Consolidated Financial Statements of
CONSTANTINE METAL RESOURCES LTD.
(Expressed in Canadian Dollars)
For the years ended October 31, 2019 and 2018
S u i t e 3 2 0 - 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 Auditor’s Report
To the Shareholders of Constantine Metal Resources Ltd.
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Constantine Metal Resources Ltd., which comprise the
consolidated statements of financial position as at October 31, 2019 and 2018, and the consolidated statements of
loss and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects the
consolidated financial position of the Company as at October 31, 2019 and 2018, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with International Financial
Reporting Standards (IFRS).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled
our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company is dependent
upon the future receipt of equity financing to maintain its operations. As stated in Note 1, these events or conditions,
along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant
doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Other Information
Management is responsible for the other information. The other information comprises the information included in
“Management’s Discussion and Analysis”, but does not include the consolidated financial statements and our
auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is James D. Gray.
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, BC, Canada
February 26, 2020
Consolidated Statements of Financial Position
As at October 31, 2019 and 2018
(Expressed in Canadian dollars)
Nature of Operations (Note 1)
Commitments (Note 14)
On Behalf of the Board of Directors:
“J. Garfield MacVeigh”
___________________________
Director
See accompanying notes to the consolidated financial statements.
“G. Ross McDonald”
___________________________
Director
2
October 312019October 312018AssetsCurrent assets: Cash and cash equivalents1,197,216$ 4,307,962$ Amounts receivable (Note 8)309,797 322,442 Advances and prepaid expenses 16,762 12,230 Investments (Note 4)26,000 22,500 1,549,775 4,665,134 Exploration and evaluation properties (Note 5)20,125,579 20,577,787 Performance bonds137,200 137,013 21,812,554$ 25,379,934$ LiabilitiesCurrent liabilities: Trade payables and accrued liabilities 540,558$ 443,203$ Amounts due to related parties (Note 8)16,667 17,750 557,225 460,953 Loan facility (Note 6)726,906 - 1,284,131 460,953 EquityShare capital (Note 7)26,960,940 30,055,499 Stock options reserve (Note 7(b))2,606,273 2,151,843 Warrants reserve530,054 432,941 Investments reserve (Note 4)(28,500) (15,250) Accumulated deficit (9,540,344) (7,706,052) 20,528,423 24,918,981 21,812,554$ 25,379,934$
Consolidated Statements of Loss and Comprehensive Loss
For the years ended October 31, 2019 and 2018
(Expressed in Canadian dollars)
* Restated to reflect share consolidation which took place on May 18, 2018.
See accompanying notes to the consolidated financial statements.
3
October 31October 3120192018Expenses:Consulting114,131$ 141,063$ Finance expense (Note 6)552 - General and administrative210,865 203,149 Insurance19,484 50,013 Interest9,946 - Legal313,973 8,823 Loan accretion (Note 6)730 - Loan interest (Note 6)3,542 - Mineral property costs- 17,475 Professional fees - audit32,000 46,822 Rent (net)17,662 3,567 Salaries, wages and benefits378,371 213,524 Shareholder communications54,830 49,922 Share-based payments (Note 7(b))500,000 215,087 Travel86,882 39,466 Loss from operations (1,742,968) (988,911)Other Items: Interest income21,432$ $ 10,451 Spin-out transaction costs(227,235) - Gain (loss) on foreign exchange43,226 (28,517) Gain on previously written off properties79,250 75,250 Write-off of exploration and evaluation properties (Note 5(b))(7,997) (7,739) Net loss for the year(1,834,292)$ (939,466)$ Other comprehensive loss: Change in value of investments (Note 4)(13,250) (15,250) Net loss and comprehensive loss for the year(1,847,542)$ (954,716)$ Basic and diluted loss per share(0.04)$ $(0.03) Weighted average number of common shares outstanding *45,108,253 35,216,728
Consolidated Statements of Cash Flows
For the years ended October 31, 2019 and 2018
(Expressed in Canadian dollars)
See accompanying notes to the consolidated financial statements.
4
October 31October 3120192018Cash provided by (used in):Operations: Net loss for the year$(1,834,292) $(939,466) Items not affecting cash: Share-based payments (Note 7(b))500,000 215,087 Write-off of exploration and evaluation properties (Note 5(b))7,997 7,739 Gain on previously written off exploration and evaluation properties (Note 5(b))(79,250) (75,250) Loan facility transaction costs(6,888) - Changes in non-cash working capital accounts: Amounts receivable(16,215) (31,166) Trade payables and accrued liabilities403,152 (275,212) Exploration costs recoverable from partner240,920 (88,044) Reclamation bonds- (104,548) Amounts due to related parties (Note 8)(1,083) 17,750 Advances and prepaid expenses(4,719) 31,963 (790,378) (1,241,147) Investing activities: Exploration and evalution properties (Note 5)(3,581,275) (5,964,043) Property option proceeds62,500 37,500 (3,518,775) (5,926,543) Financing activities: Loan facility, net (Note 6)830,907 - Proceeds from exercise of stock options (Note 7(b))367,500 - Private placement proceeds (Note 7(a))- 10,000,000 Share issuance costs- (304,740) 1,198,407 9,695,260 Change in cash and cash equivalents(3,110,746) 2,527,570 Cash and cash equivaltents, beginning of year4,307,962 1,780,392 Cash and cash equivalents, end of year$1,197,216 $4,307,962 Supplemental Disclosure of Non-Cash Investing and Financing Activities: Interest income- - Interest paid9,946 - Spin-out transaction costs recoverable212,060 - Accounts payable related to exploration and evaluation properties$42,031 $164,896
Consolidated Statements of Changes in Equity
For the years ended October 31, 2019 and 2018
(Expressed in Canadian dollars)
* Restated to reflect share consolidation which took place on May 18, 2018.
See accompanying notes to the consolidated financial statements.
5
Number of Shares*Capital StockStock OptionsWarrantsInvestmentsDeficitTotal EquityBalance, October 31, 201729,335,872 20,360,239$ 1,936,756$ 432,941$ -$ (6,766,586)$ 15,963,350$ Net loss for the year- - - - - (939,466) (939,466) Private placement (Note 7(a))14,705,881 10,000,000 - - - - 10,000,000 Share issuance costs- (304,740) - - - - (304,740) Share-based payments (Note 7(b))- - 215,087 - - - 215,087 Other comprehensive loss (Note 4)- - - - (15,250) - (15,250) Balance, October 31, 201844,041,753 30,055,499$ 2,151,843$ 432,941$ (15,250)$ (7,706,052)$ 24,918,981$ Net loss for the year- - - - - (1,834,292) (1,834,292) Equity component of loan payable (Note 6)- - - 97,113 - - 97,113 Exercise of stock options (Note 7(b))1,312,500 413,070 (45,570) - - - 367,500 Disposition of assetsupon spinout (Note 5(b))- (3,507,629) - - - (3,507,629) Share-based payments (Note 7(b))- - 500,000 - - - 500,000 Other comprehensive loss (Note 4)- - - - (13,250) - (13,250) Balance, October 31, 201945,354,253 26,960,940$ 2,606,273$ 530,054$ (28,500)$ (9,540,344)$ 20,528,423$ Share CapitalReserves
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
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 is the inherent nature of mineral
exploration. The Company has incurred losses since inception and has an accumulated operating deficit of
$13,047,973. 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 ability of the Company to continue as a going concern and meet its commitments as they become due,
including completion of the acquisition, exploration and development of its mineral property interests, is
dependent on the Company’s ability to obtain the necessary financing. The Company will require additional
capital to finance future operations and growth. If the Company is unable to obtain additional financing, the
Company would be unable to continue. There can be no assurance that management’s plans will be successful.
The business of mineral exploration involves a high degree of risk and there is no assurance that current
exploration projects will result in future profitable mining operations. The Company has no source of revenue, and
has significant cash requirements to meet its administrative overhead, pay its liabilities and maintain its mineral
interests. The recoverability of amounts shown for exploration and evaluation properties is dependent on several
factors. These include the discovery of economically recoverable reserves, the ability of the Company to obtain
the necessary financing to complete the exploration and development of these exploration and evaluation
properties, and establish future profitable production, or realize proceeds from the disposition of exploration and
evaluation properties. The carrying value of the Company’s exploration and evaluation properties does not reflect
current or future values.
These matters indicate the existence of material uncertainties that may cast significant doubt about the
Company’s ability to continue as a going concern. These consolidated financial statements do not include any
adjustments relating to the recoverability of assets and classification of assets and liabilities that might be
necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
The head office and principal address of the Company is #320 – 800 West Pender Street, Vancouver, British
Columbia, Canada, V6C 2V6.
6
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
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) Consolidated Financial Statements
These consolidated financial statements of the Company for the years ended October 31, 2019 and 2018 were
approved and authorized for issue by the Board of Directors on February 26, 2020.
