BIG RIDGE GOLD CORP.
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2024, and 2023
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Big Ridge Gold Corp.
Opinion
We have audited the accompanying consolidated financial statements of Big Ridge Gold Corp. (the "Company"), which comprise the consolidated statements of financial position as at June 30, 2024 and 2023, and the consolidated statements of operations and comprehensive loss, cash flows, and changes in shareholders' equity for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2024 and 2023, and its financial performance and its cash flows for the years then ended, in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
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, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 of the consolidated financial statements, which indicates 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 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.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matter to be communicated in our auditor's report.
Assessment of Impairment Indicators of Exploration and Evaluation Assets ("E&E Assets")
As described in Note 7 to the consolidated financial statements, the carrying amount of the Company's E&E Assets was $5,474,131 as of June 30, 2024. As more fully described in Note 3 to the consolidated financial statements, the carrying amount of the Company's E&E Assets are reviewed at the end of each reporting period to determine whether there is an indication that those assets are impairment.
The principal considerations for our determination that the assessment of impairment indicators of the E&E Assets is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the E&E Assets, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the E&E Assets.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:
- Evaluating management's assessment of impairment indicators.
- Evaluating the intent for the E&E Assets through discussion and communication with management.
- Reviewing the Company's recent expenditure activity and expenditure budgets for future periods.
- Assessing compliance with agreements and expenditure requirements including reviewing option agreements and vouching cash payments and share issuances.
- Obtaining, on a test basis, confirmation of title to ensure mineral rights underlying the E&E Assets are in good standing.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor's report includes 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 Accounting 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 consolidated 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.
- 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.
- 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 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.
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 year 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 Peter Maloff.
Vancouver, Canada | Chartered Professional Accountants |
October 28, 2024
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Big Ridge Gold Corp. are the responsibility of the Board of Directors and Management. These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and, where appropriate, include management's best estimates and judgments.
Management maintains a system of internal control designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, and that financial information is timely and reliable. However, any system of internal control over financial reporting, no matter how well designed and implemented, has inherent limitations and may not prevent or detect all misstatements.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements.
The Board of Directors carries out this responsibility principally through its Audit Committee. The Board of Directors appoints the Audit Committee, whose members are independent directors. The Audit Committee meets periodically with Management to review the financial reporting process and 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. The Board of Directors approves the consolidated financial statements on recommendation from the Audit Committee.
