Condensed Interim Consolidated Financial Statements
For the nine months ended September 30, 2016 and 2015
(Expressed in Canadian Dollars)
(Unaudited)
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 financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited condensed interim consolidated 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.
Vancouver, Canada
November 14, 2016
Exeter Resource Corporation Condensed Interim Consolidated Statements of Financial Position (Expressed in Thousands of Canadian Dollars, Except Share Data) (Unaudited) |
| | | September 30,
2016 | | | December 31,
2015 | |
| | | | | | | |
| Assets | | | | | | |
| | | | | | | |
| Current | | | | | | |
| Cash and cash equivalents | (Note 4) | | $ | 18,734 | | | $ | 22,308 | |
| Amounts receivable and prepaid expenses | | | 121 | | | | 132 | |
| Due from related party | (Note 8) | | | 6 | | | | 18 | |
| Other financial assets | | | | 123 | | | | 26 | |
| | | | 18,984 | | | | 22,484 | |
| | | | | | | | | |
| Property and equipment | | | | 44 | | | | 59 | |
| | | $ | 19,028 | | | $ | 22,543 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| | | | | | | | | |
| Current | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 274 | | | $ | 311 | |
| Due to related parties | (Note 8) | | | 74 | | | | 20 | |
| | | | 348 | | | | 331 | |
| | | | | | | | | |
| Shareholders’ Equity | | | | | | | | |
| | | | | | | | | |
| Share capital | (Note 6) | | | 246,267 | | | | 246,089 | |
| Contributed surplus | | | | 46,199 | | | | 45,635 | |
| Accumulated deficit | | | (273,933 | ) | | | (269,556 | ) |
| Accumulated other comprehensive income | | | 147 | | | | 44 | |
| | | | 18,680 | | | | 22,212 | |
| | | $ | 19,028 | | | $ | 22,543 | |
| | | | | | | | | |
Contractual Obligations (Note 11)
Approved by the Directors:
| “Robert Reynolds” | Director |
| “John Simmons” | Director |
See accompanying notes to the condensed interim consolidated financial statements
Exeter Resource Corporation Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in Thousands of Canadian Dollars, Except Share Data) (Unaudited) |
| | | Three months ended | | | Nine months ended | |
| | | September 30 | | | September 30 | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| Income | | | | | | | | | | | | |
| Interest income | | $ | 55 | | | $ | 69 | | | $ | 161 | | | $ | 229 | |
| Expenses | | | | | | | | | | | | | | | | |
| Accounting and audit | | | 2 | | | | 5 | | | | 8 | | | | 20 | |
| Administration salaries and consulting (Note 7) | | | 104 | | | | 198 | | | | 356 | | | | 629 | |
| Amortization | | | 5 | | | | 9 | | | | 15 | | | | 29 | |
| Directors’ fees (Note 7) | | | 76 | | | | 342 | | | | 326 | | | | 417 | |
| Foreign exchange (gain) loss | | | 5 | | | | (59 | ) | | | 14 | | | | (63 | ) |
| General and administration (Note 10) | | | 107 | | | | 123 | | | | 398 | | | | 359 | |
| Legal fees | | | 7 | | | | 6 | | | | 31 | | | | 70 | |
| Impairment on available for sale investments | | | - | | | | 6 | | | | - | | | | 17 | |
| Management fees (Note 7) | | | 23 | | | | 55 | | | | 94 | | | | 123 | |
| Mineral property expenditures (Notes 5 and 7) | | | 784 | | | | 1,085 | | | | 2,802 | | | | 4,717 | |
| Shareholder communications | | | 125 | | | | 104 | | | | 393 | | | | 313 | |
| Stock exchange listing and filing fees | | | - | | | | - | | | | 101 | | | | 122 | |
| | | | 1,238 | | | | 1,874 | | | | 4,538 | | | | 6,753 | |
| Net loss for the period | | $ | 1,183 | | | $ | 1,805 | | | $ | 4,377 | | | $ | 6,524 | |
| Other comprehensive (income) loss for the period | | | | | | | | | | | | | | | | |
| Items that may be reclassified to profit or loss: | | | | | | | | | | | | | | | | |
| Currency translation difference | | | (2 | ) | | | (3 | ) | | | (6 | ) | | | 12 | |
| Unrealized gain on available-for-sale investments | | | (26 | ) | | | (8 | ) | | | (97 | ) | | | (10 | ) |
| Net loss and comprehensive loss for the period | | $ | 1,155 | | | $ | 1,794 | | | $ | 4,274 | | | $ | 6,526 | |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per common share from loss for the period | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.05 | ) | | $ | (0.07 | ) |
| Weighted average number of common shares outstanding | | | 88,619,284 | | | | 88,407,753 | | | | 88,490,397 | | | | 88,407,753 | |
