Financial Statements
April 30, 2022
(Expressed in Canadian dollars)
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INDEPENDENT AUDITORS’ REPORT
To the shareholders of Benz Mining Corp.:
Opinion
We have audited the financial statements of Benz Mining Corp. [the "Company"], which comprise the statements of financial
position as at April 30, 2022 and 2021, and the statements of operations and comprehensive loss, changes in equity and cash
flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at
April 30, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with
International Financial Reporting Standards ["IFRSs"].
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our
report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial statements, which indicates that a material uncertainty exists that may cast
significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
Other Information
Management is responsible for the other information. The other information comprises the Management's Discussion and
Analysis, which we obtained prior to the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audits of the financial statements, our responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this, we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with IFRSs,
and for such internal control as management determines is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted
auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
LANCASTER & DAVID
CHARTERED PROFESSIONAL ACCOUNTANTS
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are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
•
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is Michael J. David.
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, BC
July 28, 2022
Address: Suite 510, 701 West Georgia Street, PO Box 10133, Vancouver, BC, Canada, V7Y 1C6
Telephone: 604.717.5526 Facsimile: 604.717.5560 Email: admin@lancasteranddavid.ca
Benz Mining Corp.
Statements of Operations and Comprehensive Loss
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Note
2022
2021
Operating Costs
Exploration and evaluation costs
5
19,034,483
$
7,573,430
$
Listing and filing fees
141,752
250,969
$
Management and consulting fees
6
768,646
801,516
$
Office and miscellaneous
130,348
47,542
$
Bad or doubtful debt expense
4
116,184
-
$
Professional fees
118,786
67,726
$
Share-based payments
8
4,994
2,158,003
$
Shareholder information
112,578
26,896
$
Loss from operations
(20,427,771)
(10,926,082)
Other income (expense)
Foreign exchange
(46,453)
(25,349)
$
Interest Income
23,833
22,840
$
Settlement of flow-through share premium liability
7
7,813,644
1,469,472
$
Net loss and comprehensive loss
(12,636,747)
$
(9,459,119)
$
Loss per share - basic and diluted
(0.12)
$
(0.11)
$
Weighted average number of shares outstanding -
basic and diluted
106,130,750
84,413,756
Year ended April 30,
See accompanying notes to the financial statements
Benz Mining Corp.
Statements of Financial Position
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Note
April 30, 2022
April 30, 2021
ASSETS
Current Assets
Cash and cash equivalents
2,782,026
$
13,144,767
$
Sales taxes recoverable
1,225,057
376,697
$
Other receivables
168,885
-
$
Prepaid expenses and deposits
56,000
22,757
$
Total current assets
4,231,968
13,544,221
Exploration and evaluation assets
5
1,826,667
1,555,903
$
Total assets
6,058,635
$
15,100,124
$
LIABILITIES
Current Liabilities
Trade and other payables
2,544,545
$
1,168,547
$
Flow-through share premium liability
7
-
3,359,099
$
Total current liabilities
2,544,545
4,527,646
EQUITY
Common shares
8
23,648,836
$
18,285,495
$
Equity reserves
8
8,863,788
8,648,770
$
Deficit
(28,998,534)
(16,361,787)
Total equity
3,514,090
10,572,478
6,058,635
$
15,100,124
$
Nature of Operations (Note 1)
Subsequent Events (Note 12)
These financial statements are authorized for issue by the Board of Directors on July 28, 2022
Approved by the Board of Directors:
(Signed) Evan Cranston
(Signed) Mathew O’Hara
Evan Cranston, Chairman of the Board
Mathew O’Hara, Director
See accompanying notes to the financial statement
Benz Mining Corp.
Statements of Cash Flows
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Note
2022
2021
Cash Flow from Operating Activities
Net loss for the year
(12,636,747)
$
(9,459,119)
$
Adjustments for non-cash items:
Share based payments
7
4,994
2,158,003
Settlement of flow-through share liability
6
(7,813,644)
(1,469,472)
Bad or doubtful debt expense
116,184
-
Changes in non-cash working capital:
Sales taxes recoverable
(848,360)
(353,078)
Other receivables
4
(285,069)
-
Prepaid expenses and deposits
(33,243)
(17,607)
Trade and other payables
1,375,999
924,762
Net cash flows used in operating activities
(20,119,886)
$
(8,216,511)
$
Cash Flow from Investing Activities
Additions to exploration and evaluation assets
5
(160,764)
(225,000)
Net cash flows used in investing activities
(160,764)
$
(225,000)
$
Cash Flow from Financing Activities
Issuance of common shares for cash, net of costs
8
9,660,435
$
18,018,784
$
Proceeds from exercise of warrants
8
234,368
1,217,123
Proceeds from the exercise of options
8
23,106
-
Net cash flows provided by financing activities
9,917,909
$
19,235,907
$
Net change in cash and cash equivalents
(10,362,741)
$
10,794,396
$
Cash and Cash Equivalents, Beginning of Year
13,144,767
2,350,371
Cash and Cash Equivalents, End of Year
2,782,026
$
13,144,767
$
Cash and cash equivalents consist of:
Cash
2,743,026
$
13,119,767
$
Redeemable guaranteed investment certificate ("GIC")
39,000
25,000
$
Total Cash and Cash Equivalents
2,782,026
$
13,144,767
$
Non-cash Investing and Financing Activities:
Issuance of common shares for E&E assets
3
110,000
$
461,825
$
Fair value of compensation warrants issued
8
331,610
427,720
Issuance of warrants for E&E assets
3
-
$
539,078
$
Year ended April 30,
See accompanying notes to the financial statements
Benz Mining Corp.
