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Trident Resources Corp. Interim / Quarterly Report 2024
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Interim / Quarterly Report
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Eros Resources Corp. TSX-V: ERC
(an exploration stage enterprise)
Condensed Interim Consolidated Financial Statements
Nine months ended September 30, 2024 and 2023
(Unaudited - Expressed in Canadian Dollars)
NOTICE OF NO AUDITOR REVIEW
NOTICE TO READERS
Under National Instrument 51-102, Part 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 condensed interim consolidated financial statements of Eros Resources Corp. (an exploration stage company) are the responsibility of the Company's management. The condensed interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles and reflect management's best estimates and judgment based on information currently available.
Management has developed and maintains a system of internal controls to ensure that the Company's assets are safeguarded, transactions are authorized and properly recorded, and financial information is reliable.
The Board of Directors is responsible for ensuring management fulfills its responsibilities for financial reporting and internal controls through an audit committee, which is comprised primarily of non-management directors.
The Company's independent auditors have not performed an audit or review of these condensed interim consolidated financial statements.
"Tom MacNeill"
Tom MacNeill
Chief Executive Officer
"Andrew Davidson"
Andrew Davidson
Chief Financial Officer
Vancouver, British Columbia
November 28, 2024
(anaudited - expressed in Canadian dollars)
EROS RESOURCES CORP.
(an exploration stage enterprise)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| Note | September 30, 2024 | December 31, 2023 | |
|---|---|---|---|
| Assets | |||
| Current | |||
| Cash and cash equivalents | $ 289,055 | $ 127,904 | |
| Accounts receivable | 81,537 | 39,368 | |
| Prepaid expenses | 19,575 | 29,819 | |
| 390,167 | 197,091 | ||
| Marketable securities | 4 | 9,285,157 | 6,630,645 |
| Other receivables | 370,000 | 370,000 | |
| Reclamation bonds | 26,179 | 26,179 | |
| Exploration and evaluation interests | 5 | 4,889,392 | 4,788,431 |
| Right-of-use asset | 11 | 14,180 | 14,180 |
| Property and equipment | 6 | 4,256 | 4,262 |
| $ 14,979,602 | $ 12,030,788 | ||
| Liabilities | |||
| Current | |||
| Accounts payable and accrued liabilities | $ 123,230 | $ 176,358 | |
| Margin loan payable | 610,442 | 927,098 | |
| Due to related parties | 2,352,000 | 2,352,000 | |
| Income taxes payable | 1,965,098 | 1,965,098 | |
| Lease liability – short term | 11 | 15,671 | 15,671 |
| 5,066,440 | 5,436,225 | ||
| Deferred income tax | 951,033 | 951,033 | |
| 6,017,472 | 6,387,258 | ||
| Shareholders’ Equity | |||
| Capital stock | 7 | 74,809,125 | 74,809,125 |
| Contributed surplus | 7 | 1,061,840 | 1,061,840 |
| Deficit | (66,908,836) | (70,227,435) | |
| 8,962,130 | 5,643,530 | ||
| $ | 14,979,602 | $ 18,034,224 |
Note 1: Going Concern
On behalf of the Board:
"Tom MacNeill"
Tom MacNeill, Director
"Ron Netolitzky"
Ron Netolitzky, Director
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
EROS RESOURCES CORP.
(an exploration stage enterprise)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited - expressed in Canadian dollars)
| Capital Stock | Contributed Surplus | Deficit | Total Shareholders' Equity | ||
|---|---|---|---|---|---|
| Shares | Amount | ||||
| Balance at January 1, 2023 | 97,893,741 | $ 74,809,125 | $ 1,061,840 | $ (63,608,477) | $12,262,488 |
| Net income for the period | - | - | - | (3,244,657) | (3,244,657) |
| Balance at September 30, 2023 | 97,893,741 | $ 74,809,125 | $ 1,061,840 | $ (66,853,134) | $ 9,017,831 |
| Balance at January 1, 2024 | 97,893,741 | 74,809,125 | 1,061,840 | (70,227,435) | 5,643,530 |
| Net income for the period | - | - | - | 3,318,599 | 3,318,599 |
| Balance at September 30, 2023 | 97,893,741 | $ 74,809,125 | $ 1,061,840 | $ (66,908,836) | $ 8,962,130 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
(an exploration stage enterprise)
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(unaudited - expressed in Canadian dollars)
EROS RESOURCES CORP.
