PJX RESOURCES INC.
Financial Statements
For the six months ended June 30, 2024 and 2023
(UNAUDITED)
The accompanying unaudited condensed interim financial statements of PJX Resources Inc. (the "Company") are the responsibility of the Board of Directors.
These unaudited condensed interim financial statements have been prepared by management, on behalf of the Board of Directors, in accordance with the accounting policies disclosed in the notes to the unaudited condensed interim financial statements. Where necessary, management has made informed judgments and estimates in accounting for transactions which were not complete at the end of the reporting period. In the opinion of management, the unaudited condensed interim financial statements have been prepared within acceptable limits of materiality and are in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board.
Management has established processes, which are in place to provide it sufficient knowledge to support management representations that it has exercised reasonable diligence that (i) financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of, and for the periods presented by, the financial statements and (ii) the financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented by the financial statements.
The Board of Directors is responsible for reviewing and approving the unaudited condensed interim financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the unaudited condensed interim 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 unaudited condensed interim financial statements together with other financial information of the Company for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.
(signed) | (signed) |
John Keating | Linda Brennan |
President and Chief Executive Officer | Chief Financial Officer |
Toronto, Canada | |
August 1, 2024 |
Notice of Disclosure of Non-auditor Review of Condensed Interim Unaudited condensed interim financial statements
Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, 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 condensed interim financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim financial statements of the Company for the interim periods ended June 30, 2024 and 2023 have been prepared in accordance with International Financial Reporting Standards ("IFRS") accounting principles and are the responsibility of the Company's management.
The Company's independent auditors, McGovern Hurley LLP, have not performed a review of these condensed interim financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of financial statements by an entity's auditor.
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PJX Resources Inc. | |||||
CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION | |||||
(Expressed in Canadian dollars) | |||||
June 30, | December 31, | ||||
Periods ended | Note | 2024 | 2023 | ||
(Unaudited) | |||||
ASSETS | |||||
Current assets | |||||
Cash | $ | 5,398,094 | $ | 2,703,606 | |
Amounts receivable | 6 | 50,086 | 23,200 | ||
Prepayments | 7(a) | 36,347 | 31,323 | ||
BC refundable tax credits | 12(a) | 26,089 | - | ||
Total current assets | 5,510,616 | 2,758,129 | |||
Non-current assets | |||||
Deposits | 7(b) | 280,900 | 162,900 | ||
Property and equipment | 8(a) | 38,039 | 48,662 | ||
Total non-current assets | 318,939 | 211,562 | |||
Total assets | 5,829,555 | 2,969,691 | |||
LIABILITIES | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | 14(c) | 93,200 | 120,893 | ||
Flow-through premium liability | 10(b)(i) | 171,290 | 201,487 | ||
Total current liabilities | 264,490 | 322,380 | |||
Non-current liabilities | |||||
Reclamation obligation | 7(c) | 24,500 | 24,500 | ||
Total non-current liabilities | 24,500 | 24,500 | |||
Total liabilities | 288,990 | 346,880 | |||
SHAREHOLDERS' EQUITY | |||||
Share capital | 10(b) | 18,832,650 | 15,770,554 | ||
Warrants | 11 | 2,125,529 | 1,539,975 | ||
Contributed surplus | 9,374,086 | 6,583,152 | |||
Accumulated deficit | (24,791,700) | (21,270,870) | |||
Total shareholders' equity | 5,540,565 | 2,622,811 | |||
Total shareholders' equity and liabilities | $ | 5,829,555 | $ | 2,969,691 | |
Going concern (Note 1) | |||||
Commitments and contingencies (Note 9 and 13) | |||||
Approved by the Board of Directors: | |||||
(Signed) John Keating | (Signed) Linda Brennan | ||||
John Keating, Director | Linda Brennan, Director |
See accompanying notes to the unaudited condensed interim financial statements.
