2022 YEAR END REPORT
Management’s Discussion and Analysis
and
Consolidated Financial Statements
For the Twelve Months ended December 31, 2022
(AUDITED)
FILO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2022
(Amounts in Canadian Dollars unless otherwise indicated)
This management’s discussion and analysis (“MD&A”) of Filo Mining Corp. (“Filo Mining” or the “Company”) should
be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022
and related notes therein. The financial information in this MD&A is reported in Canadian dollars unless otherwise
indicated and is partly derived from the Company’s consolidated financial statements prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).
The effective date of this MD&A is March 17, 2023. Additional information about the Company and its business
activities is available on SEDAR at www.sedar.com and the Company’s website www.filo-mining.com.
The Company’s common shares trade on the Toronto Stock Exchange under the symbol "FIL", the NASDAQ First North
Growth Market under the symbol "FIL" and on the OTCQX under the symbol “FLMMF”.
The Company announced a proposed name change to “Filo Corp.” to better align with the Company’s strategic vision
and plans to seek shareholder approval for the name change at its upcoming annual shareholder meeting. If approved
by shareholders, the name change is also subject to TSX approval.
Some of the statements in this MD&A are forward-looking statements that are subject to risk factors set out in the
cautionary note contained herein.
CORE BUSINESS AND STRATEGY
Filo Mining is a mineral exploration company, focused on its 100% controlled Filo del Sol project (“Filo del Sol” or the
“Filo del Sol Project”), which is comprised of two adjacent land holdings: the Filo del Sol property located in San Juan
Province, Argentina, and the Tamberias property, located in Region III, Chile. The Filo del Sol Project is located
between the prolific Maricunga and El Indio gold belts, two major mineralized trends that contain such deposits as
Caspiche, La Coipa, Veladero, and El Indio. The region is an established mining jurisdiction and hosts a number of
large-scale mining operations. The project area is covered under the Mining Integration and Complementation Treaty
between Chile and Argentina, which provides the framework for the development of cross border mining projects.
Drilling continues to demonstrate the significant exploration potential of the Filo del Sol Project, intersecting long
intervals of copper, gold and silver mineralization. The Company has a strong management team and board with
extensive experience in the resource sector, particularly in Chile and Argentina. The board and management team
have an appropriate mix of geological, engineering, financial, and business skills to advance the Company’s projects
and to generate value for its shareholders.
The Company’s strategy is to create value for its shareholders by expanding and increasing the confidence in and
continuity of the resources and reserves at the Filo del Sol Project through further exploration, and by advancing
engineering and other studies that are required to prepare the Filo del Sol Project for eventual development.
2022 HIGHLIGHTS
• $82.5 million in exploration and project investigation costs incurred, yielding multiple successful holes
highlighted by:
o Discovering what is interpreted to be a new porphyry centre along the broader Filo trend, now named
the “Bonita Zone”. The Bonita discovery supports the interpretation that Filo del Sol hosts a
multikilometer, northeast-trending alignment of overlapping porphyry-centered hydrothermal systems
which is open to expansion both to the south and to the north. The Bonita Zone is evidence of the
untapped exploration potential that still exists at Filo del Sol despite the significant mineral discoveries
made to date;
o Drilling the highest grade silver intersection on the project to date in hole FSDH055A which intersected
64m at 1,214 g/t silver;
1
o Extending the high-grade Breccia 41 Zone with new intersections in holes FSDH055C (126m @ 5.02%
CuEq (2.12% Cu, 1.69 g/t Au, 188.7 g/t Ag)) and FSDH057 (289m @ 2.0% CuEq (1.18% Cu, 0.68
g/t Au, 36.0 g/t Ag));
o Continued drilling of a combination of larger step-out holes to try to find the edges of the mineralized
system, along with step-out and infill holes to further define the size of the remarkable Aurora Zone;
o Both the Aurora Zone and Breccia 41 remain open to expansion in several directions and drilling to
further define them is ongoing;
• Pace of exploration accelerated with drilling rig count on site increasing from 6 at the beginning of the year
to 9 currently;
• The first year in which drilling, and field operations continued year-round, through the South American winter;
•
Funding secured via $100 million strategic investment by BHP Western Mining Resources International Pty
Ltd (“BHP”), resulting in BHP owning approximately 5% of the Company;
• Added to the S&P/TSX Composite Index - the headline index for Canada, represented by the largest companies
on the TSX, and is the principal benchmark measure for the Canadian equity markets;
• Added to the VanEck Junior Gold Miners ETF, recognizing the significant precious metals content at Filo del
Sol, as well as the continued growth in our market capitalization and trading liquidity; and
• Entered 2023 with a strong balance sheet including cash of $74.9 million and working capital of $60.3 million.
FOURTH QUARTER 2022 HIGHLIGHTS (DRILLING AND ASSAY RESULTS)
During and subsequent to the end of the fourth quarter of 2022, the Company announced the following results from
the ongoing drill program:
• FSDH067, an infill hole in the Aurora Zone, intersected 1,131.6m at 1.11% CuEq from a depth of 132m,
including 4m at 1.54% Cu, 12.08 g/t Au and 20.5 g/t Ag from 202m and 36m at 0.76% Cu, 0.71 g/t Au and
123.2 g/t Ag from 248m. The hole ended in strong mineralization at a depth of 1,263.6m;
• FSDH062 intersected 1,313.2m at 0.65% CuEq from a depth of 134m, including 520.4m at 0.82% CuEq
from 400m. The hole ended in strong mineralization at a depth of 1,447.2m due to rig capacity. The hole was
collared at the eastern edge of the current mineral resource of the Aurora Zone and is entirely outside it;
• FSDH064 intersected 1,356.0m at 1.09% CuEq from a depth of 44m, including 79.0m at 182.6 g/t Ag from
306.0m and 424.0m at 1.54% CuEq from 536.0m. The hole ended in mineralization at a depth of 1,400.0m.
The hole is an Aurora Zone infill hole, filling a 300m gap between previously drilled holes. It tested an area
which has particularly high-grade mineralization in the shallow, oxidized part of the deposit. The intersected
silver zone correlates well with adjacent holes, although the silver zone here is thicker and higher-grade than
expected. The porphyry interval in this hole also correlates well with adjacent holes;
• FSDH070A an infill hole in the Aurora Zone intersected 1,056.5m at 0.86% CuEq from a depth of 282m,
including 670.4m at 0.97% CuEq from 369.7m. The hole ended in strong mineralization at a depth of
1,338.5m due to rig capacity;
• FSDH071 an infill hole in the Aurora Zone intersected 1,028.0m at 1.16% CuEq from a depth of 292m,
including 172.0m at 2.14% CuEq from 408.0m and 237.5m at 1.49% CuEq from 776.0m. The hole ended in
mineralization at a depth of 1,320m due to rig capacity. The entire hole is outside of the resource pit shell;
• FSDH068A intersected 1,776.0m at 0.70% CuEq from a depth of 18.0m, including 1,120.0m at 0.92%
CuEq from 394.0m and 724.2m at 1.08% CuEq from 574.0m. The hole was planned to test for the eastern
and depth extension of the high-grade Breccia 41 Zone intersected in three holes drilled on this same
section. The hole is entirely outside of the resource pit shell;
• FSDH069A intersected 1,296.5m at 1.00% CuEq from a depth of 138.0m, including 31m at 127.0 g/t Ag
from 404.0m in the Silver Zone, 598.0m at 1.51% CuEq from 498.0m and 94.0m at 3.01% CuEq from
2
792.0m. The hole ended in strong mineralization at a depth of 1,434.5m due to rig capacity. The hole is
entirely outside of the resource pit shell;
• FSDH074 intersected 1,022.0m at 0.66% CuEq from a depth of 278.0m, including 516.0m at 0.79% CuEq
from 644.0m and 252.0m at 0.85% CuEq from 840.0m. The hole was collared on Section 9200N, 200m east
of FSDH068A and 400m east of FSDH041. The hole was stopped in porphyry mineralization at 1,509.0m.
The hole is entirely outside of the resource pit shell; and
• FSDH077 intersected 2.0m at 10.35 g/t Au from a depth of 192.0m plus 516.2m at 0.20% CuEq from
404.0m. The hole was collared on Section 6000N and is the first hole into the new Flamenco target and
there are no holes within 500m of it. The hole was stopped at 920.2m.
2022 ASSAY RESULTS
Assay results received by the Company during and subsequent to 2022 are summarized in the following table:
Hole-ID
FSDH054
incl.
incl.
incl.
FSDH055A
incl.
incl.
FSDH055B
FSDH055C
incl.
and incl.
incl.
incl.
incl.
FSDH056
incl.
and incl.
FSDH057
incl.
incl.
and incl.
FSDH058
incl.
incl.
incl.
FSDH059
incl.
FSDH060
incl.
incl.
FSDH061
incl.
FSDH062
incl.
From
(m)
146.0
435.9
498.0
830.0
362.0
374.4
380.0
366.0
150.0
418.0
540.0
728.0
728.0
742.0
168.0
388.0
420.0
136.0
404.0
498.0
776.0
100.0
232.0
500.0
600.0
124.0
304.0
332.0
620.0
620.0
392.0
508.0
134.0
400.0
To
(m)
1,369.5
442.0
1,090.0
1,001.5
426.0
402.0
388.0
428.0
1,487.5
504.0
1,076.0
854.0
752.0
750.6
670.2
670.2
432.5
787.1
432.0
787.1
787.1
1,351.5
238.0
1,004.0
910.0
311.5
311.5
1,070.0
1,070.0
942.0
1,093.2
914.0
1,447.2
920.4
Length
(m)
1,223.5
6.1
592.0
171.5
64.0
27.6
8.0
62.0
1,337.5
86.0
536.0
126.0
24.0
8.6
502.2
282.2
12.5
651.1
28.0
289.1
11.1
1,251.5
6.0
504.0
310.0
187.5
7.5
738.0
450.0
322.0
701.2
406.0
1,313.2
520.4
Cu
(%)
0.71
0.59
1.15
1.51
0.01
0.01
0.01
0.01
0.66
0.07
1.25
2.12
5.08
7.08
0.50
0.68
0.39
0.63
0.01
1.18
9.11
0.56
0.24
0.77
0.87
0.13
0.00
0.39
0.47
0.50
0.81
0.97
0.40
0.51
Ag
Au
(g/t)
(g/t)
18.0
0.54
127.5
0.24
31.9
0.84
1.42
75.9
0.49 1,213.8
0.50 2,439.2
0.45 5,280.0
280.5
0.61
31.5
0.54
109.2
0.43
0.95
56.1
188.7
1.69
530.2
4.88
820.4
8.16
11.4
0.40
17.9
0.39
135.8
0.93
0.37
25.6
109.9
0.19
36.0
0.68
230.4
8.87
0.41
6.6
398.3
0.24
7.4
0.54
8.2
0.62
6.2
0.19
49.7
0.08
1.9
0.14
1.8
0.14
1.8
0.16
9.1
0.33
11.1
0.40
4.5
0.29
6.4
0.35
CuEq1
(%)
1.26
1.89
2.04
3.22
1.33
2.44
5.02
13.30
20.25
0.89
1.13
1.12
2.00
17.60
0.91
1.23
1.40
0.33
0.51
0.59
0.63
1.13
1.36
0.65
0.82
3
Hole-ID
FSDH063
incl.
incl.
incl.
FSDH064
incl.
incl.
FSDH067
incl.
incl.
incl.
FSDH068A
incl.
incl.
incl.
FSDH069A
incl.
and incl.
incl.
FSDH070A
incl.
incl.
FSDH071
incl.
incl.
incl.
FSDH074
incl
incl
FSDH077
plus
From
(m)
To
(m)
Length
(m)
Cu
(%)
16.0
16.0
16.0
436.0
44.0
306.0
536.0
132.0
160.0
202.0
248.0
18.0
54.0
394.0
574.0
138.0
404.0
498.0
792.0
282.0
369.7
540.0
292.0
408.0
514.0
776.0
278.0
644.0
840.0
192.0
404.0
860.2
548.0
158.0
548.0
1,400.0
385.0
960.0
1,263.6
480.0
206.0
284.0
1,794.0
94.0
1,514.0
1,298.2
1,434.5
435.0
1,096.0
886.0
1,338.5
1,040.0
712.0
1,320.0
580.0
574.0
1,013.5
1300.0
1160.0
1092.0
194.0
920.2
844.2
532.0
142.0
112.0
1,356.0
79.0
424.0
1,131.6
320.0
4.0
36.0
1,776.0
40.0
1,120.0
724.2
1,296.5
31.0
598.0
94.0
1,056.5
670.4
172.0
1,028.0
172.0
60.0
237.5
1022.0
516.0
252.0
2.0
516.2
0.29
0.35
0.36
0.42
0.58
0.73
0.86
0.62
0.66
1.54
0.76
0.45
0.65
0.59
0.69
0.60
0.00
0.92
1.78
0.54
0.63
0.75
0.78
1.44
2.18
1.04
0.49
0.61
0.65
0.05
0.11
Au
(g/t)
0.25
0.32
0.26
0.42
0.53
0.90
0.84
0.53
0.73
12.08
0.71
0.30
0.92
0.38
0.45
0.38
0.27
0.57
1.37
0.38
0.41
0.47
0.47
0.82
1.64
0.68
0.19
0.21
0.23
10.35
0.11
Ag
(g/t)
6.5
9.0
18.1
15.0
14.4
182.6
7.8
11.9
29.9
20.5
123.2
4.0
8.1
5.3
6.8
13.9
127.0
19.3
26.3
4.0
5.3
5.9
6.7
12.6
16.9
6.0
4.4
3.2
3.6
0.5
0.9
CuEq1
(%)
0.53
0.66
0.71
0.86
1.09
3.00
1.54
1.11
1.45
10.52
2.36
0.70
1.39
0.92
1.08
1.00
1.51
3.01
0.86
0.97
1.15
1.16
2.14
3.53
1.49
0.66
0.79
0.85
0.20
As of the date of this MD&A, additional holes have been completed with assays pending, which include:
• FSDH073 drilled to a final depth of 1,388m; and
• FSDH079 drilled to a final depth of 846m.
