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Goldsky Resources M&A Activity 2025
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M&A Activity
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FORM 51-102F4
BUSINESS ACQUISITION REPORT
ITEM 1. - IDENTITY OF COMPANY
1.1 Name and Address of Company
First Nordic Metals Corp. (formerly Barsele Minerals Corp.) ("First Nordic" or the "Company")
300 - 1055 West Hastings Street
Vancouver, British Columbia V6E 2E9
1.2 Executive Officer
The executive officer of the Company who is knowledgeable about the Arrangement (as defined herein) and this report is Taj Singh, President and Chief Executive Officer of the Company, whose business telephone number is 416-568-1027.
ITEM 2. - DETAILS OF ACQUISITION
2.1 Nature of Business Acquired
On February 23, 2024, the Company completed its previously announced arrangement under the Business Corporations Act (British Columbia), pursuant to which the Company acquired all of the issued and outstanding shares of Gold Line Resources Ltd. ("Gold Line") on and subject to the terms of an arrangement agreement ("Arrangement Agreement") dated December 12, 2023, as amended (the "Arrangement"). A copy of the Arrangement Agreement is available under the Company's profile on SEDAR+ at www.sedarplus.ca. The Arrangement was approved by shareholders of Gold Line at a special meeting of shareholders held on February 15, 2024 and by the British Columbia Supreme Court on February 20, 2024.
Gold Line is a mineral exploration company focused on acquiring mineral properties with exploration potential in Sweden and Finland. Gold Line had a 100% interest in the Paubäcken project (the "Paubäcken Project") and Storjuktan project (the "Storjuktan Project"), located immediately south and immediately north of First Nordic's Barsele Gold Project in the Gold Line Mineral Belt of Sweden (the "Barsele Project"). Gold Line also had a 100% interest in the Oijärvi gold project located in the Oijärvi Greenstone Belt of Finland.
For more information on the Arrangement, see Gold Line's management information circular dated May 13, 2024 (the "Circular") and news releases dated December 13, 2023 and February 26, 2024, filed under the Company's profile on SEDAR+ at www.sedarplus.ca.
2.2 Acquisition Date
The closing date of the Arrangement was February 23, 2024.
2.3 Consideration
The holders of the issued and outstanding Gold Line common shares ("Gold Line Shares") received 0.7382 (the "Exchange Ratio") of a First Nordic common share (each whole share, an "FN Share") for each one (1) Gold Line Share held. Immediately prior to completion of the Arrangement, PI Financial Corp. was issued 1,151,450 Gold Line Shares at a deemed price
119880656 v3
of $0.0865 per Gold Line Share, which converted to 850,000 FN Shares upon completion of the Arrangement, in satisfaction of a financial advisory fee of $100,000 payable by Gold Line. PI Financial Corp. was also entitled to receive a cash fee of $75,000 from Gold Line. Upon completion of the Arrangement, the Company issued an aggregate of 35,747,716 FN Shares to former holders of Gold Line Shares.
All common share purchase warrants of Gold Line outstanding at the effective time of the Arrangement now entitle the holders thereof to acquire FN Shares, as adjusted by the Exchange Ratio, on substantially the same terms and conditions. All incentive stock options of Gold Line outstanding at the time of completion of the Arrangement were exchanged for equivalent securities to purchase FN Shares, as adjusted by the Exchange Ratio.
In connection with the Arrangement, the Company issued a total of 8,082,399 subscription receipts (the "Subscription Receipts") of First Nordic at a price of C$0.15 per Subscription Receipt to raise aggregate gross proceeds of approximately $1.21 million (the "Concurrent Private Placement"). On completion of the Arrangement, the escrow release conditions in respect of the Subscription Receipts were satisfied and the net proceeds were released to the Company, and in connection therewith each Subscription Receipt automatically converted, for no additional consideration and without further action on part of the holder thereof, into one unit (each, a "Unit") of First Nordic. Each Unit consists of one FN Share (each, a "Sub Receipt Share") and one-half of one common share purchase warrant (each whole common share purchase warrant, a "Warrant"). Each Warrant entitles the holder thereof to purchase one FN Share (each, a "Warrant Share") at a price equal to $0.25 per share for a period of two years following the date of issuance of the Warrant. The proceeds from the Concurrent Private Placement will be used by First Nordic for expenses related to the Arrangement, working capital and for general corporate purposes.
The Sub Receipt Shares, Warrants and Warrant Shares were subject to a statutory four-month hold period following the closing date of the relevant tranche of the Concurrent Private Placement.
2.4 Effect on Financial Position
Following completion of the Arrangement, First Nordic will continue to be a Scandinavian-focused mineral exploration company with a large consolidated and prospective gold exploration portfolio in Sweden and Finland. The Arrangement brought together the Company's advanced stage Barsele Project with a district-scale exploration portfolio to consolidate a significant license position in the Gold Line Mineral Belt of Sweden. Gold Line's flagship projects, the Paubäcken Project and the Storjuktan Project are located to the immediate south and immediate north of the Barsele Project, and the combined total belt position exceeds 100km of regional first-order structural corridor.
The combined exploration portfolio totalling over 104,000 hectares across 41 semi-contiguous exploration permits will be one of the largest license packages in Scandinavia. The commanding land position will cover the majority of the underexplored and highly prospective Paleoproterozoic Gold Line greenstone belt and covers more than 100 km of strike length of the regional Gold Line structural corridor.
Effective upon completion of the Arrangement, Toby Pierce, Marc Legault and Taj Singh were appointed to the board of directors of First Nordic (the "Board"), to serve alongside existing directors Gary Cope and Ross Wilmot, while Art Freeze, Rick Sayers and William (Harry) White all resigned from the Board. In addition, Gary Cope retired as President and CEO of the Company and was replaced by Taj Singh. Ross Wilmot remained as CFO of First Nordic.
The effect of the Arrangement on the Company's financial position is outlined in the unaudited management prepared pro forma financial statements included in the Circular, which is available under Gold Line's profile on SEDAR+ at www.sedarplus.ca.
Except as disclosed in this Business Acquisition Report or as otherwise publicly disclosed, and general development of the assets acquired pursuant to the Arrangement in the ordinary course of business, there are presently no plans or proposals for material changes in First Nordic's business affairs which may have a significant effect on the financial performance and financial position of the Company.
2.5 Prior Valuations
To the knowledge of the Company, no valuation opinion was obtained within the last 12 months by either the Company or Gold Line required by securities legislation or a Canadian exchange or market to support the consideration paid by the Company for the shares of Gold Line.
2.6 Parties to Transaction
The Arrangement was not with an "informed person" (as such term is defined in Section 1.1 of National Instrument 51-102 – Continuous Disclosure Obligations), associate or affiliate of the Company.
2.7 Date of Report
January 8, 2025.
ITEM 3. - FINANCIAL STATEMENTS AND OTHER INFORMATION
The audited consolidated financial statements of Gold Line as at and for the years ended December 31, 2023 and 2022 and the auditor's report thereon are attached at Schedule "A" to this Business Acquisition Report.
