CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED
SEPTEMBER 30, 2023 AND 2022
(in thousands of United States Dollars unless stated otherwise)
KPMG LLP
Purdy's Wharf Tower One
1959 Upper Water Street, Suite 1000
Halifax, NS B3J 3N2
Canada
Telephone 902 492 6000
Fax 902 429 1307
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of GoGold Resources Inc.
Opinion
We have audited the consolidated financial statements of GoGold Resources Inc. (the Entity), which comprise:
- the consolidated statements of financial position as at September 30, 2023 and September 30, 2022
- the consolidated statements of operations and comprehensive loss for the years then ended
- the consolidated statements of cash flows for the years then ended
- the consolidated statements of changes in equity for the years then ended
- and notes to the consolidated financial statements, including a summary of significant accounting policies (Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at September 30, 2023 and September 30, 2022, its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards.
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 Financial Statements" section of our auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the 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 is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended September 30, 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
© 2023 KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
KPMG Canada provides services to KPMG LLP.
Evaluation of the recoverability of in process inventory
Description of the matter
We draw attention to Notes 2(c) and 5 to the financial statements. The carrying amount of the in-process inventory is $43,744 thousand. The Entity makes estimates of gold and silver recoverable from tailings stacked on leach pads in the determination of the carrying amount of in process inventory. The quantities of recoverable gold and silver placed on the leach pads are reconciled to the quantities of gold and silver actually recovered (metallurgical balancing), by comparing the estimate of contained ounces placed on the leach pads to actual ounces recovered. In determining the recoverability of in process inventory, the Entity's significant assumptions include future leach pad recovery rates and the grade of material stacked on the leach pads.
Why the matter is a key audit matter
We identified the evaluation of the recoverability of in process inventory as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of in process inventory and high degree of estimation uncertainty in determining the recoverability of in process inventory. In addition, significant auditor judgment was required in evaluating the results of our audit procedures and significant assumptions used by the Entity.
How the matter was addressed in the audit
The primary procedures we performed to address this key audit matter included the following:
We compared the recovery rates used in calculating in process inventory to the relevant technical reports.
We evaluated management's process for estimation of future leach pad recovery rates by comparing historical and current recovery rate assumptions to actual historical recoveries.
We inspected a selection of the Entity's third-party lab assay reports used to determine actual tailings grades throughout the stacking and leaching process and compared the reports to amounts used in the calculation of in process inventory.
We assessed the completeness and accuracy of production information, including tonnage stacked and processed, and compared the production information to the financial modeling and the rollforward of estimated recoverable in process inventory.
Evaluation of the carrying value of the Parral project cash-generating unit
Description of the matter
We draw attention to Notes 2(c), 3(f) and 7 to the financial statements. At each reporting date, the net carrying amounts of property, plant, and equipment are reviewed for impairment either individually or at the cash-generating unit ("CGU") level when events and changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.
At September 30, 2023, the Entity determined that a decline in results at the Parral project, which is a CGU, constituted an indicator of potential impairment. Therefore, the Entity completed an impairment assessment whereby the carrying value was compared to its recoverable amount. As a result of the impairment assessment the Entity recognized a non-cash impairment loss of $2,980 on property, plant and equipment related to the Parral project CGU.
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The recoverable amount was determined as the higher of value in use and the fair value less costs of disposal, which was determined using an after-tax discounted future cash flow valuation model. The significant assumptions used in determining the recoverable amount were: future gold and silver prices, estimate of recoverable mineral resources and reserves, discount rate, future foreign exchange rates and operating costs.
Why the matter is a key audit matter
We identified the evaluation of the carrying value of the Parral project cash-generating unit as a key audit matter. This matter represented an area of significant risk of material misstatement as minor changes to certain significant assumptions had a significant effect on the estimated recoverable amount of the cash generating unit. As a result, significant auditor judgment was required in evaluating the results of our audit procedures. Further, professionals with specialized skills and knowledge were required to evaluate certain significant assumptions.
How the matter was addressed in the audit
The following are the primary procedures we performed to address this key audit matter.
We evaluated the operating costs and estimate of recoverable mineral resources and reserves, by comparing to historical results. We took into account changes in conditions and events affecting the Entity to assess the adjustments or lack of adjustments made by the Entity. We also evaluated the Entity's estimate of recoverable mineral resources and reserves by comparing the estimate to the latest third-party technical reports.
