FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(Expressed in United States Dollars)
INDEX
Unaudited Condensed Interim Consolidated Statements of Financial Position
1
Unaudited Condensed Interim Consolidated Statements of Income (loss) and Comprehensive Income (loss)
2
Unaudited Condensed Interim Consolidated Statements of Changes in Equity
3
Unaudited Condensed Interim Consolidated Statements of Cash Flows
4
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
5 – 15
Vox Royalty Corp.
Unaudited Condensed Interim Consolidated Statements of Financial Position
(Expressed in United States Dollars)
As at
Note
June 30,
2023
December 31,
2022
$
$
Assets
Current assets
Cash and cash equivalents
11,278,440
4,174,654
Accounts receivable
4
2,546,520
2,000,062
Prepaid expenses
248,020
595,531
Total current assets
14,072,980
6,770,247
Non-current assets
Royalty, stream and other interests
5
31,889,063
32,860,568
Intangible assets
6
1,263,939
1,355,709
Restricted cash
700,000
700,000
Deferred royalty acquisitions
5
19,315
118,932
Total assets
47,945,297
41,805,456
Liabilities
Current liabilities
Accounts payable and accrued liabilities
7
1,617,923
1,766,131
Dividends payable
8
529,672
447,583
Income taxes payable
135,174
584,148
Other liabilities
10
324,238
176,434
Total current liabilities
2,607,007
2,974,296
Non-current liabilities
Other liabilities
10
-
425,281
Deferred tax liabilities
4,135,514
2,991,431
Total liabilities
6,742,521
6,391,008
Equity
Share capital
8
63,967,564
57,020,116
Equity reserves
9
3,900,133
3,303,503
Deficit
(26,664,921
)
(24,909,171
)
Total equity
41,202,776
35,414,448
Total liabilities and equity
47,945,297
41,805,456
Commitments and contingencies (Note 14)
Subsequent events (Note 19)
Approved by the Board of Directors on August 10, 2023
Signed
“Kyle Floyd”
, Director
Signed
“Robert Sckalor”
, Director
See accompanying notes to the unaudited condensed interim consolidated financial statements.
1
Vox Royalty Corp.
Unaudited Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
Note
Three months ended
June 30, 2023
Three months ended
June 30, 2022
Six months ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Revenue
Royalty revenue
2,217,384
1,750,754
5,798,239
2,906,689
Other revenue
-
-
-
315,084
Total revenue
16
2,217,384
1,750,754
5,798,239
3,221,773
Cost of sales
Depletion
5
(385,896
)
(305,876
)
(1,001,894
)
(612,602
)
Gross profit
1,831,488
1,444,878
4,796,345
2,609,171
Operating expenses
General and administration
11,13
(1,555,689
)
(1,323,680
)
(2,856,934
)
(2,536,678
)
Share-based compensation
9,10,13
(138,410
)
(152,345
)
(819,234
)
(392,008
)
Impairment charge
5
(500,000
)
-
(500,000
)
-
Project evaluation expenses
5
(155,127
)
-
(194,937
)
-
Total operating expenses
(2,349,226
)
(1,476,025
)
(4,371,105
)
(2,928,686
)
Income (loss) from operations
(517,738
)
(31,147
)
425,240
(319,515
)
Other income (expenses)
Realized loss on investments
-
(448,036
)
-
(604,574
)
Unrealized gain on investments
-
40,309
-
-
Other income
12
983,342
1,352,963
142,187
1,701,632
Income before income taxes
465,604
914,089
567,427
777,543
Income tax expense
17
(514,047
)
(481,520
)
(1,297,109
)
(585,366
)
Net income (loss) and comprehensive income (loss)
(48,443
)
432,569
(729,682
)
192,177
Weighted average number of shares outstanding
Basic
45,592,341
41,585,170
45,286,172
40,551,889
Diluted
45,592,341
41,592,486
45,286,172
40,606,891
Income (loss) per share
Basic
(0.00
)
0.01
(0.02
)
0.00
Diluted
(0.00
)
0.01
(0.02
)
0.00
See accompanying notes to the unaudited condensed interim consolidated financial statements.
2
Vox Royalty Corp.
