MIRASOL RESOURCES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
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, 2018 and 2017 and the consolidated statements of loss and
comprehensive 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, 2018 and 2017, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards.
Vancouver, Canada
October 26, 2018
“DAVIDSON & COMPANY LLP”
Chartered Professional Accountants
Mirasol Resources Ltd.
Consolidated Statements of Financial Position
Canadian Funds
As at
ASSETS
Current Assets
Cash and cash equivalents
Short-term investments (Note 6)
Receivables and advances (Note 7)
Equipment and Software (Note 8)
Exploration and Evaluation Assets (Note 9)
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities (Note 10)
Advances from JV Partner (Note 9)
EQUITY
Share Capital (Note 11)
Reserves
Accumulated Other Comprehensive loss
Deficit
Nature of Business (Note 1)
Subsequent Event (Note 14)
On Behalf of the Board:
“ Stephen C. Nano ”
“ Nick DeMare ”
,
,
Director
Director
June 30,
2018
June 30,
2017
$
2,892,948 $
23,650,478
733,591
27,277,377
4,629,130
16,792,765
544,502
21,966,397
101,661
3,000,762
103,677
3,000,762
$
30,379,800 $
25,070,836
$
743,842 $
67,892
811,734
532,649
-
532,649
57,426,143
16,615,061
(28,122)
(44,445,016)
48,303,568
16,361,942
(23,438)
(40,103,885)
29,568,066
24,538,187
$
30,379,800 $
25,070,836
The accompanying notes are an integral part of these consolidated financial statements
Page 3
Mirasol Resources Ltd.
Consolidated Statements of Loss and Comprehensive Loss
For the Years Ended June 30
Canadian Funds
Operating Expenses
Exploration expenditures (Note 9 and 10b)
Business development
Share-based payments (Note 11c)
Management fees (Note 10a)
Office and miscellaneous
Marketing and investor communications
Director’s fees (Note 10a)
Professional fees (Note 10b)
Travel
Transfer agent and filing fees
Depreciation (Note 8)
Interest income
Foreign exchange gain (loss)
$
2018
2017
2,762,028 $
667,361
500,620
478,613
307,142
241,370
186,241
170,141
98,369
40,871
5,229
4,105,942
297,574
711,454
320,473
529,691
489,116
135,623
197,397
42,153
58,549
14,490
(5,457,985)
(6,902,462)
360,756
756,098
1,116,854
157,577
(200,762)
(43,185)
Loss for the Year
$
(4,341,131) $
(6,945,647)
Other Comprehensive loss to be Reclassified to Profit or Loss in
Subsequent Periods
Exchange differences on translation of foreign operations
Loss and Comprehensive Loss for the Year
(4,684)
(159)
(4,345,815)
(6,945,806)
Loss per Share (Basic and Diluted)
$
(0.09) $
(0.15)
Weighted Average Number of Shares Outstanding
(Basic and Diluted)
49,450,240
47,781,853
The accompanying notes are an integral part of these consolidated financial statements
Page 4
Mirasol Resources Ltd.
Consolidated Statement of Changes in Equity
Canadian Funds
Share Capital
Common Shares
Reserves
Accumulated Other
Comprehensive Loss
Deficit
Number
$
$
$
$
Total
$
Balance – June 30, 2016
44,664,411
38,393,240
15,418,454
(23,279)
(33,158,238)
20,630,177
Shares issued – Rights offering
Shares issue costs
Option exercised (Note 11b)
Share-based payments (Note 11c)
Foreign currency translation adjustment
Loss for the year
4,166,667
-
285,000
-
-
-
10,000,000
(492,138)
402,466
-
-
-
-
339,700
(107,666)
711,454
-
-
-
-
-
-
(159)
-
-
-
-
-
-
(6,945,647)
10,000,000
(152,438)
294,800
711,454
(159)
(6,945,647)
Balance – June 30, 2017
49,116,078
48,303,568
16,361,942
(23,438)
(40,103,885)
24,538,187
Shares issued – Private Placement
Share issue costs
Option exercised (Note 11b)
Share-based payments (Note 11c)
Foreign currency translation adjustment
Loss for the year
4,317,750
-
388,800
-
-
-
8,635,500
(196,090)
683,165
-
-
-
-
-
(247,501)
500,620
-
-
-
-
-
-
(4,684)
-
-
-
-
-
-
(4,341,131)
8,635,500
(196,090)
435,664
500,620
(4,684)
(4,341,131)
Balance – June 30, 2018
53,822,628
57,426,143
16,615,061
(28,122)
(44,445,016)
29,568,066
The accompanying notes are an integral part of these consolidated financial statements
Page 5
Mirasol Resources Ltd.
Consolidated Statement of Changes in Cash flows
For the Years Ended June 30
Canadian Funds
Operating Activities
Loss for the year
Adjustments for:
Share-based payments
Interest income
Depreciation
Depreciation included in exploration expenses
Unrealized foreign exchange
Changes in non-cash working capital items:
Receivables and advances
Due from joint venture partners – receivables and advances
Accounts payable and accrued liabilities
Advance from joint venture partner
Income taxes received
2018
2017
$
(4,341,131) $
(6,945,647)
500,620
(360,756)
5,229
29,562
91,592
711,454
(157,577)
14,490
24,431
18,531
(4,074,884)
(6,334,318)
166,110
-
211,193
67,892
-
(125,909)
-
(251,804)
-
-
Cash used in operating activities
(3,629,689)
(6,712,031)
Investing Activities
Short-term investments
Acquisition of exploration and evaluation assets
Recovery of exploration and evaluation assets
Interest received
Purchase of equipment and software
Cash used in investing activities
Financing Activities
Shares issued, net of issuance costs
Exercise of incentive share purchase options
Cash provided by financing activities
(6,857,713)
(61,491)
61,491
5,197
(32,775)
(6,885,291)
(16,333,765)
-
-
23,476
(77,333)
(16,387,622)
8,439,410
435,664
8,875,074
9,847,562
294,800
10,142,362
Effect of Exchange Rate Change on Cash and Cash Equivalents
(96,276)
(18,690)
Change in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning of Year
(1,736,182)
(12,975,981)
4,629,130
17,605,111
Cash and Cash Equivalents - End of Year
$
2,892,948
$
4,629,130
Supplemental Schedule of Non-Cash Investing and Financing
Transactions:
Fair value of options exercised
Fair value of bonus warrants
Cash and Cash Equivalents Consist of:
Cash
Cash equivalents
$
$
$
$
$
247,501
-
$
$
107,666
339,700
2,498,954
393,994
2,892,948
$
$
$
1,415,944
3,213,186
4,629,130
The accompanying notes are an integral part of these consolidated financial statements
Page 6
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
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 400 – 725 Granville
Street, Vancouver, British Columbia and the head office is located at 910 – 850 West Hastings Street, Vancouver,
British Columbia.
Mirasol engages in the acquisition and exploration of mineral properties, principally located in Chile and Argentina,
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 estimates that the Company has sufficient working capital to maintain its operations and activities
for at least next twelve months.
2. Basis of Presentation
Statement of compliance
The consolidated 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”) and
interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The policies presented
in Note 3 were consistently applied to all periods presented. The Board of Directors approved the consolidated
financial statements on October 26th, 2018.
Basis of measurement
These consolidated financial statements have been prepared on a historical cost basis. Financial instruments
classified as financial instruments at fair value through profit or loss are stated at their fair value. In addition, these
consolidated financial statements have been prepared using the accrual basis of accounting except for the cash
flow information.
3. Significant Accounting Policies
a) Consolidation
These consolidated financial statements include the accounts of the Company (the “Parent”) and its subsidiaries.
The principal subsidiaries of the Company, their activities, and their geographic locations as at June 30, 2018
were as follows:
Page 7
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
Subsidiary
Principal activity
Location
Minera Mirasol Chile Limitada
Cabo Sur S.A.
Australis S.A.
Minera Del Sol S.A.
Nueva Gran Victoria S.A.
La Curva Exploraciones S.A.
Oroaustral Exploraciones S.A.
Recursos Mirasol Holdings Ltd.
MDS Property Holdings Ltd.
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Holding company
Holding company
Chile
Argentina
Argentina
Argentina
Argentina
Argentina
Argentina
British Virgin Islands
British Virgin Islands
Proportion of
interest held
by the
Company
100%
100%
100%
100%
100%
100%
100%
100%
100%
The transactions among the entities in the consolidated group pertain to the transfer of funds and payment of
third party costs. All inter-group transactions and balances have been eliminated upon consolidation.
La Curva Exploraciones S.A and Oroaustral Exploraciones S.A were incorporated as of July 10, 2017 and
December 28, 2017 respectively in order to carry out exploration on joint ventured projects.
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 capitalized carrying value of each property group 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 claims’ value; whether there has been an
accumulation of costs significantly in excess of the amounts originally expected for the claims’ acquisition,
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 claims.
The Company has concluded that impairment conditions do not exist as at June 30, 2018.
Ownership of exploration and evaluation assets involves certain 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.
Page 8
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
(ii) Valuation of share purchase options: The Company provides compensation benefits to its employees,
directors and officers through a stock option plan. The fair value of each option award is estimated on the
date of the grant using the Black-Scholes option pricing model.
Expected volatility assumption used in the model is based on the historical volatility of the Company’s share
price. The Company uses historical data to estimate the period of option exercises and their forfeiture rates
for use in 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 profit or loss. All estimates used in the model are based on historical data
which may not be representative of future results.
(iii) Income taxes: The Company is subject to income taxes in numerous jurisdictions. Uncertainties exist with
respect to interpretations of tax regulations. The Company has recognized current tax refundable based on
its interpretations of tax regulations, which may differ from the interpretations of the tax authorities (Note 13).
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.
(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 factors identified in IAS 21, The Effects of Changes in Foreign
Exchange Rates (“IAS 21”).
Except for the Company’s subsidiaries in the British Virgin Islands (Note 3a) above), the Company has
determined that its subsidiaries in Chile and Argentina incur costs in United States Dollars, Canadian
Dollars, Australian dollars as well as the Chilean and Argentine Pesos and therefore do not indicate a single
primary currency for operating in these jurisdictions. These subsidiaries including the British Virgin Islands
are financed entirely by its Canadian Parent and therefore act as its extension. The Company has therefore
determined that the functional currency of all of its subsidiaries is the Canadian Dollar, similar to the Parent.
c) Foreign Currencies
The functional currency of the Company and its operating subsidiaries, Minera Del Sol S.A., Australis S.A.,
Nueva Gran Victoria S.A., Cabo Sur S.A., La Curva Exploraciones S.A., Oroaustral Exploraciones S.A., and
Minera Mirasol Chile Limitada, is the Canadian Dollar (“$”). The functional currency of its holding subsidiaries,
Recursos Mirasol Holdings Ltd., and MDS Property Holdings Ltd. is the United States Dollar.
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 profit or 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 income (loss) (“AOCI”)
in equity as a foreign currency translation adjustment.
The Company’s presentation currency is the Canadian Dollar.
Page 9
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
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.
Financial assets and liabilities at FVTPL are subsequently measured at fair value with changes in those fair
values recognized in profit or loss. Financial assets available-for-sale are subsequently measured at fair value
with changes in fair value recognized in other comprehensive income loss (“OCI”), net of tax. Financial assets
and liabilities held-to-maturity, loans and receivables, and other financial liabilities are subsequently measured
at amortized cost using the effective interest method. Refer to Note 5 for further disclosure.
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 amortized cost: The loss is the difference between the amortized cost of the
asset 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 profit
or loss. This amount represents the cumulative loss in accumulated OCI that is reclassified to profit or loss.
Impairment losses on financial assets carried at amortized 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 profit or loss in the period of such reversal.
Page 10
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
h) Equipment and Software
Equipment and software 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.
The Company provides for depreciation as follows:
• Exploration equipment: 30% declining balance;
• Computer hardware: 30% declining balance; and
• Computer software: straight-line over the estimated life of three years.
The Company allocates the amount initially recognized to each asset’s significant components and depreciates
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, and is technically feasible, in which case the
balance is tested for impairment and subsequent development costs are capitalized. Exploration costs include
value-added taxes because the recoverability of these amounts is uncertain.
The receipt of option payments from the Company’s joint venture partners are applied first towards the
capitalized cost for the acquisition of pertinent mineral property interests. Option payments in excess of the
capitalized acquisition costs are netted against the exploration costs for the period. JV management fees are
included in exploration expenditures on the statement of loss and comprehensive loss.
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 profit or loss. This unwinding
of the discount is charged to financing expense in profit or 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 profit or loss. 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 decommissioning 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.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
k)
Income Taxes
Income tax expense (recovery) is comprised of current and deferred tax. Income tax is recognized in profit or
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-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 reserves. This includes a
forfeiture estimate, which is revised for actual forfeitures in subsequent periods. The reserves 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
equity instruments issued. Otherwise, such share-based payments are measured at the fair value of goods or
services received.
m) Loss per Share
Basic loss per share is computed by dividing loss available to common shareholders by the weighted average
number of common shares outstanding during the year.
The computation of diluted loss 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 loss per share. The dilutive
effect of convertible securities is reflected in the diluted loss per share by application of the "if converted" method.
For the year presented, this calculation proved to be anti-dilutive.
Page 12
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
n) Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss) and
represents the change in equity which results from transactions and events from sources other than the
Company’s shareholders. The Company’s translation of its subsidiaries which have a functional currency other
than the Canadian Dollar is the only item affecting comprehensive income (loss) for the years presented.
o) Share Capital
Common shares of the Company are classified as equity. Transactions costs directly attributable to the issue of
common shares and share options are recognized as a deduction from equity, net of any tax effect.
The Company uses the residual value method with respect to the measurement of shares and warrants issued
as private placement units. The residual value method first allocates value to the more easily measurable
component based on fair value and then the residual value, if any, to the less easily measurable component.
The fair value of the common shares issued in the private placements was determined to be the more easily
measurable component and were valued at their fair value, as determined by the quoted bid price on the
issuance date. The balance, if material, was allocated to the attached warrants. Any fair value attributed to the
warrants on exercise is recorded as equity. If the warrants are exercised the related reserves are reclassified
from reserves to share capital.
4. Recent Accounting Pronouncements
Certain new standards, interpretations, amendments and improvements to existing standards were issued by the
IASB or IFRIC.
The following new standards and amendments to standards which are applicable to the Company have been
issued with effective dates into the later fiscal years:
a)
IFRS 9 Financial Instruments addresses the classification, measurement and recognition of financial assets and
financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39
that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the
mixed measurement model and establishes three primary measurement categories for financial assets:
amortized costs, fair value through OCI and FVTPL. The basis of classification depends on entity’s business
model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are
required to be measured at FVTPL with the irrevocable option at inception to present changes in fair value in
OCI. There is a new expected credit losses model that replaces the incurred loss impairment model used in IAS
39. For financial liabilities, there were no changes to classification and measurement except for the recognition
of changes in own credit risk in OCI, for liabilities designated at FVTPL.
IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests.
It requires an economic relationship between the hedged item and hedging instrument and for the hedged ratio
to be the same as the one management actually use for risk management purposes. Contemporaneous
documentation is still required but is different to that currently prepared under IAS 39.
The standard is effective for accounting periods beginning on or after January 1, 2018. Adoption of this standard
is not expected to have a significant impact on the Company other than increased disclosure.
b)
IFRS 15 Revenue from Contracts with Customers deals with revenue recognition and establishes principles of
reporting useful information to the users of financial statements about the nature, amount, timing, and
uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
Revenue is recognized when the customer obtains control of a good or service and thus has the ability to direct
the use and obtain the benefits from the good or service. The standard replaces IAS 18 Revenue, and IAS 11
Construction Contracts and related interpretations.