Michael Bandrowski | Jim Kirke |
President and Chief Executive Officer | Chief Financial Officer |
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Table of Contents | ||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | 4 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | 5 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | 6 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | 7 | |
1. | GOING CONCERN AND NATURE OF OPERATIONS | 8 |
2. | BASIS OF PREPARATION | 8 |
3. | MATERIAL ACCOUNTING POLICY INFORMATION | 9 |
4. | ACQUISITION OF GOLD ISLAND INC | 16 |
5. | INVESTMENT IN CAPROCK MINING CORP | 17 |
6. | PROPERTY, PLANT AND EQUIPMENT | 19 |
7. | EXPLORATION AND EVALUATION ASSETS | 20 |
8. | LEASE LIABILITY | 23 |
9. | SHARE CAPITAL | 24 |
10. | WARRANTS | 25 |
11. | SHARE-BASED COMPENSATION | 26 |
12. | GENERAL AND ADMINISTRATIVE EXPENSES | 30 |
13. | SALARIES, WAGES AND BENEFITS | 30 |
14. | FINANCE INCOME, NET | 30 |
15. | INCOME TAXES | 31 |
16. | CHANGES IN NON-CASH WORKING CAPITAL | 32 |
17. | RELATED PARTY TRANSACTIONS | 33 |
18. | FAIR VALUE HIERARCHY | 34 |
19. | CAPITAL RISK MANAGEMENT | 34 |
20. | FINANCIAL RISK MANAGEMENT | 35 |
21. | SUBSEQUENT EVENTS | 35 |
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BIG RIDGE GOLD CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at June 30
Expressed in Canadian dollars
Note | 2024 | 2023 | |
$ | $ | ||
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 383,012 | 88,379 | |
Amounts receivable | 13,584 | 25,794 | |
Marketable securities | - | 7,500 | |
Prepaids and deposits | 10,692 | 1,722 | |
Total Current Assets | 407,288 | 123,395 | |
Investment in Caprock Mining Corp. | 5 | 100,838 | 200,000 |
Property, plant and equipment | 6 | 495,190 | 436,274 |
Exploration and evaluation assets | 7 | 5,474,131 | 4,674,131 |
Total Assets | 6,477,447 | 5,433,800 | |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Accounts payable and accrued liabilities | 209,778 | 419,334 | |
Due to related parties | 17 | 19,600 | 43,385 |
Restricted Share Unit liability | 11 | 54,146 | 28,888 |
Current portion of lease liability | 8 | 40,907 | - |
324,431 | 491,607 | ||
Cash-based Deferred Share Unit liability | 11 | 93,278 | 150,123 |
Equity-based Deferred Share Unit liability | 11 | 95,293 | - |
Non-current portion of lease liability | 8 | - | - |
Total Liabilities | 513,002 | 641,730 | |
SHAREHOLDERS' EQUITY | |||
Share capital | 9 | 46,025,481 | 40,377,519 |
Contributed surplus - warrants | 10 | 1,718,149 | 1,692,944 |
Contributed surplus - options | 11 | 2,559,123 | 2,253,779 |
Deficit | (44,338,308) | (39,532,172) | |
Total Shareholders' Equity | 5,964,445 | 4,792,070 | |
Total Liabilities and Shareholders' Equity | 6,477,447 | 5,433,800 |
Going concern and Nature of operations (Note 1)
Subsequent events (Note 21)
Approved and authorized by the Board of Directors on October 28, 2024.
"Bill Williams", Director | "Michael Bandrowski", Director | ||
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The accompanying notes are an integral part of these consolidated financial statements.
BIG RIDGE GOLD CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the years ended June 30
Expressed in Canadian dollars
Note | 2024 | 2023 | |
$ | $ | ||
EXPENSES | |||
Exploration expense | 7 | 2,209,861 | 2,626,159 |
General and administrative expense | 12 | 1,294,836 | 876,513 |
Finance income, net | 14 | (21,301) | (110,902) |
Other income | - | (11,000) | |
Impairment loss on equity accounted | |||
investment | 5 | - | 140,877 |
Writedown of exploration and | |||
evaluation assets | 7 | 1,223,578 | - |
Equity loss impact of equity | |||
accounted investment | 5 | 99,162 | 159,123 |
Loss and comprehensive loss | 4,806,136 | 3,680,770 | |
Loss and comprehensive loss per | |||
share | |||
Basic and diluted | 0.03 | 0.03 | |
Weighted average number of | |||
common shares outstanding in the | |||
year | |||
Basic and diluted | 185,040,473 | 132,910,664 |
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The accompanying notes are an integral part of these consolidated financial statements.