Unaudited Condensed Interim Consolidated Statements of Changes in Equity
For the six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
Note
Number of Shares
Share
Capital
Equity Reserves
Deficit
Total
Equity
$
$
$
$
$
Balance, December 31, 2021
39,379,199
43,648,023
1,163,397
(24,101,745
)
20,709,675
Shares issued for acquisition of royalties
4,777,459
11,655,700
1,183,086
-
12,838,786
Share issue costs
-
(27,548
)
-
-
(27,548
)
Exercise of RSUs
84,474
170,112
(170,112
)
-
-
Exercise of warrants
226,234
663,970
(131,548
)
-
532,422
Share redemption (normal course issuer bid)
(70,100
)
(98,624
)
-
(87,240
)
(185,864
)
Share-based compensation
-
-
831,067
-
831,067
Net income and comprehensive income
-
-
-
192,177
192,177
Balance, June 30, 2022
44,397,266
56,011,633
2,875,890
(23,996,808
)
34,890,715
Balance, December 31, 2022
44,758,269
57,020,116
3,303,503
(24,909,171
)
35,414,448
Shares issued in equity financing
8
3,025,000
7,260,000
-
-
7,260,000
Share issue costs
-
(1,151,383
)
-
-
(1,151,383
)
Shares issued for royalty milestone payments
8
215,769
495,446
-
-
495,446
Dividends declared
8
-
-
-
(1,026,068
)
(1,026,068
)
Exercise of RSUs
9
152,918
343,385
(343,385
)
-
-
Share-based compensation
9,10
-
-
940,015
-
940,015
Net loss and comprehensive loss
-
-
-
(729,682
)
(729,682
)
Balance, June 30, 2023
48,151,956
63,967,564
3,900,133
(26,664,921
)
41,202,776
See accompanying notes to the unaudited condensed interim consolidated financial statements.
3
Vox Royalty Corp.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
Note
Three months ended
June 30, 2023
Three months ended
June 30, 2022
Six months ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Cash flows from (used) in operating activities
Net income (loss) for the period
(48,443
)
432,569
(729,682
)
192,177
Adjustments for:
Fair value change of other liabilities
10
(987,620
)
(1,570,823
)
(156,696
)
(1,853,195
)
Deferred tax expense
17
539,998
424,365
1,144,083
331,503
Foreign exchange gain (loss) on cash and cash equivalents
13,145
(108,090
)
21,014
(59,195
)
Write-off of project evaluation expenses
5
114,162
-
114,162
-
Share-based compensation
9,10
138,410
152,345
819,234
392,008
Impairment charge
5
500,000
-
500,000
-
Amortization
6
45,885
45,885
91,770
91,770
Depletion
5
385,896
305,876
1,001,894
612,602
Realized loss on investments
-
448,036
-
604,574
Unrealized gain on investments
-
(40,309
)
-
-
701,433
89,854
2,805,779
312,244
Changes in non-cash working capital:
Accounts receivable
1,037,590
(664,065
)
(546,458
)
(1,254,855
)
Prepaid expenses
195,087
13,246
168,468
77,394
Accounts payable and accrued liabilities
(828,352
)
304,275
(409,007
)
6,994
Income taxes payable
(35,967
)
46,861
(448,974
)
243,569
Net cash flows from (used in) operating activities
1,069,791
(209,829
)
1,569,808
(614,654
)
Cash flows used in investing activities
Acquisition of royalties
-
(4,144,265
)
-
(4,144,265
)
Restricted cash
-
(700,000
)
-
(700,000
)
Deferred royalty acquisitions
(6,968
)
2,529
(59,713
)
2,529
Proceeds from sale of investments
-
714,685
-
1,545,925
Net cash flows used in investing activities
(6,968
)
(4,127,051
)
(59,713
)
(3,295,811
)
Cash flows from financing activities
Proceeds from issuance of common shares
8
7,260,000
-
7,260,000
-
Share issue costs
8
(701,316
)
(27,548
)
(701,316
)
(27,548
)
Dividends paid
8
(496,396
)
-
(943,979
)
-
Share redemption (normal course issuer bid)
8
-
(120,754
)
-
(185,864
)
Exercise of warrants
-
288,069
-
532,422
Net cash flows from financing activities
6,062,288
139,767
5,614,705
319,010
Increase (decrease) in cash and cash equivalents
7,125,111
(4,197,113
)
7,124,800
(3,591,455
)
Impact of foreign exchange on cash and cash equivalents
(13,145
)
108,090
(21,014
)
59,195
Cash and cash equivalents, beginning of the period
4,166,474
5,621,565
4,174,654
5,064,802
Cash and cash equivalents, end of the period
11,278,440
1,532,542
11,278,440
1,532,542
Supplemental cash flow information (Note 15)
See accompanying notes to the unaudited condensed interim consolidated financial statements.
4
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
1. Nature of operations
Vox Royalty Corp. (“Vox” or the “Company”) was incorporated under the Business Corporations Act (Ontario). The Company’s registered office is 66 Wellington Street West, Suite 5300, TD Bank Tower Box 48, Toronto, ON, M5K 1E6, Canada. The Company’s common shares trade on the Toronto Stock Exchange (“TSX”) and on the Nasdaq Stock Market LLC (“Nasdaq”), under the ticker symbol “VOXR”.