Assay results for completed holes will be released as they are received, analyzed, and confirmed by the Company.
Two additional holes, FSDH065 (196m) and FSDH066 (458m) were suspended earlier this year, prior to the winter
weather, and will be deepened during the upcoming months.
PRE-FEASIBILITY STUDY UPDATE
The Company has completed an update to the pre-feasibility study (“PFS”) on the Filo del Sol Project, with an effective
date of February 28, 2023, which continued to demonstrate the project’s robust economic potential. The PFS, which
was based only on the oxide portion of the current Mineral Resource and used prices of US$3.65/lb copper,
US$1,700/oz gold, and US$21/oz silver, yielded an after-tax net present value (“NPV”) of US$1.3 billion at a discount
rate of 8%, and generated an internal rate of return of 20%. Positive valuations were also maintained across a wide
range of sensitivities on key assumptions.
4
The Company’s most recent Mineral Resource and Mineral Reserve statement for the Filo del Sol Project is shown
below. This Resource does not include any of the mineralization hosted in the Aurora, Breccia 41 or Bonita Zones
and the Reserve only encompasses the oxide portion of the Resource.
Category
Mineral Resource
Indicated
Inferred
Mineral Reserve
Proven
Probable
Mineral Resource
Tonnes
(millions)
Cu
(%)
Au
(g/t)
Ag
(g/t)
Lbs Cu
(billions)
Oz Au
(millions)
Oz Ag
(millions)
432.6
211.6
-
259.6
0.33
0.27
-
0.39
0.33
0.31
-
0.34
11.5
7.4
-
16.0
3.2
1.3
-
2.2
4.6
2.1
-
2.9
160.4
50.3
-
133.3
1) The Mineral Resource estimate has an effective date of January 18, 2023.
2) The qualified person for the resource estimate is James N. Gray, P Geo. of Advantage Geoservices Ltd.
3) The mineral resources were estimated in accordance with the CIM Definition Standards for Mineral Resources and Reserves.
4) Sulphide copper equivalent (CuEq) assumes metallurgical recoveries of 84% for copper, 70% for gold and 77% for silver based
on similar deposits, as no metallurgical testwork has been done on the sulphide mineralization, and metal prices of $4/lb copper,
$1800/oz gold, $23/oz silver. The CuEq formula is: CuEq=Cu+Ag*0.0077+Au*0.5469.
5) All figures are rounded to reflect the relative accuracy of the estimate.
6) Mineral resources are not mineral reserves and do not have demonstrated economic viability.
7) The resource was constrained by a Whittle® pit shell using the following parameters: Cu $4/lb, Ag $23/oz, Au $1800/oz, slope
of 29° to 45°, a mining cost of $2.72/t and an average process cost of $9.86/t.
8) Cut-off grades are 0.2 g/t Au for the AuOx material, 0.15% CuEq for the CuAuOx material and 20 g/t Ag for the Ag material.
These three mineralization types have been amalgamated in the oxide total above. CuAuOx copper equivalent (CuEq) assumes
metallurgical recoveries of 77% for copper, 72% for gold and 71% for silver based on preliminary metallurgical testwork, and
metal prices of $4/lb copper, $1800/oz gold, $23/oz silver. The CuEq formula is: CuEq=Cu+Ag*0.0077+Au*0.6136.
9) Mineral resources are inclusive of mineral reserves.
Mineral Reserve
1) The Mineral Reserve estimate has an effective date of February 28, 2023.
2) The qualified person for the estimate is Mr. Gordon Zurowski, P.Eng. of AGP Mining Consultants, Inc.
3) The mineral reserves were estimated in accordance with the CIM Definition Standards for Mineral Resources and Reserves.
4) The mineral reserves are supported by a mine plan, based on a pit design, guided by a Lerchs-Grossmann (LG) pit shell. Inputs
to that process are metal prices of Cu $3.50/lb, Ag $20/oz, Au $1600/oz; mining cost average of $2.72/t; an average processing
cost of $9.65/t; general and administration cost of $1.46/t processed; pit slope angles varying from 29 to 45 degrees, inclusive
of geotechnical berms and ramp allowances; process recoveries were based on rock type. The average recoveries applied were
83% for Cu, 73% for Au and 80% for Ag, which exclude the adjustments for operational efficiency and copper recovered as
precipitate which were included in the financial evaluation.
5) Dilution and mining loss adjustments were applied at ore/waste contacts using a mixing zone approach. The volumes of dilution
gain and ore loss were equal, resulting reductions in grades of 1.0%, 1.3% and 1.0% for Cu, Au and Ag, respectively.
6) Ore/waste delineation was based on a net value per tonne (NVPT) cut-off of $4.5/t considering metal prices, recoveries, royalties,
process and G&A costs as per LG shell parameters stated above, elevated above break-even cut-off to satisfy processing capacity
constraints.
7) The life-of-mine stripping ratio in tonnes is 1.57:1.
8) All figures are rounded to reflect the relative accuracy of the estimate. Totals may not sum due to rounding as required by
reporting guidelines.
The Company’s Mineral Resource estimate is inclusive of the Mineral Reserve estimate as set forth above.
The technical information relating to the PFS is described in a technical report titled “Filo del Sol Project NI 43-101
Technical Report, Updated Pre-feasibility Study” dated March 17, 2023, with an effective date of February 28, 2023
(the “Technical Report”). The Technical Report was prepared for Filo Mining by Ausenco Engineering Canada Inc. and
is available for review under the Company's profile on SEDAR at www.sedar.com and on the Company's website at
www.filo-mining.com.
5
OUTLOOK
Drilling continues to be the primary focus with nine drill rigs at site. As the summer drilling campaign continues, drilling
is underway on new exploration targets outside of the Aurora and Breccia 41 Zones. Drilling will remain a mix of both
large and small step-outs to the north and south of the Aurora Zone, as well as resource definition drilling within it.
The Company continues to maintain a strong focus on improving drill productivity through a variety of initiatives, and
is planning for year-around drilling and field operations.
Data collected from the current campaign will be used to develop a comprehensive geological model which will guide
further exploration and form the basis of an eventual update to the Mineral Resource estimate. The Company will
continue preliminary metallurgical testwork on the sulphide mineralization, as well as environmental and social baseline
programs in support of future project permitting.
The Company’s plans and timelines are subject to equipment and staff availability, along with being able to operate
safely and effectively throughout the winter and in accordance with the Company's health and safety protocols.
BHP EXERCISES ANTI-DILUTIVE TOP-UP RIGHT TO MAINTAIN PRO RATA SHAREHOLDING
On February 7, 2023, the Company closed a non-brokered private placement to BHP Western Mining Resources
International Pty Ltd, a wholly owned subsidiary of BHP Group Limited (collectively, "BHP"), whereby the Company
issued 43,711 common shares to BHP for gross proceeds of C$1,084,907 (the "Anti-dilution Top-Up").
The Anti-dilution Top-Up was undertaken pursuant to the terms of the March 11, 2022 private placement (the "Private
Placement"), whereby BHP was granted certain anti-dilutive rights, allowing BHP to top-up and maintain its pro rata
ownership interest in the Company from time to time (see news releases dated February 28, 2022 and March 11,
2022).
RESULTS FROM OPERATIONS
Year ended December 31,
Net loss (000’s)
Total assets (000’s)
Loss per share, basic and diluted
2022
2021
68,961 $
32,419 $
85,964
30,660
0.57 $
0.29 $
2020
18,879
47,663
0.19
$
$
Filo Mining is an exploration company and, as such, its net losses are largely driven by its exploration and project
investigation activities. There is no expectation of generating operating profits until it develops a commercially
viable mineral deposit.
Increasing year end total assets is primarily driven by the Company’s cash and cash equivalent balance, which
increased to $74.9 million following BHP’s $100 million private placement in March 2022.
Key financial results for the last eight quarters are provided in the table below.
Three Months Ended
Dec-22
Sep-22
Jun-22
Mar-22
Dec-21
Sep-21
Jun-21
Mar-21
Exploration costs ($000's)
25,604
19,915
22,136
14,869
10,328
8,696
9,358
12,519
Operating loss ($000’s)
28,608
26,238
23,666
17,013
12,037
11,835
10,041
13,268
Net loss ($000’s)
21,008
20,040
13,513
14,400
8,053
9,142
4,793
10,431
Net loss per share, basic and
diluted ($)
0.17
0.16
0.11
0.12
0.07
0.08
0.04
0.09
Costs increased during the three months and year ended December 31, 2022 with increased exploration activities
being undertaken on a year-round basis. Other relevant factors, such as the financial position of the Company,
6
other corporate initiatives, and the scope of planned exploration/project work, could affect the level of exploration
activities, operating loss, and net loss in any particular period.
For the three months and year ended December 31, 2022 Filo Mining incurred net losses of $21.0 million and
$69.0 million, respectively (2021 – $8.1 million and $32.4 million) including operating losses of $28.6 million and
$95.5 million, respectively (2021 – $12.0 million and $47.0 million) and net gains of $8.4 million and $25.0 million,
respectively, from the use of marketable securities (2021 – $4.7 million and $15.3 million). Exploration and project
investigation costs are generally the most significant expenses for the Company and for the three months and
year ended December 31, 2022, they accounted for approximately 90% and 86%, respectively, of the operating
loss (2021 – 86% and 87%). The Company expenses its exploration costs through the consolidated statement of
comprehensive loss, except for mineral property option payments and mineral property acquisition costs, which
are capitalized.
Exploration and project investigation expenses for the three months and year ended December 31, 2022 were
$25.6 million and $82.5 million, respectively, which increased relative to expenses of $10.3 million and $40.9
million incurred in the comparative periods in 2021. The period-over-period increase is primarily the result of larger
drilling programs undertaken and, for the annual period in 2022, continuing drilling and field operations through
the South American winter. By comparison, during the year ended December 31, 2021, the 2020/2021 drill
campaign concluded in May 2021, with only winterization and maintenance of the field camp and access roads
having taken place during the winter period. The Company drilled 18,629m during 2022 compared to 14,801m
drilled in 2021. In addition, during the three months and year ended December 31, 2022, the Company opened
and maintained the Chilean land access routes to the Filo del Sol Project, which was not opened in 2021, resulting
in higher roadwork costs.
Detailed categories of exploration and project investigation expenses are provided in note 10 to the 2022 Financial
Statements.
Excluding share-based compensation expense, general and administration costs for the three months and year
ended December 31, 2022 totalled $1.4 million and $5.3 million, respectively (2021 – $1.2 million and $3.6 million).
The increase is due primarily to higher general office and public company maintenance costs, such as stock
exchange and regulatory fees and insurance costs. The increases in these costs are largely the result of the
Company’s graduation from the TSX Venture Exchange to the Toronto Stock Exchange, effective October 1, 2021
and the significant increase in the Company’s market capitalization since early 2021. Salaries and benefits
increased by $0.3 million and $0.8 million during the three months and year ended December 31, 2022, due
primarily to executive and head office personnel additions.
Total share-based compensation expense for the three months and year ended December 31, 2022, was $2.0
million and $9.5 million, respectively (2021 – $0.7 million and $3.3 million). Share based compensation is a non-
cash cost which reflects the amortization of the estimated fair value of share options over their vesting period.
The fair value of share options is calculated using the Black-Scholes pricing model, which relies heavily on the
Company’s share price and historical share price volatility. Due to the material increase in the Company’s share
price and volatility since 2021, the calculated fair value of the Company’s share options has increased considerably,
resulting in a higher share option value and resultant share-based compensation expense being recognized. The
actual future value to the option holders may differ materially from these estimates as it depends on the trading
price of the Company’s shares if and when the options are exercised. In addition, as the granting of options and
their vesting is at the discretion of the Board, the related expense is unlikely to be uniform across quarters or
financial years.
Interest income has increased to $0.8 million and $1.8 million for the three months and year ended December 31,
2022, respectively (2021 – $30,227 and $0.2 million), which is due to the significant increase in the Company’s
average cash balance following the $100 million private placement to BHP, combined with increases in the interest
rates offered by the Canadian financial institutions with which the Company holds funds.
During the three months and year ended December 31, 2022, the Company recognized a net monetary loss of
$0.1 million and gain of $478,705, respectively (2021 – loss of $87,458 and gain of $34,814) in relation to the
application of hyperinflationary accounting for the Company’s Argentinian subsidiary. The monetary gains
recognized are the result of changes in the Argentinian price indices and changes to the Company’s net monetary
7
position during the year ended December 31, 2022. Further discussion regarding the application of
hyperinflationary accounting has been provided in the note 4 to the 2022 Financial Statements.
From time to time, the Company acquires and transfers marketable securities as a mechanism to facilitate
intragroup funding transfers between its Canadian headquarters and its Argentinian operating subsidiary.
Accordingly, for the three months and year ended December 31, 2022, the Company recognized gains of $8.4
million and $25.0 million, respectively (2021 – $4.7 million and $15.3 million) on the use of marketable securities
for the purposes of facilitating intragroup funding transfers, which represents the net benefit of having used this
funding mechanism over traditional methods. The year-over-year increase is primarily the result of increased funds
provided to the Argentinian subsidiary
Other foreign exchange for the three months and year ended December 31, 2022 totalled a loss of $0.2 million
and a gain of $0.5 million, respectively (2021 – losses of $0.1 million $0.1 million), which increased relative to
2021 due to a larger average US dollar balance held by the Company and depreciation of the Canadian dollar, the
Company’s functional currency, relative to the US dollar from the time of when the US dollars were purchased and
December 31, 2022.
