CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED - PREPARED BY MANAGEMENT
(Expressed in Canadian Dollars)
FOR THE THREE MONTHS ENDED
APRIL 30, 2024 & 2023
NOTICE OF NO AUDITOR REVIEW
OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023
The accompanying unaudited condensed interim consolidated financial statements of Red Metal Resources Ltd. (the “Company”) for the three months ended April 30, 2024 and 2023, 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 condensed interim consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of the condensed interim statements by an entity’s auditor. These unaudited condensed interim consolidated financial statements include all adjustments, consisting of normal and recurring items, that management considers necessary for a fair presentation of the financial position, results of operations and cash flows.
RED METAL RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars) (Unaudited) |
|
|
| April 30, | January 31, | ||
| Note | 2024 | 2024 | ||
|
|
|
| ||
ASSETS |
|
|
| ||
Current |
|
|
| ||
Cash |
| $ | 13,103 | $ | 25,699 |
Prepaids and other receivables | 7 |
| 77,195 |
| 75,924 |
Total current assets |
|
| 90,298 |
| 101,623 |
|
|
|
|
|
|
Equipment | 6 |
| 36,039 |
| 38,935 |
Exploration and evaluation assets | 5 |
| 705,316 |
| 700,852 |
Total assets |
| $ | 831,653 | $ | 841,410 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
|
|
|
|
|
Current |
|
|
|
|
|
Accounts payable |
| $ | 137,227 | $ | 173,954 |
Accrued liabilities |
|
| 62,280 |
| 51,893 |
Due to related parties | 10 |
| 616,055 |
| 600,223 |
Notes payable | 10 |
| 2,708,113 |
| 2,561,691 |
Total current liabilities |
|
| 3,523,675 |
| 3,387,761 |
|
|
|
|
|
|
Withholding taxes payable | 8 |
| 139,451 |
| 138,568 |
Total liabilities |
|
| 3,663,126 |
| 3,526,329 |
|
|
|
|
|
|
Shareholders’ deficit |
|
|
|
|
|
Share capital | 9,13 |
| 8,176,210 |
| 8,176,210 |
Share-based payment reserve | 9 |
| 4,078,941 |
| 4,078,941 |
Deficit |
|
| (14,700,293) |
| (14,552,074) |
Accumulated other comprehensive loss |
|
| (386,331) |
| (387,996) |
Total shareholders’ deficit |
|
| (2,831,473) |
| (2,684,919) |
Total liabilities and shareholders’ deficit |
| $ | 831,653 | $ | 841,410 |
Nature and continuance of operations (Note 1)
Subsequent events (Note 13)
Approved on behalf of the Board of Directors:
/s/ Caitlin Jeffs /s/ Gregory Jensen
Director Director
1 | Page
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
RED METAL RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Expressed in Canadian Dollars) (Unaudited) |
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|
| Three months ended April 30, | |||
| Note | 2024 | 2023 | ||
|
|
|
| ||
Operating expenses: |
|
|
| ||
Amortization | 6 | $ | 2,799 | $ | 4,555 |
Consulting fees | 10 |
| 15,000 |
| 35,000 |
General and administrative |
|
| 12,470 |
| 81,296 |
Mineral exploration costs | 5 |
| 36,358 |
| 1,854 |
Professional fees | 10 |
| 16,619 |
| 1,934 |
Regulatory |
|
| 7,683 |
| 7,413 |
Salaries, wages and benefits |
|
| 5,385 |
| 15,118 |
|
|
| (96,314) |
| (147,170) |
Other items |
|
|
|
|
|
Foreign exchange loss |
|
| (669) |
| (6,469) |
Interest on notes payable | 10 |
| (51,236) |
| (43,554) |
Net loss |
|
| (148,219) |
| (197,193) |
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
Items that may be reclassified to profit or loss |
|
|
|
|
|
Foreign currency translation |
|
| 1,665 |
| 16,893 |
Comprehensive loss |
| $ | (146,554) | $ | (180,300) |
|
|
|
|
|
|
Net loss per share – basic and diluted |
| $ | (0.01) | $ | (0.01) |
Weighted average number of shares outstanding - basic and diluted: |
|
| 18,288,861 |
| 18,288,861 |
Note: All share and per share amounts in these condensed interim consolidated financial statements have been retrospectively adjusted to reflect the 1-for-3 share consolidation completed on May 23, 2024.