Forward-Looking Statements
Certain statements contained within this Business Acquisition Report constitute forward-looking statements within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "budget", "plan", "endeavor", "continue", "estimate", "evaluate", "expect", "forecast", "monitor", "may", "will", "can", "able", "potential", "target", "intend", "consider", "focus", "identify", "use", "utilize", "manage", "maintain", "remain", "result", "cultivate", "could", "should", "believe" and similar expressions. Without limitation, this Business Acquisition Report contains forward-looking statements pertaining to the expected benefits of the Arrangement and the development of the Barsele Project. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company, including expectations and assumptions concerning the business plan of the Company and the successful integration of the Gold Line assets into the Company's operations. Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because the Company can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, fluctuations in commodity prices, changes in industry regulations and political landscape both domestically and abroad, foreign exchange or interest rates, stock market volatility and the retention of key management and employees. Please refer to the Company's most recent annual information form and management's discussion and analysis for additional risk factors relating to the Company, which can be accessed under the Company's profile on www.sedarplus.ca. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. The Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
SCHEDULE "A"
AUDITED FINANCIAL STATEMENTS OF GOLD LINE AS AT AND FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(See attached.)
A-1
Consolidated financial statements of
Gold Line Resources Ltd.
Years ended December 31, 2023 and 2022
(Expressed in Canadian Dollars)
DAVIDSON & COMPANY LLP
Chartered Professional Accountants
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Gold Line Resources Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Gold Line Resources Ltd. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of loss and 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, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended, in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
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 in our audit is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred a net loss of $10,629,248 during the year ended December 31, 2023 and, as of that date, the Company had a working capital deficit of $24,132,523. As stated in Note 1, these events and conditions 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 of the current year. 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 that the matter described below to be a key audit matter to be communicated in our auditor's report.
Assessment of Impairment Indicators of Exploration and Evaluation Assets ("E&E Assets")
As described in Note 5 to the consolidated financial statements, the carrying amount of the Company's E&E Assets was $6,221,626 as of December 31, 2023. As more fully described in Note 3 to the consolidated financial statements, management assesses E&E Assets for indicators of impairment at each reporting period.
A member of Nexia International
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
The principal considerations for our determination that the assessment of impairment indicators of the E&E Assets is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the E&E Assets, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the E&E Asset.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:
- Evaluating management's assessment of impairment indicators.
- Evaluating the intent for the E&E Assets through discussion and communication with management.
- Reviewing the Company's recent expenditure activity.
- Assessing compliance with agreements and expenditure requirements including reviewing option agreements and vouching cash payments and share issuances.
- Assessing the Company's rights to explore E&E Assets including sending confirmation requests to optionors to ensure good standing of agreements.
- Obtaining, on a test basis, confirmation of title to ensure mineral rights underlying the E&E Assets are in good standing.
- Review of subsequent events for impairment indicators.
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 IFRS Accounting 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.
-
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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 year 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 Peter Maloff.
Vancouver, Canada
Chartered Professional Accountants
December 19, 2024
GOLD LINE RESOURCES LTD.
Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
As at
| December 31, 2023 | December 31, 2022 | |
|---|---|---|
| Current | ||
| Cash | $ 238,422 | $ 109,550 |
| Receivables (Note 4) | 44,476 | 90,405 |
| Prepaid expenses | 71,375 | 129,321 |
| 354,273 | 329,276 | |
| Exploration and evaluation assets (Note 5) | 6,221,626 | 14,031,625 |
| $ 6,575,899 | $ 14,360,901 | |
| LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities | $ 1,103,702 | $ 424,467 |
| Loan payable (Note 9) | - | 100,000 |
| 1,103,702 | 524,467 | |
| Shareholders' equity | ||
| Share capital (Note 7) | 26,281,626 | 24,309,948 |
| Reserves (Note 7) | 3,323,094 | 3,029,761 |
| Deficit | (24,132,523) | (13,503,275) |
| 5,472,197 | 13,836,434 | |
| $ 6,575,899 | $ 14,360,901 |
Nature and continuance of operations (Note 1)
Subsequent events (Note 13)
Approved and authorized by the board on December 19, 2024
/s/ Ross Wilmot
Director
/s/ Taj Singh
Director
Ross Wilmot
Taj Singh
The accompanying notes are an integral part of these consolidated financial statements.
GOLD LINE RESOURCES LTD.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian dollars)
| Year ended December 31, 2023 | Year ended December 31, 2022 | |
|---|---|---|
| GENERAL EXPENSES | ||
| Advisory and consulting (Note 10) | $ 592,192 | $ 713,777 |
| Interest expense (Note 9) | 20,404 | - |
| License fees | 573 | - |
| Marketing and advertisement | 138,661 | 259,013 |
| Professional fees | 257,480 | 204,078 |
| Regulatory and filing | 73,053 | 77,214 |
| Rent and office | 138,773 | 142,940 |
| Salaries and benefits (Note 10) | 301,701 | 193,117 |
| Share-based compensation (Note 7(c) and 10) | 145,858 | 322,235 |
| Travel | 35,904 | 110,360 |
| 1,704,599 | 2,022,734 | |
| OTHER EXPENSES | ||
| Impairment of exploration and evaluation assets (Note 5) | (8,901,138) | (994,511) |
| Foreign exchange (loss) gain | (30,001) | 9,879 |
| Finance income | 6,490 | 4,861 |
| (8,924,649) | (979,771) | |
| Loss and comprehensive loss for the year | $ (10,629,248) | $ (3,002,505) |
| Basic and diluted loss per common share | $ (0.30) | $ (0.17) |
| Weighted average number of common shares outstanding – basic and diluted | 35,320,645 | 17,689,251 |
The accompanying notes are an integral part of these consolidated financial statements.
GOLD LINE RESOURCES LTD.
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in Canadian dollars)
| Common Shares | Share Capital | Reserves | Deficit | Total Shareholders' Equity | |
|---|---|---|---|---|---|
| Balance, December 31, 2021 | 10,855,561 | $ 18,575,719 | $ 1,974,772 | $(10,500,770) | $ 10,049,721 |
| Private placement | 15,062,500 | 4,959,375 | 640,625 | - | 5,600,000 |
| Share issuance costs | - | (453,574) | 92,129 | - | (361,445) |
| Share-based payments | - | - | 322,235 | - | 322,235 |
| Share issued for the acquisition of exploration | 964,742 | 1,228,428 | - | - | 1,228,428 |
| Loss and comprehensive loss | - | - | - | (3,002,505) | (3,002,505) |
| Balance, December 31, 2022 | 26,882,803 | 24,309,948 | 3,029,761 | (13,503,275) | 13,836,434 |
| Private placement | 19,063,334 | 2,073,000 | - | - | 2,073,000 |
| Share issuance costs | - | (83,987) | 10,492 | - | (73,495) |
| Residual value of warrants | - | (136,983) | 136,983 | - | - |
| Share-based payments | - | - | - | - | - |
| Share issued for the acquisition of exploration and evaluation assets | 1,327,989 | 119,648 | - | - | 119,648 |
| Share-based compensation | - | - | 145,858 | - | 145,858 |
| Loss and comprehensive loss | - | - | - | (10,629,248) | (10,629,248) |
| Balance, December 31, 2023 | 47,274,125 | $ 26,281,626 | $ 3,323,094 | $(24,132,523) | $ 5,472,197 |
The accompanying notes are an integral part of these consolidated financial statements.