We assessed the competence, capabilities and objectivity of the Entity's personnel who prepared the estimate of recoverable resources and reserves.
We involved valuation professionals with specialized skills and knowledge who assisted in evaluating the appropriateness of the Entity's:
- Future gold and silver prices and future foreign exchange rates by comparing to estimates that were independently developed using publicly available third-party sources
- Discount rate by comparing to estimates that were independently developed using publicly available third-party sources and data for comparable entities.
Other Information
Management is responsible for the other information. Other information comprises the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.
We obtained the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor's report.
We have nothing to report in this regard.
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Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Entity'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 Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 the 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 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 Entity'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 Entity'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 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
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report. However, future events or conditions may cause the Entity to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- 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.
- Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
- Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period 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 auditor's 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 auditor's report is Brittany Bartlett. Halifax, Canada
December 18, 2023
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands of United States dollars)
September 30 | September 30 | ||||
2023 | 2022 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 95,233 | $ | 73,344 | |
Trade receivables | 2,925 | 2,515 | |||
Input tax recoverable | 1,228 | 1,101 | |||
Prepaid expenses | 399 | 354 | |||
Inventories (Note 5) | 14,593 | 11,851 | |||
114,378 | 89,165 | ||||
Non-current assets: | |||||
Input tax recoverable | 18,690 | 13,203 | |||
Inventories (Note 5) | 32,731 | 35,665 | |||
Property, plant and equipment (Note 6) | 48,607 | 53,353 | |||
Exploration and evaluation assets (Note 8) | 88,017 | 73,292 | |||
Total assets | $ | 302,423 | $ | 264,678 | |
LIABILITIES | |||||
Current liabilities: | |||||
Trade and other payables | $ | 6,978 | $ | 7,865 | |
Current portion of long-term obligations (Note 9) | 604 | 964 | |||
Current portion of onerous contract provision (Note 10) | 460 | 545 | |||
Income taxes (Note 13) | 4,624 | 2,435 | |||
12,666 | 11,809 | ||||
Non-current liabilities: | |||||
Long-term obligations (Note 9) | 1,115 | 1,508 | |||
Onerous contract provision (Note 10) | 3,855 | 3,593 | |||
Derivative liability (Note 17(d)) | 1,176 | 745 | |||
Provision for site restoration (Note 11) | 1,705 | 2,040 | |||
Deferred tax liability (Note 13) | 349 | 4,652 | |||
Total liabilities | 20,866 | 24,347 | |||
EQUITY | |||||
Share capital (Note 12) | 310,905 | 264,044 | |||
Contributed surplus | 13,688 | 12,110 | |||
Accumulated other comprehensive loss | (8,640) | (9,317) | |||
Deficit | (34,396) | (26,506) | |||
Total equity | 281,557 | 240,331 | |||
Total liabilities and equity | $ | 302,423 | $ | 264,678 | |
Commitments (Note 18) | |||
Signed on behalf of the Board: | "signed" | "signed" | |
John Turner | George Waye |
See accompanying notes to the consolidated financial statements.
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands of United States dollars, except per share amounts)
September 30 | September 30 | |||||
For the year ended | 2023 | 2022 | ||||
Revenue from mining operations | $ | 30,260 | $ | 36,054 | ||
Cost of sales: | ||||||
Production costs, except amortization and depletion | 20,577 | 22,981 | ||||
Amortization and depletion | 3,132 | 4,158 | ||||
Inventory net realizable value adjustment (Note 5) | 10,500 | 3,595 | ||||
34,209 | 30,734 | |||||
General and administrative | 7,714 | 8,059 | ||||
Loss on onerous contract provision (Note 10) | 177 | 340 | ||||
Operating loss | (11,840) | (3,079) | ||||
Finance costs | (637) | (574) | ||||
