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Sable Resources Interim / Quarterly Report 2024
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Interim / Quarterly Report
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SABLE RESOURCES LTD.
Condensed Interim Consolidated Financial Statements
As at and for the three and nine months ended September 30, 2024 and 2023
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by the entity's auditor.
SABLE RESOURCES LTD.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| | Note | September 30
2024 | December 31
2023 |
| --- | --- | --- | --- |
| Assets | | | |
| Current Assets | | | |
| Cash and cash equivalents | 5 | $ 10,861,930 | $ 12,017,794 |
| Receivables | 6 | 24,862 | 15,512 |
| Prepaid expenses and deposits | | 269,423 | 130,221 |
| | | 11,156,215 | 12,163,527 |
| Equipment and right of use asset | 7 | 213,384 | 286,495 |
| Mineral property interests | 8 | 2,089,288 | 1,626,164 |
| | | $ 13,458,887 | $ 14,076,186 |
| Liabilities | | | |
| Current Liabilities | | | |
| Payables and accruals | 9,13 | $ 451,218 | $ 587,745 |
| Current portion of lease liability | | - | 31,228 |
| Deferred exploration recovery | 16 | 16,684,920 | 13,607,661 |
| | | 17,136,138 | 14,226,634 |
| Lease liability | | 34,714 | 26,810 |
| | | 17,170,852 | 14,253,444 |
| Shareholders' equity | | | |
| Issued capital | 10 | 55,150,701 | 55,125,701 |
| Accumulated other comprehensive loss | | (908,108) | (748,422) |
| Contributed surplus | 10 | 5,104,113 | 5,083,830 |
| Deficit | | (63,058,671) | (59,638,367) |
| | | (3,711,965) | (177,258) |
| | | $ 13,458,887 | $ 14,076,186 |
Commitments (Note 17)
Subsequent events (Note 18)
APPROVED ON BEHALF OF THE BOARD:
Signed: "Ruben Padilla"
Ruben Padilla
Chief Executive Officer and Director
Signed: "Mary Little"
Mary Little
Director
The accompanying notes are an integral part of these consolidated financial statements.
SABLE RESOURCES LTD.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| Note | Three months ended September 30, 2024 | 2023 | Nine months ended September 30, 2024 | 2023 | |
|---|---|---|---|---|---|
| Property related expenses | |||||
| Exploration expenditures | 13 | $ 909,383 | $ 1,351,877 | $ 2,290,493 | $ 9,314,661 |
| General and administrative expenses | 13 | 554,803 | 406,000 | 1,351,900 | 1,349,904 |
| Property investigation and evaluation | 25,652 | 40,658 | 127,407 | 97,607 | |
| Share-based expense | 10 | 6,476 | - | 20,283 | - |
| 1,496,314 | 1,798,535 | 3,790,083 | 10,762,172 | ||
| Other expenses (income) | |||||
| Write-down of mineral property acquisition costs | - | - | - | 168,213 | |
| Provision for value-added tax receivable | 6 | 92,280 | 197,378 | 298,244 | 1,689,078 |
| Interest income | (171,095) | (101,276) | (419,770) | (644,639) | |
| Foreign exchange | (1,584) | 65,859 | 49,424 | 65,797 | |
| Gain on use of marketable securities | 14 | (118,752) | (531,027) | (297,677) | (3,271,556) |
| Net loss | $ 1,297,163 | $ 1,429,469 | $ 3,420,304 | $ 8,769,065 | |
| Items that may be reclassified subsequently | |||||
| Foreign currency translation adjustment | (93,226) | 22,945 | 159,686 | (85,310) | |
| Other comprehensive (gain) loss | (93,226) | 22,945 | 159,686 | (85,310) | |
| Net comprehensive loss | $ 1,203,937 | $ 1,452,414 | $ 3,579,990 | $ 8,683,755 | |
| Loss per share | |||||
| Basic and diluted | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.03) | |
| Weighted average number of common shares outstanding | 287,669,294 | 286,564,898 | 286,715,583 | 286,465,172 |
The accompanying notes are an integral part of these consolidated financial statements.
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SABLE RESOURCES LTD.
