CHAKANA COPPER CORP.
CONDENSED INTEIRM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED NOVEMEBR 30, 2024 AND 2023
(UNAUDITED - EXPRESSED IN CANADIAN DOLLARS)
NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM
FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the unaudited condensed interim financial statements; they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim consolidated financial statements of Chakana Copper Corp. (the "Corporation") have been prepared by and are the responsibility of the Corporation's management. The unaudited condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards and reflect management's best estimates and judgment based on information currently available.
The Corporation's independent auditor has not performed a review of these condensed interim consolidated financial statements.
January 28, 2025
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CHAKANA COPPER CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT NOVEMBER 30, 2024 (UNAUDITED) AND MAY 31, 2024
(Expressed in Canadian Dollars)
November 30, | May 31, |
2024 | 2024 |
(Unaudited) | (Audited) |
ASSETS | ||||
Current Assets | ||||
Cash (Note 12) | $ | 523,295 | $ | 2,280,298 |
Prepaids and other current assets | 124,423 | 166,939 | ||
647,718 | 2,447,237 | |||
Non-current Assets | ||||
Property and Equipment (Note 6) | 627,328 | 419,138 | ||
Value-added tax receivable (Note 7) | 172,601 | 88,713 | ||
Prepaids | 77,815 | 75,534 | ||
Exploration and evaluation assets (Note 5) | 2,551,305 | 7,800,296 | ||
Total Assets | $ | 4,076,767 | $ | 10,830,918 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current Liabilities | ||||
Accounts payable and accrued liabilities (Notes 12 and 15) | $ | 519,435 | $ | 639,465 |
Current portion of lease obligation (Note 8) | 35,417 | 53,233 | ||
554,852 | 692,698 | |||
Non-current Liabilities | ||||
Lease obligation (Note 8) | 287,804 | 58,204 | ||
Total Liabilities | 842,656 | 750,902 | ||
Shareholders' Equity | ||||
Common shares (Note 9) | 47,622,191 | 47,550,208 | ||
Stock option reserve (Note 9) | 2,299,156 | 2,299,156 | ||
Accumulated other comprehensive income | 1,217,117 | 1,155,808 | ||
Deficit | (47,904,353) | (40,925,156) | ||
Total Shareholders' Equity | 3,234,111 | 10,080,016 | ||
Total Liabilities and Shareholders' Equity | $ | 4,076,767 | $ | 10,830,918 |
Approved on behalf of the Board of Directors | ||
/s/ Tom Wharton | /s/ Darren Devine | |
Tom Wharton, Director | Darren Devine, Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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CHAKANA COPPER CORP.
CONSOLIDATED INTEIRM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023 (Unaudited - Expressed in Canadian Dollars)
Three Months | Three Months | Six Months | Six Months | |||||
Ended | Ended | Ended | Ended | |||||
November 30, | November 30, | November 30, | November 30, | |||||
2024 | 2023 | 2024 | 2023 | |||||
OPERATING EXPENSES | ||||||||
Consulting fees (Note 15) | $ | 53,691 | $ | 46,139 | $ | 104,026 | $ | 95,877 |
Depreciation (Note 6) | 23,732 | 22,599 | 47,449 | 49,279 | ||||
Exploration and evaluation expenditures | ||||||||
(Note 5 and 10) | 174,291 | 175,689 | 773,843 | 447,614 | ||||
General and administrative | 56,137 | 61,915 | 111,019 | 130,744 | ||||
Investor relations | 12,790 | 11,366 | 43,533 | 21,994 | ||||
Legal and professional fees (Note 15) | 42,250 | 33,299 | 76,500 | 58,799 | ||||
Salaries and wages (Note 15) | 84,001 | 85,145 | 166,674 | 157,747 | ||||
Stock-based compensation (Notes 9 | - | 11,690 | ||||||
and 15) | - | 30,742 | ||||||
Travel and meals | 11,291 | - | 11,291 | 7,989 | ||||
Operating Expenses | (458,183) | (447,842) | (1,334,335) | (1,000,785) | ||||
Other | ||||||||
Foreign exchange gain (loss) | (17,695) | (4,706) | (23,259) | (47,629) | ||||
Write-off of leasehold improvements | - | - | ||||||
(Note 5) | (5,638,110) | - | ||||||
Interest income | 5,412 | 2,416 | 16,507 | 7,663 | ||||
(12,283) | (2,290) | (5,644,862) | (39,966) |
Net Loss
Other Comprehensive Loss
Item that may be reclassified to profit or loss
Foreign currency translation
(470,466) | (450,132) | (6,979,197) | (1,040,751) |
109,176 | (54,954) | 61,309 | (82,505) |
