Consolidated Financial Statements of
CONSTANTINE METAL RESOURCES LTD.
(Expressed in Canadian Dollars)
For the years ended October 31, 2016 and 2015
S u i t e 3 20 - 8 0 0 W e s t P e n d e r S t . , V a n c o u v e r , B . C. C a n a d a V 6 C 2 V 6
P h o n e ( 6 0 4 ) 6 2 9- 2 3 4 8 F a x ( 6 0 4 ) 6 0 8- 3 8 7 8
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Constantine Metal Resources Ltd.,
We have audited the accompanying consolidated financial statements of Constantine Metal Resources Ltd. (“the
Company”), which comprise the consolidated statements of financial position as at October 31, 2016 and 2015 and
the consolidated statements of loss and comprehensive loss, cash flows and changes in equity for the years then
ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board, 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.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the
consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and
fair presentation of the consolidated financial statements 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 entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Constantine Metal Resources Ltd. as at October 31, 2016 and 2015 and its financial performance and its cash flows
for the years then ended in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, Canada
February 23, 2017
Consolidated Statements of Financial Position
As at October 31, 2016 and 2015
(Expressed in Canadian dollars)
Assets
Current assets:
Cash
Amounts receivable
Exploration costs recoverable from joint venture partner (Note 5a)
Available-for-sale investments (Note 4)
Advances and prepaid expenses
Deposits
Exploration and evaluation properties (Note 5)
Performance bonds
Equipment
Liabilities
Current liabilities:
Trade payables and accrued liabilities
Deferred recovery of exploration costs (Note 5a)
Amounts due to related parties (Note 7)
Equity
Share capital (Note 6)
Stock options reserve (Note 6b)
Warrants reserve
Available-for-sale investments reserve (Note 4)
Deficit
Nature of Operations (Note 1)
Commitments (Note 12)
Events Subsequent to the end of the Period (Note 13)
On Behalf of the Board of Directors:
“J. Garfield MacVeigh”
___________________________
Director
See accompanying notes to consolidated financial statements.
2016
2015
$
567,673
24,119
-
-
47,670
639,462
$
396,069
39,965
238,334
31,074
21,030
726,472
-
13,031,273
33,528
-
19,887
13,176,501
32,688
2,968
$
13,704,263
$
13,958,516
$
225,880
91,272
15,072
332,224
$
282,643
-
3,199
285,842
20,360,239
1,722,623
432,941
-
(9,143,764)
20,326,015
1,535,432
432,941
(95,953)
(8,525,761)
13,372,039
13,672,674
$
13,704,263
$
13,958,516
“G. Ross McDonald”
___________________________
Director
2
Consolidated Statements of Loss and Comprehensive Loss
For the years ended October 31, 2016 and 2015
(Expressed in Canadian dollars)
Expenses:
Amortization
Consulting
General and administrative
Insurance
Legal
Professional fees – audit
Salaries, wages and benefits
Rent (net)
Share-based payments (Note 6b)
Shareholder communications
Travel
Loss from operations
Other Items:
Gain on foreign exchange
Gain on sale of available-for-sale investments (Note 4)
Write-off of exploration and evaluation properties (Note 5c)
Net loss for the year
Other comprehensive income
Change in available-for-sale investments (Note 4)
Comprehensive loss for the year
Basic and diluted loss per share
2016
2015
$
2,968
70,313
168,140
27,052
9,383
19,260
76,638
69,354
187,191
4,774
2,252
(637,325)
$
5,461
39,137
200,410
38,222
5,107
21,360
36,037
70,364
126,258
6,487
9,684
(558,527)
15,145
4,177
-
2,104
-
(858,218)
(618,003)
(1,414,641)
95,953
(69,916)
$ (522,050)
$
(0.01)
$
$
(1,484,557)
(0.01)
Weighted average number of common shares outstanding
117,429,468
116,666,384
See accompanying notes to consolidated financial statements.
3
Consolidated Statements of Cash Flows
For the years ended October 31, 2016 and 2015
(Expressed in Canadian dollars)
Cash provided by (used in):
Operations:
Net loss for the year
Items not affecting cash:
Amortization
Share-based payments (Note 6b)
Write-off of exploration and evaluation properties (Note 5c)
Gain on available-for-sale investments (Note 4)
Changes in non-cash working capital accounts:
Amounts receivable
Deposits
Amount due to joint venture partner
Trade payables and accrued liabilities
Exploration costs recoverable from partner (Note 5a)
Reclamation bonds
Amounts due to related parties (Note 7)
Advances and prepaid expenses
Investing activities:
Exploration and evalution properties (Note 5)
Recovery of exploration and evalution property expenditures (Note 5a)
Proceeds from sale of available-for-sale investments (Note 4)
Increase (decrease) in cash
Cash, beginning of year
Cash, end of year
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Value of shares issued for success fee on Palmer option agreement (Notes 5a and 6a)
Accounts payable related to exploration and evaluation properties
Interest received
Value of shares issued for mineral properties (Note 6a)
See accompanying notes to consolidated financial statements.
2016
2015
$
(618,003)
$
(1,414,641)
2,968
187,191
-
(4,177)
15,846
19,887
-
(7,200)
329,606
(840)
11,873
(26,640)
(89,489)
5,461
126,258
858,218
-
(28,146)
7,948
(23,802)
(4,962)
(273,310)
(4,510)
(767)
10,834
(741,419)
(5,004,626)
5,134,515
131,204
(6,588,919)
7,138,926
-
261,093
550,007
$
$
171,604
396,069
567,673
30,624
216,096
-
3,600
$
$
(191,412)
587,481
396,069
69,067
265,659
-
6,720
4
Consolidated Statements of Changes in Equity
For the years ended October 31, 2016 and 2015
(Expressed in Canadian dollars)
Share Capital
Reserves
Number of Shares Capital Stock
Stock
Options
Warrants
Available-
for-Sale
Investments
Deficit
Total Equity
116,304,665
$
20,250,228
$
1,409,174
$
432,941
$
(26,037)
$
(7,111,120)
$
14,955,186
-
-
-
-
-
-
-
-
126,258
-
-
-
-
(1,414,641)
(1,414,641)
(69,916)
-
-
-
(69,916)
126,258
541,336
116,846,001
75,787
20,326,015
$
-
$
1,535,432
-
$
432,941
-
(95,953)
$
-
(8,525,761)
$
75,787
13,672,674
$
-
-
-
-
-
-
-
-
187,191
497,483
34,224
-
-
-
-
-
-
(618,003)
(618,003)
95,953
-
-
-
-
-
95,953
187,191
34,224
Balance, October 31, 2014
Net loss for the year
Unrealized gain (loss)on available-for-sale
investments (Note 4)
Share-based payments
Shares issued for exploration and
evaluation properties (Note 6a)
Balance, October 31, 2015
Net loss for the year
Unrealized gain on available-for-sale
investments (Note 4)
Share-based payments (Note 6b)
Shares issued for exploration and
evaluation properties (Note 6a)
Balance, October 31, 2016
117,343,484
$
20,360,239
$
1,722,623
$
432,941
$
-
$
(9,143,764)
13,372,039
See accompanying notes to consolidated financial statements.
5
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
1. Nature of Operations and Going Concern
The Company is in the business of acquiring interests in resource properties that are considered to be sites
of potential economic mineralization, and then subsequently developing such assets with a view to
enhancing their value and to bringing on a major mining partner for development of the assets. The
Company may sell property for an enhanced value or seek a major mining partner to advance one of its
projects on a joint venture basis. Currently the Company is principally engaged in the exploration of mineral
properties which cannot be considered economic until a commercial feasibility study has been completed.
The Company has no sources of operating revenue and, except for cash flow generated from exploration
management fees, property option fees and sale of available-for-sale investments, is dependent upon equity
financing to maintain current operations and to ultimately develop a mineral property interest or interests
which can be profitably sold or further developed and placed into successful commercial production.
The Company has not generated any revenue since inception and has never paid any dividends and is
unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As at October 31,
2016, the Company has incurred losses since inception and has an accumulated operating deficit of
$9,143,764. The continuation and long-term viability of the Company remains dependent upon its ability to
obtain necessary equity financing to continue operations and to determine the existence, discovery and
successful exploitation of economically recoverable reserves in its resource properties, confirmation of the
Company’s interests in the underlying properties, and the attainment of profitable operations.
The head office and principal address of the Company is #320 – 800 West Pender Street, Vancouver, British
Columbia, Canada, V6C 2V6.
2. Basis of Preparation
a) Statement of Compliance
The accompanying financial statements have been prepared in accordance with the International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The
accounting policies, methods of computation and presentation applied in these financial statements are
consistent with those of the previous financial year.
b) Approval of Consolidated Financial Statements
These consolidated financial statements of the Company for the years ended October 31, 2016 and 2015
were approved and authorized for issue by the Board of Directors on February 23, 2017.
These consolidated financial statements include the accounts of the Company and its 100% controlled entity,
Constantine North Inc. (an Alaska corporation).
Inter-company balances and transactions, including unrealized income and expenses arising from inter-
company transactions, are eliminated on consolidation.
6
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
3. Significant Accounting Policies
a) Judgments and estimates
The preparation of these consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
revenues and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances and which form the basis of
making judgments about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the
estimate is revised, if the revision affects only that period, or in the period of the revision and further periods
if the revision affects both current and future periods.