Condensed Interim Consolidated Statements of Changes in Shareholders' Equity
(Expressed in Canadian Dollars)
| Note | Number of shares | Issued Capital | Accumulated Other Comprehensive Loss | Contributed Surplus | Accumulated Deficit | Total | |
|---|---|---|---|---|---|---|---|
| Balance, December 31, 2022 | 286,364,898 | $ 55,113,701 | $ (1,030,480) | $ 4,939,530 | $ (45,416,714) | $ 13,606,037 | |
| Net Loss | - | - | - | - | (8,769,065) | (8,769,065) | |
| Other comprehensive loss | - | - | 85,310 | - | - | 85,310 | |
| Shares issued in acquisition of claims | 8,10 | 200,000 | 12,000 | - | - | - | 12,000 |
| Balance, September 30, 2023 | 286,564,898 | $ 55,125,701 | $ (945,170) | $ 4,939,530 | $ (54,185,779) | $ 4,934,282 | |
| Net loss | - | - | - | - | (5,452,588) | (5,452,588) | |
| Other comprehensive loss | - | - | 196,748 | - | - | 196,748 | |
| Share-based expense | 10 | - | - | - | 144,300 | - | 144,300 |
| Balance, December 31, 2023 | 286,564,898 | $ 55,125,701 | $ (748,422) | $ 5,083,830 | $ (59,638,367) | $ (177,258) | |
| Net loss | - | - | - | - | (3,420,304) | (3,420,304) | |
| Other comprehensive loss | - | - | (159,686) | - | - | (159,686) | |
| Shares issued in acquisition of claims | 8,10 | 500,000 | 25,000 | 25,000 | |||
| Share-based expense | 10 | - | - | - | 20,283 | - | 20,283 |
| Balance, September 30, 2024 | 287,064,898 | $ 55,150,701 | $ (908,108) | $ 5,104,113 | $ (63,058,671) | $ (3,711,965) |
The accompanying notes are an integral part of these consolidated financial statements.
SABLE RESOURCES LTD.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
For the nine month period ended September 30, Note 2024 2023
| Operating Activities | |||
|---|---|---|---|
| Net loss | $ (3,420,304) | $ (8,769,065) | |
| Items not involving cash: | |||
| Amortization | 7 | 78,371 | 76,466 |
| Share-based expense | 10 | 20,283 | - |
| Provision for value-added tax receivable | 6 | 298,244 | 1,689,078 |
| Abandonment of mineral property asset | - | 168,213 | |
| (3,023,406) | (6,835,308) | ||
| Changes in non-cash working capital | |||
| Receivables | (307,594) | (1,687,851) | |
| Prepaid expenses and deposits | (139,202) | (147,859) | |
| Payables and accruals | (136,527) | (682,163) | |
| Total cash flows used in operating activities | (3,606,729) | (9,353,181) | |
| Financing Activities | |||
| Principle payments on lease liability | (23,324) | (22,585) | |
| Total cash flows used in from financing activities | (23,324) | (22,585) | |
| Investing Activities | |||
| Acquisition of mineral claims | 8 | (404,558) | (561,080) |
| Proceeds from deferred exploration recovery | 16 | 2,818,133 | 5,061,267 |
| Total cash flows from investing activities | 2,413,575 | 4,500,187 | |
| Effect of foreign exchange on cash | 60,614 | 99,276 | |
| Decrease in cash and cash equivalents | (1,155,864) | (4,776,303) | |
| Cash and cash equivalents, beginning of period | 12,017,794 | 17,152,362 | |
| Cash and cash equivalents, end of period | $ | 10,861,930 | $ 12,376,059 |
The accompanying notes are an integral part of these consolidated financial statements.
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
- NATURE OF OPERATIONS
Sable Resources Ltd. ("Sable" or the "Company") is incorporated under the Business Corporation Act (British Columbia). The Company is engaged in the acquisition, exploration and development of mineral resource properties in Argentina and Mexico. The address of the Company's corporate office and principal place of business is Suite 900, 999 West Hastings Street, Vancouver, British Columbia, V6C 2W2. The Company's shares are listed on the TSX Venture Exchange ("TSXV") and on the OTC Venture Market (OTCQB) under the symbols SAE and SBLRF, respectively.
The Company has not yet determined whether any of its properties contain mineral deposits that are economically recoverable. The recoverability of any amounts shown as mineral property interests is dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties, and future profitable production or proceeds from the disposition of its properties. There is no assurance that the Company's funding initiatives will continue to be successful. The underlying value of the mineral properties is dependent upon the existence and economic recovery of mineral reserves and is subject to, but not limited to, the risks and challenges identified above. Changes in future conditions could require material write-downs of the carrying value of mineral property interests.
These condensed interim consolidated financial statements were approved and authorized for issue by the Company's Board of Directors on November 28, 2024.
- BASIS OF PRESENTATION
a) Statement of Compliance
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These consolidated financial statements represent the Company's presentation of its results and financial position under IFRS. These accounting policies are based on the IFRS standards and International Financial Reporting Interpretations Committee ("IFRIC") interpretations that the Company expects to be applicable at that time. The policies set out below were consistently applied to all presented unless otherwise noted.
b) Basis of Measurement
These condensed interim consolidated financial statements were prepared on an accrual basis, are based on historical costs except for financial instruments measured at fair value and are presented in Canadian dollars, which is the functional currency of the Company's Canadian entity. The functional currency of the Company's foreign subsidiaries is US dollars.
