For the three and nine months ended September 30, 2024 and 2023
(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 85% of the Company’s royalty 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 high-quality 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 material accounting policy information and application as disclosed in the annual financial statements for the year ended December 31, 2023. 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 September 30, 2024 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2024. For further information, see the Company’s annual financial statements including the notes thereto for the year ended December 31, 2023.
These unaudited condensed interim consolidated financial statements were reviewed, approved, and authorized for issue by the Company’s Board of Directors on November 6, 2024.
(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 four wholly-owned subsidiaries.
(c) Principles of consolidation
These unaudited condensed interim consolidated financial statements incorporate the accounts of the Company and its wholly-owned subsidiaries: SilverStream SEZC (Cayman Islands), which in turn owns all of the shares of Vox Royalty Australia Pty Ltd. (Australia) and Vox Royalty Canada Ltd. (Ontario, Canada); and Vox Royalty USA Ltd. (Delaware, USA).
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 were required to be adopted effective January 1, 2024. These standards did not have a material impact on the Company’s current or future reporting periods.
Amendments – IAS 1 Presentation of Financial Statements (Non-current Liabilities with Covenants)
Amendments made to IAS 1 in 2020 and 2022 clarified that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is affected by the entity’s expectations or events after the reporting date (e.g. the receipt of a waiver or a breach of covenant). Covenants of loan arrangements will not affect classification of a liability as current or non-current at the reporting date if the entity must only comply with the covenants after the reporting date. However, if the entity must comply with a covenant either before or at the reporting date, this will affect the classification as current or non-current even if the covenant is only tested for compliance after the reporting date.
The amendments require disclosures if an entity classifies a liability as non-current and that liability is subject to covenants that the entity must comply with within 12 months of the reporting date. The disclosures include:
-
the carrying amount of the liability;
-
information about the covenants; and
-
facts and circumstances, if any, that indicate that the entity may have difficulty complying with the covenants.
The amendments also clarify what IAS 1 means when it refers to the “settlement” of a liability. Terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the entity’s own equity instrument can only be ignored for the purpose of classifying the liability as current or non-current if the entity classifies the option as an equity instrument. However, conversion options that are classified as a liability must be considered when determining the current/non-current classification of a convertible note.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
The amendments must be applied retrospectively in accordance with the normal requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and are effective for annual reporting periods beginning on or after January 1, 2024. These amendments did not have a significant impact on the unaudited condensed interim consolidated financial statements.
(e) Recent accounting pronouncements
Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. The amendments have an effective date of later than December 31, 2024, with earlier application permitted.
IFRS 18 – Presentation and Disclosure in Financial Statements
In April 2024, IFRS 18 was issued to achieve comparability of the financial performance of similar entities. The standard, which replaces IAS 1, impacts the presentation of primary financial statements and notes, including the statement of earnings where companies will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. The standard will also require management-defined performance measures to be explained and included in a separate note within the consolidated financial statements. The standard is effective for reporting periods beginning on or after January 1, 2027, including interim financial statements, and requires retrospective application. The Company is currently assessing the impact of the new standard.
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.
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, 2023.
4. Accounts receivable
September 30,
2024
December 31,
2023
$
$
Royalties receivable
2,809,265
3,414,128
Sales tax recoverable
16,211
93,443
2,825,476
3,507,571
Royalties receivable represents amounts that are generally collected within 45 days of quarter-end.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
5. Royalty interests
As at and for the nine months ended September 30, 2024:
Cost
Accumulated Depletion
Royalty
Country
Opening
Additions
(Impairment) reversal
Ending
Opening
Depletion
Ending
Carrying
Amount
$
$
$
$
$
$
$
$
Wonmunna
Australia
14,676,626
31,142
-
14,707,768
(2,137,537)
(1,301,711)