These consolidated financial statements include the accounts of the Company, its 100% controlled entities,
Constantine North Inc. (an Alaska corporation) and its 51% interest in Constantine Mining LLC (“CML”) (a
Delaware corporation, registered in the state of Alaska). The Company records its proportionate interest in the
assets, liabilities and expenses of CML in its consolidated financial statements.
Inter-company balances and transactions, including unrealized income and expenses arising from inter-company
transactions, are eliminated on consolidation.
c) Adoption of New and Revised Standards and Interpretations
Effective for annual periods beginning on or after January 1, 2018:
· IFRS 9, Financial Instruments;
Under IFRS 9, financial assets are required to be classified into three measurement categories on initial
recognition: those measured at fair value through profit and loss, those measured at fair value through other
comprehensive income and those measured at amortized cost. Investments in equity instruments are
required to be measured by default at fair value through profit or loss. However, there is an irrevocable option
for each equity instrument to present fair value changes in other comprehensive income. Measurement and
classification of financial assets is dependent on the entity’s business model for managing the financial
assets and the contractual cash flow characteristics of the financial asset.
IFRS 9 provides a three-stage expected credit loss model for calculating impairment for financial assets.
Expected credit losses are required to be recognized when financial instruments are initially recognized, and
the amount of expected credit losses recognized are required to be updated at each reporting date to reflect
changes in the credit risk of the financial instruments.
On initial recognition, IFRS 9 requires financial liabilities to be classified as subsequently measured at
amortized cost except for when one of the specified exceptions applies. In cases where the fair value option
is taken for financial liabilities, the part of a fair value change relating to an entity’s own credit risk is recorded
in other comprehensive income rather than the statement of loss, unless this creates an accounting
mismatch.
7
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
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. During the
current year, a significant estimate was required to determine the current fair value of the debt component of the
Company’s loan facility.
Significant judgment was required in the current fiscal year to determine that the deferred carrying costs
applicable to the Company’s gold properties formed a reasonable and fair basis for the proceeds received on
their disposition. Refer to Note 12.
A significant judgment applicable to the financial statements of the comparative year relates to the determination
of the appropriate accounting treatment for the Company’s investment in Constantine Mining LLC. Refer to
Notes 3(m) and 5(a).
b) Cash and Cash Equivalents
Cash in the statement of financial position comprises cash at banks and on hand. Cash equivalents is comprised
of highly liquid investments held at major financial institutions, having maturity dates of three months or less from
the date of purchase, which are readily convertible into known amounts of cash.
c) Foreign Currency Translation
The functional and reporting currency of the Company and its subsidiaries 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.
d) 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.
8
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
3. Significant Accounting Policies (continued)
d) Exploration and Evaluation Properties (continued)
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.
e)
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.
f) 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.
9
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
3. Significant Accounting Policies (continued)
g)
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.
h) Share-based Payments
The Company has a stock option plan that is described in Note 6(c). 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.
i) 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.
10
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
3. Significant Accounting Policies (continued)
j) Financial Instruments and Comprehensive Income
The classification of a financial asset or liability is determined at the time of initial recognition. The Company
does not enter into derivative contracts.
i)
Financial Assets
A financial asset is recognized when the Company has the contractual right to collect future cash
flows. Financial assets are derecognized when the contractual rights to the cash flows from the
financial asset expire, or when the financial asset and substantially all the risks and rewards are
transferred. Financial assets are recognized at fair value through profit or loss (“FVTPL”), fair value
through other comprehensive income (“FVOCI”) or amortized cost.
Cash and cash equivalents are recognized at their fair value and carried at amortized cost.
Receivables, excluding GST, are initially recognized at their fair value, less transaction costs and
subsequently carried at amortized cost using the effective interest method less impairment losses.
Equity investments are initially recognized at their fair value. Changes in the fair value of equity
investments are recognized in comprehensive income (loss) in the period in which they occur.
Interest income is recognized by applying the effective interest rate except for short-term receivables
when the recognition of interest would be immaterial.
Effective interest method
The effective interest method calculates the amortized cost of a financial asset and allocates interest
income over the corresponding period. The effective interest rate is the rate that discounts
estimated future cash receipts over the expected life of the financial asset, or, where appropriate, a
shorter period, to the net carrying amount on initial recognition. Income is recognized on an effective
interest basis for debt instruments other than those financial assets classified as FVTPL.
Impairment of financial assets
IFRS 9 replaces the incurred loss model from IAS 39 with an expected loss model (“ECL”). The new
impairment model applies to financial assets measured at amortized cost, contract assets and debt
investments measured at FVOCI. Under IFRS 9, credit losses will be recognized earlier than under
IAS 39. The ECL model applies to the Company’s trade receivables.
Recognition of credit losses is no longer dependent on the Company first identifying a credit loss
event. Instead, the Company considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events, current conditions and forecasts that
affect the expected collectability of future cash flows of the instrument.
11
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
3. Significant Accounting Policies (continued)
j) Financial Instruments and Comprehensive Income (continued)
i)
Financial Assets (continued)
In applying this forward-looking approach, the Company separates instruments into the below
categories:
1.
2.
3.
financial instruments that have not deteriorated significantly since initial recognition or that
have low credit risk.
financial instruments that have deteriorated significantly since initial recognition and whose
credit loss is not low.
financial instruments that have objective evidence of impairment at the reporting date.
12-month expected credit losses are recognized for the first category while ‘lifetime expected credit
losses’ are recognized for the second category.
Trade and other receivables
The Company makes use of a simplified approach in accounting for trade receivables and records
the loss allowance as lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point during the life of the financial
instrument. To calculate, the Company uses historical experience, external indicators and forward-
looking information to calculate the expected credit losses using a provision matrix.
The Company assesses impairment of trade receivables on a collective basis when they possess
shared credit risk characteristics and days past due.
For financial assets carried at amortized cost, the amount of the impairment is the difference
between the asset’s carrying amount and the present value of the estimated future cash flows,
discounted at the financial asset’s original effective interest rate.
Financial assets, other than those at FVTPL and amortized cost, are assessed for indicators of
impairment at each reporting period. Financial assets are impaired when there is objective evidence
that, as a result of one or more events that occurred after the initial recognition of the financial asset,
the estimated future cash flows of the investment have been impacted.
De-recognition of financial assets
A financial asset is derecognized when the contractual right to the asset’s cash flows expire or the
Company transfers the financial asset and substantially all risks and rewards of ownership to
another entity.
12
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
3. Significant Accounting Policies (continued)
j) Financial Instruments and Comprehensive Income (continued)
ii) Financial Liabilities
The Company classifies its financial liabilities in the following category:
Amortized cost
A financial liability is recognized when the Company has the contractual obligation to pay future cash
flows. Financial liabilities such as accounts payable and accrued liabilities are recognized at
amortized cost using the effective interest rate method.
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.
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 Issued but not yet Effective
Effective for annual periods beginning on or after January 1, 2019:
· IFRS 16, Leases
Under IFRS 16, the Company is required to review all its contracts to determine if they contain leases or
lease-type arrangements. Virtually all leases are required to be accounted for as finance leases rather than
operating leases, where the required lease payments are disclosed as a commitment in the notes to the
financial statements (Note 12). As a result, the Company will be required to recognize leased assets (“right-
of-use” assets) and the related lease liability on the statement of financial position.
13
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
3. Significant Accounting Policies (continued)
n) Joint Arrangements
The Company conducts exploration work jointly with other parties in joint ventures and other related legal entities
in circumstances where neither party can be said to authoritatively control the entity. Such arrangements are
considered, for accounting purposes, to be joint ventures when a separate legal entity exists and where the
Company’s investment is substantially related only to the net assets of that entity. The Company’s interests in a
joint venture are accounted for on the equity basis, reflective of the Company’s net investment at cost plus the
Company’s proportionate share of the entity’s subsequent income, less its share of any losses incurred.
In circumstances where the Company’s interest is considered to substantially relate to the development of a
particular asset or assets, such an arrangement in considered to be a joint operation and the Company’s
proportionate interest in the accounts of that entity are consolidated on a line by line basis with those of the
Company in the financial statements of the Company.
o) Comparative Figures
Certain comparative figures have been reclassified in accordance with the current year’s presentation.
4.
Investments
In May 2019, the Company received a second share payment of 25,000 shares from Fireweed Zinc Ltd.
(“Fireweed”) in connection with a mineral property option agreement that was signed in May 2018. The Company
previously received 25,000 shares of Fireweed at the time of the signing of the original agreement. The value of
the Company’s 50,000 Fireweed shares was $26,000 at October 31, 2019. The Company recorded a
comprehensive loss of $13,250 for the year ended October 31, 2019 (2018-$15,250) in connection with the
decrease in the value of its shares of Fireweed.
