ANNUAL REPORT
FOR THE YEAR ENDED
31 DECEMBER 2019
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Contents
Strategic Report
2019 Highlights & Recent Developments
Executive Director’s Review
Tenement Portfolio & Competent Persons Report
Chairman’s Update
Report of the Directors
Directors & Key Management
Company Directory
Directors Report
Corporate Governance Statement
Directors' Responsibilities Statement
Audited Consolidated Financial Statements
Independent Auditor's Report to the Members of Black Dragon Gold Corp.
Consolidated Statement of Financial Position
Consolidated Statement of Operations &Comprehensive Loss
Consolidated Statement of Changes of Cash Flows
Consolidated Statement of Changes in Shareholders’ Equity
Notes to the Consolidated & Company financial statements
ASX Additional Information
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2
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
2019 Highlights
The 2019 strategic plan focused on creating shareholder value through fast tracking the progress of the Salave asset to
production. Before assuming management of the Company, previous management had identified the construction
permitting issues and the existing RMB debt as the sole restraints on the realization of the asset’s significant value.
Previous management resolved the RMB debt by renegotiating an option to repurchase the US$10 million facility for
US$3 million plus certain other consideration.
On January 23, 2018 the Company announced that it had commenced a 2,200m exploration drilling program on the
Salave Gold Deposit (“Salave” or “Salave Project”) in Asturias, Spain, following the receipt of approval from the
Asturias Ministry of Employment, Industry & Tourism, as well as the Municipality of Tapia de Casariego. This drilling
program was completed in April of 2018, totalling 2,217 metres and results were released on September 24, 2018.
The previous NI 43-101 Mineral Resource Estimate (“MRE”) for the Salave Project (Amended Technical Report with
effective date of October 7, 2016) defined measured and indicated resources totalling 6.52Mt grading 4.51 g/t Au
containing 944,000 ounces of gold using a 2.0 g/t cut-off grade. This MRE identified sub-vertical structures which require
further understanding and definition. The 2018 drilling program was designed to accomplish the following:
(cid:120) Confirm the orientation of higher-grade gold mineralisation intersected in numerous drill-holes during
previous diamond drilling programs;
(cid:120) Provide information on the orientation of structures that potentially control the orientation of gold
mineralisation at Salave;
(cid:120)
(cid:120)
(cid:120)
confirm the gold tenor and intersection lengths of previous diamond drill-holes;
provide additional samples for metallurgical test work optimisation studies; and
provide additional structural and geotechnical data for ongoing project development studies.
The program pushed deeper into the Salave Lower Zone with depths reaching 350m from surface (vertical), but with
holes angled between 65° and 75°. Two drill rigs were mobilised to the Salave project in the spring of 2018 and all holes
were drilled from two locations, minimising surface disturbance, and reducing the time required to complete the program.
The results of this program have been released to the market (April 5, September 10 and September 24, 2018) and a new
MRE has been prepared by CSA Global and released on October 25, 2018. The updated MRE (Table 1) represents a 28%
increase in Measured and Indicated Resource ounces, and a 228% increase in Inferred Resource ounces.
The resource cut-off grade of 2.0 g/t Au was chosen to capture mineralisation that is potentially amenable to underground
mining, sulphide concentration, and gold recovery using off-site processing. This cut-off grade was selected based on a
gold price of US$1,300/ounce, a gold recovery of 92%, a mining cost of US$50/tonne, a processing cost of US$18/tonne,
and a G&A cost of US$6/tonne. The reported resources occur in bodies of sufficient size and continuity to meet the
requirement of having reasonable prospects for eventual economic extraction.
Due to the necessity to maintain a surficial crown pillar in a potential underground operation, all material from the present
surface to a depth of 40 m is not included in the Salave MRE. Additionally, the Company is in the process of defining an
extensive exploration program across its concessions in Asturias with the aim to identify other high priority drill targets
along the granodiorite alteration zones to the east, west and south of the current Salave deposit where historical soil and
rock chips samples identified anomalous high-grade gold mineralisation.
On February 11, 2019 the Company announced the positive results of the Preliminary Economic Assessment (“PEA”)
completed on its 100% owned Salave Gold based on the recently completed Mineral Resource Estimate completed by
CSA Global. This document will form the basis of the Environmental Impact Assessment to be made to the government
of Asturias in 2020.
On February 18, 2019 the Company announced that the Company's common shares without par value (the "Shares") will
be voluntarily delisted from the TSX Venture Exchange (the "TSX-V") effective at the close of trading on February 28,
2019. The Shares will continue to trade on the Australian Securities Exchange (the "ASX") as CHESS Depository
Interests (or "CDIs") under the ASX Code "BDG".
3
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
In July 2019, the Company completed a 760-line kilometre, high-resolution, airborne magnetic and radiometric, survey
over the entire, 3,427 ha Salave Project. The survey succeeded in enhancing Black Dragon Gold’s understanding of the
geology and identifying additional exploration targets within the Company’s investigative permit area.
Recent Developments
The following are subsequent events to the most recent fiscal year end at December 31, 2019:
In January 2020, Black Dragon Gold Corporation’s (“Black Dragon Gold” or “Company”) subsidiary Exploraciones
Minera del Cantábrico (“EMC”) received the Terms of Reference (“ToR”) for the Environmental Impact Assessment
from the Asturian Ministry of Environment. The issuance of the ToR clarifies the Provincial Government’s
environmental requirements for project approval and accelerates the permitting timeframe.
Executive Director’s Review
Your board continues to focus on developing the 100% owned the Salave project, one of the largest undeveloped gold
projects in Europe. The Salave Gold Project is situated in the Asturias province of Northern Spain. As previously
disclosed, Black Dragon Gold has an updated Measured Mineral Resource of 1.03 million tonnes grading 5.59 g/t Au,
containing 0.19 million ounces of gold; an Indicated Mineral Resource of 7.18 million tonnes grading 4.43 g/t Au,
containing 1.02 million ounces of gold, plus Inferred Resources totalling 3.12 million tonnes grading 3.47 g/t Au,
containing 348,000 ounces of gold. During the financial period, the Company’s 100% owned Spanish subsidiary EMC
officially received the Terms of Reference (“ToR”) from several administrative bodies involved in the EIA process.
EMC has commenced the preparation of the final Mine and Restoration Plan, which will be followed by the
Environmental Impact Assessment (“EIA”). Significant progress has been made in assessing water management of both
terrestrial and marine domains. In July 2019, EMC had submitted the Initial Project Description to the General
Directorate of Mines in the Principality of Asturias to initiate the EIA procedure for their Salave Gold Project in northern
Spain. The submission of the Initial Project Description is the first of a multistage review process which culminates in a
decision to grant environmental clearance for the development of the Salave Project. We continue to progress
negotiations with the local authority and Spanish Government to finalise the remaining approvals which will allow Black
Dragon to develop the Salave Gold Project.
a) Exploration Programme & Assets
The Company’s tenure includes five Mining Concessions and associated extensions covering 662 ha and an Investigation
Permit covering another 2,765 ha. Within the concession boundaries, the Company owns 109,753 m2 of freehold land
over the surface mineralisation.
The project has had some €55 million spent on its development and resource definition. A prominent geophysical
anomaly coincident with favourable geology, alteration and mineralisation defines a significant gold target that prompted
intense drilling campaigns by major gold companies resulting in some 69,000 metres of drilling plus extensive social,
environmental and engineering studies and testwork.
The Company applied for an administrative authorisation permit (“AAP”) in 2015, which is similar to a construction
permit. This was denied due to the Company not adequately addressing the concerns of the relevant stakeholders in
relation to certain water issues. The Company subsequently brought administrative judicial proceedings against the
relevant authorities claiming both the reversal of the decision and €8 million in damages. The legal proceedings
essentially blocked the development process as it halted further consultation and negotiation. All judicial proceedings
have now been dismissed. No mining is currently occurring at the Salave deposit. The only known past production of
gold from the Salave project dates from Roman times.
The Salave deposit is primarily hosted by the Salave granodiorite, an elongate body of granodiorite, trending west-
northwest and covering an area approximately 2 km x 500 m. Most of the gold mineralisation at Salave has been
delineated within an area 400 m wide, 500 m long, and 350 m deep. Gold mineralisation occurs in a series of stacked,
north to northwest trending, shallowly southwest dipping irregular lenses related to faults and fracture zones that are
parallel to the contact of the intrusive and overlying metasedimentary rocks. Mineralisation at Salave is related to
hydrothermal alteration of the host granodiorite. The highest gold grades are associated with intense albite-sericite
alteration with fine-grained arsenopyrite, commonly disseminated as fine needles, pyrite and stibnite.
4
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
Gold mineralisation in the deposit area was discovered and explored by various companies since 1967. Black Dragon
Gold completed a seven-hole confirmation drilling program (2,217m) in 2018 and an updated Mineral Resource Estimate
(“MRE”) which included the 2018 drill-holes.
The 2018 MRE has been reported and classified as Measured, Indicated and Inferred in accordance with CIM Standards
and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 edition)
(“JORC Code”) and is therefore suitable for public release. The classification level is based upon an assessment of
geological understanding of the deposit, geological and grade continuity, drill-hole spacing, quality control results, search
and interpolation parameters, and analysis of available density information.
Table 1: Mineral Resource Estimate for the Salave Gold Deposit at a 2.0 g/t Au cut-off grade,
Effective date, 31 October 2018
Resource Category
Tonnes (Mt)
Au grade (g/t)
Au contained metal (koz)
Measured
Indicated
Measured + Indicated
Inferred
Notes:
(cid:120) The Mineral Resource Estimate was carried out by Dmitry Pertel, MSc (Geol), MAIG, GAA of CSA Global, the independent
Qualified Person as defined by National Instrument 43-101. A copy of the technical report “Salave Gold Project Mineral
Resource Update for Black Dragon Gold Corp.” is posted on the Company’s website www.blackdragon gold.com
190
1,020
1,210
350
5.6
4.4
4.6
3.5
1.0
7.2
8.2
3.1
(cid:120) Classification of the MRE was completed based on the guidelines presented by Canadian Institute for Mining (CIM -May
2014), adopted for Technical reports which adhere to the regulations defined in Canadian National Instrument 43-101 (NI 43-
101), and the JORC Code
(cid:120) A cut-off grade of 2 g/t Au has been applied when reporting the Mineral Resource.
(cid:120) All density values were interpolated, except CHL and SER domains where a single density value of 2.67 t/m3 was used.
(cid:120) Rows and columns may not add up exactly due to rounding.
(cid:120) Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.
(cid:120) The quantity and grade of the Inferred resources reported in this estimation are conceptual in nature and there has been
insufficient exploration to define these Inferred resources as an Indicated and Measured resource. It is uncertain if further
exploration will result in upgrading them to an Indicated or Measured category, although it is reasonably expected that the
majority of the Inferred resources could be upgraded to Indicated Mineral Resources with further exploration.
(cid:120) The Company first reported the 2018 MRE in accordance with the JORC Code and ASX listing rule 5.8 in its ASX
announcement of 25 October 2018. The Company confirms that it is not aware of any new information or data that materially
affects the information included in the original announcement and that all material assumptions and technical parameters
underpinning the estimate in the previous announcement continue to apply and have not materially changed.