Comprehensive Loss | $ | (361,290) | $ | (505,086) | $ | (6,917,888) | $ | (1,123,256) |
Basic and diluted loss per share | $ | (0.00) | $ | (0.00) | $ | (0.03) | $ | (0.01) |
Weighted average number of common | ||||||||
shares outstanding (basic and | ||||||||
diluted) | 179,810,226 | 179,810,226 | 265,323,868 | 176,920,837 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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CHAKANA COPPER CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2024 AND 2023 (Unaudited - Expressed in Canadian Dollars)
Six Months | Six Months | |||
Ended | Ended | |||
November 30, | November 30, | |||
2024 | 2023 | |||
Cash Flows Used in Operating Activities | ||||
Net loss | $ | (6,979,197) | $ | (1,040,751) |
Adjustments to reconcile net loss to cash used in operating activities | ||||
Depreciation | 47,449 | 49,279 | ||
Stock-based compensation | - | 30,742 | ||
Unrealized foreign exchange | 20,735 | 8,210 | ||
Impairment of exploration property | 5,638,110 | - | ||
Prepaids and other current assets | 40,235 | 30,280 | ||
Value-added tax receivable | (83,888) | (11,513) | ||
Accounts payable and accrued liabilities | (120,030) | 116,861 | ||
(1,436,586) | (816,892) | |||
Cash Flows Used in Investing Activities | ||||
Acquisition of exploration and evaluation assets | (277,998) | (1,468,976) | ||
(277,998) | (1,468,976) | |||
Cash Flows Provided by Financing Activities | ||||
Repayment of lease obligation | (44,999) | (21,994) | ||
Proceeds from private placement, net of share issuance costs | - | 807,840 | ||
(44,999) | 785,846 | |||
Foreign exchange on cash | 2,580 | 243 | ||
Changes in cash during the year | (1,757,003) | (1,499,779) | ||
Cash - beginning of the year | 2,280,298 | 2,251,365 | ||
Cash - end of the year | $ | 523,295 | $ | 751,586 |
Non-cash items | ||||
Shares issued for property | $ | 71,983 | $ | 82,558 |
Amendment to lease agreement | $ | 262,559 | $ | - |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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CHAKANA COPPER CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited - Expressed in Canadian Dollars)
Common Shares | |||||||||||||
Accumulated | |||||||||||||
Other | |||||||||||||
Subscription | Comprehensiv | ||||||||||||
Shares | Amount | Receipts | e Income | Reserves | Deficit | Total | |||||||
Balance - May 31, 2023 | 173,013,379 | $ | 43,716,860 | $ | - | $ | 1,176,188 | $ | 2,236,276 | $ | (38,449,273) | $ | 8,680,050 |
Units issued on private placement | 20,541,495 | 821,660 | - | - | - | - | 821,660 | ||||||
Share issue cost | - | (20,033) | - | - | 6,213 | - | (13,820) | ||||||
Share issued for property | 1,379,310 | 82,558 | - | - | - | - | 82,558 | ||||||
Other comprehensive income for the period | - | - | - | (82,505) | - | - | (82,505) | ||||||
Stock-based compensation | - | - | - | - | 30,742 | - | 30,742 | ||||||
Net loss for the period | - | - | - | - | - | (1,040,751) | (1,040,751) | ||||||
Balance - November 30, 2023 | 194,934,184 | $ | 44,601,045 | $ | - | $ | 1,093,683 | $ | 2,273,230 | $ | (39,490,024) | $ | 8,477,934 |
Units issued on private placement | 54,459,356 | 2,178,374 | - | - | - | - | 2,178,374 | ||||||
Share issue costs | - | (228,415) | - | - | 101,692 | - | (126,723) | ||||||
Shares issued for property | 2,379,529 | 202,260 | - | - | - | - | 202,260 | ||||||
Exercise warrants for cash | 13,178,852 | 796,944 | - | - | (6,213) | - | 790,731 | ||||||
Fair value of expired warrants | - | - | - | - | (111,636) | 111,636 | - | ||||||
Other comprehensive income for the year | - | - | - | 62,125 | - | 62,125 | |||||||
Stock-based compensation | - | - | - | - | 42,083 | 42,083 | |||||||
Net loss for the period | - | - | - | - | - | (1,546,768) | (1,546,768) | ||||||
Balance - May 31, 2024 | 264,951,921 | $ | 47,550,208 | $ | - | $ | 1,155,808 | $ | 2,299,156 | $ | (40,925,156) | $ | 10,080,016 |
Shares issued for property | 2,056,650 | 71,983 | - | - | - | - | 71,983 | ||||||
Other comprehensive income for the year | - | - | - | 61,309 | - | - | 61,309 | ||||||
Net loss for the period | - | - | - | - | - | (6,979,197) | (6,979,197) | ||||||
