ALIANZA MINERALS LTD.
(formerly known as Tarsis Resources Ltd.)
Condensed Consolidated Interim Financial Statements
For the nine months ended June 30, 2015 and 2014
325 Howe Street, Suite 410, Vancouver B.C. V6C 1Z7, Canada, TSXV: ANZ; Tel: 604-687-3520
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NOTICE OF NO AUDITOR’S REVIEW OF
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Under National Instruments 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.
The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.
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CONTENTS
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Condensed Consolidated Interim Financial Statements: |
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Statements of Financial Position | 4 |
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Statements of Comprehensive Loss | 5 |
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Statements of Changes in Equity | 6 |
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Statements of Cash Flows | 7 |
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Notes to Financial Statements | 8-28 |
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
Expressed in Canadian Dollars, unless otherwise stated
| Note |
| June 30, 2015 (Unaudited) |
| September 30, 2014 (Audited) |
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Assets |
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Non-current assets |
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Equipment | 5, 6 | $ | 15,753 | $ | 2,492 |
Exploration and evaluation assets | 6, 7 |
| 4,815,777 |
| 4,086,063 |
Investment in associate | 8 |
| 560,177 |
| - |
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| 5,391,707 |
| 4,088,555 |
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Current assets |
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Prepaid expenses |
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| 16,266 |
| 4,368 |
Receivables |
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| 54,205 |
| 4,199 |
Marketable securities | 4 |
| - |
| 1,625 |
Cash |
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| 297,348 |
| 228,579 |
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| 367,819 |
| 238,771 |
Total assets |
| $ | 5,759,526 | $ | 4,327,326 |
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Shareholders’ equity |
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Share capital | 9 | $ | 13,653,601 | $ | 11,693,260 |
Reserves | 9, 10 |
| 2,421,472 |
| 2,130,562 |
Accumulated other comprehensive loss |
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| 63,623 |
| (2,135) |
Deficit |
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| (11,341,683) |
| (10,170,594) |
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| 4,797,013 |
| 3,651,093 |
Non-current liabilities |
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Deferred income tax liability |
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| 532,000 |
| 532,000 |
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| 532,000 |
| 532,000 |
Current liabilities |
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Due to related parties | 11 |
| 257,243 |
| 38,458 |
Accounts payable and accrued liabilities |
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| 173,270 |
| 105,775 |
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| 430,513 |
| 144,233 |
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Total shareholders’ equity and liabilities |
| $ | 5,759,526 | $ | 4,327,326 |
Nature of operations and going concern (Note 1)
These condensed consolidated interim financial statements are authorized for issue by the Board of Directors on August 28, 2015.
On behalf of the Board of Directors:
Director “Jason Weber”
Director “Mark T. Brown”
See accompanying notes to the condensed consolidated interim financial statements
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
FOR THE NINE MONTHS ENDED JUNE 30
(Unaudited, presented in Canadian Dollars)
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| Three months ended | Nine months ended | |||||
| Note |
| June 30, 2015 |
| June 30, 2014 |
| June 30, 2015 |
| June 30, 2014 |
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Expenses |
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Accounting and legal fees | 11 | $ | 13,163 | $ | 37,430 | $ | 148,721 | $ | 87,855 |
Depreciation | 5 |
| 970 |
| 443 |
| 1,455 |
| 1,329 |
Investor relations and shareholder information |
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| 25,846 |
| 4,785 |
| 42,209 |
| 40,428 |
Office facilities and administrative services | 11 |
| 4,000 |
| 12,304 |
| 9,000 |
| 37,387 |
Office expenses |
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| 6,474 |
| 3,901 |
| 15,136 |
| 13,097 |
Property investigation expenses |
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| 12,301 |
| - |
| 12,301 |
| 731 |
Share-based payments |
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| 289,955 |
| - |
| 289,955 |
| 167,091 |
Transfer agent, listing and filing fees |
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| 14,269 |
| 3,843 |
| 33,209 |
| 17,536 |
Travel |
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| 2,704 |
| 6,501 |
| 9,583 |
| 29,928 |
Wages, benefits and consulting fees | 11 |
| 68,678 |
| 44,181 |
| 159,452 |
| 136,674 |
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| (438,360) |
| (113,388) |
| (721,021) |
| (532,056) |
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Interest income and other income |
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| 20,577 |
| 215 |
| 20,954 |
| 1,583 |
Foreign exchange gain/(loss) |
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| (58,011) |
| - |
| (84,957) |
| - |
Loss of marketable securities |
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| (20,000) |
| - |
| (20,000) |
| - |
Write-down of exploration and evaluation assets (Note 7) |
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| (366,065) |
| - |
| (366,065) |
| - |
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Net loss for the period |
| $ | (861,859) | $ | (113,173) | $ | (1,171,089) | $ | (530,473) |
Other comprehensive income (loss) |
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Unrealized gain (loss) on available-for-sale securities | 4 |
| 20,000 |
| (125) |
| 18,375 |
| (125) |
Exchange difference arising on the translation of foreign subsidiary |
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| 23,437 |
| (12,812) |
| 47,383 |
| 22,679 |
Total comprehensive loss for the period |
| $ | (818,422) | $ | (126,110) | $ | (1,105,331) | $ | (507,919) |
Basic and diluted loss per common share |
| $ | (0.08) | $ | (0.02) | $ | (0.15) | $ | (0.11) |
Weighted average number of common shares outstanding – basic and diluted |
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| 11,336,376 |
| 5,064,044 |
| 7,787,791 |
| 4,763,523 |
See accompanying notes to the condensed consolidated interim financial statements
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited, presented in Canadian Dollars)
| Share Capital |
| Reserves | Accumulated Other Comprehensive Income (Loss) |
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| Note | Number of shares | Amount |
| Equity settled employee benefits | Warrants | Finders’ warrants | Available-for- sale securities | Foreign exchange reserve | Deficit | Total equity |
Balance, September 30, 2013 |
| 4,313,712 | $10,751,788 |
| $1,143,194 | $597,205 | $214,325 | $ (18,750) | $(12,838) | $(6,052,555) | $6,622,369 |
Private placements | 9(b)(i), 9(b)(ii) | 750,334 | 562,750 |
| - | - | - | - | - | - | 562,750 |
Share issue costs |
| - | (27,210) |
| - | - | - | - | - | - | (27,210) |
Share-based payments |
| - | - |
| 167,091 | - | - | - | - | - | 167,091 |
Net loss |
| - | - |
| - | - | - | (125) | 22,679 | (530,473) | (507,919) |
Balance, June 30, 2014 |
| 5,064,046 | 11,287,328 |
| 1,310,285 | 597,205 | 214,325 | (18,875) | 9,841 | (6,583,028) | 6,817,081 |
