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Osisko Development Corp. — Interim / Quarterly Report 2020
Nov 28, 2020
45981_rns_2020-11-27_11c0a0dd-f778-4db1-8b1d-7efca4835e34.pdf
Interim / Quarterly Report
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Management Discussion and Analysis For the Nine Months Ended September 30, 2020
The following discussion and analysis of the operations, results and financial position of Cresval Capital Corp. (the “Company” or “Cresval”) should be read in conjunction with the Company’s unaudited consolidated financial statements for the nine months ended September 30, 2020, which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and the notes thereto.
This Management’s Discussion and Analysis (“MD&A”) is dated November 27, 2020 and discloses specified information up to that date. Cresval is classified as a “venture issuer” for the purposes of National Instrument 51-102.
We recommend that readers consult the “Cautionary Statement” on the last page of this report.
Additional information relating to the Company can be obtained on SEDAR at www.sedar.com.
Overview
Cresval was incorporated under the Company Act of British Columbia on July 23, 2001 and is a reporting issuer in the Provinces of British Columbia and Alberta. The common shares of the Company are listed for trading on the TSX Venture Exchange under the symbol “CRV” and on the Frankfurt Stock Exchange under the symbol “CFV”. Its principal business comprises the acquisition and exploration of mineral resource properties, with a current focus on base and precious metal properties located in the Province of British Columbia, Canada.
The Company is in the exploration stage. The Company is classified as a Mineral Exploration company. The financial statements to which this MD&A relates have been prepared on a going concern basis, which presumes the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. The Company had a working capital deficit of $745,259 at September 30, 2020 and has accumulated losses of $3,326,622 since inception. The Company’s ability to meet its obligations and maintain its operations is contingent upon additional financing or profitable operations in the future.
Strategy, Performance and Outlook
On January 9, 2020, the Company issued 2,400,000 shares pursuant to a private placement for gross proceeds of $120,000 consisting of 2,200,000 units and 200,000 flow-through units. All units consist of one common share and one common share purchase warrant exercisable at $0.07 per warrant share for a period of two years.
On June 19, 2020, the British Columbia Securities Commission issued a cease trade order for failure to file financial statements. A full revocation order was issued on June 22, 2020. On June 22, 2020, the Company was halted from trading on the TSX Venture Exchange, and reinstatement is pending as of the date of this Management’s Discussion and Analysis.
Mineral Property Interests
The Company currently has interests in two exploration projects. The first property, known as the MIKE Property, located 40 km west-northwest of Goldbridge, British Columbia in the Lillooet Mining Division consists of 27 contiguous mineral claims and covers an area of approximately 11,127 hectares. The Company did not complete any exploration on the MIKE property during the three month period ended September 30, 2020.
In the second quarter of 2020, the Company received $3,889 relating to the BC Mining Tax Credit for eligible exploration expenditures made on the MIKE property in previous periods.
The second property, the New Raven property, is located 15 km southwest of Lillooet, British Columbia, in the Lillooet Mining Division and consists of 7 mineral claims, covering an area of approximately 3,200 hectares. During the year ended December 31, 2018, the Company amalgamated its Aumax claims into the New Raven claims resulting in a single property interest. The Company did not incur any exploration-related costs on the New Raven claims during the three month period ended September 30, 2020.
In November 2020, the Company received a refund, from the Province of British Columbia, of $15,000 pertaining to security relating to reclamation bonds.
Review of Operations
Three months ended September 30, 2020 compared with the three months ended September 30, 2019
| 3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | |
|---|---|---|---|---|
| September 30, | September 30, | |||
| General and Administrative Expenses | 2020 | 2019 | ||
| Consulting and management fees | $ | 17,200 | $ | 39,000 |
| Depreciation | 122 | 148 | ||
| Office supplies and services | 227 | 3,145 | ||
| Professional fees | - | 1,750 | ||
| Shareholder information and communications | 189 | 520 | ||
| Share transfer, listing and filing fees | 6,805 | 1,464 | ||
| Travel | - | 75 | ||
| (24,543) | (46,102) | |||
| Other Income and Expenses | (1,416) | - | ||
| Total Net Loss and Comprehensive Loss | $ | (25,959) | $ | (46,102) |
| Basic and Diluted Loss per Share | $ | (0.001) | $ | (0.002) |
| Weighted Average Shares Outstanding (basic and diluted) | 32,418,231 | 30,018,231 |
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Consulting and management fees declined for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 due to the resignation of a director in July 2020 who previously provided consulting services. As well, the Company’s former CFO had reduced involvement during the current quarter. Subsequent to September 30, 2020, a new, interim CFO has been appointed.
