MIRASOL RESOURCES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2019
Canadian Funds
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of
Mirasol Resources Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Mirasol Resources Ltd. (the “Company”), which
comprise the consolidated statements of financial position as at June 30, 2019 and 2018 and the consolidated statements of loss
and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
Company as at June 30, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance
with International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section
of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of
the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide
a basis for our opinion.
Other Information
Management is responsible for the other information. The other information obtained at the date of this auditor's report includes
Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Company to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Stephen Hawkshaw.
Vancouver, Canada
October 25, 2019
“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 (Note 3d)
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 9e and Note 9k)
EQUITY
Share Capital (Note 11)
Reserves
Accumulated Other Comprehensive loss
Deficit
Nature of Business (Note 1)
Commitments (Note 14)
Subsequent Event (Note 15)
On Behalf of the Board:
“Norman Pitcher”
“Nick DeMare”
,
,
Director
Director
June 30,
2019
June 30,
2018
$
4,648,284 $
16,836,008
458,707
21,942,999
2,892,948
23,650,478
733,591
27,277,377
201,041
3,047,718
101,661
3,000,762
$
25,191,758 $
30,379,800
$
430,239 $
846,947
1,277,186
743,842
67,892
811,734
57,677,690
17,354,426
(25,742)
(51,091,802)
57,426,143
16,615,061
(28,122)
(44,445,016)
23,914,572
29,568,066
$
25,191,758 $
30,379,800
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)
Share-based payments (Note 11c)
Business development
Management fees (Note 10a)
Office and miscellaneous
Marketing and investor communications
Professional fees (Note 10b)
Director’s fees (Note 10a)
Travel
Transfer agent and filing fees
Depreciation (Note 8)
Interest income
Foreign exchange gain (loss)
$
2019
2018
2,656,673 $
859,562
628,549
622,691
353,461
267,569
220,022
180,750
78,635
41,478
8,395
2,762,028
500,620
667,361
478,613
307,142
241,370
170,141
186,241
98,369
40,871
5,229
(5,917,785)
(5,457,985)
440,137
(1,169,138)
360,756
756,098
(729,001)
1,116,854
Loss for the Year
$
(6,646,786) $
(4,341,131)
Other Comprehensive income (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
Loss per Share (Basic and Diluted)
2,380
(4,684)
(6,644,406) $
(4,345,815)
(0.12) $
(0.09)
$
$
Weighted Average Number of Shares Outstanding
(Basic and Diluted)
53,926,419
49,450,240
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
Number
$
$
Accumulated Other
Comprehensive
Loss
$
Deficit
$
Total
$
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
Shares 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
Bonus shares issued (Note 10a)
Option exercised (Note 11b)
Share-based payments (Note 11))
Foreign currency translation adjustment
Loss for the year
75,000
51,250
85,000
-
-
86,250
67,897
97,400
-
-
-
(22,797)
762,162
-
-
-
-
-
2,380
-
-
-
-
-
(6,646,786)
86,250
45,100
859,562
2,380
(6,646,786)
Balance – June 30, 2019
54,033,878
57,677,690
17,354,426
(25,742)
(51,091,802)
23,914,572
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
Bonus shares
Interest income
Depreciation
Depreciation included in exploration expenses
Unrealized foreign exchange
Changes in non-cash working capital items:
Receivables and advances
Accounts payable and accrued liabilities
Advance from joint venture partner
Cash used in operating activities
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
2019
2018
$
(6,646,786) $
(4,341,131)
859,562
86,250
(440,137)
8,395
44,547
579,775
500,620
(360,756)
5,229
29,562
91,592
(5,508,394)
(4,074,884)
560,860
(313,603)
779,055
166,110
211,193
67,892
(4,482,082)
(3,629,689)
6,814,470
(75,205)
28,249
154,521
(152,322)
6,769,712
-
45,100
45,100
(6,857,713)
(61,491)
61,491
5,197
(32,775)
(6,885,291)
8,439,410
435,664
8,875,074
Effect of Exchange Rate Change on Cash and Cash Equivalents
(577,395)
(96,276)
Change in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning of Year
1,755,336
2,892,948
(1,736,182)
4,629,130
Cash and Cash Equivalents - End of Year
$
4,648,284
$
2,892,948
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
Cash paid during the year for interest
Cash paid during the year for income taxes
$
$
$
$
$
$
$
22,797
-
4,642,067
6,217
4,648,284
-
-
$
$
$
$
$
$
$
247,501
-
1,172,260
393,994
2,892,948
-
-
The accompanying notes are an integral part of these consolidated financial statements
Page 6
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
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 1150 - 355 Burrard 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 25th, 2019.
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.
Page 7
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
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, 2019
were as follows:
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%
Subsidiaries are included in the consolidated financial results of the Company from the effective date of
acquisition or control and up to the effective date of disposition or loss of control. Control is achieved when the
Company has power over the investee, is exposed to or has rights to variable returns from its involvement with
an investee, and has the ability to affect those returns through its power over the investee.
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.
Page 8
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
b) Significant Accounting Estimates and Judgments (Cont’d…)
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, 2019.
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.
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
judgment 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.
Page 9
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
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.
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
As at July 1, 2018, the Company adopted all of the requirements of IFRS 9, which replaced IAS 39 Financial
Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 introduces extensive changes to IAS 39’s
guidance on the classification and measurement of financial assets and a new “expected credit loss model” for
the impairment of financial assets. IFRS 9 also provides new guidance on the application of hedge accounting.
Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward
in IFRS 9, so the Company’s accounting policy with respect to financial liabilities is substantially unchanged.
The following table shows the original classification under IAS 39 and the new classification under IFRS 9.
Financial assets
Cash and cash equivalents
Short term investments
Receivables
Original classification
IAS 39
New classification
IFRS 9
Financial assets – FVTPL
Financial assets – FVTPL
Loans and receivables -
amortized cost
Financial assets - FVTPL
Financial assets - FVTPL
Amortized cost
Financial liabilities
Accounts payable and accrued
liabilities
Advances from JV Partner
Other financial liabilities -
amortized cost
Other financial liabilities -
amortized cost
Amortized cost
Amortized cost
Page 10
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
e) Financial instruments (Cont’d)
IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized
cost or at fair value. The classification and measurement of financial assets is based on the Company’s business
models for managing its financial assets and whether the contractual cash flows represent solely payments of
principal and interest (“SPPI”). The following are new accounting policies for financial assets under IFRS 9.
The Company classifies its financial assets in one of the following categories: (1) financial assets at fair value
through profit or loss (“FVTPL”), (2) loans and receivables at amortised cost or (3) financial assets at fair value
through other comprehensive income (“FVTOCI”). The classification depends on the purpose for which the
financial assets were acquired. Management determines the classification of its financial assets at initial
recognition.
Financial assets at FVTPL
Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the
statement of loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial
asset held at FVTPL are included in the statement of loss in the period in which they arise.
Financial assets at amortized cost
Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized
cost less any impairment. They are classified as current assets or non-current assets based on their maturity
date.
Financial assets at FVTOCI
Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs.
Subsequently, they are measured at fair value, with gains and losses arising from changes in fair value
recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses
to profit or loss following the de-recognition of the investment.
Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of
ownership have been transferred. Gains and losses on de-recognition of financial assets classified as FVTPL or
amortized cost are recognized in profit or loss. Gains or losses on financial assets classified as FVTOCI remain
within accumulated other comprehensive income.
Financial Liabilities
Financial liabilities are recognized initially at fair value and in the case of financial liabilities not subsequently
measured at fair value, net of directly attributable transaction costs. Financial liabilities are derecognized when
the obligation specified in the contract is discharged, canceled, or expired. Trade payables and accrued liabilities,
debentures and deferred consideration on acquisition are classified as financial liabilities to be subsequently
measured at amortized cost.
Expected Credit Losses
The Company recognizes an allowance for expected credit losses (“ECL”) for all financial assets not held at fair
value through profit or loss. ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Company expects to receive, discounted at an
approximation of the original effective interest rate. ECLs are recognized in two stages. For credit exposures for
which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those
credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss
Page 11
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
Expected Credit Losses (Cont’d…)
allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing
of the default (a lifetime ECL).
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs.
Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on
lifetime ECLs at each reporting date. A financial asset is considered in default when contractual payments are
365 days past due. Therefore, the Company does not track changes in credit risk but makes a loss allowance
based on 12 months ECL.
A financial asset may also be considered to be in default if internal or external information indicates that the
Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held. A financial asset is written off when there is no reasonable expectation of recovering the
contractual cash flows.
f)
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.
g) Equipment and Software
Equipment and software are 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.
Page 12
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
h) 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.
i)
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.
j)
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.
Page 13
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
j)
Income Taxes (Cont’d…)
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.
k) 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.
The Company grants to employees, officers, directors and consultants, Restricted Share Units (“RSUs”) in such
numbers and for such terms as may be determined by the Board. RSUs granted under the RSU Plan are
exercisable into common shares for no additional consideration after the vesting conditions, as specified by the
Board, are met. The Company intends to settle each RSU with one common share of the Company and therefore
RSUs are accounted for as equity-settled instruments.
RSUs are measured at fair value on the date of grant and the corresponding share-based compensation is
recognized over the vesting period in profit or loss.
l) 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.
m) 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.
Page 14
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
n) 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 and Adoptions
Certain new standards, interpretations, amendments and improvements to existing standards were issued by the
IASB or IFRIC.
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
did not 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 did not have an impact on the Company.
Page 15
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
4. Recent Accounting Pronouncements and Adoptions (Cont’d…)
c)
IFRS 16 – Leases: On January 13, 2016, the IASB issued the final version of IFRS 16 Leases. The new
standard will replace IAS 17 Leases and is effective for annual periods beginning on or after July 1, 2019.