In other comprehensive income, the Company reported foreign exchange translation gains of $0.6 million and
$0.5 million for the three months and year ended December 31, 2022, respectively (2021 – losses of $0.2 million
and $0.7 million) on translation of subsidiary company accounts from their respective functional currencies to the
Canadian dollar presentation currency. The foreign exchange translation losses reported in the current periods are
primarily the result of fluctuations of the Canadian dollar relative to the Chilean peso over the respective periods.
For the three months and year ended December 31, 2022, the impact of hyperinflation amounted to gains of $0.4
million and $0.8 million, respectively (2021 – $0.1 million and $0.3 million) and consist of adjustments recognized
on the continuing inflation of opening non-monetary balances during the year and the ongoing translation of the
Company’s Argentinian subsidiary into the Canadian dollar presentation currency.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2022, the Company had cash and cash equivalents of $74.9 million and net working capital of
$60.3 million, compared to cash of $19.4 million and net working capital of $13.1 million as at December 31, 2021.
The increase in the Company’s cash and cash equivalents and net working capital is due primarily to the $100.0 million
private placement to BHP and $4.8 million in gross proceeds received by the Company in relation to the exercise of
stock options during 2022. These cash inflows have been offset by funds used in operations and for general corporate
purposes, plus mineral property payments and amounts used in the acquisition of equipment and facilities for the Filo
del Sol Project.
The Company will continue to deploy the majority of its treasury to fund ongoing advancement of the Filo del Sol
Project, and to a lesser extent, for working capital and general corporate purposes.
The Company does not currently generate income from operations. The Company has sufficient working capital for
the Company to fund operations for the near term. However, the Company will need further funding to support the
advancement of the Filo del Sol Project towards development and to meet general corporate and working capital
requirements. Historically, capital requirements have been funded through equity financing. While management is
confident that additional sources of funding will be secured to fund potential future expenditures, factors that could
affect the availability of financing include the progress and results of ongoing project exploration and evaluation
activities at the Company’s Filo del Sol Project, the state of international debt and equity markets, investor perceptions
and expectations of the global copper, gold, and/or silver markets. Based on the amount of funding raised, the
Company’s planned initiatives and other work programs may be postponed, or otherwise revised, as necessary.
RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances with related parties.
During the year ended December 31, 2022, the Company engaged with Josemaria Resources Inc. (“Josemaria”) and
NGEx Minerals Ltd. (“NGEx Minerals”), which were related parties to the Company by way of directors, officers and
shareholders in common. Josemaria ceased to be a related party of the Company as of April 28, 2022, following the
acquisition of all of Josemaria’s issued and outstanding common shares by Lundin Mining Corporation.
8
Related party services
The Company has an ongoing cost sharing arrangement with NGEx Minerals and, through April 28, 2022, Josemaria.
Under the terms of these arrangements, the Company provides management, technical, administrative and/or financial
services (collectively, “Management Services”) to NGEx Minerals and Josemaria, and vice versa. These transactions
were incurred in the normal course of operations, and are summarized as follows:
Management Services to NGEx Minerals
$
902,414 $
Management Services to Josemaria
Management Services from NGEx Minerals
Management Services from Josemaria
42,374
(364,343)
-
2022
2021
549,787
281,813
(591,415)
(99,869)
Year ended
December 31,
Related party balances
The amounts due from (to) related parties, and the components of the consolidated statement of financial position in
which they are included, are as follows:
Receivables and other assets
Receivables and other assets
Related Party
NGEx Minerals
Josemaria
Accounts payable and accrued liabilities
NGEx Minerals
(112,163)
Accounts payable and accrued liabilities
Josemaria
-
December 31,
2022
186,449 $
December 31,
2021
15,113
$
-
46,678
(24,343)
(1,667)
Camp usage agreement
On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction with a wholly-owned
subsidiary of Josemaria whereby the Company extended its right to use Josemaria’s Batidero Camp in Argentina.
The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence of such notice the
agreement may be renewed annually at the Company’s election. On March 9, 2023, Filo Mining provided formal notice
of renewal for the period through April 1, 2024.
9
Key management compensation
The Company’s key management personnel have the authority and responsibility for overseeing, planning, directing
and controlling its activities and consist of the Board of Directors and members of the executive management team.
Total compensation expense for key management personnel, and the composition thereof, is as follows:
Salaries
Short-term employee benefits
Directors’ fees
Stock-based compensation
Incentive bonuses
Year ended
December 31,
2022
$
1,346,667 $
32,369
233,056
6,910,772
1,165,000
2021
965,333
28,107
162,004
2,040,635
1,030,000
$ 9,687,864 $
4,226,079
SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant account policies are described in Note 3 the consolidated financial statements for year
ended December 31, 2022, as filed on SEDAR at www.sedar.com.
New Accounting Pronouncements
The IASB and/or the IFRS Interpretations Committee have issued new standards, amendments, or interpretations
to existing standards, which were not yet in effect or did not apply to the Company as at December 31, 2022,
such as:
IAS 16, Property, plant and equipment
IAS 16 has been amended to provide clarity with respect to the treatment of net proceeds generated from
selling any items produced while bringing an item of property, plant and equipment to the location and
condition necessary for it to be capable of operating in the manner intended by the entity. Specifically, the
amendments prohibit entities from deducting amounts resulting from the sale of items produced during this
phase from the cost of property, plant and equipment. Instead, an entity shall recognize such sales proceeds
and related costs in profit or loss.
The amendments to IAS 16 were not effective for annual reporting periods beginning on or after January 1,
2022, and did not have an impact on the Company’s financial results for the year ending December 31, 2022.
There are no other IFRS standards or International Financial Reporting Interpretations Committee interpretations
that are not yet effective or early adopted that are expected to have any impact on the Company.
CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS
The preparation of the consolidated financial statements in accordance with IFRS, such as the underlying
consolidated financial statements for the year ended December 31, 2022, requires management to make
estimates, assumptions and judgements that affect the reported amounts of assets, liabilities and expenditures.
These estimates, assumptions and judgements are based on management’s best knowledge of the relevant facts
and circumstances taking into account previous experience. Actual results could differ and such differences could
be material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are based on historical
experience and other facts and circumstances. Revisions to estimates, assumptions and judgements, and the
resulting effects on the carrying amounts of the Company’s assets and liabilities, are accounted for prospectively.
Information about estimates, assumptions, judgements and other sources of estimation uncertainty as at December
10
31, 2022 that have a risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within
the next year are provided below:
Valuation of mineral properties
The Company carries the acquisition costs of its mineral properties at cost less any provision for impairment.
At each reporting period, management applies judgement in assessing whether there are any indicators of
impairment relating to mineral properties. If any such indicator exists, then an impairment test is performed
by management, which also requires the Company to make significant judgments and estimates. Information
considered by management in assessing indicators of impairment may include the period for which the entity
has the right to conduct its exploration and project investigation activities, including expected renewals,
whether substantive expenditure on further exploration and project investigation of mineral properties is
budgeted, the evaluation of the results of exploration and project investigation activities up to the reporting
date and other information that may indicate that that the carrying value of mineral properties may not be
recovered in full from successful development or sale of the asset. The judgments and estimates mentioned
above are subject to various risks and uncertainties, which may ultimately have an effect on the expected
recoverability of the carrying values of the mineral properties.
The Company has determined that no indicators of impairment exist for its mineral properties as of December
31, 2022.
FINANCIAL INSTRUMENTS
The Company’s financial instruments consist of cash, receivables and other assets, and trade payables and accrued
liabilities. The carrying values of the Company’s financial instruments are considered to be reasonable
approximations of fair value due to their anticipated short-term nature.
As at December 31, 2022, the Company’s financial instruments are exposed to the following financial risks,
including credit, liquidity and currency risks:
(i) Credit risks associated with cash are minimal as the Company deposits the majority of its cash with a
large Canadian financial institution that has been accorded a strong investment grade rating by a
primary rating agency.
(ii) Liquidity risks associated with the inability to meet obligations as they become due are minimized
through the management of its capital structure and by maintaining good relationships with significant
shareholders and creditors, such as Zebra. The Company also closely monitors and reviews its costs
to date and actual cash flows on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2022, are as follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
$
15,450,886 $
15,450,886 $
Total
$ 15,450,886 $ 15,450,886 $
- $
- $
-
-
(iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net financial
assets or liabilities which are denominated in currencies other than their respective functional
currencies.
At December 31, 2022, the Company’s largest foreign currency risk exposures existed at the level of
its Canadian headquarters, where the Company held a net financial asset position denominated in US
dollars having a Canadian dollar equivalent of approximately $9.6 million. A 10% change in the foreign
exchange rate between the US dollar and the Canadian dollar, the functional currency of Filo Mining,
11
to an
would give
position/comprehensive loss.
rise
increase/decrease of approximately $1.0 million
in
financial
OUTSTANDING SHARE DATA
As at March 17, 2023, the Company had 123,567,695 common shares outstanding and 5,568,200 share options
outstanding under its share-based incentive plan.
FINANCIAL INFORMATION
The Company’s next scheduled financial report will be for the three months ended March 31, 2023, which is
expected to be published on or around May 5, 2023.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure controls and procedures (“DC&P”)
DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in
its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded,
processed, summarized and reported within the time periods specified in the securities legislation. They include
controls and procedures designed to ensure that information required to be disclosed by the Company in its annual
filings, interim filings or other reports filed or submitted under securities legislation is accumulated and
communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
There have not been any material changes in the Company’s DC&P during the year ended December 31, 2022.
Internal controls over financial reporting (“ICFR”)
The Company’s ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting
and preparation of financial statements for external purposes in accordance with IFRS. The Company’s ICFR
include policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and disposition of assets; provide reasonable assurance that transactions are
recorded as necessary to permit preparation of the financial statements in accordance with IFRS; that receipts
and expenditures are being made only in accordance with authorization of management and directors of the
Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of assets that could have a material effect on the financial statements.
Any system, no matter how well conceived or operated, has inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement
preparation and presentation and will not prevent all, or detect all, misstatements and frauds. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented
or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any control system also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
Management uses the Internal Control – Integrated Framework (2013 Framework) issued by the Committee of
Sponsoring Organizations for the Treadway Commission (COSO) in order to assess the effectiveness of the
Company’s ICFR.
There have not been any material changes in the Company’s internal controls during the year ended December
31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s ICFR.
12
RISKS AND UNCERTAINTIES
The operations of the Company are speculative due to the high-risk nature of its business, which includes the
acquisition, financing, exploration, development and operation of mineral and mining properties. There are a
number of factors that could negatively affect the Company’s business and the value of its common shares, and
these risk factors could materially affect the Company’s future operations and financial position and could cause
actual events to differ materially from those described in forward-looking statements relating to the Company.
Significant risk factors have been identified by the Company and are listed below. Further discussion and additional
risk factors are also available in the Company’s most recent annual information form, as filed on SEDAR at
www.sedar.com. The following information pertains to the outlook and conditions currently known to the Company
that could have a material impact on the financial condition of the Company. Other factors may arise that are not
currently foreseen by management of the Company that may present additional risks in the future. Current and
prospective security holders of the Company should carefully consider these risk factors, as they could materially
affect the Company’s future operations and could cause actual events to differ materially from those described in
forward-looking statements relating to the Company.
Exploration and Development Risk
Mining exploration, development and operations generally involve a high degree of risk that cannot be eliminated,
and which can adversely impact the Corporation’s success and financial performance. Exploration for and
development of mineral deposits involves a high degree of risk and few properties that are explored are ultimately
developed into producing mines.
Discovery of mineral deposits is dependent upon a number of factors, not the least of which are the technical
skills of the exploration personnel involved and the capital required for the programs. The cost of conducting
programs may be substantial and the likelihood of success is difficult to assess. There is no assurance that the
Company’s mineral exploration activities will result in any discoveries of new bodies of commercial ore. There is
also no assurance that even if commercial quantities of ore are discovered that a new ore body would be
developed and brought into commercial production. The commercial viability of a mineral deposit once discovered
is dependent upon a number of factors, some of which are discussed elsewhere in this AIF, and include the
particular attributes of the deposit (such as size, grade, metallurgy, expected recovery rates of metals from the
ore and proximity to infrastructure and labour), the interpretation of geological data obtained from drilling and
sampling, feasibility studies, the ability to acquire and access land, the availability and cost of water and power,
anticipated climatic conditions; cyclical metal prices; fluctuations in inflation and currency exchange rates, higher
input commodity and labour costs, commodity price fluctuations, government regulations, including regulations
relating to prices, taxes, royalties, land tenure and use, allowable production, importing and exporting of minerals,
and environmental protection. Most of the above factors are beyond the control of the Company. Development
projects will also be subject to the successful completion of final feasibility studies, issuance of necessary permits
and other governmental approvals and receipt of adequate financing, as major expenses are typically required
to locate and establish Mineral Reserves, to develop metallurgical processes and to construct mining and
processing facilities at a particular site. The exact effect of these factors cannot be accurately predicted, but the
combination of any of these factors may adversely affect the Company’s business.
The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration
and development of copper, gold, and silver projects and properties, including unusual and unexpected geologic
formations, seismic activity, rock slides, ground instabilities or failures, mechanical failures, precipitation, flooding
and other conditions involved in the drilling and removal of material, any of which could result in damage to, or
destruction of facilities, damage to life or property, environmental damage and possible legal liability.
As appropriate, the Company may seek to mitigate its exploration risk by diversifying its portfolio, or through the
establishment of joint ventures and option agreements with third parties.