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
2. BASIS OF PRESENTATION (continued)
c) Subsidiaries
Subsidiaries are all corporations over which the Company has control. Control is achieved when the Company has power over the investee, is exposed or has right to variable returns from its involvement with the investee and has the ability to use its power to affect its returns.
Subsidiaries are fully consolidated from the date on which control is acquired by the Company. They are deconsolidated from the date that control by the Company ceases.
These condensed interim consolidated financial statements for the three and nine month periods ended September 30, 2024 and 2023 include the financial position, financial performance and cash flows of the Company and its subsidiaries detailed below:
| Name | Location | Ownership | Status | Functional Currency |
|---|---|---|---|---|
| Sable Resources Ltd. | Canada | Parent | Consolidated | CAD |
| Exploraciones Sable, S.A. de R.L. de C.V. | Mexico | 100% | Consolidated | USD |
| Exploraciones Tres Cordilleras, S.A. de C.V. | Mexico | 100% | Consolidated | USD |
| Exploraciones Catalinas, S.A. de C.V. | Mexico | 100% | Consolidated | USD |
| Exploraciones Vientos de Sur, S.A. de C.V. | Mexico | 100% | Consolidated | USD |
| Sable Argentina S.A. | Argentina | 100% | Consolidated | USD |
| Olivares S.A. (Note 16) | Argentina | 100% | Consolidated | USD |
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES
These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023. The Company's significant accounting policies are presented under Note 3 in the audited consolidated financial statements as at and for the year ended December 31, 2023 and have been consistently applied in the preparation of these unaudited condensed interim consolidated financial statements.
4. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND UNCERTAINTIES
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on the historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.
In preparing these unaudited condensed interim consolidated financial statements, the significant judgements and estimates made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements as at and for the year ended December 31, 2023.
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on deposit with major Canadian, Argentinian and Mexican banks in general interest-bearing accounts totaling $10,861,930 (December 31, 2023 - $12,017,794).
Cash and cash equivalents include:
- $40,000 (December 31, 2023 - $40,000) one-year cashable guaranteed investment certificate (GIC) held with the Royal Bank of Canada with an interest rate of 2.25% and maturing on July 1, 2024.
- $3,500,000 (December 31, 2023 - $nil) prime linked cashable GIC held with the Royal Bank of Canada.
- $4,000,000 (December 31, 2023 - $nil) 150 day cashable GIC held with Royal Bank of Canada with an interest rate of 4.66% and maturing on December 27, 2024.
6. RECEIVABLES
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Goods and services tax | $ 24,862 | $ 15,512 |
| Value added tax | 1,442,899 | 1,429,556 |
| Less: Provision for value added tax | (1,442,899) | (1,429,556) |
| $ 24,862 | $ 15,512 |
The VAT receivables include $1,315,6435 or ARS 943,248,380 equivalent (December 31, 2023 - $1,290,961 or ARS 789,133,812 equivalent) due from the Argentinian tax authorities, and $126,254 or MXN 1,842,192 equivalent (December 31, 2023 - $138,595 or MXN 1,778,720 equivalent) due from the Mexican tax authorities.
The Company has deemed the collection of the VAT receivables in both Argentina and Mexico to be uncertain. As such, as of September 30 2024, the Company records a provision for its outstanding VAT receivable balances.
For the three and nine month periods ended September 30, 2024, a provision for VAT of $92,280 (September 30, 2023 - $197,378) and $298,244 (September 30, 2023 - $1,689,078), respectively, has been recognized in the consolidated statement of net loss and comprehensive loss.
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
- EQUIPMENT AND RIGHT OF USE ASSET
| Equipment | Right-of-Use Asset | Total | |
|---|---|---|---|
| Cost | |||
| Balance at September 30, 2023 | $ 375,832 | $ 187,599 | $ 563,431 |
| Currency translation adjustment | (8,172) | - | (8,172) |
| Balance at December 31, 2023 | 367,660 | 187,599 | 555,259 |
| Currency translation adjustment | 7,589 | - | 7,589 |
| Balance at September 30, 2024 | $ 375,249 | $ 187,599 | $ 562,848 |
| Accumulated amortization | |||
| Balance at September 30, 2023 | $ 130,038 | $ 127,471 | $ 257,509 |
| Amortization | 18,590 | 7,215 | 25,805 |
| Currency translation adjustment | (14,550) | - | (14,550) |
| Balance at December 31, 2023 | 134,078 | 134,686 | 268,764 |
| Amortization | 56,725 | 21,646 | 78,371 |
| Currency translation adjustment | 2,329 | - | 2,329 |
| Balance at September 30, 2024 | $ 193,132 | $ 156,332 | $ 349,464 |
| Net book value at: | |||
| December 31, 2023 | $ 286,495 | ||
| September 30, 2024 | $ 213,384 |
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
8. MINERAL PROPERTY INTERESTS
| Project | January 1, 2024 | Additions | Abandonment and impairment | Currency Translation Adjustment | September 30, 2024 |
|---|---|---|---|---|---|
| Argentina | |||||
| Don Julio | $ 1,036,322 | $ 269,980 | $ - | $ 21,390 | $ 1,327,692 |
| El Fierro | 589,842 | - | - | 12,176 | 602,018 |
| British Columbia | |||||
| Perk Rocky | - | 125,000 | - | - | 125,000 |
| Copper Queen | - | 24,291 | - | - | 24,291 |
| BC Regional | - | 10,287 | - | - | 10,287 |
| $ 1,626,164 | $ 429,558 | $ - | $ 33,566 | $ 2,089,288 |
Argentina
a) Don Julio and Don Julio Regional Project
On December 6, 2017, the Company entered into an agreement to acquire up to a 100% interest in the Don Julio project and the Don Julio Regional Project (collectively, "Don Julio") located in San Juan Province, Argentina, subject to a 2% net smelter royalty, of which one half may be purchased by the Company for US$2,500,000 anytime after 12 months from which commercial production has been declared for any part of Don Julio. This was subsequently amended on June 1, 2020, whereby the remaining 1% net smelter royalty can be purchased by the Company for US$5,000,000. On March 31, 2023, the Company completed its purchase of a 50% interest in the Don Julio project through the cumulative issuance of 1,200,000 common shares and payments of $804,748 or US$600,000 equivalent since entering into the agreement in 2017.
