ANNUAL REPORT
FOR THE YEAR ENDED
31 DECEMBER 2021
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
Contents Page
Page
Strategic Report
3
2021 Highlights & Recent Developments
3
Managing Director’s Review
4
Tenement Portfolio & Competent Persons Report
8/9
Chairman’s Update
10
Report of the Directors
12
Directors & Key Management
12
Company Directory
14
Directors Report
15
Corporate Governance Statement
17
Directors' Responsibilities Statement
19
Audited Consolidated Financial Statements
21
Independent Auditor's Report to the Members of Black Dragon Gold Corp.
22
Consolidated Statement of Financial Position
25
Consolidated Statement of Operations &Comprehensive Loss
26
Consolidated Statement of Changes of Cash Flows
27
Consolidated Statement of Changes in Shareholders’ Equity
28
Notes to the Consolidated & Company financial statements
29
ASX Additional Information
43
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
3
Report of the Directors
2021 Highlights
Black Dragon Gold Corporation (Black Dragon or the Company) is the 100% owner of one of the largest undeveloped
gold projects in Europe. The Salave project has a Mineral Resource Estimate of 1.56m ounces of gold grading at
4.45 grams per tonne at a cut-off grade of 2 grams per tonne.
Mineral Resource Classification
Million
Tonnes
Au
Grade
Million
Ounces of
Gold
Measured
1.03
5.59g/t
0.19
Indicated
7.18
4.43g/t
1.02
Total Mineral Resource
Measured & Indicated
8.21
4.57g/t
1.21
Inferred
3.12
3.47g/t
0.35
During financial year 2021 (FY21) Black Dragon continued to progress the permitting and development of the Salave
Gold Project in Northern Spain in the province of Asturias. Despite the continued challenges of the COVID-19
pandemic during FY21 and our patient and respectful progression of our permitting programme, the company was
able to achieve the filing milestones in FY21:
(i) Salave Environmental Impact Assessment Submitted: In July 2021, Black Dragon announced that
its Spanish subsidiary, Exploraciones Mineras del Cantábrico (EMC) submitted the Environmental
Impact Assessment (EIA) to the Asturian Ministry of Mines. This was a significant milestone for the
Company and was the culmination of substantial work by the Black Dragon team involving the re-
modelling of the mine plan and environmental studies which resulted the Company submitting a best
practice EIA. Following the submission of the EIA, Black Dragon has been working closely with
Government of the Principality of Asturias in Spain to manage and work through the public consultation
period.
The consultative dialogue allows the Company to address or clarify points raised by the local community
and stakeholders about the proposed development of the Project. Following the consultation period,
EMC will seek the final environmental approval for the commencement of construction at Salave.
(ii) Funding & Shareholder Securities Plan: In Q4-FY21 the Company launched a funding round
comprising of:
•
Placement for AUD$2.4m
•
Securities Purchase Plan (SPP) AUD$1.1m
The placement was well supported by key shareholders including Paul Cronin (Chairman) and
substantial shareholders, Deutsche Balaton Aktiengesellschaft and David Michael. The SPP was well
supported by the Company’s shareholders with a total of AUD$1.1m raised. The securities were issued
at AUD$0.056 per share with each placement and SPP participant receiving one attaching unlisted
option for every two SPP CDIs issued, with each option having an exercise price of $0.10, expiring 31
December 2023. Securities issued for the funding round noted below:
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
4
Shares
Options
Placement
33,035,730
16,517,862
SPP
19,696,414
9,848,195
Total
52,732,144
26,366,057
The Q4-FY21 funding round has set the company up to continue advancing the 1m+/oz Salave Gold Project
including finalising the Environmental Impact Assessment approval by the Government of the Principality of
Asturias in Spain andin addition, Black Dragon will initiate its Salave Gold Project Pre-Feasibility Study. In
parallel the Company will be reviewing new opportunities in the precious and base metals’ segments with a bias
towards an Australian project.
Recent Developments
Subsequent to 31 December 2021, effective 1 March 2022 and as announced to the ASX on 3 March 2022, Mr Paul
Cronin was appointed Non-Executive Chairman replacing Mr Jonathan Battershill. As part of this restructure Mr
Paul Cronin relinquished his Executive Director role and Mr Gabriel Chiappini was appointed Chief Executive
Officer.
On 18 March 2022, Mr Gabriel Chiappini was appointed Managing Director and Mr Jonathan Battershill resigned as
a director of the Company.
Subsequent to 31 December 2021 and as announced to the ASX on 18 November 2021, the Company issued
19,696,414 CDIs at an issue price of AUD$0.056 to raise AUD$1,102,999 under the Company’s securities purchase
plan with theCDIs being allotted on 14 January 2022. As part of the issue, the Company also issued on a 1-for-2
basis a total of 9,848,195 unlisted options with an exercise price of $0.10, expiring 31 December 2023. The Company
issued 10,357,142 CDIs at an issue price of AUD$0.056 to raise AUD$580,000 under the placement announced in
November 2021. These CDIs were subject to shareholder approval at an EGM held on 12 January 2022 as they were
issued to directors Mr Paul Cronin (AUD$500,000) and Mr Alberto Lavandeira (AUD$80,000). In accordance with
the terms of the placement and the shareholder EGM, the Company also issued to the directors as approved by
shareholders on a 1-for-2 basis a total of 5,178,570 unlisted options with an exercise price of $0.10, expiring 31
December 2023. The director securities were issued on the same terms & conditions as the placement and SPP
participants.