Mineral Reserves and Mineral Resources Estimates
The Company’s reported Mineral Reserves and Mineral Resources are estimations only. No assurance can be
given that the estimated Mineral Reserves and Mineral Resources are accurate or that the indicated level of
13
copper, gold, silver or any other mineral will be recovered or produced. Actual mineralization or formations may
be different from those predicted. It may take many years from the initial phase of drilling before production is
possible and during that time the economic feasibility of exploiting a discovery may change. Market price
fluctuations of copper, gold and silver and certain other metals, as well as increased production and capital costs
or reduced recovery rates, may render the Company’s Mineral Reserves uneconomic to develop. Moreover, short-
term operating factors relating to the Mineral Reserves, such as the need for the orderly development of ore
bodies, the processing of new or different ore grades, the technical complexity of ore bodies, unusual or
unexpected geological formations, ore dilution or varying metallurgical and other ore characteristics may cause
Mineral Reserves to be reduced. Estimated Mineral Reserves may have to be recalculated based on fluctuations
in the price of metals, or changes in other assumptions on which they are based. Any of these factors may require
the Company to reduce its Mineral Reserves and Mineral Resources, which could have a negative impact on the
Company’s business.
Failure to obtain or maintain necessary permits or government approvals or changes to applicable legislation
could also cause the Company to reduce its reserves. In addition, changes to mine plans could cause the Company
to reduce its Mineral Reserves. There is also no assurance that the Company will achieve indicated levels of
copper, gold or silver recovery or obtain the prices assumed in determining such Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no
assurance that they will ever be mined or processed profitably. Due to the uncertainty which may attach to
Mineral Resources, there is no assurance that all or any part of Measured or Indicated Mineral Resources will
ever be converted into Mineral Reserves; and no assurance that all or any part of an Inferred Mineral Resources
exists or is economically or legally mineable.
Permitting
The Company’s development and exploration activities are subject to permitting requirements in both Argentina
and Chile. In particular, comprehensive environmental assessments will be necessary for the Filo del Sol Project
in Argentina in order to obtain the necessary approval for each of the Filo del Sol Project stages, which assessment
will be conducted in compliance with Argentinian regulations. Project development will also require an
environmental impact assessment study in Chile. Following the receipt of environmental approvals, additional
permits, licences, authorizations, and certificates will be required to proceed to project construction, including,
for example, mining water and fuel delivery, sewage water treatment, hazardous waste plans, drilling and closure
plans. Failure to obtain required permits and/or to maintain compliance with permits once obtained could result
in injunctions, fines, suspension or revocation of permits and other penalties.
There can be no assurance that the Company will obtain all such permits and/or achieve or maintain full
compliance with such permits at all times. Activities required to obtain and/or achieve or maintain full compliance
with such permits can be costly and involve extended timelines.
Previously issued permits may be suspended or revoked for a variety of reasons, including through government
or court action. Failure to obtain and/or comply with required permits can have serious consequences, including:
damage to the Company’s reputation, stopping the Company from proceeding with the exploration and
development of a project, negatively impacting further development of a mine, and increasing the costs of
development and litigation or regulatory action against the Company, and may materially adversely affect the
Company’s business, results of operations or financial condition.
Infrastructure
Development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable
roads, bridges, power and water supplies are important determinants that affect costs. The Company’s ability to
obtain a secure supply of power and water at a reasonable cost depends on many factors, including: global and
regional supply and demand; political and economic conditions; problems that can affect local supplies; delivery;
and relevant regulatory regimes. Unusual or infrequent weather phenomena, sabotage or government, and other
interference in the maintenance or provision of such infrastructure could adversely affect the activities and
profitability of the Company.
14
Establishing such infrastructure will require significant resources, identification of adequate sources of raw
materials and supplies and necessary cooperation from national and regional governments, none of which can
be assured. There is no guarantee that the Company will secure these power, water and access rights going
forward or on reasonable terms.
Title Risk
The Company has investigated its right to explore and exploit its properties and, to the best of its knowledge,
those rights are in good standing. The results of the Company’s investigations should not be construed as a
guarantee of title. Other parties may dispute the title to a property, or the property may be subject to prior
unregistered agreements or liens and transfers or land claims by aboriginal, native, or indigenous peoples. The
title may be affected by undetected encumbrances or defects or governmental actions. The Company has not
conducted surveys of all its properties, and the precise area and location of claims or the properties may be
challenged, and no assurances can be given that there are no title defects affecting such properties. The rules
governing mining concessions in Chile and Argentina are complex and any failure by the Company to meet
requirements would have a material adverse effect on the Company. Any defects in the title to the Company’s
properties could have a material and adverse effect on the Company.
No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the
applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be
challenged or impugned by third parties. Although the Company has not had any problem renewing its licenses
in the past there is no guarantee that it will always be able to do so. Inability to renew a license could result in
the loss of any project located within that license.
The Company is earning an interest in the Tamberias property through an option agreement requiring property
payments and acquisition of title to the properties is completed only when the option conditions have been met.
If the Company does not satisfactorily complete these option conditions in the period laid out in the option
agreements, the Company’s title to the related property will not vest and the Company will have to write down
its previously capitalized costs related to that property.
Ability to Operate Year-round
During 2022, the Company commenced year-round operations at the Filo del Sol Project. Risks and uncertainties
associated with the Company’s ability to successfully operate year-round include, but are not limited to, the
nature, duration or extent of weather and other natural events and the availability of personnel, logistical support
and key contractors to provide services in challenging winter conditions.
There can be no assurances that the Company’s preparation and winterization efforts adequately anticipated,
and safeguarded against, all the challenges of conducting exploration programs during the South American winter
in the high Andes.
Dependence on Single Project
The Filo del Sol Project is currently the Company’s sole project and therefore, any adverse development with
respect to the Filo del Sol Project will have a material adverse effect on the Company.
Economic and Political Instability in Argentina
The Filo del Sol Project is predominantly located in San Juan Province, Argentina. There are risks relating to an
uncertain or unpredictable political and economic environment in Argentina. During an economic crisis in 2001
to 2003 and again in 2014 and 2020, Argentina defaulted on foreign debt repayments and on the repayment on
a number of official loans to multinational organizations. In addition, the government has renegotiated or
defaulted on contractual arrangements. The current government, which took office in December 2019, has
reinstated currency controls previously lifted by the opposition government, which, among other impacts, restricts
the ability of companies and its citizens to obtain foreign currency including, US$, in each case requiring Central
Bank approval (resulting in, at times, a limitation on the ability of multi-national companies to distribute dividends
abroad in foreign currency including, US$). The current government has also reversed certain corporate tax rate
15
reductions previously introduced by the previous opposition government. While the political environment in
Argentina continues to develop, and the status of currency controls and restrictions remains fluid, past actions
indicate that the Argentinean government may from time to time alter or impose additional requirements or
policies that may adversely affect the Company’s activities in Argentina or in its ability to attract joint venture
partners or obtain financing for its projects in the future. In addition, economic instability in Argentina may
negatively impact the timeliness or recoverability of amounts collectible from the government of Argentina. There
may be material adverse consequences with respect to the Company and its operations as a result of political or
economic instability in Argentina.
Foreign Operations Risk
The Company conducts exploration activities in foreign countries, including Argentina and Chile. Each of these
countries exposes the Company to risks that may not otherwise be experienced if all operations were located in
Canada. The risks vary from country to country and can include, but are not limited to, civil unrest or war,
terrorism, illegal mining, changing political conditions, fluctuations in currency exchange rates, expropriation or
nationalization without adequate compensation, changes to royalty and tax regimes, high rates of inflation, labour
unrest and difficulty in understanding and complying with the regulatory and legal framework respecting
ownership and maintenance of mineral properties, as well as the revocation or suspension of previously issued
mining permits. Changes in mining or investment policies or shifts in political attitudes may also adversely affect
the Company’s existing assets and operations. Real and perceived political risk may also affect the Company’s
ability to finance exploration programs and attract joint venture or option partners, and future mine development
opportunities. Chile is typically viewed as a favourable mining jurisdiction; however, certain Canadian issuers
have recently experienced regulatory action with regards to Chilean operations, specifically with respect to
increased permitting timelines.
Numerous countries have introduced changes to mining regimes that reflect increased government control or
participation in the mining sector, including, but not limited to, changes of law affecting foreign ownership,
mandatory government participation, taxation and royalties, exploration licensing, export duties, and repatriation
of income or return of capital. There can be no assurance that industries, which are deemed of national or
strategic importance in countries in which the Company has assets, including mineral exploration, will not be
nationalized. There is a risk that further government limitations, restrictions or requirements, not presently
foreseen, will be implemented. Changes in policy that alter laws regulating the mining industry could have a
material adverse effect on the Company. There can be no assurance that the Company’s assets in these countries
will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or
body.
In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts
in Canada. The Company also may be hindered or prevented from enforcing its rights with respect to a
governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company
to accurately predict such developments or changes in laws or policy or to what extent any such developments
or changes may have a material adverse effect on the Company.
Non-compliance with applicable laws, regulations and permitting requirements (including allegations of such)
may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations
to cease or be curtailed or causing the withdrawal of permits or mining licenses, and the imposition of corrective
measures requiring material capital expenditure or remedial action resulting in materially increased cost of
compliance, reputational damage and potentially impaired ability to secure future approvals and permits. The
Company may be required to compensate third parties for loss or damage and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations.
Environmental and Socio-Political Risks
Present or future laws and regulations with respect to environmental protection standards or corporate social
responsibility may affect the Company’s operations. Environmental legislation is evolving in a manner that
requires stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent
16
environmental assessments of proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees. The Company is currently engaged in exploration with limited
environmental impact. Future environmental costs may increase due to changing requirements or costs
associated with exploration and the developing, operating and closing of mines, as well as with respect to
changing requirements for disclosure and compliance. The Company is subject to environmental regulation in
the various jurisdictions in which it operates. Failure to comply with these laws, regulations and permitting
requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities
causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the
exploration or development of mineral properties may also be required to compensate those suffering loss or
damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations
of applicable laws or regulations. Furthermore, environmental hazards may exist on the properties on which the
Company holds interests which are unknown to the Company at present and which have been caused by previous
or existing owners or operators of the properties.
Programs may also be delayed or prohibited in some areas due to technical factors, new legislative constraints,
social opposition or local government capacity or willingness to issue permits to explore in a timely manner. In
parts of Argentina, there is environmental opposition to both mineral exploration and mining. Accordingly, there
may be a certain degree of anti-mining sentiment that could potentially affect the risk of successfully exploring
and developing the Company’s assets in those provinces.
In Chile, a newly elected government is discussing changes to its constitution which may include changes to the
current environmental and socio-political landscape in that country. Additionally, the Chilean Congress is also
considering legislation designed to protect the country’s glaciers. No changes have yet been made to the
constitution and any proposed legislation has not yet been approved; however, depending on its final language,
these changes could affect the Company’s ability to develop the Tamberias property.
Climate Change and Carbon Pricing
Climate change continues to be a top priority for many countries and jurisdictions around the world and
governments and regulators continue to implement and develop new rules and regulations to control carbon gas
or “green-house” gas emissions attributable to climate change. As part of their efforts to shift to lower-carbon
economies, governments have implemented carbon pricing, a mechanism that harnesses market forces to
address climate change by creating financial incentives to lower emissions. Some of these mechanisms include
the implementation of taxes on fuel sales, emissions trading schemes, and fossil fuel extraction fees, all of which
are expected to play an ongoing role in global efforts to address climate change. The cost of compliance with
various climate change regulations will ultimately be determined by the regulations themselves and by the
markets that evolve for carbon credits and offsets and, as a result, the financial impact, if any, on the Company’s
operations cannot yet be fully understood.
The potential physical impacts of climate change due to extreme weather events on the Company’s operations
are also highly uncertain and may be particular to the unique geographic circumstances associated with the
Company’s projects and operations. Due to changes in global climate conditions, many scientists predict an
increase in the frequency of extreme weather events such as severe and unpredictable rain and snowfall
precipitation, winds, floods, droughts, and other types of extreme weather conditions and events. Such events
could disrupt the Company’s operations and development activities; impact the Company’s equipment and
infrastructure; impede access to the Company’s projects and properties; or threaten the health and safety of the
Company’s employees and contractors.
Negative Operating Cash Flow
The Company is an exploration stage company and has not generated cash flow from operations. The Company
is devoting significant resources to the exploration and acquisition of its properties; however, there can be no
assurance that it will generate positive cash flow from operations in the future. The Company expects to continue
to incur negative consolidated operating cash flow and losses until such time as it achieves commercial production
at a particular project. The Company currently has negative cash flow from operating activities.
17
The Company’s exploration projects have no operating history upon which to base estimates of future cash flows.
Substantial expenditures are required to develop mineral projects. It is possible that actual costs and future
economic returns may differ materially from Filo Mining’s estimates. There can be no assurance that the
underlying assumed levels of expenses for any project will prove to be accurate. Further, it is not unusual in the
mining industry for new mining operations to experience unexpected problems during start-up, resulting in delays
and requiring more capital than anticipated. There can be no assurance that Filo Mining’s projects will move
beyond the exploration stage and be put into production, achieve commercial production or that Filo Mining will
produce revenue, operate profitably or provide a return on investment in the future. Mineral exploration involves
considerable financial and technical risk. There can be no assurance that the funds required for exploration and
future development can be obtained on a timely basis. There can be no assurance that Filo Mining will not suffer
significant losses in the near future or that Filo Mining will ever be profitable.
Uncertainty of Long-term Funding and Dilution of Shareholders’ Interests in the Company
The exploration and development of mineral properties requires a substantial amount of capital and may depend
on the Company’s ability to obtain financing through joint ventures, debt financing, equity financing or other
means. General market conditions which may be impacted by geopolitics or international conflict, volatile metals
prices, a claim against the Company, a significant disruption to the Company’s business, or other factors may
make it difficult to secure the necessary financing in the long term. There is no assurance that the Company will
be successful in obtaining required financing as and when needed on acceptable terms. Failure to obtain any
necessary additional financing may result in delaying or indefinite postponement of exploration or development
or even a loss of property interest. If the Company needs to raise additional funds, such financing may
substantially dilute the economic and voting rights of the Company’s shareholders and reduce the value of their
investment. Since the Company’s capital needs depend on market conditions and other factors beyond its control,
it cannot predict or estimate the amount, timing or nature of any such future offering of securities. Thus, holders
of Common Shares of the Company bear the risk of any future offerings reducing the market price of the Common
Shares and diluting their shareholdings in the Company.