2 | Page
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
RED METAL RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT (Expressed in Canadian Dollars) (Unaudited) |
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|
| Share Capital |
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|
|
| |
| Note | Number of common shares issued | Amount | Share-based payment reserve | Deficit | Accumulated other comprehensive income/(loss) | Total deficit |
Balance, January 31, 2023 |
| 18,288,861 | $ 8,176,210 | $ 4,078,941 | $ (13,914,265) | $ (317,002) | $ (1,976,116) |
|
|
|
|
|
|
|
|
Net loss |
| - | - | - | (197,193) | - | (197,193) |
Foreign exchange translation |
| - | - | - | - | 16,893 | 16,893 |
Balance, April 30, 2023 |
| 18,288,861 | $ 8,176,210 | $ 4,078,941 | $ (14,111,458) | $ (300,109) | $ (2,156,416) |
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|
|
|
|
|
|
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Balance at January 31, 2024 |
| 18,288,861 | $ 8,176,210 | $ 4,078,941 | $ (14,552,074) | $ (387,996) | $ (2,684,919) |
|
|
|
|
|
|
|
|
Net loss |
| - | - | - | (148,219) | - | (148,219) |
Foreign exchange translation |
| - | - | - | - | 1,665 | 1,665 |
|
|
|
|
|
|
|
|
Balance, April 30, 2024 |
| 18,288,861 | $ 8,176,210 | $ 4,078,941 | $ (14,700,293) | $ (386,331) | $ (2,831,473) |
Note: All share and per share amounts in these condensed interim consolidated financial statements have been retrospectively adjusted to reflect the 1-for-3 share consolidation completed on May 23, 2024.
3 | Page
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
RED METAL RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars) (Unaudited) |
|
| Three months ended April 30, | |||
| 2024 | 2023 | ||
Cash flows used in operating activities |
|
| ||
Net loss | $ | (148,219) | $ | (197,193) |
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
Accrued interest on notes payable |
| 51,236 |
| 43,554 |
Amortization |
| 2,799 |
| 4,555 |
Foreign exchange |
| (539) |
| 6,311 |
Write-off of equipment |
| 263 |
| - |
Changes in operating assets and liabilities |
|
|
|
|
Prepaids and other receivables |
| (1,271) |
| 45,285 |
Accounts payable |
| (37,681) |
| 64 |
Accrued liabilities |
| 10,314 |
| 2,064 |
Due to related parties |
| 15,575 |
| 67,314 |
Net cash used in operating activities |
| (107,523) |
| (28,046) |
|
|
|
|
|
Cash flows provided by financing activities |
|
|
|
|
Issuance of notes payable to related parties |
| 94,882 |
| 23,653 |
Net cash provided by financing activities |
| 94,882 |
| 23,653 |
|
|
|
|
|
Effects of foreign currency exchange |
| 45 |
| 421 |
|
|
|
|
|
Decrease in cash |
| (12,596) |
| (3,972) |
Cash, beginning |
| 25,699 |
| 20,776 |
Cash, ending | $ | 13,103 | $ | 16,804 |
4 | Page
The accompanying notes are an integral part of these condensed interim consolidated financial statement.
RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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1.NATURE AND CONTINUANCE OF OPERATIONS
The Company’s head office is located at 1130 West Pender Street, Suite 820, Vancouver, British Columbia, V6E 4A4. Its registered office address is 800 ‐ 885 West Georgia Street, Vancouver, BC V6C 3H1. The Company’s mailing address is 278 Bay Street, Suite 102, Thunder Bay, Ontario, P7B 1R8. Polymet’s head office is located in Vallenar, III Region of Atacama, Chile.