| For the three months ended September 30 | For the nine months ended September 30 | ||||
|---|---|---|---|---|---|
| Note | 2024 | 2023 | 2024 | 2023 | |
| Expenses | |||||
| Amortization | $ 349 | $ 333 | $ 1,047 | $ 1,000 | |
| Consulting fees | 8 | 64,000 | 24,000 | 172,000 | 60,000 |
| Finance costs | 42,315 | 30,047 | 66,164 | 122,721 | |
| Investor relations | 9,708 | 6,429 | 21,385 | 19,155 | |
| Office and administration | 32,584 | 14,192 | 60,023 | 43,162 | |
| Professional fees | 52,841 | 506 | 114,849 | 15,592 | |
| Investment research | 6,000 | 6,000 | 18,000 | 18,000 | |
| Transfer agent and listing fees | 11,561 | 890 | 25,309 | 13,082 | |
| Wages and benefits | 8 | 59,873 | 55,639 | 174,390 | 182,953 |
| (279,230) | (138,037) | (653,167) | (475,665) | ||
| Other items | |||||
| Gain (loss) on foreign exchange | 67 | (2,393) | (5,005) | (3,414) | |
| Interest income | 14 | - | 152,796 | - | |
| Unrealized gain(loss) on marketable securities | 1,938,045 | (631,678) | 3,010,540 | (2,659,381) | |
| Gain(loss) on sale of marketable securities | 395,226 | 135,539 | 434,039 | (106,275) | |
| Recovery of previously impaired securities | - | - | 379,391 | - | |
| (Loss) Income before income taxes | 2,054,122 | (636,564) | 3,318,599 | (3,244,657) | |
| Income taxes | |||||
| Deferred income tax | - | - | - | - | |
| Net and comprehensive income (loss) for the period | 2,054,122 | (636,564) | 3,318,599 | (3,244,657) | |
| Basic and diluted net income (loss) per share | $ 0.02 | $ (0.08) | $ 0.03 | $ (0.03) | |
| Weighted average number of common shares outstanding | 97,893,741 | 97,893,741 | 97,893,741 | 97,893,741 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
(anaudited - expressed in Canadian dollars)
EROS RESOURCES CORP.
| For the three months ended September 30 | For the nine months ended September 30 | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Cash from operating activities | ||||
| Net income (loss) for the period | $ 2,054,122 | $ (1,181,370) | $ 3,318,599 | $ (3,244,657) |
| Add back non-cash items: | ||||
| Amortization | 434 | 446 | 1,047 | 1,000 |
| Loss (gain) on sale of marketable | (395,226) | 109 | (434,039) | 106,275 |
| Unrealized loss (gain) on marketable securities held for trading | (1,895,700) | 251,527 | (2,968,252) | 1,190,697 |
| Changes in non-cash working capital: | ||||
| Accounts receivable | (29,782) | 21,944 | (42,170) | 94,515 |
| Prepaid expenses | 10,987 | 10,599 | 10,243 | 14,594 |
| Accounts payable and accrued | (21,766) | (29,176) | (53,127) | 44,488 |
| Cash from (used in) operating activities | (276,931) | (925,921) | (167,699) | (1,793,088) |
| Investing activities | ||||
| Acquisition of marketable securities | - | (300,000) | (196,143) | (196,143) |
| Acquisition of property, plant and equipment | (1,311) | |||
| Proceeds on sale of marketable securities | 597,779 | 1,252,433 | 747,779 | 2,436,043 |
| Exploration and evaluation expenditures | (13,230) | (69,269) | (100,961) | (176,558) |
| Cash from (used in) investing activities | 584,548 | 883,164 | 645,506 | 2,063,341 |
| Financing activities | ||||
| Margin loan repayment | (307,821) | - | (382,821) | - |
| Interest on margin loan | 42,197 | - | 66,164 | - |
| Cash from (used in) financing activities | (265,624) | - | (316,657) | - |
| Increase (decrease) in cash during the period | 41,994 | (42,756) | 161,151 | 270,254 |
| Cash and cash equivalents, beginning of the period | 247,061 | 128,115 | 127,904 | 61,074 |
| Cash and cash equivalents, end of the period | $ 289,055 | $ 85,359 | $ 289,055 | $ 331,328 |
| Cash and cash equivalents consist of: | ||||
| Cash | $ 289,055 | $ 85,359 | $ 289,055 | $ 331,328 |
| Short-term deposits | - | - | - | - |
| $ 289,055 | $ 85,359 | $ 289,055 | $ 331,328 | |
| Supplemental Cash Flow Information | ||||
| Interest received | $ - | $ - | $ - | $ - |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
1. NATURE OF OPERATIONS
Eros Resources Corp.'s ("Eros" or the "Company") principal business activities include the acquisition, exploration and development of mineral and oil and gas resource properties in North America. The Company's corporate office is located at Suite 420, 789 West Pender Street, Vancouver, British Columbia V6C 1H2. Eros is a Tier 1 company listed on the TSX Venture Exchange ("TSX-V").