Metal Price Risk
The Company’s portfolio of properties and investments have exposure to predominantly copper, gold, and silver
prices. Commodity prices fluctuate widely and are affected by numerous factors beyond the Company’s control,
such as the sale or purchase of metals by various central banks and financial institutions, interest rates, exchange
rates, inflation or deflation, fluctuation in the value of the US$ and foreign currencies, global and regional supply
and demand, and the political and economic conditions of major metals-producing and metals-consuming
countries throughout the world. The prices of these metals greatly affect the value of the Company, the price of
the Common Shares and the potential value of its properties and investments. This, in turn, greatly affects its
ability to form joint ventures, option agreements and the structure of any joint ventures formed. This is due, at
least in part, to the underlying value of the Company’s assets at different metals prices.
Tax, Royalties and Other Charges
The Company runs its business in different countries and strives to run its business in as tax efficient a manner
as possible. The Company is potentially subject to taxes (including income taxes and mineral taxes), various fees
and royalties imposed by various levels of government across the jurisdiction in which it operates. The laws
imposing these taxes, fees and royalties and the manner in which they are administered may in the future be
changed or interpreted in a manner that materially and adversely affects our business, financial position and
results of operations. Repatriation of earnings to Canada from other countries may be subject to withholding
taxes or restricted by currency controls. The Company has no control over withholding tax rates.
Health and Safety Hazards
Mining exploration and operations involve health and safety hazards that could adversely affect the Company’s
reputation, business and future operations. By nature, exploration and mining activities present a variety of
hazards and associated health and safety risks. Workers involved in the Company’s operations are subject to
18
many inherent health and safety risks and hazards, including, but not limited to, rock falls, slides or bursts,
equipment or structural fires, falls of ground, floods, chemical and biological hazards, mineral dusts, atmospheric
hazards including low oxygen levels, gases and fumes, high altitude work, use of explosives, noise, electricity,
fixed and moving equipment, civil disturbances and criminal activity, which could result in occupational illness or
health issues, personal injury, and loss of life, and/or facility and workforce evacuation. Even though robust
health and safety controls and risk mitigation measures are in place across the Company’s sites, health and safety
incidents may occur. The overall management of health and safety is governed in accordance with the
requirements of the Company’s Responsible Mining Development Policy. While significant effort is made to control
and eliminate potential health and safety risks, these risks cannot be eliminated and may adversely affect the
Company’s reputation, business, and future operations. Incidents resulting in serious injury or death, or those
having a negative impact on surrounding communities (real or perceived) could result in litigation, civil or criminal
sanctions, regulatory action (including, but not limited to suspension of operations and/or fines and penalties),
increased community tensions, or otherwise adversely affect the Company’s reputation and ability to meet its
objectives.
Pandemic Virus Outbreaks
Over the last three years the COVID-19 pandemic has negatively impacted and increased volatility of global
financial markets and may continue to do so. The economic viability of the Company’s long-term business plan
is impacted by its ability to obtain financing, and global economic conditions impact the general availability of
financing through public and private debt and equity markets, as well as through other avenues.
The health and safety of the stakeholders remain the Company’s top priority, and pursuant to its COVID-19
operating protocol, the Company’s camp facilities and offices have implemented travel restrictions, surveillance,
monitoring and response plans to reduce the risk of COVID-19 exposure and outbreak, including health screening
of personnel when appropriate.
As the Company continues to monitor developments with respect to COVID-19, both globally and within its
operating jurisdictions, it will remain adaptive and will implement any such changes to its COVID-19 protocol, or
its business in general, as may be deemed appropriate to mitigate any potential impacts to its business and its
Stakeholders. Such changes, may include, but are not limited to, reduced operations, temporary closures of the
Company’s project site or offices, and deviations from the timing and nature of previous operating plans.
Moreover, sustained COVID-19 outbreaks have resulted in operational and supply chain delays and disruption as
a result of governmental regulation and preventative measures being implemented worldwide, including in
Argentina. The Company could also be required to close, curtail or otherwise limit its operating activities as a
result of the implementation of any such governmental regulation or preventative measures in the jurisdictions
in which the Company operates, or as a result of sustained COVID-19 outbreaks at its project site or facilities.
Any such closures or curtailments could have an adverse impact on the business of the Company.
In addition to the current COVID-19 pandemic, another emerging infectious disease or the threat of outbreaks
of viruses or other contagions or epidemic diseases could have a material adverse effect on the Company by
causing operational and supply chain delays and disruptions, labour shortages and shutdowns, social unrest,
breach of material contracts and customer agreements, government or regulatory actions or inactions, changes
in tax laws, payment deferrals, increased insurance premiums, decreased demand for base and precious metals,
declines in the price of base and precious metals, delays in permitting or approvals, governmental disruptions,
capital markets volatility, or other unknown but potentially significant impacts. In addition, governments may
impose strict emergencies measures in response to the threat or existence of an infectious disease, which could
have a material adverse effect on the Company’s business.
OFF-BALANCE SHEET ARRANGEMENTS
During the year ended December 31, 2022, there were no material off-balance sheet transactions which have not
been recorded in the Company’s consolidated financial statements. The Company has not entered into any specialized
financial arrangement to minimize its currency risk.
19
QUALIFIED PERSON
The scientific and technical disclosure for the Filo del Sol Project included in this MD&A have been reviewed and
approved by Bob Carmichael, P. Eng. (BC) and/or Jamie Beck, B.A.Sc., P.Eng. Mr. Carmichael is Filo Mining's Vice-
President of Exploration and a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral
Projects. (“NI 43-101”). Mr. Beck is Filo Mining’s President and Chief Executive Officer and is also a Qualified Person
under NI 43-101.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made and information contained herein in the MD&A constitutes “forward-looking information” and
“forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking
information” or “forward-looking statements”) concerning the business, operations, financial performance and
condition of Filo Mining. The forward-looking information contained in this MD&A is based on information available to
the Company as of the date of this MD&A. Except as required under applicable securities legislation, the Company
does not intend, and does not assume any obligation, to update this forward-looking information. Generally, any
statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance, (often, but not always, identified by words or phrases such
as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends",
“projects” , “estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “strategy”, “goals”, “objectives”,
“potential”, “possible”, "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events, conditions or results “will”, "may", "could", "would", “should”, "might" or "will
be taken", "will occur" or "will be achieved" or the negative connotations thereof and similar expressions) are not
statements of historical fact and may be forward-looking statements.
All statements other than statements of historical fact may be forward-looking statements. Forward-looking information
is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of
the Company to be materially different from those expressed or implied by such forward-looking information, including
but not limited to: risks and uncertainties relating to, among other things, the inherent uncertainties regarding Mineral
Resource estimates, cost estimates, changes in commodity prices, currency fluctuation, financings, unanticipated
resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment,
timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental
impact on operations as well as other risks, and uncertainties and other factors, including, without limitation, those
referred to in the “Risks and Uncertainties” section of the MD&A and in the Company’s most recent Annual Information
Form, under the heading “Risks Factors”, and elsewhere, which may cause the actual results, level of activity,
performance or achievements of the Company to be materially different from those expressed or implied by such
forward-looking information.
The Company believes that the expectations reflected in the forward-looking statements and information included in
this MD&A are reasonable but no assurance can be given that these expectations will prove to be correct and such
forward-looking statements and information should not be unduly relied upon. This statement and information is as
of the date of the MD&A. In particular, this MD&A contains forward-looking statements or information pertaining to
the assumptions used in the PFS for the Filo del Sol Project, the assumptions used in the Mineral Reserves and
Resources estimates for the Filo del Sol Project, including, but not limited to, geological interpretation, grades, metal
price assumptions, metallurgical and mining recovery rates, geotechnical and hydrogeological conditions, as applicable;
ability to develop infrastructure; assumptions made in the interpretation of drill results, geology, grade and continuity
of mineral deposits; expectations regarding access and demand for equipment, skilled labour and services needed for
exploration and development of mineral properties; and that activities will not be adversely disrupted or impeded by
exploration, development, operating, regulatory, political, community, economic and/or environmental risks. In
addition, this MD&A may contain forward-looking statements or information pertaining to: the potential exploration
results or anticipated outcomes of infill or step-out drilling planned at Filo del Sol; exploration and development plans
and expenditures, including but not limited to its plans to add rigs its ongoing drilling campaign, the sequencing or
prioritization of drill targets, and a transition to year-round operations; the ability of the Company’s COVID-19 operating
protocol to continue to meet government mandated health and safety guidelines enabling it to conduct its field
20
programs as planned; the ultimate size and scope of its field programs and the Company’s ability to achieve the
objectives thereof; the size and scope of its field programs and the Company’s ability to achieve the objectives thereof;
the impact of the Company’s winterization efforts at Filo del Sol, and whether such efforts will enable year-round
operations and have adequately anticipated the challenges of winter operation, including but not limited to weather
and potential supply chain disruptions; the anticipated use of proceeds from the Private Placement; the timing or
results of an upgrade to the Mineral Resources estimate at Filo del Sol, including the inputs used therein; opportunities
to improve project economics; the success of future exploration activities; potential for resource expansion; potential
for the discovery of new mineral deposits; ability to build shareholder value; expectations with regard to adding to
Mineral Reserves or Resources through exploration; expectations with respect to the conversion of inferred resources
to an indicated resources classification; ability to execute the planned work programs; estimation of commodity prices,
Mineral Reserves and Resources, estimations of costs, and permitting timelines; ability to obtain surface rights and
property interests; currency exchange rate fluctuations; requirements for additional capital; government regulation of
mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on
insurance coverage; and other risks and uncertainties.
Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that
the current price of and demand for commodities will be sustained or will improve, the supply of commodities will
remain stable, that the general business and economic conditions will not change in a material adverse manner, that
financing will be available if and when needed on reasonable terms and that the Company will not experience any
material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed
as being, exhaustive. Although the Company has attempted to identify important factors that would cause actual
results to differ materially from those contained in forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to
be accurate, as the Company’s actual results and future events could differ materially from those anticipated in such
statements, as a result of the factors discussed in the “Risk and Uncertainties” section of this MD&A, and elsewhere,
and in the “Risk Factors” section of the Company’s most recent Annual Information Form, which is available under the
Company’s profile on SEDAR at www.sedar.com. All of the forward-looking information contained in this document is
qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking
information due to the inherent uncertainty thereof.
Statements relating to "Mineral Resources" are deemed to be forward looking information, as they involve the implied
assessment, based on certain estimates and assumptions, that the Mineral Resources described can be profitably
produced in the future.
21
Independent auditor’s report
To the Shareholders of Filo Mining Corp.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Filo Mining Corp. and its subsidiaries (together, the Company) as at December 31,
2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards
Board (IFRS).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at December 31, 2022 and 2021;
the consolidated statements of comprehensive loss for the years then ended;
the consolidated statements of cash flows for the years then ended;
the consolidated statements of changes in equity for the years then ended; and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
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. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2022. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Assessment of impairment indicators of
mineral properties
Our approach to addressing the matter included
the following procedures, among others:
Refer to note 3(b) – Critical accounting estimates,
assumptions and judgments, note 3(d) – Mineral
properties and exploration expenditure, note 3(f) –
Impairment of non-financial assets and note 7 –
Mineral properties to the consolidated financial
statements.
The total book value of mineral properties
amounted to $9.7 million as at December 31,
2022. At each reporting period, management
applies judgment in assessing whether there are
any indicators of impairment relating to mineral
properties. If any such indicator exists, then an
impairment test is performed by management.
Information considered by management in
assessing indicators of impairment may include
(i) the period for which the entity has the right to
conduct its exploration and project investigation
activities, including expected renewals,
(ii) whether substantive expenditure on further
exploration and project investigation of mineral
properties is budgeted, (iii) the evaluation of the
results of exploration and project investigation
activities up to the reporting date and (iv) other
information that may indicate that the carrying
value of mineral properties may not be recovered
in full from successful development or sale of the
asset. No impairment indicators were identified by
management as at December 31, 2022.
Evaluated the reasonableness of
management’s assessment of impairment
indicators, which included the following:
– Assessed the period for which the entity
has the right to conduct its exploration
and project investigation activities,
including expected renewals, by agreeing
the Company’s list of mining titles to
government agency websites, and other
regulatory bodies, as applicable, and
vouching payments of required fees on a
sample basis.
– Assessed whether substantive
expenditure on further exploration and
project investigation of mineral properties
is budgeted by considering the results of
current year work programs and
management’s long-term plans, the Board
of Directors’ meeting minutes and
approved budgets.
– Assessed the evaluation of the results of
exploration and project investigation
activities up to the reporting date by
considering the results of the current year
work programs and considering evidence
obtained in other areas of the audit.
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to
(i) the significance of the mineral properties
balance and (ii) the subjectivity in performing audit
procedures to evaluate management’s indicators
of impairment assessment, which required
management judgment.
– Assessed whether there is other
information that may indicate that the
carrying amount may not be recovered
from successful development or sale of
the asset, by considering evidence
obtained in other areas of the audit.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above 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.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Ranbir Gill.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
March 17, 2023
Filo Mining Corp.
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Audited)
ASSETS
Current assets
Cash and cash equivalents
Receivables and other assets
Non-current assets
Taxes receivable
Equipment and facilities
Mineral properties
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade payables and accrued liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Contributed surplus
Deficit
Accumulated other comprehensive loss
TOTAL SHAREHOLDERS’ EQUITY
5, 10
6
7
8
Note
December 31,
2022
December 31,
2021
$
5
74,915,331 $
831,388
75,746,719
-
480,760
9,736,629
10,217,389
85,964,108
19,416,984
697,660
20,114,644
2,314,091
168,347
8,062,918
10,545,356
30,660,000
15,450,886
15,450,886
7,062,830
7,062,830
287,955,759
15,499,303
(232,073,903)
(867,937)
70,513,222
180,266,718
8,544,029
(163,112,572)
(2,101,005)
23,597,170
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
85,964,108 $
30,660,000
Subsequent events (Notes 1, 8)
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board:
/s/Joyce Ngo
Director
/s/James Beck
Director
Filo Mining Corp.