IFRS 16 eliminates the classification of leases as either operating leases or finance leases for a lessee.
Instead, all leases are treated in a similar way to finance leases applying IAS 17. IFRS 16 does not require a
lessee to recognize assets and liabilities for short-term leases (i.e. leases of 12 months or less) and leases
of low-value assets.
The Company plans to apply IFRS 16 effective July 1, 2019 using the modified retrospective method. Under
this method, financial information will not be restated and will continue to be reported under the accounting
standards in effect for those periods. The Company will recognize lease obligations related to its lease
commitment. It will be measured at the present value of the remaining lease payments, discounted using the
Company’s incremental borrowing rate as at July 1, 2019. The associated right of use asset will be measured
at the lease obligation amount, less prepaid lease payments, resulting in no adjustment to the opening
balance of deficit. The Company intends to apply the following practical expedients permitted under the new
standard:
leases of low dollar value will continue to be expensed as incurred; and
the Company will not apply any grandfathering practical expedients.
The impacts on profit or loss will be an elimination of lease expense within general and administrative
expenses, for those contracts with are recognized as leases, and instead will be replaced by an amortization
of the right of use asset and interest (finance) costs on the lease liability.
As at July 1, 2019 the Company expects to recognize approximately $326,000 in right-of-use assets, a
corresponding lease liability of $326,000.
5. Financial Instruments
Categories of financial instruments
Financial assets
Fair Value Through Profit or Loss
Cash and cash equivalents
Short-term investments
Amortized Cost
Receivables
Financial liabilities
Amortized Cost
Advances from JV Partner
Accounts payable and accrued liabilities
June 30,
2019
June 30,
2018
$
4,648,284 $
16,836,008
2,892,948
23,650,478
331,505
568,692
$
21,815,797 $
27,112,118
$
846,947 $
430,239
$
1,277,186 $
67,892
743,842
811,734
Page 16
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
a) Fair Value
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy
according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value
hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – Inputs other than quoted prices that are directly or indirectly observable for the asset or liability; and,
Level 3 – Inputs that are not based on observable market data;
Level 1
Cash and cash equivalents
Short-term investments
June 30,
2019
June 30,
2018
$
$
4,648,284 $
16,836,008 $
2,892,948
23,650,478
The fair values of the Company’s other financial instruments approximate their carrying values because of the
short-term nature of these instruments.
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.
b) 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 17
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
b) Management of Financial Risk (Cont’d…)
At June 30, 2019, 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
686,026
10,900,246
-
(15,504)
Australian
Dollars
434,197
487,759
-
(22,127)
Argentine
Peso
19,932,529
-
893,566
(8,804,776)
Chilean
Peso
535,335,164
-
19,866,735
(10,389,639)
Based on the net exposures as at June 30, 2019, 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 $1,514,266 and $82,577, 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 $36,905 and $105,149, 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, 2019, the Company’s financial liabilities consist of accounts payable and
accrued liabilities and advances from JV partner. 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 18
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
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 bearing interest between 1.25% and 5.00% per annum.
Maturity dates of these GIC’s are between three to twelve months.
7. Receivables and Advances
Goods and services tax receivable
Interest receivable
Prepaid expenses and advances
Due from joint venture partners
8. Equipment and Software
Cost
Balance as at June 30, 2017 $
Additions for the year
Balance as at June 30, 2018 $
Additions for the year
Balance as at June 30, 2019 $
Accumulated Depreciation
Balance as at June 30, 2017 $
Depreciation for the year
Balance as at June 30, 2018 $
Depreciation for the year (i)
Balance as at June 30, 2019 $
$
June 30,
2019
6,745
324,760
127,202
-
$
$
458,707
$
June 30,
2018
10,134
199,656
165,259
358,902
733,951
Exploration
Equipment
Computer
Hardware
Computer
Software
477,231 $
-
477,231 $
150,490
627,721 $
386,826 $
27,122
413,948 $
41,151
455,099 $
57,883 $
32,775
90,658 $
1,832
92,490 $
44,611 $
7,669
52,280 $
11,791
64,071 $
37,834 $
-
37,834 $
-
37,834 $
37,834 $
-
37,834 $
-
37,834 $
Total
572,948
32,775
605,723
152,322
758,045
469,271
34,791
504,062
52,942
557,004
Carrying Amounts
As at June 30, 2018
As at June 30, 2019
$
$
63,283 $
172,622 $
38,378 $
28,419 $
- $
- $
101,661
201,041
(i) Allocated between depreciation expense ($8,395) (2018 - $5,229) and exploration costs ($44,547) (2018-
$29,562) on the statement of loss and comprehensive loss.
Page 19
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
9. Exploration and Evaluation Assets
A reconciliation of capitalized acquisition costs is as follows:
Acquisition Costs
Chile
Atlas - Dos Hermanos
Los Amarillos (Enami)
Zeus
Argentina
Santa Rita and Virginia
Sascha-Marcelina
Pipeline projects
Balance at
June 30, 2018
Cost
Recoveries
Balance at
June 30, 2019
$
171,777 $
-
-
2,808,819
-
20,166
-
13,260
28,249
-
33,696
-
$
-
-
(28,249)
$
-
-
-
$
3,000,762 $
75,205
$
(28,249)
$
171,777
13,260
-
2,808,819
33,696
20,166
3,047,718
Balance at
June 30, 2017
Cost
Recoveries
Balance at
June 30, 2018
Chile
Atlas - Dos Hermanos
Zeus
Argentina
Santa Rita and Virginia
Pipeline projects
$
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
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
a) Altazor option to joint venture
The Company owns a 100% interest in certain claims located in Northern Chile and referred to as the Altazor
Gold project.
On November 7, 2017, the Company signed an exploration and option agreement with Newcrest International
Pty Limited (“NCM”) on the Altazor Gold project 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 required 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 served as operator for exploration
during the option period in return for 10% management fee. As of July 1, 2018, the Company is no longer the
operator for exploration and is not receiving the management fees.
NCM can earn up to 51% interest in the property by making a one-time US$500,000 cash payment (received)
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.
Page 20
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
a) Altazor option to joint venture (Cont’d…)
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 a 20% funded-to production interest with
NCM financing the development costs to production.
On November 12, 2018, NCM exercised its option to enter the farm-in stage of the agreement and can earn
up to 51% of the interest of the property by spending an additional US$8.5 million in exploration within the next
four years of the agreement. NCM is the operator and will be managing all exploration activities at the project.
b) Zeus option to joint venture
The Company owns a 100% interest in certain claims, which now form part of the Zeus Gold project located
in Northern Chile acquired by way of staking.
During the year ended June 30, 2018, the Company entered into an option agreement to acquire a 100% in
certain other claims, which form part of the Zeus Gold project. The Company can acquire the claims under
option by making staged option payments totalling US$2.747 million over five years and incur US$300,000 in
exploration expenditures within three years. The property owner retains a 1.5% Net Smelter Returns (“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 (paid)
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 required NCM to fund US$1.5 million in exploration
expenditures in the first 18 months and to make a US$100,000 option payment (received) upon signing option
agreement. The Company served as operator for exploration during the option period in return for 10%
management fee. As of July 1, 2018, the Company is no longer the operator for exploration and is not receiving
the management fee. On December 10, 2018 the Company and NCM agreed to terminate the agreement. On
February 1, 2019, the Company received US$200,000 payment from NCM for termination of the Zeus Gold
project joint venture.
c)
Indra option to joint venture
On October 17, 2018, the Company signed an exploration and option agreement (the “Agreement”) with
Hochschild Mining Plc (“HOC”) on its Indra Gold project in Chile. The Indra project was generated by the
Company.
HOC has been granted the option to acquire up to a 70% interest in the Indra Gold project, exercisable in five
stages over an eight-year, or shorter, earn-in period.
Page 21
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
c)
Indra option to joint venture (Cont’d…)
The agreement requires HOC to incur US$800,000 in exploration expenditures within 18-months and complete
a drill program of 1,500 metres within 30 months of the date of the Agreement. In addition, a US$50,000 option
payment was paid 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.
HOC can earn in stages additional 10% interest in the property by funding the delivering a positive PEA and
further 9% by delivering a BFS.
The Company will retain a 30% interest or can exercise the funding option requiring HOC to fund its interest
to production in the Indra project and retain 25%. The Company serves as operator during the option phase
in return for a 10% management fee from exploration contracts with values less than US$250,000 and 5% fee
on contracts over US$250,000.
During the year ended June 30, 2019, the Company received US$1,153,486 in advances from Hochschild to
be used on exploration expenditures. As of June 30, 2019, of the advanced amounts, $846,494 is included in
cash and cash equivalents.
d) Gorbea option to joint venture
The Company owns a 100% interest in certain claims located in Northern Chile and referred to as the Gorbea
Gold project.
On January 28, 2019, the Company signed a definitive agreement with NCM whereby, NCM has been granted
the option to acquire up to an 75% interest in the Gorbea Gold project, exercisable in stages over a nine-year,
or shorter, earn-in period. The agreement requires NCM to fund US$4.0 million in exploration expenditures
and make a US$100,000 option payment (received) in the first year of the option. NCM will be the operator of
the exploration program and will receive a 5% management fee.
NCM can earn up to 51% of the interest of the property by making a US$500,000 cash payment to the
Company at the start of the earn in period and by spending an additional US$15.0 million in exploration within
the next four years of the agreement with minimum drilling commitment of 6,000 m to be completed within the
first two years.
NCM can then earn in stages up to a 65% interest in the property by delivering a PEA and a BFS (total
expenditure capped at US$100 million after the completion of the PEA stage) and by making a cash payment
to the Company within the four years after earning the 51% interest.
The Company can retain a participating 25% interest in the project or has the right to convert up to 10% equity
interest into 2.0% NSR royalty after completion of BFS stage.