14
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
5. Exploration and Evaluation Properties
The following tables are a summary of the Company’s exploration and evaluation property interests:
(continued on next page)
15
BalanceFiscalBalanceFiscalBalanceOctober 312018October 312019October 312017Expenditures2018Expenditures2019PALMER PROJECT, ALASKAPalmer PropertyAcquisition costs 878,712$ -$ 878,712$ -$ 878,712$ Less: Recovery of acquisition costs(1,140,225) - (1,140,225) - (1,140,225) Advance royalty payments540,876 27,898 568,774 56,762 625,536 Assaying and testing528,303 105,477 633,780 107,649 741,429 Field transportation5,867,791 472,702 6,340,493 254,582 6,595,075 Geophysics892,252 4,827 897,079 22,432 919,511 Drilling15,148,453 1,708,344 16,856,797 623,465 17,480,262 Property maintenance 792,481 71,492 863,973 51,552 915,525 Geology and field support10,340,361 642,925 10,983,286 310,235 11,293,521 Environmental 1,587,983 435,321 2,023,304 703,529 2,726,833 Technical consulting and engineering- 470,869 470,869 196,754 667,623 Travel631,520 218,693 850,213 82,125 932,338 Construction and development- 105,531 105,531 301,697 407,228 Cost recoveries(24,383,441) - (24,383,441) - (24,383,441) 11,685,066$ 4,264,079$ 15,949,145$ 2,710,782$ 18,659,927$ Haines Block Acquisition costs129,165$ -$ 129,165$ -$ 129,165$ Assaying and testing5,261 - 5,261 - 5,261 Field transportation427,819 101,024 528,843 - 528,843 Geophysics99,119 14,084 113,203 - 113,203 Drilling563,394 382,635 946,029 28,766 974,795 Property maintenance - 68,045 68,045 15,943 83,988 Geology and field support179,992 194,924 374,916 - 374,916 Environmental 22,986 - 22,986 - 22,986 Travel5,781 - 5,781 - 5,781 Construction and development- 236,075 236,075 - 236,075 Cost recoveries(1,009,361) - (1,009,361) - (1,009,361) 424,156$ 996,787$ 1,420,943$ 44,709$ 1,465,652$ Palmer Project Totals12,109,222$ 5,260,866$ 17,370,088$ 2,755,491$ 20,125,579$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
(continued on next page)
16
`BalanceFiscalBalanceFiscalBalanceOctober 312018October 312019October 312017Expenditures2018Expenditures2019GOLD PROJECTSJohnson Tract Property, AlaskaAcquisition costs-$ 93,991$ 93,991$ 133,543$ 227,534$ Community relations & advocacy- 261 261 151 412 Administration- 6,469 6,469 8,104 14,573 Camp costs and field support- 202,626 202,626 929 203,555 Field transportation- 136,747 136,747 627 137,374 Geology and project mgmt- 312,963 312,963 56,786 369,749 Environmental - 1,192 1,192 5,677 6,869 Travel- 6,210 6,210 1,392 7,602 Disposition of assets upon spin-out (Note 12)- - - - (967,668) -$ 760,459$ 760,459$ 207,209$ -$ Munro-Croesus Property, Ontario, CanadaAcquisition costs494,876$ 1,266$ 496,142$ 1,935$ 498,077$ Assaying and testing107,655 10 107,665 - 107,665 Drilling1,127,740 - 1,127,740 - 1,127,740 Field transportation23,678 - 23,678 - 23,678 Geophysics149,446 - 149,446 - 149,446 Travel74,386 - 74,386 - 74,386 Geology and field support554,395 4,027 558,422 1,000 559,422 Proceeds allocated on sale of mineral claims(440,512) - (440,512) - (440,512) Disposition of assets upon spin-out (Note 12)- - - - (2,099,902) 2,091,664$ 5,303$ 2,096,967$ 2,935$ -$ Gold Projects (Sub-Total)2,091,664$ 765,762$ 2,857,426$ 210,144$ -$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
17
BalanceFiscalBalanceFiscalBalanceOctober 312018October 312019October 312017Expenditures2018Expenditures2019Gold Projects (Balance forward)2,091,664$ 765,762$ 2,857,426$ 210,144$ -$ Golden Mile Property, Ontario, CanadaAcquisition costs218,374$ -$ 218,374$ -$ 218,374$ Advance royalty payments- 10,000 10,000 10,000 20,000 Assaying and testing40,829 - 40,829 - 40,829 Drilling396,613 - 396,613 - 396,613 Field transportation22,514 - 22,514 - 22,514 Geophysics160,669 - 160,669 - 160,669 Geology and field support525,066 22,619 547,685 5,231 552,916 Technical consulting90,970 - 90,970 - 90,970 Travel31,133 3,201 34,334 - 34,334 Cost recoveries(1,230,468) - (1,230,468) - (1,230,468) Disposition of assets upon spin-out (Note 12)- - - - (306,751) 255,700$ 35,820$ 291,520$ 15,231$ -$ Golden Perimeter Property, Ontario, CanadaAcquisition costs-$ 17,900$ 17,900$ 10,600$ 28,500$ Geophysics- 40,000 40,000 62,905 102,905$ Geology and field support- 852 852 1,050 1,902$ Disposition of assets upon spin-out (Note 12)- - - - (133,307)$ -$ 58,752$ 58,752$ 74,555$ -$ Yukon, CanadaAcquisition costs57,021$ 4,620$ 61,641$ 5,670$ 67,311$ Assaying and testing197,379 - 197,379 - 197,379 Field transportation476,911 - 476,911 - 476,911 Geology185,234 1,679 186,913 297 187,210 Geochemisty290,093 - 290,093 - 290,093 Technical consulting61,608 - 61,608 - 61,608 Other573,494 1,440 574,934 2,030 576,964 Cost recoveries(25,000) - (25,000) - (25,000) Writedown of exploration and evaluation properties (1,816,739) (7,739) (1,824,478) (7,997) (1,832,475) Disposition of assets upon spin-out (Note 12)- - - - (1) 1$ -$ 1$ -$ -$ Total Gold Projects2,347,365$ 860,334$ 3,207,699$ 299,930$ -$ Total 14,456,587$ 6,121,200$ 20,577,787$ 3,055,421$ 20,125,579$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
a) Palmer Project, Alaska USA
i) Palmer Property Description
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,
there is a requirement to make annual advance royalty payments of US$42,500 and pay Federal claim
annual maintenance fees, which were US$52,700 in 2019.
The lease is subject to a 2.5% net smelter returns (“NSR”) royalty. CML 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.
ii) Limited Liability Company holding Palmer Project
In December 2016 Dowa Metals & Mining Co., Ltd. (“Dowa”) completed its option to earn a 49% interest
in the Palmer Project, having completed US$22,000,000 in aggregate exploration expenditures on the
project. A limited liability company (Constantine Mining LLC, or “CML”) was then formed at the end of
June 2017 and began operating in October 2017, with the Company owning 51% and Dowa owning 49%
of the new entity. The Company’s rights to the Palmer Property and a portion of the Haines Block land
parcel (see below) have been assigned to CML.
Under the terms of the CML members’ agreement, the Company is operator of CML and each party is
responsible for its proportionate share of expenses, determined on the basis of ownership and subject to
dilution according to standard dilution provisions.
For accounting purposes, the Company’s investment in CML is considered to primarily relate to the
continued advancement, with Dowa, of the Palmer property and the related elements of the Haines Block
land parcel. Funding of CML by both venturers is on an ongoing cash-call basis, and accordingly the
third-party assets, liabilities and expenses of CML, other than its mineral property interest, are expected
to be relatively nominal at any point in time. Management’s judgement is that the fairest accounting
presentation for this arrangement is to provide, as a priority, a clear continuity of the Company’s
beneficial interest in the underlying property costs incurred. Accordingly, the Company’s interest in CML
has been considered a joint operation and its 51% interest in the accounts of CML have been
consolidated within its own financial statements on a line by line basis. The Company recovers, from
CML, a 7% management fee on eligible expenditures incurred. On consolidation, this fee is accounted
for as a property cost recovery to the extent of Dowa’s 49% share, and is offset against the Company’s
recognition of the same amount recorded as a property cost.
18
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
5. Exploration and Evaluation Properties (continued)
a)
Palmer Project, Alaska USA (continued)
iii) Haines Block Lease
In 2014, the Company entered into an 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”). There was a reduction in the size of the land package to 65,196 acres in 2017, in
accordance with the terms of the lease agreement. 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.
A portion of the Haines Block land parcel with surface and mineral rights comprising approximately 3,483
acres, has been contributed to CML.
b)
Gold Projects
Spin-out of Gold Project Assets
On August 1, 2019, the Company completed a spin-out of its gold property assets into a new company,
HighGold Mining Inc. (“HighGold”), and distributed the shares of HighGold to the Company’s
shareholders on a basis proportionate to their shareholdings of the Company.
