Interim Consolidated Financial Statements
For the Nine Months Ended
September 30, 2024 and 2023
(Unaudited)
TVI Pacific Inc. | 1 | June 30, 2024 |
NOTICE OF NO AUDITOR REVIEW OF CONDENSED
CONSOLIDATED 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 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 consolidated interim financial statements of TVI Pacific Inc. for the interim reporting period ended September 30, 2024, have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board, and are the responsibility of the Company's management.
The Company's independent auditors have not performed a review of these consolidated interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada ("CPA Canada") for a review of interim financial statements by an entity's auditor.
1
TVI Pacific Inc.
Consolidated Statements of Financial Position September 30, 2024
(in Canadian dollars)
Notes | September 30, 2024 | December 31, 2023 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | 4 | $ | 126,536 | $ | 266,155 | ||||||
Accounts receivable | 5 | 9,313 | 18,338 | ||||||||
Due from related parties | 6(a) | 2,950 | 3,012 | ||||||||
Prepaid expenses | 7,961 | 3,050 | |||||||||
Total current assets | 146,760 | 290,555 | |||||||||
Non-current assets: | |||||||||||
Investment in joint venture | 8 | 25,621,402 | 22,545,440 | ||||||||
Property and equipment | 9,156 | 9,300 | |||||||||
Other assets | 6 | 6 | |||||||||
Total non-current assets | 25,630,565 | 22,554,746 | |||||||||
Total assets | $ | 25,777,325 | $ | 22,845,301 | |||||||
Liabilities and Shareholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued liabilities | 9 | $ | 224,434 | $ | 315,126 | ||||||
Due to related parties | 6(b) | 3,353,827 | 3,114,720 | ||||||||
Income tax payable | 0 | 4 | |||||||||
Total current liabilities | 3,587,261 | 3,429,850 | |||||||||
Non-current liabilities: | |||||||||||
Retirement benefit payable | 10 | 197,259 | 208,944 | ||||||||
Deferred tax liability | 11 | 322,715 | 322,715 | ||||||||
Loans | 12 | 1,181,348 | - | ||||||||
Total non-current liabilities | 1,701,322 | 531,659 | |||||||||
Total liabilities | 5,279,583 | 3,961,509 | |||||||||
Equity attributable to shareholders of the Company: | |||||||||||
Share capital | 13(b) | 34,374,277 | 34,374,277 | ||||||||
Contributed surplus | 13(d) | 7,326,748 | 7,326,748 | ||||||||
Deficit | (15,436,835) | (17,050,786) | |||||||||
Translation reserves | (5,766,447) | (5,766,447) | |||||||||
Total equity | 20,497,742 | 18,883,792 | |||||||||
Total liabilities and equity | $ | 25,777,325 | $ | 22,845,301 | |||||||
Going concern (note 1)
Commitment (note 18)
Subsequent events (note 19)
The accompanying notes are an integral part of these consolidated interim financial statements.