Page 13
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
It is effective for annual periods beginning on or after January 1, 2018 with earlier application permitted. Adoption
of this standard is not expected to have an impact on the Company.
c)
IFRS 16 is a new standard that sets out the principles for recognition, measurement, presentation, and
disclosure of leases including guidance for both parties to a contract, the lessee and the lessor. The new
standard eliminates the classification of leases as either operating or finance leases as is required by IAS 17
and instead introduces a single lessee accounting model. IFRS 16 specifies how an IFRS reporter will recognize,
measure, present and disclose leases. The standard provides a single lessee accounting model, requiring
lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the
underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s
approach to lessor accounting substantially unchanged from its predecessor, IAS 17 Leases.
The standard was issued in January 2016 and is effective for annual periods beginning on or after January 1,
2019. The Company is currently assessing the impact of the standard on the Company.
5. Financial Instruments
Categories of financial instruments
Financial assets
Fair Value Through Profit or Loss
Cash and cash equivalents
Short-term investments
Loans and receivables
Receivables and advances
Financial liabilities
Other financial liabilities
Advances from JV Partner
Accounts payable and accrued liabilities
a) Fair Value
June 30,
2018
June 30,
2017
$
2,892,948 $
23,650,478
4,629,130
16,792,765
568,692
396,323
$
27,112,118 $
21,818,218
$
67,892 $
743,842
$
811,734 $
-
532,649
532,649
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
June 30,
2018
June 30,
2017
$
$
2,892,948 $
23,650,478 $
4,629,130
16,792,765
The fair values of the Company’s other financial instruments approximate their carrying values because of the
short-term nature of these instruments.
Page 14
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
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 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 adjusts 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.
To maximize ongoing exploration, 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”) dollars, 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.
Page 15
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
At June 30, 2018, 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
Short-term investments
Receivables and advances
Accounts payable and accrued liabilities
US
Dollars
1,124,657
8,250,001
200,000
(13,763)
Australian
Dollars
128,522
1,660,252
-
(95,570)
Argentine
Peso
12,059,164
Chilean
Peso
139,740,623
1,819,899
(4,452,833)
23,846,893
(121,721,852)
Based on the net exposures as at June 30, 2018, 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 $1,273,824 and $168,972, respectively in the Company’s comprehensive loss.
Likewise, a 10% depreciation or appreciation of the Canadian dollar against the Argentine and Chilean Peso
would result in an increase/decrease of $45,228 and $8,582, respectively in the Company’s comprehensive
loss.
(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 and cash equivalents is held through large financial institutions. The Company’s
receivables primarily consist of interest receivable due from major financial institutions on short term
investments. 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, 2018, the Company’s financial liabilities consist of accounts payable and
accrued liabilities totalling $743,842. 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 and cash equivalents is limited because
these investments are generally held to maturity. The applicable rates of interest on such investments range
between 0.05% and 3.25%.
(v) Price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to
changes in market prices, other than those arising from interest rate risk and foreign currency risk. The
Company is not exposed to significant other price risk.
Page 16
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
6. Short-term Investments
Short term investments comprise cashable and non-cashable Guaranteed Investment Certificates (“GIC”)
placed with major Canadian and US financial institutions. Maturity dates of these GIC’s are between three to
twelve months.
7. Receivables and Advances
Goods and services tax receivable
Income taxes recoverable
Interest receivable
Prepaid expenses and advances
Due from joint venture partners
$
$
June 30,
2018
10,134
-
199,656
165,259
358,902
$
733,951
$
June 30,
2017
7,961
23,991
129,345
116,227
266,978
544,502
8. Equipment and Software
Cost
Balance as at June 30, 2016 $
Additions for the year
Balance as at June 30, 2017 $
Additions for the year
Balance as at June 30, 2018 $
Accumulated Depreciation
Balance as at June 30, 2016 $
Depreciation for the year
Balance as at June 30, 2017 $
Depreciation for the year (i)
Balance as at June 30, 2018 $
Exploration
Equipment
Computer
Hardware
Computer
Software
399,898 $
77,333
477,231 $
-
477,231 $
364,670 $
22,156
386,826 $
27,122
413,948 $
57,883 $
37,834 $
-
57,883 $
32,775
90,658 $
38,924 $
5,687
44,611 $
7,669
52,280 $
-
37,834 $
-
37,834 $
26,756 $
11,078
37,834 $
-
37,834 $
Total
495,615
77,333
572,948
32,775
605,723
430,350
38,921
469,271
34,791
504,062
Carrying Amounts
As at June 30, 2017
As at June 30, 2018
$
$
90,405 $
63,283 $
13,272 $
38,378 $
- $
- $
103,677
101,661
(i) Allocated between depreciation expense ($5,229) (2017 - $14,490) and exploration costs ($29,562) (2017-
$24,431) on the statement of loss and comprehensive loss.
Page 17
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
9. Exploration and Evaluation Assets
A reconciliation of capitalized acquisition costs is as follows:
Acquisition Costs
Chile
Atlas - Dos Hermanos
Zeus
Argentina
Santa Rita and Virginia
Pipeline projects
Balance at
June 30, 2017
Cost
Recoveries
Balance at
June 30, 2018
$
171,777 $
-
2,808,819
20,166
-
61,491
$
-
(61,491)
$
-
-
-
-
$
3,000,762 $
61,491
$
(61,491)
$
171,777
-
2,808,819
20,166
3,000,762
Chile
Atlas - Dos Hermanos
Argentina
Santa Rita and Virginia
Pipeline projects
Balance at
June 30, 2016
$
$
171,777 $
2,808,819
20,166
3,000,762 $
Cost
Recoveries
-
-
-
-
$
$
-
-
-
-
Balance at
June 30, 2017
$
$
171,777
2,808,819
20,166
3,000,762
The Company owns 100% of the mineral exploration rights to a large portfolio of properties focused in two mining
regions, namely the Atacama region in northern Chile and the Santa Cruz Province in southern Argentina. As well
the Company holds several other properties in both San Juan and Catamarca provinces of northern Argentina. The
Company also focuses on generative exploration to identify and acquire new prospects.
Chile
The Company has a portfolio of gold, silver and copper projects in northern Chile.
a) Gorbea Belt - Properties Joint Ventured to Other Companies:
The Company currently has a 100% interest in precious metals properties that define the Gorbea Belt (the “Gorbea
Project”). The Gorbea Project is a reconnaissance program engaged in prospect generation and exploration of
disseminated gold and silver prospects in the region. The Company’s focus along the Gorbea Belt has been on
the advancement of its Atlas and Titan properties.
i. Atlas Property
The Company holds a 100% interest in the Atlas Property in northern Chile, acquired by staking on open
ground.
ii. Titan Property
The Company holds a 100% interest in the Titan Property in northern Chile. The property was acquired by
staking on open ground.
Page 18
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
iii. Letter Agreement with Yamana Gold Inc. (“Yamana”)
On March 25, 2015, the had Company entered into a joint venture agreement, granting Yamana the option to
acquire up to a 75% interest in the Gorbea Project (“the Letter Agreement”).
The first phase of the Letter Agreement entitled Yamana to earn a 51% interest on the first earn-in by incurring,
over a period of four years, annual staged expenditures totalling US$10,000,000, and making annual staged
payments totalling US$2,000,000. After the first earn-in, Yamana could earn up to 75% interest.
On April 13, 2018, the agreement was terminated.
b) Earn-In Joint Venture (“JV”) on Third Party Projects:
Frontera JV
In fiscal 2013, the Company signed a definitive exploration and option agreement (the “Agreement”) with an
arms-length private Chilean company.
The Frontera JV Agreement provided for the Company to earn a 51% interest in any, or all, of the exploration
properties by expending US$3 million within a four-year period which commenced on December 26, 2012. On
March 7, 2017 the Company terminated the agreement.
c) Altazor Property
The Company owns a 100% interest in mining claims of Altazor gold project in Northern Chile.
On November 7, 2017, the Company signed an exploration and option agreement with Newcrest International
Pty Limited (“NCM”) on the Altazor property whereby, NCM has been granted the option to acquire up to an
80% interest in the property, exercisable in stages over a nine-year, or shorter, earn-in period. The agreement
requires NCM to fund US$1.5 million in exploration expenditures and make a US$100,000 option payment
(received) in the first year of the option. The Company will serve as operator for exploration during the option
period in return for 10% management fee.
NCM can earn up to 51% of the interest of the property by making a one-time US$500,000 cash payment to
the Company at the start of the earn in period and by spending an additional US$8.5 million in exploration
within the next four years of the agreement.
NCM can earn in stages up to a 75% interest in the property by delivering a positive preliminary economic
assessment (‘PEA’) and a bankable feasibility study (‘BFS’) (total expenditure capped at US$100 million after
the completion of the PEA stage) and by making US$1.3 million cash payments to the Company within the
four years after earning the 51% interest.
The Company can retain a participating 25% interest in the project or 20% funded-to production interest with
NCM financing the development cost to the production. The agreement is in good standing as of June 30,
2018.
d) Zeus Property
The Company owns a 100% interest in certain mining claims of which now forms part of the Zeus gold project
in Northern Chile acquired by way of staking.
During the year ended June 30, 2018, the Company acquired another project by way of option agreement and
consolidated to form part of the Zeus project.
Page 19
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
The Company can acquire the claims under option agreement by making staged option payments totalling
US$2.747 million over 5 years with US$2.45 million of the payments due in the 5th year of the option and incur
US$300,000 in exploration expenditures within 3 years. The property owner will retain 1.5% NSR royalty. The
Company has a right to buy 0.5% of the royalty for US$3.0 million. Option payments are due as follows:
On signing (paid)
On or before October 10, 2018 (paid)
On or before October 10, 2019
On or before October 10, 2020
On or before October 10, 2021
On or before October 10, 2022
Total
US $12,000
US $30,000
US $50,000
US $70,000
US $90,000
US $2,495,000
US $2,747,000
On February 22, 2018, the Company signed an exploration and option agreement with NCM whereby, NCM
has been granted the option to acquire up to an 80% interest in the property, exercisable in stages over a nine-
year, or shorter, earn-in period. The agreement requires NCM to fund US$1.5 million in exploration
expenditures in the first 18 months and make a US$100,000 option payment (received) upon signing option
agreement. The Company will serve as operator for exploration during the option period in return for 10%
management fee.
NCM can earn up to 51% of the interest of the property by making a one-time US$400,000 cash payment to
the Company at the start of the earn in period and by spending an additional US$8.0 million in exploration
within the next four years of the agreement.
NCM can earn in stages up to a 65% interest in the property by delivering a positive preliminary economic
assessment (‘PEA’) and a bankable feasibility Study (‘BFS’) (total expenditure capped at US$100 million after
the completion of the PEA stage) and by making US$1.3 million cash payments to the Company within the
four years after earning the 51% interest.
The Company can retain a participating 25% interest in the project or 20% funded-to production interest with
NCM financing the development cost to the production. The agreement is in good standing as of June 30,
2018.
Argentina
In the Santa Cruz province of Argentina, the Company controls the mineral exploration rights to various precious
metals properties.
e) Claudia Property
The Company owns a 100% interest in the Claudia property situated in south-central part of the Santa Cruz
Mining District, Argentina.
On October 20, 2017, the Company signed a definitive agreement with OceanaGold Corporation (“OGC”)
whereby, OGC has been granted the option to acquire up to a 75% interest in the property, exercisable in 4
stages over an eight-year, or shorter, earn-in period. The agreement requires OGC to make a first-year
commitment of US$1.75 million in exploration expenditures, complete 3,000 metres of drilling, and make a
US$100,000 option payment (received) to the Company on signing the Agreement.
The first earn-in option for OGC to earn 51% interest over four years from the date of Agreement requires
spending US$10.5 million on exploration, making US$1 million in payments to the Company. The Company
will serve as operator for exploration for first year in return for 5% management fee and the Company will
retain a 30% funded-to production interest in the property. The agreement is in good standing as of June 30,
2018.
Page 20
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
f) La Curva Property
The Company owns a 100% interest in mining claims of La Curva property in the Santa Cruz Province of
Argentina.
On May 25, 2017, the Company signed an exploration and option agreement with OGC whereby OGC has
been granted the option to acquire up to a 75% interest in the La Curva Project, exercisable in 5 stages over
an eight-year, or shorter, earn-in period.
The agreement requires OGC to make a first-year commitment of US$1.25 million in exploration expenditures,
complete 3,000 metres of drilling, and make a US$100,000 (received) option payment to the Company on
signing the Agreement.
The first earn-in option for OGC to earn 51% interest over four years from the date of Agreement requires
spending US$7 million on exploration, making US$1.5 million in payments to the Company. The Company will
serve as operator for exploration for first year in return for 5% management fee and the Company will retain a
30% funded-to production interest in the property. The agreement is in good standing as of June 30, 2018.
g) Santa Rita Property and Virginia Zone
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.
h) Pipeline Projects:
The Company carries out exploration programs on a number of projects which are prospective for gold and/or
silver mineralization in Chile and Argentina.
In order to achieve cost efficiencies certain claims without merit were dropped during the year ended June 30,
2018 resulting in a write-off of $Nil (June 30, 2017 - $Nil).
i) Advances to/from joint venture partners:
The Company is the operator for four joint venture projects. As of June 30, 2018, the Company has $67,892
(2017-$Nil) of unspent exploration advances. Expense reimbursement receivable of $118,467 is included in
accounts receivable as of June 30, 2018.
10. Related Party Transactions
Details of the transactions between the Company’s related parties are disclosed below.
a) Compensation of key management personnel
Key management personnel include persons having the authority and responsibility for planning, directing, and
controlling the activities of the Company as a whole.
Page 21
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
The remuneration of management and independent directors was as follows:
Management compensation (i)
Share-based payments (ii)
Director’s fees (iv)
Year Ended June 30,
2018
501,273
261,084
186,241
$
948,598
$
2017
514,369
250,749
135,623
900,741
$
$
(i) Management compensation is included in Management fees (2018 - $272,046; 2017 - $211,804) and in
exploration expenditures (2018 - $229,227; 2017 - $302,565).
(ii) Share-based payments represent the expense for the years ended June 30, 2018 (Note 11c) and 2017.
(iii) In February 2016, the Company signed Consulting Agreements, effective July 2015, with each of Global Ore
Discovery Pty Ltd. (“Global Ore”) and Stephen Nano, to perform the duties of President, CEO and Qualified
Person for the Company.
Under the terms of the Global Ore agreement, the Company has retained the services of Global Ore
consultants until June 30, 2018, to provide target generation related consulting services to the Company on
an exclusive basis throughout Chile and Argentina. The Company has agreed to a minimum monthly retainer
of Australian Dollar (“AUD”) $35,000. The Global Ore contract can be terminated at any time by the Company
by paying a fee of AUD $225,000.
The CEO consulting agreement with Mr. Nano is for a term expiring on June 30, 2018 and was renewed on
a month to month basis upon its expiry and provides for payment of a consulting fee of $25,000 per month.
The contract with Mr. Nano contains termination provisions which require payment of one-year’s fees for
termination without cause and two years for termination due to a change of control event, as defined.