GOLD LINE RESOURCES LTD.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
| Year ended December 31, 2023 | Year ended December 31, 2022 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Loss and comprehensive for the year | $ (10,629,248) | $ (3,002,505) |
| Items not involving cash: | ||
| Share-based compensation (Note 7(c)) | 145,858 | 322,235 |
| Impairment of exploration and evaluation assets (Note 5) | 8,901,138 | 994,511 |
| Changes in non-cash working capital items: | ||
| Receivables | 45,929 | 35,074 |
| Prepaid expenses | 57,946 | 168,126 |
| Accounts payable and accrued liabilities | 679,235 | 173,588 |
| Cash used in operating activities | (799,142) | (1,308,971) |
| CASH FLOWS FROM INVESTING ACTIVITY | ||
| Exploration and evaluation assets | (971,491) | (4,086,347) |
| CASH FLOWS FROM FINANCING ACTIVITY | ||
| Private placement financing, net of share issuance costs (Note 7(b)) | 1,999,505 | 5,238,555 |
| Loan advances | 100,000 | |
| Loan repayment | (100,000) | - |
| Cash provided by financing activities | 1,899,505 | 5,338,555 |
| Change in cash during the year | 128,872 | (56,763) |
| Cash, beginning of year | 109,550 | 166,313 |
| Cash, end of year | $ 238,422 | $ 109,550 |
| Supplemental cash flow information: | ||
| Shares issued for exploration and evaluation assets | $ 119,648 | $ 1,228,428 |
| Warrants issued as finder’s fee | $ 10,492 | $ - |
| Fair value of warrants attached to units | $ 136,983 | $ - |
| Exploration and evaluation assets accrued through amounts payable and accrued liabilities | $ - | $ 77,729 |
The accompanying notes are an integral part of these consolidated financial statements.
Page | 8
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Gold Line Resources Ltd, (“GLR” or “the Company”) was incorporated under the laws of the Province of British Columbia and continued under the Canada Business Corporation Act. On February 23, 2024, the Company was acquired by First Nordic Metals Corp. (formerly Barsele Minerals Corp.) (“FNM”) (the “Merger”) (Note 13). The Company shares were delisted from the TSX-V and OTC Exchange. The registered address and records office of the Company is located at 2200 HSBC Building, 885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3E8. As at the date of this report, the Company’s principal business activity is the acquisition and exploration of mineral property interests, particularly in Sweden and Finland.
These consolidated financial statements have been prepared with the assumption that the Company will continue as a going concern, meaning it will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. As at December 31, 2023, the Company had a working capital deficit of $749,429 (December 31, 2022 - $195,191). During the year ended December 31, 2023, the Company incurred a loss of $10,629,248, and at December 31, 2023, the Company has not achieved profitable operations, and has accumulated losses of $24,132,523 since inception. The Company's ability to continue in the normal course of operations is dependent on its ability to raise equity financing or through the sale of its assets at amounts favourable to the Company. Although the Company has been successful in the past in raising funds to continue operations, there is no assurance it will be able to do so in the future. These material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern.
On June 15, 2022, the Company consolidated its issued and outstanding common shares on the basis of ten pre-consolidation shares for every one post-consolidation share (the “Consolidation”). All shares, options, warrants, and per share amounts were adjusted to reflect the consolidation ratio and are presented in these consolidated financial statements on a post-consolidation basis unless otherwise stated.
2. BASIS OF PRESENTATION
(a) Statement of compliance
These consolidated financial statements, including comparatives, have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee.
(b) Basis of measurement
These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
(c) Basis of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, being Gold Line Resources Holdings Ltd. (British Columbia, Canada), Gold Line Resources Sweden AB (Sweden), GLR Finland Oy (Finland), Solvik Gold OB (Sweden), Nordic Route Explorations Ltd. (British Columbia, Canada), and Nordic Route Explorations AB (Sweden).
Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries, including entities which the Company controls, are included in the consolidated financial statements from the date that control commences until the date that control ceases. All intercompany transactions and balances have been eliminated.
(d) Significant accounting judgments and estimates
Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
2. BASIS OF PRESENTATION (Continued)
(d) Significant accounting judgments and estimates (Continued)
Critical judgment
The preparation of these consolidated financial statements requires the Company to make judgments regarding the going concern of the Company as disclosed in Note 1. Management considers various factors including current working capital, budgeted and committed expenditures, discretionary expenditures and available financing opportunities. As at December 31, 2023, management determined the existence of material uncertainties that may cast significant doubt on the Company’s ability to continue as a going concern.
Key sources of estimation uncertainty
Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates and such differences could be significant. Significant estimates made by management affecting the consolidated financial statements include:
Fair value of stock options and warrants
Determining the fair value of warrants and stock options requires judgments related to the choice of a pricing model, the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could result in a significant impact on the Company’s future operating results or on other components of equity.
Determination of functional currency
In accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates, the Company determined its functional currency, and the functional currency of its subsidiaries to be the Canadian dollar. The Company makes judgments in defining the functional currency based on the economic substance of the transactions relevant to the entity.
Income taxes
The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management’s assessment of the Company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets, and future income tax provisions or recoveries could be affected.
Carrying value and recoverability of exploration and evaluation assets
The carrying amount of the Company’s exploration and evaluation assets properties does not necessarily represent present or future values, and the Company’s exploration and evaluation assets have been accounted for under the assumption that the carrying amount will be recoverable. Recoverability is dependent on various factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development and upon future profitable production or proceeds from the disposition of the mineral properties themselves. Additionally, there are numerous geological, economic, environmental and regulatory factors and uncertainties that could impact management’s assessment as to the overall viability of its properties or to the ability to generate future cash flows necessary to cover or exceed the carrying value of the Company’s exploration and evaluation assets.
Page | 10
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
The principal accounting policies used in the preparation of these consolidated financial statements are described below:
(a) Cash
Cash includes deposits held with banks that are available on demand.
(b) Exploration and evaluation assets
Exploration and evaluation expenditures are capitalized on a property by property basis once the legal right to explore a property has been acquired, and future economic benefits are more likely than not to be realized. These include the costs of acquiring, maintaining its interest in, and exploring and evaluating mineral properties until such time as the lease expires, it is abandoned, sold, or considered impaired in value. Costs incurred before the Company has obtained the legal right to explore, as well as indirect administrative costs, are expensed as incurred.
At each reporting date the carrying amounts of the Company’s exploration and evaluation assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period.
For the purposes of impairment testing, exploration and evaluation assets are allocated to cash generating units to which the exploration activity relates. Each of the Company’s properties is considered to be a separate cash generating unit. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
(c) Financial instruments
Classification
The Company determines the classification of its financial instruments at initial recognition. Upon initial recognition, a financial asset is classified and measured at: amortized cost, fair value through profit and loss (“FVTPL”), or fair value through other comprehensive loss (“FVOCI”). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial liability is classified and measured at amortized cost or FVTPL.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as FVTPL:
- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
An equity investment that is held for trading is measured at FVTPL. For other equity investments that are not held for trading, the Company may irrevocably elect to designate them as FVOCI. This election is made on an investment-by-investment basis.
Page | 11
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
(c) Financial instruments (Continued)
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has elected to measure them at FVTPL.
The Company classifies its financial instruments as follows:
| Asset or Liability | IFRS 9 classification |
|---|---|
| Cash | Amortized cost |
| Amounts receivable | Amortized cost |
| Amounts payable and accrued liabilities | Amortized cost |
| Loan payable | Amortized cost |
Measurement
Financial assets
Financial assets are classified as measured at: amortized cost; fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification.
All financial assets except those measured at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is objective evidence of impairment as a result of one or more events that have occurred after initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or the group of financial assets.
Impairment of financial assets at amortized cost and expected credit losses
The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date, with the risk of default as at the date of initial recognition, based on all the information available, and reasonable and supportive forward-looking information.
Financial liabilities
Financial liabilities are initially recognized on the date they are originated and are derecognized when the contractual obligations are discharged or cancelled or expire. These financial liabilities are recognized initially at fair value and subsequently are measured at amortized costs using the effective interest method, when materially different from the initial amount. Fair value is determined based on the present value of future cash flows, discounted at the market rate of interest.