Vox is a mining royalty company focused on accretive acquisitions. Approximately 80% of the Company’s royalty and streaming assets by royalty count are located in Australia, Canada and the United States. Further, the Company is prioritizing acquiring royalties on producing or near-term producing assets to complement its portfolio of exploration and development stage royalties.
2. Basis of preparation
(a) Statement of compliance
These unaudited condensed interim consolidated financial statements are prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and apply the same accounting policies and application as disclosed in the annual financial statements for the year ended December 31, 2022. They do not include all of the information and disclosures required by International Financial Reporting Standards (“IFRS”) for annual statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included in these unaudited condensed interim consolidated financial statements. Operating results for the period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2023. For further information, see the Company’s annual financial statements including the notes thereto for the year ended December 31, 2022.
These unaudited condensed interim consolidated financial statements were reviewed, approved, and authorized for issue by the Company’s Board of Directors on August 10, 2023.
(b) Basis of presentation
These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments, which have been measured at fair value. These unaudited condensed interim consolidated financial statements are presented in United States dollars (“$”), which is also the functional currency of the Company and its three wholly-owned subsidiaries.
(c) Principles of consolidation
These unaudited condensed interim consolidated financial statements incorporate the accounts of the Company and its three wholly-owned subsidiaries, SilverStream SEZC (Cayman Islands), Vox Royalty Australia Pty Ltd. (Australia) and Vox Royalty Canada Ltd. (Ontario, Canada).
Subsidiaries are fully consolidated from the date the Company obtains control and continue to be consolidated until the date that control ceases. Control is achieved when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. All intercompany balances, transactions, revenues and expenses have been eliminated on consolidation.
(d) Changes in accounting policies
Certain new accounting standards and interpretations have been published that are currently effective requirements. These standards did not have a material impact on the Company’s current or future reporting periods.
(e) Recent accounting pronouncements
Certain pronouncements were issued by the IASB or the International Financial Reporting Interpretations Committee that are mandatory for accounting periods commencing on or after January 1, 2024. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current
Effective on January 1, 2024, the amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability.
3. Significant judgments, estimates and assumptions
The preparation of the Company’s unaudited condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the unaudited condensed interim consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. The unaudited condensed interim consolidated financial statements include estimates, which, by their nature, are uncertain. The impact of such estimates are pervasive throughout the unaudited condensed interim consolidated financial statements and may require accounting adjustments based on future occurrences.
5
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where the assumptions and estimates are significant to the consolidated financial statements were the same as those applied to the Company’s annual financial statements for the year ended December 31, 2022.
4. Accounts receivable
June 30,
2023
December 31,
2022
$
$
Royalties receivable
2,371,019
1,921,670
Sales tax recoverable
175,501
78,392
2,546,520
2,000,062
Royalties receivable represents amounts that are generally collected within 45 days of quarter-end.
5. Royalty, stream and other interests
As at and for the six months ended June 30, 2023:
Cost
Accumulated Depletion
Royalty
Country
Opening
Additions
Impairment
Ending
Opening
Depletion
Disposal
Ending
Carrying Amount
$
$
$
$
$
$
$
$
$
Wonmunna
Australia
14,527,467
34,943
-
14,562,410
(830,176)
(665,130)
-
(1,495,306)
13,067,104
Janet Ivy
Australia
2,494,285
-
-
2,494,285
(29,633)
(14,798)
-
(44,431)
2,449,854
Koolyanobbing
Australia
2,649,738
-
-
2,649,738
(1,198,243)
(123,822)
-
(1,322,065)
1,327,673
South Railroad
USA
2,316,757
-
-
2,316,757
(79,814)
(5,877)
-
(85,691)
2,231,066
Limpopo
South Africa
1,150,828
-
-
1,150,828
-
-
-
-
1,150,828
Bowdens
Australia
