Interim Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2024 and 2023
(UNAUDITED)
Presented in Canadian dollars
1
Management's Responsibility for Financial Reporting
The accompanying consolidated financial statements for Almonty Industries Inc. were prepared by management in accordance with International Financial Reporting Standards (IFRS). Management acknowledges responsibility for the preparation and presentation of the consolidated financial statements, including responsibility for significant accounting judgments and estimates and the choice of accounting principles and methods that are appropriate to the Company's circumstances. The significant accounting policies of the Company are summarized in Note 3 to the consolidated financial statements.
Management has established processes, which are in place to provide them sufficient knowledge to support management representations that they have exercised reasonable diligence that (i) the consolidated financial statements do not contain any untrue statement of 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 is made, as of the date of and for the periods presented by the consolidated financial statements and (ii) the consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods then ended presented by the consolidated financial statements.
The Board of Directors is responsible for reviewing and approving the consolidated financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. The Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the consolidated financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the consolidated financial statements together with other financial information of the Company for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.
"Lewis Black" | ____ | "Mark Gelmon"______ | |
Lewis Black | Mark Gelmon | ||
Director, President & CEO | Chief Financial Officer | ||
May 13, 2024 | |||
Toronto, Ontario |
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Almonty Industries Inc.
Interim Condensed Consolidated Balance Sheets
(Unaudited) (in 000's of Canadian dollars unless otherwise noted)
March 31, | December 31, | ||||
Note | 2024 | 2023 | |||
Assets | |||||
Current Assets | |||||
Cash | 16,538 | 22,019 | |||
Trade receivables | 1,867 | 2,679 | |||
Taxes recoverable | 466 | 661 | |||
Inventories | 4 | 6,685 | 7,832 | ||
Prepaid expenses and other current assets | 3,049 | 3,049 | |||
Total Current Assets | 28,605 | 36,240 | |||
Mining assets | 5 | 171,590 | 165,681 | ||
Tailings inventory | 4 | 30,285 | 30,355 | ||
Deferred tax assets | 11 | 2,545 | 2,551 | ||
Other assets | 613 | 507 | |||
205,033 | 199,094 | ||||
Total Assets | 233,638 | 235,334 | |||
Liabilities | |||||
Current Liabilities | |||||
Accounts payable and accrued liabilities | 7 | 25,372 | 31,469 | ||
Deferred revenue | 75 | 1,062 | |||
Current portion of long-term debt | 8 | 23,689 | 34,167 | ||
Total Current Liabilities | 49,136 | 66,698 | |||
Warrant liabilities | 8 & 10 | 1,323 | 958 | ||
Long-term debt | 8 | 104,887 | 95,900 | ||
Restoration provision and other liabilities | 9 | 23,280 | 23,256 | ||
Deferred tax liabilities | 11 | 14 | 14 | ||
129,504 | 120,128 | ||||
Total Liabilities | 178,640 | 186,826 | |||
Shareholders' Equity | |||||
Share capital | 10 | 140,285 | 127,359 | ||
Equity portion of convertible debentures | 1,241 | 1,241 | |||
Contributed surplus | 13,169 | 12,302 | |||
Accumulated other comprehensive income | 8,008 | 11,529 | |||
Deficit | (107,705) | (103,923) | |||
Total Shareholders' Equity | 54,998 | 48,508 | |||
Total Liabilities and Shareholders' Equity | 233,638 | 235,334 |
Nature of operations (Note 1) | Commitments and contingent liabilities (Note 16) | Subsequent events (Note 18) The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Signed on behalf of the Board: | |
/s/ Lewis Black | /s/ Mark Trachuk |
Lewis Black | Mark Trachuk |
Director, President & CEO | Director, Audit Committee Chair |
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Almonty Industries Inc.