Consolidated Statements of Comprehensive Loss
(Expressed in Canadian Dollars)
(Audited)
Note
2022
Year ended
December 31,
2021
Expenses
Exploration and project investigation
10
$
82,523,935 $
40,901,439
General and administration:
Salaries and benefits
Share-based compensation
Management fees
Professional fees
Travel
Promotion and public relations
Office and general
Operating loss
Other (income) and expenses
Interest income
Financing costs
Net monetary gain
Gain on use of marketable securities
Other foreign exchange loss (gain)
Other non-income taxes
Net loss
9
4
14
3,327,768
7,688,403
198,900
221,385
264,767
338,817
961,835
2,386,974
2,486,014
128,100
236,521
21,826
309,748
543,845
95,525,810
47,014,467
(1,846,038)
-
(478,705)
(25,015,866)
(459,211)
1,235,341
(166,848)
167,178
(34,814)
(15,281,148)
128,821
591,553
68,961,331
32,419,209
Other comprehensive (income) loss
Items that may be reclassified subsequently to
net loss:
Foreign currency translation adjustment
Impact of hyperinflation
4
Comprehensive loss
Basic and diluted loss per common share
Weighted average common shares
outstanding
(458,688)
(774,380)
722,469
(259,519)
67,728,263 $
32,882,159
0.57 $
0.29
$
$
120,914,843
112,765,794
The accompanying notes are an integral part of these consolidated financial statements.
2
Filo Mining Corp.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
(Audited)
Cash flows used in operating activities
Net loss for the year
Items not involving cash
Share-based compensation
Financing costs
Net monetary loss
Unrealized foreign exchange loss (gain)
Depreciation
Net changes in working capital and other items
6, 10
Receivables and other
Trade payables and accrued liabilities
9
8
8
6
7
Cash flows from (used in) financing activities
Proceeds from option exercises
Proceeds from equity financings, gross
Share issuance costs
Repayment of lease liabilities
Cash flows used in investing activities
Acquisition of equipment and facilities
Mineral properties and related expenditures
Effect of foreign exchange rate changes on
cash and cash equivalents
Increase (decrease) in cash and cash
equivalents during the year
Cash and cash equivalents, beginning of the
year
Note
2022
Year ended
December 31,
2021
$
(68,961,331) $
(32,419,209)
9
9,460,115
-
1,532,312
(460,321)
15,632
1,535,743
11,592,776
3,301,123
330
739,682
27,525
-
(928,417)
4,887,150
(45,285,075)
(24,391,816)
4,788,719
100,682,181
(286,700)
-
105,184,200
9,626,522
-
-
(12,411)
9,614,111
(289,671)
(1,118,190)
(1,407,861)
(165,698)
(1,114,460)
(1,280,158)
(2,992,917)
(851,271)
55,498,347
(16,909,134)
19,416,984
36,326,118
Cash and cash equivalents, end of the year
$
74,915,331 $
19,416,984
The accompanying notes are an integral part of these consolidated financial statements.
3
Filo Mining Corp.
Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
(Audited)
Note
Number of
Shares
Share Capital
Contributed
Surplus
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Shareholders’
Equity
Balance, January 1, 2021
Share-based compensation
Shares issued pursuant to stock option
exercises
Net loss and other comprehensive loss
Balance, December 31, 2021
Shares issued pursuant to the Private
Placement
Share issuance costs
Share-based compensation
Shares issued pursuant to stock option
exercises
Net loss and other comprehensive loss
9
9
8
8
9
9
110,770,770 $
166,119,611 $
9,763,491 $
(130,693,363)
$
(1,638,055) $
43,551,684
-
-
3,301,123
4,272,169
14,147,107
(4,520,585)
-
-
-
-
3,301,123
9,626,522
-
-
-
(32,419,209)
(462,950)
(32,882,159)
115,042,939 $ 180,266,718 $
8,544,029 $
(163,112,572) $
(2,101,005) $
23,597,170
6,314,047
100,682,181
(286,700)
-
-
-
9,460,115
-
-
1,727,832
7,293,560
(2,504,841)
-
-
-
-
-
-
-
-
100,682,181
(286,700)
9,460,115
4,788,719
-
-
-
(68,961,331)
1,233,068
(67,728,263)
Balance, December 31, 2022
123,084,818 $ 287,955,759 $ 15,499,303 $
(232,073,903) $
(867,937) $
70,513,222
The accompanying notes are an integral part of these consolidated financial statements.
4
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
1. NATURE OF OPERATIONS
Filo Mining Corp. (the “Company” or “Filo Mining”) was incorporated on May 12, 2016 under the Canada
Business Corporations Act. The Company’s principal business activities are the exploration and
development of the Filo del Sol and Tamberias properties, which are comprised of adjacent mineral
titles in San Juan Province, Argentina and Region III, Chile. Its registered office is located at Suite 2200,
885 West Georgia Street, Vancouver, British Columbia, V6C 3E8, Canada. The Company’s common
shares trade on the Toronto Stock Exchange under the symbol “FIL”. In addition, the Company’s
common shares trade on the NASDAQ First North Growth Market under the symbol "FIL" and on the
OTCQX under the symbol “FLMMF”. On January 17, 2023, the Company announced a proposed name
change to “Filo Corp.” to better align with the Company’s strategic vision. The Company plans to seek
shareholder approval for the name change at its upcoming annual shareholder meeting. If approved by
shareholders, the name change is also subject to TSX approval.
2. BASIS OF PRESENTATION
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), on a going
concern basis, which contemplates the realization of assets and settlement of liabilities in the normal
course of business. These consolidated financial statements are prepared on a historical cost basis
except for certain financial assets, which are measured at fair value. Certain prior year comparatives
have been reclassified to align with current year presentation. Specifically, interest income is now
separately presented on the consolidated statements of comprehensive loss.
These consolidated financial statements were authorized for issuance by the Board of Directors of the
Company on March 17, 2023.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Consolidation
The consolidated financial statements of the Company include the following subsidiaries:
Subsidiaries
NGEx Filo del Sol Holdings Inc.
NGEx Chile Holdings Inc.
Filo del Sol Uruguay S.A.
Frontera Holdings (Bermuda) IV Ltd.
Frontera Holdings (Bermuda) V Ltd.
Filo del Sol Exploración S.A.
Frontera Chile Limitada
Jurisdiction
Canada
Canada
Uruguay
Bermuda
Bermuda
Argentina
Chile
Nature of operations
Holding company
Holding company
Holding company
Holding company
Holding company
Exploration company
Exploration company
The Company consolidates an entity when it has control over that entity, is exposed, or has rights,
to variable returns from its involvement with that entity and has the ability to affect those returns
through its control over that entity.
All the Company’s subsidiaries are wholly owned and all intercompany balances, transactions,
including income and expenses arising from inter-company transactions are eliminated in preparing
the consolidated financial statements.
b) Critical accounting estimates, assumptions and judgements
The preparation of the consolidated financial statements in accordance with IFRS requires
management to make estimates, assumptions and judgements that affect the reported amounts of
5
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
assets, liabilities and expenditures on the financial statements. These estimates, assumptions and
judgements are based on management’s best knowledge of the relevant facts and circumstances
taking into account previous experience. Actual results could differ and such differences could be
material. Estimates, assumptions and judgements are reviewed on an ongoing basis and are based
on historical experience and other facts and circumstances. Revisions to estimates, assumptions and
judgements, and the resulting effects on the carrying amounts of the Company’s assets and
liabilities, are accounted for prospectively. Information about estimates, assumptions, judgments
and other sources of estimation uncertainty as at December 31, 2022 that have a risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities within the next year are
provided below:
Valuation of mineral properties
The Company carries the acquisition costs of its mineral properties at cost less any provision for
impairment. At each reporting period, management applies judgement in assessing whether
there are any indicators of impairment relating to mineral properties. If any such indicator exists,
then an impairment test is performed by management, which also requires the Company to make
significant judgments and estimates. Information considered by management in assessing
indicators of impairment may include the period for which the entity has the right to conduct its
exploration and project investigation activities, including expected renewals, whether substantive
expenditure on further exploration and project investigation of mineral properties is budgeted,
the evaluation of the results of exploration and project investigation activities up to the reporting
date and other information that may indicate that that the carrying value of mineral properties
may not be recovered in full from successful development or sale of the asset. The judgments
and estimates mentioned above are subject to various risks and uncertainties, which may
ultimately have an effect on the expected recoverability of the carrying values of the mineral
properties.
The Company has determined that no indicators of impairment exist for its mineral properties as
of December 31, 2022.
c) Foreign currency translation
These consolidated financial statements are presented in Canadian dollars, which is the Company’s
functional and presentation currency. The functional currencies of its material subsidiaries, which
have operations in Chile and Argentina, are the Chilean peso and the Argentine peso, respectively.
For the Company’s Argentine subsidiary, which is affected by hyperinflationary accounting as
described in Notes 3o) and 4 below, and uses the Argentine peso as its functional currency, the
results and financial position of this subsidiary are translated into the presentation currency using
the exchange rate prevailing at the date of the statement of financial position.
The results and financial position of all other subsidiaries that have a functional currency different
from the presentation currency are translated into the presentation currency as follows:
• Assets and liabilities for each statement of financial position presented are translated using
the exchange rate prevailing at the date of that statement of financial position;
•
Income, expenses, and other comprehensive income for each statement of comprehensive
income are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of the transactions);
and
6
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
• All resulting exchange differences are recognized as a separate component of equity and in
other comprehensive income.
d) Mineral properties and exploration expenditure
The Company capitalizes acquisition costs for property rights, including payments for exploration
rights and estimated fair value of exploration properties acquired as part of an acquisition.
Mineral exploration costs and maintenance payments are expensed prior to the determination that
a property has economically recoverable ore reserves. When it has been established that a mineral
property is considered to be sufficiently advanced to the development stage, with economic viability
and technical feasibility demonstrated, all further expenditures for the current year and subsequent
years are capitalized as incurred and subsequently amortized on a units of production based on
proven and probable reserves of the assets to which they relate.
e) Equipment and facilities
Equipment and facilities are carried at cost less accumulated depreciation and impairment losses.
The cost of an asset consists of its purchase price, any directly attributable costs of bringing the
asset to the working condition and location of its intended use and an initial estimate of the costs
of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably.
Depreciation of each asset is calculated using the straight-line method to allocate its cost less its
residual value over its estimated useful life. Depreciation of an asset begins when it is available for
use at the location, and in the condition, as intended by management.
The assets’ residual values, depreciation methods, and useful lives are reviewed, and adjusted if
appropriate, at each statement of financial position date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
When an asset is disposed of, the difference between the net sale proceeds and its carrying amount
is recognized as a gain or loss within net loss in the consolidated statement of comprehensive loss.
f) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows (cash-generating units, or “CGU’s”). Value in use is determined as the
present value of future cash inflows expected to be derived from a CGU using a pre-tax discount
rate that reflects the current time value of money and the risks specific to that CGU.
Non-financial assets that have been previously impairment are reviewed for possible reversal of the
impairment at each reporting date.
7
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
g) Financial instruments
(i) Recognition
The Company measures and classifies its financial assets based on its business model for
managing its financial assets and the contractual cash flow characteristics of those financial
assets. Financial assets are classified into three measurement categories on initial recognition:
those measured at fair value through profit or loss, those measured at fair value through other
comprehensive income (“OCI”) and those measured at amortized cost.
Financial assets and liabilities at amortized cost are initially recognized at fair value plus or
minus transaction costs, respectively, and subsequently carried at amortized cost less any
impairment.
Investments in marketable securities, such as equity instruments of publicly listed entities, are
required to be measured at fair value through profit or loss, unless the Company makes an
irrevocable election to present subsequent changes in the fair value of such instruments
through OCI. The Company has not elected to measure any of its marketable securities
through OCI.
(ii) Derecognition
The Company derecognizes financial assets when the contractual rights to cash flows from the
financial assets expire, or when it transfers the financial assets and substantially all the
associated risk and rewards of ownership to another entity. A financial liability is derecognized
when the obligation under the liability is discharged, canceled or expired. Gains and losses on
derecognition of financial assets and liabilities are generally recognized in the consolidated
statement of comprehensive loss.
(iii) Impairment
The Company recognizes a loss allowance for expected credit losses on financial assets that
are measured at amortized cost based on a probability-weighted estimate of credit losses over
the expected life of the financial asset.
At each reporting date, the Company measures the loss allowance for the financial asset at
an amount equal to the lifetime expected credit losses if the credit risk on the financial asset
has increased significantly since initial recognition. If at the reporting date, the credit risk on
the financial asset has not increased significantly since initial recognition, the Company
measures the loss allowance for the financial asset at an amount equal to twelve month
expected credit losses. Impairment losses on financial assets carried at amortized cost are
reversed in subsequent periods if the expected credit losses are reversed after the impairment
was recognized.
h) Cash
Cash includes cash on hand, and deposits held with financial institutions with a fixed deposit term
of three months or less, net of bank overdrafts.
i) Current and deferred income tax
The Company follows the liability method of accounting for income taxes. Under the liability method,
deferred income 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 bases, unused tax losses and other income tax deductions. Deferred income tax
assets are recognized for deductible temporary differences, unused tax losses and other income tax
8
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
deductions to the extent that it is probable the Company will have taxable income against which
those deductible temporary differences, unused tax losses and other income tax deductions can be
utilized.
Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax
rates expected to apply when the related assets are realized or the liabilities are settled. The
measurement of deferred income tax assets and liabilities reflects the tax consequences that would
follow from the manner in which the Company expects, at the reporting date, to recover and settle
the carrying amounts of its assets and liabilities, respectively. The effect on deferred income tax
assets and liabilities of a change in tax rates is recognized in the period in which the change is
substantively enacted.
j) Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issuance of
new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
k) Share-based compensation
The Company has a share-based compensation plan, whereby it is authorized to grant share options
to officers, employees, directors, and other eligible persons. The fair value of the options is
measured at the date the options are granted, using the Black-Scholes option-pricing model with
assumptions for risk-free interest rates, dividend yields, volatility of the expected market price of
the common shares and an expected life of the options. The fair value less estimated forfeitures is
charged over the vesting period of the related options as an expense on its financial statements.
l) Provisions
Provisions for restructuring costs and legal claims are recognized when: the Company has a present
legal or constructive obligation as a result of past events; it is probable that an outflow of resources
will be required to settle the obligation; and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligations using the pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to the passage of
time is recognized as interest expense.
m) Leases
The Company recognizes a right-of-use asset, and corresponding lease liability, for almost all
leases, unless the lease term is 12 months or less or the underlying asset has a low value, in which
case, lease payments are recognized as an expense on a straight-line basis over the lease term or
another systematic basis, if deemed more representative.
n) Segment reporting
As the Company primarily focuses its activity on the exploration and development of mineral
properties, its operating and reportable segments are the Filo del Sol Project, comprised of the Filo
del Sol property and the Tamberias property, other general exploration and project generation
initiatives, and the Company’s corporate administration function. Operating segments are
components of an entity that engage in business activities from which they incur expenses and
whose operating results are regularly reviewed by a chief operating decision maker to make
resource allocation decisions and to assess performance. The Chief Executive Officer, the chief
operating decision-maker for the Company, obtains and reviews operating results of each operating
segment on a monthly basis.
9
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
o) Hyperinflation
The Company applies IAS 29, Financial Reporting in Hyperinflationary Economies, which outlines
the use of the hyperinflationary accounting, to consolidate and report its Argentine operating
subsidiary.
The application of hyperinflationary accounting requires restatement of the Argentine subsidiary’s
non-monetary assets and liabilities, shareholders’ equity and comprehensive loss items from the
transaction date when they were first recognized into the current purchasing power which reflects
a price index current at the end of the reporting period before being included in the consolidated
financial statements. To measure the impact of inflation on its financial position and results, the
Company has elected to use the Wholesale Price Index (Indice de Precios Mayoristas or “IPIM”) for
periods up to December 31, 2016, and the Retail Price Index (Indice de Precios al Consumidor or
“IPC”) thereafter. These price indices have been recommended by the Government Board of the
Argentine Federation of Professional Councils of Economic Sciences (“FACPCE”).
As the consolidated financial statements of the Company have been previously presented in
Canadian dollars, a stable currency, the comparative period amounts do not require restatement.
p) New accounting pronouncements
The IASB and/or the IFRS Interpretations Committee have issued new standards and amendments,
or interpretations to existing standards, which were not yet effective or did not apply to the
Company as at December 31, 2022. The Company continues to evaluate these changes to
determine their impact, if any.
IAS 16, Property, plant and equipment
IAS 16 has been amended to provide clarity with respect to the treatment of net proceeds
generated from selling any items produced while bringing an item of property, plant and
equipment to the location and condition necessary for it to be capable of operating in the
manner intended by the entity. Specifically, the amendments prohibit entities from deducting
amounts resulting from the sale of items produced during this phase from the cost of property,
plant and equipment. Instead, an entity shall recognize such sales proceeds and related costs
in profit or loss.
The amendments to IAS 16 were effective for annual reporting periods beginning on or after
January 1, 2022 and did not have an impact on the Company’s financial results for the year
ended December 31, 2022.
There are no other IFRS standards or International Financial Reporting Interpretations Committee
interpretations that are not yet effective or early adopted that are expected to have any impact on
the Company.
4. HYPERINFLATION
Argentina was designated a hyperinflationary economy as of July 1, 2018 for accounting purposes.
The Company recognized a gain of $774,380 for the year ended December 31, 2022 (2021 – $259,519)
in relation to the impact of hyperinflation within other comprehensive (income) loss, which is primarily
the result of continued inflation during the year and the resulting adjustments recognized on the net
asset position of the Company’s Argentine operating subsidiary.
As a result of changes in the IPC and changes to the Company’s net monetary position, the Company
recognized a net monetary gain of $478,705 for the year ended December 31, 2022 (2021 – $34,814),
to adjust transactions recorded during the year into a measuring unit current as of December 31, 2022.
10
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
The level of the IPC at December 31, 2022 was 1,134.59 (December 31, 2021 – 582.5), which represents
an increase of approximately 95% over the IPC at December 31, 2021, and an approximate 34%
increase over the average level of the IPC during the year ended December 31, 2022.
5. RECEIVABLES AND OTHER ASSETS
Current
Taxes receivable
Other receivables
Prepaid expenses and deposits
Non-current
Taxes receivable
December 31,
2022
December 31,
2021
$
28,427 $
334,091
468,870
831,388
59,150
237,238
401,272
697,660
-
2,314,091
$
831,388 $
3,011,751
Pursuant to statutory regulations, the Company is entitled to a refund of certain value added taxes
(“VAT”) paid in Argentina, however, the Company has deemed the collection of these funds to be
uncertain. As such, during the year ended December 31, 2022, the Company wrote down the balance
of its outstanding VAT receivable balances to $nil, resulting in a charge of $2,812,565, recognized in
exploration and project investigation (note 10). Should the Company receive a future refund of amounts
written down, the corresponding impact will be credited against exploration and project investigation
expense.
11
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
6. EQUIPMENT AND FACILITIES
The Company’s equipment and facilities relate to mobile equipment and field facilities acquired or
constructed for its Filo del Sol property in Argentina. The Company depreciates these assets over their
useful lives of 10 years and classifies its depreciation expense as other administrative costs within
exploration and project investigation expense (note 10).
Cost
January 1, 2021
Additions
Adjustment for the impacts of hyperinflation
December 31, 2021
Additions
Adjustment for the impacts of hyperinflation
Reclassifications
December 31, 2022
Accumulated depreciation
January 1, 2021
December 31, 2021
Depreciation
Adjustment for the impacts of hyperinflation
December 31, 2022
Net book amount
December 31, 2021
December 31, 2022
7. MINERAL PROPERTIES
Works in progress
Equipment
Facilities
Facilities
Total
$
- $
- $
32,309
(529)
133,389
3,178
- $
-
-
-
165,698
2,649
$
31,780 $
136,567 $
- $
168,347
-
6,578
-
82,111
5,852
(224,530)
207,560
31,572
224,530
289,671
44,002
-
$
38,358 $
- $
463,662 $
502,020
$
$
$
- $
- $
-
-
- $
- $
-
-
- $
- $
(15,632)
(5,628)
-
-
(15,632)
(5,628)
- $
- $
(21,260) $
(21,260)
$
31,780 $
136,567 $
- $
38,358
-
442,402
168,347
480,760
Filo del Sol
Tamberias
Total
January 1, 2021
$
3,385,531 $
5,471,870 $
8,857,401
Adjustment for the impacts of
hyperinflation
108,294
-
Effect of foreign currency translation
-
(902,777)
108,294
(902,777)
December 31, 2021
$
3,493,825 $
4,569,093 $
8,062,918
Additions
Adjustment for the impacts of
hyperinflation
Effect of foreign currency translation
-
1,118,190
1,118,190
118,962
-
-
436,559
118,962
436,559
December 31, 2022
$
3,612,787 $
6,123,842 $
9,736,629
12
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
The Company’s primary mineral property assets are the Filo del Sol and Tamberias properties (together,
the “Filo del Sol Project”), which are comprised of adjacent mineral titles in San Juan Province, Argentina
and Region III, Chile, and are 100% controlled by Filo Mining either through direct ownership or option
agreements.
Filo del Sol Property (San Juan Province, Argentina)
Sole ownership of the Filo del Sol property was acquired by Filo del Sol Exploracion S.A., a wholly owned
subsidiary of the Company, in October 2014, through the acquisition of its then joint exploration
partner’s 40% interest in the property.
Tamberias Property (Region III, Chile)
Through its wholly owned subsidiary, Frontera Chile Limitada, the Company is party to an option
agreement with Compania Minera Tamberias SCM (“Tamberias SCM”) whereby the Company can earn
a 100% interest in the Tamberias property by making certain scheduled option payments. In addition,
Tamberias SCM will retain a 1.5% net smelter royalty, which will be paid only after the Company has
recovered all its exploration and development costs.
Pursuant to a series of amendments to the terms of the remaining option payments payable under the
option agreement with Tamberias SCM, the last of which was executed on May 13, 2020 (the “Option
Amendments”), the remaining option payments were rescheduled and extended through to June 30,
2026. In June 2022, the Company made a US$500,000 payment pursuant to the Option Amendments
and as at December 31, 2022, the Company’s total remaining option payments were as follows:
Payment by:
June 30, 2023
June 30, 2024
June 30, 2025
June 30, 2026
TOTAL
Amount (US$)
750,000
950,000
1,050,000
12,000,000
14,750,000
In addition, in June 2022, the Company acquired a five-hectare claim block, which is located within
the broader Tamberias property area (the “Austral Claims”). Prior to the acquisition, the Austral
Claims were the only claim blocks within the Tamberias property footprint that were not owned or
controlled by the Company. The Austral Claims were acquired for a purchase price of US$400,000.
8. SHARE CAPITAL
The Company has authorized an unlimited number of voting common shares without par value.
On March 11, 2022, by way of a non-brokered private placement, the Company closed the sale of
6,270,000 common shares to BHP Western Mining Resources International Pty Ltd, a wholly owned
subsidiary of BHP Group Limited (collectively, "BHP"), at a price of $15.95 per common share for total
proceeds of $100 million (the “Private Placement”). Share issuance costs related to the Private
Placement totaled $268,751 and consisted of professional fees and regulatory fees. No finder's fee or
commissions were payable in connection with this Private Placement.
Upon closing of the Private Placement, BHP owned approximately 5% of the Company’s issued and
outstanding common shares on an undiluted basis. The common shares acquired by BHP pursuant to
13
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
the Private Placement were subject to a statutory four-month hold period in accordance with applicable
securities regulations, which ended July 12, 2022.
In connection with the Private Placement, BHP has been granted certain participation and top-up rights
(the “Top-Up Provision”), allowing BHP to maintain its ownership interest from time to time, provided
that such participation rights will not apply to any portion of BHP's ownership interest in excess of a
9.9% undiluted ownership level in the Company. On July 29, 2022, the Company closed a non-brokered
private placement to BHP in accordance with the Top-Up Provision, whereby the Company sold 44,047
common shares to BHP for gross proceeds of $675,681, less share issuance costs of $17,949.
On February 7, 2023, the Company closed a non-brokered private placement to BHP in accordance with
the Top-Up Provision, whereby the Company sold 43,711 common shares to BHP for gross proceeds of
$1,084,907, less share issuance costs of $5,684.
The Company has deployed the proceeds of the Private Placement to advance exploration and
development of the Company's Filo del Sol Project and for working capital and general corporate
purposes. In addition, the Company and BHP have formed a joint advisory committee to share expertise,
exploration concepts, and discuss future project development.
Also during 2022, 1,727,832 share options were exercised (2021 – 4,272,169; note 9), resulting in an
increase to share capital of $7,293,560 (2021 – $14,147,107). These exercises consisted of a cash
portion of $4,788,719 (2021 – $9,626,522) and a contributed surplus portion of $2,504,841 (2021 –
$4,520,585).
9. SHARE OPTIONS
a) Share option plan
The Company has a share option plan adopted by the Board of Directors on July 8, 2016 and
amended May 6, 2022, which reserves an aggregate of 10% of the issued and outstanding
shares of the Company for issuance upon the exercise of options granted. The granting, vesting
and terms of the share options are at the discretion of the Board of Directors.
b) Share options outstanding
Movements in the number of share options outstanding and their related weighted average
exercise prices are as follows:
Balance at January 1, 2021
Options granted
Exercised
Expired or forfeited
Balance at December 31, 2021
Options granted
Exercised
Forfeited
Balance at December 31, 2022
Number of shares
issuable pursuant to
share options
Weighted
average exercise
price per share
9,455,834 $
1,082,600
(4,272,169)
(28,667)
6,237,598 $
1,540,000
(1,727,832)
(42,400)
6,007,366 $
2.29
9.04
2.25
6.49
3.47
17.17
2.77
14.06
7.11
14
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
The weighted average share price on the exercise date for the share options exercised during
the year ended December 31, 2022 was $18.51.
