CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
EXPRESSED IN CANADIAN DOLLARS
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
Page | |
Contents | 1 |
Condensed Interim Consolidated Statements of Financial Position | 2 |
| |
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss | 3 |
| |
Condensed Interim Consolidated Statements of Cash Flows | 4 |
| |
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity | 5 |
| |
Notes to Condensed Interim Consolidated Financial Statements | 6 |
1
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Condensed Interim Consolidated Statements of Financial Position |
(Expressed in Canadian Dollars - unaudited) |
September 30, | December 31, | ||||
2019 | 2018 | ||||
$ | $ | ||||
Assets | |||||
Current | |||||
Cash (Note 3) | 14,969,970 | 18,333,732 | |||
Receivables | 55,611 | 34,692 | |||
Prepaid expenses (Note 4) | 552,558 | 489,902 | |||
15,578,139 | 18,858,326 | ||||
Exploration and evaluation assets(Note 5) | 216,361,141 | 196,666,709 | |||
Reclamation bonds(Note 6) | 2,110,590 | 2,154,027 | |||
Property and equipment(Note 7) | 336,730 | 455,422 | |||
Right-of-use assets(Note 8) | 781,770 | - | |||
235,168,370 | 218,134,484 | ||||
Liabilities | |||||
Current | |||||
Accounts payable and accrued liabilities (Notes 9 and 13) | 3,572,563 | 1,950,222 | |||
Current portion of lease liabilities (Note 8) | 155,185 | - | |||
3,727,748 | 1,950,222 | ||||
Lease liabilities(Note 8) | 617,420 | - | |||
Provision for site reclamation(Note 10) | 981,702 | 1,004,499 | |||
5,326,870 | 2,954,721 | ||||
Shareholders' equity | |||||
Share capital (Note 11) | 290,481,596 | 270,513,901 | |||
Reserves (Note 11) | 9,956,366 | 8,522,564 | |||
Deficit | (70,596,462 | ) | (63,856,702 | ) | |
229,841,500 | 215,179,763 | ||||
235,168,370 | 218,134,484 |
Nature and Continuance of Operations(Note 1),Commitments(Note 16)
These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on November 8, 2019.
On Behalf of the Board of Directors:
“Alex Morrison” | “Zara Boldt” |
Alex Morrison, Director | Zara Boldt, Director |
The accompanying notes are an integral part of these condensed interim consolidated financial statements
2
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss |
(Expressed in Canadian Dollars - unaudited) |
For the three months ended | For the nine months ended | ||||||||||
September 30, | September 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
$ | $ | $ | $ | ||||||||
Expenses | |||||||||||
Accretion expenses (Note 10) | 2,193 | - | 6,607 | - | |||||||
Community relations | 4,894 | 1,983 | 12,229 | 104,231 | |||||||
Consulting fees | 225,038 | 251,314 | 439,318 | 722,121 | |||||||
Depreciation (Notes 7 and 8) | 90,527 | 45,647 | 271,581 | 133,636 | |||||||
Foreign exchange loss (gain) | 80,589 | 197,763 | 237,466 | (397,506 | ) | ||||||
Insurance | 117,081 | 104,471 | 329,366 | 301,890 | |||||||
Interest expense on lease liabilities (Note 8) | 14,581 | - | 45,844 | - | |||||||
Investor relations | 82,806 | 72,348 | 165,804 | 154,436 | |||||||
Management fees (Note 13) | 280,250 | 278,750 | 840,750 | 833,540 | |||||||
Office | 134,849 | 124,680 | 398,187 | 424,741 | |||||||
Professional fees (Note 13) | 212,979 | 322,429 | 684,091 | 1,065,029 | |||||||
Property investigation | 6,320 | 29,728 | 66,849 | 36,622 | |||||||
Regulatory and shareholders service | 53,946 | 90,833 | 261,302 | 368,771 | |||||||
Rent | - | 64,090 | - | 207,970 | |||||||
Share-based compensation (Notes 11 and 13) | 588,429 | 851,848 | 2,309,569 | 3,070,407 | |||||||
Travel and related | 208,681 | 195,213 | 610,582 | 657,292 | |||||||
Wages and salaries (Note 13) | 198,851 | 174,204 | 611,187 | 432,449 | |||||||
(2,302,014 | ) | (2,805,301 | ) | (7,290,732 | ) | (8,115,629 | ) | ||||
Gain (loss) on investments | - | 8,707 | - | (88,332 | ) | ||||||
Interest income | 13,187 | 96,555 | 80,121 | 313,515 | |||||||
Loss and comprehensive loss for theperiod | (2,288,827 | ) | (2,700,039 | ) | (7,210,611 | ) | (7,890,446 | ) | |||
| |||||||||||
Basic and diluted loss per share | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.03 | ) | |||
| |||||||||||
Weighted average number of commonshares outstanding (basic anddiluted) | 271,777,397 | 256,057,075 | 263,938,379 | 250,989,547 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements
3
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Condensed Interim Consolidated Statements of Cash Flows |
(Expressed in Canadian Dollars - unaudited) |
For the nine months ended September 30, | |||||
2019 | 2018 | ||||
$ | $ | ||||
Cash flows used in operating activities | |||||
Loss for the period | (7,210,611 | ) | (7,890,446 | ) | |
Items not affecting cash: | |||||
Depreciation | 271,581 | 133,636 | |||
Share-based compensation | 2,309,569 | 3,070,407 | |||
Accretion expense | 6,607 | - | |||
Loss on investments | - | 88,332 | |||
Unrealized foreign exchange | 19,367 | (31,846 | ) | ||