Interim Condensed Consolidated Statements of Operations and
Comprehensive Loss
(Unaudited) (in 000's of Canadian dollars except share and per share amounts)
Three months ended March 31, | ||||||||
Note | 2024 | 2023 | ||||||
Revenue | 7,824 | 7,097 | ||||||
Cost of sales | 6,665 | |||||||
Production costs | 5,728 | |||||||
Care and maintenance costs | 263 | 255 | ||||||
Depreciation and amortization | 290 | 250 | ||||||
Income from mining operations | 606 | 864 | ||||||
Expenses | 1,475 | |||||||
General and administrative | 1,689 | |||||||
Share-based compensation | 10 | 392 | 102 | |||||
Loss before other items and income taxes | (1,261) | (927) | ||||||
Other (income) expenses | 1,423 | |||||||
Interest expense | 967 | |||||||
Financing fees | - | 739 | ||||||
Loss (gain) on valuation of embedded derivative liabilities | 8(c) | 81 | (123) | |||||
Loss (gain) on valuation of warrant liabilities | 8 & 10 | 109 | (429) | |||||
Foreign exchange loss | 903 | 232 | ||||||
Loss before income taxes | (3,777) | (2,313) | ||||||
Income tax expense | 5 | 103 | ||||||
Current | 11 | |||||||
5 | 103 | |||||||
Net loss for the period | (3,782) | (2,416) | ||||||
Other comprehensive loss not through profit and loss | (3,782) | |||||||
Net loss for the period | (2,416) | |||||||
Items that may be reclassified subsequently to profit/loss | (3,521) | |||||||
Foreign currency translation adjustment | (5,599) | |||||||
Comprehensive loss for the period | (7,303) | (8,015) | ||||||
Loss per common share - basic and diluted | $ | (0.02) | $ | (0.01) | ||||
Weighted average number of shares outstanding-basic | ||||||||
and diluted | 243,300,011 | 218,437,709 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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Almonty Industries Inc.
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity
Three months ended March 31, 2024 and 2023
(Unaudited) (in 000's of Canadian dollars unless otherwise noted)
Equity | Accumulated | ||||||
Share | Portion of | Contributed | Other | Total | |||
Convertible | Comprehensive | ||||||
Note | Capital | Debentures | Surplus | Income (Loss) | Deficit | Equity | |
Balance at December 31, 2022 | 119,383 | 1,241 | 10,821 | 3,391 | (95,086) | 39,750 | |
Issuance of common shares for cash | 10 | 3,856 | - | - | - | - | 3,856 |
Share issuance costs | 10 | (309) | - | - | - | - | (309) |
Shares issued on exercise of warrants | 10 | 42 | - | (7) | - | - | 35 |
Shares issued to settle convertible debt | 10 | 2,917 | - | - | - | - | 2,917 |
Share-based compensation | 10 | - | - | 102 | - | - | 102 |
Net loss and comprehensive loss for the period | - | - | - | (5,599) | (2,416) | (8,015) | |
Balance at March 31, 2023 | 125,889 | 1,241 | 10,916 | (2,208) | (97,502) | 38,336 | |
Issuance of common shares for cash | 10 | 1,532 | - | 347 | - | - | 1,879 |
Share issuance costs | 10 | (62) | - | - | - | - | (62) |
Share-based compensation | 10 | - | - | 1,039 | - | - | 1,039 |
Net loss and comprehensive income for the period | - | - | - | 13,737 | (6,421) | 7,316 | |
Balance at December 31, 2023 | 127,359 | 1,241 | 12,302 | 11,529 | (103,923) | 48,508 | |
Issuance of common shares for cash | 10 | 2,326 | - | 475 | - | - | 2,801 |
Share issuance costs | 10 | (60) | - | - | - | - | (60) |
Shares issued for settlement of debt | 10 | 10,660 | - | - | - | - | 10,660 |
Share-based compensation | 10 | - | - | 392 | - | - | 392 |
Net loss and comprehensive loss for the period | - | - | - | (3,521) | (3,782) | (7,303) | |
Balance at March 31, 2024 | 140,285 | 1,241 | 13,169 | 8,008 | (107,705) | 54,998 |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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Almonty Industries Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited) (in 000's of Canadian dollars unless otherwise noted)
Operating activities | Note |
Net loss for the period | |
Add (deduct) non-cash items: | |
Share-based compensation | 10 |
Depreciation and amortization | |
Interest expense | |
Financing fees | |
Income tax expense | |
Gain on valuation of embedded derivative liabilities | 8(c) |
Gain on valuation of warrant liabilities | |
Unrealized foreign exchange losses | |
Changes in non-cash working capital | |
Trade receivables | |
Taxes recoverable | |
Inventories | |
Prepaid expenses and other current assets | |
Accounts payable and accrued liabilities | |
Deferred revenues | |
Net change in non-cash working capital | |
Other assets | |
Cash flow used in operating activities | |
Investing activities | |
Additions to mining assets | |
Cash flow used in investing activities | |
Financing activities | |
Issuance of common shares | 10 |
Share issuance costs paid | 18 |
Issuance of long-term debt | 8 |
Repayment of long-term debt |
Interest paid
Cash flow provided by financing activities
Effect of foreign exchange on cash
Net increase in cash for the period
Cash at beginning of period
Cash at end of period (1)
Three months ended March 31,
20242023
(3,782) | (2,416) | |||
392 | 102 | |||
290 | 250 | |||
1,423 | 967 | |||
- | 739 | |||
5 | 103 | |||
81 | (123) | |||
109 | (429) | |||
903 | 230 | |||
(579) | (577) | |||
812 | 564 | |||
195 | 100 | |||
1,147 | 172 | |||
- | 459 | |||
(1,505) | (1,050) | |||
(987) | (565) | |||
(338) | (320) | |||
(204) | 171 | |||
(1,120) | (726) | |||
(7,368) | (2,645) | |||
(7,368) | (2,645) | |||
3,057 | 5,002 | |||
(60) | (309) | |||
2,017 | - | |||
(1,179) | (2,087) | |||
(691) | (931) | |||
3,144 | 1,675 | |||
(136) | (355) | |||
(5,481) | (2,051) | |||
22,019 | 8,442 | |||
16,538 | 6,391 |
- Cash includes $13,725 (March 31, 2023 - $4,868) of restricted cash solely for use on the Sangdong Project.