Page | 12
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
(d) Impairment of exploration and evaluation assets
At the end of each reporting period, the Company’s exploration and evaluation assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use.
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
(e) Loss per share
The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.
(f) Provision for environmental rehabilitation
The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of mineral properties and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to mining assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as mining assets.
The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.
Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss for the period. The Company had no provisions for environmental rehabilitation as at December 31, 2023 and 2022.
Page | 13
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
(g) Income taxes
Income tax expense is comprised of current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive income or loss. Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss. Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting period the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
(h) Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and stock options are recognized as a deduction from equity.
Proceeds from unit placements are allocated between common shares and warrants using the residual value method, which allocates value first to the fair value of the common shares and the balance, if any, is allocated to the attached warrants.
(i) Share-based payments
The Company's stock option plan allows Company employees, directors, officers, consultants and charities to acquire shares of the Company. The fair value of options granted is recognized as share-based compensation expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.
Fair value is measured at grant date, and each tranche is recognized using the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. In situations where equity instruments are issued to consultants and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.
Page | 14
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
3. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (Continued)
(j) Foreign exchange
The Company’s functional and reporting currency is the Canadian dollar. Transactions denominated in other currencies are translated into their Canadian dollar equivalents at exchange rates prevailing at the transaction date. Carrying values of monetary assets and liabilities denominated in foreign currencies are adjusted at the date of the statement of financial position to reflect exchange rates prevailing at that date. Non-monetary assets and liabilities are translated at historical exchange rates. Gains and losses on translation are included in profit or loss for the year.
(k) Significant new accounting policies
Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or IFRIC.
The Company adopted the following amendments to accounting standards, which are effective for annual reporting periods beginning on or after January 1, 2023:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) – the amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy.
The amendment was applied effective January 1, 2023 and did not have a material impact on the Company's consolidated financial statements.
The following amendment is effective for the period beginning January 1, 2024:
- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that ‘settlement’ includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument.
The following amendment is effective for the period beginning January 1, 2027
- IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18 will replace IAS 1, Presentation of Financial Statements which aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from 1 January 2027. Companies are permitted to apply IFRS 18 before that date.
The Company is currently assessing the impact of these accounting standards and amendments. The Company does not believe that these amendments will have a significant impact on its financial statements.
Page | 15
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
4. RECEIVABLES
Amounts receivable as at December 31, 2023 composed of $44,476 related to input tax credits and value added tax receivable (December 31, 2022 - $90,405).
5. EXPLORATION AND EVALUATION ASSETS
The following tables summarize the capitalized costs associated with the Company’s exploration and evaluation assets:
| Gold Line Project | Klippen Gold Project | Oijärvi Gold Project | Solvik Gold Project | Total | |
|---|---|---|---|---|---|
| Acquisition costs: | |||||
| Balance, December 31, 2022 | $ 1,522,390 | $ 2,012,225 | $ 3,920,206 | $ - | $ 7,454,821 |
| Cash | - | - | 118,528 | - | 118,528 |
| Impairment of acquisition costs | - | - | - | - | - |
| Shares issued | - | - | 119,648 | - | 119,648 |
| Balance, December 31, 2023 | 1,522,390 | 2,012,225 | 4,158,382 | - | 7,692,997 |
| Exploration costs: | |||||
| Balance, December 31, 2022 | 6,350,007 | 11,355 | 215,442 | - | 6,576,804 |
| Assay | 25,025 | - | - | - | 25,025 |
| Consulting, contractors, and general | 146,943 | - | - | - | 146,943 |
| Drilling | 130,520 | - | 39,714 | - | 170,234 |
| Impairment of exploration costs | - | - | - | - | - |
| Mineral licenses | 191,039 | - | - | - | 191,039 |
| Operator fees | 9,033 | - | - | - | 9,033 |
| Rent and storage | 5,028 | - | 5,553 | - | 10,581 |
| Royalty | 77,310 | - | - | - | 77,310 |
| Salaries and benefits | 50,172 | - | 109,461 | - | 159,633 |
| Supplies and miscellaneous | 28,751 | - | 12,340 | - | 41,091 |
| Travel | 22,074 | - | - | - | 22,074 |
| Balance, December 31, 2023 | 7,035,902 | 11,355 | 382,510 | - | 7,429,767 |
| Total costs: | |||||
| Balance, December 31, 2023 | 8,558,292 | 2,023,580 | 4,540,892 | - | 15,122,764 |
| Impairment of properties* | (5,035,915) | (1,179,363) | (2,685,860) | - | (8,901,138) |
| Balance, December 31, 2023 | $ 3,522,377 | $ 844,217 | $ 1,855,032 | $ - | $ 6,221,626 |
- Subsequent to the year, on February 24, 2024 the Company was acquired by First Nordic Metals Corp. The Company impaired the carrying value of the properties to reflect the fair value of the consideration received at the time of acquisition (Note 13).
Page | 16
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
- EXPLORATION AND EVALUATION ASSETS (Continued)
| Gold Line Project | Klippen Gold Project | Oijärvi Gold Project | Solvik Gold Project | Total | |
|---|---|---|---|---|---|
| Acquisition costs: | |||||
| Balance, December 31, 2021 | $ 1,359,265 | $ 2,012,225 | $ 1,304,943 | $ 326,236 | $ 5,002,669 |
| Cash | - | - | 1,763,020 | 440,755 | 2,203,775 |
| Impairment of acquisition costs | - | - | - | (980,051) | (980,051) |
| Shares issued | 163,125 | - | 852,243 | 213,060 | 1,228,428 |
| Balance, December 31, 2022 | 1,522,390 | 2,012,225 | 3,920,206 | - | 7,454,821 |
| Exploration costs: | |||||
| Balance, December 31, 2021 | 4,814,763 | - | 35,248 | 4,360 | 4,854,371 |
| Assay | 95,301 | - | - | - | 95,301 |
| Consulting, contractors, and general support | 738,092 | - | - | - | 738,092 |
| Drilling | 430,384 | - | - | - | 430,384 |
| Impairment of exploration costs | - | - | - | (14,460) | (14,460) |
| Mineral licenses | 7,166 | 11,355 | - | - | 18,521 |
| Operator fees | 30,492 | - | - | - | 30,492 |
| Rent and storage | 20,098 | - | 129,656 | 5,892 | 155,646 |
| Salaries and benefits | 36,012 | - | 50,538 | - | 86,550 |
| Supplies and miscellaneous | 139,760 | - | - | 4,208 | 143,968 |
| Travel | 37,939 | - | - | - | 37,939 |
| Balance, December 31, 2022 | 6,350,007 | 11,355 | 215,442 | - | 6,576,804 |
| Total costs: | |||||
| Balance, December 31, 2022 | $ 7,872,397 | $ 2,023,580 | $ 4,135,648 | $ - | $ 14,031,625 |
Gold Line Project, Sweden
On April 1, 2019, GLR entered into a purchase and sale agreement (the "Gold Line Agreement") with Eurasian Minerals Sweden AB ("EMSAB") and Viad Royalties AB ("VRAB"), two wholly-owned subsidiaries of EMX Royalty Corp. ("EMX"), to acquire mineral property licenses in the Gold Line of Northern Sweden (the "Gold Line Project"). The Gold Line Project includes the Långtjärn Property, Blåbärlden Property, Paubäcken Property, and the Kankberg Norra Property.