To earn an additional 10% for a 60% ownership in Don Julio:
- Make a payment of US$200,000 prior to April 1, 2024 ($269,980 or US$200,000 equivalent paid during the period ended June 30, 2024); and
- Issue 500,000 common shares and make a payment of US$220,000, adjusted for the USA Consumer Price Index ("CPI") between April 1, 2024 and April 1, 2025, prior to April 1, 2025.
To earn an additional 10% for a 70% ownership in Don Julio:
- Make a payment of US$240,000, adjusted for CPI between April 1, 2024 and April 1, 2026, prior to April 1, 2026;
- Make a payment of US$450,000, adjusted for CPI between April 1, 2024 and April 1, 2027, prior to April 1, 2027; and
- Issue 800,000 common shares and make a payment of US$450,000, adjusted by the US inflation rate between April 1, 2024 and April 1, 2028, prior to April 1, 2028.
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
8. MINERAL PROPERTY INTERESTS (continued)
To earn an additional 30% for a 100% ownership in Don Julio:
- Issue 1,000,000 common shares and make payment of US$1,900,000, adjusted for CPI between April 1, 2026 and April 1, 2029, prior to April 1, 2029.
b) El Fierro Project
On February 25, 2020, the Company entered into option agreements to acquire a 100% interest in the El Fierro project (“El Fierro”) located in San Juan Province, Argentina. To earn a 100% interest in El Fierro, the Company must:
- Make payment of US$30,000 on the signing of the agreement ($40,365 or US$30,000 equivalent paid during the year ended December 31, 2020);
- Make payment of US$70,000 prior to March 1, 2021 ($88,291 or US$70,000 equivalent paid during the year ended December 31, 2021);
- Make payment of US$150,000 prior to March 1, 2022 ($205,605 or US$150,000 equivalent paid during the year ended December 31, 2022);
- Make payment of US$100,000 prior to March 1, 2023 ($132,260 or US$100,000 equivalent paid during the year ended December 31, 2023);
- Make payment of US$150,000 prior to December 20, 2024;
- Make payment of US$150,000 prior to March 30, 2025; and
- Make payment of US$560,000 prior to March 30, 2026.
During the period ended June 30, 2023, the Company terminated one of the option agreements at El Fierro. This resulted in an abandonment loss of $169,075.
On September 17, 2020, the Company entered into an option agreement to acquire 100% interest in the Laspina project (“Laspina”) located next to El Fierro in San Juan Province, Argentina, and this project is considered part of the El Fierro project. During the year ended December 31, 2023, the Company completed its purchase of Laspina through cumulative payments of $105,158 or US$81,000 equivalent since entering into the option agreement in 2020.
On October 1, 2020, the Company entered into an option agreement to acquire a 100% interest in the El Fierrazo project (“El Fierrazo”) located next to El Fierro in San Juan Province, Argentina, and this project is considered part of the El Fierro project. To earn a 51% interest in El Fierrazo, the Company must:
- Make payment of US$20,000 on the signing of the agreement ($26,266 or US$20,000 equivalent paid during year ended December 31, 2020);
- Make payment of US$40,000 prior to October 1, 2021 ($51,025 or US$40,000 equivalent paid during the year ended December 31, 2021); and
- Make payment of US$80,000 prior to October 1, 2022 ($109,656 or US$80,000 equivalent paid during the year ended December 31, 2022).