The resource cut-off grade of 2.0 g/t Au was chosen to capture mineralisation that is potentially amenable to underground
mining, sulphide concentration, and gold recovery using off-site processing. This cut-off grade was selected based on a
gold price of US$1,300/ounce, a gold recovery of 92%, a mining cost of US$50/tonne, a processing cost of US$18/tonne,
and a general and administration (“G&A”) cost of US$6/tonne. The reported resources occur in bodies of sufficient size
and continuity to meet the requirement of having reasonable prospects for eventual economic extraction. Due to the
necessity to maintain a surficial crown pillar in a potential underground operation, all material from the present surface
to a depth of 40 m is not included in the Salave Resources. For full details regarding the Salave MRE please refer to the
CSA Global technical report titled “Salave Gold Project Mineral Resource Update for Black Dragon Gold.” on the
Company’s website, www.blackdragongold.com.
Several phases of metallurgical testwork has been be carried out on the Salave Deposit. The most comprehensive
metallurgical program consisting of bench-scale and pilot testing was managed by Ausenco Ltd. From 2005 to 2006 on
two bulk samples from the Upper and Lower Zones of the Salave orebody. The results from metallurgical testwork to
date indicate that the Salave mineralisation is refractory and shows consistently high gold recoveries by flotation and
subsequent pressure or bio oxidation of the sulphide concentrate. The Ausenco testwork demonstrated that the Salave
ore is moderately hard with a bond work index ranging from 16.3 to 17.2 kWh/tonne, yields flotation recoveries ranging
from 96.3 to 97.8% and subsequent recovery from pressure oxidation of the gold bearing sulphide concentrate of over
98%. The resulting overall potential gold recovery is approximately 96.5%.
The Company announced the results of a Preliminary Economic Assessment (“PEA” – Effective Date January 2019) on
11 February 2019, which was based on the updated MRE completed by CSA Global in 2018. The PEA, authored by a
Madrid-based consultancy firm, CRS Ingeniería, is a key milestone on the path to development of Salave. It forms the
first step in Salave’s permitting process, presenting a new optimised process on a zero-discharge basis that minimises the
visual and surface impact of the project.
5
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
The results of this PEA underline the potential economic viability (After Tax NPV5 of US$230.0M with 25% IRR and
a Pre-tax NPV5 of US$296.2M with 28% IRR) of the current Salave resource to be mined over an initial 14-year mine
life.
The PEA concluded that Salave has the potential to produce over 1.1Moz of gold (560 kt of concentrate averaging over
59 g/t Au) over the life of mine, providing a number of marketing options for export and refining, while minimising the
need for additional plant and equipment, and hence reducing the project’s footprint.
Readers are cautioned that the PEA is preliminary in nature and includes the use of Inferred Mineral Resources which
are considered too speculative geologically to have economic considerations applied to them that would enable them to
be categorized as Mineral Reserves and there is no certainty that the results of the PEA will be realized. For full details
regarding the Salave PEA please refer to the CRS Ingeniería technical report titled “Preliminary Economic Assessment
Salave” on
the Company's announcement of
11 February 2019. The Company confirms that all material assumptions underpinning the production targets and forecast
financial information derived from the production target, as disclosed the announcement of 11 February 2019, continue
to apply and have not materially changed.
the Company’s web site, www.blackdragongold.com, and
b) Spanish Operating Environment & In-Country Management Team
The Project is in Spain, therefore, the Company is subject to governmental, political, economic, and other uncertainties,
including, but not limited to, expropriation of property, changes in mining policies or the personnel administering them.
The Company’s operations may also be adversely affected by laws and policies of Canada affecting foreign trade,
taxation and investment.
In the event of a dispute arising in connection with the Company’s operations in Spain, the Company may be subject to
the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of
the courts of Canada or enforcing Canadian judgments in such other jurisdictions. The Company may also be hindered
or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign
immunity.
Accordingly, the Company’s exploration, development and production activities in Spain could be substantially affected
by factors beyond the Company’s control, any of which could have a material adverse effect on the Company.
The Company may in the future acquire mineral properties and operations outside of Spain, which expansion may present
challenges and risks that the Company has not faced in the past, any of which could adversely affect the results of
operations and/or financial condition of the Company.
Any material adverse changes in government policies or legislation of Spain, Canada or any other country that the
Company has economic interests may affect the viability and profitability of the Company.
The Company's activities will involve mineral exploration and mining and regulatory approval of its activities may
generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and
increased expenses for, the Company's activities. The nature of the Company's business attracts a high level of public
and media interest and, in the event of any resultant adverse publicity; the Company's reputation may be harmed.
c) José Manuel Domínguez –General Manager in Spain
José Manuel Domínguez is a mining engineer with more than 30 years of experience across various projects in Spain,
Portugal and Italy, including as a general manager for Luzenac Europe (part of the Rio Tinto Group) from 1999 to 2006,
a general manager for Rio Tinto Minerals Spain (part of the Rio Tinto Group) from 2006 to 2011 and a general manager
of Imerys Talc Ital (part of the Imerys Group) from 2014 to 2016.
d) Black Dragon Gold’s Key Principles
The Company has the following key principles:
(cid:120)
(cid:120)
(cid:120)
demonstrate a commitment to health, safety, security, sustainability and environment at all locations and
maintain a safe, healthy work environment;
ensure adequate resources are allocated to health, safety, security, sustainability and environmental
performance;
comply with local laws relating to health, safety, security, sustainability and environment as well as embrace
international laws and best practice, where possible;
6
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
(cid:120)
(cid:120)
respect for human rights and social and cultural rights including the rights of indigenous and vulnerable
people; promote where possible, local communities through procurement and employment practice;
and ensure that proper management systems for health, safety, security, sustainability and environment are
in place through training, information sharing and continuous monitoring.
e) Result for FY19
During the year ended December 31, 2019 (the “current year”), the Company recorded net loss of $1,972,126 compared
to a net loss of $3,638,540 during the year ended December 31, 2018 (the “comparative year”). The significant variances
resulted from the following:
o Foreign exchange gain (loss)
During the current year, the Company incurred a $89,504 foreign exchange loss compared to a $155,601 foreign exchange
loss incurred during the comparative year. This variance related mainly to the change in the US$: CAD$ foreign exchange
rate as it affected US$-denominated liabilities and EUR: CAD$ foreign exchange rates.
o Consultants and Management fees
During the current year, the Company incurred $405,716 of consultants and management fees, compared to $516,235
during the comparative year. This variance related mainly to overall reduced corporate costs as the Company continues
its strengthening of the local Management Team in Spain.
o Exploration and evaluation costs
During the current year, the Company incurred general exploration expenses of $461,500 (2018 - $798,222) related to
the Company’s Salave Gold property. This reduced exploration and development spend is in line with the Company’s
focus on Government relations and permitting.
Exploration and Evaluation
December 31, 2019
December 31, 2018
Drilling costs
Assays and Sampling
Consultants - PEA
Consultants – Mineral Resource Estimate
Consultants – Geological and mapping database
Mining software
-
60,527
22,857
69,741
293,827
14,548
402,930
80,545
108,972
114,936
51,440
39,399
$461,500
$798,222
o Professional fees
During the current year, the Company incurred professional fees expense of $99,468 (2018 - $117,246), due to reduced
corporate related activity in the year.
o Share-based compensation
During the current year, the Company incurred share-based payments expense of $151,437 (2018 - $906,006), valued
using the Black-Scholes option pricing model, as a result of granting 1,500,000 stock options with exercise prices of
AUD$0.10 for all issued options in 2019.
Paul Cronin
Executive Director
20 May 2020
7
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
Tenement Portfolio
Black Dragon Gold owns 100% of the Salave gold deposit through its wholly owned Spanish subsidiary, EMC. The
Black Dragon Gold tenure includes five Mining Concessions and associated extensions covering 662 ha and an
Investigation Permit covering another 2,765 ha (Table 2) and (Figure 2).
An Investigation Permit gives the holder the right to carry out, within the indicated perimeter and for a specific term (a
maximum of three years), studies and work aimed at demonstrating and defining resources and the right, once defined,
to be granted a permit for mining them. The term of an Investigation Permit may be renewed by the Regional Ministry
of Economy and Employment for three years and, exceptionally, for successive periods.
A Mining Concession entitles its holder to develop resources located within the concession area, except those already
reserved by the State.
Under Spanish regulations, ownership of the land is independent of ownership of the mineral rights. CSA Global to the
extent known, is not aware of all environmental liabilities to which the property is subject. To the extent known, CSA
Global is not aware of the permits that must be acquired to conduct the work proposed for the property, and if the permits
have been obtained; and to the extent known, CSA Global is not aware of any other significant factors and risks that may
affect access, title, or the right or ability to perform work on the property.
Table 2:
Black Dragon Gold’s Concessions – Salave Gold Project, Spain
Concession/Investigation Permit name
Registration no.
Area (ha)
Date granted
Expiration date
Concessions
Dos Amigos
Salave
Figueras
Demasia
Ampliación de Figueras
Demasia
Segunda Ampliación de Figueras
Demasia
TOTAL
Investigation Permit
IP Sallave
24.371
25.380
29.500
29.969
29.820
41.99
67.98
212.02
92.55
10.99
68.85
100.04
67.55
661.97
10 Sep 1941
10 Apr 1945
10 Oct 2045
10 Oct 2045
25 Jan 1977
25 Jan 2037
9 Nov 1988
9 Nov 2048
16 Sep 1981
16 Sep 2041
30.812
2,765
18 Feb 2014
14 Nov 2021
Figure 2: Tenement and drill-hole location plan
8
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
Competent Persons Statement
The Technical Information disclosed in this Annual Report has been reviewed and approved by Douglas Turnbull,
P.Geo., a Qualified Person as defined under National Instrument 43-101 and a Competent Person for the purposes of
JORC 2012. Mr Turnbull is a Professional Geologist and a member of the Engineers and Geoscientists of British
Columbia. Mr Turnbull is a consultant to Black Dragon, and has sufficient experience relevant to the style of
mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent
Person as defined in the 2012 Edition of the “Australian Code of Reporting of Exploration Results, Mineral Resources
and Ore Reserves”. Mr Turnbull consents to the inclusion in this report of the matters based on that information in the
form and context in which it appears.
Key Performance Indicators
The near term and primary performance indicators for Black Dragon are related to its exploration activities and
include:
(i) Efficiently managing the exploration programme and increasing the current mineralised footprint and
increasing Black Dragon’s current JORC resource base;
(ii) Advancing the permitting status on a pathway towards exploitation;
(iii) Continued exploration on nearby prospects to define further drill targets with the intent of making
additional mineral discoveries, and;
(iv) Progressing the technical study elements for Salave, culminating in publishing a Pre-Feasibility study and
making progress towards future Feasibility Studies.
Chairman’s Update
Corporate Strategy
The 2019 strategic plan focused on creating shareholder value through fast tracking the progress of the Salave asset to
production. Before assuming management of the Company, previous management had identified the construction
permitting issues and the existing RMB debt as the sole restraints on the realization of the asset’s significant value.
