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Glen Eagle Resources Inc. — Interim / Quarterly Report 2021
Nov 26, 2021
42904_rns_2021-11-26_f04161e4-64e8-4049-8863-a75ca2ec5af0.pdf
Interim / Quarterly Report
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Unaudited Condensed Consolidated Interim Financial Statements
Glen Eagle Resources Inc.
Third quarter ended September 30, 2021 (in Canadian dollars, unless otherwise stated)
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UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3 (3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared by, and are the responsibility of the Company's management.
The unaudited condensed interim consolidated financial statements of Glen Eagle Resources Inc. as at September 30, 2021 and for the three-month periods ended September 30, 2021 and 2020, have not been reviewed by the Company’s external auditors.
Jean Labrecque Daniel Bélisle Jean Labrecque Daniel Bélisle, CPA, CA President and Chief Executive Officer Chief Financial Officer & Corporate Secretary
Date: November 26th, 2021
Glen Eagle Resources Inc. Consolidated Interim Statements of Financial Position Unaudited
(in Canadian dollars)
| Assets Current assets Cash Short term investments – term deposits Prepaids Amounts receivable (note 3) Inventory (note 4) Non-current assets Property, plant and equipment (note 5) Exploration and evaluation assets (note 6) TOTAL ASSETS Liabilities Current liabilities Accounts payable and accrued liabilities (note 7) Current portion of terms loans and convertible debenture Non-current liabilities Term loans (note 8) Provision (note 9) Convertible debenture (note 10) TOTAL LIABILITIES Equity Share capital (note 11) Warrants (note11) Stock options (note 12) Equity component of convertible debenture (note 10) Contributed surplus Deficit Accumulated other comprehensive income (loss) Total equity TOTAL LIABILITIES AND EQUITY Going concern (note 1) Contingencies (note 18) |
September 30 2021 $ |
December 31 2020 $ |
|---|---|---|
| 431,452 8,114 40,000 211,328 192,185 |
141,532 8,099 - 82,003 38,871 |
|
| 883,079 | 270,505 | |
| 2,655,519 217,005 |
2,846,493 214,727 |
|
| 2,872,524 | 3,061,220 | |
| 3,755,603 | 3,331,725 | |
| 1,270,200 170,000 |
1,272,650 147,641 |
|
| 1,440,200 | 1,420,291 | |
| 660,000 70,113 95,353 |
660,000 68,461 93,752 |
|
| 820,466 | 822,213 | |
| 2,265,666 | 2,242,504 | |
| 29,997,426 785,715 718,151 7,140 3,378,133 (33,203,224) (193,404) |
28,817,777 192,005 512,081 7,140 3,284,643 (31,545,576) (178,849) |
|
| 1,489,937 | 1,089,221 | |
| 3,755,603 | 3,331,725 | |
The accompanying notes are an integral part of these consolidated financial statements Approved by the Board of Directors
/s/ Jean Labrecque___ Director /s/ Guy Chamard__ Director
2
Glen Eagle Resources Inc.
Consolidated Interim Statements of Comprehensive Income (Loss) For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars)
| Sales Gold & silver Cost of sales(note 13) Gross operating margin General and administrative (note 13) Selling expenses General exploration, net of tax credits Operating loss Interest expense Foreign exchange gain (loss) Unrealized gain on fair value of derivative Net loss for the period Other comprehensive income (loss) net of income tax: Currency translation adjustment Net comprehensive loss for the period Weighted average number of outstanding common shares Loss per share Basic and diluted |
Three-month period ended September 30, 2021 $ Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ |
Three-month period ended September 30, 2021 $ Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ |
Nine-month period ended September 30, 2020 $ |
|---|---|---|---|
| - - 165,435 (301,430) (222,736) (768,111) |
697,138 (1,050,887) |
||
| (301,430) (222,736) (602,676) (586,536) (270,085) (888,485) (10,783) (10,360) (26,346) (13,940) (94,688) (27,067) |
(353,749) (527,154) (51,097) (94,688) |
||
| (912,689) (597,869) (1,544,574) (34,816) (26,058) (105,774) (12,355) (12,674) (13,521) 3,036 - 6,221 |
(1,026,688) (96,849) (16,991) - |
||
| (956,824) (636,601) (1,657,648) 39,969 (22,230) (14,555) |
(1,140,528) 82,579 |
||
| (916,855) (658,831) (1,672,203) |
(1,057,949) | ||
| 113,934,635 86,933,733 101,757,608 |
83,892,866 (0.01) |
||
| (0.01) (0.01) (0. |
02) |
The accompanying notes are an integral part of these consolidated financial statements
3
Glen Eagle Resources Inc.