(iv) The independent directors of the Company are paid $2,100 per month (2017 - $2,100 per month) while the
Chairman of the Board of Directors receives an additional $3,000 per month for serving in this capacity (2017
- $3,000). On June 14, 2017, the Chairman of the Board was appointed Executive Chairman and is paid an
additional $4,100 per month.
b) Transactions with other related parties
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
Global Ore Discovery Pty Ltd.
Evrim Resources Corp. (“Evrim”)
Nature of transactions
Legal fees
Project generation, exploration management and
GIS services
CFO services, office administration support
services and office sharing
Page 22
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
The Company incurred the following fees and expenses with related parties as follows:
Legal fees
CFO services
Office sharing and administration services
Project generation, exploration expenses and GIS services
$
Year Ended June 30,
$
2018
189,138
101,750
49,440
711,619
2017
226,101
72,588
87,316
965,443
$
1,051,947
$
1,351,448
The Company had entered into an agreement with Evrim, a company with common management, to share CFO
services, Administration services and office space. The Agreement was renewed on a month to month basis
upon its expiry on February 28, 2018.
Included in accounts payable and accrued liabilities at June 30, 2018, is an amount of $153,904 (2017 - $149,287)
owing to directors and officers of the Company and to companies where the directors and officers are principals.
11. Share Capital
a) Authorized Share Capital
The Company’s authorized share capital consists of an unlimited number of common shares without par value. All
issued common shares are fully paid.
b) Changes in Share Capital
(i) Financing
During the year ended June 30, 2018, the Company completed a non-brokered private placement issuing
4,317,750 units for gross proceeds of $8,635,500. Each unit consisted of one common share and one-half of one
non-transferable common share purchase warrant. Each full warrant is exercisable into one common share at a
price of $3.00 for two years from the closing date.
The Company incurred $126,750 cash finder’s fees, $69,340 for regulatory and other related fees.
(ii) Rights offering
During the year ended June 30, 2017, the Company completed a rights offering for gross proceeds of $10,000,000.
Bonus warrants of 500,000 were issued to the guarantors of the rights offering. Each bonus warrant is exercisable
at $2.40 and expired unexercised on March 23, 2017. The fair value of these bonus warrants was estimated to be
$339,700 using the following weighted average assumptions in the Black-Scholes option pricing model.
Expected dividend yield
Expected share price volatility
Risk-free interest rate
Expected life of options
0.0%
73.06%
0.58%
0.5 years
The Company incurred $152,438 of share issuance costs in connection with the rights offering.
Page 23
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
(iii) Options exercised
During the year ended June 30, 2018, the Company issued 388,800 (2017 - 285,000) shares on exercise of share
purchase option for gross proceeds of $435,664 (2017 - $294,800). The options had a fair value of $247,501 (2017
- $107,666).
c) 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, 2018, a total of 5,382,263 options
were reserved under the option plan with 3,065,826 options outstanding.
(i) Movements in share purchase options during the year
A summary of the Company’s share purchase options and the changes for the year are as follows:
Options outstanding as at June 30, 2016
Granted
Exercised
Expired
Options outstanding as at June 30, 2017
Granted
Exercised
Expired / Forfeited
Options outstanding as at June 30, 2018
Options exercisable at June 30, 2018
Number of Options
2,553,750
740,876
(285,000)
(25,000)
2,984,626
935,000
(388,800)
(465,000)
3,065,826
2,840,826
Weighted Average
Exercise Price
$1.07
$2.81
$1.03
$1.55
$1.50
$1.70
$1.12
$1.08
$1.67
$1.68
(ii) Fair value of share purchase options granted
During the year ended June 30, 2018, the Company amended the vesting provisions and adjusted 500,000 options
issued during 2015 to 100,000 options. As a result, the Company recognized a credit of $74,805 related to stock-
based compensation.
Total share-based payments recognised for the year ended June 30, 2018 amounted to $500,620 (June 30, 2017
- $711,454).
Page 24
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
The fair value of options granted, and the incremental fair value of the amended options 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)
Year Ended June 30,
2018
0.0%
64.46%
1.57%
2.33 years
$0.65
2017
0.0%
49.19%
0.576%
2.13 years
$0.36
(iii) Share purchase options outstanding at the end of the year
A summary of the Company’s options outstanding as at June 30, 2018 is as follows:
Expiry Date
December 16, 2018
March 23, 2019
August 4, 2019
May 14, 2018*
April 29, 2021
April 29, 2021
August 26, 2019
September 12, 2021
September 12, 2020
December 19, 2020
December 20, 2020
Exercise price
$
0.88
0.88
0.88
1.28
0.88
1.38
2.85
1.80
1.80
1.61
1.65
Options
Outstanding
3,750
165,000
142,500
238,700
545,000
320,000
715,876
150,000
235,000
200,000
350,000
3,065,826
Weighted
Average
Remaining Life
of Options
(years)
1.92
Options
Exercisable
3,750
165,000
142,500
238,700
545,000
240,000
715,876
70,000
235,000
200,000
285,000
2,840,826
* As of June 30, 2018, the options remain outstanding as the Company has an obligation to extend the expiry
date pursuant to the terms of the option.
d) Warrants
On June 8, 2018, the Company issued 2,158,875 of share pruchase warrants with an exercise price of $3.00
expirying in twenty-four months. These warrants were outstanding as of June 30, 2018 (2017-Nil). During the
year ended June 30, 2017, 500,000 share purchase warrants were granted with an exercise price of $2.40. The
share purchase warrants were issued in connection with the Company’s Right offering (Note 11 b (i)) and expired
on March 23, 2017.
Page 25
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
e) Restricted Share Unit (“RSU”) Plan
On April 26th, 2018 the shareholders approved a restricted share unit plan (the “RSU Plan”). The RSU plan was
also approved by the Board on July 16th 2018 and by the TSX Venture Exchange on July 17, 2018. The RSU
Plan provides for the issuance of up to 1,000,000 restricted share units (the “RSUs”). Under the RSU Plan, RSUs
may be granted to directors, officers, employees and consultants of the Company (excluding investor relations
consultants) as partial compensation for the services they provide to the Company. The RSU Plan is a fixed
number plan, and the number of common shares issued under the RSU Plan, when combined with the number
of stock options available under the Company’s stock option plan, will not exceed 10% of the Company’s
outstanding common shares. The Company’s Compensation Committee and Board of Directors have approved
an award of 110,000 RSUs. Subsequent to June 30, 2018, 30,000 RSU’s were granted.
12. Segmented Information
The Company’s business consists of a single reportable segment being mineral property acquisition and
exploration. Details on a geographical basis are as follows:
Total Non-Current Assets
Canada
Argentina
Chile
13. Income Taxes
June 30,
2018
$
27,983 $
2,844,780
229,660
June 30,
2017
7,959
2,842,013
254,467
$
3,102,423 $
3,104,439
The Company is subject to Canadian federal and provincial tax for the estimated taxable income at a rate of 26%.
The Company has no taxable income in Canada.
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:
Year Ended June
30, 2018
Year Ended June
30, 2017
Net loss before income taxes
Canadian federal and provincial income tax rates
t
Expected income tax recovery based on the above
Non-deductible expenses
Change in statutory and foreign tax rates
Tax effect of deferred tax assets for which no tax
benefit has been recorded
Foreign exchange and other
Total income tax recovery
$
$
(4,341,131)
26.50%
(1,150,400)
216,756
710,673
$
$
(6,945,647)
26.00%
(1,805,868)
220,512
(54,013)
(2,316,280)
2,539,251
-
$
2,865,419
(1,226,050)
-
$
In September 2017, the British Columbia (BC) Government proposed changes to the general corporate income
tax rate to increase the rate from 11% to 12% effective January 1, 2018 and onwards. This change in tax rate
was substantively enacted on October 26, 2017. The relevant deferred tax balances have been re-measured to
reflect the increase in the Company's combined Federal and Provincial (BC) general corporate income tax rate
from 26% to 27%.
Page 26
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
The Company’s unrecognized deferred tax assets are as follows:
Unrecognized deferred income tax assets:
Non-capital losses
Exploration and evaluation assets
Share issue costs
Other
Total unrecognized deferred income tax assets
June 30,
2018
June 30,
2017
$
$
2,552,000
3,639,936
67,051
12,154
6,271,140
$
$
2,182,224
6,359,253
31,707
14,234
8,587,418
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.
Deductible temporary differences, unused tax losses and unused tax credits:
June 30,
2018
June 30,
2017
Expiry date
Range
Non-capital losses
Exploration and evaluation assets
Share issue costs
Other
$
9,403,016 $
12,413,823
248,336
45,121
See below
7,409,201
18,824,237 Not applicable
2036
121,950
42,533 Not applicable
As at June 30, 2018, an estimated income tax refund of $Nil (2017 - $23,991) is recognized in receivables and
advances (Note 7). Income taxes recoverable includes a recovery of $Nil (2017 – $23,991 related to realized
capital losses that are carried back and applied against capital gains reported during the year ended June 30,
2013 / 2014.
The Company has non-capital loss carry-forwards of approximately $9,403,016 that may be available for tax
purposes. The loss carry-forwards are principally in respect of Canadian, Argentine and Chilean operations and
expire as follows:
2019
2020
2021
2022
2023
2035 to 2038
No-expiry
$
Canada
- $
-
-
-
-
6,054,954
-
Argentina
288,009 $
504,701
-
770,576
39,642
-
-
$
6,054,954 $
1,602,928 $
Chile
-
-
-
-
-
-
1,745,134
1,745,134
Page 27
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
June 30, 2018
Canadian Funds
14. Subsequent Event
On October 17, 2018, the Company signed an exploration and option agreement (the “Agreement”) with
Hochschild Mining (“HOC”) on its Indra project in Chile. The Indra project was generated through the
generative efforts of the Company.
HOC has been granted the option to acquire up to a 70% interest in the Indra project, exercisable in 5 stages
over an eight-year, or shorter, earn-in period.
The Agreement requires HOC to make a minimum spend commitment of US$800,000 in exploration
expenditures in the first 18-months of the exploration program, and complete 1,500 metres of drilling within 30
months of the date of the Agreement. In addition, a US$50,000 option payment (received) is to be made to the
Company upon signing the Agreement.
The first earn-in option for HOC to earn 51% interest over three years (total 4.5 years) from the date of the
Agreement requires spending an additional US$5.2 million on exploration and making two staged payments
totalling US$675,000 to the Company. The Company will retain a 30% funded-to production interest in the
Indra project.
The Company will serve as operator during the option phase in return for a 10% management fee on values
less than US$250,000 and 5% fee on over US$250,000.
On July 17, 2018 a total of 60,000 incentive stock options were granted with an exercise price $1.76 per share
for a period of three years. The options vest 50% on grant with the remaining balance vesting in six months.
Page 28
Management Discussion and Analysis
For Mirasol Resources Ltd.
(“Mirasol” or the “Company”)
INTRODUCTION
The Management Discussion and Analysis (“MD&A”) is prepared as of October 26, 2018 and is
intended to supplement Company’s annual audited consolidated financial statements for the year
ended June 30, 2018 (“Current Period”). 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 annual audited consolidated financial statements and related notes for
the year ended June 30, 2018.
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, the Company’s goals and plans going forward, 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. The material factors and assumptions used to develop forward-looking
information include, but are not limited to, the future prices of gold, silver and copper, success of
exploration activities, permitting time lines, currency exchange rate fluctuations, government
regulation of mining operations, environmental risks, the estimation of mineral resources, capital
expenditures, costs and timing of the development of new discoveries, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance coverage, continued availability of
capital and financing, and general economic, market or business conditions.
Forward looking statements are based on the beliefs, estimates and opinions of the Company’s
management on the date the statements are made. The Company undertakes no obligation to
update these forward-looking statements in the event that management’s beliefs, estimates or
opinions, or other factors, should change, except as may be required by applicable law.
This MD&A also uses the terms pit constrained mineral resources estimate and indicated resource.
The Company advises that these terms are recognized by Canadian securities regulations (under
National Instrument 43-101 “Standards of Disclosure for Mineral Projects”), however the US
Securities and Exchange Commission does not recognize these terms. Investors are cautioned not
to assume that any part of or all, of the mineral occurrences in these categories will ever be converted
into reserves. Stephen Nano, President and CEO for the Company and a “Qualified Person” under
National Instrument 43-101 (“NI 43-101”), has reviewed and approved the scientific and technical
information in this MD&A.
1
CORPORATE AND STRATEGIC OVERVIEW
Mirasol (TSXV-MRZ) is a mineral exploration company focused on the exploration and discovery of
Au+Ag and copper (Au, Ag and Cu) deposits via the project generator business model, in the
Atacama-Puna region of northern Chile and Argentina, and in the Santa Cruz Province of southern
Argentina. These regions are highly prospective and host many large-scale precious and base metal
mines, operated by some of the world’s largest mining companies (Figure 1). Mirasol believes well-
managed and focused exploration can deliver further discoveries within its generative regions and
increase shareholder value.
During 2014, the Company recognized that the protracted, industry-wide downturn in exploration
expenditures could create a business opportunity for the Company’s generative exploration program.
While the majority of competitors were inactive, the Mirasol deployed a 3-year countercyclical project
generation strategy. This strategy allowed Mirasol to build a large and diverse portfolio of
prospective Au, Ag and Cu properties in preparation for an upswing in global exploration spending
and the ensuing increase in demand for quality exploration projects.
During 2017, the Company noted that the global precious metal exploration budgets began to
increase again. This trend was further signaled by improving demand for Mirasol’s projects from
leading mid-tier and major precious metal producers. During the Current Period, Mirasol made a
strategic decision to focus a higher proportion of its budget on business development, with the
objective of maximizing partner-funded exploration spending on the Company’s projects.
As a result of the improved demand for projects and the Company’s increased business development
investments, the company has now secured five Options to Joint Venture (“JVs”) deals with both
major and mid-tier precious metals producers on its projects in Chile and Argentina, including the
recently announced (October 17th, 2018) JV with Hochschild Mining (“HOC”) in Chile. Under these
agreements, the JV partners fund all exploration and tenure holding costs, make staged option
payments, and pay management fees to Mirasol for the JVs that Mirasol operates.
During the Current Period the combined partner expenditures on Mirasol’s JVs totaled approximately
C$9 million, which delivered approximately 9,000 m of exploration drilling at Claudia, Curva and at
Gorbea (pre-termination of the JV agreement) and extensive surface geological, geochemical and
geophysical exploration programs at Altazor and Zeus to define drill targets.
The Company has also recently announced that it is expanding the company’s business and
exploration strategy to include self-funded drilling of selected high-grade Au+Ag projects leveraged
to near-mine infrastructure and has closed a C$8.6 million non-brokered private placement to fund
this exploration. The Company will retain the joint venture business model as the central pillar of the
company’s business philosophy and as a non-dilutive path to discovery. Our JV efforts will be
focused on large, district-scale targets where Mirasol will benefit from partnerships with well-funded
producers to explore and develop the resulting discoveries.
The combined outcome of JV partner-funded exploration and income generated from related option
payments and management fees allows Mirasol to focus its available treasury on further exploration
and business development activities while maximizing the potential for discovery with multiple
projects being drill tested.
In Argentina, the Company is monitoring the impact of the recently announced new export tax, and
the rapid currency devaluation (inflation). To date this has not had a measurable impact on Mirasol’s
capacity to operate as a project generator and exploration company in Argentina. Our JV partner in
Santa Cruz, OceanaGold Corporation (“OGC”), is continuing with its exploration programs at the
Claudia project and has commenced a +2,500 m drill program at the Curva project, planned for
completion in the December quarter of 2018.
