MIRASOL RESOURCES LTD.
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2013
Canadian Funds
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Mirasol Resources Ltd.
We have audited the accompanying consolidated financial statements of Mirasol Resources Ltd., which comprise the
consolidated statements of financial position as at June 30, 2013 and 2012, and the consolidated statements of (income) loss
and comprehensive (income) loss, changes in equity and cash flows for the years then ended, and a summary of significant
accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with International Financial Reporting Standards, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Mirasol
Resources Ltd. as at June 30, 2013 and 2012, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards.
Vancouver, Canada
October 22, 2013
“DAVIDSON & COMPANY LLP”
Chartered Accountants
Mirasol Resources Ltd.
(An Exploration Stage Company)
Consolidated Statements of Financial Position
Canadian Funds
As at
ASSETS
Current Assets
Cash and cash equivalents
Short-term investments
Receivables and advances (Note 6)
Investments (Note 7)
Equipment (Note 8)
Exploration and Evaluation Assets (Note 9)
LIABILITIES
Current Liabilities
June 30,
2013
June 30,
2012
$
$
27,786,195
1,415,928
1,196,092
18,315,659
48,713,874
166,416
2,832,215
6,826,040
997,830
231,466
-
8,055,336
208,870
2,624,003
$
51,712,505
$
10,888,209
Accounts payable and accrued liabilities (Note 10 and 11)
$
6,057,594
$
985,207
37,821,160
14,823,477
(1,267)
(6,988,459)
45,654,911
36,029,893
14,019,377
-
(40,146,268)
9,903,002
$
51,712,505
$
10,888,209
EQUITY
Share Capital (Note 12)
Reserves
Accumulated Other Comprehensive Loss
Deficit
Nature of Business (Note 1)
Subsequent Events (Note 16)
On Behalf of the Board:
“ Mary L. Little ”
“ Nick DeMare ”
,
,
Director
Director
The accompanying notes are an integral part of these consolidated financial statements
Page 3
Mirasol Resources Ltd.
(An Exploration Stage Company)
Consolidated Statements of (Income) Loss and Comprehensive (Income) Loss
For the Years Ended June 30
Canadian Funds
Operating Expenses
Exploration costs (Note 9)
Management fees (Note 11)
Share-based payments (Note 12)
Professional fees
Office and miscellaneous
Travel
Shareholder information
Listing and filing fees
Depreciation (Note 8)
Director fee
Interest income
Foreign exchange (gain) loss
Gain on sale of Joaquin Property (Note 9(c))
Fair value adjustment on investment (Note 7)
$
2013
2012
$
8,068,960
2,101,022
1,065,617
376,214
236,692
83,307
54,598
38,744
9,535
2,000
12,036,689
(36,354)
(2,955,515)
(58,990,546)
12,664,608
11,599,329
284,322
3,345,027
325,528
256,583
41,271
73,009
47,519
2,272
-
15,974,860
(29,733)
197,870
-
-
Net (Income) Loss for the Year before Income Taxes
Income tax expense (Note 15)
Net (Income) Loss for the Year
(37,281,118)
16,142,997
4,123,309
-
$
(33,157,809) $
16,142,997
Other Comprehensive Loss
Foreign currency translation losses
Comprehensive (Income) Loss for the Year
Basic (Earnings) Loss per Share (Note 13)
Diluted (Earnings) Loss per Share (Note 13)
1,267
(33,156,542) $
-
16,142,997
(0.76) $
(0.76) $
0.40
0.40
$
$
$
Weighted Average Number of Shares Outstanding – Basic (Note 13)
43,460,373
39,986,459
Weighted Average Number of Shares Outstanding – Diluted (Note 13)
43,890,565
39,986,459
The accompanying notes are an integral part of these consolidated financial statements
Page 4
Mirasol Resources Ltd.
(An Exploration Stage Company)
Consolidated Statements of Changes in Equity
Canadian Funds
Share Capital
Common Shares
Reserves
Accumulated
Other
Comprehensive
Income
Deficit
Total
Number
$
$
$
$
$
Balance – June 30, 2011
38,342,201
24,633,294
9,099,836
Private placement
- Units issued for cash
- Fair value of private
placement warrants
Share issuance costs
- Finders’ warrants
- Cash
Options exercised
Fair value of options
exercised
Warrants exercised
Fair value of warrants
exercised
Share-based payments
Loss for year
Balance – June 30, 2012
Options exercised
Fair value of options
Bonus shares issued
Share-based payments
Foreign currency translation
adjustment
Net income for the year
4,000,000
13,200,000
-
-
(1,764,978)
1,764,978
-
-
20,000
(250,440)
(1,015,313)
12,600
-
338,460
-
-
-
6,296
773,826
434,608
-
-
42,700,661
955,000
-
500,000
-
36,029,893
504,750
261,517
1,025,000
-
250,440
-
-
(6,296)
-
(434,608)
3,345,027
-
14,019,377
-
(261,517)
-
1,065,617
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24,003,271)
9,729,859
-
-
-
-
-
-
-
13,200,000
-
-
(1,015,313)
12,600
-
773,826
-
-
(16,142,997)
-
3,345,027
(16,142,997)
(40,146,268)
-
-
-
-
9,903,002
504,750
-
1,025,000
1,065,617
-
-
-
-
-
-
(1,267)
-
-
33,157,809
(1,267)
33,157,809
Balance – June 30, 2013
44,155,661
37,821,160
14,823,477
(1,267)
(6,988,459)
45,654,911
The accompanying notes are an integral part of these consolidated financial statements
Page 5
Mirasol Resources Ltd.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended June 30
Canadian Funds
Operating Activities
Income (loss) for the year
Adjustments for:
Gain on sale of Joaquin Property (Note 9(c))
Fair value adjustment on investments (Note 7)
Bonus share compensation
Share-based payments (Note 12)
Interest income
Depreciation
Depreciation included in exploration expenses
Unrealized foreign exchange
Changes in non-cash working capital items:
Receivables and advances
Accounts payable and accrued liabilities
Cash used in operating activities
Investing Activities
Acquisition of exploration and evaluation assets
Proceeds from sale of Joaquin Property (Note 9)
Short-term investments purchased
Interest received
Purchase of equipment
Cash provided by (used) in investing activities
Financing Activities
Share capital issued, net of share issuance costs
Cash provided by financing activities
2013
2012
$
33,157,809
$
(16,142,997)
(58,990,546)
12,664,608
1,025,000
1,065,617
(36,354)
9,535
58,381
(2,271,816)
-
-
-
3,345,027
(29,733)
2,272
53,992
22,335
(13,317,766)
(12,749,104)
82,444
4,410,933
(61,653)
139,702
(8,824,389)
(12,671,055)
(208,212)
28,831,815
(415,928)
34,047
(25,462)
28,216,260
(2,480,198)
-
(997,830)
29,733
(118,091)
(3,566,386)
504,750
504,750
12,971,113
12,971,113
Effect of exchange rate change on cash and cash equivalents
1,063,534
(22,335)
Change in Cash and cash equivalents
Cash and cash equivalents - Beginning of year
20,960,155
6,826,040
(3,288,663)
10,114,703
Cash and cash equivalents - End of year
$
27,786,195
$
6,826,040
Supplemental Schedule of Non-Cash Investing and Financing Transactions:
Shares received for the sale of Joaquin Property (Note 7 and 9(c))
Shares issued under bonus share plan (Note 12(d))
Exploration and evaluation assets included in accounts payable
Fair value of private placement warrants
Fair value of finder fees warrants
Fair value of options exercised
Fair value of warrants exercised
$
$
$
$
$
$
$
29,825,985
1,025,000
-
-
-
261,517
-
$
$
$
$
$
$
$
-
-
65,472
1,764,978
250,440
6,296
434,608
There was no cash paid for interest or income taxes for the years ended June 30, 2013 and 2012.
The accompanying notes are an integral part of these consolidated financial statements
Page 6
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
1. Nature of Business
Mirasol Resources Ltd. (“Mirasol” or “the Company”) is incorporated under the laws of the Province of British
Columbia, Canada. The Company’s corporate registered and records office is located at 600 – 890 West
Pender Street, Vancouver, British Columbia.
Mirasol engages in acquiring and exploring mineral properties, principally located in Argentina and Chile,
with the objective of identifying mineralized deposits economically worthy of subsequent development,
mining or sale.
The business of mining and exploration involves a high degree of risk and there can be no assurance that
current exploration programs will result in profitable mining operations. The Company has no source of
revenue, and has significant cash requirements to meet its administrative overhead and maintain its
exploration and evaluation assets. The recovery of the Company’s exploration and evaluation assets is
dependent on the discovery of economically recoverable reserves, the ability of the Company to obtain the
necessary financing to complete the development of these properties, and future profitable production or
proceeds from disposition of exploration and evaluation assets. While the Company has been successful in
the past with its financing efforts, there can be no assurance that it will be able to do so in the future.
Management believes that the Company has sufficient working capital to maintain its operations and
activities for the next twelve months.
2. Basis of Presentation
Statement of compliance
The financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The
policies presented in Note 3 were consistently applied to all periods presented. The Board of Directors
approved the consolidated financial statements on October 22, 2013.
Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for financial
instruments classified as financial instruments at fair value through profit and loss, which are stated at their
fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of
accounting except for cash flow information.
3. Significant Accounting Policies
a) Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries, Minera Del Sol S.A., Australis S.A., Gran Nueva Victoria S.A., Cabo Sur S.A., Recursos Mirasol
Holdings, MDS Property Holdings Limited and Minera Mirasol Chile Limitada. The accounts of Mirasol
Argentina S.R.L. were included up to the date of disposition on December 21, 2012. Inter-company balances
have been eliminated upon consolidation.
Page 7
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
b) Significant Accounting Estimates and Judgments
The preparation of financial statements requires management to make judgments, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, profit and
expenses. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgments about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and further periods if the review affects both current and future periods.
Significant accounting estimates and judgments are related to, but are not limited to, the following:
(i)
Impairment of exploration and evaluation assets: The net carrying value of each mineral license and
capitalized exploration costs is reviewed regularly for conditions that are indicators of impairment. This
review requires significant judgment as the Company does not have any proven and probable reserves
that enable future cash flows to be compared to the carrying values. Factors considered in the
assessment of asset impairment include, but are not limited to, whether there has been a significant
adverse change in the legal, regulatory, accessibility, title, environmental or political factors that could
affect the licenses’ value; whether there has been an accumulation of costs significantly in excess of the
amounts originally expected for the licenses’ acquisition, development or cost of holding; whether
exploration activities produced results that are not promising such that no more work is being planned in
the foreseeable future; and whether the Company has the necessary funds to be able to maintain its
interest in the mineral license. As at June 30, 2013, the Company has concluded that impairment
conditions do not exist.
(ii) Share-based payments: The Company provides compensation benefits to its employees, directors and
officers through a stock option plan. The Company also grants warrants in conjunction with private
placements and as compensation for debt financing arrangements. The fair value of each option award
is estimated on the date of the grant using the Black-Scholes option pricing model. Expected volatility is
based on historical volatility of the Company’s share price. The Company uses historical data to
estimate option exercises and forfeiture rates with the valuation model. The risk-free interest rate for the
expected term of the option is based on the yields of government bonds. Changes in these
assumptions, especially the volatility and the expected life determination could have a material impact
on the Company’s comprehensive (income) loss for the year. All estimates used in the model are based
on historical data which may not be representative of future results.
(iii) Provision for income taxes: The Company is subject to income taxes in numerous jurisdictions.
Uncertainties exist with respect to interpretations of tax regulations. The Company recognizes it current
tax payable based on its interpretations of tax regulations which may differ from the interpretations of the
tax authorities. Such differing interpretations may impact the Company’s current income tax payable.
Judgment is required in determining whether deferred tax assets are recognized on the statement of
financial position. The recognition of deferred tax assets require management to assess the likelihood
that the Company will generate taxable income in future periods to utilize the deferred tax assets. Due to
a history of losses deferred tax assets have not be recognized.
Page 8
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
(iv) Functional currencies: The functional currency of an entity is the currency of the primary economic
environment in which an entity operates. The determination of an entity’s functional currency requires
judgement based on analysis of relevant criteria. The functional currency of the Company and its
subsidiaries was determined by conducting an analysis of the consideration factors identified in IAS 21,
The Effects of Changes in Foreign Exchange Rates.
c) Foreign Currencies
The functional currency is the currency of the primary economic environment in which an entity operates.
The functional currency of the Company and its wholly owned subsidiaries, Mirasol Argentina S.R.L.
(disposed December 21, 2012), Minera Del Sol S.A., Australis S.A., Gran Nueva Victoria S.A., Cabo Sur
S.A., and Minera Mirasol Chile Limitada, is the Canadian Dollar (“$”). The functional currency of its wholly
owned subsidiaries Recursos Mirasol Holdings Limited and MDS Property Holdings is the United States
Dollar. The functional currency determinations were conducted through an analysis of the consideration
factors identified in IAS 21.
Any transactions in currencies other than the functional currency have been translated to the Canadian dollar
in accordance with IAS 21. Transactions in currencies other than the functional currency are recorded at the
rates of exchange prevailing on dates of transactions. At the end of each reporting period, monetary assets
and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date.
Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are
translated at rates prevailing at the date when the fair value was determined. All gains and losses on
translation of these foreign currency transactions are included in the statements of (income) loss and
comprehensive (income) loss. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Assets and liabilities of entities with a functional currency other than the Canadian Dollar are translated at
the period end rates of exchange, and the results of their operations are translated at average rates of
exchange for the period. The resulting changes are recognized in accumulated other comprehensive loss
(“AOCI”) in equity as a foreign currency translation adjustment.
The Company’s presentation currency is the Canadian dollar.
d) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit with banks and short-term interest-bearing
investments with maturities of three months or less at the purchase date. Deposits with banks and short-term
interest-bearing investments with original term to maturity greater than three months but less than one year
are presented as short-term investments.
e) Financial Instruments
All financial instruments are initially recognized at fair value on the statement of financial position. The
Company has classified each financial instrument into one of the following categories: (1) financial assets or
liabilities at fair value through profit or loss (“FVTPL”), (2) loans and receivables, (3) financial assets
available-for-sale, (4) financial assets held-to maturity, and (5) other financial liabilities. Subsequent
measurement of financial instruments is based on their classification.