In consideration for the Gold Line Project, GLR paid $133,733 (US$101,390) and issued 255,521 common shares issued valued at $127,761, representing a 9.9% equity ownership of the Company on a non-diluted basis.
GLR also agreed to issue additional common shares to allow EMX to maintain a 9.9% equity ownership in GLR for no additional consideration until GLR raised an aggregate of $5,000,000 in equity financing (the "Anti-Dilution Right"), after which EMX will have the right to participate pro-rata in future financings at its own cost to maintain its interest in GLR (the "Pre-Emptive Right").
Page | 17
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
5. EXPLORATION AND EVALUATION ASSETS (Continued)
Gold Line Project, Sweden (Continued)
In October 2020, GLR entered into an agreement among EMX, EMSAB and VRAB (the “Acknowledgement Agreement”). Pursuant to the Acknowledgement Agreement, (a) EMX was issued 439,108 shares valued at $1,097,771 at closing of the transaction (the “EMX Closing Shares”), following which EMX has no further Anti-Dilution Right; (b) the EMX Closing Shares were escrowed until the release conditions have been satisfied, which such conditions have since been satisfied, and the shares released from escrow; (c) following closing of the RTO Transaction, EMX continues to have the Pre-Emptive Right unless and until EMX’s interest in the Company becomes less than 5%; and (d) two Rötjärnen licenses were excluded from the licenses to be acquired, resulting in 11 mineral property licenses acquired under the Gold Line Agreement. Pursuant to an amendment to the Gold Line Agreement as of March 25, 2021, the parties agreed to add the Kattisavan nr 102 license to the Gold Line Project, and in consideration therefor, the Company reimbursed EMSAB for SEK 570,944 in acquisition costs.
EMSAB Royalty:
In accordance with the Gold Line Agreement, and in respect of the Gold Line Project, GLR entered into a royalty agreement with EMSAB dated April 1, 2019, pursuant to which GLR is required to pay an annual advance royalty (the “Gold Line AAR”) payments of 30 ounces of gold, or its value equivalent in USD or issuance of shares, on or before April 1, 2022, the third anniversary of the closing date. This royalty payment will then increase by 5 ounces per year up to a maximum of 75 ounces of gold per year until commencement of commercial production. As at December 31, 2023, the Company has not paid the Gold Line AAR payment which was CAD $77,310.
AOI Royalty:
If at any time before April 1, 2024, EMSAB, VRAB or EMX (each, a “Seller Party”) acquires any mineral interest located within the agreed upon area of interest (the “AOI”) surrounding certain of the licenses comprising the Gold Line Project (an “AOI Interest”), then the Seller Party must provide notice to GLR and GLR may elect to acquire the AOI Interest at the same cost that the Seller Party acquired such AOI. If GLR elects to acquire an AOI Interest, then, in exchange for the transfer of title to the AOI Interest, GLR will grant EMSAB a 1.0% net smelter return royalty (“AOI Royalty”) in production from the AOI Interest on the terms and conditions prescribed by the Gold Line Agreement. Additionally, if GLR or any subsidiary or affiliate of GLR (each, a “Buyer Party”) acquires a new mineral exploration license (an “AOI License”) or mineral interest (an “AOI Acquired Interest”) covering properties with an AOI, then the Buyer Party must provide notice to EMSAB and grant EMSAB a 1.0% Net Smelter Royalty in production from any AOI License and a 0.25% NSR Royalty in production from any AOI Acquired Interest, in each case on the terms and conditions prescribed by the Gold Line Agreement.
Failure to Comply:
If GLR delivers a relinquishment notice to EMX, fails to make the required payment of royalties or annual advance royalties or, fails to complete the second equity financing and use such amounts to fund the exploration and development of the Gold Line Project within two years, EMX will have the right to demand GLR transfer the Gold Line Project back to EMX for no further consideration.
Oijärvi Reservation Transaction
Effective December 31, 2021, the Company entered into an amendment to the Gold Line Agreement with EMSAB and VRAB, whereby the Company acquired the Oijärvi exploration reservation (the “Oijärvi Reservation”), located in Finland (the “Oijärvi Reservation Transaction”).
On January 21, 2022, the Company issued EMX 112,500 common shares of the Company as consideration for the Oijärvi Reservation Transaction. The common shares were valued at $1.45 per share, for total share consideration of $163,125. EMX will also receive an uncapped 3% NSR royalty on the Oijärvi Reservation. Within six years of December 31, 2021, the Company can exercise its right to buy down up to 1% of the royalty owed to EMX (leaving EMX with a 2% NSR) by paying EMX 2,500 ounces of gold, or the cash equivalent thereof.
Page | 18
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
- EXPLORATION AND EVALUATION ASSETS (Continued)
Gold Line Project, Sweden (Continued)
EMX will also receive annual advance royalty (the “Oijärvi Extension AAR”) payments of 30 ounces of gold on the Oijärvi Extension Project, commencing on December 31, 2023, the second anniversary of December 31, 2021, until commencement of commercial production, with each AAR payment increasing by five ounces of gold per year up to a maximum of 75 ounces of gold per year. EMX will have an option to receive the AAR payments in gold bullion, a gold bullion cash equivalent, or a value equivalent in shares of the Company, subject to certain and agreed upon conditions.
The Company reimbursed $30,000 to EMX for the original acquisition costs incurred for the Oijärvi Reservation.
In addition, the Oijärvi Reservation will be held by EMX, in trust for the Company, until such time as the Oijärvi Reservation has been converted into an exploration permit application (the “Exploration Permit Application”) registered in the name of the Company. While holding the Oijärvi Reservation and the Exploration Permit Application in trust for the Company, the Company will have the right to conduct exploration and development activities on or with respect to the project area, for purposes of determining viability of the project.
Oijärvi Gold Project, Finland and Solvik Gold Project, Sweden
On March 19, 2021, the Company and EMX entered into a definitive agreement (the “AEM Agreement”) with Agnico Eagle Mines Limited (NYSE and TSX: AEM; “Agnico”) pursuant to which the Company will acquire a 100% interest in Agnico’s Oijärvi Gold Project located in central Finland and the Solvik Gold Project located in southern Sweden. Agnico will retain a 2% net smelter return (“NSR”) royalty on the projects, 1% of which may be purchased at any time by EMX for US$1,000,000.
Consideration for the AEM Agreement is US$10,000,000, comprised of US$7,000,000 in cash, US$1,500,000 in common shares of EMX (“EMX Shares”) and US$1,500,000 in common shares of the Company.
On May 1, 2023 the Company has entered into an amending agreement to the previously announced asset purchase agreement dated March 19, 2021.
In connection with the amending agreement, the Company issued 1,327,989 common shares of the Company valued at $119,648 on May 1, 2023 and is required to make a cash payment in the amount of US$87,500 on or before June 30, 2023.