Statements of Changes in Equity
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Equity
Note
Number
Amount
Reserves
Deficit
Total Equity
Balance, April 30, 2020
57,215,118
7,388,166
$
1,981,393
$
(6,904,204)
$
2,465,355
$
Common shares issued for cash:
Flow-through private placement
8
26,857,142
12,172,147
4,427,853
-
16,600,000
Premium on flow-through shares
7
-
(4,828,571)
-
-
(4,828,571)
Private placement
8
400,000
220,000
-
-
220,000
Prospectus offering
8
4,000,000
1,929,000
-
-
1,929,000
Share issuance costs
8
-
(1,157,936)
427,720
-
(730,216)
Exercise of warrants
8
4,791,819
922,657
(314,912)
-
607,745
Exercise of options
8
3,550,500
1,178,207
(568,829)
-
609,378
Shares issued for exploration and
evaluation assets
5
2,124,177
461,825
-
-
461,825
Warrants issued for exploration and
evaluation assets
5
-
-
539,078
-
539,078
Share based payments
8
-
-
2,158,003
-
2,158,003
Expired stock options
8
-
-
(1,536)
1,536
-
Net loss for the year
-
-
-
(9,459,119)
(9,459,119)
Balance, April 30, 2021
98,938,756
18,285,495
8,648,770
(16,361,787)
10,572,478
Common shares issued for cash:
Private placement
8
9,090,909
10,000,000
-
10,000,000
Share issuance costs
8
-
(671,175)
331,610
(339,565)
Premium on flow-through shares
7
-
(4,454,545)
-
-
(4,454,545)
Exercise of warrants
8
1,744,737
336,127
(101,759)
-
234,368
Exercise of options
8
151,250
42,933
(19,827)
-
23,106
Shares issued for exploration and
evaluation assets
5
174,658
110,000
-
-
110,000
Share based payments
8
-
-
4,994
-
4,994
Net loss for the year
-
-
-
(12,636,747)
(12,636,747)
Balance, April 30, 2022
110,100,310
23,648,836
$
8,863,788
$
(28,998,534)
$
3,514,090
$
Common Shares
See accompanying notes to the financial statements
Notes to the Financial Statements (continued)
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1. NATURE OF OPERATIONS AND GOING CONCERN UNCERTAINTY
Benz Mining Corp. (“Benz” or the “Company”) is involved in the acquisition, exploration and
exploitation of mineral properties located in the Americas. The Company’s head and registered
offices are located at Suite 1700, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9.
The Company’s common shares are traded on the TSX-V Exchange and the Australian Securities
Exchange.
Going Concern Uncertainty
These financial statements have been prepared on the basis of accounting principles applicable to a
going concern, which assume that the Company will continue in operation for the foreseeable future
and will be able to realize its assets and discharge its obligations in the normal course of operations.
In assessing whether the going concern assumption is appropriate, management takes into account
all available information about the future, which is at least, but not limited to twelve months from
the end of the reporting period. The use of these principles may not be appropriate.
To date, the Company has not earned significant revenues and is considered to be in the exploration
phase. The investment in, and expenditures on, exploration and evaluation assets comprise a
significant portion of the Company’s activities. Mineral exploration and development is highly
speculative and involves inherent risks.
The Company’s current committed cash resources are insufficient to cover expected expenditures
for the next 12 months. The Company’s ability to continue as a going concern is dependent on being
able to obtain the necessary financing to satisfy its liabilities as they become due. There can be no
assurance that management will be successful in securing adequate financing. In addition, while the
Company’s future activities in relation to drilling on its mineral claims look promising, there can be
no assurance that the results of its exploration activities will confirm the existence of economically
viable quantities of ore or that the project will ultimately go into production.
The Company reported a net loss and total comprehensive loss in the year ended April 30, 2022 of
$12,636,747 (2021 - $9,459,119). As at April 30, 2022, the Company’s current assets exceed its
current liabilities by $1,687,423 but its planned expenditures for fiscal 2023 exceeds the value of
working capital currently on hand. These recurring losses and the need for continued financing to
further successful exploration activities indicate the existence of a material uncertainty that may
cast significant doubt as to the Company’s ability to continue as a going concern.
The Company’s financial statements do not give effect to any adjustments to the carrying values and
classifications of assets and liabilities that might be necessary if the Company is unable to continue
as a going concern. Such adjustments could be material.
Notes to the Financial Statements (continued)
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2. BASIS OF PRESENTATION
Statement of compliance
These audited financial statements for the year ended April 30, 2022 (“Financial Statements”) have
been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”).
Basis of measurement
These financial statements are expressed in Canadian dollars, the Company’s functional currency,
and have been prepared on a historical cost basis, except for financial instruments that have been
measured at fair value.
Significant Accounting Judgements and Estimates
Significant assumptions about the future and other sources of estimation uncertainty that
management has made at the statement of financial position date, that could result in a material
adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ
from assumptions made, relate to, but are not limited to, the following:
a) Impairment of exploration and evaluation assets
Management considers both external and internal sources of information in assessing whether
there are any indications that the Company’s exploration and evaluation assets are impaired.