Page 9
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Financial assets and liabilities at FVTPL are subsequently measured at fair value with changes in those fair
values recognized in the statement of (income) loss and comprehensive (income) loss. Financial assets
“available-for-sale” are subsequently measured at fair value with changes in fair value recognized in other
comprehensive income/loss, net of tax. Financial assets and liabilities “held-to-maturity”, “loans and
receivables”, and “other financial liabilities” are subsequently measured at depreciated cost using the
effective interest method.
f)
Impairment of Financial Assets
At each reporting date, the Company assesses whether there is objective evidence that a financial asset is
impaired. If such evidence exists, the Company recognizes an impairment loss as follows:
(i) Financial assets carried at depreciated cost: The loss is the difference between the depreciated cost of
the loan or receivable and the present value of the estimated future cash flows, discounted using the
instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount
either directly or indirectly through the use of an allowance account.
(ii) Available-for-sale financial assets: The impairment loss is the difference between the original cost of the
asset and its fair value at the measurement date, less any impairment losses previously recognized in
the statement of (income) loss and comprehensive (income) loss. This amount represents the
cumulative loss in accumulated other comprehensive income that is reclassified to the statement of
(income) loss and comprehensive (income) loss.
Impairment losses on financial assets carried at depreciated cost are reversed in subsequent periods if the
amount of the loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognized. Impairment losses on available-for-sale financial assets are not reversed.
g)
Impairment of Non-financial Assets
The carrying amounts of non-financial assets are reviewed for impairment whenever facts and
circumstances suggest that the carrying amounts may not be recoverable. If there are indicators of
impairment, the recoverable amount of the asset is estimated in order to determine the extent of any
impairment. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (“cash-generating units” or “CGUs”). The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of
the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the
amount by which the asset’s carrying amount exceeds its recoverable amount.
Non-financial assets that have been impaired in prior periods are tested for possible reversal of impairment
whenever events or changes in circumstances indicate that the impairment has reversed. If the impairment
has reversed, the carrying amount of the asset is increased to its recoverable amount but not beyond the
carrying amount that would have been determined had no impairment loss been recognized for the asset in
the prior periods. A reversal of an impairment loss is recognized in the statement of (income) loss and
comprehensive (income) loss.
h) Equipment
Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of the asset. 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 can be
measured reliably. The carrying amount of a replaced asset is derecognized when replaced.
Page 10
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
The Company provides for depreciation for equipment using the declining balance method at a rate of 30%
for exploration equipment and 30% for computer hardware and applies only one-half of the applicable rate in
the year of acquisition.
The Company allocates the amount initially recognized to each asset’s significant components and
amortizes each component separately. Residual values, depreciation methods and useful lives of the assets
are reviewed periodically and adjusted on a prospective basis as required.
i)
Exploration and Evaluation Assets
The Company capitalizes the direct costs of acquiring mineral property interests as exploration and
evaluation assets. Option payments are considered acquisition costs if the Company has the intention of
exercising the underlying option.
Exploration and evaluation costs are charged to operations in the period incurred until such time as it has
been determined that a property has economically recoverable reserves, in which case subsequent
exploration and development costs are capitalized. Exploration costs include value-added taxes because the
recoverability of these amounts is uncertain.
Ownership of exploration and evaluation assets involves certain interest risks due to the difficulties of
determining and obtaining clear title to claims as well as the potential for problems arising from the frequently
ambiguous conveyance history characteristics of many exploration and evaluation assets. The Company has
investigated ownership of its exploration and evaluation assets and, to the best of its knowledge, ownership
of its interests are in good standing.
j)
Provisions
(i) Decommissioning and restoration provision: Future obligations to retire an asset, including dismantling,
remediation and ongoing treatment and monitoring of the site related to normal operations are initially
recognized and recorded as a liability based on estimated future cash flows discounted at a risk free
rate. The decommissioning and restoration provision is adjusted at each reporting period for changes to
factors including the expected amount of cash flows required to discharge the liability, the timing of such
cash flows and the pre-tax rate for risk specific to the liability.
The liability is also accreted to full value over time through periodic charges to earnings. This unwinding
of the discount is charged to financing expense in the statement of (income) loss and comprehensive
(income) loss.
The amount of the decommissioning and restoration provision initially recognized is capitalized as part
of the related asset’s carrying value and depreciated to earnings. The method of depreciation follows
that of the underlying asset. The costs related to a decommissioning and restoration provision are only
capitalized to the extent that the amount meets the definition of an asset and can bring about future
economic benefit.
For the years presented, the Company does not have any decommission or restoration provisions.
(ii) Other provisions: Provisions are recognized when a current legal or constructive obligation exists, as a
result of past events, and it is probable that an outflow of resources that can be reliably estimated will be
required to settle the obligation. Where the effect is material, the provision is discounted using an
appropriate pre-tax rate for risk specific to the liability.
Page 11
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
k)
Income Taxes
Income tax expense is comprised of current and deferred tax. Income tax is recognized in the statement of
(income) loss and comprehensive (income) loss except to the extent that it relates to items recognized
directly in equity, in which case the income tax is also recognized directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of
previous years.
In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income
tax is determined on a non-discounted basis using tax rates and laws that have been enacted or
substantively enacted at the date of statement of financial position and are expected to apply when the
deferred tax asset or liability is settled. Deferred tax assets are recognized to the extent that it is probable
that the assets can be recovered.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates,
except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled
by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are presented as non-current.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities, when they relate to income taxes levied by the same taxation authority
and when the Company intends to settle its current tax assets and liabilities on a net basis.
l)
Share Capital
Share capital issued as non-monetary consideration is recorded at an amount based on fair market value of
the shares issued.
The proceeds from the issue of units is allocated between common shares and common share purchase
warrants on a pro-rated basis on a relative fair value as follows: the fair value of common shares is based on
the price at market close on the date the units are issued and the fair value of the common share purchase
warrants is determined using a Black-Scholes pricing model.
m) Share-based Payments
The Company grants share options to buy common shares of the Company to directors, officers, employees
and service providers. The Company recognizes share-based payment expense based on the estimated fair
value of the options. A fair value measurement is made for each vesting instalment within each option grant
and is determined using the Black-Scholes option-pricing model. The fair value of the options is recognized
over the vesting period of the options granted as both share-based payment expense and reserve. This
includes a forfeiture estimate, which is revised for actual forfeitures in subsequent periods. The reserve
account is subsequently reduced if the options are exercised and the amount initially recorded is then
credited to share capital.
In situations where equity instruments are issued to non-employees and some or all of the goods or services
received by the entity as consideration cannot be specifically identified, they are measured at fair value of
the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or
services received.
Page 12
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
n) Earnings per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during the year. The computation of diluted earnings per
share assumes the conversion, exercise or contingent issuance of securities only when such conversion,
exercise or issuance would have a dilutive effect on the earnings per share. The dilutive effect of convertible
securities is reflected in the diluted earnings per share by application of the "if converted" method. The
dilutive effect of outstanding options and warrants and their equivalents is reflected in the diluted earnings
per share by application of the treasury stock method.
4. Recent Accounting Pronouncements
Certain new standards, interpretations, amendments and improvements to existing standards were issued by
the International Accounting Standards Board (“IASB”) or International Financial Reporting Interpretations
Committee (“IFRIC”). The new standards, amendments to standards and interpretations that been issued
and that are applicable to the Company but not effective during the ended June 30, 2013 are as follows:
a)
b)
c)
d)
IFRS 7 Disclosures: Transfers of Financial Assets (Amendment) has been amended to enhance disclosures
for financial assets. These disclosures relate to assets transferred (as defined under IAS 39 Financial
Instruments: Recognition and Measurement (“IAS 39”)). If the assets transferred are not derecognized
entirely in the financial statements, an entity has to disclose information that enables users of financial
statements to understand the relationship between those assets which are not derecognized and their
associated liabilities. If those assets are derecognized entirely, but the entity retains a continuing
involvement, disclosures have to be provided that enable users of financial statements to evaluate the
nature of, and risks associated with, the entity’s continuing involvement in those derecognized assets. The
standard has an effective date of January 1, 2013 with early adoption permitted. The Company does not
anticipate that this amendment will have a significant impact on its financial statements.
IFRS 9 Financial Instruments: Classification and Measurement is the first part of a new standard on
classification and measurement of financial assets that will replace IAS 39. IFRS 9 has two measurement
categories: depreciated cost and fair value. All equity instruments are measured at fair value. A debt
instrument is recorded at depreciated cost only if the entity is holding the instrument to collect contractual
cash flows and the cash flows represent principal and interest. Otherwise it is recorded at fair value through
profit or loss. The effective date for the amendment is January 1, 2015 and is applied retrospectively. Early
application is permitted. The Company is currently evaluating the impact of this standard.
IFRS 10 Consolidated Financial Statements replaces IAS 27, Consolidated and Separate Financial
Statements, and requires all controlled entities to be consolidated based on a single control model, whereby
control is defined as the exposure to, or having rights to, returns from its involvement in its investee, and the
ability to affect those returns through is power over the investee. The standard has an effective date of
January 1, 2013 with early adoption permitted. The Company is currently evaluating the impact of this
standard.
IFRS 11 Joint Arrangements replaces the existing IAS 31, Joint Ventures. IFRS 11 provides for the
accounting of joint arrangements by focusing on the rights and obligations of the arrangement, rather than
its legal form (as is currently the case). The Standard also eliminates the option to account for jointly
controlled entities using the proportionate consolidation method. The standard has an effective date of
January 1, 2013 with early adoption permitted. The Company is currently evaluating the impact of this
standard.
Page 13
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
e)
f)
g)
h)
i)
IFRS 12 Disclosure of Interests in Other Entities provides certain disclosure requirements about
subsidiaries, joint ventures and associates, as well as unconsolidated structured entities and replaces
existing disclosure requirements. The key features are the requirement to disclose judgements and
assumptions made when deciding how to classify involvement with another entity, interest that non-
controlling entities have in consolidated entities and the nature of the risks associated with interests in
other entities. This is effective for annual periods beginning on or after January 1, 2013, with early
adoption permitted. The Company is currently evaluating the impact of this standard.
IFRS 13 Fair Value Measurement establishes a single source of guidance for fair value measurements,
when fair value is permitted by IFRS. The standard will not affect when fair value is used, it just describes
how to measure fair value. The standard provides a single framework for measuring fair value, while
requiring enhanced disclosures when fair value is applied, establishes the definition of fair value as the
“exit price” and clarifies that the concepts of highest and best use and valuation premise are relevant only
for non-financial assets and liabilities. This is effective for annual periods beginning on or after January 1,
2013, with early adoption permitted. The Company is currently evaluating the impact of this standard.
IAS 27 Separate Financial Statements addresses accounting and disclosure requirements for
investments in subsidiaries, joint ventures and associates when an entity prepares separate financial
statements. This is effective for annual periods beginning on or after January 1, 2013, with early adoption
permitted. The Company is currently evaluating the impact of this standard.
IAS 28 Investments in Associates and Joint Ventures has been amended and will provide accounting and
disclosure guidance for investments in associates and joint ventures. This is effective for annual periods
beginning on or after January 1, 2013, with early adoption permitted. The Company is currently evaluating
the impact of this standard.
IAS 32 Financial Instruments: Presentation updates the application guidance to clarify some of the
requirements for offsetting financial assets and financial liabilities on the statement of financial position.
This is effective for annual periods beginning on or after January 1, 2014. The Company is currently
evaluating the impact of this standard.
5. Financial Instruments
Categories of financial instruments
Financial assets
Fair Value Through Profit and Loss
Cash and cash equivalents
Short-term investments
Investments
Loans
Receivables and advances
Financial liabilities
Other financial liabilities
Accounts payable and accrued liabilities
Page 14
June 30,
2013
June 30,
2012
$
27,786,195 $
1,415,928
18,315,659
972,515
6,826,040
997,830
-
-
$
$
48,490,297 $
7,823,870
1,934,285 $
985,207
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
a) Fair Value
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy
according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair
value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than quoted prices that are directly or indirectly observable for the asset or liability;
and,
Level 3 – Inputs that are not based on observable market data;
Level 1
Cash and cash equivalents
Short-term investments
Investments
June 30,
2013
$
$
$
27,786,195 $
1,415,928 $
18,315,659 $
June 30,
2012
6,826,040
997,830
-
Fair value of investments traded in active markets is based on quoted market prices on the date of the
statement of financial position. A market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those
prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted
market price used for investments held by the Company is the current bid price of the held securities. These
securities are therefore included in level 1 of the fair value hierarchy.
The fair values of the Company’s other financial instruments approximates their carrying values because of
the short-term nature of these instruments.
b) Management of capital risk
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
going concern in order to pursue the development of its exploration and evaluation assets and to maintain a
flexible capital structure which optimizes the costs of capital at an acceptable risk. In the management of
capital, the Company includes the components of equity.
The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,
the Company may attempt to issue new shares, acquire or dispose of assets, enter into joint ventures or
obtain debt financing. In order to facilitate the management of its capital requirements, the Company
prepares annual expenditure budgets that are updated as necessary depending on various factors, including
successful capital deployment and general industry conditions.
In order to maximize ongoing development efforts, the Company does not pay out dividends.
The Company’s investment policy is to invest its cash in highly liquid short-term interest-bearing investments
with maturities of twelve months or less from the original date of acquisition, selected with regards to the
expected timing of expenditures from continuing operations. The Company is not subject to externally
imposed capital requirements. There were no changes to the Company’s approach to capital management
during the year.
Page 15
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
c) Management of financial risk
The Company’s financial instruments are exposed to certain financial risks. The risk exposures and the
impact on the Company's financial instruments are summarized below.
i. Currency risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The
Company operates in Canada, Argentina and Chile and a portion of its expenses are incurred in United
States (“US”), Australian dollars and in Argentine and Chilean Pesos. A significant change in the currency
exchange rates between the US and Australian dollar relative to the Canadian dollar and the Argentine
and Chilean Peso to the Canadian dollar could have an effect on the Company’s results of operations,
financial position or cash flows. The Company has not hedged its exposure to currency fluctuations.