Page 22
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
e) Los Amarillos option to purchase
The Company owns a 100% interest in certain claims, which now form part of the Los Amarillos Gold-Silver
project located in Northern Chile acquired by way of staking.
During the year ended June 30, 2019, the Company entered into an option agreement to acquire a 100% in
certain other claims, which form part of the Los Amarillos Gold-Silver project. The Company can acquire the
claims under option by making staged option payments totalling US$100,000 over three years and incur
US$300,000 in exploration expenditures within three years (including a committed US$50,000 for the first 12
months). The property owner retains a 1.5% NSR royalty. The Company holds a right of First refusal on the
royalty sale. Option payments are due as follows:
On signing (paid)
On or before June 21, 2020
On or before June 21, 2021
On or before June 21, 2022
Total
US $10,000
US $20,000
US $30,000
US $40,000
US $100,000
Argentina
f) Claudia option to joint venture
The Company owns a 100% interest in certain claims located in Santa Cruz Mining District, Argentina and
referred to as the Claudia Gold property.
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 first earn-in option for OGC to earn 51% interest over four years from the date of the Agreement required
spending US$10.5 million on exploration, and making US$1 million in staged payments to the Company. The
Company served as operator of the project in return for a 5% management fee.
OGC paid US$100,000 on signing of the agreement. OGC’s first-year commitment required US$1.75 million
in exploration expenditures with a minimum of 3,000 metres of drilling, and an additional US$100,000 option
payment (received) to continue into the second year commitment.
On March 22, 2019, the Company received notice from OGC that it terminated the agreement. The minimum
first-year exploration commitment was not met by OGC as of the termination date. A payment of US$128,410
was made in lieu of exploration commitments.
g) La Curva option to joint venture
The Company owns a 100% interest in certain claims located in the Santa Cruz Province of Argentina and
referred to as the La Curva Gold project.
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 Gold project, exercisable in 5 stages
over an eight-year, or shorter, earn-in period.
OGC completed its first-year commitment of US$1.25 million in exploration expenditures, including 3,000
metres of drilling, and made a US$100,000 option payment to the Company on signing the Agreement.
Page 23
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
g) La Curva option to joint venture (Cont’d…)
OGC continued into the second-year commitment of the La Curva Gold project by making a US$200,000
option payment (received) during the year ended June 30, 2019. The Company served as operator for
exploration in return for 5% management fee.
On March 22, 2019, the Company received notice from OGC that it terminated the agreement.
h) Sascha-Marcelina option to purchase
The Company owns a 100% interest in certain claims, which now form part of the Sascha-Marcelina Gold
project located in Santa Cruz, Argentina acquired by way of staking.
During the year ended June 30, 2019, the Company entered into an option to purchase agreement to acquire
a 100% in certain other claims, which form part of the Sascha-Marcelina project. The Company can acquire
the claims under option by making staged option payments totalling US$3.4 million over four years. The
Company has a minimum US$300,000 exploration spending commitment during the three years of the option
period. The property owner retains a 1.5% NSR royalty. Option payments are due as follows:
On signing (paid)
On or before January 23, 2020
On or before January 23, 2021
On or before January 23, 2022
On or before January 23, 2023
Total
US $25,000
US $50,000
US $75,000
US $100,000
US $3,150,000
US $3,400,000
i) 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.
j) 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.
k) Advances to/from joint venture partners:
The Company is the operator for one joint venture project. As of June 30, 2019, the Company has $846,947
(2018-$67,892) of unspent exploration advances. Expense reimbursement receivable of $Nil (2018-$118,467)
is included in accounts receivable as of June 30, 2019.
Page 24
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
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.
The remuneration of management and independent directors was as follows:
Management compensation (i)
Share-based payments (ii)
Director’s fees (iii)
Bonus shares (iv)
Year Ended June 30,
$
2019
579,015
853,972
180,750
86,250
$
$
1,699,987
$
2018
501,273
261,084
186,241
-
948,598
i. Management compensation is included in Management fees (2019 - $352,639; 2018 - $272,046) and
in exploration expenditures (2019 - $226,376; 2018 - $229,227).
ii.
Share-based payments represent the expense for the years ended June 30, 2019 (Note 11 c (ii)) and
2018.
iii.
iv.
The independent directors of the Company are paid $2,100 per month (2018 - $2,100 per month)
while the Chairman of the Board of Directors receives an additional $7,100 per month for serving in
this capacity (2018 - $7,100).
In November 2018, the Company signed consulting agreements, effective July 2018, with Global Ore
Discovery Pty Ltd. (“Global Ore”), a company related through former CEO, to perform the duties of
exploration services for the Company. Under the terms of the Global Ore agreement, the Company
has retained the services of Global Ore consultants until June 30, 2019, to provide target generation
related consulting services to the Company on an exclusive basis throughout Chile and Argentina.
The Company has agreed to pay a minimum monthly retainer of Australian Dollar (“AUD”) $50,000
and six month minimum of $350,000. The Company has an additional trailing one-year contact with
Global Ore commencing July 1, 2019 to June 30, 2020 (Note 14).
Further, as additional consideration, the Company has agreed to issue 75,000 Retention Bonus Shares (“the
Bonus Shares”) (Issued January 3, 2019), subject to vesting, to key representatives of Global Ore other than
Mr. Stephen Nano, the previous CEO of the Company.
The Bonus Shares were issued, subject to receipt of TSX Venture Exchange (“TSXV”) acceptance, and
are subject to escrow restrictions whereby 37,500 were released upon TSXV acceptance and signing of the
Global Ore consulting contract; 18,750 released on January 1, 2019 and 18,750 released on April 1, 2019.
The Global Ore trailing contract can be terminated at any time by Global Ore after four months from its
commencement on July 1, 2019 with a one month’s notice to the Company.
Page 25
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
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.
(“Global Ore”)
Evrim Resources Corp. (“Evrim”)
Chase Management Ltd.
Mathew Lee
Nature of transactions
Legal fees
Project generation, exploration management and GIS services
Office administration support services and office sharing
Professional fees
CFO services
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,
$
2019
213,426
54,000
-
788,077
2018
189,138
101,750
49,440
711,619
$
1,055,503
$
1,051,947
Included in accounts payable and accrued liabilities at June 30, 2019, is an amount of $45,085 (2018 - $153,904)
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
No financings were conducted by the Company during the year ended June 30, 2019.
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.
Options exercised
During the year ended June 30, 2019, the Company issued 51,250 (2018 – 388,800) shares on exercise of share
purchase option for gross proceeds of $45,100 (2018 - $435,664). The options had a fair value of $22,797 (2018
- $247,501).
Page 26
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
iii.
Bonus shares
During the year ended June 30, 2019, the Company issued 75,000 bonus shares, pursuant to the executed
consulting contract with Global Ore Discovery Pty Ltd. (“Global Ore”) with a fair value of $86,250 (2018- $Nil) (Note
10 a (iv)).
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 TSXV 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, 2019, a total of 5,403,388 options
were reserved under the option plan with 3,711,876 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, 2017
Granted
Exercised
Expired / Forfeited
Options outstanding as at June 30, 2018
Granted
Exercised
Expired / Forfeited
Options outstanding as at June 30, 2019
Options exercisable at June 30, 2019
Number of Options
2,984,626
935,000
(388,800)
(465,000)
3,065,826
1,420,000
(51,250)
(722,700)
3,711,876
3,265,626
Weighted Average
Exercise Price
$1.50
$1.70
$1.12
$1.08
$1.67
$1.21
$0.90
$1.60
$1.52
$1.55
Page 27
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
(ii) Fair value of share purchase options granted
Total share-based payments for options granted and vested recognised for the year ended June 30, 2019
amounted to $737,262 (June 30, 2018 - $500,620).
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,
2019
0.0%
78.07%
1.82%
2.73 years
$0.56
2018
0.0%
64.46%
1.57%
2.33 years
$0.65
(iii) Share purchase options outstanding at the end of the year
A summary of the Company’s options outstanding as at June 30, 2019 is as follows:
Expiry Date
August 4, 2019
April 29, 2021
April 29, 2021
August 26, 2019
September 12, 2021
September 12, 2020
December 19, 2020
December 20, 2020
July 18, 2021
December 14, 2021
January 31, 2022
January 31, 2023
March 14, 2023
April 15, 2022
Exercise price
$
0.88
0.88
1.38
2.85
1.80
1.80
1.61
1.65
1.76
1.10
1.27
1.27
1.09
0.68
Options
Outstanding
140,000
505,000
255,000
566,876
150,000
150,000
195,000
330,000
60,000
397,500
150,000
600,000
200,000
12,500
3,711,876
*Options expired unexercised subsequent to June 30, 2019.
d) Warrants
Weighted
Average
Remaining Life
of Options
(years)
Options
Exercisable
140,000*
505,000
255,000
566,876*
110,000
150,000
195,000
330,000
60,000
397,500
150,000
200,000
200,000
6,250
1.94
3,265,626
On June 8, 2018, the Company issued 2,158,875 of share purchase warrants with an exercise price of $3.00
expirying June 1, 2020. These warrants were outstanding as of June 30, 2019 (2018 - 2,158,875). These
warrants were issued in connection with the Company’s private placement offering (Note 11 b (i)).
Page 28
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
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 TSXV 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 120,000
RSUs.
During the year ended June 30, 2019, the vesting conditions of 85,000 RSU’s were met and the Company issued
85,000 common shares with a fair value of $97,400 was recorded as share-based payments in the Company’s
consolidated statements of loss and comprehensive loss. An additional $24,900 was recorded as share-based
payments for vesting of RSUs for which common shares have not yet been issued.
Subsequent to June 30, 2019, 35,000 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,
2019
$
19,588 $
2,961,146
268,025
June 30,
2018
27,983
2,844,780
229,660
$
3,248,759 $
3,102,423
The Company is subject to Canadian federal and provincial tax rates.