Changes in non-cash working capital items | |||||
Decrease (increase) in receivables | (20,919 | ) | 2,814 | ||
(Increase) in prepaid expenses | (112,328 | ) | (429,890 | ) | |
(Decrease) in accounts payable and accrued liabilities | (313,402 | ) | (687,532 | ) | |
(5,050,136 | ) | (5,744,525 | ) | ||
Cash flows used in investing activities | |||||
Reclamation bonds | (18,633 | ) | (55,892 | ) | |
Proceeds from sale of investments | - | 220,703 | |||
Acquisition of property and equipment | - | (225,240 | ) | ||
Exploration and evaluation assets expenditures | (17,844,775 | ) | (29,599,837 | ) | |
(17,863,408 | ) | (29,660,266 | ) | ||
Cash flows from financing activities | |||||
Proceeds from share issuances | 21,045,000 | 48,907,549 | |||
Share issuance costs | (1,665,485 | ) | (2,838,520 | ) | |
Proceeds from exercise of stock options | 269,350 | 2,113,632 | |||
Repayment of lease liabilities | (99,083 | ) | - | ||
19,549,782 | 48,182,661 | ||||
Net change in cash | (3,363,762 | ) | 12,777,870 | ||
Cash, beginning of period | 18,333,732 | 18,458,791 | |||
Cash, end of period | 14,969,970 | 31,236,661 |
Supplementary Cash Flow Information(Note 17)
The accompanying notes are an integral part of these condensed interim consolidated financial statements
4
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity |
(Expressed in Canadian Dollars - unaudited) |
Total | ||||||||||||||
Number of | Shareholders' | |||||||||||||
Shares Issued | Share Capital | Reserves | Deficit | Equity | ||||||||||
$ | $ | $ | $ | |||||||||||
Balance at December 31, 2017 | 233,536,671 | 220,941,105 | 6,505,922 | (53,842,098 | ) | 173,604,929 | ||||||||
Shares issued for cash | 23,857,341 | 48,907,549 | - | - | 48,907,549 | |||||||||
Share issuance costs | - | (3,089,463 | ) | - | - | (3,089,463 | ) | |||||||
Stock options exercised | 2,415,666 | 3,754,710 | (1,641,078 | ) | - | 2,113,632 | ||||||||
Stock options expired | - | - | (166,715 | ) | 166,715 | - | ||||||||
Stock options cancelled | - | - | (9,919 | ) | 9,919 | - | ||||||||
Share-based compensation | - | - | 3,070,407 | - | 3,070,407 | |||||||||
Loss for the period | - | - | - | (7,890,446 | ) | (7,890,446 | ) | |||||||
Balance at September 30, 2018 | 259,809,678 | 270,513,901 | 7,758,617 | (61,555,910 | ) | 216,716,608 | ||||||||
Stock options expired | - | - | (47,672 | ) | 47,672 | - | ||||||||
Share-based compensation | - | - | 811,619 | - | 811,619 | |||||||||
Loss for the period | - | - | - | (2,348,464 | ) | (2,348,464 | ) | |||||||
Balance at December 31, 2018 | 259,809,678 | 270,513,901 | 8,522,564 | (63,856,702 | ) | 215,179,763 | ||||||||
Shares issued for cash | 17,250,000 | 21,045,000 | - | - | 21,045,000 | |||||||||
Share issuance costs | - | (1,751,571 | ) | - | - | (1,751,571 | ) | |||||||
Stock options exercised | 355,000 | 486,341 | (216,991 | ) | - | 269,350 | ||||||||
Restricted share units vested | 113,208 | 187,925 | (187,925 | ) | - | - | ||||||||
Stock options expired | - | - | (462,456 | ) | 462,456 | - | ||||||||
Restricted share units cancelled | - | - | (8,395 | ) | 8,395 | - | ||||||||
Share-based compensation | - | - | 2,309,569 | - | 2,309,569 | |||||||||
Loss for the period | - | - | - | (7,210,611 | ) | (7,210,611 | ) | |||||||
Balance at September 30, 2019 | 277,527,886 | 290,481,596 | 9,956,366 | (70,596,462 | ) | 229,841,500 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements
5
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 1 - Nature and Continuance of Operations
Gold Standard Ventures Corp. (the “Company”) was incorporated on February 6, 2004 under theBusiness Corporations Act(British Columbia) and is listed for trading on the Toronto Stock Exchange (“TSX”) under the symbol “GSV” and on the NYSE American under the symbol “GSV”.
The Company’s head office, principal address and registered and records office is located at Suite 610 – 815 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1B4.
The Company’s exploration and evaluation assets are at the exploration stage and are without a known body of commercial ore. The business of exploring for minerals involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Major expenditures may be required to establish ore reserves, to develop metallurgical processes, to acquire construction and operating permits and to construct mining and processing facilities. The amounts shown as exploration and evaluation assets cost represent acquisition, holding and deferred exploration costs and do not necessarily represent present or future recoverable values. The recoverability of the amounts shown for exploration and evaluation assets cost is dependent upon the Company obtaining the necessary financing to complete the exploration and development of the properties, the discovery of economically recoverable reserves and future profitable operations or through sale of the assets.