Previous management resolved the RMB debt by renegotiating an option to repurchase the US$10 million facility for
US$3 million plus certain other consideration. Management’s strategy for the construction approval was on clearing
adversarial legal proceedings to allow the Company to reset the relationships with the relevant authorities and
stakeholders. All proceedings have now been concluded with the final proceedings being dismissed by the Superior Court
of Justice of Asturias during 2017.
On January 23, 2018 the Company announced that it had commenced a 2,200m exploration drilling program on the
Salave Gold Deposit (“Salave” or “Salave Project”) in Asturias, Spain, following the receipt of approval from the
Asturias Ministry of Employment, Industry & Tourism, as well as the Municipality of Tapia de Casariego. This drilling
program was completed in April of 2018, totalling 2,217 metres and results were released on September 24, 2018.
The previous NI 43-101 Mineral Resource Estimate for the Salave Project (Amended Technical Report with effective
date of October 7, 2016) defined measured and indicated resources totalling 6.52Mt grading 4.51 g/t Au containing
944,000 ounces of gold using a 2.0 g/t cut-off grade. This MRE identified sub-vertical structures which require further
understanding and definition. The 2018 drilling program was designed to accomplish the following:
(cid:120) Confirm the orientation of higher-grade gold mineralisation intersected in numerous drill-holes during
previous diamond drilling programs.
(cid:120) Provide information on the orientation of structures that potentially control the orientation of gold
mineralisation at Salave.
(cid:120)
(cid:120)
(cid:120)
confirm the gold tenor and intersection lengths of previous diamond drill-holes.
provide additional samples for metallurgical test work optimisation studies; and
provide additional structural and geotechnical data for ongoing project development studies.
9
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
The program pushed deeper into the Salave Lower Zone with depths reaching 350m from surface (vertical), but with
holes angled between 65° and 75°. Two drill rigs were mobilised to the Salave project in the spring of 2018 and all holes
were drilled from two locations, minimising surface disturbance, and reducing the time required to complete the program.
The results of this program have been released to the market (April 5, September 10 and September 24, 2018) and a new
MRE has been prepared by CSA Global and released on October 25, 2018. The updated MRE (Table 1) represents a 28%
increase in Measured and Indicated Resource ounces, and a 228% increase in Inferred Resource ounces.
The resource cut-off grade of 2.0 g/t Au was chosen to capture mineralisation that is potentially amenable to underground
mining, sulphide concentration, and gold recovery using off-site processing. This cut-off grade was selected based on a
gold price of US$1,300/ounce, a gold recovery of 92%, a mining cost of US$50/tonne, a processing cost of US$18/tonne,
and a G&A cost of US$6/tonne. The reported resources occur in bodies of sufficient size and continuity to meet the
requirement of having reasonable prospects for eventual economic extraction. Due to the necessity to maintain a surficial
crown pillar in a potential underground operation, all material from the present surface to a depth of 40 m is not included
in the Salave MRE.
Additionally, the Company is in the process of defining an extensive exploration program across its concessions in
Asturias with the aim to identify other high priority drill targets along the granodiorite alteration zones to the east, west
and south of the current Salave deposit where historical soil and rock chips samples identified anomalous high-grade
gold mineralisation.
On February 11, 2019 the Company announced the positive results of the Preliminary Economic Assessment (“PEA”)
completed on its 100% owned Salave Gold based on the recently completed Mineral Resource Estimate completed by
CSA Global. This document will form the basis of the Environmental Impact Assessment to be made to the government
of Asturias in 2020.
On February 18, 2019 the Company announced that the Company's common shares without par value (the "Shares") will
be voluntarily delisted from the TSX Venture Exchange (the "TSX-V") effective at the close of trading on February 28,
2019. The Shares will continue to trade on the Australian Securities Exchange (the "ASX") as CHESS Depository
Interests (or "CDIs") under the ASX Code "BDG".
In July 2019, the Company completed a 760-line kilometre, high-resolution, airborne magnetic and radiometric, survey
over the entire, 3,427ha Salave Project. The survey succeeded in enhancing Black Dragon Gold’s understanding of the
geology and identifying additional exploration targets within the Company’s investigative permit area.
Principal Risks and Uncertainties
The management of the business and the execution of the Group’s strategy are exposed it to a number of risks. These
risks are reviewed by the Board and Management with appropriate processes put in place to monitor and mitigate the
risks.
Key business risks affecting the Group are set out below.
o Exploration & Development
The Concessions and the Investigation Permit are at various stages of exploration and development. Potential investors
should understand that mineral exploration and development are high-risk undertakings. There can be no assurance that
exploration and development of these permits and concessions, or any other permits or concessions that may be acquired
in the future, will result in the discovery of further mineral deposits.
Even if an apparently viable deposit is identified, such as the Mineral Resource at the Project, there is no guarantee that
it can be economically exploited.
o Future funding needs
The Company has no operating revenue and is unlikely to generate any operating revenue unless and until production
commences at the Project. The future capital requirements of the Company will depend on many factors including its
business development activities. The Company believes its available cash and the net proceeds of the Public Offer on
August 29, 2018 should be adequate to fund its business development activities, exploration program and other Company
objectives in the short term.
10
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Strategic Report
o Spain in-country risks
The Project is located in Spain. As such, the Company is subject to governmental, political, economic, and other
uncertainties, including, but not limited to, expropriation of property, changes in mining policies or the personnel
administering them. The Company’s operations may also be adversely affected by laws and policies of Canada affecting
foreign trade, taxation and investment. In the event of a dispute arising in connection with the Company’s operations in
Spain, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting
foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions.
The Company may also be hindered or prevented from enforcing its rights with respect to a governmental instrumentality
because of the doctrine of sovereign immunity. Accordingly, the Company’s exploration, development and production
activities in Spain could be substantially affected by factors beyond the Company’s control, any of which could have a
material adverse effect on the Company.
The Company may in the future acquire mineral properties and operations outside of Spain and Canada, which expansion
may present challenges and risks that the Company has not faced in the past, any of which could adversely affect the
results of operations and/or financial condition of the Company.
o Operational risks
The future exploration and development activities of the Company may be affected by a range of factors, including
geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical
difficulties, industrial and environmental accidents, native title process, changing government regulations and many other
factors beyond the control of the Company.
Further to the above, the future development of mining operations at the Project (or any future projects that the Company
may acquire an interest in) is dependent on a number of factors and avoiding various risks, including, but not limited to
mechanical failure of operating plant and equipment, unexpected shortages or increases in the price of consumables,
spare parts and plant and equipment, cost overruns, risk of access to the required level of funding and contracting risk
from third parties providing essential services.
In addition, the construction of any proposed development may exceed the expected timeframe or cost for a variety of
reasons out of the Company’s control. Any delays to project development could adversely affect the Company’s
operations and financial results and may require the Company to raise further funds to complete the project development
and commence operations.
o Environmental risk
The Company’s activities are subject to the environmental laws inherent in the mining industry and those specific to
Spain. The Company intends to conduct its activities in an environmentally responsible manner and in compliance with
all applicable laws. However, the Company may be the subject of accidents or unforeseen circumstances that could
subject the Company to extensive liability.
o Commodity & Currency Exchange prices
To the extent the Company is involved in mineral production the revenue derived through the sale of commodities may
expose the potential income of the Company to commodity price and exchange rate risks. The prices of gold, and other
minerals fluctuate widely and are affected by numerous factors beyond the control of the Company, such as industrial
and retail supply and demand, exchange rates, inflation rates, changes in global economies, confidence in the global
monetary system, forward sales of metals by producers and speculators as well as other global or regional political, social
or economic events. Future serious price declines in the market values of gold, and other minerals could cause the
development of, and eventually the commercial production from, the Company’s projects and the Company’s other
properties to be rendered uneconomic.
Jonathan Battershill
Chairman
20 May 2020
11
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors’
Directors and Key Management
Jonathan Battershill – Non-Executive Chairman
Mr. Battershill graduated with a Bachelor of Engineering (Geology) degree (Hons) from the Camborne School of Mines,
United Kingdom in 1995. His career spans over 20 years in mining, business development and finance both in Australia
and internationally. His industry experience includes senior operational and business development roles with WMC
Resources Limited as well as significant stockbroking experience at Hartleys, Citigroup and UBS both in Sydney and
London. Mr. Battershill was consistently voted one of the leading mining analysts in Australia between 2009 and 2015
by global institutional investors and, until mid-2017, was the Global Mining Strategist (Executive Director) with the
UBS investment bank in London.
Mr. Battershill is currently the Principal of JJB Advisory Limited, a private advisory and consulting firm based in the
UK and also serves as a Non-Executive Director of ASX listed Silver Mines Limited.
Paul Cronin - Executive Director
Paul Cronin is a unique resource finance specialist, with significant experience in equity, debt and mergers and
acquisitions within the sector. As CEO of ASX listed Anatolia Energy, Mr. Cronin oversaw two successful and
oversubscribed capital raisings, steering the company to be one of the best performing uranium stocks globally during
his time with the company, and prior to its sale at a significant premium to its market capitalisation. Prior to Anatolia,
Mr. Cronin was Vice President at the highly regarded resource fund, RMB Resources where he originated, structured
and managed several debt and equity investments on behalf of the fund. Mr. Cronin has a B.Com and an MBA. Mr.
Cronin has 10 years of commodity trading and structuring experience and 6 years of equity trading and fund management
experience. His direct exposure to the junior resource sector as both a fund manager and CEO gives him an invaluable
insight into the inner workings of capital markets serving that industry.
Mr. Cronin is also Managing Director and CEO of ASX listed Adriatic Metals plc and Non-Executive Director of TSX
listed Global Atomic Corporation.
Richard Monti – Non-Executive Director
Richard Monti has had a 30-year career in the international mineral resource industry resulting in broad knowledge and
resulting strategic planning capabilities. First-hand working knowledge of all aspects of the industry from project
generation through exploration, resource, feasibility, construction, operations, finance, marketing and divestment. He
has worked in diverse countries and has had exposure to most commodities including nickel, iron ore, coal, industrial
minerals, potash, gold and base metals. He has had 45 director-years’ experience on thirteen ASX and TSX listed
companies covering exploration and mining activities.
His directorships roles include four as Chairman and sitting on numerous sub-committees. Mr. Monti was a principal
of Ventnor Capital from 2005 to 2010, a corporate advisory business supplying advice across the commercial and
corporate spectrum to junior- and mid-size companies.
Mr. Monti is currently Chairman of ASX listed Zinc of Ireland NL.
Alberto Lavandeira – Non-Executive Director
Alberto Lavandeira has over 38 years’ experience operating and developing mining projects. Former Chief Executive
Officer, President and COO of Rio Narcea Gold Mines (1995-2007), which built three mines including Aguablanca.
Director of Samref Overseas S.A (2007-2014) – involved in the development of the Mutanda Copper-Cobalt Mine in the
DRC.
Mr. Lavandeira is currently Chief Executive Officer and Managing Director of AIM and TSX listed Atalaya Mining plc.