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Office supplies and services decreased for the three months ended September 30, 2020 compared to the same period ended September 30, 2019 due primarily to a decrease in expense for rental premises.
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Share transfer, listing and filing fees increased to $6,805 for the three months ended September 30,
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2020 compared to $1,464 for the three months ended September 30, 2019. The increase is due primarily to fees for approval of the Company’s stock option plan.
Nine months ended September 30, 2020 compared with the nine months ended September 30, 2019
| 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |
|---|---|---|---|---|
| September 30, | September 30, | |||
| General and Administrative Expenses | 2020 | 2019 | ||
| Consulting and management fees | $ | 95,200 | $ | 117,000 |
| Depreciation | 366 | 478 | ||
| Office supplies and services | 1,396 | 12,949 | ||
| Professional fees | 9,818 | 11,209 | ||
| Shareholder information and communications | 569 | 114,644 | ||
| Share transfer, listing and filing fees | 18,179 | 25,077 | ||
| Travel | 112 | 943 | ||
| (125,640) | (282,300) | |||
| Other Income and Expenses | (1,543) | 90 | ||
| Total Net Loss and Comprehensive Loss | $ | (127,183) | $ | (282,210) |
| Basic and Diluted Loss per Share | $ | (0.004) | $ | (0.010) |
| Weighted Average Shares Outstanding | 32,339,399 | 28,884,165 |
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Consulting and management fees declined for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to the resignation of a director in July 2020 who previously provided consulting services. As well, the Company’s former CFO had reduced involvement during the current quarter. Subsequent to September 30, 2020, a new, interim CFO has been appointed.
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Office supplies and services decreased for the nine months ended September 30, 2020 compared to the same period for 2019 due primarily to a decrease in expense for rental premises.
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Shareholder information and communications decreased significantly for the nine months ended September 30, 2020 compared to the same period in 2019 as a result of the termination of marketing and communications consultant services before the end of 2019.
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Share transfer, listing and filing fees decreased for the nine months ended September 30, 2020 compared to the same period in 2019 due to a decrease in filings for reviewable transactions and a decrease in corporate actions.
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Review of Quarterly Results
| 2020 | 2019 | 2018 | ||||||
|---|---|---|---|---|---|---|---|---|
| Quarter ended | Sept. 30 Q3 $ |
June 30 Q2 $ |
Mar. 31 Q1 $ |
Dec. 31 Q4 $ |
Sept. 30 Q3 $ |
June 30 Q2 $ |
Mar. 31 Q1 $ |
Dec. 31 Q4 $ |
| Revenues G&A Expenses Option Benefits Net Loss (Income) -per share -per share - diluted Total assets Liabilities (Long Term) Cash Dividends Working Capital (Deficiency) Share Capital: - Authorized - Outstanding - Warrants - Options |
- 24,543 25,959 - - 267,414 - - (745,259) Unlimited 32,418,231 5,750,000 - |
- 49,483 49,610 - - 320,691 - - (719,422) Unlimited 32,418,231 5,750,000 - |
- 51,614 51,614 - - 266,232 - - (673,819) Unlimited 32,418,231 5,750,000 - |
- 60,784 60,784 - - 271,418 - - (741,039) Unlimited 30,018,231 3,350,000 - |
- 46,102 46,102 - - 241,101 - - (633,809) Unlimited 30,018,231 3,350,000 - |
- 126,918 126,828 - - 254,460 - - (587,855) Unlimited 30,018,231 3,990,000 - |
- 109,280 109,280 - - 249,766 - (494,203) Unlimited 27,618,231 1,590,000 - |
- 132,232 132,232 - - 270,879 - - (385,093) Unlimited 27,618,231 1,590,000 7,500 |
Results of operations can vary significantly by quarter, as a result of a number of factors. The Company’s level of activity and expenditures during a specific quarter are determined by the Company’s working capital position, the availability of external financing, the time required to gather, analyze and report on geological data related to its properties, the amount of stock options granted, the number of personnel required to support the level of corporate activity and the seasonality of exploration programs undertaken on the Company’s mineral properties.
Liquidity and Capital Resources
Since inception, the Company has incurred cumulative losses of $3,326,622, has a working capital deficiency at September 30, 2020 of $745,259 (2019 – $741,039).
The Company has financed its operations to date primarily through the issuance of common shares for private placements. The Company continues to seek capital through various means including the issuance of equity and/or debt.
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to have profitable operations in the future.
The Company's future capital requirements will depend on many factors, including costs of exploration and development of the properties, cash flow from operations, competition and global market conditions. The Company's growing working capital needs will require it to obtain additional capital to operate its business.
