Amarc Resources (AXREF) 6-K Condensed Interim Financial Statements

AMARC RESOURCES LTD.

CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED
DECEMBER 31, 2016 and 2015

(Expressed in Canadian Dollars)

(Unaudited)

Notice to Reader

In accordance with subsection 4.3(3) of National Instrument 51-102, management of the Company advises that the Company's auditors have not performed a review of these interim financial statements.

Amarc Resources Ltd.
Condensed Interim Statements of Financial Position
(Expressed in Canadian Dollars)

			December 31,			March 31,
			2016			2016
	Note		(unaudited)
ASSETS
Current assets
Cash	3	$	619,053		$	747,408
Amounts receivable and other assets	5		23,377			117,406
Marketable securities			13,873			26,404
			656,303			891,218
Non-current assets
Mineral property interests	6 (a)		505,101			–
Restricted cash	4		103,354			205,028
Total assets		$	1,264,758		$	1,096,246
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Amounts payable and accrued liabilities	7	$	69,297		$	22,357
Balance due to a related party	10 (b)		96,550			180,476
Director's loan	8		347,064			1,000,000
			512,911			1,202,833
Non-current liabilities
Director's loan	8		906,070			234,849
Total liabilities			1,418,981			1,437,682
Shareholders' deficiency
Share capital	9		58,967,910			58,967,910
Reserves			5,957,280			5,357,405
Accumulated deficit			(65,079,413	)		(64,666,751	)
			(154,223	)		(341,436	)
Total liabilities and shareholders' deficiency		$	1,264,758		$	1,096,246
Nature of operations and going concern (note 1)

The accompanying notes are an integral part of these condensed interim financial statements.

/s/ Robert A. Dickinson	/s/ Rene G. Carrier
Robert A. Dickinson	Rene G. Carrier
Director	Director

Amarc Resources Ltd.
Condensed Interim Statements of Loss
(Unaudited - Expressed in Canadian Dollars, except for weighted average number of common shares outstanding)

			Three months ended						Nine months ended
			December 31,						December 31,
			2016			2015			2016			2015
	Note					(note 2(b))						(note 2(b))
Expenses
Exploration and evaluation	10,11	$	310,653		$	693,755		$	2,599,504		$	2,669,547
Assays and analysis			27,942			98,137			116,794			111,499
Drilling			–			98,453			263,705			746,312
Equipment rental			1,080			7,434			24,003			16,681
Geological			146,327			128,452			741,827			360,555
Helicopter			–			156,415			568,658			773,841
Property costs and assessments			64,374			100,714			304,572			153,412
Site activities			21,194			84,295			362,966			202,413
Socioeconomic			44,596			67,990			188,928			277,819
Travel and accommodation			5,140			(48,135	)		28,051			27,015
Administration	10,11		155,761			367,024			547,336			1,052,009
Legal, accounting and audit			12,498			60,652			34,016			66,872
Office and administration	11 (b)		101,401			281,058			436,851			904,998
Shareholder communication			27,259			15,188			41,203			44,926
Travel and accommodation			2,594			2,165			3,008			8,597
Trust and regulatory			12,009			7,961			32,258			26,616
Cost recoveries			(414,300	)		(150,000	)		(2,932,597	)		(714,658	)
Pursuant to IKE Option Agreement	6 (b)		(414,300	)		–			(2,932,597	)		–
Mineral exploration tax credit			–			(150,000	)		–			(714,658	)
			52,114			910,779			214,243			3,006,898
Other items
Finance income			(1,871	)		(6,018	)		(7,110	)		(8,205	)
Finance expenses - director's loans	8		96,797			23,609			220,335			556,436
Foreign exchange loss (gain)			43			(37	)		–			2,169
Gain on disposition of marketable securities			–			(2,886	)		(14,806	)		(7,923	)
Loss for the period		$	147,083		$	925,447		$	412,662		$	3,549,375
Basic and diluted loss per common share		$	0.00		$	0.01		$	0.00		$	0.03
Weighted average number of common shares outstanding			141,424,061			141,424,061			141,424,061			141,388,542

The accompanying notes are an integral part of these condensed interim financial statements.

Amarc Resources Ltd.
Condensed Interim Statements of Comprehensive Loss
(Unaudited - Expressed in Canadian Dollars)

		Three months ended December				Nine months ended December
		31,				31,
		2016		2015		2016			2015
Loss for the period	$	147,083	$	925,447	$	412,662		$	3,549,375
Other comprehensive loss (income):
Items that may be reclassified subsequently to profit    and loss:
Revaluation of marketable securities		2,874		6,536		(7,275	)		26,132
Reallocation of the fair value of marketable securities     upon disposition		–		2,913		14,806			8,023
Total other comprehensive loss for the period		2,874		9,449		7,531			34,155
Comprehensive loss for the period	$	149,957	$	934,896	$	420,193		$	3,583,530

The accompanying notes are an integral part of these condensed interim financial statements.