Consolidated Interim Statements of Changes in Equity For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except for the number of shares)
| (note) Balance as at January 1, 2020 Net loss for the period Currency translation adjustment Comprehensive loss for the period Issued and paid in cash (11) Warrants issued (11) Equity component on convertible debenture (10) Fair value of stock option expired (12) Share based compensation expense (12) Balance as at September 30, 2020 Balance as at January 1, 2021 Net loss for the period Currency translation adjustment Comprehensive loss for the period Units issued pursuant to private placements nets of issue costs (11) Warrants issued (11) Expiration of stock options (11) Share based compensation expense (12) Balance as at September 30, 2021 |
Number of common shares Share capital $ |
Warrants $ Stock options $ Equity component of convertible debenture $ Contributed surplus $ Accumulated other comprehensive loss $ Deficit $ Total $ |
|---|---|---|
| 82,868,108 28,138,995 |
- 617,106 - 3,050,304 (187,268) (29,895,310) 1,723,827 |
|
| - (1,140,528) (1,140,528) 82,579 - 82,579 |
||
| 11,087,500 830,787 - (192,005) - - - - - - |
82,579 (1,140,528) (1,057,949) - - - - - - 830,787 192,005 - - - - - - - - 7,140 - - - 7,140 - (157,924) - 157,924 - - - - 129,313 - - - - 129,313 |
|
| 11,087,500 638,782 |
192,005 (28,611) 7,140 157,924 82,579 (1,140,528) (90,709) |
|
| 93,955,108 28,777,777 |
192,005 588,495 7,140 3,208,228 (104,689) (31,035,838) 1,633,118 |
|
| 94,455,608 28,817,777 |
192,005 512,081 7,140 3,284,643 (178,849) (31,545,576) 1,089,221 |
|
| - (1,657,648) (1,657,648) (14,555) - (14,555) |
The accompanying notes are an integral part of these consolidated financial statements
4
Glen Eagle Resources Inc. Consolidated Interim Statement of Cash Flows For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars)
| Cash flows provided (used in) Operating activities Net income (loss) for the period Adjustments for Depreciation and amortization Unrealized gain on fair value of derivative Foreign exchange loss (gain) Accretion expense Share-based compensation expense Foreign exchange on cash Changes in working capital items Amounts receivable Prepaid expense Inventory Accounts payable and accrued liabilities Net cash from (used in) operating activities Investing activities Acquisition of exploration and evaluation asset Acquisition of property, plant & equipment Net cash used in investing activities Financing activities Increase in convertible debenture Increase in long term debt Issuance of share capital, net of issue costs Net cash provided by financing activities Foreign exchange on cash Net increase (decrease) – cash and cash equivalent Cash and cash equivalents – Beginning of period Cash and cash equivalents – End of period Additional information Interest received |
Three-month period ended September 30, 2021 $ Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ Nine-month period ended September 30, 2020 $ |
Three-month period ended September 30, 2021 $ Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ Nine-month period ended September 30, 2020 $ |
|---|---|---|
| (956,824) (636,601) (1,657,648) 56,185 61,359 166,479 - (234) (3,185) 5,254 - 14,555 (2,962) 2,885 3,624 299,560 101,480 299,560 12,355 12,674 13,521 |
(1,140,528) 178,540 - - 7,813 129,313 16,991 |
|
| (586,432) (458,437) (1,163,094) (7,572) 10,943 (129,339) (30,000) 11,547 (40,000) (155,730) (145,835) (153,315) 14,587 79,501 18,109 |
(807,871) (5,603) (9,554) (551) 313,556 |
|
| (765,147) (502,281) (1,467,639) |
(510,023) | |
| - - (2,280) 9,402 (8,611) - |
- (13,562) |
|
| 9,402 (8,611) (2,280) |
(523,585) | |
| - 100,000 - - - - 938,606 786,787 1,773,360 |
100,000 - 830,787 |
|
| 938,606 886,787 1,773,360 |
930,787 | |
| (12,355) (12,674) (13,521) 170,506 (363,221) 289,920 260,946 34,460 141,532 431,452 397,681 431,452 |
(16,991) (390,211) 7,470 397,681 |
|
| - - - - |
92 |
The accompanying notes are an integral part of these consolidated financial statements.
5
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
1 Incorporation, nature of activities and going concern
Glen Eagle Resources Inc. (the “Corporation”) is incorporated under the Canada Business Corporations Act and is engaged in the acquisition, the exploration and the evaluation of mining properties. The address of the registered office and its principal place of business is 2075 Victoria Street, #201 St-Lambert (Quebec), Canada. The Corporation’s shares are listed on the TSX Venture Exchange (symbol: GER).
Although management has taken steps to verify titles of mining properties in which the Corporation has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Corporation’s title. Property title may be subject to unregistered prior agreements and non-compliant with regulatory requirements.