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:
Net loss before income taxes
Canadian federal and provincial income tax rates
Expected income tax recovery based on the above
rates
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
Year Ended June
30, 2019
Year Ended June
30, 2018
$
$
(6,646,786)
27.00%
(1,795,000)
(1,063,000)
-
$
$
(4,341,131)
26.50%
(1,150,400)
216,756
710,673
1,455,000
1,403,000
-
$
(2,316,280)
2,539,251
-
$
Page 29
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
13. Income Taxes (Cont’d…)
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,
2019
June 30,
2018
$
$
2,673,000
4,983,000
48,000
21,000
7,725,000
$
$
2,552,000
3,639,936
67,051
12,154
6,271,140
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,
2019
June 30,
2018
Expiry date
Range
Non-capital losses
Exploration and evaluation assets
Share issue costs
Other
$
9,934,000 $
17,055,000
179,000
79,000
See below
9,403,016
12,413,823 Not applicable
2036
248,336
45,121 Not applicable
The Company has non-capital loss carry-forwards of approximately $9,934,000 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:
2020
2021
2022
2023
2024
2036 to 2039
No-expiry
$
$
Canada
- $
-
-
-
-
7,164,000
-
7,164,000 $
Argentina
322,000 $
-
492,000
-
113,000
-
-
927,000 $
Chile
-
-
-
-
-
-
1,843,000
1,843,000
Page 30
Mirasol Resources Ltd.
Notes to Consolidated Financial Statements
For the Years Ended June 30
Canadian Funds
14. Commitments
a. On June 30, 2019, the Global Ore contract (Note 10 a (iv)) will expire. The Company has agreed to
a 12-month trailing contract commencing on July 1, 2019. As part of the 12-month trailing contract,
the Company has agreed to a one-year commitment to pay a minimum monthly retainer of
AUD$20,000 and a quarterly minimum of AUD$75,000.
The Company has also agreed to issue Global Ore 25,000 common shares (issued) on
commencement of the 12-month trailing contract and 25,000 common shares after six months. The
Global Ore trailing contract can be terminated at any time by Global Ore after four months from its
commencement on July 1, 2019 with one month’s notice to the Company.
b. On February 6, 2019, the Company signed a lease for its head office located at 1150 - 355 Burrard
Street, Vancouver, British Columbia, effective May 1, 2019 to April 30, 2025. This lease is classified
as an operating lease. The Company has made a security deposit of $20,000. The minimum
commitment is as follows:
Period
In 1 year
1 – 5 years
5 + years
Amount
$75,480
$404,780
Nil
15. Subsequent Event
On October 4, 2019, the Company entered into definitive agreement (the “Agreement”) with First Quantum
Minerals (“FQM”) for its Coronación Copper/Gold Project (the “Project”) in Northern Chile.
The Company granted to FQM the option to earn-in 80% of the Project over 6 years by:
Making annual cash payments totaling US$ 875,000 (US $50,000 received);
Completing at least 10,000m of drilling; and
Delivering a NI 43-101 compliant Prefeasibility Study Report.
FQM is committed to completing 3,000 m of drilling and a systematic geophysical program on the Project over
the first 24 months of the Agreement. Following this period, FQM is required to spend a minimum of US$500,000
per year over the term of the Agreement. FQM will be the operator during the option period. Following the
completion of the 80% earn-in, FQM will have a one-time option to acquire the remaining 20% on terms to be
negotiated between the parties. If this option is not exercised, the parties will form a participating joint venture to
further fund the development of the Project.
Page 31
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 25th, 2019 and is
intended to supplement the Company’s annual audited condensed consolidated financial statements
for the year ended June 30, 2019. 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, 2019.
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”). 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. Norm Pitcher, President and CEO, 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 searching for gold, silver and copper (“Au”,
“Ag” and “Cu” respectively) deposits, 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 that well-managed and focused exploration can
deliver further discoveries within its generative regions and increase shareholder value.
Mirasol has four active option to joint venture agreements with major and mid-tier precious metals
producers in Chile. Under these agreements, the partners fund all exploration, land holding costs
and make staged option payments to Mirasol as well as pay project management fee for the
programs operated by the Company. This exploration model allows Mirasol to focus its available
capital on further exploration and business development activities while having multiple projects
being drill tested by its partners.
While the Company retains the joint venture business model as the central pillar of its philosophy,
Mirasol has expanded its business and exploration strategy to fund drilling of certain infrastructure
advantaged and high-grade Au+Ag projects. These Mirasol funded programs will give the Company
greater deal-making leverage and place it in a better position to monetize its assets in the event of
positive exploration results. This strategy will accelerate drill testing of key projects and the path to
potential discoveries.
2
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 $21,484,292 as
of June 30, 2019. 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 exploration agreements
with its industry partners.
During the year, the Company incurred total company-wide net cash expenditures of $5,049,828.
The financial statements show a total expenditure of $5,917,785 of which non-cash items such as
share-based payments and depreciation totalled $867,957.
inclusive of officer’s salaries, board
The total net cash expenditure was distributed between head office corporate spending of
$3,261,112,
fees, business development, corporate
administration, investor relations and regulatory compliance; and a total net exploration expenditure
of $2,656,673. For the year, the Company has accounted for $3,377,679 in exploration
reimbursements, $1,518,570 in option/termination payments and $139,017 in management fee
income from partners, which are offset against the Company’s exploration and in-country
management and operating costs.
Mirasol’s Exploration Strategy
Mirasol is a leading project generation and exploration company with a mission to create shareholder
value from resource discoveries.
The Company maintains a high-quality portfolio of exploration properties with the potential to deliver
economic discoveries by applying innovative, concept-driven geological techniques integrated with
detailed field work. In the recent years, the primary focus of the Company’s project generation efforts
has been the Atacama-Puna program where Mirasol is exploring the world class Tertiary age mineral
belts in northern Chile. Mirasol is also exploring on its Santa Cruz, Argentina projects and, in some
areas, staked or optioned new claims to consolidate its project portfolio.
Mirasol’s exploration strategy is to advance prospects with technical merit by either:
1) entering into option to joint venture agreements with major and mid tier mining companies to
fund exploration and drill testing of large-scale / higher exploration risk and cost projects, or
2) self-funding exploration and drilling programs to test high grade / infrastructure advantaged /
lower exploration risk targets.
Mirasol’s Joaquin and Virginia silver discoveries in Argentina are evidence of successful outcomes
of these processes. Joaquin was monetized through a sale to Coeur d’Alene Mines (now Coeur
Mining) in 2012.
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).
From youngest to oldest, these are:
• Miocene to Pliocene (Mio-Pliocene, 23-5 Ma): High-sulfidation epithermal (“HSE”) Au+Ag
and porphyry Cu+Mo
• 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
4
Figure 2: Mirasol’s Atacama - Puna Generative Program.
Mirasol uses its advanced scientific analysis techniques to target areas with high potential for
discovery of quality mineral prospects. The Company also applies several risk qualifying filters to
both minimize exposure to and/or increase awareness of areas that may have environment and/or
community sensitivities.
5
The 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 8.9 Moz Au grading 1.06 g/t Au contained within
261.3 Mt (Barrick 2018 Mineral Reserves and Mineral Resources).
• Salares Norte deposit, with a maiden reserve of 3.5 Moz Au at 5.1 g/t Au and 39.3 Moz Ag
contained within 21.1 Mt. Gold Fields announced in February 2019, the completion of a
positive feasibility study on this project and its confidence that that the project will be
developed. Gold Fields is working on permitting and detailed engineering with construction
potentially in late 2020 (Gold Fields Ltd. 2018 Year End Results).
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. These 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 project, where Mirasol
announced (news release November 21, 2017 and December 10, 2018) the signing of two option
and farm-in agreements with a subsidiary of Newcrest Mining Limited (“NCM”).
In addition to HSE targets, the Mio-Pliocene belt can also host large scale porphyry deposits such
as First Quantum Minerals (“FQM”) Taca Taca development project in Argentina. This type of deposit
will be the exploration focus for the Coronación project which is subject to an agreement between
Mirasol and FQM (news release October 7, 2019).
In the Mio-Pliocene belt north of the Maricunga Belt, Mirasol has approximately 119,000 ha of
granted exploration claims. In the Mio-Pliocene aged “Southern Porphyry Belt”, Mirasol holds
exploration rights to approximately 28,000 ha of granted claims.
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, several factors point toward possible supply deficits.
Mirasol considers the projected supply shortfall a potential driver for increased demand for Cu
exploration projects and, accordingly, has staked claims and expanded existing claim holdings in
this belt to secure quality exploration ground to build a pipeline of Cu exploration projects.
Mirasol presently holds approximately 38,000 ha of granted exploration claims 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 El Peñón, a high-grade, low-sulfidation epithermal Au+Ag deposit. In this belt, 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 announced the
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signing of Option and Earn-in Agreements with Hochschild Mining (“HOC”) (news release August 29
and 30, 2018 and October 17th, 2018).
Mirasol presently controls approximately 29,000 ha of granted exploration claims in Paleocene belt.
Argentina: Santa Cruz Province Generative Region
The Company’s generative program in Argentina is focussed in Santa Cruz Province and
encompasses the area of the Deseado Massif, a 60,000 sq-km region of upper-middle Jurassic age
volcanics which are recognized as having a high potential for hosting low- and intermediate-
sulfidation epithermal Au and Ag deposits. Mirasol controls approximately 344,000 ha of exploration
and mining claims in the province.
Santa Cruz Province hosts seven operating Au+Ag mines with the recent commissioning of the Cerro
Morro mine operated by Yamana Gold. Five of the mines are owned and operated by international,
mid-tier to major 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 underground mining
techniques.
Figure 3: Santa Cruz Project Portfolio.