Managing Director’s Review
Having just been appointed the Company’s Managing Director during March 2022, I gratefully accepted the
challenge and the privilege of leading Black Dragon’s strategic drive to develop the Salave Gold Project. Having
recently been the Company’s Chief Financial Officer and Company Secretary, I saw first-hand how committed and
determined both the board and management are in de-risking and progressing the project.
As noted earlier in this report, we have been frustrated with the prolonged period that our permitting programme is
taking and the COVID global pandemic has not helped. We are working towards having the Salave Gold Project
Environmental Impact Assessment approved and continuing our respectful and patient collaboration with the
Government of the Principality of Asturias and Spanish Government to finalise the remaining approvals to allow the
Company to develop the Salave Gold project.
a) Salave Gold Project
The Company’s tenure includes five Mining Concessions and associated extensions covering 662 ha and an
Investigation Permit covering another 2,765 ha – refer table 2 on page 8. Within the concession boundaries, the
Company owns 109,753 m2 of freehold land over the surface mineralization.
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
5
The project has had some €55 million spent on its development and resource definition. A prominent geophysical
anomaly coincident with favourable geology, alteration and mineralization 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 2018 Mineral Resource Estimate (“MRE”) has been reported and classified as Measured, Indicated and Inferred
in accordance with CIM Definition Standards (May, 2014) 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
1.0
5.6
190
Indicated
7.2
4.4
1,020
Measured + Indicated
8.2
4.6
1,210
Inferred
3.1
3.5
350
Notes:
•
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." with an effective date of October 31, 2018, is posted on
the Company’s website www.blackdragongold.com
•
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
(NI43- 101), and the JORC Code
•
A cut-off grade of 2 g/t Au has been applied when reporting the Mineral Resource.
•
All density values were interpolated, except CHL and SER domains where a single density value of 2.67 t/m3 was used.
•
Rows and columns may not add up exactly due to rounding.
•
Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.
•
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.
•
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 mineralization 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.
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
6
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 mineralization 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%.
During FY21 the Company’s focus was on finalizing and submitting the EIA and as a result there was minimal
exploration activity undertaken which resulted in a reduced expenditure outflow. Subject to permitting success and
funding the Company does intend to expand its exploration programme to identify new zones of mineralization.
b) Spanish Operating Environment & In-Country Management Team
The Salave Gold Project is in Spain and 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 judgements 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 intere st and, in the event of any resultant adverse publicity; the Company's reputation may be
harmed.
c) Jose Manuel Dominguez - General Manager in Spain
Jose Manuel Dominguez 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.
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
7
d) Black Dragon Gold’s Key Principles
The Company has the following key principles:
•
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;
•
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 FY21
During the year ended December 31, 2021 (the “current year”), the Company recorded net loss of $1,818,420
compared to a net loss of $1,184,893 during the year ended December 31, 2021 (the “comparative year”). The
significant variances resulted from the following:
•
Foreign exchange gain (loss): During the current year, the Company incurred a $120,995 foreign exchange
loss compared to a $52,793 foreign exchange gain incurred during the comparative year. This variance
related mainly to the change in the US$: CAD$ foreign exchange rate as it affected US$-denominated
liabilities and EUR: CAD$ foreign exchange rates.
•
Consultants and Management fees: During the current year, the Company incurred $270,049 of consultants
and management fees, compared to $298,674 during the comparative year. This variance related mainly to
overall increase in corporate costs as the Company continues focuses on its permitting programme.
•
Exploration and evaluation costs: During the current year, the Company incurred general exploration
expenses of $338,157 (2020 - $137,700) related to the Company’s Salave Gold property. This increased
exploration and development spend is in line with the Company’s focus on Government relations and
permitting.
Exploration and evaluation costs
December 31, 2021
December 31, 2020
Consultants - EIA, Geological compilation and GIS database
management
338,157
137,700
•
Professional fees: During the current year, the Company incurred professional fees expense of $113,370
(2020 - $133,313) with decrease due to reduced in-house work due to reduced activity resulting in more
work being outsourced.
•
Share-based compensation
During the current year, the Company incurred $90,177 share-based payments expense (2020 – NIL).
Gabriel Chiappini
Gabriel Chiappini
Managing Director
30 March 2022
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
8
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.
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
24.371
41.99
10 Sep 1941
10 Oct 2045
Salave
25.380
67.98
10 Apr 1945
10 Oct 2045
Figueras
29.500
212.02
25 Jan 1977
25 Jan 2037
Demasia
92.55
Ampliacion de Figueras
29.969
10.99
9 Nov 1988
9 Nov 2048
Demasia
68.85
Segunda Ampliacion de Figueras Demasia
29.820
100.04
67.55
16 Sep 1981
16 Sep 2041
TOTAL
661.97
Investigation Permit IP
Sallave
30.812
2,765
18 Feb 2014
Being Rolled Over
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
9
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
mineralization 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 the completion of a Definitive
Figure 2: Tenement and drill-hole location plan
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
10
Feasibility Study and Environmental and Social Impact Assessment (“ESIA”), both critical steps in making
progress towards obtaining the necessary permits required for the development of the Salave Deposit.
Chairman’s Update Corporate Strategy
As highlighted earlier in the CEO’s report, during FY21 we submitted our EIA and work collaboratively with the
Government of the Principality of Asturias in Spain. FY21 was also associated with additional delays to our
permitting programme and on continued malaise caused by the COVID-19 global pandemic.
Unfortunately, as a result we were not able to advance and accelerate the development of the Salave Gold project
according to our internal forecast. Your board remains confident and focused on being able to develop the Salace
Gold Project.