See accompanying notes to the condensed interim consolidated financial statements
Exeter Resource Corporation Condensed Interim Consolidated Statements of Cash Flows (Expressed in Thousands of Canadian Dollars, Except Share Data) (Unaudited) | |
| For the nine months ended September 30, | | | 2016 | | | 2015 | |
Operating Activities | | | | | | | |
| Net loss for the period | | | $ | (4,377 | ) | | $ | (6,524 | ) |
| Non-cash items: | | | | | | | | |
| Amortization | | | 15 | | | | 29 | |
| Loss on available-for-sale investments | | | | - | | | | 17 | |
| Share-based compensation | (Note 7) | | | 616 | | | | 825 | |
| | | | | (3,746 | ) | | | (5,653 | ) |
| Changes in non-cash working capital items: | | | | | | | | |
| Amounts receivable and prepaid expenses | | | 11 | | | | 14 | |
| Due from related parties | | | 12 | | | | (6 | ) |
| Due to related parties | | | 54 | | | | (47 | ) |
| Accounts payable and accrued liabilities | | | (38 | ) | | | (871 | ) |
| Cash outflow from operating activities | | | (3,707 | ) | | | (6,563 | ) |
Financing Activities | | | | | | | | |
| Issue of share capital for cash (Note 7) | | | 126 | | | | - | |
| Cash flows from financing activities | | | 126 | | | | - | |
Investing Activities | | | | | | | | |
| Acquisition of property and equipment | | | - | | | | (9 | ) |
| Acquisition of available-for-sale investment | | | - | | | | (50 | ) |
| Cash flows from investing activities | | | - | | | | (59 | ) |
| | | | | | | | | |
| Effect of foreign exchange rate change on cash | | | 7 | | | | 2 | |
| | | | | | | | | |
| Net decrease in cash and cash equivalents | | | (3,574 | ) | | | (6,620 | ) |
| Cash and cash equivalents – beginning of the period | | | 22,308 | | | | 30,752 | |
| Cash and cash equivalents – end of the period | | $ | 18,734 | | | $ | 24,132 | |
See accompanying notes to the condensed interim consolidated financial statements
Exeter Resource Corporation Condensed Interim Consolidated Statements of Changes in Equity (Expressed in Thousands of Canadian Dollars, Except Share Data) (Unaudited) | |
| | Issued Share Capital | | | | | | | | | |
| | Number of
Shares | | Amount | | Contributed
Surplus | | Deficit | | Accumulated Other
Comprehensive
Income (Loss) | | Total
Shareholders'
Equity | |
| | | | | | | | | | | | | |
| Balance - January 1, 2015 | 88,407,753 | $ | 246,089 | $ | 44,404 | $ | (260,659 | ) $ | 40 | $ | 29,874 | |
| Activity during the period: | | | | | | | | | | | | |
| - | Share-based compensation | - | | - | | 825 | | - | | - | | 825 | |
| - | Other comprehensive income | - | | - | | - | | - | | (2 | ) | (2 | ) |
| - | Net loss for the period | - | | - | | - | | (6,524 | ) | - | | (6,524 | ) |
| Balance - September 30, 2015 | 88,407,753 | $ | 246,089 | $ | 45,229 | $ | (267,183 | ) $ | 38 | $ | 24,173 | |
| Activity during the period: | | | | | | | | | | | | |
| - | Share-based compensation | - | | - | | 406 | | - | | - | | 406 | |
| - | Other comprehensive income | - | | - | | - | | - | | 6 | | 6 | |
| - | Net loss for the period | - | | - | | - | | (2,373 | ) | - | | (2,373 | ) |
| Balance - December 31, 2015 | 88,407,753 | $ | 246,089 | $ | 45,635 | $ | (269,556 | ) $ | 44 | $ | 22,212 | |
| Activity during the period: | | | | | | | | | | | | |
| - | Exercise of stock options | 252,500 | | 126 | | - | | - | | - | | 126 | |
- | Contributed surplus allocated on exercise of options | - | | 52 | | (52 | ) | - | | - | | - | |
| - | Share-based compensation | - | | - | | 616 | | - | | - | | 616 | |
| - | Other comprehensive income | - | | - | | - | | - | | 103 | | 103 | |
| - | Net loss for the period | - | | - | | - | | (4,377 | ) | - | | (4,377 | ) |
| Balance - September 30, 2015 | 88,660,253 | $ | 246,267 | $ | 46,199 | $ | (273,933 | ) $ | 147 | $ | 18,680 | |
See accompanying notes to the condensed interim consolidated financial statements
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
Exeter Resource Corporation (“Exeter” or the “Company”) is an exploration stage company incorporated under the laws of British Columbia, Canada and together with its subsidiaries, it is engaged in the acquisition and exploration of mineral properties located in the Americas.
