KUYA SILVER CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEAR ENDED DECEMBER 31, 2023
(Expressed in US Dollars)
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Kuya Silver Corporation
Opinion
We have audited the accompanying consolidated financial statements of Kuya Silver Corporation (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity, and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
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 Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated 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 in our audit is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 of the consolidated financial statements, which indicates that management estimates additional funding will be required to continue current operations and further advance its existing exploration and evaluation assets in the upcoming year. As stated in Note 1, 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. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our auditor's report.
Assessment of Impairment Indicators of Exploration and Evaluation Assets ("E&E Assets")
As described in Note 5 to the consolidated financial statements, the carrying amount of the Company's E&E Assets was $24,271,490 as of December 31, 2023. As more fully described in Note 3 to the consolidated financial statements, management assesses E&E Assets for indicators of impairment at the end of each reporting period.
The principal considerations for our determination that the assessment of impairment indicators of the E&E Assets is a key audit matter is that there was judgment made by management when assessing whether there were indicators of impairment for the E&E Assets, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the E&E Assets.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:
- Evaluating the reasonableness of management's assessment of indicators of impairment for the E&E assets.
- Evaluating the intent for the E&E Assets through discussion and communication with management.
- Assessing compliance with agreements and expenditure requirements including reviewing option agreements and vouching cash payments and share issuances.
- On a test basis, evaluating title to ensure mineral rights underlying the E&E Assets are in good standing.
Estimate of Reclamation Provisions related to Exploration and Evaluation Assets
As described in Note 5 to the consolidated financial statements, the carrying amount of the Company's reclamation provision was $1,815,709 as of December 31, 2023. As more fully described in Note 3 to the consolidated financial statements, management assesses its provision for restoration, rehabilitation and environmental obligations at the end of each reporting period.
The principal considerations for our determination that the estimate of reclamation provisions is a key audit matter are that estimating the costs of such reclamation activities includes significant judgement such as when the reclamation will take place, the time period required to undertake the reclamation, the extent and costing of reclamation activities, regulatory and legislative changes, inflation and discount rates utilized. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their estimate of the net present value of the reclamation provisions.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:
- Assessing the reasonableness of changes in cost estimates against prior year calculations, and timing of expected reclamation activities.
- Evaluating the mathematical accuracy of the reclamation provision model.
- Evaluating the inflation rate and discount rate utilized in the reclamation provision model.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated 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 these consolidated 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 consolidated 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 Company'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 Company'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 consolidated 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 report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We 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.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year 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 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 independent auditor's report is Michael MacLaren.
Vancouver, Canada | Chartered Professional Accountants |
April 18, 2024
KUYA SILVER CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in US Dollars)
As at December 31,
2023 | 2022 | |||
ASSETS | ||||
Current | ||||
Cash | $ | 2,650,187 | $ | 1,196,879 |
Receivables | 206,138 | 106,899 | ||
Prepaids and advances | 149,458 | 259,128 | ||
3,005,783 | 1,562,906 | |||
Facilities and equipment (Note 4) | 6,798 | 110,070 | ||
Exploration and evaluation assets (Note 5) | 24,271,490 | 22,825,721 | ||
$ | 27,284,071 | $ | 24,498,697 | |
LIABILITIES | ||||
Current | ||||
Accounts payable and accrued liabilities (Notes 6 and 11) | $ | 945,236 | $ | 1,103,378 |
Flow-through share premium (Note 8) | 48,492 | 118,269 | ||
993,728 | 1,221,647 | |||
Reclamation provision (Note 5) | 1,815,709 | 1,852,489 | ||
2,809,437 | 3,074,136 | |||
SHAREHOLDERS' EQUITY | ||||
Share capital (Note 8) | 44,177,779 | 37,200,411 | ||
Reserves (Notes 8 and 9) | 1,507,806 | 1,219,513 | ||
Deficit | (21,210,951) | (16,995,363) | ||
24,474,634 | 21,424,561 | |||
$ | 27,284,071 | $ | 24,498,697 | |
Nature of operations and going concern (Note 1) | ||||
Commitments and contingencies (Note 17) | ||||
Subsequent events (Notes 9 and 18) |
Approved on behalf of the board by:
/s/ "David Stein" | /s/ "Dale Peniuk" | |
David Stein, Director | Dale Peniuk, Director |
The accompanying notes are an integral part of these consolidated financial statements.