Mirasol has been exploring in Santa Cruz for over 15 years and has a successful track record of
targeting, securing and delivering attractive, district-scale projects to precious metal producers as
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demonstrated by the discovery of two Ag deposits: Joaquin, sold to joint venture 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 focused on consolidating
claims holdings around key mineral districts where Mirasol already has established projects and
where the Company’s exploration has confirmed the potential for, large-sized precious metal
systems.
The Company is closely monitoring the impact of the export tax announced in September 2018, the
rapid currency devaluation (inflation) and the upcoming presidential election. To date, these issues
have not impacted Mirasol’s capacity to operate in Argentina and Mirasol has received continued
interest for its Argentine projects for potential new exploration agreements, from mid-tier to major
producers and listed junior resource companies. Mirasol remains focused on securing new partner
investments in its Argentine projects.
The Company continually assesses the investment and operating climate in Argentina and will adjust
its activities in response to the evolving investment and operational environment, if necessary.
JOINT VENTURE, BUSINESS DEVELOPMENT AND EXPLORATION ACTIVITIES
Activities on Projects Under Option to Joint Venture
Chile
Altazor-NCM: Altazor Au project, northern Chile
Altazor is an HSE Au project covering 33,230 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 reported from surface sampling at Gold Fields’ Salares Norte Project, which
has a geological setting analogous to 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 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 was 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.
On November 12, 2018 the Company reported that the initial 12-month Option stage of the Altazor
Agreement has been completed with NCM incurring exploration expenditures in excess of US$1.5
million. NCM exercised its option to enter the farm-in stage, triggering a US$500,000 payment to
Mirasol.
Exploration Program Results
Mirasol’s initial reconnaissance sampling, completed in 2017 prior to the NCM agreement, covered
approximately 50% of the project area. A total of 216 stream sediment, 395 soil and 933 rock chip
samples were 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
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(news release October 11, 2017).
In November 2018, Mirasol reported the results from the 2017/18 exploration program completed
under the exploration agreement with NCM, which included alteration analysis of soils and
radiometric age dates as well as results from a 1,035 line-km ground magnetic survey, geological
mapping and rock chip sampling over an area of 128 sq. km, a 2,030 sample, low detection limit soil
grid covering 85.6 sq. km, and a 66.9 line-km Controlled Source Audio-Magnetotellurics (CSAMT)
resistivity geophysical survey. Integrated analysis of the combined data sets shows Altazor to be a
district-scale, zoned alteration system, preserved at a level that could conceal HSE gold deposits
beneath “barren” steam heated cap rocks and post mineral cover, as has been the case at recent
multimillion-ounce discoveries elsewhere in the Mio-Pliocene mineral belt in Chile.
The 2017/2018 Altazor exploration results highlight the very large areal extent of the alteration
system at the project where it will require several seasons of work to complete a first pass evaluation.
The integrated leading-edge technologies applied during the first season’s exploration have
identified multiple compelling large-scale drill targets in three principal prospects that have alteration,
geochemical and geophysical characteristics in common with the predrill target signatures of Salares
Norte and other recent HSE gold discoveries.
Mirasol and NCM have also staked an additional 10,000 ha of exploration claims covering potential
extension of the Altazor alteration system, bringing the total area covered by the project to
approximately 32,000 ha. NCM has assembled a Chile-based exploration team and elected to take
operatorship of the exploration program from July 1, 2018. This has freed Mirasol exploration and
management teams to peruse new project opportunities.
During the first half of 2019, NCM reinitiated surface exploration of the large Altazor alteration
systems, aimed at exploring extensions of the prospects identified during last season’s program, to
undertake first pass exploration of new claims staked at the end of last season, and to cover
interpreted extensions of the alteration system. Field work consisted of rock chip and alteration
sampling as well as detailed geologic mapping.
Two target areas were defined by the fieldwork completed and NCM is anticipating to complete an
initial 2,000m diamond drilling program and in‑fill CSAMT geophysics during the upcoming field
season.
Gorbea – NCM: Gorbea Au Project, Atacama Puna, Northern Chile
The Gorbea Project comprises a package of projects totaling 28,600 ha, including the Atlas Au+Ag
and the Titan Au (Cu) projects, located in the Mio-Pliocene age mineral belt of northern Chile.
The Gorbea properties were subject to a previous joint venture with Yamana Gold that was
terminated in April 2018, after the partner had incurred exploration expenditures in excess of US$ 8
million. The exploration identified a significant body of HSE gold mineralization at the Atlas project,
which returned a drill intercept of 114 m grading 1.07 g/t Au, including 36 m grading 2.49 g/t Au
(news release September 11, 2017).
On December 10, 2018, the Company announced a Heads of Agreement granting NCM the right to
acquire, in multiple stages, up to 75% of the Gorbea Project by completing US$19 million in
exploration expenditures and delivering a feasibility study as well as making staged option payments
to Mirasol. Upon NCM earning 75% of the Project, Mirasol can elect to fund its share and retain a
25% project equity position, or exercise a one-time equity conversion option to convert up to 10% of
its equity to a NSR royalty at a rate of 2.5% equity per 0.5% NSR royalty (max 2% NSR royalty).
NCM has committed to spend a minimum of US$4 million and complete a minimum of 3,000 m of
drilling over an initial 18-month period. The Company announced the signing of the definitive Letter
Agreement on January 28, 2019.
Exploration Program Results
9
On January 7, 2019, Mirasol reported significant progress in geological understanding derived from
Mirasol’s initial interpretation of exploration data generated under a recently terminated partnership
on the Gorbea package (see news release April 13, 2018).
The outcomes of this work include the recognition of a large breccias complex at Atlas that hosts the
better gold mineralization, the development of a new alteration vectoring model suggesting that a
number of previous drill holes with anomalous Au+Ag assays may have been terminated too early
above the potentially better mineralized zone, and the recognition of new target areas where gold
mineralization may occur closer to surface.
The scale of the Atlas Au+Ag system, combined with the relatively modest amount of exploration
drilling to date (10,499 m in 26 holes) and the range of priority targets identified, highlights the project
as a large, under-explored HSE system, requiring further drill testing for potential large tonnage bulk
minable Au+Ag mineralization.
NCM is operating the Gorbea exploration program and was able to complete, before the onset of
winter, two diamond drill holes for 391m and 512m respectively (of a planned a 2,000m drilling
program), 50km of CSAMT geophysics over the Atlas target as well as reconnaissance mapping and
sampling over several other target areas in the Gorbea property package. The first hole drilled by
NCM was terminated in mineralization and abandoned early due to ground conditions. Drilling was
targeting a coincident geophysical, geochemical and alteration anomaly at depth below a barren
steam-heated leach cap and was following up on the drilling results from Mirasol’s previous partner
(see news release July 24, 2019 for assay results). NCM is planning to extend the hole that was
abandoned and to complete its initial 2,000m program at the beginning of the next field season.
Indra-HOC: Indra Precious Metals project, Northern Chile
Indra is a 20,000-ha epithermal precious metals project 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 low to intermediate sulfidation 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 October 17, 2018, the Company announced the signing of an Option and Earn-in Agreement
with HOC for Indra, and the beginning of a surface exploration program on the project. The
agreement 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.
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 (news release August 30,
2018).
The project hosts the following prospects:
• Agni, with a large chalcedony and opal silica alteration system and associated silica – barite
structures; and
10
•
Indra, with a large carbonate-silica vein and vein-breccia zone.
On the successful completion of a surface program on the project that included ground magnetic,
geological mapping and rock chip geochemical sampling and also alteration vectoring, HOC has
agreed to a maiden drill program.
Six reverse circulation drill holes were drilled in late August 2019, targeting the depth extension of
the carbonate veins mapped and sampled at surface, with the objective of determining if the
carbonate composition of the veins grades into silica at depth along with an associated increase in
the Au and Ag values. Results are pending and Mirasol will update its shareholders once results
have been received and analysed.
Coronación – FQM: Coronación Cu Project, Northern Chile
On October 7, 2019, Mirasol announced the signing of a definitive agreement with FQM for its 1,200
ha Coronación Copper/Gold project in the Region II of Northern Chile. FQM was granted the option
to earn 80% in the project over 6 years, by making annual cash payments totaling US$875,000,
completing at least 10,000m of drilling and delivering a NI 43-101 compliant Prefeasibility Study
Report. Following the completion of the 80% earn-in, FQM will have a one-time option to acquire the
remaining 20% on terms to be negotiated between the parties at that time. If this option is not
exercised, the parties will form a participating joint venture to further fund the development of the
Project. FQM is the operator under this agreement.
The project is located on a major NW structural trend associated with several Andean porphyry
deposits. Work completed by Mirasol indicates the potential presence of a porphyry/breccia system
intruding a layered Miocene aged volcanic sequence of dacitic domes and pyroclastic units. Two
distinct and coincident alteration areas interpreted using ASD spectral analysis, display affinities to
a HSE system to the east, with the western side displaying a more typical porphyry deposit related
style of alteration. Geochemical sampling has also defined a large 600 by 800 m Cu-Mo geochemical
anomaly on the western side within the overall 3 by 2.5 km alteration halo.
11
Exploration Activities On 100% Owned Mirasol Claims
Chile
Los Amarillos Au/Ag Project, Northern Chile
On June 26, 2019 Mirasol announced that it has executed an Option to Purchase agreement with
Empresa Nacional de Minería (“ENAMI”) of Chile to consolidate and gain control of claims hosting
potential extensions to the mapped mineralization on the surface of its Los Amarillos project.
Mirasol holds the right to acquire 100% of 288 ha of claims (the “ENAMI Claims”) by completing
US$300,000 in exploration expenditures over 3 years (including a committed US$50,000 for the first
12 months) and by making total cash payments of US$100,000 over the same period. The first
US$10,000 payment has been made on signing. Once the option period is completed, ENAMI will
hold a 1.5% NSR royalty on the ENAMI Claims, which will be subject to a right of first refusal held by
Mirasol.