(3,439,248)
11,268,520
Royalty portfolio
Australia
5,205,731
-
-
5,205,731
-
-
-
5,205,731
Janet Ivy
Australia
4,457,600
-
-
4,457,600
(244,817)
(224,230)
(469,047)
3,988,553
Castle Hill portfolio
Australia
-
3,139,531
-
3,139,531
-
-
-
3,139,531
Koolyanobbing
Australia
2,649,738
-
-
2,649,738
(1,712,526)
(204,875)
(1,917,401)
732,337
South Railroad
USA
2,316,757
-
-
2,316,757
(123,907)
(5,877)
(129,784)
2,186,973
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
1,258,810
-
-
1,258,810
-
-
-
1,258,810
Brits
South Africa
764,016
-
-
764,016
-
-
-
764,016
Otto Bore
Australia
583,612
-
-
583,612
-
-
-
583,612
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
(111,301)
(3,091)
(114,392)
361,331
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
(100,423)
(2,026)
(102,449)
159,879
Montanore
USA
61,572
-
-
61,572
-
-
-
61,572
Mt Ida
Australia
210,701
-
-
210,701
-
-
-
210,701
Other
Australia
1,768,873
-
-
1,768,873
(29,842)
-
(29,842)
1,739,031
Other
Canada
624,919
-
-
624,919
-
-
-
624,919
Other
Peru
45,609
-
-
45,609
-
-
-
45,609
Total
41,903,551
3,170,673
-
45,074,224
(4,460,353)
(1,741,810)
(6,202,163)
38,872,061
Total royalty interests include carrying amounts in the following countries:
September 30,
2024
December 31,
2023
$
$
Australia
31,296,236
29,859,470
Canada
2,756,817
2,756,817
USA
2,248,545
2,254,422
South Africa
1,914,844
1,914,844
Brazil
610,010
612,036
Peru
45,609
45,609
38,872,061
37,443,198
Royalties acquired during the nine months ended September 30, 2024
On May 14, 2024, the Company completed the acquisition of the Castle Hill royalty portfolio, an advanced portfolio of four Australian royalties at various stages of development (construction, development and exploration) and the rights to one production-linked milestone payment, for total cash consideration on closing of $3,119,814 (A$4,700,000). The Company also incurred $19,717 of legal and professional fees related to the acquisition of the Castle Hill royalty portfolio.
Deferred royalty acquisitions
Deferred royalty acquisitions as at September 30, 2024 of $19,433 (December 31, 2023 - $Nil) relates to costs incurred prior to the execution and closing of a royalty acquisition. Deferred royalty acquisition costs are reallocated to royalty interests upon signing of a definitive agreement. If management determines not to proceed with a proposed acquisition, the deferred costs are expensed as project evaluation expenses.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
Impairment reversal on British King royalty
On September 21, 2023, SilverStream SEZC (“SilverStream”) agreed to the following:
·
SilverStream’s historical 1.5% NSR on the first 10,000oz produced and 5.25% gold stream thereafter originally granted to SilverStream by the prior operator was extinguished;
·
A new 1.25% NSR gold royalty interest was assigned to Vox Royalty Australia Pty Ltd (“Vox Australia”) by the prior operator in connection with the transfer of the project from the prior operator to the new operator; and
·
Vox received $126,390 (A$200,000) for reimbursement of legal fees, which was recorded as a reduction of project evaluation expenses in the consolidated statements of income (loss) and comprehensive income (loss).
As a result of the new 1.25% NSR gold royalty assigned to Vox by the prior operator, the Company considered this an indicator of impairment reversal and determined that the recoverable amount was $250,000, which was recognized as an impairment reversal in the consolidated statements of income (loss) and comprehensive income (loss).
Impairment charge
During the period ended June 30, 2023, the Company became aware that the operator of the Alce exploration project did not renew the relevant mining concessions 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 had been reduced to $nil.
6. Credit facility
Facility terms
On January 16, 2024, the Company entered into a definitive credit agreement with the Bank of Montreal (“BMO”) providing for a $15,000,000 secured revolving credit facility (the “Facility”). The Facility includes an accordion feature which provides for an additional $10,000,000 of availability, subject to certain conditions. The Facility, secured against the assets of the Company, is available for general corporate purposes, acquisitions, and investments, subject to certain limitations. At the Company’s election, amounts drawn on the Facility bear interest at either (i) a rate determined by reference to the U.S. dollar base rate plus a margin of 1.5% to 2.5% per annum, or (ii) the secured overnight financing rate plus a margin of 2.60% to 3.60% per annum. The undrawn portion of the Facility is subject to a standby fee of 0.5625% to 0.7875% per annum, all of which is dependent on the Company’s leverage ratio (as defined in the credit agreement with BMO dated January 16, 2024). The Facility has an initial term that matures on December 31, 2025 and is extendable one-year at a time through mutual agreement between Vox and BMO. The Facility includes covenants that require the Company to maintain certain financial ratios, including the Company’s leverage ratios and meet certain non-financial requirements. As at September 30, 2024, Vox was in compliance with all such covenants.
As at September 30, 2024, there were no outstanding amounts under the Facility.