At June 30, 2013, the Company is exposed to currency risk through the following assets and liabilities
denominated in US and Australian dollars and Argentine and Chilean Pesos:
Cash and cash equivalents
Receivables and advances
Accounts payable and accrued liabilities
US
Dollars
20,193,886
925,147
(664,492)
Australian
Dollars
10,743
-
(2,269)
Argentine
Peso
2,002,826
2,103,754
(4,191,172)
Chilean
Peso
197,570,323
-
(381,913,720)
Based on the above net exposures as at June 30, 2013, and assuming that all other variables remain
constant, a 10% depreciation or appreciation of the Canadian dollar against the US and Australian dollar
would result in an increase/decrease of $2,150,181 and $817, respectively in the Company’s net income.
Likewise, a 10% depreciation or appreciation of the Canadian dollar against the Argentine and Chilean
Peso would result in an increase/decrease of $1,650 and $38,196, respectively in the Company’s net
income.
ii. Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to
meet its contractual obligations.
The Company’s cash is held through large financial institutions. The Company’s receivables consist of
Goods and Services tax due from the Federal Government of Canada and holdback receivable from
Coeur, which was collected subsequent to the year ended June 30, 2013 (Note 9(c)). Management
believes that credit risk concentration with respect to receivables is remote.
iii. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company manages liquidity risk through the management of its capital structure and financial
leverage as outlined above. As at June 30, 2013, the Company’s financial liabilities consist of accounts
payable and accrued liabilities totalling $1,934,285 (2012 - $985,207). The Company has also recorded
an income tax provision of $4,123,309. All of the Company’s obligations are expected to be paid within 90
days. Management believes the Company has sufficient funds to meet its liabilities as they become due.
Page 16
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
iv.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The risk that the Company will realize a loss as a result of a
decline in the fair value of the short-term investments included in cash is limited because these
investments are generally held to maturity.
v. Commodity price risk
The Company is exposed to equity securities price risk because of investments held by the Company and
classified on the statement of financial position as FVTPL and also to the price risk with respect to
commodity prices.
The Company does not typically invest in equity securities and the maximum exposure to the price risk is
represented by the changing fair value of such investments. Assuming all variables remain constant, a
10% increase/decrease in the quoted market price of the Company’s investments would result in an
increase/decrease in the Company’s income of approximately US$1,742,357.
The Company closely monitors commodity prices to determine the appropriate course of action to be
taken by the Company.
6. Receivables and advances
Good and services tax receivable
Prepaid expenses and advances
Holdback receivable (Note 9(c))
7. Investments
Common shares - Coeur Mining Inc.
Change in fair value
Exchange differences
June 30,
2013
22,746 $
200,831
972,515
1,196,092 $
June 30,
2012
23,701
207,765
-
231,466
$
$
June 30,
2013
June 30,
2012
$
$
$
29,825,985
(12,664,608)
1,154,282
18,315,659
$
-
-
-
-
On December 21, 2012, the Company, in conjunction with the sale of its Joaquin Property (Note 9(c)),
received as partial consideration, 1,310,043 common shares of Coeur Mining Inc. (formally Coeur d’Alene
Mines Corporation) (“Coeur”) valued at $29,825,985 (US $29,999,985). The Company has designated these
common shares as financial assets at fair value through profit or loss and the resulting change in their fair
value has been recorded within the statement of (income) loss and comprehensive (income) loss. The fair
value of common shares of Coeur is based on their current close prices on the New York Stock Exchange as
at June 30, 2013.
Page 17
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
8. Equipment
Cost
Balance as at June 30, 2011
Additions for the year
Balance as at June 30, 2012
Additions for the year
Balance as at June 30, 2013
Accumulated Depreciation
Balance as at June 30, 2011
Depreciation for the year
Balance at June 30, 2012
Depreciation for the year
Balance as at June 30, 2013
Carrying amounts
As at June 30, 2012
As at June 30, 2013
Exploration
Equipment
Computer
Hardware
247,859 $
112,280
360,139 $
23,105
383,244 $
23,936 $
5,811
29,747 $
2,357
32,104 $
Total
271,795
118,091
389,886
25,462
415,348
109,277 $
15,475 $
53,234
3,030
162,511 $
18,505 $
64,189
3,727
226,700 $
22,232 $
124,752
(i) 56,264
181,016
(i) 67,916
248,932
197,628 $
156,544 $
11,242 $
9,872 $
208,870
166,416
$
$
$
$
$
$
$
$
(i) Allocated between depreciation expense and exploration costs on the statement of (income) loss and
comprehensive (income) loss.
9. Exploration and Evaluation Assets
a) Claudia Property
The Company owns a 100% interest in the Claudia property situated in the Santa Cruz Mining District,
Argentina.
b) Espejo, La Libanesa, and La Curva Properties
The Company owns a 100% interest in mining interests of Espejo, La Libanesa, and La Curva properties
situated in the Santa Cruz Mining District, Argentina, by staking.
The Company signed a letter of intent on April 27, 2011 and a definitive agreement on October 4, 2012 with
Pan American Silver Corp. (“Pan American”) which permits Pan American to earn a 51% interest in the
Espejo property by expending US $4 million over four years, and then to reach a 61% interest by completing
a National Instrument 43-101 (“NI 43-101”) compliant feasibility study, at which time Mirasol can retain an
equity interest in the project or request Pan American to finance project development, to be repaid through
cash flow. The Company received $76,433 (US $75,000) pursuant to the arrangement between the parties
during the year ended June 30, 2012.
Page 18
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
c) Sascha and Joaquin Properties
The Company owns a 100% interest in the Sascha Property situated in the Santa Cruz Mining District,
Argentina.
The Company had a signed option agreement with Coeur for the exploration of Sascha and Joaquin gold-
silver projects. The agreement provided Coeur the option to earn an initial 51% in both projects by expending
a total of US $8 million in exploration over four years. In October 2008, Coeur terminated its option on the
Sascha property and returned the property to Mirasol. The total earn-in on both properties reached US $6
million and Coeur vested at 51% interest in the Joaquin property in December 2010.
On December 21, 2012, the Company completed the sale of its remaining 49% interest in the Joaquin
Property to Coeur for total consideration of $59,652,000 (US $60,000,000). The transaction was carried out
through the sale of the Company’s Argentine subsidiary holding the 49% interest in the Joaquin Property.
One-half of the consideration was paid in cash (with a holdback of $994,200 (US $1,000,000) to cover any
relevant taxes on the transfer of ownership in Argentina) and the balance was paid with 1,310,043 shares of
common stock in the capital of Coeur (Note 7). As at June 30, 2013, the holdback receivable, net of transfer
taxes paid, is recorded at $972,515 (US$925,147) and is included in receivables and advances in these
consolidated financial statements (Note 6). The holdback receivable was received on July 12, 2013. The
transaction resulted in a pre-tax accounting gain of $58,990,546 calculated as follows:
Cash received (US $29,000,015)
Cash held back and receivable (US $1,000,000)
Common shares of Coeur (US $29,999,985)
Transaction costs
Working capital of Argentine subsidiary
Gain on Sale of Joaquin Property
d) Santa Rita Property and Virginia Zone
$
$
28,831,815
994,200
29,825,985
(686,076)
24,622
58,990,546
The Company owns a 100% interest in the Santa Rita property situated in the Santa Cruz Mining District,
Argentina. The Santa Rita property also hosts the Virginia prospect, thus together Santa Rita and Virginia
account for total expenditures on the Santa Rita property.
During the year ended June 30, 2013, the Company purchased certain surface rights overlaying the Virginia
prospect for $34,034 (Argentine Pesos 157,564) (Year ended June 30, 2012 - $2,545,670). The cost of
surface rights has been capitalized to exploration and evaluation assets.
e) Nico Property
The Company owns a 100% interest in the Nico property mining interests situated in the Santa Cruz Mining
District, Argentina, by staking.
f) Pajaro, Veloz and Los Loros Properties
The Company owns 100% of the rights to three exploration properties, Pajaro, Los Loros and Veloz, in Santa
Cruz Province, Argentina. During 2008, these exploration properties were acquired by the Company issuing
100,000 common shares. The shares had a fair value acquisition cost at issuance of $69,801.
Page 19
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
g) Gorbea Project
The Company owns 100% of the claims under its Gorbea project in Northern Chile. It is engaged in prospect
generation and exploration of disseminated gold and copper prospects in the region.
h) Rubi Property
The Company owns a 100% interest in the Rubi property located 22 km southwest of El Salvador in Northern
Chile.
i) Atlas Property
The Company holds a 100% interest in the Atlas Property (formally Akira Property) in northern Chile,
acquired by staking on open ground. During the year ended June 30, 2013, the Company acquired mineral
concessions on the property for a claim titled Dos Hermanos for $174,178 (US$175,000). The amount has
been capitalized to exploration and evaluation assets.
j)
Titan Property
The Company holds 100% interest in the Titan Property (formally Cindy) in Northern Chile. The property was
acquired through staking on open ground, as part of the Company’s Miocene Arc exploration program
k) Other Properties
Mirasol holds a number of early stage exploration properties which are prospective for gold and/or silver
mineralization in southern Argentina and northern Chile.
A reconciliation of capitalized acquisition costs is as follows:
Acquisition Costs
Argentina
Nico
Pajaro, Veloz and Los Loros
Santa Rita and Virginia
Chile
Atlas - Dos Hermanos
Argentina
Nico
Pajaro, Veloz and Los Loros
Santa Rita and Virginia
Balance at
June 30, 2012
Additions during
the year
Balance at
June 30, 2013
$
-
-
34,034
174,178
208,212
$
8,532
69,801
2,579,704
174,178
2,832,215
Additions during
the year
Balance at
June 30, 2012
- $
-
2,545,670
2,545,670 $
8,532
69,801
2,545,670
2,624,003
$
$
$
$
8,532
69,801
2,545,670
-
2,624,003
Balance at
June 30, 2011
8,532
69,801
-
78,333
$
$
$
$
Page 20
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Cumulative exploration expenditures per project under active exploration are as follows:
Exploration Costs
Claudia
Espejo
Homenaje
Joaquin
La Curva
La Libanesa
Nico
Pajaro, Veloz and Los Loros
Santa Rita and Virginia
Sascha
Other**
Total Argentina Properties
Atlas
El Dorado
Gorbea
Rubi
Titan (formerly Cindy)
Vaquillas
Other**
Total Chile Properties
Total Exploration Costs
$
$
$
$
$
Balance at
June 30, 2012
Additions during
the period
Balance at
June 30, 2013
$
$
$
3,599,635
134,002
173,701
552,365
822,503
871,022
305,893
154,827
8,528,465
486,504
5,712,198
21,341,115
13,689
-
1,315,385
583,850
279,804
-
314,015
1,459,148 $
17,078
36,667
100,993
451,551
16,294
8,407
11,253
1,139,187
22,365
1,594,334
5,058,783
151,080
210,368
653,358
1,274,054
887,316
314,300
166,080
9,667,652
508,869
7,306,532
4,857,277 $
26,198,392
842,091 $
58,950
49,869
248,018
1,610,120
153,938
248,697
855,780
58,950
1,365,254
831,868
1,889,924
153,938
562,712
2,506,743
$
3,211,683 $
5,718,426
23,847,858
$
8,068,960 $
31,916,818
** Includes costs incurred for value added taxes and generative exploration.
Page 21
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
The Company incurred exploration and evaluation costs on its properties as follows:
Argentina
Claudia
Consultants and salaries
Camp and general
Drilling
Geophysics
Travel
Mining rights and fees
Assays and sampling
Espejo
Option payment received
Consultants and salaries
Camp and general
Travel
Mining rights and fees
Homenaje
Consultants and salaries
Camp and general
Travel
Mining rights and fees
Assays and sampling
Joaquin
Consultants and salary
Camp and general
Travel
Mining rights and fees
Assays and sampling
La Curva
Consultants and salary
Camp and general
Travel
Mining rights and fees
Assays and sampling
La Libanesa
Consultants and salary
Camp and general
Travel
Mining rights and fees
Assays and sampling
Year Ended
June 30, 2013
Year Ended
June 30, 2012
$
$
714,309
632,713
-
-
53,313
1,765
57,048
1,459,148
1,004,302
973,971
491,425
1,966
127,134
135,775
209,708
2,944,281
-
15,244
133
718
983
17,078
17,045
10,043
30
103
9,446
36,667
63,048
30,595
5,550
211
1,589
100,993
271,309
134,876
30,106
333
14,927
451,551
2,898
12,288
-
1,108
-
16,294
(76,433)
2,917
849
38
1,530
(71,099)
68,089
44,823
19,669
1,185
15
133,781
114,513
4,020
8,545
833
90
128,001
72,348
34,608
10,728
1,180
15
118,879
63,973
28,532
4,179
1,015
478
98,177
Page 22
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Argentina (Continued)
Los Loros
Consultants and salary
Camp and general
Travel
Mining rights and fees
Assays and sampling
Nico
Consultants and salary
Camp and general
Travel
Mining rights and fees
Santa Rita and Virginia
Consultant and salary
Camp and general
Drilling
Mining rights and fees
Travel
Assays and sampling
Sascha
Consultants and salary
Camp and general
Mining rights and fees
Travel
Chile
Atlas
Consultant and salary
Camp and general
Drilling
Environmental
Geophysics
Travel
Mining rights and fees
Assays and sampling
El Dorado
Consultant and salary
Camp and general
Geophysics
Travel
Mining rights and fees
Assays and sampling
$
Year Ended
June 30, 2013
Year Ended
June 30, 2012
$
9,563
-
1,512
178
-
11,253
5,751
2,270
-
386
8,407
653,572
390,160
-
1,201
57,583
36,671
1,139,187
3,238
18,615
512
-
22,365
242,069
243,905
42,741
49,587
19,344
96,253
25,661
122,531
842,091
29,414
14,563
162
4,860
3,069
6,882
58,950
48,065
9,166
7,695
331
134
65,391
396
1,380
23
32
1,831
1,271,717
1,080,227
2,725,136
118,118
150,540
242,593
5,588,331
13,840
8,300
318
2,103
24,561
-
-
-
-
239
-
13,450
-
13,689
-
-
-
-
-
-
-
Page 23
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Chile (Continued)
Gorbea
Consultant and salary
Camp and general
Drilling
Geophysics
Travel
Mining rights and fees
Assays and sampling
Rubi
Consultant and salary
Camp and general
Environmental
Geophysics
Travel
Mining rights and fees
Titan (formerly Cindy)
Consultant and salary
Camp and general
Drilling
Geophysics
Travel
Mining rights and fees
Assays and sampling
Vaquillas
Consultant and salary
Camp and general
Mining rights and fees
Value added tax and other taxes
paid
Generative exploration and
administrative
Other Projects
Year Ended
June 30, 2013
Year Ended
June 30, 2012
$
$
49,869
-
-
-
-
-
-
49,869
54,940
9,255
14,749
364
19,050
149,660
248,018
483,964
227,657
651,772
3,878
84,996
42,262
115,591
1,610,120
36,232
26,282
91,424
153,938
301,887
119,746
35,525
9,756
78,736
14,286
98,493
658,429
-
737
-
32,739
-
149,720
183,196
189,771
28,429
-
24,640
23,092
12,320
1,552
279,804
-
-
-
-
631,778
1,037,997
885,980
325,273
98,763
295,317
Total Exploration and Evaluation Costs
$
8,068,960
$
11,599,329
Page 24
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
10. Accounts Payable and Accrued Liabilities
Trade payables
Accrued liabilities
Income tax provision (Note 15)
June 30,
2013
1,257,565 $
676,720
4,123,309
6,057,594 $
June 30,
2012
856,429
128,778
-
985,207
$
$
11. Related Party Transactions
Details of the transactions between the Company’s related parties are disclosed below.
a) Trading transactions
Certain of the Company’s officers and directors render services to the Company as sole proprietors or
through companies in which they are an officer, director, or partner.