On behalf of the Board:
Michael G. Regino | Love D. Manigsaca |
President, CEO and Director | Chief Financial Officer |
TVI Pacific Inc. | 2 | September 30, 2024 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Comprehensive Loss September 30, 2024 and 2023
(in Canadian dollars)
Three months ended | Nine months ended | ||||||||
September 30 | September 30 | ||||||||
Notes | 2024 | 2023 | 2024 | 2023 | |||||
Expenses: | |||||||||
Depreciation expense | $ | 723 | $ | 1,102 | $ | 2,082 | $ | 3,805 | |
Administrative and general costs | 15 | 215,088 | 403,410 | 1,323,211 | 1,284,621 | ||||
Total expenses | 215,811 | 404,512 | 1,325,293 | 1,288,426 | |||||
Operating loss | (215,811) | (404,512) | (1,325,293) | (1,288,426) | |||||
Other income (expenses): | |||||||||
Interest income (expense), net | 17 | (22,307) | (56,478) | (138,758) | (138,151) | ||||
Foreign exchange gain (loss) | 18 | (280) | 1,347 | 2,218 | 604 | ||||
Share of income of joint venture | 8 | 3,367,093 | (1,763,613) | 2,624,707 | (4,635,108) | ||||
Other income (expenses), net | 3,344,506 | (1,818,744) | 2,488,168 | (4,772,655) | |||||
Net income (loss) before income tax | 3,128,695 | (2,223,256) | 1,162,875 | (6,061,081) | |||||
Net income (loss) | 3,128,695 | (2,223,256) | 1,162,875 | (6,061,081) | |||||
Other comprehensive income (loss): | |||||||||
Items that may be reclassified to profit or | |||||||||
loss in subsequent periods: | |||||||||
Foreign currency translation adjustment - | |||||||||
foreign operations | - | (5,765) | (181) | 9,959 | |||||
Foreign currency translation adjustment - | |||||||||
joint venture | 1,046,336 | (310,249) | 451,255 | (687,317) | |||||
Comprehensive income (loss) | $ | 4,175,031 | $ | (2,539,270) | $ 1,613,950 | $ | (6,738,439) | ||
Basic income (loss) per share | 13 | $ | 0.004 | $ | (0.003) | $ | 0.002 | $ | (0.009) |
Diluted income (loss) per share | 13 | 0.004 | (0.003) | 0.002 | (0.009) | ||||
Weighted average number of common shares, | 13 | 728,587,039 | 676,918,891 | 728,587,039 | 676,918,891 | ||||
basic | |||||||||
Weighted average number of common shares, | 13 | 728,587,039 | 687,055,462 | 728,587,039 | 687,055,462 | ||||
diluted |
The accompanying notes are an integral part of these interim consolidated financial statements.
TVI Pacific Inc. | 3 | September 30,2024 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Changes in Equity September 30, 2024 and 2023
(in Canadian dollars)
Share capital | Contributed | Translation | Total | ||||||||||||||
surplus | Deficit | ||||||||||||||||
(Note 12b) | reserves | equity | |||||||||||||||
(Note 12d) | |||||||||||||||||
January 1, 2024 | $ | 34,374,277 | $ | 7,326,748 | $ (17,050,786) | $ | (5,766,447) | $ | 18,883,792 | ||||||||
Comprehensive loss | |||||||||||||||||
Net Income (loss) | 1,162,875 | 1,162,875 | |||||||||||||||
Other comprehensive gain: | |||||||||||||||||
Foreign currency translation adjustment | 451,074 | 451,074 | |||||||||||||||
Total comprehensive loss | - | - | 1,162,875 | 451,074 | 1,613,950 | ||||||||||||
September 30, 2024 | $ | 34,374,277 | $ | 7,326,748 | $ | (15,887,911) | $ | (5,315,373) | $ | 20,497,741 | |||||||
January 1, 2023 | $ | 33,016,445 | $ | 7,074,580 | $ (8,466,859) | $ | (5,242,126) | $ | 26,382,040 | ||||||||
Transactions with owners | |||||||||||||||||
Issued shares (note 12(b)) | 1,340,000 | 1,340,000 | |||||||||||||||
Options exercised (note 12(c)) | 17,832 | 252,168 | 270,000 | ||||||||||||||
Total transaction with owners | 1,357,832 | 252,168 | 1,610,000 | ||||||||||||||
Comprehensive loss | |||||||||||||||||
Net loss | - | - | (6,061,081) | - | (6,061,081) | ||||||||||||
Other comprehensive gain: | |||||||||||||||||
Foreign currency translation adjustment | - | - | - | (677,358) | (677,358) | ||||||||||||
Total comprehensive loss | - | - | (6,061,081) | (677,358) | (6,738,439) | ||||||||||||
September 30, 2023 | $ | 33,374,277 | $ | 7,326,748 | $ | (14,527,940) | $ | (5,919,484) | $ | 21,253,601 | |||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