These condensed interim consolidated financial statements have been prepared on the assumption that the Company and its subsidiaries will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at September 30, 2019, the Company had not advanced its properties to commercial production and is not able to finance day to day activities through operations. The Company’s continuation as a going concern is dependent upon the successful results from its exploration activities and its ability to attain profitable operations and generate funds therefrom and/or raise equity capital or borrowings sufficient to meet current and future obligations.
NOTE 2 - Significant Accounting Policies and Basis of Preparation
The following is a summary of significant accounting policies used in the preparation of these condensed interim consolidated financial statements.
Statement of compliance
These condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Accounting Standards (“IAS”) 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”).
This condensed interim financial report does not include all of the information required of a full annual financial report and is intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period. It is therefore recommended that this financial report be read in conjunction with the annual audited financial statements of the Company for the year ended December 31, 2018.
6
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 2 - Significant Accounting Policies and Basis of Preparation (continued)
Statement of compliance (continued)
The accounting policies applied in preparation of these condensed interim consolidated financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2018, except for the following:
Leases
On January 1, 2019, the Company adopted IFRS 16 – Leases (“IFRS 16”) which replaced IAS 17 – Leases and IFRIC 4 –Determining Whether an Arrangement Contains a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. The standard is effective for annual periods beginning on or after January 1, 2019. IFRS 16 eliminates the classification of leases as either operating leases or finance leases for a lessee. Instead, all leases are treated in a similar way to finance leases applied in IAS 17. IFRS 16 does not require a lessee to recognize assets and liabilities for short-term leases (i.e. leases of 12 months or less) and leases of low-value assets.
The Company applied IFRS 16 using the modified retrospective method. Under this method, financial information will not be restated and will continue to be reported under the accounting standards in effect for those periods. The Company will recognize lease liabilities related to its lease commitments for its office leases. The lease liabilities will be measured at the present value of the remaining lease payments, discounted using the Company’s estimated incremental borrowing rate as at January 1, 2019, the date of initial application, resulting in no adjustment to the opening balance of deficit. The associated right-of-use assets will be measured at the lease liabilities amount, plus prepaid lease payments made by the Company. The Company has implemented the following accounting policies permitted under the new standard:
leases of low dollar value will continue to be expensed as incurred; and
the Company will not apply any grandfathering practical expedients.
As at January 1, 2019, the Company recognized $934,659 in right-of-use assets and $884,987 in lease liabilities as summarized below.
$ | ||||
Minimum lease payments under operating leases as of December 31, 2018 | 657,466 | |||
Assumed exercise of renewal of office lease in April 2020 | 460,050 | |||
Effect from discounting at the incremental borrowing rate as of January 1, 2019 | (232,529 | ) | ||
Lease liabilities recognized as of January 1, 2019 | 884,987 | |||
Prepaid lease payments | 49,672 | |||
Right-of-use assets recognized as of January 1, 2019 | 934,659 | |||
The lease liabilities were discounted at a discount rate of 7% as at January 1, 2019. |
New accounting policy for leases under IFRS 16
The following is the accounting policy for leases as of January 1, 2019 upon adoption of IFRS 16:
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether the right to obtain substantially all of the economic benefits from use of the asset during the term of the arrangement exists, and if the Company has the right to direct the use of the asset. At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative standalone prices.
7
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 2 - Significant Accounting Policies and Basis of Preparation (continued)
Statement of compliance (continued)
New accounting policy for leases under IFRS 16 (continued)
As a lessee, the Company recognizes a right-of-use asset and a lease liability at the commencement date of a lease. The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received.
The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, the incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:
fixed payments, including in-substance fixed payments, less any lease incentives receivable;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee;
exercise prices of purchase options if the Company is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in the estimate or assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination option. Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit or loss.
The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases are charged directly to profit or loss on a straight-line basis over the lease term.
Basis of presentation
These condensed interim consolidated financial statements of the Company have been prepared on an accrual basis and are based on historical costs, except for financial instruments measured at fair value. The condensed interim consolidated financial statements are presented in Canadian dollars unless otherwise noted.
Basis of consolidation
These condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, JKR Gold Resources ULC, Gold Standard Ventures (US) Inc., Tacoma Exploration LLC, Battle Mountain Gold Inc., and Madison Enterprises (Nevada) Inc., from their dates of formation or acquisition. The Company’s Canadian subsidiaries are holding companies while its US subsidiaries are operating companies. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated upon consolidation.
8
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 2 - Significant Accounting Policies and Basis of Preparation (continued)
Foreign currency translation
The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and each of its subsidiaries is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21 – The Effects of Changes in Foreign Exchange Rates.
Transactions in currencies other than Canadian dollars are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in profit or loss.
Use of estimates
The preparation of financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the period.
Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.
The most significant accounts that require estimates and judgements as the basis for determining the stated amounts include the recoverability of exploration and evaluation assets, determination of functional currency, valuation of the acquisition of an associated company, valuation of share-based compensation, recognition of deferred tax amounts and reclamation provisions.
Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the condensed interim consolidated financial statements are as follows:
Economic recoverability and probability of future economic benefits of exploration and evaluation assets
Management has determined that exploration, evaluation, and related costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including, geologic and other technical information, a history of conversion of mineral deposits with similar characteristics to its own properties to proven and probable mineral reserves, the quality and capacity of existing infrastructure facilities, evaluation of permitting and environmental issues and local support for the project.