2
The Company is also continuing to experience strong broad-based interest in our Argentine projects
for potential new joint ventures, from major to mid-tier producers, well funded private and listed junior
resource companies. Notably, expressions of interest are being received from in-country precious
metal producers as well as from companies that are interested in making new or first-time
investments in the country. Our business development team is focusing efforts to convert this
interest into new partner investment in our Argentine projects.
The Company continually assesses the investment and operation climate in Argentina and will adjust
its activities in the country in response to the evolving investment and operational environment.
Our generative work and JV funded exploration in Chile continues to provide opportunity for
discovery in this country and balance to our exposure to Argentina.
Figure 1: Location of Mirasol’s Exploration Projects, Joint Ventures, and Generative Programs.
3
Financial Condition
Mirasol remains in a strong financial position with cash and short-term investment of $26,543,426 as
of June 30, 2018, having raised $8,635,500 through a private placement completed on June 8, 2018.
The annual level of spending by the Company is largely determined by its ability to secure financing
through the sale of its securities, sales of assets and JV arrangements with its industry partners.
During the Current Period, Mirasol incurred total company-wide net cash expenditures of
$4,952,135. The financial statements for the Current Period show a total expenditure of $5,457,985
of which non-cash items such as share-based payments and depreciation totalled to $505,849.
For the Current Period, the total net cash expenditure was distributed between head office corporate
spending of $2,190,108 inclusive of officer’s salaries, board fees, business development, corporate
administration, investor relations and regulatory compliance; and a total net exploration expenditure
of $2,762,028. For the Current Period, the Company has accounted for $6,153,915 in exploration
reimbursements, $380,845 (US$ 300,000) in option payments and $374,356 in management fees
income from JV partners, which are offset against the Company’s exploration and in-country
management and operating costs.
Mirasol’s Exploration Focus
Mirasol is a successful project generator with a mission to create shareholder wealth from resource
discovery.
The Company maintains a high-quality portfolio of exploration properties with the potential to deliver
an economic discovery by applying innovative, concept-driven geological techniques integrated with
detailed field work. Mirasol strategically advances prospects with technical merit by: 1) entering
strong JV earn-in deals with major mining companies, reducing exploration risk while conserving the
Company’s treasury; and /or 2) testing high priority targets with self-funded drill programs where
warranted, thereby positioning the Company to monetize its assets in the event of successful
exploration results. Mirasol’s Joaquin and Virginia Ag discoveries in Argentina are evidence of
successful outcomes of these processes. Joaquin was monetized through sale to Coeur d’Alene
Mines (now Coeur Mining) in 2012.
Project Generation and Business Development
Until recently, the primary focus of the Company’s generative efforts has been the Atacama-Puna
Program where Mirasol is exploring world class Tertiary age mineral belts in northern Chile.
However, during 2016 the change to a pro-business government in Argentina, encouraged Mirasol
to reinitiate exploration on and adjacent to its Santa Cruz projects in Argentina and in some areas
stake new claims to consolidate its project portfolio.
During the 2018 financial year, Mirasol focused a larger proportion of its budget on business
development activities with the objective of securing new JVs for assets within its property portfolio
and other business opportunities to accelerate drill testing of the Company’s assets. The focus on
business development was timed to coincide with an upturn in demand for projects from precious
metal producers, allowing the business development team to secure five new JVs with major and
mid-tier mining companies in Chile and Argentina over the last 18 months.
Mirasol is seeing a continuing growth in interest in its Au+Ag and Cu project portfolio from companies
seeking new JVs and is focused on securing new agreements during the 2019 financial year.
4
Chile/Argentina: Atacama – Puna Generative Region
The Company’s generative program in the Atacama-Puna region encompasses a 1,700 km-long
segment of three north-south oriented prolific mineral belts which run through Chile and Argentina
and host many world-class Cu and Au mines and occurrences, and are of differing ages in millions
of years (Ma; Figure 2), and from youngest to oldest include:
• Miocene to Pliocene (Mio-Pliocene, 23-5 Ma): High-sulfidation epithermal (“HSE”) Au+Ag
• Middle Eocene to Early Oligocene (Eocene-Oligocene 40-28 Ma): Porphyry Cu+Mo
• Paleocene to Early Eocene (Paleocene, 66-53 Ma): Low-intermediate-sulfidation epithermal
Au+Ag and porphyry Cu+Mo
Figure 2: Mirasol’s Atacama - Puna Generative Program.
Mirasol uses its proprietary prospectivity analysis techniques to target areas with heightened
potential for discovery of quality mineral prospects. The Company also applies a number of risk
qualifying filters to both minimize exposure to and/or increase awareness of areas that may have
environment and/or community sensitivities.
5
Following are brief explanations of the three metallogenic belts and Mirasol’s target concepts:
Miocene – Pliocene belt
This mineral belt in-particular has been the focus of two recent substantial discoveries of multi-
million-ounce HSE oxide Au deposits;
• Alturas deposit, with Inferred resources of 6.8 Moz Au grading 1.0 g/t Au contained within
211 Mt (Barrick 2017 Annual Report; unchanged from 2016).
• Salares Norte deposit, with Indicated + Inferred resources of 3.7 Moz Au at 4.89 g/t Au and
49.5 Moz Ag contained within 23.3 Mt (Gold Fields Ltd. Mineral Resource & Mineral Reserve
Supplement 2017).
Alturas and Salares Norte are large-tonnage, near-surface oxidized Au deposits, which are largely
concealed beneath geochemically barren, but hydrothermally altered, cap rocks (the “steam heated
cap”) which obscured earlier recognition of these prospects. Their discoveries were further
complicated by their remote location and high elevation. Mirasol is actively exploring for this type of
Au deposit at its Atlas and Titan projects in the Gorbea property package and at the Altazor and
Zeus projects, where Mirasol recently announced (news release November 21, 2017 and February
26, 2018) the signing of two Option and Farm-in Agreements with a subsidiary of Newcrest Mining
Limited (“NCM”).
In the Mio-Pliocene belt north of the Maricunga Belt, Mirasol has approximately 116,000 ha of
granted exploration claims. In the Mio-Pliocene aged “Southern Porphyry Belt”, Mirasol holds
exploration rights to approximately 24,000 ha of granted claims and claims applications.
Middle Eocene – Early Oligocene belt
The Eocene-Oligocene belt hosts many giant porphyry Cu mines such as Escondida, Chuquicamata
and Collahuasi that significantly contribute to the annual Cu production in Chile. This Cu belt is
considered a “mature exploration terrain” but it is also recognized as prospective for future Cu
discoveries. The continued prospectivity of this belt is attributed to its extensive post-mineral cover,
and in some cases, its “geochemically barren” alteration caps concealing a substantial proportion of
the most productive and logistically accessible segments of the belt. While Cu was not previously
considered a core commodity for Mirasol, a number of factors point toward possible supply deficits.
Mirasol considers the supply shortfall as a driver for increased demand for Cu exploration projects
and accordingly, Mirasol has staked new claims and expanded existing claims holdings in this belt
to secure quality exploration ground to build a pipeline of Cu exploration projects.
Mirasol presently holds approximately 42,000 ha in the Cu-rich Eocene-Oligocene belt, including the
Rubi and Odin projects.
Paleocene to Early Eocene belt
This belt hosts significant mines, including BHP’s Spence porphyry Cu+Mo mine, and Yamana
Gold’s (YRI) El Peñón, a high-grade, low-sulfidation epithermal (“LSE”) Au+Ag deposit. El Peñón is
the largest precious metal mine in the Paleocene belt with contained metal of 7 Moz Au and 188 Moz
Ag (reserves, resources and historic production; SNL Metals & Mining – December 31, 2017). Here,
Mirasol is targeting large-scale multi-million ounce epithermal Au+Ag and large porphyry Cu
deposits. Mirasol is actively exploring for this type of Au deposit at its Indra project where Mirasol
recently announced the signing of an Option and Earn-in Agreements with HOC (news release
August 29 and 30, 2018 and October 17th, 2018). Mirasol presently controls approximately 35,000
ha of granted exploration claims in Paleocene belt.
6
Mirasol Projects in Atacama-Puna
Mirasol’s portfolio of projects and JVs in Atacama-Puna Generative Region include:
• Altazor-NCM JV: Altazor is an HSE Au + project covering 33,200 ha located in an
underexplored section of the Mio-Pliocene age mineral belt. Mirasol has completed a first-
pass reconnaissance sampling over approximately 50% of the project area and reported the
results on October 11, 2017. The results show comparable geology, alteration patterns and
Au ppb level anomalous assays in soil and rock chip samples to those recorded/reported
from surface sampling at Gold Fields’ Salares Norte Project, which has a geological setting
analogous to that at Altazor in the Mio-Pliocene mineral belt of Chile.
On November 21, 2017 Mirasol announced the signing of an Option and Farm-in Agreement
with Newcrest International Pty Limited. The JV agreement grants NCM the right to acquire
up to an 80% interest in the Altazor project by making US$ 10 million in exploration
expenditures, delivering a feasibility study and, at Mirasol’s request, funding to commercial
production the Company’s 20% retained project equity. The first-year spending commitment
of US$ 1.5 million has been directed to an aggressive property wide surface exploration and
geophysics program for drill target definition. NCM is also required to pay US$ 1.9 million in
staged option payments to Mirasol over the duration of the agreement.
• Zeus-NCM JV: Zeus is a gold project covering 18,500 ha that is located 40 km east-south-
east of the Salares Norte project. Zeus presently hosts two recognized breccia Au targets:
Artemisa and Apollo. Au grades from rock chip sampling ranging to 1.28 g/t Au have been
found in a prospective high-level epithermal breccia setting at Apollo. The reconnaissance
stage exploration results from both prospects are considered very encouraging for this early
stage of exploration work.
On February 26, 2018, Mirasol announced the signing of an Option and Farm-in Agreement
with NCM. The JV agreement grants NCM the right to acquire up to an 80% interest in the
Zeus project by making US$ 9.5 million in exploration expenditures, delivering a feasibility
study and, at Mirasol’s request, funding to commercial production the Company’s 20%
retained project equity. NCM is also required to pay US$ 1.0 million in staged option
payments to Mirasol over the duration of the agreement and committed to spending US$ 1.5
million over the first 18 months. On April 24, 2018, Mirasol announced the beginning of a US$
750,000 surface exploration program on the project.
•
Indra-HOC JV: Indra is a 21,000 ha epithermal precious metals project is located in the
Paleocene Age Mineral Belt, 5 km south of the 1.37 Moz Au equivalent El Guanaco Au +
mine in northern Chile (reserves, resources and historic production; SNL Metals & Mining –
December 31, 2017). The project is interpreted to host the upper levels of a large epithermal
Au+Ag system. The project is characterized by a large carbonate+silica vein and breccia
system with weakly anomalous Au+Ag rock chip assays and strongly anomalous epithermal
path finder geochemistry.
On August 29, 2018, Mirasol announced the signing of a Letter of Intent (“LOI”) for a JV with
HOC. The LOI gives HOC the right to acquire, in multiple stages, up to 70% of the project
by completing a series of exploration and development milestones and making staged option
payments. Mirasol can elect to contribute its 30% of development expenditures or exercise
an option for HOC to finance 100% of the development costs through to production, in this
latter scenario, Mirasol would retain a 25% interest in the project and HOC’s interest would
be increased to 75%. HOC is also required to pay US$ 725,000 in staged option payments
to Mirasol over the duration of the agreement and committed to spending US$800,000 over
the first 18 months. On October 17, 2018, Mirasol announced the signing of a definitive
agreement and the beginning of a surface exploration program on the project.
7
• Gorbea: Nine precious metal properties totaling approximately 22,200 ha, including the Atlas
project, were under JV agreement with Yamana Gold (“YRI”), (news release March 26, 2015).
In April 2018, YRI advised the company of its decision to terminate the Gorbea JV (news
release April 13, 2018). Over the term of the JV, YRI invested approximately C$ 10 million
on exploration at Gorbea, drilling over 11,600 m of targets focused within the Atlas and Titan
projects.
• Rubi project: Rubi is located in the El Salvador Cu-Au mining district, Chile, and hosts the
Lithocap, Zafiro and Puertozuelo porphyry Cu targets. The El Salvador district hosts large-
scale porphyry Cu mines operated by Codelco, the Chilean national mining company. Mirasol
has continued to expand its claims holdings to secure possible extensions and new prospect
areas, resulting in a total claims area of 26,000 ha.
• Odin project: Odin is located 20 km north of the giant Escondida Cu mine. The Odin claims
cover a previously unexplored Mirasol-generated conceptual porphyry Cu mineralization
target, concealed by a strongly altered geochemically barren lithocap. In Q1, Mirasol
reported the expansion of claims at Odin from 900 to 5,700 ha (news release July 25, 2017).
• Generative Prospect Portfolio: As of the end of September 2018, and in addition to Gorbea,
Altazor, Zeus, Rubi and Odin; Mirasol holds approximately 112,000 ha of 100% owned Au,
Ag, Cu prospects in 28 areas of claims, which provide a prospect “pipeline”. These claims
have been staked as part of the Company’s ongoing project generation program in the region.
8
Argentina: Santa Cruz Province Generative Region
The Company’s generative program in Argentina is focussed in Santa Cruz Provence and
encompasses the area of the Deseado Massif, a 60,000 sq-km region of upper-middle Jurassic age
volcanics which are recognized as an under-explored terrain with high potential for hosting low- and
intermediate-sulfidation epithermal Au and Ag deposits.
The Santa Cruz Province hosts seven operating Au+Ag mines with the recent commissioning of the
Cerro Morro mine operated by YRI. Five of the mines are owned and operated by international, mid-
tier to major sized, precious metal producing companies. Mineralization in Santa Cruz typically
occurs in high-grade vein systems with both Low Sulfidation Epithermal (“LSE”) and Intermediate
Sulfidation Epithermal (“ISE”) styles. These deposits are mined by both open-pit and bulk-method
underground mining techniques.
Figure 3: Santa Cruz Project Portfolio.
Mirasol has been exploring in Santa Cruz for over 10 years and has a successful track record of
targeting, securing and delivering attractive, district-scale projects to precious metal producers as
demonstrated by the discovery of two Ag deposits: Joaquin, sold to JV partner Coeur Mining in 2012;
and Virginia which remains 100% owned by the Company.
The Company’s strategy in Santa Cruz since December 2016, has been to focus on consolidating
claims holdings around key mineral districts where Mirasol already has established projects and
where the Company’s exploration has confirmed the presence of and potential for, large-sized
precious metal systems.
9
On June 8, 2018, the Company closed a private placement to raise funds to expand its exploration
strategy and accelerate the drill testing of high grade near mine infrastructure projects in the
Company’s portfolio. The self-funded drill testing of these properties will give Mirasol greater deal
making leverage and a better position to monetize its assets in the event of positive exploration
results. The Company believes that its new strategy can accelerate the path to discovery and the
potential for shareholder wealth creation.
Mirasol Projects in Santa Cruz
Mirasol’s portfolio of projects in Santa Cruz comprises (Figure 3):
• Claudia-OGC JV: The large Claudia Au+Ag project (approximately 102,000 ha) comprises
several drill-ready prospects and is contiguous with the world-class Cerro Vanguardia Au+Ag
district operated by Cerro Vanguardia S.A., a 92.5 % owned subsidiary of Anglo Gold Ashanti
(“CVSA”).