The following gold projects were spun-out as of August 1, 2019 and no longer form part of the
Company’s assets (Note 12):
Johnson Tract Property
•
• Munro-Croesus Property
• Golden Mile Property
• Golden Perimeter Property
Yukon Land Position
•
6. Loan Facility Agreement - Inter World Investments (Canada) Ltd.
On October 10, 2019, the Company entered into a loan facility agreement with Inter-World Investments (Canada)
Ltd. (the “Lender”) under which it obtained a US$630,000 loan (the “Loan”) from the Lender on an unsecured
basis. The principal terms of the loan facility are:
19
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
6. Loan Facility Agreement - Inter World Investments (Canada) Ltd. (continued)
The Loan has a term of five years, subject to acceleration upon the occurrence of certain events, and accrues
simple interest at a rate of 12% per annum. The purpose of the Loan was to allow the Company to meet
expenditure requirements in connection with the Company’s Palmer Project in southeast Alaska.
As consideration for the Loan, the Company issued 2,701,683 warrants (“Bonus Warrants”) to the Lender, with
each Bonus Warrant exercisable to purchase one common share of the Company at a price of $0.31 for a period
of five years. The Company also paid finders fees of US$30,000 in connection with the Loan.
For accounting purposes the Loan is classified as a compound financial instrument with a debt element as a
financial liability and recorded initially at fair value, and the warrants treated as equity. The current fair value of
the debt component of the Loan was determined based on an interest rate of 16%, which the Company
considered to be a reasonable estimate for a comparable instrument and circumstance. On issuance the equity
conversion feature was valued at $97,113, net of transaction costs of $11,712 which were expensed.
Changes to the Loan balance is comprised of the following:
The $97,113 discount in the carrying amount of the debt component relative to its face value, equivalent also to
the equity component, is being accreted to operations over the term of the debt on a straight-line basis.
Transaction costs of $77,710 applicable to the debt component are being amortized over the five year period on
the same basis.
7. Share Capital
a) Common Shares
Authorized: unlimited common shares without par value
Issued and outstanding: 45,354,253 common shares
On May 18, 2018, the Company consolidated the outstanding share capital of the Company on the basis of four
pre-consolidated shares for one post-consolidated share.
On May 30, 2018, the Company completed the first tranche of a $10,000,000 private placement, for proceeds of
$8,392,570. The Company issued 12,342,013 units, with each unit consisting of one common share and one
transferable share purchase warrant. Each warrant from the first tranche entitles the holder to purchase one
common share at a price of $1.00 per share until May 29, 2023.
20
Receipt of loan, net of transaction costs of $77,710830,907$ Transaction costs attributable to equity conversion component (11,712) Equity conversion component(97,113) Accreted interest730 Finance expense552 Interest expense3,542 Carrying amount of debt component, October 31, 2019726,906$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
7.
Share Capital (continued)
a) Common Shares (continued)
On October 19, 2018, the Company issued 2,363,868 units for the second tranche of the above private
placement, for proceeds of $1,607,430. Each warrant from the second tranche entitles the holder to purchase
one common share at a price of $1.00 per share until October 19, 2023.
In the months of December 2018 and January 2019, an aggregate of 1,312,500 stock options of the Company
were exercised at a price of $0.28 each, resulting in the issuance of 1,312,500 shares of the Company and cash
proceeds to the Company of $367,500.
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 14, 2019, the Company issued 1,210,000 incentive share options, exercisable at a price of $0.54,
expiring June 14, 2024. The stock options were issued to directors, officers and employees of the Company.
b) Stock Options
On December 24, 2018, the Company issued 225,000 incentive share options, exercisable at a price of $0.44,
expiring December 24, 2023. The stock options were issued to a director and officer of the Company.
On June 6, 2018, the Company issued 225,000 incentive share options, exercisable at a price of $0.68, expiring
June 5, 2023. The stock options were issued to a director, an officer and an employee of the Company.
On February 5, 2018, the Company issued 75,000 incentive share options, exercisable at a price of $0.74,
expiring February 5, 2023. The stock options were issued to an officer of the Company.
21
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
7. Share Capital (continued)
b) Stock Options (continued)
A summary of the status of the Company’s stock options at October 31, 2019 and October 31, 2018 and changes
during the periods therein is as follows:
In the year ended October 31, 2019, the Company recorded share-based payment costs of $500,000 (2018-
$215,087) in regard to stock options issued.
During the year ended October 31, 2019, the Company recorded a reversal of $45,570 in fair value costs
attributed to the exercise of 1,312,500 options during the year.
The fair value cost of the stock options granted in June 2019 and December and June 2018 were calculated
using the Black-Scholes Pricing Model using the following range of assumptions:
The fair value computed using the Black-Scholes model is only an estimate of the potential value of the individual
options and the Company is not required to make payments for such transactions.
22
WeightedWeightedNumber ofaverageNumber ofaverageoptionsexercise priceoptionsexercise priceBalance, beginning of year3,156,250 0.44$ 2,856,250 0.40$ Granted1,435,000 0.52 300,000 0.74 Exercised(1,312,500) 0.28 - - Balance, end of year3,278,750 3,156,250 Year endedYear endedOctober 31, 2019October 31, 2018June 2019December 2018June 2018February 2018Risk-free interest rate1.33%1.93%1.93%2.04%Expected life (in days)1,8251,8251,8251,825Annualized volatility79.19%80.73%137.93%82.51%Dividend raten/an/an/an/a
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
7. Share Capital (continued)
b) Stock Options (continued)
A summary of the Company’s stock options outstanding as at October 31, 2019 is as follows:
c) Warrants
The Company issued 2,071,683 warrants on October 22, 2019 as part of the consideration paid for the
establishment of a loan facility agreement (Note 6), with each warrant exercisable to purchase one common
share of the Company at a price of $0.31 for a period of five years.
A summary of the Company warrants outstanding as of October 31, 2019 is as follows:
23
Expiry DateWeightedAverageExercisePriceNumberof OptionsOutstandingWeightedAverageRemainingContractualLife(in years)Numberof OptionsExercisableMarch 6, 20200.56$ 350,000 0.85 350,000 June 30, 20210.40 612,500 2.16 612,500 June 2, 20220.64 581,250 3.09 581,250 February 5, 20230.74 75,000 3.77 75,000 June 6, 20230.68 225,000 4.10 225,000 December 24, 20230.44 225,000 4.65 225,000 June 14, 20240.54 1,210,000 4.87 1,210,000 0.48$ 3,278,750 3.53 3,278,750 Number of warrantsWeighted-averageexercise priceNumber of warrantsWeighted-average exercise priceOutstanding, beginning of year 14,705,881 $1.00 - -Issued 2,701,683 $0.31 14,705,881 $1.00 Outstanding, end of year17,407,56414,705,881 October 31, 2019October 31, 2018Expiry DateExercisePriceNumberof WarrantsMay 29, 20231.00$ 12,342,013 July 19, 20231.00$ 2,363,868 October 22, 20190.31$ 2,701,683 17,407,564
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
8. Related Party Transactions
The following represents the details of related party transactions paid or accrued for the years ended October 31,
2019 and 2018:
The Company paid or accrued to NS Star Enterprises Ltd., a company controlled by Mr. Wayne Livingstone,
$86,162 for consulting, management and administration services for the years ended October 31, 2019 (2018-
$71,940). The Company paid or accrued to Morfopoulos Consulting Associates Ltd., a company controlled by
the CFO, $93,468 for accounting, and management and administration services for the years ended October 31,
2019 (2018-$101,679). The Company paid D. Green Geoscience Inc., a company controlled by the vice-
president of exploration, $161,315 for technical consulting and management and administration services for the
years ended October 31, 2019 (2018-$204,750).
For the years ended October 31, 2019, the Company paid wages totaling $150,000 (2018-$105,500) to Mr. J.
Garfield MacVeigh in his capacity as President of the Company. For the years ended October 31, 2019, the
Company paid wages totaling: $172,483 (2018-$181,228) to Elizabeth Cornejo in her capacity as Vice-President,
Community and External Affairs of the Company; $208,030 (2018-$186,322) to Mr. Ian Cunningham-Dunlop in
his capacity as Vice-President, Advanced Projects; and $170,000 (2018-$25,286) to Naomi Nemeth in her
capacity as Vice-President, Investor Relations.
At October 31, 2019, the Company had accounts payable of $16,667 (October 31, 2018-$17,750) due to related
parties for outstanding consulting fees and expense reimbursements.