TVI Pacific Inc. | 4 | September 30,2024 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Cash Flows September 30, 2024 and 2023
(in Canadian dollars)
Three months ended September 30 | Nine months ended September 30 | |||||||||||
Notes | 2024 | 2023 | 2024 | 2023 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income (loss) before income tax | $ | 3,128,695 | $ | (2,223,256) | $ | 1,162,875 | $ | (6,061,081) | ||||
Adjustments for: | ||||||||||||
Depreciation expense | 723 | 1,102 | 2,082 | 3,805 | ||||||||
Unrealized foreign exchange (gain) loss | 18 | (49) | (3,365) | 176 | (2,620) | |||||||
Share of loss (gains) of joint venture | 8 | (3,367,093) | 1,763,613 | (2,624,707) | 4,635,108 | |||||||
Changes in non-cash working capital | 16 | (141,706) | (542,396) | (71,049) | 84,137 | |||||||
Changes in retirement benefit payable | 10 | (23,676) | - | (11,685) | - | |||||||
Net cash used in operating activities | (403,111) | (1,004,302) | (1,400,214) | (1,340,651) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Shares issued - Private placement of PRHI | 12(b) | 1,340,000 | 1,340,000 | |||||||||
Shares issued - Options exercised | 13(c) | 270,000 | ||||||||||
Proceeds from Promissory Notes and Funds from TVIRD | 277,781 | 1,262,714 | ||||||||||
Net cash used from financing activities | 277,781 | 1,340,000 | 1,262,714 | 1,610,000 | ||||||||
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | ||||||||||||
Expenditures on property and equipment and other assets | - | - | (1,937) | - | ||||||||
Net cash used in investing activities | - | (1,937) | ||||||||||
Effect of foreign exchange rates on cash | (2,903) | (192) | (181) | (353) | ||||||||
Net increase (decrease) in cash and cash equivalents | (128,233) | 335,506 | (139,619) | 268,996 | ||||||||
Cash and cash equivalents at beginning of the period | 254,769 | 68,376 | 266,155 | 134,886 | ||||||||
Cash and cash equivalents at end of the period | $126,536 | 403,882 | $126,536 | 403,882 | ||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
TVI Pacific Inc. | 5 | September 30,2024 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2024 and 2023
(in Canadian dollars)
1. Corporate information, nature of operations and going concern:
TVI Pacific Inc. ("TVI" or the "Company") is a publicly listed resource company incorporated in Alberta,
Canada on January 12, 1987, under the Alberta Business Corporations Act. TVI's shares are listed on the TSX Venture Exchange. TVI is focused on the acquisition of diversified resource projects in the Asia Pacific region and on evaluating and acquiring interests in resource projects that can be rapidly developed and put into production to generate revenue and cash flows. TVI does not presently have an active resource property but holds equity and joint venture investments in resource companies engaged in production, development and/or exploration activities in the Philippines.
TVI holds a 30.66% interest in TVI Resource Development Phils., Inc. ("TVIRD"). TVIRD's assets include the wholly owned Balabag gold-silver mine and Siana gold mine ("Siana"), a 60% interest in the Agata nickel laterite and Direct Shipping Nickel/Iron projects and interests in the Agata processing project, a 60% indirect interest in Mt. Labo Exploration and Development Corporation ("MLEDC") and the Mabilo project ("Mabilo") that MLEDC wholly owns and operates, and various other exploration properties in the Philippines. TVIRD holds the 60% indirect interest in MLEDC through its 100% ownership of SageCapital Partners, Inc. ("SageCapital"). As at September 30, 2024, TVI also holds a 14.4% equity interest in Mindoro Resources Ltd. ("Mindoro"), an entity incorporated in Canada that is engaged in mining and exploration in the Philippines. TVI has established its principal business address at Suite 600, 505 2nd St. SW Calgary, Alberta, Canada T2P 1N8.
These consolidated interim financial statements were authorized for issue by the Board of Directors on
Nov. 19 , 2024.
