OREX MINERALS INC.
Condensed Consolidated Interim Financial Statements
(Expressed in Canadian Dollars)
For the period ended October 31, 2024
Notice to Reader
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the condensed consolidated interim financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of financial statements by an entity's auditor.
OREX MINERALS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian Dollars)
As at
October 31, | April 30, | ||||||||
2024 | 2024 | ||||||||
ASSETS | |||||||||
Current | |||||||||
Cash | $ | 538,699 | $ | 27,907 | |||||
Receivables | 86,043 | 29,303 | |||||||
Prepaid expenses and deposits | 110,352 | 6,132 | |||||||
735,094 | 63,342 | ||||||||
Equipment (Note 4) | 7,850 | 8,972 | |||||||
Deposits | 25,000 | 25,000 | |||||||
Investment in associates (Note 6) | 3,026,327 | 3,146,646 | |||||||
IVA receivable | 204,187 | 222,075 | |||||||
Exploration and evaluation assets (Note 5) | 1 | 1 | |||||||
$ | 3,998,459 | $ | 3,466,036 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current | |||||||||
Accounts payable and accrued liabilities | $ | 590,892 | $ | 523,480 | |||||
Subscriptions received in advance | 12,000 | - | |||||||
602,892 | 523,480 | ||||||||
Shareholders' equity | |||||||||
Share capital (Note 7) | 39,588,531 | 37,723,754 | |||||||
Reserves (Note 7) | 6,808,422 | 6,808,422 | |||||||
Accumulated other comprehensive income | 365,059 | 548,875 | |||||||
Deficit | (43,366,445) | (42,138,495) | |||||||
3,395,567 | 2,942,556 | ||||||||
$ | 3,998,459 | $ | 3,466,036 | ||||||
Nature and continuance of operations (Note 1) | |||||||||
Subsequent events (Note 10 and 13) | |||||||||
Approved and authorized by the board on December 19, 2024 | |||||||||
"John Eren" | Director | "Stephen Cope" | Director | ||||||
John Eren | Stephen Cope |
The accompanying notes are an integral part of these consolidated financial statements.
OREX MINERALS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in Canadian Dollars)
Three Months ended October 31, | Six Months ended October 31, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
EXPLORATION EXPENSES | ||||||||
Geological (Note 10) | $ | 28,400 | 51,600 | $ | 80,000 | 139,125 | ||
General exploration | 55,941 | 77,984 | 115,012 | 194,940 | ||||
84,341 | 129,584 | 195,012 | 334,065 | |||||
GENERAL EXPENSES | ||||||||
Communication and marketing | 97,175 | - | 97,175 | - | ||||
Consulting fees | 340,083 | 6,000 | 341,083 | 12,000 | ||||
Depreciation (Note 4) | 561 | 747 | 1,122 | 1,495 | ||||
Investor relations | 73,885 | 57,845 | 90,820 | 108,578 | ||||
Management fees (Note 10) | 57,800 | 103,200 | 161,000 | 206,400 | ||||
Office and administrative | 80,718 | 68,073 | 168,088 | 134,802 | ||||
Professional fees | 55,128 | 29,858 | 70,203 | 41,220 | ||||
Rent | 9,095 | 4,800 | 13,895 | 9,600 | ||||
Stock-based compensation | 155,890 | - | 155,890 | - | ||||
Transfer agent and filing fees | 30,671 | 24,731 | 38,609 | 38,001 | ||||
901,006 | 295,254 | 1,137,885 | 552,096 | |||||
(985,347) | (424,838) | (1,332,897) | (886,161) | |||||
Dilution gain on investment in associate (Note 6) | 191,426 | - | 272,887 | - | ||||
Equity loss in associated companies (Note 6) | (86,932) | (21,420) | (209,390) | (132,472) | ||||
Foreign exchange gain (loss) | (19,514) | (5,006) | (1,698) | 20,787 | ||||
Gain on settlement of accounts payable (Note 10) | - | - | 43,131 | - | ||||
Interest income | 17 | 2,224 | 17 | 8,988 | ||||
84,997 | (24,202) | 104,947 | (102,697) | |||||
Loss for the period | (900,350) | (449,040) | (1,227,950) | (988,858) | ||||
Equity investment - foreign currency translation (Note 6) | (47,438) | (46,070) | (183,816) | 36,616 | ||||
Comprehensive loss for the period | $ | (947,788) | (495,110) | $ | (1,411,766) | (952,242) | ||
Basic and diluted loss per common share | $ | (0.03) | (0.03) | $ | (0.05) | (0.05) | ||
Weighted average number of common shares outstanding | 27,096,636 | 18,739,806 | 25,853,133 | 18,739,806 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
OREX MINERALS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Expressed in Canadian Dollars)
Accumulated | |||||||||||
other | Total | ||||||||||
Common | Share | comprehensive | Shareholders | ||||||||
Shares | Capital | Reserves | income | Deficit | ' Equity | ||||||
Balance, April 30, 2023 | 18,739,806 | 37,552,572 | 6,808,422 | 427,634 | (40,264,868) | 4,523,760 | |||||
Comprehensive loss for the period | - | - | - | 36,616 | (988,858) | (952,242) | |||||
Balance, October 31, 2023 | 18,739,806 | $ | 37,552,572 | $ | 6,808,422 | $ | 464,250 | $ | (41,253,726) | $ | 3,571,518 |
Issuance of common shares | 1,225,000 | 183,750 | - | - | - | 183,750 | |||||
Share issuance costs | - | (12,568) | - | - | - | (12,568) | |||||
Comprehensive loss for the period | - | - | - | 84,625 | (884,769) | (800,144) | |||||