As a result of the Amending Agreement, total consideration for the transaction will be US$10,175,000, comprised of US$7,087,500 in cash, US$1,500,000 in common shares of EMX Royalty Corp. and US$1,587,500 in common shares of the Company, which is required to be paid (or has been paid) to Agnico as follows:
| Date | Cash Payments (USD) | EMX Shares (USD) | Gold Line Shares (USD) |
|---|---|---|---|
| Upon TSXV approval | $750,000 (paid) | $375,000 (issued) | $375,000 (issued) |
| On the first anniversary of the AEM Agreement (March 19, 2022) | $1,500,000 (paid) | $500,000 (issued) | $500,000 (issued) |
| On the second anniversary of the AEM Agreement (June 30, 2023) | $87,500 (unpaid) | - | $87,500 (issued) |
| On the third anniversary of the AEM Agreement (March 19, 2024) | $4,750,000 | $625,000 | $625,000 |
| Total | $7,087,500 | $1,500,000 | $1,587,500 |
Page | 19
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
5. EXPLORATION AND EVALUATION ASSETS (Continued)
Oijärvi Gold Project, Finland and Solvik Gold Project, Sweden (Continued)
As part of the AEM Agreement, EMX will receive cash and share payments from the Company as set out in the table below, as well as the purchase right of 1% of Agnico’s 2% NSR royalty.
| Date | Cash Payments (USD) | Gold Line Shares Issued to EMX (USD) |
|---|---|---|
| Upon TSXV approval | - | $375,000 (issued) |
| On the first anniversary of the AEM Agreement (March 19, 2022) | $250,000 (paid) | $250,000 (issued) |
| On the second anniversary of the AEM Agreement (March 19, 2024) | $312,500 (unpaid) | $312,500 (unpaid) |
All common shares issuable in connection with the AEM Agreement are based on the volume-weighted average price for the 20 trading days (the " 20-day VWAP ") prior to the date of issuance, with the exception of the first tranche, which was based on the 20-day VWAP prior to the effective date of the AEM Agreement, being $5.90 on March 18, 2021.
In December 2020, the Company paid Agnico an exclusivity payment of $25,904 (US$20,000).
In June 2021, pursuant to the terms of the AEM Agreement, the Company paid US$750,000, issued 79,322 common shares to Agnico and 79,322 common shares to EMX. The common shares were valued at $2.85 per share, for total share consideration of $452,135.
In connection with the AEM Agreement, the Company paid finder's fees of 2% to two arm's length parties, who assisted in facilitating the AEM Agreement, which was paid by issuing an aggregate of 42,305 common shares split evenly between the two parties. The common shares were valued at $2.85 per share, for total share consideration of $120,569. In addition, the Company paid success fee of $120,000 to an arm's length party.
In connection with the AEM Transaction, total acquisition costs during the year ended December 31, 2021 was $1,631,179. Management allocated 80% of the total acquisition costs to the Oijärvi Gold Project and allocated 20% of the total acquisition costs to the Solvik Gold Project.
In March 2022, pursuant to the terms of the AEM Agreement to fulfill the first anniversary payment, the Company paid US$1,500,000 to Agnico and paid US$250,000 to EMX. In addition, the Company issued 568,161 common shares to Agnico and 284,081 common shares to EMX. The common shares were valued at $1.25 per share, for total share consideration of $1,065,302. In connection with the AEM Agreement, total acquisition costs during the year ended December 31, 2022 was $3,269,078. Management allocated 80% of the total acquisition costs to the Oijärvi Gold Project and allocated 20% of the total acquisition costs to the Solvik Gold Project.
During the year ended December 31, 2022, the Company decided not to proceed with the Solvik Gold Project and therefore fully impaired the property in the amount of $994,511.
Subsequent to the year ended December 31, 2023, the Company was acquired by First Nordic Metals Corp (Formerly Barsele Minerals Corp.) (Note 13) (“FNM”) and the payments required under the AEM Agreement with Agnico were settled with the issuance of 27,954,872 common shares of FNM.
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GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
5. EXPLORATION AND EVALUATION ASSETS (Continued)
Klippen Gold Project
Effective May 20, 2021, the Company signed a definitive share purchase agreement with Nordic Route Explorations Ltd. ("Nordic") and all of the shareholders of Nordic (collectively, the "Nordic Vendors"), pursuant to which the Company will acquire all of the outstanding share capital of Nordic from the Nordic Vendors. Nordic is a privately held company that, through its wholly-owned subsidiary, FS Guldägg 001 AB, controls the Klippen Gold Project ("Klippen"), consisting of an exploration license located in the Kingdom of Sweden (the "Nordic Transaction").
On June 8, 2021, in connection with the Nordic Transaction, the Company issued 700,000 common shares of the Company in consideration for all of the outstanding share capital of Nordic. The common shares were valued at $2.95 per share, for total share consideration of $2,065,000.
On closing of the Nordic Transaction, Nordic's assets consisted primarily of mineral properties. As Nordic did not have processes capable of generating outputs, Nordic did not meet the definition of a business in accordance with IFRS 3 Business Combinations, and as a result the Nordic Transaction has been accounted for as an asset acquisition. The value of the consideration paid after allocation to the other net assets acquired, was allocated to the Klippen Project, all of which are located in Sweden, based on their fair values on June 8, 2021.
The purchase price has been determined and allocated as follows:
| Total | |
|---|---|
| Consideration | |
| 700,000 shares at a value of $2.95 per share | $ 2,065,000 |
| 2,065,000 | |
| Net assets acquired | |
| Cash | 59,654 |
| Receivables | 732 |
| Exploration and evaluation assets | 2,012,225 |
| Accounts payable and accrued liabilities | (7,611) |
| $ 2,065,000 |
6. FINANCIAL INSTRUMENTS
Financial instruments recognized on the consolidated statements of financial position consist of cash, amounts receivable, loan payable and amounts payable and accrued liabilities.
The carrying amounts on the statement of financial position for cash, amounts receivable, amounts payable and accrued liabilities, and loan payable approximate their fair values due to the immediate or short-term maturities of these financial instruments.
The Company, through its financial assets and liabilities, is exposed to various risks. The following analysis provides a measurement of risks as at December 31, 2023:
(a) Credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and amounts receivable. The Company limits its exposure to credit risk by placing its cash with high quality financial institutions. The Company's amounts receivable consist of input tax credit refunds from the federal government and as such, the Company believes the risk to be minimal.
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GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
6. FINANCIAL INSTRUMENTS (Continued)
(b) Currency risk
The Company is exposed to foreign currency risk on fluctuations related to cash, receivables, prepaid expenses, amounts payable and accrued liabilities that are denominated in the Swedish Krona. A 10% fluctuation in the SEK against the Canadian dollar would not result in any material change in loss for the year ended December 31, 2023.
(c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company attempts to ensure there is sufficient access to funds to meet on-going business requirements, taking into account its current cash position and potential funding sources. As at December 31, 2023, the Company had a working capital deficit of $712,429, including cash of $238,422 to settle current liabilities of $1,066,702, and will require additional funding to continue operations for the next twelve months (Note 1).
(d) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. The Company is not exposed to any significant interest rate risk.
(e) Price risk
The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market.
7. EQUITY
(a) Authorized
Unlimited number of common shares with no par value.
On June 15, 2022, the Company consolidated its issued and outstanding common shares on the basis of ten pre-consolidation shares for every one post-consolidation share. All shares, options, warrants, and per share amounts were adjusted to reflect the consolidation ratio and are presented in these consolidated financial statements on a post-consolidation basis unless otherwise stated.
(b) Issued and fully paid common shares
During the year ended December 31, 2023
On October 27, 2023, the Company closed a non-brokered private placement for gross proceeds of $1,073,000. The Company issued 10,730,000 units at a price of $0.10 per unit consisting of 10,730,000 common shares and 5,365,000 share purchase warrants. The Company paid finders fees totalling $41,930 and issued a total of 342,000 finders warrants. All warrants and finders warrants are exercisable at a price of $0.20 per share for one common share in the capital of the Company for a period of twenty-four (24) months from the date of issuance, expiring October 27, 2025.
On May 1, 2023, as part of the Amending Agreement, the Company issued 1,327,989 common shares valued at $119,648 (Note 5).