We were pleased to announce Gabriel Chiappini as our Chief Executive Officer and the board looks forward to
working with Gabriel to execute our strategic plan of permitting and developing our world class Salave Gold Project
and to lead our new ventures team in identifying a complimentary Australian exploration asset.
Gabriel has been part of the Black Dragon executive team for approximately 3 years, and clearly understands the
very real opportunity Salave presents as a world-class gold project, with ability to significantly re-rate Black Dragon
once its value is unlocked through the permitting process. We have every confidence this can be achieved, and trust
he’s the right choice to continue driving this process.
Noted below are some of the key risks & uncertainties associated with the project:
•
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.
•
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 will need to continue to raise further capital to allow the company to
develop the Salave Gold project and/or acquire further assets.
•
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 judgements
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
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
11
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.
•
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.
•
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.
• 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.
Paul Cronin
Paul Cronin
Chairman
30 March 2022
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
12
Directors & Key Management
Paul Cronin – Non-Executive Chairman
Paul Cronin is a unique resource finance specialist, with significant experience in equity, debt and mergers and
acquisitions within the sector. 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. He is currently
Managing Director & CEO of Adriatic Metals, once of the UK’s fasted growing base and precious development
companies, where he has personally overseen a paradigm shift in the manner in which junior mining companies
interface and benefit their local communities. Mr. Cronin has nearly 20 years of commodity trading, funds
management and junior mining development experience. giving him an invaluable insight into the inner workings of
capital markets serving the mining industry.
Mr. Cronin is also a Non-Executive Director of ASX listed Taruga Minerals Limited.
Alberto Lavandeira - Non-Executive Director
Alberto Lavandeira has over 43 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.
Gabriel Chiappini – Managing Director & Company Secretary
Mr Chiappini was appointed as Black Dragon’s Managing Director effective 18 March 2022. Mr Chiappini is a
Chartered Accountant and member of the Chartered Accountants Australia & New Zealand (CA ANZ) & Australian
Institute of Company Directors. Gabriel has more than 23 years’ experience working in key strategic roles including,
Executive Chairperson, Director, Chief Financial Officer and Company Secretary roles both in public and private
companies. Mr Chiappini has provided advice and services on equity raisings exceeding AU$500m and assisted his
clients with both divestment and acquisition strategies. Some of Gabriel’s ASX experience includes:
•
Founding & current Director of Black Rock Mining (ASX: BKT), a Graphite development company with
the Mahenge Graphite Project in Tanzania (current market capitalisation $200m);
•
Founding & current Director of Zimbabwean oil and gas developer, Invictus Energy Limited (ASX: IVZ –
current market capitalisation $90m);
•
Instrumental as a director of Ioneer Ltd (ASX:INR), helping with the acquisition of and development of the
Rhyolite Ridge Lithium-Boron Project in Nevada – current market capitalisation AUD$1,050m;
•
Part of the pre-IPO team to list Adriatic Metals plc (ASX:ADT) on the ASX and LSE;
•
A founding Executive Chairman of robotic solutions company FBR Limited (ASX: FBR) having taken
FBR from pre-IPO to a market value of in excess of AUD$270m;
•
Key executive at Avita Medical’s Spray on Skin Co, now quoted on NASDAQ; and
•
Former Director of Scotgold Resources Ltd (AIM:SGZ).
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
13
Additional Key Management Personnel
Jose Manuel Dominguez - General Manager in Spain
Jose Manuel Dominguez 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.
Doug Turnbull – Exploration and Technical Advisor
Mr. Turnbull is a consulting geologist with over 30 years’ experience in diamond, precious and base metal
exploration. He holds an Honours Bachelor of Science degree in Geology and is a Qualified Professional
Geoscientist recognized by the Engineers and Geoscientists of British Columbia, Canada. Mr. Turnbull has
managed or served on the boards of a number of junior exploration and mining companies with assets ranging from
early stage to advanced projects worldwide. He has played a key role on exploration teams responsible for the
exploration and development of the Eskay Creek Gold Deposit in British Columbia, Canada, the Petaquilla Cu-Au
Porphyry Deposit in Panama, the Mt. Kare Gold Deposit in Papua New Guinea and the OJVG Gold Deposits in
Senegal.
Frederic W S Bolton – Business & Project Development
Mr. Bolton is a geologist with precious and base metals experience in Australia, Indonesia and more recently, Europe.
He holds an BSc in Geology from Bristol University, an MSc in Mining Geology from Camborne School of Mines
and an MBA from Quantic School of Business & Technology. Mr Bolton works for Adriatic Metals as their Strategic
Planning Analyst (and formerly, Geologist), advancing the Vares Polymetallic Project in Bosnia. He has assisted in
raising c.US$600m for natural resource companies in London and previously worked with Bloomberg Intelligence’s
metals and mining department. He is a fellow of the Geological Society of London.
Amy Fink – Chief Financial Officer
Ms Fink was appointed as the Company’s CFO during March 2022 and is an experienced Chartered Accountant with
a professional career spanning 18 years across EY Australia, publicly listed companies, large private companies. Ms
Fink has held over her career include Financial Controller, Chief Financial Officer and Company Secretary, bringing
a strong skillset to the Company. Responsibilities have included financial compliance and reporting, company
secretarial duties, capital raisings, budgeting and forecasting, cash flow management, investor relations, executive and
board reporting, as well as external and internal auditing.