At October 31, 2019, the Company’s amounts receivable balance includes $12,761, representing the 49% non-
consolidated portion of the amount receivable from CML (December 31, 2018-$253,681), $22,909 from Carlin
Gold Corporation representing amounts receivable for rent and joint venture expenses (2018-$17,264) and
$1,575 from New Oroperu Resources Inc. representing amounts receivable for rent (2018-$6,900).
9. Management of Capital
The Company manages its cash, common shares, stock options and warrants as capital. The Company’s
objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order
to pursue the development of its exploration and evaluation properties and to maintain a flexible capital structure
which optimizes the costs of capital at an acceptable risk. The Company does not have any externally imposed
capital requirements to which it is subject. There were no significant changes in the Company’s approach or the
Company’s objectives and policies for managing its capital.
24
For the years ended October 31,20192018Consulting, administrative and technical fees paid or accrued to companies owned by directors86,162$ 82,150$ Consulting fees paid to officers161,315 205,975 Directors fee- 93,000 Accounting and administration fees paid or accrued to a company 50% owned by an officer93,468 101,681 Share-based payments to key management457,229 159,996 798,174$ 642,802$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
9. Management of Capital (continued)
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.
10. 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 and cash equivalents, amounts
receivable, available-for-sale investments, trade payables and amounts due to related parties.
The fair values of cash and cash equivalents, 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 and cash equivalents. Cash and cash equivalents 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.
Exchange Risk
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.
25
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
10. Financial Instruments (continued)
c) Fair Value Measurements
The carrying value of financial assets and financial liabilities at October 31, 2019 and October 31, 2018 are as
follows:
The Company does not use Level 2 or Level 3 valuation inputs.
26
October 312019October 312018Financial AssetsFVTPL, measured at fair value Cash and cash equivalents1,197,216$ 4,307,962$ Loans and receivables, measured at amortized cost Amounts receivable309,797 322,442 Advances and prepaid expenses16,762 12,230 Investments, measured at fair value Investments26,000 22,500 Financial LiabilitiesOther liabilities, measured at amortized cost Trade payables and accrued liabilities554,812$ 443,203$ Loan facility (Note 6)883,376 -$ Amounts due to related parties2,413 17,750 The fair value hierarchy of financial instruments measured at fair value is as follows:As atOctober 312019October 312018Level 1Level 1Cash and cash equivalents1,197,216$ 4,307,962$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
11. Segmented Information
The Company has one operating segment, which is exploration and evaluation of its mining properties.
At October 31, 2019, the Company operates in two geographic areas, being Canada and the United States. The
following is an analysis of the non-current assets by geographical area:
12. Disposition of Assets Upon Spinout
On August 1, 2019, the Company completed a spin-out of its gold property assets (the “Gold Projects”) into a new
company, HighGold Mining Inc. (“HighGold”) and distributed the shares of HighGold to the Company’s
shareholders.
The spin-out was conducted by way of a plan of arrangement under the British Columbia Business Corporations
Act. Pursuant to the plan of arrangement (the “Arrangement”), shareholders of the Company received one
HighGold share for every three shares of the Company held, distributed on a pro rata basis. Upon completion of
the Arrangement, shareholders of the Company received 15,118,075 shares of HighGold.
The following Gold Projects were spun-out as of August 1, 2019 and no longer form part of the Company’s
assets:
On the basis that an accurate and fair valuation of these properties, individually and in the aggregate, is not
otherwise reasonably determinable, the Company has recorded these dispositions to HighGold using the current
deferred mineral property costs applicable to each. Accordingly, no gain or loss has been recognized herein.
27
CanadaUnited StatesTotalNon-Current AssetsExploration and Evaluation PropertiesAs at October 31 2019-$ 20,125,579$ 20,125,579$ As at October 31, 20182,447,240 18,130,547 20,577,787 Performance BondsAs at October 31, 2019- 137,200 137,200 As at October 31, 2018- 137,013 137,013 Gold ProjectAggregate deferred costs incurred by the Company as at August 1, 2019Johnson Tract 967,668$ Munro Croesus2,099,902 Golden Mile306,751 Golden Perimeter133,307 Yukon Land Position1 3,507,629$
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
13. Income Taxes
A reconciliation of income taxes at statutory rates is as follows:
2019
2018
Net income (loss) for the year
$
(1,834,292)
$
(939,466)
Expected income tax expense (recovery)
Net adjustment for amortization and other non-deductible amounts
Unrecognized benefit of DIT assets
Recognition of prior year non-capital losses
(500,865)
113,351
-
387,514
(265,465)
(21,859)
-
287,324
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
2019
2018
-
59,000
183,000
6,166,000
$
(2,063,000)
59,000
244,000
4,668,000
$
6,408,000
$
2,908,000
The Company has Canadian non-capital losses of approximately $5,051,000 (2018 - $3,596,000) and US non-
capital losses of US $1,115,000 (2018–US $816,000), 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:
2031
2032
2033
2034
2035
2036
2037
2038
2039
804,000
790,000
540,000
203,000
154,000
429,000
-
709,000
1,422,000
$ 5,051,000
28
Notes to the Consolidated Financial Statements
For the year ended October 31, 2019
__________________________________________________________________________________________
14. Commitments
a) Office lease
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:
2020 fiscal year
2021 fiscal year
Amount
43,626
25,449
69,075
$
$
The Company currently rents out a portion of its office space on a month-to-month basis for $4,389 per month.
b) Financial Advisory Services
In connection with a financial advisory services agreement with an effective date of September 23, 2019, the
Company has a commitment to pay RCI Capital Group Inc. an amount of US$20,000 per month for a minimum of
three months. For the year ended October 31, 2019, an amount of $26,378 has been recorded in accrued
liabilities for this commitment.
29
Management’s Discussion and Analysis
For the year ended October 31, 2019
(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, 2019 and 2018, 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, 2019 and 2018 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 26, 2020.
Constantine is a junior mining company engaged in the exploration and development of North American
mineral properties. Its principal and only project is the Palmer Project, an advanced polymetallic (zinc-
copper-silver-gold) volcanogenic massive sulphide exploration project in a very accessible part southeast
Alaska. On August 1, 2019, Constantine completed the spinout of all its gold assets pursuant to a Plan of
Arrangement supported by Constantine shareholders at the Annual General and Special Meeting of
Shareholders in July 2019. HighGold Mining Inc. (“HighGold”) acquired Constantine’s interest in
Constantine’s gold assets in exchange for common shares of HighGold distributed to Constantine
shareholders, on a basis of one HighGold share for every three Constantine shares held.
The Company is a reporting issuer in British Columbia, Alberta and Ontario and trades on the TSX
Venture Exchange under the symbol CEM, and is quoted on the US over-the-counter trading platform,
OTCQX platform.
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.
2019 Year Review
• Positive Preliminary Economic Assessment for Palmer Zinc-Copper-Silver-Gold Project,
Post-Tax NPV of US$266 million - The Company reported a positive Preliminary Economic
Assessment (“PEA”) for the Project on June 3, 2019 and outlined the potential for a low capex,
low operating cost, high margin underground mining operation with attractive environmental
attributes. The Project is wholly-owned by the Constantine Mining LLC Joint Venture, of which
Constantine owns a 51% interest. The NI 43-101 PEA report was filed on Sedar.com on July 18,
2019 (news release NR #168-19).
1
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
• Gold Spin-out Transaction Completed - The spin-out of Constantine’s Johnson Tract Project,
Munro-Croesus Project, Golden Mile Project, Golden Perimeter Project, and Yukon Project
(collectively, the “Spin-out Assets”) was carried out by way of statutory plan of arrangement.
Pursuant to the arrangement, HighGold acquired Constantine’s interest in the Spin-out Assets in
exchange for shares of HighGold. On September 19, 2019, HighGold closed a non-brokered
private placement of 17,000,000 units at a price of C$0.45 per Unit for gross proceeds of
C$7,650,000. The shares started trading on the TSX-V on September 23, 2019 under the symbol
“HIGH”. Upon completion of the spin-out, shareholders of the Company received 15,118,075
shares, which had an aggregate value of approximately $22,000,000 (ie. $1.47 per HighGold
share) at the Company’s year-end.
• 2019 Field Program at Palmer Zinc-Copper-Silver-Gold Project – The Company completed a
total of 3,165 meter of drilling in eight holes (CMR19-135 to CMR19-142) on the Palmer Project in
2019. Holes targeted step-outs at: 1) the RW West Zone, 2) the AG Deposit, and 3) a previously
untested sub-ice geophysical target to the west of the HG prospect. Drill hole CMR19-140,
designed to test the open down-dip and down-plunge extension of the RW West Zone,
intersected massive baritic sulphide mineralization over a width of 4.6m* with 4.65% Zinc, 0.52%
Copper, 27.7 g/t silver, 0.20, g/t gold and 43.7% Barite. The new intercept represents a
significant 335 meter step-out of the mineralized zone.