Balance - November 30, 2024 | 267,008,571 | $ | 47,622,191 | $ | - | $ | 1,217,117 | $ | 2,299,156 | $ | (47,904,353) | $ | 3,234,111 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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CHAKANA COPPER CORP.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONHTS ENDED NOVEMEBR 30, 2024 AND 2023
(Unaudited - Expressed in Canadian Dollars)
-
Nature of Operations and Going Concern
Chakana Copper Corp. (the "Corporation" or "Chakana") was incorporated on May 2, 2011, under the laws of the province of British Columbia, Canada. The Corporation is listed on the TSX Venture Exchange under the symbol "PERU". The Corporation is currently engaged in exploration of mineral properties, with its principal focus at this stage on the exploration of the expanded Soledad copper-gold-silver project located in central Peru (the "Soledad Project").
The head office and principal address is Suite 1012 - 1030 West Georgia Street, Vancouver, British Columbia, V6E 2Y3, Canada. The records office of the Corporation is located at 1055 West Pender Street, Suite 1500, Vancouver, British Columbia, V6E 4V7, Canada.
The Corporation is in the process of exploring and developing its mineral properties. The recoverability of the amounts shown for mineral properties is dependent upon the existence of economically recoverable reserves, successful permitting, the ability of the Corporation to obtain necessary financing to complete exploration and development, and upon future profitable production or proceeds from the disposition of each mineral property. Furthermore, the acquisition of title to mineral properties is a complicated and uncertain process, and while the Corporation has taken steps in accordance with normal industry standards to verify its title to the mineral properties in which it has an interest, there can be no assurance that such title will ultimately be secured. The carrying amounts of mineral properties are based on costs incurred to date, and do not necessarily represent present or future values.
These condensed interim consolidated financial statements have been prepared on a going concern basis which assumes that the Corporation will be able to continue in operation for the foreseeable future and meet its obligations in the normal course of business.
The Corporation has incurred ongoing losses and will continue to incur further losses in the course of exploring its mineral properties. During the period ended November 30, 2024, the Corporation incurred a net loss of $6,979,197 (2023 - $1,040,751) and as of that date has a deficit of $47,904,353 (May 31, 2024 ‐ $40,925,156). The Corporation has historically relied on the issuance of share capital to fund its operations. Although the Corporation has been successful in raising equity financing in the past, there is no assurance that such financing will continue to be available with acceptable terms. These uncertainties may cast significant doubt about the Corporation's ability to continue as a going concern. Accordingly, these consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Corporation be unable to continue as a going concern. Such adjustments could be material. - Basis of Preparation and Statement of Compliance
These condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as applicable to interim financial reports, including International Accounting Standard 34 Interim Financial Reporting. Therefore, these condensed interim consolidated financial statements do not include all the information and note disclosures required by IFRS for annual financial statements and should be read in conjunction with the annual consolidated financial statements for the year ended May 31, 2024 ("Annual Financial Statements"), which have been prepared in accordance with
IFRS.
The accounting policies applied in preparation of these condensed interim consolidated financial statements are the same as those applied in the most recent Annual Financial Statements and were consistently applied to all the periods presented. These condensed interim consolidated financial statements were approved by the Board of Directors on January 28, 2025.
These condensed interim consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information and are presented in Canadian dollars except where otherwise indicated.