BIG RIDGE GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30
Expressed in Canadian dollars
2024 | 2023 | |
$ | $ | |
Operating activities: | ||
Loss for the year | (4,806,136) | (3,680,770) |
Items not affecting cash: | ||
Writedown of mineral properties (notes 4 and 7) | 1,223,578 | |
Impairment loss on equity accounted investments (note 7) | - | 140,877 |
Amortization | 139,346 | 87,689 |
Other income | - | (11,000) |
Share-based compensation (note 11) | 221,837 | (55,667) |
Equity loss on equity accounted investments (note 5) | 99,162 | 159,123 |
Realized gain on sale of marketable securities | (5,875) | (117,264) |
Accretion (note 8) | 1,489 | - |
Unrealized loss on marketable securities | - | 3,500 |
(3,126,599) | (3,473,512) | |
Changes in non-cash working capital items (note 15) | (339,471) | (923,785) |
Cash used in operating activities | (3,466,070) | (4,397,297) |
Investing activities: | ||
Purchase of capital assets | (23,578) | (14,541) |
Proceeds from sales of marketable securities | 13,375 | 211,279 |
Cash used in investing activities | (10,203) | 196,738 |
Financing activities: | ||
Cash acquired upon completion of acquisition of Gold Island Inc. (note 4) | 3,834,563 | - |
Lease payments (note 8) | (9,707) | - |
Common shares issued for cash (note 9) | - | 2,525,000 |
Share issuance costs paid in cash | (53,950) | (209,886) |
Cash provided by financing activities | 3,770,906 | 2,315,114 |
Net increase (decrease) in cash | 294,633 | (1,885,445) |
Cash and cash equivalents - Beginning of year | 88,379 | 1,973,824 |
Cash and cash equivalents - End of year | 383,012 | 88,379 |
Supplementary Disclosure | ||
Interest paid in cash | - | - |
Income taxes paid in cash | - | - |
Fair value of broker warrants issued pursuant to private placements | - | 77,799 |
Fair value of common shares issued pursuant to the acquisition of Gold Island | ||
Inc. (note 4) | 4,887,037 | - |
Fair value of options issued pursuant to the acquisition of Gold Island Inc. | ||
(note 4) | 162,088 | - |
Fair value of warrants issued pursuant to the acquisition of Gold Island Inc. | ||
(note 4) | 25,205 | - |
Shares issued to First Mining Gold Corp. (note 7) | 800,000 | 1,950,000 |
Fair value of shares issued in settlement of vested RSUs | 14,875 | 67,812 |
Fair value of shares of Forum Energy Metals Corp. received as consideration | ||
upon the sale of the Fisher property | - | 11,000 |
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The accompanying notes are an integral part of these consolidated financial statements.
BIG RIDGE GOLD CORP. | ||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||
Expressed in Canadian dollars | ||||||
# | $ | $ | $ | $ | $ | |
Balance - July 1, 2022 | 108,504,585 | 36,438,017 | 2,109,015 | 1,299,520 | (35,851,402) | 3,995,150 |
Loss for the year | - | - | - | - | (3,680,770) | (3,680,770) |
Stock option expense | - | - | 144,764 | - | - | 144,764 |
Issuance of common shares to First | ||||||
Mining Gold Corp. (note 7) | 15,000,000 | 1,950,000 | - | - | - | 1,950,000 |
Issuance of flow-through units | ||||||
pursuant to private placement | 12,625,000 | 2,209,375 | - | 315,625 | - | 2,525,000 |
Issued in settlement of vested RSUs | 481,250 | 67,812 | - | - | - | 67,812 |
Share issuance costs | - | (287,685) | - | 77,799 | - | (209,886) |
Balance - June 30, 2023 | 136,610,835 | 40,377,519 | 2,253,779 | 1,692,944 | (39,532,172) | 4,792,070 |
Balance - July 1, 2023 | 136,610,835 | 40,377,519 | 2,253,779 | 1,692,944 | (39,532,172) | 4,792,070 |
Loss for the year | - | - | - | - | (4,806,136) | (4,806,136) |
Stock option expense | - | - | 143,256 | - | - | 143,256 |
Issued pursuant to the acquisition of | ||||||
Gold Island Inc. (note 4) | 51,442,492 | 4,887,037 | 162,088 | 25,205 | - | 5,074,330 |
Issued pursuant to the amended earn- | ||||||
in agreement over the Hope Brook | ||||||
Gold Project (note 7) | 10,000,000 | 800,000 | - | - | - | 800,000 |
Issued in settlement of vested RSUs | 192,500 | 14,875 | - | - | - | 14,875 |
Share issuance costs | - | (53,950) | - | - | - | (53,950) |
Balance - June 30, 2024 | 198,245,827 | 46,025,481 | 2,559,123 | 1,718,149 | (44,338,308) | 5,964,445 |
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The accompanying notes are an integral part of these consolidated financial statements.