These condensed interim consolidated financial statements have been prepared on the assumption that the Company 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. As at April 30, 2024, the Company has not advanced its mineral 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 mineral property exploration activities and its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. As at April 30, 2024, the Company had $13,103 cash and working capital deficit of $3,433,377. The Company raises financing for its exploration and development activities in discrete tranches to finance its activities for limited periods only. The Company has identified that further funding may be required for working capital purposes, and to finance the Company’s exploration program and development of mineral assets. These conditions may cast substantial doubt on the Company’s ability to continue as a going concern.
On May 23, 2024, the Company completed a share consolidation (reverse stock split) on the basis of one new share for every three old shares. As a result of the share consolidation, the number of issued and outstanding ordinary shares was reduced from 54,866,625 to 18,288,861 shares. The share consolidation did not change the proportionate ownership interest of any shareholder or the total equity attributable to the Company’s shareholders. All references to share and per share amounts in these condensed interim consolidated financial statements and accompanying notes have been retrospectively adjusted to reflect the share consolidation as if it had occurred at the beginning of the earliest period presented.
These condensed interim consolidated financial statements do not give effect to any adjustment which would be necessary should the Company be unable to continue as a going concern and, therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the consolidated financial statements and such adjustments may be material.
2.BASIS OF PREPARATION
These condensed interim consolidated financial statements were authorized for issue on June 27, 2024, by the directors of the Company.
a) Statement of Compliance and Basis of Presentation
The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee which the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the CPA Canada Handbook - Accounting including IAS 34 Interim financial reporting. The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended January 31, 2024.
The condensed interim consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which have been measured at fair value.
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RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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Balance sheet items are classified as current if receipt or payment is due within twelve months. Otherwise, they are presented as non-current.
b) Material accounting policies
The accounting policies applied in these condensed interim consolidated financial statements are consistent with those applied in the preparation of the Company’s consolidated financial statements for the year ended January 31, 2024.
c) Functional & presentation currencies
The functional currency of the Company is the Canadian dollar. The functional currency of the Company’s subsidiary, Polymet, is the Chilean peso, which is determined to be the currency of the primary economic environment in which Polymet operates.
d) Accounting standards issued but not yet effective
Accounting standards, amendments to standards, or interpretations have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s condensed interim consolidated financial statements.
3.SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of these condensed interim consolidated financial statements in conformity with IFRS requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. These condensed interim consolidated financial statements include estimates which, by their nature, are uncertain. These assumptions and associated estimates are based on historical experience and other factors that are considered to be relevant. The current market conditions introduce additional uncertainties, risks and complexities in management’s determination of the estimates and assumptions used to prepare the Company’s financial results. As volatility in financial markets is an evolving situation, management cannot reasonably estimate the length or severity of the impact on the Company. As such, actual results may differ from estimates and the effect of such differences may be material. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.
The following are critical judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the financial statements:
·classification/allocation of expenses as exploration and evaluation expenditures;
·classification and measurement of the Company’s financial assets and liabilities;
·determination that the Company is able to continue as a going concern; and
·determination whether there have been any events or changes in circumstances that indicate the impairment of the Company’s exploration and evaluations assets.
Key sources of estimation uncertainty include the following:
·the carrying value and recoverability of exploration and evaluation assets;
·recoverability and measurement of deferred tax assets;
·provisions for restoration and environmental obligations and contingent liabilities; and
·measurement of share-based transactions.
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RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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4.FINANCIAL INSTRUMENTS AND RISKS
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 at the fair value hierarchy are:
Level 1 -quoted prices in active markets for identical assets and liabilities.
Level 2 -observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3 -unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions.
The Company has classified its cash as measured at fair value in the statement of financial position, using level 1 inputs
Categories of financial instruments
As at: |
| April 30, 2024 | January 31, 2024 | ||
Financial assets: |
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|
|
FVTPL |
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|
|
|
|
Cash |
| $ | 13,103 | $ | 25,699 |
Financial liabilities: |
|
|
|
|
|
Amortized cost |
|
|
|
|
|
Accounts payable |
| $ | 137,227 | $ | 173,954 |
Accrued liabilities |
| $ | 62,280 | $ | 51,893 |
Due to related parties |
| $ | 616,055 | $ | 600,223 |
Notes payable |
| $ | 2,708,113 | $ | 2,561,691 |
Assets and liabilities measured at fair value on a recurring basis:
As at April 30, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||
Cash | $ | 13,103 | $ | - | $ | - | $ | 13,103 |
Accounts payable, accrued liabilities, due to related parties, and notes payable approximate their fair value due to the short-term nature of these instruments.