Private placement | 9(b)(iii) | 900,000 | 450,000 |
| - | - | - | - | - | - | 450,000 |
Share issue costs |
| - | (44,068) |
| - | - | 8,747 | - | - | - | (35,321) |
Net loss |
| - | - |
| - | - | - | 500 | 6,399 | (3,587,566) | (3,580,667) |
Balance, September 30, 2014 |
| 5,964,046 | 11,693,260 |
| 1,310,285 | 597,205 | 223,072 | (18,375) | 16,240 | (10,170,594) | 3,651,093 |
Purchase of exploration and evaluation assets | 9(b)(iv) | 150,000 | 60,000 |
| - | - | - | - | - | - | 60,000 |
Shares issued for the acquisition of Estrella | 9(b)(v) | 4,665,032 | 1,166,258 |
| - | - | - | - | - | - | 1,166,258 |
Private placement | 9(b)(vi) | 3,000,000 | 750,000 |
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| 750,000 |
Share issue costs |
| - | (15,917) |
| - | - | 955 | - | - | - | (14,962) |
Share-based payments |
| - | - |
| 289,955 | - | - | - | - | - | 289,955 |
Net loss |
| - | - |
| - | - | - | 18,375 | 47,383 | (1,171,089) | (1,105,331) |
Balance, June 30, 2015 |
| 13,779,078 | $13,653,601 |
| $1,600,240 | $597,205 | $224,027 | $ - | $ 63,623 | $(11,341,683) | $4,797,013 |
See accompanying notes to the condensed consolidated interim financial statements
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
(Unaudited, presented in Canadian Dollars)
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| Nine months ended June 30, 2015 |
| Nine months ended June 30, 2014 |
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Cash flows from (used in) operating activities |
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Loss for the period | $ | (1,171,089) | $ | (530,473) |
Items not affecting cash: |
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Depreciation |
| 1,455 |
| 1,329 |
Loss of marketable securities |
| 20,000 |
| - |
Share-based payments |
| 289,955 |
| 167,091 |
Write-down of exploration and evaluation assets |
| 366,065 |
| - |
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Changes in non-cash working capital items: |
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Receivables |
| (50,006) |
| 992 |
Prepaid expenses |
| (11,898) |
| 10,401 |
Accounts payable and accrued liabilities |
| (219,082) |
| (31,146) |
Due to related parties |
| 218,785 |
| 19,346 |
Net cash (used in) operating activities |
| (555,815) |
| (362,460) |
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Cash flows from (used in) investing activities |
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Exploration and evaluation assets |
| (161,383) |
| (188,988) |
Net cash (used in) investing activities |
| (161,383) |
| (188,988) |
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Cash flows from (used in) financing activities |
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Proceeds from issuance of common shares |
| 750,000 |
| 562,750 |
Share issue costs |
| (18,462) |
| (27,210) |
Net cash provided by financing activities |
| 731,538 |
| 535,540 |
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Effect of exchange rate changes on cash |
| 54,428 |
| 22,679 |
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Change in cash for the period |
| 68,769 |
| 6,771 |
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Cash, beginning of the period |
| 228,579 |
| 21,044 |
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Cash, end of the period | $ | 297,348 | $ | 27,815 |
Supplemental disclosure with respect to cash flows (Note 12)
See accompanying notes to the condensed consolidated interim financial statements
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
1.
NATURE OF OPERATIONS AND GOING CONCERN
Alianza Minerals Ltd. (formerly Tarsis Resources Ltd., “Tarsis”) (the “Company” or “Alianza”) was incorporated in Alberta on October 21, 2005 under the Business Corporations Act of Alberta and its registered office is Suite 410, 325 Howe Street, Vancouver, BC, Canada, V6C 1Z7. On April 25, 2008 the Company filed for a certificate of continuance and is continuing as a BC Company under the Business Corporations Act (British Columbia).
The Company is an exploration stage company and is engaged principally in the acquisition and exploration of mineral properties. The recovery of the Company’s investment in its exploration and evaluation assets is dependent upon the future discovery, development and sale of minerals, upon the ability to raise sufficient capital to finance these activities, and/or upon the sale of these properties.
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The ability of the Company to continue as a going concern is dependent on obtaining additional financing through the issuance of common shares or obtaining joint venture or property sale agreements for one or more properties.
There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the condensed consolidated interim statement of financial position. The condensed consolidated interim financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.
Adverse financial market conditions and volatility increase the uncertainty of the Company’s ability to continue as a going concern given the need to both manage expenditures and to raise additional funds. The Company is experiencing, and has experienced, negative operating cash flows. The Company will continue to search for new or alternate sources of financing but anticipates that the current market conditions may impact the ability to source such funds. Accordingly, these material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern.
As at June 30, 2015, the Company had working capital deficit of $62,694 (September 30, 2014: working capital of $94,538) and shareholders’ equity of $4,797,013 (September 30, 2014: $3,651,093).
2.
BASIS OF PREPARATION
Statement of Compliance
These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) using accounting policies consistent with IFRS issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
2.
BASIS OF PREPARATION- continued
Basis of preparation
These condensed consolidated interim financial statements have been prepared on a historical cost basis except for marketable securities classified as available-for-sale, which are stated at fair value through other comprehensive income (loss). In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The preparation of these condensed consolidated interim financial statements in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements.
These condensed consolidated interim financial statements, including comparatives, have been prepared on the basis of IFRS standards that are published at the time of preparation.
Basis of preparation
The condensed consolidated interim financial statements of the Company include the following subsidiaries and interest in joint ventures:
| Name of Subsidiaries | % of ownership | Jurisdiction | Principal Activity |
| Tarsis Resources US Inc. | 100% | Nevada, USA | Holding Company |
| Minera Tarsis, S.A. de C.V. | 100% | Mexico | Exploration Company |
| Alianza Holdings Ltd. | 100% | Canada | Holding Company |
| Canadian Shield Explorations (Int’l) Ltd. | 100% | Canada | Holding Company |
| Canadian Shield Explorations Ltd. | 100% | Canada | Holding Company |
| Estrella Gold Peru S.A.C. | 100% | Peru | Exploration Company |
| Yanac Peru Exploration LLC | 50% | Delaware, USA | Holding Company |
| Yanac Minera Peru S.A.C. | 50% | Peru | Exploration Company |
| Pucarana S.A.C. | 36% | Peru | Exploration Company |
Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated in preparing the condensed consolidated interim financial statements.
New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the June 30, 2015 reporting period. The Company has not early adopted the following new and revised standards, amendments and interpretations that have been issued but are not yet effective:
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IFRS 9 (Amended 2010) Financial Instruments (effective January 1, 2018)
The Company anticipates that the application of the above new and revised standards, amendments and interpretations will have no material impact on its results and financial position.
