PALAMINA CORP.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(Expressed in Canadian Dollars)
INDEX | Page |
Independent Auditor's Report | 2-5 |
Statements of Financial Position | 6 |
Statements of (Income) Loss and Comprehensive (Income) Loss | 7 |
Statements of Changes in Shareholders' Equity (Deficiency) | 8 |
Statements of Cash Flows | 9 |
Notes to the Financial Statements | 10-35 |
Independent Auditor's Report
To the Shareholders of Palamina Corp.
Opinion
We have audited the consolidated financial statements of Palamina Corp. and its subsidiaries (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of income (loss) and comprehensive income (loss), consolidated statements of changes in shareholders' equity (deficiency) and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined that there were no key audit matters to communicate in our report.
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Other information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
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As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner of the audit resulting in this independent auditor's report is Nicole Louli.
McGovern Hurley LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Ontario
April 29, 2024
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PALAMINA CORP.
Consolidated Statements of Financial Position
As at
December 31, | December 31, | ||||
(Expressed in Canadian Dollars) | 2023 | 2022 | |||
ASSETS | |||||
Current assets | |||||
Cash | $ | 3,040,172 | $ | 81,302 | |
Harmonized sales tax receivable | 9,685 | 9,562 | |||
Prepaid expenses and other assets | Note 6 | 200,964 | 165,810 | ||
3,250,821 | 256,674 | ||||
Non-current assets | |||||
Equipment | Note 7 | 29,769 | 38,304 | ||
Investment in associate | Notes 16 | 430,407 | 11,114 | ||
Total Assets | $ | 3,710,997 | $ | 306,092 | |
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | Notes 8,12 | $ | 768,004 | $ | 442,569 |
Total Liabilities | 768,004 | 442,569 | |||
Shareholders' Equity (Deficiency) | |||||
Share capital | Note 9 | 10,012,858 | 9,457,488 | ||
Stock option reserve | Note 10 | 945,480 | 1,198,286 | ||
Warrant reserve | Note 11 | 170,690 | 1,947,000 | ||
Foreign currency translation | (54,848) | (23,220) | |||
Deficit | (8,131,187) | (12,716,031) | |||
Total Shareholders' Equity (Deficiency) | 2,942,993 | (136,477) | |||
Total Liabilities and Shareholders' Equity (Deficiency) | $ | 3,710,997 | $ | 306,092 | |
Nature of Operations and Going Concern (Note 1)
Commitments and Contingencies (Note 14)
Subsequent Events (Note 18)
Approved by the Board of Directors and authorized on April 29, 2024:
Andrew Thomson | Christina McCarthy |
Director | Director |
The accompanying notes form an integral part of these consolidated financial statements.
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PALAMINA CORP.
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) For the years ended
December 31, | ||||||
(Expressed in Canadian Dollars) | 2023 | 2022 | ||||
Expenses | ||||||
Exploration and evaluation expenditures | Note 13 | $ | 847,732 | $ | 1,529,059 | |
Salaries, director and management fees | Note 12 | 488,389 | 304,935 | |||
Investor relations | 87,718 | 137,282 | ||||
Shareholder costs and filing fees | 52,430 | 40,774 | ||||
Professional fees | 55,246 | 69,882 | ||||
Office and general | 57,478 | 55,571 | ||||
Depreciation | Note 7 | 8,005 | 8,168 | |||
Share-based compensation | Notes 10,12 | 112,296 | 121,575 | |||
Total expenses | (1,709,294) | (2,267,246) | ||||
Other income (expense) | ||||||
Gain on sale of investment in associate | Note 16 | 65,425 | - | |||
Gain on dilution | Note 16 | 241,963 | - | |||
Bank charges | (2,829) | (2,189) | ||||
Loss on foreign exchange | (7,169) | (7,263) | ||||
Interest income | 1,301 | 6,417 | ||||
Advance royalty | Note 12, 16 | 67,715 | 64,685 | |||
Share of income (loss) of associate | Note 16 | 3,615,630 | (186,951) | |||
Net income (loss) for the year | 2,272,742 | (2,392,547) | ||||
Other comprehensive loss - items that will | ||||||
not subsequently reclassify into income | ||||||
Exchange loss on translation of foreign subsidiaries | (31,628) | (7,513) | ||||
Net comprehensive income (loss) for the year | $ | 2,241,114 | $(2,400,060) | |||
Net Income (loss) per share | ||||||
- | Basic | $ | 0.03 | $ | (0.04) | |
- | Diluted | $ | 0.03 | $ | (0.04) | |
Weighted average number of shares outstanding | ||||||
- Basic | 68,572,507 | 65,284,836 | ||||
- Diluted | 68,599,868 | 65,284,836 |
The accompanying notes form an integral part of these consolidated financial statements.