1,130,068
-
-
1,130,068
-
-
-
-
1,130,068
Bullabulling
Australia
953,349
-
-
953,349
-
-
-
-
953,349
Goldlund
Canada
400,671
424,824
-
825,495
-
-
-
-
825,495
Brits
South Africa
764,016
-
-
764,016
-
-
-
-
764,016
Otto Bore
Australia
583,612
-
-
583,612
-
-
-
-
583,612
Segilola
Nigeria
706,425
-
-
706,425
(528,220)
(178,205)
-
(706,425)
-
Lynn Lake
(MacLellan)
Canada
873,088
-
-
873,088
-
-
-
-
873,088
Bulong
Australia
544,957
-
-
544,957
-
-
-
-
544,957
Dry Creek
Australia
475,723
-
-
475,723
(93,637)
(141)
-
(93,778)
381,945
Sulfur Springs/
Kangaroo Caves
Australia
467,983
-
-
467,983
-
-
-
-
467,983
Pedra Branca
Brazil
450,131
-
-
450,131
-
-
-
-
450,131
Ashburton
Australia
355,940
-
-
355,940
-
-
-
-
355,940
Anthiby Well
Australia
311,742
-
-
311,742
-
-
-
-
311,742
Cardinia
Australia
302,850
-
-
302,850
-
-
-
-
302,850
Brauna
Brazil
262,328
-
-
262,328
(75,121)
(13,921)
-
(89,042)
173,286
Montanore
USA
61,572
-
-
61,572
-
-
-
-
61,572
Mt Ida
Australia
210,701
-
-
210,701
-
-
-
-
210,701
Other
Australia
1,606,079
-
-
1,606,079
-
-
-
-
1,606,079
Other
Peru
1,545,609
-
(500,000)
1,045,609
-
-
-
-
1,045,609
Other
Canada
549,493
70,622
-
620,115
-
-
-
-
620,115
Total
35,695,412
530,389
(500,000)
35,725,801
(2,834,844)
(1,001,894)
-
(3,836,738)
31,889,063
6
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
Total royalty, stream and other interests include carrying amounts in the following countries:
June 30,
2023
December 31,
2022
$
$
Australia
23,693,857
24,462,805
USA
2,292,638
2,298,515
South Africa
1,914,844
1,914,844
Canada
2,318,698
1,823,252
Peru
1,045,609
1,545,609
Brazil
623,417
637,338
Nigeria
-
178,205
31,889,063
32,860,568
Impairment
During the period, the Company became aware that the operator of the Alce exploration project did not renew the relevant mining claims and therefore the Peruvian Ministry of Energy and Mining extinguished the mining concessions. As a result, the Company concluded that the Alce royalty should be fully impaired as of June 30, 2023, and the carrying value of the investment of $500,000 has been reduced to $nil.
Deferred royalty acquisitions
Deferred royalty acquisitions as at June 30, 2023 of $19,315 (December 31, 2022 - $118,932) relate to costs incurred prior to the execution and closing of a royalty acquisition. Deferred royalty acquisition costs are reallocated to royalty, stream and other interests upon signing of a definitive agreement. If management determines not to proceed with a proposed acquisition, the deferred costs are reallocated to project evaluation expenses.
6. Intangible assets
Intangible assets are comprised of the Mineral Royalties Online (“MRO”) royalty database.
Database
$
Cost at:
December 31, 2022
1,837,500
Additions
-
June 30, 2023
1,837,500
Accumulated amortization at:
December 31, 2022
481,791
Additions
91,770
June 30, 2023
573,561
Net book value at:
December 31, 2022
1,355,709
June 30, 2023
1,263,939
7. Accounts payable and accrued liabilities
June 30,
2023
December 31,
2022
$
$
Trade payables
493,292
448,206
Sales tax payable
473,238
345,036
Accrued liabilities
651,393
972,889
1,617,923
1,766,131
7
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
8. Share capital and additional paid-in capital
Authorized
The authorized share capital of the Company is an unlimited number of common shares without par value.
The number of common shares issued and outstanding as at June 30, 2023 and at December 31, 2022 is as follows:
June 30,
2023
December 31,
2022
$
$
Issued and outstanding: 48,151,956 (December 31, 2022: 44,758,269) common shares
63,967,564
57,020,116
Share issuances for the six months ended June 30, 2023
On January 24, 2023, the Company issued 215,769 common shares as a second milestone payment relating to the Goldlund royalty, for total consideration of $495,446.
On June 16, 2023, the Company completed a public offering (“Public Offering”) of 3,025,000 common shares at a price of $2.40 per common share, for gross proceeds of $7,260,000. In connection with the offering, the Company paid agent fees of $471,900, representing 6.5% of the gross proceeds.
Dividends
On November 14, 2022, the Board of Directors of the Company declared a dividend of $0.01 per common share payable on January 13, 2023 to shareholders of record as of the close of business on December 30, 2022. Total dividends of $447,583 were payable as at December 31, 2022, which were paid on January 13, 2023.
On March 13, 2023, the Board of Directors of the Company declared a quarterly dividend of $0.011 per common share payable on April 14, 2023 to shareholders of record as of the close of business on March 31, 2023. Total dividends of $496,396 were payable as at March 31, 2023, which were paid on April 14, 2023.
