CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 2024 AND FEBRUARY 28, 2023
(Expressed in Canadian Dollars)
Tel: 1-604-688-8700
Email:info@tres-or.com
Website:http://www.tres-or.com
Tres-Or trades on the TSX Venture Exchange under the symbol TRS
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Tres-Or Resources Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Tres-Or Resources Ltd. (the "Company"), which comprise the consolidated statements of financial position as at February 29, 2024 and February 28, 2023, and the consolidated statements of income (loss) and comprehensive income (loss), changes in equity, and cash flows 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 February 29, 2024 and February 28, 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 the Company has working capital deficiency as at February 29, 2024 of $454,812 and a deficit of $16,818,750. The Company has not generated revenue from operations; additional financing will be required in the foreseeable future to fund the Company's established business plan. As stated in Note 1, these events and conditions 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 consolidated financial statements of the current year. 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 6 to the consolidated financial statements, the carrying amount of the Company's E&E Assets was $2,709,379 as of February 29, 2024. As more fully described in Note 2 to the consolidated financial statements, management assesses E&E Assets for indicators of impairment at each reporting period.
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.
- Evaluating, 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 ended 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 Catherine Tai.
Vancouver, Canada | Chartered Professional Accountants |
June 28, 2024
TRES-OR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
February 29, | February 28, | ||||
Note | 2024 | 2023 | |||
ASSETS | |||||
Current assets | |||||
Cash | $ | 85,981 | $ | 280,844 | |
Marketable securities | 3 | 73,944 | 1,320,504 | ||
Receivables | 4 | 6,525 | 8,150 | ||
Prepaids | 313 | 1,346 | |||
Total current assets | 166,763 | 1,610,844 | |||
Non-current assets | |||||
Exploration and evaluation assets | 6 | 2,709,379 | 2,409,131 | ||
TOTAL ASSETS | $ | 2,876,142 | $ | 4,019,975 | |
LIABILITIES | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | $ | 258,064 | $ | 242,535 | |
Due to related parties | 8 | 363,511 | 329,179 | ||
Flow through share premium liability | 10 | - | 21,369 | ||
Total current liabilities | 621,575 | 593,083 | |||
Non-current liabilities | |||||
Loans payable | 7,8 | 12,807 | - | ||
TOTAL LIABILITIES | 634,382 | 593,083 | |||
EQUITY | |||||
Share capital | 9 | 18,261,113 | 18,067,993 | ||
Treasury shares | 9 | - | (120,000) | ||
Equity reserves | 9 | 2,272,453 | 2,272,453 | ||
Accumulated other comprehensive loss | (1,473,056) | (228,096) | |||
Deficit | (16,818,750) | (16,565,458) | |||
TOTAL EQUITY | 2,241,760 | 3,426,892 | |||
TOTAL LIABILITIES AND EQUITY | $ | 2,876,142 | $ | 4,019,975 | |
Nature and continuance of operations (Note 1) |
Approved by the Board of Directors on June 28, 2024:
"Gareth E. Mason " | "Laura Lee Duffett" | |
Director | Director |
The accompanying notes are an integral part of these consolidated financial statements.
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TRES-OR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(Expressed in Canadian Dollars)
Years ended | |||||
February 29, | February 28, | ||||
Note | 2024 | 2023 | |||
GENERAL AND ADMINISTRATIVE EXPENSES | |||||
Consulting fees | $ | 13,556 | $ | - | |
Management fees | 8 | 54,000 | 69,000 | ||
Office and miscellaneous | 31,205 | 12,406 | |||
Professional fees | 102,428 | 96,362 | |||
Project investigation | - | 6,600 | |||
Transfer agent and regulatory fees | 25,478 | 11,392 | |||
Travel and promotion | 8 | 29,595 | 13,432 | ||
(256,262) | (209,192) | ||||
Settlement of flow through share premium | |||||
liabilities | 10 | 21,369 | 12,830 | ||
Bad debt recovery | 6 | - | 125,337 | ||
Foreign exchange | (3,863) | - | |||
Interest income | 5,064 | 5,321 | |||
Gain on loan settlement | 7 | - | 19,375 | ||
Gain on sale of exploration and evaluation | |||||
assets | 6 | - | 377,754 | ||
Income (loss) for the year | (233,692) | 331,425 | |||
OTHER COMPREHENSIVE LOSS | |||||
Unrealized loss on marketable securities | 3 | (1,244,560) | (228,096) | ||
Total comprehensive income (loss) for the year | $ | (1,478,252) | $ | 103,329 | |
Basic and diluted income (loss) per common | |||||
share | $ | (0.01) | $ | 0.01 | |
Weighted average number of | |||||
common shares outstanding - basic and | |||||
diluted | 24,847,934 | 22,961,863 | |||
The accompanying notes are an integral part of these consolidated financial statements.