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
Paul Cronin (Non-Executive Chairman)
Alberto Lavandeira (Non-Executive Director)
Gabriel Chiappini (Managing Director)
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
14
Company Secretary
Gabriel Chiappini
Chief Financial Officer
Amy Fink
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
Level 1, 10 Outram Street, West Perth, WA 6005.
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
Company Website
ww.blackdragongold.com
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
15
Directors’ Report
The Directors present their annual report with the statutory financial statements of the Group for the year ended
December 31, 2021.
This report should be read in conjunction with the Report on pages 3 to 13.
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
Appointed
Resigned
Paul Cronin
Non-Executive Chairman
10 July 2017
-
Alberto Lavandeira
Non-Executive Director
10 July 2017
-
Gabriel Chiappini
Managing Director
18 March 2022
Jonathan Battershill
Non-Executive Director
10 July 2017
18 March 2022
Richard Monti
Non-Executive Director
10 July 2017
11 August 2021
2. Results
The Group realized a loss after tax for the year of CAD$1,818,420 (2020 loss of CAD$1,184,893).
3. Going Concern
The Group incurred a loss of CAD$1,818,420 (31 December 2020: CAD$1,184,893) in the period
however the Group had a net asset position of $1,719,659 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, 2021 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
As the company is focusing on the development of Salave Gold Project and not yet in production, the
Company is not able to declare a dividend for the year ended 31 December 2021 (2020: $nil).
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
16
5. Directors’ indemnity insurance
The Company has arranged appropriate Directors’ and Officers’ insurance to indemnify the Directors
against liability in respect of proceedings brought about by third parties. Such provisions remain in
place at the date of this report.
6. Auditor
Davidson & Company LLP, Chartered Professional Accountants have been appointed as auditors of
Black Dragon Gold Corp. and at the Company’s Annual General Meeting Davidson & Company LLP,
Chartered Professional Accountants.
7. Financial risk management objectives
The Group’s financial risk management objectives and policies and exposures to risk are outlined in
Note 9 to the financial statements.
8. Rounding of amounts and presentational Currency
Amounts in the Directors Report and the accompanying financial report have been rounded to the
nearest thousand dollars, or in certain cases to the nearest dollar, unless otherwise expressly stated.
The Group financial statements are presented in Canadian Dollars (“CAD$”) which is the Group’s
presentational currency.
On behalf of the Board
Paul Cronin
Paul Cronin
Chairman
30 March 2022
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
17
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/corpgovernance-files-
/bdg- corporategovernance-manual-final-2021.pdf
Remuneration policy for Executives and Management
Given the size of the company, the Articles, and the board structure at 31 December 2021 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 (or
CEO equivalent) 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. There were no
share options issued during the year.
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. During FY21 there were no changes to the Non-Executive
Directors’ remuneration packages or fees.
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
18
Directors’ remuneration (audited)
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.
The Company paid the following remuneration to each Non-Executive Director:
2021
Salary/Fee(ii)
Long term benefit
Total
CAD$
CAD$
CAD$
Jonathan Battershill(i)
86,231
-
86,231
Richard Monti(ii)
34,492
-
34,492
Alberto Lavandeira
51,739
-
51,739
(i)
Jonathan Battershill resigned from the board on 18 March 2022
(ii)
Richard Monti retired from the board on 11 August 2021
(iii)
50% of director fees for the period 1 January 2021 to 30 June 2021 were paid in shares in accordance with the
AGM resolutions for 2020
The annual Directors fees payable by the Company is as follows:
Salary/Fee
GBP£
Jonathan Battershill
50,000
Paul Cronin - Executive Director
75,000
Richard Monti - retired in 2021 (i)
20,000
Alberto Lavandeira
30,000
Total
175,000
(i)
Richard Monti retired from the board on 11 August 2021 (fees paid through to 31 August 2021)
TOTAL
172,462
-
172,462
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
19
Directors’ Share options
In addition to the fees above, the Company has issued the following options to Directors
Name of Director
Non-Executive and
Executive
Total options
issued & vested
as at
31 December
2020(i)
Options Granted &
Vested during 2021(ii)
Total Options
vested
as at
31 December 2021
Jonathan Battershill
633,334
1,000,000
1, 633,334
Paul Cronin
1,053,334
1,500,000
2,553,334
Alberto Lavandeira
440,000
660,000
1,100,000
Richard Monti
(retired 11 August 2021)
266,666
-
266,666
(i)
50% of options with an Exercise price of CAD$0.33 / 50% of options with an exercise price of CAD$0.45 with
expiry date of 24 September 2027
(ii) Exercise price of AUD$0.096 with expiry date of 7 September 2024
Directors’ interests
The Directors’ interests in shares and other securities in Black Dragon Gold are set out below:
Director
Number of ordinary Shares
31 December 2021
Number of options
31 December 2021
Jonathan Battershill
2,550,824
1, 633,334
Paul Cronin
3,596,856
2,553,334
Alberto Lavandeira
1,548,027
1,100,000
Richard Monti
(retired 11 August 2021)
1,794,591
266,666
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:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
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.
Black Dragon Gold Corp.
Annual report for the year ended 31 December 2021
20
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:
•
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
Paul Cronin
Paul Cronin
Chairman
30 March 2022
21
BLACK DRAGON GOLD CORP.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED
DECEMBER 31, 2021 AND 2020
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, 2021 and 2020, and the consolidated statements
of loss and comprehensive loss, cash flows, and changes in shareholders’ equity 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, 2021 and 2020, and its financial performance and its cash flows for the years 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 incurred losses
since inception. 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.
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 skepticism throughout the audit. We also:
•
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.
•
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.
