UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 20-F
SEC File No.
001-31799
(Mark One)
[ ] Registration statement pursuant to Section 12(b)
or (g) of the Securities Exchange Act of 1934
or
[ X ] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended January 31,
2015
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _________________to
_________________
[ ] Shell Company Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
Date of event requiring this shell company report
_______________________
ROUGE RESOURCES LTD.
(Exact name of registrant as specified in this charter)
British Columbia, Canada
(Jurisdiction of
incorporation or organization)
#203-409 Granville Street, Vancouver
British
Columbia, V6C 1T2, Canada
(Address of principal executive
offices)
Darcy Krell |
Copy to: |
Secretary, General Manager and Director |
Doug E. Eacrett, |
(Tel) 604-831-2739 |
Barrister & Solicitor |
(Fax) 604-831-2735 |
Suite 203 409 Granville St |
|
Vancouver, BC, Canada V6C 1T2 |
|
Phone No.: (604) 689-5002 Fax No: (604)
689-5003 |
Securities registered or to be registered pursuant to section
12(b) of the Act:
None |
None |
(Title of each class) |
(Name of each exchange on which registered)
|
Securities registered or to be registered pursuant to Section
12(g) of the Act:
Common Shares Without Par Value
(Title of
Class)
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the
issuers classes of capital or common stock as of the close
of the period
covered by the annual report.
44,633,171 Common Shares
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
[ ] Yes [ X ] No
If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports
pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
[ ] Yes [ X ] No
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of
the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if
any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files).
[ ] Yes [ X ] No (Not Required)
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check
Large accelerated filer [ ] |
Accelerated filer [ ] |
Non-accelerated filer [ X ]
|
Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing
U.S. GAAP [ ]
|
International Financial Reporting
Standards as issued by the International Accounting Standards
Board [ X ] |
Other [ ]
|
|
If Other has been checked in response to previous question,
indicate by check mark which financial statement
item the registrant has
elected to follow.
Item 17 [ ] Item 18 [ ].
If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-
2 of the Exchange
Act).
[ ] Yes [ X ] No
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F and exhibits attached hereto
contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and Canadian securities laws. Such
forward-looking statements concern the Companys plans for its properties,
operations and other matters. T hese statements relate to analyses and other
information that are based on forecasts of future results, estimates of amounts
not yet determinable and assumptions of management. Statements concerning
estimates of mineral resources and reserves may also be deemed to constitute
forward-looking statements to the extent that they involve estimates of the
mineralization that will be encountered if the property is developed, and in the
case of mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically exploited. Any
statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or phrases such as
expects or does not expect, is expected, anticipates or does not
anticipate, plans, estimates or intends, or stating that certain actions,
events or results may, could, would, might or will be taken, occur or
be achieved) are not statements of historical fact and may be forward-looking
statements. Forward-looking statements are subject to a variety of risks and
uncertainties, which could cause actual events or results to differ from those
reflected in the forward-looking statements, including, without limitation:
|
risks related to continuing as a going concern and
possible failure to obtain adequate financing on a timely basis and on
acceptable terms; |
|
political and regulatory risks associated with mining and
exploration; |
|
risks related to the maintenance of exchange listings;
|
|
risks related to environmental regulation and liability;
|
|
risks related to the potential for delays in exploration
or development activities; |
|
risks related to the uncertainty of profitability based
upon the Companys history of losses; |
|
risks and uncertainties relating to the interpretation of
drill results, the geology, grade and continuity of mineral deposits;
|
|
risks related to the inherent uncertainty of production
and cost estimates and the potential for unexpected |
|
costs and expenses; |
|
results of prefeasibility and feasibility studies, and
the possibility that future exploration, development or mining results
will not be consistent with the Companys expectations; |
|
risks related to gold price and other commodity price
fluctuations |
|
etc. |
This list is not exhaustive of the factors that may affect our
forward-looking statements. Some of the important risks and uncertainties that
could affect forward-looking statements are described in this Annual Report as
Item 3.4 under the heading Description of Business Risk Factors. Should one
or more of these risks and uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in forward-looking statements. Forward-looking statements are made
based on managements beliefs, estimates and opinions on the date the statements
are made. Investors are cautioned against attributing undue certainty to
forward-looking statements.
PART I
ITEM 1. |
Identity of Directors, Senior Management and
Advisors |
1.1 Directors and Senior
Management:
Linda J. Smith #203-409 Granville
Street, Vancouver, British Columbia, V0R 1X0, Canada |
President, Chief Executive
Officer and Director
|
Darcy T. Krell #203-409 Granville Street,
Vancouver, British Columbia, V0R 1X0, Canada |
Secretary, General Manager and Director
|
J. Ronald McGregor #203-409 Granville Street,
Vancouver, British Columbia, V0R 1X0, Canada |
Chief Financial Officer (CPA, CA) and
Director
|
Steven J. Chan #203-409 Granville Street,
Vancouver, British Columbia, V0R 1X0, Canada |
Director
|
James O. Burns #203-409 Granville Street,
Vancouver, British Columbia, V0R 1X0, Canada |
Director
|
David Mark #203-409 Granville Street,
Vancouver, British Columbia, V0R 1X0, Canada |
Geologist and Director
|
|
1.2 Advisors:
Doug E. Eacrett, Barrister &
Solicitor, Suite 203 409 Granville St, Vancouver BC, Canada V6C
1T2 |
Company Lawyer
|
Ms. Caitlin Jeffs, H.B.Sc., P.Geo, Mr. Michael
Thompson, H.B.Sc., P.Geo, C/o Fladgate Exploration Consulting
Corporation 195 Park Avenue, Thunder Bay Ontario, P7B 1B9, Canada.
|
Consulting Geologists
|
|
1.3 Auditor:
Dale Matheson Carr-Hilton Labonte LLP,
Chartered Accountants, Suite 1500 1140 West Pender Street,
Vancouver BC, Canada V6E 4G1 |
Replaced Morgan & Company
during the year ended January 31, 2009
|
|
Our auditors are members in good standing with the Institute of
Chartered Accountants of British Columbia and are registered with the Canadian
Public Accountability Board (CPAB) and the Public Company Accounting Oversight
Board - United States (PCAOB).
ITEM 2. |
Offer Statistics and Expected Timetable
|
Not applicable
3.1 |
Selected Financial Data |
The following tables show selected financial data of the
Company and should be read in conjunction with our audited financial statements
for the fiscal years ended January 31, 2015, 2014 and 2013 included as an
exhibit in this annual report. Our audited financial statements for the fiscal
years ended January 31, 2012 and 2011 are not included in this annual
report.
Since February 1, 2010, our financial statements have been
prepared in accordance with International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB) along with
interpretations of the International Financial Reporting Interpretations
Committee (IFRIC). Except for the reclassification between equity accounts
from contributed surplus (the Canadian GAAP term used for this account) to
convertible debt reserve (the IFRS term for this account) the adoption of IFRS
had no impact on the Companys financial position as at February 1, 2010 and
subsequent periods. All amounts continue to be expressed in Canadian
dollars.
The Company has reviewed recently issued accounting standards
under IFRS and is currently assessing the impact that these standards may have
on its financial statements and does not expect the adoption of these standards
will have a material impact on its financial position, results of operations nor
cash flows.
The financial data below is presented in accordance with IFRS
in Canadian dollars as at and for the five fiscal years ended January 31.
IFRS (in Cdn $)
|
2015 |
2014 |
2013 |
2012 |
2011 |
Net loss |
($186,548) |
($209,624) |
($239,258) |
($279,284) |
($255,692) |
Loss per share - basic and diluted |
($0.01) |
($0.01) |
($0.01) |
($0.01) |
($0.01) |
Cash dividends per
share |
Nil |
Nil
|
Nil
|
Nil
|
Nil
|
Total assets |
$286,149 |
$397,066 |
$584,877 |
$243,140 |
$364,036 |
Long term debt |
Nil |
Nil
|
Nil
|
$39,676 |
Nil
|
Deficit |
($3,908,267) |
($3,721,719) |
($3,512,095) |
($3,272,837) |
($2,993,553) |
Share capital |
$3,953,590 |
$3,953,590 |
$3,953,590 |
$3,110,796 |
$3,110,796 |
Total equity
(deficiency) |
$96,680 |
$285,228 |
$494,852 |
($108,684) |
$170,600 |
Weighted average number of
shares outstanding |
44,633,171 |
44,633,171 |
42,299,073 |
40,565,171 |
33,578,870 |
Since June 1, 1970, the government of Canada permitted a
floating exchange rate to determine the value of the Canadian dollar compared to
the United States dollar. On May 26, 2015, the exchange rate in effect was
C$1.00 = US$0.80. This exchange rate is based on the noon buying rates in New
York City, for cable transfers in Canadian dollars, as certified for customs
purposes by the Federal Reserve Bank of New York. For the past five fiscal years
and the past six months ended January 31, 2015, the following exchange rates
were in effect for United States dollars stated in Canadian dollars:
Years Ended |
|
Actual Year End Exchange Rate
|
|
January 31, 2015 (ie. Cdn$1.00 = US$0.7 9)
|
|
$ 0.79 |
|
January 31, 2014 |
|
$ 0.90 |
|
January 31, 2013 |
|
$ 1.00 |
|
January 31, 2012 |
|
$ 0.99 |
|
January 31, 2011 |
|
$ 1.00 |
|
Months Ended |
|
Month End Exchange Rate |
|
January 31, 2015 (ie. Cdn$1.00 = US$0.79)
|
|
$ 0.79 |
|
December 31, 2014 |
|
$ 0.86 |
|
November 31, 2014 |
|
$ 0.88 |
|
October 31, 2014 |
|
$ 0.89 |
|
September 30, 2014 |
|
$ 0.90 |
|
August 31, 2014 |
|
$ 0.92 |
|
3.2 |
Capitalization and
Indebtedness |
The following table sets forth our exploration and evaluation
assets, indebtedness and shareholders equity (deficiency) as at January 31,
2015 in Canadian dollars under both IFRS and US GAAP:
|
IFRS |
US GAAP |
Exploration
and evaluation assets |
$ 277,341 |
$ 63,613 |
Total indebtedness
|
$
187,469 |
$
187,489 |
Equity
(Deficiency) |
|
|
Share
capital |
$
3,953,590 |
$
3,953,590 |
Convertible debt reserve |
$
53,357 |
-
|
Deficit |
($ 3,908,267) |
($
4,068,639) |
Total |
$
96,680 |
($ 115,049) |
The Issuers financial statements have been prepared in
accordance with IFRS which differ in certain material respects from those
principles that the Issuer would have followed had its financial statements been
prepared in accordance with US GAAP. The differences above between IFRS and US
GAAP affecting the Companys financial statements are described below.
Exploration and Evaluation Assets
Under IFRS,
property acquisition costs and exploration & evaluation costs are
capitalized and reviewed for impairment on a reporting period basis. Under US
GAAP, property acquisition costs are capitalized and reviewed for impairment on
a reporting period basis and exploration & evaluation costs are expensed as
incurred. When it has been determined that a mineral interest can be
economically developed as a result of establishing proven and probable reserves,
the costs incurred to develop such property are then capitalized.