The consolidated Los Amarillos Project occupies 1,857 ha and is 15 km north of Mirasol’s Rubi
project and 10 km northwest of Coldelco’s El Salvador mine. The property sits at elevations ranging
from 1700m to 2100m ASL. Year-round road access is excellent, and both power and water lines
traverse the northern edge of the claim block.
The project is part of the Paleocene-Lower Eocene Caldera and is located within the Ojos Del Salado
trans-orogen structure that also hosts the El Salvador (Cu-Mo-Au), Potrerillos (Cu-Au), and La Coipa
(Ag-Au) deposits. Mineralization at Los Amarillos is hosted within a thick sequence of rhyodacitic to
trachytic pyroclastics and flows within the caldera, with quartz-adularia-carbonate Intermediate
Sulfidation veins hosted along north-south structures, coincident with rhyolitic to dacitic dyke swarms.
Numerous vein structures up to 3 m wide have been mapped over a 7 km strike length throughout
the project. Vein filling is massive to banded quartz with polymetallic (Au-Ag-Cu-Pb-Zn)
mineralization and barren later stage carbonates. Reconnaissance rock chip sampling of quartz
veins has returned assays up to 40.5 g/t Au with anomalous antimony, arsenic, and barium. Zones
of narrow veinlets and stockwork within the wall rock carry up to 2.7 g/t Au. In addition, there is
evidence of wider zones of sheeted veins and breccias zones that may be a target for bulk mining.
Numerous old and small-scale artisanal pits exist within the claim block but there has been no
modern exploration or drilling beyond the initial reconnaissance work completed by Mirasol.
Mirasol is conducting follow up mapping and sampling and recently completed a ground magnetic
geophysical survey over the entire project.
Zeus Au project, northern Chile
Zeus is a gold project covering 18,500 ha that is located 40 km east - southeast of the Salares Norte
project.
On February 26, 2018, Mirasol announced the signing of an Option and Farm-in Agreement with
NCM. Following execution of the agreement, a US$ 750,000 surface exploration program was
completed (see News Release April 24, 2018). The program was focused on the known breccia
bodies at 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 performed and will be completed
during the second quarter of 2019.
On December 10, 2018, Mirasol announced that the companies had agreed to the early termination
of the Zeus Option to Farm-in Agreement. NCM agreed to a US$200,000 early termination payment
to Mirasol and NCM has no retained rights in the Zeus project.
Mirasol has initiated the business development process to identify a new exploration partner to
continue exploration at the Zeus project. Mirasol believes that Zeus is a very prospective,
underexplored, Au+Ag project hosted in a permissive geological setting, 43 km East of the Salares
12
Norte project. Mirasol also views Goldfields’ reporting in February this year, of a positive feasibility
study for the Salares Norte Project, as a potentially encouraging outcome for the Zeus project.
Exploration Program Results
The Zeus project consists of two primary prospects, Apollo and Artemisa that were the focus of the
partner-funded exploration program during the 2017-2018 summer campaign. Exploration included
a 36.3 km2 soil survey, prospect scale geological mapping, rock chip geochemical sampling (that
notably returned up to 2.01 g/t Au and 17.45 g/t Ag in separate samples at Apollo), Corescan
alteration analysis of soils and CSAMT resistivity geophysics. Mirasol’s comprehensive analysis of
results indicates that the geophysical anomalies, as outlined, are coincident with the alteration on
surface and that they define attractive drill targets that remain to be tested. Mirasol is actively seeking
an exploration partner to move forward exploration activities at the Zeus project. Additional technical
information and results are available on the Company’s website.
Odin Cu Project, Atacama Puna
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.
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
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 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 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).
Argentina
Sascha – Marcelina Au Ag Project, Santa Cruz
Mirasol staked the Sascha project in 2003 to secure the 5 km long Sascha Vein Zone, which was
partially drill tested on the western end while under an exploration agreement to Coeur Mining from
2006 to 2009. Coeur terminated the agreement in 2009 and returned 100% of the project to Mirasol.
On January 23, 2019, Mirasol signed an option to purchase agreement with a private mining
company for the 5,700 ha Marcelina exploration claims, consolidating for the first time the full district
under one company.
Under the terms of the Agreement, Mirasol can acquire 100% of the Marcelina claims, by making
staged option payments totalling US$3.4 million over 4 years and subject to a 1.5% NSR royalty.
US$3.15 million of the option payments are due on the 4th anniversary. Mirasol committed to a
minimum US$300,000 exploration spending during the first three years of the option period.
Mirasol has completed an integrated interpretation of district-scale exploration data sets collected
prior to 2009. Anomalous rock chip Au+Ag assays and Aster satellite alteration anomalies define a
16.5 x 4.0 km (65 sq. km) “footprint” to the district, showing a large-scale, zoned alteration system
characteristic of a large LSE Au+Ag system. Five, multi-kilometre long, mineralized vein and silicified
13
breccia trends have been recognized to date across the consolidated district. The trends traverse
the Pellegrini Silica Cap, or outcrop through post mineral gravel and basalt cover that surrounds the
Silica Cap.
The geologic and geomorphic setting of the Pellegrini Silica Cap and related silica structures and
veins is analogous to the setting of the Cerro Negro Mine, which is a high grade, low cost
underground mine operated by Newmont Goldcorp. Cerro Negro is located approximately 100 km to
the north of the Sascha – Marcelina project.
Interpretation of mapped volcanic and sedimentary stratigraphy, Au+Ag and multielement
geochemistry and alteration mineralogy shows that different levels of the epithermal system outcrop
across the district, exposing what are interpreted to be different levels of the mineralized column of
an LSE Au+Ag system.
The surface exploration activities completed this field season on the Sascha Marcelina project (see
news release July 18, 2019) include geological mapping aided by the acquisition of drone supported
high-resolution base images, detailed rock chip sampling, extensive soil grid sampling (with PXRF
sourced geochemistry) and the acquisition of alteration data using in-house handheld ASD
(Analytical Spectral Devices) technology on all of the rock chips and soil samples collected to date.
This recent work has defined a large alteration footprint located in the immediate vicinity of the
Marcelina claims, and hosting an epithermal silica vein system with multiple mineralized trends.
Within this area, new prospects have been recognized, with the “Estancia Trend” and the “Igloo
Trend”, both located in close proximity to an extensive Pellegrini Silica Cap, which is interpreted as
representing the preserved fossil paleosurface of a low sulfidation system.
To date, a total of 422 new rock chip samples have been collected from within the Marcelina area
with assays as high as 27.7 g/t Au and 121 g/t Ag, taken from epithermal silica vein/veinlets and
silica-hematite hydrothermal breccias. These precious metal values are accompanied by highly
elevated epithermal pathfinder elements including arsenic, antimony, tellurium, and anomalous lead
and zinc.
The recent prospecting/sampling, geological mapping and alteration vectoring studies have defined
possible feeder structures that could potentially be the source of the hydrothermal fluids in each of
the prospects. Next field season, Mirasol will focus on generating targets for drill testing by
completing systematic electrical geophysical IP lines over main prospects. In parallel with its
exploration program, Mirasol has also initiated a search for a partner to drill test the project.
La Curva Au Project, Santa Cruz, Argentina
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. The geological
setting of the La Curva project is prospective for high-grade LSE breccia/sheeted veins, as well as
fissure vein styles of Au+Ag mineralization.
On May 18, 2017, Mirasol signed a definitive agreement with OceanaGold Corporation (“OGC”) to
explore the La Curva project. The agreement granted 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.
On March 22, 2019, Mirasol announced that it was advised by OCG of its decision to terminate the
agreement. Since the beginning agreement, OCG completed C$3.7 million in exploration
expenditures on the project and drilled 6,250 m in 36 holes. Results from the second phase drill
program were released on March 4, 2019 along with Mirasol’s geological interpretation and drill
targets.
Exploration Program Results
14
On February 28, 2018, Mirasol announced the results from the first season of drilling at Curva. The
18-hole, 2,550 m, diamond drill 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.
Two distinct stages of Au mineralization were 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).
On March 4, 2019, Mirasol reported the assay results from the second program of drilling and initial
cyanide extractable gold tests of the mineralization from the La Curva project.
The second program totalled 3,227.8 m in 17 holes, testing targets at the Curva West prospect and
the Castora Trend’s Cerro Chato, SouthWest and Pison prospects with encouraging anomalous
Au+Ag intersections returned at the 3 Castora Trend Prospects.
Results from all drilling to date and surface geology at SouthWest, outline a NW oriented 1,100 m
long and up to 300 m wide target zone for Au+Ag mineralization. Cross sections through this target,
show Au+Ag grades vectors to depth and the north, toward a large NW striking normal fault that may
have acted as a “feeder structure” to mineralization. This structure represents a compelling drill target
for higher grade Au+Ag mineralization.
Nine samples weighing up to 1 kg, composited from mineralized drill assay pulps from the SouthWest
and Cerro Chato prospects, were assayed via the LeachWELLTM process, as an initial test of
cyanide recoverable gold characteristics of the main styles of mineralization recognized to date.
Claudia Au+Ag Project, Santa Cruz, Argentina
The large Claudia Au+Ag project (approximately 102,000 ha) comprises several drill-ready prospects
and is contiguous with the Cerro Vanguardia Au+Ag district operated by Cerro Vanguardia S.A.,
(“CVSA”) a 92.5 % owned subsidiary of Anglo Gold Ashanti. 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 also defined at Rio Seco, Ailen and the large Curahue zone.
A definitive 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. On March 22, 2019, Mirasol announced that it was advised
by OCG of its decision to terminate the agreement. OCG invested C$2 million since execution of the
agreement and drilled 2,500m in 12 holes.