Balance, April 30, 2024 | 19,964,806 | $ | 37,723,754 | $ | 6,808,422 | $ | 548,875 | $ | (42,138,495) | $ | 2,942,556 |
Issuance of common shares | 6,666,617 | 999,993 | - | - | - | 999,993 | |||||
(Note 7) | |||||||||||
Share issuance costs | (10,366) | - | - | - | (10,366) | ||||||
Stock options exercised (Note 7) | 909,090 | 355,890 | (155,890) | - | - | 200,000 | |||||
Share-based payments (Note 7) | 155,890 | - | - | 155,890 | |||||||
Warrants exercised | 2,732,950 | 519,260 | - | - | - | 519,260 | |||||
Comprehensive loss for the period | - | - | - | (183,816) | (1,227,950) | (1,411,766) | |||||
Balance, October 31, 2024 | 30,273,463 | $ | 39,588,531 | $ | 6,808,422 | $ | 365,059 | $ | (43,366,445) | $ | 3,395,567 |
The accompanying notes are an integral part of these consolidated financial statements.
OREX MINERALS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars)
Six months | Six months | |||
ended October | ended October | |||
31, 2024 | 31, 2023 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Loss for the period | $ | (1,227,950) | $ | (988,858) |
Items not affecting cash: | ||||
Depreciation | 1,122 | 1,495 | ||
Dilution gain on investment in associate | (272,887) | - | ||
Equity loss in associated companies | 209,390 | 132,472 | ||
Gain on settlement of accounts payable | (43,131) | - | ||
Stock-based compensation | 155,890 | - | ||
Changes in non-cash working capital items: | ||||
Receivables | (56,740) | 51,663 | ||
Prepaid expenses | (104,220) | 10,310 | ||
IVA receivable | 17,888 | (26,937) | ||
Accounts payable and accrued liabilities | 322,543 | 23,380 | ||
Cash used in operating activities | (998,095) | (796,475) | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Equity investments | - | (141,311) | ||
Cash used in investing activities | - | (141,311) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from private placement, net share issuance costs | 989,627 | - | ||
Proceeds from warrant exercise | 519,260 | |||
Cash from financing activities | 1,508,886 | - | ||
Change in cash during the period | 510,792 | (937,786) | ||
Cash, beginning of period | 27,907 | 1,126,141 | ||
Cash, end of period | $ | 538,699 | $ | 188,355 |
Supplemental disclosure with respect to cash flows (Note 9)
The accompanying notes are an integral part of these consolidated financial statements.
OREX MINERALS INC.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS SIX MONTHS ENDED OCTOBER 31, 2024
(Expressed in Canadian Dollars)
1. NATURE AND CONTINUANCE OF OPERATIONS
Orex Minerals Inc. (the "Company") was incorporated under the laws of the Province of British Columbia, Canada on April 25, 1996. The Company's principal business activities include the acquisition and exploration of mineral properties in Mexico, and Canada.
The head office of the Company is located at Suite 300 - 1055 West Hastings Street, Vancouver, BC, Canada, V6E 2E9. The registered address and records office of the Company is located at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC, Canada V6C 2X8.
The Company's financial statements and those of its controlled subsidiaries ("consolidated financial statements") are presented in Canadian dollars.
The Company is in the process of exploring and evaluating its resource properties and has not yet determined whether any of its properties contain ore reserves that are economically recoverable. The amounts shown for exploration and evaluation assets do not necessarily represent present or future values.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. The Company has incurred losses from inception and does not currently have the financial resources to sustain operations in the long-term. While the Company has been successful in obtaining its required funding in the past, there is no assurance that such future financing will be available or be available on favourable terms. The Company had incurred a loss of $1,227,950 for the period ended October 31, 2024 and accumulated losses of $43,366,445 as of October 31, 2024. 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.
On September 27, 2023, the Company consolidated its outstanding share capital on the basis of ten (10) pre- consolidated shares for one (1) post-consolidation share. All share amounts have been adjusted to reflect the consolidation. The exercise price and number of common shares issuable upon the exercise of the Company's outstanding options are proportionally adjusted also.
These consolidated financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. Continued operations of the Company are dependent on the Company's ability to receive financial support, necessary financings, or generate profitable operations in the future.
2. BASIS OF PREPARATION
These consolidated financial statements, including comparatives, have been prepared using accounting policies consistent with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB").
These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.