On April 28, 2023, the Company closed a non-brokered private placement for gross proceeds of $1,000,000. The Company issued 8,333,334 units at a price of $0.12 per unit consisting of 8,333,334 common shares and 4,166,667 share purchase warrants. The Company paid finders fees totalling $31,565 and issued a total of 179,700 finders warrants. All
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GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
7. EQUITY (Continued)
(b) Issued and fully paid common shares (Continued)
warrants and finders warrants are exercisable at a price of $0.25 per share for one common share in the capital of the Company for a period of twenty-four (24) months from the date of issuance, expiring April 28, 2025.
During the year ended December 31, 2022
On September 14, 2022, the Company completed a non-brokered private placement (the “September 2022 Private Placement”), pursuant to which the Company issued an aggregate of 12,500,000 units at a price of $0.12 per unit for gross proceeds of $1,500,000. Each unit consisted of one common share and one-half of one share purchase warrant, with each warrant entitling the holder thereof to purchase one additional common share at a price of $0.25 until September 14, 2024. In connection with closing of the private placement, the Company paid cash finders’ fee of $42,504 and issued 354,200 finder's warrants. Each finder's warrant is exercisable at a price of $0.25 until September 14, 2024. The finder’s warrants were allocated a value of $9,451. The fair value of the warrants was determined using the Black Scholes valuation model with the following assumptions: i) expected share price volatility of 75%; ii) risk free interest rate of 3.72%; iii) dividend yield of $nil; and iv) expected life of 2 years. Other share issuance costs related to the September 2022 Private Placement include $24,844.
In March 2022, pursuant to the terms of the AEM Agreement to fulfill the first anniversary payment, the Company issued 568,161 common shares to Agnico and 284,081 common shares to EMX. The common shares were valued at $1.25 per share, for total share consideration of $1,065,302 (Note 5).
On January 31, 2022, the Company completed a non-brokered private placement (the “January 2022 Private Placement”), pursuant to which the Company issued an aggregate of 2,562,500 units at a price of $1.60 per unit for gross proceeds of $4,100,000. Proceeds of $4,959,375 were allocated to the common shares and $640,625 were allocated to the warrant based on the residual value method. Each unit consisted of one common share and one common share purchase warrant, with each warrant entitling the holder thereof to purchase one additional common share at a price of $2.50 until January 31, 2025. In connection with closing of the private placement, the Company paid cash finders’ fee of $200,952 and issued 125,595 finder's warrants. Each finder's warrant is exercisable at a price of $1.60 until January 31, 2024. The fair value of the finders’ warrants of $82,678 was determined using the Black Scholes valuation model with the following assumptions: i) expected share price volatility of 75%; ii) risk free interest rate of 1.23%; iii) dividend yield of $nil; and iv) expected life of 2 years. Other share issuance costs related to the January 2022 Private Placement include $93,145.
On January 21, 2022, the Company issued 112,500 common shares of the Company to EMX as consideration for the Oijärvi Reservation Transaction. The common shares were valued at $1.45 per share, for total share consideration of $163,125 (Note 5).
(c) Stock options
The Company has established a rolling Share Option Plan (the “Plan”). Under the Plan, the number of shares reserved for issuance may not exceed 10% of the total number of issued and outstanding shares and, to any one optionee, may not exceed 5% of the issued shares on a yearly basis. The maximum term of each option shall not be greater than ten years. The exercise price of each option shall not be less than the market price of the Company’s shares at the date of grant. Options granted to consultants performing investor relations activities shall vest over a minimum of 12 months with no more than 1/4 of such Options vesting in any three month period. All other options vest at the discretion of the Board of Directors.
During the year ended December 31, 2023, the Company granted the following incentive stock options:
In December 2023, 933,500 stock options were cancelled.
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GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
7. EQUITY (Continued)
(c) Stock options (Continued)
In December 2023, the Company granted 2,100,000 incentive stock options to various consultants, directors and officers of the Company pursuant to the Company’s stock option plan. The options vested immediately and are exercisable at a price of $0.11 per share until December 23, 2028. Using the Black-Scholes valuation model, the grant date fair value was $145,858, or $0.07 per option. The following weighted average assumptions were used for the valuation of the share options: risk-free interest rate of 3.38%, expected life of 2 years, annualized volatility of 75% and dividend rate of 0.00%.
During the year ended December 31, 2022, the Company granted the following incentive stock options:
In March 2022, the Company granted 292,000 incentive stock options to various consultants, directors and officers of the Company pursuant to the Company’s stock option plan. The options vested immediately and are exercisable at a price of $1.60 per share until March 31, 2027. Using the Black-Scholes valuation model, the grant date fair value was $197,520, or $0.68 per option. The following weighted average assumptions were used for the valuation of the share options: risk-free interest rate of 2.37%, expected life of 5 years, annualized volatility of 75% and dividend rate of 0.00%.
In March 2022, the Company granted 210,000 incentive stock options to various consultants of the Company pursuant to the Company’s stock option plan. The options vested immediately and are exercisable at a price of $1.60 per share until March 16, 2027. Using the Black-Scholes valuation model, the grant date fair value was $109,597, or $0.52 per option. The following weighted average assumptions were used for the valuation of the share options: risk-free interest rate of 1.99%, expected life of 5 years, annualized volatility of 75% and dividend rate of 0.00%.
In March 2022, the Company granted 50,000 incentive stock options to a consultant of the Company pursuant to the Company’s stock option plan. The options vest quarterly and are exercisable at a price of $1.60 per share until March 16, 2025. Using the Black-Scholes valuation model, the grant date fair value was $18,931, or $0.38 per option. The following weighted average assumptions were used for the valuation of the share options: risk-free interest rate of 1.99%, expected life of 3 years, annualized volatility of 75% and dividend rate of 0.00%. Share based compensation of $15,118 was recorded for this grant during the year ended December 31, 2022.
In April 2022, 105,000 stock options with an original exercise price of $2.50 exercisable until October 29, 2030 and 77,500 stock options with an original exercise price of $4.00 exercisable until January 12, 2031 were repriced to $1.60 per share.
In February 2022, 19,500 stock options with an exercise price of $1.00 and 80,000 stock options with an exercise price of $2.50 expired unexercised. The repricing of stock option were allocated a fair value of $nil.
In November 2022, 479,000 stock options were cancelled.
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GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
7. EQUITY (Continued)
(c) Stock options (Continued)
A summary of changes in stock options is presented below:
| Options | Options Weighted average exercise price | |
|---|---|---|
| Outstanding, December 31, 2021 | 960,000 | $ 2.40 |
| Granted | 552,000 | 1.60 |
| Expired | (99,500) | 2.21 |
| Cancelled | (479,000) | 1.92 |
| Outstanding, December 31, 2022 | 933,500 | 1.88 |
| Granted | 2,100,000 | 0.11 |
| Exercised | - | - |
| Expired | - | - |
| Cancelled | (933,500) | 1.88 |
| Outstanding, December 31, 2023 | 2,100,000 | $ 0.11 |
| Exercisable, December 31, 2023 | 2,100,000 | $ 0.11 |
The following table summarizes information about the stock options outstanding and exercisable at December 31, 2023:
| Number of Shares Outstanding | Number of Shares Exercisable | Weighted average exercise price | Expiry Date |
|---|---|---|---|
| 2,100,000 | 2,100,000 | $0.11 | December 23, 2028 |
| 2,100,000 | 2,100,000 | $0.11 |
(d) Warrants
During the year ended December 31, 2023, in connection with the October 2023 Private Placement, the Company issued 5,365,000 warrants with an exercise price of $0.20 per warrant and 342,000 finder's warrants at a price of $0.20 per finder's warrant share (Note 7(b)). The fair value of the finder's warrant using the Black-Scholes valuation model was $6,501. The following weighted average assumptions were used for the valuation of the share options: risk-free interest rate of 4.62%, expected life of 2 years, annualized volatility of 75% and dividend rate of 0.00%. The warrants attached to the units were valued at $0.01 per warrant using the residual value method.