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
3.
SIGNIFICANT ACCOUNTING POLICIES
These unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS as issued by the IASB on a basis consistent with those followed in the Company’s most recent annual financial statements for the year ended September 30, 2014.
These unaudited condensed consolidated interim financial statements do not include all note disclosures required by IFRS for annual financial statements, and therefore should be read in conjunction with the annual financial statements for the year ended September 30, 2014. In the opinion of management, all adjustments considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the nine month period ended June 30, 2015 are not necessarily indicative of the results that may be expected for the current fiscal year ending September 30, 2015.
4.
MARKETABLE SECURITIES
The Company holds shares of a publicly traded company which are held as available-for-sale and valued in accordance with the quoted market price of the common shares.
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| June 30, 2015 |
| September 30, 2014 |
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| Balance, beginning of the period | $ | 1,625 | $ | 1,250 |
| Realized gain (loss) |
| (20,000) |
| - |
| Unrealized gain (loss) |
| 18,375 |
| 375 |
| Balance, end of the period | $ | - | $ | 1,625 |
Marketable securities consist of equity securities over which the Company does not have control or significant influence. Unrealized gains and losses due to period end revaluation to fair value, other than those determined to be due to significant or prolonged losses, are recorded as other comprehensive income or loss. During the nine months ended June 30, 2015, the Company determined that there is a prolonged decline in the fair value of the available-for-sale securities, the full amount of the impairment, including any amount previously recognized in other comprehensive income, is recognized in profit or loss.
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
5.
EQUIPMENT
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| Office equipment and furniture |
| Vehicles and other field equipment |
| Total |
| Cost |
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| As at September 30, 2013 | $ | 2,722 | $ | 5,500 | $ | 8,222 |
| Assets acquired |
| - |
| - |
| - |
| As at September 30, 2014 |
| 2,722 |
| 5,500 |
| 8,222 |
| Assets acquired through plan of arrangement |
| 3,535 |
| 10,987 |
| 14,522 |
| Foreign exchange movement |
| 277 |
| 1,096 |
| 1,373 |
| As at June 30, 2015 | $ | 6,534 | $ | 17,583 | $ | 24,117 |
| Accumulated depreciation |
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| As at September 30, 2013 | $ | 749 | $ | 3,209 | $ | 3,958 |
| Depreciation for the year |
| 1,085 |
| 687 |
| 1,772 |
| As at September 30, 2014 |
| 1,834 |
| 3,896 |
| 5,730 |
| Depreciation for the period |
| 652 |
| 803 |
| 1,455 |
| Foreign exchange movement |
| 228 |
| 951 |
| 1,179 |
| As at June 30, 2015 | $ | 2,714 | $ | 5,650 | $ | 8,364 |
| Net book value |
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| As at September 30, 2014 | $ | 888 | $ | 1,604 | $ | 2,492 |
| As at June 30, 2015 | $ | 3,820 | $ | 11,933 | $ | 15,753 |
6.
ACQUISITION OF ALIANZA HOLDINGS LTD.
On April 29, 2015, the Company completed a Plan of Arrangement to acquire all of the issued and outstanding shares of Alianza Holdings Ltd. (formerly Estrella Gold Corporation, “Estrella”). Based on 46,650,304 Estrella shares outstanding, the Company issued 46,650,304 (ratio of 1) of their common shares to complete the transaction. In connection with the Plan of Arrangement, the Company effected a consolidation of its issued share capital on a ten old shares for one new share basis and raised $750,000 by way of financing and issued 3 million units (Note 9(c)(vi)). On the post-consolidation basis, the shares issued to Estrella represent approximately 31.6% of the Company’s issued and outstanding common shares.
Estrella is an exploration company operating in Peru. Estrella owns a 100% interest in its subsidiaries, Canadian Shield Explorations (Int’l) Ltd., Canadian Shield Explorations Ltd. and Estrella Gold Peru S.A.C., a 36% interest in its subsidiary Pucarana S.A.C. and a 50% interest in its subsidiaries, Yanac Peru Exploration LLC and Yanac Minera Peru S.A.C.
As Estrella is in the early stage of exploration and does not yet have any processes or outputs, the acquisition was accounted for as a purchase of assets. The difference between the purchase consideration and the adjusted book values of Estrella’s assets and liabilities had been assigned to “exploration and evaluation assets”. The purchase price of the acquisition and the assets acquired are described below:
| Purchase price | $ |
| 46,650,304 common shares of Estrella by issue of 46,650,304 Alianza shares @ $0.025 | 1,166,258 |
| Transaction costs | 173,608 |
| Total purchase price | 1,339,866 |
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
6.
ACQUISITION OF ALIANZA HOLDINGS LTD.- continued
| Assets acquired | $ |
| Net working capital | (194,867) |
| Equipment | 14,522 |
| Investment in associate | 567,416 |
| Exploration and evaluation assets | 952,795 |
| Net identifiable assets of Estrella | 1,339,866 |
7.
EXPLORATION AND EVALUATION ASSETS
The Company follows the prospect generator model whereby it acquires projects on attractive terms, adds value through preliminary exploration efforts and then vends or options the project for further advancement.
The Company has properties in Mexico (the “Mexico Properties”), in Nevada, USA (the “USA Properties”), in Peru (the “Peru Properties”) and in the Yukon Territory of Canada (the “Canada Properties”). Following are summary tables of exploration and evaluation assets and brief summary descriptions of each of the exploration and evaluation assets:
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
7.