Significant areas requiring the use of estimates relate to the determination of impairment of exploration and
evaluation properties, determination of mineral reserves, and provision for closure and reclamation.
b) Foreign currency translation
The functional and reporting currency of the Company and its subsidiary is the Canadian dollar.
Transactions in currencies other than the functional currency are recorded at the rate of exchange prevailing
on the dates of transactions. Monetary assets and liabilities that are denominated in foreign currencies are
translated at the rates prevailing at each reporting date. Non-monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange
rate at the date the fair value was determined. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated. Foreign currency translation differences are recognized in
profit or loss, except for differences on the retranslation of available-for-sale instruments, which are
recognized in other comprehensive loss.
c) Exploration and Evaluation Properties
Costs directly related to the exploration and evaluation of resource properties are capitalized once the legal
rights to explore the resource properties are acquired or obtained. When the technical and commercial
viability of a mineral resource have been demonstrated and a development decision has been made, the
capitalized costs of the related property are transferred to mining assets and depreciated using the units of
production method on commencement of commercial production.
If it is determined that capitalized acquisition, exploration and evaluation costs are not recoverable, or the
property is abandoned or management has determined an impairment in value, the property is written down
to its recoverable amount. Resource properties are reviewed for impairment at each reporting date.
From time to time, the Company acquires or disposes of properties pursuant to the terms of option
agreements. Options are exercisable entirely at the discretion of the optionee and, accordingly, are recorded
as mineral property costs or recoveries when the payments are made or received. After costs are recovered,
the balance of the payments received are recorded as a gain on option or disposition of mineral property.
Although the Company has taken steps to verify title to the properties on which it is conducting exploration
and in which it has an interest, in accordance with industry standards for the current stage of exploration of
such properties, these procedures do not guarantee the Company’s title. Property title may be subject to
unregistered prior agreements and non-compliance with regulatory requirements.
7
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
3. Significant Accounting Policies (continued)
d)
Impairment of Non-current Assets
The Company’s tangible and intangible assets are reviewed for an indication of impairment at the end of
each reporting period. If an indication of impairment exists, the Company makes an estimate of the asset’s
recoverable amount. Individual assets are grouped for impairment assessment purposes at the lowest level
at which there are identifiable cash flows that are largely independent of the cash flows of other groups of
assets. The recoverable amount of an asset group is the higher of its fair value less costs to sell and its
value in use. Where the carrying amount of an asset group exceeds its recoverable amount, the asset group
is considered impaired and is written down to its recoverable amount. Impairment losses are recognized in
profit or loss to the extent the carrying amount exceeds the recoverable amount. In assessing value in use,
the estimated future cash flows are adjusted for the risks specific to the asset group and are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been
a change in the estimates used to determine the asset’s recoverable amount. An impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation, if no impairment loss had been recognized.
e) Provision for Closure and Reclamation
The Company recognizes liabilities for legal or constructive obligations associated with the retirement of
resource properties and equipment. The net present value of future rehabilitation costs is capitalized to the
related asset along with a corresponding increase in the rehabilitation provision in the period incurred.
Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present
value.
The Company’s estimates of reclamation costs could change as a result of changes in regulatory
requirements, discount rates and assumptions regarding the amount and timing of the future expenditures.
These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation
provision. The increase in the provision due to the passage of time is recognized as interest expense.
f)
Income Taxes
The Company uses the balance sheet method of accounting for income taxes. Under this method, deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred income tax assets also result from unused loss carry-forwards, resource related pools and other
deductions. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they can
be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.
8
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
3. Significant Accounting Policies (continued)
g) Share-based Payments
The Company has a stock option plan that is described in Note 6c. Share-based payments to employees are
measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based
payments to non-employees are measured at the fair value of the goods or services received or the fair
value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be
reliably measured, and are recorded at the date the goods or services are received. The amount recognized
as an expense is adjusted to reflect the number of awards expected to vest. The offset to the recorded cost
is to stock options reserve. Consideration received on the exercise of stock options is recorded as share
capital and the related stock options reserve is transferred to share capital. Charges for options that are
forfeited before vesting are reversed from stock options reserve.
h) Loss per Share
Basic loss per share is calculated by dividing the loss available to common shareholders by the weighted
average number of common shares outstanding in the year. For all years presented, the loss available to
common shareholders equals the reported loss. Diluted loss per share is calculated by the treasury stock
method. Under the treasury stock method, the weighted average number of common shares outstanding for
the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive
share options and warrants are used to repurchase common shares at the average market price during the
period. In the Company’s case, diluted loss per share is the same as basic loss per share, as the effects of
including all outstanding options and warrants would be anti-dilutive.
i) Advances from Joint Venture Partner
When acting as operator of a particular project, the Company typically receives funds in advance of
performing exploration work. The Company records such advances as a deferred liability until such time as
the applicable costs are incurred, at which point these advances are offset against the costs.
j) Financial Instruments and Comprehensive Income
i)
Financial Assets
The Company classifies its financial assets in the following categories: held-to-maturity, fair
value through profit or loss (“FVTPL”), loans and receivables, and available-for-sale (“AFS”).
The classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of financial assets at recognition.
Held-to-maturity
Held-to-maturity financial assets are recognized on a trade-date basis and are initially measured
at fair value using the effective interest rate method. The Company has no assets classified as
held-to-maturity.
Financial assets at fair value through profit or loss (“FVTPL”)
Financial assets at FVTPL are initially recognized at fair value with changes in fair value
recorded through profit or loss. Cash is included in this category of financial assets.
9
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
3. Significant Accounting Policies (continued)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are classified as current assets or non-current
assets based on their maturity date. Loans and receivables are carried at amortized cost less
any impairment. Loans and receivables comprise amounts receivable.
Available-for-sale financial assets
AFS financial assets are non-derivatives that are either designated as available-for-sale or not
classified in any of the other financial asset categories. Changes in the fair value of AFS
financial assets are recognized as other comprehensive income and classified as a component
of equity. AFS assets include investments in marketable securities.
Management assesses the carrying value of AFS financial assets at least annually and any
impairment charges are also recognized in profit or loss. When financial assets classified as
AFS are sold, the accumulated fair value adjustments recognized in other comprehensive
income are included in profit or loss.
ii) Financial Liabilities
The Company classifies its financial liabilities in the following categories:
Borrowings and other financial liabilities
Borrowings and other financial liabilities are non-derivatives and are recognized initially at fair
value, net of transaction costs incurred, and are subsequently stated at amortized cost. Any
difference between the amounts originally received, net of transaction costs, and the redemption
value is recognized in the statement of loss and comprehensive loss over the period to maturity
using the effective interest method.
Borrowings and other financial liabilities are classified as current or non-current based on their
maturity date. Financial liabilities include trade payables and accrued liabilities, amounts due to
joint venture partner and amounts due to related parties.
iii) Fair Value Hierarchy
Fair value measurements of financial instruments are required to be classified using a fair value
hierarchy that reflects the significance of inputs in making the measurements. The levels of the
fair value hierarchy are defined as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3 – Inputs for the asset or liability that are not based on observable market data.
10
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
3. Significant Accounting Policies (continued)
k) Share Capital
The Company records proceeds from share issuances, net of issue costs. Common shares issued for
consideration other than cash are valued based on their market value at the date the agreement to issue
shares was concluded.
l) Valuation of Equity Units Issued in Private Placements
Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated first to
common shares based on the market trading price of the common shares at the time the units are priced,
and any excess is allocated to warrants.
m) Accounting standards adopted, or issued but not yet effective
The Company adopted no material new accounting standards during its current fiscal year, and is unaware
of any applicable, but not-yet-adopted standards that are expected to materially affect the financial
statements of future periods.
4. Available-for-Sale Investments
In August 2016, the Company sold all of its available-for-sale investment for cash proceeds of $131,204 and
recognized a gain of $4,178 (2015-Nil) on the sale.