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CHAKANA COPPER CORP.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONHTS ENDED NOVEMEBR 30, 2024 AND 2023
(Unaudited - Expressed in Canadian Dollars)
-
Basis of Preparation and Statement of Compliance (Continued)
The Corporation's consolidated financial statements include the accounts of the Corporation and its subsidiaries. Subsidiaries are entities controlled by the Corporation, where control is achieved by the Corporation being exposed to, or having rights to, variable returns from its involvement with the entity and having the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is obtained by the Corporation and are deconsolidated from the date that control ceases. The Corporation currently has one wholly owned subsidiary: Chakana Resources S.A.C., a Peruvian company.
All inter-company transactions, balances, income, and expenses are eliminated on consolidation. - Significant Accounting Judgments and Estimates
The preparation of the Corporation's condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the condensed interim consolidated financial statements and reported amounts of income and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes may differ significantly from these estimates.
Significant judgments and estimates that have the most significant effect on the amounts recognized in the
Corporation's condensed interim consolidated financial statements are as follows.
Critical accounting judgments:
Judgments that have the most significant effect on the amounts recognized in the Corporation's condensed interim consolidated financial statements are as follows: - Impairment of Exploration and Evaluation Asset
The net carrying value of an exploration asset is reviewed regularly for conditions that suggest potential indications of impairment. This review requires significant judgment. Factors considered in the assessment of asset impairment include, but are not limited to, whether there has been a significant adverse change in the legal, regulatory, accessibility, title, environmental or political factors that could affect the property's value; whether there has been an accumulation of costs significantly in excess of the amounts originally expected for the property's acquisition, development or cost of holding; and whether exploration activities produced results that are not promising such that no more work is being planned in the foreseeable future. - Going Concern
The assessment of the Corporation's ability to continue as a going concern involves critical judgment based on historical experience and expectations of the Corporation's ability to generate adequate financing. Significant judgment is used in the Corporation's assessment of its ability to continue as a going concern.
- Impairment of Exploration and Evaluation Asset
- Functional Currency
The functional currency of Chakana Resources S.A.C. is the Peruvian Sol - the currency of the primary economic environment in which the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Corporation reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.
- Income taxes
Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases ("temporary differences"), and losses carried forward.
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CHAKANA COPPER CORP.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONHTS ENDED NOVEMEBR 30, 2024 AND 2023
(Unaudited - Expressed in Canadian Dollars)
3. Significant Accounting Judgments and Estimates (continued) Critical accounting judgments (continued):
- Income taxes (Continued)
The determination of the ability of the Corporation to utilize tax loss carry-forwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Corporation. Management is required to assess whether it is probable that the Corporation will benefit from these prior losses and other deferred tax assets. Change in economic conditions, metal prices and other factors could result in revision to the estimates of the benefits to be realized or the timing of utilizing the losses.
-
Value Added Tax ("VAT")
Management's assumptions regarding the recoverability of Value Added Tax ("VAT") receivable at the end of each reporting period is made using all relevant facts available, including past collectability, the development of VAT policies and the general economic environment of the country to determine if a write-down of the VAT is required. Collection of the amount receivable depends on processing and payment of the claims by the local government, which historically has been very slow. The Corporation has been receiving its VAT from prior years and as such, management has determined as at May 31, 2024 and 2023 that it is appropriate to record the VAT as a receivable without any allowance for collectability. The timing and amount of the VAT ultimately collectable could be materially different from the amount recorded in the consolidated financial statements.
Critical accounting estimates:
-
Stock-basedcompensation
Stock-based compensation is valued using the Black-Scholes option pricing model at the date of grant and expensed in profit or loss over vesting period of each award for stock options and recorded as share issue cost for broker warrants issued in conjunction with financings. The Black-Scholes option pricing model utilizes subjective assumptions such as expected price volatility and expected life of the option. Stock-based compensation expense also utilizes subjective assumption on forfeiture rate. Changes in these input assumptions can significantly affect the fair value estimate.
