PASINEX RESOURCES LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2023 and 2022
(EXPRESSED IN CANADIAN DOLLARS)
Management's Responsibility
To the Shareholders of Pasinex Resources Limited (the "Company"):
Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgements and estimates in accordance with International Financial Reporting Standards and ensuring that all information in the Company's publicly filed information is consistent with the statements. This responsibility includes selecting appropriate accounting principles and methods and making decisions affecting the measurement of transactions in which objective judgement is required.
In discharging its responsibilities for the integrity and fairness of the consolidated financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded, and financial records are properly maintained to provide reliable information for the preparation of consolidated financial statements.
The Board of Directors and Audit Committee are composed primarily of Directors who are neither management nor employees of the Company. The Board is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report. The Board fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and external auditors. The Audit Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Board of Directors is also responsible for recommending the appointment of the Company's external auditors.
MNP LLP is appointed by the shareholders to audit the consolidated financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with both the Audit Committee and management to discuss their audit findings.
(signed) | (signed) |
Larry Seeley | Andrew Gottwald |
Director | Chief Financial Officer |
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Independent Auditor's Report
To the Shareholders of Pasinex Resources Limited:
Opinion
We have audited the consolidated financial statements of Pasinex Resources Limited (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and December 31, 2022, and the consolidated statements of loss (income) and comprehensive loss (income), cashflows and changes in equity for the years then ended, and notes to the consolidated financial statements, including a summary of material 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 December 31, 2022, and its consolidated financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.
Basis for Opinion
We conducted our audits 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 audits of the financial statements in Canada, and 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 3(a) in the consolidated financial statements, which indicates that the Company reported a net loss during the year ended December 31, 2023 and, as of that date, the Company had a working capital deficiency and a net equity deficit. As stated in Note 3(a), these events or conditions, along with other matters as set forth in Note 3(a), indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.
MNP LLP
50 Burnhamthorpe Road West, Suite 900, Mississauga ON, L5B 3C2 | T: 416.626.6000 F: 416.626.8650 |
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 audits 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 audits 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 on this other information, 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 International Financial Reporting Standards, 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 to 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment 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 risk 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.
50 Burnhamthorpe Road West, Suite 900, Mississauga, Ontario, L5B 3C2
T: 416.626.6000 F: 416.626.8650 MNP.ca
- 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.
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.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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 on the audit resulting in this independent auditor's report is Isabella Lee.
Mississauga, Ontario | Chartered Professional Accountants |
May 31, 2024 | Licensed Public Accountants |
50 Burnhamthorpe Road West, Suite 900, Mississauga, Ontario, L5B 3C2
T: 416.626.6000 F: 416.626.8650 MNP.ca
Pasinex Resources Limited
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
As at December 31, | ||||||
2023 | 2022 | |||||
Assets | ||||||
Current Assets | ||||||
Cash | $ | 177,278 | $ | 855,567 | ||
Receivables | 11,589 | 48,456 | ||||
Prepaid expenses and deposits | 142,601 | 247,185 | ||||
Total current assets | 331,468 | 1,151,208 | ||||
Non-current assets | ||||||
Equipment | 2,529 | 4,608 | ||||
Value added tax receivable | 6,932 | 16,445 | ||||
Exploration and evaluation assets (note 7) | 1,859,311 | 1,893,020 | ||||
Equity investment in Horzum AS (note 6) | 824,420 | 1,016,855 | ||||
Total non-current assets | 2,693,192 | 2,930,928 | ||||
Total assets | $ | 3,024,660 | $ | 4,082,136 | ||
Shareholders' equity and liabilities | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities (note 8) | $ | 364,467 | $ | 715,580 | ||
Due to related parties (note 14) | 49,682 | 406,236 | ||||
Shareholder loans (notes 9 and 14) | 2,491,365 | 2,403,147 | ||||
Loan payable (note 10) | 40,000 | 40,000 | ||||
Income taxes payable | 31,175 | - | ||||
Total current liabilities | 2,976,689 | 3,564,963 | ||||
Total liabilities | 2,976,689 | 3,564,963 | ||||
Shareholders' equity | ||||||
Share capital (note 11) | 12,888,506 | 12,888,506 | ||||
Reserves | 2,157,117 | 2,157,117 | ||||
Deficit | (10,612,090) | (10,302,322) | ||||
Accumuated other comprehensive loss | (4,385,562) | (4,226,128) | ||||
Total shareholders' equity | 47,971 | 517,173 | ||||
Total liabilities and shareholders' equity | $ | 3,024,660 | $ | 4,082,136 | ||
Basis of measurement and going concern (note 3(a)) | ||||||
Subsequent events (note 18) | ||||||
Approved on behalf of the Board: | ||||||
"Larry Seeley" | Director | "Victor Wells" | Director |
The accompanying notes to the audited annual consolidated financial statements are an integral part of these statements.