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
8. MINERAL PROPERTY INTERESTS (continued)
- Upon the Company entering into an agreement with another party to obtain financing for the direct purpose of exploring El Fierrazo (“Exploration Financing”):
- Make payment of US$40,000 prior to the three month anniversary of the exploration financing;
- Make payment of US$60,000 prior to the first anniversary of the exploration financing;
- Make payment of US$80,000 prior to the second anniversary of the exploration financing;
- Make payment of US$100,000 prior to the third anniversary of the exploration financing; and
- Make payment of US$220,000 prior to the fourth anniversary of the exploration financing.
To earn additional interest in El Fierrazo up to 100%, the Company must make payment of US$900,000 before the fifth anniversary of the exploration financing. There is a 1.5% net smelter royalty on El Fierrazo, which may be purchased by the Company for US$5,000,000.
c) La Poncha Project
On July 17, 2020, the Company entered into a Letter of Intent (“LOI”) to acquire a 100% interest in the La Poncha project (“La Poncha”) located in San Juan Province, Argentina. On March 15, 2021, the Company exercised its right under the letter of intent to enter into an option agreement for La Poncha. During the year ended December 31, 2023, the Company terminated the option agreement.
Canada
a) Perk Rocky
On May 14, 2024, the Company entered into an option agreement for the Perk Rocky property, which provided the Company with an option to acquire 100% of the Perk Rocky mineral claims (the “Perk Rocky property”). Under the term of the option agreement, the Company agreed to:
- Make payment of $100,000 and issue 500,000 common shares upon signing ($100,000 was paid and 500,000 common shares valued at $25,000 were issued during the period ended June 30, 2024);
- Make payment of $150,000 on or prior to May 14, 2025;
- Make payment of $225,000 on or prior to May 14, 2026;
- Make payment of $250,000 on or prior to May 14, 2027;
- Make payment of $500,000 on or prior to May 14, 2028; and
- Make payment of $775,000 on or prior to May 14, 2029
The option agreement was also subject to the following milestone success payments:
- US$650,000 in the event of the filing of a National Instrument 43-101 technical report that reports a current mineral resource;
- US$1,500,000 in the event of the obtaining of a Preliminary Economic Assessment;
- US$2,000,000 in the event of obtaining a Feasibility Study; and
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SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
- US$5,000,000 in the event that the board of directors makes the decision to proceed to commercial production at the property.
The option agreement was also subject to a Net Smelters Return royalty of 3% with the Company having the right at any time prior to commencement of commercial production to buy back 1% for US$2,000,000, and an additional 1% for US$5,000,000, to reduce the Net Smelters Return royalty to 1%.
On November 20, 2024, the Company provided a 30 day notice of termination of the Perk Rocky option agreement.
Mexico
b) BlueJoint Mineral Applications and Titles
On January 29, 2018, the Company acquired various mineral titles and mineral title applications in Mexico in connection with the acquisition of BlueJoint. On December 13, 2023, the Company terminated its mining titles in Mexico. While the Company will continue to hold its mineral title applications, it was determined that further exploration and evaluation expenditures are no longer planned in the near term and that the carrying amount of this asset is unlikely to be recovered from a sale of asset at the current time. As a result of this and the termination of mineral titles, this asset was impaired to zero on December 31, 2023.
9. PAYABLES AND ACCRUALS
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Trade payables | $ 306,463 | $ 220,509 |
| Accruals and other | 144,755 | 367,236 |
| $ 451,218 | $ 587,745 |
10. ISSUED CAPITAL AND CONTRIBUTED SURPLUS
a) Issued Capital
The Company is authorized to issue an unlimited number of common shares.
b) Stock Options
The Board of Directors of the Company adopted a stock option plan (the "Plan") whereby the aggregate number of common shares reserved for issuance under the Plan, including common shares reserved for issuance under any other share compensation arrangement granted or made available by the Company from time to time, may not exceed 10% of the Company's issued and outstanding common shares. The Plan is administered by the Board of Directors and grants made pursuant to the Plan must at all times comply with regulatory policies. The option exercise price is decided by the Board of Directors but may not be less than the discounted market price of the Company's shares in accordance with regulatory requirements.