External sources of information that management considers include changes in the market,
economic and legal environment, in which the Company operates, that are not within its
control, and affect the recoverable amount of its mining interests.
b) Valuation of share-based payments
The Company uses the Black-Scholes option pricing model for valuation of share-based
payments. Option pricing models require the input of subjective assumptions including expected
price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can
materially affect the fair value estimate and the Company’s earnings and equity reserves.
c) Recognition and measurement of deferred tax assets and liabilities
Estimates of future taxable income are based on forecasted cash flows from operations and the
application of existing tax laws in each jurisdiction. Weight is attached to tax planning
opportunities that are within the Company’s control and are feasible and implementable
without significant obstacles. The likelihood that tax positions taken will be sustained upon
examination by applicable tax authorities is assessed based on individual facts and
circumstances of the relevant tax position evaluated in light of all available evidence. Where
applicable tax laws and regulations are either unclear or subject to ongoing varying
interpretations, it is reasonably possible that changes in these estimates can occur that
materially affect the amounts of income tax assets/liabilities.
Notes to the Financial Statements (continued)
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3. SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and on hand, and short-term deposits with an
original maturity of three months or less, which are cashable and readily convertible into a known
amount of cash.
Exploration and evaluation assets
The cost of a property acquired as an individual asset purchase or as part of a business combination
represents the property's fair value at the date of acquisition. This cost is capitalized until the
viability of the mining property is determined. When it is determined that a property is not
economically viable, the amount capitalized is written off which includes expenditures which were
capitalized to the carrying amount of the property subsequent to its acquisition.
The Company expenses all costs relating to the exploration for and evaluation of mineral claims until
such time as a technical feasibility study has been completed and commercial viability of extracting
the mineral resources is demonstrable. Such costs include, but are not limited to, geological,
geophysical studies, exploratory drilling and sampling. Once the technical feasibility and commercial
viability of the extraction of mineral resources in an area of interest are demonstrable, exploration
and evaluation expenses attributable to that area of interest will be capitalized to mineral
properties. Costs will continue to be capitalized until the property to which they relate is ready for
its intended use, sold, abandoned, or management has determined there is impairment. If
economically recoverable reserves are developed, capitalized costs of the property are depleted
using the units of production method.
The Company capitalizes acquisition costs related to mineral properties.
Impairment
Non-financial assets are reviewed for impairment at the end of each reporting period and
throughout the year if there is any indication that the carrying amount may not be recoverable. If
any such indication is present, the recoverable amount of the asset is estimated in order to
determine whether impairment exists. Where the asset does not generate cash inflows that are
independent from other assets, the Company estimates the recoverable amount of the cash-
generating unit to which the asset belongs. Goodwill, any intangible asset with an indefinite useful
life, or any intangible asset not yet available for use is tested for impairment annually and whenever
there is an indication that the asset may be impaired.
An asset or cash-generating unit’s recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value, using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which estimates of future cash flows have not
been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized
immediately in profit or loss. Where an impairment subsequently reverses, the carrying amount is
increased to the revised estimate of recoverable amount but only to the extent that this does not
exceed the carrying value that would have been determined if no impairment had previously been
recognized. Impairment of goodwill cannot be reversed.
Notes to the Financial Statements (continued)
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Financial instruments
Financial assets and financial liabilities are classified into three categories: Amortized Cost, Fair
Value through Other Comprehensive Income ("FVOCI") and Fair Value through Profit and Loss
(“FVPL”). The classification of financial assets is determined by their context in the Company’s
business model and by the characteristics of the financial asset’s contractual cash flows.
Financial assets and financial liabilities are measured at fair value on initial recognition, which is
typically the transaction price unless a financial instrument contains a significant financing
component. Subsequent measurement is dependent on the financial instrument’s classification.
Cash and cash equivalents, other receivables, and trade and other payables are measured at
amortized cost. The contractual cash flows received from the financial assets are solely payments of
principal and interest and are held within a business model whose objective is to collect the
contractual cash flows. The financial assets and financial liabilities are subsequently measured at
amortized cost using the effective interest method.
The Company has no financial instruments measured at FVPL or FVOCI.
The Company recognizes a loss allowance for expected credit losses on financial assets that are
measured at amortized cost. At each reporting date, the Company measures the loss allowance for
the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the
financial asset has increased significantly since initial recognition. If at the reporting date, the
financial asset has not increased significantly since initial recognition, the Company measures the
loss allowance for the financial asset at an amount equal to the twelve month expected credit
losses. The Company shall recognize in profit or loss, as an impairment gain or loss, the amount of
expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date
to the amount that is required to be recognized.
Provisions
Provisions are recognized where a legal or constructive obligation has been incurred as a result of
past events, it is probable that an outflow of resources embodying economic benefit will be required
to settle the obligation and a reliable estimate of the amount of the obligation can be made. If
material, provisions are measured at the present value of the expenditures expected to be required
to settle the obligation. The increase in any provision due to passage of time is recognized as
accretion expense.
Share capital
Common shares are classified as equity. Transaction costs directly attributable to the issue of
common shares and share options are recognized as a deduction from equity, net of any tax effects.