On May 10, 2023, the Board of Directors of the Company declared a quarterly dividend of $0.011 per common share payable on July 14, 2023 to shareholders of record as of the close of business on June 30, 2023. Total dividends of $529,672 were payable as at June 30, 2023, which were paid on July 14, 2023.
9. Equity reserves
Warrants
The following summarizes the warrant activity for the six months ended June 30, 2023 and 2022:
June 30, 2023
June 30, 2022
Number
Weighted average exercise price
Number
Weighted average exercise price
#
C$
#
C$
Outstanding, beginning of period
3,600,000
4.50
251,762
3.00
Granted
-
-
3,600,000
4.50
Exercised
-
-
(226,234
)
3.00
Expired
-
-
(25,528
)
3.00
Outstanding, end of period
3,600,000
4.50
3,600,000
4.50
Exercisable, end of period
3,600,000
4.50
3,600,000
4.50
The following table summarizes information of warrants outstanding and exercisable as at June 30, 2023:
Expiry date
Number of
warrants
outstanding
Exercise
price
Weighted average remaining contractual life
#
C$
Years
May 25, 2024
3,600,000
4.50
0.74
3,600,000
4.50
0.74
See Note 10 for additional warrants classified as other liabilities.
8
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
Options
The Company maintains an omnibus long-term incentive plan (the “Plan”) whereby certain key employees, officers, directors and consultants may be granted options to acquire common shares of the Company. The exercise price, expiry date, and vesting terms are determined by the Board of Directors. The Plan permits the issuance of options which, together with the Company’s other share compensation arrangements, may not exceed 10% of the Company’s issued common shares as at the date of grant.
The following summarizes the stock option activity for the six months ended June 30, 2023 and 2022:
June 30, 2023
June 30, 2022
Number
Weighted average exercise price
Number
Weighted average exercise price
#
C$
#
C$
Outstanding, beginning of period
1,603,984
3.71
799,826
3.25
Granted
-
-
804,158
4.16
Outstanding, end of period
1,603,984
3.71
1,603,984
3.71
Exercisable, end of period
1,201,905
3.55
399,914
3.25
The following table summarizes information of stock options outstanding as at June 30, 2023:
Options Outstanding
Options Exercisable
Expiry date
Exercise
price
Number of
options
outstanding
Weighted average remaining contractual life
Number of options exercisable
Weighted average remaining contractual life
C$
#
Years
#
Years
June 30, 2026
3.25
799,826
3.00
799,826
3.00
March 9, 2027
4.16
804,158
3.69
402,079
3.69
1,603,984
3.35
1,201,905
3.23
Restricted Share Unit Plan
The Plan provides that the Board of Directors may, at its discretion, grant directors, officers, employees and consultants non-transferable RSUs based on the value of the Company’s share price at the date of grant. The Board of Directors has the discretion to issue cash or equity settle the vested RSUs. The RSUs issued were treated as equity-settled instruments and measured at the grant date fair value because the Company does not have a present obligation to settle the issued RSUs in cash.
During the six months ended June 30, 2023, 725,157 RSUs were granted, and vest as follows:
-
709,168 RSUs vest in 25% increments on each of June 30, 2023, December 31, 2023, June 30, 2024, and December 31, 2024; and
-
15,989 RSUs vest in 25% increments on each of June 30, 2023, September 30, 2023, December 31, 2023, and March 31, 2024.
The share-based compensation expense related to RSU grants is recorded over the vesting period.
The following summarizes the RSU activity for the six months ended June 30, 2023 and 2022:
June 30, 2023
June 30, 2022
Number
Weighted average fair value
Number
Weighted average fair value
#
$
#
$
Outstanding, beginning of period
615,044
2.56
581,696
2.13
Granted
725,157
2.60
263,548
3.01
Exercised
(152,918
)
2.25
(84,474
)
2.01
Outstanding, end of period
1,187,283
2.60
760,770
2.45
Vested, end of period
490,622
2.49
142,516
2.22
9
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
10. Other liabilities
The following summarizes the other liabilities balance:
June 30,
2023
December 31, 2022
$
$
Warrants
288,520
445,216
PSUs
35,718
156,499
324,238
601,715
Less: current portion
324,238
176,434
Non-current portion
-
425,281
Warrants
The following summarizes the warrant activity for six months ended June 30, 2023 and 2022:
June 30, 2023
June 30, 2022
Number
Weighted average exercise price
Number
Weighted average exercise price
#
C$
#
C$
Outstanding, beginning of period
5,097,550
4.50
5,097,550
4.50
Expired
(2,289,667
)
4.50
-
-
Outstanding, end of period
2,807,883
4.50
5,097,550
4.50
Exercisable, end of period
5,097,550
4.50
5,097,550
4.50
The following table summarizes information of warrants outstanding and exercisable as at June 30, 2023:
Expiry date
Number of
warrants
outstanding
Exercise
price
Weighted average remaining contractual life
#
C$
Years
March 25, 2024
2,807,883
4.50
0.74
2,807,883
4.50
0.74
The Company used the BSM to estimate the period end fair value of warrants during the period using the following weighted average assumptions:
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
Expected stock price volatility
42
%
44
%
Risk-free interest rate
4.54
%
3.09
%
Expected life
0.74 years
1.35 years
Period end share price
$
2.40
$
2.18
Expected dividend yield
1.80
%
-
Performance Share Unit Plan
The Plan provides that the Board of Directors may, at its discretion, grant directors, officers, employees and consultants, non-transferable PSUs based on the value of the Company’s share price at the date of grant. The Board of Directors has the discretion to issue cash or equity settle the vested PSUs. The PSUs issued were treated as derivative instruments because the number of shares to be eventually issued is based on a percentage of the common shares outstanding at the time the performance hurdle is met. The share-based compensation expense will be recorded over the vesting period, which is the date that specific share price hurdles are met.