EXPLORATION AND EVALUATION ASSETS– continued
Exploration and Evaluation Assets for the period ended June 30, 2015
| Mexico | USA | Peru | Canada |
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| Yago | Others | East Walker | Others | Yanac | Others |
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Balance at September 30, 2014 | $ | 422,415 | $ | 2,307,486 | $ | - | $ | 181,993 | $ | - | $ | - | $ | 1,174,169 | $ | 4,086,063 |
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Additions during the period |
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Acquisition costs: |
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|
|
|
Holding |
| 113,081 |
| (43,996) |
| - |
| 6,036 |
| - |
| 33,258 |
| - |
| 108,379 |
Property acquisition |
| - |
| - |
| 7,500 |
| 52,500 |
| - |
| - |
| - |
| 60,000 |
Acquired through plan of arrangement |
| - |
| - |
| - |
| - |
| 476,397 |
| 476,398 |
| - |
| 952,795 |
|
| 113,081 |
| (43,996) |
| 7,500 |
| 58,536 |
| 476,397 |
| 509,656 |
| - |
| 1,121,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camp, travel and meals |
| 9,338 |
| - |
| - |
| - |
| - |
| - |
| - |
| 9,338 |
Community relations |
| - |
| (604) |
| - |
| - |
| - |
| - |
| - |
| (604) |
Drilling |
| (70,575) |
| 31,007 |
| - |
| - |
| - |
| - |
| - |
| (39,568) |
Field supplies and maps |
| 1,769 |
| 94 |
| - |
| - |
| - |
| - |
| - |
| 1,863 |
Geochemical |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Geological consulting |
| 300 |
| - |
| 366 |
| 5,072 |
| - |
| 202 |
| - |
| 5,940 |
Ground geophysics |
| - |
| (165) |
| - |
| - |
| - |
| - |
| - |
| (165) |
Legal |
| - |
| - |
| 377 |
| 2,639 |
| - |
| - |
| - |
| 3,016 |
Licence and permits |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Office and administrative fees |
| - |
| - |
| - |
| - |
| - |
| (909) |
| - |
| (909) |
Rent |
| 1,446 |
| 605 |
| - |
| - |
| - |
| - |
| - |
| 2,051 |
Reporting, drafting, sampling and |
| - |
| - |
| - |
| 2,126 |
| - |
| - |
| - |
| 2,126 |
|
| (57,722) |
| 30,937 |
| 743 |
| 9,837 |
| - |
| (707) |
| - |
| (16,912) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-down of properties |
| (4,866) |
| (366,960) |
| - |
| - |
| - |
| - |
| - |
| (371,826) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net additions |
| 50,493 |
| (380,019) |
| 8,243 |
| 68,373 |
| 476,397 |
| 508,949 |
| - |
| 732,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
| - |
| (21,861) |
| - |
| - |
| 1,931 |
| 17,208 |
| - |
| (2,722) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2015 | $ | 472,908 | $ | 1,905,606 | $ | 8,243 | $ | 250,366 | $ | 478,328 | $ | 526,157 | $ | 1,174,169 | $ | 4,815,777 |
|
|
|
|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
7.
EXPLORATION AND EVALUATION ASSETS– continued
Exploration and Evaluation Assets for the year ended September 30, 2014
| Mexico | USA | Canada |
| ||||||
|
|
|
|
| ||||||
| Yago | Others |
|
| Total | |||||
|
|
|
|
|
|
|
|
|
|
|
Balance as at September 30, 2013 | $ | 214,500 | $ | 2,270,228 | $ | 117,782 | $ | 4,600,972 | $ | 7,203,482 |
|
|
|
|
|
|
|
|
|
|
|
Additions during the year |
|
|
|
|
|
|
|
|
|
|
Acquisition costs: |
|
|
|
|
|
|
|
|
|
|
Holding |
| 19,087 |
| 4,266 |
| - |
| 1,224 |
| 24,577 |
|
| 19,087 |
| 4,266 |
| - |
| 1,224 |
| 24,577 |
|
|
|
|
|
|
|
|
|
|
|
Exploration expenditures: |
|
|
|
|
|
|
|
|
|
|
Camp, travel and meals |
| 34,797 |
| - |
| - |
| 949 |
| 35,746 |
Drilling |
| 88,820 |
| - |
| - |
| - |
| 88,820 |
Field supplies & overhead |
| 5,219 |
| 105 |
| - |
| 513 |
| 5,837 |
Geological consulting |
| 36,848 |
| 3,112 |
| 20,000 |
| 2,000 |
| 61,960 |
License and permits |
| - |
| - |
| 44,211 |
| - |
| 44,211 |
Reporting, drafting, sampling and |
| 23,144 |
| 919 |
| - |
| 7,686 |
| 31,749 |
|
| 188,828 |
| 4,136 |
| 64,211 |
| 11,148 |
| 268,323 |
|
|
|
|
|
|
|
|
|
|
|
Impairment allowance |
| - |
| - |
| - |
| (3,439,175) |
| (3,439,175) |
Foreign currency translation |
| - |
| 28,856 |
| - |
| - |
| 28,856 |
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2014 | $ | 422,415 | $ | 2,307,486 | $ | 181,993 | $ | 1,174,169 | $ | 4,086,063 |
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
7.
EXPLORATION AND EVALUATION ASSETS – continued
Mexico
On July 23, 2007, the Company purchased from Almaden Minerals Ltd. (“Almaden”) the Erika property, along with 4 other existing properties in Yukon. The Erika property is located in Guerrero State, Mexico, south of Mexico City. Almaden has a 2% NSR royalty on future production from mineral claims purchased from them.
On June 10, 2013, the Company purchased from Almaden five properties in Mexico and two properties in Nevada USA by issuing 400,000 common shares (post 10:1 share consolidation) at a price of $0.55 per share to Almaden on July 25, 2013. Almaden also retains a 2% Net Smelter Return (“NSR”) royalty on future production on all these properties.
·
Yago
·
Gallo de Oro (this is part of the Yago property)
·
San Pedro
·
Mezquites
·
Llano Grande
In addition, areas of influence have been outlined in Mexico, where Almaden has provided its proprietary data and concepts to the Company. In return, the Company will issue 20,000 shares (post 10:1 share consolidation) to Almaden for each new property acquired within the area of influence. The Company will issue a further 80,000 shares (post 10:1 share consolidation) to Almaden upon the first time disclosure of a mineral resource on each and any of the new properties.
The value of the 400,000 common shares (post 10:1 share consolidation) issued to Almaden on acquisition of these seven properties was allocated amongst the properties on a pro-rata basis, based on Almaden’s total capitalized carrying value of the properties immediately preceding transfer.
Subsequently, the Company reduced the size of the Mezquites property and dropped the Llano Grande property.
a)
Yago
The Yago property is located 50 km north of Tepic, the state capital of Nayarit. As of June 30, 2015, the Company had spent $472,908 on advancing this property to joint-venture ready status.
|
|
|
|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
7.
EXPLORATION AND EVALUATION ASSETS – continued
USA
On June 10, 2013, the Company purchased from Almaden two properties in Nevada, USA and five properties in Mexico by issuing 400,000 common shares (post 10:1 share consolidation) at a price of $0.55 per share to Almaden on July 25, 2013. Almaden also retains a 2% NSR royalty on future production on all these properties.
·
BP
·
Black Jack Springs (“BJS”)
In addition, areas of influence have been outlined in Nevada, where Almaden has provided its proprietary data and concepts to the Company. In return, the Company will issue 20,000 shares (post 10:1 share consolidation) to Almaden for each new property acquired within the area of influence. The Company will issue a further 80,000 shares (post 10:1 share consolidation) to Almaden upon the first time disclosure of a mineral resource on each and any of the new properties.