The Company uses the Black-Scholes option pricing model to estimate the fair value for all
options granted and the resulting stock-based compensation. The weighted average
assumptions used in this pricing model, and the resulting fair values per option, for the
1,540,000 share options granted during the year ended December 31, 2022, were as follows:
Risk-free interest rate
Expected life
Expected volatility
Expected dividends
Fair value per option
Year ended
December 31, 2022
2.8%
4.8 years
62.9%
Nil
$9.29
The following table details the share options outstanding and exercisable as at December 31,
2022:
Outstanding options
Exercisable options
Exercise
price
Options
outstanding
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
$
$
$
$
$
$
$
$
$
$
$
1.91
2.20
2.75
8.95
11.00
12.90
15.42
16.03
16.93
19.45
20.10
1,068,333
1,245,000
1,235,000
921,833
15,000
5,200
80,000
226,000
951,000
210,000
50,000
2.6 $
0.6 $
1.8 $
3.6 $
3.4 $
3.9 $
4.7 $
4.7 $
4.6 $
4.2 $
4.5 $
1.91
2.20
2.75
8.95
11.00
12.90
15.42
16.03
16.93
19.45
20.10
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price
2.6 $
0.6 $
1.8 $
3.6 $
3.4 $
3.9 $
4.7 $
4.7 $
4.6 $
4.2 $
4.5 $
1.91
2.20
2.75
8.95
11.00
12.90
15.95
16.03
16.93
19.45
20.10
Options
exercisable
1,068,333
1,245,000
1,235,000
614,555
10,000
5,200
26,667
75,333
317,000
70,000
16,667
6,007,366
2.7 $
7.11
4,683,755
2.2 $
4.81
15
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
c) Share-based compensation
Year ended
December 31,
2022
2021
Exploration and project investigation (note 10)
$
1,771,712 $
815,109
General and administration
7,688,403
2,486,014
$
9,460,115 $
3,301,123
10. EXPLORATION AND PROJECT INVESTIGATION
All exploration and project investigation costs are related to the Filo del Sol Project. Due to the
geographic location of the Filo del Sol Project, the Company’s business activities have historically
fluctuated with the seasons, through increased drilling and other exploration activities during the
summer months in South America. However, commencing in June 2021, the Company has
undertaken winterization efforts which are intended to facilitate continuous, year-round field
operations potentially reducing this seasonal fluctuation in exploration expenditures moving forward.
The Company expensed the following exploration and project investigation costs, all incurred in
relation to the Filo del Sol Project:
Year ended
December 31,
2022
2021
Land holding and access costs
$
905,932 $
610,952
Drilling, fuel, camp costs and field supplies
Roadwork, travel and transport
Conceptual and engineering studies
Consultants, geochemistry and geophysics
Environmental and community relations
VAT and other taxes
Write-down of VAT receivable (note 5)
Office, field and administrative salaries, overhead
and other administrative costs
COVID-19-related health and safety
Share-based compensation
42,030,383
13,529,981
320,280
1,511,590
1,784,545
10,950,266
2,812,565
6,069,360
837,321
1,771,712
20,624,075
5,762,367
-
1,043,631
751,171
5,555,377
-
3,719,574
2,019,183
815,109
$ 82,523,935 $ 40,901,439
During the year ended December 31, 2022, the Company deemed collection of its VAT receivable to
be uncertain and made a provision for the balance, resulting in a write-down of $2,812,565.
11. RELATED PARTY TRANSACTIONS
Under the normal course of operations, the Company may undertake transactions or hold balances
with related parties. During the year ended December 31, 2022, the Company engaged with
Josemaria Resources Inc. (“Josemaria”) and NGEx Minerals Ltd. (“NGEx Minerals”), which were
16
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
related parties to the Company by way of directors, officers and shareholders in common. Josemaria
ceased to be a related party of the Company as of April 28, 2022, following the acquisition of all of
Josemaria’s issued and outstanding common shares by Lundin Mining Corporation.
a) Related party services
The Company has an ongoing cost sharing arrangement with NGEx Minerals and, through April 28,
2022, Josemaria. Under the terms of these arrangements, the Company provides management,
technical, administrative and/or financial services (collectively, “Management Services”) to NGEx
Minerals and Josemaria, and vice versa. These transactions were incurred in the normal course of
operations, and are summarized as follows:
Management Services to NGEx Minerals
$
902,414 $
Management Services to Josemaria
Management Services from NGEx Minerals
Management Services from Josemaria
42,374
(364,343)
-
2022
2021
549,787
281,813
(591,415)
(99,869)
Year ended
December 31,
b) Related party balances
The amounts due from (to) related parties, and the components of the consolidated statements of
financial position in which they are included, are as follows:
Receivables and other assets
Receivables and other assets
Related Party
NGEx Minerals
Josemaria
Accounts payable and accrued liabilities
NGEx Minerals
(112,163)
Accounts payable and accrued liabilities
Josemaria
-
December 31,
2022
186,449 $
December 31,
2021
15,113
$
-
46,678
(24,343)
(1,667)
c) Camp usage agreement
On June 26, 2019, the Company, through a wholly-owned subsidiary, entered into a transaction
with a wholly-owned subsidiary of Josemaria whereby the Company extended its right to use
Josemaria’s Batidero Camp in Argentina.
The agreement may be terminated with one year’s prior notice by Josemaria, and in the absence
of such notice the agreement may be renewed annually at the Company’s election. On March 9,
2023, Filo Mining provided formal notice of renewal for the period through April 1, 2024.
17
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
d) Key management compensation
The Company’s key management personnel have the authority and responsibility for overseeing,
planning, directing and controlling its activities and consist of the Board of Directors and members
of the executive management team. Total compensation expense for key management personnel,
and the composition thereof, is as follows:
Salaries
Short-term employee benefits
Directors’ fees
Stock-based compensation
Incentive bonuses
Year ended
December 31,
2022
$
1,346,667 $
32,369
233,056
6,910,772
1,165,000
2021
965,333
28,107
162,004
2,040,635
1,030,000
$ 9,687,864 $
4,226,079
12. INCOME TAXES
Income tax expense differs from the amount that would result from applying the Canadian federal and
provincial income tax rates to the loss for the year. These differences result from the following items:
Loss before taxes
Year ended
December 31,
2022
2021
$
68,961,331 $
32,419,209
Combined Canadian federal and provincial statutory income
tax rates
Income tax recovery based on the above rate
27.00%
18,619,559
27.00%
8,753,186
Income tax benefits that have not been recognized and
other temporary differences
Non-deductible expense
Other permanent differences
(13,415,921)
(9,703,799)
(3,795,236)
(111,588)
9,301,551
6,325,850
Impacts of changes in foreign tax and currency rates
(13,806,839)
(7,021,540)
Differences between Canadian and foreign tax rates
3,096,886
1,757,891
Total income tax recovery
$
- $
-
18
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
The Company’s unrecognized deductible temporary differences and unused tax losses for which no
deferred tax asset has been recognized consist of the following:
December 31,
2022
December 31,
2021
Non-capital losses carried forward
$
8,317,504
$
6,442,468
Mineral properties and related expenditures
Other
26,330,023
929,399
16,543,307
1,066,502
$
35,576,926 $
24,052,277
As at December 31, 2022, the non-capital loss carry-forwards and their respective expiration dates are
as follows:
Year
2023
2024
2025
2026
Canada
Argentina
Other
$
-
-
-
-
$
2,739
$
11,943
$
76,664
200,497
2,254,429
5,300,116
-
239,088
8,159
30,692
Total
14,682
76,664
439,585
2,262,588
28,613,855
2027 and onwards
23,283,047
$
23,283,047 $ 7,834,445 $
289,882 $ 31,407,374
13. SEGMENTED INFORMATION
The Company is principally engaged in the acquisition, exploration and development of mineral properties
in South America. The information regarding equipment and facilities, mineral properties and exploration
and project investigation costs presented in Notes 6, 7, and 10, respectively, represent the manner in
which management reviews its business performance. All the Company’s equipment and facilities, mineral
properties and exploration and project investigation costs relate to the Filo del Sol Project, which
straddles the border between the San Juan Province, Argentina and Region III, Chile and is comprised
of the Filo del Sol property and the Tamberias property. The net gains on the use of marketable securities
are allocated to the Filo del Sol Project, as they are the result of funding provided to the Company’s
Argentinian subsidiary in support of the project. Materially, all the Company’s administrative costs are
incurred by the Canadian parent, where materially all of the Company’s cash is held in the normal course
of business until it is required to be deployed to the Company’s South American subsidiaries in support
of ongoing and planned work programs.
19
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
The following are summaries of the Company’s current and non-current assets, current liabilities, and
net losses by segment:
As at
Filo del Sol
Project
December 31, Current assets
$
4,055,924 $
2022 Taxes receivable
Equipment and facilities
Mineral properties
Total assets
-
480,760
9,736,629
$
14,273,313 $
71,690,795 $
Corporate
71,690,795 $
-
-
-
Total
75,746,719
-
480,760
9,736,629
85,964,108
Current liabilities
$
14,590,638 $
860,248 $
15,450,886
December 31, Current assets
$
2021 Taxes receivable
Equipment and facilities
Mineral properties
Total assets
6,524,265 $
2,314,091
168,347
8,062,918
13,590,379 $
-
-
-
$
17,069,621 $
13,590,379 $
20,114,644
2,314,091
168,347
8,062,918
30,660,000
Current liabilities
$
6,628,841 $
433,989 $
7,062,830
Year ended
December 31,
Filo del Sol
Project
2022
Exploration and project investigation
$
82,523,935 $
Gain on use of marketable securities
(25,015,866)
General and administration and other
Corporate
Total
- $
82,523,935
-
(25,015,866)
items
Net loss
756,636
10,696,626
11,453,262
$ 58,264,705 $
10,696,626 $
68,961,331
2021
Exploration and project investigation
$
40,901,439 $
Gain on use of marketable securities
(15,281,148)
- $
40,901,439
-
(15,281,148)
General and administration and other
items
Net loss
(34,814)
6,833,732
6,798,918
$ 25,585,477 $
6,833,732 $
32,419,209
14. USE OF MARKETABLE SECURITIES
From time to time, the Company may acquire and transfer marketable securities to facilitate intragroup
funding transfers between the Canadian parent and its Argentinian operating subsidiary.
The Company does not acquire marketable securities or engage in these transactions for speculative
purposes. In this regard, under this strategy, the Company generally uses marketable securities of
large, established companies, with high trading volumes and low volatility. Nonetheless, as the process
to acquire, transfer and ultimately sell the marketable securities occurs over several days, some
fluctuations do occur.
20
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
As the marketable securities are acquired with the intention of a near term sale, they are considered
financial instruments that are held for trading. Accordingly, all changes in the fair value of the
instruments, between acquisition and disposition, are recognized through profit or loss.
As a result of having utilized this mechanism for intragroup funding for the year ended December 31,
2022, the Company realized a net gain of $25,015,866 (2021 – $15,281,148). The net gain for the year
ended December 31, 2022 was comprised of a favorable foreign currency impact of $27,414,923 (2021
– $18,425,317) and a trading loss of $2,399,058 (2021 – $3,144,170), including the impact of fees and
commissions.
15. CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to safeguard its 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. In the management and
definition of capital, the Company considers the items included in shareholders’ equity to be capital.
The Company manages the capital structure and makes adjustments, as necessary, in light of
changes in economic conditions and the risk characteristics of its assets. In order to maintain or
adjust the capital structure, the Company may attempt to issue new shares or debt instruments,
acquire or dispose of assets, or to bring in joint venture partners.
To facilitate the management of its capital requirements, the Company prepares annual expenditure
budgets that are updated as necessary depending on various factors, including, but not limited to,
successful capital deployment and general industry conditions. The annual and updated budgets
are approved by the Board of Directors.
16. FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS
The Company has estimated the fair values of its financial instruments based on appropriate
valuation methodologies. These values are not materially different from their carrying value.
The Company classifies the fair value of its financial instruments according to the following
hierarchy based on the amount of observable inputs used to value the instrument:
•
•
•
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the
assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The Company’s financial instruments consist of cash, receivables and other assets, and trade
payables and accrued liabilities. The carrying values of the Company’s financial instruments are
considered to be reasonable approximations of fair value due to their anticipated short-term nature.
As at December 31, 2022, the Company’s financial instruments are exposed to the following
financial risks, including credit, liquidity and currency risks:
(i) Credit risks associated with cash are minimal as the Company deposits the majority of its
cash with a large Canadian financial institution that has been accorded a strong
investment grade rating by a primary rating agency.
(ii) Liquidity risks associated with the inability to meet obligations as they become due are
minimized through the management of its capital structure as explained on Note 16 and
by maintaining good relationships with significant shareholders and potential creditors.
21
Filo Mining Corp.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2022 and 2021
(Expressed in Canadian Dollars, unless otherwise stated)
The Company also closely monitors and reviews its costs to date and actual cash flows
on a monthly basis.
The maturities of the Company’s financial liabilities as at December 31, 2022 are as
follows:
Total
Less than
1 year
1-5 years
More than
5 years
Accounts payable and
accrued liabilities
Total
$
15,450,886 $
15,450,886 $
$ 15,450,886 $ 15,450,886 $
- $
- $
-
-
(iii) Foreign currency risk can arise when the Company or its subsidiaries transact or have net
financial assets or liabilities which are denominated in currencies other than their respective
functional currencies.
At December 31, 2022, the Company’s largest foreign currency risk exposures existed at
the level of its Canadian headquarters, where the Company held a net financial asset
position denominated in US dollars having a Canadian dollar equivalent of approximately
$9.6 million. A 10% change in the foreign exchange rate between the US dollar and the
Canadian dollar, the functional currency of Filo Mining, would give rise to an
increase/decrease of approximately $1.0 million in financial position/comprehensive loss.
22
CORPORATE DIRECTORY
OFFICERS
Jamie Beck
President & CEO
Robert Carmichael
VP Exploration
Trevor D’Sa
VP Corporate Development & IR
Ian Gibbs
Chief Financial Officer
Arndt Brettschneider
VP Operations & Projects
DIRECTORS
Adam Lundin, Chair
Jamie Beck
Wojtek Wodzicki
Ron Hochstein
Erin Johnston
Carmel Daniele
William Lundin
Joyce Ngo
Peter O'Callaghan
AUDITORS
PricewaterhouseCoopers LLP
Vancouver, British Columbia, Canada
LEGAL COUNSEL
Cassels Brock & Blackwell LLP
Vancouver, British Columbia, Canada
CORPORATE OFFICE
Suite 2000 - 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3E8
Telephone: +1 604 689-7842
Fax: +1 604 689-4250
REGISTERED & RECORDS OFFICE
Suite 2200 - 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3E8
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of Canada
Vancouver, British Columbia
Canada
SHARE LISTINGS
TSX & Nasdaq First North
Growth Market: FIL
OTCQX: FLMMF
CUSIP No.: 31730E101
ISIN: CA31730E1016