Risk management
The Company has exposure to the following risks from its use of financial instruments: credit risk, market risk and liquidity risk. Management, the Board of Directors, and the Audit Committee monitor risk management activities and review the adequacy of such activities.
Credit risk:
Credit risk is the risk of potential loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is limited to the carrying amount on the statement of financial position and arises from the Company’s cash, which is held with a high-credit quality financial institutions in Canada and in Chile. As such, the Company’s credit risk exposure is minimal.
Market risk:
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and equity prices.
7 | Page
RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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i.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 has minimal interest rate risk as it has no interest accumulating financial assets that may become susceptible to interest rate fluctuations.
ii.Currency risk:
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company has offices in Canada and Chile, and holds cash in Canadian, United States, and Chilean Peso currencies. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar and Chilean Peso could have an effect on the Company’s results of operations, financial position, and/or cash flows. At April 30, 2024, the Company had no hedging agreements in place with respect to foreign exchange rates. As the majority of the transactions of the Company are denominated in CAD and Chilean Peso currencies, movements in the foreign exchange rates are not expected to have a material impact on the consolidated statements of comprehensive loss.
iii.Equity price risk:
Equity price risk is the risk that the fair value of equity/securities decreases as a result of changes in the levels of equity indices and the value of individual stocks. The Company is not exposed to equity price risk as it does not have any investments in marketable securities.
Liquidity risk:
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. Historically, the Company’s sources of funding have been through equity financings and loans from the Company’s management and its major shareholder; however, the Company cannot be certain that it will be able to raise sufficient funds to meet its short-term business requirements.
The following table details the remaining contractual maturities of the Company’s financial liabilities as of April 30, 2024.
| Within 1 year | 1-5 years | 5+ years | |||
Accounts payable and accrued liabilities | $ | 199,507 | $ | - | $ | - |
Amounts due to related parties |
| 616,055 |
| - |
| - |
Loans payable |
| 2,708,113 |
| - |
| - |
Withholding taxes payable |
| - |
| - |
| 139,451 |
| $ | 3,523,675 | $ | - | $ | 139,451 |
5.EXPLORATION AND EVALUATION ASSETS
As of April 30, 2024, and January 31, 2024, the Company’s interest in exploration and evaluation assets consisted of three active copper-gold projects on two properties, namely the Farellón and Perth Projects both located on the Carrizal Property, and the Mateo Project located on the Mateo Property. The Company capitalizes acquisition costs incurred on the Company’s exploration and evaluation properties; the costs associated with exploration and drilling programs as well as property tax payments are expensed as period costs in the period they are incurred. Following tables present acquisition costs associated with each property as of April 30, 2024 and January 31, 2024:
8 | Page
RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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Exploration and evaluation assets at April 30, 2024
| January 31, 2024 | Effect of Foreign currency translation | April 30, 2024 | |||
Farellón Project |
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| |||
Farellón | $ | 394,421 | $ | 2,512 | $ | 396,933 |
Quina |
| 152,025 |
| 968 |
| 152,993 |
Exeter |
| 154,406 |
| 984 |
| 155,390 |
Total costs | $ | 700,852 | $ | 4,464 | $ | 705,316 |
Exploration and evaluation assets at January 31, 2024
| January 31, 2023 | Effect of Foreign currency translation | January 31, 2024 | |||
Farellón Project |
|
|
| |||
Farellón | $ | 452,048 | $ | (57,627) | $ | 394,421 |
Quina |
| 174,237 |
| (22,212) |
| 152,025 |
Exeter |
| 176,966 |
| (22,560) |
| 154,406 |
Total costs | $ | 803,251 | $ | (102,399) | $ | 700,852 |
During the three-month periods ended April 30, 2024 and 2023, the Company incurred the following costs associated with the exploration activities on its mineral properties:
Exploration costs for the three-month period ended April 30, 2024
| Farellón Project | Perth Project | Mateo Project | Total Costs |
Property taxes paid | $ 9,185 | $ 21,295 | $ 1,800 | $ 32,280 |
Camp costs (including meals and travel) | 2,855 | - | - | 2,855 |
Total exploration costs | $ 12,040 | $ 21,295 | $ 1,800 | $ 35,135 |
Exploration costs for the three-month period ended April 30, 2023
| Farellón Project | Perth Project | Mateo Project | Total Costs |
Assay costs | $ 192 | $ - | $ - | $ 192 |
Total exploration costs | $ 192 | $ - | $ - | $ 192 |
In addition to the costs listed in the tables above, during the nine-month period ended April 30, 2024, the Company incurred $4,399 in regulatory fees associated with claim maintenance (October 31, 2022 - $3,633).