12
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors’
Additional Key Management Personnel
Sean Duffy – Chief Financial Officer and Company Secretary (Joint)
Sean Duffy has more than 20 years of international finance experience in the mining industry, previously with Asian
Mineral Resources where he served as CFO for the TSXV-listed nickel mining company. Previously, Mr. Duffy was at
Anglo Asian Mining Plc where he served as CFO and Company Secretary of the AIM-listed gold mining company and
has held senior finance roles at BHP Billiton’s global operations, where he oversaw the corporate integration of the
company’s US$9bn acquisition of Western Mining Corporation, and as Finance Director of BHP Billiton Indonesia,
where he was responsible for all aspects of finance and admin, IT, procurement and logistics.
José Manuel Domínguez –General Manager in Spain
José Manuel Domínguez is a mining engineer with more than 30 years of experience across various projects in Spain,
Portugal and Italy, including as a general manager for Luzenac Europe (part of the Rio Tinto Group) from 1999 to 2006,
a general manager for Rio Tinto Minerals Spain (part of the Rio Tinto Group) from 2006 to 2011 and a general manager
of Imerys Talc Ital (part of the Imerys Group) from 2014 to 2016.
Gabriel Chiappini – Company Secretary (Joint)
Mr. Chiappini is an experienced ASX director and has been active in the capital markets for 17 years. He has assisted in
raising AUD$450m and has provided investment and divestment guidance to a number of companies and has been
involved with 10 ASX IPO’s in the last 12 years. He is a member of the AICD and CA ANZ. Mr. Chiappini is a Non-
Executive Director of Black Rock Mining Limited (ASX:BKT), Invictus Energy Limited (ASX:IVZ) and Eneabba Gas
Limited (ASX:ENB).
Company Directory
Black Dragon Gold Corp. (the “Company”) was incorporated under the laws of the Province of British Columbia,
Canada on August 20, 2007 and is classified as a junior mining issuer with the Australian Securities Exchange
(“ASX”) and as a Canadian non venture issuer.
Black Dragon Gold Corporation is incorporated in British Columbia, company incorporation number BC0800267
Black Dragon Gold Corporation is a Registered Foreign Company in Australia: ARBN 625522250
Directors
Jonathan Battershill (Non-Executive Chairman)
Paul Cronin (Executive Director)
Richard Monti (Non-Executive Director)
Alberto Lavandeira (Non-Executive Director)
Joint Company Secretaries
Sean Duffy (UK based)
Gabriel Chiappini (Australian based)
Canadian Registered Office
1000 Cathedral Place, 925 West Georgia Street, Vancouver, BC V6C 3L2. Email: info@blackdragongold.com
United Kingdom Office
Ground Floor, Regent House, 65 Rodney Road, Cheltenham, Gloucestershire, GL50 1HX U.K. Phone: +44 0207 993 4077
Australian Registered Office
13
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors’
Ground Floor, 24 Outram Street, West Perth, WA 6005.Australia Phone: + 61 8 6102 5055
Auditor
Davidson & Company LLP, Chartered Professional Accountants, 1200-609 Granville Street, P.O. Box 10372, Pacific
Centre, Vancouver, B.C V7Y 1G6
Stock Exchange Listing
Australian Securities Exchange (Code: BDG)
Australian Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace, Perth WA 6000
T: 1300 787 272
F: (08) 9323 2033
E: web.queries@computershare.com.au
Canadian Share Registry
Computershare Investor Services Inc. 510 Burrard St, Vancouver, BC, V6C 3B
Website
www.blackdragongold.com
14
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors’
Directors’ Report
The Directors present their annual report with the statutory financial statements of the Group for the year ended
December 31, 2019.
This report should be read in conjunction with the Strategic Report on pages 3 to 14.
1. Board of Directors and Officers of the company
The names of the Directors who held office during the financial year and to the date of this report were:
Director Name
Position
Jonathan Battershill
Non-Executive Chairman
Paul Cronin
Richard Monti
Executive Director
Non-Executive Director
Alberto Lavandeira
Non-Executive Director
Appointed
10 July 2017
10 July 2017
10 July 2017
10 July 2017
The joint company secretaries are Sean Duffy and Gabriel Chiappini.
2. Results
The Group realised a loss after tax for the year of CAD$1,972,126 (2018 loss of CAD$3,638,540).
3. Going Concern
The Group incurred a loss of CAD$1,972,126 (31 December 2018: CAD$3,638,540) in the period however the Group
also had a net asset position at the balance sheet date.
The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends
upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively
targeting sources of additional financing through alliances with financial, exploration and mining entities, or other
business and financial transactions which would assure continuation of the Company’s operations and exploration
programs. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company
is solely dependent upon its ability to generate such financing. These material uncertainties may cast significant doubt
upon the Company’s ability to continue as a going concern. There can be no assurance that the Company will be able
to continue to raise funds, in which case the Company may be unable to meet its obligations. Should the Company be
unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its
assets may be materially less than the amounts recorded in the financial statements.
The consolidated financial statements for the year ended December 31, 2019 do not include any adjustments relating to
the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary
should the Company be unable to continue in existence.
4. Dividend
The Directors do not recommend the payment of a final dividend for the year ended 31 December 2019 (2018: $nil).
15
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors’
5. Directors’ indemnity insurance
The Company has arranged appropriate Directors’ and Officers’ insurance to indemnify the Directors against liability
in respect of proceedings brought about by third parties. Such provisions remain in place at the date of this report.
6. Auditor
Davidson & Company LLP, Chartered Professional Accountants have been appointed as auditors of Black Dragon
Gold Corp. and at the Company’s Annual General Meeting Davidson & Company LLP, Chartered Professional
Accountants will be proposed for re- appointment.
7. Financial risk management objectives
The Group’s financial risk management objectives and policies and exposures to risk are outlined in Note 10 to the
financial statements.
8. Rounding of amounts and presentational Currency
Amounts in the Directors Report and the accompanying financial report have been rounded to the nearest thousand
dollars, or in certain cases to the nearest dollar, unless otherwise expressly stated. The Group financial statements
are presented in Canadian Dollars (“CAD$”) which is the Group’s presentational currency.
On behalf of the Board
Jonathan Battershill
Chairman
20 May 2020
16
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors’
Corporate Governance Statement
The Board of Directors of Black Dragon Gold is responsible for establishing the corporate governance
framework of the group having regard to the ASX Corporate Governance Council published guidelines. The
Board guides and monitors the business and affairs of the group on behalf of the shareholders by whom they
are elected and to whom they are accountable. The Board has adopted a corporate governance manual, based
upon ASX Corporate Governance Council’s Principles and Recommendations – 4th Edition. The board
considers the Corporate Governance Manual to be suitable for the Company, given the size, history and current
strategy of the Company.
The Company’s Corporate Governance Manual together with the Appendix 4G ‘Key to Disclosures Corporate
Governance Council Principles and Recommendations’, have been approved by the Board and can be located
on the Company’s website at https://www.blackdragongold.com/downloads/corp-governance-files-/bdg-
corporate-governance-manual-final-2020.pdf
Remuneration policy for Executives and Management
Given the size of the company, the Articles, and the board structure at 31 December 2019; the company had
not established a separate Remuneration and Nominations Committee with relevant matters being considered
by the full Board of the Company.
The Directors have responsibility for the appointment and performance assessment of the Chief Executive
Officer and Chief Financial Officer, Company Secretary, other senior executives and terms and conditions
including remuneration and approving the Company’s remuneration and rewards framework. When
considering the remuneration policy for the Company’s Executives and Management the Board will consider
performance and achievement in line with the Company’s objectives and to ensure the interests of shareholders
and stakeholders are enhanced. The Board will perform an annual review to ensure a strong link between
performance and reward is made and will form part of the annual remuneration review.
Share options
The Company has adopted a company share option plan (Plan). The Plan forms what the Board considers to be
an important element of the Company’s total remuneration strategy for its officers and staff.
Remuneration policy for Non-Executive Directors
The Directors have responsibility to review, monitor and make recommendations to the Board regarding the
orientation and education of directors which includes an annual review of the directors’ compensation program.
The Company Articles provide that each Director is entitled to such remuneration from the Company as the
Directors decide. The remuneration of the Non- Executive Directors must not be increased except pursuant to
a resolution passed at a general meeting of the Company where notice of the proposed increase has been given
to Shareholders in the notice convening the meeting.
17
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors
The remuneration of the Non-Executive Directors is determined by the Board as a whole, based on a review of current
practices in other equivalent companies. The Non-Executive Directors each have service agreements that are reviewed
annually by the Board.
Directors’ remuneration (audited)
The Company paid the following remuneration to each Non-Executive Director:
2019
Jonathan Battershill
Richard Monti
Alberto Lavandeira
TOTAL
Salary/Fee
CAD$
84,388
50,633
50,633
185,654
Long term benefit
CAD$
-
-
-
-
Total
CAD$
84,388
50,633
50,633
185,654
The annual Directors fees payable by the Company is as follows:
Jonathan Battershill
Paul Cronin – Executive Director
Richard Monti
Alberto Lavandeira
Total
Salary/Fee
GBP£
50,000
75,000
30,000
30,000
185,000
Related Party Note – Director Advisor Fees
The Company has entered into a consultancy agreement with Paul Cronin and Swellcap Limited (Cronin Agreement). Under
the Cronin Agreement, Mr. Cronin is engaged by the Company to provide consultancy services to the Company as chief
executive officer, commencing from the date the Company’s closes a capital raising of C$8,500,000. On 4 July 2017, the
Company filed a news release on the TSX-V disclosing that it had successfully closed a private placement to raise
C$8,500,000. The total consultancy fee payable to Mr. Cronin for the consultancy services is £150,000 per annum plus a
further £10,000 for Administration Services provided by other employees of Swellcap Limited. £20,000 is payable in respect
of office facilities for use by the Company.
The Company will also reimburse Mr. Cronin for reasonable expenses necessarily incurred by him in the performance of
the consultancy services. Mr. Cronin will report to the Board in relation to his engagement and the provision of the CEO
consultancy services, which include managing the business of the Company, implementing strategy and managing
operational functions of the Company in the role of CEO and as directed by the Board. Mr. Cronin may terminate the Cronin
Agreement without cause by providing 3 months written notice to the Company. The Company may terminate the Cronin
Agreement immediately with cause or by providing 6 months written notice without cause.
In the event the Company is the subject of a change of control transaction, Mr. Cronin is entitled to receive a transaction
bonus equal to £150,000.
The board of Black Dragon Gold resolved to amend the role of Paul Cronin from Managing Director to Executive Director,
and in recognition of this transfer of responsibility reduce the cash fees paid by 50% effective 1 July 2019. Mr Cronin will
remain the senior executive at Black Dragon.