The Corporation has not yet determined whether the exploration and evaluation assets have economically recoverable ore reserves. Recovery of amounts indicated under exploration and evaluation assets and other tangible assets are subject to certain conditions: the discovery of economically recoverable reserves, the Corporation’s ability to obtain the financing required to complete exploration, evaluation, development, construction and, ultimately, the sale of such assets.
The Corporation’s consolidated financial statements have been prepared using accounting principles applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business 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 not limited to twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events and conditions that may cast a significant doubt upon the Corporation’s ability to continue as a going concern as described in the following paragraph, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. These consolidated financial statements do not reflect the adjustment to the carrying values of assets and liabilities, expenses and balance sheet classifications that would be necessary were the going concern assumption would not be appropriate. These adjustments could be material.
For the period ended September 30, 2021, the Corporation reported a net loss of $956,824 (net loss of $636,601 for the period ended September 30, 2020) and has an accumulated deficit of $33,203,224 as at September 30, 2021. In addition to ongoing working capital requirements, the Corporation must secure sufficient funding to meet its existing commitments for exploration and evaluation programs and pay general and administration costs. As at September 30, 2021, the Corporation has a negative working capital of $557,121 (negative of $1,149,786 as at December 31, 2020). Management estimates that current funds will not be sufficient to meet the Corporation’s obligations and budgeted expenses through December 31, 2021. Any additional funding may be met in the future in a number of ways including but not limited to, increase in production, the issuance of new equity instruments and debt financing. While management has been successful in securing financing in the past, there can be no assurance it will be able to do so in the future or that these sources of funding or initiatives will be available for the Corporation or that they will be available on terms which are acceptable to the Corporation. If management is unable to obtain new funding, the Corporation may be unable to continue its operations, and amounts realized for assets might be less than amounts reflected in these consolidated financial statements.
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation and created significant volatility and disruption of financial markets. The extent of the impact of the COVID-19 pandemic on the Corporation operational and
6
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
financial performance, including its ability to execute the 2021 business plan in the expected time frame, will depend on future developments, including the duration and severity of the pandemic and related restrictions, all of which are uncertain and cannot be predicted. The Corporation has taken and will continue to take action to minimize the impact. However, it is impossible to determine the financial implications of these events for the moment.
These condensed consolidated interim financial statements were approved and authorized for issue by the board of directors on November 26th, 2021.
2
Basis of preparation
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”).
The accounting policies followed in these condensed interim consolidated financial statements are consistent with those applied in the Corporation’s annual financial statements for the year ended December 31, 2020. These condensed interim consolidated financial statements should be read in conjunction with the Corporation’s annual financial statements for the year ended December 31, 2020 which have been prepared in accordance with IFRS as issued by the IASB.
3 Amounts receivable
| Sales tax receivable Trade receivables |
September 30 2021 December 31 2020 |
|---|---|
| $ $ |
|
| 14,178 17,638 197,150 64,365 |
|
| 211,328 82,003 |
All of the Corporation’s gold and silver sales are with one customer at the market prices in effect at the time of delivery, however economic dependence is mitigated as the Corporation can sell its gold to numerous clients throughout the world.
4 Inventories
| Stockpile Ore Consummables Work in process Dorey bar |
September 30 2021 December 31 2020 |
|---|---|
| $ $ |
|
| 2,436 - 10,161 38,871 14,353 - 165,235 - |
|
| 192,185 38,871 |
7
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
5 Property and equipment
| Cost As at January 1, 2021 Additions Foreign exchange As at September 30,2021 Accumulated depreciation As at January 1, 2021 Depreciation Foreign exchange As at September 30, 2021 Net book value September 30, 2021 Cost As at January 1, 2020 Additions Foreign exchange As at December 31, 2020 Accumulated depreciation As at January 1, 2020 Depreciation Foreign exchange As at December 31, 2020 Net book value December 31, 2020 |