9 | Page
RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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6.EQUIPMENT
Changes in equipment cost, depreciation and net book value of the equipment at April 30, 2024 and January 31, 2024 are as follows:
Cost | Equipment | |
Balance at January 31, 2023 | $ | 109,348 |
Effect of foreign currency translation |
| (13,939) |
Balance at January 31, 2024 |
| 95,409 |
Disposition of equipment |
| (13,177) |
Effect of foreign currency translation |
| 523 |
Balance at April 30, 2024 | $ | 82,755 |
Accumulated depreciation |
|
|
Balance at January 31, 2023 | $ | 48,395 |
Additions |
| 15,797 |
Effect of foreign currency translation |
| (7,718) |
Balance at January 31, 2024 |
| 56,474 |
Additions |
| 2,799 |
Disposition of equipment |
| (12,914) |
Effect of foreign currency translation |
| 357 |
Balance at April 30, 2024 | $ | 46,716 |
Net carrying amounts |
|
|
Balance, January 31, 2024 | $ | 38,935 |
Balance, April 30, 2024 | $ | 36,039 |
7.PREPAIDS AND OTHER RECEIVABLES
Prepaids and other receivables consisted of the following as at April 30, 2024 and at January 31, 2024:
| April 30, 2024 | January 31, 2023 | ||
GST receivable | $ | 3,629 | $ | 2,352 |
Prepaid expenses for general and administrative fees |
| 73,566 |
| 73,572 |
Total prepaids and other receivables | $ | 77,195 | $ | 75,924 |
8.WITHHOLDING TAXES PAYABLE
As at April 30, 2024 and January 31, 2024, the Company had $139,451 and $138,568 in Chilean withholding taxes payable, respectively.
9.SHARE CAPITAL
The Company is authorized to issue an unlimited number of common shares without par value (the “Shares”).
The Company did not issue any Shares during the three months ended April 30, 2024.
Share consolidation
On May 23, 2024, the Company c`ompleted a share consolidation (reverse stock split) on the basis of one new share for every three old shares. As a result of the share consolidation, the number of issued and outstanding ordinary shares was reduced from 54,866,625 to 18,288,861 shares. The share consolidation did not change the proportionate ownership interest of any shareholder or the total equity attributable to the Company’s shareholders. All references
10 | Page
RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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to share and per share amounts in the financial statements and accompanying notes have been retrospectively adjusted to reflect the share consolidation as if it had occurred at the beginning of the earliest period presented.
Warrants
The changes in the number of warrants outstanding during the three-month period ended April 30, 2024, and for the year ended January 31, 2024, are as follows:
| Three months ended April 30, 2024 |
| Year ended January 31, 2024 | ||||
| Number of warrants | Weighted average exercise price |
| Number of warrants | Weighted average exercise price | ||
Warrants outstanding, beginning | 2,453,473 | $ | 1.17 |
| 4,732,996 | $ | 1.14 |
Warrants expired | - | $ | n/a |
| (2,279,523) | $ | 1.77 |
Warrants outstanding, ending | 2,453,473 | $ | 1.17 |
| 2,453,473 | $ | 1.17 |
Details of warrants outstanding as at April 30, 2024, are as follows:
Number of warrants exercisable | Grant date | Exercise price |
1,283,222 | May 17, 2021 | $0.60 expiring on May 17, 2024, as extended on May 2, 2022 |
1,102,888 | May 16, 2022 | $1.80 expiring on May 16, 2024 |
67,363 | May 16, 2022 | $1.80 expiring on May 16, 2024 |
2,453,473 |
|
|
All warrants expired unexercised subsequent to April 30, 2024.