10
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
The following summarizes the PSU activity for the six months ended June 30, 2023 and 2022:
June 30, 2023
June 30, 2022
Number
Weighted average fair value
Number
Weighted average fair value
#
$
#
$
Outstanding, beginning of period
895,166
0.23
787,584
1.36
Increase for the period
67,874
0.04
100,362
0.41
Outstanding, end of period
963,040
0.04
887,946
0.41
Vested, end of period
-
-
-
-
The Company used the Monte Carlo simulation model to estimate the period end fair value of PSUs during the period using the following weighted average assumptions:
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
Expected stock price volatility
38.21
%
44
%
Risk-free interest rate
4.81
%
3.03
%
Expected life
0.45 years
1.05 years
Period end share price
C$ 3.23
C$ 2.81
Expected dividend yield
1.57
%
-
11. General and administration
The Company’s general and administrative expenses incurred for three and six months ended June 30, 2023 and 2022 are as follows:
Three months ended
June 30, 2023
Three months
ended
June, 2022
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Corporate administration
347,158
390,201
663,957
757,867
Nasdaq / TSX Listing costs
147,327
145,898
147,327
145,898
Professional fees
195,980
151,435
417,010
265,522
Salaries and benefits
786,976
590,261
1,476,513
1,275,621
Director fees
32,363
-
60,357
-
Depreciation
45,885
45,885
91,770
91,770
1,555,689
1,323,680
2,856,934
2,536,678
12. Other income
The Company’s other income for the three and six months ended June 30, 2023 and 2022 are as follows:
Three months ended
June 30, 2023
Three months
ended
June, 2022
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Fair value change of other liabilities
987,620
1,570,823
156,696
1,853,195
Foreign exchange expense
(73,230
)
(226,206
)
(137,093
)
(162,980
)
Interest income
68,952
8,346
122,584
11,417
983,342
1,352,963
142,187
1,701,632
11
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
13. Related party transactions
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, and also comprise the directors of the Company.
The remuneration of directors and other members of key management personnel during the three and six months ended June 30, 2023 and 2022 are as follows:
Three months
ended
June 30, 2023
Three months
ended
June, 2022
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Short-term employee benefits
583,750
468,765
1,260,961
1,044,625
Share-based compensation
61,834
21,576
703,433
181,830
645,584
490,341
1,964,394
1,226,455
14. Commitments and contingencies
As at June 30, 2023, the Company did not have any right-of-use assets or lease liabilities.
The Company is, from time to time, involved in legal proceedings of a nature considered normal to its business. The Company believes that none of the litigation in which it is currently involved or have been involved with, individually or in the aggregate, is material to its consolidated financial condition or results of operations.
The Company is committed to minimum annual lease payments for its premises, which renews on a quarterly basis, and certain consulting agreements, as follows:
July 1, 2023
to
June 30, 2024
$
Leases
12,980
Consulting agreements
99,570
112,550
The Company is responsible for making certain milestone payments in connection with royalty acquisitions, which become payable on certain royalty revenue or cumulative production thresholds being achieved, as follows:
Royalty
$
Limpopo(1)(3)
6,722,054
Janet Ivy(1)(4)
1,997,130
Goldlund(1)(5)
377,644
Brits(1)(6)
1,250,000
Bullabulling(2)(7)
665,710
Koolyanobbing(8)
332,855
El Molino(9)
450,000
Uley(1)(10)
146,456
Winston Lake(11)
75,529
Norbec & Millenbach(11)
18,882
12,036,260
(1)
The milestone payments may be settled in either cash or common shares of the Company, at the Company’s election.