Land $ Building $ Plant equipment $ |
Land $ Building $ Plant equipment $ |
Land $ Building $ Plant equipment $ |
Machinery and | Machinery and | |||
|---|---|---|---|---|---|---|---|---|
| Vehicle | Equipment |
Total | ||||||
| $ | $ |
$ | ||||||
523,732 394,775 2,146,858 18,297 - - - - (3,991) (3,006) (16,355) (140) |
524,961 (1,051) (4,042) |
3,608,623 (1,051) (27,534) 3,580,038 |
||||||
| 519,741 391,769 2,130,503 18,157 |
519,868 | |||||||
- (121,984) (497,292) (13,586) (32,190) (106,225) (2,669) - 597 2,695 77 |
(129,268) (25,395) 721 |
(762,130) (166,479) 4,090 (924,519) |
||||||
| - (153,577) (600,822) (16,178) |
(153,942) | |||||||
| 519,741 238,192 1,529,681 1,979 |
365,926 | 2,655,519 | ||||||
| Land $ Building $ Plant equipment $ |
Machinery and | Total $ |
||||||
| Vehicle | Equipment |
|||||||
| $ | $ |
|||||||
524,017 394,992 2,148,032 18,307 - - - - (285) (217) (1,174) (10) |
517,184 8,231 (454) |
3,602,532 8,231 (2,140) 3,608,623 (536,443) (231,489) 5,802 (762,130) 2,846,493 |
||||||
| 523,732 394,775 2,146,858 18,297 |
524,961 | |||||||
- (78,332) (353,293) (9,968) - (44,760) (147,706) (3,711) - 1,108 3,707 93 |
(94,850) (35,312) 894 |
|||||||
| - (121,984) (497,292) (13,586) |
(129,268) | |||||||
| 523,732 272,791 1,649,566 4,711 |
395,693 |
8
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
6 Exploration and evaluation assets
Capitalized E&E assets are comprised of wholly owned mining rights and undivided interests in properties, detailed as follows:
Costs of E&E assets at the end of the year:
| Mining properties Balance January 1, 2020 Additions Balance December 31, 2020 Additions Balance June 30, 2021 |
Mining properties Balance January 1, 2020 Additions Balance December 31, 2020 Additions Balance June 30, 2021 |
Moose Lake- Canada (phosphate) La Cobra - Honduras (gold) Piedra Dorada Honduras (gold) Total $ 214,726 1 - 214,727 - (1) 1 - |
|---|---|---|
| 214,726 - 1 214,727 2,278 - - 2,278 |
||
| 217,004 - 1 217,005 |
7 Accounts payable and accrued liabilities
| Accounts payable Accrued and other liabilities (a) |
September 30 2021 December 31 2020 |
|---|---|
| $ $ |
|
| 248,045 183,009 1,022,155 1,089,641 |
|
| 1,270,200 1,272,650 |
- (a) As at September 30, 2021 and December 31, 2020, the accrued and other liabilities include a provision of $431,736 for tax and other non-compliance penalty. It also includes interest on loans and debenture due to insiders of $261,725 (2020: $167,631) and management fees due of $87,000 (2020: $87,000).
8 Term loans
| Balance – Beginning of the period Increase during the period Balance – End of period |
September 30 2021 $ December 31 2020 $ 660,000 660,000 - - |
|---|---|
| 660,000 660,000 |
9
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
8 Term loans - continued
A first loan by an insider, of $100,000, is a non-guaranteed loan due on April 30, 2021, that was closed on October 20, 2018 and bears interest at an annual rate of 15%. The interest is payable twice a year on June 30 and December 31. Interest were not paid and recorded in accrued liabilities. An Officer of the Corporation has guaranteed this loan. On August 30, 2021, the Corporation has extended the loan until June 30, 2024.
A second loan by an insider, of $150,000, is a non-guaranteed loan due on April 30, 2021, that was closed on December 19, 2018 and bears interest at an annual rate of 15%. The interest is payable twice a year on June 30 and December 31. Interest were not paid and recorded in accrued liabilities. On August 30, 2021, the Corporation has extended the loan until June 30, 2024.
A third loan by an insider, of $410,000, is a non-guaranteed long term loan due on May 29, 2023, that was closed on May 30, 2019 and bears interest at an annual rate of 12%. The interest is payable monthly. Interest were not paid and recorded in accrued liabilities.
A fourth loan by an insider, of $20,000, is a non-guaranteed long term loan due on May 10, 2021, that was closed on March 10, 2021 and bears interest at an annual rate of 12%. Interest were not paid and recorded in accrued liabilities.
9 Provision
| Balance – Beginning of the period Increase (decrease) during the period Balance – End of period Asset retirement obligations |
September 30 2021 $ December 31 2020 $ |
|---|---|
| 68,461 65,678 (106) 2,783 70,113 68,461 |
During 2017, an asset retirement obligation study was conducted for the subsidiary in Honduras. The liability for asset retirement obligations as at September 30, 2021 is $68,355. The estimated undiscounted value of this liability was $105,319 on September 30, 2021 and disbursements are expected to be made in 2031. A discount rate of 4.22% was used to estimate the obligation. Each quarter, the Corporation reviews the expected timing of the cash payments required to settle the obligations, and adjusts the asset retirement obligation accordingly, which also includes foreign exchange differences. During 2020, the increase in asset obligation retirement is due to accretion. The provision is also subject to variation in foreign exchange.