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TRES-OR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in Canadian Dollars)
Accumulated | ||||||||||||
Other | ||||||||||||
Number of | Treasury | Equity | Comprehensive | |||||||||
shares | Share Capital | Shares | Reserves | Loss | Deficit | Total | ||||||
Balance - February 28, 2022 | 22,961,863 | $ | 18,069,565 | $ | - | $ | 2,272,453 | $ | - | $ (16,896,883) | $ | 3,445,135 |
Share issue costs | - | (1,572) | - | - | - | - | (1,572) | |||||
Treasury shares | - | - | (120,000) | - | - | - | (120,000) | |||||
Unrealized loss on marketable securities | - | - | - | - | (228,096) | - | (228,096) | |||||
Income for the year | - | - | - | - | - | 331,425 | 331,425 | |||||
Balance - February 28, 2023 | 22,961,863 | 18,067,993 | (120,000) | 2,272,453 | (228,096) | (16,565,458) | 3,426,892 | |||||
Shares issued for exploration and evaluation asset | 2,272,000 | 193,120 | - | - | - | - | 193,120 | |||||
Sale of treasury shares | - | - | 120,000 | - | - | (20,000) | 100,000 | |||||
Unrealized loss on marketable securities | - | - | - | - | (1,244,560) | - | (1,244,560) | |||||
Gain on marketable securities | - | - | - | - | (400) | 400 | - | |||||
Loss for the year | - | - | - | - | - | (233,692) | (233,692) | |||||
Balance - February 29, 2024 | 25,233,863 | $ | 18,261,113 | $ | - | $ | 2,272,453 | $ | (1,473,056) | $ (16,818,750) | $ | 2,241,760 |
The accompanying notes are an integral part of these consolidated financial statements.
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TRES-OR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
For the years ended | |||||
February 29, | February 28, | ||||
2024 | 2023 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income (loss) for the year | $ | (233,692) | $ | 331,425 | |
Items not affecting cash | |||||
Foreign exchange | (86) | - | |||
Gain on loan settlement | - | (19,375) | |||
Gain on property transfer | - | (377,754) | |||
Settlement of flow through share premium liability | (21,369) | (12,830) | |||
Bad debt recovery | - | (125,337) | |||
Changes in non-cash working capital items | |||||
Receivables | 1,625 | 28,957 | |||
Prepaid expenses | 1,033 | 5,155 | |||
Accounts payable and accrued liabilities | 15,529 | 26,636 | |||
Due to related parties | (3,168) | (2,503) | |||
(240,128) | (145,626) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Exploration and evaluation assets expenditures | (62,189) | (127,257) | |||
Proceeds from sale of marketable securities | 2,000 | - | |||
Option payment received | - | 350,000 | |||
ESGold settlement | - | 100,000 | |||
(60,189) | 322,743 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Proceeds from sale of treasury shares | 100,000 | - | |||
Repayment of loan | - | (155,000) | |||
Proceeds from loan | 5,454 | - | |||
105,454 | (155,000) | ||||
Change in cash | (194,863) | 22,117 | |||
Cash, beginning of the year | 280,844 | 258,727 | |||
Cash, end of the year | $ | 85,981 | $ | 280,844 | |
Supplemental disclosure with respect to cash flows (Note 14) |
The accompanying notes are an integral part of these consolidated financial statements.