A definitive JV option agreement was signed with OceanaGold Corporation on October 20,
2017, granting OGC the right to earn up to 75% of the project by spending US$ 10.5 million
in exploration expenditures, delivering a feasibility study, a decision to mine and funding
Mirasol’s 25% project equity position to commercial production. If OGC elects to stay in the
JV to the 51% earn-in, OGC will have paid Mirasol US$ 1 million in staged cash payments.
Further, OGC will make a one-off payment to Mirasol of US$ 250,000 if the Au+Ag ounces in
a non-NI 43-101 compliant mineral inventory, outlined in the Curahue prospect Io Vein
preliminary block model by Mirasol’s previous JV partner CVSA, are included by OCG within
the PEA, or feasibility stage, declaration of resources. OGC and Mirasol completed a first
field exploration program at Claudia and reported drill results and new target definition on
September 17, 2018
• La Curva-OGC JV: The La Curva Au project with 36,100 ha includes three priority drill-ready
prospects along the La Castora trend and a series of other early stage prospects in the Curva
West area.
On May 18, 2017, Mirasol signed a definitive JV option agreement with OGC for a JV to
explore the La Curva project in Santa Cruz Argentina for LSE Au+Ag mineralization. The
agreement grants OGC the right to earn up to 75% of the project by spending US$ 7.0 million
in exploration expenditures, delivering a feasibility study, a decision to mine and funding
Mirasol 25% project equity position to commercial production. If OGC elects to stay in the
JV to the 51% earn-in, OGC will have paid US$ 1.5 million in staged cash payments. On
October 26, 2017, OGC and Mirasol announced that they initiated a 2,500 m diamond core
drill (“DDH”) program to test a series of drill targets along the Castora Au + Trend. Results
from the program were announced on February 28, 2018 and September 19, 2018.
• Nico: The project is an ISE Au+Ag target located 85 km from the Pan American Silver
Manantial Espejo Ag+Au combination open-pit and underground mine. During the Current
Period, Mirasol reported “bonanza” high-grade Au+Ag results from sampling the Company’s
newly discovered Aurora and Resolution vein zones. Best results to-date from surface chip
sampling of oxidized typically sub-meter veins containing 35.09 g/t Au and 2,095 g/t Ag (at
Aurora), and 12.28 g/t Au and 6,181 g/t Ag (at Resolution). Saw-cut channel, and geophysical
survey were completed on the Resolution prospect to define drill targets (see new release
from July 5, July 12 and August 27, 2018). On March 2, 2018, the Company also reported
the delineation of a new Au+Ag vein corridor at the Vittoria Vein Trend.
• Virginia: At this epithermal Ag project, Mirasol has outlined high-grade Ag mineralization in
seven separate deposits (as vein shoots). Mirasol’s work at Virginia has delineated an initial
open pit constrained NI 43-101 compliant mineral resource of Indicated resources totalling
11.9 Moz Ag grading 310 g/t Ag, and additional Inferred resources totalling 3.1 Moz Ag
10
grading 207 g/t Ag. Mirasol’s claims holdings have recently been expanded to 70,000 ha
where encouraging reconnaissance float rock sampling returned assays grading up to
6,586.3 g/t Ag, outlining a series of aligned float blocks that may indicate the presence of
undiscovered high grade Ag veins under thin post mineral cover.
• Exploration portfolio: The Company’s portfolio of additional quality precious metal properties
totaling approximately 125,000 ha, contains a number with drill-ready Au+Ag targets,
including the Homenaje, Sascha and Libanesa projects.
HIGHLIGHTS FOR THE PERIOD JULY 1, 2017 TO OCTOBER 26, 2018
Exploration Financial Summary
The Company’s total exploration costs include generative exploration, property retention costs of the
exploration project portfolio, costs associated with preparing projects for joint venture, in-country
operation and management, and local value added taxes (VAT). For the Current Period Mirasol
invested $1,509,158 (Table 3) on exploration in Chile and $1,252,870 in Argentina. The Company
received $6,153,915 in cost recoveries for the Current Period; claims fees, salaries of Mirasol
employees seconded to the JV programs and other operational costs that are covered by the JV
partners under the terms of the JV agreements. Mirasol earned $374,356 of management fee
income during the period.
Mirasol also received JV option payments of US $550,000 comprised of:
•
•
•
•
In October 2017, a Claudia JV signing payment from OGC of US$ 100,000
In December 2017, an Altazor JV signing payment from NCM of US$ 100,000
In February 2018, a Zeus JV signing payment from NCM of US$ 100,000
In August 2018, a La Curva JV first anniversary option payment of a US$ 200,000 from OGC
signalling the continuation of JV into its second year of exploration.
In October 2018, an Indra JV signing payment from HOC of US$ 50,000.
Corporate Matters
On December 19 and 20 of 2017, the Company granted a total of 550,000 incentive stock options
under its incentive stock option plan to the employees and consultants, directors and officers. The
options are exercisable at $1.61 and $1.65 respectively for a period of three years from the date of
grant.
On September 12, 2017, the Company granted 385,000 incentive stock options under its incentive
stock option plan to certain officers, employees and consultants. All the options are exercisable at
$1.80 per share, with 235,000 options being exercisable for a period of three years from the date of
grant, and 150,000 options, which are subject to certain vesting restrictions, being exercisable for a
period of four years from the date of grant.
On April 30, 2018, the Company announced the results of its 2017 Annual General Meeting of
shareholders, which was held on April 26, 2018. The shareholders of the Company represented at
the Meeting elected Stephen C. Nano, Nick DeMare, Borden R. Putnam III, Dana H. Prince, John
Tognetti and Patrick C. Evans as directors of the Company for the ensuing year. Further,
shareholders also approved: (i) the re-appointment of Davidson & Company as the Company’s
independent auditor; and (ii) the Amended and Restated Equity Incentive Plan, as described in the
Information Circular prepared for the Meeting.
11
On May 2, 2018, the Company announced a non-brokered private placement of up to 2,500,000
Units of the Company (“Units”) at a price of $2.00 per Unit, to raise aggregate gross proceeds of up
to $5,000,000. Each Unit consisted of one common share and one-half of one non-transferable
common share purchase warrant (each whole warrant, a “Warrant”). Each warrant is exercisable into
one additional common share of the Company for a period of 24 months from closing at an exercise
price of $3.00 per share. A substantial portion of the proceeds from the sale of the Units will be used
to further explore and test certain prospective Au+Ag projects in the Santa Cruz Province, Argentina,
and the balance will be used for general working capital.
On June 8, 2018, the Company announced the closing of the non-brokered private placement. The
placement was over-subscribed, and the Company issued 4,317,750 Units at a price of $2.00 per
unit and received gross proceeds of $8,635,500.
On June 29, 2018, the Company announced the appointment of Mathew Lee as Chief Financial
Officer effective July 1, 2018.
On July 17, 2018, the Company announced the appointment of Jonathan Rosset as Vice-President
Corporate Development and the grant of 60,000 stock options and 110,000 restricted share units
(“RSUs”) under its Equity Incentive Plan to certain officers, employees and consultants. The options
are exercisable at $1.76 per share for a period of three years from the date of grant and are subject
to vesting whereby 50% shall be vesting immediately and the balance shall vest in six months,
subject to certain contractual conditions.
The RSUs are also subject to vesting whereby 50% shall vest on the date that new contracts are
entered into with each recipient, and the balance shall vest 12 months thereafter. The RSUs entitle
the holder to be issued one common share for each vested RSU. The Company currently has 3.1
million options allocated of the 5.4 million options available under the Company’s Options Plan.
JOINT VENTURE, BUSINESS DEVELOPMENT AND EXPLORATION ACTIVITIES
FOR THE PERIOD JULY 1, 2017 TO OCTOBER 26, 2018
Joint Venture Activities
Altazor-NCM JV: Altazor Au project, northern Chile
On November 21, 2017, the Company announced that it signed an Option and Farm-in Agreement
with Newcrest International Pty Limited, a subsidiary of NCM for the Altazor Au + project in
northern Chile. NCM has the right to acquire, in multiple stages, up to 80% of the Mirasol owned
Altazor project by completing a series of exploration and development milestones and making cash
payments to Mirasol. The agreement includes the following key terms:
Option phase:
• A US$ 100,000 cash payment upon signing the agreement;
• NCM has a minimum commitment to spending US$ 1.5 million in the first-year exploration
program;
• Mirasol will operate the project during the Option phase (1st year) and will receive a 10%
management fee; and
• At the end of the first year, NCM will have the right to exercise the farm-in phase of the
agreement.
12
JV farm-in phase:
• Stage 1: If NCM elects to exercise the option to farm-in, NCM will make a cash payment
to Mirasol of US$ 500,000, and will have the right to earn 51% of the Project over a 4-
year period (total 5 years) by spending an additional US$ 8.5 million (total US$ 10 million);
• Stage 2: If NCM elects to proceed to Stage 2 of the farm-in, it will make a cash payment
to Mirasol of US$ 650,000 and have the right to earn 65% of the Project over an additional
2-year period (total 7 years), by funding the delivery of a positive preliminary economic
assessment (“PEA”), in accordance with NI 43-101 on a resource of not less than
1,000,000 ounces of Au + at a cut-off grade of 0.30 grams per tonne (g/t);
• Stage 3: If NCM elects to proceed to Stage 3 of the farm-in, it will make a cash payment
to Mirasol of US$ 650,000 and have the right to earn 75% of the Project over an additional
2-year period (total 9 years) by funding the lesser of either: (i) additional expenditures
after the completion of Stage 2 of US$ 100 million; or (ii) the delivery of a positive
bankable Feasibility Study (BFS), in accordance with NI 43-101;
• Stage 4: After completion of Stage 3, Mirasol can elect to contribute its proportionate
share (25%) of further development expenditures or exercise a financing option requiring
NCM to finance Mirasol’s share of the development costs through to production in
exchange for a further 5% interest in the Project. If Mirasol exercises the financing option:
(i) Mirasol’s interest will be reduced from 25% to 20% and NCM’s interest will be
increased from 75% to 80%, and (ii) the loan will have an interest rate of LIBOR + 3%
and will be repaid from 70% of Mirasol’s share of dividends and be secured against the
shares of the Mirasol subsidiary that holds the interest in the Project and its right to
dividends.
Exploration Program Results
Mirasol’s initial reconnaissance sampling has been completed over approximately 50% of the project
area in 2017. A total of 216 stream sediment, 395 soils and 933 rock chip samples have been
collected and returned low-level but significantly anomalous Au, Ag, Cu, Pb, Zn and epithermal path
finder element assays, from sampling in the vicinity, and of mapped breccia bodies (news release
October 11, 2017). The Altazor surface results show comparable ppb level anomalous Au + assay
in soils and rock chips to those recorded at surface at Gold Field’s Salares Norte Project, which lies
in a geological setting analogous to Altazor.
The JV has completed an approximately US$1.5 million surface exploration program at Altazor since
commencement of the JV in November 2017. This program included geological mapping and rock
chip sampling, alteration modeling with Hyperspectral alteration technology, a project-wide
magnetics and soil survey and a large-area Controlled Source Audio-Magnetotellurics (CSAMT)
geophysical survey.
Analysis of exploration data is currently being completed. Results and exploration plans for the
coming southern hemisphere summer campaign will be reported in the December quarter of 2018.
The JV has recently staked an additional 10,000 ha of claims covering potential extension of the
Altazor alteration system, bringing the total area covered by the project to approximately 32,000 ha.
NCM assembled a new Chile based exploration team and has elected to take operatorship of the
exploration program from July 1, 2018. This has freed Mirasol exploration and management teams
up to peruse new project opportunities for the Company.
Zeus-NCM JV: Zeus Au project, northern Chile
On February 26, 2018, the Company announced the signing of an Option and Farm-in Agreement
with Newcrest International Pty Limited for the Company’s Zeus Au+Ag project in northern Chile.
13
NCM has the right to acquire, in multiple stages, up to 80% of the Mirasol-owned Zeus Project by
completing a series of exploration and development milestones and making cash payments to
Mirasol.
The agreement includes the following key terms in addition to NCM funding the underlying Option
agreement detailed in the next section.
Option phase:
• A US$ 100,000 cash payment upon signing the agreement;
• NCM has a minimum commitment to spending US$ 1.5 million in the first 18-month
exploration program;
• Mirasol will operate the project during the Option phase and will receive a 10%
management fee; and
• At the end of the Option phase, NCM will have the right to exercise the farm-in phase of
the agreement.
Farm-in phase:
• Stage 1: If NCM elects to exercise the option to farm-in, NCM will make a cash payment
to Mirasol of US$ 400,000 and will have the right to earn 51% of the Project over a 4-year
period (total 5.5 years) by spending an additional US$ 8 million (total US$ 10 million);
During the Stage1 period, NCM will incur a minimum USD$ 750,000 per year in
exploration expenditure.
• Stage 2: If NCM elects to proceed to Stage 2 of the farm-in, it will make a cash payment
to Mirasol of US$ 500,000 and have the right to earn 65% of the Project over an additional
2-year period (total 7.5 years), by funding the delivery of a positive preliminary economic
assessment (“PEA”), in accordance with NI 43-101 on a resource of not less than
1,000,000 ounces of Au + at a cut-off grade of 0.30 grams per tonne (g/t);
• Stage 3: If NCM elects to proceed to Stage 3 of the farm-in, it will have the right to earn
75% of the Project over an additional 2-year period (total 9.5 years) by funding the lesser
of either: (i) additional expenditures after the completion of Stage 2 of US$ 100 million;
or (ii) the delivery of a positive bankable Feasibility Study (BFS), in accordance with NI
43-101;
• Stage 4: After completion of Stage 3, Mirasol can elect to contribute its proportionate
share (25%) of further development expenditures or exercise a financing option requiring
NCM to finance Mirasol’s share of the development costs through to production in
exchange for a further 5% interest in the Project. If Mirasol exercises the financing option:
(i) Mirasol’s interest will be reduced from 25% to 20% and NCM’s interest will be
increased from 75% to 80%, and (ii) the loan will have an interest rate of 12-month LIBOR
+ 3% and will be repaid from 70% of Mirasol’s share of dividends and be secured against
the shares of the Mirasol subsidiary that holds the interest in the Project and its right to
dividends.
Underlying Ladera Option agreement
• 2,500 ha of claims that form part of the 18,480 ha Zeus project is controlled by Mirasol
via a 5-year option to purchase agreement with the underlying property owner.
The remainder of the project is 100% owned by Mirasol. On its election, Mirasol can
acquire 100% of these claims by making staged option payments totalling US$ 2.75
million over the 5 years with US$ 2.45 million of the payments due in the 5th year of the
option.
14
• The property owner will retain 1.5% NSR royalty; Mirasol has a right to buy 0.5% of that
royalty for US$ 3.0 million. These option payments are being funded by NCM as part of
the Mirasol – NCM Zeus option agreement.
Exploration Program Results
A US$ 750,000 surface exploration program was announced on April 24, 2018. The program focus
was on the known breccia bodies of the Apollo and Artemisa prospects, and included detailed
mapping, gridded systematic soil and rock chip sampling geochemistry, CoreScan alteration
mapping and 32 line-km of CSAMT geophysics.
Analysis of exploration data is currently being completed. Results and exploration plans for the
coming southern hemisphere summer campaign will be reported in the December quarter of 2018.