These consolidated financial statements have been prepared on a going concern basis in accordance with IFRS under the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.
The Company's continuing operations, as intended, are dependent upon its ability to identify, evaluate and negotiate an acquisition of or participation in an interest in properties, assets, or businesses.
The business of mining and exploring for minerals and oil and gas reserves involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The recoverability of the carrying value of exploration and evaluation assets and the Company's ability to continue as a going concern is dependent upon the preservation of its interest in the underlying properties, the discovery of economically recoverable reserves, the achievement of profitable operations or the ability of the Company to raise alternative financing.
At the time these consolidated financial statements were prepared, the global economy is struggling with high inflation rates and the ongoing war in the Ukraine. While these events have had mixed effects on the economy in general, there has been little to no impact on the operations of Eros.
2. BASIS OF PRESENTATION
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") and interpretations of the IFRS Interpretations Committee ("IFRIC") applicable to the preparation of interim financial statements, including International Accounting Standard 34 ("IAS 34"), Interim Financial Reporting.
These condensed interim consolidated financial statements include the accounts of Eros and its wholly owned subsidiaries, Anthem Resources Incorporated ("Anthem") and Otish Minerals Ltd., both companies incorporated in British Columbia, and Bell Mountain Exploration Corp. ("Bell Mountain"), a company incorporated in Nevada, USA. These condensed interim consolidated financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS as issued by the IASB.
Basis of measurement
These condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. In addition, these financial statements have been prepared on a historical cost basis, except for certain financial instruments that have been measured at fair value.
These condensed interim consolidated financial statements are presented in Canadian dollars, which is the Company's and its subsidiaries' functional currency.
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
2. BASIS OF PRESENTATION (continued)
The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.
4. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 Unadjusted quoted prices 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 marketable securities which consist of common shares are based on quoted prices and are therefore considered to be Level 1. The marketable securities which consist of warrants are based on inputs other than quoted prices and are therefore considered to be Level 2. The marketable securities which consist of common shares of private companies are based on unobservable inputs and are therefore considered to be Level 3. The Company's risk exposures are summarized below:
Credit risk
Credit risk is the risk that the Company will incur an unexpected loss as a result of the counterparty to a financial asset failing to meet their contractual obligations. The Company's financial assets that are exposed to credit risk are cash and other receivables. The Company holds cash with large financial institutions in accordance with the Company's investment policy. Management considers credit risk on cash to be low, as the counterparties are highly rated Canadian banks. The Company is exposed to some credit risk on other receivables, apart from sales tax refunds receivable. The amounts included in other receivables are due from companies with a common director and/or officer with Eros.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company's approach to managing liquidity risk is to provide reasonable assurance that it has sufficient capital to meet short-term financial obligations after taking into account its exploration obligations and cash on hand. All of the Company's financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms with the exception of lease liabilities. The Company's lease liability matures based on the terms outlined in the lease agreement. The Company is also exposed to liquidity risk on its margin loan and advances from related parties as the amounts are due on demand.
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
3. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Market risk
Market risk consists of interest rate risk, foreign currency risk and other price risk. Market risk to which the Company is exposed is as follows:
Interest rate risk
Interest rate risk consists of two components:
(i) To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.
(ii) To the extent that changes in prevailing market rates differ from the interest rate in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.