11
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
5. Exploration and Evaluation Properties
The following tables are a summary of the Company’s exploration and evaluation property interests:
Balance
October 31
2014
Fiscal
Balance
Fiscal
2015
Expenditures
October 31
2015
2016
Expenditures
Balance
October 31
2016
Palmer Property, Alaska, USA
Acquisition costs
$
878,712
$
-
$
878,712
$
-
$
878,712
Less: Recovery of acquisition costs
(656,841)
(213,589)
(870,430)
(269,795)
(1,140,225)
Advance royalty payments
Assaying and testing
Field transportation
Geophysics
Drilling
Property maintenance
Geology and field support
Environmental
Technical consulting
Travel
Cost recoveries
Haines Block
Acquisition costs
Assaying and testing
Field transportation
Geophysics
Drilling
Geology and field support
Environmental
Travel
Cost recoveries
Total Alaska Properties
(continued on next page)
383,474
325,080
4,150,860
512,764
8,959,855
522,565
3,596,518
331,198
1,160,974
265,202
52,952
59,286
812,870
237,573
3,338,002
88,569
1,555,167
415,013
-
126,006
436,426
384,366
4,963,730
750,337
12,297,857
611,134
5,151,685
746,211
1,160,974
391,208
56,368
26,715
269,906
40,361
671,373
95,447
2,512,435
486,690
-
97,755
492,794
411,081
5,233,636
790,698
12,969,230
706,581
7,664,120
1,232,901
1,160,974
488,963
(10,033,923)
(6,992,040)
(17,025,963)
(4,420,507)
(21,446,470)
10,396,438
(520,191)
9,876,247
(433,252)
9,442,995
$
32,893
$
63,114
$
96,007
$
33,158
$
129,165
-
-
-
-
-
-
-
-
-
161,139
34,356
240,136
92,738
22,986
5,781
-
161,139
34,356
240,136
92,738
22,986
5,781
5,261
181,541
17,440
326,240
82,055
-
-
5,261
342,680
51,796
566,376
174,793
22,986
5,781
(565,148)
(565,148)
(444,213)
(1,009,361)
$
$
32,893
10,429,331
$
$
55,102
(465,089)
$
$
87,995
9,964,242
$
$
201,482
(231,770)
$
$
289,477
9,732,472
12
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
Ontario Properties:
Munro-Croesus Property, ON, Canada
Acquisition costs
Assaying and testing
Drilling
Field transportation
Geophysics
Travel
Geology and field support
Technical consulting
Four Corners Property, ON, Canada
Acquisition costs
Assaying and testing
Drilling
Geophysics
Field Transportation
Travel
Technical consulting
Geology and field support
Golden Mile Property, ON, Canada
Acquisition costs
Assaying and testing
Drilling
Field transportation
Geophysics
Geology and field support
Technical consulting
Travel
Cost recoveries
Balance
October 31
2014
Fiscal
Balance
Fiscal
2015
Expenditures
October 31
2015
2016
Expenditures
Balance
October 31
2016
483,545
107,655
1,127,740
23,394
149,446
66,838
182,270
340,262
2,481,150
119,681
23,367
243,471
56,893
946
7,485
81,673
33,107
566,623
68,054
40,829
396,613
22,514
160,669
508,784
90,970
30,568
1,627
-
-
284
-
288
1,660
-
3,859
5,000
1,353
-
-
-
573
-
6,215
13,141
48,720
-
-
-
-
10,232
-
-
485,172
107,655
1,127,740
23,678
149,446
67,126
183,930
340,262
2,485,009
124,681
24,720
243,471
56,893
946
8,058
81,673
39,322
579,764
116,774
40,829
396,613
22,514
160,669
519,016
90,970
30,568
(1,233,522)
85,479
3,054
62,006
(1,230,468)
147,485
2,760
-
-
-
-
7,260
18,098
710
28,828
22,000
71
-
-
-
-
-
296
22,367
31,600
-
-
-
-
3,182
-
565
-
35,347
487,932
107,655
1,127,740
23,678
149,446
74,386
202,028
340,972
2,513,837
146,681
24,791
243,471
56,893
946
8,058
81,673
39,618
602,131
148,374
40,829
396,613
22,514
160,669
522,198
90,970
31,133
(1,230,468)
182,832
Sub-total of Ontario Properties
$
3,133,252
$
79,006
$
3,212,258
$
86,542
$
3,298,800
(continued on next page)
13
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
Ontario Properties (Balance forward)
$
3,133,252
$
79,006
$
3,212,258
$
86,542
$
3,298,800
Balance
October 31
Fiscal
2015
Balance
October 31
Fiscal
2016
Balance
October 31
2014
Expenditures
2015
Expenditures
2016
Yukon, Canada
Acquisition costs
Assaying and testing
Field transportation
Geology
Geochemisty
Technical consulting
Other
Cost recoveries
Writedown of exploration and evaluation
properties
52,401
197,379
476,911
184,753
290,093
61,608
572,595
(25,000)
-
-
-
-
-
-
899
-
52,401
197,379
476,911
184,753
290,093
61,608
573,494
(25,000)
(953,420)
857,320
(858,218)
(857,319)
(1,811,638)
1
-
-
-
-
-
-
-
-
-
-
52,401
197,379
476,911
184,753
290,093
61,608
573,494
(25,000)
(1,811,638)
1
Total Other Properties
$
3,990,572
$
(778,313)
$
3,212,259
$
86,542
$
3,298,801
Total Alaska and Other Properties
$
14,419,903
$
(1,243,402)
$
13,176,501
$
(145,228)
$
13,031,273
a) Palmer Project, Alaska USA
The Palmer property is comprised of 340 federal mining claims subject to a 99 year mining lease, dated
December 19, 1997, and 63 state mining claims located near Haines, Alaska. To maintain the lease, the
Company is required to make annual advance royalty payments of US$42,500 and pay Federal claim annual
maintenance fees, which were US$52,700 in 2016.
The lease is subject to a 2.5% net smelter returns (“NSR”) royalty. The Company has a right of first refusal
to purchase the NSR or any portion thereof at any time during the term of the lease. The advance royalty
payments are deductible from the NSR royalty.
Option and Joint Venture Agreement
As at October 31, 2016, the Company was in the third year of an option and joint venture agreement (the
“Property Agreement”) with Dowa Metals & Mining Co., Ltd (“Dowa”) relating to the Palmer Property (the
“Project”). On December 20, 2016, Dowa completed the earn-in expenditures required under the Property
Agreement and exercised its option to participate in the formation of a joint venture (the “Joint Venture”)
between the Company (51%) and Dowa (49%) (Note 13).
Under the terms of the Property Agreement, Dowa had an option to earn a 49% interest in the Project by
making aggregate expenditures of US$22,000,000 over a four year period. The Company will continue as
operator when the joint venture is formed. After formation of the Joint Venture each party shall be
responsible for its proportionate share of expenses determined on the basis of ownership or suffer dilution
according to standard dilution provisions.
The Property Agreement also includes terms that allow Dowa to acquire certain zinc and copper off-take
rights in stages, during and upon completion of the earn-in option period.
14
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
In the year ended October 31, 2016, the final finder’s fee due in connection with the Dowa Agreement
transaction was paid, totaling US$44,030, of which $20,000 was paid in cash and the balance in shares of
the Company by the issuance of 437,483 common shares at a deemed value of $30,824.
Haines Block Lease
In September 2014, the Company signed a formal lease agreement with the Alaska Mental Health Trust
Authority (the “Trust”) for the mineral exploration and development of an approximately 92,000 acre package
of land (the “Haines Block. The principal terms of the lease agreement are as follows:
1. Annual payments of US$25,000 per year for the initial 3 year lease term, US$40,000 for years 4 to 6,
US$55,000 for years 7 through 9;
2. Work commitments of US$75,000 per year, escalating by US$50,000 annually;
3. Annual payments are replaced by royalty payments upon achieving commercial production;
4. Production royalties payable to the Trust include a sliding scale 1% to 4.5% royalty for gold, based
on gold price, and a 3.5% royalty on minerals other than gold.
The Haines Block is contiguous with and surrounds the Federal and State mining claims that make up the
Palmer Property.
Haines Block Selection Agreement
In October 2015, the Company signed a Selection Agreement (the “Selection Agreement”) with Dowa on the
Haines Block mining lease. Under the terms of the Selection Agreement, Dowa selected a small subset of
the Haines Block (the “Selection Area”) including both surface and mineral rights, to become part of the
Agreement. The remaining mineral rights of the Haines Block, representing approximately 96 percent of the
total Haines Block land package, are 100 percent Company-owned, subject to a Right of First Offer
(“ROFO”) by Dowa that expires on September 1, 2017.
The main elements of the Selection Agreement were as follows:
1. Dowa selected a Haines Block land parcel with surface and mineral rights comprising approximately
3483 acres, exclusive of all pre-existing federal claims, to be included as part of the Palmer Property
and therefore subject to Dowa’s option to earn a 49% joint venture interest.
2. The Company will maintain its 100% interest in the balance of the property of the Haines Block
exclusive of the Selection Area and any exploration done in such area outside of the Selection Area
will be at the Company’s expense.
3. Dowa and the Company to share the annual rental requirements of the Lease of US$25,000 for the
first 3 year lease term, in a proportion of 49:51, which are amounts of US$12,250 and US$12,750,
respectively, until the Joint Venture (“JV”) is formed.
15
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
4. Dowa to meet certain minimum exploration requirements during the Option period and until such
time as the JV is formed. These minimum requirements were $75,000 by September 1, 2015 (paid)
and $125,000 minimum for 2016 (paid)). These expenditures deemed to be part of the earn-in
expenditures paid by Dowa.
5. The Company granted Dowa a ROFO on Haines Block lands located outside of the Selection Area
for a 3 year period beginning as of September 1, 2014, and terminating on September 1, 2017.
b) Ontario Properties
i) Munro-Croesus Property
The Company owns 100% of the Munro-Croesus gold mineral property, including the former Munro-
Croesus gold mine, consisting of 22 patented mining claims and leases (416 hectares), located 90
kilometers east of Timmins, Ontario.