NCM assembled a new Chile based exploration team and has elected to take operatorship of the
exploration program from July 1, 2018. This has freed Mirasol exploration and management teams
up to peruse new project opportunities for the Company. Zeus hosts two breccia-hosted Au + targets:
Artemisa and Apollo (news release January 16, 2018):
• Artemisa: Mirasol’s exploration has outlined an 800 m diameter zone of advanced argillic
alteration developed in a breccia where reconnaissance level soil sampling has defined a
low-level coincident Au+Ag+As+Cu+Pb+Sb+Mo geochemical anomaly, which overlies the
edge of the mapped breccia body.
• Apollo: Mirasol has identified a 0.6 x 1.2 km crescent-shaped zone of advanced-stage argillic
and intermediate-argillic altered pyroclastic breccias and epiclastic sediments which outcrop
through an erosional window through post-mineral (late) lava flows. Mirasol interprets this
alteration to be hosted within a phreatomagmatic breccia and flow-dome complex, which,
while poorly exposed, presents a geological setting favorable for hosting HSE occurrences.
Mirasol has undertaken initial mapping, rock chip sampling and alteration modelling from 218
samples collected throughout the Apollo “alteration window”. Assay results show wide-
spread strongly anomalous Ag, As, Ba, Hg, Sb, with 38 of 218 samples collected in the altered
window returning Au assays in the range 0.1 to 1.28 g/t Au.
Indra-HOC JV: Indra Precious Metals project, Northern Chile
On October 17, 2018, the Company announced the signing of an Option and Earn-in Agreement
with HOC for the Company’s Indra precious metals project in northern Chile. HOC has the right to
acquire, in multiple stages, up to 70% of the Mirasol-owned Indra project by completing a series of
exploration and development milestones and making cash payments to Mirasol. The agreement
includes the following key terms:
Option phase:
• A US$ 50,000 cash payment upon signing the agreement;
• A minimum commitment for HOC to spend US$ 800,000 in the first 18-month exploration
program and to drill a minimum 1,500m within 30 months of the date of the agreement;
• Mirasol will operate the Project during the Option phase and will receive a 10%
management fee from exploration contracts with values of less than US$ 250,000 and
5% from contracts with values of more than US$ 250,000; and
• At the end of the 18-month period, HOC will have the right to exercise the earn-in phase
of the agreement.
15
Earn-in phase:
• Stage 1: If HOC elects to exercise the option to earn-in, HOC will have the right to earn
51% of the project over a 3-year period (total 4.5 years) by spending no less than US$
5.2 million (total US$ 6 million) and making two staged payments totalling US$ 675,000;
• Stage 2: If HOC elects to proceed to Stage 2 of the earn-in, HOC will have the right to
earn 60% of the project over an additional 3-year period (total 7.5 years), by funding the
delivery of a positive preliminary economic assessment, in accordance with NI 43-101 on
a resource of not less than 1,000,000 ounces of Au + at a cut-off grade of 0.50 grams
per tonne (g/t);
• Stage 3: If HOC elects to proceed to Stage 3 of the earn-in, HOC will have the right to
earn 70% of the project over an additional 3-year period (total 10.5 years) by funding the
delivery of a feasibility study, in accordance with NI 43-101;
• Stage 4: After completion of Stage 3, Mirasol can elect to contribute its proportionate
share (30%) of further development expenditures or exercise a financing option requiring
HOC to finance Mirasol’s share of the development costs through to production in
exchange for a further 5% interest in the project. If Mirasol exercises the financing option
Mirasol’s interest will be reduced from 30% to 25% and HOC’s interest will be increased
from 70% to 75%.
The LOI contains other customary terms including extension rights to increase the
duration of each stage 1, 2 or 3 for cash payments to Mirasol and 2% NSR dilution royalty,
triggered upon dilution of a party’s interest to 10% or below, if the agreement proceeds
beyond 51% earn-in.
Exploration Program Results
The Indra project was staked by Mirasol as an outcome of the Company’s Atacama – Puna
Generative exploration program and encompasses what Mirasol interprets may be the upper levels
of a large epithermal Au-Ag system. Mirasol has identified a limited number of prospect pits at Indra
estimated to be from the 1900’s however, there is no evidence of modern exploration at the project
despite year-round access and its location adjacent to an operating mine (see news release August
30, 2018).
The project is located in Paleocene Age Mineral Belt of northern Chile. The Belt hosts a number of
world class mines, including YRI’s El Penon (LSE) Au–Ag mine (6.95 Moz Au and 188.1 Moz Ag)
and BHP Billiton’s Spence porphyry-copper mine (14 Mt of Cu) (reserves, resources and historic
production; SNL Metals & Mining – June 30, 2018).
The project hosts the following encouraging prospects:
• Agni, with a large chalcedony and opal silica alteration system and associated silica –
barite structures; and
•
Indra, with a large carbonate-silica vein and vein-breccia zone.
The initial program comprises of detailed geological mapping and surface rock and trench
geochemical sampling, along with a 2,100 line km ground magnetic and additional electrical
geophysical surveys to define drill targets at the project.
On October 17, 2018, Mirasol announced that it initiated work on the Indra project. Mirasol is
operating the Indra exploration program and currently has a team of 3 geologists, field technicians
and a geophysical crew undertaking detailed mapping, reconnaissance and progressing the ground
magnetics survey.
16
This phase of the exploration program is scheduled to be completed during the December quarter
of 2018 and is designed to identify focus areas for potential trenching and deep penetrating
geophysics prior to drill testing.
Gorbea-YRI JV Termination: Gorbea Au Belt, northern Chile
On April 13, 2018 the Company announced the termination of the Gorbea Joint Venture with YRI.
Since inception of the JV Agreement, YRI has incurred exploration expenditures in-excess of
C$ 10 million on the properties which includes 11,640 m of drilling; YRI has also made US
$580,000 in option payments to Mirasol.
Exploration Program Results
During the 2017-2018 exploration season (third year of JV) YRI re-commenced drilling at Atlas with
a seven-hole, 2,600 m DDH program (see news release November 14, 2017), and initiated
reconnaissance level surface exploration at the Ventura, Orion and Siro projects.
On September 11, 2017, the Company reported results from the second season of drilling by YRI at
the Atlas Project. The best results from this drill campaign include:
• 1.07 g/t Au and 1.78 g/t Ag over 114.1 m (including 2.49 g/t Au and 3.08 g/t Ag over 36 m;
DDH 15); and
• 0.32 g/t Au and 0.81 g/t Ag over 45.8 m (DDH 16).
Information gathered from the second season of exploration indicate that the mineralization at Atlas
is hosted in a cluster of phreatomagmatic and hydrothermal breccia bodies that when combined,
outline a larger breccia complex. Preliminary geological models show mineralization identified at
Atlas is hosted in both the breccia bodies and in stratabound zones of vuggy silica developed in the
wall rock adjoining the breccia.
Yamana drilling at the Atlas project through to the end of the second season outlined precious metal
mineralization at the SHZ prospect over an area of 650 x 125 m and a vertical depth in excess of
200 m (see Table 1; news release September 11, 2017). The SHZ mineralized zone is open at depth
and laterally in all directions beyond the area of current drilling. As defined to-date, the top of
mineralization is located between approximately 255 to 310 m depth beneath altered cap rocks, a
characteristic in-common with other recent, HSE Au discoveries elsewhere on this same mineral belt
in Chile.
Results from the 2017-2018 third season of drilling and surface exploration, were reported to Mirasol
at termination of the YRI JV. An integrated analysis of all results generated by the JV is in progress
and will be reported along with the Company’s future plans for the Gorbea Project during the
December 2018 quarter.
17
Table 1: Atlas Key DDH Intersections to Date (as at September 2017)
La Curva-OGC JV: La Curva Au Project, Santa Cruz, Argentina
Mirasol’s exploration at the Curva project outlined three priority drill ready prospects, the Cerro
Chato, Loma Arthur and SouthWest prospects. The geological setting of the La Curva project is
prospective for high-grade LSE breccia/sheeted veinlet, and fissure vein styles of Au+Ag
mineralization.
Mirasol signed an LOI with OGC on January 24, 2017 (see news release January 30, 2017), and the
definitive JV option agreement signed on May 18, 2017 and the first JV option payment of US$
100,000 was received by Mirasol (news release May 25, 2017). Mirasol operates this JV and is
receiving a 5% management fee.
The JV completed 2,550 m of drilling in the first JV year at the Castora trend. On October 9, 2018
the JV commenced second season drilling with a + 2,500 m drill program at the project to follow-up
and test additional targets at the Castora Trend and to test new targets at the Curva West prospect.
Exploration Program Results
On February 28, 2018, Mirasol announced the results from the first season of drilling at Curva. The
18-hole, 2,550 m, DDH program provided an initial test of three prospects on the Castora Trend:
Cerro Chato, Loma Arthur and SouthWest. Drilling intersected widespread pervasive argillic
alteration, silicification and Au+Ag mineralization indicative of a large LSE Au+Ag system (Table 2).
Highlights include:
• 0.48 g/t Au and 2.1 g/t Ag over 47.9 m (CC-DDH-01)
• 0.61 g/t Au and 2.7 g/t Ag over 106.2 m (SW-DDH-02)
18
Presently, two distinct stages of Au mineralization are recognized: Stage 1) broad zones (up to
106.2 m downhole) of lower-grade, early quartz+pyrite mineralization; and Stage 2) an overprinting
phase of higher-grade multi-pulse epithermal veins and veinlets with individual assays up to 12.72
g/t Au and 145.4 g/t Ag over 0.8 m (SW-DDH-02). The better DDH intersections include:
• 0.72 g/t Au and 2.6 g/t Ag over 0.8 m (including 6.12 g/t Au and 18.6 g/t Ag over 19.65
m); and 1.24 g/t Au and 2.0 g/t Ag over 5.75 m (including 5.99 g/t Au and 5.9 g/t Ag over
0.85 m; CC-DDH-01)
• 1.22 g/t Au and 0.7 g/t Ag over 13 m (including 1.81 g/t Au and 0.7 g/t Ag over 7.4 m;
LA-DDH-04).
• 2.33 g/t Au and 31.1 g/t Ag over 6.2 m (including 6.88 g/t Au and 84.9 g/t Ag over 1.8
m), and 0.82 g/t Au and 2.2 g/t Ag over 26.7 m (including 3.5 g/t Au and 11.3 g/t Ag
over 1.45 m; SW-DDH-02).
Preliminary geological interpretation suggests the Castora Trend prospects represent a series of
intrusive flow dome related maar diatreme breccias.
On September 19, 2018, Mirasol announced the receipt of the US$ 200,000 option payment
confirming that OCG will continue into the 2nd year of the La Curva JV. OGC has met the first-year
minimum JV commitments spending approximately US$ 1.50 million to the end of May 2018 (against
US$ 1.25 million committed) and drilling 3,020 m at the Castora Trend (see news release May 25,
2017). A follow-up deep stratigraphic drill hole was also completed to test for the presence of
permissive hosts rocks a depth at the Cerro Chato prospect. Additional surface work also confirmed
the presence of a prospective geological environment for epithermal Au+Ag mineralization at the
undrilled Curva West and the Castora Trend SouthWest prospects.
Table 2: La Curva JV, Castora Trend Length-weighted Averaged Assay Composites
(February 2018)
19
Claudia-OGC JV: Claudia Au+Ag Project, Santa Cruz, Argentina
The large Claudia project adjoins the southern boundary of CVSA’s Cerro Vanguardia mining
property. Mirasol’s exploration has outlined five large-scale epithermal Au+Ag vein prospects at Rio
Seco, Laguna Blanca, Ailen, Cilene and Curahue. At Curahue, six separate vein trends have been
identified: Io, Europa, Ganymede, Callisto, Sinope and Themisto, along a 15 km corridor (news
release July 27, 2015). A series of drill ready targets are defined at Rio Seco, Ailen and the large
Curahue zone.
Mirasol signed a LOI, dated August 31, 2017, with OGC with respect to an option joint venture
agreement for the Claudia Project. On October 20, 2017, the Definitive JV Option Agreement with
OGC was signed and the 1st option payment of US$ 100,000 was received by Mirasol.
Key terms include:
• First year exploration spending commitment by OGC of US$ 1.75 million that includes a
minimum 3,000 m of drilling.
• OGC option to earn 51% over a 4-year period by making cumulative exploration investments
totaling US$ 10.5 million, plus staged option payments to Mirasol of US$ 1 million.
• OGC options to earn 60%, 65% and 70% over two additional 2-year periods (cumulative 8
years) by delivering a preliminary economic assessment and feasibility study that is
“bankable” and delivering a decision to mine, both prepared in accordance with NI 43-101.
• Mirasol will receive a one-off payment of US$ 250,000 if the ounces of Au+Ag in a non-NI
43-101 compliant mineral inventory, outlined in the Curahue prospect Io Vein preliminary
block model by Mirasol’s previous JV partner CVSA, are included in the PEA or feasibility
stage resources.
• At decision to mine, Mirasol can elect to fund its pro-rata 30% share of the mine development
costs or require OGC to finance Mirasol’s proportion of the development costs for a further
5% of the project, with Mirasol retaining 25% of the project and OGC owning 75% of the
project.
• OGC has the option to extend each of the 60% and 70% earn-in stages by one year per earn-
in stage by making one-off payments to Mirasol.
• Mirasol will operate the JV during the first year and will be paid a 5% fee to cover
administrative and overhead costs.
Exploration Program Results
On September 17, 2018 Mirasol reported the first season exploration results for the Claudia-OCG
JV. Highlights from exploration include:
• Drilling Results: Since inception of the OGC Joint Venture 12 diamond core holes (DDH)
totaling 2,529 m have been drilled, testing targets at the Curahue and Cilene prospects.
Assays from the Curahue prospect, Europa and Io trends include 0.6 m at 0.08 g/t Au and
610.0 g/t Ag, and 0.55 m at 1.15 g/t Au and 22.9 g/t Ag; and from the Cilene prospect 0.9 m
at 1.95 g/t Au and 5.7 g/t Ag;
• Geophysical Surveys: A combined 114.5 line-km of gradient array and IP electrical
geophysics surveys have been completed at the Rio Seco, Curahue and Cilene prospects;
• Geophysical Models: 3D models have been generated from existing ground magnetics and
from combined new and existing electrical geophysical data sets for the NW end of Curahue
and for Rio Seco;
20
• Reconnaissance: Prospecting of the large property package has progressed with rock chip
sampling returning Au + assays up to 7.26 g/t Au and 124 g/t Ag from extensions or new vein
and veinlet zones at Europa and Themisto Trends at Curahue, and new Volcan prospect
located 7 km to the east of the Cerro Vanguardia Mine;
Integrated analysis of this season’s data with existing data, is providing new geological insight into
the controls on mineralization at the Curahue and Rio Seco prospects, guiding exploration program
design for Southern Hemisphere spring and summer exploration season.
Claudia-CVSA JV Termination: Claudia Au+Ag Project, Santa Cruz, Argentina
On August 31, 2017, the Company announced completion of the exit process from the JV agreement
with Cerro Vanguardia S.A (“CVSA”). Mirasol received a US$ 205,000 payment from CVSA in-lieu
of certain uncompleted exploration commitments. CVSA had completed 7,526 m of drilling and spent
$US 1.97 million and developed a preliminary block model for the Io vein structure outlining a small
non-NI 43-101 Au+Ag mineral inventory.
Business Development Activities
Since the beginning of July 2017, Mirasol has signed confidentiality agreements, distributed data
sets and conducted field reviews with selected Au and Cu companies to secure potential new JV’s
for many of its projects including;
• Santa Cruz: Nico and Sascha Au Ag Projects, Libanesa, Homenaje and Virginia Ag Projects
in Argentina.