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
10. ISSUED CAPITAL AND CONTRIBUTED SURPLUS (continued)
b) Stock Options (continued)
| Number of stock options | Weighted average exercise price | |
|---|---|---|
| Balance at December 31, 2022 | 21,785,000 | $ 0.18 |
| Options issued | 3,900,000 | 0.07 |
| Options cancelled | (600,000) | (0.25) |
| Options expired | (2,875,000) | (0.25) |
| Balance at December 31, 2023 | 22,210,000 | $ 0.15 |
| Options issued | 3,450,000 | 0.05 |
| Options expired | (2,600,000) | (0.25) |
| Balance at September 30, 2024 | 23,060,000 | $ 0.13 |
As at September 30, 2024, the following stock options were outstanding and exercisable:
| Expiry date | Number of options outstanding | Number of stock options vested | Weighted average exercise price | Weighted average number of years to expiry |
|---|---|---|---|---|
| March 11, 2025 | 1,300,000 | 1,300,000 | 0.10 | 0.44 |
| May 13, 2025 | 1,350,000 | 1,350,000 | 0.10 | 0.62 |
| September 5, 2025 | 1,810,000 | 1,810,000 | 0.10 | 0.93 |
| September 5, 2025 | 1,290,000 | 1,290,000 | 0.20 | 0.93 |
| September 5, 2025 | 1,510,000 | 1,510,000 | 0.25 | 0.93 |
| September 5, 2025 | 1,925,000 | 1,925,000 | 0.07 | 0.93 |
| October 1, 2025 | 2,460,000 | 2,460,000 | 0.20 | 1.00 |
| October 14, 2026 | 2,640,000 | 2,640,000 | 0.25 | 2.04 |
| November 25, 2027 | 3,350,000 | 3,350,000 | 0.10 | 3.15 |
| December 19, 2028 | 1,975,000 | 1,975,000 | 0.07 | 4.22 |
| September 24, 2029 | 3,450,000 | 3,450,000 | 0.05 | 4.99 |
| Balance at September 30, 2024 | 23,060,000 | 23,060,000 | $ 0.13 | 2.23 |
Page 15
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
10. ISSUED CAPITAL AND CONTRIBUTED SURPLUS (continued)
c) Restricted share units
The Restricted Share Unit Plan (“RSU Plan”) provides for the grant of restricted share units (each, an “RSU”) convertible into a maximum number of common shares equal to ten percent (10%) of the number of common shares then issued and outstanding, provided, however, the number of common shares reserved for issuance from treasury under the RSU Plan and pursuant to all other security based compensation arrangements of the Company shall, in the aggregate, not exceed ten percent (10%) of the number of common shares then issued and outstanding. Any common shares subject to a RSU which has been cancelled or terminated in accordance with the terms of the RSU Plan without settlement will again be available under the RSU Plan. When vested, each RSU entitles the holder to receive, subject to adjustments as provided for in the RSU Plan, one common share or payment in cash for the equivalent thereof based on the volume weighted average trading price of the common shares on the five trading days immediately preceding the redemption date. The terms and conditions of vesting (if applicable) of each grant are determined by the Board at the time of the grant, subject to the terms of the RSU Plan. RSU awards may, but need not, be subject to performance incentives to reward attainment of annual or long-term performance goals. Any such performance incentives or long term performance goals are subject to determination by the Board and specified in the award agreement.
The following table summarizes changes in the number of RSUs outstanding:
| Number of RSU’s | Weighted average fair value | |
|---|---|---|
| Balance at December 31, 2022 | 1,300,000 | $ 0.06 |
| Balance at September 30, 2024 | 1,300,000 | $ 0.06 |
d) Share purchase warrants
Share purchase warrants enable the holders to acquire common shares of the Company upon exercise. Continuity of share purchase warrants issued and outstanding:
| Number of warrants | Weighted average exercise price | |
|---|---|---|
| Balance at December 31, 2022 | 31,424,492 | $ 0.20 |
| Share warrants expired | (31,424,492) | (0.20) |
| Balance at December 31, 2023 | - | $ - |
| Balance at September 30, 2024 | - | $ - |
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
11. FINANCIAL INSTRUMENTS
Financial assets and liabilities as at September 30, 2024 and December 31, 2023 are as follows:
| Fair value through other comprehensive income | Amortized cost | Other financial liabilities | Total | |
|---|---|---|---|---|
| As at September 30, 2024 | ||||
| Cash and cash equivalents | $ - | $ 10,861,930 | $ - | $ 10,861,930 |
| Payables and accruals | - | 451,218 | - | 451,218 |
| Lease liability | - | - | 34,714 | 34,714 |
| Deferred exploration recovery | 16,684,920 | - | - | 16,684,920 |
| As at December 31, 2023 | ||||
| Cash and cash equivalents | $ - | $ 12,017,794 | $ - | $ 12,017,794 |
| Payables and accruals | - | 587,745 | - | 587,745 |
| Lease liability | - | - | 58,038 | 58,038 |
| Deferred exploration recovery | 13,607,661 | - | - | 13,607,661 |
The Company classifies its financial instruments carried at fair value according to a three level hierarchy that reflects the significance of the inputs used in making the fair value measurements. The three levels of fair value hierarchy are as follows:
- Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
- Level 2 - Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly; and
- Level 3 – Inputs for assets or liabilities that are not based on observable market data.