Under the terms of the original acquisition agreement, there is a 2% NSR production royalty payable
on the property, of which 0.5% can be purchased by the Company for $1,000,000, with a right of first
refusal on the remaining 1.5% NSR royalty.
ii) Golden Mile Property
In March 2012, the Company entered into an option agreement to acquire the Golden Mile property
in northern Ontario, Canada. Under the terms of the agreement, in order to maintain the option the
Company must make payments of $175,000 and issue 180,000 of the Company’s shares over a four
year period commencing on December 10, 2012. As at October 31, 2016, a total of $105,000 has
been paid and 180,000 shares have been issued.
iii) Four Corners Property
As at October 31, 2016, the Company owned a 100% interest in the 63 claim Four Corners property
located east of Timmins, Ontario. The Company sold all of its interest in the Four Corners property
claims, subsequent to the Company’s fiscal year-end (Note 13).
c) Yukon Land Position and Joint Venture
The Company and Carlin Gold Corporation (“Carlin Gold”) control over 3,000 claims in the Mayo and Watson
Lake Mining Districts, Yukon. The claims are distributed in twelve blocks that total approximately 65,000
hectares (250 square miles).
In April 2015, subsequent to an impairment review completed in accordance with IFRS, the Company
recorded a $858,218 writedown of the property to a carrying value of $1.
16
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
6. Share Capital
a) Common Shares
Authorized: unlimited common shares without par value
Issued and outstanding: 117,373,484 common shares
i) On May 9, 2016, the Company issued 437,483 shares valued at $30,624, as part of a final
success fee paid in regard to the option and joint venture agreement on the Palmer property
(Note 5a).
ii) On December 10, 2015, the Company issued 60,000 shares valued at $3,600 related to the
Golden Mile property (Note 5b(ii)).
iii) On March 6, 2015, the Company issued 493,336 shares valued at $69,067, as part of a success
fee payment in regard to the option and joint venture agreement on the Palmer property.
iv) On December 10, 2014, the Company issued 48,000 shares valued at $6,720 related to the
Golden Mile property (Note 5b(ii)).
b) Stock Options
The Company has established a stock option plan whereby the board of directors may, from time to time,
grant options to directors, officers, employees or consultants. Options granted must be exercised no later
than five years from the date of grant or such lesser period as determined by the Company’s board of
directors. The exercise price of an option is not less than the closing price on the Exchange on the last
trading day preceding the grant date. Options begin vesting on the grant date based on a schedule outlined
in the share purchase option plan. The maximum number of options to be granted under the plan is 10% of
the Company’s issued capital.
On June 30, 2016, the Company issued 2,450,000 incentive share options to management and employees,
exercisable at a price of $0.10, expiring June 30, 2021. The stock options were issued to directors, officers
and employees of the Company.
On March 6, 2015, the Company issued 1,400,000 incentive share options to management and employees,
exercisable at a price of $0.14, expiring March 6, 2020. The stock options were issued to directors, officers
and employees of the Company.
17
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
6. Share Capital (continued)
b) Stock Options (continued)
A summary of the status of the Company’s stock options at October 31, 2016 and 2015 and changes during
the years therein is as follows:
Balance, beginning of year
Granted
Expired or cancelled
Balance, end of year
Year ended
October 31, 2016
Number of
Weighted
average
options exercise price
8,675,000
2,450,000
-
$
0.09
0.10
-
Year ended
October 31, 2015
Number of
options
7,325,000
1,400,000
(50,000)
Weighted
average
exercise price
$
0.08
0.14
0.11
11,125,000
$
0.09
8,675,000
$
0.09
The fair value cost of the stock options granted during the year ended October 31, 2016 was calculated
using the Black-Scholes Pricing Model using the following range of assumptions:
Risk-free interest rate
Expected life (in days)
Annualized volatility
Dividend rate
October 31, 2016
0.56%
1,825
82.51%
n/a
October 31, 2015
0.59%
1,825
82.51%
n/a
The fair value computed using the Black-Scholes model is only an estimate of the potential value of the
individual options and the Company is not required to make payments for such transactions. An amount of
$187,191 was charged to share-based payments expense for the year ended October 31, 2016 (2015-
$126,258).
A summary of the Company’s stock options outstanding as at October 31, 2016 is as follows:
Expiry Date
March 5, 2017
January 17, 2019
March 6, 2020
June 30, 2021
Weighted
Average
Exercise
Price
0.11
0.07
0.14
0.10
0.09
$
Number
of Options
Outstanding
1,875,000
5,400,000
1,400,000
2,450,000
11,125,000
Weighted
Average
Remaining
Contractual
Life
(in years)
0.06
1.07
0.42
1.03
2.58
Number
of Options
Exercisable
1,875,000
4,900,000
1,300,000
2,450,000
10,525,000
18
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
6. Share Capital (continued)
b) Stock Options (continued)
A summary of the Company’s stock options outstanding as at October 31, 2015 is as follows:
Expiry Date
March 5, 2017
January 17, 2019
March 6, 2020
Weighted
Average
Exercise
Price
0.11
0.07
0.14
0.09
$
Number
of Options
Outstanding
1,875,000
5,400,000
1,400,000
8,675,000
Weighted
Average
Remaining
Contractual
Life
(in years)
0.29
2.00
0.70
3.00
Number
of Options
Exercisable
1,875,000
4,400,000
1,200,000
7,475,000
7. Related Party Transactions
The following represents the details of related party transactions paid or accrued for the years ended
October 31, 2016 and 2015:
For the years ended October 31,
Consulting, administrative and technical fees paid or accrued to companies owned by directors
Consulting fees paid to officers
Accounting and administration fees paid or accrued to a company 50% owned by an officer
Share-based payments to key management
2016
2015
$ 30,096 $ 43,178
181,676 178,426
72,000
72,000
64,871 71,745
$ 348,643 $ 365,349
The Company paid NS Star Enterprises Ltd., a company controlled by a director, $30,096 for management
and administration services during the year ended October 31, 2016 (2015-$43,178). The Company paid
Morfopoulos Consulting Associates Ltd., a company controlled by the CFO, $72,000 for accounting, and
management and administration services during the year ended October 31, 2016 (2015-$72,000). The
Company paid D. Green Geoscience Inc., a company controlled by the vice-president of exploration,
$181,676 for technical consulting and management and administration services during the year ended
October 31, 2016 (2015-$178,426).
The Company paid wages totaling $132,000 (2015-$132,000) to Mr. J. Garfield MacVeigh, in his capacity as
President of the Company.
Related party amounts are unsecured, non-interest bearing and due on demand. As at October 31, 2016,
$15,071 (2015 - $3,199) is due to related parties of the Company.
19
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
8. Management of Capital
The Company manages its cash, common shares, stock options and warrants as capital. The Company’s
objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in
order to pursue the development of its exploration and evaluation properties and to maintain a flexible capital
structure which optimizes the costs of capital at an acceptable risk. The Company does not have any
externally imposed capital requirements to which it is subject. There were no significant changes in the
Company’s approach or the Company’s objectives and policies for managing its capital.
The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,
the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the
amount of cash and cash equivalents.
In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets
that are updated as necessary depending on various factors, including successful capital deployment and
general industry conditions.
9. Financial Instruments
a) Financial Risk Management
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk
management framework. The Company’s financial instruments consist of cash, amounts receivable,
available-for-sale investments, trade payables and amounts due to related parties.
The fair values of cash, amounts receivable, deposits, trade payables and amounts due to related parties
approximate their book values because of the short-term nature of these instruments.
b) Financial Instrument Risk Exposure
The Company is exposed in varying degrees to a variety of financial instrument-related risks. The Board
approves and monitors the risk management processes.
Credit Risk
The Company’s only exposure to credit risk is on its cash. Cash are with a Canadian Schedule 1 bank and a
US bank for its subsidiary. The Company has no asset-backed commercial paper.
Liquidity Risk
The Company ensures that there is sufficient capital in order to meet short-term business requirements, after
taking into account the Company’s holdings of cash. A portion of the Company’s cash is invested in business
accounts which are available on demand.
Market Risk
The only significant market risk exposure to which the Company is exposed is interest rate risk. The
Company’s bank account earns interest income at variable rates. The fair value of its marketable securities
portfolio is relatively unaffected by changes in short-term interest rates. The Company’s future interest
income is exposed to short-term rates and fluctuations, however management does not consider this risk to
be significant.
20
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
9. Financial Instruments (continued)
Exchange Risk
As at October 31, 2016, the majority of the Company’s cash was held in the USA in U.S. dollars. The
Company’s significant operations are carried out in Canada and in Alaska, USA. As a result a portion of the
Company’s cash and cash equivalents, amounts receivable, and trade payables are denominated in US
dollars and are therefore subject to fluctuations in exchange rates. Management does not believe that the
exchange risk is significant.
c) Fair Value Measurements
The carrying value of financial assets and financial liabilities at October 31, 2016 and 2015 is as follows:
As at October 31,
Financial Assets
FVTPL, measured at fair value
Cash
Loans and receivables, measured at amortized cost
Amounts receivable
Exploration costs recoverable from joint venture partner
Available-for-sale, measured at fair value
Available-for-sale investments
Financial Liabilities
Other liabilities, measured at amortized cost
Trade payables and accrued liabilities
Amounts due to related parties
2016
2015
$
567,673
$
396,069
24,119
-
39,965
283,334
-
31,074
$
225,880
15,072
$
282,643
3,199
The fair value hierarchy of financial instruments measured at fair value is as follows:
As at
Cash
Available-for-sale investments
2016
Level 1
2015
Level 1
$
567,673
-
$
396,069
31,074
The Company does not use Level 2 or Level 3 valuation inputs.