• Eocene-Oligocene Belt: Odin and Rubi Cu Projects in Chile.
• Mio Pliocene Belt: Gorbea Project and other Mio-Pliocene pipeline projects in Chile and
Argentina.
The Company is also focusing its exploration activities on its Mio-Pliocene “pipeline” properties to
advance them to drill-ready status in preparation for JV.
Project Exploration Activities On 100% Owned Mirasol Claims
Exploration: Chile
Odin Cu Project, Atacama Puna
Mirasol expanded the claims at Odin from 900 to 5,667 ha, securing significant extensions to the
district scale alteration system previously reported at the project (news release July 25, 2017).
Mirasol expanded reconnaissance rock chip sampling outward from the original Odin target into the
new claims. Initial results have returned encouraging Cu + Mo + Au assays. These areas will be
the focus of future exploration.
Rubi Cu Project, Atacama Puna
Mirasol completed field evaluation and targeting programs at Rubi identifying three large-scale Cu +
Mo + Au targets at the Lithocap, Zafiro, and Portezuelo prospects. The targets were defined by
integrated analysis, including re-logging of drill samples and the re-interpretation of geophysics and
geochemistry from previous JV partner exploration at Rubi. This was combined with recent Mirasol
geological mapping, rock chip sampling and target vector modelling from field-based measurements
of alteration minerology (news release July 24, 2017).
21
The Company has systematically consolidated claims holdings at Rubi over the past 12 months and
has expanded the claim area to a total of nearly 26,000 ha (news release July 24, 2017).
Exploration: Argentina
Nico Au Ag Project, Santa Cruz
Mirasol has been actively exploring the Nico project and reporting results throughout the Current
Period.
On August 8, 2017, Mirasol reported that reconnaissance mapping and sampling at the Nico claims,
approximately 12 km to the east of the Aurora prospect, led to the discovery of a new high-grade
epithermal vein at the Resolution prospect where reconnaissance rock chip sampling returned
assays ranging to 4.79 g/t Au and 6,181 g/t Ag. This mineralization is contained within oxidized veins
and veinlets of a grey, chalcedonic silica with localized zones of banded saccharoidal silica and
breccia textures all hosted within dacitic subvolcanic rocks (news release August 8, 2017).
On March 2, 2018, Mirasol announced the upgrade of the Resolution Trend, upon receipt of
additional Ag+Au rock chip assay results of up to 5.73 g/t Au and 528 g/t Ag, identifying new parallel
vein echelon mineralized structures with intervening zones of sheeted and stockwork veinlets. At
that time and as defined by anomalous Ag+Au rock chip assays, the Resolution Trend was a 1.25
km long zone, defined by parallel 0.1 to 1.0 m wide veins and intervening stockwork veinlets, that
combine up to 80 m wide zones of veining and stockwork.
On July 5, 2018, Mirasol announced that a 1.7 sq-km, 100 m line-spacing geophysical survey
outlined a 1.4 km long chargeability anomaly coincident with the down-dip projection of the previously
reported high-grade Ag+Au bearing vein breccias (see news releases, March 2, 2018 and August 8,
2017). Geological mapping outlined a prospective setting of outcropping mineralized structures with
a defined cumulative strike length in excess of 1.5 km, hosted within a porphyritic sub-volcanic dacite
dome unit
On July 12, 2018, the Company reported systematic rock chip outcrop and float sampling returns of
“bonanza” grade Ag+Au assays from a 1.2 km long section of Resolution Trend. Assay results
support recently reported anomalous electrical geophysics survey results from the Resolution Trend
include these highest grades from outcrop samples (see news release July 5, 2018):
• 1,435.9 g/t Ag and 1.37 g/t Au (25.3 g/t AuEq601) and 456.9 g/t Ag and 1.76 g/t Au (9.4 g/t
AuEq60).
• 2,332.3 g/t Ag and 9.62 g/t Au (48.5 g/t AuEq60) and 1,484.7 g/t Ag and 8.15 g/t Au (32.9 g/t
AuEq60)
On August 27, 2018, the Company announced the receipt of 208 rock chip samples from the
Resolution Prospect that returned assays of up to 544.9 g/t Ag and 0.87 g/t Au, with the top 79 Ag
samples averaging 127.6 g/t Ag. These samples were collected from structures peripheral to the
core of the prospect and expand the known area of mineralization.
In addition, saw-cut channel samples from the Resolution Main and peripheral structures return
length-weighted average assays that include 1.34 m at 155 g/t Ag and 0.04 g/t Au (2.6 g/t AuEq60),
0.7 m at 369.5 g/t Ag and 1.41 g/t Au (7.6 g/t AuEq60) and 0.3 m at 950 g/t Ag and 4.27 g/t Au (20.1
g/t AuEq60) at an AuEq60 1.0 g/t cut off. 55 rock chip samples of oxidized vein-breccia from these
trends, averaged 44.46 g/t Ag and 4.03 g/t Au and (4.8 g/t AuEq60), with a peak assay of 454.1 g/t
Ag and 21.40 g/t Au (28.9 g/t AuEq60).
1 AuEq60 is the sum of the value of Au + and Ag in a given interval represented as a Au + equivalent g/t value
calculated via the formula: Au assay in g/t + (Ag assay in g/t ÷ 60)
22
Mirasol also completed reconnaissance exploration work at the Aurora prospect identifying new high-
grade Ag+Au vein-breccia trends. To date, 9 priority targets have been defined at the Aurora
prospect. The work completed comprised geological mapping, detailed ground magnetics and rock
chip sampling, which defined a system of structurally-hosted epithermal silica-iron oxide breccias
and chalcedonic silica veinlets, developed in multiple interpreted mineralized trends over a 4.0 by
2.1 km area (news releases August 27, 2018, June 12, 2017 and July 5, 2017).
A new Ag+Au vein corridor was delineated at the Vittoria Vein Trend, that to date has been traced
over a 1.6 km strike length. The Vittoria Vein Trend as known to date, ranges from sub-meter to
locally up to 10 m wide trend, characterized by multiple parallel 0.3-0.5 m wide chalcedonic quartz
vein outcrops and sub-cropping blocks, that have returned rock chip assays of up to 1.44 g/t Au
and 174 g/t Ag. (news release March 2, 2018).
Mirasol increased the area of the Nico Project by staking of new claims to secure extensions of the
volcanic complex interpreted to relate to the mineralization, bringing the total project area to over
77,700 ha (news release August 8, 2017).
On September 25, 2018 Mirasol recommenced exploration at the Nico project for the 2018-19
southern hemisphere summer exploration season. Mirasol’s field teams are engaged in detailed
mapping and sampling of the Aurora prospect, with geophysical teams planned to start IP pole dipole
survey of key zones at this prospect in late October 2018. The Company will complete an integrated
analysis of the Aurora and Resolution prospects to identify targets for potential drill testing.
Virginia Ag Project, Santa Cruz
The Virginia high-grade, Ag vein zone was discovered by Mirasol in late 2009. In the 2015 financial
year, Mirasol reported an initial mineral resource estimate for the Virginia project. The report presents
a conceptual, open-pit constrained, mineral resource estimate focused exclusively on the high-grade
vein/breccia component of the mineralization as previously reported (Figure 4; and see news release
February 7, 2013). The mineral resource estimate contains Indicated resources totalling 11.9 Moz
Ag at 310 g/t, and Inferred material totalling 3.1 Moz Ag at 207 g/t, all contained within seven
outcropping veins of high-grade Ag mineralization (see news release January 28, 2015).
23
Figure 4: Virginia expanded Claims and new sampling, May 2018.
On March 29, 2016, Mirasol filed an amended technical report on SEDAR dated February 29, 2016.
The Amended Report addressed specific technical comments received from the BC Securities
Commission (“BCSC”) following their routine review of technical disclosure. The base case Mineral
Resource estimate contained in the Original Report remains unchanged in the Amended Report.
Mirasol’s holdings at Virginia were consolidated and preliminary prospecting south of the limit of
Mirasol drilling on the newly acquired claims identified quartz vein and vein breccia “float”, scattered
along a 2 km trend (news release September 14, 2016).
During the Current Period prospecting and reconnaissance mapping on the newly acquired claims
resulted in the discovery of additional high-grade Ag mineralization (news release May 10, 2018).
Surface Ag mineralization at Margarita was extended over a 450 m strike-length. The newly
recognized Julia South Dome Trend is defined by intermittent vein and vein-breccia subcrop and
float samples which extend 2.15 km south from the limits of drilling defining the resources at Virginia.
The new East Zone target covers a 1.2 km x 600 m area where rock chip sampling of subcropping
epithermal vein-breccia and aligned float blocks have returned high-grade Ag assays.
Detailed exploration, including surface electrical geophysics, trenching and shallow drilling are
required to further test these new target areas to confirm if shallow cover is concealing undiscovered
Ag veins that are the source of the float.
Other Properties
Mirasol holds several additional drill-ready and early-stage exploration properties, which are
prospective for Au and/or Ag and Cu mineralization in southern Argentina and northern Chile.
24
RESULTS OF OPERATIONS
Table 3: Exploration expenditures per projects under active exploration (following page)
For the Twelve Months Ended June 30,
2018
2017
CHILE
Yamana Gorbea - Joint Venture
Camp and general
Contractors and consultants
Geophysics
Mining rights and fees
Exploration costs recovered
Travel & accommodation
Option Income
Resource Studies
Professional fees
Altazor - Joint Venture
Assays and sampling
Camp and general
Contractors and consultants
Exploration costs recovered
Geophysics
Management fees
Mining rights and fees
Professional fees
Travel & accommodation
Resource Studies
Option income
Zeus - Joint Venture
Assays and sampling
Camp and general
Contractors and consultants
Exploration costs recovered
Geophysics
Professional fees
Management fees
Mining rights and fees
Option Income
Resource Studies
Travel & accommodation
46,011
107,399
-
11,064
-
6,970
-
5,574
5,851
182,869
98,779
114,383
530,338
(1,696,669)
416,730
154,243
106,687
1,240
162,591
33,774
(126,040)
(203,944)
35,229
240,934
158,669
(759,113)
138,539
198
69,010
44,328
(66,762)
75,565
15,484
(47,919)
540
108,145
3,256
239,127
(209,550)
4,689
(545,664)
-
361
(399,096)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total - Properties joint ventured to other companies
(68,994)
(399,096)
25
Chile Pipeline Projects
Assays and sampling
Camp and general
Contractors and consultants
Geophysics
Mining rights and fees
Travel & accommodation
Rubi
Assays and sampling
Camp and general
Contractors and consultants
Geophysics
Mining rights and fees
Travel & accommodation
For the Twelve Months Ended June 30,
2018
2017
29,212
22,087
166,077
565
351,488
20,552
589,981
824
2,719
13,341
-
186,335
1,041
204,260
61,417
58,512
383,393
5,469
306,932
51,345
867,068
7,020
15,154
207,219
8,089
225,206
13,333
476,021
Total - 100% owned properties
794,241
1,343,089
Frontera - Joint Venture
Assays and sampling
Camp and general
Contractors and consultants
Environmental
Geophysics
Mining rights and fees
Travel & accommodation
Total - Earn-in joint venture on third party projects
Project Generation
Management Fee Income
Corporate Operation & Management - Chile
-
-
-
-
-
8
48
56
56
11,043
(223,253)
996,065
461
-
38,722
-
452
41,380
633
81,648
81,648
796,156
-
549,921
Total Chile
1,509,158
2,371,718
26
Claudia - Joint Venture
Assays and Sampling
Option income
Camp and general
Contractors and consultants
Drilling
Environmental
Exploration costs recovered
Geophysics
Interest
Mining rights and fees
Management fees
Professional fees
Travel & accommodation
La Curva - Joint Venture
Assays and Sampling
Camp and general
Contractors and consultants
Exploration costs recovered
Environmental
Geophysics
Management fees
Option Income
Drilling
Interest
Mining rights and fees
Professional fees
Travel & accommodation
For the Twelve Months Ended June 30,
2018
2017
75,629
(126,552)
266,217
342,261
572,498
11,947
(1,667,369)
29,761
53
199,766
70,488
4,719
44,261
(176,321)
97,823
306,606
460,662
(2,030,764)
8,941
-
80,615
-
733,654
133
61,036
6,026
52,903
(222,365)
379
-
12,494
88,333
-
9
(422,367)
-
-
194,882
-
5,109
9,861
(111,300)
9,325
15,352
145,787
-
5,493
8,825
-
(136,140)
-
-
17,641
42,154
5,344
113,781
Total - Properties joint ventured to other companies
(398,686)
2,481
27
Santa Rita and Virginia
Assays and sampling
Camp and general
Contractors and consultants
Mining rights and fees
Environmental
Travel & accommodation
Argentina Pipeline Projects
Assays and sampling
Camp and general
Contractors and consultants
Environmental
Geophysics
Mining rights and fees
Professional fees
Travel & accommodation
Total - 100% owned properties
Project Generation
Management Fee Income
Corporate Operation & Management - Argentina
Total Argentina
For the Twelve Months Ended June 30,
2018
2017
-
28,800
16,588
33,903
2,783
8
82,082
108,374
47,992
139,615
11,374
6,214
119,668
1,060
44,952
479,249
561,331
57
(151,103)
1,241,269
1,252,870
27,359
83,732
91,312
39,208
-
5,300
246,911
66,084
83,552
264,993
1,011
14,140
127,751
133,565
34,374
725,470
972,381
18,925
-
740,437
1,734,226
Total Exploration and Evaluation Costs
2,762,028
4,105,942
28
FOR THE YEAR ENDED JUNE 30, 2018, AS COMPARED TO THE YEAR ENDED JUNE 30, 2017
The Company’s net comprehensive loss for the year ended June 30, 2018 (“2018”) was $4,345,815
or $0.09 per share compared to $6,945,806 or $0.15 per share for the year ended June 30, 2017
(“2017”), a decrease of $2,599,991.
The reason for the decrease in net loss during 2018 is due to decrease in exploration expenditures
and redirection of resources towards business development goals of the Company.
The Company’s total operating expenses were $5,457,985 in 2018 compared to $6,902,462 in 2017.
As presented in Table 3 above, the Company incurred exploration costs of $2,762,028 in 2018,
compared to $4,105,942 in 2017. Reduction in generative exploration and increased JV project
management in Argentina and Chile during 2018 resulted in reduction in exploration expenses.
Stock-based payments and depreciation are non-cash items. Excluding the above and the
exploration cost, the Company incurred $2,190,108 in 2018 compared to $2,070,576 in 2017. The
increase of $119,532 is attributable to the increase in management fees, directors fees and business
development redirection of company objectives.
Reductions in transfer agent and filing fees, marketing and office and miscellaneous in 2018
compared to 2017, were attributable to reduction in rates and the services obtained and efficient cost
management.
The Company also recorded a foreign exchange gain of $756,098 during 2018 compared to the loss
of $200,762 in 2017. The periodic variance in foreign exchange gain or loss recorded by the
Company is primarily the result of the movement in the value of the US dollar relative to the Canadian
dollar, due to the significant US dollar asset holding by the Company.
FOURTH QUARTER ANALYSIS
The Company carried out its limited generative exploration work during the fourth quarter. The net
loss for the quarter ended June 30, 2018 (“Current Quarter”) was $14,623 compared to net loss
$1,388,787 for the quarter ended June 30, 2017 (Comparative Quarter). As for the current quarter
the reason for the decrease in the loss is due to decrease in exploration expenditures and gain on
the foreign exchange during the quarter.