Subsequently, the Company reduced the size of the BP property and dropped the BJS property.
On January 27, 2015, the Company announced that it signed a binding agreement to acquire eight gold properties in Nevada, USA from Sandstorm Gold Ltd. (“Sandstorm”) by issuing 150,000 shares (post 10:1 share consolidation) to Sandstorm (Note 9(c)(iv)) and granting a new smelter returns royalty ranging from 0.5% to 1.0%. The Company also granted Sandstorm a right of first refusal on any future metal streaming agreements on these properties.
·
Ashby
·
Bellview
·
Columbia
·
East Walker
·
Fri Gold
·
Horsethief
·
Hot Pot
·
Kobeh
Subsequently, the Company reduced the size of each of the Ashby, Bellview, Columbia, East Walker, Fri Gold and Horsethief properties as well as dropping the Hot Pot property.
b)
East Walker
The East Walker property is located in Lyon County, west of Hawthorne. A 2% NSR is payable to a previous owner of the property from production from some claims on the property.
As of June 30, 2015, the Company had spent $8,243 on advancing this property.
|
|
|
|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
7.
EXPLORATION AND EVALUATION ASSETS – continued
Peru
On April 29, 2015, the Company acquired the Yanac, Isy and La Estrella properties in Peru through the Plan of Arrangement with Estrella (Note 6).
·
Yanac – located in Chincha region of the Department of Ica, south-central Peru.
·
Isy – located in the Department of Ayucucho, Peru.
·
La Estrella – located 130 kilometers south of Huancayo in the Department of Huancavelica, Peru.
a)
Yanac
The Yanac property is located in Chincha region of the department of Ica, in south-central Peru.
On February 27, 2013, Cliffs Natural Resources Inc. (“Cliffs”) and Estrella entered into a joint venture in respect of the Yanac property. Cliffs and Estrella each now hold a 50% interest in the property, and Cliffs was required to spend a firm commitment of US$500,000 in year one on exploration or pay the same amount to Estrella, with an additional US$250,000 (not firm) to a total of US$750,000 to maintain Cliffs’ interest beyond year one. Cliffs met the US$750,000 commitment by December 31, 2013.
Cliffs can acquire an additional 20% interest in the Yanac property, to a total 70% interest, by spending a minimum of US$4,000,000 (including the above mentioned US$750,000) and completing 3,000 meters of drilling by February 27, 2017. If Cliffs fails to acquire the additional 20%, 100% of the property reverts to Estrella, subject in certain circumstances to a potential NSR royalty in favor of Cliffs. Upon earning 70%, Cliffs can acquire an additional 10% interest in the Yanac property, to a total 80% by completing an NI 43-101 Compliant Pre-Feasibility Study or by defining a compliant Inferred Mineral Resource containing a minimum of 1,000,000 ounces of gold or gold equivalent, within four years of earning its 70% interest. If Cliffs elects not to earn an additional 10% interest, Cliffs will pay Estrella US$2,000,000 within 60 days and the parties will fund their proportional interest, subject to conventional dilution. If either party’s interest in the Yanac property is reduced to 10% or less, that interest will be converted to a 2% NSR royalty.
As of June 30, 2015, Cliffs had spent a total of US$1,799,679 on the Yanac property.
Canada
In 2010, the Company acquired the White River property through staking. The White River property is located in the Yukon, northwest of Whitehorse.
On July 23, 2007, the Company purchased from Almaden certain properties in Yukon and one property in Mexico (Erika) and Almaden has a 2% NSR royalty on future production from these mineral claims:
b)
Goz Creek – located 180 kilometers north east of Mayo, Yukon.
c)
MOR – located 35 kilometers east of Teslin, Yukon and is 1.5 kilometers north of the paved Alaska Highway.
d)
Tim – located 72 kilometers west of Watson Lake, Yukon and 12 kilometers northeast of the Silvertip/Midway deposit.
|
|
|
|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
7.
EXPLORATION AND EVALUATION ASSETS – continued
Canada– continued
On June 10, 2008 the Company signed another agreement with Almaden to acquire a 100% interest in the Prospector Mountain gold-silver-copper property, located in central Yukon. The Company issued 10,000 fully paid common shares (post 10:1 share consolidation) to Almaden and made a cash payment of $30,000 for a 100% interest in the property. Almaden will retain a 2% net smelter royalty (NSR) over any minerals produced from the property, however, half of the NSR may be purchased by the Company at any time after the production commences for fair value as determined by an independent valuator. The Company will also issue to Almaden 50,000 fully paid common shares (post 10:1 share consolidation) upon receipt of a positive bankable feasibility study for the property.
On September 9, 2009 the Company acquired a 100% interest in the Highway property from Strategic Metals Ltd. (“Strategic”). The Company has granted Strategic a 2% NSR royalty on any future production from the mineral claims acquired from them. The Company has incorporated the Highway property as an expansion to the MOR property. In March 2014, the Highway property expired.
8.
INVESTMENT IN ASSOCIATE
On April 29, 2015, the Company owned 36% interest in the subsidiary, Pucarana S.A.C. through the Plan of Arrangement with Estrella (Note 6).
On May 22, 2015, Pucarana S.A.C. signed an Assignment Agreement with Compania de Minas Buenaventura S.A.A. (“Buenaventura”) whereby Pucarana S.A.C. assigns to Buenaventura the rights to the Pucarana property. In consideration, Buenaventura grant a 3% NSR royalty to Pucarana S.A.C. that is then distributed as to 60% to Alamos Gold Inc. (1.8% NSR), 36% to Estrella (1.08% NSR) and 4% to Gallant Minerals Ltd (0.12% NSR).
9.
SHARE CAPITAL
a)
Authorized:
As at June 30, 2015, the authorized share capital is comprised of an unlimited number of common shares without par value and an unlimited number of preferred shares issuable in series. All issued shares are fully paid.
b)
Share consolidation
On April 29, 2015, the Company consolidated its share capital on the basis of one new share for every 10 old shares. All references to the number of shares and per share amounts have been retroactively restated to reflect the consolidation.
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|
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|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
9.