18
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors
Directors’ Share options
In addition to the fees above, the Company has issued the following options to Directors.
of
Name
Director
Non-Executive
and Executive
Options
granted
Jonathan Battershill
1,583,333
Total
options
vested as
at 1
January
2019
950,000
Options
vesting
in the
year
Total options
vested as at
31 December
2019
Exercise
price
Date of
expiry
633,333
1,583,333
CAD$0.24
24/9/2027
Paul Cronin –
Executive Director
2,633,333
1,580,000
1,053,333
2,633,333
CAD$0.24
24/9/2027
Richard Monti
666,666
400,000
266,666
666,666
CAD$0.24
24/9/2027
Alberto Lavandeira
1,100,000
660,000
440,000
1,100,000
CAD $0.24
24/9/2027
Directors’ interests
The Directors’ interests in shares and other securities in Black Dragon Gold are set out below:
Non-Executive Director
Jonathan Battershill
Paul Cronin(i)
Richard Monti
Alberto Lavandeira
Number of ordinary Shares
(CDI’s)
31 December
Number of options
31 December 2019
1,099,140
2,087,326
749,636
491,303
1,583,333
2,633,333
666,666
1,100,000
(i) Paul Cronin – was appointed as Executive director on 1 July 2019
19
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors
Directors Responsibilities Statement
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) and
applicable Canadian Company law. Under company law the directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss
of the Group for that year. In preparing these financial statements, the directors are required to:
(cid:120)
select suitable accounting policies and then apply them consistently;
(cid:120) make judgements and estimates that are reasonable and prudent;
(cid:120)
(cid:120)
state whether applicable International Financial Reporting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's
and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group. They are
also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors confirm that:
(cid:401)
(cid:401)
so far as each director is aware, there is no relevant audit information of which the company’s auditor is
unaware; and
the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware
of any relevant audit information and to establish that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in Canada governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
On behalf of the Board
Jonathan Battershill
Chairman
20 May 2020
20
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED
DECEMBER 31, 2019 AND 2018
21
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
Report of the Directors
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Black
Dragon Gold Corp.
Opinion
We have audited the accompanying consolidated financial statements of Black Dragon Gold Corp. (the “Company”), which
comprise the consolidated statements of financial position as at December 31, 2019 and the consolidated statements of
operations and comprehensive loss, changes in shareholders’ equity and cash flows for the years then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
Company as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards (“IFRS”).
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 Consolidated 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 consolidated 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 in our audit is sufficient and appropriate to provide a basis
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has not achieved
profitable operations and has accumulated losses since inception. The Company may be required to delay discretionary
expenditures if additional financing cannot be obtained on reasonable term. As stated in Note 1, these events and conditions
indicate 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 obtained at the date of this auditor's report includes
Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
22
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, 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 Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated 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 the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated 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 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 consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
(cid:120)
Identify and assess the risks of material misstatement of the consolidated 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.
(cid:120)
(cid:120)
(cid:120) 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 consolidated 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 consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
(cid:120)
(cid:120) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Company to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
23
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 Dylan Connelly.
Vancouver, Canada
May 20, 2020
“DAVIDSON & COMPANY LLP”
Chartered Professional Accountants
24
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian dollars)
AS AT
ASSETS
Current
Cash and cash equivalents
Receivables
Prepaid expenses
Deposits
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities
Interest payable
Shareholders' equity
Share capital
Warrants
Reserves
Deficit
Notes
December 31,
2019
December 31,
2018
3,9
$ 1,761,658 $ 3,582,261
224,226
422
3,806,909
100,792
-
1,862,450
1,240
1,240
$ 1,863,690 $ 3,808,149
5,9
7
$
364,520 $
-
493,625
43,426
364,520
537,051
7
7
7
23,165,446
4,724,574
5,909,006
(32,299,856)
23,116,685
4,724,574
5,757,569
(30,327,730)
Total shareholders’ equity
1,499,170
3,271,098
Total liabilities and shareholders’ equity
$ 1,863,690 $ 3,808,149
Nature and continuance of operations (Note 1)
Subsequent events (Note 14)
These consolidated financial statements were approved for issue by the Board of Directors on 27th March, 2020
and are signed on its behalf by:
/s/ Paul Cronin
Paul Cronin
Director
/s/ Richard Monti
Richard Monti
Director
The accompanying notes are an integral part of these consolidated financial statements.
25
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in Canadian dollars)
YEARS ENDED
Notes
December 31,
2019
December 31,
2018
EXPENSES
Consulting
Depreciation
Directors’ fees
Filing fees
Foreign exchange Loss
General and administrative
Exploration and evaluation costs
Management fees
Professional fees
Shareholder communication
Share-based compensation
Transfer agent
Travel and related
Loss before other items
OTHER ITEMS
Interest and accretion expense
Interest Income
Settlement of RMB royalty
Gain on settlement of debt
Other income
Loss and comprehensive loss for the year
Basic loss per common share
Diluted loss per common share
Weighted average number of common
shares outstanding – basic and diluted
9
9
9
9
9
7, 9
6
7, 9
7
7
$
236,744 $
-
185,654
21,920
89,504
509,394
461,500
168,972
99,468
23,288
151,437
14,742
56,374
135,206
685
190,435
13,310
155,601
578,665
798,222
381,029
117,246
7,773
906,006
29,443
48,127
(2,018,997)
(3,361,748)
-
24,705
-
21,952
214
(18,546)
11,765
(576,051)
-
306,040
46,871
(276,792)
$ (1,972,126) $ (3,638,540)
$
$
(0.02)
$
(0.02) $
(0.04)
(0.04)
90,892,206
90,812,051
The accompanying notes are an integral part of these consolidated financial statements.
26
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
YEARS ENDED
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year
Items not affecting cash:
Depreciation
Interest and accretion expense
Share-based compensation
Interest received on GIC
Gain on settlement of debt
Shares issued for directors services
Change in non-cash working capital items
Increase (decrease) in receivables
Increase in prepaid expenses
Decrease in accounts payable and accrued liabilities
December 31,
2019
December 31,
2018
$ (1,972,126)
$ (3,638,540)
-
-
151,437
(24,705)
(21,952)
48,761
685
46,603
906,006
(9,114)
-
-
123,434
422
(150,579)
(154,274)
8,732
(308,232)
Net cash used in operating activities
(1,845,308)
(3,148,134)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest received on GIC
Shares and units issued for cash, net
Net cash provided by financing activities
Change in cash and cash equivalents during the year
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Cash paid during the year for interest
Cash paid during the year for taxes
Supplemental disclosure with respect to cash flows (Note 8)
24,705
-
9,114
4,968,060
24,705
4,977,174
(1,820,603)
1,829,040
3,582,261
1,753,221
$ 1,761,658
$ 3,582,261
$
$
-
-
-
-
The accompanying notes are an integral part of these consolidated financial statements.
27
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Expressed in Canadian dollars)
Share Capital
Equity Portion
of Convertible
Number
Amount
Warrants
Debenture
Reserves
Deficit
Total
Balance, December 31, 2017
78,862,741
$ 19,695,960
$ 3,164,574
$
15,388
$ 4,629,463
$ (26,689,190)
$ 816,195
Shares issued for cash
Finders’ fees and capital costs- cash
Finders’ fees – ASX CDI’s (shares)
Finders’ fees – ASX options
Shares issued for convertible debentures
Conversion of convertible debt
Residual value of warrants
Share-based compensation
Loss for the year
30,000,000
-
483,333
-
1,515,151
-
-
-
-
5,727,541
(759,481)
-
(222,100)
219,377
15,388
(1,560,000)
-
-
-
-
-
-
1,560,000
-
-
Balance, December 31, 2018
110,861,225
$ 23,116,685
$ 4,724,574
$
-
-
-
-
-
(15,388)
-
-
-
-
-
-
222,100
-
-
-
-
-
-
906,006
-
-
(3,638,540)
5,727,541
(759,481)
-
-
219,377
-
-
906,006
(3,638,540)
$
5,757,569
$ (30,327,730)
$ 3,271,098
Share Capital
Equity Portion
of Convertible
Number
Amount
Warrants
Debenture
Reserves
Deficit
Total
Balance, December 31, 2018
110,861,225
$ 23,116,685
$ 4,724,574
$
Shares issued for Directors services
Share-based compensation
Loss for the year
696,589
-
-
48,761
-
-
-
-
-
Balance, December 31, 2019
111,557,814
$ 23,165,446
$ 4,724,574
$
-
-
-
-
-
$ 5,757,569
$ (30,327,730)
$ 3,271,098
-
151,437
-
-
-
(1,972,126)
48,761
151,437
(1,972,126)
$
5,909,006
$ (32,299,856)
$ 1,499,170
The accompanying notes are an integral part of these consolidated financial statements
28
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
1.
NATURE OF OPERATIONS AND GOING CONCERN
Black Dragon Gold Corp. (the “Company”) was incorporated under the laws of the Province of British Columbia on
August 20, 2007, and is classified as a junior mining issuer with the Australian Securities Exchange (the “ASX”). On
February 28, 2019, the Company voluntarily delisted from the TSX Venture Exchange (“TSX-V”) and continued to
trade on the ASX. The Company’s head office address is Ground Floor, Regent House, Rodney Road, Cheltenham,
Gloucestershire, GL50 1HX, U.K. The registered and records office address is 1000 Cathedral Place, 925 West
Georgia Street, Vancouver, BC V6C 3L2.
These consolidated financial statements have been prepared assuming the Company will continue on a going-concern
basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern
depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is
actively targeting sources of additional financing through alliances with financial, exploration and mining entities, or
other business and financial transactions which would assure continuation of the Company’s operations and
exploration programs. In order for the Company to meet its liabilities as they come due and to continue its operations,
the Company is solely dependent upon its ability to generate such financing. These material uncertainties may cast
significant doubt upon the Company’s ability to continue as a going concern.
There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may
be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in
the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded
in these financial statements.
The consolidated financial statements for the year ended December 31, 2019 do not include any adjustments relating
to the recoverability and classification of recorded asset amounts and classification of liabilities that might be
necessary should the Company be unable to continue in existence.
On May 1, 2018, the Company completed a consolidation of its issued and outstanding common shares on the basis
of three (3) pre-consolidation common shares, options and warrants to one (1) post consolidation common share,
option and warrant (the “Share Consolidation”). The Share Consolidation has been presented throughout the
consolidated financial statements retroactively and all equity related issuances are presented on a post consolidation
basis.
2.
SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These consolidated financial statements for the year ended December 31, 2019 are prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”).
The preparation of consolidated financial statements requires the use of certain critical accounting estimates and the
exercise of management’s judgment in applying the Company’s accounting policies. Areas involving a high degree of
judgment or complexity and areas where assumptions and estimates are significant to the Company’s consolidated
financial statements are discussed below.
The Company’s consolidated financial statements for the year ended December 31, 2019 have been prepared on a
historical cost basis except for certain financial instruments measured at fair value. In addition, these consolidated
financial statements have been prepared using the accrual basis of accounting except for cash flow information.
29
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of estimates
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and
liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions.
The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income
in the period of the change, if the change affects that period only, or in the period of the change and future periods, if
the change affects both.
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:
Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions
requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the
grant. This estimate also requires determining the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield and making assumptions about them. The Company
also makes estimates as to when performance conditions for stock options will be met.
The determination of whether or not the achievement of performance milestones for stock options likely requires
management to consider factors such as the likelihood of an employee or consultant remaining with the Company
until requisite performance is achieved as well as external factors such as government regulations, financial market
developments and industry trends which influence the milestones. Additionally, factors internal to the Company, such
as the financial and strategic support for the achievement of the milestone must be considered. This determination is
subject to significant judgment and changes to any of these factors or management’s interpretation thereof, may result
in expenses being recognized or previously recognized expense being reversed. The assumptions and models used for
estimating fair value for share-based payment transactions are discussed in Note 7.