At April 30, 2024, the weighted average life of the warrants was 0.05 years.
Options
The Company adopted an incentive stock option plan (the “Option Plan”) which provides that the Board of Directors of the Company may, from time to time, at their discretion and in accordance with the CSE requirements, grant stock options to directors, officers and technical consultants for up to 10% of the issued and outstanding common shares of the Company. Such options are exercisable for a period of up to ten years from the date of grant. Exercise price and vesting terms are determined at the time of grant by the Board of Directors.
The changes in the number of options outstanding during the three-month period ended April 30, 2024, and for the year ended January 31, 2024, are as follows:
| Three months ended April 30, 2024 |
| Year ended January 31, 2024 | ||||
| Number of warrants | Weighted average exercise price |
| Number of warrants | Weighted average exercise price | ||
Options outstanding, beginning | 556,667 | $ | 0.75 |
| 573,333 | $ | 0.75 |
Options expired | - | $ | n/a |
| (16,666) | $ | 0.75 |
Options outstanding, ending | 556,667 | $ | 0.75 |
| 556,667 | $ | 0.75 |
Details of options outstanding as at April 30, 2024, are as follows:
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RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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Number of options exercisable | Grant date | Exercise price and expiry date |
556,667 | November 24, 2021 | $0.75 expiring on November 24, 2026 |
556,667 |
|
|
10.RELATED PARTY TRANSACTIONS
Related parties include the directors, officers, key management personnel, close family members and entities controlled by these individuals. Key management personnel are those having authority and responsibility for planning, directing and controlling the activities of the Company as a whole.
Transactions with Related Parties
During the three-month periods ended April 30, 2024 and 2023, the Company incurred the following expenses with related parties:
| Three months ended April 30, | |||
| 2024 | 2023 | ||
Consulting fees to a company owned by the Chief Financial Officer (“CFO”) | $ | 15,000 | $ | 15,000 |
Consulting fees to a company controlled by directors |
| - |
| 15,000 |
Legal fees paid to a company controlled by a director |
| 6,318 |
| 3,776 |
Total transactions with related parties | $ | 21,318 | $ | 33,776 |
Amounts due to Related Parties
The following amounts were due to related parties as at:
| April 30, 2024 | January 31, 2024 | ||
|
|
| ||
Due to a company owned by the CFO | $ | 174,599 | $ | 158,831 |
Due to a company controlled by directors |
| 155,803 |
| 155,803 |
Due to a company controlled by directors |
| 203,450 |
| 203,450 |
Due to a director (b) |
| 68,239 |
| 68,159 |
Due to the CFO (b) |
| 1,375 |
| 1,340 |
Due to a major shareholder (b) |
| 3,437 |
| 3,349 |
Due to a company controlled by a director |
| 9,152 |
| 9,291 |
Total due to related parties (a) | $ | 616,055 | $ | 600,223 |
(a)Amounts are unsecured, due on demand and bear no interest (Note 13).
(b)On July 29, 2020, Polymet entered into mining royalty agreements (the “NSR Agreements”) with the Company’s director and former CEO, CFO, and the major shareholder (the “Purchasers”) to sell net smelter returns (the “NSR”) on its mineral concessions. NSR range from 0.3% to 1.25% depending on particular concession and the Purchaser. The Company’s director and former CEO agreed to acquire the NSR for $2,063 (US$1,500), CFO agreed to acquire the NSR for $1,375 (US$1,000), and the major shareholder agreed to acquire the NSR for $3,438 (US$2,500).
The NSR will be paid quarterly once commercial exploitation begins and will be paid on gold, silver, copper and cobalt sales. If, within two years, the Company does not commence commercial exploitation of the mineral properties, an annual payment of $10,000 per purchaser will be paid.