4. Exploration and Evaluation Assets
Condor | ||||||||
Option | Aija Project | Barrick | Total | |||||
Balance - May 31, 2023 | $ | 4,212,021 | $ | 1,386,624 | $ | 348,193 | $ | 5,946,838 |
Acquisition costs | 1,437,861 | 472,993 | - | 1,910,854 | ||||
Foreign exchange on translation | (41,150) | (12,411) | (3,835) | (57,396) | ||||
Balance - May 31, 2024 | 5,608,732 | 1,847,206 | 344,358 | 7,800,296 | ||||
Acquisition costs | 40,627 | 309,329 | - | 349,956 | ||||
Foreign exchange on translation | (11,249) | 42,924 | 7,488 | 39,163 | ||||
Impairment of exploration asset | (5,638,110) | - | - | (5,638,110) | ||||
Balance - November 30, 2024 | $ | - | $ | 2,199,459 | $ | 351,846 | $ | 2,551,305 |
The Corporation's wholly owned subsidiary, Chakana Resources S.A.C., holds the following:
(i.) | An option to acquire a 100% ownership interest in the adjacent Aija Project, Peru ("Aija Project"); and |
(ii.) | An option to acquire up to a 100% ownership in other adjacent mineral concessions owned by Minera Barrick |
Misquichilca S.A. ("Barrick") (the "Barrick Option"). |
These options are collectively referred to as the "expanded Soledad Project".
The Corporation is the operator of all related mineral exploration activities on these projects.
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CHAKANA COPPER CORP.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONHTS ENDED NOVEMEBR 30, 2024 AND 2023
(Unaudited - Expressed in Canadian Dollars)
5. Exploration and Evaluation Assets (continued)
-
Aija Project
On March 20, 2018, the Corporation entered into an Option Agreement (the "Aija Option") with an arms-length third party to acquire 100% of the rights and interest in the Aija Project (the "Aija Project") subject to a 2%
NSR.
During December 2022, the Corporation entered into an agreement to amend the payment terms under the Aija Option. The agreement was subsequently amended again during January 2024.
Under the terms of the original agreement, a final payment of US$1.5 million was due on May 1, 2023. The parties agreed to extend and amend the terms of the agreement as follows:
Cash Amount | US$ paid | ||
Installment | Date | (in US$) | in shares |
1 | Upon execution of Letter of Intent on October 3, 2017 (paid) | 75,000 | - |
2 | Upon close of Definitive Agreement on August 1, 2018 (paid) | 75,000 | - |
3 | February 1, 2019 (paid) | 50,000 | - |
4 | August 1, 2019 (paid) | 50,000 | - |
5 | February 1, 2020 (paid) | 75,000 | - |
6 | November 1, 2020 (paid) | 75,000 | - |
7 | May 1, 2021 (paid) | 100,000 | - |
8 | November 1, 2021 (paid) | 100,000 | - |
9 | May 1, 2022 (paid) | 100,000 | - |
10 | November 1, 2022 (paid) | 100,000 | - |
11 | December 1, 2022 (Cash paid, shares issued) | 100,000 | 75,000 |
12 | May 1, 2023 (Cash paid, shares issued) | 100,000 | 125,000 |
13 | November 1, 2023 (Cash paid, shares issued) | 100,000 | 150,000 |
14 | August 1, 2024 (Cash paid, shares issued) | 75,000(1) | 75,000 |
15 | November 1, 2024 (paid) | 75,000 | - |
16 | February 1, 2025 | 150,000 | 75,000 |
17 | May 1, 2025 | 150,000 | - |
18 | November 1, 2025 | 150,000 | - |
19 | May 1, 2026 | 150,000 | - |
20 | November 1, 2026 | 250,000 | - |
Total | 2,100,000 | 500,000 |
- The Corporation renegotiated the August 1, 2024 cash amount of US$150,000 to be paid in two instalments of US$75,000; one instalment was paid August 14, 2024 along with the issuance common shares equivalent to US$75,000 and the second US$75,000 payment to be made November 1, 2024.
The number of shares will be determined based on the greater of (i) the ten-day volume weighted average trading price of the Chakana common shares as of the date of issuance of such Chakana shares, or (ii) the market value at the time the obligation arises, provided that the shares for each payment may not be issued at a price lower than $0.05 per share. As at November 30, 2024, the Corporation has paid instalments 1 to 15, totaling US$1,250,000 and made payment 15 subsequent to November 30, 2024. Under the terms of the Aija Option, the Corporation may purchase all of the 2% NSR at any time for US$2,000,000. There are no drilling or work expenditure commitments under the Option.
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