The following companies are related parties through association of the Company’s directors and officers:
Miller Thomson
Avisar Chartered Accountants
Global Ore Discovery
Nature of transactions
Legal fees
Accounting fees
Exploration costs and project management fees
The Company incurred the following fees and expenses with related parties:
Legal fees
Accounting fees
Exploration costs
Other operating expenses
Year ended
June 30, 2013
188,240 $
96,000
869,502
92,170
Year ended
June 30, 2012
160,966
86,750
746,795
62,802
1,245,912 $
1,057,313
$
$
Included in accounts payable and accrued liabilities at June 30, 2013 is an amount of $655,046 (June 30,
2012 - $95,395) owing to directors and officers of the Company and to companies where the directors and
officers are principals.
Page 25
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
b) Compensation of key management personnel
Key management personnel included these persons having the authority and responsibility for planning,
directing, and controlling the activities of the Company as a whole.
The remuneration of the chief executive officer, vice president of exploration, exploration manager, and the
corporate secretary during the years ended June 30, 2013 and 2012 were as follows:
Management compensation (i)
Management bonus (i)
Director’s fees
Share bonus (i) and (ii)
Share-based payments (iii)
$
2013
414,403 $
630,720
2,000
768,750
522,586
2012
289,112
-
-
-
1,736,354
$
2,338,459 $
2,025,466
(i) Management compensation and bonuses are included within management fees as disclosed on the
consolidated statements of (income) loss and comprehensive (income) loss.
(ii) During the year ended June 30, 2013, the Company issued 375,000 common shares of the Company to
related parties under its share bonus plan (Note 12). The Common shares were valued at $2.05 per
share each.
(iii) Share-based payments represent the expense for the years ended June 30, 2013 and 2012.
12. Share Capital
Common Shares
Authorized: Unlimited number of common shares
Private Placement Financing
On December 20, 2011, the Company completed a bought deal private placement (“the Offering”) and
issued 4,000,000 units at a price of $3.30 per unit for gross proceeds of $13,200,000. Each unit consists of
one common share and one-half common share purchase warrant. One whole warrant entitles the holder to
purchase a common share of the Company at a price of $4.30 per share expiring on December 20, 2013.
The Company allocated $11,435,022 to the common shares and $1,764,978 to the share purchase warrants
based upon the relative fair values.
The Company paid the underwriters commission consisting of $792,000, equal to 6% of the value of the
Offering in cash and issued 200,000 common share purchase warrants with fair value of $250,440. Each
warrant entitles the underwriters to purchase one common share at a price of $3.30, expiring on December
20, 2013. Other costs relating to the Offering amounted to $223,313.
The warrants’ fair values were based on the following assumptions:
Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected life of warrants
Page 26
2013
-
-
-
-
2012
0.0%
77.62%
0.9%
2 years
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Share Purchase Options
The Company has established a share purchase option plan whereby the board of directors may, from time
to time, grant options to directors, officers, employees or consultants. Options granted must be exercised no
later than five years from the date of grant or such lesser period as determined by the Company’s board of
directors. The exercise price of an option is equal to or greater than the closing market price on the TSX
Venture Exchange (“TSX-V”) on the day preceding the date of grant. The vesting terms for each grant are
set by the Board of Directors. The option plan provides that the aggregate number of shares reserved for
issuance under the plan shall not exceed 10% of the total number of issued and outstanding shares. At June
30, 2013, a total of 4,415,566 options were reserved under the option plan with 3,757,800 options
outstanding.
a) Movements in share options during the year
A summary of the Company’s options, which includes options issued under the Company’s share option plan
and agent’s options at June 30, 2013 and the changes for the period are as follows:
Options outstanding at June 30, 2011
Granted
Exercised
Options outstanding at June 30, 2012
Granted
Exercised
Forfeited
Options outstanding as at June 30, 2013
Options exercisable at June 30, 2013
Number of Options
2,892,800
800,000
(20,000)
3,672,800
1,125,000
(955,000)
(85,000)
3,757,800
3,757,800
Weighted Average
Exercise Price
$2.96
$5.23
$0.63
$3.47
$1.42
$0.53
$4.30
$2.99
$2.99
During the year ended June 30, 2013, the Company issued 955,000 common shares on the exercise of
share options for gross proceeds of $504,750. These options had an additional fair value of $261,517.
On January 19, 2012, the Company announced the amendment of the exercise price of 775,000 incentive
share options originally granted on March 23, 2011 from $6.25 per share to $3.32 per share. On October 15,
2012, the Company received approval from the TSX-V for the amendment. In accordance with TSX-V
policies, the repricing of options held by officers and directors was approved at the Company’s 2012 Annual
General Meeting of shareholders held on December 18, 2012. The incremental estimated fair value of these
share options was determined to be $238,433.
The fair value of the amended incentive share options, using the Black-Scholes option pricing model, was
based on the following weighted average assumptions:
Expected dividend yield
Expected share price volatility
Risk-free interest rate
Expected life of options
2013
0.0%
69.3%
1.16%
1.8 years
Page 27
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
b) Fair value of share options granted
On May 14, 2013, the Company granted options to directors, officers, employees and consultants of the
Company to purchase up to 980,000 common shares of the Company at an exercise price of $1.28. The
estimated fair value of these share options was determined to be $690,440 using the Black-Scholes option
pricing model and the amount is recognized as share-based payments expense in the Company’s statement
of (income) loss.
On September 26, 2012, the Company granted options to employees and consultants to purchase up to
145,000 common shares of the Company at an exercise price of $2.34. The estimated fair value of these
share options determined to be $147,467 using the Black-Scholes option pricing model and the amount is
recognized as share-based payments expense in the Company’s statement of (income) loss, using the
graded vesting method.
During the year ended June 30, 2012, the Company granted options to directors, officers and employees to
purchase up to 800,000 common shares of the Company at an exercise price of $5.23. The estimated fair
value of these share options was $3,173,883 using the Black-Scholes option pricing model which was
recognized as share based payments expense during the year ended June 30, 2012 using the graded
vesting method.
The fair value of options granted was estimated on the date of the grant using the Black-Scholes option
pricing model, with the following weighted average assumptions:
Expected dividend yield
Expected share price volatility
Risk-free interest rate
Expected life of options
Fair value of options granted (per share option)
c) Share options outstanding at the end of the year
Year Ended
June 31, 2013
0.0%
78.3%
1.17%
3.41 years
0.75
Year Ended
June 30, 2012
0.0%
120%
1.92%
3.7 years
3.97
A summary of the Company’s options outstanding as at June 30, 2013 is as follows:
Expiry Date
May 21, 2014
October 5, 2015
December 16, 2015
March 23, 2016
August 4, 2016
September 26, 2017
May 14, 2018
Exercise
price
$0.25
$2.90
$5.55
$3.32
$5.23
$2.34
$1.28
Options
Outstanding
Weighted Avg
Remaining Life
of Options
Options
Exercisable
0.89 years
2.27 years
2.46 years
2.73 years
3.10 years
4.24 years
4.87 years
3.25 years
90,000
982,800
55,000
760,000
755,000
135,000
980,000
3,757,800
90,000
982,800
55,000
760,000
755,000
135,000
980,000
3,757,800
Page 28
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Warrants
a) Movements in warrants during the year
A summary of the Company’s share purchase warrants and broker warrants at June 30, 2013 and the
changes for the year are as follows:
Warrants outstanding at June 30, 2011
Issued - private placement warrants
Issued - broker warrants
Expired
Exercised
Balance at June 30, 2012 and 2013
b) Warrants outstanding
Warrants
Outstanding
1,838,500
2,000,000
200,000
(1,500,040)
(338,460)
2,200,000
Weighted Average
Exercise Price
$3.66
$4.30
$3.30
$4.00
$2.29
$4.21
At June 30, 2013, the following warrants are outstanding:
Private placement warrants
Broker warrants
Expiry Date
December 20, 2013
December 20, 2013
Exercise Price
$4.30
$3.30
Warrants
Outstanding
2,000,000
200,000
2,200,000
Share Bonus Plan
The Company established a TSX-V approved share bonus plan in 2007. The plan allows issuance of
common shares to the directors, officers, employees and consultants with significant contributions to the
discovery of an ore body containing at least 500,000 gold equivalent ounces. The Company can issue
500,000 shares for an initial 500,000 ounces of gold and gold equivalent of “Indicated Mineral Resource”, as
defined in the NI 43-101, for an individual project, and up to 1,000,000 shares in total on any of the
Company’s properties in which the Company retains an interest of at least 20%. During the year ended June
30, 2013, the Company issued 500,000 common shares, valued at $1,025,000 to directors, senior
management and consultants under the share bonus plan, 375,000 of these common shares valued at
$768,750 were issued to key management personnel (Note 11).
Page 29
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
13. (Earnings) Loss Per Share
Earnings (loss) per share, calculated on a basic and diluted basis, is as follows:
(Earnings) loss per share
Basic
Diluted
Net (income) loss available to common shareholders – basic
Net income (loss) available to common shareholders – diluted
Weighted average number of shares outstanding
Weighted average number of shares outstanding – basic
Dilutive securities:
Share options
Weighted average number of shares outstanding – diluted
For the Year Ended
June 30
2013
2012
$
$
$
$
(0.76) $
(0.76) $
(33,157,809) $
(33,157,809) $
0.40
0.40
16,142,997
16,142,997
43,460,373
39,986,459
430,192
43,890,565
-
39,986,459
For the year ended June 30, 2013, exercisable common equivalent shares totalling 5,012,033 (year ended
June 30, 2012 – 5,872,800) consisting of shares issuable on the exercise of share options and share
purchase warrants have been excluded from the calculation of diluted earnings per share because the effect
is anti-dilutive.
14. Segmented Information
The Company’s business consists of a single reportable segment being mineral exploration and
development. Details on a geographical basis are as follows:
Total Non-Current Assets
Canada
Argentina
Chile
June 30,
2013
29,385
2,769,722
199,524
$
2,998,631
$
June 30,
2012
38,437
2,761,088
33,348
2,832,873
$
$
Page 30
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
15. Income Taxes
The Company is subject to Canadian federal and provincial tax for the estimated assessable profit for the
years ended June 30, 2013 and June 30, 2012 at a rate of 25.25% and 25.75% respectively. The Company
has assessable profit in Canada for the years ended June 30, 2013 but none for the year ended June 30,
2012.
The tax expense at statutory rates for the Company can be reconciled to the reported income taxes per the
statement of loss and comprehensive loss as follows:
Net income (loss) before income taxes
Canadian federal and provincial income tax rates
Expected income tax recovery based on the above rates
Non-deductible expenses
Difference between Canadian and foreign tax rates
Tax effect of deferred tax assets for which no tax benefit has been
recorded
Deferred taxes transferred on sale of subsidiary
Foreign exchange and other
Total income taxes
Represented by:
Current income taxes
Deferred income taxes
Year Ended
June 30, 2013
Year Ended
June 30, 2012
37,281,118 $
25.25%
(16,142,997)
25.75%
9,413,482 $
(8,392,747)
1,791,570
(4,156,822)
1,759,019
(622,590)
329,914
2,881,414
1,755,421
(774,331)
4,123,309 $
-
138,979
-
4,123,309 $
-
4,123,309 $
-
-
-
$
$
$
$
$
The Canadian Federal and provincial statutory income tax rate decreased to 25.25% due to legislated
changes.
The Company’s unrecognized deferred tax assets are as follows:
Unrecognized deferred income tax assets:
Non-capital losses
Investments
Exploration and evaluation assets
Share issue costs
Other
Total unrecognized deferred income tax assets
June 30,
2013
June 30,
2012
$
$
505,764
1,646,399
5,360,872
233,711
692,579
8,439,325
$
$
2,091,908
-
5,096,394
318,124
602,985
8,109,411
In assessing the recoverability of deferred tax assets other than deferred tax assets resulting from the initial
recognition of assets and liabilities that do not affect accounting or taxable profit, management considers
whether it is more likely than not that some portion or all of the deferred tax assets will be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible.
Page 31
Mirasol Resources Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Year Ended June 30, 2013
Canadian Funds
Deductible temporary differences, unused tax losses and unused tax credits:
Non-capital losses
Resource properties
Investments
Share issue costs
Other
June 30,
2013
June 30,
2012
Expiry date
Range
$
1,583,734 $
16,859,992
12,664,608
898,888
2,157,315
See below
7,462,108
15,266,038 Not applicable
- Not applicable
2014 - 2016
1,272,494
1,801,496 Not applicable
During the year ended June 30, 2013, the Company utilized all its Canadian non-capital loss carry-forwards
in the amount of $5,929,897 against taxable income.