The Company is exposed to interest rate risk though its margin loan. The rate of interest charged on borrowed funds under margin loan is prime plus 3% and is calculated daily and charged monthly (Note 8). Any fluctuation of interest rate as a result of movement in prime rate could lead to an increase or decrease in the amount the Company pays to service the margin loan. The Company manages its interest rate risk by monitoring its debt levels. The Company estimates that a 100-basis point fluctuation in short-term interest rates, with all other variables held constant, would not result in material adjustment to interest expense.
Foreign currency risk
The Company is exposed to financial risk related to the fluctuation of foreign exchange rates. A significant change in the exchange rate between the Canadian dollar relative to the US dollar could have an effect on the Company’s future results of operations, financial position, or cash flows. The Company has not hedged its exposure to currency fluctuations. As at September 30, 2024 and December 31, 2023, the Company is exposed to currency risk through the following financial assets denominated in a currency other than the Canadian dollar:
| September 30, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| US $ | CDN $ | US $ | CDN $ | |
| Cash | 3,128 | 4,230 | 4,686 | 6,207 |
| Accounts payable | (29,531) | (39,937) | (53,530) | (70,900) |
Based on the above, assuming all other variables remain constant, a 10% strengthening of the Canadian dollar against the US dollar would have increased the Company’s comprehensive income/loss by $2,640 (2023 - $9,558). A weakening of the Canadian dollar would have had the opposite effect.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk. The Company’s marketable securities are carried at market value or fair value based on observable market values and are therefore directly affected by fluctuations in the market value of the underlying securities. Changes in market prices of securities in the portfolio have a material effect on net income (loss). A 20% increase in the market prices would have increased/decreased the Company’s net income/loss by $1,857,031 (2023 - $1,326,129).
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
- MARKETABLE SECURITIES
| September 30, 2024 | ||
|---|---|---|
| Company | Number of common shares | Equity securities |
| Skeena Resources Limited (“Skeena”) (Note 8) | 585,500 | $ 6,727,395 |
| MAS Gold Corp. (“MAS”) (2) | 39,228,572 | 737,667 |
| Acquisition Oil & Gas Corp. | 500,000 | 535,000 |
| Southern Empire Resources Corp.(1) | 9,398,654 | 407,004 |
| Getty Copper Corp. | 8,200,000 | 341,000 |
| Nickel North Exploration Corp. | 10,200,000 | 153,000 |
| Eagle Plains Resources Corp. | 675,000 | 67,500 |
| Omineca Mining and Metals Ltd. | 500,000 | 32,500 |
| Lake Victoria Gold Corp. | 175,000 | 31,500 |
| Metallic Minerals Corp. | 105,000 | 21,000 |
| Other equities and warrants | - | 231,591 |
| $ 9,285,157 | ||
| December 31, 2023 | ||
| --- | --- | --- |
| Company | Number of common shares | Equity securities |
| Skeena Resources Limited (“Skeena”) (Note 8) | 675,500 | $ 4,356,975 |
| Acquisition Oil & Gas Corp. | 500,000 | 535,000 |
| Southern Empire Resources Corp. (1) | 9,398,654 | 465,147 |
| Getty Copper Corp. | 8,200,000 | 410,000 |
| MAS Gold Corp. (“MAS”) (2) | 39,228,572 | 392,286 |
| Nickel North Exploration Corp. | 10,200,000 | 153,000 |
| Eagle Plains Resources Corp. | 675,000 | 84,375 |
| Lake Victoria Gold Corp. | 175,000 | 35,875 |
| Metallic Minerals Corp. | 105,000 | 32,550 |
| Omineca Mining and Metals Ltd. | 500,000 | 30,000 |
| Other equities and warrants | - | 135,437 |
| $ 6,630,645 |
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
4. MARKETABLE SECURITIES (continued)
(1) Southern Empire Resources Corp. is a company with common management and a common director.
(2) MAS is a company with a common director.
Securities were purchased and sold during the period, resulting in the realization of gains and losses. The fair value of equity securities is determined by reference to closing prices on a stock exchange. The investment in private entity is carried at cost as its fair value is indeterminable.