The operating cost for the Current Quarter was less than the Comparative quarter due to a decrease
in the exploration costs, marketing and investor communications and office and miscellaneous
related to the operations. Allocation of resources to business development, professional fees and
director’s fees resulted in an increase in the related costs during the Current Quarter compared to
the Comparative Quarter.
During the fourth quarter, the Company completed a non-brokered private placement. The
placement was over-subscribed, and the Company issued 4,317,750 Units at a price of $2.00 per
unit and received gross proceeds of $8,635,500.
SELECTED ANNUAL INFORMATION AND SUMMARY OF QUARTERLY RESULTS
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, 2018, 2017 and
2016.
29
Sales
Income (loss) for the Year
Earnings (loss) per share – Basic
Earnings (loss) per share – Diluted
Total Assets
Total Long-term Liabilities
Dividends Declared
2018
$
-
(4,341,131)
(0.09)
(0.09)
30,379,800
-
-
2017
$
-
(6,945,647)
(0.15)
(0.15)
25,070,836
-
-
2016
$
-
(6,017,003)
(0.14)
(0.14)
21,414,630
-
-
The following table sets out selected unaudited quarterly financial information of the Company and
is derived from unaudited quarterly consolidated financial statements prepared by management in
accordance with IAS 34 and accounting policies consistent with IFRS.
Income (Loss)
from Continued
Operations
$
(14,623)
(1,491,031)
(1,010,958)
(1,824,519)
(1,388,787)
(1,789,281)
(1,669,075)
(2,098,504)
Basic Income
(Loss) per Share
from Continued
Operations
$
(0.001)
(0.03)
(0.02)
(0.04)
(0.03)
(0.04)
(0.03)
(0.05)
Diluted Income
(Loss) per Share
from Continued
Operations
$
(0.001)
(0.03)
(0.02)
(0.04)
(0.03)
(0.04)
(0.03)
(0.05)
Revenues
$
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Period
4th Quarter 2018
3rd Quarter 2018
2nd Quarter 2018
1st Quarter 2018
4th Quarter 2017
3rd Quarter 2017
2nd Quarter 2017
1st Quarter 2017
The Company’s quarterly results will vary primarily in accordance with the Company’s exploration
and business development activities. To finance its operations, the Company also grants incentive
stock options to its directors, management, employees, and consultants, which will also cause
variation in the Company’s results from period to period.
The movement in the value of the US dollar relative to the Canadian dollar could also have a
significant impact on the Company’s results from one period to the next as the Company primarily
holds its working capital in US dollars.
INVESTING ACTIVITIES
Company continued to invest Canadian, Australian and US dollars in interest-bearing financial
instruments maturing up to one year. The total amount invested was CAD$23,650,478. The
Company received interest income of $360,756 during 2018 compared to $157,577 in 2017.
FINANCING ACTIVITIES
During 2018, the Company completed a private placement for gross proceeds of $8,635,500. The
Company in the prior year end 2017 completed a rights offering for gross proceeds of $10,000,000.
CAPITAL RESOURCES AND LIQUIDITY
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).
30
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.
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 Company
applies the Project Generator model where it seeks and presents partners with an option to joint
venture the Company’s projects, in order to have those partners fund the exploration of the project to
earn an interest. In some agreements, the Company receives cash option payments or common stock
of the joint venture partner, as a portion of the partner’s cost to earn an interest. If any of its exploration
programs are successful and the partners complete their earn-ins, the Company would have to provide
its share of ongoing exploration and development costs in order to maintain its interests; and if not,
reduce its equity interest through a monetization transaction or dilution of its ownership interest or
conversion to a royalty interest. The Company does not anticipate mining revenues from sale of
mineral production in the foreseeable future.
With working capital of approximately $26 million on June 30, 2018, the Company believes it has more
than sufficient funds to conduct its administrative, business development, and discretionary exploration
activities over the next twelve months. Actual funding requirements may vary from those planned due
to several factors, including the Company’s joint venture partners encountering difficulty in financing
exploration programs on the optioned properties. The Company further believes it has the ability to
raise equity capital to meet its foreseeable longer-term working capital needs but recognizes that the
ability to raise capital in the future involves risks beyond its control.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no significant off-balance sheet arrangements.
PROPOSED TRANSACTIONS
The Company has no proposed transactions.
TRANSACTIONS WITH RELATED PARTIES
Details of the transactions between the Company’s related parties are disclosed below.
Compensation of key management personnel
Key management personnel include persons having the authority and responsibility for planning,
directing, and controlling the activities of the Company as a whole.
The remuneration of the management and the independent directors was as follows:
The remuneration of management and independent directors was as follows:
Management compensation (i)
Share-based payments (ii)
Director’s fees (iv)
Year Ended June 30,
2018
501,273
261,084
186,241
948,598
$
$
2017
514,369
250,749
135,623
900,741
$
$
(i) Management compensation is included in Management fees (2018 - $272,046; 2017 -
$211,804) and in exploration expenditures (2018 - $229,227; 2017 - $302,565).
31
(ii) Share-based payments represent the expense for the years ended June 30, 2018 (Note 11c)
and 2017.
(iii) In February 2016, the Company signed Consulting Agreements, effective July 2015, with
each of Global Ore Discovery Pty Ltd. (“Global Ore”) and Stephen Nano, to perform the duties
of President, CEO and Qualified Person for the Company.
Under the terms of the Global Ore agreement, the Company has retained the services of
Global Ore consultants until June 30, 2018, to provide target generation related consulting
services to the Company on an exclusive basis throughout Chile and Argentina. The
Company has agreed to a minimum monthly retainer of Australian Dollar (“AUD”) $35,000.
The Global Ore contract can be terminated at any time by the Company by paying a fee of
AUD $225,000.
The CEO consulting agreement with Mr. Nano is for a term expiring on June 30, 2018 and
was renewed on a month to month basis upon its expiry and provides for payment of a
consulting fee of $25,000 per month. The contract with Mr. Nano contains termination
provisions which require payment of one-year’s fees for termination without cause and two
years for termination due to a change of control event, as defined.
(iv) The independent directors of the Company are paid $2,100 per month (2017 - $2,100 per
month) while the Chairman of the Board of Directors receives an additional $3,000 per month
for serving in this capacity (2017 - $3,000). On June 14, 2017, Dana Prince was appointed
Executive Chairman and is paid an additional $4,100 per month.
Transactions with other related parties
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
Chase Management Ltd.
Global Ore Discovery Pty Ltd.
Evrim Resources Corp. (“Evrim”)
Nature of transactions
Legal fees
Professional fees
Project generation, exploration management and
GIS services
CFO services, office administration support
services and office sharing
The Company incurred the following fees and expenses with related parties as follows:
Legal fees
CFO services
Office sharing and administration services
Project generation, exploration expenses and GIS services
Year Ended June 30,
2018
189,138
101,750
49,440
711,619
1,051,947
$
$
2017
226,101
72,588
87,316
965,443
1,351,448
$
$
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The Company had entered into an agreement with Evrim, a company with common management,
to share CFO services, Administration services and office space. The Agreement was renewed on
a month to month basis upon its expiry on February 28, 2018.
Included in accounts payable and accrued liabilities at June 30, 2018, is an amount of $153,904
(2017 - $149,287) owing to directors and officers of the Company and to companies where the
directors and officers are principals.
SIGNIFICANT ACCOUNTING POLICIES
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, 2018. 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.
The Company did not adopt any significant new accounting policies during the reporting period.
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, and is technically
feasible, in which case the balance is tested for impairment and subsequent development costs are
capitalized. Exploration costs include value-added taxes because the recoverability of these
amounts is uncertain.
The receipt of option payments from the Company’s joint venture partners are applied first towards
the capitalized cost for the acquisition of pertinent mineral property interests. Option payments in
excess of the capitalized acquisition costs are netted against the exploration costs for the period. JV
management fees are included in exploration expenditures on the statement of loss and
comprehensive loss.
RECENT ACCOUNTING PRONOUNCEMENTS
Certain new standards, interpretations, amendments and improvements to existing standards were
issued by the IASB or IFRIC.
The following new standards and amendments to standards which are applicable to the Company
have been issued with effective dates into the later fiscal years:
a) IFRS 9 Financial Instruments addresses the classification, measurement and recognition of
financial assets and financial liabilities. The complete version of IFRS 9 was issued in July
2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of
financial instruments. IFRS 9 retains but simplifies the mixed measurement model and
establishes three primary measurement categories for financial assets: amortized costs, fair
value through OCI and FVTPL. The basis of classification depends on entity’s business model
and the contractual cash flow characteristics of the financial asset.
33
Investments in equity instruments are required to be measured at FVTPL with the irrevocable
option at inception to present changes in fair value in OCI. There is a new expected credit
losses model that replaces the incurred loss impairment model used in IAS 39.
For financial liabilities, there were no changes to classification and measurement except for the
recognition of changes in own credit risk in OCI, for liabilities designated at FVTPL.
IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge
effectiveness tests. It requires an economic relationship between the hedged item and hedging
instrument and for the hedged ratio to be the same as the one management actually use for
risk management purposes. Contemporaneous documentation is still required but is different
to that currently prepared under IAS 39.
The standard is effective for accounting periods beginning on or after January 1, 2018.
Adoption of this standard is not expected to have a significant impact on the Company other
than increased disclosure.
b) IFRS 15 Revenue from Contracts with Customers deals with revenue recognition and
establishes principles of reporting useful information to the users of financial statements about
the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s
contracts with customers.
Revenue is recognized when the customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good or service. The standard
replaces IAS 18 Revenue, and IAS 11 Construction Contracts and related interpretations.
It is effective for annual periods beginning on or after January 1, 2018 with earlier application
permitted. Adoption of this standard is not expected to have an impact on the Company.
c) IFRS 16 is a new standard that sets out the principles for recognition, measurement,
presentation, and disclosure of leases including guidance for both parties to a contract, the
lessee and the lessor. The new standard eliminates the classification of leases as either
operating or finance leases as is required by IAS 17 and instead introduces a single lessee
accounting model. IFRS 16 specifies how an IFRS reporter will recognize, measure, present
and disclose leases. The standard provides a single lessee accounting model, requiring
lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or
less or the underlying asset has a low value. Lessors continue to classify leases as operating
or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its
predecessor, IAS 17 Leases.
The standard was issued in January 2016 and is effective for annual periods beginning on or
after January 1, 2019. The Company is currently assessing the impact of the standard on the
Company.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
34
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 capitalized carrying value of each
property group 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 claims’ value; whether there has
been an accumulation of costs significantly in excess of the amounts originally expected for
the claims’ acquisition, 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 claims.
The Company has concluded that impairment conditions do not exist as at June 30, 2018.
Ownership of exploration and evaluation assets involves certain 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.
(ii) Valuation of share purchase options: The Company provides compensation benefits to its
employees, directors and officers through a stock option plan. The fair value of each option
award is estimated on the date of the grant using the Black-Scholes option pricing model.
Expected volatility assumption used in the model is based on the historical volatility of the
Company’s share price. The Company uses historical data to estimate the period of option
exercises and their forfeiture rates for use in 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 profit or loss.
All estimates used in the model are based on historical data which may not be
representative of future results.
(iii) Income taxes: The Company is subject to income taxes in numerous jurisdictions.
Uncertainties exist with respect to interpretations of tax regulations. The Company has
recognized current tax refundable based on its interpretations of tax regulations, which may
differ from the interpretations of the tax authorities (Note 13).
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.
35
(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 factors identified in
IAS 21, The Effects of Changes in Foreign Exchange Rates (“IAS 21”).
Except for the Company’s subsidiaries in the British Virgin Islands (Note 3a) above), the
Company has determined that its subsidiaries in Chile and Argentina incur costs in United
States Dollars, Canadian Dollars, Australian dollars as well as the Chilean and Argentine
Pesos and therefore do not indicate a single primary currency for operating in these
jurisdictions.
These subsidiaries including the British Virgin Islands are financed entirely by its Canadian
Parent and therefore act as its extension. The Company has therefore determined that the
functional currency of all its subsidiaries is the Canadian Dollar, similar to the Parent.
FINANCIAL INSTRUMENTS
The Company’s financial instruments as at June 30, 2018, consist of cash and cash equivalents,
interest receivable, accounts payable and accrued liabilities and advances from joint venture
partners. The fair value of all these instruments approximates their carrying value. There are no off-
balance sheet financial instruments.
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”) dollars, 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, 2018, 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
Short-term investments
Receivables and advances
Accounts payable and accrued
liabilities
US
Dollars
1,124,657
8,250,001
200,000
Australian
Dollars
128,522
1,660,252
-
Argentine
Peso
12,059,164
Chilean
Peso
139,740,623
1,819,899
23,846,893
(13,763)
(95,570)
(4,452,833)
(121,721,852)
Based on the net exposures as at June 30, 2018, 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 $1,273,824 and $168,972, respectively in the
Company’s comprehensive loss. Likewise, a 10% depreciation or appreciation of the Canadian
dollar against the Argentine and Chilean Peso would result in an increase/decrease of $45,228 and
$8,582, respectively in the Company’s comprehensive loss.
36
(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 and cash equivalents is held through large financial institutions.
The Company’s receivables primarily consist of interest receivable due from major financial
institutions on short term investments. 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, 2018, the Company’s
financial liabilities consist of accounts payable and accrued liabilities totalling $743,842. All
of the Company’s obligations are expected to be paid within 90 days. Management believes
the Company has sufficient funds to meet its liabilities as they become due.
(iv) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The risk that the Company will realize
a loss as a result of a decline in the fair value of the short-term investments included in cash
and cash equivalents is limited because these investments are generally held to maturity.
The applicable rates of interest on such investments range between 0.05% and 3.25%.
(v) Price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate due to changes in market prices, other than those arising from interest rate risk and
foreign currency risk. The Company is not exposed to significant other price risk.
The Company appointed a special treasury committee comprising of three board members to
consider management’s recommendations to mitigate the exposure to foreign currency risk. The
committee accepted the consideration that the management maintain a ratio of 70:15:15 for US$:
CAD$: AUD$ of the treasury whenever practical.
MANAGEMENT OF CAPITAL RISK
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue
as a going concern, 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 adjusts it considering 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. To facilitate the management of its capital requirements, the
Company prepares annual and quarterly expenditure budgets that are updated as necessary
depending on various factors, including successful capital deployment and general industry
conditions.
To maximize ongoing development efforts, the Company does not pay out dividends.
37
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 does not invest in commercial paper. The Company is not subject to externally
imposed capital requirements.
ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE
Additional disclosure concerning the Company’s operating expenses is provided above, in the
Company’s consolidated statements of (income) loss of the audited annual consolidated financial
statements for the period ended June 30, 2018 that is available on the Company’s website at
www.mirasolresources.com or on its SEDAR company page accessed through www.sedar.com.
OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had 53,837,628 issued and outstanding common shares.
In addition, the Company has 3,096,876 options outstanding that expire through December 20th,
2020, and 2,158,875 warrants outstanding that expire through June 1st, 2020. The Company had
15,000 of the 30,000 RSU’s granted outstanding as of the date of the MD&A. Details of issued share
capital are included in Note 11 of the audited consolidated financial statements for the years ended
June 30, 2018 and 2017.
APPROVAL
The Audit Committee of the Company has approved the disclosure contained in this MD&A.
ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at www.sedar.com and on
the Company’s website at www.mirasolresources.com.
38