The company has non-capital loss carry-forwards of approximately $1,583,734 that may be available for tax
purposes. The loss carry-forwards are principally in respect of Argentine and Chilean operations and expire
as follows:
2012
2013
2014
2015
2016
2017
2018
2019
No-expiry
Argentina
-
227,327
740,164
8,765
10,134
1,717
7,473
256,261
-
$
1,251,841 $
Chile
-
-
-
-
-
-
-
-
331,893
331,893
16. Subsequent Event
i. On September 11, 2013, the Company signed a binding Letter Agreement with First Quantum Minerals
Ltd. ("First Quantum") which permits First Quantum to a earn a 55% interest on the Rubi property by
expending US $6.5 million over four years and US $1.2 million in staged cash payments. The exploration
expenditure commitment during the first year is US $1.5 million.
ii. On October 7, 2013, the Company granted 30,000 incentive share options to a consultant. The options
are exercisable at $1.18 per common share for the period of three years from the date of grant.
Page 32
Form 51-102F1
Management Discussion and Analysis
For Mirasol Resources Ltd
Introduction
The Management Discussion and Analysis (“MD&A”) is prepared as of October 22, 2013 and is
intended to supplement Mirasol Resources Ltd.’s (“Mirasol” or the “Company”) consolidated
financial statements for the year ended June 30, 2013. All financial information, unless
otherwise indicated, has been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All
dollar amounts referenced, unless otherwise indicated, are expressed in Canadian funds.
The following discussion of the Company’s financial condition and results of operations should
be read in conjunction with its consolidated financial statements and related notes for the year
ended June 30, 2013. This section contains forward-looking statements that involve risks and
uncertainties. The Company’s actual results may differ materially from those discussed in
forward-looking statements as a result of various factors, including those described under
“Forward-Looking Information”.
Forward-Looking Information
This MD&A contains certain forward-looking statements and information relating to Mirasol that
are based on the beliefs of its management as well as assumptions made by and information
currently available to the Company. When used in this document, the words “anticipate”,
“believe”, “estimate”, “expect” and similar expressions, as they relate to Mirasol or its
management, are intended to identify forward-looking statements. This MD&A contains forward-
looking statements relating to, among other things, regulatory compliance, the sufficiency of
current working capital, and the estimated cost and availability of funding for the continued
exploration and development of the Company’s exploration properties. Such statements reflect
the current views of Mirasol with respect to future events and are subject to certain risks,
uncertainties and assumptions. Many factors could cause the actual results, performance or
achievement of the Company to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking statements.
Overview
Mirasol (TSXV-MRZ) is a precious metals exploration and development company focused on
the discovery and acquisition of new, high-potential metals deposits in the Americas. Minera Del
Sol S.A., Cabo Sur S.A., Australis S.A., and Nueva Gran Victoria S.A., the Company’s
subsidiaries in Argentina, and Minera Mirasol Chile Limitada, the Company’s subsidiary in Chile,
currently hold 100% of the rights, or applications in progress, over twenty exploration projects in
Patagonia and ten early stage precious metal prospects in northern Chile. The Company offers
shareholders access to growth from the early stages, a portfolio of 100%-owned high quality
projects in various stages of exploration, and a focus on emerging regions with high potential for
discovery.
1
Highlights for the Year Ended June 30, 2013
The Company’s joint venture partner and operator of its Joaquin Project, Coeur Mining Inc.
(previous, Coeur d’Alene Mines) (“Coeur”) filed the second National Instrument 43-101 (“NI 43-
101”) Technical Report resource estimate for the Joaquin Silver-Gold Project in Santa Cruz
Province, Argentina on August 7, 2012. The resource estimate includes 38.4 million ounces of
silver and 39,600 ounces of gold in the Measured and Indicated categories, and 31.3 million
ounces of silver and 19,400 ounces of gold in the Inferred category. Coeur held a vested 51%
interest in the Joaquin Project since November, 2010.
Pursuant to the Company's share bonus plan, approved by the TSX-V in 2007, Mirasol issued
500,000 common shares in relation to the updated resource estimate for the Joaquin silver-gold
deposit published in August 2012. The plan allows for issuance of a discovery bonus comprising
common shares to the directors, officers, employees, and consultants who made significant
contributions to the discovery of an ore body containing at least 500,000 gold equivalent
ounces. 375,000 of the 500,000 common shares of the Company were issued to the directors
and officers of the Company.
On December 21, 2012, the Company sold its remaining 49% interest in the Joaquin Project to
Coeur for a total consideration of $59,652,000 (US $60,000,000). One half of the purchase
consideration was paid in cash, of which $28,831,815 (US $29,000,015) was received by the
Company upon closing of the transactions and the remaining amount of $994,200 (US
$1,000,000) was held back for two months by Coeur to cover any potential taxes on transfer of
relevant ownership in Argentina. A total of $972,515 (US $925,147) of this amount was received
by the Company on July 12, 2013. The remaining one half of the purchase consideration was
paid by the issue of 1,310,043 shares of unregistered common stock of Coeur, based upon a 10
day volume-weighted average price of US $22.90 per share. The common shares of Coeur
received as partial consideration were restricted from trading as defined under Rule 144 of the
United States Securities Act of 1933, for a period of six months, with expired on June 21, 2013.
The sale of the Company’s 49% interest in the Joaquin Project to Coeur resulted in the
recognition of a pre-tax accounting gain of $58,990,546 during the year.
The Company announced initial gold and metal assay results from trenches on its 100%-owned
Titan prospect in northern Chile. Surface geochemical results over a 600 x 800 metre area and
trench assays showed gold and copper-molybdenum anomalous mineralization related to a
gold-bearing high sulphidation epithermal system. The Company conducted a 15 hole,
3,200metre reverse circulation drill program to test several gold targets and covered
geophysical targets.
Mirasol completed a first-pass metallurgical testing of seven quartz vein shoots at the Virginia
vein system. Non-optimized recoveries for higher grade mineralized vein material, using two
conventional technologies of agitated leach and flotation, yielded silver recoveries of 75% -
81%, which fall within expected recoveries for similar deposits. Metallurgical testing on lower
grade material is continuing.
The Company completed a 25 hole, 2,599 metre diamond drill campaign and second phase
1,216 metre trenching program at the Rio Seco prospect at its 100% owned Claudia gold silver
project.
The Company announced initial surface chip results from its 100% owned Atlas gold-silver
project in northern Chile. Surface rock chip samples returned assay results of up to 7.45 grams
per tonne gold and 6.39 grams per tonne silver.
2
The Company granted a total of 1,125,000 stock options under its incentive stock option plan to
certain employees and consultants during the year. 145,000 incentive stock options are
exercisable at $2.34 per common share for a period of five years until September 26, 2017,
while 980,000 incentive stock options are exercisable at $1.28 per common share for a period of
five years until May 14, 2018.
Mr. Borden Putnam III was elected to the Company’s Board of Directors at the Annual and
Special meeting held December 18, 2012.
The Company modified the terms of incentive stock options, originally granted on March 23,
2011, revising the exercise price to $3.32 from the original price of $6.25 per share, which was
subsequently approved by shareholders at the Annual and Special Meeting on December 18,
2012
Effective April 2, 2013, Mr. Douglas B. Silver, the initial independent director of the Company
resigned from the Company’s board of directors to pursue his primary business commitments.
Highlights Subsequent to the Year Ended June 30, 2013
On September 11, 2013, the Company signed a binding Letter Agreement with First Quantum
Minerals Ltd. ("First Quantum") which permits First Quantum to a earn a 55% interest on the
Rubi property by expending US $6.5 million over four years and US $1.2 million in staged cash
payments. The exploration expenditure commitment during the first year is US $1.5 million
which will include conducting a magnetic survey of the claims and 3,000m of drilling. After earn-
in, First Quantum’s participating interest may be increased to 65% on completing an NI 43-101
compliant resource estimate and preliminary economic assessment on a minimum size
resource of one million tonnes of contained Cu. First Quantum may further increase its interest
to 75% by declaring a “decision to mine” and providing mine financing at commercial terms if
requested by Mirasol. Financing terms include interest calculated at LIBOR + 4% and
repayment of Mirasol’s proportional mine finance from 50% cash flow.
On October 7, 2013, the Company granted 30,000 stock options under its incentive stock option
plan to a consultant. The options are exercisable at $1.18 per common share for a period of
three years until October 7, 2016
Activities on Mineral Projects
Activities during the year ended June 30, 2013 were focused on exploration activities on the
Company’s gold-silver prospects and acquisition evaluations in Santa Cruz Province, Argentina,
and northern Chile.
The Company carries out “grass-roots” exploration for gold and silver in Argentina, Chile, and
elsewhere in the Americas. Properties are advanced through exploration to bring the projects to
a stage where the Company can attract the participation of major resource companies having
the expertise and financial capability to take such properties to commercial production. At
present, Mirasol has an option agreement with First Quantum to earn 55% interest in the
Company’s Rubi property. Mirasol holds a 100% interest in all other properties.
The Company plans to undertake joint ventures on several properties in Argentina. In addition,
the Company has progressed its generative and reconnaissance precious metals exploration
program in northern Chile.
3
Generative Exploration
Generative exploration is a key strategy employed by Mirasol for identifying and acquiring new
prospects. To identify and capitalize on a good quality prospect, experienced professionals are
needed to ensure that the right opportunity is taken at the right time. Costs of generative
exploration are those costs not attributable to a specific Mirasol project. When Mirasol defines a
project as a distinct exploration target, it is then accounted for as a separate project. Costs of
generative exploration totalled $11,554 for the year ended June 30, 2013 (2012 - $98,763), a
decrease of $87,209 from costs incurred in the prior year due to the Company’s exploration
focus on specific projects in the current fiscal year. Exploration activities in Chile and Argentina
are managed from the Company’s Mendoza, Argentina exploration office. Legal and logistical
matters in Chile are managed from Santiago, Chile.
Rubi Property, Chile
The Rubi copper property in northern Chile, covering more than 14,000 hectares, is strategically
located 22 km southwest of, and adjacent to, El Salvador, one of Chile’s giant porphyry-copper
producing districts, operated by Codelco, the Chilean state mining company. The Rubi property
was staked in December 2006 and in 2008 was enlarged, and is located in the Eocene-
Oligocene metallogenic belt which hosts some of the world’s largest porphyry copper deposits.
During 2008, Mirasol consolidated its mineral land position at Rubi and conducted additional
detailed mapping, sampling and re-interpretation of the area’s geology. An altered and
mineralized lithocap (the “Lithocap prospect”) returned copper and gold anomalies in surface
and stream sediment samples and indicate the potential for a porphyry copper (gold) system to
exist under partial gravel cover (News release dated June 12, 2007). The Portezuelo prospect is
an outcropping copper mineralized stockwork and vein system with drill-ready targets.
The Rubi property has been brought through "mensura", the most secure mineral property
stage.
On September 11, 2013, the Company signed a binding Letter Agreement with First Quantum
Minerals Ltd. ("First Quantum") which permits First Quantum to a earn a 55% interest on the
Rubi property by expending US $6.5 million over four years and US $1.2 million in staged cash
payments. The exploration expenditure commitment during the first year is US $1.5 million to
include a magnetic survey of the claims and 3,000m of drilling. After earn-in, First Quantum’s
participating interest may be increased to 65% on completing an NI 43-101 compliant resource
estimate and preliminary economic assessment on a minimum size resource of one million
tonnes of contained Cu. First Quantum may further increase its interest to 75% by declaring a
“decision to mine” and providing mine financing at commercial terms if requested by Mirasol.
Financing terms include interest calculated at LIBOR + 4% and repayment of Mirasol’s
proportional mine finance from 50% cash flow.
Titan Property, Chile
The Titan property is 100% held and was staked by the Company as part of its Miocene Arc
exploration program and comprises 5500 hectares. Mirasol conducted surface trenching and
published rock chip channel trench geochemical results on January 21, 2013, as part of its first
pass exploration.
Initial reconnaissance samples from the project returned assays up to 1.60 g/t gold from
outcrops and small hand-dug pits. Mirasol also completed a 3,285 metre mechanical trenching
program which defined a surface gold anomaly at Titan in excess of 700 metres by 660 metres
wide. Uncut assays from the trenches defined multiple intervals in-excess of 100 metres in
4
length of anomalous gold mineralization, with the best interval being 194 metres at 0.41 g/t
gold. Applying a 0.1 g/t gold cut-off to these results, returned better intervals of 132 metres at
0.55 g/t gold, 80 metres at 0.56 g/t gold, 24 metres at 0.95 g/t gold and 10 metres at 2.93 g/t
gold.
Mirasol completed a 17.2 square kilometre high-resolution ground magnetic survey and a 26.6
line-kilometre pole-dipole (PDP) induced polarization (IP) electrical geophysical grid at the
project (news release March 1, 2013). Results from these ground geophysical surveys are
consistent with the Company's geological concept and model of an epithermal gold-bearing
zone positioned over a postulated mineralized intrusion at depth. Such systems are known to
host economic precious and base metals mineralization elsewhere in the area.
During the year ended June 30, 2013, the Company completed a 3,200 metre reverse
circulation drill program at Titan to test oxide gold targets and covered geophysical targets, with
results pending. This drill program confirmed the presence of a gold-mineralized high-
sulphidation epithermal system at Titan.
Atlas Property, Chile
The Atlas property is 100% owned, 7,500 hectare gold-silver property, located adjacent to the
Company’s Titan gold project in the Miocene-aged volcanic belt of northern Chile. Mineralization
at Atlas is related to a large gold-silver bearing, high-sulphidation epithermal alteration system.
This type of system hosts large, profitable mines in the Miocene-aged mineral belt of Chile;
including Kinross's La Coipa high sulphidation silver-gold mine (located 150 km south of Atlas
and Titan).
Two separate areas of at surface precious metal mineralization have been identified to date
within the Atlas project: the Atlas Gold Zone (“AGZ”) and the Atlas Silver Zone (“ASZ”) where
AGZ is located 2 km north of ASZ. Five trenches have been completed at these prospects as a
partial test of rock chip gold and silver anomalies.