SHARE CAPITAL– continued
c)
Issued:
During the year ended September 30, 2014, the Company:
i)
Completed a non-brokered private placement on December 16, 2013 by issuing 483,667 units (“Unit”) at a price of $0.75 per Unit for gross proceeds of $362,750. Each Unit consists of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share for a 36 month period at a price of $1.50. Insiders participated in the offering for a total of 210,000 Units for gross proceeds of $157,500. Under the residual value approach, no value was assigned to the warrant component of the Units. The Company incurred share issue costs of $15,689 in connection with this financing.
ii)
Completed a non-brokered private placement on March 17, 2014 by issuing 266,667 units (“Unit”) at a price of $0.75 per Unit for gross proceeds of $200,000. Each Unit consists of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share for a 36 month period at a price of $1.50. Insiders participated in the offering for a total of 94,333 Units for gross proceeds of $70,750. Under the residual value approach, no value was assigned to the warrant component of the Units. The Company incurred share issue costs of $11,521 in connection with this financing.
iii)
Completed a non-brokered private placement on September 11, 2014 by issuing 900,000 units (“Unit”) at a price of $0.50 per Unit for gross proceeds of $450,000. Each Unit consists of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share for a 36 month period at a price of $1.00. In connection with the financing, the Company paid $9,600 as a cash finder’s fee and issued 26,880 finder’s warrants, each of which is exercisable into one common share at a price of $0.50 for a period of 12 months. The value of the finder’s warrants was determined to be $8,747 and was calculated using the Black-Scholes option pricing model. Insiders participated in the offering for a total of 207,000 Units for gross proceeds of $103,500. Under the residual value approach, no value was assigned to the warrant component of the Units. The Company incurred additional share issue costs of $25,721 in connection with this financing.
During the nine months ended June 30, 2015, the Company:
iv)
Issued 150,000 common shares to Sandstorm at a price of $0.40 per share for a total consideration of $60,000 to pay for eight exploration and evaluation asset properties in Nevada, USA (Note 7 USA).
v)
Completed the acquisition of all of the outstanding common shares of Estrella on April 29, 2015. As part of the consideration, the Company issued 4,665,032 common shares (post-consolidated) with a fair value of $1,166,258 (Note 6).
|
|
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|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
9.
SHARE CAPITAL– continued
c)
Issued: – continued
vi)
Completed a non-brokered private placement on April 29, 2015 by issuing 3,000,000 units (“Unit”) at a price of $0.25 per Unit for gross proceeds of $750,000. Each Unit consists of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share for a 36 month period at a price of $0.40. In connection with the financing, the Company paid $1,500 as a cash finder’s fee and issued 6,000 finder’s warrants, each of which is exercisable into one common share at a price of $0.25 for a period of 12 months. The value of the finder’s warrants was determined to be $955 and was calculated using the Black-Scholes option pricing model. Insiders participated in the offering for a total of 172,000 Units for gross proceeds of $43,000. Under the residual value approach, no value was assigned to the warrant component of the Units. The Company incurred additional share issue costs of $12,662 in connection with this financing.
10.
STOCK OPTIONS AND WARRANTS
a)
Stock option compensation plan
The Company grants stock options to directors, officers, employees and consultants pursuant to the Company’s Stock Option Plan (the “Plan”). The number of options that may be issued pursuant to the Plan are limited to 10% of the Company’s issued and outstanding common shares and to other restrictions with respect to any single participant (not greater than 5% of the issued common shares) or any one consultant (not greater than 2% of the issued common shares).
Options granted to consultants performing investor relations activities will contain vesting provisions such that vesting occurs over at least 12 months with no more than one quarter of the options vesting in any 3 month period.
Vesting provisions may also be applied to other option grants, at the discretion of the directors. Options issued pursuant to the Plan will have an exercise price as determined by the directors, and permitted by the TSX-V, at the time of the grant. Options have a maximum expiry date of 5 years from the grant date.
|
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|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
10.
STOCK OPTIONS AND WARRANTS– continued
a)
Stock option compensation plan – continued
Stock option transactions and the number of stock options for the nine months ended June 30, 2015 are summarized as follows:
| Expiry date | Exercise price | September 30, 2014 | Granted | Exercised | Expired/ cancelled | June 30, 2015 |
| October 5, 2014 | $3.00 | 10,000 | - | - | (10,000) | - |
| June 23, 2015 | $2.00 | 10,000 | - | - | (10,000) | - |
| October 1, 2015 | $5.90 | 86,500 | - | - | (86,500) | - |
| May 4, 2016 | $6.10 | 42,500 | - | - | (42,500) | - |
| May 7, 2017 | $2.60 | 63,500 | - | - | (63,500) | - |
| February 25, 2019 | $1.00 | 212,500 | - | - | (212,500) | - |
| October 1, 2015 | $0.25 | - | 6,000 | - | - | 6,000 |
| May 7, 2017 | $0.25 | - | 4,500 | - | - | 4,500 |
| February 25, 2019 | $0.25 | - | 22,500 | - | - | 22,500 |
| April 29, 2020 | $0.25 | - | 1,265,500 | - | - | 1,265,500 |
| Options outstanding |
| 425,000 | 1,298,500 | - | (425,000) | 1,298,500 |
| Options exercisable |
| 425,000 | 1,298,500 | - | (425,000) | 1,298,500 |
| Weighted average exercise price |
| $2.80 | $0.25 | $Nil | $2.80 | $0.25 |
As at June 30, 2015, the weighted average contractual remaining life of options is 4.78 years (September 30, 2014 – 2.97 years). The weighted average fair value of stock options granted during the nine months ended June 30, 2015 was $0.22 (2014 - $0.80).
Stock option transactions and the number of stock options for the year ended September 30, 2014 are summarized as follows:
| Expiry date | Exercise price | September 30, 2013 | Granted | Exercised | Expired/ cancelled | September 30, 2014 |
| December 11, 2013 | $1.00 | 27,500 | - | - | (27,500) | - |
| October 5, 2014* | $3.00 | 10,000 | - | - | - | 10,000 |
| June 23, 2015 | $2.00 | 10,000 | - | - | - | 10,000 |
| October 1, 2015 | $5.90 | 86,500 | - | - | - | 86,500 |
| May 4, 2016 | $6.10 | 42,500 | - | - | - | 42,500 |
| May 7, 2017 | $2.60 | 64,500 | - | - | (1,000) | 63,500 |
| February 25, 2019 | $1.00 | - | 213,000 | - | (500) | 212,500 |
| Options outstanding |
| 241,000 | 213,000 | - | (29,000) | 425,000 |
| Options exercisable |
| 241,000 | 213,000 | - | (29,000) | 425,000 |
| Weighted average exercise price |
| $4.20 | $1.00 | $Nil | $1.10 | $2.80 |
*Subsequently, 10,000 stock options expired.
The weighted average assumptions used to estimate the fair value of options for the nine months ended June 30, 2015 and 2014 were as follows:
|
| June 30, 2015 | June 30, 2014 |
| Risk-free interest rate | 1.18% | 1.67% |
| Expected life | 5 years | 5 years |
| Expected volatility | 143.00% | 136.51% |
| Expected dividend yield | n/a | nil |
|
|
|
|
|
|
|
|
|
ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
10.