The Company is in the process of exploring its mineral properties. The continued operation of the Company is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of such properties, and the profitable production from or disposition of such properties.
The Company has its primary listing on the Toronto Stock Exchange and a secondary listing on the NYSE-MKT. The Company’s head office is located at 1660 - 999 West Hastings Street, Vancouver, BC, Canada, V6C 2W2.
These condensed interim consolidated financial statements have been prepared in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), as applicable to interim financial reports including IAS 34 “Interim Financial Reporting”. The accounting policies followed by the Company are set out in Note 4 of the audited consolidated financial statements for the year ended December 31, 2015, and have been consistently followed in the preparation of these condensed interim consolidated financial statements. These condensed interim consolidated financial statements do not include all the information and note disclosure required by IFRS for annual financial statements, and therefore, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2015.
These condensed interim consolidated financial statements were approved by the Board of Directors on November 14, 2016.
The carrying amounts of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities and due to and from related parties approximate fair value due to the short term nature of these financial instruments.
Fair value measurements are categorized within the following hierarchy:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The marketable securities held by the Company are carried at fair value based on quoted prices in the active market (Level 1).
The Company has no other financial assets or liabilities measured at fair value on a recurring basis.
| 4. | Cash and Cash Equivalents |
| (in thousands) | | September 30, 2016 | | | December 31,
2015 | |
| Cash | | | | | | |
| Cash at bank | | $ | 9,084 | | | $ | 12,728 | |
| Investment savings accounts | | | 9,650 | | | | 9,580 | |
| Total | | $ | 18,734 | | | $ | 22,308 | |
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
| 5. | Mineral Properties - Acquisition and Mineral Property Costs |
Caspiche
By an agreement dated October 11, 2005 and subsequently amended, the Company acquired the right to review a number of properties in the Maricunga region of Chile. Under the terms of the agreement, the Company had the right to earn a 100% interest in the properties by incurring aggregate expenditures of US$2.55 million over five years including conducting 15,500 meters (“m”) of drilling with the vendor retaining a 3% net smelter royalty (“NSR”) in the properties.
Having met the requirements to earn its interest in the properties effective February 14, 2011 the Company exercised its option and acquired the properties. The vendor retains a 3% NSR from production from the property and has the right to buy the property back by reimbursing certain of the Company’s expenditures incurred on the property if it is not put into production within 15 years of exercising the option. In addition, the Company will be required to pay a further 0.08% NSR from production pursuant to an agreement with a private entity. The Company is required to make an advance annual royalty payment of US$250,000 up until March 31, 2020 (US$1,500,000 paid to September 30, 2016) and thereafter US$1 million annually for the period March 31, 2021 to March 31, 2025 or until commencement of commercial production, should production commence prior to March 31, 2025, at which time the advance royalty will cease and the NSR will be payable.