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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Almonty Industries Inc.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2024
(Unaudited) (In 000's of Canadian dollars, unless otherwise noted)
1. Nature of operations
Almonty Industries Inc. ("Almonty") (with its subsidiaries, the "Company") is incorporated in Canada. The Company's shares are listed on the Toronto Stock Exchange ("TSX"), trading under the symbol AII. The Company's shares are also listed on the OTCQX Best Markets under the symbol ALMTF and on the Australia Securities Exchange, under the symbol AII.
The head office of the Company is located at 100 King Street West, Suite 5700, Toronto, Ontario, M5X 1C7. The principal business of Almonty is the mining, processing and shipping of tungsten concentrate from the Los Santos tungsten mine located near Salamanca, Spain (the "Los Santos Mine") and the Panasqueira tin and tungsten mine in Covilha, Castelo Branco, Portugal (the "Panasqueira Mine") as well as the development of the Sangdong tungsten project located in Gangwon Province, Republic of Korea, (the "Sangdong Project") and the exploration and evaluation of the Valtreixal tin and tungsten project, located in the province of Zamora in Western Spain (the "Valtreixal Project").
Although the Company has taken steps to verify the title to the properties on which it is conducting its exploration, development and mining activities, these procedures do not guarantee the Company's title. Property title may be subject to government licensing requirements or regulations, unrestricted prior agreements, unregistered claims, aboriginal land claims and non-compliance with regulatory and environmental requirements. The Company's mining and exploration activities are subject to laws and regulations relating to the environment, which are continually changing, and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to remain in compliance.
These unaudited interim condensed consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue operating for the foreseeable future and will be able to realize a return on its assets and discharge its liabilities and commitments in the ordinary course of its business.
Management assesses the Company's ability to continue as a going concern at each reporting date, using quantitative and qualitative information available. As at March 31, 2024, the Company had a working capital deficiency of $20,531 (December 31, 2023 - $30,458). During the three months ended March 31, 2024, the Company secured additional financings totaling $3,058 plus an additional $125 received and an additional $1,650 commitment, subsequent to March 31, 2024. In addition, during July, 2022, the Company closed its US$75.1 million project financing with the KfW IPEX-Bank ("KfW") and received the first and second drawdowns on this facility of US$16.9 million during August, 2022, with a third drawdown of US$9.8 million received during November, 2022, a fourth drawdown of US$5.6 million received during April 2023 a fifth drawdown of US$9.8 million received during August, 2023 and a sixth drawdown of US$13.68 million during November 2023.
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Almonty Industries Inc.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2024
(Unaudited) (In 000's of Canadian dollars, unless otherwise noted)
Additionally, during November 2023, the Company negotiated the extension of the maturity date of various debt instruments totaling $22,657 (Note 8) to September 30, 2025, with an additional extension of the maturity date of various debt instruments totaling $4,638 during the three months ended March 31, 2024 to October 31, 2025 (Notes 8(iv) and 8(ix)). Also in late 2023, the Company restructured certain long-term debt instruments totaling EUR 7,900 whereby four loans were consolidated into one new loan with the maturity date of the new loan extended to September 15, 2025 (Note 8(c)(xi).
During the three months ended March 31, 2024, the Company issued 10,249,605 common shares of the Company in conjunction with the conversion of long-term debt totaling $9,225 and issued 2,583,316 common shares of the Company to settle certain accounts payable.
Subsequent to March 31, 2024, the Company refinanced the Unicredit US$15,650 term loan (Note 8(b)) with the KfW-IPEX Bank with a new maturity date of March 31, 2027 (Note 18).