Convertible Debt Reserve
Under IFRS,
companies allocate convertible debt proceeds between the debt component and the
embedded conversion feature using the residual value method with debt valued
first and the conversion feature valued at whats left over. Under US GAAP,
companies allocate convertible loan proceeds to the embedded conversion feature
only if such feature has intrinsic value. Also, the convertible note is treated
solely as a liability since the embedded conversion feature has no intrinsic
value and accordingly does not meet the requirements of an equity component.
3.3 |
Reasons for the Offer and Use of
Proceeds |
Not applicable
3.4 |
Description of Business - Risk
Factors |
Any investment in our common shares involves a high degree of
risk. You should consider carefully the following information before you decide
to buy our common shares. If any of the events discussed in the following risk
factors actually occur, our business, financial condition or results of
operations would likely suffer. In this case, the market price of our common
shares could decline, and you could lose all or part of your investment in our
shares. The following is a list of all known material risks relating to our
business and an investment in our common shares:
We have a history of losses. Our inability to achieve
profitability will negatively impact any investment in our shares.
We
have incurred losses in our business operations since inception, and we expect
that we will continue to incur losses in the foreseeable future. From March 31,
1988, the date of incorporation, to January 31, 2015, we have incurred losses
totaling $3,908,267 under IFRS. Very few junior resource companies ever become
profitable. Failure to achieve and maintain profitability may adversely affect
the market price of our common stock.
If we are unable to generate revenue or raise financing, our
business may fail.
We have limited financial resources, no source of
operating cash flow and no commitments for additional financing to fund further
exploration of our mineral property interests. Failure to obtain this financing
could result in delay or indefinite postponement of further exploration and
ultimately the failure of our business.
If we are unable to prove that a mineral reserve exists on
our mineral property interests, our business may fail.
The business of
exploring minerals and mining involves a high degree of risk. Few mineral
properties that are explored ultimately develop into producing mines. At
present, our mineral properties have no known commercial ore body. Most
exploration projects do not result in the discovery of commercially mineable
deposits of ore.
Substantial expenditures are required for us to establish ore
reserves through drilling, to develop metallurgical processes, to extract the
metal from the ore and, in the case of new properties, to develop the mining and
processing facilities and infrastructure at a chosen mining site.
It is unknown whether we will discover minerals in sufficient
quantities to justify commercial operations or that we can obtain the funds
required for development on a timely basis. The probability of an individual
mineral exploration prospect ever containing reserves is extremely remote. It is
unlikely that our mineral properties contain reserves, so any funds expended on
the property will most likely be lost.
Our auditors have expressed substantial doubt about our
ability to continue as a going concern, and if we do not obtain additional
financing, our business will fail.
As at January 31, 2015, we had a cash
balance of $271. Our financial statements have been prepared on the assumption
that the Company will continue as a going concern, meaning it will continue in
operation for the foreseeable future and will be able to realize assets and
discharge liabilities in the ordinary course of business. As at January 31,
2015, the Company had not advanced any of its properties to commercial
production and is not able to finance day-to-day activities through operations.
The Companys continuation as a going concern is dependent upon the successful
results from its mineral property exploration activities; its ability to attain
profitable operations and generate funds therefrom; and its ability to raise
equity capital or borrowings sufficient to meet current and future obligations.
These factors indicate the existence of a material uncertainty that casts
substantial doubt about the Companys ability to continue as a going concern.
Management intends to finance operating costs over the next twelve months with
cash on hand, loans from directors and companies controlled by directors, and/or
private placement of common shares. Should the Company be unable to continue as
a going concern, the net realizable value of its assets may be materially less
than the amounts presented on its Statement of Financial Position.
Due to the speculative nature of mineral property
exploration, there is substantial risk that no commercially viable mineral
deposits will be found on our Dotted Lake-Lampson Lake Property or other mineral
properties that we acquire.
In order for us to even commence mining
operations we face a number of challenges which include finding qualified
professionals to conduct our exploration program, obtaining adequate financing
to continue our exploration program, locating a viable mineral body, partnering
with a senior mining company, obtaining mining permits, and ultimately selling
minerals in order to generate revenue. Moreover, exploration for commercially
viable mineral deposits is highly speculative in nature and involves substantial
risk that no viable mineral deposits will be located on any of our present or
future mineral properties. There is a substantial risk that the exploration
program we plan to conduct on the Dotted Lake-Lampson Lake project may not
result in the discovery of any significant mineralization, and therefore no
commercially viable mineral deposit. There are numerous geological features that
we may encounter that would limit our ability to locate mineralization or that
could interfere with our exploration programs as planned, resulting in
unsuccessful exploration efforts. In such a case, we may incur significant costs
associated with an exploration program, without any benefit. This would likely
result in a decrease in the value of our common stock.
General economic conditions could have a negative impact on
our business.
Ongoing volatility in global financial markets has had a
profound impact on the global economy. Many industries, including the precious
metal and base metal mining industries, are impacted by these market conditions.
Some of the key impacts of the current financial market turmoil include
contraction in credit markets resulting in a widening of credit risk,
devaluations and high volatility in global equity, commodity, foreign exchange
and precious metal markets, and a lack of market liquidity. A continued or
worsened slowdown in the financial markets or other economic conditions,
including but not limited to, consumer spending, employment rates, business
conditions, inflation, fuel and energy costs, consumer debt levels, lack of
available credit, the state of the financial markets, interest rates, and tax
rates may adversely affect our growth and profitability. Specifically:
|
the global credit/liquidity crisis could impact
the cost and availability of financing and our overall liquidity; |
|
the volatility of the gold price may impact our
future revenues, profits and cash flow; |
|
volatile energy prices, commodity and
consumables prices and currency exchange rates impact potential production
costs; and |
|
the devaluation and volatility of global stock
markets impacts the valuation of our equity securities, which may impact
our ability to raise funds through the issuance of equity.
|
These factors could have a material adverse effect on our
financial condition and results of operations.
Mineral exploration involves a high degree of risk against
which we are not currently insured. If an environmental liability was incurred,
it may irreparably harm our business.
Unusual or unexpected rock
formations, formation pressures, fires, power outages, labour disruptions,
flooding, cave-ins, landslides and the inability to obtain suitable or adequate
machinery, equipment or labour are risks involved in the operation of mines and
the conduct of exploration programs.
It is not always possible to fully insure against such risks
and we may decide not to take out insurance against such risks as a result of
high premiums or other reasons. Should such liabilities arise, they could reduce
or eliminate any future profitability and result in increasing costs and a
decline in the value of our common stock. We do not currently maintain insurance
against environmental risks relating to our mineral property interests.
If title to our mineral property interests is disputed, we
may lose our business assets and our business may fail.
Our mineral
property interests may be subject to prior unregistered agreements or transfers
or aboriginal land claims and title may be affected by undetected defects. There
is a risk that the property boundaries could be challenged. In such
circumstances, we will incur costs defending our title to our mineral property
interests and may lose our interest in the claims, causing our business to fail.
The Company has investigated and believes it has good title to its properties.
However, there is no guarantee that adverse claims to title will not arise in
the future, nor can the Company express an opinion on how difficult the
resolution of such claims would be.
The legal nature of aboriginal land claims, in particular, is a
matter of considerable complexity. The impact of any such claim on our ownership
interest in our properties cannot be predicted with any degree of certainty and
no assurance can be given that a broad recognition of aboriginal rights in the
area in which the properties optioned by us are located, by way of a negotiated
settlement or judicial pronouncement, would not have an adverse effect on our
activities. Even in the absence of such recognition, we may at some point be
required to negotiate with first nations in order to facilitate exploration and
development work on the properties optioned by us.
We may require permits and licenses that we may not be able
to obtain. If we are unable to obtain such permits and licenses, our business
plan will fail.
Our current or future operations, including exploration
and development activities and the commencement and continuation of commercial
production, require licenses, permits or other approvals from various federal,
provincial and/or local governmental authorities and such operations are or will
be governed by laws and regulations relating to prospecting, development,
mining, production, exports, taxes, labour standards, occupational health and
safety, waste disposal, toxic substances, land use, water use, environmental
protection, aboriginal land claims and other matters.
We believe that we are in substantial compliance with all
material laws and regulations which currently apply to our activities. There can
be no assurance, however, that we will obtain on reasonable terms or at all the
permits and approvals, and the renewals thereof, which we may require for the
conduct of our current or future operations or that compliance with applicable
laws, regulations, permits and approvals will not have an adverse effect on any
mining project which the Issuer may undertake. Possible changes to mineral tax
legislation and, regulations could cause additional expenses, capital
expenditures, restrictions and delay on the Issuers planned exploration and
operations, the extent of which cannot be predicted.
Failure to comply with applicable laws, regulations and
permitting requirements may result in enforcement actions thereunder, including
orders issued by regulatory or judicial authorities causing operations to cease
or be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment, or remedial actions. Parties
engaged in mining operations may be required to compensate those suffering loss
or damage by reason of the mining activities and may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations.
We will be required to obtain work permits from the Ontario
Ministry of Northern Development and Mines for any subsequent exploration work
that results in a physical disturbance to the land if the program calls for the
disturbance of more than 10,000 square meters of the property surface, or such
areas that would total that amount when combined. A work permit is also required
for the erection of structures on the property. There is no charge to obtain a
work permit under the Mining Act.
Precious metal prices fluctuate widely. A decrease in these
prices may prevent us from raising the capital necessary to continue our
business plan in the future. As well, low prices will reduce the value of any
reserve we discover on our mineral property interests.
Factors beyond
our control may affect the marketability of any precious metals we discover.
Metal prices have fluctuated widely, particularly in recent years. Our ability
to raise capital for continuing exploration of our mineral property interests
depends to a large degree on the market price for metals generally, as well as
for gold in particular. In addition, the value of any reserve we discover on the
Dotted Lake-Lampson Lake properties will fluctuate depending on current metal
prices. Low metal prices may make it uneconomical to commence production on our
mineral property interests, if a reserve is established, of which there is no
guarantee.
The resource industry is very competitive. The competitive
nature of the business may increase our cost of operations and prevent us from
obtaining interests in additional mineral properties.
The resource
industry is intensely competitive in all its phases. We compete with many
companies possessing greater financial resources and technical facilities than
us for the acquisition of mineral concessions, claims, leases and other mineral
interests as well as for the recruitment and retention of qualified
employees.
In conducting exploration on our mineral property interests,
we will be subject to environmental regulations. In addition, our operations may
be adversely affected by changes in environmental regulations. A significant
change in such regulations may prevent us from proceeding with our business
plan.
Our operations are subject to environmental regulations
promulgated by government agencies from time to time. Environmental legislation
provides for restrictions and prohibitions on spills, release or emissions of
various substances produced in association with certain mining industry
operations, such as seepage from tailings disposal areas, which would result in
environmental pollution. A breach of such legislation may result in the
imposition of fines and penalties. In addition, certain types of operations
require the submission and approval of environmental impact assessments.
Environmental legislation is evolving in a manner which means that standards,
enforcement, fines and penalties for non-compliance are more stringent.