The continuity of the Company's marketable securities during the nine-months ended September 30, 2024 is as follows:
| December 31, 2023 | Additions | Proceeds from dispositions | Realized Gains (Loss) | Unrealized Gains (Loss) | September 30, 2024 | |
|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | |
| Investment in public entities: | ||||||
| - Shares and shares purchase warrants | 6,095,645 | - | (747,779) | 434,039 | 2,968,252 | 8,750,157 |
| Investment in private entity: | ||||||
| - Shares | 535,000 | - | - | - | - | 535,000 |
| Total | 6,630,645 | - | (747,779) | 434,039 | 2,968,252 | 9,285,157 |
The continuity of the Company's marketable securities during the year ended December 31, 2023, is as follows:
| December 31, 2022 | Additions | Proceeds from dispositions | Realized Gains | Unrealized Gains | December 31, 2023 | |
|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | |
| Investment in public entities: | ||||||
| - Shares and shares purchase warrants | 8,885,040 | 251,143 | (1,153,733) | (6,287) | (1,880,518) | 6,095,645 |
| Investment in private entity: | ||||||
| - Shares | 750,000 | - | - | - | (215,000) | 535,000 |
| Total | 9,635,040 | 251,143 | (1,153,733) | (6,287) | (2,095,518) | 6,630,645 |
The marketable securities portfolio includes warrants where fair values were estimated using the Black-Sholes option pricing model using the following ranges of inputs:
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Stock price | Closing prices | Closing prices |
| Exercise price | $0.10 to $0.20 | $0.10 to $0.20 |
| Expected life | 0.01 to 1.48 years | 0.76 to 2.23 years |
| Annualized volatility | 80% | 80% |
| Dividend rate | 0% | 0% |
| Risk free rate | 2.91% to 2.94% | 3.88% to 3.91% |
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
5. EXPLORATION AND EVALUATION INTERESTS
The exploration and evaluation assets that have been capitalized for the periods ended September 30, 2024 and December 31, 2023 are as follows:
| Saskatchewan | Saskatchewan | Nevada | Total | |
|---|---|---|---|---|
| Commodity | Gold | Uranium | Gold-Silver | |
| Balance at December 31, 2022 | $ 3,500,000 | $ 22,343 | $ 2,697,092 | $ 6,219,435 |
| Additions | ||||
| Staking and maintenance | - | - | 43,193 | 43,193 |
| Royalties | - | - | 20,000 | 20,000 |
| Geology/geophysics | - | - | 30,126 | 30,126 |
| Field support | - | - | 15,136 | 15,136 |
| Environmental and socio-economic | - | - | 101,092 | 101,092 |
| Total additions for the year: | - | - | 209,547 | 209,547 |
| Impairment during the year: | - | - | (1,640,551) | (1,640,551) |
| Balance at December 31, 2023 | 3,500,000 | 22,343 | 1,266,088 | 4,788,431 |
| Additions | ||||
| Geology/geophysics | - | - | 24,866 | 24,866 |
| Drilling | - | - | - | - |
| Field support | - | - | 13,428 | 13,428 |
| Environmental and socio-economic | - | - | 62,667 | 62,667 |
| Total additions for the period: | - | - | 100,962 | 100,962 |
| Impairment during the period: | - | - | - | - |
| Balance at September 30, 2024 | $ 3,500,000 | $ 22,343 | $ 1,367,049 | $ 4,889,392 |
Realization of exploration and evaluation assets
The investment in and expenditures on exploration and evaluation assets comprise a significant portion of the Company's assets. Realization of the Company's investment in these assets is dependent upon the establishment and maintenance of legal ownership, the attainment of successful production from the properties or from the proceeds of their disposal.
Mineral exploration and development is highly speculative and involves inherent risks. While the rewards if an ore body is discovered can be substantial, few properties that are explored are ultimately developed into producing mines. There can be no assurance that current exploration programs will result in the discovery of economically viable quantities of ore. There can be no assurance that compensation will be received for properties that have been or may be expropriated. The amounts shown for acquisition costs and deferred exploration expenditures represent costs incurred to date and do not necessarily reflect present or future
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
5. EXPLORATION AND EVALUATION INTERESTS (continued)
values. These costs will be depleted over the useful lives of the properties upon commencement of commercial production or written off if the properties are abandoned or if the claims are allowed to lapse.
Title to exploration and evaluation interests
Title to exploration and evaluation assets involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history of many mineral properties. The Company has investigated title to its mineral property interests in accordance with industry standards for the current stage of exploration of such properties, and, to the best of its knowledge, title to its properties are in good standing; however, these procedures do not guarantee the Company's title. Property title may be subject to unregistered prior agreements or transfers and title may be affected by undetected defects.