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TRES-OR RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 2024 AND FEBRUARY 28, 2023 (Expressed in Canadian Dollars)
1. NATURE AND CONTINUANCE OF OPERATIONS
Tres-Or Resources Ltd. (the "Company") was incorporated under the laws of the Province of British Columbia and is in the business of exploration and evaluation of mineral properties. To date, the Company has not earned significant revenues and is considered to be in the exploration stage. The Company is listed on the TSX Venture
Exchange ("TSX-V") under the trading symbol "TRS".
The Company's registered office address is Suite 1500 - 1055 West Georgia Street, Vancouver, BC, V6E 4N7, Canada.
The consolidated financial statements are presented in Canadian dollars unless otherwise indicated, which is the functional currency of the Company and its subsidiaries.
The Company is in the process of exploring its exploration and evaluation assets and has not yet determined whether the properties contain reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets and related deferred exploration costs are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production.
These consolidated financial statements of the Company have been prepared using accounting policies applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they fall due for the foreseeable future. The Company has working capital deficiency at February 29, 2024 of $454,812 and a deficit of $16,818,750. The Company has not generated revenue from operations; additional financing will be required in the foreseeable future to fund the Company's established business plan. These circumstances comprise a material uncertainty which may cast significant doubt as to the ability of the Company to continue as a going concern. The Company will continue to pursue opportunities to raise additional capital through equity markets and/or related party loans to fund its exploration and operating activities; however, there is no assurance of the success or sufficiency of these initiatives. The Company's ability to continue as a going concern is dependent upon it securing the necessary working capital and exploration requirements and eventually to generate positive cash flows either from operations or additional financing. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary if the going concern assumption was inappropriate, and these adjustments could be material.
There are many external factors that can adversely affect general workforces, economies, and financial markets globally. Examples include but are not limited to political conflict in other regions. It is not possible for the Company to predict the duration or magnitude of adverse results of such external factors and their effect on the Company's business or ability to raise funds.
2. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION
The consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments that have been measured at fair value.
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standard Board ("IASB"). The significant accounting policies applied in these consolidated financial statements are based on the IFRS issued and outstanding as of February 29, 2024.
Basis of Consolidation
These consolidated financial statements include the accounts of the Company, which is incorporated under the laws of British Columbia, and its wholly owned subsidiaries: Temagami-Diamonds Ltd. and Vaaldiam do Brasil Mineração Ltda. All significant intercompany balances and transactions have been eliminated upon consolidation.
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TRES-OR RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 29, 2024 AND FEBRUARY 28, 2023 (Expressed in Canadian Dollars)
2. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION (Cont'd)
Basis of Consolidation (Cont'd)
Interest | Interest | ||
February 29, | February 28, | ||
Name of subsidiary | Incorporation | 2024 | 2023 |
Temagami-Diamonds Ltd. | Canada | 100% | 100% |
Vaaldiam do Brasil Mineração | Brazil | 100% | - |
Ltda. | |||
Significant Accounting Estimates and Judgments
The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impact of such estimates is pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and judgment
Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, that could result in a material adjustment to the carrying amounts of assets and liabilities, if actual results differ from assumptions made, relate to, but are not limited to, the following:
Valuation of stock options and share purchase warrants
Management uses the Black-Scholes option pricing model to determine the fair value of employee stock options and share purchase warrants issued for goods or services. This model requires assumptions of the expected future price volatility of the Company's common shares, expected life of options and warrants, future risk-free interest rates and the dividend yield of the Company's common shares.
Income taxes
Provisions for income and other taxes are based on management's interpretation of taxation laws, which may differ from the interpretation by taxation authorities. Such differences may result in eventual tax payments differing from amounts accrued. Reported amounts for deferred tax assets and liabilities are based on management's expectation for the timing and amounts of future taxable income or loss, as well as future taxation rates. Changes to these underlying estimates may result in changes to the carrying value, if any, or deferred income tax assets and liabilities.
Economic recoverability of exploration and evaluation assets
Management has determined that exploration and evaluation costs incurred which were capitalized have future economic benefits and are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including geological and metallurgic information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, existing permits and life of mine plans.
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