Other assets (Facility transaction costs)
The Company incurred $459,944 of legal fees, of which $271,029 was incurred during the year ended December 31, 2023, included in Other Assets on the unaudited condensed interim consolidated statements of financial position, relating to the work performed to implement the Facility. On execution of the Facility on January 16, 2024, the Company paid BMO a one-time arrangement fee of 0.5% and a two-year upfront fee of 0.25% per annum on the total Facility amount, being $150,000 in the aggregate.
The following summarizes the change in other assets as at September 30, 2024 and December 31, 2023:
September 30,
2024
December 31,
2023
$
$
Balance, beginning of period
271,029
-
Facility transaction costs incurred during the period
188,915
271,029
Amortization expense of Facility transaction costs
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
Interest and finance expenses
The following summarizes the interest and finance expenses for the three and nine months ended September 30, 2024 and 2023:
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
Nine months
ended
September 30,
2024
Nine months
ended
September 30,
2023
$
$
$
$
Amortization expense of Facility transaction costs
58,716
-
166,362
-
Interest expense on Facility
21,468
-
67,734
-
80,184
-
234,096
-
7. Intangible assets
Intangible assets are comprised of the Mineral Royalties Online (“MRO”) royalty database.
Database
$
Cost at:
December 31, 2023
1,837,500
September 30, 2024
1,837,500
Accumulated amortization at:
December 31, 2023
665,330
Amortization
137,655
September 30, 2024
802,985
Net book value at:
December 31, 2023
1,172,170
September 30, 2024
1,034,515
On October 25, 2023, the Company entered into an Intellectual Property Licensing Agreement (“IP Licensing Agreement”) with a private investment group, in respect of certain coal royalties in Vox’s MRO royalty database. As part of the IP Licensing Agreement, on the successful closing of relevant coal royalty transactions, Vox will receive a Transaction Fee of up to 3.0% of the upfront purchase price and up to 3.0% of any future earn out payments or contingent payments associated with any applicable coal royalty assets acquired.
8. Accounts payable and accrued liabilities
September 30,
2024
December 31,
2023
$
$
Trade payables
123,021
362,198
Sales tax payable
547,616
653,792
Accrued liabilities
709,305
824,102
1,379,942
1,840,092
9. Share 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 September 30, 2024 and at December 31, 2023 is as follows:
September 30,
2024
December 31,
2023
$
$
Issued and outstanding: 50,588,253 (December 31, 2023: 49,985,102) common shares
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
Dividends
The following table provides details on the dividends declared for the nine months ended September 30, 2024.
Declaration date
Dividend per common share
Record
date
Payment
date
Dividends
payable
$
$
March 7, 2024
0.012
March 29,2024
April 12, 2024
601,462
May 8, 2024
0.012
June 28, 2024
July 12, 2024
602,883
August 7, 2024
0.012
September 27, 2024
October 11,
2024
607,059
0.036
1,811,404
Total dividends paid for the nine months ended September 30, 2024, included $78,183 paid in shares through the dividend reinvestment program, being 36,063 common shares issued at a discount rate of 5%.
10. Equity reserves
Warrants
The following summarizes the warrant activity for the nine months ended September 30, 2024 and 2023:
September 30, 2024
September 30, 2023
Number
Weighted average exercise price
Number
Weighted average exercise price
#
C$
#
C$
Outstanding, beginning of period
3,600,000
4.50
3,600,000
4.50
Expired
(3,600,000
)
4.50
-
-
Outstanding, end of period
-
-
3,600,000
4.50
Exercisable, end of period
-
-
3,600,000
4.50
See Note 11 for additional warrants classified as other liabilities.
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 nine months ended September 30, 2024 and 2023:
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
The following table summarizes information of stock options outstanding as at September 30, 2024:
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
680,703
1.75
680,703
1.75
March 9, 2027
4.16
666,135
2.44
606,135
2.44
1,346,838
2.09
1,286,838
2.07
During the nine months ended September 30, 2024:
-
240,000 stock options were granted, and vest in 25% increments on each of June 12, 2024, June 30, 2024, September 30, 2024, and December 31, 2024.
-
240,560 stock options were cancelled.
The share-based compensation expense related to the stock option grant is recorded over the vesting period, being the duration of the 2024 calendar year, as per the terms of the service agreement.
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 nine months ended September 30, 2024, 968,448 RSUs were granted, and vest in 25% increments on each of June 30, 2024, December 31, 2024, June 30, 2025, and December 31, 2025. The share-based compensation expense related to RSU grants is recorded over the vesting period.