Environmental assessments of proposed projects carry a heightened degree of
responsibility for us and our directors, officers and consultants. The cost of
compliance with changes in governmental regulations has a potential to reduce
the profitability of our operations. We do not maintain environmental liability
insurance.
When our exploration program on our mineral property interests
proceeds to the drilling stage, we may be required to post small bonds if the
rights of a private land owner may be affected. We may also be required to file
statements of work with the Ministry of Northern Development and Mines. We will
also be required to undertake remediation work on any exploration that results
in physical disturbance to the land. The cost of remediation work will vary
according to the degree of physical disturbance.
Our listed securities are subject to penny stock regulation,
which may impede an investors ability to purchase our common shares.
The price of our common stock is below $5.00 per share and is subject to
"penny stock" regulation. "Penny stock" rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with a spouse). For transactions covered by these rules, the broker-dealer must
make a special suitability determination for the purchase of such securities and
have received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a
result.
We rely on the technical and financial skills and
contributions of our management team, the loss of any one of which may adversely
impact our business.
Our success will be largely dependent, in part, on
the services of our senior management and directors whose contributions include
both technical and financial skills and assistance. We have not purchased any
key man insurance, nor have we entered into any non-competition or
non-disclosure agreements with any of our directors, officers or key employees
and have no current plans to do so. We may hire consultants and others for
geological and technical expertise but there is no guarantee that we will be
able to retain personnel with sufficient technical expertise to carry out the
future development of our mineral properties.
Some of our directors are or will be directors of other
companies, which could result in conflicts of interest.
Certain of our
directors, officers and other members of management do, and may in the future,
serve as directors, officers, promoters and members of management of other
companies and, therefore, it is possible that a conflict may arise between their
duties as a director, officer, promoter or member of our management team and
their duties as a director, officer, promoter or member of management of such
other companies. Our directors and officers are aware of the laws governing
accountability of directors and officers for corporate opportunity and the
requirement of directors to disclose conflicts of interest. We will rely upon
these laws in respect of any directors and officers conflicts of interest or
in respect of any breaches of duty by any of our directors or officers.
Enforcement of US legal process may be difficult.
All members of our Board of Directors and management reside in Canada
and our address for service is a Canadian address. Accordingly, investors will
not be able to:
i) |
effect legal process upon us or upon individuals related
to us within the United States; |
ii) |
enforce judgments obtained in United States courts
against us based upon the civil liability provisions of the United States
securities law; or |
iii) |
enforce United States court judgments based upon the
civil liability provisions of the United States federal securities
law. |
However, investors may commence original actions against us,
our directors and officers and our experts in British Columbia courts. However,
as our sole mineral property asset is located in Ontario, additional legal
proceedings would need to be commenced in that province in order to satisfy any
judgment.
Investors may not be able to seek judgment in British Columbia
or Ontario if the court determines that it is unable to rule in a matter that
involves determinations respecting United States securities laws. In such
circumstances, investors would be prevented from obtaining judgment that is
enforceable against us.
As we are incorporated pursuant to the laws of British
Columbia, duties of our directors and officers, and the ability of shareholders
to initiate a lawsuit on our behalf, are governed by the British Columbia
Business Corporations Act.
Currency fluctuations may increase the costs of doing
business for us.
The Company's offices and primary activities are
currently located in Canada and commodities are sold in international markets at
prices denominated in US dollars. However, some of the costs associated with the
Company's activities in Canada may be denominated in currencies other than the
US dollar. Any appreciation of these currencies vis-a-vis the US dollar could
increase the Company's cost of doing business in these countries. In addition,
the US dollar is subject to fluctuation in value vis-a-vis the Canadian dollar.
The Company does not utilize hedging programs to mitigate the effect of currency
movements.
We may, in the future, issue additional common shares, which
would reduce investors percent of ownership and may dilute our share value.
Our Memorandum (charter document) authorized the issuance of an
unlimited number of common shares. As of May 26, 2015, the Company had
44,633,171 common shares outstanding. We may issue an unlimited number of
additional common shares. The future issuance of common shares may result in
substantial dilution in the percentage of our common shares held by our then
existing shareholders. We may value any common shares issued in the future on an
arbitrary basis. The issuance of common shares for future services or
acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by our investors, and might have an adverse effect on
any trading market for our common shares.
If we lose our Foreign Private Issuer status in the U.S.,
our operating costs will increase.
The Company is required to determine
its foreign private issuer status (as defined in Rule 3b-4(c) under the U.S.
Securities and Exchange Act of 1934 (as amended) for the purposes of U.S.
securities law) (the Exchange Act), annually at the end of its second fiscal
quarter. Although less than 50% of its voting securities were held by U.S.
residents on the last business day of its most recently completed second fiscal
quarter, the Company is considered a foreign private issuer as it met the
following conditions: (i) a majority of its executive officers and directors,
taken separately, are non-U.S. citizens or residents, (ii) more than 50% of its
assets are located outside the U.S., and (iii) the business of the Company is
principally administered outside the U.S. The Company may in the future lose its
foreign private issuer status if it fails to meet any of the aforementioned
criteria.
The regulatory and compliance costs to the Company under U.S.
securities laws as a U.S. domestic issuer may be significantly more than the
costs the Company incurs as a Canadian foreign private issuer eligible to use
the multi-jurisdictional disclosure system. If the Company is not a foreign
private issuer it would be required to file periodic and current reports and
registration statements on U.S. domestic issuer forms with the SEC, which are
more detailed and extensive than the forms available to a foreign private
issuer. This could have a materially adverse impact on the Companys corporate
overhead costs and its ability to raise future financing.
Because we do not intend to pay any cash dividends on our
common shares, our shareholders will not be able to receive a return on their
shares unless they sell them.
We intend to retain any future earnings to
finance the development and expansion of our business. We do not anticipate
paying any cash dividends on our common stock in the foreseeable future. Unless
we pay dividends, our shareholders will not be able to receive a return on their
shares unless they sell them. There is no assurance that shareholders will be
able to sell shares when desired.
ITEM 4 |
Information on the Company
|
|
4.1 |
History and Development |
The financial information contained herein complies 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).
Rouge Resources Ltd (the Company or We or the Issuer) was
incorporated under the name Gemstar Resources Ltd. on March 31, 1988 pursuant
to the provisions of the Company Act (British Columbia). In March 2006,
we were transitioned to the Business Corporations Act (British Columbia).
On March 25, 2008, the Companys name was changed to Rouge Resources Ltd. Our
registered and records office is located at 203-409 Granville Street, Vancouver
BC, V6C 1T2.
We have been a reporting issuer in British Columbia and Alberta
since April 3, 1989 and became a foreign private issuer in the United States
pursuant to filings with the US Securities and Exchange Commission on or about
November 15, 2003. Prior to August 30, 2012, our common shares were quoted only
on the OTC:BB in the United States under the symbol ROUGF but since this date
have also been listed for trading on the TSX Venture Exchange under the symbol
ROU.
At January 31, 2015, there were 44,633,171 issued and fully
paid common shares outstanding (January 31, 2014 and 2013 44,633,171) of which
1,894,800 shares are held in escrow, subject to release following regulatory
approval.
Description of Business
The Company is a
Vancouver-based junior mineral exploration company engaged in the business of
acquiring, exploring, evaluating and, if warranted, developing mineral resource
properties in Canada. No revenue has been generated since inception and there is
no assurance that a commercially viable mineral deposit exists on our
exploration and evaluation assets. Further exploration is required before a
final evaluation of the economic feasibility can be determined. Significant
financing and considerable time and effort will be required before our mineral
claims can be further explored and, if warranted, developed into a commercial
enterprise.
We hold a 100% interest in 9 claims in the Thunder Bay Mining
District of North Central Ontario area, called the Dotted Lake Property which
includes the Lampson Lake claims acquired under the now completed option
agreement dated April 10, 2010. We continue to monitor claims in North-Central
Ontario and plan to make additional acquisitions in this and other areas when
and if The Property is considered to be strategic or otherwise beneficial to the
Company.
We have not been involved in any bankruptcy, receivership or
similar proceedings, nor have we been a party to any material reclassification,
merger, consolidation, purchase or sale of a significant amount of assets.
Additional information on the Company is available on both SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.
The material events in development of the Issuers current
business over the past seven fiscal years to the date of this Annual Report are
summarized as follows:
|
In March 2008, the Issuer consolidated its
share capital on a 10 for 1 basis and changed its name from Gemstar
Resources Ltd. to Rouge Resources Ltd. |
|
|
|
In May 2008, the Issuer hired Caitlin Jeffs,
P.Geo, of Fladgate Exploration Consulting Corporation as consulting
geologist to conduct a soil sampling program on the Dotted Lake Property.
|
|
On August 5, 2008, Caitlin Jeffs, P.Geo completed an
internal report of the results of the Issuers soil sampling program,
indicating the possibility of both anomalous gold and anomalous zinc
mineralization in two of the 47 samples collected and analyzed during the
program. |
|
|
|
On December 24, 2008, the Issuer announced the closing of
a non-brokered private placement of 10,000,000 units at $0.05 per unit for
gross proceeds of $500,000 before share issue costs. Each unit was
comprised of one Share of the Issuer and one additional non-transferable
share purchase warrant, each warrant entitling the holder to acquire one
additional Share of the Issuer at a price of $0.10 per share for two years
from the date of closing. Proceeds of the private placement were used for
exploration expenditures on the Issuers property, operating expenses and
general working capital purposes. |
|
|
|
In October 2009, the Issuer expanded its holdings in the
Dotted Lake Property to a 100% interest in a total of ten claims of 82
units by staking. Shortly thereafter, the Issuer commenced a new soil
sampling program in accordance with the report dated August 5, 2008.
|
|
|
|
On May 13, 2010, the Issuer announced the closing of a
non-brokered private placement of 30,000,000 units at a price of $0.05 per
unit for gross proceeds of $1,500,000 before share issue costs. Each unit
was comprised of one Share of the Issuer and one non-transferable share
purchase warrant, each warrant entitling the holder to acquire one
additional Share of the Issuer at a price of $0.10 per share for two years
from the date of closing. Proceeds of the private placement were used for
repayment of related party loans, exploration expenditures on the Original
Dotted Lake Property, on-going operating expenses and general working
capital purposes. |
|
|
|
On April 20, 2010, the Issuer entered into an exclusive
Option Agreement with certain Ontario prospectors to acquire a 100%
undivided interest in two claims adjacent to the Dotted Lake Property,
known as the Lampson Lake Property, subject to certain royalty interests
when and if future revenue is generated. Exercise of the Option required
the Issuer to pay a total of $60,000 to the vendors over a period of three
years. |
|
|
|
On September 7, 2010, the Issuers independent consulting
geologists completed a NI 43-101 compliant Technical Report, detailing all
work completed on the Dotted Lake Property to date and recommendations for
further exploration work. |
|
|
|
On October 25, 2010, the Issuer announced the
resignations of Shannon Krell, Ryan Krell and Ivan Martinez from its board
of directors and the appointment of Brian A Lueck and Mark H. Holden in
their stead as independent directors. |
|
|
|
On November 30, 2010, a revised version of its NI 43-101
Technical Report was completed by the authors and delivered to the Issuer.
|
|
|
|
At the December 13, 2011 Annual General Meeting of
shareholders, three new directors were elected: J. Ronald McGregor, Steven
J. Chan and James O. Burns. Subsequently, Mr. J. Ronald McGregor was
appointed Chief Financial Officer of the Issuer to replace Mr. Darcy T.