Amarc Resources Ltd.
Condensed Interim Statements of Changes in Deficiency
(Unaudited - Expressed in Canadian Dollars, except for share information)

		Share capital				Reserves
						Share-based		Investment			Share
		Number				payments		revaluation			warrants
	Note	of shares		Amount		reserve		reserve			reserve		Deficit			Total
Balance at April 1, 2015		141,324,061	$	58,955,410	$	2,202,640	$	54,840		$	2,811,220	$	(63,547,972	)	$	476,138
Common shares issued - property payment	6	100,000		12,500		–		–			–		–			12,500
Issuance of share purchase warrants	9 (c)	–		–		–		–			500,000		–			500,000
Total other comprehensive loss		–		–		–		(34,155	)		–		–			(34,155	)
Loss for the period		–		–		–		–			–		(3,549,375	)		(3,549,375	)
Balance at December 31, 2015		141,424,061	$	58,967,910	$	2,202,640	$	20,685		$	3,311,220	$	(67,097,347	)	$	(2,594,892	)
Balance at April 1, 2016		141,424,061	$	58,967,910	$	2,202,640	$	21,402		$	3,133,363	$	(64,666,751	)	$	(341,436	)
Issuance of share purchase warrants	9 (c)	–		–		–		–			607,406		–			607,406
Total other comprehensive income		–		–		–		(7,531	)		–		–			(7,531	)
Loss for the period		–		–		–		–			–		(412,662	)		(412,662	)
Balance at December 31, 2016		141,424,061	$	58,967,910	$	2,202,640	$	13,871		$	3,740,769	$	(65,079,413	)	$	(154,223	)

Theaccompanying notes are anintegral part of thesecondensed interimfinancialstatements.

Amarc Resources Ltd.
Condensed Interim Statements of Cash Flows
(Unaudited - Expressed in Canadian Dollars)

			Nine months ended
			December 31,
	Note		2016			2015
Operating activities
Loss for the period		$	(412,662	)	$	(3,549,375	)
Adjustments for:
Finance income			(7,110	)		(8,205	)
Finance expenses - director's loans			220,335			556,436
Common shares issued, included in exploration expenses			–			12,500
Gain on disposition of marketable securities			(14,806	)		(7,923	)
Changes in working capital items
Amounts receivable and other assets			94,030			162,943
Restricted cash			101,674			(830	)
Accounts payable and accrued liabilities			46,940			1,321
Balances due to related parties			(83,926	)		(38,889	)
Advance contributions received	6 (a)		–			3,000,000
Net cash (used in) provided by operating activities			(55,525	)		127,978
Investing activities
Interest received			7,110			8,205
Acquisition of mineral property interest			(505,101	)		–
Proceeds from disposition of marketable securities			19,805			7,923
Net cash provided by investing activities			(478,186	)		16,128
Financing activities
Proceed from director's loan	8		500,000			1,050,000
Repayment of loans payable to director	8		–			(550,000	)
Interest paid on director's loans	8		(94,644	)		(56,436	)
Net cash provided by financing activities			405,356			443,564
Net (decrease) increase in cash			(128,355	)		587,670
Cash, beginning of the period			747,408			489,150
Cash, end of the period		$	619,053		$	1,076,820
			–
Supplementary cash flow information:
Other non-cash investing and financing activities:
Issuance of the Company's equity instruments pursuant to mineral property agreements		$	–		$	12,500
Issuance of share purchase warrants pursuant to loan agreement		$	607,406		$	322,143

The accompanying notes are an integral part of these condensed interim financial statements.