10
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
10 Convertible debenture
- a) Debenture - $150,000
| Balance – December 31, 2019 Unrealized gain on fair value of derivative Accretion Balance – December 31, 2020 Unrealized loss on fair value of derivative Accretion Balance – September 30, 2021 |
Host Embedded Derivative **Total ** |
|---|---|
| 130,316 7,280 137,596 - 351 351 9,694 - 9,694 |
|
| 140,010 7,631 147,641 - (6,221) (6,221) 8,580 - 8,580 |
|
| 148,590 1,410 150,000 |
On December 13, 2018, the Corporation completed the financing of a $150,000 convertible debenture bearing interest at a rate of 12% per annum and maturing on December 12, 2021. The principal amount of the debenture will be payable at the maturity date and accrued interest will be paid on June 30 and December 31 of each year until maturity date. Interest were not paid and recorded in accrued liabilities.
The debenture is convertible at $0.20 into units, composed of one common share and one common share purchase warrant. The unit is to be converted at $0.20 a share until maturity date for a total of 750,000 shares and 750,000 common share purchase warrants to be exercised at $0.30 for two years after conversion of the debenture.
The convertible debenture is a hybrid instrument, which is in its entirety a financial liability. The initial carrying amount of $122,261 for the host represents the residual amount of the proceeds after separating out the $28,532 fair value of the derivative. The derivative value was reduced by $3,036 during Q-3 2021 (2020: $351).
The derivative was valued using a binomial model.
11
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
10 Convertible debenture - continued
b) Debenture - $100,000
| Balance – beginning of period Proceeds Equity component of convertible debenture Accretion Balance – September 30, 2021 |
September 30 2021 December 31 2020 |
|---|---|
| 93,752 - - 100,000 - (7,140) 1,601 892 |
|
| 95,353 93,752 |
On July 18, 2020, the Corporation completed the financing of a $100,000 convertible debenture bearing interest at a rate of 12% per annum and maturing on July 18, 2023. The principal amount of the debenture will be payable at the maturity date and accrued interest will be paid annually on December 31 of each year until maturity date. Interest were not paid and recorded in accrued liabilities.
The debenture is convertible at $0.12 into common shares. After the end of the first year, the Corporation will be able to force the conversion debentures if the company's stock trades at more than $1.00 for more than 10 consecutive days.
11 Share capital and warrants
Share capital
Authorized
Unlimited number of voting common shares, participating, without par value.
-
c) Issued and fully paid
-
i) On September 13, 2021, the Corporation completed the final closing of a private placement for 14,285,714 units at a price of $0.07 per unit for a cash consideration of $1,000,000. Each unit consists of one common share and one warrant which entitles its holder to purchase one common share at a price of $0.085 per share for 24 months. The fair value of $423,063 was assigned to the warrant account and the total share issue cost amounted to $61,394 reduced by a value of $25,000 attributable to the warrants. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.07, expected dividend yield of 0%, expected volatility of 128,2%, risk free rate of 0.41% and expected life of 2 years.
12
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
11 Share capital and warrants - continued
-
ii) On September 13, 2021, the Corporation issued 760,000 broker warrants exercisable at $0.12 for 36 months. The fair value of $83,595 was assigned to the warrant account. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.07, expected dividend yield of 0%, expected volatility of 128,2%, risk free rate of 0.41% and expected life of 2 years.
-
iii) On June 2, 2021, the Corporation completed the final closing of a private placement for 12,000,000 units at a price of $0.05 per unit for a cash consideration of $600,000. Each unit consists of one common share and one warrant which entitles its holder to purchase one common share at a price of $0.08 per share for 24 months. The fair value of $112,052 was assigned to the warrant account and the total share issue cost amounted to $5,250. The fair value of the warrants was determined using the BlackScholes model with the following assumptions: share price of $0.05, expected dividend yield of 0%, expected volatility of 76.7%, risk free rate of 0.32% and expected life of 2 years.
-
iv) On April 26[th] , 2021, the Corporation closed the private placement for which a first closing was made on March 11, 2021, with the issuance of 4,839,275 shares at a price of $0.05 per share for a cash consideration of $241,963. No warrants or commission were issued for this placement.
-
v) On October 13, 2020, the Corporation issued 500,000 common shares at a deemed price of $0.08 per share, for the settlement of amounts due to the CEO.
-
vi) On September 1, 2020, the Corporation completed the final closing of a private placement for 3,587,500 units at a price of $0.08 per unit for a cash consideration of $287,000.
On July 21, 2020, a first closing for 1,250,000 units was completed. Each unit consists of one common share and one warrant which entitles its holder to purchase one common share at a price of $0.12 per share for 24 months. The fair value of $18,228 was assigned to the warrant account and the total share issue cost amounted to $761. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 72.5%, risk free rate of 0.27% and expected life of 2 years.
On September 1, 2020, a second closing for 2,337,500 units was completed. Each unit consists of one common share and one warrant which entitles its holder to purchase one common share at a price of $0.12 per share for 24 months. The fair value of $$34,913 was assigned to the warrant account and the total share issue cost amounted to $3,363. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 73.9%, risk free rate of 0.27% and expected life of 2 years.