Water agreement
In January 2014, the Company’s Chilean subsidiary, Sociedad Contractual Minera Eton Chile (“Eton”), negotiated new water exploration agreement (“Water Agreement”) terms with the Chilean subsidiary of Canadian company Atacama Pacific Gold Corporation (“Atacama Pacific”). The new terms amend the original agreement entered into between the parties in May 2013. The Water Agreement allows Eton to earn an additional 40% interest, for an aggregate 90% interest, in any water rights granted following the discovery of water near Peñas Blancas (Laguna Verde) in the Maricunga region, northern Chile. To earn the additional 40% interest, Eton is required to incur an additional 40% (total of 90%) of all expenditures relating to exploration and potential development on the water tenements. In addition, in the event of approval of water rights by the General Directorate of Water Resources (“DGA”), Eton will assume Atacama Pacific’s obligation to pay Hydro Exploraciones SpA (“Hydro”), an Atacama Pacific affiliate, US$15,000 per litre per second (“l/s”) of DGA approved water rights. Atacama Pacific will remain obligated to pay Hydro US$15,000 per l/s on its 10% interest. Regardless of the total amount of DGA approved water acquired, payments to Hydro are capped at US$1 million. These payments are not applicable to Eton’s original 50% interest in any water rights acquired. In addition, Eton will pay US$5,000 per month to Hydro from the date of any application for water rights for assisting with securing such water rights. The aggregate of the monthly payments are deductible from any amount payable to Hydro for water rights acquired. In Q4 2015, the Company was granted a provisional easement over the area covering the water exploration holes.
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
| 5. | Mineral Properties - Acquisition and Mineral Property Costs (Continued) |
Land easement
The Company has a lease agreement with the Chilean Government for the surface rights that correspond to its initial mineral rights in the Caspiche area and in Q3 2016 the lease was renewed for a further 10 year period at an annual rate of approximately US$40,000. On June 10, 2013 the Company announced that its application for surface rights at Caspiche had been granted by the Chilean Government; this easement extends this area to cover most of its additional tenements as well as areas that may be required for potential development of a mine at Caspiche. In order to maintain these rights, which are valid for 25 years, the Company is required to make total payments of 158,876 Unidades de Fomento (UF)*, an equivalent of approximately US$6.6 million of which US$3.0 million has been paid to September 30, 2016. Seven annual payments of approximately US$510,000 each remain payable.
* Unidad de Fomento (UF). This is a unit of account used in Chile. The exchange rate between the UF and the Chilean peso is constantly adjusted to inflation so that the value of the UF remains constant.
The tables below show the Company’s mineral property expenditures for the periods ended
September 30, 2016 and 2015.
| | | 2016 | |
| (in thousands) | | Generative | | | Chile | | | Total | |
| Access, advance royalty and easement payments | | $ | - | | | $ | 407 | | | $ | 407 | |
| Consultants and contractors | | | - | | | | 165 | | | | 165 | |
| Engineering and geological * | | | 173 | | | | 388 | | | | 561 | |
| Environmental | | | - | | | | 134 | | | | 134 | |
| Field camp | | | - | | | | 185 | | | | 185 | |
| IVA tax | | | - | | | | 18 | | | | 18 | |
| Legal and title | | | - | | | | 305 | | | | 305 | |
| Metallurgical | | | - | | | | 76 | | | | 76 | |
| Office operations | | | - | | | | 145 | | | | 145 | |
| Travel | | | - | | | | 264 | | | | 264 | |
| Wages and benefits * | | | 68 | | | | 474 | | | | 542 | |
| Mineral property costs | | $ | 241 | | | $ | 2,561 | | | $ | 2,802 | |
* Includes share-based compensation as reflected below:
| | | 2016 | |
| (in thousands) | | Generative | | | Chile | | | Total | |
| Engineering and geological | | $ | - | | | $ | 124 | | | $ | 124 | |
| Wages and benefits | | | 28 | | | | 52 | | | | 80 | |
| Total | | $ | 28 | | | $ | 176 | | | $ | 204 | |
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
| 5. | Mineral Properties - Acquisition and Mineral Property Costs (Continued) |
| | | 2015 | |
| (in thousands) | | Generative | | | Chile | | | Total | |
| Access, advance royalty and easement payments | | $ | - | | | $ | 382 | | | $ | 382 | |
| Consultants and contractors | | | - | | | | 340 | | | | 340 | |
| Drilling | | | - | | | | 869 | | | | 869 | |
| Engineering and geological * | | | 248 | | | | 470 | | | | 718 | |
| Environmental | | | - | | | | 118 | | | | 118 | |
| Field camp | | | - | | | | 302 | | | | 302 | |
| IVA tax | | | - | | | | 368 | | | | 368 | |
| Legal and title | | | - | | | | 352 | | | | 352 | |
| Metallurgical | | | - | | | | 10 | | | | 10 | |
| Office operations | | | - | | | | 148 | | | | 148 | |
| Resource development | | | - | | | | 3 | | | | 3 | |
| Travel | | | 27 | | | | 244 | | | | 271 | |
| Wages and benefits * | | | 67 | | | | 769 | | | | 836 | |
| Mineral property costs | | $ | 342 | | | $ | 4,375 | | | $ | 4,717 | |
* Includes share-based compensation as reflected below:
| | | 2015 | |
| (in thousands) | | Chile | | | Total | |
| Engineering and geological | | $ | 219 | | | $ | 219 | |
| Wages and benefits | | $ | 113 | | | $ | 113 | |
| Total | | $ | 332 | | | $ | 332 | |
The Company is authorized to issue an unlimited number of common shares without par value and an unlimited number of preferred shares.