Page 17
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
12. SEGMENTED INFORMATION
The Company considers itself to operate in a single operating segment, being resource exploration and development. It holds mineral interests in Argentina and Mexico.
| Period ended September 30, 2024 | Canada | Mexico | Argentina | Total |
|---|---|---|---|---|
| Exploration expenditures | $ 513,318 | $ - | $ 1,777,175 | $ 2,290,493 |
| General and administrative expenses | 1,036,846 | 38,434 | 276,620 | 1,351,900 |
| Property investigation and evaluation | 127,407 | - | - | 127,407 |
| As at September 30, 2024 | ||||
| Total assets | $ 10,319,967 | $ 16,446 | $ 3,122,474 | $ 13,458,887 |
| Total liabilities | 337,718 | - | 16,833,134 | 17,170,852 |
| Period ended September 30, 2023 | Canada | Mexico | Argentina | Total |
| Exploration expenditures | $ - | $ 177,077 | $ 9,137,584 | $ 9,314,661 |
| General and administrative expenses | 1,015,313 | 7,424 | 327,167 | 1,349,904 |
| Property investigation and evaluation | 90,871 | - | 6,736 | 97,607 |
| As at December 31, 2023 | ||||
| Total assets | $ 11,849,871 | $ 2,239 | $ 2,224,067 | $ 14,076,177 |
| Total liabilities | 393,855 | 4,218 | 13,855,371 | 14,253,444 |
13. RELATED PARTY TRANSACTIONS
The following is a summary of the Company's related party transactions during the nine month periods ended September 30, 2024 and 2023:
- The Company incurred exploration costs in the amount of $nil (September 30, 2023 - $5,241) paid to Talisker Exploration Services Ltd., a private company with shared directors and officers.
- The Company incurred general and administrative expenses in the amount of $7,200 (September 30, 2023 - $8,350) paid to JDS Energy & Mining Inc., a private company with a shared director.
- The Company incurred general and administrative expenses in the amount of $nil (September 30, 2023 - $2,691) paid to Talisker Resources Ltd., a public company with shared directors and officers.
Compensation of key management personnel of the Company
In accordance with IAS 24, key management personnel, including companies controlled by them, are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.
Page 18
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
13. RELATED PARTY TRANSACTIONS (continued)
The remuneration of directors and key executives is determined by the compensation committee.
The remuneration of directors and other members of key management personnel during the periods ended June 30, 2024 and 2023 were as follows:
| | Three months ended
September 30, | | Nine months ended
September 30, | |
| --- | --- | --- | --- | --- |
| | 2024 | 2023 | 2024 | 2023 |
| Salaries and director fees | $ 217,428 | $ 222,929 | $ 683,452 | $ 668,714 |
| Share based expense | 6,476 | - | 20,282 | - |
| | $ 223,904 | $ 222,929 | $ 703,734 | $ 668,714 |
As at September 30, 2024, an amount of $63,849 (December 31, 2023 - $56,569) due to key management personnel, was included in payables and accruals. This amount is unsecured, non-interest bearing and without fixed terms of repayment.
14. USE OF MARKETABLE SECURITIES
From time to time, the Company may acquire and transfer marketable securities to facilitate intragroup funding transfers between the Canadian parent and its Argentine operating subsidiaries.
The Company does not acquire marketable securities or engage in these transactions for speculative purposes. In this regard, under this strategy, the Company generally uses marketable securities of large and well established companies, with high trading volumes and low volatility. Nonetheless, as the process to acquire, transfer and ultimately sell the marketable securities occurs over several days, some fluctuations are unavoidable.
As the marketable securities are acquired with the intention of a near term sale, they are considered financial instruments that are held for trading, all changes in the fair value of the instruments, between acquisition and disposition, are recognized through profit or loss. The Company conducts such transactions on an intra-period basis and does not hold the equity instruments at period end.
As a result of having utilized this mechanism for intragroup funding for the three and nine month periods ended September 30, 2024, the Company realized a net favourable foreign currency impact gain of $118,752 (September 30, 2023: $531,027) and $297,677 (September 30, 2023: $3,271,556). This gain includes a net favourable foreign currency impact gain of $108,298 (September 30, 2023: $267,458) and $257,054 (September 30, 2023: $2,516,482) realized from payments in kind received from South32 Aluminum (Holdings) Pty Ltd. ("South32") (Note 16).
Page 19
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
15. CAPITAL MANAGEMENT
The Company's capital management objectives are to raise the necessary equity financing to fund its exploration projects and mining activities and to manage the equity funds raised to best optimize its exploration programs in the interests of its shareholders and other stakeholders at an acceptable risk. The Company manages its capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of its underlying assets. To maintain or adjust the capital structure, the Company may raise additional equity funds and acquire new exploration properties as circumstances dictate.
In the management of capital, the Company includes shareholders' equity and cash and cash equivalents in the definition of capital.
16. DEFERRED EXPLORATION RECOVERY
On January 27, 2021, the Company and its wholly-owned subsidiary Olivares S.A. ("Olivares") signed an earn-in agreement with South32 (the "EIA"), to jointly explore Don Julio.