KUYA SILVER CORPORATION
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in US Dollars)
For the year ended December 31,
2023 | 2022 | |||
Property expenses | ||||
Exploration and evaluation expenditures | ||||
(Notes 5 and 11) | $ | 2,518,775 | $ | 1,773,259 |
(2,518,775) | (1,773,259) | |||
Administrative expenses | ||||
Administrative costs | 61,496 | 41,503 | ||
Consulting fees (Note 11) | 7,431 | 11,021 | ||
Directors' fees (Note 11) | 99,988 | 101,363 | ||
Filing fees | 32,593 | 58,998 | ||
Management fees | 62,236 | 64,561 | ||
Marketing and investor relations | 178,117 | 281,681 | ||
Office and miscellaneous | 332,072 | 541,693 | ||
Professional fees (Note 11) | 296,402 | 378,100 | ||
Share-based compensation (Notes 9 and 11) | 316,925 | 681,610 | ||
Shareholder communication | 10,786 | 13,342 | ||
Transfer agent | 15,634 | 12,390 | ||
Travel | 127,311 | 224,171 | ||
Wages and benefits (Note 11) | 686,668 | 1,272,179 | ||
Warrants issued for loans payable (Notes 7 and 11) | - | 52,012 | ||
(2,227,659) | (3,734,624) | |||
Operating loss | (4,746,434) | (5,507,883) | ||
Accretion expense (Note 5) | (59,693) | (48,162) | ||
Foreign exchange gain (loss) | 13,207 | (108,981) | ||
Gain on settlement of accounts payable | ||||
and accrued liabilities (Note 8) | 13,440 | 4,797 | ||
Recognition of flow-through share premium (Note 8) | 242,573 | 657 | ||
209,527 | (151,689) | |||
Loss for the year | (4,536,907) | (5,659,572) | ||
Other comprehensive income (loss) | ||||
Item that may be reclassified subsequently to profit and loss | ||||
Foreign currency translation adjustment | 504,337 | (1,392,523) | ||
Comprehensive loss for the year | $ | (4,032,570) | $ | (7,052,095) |
Loss per common share - basic and diluted | $ | (0.06) | $ | (0.12) |
Weighted average number of common | ||||
shares outstanding - basic and diluted | 71,126,641 | 49,168,739 |
The accompanying notes are an integral part of these consolidated financial statements.
KUYA SILVER CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Expressed in US Dollars)
For the years ended December 31, 2023 and 2022
Share Capital | |||||||||||
Foreign | |||||||||||
currency | |||||||||||
Number | Share-based | translation | |||||||||
of shares | Amount | reserves | reserves | Deficit | Total | ||||||
December 31, 2021 | 45,279,981 | $ | 33,172,493 | $ | 1,147,110 | $ | 399,606 | $ | (11,335,791) | $ | 23,383,418 |
Issuance of units for cash (Note 8) | 12,041,330 | 4,085,857 | 374,411 | - | - | 4,460,268 | |||||
Flow-through share premium (Note 8) | - | (118,278) | - | - | - | (118,278) | |||||
Share issue costs | - | (538,930) | 143,377 | - | - | (395,553) | |||||
Issuance of common shares on acquisition of | |||||||||||
exploration and evaluation assets (Note 5) | 1,084,490 | 399,910 | - | - | - | 399,910 | |||||
Issuance of units on settlement of accounts | |||||||||||
payable and accrued liabilities | 26,000 | 11,698 | 1,571 | - | - | 13,269 | |||||
Issuance of common shares on settlement of | |||||||||||
restricted share units (Notes 8 and 9) | 400,000 | 187,661 | (187,661) | - | - | - | |||||
Issuance of warrants for loans payable | |||||||||||
(Note 8) | - | - | 52,012 | - | - | 52,012 | |||||
Share-based compensation (Note 9) | - | - | 681,610 | - | - | 681,610 | |||||
Foreign currency translation | - | - | - | (1,392,523) | - | (1,392,523) | |||||
Loss for the year | - | - | - | - | (5,659,572) | (5,659,572) | |||||
December 31, 2022 | 58,831,801 | $ | 37,200,411 | $ | 2,212,430 | $ | (992,917) | $ | (16,995,363) | $ | 21,424,561 |
The accompanying notes are an integral part of these consolidated financial statements.