Determination of functional currency
The Company determines the functional currency through an analysis of several indicators such as expenses and cash flow, financing activities, retention of operating cash flows, and frequency of transactions within the reporting entity.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments are as follows:
Valuation of share-based compensation
The Company uses the Black-Scholes option pricing model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, risk-free interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.
9
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 2 - Significant Accounting Policies and Basis of Preparation (continued)
Use of estimates (continued)
Income taxes
In assessing the probability of realizing income tax assets, management makes estimates related to expectation of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.
Reclamation provisions
The Company’s reclamation provision represents management’s best estimate of the present value of the future cash outflows required to settle the obligation. Management assesses these provisions on an annual basis or when new information becomes available. This assessment includes the estimation of the future reclamation costs, the timing of these expenditures, inflation, and the impact of changes in discount rates, interest rates and foreign exchange rates. The actual future expenditures may differ from the amounts currently provided if the estimates made are significantly different than actual results or if there are significant changes in environmental and/or regulatory requirements in the future.
Valuation of right-of-use asset and lease liabilities
The application of IFRS 16 requires the Company to make judgments that affect the valuation of the right-of-use assets and the valuation of lease liabilities. These include: determining agreements in scope of IFRS 16, determining the contract term and determining the interest rate used for discounting of future cash flows.
The lease term determined by the Company is comprised of the non-cancellable period of lease agreements, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.
The present value of the lease payment is determined using a discount rate representing the rate of a commercial mortgage rate, observed in the period when the lease agreement commences or is modified.
NOTE 3 – Cash
September 30, 2019 | December 31, 2018 | ||||||
$ | $ | ||||||
Cash at financial institutions | 14,700,901 | 18,224,563 | |||||
Cash held in lawyers’ trust account | 269,069 | 109,169 | |||||
14,969,970 | 18,333,732 |
NOTE 4 – Prepaid Expenses
September 30, 2019 | December 31, 2018 | ||||||
$ | $ | ||||||
Prepaid expenses | 531,879 | 468,600 | |||||
Deposits | 20,679 | 21,302 | |||||
552,558 | 489,902 |
10
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 5 – Exploration and Evaluation Assets
Expenditures for the periods related to exploration and evaluation assets located in Nevada, USA were as follows:
Railroad- Pinion Project | Lewis Gold Project | Total | |||||||
$ | $ | $ | |||||||
Balance as at December 31, 2017 | 116,743,248 | 37,692,627 | 154,435,875 | ||||||
Property acquisition and staking costs | 4,989 | - | 4,989 | ||||||
NSR buy-down | 4,427,850 | - | 4,427,850 | ||||||
Exploration expenses | |||||||||
Claim maintenance fees | 359,532 | 81,528 | 441,060 | ||||||
Consulting | 3,692,499 | 81,721 | 3,774,220 | ||||||
Data Analysis | 58,172 | 22,282 | 80,454 | ||||||
Drilling | 18,472,855 | 174,781 | 18,647,636 | ||||||
Engineering | 134,827 | - | 134,827 | ||||||
Environmental and permitting | 387,679 | - | 387,679 | ||||||
Equipment rental | 127,471 | 491 | 127,962 | ||||||
Geological | 788,032 | 25,554 | 813,586 | ||||||
Geotechnical | 654,687 | - | 654,687 | ||||||
Hydrology | 930,729 | - | 930,729 | ||||||
Lease payments | 1,805,255 | 118,784 | 1,924,039 | ||||||
Metallurgy | 551,864 | - | 551,864 | ||||||
Preliminary economic assessment | 579,226 | - | 579,226 | ||||||
Provision for site reclamation | 946,010 | - | 946,010 | ||||||
Sampling and processing | 561,710 | 81,770 | 643,480 | ||||||
Site development and reclamation | 5,722,669 | 98,297 | 5,820,966 | ||||||
Supplies | 1,224,990 | 1,002 | 1,225,992 | ||||||
Vehicle | 113,578 | - | 113,578 | ||||||
41,544,624 | 686,210 | 42,230,834 | |||||||
Balance as at December 31, 2018 | 158,287,872 | 38,378,837 | 196,666,709 |
11
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 5 - Exploration and Evaluation Assets (continued)
Railroad- Pinion Project | Lewis Gold Project | Total | |||||||
$ | $ | $ | |||||||
Balance as at December 31, 2018 | 158,287,872 | 38,378,837 | 196,666,709 | ||||||
Claim maintenance fees | 388,849 | 88,369 | 477,218 | ||||||
Consulting | 1,292,810 | 95,134 | 1,387,944 | ||||||
Data analysis | 275,772 | - | 275,772 | ||||||
Drilling | 6,581,515 | 464,391 | 7,045,906 | ||||||
Engineering | 96,659 | - | 96,659 | ||||||
Environmental and permitting | 1,118,732 | 9,824 | 1,128,556 | ||||||
Equipment rental | 109,922 | 9,481 | 119,403 | ||||||
Geological | 27,707 | - | 27,707 | ||||||
Geotechnical | 16,927 | - | 16,927 | ||||||
Hydrology | 1,308,443 | - | 1,308,443 | ||||||
Lease payments | 889,200 | - | 889,200 | ||||||
Metallurgy | 1,970,020 | - | 1,970,020 | ||||||
Preliminary economic assessment | 902,737 | - | 902,737 | ||||||
Sampling and processing | 320,193 | 533 | 320,726 | ||||||
Site development and reclamation | 3,195,162 | 101,978 | 3,297,140 | ||||||
Supplies | 428,239 | 1,835 | 430,074 | ||||||
18,922,887 | 771,545 | 19,694,432 | |||||||
Balance as at September 30, 2019 | 177,210,759 | 39,150,382 | 216,361,141 |
Railroad-Pinion Project
The Railroad-Pinion project is located in Elko County, Nevada, USA.