Foreign exchange gain | 1,456 | 4,901 | ||||
(Loss) gain on derivative liability (Note 17(d)) | (431) | 230 | ||||
Interest income | 4,428 | 5,688 | ||||
Impairment charge (Note 7) | (2,980) | - | ||||
1,836 | 10,245 | |||||
Net (loss) income before income taxes | (10,004) | 7,166 | ||||
Current income tax expense (Note 13) | 2,189 | 2,435 | ||||
Deferred income tax (recovery) expense (Note 13) | (4,303) | 4,039 | ||||
(2,114) | 6,474 | |||||
Net (loss) income | (7,890) | 692 | ||||
Other comprehensive income (loss): | ||||||
Foreign currency translation differences which may | ||||||
subsequently be cycled through net income | 677 | (4,967) | ||||
Total comprehensive loss | $ | (7,213) | $ | (4,275) | ||
Net (loss) income per share (Note 12(h)) | ||||||
Basic | $ | (0.025) | $ | 0.002 | ||
Diluted | $ | (0.025) | $ | 0.002 | ||
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CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of United States dollars)
September 30 | September 30 | |||||
For the year ended | 2023 | 2022 | ||||
Cash provided by (used in) the following activities: | ||||||
Operating activities | ||||||
Net (loss) income | $ | (7,890) | $ | 692 | ||
Items not involving cash: | ||||||
Amortization and depletion | 3,132 | 4,158 | ||||
Deferred income taxes | (4,303) | 4,039 | ||||
Foreign exchange gain | (1,456) | (4,901) | ||||
Finance cost | 637 | 562 | ||||
Interest paid | (28) | (67) | ||||
Inventory net realizable value adjustment (Note 5) | 10,500 | 3,595 | ||||
Impairment charge (Note 7) | 2,980 | - | ||||
Loss (gain) on derivative liability | 431 | (230) | ||||
Loss on onerous contract provision (Note 10) | 177 | 340 | ||||
Settlement of onerous contract provision | ||||||
by sale of Off-Take Ounces (Note 10) | (288) | (346) | ||||
Stock based compensation | 1,897 | 1,949 | ||||
5,789 | 9,791 | |||||
Net change in non-cash operating working capital (Note 14) | (13,208) | (10,767) | ||||
Net cash used in operating activities | (7,419) | (976) | ||||
Investing activities | ||||||
Exploration and evaluation expenditures (Note 8) | (13,863) | (24,492) | ||||
Purchase of property, plant and equipment | (1,037) | (208) | ||||
Net cash used in investing activities | (14,900) | (24,700) | ||||
Financing activities | ||||||
Net proceeds on equity issuances (Note 12) | 45,362 | 33,424 | ||||
Proceeds on option exercises (Note 12) | 56 | 213 | ||||
Payment of leases (Note 9) | (435) | (439) | ||||
Payment of long-term obligations (Note 9) | (588) | (771) | ||||
Net cash provided by financing activities | 44,395 | 32,427 | ||||
Effect of exchange rate changes on cash and cash equivalents | (187) | (244) | ||||
Net increase in cash and cash equivalents | 21,889 | 6,507 | ||||
Cash and cash equivalents, beginning of year | 73,344 | 66,837 | ||||
Cash and cash equivalents, end of year | $ | 95,233 | $ | 73,344 | ||
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of United States dollars)
Number of | Share | Contributed | Accumulated other | ||||||||
shares | capital | surplus comprehensive loss | Deficit | Total equity | |||||||
Balance at September 30, 2021 | 277,847,367 | $ | 227,520 | $ | 10,289 | $ | (4,350) | $ | (27,198) | $ | 206,261 |
Net income | - | - | - | - | 692 | 692 | |||||
Other comprehensive loss | - | - | (4,967) | - | (4,967) | ||||||
Tax recovery on share issue costs (Note 12) | - | 688 | - | - | - | 688 | |||||
Options exercised | 687,639 | 362 | (149) | - | - | 213 | |||||
Stock-based compensation (Note 12) | - | - | 1,970 | - | - | 1,970 | |||||
Shares issued, net of issuance costs (Note 12) | 17,171,000 | 35,474 | - | - | - | 35,474 | |||||
Balance at September 30, 2022 | 295,706,006 | $ | 264,044 | $ | 12,110 | $ | (9,317) | $ | (26,506) | 240,331 | |
Net loss | - | - | - | - | (7,890) | (7,890) | |||||
Other comprehensive income | - | - | 677 | - | 677 | ||||||
Options exercised | 938,755 | 241 | (147) | - | - | 94 | |||||
Stock-based compensation (Note 12) | - | - | 1,725 | - | - | 1,725 | |||||
Shares issued, net of issuance costs (Note 12) | 29,843,750 | 46,620 | - | - | - | 46,620 | |||||
Balance at September 30, 2023 | 326,488,511 | $ | 310,905 | $ | 13,688 | $ | (8,640) | $ | (34,396) | $ | 281,557 |
See accompanying notes to the consolidated financial statements.
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GoGold Resources Inc. published this content on 19 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 December 2023 13:47:35 UTC.