ | 237,673 | $ | 250,590 |
| 1 to 3 months | 2,662 | 55,717 | ||
| Greater than 3 months | 156,465 | (4,140) | ||
| Total amounts payable and other liabilities | $ | 396,800 | $ | 302,167 |
9. Investment in associate
An associate is an entity over which the Company has significant influence, and is not a subsidiary or joint venture. Significant influence is presumed to exist when the Company has the power to be actively involved and influential in financial and operating policy decisions of the associate.
The Company accounts for its investment in an associate using the equity method. Under the equity method, the Company's investment in an associate is initially recognized at cost and subsequently increased or decreased to recognize the Company's share of profit and loss of the associate and for impairment losses after the initial recognition date. The Company's share of comprehensive earnings or losses of associates is recognized in comprehensive income (loss) during the period. Distributions received from an associate are accounted for as a reduction in the carrying amount of the Company's investment.
For the three and six months ended August 31, 2024, the Company recognized its share of Garibaldi Resources Corp. ("GGI") loss of $49,413 and $79,979, respectively (three and six months ended August 31, 2023 - $74,306 and $118,990, respectively), using the equity method.
As at August 31, 2024, the Company has a total ownership of 17.25%.
- 9 -
Eskay Mining Corp.
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
9. Investment in associate (continued)
The changes to the carrying amounts presented in the consolidated statement of financial position can be summarized as follows:
| As at | As at | |||
|---|---|---|---|---|
| August 31, | February 28, | |||
| 2024 | 2024 | |||
| Balance, beginning of year | $ | 1,896,156 | $ | 5,690,302 |
| Impairment loss | - | (3,331,019) | ||
| Loss from investment in associate | (79,979) | (461,142) | ||
| Loss on dilution of investment in associate | - | (1,985) | ||
| Balance,end ofperiod | $ | 1,816,177 | $ | 1,896,156 |
The following is a summary of the financial information of GGI, adjusted to conform with the accounting policies of Eskay, on a 100% basis as at the specified date and for the periods then ended, as disclosed in the table below, which is the most recent publicly available information for GGI.
| As at | As at | |
|---|---|---|
| July 31, | July 31, | |
| 2024 | 2023 | |
| Cash and cash equivalents | 32,425 | 1,569,707 |
| Total current assets | 61,835 | 1,771,562 |
| Total non-current assets | 261,700 | 315,354 |
| Total current liabilities | (2,287,757) | (1,519,352) |
| Total non-current liabilities | (3,012,000) | (3,637,000) |
| Net loss | (463,617) | (689,293) |
10. Share capital
a) Authorized share capital
The authorized share capital consists of an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.
b) Common shares issued
As at August 31, 2024, the issued share capital amounted to $113,693,197 (February 29, 2024 - $113,693,197). Changes in issued share capital are as follows:
| Changes in issued share capital are as follows: | ||
|---|---|---|
| Number of | ||
| common shares | Amount | |
| Balance, February 28, 2023, August 31, 2023, February 29, 2024 | ||
| and August 31, 2024 | 183,617,123 | $113,693,197 |
- 10 -
Eskay Mining Corp. Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
11. Stock options
The following table reflects the continuity of stock options for the periods presented:
| Number of | Weighted average | |
|---|---|---|
| stock options | exerciseprice($) | |
| Balance, February 28, 2023 | 11,455,000 | 1.37 |
| Granted (i)(ii) | 1,550,000 | 0.72 |
| Expired | (20,000) | 1.81 |
| Balance, August 31, 2023 | 12,985,000 | 1.29 |
| Balance, February 29, 2024 | 12,985,000 | 1.29 |
| Granted (iii) | 1,500,000 | 0.31 |
| Expired | (1,730,000) | 0.08 |
| Balance, August 31, 2024 | 12,755,000 | 1.32 |
(i) On March 20, 2023, the Company granted 1,250,000 stock options to officers, directors and consultants of Eskay at $0.66 per share for five years expiring March 20, 2028. 750,000 of these stock options were issued to related parties. These options vested immediately. These options have a grant date fair value of $738,971, estimated using the BlackScholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 122% based on the Company's historical volatility; share price of $0.70; risk-free interest rate of 2.96% and an expected life of five years. During the three and six months ended August 31, 2024, $nil (three and six months ended August 31, 2023 - $nil and $738,971, respectively) was recorded as share-based payments.