During the period from August 2009 to December 2018, the Company entered into various agreements to acquire or lease certain claims, properties and surface rights subject to net smelter return royalties (“NSR”) ranging between 1% and 5%. As well, certain claims are subject to a 1.5% Mineral Production Royalty. The agreements are subject to specific lease terms, extension options, back-in rights, buy down or purchase provisions, and work commitments as further detailed in the Company’s most recent annual audited consolidated financial statements.
During the nine months ended September 30, 2019, the Company entered into certain amendment agreements to amend various surface use and mining lease agreements (“Amendment Agreements”) to extend the primary term of these surface use and mining lease agreements for an additional eight years. The Company incurred a total of US$150,000 upon execution of these Amendment Agreements.
12
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 5 - Exploration and Evaluation Assets (continued)
Railroad-Pinion Project (continued)
Payment requirements from 2019 to 2023 under agreements are approximately as follows:
Total Work commitment US$ | Total Lease payment US$ | Total US$ | ||||||||
2019 | - | 657,000 | 657,000 | |||||||
2020 | 1,300,000 | 1,103,000 | 2,403,000 | |||||||
2021 | 1,300,000 | 910,000 | 2,210,000 | |||||||
2022 | 1,400,000 | 470,000 | 1,870,000 | |||||||
2023 | 1,300,000 | 470,000 | 1,770,000 | |||||||
5,300,000 | 3,610,000 | 8,910,000 |
Lewis Gold Project
As a result of the acquisition of Battle Mountain Gold Inc., the Company acquired a 100% right, title and interest in mining claims located in the Battle Mountain Mining District in Lander County, Nevada, USA (the “Lewis Gold Project”).
The Lewis Gold Project is subject to an advance minimum annual royalty in the amount of US$60,000 in cash, which is subject to an annual escalation based upon a defined consumer price index. The advance minimum royalty payments are to be credited against any production royalty payable in the same year. Production royalties include a 3.5% NSR for gold and silver and a 4% NSR for other minerals such as lead, zinc, and copper.
NOTE 6 - Reclamation Bonds
In relation to its exploration and evaluation assets, the Company has posted reclamation bonds as at September 30, 2019 of $2,110,590 (US$1,595,176) (December 31, 2018 - $2,154,027 (US$1,581,158)).
13
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 7 - Property and Equipment
Leasehold | |||||||||
improvements | Computers | Total | |||||||
$ | $ | $ | |||||||
Cost: | |||||||||
At December 31, 2017 | 499,323 | 29,482 | 528,805 | ||||||
Additions | 184,435 | 40,805 | 225,240 | ||||||
At December 31, 2018 and | |||||||||
September 30, 2019 | 683,758 | 70,287 | 754,045 | ||||||
Depreciation: | |||||||||
At December 31, 2017 | 116,020 | 4,422 | 120,442 | ||||||
Charge for the year | 141,956 | 36,225 | 178,181 | ||||||
At December 31, 2018 | 257,976 | 40,647 | 298,623 | ||||||
Charge for the period | 106,467 | 12,225 | 118,692 | ||||||
At September 30, 2019 | 364,443 | 52,872 | 417,315 | ||||||
Net book value: | |||||||||
At December 31, 2018 | 425,782 | 29,640 | 455,422 | ||||||
At September 30, 2019 | 319,315 | 17,415 | 336,730 |
NOTE 8 – Right-of-Use Assets and Lease Liabilities
Right-of-Use Assets
Office Leases | |||
Cost: | $ | ||
At December 31, 2017 and 2018 | - | ||
Adjustment on initial adoption of IFRS 16 (Note 2) | 934,659 | ||
At September 30, 2019 | 934,659 | ||
Depreciation: | |||
At December 31, 2017 and 2018 | - | ||
Charge for the period | 152,889 | ||
At September 30, 2019 | 152,889 | ||
Net book value: | |||
At December 31, 2018 | - | ||
At September 30, 2019 | 781,770 |
Depreciation of right-of-use assets is calculated using the straight-line method over the remaining lease term.
14
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 8 – Right-of-Use Assets and Lease Liabilities (continued)
Lease Liabilities | |||
$ | |||
Lease liabilities recognized as of January 1, 2019 | 884,987 | ||
Lease payments made | (144,927 | ) | |
Interest expense on lease liabilities | 45,844 | ||
Foreign exchange adjustment | (13,299 | ) | |
772,605 | |||
Less: current portion | (155,185 | ) | |
At September 30, 2019 | 617,420 |
The remaining minimum future lease payments, excluding estimated operating costs, for the term of the lease including assumed renewal periods are as follows:
$ | |||
October 1, 2019 to December 31, 2019 | 50,185 | ||
Fiscal 2020 | 211,568 | ||
Fiscal 2021 | 225,648 | ||
Fiscal 2022 | 196,387 | ||
Fiscal 2023 | 94,055 | ||
2024 and beyond | 129,836 |
NOTE 9 – Accounts Payable and Accrued Liabilities
September 30, 2019 | December 31, 2018 | |||||
$ | $ | |||||
Accounts payable | 2,617,585 | 848,332 | ||||
Accrued liabilities | 954,978 | 1,101,890 | ||||
3,572,563 | 1,950,222 |
NOTE 10 – Provision for Site Reclamation
During the year ended December 31, 2018, the Company recorded a provision for the estimated cost of site reclamation relating to exploration activities at its Railroad-Pinion Project. The Company used an inflation rate of 2.16% and an average discount rate of 3.09% in calculating the estimated obligation. The undiscounted uninflated value of the cash flows required to settle the provision is approximately $1,138,149 expected to be incurred over the next 20 years.