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

1.	NATURE OF OPERATIONS AND GOING CONCERN
	Amarc Resources Ltd. (the "Company" or "Amarc") is incorporated under the laws of the Province of British Columbia (“BC”), and its principal business activity is the acquisition and exploration of mineral properties. Its principal mineral property interests are located in BC. The address of the Company's corporate office is 15thFloor, 1040 West Georgia Street, Vancouver, BC, Canada V6E 4H1.
	The Company is in the process of exploring its mineral property interests and has not yet determined whether its mineral property interests contain economically recoverable mineral reserves. The Company's continuing operations are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to continue the exploration and development of its mineral property interests and to obtain the permits necessary to mine, and on future profitable production or proceeds from the disposition of its mineral property interests.
	These condensed interim financial statements (the “Financial Statements”) have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. The Company has a history of losses with no operating revenue. As at December 31, 2016, the Company had a shareholders’ deficiency. During the nine month period ended December 31, 2016, the Company received project funding of $3.0 million in cash from Thompson Creek Metals Company Inc. (“Thompson Creek”; now a wholly owned subsidiary of Centerra Gold Inc.) under the IKE Agreement (note 6(b)). The Company also received an advance of $500,000 as part of a debt restructuring (note 8).
	The Company will need to seek additional financing to meet its exploration and development objectives. These factors indicate the existence of a material uncertainty that raises significant doubt about the Company’s ability to continue as a going concern. The Company has a reasonable expectation that additional funds will be available when necessary to meet ongoing exploration and development costs. However, there can be no assurance that the Company will continue to be able to obtain additional financial resources or will achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will be required to re-evaluate its planned expenditures until additional funds can be raised through financing activities.
	These Financial Statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.	SIGNIFICANT ACCOUNTING POLICIES
	The principal accounting policies applied in the preparation of these Financial Statements are described below. These policies have been consistently applied for all years presented, unless otherwise stated.

(a)

Statement of compliance

These Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the International Accounting Standards Board ("IASB"), and interpretations by the IFRS Interpretations Committee (“IFRIC”). These Financial Statements do not include all of the information and footnotes required by International Financial Reporting Standards ("IFRS") for complete financial statements for year-end reporting purposes. These Financial Statements should be read in conjunction with the Company’s financial statements as at and for the year ended March 31, 2016.

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

	Results for the reporting period ended December 31, 2016 are not necessarily indicative of future results. The accounting policies and methods of computation applied by the Company in these Financial Statements are the same as those applied by the Company in its most recent annual financial statements which are filed under the Company’s profile on SEDAR atwww.sedar.com.
	The Board of Directors of the Company authorized these Financial Statements for issuance on February 24, 2017.
(b)	Basis of presentation
	These Financial Statements have been prepared on a historical cost basis, except for financial instruments classified as marketable securities which are stated at fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting, except for cash flow information.
	Certain comparative amounts have been reclassified to conform to the presentation adopted in the current year.
(c)	Significant accounting estimates and judgements
	The critical judgements and estimates applied in the preparation of these Financial Statements are consistent with those applied in the Company’s audited financial statements as at and for the year ended March 31, 2016.
(d)	Accounting standards, interpretations and amendments to existing standards
	There were no new standards, interpretations, or amendment adopted by the Company during the period covered by these Financial Statements that may have a significant impact on these Financial Statements. New standards and amendments to existing standards issued but not yet effective are listed below:
	Effective for annual periods commencing on or after January 1, 2018

• IFRS 9, Financial Instruments

• IFRS 15, Revenue from Contracts with Customers

Effective for annual periods commencing on or after January 1, 2019

• IFRS 16, Leases and revised IAS 17, Leases

	The Company is currently in the process of assessing the impact of the adoption of the above standards on its financial statements.
3.	CASH
	The Company's cash is invested in business and savings accounts which are available on demand by the Company.

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

4.	RESTRICTED CASH
	Restricted cash represents guaranteed investment certificates held in support of exploration permits. The amounts are refundable subject to the consent of regulatory authorities upon the completion of any required reclamation work on the related projects.
5.	AMOUNTS RECEIVABLE AND OTHER ASSETS

		December 31,		March 31,
		2016		2016
Sales tax refundable	$	23,377	$	15,991
Other amounts receivable		—		101,415
Total	$	23,377	$	117,406