Flow-through shares
The Company will from time to time, issue flow-through common shares to finance a significant
portion of its exploration program. Pursuant to the terms of the flow-through share agreements,
these shares transfer the tax deductibility of qualifying resource expenditures to investors. On
issuance, the Company bifurcates the flow-through share into i) a flow-through share premium,
equal to the estimated premium, if any, investors pay for the flow-through feature, which is
recognized as a liability, and ii) share capital. Upon expenses being incurred, the Company
derecognizes the liability and recognizes a deferred tax liability for the amount of tax reduction
Notes to the Financial Statements (continued)
12 | P a g e
renounced to the shareholders. The premium is recognized as other income and the related
deferred tax is recognized as a tax provision.
The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the
look-back rule, in accordance with Government of Canada flow-through regulations. When
applicable, this tax is accrued as a financial expense until paid.
Unit offerings
The Company has adopted the relative fair value method with respect to the measurement of
shares and warrants issued as equity units. The relative fair value method requires an allocation of
the net proceeds received based on the pro rata relative fair values of the components. If and when
the warrants are ultimately exercised, the applicable amounts are transferred from equity reserves
to share capital. If the warrants expire unexercised, the Company will transfer the value attributed
to those warrants from equity reserves to deficit.
Share-based payment transactions
The share option plan allows Company employees, directors, and consultants to acquire shares of
the Company. All options granted are measured at fair value and are recognized in expenses as
share-based payments with a corresponding increase in equity reserves. An individual is classified
as an employee when the individual is an employee for legal or tax purposes (direct employee) or
provides services similar to those performed by a direct employee.
The fair value of employee options is measured at grant date, and each tranche is recognized using
the graded vesting method over the period during which the options vest. The fair value of the
options granted is measured using the Black-Scholes option pricing model taking into account the
terms and conditions upon which the options were granted. For non-employees, share-based
payments are measured at the fair value of goods and services received or the fair value of the
equity instruments issued, if it is determined that the fair value cannot be reliably measured and are
recorded at the date the goods or services are received. The fair value of the options is accrued and
charged either to operations or exploration and evaluation assets, with the offset credit to equity
reserves. This includes a forfeiture estimate, which is revised for actual forfeitures in subsequent
periods. Upon the expiration or cancellation of unexercised stock options, the Company will transfer
the value attributed to those stock options from equity reserves to deficit.
Loss per share
The Company presents basic and diluted loss per share data for its common shares, calculated by
dividing the loss attributable to common shareholders of the Company by the weighted average
number of common shares outstanding during the period. Diluted loss per share is determined by
adjusting the loss attributable to common shareholders and the weighted average number of
common shares outstanding for the effects of all dilutive potential common shares. In the
Company's case, diluted loss per share is the same as basic loss per share as the effects of including
all outstanding options and warrants would be anti-dilutive.
Related party transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the
other party or exercise significant influence over the other party in making financial and operating
decisions. Parties are also considered to be related if they are subject to common control. Related
Notes to the Financial Statements (continued)
13 | P a g e
parties may be individuals or corporate entities. A transaction is considered to be a related party
transaction when there is a transfer of resources or obligations between related parties.
Income taxes
Income tax comprises current and deferred tax. Income tax is recognized in profit or loss, except to
the extent that it relates to items recognized directly in equity, in which case it is recognized as
equity.
Current tax expense is the expected tax payable on the taxable income for the year, using rates
substantively enacted at period end, adjusted for amendments to tax payable with regards to
previous years.
Deferred tax is provided for temporary differences, between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits
will be available against which the asset can be utilized. To the extent that the Company does not
consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced
using a valuation allowance.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when they relate to income taxes levied by the
same taxation authority and the Company intends to settle its current tax assets and liabilities on a
net basis.
New accounting standards
There were no new or amended IFRS pronouncements effective for the year ended April 30, 2022
that impacted the Company’s financial statements.
Notes to the Financial Statements (continued)
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4. OTHER RECEIVABLES
Other receivables as at April 30, 2022 and 2021 were as follows:
April 30, 2022
April 30, 2021
Expenditures recoverable from third parties
$ 116,184
-
Amounts refundable from suppliers
168,885
-
Total other receivables
285,069
-
Less provision for doubtful debts
(116,184)
-
$ 168,885
$ -
5. EXPLORATION AND EVALUATION ASSETS
The Company has accumulated the following acquisition expenditures:
Eastmain
Property
Windy
Mountain
Property
Total
Balance, April 30, 2020
$ 330,000
$ -
$ 330,000
Acquisition costs – issuance of shares
461,825
-
461,825
Acquisition costs – issuance of warrants
539,078
-
539,078
Acquisition costs – cash
225,000
-
225,000
Balance, April 30, 2021
$ 1,555,903
$ -
$ 1,555,903
Acquisition costs – issuance of shares
110,000
-
110,000
Acquisition costs – cash
150,000
10,764
160,764
Balance, April 30, 2022
$ 1,815,903
$ 10,764
$ 1,826,667
During the year ended April 30, 2022 and 2021 exploration and evaluation expenditures, recorded in
the statements of operations and comprehensive loss, consisted of the following:
April 30, 2022
April 30, 2021
Eastmain: Geology
1,600,205
720,003
Eastmain: Location/camp services
2,702,864
1,946,624
Eastmain: Drilling
10,787,669
3,442,244
Eastmain: Geochemical analysis
2,569,174
263,059
Eastmain: Geophysics
968,229
951,998
Eastmain: Environment
28,485
-
Eastmain: Health & safety
366,416
249,502
Eastmain: Property Maintenance
11,441
-
Total exploration and evaluation costs
19,034,483
7,573,430
Notes to the Financial Statements (continued)
15 | P a g e
Eastmain Property
In August 2019, the Company entered into an option agreement (the "Option Agreement") to
acquire from Eastmain Resources Inc, (“Eastmain” or “the Vendor”), a 100% interest in the former
producing Eastmain Gold project (the "Project") located in James Bay District, Quebec for
$5,000,000. In April 2020, Benz entered into an amending agreement (the "Amending Agreement")
in connection with the Project pursuant to which it acquired a further option to earn a 100% interest
in the Ruby Hill West and Ruby Hill East properties (“Ruby Hill Properties”), located west of the
Eastmain gold mine project.