(2)
The milestone payments may be settled in cash or ½ cash and ½ common shares of the Company, at the Company’s election
(3)
Milestone payments include: (i) C$1,500,000 upon cumulative royalty receipts from Limpopo exceeding C$500,000; (ii) C$400,000 upon cumulative royalty receipts from Limpopo exceeding C$1,000,000; and (iii) C$7,000,000 upon cumulative royalty receipts from Limpopo exceeding C$50,000,000.
(4)
A milestone payment of A$3,000,000 due upon cumulative royalty receipts from Janet Ivy exceeding A$750,000.
(5)
A milestone payment of C$500,000 or issue up to a maximum of 184,399 common shares in December 2023.
(6)
Milestone payments include: (i) $1,000,000 once 210,000t have been mined over a continuous six-month period, and (ii) a further $250,000 once 1,500,000t have been mined over a rolling 3-year time horizon.
(7)
Milestone payments include: (i) A$500,000 upon the Operator receiving approval of a mining proposal from the West Australian Department of Mines, Industry Regulation and Safety; and (ii) A$500,000 upon the Company receiving first royalty revenue receipt from the Bullabulling project.
(8)
Milestone payment due upon achievement of cumulative 5Mdmt of ore processed.
(9)
Milestone payment due upon registration of the El Molino royalty rights on the applicable mining title in Peru and the satisfaction of other customary completion conditions.
12
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
(10)
Milestone payment due upon commencement of commercial production.
(11)
Milestone payment due upon (i) the exercise of a separate third-party option agreement, (ii) the issuance of the royalty to the previous royalty owner, and (iii) the assignment of the royalty to Vox.
15. Supplemental cash flow information
Three months
ended
June 30, 2023
Three months
ended
June, 2022
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Change in accrued deferred royalty acquisitions
12,348
-
(45,168
)
-
Change in accrued royalty acquisition costs
34,943
29,266
34,943
29,266
Change in accrued share issue costs
271,024
-
271,024
-
Reclassification of prepaid expenses to share issue costs
179,043
-
179,043
-
Share issuance for royalty milestone payments
-
-
495,446
-
Change in accounts receivable related to Wonmunna pre-acquisition royalty revenues
-
(1,414,276
)
-
(1,414,276
)
Share issuance for royalty acquisition costs
-
11,655,770
-
11,655,770
Warrants issuance for royalty acquisition costs
-
1,183,086
-
1,183,086
16. Segment information
For the six months ended June 30, 2023 and 2022, the Company operated in one reportable segment being the acquisition of royalty interests.
For the three and six months ended June 30, 2023 and 2022, revenues generated from each geographic location is as follows:
Three months
ended
June 30, 2023
Three months
ended
June 30, 2022
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Australia
2,047,257
1,125,539
4,866,991
1,867,217
Nigeria
170,127
625,215
888,010
1,006,210
Brazil
-
-
27,733
17,757
USA
-
-
15,505
15,505
Canada
-
-
-
315,084
Total
2,217,384
1,750,754
5,798,239
3,221,773
The Company has the following non-current assets in eight geographic locations:
June 30,
2023
December 31,
2022
$
$
Australia
24,413,172
25,162,805
USA
2,292,638
2,298,515
Canada
2,318,698
1,942,184
South Africa
1,914,844
1,914,844
Peru
1,045,609
1,545,609
Cayman Islands
1,263,939
1,355,709
Brazil
623,417
637,338
Nigeria
-
178,205
Total
33,872,317
35,035,209
17. Income taxes
For the three and six months ended June 30, 2023 and 2022, income tax recognized in net income (loss) and comprehensive income (loss) is comprised of the following:
Three months
ended
June 30, 2023
Three months
ended
June 30, 2022
Six months
ended
June 30, 2023
Six months
ended
June 30, 2022
$
$
$
$
Current tax expense (recovery)
(25,951
)
57,155
153,026
253,863
Deferred tax expense
539,998
424,365
1,144,083
331,503
Income tax expense
514,047
481,520
1,297,109
585,366
13
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
18. Financial instruments
The Company’s risk exposures and the impact on the financial instruments are summarized below. There have been no material changes to the risks, objectives, policies and procedures during the six months ended June 30, 2023 and the year ended December 31, 2022.