- vii) On September 1, 2020, the Corporation completed the final closing of a private placement for 7,500,000 units at a price of $0.08 per unit for a cash consideration of $600,000. Each unit consists of one common share and one warrant which entitles its
13
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
holder to purchase one common share at a price of $0.12 per share for 36 months. The fair value of $139,689 was assigned to the warrant account and the total share issue cost amounted to $52,089 reduced by a value of $12,000 attributable to the warrants. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 73.1%, risk free rate of 0.28% and expected life of 3 years.
viii) On September 1, 2020, the Corporation issued 600,000 broker warrants exercisable at $0.12 for 36 months. The fair value of $11,175 was assigned to the warrant account. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 73.1%, risk free rate of 0.28% and expected life of 3 years.
b) Changes in Corporation warrants are as follows:
| Share purchase warrants Balance – Beginning of period Issued Exercised Balance – End ofperiod |
September 30 2021 |
December 31 2020 |
December 31 2020 |
|
|---|---|---|---|---|
| Num ber Weighted average exercise price $ |
Number Weighted average exercise price $ |
|||
| 11,687,500 0.12 27,045,714 0.08 - - |
- 11,687,500 - |
- 0.12 - |
||
| 38,733,214 0.09 |
11,687,000 | 0.12 | ||
| Number of warrants | Exercise price $ |
|||
| 1,250,000 2,337,500 7,500,000 600,000 12,000,000 14,285,714 760,000 |
0.12 0.12 0.12 0.12 0.08 0.085 0.085 |
14
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
12 Share based payments
The Corporation has a stock option plan whereby the Board of Directors may grant to directors, officers or consultants of the Corporation, options to acquire common shares. The Board of Directors has the authority to determine the terms and conditions of the grant of options. The Board of Directors approved a ‘‘Rolling’’ stock option plan (“Plan”) reserving a maximum of 10% of the shares of the Corporation at the time of the stock option grant, with a vesting period allowed of zero up to eighteen months, when the grant of option is made at market price, for the benefit of its directors, officers, employees and consultants. The Plan provides that no single person may hold options representing more than 5% of the outstanding common shares. The number of stock options granted to a beneficiary and the vesting period are determined by the Board of Directors.
The exercise price of any option granted under the Plan is fixed by the Board of Directors at the time of the grant and cannot be less than the market price per common share the day before the grant. The term of an option will not exceed five years from the date of grant. Options are not transferable and can be exercised while the beneficiary remains a director, an officer, an employee or consultant of the Corporation or between three and up to twelve months after the beneficiary has left.
The options granted in 2021 and 2020 were granted at a price equal to the closing market value of the shares, the previous day before the grant. The changes to the number of stock options granted by the Corporation and their weighted average exercise price are as follows:
| Stock option Balance – Beginning of year Granted Expired Balance – End of year Options exercisable End of period |
September 30 2021 Number Weighted average exercise price $ |
December 31 2020 |
|
|---|---|---|---|
| Number | Weighted average exercise price $ |
||
| 6,355,000 0.12 5,335,000 0.10 (1,345,000) 0.105 |
8,080,000 2,125,000 (3,850,000) |
0.11 0.10 (0.09) |
|
| 10,345,000 0.11 |
6,355,000 | 0.12 | |
| 10,345,000 0.11 |
6,355,000 | 0.12 |
-
a) Options granted
-
i) On August 30, 2021, the Corporation granted an aggregate of 4,535,000 options to officers and a consultant. The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.10 until August 30, 2026. The fair value of these options was estimated at $260,270 using the Black-Scholes option-pricing model with the following assumptions: share price of
15
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
-
(in Canadian dollars, except per share amounts)
- $0.085, expected dividend yield of 0%, expected volatility of 91,6%, risk free rate of 0.81% and expected life of 5 years.
-
ii) On July 28, 2021, the Corporation granted an aggregate of 800,000 options to an officer and a consultant. The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.07 until July 28, 2026. The fair value of these options was estimated at $39,290 using the Black-Scholes option-pricing model with the following assumptions: share price of $0.10, expected dividend yield of 0%, expected volatility of 91.9%, risk free rate of 0.78% and expected life of 5 years.
-
iii) On September 18, 2020, the Corporation granted an aggregate of 1,700,000 options to officers and a consultant. The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.10 until September 18, 2025. The fair value of these options was estimated at $101,481 using the Black-Scholes option-pricing model with the following assumptions: share price of $0.10, expected dividend yield of 0%, expected volatility of 81.9%, risk free rate of 0.37% and expected life of 5 years.
-
iv) On February 13, 2020, the Corporation granted an aggregate of 425,000 options to one officer and two employees . The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.10 until February 13, 2025. The fair value of these options was estimated at $27,833 using the Black-Scholes option-pricing model with the following assumptions: share price of $0.10, expected dividend yield of 0%, expected volatility of 78.9%, risk free rate of 1.4% and expected life of 5 years.