Pursuant to the Option and Amendment Agreements, the Company retains the right and option to
earn a 75% interest in the Project and Ruby Hill Properties by issuing the following cash and
common shares payments to the vendor (the "Option Payments"):
Option Payments
Payable in Cash
Option Payments
Payable in Cash or
Shares
Option Agreement Effective date – October 23, 2019 (paid)
$75,000
-
Amending Agreement approval date by TSX-V Exchange – May
21, 2020 (paid)
$75,000
-
On or before the 1st Anniversary of the Effective Date (paid)
$150,000
$100,000
On or before the 2nd Anniversary of the Effective Date (paid)
$150,000
$110,000
On or before the 3rd Anniversary of the Effective Date
$200,000
$110,000
On or before the 4th Anniversary of the Effective Date
$1,250,000
$475,000
Total Price*
$1,900,000
$795,000
* Total in cash and shares is $2,695,000.
In addition to the Option Payments, the Company issued to Eastmain 3,000,000 common shares,
with a value of $255,000 on grant date. Per the terms of the Amending Agreement, Benz made a
share payment of 2,000,000 common shares valued at $360,000 and issued 4,000,000 share
purchase warrants. Each warrant enables the holder to purchase one common share of Benz at a
price of $0.12 per share until April 27, 2023. The additional 2,000,000 shares and 4,000,000
warrants were issued on May 21, 2020. The warrants were valued at $539,078 using the Black-
Scholes pricing model with a share price of $0.18, risk-free rate of 0.29%, volatility of 117.92% and
expected life of 2.93 years.
If and when the Company has made the Option Payments, issued shares and warrants and incurred
expenditures as described above, the Company will be deemed to have exercised the options and a
75% right, title and interest to the Project and Ruby Hill Properties. The Company has the right to
accelerate expenditures at any time.
Following the exercise of the options, the Company will be obligated to make the following
additional payments to the vendor on the occurrence of the following events:
•
$1,000,000 within five (5) business days of the closing of project financing to place the
Project or any part thereof into commercial production in accordance with a feasibility study
completed by the Company within 24 months of the exercise of the option. With this
payment, Benz will have acquired 100% of Eastmain’s recorded and/or leasehold interest in
the Project. If Benz fails to make this milestone payment, Eastmain will have the right to buy
Notes to the Financial Statements (continued)
16 | P a g e
back the Company's 75% interest in the Project for $3,500,000, of which up to $1,225,000
may be paid in common shares of Eastmain; and
•
$1,500,000 within five (5) business days of the commencement of commercial production.
The Company may, at its election, pay up to 25% of this payment in common shares of the
Company. The number of common shares required to be issued will be determined by the share
equivalent of such payment on the date of issuance.
Eastmain would retain a 2% Net Smelter Return (“NSR”) royalty in respect of the Project. The
Company may, at any time, purchase one half of the NSR royalty, thereby reducing the NSR royalty
to a 1% NSR royalty, for $1,500,000.
Benz will have the right to earn an additional 25% interest in the Ruby Hill Properties by paying an
additional $100,000 to Eastmain by October 23, 2025, which can be paid in shares at the election of
Eastmain based on the prevailing volume weighted average price (“VWAP”) of the Company's shares
up to a maximum of 500,000 shares.
Following the acquisition of a 100% interest in the Ruby Hill Properties, Eastmain will retain a 1%
NSR royalty, of which one half may be purchased for $500,000 thereby reducing it to a 0.5% NSR
royalty. The NSR royalty is also offset by any pre-existing royalties which may reduce the royalty
burden.
The Project property expenditure schedule, as defined in the Option Agreement and updated in the
Amending Agreement totals $3,500,000 as follows:
Cash Spend
On or before the 1st Anniversary of the Effective Date
$0
On or before the 2nd Anniversary of the Effective Date
$1,000,000
On or before the 3rd Anniversary of the Effective Date
$1,500,000
On or before the 4th Anniversary of the Effective Date
$1,000,000
Total Property Expenditure
$3,500,000
During the year ended April 30, 2022, Benz completed exploration and evaluation activities totaling
$19,034,483 at the Project.
Windy Mountain Property
In August 2021, the Company acquired the Windy Mountain property for cash totaling $10,764. The
Windy Mountain project acquired consisted of 69 claims to which an additional 4 claims have been
added in 2022, totaling 73 claims covering 3,846.3 hectares (38.46 km2).
During the year ended April 30, 2022, Benz did not incur any exploration and evaluation activities on
the Windy Mountain property.