Going concern
These consolidated interim financial statements ("consolidated interim financial statements") have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") on the basis of accounting principles applicable to a going concern, which assume the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
For the nine months ended September 30, 2024, TVI reported a net income of $1,162,875 (September 30, 2023 - $6,061,081- net loss). TVI had a working capital deficit of $ 3,431,500 as at September 30, 2024 (December 31, 2023 - $ 3,139,295 working capital deficit). As at September 30, 2024, the Company had accounts payable and accrued liabilities of $224,434 (December 31, 2023 - $315,126) and a payable to related parties of $3,353,827 (December 31, 2023 - $3,114,719) and with outstanding loans payable of $1,181,348 from issuance of promissory notes.
During the nine months ended September 30, 2024, and September 30, 2023, no dividends were received from TVIRD. The Company's ability to continue as a going concern is dependent upon possible distributions from its joint venture investment in TVIRD, which the Company does not control. This undertaking, while significant, is not sufficient in and of itself to enable the Company to fund all aspects of its operations and, accordingly, management is pursuing other financing alternatives to fund the Company's operations and to pursue interests in resource projects in the Asia Pacific region that can be rapidly developed and put into production to generate revenue and cash flows so it can continue as a going concern. Nevertheless, there is no assurance that these initiatives will be successful.
These material uncertainties lend significant doubt as to the ability of the Company to meet its obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.
TVI Pacific Inc. | 6 | September 30,2024 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2024 and 2023
(in Canadian dollars)
1. Corporate information, nature of operations and going concern:
The Company's ability to continue as a going concern is dependent upon its ability to fund its operations, distributions from its joint venture investment in TVIRD and the ability of TVI to develop its resource projects and generate positive cash flows from operations. These consolidated 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 Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.
2. Basis of preparation:
(a) Statement of compliance
These consolidated interim financial statements have been prepared in accordance with IFRS Accounting Standards.
(b) Basis of measurement
These consolidated interim financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value (note 3b). In addition, these consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated interim financial statements are presented in Canadian Dollars, which is the functional and reporting currency of TVI.
3. Financial risk management:
The Company's activities expose it to a variety of financial risks: market risk (currency risk, interest rate risk and price risk), liquidity risk and credit risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Board of Directors has the overall responsibility for the establishment and oversight of the Company's risk management framework.
- Financial risk management
(i) Currency risk
The Company faces currency risks mainly due to the substantial cross-border element of its operations. The Company has its office in Canada (Canadian Dollar), while TVIRD is located in the Republic of the Philippines (Peso). The Company has cash deposits denominated in US Dollars, which are revalued at the spot rate.
There are no forward sales, and the Company does not engage in currency hedging activities. The Company minimizes currency risk by carefully planning the timing of settlement of foreign currency denominated balances and closely monitoring changes in foreign exchange rates.
For the nine months ended September 30, 2024:
- the impact on net loss if the US Dollar moved by 5% against the Canadian Dollar, with all other variables held constant, would be $2,452.
- the impact on net loss if the Philippine Peso moved by 5% against the Canadian Dollar, with all other variables held constant, would be -$57.
The following significant exchange rates have been applied during the current year and prior year:
Average rate | Spot rate | |||||||||||
Nine months ended | Year ended | |||||||||||
Sep.30.2024 | Dec.31.2023 | Sep.30.2024 | Dec.31.2023 | |||||||||
Canadian Dollar/US Dollar | 1.3586 | 1.3497 | 1.3687 | 1.3226 | ||||||||
Canadian Dollar/ Philippine Peso | 0.0236 | 0.0243 | 0.0237 | 0.0238 | ||||||||
TVI Pacific Inc. | 7 | September 30,2024 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2024 and 2023
(in Canadian dollars)
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As the Company has no significant interest- bearing assets or liabilities for which the interest rate fluctuates, the Company's income (loss) and operating cash flows are not significantly impacted by changes in market interest rates. The Company started to accrue interest in October 2020 on unpaid Management and directors' fees (note 6(b)) that is calculated on total unpaid fees. This rate was set at four percent (4%) per annum, calculated daily and compounded annually and revised commencing July 2022 to Canada Prime Rate plus 2%. Payment for the interest on unpaid Management and directors' fees has been made in the nine months ended September 30, 2024 - $13,092 (September 30, 2023 - nil). The Company has no other significant interest-bearing assets or liabilities for which the interest rate fluctuates and may thereby significantly impact the Company's income (loss) and operating cash flows.