Credit risk
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash and cash equivalents and royalty receivables in the ordinary course of business. In order to mitigate its exposure to credit risk, the Company maintains its cash in high quality financial institutions and closely monitors its royalty receivable balances. The Company’s royalty receivables are subject to the credit risk of the counterparties who own and operate the mines underlying Vox’s royalty and streaming portfolio.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company’s approach to managing liquidity is to ensure it will have sufficient liquidity to meet liabilities when due. In managing liquidity risk, the Company takes into account anticipated cash flows from operations and holding of cash and cash equivalents. As at June 30, 2023, the Company had cash and cash equivalents of $11,278,440 (December 31, 2022 - $4,174,654) and working capital of $11,465,973 (December 31, 2022 - $3,795,951).
Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Financial instruments that impact the Company’s net income due to currency fluctuations include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, income taxes payable and other liabilities denominated in Canadian and Australian dollars. Based on the Company’s Canadian and Australian-denominated monetary assets and liabilities at June 30, 2023, a 10% increase (decrease) of the value of the Canadian and Australian dollar relative to the United States dollar would increase (decrease) net income (loss) and other comprehensive income (loss) by $362,000.
Interest rate risk
The Company has cash balances with rates that fluctuate with the prevailing market rate. The Company’s current policy is to invest excess cash in cash accounts or short-term interest-bearing securities issued by chartered banks. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. The Company does not use any derivative instrument to reduce its exposure to interest rate risk.
Commodity and share price risk
The Company’s royalties are subject to fluctuations from changes in market prices of the underlying commodities. The market prices of precious and base metals are the primary drivers of the Company’s profitability and ability to generate free cash flow. All of the Company’s future revenue is not hedged in order to provide shareholders with full exposure to changes in the market prices of these commodities.
The Company’s financial results may be significantly affected by a decline in the price of precious, base and/or ferrous metals. The price of precious and base metals can fluctuate widely, and is affected by numerous factors beyond the Company’s control.
Fair value of financial instruments
The carrying amounts for cash and cash equivalents, accounts receivables, accounts payable and accrued liabilities, and income tax liabilities on the unaudited condensed interim consolidated statements of financial position approximate fair value because of the limited term of these instruments.
The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
-
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).
As at June 30, 2023 and December 31, 2022, the Company does not have any financial instruments measured at fair value after initial recognition, except for other liabilities, which are estimated using Level 3 inputs.
The following table provides information about financial assets and liabilities measured at fair value in the unaudited condensed interim consolidated statements of financial position and categorized by level according to the significance of the inputs used in making the measurements.
14
Vox Royalty Corp.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Expressed in United States Dollars)
As at June 30, 2023
Level 1
Level 2
Level 3
Total
$
$
$
$
Other liabilities
-
-
(324,238
)
(324,238
)
-
-
(324,238
)
(324,238
)
Level 3 Hierarchy
The following table presents the changes in fair value measurements of financial instruments classified as Level 3 as at June 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The gains and losses are recognized in the unaudited condensed interim consolidated statements of income (loss) and comprehensive income (loss).
June 30,
2023
December 31,
2022
$
$
Balance, beginning of period
601,715
3,327,672
Change in valuation of financing warrants (Note 10)
(156,696
)
(2,200,312
)
Share-based compensation recovery on PSUs (Note 10)
(120,781
)
(525,645
)
Balance, end of period
324,238
601,715
Capital management
The Company’s primary objective when managing capital is to maximize returns for its shareholders by growing its asset base through accretive acquisitions of royalties, streams and other interests, while optimizing its capital structure by balancing debt and equity. As at June 30, 2023, the capital structure of the Company consists of $41,202,776 (December 31, 2022 - $35,414,448) of total equity, comprising of share capital, equity reserves, and deficit. The Company was not subject to any externally imposed capital requirements.
19. Subsequent events
On July 11, 2023, in connection with the Public Offering that closed on June 16, 2023, the underwriters exercised their over-allotment option in full, purchasing an additional 453,750 Vox common shares for further gross proceeds of $1,089,000.
On July 28, 2023, Vox entered into a royalty sale and purchase agreement with an Australian company to acquire a portfolio of development and exploration-stage royalties located in Australia (the “Portfolio”). A number of the royalties are subject to a right of first refusal, a right of first offer or a consent to assignment right (together, the “Rights”) in connection with a proposed assignment thereof, and therefore it is not yet certain how many royalties the Company will acquire at closing, if any. The aggregate purchase price for the Portfolio consists of cash and non-cash consideration, cash consideration being (i) up to A$8,000,000 payable at closing, subject to reduction if any of the Rights are exercised, and non-cash consideration being (ii) providing ongoing royalty-related services to the vendor from Vox’s proprietary database of royalties.
On August 10, 2023, the Board of Directors of the Company declared a quarterly dividend of $0.011 per common share payable on October 13, 2023 to shareholders of record as of the close of business on September 29, 2023.
15
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