Preliminary geological interpretation of the results obtained suggests that mineralized zones at
AGZ and ASZ extend under thin cover beyond the limit of current trenching. The distribution of
gold-silver anomalous surface rock chips highlight other targets in the AGZ and ASZ prospects
that warrant trenching to test for additional mineralization. PIMA (hand held mineral
spectrometer) analysis of the mineralized trench samples shows an advanced argillic alteration
assemblage typical of high sulphidation epithermal precious metal systems.
Mirasol is planning a 2013-2014 southern hemisphere summer exploration program at Atlas,
aimed at testing for extensions to the AGZ and ASZ anomalies, which will include geochemical
sampling of known prospects and reconnaissance of the previously unexplored parts of the
extensive Atlas alteration system.
Chile Portfolio Properties
Mirasol staked nine properties in an underexplored region of northern Chile during 2010 – 2012,
including the Titan and Atlas properties. The new Chile gold exploration portfolio properties
comprise a total of 20,500 hectares of 100%-held first-tier concession rights. In 2012-2013,
Mirasol’s exploration focused on systematic in-house reconnaissance mapping, sampling and
geophysical surveys (IP and ground magnetics). Several early stage properties have been
mapped and sampled, with accompanying reconnaissance geophysics to focus future
exploration efforts.
5
Joaquin Property, Argentina
The Joaquin Property is located in the central part of Santa Cruz Province and comprises
exploration “cateos”1 and “manifestaciones de descubrimiento”2. The Joaquin Project was part
of the 2006 joint venture with Coeur; the project operator.
A second resource was announced on August 7, 2012 and a NI 43-101 Technical Report was
published on September 21, 2012 on www.sedar.com. The new resource comprises:
August 7, 2012 Resources Joaquin Project Totals
Mineral Type
and Category
Tonnes
(000)
Silver
g/t
Silver oz.
(000)
Gold
g/t
Gold oz.
Total of Oxides & Sulphides
Measured
103.1
5,600
Indicated
96.8
34,600
97.6
39,600
Meas. + Indic.
19,400
123.7
Inferred
Mineral resources that are not mineral reserves have not demonstrated economic viability.
Due to rounding of insignificant figures as required by best practices, sums of tonnes and
ounces may not appear to total correctly.
5,500
33,000
38,400
31,300
1,650
10,600
12,300
7,900
0.11
0.10
0.10
0.07
Metal prices used were US$30 /oz. Ag and US$1,300 /oz. Au. Only silver mineralization was included in the in-pit
calculation.
Oxide mineral resources estimated using a cut-off grade of 33 g/t Ag Eq and sulphide mineral resources with a cut-off of
51.9 g/t Ag Eq. within Whittle® surface mine designs.
Ag Eq (silver equivalent) = Ag grade in grams per tonne + Au grade in grams per tonne x 65.
Mineral resources estimated by the consulting firm of NCL Ingeniería y Construcción Ltda. in Santiago, Chile.
Mineral resources that are not mineral reserves have not demonstrated economic viability.
On December 21, 2012, the Company sold its remaining 49% interest in the Joaquin Project to
Coeur for a consideration of US $60,000,000. One half of the purchase consideration was paid
in cash (US $29,000,015 with US $1,000,000 holdback) and the balance was paid by the issue
of 1,310,043 shares of unregistered common stock in the capital of Coeur, based upon a 10 day
volume-weighted average price of US $22.90 per share. Mirasol has no further ownership in the
Joaquin Project.
Virginia Project, Santa Rita Property, Argentina
The Santa Rita property comprises “manifestaciones de descubrimiento” and exploration
“cateos”, located in the northwestern sector of the Deseado Massif volcanic terrain.
During fiscal 2010, a new, high grade, silver vein zone was discovered at the Santa Rita
property, named the Virginia zone. On January 6, 2010, the Company reported initial results
from 30 chip samples taken over a two kilometre length of the Julia Vein sector. The average
silver grade of the initial 30 chip samples was 645 grams/tonne (“g/t”) silver from the Julia Vein.
On February 16, 2010, Mirasol reported assays ranging up to 3,170 g/t silver from rock chip
sampling of the Julia vein and surrounding veins.
Sawn channel samples (March 4, 2010) from all 58 Julia vein channels averaged 805 g/t silver.
Ground geophysical surveys, including ground magnetic and gradient array IP were completed.
1
“Cateo” is the initial stage of exploration mineral property which can be staked in Argentina. The maximum size of an individual
cateo is 10 km by 10 km.
2 “Manifestacion de descubrimiento”, or simply “M.D.” is the second level of mineral property in Argentina, after Cateo, and must be
registered with a “discovery” location. An M.D. may be converted into the third level, "mina" on completion of certain requirements.
6
Additional press releases in May and June, 2010, confirmed significant silver values from
additional veins parallel and surrounding the Julia vein called the Ely, Naty, Margarita and
Roxane veins. Outlying veins were discovered east and northwest of the principal vein zone.
The Virginia discovery has more than 9 kilometres of exposed or interpreted vein length.
Drilling in 2010 through mid-2011 systematically tested 1,780 metres of strike length of the
9,600 metres length of veining outlined at the Virginia Silver District, totaling 9,266 metres of
diamond drilling in 117 holes. Drilling defined four silver deposits at Julia North, Julia Central,
Julia South and Naty Vein with potentially economic silver grades and widths, at a nominal drill
spacing of 50 by 50 metres or closer. Mirasol re-drilled a total of 22 holes to improve percentage
core recovery. Results from the final 14 re-drilled holes included significant silver intersections
with excellent core recovery, among them hole VG-6A containing 24.27 metres of 326 g/t silver
with 96 percent core recovery, including 5.48 metres of 1,038 g/t silver with 98 percent recovery
from the Julia North deposit. At Julia Central, VG-50A contains 28.25 metres of 220 g/t silver
with 98 percent recovery including 18.11 metres of 303 g/t silver with 96% recovery. In addition,
encouraging intersections from scout holes drilled at Naty Extension, Ely South and Martina
(news release July 18, 2011) indicated several zones with a high priority for follow-up drilling.
In October 2011, the Company commenced a new season of diamond drilling with the focus to
test new veins, vein extensions, and expand the project’s resource potential for additional
shallow oxide silver deposits. The 2011-2012 programs expand drilling in the areas successfully
tested by scout holes. Highlights (news release January 26, 2012) at Naty Extension included
1.5 metres of 797 g/t silver in VG-096 and 2.0 metres of 214 g/t silver including 0.3 metres of
1,195 g/t silver in VG-097. Martina vein highlights included 3.8 metres of 155 g/t silver within a
broad intercept of 25.4 metres grading 61 g/t silver in VG-119B, and 10.9 metres of 63 g/t silver,
including 1.1 metres of 141 g/t silver, in VG-122A. Ely South highlights include 21.8 metres of
79 g/t silver including 1.9 metres of 495 g/t silver in VG-113, and 18.2 metres of 63 g/t silver
including 4.5 metres of 109 g/t silver in VG-111. VG-127 intersected 26.9 metres, with an
estimated true thickness of 15.0 metres, containing 135 g/t silver, which included 1.19 metres of
1,760 g/t silver. VG-138 contains 28.0 metres with an interpreted true thickness of 18.4 metres,
grading 195 g/t silver, including 4.6 metres of 493 g/t silver. Final results from Phase IV drilling
were published on June 25, 2012.
On February 7, 2013, Mirasol announced the results of first-pass metallurgical testing of seven
quartz vein shoots at the Virginia vein system. Non-optimized recoveries for higher grade
mineralized vein material, using two conventional technologies of agitated leach and flotation,
yielded silver recoveries of 75% - 81%, which fall within expected recoveries for similar
deposits. Metallurgical testing on lower grade material is continuing.
In 2013, Mirasol undertook regional reconnaissance of the Virginia - Santa Rita property utilizing
mapping and geophysical technology to successfully identify additional prospective targets on
the property.
Claudia Property, Argentina
The large Claudia Property comprises exploration “cateos” located in the south-central part of
Santa Cruz Province, beginning at the limit with, and for approximately 30 km south of
AngloGold Ashanti’s producing Cerro Vanguardia gold-silver mine. Initial reconnaissance assay
results from systematic channel sampling returned values reaching 3.28 g/t gold with 15.33 g/t
silver over 1.7 metres, and individual vein results up to 14.2 g/t Au with 229 g/t Ag over 0.7
metres were obtained in the “J vein” sector of the Rio Seco Zone. (Further Claudia Project news
was published dated on August 3, 2006, November 1, 2007, January 8, 2009, and June 1,
2009).
7
Mirasol signed a joint venture agreement with Hochschild Mining Group in February 2007, who
completed 3,871 metres of core drilling by December 2007, and 3,011 metres of reverse
circulation drilling in December 2008. Drilling was designed to test both outcropping Cerro
Vanguardia-style quartz veins and covered geophysical targets. Although multiple mineralized
targets were intersected, on April 7, 2009 Hochschild returned 100% of the property to the
Company.
The Company’s 2011-2012 exploration at Claudia focused on four separate prospects: the
Laguna Blanca, Ailen, the 15 kilometre Curahue Trend in the west, and the Rio Seco vein zone
in the east. At Rio Seco, Mirasol completed geological mapping, rock chip sampling, excavation
of more than 53 trenches, a 10.7 square kilometre gradient array IP geophysical survey, and
11.1 line kilometres of pole-dipole IP geophysics (news release March 5, 2012). Rock chip
assays returned up to 20.1 g/t gold and 34 g/t silver, and saw-cut channel and trench sample
composites returned 0.7 metres at 13.9 g/t gold and 229 g/t silver, and 10.5 metres of 1.9 g/t
gold and 22 g/t silver from mineralized zones. A geophysical survey at the Curahue prospect
(news release April 18, 2012) defined a 10 km long zone which hosts epithermal cobbles in an
alluvial terrace that partially covers the zone, which returned assays up to 2.0 g/t gold and
213.0g/t silver. Trenching in this zone geophysical anomalies, and returned assays up to 0.9
metres at 4.7 g/t gold with 120.0 g/t silver from veins in bedrock, and up to 26 metres at 0.45 g/t
gold and 1.9 g/t silver from a veinlet zone.
A 25 hole, 2,599 metre diamond drill campaign was carried out at the Rio Seco Zone in May
2012, and targeted gold-silver anomalies exposed in shallow trenches and in vein outcrop and
float material (news release March 4, 2013). Nine of the 25 diamond drill holes returned
anomalous gold and silver assays. Better drill results included individual assays of up to 0.83
metres at 6.59 g/t gold and 139.3 g/t silver (9.12 g/t gold equivalent) and broad intersections of
anomalous gold and silver up to 15.3 metres of 0.29 g/t gold and 50.9 g/t. The majority of the
anomalous drill results are clustered around the structural intersection of the “Loma Alta Trend”
and the “Rio Seco Main” veins
Phase 2 trenching program completed in 2013 at Rio Seco totalling 1,216 metres in 31 trenches
(news release March 4, 2013). Trenching successfully extended the Loma Alta vein trend for an
additional 900 metres to the southwest for 3 kilometres total length, and returned assays of up
to 6.9 g/t gold and up to 448 g/t silver, which defined multiple new drill targets.
The Curahue, Curahue West and Ailen zones were significantly expanded during 2013.
Additional IP geophysical surveys, mapping and trenching indicate additional vein systems
occur at these targets.
Espejo Property, Argentina
The Espejo property was staked in April 2006 and adjoins Pan American Silver’s Manantial
Espejo silver-gold mine to the south and southeast, and hosts the on-strike extension of
structures. . Exploration work includes remote sensing (satellite image) interpretation, ground
magnetic survey, gradient array IP geophysical survey, and geochemical sampling which define
multiple coincident resistive and conductive geophysical anomalies on strike with the principal
vein structures under development and production at the Manantial Espejo mine. Additional
exploration cateos were staked in 2008 which expand the property to the south (news release
June 26, 2008).
An exploration option agreement on October 4, 2012 with Pan American Silver provided for an
option Pan American Silver to earn a 51% interest in the property by expending US$4 million
over four years, to reach a 61% interest by completing a NI 43-101 compliant feasibility study,
8
and then to further increase the interest to 70% by providing mine financing at commercial
terms. During the year ended June 30, 2013, Pan American Silver initiated drilling on the
property, however the joint venture option was terminated in July 2013 due to budget
constraints.
La Curva Property, Argentina
The La Curva property, comprises four exploration cateos, is located in the eastern Deseado
Massif and has year round access from the paved national highway and secondary roads. In
2013, surface mapping, geophysical surveys and systematic geochemical sampling define
rhyolitic domes and two gold-anomalous targets on the east side with associated gold-bearing
quartz veins. The two principal targets include the Loma Arthur vein-dome system and Cerro
Chato, which hosts gold-rich veins and silicified breccias (news releases of April 1, 2008 and
February 24, 2009). During 2013, exploration focused on the western part of the property where
gold and pathfinder element geochemical anomalies and defined several new gold-anomalous
targets. Ground magnetic and IP geophysical surveys support interpretation leading to
discovery of multiple new gold-anomalous dome targets. The La Curva property is available for
joint venture.
Sascha Property, Argentina
The Sascha property hosts a gold and silver mineralized epithermal quartz vein system of low-
sulphidation style which comprises four cateos and two “manifestaciones de descubrimiento”.
The Sascha property was initially included in the Coeur joint venture signed in 2006. In 2007
Coeur completed 19 diamond drill holes totaling approximately 2,500 metres and in October
2008 tested the northwest extension of the Sascha Main mineralized vein structure. Coeur
returned the property to Mirasol on October 31, 2008. All environmental reclamation
requirements have been completed. Additional mapping and new interpretation of the drill
results have defined a number of new prospective exploration targets at Sascha. The Sascha
Property is available for joint venture.