Notes to the Financial Statements (continued)
17 | P a g e
6. RELATED PARTY TRANSACTIONS AND BALANCES
Related party transactions are measured at the estimated fair values of the services provided or
goods received. Related party transactions not disclosed elsewhere in these financial statements are
as follows:
a) Key Management Compensation
Key management personnel include the members of the Board of Directors and officers of the
Company, who have the authority and responsibility for planning, directing, and controlling the
activities of the Company. The remuneration of directors and officers for years ended April 30,
2022 and 2021 was as follows:
April 30, 2022
April 30, 2021
Salaries, bonuses, fees and benefits
Management, director and consulting fees to the
officers and directors of the Company (including
$266,084 (2021 - $219,105) classified with exploration
and evaluation expenditures)
$ 961,440
$ 988,184
Share-based payments
Officers and directors of the Company
-
1,838,283
$ 961,440
$ 2,826,467
b) In the normal course of operations, the Company transacts with companies related to its
directors or officers. The following amounts are payable to related parties, and are included in
trade and other payables:
April 30, 2022
April 30, 2021
Management fees
$ 73,206 $ 187,989
7. FLOW-THROUGH SHARE LIABILITY
The following is a continuity schedule of the liability portion of the flow-through share issuances.
Balance, April 30, 2020
$ -
Liability incurred on flow-through shares issued (June and October 2020)
4,828,571
Settlement of flow-through liability upon incurring exploration expenditures
(1,469,472)
Balance, April 30, 2021
$ 3,359,099
Liability incurred on flow-through shares issued (August 2021)
4,454,545
Settlement of flow-through liability upon incurring exploration expenditures
(7,813,644)
Balance, April 30, 2022
$ -
Notes to the Financial Statements (continued)
18 | P a g e
8. SHARE CAPITAL
a) Authorized: Unlimited common shares, without par value
Unlimited preferred shares, without par value
b) Issued: During the current year
On August 30, 2021, the Company closed a non-brokered flow-through private placement of
9,090,909 flow-through shares at a price of $1.10 per share, for gross proceeds of $10,000,000.
The Company incurred share issuance costs of $339,565 in the form of finders’ fees and
professional fees in addition to issuing compensation warrants valued at $331,610.
On October 22, 2021 the Company issued 174,658 common shares pursuant to the terms of the
Eastmain option agreement (see Note 5) with a value of $110,000.
During the year ended April 30, 2022, the Company issued 1,744,737 shares on the exercise of
warrants for proceeds of $234,368. The fair value of these warrants, totaling $101,759, was
transferred to share capital from equity reserves.
During the year ended April 30, 2022, the Company issued 151,250 shares on the exercise of
options for proceeds of $23,106. The fair value of these options, totaling $19,827, was
transferred to share capital from equity reserves. The weighted-average share price at the date
of exercise for options exercised was $0.64.
c) Issued: During the previous year
In May 2020, the Company issued 2,000,000 common shares pursuant to the terms of the
Eastmain option agreement (see Note 5) with a value of $360,000. In October 2020, a further
124,177 shares with a value of $101,825 were issued pursuant to the terms of the agreement.
In June 2020, the Company closed a non-brokered flow-through private placement of
12,000,000 flow through units at a price of $0.30 per unit, for gross proceeds of $3,600,000.
Each flow-through unit consists of one common share of the Company and one common share
purchase warrant. Each warrant entitles the holder to purchase one non-flow through common
share at a price of $0.17 per share until June 1, 2023. The Company incurred share issuance
costs of $181,633 in the form of finders’ fees and professional fees in addition to issuing
compensation units valued at $427,720.
In October 2020, the Company closed a non-brokered flow-through private placement of
14,857,142 flow through units at a price of $0.875 and 400,000 hard dollar units at $0.55 per
unit, for aggregate gross proceeds of $13,219,999. Each flow-through unit and hard dollar unit
consists of one common share of the Company and one-half common share purchase warrant.
Each whole warrant entitles the holder to purchase one non-flow through common share at a
price of $1.00 per share until October 29, 2022. The Company incurred share issuance costs of
$457,417 in the form of finders’ fees and professional fees.
In December 2020, the Company issued 4,000,000 common shares pursuant to a prospectus
offering lodged with the Australian Securities and Investments Commission in relation to its dual
listing on the Australian Securities Exchange. In exchange for the common shares, the Company
received $1,929,000 and incurred share issuance costs of $91,166 in the form of finders’ fees
and professional fees.
Notes to the Financial Statements (continued)
19 | P a g e
During the year ended April 30, 2021, the Company issued 3,550,500 shares on the exercise of
options for $609,378. The fair value of these options totaling $568,829 was transferred to share
capital from reserves. The weighted-average share price at the date of exercise for options
exercised was $0.47.
During the year ended April 30, 2021, the Company issued 4,791,819 shares on the exercise of
warrants for $607,746. The fair value of these warrants totaling $314,912 was transferred to
share capital from reserves.
Escrow Shares
As at April 30, 2022 and 2021, an amount of 222,857 common shares are being held in escrow
subject to an escrow agreement with Tusk Exploration Ltd. These shares continue to be held due
to unmet contractual obligations.
d) Share purchase warrants
A summary of changes in share purchase warrants is as follows:
Underlying Shares
Weighted Average
Exercise Price
Balance, April 20, 2020
27,773,024
$ 0.12
Issued
23,628,571
0.43
Exercised
(4,791,819)
0.13
Balance, April 30, 2021
46,609,776
$ 0.28
Exercised
(1,744,737)
0.13
Balance, April 30, 2022
44,865,039
$ 0.28
On May 21, 2020, the Company issued 4,000,000 warrants pursuant to the terms of the
Eastmain option agreement (see Note 5). Each warrant entitles the holder to acquire one
additional share at the price of $0.12 until April 27, 2023.