STOCK OPTIONS AND WARRANTS– continued
b)
Warrants
The continuity of warrants for the nine months ended June 30, 2015 is as follows:
| Expiry date | Exercise price | September 30, 2014 | Issued per Plan of Arrangement | Issued | Exercised | Expired | June 30, 2015 |
| October 3, 2015 | $2.50 | 687,000 | - | - | - | - | 687,000 |
| October 9, 2015 | $2.50 | - | 755,500 | - | - | - | 755,500 |
| December 16, 2016 | $1.50 | 483,666 | - | - | - | - | 483,666 |
| March 17, 2017 | $1.50 | 266,667 | - | - | - | - | 266,667 |
| May 15, 2017 | $1.00 | - | 1,200,000 | - | - | - | 1,200,000 |
| September 11, 2017 | $1.00 | 900,000 | - | - | - | - | 900,000 |
| December 24, 2017 | $1.00 | - | 300,000 | - | - | - | 300,000 |
| April 29, 2018 | $0.40 | - | - | 3,000,000 | - | - | 3,000,000 |
| Outstanding |
| 2,337,333 | 2,255,500 | 3,000,000 | - | - | 7,592,833 |
| Weighted average exercise price |
| $1.60 | $1.50 | $0.40 | $Nil | $Nil | $1.10 |
As at June 30, 2015, the weighted average contractual remaining life of warrants is 1.98 years (September 30, 2014 – 2.17 years).
On April 29, 2015, the Company’s warrants were consolidated on a 10 for 1 basis and the exercise prices were reflected as such (Note 9(b)).
The continuity of warrants for the year ended September 30, 2014 is as follows:
| Expiry date | Exercise price | September 30, 2013 | Issued | Exercised | Expired | September 30, 2014 |
| October 3, 2015 | $2.50 | 687,000 | - | - | - | 687,000 |
| December 16, 2016 | $1.50 | - | 483,666 | - | - | 483,666 |
| March 17, 2017 | $1.50 | - | 266,667 | - | - | 266,667 |
| September 11, 2017 | $1.00 | - | 900,000 | - | - | 900,000 |
| Outstanding |
| 687,000 | 1,650,333 | - | - | 2,337,333 |
| Weighted average exercise price |
| $2.50 | $1.20 | $Nil | $Nil | $1.60 |
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
10.
STOCK OPTIONS AND WARRANTS– continued
c)
Finder’s warrants
The continuity of finder’s warrants for the nine months ended June 30, 2015 is as follows:
| Expiry date | Exercise price | September 30, 2014 | Issued per Plan of Arrangement | Issued | Exercised | Expired | June 30, 2015 |
| September 11, 2015 | $0.50 | 26,880 | - | - | - | - | 26,880 |
| October 3, 2015(a) | $1.50 | 47,150 | - | - | - | - | 47,150 |
| October 9, 2015(b) | $1.50 | - | 56,500 | - | - | - | 56,500 |
| April 29, 2016 | $0.25 | - | - | 6,000 | - | - | 6,000 |
| Outstanding |
| 74,030 | 56,500 | 6,000 | - | - | 136,530 |
| Weighted average exercise price |
| $1.10 | $1.50 | $0.25 | $Nil | $Nil | $1.25 |
(a) Each finder’s warrant consists of one common share and one warrant with each warrant being exercisable into one common share at $2.50, expiring on October 3, 2015.
(b)Each finder’s warrant consists of one common share and one warrant with each warrant being exercisable into one common share at $2.50, expiring on October 9, 2015.
As at June 30, 2015, the weighted average contractual remaining life of finder’s warrants is 0.28 years (September 30, 2014 – 0.99 years).
On April 29, 2015, the Company’s finder’s warrants were consolidated on a 10 for 1 basis and the exercise prices were reflected as such (Note 9(b)).
The continuity of finder’s warrants for the year ended September 30, 2014 is as follows:
| Expiry date | Exercise price | September 30, 2013 | Issued | Exercised | Expired | September 30, 2014 |
| October 3, 2015 | $1.50 | 47,150 | - | - | - | 47,150 |
| September 11, 2015 | $0.50 | - | 26,880 | - | - | 26,880 |
| Outstanding |
| 47,150 | 26,880 | - | - | 74,030 |
| Weighted average exercise price |
| $1.50 | $0.50 | $Nil | $Nil | $1.10 |
The weighted average assumptions used to estimate the fair value of finder’s warrants for the nine months ended June 30, 2015 and 2014 were as follows:
|
| June 30, 2015 | June 30, 2014 |
| Risk-free interest rate | 0.90% | n/a |
| Expected life | 1 year | n/a |
| Expected volatility | 181.06% | n/a |
| Expected dividend yield | n/a | n/a |
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
10.
RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:
For the nine months ended June 30, 2015
|
| Short-term employee benefits | Post- employment benefits | Other long- term benefits | Termination benefits | Share-based payments | Total |
| Jason Weber Chief Executive Officer, Director | $ 20,000 | $ Nil | $ Nil | $ Nil | $ 33,495 | $ 53,495 |
| Winnie Wong Chief Financial Officer | $ Nil | $ Nil | $ Nil | $ Nil | $ 33,495 | $ 33,495 |
| Marc G. Blythe Chief Operating Officer, Director(c) | $ 117,500 | $ Nil | $ Nil | $ Nil | $ 33,495 | $ 150,995 |
| Mark T. Brown, Chief Financial Officer, Director(a) | $ Nil | $ Nil | $ Nil | $ Nil | $ 33,495 | $ 33,495 |
| Adrian Fleming Director | $ Nil | $ Nil | $ Nil | $ Nil | $ 22,330 | $ 22,330 |
| Craig Lindsay Director | $ Nil | $ Nil | $ Nil | $ Nil | $ 22,330 | $ 22,330 |
| John Wilson Director | $ Nil | $ Nil | $ Nil | $ Nil | $ 22,330 | $ 22,330 |
For the nine months ended June 30, 2014
|
| Short-term employee benefits | Post- employment benefits | Other long- term benefits | Termination benefits | Share-based payments | Total |
| Marc G. Blythe Chief Executive Officer, Director(c) | $ 131,250 | $ Nil | $ Nil | $ Nil | $ 35,301 | $ 166,551 |
| Mark T. Brown, Chief Financial Officer, Director(a) | $ Nil | $ Nil | $ Nil | $ Nil | $ 35,301 | $ 35,301 |
| Adrian Fleming Director | $ Nil | $ Nil | $ Nil | $ Nil | $ 15,689 | $ 15,689 |
| Craig Lindsay Director | $ Nil | $ Nil | $ Nil | $ Nil | $ 15,689 | $ 15,689 |
| Jason Weber Director | $ Nil | $ Nil | $ Nil | $ Nil | $ 15,689 | $ 15,689 |
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
11. RELATED PARTY TRANSACTIONS– continued
Related party transactions and balances
|
|
| Nine months ended | Balance due | ||
|
| Services | June 30, 2015 | June 30, 2014 | As at June 30, 2015 | As at September 30, 2014 |
| Amounts due to: |
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|
| Marc. G. Blythe(c) | Wages, consulting fee and share-based payment | $ 150,995 | $ 166,551 | $ - | $ 3,594 |
| Pacific Opportunity Capital Ltd.(a) | Accounting, financing and shareholder communication services | $ 181,950 | $ 110,757 | $ 257,243 | $ 21,840 |
| Almaden Minerals Ltd.(b) | Rent, insurance, office facilities and expenses | $ - | $ 36,900 | $ - | $ 13,024 |
| TOTAL: |
|
|
| $ 257,243 | $ 38,458 |
(a) Mark T. Brown, a director of the Company, is the president of Pacific Opportunity Capital Ltd., a private company. Mr. Brown resigned from being the Chief Financial Officer effective April 29, 2015 but remains as a director of the Company.