Krell. |
|
|
|
In February 2012, the Issuer entered into an agreement to
defer $39,676 in debt owed to a professional advisor which was been
converted from a short term to a long term liability. This amount is
unsecured and non-interest bearing due after July 31, 2013 but to date
there has been no demand for repayment. |
|
|
|
On April 25, 2012, the Issuer received conditional
approval of its Listing Application by the TSX Venture Exchange subject to
completion of a proposed private placement financing in accordance with
the Exchange requirements. |
|
|
|
On August 28, 2012, the Issuer announced the closure of
two private placements, one brokered and the other non-brokered. The
brokered private placement raised $829,000 (3,316,000 Units) through
Canaccord Genuity Corp. (the Agent) and the non-brokered private
placement raised $188,000 (752,000 Units) for combined gross proceeds of
$1,017,000 (4,068,000 units). Each unit of the Company was sold for $0.25
consisting of one common share and one transferable share purchase
warrant. Each warrant entitles the holder to acquire one additional common
share of the Company at a price of $0.40 per share for a period of one
year from the date of closing. Share issuance costs of $174,206 were
incurred in relation to the brokered private placement.
|
|
The net proceeds of the financings were used to eliminate
the working capital deficiency; to meet obligations under the Lampson Lake
option agreement; and to meet its on-going operating requirements.
|
|
|
|
On August 30, 2012, the shares commenced trading on the
TSX Venture Exchange under the symbol ROU. |
|
|
|
On September 4, 2012, the Issuer paid $9,246 with respect
to staking of 6 additional claims contiguous to the Dotted Lake claims
bringing the total number of claims owned by the Issuer to 18, including
the two Lampson Lake claims under option per above. |
|
|
|
On October 3, 2012, an assessment report was completed by
the Issuers independent consulting geologists detailing results of a soil
sampling and prospecting program conducted on 5 of the 6 additional claims
staked prior to September 4, 2012. |
|
|
|
On March 1, 2013 pursuant to the Lampson Lake Option
Agreement mentioned above, the Optionors agreed with the Issuer to split
the final payment of $25,000 into two equal amounts of $12,500, the first
payable on April 20, 2013 which was paid and the second payable on April
20, 2014. |
|
|
|
On April 20, 2014, the Company made the final payment of
$12,500 pursuant to the exclusive Lampson Lake Option Agreement.
|
|
|
|
In May 2015, the Issuer completed a claims
reconfiguration plan of its Dotted Lake-Lampson Lake Property designed to
focus entirely on claims of merit in the area. The total cost was $11,400,
of which $7,000 was paid subsequent to the year end, reducing its position
from 18 to 9 claims of merit going forward. As a result, the Company
recorded a one-time non-cash $31,500 impairment of its exploration and
evaluation assets as at January 31, 2015. |
Since the Company is in the exploration stage, it has no
current revenues nor has it earned any since inception. There is no assurance
that a commercially viable mineral deposit exists on our Mineral Property
Interests. Further exploration is required before a final evaluation of the
economic feasibility can be determined. Significant additional financing and
considerable time will be required before our mineral claims can be explored
and, if warranted, developed into a commercial enterprise.
|
4.2 |
Mineral Property Interests |
The following table summarizes the amounts expended on
exploration and evaluation assets as at and for the years ended January 31:
|
|
North-Central Ontario |
|
|
Totals for years ended January 31, |
|
|
|
Dotted |
|
|
Lampson |
|
|
|
|
|
|
|
|
|
|
|
|
Lake |
|
|
Lake |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
|
mining |
|
|
mining |
|
|
|
|
|
|
|
|
|
|
|
|
claims |
|
|
claims |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
$ |
24,607 |
|
$ |
49,533 |
|
$ |
74,140 |
|
$ |
61,640 |
|
$ |
36,294 |
|
Expenditures |
|
4,400 |
|
|
12,500 |
|
|
16,900 |
|
|
12,500 |
|
|
25,346 |
|
Impairment |
|
(24,607 |
) |
|
(2,820 |
) |
|
(27,427 |
) |
|
- |
|
|
- |
|
Balance,
ending |
|
4,400 |
|
|
59,213 |
|
|
63,613 |
|
|
74,140 |
|
|
61,640 |
|
Exploration and evaluation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
|
216,867 |
|
|
- |
|
|
216,867 |
|
|
206,934 |
|
|
176,585 |
|
Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Field and camp costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
21,477 |
|
Geological consulting
and reporting |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,488 |
|
Geo-referencing |
|
- |
|
|
- |
|
|
- |
|
|
9,933 |
|
|
- |
|
Project administration |
|
934 |
|
|
- |
|
|
934 |
|
|
- |
|
|
3,606 |
|
Soil sample analysis |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,778 |
|
Impairment |
|
(4,073 |
) |
|
- |
|
|
(4,073 |
) |
|
- |
|
|
- |
|
|
|
(3,139 |
) |
|
- |
|
|
(3,139 |
) |
|
9,933 |
|
|
30,349 |
|
Balance,
ending |
|
213,728 |
|
|
- |
|
|
213,728 |
|
|
216,867 |
|
|
206,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total balance,
ending |
$ |
218,128 |
|
$ |
59,213 |
|
$ |
277,341 |
|
$ |
291,007 |
|
$ |
268,574 |
|
During the current year, the Company made its final payment of
$12,500 for 2 claims pursuant to its exclusive Lampson Lake Option Agreement.
These claims are subject to a 2% net smelter royalty (NSR) in favour of the
optionors on one claim and with respect to the other, a combination of a 2% NSR
in favour of the optionors and a 1% NSR on any metals and/or a 1% NSR payable to
Ontario Exploration Company (OEC) on any precious metals recovered from the
property. The Company has the right to buy back 1% of the NSR in favour of the
optionors for $1,000,000 and to buy back three-quarters of 1% of the royalty
vested with OEC over 10 years on an increasing scale from $15,000 to
$750,000.
In addition and primarily due to continuing uncertainty in the
market conditions of the junior mining exploration sector, the Company started a
claims reconfiguration plan on its Dotted Lake-Lampson Lake Property (The
Property) during the year ended January 31, 2015 and completed it subsequent to
the year end in May 2015. The plan was designed to focus entirely on claims of
merit and resulted in certain claims being allowed to lapse, certain claims
being partially re-staked, and certain land positions were modified or increased
as follows: The plan was designed to focus entirely on claims of merit as
follows:
- |
Low potential claims were allowed to lapse when due and
not re-staked. This resulted in 3 claims being cancelled during the year
ended January 31, 2015 and 3 more being cancelled subsequent to the year
end. |
|
|
- |
Some claims were allowed to lapse when due and only
partially re-staked in order to recapture the most promising geology at
significantly lower cost compared to expensive assessment work otherwise
required to keep the claims in good standing. In this connection, 6
existing claims were re-staked and combined into 3 new claims costing only
$4,400 during fourth quarter of the year ended January 31, 2015;
|
|
|
- |
Some land positions forming part of or adjacent to
existing claims were modified or increased when due and re-staked in order
to enhance exposure to the gold-bearing areas previously identified from
earlier exploration on the original property. In this connection, $7,000
was paid subsequent to the year-end for staking 6 new claims at much lower
cost than assessment work otherwise required. This action completed the
reconfiguration plan in May 2015, notwithstanding that 5 additional claims
will be allowed to lapse when due in August 2015 without re-staking.
|
The Company now has a 100% interest in 9 claims of merit going
forward consisting of 101 units or 4,040 acres in The Property, located in the
Thunder Bay Mining District of North Central Ontario, and will remain in good
standing until renewal is required in January, March and May 2017. This compares
to 18 claims consisting of 171 units or 6,840 acres as at year ended January 31,
2014. As a result of these changes, the Company recorded an impairment charge of
$31,500 representing the portion of lapsed claims which reduced the carrying
value of The Property to $277,341 as at year ended January 31, 2015.
Future exploration plans will be developed and implemented when
the market for precious metals begins to improve in due course.
Status of Dotted Lake-Lampson Lake Mining
Claims
The Dotted Lake-Lampson Lake Property (The Property) is
located in the southeast part of the Black River Area Township and the southwest
corner of the Olga Lake Township within the Thunder Bay Mining Division of
Northwestern Ontario, Canada. The Property lies 45 km south of the town of
Manitouwadge and now comprises 4,040 acres oriented approximately east-west, 8.5
km long by roughly 2 km wide in an irregular shape.
The information in Table 1 below was prepared by the Company
from updated on-line information provided by the Ministry of Northern
Development and Mines in order to provide current status of its nine 100%-owned
mining claims of merit going forward. All claims of merit in good standing as at
year ended January 31, 2014 were allowed to lapse when due, then modified and
re-staked or partially re-staked during the period January 15 to May 5, 2015 at
much lower cost than assessment work otherwise required as explained above. All
of these new claims are in good standing now until January, March or May, 2017,
as indicated below.
Table 1 Status of Dotted Lake-Lampson Lake Mining
Claims
|
Mining |
Township/Area |
Units |
Date Recorded |
Date Due for Work |
Work |
|
claim No. |
|
|
|
Credits to be Applied |
Required |
|
|
|
|
|
|
|
(iii) |
4277977 |
BLACK RIVER AREA |
12 |
Jan 15 15 |
Jan 15 17 |
$ 4,800 |
|
|
|
|
|
|
|
(iii) |
4279197 |
BLACK RIVER AREA |
4 |
Mar 24 15 |
Mar 24 17 |
$ 1,600 |
|
|
|
|
|
|
|
(i) |
4279198 |
BLACK RIVER AREA |
15 |
Mar 24 15 |
Mar 24 17 |
$ 6,000 |
|
|
|
|
|
|
|
(iii) |
4283104 |
BLACK RIVER AREA |
15 |
Jan 15 15 |
Jan 15 17 |
$ 6,000 |
|
|
|
|
|
|
|
(iii) |
4283441 |
OLGA LAKE AREA |
15 |
Jan 15 15 |
Jan 15 17 |
$ 6,000 |
|
|
|
|
|
|
|
(ii) |
4245668 |
BLACK RIVER AREA |
6 |
Mar 6 15 |
Mar 6 17 |
$ 1,493 |
|
|
|
|
|
|
|
(iii) |
4279130 |
OLGA LAKE AREA |
4 |
May 5 15 |
May 5 17 |
$ 1,600 |
|
|
|
|
|
|
|
(iii) |
4279132 |
BLACK RIVER AREA |
15 |
May 5 15 |
May 5 17 |
$ 6,000 |
|
|
|
|
|
|
|
(ii) |
4279133 |
BLACK RIVER AREA |
15
|
May 5 15 |
May 5 17 |
$
6,000 |
|
|
|
|
|
|
|
|
|
Totals |
101 |
|
|
$
39,493 |
(i) |
Issuer's original claim re-staked in March 2003. Also,
allowed to lapse when due in January 2015 then re-staked at much lower
cost than assessment work otherwise required. |
|
|
(ii) |
2 claims optioned by the Issuer on April 20, 2010, known
as the Lampson Lake Property with final option payment made on April 20,
2014, were allowed to lapse when due then substantially re-staked in May
2015 at much lower cost than assessment work otherwise required. |
|
|
(iii) |
6 claims allowed to lapse when due, then modified or
increased in size for re-staking in January, March and May 2015 at much
lower cost than assessment work otherwise required. |
|
|
|
Note that 5 additional claims are not included in this
listing since they will be allowed to lapse when due in August 2015 and
will not be re-staked. |
Map 1 Dotted Lake-Lampson Lake Claims Located in Ontario,
Canada
![](form20fx19x1.jpg)
Map 2 Dotted Lake-Lampson Lake Property (9 Claims) in
Thunder Bay Mining Division of North Western Ontario
![](form20fx20x1.jpg)
Background
Since 2003, the Issuer has been slowly advancing the
exploration work on the Property to determine potential of the ground which lies
in an underexplored area of the Schrieber-Hemlo greenstone belt, host to the
Hemlo Gold deposit.