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries,
including Exploraciones Mineras del Cantabrico S.L. (“EMC”). EMC is a mining company in Asturias, Spain. All
inter-company transactions and accounts have been eliminated upon consolidation.
Exploration and evaluation assets
Before legal rights to explore a property have been acquired, costs are expensed as incurred. Costs related to the
acquisition of exploration and evaluation assets are capitalized by property. If commercially profitable ore reserves
are developed, capitalized costs of the related property are reclassified as mining assets and depreciated using the unit
of production method. If, after management review, it is determined that capitalized acquisition costs are not
recoverable over the estimated economic life of the property, the property is abandoned or management deems there
to be an impairment in value, the property is written down to its net realizable value.
30
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Exploration and evaluation assets (continued)
Costs related to the exploration and evaluation of mineral properties are recognized in profit or loss as incurred.
Exploration expenditures are the costs of exploring for mineral resources other than those occurring at existing
operations and projects and comprise geological and geophysical studies, exploratory drilling, and sampling and
resource development. Evaluation expenditures include the cost of conceptual and feasibility studies and evaluation
of mineral resources at existing operations. When a decision is taken that a mining project is technically feasible and
commercially viable, subsequent directly attributable expenditures are considered development expenditure and are
capitalized within property, plant and equipment or mineral properties. If a property does not prove economically
recoverable or technically feasible, all irrecoverable costs associated with the project, net of any previous impairment
provisions, are written off.
Any option payments received by the Company from third parties or tax credits refunded to the Company are credited
to the capitalized cost of the mineral interest. If payments received exceed the capitalized cost of the mineral interest,
the excess is recognized as income in the year received.
The amounts shown for exploration and evaluation assets do not necessarily represent present or future values. Their
recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to
obtain the necessary financing to complete the exploration and evaluation and future profitable production or proceeds
from the disposition thereof.
Impairment of non-financial assets
At each reporting date the carrying amounts of the Company’s long-lived non-financial assets, which are comprised
of property, plant and equipment, and exploration and evaluation assets, are reviewed to determine whether there is
any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value
less costs to sell and value in use, which is the present value of future cash flows expected to be derived from the asset
or its related cash generating unit. For purposes of impairment testing, assets are grouped at the lowest levels that
generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups
of assets (the “cash generating unit”).
If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the
carrying amount of the associated assets are reduced to their recoverable amount and the impairment loss is recognized
in profit or loss for the year.
Impairment losses recognized in prior years are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment charge is reversed through profit or loss only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of any applicable
depreciation, if no impairment loss had been recognized.
Decommissioning provisions
The Company recognizes the fair value of a liability for a decommissioning provision in the year in which it is incurred
when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased
by the same amount as the liability. The Company does not have any decommissioning provisions as at December 31,
2019 and 2018.
31
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
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 in equity. Current tax expense is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with
regards to previous years.
Deferred tax is recorded by providing for temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are
not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect
neither accounting or taxable loss; and differences relating to investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner
of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively
enacted at the statement of financial position date.
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.
Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability
to pay the related dividend. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set
off 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.
Loss per share
Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders by the
weighted average number of shares outstanding during the reporting year. Diluted earnings (loss) per share is
computed similar to basic earnings (loss) per share except that the weighted average shares outstanding are increased
to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of
additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the
proceeds from such exercises were used to acquire common stock at the average market price during the reporting
years.
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. Common shares issued for consideration other than cash, are
valued based on their trading value at the date the shares are issued.
The Company uses the residual value method with respect to the measurement of shares and warrants issued as private
placement units. The residual value method first allocates value to the more easily measurable component based on
fair value and then the residual value, if any, to the less easily measurable component. The Company considers the
fair value of common shares issued in a unit private placement to be the more easily measurable component. The
balance, if any, is allocated to the attached warrants, except where there is a related flow-through share premium, as
detailed in the next paragraph. Any fair value attributed to the warrants is recorded as reserves.
32
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Share-based compensation
Stock options and direct awards of stock granted to employees and other providing similar services are measured at
fair value on the date of grant and is recognized as an expense with a corresponding increase in reserves as the options
vest. Fair value is determined using the Black Scholes option pricing model taking into the terms and conditions upon
which the options were granted. The amount recognized as an expense is adjusted to reflect the actual number of share
options expected to vest. Each tranche in an award with graded vesting is considered a separate grant with a different
vesting date and fair value.
Options granted to non-employees are measured at their fair value of goods or series received, unless that fair value
cannot be estimated reliably, in which case the fair value of the equity instruments issued is used. The value of the
goods or services is recorded at the earlier of the vesting date, or the date the goods or services are received.
Consideration paid for the shares on the exercise of stock options is credited to share capital.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less
from the acquisition date that are subject to an insignificant risk of changes in their fair value.
Foreign currency translation
The functional currency is the currency of the primary economic environment in which the entity operates and has
been determined for each entity within the Company. The functional currency for the Company and its subsidiaries is
the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration
factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.
Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the
transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are
denominated in foreign currencies are translated at the rate of exchange at the financial position reporting date.
Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the
transactions. Exchange gains and losses arising on translation are reflected in profit or loss for the period.
Financial instruments
Classification
Financial assets are classified at initial recognition as either: measured at amortized cost, FVTPL or fair value through
other comprehensive income ("FVOCI"). The classification depends on the Company’s business model for managing
the financial assets and the contractual cash flow characteristics. For assets measured at fair value, gains and losses
will either be recorded in profit or loss or OCI.
Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated.
Instead, the hybrid financial instrument as a whole is assessed for classification.
Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL or the Company
has opted to measure at FVTPL.
33
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments (Continued)
Measurement
Financial assets and liabilities at FVTPL are initially recognized at fair value and transaction costs are expensed in the
consolidated statement of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes
in the fair value of the financial assets or liabilities held at FVTPL are included in the consolidated statement of loss
and comprehensive loss in the period in which they arise. Where the Company has opted to designate a financial
liability at FVTPL, any changes associated with the Company's credit risk will be recognized in OCI.
Financial assets and liabilities at amortized cost are initially recognized at fair value, and subsequently carried at
amortized cost less any impairment.
Impairment
The Company assesses on a forward looking basis the expected credit losses ("ECL") associated with financial assets
measured at amortized cost, contract assets and debt instruments carried at FVOCI. The impairment methodology
applied depends on whether there has been a significant increase in credit risk.
New accounting standards and interpretations adopted during the year
As at the date of these financial statements, the following standards have been applied in these financial statements:
(i)
(ii)
IFRS 16 – New standard to establish principles for recognition, measurement, presentation and
disclosure of leases with an impact on lessee accounting, effective for annual periods beginning on
or after January 1, 2019.
IFRIC 23 - New standard sets out how to determine the accounting tax position when there is
uncertainty over income tax treatments. IFRIC 23 requires an entity to determine whether uncertain
tax positions are assessed separately or as a group; and assess whether it is probable that a tax
authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its
income tax filings. IFRIC 23 is effective for annual periods beginning on or after January 1, 2019.
The adoption of the above standards did not have an impact on the consolidated financial statements of the Company.
3.
RECEIVABLES
Related party receivable (Note 9)
Value-added tax receivable
GST receivable
Total
December 31,
2019
$
6,315
85,126
9,351
December 31,
2018
-
172,068
52,158
$
$
$
100,792
$
224,226
34
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
4.
EXPLORATION AND EVALUATION ASSETS
Salave Gold Property
The Salave Project is comprised of 30-year-term mining concessions over the resource area. On January 23, 2018 the
Company announced that it had commenced an exploration drilling program on the Salave Gold Deposit (“Salave” or
“Salave Project”) in Asturias, Spain, following the receipt of approval from the Asturias Ministry of Employment,
Industry & Tourism, as well as the Municipality of Tapia de Casariego. This drilling program was completed in April
of 2018.
A Preliminary Economic Assessment of the Salave project was performed in 2018 and on February 11, 2019 the
Company announced results of the PEA. The PEA is based on the recently completed Mineral Resource Estimate
completed by CSA Global.
Although the Company has taken steps to verify title to its mineral property in which it has an interest, these procedures
do not guarantee the Company’s title. Its property may be subject to prior agreements or transfers and title may be
affected by undetected defects. Further, we make judgements for properties where concessions terms have expired,
and a renewal application has been made and is awaiting approval. We use judgement as to whether the concession
renewal application is probable to be received, but ultimately this is beyond our control. If a renewal application is not
approved, we could lose rights to those concession.
5.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payables
Accrued liabilities
Due to related parties (Note 9)
Total
2019
113,529
187,255
63,736
364,520
$
$
2018
237,976
180,855
74,794
493,625
$
$
6.
CONVERTIBLE DEBENTURE AND LOAN FACILITY
Convertible Debenture:
During April 2017, the Company issued unsecured convertible debentures with a total principal amount of $251,000,
bearing interest at the rate of 15% per annum. The debentures matured and be repayable on or before April 18, 2019.
The debentures are convertible into common shares of the Company at a conversion price $0.165 per share until April
18, 2018, and $0.30 per share thereafter until April 18, 2019. For each $1,000 in principal amount of debentures, 6,060
common share purchase warrants were issued. Each warrant entitles the holder to acquire one additional common
share of the Company at a price of $0.33 per common share for a period of 24 months. If, during this 24-month period,
the volume-weighted average price of the Company’s common shares is at least $0.66 for a period of seven consecutive
trading days, the Company may, at its option, accelerate the expiry date of the warrants by issuing a news release or
giving written notice thereof to all holders of the warrants, and, in such case, the warrants will expire on the earlier of:
(i) the 30th day after the date on which the news release or written notice is provided by the Company; and
(ii) the original expiry date. In connection with the issuance of the debentures, the holders thereof will be granted a
right to nominate a member for election to the Company's board of directors at any meeting of shareholders where
directors are to be elected, provided such nominee is acceptable to regulatory authorities, for so long as the debentures
are outstanding.
Pursuant to a service agreement dated July 11, 2016, and previously approved by the TSX-V, Lionsbridge Capital Pty.
Ltd., a company owned and controlled by Brian S. Wesson, former chief executive officer, B. Clyde Wesson, former
chief operating officer, and Amelia Wesson, former vice-president, received a finder's fee of 190,151 common shares,
valued at $25,671, in connection with the closing of the debentures.
35
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
6.
CONVERTIBLE DEBENTURE AND LOAN FACILITY (Continued)
On May 2, 2018 the unsecured convertible debentures were converted into common shares of the Company at a post
share consolidation share price of $0.165 for 1,515,151 ordinary shares.
As at December 31, 2019, the Company has no accrued interest payable in connection with the convertible debenture
(2018 - $43,426).
Loan receivable:
In June 2013, the Company, through their subsidiary, EMC, closed an agreement for a $10,000,000 loan facility
(“Facility”) to be provided by RMB Australia Holdings Limited (“RMB”), the lender. On August 8, 2013, the Facility
was amended to convert all amounts owing and future borrowings from Canadian dollars to US dollars. Previously
drawn Canadian dollar amounts were converted to their US dollar equivalents. The total value of the loan facility
available to the Company was converted to US$10,000,000. During the year ended December 31, 2019 and 2018, the
Company recorded $nil in interest expense.