•
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 group audit. We remain solely responsible for our audit opinion.
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
Chartered Professional Accountants
March 30, 2022
The accompanying notes are an integral part of these consolidated financial statements.
25
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian dollars)
AS AT
Notes
December 31,
2021
December 31,
2020
ASSETS
Current
Cash and cash equivalents
7
$2,013,952
$2,097,420
Receivables
3,8
105,639
47,967
2,119,591
2,145,387
Deposits
Total assets
1,240
1,240
$2,120,831
$2,146,627
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities
5,8
$401,172
$335,997
401,172
335,997
Shareholders' equity
Share Capital
6
26,299,071
24,661,799
Warrants
6
4,724,574
4,724,574
Reserves
6
5,999,183
5,909,006
Deficit
Total shareholders’ equity
Total liabilities and shareholders’ equity
(35,303,169)
(33,484,749)
1,719,659
1,810,630
$2,120,831
$2,146,627
Nature of operations and going concern (Note 1)
Subsequent events (Note 12)
These consolidated financial statements were approved for issue by the Board of Directors on 30 March 2022 and
are signed on its behalf by:
“Paul Cronin”
“Gabriel Chiappini”
Chairman
Managing Director
26
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in Canadian dollars)
YEARS ENDED
December 31,
December 31,
Notes
2021
2020
EXPENSES
Consulting
8
$270,049
$217,358
Directors’ fees
8
317,113
241,474
Filing fees
68,342
30,937
Foreign exchange loss (gain)
120,995
(52,793)
General and administrative
8
487,914
406,685
Exploration and evaluation costs
338,157
137,700
Management fees
8
-
81,316
Professional fees
113,370
133,313
Rent
16,789
-
Shareholder communications
21,759
24,469
Share-based compensation
6, 8
90,177
-
Transfer agent
11,825
10,998
Travel and related
8,067
5,014
Loss before other items
(1,864,557)
(1,236,471)
OTHER ITEMS
Gain (loss) on settlement of debt
6, 8
46,074
(60,881)
Interest income
63
1,992
Other income
-
110,467
46,137
51,578
Loss and comprehensive loss for the year
$(1,818,420)
($1,184,893)
Basic and diluted loss per common share
$(0.01)
$(0.01)
Number
Number
Weighted average number of common shares outstanding
-
basic and diluted
138,604,821
119,724,074
The accompanying notes are an integral part of these consolidated financial statements.
27
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
Year Ended December 31,
2021
2020
Operating activities
Loss for the year
$(1,818,420)
$(1,184,893)
Adjustments for:
Share-based compensation
90,177
-
Interest income
(63)
(1,992)
Loss (gain) on settlement of debt
(46,074)
60,881
Shares issued for directors and officer services
113,776
151,072
Changes in non-cash working capital items:
Decrease (increase) in receivables
(57,672)
52,825
Increase (decrease) in accounts payable and accrued liabilities
60,106
(89,404)
Net cash used in operating activities
(1,658,170)
(1,011,511)
Financing activities
Interest income
63
1,992
Shares issued for cash, net
1,574,639
1,345,281
Net cash provided by financing activities
1,574,702
1,347,273
Net change in cash and cash equivalents
(83,468)
335,762
Cash and cash equivalents at beginning of year
2,097,420
1,761,658
Cash and cash equivalents at end of year
$2,013,952
$2,097,420
Cash paid during the year for interest
$-
$-
Cash paid during the year for taxes
$-
$-
Supplemental disclosure with respect to cash flows (Note 7)
The accompanying notes are an integral part of these consolidated financial statements.
28
BLACK DRAGON GOLD CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Expressed in Canadian dollars)
Share Capital
Warrants
Reserves
Deficit
Total
Number
Amount
Balance, December 31, 2019
111,557,814
$23,165,446
$4,724,574
$5,909,006
$(32,299,856)
$1,499,170
Shares issued for directors and officer services
1,367,226
151,072
-
-
-
151,072
Shares issued for cash
21,428,572
1,423,137
-
-
-
1,423,137
Finders’ fees – cash
-
(77,856)
-
-
-
(77,856)
Loss for the year
-
-
-
-
(1,184,893)
(1,184,893)
Balance, December 31, 2020
134,353,612
24,661,799
$4,724,574
$5,909,006
$(33,484,749)
$1,810,630
Shares issued for directors and officer services
1,798,586
113,776
-
-
-
113,776
Shares issued for cash
33,035,730
1,685,496
-
-
-
1,685,496
Share-based compensation
-
-
-
90,177
-
90,177
Share issuance costs
-
(162,000)
-
-
-
(162,000)
Loss for the year
-
-
-
-
(1,818,420)
(1,818,420)
Balance, December 31, 2021
169,187,928
$26,299,071
$4,724,574
$5,999,183
$(35,303,169)
$1,719,659
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
29
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, 2021 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.
During the year ended December 31, 2021, COVID-19 restrictions in Spain and more specifically Asturias, have
prevented the execution and completion of certain field studies and site visits required for the completion of the
Company’s Environmental and Social Impact Assessment. Due to the impact of COVID-19 restrictions, the
operational functionality of these regulatory bodies has been impacted and many of the normal course meetings
between the government and the Company’s management have been postponed.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These consolidated financial statements for the year ended December 31, 2021 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 judgement in applying the Company’s accounting policies. Areas involving a high degree
of judgement or complexity and areas where assumptions and estimates are significant to the Company’s consolidated
financial statements are discussed below.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
30
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of presentation (continued)
The Company’s consolidated financial statements for the year ended December 31, 2021 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.