KUYA SILVER CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (cont'd…)
(Expressed in US Dollars)
For the years ended December 31, 2023 and 2022
Share Capital | |||||||||||
Foreign | |||||||||||
currency | |||||||||||
Number | Share-based | translation | |||||||||
of shares | Amount | reserves | reserves | Deficit | Total | ||||||
December 31, 2022 | 58,831,801 | $ | 37,200,411 | $ | 2,212,430 | $ | (992,917) | $ | (16,995,363) | $ | 21,424,561 |
Issuance of units for cash (Note 8) | 29,166,123 | 5,875,730 | 138,331 | - | - | 6,014,061 | |||||
Flow-through share premium (Note 8) | - | (175,627) | - | - | - | (175,627) | |||||
Share issue costs | - | (299,159) | 74,677 | - | - | (224,482) | |||||
Issuance of common shares on acquisition of | |||||||||||
exploration and evaluation assets | |||||||||||
(Notes 5 and 8) | 4,369,370 | 1,057,491 | - | - | - | 1,057,491 | |||||
Issuance of common shares on exercise of | |||||||||||
options (Notes 8 and 9) | 200 | 250 | (114) | - | - | 136 | |||||
Issuance of common shares on settlement of | |||||||||||
accounts payable and accrued liabilities | |||||||||||
(Note 8) | 405,405 | 94,139 | - | - | - | 94,139 | |||||
Issuance of common shares on settlement of | |||||||||||
restricted share units (Notes 8 and 9) | 150,000 | 65,895 | (65,895) | - | - | - | |||||
Options forfeited or expired (Note 9) | - | - | (269,307) | - | 269,307 | - | |||||
Warrants expired (Note 8) | - | 358,649 | (410,661) | - | 52,012 | - | |||||
Share-based compensation (Note 9) | - | - | 316,925 | - | - | 316,925 | |||||
Foreign currency translation | - | - | - | 504,337 | - | 504,337 | |||||
Loss for the year | - | - | - | - | (4,536,907) | (4,536,907) | |||||
December 31, 2023 | 92,922,899 | $ | 44,177,779 | $ | 1,996,386 | $ | (488,580) | $ | (21,210,951) | $ | 24,474,634 |
The accompanying notes are an integral part of these consolidated financial statements.
KUYA SILVER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in US Dollars)
For the year ended December 31,
2023 | 2022 | |||
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES | ||||
Loss for the year | $ | (4,536,907) | $ | (5,659,572) |
Adjust for items not involving cash: | ||||
Depreciation | 85,672 | 113,315 | ||
Accretion expense | 59,693 | 48,162 | ||
Share-based compensation | 316,925 | 681,610 | ||
Recognition of flow-through share premium | (242,573) | (657) | ||
Warrants issued for loans payable | - | 52,012 | ||
Unrealized foreign exchange loss | (11,397) | (76,848) | ||
Gain on settlement of accounts payable and accrued liabilities | (13,440) | (4,797) | ||
Gain on disposal of facilities and equipment | (2,477) | - | ||
Change in non-cash working capital items: | ||||
Receivables | (103,318) | 54,770 | ||
Prepaids and advances | 114,095 | (150,755) | ||
Accounts payable and accrued liabilities | 39,824 | (36,966) | ||
Net cash used in operating activities | (4,293,903) | (4,979,726) | ||
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES | ||||
Disposal of facilities and equipment | 20,500 | - | ||
Payment for exploration and evaluation assets | (100,000) | (60,000) | ||
Net cash used in investing activities | (79,500) | (60,000) | ||
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES | ||||
Proceeds from issuance of share capital | 6,014,197 | 4,460,268 | ||
Share issue costs | (188,463) | (391,502) | ||
Proceeds from loans payable | - | 232,141 | ||
Repayment of loans payable | - | (232,141) | ||
Net cash provided by financing activities | 5,825,734 | 4,068,766 | ||
Change in cash | 1,452,331 | (970,960) | ||
Effect of foreign exchange on cash | 977 | 15,228 | ||
Cash, beginning of year | 1,196,879 | 2,152,611 | ||
Cash, end of year | $ | 2,650,187 | $ | 1,196,879 |
Supplemental cash flow information (Note 12) |
The accompanying notes are an integral part of these consolidated financial statements.
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Kuya Silver Corp. published this content on 02 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 19:24:15 UTC.