(b) Mark T. Brown, a director of the Company, is a director of Almaden Minerals Ltd., a public company.
(c) Marc Blythe resigned from being the Chief Executive Officer and became the Chief Operating Officer effective April 29, 2015. Mr. Blythe remains as a director of the Company.
12.
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
The significant non-cash investing and financing transactions during the nine months ended June 30, 2015 were as follows:
·
The Company recorded $60,000 in share capital related to the issue of common shares pursuant to the acquisition of exploration and evaluation assets (Note 7 USA);
·
The Company recorded $1,166,258 in share capital, $14,522 in equipment, $567,416 in investment in associate, working capital deficiency of $194,867, and $952,795 in exploration and evaluation assets related to the completion of the Plan of Arrangement with Estrella (Note 6); and
·
As at June 30, 2015, a total of $165,785 in exploration and evaluation assets and a total of 12,500 in share issue costs were included in accounts payable and accrued liabilities.
The significant non-cash investing and financing transactions during the nine months ended June 30, 2014 were as follows:
·
As at June 30, 2014, a total of $104,270 in exploration and evaluation assets were included in accounts payable and accrued liabilities.
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
13.
SEGMENTED INFORMATION
The Company has one reportable operating segment, that being the acquisition and exploration of mineral properties. Geographical information is as follows:
|
| June 30, 2015 | September 30, 2014 |
| Non-current assets |
|
|
| Mexico | $ 2,378,514 | $ 2,729,901 |
| USA | 258,609 | 181,993 |
| Peru | 1,578,650 | - |
| Canada | 1,175,934 | 1,176,661 |
|
| $ 5,391,707 | $ 4,088,555 |
14.
FINANCIAL INSTRUMENTS
The Company’s financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest rate risk and commodity price risk.
(a)
Currency risk
The Company’s property interests in Mexico, Peru and USA make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s financial position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian Dollar and foreign functional currencies. The Company does not invest in foreign currency contracts to mitigate the risks. TheCompany’s exploration program, some of its general and administrative expenses and financial instruments denoted in a foreign currency are exposed to currency risk. A 10% change in the Mexican peso, Peruvian nuevo sol and US dollar over the Canadian dollar would change the results of operations by approximately $51,000.
(b)
Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to the liquidity of its cash. The Company limits exposure to credit risk by maintaining its cash with a large Canadian financial institution. The Company’s receivables consist of goods and services/harmonized sales tax due from the federal government of Canada.
(c)
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 ensures there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company’s holdings of cash. The Company has sufficient cash to settle its current liabilities, but further funding will be required to meet the Company’s short-term and long-term operating needs. The Company manages liquidity risk through the management of its capital structure.
Accounts payable and accrued liabilities are due within the current operating period.
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
14.
FINANCIAL INSTRUMENTS– continued
(d)
Market risk
Market risks to which the Company is exposed include unfavorable movements in commodity prices, interest rates, and foreign exchange rates. As at June 30, 2015, the Company has no producing assets and holds the majority of its cash in secure, Canadian dollar-denominated deposits. Consequently, its exposure to these risks has been significantly reduced, but as the Company redeploys its cash, exposure to these risks may increase. The objective of the Company is to mitigate exposure to these risks while maximizing returns.
The Company may from time-to-time own available-for-sale marketable securities, in the mineral resource sector. Changes in the future pricing and demand of commodities can have a material impact on the market value of the investments. The nature of such investments is normally dependent on the invested company being able to raise additional capital to further develop and to determine the commercial viability of its resource properties. Management mitigates the risk of loss resulting from this concentration by monitoring the trading value of the investments on a regular basis.
i)
Interest rate risk
As at June 30, 2015, the Company’s exposure to movements in interest rates was limited to potential decreases in interest income from changes to the variable portion of interest rates for its cash. Market interest rates in Canada are at historically low levels, so management does not consider the risk of interest rate declines to be significant, but should such risks increase, the Company may mitigate future exposure by entering into fixed-rate deposits. A 1% change in the interest rate, with other variables unchanged, would affect the Company by an annualized amount of interest equal to approximately $2,800.
ii)
Foreign exchange risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company may maintain cash and other financial instruments, or may incur revenues and expenditures in currencies other than the Canadian dollar. Significant changes in the currency exchange rates between the Canadian dollar relative to these foreign currencies, which may include but are not limited to US dollars, Mexican peso and Peruvian nuevo sol, could have an effect on the Company’s results of operations, financial position or cash flows. The Company has not hedged its exposure to currency fluctuations.
(e)
Commodity price risk
The ability of the Company to develop its mineral properties and the future profitability of the Company are directly related to the market price of minerals such as gold, zinc, lead and copper. The Company’s input costs are also affected by the price of fuel. The Company closely monitors mineral and fuel prices to determine the appropriate course of action to be taken by the Company.
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ALIANZA MINERALS LTD.
(Formerly Tarsis Resources Ltd.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2015 AND 2014
(Unaudited, presented in Canadian Dollars)
14.
FINANCIAL INSTRUMENTS– continued
IFRS 7 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy.
|
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| Assets: |
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| Cash | $ | 297,348 | $ | - | $ | - | $ | 297,348 |
|
| $ | 297,348 | $ | - | $ | - | $ | 297,348 |
15.
MANAGEMENT OF CAPITAL RISK
The Company considers items included in shareholders’ equity as capital. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents.
In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.
In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with maturities of 90 days or less from the original date of acquisition, selected with regard to the expected timing of expenditures from continuing operations. The Company’s approach to managing capital remains unchanged from the year ended September 30, 2014.