Railroad-Pinion | |||
Project | |||
$ | |||
Balance as at December 31, 2017 | - | ||
Increase in estimate | 946,010 | ||
Foreign exchange adjustment | 56,351 | ||
Accretion expense | 2,138 | ||
Balance as at December 31, 2018 | 1,004,499 | ||
Foreign exchange adjustment | (29,404 | ) | |
Accretion expense | 6,607 | ||
Balance as at September 30, 2019 | 981,702 |
15
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 11 - Share Capital and Reserves
Authorized Share Capital
Unlimited number of common shares without par value.
Issued Share Capital
In February 2018, the Company completed an underwritten public offering and a concurrent private placement financing and issued 18,626,440 common shares of the Company at a price of $2.05 per share for gross proceeds totalling $38,184,202, and incurred cash commissions and expenses of $2,623,077.
In September 2018, the Company completed a private placement financing and issued 5,230,901 common shares of the Company at a price of $2.05 per share for gross proceeds totalling $10,723,347, and incurred cash commissions and expenses of $466,386.
In January 2019, the Company issued 113,208 common shares of the Company at a fair value of $1.66 per share in connection to the vesting of restricted share units.
In July 2019, the Company completed an underwritten public offering financing and issued 17,250,000 common shares of the Company at a price of $1.22 per share for gross proceeds totalling $21,045,000, and incurred cash commissions and expenses of $1,751,571.
Share Purchase Warrants
There were no share purchase warrants outstanding as at September 30, 2019 and December 31, 2018.
Stock Options
The Company has a Stock Option Plan whereby the maximum number of common shares reserved for issue under the plan shall not exceed 10% of the outstanding common shares of the Company, as at the date of the grant. The exercise price of each option granted under the plan may not be less than the Discounted Market Price (as that term is defined in the policies of the TSX). Options may be granted for a maximum term of five years from the date of the grant, are non-transferable and generally expire within 90 days of termination of employment, consulting arrangement or holding office as a director or officer of the Company, are subject to provisions as determined by the Board of Directors (the “Board”) and, in the case of death, expire within one year thereafter. Upon death, the options may be exercised by legal representation or designated beneficiaries of the holder of the option.
During the year ended December 31, 2018, the Company issued 2,415,666 common shares in relation to the exercise of 2,415,666 stock options for total proceeds of $2,113,632 and the fair value of $1,641,078 attributable to these stock options was transferred from reserves to share capital. Additionally, 292,934 stock options expired unexercised and 25,000 stock options were cancelled and the fair value of $224,306 attributable to these stock options was transferred from reserves to deficit. In addition, during the year ended December 31, 2018, the Company granted a total of 2,799,256 stock options as follows:
100,000 stock options with an exercise price of $1.96 per share vest one-third immediately, one-third on January 15, 2019, and one-third on January 15, 2020, with a fair value of $102,519.
2,439,256 stock options with an exercise price of $2.11 per share vest one-third immediately, one-third on January 26, 2019, and one-third on January 26, 2020, with a fair value of $2,599,050.
100,000 stock options with an exercise price of $2.11 per share vest one-third immediately, one-third on April 27, 2019, and one-third on April 27, 2020, with a fair value of $105,740.
160,000 stock options with an exercise price of $1.96 per share vest one-third immediately, one-third on June 26, 2019, and one-third on June 26, 2020, with a fair value of $156,288.
16
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 11 - Share Capital and Reserves (continued)
Stock Options (continued)
During the year ended December 31, 2018, the Company expensed a total of $3,227,899 as share-based compensation for values of stock options vested.
During the nine months ended September 30, 2019, the Company issued 355,000 common shares in relation to the exercise of 355,000 stock options for total proceeds of $269,350 and the fair value of $216,991 attributable to these stock options was transferred from reserves to share capital. Additionally, 420,000 stock options expired unexercised and the fair value of $462,456 attributable to these stock options was transferred from reserves to deficit. In addition, during the nine months ended September 30, 2019, the Company granted a total of 1,921,424 stock options as follows:
1,821,424 stock options with an exercise price of $1.74 per share vest one-third immediately, one-third on January 31, 2020, and one-third on January 31, 2021, with a fair value of $1,534,992.
50,000 stock options with an exercise price of $1.49 per share vest one-third immediately, one-third on March 15, 2020, and one-third on March 15, 2021, with a fair value of $32,988.
50,000 stock options with an exercise price of $1.20 per share vest one-third immediately, one-third on August 16, 2020, and one-third on August 16, 2021, with a fair value of $28,802.
During the nine months ended September 30, 2019, the Company expensed a total of $1,610,805 (September 30, 2018 –$2,638,727) as share-based compensation for values of stock options vested.