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PJX Resources Inc. | |||||||||
CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS | |||||||||
(Expressed in Canadian dollars) | |||||||||
(Unaudited) | Three months | Six months | |||||||
Six months ended June 30, | Note | 2024 | 2023 | 2024 | 2023 | ||||
Expenses | |||||||||
Exploration | 12(a) | $ | 121,912 | $ | 128,967 | $ | 296,606 | $ | 253,515 |
General and administration | 12(b) | 307,705 | 129,532 | 452,864 | 266,479 | ||||
Share based compensation | 10(b)(ii) | 2,790,934 | - | 2,790,934 | - | ||||
Depreciation | 8(a) | 5,312 | 6,930 | 10,623 | 14,320 | ||||
Total operating expenses | 3,225,863 | 265,429 | 3,551,027 | 534,314 | |||||
Loss before income taxes | (3,225,863) | (265,429) | (3,551,027) | (534,314) | |||||
Flow-through premium recoveries | 13,990 | - | 30,197 | - | |||||
Net loss and comprehensive loss for the | |||||||||
period | $ | (3,211,873) | $ | (265,429) | $ | (3,520,830) | $ | (534,314) | |
Basic and diluted loss per share | ($0.02) | ($0.00) | ($0.02) | $0.00 | |||||
Weighted average number of shares | |||||||||
outstanding (basic and diluted) | 160,076,526 | 133,216,488 | 166,167,063 | 133,216,488 |
See accompanying notes to the unaudited condensed interim financial statements.
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PJX Resources Inc. | ||||||||
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||
(Expressed in Canadian dollars) | ||||||||
(Unaudited) | Three months | Six months | ||||||
Six months ended June 30, | Note | 2024 | 2023 | 2024 | 2023 | |||
Share capital | ||||||||
Balance, beginning of the period | $ | 15,794,109 | $ | 13,943,868 | $ | 15,770,554 | $ | 13,943,868 |
Shares issued on private placement | 10(b) | 3,600,000 | - | 3,600,000 | - | |||
Value allocated to warrants | 11 | (614,738) | - | (614,738) | - | |||
Warrants exercised | 11 | 170,629 | - | 194,184 | - | |||
Share issue cost | 10(b) | (117,350) | - | (117,350) | - | |||
Balance, end of the period | 18,832,650 | 13,943,868 | 18,832,650 | 13,943,868 | ||||
Warrants | ||||||||
Balance, beginning of the period | 1,536,420 | 1,748,454 | 1,539,975 | 1,748,454 | ||||
Issued on private placement | 11 | 614,738 | - | 614,738 | - | |||
Fair value of warrants exercised | 11 | (25,629) | - | (29,184) | - | |||
Warrants expired | 11 | - | (537,320) | - | (537,320) | |||
Balance, end of the period | 2,125,529 | 1,211,134 | 2,125,529 | 1,211,134 | ||||
Contributed surplus | ||||||||
Balance, beginning of the period | 6,583,152 | 5,803,860 | 6,583,152 | 5,803,860 | ||||
Warrants expired | 11 | - | 537,320 | - | 537,320 | |||
Share based compensation | 10(b)(ii) | 2,790,934 | - | 2,790,934 | - | |||
Balance, end of the period | 9,374,086 | 6,341,180 | 9,374,086 | 6,341,180 | ||||
Accumulated deficit | ||||||||
Balance, beginning of the period | (21,579,827) | (20,351,569) | (21,270,870) | (20,082,684) | ||||
Net loss for the period | (3,211,873) | (265,429) | (3,520,830) | (534,314) | ||||
Balance, end of the period | (24,791,700) | (20,616,998) | (24,791,700) | (20,616,998) | ||||
Total shareholders' equity | $ | 5,540,565 | $ | 879,184 | $ | 5,540,565 | $ | 879,184 |
See accompanying notes to the unaudited condensed interim financial statements.
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PJX Resources Inc. | ||||
CONDENSED INTERIM STATEMENTS OF CASH FLOWS | ||||
(Expressed in Canadian dollars) | ||||
(Unaudited) | ||||
Six months ended June 30, | Note | 2024 | 2023 | |
Cash flows from operating activities | ||||
Net loss for the period | $ | (3,520,830) | $ | (534,314) |
Items not involving cash: | ||||
Depreciation | 8(a) | 10,623 | (2,269) | |
Flow-through premium recoveries | 10(b)(i) | (30,197) | - | |
Share based compensation | 2,790,934 | - | ||
Changes in non-cash work ing capital: | ||||
Deposits | (118,000) | (6,604) | ||
Amounts receivable and prepayments | (31,910) | 3,741 | ||
BC refundable tax credits | 12(a) | (26,089) | - | |
Accounts payable and accrued liabilities | (27,693) | 4,028 | ||
Net cash used in operating activities | (953,162) | (535,418) | ||
Cash flow from financing activities | ||||
Payment of lease liability | - | (4,721) | ||
BC refundable tax credits | - | 204,914 | ||
Proceeds on issuance of shares and warrants | 10(b)(i) | 3,765,000 | - | |
Cash portion of issue costs | 10(b) | (117,350) | - | |
Net cash from financing activities | 3,647,650 | 200,193 | ||
Net change in cash | 2,694,488 | (335,225) | ||
Cash, beginning of the period | 2,703,606 | 963,443 | ||
Cash, end of the period | $ | 5,398,094 | $ | 628,218 |
See accompanying notes to the unaudited condensed interim financial statements.