On July 6, 2017, the Company settled the RMB loan facility, including accrued interest, for cash consideration of
$4,493,966 and the granting by the Company to RMB of a 2% net smelter return (“NSR”) royalty on the first 800,000
ounces of gold production from the Salave property.
On 4 October 2018 the Company entered into an agreement with RMB to buy out the 2% NSR on the first 800,000
ounces of production at a buy-out fee of $576k (US$447k) (paid).
7.
SHARE CAPITAL AND RESERVES
Authorized:
Unlimited number of common shares without par value.
Issued - 2019 transactions
On November 20, the Company issued 696,589 shares valued at $0.07 per share to settle outstanding director fees.
The shares had a fair value of $48,761, which resulted with a gain on settlement of debt of $21,952 (Note 9).
Issued - 2018 transactions
On May 1, 2018, the Company completed a consolidation of its issued and outstanding common shares on the basis
of three (3) pre-consolidation common shares, options and warrants to one (1) post consolidation common share,
option and warrant (the “Share Consolidation”). Prior to the Share Consolidation, the Company had 236,588,374
Shares issued and outstanding. Following the Share Consolidation, the Company had 78,862,741 Shares issued and
outstanding. The Share Consolidation has been presented throughout the consolidated financial statements
retroactively.
On May 2, 2018 the unsecured convertible debentures were converted into common shares of the Company at a post
share consolidation share price of $0.165 for 1,515,151 ordinary shares.
On August 22, 2018 the Company issued 30,000,000 CHESS Depository Interests (“CDI’s”) in conjunction with an
Initial Public Offering (“Prospectus Offering”) on the Australian Securities Exchange (“ASX”) for gross proceeds of
AUD$6,000,000 ($5,727,541). Each CDI unit is comprised of one common share and one option warrant for every 2
CDI units issued at a share price of AUD$0.33 ($0.31), expiring on August 22, 2019. A residual value of $1,560,000
was allocated to the warrants. The value attributed to the warrants was based on the residual method, which values the
common shares at fair value, with the remaining amount of the proceeds being allocated to the warrants.
Finders fees and listing costs paid in conjunction with the Prospectus Offering were comprised of cash payments
totalling $759,481, the issuance of 483,333 CDI’s valued at $92,493 and the issuance of 6,075,000 share purchase
warrants valued at $222,100 exercisable for one year, all with the same terms as those attached to the unit warrants.
36
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
7.
SHARE CAPITAL AND RESERVES Continued)
Warrants
A summary of the number of common shares reserved pursuant to the Company’s warrants outstanding as at December
31, 2019 and 31 December 2018, is as follows:
Outstanding, December 31, 2017
Issued
Expired
Outstanding, December 31, 2018
Expired
Outstanding, December 31, 2019
Weighted
Average
Exercise
Price
Number
of Warrants
$
65,636,353
15,000,000
(4,740,864)
75,895,489
(73,228,823)
$
0.34
0.32
0.24
0.34
0.34
2,666,666
$
0.33
A summary of the number of common shares reserved pursuant to the Company’s warrants outstanding as at
December 31, 2019 is as follows:
Expiry date
June 29, 2021
Total
Stock options
Number
Exercise Price
2,666,666
2,666,666
0.33
0.33
The Company has a stock option plan under which it is authorized to grant options to directors, employees and
consultants, to acquire up to 10% of the issued and outstanding common stock. The exercise price of each option is
based on the market price of the Company’s stock at the date of grant. The options can be granted for a maximum
term of 10 years and vest as determined by the board of directors.
37
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
7.
SHARE CAPITAL AND RESERVES (continued)
Stock options (Continued)
A summary of the status of the Company’s stock options as at December 31, 2019 and 2018 is as follows:
Outstanding, December 31, 2017
Granted
Expired
Outstanding, December 31, 2018
Granted
Expired
Outstanding, December 31, 2019
Weighted
Average
Exercise
Price
0.25
0.32
1.20
0.28
0.10
0.32
0.22
Number
of Options
6,660,000
6,408,333
(66,667)
13,001,666
1,500,000
(6,268,334)
8,233,332
A summary of the number of common shares reserved pursuant to the Company’s options outstanding as at
December 31, 2019 is as follows:
Expiry Date
September 24, 2027
October 22, 2027
August 29, 2023
September 18, 2022
Total
Number of Options
Exercise Price
Number of Options
exercisable
5,983,333
416,666
333,333
1,500,000
8,233,332
$0.24
$0.24
$0.33
$0.10
$0.22
5,983,333
416,666
333,333
1,500,000
8,233,332
During the year ended December 31, 2019, the Company recognized $151,437 (2018 - $906,006) of share-based
compensation expense.
2019 transactions
On September 18, 2019, the Company granted 1,500,000 stock options to directors, officers, and consultants of the
Company. The options are exercisable for a period of three years at a price of $0.10 per share. The options vested
immediately upon grant and were valued at $41,627 which is included in share-based compensation at December 31,
2019 and were valued using the Black-Scholes option pricing model with the following weighted average assumptions:
Stock price
Risk-free interest rate
Expected volatility
Expected life (years)
Expected dividend
$0.07
1.54%
73.82%
3
nil
38
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
7.
SHARE CAPITAL AND RESERVES (continued)
Stock options (Continued)
2018 transactions
On February 7, 2018, the Company granted 333,333 stock options to an officer of the Company exercisable at a price
of $0.33 per share. These options vest upon achievement of certain performance conditions and expire at the earlier
of: i) five years from the date each milestone is obtained, or ii) ten years from the date of grant being February 7, 2028.
100% will vest upon commencement of the trading of the Company's shares on the Australian Stock Exchange and be
exercisable at a price of $0.33 per share.
On August 29, 2018 Finders fees and listing costs paid in conjunction with the Prospectus Offering were the issuance
of 6,075,000 share options valued at $222,100 exercisable for one year, at a share price of AUD$0.33 (CAD $0.31),
expiring on August 29, 2019.
8.
SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
During the years ended December 31, 2019 and 2018, the Company incurred the following non-cash transactions that
are not reflected in the statements of cash flows:
Allocation of equity portion of convertible debt
Residual value of unit warrants
Shares issued for convertible debt
Options issued as finders fees
Shares issued as finders fees
$
$
$
$
$
2019
-
-
-
-
-
2018
15,388
1,560,000
219,377
222,100
92,493
$
$
$
$
$
Cash and cash equivalents consists of $1,756,124 (2018 - $785,320) of cash and $5,534 (2018 - $2,796,941) in cash
equivalents.
9.
RELATED PARTY TRANSACTIONS
The Company considers personnel with the authority and responsibility for planning, directing and controlling the
activities of the Company to be key management personnel.
Transactions with key management personnel
The following amounts were incurred with respect to the President and Chief Executive Officer, Directors, the
Chief Operating Officer and the Chief Financial Officer of the Company:
Management fees – current Chief Executive Officer
Directors’ fees – current directors
Management fees – current Chief Financial Officer
Wages and salary
Consulting fees – current Chief Executive Officer
Administrative fees – current Chief Executive Officer
Share-based compensation
2019
50,776
185,654
118,196
93,786
201,545
-
133,529
783,486
$
$
2018
258,882
190,435
122,147
-
-
52,178
840,142
1,463,784
$
$
39
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
9.
RELATED PARTY TRANSACTIONS (Continued)
As at December 31, 2019, included in accounts payable and accrued liabilities is $116,706 (2018 - $74,794) that is
due to directors, officers and companies controlled by directors or officers or a former director or officer of the
Company.
As at December 31, 2019, included in accounts receivable is $6,315 (2018 - $nil) that is due to an officer of the
Company.
During the year ended December 31, 2019, the Company issued 696,589 shares valued at $0.07 per share to settle
outstanding director fees. The shares had a fair value of $48,761, which resulted with a gain on settlement of debt of
$21,952.
10.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Fair value
The inputs used in making fair value measurements are classified within a hierarchy that prioritizes their significance.
The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or
indirectly; and
Level 3 – Inputs that are not based on observable market data.
The carrying value of receivables and accounts payable and accrued liabilities and interest payable approximated their
fair value because of the short-term nature of these instruments. Cash and cash equivalents are measured at fair value
using Level 1 inputs.
Financial instruments measured at fair value on the consolidated statements of financial position are summarized in
levels of fair value hierarchy as follows:
Assets
Level 1
Level 2
Level 3
Total
Cash and cash equivalents
$ 1,761,658
$
-
$
-
$
1,761,658
The Company has exposure to the following risks from its use of financial instruments:
Credit risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfil its payment obligations. The Company’s
cash and cash equivalents are held at large financial institutions and it believes it has no significant credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will not meet its financial obligations as they fall due. The Company
manages its liquidity risk by forecasting cash flows from operations and anticipating investing and financing activities.
As at December 31, 2019, the Company had current assets of $1,862,450 to settle current liabilities of
$364,520 which either have contractual maturities of less than 30 days and are subject to normal trade terms or are
due on demand.
40
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
10.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)
Market risk
Market risk is the risk of loss that may arise from changes in market factors, such as interest rates and foreign exchange
rates.
a) Interest rate risk
Interest rate risk is the risk due to variability of interest rates. The Company is exposed to interest rate risk on its bank
account. The income earned on the bank account is subject to the movements in interest rates. The Company has cash
balances and no-interest bearing debt, therefore, interest rate risk is nominal.
b) Foreign currency risk
The Company’s functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars.
The Company funds certain operations, exploration and administrative expenses in Spain by using Euros converted
from its Canadian bank accounts. Management believes the foreign exchange risk derived from currency conversions
is negligible and therefore does not hedge its foreign exchange risk. Based on the Company’s Euro denominated
financial instruments at December 31, 2019, a 10% change in exchange rates between the Canadian dollar and the
Euro would result in a change of $7,000 in foreign exchange gain or loss.
11.
CAPITAL MANAGEMENT
The Company’s capital structure consists of shareholders’ equity. The Company’s objective when managing capital
is to maintain adequate levels of funding to support the development of its business and maintain the necessary
corporate and administrative functions to facilitate these activities. This is done primarily through equity financing,
selling assets, and incurring debt. Future financings are dependent on market conditions and there can be no assurance
the Company will be able to raise funds in the future. The Company invests all capital that is surplus to its immediate
operational needs in short-term, high liquid, high-grade financial instruments. There were no changes to the
Company’s approach to capital management during the year. The Company will need to raise additional capital by
obtaining equity financing, selling assets and incurring debt to develop its business.
13.
INCOME TAXES
A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
Income (Loss) for the year
Expected income tax recovery
Change in statutory, foreign tax, foreign exchange rates and other
Share issuance costs
Permanent differences
Adjustment to prior year tax provision versus statutory tax returns
Change in unrecognized deductible temporary differences
2019
2018
$ (1,972,126)
$ (3,638,540)
$
(532,000) $
449,000
-
41,000
175,000
(133,000)
(982,000)
(79,000)
(205,000)
245,000
(309,000)
1,330,000
Total income tax expense (recovery)
$
-
$
-
41
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
13.