The fair value of options granted is estimated on the grant date using the Black-Scholes option pricing model using the following weighted average variables:
For the nine months ended September 30, | |||||
2019 | 2018 | ||||
Risk-free interest rate | 1.80 | % | 1.99 | % | |
Expected option life in years | 4 years | 4 years | |||
Expected stock price volatility | 62 | % | 65 | % | |
Expected dividend rate | 0 | % | 0 | % |
A summary of stock option activities is as follows:
Number of | Weighted average | ||||
options | exercise price | ||||
$ | |||||
Outstanding at December 31, 2017 | 9,251,640 | 1.43 | |||
Exercised | (2,415,666 | ) | 0.87 | ||
Granted | 2,799,256 | 2.10 | |||
Expired | (292,934 | ) | 2.12 | ||
Cancelled | (25,000 | ) | 2.11 | ||
Outstanding at December 31, 2018 | 9,317,296 | 1.75 | |||
Exercised | (355,000 | ) | 0.76 | ||
Granted | 1,921,424 | 1.72 | |||
Expired | (420,000 | ) | 2.14 | ||
Outstanding at September 30, 2019 | 10,463,720 | 1.76 |
17
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 11 - Share Capital and Reserves (continued)
Stock Options (continued)
A summary of the stock options outstanding and exercisable at September 30, 2019 is as follows:
Exercise | Number | Number | |||||||||
Price | Outstanding | Exercisable | Expiry Date | ||||||||
$ | |||||||||||
0.77 | 450,000 | 450,000 | November 30, 2019* | ||||||||
0.73 | 2,125,000 | 2,125,000 | November 27, 2020 | ||||||||
3.16 | 457,500 | 457,500 | September 29, 2021 | ||||||||
2.24 | 325,000 | 325,000 | June 1, 2022 | ||||||||
2.12 | 2,030,540 | 2,030,540 | August 1, 2022 | ||||||||
2.25 | 600,000 | 600,000 | September 12, 2022 | ||||||||
1.96 | 100,000 | 66,667 | January 15, 2023 | ||||||||
2.11 | 2,314,256 | 1,542,837 | March 5, 2023 | ||||||||
2.11 | 100,000 | 66,667 | April 27, 2023 | ||||||||
1.96 | 160,000 | 106,667 | September 14, 2023 | ||||||||
1.74 | 1,701,424 | 567,141 | January 31, 2024 | ||||||||
1.49 | 50,000 | 16,667 | March 15, 2024 | ||||||||
1.20 | 50,000 | 16,667 | August 16, 2024 | ||||||||
10,463,720 | 8,371,353 | ||||||||||
* Estimated |
The stock option reserve records items recognized as share-based compensation expense until such time that the stock options are exercised, at which time the corresponding amount will be transferred to share capital. If vested options expire unexercised or are forfeited, the amount recorded is transferred to deficit.
Restricted Share Unit Award Plan
In 2017, the Company adopted a Restricted Share Unit Award Plan (“RSU Plan”) whereby the maximum number of common shares reserved for issue under the RSU Plan shall not exceed 5,000,000 common shares of the Company.In addition, the aggregate number of common shares issuable pursuant to the RSU Plan combined with all of the Company’s other security-based compensation arrangements, including the Company’s Stock Option Plan, shall not exceed 10% of the Company’s outstanding shares.
In March 2018, the Company granted 567,110 restricted share units (“RSUs”) to certain officers and directors with a fair value of $1,196,602. The RSUs issued to officers of the Company vest one-third every year. The directors of the Company, who have been granted RSUs, have the entitlement to have one-third of the grant vest every year. However, the RSUs will vest only when the director’s position on the Board has been terminated. During the year ended December 31, 2018, the Company expensed a total of $654,127 as share-based compensation for values of RSUs vested.
In January 2019, the Company granted 664,730 restricted share units to certain officers and directors with a fair value of $1,156,630. Certain RSUs issued to officers of the Company vest either one-third every year or approximately three years from the grant date. The directors of the Company, who have been granted RSUs, have the entitlement to have one-third of the grant vest every year. However, the RSUs will vest only when the director’s position on the Board has been terminated.
18
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 11 - Share Capital and Reserves (continued)
Restricted Share Unit Award Plan (continued)
During the nine months ended September 30, 2019, the Company cancelled 57,168 RSUs and the fair value of $8,395 attributable to these RSUs was transferred from reserves to deficit. In addition, the Company expensed a total of $698,764 (September 30, 2018 – $431,680) as share-based compensation for values of RSUs vested.
A summary of restricted share unit activities is as follows:
Number of | |||
RSUs | |||
Outstanding at December 31, 2017 | - | ||
Granted | 567,110 | ||
Outstanding at December 31, 2018 | 567,110 | ||
Vested | (113,208 | ) | |
Granted | 664,730 | ||
Cancelled | (57,168 | ) | |
Outstanding at September 30, 2019 | 1,061,464 |
NOTE 12 - Segmented Information
The Company has one operating segment, being the acquisition and exploration of exploration and evaluation assets.