For the period ended September 30, 2021 the stock-based compensation charged to the consolidated statement of comprehensive income (loss) was $299,560 (December 2020 – $129,314 ). As at September 30, 2021, the Corporation had the following stock options outstanding:
| Expiry date: February 13, 2022 April 26, 2022 January 25, 2023 January 24, 2024 June 25, 2024 February 13, 2025 September 18, 2025 July 28, 2026 August 30,2026 |
Exercise price $ |
Options granted Number of options exercisable Remaining contractual life (year) |
|---|---|---|
| 0.12 0.20 0.225 0.13 0.105 0.10 0.10 0.07 0.10 |
70,000 70,000 0.37 840,000 840,000 0,57 175,000 175,000 1.32 350,000 350,000 2.32 1,450,000 1,450,000 2,74 425,000 425,000 3.38 1,700,000 1,700,000 3.97 800,000 800,000 4.83 4,535,000 4,535,000 4.92 10,345,000 10,345,000 3.85 |
16
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
13 Information included in the consolidated statements of comprehensive income
| Cost of sales Material supplies Consumables Salaries, benefits and other employee expenses Electricity Equipment repair and maintenance Production supplies Depreciation of plant and equipment Depreciation vehicle Variation of finished goods Variation of work in process inventory |
Three-month period ended September 30, 2021 $ |
Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ Nine-month period ended September 30, 2020 $ |
Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ Nine-month period ended September 30, 2020 $ |
|---|---|---|---|
| 121,315 11,106 130,307 10,734 65,835 80,016 39,916 6,390 (164,189) - |
7,854 213,494 6,991 47,277 108,427 250,474 23,433 56,258 57,910 121,535 43,360 106,388 39,815 117,987 6,374 18,887 (69,126) (164,189) (2,302) - |
149,003 66,886 276,206 114,072 105,733 115,145 122,631 19,631 (95,600) 177,180 |
|
| 301,430 | 222.736 768,111 |
1,050,887 |
General and administrative
| General and administrative | ||
|---|---|---|
| Office expenses and rent Consulting and management fees Share base payments Professional fees Public company expenses Depreciation and amortization Business development |
Three-month period ended September 30, 2021 $ |
Three-month period ended September 30, 2020 $ Nine-month period ended September 30, 2021 $ Nine-month period ended September 30, 2020 $ |
| 67,558 61,249 299,560 91,040 12,913 10,235 43,981 |
48,632 104,848 66,186 55,950 182,014 160,950 101,481 299,560 129,314 38,217 177,629 90,116 13,524 33,548 34,059 10,208 30,255 31,581 2,073 60,631 14,948 |
|
| 586,536 | 270,085 888,485 527,154 |
17
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
14 Related party transactions
Remuneration of key management
Key management includes directors and senior executives of the parent company and its subsidiary. The compensation recognized as an expense and paid to key management for services is presented below:
| Related party transactions Management fees Share based payments |
Three-month period ended September 30, 2021 $ |
Three-month period ended September 30, 2020 $ Six-month period ended September 30, 2021 $ Six-month period ended September 30, 2020 $ |
|---|---|---|
| 58,417 186,080 |
52500 155,617 105,000 - 186,080 27,333 |
|
| 244,497 | 52,500 341,697 132,333 |
During the period, companies controlled by officers and directors charged an amount of $3,600 ($3,600 - 2020) for office expenses and rent. An amount of $87,000 is due to Officers of the Corporation at the end of the period.
15 Capital management policies and procedures
The Corporation considers the items included in equity as capital components.
The Corporation’s capital management objectives are:
-
to ensure the Corporation’s ability to continue as a going concern;
-
to increase the value of the assets of the business; and
-
to provide an adequate return to shareholders.
These objectives will be achieved by identifying the right exploration projects, adding value to these projects and ultimately taking them through to production or sale and cash flow, either with partners or by the Corporation’s own means.
The Corporation is not exposed to any externally imposed capital requirements except when the Corporation issues flow-through shares for which amounts should be used for E&E work. There is no dividend policy. Changes in capital are described in the consolidated statements of Changes in Equity and the related notes.
18
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
16 Financial instruments
Measurement categories
As explained in Note 3, financial assets and liabilities have been classified into categories that determine their basis of measurement and, for items measured at fair value, whether changes in fair value are recognized in the consolidated statement of comprehensive loss. Those categories are: fair value through profit or loss; loans and receivables; available for sale financial assets; and, for liabilities, amortized cost. The following table shows the carrying values of assets and liabilities for each of these categories as at September 30, 2021 and December 31, 2020.
| Financial instruments Loans and receivable Cash Term deposit Receivable from related party and other receivables (except indirect taxes) Liabilities – Amortized cost Accounts payable, accrued liabilities(1) Term loans Convertible debenture Convertible debenture - Host Liabilities at fair value through profit or lost Convertible debenture – Derivative level (level 3) |
September 30 2021 $ December 31 2020 $ |
|
|---|---|---|
| 431,452 141,532 8,114 8,099 197,150 64,366 636,716 213,997 1,270,200 811,646 680,000 660,000 95,353 93,752 150,000 140,010 7,140 7,631 |
(1) Includes interest expenses due to insiders for $261,725 and management fees for $87,000. (note 7). Excludes provisions.