Earn-in Agreement
The EIA grants South32 the right to acquire 65% of the shares of Olivares by providing US$8.5 million in exploration funding over a period of five years (the "EIA Period") and assuming responsibility for paying 100% of the cash option payments due to the underlying owners of Don Julio during the EIA Period. At South32's election, the EIA Period can be extended by one year to a total period of six years in consideration for South32 providing an additional US$1.5 million in exploration funding. The Company will operate all exploration programs during the EIA Period and will receive a 7.5% operator fee on all qualifying exploration expenditures. Pursuant to the terms of the EIA, to maintain the option to acquire a 100% interest in Don Julio in good standing, the Company retains the obligation to issue shares to the underlying owners. In the event that South32 terminates the EIA, and Olivares subsequently recovers or obtains any VAT, Sable must pay to South32 an amount equal to the amount of such recovered VAT.
On February 24, 2023, the Company signed an addendum to the EIA whereby 35% of any excess contributions above US$8.5 million over five years or US$10 million over six years made by South32 during the EIA period can be used as a credit by South32 for their portion of the first approved program and budget of the Joint Venture Period. The credit has a maximum value of US$1.75 million (Note 17).
During the nine month period ended September 30, 2024, Olivares received payments of $2,818,133 or US$2,071,547 equivalent (September 30, 2023: $5,061,267 or US$3,761,067 equivalent). Included in these payments were $896,361 or US$662,109 (September 30, 2023: $3,187,321 or US$2,368,522 equivalent) that were received in kind through the use of marketable securities (Note 14). These marketable securities were converted into cash upon receipt.
As at September 30, 2024, South32 invested a total of $16,684,920 or US$12,360,116 equivalent (December 31, 2023: $13,607,661 or US$10,288,569 equivalent). These payments have been deferred as a liability and represent a portion of the funding that will form the consideration for South32's investment in Olivares, should South32 exercise its right to acquire a 65% direct interest in Olivares as discussed above.
Page 20
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
16. DEFERRED EXPLORATION RECOVERY (continued)
During the year ended December 31, 2023, South32 completed its requirement of providing US$8.5 million in exploration funding required over a five year period. South32 now has the right to acquire 65% of the shares of Olivares, and therefore the deferred liability representing the funding that will form consideration for South32's investment in Olivares has been classified as a current liability.
Shareholders' Agreement
On satisfying the exploration funding and cash option payment requirements under the EIA, South32 can elect to subscribe for 65% of the shares of Olivares. The Company, Olivares and South32 would then enter into a Shareholders' Agreement, on terms agreed and appended to the EIA.
During the period governed by the Shareholders' Agreement (the "Joint Venture Period"), Sable and South32 will contribute their proportionate share of further exploration and development expenditures or dilute on a straight-line basis. Other key terms of the Shareholders' Agreement include:
- If South32 elects not to contribute to the first approved program and budget of the Joint Venture Period (which budget must be a minimum of US$4,000,000), then its interest in Olivares will be immediately reduced to 49%, with Sable's interest immediately increasing to 51%;
- At any time, South32 may elect to sole fund a Preliminary Economic Assessment ("PEA") in exchange for an additional 10% interest in Olivares, such PEA to be delivered within five years of South32's election;
- The Shareholder with the larger interest in Olivares will have the right to act as operator either directly or through an affiliate;
- For as long as South32 continues to hold the larger interest in Olivares, South32 will have the right to appoint an affiliate to act as the worldwide marketing and distribution agent for product produced;
- In the event that Sable or South32 dilute below a 10% interest in Olivares, then the non-diluted party is entitled to buy out the diluted party's participating interest; and
- At any time, should the surrender or abandonment of part of the Don Julio project be authorized by Olivares, each shareholder will have the right to elect to take an assignment of the surrendered or abandoned portion, subject to any prior rights of third parties.
Page 21
SABLE RESOURCES LTD.
Condensed Interim Notes to the Consolidated Financial Statements
For the three and nine month periods ended September 30, 2024 and 2023
(Expressed in Canadian Dollars)
17. COMMITMENTS
Based on the terms of the EIA (Note 16), should South32 exercise its right to subscribe for 65% of the shares of Olivares, the Company would be required to contribute on South32’s behalf to the first approved program and budget of the Joint Venture period an amount equal to 35% of any excess contributions above US$8.5 million over five years or US$10 million over six years. The credit has a maximum value of US$1.75 million. Should the Company elect not to make these contributions on South32’s behalf, then the amount would be deemed to be credited to South32 and the Company’s interest in Olivares would be diluted as such on a straight line basis. As of September 30 2024, this contribution on South32’s behalf would be $1,521,392 or US$1,127,041 equivalent.
18. SUBSEQUENT EVENTS
On November 20, 2024, the Company provided 30 day termination notice of the Perk Rocky option agreement.
Page 22