Environmental
The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous material and other matters. The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its properties and properties in which it has previously had an interest.
The Company conducts its mineral exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any existing environmental problems related to any of its current or former properties that may result in material liability to the Company.
Environmental legislation is becoming increasingly stringent, and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation on the Company's operations may cause additional expenses and restrictions. If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the properties may be diminished or negated.
a. Nevada
Bell Mountain Property
The Company has earned a 100% ownership of the Bell Mountain gold-silver property. An Advance Royalty Payment of $20,000 is due annually on June 15 until such time as there is production from the property (paid during the year ended December 31, 2023). In conjunction with the updated notice from the Bureau of Land Management in August of 2018 which exempts the Bell Mountain project from the moratorium on exploration activities, the Company is once again actively exploring its Nevada properties.
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
5. EXPLORATION AND EVALUATION INTERESTS (continued)
b. Saskatchewan
Saskatchewan uranium interests
Hatchet Lake
The Company has an interest in a joint venture property with Denison Mines Corp. ("Denison") as operator, located on the Wollaston Trend at the northeast margin of the Athabasca Basin. Eros holds a 29.89% joint venture interest for Hatchet Lake with further dilution expected.
Wollaston Trend
The Company has a 2% net smelter return royalty ("NSR") interest on 44 claims of uranium exploration lands along the Wollaston Trend underlying the southeast margin of the Athabasca Formation. Denison retains the right to purchase one-half of the NSR at any time for $1,000,000.
Athabasca Basin – Uranium
The Company has a 100% interest in six claim groups in the Athabasca Northern Basin of Saskatchewan. Some of the claims are subject to a non-participating, non-voting, carried 0.5% NSR.
La Ronge Gold Belt
On December 20, 2021, MAS Gold Corp. and the Company signed an option agreement granting the Company an option for the exclusive right to earn a 17.5% interest in all of MAS's current properties in the prospective La Ronge Gold Belt of north-eastern Saskatchewan by funding $3,500,000 in exploration expenditures over a six-month period, starting from January 2022. During the year ended December 31, 2022, Eros completed its funding commitment and has earned its 17.5% interest.
Upon the delivery of a written notice to MAS Gold Corp., a Joint Venture shall be deemed formed between MAS and the Company ("Joint Venture"). The respective participating interest of each party under the Joint Venture Agreement shall be MAS as to 82.5%; and the Company as to 17.5%. As at September 30, 2024, the company has not entered into a Joint Venture Agreement with MAS.
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
6. PROPERTY AND EQUIPMENT
| Cost | Mineral exploration field equipment | Total |
|---|---|---|
| Balance, December 31, 2023 | $ 100,080 | $ 100,080 |
| Additions | 1,311 | 1,311 |
| Disposals | - | - |
| Balance, September 30, 2024 | $ 101,391 | $ 101,391 |
| Accumulated Amortization | ||
| Balance, December 31, 2023 | $ 95,818 | $ 95,818 |
| Amortization/depletion | 1,047 | 1,047 |
| Balance, September 30, 2024 | $ 96,875 | $ 96,875 |
| Carrying Value | ||
| Balance, December 31, 2023 | $ 4,262 | $ 4,262 |
| Balance, September 30, 2024 | $ 4,526 | $ 4,526 |
7. RIGHT-OF-USE ASSET AND LEASE LIABILITY
The Company has a lease agreement for the headquarter office space in Vancouver, British Columbia. During the year ended December 31, 2022, the Company committed to extending the lease expiring on January 31, 2022 to January 31, 2025. The Company recognized an additional $39,272 for a ROU asset and $39,272 for a lease liability as at February 1, 2022.