The Company's current forecast indicates that it will have sufficient cash flows from operations and from financings outlined above for at least the next year to continue as a going concern and settle obligations as they come due. The assessment of the Company's ability to continue as a going concern, by its nature, relies on estimates of future cash flows and other future events, whose subsequent changes would materially impact the validity of such an assessment.
2. Basis of Preparation
a) Statement of compliance
These unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with International Accounting Standard IAS 34, Interim Financial Reporting. These financial statements do not include all the information and disclosures required in the Company's annual financial statements and should be read in conjunction with the Company's audited annual financial statements for the year ended December 31, 2023.
These unaudited interim condensed consolidated financial statements have been prepared on a historical cost basis, except for fair-valuethrough-profit-or-loss financial assets and liabilities and derivative financial instruments, which are measured at fair value.
These unaudited interim condensed consolidated financial statements were authorized for issuance by the Company's Board of Directors on May 13, 2024.
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Almonty Industries Inc.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2024
(Unaudited) (In 000's of Canadian dollars, unless otherwise noted)
b) Basis of preparation and principles of consolidation
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The Company controls an investee if the Company has:
- power over the investee;
- exposure, or rights, to variable returns from its involvement with the investee; and
- the ability to use its power over the investee to affect its returns.
When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including but not limited to:
- the contractual arrangement with the other vote holders of the investee;
- rights arising from other contractual arrangements; and
- the Company's potential voting rights.
The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Assets, liabilities, income and expenses of a subsidiary are included in the consolidated balance sheet and statement of operations and comprehensive income (loss) from the date that the Company gains control until the date that the Company ceases to control the subsidiary.
These consolidated financial statements include the accounts of the Company and its 100%-owned subsidiaries, Daytal Resources Spain S.L. ("Daytal"), Beralt Ventures Inc. ("BVI"), Beralt Tin and Wolfram (Portugal) SA ("BTW"), 7887523 Canada Inc. ("Almonty Sub"), Valtreixal Resources Spain ("VRS"), and Woulfe Mining Corp. ("Woulfe") and its four wholly-owned subsidiaries ("Woulfe Subs").
All intercompany balances, transactions, unrealized gains and losses resulting from intercompany transactions and dividends have been eliminated on consolidation.
c) Economic dependence
Almonty's wholly-owned subsidiaries, Daytal and BTW, participate in the global tungsten business. Currently, the majority of the output of Almonty's operations is sold to two customers (2021 - two), one of which is a shareholder of the Company. There is no guarantee that Almonty would be able to find an alternative customer or customers on market terms to replace this revenue.
d) Foreign currency translation
These financial statements are presented in Canadian dollars. The functional currency of Almonty is the Canadian dollar. Daytal, BVI, BTW and VRS's functional currency is the Euro ("€") and AKTC's functional currency is the Korean Won ("KRW").
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Almonty Industries Inc.
Notes to the Interim Condensed Consolidated Financial Statements
March 31, 2024
(Unaudited) (In 000's of Canadian dollars, unless otherwise noted)
Transactions denominated in a currency other than the functional currency of Almonty or its respective subsidiaries, including revenues of Daytal and BTW which are denominated in US$, are translated into their respective functional currencies using the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the historical exchange rate. Exchange gains and losses are recognized in profit or loss in the period in which they arise.
For the purpose of presenting these consolidated financial statements, the assets and liabilities of the foreign operations are translated into Canadian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Currency translation gains and losses arising from translation are recognized as a separate component of equity and as a foreign currency translation adjustment in other comprehensive income (loss).
e) Critical judgments and estimates
The preparation of consolidated financial statements requires management to make judgments, estimates and form assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the financial statements and reported amount of revenues and expenses for the reporting period. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Critical judgments
-
Functional currency
The functional currency of the Company and each of its subsidiaries is the currency of the primary economic environment in which the respective entities operate. Assessment of functional currency involves certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment. - Stage of exploration and development
Upon achieving technical feasibility and when commercial viability is demonstrated, capitalized exploration and evaluation assets are transferred to mineral properties and plant and equipment. - Tailings inventory
The valuation of tailings inventory at the Los Santos Mine requires management to make judgements regarding the ability to reprocess the tailings inventory and the recoverability of the tungsten contained in the tailings inventory. - Going concern
The preparation of these consolidated financial statements requires management to make judgments regarding its ability to continue as a going concern as discussed in Note 1.
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Almonty Industries Inc. published this content on 17 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 May 2024 20:19:20 UTC.