During the year ended December 31, 2023, in connection with the May 2023 Private Placement, the Company issued 4,166,667 warrants with an exercise price of $0.25 per warrant and 179,700 finder's warrants at a price of $0.25 per finder's warrant share (Note 7(b)). The fair value of the finder's warrant using the Black-Scholes valuation model was $3,991. The following weighted average assumptions were used for the valuation of the share options: risk-free interest rate of 3.72%, expected life of 2 years, annualized volatility of 75% and dividend rate of 0.00%. The warrants attached to the units were valued at $0.02 per warrant using the residual value method.
During the year ended December 31, 2023, 1,148,518 warrants with a weighted average exercise price of $0.29 per warrant expired unexercised.
During the year ended December 31, 2022, in connection with the September 2022 Private Placement, the Company issued 6,250,000 warrants with an exercise price of $0.25 per warrant and 354,200 finder's warrants at a price of $0.25 per finder's warrant share (Note 7(b)).
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
7. EQUITY (Continued)
(d) Warrants (Continued)
During the year ended December 31, 2022, in connection with the January 2022 Private Placement, the Company issued 2,562,500 warrants with an exercise price of $2.50 per warrant and 125,595 finder's warrants at a price of $1.60 per finder's warrant share (Note 7(b)).
In October 2022, 2,338,000 warrants with an exercise price of $4.00 per warrant expired unexercised.
A summary of changes in warrants is presented below:
| Warrants | Warrants Weighted average exercise price | |
|---|---|---|
| Outstanding, December 31, 2021 | 3,507,398 | $ 3.30 |
| Issued | 9,292,295 | 0.89 |
| Expired | (2,358,880) | 3.99 |
| Outstanding, December 31, 2022 | 10,440,813 | 0.99 |
| Issued | 10,053,367 | 0.22 |
| Expired | (1,148,518) | 0.18 |
| Exercised | - | - |
| Outstanding, December 31, 2023 | 19,345,662 | $ 0.54 |
| Exercisable, December 31, 2023 | 19,345,662 | $ 0.54 |
The following table summarizes information about the warrants outstanding and exercisable at December 31, 2023:
| Number of Warrants Outstanding and exercisable | Weighted average exercise price | Expiry Date | Weighted average remaining contractual life (years) |
|---|---|---|---|
| 125,595 | $1.60 | January 31, 2024 | 0.1 |
| 6,604,200 | $0.25 | September 14, 2024 | 0.7 |
| 2,562,500 | $2.50 | January 31, 2025 | 1.1 |
| 4,346,367 | $0.25 | April 28, 2025 | 1.3 |
| 5,707,000 | $0.20 | October 27, 2025 | 1.8 |
| 19,345,662 |
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GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
8. CAPITAL MANAGEMENT
The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of equity comprising issued capital stock, equity reserves and deficit.
The Company is not subject to externally imposed capital requirements. The Company does not pay dividends. There were no changes to the Company’s capital management strategies during the year ended December 31, 2023.
9. LOAN PAYABLE
During the year ended December 31, 2023 the payable to a shareholder was repaid and the amount due as at December 31, 2023 is $Nil (December 31, 2022 - $100,000). The loan is unsecured, non-interest bearing, with no specific repayment terms.
10. RELATED PARTY TRANSACTIONS
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. The remuneration of directors and key management personnel during the years ended December 31, 2023 and 2022 are as follows:
| Year ended December 31, 2023 | Year ended December 31, 2022 | |||
|---|---|---|---|---|
| Management fees | $ | 514,952 | $ | 358,396 |
| Fees to officers | 30,000 | - | ||
| Share based payments | 135,439 | 152,199 | ||
| Total | $ | 602,140 | $ | 510,595 |
There was $380,499 owing to directors and officers of the Company as at December 31, 2023 (December 31, 2022 - $73,246).
11. SEGMENTED INFORMATION
The Company operates in one segment, being exploration and evaluation of mineral properties, in Sweden and Finland. Geographic segmentation is as follows:
| Sweden | Finland | Total | |
|---|---|---|---|
| December 31, 2023 | |||
| Exploration and evaluation assets | $ 4,126,160 | $ 2,095,466 | $ 6,221,626 |
| December 31, 2022 | |||
| Exploration and evaluation assets | $ 9,732,852 | $ 4,298,773 | $ 14,031,625 |
GOLD LINE RESOURCES LTD.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
12. INCOME TAXES
A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
| Year ended December 31, 2023 | Year ended December 31, 2022 | |
|---|---|---|
| Loss and comprehensive loss for the year | $ (10,629,248) | $ (3,002,505) |
| Expected income tax (recovery) | (2,870,000) | (811,000) |
| Change in statutory, foreign tax, foreign exchange rates and other | 597,000 | 70,000 |
| Permanent differences | 57,000 | 81,000 |
| Share issue cost | - | (97,000) |
| Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses | - | 92,000 |
| Change in unrecognized deductible temporary differences | 2,216,000 | 665,000 |
| Total income tax expenses (recovery) | $ - | $ - |
The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:
| Year ended December 31, 2023 | Expiry Date Range | Year ended December 31, 2022 | Expiry Date Range | |
|---|---|---|---|---|
| Temporary Differences | ||||
| Exploration and evaluation assets | $ 8,742,000 | No expiry date | $ 1,020,000 | No expiry date |
| Share issue costs | 617,000 | 2043 to 2046 | 825,000 | 2042 to 2045 |
| Allowable capital losses | 6,673,000 | No expiry date | 6,673,000 | No expiry date |
| Non-capital losses available for future periods: | 7,549,000 | 5,785,000 | ||
| Canada | 7,328,000 | 2036 to 2042 | 5,587,000 | 2036 to 2041 |
| Sweden | 221,000 | Indefinitely | 198,000 | Indefinitely |
13. SUBSEQUENT EVENTS
On February 23, 2024, the Merger closed and FNM acquired all issued and outstanding common shares of the Company in exchange for 35,747,716 common shares of FNM. The shareholders of the Company received 0.7382 of a common share of FNM for each common share of The Company. FNM also exchanged the outstanding options and warrants of the Company by issuing 1,550,220 stock options and 14,188,255 warrants.
On February 23, 2024, immediately prior to the Merger, the Company issued 1,151,450 common shares in satisfaction of a financial advisory fee.
In connection with the Merger, FNM closed the concurrent private placement. In January and February 2024 prior to closing of the Merger, FNM had issued a total of 8,082,399 subscription receipts at a price of $0.15 per unit for gross proceeds of $1,212,360 of which $37,000 was recognized as subscriptions received in advance as at December 31, 2023 (note 7). Upon closing of the Merger, each subscription receipt was converted into one common share of FNM and one-half of one common share purchase warrant. Each warrant entitles the holder to purchase one common shares of the FNM at a price equal to $0.25 per share for a period of two years. FNM paid finder's fees of $50,845 and 338,967 finder warrants. The finder warrants have the same terms as the warrants described above.
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