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PALAMINA CORP.
Consolidated Statements of Changes in Shareholders' Equity (Deficiency)
(Expressed in Canadian Dollars) | Share Capital | Reserves | |||||||||||
Number of | Foreign | ||||||||||||
Currency | |||||||||||||
shares | Amount | Stock Options | Warrants | Translation | Deficit | Total | |||||||
Balance at December 31, 2021 | 65,284,836 | $ | 9,457,488 | $ | 1,178,044 | $ | 2,215,000 | $ | (15,707) | $ | (10,692,817) | $ | 2,142,008 |
Expiry of warrants | - | - | - | (268,000) | - | 268,000 | - | ||||||
Expiry of stock options | - | - | (101,333) | - | - | 101,333 | - | ||||||
Share-based compensation | - | - | 121,575 | - | - | - | 121,575 | ||||||
Net loss for the year | - | - | - | - | - | (2,392,547) | (2,392,547) | ||||||
Other comprehensive loss | - | - | - | - | (7,513) | - | (7,513) | ||||||
Balance at December 31, 2022 | 65,284,836 | 9,457,488 | 1,198,286 | 1,947,000 | (23,220) | (12,716,031) | (136,477) | ||||||
Shares issued for cash as part of unit financing | 6,000,000 | 750,000 | - | - | - | - | 750,000 | ||||||
Warrants issued as part of unit financing | - | (175,200) | - | 175,200 | - | - | - | ||||||
Share issue costs - cash | - | (18,340) | - | (5,600) | - | - | (23,940) | ||||||
Share issue costs - finder warrants | - | (1,090) | - | 1,090 | - | - | - | ||||||
Expiry of warrants | - | - | - | (1,947,000) | - | 1,947,000 | - | ||||||
Expiry of stock options | - | - | (278,132) | - | - | 278,132 | - | ||||||
Cancellation of stock options | - | - | (86,970) | - | - | 86,970 | - | ||||||
Share-based compensation | - | - | 112,296 | - | - | - | 112,296 | ||||||
Net income for the year | - | - | - | - | - | 2,272,742 | 2,272,742 | ||||||
Other comprehensive loss | - | - | - | - | (31,628) | - | (31,628) | ||||||
Balance at December 31, 2023 | 71,284,836 | $ | 10,012,858 | $ | 945,480 | $ | 170,690 | $ | (54,848) | $ | (8,131,187) | $ | 2,942,993 |
The accompanying notes form an integral part of these consolidated financial statements.
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PALAMINA CORP.