Exploration work to date has included airborne and ground
geophysics in 2005, soil sampling in 2008 and 2009 and prospecting/ trenching in
2010 and more soil sampling/prospecting on five of the six new claims acquired
during year ended January 31, 2013. The soil sampling programs completed in 2008
and 2009 were intended to evaluate the property for further mineralization and
potentially to expand on the known zinc mineralization at the Fairservice zinc
showing. They successfully outlined previously undetected gold mineralization,
hosted in sulphide rich shear bands in granitoid rock, but were not successful
in expanding on the Fairservice zinc showing.
This has been adequate for initial exploration work, but future
programs should also include a more thorough QA/QC procedure including a variety
of check samples such as duplicate samples, reruns of sample pulps, a variety of
standard samples including low and high grade gold and blank samples.
Accordingly, we consider The Property to be an early stage
exploration project upon which further exploration should be conducted in order
to gain better understanding of the strike content and width of the gold
mineralization uncovered in past exploration programs.
A two phase budget for future exploration has been prepared
(see below) to continue with more soil sampling, prospecting and trenching on
The Property. However, due to the challenging economic circumstances, which
persist for the Junior Mineral Exploration industry at the present time,
implementation has been delayed. This delay will continue until more favorable
market conditions return.
Budget
Item |
Total (CAD$) |
Comments |
Exploration (Phase 1) Property wide soils and further
trenching |
Consulting
geologist |
$52,000 |
Consulting geologist at $650/day |
Geo-technicians
|
$39,000 |
Geo-technician at $325/day |
Truck and ATV
Rental and Fuel |
$22,000 |
Truck
at $75/day and ATV at $125/day |
Heavy Equipment
Rental |
$30,000 |
Trench
digging at $140/hour |
Assays |
$45,500 |
Assaying at $35/sample |
Room and board |
$17,500 |
$125/day per geo & tech |
10% contingency
for miscellaneous items |
$20,600 |
Field
supplies etc. |
Subtotal (Phase
1): |
$226,600 |
|
Exploration (Phase 2) 1500 metres of diamond drilling |
|
Consulting
geologist |
$52,000 |
Consulting geologist at $650/day |
Geo-technicians
|
$16,250 |
Geo-technician at $325/day |
Room and board |
$12,500 |
$125/day per geo & tech |
Truck and Fuel |
$6,250
|
Truck
at $75/day +fuel |
Logging Shack
w/saw |
$2,500
|
$1500/month |
Heavy equipment
rental |
$10,000 |
Building drill pads and access roads |
Assays |
$18,375 |
Assaying at $35/sample |
Diamond Drilling
|
$165,000 |
Diamond drilling at $110/metre |
10% contingency
for miscellaneous items |
$28,288 |
Field
supplies etc. |
Subtotal (Phase
2): |
$311,163 |
|
Total CAD$
(Both Phases) |
$537,763 |
|
Although our previous work on the Property has identified some
gold mineralization, there is no assurance that a commercially viable mineral
deposit exists on our mineral claims. Further exploration is required before a
final evaluation of the economic feasibility can be determined. This will
require significant additional financing and considerable time and effort before
our mineral claims can be further explored and, if warranted, developed into a
commercial enterprise.
The Company continues to monitor claims in the Dotted
Lake-Lampson Lake area and plans to make additional acquisitions in this and
other areas when and if market conditions improve and the claims are considered
to be strategic or otherwise beneficial to the Company.
The mineral property exploration business, in general, is
intensely competitive and there is no assurance that, even if commercial
quantities of ore are discovered, a ready market will exist for the sale of
same. Numerous factors beyond our control may affect the marketability of any
minerals discovered. These factors include market fluctuations, the proximity
and capacity of natural resource markets and processing equipment, government
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals, environmental protection, etc. The exact
effect of these factors cannot be accurately predicted, but in combination they
may make it very difficult to realize an adequate return on investment.
We compete with many companies possessing greater financial
resources and technical capabilities than we have regarding the acquisition of
mineral concessions, claims, leases and other mineral interests as well as for
the recruitment and retention of qualified staff.
|
4.4 |
Management and Employees |
We do not have any employees other than our directors and
officers. When required, we retain geological, financial and other consultants
on a contract basis in order to keep overhead expenses to a minimum.
We are party to an amended agreement dated August 1, 2008 with
Mr. Darcy Krell, our Secretary and General Manager, who is engaged to perform
certain management and administrative functions on our behalf for a fee of
$7,500 per month, including $5,000 for management fees and $2,500 for office
rent. Mr. Krell is the husband of our President and CEO, Ms. Linda Smith.
We retain Mr. Krell to arrange and negotiate mineral property
acquisitions and exploration contracts (subject to director approval); arrange
for and secure financings for the company; arrange for the payment of company
obligations and the collection of all receivables, if any; establish and
maintain suitable banking relationships; ensure the maintenance of proper
accounting records and compliance with all statutory reporting requirements; and
administer corporate inquiries and correspondence as required.
|
4.5 |
Environmental Regulations |
We are required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to the
exploration of minerals in Canada generally, and in the Province of Ontario
specifically. Under these laws, prior to production, we have the right to
explore the property, subject only to a notice of work which may entail posting
a bond. To date, we have not been required to post a bond with respect to our
exploration activities on the Dotted Lake-Lampson Lake Property.
In addition, production of minerals in Ontario will require
prior approval of applicable governmental regulatory agencies. We can provide no
assurance to investors that such approvals will be obtained. The cost and delay
involved in attempting to obtain such approvals is unknown at this time.
We have budgeted for regulatory compliance costs as part of our
operations. We will have to incur the cost of reclamation and environmental
mediation for all exploration work undertaken. The amount of these costs is
unknown at this time as we do not know the extent of future exploration.
Permits and regulations will control all aspects of any
production program, if the project continues to that stage, because of the
potential impact on the environment. Examples of regulatory requirements
include:
i) |
Water discharge will have to meet water
standards; |
ii) |
Dust generation will have to be minimal or otherwise
re-mediated; |
iii) |
Dumping of material on the surface will have to be
re-contoured and re-vegetated; |
iv) |
An assessment of all material to be left on the surface
will need to be environmentally benign; |
v) |
Ground water will have to be monitored for any potential
contaminants; |
vi) |
The socio-economic impact of the project will have to be
evaluated and if deemed negative, will have be re-mediated; and |
vii) |
There will have to be an impact report of the work on the
local fauna and flora. |
We now have a permit from the Ministry of Northern Development
and Mines to proceed with Phase 1 of the exploration program when were ready
since it will cause little, if any, physical disturbance of the land. However,
we will be required to obtain work permits from the Ontario Ministry of Northern
Development and Mines for the Phase 2 drilling program and any subsequent
exploration work that results in a physical disturbance to the land should we
decide to proceed. If more than 10,000 square meters of property surface are
affected, or such areas that would total that amount when combined, a work
permit is required. There is no charge to obtain a work permit under the Mining
Act.
When our exploration program proceeds to the drilling stage, we
may be required to post small performance bonds if the rights of a private land
owner may be affected. We may also be required to file statements of work with
the Ministry of Northern Development and Mines and to undertake remediation work
on any exploration that results in physical disturbance to the land. The cost of
remediation work will vary according to the degree of physical disturbance.
ITEM 4A. |
Unresolved Staff Comments
|
None.
ITEM 5. |
Operating and Financial Review |
|
(stated in Canadian $ in accordance with IFRS)
|
The following table summarizes information from our audited
financial statements presented in accordance with IFRS as at and for the years
ended January 31:
|
2015 |
2014 |
2013 |
FINANCIAL POSITION |
|
|
|
Total Assets |
$
286,149 |
$
397,066 |
$
584,877 |
Total Liabilities
|
$
187,469 |
$
111,838 |
$
90,025 |
Deficit |
($3,908,267) |
($3,721,719) |
($3,512,095) |
OPERATIONS
|
|
|
|
Total Revenues |
Nil |
Nil
|
Nil |
Net Loss |
$
186,548 |
$ (209,624) |
$ (239,258) |
Loss per share
basic and diluted |
$
0.01 |
$ (0.01) |
$
(0.01) |
The following table summarizes the results of operations
presented in accordance with IFRS for the years ended January 31 and should be
read in conjunction with the audited financial statements contained herein:
|
2015 |
2014 |
2013 |
Revenue |
$ Nil |
$ Nil |
$ Nil |
Expenses |
|
|
|
Amortization and accretion |
$ 380 |
$ 543 |
$ 776 |
Consulting fees |
1,600 |
5,800 |
5,670 |
Interest expense - net |
737 |
408 |
391 |
Listing application expenses |
- |
402 |
62,601 |
Management services |
60,000 |
60,000 |
60,000 |
Office admin. and travel |
52,909 |
74,286 |
44,115 |
Professional fees |
20,731 |
44,368 |
47,705 |
Transfer agent and filing fees |
18,691 |
23,817 |
18,000 |
|
|
|
|
Loss before other item |
$ (155,048) |
$ (209,624) |
$ (239,258) |
Other item |
|
|
|
Impairment of exploration and evaluation
assets |
(31,500) |
- |
- |
|
|
|
|
|
2015 |
2014 |
2013 |
Net loss |
$ (186,548) |
$ (209,624) |
$ (239,258) |
Loss per share |
|
|
|
basic and diluted |
$ (0.01) |
$ (0.01) |
$ (0.01) |
Weighted average number of shares outstanding |
|
|
|
basic and diluted |
44,633,171 |
44,633,171 |
42,299,073 |
Revenue
The Company is in the exploration stage and
has not generated any revenues since inception.