Use of estimates
The Company makes estimates and assumptions about the future that affect the reported amounts of assets and
liabilities. Estimates and judgements 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 judgement 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 6.
Income taxes
The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment
of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry
of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income, which in turn is dependent upon the successful discovery, extraction, development and
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
31
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of estimates (continued)
commercialization of mineral reserves. To the extent that management’s assessment of the Company’s ability to
utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets,
and future income tax provisions or recoveries could be affected.
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary,
Exploraciones Mineras del Cantabrico S.L. (“EMC”). EMC is a mining company in Asturias, Spain. All
intercompany 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.
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.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
32
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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, 2021 and 2020.
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.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
33
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes (continued)
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 loss per share is computed by dividing net loss available to common shareholders by the weighted average
number of shares outstanding during the reporting year. Diluted loss per share is computed similar to basic 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. Any fair value attributed to the warrants is recorded as reserves.
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.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
34
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of twelve 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 subsidiary 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, fair value through profit or
loss (“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.
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.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________________
35
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
3. RECEIVABLES
December 31,
2021
December 31,
2020
Related party receivable (Note 8)
$-
$9,400
Value-Added Tax receivable
96,326
29,906
GST receivable
9,313
8,661
Total
$105,639
$47,967
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.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
36
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
December 31,
2021
December 31,
2020
Accounts payables
$137,601
$60,250
Accrued liabilities
213,662
143,799
Due to related parties (Note 8)
49,909
131,948
Total
$401,172
$335,997
6. SHARE CAPITAL AND RESERVES
Authorized:
Unlimited number of common shares without par value.
Issued – 2021 transactions
On May 3, 2021, the Company issued 1,285,539 shares valued at $0.07 per share to settle outstanding
director fees. The shares had a fair value of $85,342, which resulted with a gain on debt settlement of
$34,799 (Note 8).
On September 22, 2021, the Company issued 513,047 shares valued at $0.06 per share to settle outstanding
director fees. The shares had a fair value of $28,434, which resulted with a gain on debt settlement of
$11,275 (Note 8).
On November 25, 2021, the Company issued 33,035,730 shares at AUD$0.056 per share for gross
proceeds of AUD$1,850,000 ($1,685,496). Share issuance costs totaled $162,000, of which $110,857
was paid and $51,143 was included in accounts payable and accrued liabilities as of December 31, 2021
(Note 7).
Issued – 2020 transactions
On February 20, 2020, the Company issued 371,522 shares valued at $0.07 per share to settle outstanding
director fees. The shares had a fair value of $26,373, which resulted with a loss on debt settlement of
$2,718 (Note 8).
On August 24, 2020, the Company issued 21,428,572 shares at AUD$0.07 per share for gross proceeds
of AUD$1,500,000 ($1,423,137). Finders fees paid were comprised of cash payments totaling $77,856.
On September 14, 2020, the Company issued 995,704 shares valued at $0.13 per share to settle
outstanding director and officer fees. The shares had a fair value of $124,699, which resulted with a loss
on debt settlement of $58,163 (Note 8).
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
37
6. SHARE CAPITAL AND RESERVES (continued)
Warrants
A summary of the number of common shares reserved pursuant to the Company’s warrants outstanding as of
December 31, 2021 and 2020 is as follows:
Number of
Warrants
Weighted
Average
Exercise
Price
Outstanding, December 31, 2019 and 2020
2,666,666
$
0.33
Expired
(2,666,666)
0.33
Outstanding, December 31, 2021
-
$
-
Stock options
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.
A summary of the status of the Company’s stock options as at December 31, 2021 and 2020 is as follows:
Number of
Options
Weighted
Average
Exercise
Price
Outstanding, December 31, 2019 and 2020
Granted
8,233,332
4,160,000
$0.22
AUD$0.096
Outstanding, December 31, 2021
12,393,332
$0.18
A summary of the number of common shares reserved pursuant to the Company’s options outstanding as at
December 31, 2021 is as follows:
Expiry Date
Number of Options
Outstanding
Exercise Price
Number of
Options
Exercisable
September 24, 2027
5,983,333
$0.24
5,983,333
October 22, 2027
416,666
$0.24
416,666
February 7, 2028
333,333
$0.33
333,333
September 18, 2022
1,500,000
$0.10
1,500,000
September 7, 2024
4,160,000
AUD$0.096
4,160,000
Total
12,393,332
$0.18
12,393,332
During the year ended December 31, 2021, the Company recognized $90,177 (2020 - $nil) of share-based
compensation expense.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
38
6. SHARE CAPITAL AND RESERVES (continued)
On September 9, 2021, the Company granted 4,160,000 stock options to officers and directors of the Company.
The options are exercisable for a period of three years at a price of AUD$0.096 ($0.09) per share. The options
vested immediately upon grant and were valued at $90,177 which is included in share-based compensation at
December 31, 2021 and were valued using the Black-Scholes option pricing model with the following weighted
average assumptions:
Stock price
$0.06
Risk-free interest rate
0.49%
Expected volatility
71.78%
Expected life (years)
3
Expected dividend
nil
7. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
Cash and cash equivalents consists of $2,008,418 (2020- $2,091,886) of cash and $5,534 (2020 - $5,534) in cash
equivalents.
Share issuance costs of $51,143 were included in accounts payable and accrued liabilities as at December 31, 2021
(2020 - $nil).