(iii) Liquidity risk
As at September 30, 2024 and September 30, 2023, the Company has a $3.4 million and $2.0 million working capital deficit, respectively.
The table below summarizes the Company's financial liabilities by relevant maturity groupings based on contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances, as the impact of discounting is not considered to be significant.
September 30, 2024 | December 31, 2023 | |||||||
Due within 12 months: | ||||||||
Accounts payable and accrued liabilities (note 9) | $ | 224,434 | $ | 315,126 | ||||
Due to related parties (note 6) | 3,353,827 | 3,114,720 | ||||||
Income tax payable | 0 | 4 | ||||||
$ | 3,578,261 | $ | 3,429,850 |
The Company remains focused upon conserving cash through reducing expenditures but to continue operations and to fund expenses and settle liabilities the Company is presently dependent on possible distributions from its joint venture investment in TVIRD, which the Company does not control.
(iv) Credit risk
Credit risk arises from the potential that a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's cash and cash equivalents, accounts receivable, due from related parties and other assets.
The Company manages credit risk associated with cash by maintaining its cash deposits in accounts with creditworthy banks that have been approved by the Board of Directors.
Balances due within 12 months equal their carrying balances, as the impact of discounting is not considered to be significant.
September 30, 2024 | December 31, 2023 | |||
Due within 12 months: | ||||
Accounts receivable | $ | 9,313 | $ | 18,338 |
Due from related parties | 2,950 | 3,012 | ||
$ | 12,263 | $ | 21,350 |
The carrying amounts of cash and cash equivalents, accounts receivable, due from related parties and other assets at September 30, 2024 represent the Company's maximum credit risk exposure.
TVI Pacific Inc. | 8 | September 30,2024 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2024 and 2023
(in Canadian dollars)
-
Fair value measurements recognized in the statement of financial position
The analysis of financial instruments that are measured subsequent to initial recognition at fair value can be classified into Levels 1 to 3 based on the degree to which fair value is observable. - Level 1- fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities.
- Level 2- fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
- Level 3- fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The carrying value of the Company's financial assets and liabilities consisting of cash and cash equivalents, accounts receivable, due from and to related parties, retirement benefit payable, and accounts payable and accrued liabilities approximate their fair values at September 30, 2024 and September 30, 2023 due to their short-term nature.
-
Capital risk management
The Company monitors capital on the basis of the debt-to-equity ratio and the debt-to-assets ratio. Debt is composed of accounts payable, accrued liabilities and due to related parties. Equity comprises all components of equity other than amounts in accumulated other comprehensive income (loss). Assets are defined as the Company's total current and non-current assets. The
Company's strategy is to improve the debt-to-equity ratio in order to secure access to financing at a reasonable cost by maintaining a good credit rating.
September 30, 2024 | December 31, 2023 | ||||||
Debt | $ | 3,578,261 | $ | 3,429,850 | |||
Equity | 25,813,115 | 24,650,239 | |||||
Assets | 25,777,325 | 22,845,301 | |||||
Debt-to-equity | 14% | 14% | |||||
Debt-to-assets | 14% | 15% |
4. Cash and cash equivalents:
Cash and cash equivalents consist of:
September 30, 2024 | December 31, 2023 | |||
Cash on hand | $ | 355 | $ | 357 |
Cash in banks | 126,181 | 265,798 | ||
$ | 126,536 | $ | 266,155 |
Cash in banks earns interest at the prevailing bank deposit rates. The carrying amounts of cash and cash equivalents approximate their fair value.
5. Accounts receivable:
Accounts receivable consists of:
September 30, 2024 | December 31, 2023 | ||||||
Goods and services tax receivable | $ | 9,313 | $ | 18,229 | |||
Others | - | 109 | |||||
$ | 9,313 | $ | 18,338 |
TVI Pacific Inc. | 9 | September 30,2024 |