Net Loss
The Company reported a net and
comprehensive loss of $186,548 for year ended January 31, 2015 compared to
$209,624 for last year. This $23,076 decrease in loss resulted from the
following:
- |
$163 minor decrease in amortization due to use
of declining balance method. |
- |
$4,200 decrease in consulting fees for business
planning purposes |
- |
$329 increase in interest expense |
- |
$402 decrease in Listing Application expenses
following approval of Listing Application on TSX-V Exchange 2 years ago.
|
- |
$21,377 decrease in office administration and
travel expenses primarily due to much lower level of business activity.
|
- |
$23,637 decrease in professional fees (legal,
audit and accounting) due to much lower level of business activity and an
audit fee over accrual from year ended January 31, 2014. |
- |
$5,126 decrease in transfer agent and filing
fees due to much lower level of business activity. |
- |
$31,500 one-time impairment of exploration and
evaluation assets described in Item 1.2 above. |
The following table summarizes the working capital (deficiency)
as at January 31 and should be read in conjunction with the audited financial
statements contained herein:
Working Capital
(Deficiency) |
2015 |
2014 |
2013 |
Current assets |
$ 1,020 |
$ 97,891 |
$ 307,592 |
Current liabilities |
(187,469) |
(111,838) |
(90,025) |
|
|
|
|
Working capital (deficiency) |
$ (186,449) |
$ (13,947) |
$ 217,567 |
During the year ended January 31, 2015, the working capital
deficiency increased to $186,449 from $13,947 as at January 31, 2015. This
$172,502 increase resulted primarily from the $155,048 loss for the current year
before the non-cash impairment of exploration and evaluation assets.
The current assets at January 31, 2015 consisted of a nominal
cash position of $271 (January 31, 2014 - $96,466) and GST receivable $749
(January 31, 2014 - $1,425). The current liabilities at January 31, 2015
consisted of $66,984 of trade payables, accrued liabilities & loan payable
(January 31, 2014 - $65,283) and $120,485 of related party payables (January 31,
2014 - $46,555).
The following table summarizes comparative cash flows for the
years ended January 31:
Cash Flows
|
2015 |
2014 |
2013
|
Net cash used in operating activities |
($ 152,291) |
($ 218,035) |
($ 260,425) |
Net cash used in investing activities |
(17,834) |
(22,433) |
(55,695)
|
Net cash from financing activities |
73,930 |
35,089 |
600,142 |
|
|
|
|
Increase (decrease) in cash |
($ 96,195) |
($ 205,379) |
$ 284,022 |
|
|
|
|
Cash, beginning |
$ 96,466 |
301,845 |
17,823 |
Cash, end |
$ 271 |
$ 96,466 |
$ 301,845 |
As at January 31, 2015, the Companys cash position was $271
compared to $96,466 as at last year end. The $96,195 decrease in cash during
year ended January 31, 2015 resulted from the following cash flow
activities:
|
(i) |
Net cash used in operating activities of $152,291 in 2015
and $218,035 in 2014 was due in both years to on-going operating losses
adjusted for changes in non-cash working capital items, including the
$31,500 one-time impairment of exploration and evaluation assets in
2015. |
|
|
|
|
(ii) |
Net cash used in investing activities of $17,834 in 2015
and $22,433 in 2014 related to expenditures on exploration and evaluation
assets to keep the Dotted Lake Property in good standing with the Ontario
Ministry of Northern Development and Mines and continuation of scheduled
payments under the Lampson Lake option agreement. |
|
|
|
|
(iii) |
Net cash from financing activities of $73,930 in 2015 and
$35,089 in 2014 arose from an increase in related party payables used to
partially fund ongoing operating expenses. |
Share Capital
Authorized share capital
The Companys
authorized share capital consisted of an unlimited number of common shares
without par value.
Issued share capital
As at January 31, 2015,
there were 44,633,171 issued and fully paid common shares outstanding (January
31, 2014 and 2013 44,633,171) of which 1,894,800 shares remained in escrow
(January 31, 2014 and 2013 3,789,600), subject to release following regulatory
approval.
Private placements
No shares were issued
during the years ended January 31, 2015 and 2014.
During the year ended January 31, 2013, the Company completed
two private placements, one brokered and the other non-brokered, of 4,068,000
units for combined gross proceeds of $1,017,000. Share issuance costs of
$174,206 were incurred in relation to the brokered private placement.
Basic and diluted loss per share
The
calculation of basic and diluted loss per share for year ended January 31, 2015
was based on the net loss attributable to common shareholders of $186,548
(January 31, 2014 - $209,624; January 31, 2013 - $239,258) and the weighted
average number of common shares outstanding of 44,633,171 (January 31, 2014
44,633,171 and January 31, 2013 42,299,073). The diluted loss per share will
not include the effect of any share purchase warrants outstanding in the future
since the effect would be anti-dilutive.
Stock options
The Company has adopted an
incentive stock option plan which provides that the Board of Directors of the
Company may from time to time, in its discretion and in accordance with the
TSX-V requirements, grant to directors, officers, employees and technical
consultants to the Company, non-transferable stock options to purchase common
shares, provided that the number of common shares reserved for issuance in any
twelve month period will not exceed 10% of the Companys issued and outstanding
common shares. Such options will be exercisable for a period of up to 10 years
from the date of grant at a price not less than the closing price of the
Companys shares on the last trading day before the grant of such options less
any discount, if applicable, but in any event not less than $0.10 per share. In
connection with the foregoing, the number of common shares reserved for issuance
to any one optionee insider in any twelve month period will not exceed ten
percent (10%) of the issued and outstanding common shares and the number of
common shares reserved for issuance to any one employee or consultant will not
exceed two percent (2%) of the issued and outstanding common shares. Options may
be exercised no later than 90 days following cessation of the optionees
position with the Company or 30 days following cessation of an optionee
conducting investor relations activities.
As at January 31, 2015, 2014 and 2013, there were no stock
options outstanding.
Share purchase warrants
Share purchase
warrants outstanding are as follows:
|
|
|
|
|
|
|
|
Years ended January 31, |
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Number of |
|
|
Exercise |
|
|
Number of |
|
|
Exercise |
|
|
Number of |
|
|
Exercise |
|
|
|
warrants |
|
|
Price |
|
|
warrants |
|
|
price |
|
|
warrants |
|
|
price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
|
- |
|
|
- |
|
|
4,068,000 |
|
$ |
0.40 |
|
|
30,000,000 |
|
$ |
0.10 |
|
Warrants issued |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
4,068,000 |
|
|
0.40 |
|
Warrants expired |
|
- |
|
|
- |
|
|
(4,068,000 |
) |
|
0.40 |
|
|
(30,000,000 |
) |
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, ending |
|
|
|
|
|
|
|
- |
|
$ |
-
|
|
|
4,068,000 |
|
$ |
0.40 |
|
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Management
The Company's policy is to
maintain a sufficient capital base so as to maintain investor and creditor
confidence, safeguard the Companys ability to support the exploration and
development of its exploration and evaluation assets and to sustain future
development of the business. The capital structure of the Company consists of
share and working capital. There were no changes in the Company's approach to
capital management during the year and the Company is not subject to any
restrictions on its capital.
With no operating revenues to date, we continue to finance our
operations through the issuance of common shares and advances from related
parties. Although there were two private placements completed during year ended
January 31, 2013, there is no assurance that additional financing will be
available when needed in the future nor, if available, on commercially
reasonable terms. If we are unable to obtain additional financing on a timely
basis, either through issuance of more common shares or obtaining additional
advances from related parties, we may not be able to meet our obligations as
they come due which may impact our ability to continue as a going concern in the
future.
To a significant extent, our ability to raise capital is
affected by trends and uncertainties beyond our control. These include general
economic conditions, the market prices for precious metals and results from our
exploration programs. The Companys ability to reach its business objectives may
be significantly impaired if general economic conditions continue to
deteriorate, prices for metals such as gold, silver and molybdenum fall or if
results from planned exploration programs are unsuccessful.
Convertible debt reserve
Under IFRS, the
convertible debt reserve of $53,357 is the equity component of convertible debt
with both liability and equity components. On conversion, the amount recorded is
transferred to share capital.
Under US GAAP, companies allocate convertible debt proceeds to
the embedded conversion feature only if such feature has intrinsic value. Also,
under US GAAP, the convertible debt should be treated solely as a liability
since the embedded conversion feature has no intrinsic value and accordingly
does not meet the requirements of an equity component.
Other than the above, no other securities are outstanding which
are convertible into, or exchangeable for, the Companys shares.
|
5.4 |
Off-balance sheet
arrangements |
The Company has no off-balance sheet arrangements.
ITEM 6. |
Directors, Senior Officers and Employees
|
|
6.1 |
Directors and Senior
Officers |
Background information about our directors and senior officers
is shown below as at January 31, 2015:
Name |
Position Held with the
Company |
Age |
Date First Elected
or Appointed |
Linda J. Smith |
President, Chief Executive Officer and
Director |
65 |
October 27, 2000 |
Darcy T. Krell |
Secretary, General Manager and Director |
66 |
October 10, 2008 |
J. Ronald McGregor |
Chief Financial Officer and Director |
71 |
December 13, 2011 |
Steven J. Chan |
Director |
50 |
December 13, 2011 |
James O. Burns |
Director |
83 |
December 13, 2011 |
David Mark |
Director |
68 |
October 24, 2013
|
There are no arrangements or undertakings between any of our
directors or executive officers, pursuant to being selected as a director or
senior officer. However, there is a family relationship between two of our
officers in that Ms. Linda Smith and Mr. Darcy Krell are husband and wife. The
following describes the business experience of our directors and senior
officers, including other directorships held in reporting companies:
Linda Smith
Ms. Linda Smith has acted as our
president, CEO and one of our directors since October 27, 2000 to present. She
spends approximately 10% of her time assisting Mr. Darcy Krell in providing
management services to us for which she receives no compensation.
Ms. Smith acted as Blue Lightning Ventures Inc.s president and
director from October 1999 to July 2004. She also acted in the same capacities
for Big Bar Gold Corporation from June 1999 to April 2003; for Candorado
Operating Company Ltd. from June 2000 to November 2001; and for East-West
Petroleum Corp. (formerly Algorithm Media Inc.) from December 2005 to December
2009. She is currently a director of Golden Secret Ventures Ltd. (formerly
Lakewood Mining Co. Ltd.) from December 2012. All of these companies are British
Columbia and Alberta reporting corporations and involved in mineral property
exploration.
Ms. Smith was also employed as a part-time dental assistant
from May 1995 to October 2002.
Darcy Krell
Mr. Krell has served the Issuer
in several capacities, including as the Issuers corporate secretary since March
31, 2005 and a director since October 10, 2008. He has served as the general
manager of the Issuer since November 1, 2000. Mr. Krell also served as the
Issuers CFO from October 10, 2008 to January 9, 2012. He has been a private
investor in various public and private companies since 1996. He has extensive
business experience but has no professional training or technical credentials in
the field of mineral property exploration or development. He spends
approximately 35% of his time on the business of the Issuer.
Mr. Krell also acted as a director of Big Bar Gold Corporation
from March 2000 to April 2004 and Blue Lightning Ventures Inc. from March 2002
to July 2004. In addition, Mr. Krell acted as a director of Algorithm Media Inc.
from December 2005 to January 2010 and has also been serving as President, CEO
and Director of Golden Secret Ventures Ltd. (formerly Lakewood Mining Co Ltd)
since May 2, 2012. All of these companies are Alberta and British Columbia
reporting companies and involved in mineral property exploration.