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PJX Resources Inc.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian dollars)
Six months ended June 30, 2024, and 2023
1. NATURE OF OPERATIONS AND GOING CONCERN
PJX is a Canadian corporation with corporate offices located at 5600 One First Canadian Place, Toronto, Ontario. The Company is listed on the TSX Venture Exchange.
The principal activities of the Company are mineral exploration properties located near Cranbrook, British Columbia. The Company is in the exploration stage, has no producing properties and, consequently, has no current operating income or cash flow. Financing of the Company's activities to date has been obtained primarily from equity issues.
The unaudited condensed interim financial statements have been prepared using generally accepted accounting principles applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due in the foreseeable future. For the six months ended June 30, 2024, the Company generated a loss of $3,520,830 or ($0.02) per share, (June 30, 2023: $534,314 or $0.00 per share) and reported an accumulated deficit of $24,791,700 (December 31, 2023: $21,270,870). As at June 30, 2024, the working capital of the Company was $5,246,126 (December 31, 2023: $2,435,749).
Management believes that the working capital is sufficient to support operations for the next twelve months. However, additional funding will be required to allow the Company to continue operating and to fund future exploration and development programs. These factors indicate the existence of material uncertainties that cast significant doubt about the Company's ability to continue as a going concern. The Company will continue to explore financing alternatives to raise capital. Although PJX has been successful in these activities in the past, the Company has no assurance on the success or sufficiency of these initiatives or that such financing will be available on acceptable terms.
The Company's unaudited condensed interim financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the going concern assumption were inappropriate, and these adjustments could be material.
These unaudited condensed interim financial statements were approved by the Board of Directors for issue on August 1, 2024.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies
The principal accounting policies applied in the preparation of these financial statement are set out below. These policies have been consistently applied in the periods presented, unless otherwise stated. These unaudited condensed interim financial statements are expressed in Canadian dollars, which is the Company's presentation and functional currency.
Statement of Compliance
The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretation issued by the International Financial Reporting Interpretations Committee ("IFRIC"). These unaudited condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by IASB and interpretations issued by IFRIC.
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PJX Resources Inc.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian dollars)
Six months ended June 30, 2024, and 2023
The policies applied in these unaudited condensed interim financial statements are based on IFRSs issued and outstanding as of August 1, 2024, the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim financial statements as compared with the most recent annual financial statements as at and for the year ended December 31, 2023. Any subsequent changes to IFRS that are given effect in the Company's annual financial statements for the year ending December 31, 2024, could result in restatement of these unaudited condensed interim financial statements.
Changes in accounting policies:
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2024. Many are not applicable or do not have a significant impact to the Company and have been excluded.
IAS 1 - Presentation of Financial Statements ("IAS 1") was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company's right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company's own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on January 1, 2024.
There was no impact on the Company's record following the implementation of the above-mentioned amendment.
3. CAPITAL MANAGEMENT
The Company considers its capital to be shareholders' equity, which is comprised of share capital, warrants, contributed surplus and accumulated deficit, which as at June 30, 2024 totaled $5,540,565 (December 31, 2023: $2,622,811). When managing capital, the Company's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management adjusts the capital structure as necessary in order to support the acquisition, exploration and development of its exploration properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business.
The properties in which the Company currently has an interest are in the exploration stage. As such, the Company is dependent on further external financing to fund its working capital and exploration activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and attempt to raise additional funds as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the six months ended June 30, 2024. The Company is not subject to externally imposed capital requirements.
The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange ("TSXV") which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required to maintain operations and
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PJX Resources Inc.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian dollars)
Six months ended June 30, 2024, and 2023
cover general and administrative expenses for a period of 6 months. As of June 30, 2024, the Company believes it is compliant with the policies of the TSXV.