Geographic information is as follows:
As at September 30, 2019 | |||||||||
Canada | US | Total | |||||||
$ | $ | $ | |||||||
Reclamation bonds | - | 2,110,590 | 2,110,590 | ||||||
Property and equipment | 31,618 | 305,112 | 336,730 | ||||||
Exploration and evaluation assets | - | 216,361,141 | 216,361,141 | ||||||
Right-of-use assets | 391,967 | 389,803 | 781,770 | ||||||
423,585 | 219,166,646 | 219,590,231 | |||||||
As at December 31, 2018 | |||||||||
Canada | US | Total | |||||||
$ | $ | $ | |||||||
Reclamation bonds | - | 2,154,027 | 2,154,027 | ||||||
Property and equipment | 67,636 | 387,786 | 455,422 | ||||||
Exploration and evaluation assets | - | 196,666,709 | 196,666,709 | ||||||
67,636 | 199,208,522 | 199,276,158 |
19
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 13 - Related Party Transactions
During the nine months ended September 30, 2019, the Company entered into the following transactions with related parties, not disclosed elsewhere in these financial statements:
i. | As at September 30, 2019, $7,606 (December 31, 2018 - $296,702) was included in accounts payable and accrued liabilities owing to officers and directors of the Company in relation to professional fees and reimbursement of expenses. | |
ii. | The Company received $9,000 (September 30, 2018 - $13,500) of rent from a company related by way of common officers. |
Summary of key management personnel compensation:
Key management personnel includes those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Board and corporate officers, including the Company’s Chief Executive Officer and Chief Financial Officer.
For the nine months ended September 30, | ||||||
2019 | 2018 | |||||
$ | $ | |||||
Management fees | 840,750 | 833,540 | ||||
Professional fees | 172,863 | 172,863 | ||||
Exploration and evaluation assets expenditures | 144,333 | 122,560 | ||||
Wages and salaries | 25,471 | 21,628 | ||||
Share-based compensation | 1,509,959 | 1,857,947 | ||||
2,693,376 | 3,008,538 |
NOTE 14 - Capital Disclosure and Management
The Company considers its capital structure to include the components of shareholders’ equity. Management’s objective is to ensure that there is sufficient capital to minimize liquidity risk and to continue as a going concern. As an exploration stage company, the Company is currently unable to self-finance its operations.
Although the Company has been successful in the past in obtaining financing through the sale of equity securities, there can be no assurance that the Company will be able to obtain adequate financing in the future, or that the terms of such financings will be favourable.
The Company’s share capital is not subject to any external restrictions and the Company did not change its approach to capital management during the period.
NOTE 15 - Financial Instruments and Risk Management
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
The Company’s financial instruments consist of cash, receivables, reclamation bonds, and accounts payable, and accrued liabilities. The fair value of these financial instruments, other than cash, approximates their carrying values due to the short-term nature of these instruments. Cash is measured at fair value using level 1 inputs.
20
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 15 - Financial Instruments and Risk Management (continued)
The Company is exposed to a variety of financial risks by virtue of its activities including currency, credit, interest rate, liquidity, and commodity price.
a) | Currency risk |
The Company conducts exploration and evaluation activities in the United States. As such, it is subject to risk due to fluctuations in the exchange rates for the Canadian and US dollars. As at September 30, 2019, the Company had a foreign currency net monetary asset position of approximately US$3,635,000. Each 1% change in the US dollar relative to the Canadian dollar will result in a foreign exchange gain/loss of approximately $36,000.
b) | Credit risk |
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s cash is held in large Canadian and U.S. financial institutions and the Company considers this risk to be remote.
c) | Interest rate risk |
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to limited interest rate risk as it only holds cash and highly liquid short-term investments.
d) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its obligations as they come due. The Company’s ability to continue as a going concern is dependent on management’s ability to raise the required capital through future equity or debt issuances. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board are actively involved in the review, planning, and approval of significant expenditures and commitments.
e) | Commodity price risk |
The ability of the Company to raise funds to explore and develop its exploration and evaluation assets and the future profitability of the Company are directly related to the price of gold. The Company monitors gold prices to determine the appropriate course of action to be taken.
NOTE 16 - Commitments
a) | The Company has two separate consulting agreements with officers and directors of the Company to provide management consulting and exploration services to the Company for an indefinite term. The agreements require total combined payments of $50,750 per month. Included in each agreement is a provision for a two-year payout in the event of termination without cause and three-year payout in the event of a change in control. | |
b) | The Company has two separate employment agreements with employees of the Company to provide exploration services to the Company for an indefinite term. The agreements require total combined payments of US$31,767 per month. Included in each agreement is a provision for a two-year payout in the event of termination following a change in control. | |
c) | The Company has an employment agreement with an officer of the Company to provide corporate secretarial and legal services to the Company for an indefinite term. The agreement requires payment of $19,167 per month. Included in the agreement is a provision for a two-year payout in the event of termination without cause or in the event of a change in control. |
21
GOLD STANDARD VENTURES CORP. |
(An Exploration Stage Company) |
Notes to Condensed Interim Consolidated Financial Statements |
For the three and nine months ended September 30, 2019 |
(Expressed in Canadian Dollars - unaudited) |
NOTE 17 – Supplementary Cash Flow Information
For the nine months ended September 30, | ||||||
2019 | 2018 | |||||
$ | $ | |||||
Non-cash transactions | ||||||
Exploration and evaluation assets expenditures in accounts payable | 3,205,315 | 1,632,279 | ||||
Share issuance costs in accounts payable | 86,086 | 250,943 | ||||
Reclassification of cancelled stock options | - | 9,919 | ||||
Reclassification of expired stock options | 462,456 | 166,715 | ||||
Reclassification of stock options exercised | 216,991 | 1,641,078 | ||||
Reclassification of cancelled restricted share units | 8,395 | - | ||||
Reclassification of restricted share unit vested | 187,925 | - | ||||
Capitalization of right-of-use assets and lease liabilities | 934,659 | - | ||||
Provision for site reclamation | - | 942,713 |
22