Interim Condensed Consolidated Financial Statements
Fortune Minerals Limited
March 31, 2024
Fortune Minerals Limited
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, Subsection 4.3(3)(a), if an auditor has not performed a review of the interim condensed interim condensed consolidated 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 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 financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
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Fortune Minerals Limited
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(expressed in Canadian dollars)
Unaudited
As at | March 31, | December 31, |
2024 | 2023 | |
ASSETS | ||
Current assets | 225,231 | |
Cash and cash equivalents [note 10] | 673,635 | |
Accounts receivable | 38,420 | 26,328 |
Prepaid expenses | 64,300 | 59,772 |
Total current assets | 327,951 | 759,735 |
Reclamation security deposits [note 7] | 201,448 | 199,329 |
Deposits on capital assets [note 4i] | 400,000 | 355,000 |
Capital assets, net [note 8] | 230,605 | 246,781 |
Total assets | 1,160,004 | 1,560,845 |
LIABILITIES AND SHAREHOLDERS' DEFICIENCY | ||
Current liabilities | 216,481 | |
Accounts payable and accrued liabilities | 187,451 | |
Lease liability [note 12] | 54,665 | 53,399 |
Flow-through share premium [note 5i[b]] | 185,587 | 201,427 |
Current debt [note 11i] | 9,495,696 | 9,274,663 |
Total current liabilities | 9,952,429 | 9,716,940 |
Provision for environmental rehabilitation [note 7] | 139,719 | 138,671 |
Lease liability [note 12] | 154,752 | 169,204 |
Total liabilities | 10,246,900 | 10,024,815 |
SHAREHOLDERS' DEFICIENCY | 182,028,274 | |
Share capital and warrants [note 5] | 182,028,274 | |
Other reserves [notes 5iii, 6] | 17,258,719 | 17,258,719 |
Deficit | (208,373,889) | (207,750,963) |
Total shareholders' deficiency | (9,086,896) | (8,463,970) |
Total liabilities and shareholders' deficiency | 1,160,004 | 1,560,845 |
See accompanying notes to the consolidated financial statements
See note 2 going concern uncertainty
Commitments and contingencies [notes 11, 12 and 20]
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Fortune Minerals Limited
CONSOLIDATED STATEMENTS OF LOSS AND
COMPREHENSIVE LOSS
(expressed in Canadian dollars)
For the three months ended March 31, | 2024 | 2023 |
INCOME | (Note 3) | |
20,513 | ||
Interest and other income [note 14] | 1,363 | |
Total income | 20,513 | 1,363 |
EXPENSES | 222,091 | |
General and administrative | 252,359 | |
Interest | 264,347 | 321,723 |
Corporate development | 18,194 | 30,818 |
Exploration and evaluation expenditures [note 4] | 122,631 | 65,679 |
Amortization [note 8] | 16,176 | 17,508 |
Total expenses | 643,439 | 688,087 |
Net loss and comprehensive loss for the period | (622,926) | (686,724) |
Basic and diluted loss per share [note 18] | (0.00) | (0.00) |
See accompanying notes to the consolidated financial statements |
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Fortune Minerals Limited
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(expressed in Canadian dollars)
Unaudited
For the three months ended March 31, | 2024 | 2023 |
OPERATING ACTIVITIES | (Note 3) | |
(622,926) | ||
Net loss for the period from continuing operations | (686,724) | |
Add (deduct) items not involving cash | 16,176 | |
Amortization [note 8] | 17,508 | |
Flow-through share premium | (15,840) | - |
Interest expense on debentures and loans payable [note 11] | 261,033 | 317,226 |
Interest expense on lease liability [note 12] | 3,314 | 3,678 |
Change in fair value related to provision for environmental rehabilitation [note 7] | 1,048 | 574 |
Changes in non-cash working capital balances | ||
related to operations | (12,092) | |
Accounts receivable | 5,192 | |
Prepaid expenses | (4,528) | (79,790) |
Accounts payable and accrued liabilities | 29,030 | 30,667 |
Cash used in operating activities | (344,785) | (391,669) |
INVESTING ACTIVITIES | (45,000) | |
Deposits on capital assets | (30,000) | |
Posting of security for reclamation security deposits | (2,119) | (1,641) |
Cash used in investing activities | (47,119) | (31,641) |
FINANCING ACTIVITIES | (16,500) | |
Lease payments | (5,500) | |
Proceeds on issuance of units | - | 484,100 |
Share issuance costs | - | (55,290) |
Repayment of corporate facility | (40,000) | - |
Cash provided (used) by financing activities | (56,500) | 423,310 |