6. MINERAL PROPERTY INTEREST AND EXPLORATION FOR MINERAL RESOURCES

(a)	Acquisition of mineral property interest
	In December 2016, the Company acquired, from a private company wholly-owned by one of its directors, a 100% interest in two deposit targets located in north-central and central BC respectively, known as JOY and DUKE, for an aggregate acquisition cost of $505,101, which was the out-of-pocket costs of the private company.
(b)	Exploration for mineral resources
	During the nine months ended December 31, 2016, the Company’s mineral exploration and evaluation activities were primarily focused on its IKE Project, which comprises the IKE and also the Granite, Juno and Galore Properties (collectively the “IKE Project”).
	During the nine months ended December 31, 2016, the Company recorded a gross amount of cost recovery of $3,000,000 representing contributions received pursuant to a definitive agreement (the "IKE Agreement") with Thompson Creek dated February 2016, whereby the latter had an option to acquire, through a staged investment process within five years, a 30% ownership interest (“Stage 1 Option”) in the mineral claims and crown grants covering the IKE copper-molybdenum-silver porphyry deposit and the surrounding district. The net amount of cost recovery in the current period, after deduction $67,403 attributable to expenditures incurred in the prior fiscal year, was $2,932,597. Under the terms of the IKE Agreement, subject to certain conditions, Thompson Creek also had an option to acquire an additional 20% interest in the IKE Project.
	As of December 31, 2016, Thompson Creek had acquired a 10% participating interest in the IKE Project by investing an aggregate amount of $6,000,000 in exploration programs undertaken in calendar years 2015 and 2016.
	After the reporting period, in January 2017, Thompson Creek relinquished its option under the IKE Agreement and elected to exchange its 10% participating interest for a 1% Conversion Net Smelter Royalty from mine production; capped at a total of $5 million. As a result, the Company re-acquired a 100% interest in the IKE Project.

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		December 31,		March 31,
		2016		2016
Accounts payable	$	69,297	$	20,497
Accrued liabilities		–		1,860
Total	$	69,297	$	22,357

8. DIRECTOR’S LOANS

Unsecured loans payable to a director		Nine months ended			Year ended
		December 31, 2016			March 31, 2016
Opening balance	$	1,234,849		$	1,000,000
Net amount advanced		500,000			500,000
Deferred financing cost		(607,406	)		(322,143	)
Amortisation of deferred financing cost		125,692			56,992
Ending balance	$	1,253,135		$	1,234,849

		December 31,		March 31,	��
		2016		2016
Current portion	$	347,065	$	1,000,000
Non-current portion		906,070		234,849
Total	$	1,253,135	$	1,234,849

		Three months ended				Nine months ended
Finance costs		December 31,				December 31,
		2016		2015		2016		2015
Interest on director’s loans	$	34,986	$	23,609	$	94,643	$	56,436
Amortization of deferred finance expenses		61,812		30,968		125,692		284,692
Total	$	96,798	$	19,230	$	220,335	$	532,827

At December 31, 2016, two unsecured loans owing to a director (the “Lender”) of the Company were outstanding with the principal sums of $500,000 (the “2015-Loan Agreement”) and $1,500,000 (the “2016-Loan Agreement”) respectively; the key terms of the underlying agreements for each loan are summarizes below:

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

	2016-Loan Agreement
	In December 2016, the 2016-Loan Agreement was executed, pursuant to which a previous loan agreement for a principal sum of $1,000,000 and with a due date of November 26, 2016 was extended for three years on customary conditions, and the principal sum was increased to $1,500,000 by way of an additional advance of $500,000 to fund mineral property acquisitions (note 6(a)). Pursuant to the 2016-Loan Agreement, the Company issued to the Lender a loan bonus comprising of 10,000,000 common share purchase warrants (note 9(c)) with a three-year term and an exercise price of $0.08 per share.
	This loan was originally advanced for a one-year term and with a principal sum of $1,000,000 in November 2014, bearing interest at prime plus 2% per annum. The Company issued 2,500,000 of its common shares to the Lender as per the term of the original advance. The aggregate fair value of these common shares, with reference to their quoted market price on the date of issuance, was determined at $187,500. The loan was later extended to May 26, 2016 at a 7% per annum fixed interest rate and then to November 26, 2016 at a 9% per annum fixed interest rate for the additional terms.
	2015-Loan Agreement
	The 2015-Loan Agreement was executed in September 2015 when a principal sum of $500,000 was advanced to the Company with a two-year term and at an interest rate of 7% per annum. Pursuant to this loan, the Company issued 5,555,555 common share purchase warrants (note 9(c)) to the Lender with an expiry term of two years and exercise price of $0.09.
9.	CAPITAL AND RESERVES

(a)	Authorized share capital
	The Company's authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares. All issued common shares are fully paid. No preferred shares have been issued.
(b)	Share purchase option compensation plan
	The following table summarizes the changes in the Company's share purchase options:

Share purchase options (exercise price – $0.32)	Nine months ended December 31,
	2016		2015
Outstanding – beginning of period	3,051,300		3,051,300
Expired	(3,051,300	)	–
Outstanding and Exercisable – end of period	–		3,051,300

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

(c)	Share purchase warrants
	The following common share purchase warrants were outstanding at December 31, 2016 and March 31, 2016:

				Number of warrants
			Exercise	December 31,	March 31,
	Expiry		price	2016	2016
Issued pursuant to:
the 2015-Loan Agreement(i)(note 8)	September 2017	$	0.09	5,555,555	5,555,555
the 2016-Loan Agreement(ii)(note 8)	December 2019	$	0.08	10,000,000	–
Total				15,555,555	5,555,555

(i)	The fair value of these warrants was determined as $322,143, using the Black Scholes option pricing model and based on the following assumptions: risk-free rate of 0.51%; expected volatility of 130%; the underlying’s market price of $0.09, expiry term of 2 years; and dividend yield of nil.
(ii)	The Company determined the fair value of these warrants as $607,406, using the Black Scholes option pricing model and based on the following assumptions: risk-free rate of 0.79%; expected volatility of 135%; the underlying’s market price of $0.08, expiry term of 3 years; and dividend yield of nil.

10. RELATED PARTY TRANSACTIONS

(a)	Transactions with key management personnel
	Key management personnel (“KMP”) are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, and by definition include all directors of the Company.
	Transactions with key management personnel were as follows:

		Three months ended				Nine months ended
		December 31,				December 31,
		2016		2015		2016		2015
Directors fees paid directly by the Company	$	–	$	14,000	$	–	$	41,000
Directors fees paid to HDSI		–		62,000		–		187,000
Total	$	–	$	76,000	$	–	$	228,000

Note 8 includes the details of a director’s loans. Note 6 includes the details of the acquisition of mineral property interests from a private entity wholly-owned by one of the Company’s directors.

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

(b)	Balances and transactions with Hunter Dickinson Inc.
	Hunter Dickinson Inc. (“HDI”) and its wholly owned subsidiary Hunter Dickinson Services Inc. ("HDSI") are private companies established by a group of mining professionals engaged in advancing mineral properties for a number of publicly-listed exploration companies, one of which is the Company. The Company has 3 directors in common with HDSI, namely: Robert Dickinson, Ronald Thiessen, and Scott Cousens. Also, the Company’s President, Chief Financial Officer, and Corporate Secretary are employees of HDSI and work for the Company under an employee secondment arrangement between the Company and HDSI.
	HDSI provides technical, geological, corporate communications, regulatory compliance, and administrative and management services to the Company, on an as-needed and as-requested basis from the Company. As a result of this relationship, the Company has ready access to a range of diverse and specialized expertise on a regular basis, without having to engage or hire full-time experts. Services from HDSI are provided on a non-exclusive basis. The Company is not obligated to acquire any minimum amount of services from HDSI. The value of services received from HDSI is determined based on a charge-out rate for each employee performing the service and for the time spent by the employee. Such charge-out rates are agreed and set annually in advance.
	HDSI also incurs third-party costs on behalf of the Company; such third party costs are reimbursed by the Company to HDSI at cost without any markup and such costs include, for example, directors and officers insurance, travel, conferences, and communication services.

		December 31,		March 31,
		2016		2016
Balance due to HDSI	$	96,550	$	180,476

The following is a summary of transactions with related entities that occurred during the reporting period:

		Three months ended				Nine months ended
Transactions with HDSI		December 31,				December 31,
		2016		2015		2016		2015
Services received from HDSI and as requested      by the Company	$	240,000	$	390,000	$	803,000	$	1,142,000
Directors fees paid to HDSI (note 10(a))		–		62,000		–		187,000
Information technology – infrastructure and       support services		15,000		30,000		45,000		96,000
Reimbursement, at cost, of third-party expenses      incurred by HDSI on behalf of the Company		3,000		5,000		27,000		34,000

Amarc Resources Ltd.

Notes to the Condensed Interim Financial Statements

For the three and nine months ended December 31, 2016 and 2015

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

11. EMPLOYEE SALARIES AND BENEFITS EXPENSES

(a)	Employee salaries and benefits
	The employees’ salaries and benefits included in exploration and evaluation expenses and administration expenses are as follows:

		Three months ended				Nine months ended
		December 31,				December 31,
		2016		2015		2016		2015
Exploration and evaluation expenses	$	143,000	$	230,000	$	581,000	$	626,000
General and administration expenses		113,000		246,000		336,000		766,000
Total	$	256,000	$	476,000	$	917,000	$	1,392,000

(b)	Office and administration expenses
	Office and administration expenses include the following:

		Three months ended				Nine months ended
		December 31,				December 31,
		2016		2015		2016		2015
Salaries and benefits	$	84,000	$	218,000	$	307,000	$	715,000
Data processing and retention		16,000		30,000		46,000		96,000
Insurance and other office expenses		1,000		32,000		83,000		96,000
Total	$	101,000	$	280,000	$	436,000	$	907,000