Exploration Program Results
During the 2018-2019 field program, Mirasol completed additional partner-funded surface
exploration work on the property developing new drill targets that remain to be tested. A total of 249
rock chip samples were submitted for assays with results up to 7.99 g/t Au and 69 g/t Ag returned
from the Curahue trend. In addition, two new IP geophysical surveys focused on the Curahue and
Themisto prospects were completed extending existing survey coverage of the Claudia project to a
total of 42.8 sq-km of Gradient Array survey and 96.32 line km of PDP survey.
Mirasol believes targets remain to be drill tested on the Curahue, Thermisto and Rio Seco prospects
and has initiated a search for a new partner for the Claudia project.
Nico Au Ag Project, Santa Cruz
15
On September 25, 2018 Mirasol recommenced exploration at the Nico project for the 2018-19
southern hemisphere summer exploration season. In mid-December 2018, Mirasol initiated a
shallow drill program at the project.
Mirasol completed 27 holes totalling 1,610.2 m, including 17 reverse circulation holes for 907m and
10 diamond core holes for 703.2 m. Drilling was designed to provide an initial shallow test of narrow
structures that have returned high grade Au and Ag assays from surface rock chip and saw cut
channel sampling.
On March 4, 2019, the Company reported that it had completed the self-funded drill program on the
Nico property in Santa Cruz, Argentina. The majority of the assay results have been received and
were generally of low grade.
On May 8, 2019, the Company announced that the full results were received for the program which
can be viewed on the Company’s website. Two factors have contributed to disappointing results: i)
the majority of vein or vein breccia structures were found to maintain the same width, or pinch out
rapidly at depth instead of dilating; and ii) the surface samples are strongly oxidised and there seems
to have been significant supergene enrichment episode of Ag and Au very near surface that does
not continue to depth.
At this time, Mirasol does not intend to do any further exploration on the Nico project.
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 (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 (news release January 28, 2015).
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 expanded to 70,000 ha 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 last financial year, 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.
16
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.
Mirasol is advancing first pass reconnaissance sampling of its Mio-Pliocene pipeline property
portfolio and will report results from this exploration at the end of the 2019 southern hemisphere
summer season.
Business Development Activities
Since the beginning of July 2018, Mirasol has signed confidentiality agreements, distributed data
sets and conducted field reviews with selected Au and Cu companies with the objective of securing
potential new partnerships for many of its projects including:
• Santa Cruz: Sascha-Marcelina Au Ag Projects, Libanesa, Homenaje and Virginia Ag Projects
in Argentina.
• Eocene-Oligocene Belt: Odin and Rubi Cu Projects in Chile.
• Mio-Pliocene Belt: Zeus Project and other Mio-Pliocene pipeline projects in Chile.
The Company is also focusing its exploration activities on its Mio-Pliocene “pipeline” properties to
advance them to drill-ready status.
HIGHLIGHTS FOR THE PERIOD JULY 1, 2018 TO OCTOBER 25, 2019
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 year, Mirasol invested
$976,147 (Table 2) on exploration in Chile and $1,680,527 in Argentina.
The Company received $3,377,679 in cost recoveries for the year; including claims fees, salaries of
Mirasol employees seconded to the partner-funded programs and other operational costs that are
covered by the partners under the terms of the agreements. Mirasol earned $139,017 of
management fee income during the period.
Mirasol also received option payments of US $1,200,000 comprised of:
•
•
•
•
•
In October 2018, the Indra signing payment from HOC of US$ 50,000.
In August 2018, a La Curva option payment from OGC of US$ 200,000.
In November 2018, a Claudia option payment from OGC of US$ 100,000.
In November 2018, the Altazor option exercise payment from NCM of US$ 500,000.
In February 2019, the Gorbea signing and Zeus termination payment from NCM of
US$300,000.
•
In October 2019, the Coronación signing payment from FQM of US$50,000
17
Corporate Matters
On July 17, 2018, the Company announced the appointment of Jonathan Rosset as Vice-President
Corporate Development, together with 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 3.265 million options allocated of the 5.4 million
options available under the Company’s Options Plan.
On November 21, 2018, the Company reported that Borden R. Putnam III resigned as a director
effective November 20, 2018. Mr. Putnam served on the Board since December 2012 and was
involved in various committees as an independent director during his tenure.
On December 18, 2018, the Company announced the annual grant of stock options under its Equity
Incentive Plan. A total of 397,500 options were granted to directors, officers, employees and
consultants, which are exercisable at $1.10 per share for a period of three years. The Company has
also announced that it renewed consulting agreements with:
(i)
(ii)
Global Ore Discovery (“Global Ore”) to provide continued technical services, under which
the Company agreed to grant Global Ore 75,000 common shares in stages as a retention
bonus, with 37,500 shares being issued with 10 days of TSX Venture Exchange
acceptance, 18,750 shares on January 1, 2019, and 18,750 shares on April 1, 2019; and
Stephen Nano, who served at the time as CEO and President of the Company, under
which the Company granted 50,000 RSUs under its Equity Incentive Plan to Mr. Nano,
who is a principal of Global Ore.
Effective February 1, 2019, Norman Pitcher, P.Geo., was appointed President and CEO of the
Company. In connection with his appointment, the Company granted 600,000 stock options to Mr.
Pitcher. The options are exercisable at $1.27 per share for a period of four years subject to vesting
restrictions whereby 200,000 options shall vest immediately; 200,000 options shall vest on February
1, 2020; and 200,000 options shall vest on February 1, 2021, provided that Mr. Pitcher’s employment
agreement is in effect on such dates. An additional 150,000 stock options were granted to the
Chairman of the Board and are exercisable at $1.27 per share for a period of three years.
Effective March 14, 2019, Dr. Diane Nicolson has been appointed as an independent director of the
Company. Mirasol also announced the grant of 200,000 stock options to certain directors under its
Equity Incentive Plan. The options are exercisable at $1.09 per share for a period of four years,
100,000 of which are subject to vesting restrictions.
On March 21, 2019, the Company announced that Norman Pitcher, President and CEO, has been
appointed to the Company’s Board of Directors following the resignation of Stephen Nano from the
board. Mr. Nano will continue as an advisor to the Company.
On May 9, 2019, results of the 2019 Annual General Meeting of shareholders were reported. The
shareholders of the Company represented at the meeting elected Norman Pitcher, Dana Prince, Nick
DeMare, John Tognetti, Patrick Evans and Diane Nicolson as directors of the Company for the
ensuing year. Further, shareholders also approved: (i) the reappointment of Davidson & Company
as the Company’s independent auditor; and (ii) the Equity Incentive Plan, all as described in the
Information Circular. Subsequent to the Meeting, the Board reappointed the following officers of the
18
Company: Norman Pitcher, President and CEO; Dana Prince, Chairman; Mathew Lee, CFO; Timothy
Heenan, Country Manager; Jonathan Rosset, VP Corporate Development and Gregory Smith,
Corporate Secretary.
Table 2: Exploration expenditures per projects under active exploration
RESULTS OF OPERATIONS
19
20
20192018 Gorbea Package - Joint VentureAssays and sampling1,356 - Camp and general1,061 46,011 Contractors and consultants14,485 107,399 Mining rights and fees35,546 11,064 Travel & accommodation634 6,970 Option Income(132,600) - Resource Studies8,264 5,574 Professional fees- 5,851 (71,254) 182,869 Altazor - Joint VentureAssays and sampling24,265 98,779 Camp and general39,390 114,383 Contractors and consultants92,591 530,338 Exploration costs recovered(258,434) (1,696,669) Geophysics- 416,730 Management fees- 154,243 Mining rights and fees68,809 106,687 Professional fees2,373 1,240 Travel & accommodation48,616 162,591 Resource Studies4,787 33,774 Option income(662,950) (126,040) (640,552) (203,944) Zeus - Joint VentureAssays and sampling7,325 35,229 Camp and general(4,019) 240,934 Contractors and consultants42,920 158,669 Exploration costs recovered(90,530) (759,113) Geophysics- 138,539 Professional fees- 198 Management fees- 69,010 Mining rights and fees43,737 44,328 Option Income(261,900) (66,762) Resource Studies- 75,565 Travel & accommodation1,248 15,484 (261,219) (47,919) Indra Agni - Joint VentureAssays and sampling17,185 - Camp and general96,880 - Contractors and consultants280,470 - Exploration costs recovered(701,429) - Geophysics7,739 - Management fees61,244 - Mining rights and fees70,217 - Option Income(65,380) - Resource Studies60,093 - Travel & accommodation69,579 - (103,403) - Ladera - Joint VentureContractors and consultants6,095 - Mining rights and fees2,904 - 8,999 - (1,067,429) (68,994) For the Twelve Months Ended June 30, CHILE Total - Properties joint ventured to other companies
21
20192018Chile Pipeline ProjectsAssays and sampling25,229 30,036 Camp and general63,995 24,806 Contractors and consultants316,162 179,418 Geophysics38 565 Mining rights and fees387,294 537,823 Travel & accommodation48,180 21,593 840,898 794,241 GorbeaAssays and sampling2,228 - Camp and general83,428 - Contractors and consultants80,602 - Geophysics- - Mining rights and fees25,724 - Travel & accommodation10,216 - 202,197 - OdinAssays and sampling692 - Camp and general755 - Contractors and consultants741 - Mining rights and fees9,361 - Travel & accommodation696 - 12,247 - ZeusContractors and consultants422 Mining rights and fees30,914 - 31,337 - 1,086,679 794,241 Frontera - Joint VentureCamp and general- 8 Geophysics- 48 - 56 LaderaMining rights and fees14,653 - 14,653 - Enami (Los Amarillos)Assays and Sampling787 - Mining rights and fees341 - Joint venture payments13,260 - 14,388 - 29,041 56 Project Generation12,115 11,043 Management Fee Income(61,244) (223,253) 976,984 996,065 976,146 1,509,158 For the Twelve Months Ended June 30, Total - 100% owned propertiesTotal - Earn-in joint venture on third party projectsTotal ChileCorporate Operation & Management - Chile
22
20192018Claudia - Joint VentureAssays and sampling5,996 75,629 Camp and general71,977 266,217 Contractors and consultants192,021 342,261 Drilling- 572,498 Environmental9,459 11,947 Exploration costs recovered(603,328) (1,667,369) Geophysics13,987 29,761 Interest20 53 Management fees- 70,488 Mining rights and fees102,792 199,766 Option income(132,700) (126,552) Professional fees4,025 4,719 Travel & accommodation12,391 44,261 (323,360) (176,321) La Curva - Joint VentureAssays and sampling89,653 97,823 Camp and general163,029 306,606 Community relations(4,775) - Contractors and consultants304,887 460,662 Drilling704,431 733,654 Environmental1,146 8,941 Exploration costs recovered(1,723,958) (2,030,764) Interest- 133 Management fees- 80,615 Mining rights and fees40,733 61,036 Option income(263,040) - Professional fees1,097 6,026 Travel & accommodation33,860 52,903 (652,937) (222,365) (976,297) (398,686) ARGENTINA Total - Properties joint ventured to other companies For the Twelve Months Ended June 30,
23
20192018Argentina pipeline projectsAssays and sampling81,796 108,374 Camp and general297,001 47,992 Contractors and consultants293,888 139,615 Drilling275,570 - Environmental8,125 11,374 Geophysics56,368 6,214 Mining rights and fees106,592 119,668 Professional fees- 1,060 Travel & accommodation32,094 44,952 1,151,434 479,249 Claudia Assays and sampling1,820 - Camp and general5,394 - Contractors and consultants22,899 - Mining rights and fees38,177 - Travel & accommodation1,661 - 69,951 - La CurvaCamp and general11 - Community relations4,698 Contractors and consultants23,404 - Mining rights and fees7,402 - Travel & accommodation301 - 35,816 - SaschaAssays and sampling5,297 - Contractors and consultants20,865 - Mining rights and fees4,928 - Professional fees505 - 31,595 - Santa Rita and VirginiaCamp and general- 28,800 Contractors and consultants- 16,588 Environmental- 2,783 Mining rights and fees- 33,903 Travel & accommodation- 8 - 82,082 1,288,796 561,331 For the Twelve Months Ended June 30, Total - 100% owned properties
FOR THE YEAR ENDED JUNE 30, 2019 AS COMPARED TO THE YEAR ENDED JUNE 30, 2018
The Company’s net comprehensive loss for the year ended June 30, 2019 (“2019”) was $6,644,406
or $0.12 per share compared to a net comprehensive loss of $4,345,815 or $0.09 per share for the
year ended June 30, 2018 (“2018”), an increase of $2,298,591.