Ronald McGregor
Mr. McGregor is a professional
accountant (CPA,CA) and has been contract controller for the Issuer since
December 2006 and was appointed Director on December 13, 2011 and CFO on May 2,
2012; is President of AYL Enterprises Ltd., a private company providing contract
controller services to public companies since September 1996. He has also been
Director and CFO of Golden Secret Ventures Ltd (formerly Lakewood Mining Co Ltd)
since May 2, 2012 and a senior accounting instructor at BCIT since January 1997.
Mr. McGregor spends approximately 20% of his time on the business of the Issuer.
Steven Chan
Mr. Chan has been the CEO for
Wasco Management Inc. since September 2010. He is a director of several
companies listed on the Exchange including Abitibi Mining Corp.; Amador Gold
Corp.; Expedition Mining Inc.; Kermode Resources Ltd.; Klondike Gold Corp.;
Klondike Silver Corp.; La Ronge Gold Corp.; Golden Secret Mining Ltd. (formerly
Lakewood Mining Co. Ltd.), Sedex Mining Corp.; and Zinccorp Resources Inc. He
was Vice-President of Cambridge House International Inc. from April 2000 to June
2010 and is currently a director of Golden Secret Ventures Ltd. since May 2,
2012. Mr. Chan spends approximately 5% of his time on the business of the
Issuer.
James Burns
Mr. Burns is a retired businessman
since 1998 following sale of his Northern Ontario hunting and fishing lodge
which he operated for many years. He is currently a director of Golden Secret
Ventures Ltd. since May 2, 2012. and spends approximately 5% of his time on the
business of the Issuer.
David Mark
Mr. Mark is a professional
geoscientist (P.Geo.) with membership in the Association of Professional
Engineers and Geoscientists of the Province of British Columbia. He mostly
operates through his company, Geotronics Consulting Inc., which provides
exploration services, mainly geophysics and geochemistry, to mining exploration
companies as well as geotechnical geophysics to geotechnical engineering
consultants, and environmental geophysics to environmental consultants. He is
also currently director of three other issuers, namely Green Valley Mine
Incorporated, Bullion Gold Resources Corp., and Golden Secret Ventures Ltd. He
has also been a director and/or an officer of several other issuers since the
early 1970s. Mr. Mark intends to devote approximately 5% of his time to the
business of the Issuer.
None of the above individuals have entered into non-competition
or non-disclosure agreements with the Company. Except as otherwise disclosed,
none of the above individuals are employees or independent contractors of the
Company.
|
6.2 |
Compensation of Directors and senior
officers |
We are required, under applicable securities legislation in
Canada, to disclose to our shareholders details of compensation paid to our
directors and senior officers. The following fairly reflects all material
information regarding compensation paid to our directors and senior officers for
the fiscal years ended January 31 as follows:
Summary Compensation Table
|
|
ANNUAL COMPENSATION |
LONG-TERM COMPENSATION
|
NAME AND |
|
Salary |
Bonus |
Other |
Awards |
LTIP |
All Other |
PRINCIPAL |
YEAR |
|
|
Annual |
|
|
payouts |
Compen- |
POSITION |
1 |
|
|
Compen- |
Restricted |
Securities |
|
|
|
|
|
|
sation |
Stock |
Underlying
|
|
sation |
|
|
|
|
|
Awards |
Options/ |
|
|
|
|
|
|
|
|
SARs |
|
|
|
|
|
|
|
|
|
|
|
Linda Smith |
2015 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
as President, |
|
|
|
|
|
|
|
|
CEO and |
2014 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Director |
|
|
|
|
|
|
|
|
|
2013 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
|
|
|
|
|
|
|
|
|
Darcy Krell, |
2015 |
$60,0002 |
Nil |
Nil |
Nil |
Nil |
Nil |
$30,0003 |
as Secretary, |
|
|
|
|
|
|
|
|
General |
2014 |
$60,0002 |
Nil |
Nil |
Nil |
Nil |
Nil |
$30,0003 |
Manager, |
|
|
|
|
|
|
|
|
and Director4 |
2013 |
$60,0002 |
Nil |
Nil |
Nil |
Nil |
Nil |
$30,0003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald |
2015 |
$8,113 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
McGregor |
|
|
|
|
|
|
|
|
as CFO and |
2014 |
$16,170 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Director 5 |
|
|
|
|
|
|
|
|
|
2013 |
$16,322 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
|
|
|
|
|
|
|
|
|
Steven Chan |
2015 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$1,6008 |
as |
|
|
|
|
|
|
|
|
Director 6 |
2014 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$2,8008 |
|
|
|
|
|
|
|
|
|
|
2013 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$4,5008 |
|
|
|
|
|
|
|
|
|
James Burns |
2015 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
as |
|
|
|
|
|
|
|
|
Director 6 |
2014 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
|
|
|
|
|
|
|
|
|
|
2013 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
|
|
|
|
|
|
|
|
|
David Mark7 |
2015 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
as |
|
|
|
|
|
|
|
|
Director |
2014 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
1 |
Represents fiscal years from February 1 to January
31. |
2 |
Represents management fees. |
3 |
Represents amounts paid for rent of office facilities
provided to the Company. |
4 |
Resigned as CFO on December 13, 2011. |
5 |
Appointed Director on December 13, 2011 and CFO on May 2,
2012 and will continue to earn fees on an hourly basis primarily for
accounting and financial reporting services. |
6 |
Appointed Director on December 13, 2011. |
7 |
Appointed Director on October 24, 2013. |
8 |
Represents consulting fees |
The Issuer has not paid any compensation for director services
per se in the fiscal years ended January 31, 2015, 2014 and 2013. However, the
Issuer paid for certain management and administrative services to Mr. Darcy T.
Krell, prior to him becoming a director of the Issuer in October 2008 in his
capacity as the Issuers Secretary, General Manager and Chief Financial Officer.
The management fees were $2,500 per month from February 1, 2002 to April 30,
2008, when they were increased to $5,000 per month due to more time and effort
required to run the business pursuant to an unwritten agreement which was
formalized by an amended management agreement between the Issuer and Mr. Krell
dated August 1, 2008. Under this agreement, home office rent increased from
$1,500 to $2,500 per month which did not commence until February 1, 2009.
Linda Smith was appointed President, CEO and director of the
Issuer on October 27, 2000. Darcy Krell was appointed director on October 10,
2008. Ronald McGregor, Steven Chan and James Burns were appointed directors on
December 13, 2011. David Mark was appointed director on October 24, 2013.
The directors hold office until the next annual general meeting
of the shareholders at which time they may stand for re-election. We are
required to hold an annual general meeting once every calendar year and not
longer than thirteen months from the last annual general meeting. The last
annual general meeting was held in Vancouver, BC on November 25, 2014.
We have a three member audit committee of the Board (see Item
16A below) but have not appointed a compensation committee. Full text of the
audit committee charter is attached as an Exhibit.
We do not have any employees other than our directors and
officers. When required, we retain geological, financial and other consultants
on a contract basis in order to keep overhead expenses to a minimum.
|
6.5 |
Share Ownership of Directors and Senior
Officers |
Our directors and officers own beneficially the following
securities of the Company as of the date of this annual report.
|
|
|
Shares as % of Issued and |
|
Number of Shares |
Number of Warrants |
Outstanding Shares |
|
|
|
|
Linda Smith |
600,000 |
0 |
1.3% |
Darcy Krell |
516,000 |
0 |
1.2% |
Steven Chan |
2,700,000 |
0 |
6.0% |
James Burns |
2,000,000 |
0 |
4.5% |
|
|
|
|
|
5,816,000 |
0 |
13.0% |
The above percentages are based on the 44,633,171 common shares
issued and outstanding in our capital stock as of the date of this annual
report.
We have adopted an incentive stock option plan but to date the
Company has no issued or outstanding stock options.
ITEM 7. |
Major Shareholders and Related Party
Transactions |
As used in this section, the term "beneficial ownership" with
respect to a security is defined by Regulation 228.403 under the Securities
exchange Act of 1934, as amended, as consisting of: (1) any person who, directly
or indirectly, through any contract, arrangement, understanding, relationship or
otherwise has or shares voting power (which includes the power to vote, or to
direct the voting of such security) or investment power (which includes the
power to dispose, or to direct the disposition of, such security); and (2) any
person who, directly or indirectly, creates or uses a trust, proxy, power of
attorney, pooling arrangement or any other contract, arrangement or device with
the purpose or effect of divesting such person of beneficial ownership of a
security or preventing the vesting of such beneficial ownership.
As of the date of this annual report, 44,633,171 common shares
are issued and outstanding and we are authorized to issue an unlimited number of
common shares without par value.
As of the date of this annual report, the following person
known to us was the beneficial owner of more than 5% of our outstanding common
shares.
Name of Shareholder |
Number of Shares
Owned |
Percentage of Issued
and Outstanding Shares |
Steve Chan
|
2,700,000 |
6.0% |
|
Each of our issued shares entitles the holder to one vote at
our annual general shareholder meetings. There are no disproportionate or
weighted voting privileges.
We are not controlled directly or indirectly by any other
corporation or any other foreign government or by any other natural or legal
person, severally or jointly.
There are no arrangements which at a subsequent date may result
in a change in our control.
|
7.2 |
Related Party Payables and
Transactions |
Related party payables included in the Statement of Financial
Position as at January 31 are as follows:
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Payable to Company directors and companies
controlled by its directors
|
$ |
120,485 |
|
$ |
46,555 |
|
$ |
11,466 |
|
These amounts are non-interest bearing, unsecured with no fixed
term of repayment.
The following transactions with company directors and companies
controlled by its directors in the Statement of Comprehensive Loss for the years
ended January 31 are as follows:
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Consulting services |
$ |
1,600 |
|
$ |
2,800 |
|
$ |
4,500 |
|
Management services |
|
60,000 |
|
|
60,000 |
|
|
60,000 |
|
Office rent |
|
30,000 |
|
|
30,000 |
|
|
30,000 |
|
Professional
services |
|
8,113 |
|
|
16,170 |
|
|
16,322 |
|
|
$ |
99,713 |
|
$ |
108,970 |
|
$ |
110,822 |
|
Key management personnel compensation for the years ended
January 31:
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Management services
|
$ |
60,000 |
|
$ |
60,000 |
|
$ |
60,000 |
|
Professional services |
|
8,113 |
|
|
16,170 |
|
|
16,322 |
|
|
$ |
68,113 |
|
$ |
76,170 |
|
$ |
76,322 |
|
|
7.3 |
Interests of Experts and
Counsel |
Our experts and legal counsel have no direct nor indirect
interest in our properties and no shareholders are employed on a contingent
basis.
ITEM 8. |
Financial Information
|
The audited financial statements for the year ended January 31,
2015 are attached hereto as an exhibit and incorporated herein by reference.
To the best of our knowledge there are no legal or arbitration
proceedings threatened, pending or in progress against us.
As mentioned in Item 4.2 above, the Company paid $7,000
subsequent to the year end in order to complete its claims reconfiguration plan
of The Property and thereby keep its new claims in good standing until January,
March and May 2017.