The Company has adopted an incentive stock option plan (the “Plan”). On May 31, 2013, shareholders approved an amendment reducing the aggregate number of shares of the Company’s capital stock issuable pursuant to options granted under the Plan, such that options granted under the Plan may not exceed 10% of the issued and outstanding shares of the Company at the time of the option grant. The renewal of the amended plan was approved by shareholders on June 7, 2016. At September 30, 2016, the maximum number of options issuable under the Plan was 8,866,025. Options granted under the Plan may have a maximum term of 10 years, but options granted to date have had a life of 5 years.
Unless subsequently amended, the exercise price of options granted under the Plan will not be less than the last closing market price of the Company’s shares immediately preceding the grant date. Options granted under the Plan may be subject to vesting at times as determined by the directors of the Company and the Toronto Stock Exchange. Stock options usually vest in tranches over a period of 1 to 2 years (50 - 100% per year).
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
| 7. | Stock Option Plan (Continued) |
A summary of the changes in share options during the period is as follows:
| | | September 30, 2016 | | | December 31, 2015 | |
| | | Options | | | Weighted
Average Exercise
Price | | | Options | | | Weighted
Average Exercise
Price | |
| |
| Options outstanding, beginning of period | | | 7,445,000 | | | $ | 0.53 | | | | 8,253,000 | | | $ | 1.26 | |
| Granted | | | - | | | | - | | | | 7,230,000 | | | | 0.53 | |
| Exercised | | | (252,500 | ) | | | 0.50 | | | | - | | | | - | |
| Cancelled | | | - | | | | - | | | | (7,252,500 | ) | | | 1.27 | |
| Forfeited | | | - | | | | - | | | | (410,000 | ) | | | 1.27 | |
| Expired | | | - | | | | - | | | | (375,500 | ) | | | 1.27 | |
| Options outstanding, end of period | | | 7,192,500 | | | $ | 0.53 | | | | 7,445,000 | | | $ | 0.53 | |
During 2015, option holders voluntarily surrendered 7,252,500 options and the Company accounted for these as cancellations whereby the unvested balance of the original fair value was immediately expensed in the amount of $nil. Additionally, the Company re-priced 215,000 options which ranged in price from $0.70 to $1.27 to an exercise price of $0.50 per option, recognizing $38,650 in share-based compensation.
During 2015, the Company granted 7,230,000 options at an average exercise price of $0.53. Of the options granted, 1,500,000 were accounted for as a re-pricing from an exercise price of $1.22 to an exercise price of $0.54 resulting in the Company recognizing $138,809 in share-based compensation. The remaining 5,730,000 options were accounted for as a new grant and the Company recognized share-based compensation expense of $1,053,577. Total share-based compensation for the year ended 2015 was $1,231,036.