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RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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Pursuant to Chilean law, the NSR agreements will come in force only when registered against the land title in Chile. Due to temporary safety restrictions associated with COVID-19 pandemic, the registration of the NSR Agreements has been deferred, therefore the payments made by the CEO, CFO, and the major shareholder have been recorded as advances on the books of the Company and will be applied towards the NSR Agreements, once they are fully legalized.
Notes payable to Related Parties
The following amounts were due under the notes payable the Company issued to related parties:
| April 30, 2024 | January 31, 2024 | ||
|
|
| ||
Note payable to a director and former CEO | $ | 1,392,109 | $ | 1,325,624 |
Note payable to CFO |
| 18,014 |
| 17,664 |
Note payable to a company controlled by directors |
| 204,213 |
| 200,240 |
Note payable to a company controlled by directors |
| 402,809 |
| 340,611 |
Note payable to a major shareholder |
| 690,968 |
| 677,552 |
Total notes payable to related parties | $ | 2,708,113 | $ | 2,561,691 |
The above notes payable to related parties accumulate interest at a rate of 8% per annum and are unsecured (Note 13).
During the three-month period ended April 30, 2024, the Company accrued $51,236 (April 30, 2023 - $43,554) in interest expense on the notes payable to related parties.
11.SEGMENTED INFORMATION
The Company has one operating segment, the exploration of mineral properties, and two geographical segments with all current exploration activities being conducted in Chile. All of the Company’s equipment and exploration and evaluation assets are located in Chile as follows:
| April 30, 2024 | January 31, 2024 | ||
Equipment | $ | 36,039 | $ | 38,935 |
Exploration and evaluation assets |
| 705,316 |
| 700,852 |
| $ | 741,355 | $ | 739,787 |
12.CAPITAL MANAGEMENT
The Company manages its capital, consisting of share and working capital, in a manner consistent with the risk characteristic of the assets it holds. All sources of financing are analyzed by management and approved by the Board of Directors. The Company’s objectives when managing capital is to safeguard the Company’s ability to continue as a going concern and to support the exploration and development of its exploration and evaluation assets and to sustain future development of its business. The Company is meeting its objective of managing capital through preparing short-term and long-term cash flow analysis to ensure an adequate amount of liquidity. The Company is not subject to any externally imposed capital restrictions. There were no changes in the Company’s approach to capital management during the period.
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RED METAL RESOURCES LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED APRIL 30, 2024 & 2023 (Expressed in Canadian Dollars) (Unaudited) |
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13.SUBSEQUENT EVENTS
Related Party Notes and Advances:
Subsequent to April 30, 2024, the Company entered into a loan agreement with Fairtide Ventures, an entity controlled by Ms. Jeffs, the Company’s director and the former CEO, for a total of $6,891. The loan accumulates interest at a rate of 8% per annum, is unsecured, and payable on demand. In addition, Ms. Jeffs advanced to the Company $10,411; this amount does not bear any interest and is payable on demand.
Restructuring of Certain Debt with Related Parties:
Subsequent to April 30, 2024, The Company restructured certain debt (the “Restructuring”) in the amount of $1,911,451 (the “Debt”) owed to its related parties, whereby the creditors agreed to forgive a total of $145,847 in interest accrued on the notes payable, and to restructure repayment of remaining balance of $1,765,604 over a period of 60 months in installment payments every six months, commencing on the date that is six months from the date of the Debt Agreements, being May 9, 2024.
In addition, the Company was also notified that $450,000 owed under the notes payable with related parties have been reassigned to new directors and officers of the Company, who joined the management team on May 10, 2024. This amount was converted to 9,000,000 common shares at $0.05 per share, as part of the June 19, 2024, debt settlement transaction.
Subsequent to April 30, 2024, the Company entered into debt settlement agreements with Da Costa Management Corp, an entity owned by the Company’s CFO, and Fladgate Exploration Consulting Corporation, an entity partly owned by Mr. Thompson, the Company’s director and VP of Exploration, and Ms. Jeffs, who agreed to convert a total of $179,093 into 3,581,860 common shares at $0.05 per share. The debt settlement transaction was completed on June 19, 2024.
Private Placement Financing:
On June 19, 2024, the Company closed the first tranche of a private placement financing issuing 1,200,000 common shares of the Company for gross proceeds of $60,000.
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