*estimated 85-90% true width.
• Approval Received for Underground Exploration Plan of Operations for Palmer Project – In
July 2019, the Constantine Mining LLC Joint Venture, of which Constantine owns a 51% interest,
received all the necessary approvals to proceed with an underground exploration plan for the
Palmer Zinc-Copper-Silver-Gold Project, Southeast Alaska. The Company has recently been
advised that the Waste Management Permit for the project has been remanded to the Alaska
Department of Environmental Conservation (“DEC”) staff for further review. The remand is due to
a 9th Circuit Court Decision related to the Maui vs. Hawaii Wildlife Fund case that is currently
before the Supreme Court and being contested by Alaska and eighteen other States.
• Loan Facility Agreement – In October 2019, the Company entered into a loan facility agreement
with Inter-World Investments (Canada) Ltd. for a US$667,800 loan on an unsecured basis, in
order to meet its 2019 cash call requirements for the Palmer Project joint venture.
Positive Preliminary Economic Assessment for Palmer Zinc-Copper-Silver-Gold Project, Post-Tax
NPV of US$266 million (see June 3, 2019 news release NR #164 – 19)
Highlights of the PEA, assuming base case metal price of $1.22 per pound zinc, $2.82 per pound copper,
$16.3 per ounce silver, $1,296 per ounce gold and $220 per metric tonne barite, include:
• $354M pre-tax Net Present Value (“NPV”) at 7% discount rate
• $266M after-tax NPV at 7% discount rate
• 24% pre-tax Internal Rate of Return (“IRR”) and 21% post-tax IRR
• Mine life of 11 years after 24-months pre-production (based on current mineral resource)
•
two-year ramp up to 3,500 tonnes-per-day steady state mining and processing rate
• Operating cost is $54.2/tonne (mining, processing, general & administrative)
• Operating costs, including sustaining capital cost for mining only, are $65.4/tonne
2
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
• Net operating income is $92.6/tonne ($81.4/tonne including sustaining capital costs)
• Zinc cash cost including sustaining capital is $0.11 per lb net of by-product credits
• Pre-production development capital cost of $278 million
• Sustaining capital and closure cost of $140 million; total Life of Mine (“LOM”) capital cost of $418
million
• Post-tax payback period of 3.3 years
• 12.48 million tonnes (“Mt”) mined at a diluted head grade of 4.24% zinc, 0.81% copper, 49.6
grams per tonne (“g/t”) silver, 0.33 g/t gold and 22.6% barite
• LOM recovered metal production of 1,068 M lbs of zinc, 196 M lbs of copper, 18 M oz of silver, 91
K oz of gold and 2.89 M tonnes of barite
The PEA is preliminary in nature and includes inferred mineral resources that are too speculative
geologically to have economic considerations applied to them that would enable them to be categorized
as mineral reserves. There is no certainty that PEA results will be realized. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.
For more details please refer to June 3, 2019 news release NR #164-19. The NI 43-101 PEA report was
filed on Sedar.com on July 18, 2019 (news release NR #168-19).
Gold Spin-out Transaction Completed
On August 1, 2019, the Company completed a spin-out of its gold property assets (the “Gold Projects”)
into a new company, HighGold Mining Inc. (“HighGold”) and distributed the shares of HighGold to the
Company’s shareholders.
The spin-out was conducted by way of a plan of arrangement under the British Columbia Business
Corporations Act. Pursuant to the plan of arrangement (the “Arrangement”), shareholders of the
Company received one HighGold share for every three shares of the Company held, distributed on a pro
rata basis. Upon completion of the Arrangement, shareholders of the Company received 15,118,075
shares of HighGold, representing 100% of HighGold pre-financing stock.
The following Gold Projects were spun-out as of August 1, 2019 and no longer form part of the
Company’s assets:
Name of Gold Project
Johnson Tract
Munro Croesus
Golden Mile
Golden Perimeter
Yukon Land Position
$ 967,668
2,099,902
306,751
133,307
1
$ 3,507,629
On the basis that an accurate and fair valuation of these properties, individually and in the aggregate, is
not otherwise reasonably determinable, the Company has recorded these dispositions to HighGold using
3
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
the current deferred mineral property costs applicable to each. Accordingly, no gain or loss has been
recognized herein.
2019 Field Program at Palmer Zinc-Copper-Silver-Gold Project
The Company completed a total of 3,165 meter of drilling in eight holes (CMR19-135 to CMR19-142) on
the Palmer Project in 2019. Holes targeted step-outs of: 1) the RW West zone, 2) the AG Deposit area,
and 3) a previously untested sub-ice geophysical target to the west of the HG prospect. All assays have
been received. Drill hole CMR19-140 designed to test the open down-dip and down-plunge extension of
the RW West Zone intersected massive baritic sulphide mineralization over a width of 4.6m* with 4.65%
Zinc, 0.52% Copper, 27.7 g/t silver, 0.20, g/t gold and 43.7% Barite. The new intercept represents a
significant 335 meter step-out of the mineralized zone.
*estimated 85-90% true width.
The zone is open to further expansion along strike (east and west) and at depth. Mineralization in drill
hole CMR19-140 is very similar in character to previous RW Zone drill hole intersections, which were last
drilled in 2014. The nearest up-dip intersection is hole CMR14-67 which returned 3.9 meters averaging
5.11% Zinc, 0.19% Copper, 92.5 g/t Ag and 0.37 g/t Au. The RW West Zone previously had an
approximate maximum true thickness of 6 meters, a strike length of 375 meters, and a dip length of 325
meters (based on mineral resource wireframes).The RW Zone is located in the Palmer Deposit area and
within the same folded mineralized horizon that hosts the main South Wall Zones. Expansion of the RW
Zone is important because it is close to the potential mining infrastructure, but not included in the
Company’s recently released PEA (See Company Press Release dated June 3rd, 2019). This new 335
meter step-out intersection at the RW Zone shows the potential to expand the RW Zone that could
ultimately lead to the inclusion of the RW Zone in future economic studies on Palmer and further enhance
the Project.
Three stepout holes tested the downdip southeast edge of the AG Deposit area. The drilling to date
shows that the AG Deposit remains open up-plunge to the southeast towards the JAG prospect and
towards the Waterfall prospect, 1.2 kilometers to the northwest.
At the sub-ice geophysical target, VMS-style barite-zinc mineralization in drill hole CMR19-142 returned
1.3% Zinc and 8.52% Barite from 378.7 to 379.2 meters with extensive strong pyritic footwall style
alteration. These results are highly encouraging for follow-up of this target and for the adjacent untested
HG prospect.
Approval for Underground Exploration Plan of Operations for the Palmer Project
In July 2019, the Company received all the necessary approvals to proceed with an underground
exploration plan for the Palmer Zinc-Copper-Silver-Gold Project, Southeast Alaska.
The approvals for this “Plan of Operations” submission include:
• Excavation of approximately 2,000 meters of underground ramp to provide a drill platform for
exploration and to provide access to gather additional geotechnical and hydrological data;
• 30,000 meters of underground exploration drilling;
• Placement on the surface of waste rock from underground excavation;
4
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
• Construction and operation of sediment settling ponds and land application disposal system for
the discharge of underground seepage waters;
• Construction of other facilities necessary for the underground excavation and drill programs.
The Plan of Operations was prepared by the Company and submitted to the Alaska Mental Health Trust
Lands Office, The Alaska Department of Natural Resources and The Alaska Department of
Environmental Conservation in December 2018. Each entity is responsible for the review and approval
of the specific elements of the plan pertinent to its interest and authority. The approvals for the Plan of
Operations cover a Waste Management Permit to manage wastewater and waste rock issued by the
Alaska Department of Environmental Conservation, approval for the Reclamation Plan issued by
Alaska Department of Natural Resources and approval for the overall Plan of Operations by the Alaska
Mental Health Trust, on whose land package the Palmer project is located.
In July 2019, Constantine was advised that the Waste Management Permit had been remanded to the
Alaska Department of Environmental Conservation (“DEC”) staff for further review . The remand is due
to a 9th Circuit Court Decision related to the Maui vs. Hawaii Wildlife Fund case that is currently before
the Supreme Court that may change the way that EPA and DEC permit water discharges in the United
States. Alaska has joined 18 other States in supporting EPA’s and DEC’s current permitting process
and asking that the 9th Circuit’s decision in the Maui vs. Hawaii Wildlife Fund be reversed.
The Company is continuing to evaluate the schedule for the start of the underground exploration work.
Most of road access and other ground-work preparation has been completed, but additional work is
required before starting the underground exploration development. Budgets are currently being set for
2020 and because of the uncertainty in the outcome and timing of the US Supreme Court decision on
the Maui vs. Hawaii Wildlife case, the current plan is to delay the underground exploration work until
2021.