The following table summarizes information about the stock options outstanding at September 30, 2016:
| Outstanding Options | | | Exercisable Options | |
| Prices ($) | | | Number | | | Weighted Average Remaining Life (Years) | | | Weighted
Average
Exercise Price | | | Number | | | Weighted
Average
Exercise Price | |
| | 0.50 | | | | 2,652,500 | | | | 3.95 | | | $ | 0.50 | | | | 1,988,750 | | | $ | 0.50 | |
| | 0.54 | | | | 1,750,000 | | | | 3.91 | | | | 0.54 | | | | 1,312,500 | | | | 0.54 | |
| | 0.56 | | | | 2,790,000 | | | | 3.89 | | | | 0.56 | | | | 2,092,500 | | | | 0.56 | |
| | | | | | 7,192,500 | | | | 3.92 | | | $ | 0.53 | | | | 5,393,750 | | | $ | 0.53 | |
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
| 7. | Stock Option Plan (Continued) |
Share-based Compensation
No options were granted by the Company during the period ended September 30, 2016 (2015 - 7,230,000).
Share-based compensation expense for the three and nine month periods ended September 30 has been allocated as follows:
| (in thousands) | | Three Months ended September 30 | | | Nine Months ended September 30 | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| Administration salaries and consulting | | $ | 29 | | | $ | 131 | | | $ | 136 | | | $ | 158 | |
| Directors’ fees | | | 49 | | | | 306 | | | | 247 | | | | 306 | |
| Management fees | | | 7 | | | | 29 | | | | 29 | | | | 29 | |
| Mineral property expenditures | | | 43 | | | | 289 | | | | 204 | | | | 332 | |
| Total | | $ | 128 | | | $ | 755 | | | $ | 616 | | | $ | 825 | |
| 8. | Related Party Transactions |
An amount due from a related party of $6,000 at September 30, 2016 (December 31, 2015 - $18,000) is for the recovery of common expenditures from Rugby Mining Limited (“Rugby”). The amounts due from related parties are non-interest bearing and are due on demand.
Amounts due to related parties of $74,000 at September 30, 2016 (December 31, 2015 - $20,000) is for management, consulting and exploration fees and for expenses incurred while conducting the Company’s business. The amounts due to related parties are non-interest bearing and are due on demand.
During the period ended September 30, 2016 a total of $488,000 (2015 - $610,000) was paid or accrued for related party transactions as described below:
| a) | Exploration and consulting fees of $105,000 (2015 - $150,000) were paid or accrued to a corporation of which a Co-Chairman of the Company is a principal. As at September 30, 2016, the Company had amounts owing of $8,000 (December 31, 2015 - $5,000) to this company. |
| b) | Exploration fees of $199,000 (2015 - $196,000) were paid or accrued to a corporation controlled by the Vice-President, Development and Operations. As at September 30, 2016, the Company had amounts owing of $17,000 (December 31, 2015 - $13,000) to this company. |
| c) | Management fees of $53,000 (2015 - $76,000) were paid to a corporation controlled by a Co-Chairman of the Company. As at September 30, 2016, the Company had amounts owing of $34,000 (December 31, 2015 - $Nil) to this company. |
| d) | Management fees of $131,000 (2015 - $188,000) were paid or accrued to a corporation controlled by the Chief Financial Officer of the Company. As at September 30, 2016, the Company had amounts owing of $15,000 (December 31, 2015 - $2,000) to this company. |
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
Key management personnel are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel of the Company include executive officers and the board of directors.