The continuity of the ROU asset and lease liability for the periods ended September 30, 2024 and December 31, 2023 is as follows:
| Right-of-use asset | |
|---|---|
| Value of right-of-use asset as at December 31, 2022 | $ 27,272 |
| Amortization | (13,092) |
| Value of right-of-use asset as at December 31, 2023 | $ 27,272 |
| Additions | - |
| Amortization | - |
| Value of right-of-use asset as at September 30, 2024 | $ 27,272 |
| Lease liability | |
| Lease liability recognized as of December 31, 2022 | $ 28,764 |
| Additions | - |
| Lease payments | (14,689) |
| Lease interest | 1,596 |
| Lease liability recognized as of December 31, 2023 | $ 15,671 |
| Additions | - |
| Lease payments | - |
| Lease interest | - |
| Lease liability recognized as of September 30, 2024 | $ 15,671 |
| Current portion | $ 15,671 |
| $ - |
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
- Margin loan payable
On May 3, 2022, the Company entered into a Margin Account Agreement with Canaccord Genuity Wealth Management ("Canaccord") for a $1.5 million advance (the "Margin Loan"). The Margin Loan: (i) is subject to an interest rate of prime plus 3%, with interest rate being calculated daily and charged monthly; (ii) is due on demand; (iii) is secured by 645,500 shares of Skeena held with Canaccord; and (iv) is subject to margin requirement percentage of 30% loan value. The Company has no restrictions on trading Skeena shares, but margin calls can be made by Canaccord if or when the account balance drops below the margin requirement.
During the nine-months ended September 30, 2024, the Company paid $66,164 in interest expense on the margin loan. The Company has outstanding advances of $610,442 as at September 30, 2024.
- SHARE CAPITAL AND CONTRIBUTED SURPLUS
Authorized
Unlimited number of common shares without par value.
Shares
There has been no movement in shares during the nine-months ended September 30, 2024 or the year ended December 31, 2023.
Warrants
Warrant transactions are summarized as follows:
| Warrants | ||
|---|---|---|
| Number | Weighted Average Exercise Price | |
| Outstanding December 31, 2022, 2023 and September 30, 2024. | 24,723,444 | $0.15 |
| Number currently exercisable | 24,723,444 | $ 0.15 |
On August 4, 2021, the Company extended the expiry date of 24,723,444 warrants originally set to expire on August 12 and 13, 2021 to August 12 and 13, 2022.
On August 10, 2022, the Company further extended the expiry date of 24,723,444 warrants set to expire on August 12 and 13, 2022 to August 12 and 13, 2025.
At September 30, 2024, warrants were outstanding as follows:
| Grant date | Number of Warrants | Exercise Price | Expiry Date |
|---|---|---|---|
| August 12, 2020 | 24,223,444 | $ 0.15 | August 12, 2025 |
| August 13, 2020 | 500,000 | $ 0.15 | August 13, 2025 |
| 24,723,444 |
The weighted average remaining contractual life of the warrants is 1.12 (December 31, 2023 – 1.62) years.
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EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
- SHARE CAPITAL AND CONTRIBUTED SURPLUS (continued)
Stock options
The Company has a stock option plan under which it is authorized to grant options to executive officers, directors, employees, and consultants. Pursuant to the policies of the TSX-V, the Company is authorized to grant options to acquire up to 10% of its issued and outstanding common shares. The exercise price of each option granted under the plan is greater than or equal to the closing market price of the Company's shares on the date of each grant. The maximum term of each option is five years.
Share-based payments
Stock option transactions are summarized as follows:
| Stock Options | ||
|---|---|---|
| Number | Weighted Average Exercise Price | |
| Outstanding, December 31, 2022 | 2,400,000 | $0.08 |
| Expired | (400,000) | ($0.165) |
| Outstanding, December 31, 2023 | 2,400,000 | $0.080 |
| Expired | (2,400,000) | ($0.080) |
| Outstanding, September 30, 2024 | - | - |
| Number currently exercisable | - | - |
At September 30, 2024, there were no stock options outstanding:
At December 31, 2023, stock options were outstanding as follows:
| Grant date | Number of Shares | Exercise Price | Expiry Date |
|---|---|---|---|
| July 30, 2019 | 2,400,000 | $0.080 | July 30, 2024 |
| 2,400,000 |
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
10. RELATED PARTY BALANCES
In addition to the related party information disclosed elsewhere in the consolidated financial statements, the following significant transactions between the Company and its related parties took place during the financial year at terms agreed between the parties concerned:
Key management compensation
Key management personnel at the Company are the directors and officers of the Company. The remuneration of key management personnel during the periods ended September 30, 2024 and December 31, 2023 was as follows:
| September 30, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Short-term benefits | 1 | $ 193,506 | $ | 121,011 |
1 Short-term benefits consist exclusively of salaries, bonuses, health benefits and consulting fees for key management personnel.
Other than the amounts disclosed above, there were no short-term employee benefits or share-based payments paid to key management personnel during the periods ended September 30, 2024 and December 31, 2023.