Fair values, including valuation methods and assumptions
As at September 30, 2021, the carrying values of cash, amounts receivable, convertible debenture, trade payables and accrued liabilities approximate their fair value due to their relative short maturities. Interest income on term deposits measured at amortized cost was nil for the current period (2020- nil).
As at September 30, 2021, the Coporation is committed to minimum future principal and interest payments for term loans and convertible debentures, as follows:
19
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
16 Financial instruments - continued
Financial risks factors
The Corporation’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the board of directors. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, fair value risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. The Corporation’s overall risk management program seeks to minimize potential adverse effects on the Corporation’s financial performance.
b) Market risk
- i) Foreign exchange risk
On September 30, 2021, the subsidiary of the Corporation has certain transactions in foreign currencies such as the Hondurans Lempira and the US dollar. Consequently, certain assets and liabilities and expenses are exposed to currency fluctuations. The Corporation does not use derivative or hedge instruments to manage foreign exchange risks.
The Corporation’s consolidated statement of financial position contains balances of cash,receivables and payables and accrued liabilities in currencies other than the operation’s relevant functional currency. Accordingly, the Corporation is exposed to foreign exchange risk.
The balances in currencies are as follows as at September 30, 2021 and December 31,2020 :
| Cash in Lempiras CAD dollar equivalents |
September 30 2021 December 31 2020 |
|---|---|
| HNL HNL 135,751 70,359 5,892 3,731 |
The sensitivity of the Corporation to a variation of 10% in the value of the Honduran Lempira and the US dollar would not have a significant impact on the assets, liabilities and expenses.
ii) Interest rate risk: Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. As at September 30, 2021, a term deposit of $8,114 (December 31, 2020 – $8,099) is in the current assets.
20
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
The sensitivity of the Corporation to a variation of 1% in the interest rate would not have an impact. The Corporation’s other financial assets and liabilities do not comprise any interest rate fair value risk since they do not bear interest.
iii) Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Corporation is subject to concentrations of credit risk through cash and accounts receivable. The Corporation reduces its credit risk by maintaining part of its cash in financial instruments held with a Canadian chartered bank.
- iv) Liquidity risk
Liquidity risk is the risk that the Corporation will not be able to meet the obligations associated with its financial liabilities. Management estimates that the funds as at September 30, 2021 will not be sufficient to meet the Corporation’s obligations and budgeted assets through December 31, 2021. Any additional funding may be met in the future in a number of ways including but not limited to, the issuance of new equity instruments. Cash flow forecasting is performed by the Corporation which monitors rolling forecasts of the Corporation’s liquidity requirements to ensure it has sufficient cash to meet operational needs at all times. Surplus cash over and above balances required for working capital management are invested in interest bearing short-term deposits with a maturity within 12 months, which are selected with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts. Accounts payable and accrued liabilities as at September 30, 2021 consist of items that should be settled within approximately 30 days (see note 1 for information on going concern), except for provision made in the accounts payable and accrued liabilities (note 7).
17 Segmented information
The Corporation operates in 2 different geographic segments located in Canada and Honduras.
| ASSETS Current assets Non-current assets Property and equipment Exploration and evaluation assets Current liabilities Accounts payable and accrued liabilities Current portion of term loans and convertible debenture Non-current liability Term loans Convertible debenture Provision |
Glen Eagle Resources (Canada) $ Cobra Oro De Honduras SA (Honduras) $ Total $ |
|---|---|
| 488,224 394,855 883,080 - 2,655,519 2,655,519 217,005 - 217,005 916,847 353,353 1,270,200 170,000 - 170,000 660,000 - 660,000 95,353 - 95,353 - 70,113 70,113 |
21
Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2021 and 2020 Unaudited
(in Canadian dollars, except per share amounts)
18 Contingencies
In February 2021, the Corporation received a notice of arbitration and claim from a potential investor for failure to issue warrants as provided in an equity line of credit agreement, claiming an amount of approximately $1.3 million. On July 28, 2020, the TSX Venture reviewed the terms of the agreement and came to the conclusion that the transaction could not take place in its current form and further discussions with the investor stalled. No provision has been recorded in these consolidated financial statements on this matter as management believes that the amounts claimed are unfounded. The Corporation intends to vigorously defend its position.
22