Consolidated Statements of Cash Flows
For the years ended
December 31, | |||||
(Expressed in Canadian Dollars) | 2023 | 2022 | |||
Cash flows from operating activities | |||||
Net income (loss) for the year | $ | 2,272,742 | $ | (2,392,547) | |
Adjustments not affecting cash: | |||||
Share-based compensation | Note 10 | 112,296 | 121,575 | ||
Depreciation | Note 7 | 8,005 | 8,168 | ||
Gain on sale of investment in associate | Note 16 | (65,425) | - | ||
Gain on dilution | (241,963) | - | |||
Unrealized foreign exchange differences | (31,098) | (9,447) | |||
Share of (income) loss of associate | Note 16 | (3,615,630) | 186,951 | ||
Operating cash flows before changes in non-cash working capital: | (1,561,073) | (2,085,300) | |||
Changes in non-cash working capital: | |||||
Harmonized sales tax receivable | (123) | 51,238 | |||
Prepaid expenses and other assets | (35,154) | 72,617 | |||
Accounts payable and accrued liabilities | 325,435 | (79,481) | |||
Cash used in operating activities | (1,270,915) | (2,040,926) | |||
Cash flows from investing activities | |||||
Purchase of equipment | Note 7 | - | (18,081) | ||
Investment in associate | Note 16 | (186,700) | (93,000) | ||
Sale of investment in associate | Note 16 | 65,425 | - | ||
Return of capital from investment in associate | Note 16 | 3,625,000 | - | ||
Cash provided by (used in) investing activities | 3,503,725 | (111,081) | |||
Cash flows from financing activities | |||||
Proceeds from private placement | Note 9 | 750,000 | - | ||
Share issue costs | Note 9 | (23,940) | - | ||
Cash provided by financing activities | 726,060 | - | |||
Increase (decrease) in cash during the year | 2,958,870 | (2,152,007) | |||
Cash, beginning of year | 81,302 | 2,233,309 | |||
Cash, end of year | $ | 3,040,172 | $ | 81,302 | |
Supplemental cash flow information: | |||||
Value of finder warrants issued | Note 11 | $ | 1,090 | $ | - |
The accompanying notes form an integral part of these consolidated financial statements.
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PALAMINA CORP.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2023 and 2022
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Palamina Corp. ("Palamina" or the "Company") is an exploration stage company focused on the exploration for economic mineral deposits in Peru through its wholly owned subsidiary Palamina SAC ("Palamina Peru") and to a much lesser degree, through its wholly owned Mexican subsidiary Palamina S.A. de C.V. ("Palamina Mexico").
Palamina was incorporated on April 23, 2015 under the Business Corporations Act (Ontario). The Company is listed on the TSX Venture Exchange ("TSX-V") having the symbol PA and on the OTCQB under the symbol PLMNF. The Company's head office is located at 145 King Street West, Suite 2870 Toronto, Ontario M5H 1J8.
These consolidated financial statements have been prepared on a going concern basis, which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern, and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements. Such adjustments could be material. It is not possible to predict whether the Company will be able to raise adequate financing or to ultimately attain profitable levels of operations. Changes in future conditions could require material write downs of the carrying values.
The business of mineral exploration involves a high degree of risk and there can be no assurance that the Company's exploration programs will result in profitable operations. The recoverability of the Company's exploration and evaluation expenditures is dependent upon the discovery of economically recoverable mineral reserves; securing and maintaining title and beneficial interest in the properties; the ability to obtain the necessary financing to complete exploration, development and construction of processing facilities; obtaining various government approvals; and attaining profitable production or alternatively, upon the Company's ability to dispose of its interests on an advantageous basis; all of which are uncertain.
Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company's title. Property title may be subject to unregistered prior agreements, non-compliance with regulatory requirements or aboriginal land claims. The Company's exploration property interests may also be subject to increases in taxes and royalties, renegotiation of contracts, political uncertainty and currency exchange fluctuations and restrictions.
The Company is at an early stage of development and, as is common with many exploration companies, it relies on financings to fund its exploration and acquisition activities. The Company had a working capital surplus at December 31, 2023 of $2,482,817 (December 31, 2022 - working capital deficiency of $185,895), had not yet achieved profitable operations, had accumulated losses of $8,131,187 at December 31, 2023 (December 31, 2022 - $12,716,031) and expects to incur further losses in the development of its business. As at December 31, 2023, Palamina has adequate cash resources to fund its operations over the next twelve months, including planned work programs on its mineral properties, corporate overhead and the ability to discharge its liabilities as they come due. As a result, there is currently no material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.
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Palamina Corp. published this content on 23 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 May 2024 15:25:03 UTC.