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Pasinex Resources Limited
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income (Expressed in Canadian Dollars)
Years Ended December 31, | ||||
2023 | 2022 | |||
Equity gain from Horzum AS (note 6) | $ | 1,797,579 | $ | 3,928,724 |
Expenses | ||||
Exploration costs (note 7) | 563,889 | 1,072,614 | ||
General and administrative costs (note 13) | 1,486,037 | 1,390,207 | ||
Share-based payments (notes 12 and 14) | - | 57,000 | ||
Total expenses | 2,049,926 | 2,519,821 | ||
Other (loss) income | ||||
Other (loss) income | (163,997) | 4,230 | ||
Interest expense (notes 9, 10 and 14) | (138,218) | (150,191) | ||
Foreign exchange gain | 171,472 | 150,939 | ||
Assigned dividend (note 5) | 626,476 | 1,095,289 | ||
Loss on net monetary position | (515,340) | (465,997) | ||
Total other (loss) income | (19,607) | 634,270 | ||
Net (loss) income for the year before income tax | (271,954) | 2,043,173 | ||
Provision for income tax | ||||
Current | (37,814) | - | ||
Net (loss) income for the year | (309,768) | 2,043,173 | ||
Other comprehensive (loss) income | ||||
Item that will be reclassified subsequently to profit and loss: | ||||
Currency translation adjustment | (159,434) | (164,575) | ||
Total comprehensive (loss) income for the year | $ | (469,202) | $ | 1,878,598 |
Net (loss) income per share - basic and diluted | $ | 0.00 | $ | 0.01 |
Weighted average number of shares outstanding | 144,554,371 | |||
- basic and diluted | 144,554,371 |
The accompanying notes to the audited annual consolidated financial statements are an integral part of these statements.
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Pasinex Resources Limited
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
Years Ended December 31, | ||||
2023 | 2022 | |||
Operating activities | ||||
Net (loss) income for the year | $ | (309,768) | $ | 2,043,173 |
Net equity gain from Horzum AS | (1,797,579) | (3,928,724) | ||
Dividend received (note 3(a)) | 1,760,901 | 3,256,282 | ||
Adjustments for items not involving cash: | ||||
Interest accrual (notes 9, 10 and 14) | 138,218 | 150,191 | ||
Share-based payments (notes 12 and 14) | - | 57,000 | ||
Foreign exchange | (80,199) | 266,143 | ||
Assigned dividend | (626,476) | (1,095,289) | ||
Loss on net monetary position | 515,340 | 465,997 | ||
Depreciation | 1,911 | 2,158 | ||
Changes in non-cash working capital items: | ||||
Due from related parties | - | 814,897 | ||
Prepaid expenses and deposits | 90,902 | (218,414) | ||
Accounts payable and accrued liabilities | (294,195) | 100,853 | ||
Due to related parties | 5,446 | (42,080) | ||
Other | 41,102 | (33,726) | ||
Net cash (used in) provided by operating activities | (554,397) | 1,838,461 | ||
Investing activities | ||||
Equipment acquisiton | (1,823) | (2,041) | ||
Net cash used in investing activities | (1,823) | (2,041) | ||
Financing activities | ||||
Cash paid on shareholders loans (note 9) | (50,000) | (518,107) | ||
Payments on loan payable (note 10) | - | (116,510) | ||
Net cash used in financing activities | (50,000) | (634,617) | ||
Net change in cash | (606,220) | 1,201,803 | ||
Effect of foreign currencies on cash | (72,069) | (446,267) | ||
Cash, beginning of year | 855,567 | 100,031 | ||
Cash, end of year | $ | 177,278 | $ | 855,567 |
The accompanying notes to the audited annual consolidated financial statements are an integral part of these statements.