Loan Facility Agreement
In October 2019, the Company entered into a loan facility agreement with Inter-World Investments
(Canada) Ltd. (“Inter-World”) under which it obtained a US$630,000 loan from Inter-World on an
unsecured basis. The loan has a term of five years, subject to acceleration upon the occurrence of certain
events, and an interest at a rate of 12% per annum. The purpose of the loan was to allow Constantine to
meet expenditure requirements in connection with the Company’s Palmer Project in Southeast Alaska,
without causing dilution of its 51% interest in the project.
As consideration for the loan, the Company issued 2,701,683 warrants (“Bonus Warrants”) to Inter-World,
with each Bonus Warrant exercisable to purchase one common share of the Company at a price of $0.31
for a period of five years.
In connection with the loan, the Company recorded interest expense of $3,542 for the year ended
October 31, 2019 (2018-Nil).
Summary of the Palmer Zinc-Copper-Silver-Gold Metal Project
Palmer is an advanced stage, high-grade Volcanogenic Massive Sulfide (VMS) project, with an Indicated
Resource of 4,677,000 tonnes grading 5.23% zinc, 1.49% copper, 30.8 g/t silver, 0.30 g/t gold, 23.9%
barite and 9,594,000 million tonnes Inferred at 4.95% zinc, 0.59% copper, 0.43% lead, 69.3 g/t silver,
5
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
0.39 g/t gold, 27.7% barite. The project is being advanced in partnership with Dowa, who earned 49% in
the project at the end of 2016 by completing aggregate expenditures of US$22 million over four years.
Since that time, Dowa and Constantine have advanced the project by funding on a 49/51% basis
respectively. The Palmer project is located in an easily accessed part of coastal southeast Alaska, with
road access on the property to the immediate South Wall deposit area. Palmer sits within 60 kilometers of
the year-round deep-sea port of Haines. Mineralization at Palmer occurs within the same belt of rocks
which hosts 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.
The Company recently reported a positive Preliminary Economic Assessment (“PEA”) for the Project on
June 3, 2019 and outlined the potential for a low capex, low operating cost, high margin underground
mining operation with attractive environmental attributes.
The opportunity to add to the existing mineral resource base and enhance the robust economics of the
Project, and to discover new resources to potentially significantly extend the PEA mine life, is considered
excellent. The Project benefits from structural folding which has resulted in +10 km of the key mineralized
horizon stratigraphy being compressed into a relatively compact area such that multiple deposits can
potentially be accessed by a single, centrally-located portal.
Constantine and joint venture partner Dowa Metals & Mining Co. Ltd. will focus on upgrading and
expanding the Palmer and AG Deposit resources and locating the faulted offset of the thickest down-dip
part of the South Wall Zone that has the potential to significantly increase the project resources. The Joint
Venture will continue to carryout environmental/hydrological work required to advance the Palmer project
and to fulfill the requirements of existing permits. The Company will continue to work with and keep the
local communities informed on project developments and continue to maximize local purchasing and
hiring of workers. The long-term vision is to define a multi-decade mining operation at Palmer.
Results of Operations
The Company recorded a net loss of $1,834,292 for the year ended October 31, 2019 (2018-$939,466).
Exploration and Evaluation Expenditures
In the year ended October 31, 2019, the Company recorded net expenditure additions of $3,055,421 on
exploration and evaluation properties (2018-$6,121,200). The Palmer project accounted for $2,755,491
(2018-$5,260,866) of these expenditures, and the Johnson Tract project accounted for $207,209 (2018-
$760,459) of these expenditures before it was spun-out on August 1, 2019. The Company’s Golden
Perimeter project accounted for $74,555 (2018-$58,752) of these expenditures before it was spun-out on
August 1, 2019.
Palmer Project Joint Venture Accounting
On July 1, 2017, the Company began accounting for the Palmer Project joint venture as a joint operation
for accounting purposes, and only 51% of the exploration expenditures on the Palmer Project joint
venture are included in the Company’s financial statements since that date.
During the year ended October 31, 2019, the Company made cash contributions totaling $3,906,088 in
order to maintain its 51% interest in the Palmer Project joint venture.
6
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
Change in Use of Proceeds of 2018 Private Placement
The Company completed a $10,000,000 private placement in July 2018, the proceeds of which were
originally announced as intended for use in the Palmer project and general corporate purposes. As a
result of acquiring a lease interest in the Johnston Tract property in 2018, the Company determined it to
be in its best interests to utilize a portion of the private placement for expenditures related to its new
Johnson Tract property in Alaska and its new Golden Perimeter property in Ontario, Canada. Before the
spin-out of the Gold Projects on July 31, 2019, a total of $961,313 was incurred on the Johnson Tract
property and $133,307 was incurred on the Golden Perimeter property.
Operating Costs
The Company had net cash operating expenses of $1,242,968 for the year ended October 31, 2019
(which excludes $500,000 for non-cash share-based payments), compared to cash operating costs of
$773,824 for the previous year. The increases in operating costs were primarily due to increased
expenditures on corporate development activities. These costs were higher, in terms of salaries, travel
and shareholder communication and are expected to remain in a higher range for the remainder of the
fiscal year.
General and administrative costs of $210,865 for the year ended October 31, 2019 were consistent with
the total general and administrative costs for the preceding year which totaled $203,149. A breakdown of
total general and administrative costs for the year ended October 31, 2019 is shown below:
For the year ended October 31, 2019, the Company incurred non-recurring costs related to the spin-out of
its gold assets in the amount of $227,235. The Company also incurred increased legal costs during the
year ended October 31, 2019 of $313,973, of which $272,000 was accrued for legal fees related to the
acquisition of the Johnson Tract property.
Annual Financial Information
Selected annual financial information for the three years ended October 31, 2019, 2018 and 2017 are as
follows:
At October 31,
Loss before other items
Net income (loss) for the year
Income (loss) per share
Total assets
Total liabilities
Total shareholders’ equity
2019
$ (1,742,968)
(1,834,292)
(0.04)
21,812,554
1,284,131
20,528,423
2018
$ (988,911)
(939,466)
(0.03)
25,379,934
460,953
24,918,981
2017
$ (1,027,927)
2,377,178
0.08
16,516,869
553,519
15,963,350
7
`General and Administrative expenses for year ended October 31, 2019AmountConferences, trade shows and advertising $ 127,753 Accounting and administration24,000Office expenses9,926Transfer agent, listing and filing fees49,186Total $ 210,865
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
Summary of Quarterly Results
In the three months ended October 31, 2019, the Company incurred aggregate expenditures of $431,274
on exploration and evaluations properties, of which $424,919 was incurred on the Palmer project, the
Company’s main operational focus. The Company recorded cash operating expenses of $314,037 for the
three months ended October 31, 2019 (excluding $4,364 for non-cash share-based payments), compared
to cash operating costs of $256,481 for the same quarter last year. Current year expenditures for the
quarter were higher primarily due to increased legal costs. In the three months ended October 31, 2019,
the Company also incurred or accrued for non-recurring costs related to the spin-out of its gold assets in
the amount of $63,313.
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, by the sale of mineral property assets, and by option and joint venture agreements that provide
cash payments and management fees.
The Company and Dowa are responsible for funding the cash requirements of the Palmer Project joint
venture, based on their 51:49 interests. As at October 31, 2019, the Company has made aggregate cash
contributions to the Palmer Project joint venture totaling US$10,247,883.
The Company's cash position at October 31, 2019 was $1,197,216 (October 31, 2018-$4,307,962) and its
working capital was $992,550 (October 31, 2018-$4,204,181). In October 2019 the Company obtained an
unsecured loan from Inter-World Investments (Canada) Ltd. in the amount of $630,000 US ($880,770
CAD) which has a five year term.
In the year ended October 31, 2019, the Company received $367,500 from the exercise of 1,312,500
stock options.
8
For Quarter EndedTotalAssetsIncome(Loss)Income(Loss)per shareOctober 31, 2019$ 21,812,554 $ (391,383)$ (0.01)July 31, 2019 25,763,494 (821,856) (0.01)April 30, 2019 23,464,433 (322,787) (0.01)January 31, 2019 25,321,910 (298,266) (0.01)October 31, 2018 25,379,934 (116,492) (0.01)July 31, 2018 25,852,498 (328,971) (0.01)April 30, 2018 15,694,175 (244,992) (0.01)January 31, 2018 15,847,100 (249,011) (0.01)
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
The Company is dependent on equity capital to fund exploration and development of exploration
properties and its on-going operations. The Company projects that it will require additional equity capital
in 2020 to continue to fund its portion of the Palmer Project joint venture and other exploration work as
may be determined by the Company’s management.