INCOME TAXES (Continued)
The significant components of the Company's temporary differences and tax losses that have not been recognized on
the consolidated statements of financial position are as follows:
Temporary Differences 2019
Expiry Date
Range 2018
Expiry Date
Range
Exploration and evaluation assets
Share issue costs and other
Non-capital losses available
for future period
Note Tax balances are subject to
review and potential adjustment by
tax authorities
$ 18,462,000 No expiry date
832,000 2039 to 2042
$ 19,723,000 No expiry date
1,387,000 2039 to 2042
16,620,000 2023 to no expiry
15,372,000 2023 to no expiry
42
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
14.
SUBSEQUENT EVENT
Subsequent to December 31, 2019:
a) The Company issued 371,522 common shares pursuant to the shareholder resolutions relating
to Non-Executive Directors’ receiving common shares in lieu of cash payment to settle
outstanding director fees.
b)
In March 2020 the World Health Organization declared coronavirus COVID-19 a global
pandemic. This contagious disease outbreak, which has continued to spread, and any related
adverse public health developments, has adversely affected workforces, economies, and
financial markets globally, potentially leading to an economic downturn. It is not possible for
the Company to predict the duration or magnitude of the adverse results of the outbreak and
its effects on the Company’s business or results of operations at this time.
43
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
ASX Additional Information
Annual Mineral Resources Statement
A summary of the Company's annual review of its Mineral Resources is in the Executive Director's Review
above.
As at 31 December 2019, the Company's Mineral Resource holdings was comprised of the following. The
Company's sole project is the Salave Gold Project in Asturias, Spain:
Mineral Resource Estimate for the Salave Gold Deposit at a 2.0 g/t Au cut-off grade,
Resource Category
Tonnes (Mt)
Au grade (g/t)
Au contained metal (koz)
Measured
Indicated
Measured + Indicated
Inferred
Notes:
(cid:120) The Mineral Resource Estimate was carried out by Dmitry Pertel, MSc (Geol), MAIG, GAA of CSA Global, the
190
1,020
1,210
350
1.0
7.2
8.2
3.1
5.6
4.4
4.6
3.5
independent Qualified Person as defined by National Instrument 43-101. A copy of the technical report “Salave Gold
Project Mineral Resource Update for Black Dragon Gold Corp.” is posted on the Company’s website
www.blackdragon gold.com
(cid:120) Classification of the MRE was completed based on the guidelines presented by Canadian Institute for Mining (CIM -
May 2014), adopted for Technical reports which adhere to the regulations defined in Canadian National Instrument
43-101 (NI 43-101), and the JORC Code
(cid:120) A cut-off grade of 2 g/t Au has been applied when reporting the Mineral Resource.
(cid:120) All density values were interpolated, except CHL and SER domains where a single density value of 2.67 t/m3 was used.
(cid:120) Rows and columns may not add up exactly due to rounding.
(cid:120) Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.
(cid:120) The quantity and grade of the Inferred resources reported in this estimation are conceptual in nature and there has
been insufficient exploration to define these Inferred resources as an Indicated and Measured resource. It is uncertain
if further exploration will result in upgrading them to an Indicated or Measured category, although it is reasonably
expected that the majority of the Inferred resources could be upgraded to Indicated Mineral Resources with further
exploration.
(cid:120) The Company first reported the 2018 MRE in accordance with the JORC Code and ASX listing rule 5.8 in its ASX
announcement of 25 October 2018. The Company confirms that it is not aware of any new information or data that
materially affects the information included in the original announcement and that all material assumptions and
technical parameters underpinning the estimate in the previous announcement continue to apply and have not
materially changed.
There was no change between the Company's Mineral Resources as at 31 December 2019 against that as at
31 December 2018.
The Company has ensured that the Mineral Resources quoted are subject to thorough governance arrangements
and internal controls. The Mineral Resource estimates were prepared by independent specialist resource and
mining consulting group CSA Global. The Company understands that CSA Global is an experienced consulting
group which applies best practice in modelling and estimation methods. CSA has also undertaken reviews of the
underlying information used to generate the resource estimation. In addition, the Company’s management carries
out regular reviews and audits of internal processes and external consultants that have been engaged by the
Company.
The Annual Mineral Resources statement above is based on and fairly represents information and supporting
documentation prepared by a competent person or persons. The Annual Mineral Resource statement as a whole
has been approved by Douglas Turnbull, P. Geo. is a consultant to Black Dragon Gold and is a Professional
Geologist and a member of the Engineers and Geoscientists of British Columbia. Douglas Turnbull, has
provided prior written consent to the issue of the Annual Mineral Resource statement in the form and context in
which it appears in this annual report.
44
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
ASX Additional Information
Use of Funds Statement
The Company was admitted to the official list of ASX on 27 August 2018 ("Admission"). As part of the
Company's listing on ASX, it issued a replacement prospectus dated 23 July 2018 which disclosed the
Company's intended use of funds in the 18 month period following Admission (that is, until 27 February 2020)
("Use of Funds"). The Company raised the maximum subscription ($6 million) under its ASX IPO.
For the period commencing on Admission and ending 31 December 2019, the Company's actual expenditure has
been materially consistent with its business objectives as disclosed in the replacement prospectus. The
Company's exploration expenditure was lower than forecast in the replacement prospectus as a result of ongoing
delays in receiving the required government approvals. The risk of such delays was disclosed in the replacement
prospectus.
Corporate governance statement
The Company's corporate governance statement for the year ended 31 December 2019 is available on the
Company's website at https://www.blackdragongold.com/downloads/corp-governance-files-/bdg-corporate-governance-
manual-final-2020.pdf.
Shareholdings
The issued capital of the Company as at 4th May 2020 is 111,929,336 fully paid ordinary shares.
All issued ordinary shares carry one vote per share and carry the rights to dividends.
Distribution of Ordinary Shares
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
Unmarketable Parcels
Total holders
12
11
61
158
116
358
Units
4,157
47,076
568,770
6,846,230
95,182,161
102,648,394
Minimum $ 500.00 parcel at AUD6.5 cents per unit
7,693
Minimum Parcel Size
Holders
31
Substantial shareholders as at 4th May 2020
As at 4th May 2020 there were 4 shareholders who held a substantial shareholding within the meaning of the
Australian Corporations Act. A person has a substantial holding if the total votes that they or their associates
have relevant interests in is five per cent of more of the total number of votes.
% Units
0.00
0.05
0.55
6.67
92.73
0.00
100.00
Units
101,487
Name
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Oceanic Capital Pty Ltd
Shares
8,110,821
7,784,101
7,697,933
7,154,167
% of issued capital
7.25 %
6.95 %
6.88 %
6.39 %
45
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
ASX Additional Information
Top 20 Shareholders as at 4th May 2020
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
J P Morgan Nominees Australia Pty Limited
Hsbc Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Oceanic Capital Pty Ltd
Panterra Gold Technologies Pty Ltd
Zenix Nominees Pty Ltd
Redland Plains Pty Ltd
Buprestid Pty Ltd
Wymond Investments Pty Ltd
Mr Barry Francis Cronin + Mrs Kerry Anne Cronin
Deutsche Balaton Aktiengesellschaft
Swellcap Limited
Dixson Trust Pty Limited
Sorbie Bornholm Lp
Hsbc Custody Nominees (Australia) Limited
Invia Custodian Pty Limited
Mr Owen Barry Merrett + Mrs Joanne Ross Merrett
Awd Consultants Pty Ltd
Redland Plains Pty Ltd
Caves Road Investments Pty Ltd
Total
Shares
8,110,821
7,784,101
7,697,933
7,154,167
3,666,666
3,370,329
3,194,421
3,000,000
2,518,333
2,401,112
2,000,000
1,957,372
1,883,333
1,613,765
1,501,666
1,333,333
1,268,333
1,100,000
1,097,754
1,023,333
63,676,772
% Shares
7.25
6.95
6.88
6.39
3.28
3.01
2.85
2.68
2.25
2.15
1.79
1.75
1.68
1.44
1.34
1.19
1.13
0.98
0.98
0.91
56.89%
Unquoted Securities
Total Unquoted Options
Total number of holders
of Unquoted Options
Significant Option Holders
Name
Jonathan Battershill
Paul Cronin
Alberto Lavandeira
Richard Monti
Total Unquoted Warrants expiring 29 June 2021
Total number of holders of Unquoted Warrants
6,733,331
7
Number of Options
1,583,333
2,633,333
1,100,000
666,666
3,857,932
5
46
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2019
ASX Additional Information
Voting Rights
The Company is incorporated under the legal jurisdiction of British Columbia, Canada. To enable companies such
as the Company to have their securities cleared and settled electronically through CHESS, Depositary Instruments
called CHESS Depositary Interests (CDIs) are issued. Each CDI represents one underlying ordinary share in the
Company (Share). The main difference between holding CDIs and Shares is that CDI holders hold the beneficial
ownership in the Shares instead of legal title. CHESS Depositary Nominees Pty Limited (CDN), a subsidiary of
ASX, holds the legal title to the underlying Shares.
Pursuant to the ASX Settlement Operating Rules, CDI holders receive all of the economic benefits of actual
ownership of the underlying Shares. CDIs are traded in a manner similar to shares of Australian companies listed
on ASX.
CDIs will be held in uncertificated form and settled/transferred through CHESS. No share certificates will be
issued to CDI holders. Each CDI is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
If holders of CDls wish to attend and vote at the Company's general meetings, they will be able to do so. Under
the ASX Listing Rules and the ASX Settlement Operating Rules, the Company as an issuer of CDls must allow
CDI holders to attend any meeting of the holders of Shares unless relevant English law at the time of the meeting
prevents CDI holders from attending those meetings.
In order to vote at such meetings, CDI holders have the following options:
(i)
instructing CDN, as the legal owner, to vote the Shares underlying their CDls in a particular manner. A
voting instruction form will be sent to CDI holders with the notice of meeting or proxy statement for the
meeting and this must be completed and returned to the Company's Share Registry prior to the meeting;
or
(ii) informing the Company that they wish to nominate themselves or another person to be appointed as
CDN's proxy with respect to their Shares underlying the CDls for the purposes of attending and voting at
the general meeting; or
(iii) converting their CDls into a holding of Shares and voting these at the meeting (however, if thereafter the
former CDI holder wishes to sell their investment on ASX it would be necessary to convert the Shares
back to CDls). In order to vote in person, the conversion must be completed prior to the record date for
the meeting. See above for further information regarding the conversion process.
As holders of CDls will not appear on the Company's share register as the legal holders of the Shares, they will
not be entitled to vote at Shareholder meetings unless one of the above steps is undertaken.
As each CDI represents one Share, a CDI Holder will be entitled to one vote for every CDl they hold.
Proxy forms, CDI voting instruction forms and details of these alternatives will be included in each notice of
meeting sent to CDI holders by the Company.
These voting rights exist only under the ASX Settlement Operating Rules, rather than under British Columbia
Law. Since CDN is the legal holder of the applicable Shares and the holders of CDIs are not themselves the legal
holder of their applicable Shares, the holders of CDls do not have any directly enforceable rights under the
Company’s articles of association.
As holders of CDIs will not appear on our share register as the legal holders of shares of ordinary shares they will
not be entitled to vote at our shareholder meetings unless one of the above steps is undertaken.
47