21
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
10. Segmented Information
The Company has one operating segment, which is exploration and evaluation of its mining properties.
At October 31, 2016, the Company operates in two geographic areas, being Canada and the United States.
The following is a breakdown of the non-current assets by geographical area:
Non-Current Assets
Exploration and Evaluation Properties
As at October 31, 2016
As at October 31, 2015
Performance Bonds
As at October 31, 2016
As at October 31, 2015
Equipment
As at October 31, 2016
As at October 31, 2015
11. Income Taxes
Canada
United States
Total
3,298,801
3,212,259
-
-
-
2,968
9,732,472
9,964,242
33,528
26,178
-
-
13,031,273
13,176,501
33,528
26,178
-
2,968
A reconciliation of income taxes at statutory rates is as follows:
2016
2015
Net loss for the year
$
(618,003)
$
(1,414,641)
Expected income tax expense
Net adjustment for amortization and other non-deductible amounts
Unrecognized benefit of DIT assets
(158,343)
51,325
107,018
(421,413)
257,654
163,759
Total income tax recovery
$
-
$
-
There are no deferred tax assets presented in the statement of financial position.
Subject to confirmation with regulatory authorities, deductible temporary differences, unused tax losses and
unused tax credits for which no deferred tax assets have been recognized are attributable to the following:
Deferred income tax assets (liabilities):
Net mineral property carrying amounts in excess of tax pools
$
Equipment
Share issue costs
Non-capital loss carryforwards
2016
2015
(1,294,000)
59,000
-
7,082,000
$
(2,319,000)
51,000
3,000
6,606,000
$
5,847,000
$
4,341,000
22
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
11. Income Taxes (continued)
The Company has Canadian non-capital losses of approximately $5,809,000 (2015 - $5,360,000) and US
non-capital losses of US $949,000 (2015–US $954,000), which will be available to reduce future taxable
income in Canada and the US, respectively. The respective non-capital losses will begin to expire in 2017
until 2036.
The Canadian non-capital losses, if not utilized, will expire in the years presented below:
2016
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
$ 161,000
447,000
594,000
656,000
820,000
995,000
790,000
540,000
203,000
154,000
449,000
$ 5,809,000
12. Commitments
The Company has a lease agreement for the rental of office space, which expires on May 31, 2021.
The future minimum lease obligations under the lease are as follows:
2017 fiscal year
2018 fiscal year
2019 fiscal year
2020 fiscal year
2021 fiscal year
Amount
39,660
40,486
42,469
43,626
25,449
191,690
$
$
The Company currently rents out a portion of its office space on a month-to-month basis for $1,000 per
month.
23
Notes to Consolidated Financial Statements
For the years ended October 31, 2016 and 2015
_____________________________________________________________________________________
13. Events Subsequent to the end of the Period
a) Sale of Four Corners Property
On November 7, 2016, the Company announced that it had entered into a Property Purchase Agreement
(“Agreement”) with Lake Shore Gold Corp. (“Lake Shore”) a wholly owned division of Tahoe Resources Inc.
to sell certain of its Four Corners mineral property claims. Details of the Agreement, which closed in January
2017, include:
i) a $4,500,000 cash payment received for sale of 100% interest in its mineral claims known as the
Horseshoe, Four Corners and the Meunier Add-on claims.
ii) Company will retain a 1% Net Smelter Return royalty (“NSR”) on the Horseshoe claims, as well as
the right of first refusal on the NSR associated with the underlying property agreement.
iii) Lake Shore transferred to Company a 100% interest in patented mining claim L39421 that is
contiguous to Company’s Munro-Croesus claims; while Lake Shore will retain a 1.5% NSR.
iv) Company will retain the rights to the NSR buy-down provisions associated with the underlying
property agreements on all of the properties sold to Lake Shore,
b) Completion of Dowa Earn-in on Palmer Project – Joint Venture Formed
On December 20, 2016, Dowa completed the $22,000,000 US earn-in expenditures required under the
Property Agreement and exercised its option to participate in the formation of a 51:49 joint venture between
the Company (51%) and Dowa (49%).
24
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
General
The information in this Management’s Discussion and Analysis, or MD&A, is intended to assist the reader
in the understanding and assessment of the trends and significant changes in the results of operations
and financial conditions of Constantine Metal Resources Ltd. (the “Company” or “Constantine”). This
MD&A should be read in conjunction with the audited consolidated financial statements of the Company,
including the notes thereto, for the years ended October 31, 2016 and 2015, and the MD&A of such
financial statements, and other information relating to the Company on file with the Canadian provincial
securities regulatory authorities on SEDAR at www.sedar.com. The Company’s audited consolidated
financial statements for the years ended October 31, 2016 and 2015 have been prepared in accordance
with International Financial Reporting Standards (“IFRS”). This MD&A has taken into account information
available up to and including February 23, 2017.
Constantine is a junior exploration company engaged in the exploration and development of several
exploration properties. Its principal project is a polymetallic (copper-zinc-gold-silver) massive sulphide
advanced exploration project in southeast Alaska known as the Palmer Project. Constantine also has
gold properties in Ontario and the Yukon. The Company’s principal Ontario gold projects are the Golden
Mile project in the Timmins gold camp and the Munro-Croesus project, which includes the past-producing
high-grade Croesus gold mine located east of the Timmins gold camp.
The Company is a reporting issuer in British Columbia, Alberta and Ontario and trades on the TSX
Venture Exchange under the symbol CEM.
Historical results of operations and trends that may be inferred from the following discussions and
analysis may not necessarily indicate future results from operations. The Company is currently engaged
in exploration and development of mineral properties and does not have any source of revenue or
operating assets, however the Company has generated cash flow from option earn-in agreements, from
fees for management of option-joint venture exploration projects and from sale of available-for-sale
investments. The recoverability of the amounts shown for mineral properties is dependent upon the ability
of the Company to obtain necessary financing to complete exploration, technical studies and, if
warranted, development and future profitable production or proceeds from the disposition of properties.
The amounts shown as mineral properties represent net costs to date and do not necessarily represent
present or future values.
Highlights
Ontario Mineral Claims Sold for $4.5 Million Plus Royalties – In January 2017, the Company
completed the sale of some of its Ontario exploration properties for $4.5 million cash, plus
royalties.
Dowa Exercises Option to Form Joint Venture on Palmer Project - In December 2016, Dowa
Metals & Mining Alaska Ltd. (“Dowa”) completed its US$22 million earn-in to the Palmer VMS
Project and exercised its option to participate as a partner in the project. A joint venture was
formed for the purpose of further exploring and developing the Palmer project, with Constantine
owning a 51% participating interest and Dowa owning a 49% participating interest. Approximately
US$2 million in unspent option earn-in funds will form the starting cash balance of the joint
venture.
1
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
2016 Palmer Project Summer Work Program Completed – The Company completed a US$3.7
exploration program on the Palmer Project. Drilling included four reconnaissance exploration
holes (1,465 m) and three geotechnical holes (502 m) for a combined total of 1,967 meters.
CAP Prospect Highlight - a 20.5 meter thick zone of chert and semi-massive pyrite intersected
at the CAP prospect provides an important vector to the potential massive sulphide component of
the CAP prospect for follow-up drilling.
South Wall Zone Fault Offset Interpretation - Analysis by a recognized, independent structural
geologist was completed, which provided new insight into the direction and sense of
displacement of fault structures identified in the 2015 down-dip resource drilling. This targets the
offset to two of the better grade and thick intervals encountered in the EM zone.
Road Construction Started – In August 2016, a permit was granted to the Company to build an
access road to Palmer Project deposit area, and construction of the road commenced.
Environmental Studies and Engineering – Over $1,250,000 has been spent to date on
environmental and engineering studies to support permitting. These studies are on-going and
include surface and groundwater hydrology, geotechnical, water quality, wildlife and plant
surveys, rock quality characterization, meteorology, natural hazard assessment, and terrain and
surficial geology analysis.
Sale of Ontario Mineral Claims for $4.5 Million Cash
In January 2017, the Company completed the sale of certain mineral claims in Ontario to Lake Shore
Gold Corp (“Lake Shore”)(see News Release dated November 7, 2016). Constantine received $4.5
million cash from Lake Shore and a 100% interest in Lake Shore’s “Munro” claim, which is contiguous to
Constantine’s existing Munro-Croesus claims.
The mineral claims that have been sold, known as the Horseshoe, Four Corners and the Meunier Add-on
claims, are located adjacent to Lake Shore’s Fenn-Gib gold project in Ontario. The sale does not include
Constantine’s neighboring Munro Croesus Gold Property that is renowned for its exceptionally high-grade
past production, or the Golden Mile Property, which collectively represent a rare opportunity to control an
extensive, high potential land position in the prolific Timmins gold camp. Under the terms of the
agreement with Lake Shore, Constantine retains a 1% Net Smelter Return Royalty (“NSR”) on the
Horseshoe claims, which are located a few hundred meters west-northwest of the Fenn-Gib gold
resource. Constantine also retains the rights to certain NSR buy-down provisions associated with the
underlying property agreements on all of the properties sold to Lake Shore.