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Pasinex Resources Limited
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in Canadian Dollars)
Accumulated | |||||||||||
Other | |||||||||||
Number of | Share | Comprehensive | |||||||||
Shares | Capital | Reserves | Deficit | Loss | Total | ||||||
(note 11) | (note 11) | ||||||||||
Balance as at December 31, 2021 | 144,554,371 | $ | 12,888,506 | $ | 2,100,117 | $ | (12,049,182) | $ | (4,061,553) | $ | (1,122,112) |
Impact of hyperinflation adjustment (note 3(o)) | - | - | - | (296,313) | 296,313 | - | |||||
Balance as at January 1, 2022 | 144,554,371 | $ | 12,888,506 | $ | 2,100,117 | $ | (12,345,495) | $ | (3,765,240) | $ | (1,122,112) |
Share-based payments (notes 12 and 14) | - | - | 57,000 | - | - | 57,000 | |||||
Currency translation adjustment | - | - | - | - | (460,888) | (460,888) | |||||
Net income for the year | - | - | - | 2,043,173 | - | 2,043,173 | |||||
Balance as at December 31, 2022 | 144,554,371 | $ | 12,888,506 | $ | 2,157,117 | $ | (10,302,322) | $ | (4,226,128) | $ | 517,173 |
Currency translation adjustment | - | - | - | - | (159,434) | (159,434) | |||||
Net loss for the year | - | - | - | (309,768) | - | (309,768) | |||||
Balance as at December 31, 2023 | 144,554,371 | $ | 12,888,506 | $ | 2,157,117 | $ | (10,612,090) | $ | (4,385,562) | $ | 47,971 |
The accompanying notes to the audited annual consolidated financial statements are an integral part of these statements.
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Pasinex Resources Limited
Notes to Consolidated Financial Statements Years Ended December 31, 2023 and 2022
(Expressed in Canadian Dollars, unless otherwise indicated)
1. Corporate information and nature of operations
Pasinex Resources Limited ("Pasinex" or the "Company") is a publicly listed company incorporated in British Columbia. The Company's shares are listed on the Canadian Securities Exchange ("CSE") under the symbol "PSE" and on the Frankfurt Stock Exchange ("FSE") under the symbol "PNX". The head office, principal address and registered and records office of the Company are located at 82 Richmond Street East, Toronto, Ontario, Canada, M5C 1P1.
Pasinex Resources Limited owns 50% of Horzum Maden Arama ve Isletme Anonim Sirketi ("Horzum AS" or "Joint Venture"), through its 100% owned subsidiary Pasinex Arama ve Madencilik Anonim Sirketi ("Pasinex Arama"). The other 50% owner is Akmetal Madencilik Sanayi ve Ticaret A.S. ("Akmetal"), a private Turkish company. Horzum AS holds 100% of the producing Pinargozu high-grade zinc mine. Horzum AS sells directly to zinc smelters and or refiners through commodity brokers from its mine site in Türkiye. The Company also holds a 51% interest, with an option to increase to an 80% interest of a high-grade zinc exploration project, the Gunman Project, located in Nevada.
These consolidated financial statements were approved and authorized for issuance by the Audit Committee and Board of Directors on May 31, 2024.
The Company has not been materially impacted by the ongoing conflict in the Ukraine, but uncertainty remains surrounding the conflict and the extent and duration of the impacts that it may have on the Company's ability to operate, on prices for zinc, on logistics and supply chains, on the Company's employees and on global financial markets.
2. Basis of presentation
(a) Statement of compliance
These 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 issued by the IFRS Interpretations Committee ("IFRIC"). The policies in these consolidated financial statements are based on IFRS in effect as at December 31, 2023. Accounting policies are consistently applied to all years presented, unless otherwise stated.
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Pasinex Resources Limited published this content on 01 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 June 2024 03:23:01 UTC.