OREX MINERALS INC.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS SIX MONTHS ENDED OCTOBER 31, 2024
(Expressed in Canadian Dollars)
2. BASIS OF PREPARATION (cont'd...)
Critical accounting estimates and judgements
The preparation of these consolidated financial statements in accordance with IFRS Accounting Standards 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 the reported expenses during the period. Actual results could differ from these estimates.
Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
- The determination of an investments in an associate as an equity investment requires judgement as to whether the Company has significant influence over the strategic financial and operating decisions relating to the activity of the investee.
- The carrying value and the recoverability of investment in associates, which are included in the statements of financial position. At every reporting period, management assesses the potential impairment which involves assessing whether or not facts or circumstances exist that suggest amounts exceeds the recoverable amounts.
- The functional currency of the equity investments is considered to be the Mexican Peso. The investments are controlled by a Mexican parent company and expenditures are primarily in the local currency.
3. MATERIAL ACCOUNTING POLICY INFORMATION
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its controlled subsidiaries (Note 10). Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All significant intercompany balances and transactions have been eliminated upon consolidation.
OREX MINERALS INC.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS SIX MONTHS ENDED OCTOBER 31, 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Exploration and evaluation assets
The Company is currently in the exploration stage with all its mineral interests. Exploration and evaluation costs include the costs of acquiring concessions, and the fair value, upon acquisition, of mineral properties acquired in a business combination. Costs incurred before the Company has obtained the legal rights to explore an area are recognized in profit or loss.
Exploration and evaluation expenditures are expensed in the period they are incurred except for expenditures associated with the acquisition of exploration and evaluation assets through a business combination or an asset acquisition. Significant property acquisition costs are capitalized only to the extent that such costs can be directly attributed to an area of interest where it is considered likely to be recoverable by future exploitation or sale.
Equipment
Equipment is recorded at cost less depreciation, and any impairments and is depreciated over its estimated useful life using the declining balance method at a rate of 25% per annum. Cost comprises the fair value of consideration given to acquire or construct an asset and includes the direct charges associated with bringing the asset to the location and condition necessary for putting it into use. When parts of equipment have different useful lives, they are accounted for as separate items (major components) of equipment. The cost of major overhauls of parts of equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of equipment are recognized in profit or loss as incurred.
Impairment
At the end of each reporting period, the Company's assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
OREX MINERALS INC.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS SIX MONTHS ENDED OCTOBER 31, 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Provision for environmental rehabilitation
The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of exploration and evaluation assets and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to the related assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as the related assets.
The Company's estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation provision. The
Company's estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.
Changes in the net present value, excluding changes in the Company's estimates of reclamation costs, are charged to profit or loss for the period. The Company has no material restoration, rehabilitation or environmental obligations as the disturbance to date is limited.
Financial instruments
The details of IFRS 9, Financial Instruments are set out below.
-
Classification and measurement of financial assets and liabilities
A financial asset is classified as measured at: amortized cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). The classification of financial assets depends on the purpose for which the financial assets were acquired. The Company's financial assets, consists of cash and receivables classified at amortized cost. Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date.
The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Company's accounting policy for each category is as follows:
Fair value through profit or loss: This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the statement of financial position at fair value with changes in fair value recognized through profit or loss.
Amortized cost: This category includes accounts payable and accrued liabilities which is recognized at amortized cost. - Impairment of financial assets
An 'expected credit loss' (ECL) model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. The Company's financial assets are measured at amortized cost and subject to the ECL model.
OREX MINERALS INC.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS SIX MONTHS ENDED OCTOBER 31, 2024
(Expressed in Canadian Dollars)
3. MATERIAL ACCOUNTING POLICY INFORMATION (cont'd...)
Foreign exchange
The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional currency for all entities within the corporate entity is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.
Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the statement of financial position date while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in profit or loss.
On inclusion of an equity investment with a functional currency other than the Canadian dollar, the assets and liabilities are translated into Canadian dollars using the period-end rate and the operations and cash flows translated using the average rates of exchange. Exchange adjustments arising when the opening net assets and the profit or loss are translated into Canadian dollars are taken into a separate component of equity and reported in other comprehensive income or loss.
Share capital
Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company's common shares and options are classified as equity instruments. Incremental costs directly attributable to the issuance of new shares are shown in equity as a deduction from the proceeds.
Equity financing transactions may involve issuance of common shares or units. A unit comprises of a certain number of common shares and a certain number of share purchase warrants. Depending on the terms and conditions of each equity financing agreement, the warrants are exercisable into additional common shares prior to expiry at a price stipulated by the agreement. Warrants that are part of units are assigned value based on the residual value method and included in share capital with the common shares that were concurrently issued.
Share-based payments
The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants.
The fair value of stock options granted to directors, officers, employees and consultants is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period as expense, with a corresponding increase in reserves. Consideration paid for the shares on the exercise of stock options is credited to share capital.
In situations where equity instruments are issued to non-employees and some or all the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payments. Otherwise, share-based payments are measured at the fair value of goods or services received.