The following compensation has been provided to key management personnel for the nine month periods ended September 30:
| (in thousands) | | 2016 | | | 2015 | |
| Compensation - cash | | $ | 552 | | | $ | 789 | |
| Share-based payments | | | 388 | | | | 536 | |
| Total | | $ | 940 | | | $ | 1,325 | |
10. Expenses by Nature
General and administration expense for the three and nine month periods ended September 30 is made up of the following:
| (in thousands) | | Three Months ended September 30 | | | Nine Months ended September 30 | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| Bank charges | | $ | 2 | | | $ | 2 | | | $ | 6 | | | $ | 6 | |
| Office | | | 50 | | | | 53 | | | | 156 | | | | 159 | |
| Rent | | | 39 | | | | 45 | | | | 115 | | | | 133 | |
| Telecommunications | | | 5 | | | | 7 | | | | 17 | | | | 18 | |
| Transfer agent | | | - | | | | 1 | | | | 3 | | | | 8 | |
| Travel and promotion | | | 11 | | | | 15 | | | | 101 | | | | 35 | |
| Total | | $ | 107 | | | $ | 123 | | | $ | 398 | | | $ | 359 | |
| 11. | Contractual Obligations |
The Company leases offices in Canada and Chile and has land easement payments and advance royalty obligations related to its properties. Option payments and property expenditure obligations are contingent on exploration results and can be cancelled at any time should exploration results so warrant. Other financial commitments are summarized in the table below:
Payments Due by Year (in thousands) | | Total | | | 2016 | | | | 2017 – 2018 | | | | 2019 – 2020 | | | | 2021 - 2026 | |
| Advance royalty payments* | | $ | 7,871 | | | $ | - | | | $ | 656 | | | $ | 656 | | | $ | 6,559 | |
| Land easement payments** | | | 4,612 | | | | 669 | | | | 1,338 | | | | 1,338 | | | | 1,267 | |
| Office and equipment leases | | | 213 | | | | 89 | | | | 124 | | | | - | | | | - | |
| Property access agreements | | | 553 | | | | 53 | | | | 105 | | | | 105 | | | | 290 | |
| Total | | $ | 13,249 | | | $ | 811 | | | $ | 2,223 | | | $ | 2,099 | | | $ | 8,116 | |
* Obligation in US dollars converted to Canadian dollars at the closing rate of the reporting period (1 USD = 1.3117 CAD).
** Obligation in Unidad de Fomento (UF). This value is converted to Canadian dollars at the closing rate of the reporting period (1 UF = 26,224.30 CHP).
| Exeter Resource Corporation |
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the nine months ended September 30, 2016 and 2015 (tabular amounts in 000’s) |
The Company’s activities are all in the one reportable operating segment - mineral property acquisition, expenditures and development. The following provides required disclosures on a geographic basis:
As at September 30, 2016 (in thousands) | | Canada | | | Chile | | | Total | |
| Cash and cash equivalents | | $ | 18,620 | | | $ | 114 | | | $ | 18,734 | |
| Amounts receivable and prepaid expenses | | | 107 | | | | 14 | | | | 121 | |
| Due from related parties | | | 6 | | | | - | | | | 6 | |
| Other financial assets | | | 123 | | | | - | | | | 123 | |
| Property and equipment | | | 4 | | | | 40 | | | | 44 | |
| | | | 18,860 | | | | 168 | | | | 19,028 | |
| Current Liabilities | | | (228 | ) | | | (120 | ) | | | (348 | ) |
| | | $ | 18,632 | | | $ | 48 | | | $ | 18,680 | |
| Three months ended September 30, 2016 | | | | | | | | | | | | |
| Mineral property expenditures | | $ | 76 | | | $ | 708 | | | $ | 784 | |
| Net loss | | $ | 393 | | | $ | 790 | | | $ | 1,183 | |
| Nine months ended September 30, 2016 | | | | | | | | | | | | |
| Mineral property expenditures | | $ | 241 | | | $ | 2,561 | | | $ | 2,802 | |
| Net loss | | $ | 1,549 | | | $ | 2,828 | | | $ | 4,377 | |
As at December 31, 2015 (in thousands) | | Canada | | | Chile | | | Total | |
| Cash and cash equivalents | | $ | 22,268 | | | $ | 40 | | | $ | 22,308 | |
| Amounts receivable and prepaid expenses | | | 79 | | | | 53 | | | | 132 | |
| Due from related parties | | | 18 | | | | - | | | | 18 | |
| Other financial assets | | | 26 | | | | - | | | | 26 | |
| Property and equipment | | | 7 | | | | 52 | | | | 59 | |
| | | | 22,398 | | | | 145 | | | | 22,543 | |
| Current liabilities | | | (193 | ) | | | (138 | ) | | | (331 | ) |
| | | $ | 22,205 | | | $ | 7 | | | $ | 22,212 | |
| Three months ended September 30, 2015 | | | | | | | | | | | | |
| Mineral property expenditures | | $ | 218 | | | $ | 867 | | | $ | 1,085 | |
| Net loss | | $ | 716 | | | $ | 1,089 | | | $ | 1,805 | |
| Nine months ended September 30, 2015 | | | | | | | | | | | | |
| Mineral property expenditures | | $ | 342 | | | $ | 4,375 | | | $ | 4,673 | |
| Net loss | | $ | 1,808 | | | $ | 4,716 | | | $ | 6,524 | |