Base Metal Project – Palmer Property (southeast Alaska, USA)
Dowa Exercise Option to Earn 49% Interest in Palmer Project
In December 2016, Dowa completed its US$22 million earn-in to the Palmer VMS Project and exercised
its option to participate as a partner in the project. A joint venture was formed for the purpose of further
exploring and developing Palmer project, with Constantine owning a 51% participating interest and Dowa
owning a 49% participating interest. Approximately US$2 million in unspent option earn-in funds will form
2
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
the starting cash balance of the joint venture, and the partners will thereafter co-fund the JV’s
expenditures according to their interests in the project. The joint venture is currently being formalized as
a LLC entity.
Palmer Project Description
Palmer is a resource expansion stage, high-grade volcanogenic massive sulphide (VMS) project, with an
Inferred Mineral Resource of 8.1 million tonnes grading 1.41% copper, 5.25% zinc, 0.32 g/t gold and 31.7
g/t silver*. The Project is being advanced in partnership with Dowa Metals & Mining Co., Ltd. which has
earned 49% in the project by making aggregate expenditures of US$22 million over four years. The
Palmer project is located in a very accessible part of coastal southeast Alaska, with road access to the
edge of the property and is within 60 kilometers of the year-round deep sea port of Haines. Mineralization
at Palmer occurs within the same belt of rocks that is host to the Greens Creek mine, one of the world’s
richest VMS deposits. There are at least 25 separate base metal and/or barite occurrences and
prospects on the Palmer property, indicating the potential for discovery of multiple deposits beyond the
RW-South Wall deposit area.
* See the Company's news release date May 11, 2015 and the company’s technical report entitled “NI 43-101 Technical Report
and Updated Resource Estimate Palmer Exploration Project “dated June 24, 2015 available on www.sedar.com. Resource
estimate utilizes an NSR cut-off of US$75/t with assumed metal prices of US$1200/oz for gold, US$18/oz for silver, US$2.75/lb
for copper, and US$1.00/lb for zinc. Estimated metal recoveries are 89.6% for copper, 84.9% for zinc, 75% for gold (61.5% to
the Cu concentrate and 13.5% to the Zn concentrate) and 89.7% for silver (73.7% to the Cu concentrate and 16% to the Zn
concentrate) as determined from metallurgical locked cycle flotation tests. An Inferred Mineral Resource is that part of a
Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and
sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.
2016 Work Program Summary
The 2016 summer drill program included four reconnaissance exploration holes (1,465 m) and three
geotechnical holes (502 m) for a combined total of 1,967 meters.
Highlights include a 20.5 meter (estimated true thickness) zone of chert and semi-massive pyrite
intersected at the CAP prospect. The intersection, which is anomalous in silver and other pathfinder
elements, is geologically significant. At the South Wall and RW zones, located 2,500 meters to the
northeast, chert grades laterally into high-grade massive sulphide, and similar zoning is predicted at CAP.
The thickness of the chert horizon at CAP, which occurs at the contact between overlying argillite and
altered footwall volcanics, suggests good potential for a well-developed massive sulphide system within
the immediate area. The limited 2016 drilling provides an important vector to the potential massive
sulphide component of the CAP prospect for follow-up drilling.
Analysis by a recognized, independent structural geologist has provided new insight into the direction and
sense of displacement of fault structures identified in the 2015 down-dip resource drilling that intersect
and offset the lowermost portion of the South Wall zone. The work included a review of the fault and
adjacent rocks in drill core and on surface, and has produced new drill targets. These targets would test
the offset to the better grade and thick intervals encountered in the prior drilling of the EM zone (see
News Release dated September 29, 2014).
3
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
Mapping and rock and soil sampling programs were completed at several areas throughout the Property
with the objective of advancing prospects to the drill stage. Recommendations to drill test some of these
targets in the 2017 budget will be made by the Company.
Significant new environmental and geotechnical data was collected over the course of the summer
exploration program. This includes hydrogeology, water quality, aquatic resources, wildlife, rock
geochemistry, rock and soil geotechnical engineering, and natural hazard assessments. These studies
support the ongoing evaluation of the inferred mineral resource.
Palmer Project Agreements
The Company holds a 99 year mining lease dated December 19, 1997 on 340 mining claims that
comprise the original Palmer property. To maintain the lease, the Company is required to make annual
advance royalty payments of US$42,500 and pay Federal claim maintenance fees, which were US
$52,700 in 2016. The lease is subject to a 2.5% net smelter return (“NSR”) royalty. The Company has a
right of first refusal to purchase the NSR or any portion thereof at any time during the term of the lease.
The advance royalty payments, which total US$811,042 to date, are deductible from the NSR royalty.
In September 2014, a formal agreement was signed between the Alaska Mental Health Trust Authority, a
state corporation within Alaska (the “Trust”) and the Company for an upland mining lease on the
approximately 92,000 acre Haines Block land package surrounding the Palmer property. Constantine
acquired the Haines Block for mineral exploration and development in a competitive lease process
offered by the Trust. The Haines Block is contiguous with and surrounds the Federal and State mining
claims that make up the approximately 16,000 acre Palmer property. The Trust owns the subsurface
mineral estate of the Haines Block and a small subset of the block is held fee simple, for which the Trust
owns both the surface and subsurface estate. General lease terms include annual rental of US$25,000
per year for the initial three year lease term, US$40,000 for years 4 to 6, US$55,000 for years 7 through
9, with work commitments of US$75,000 per year, escalating by US$50,000 annually. There is a
mandatory acreage reduction of 25,000 acres at the end of the first and second 3 year lease terms. The
lease can be extended beyond year nine by making annual rental payments and continuing to diligently
pursue exploration and development on the lease. Annual payments are replaced by royalty payments
upon achieving commercial production. Production royalties payable to the Trust include a sliding scale
1% to 4.5% royalty for gold based on gold price, and a 3.5% royalty on minerals other than gold. The
Alaska State production royalty levied on State lands does not apply to production on Trust lands.
Dowa exercised the right under the Constantine-Dowa Option-JV Agreement (see Selection Agreement
below) to include a portion of Mental Health Trust Lease land (3,483 acres) that is immediately adjacent
to the Company’s current drilling activities as part of the Palmer Property to the benefit of both parties and
at the same time leaves Constantine with a 100% interest in the balance of approximately 89,000 acres of
highly prospective Haines Block land.
The Haines Block shares similar geology to the Palmer Property and is considered prospective for
hosting high-grade massive sulphide mineralization. The property also covers areas upland of the active
Porcupine placer gold district that has estimated past production of 82,489 ounces of gold. This
represents the first time the Haines Block has been offered to the public for lease, with very limited
exploration work having taken place in recent decades. Please refer to the Company’s September 9,
2014 news release for additional details about the Haines Block lease agreement.
4
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
About the Constantine-Dowa Option and Joint Venture Agreement
Under the terms of an Option and Joint Venture Agreement (the “Agreement”) dated February 1, 2013,
Dowa had the option to earn a 49% interest in the Palmer project by making aggregate expenditures of
US$22,000,000 over a four year period. Included in the amount of aggregate expenditures were cash
payments to Constantine totaling US$1,250,000 over the four years. Constantine was the operator of the
project and received a management fee for work programs during the earn-in period.
Dowa completed its earn-in of US$22 million at the end of 2016 and a joint venture was formed (51%
Constantine, 49% Dowa). The 2016 budget of US$3.7 million resulted in total aggregate expenditures of
approximately US$20 million at the end of the year. The unspent commitment at the end of 2016
(approximately US$2 million) has been deposited in the project funding account in December 2016 and
will be spent by the Joint Venture before Constantine is required to make any contribution.
Finder’s Fees Paid on Dowa Agreement in 2016
In April 2016, the Company paid US$20,000 in finder’s fees related to the Dowa agreement, and in May
2016 the Company issued 437,483 shares of the Company in relation to finder’s fees on the Dowa
agreement. An aggregate of US$250,000 (consisting of US$60,000 cash US$190,000 in shares) has
been paid in finder’s fees in connection with the Dowa agreement, which is the total amount payable
under the Company’s agreement with the finder.
Gold Projects
In January 2017, the Company completed the sale of Horseshoe claims and the Four Corners and
Meunier Add-On properties to Lake Shore Gold (the “Lake Shore Transaction”) (see News Release dated
November 7, 2016) for $4.5 million cash plus retained royalties and the acquisition of a 100% interest in
Lake Shore’s Munro Claim, which is contiguous to Constantine’s existing Munro-Croesus claims. The
mineral claims included in the $4.5 million sale, known as the Horseshoe, Four Corners and the Meunier
Add-on claims, are located adjacent to Lake Shore’s Fenn-Gib gold project in Ontario, but do not include
Constantine’s neighboring Munro Croesus Gold Property, which is renowned for its exceptionally high-
grade past production from the Croesus Mine.
Subsequent to the Lake Shore Transaction, Constantine controls a 100% interest in the core Munro
Croesus gold mine property and the Golden Mile property, that collectively represent a high potential land
position in the prolific Timmins gold camp in Ontario. The Munro Croesus project, which includes the
famous high-grade past-producing Croesus Gold Mine, is located along the north side of the Pipestone
Fault and within the Porcupine Destor Fault zone corridor approximately 75 kilometers east of the center
of the Timmins gold camp. The large (68 square kilometers) Golden Mile property is in the Timmins gold
camp, nine kilometers northeast of Goldcorp’s multimillion ounce Hoyle Pond Mine, and is strategically
located at the intersection of the projection of the Timmins camp giant mine corridor with the Pipestone
fault.