Decrease in cash and cash equivalents | ||
during the period, net | (448,404) | - |
Cash and cash equivalents, beginning of the period | 673,635 | 78,650 |
Cash and cash equivalents, end of the period [note 10] | 225,231 | 78,650 |
Cash and cash equivalents is comprised of the following; | 83,343 | |
Cash on hand and balances with banks | 64,906 | |
Short-term investments | 141,888 | 13,744 |
Supplemental Cash Flow Disclosure | - | |
Shares for debt settlement | 68,365 |
See accompanying notes to the consolidated financial statements
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Fortune Minerals Limited
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
(expressed in Canadian dollars)
Unaudited | ||||||||
Total | ||||||||
Deficit | shareholders' | |||||||
Common shares | Warrants | Subtotal | Other reserves | (Note 3) | deficiency | |||
# | $ | # | $ | $ | $ | $ | $ | |
December 31, 2022 | 459,751,506 | 180,098,532 | 10,025,750 | 431,499 | 180,530,031 | 16,694,979 | (204,900,389) | (7,675,379) |
Issued as a result of: | ||||||||
Private offerings | 7,892,356 | 376,549 | 8,155,356 | 185,916 | 562,465 | - | - | 562,465 |
Share issuance costs | - | (44,251) | - | (21,039) | (65,290) | - | - | (65,290) |
Net income for the period | - | - | - | - | - | - | (686,724) | (686,724) |
March 31, 2023 | 467,643,862 | 180,430,830 | 18,181,106 | 596,376 | 181,027,206 | 16,694,979 | (205,587,113) | (7,864,928) |
December 31, 2023 | 499,643,862 | 181,558,107 | 33,541,106 | 470,167 | 182,028,274 | 17,258,719 | (207,750,963) | (8,463,970) |
Issued as a result of: | ||||||||
Net loss for the period | - | - | - | - | - | - | (622,926) | (622,926) |
March 31, 2024 | 499,643,862 | 181,558,107 | 33,541,106 | 470,167 | 182,028,274 | 17,258,719 | (208,373,889) | (9,086,896) |
See accompanying notes to the consolidated financial statements | (9,086,896) |
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Fortune Minerals Limited
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2024
1. CORPORATE INFORMATION
Fortune Minerals Limited's business activity is the exploration and development of mineral properties in Canada. Fortune Minerals Limited is incorporated under the laws of Ontario, domiciled in London, Ontario, Canada, and its shares are publicly traded on the Toronto Stock Exchange ["TSX"] and the OTCQB in the United States.
The interim condensed consolidated financial statements of Fortune Minerals Limited ["the Company"] for the three months ended March 31, 2024, were authorized for issuance by the Board of Directors on May 13, 2024.
2. BASIS OF PRESENTATION
- Statement of Compliance
These interim condensed consolidated financial statements of the Company have been prepared by management in accordance with International Financial Reporting Standards ["IFRS"] as issued by the International Accounting Standards Board ["IASB"] and in accordance with International Accounting Standard ["IAS"] 34, Interim Financial Reporting.
- Going Concern of Operations
These interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of the Company's assets and discharge of its liabilities and commitments in the normal course of business. With the Company's negative working capital of $9,624,478 on March 31, 2024, which includes $9,495,696 related to debt maturing December 31, 2024, the Company will require additional further funding to repay these debts. The NICO project also requires further funding to advance the project through to production. This results in the existence of a material uncertainty that casts significant doubt about the Company's ability to continue as a going concern. The Company has historically been successful in financing its activities, however, there can be no assurances that the Company will be able to obtain continued support from existing lenders or obtain sufficient financing on terms acceptable to management to be able to meet its current liabilities as they come due. These interim condensed consolidated financial statements do not include adjustments, which may be material, to the amounts and classification of assets and liabilities that would be necessary should the going concern principle not be appropriate.
- Title Risk
The Company is in the process of exploring its mineral property and the recoverability of the amounts expended on its mineral property is dependent upon future profitable production or proceeds from the disposition of properties.