8. 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 Chief Executive Officer, Directors, and the Chief
Financial Officer of the Company:
2021
2020
Management and consulting fees – Chief Executive Officer
$-
$147,687
Directors’ fees
Management and consulting fees – current Chief Financial
Officer
317,113
124,747
241,474
71,405
Management and consulting fees – former Chief Financial
Officer
-
74,683
Wages and salary
109,944
107,334
Share-based compensation
90,177
-
Total
$641,981
$642,583
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
39
8. RELATED PARTY TRANSACTIONS (continued)
•
As at December 31, 2021, included in accounts payable and accrued liabilities for unpaid standard
directors’ fees is $49,909 (2020 - $128,390) that is due to directors, officers and companies controlled by
directors or officers.
•
As at December 31, 2021, included in accounts receivable is $Nil (2020 - $9,400) that is due from a
company with a common director and officer of the Company (Note 3).
•
On May 3, 2021, the Company issued 1,285,539 shares valued at $0.07 per share to settle outstanding
director fees. The shares had a fair value of $85,342, which resulted with a gain on debt settlement of
$34,799 (Note 6).
•
On September 22, 2021, the Company issued 513,047 shares valued at $0.06 per share to settle
outstanding director fees. The shares had a fair value of $28,434, which resulted with a gain on debt
settlement of $11,275 (Note 6).
•
During the year ended December 31, 2020, the Company issued 371,522 shares valued at $0.07 per share
to settle outstanding director fees. As part of the Company’s austerity programme, these shares were
issued to directors in lieu of director fees and were approved by shareholders at the 2020 AGM. The
shares had a fair value of $26,373, which resulted with a loss on debt settlement of $2,718.
•
During the year ended December 31, 2020, the Company issued 995,704 shares valued at $0.13 per share
to settle outstanding director and officer fees. As part of the Company’s austerity programme, these shares
were issued to directors in lieu of director fees and were approved by shareholders at the 2020 AGM.
The shares had a fair value of $124,699, which resulted with a loss on debt settlement of $58,163.
9. 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 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
$2,013,952
-
-
$2,013,952
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
40
9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)
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. The Company’s receivables are due from the Government of Canada, Government of Spain, and
a related party and are therefore considered to have 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, 2021, the Company had current assets of $2,119,591 to settle current
liabilities of $401,172 which either have contractual maturities of less than 30 days and are subject to normal
trade terms or are due on demand.
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 accounts. The income earned on the bank accounts are 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, AUD, USD, and GBP denominated financial instruments at December 31,
2021, a 10% change in exchange rates between the Canadian dollar, Euro, AUD, USD, and GBP would result
in a change of $181,382 in foreign exchange gain or loss.
10. 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.
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
41
11. INCOME TAXES
A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
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
2021
Expiry Date
Range
2020
Expiry Date
Range
Exploration and evaluation assets $18,202,000
No expiry date $ 19,741,000
No expiry date
Share issue costs and other
Non-capital losses available
$442,000
2042 to 2045 $716,000
2041 to 2044
for future period
$25,036,000 2028 to no expiry
$18,559,000 2024 to no expiry
Tax attributes are subject to review and potential adjustment by tax authorities.
12. SUBSEQUENT EVENTS
Effective 1 March 2022 and as announced to the ASX on 3 March 2022, Mr. Paul Cronin was appointed Non-
Executive Chairman replacing Mr. Jonathan Battershill. As part of this restructure, Mr. Paul Cronin relinquished
his Executive Director role and Mr. Gabriel Chiappini was appointed Chief Executive Officer.
On 18 March 2022, Mr. Gabriel Chiappini was appointed Managing Director and Mr. Jonathan Battershill resigned
as a director of the Company.
As part of Gabriel Chiappini’s Chief Executive Officer appointment in March 2022, he was issued with a long-
term incentive plan comprising of the issue of 5,000,000 performance rights that convert into ordinary shares upon
the achievement of the following share price milestone hurdles:
•
1,500,000 performance rights convert to shares upon the Company’s volume weighted average price of
shares on ASX over 20 consecutive dates on which the Company’s fully paid ordinary shares are traded
exceeding AUD$0.10;
•
1,500,000 performance rights convert to shares upon the Company’s volume weighted average price of
shares on ASX over 20 consecutive dates on which the Company’s fully paid ordinary shares are traded
exceeding AUD$0.15; and
•
2,000,000 performance rights convert to shares upon the Company’s volume weighted average price of
shares on ASX over 20 consecutive dates on which the Company’s fully paid ordinary shares are traded
exceeding AUD$0.20.
Each milestone has a 3-year milestone conversion date.
2021
2020
Loss for the year
(1,818,420)
(1,184,893)
Expected income tax recovery
(491,000)
(320,000)
Change in statutory, foreign tax, foreign exchange rates and other
577,000
(441,000)
Share issuance costs
(44,000)
(21,000)
Permanent differences
25,000
-
Adjustment to prior year tax provision versus statutory tax returns
(1,328,000)
(12,000)
Change in unrecognized deductible temporary differences
1,261,000
794,000
Total income tax expense (recovery)
-
-
BLACK DRAGON GOLD CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian dollars)
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
________________________________________________________________________________________________
42
12. SUBSEQUENT EVENTS (continued)
Subsequent to 31 December 2021 and as announced to the ASX on November 18, 2021, the Company issued
19,696,414 Chess Depositary Interests (“CDIs”) at an issue price of AUD$0.056 to raise AUD$1,102,999 under
the Company’s securities purchase plan. The CDIs were issued on 13 January 2022. As part of the issuance, the
Company also issued on a 1-for-2 basis a total of 9,848,195 unlisted options with an exercise price of $0.10,
expiring 31 December, 2023.