(ii) On July 11, 2023, the Company granted 300,000 stock options to a consultant of Eskay at $0.95 per share for five years expiring July 11, 2028. These options vest on November 12, 2023. These options have a grant date fair value of $234,070, estimated using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 121% based on the Company's historical volatility; share price of $0.93; risk-free interest rate of 3.95% and an expected life of five years. During the three and six months ended August 31, 2024, $nil (three and six months ended August 31, 2023 - $32,706) was recorded as share-based payments.
(iii) On March 22, 2024, the Company granted 1,500,000 stock options to a consultant of Eskay at $0.31 per share for five years expiring March 22, 2029. These options vest immediately. These options have a grant date fair value of $372,128, estimated using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 110% based on the Company's historical volatility; share price of $0.31; risk-free interest rate of 3.48% and an expected life of five years. During the three and six months ended August 31, 2024, $372,128 (three and six months ended August 31, 2023 - $nil) was recorded as share-based payments.
- 11 -
Eskay Mining Corp.
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
11. Stock options (continued)
The following table reflects the actual stock options issued and outstanding as of August 31, 2024:
| Weighted Average | |||||
|---|---|---|---|---|---|
| Remaining | Number of | Number of | |||
| Exercise | Contractual Life | Options | Options Vested | Grant Date | |
| Expiry Date | Price ($) | (years) | Outstanding | (Exercisable) | Fair value ($) |
| September 5, 2024 | 0.095 | 0.01 | 1,300,000 | 1,300,000 | 109,200 |
| December 9, 2024 | 0.135 | 0.27 | 850,000 | 850,000 | 128,500 |
| June 24, 2025 | 0.24 | 0.81 | 1,500,000 | 1,500,000 | 308,850 |
| July 21, 2025 | 0.46 | 0.89 | 350,000 | 350,000 | 144,725 |
| February 5, 2026 | 3.00 | 1.43 | 3,600,000 | 3,600,000 | 9,563,760 |
| July 04, 2027 | 1.81 | 2.84 | 2,100,000 | 2,100,000 | 3,387,882 |
| September 21, 2027 | 1.49 | 3.06 | 5,000 | 5,000 | 6,386 |
| March 20, 2028 | 0.66 | 3.55 | 1,250,000 | 1,250,000 | 738,971 |
| July 11, 2028 | 0.95 | 3.86 | 300,000 | 300,000 | 234,070 |
| March 22, 2029 | 0.31 | 4.56 | 1,500,000 | 1,500,000 | 372,128 |
| Total | 1.33 | 1.99 | 12,755,000 | 12,755,000 | 14,994,472 |
The weighted average exercise price of the vested options as at August 31, 2024 is $1.33. The weighted average fair value of all grants in the three and six months ended August 31, 2024 was $0.31 per share (February 29, 2024 – $0.63).
12. Warrants
The following table reflects the continuity of warrants for the periods presented:
| Number of | Weighted average | |
|---|---|---|
| warrants | exerciseprice($) | |
| Balance, February 28, 2023 | 6,433,942 | 3.02 |
| Expired | (4,211,719) | (2.82) |
| Balance, August 31, 2023 | 2,222,223 | 3.40 |
| Number of | Weighted average | |
| warrants | exerciseprice($) | |
| Balance, February 29, 2024 | 2,222,223 | 3.40 |
| Expired | (2,222,223) | (3.40) |
| Balance, August 31, 2024 | - | - |
As of August 31, 2024, the Company has no outstanding warrants.
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Eskay Mining Corp.
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
13. Net loss per common share
| Three Months | Three Months | Six Months | Six Months | Six Months | ||
|---|---|---|---|---|---|---|
| Ended | Ended | |||||
| August 31, | August 31, | |||||
| 2024 | 2023 | 2024 | 2023 | |||
| Weighted average number of common shares | ||||||
| outstanding - Basic | 183,617,123 | 183,492,123 | 183,617,123 | 183,617,123 | ||
| Dilutive effect of stock options and warrants | 5,095,890 | - | 4,761,842 | |||
| Weighted average number of common shares | ||||||
| outstanding- Diluted | 183,617,123 | 188,588,013 | 183,617,123 | 188,378,965 | ||
| Net loss per share | ||||||
| - Basic and diluted | $ | (0.01) | $ | 0.01 |
The diluted loss per share for the years ended August 31, 2024 and August 31, 2023 excluded all outstanding options and warrants (if applicable) as they were anti-dilutive.