On June 1, 2020, the Company issued 12,000,000 warrants through the financing described in
the previous section. Each warrant entitles the holder to acquire one additional share at the
price of $0.17 until June 1, 2023.
On October 29, 2020, the Company issued 15,257,142 half warrants through the financing
described in the previous section. Each whole warrant entitles the holder to acquire one
additional share at the price of $1.00 until October 29, 2022.
Notes to the Financial Statements (continued)
20 | P a g e
The warrants during the year ended April 30, 2021 were valued using the Black-Scholes pricing
model. The following assumptions were used for the Black-Scholes valuation of the warrants
granted:
April 30, 2021
Weighted average assumptions:
Risk-free interest rate
0.31%
Expected dividend yield
0.00%
Expected option life (years)
2.67
Expected stock price volatility
121%
Weighted average fair value at measurement date
$0.23
Warrants outstanding as at April 30, 2022 and 2021, are:
Exercise Price
Outstanding and Exercisable
Expiry Date
per Share
April 30, 2022
April 30, 2021
October 29, 2022
$1.00
7,628,571
7,628,571
April 27, 2023
$0.12
26,391,013
27,635,750
June 1, 2023
$0.17
10,845,455
11,345,455
44,865,039
46,609,776
e) Compensation Units and Warrants
A summary of changes in compensation units and warrants is as follows:
Compensation
Units
Compensation
Warrants
Weighted Average
Exercise Price
Balance, April 30, 2020
2,115,652
-
$ 0.076
Issued
1,440,000
-
0.17
Balance, April 30, 2021
3,555,652
-
$ 0.11
Issued
-
909,090
0.65
Balance, April 30, 2022
3,555,652
909,090
$ 0.23
Pursuant to the August 2021 private placement of 9,090,909 flow-through shares, the Company
paid finders’ fees and professional fees consisting of a cash payment in the aggregate amount of
$339,565 and the issue of 909,090 compensation warrants with a fair value of $331,610. Each
compensation warrant is exercisable at a price of $0.65 until August 31, 2023 and entitles the
holder to purchase one common share of the Company.
Pursuant to the June 2020 private placement of 12,000,000 flow-through units, the Company
paid finders’ fees and professional fees consisting of a cash payment in the aggregate amount of
$144,000 and 1,440,000 compensation units with a fair value of $427,720. Each compensation
unit is exercisable at a price of $0.17 until June 1, 2023 and entitles the holder to purchase one
unit (comprised of one share and one warrant). Each warrant received upon the exercise of a
compensation unit entitles the holder to purchase one share at price of $0.17 per warrant until
June 1, 2023.
Notes to the Financial Statements (continued)
21 | P a g e
The following assumptions were used for the Black-Scholes valuation of the compensation units
and warrants granted:
April 30, 2022
April 30, 2021
Weighted average assumptions:
Risk-free interest rate
0.41%
0.34%
Expected dividend yield
0.00%
0.00%
Expected option life (years)
2
3
Expected stock price volatility
121%
118%
Weighted average fair value at measurement date
$0.36
$0.15
Compensation units and warrants outstanding as at April 30, 2022 and 2021, are:
Exercise Price
Outstanding and Exercisable
Expiry Date
per Share/Unit
April 30, 2022
April 30, 2021
April 27, 2023
$0.076
2,115,652
2,115,652
June 1, 2023
$0.17
1,440,000
1,440,000
August 31, 2023
$0.65
909,090
-
4,464,742
3,555,652
f)
Stock options
The Company’s stock option plan authorizes for the granting of options to directors, officers,
employees, and consultants. Pursuant to the terms of the Stock Option Plan, the Board of
Directors may from time to time, in its discretion, and in accordance with Exchange policies,
grant incentive stock options ("Options") to purchase the Company’s common shares to
directors, officers, employees, and consultants. Under the Stock Option Plan, a maximum of 10%
of the outstanding shares can be reserved for issuance. The number of shares reserved for
issuance to any individual director or officer will not exceed five percent (5%) of the issued and
outstanding shares and the number of shares reserved for issuance to all technical consultants
will not exceed two percent (2%) of the issued and outstanding shares.
Notes to the Financial Statements (continued)
22 | P a g e
A summary of changes in stock options is as follows:
Underlying
Shares
Weighted Average
Exercise Price
Stock options outstanding, April 30, 2020
5,720,598
$0.16
Granted
5,300,000
$0.53
Exercised
(3,550,500)
$0.17
Cancelled
(12,885)
$3.00
Stock options outstanding, April 30, 2021
7,457,213
$0.41
Stock options exercisable, April 30, 2021
7,422,838
$0.41
Stock options outstanding, April 30, 2021
7,457,213
$0.41
Exercised
(151,250)
$0.15
Stock options outstanding, April 30, 2022
7,305,963
$0.42
Stock options exercisable, April 30, 2022
7,305,963
$0.42
In May 2020, Benz cancelled an aggregate of 12,885 stock options previously held by a
consultant.
In June 2020, the Company granted 1,400,000 stock options to eligible parties, exercisable at a
price of $0.21 per share for a period of five years.
In October 2020, the Company granted 3,900,000 stock options to eligible parties, exercisable at
a price of $0.64 per share for a period of three years.