Financial Advisory Services Appointment
In October 2019 the Company appointed RCI Capital Group Inc. (“RCI”) as a financial advisor to the
Company. RCI facilitated the October 2019 unsecured loan agreement with Inter-World Investments
(Canada) Ltd.
Pursuant to a financial services agreement signed with the Company, RCI has agreed to provide non-
exclusive financial advisory services to Constantine, including assisting the Company in negotiating and
structuring an equity financing or other strategic transaction in connection with the Palmer Project. RCI is
a privately held global M&A advisory firm that focuses on inbound Asian strategic capital in the resource
sector. RCI has offices in Vancouver, Tokyo, Beijing and Seoul. RCI has been a trusted advisor to both
buy-side and sell-side clients, providing services in all facets of corporate and government finance,
mergers and acquisitions, equity and fixed income and investment research.
Material Contractual Commitment
In connection with the above financial advisory services agreement, the Company has a commitment to
pay RCI an amount of US$20,000 per month for a minimum of three months starting September 30,
2019. For the year ended October 31, 2019, an amount of $26,378 has been recorded in accrued
liabilities for this commitment.
Corporate and Management Changes
In October 2019, founding director Mr. Brian Irwin retired from the Board of Directors. Mr. Irwin played a
key role in guiding and supporting Constantine through the Palmer discovery years and during
challenging times in world markets. The Company warmly thanks him for his service to the Company
over the past 13 years and wishes him well in the future.
On December 31, 2019, Mr. Darwin Green resigned from his position as Vice-President Exploration of the
Company as planned. Mr. Green spearheaded the spin-out of Constantine’s gold assets last year and
assumed the position of President and CEO of HighGold when it was formed. He guided the new
company through its successful public listing while remaining as Vice-President of the Company until the
end of the year, when he became the full-time president and CEO of HighGold.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet financing arrangements.
9
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
Related Party Transactions
The following represents the details of related party transactions paid or accrued for the years ended
October 31, 2019 and 2018:
The Company paid or accrued to NS Star Enterprises Ltd., a company controlled by Mr. Wayne
Livingstone, $86,162 for consulting, management and administration services for the years ended
October 31, 2019 (2018-$71,940). The Company paid or accrued to Morfopoulos Consulting Associates
Ltd., a company controlled by the CFO, $93,468 for accounting, and management and administration
services for the years ended October 31, 2019 (2018-$101,679). The Company paid D. Green
Geoscience Inc., a company controlled by the vice-president of exploration, $161,315 for technical
consulting and management and administration services for the years ended October 31, 2019 (2018-
$204,750).
For the years ended October 31, 2019, the Company paid wages totaling $150,000 (2018-$105,500) to
Mr. J. Garfield MacVeigh in his capacity as President of the Company. For the years ended October 31,
2019, the Company paid wages totaling: $172,483 (2018-$181,228) to Elizabeth Cornejo in her capacity
as Vice-President, Community and External Affairs of the Company; $208,030 (2018-$186,322) to Mr. Ian
Cunningham-Dunlop in his capacity as Vice-President, Advanced Projects; and $170,000 (2018-$25,286)
to Naomi Nemeth in her capacity as Vice-President, Investor Relations.
At October 31, 2019, the Company had accounts payable of $16,667 (October 31, 2018-$17,750) due to
related parties for outstanding consulting fees and expense reimbursements.
At October 31, 2019, the Company’s amounts receivable balance includes $12,761, representing the
49% non-consolidated portion of the amount receivable from CML (December 31, 2018-$253,681),
$22,909 from Carlin Gold Corporation representing amounts receivable for rent and joint venture
expenses (2018-$17,264) and $1,575 from New Oroperu Resources Inc. representing amounts
receivable for rent (2018-$6,900).
Management of Capital
The Company manages its cash, common shares and stock options as capital. The Company’s
objectives when managing capital are to safeguard the Company’s ability to continue as a going concern
in order to pursue the development of its mineral properties and to maintain a flexible capital structure
which optimizes the costs of capital at an acceptable risk. The Company does not have any externally
imposed capital requirements to which it is subject.
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For the years ended October 31,20192018Consulting, administrative and technical fees paid or accrued to companies owned by directors86,162$ 82,150$ Consulting fees paid to officers161,315 205,975 Directors fees- 93,000 Accounting and administration fees paid or accrued to a company 50% owned by an officer93,468 101,681 Share-based payments to key management457,229 159,996 798,174$ 642,802$
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
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.
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 45,354,253 shares outstanding on October 31, 2019 and as of the date of this report.
The following stock options were outstanding on October 31, 2019 and as of the date of this report:
No. of Stock Options
350,000
612,500
581,250
75,000
225,000
225,000
1,210,000
3,278,750
Price per Share
$0.56
$0.40
$0.64
$0.74
$0.68
$0.44
$0.54
Expiry Date
March 6, 2020
June 30, 2021
June 2, 2022
February 5, 2023
June 6, 2023
December 24, 2023
June 14, 2024
The following warrants were outstanding on October 31, 2019 and as of the date of this report:
Expiry Date
May 29, 2023
July 19, 2023
October 22, 2024
Corporate Governance
Exercise
Price
$ 1.00
1.00
0.31
Number
of Warrants
12,342,013
2,363,868
2,701,683
17,407,564
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.
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Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
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.
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,
2019, the Company has incurred significant losses since inception and has an accumulated operating
deficit of $13,407,973. 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.
Going Concern
The ability of the Company to continue as a going concern and meet its commitments as they become
due, including completion of the acquisition, exploration and development of its mineral property interests,
is dependent on the Company’s ability to obtain the necessary financing. The Company will require
additional capital to finance future operations and growth. If the Company is unable to obtain additional
financing, the Company would be unable to continue. There can be no assurance that management’s
plans will be successful.
The business of mineral exploration involves a high degree of risk and there is no assurance that current
exploration projects will result in future profitable mining operations. The Company has no source of
revenue, and has significant cash requirements to meet its administrative overhead, pay its liabilities and
maintain its mineral interests. The recoverability of amounts shown for exploration and evaluation
properties is dependent on several factors. These include the discovery of economically recoverable
reserves, the ability of the Company to obtain the necessary financing to complete the exploration and
development of these exploration and evaluation properties, and establish future profitable production, or
realize proceeds from the disposition of exploration and evaluation properties. The carrying value of the
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Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
Company’s exploration and evaluation properties does not reflect current or future values.
These matters indicate the existence of material uncertainties that may cast significant doubt about the
Company’s ability to continue as a going concern. These consolidated financial statements do not include
any adjustments relating to the recoverability of assets and classification of assets and liabilities that
might be necessary should the Company be unable to continue as a going concern. Such adjustments
could be material.
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. While the political climate in Alaska 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.
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. 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.
In December 2017, a complaint was filed in Alaska against the Bureau of Land Management (“BLM”)
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Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
for approving exploration Plans of Operations for the Palmer Project in Environmental Analyses and
Decision Records that did not analyze the environmental impacts of full mine development. The Plaintiffs’
Motion for Summary Judgment was denied by the United States District Court for the District of Alaska on
March 15, 2019. The decision was appealed to the United States Court of Appeals for the Ninth Circuit on
May 15, 2019 and will likely be decided in the fall of 2020. Although the action was filed against the BLM,
Constantine is an intervenor-Appellee supporting the BLM in its case.
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.
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.
Cyber security risk
Cyber security risk is the risk of negative impact on the operations and financial affairs of the Company
due to cyber-attacks, destruction or corruption of data, and breaches of its electronic systems.
Management believes that it has taken reasonable and adequate steps to mitigate the risk of potential
damage to the Company from such risks. The Company also relies on third-party service providers for the
storage and processing of various data. A cyber security incident against the Company or its service
providers could result in the loss of business sensitive, confidential or personal information as well as
violation of privacy and security laws, litigation and regulatory enforcement and costs. The Company has
not experienced any material losses relating to cyber-attacks or other information security breaches,
however there can be no assurance that it will not incur such losses in the future.
Credit risk
Credit risk is the risk of potential loss to the Company if a customer or counterparty to a financial
instrument fails to meet 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.
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, 2019, the Company had a total cash balance of $1,197,216 to settle
current liabilities of $557,225.
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Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
Trade payables and amounts due to related parties have maturities of 30 days or are due on demand and
are subject to normal trade terms. The loan facility from Inter-World has a five year term, subject certain
acceleration provisions.
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 timelines, currency fluctuations, environmental risks, unanticipated
reclamation expenses, and title disputes or claims.
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,
15
Management’s Discussion and Analysis
For the year ended October 31, 2019
(Expressed in Canadian dollars)
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. 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 rest of the 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
Ian Cunningham-Dunlop, P. Eng., Vice-President, Advanced Projects, 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.
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. Mr. Gray and Mr. Cunningham-Dunlop have reviewed and
approved the resource estimate statements in this MD&A.
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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