4. FINANCIAL RISK FACTORS
A summary of the Company's risk exposures as it relates to financial instruments are reflected below:
Credit risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The Company's credit risk is primarily attributable to cash and deposits and tax credits receivable from the British Columbia Provincial Government. Cash is held with reputable Canadian chartered banks, from which management believes the risk of loss to be minimal. Deposits are held with the British Columbia Ministry of Energy and Mines, from which management believes that the credit risk is minimal. Credit risk related to the tax credits is also assessed to be minimal.
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As of June 30, 2024, the Company had a cash balance of $5,398,094 (December 31, 2023: $2,703,606) to settle current liabilities of $264,490 which includes a non-cash flow through premium liability of $171,290 (December 31, 2023: $322,380). All of the Company's financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. In addition, refer to Note 3 for the Company's approach to capital management.
Market risk
Interest rate risk
The Company's current policy is to invest excess cash in interest bearing accounts at major Canadian chartered banks. The Company periodically monitors its cash management policy. At June 30, 2024 and December 31, 2023, the Company did not have any amounts invested in interest bearing accounts.
Price risk
The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market affecting PJX's capacity to obtain future financings. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices as it relates to the mineral commodities to determine the appropriate course of action to be taken by the Company.
Based on Management's knowledge and experience in the financial markets, the Company believes that it is "reasonably possible" that commodity price fluctuation could adversely affect the Company. In particular, the Company's future profitability and viability of development depends upon the world market price of mineral commodities. As of June 30, 2024, the Company was not in the production phase. As a result, commodity price risk may affect the completion of future equity transactions such as equity offerings and the exercise of stock options. This may also affect the Company's liquidity and its ability to meet its ongoing obligations.
5. FAIR VALUE MEASUREMENT
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As at June 30, 2024 and December 31, 2023, the carrying values approximate the fair value amounts of the Company's financial instruments due to their short-term nature.
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PJX Resources Inc.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian dollars)
Six months ended June 30, 2024, and 2023
6. AMOUNTS RECEIVABLE
Amounts receivable corresponds to the sale taxes recoverable paid on taxable purchases of material and services.
7. PREPAYMENTS AND DEPOSITS
- Prepayments totalling $36,347 (December 31, 2023: $31,323) represents advanced payments to suppliers.
- As of June 30, 2024, the Company has deposits totalling $280,900 of which $180,900 corresponds to deposits with the British Columbia Ministry of Finance representing remediation cost bonds associated with its properties, and $100,000 representing deposits with suppliers (December 31, 2023: $162,900 and $Nil, respectively).
- During the year ended December 31, 2018, the Company assumed obligations relating to an excavated trail located in the Zinger Property, in exchange for cash consideration of $25,000. The decommissioning liabilities are assessed based on the estimated costs to reclaim the excavation trails and the estimated timing of the costs to be incurred in future periods. Management of the Company has estimated that the total undiscounted cash flows required to settle the obligations will be approximately $27,000. These obligations have been discounted using a risk-free rate of 4.6% and an inflation rate of 4.3% per year. Most of this obligation is not expected to be paid until approximately 5 years in the future and have already been fully funded with a refundable deposit, held on account with the British Columbia Ministry of Finance. Included under deposits disclosed in Note 7(b) are $24,500 (December 31, 2023: $24,500) that the Company has made with the British Columbia Ministry of Natural Resources on this respect, funds that will be refunded to the Company once its obligation is discharged.
8. PROPERTY AND EQUIPMENT, RIGHT OF USE ASSET AND LEASE LIABILITY
a) Property, equipment and right of use asset
The following schedules describe the transactions for Vehicles and Right of Use Asset arising during the six months ended June 30, 2024, and the year ended December 31, 2023:
Right of | ||||||
Property & equipment: | Vehicles | Use Asset | Total | |||
Balance, December 31, 2023 | $ | 99,552 | $ | 35,282 | $ | 134,834 |
Cost, June 30, 2024 | $ | 99,552 | $ | 35,282 | $ | 134,834 |
Accumulated depreciation | ||||||
Balance, December 31, 2023 | $ | 50,890 | $ | 35,282 | $ | 86,172 |
Depreciation | 10,623 | - | 10,623 | |||
Accumulated depreciation - June 30, 2024 | 61,513 | 35,282 | 96,795 | |||
Net book value - June 30, 2024 | $ | 38,039 | $ | - | $ | 38,039 |
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