During the year ended April 30, 2022, 151,250 (2021 - 3,550,500) stock options were exercised
for proceeds of $23,106 (2021 - $609,378).
During the years ended April 30, 2022 and 2021, the Company recorded share-based payments
of $4,994 (2021 - $2,158,003), of which $Nil (2021 - $1,838,283) pertained to directors and
officers of the Company. The fair value of stock options issued during these years was
estimated using the Black-Scholes Option Pricing Model with the following assumptions:
April 30, 2022 April 30, 2021
Weighted average assumptions:
Risk-free interest rate
0.85%
0.50%
Expected dividend yield
0.00%
0.00%
Expected option life (years)
6.00
4.17
Expected stock price volatility
127%
123%
Weighted average fair value at measurement date
$0.73
$0.46
Notes to the Financial Statements (continued)
23 | P a g e
A summary of stock options outstanding as at April 30, 2022, is as follows:
Number of
Stock Options
Outstanding
Number of
Stock Options
Exercisable
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (in years)
Intrinsic
Value
Expiry Date
9,713
9,713
$3.00
2.72
$0.00
January 18, 2025
131,250
131,250
$0.265
5.34
$0.37
August 31, 2027
70,000
70,000
$0.076
2.84
$0.55
March 3, 2025
2,100,000
2,100,000
$0.12
2.99
$0.51
April 27, 2025
1,095,000
1,095,000
$0.21
3.09
$0.42
June 1, 2025
3,900,000
3,900,000
$0.64
1.42
$0.00
October 2, 2023
7,305,963
7,305,963
2.21
9. CAPITAL MANAGEMENT
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 exploration and development of its properties
and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. In the
management of capital, the Company includes the components of shareholders’ equity.
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 or adjust the amount of cash and
cash equivalents. Management reviews the capital structure on an ongoing basis and believes that
this approach, given the relative size of the Company, is reasonable.
The Company is not subject to externally imposed capital requirements. There were no changes to
the Company’s capital management during the year ended April 30, 2022.
10. FINANCIAL INSTRUMENTS AND RISK
The Company’s financial instruments consist of cash and cash equivalents, other receivables, and
trade and other payables. The fair value of the financial instruments approximates their carrying
values, unless otherwise noted.
The Company’s risk exposures and the impact on the Company’s financial instruments are
summarized below:
a) Credit risk
The Company’s credit risk is mainly attributable to its liquid financial assets: cash and cash
equivalents. The Company deposits cash with high credit quality financial institutions and credit
risk is considered to be minimal. The Company’s maximum exposure to credit risk is $2,782,026,
which is the carrying value of the Company’s cash and cash equivalents at April 30, 2022.
b) Liquidity risk
The Company’s approach to managing liquidity risk is to ensure that it will have sufficient
liquidity to meet liabilities when due. As at April 30, 2022, the Company had a cash and cash
Notes to the Financial Statements (continued)
24 | P a g e
equivalents balance of $2,782,026 (April 30, 2021- $13,144,767) to settle current liabilities of
$2,544,545 (April 30, 2021 - $4,527,646).
c) Foreign exchange risk
Foreign exchange risk is the risk that the Company’s financial instruments will fluctuate in value
as a result of movements in foreign exchange rates. The Company is exposed to foreign currency
risk to the extent that monetary assets and liabilities held by the Company are not denominated
in Canadian dollars. As at April 30, 2022, the Company is exposed to currency risk as some
transactions and balances are denominated in Australian dollars. As at April 30, 2022, a 10%
change of the Canadian dollar relative to the Australian dollar would have net financial impact of
approximately $21,000 (2021 - $147,000). The Company does not use derivative instruments to
hedge exposure to foreign exchange rate risk.
11. INCOME TAXES
A reconciliation of income taxes at statutory rates with reported taxes is as follows:
April 30, 2022
April 30, 2021*
Statutory rates
26.5%
26.5%
Loss before income taxes
$ (12,636,747)
$ (9,459,119)
Expected income tax recovery at statutory rate
3,348,738
2,506,667
Non-deductible items and permanent differences
(2,869,447)
(2,092,963)
Effect of change in tax rates
-
(29,290)
Change in valuation allowance
(479,291)
(384,414)
Future income tax recovery
$ -
$ -
*Certain comparative figures have been restated to agree to the Company’s income tax return as filed.
The significant components of the Company's future income tax assets are as follows:
April 30, 2022
April 30, 2021*
Future income tax asset:
Non-capital loss carryforwards
$ 1,808,147
$ 1,328,857
Exploration expenditure pool
439,497
441,947
Undeducted financing costs
281,169
305,145
2,528,813
2,075,949
Less: valuation allowance
(2,528,813)
(2,075,949)
Net future income tax assets
$ -
$ -
*Certain comparative figures have been restated to agree to the Company’s income tax return as filed.
Notes to the Financial Statements (continued)
25 | P a g e
The Company has non-capital losses for tax purposes of approximately $6,824,000 which may be
used to reduce future taxable income in Canada. The losses expire in the following years:
Year
Amount
2031
$ 9,000
2032
4,000
2033
130,000
2034
185,000
2035
330,000
2036
104,000
2037
310,000
2038
1,079,000
2039
627,000
2040
676,000
2041
1,561,000
2042
1,809,000
$ 6,824,000
12. SUBSEQUENT EVENT
In May 2022, the Company issued 500,000 common shares at $0.12 per share upon the exercise of
warrants for total proceeds of $60,000.