Nico Property, Argentina
The Nico property was initially staked in 2004 and expanded in 2005 and 2006. The mineral
property is held as “manifestaciones de descubrimiento” and is located 40 km north of Coeur’s
Martha silver mine, and crosses a provincial highway. The central mineralized zone at Nico
hosts a north-south trend of quartz veinlets and breccia and exhibits a silver-gold-polymetallic
anomaly. The Nico main mineralized zone extends as a traceable geophysical structure for 2.5
km in length. During the 2007-2008, a prospect-scale ground magnetic survey and gradient
array IP geophysical survey were completed over key targets. New geophysical interpretation
identified a felsic dome field which has not been drill tested.
On February 12, 2009, the Company signed an exploration option agreement with Coeur for the
exploration of the Nico gold-silver project to earn an initial 55% in the project by expending a
total of US$2,300,000 on exploration over four years and making cash payments totaling
US $250,000 (press release of February 12, 2009). Coeur drilled eleven shallow diamond holes
in late 2009 at the Nico Main target and reported best results of 8.23 metres containing 0.43 g/t
gold and 27 grams silver, including 1.25 metres of 2.21 g/t gold and 200 g/t silver in DDH-11.
Coeur returned the Nico property to Mirasol in January 2010, and it is available for joint venture.
9
La Libanesa Property, Argentina
The La Libanesa property hosts a hydrothermal breccia hill, “Cerro Plomo”, which contains high
grade lead-silver-gold anomalies. Cerro Plomo is hosted in a unique rhombic structural block
and is associated with radial dikes and peripheral gold-bearing veins. La Libanesa was staked
in 2006 and the property was expanded to five cateos during 2007. Trenching, geochemical
sampling, mapping, and a Mobile Metal Ion (“MMI”) geochemical survey have been completed
with a regional interpretation of La Libanesa’s unique geological setting.
In 2010, an AMT ground geophysical survey identified a strong resistive feature near Cerro
Plomo. An MMI soil survey identified an extended area reaching at least 400 metres east and
west of Cerro Plomo which show highly elevated base metals with silver and gold anomalies
(News release dated February 24, 2009). Gold-silver bearing quartz vein material has been
mapped which forms a radial distribution around Cerro Plomo.
The Libanesa property is available for joint venture.
Other Properties
Mirasol holds a number of early stage exploration properties which are prospective for gold
and/or silver mineralization in southern Argentina and northern Chile.
Mirasol’s Results of Operations
For the Year Ended June 30, 2013 as compared to the Year Ended June 30, 2012
The Company’s net income for the year ended June 30, 2013 (“Current Year”) was $33,157,809
or $0.76 per share (Basic and Diluted) compared to a net loss of $16,142,997 or $0.40 per
share (Basic and Diluted) for the year ended June 30, 2012 (“Comparative Year”).
The net income generated in the year is attributable to the gain recorded on the sale of the
Joaquin Project. The Company reached an agreement with Coeur during the Current Year to
sell its 49% interest in the Joaquin Project, through the sale of its 100%-owned Argentine
subsidiary holding the interest in the Project, for $59,652,000 (US $60,000,000). The proceeds,
netted against the transaction costs and working capital deficiency of the Company’s subsidiary
disposed of, for a total of $661,454, resulted in an accounting gain of $58,990,546. The
Company did not have any acquisition costs capitalized for the Joaquin Project. $29,825,985 of
the purchase price was paid by Coeur with 1,310,043 shares of its common stock, which were
classified by the Company as financial instruments at fair value through profit or loss. These
shares were valued at $18,315,659 on June 30, 2013 with loss of $12,664,608 attributed to the
decrease in fair value and a gain of $1,154,282 to foreign exchange in the Current Year.
The Company also incurred lower share-based payments expense ($1,065,617 in the Current
Year compared to $3,345,027 during the Comparative Year) as a result of significantly more
incentive stock options granted with higher fair values during the year ended June 30, 2012.
The Company’s exploration costs also decreased in the Current Year to $8,068,960 compared
to $11,599,329 in the Comparative Year, a decrease of $3,530,369. These costs were higher in
the Comparative Year as the Company commenced a new diamond drilling season on its
Virginia Project, where majority of the resources were expended during the year ended June 30,
2012. During the Current Year, the Company increased its non-drilling exploration expenditure
in Chile and continued its exploration on its Claudia Project, La Curva Project and the Virginia
Project in Argentina. Also during the Current Year, the Company recognized a foreign exchange
gain of $2,955,515 compared to a loss of $197,870 in the Comparative Year, primarily due to
10
the strengthening of the US dollar and the Company’s higher investment in US dollar
denominated financial assets (primarily cash held in US funds and Coeur shares) during the
Current Year.
The additional income and a lower loss above were offset by an increase in management fees
during the Current Year of $1,816,700 ($2,101,022 compared to $284,322 during the year
ended June 30, 2012). The increase pertained to the issuance of common shares by the
Company under its share bonus plan to management, including certain directors, for their
significant contributions in the discovery of a deposit of more than 500,000 gold equivalent
ounces at the Joaquin Project and a bonus to senior management with significant contributions
in effecting the sale of the Joaquin Project to Coeur. The Company issued 500,000 shares of its
common stock, valued at $2.05 per share under the plan for a total value of $1,025,000, and
accrued a bonus of $630,720 (US $600,000), respectively. The Company also recorded an
estimated income tax expense of $4,123,309 in the Current Year, being a provision for
estimated corporate income tax payable on the Company’s 2013 taxable income.
All other costs remained consistent with those incurred during the year ended June 30, 2012.
For the Three Months Ended June 30, 2013 as compared to the Three Months Ended
June 30, 2012
The Company’s net loss for the three month period ended June 30, 2013 (“Current Quarter”)
was $9,934,313 or $0.22 per share compared to a net loss of $3,537,826 or $0.08 per share for
the three month period ended June 30, 2012 (“Comparative Quarter”), an increase in net loss of
$6,396,487.
The increase in loss is primarily attributable to the change in market value of Coeur’s common
shares, acquired by the Company in conjunction with the sale of its 49% interest in the Joaquin
Project during the year ended June 30, 2013. The Company received 1,310,043 shares of
common stock of Coeur as partial consideration of the sale. The common shares of Coeur,
designated as financial instruments held at fair value through profit or loss, were marked to their
market value on June 30, 2013 and the resultant loss of $7,397,468 was recorded in the
Company’ statement of income/loss and comprehensive income/loss.
The Company’s management fees increased during the Current Quarter by $655,710 ($740,290
compared to $84,580 during the Comparative Quarter) as a result of additional bonus to senior
management for their contributions in connection with the sale of the Joaquin Project to Coeur.
The Company also recorded an additional share-based payments expense of $679,718
primarily attributable to the estimated fair value of the 980,000 incentive stock options granted
during the Current Quarter.
The above increase in costs was offset by a decrease in the Company’s exploration costs in the
Current Quarter of $321,223 ($2,929,263 compared to $3,250,486 in the Comparative Quarter)
These costs were higher in the Comparative Quarter as the Company commenced a new
diamond drilling season during fiscal 2012 on its Virginia Project, where majority of the
resources were expended during the period. During the Current Quarter, the Company shifted
its non-drilling exploration focus to its projects in Chile, namely Titan. Also during the Current
Quarter, the Company recognized a foreign exchange gain of $1,447,724 compared to a gain of
$21,296 in the Comparative Quarter, primarily due to the Company’s increased investment in
US dollar denominated financial assets (primarily cash held in US funds and Coeur shares). The
Company also revised its estimated income tax liability in the Current Quarter which reduced
the net loss by a further 576,691.
11
All other costs remained consistent with those incurred during the three months ended June 30,
2012.
Selected Annual Information
The following table sets out selected annual financial information of the Company and is derived
from the Company’s consolidated financial statements for the years ended June 30, 2013, 2012
and 2011.
Sales
Income (loss) for the Period
Earnings (loss) per Share - Basic
$
$
$
Earnings (loss) per Share - Diluted $
Total Assets
Total Long-term Liabilities
Dividends Declared
$
$
$
Summary of Quarterly Results
2013
2012
2011
- $
- $
-
33,157,809 $ (16,142,997) $ (12,734,165)
0.76 $
0.76 $
(0.40) $
(0.40) $
(0.35)
(0.35)
51,712,505 $
10,888,209 $
10,509,892
- $
NIL $
- $
NIL $
-
NIL
The following table sets out selected unaudited quarterly financial information of Mirasol and is
derived from unaudited quarterly consolidated financial statements prepared by management in
accordance with IAS 34 and accounting policies consistent with IFRS.
Period
4th Quarter 2013
3rd Quarter 2013
2nd Quarter 2013
1st Quarter 2013
4th Quarter 2012
3rd Quarter 2012
2nd Quarter 2012
1st Quarter 2012
Revenues
$
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Income (Loss)
from Continued
Operations
$
(9,934,313)
(7,453,050)
52,371,426
(1,826,254)
(3,537,826)
(4,697,002)
(3,971,464)
(3,936,705)
Basic Income
(Loss) per Share
from Continued
Operations
$
(0.22)
(0.17)
1.22
(0.04)
(0.08)
(0.11)
(0.10)
(0.10)
Diluted Income
(Loss) per Share
from Continued
Operations
$
(0.22)
(0.17)
1.20
(0.04)
(0.08)
(0.11)
(0.10)
(0.10)
Quarterly results will vary in accordance with the Company’s exploration, investing and
financing activities.
12
Liquidity
The Company’s net working capital as at June 30, 2013 was $42,656,280 compared to a net
working capital of $7,070,129 at June 30, 2012. The cash and short-term investment and current
receivable and advances balances at June 30, 2013 were $30,398,215 compared to $8,055,336
at June 30, 2012. As at June 30, 2013 current liabilities were $6,057,594 compared to $985,207
at June 30, 2012.
On October 22, 2013, the Company has 44,155,661 shares issued and outstanding. The
Company also has 3,757,800 stock options, 2,000,000 private placement warrants and 200,000
Underwriters’ warrants outstanding with a weighted average exercise price of $2.99, $4.30 and
$3.30, respectively, which if were exercised in total, would allow the Company to raise
approximately $26.80 million.
Investing Activities
During the year ended June 30, 2013, the Company received $28,831,815 (net of holdback of
$994,200 (US $1,000,000) from sale of its 49% interest in the Joaquin Project. Other investing
activities consisted of the purchase of surface rights overlaying its Virginia project in Argentina
and purchase of mineral rights overlaying the Atlas (formerly Akira) property in Chile for a total
cash outlay of $208,212, funds invested in short-term deposits of $1,415,928 and also a
purchase of exploration equipment worth $25,462.The cash outlay for the purchase of Virginia
surface rights totaled $2,480,198 during the year ended June 30, 2012 and the Company also
expended $118,091 for purchase of exploration equipment during the Comparative Year. The
funds invested in short-term deposits of $997,830 during the year ended June 30, 2012 were
redeemed during the Current Year. The Company received interest from its funds held in banks
of $34,047 during the Current Year (2012 - $29,733).
Also during the year ended June 30, 2013, in addition to the cash proceeds, the Company
received common shares of Coeur worth $29,825,985 in conjunction with the sale of its 49%
interest in the Joaquin project, for a total purchase price of $59,652,000. The fair value of the
common shares of Coeur was determined to be $18,315,659 on June 30, 2013.
Financing Activities
During the year ended June 30, 2013, the Company received cash proceeds of $504,750 from
exercise of 955,000 incentive stock options. The Company also issued 500,000 shares of its
common stock as a discovery bonus to management, including certain directors, under its share
bonus plan.
During the year ended June 30, 2012, the Company closed a bought deal private placement
with underwriters and issued 4,000,000 units of the Company at a price of $3.30 per unit for
aggregate gross proceeds of $13,200,000. The Company paid the underwriters cash
commission of $792,000 and issued 200,000 common share purchase warrants for purchase of
common shares of the Company at a price of $3.30 per share. Total cost incurred by the
Company in relation to the private placement was $1,015,313, inclusive of cash commission fee
to the underwriters. The Company also received cash proceeds of $786,426 from exercise of
certain outstanding incentive stock options (20,000) and warrants (338,460).
13
Capital Resources
The Company has no operations that generate cash flow and its long term financial success is
dependent on management’s ability to discover economically viable mineral deposits. The mineral
exploration process can take many years and is subject to factors that are beyond the Company’s
control.
In order to finance the Company’s exploration programs and to cover administrative and overhead
expenses, the Company primarily raises money through equity sales and from the exercise of
convertible securities (share purchase options and warrants). Many factors influence the
Company’s ability to raise funds, including the health of the resource market, the climate for
mineral exploration investment, the Company’s track record and the experience and calibre of its
management.
With working capital of $42,656,280, the Company believes it has sufficient funds to meet its
administrative, corporate development and discretionary exploration activities over the next
twelve months. Actual funding requirements may vary from those planned due to a number of
factors. The Company believes it will be able to raise equity capital as required in the long term
but recognizes there will be risks involved that may be beyond its control.
Off-Balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements.
Transactions with Related Parties
Details of the transactions between the Company’s related parties are disclosed below.
Trading transactions
Certain of the Company’s officers and directors render services to the Company as sole
proprietors or through companies in which they are an officer, director, or partner.
The following companies are related parties through association of the Company’s directors and
officers:
Miller Thomson
Avisar Chartered Accountants
Global Ore Discovery
Nature of transactions
Legal fees
Accounting fees
Exploration costs and project management
fees
During the year, the Company incurred the following fees and expenses with related parties
Legal fees
Accounting fees
Exploration costs
Other operating expenses
2013
188,240 $
96,000
869,502
92,170
1,245,912 $
2012
160,966
86,750
746,795
62,802
1,057,313
$
$
14
Included in accounts payable and accrued liabilities at June 30, 2013 is an amount of $655,046
(June 30, 2012 - $95,395) owing to directors and officers of the Company and to companies
where the directors and officers are principal.
Compensation of key management personnel
Key management personnel include people having the authority and responsibility for planning,
directing, and controlling the activities of the Company as a whole.
The remuneration of the chief executive officer, vice president of exploration, exploration
manager, and the corporate secretary during the years ended June 30, 2013 and 2012 were as
follows:
Management compensation
Management bonus
Director’s fees
Share bonus
Share-based payments
Significant Accounting Policies
2013
414,403 $
630,720
2,000
768,750
522,586
2,338,459 $
2012
289,112
-
-
-
1,736,354
2,025,466
$
$
The details of the Company’s accounting policies are presented in Note 3 of the Company’s
consolidated financial statements for the year ended June 30, 2013. The following policies are
considered by management to be essential to the understanding of the processes and
reasoning that go into the preparation of the Company’s financial statements and the
uncertainties that could have a bearing on its financial results.