In Alaska, the Company holds a 100% interest in the portion of the Haines Block Lease property that
covers areas upland of the active Porcupine placer gold district that has estimated past production of
82,489 ounces. Other gold assets include a 50/50 Joint Venture formed in 2010 with Carlin Gold
Corporation exploring a >600 sq. km land position in a new Carlin-type gold district in Yukon.
5
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
The Company is continuing to actively consider various strategic alternatives to realize the value of the
remaining gold assets for its shareholders.
Results of Operations
The Company recorded a net loss of $618,003 for the year ended October 31, 2016, ($431,109 exclusive
of non-cash compensation expense for share-based payments resulting from the issuance and vesting of
directors and employee stock options).
Exploration and Evaluation Property Expenditures
In the year ended October 31, 2016, the Company incurred expenditures of $4,989,287 on exploration
and evaluation properties. The Palmer project accounted for $4,902,745 of those expenditures. In the
year ended October 31, 2016, the Company recorded a total of $5,134,515 in cost recoveries, agreement
payments and project management fees for the Palmer project that exceeded the Company’s
expenditures on the project. For the year ended October 31, 2016, the Company incurred costs totaling
$86,542 on the remainder of its exploration and evaluation properties.
Operating Costs
The Company recorded cash operating expenses of $447,166 for the year ended October 31, 2016,
compared to cash operating costs of $426,808 for the previous year. A breakdown of total general and
administrative costs for the year ended October 31, 2016 is shown in the table below. The Company is
projecting such costs to remain in the same range for the next fiscal year.
Annual Financial Information
Selected annual financial information for the three years ended October 31, 2016, 2015 and 2014 as
follows:
At October 31,
Loss before other items
Net loss for the year
Loss per share
Total assets
Total liabilities
Total shareholders’ equity
2016
$ (637,325)
(618,003)
(0.01)
13,704,263
332,224
13,372,039
2015
$ (558,527)
(1,414,641)
(0.01)
13,958,516
285,842
13,672,674
2014
$ (657,890)
(1,087,362)
(0.01)
15,216,499
261,313
14,955,186
6
General and Administrative expenses for the year ended October 31, 2016AmountConferences, trade shows and advertising $ 44,954 Accounting and administration60,000Office expenses35,830Transfer agent, listing and filing fees16,972Other10,384Total $ 168,140
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
Summary of Quarterly Results
In the three months ended October 31, 2016, the Company incurred aggregate expenditures of
$2,153,154 on exploration and evaluations properties, virtually all of which ($2,116,304) was incurred on
the Palmer project, the Company’s main operational focus. The Company recorded cash operating
expenses of $104,012 for the three months ended October 31, 2016, compared to cash operating costs
of $77,928 for the same period last year. The Company recorded a net loss of $56,671 for the three
months ended October 31, 2016.
The following is a summary of certain consolidated financial information of the Company for the past eight
quarters:
Financial Condition, Liquidity and Capital Resources
The Company is not in commercial production on any of its mineral properties and accordingly, it does not
generate cash from operations. The Company finances its activities by raising capital through the equity
markets, option and joint venture agreements that provide cash payments and management fees, and
monetization of assets. In the year ended October 31, 2016, the Company recorded an aggregate of
$608,718 (2015-$630,891) in option payments and management and project fees from operating the
Palmer project.
The Company's cash position at October 31, 2016 was $567,673 (2015-$396,069) and its working capital
at October 31, 2016 was $307,238 (2015-$440,630). As of the date of this report, the Company’s total
cash position is approximately $7,200,000, including approximately US$2,000,000 in Palmer joint venture
funds. The Company’s working capital is currently approximately $4,500,000.
In August 2016, the Company sold all of its Available-for-Sale investment for net proceeds of $131,204
cash, which amount was added to general working capital.
In January 2017, the Company received $4,500,000 cash from the sale of exploration properties in
Ontario (Lake Shore Gold Corp. transaction).
The Company is dependent on equity capital to fund exploration and development of exploration
7
For Quarter EndedTotalAssetsIncome(Loss)Income(Loss)per shareOctober 31, 2016$ 13,704,263 $ (56,671)$ 0.00 July 31, 2016 14,478,625 (295,275) (0.00)April 30, 2016 13,683,252 (157,346) (0.00)January 31, 2016 13,674,186 (108,711) (0.00)October 31, 2015 13,958,516 (148,405) (0.00)July 31, 2015 14,885,665 (101,128) (0.00)April 30, 2015 14,087,749 (1,117,375) (0.01)January 31, 2015 15,083,372 (47,733) (0.00)
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
properties and its on-going operations. Constantine has a joint venture in place which will fund the
Palmer project in Alaska in 2017, with Constantine contributing its share of expenditures. Additional
working capital will be required in order to finance any significant exploration work on its other properties.
At this time, the Company has no material contractual commitments for capital expenditures.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet financing arrangements.
Related Party Transactions
The following represents the details of related party transactions paid or accrued for the years ended
October 31, 2016 and 2015:
The Company paid NS Star Enterprises Ltd., a company controlled by a director, $30,096 for
management and administration services during the year ended October 31, 2016 (2015-$43,178). The
Company paid Morfopoulos Consulting Associates Ltd., a company controlled by the CFO, $72,000 for
accounting, and management and administration services during the year ended October 31, 2016 (2015-
$72,000). The Company paid D. Green Geoscience Inc., a company controlled by the vice-president of
exploration, $181,676 for technical consulting and management and administration services during the
year ended October 31, 2016 (2015-$178,426).
The Company paid wages totaling $132,000 (2015-$132,000) to Mr. J. Garfield MacVeigh, in his capacity
as president of the Company.
Related party amounts are unsecured, non-interest bearing and due on demand. As at October 31, 2016,
$15,071 (2015 - $3,199) is due to related parties of the Company.
Management of Capital
The Company manages its cash, common shares and stock options as capital. The Company’s
objectives when managing capital are to safeguard the Company’s ability to continue as a going concern
in order to pursue the development of its mineral properties and to maintain a flexible capital structure
which optimizes the costs of capital at an acceptable risk. The Company does not have any externally
imposed capital requirements to which it is subject.
The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,
8
For the years ended October 31,20162015Consulting,administrativeandtechnicalfeespaidoraccruedtocompaniesownedbydirectors $ 30,096 $ 43,178 Consulting fees paid to officers 181,676 178,426 Accounting and administration fees paid or accrued to a company 50% owned by an officer72,00072,000Share-based payments to key management64,871 71,745 $ 348,642 $ 365,349
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the
amount of cash and cash equivalents.
In order to facilitate the management of its capital requirements, the Company prepares expenditure
budgets that are updated as necessary depending on various factors, including successful capital
deployment and general industry conditions.
In order to maximize ongoing exploration efforts, the Company does not pay out dividends. The
Company’s investment policy is to keep its cash treasury on deposit in an interest bearing Canadian
chartered bank account.
Summary of Outstanding Shares Data
The Company had 117,343,484 shares outstanding on October 31, 2016, and as of the date of this
report.
The following stock options were outstanding at October 31, 2016 and as of the date of this report:
No. of Stock Options
1,875,000
5,400,000
1,400,000
2,450,000
11,125,000
Price per Share
$0.11
$0.07
$0.14
$0.10
Expiry Date
March 5, 2017
January 17, 2019
March 6, 2020
June 30, 2021
Corporate Governance
Management of the Company is responsible for the preparation and presentation of the interim and
annual financial statements and notes thereto, MD&A and other information contained in this MD&A.
Additionally, it is management’s responsibility to ensure the Company complies with the laws and
regulations applicable to its activities.
The Company’s management is held accountable to the Board of Directors (“Directors”), each member of
which is elected annually by the shareholders of the Company. The Directors are responsible for
reviewing and approving the annual audited financial statements and MD&A. Responsibility for the
review and approval of the Company’s unaudited interim financial statements and MD&A is delegated by
the Directors to the Audit Committee, which is comprised of three directors, two of whom are independent
of management. Additionally, the Audit Committee pre-approves audit and non-audit services provided
by the Company’s auditors.
The auditors are appointed annually by the shareholders to conduct an audit of the financial statements in
accordance with generally accepted auditing standards. The external auditors have complete access to
the Audit Committee to discuss the audit, financial reporting and related matters resulting from the annual
audit as well as assist the members of the Audit Committee in discharging their corporate governance
responsibilities.
9
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
Risk Factors
Companies operating in the mining industry face many and varied kind of risks. While risk management
cannot eliminate the impact of all potential risks, the Company strives to manage such risks to the extent
possible and practical. Following are the risk factors most applicable to the Company.
Financial
The Company has not generated any revenue since inception and has never paid any dividends and is
unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As at October 31,
2016, the Company has incurred losses since inception and has an accumulated operating deficit of
$9,143,764. The continuation and long-term viability of the Company remains dependent upon its ability
to obtain necessary equity financing to continue operations and to determine the existence, discovery and
successful exploitation of economically recoverable reserves in its resource properties, confirmation of the
Company’s interests in the underlying properties, and the attainment of profitable operations.