The increase in net loss during 2019 is due to an increase in management fees from issuance of
bonus shares and share based compensation issued to various directors and officers. The Company
entered into a new lease agreement for head office space during the year which resulted in
purchasing furniture, security deposit and increase in base rent. The Company recorded a loss on
foreign exchange from conversion of funds during the year.
The Company’s total operating expenses were $5,917,785 in 2019 compared to $5,457,985 in 2018.
As presented in Table 2 above, the Company incurred exploration costs of $2,656,673 in 2019,
compared to $2,762,028 in 2018. Reduction in generative exploration and increased partner-funded
project management in Argentina and Chile during 2019 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 $2,393,155 in 2019 compared to $2,190,108 in 2018. The
increase of $203,047 is attributable to the increase in management fees, office and miscellaneous,
marketing and professional fees redirection of company objectives. This also includes the salary
increases during 2019.
24
Marcelina Assays and sampling26,024 - Camp and general34,648 - Contractors and consultants102,434 - Environmental4,297 - Mining rights and fees4,169 - Travel & accommodation10,577 - Share Capital226 - Acquistion Costs33,696 - 216,071 - 216,071 - Project Generation150 59 Management Fee Income(77,773) (151,103) 1,229,580 1,241,269 1,680,527 1,252,870 2,656,673 2,762,028 Total - Earn-in joint venture on third party projectsTotal Exploration and Evaluation CostsTotal ArgentinaCorporate Operation & Management - Argentina
Reductions in cost of travel and business development in 2019 compared to 2018, were attributable
to reduction in rates and the services obtained and efficient cost management.
The Company also recorded a foreign exchange loss of $1,169,138 during 2019 compared to the
gain of $756,098 in 2018. 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 generative exploration work during the fourth quarter. The net loss for
the quarter ended June 30, 2019 (“Current Quarter”) was $1,975,115 compared to net loss $14,623
for the quarter ended June 30, 2018 (Comparative Quarter). As for the current quarter the reason
for the increase in the loss is due to a loss 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 professional fees and an increase in share-
based payments expense resulted in an increase in the related costs during the Current Quarter
compared to the Comparative Quarter.
SELECTED ANNUAL FINANCIAL INFORMATION
Sales
Loss for the year
Loss per share – basic and diluted
Total assets
Total long-term liabilities
Dividends declared
SUMMARY OF QUARTERLY RESULTS
2019
$
-
(6,646,786)
(0.12)
25,191,758
-
-
2018
$
-
(4,341,131)
(0.09)
30,379,800
-
-
2017
$
-
(6,945,647)
(0.15)
25,070,836
-
-
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.
25
Income (Loss)
from Continued
Operations
$
(1,975,115)
(3,440,524)
336,804
(1,567,951)
(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
$
(0.04)
(0.07)
0.01
(0.03)
(0.001)
(0.03)
(0.02)
(0.04)
(0.03)
(0.04)
(0.03)
(0.05)
Diluted Income
(Loss) per Share
from Continued
Operations
$
(0.04)
(0.07)
0.01
(0.03)
(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
Nil
Nil
Nil
Nil
Period
4th Quarter 2019
3rd Quarter 2019
2nd Quarter 2019
1st Quarter 2019
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$16,836,008. The
Company received interest income of $440,137 during 2019 compared to $360,756 in 2018.
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). 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
26
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 $20.7 million on June 30, 2019, the Company has 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.
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.
The remuneration of management and independent directors was as follows:
Management compensation (i)
Share-based payments (ii)
Director’s fees (iii)
Bonus shares (iv)
Year Ended June 30,
2019
579,015
853,972
180,750
86,250
1,699,978
$
$
$
$
2018
501,273
261,084
186,241
-
948,598
(i)
Management compensation is included in Management fees (2019 - $352,639; 2018 -
$272,046) and in exploration expenditures (2019 - $226,376; 2018 - $229,227).
(ii)
Share-based payments represent the expense for the years ended June 30, 2019 and 2018.
(iii)
(iv)
The independent directors of the Company are paid $2,100 per month (2018 - $2,100 per
month) while the Chairman of the Board of Directors receives an additional $7,100 per month
for serving in this capacity (2018 - $7,100).
In November 2018, the Company signed consulting agreements, effective July 2018, with
Global Ore to perform the duties of exploration services for the Company. Under the terms of
the Global Ore agreement, the Company has retained the services of Global Ore consultants
until June 30, 2019, to provide target generation related consulting services to the Company
on an exclusive basis throughout Chile and Argentina. The Company has agreed to pay a
minimum monthly retainer of AUD $50,000 and six month minimum of $350,000. The
27
Company has an additional trailing one-year contact with Global Ore commencing July 1,
2019 to June 30, 2020.
Further, as additional consideration, the Company has agreed to issue 75,000 Retention
Bonus Shares (“the Bonus Shares”) (Issued January 3, 2019), subject to vesting, to key
representatives of Global Ore other than Mr. Stephen Nano, the previous CEO of the
Company.
The Bonus Shares shall be issued, subject to receipt of TSX Venture Exchange (“TSXV”)
acceptance, and will be subject to escrow restrictions whereby 37,500 will be released upon
TSXV acceptance and signing of the Global Ore consulting contract; 18,750 released on
January 1, 2019 and 18,750 released on April 1, 2019. The Global Ore trailing contract can
be terminated at any time by Global Ore after four months from its commencement on July
1, 2019 with a one month’s notice to the Company.
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:
Nature of transactions
Miller Thomson
Global Ore
Evrim Resources Corp. (“Evrim”) Office administration support services and office sharing
Chase Management Ltd.
Mathew Lee
Legal fees
Project generation, exploration management and GIS services
Professional fees
CFO services
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,
2019
213,426
54,000
-
788,077
1,055,503
$
$
2018
189,138
101,750
49,440
711,619
1,051,947
$
$
Included in accounts payable and accrued liabilities at June 30, 2019, is an amount of $45,085 (2018
- $153,904) 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, 2019.
The Company did not adopt any significant new accounting policies during the reporting period.
28
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.
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.
The Company operates in Argentina which is classified as a hyperinflation economy. However, the
Companies functional currency is US dollars. Therefore, the provisions of IAS 29 Financial Reporting
in Hyper-Inflationary Economies have not been adopted nor have they been applied to the
consolidated financial statements for the year ended June 30, 2019.
FINANCIAL INSTRUMENTS
The Company’s financial instruments as at June 30, 2019, consist of cash and cash equivalents,
receivables and advances, 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.
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 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.
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 and 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
29
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.
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 loss and comprehensive loss of the audited annual
consolidated financial statements for the year ended June 30, 2019 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 54,033,878 issued and outstanding common shares.
In addition, the Company has 3,711,876 options outstanding that expire through March 14th, 2023,
and 2,158,875 warrants outstanding that expire through June 1st, 2020. At the date of this MD&A,
110,000 RSU’s were outstanding.
Details of issued share capital are included in Note 6 of the consolidated financial statements for the
year ended June 30, 2019.
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.
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