Exploration and Evaluation Assets
The Company capitalizes the direct costs of acquiring mineral property interests. Option
payments are considered acquisition costs if the Company has the intention of exercising the
underlying option.
Exploration and evaluation costs are charged to operations in the period incurred until such time
as it has been determined that a property has economically recoverable reserves, in which case
subsequent exploration and development costs are capitalized. Exploration costs include value-
added taxes because the recoverability of these amounts is uncertain.
15
Recent Accounting Pronouncements
Certain new standards, interpretations, amendments and improvements to existing standards
were issued by the International Accounting Standards Board (“IASB”) or International Financial
Reporting Interpretations Committee (“IFRIC”). The new standards, amendments to standards
and interpretations that been issued and that are applicable to the Company but not effective
during the ended June 30, 2013 are as follows:
a) IFRS 7 Disclosures: Transfers of Financial Assets (Amendment) has been amended to
enhance disclosures for financial assets. These disclosures relate to assets transferred
(as defined under IAS 39 Financial Instruments: Recognition and Measurement (“IAS
39”)). If the assets transferred are not derecognized entirely in the financial statements, an
entity has to disclose information that enables users of financial statements to understand
the relationship between those assets which are not derecognized and their associated
liabilities. If those assets are derecognized entirely, but the entity retains a continuing
involvement, disclosures have to be provided that enable users of financial statements to
evaluate the nature of, and risks associated with, the entity’s continuing involvement in
those derecognized assets. The standard has an effective date of January 1, 2013 with
early adoption permitted. The Company does not anticipate that this amendment will have
a significant impact on its financial statements.
b) IFRS 9 Financial Instruments: Classification and Measurement is the first part of a new
standard on classification and measurement of financial assets that will replace IAS 39.
IFRS 9 has two measurement categories: depreciated cost and fair value. All equity
instruments are measured at fair value. A debt instrument is recorded at depreciated cost
only if the entity is holding the instrument to collect contractual cash flows and the cash
flows represent principal and interest. Otherwise it is recorded at fair value through profit or
loss. The effective date for the amendment is January 1, 2015 and is applied
retrospectively. Early application is permitted. The Company is currently evaluating the
impact of this standard.
c) IFRS 10 Consolidated Financial Statements replaces IAS 27, Consolidated and Separate
Financial Statements, and requires all controlled entities to be consolidated based on a
single control model, whereby control is defined as the exposure to, or having rights to,
returns from its involvement in its investee, and the ability to affect those returns through is
power over the investee. The standard has an effective date of January 1, 2013 with early
adoption permitted. The Company is currently evaluating the impact of this standard.
d) IFRS 11 Joint Arrangements replaces the existing IAS 31, Joint Ventures. IFRS 11
provides for the accounting of joint arrangements by focusing on the rights and obligations
of the arrangement, rather than its legal form (as is currently the case). The Standard also
eliminates the option to account for jointly controlled entities using the proportionate
consolidation method. The standard has an effective date of January 1, 2013 with early
adoption permitted. The Company is currently evaluating the impact of this standard.
e) IFRS 12 Disclosure of
in Other Entities provides certain disclosure
Interests
requirements about subsidiaries,
joint ventures and associates, as well as
unconsolidated structured entities and replaces existing disclosure requirements. The
key features are the requirement to disclose judgements and assumptions made when
deciding how to classify involvement with another entity, interest that non-controlling
entities have in consolidated entities and the nature of the risks associated with interests
in other entities. This is effective for annual periods beginning on or after January 1,
16
2013, with early adoption permitted. The Company is currently evaluating the impact of
this standard.
f)
IFRS 13 Fair Value Measurement establishes a single source of guidance for fair value
measurements, when fair value is permitted by IFRS. The standard will not affect when
fair value is used, it just describes how to measure fair value. The standard provides a
single framework for measuring fair value, while requiring enhanced disclosures when
fair value is applied, establishes the definition of fair value as the “exit price” and clarifies
that the concepts of highest and best use and valuation premise are relevant only for
non-financial assets and liabilities. This is effective for annual periods beginning on or
after January 1, 2013, with early adoption permitted. The Company is currently
evaluating the impact of this standard.
g) IAS 27 Separate Financial Statements addresses accounting and disclosure
requirements for investments in subsidiaries, joint ventures and associates when an
entity prepares separate financial statements. This is effective for annual periods
beginning on or after January 1, 2013, with early adoption permitted. The Company is
currently evaluating the impact of this standard.
h) IAS 28 Investments in Associates and Joint Ventures has been amended and will
provide accounting and disclosure guidance for investments in associates and joint
ventures. This is effective for annual periods beginning on or after January 1, 2013, with
early adoption permitted. The Company is currently evaluating the impact of this
standard.
i)
IAS 32 Financial Instruments: Presentation updates the application guidance to clarify
some of the requirements for offsetting financial assets and financial liabilities on the
statement of financial position. This is effective for annual periods beginning on or after
January 1, 2014. The Company is currently evaluating the impact of this standard.
Significant Accounting Estimates and Judgments
The preparation of consolidated financial statements in accordance with IFRS requires that the
Company’s management make judgements and estimates and form assumptions that affect the
amounts in the financial statements and the Notes to those financial statements. Actual results
could differ from those estimates. Judgements, estimates and assumptions are reviewed on an
ongoing basis based on historical experience and other factors that are considered to be
relevant under the circumstances.
Significant accounting estimates and judgments are related to, but are not limited to, the
following:
a) Impairment of exploration and evaluation assets: The net carrying value of each mineral
license and capitalized exploration costs is reviewed regularly for conditions that are
indicators of impairment. This review requires significant judgment as the Company does
not have any proven and probable reserves that enable future cash flows to be
compared to the carrying values. Factors considered in the assessment of asset
impairment include, but are not limited to, whether there has been a significant adverse
change in the legal, regulatory, accessibility, title, environmental or political factors that
could affect the licenses’ value; whether there has been an accumulation of costs
significantly in excess of the amounts originally expected for the licenses’ acquisition,
development or cost of holding; whether exploration activities produced results that are
not promising such that no more work is being planned in the foreseeable future; and
17
whether the Company has the necessary funds to be able to maintain its interest in the
mineral license. As at June 30, 2013, the Company has concluded that impairment
conditions do not exist.
b) Share-based payments: The Company provides compensation benefits
its
employees, directors and officers through a stock option plan. The Company also grants
warrants in conjunction with private placements and as compensation for debt financing
arrangements. The fair value of each option award is estimated on the date of the grant
using the Black-Scholes option pricing model. Expected volatility is based on historical
volatility of the Company’s share price. The Company uses historical data to estimate
option exercises and forfeiture rates with the valuation model. The risk-free interest rate
for the expected term of the option is based on the yields of government bonds.
life
Changes
determination could have a material impact on the Company’s comprehensive loss for
the year.
these assumptions, especially
the volatility and
the expected
to
in
c) Provision for income taxes: The Company is subject to income taxes in numerous
jurisdictions. Uncertainties exist with respect to interpretations of tax regulations. The
Company recognizes it current tax payable based on its interpretations of tax regulations
which may differ from the interpretations of the tax authorities. Such differing
interpretations may impact the Company’s current income tax payable.
Judgment is required in determining whether deferred tax assets are recognized on the
statement of financial position. The recognition of deferred tax assets requires
management to assess the likelihood that the Company will generate taxable income in
future periods to utilize the deferred tax assets. Due to a history of losses deferred tax
assets have not be recognized.
d) Functional currencies: The functional currency of an entity is the currency of the primary
economic environment in which an entity operates. The determination of an entities
functional currency requires judgement based on analysis of relevant criteria. The
functional currency of the Company and its subsidiaries was determined by conducting
an analysis of the consideration factors identified in IAS 21, The Effects of Changes in
Foreign Exchange Rates.
18
Financial Instruments
Categories of financial instruments
Financial assets
Fair Value Through Profit and Loss
Cash and cash equivalents
Short-term investments
Investments
Loans
Receivables and advances
Financial liabilities
Other financial liabilities
Accounts payable and accrued
liabilities
a) Fair Value
June 30,
2013
June 30,
2012
$
27,786,195 $
1,415,928
18,315,659
6,826,040
997,830
-
975,515
-
$
48,490,297 $
7,823,870
$
1,934,285 $
985,207
Financial instruments measured at fair value are classified into one of three levels in the fair
value hierarchy according to the relative reliability of the inputs used to estimate the fair
values. The three levels of the fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than quoted prices that are directly or indirectly observable for the asset
or liability; and,
Level 3 – Inputs that are not based on observable market data;
Level 1
Cash and cash equivalents
Short-term investments
Investments
June 30,
2013
June 30,
2012
$
$
$
27,786,195 $
1,415,928 $
18,315,659 $
6,826,040
997,830
-
Fair value of investments traded in active markets is based on quoted market prices on the
date of the statement of financial position. A market is regarded as active if quoted prices are
readily and regularly available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis. The quoted market price used for investments
held by the group is the current bid price of the held securities. These securities are therefore
included in level 1 of the fair value hierarchy.
The fair values of the Company’s other financial instruments approximates their carrying
values because of the short-term nature of these instruments.
19
b) Management of capital risk
The Company’s objectives when managing capital are to safeguard the Company’s ability to
continue as a going concern in order to pursue the development of its exploration and
evaluation assets and to maintain a flexible capital structure which optimizes the costs of
capital at an acceptable risk. In the management of capital, the Company includes the
components of equity.
The Company manages the capital structure and makes adjustments to it in light of changes
in economic conditions and the risk characteristics of the underlying assets. To maintain or
adjust the capital structure, the Company may attempt to issue new shares, acquire or
dispose of assets, enter into joint ventures or obtain debt financing. In order to facilitate the
management of its capital requirements, the Company prepares annual expenditure budgets
that are updated as necessary depending on various factors, including successful capital
deployment and general industry conditions.
In order to maximize ongoing development efforts, the Company does not pay out dividends.
The Company’s investment policy is to invest its cash in highly liquid short-term interest-
bearing investments with maturities of twelve months or less from the original date of
acquisition, selected with regards to the expected timing of expenditures from continuing
operations. The Company is not subject to externally imposed capital requirements. There
were no changes to the Company’s approach to capital management during the year.
c) Management of financial risk
The Company’s financial instruments are exposed to certain financial risks. The risk
exposures and the impact on the Company's financial instruments are summarized below.
i. Currency risk
The Company is exposed to the financial risk related to the fluctuation of foreign
exchange rates. The Company operates in Canada, Argentina and Chile and a portion of
its expenses are incurred in United States (“US”), Australian dollars and in Argentine and
Chilean Pesos. A significant change in the currency exchange rates between the US and
Australian dollar relative to the Canadian dollar and the Argentine and Chilean Peso to
the Canadian dollar could have an effect on the Company’s results of operations,
financial position or cash flows. The Company has not hedged its exposure to currency
fluctuations.
At June 30, 2013, the Company is exposed to currency risk through the following assets
and liabilities denominated in US and Australian dollars and Argentine and Chilean
Pesos:
Cash and cash equivalents
Receivables and advances
Accounts payable and accrued
US
Dollars
20,193,886
925,147
Australian
Dollars
10,743
-
Argentine
Peso
2,002,826
2,103,754
Chilean
Peso
197,570,323
-
liabilities
(664,492)
(2,269)
(4,191,172)
(381,913,720)
20
Based on the above net exposures as at June 30, 2013, and assuming that all other
variables remain constant, a 10% depreciation or appreciation of the Canadian dollar
against the US and Australian dollar would result in an increase/decrease of $2,150,181
and $817, respectively in the Company’s net income. Likewise, a 10% depreciation or
appreciation of the Canadian dollar against the Argentine and Chilean Peso would result
in an increase/decrease of $1,650 and $38,196, respectively in the Company’s net
income.
ii. Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial
instrument fails to meet its contractual obligations.
The Company’s cash is held through large financial institutions. The Company’s
receivables consist of Goods and Services tax due from the Federal Government of
Canada and holdback receivable from Coeur, which was collected subsequent on July
12, 2013. Management believes that credit risk concentration with respect to receivables
is remote.
iii. Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations
as they fall due. The Company manages liquidity risk through the management of its
capital structure and financial leverage as outlined above. As at June 30, 2013, the
Company’s financial liabilities consist of accounts payable and accrued liabilities totaling
$1,934,285 (2012 - $985,207). The Company has also recorded an income tax provision
of $4,123,309. All of the Company’s obligations are expected to be paid within 90 days.
Management believes the Company has sufficient funds to meet its liabilities as they
become due.
iv. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The risk that the
Company will realize a loss as a result of a decline in the fair value of the short-term
investments included in cash is limited because these investments are generally held to
maturity.
v. Commodity price risk
The Company is exposed to equity securities price risk because of investments held by
the Company and classified on the statement of financial position as FVTPL and also to
the price risk with respect to commodity prices.
The Company does not typically invest in equity securities and the maximum exposure
to the price risk is represented by the changing fair value of such investments. Assuming
all variables remain constant, a 10% increase/decrease in the quoted market price of the
Company’s investments would result in an increase/decrease in the Company’s income
of approximately US$1,742,357.
The Company closely monitors commodity prices to determine the appropriate course of
action to be taken by the Company.
21
Additional Disclosure for Venture Issuers without Significant Revenue
Additional disclosure concerning Mirasol’s operating expenses and exploration and evaluation
costs is provided in the Company’s Consolidated Statements of (Income) Loss and
Comprehensive (Income) Loss and in Note 9 of the consolidated financial statements for the
year ended June 30, 2013 that is available on Mirasol’s website at www.mirasolresources.com
or on its SEDAR company page accessed through www.sedar.com.
Approval
The Audit Committee of the Company has approved the disclosure contained in this MD&A.
Additional Information
Additional information relating to Mirasol is available on SEDAR at www.sedar.com and on the
Company’s website at www.mirasolresources.com.
22