The Company will depend on outside capital to complete the exploration and development of its resource properties. Such outside capital will include the sale of additional common shares and possibly debt
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financing. There can be no assurance that capital will be available as necessary to meet these continuing exploration and development costs or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in a significant dilution in the equity interests of its current shareholders. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success may be adversely affected.
Related Party Transactions
Management services by the Company’s officers are provided on a consultancy basis. These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
The Company defines its directors and officers as its key management personnel. The compensation costs for key management personnel for the nine months ended September 30, 2020 and 2019 are as follows:
| Rent Consulting fees and management fees |
September 30, 2020 September 30, 2019 |
|---|---|
| $ - 95,200 $ 10,100 117,000 |
|
| $ 95,200 $ 127,100 |
Due to Related Parties
As at September 30, 2020, there is $386,924 due to the president of the Company (2019 - $324,570), $1,000 due to the Company’s former CEO (2019 - $1,000), and $12,100 due to the Company’s former CFO (2019 - $7,900). These amounts due to related parties are non-interest bearing, with no specific terms of repayment.
Also as of September 30, 2020, there is $159,250 (2019 - $144,250) due to a former director of the Company who resigned during the quarter. This amount is non-interest bearing, with no specific terms of repayment.
Critical Judgments and Estimates
The preparation of these financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the amount of revenues and expenses for the years reported. These estimates are reviewed periodically, and as adjustments become necessary, they are reported in operations in the period they become known.
Off-balance sheet arrangements
The Company has no off-balance sheet arrangements.
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Financial Instruments
As at September 30, 2020, the Company’s financial instruments are comprised of cash, receivables, accounts payable and accrued liabilities, short term loans, and due to related parties. The carrying value of receivables, accounts payable, accrued liabilities, short term loans and due to related parties approximate their fair values due to the relatively short periods to maturity of these financial instruments.
The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value.
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company has valued its cash using Level 1 inputs as at September 30, 2020. The fair value of the receivables, due to related parties, short term loans, and trade and other payables approximate their carrying values because of the short-term nature of these instruments.
The Company’s cash is held through a Canadian chartered bank. The Company’s current policy is to invest excess cash in a guaranteed investment certificate administered by a Canadian chartered bank. The Company has no debt instruments.
Risks and Uncertainties
The acquisition and exploration of mineral properties involves a high degree of risk, and the successful achievement of a profitable operation cannot be assured. Many exploration programs do not result in the discovery of mineralization; moreover, mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Costs of finding and evaluating an ore body are substantial, and may take several years to complete. The Company must first overcome many risks associated with an early stage exploration property. Outstanding items to be completed include, but are not limited to, identification and quantification of a commercially viable ore body, confirmation of the Company’s interest in the underlying claims and leases, completion of a feasibility study, funding of all costs to a commercial operating venture, completion of the permitting process, detailed engineering and procurement of a processing plant, and constructing a facility to support the mining activity. Construction and operational risks including, but not limited to, equipment and plant performance, metallurgical, environmental, cost estimation accuracy, and workforce performance and dependability will all affect the profitability of an operating property.
External financing, primarily through the issuance of common shares, will be required to fund the Company’s activities. There can be no assurance that the Company will be able to raise the requisite financing in the future.
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Outstanding Share Data as of November 27, 2020 and September 30, 2020
| November 27,2020 | November 27,2020 | September 30,2020 | September 30,2020 | |
|---|---|---|---|---|
| Shares | 32,418,231 | 32,418,231 | ||
| Options | - | - | ||
| Warrants | 5,750,000 | 5,750,000 | ||
| FullyDiluted | 38,168,231 | 38,168,231 |
Management’s Responsibility for Financial Statements
The Company’s certifying officers, based on their knowledge, having exercised reasonable diligence, are responsible to ensure that these filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by these filings, and the financial statements together with the other financial information included in these filings. The Board of Directors approves the Financial Statements and MD&A and ensures that management has discharged its financial responsibilities. The Board’s review is accomplished principally through the Audit Committee, which meets periodically to review all financial reports, prior to filing.
ADDITIONAL INFORMATION
Additional information about the company can be found on www.sedar.com.
Cautionary Statement
This MD&A is based on a review of the Company’s operations, financial position and plans for the future based on facts and circumstances as of November 27, 2020. Except for historical information or statements of fact relating to the Company, this document contains “forward-looking statements” within the meaning of applicable Canadian securities regulations. There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in the Company’s documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies we are bound. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and we do not undertake any obligation to update forward-looking statements should conditions or our estimates or opinions change. These statements involve known and unknown risks, uncertainties, and other factor that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievement expressed or implied by these forward-looking statements.
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