The business of mining and exploration involves a high degree of risk and there can be no assurance that the Company's exploration programs will result in profitable mining operations. The Company's continued existence is dependent upon the discovery of economically recoverable
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Fortune Minerals Limited
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2024
reserves and resources, securing and maintaining title and beneficial interest in its properties, making the required payments pursuant to mineral property option agreements and/or securing additional financing; all of which are uncertain.
Although the Company has taken steps to verify title to exploration properties in which it has an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company's title. Property title may be subject to other licensing requirements or regulations, social licensing requirements unregistered prior agreements, unregistered claims, aboriginal land claims and non-compliance with regulatory requirements.
- Basis of Consolidation
These interim condensed consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Fortune Minerals Limited is the ultimate parent company of the consolidated group. Subsidiaries are consolidated from the date on which the Company obtains control and continue to be consolidated until control ceases. Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. These financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions. Where the ownership of a subsidiary is less than 100%, and a non-controlling interest exists, any losses of that subsidiary are attributed to the non-controlling interests even if that results in a deficit. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
A joint arrangement is defined as one over which two or more parties have joint control, which is the contractually agreed sharing of control over an arrangement. This exists only when the decisions about the relevant activities (being those that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. There are two types of joint arrangements, joint operations ["JO"] and joint ventures ["JV"]. A JO is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. A JV is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. As at March 31, 2024, the Company assessed its investment in Arctos Anthracite as a JV, and has accounted for it under the equity method. During the three months ended March 31, 2024, the Arctos JV did not have any assets or liabilities other than the reclamation security deposit, for which the Company is solely responsible for [Note 4ii, 7].
These interim condensed consolidated financial statements have been prepared on a historical cost basis. In addition, these interim condensed consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
- Basis of Measurement
These interim condensed consolidated financial statements are presented in Canadian dollars ["CDN"], which is also the Company's and its subsidiaries' functional currency.
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Fortune Minerals Limited
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2024
These interim condensed consolidated financial statements reflect the financial position and results of operations of the Company and its wholly owned subsidiaries Fortune Minerals NWT Inc. ["FMNWT"], Fortune Minerals Saskatchewan Inc. ["FMSI"], Fortune Coal Limited ["FCL"], and Fortune Minerals Mining Limited ["FMML"]. The Arctos Anthracite Joint Venture ["Arctos JV'] is accounted for as a joint operation and FCL recognizes its 50% interest in the assets, liabilities, income, loss, and expenses. All intercompany transactions and balances have been eliminated upon consolidation.
The accounting policies have been applied consistently to all years presented in these interim condensed consolidated financial statements, unless otherwise indicated.
- Judgments and Estimates
The preparation of interim condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. The reported amounts and note disclosures are determined using management's best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results, however, may differ from the estimates used in the interim condensed consolidated financial statements.
The estimates and underlying assumptions are reviewed on an ongoing basis.
In particular, the Company has identified the following areas where significant judgments, estimates, and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements.
-
Income, value added, withholding and other taxes
The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company's provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company's interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.
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Fortune Minerals Limited
NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2024
-
Share-basedpayments and warrants
Management estimates the values for share-based payments and warrants using market-based valuation techniques. The fair value of the market-based share awards is determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates. - Discount rates and lease terms used in application of IFRS 16, Leases
The determination of the Company's lease liabilities and right-of-use assets depends on certain assumptions, which include the selection of the discount rate. The discount rate is set by reference to the Company's incremental borrowing rate. Management determines the incremental borrowing rate for each leased asset by taking into account the Company's credit standing, the guarantee, the term and the value of the underlying leased asset, as well as the economic environment in which the leased asset is operated. Incremental borrowing rates can be changed due to macroeconomic changes in the environment. To determine the appropriate lease term, management considers all relevant facts and circumstances that create an economic incentive for the Company to exercise a renewal option or not to exercise a termination option. The periods covered by the renewal options are included in the lease term only if management is reasonably certain it will renew the lease. Changes in the assumptions used may have a significant effect on the interim condensed consolidated financial statements. - Estimation of decommissioning and reclamation costs and timing of expenditure
The cost estimates are updated annually to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations), and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company's interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities. - Valuation of financial instruments
The Company makes estimates and assumptions relating to the fair value measurement and disclosure of its long-term debts. The fair values are determined using a variety of valuation techniques. The inputs to these models are derived from
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Fortune Minerals Limited published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 18:33:08 UTC.