Industry
Exploring and developing mineral resource projects bears a high potential for all manner of risks.
Additionally, few exploration projects successfully achieve development due to factors that cannot be
predicted or foreseen. Moreover, even one such factor may result in the economic viability of a project
being detrimentally impacted such that it is not feasible or practical to proceed. The Company monitors
its risk based activities and periodically employs experienced consulting, engineering, insurance and legal
advisors to assist in its risk management reviews.
Although the Company has taken steps to verify the title to mineral properties in which it has an interest,
in accordance with industry standards for the current stage of exploration of such properties, these
procedures do not guarantee the company's title. Property title may be subject to unregistered prior
agreements or transfers and title may be affected by undetected defects.
Metal Prices
The principal activity of the Company is the exploration and development of precious metal and base
metal resource properties. The feasible development of such properties is highly dependent upon the
price of gold, silver, copper lead and zinc. A sustained and substantial decline in precious metal and
base metal commodity prices could result in the write-down, termination of exploration and development
work or loss of its interests in identified resource properties. Although such prices cannot be forecasted
with certainty, the Company carefully monitors factors which could affect precious metal and base metal
commodity prices in order to assess the feasibility of its resource projects.
Political Risk
The resource properties on which the Company is actively pursuing its exploration and development
activities are located in Alaska, USA, Yukon and Ontario, Canada. While the political climate in Alaska,
Yukon, British Columbia and Ontario is considered by the Company to be stable, there can be no
assurances that this will continue indefinitely. To alleviate such risk, the Company funds its operations on
an as-needed basis. The Company does not presently maintain political risk insurance for its foreign
exploration projects.
10
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
Environmental
Exploration and development projects are subject to the environmental laws and regulations of the state
of Alaska and of the United States of America (Palmer project) and the environmental laws and
regulations of Canada and the province of Ontario (Munro-Croesus and Golden Mile projects). As such
laws are subject to change, the Company monitors proposed and potential changes and management
believes the Company remains in compliance with current environmental regulations in the relevant
jurisdictions.
On the Palmer project, reclamation of disturbances related to the Company’s permitted exploration
activities are bonded under the Alaska State-wide Bond Pool. The Company has also contracted an
ASTM Phase 1 environmental site assessment (ESA) on the federal lode mining claims of the Palmer
project. The ESA concluded that there are no environmental concerns associated with the Property at this
time.
The Munro Croesus project includes the very small past producing Munro Croesus Gold Mine that mined
approximately 5000 tons of ore. The Company has assumed the environmental liability at the Croesus
minesite on the Munro Croesus property. To date it has not incurred any material expenses, however it
does remain an uncertain liability. The Ontario government requires a closure plan if the claims are
abandoned or become inactive and the closure plan will require some water sampling and site
reclamation costs. The previous owner completed remediation of what the Company considers to be the
major liabilities, which included capping the Walsh and Croesus shafts. The Croesus minesite was visited
by a mines inspector in September 2010 and an inspection report received from the Ministry of Northern
Development, Mines and Forestry (Ontario) in early 2011. The summary of field observations and
recommendations in the Inspection Report are near surface stope stability concerns and recommendation
for a crown pillar stability assessment. There is a specific near-term recommendation to secure the
location of a small raise to surface that is filled with waste rock with a fence and signs and this remedial
action has been taken. The small raise area was fenced and cautionary signage was installed. A
preliminary evaluation of the near surface stope stability and a crown pillar stability assessment was
completed by a qualified engineer, independent of the Company. The initial conclusion based on historic
data and new information from drill data through the old workings and the recent excavation work is that
the “old workings will stand for a long time” and that “surface subsidence would be minimal at the down-
dip edge of the zone and could be as much as 1 meter near the upper edge.” Now that the crown pillar is
exposed, a site visit by a qualified Ontario mining engineer is required with formal reporting of the
conclusions to be made to the Ministry of Northern Development, Mines and Forestry (Ontario). Surface
water samples upstream and downstream of the site have been recommended to determine water quality
issues. No specific schedule has been established to carry out this work.
Operational
Exploration development projects require third party contractors for the execution of certain activities.
The availability and cost of third party contractors is subject to a competitive environment for their use,
which is beyond the control of the Company.
Credit risk
Credit risk is the risk of potential loss to the Company if a customer or counterparty to a financial
instrument fails to meets its contractual obligations. The Company’s credit risk is limited to the carrying
amount on the balance sheet and arises from the Company’s cash and receivables.
11
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
The Company’s cash is held primarily through a Canadian chartered bank, which is a high-credit quality
financial institution. The credit risk in receivables is considered low by management as it consists
primarily of amounts owing for Canadian government sales tax credits.
Liquidity risk
Liquidity risk is the risk that the Company will not meet its financial obligations as they fall due. The
Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet
liabilities when due. At October 31, 2016, the Company had a cash balance of $567,673 to settle current
liabilities of $322,224.
All other financial liabilities have maturities of 30 days or are due on demand and are subject to normal
trade terms.
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.
Interest rate risk
The Company has cash balances and no interest-bearing debt. The Company’s current policy is to invest
excess cash in investment-grade short-term certificates of deposits issued by its banking institutions. The
Company periodically monitors the investments it makes and is satisfied with the credit ratings of its
banks.
Foreign currency rate risk
The Company’s functional currency is the Canadian dollar and major purchases are transacted in
Canadian dollars. Management believes the foreign exchange risk derived from currency conversions is
insignificant and therefore does not hedge its foreign exchange risk.
Sensitivity analysis
The carrying value of cash, receivables, accounts payable, and amounts due to related parties closely
approximate their fair values in view of the relatively short periods to maturities of these financial
instruments.
Based on management’s knowledge of and experience in the financial markets, management does not
believe that the Company’s current financial instruments will be materially affected by credit risk, liquidity
risk or market risk.
Forward-Looking Statements
Forward-looking statements include, but are not limited to statements regarding the use of proceeds,
costs and timing of the development of new deposits, statements with respect to success of exploration
and development activities, permitting time lines, currency fluctuations, environmental risks, unanticipated
reclamation expenses, and title disputes or claims.
12
Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
Forward-looking statements often, but not always are identified by the use of words such as “plans”,
“seeks”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “targets”,
“forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and
phrases or statements that certain actions, events or results “may”, “should”, “could”, “would”, “might”,
“will”, or “will be taken”, “occur” or “be achieved”.
Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other
factors which may cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements expressed or implied by the
forward-looking statements. These statements are based on a number of assumptions and factors,
including assumptions regarding general market conditions; future prices of gold and other metals;
possible variations in ore resources, grade or recovery rates; actual results of current exploration
activities; actual results of current reclamation activities; conclusions of future economic evaluations;
changes in project parameters as plans continue to be refined; failure of plant, equipment, or processes
to operate as anticipated; accidents, labour disputes and other risks of the mining industry; risks related to
joint venture operations; timing and receipt of regulatory approvals of operations; the ability of the
Company and other relevant parties to satisfy regulatory requirements; the availability of financing for
proposed transactions and programs on reasonable terms; the ability of third-party service providers to
deliver services on reasonable terms and in a timely manner; and delays in the completion of
development or construction activities. Other factors that could cause the actual results to differ include
market prices, results of exploration, availability of capital and financing on acceptable terms, inability to
obtain required regulatory approvals, unanticipated difficulties or costs in any rehabilitation which may be
necessary, market conditions and general business, economic, competitive, political and social
conditions. Although the Company has attempted to identify important factors that could cause actual
results to differ materially from those expressed or implied in forward-looking statements, there may be
other factors which cause actual results to differ. Significant additional drilling is required by the Company
at its Palmer property to fully understand the system size before a meaningful resource can be calculated
and completed. Accordingly, readers should not place undue reliance on forward-looking statements.
This MD&A includes, but is not limited to, forward-looking statements regarding: the Company’s plans for
upcoming exploration work on the Company’s exploration properties in Alaska, and the Company’s ability
to meet its working capital needs for the next fiscal year.
Forward-looking statements contained herein are made as of the date of this MD&A and the Company
disclaims any obligation to update any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as required by applicable securities laws.
Approval
Darwin Green, P. Geo., Vice-President Exploration for Constantine, and a qualified person as defined by
Canadian National Instrument 43-101, has reviewed the technical information contained in this MD&A
and has also verified the analytical data for drill core samples disclosed in this release by reviewing the
blanks duplicates and certified reference material standards and confirming that they fall within limits as
determined by acceptable industry practice.
Ian Cunningham-Dunlop, P.Eng. and Technical Advisor to Constantine Metal Resources Ltd., is a
Qualified Person as defined by NI 43-101 for the Palmer project. James N. Gray, P.Geo. of Advantage
Geoservices Ltd. is the Qualified Person as defined by NI 43-101 for the resource estimate discussed
above. They have reviewed and approved the resource estimate statements in this MD&A.
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Management’s Discussion and Analysis
For the year ended October 31, 2016
(Expressed in Canadian dollars)
The Board of Directors of the Company has approved the disclosure contained in this MD&A. A copy of
this MD&A will be provided to anyone who requests it.
Additional Information
Additional disclosures pertaining to the Company’s technical reports, management information circulars,
material change reports, press releases and other information are available on the SEDAR website at
www.sedar.com.
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