14. General and administrative
| Three Months Ended | Three Months Ended | Three Months Ended | Six Months | Six Months | Ended | |||
|---|---|---|---|---|---|---|---|---|
| August 31, | August | 31, | ||||||
| 2024 | 2023 | 2024 | 2023 | |||||
| Professional fees (note 15(ii) and (iii)) | $ | 72,833 | $ | 57,992 | $ | 102,712 | $ | 106,167 |
| Reporting issuer costs | 24,181 | 46,614 | 25,433 | 55,370 | ||||
| Office and general | 42,202 | 117,752 | 61,187 | 190,183 | ||||
| Advertising and promotion | 13,617 | 36,115 | 19,417 | 72,509 | ||||
| Management and consulting fees (note 15(i)) | 144,110 | 75,510 | 288,220 | 184,620 | ||||
| Interest and bank charges | 1,549 | 724 | 2,095 | 1,450 | ||||
| Share-basedpayments(note 11) | - | 32,706 | 372,128 | 771,677 | ||||
| $ | 298,492 | $ | 367,413 | $ | 871,192 | $ | 1,381,976 |
15. Related party balances and transactions
Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions.
Eskay entered into the following transactions with related parties:
(i) For the three and six months ended August 31, 2024, the Company paid or accrued $141,110 and $285,220, respectively in management and consulting fees to companies controlled by Marrelli Group of Companies, Balkam Partner, and Robert Myhill who are controlled by officers of the Company (three and six months ended August 31, 2023 - $136,110 and $253,720, respectively). As at August 31, 2024, these officers have balances outstanding to the Company of $117,500 (February 29, 2024 - $10,264). These amounts are unsecured, non-interest bearing and due on demand.
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Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
Eskay Mining Corp.
15. Related party balances and transactions (continued)
(ii) For the three and six months ended August 31, 2024, the Company paid or accrued $7,866 and $16,270, respectively in professional fees (August 31, 2023 - $8,258 and $17,503, respectively) to Marrelli Group of Companies (defined as Marrelli Support Services Inc., Marrelli Trust Company Ltd., DSA Filing Services Ltd.) who is controlled by an officer of the Company. As at August 31, 2024, this Company is owed $2,900 (February 29, 2024 - $9,683). This amount is unsecured, non-interest bearing and due on demand.
(iii) During the three and six months ended August 31, 2024, the Company paid professional fees and disbursements of $63,522 and $79,749, respectively (August 31, 2023 - $26,780 and $58,098, respectively) to Gardiner Roberts LLP ("Gardiner"), a law firm of which William R. Johnstone, Corporate Secretary of the Company, is a partner. These services were for general corporate matters. As at August 31, 2024, Gardiner is owed $4,548 (February 29, 2024 - $970) and this amount is included in amounts due to related parties. These balances are unsecured, non-interest bearing, and due on demand.
(iv) See note 3.
(v) See note 11.
As at August 31, 2024, Hugh Balkam, a director of the Company owns 16,883,345 common shares of the Company carrying approximately 9.19% of the voting rights attached to all common shares of the Company. As at August 31, 2024, directors and officers of the Company control an aggregate of 30,820,990 common shares of the Company or approximately 16.79% of the shares outstanding.
As at August 31, 2024, the Company is not aware of any arrangements that may at result in a change in control of the Company. To the knowledge of the Company, it is not directly or indirectly owned or controlled by another corporation, by any government or by any natural or legal person severally or jointly.
16. Commitments and contingencies
Environmental contingencies
The Company’s exploration activities are subject to various federal, provincial and international laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.
Management contracts
The Company is party to management contracts that require additional payments of up to $630,000 to be made upon the occurrence of certain events such as termination for any reason, other than for just cause. The Company is also party to management contracts that require additional payments of up to $2,760,000 to be made upon the occurrence of certain events such as a change of control. As the triggering event has not occurred, the contingent payments have not been reflected in these unaudited condensed interim financial statements.
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Eskay Mining Corp.
Notes to Condensed Interim Financial Statements Three and Six Months Ended August 31, 2024 (Expressed in Canadian Dollars) (Unaudited)
17. Segmented information
The Company's operations comprise a single reporting operating segment engaged in mineral exploration in Canada. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent segment amounts. In order to determine reportable operating segments, the chief operating decision maker reviews various factors including geographical location, quantitative thresholds and managerial structure.
18. Subsequent events
On October 18, 2024, 200,000 options with an exercise price of $0.095 were exercised.
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