Subsequent to 31 December 2021 and as announced to the ASX on 18 November 2021, as part of the
AUD$1,850,000 financing (Note 6), the Company also issued on a 1-for-2 basis a total of 16,517,862 unlisted
options with an exercise price of $0.10, expiring 31 December, 2023. The options were issued on 14 January 2022.
On 24 January 2022, the Company also issued 10,357,142 CDIs at an issue price of AUD$0.056 to raise
AUD$580,000 under the placement announced in November 2021. These CDIs were subject to shareholder
approval at an EGM held on 12 January 2022 as they were issued to directors Mr. Paul Cronin (AUD$500,000)
and Mr. Alberto Lavandeira (AUD$80,000). In accordance with the terms of the placement and the shareholder
EGM, the Company also issued to the directors as approved by shareholders on a 1-for-2 basis a total of 5,178,570
unlisted options with an exercise price of $0.10, expiring 31 December 2023.
BLACK DRAGON GOLD CORP.
Annual Report 31 December 2021
ASX Additional Information
________________________________________________________________________________________________
43
Annual Mineral Resources Statement
A summary of the Company's annual review of its Mineral Resources is in the Executive Director's Review.
As at 31 December 2021, 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
Mineral Resource Classification
Million
Tonnes
Au
Grade
Million
Ounces of
Gold
Measured
1.03
5.59g/t
0.19
Indicated
7.18
4.43g/t
1.02
Inferred
3.12
3.47g/t
0.35
Total Mineral Resource
11.33
4.45g/t
1.56
Notes:
• 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. " with an effective date of October 31, 2018, is posted
on the Company’s website www.blackdragongold.com
• 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 (NI43-101), and the JORC Code
• A cut-off grade of 2 g/t Au has been applied when reporting the Mineral Resource.
• All density values were interpolated, except CHL and SER domains where a single density value of 2.67 t/m3 was
used.
• Rows and columns may not add up exactly due to rounding.
• Mineral Resources that are not Mineral Reserves have not demonstrated economic viability.
• 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.
• 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 2020 against that as at 31 December
2021.
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.
BLACK DRAGON GOLD CORP.
Annual Report 31 December 2021
ASX Additional Information
________________________________________________________________________________________________
44
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., a consultant to Black Dragon Gold, 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.
Please refer to competent person’s statement on page 9 of this annual report.
Corporate governance statement
The Company's corporate governance statement for the year ended 31 December 2021 is available on the Company's
website at https://www.blackdragongold.com/downloads/corp-govemance-files-/bdg-corporategovemance-
manualfinal-2021.pdf.
Shareholdings
The issued capital of the Company as at 11 March 2022 was 199,241,484 fully paid ordinary shares. All
issued ordinary shares carry one vote per share and carry the rights to dividends.
Distribution of Ordinary Shares
Range of Units as of 11 March 2022
Range
Total holders
Units
% Units
1 - 1,000
19
6,103
0.00
1,001 - 5,000
13
57,327
0.03
5,001 - 10,000
63
565,835
0.28
10,001 - 100,000
156
6,451,850
3.24
100,001 Over
171
192,160,369
96.45
Total
422
199,241,484
100.00
Unmarketable Parcels (Australian CDI)
Minimum Parcel Size
Holders
Units
Minimum $ 500.00 parcel at $ 0.0710 per unit
7,043
44
141,780
Substantial shareholders as at 11 March 2022
As at 11 March 2022 there were 3 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.
Name
Shares
% of issued
capital
DEUTSCHE BALATON AKTIENGESELLSCHAFT
25,903,647
13.00%
PAUL CRONIN
12,525,427
6.29%
OCEANIC CAPITAL PTY LTD
17,955,848
9.01%
BLACK DRAGON GOLD CORP.
Annual Report 31 December 2021
ASX Additional Information
________________________________________________________________________________________________
45
Top 20 Shareholders as at 11 March 2022
Rank
Name
Shares
% Shares
1
OCEANIC CAPITAL PTY LTD
10,650,599
5.35
2
MR PAUL CRONIN
9,657,726
4.85
3
DEUTSCHE BALATON AKTIENGESELLSCHAFT
9,142,857
4.59
4
CITICORP NOMINEES PTY LIMITED
7,640,115
3.84
5
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
7,335,000
3.68
6
REDLAND PLAINS PTY LTD
6,692,889
3.36
7
DEUTSCHE BALATON AKTIENGESELLSCHAFT
6,449,290
3.24
8
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
6,222,773
3.12
9
MR BARRY FRANCIS CRONIN
6,122,377
3.07
10
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
5,448,014
2.73
11
BUPRESTID PTY LTD
4,550,000
2.28
12
ST BARNABAS INVESTMENTS PTY LTD
4,362,388
2.19
13
ANTILLES GOLD TECHNOLOGIES PTY LTD
3,666,666
1.84
14
PAYZONE PTY LTD
3,478,575
1.75
15
CROESUS MINING PTY LTD
3,036,872
1.52
16
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
2,900,000
1.46
17
CDS & CO
2,892,802
1.45
18
WYMOND INVESTMENTS PTY LTD
2,518,333
1.26
19
DIXSON TRUST PTY LIMITED
2,419,047
1.21
20
GREATCITY CORPORATION PTY LTD
2,413,502
1.21
Total
107,599,825
54.00
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.
BLACK DRAGON GOLD CORP.
Annual Report 31 December 2021
ASX Additional Information
________________________________________________________________________________________________
46
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.