The following summarizes the RSU activity for the nine months ended September 30, 2024 and 2023:
September 30, 2024
September 30, 2023
Number
Weighted average fair value
Number
Weighted average fair value
#
$
#
$
Outstanding, beginning of period
952,018
2.62
615,044
2.56
Granted
968,448
2.00
725,157
2.60
Settled
(567,088
)
2.51
(343,658
)
2.34
Forfeited
-
-
(4,559
)
3.01
Outstanding, end of period
1,353,378
2.22
991,984
2.63
Vested, end of period
425,155
2.46
379,649
2.61
11. Other liabilities
Warrants
The following summarizes the warrant activity for the nine months ended September 30, 2024 and 2023:
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
12. General and administration
The Company’s general and administration expenses incurred for the three and nine months ended September 30, 2024 and 2023 are as follows:
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
Nine months
ended
September 30,
2024
Nine months
ended
September 30,
2023
$
$
$
$
Corporate administration
370,840
314,521
932,356
978,478
TSX listing costs
-
-
-
147,327
Professional fees
121,644
116,708
328,212
533,718
Salaries and benefits
640,752
625,500
1,943,645
2,102,013
Director fees
40,147
29,453
106,605
89,810
Amortization
45,885
45,885
137,655
137,655
1,219,268
1,132,067
3,448,473
3,989,001
13. Other income
The Company’s other expenses for the three and nine months ended September 30, 2024 and 2023 are as follows:
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
Nine months
ended
September 30,
2024
Nine months
ended
September 30,
2023
$
$
$
$
Interest income
122,498
155,353
368,680
277,937
Foreign exchange expense
(34,215
)
(169,873
)
(167,491
)
(306,966
)
Fair value change of other liabilities
-
190,147
-
346,843
88,283
175,627
201,189
317,814
14. Related party transactions
Related parties include the Company’s Board of Directors and management, as well as close family and enterprises that are controlled by these individuals and certain persons performing similar functions. Other than indicated below, the Company entered into no related party transactions during the three and nine months ended September 30, 2024 and 2023.
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. Key management personnel include the Company’s Chief Executive Officer, Chief Financial Officer, Chief Investment Officer, and EVP – Australia.
The remuneration of directors and other members of key management personnel during the three and nine months ended September 30, 2024 and 2023 are as follows:
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
Nine months
ended
September 30,
2024
Nine months
ended
September 30,
2023
$
$
$
$
Short-term employee benefits
532,685
580,565
1,601,564
1,841,526
Share-based compensation
322,040
407,291
1,586,221
1,110,724
854,725
987,856
3,187,785
2,952,250
15. Commitments and contingencies
The Company is, from time to time, involved in legal proceedings of a nature considered normal to its business. Other than as noted below, the Company believes that none of the litigation in which it is currently involved or have been involved with during the period ended September 30, 2024, individually or in the aggregate, is material to its consolidated financial condition or results of operations.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
Litigation matter
Titan
During the year ended December 31, 2023, the Company and SilverStream became aware that the operator of the Jaw, Phoebe, Cart and Colossus exploration projects did not renew all or substantially all of the relevant mining concessions and therefore the Peruvian Ministry of Energy and Mining extinguished the mining concessions. As a result, the Company fully impaired the four royalties as of December 31, 2023, and the carrying value of the investment of $1,000,000 was reduced to $nil. The Company has filed a statement of claim in the Supreme Court of Western Australia, as discussed below, against the operator of the Jaw, Phoebe, Cart and Colossus exploration projects. Pursuant to the original agreement signed with the operator on July 15, 2021, if any of the four exploration projects became relinquished within three years of signing the original agreement, the operator must promptly provide Vox with a replacement royalty for each relinquished royalty and with each replacement royalty having a value of at least $250,000. To the extent Vox is granted one or more replacement royalties, the Company expects to reverse up to $1,000,000 of the 2023 impairment charge, which would increase net income by the equivalent amount. During the nine months ended September 30, 2024, no replacement royalties have been granted.
SilverStream filed a writ and statement of claim in the Supreme Court of Western Australia against Titan Minerals Limited (“Titan”) on February 23, 2024, along with an amended writ and statement of claim on March 28, 2024, in respect of the Titan assets. SilverStream is seeking to enforce its rights to be issued replacement royalties and/or damages in respect of Titan’s failure to maintain certain mining concessions in Peru in accordance with various royalty deeds entered into between Titan and SilverStream in 2021. As at September 30, 2024, the proceeding is ongoing.