Included in the consolidated statements of financial position is an amount of $2,352,000 (2023 - $2,352,000) payable to related parties which includes the directors and officers of the Company.
The amounts due to related parties are unsecured, non-interest bearing, repayable on demand and are to be settled in cash. The carrying amounts of the amounts due to related parties approximate their fair values.
11. SEGMENTED INFORMATION
The Company operates in two business segments being the exploration and development of mineral resource properties and investing in marketable securities with a focus on commodities, with operations and long-term assets in the United States and Canada. The Company's operations are segmented on a district basis due to the geographic locations of the Company's exploration operations. At September 30, 2024, long-term assets of $1,393,228 (December 31, 2023 - $1,292,265) relates to mineral resource properties and reclamation bonds located in the United States with the remaining $13,586,376 (December 31, 2023 - $10,541,442) located in Canada.
12. CAPITAL DISCLOSURES
The Company manages its capital structure and makes adjustments to it based on the funds available to the Company, in order to support the acquisition and exploration of mineral properties, oil and gas exploration and development, and other strategic investments. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. The Company defines capital as shareholders' equity. The Company is not exposed to any capital requirements.
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EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
The Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. In addition, the Company evaluates
13. CAPITAL DISCLOSURES (continued)
investment opportunities, as well as existing investments, for suitability and potential on an ongoing basis. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company's capital risk management approach was unchanged in the first half of 2024 or fiscal 2023. There were no capital restrictions in the nine-month period ended September 30, 2024 and the year ended December 31, 2023 and the Company had no debt aside from trade payables, margin loan payable, due to related parties, income taxes and lease liability.
14. COMMITMENTS
The Company must pay an advance royalty payment of $20,000 annually towards the Bell Mountain property in Nevada until such time as there is production from the property (Note 5).
As at September 30, 2024, the Company was committed to pay for office premises leases expiring in January 2025. The Company's minimum lease payments over the next three years, in aggregate, is as follows:
| $ | |
|---|---|
| 2024 | 15,706 |
| 2025 | 1,312 |
| Total | 17,018 |
15. EARNINGS PER SHARE
The calculation of basic and diluted earnings (loss) per share for the relevant period is based on the following:
| September 30, 2024 | December 31, 2023 | |
|---|---|---|
| Net (loss) income | $ 3,318,599 | $ (4,250,601) |
| Basic weighted average number of common shares outstanding | 97,893,741 | 97,893,741 |
| Effect on dilutive securities: | ||
| Options and warrants | - | - |
| Diluted weighted average number of common shares outstanding | 97,893,741 | 97,893,741 |
| Basic income per share | $ 0.03 | $ (0.04) |
| Diluted income per share | $ 0.03 | $ (0.04) |
EROS RESOURCES CORP.
(an exploration stage enterprise)
Notes to the Consolidated Financial Statements
For the periods ended September 30, 2024 and 2023
(expressed in Canadian dollars)
16. SUBSEQUENT EVENTS
Subsequent to the end of the period, on October 10, 2024, Eros reported that it has entered into a business combination agreement MAS Gold Corp. and Rockridge Resources Ltd. ("MAS", "Rockridge" and, collectively with Eros, the "Companies") to combine the companies in a three-way merger transaction (the "Transaction"). Eros will acquire all of the issued and outstanding shares of both Rockridge and MAS that are not already owned by Eros by way of two plans of arrangement under the Business Corporations Act (British Columbia). Pursuant to the Transaction, shareholders of Rockridge will receive 0.375 common shares of Eros (each full share, an "Eros Share") for each Rockridge common share (a "Rockridge Share") held and shareholders of MAS will receive 0.25 Eros Shares for each MAS common share (a "MAS Share") held. Upon closing of the Transaction, existing Eros shareholders will own approximately 42.37% of the combined company, existing MAS shareholders will own approximately 37.33% of the combined company, and existing Rockridge shareholders will own approximately 20.30% (based on the current issued and outstanding shares of each of the respective companies).
The Transaction remains subject to shareholder approval for each of Eros, MAS and Rockridge.
Subsequent to the end of the period, on November 19, 2024, the Company announced that it has issued 4,800,000 incentive stock options to directors and officers. The stock options are exercisable at a price of $0.05 per share and expire on November 19, 2025.
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