Commitments
The Company is committed to minimum annual lease payments for its premises and certain consulting agreements, as follows:
October 1, 2024
to
September 30, 2025
$
Leases
14,750
Consulting agreements
68,517
83,267
Contingencies
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)
6,593,081
Brits(1)(4)
1,250,000
Bullabulling(2)(5)
691,385
Koolyanobbing(6)
345,692
El Molino(7)
450,000
Uley(1)(8)
152,105
Winston Lake(9)
74,080
Norbec & Millenbach(9)
18,520
9,574,863
(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)
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.
(5)
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.
(6)
Milestone payment due upon achievement of cumulative 5Mdmt of ore processed.
(7)
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.
(8)
Milestone payment due upon commencement of commercial production.
(9)
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.
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
16. Supplemental cash flow information
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
Nine months
ended
September 30,
2024
Nine months
ended
September 30,
2023
$
$
$
$
Change in accrued other assets
-
-
(271,029
)
-
Change in accrued deferred royalty acquisitions
(12,463
)
(7,348
)
477
(52,516
)
Change in accrued royalty interests
(5,500
)
66,142
-
101,085
Change in accrued interest expense on Facility
235
-
21,563
-
Change in accrued share issue costs
-
(271,024
)
-
-
Share issuance for royalty milestone payments
-
-
-
495,446
Reclassification of prepaid expenses to share
issue costs
-
-
-
179,043
17. Segment information
For the nine months ended September 30, 2024 and 2023, the Company operated in one reportable segment being the acquisition of royalty interests.
For the three and nine months ended September 30, 2024 and 2023, revenues generated from each geographic location is as follows:
Three months
ended
September 30,
2024
Three months
ended
September 30,
2023
Nine months
ended
September 30,
2024
Nine months
ended
September 30,
2023
$
$
$
$
Australia
2,428,809
3,497,424
8,130,121
8,364,415
Nigeria
-
-
-
882,922
Brazil
-
17,505
4,812
50,326
USA
-
-
15,505
15,505
Total
2,428,809
3,514,929
8,150,438
9,313,168
The Company has the following non-current assets in seven geographic locations:
September 30,
2024
December 31,
2023
$
$
Australia
31,818,899
30,396,980
Canada
3,050,399
3,027,846
USA
2,248,545
2,254,422
South Africa
1,914,844
1,914,844
Cayman Islands
1,034,515
1,172,170
Brazil
610,010
612,036
Peru
45,609
45,609
Total
40,722,821
39,423,907
18. Income taxes
For the three and nine months ended September 30, 2024 and 2023, income tax recognized in net loss and comprehensive loss is comprised of the following:
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
19. 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 nine months ended September 30, 2024, and the year ended December 31, 2023.
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 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 the amount available under the Company’s revolving credit facility, anticipated cash flows from operations and holding of cash and cash equivalents. As at September 30, 2024, the Company had cash and cash equivalents of $9,301,289 (December 31, 2023 - $9,342,880) and working capital of $8,517,006 (December 31, 2023 - $10,378,752).
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 and income taxes payable denominated in Canadian and Australian dollars. Based on the Company’s Canadian and Australian-denominated monetary assets and liabilities at September 30, 2024, a 10% increase (decrease) of the value of the Canadian and Australian dollar relative to the United States dollar would increase (decrease) net loss and other comprehensive loss by $525,000.
Interest rate risk
The Company is exposed to interest rate risk due to the Facility being subject to floating interest rates. The Company monitors its exposure to interest rates. During the period ended September 30, 2024, a 1% increase (decrease) in nominal interest rates would have increased (decreased) net loss and other comprehensive loss by approximately $112,500.
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, base and ferrous 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).
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Expressed in United States Dollars)
As at September 30, 2024 and December 31, 2023, the Company does not have any financial instruments measured at fair value after initial recognition.
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 royalty interests, while optimizing its capital structure by balancing debt and equity. Management regularly reviews cash flow forecasts to determine whether the Company has sufficient cash reserves to meet future working capital requirements and discretionary business development opportunities. As at September 30, 2024, the capital structure of the Company consists of $44,242,642 (December 31, 2023 - $44,923,670) of total equity, comprising of share capital, equity reserves, and deficit.
The Company is not subject to any externally imposed capital requirements other than as disclosed for the Facility.
20. Subsequent events
On November 6, 2024, the Board of Directors of the Company declared a quarterly dividend of $0.012 per common share payable on January 14, 2025, to shareholders of record as of the close of business on December 31, 2024.
16
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