ITEM 9. |
The Offer and Listing Details
|
We have been a reporting issuer in British Columbia and Alberta
since April 3, 1989 and became a foreign private issuer in the United States
pursuant to filings with the US Securities and Exchange Commission on or about
November 15, 2003. After filing and receipting a registration statement on Form
20-F with the United States Securities and Exchange Commission, our common
shares were posted for trading on the Over-the-Counter Bulletin Board (OTC:BB)
in the United States under the symbol GMSRF. With the name change from Gemstar
Resources Ltd. to Rouge Resources Ltd., the trading symbol was changed to ROUGF
effective March 25, 2008. Our shares are now quoted on the OTCQB operated by OTC
Markets Group, Inc. in the United States and since August 31, 2012 have also
been listed for trading on the TSX-Venture Exchange under the symbol ROU.
The following table sets forth the high and low prices of our
common shares in Canadian funds on a quarterly basis since trading began on the
OTCBB:
Quarters ended |
High |
Low |
|
|
|
February 14 to April 30, 2007 |
No trading
|
July 31, 2007 |
No trading
|
October 30, 2007 |
$0.50 |
$0.20 |
January 31, 2008 |
$0.70 |
$0.10 |
|
|
|
April 30, 2008 |
$1.00 |
$0.12 |
July 31, 2008 |
$0.13 |
$0.10 |
October 31, 2008 |
$0.10 |
$0.05 |
January 31, 2009 |
$0.07 |
$0.06 |
|
|
|
April 30, 2009 |
$0.06 |
$0.01 |
July 31, 2009 |
No trading |
October 31, 2009 |
No trading |
January 31, 2010 |
No trading |
|
|
|
April 30, 2010 |
No trading |
July 31, 2010 |
$0.30 |
$0.30 |
Oct 31, 2010 |
$0.35 |
$0.35 |
January 31, 2011 |
$0.35 |
$0.35 |
|
|
|
April 30, 2011 |
$0.36 |
$0.35 |
July 31, 2011 |
$0.35 |
$0.35 |
October 31, 2011 |
$0.35 |
$0.35 |
January 31, 2012 |
No trading |
|
|
|
April 30, 2012 |
$0.50 |
$0.35 |
July 31, 2012 |
$0.50 |
$0.50 |
October 31, 2012 |
$0.50 |
$0.41 |
January 31, 2013 |
$0.50 |
$0.50 |
|
|
|
April 30, 2013 |
$0.25 |
$0.25 |
July 31, 2013 |
$0.15 |
$0.15 |
October 31, 2013 |
$0.04 |
$0.04 |
January 31, 2014 |
No trading |
|
|
|
April 30, 2014 |
$0.03 |
$0.03 |
July 31, 2014 |
$0.03 |
$0.03 |
October 31, 2014 |
$0.05 |
$0.05 |
January 31, 2015 |
$0.03 |
$0.03 |
|
|
|
April 30, 2015 |
$0.03 |
$0.03
|
In prior years, our common shares were traded on the Canadian
Venture Exchange and its predecessor, the Vancouver Stock Exchange, under the
symbol GMS before the name change to Rouge Resources Ltd. effective March 25,
2008. On July 12, 2001, our shares were suspended from trading on the Canadian
Venture Exchange due to failure to meet the Exchanges minimum working capital
requirements. At that time, the Canadian Venture Exchange (now called the TSX
Venture Exchange) required that listed companies have a minimum of $50,000 in
unallocated working capital. Since we did not meet this requirement, trading in
our shares was suspended.
The Cease Trade Orders issued against us on November 7, 2003 by
the Alberta Securities Commission (the ASC) and on January 14, 2004 by the
British Columbia Securities Commission (the BCSC) were lifted on August 18,
2006 by the BCSC and on August 23, 2006 by the ASC. These reactivation and
revocation orders resulted from the Company bringing its disclosure records
up-to-date on SEDAR (www.sedar.com); preparing a new Evaluation Report
regarding the merits of the Dotted Lake property dated December 6, 2005; meeting
all other regulatory requirements; and paying all required fees and penalties.
Following conditional approval of the Companys Listing
Application by the TSX Venture Exchange on April 25, 2012 and completion of a
required private placement financing, the companys shares commenced trading
again on August 30, 2012 under the symbol ROU.
The following table sets forth the high and low closing prices
in Canadian funds of our common shares during the time they traded originally
through the facilities of the Canadian Venture Exchange, and its predecessor,
the Vancouver Stock Exchange, and again following restart of trading on August
28, 2012:
Period
|
High
|
Low
|
February 1, 1999 to January 31, 2000 |
$1.50 |
$0.30 |
February 1, 2000
to January 31, 2001 |
$2.50 |
$0.60 |
February 1, 2001
to July 12, 2001 |
$1.00 |
$0.60 |
August 28,
2012 to January 31, 2013 |
$0.40 |
$0.30 |
February 1, 2013
to January 31, 2014 |
$0.35 |
$0.02 |
February 1, 2014
to January 31, 2015 |
$0.05 |
$0.03 |
ITEM 10. |
Additional Information
|
Refer to item 5.3 above
|
10.2 |
Memorandum and Articles of
Association |
We were incorporated pursuant to the Company Act of
British Columbia by registration of our articles of incorporation and memorandum
on March 31, 1988 and were subsequently transitioned to the replacement
Business Corporations Act in March 2006. Pursuant to the provisions of
the Business Corporations Act, a company may conduct any business that is
not restricted by the terms of its articles. Our articles contain no such
restrictions.
Our directors are required to disclose to the board of
directors the nature and extent of their interest in any proposed transaction or
contract and must thereafter refrain from voting in respect thereof. An
interested director may be counted in the quorum when a determination as to such
directors remuneration is being considered but may not vote in respect thereof.
The directors have an unlimited power to borrow money, issue debt obligations
and mortgage or charge our assets provided such actions are conducted bona fide
and in our best interests. There are no mandatory retirement ages for directors
or any required shareholdings.
All holders of common shares are entitled to receive dividends
out of assets legally available therefore at such times and in such amounts as
the board of directors may from time to time determine. All holders of common
shares will share equally on a per share basis in any dividend declared by the
board of directors. The dividend entitlement time limit will be fixed by the
board of directors at the time any such dividend is declared. Each outstanding
common share is entitled to one vote on all matters submitted to a vote of our
shareholders in general meeting. There are no cumulative voting rights attached
to any of our shares and, accordingly, the holders of more than half of the
shares represented at a general meeting can elect all of the directors to be
elected in a general meeting. All directors stand for re-election annually. Upon
any liquidation, dissolution or winding up, all common shareholders are entitled
to share ratably in all net assets available for distribution after payment to
creditors. The common shares are not convertible or redeemable and have no
preemptive, subscription or conversion rights. In the event of a merger or
consolidation, all common shareholders will be entitled to receive the same per
share consideration.
The rights of shareholders may only be altered by the
shareholders passing a special resolution at a general meeting. A special
resolution may only be passed when it has been circulated to all shareholders by
way of an information circular and then must be passed by seventy-five percent
of the votes cast at the general meeting.
The board of directors may call annual and extraordinary
general meetings when required. One or more shareholders holding in aggregate
five percent or more of our issued shares may requisition an extraordinary
meeting and the directors are required to hold such meeting within four months
of such requisition. Only registered shareholders or persons duly appointed by
proxy may be admitted to meetings unless otherwise permitted by the chairman of
the meeting.
There are no national limitations or restrictions on the right
to own our common shares.
There are no provisions in our articles of association that
would have the effect of delaying, deferring or preventing a change in
control.
There are no provisions in our articles of association that
establish any threshold for disclosure of ownership. However, the British
Columbia and Alberta Securities Commissions require that persons who are the
registered owners of, and/or have voting control over 10% or more of our common
shares must file insider reports disclosing securities holdings.
The following material contracts are currently outstanding:
i) |
the Debt Deferral Agreement dated February 6, 2012
between the Issuer and Gregory S. Yanke Law Corp. regarding the deferral
of $39,676 of Issuer debt to July 31, 2013 or later is unsecured,
non-interest bearing. To date, there has been no demand for
repayment. |
|
|
ii) |
the amended management agreement with Mr. Darcy Krell
dated August 1, 2008 . The management fees were $2,500 per month from
February 1, 2002 to April 30, 2008, when they were increased to $5,000 per
month due to more time and effort required to run the business pursuant to
an unwritten agreement which was formalized by an amended management
agreement between the Issuer and Mr. Krell dated August 1, 2008. Under
this agreement, home office rent increased from $1,500 to $2,500 per month
but this did not commence until February 1,
2009. |
|
10.4 |
Exchange Controls and Other Limitations Affecting
Security Holders |
There is no law or governmental decree or regulation in Canada
that restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to a non-resident holder of common shares,
other than withholding tax requirements. See Item 10.5 below.
There is no limitation imposed by Canadian law or by our
constituent documents on the right of a non-resident to hold or vote common
shares, other than are provided in the Investment Canada Act (Canada). The
following summarizes the principal features of the Investment Canada Act
(Canada).
The Investment Canada Act (Canada) requires certain
"non-Canadian" individuals, governments, corporation or other entities who wish
to acquire a "Canadian business" (as defined in the Investment Canada Act), or
establish a "new Canadian business" (as defined in the Investment Canada Act) to
file either a notification or an application for review with a governmental
agency known as "Investment Canada". The Investment Canada Act requires that
certain acquisition of control of Canadian business by a "non-Canadian" must be
reviewed and approved by the Minister responsible for the Investment Canada Act
on the basis that the Minister is satisfied that the acquisition is "likely to
be of net benefit to Canada", having regard to criteria set forth in the
Investment Canada Act. Only acquisitions of control are reviewable under the
Investment Canada Act; however, the Investment Canada Act provides detailed
rules for the determination of whether control has been acquired and, pursuant
to those rules, the acquisition of one-third or more of the voting shares of a
corporation may, in some circumstances, be considered to constitute an
acquisition of control. Certain reviewable acquisitions of control may not be
implemented before being approved by the Minister; if the Minister does not
ultimately approve a reviewable acquisition, which has been completed, the
acquired Canadian business must be divested. Failure to comply with the review
provisions of the Investment Canada Act could result in, amongst other things,
an injunction or a court order directing disposition of assets of shares.
|
10.5 |
Canadian Federal Income Tax Consequences to U.S.
Investors |
A brief description of certain provisions of the tax treaty
between Canada and the United States is included below, together with a brief
outline of certain taxes, including withholding provisions to which United
States security holders are subject under existing laws and regulations of
Canada and United States; the consequences, if any, of state and local taxes are
not considered. The following information is general and security holders are
urged to seek the advice of their own tax advisors, tax counsel or accountants
with respect to the applicability or effect on their own individual
circumstances of not only the matters referred to herein, but also any state or
local taxes.
Canadian federal tax legislation generally requires a 25%
withholding from dividends paid or deemed to be paid to the Company's
nonresident shareholders. However, shareholders resident in the United States
will generally have this rate reduced to 15% through the tax treaty between
Canada and the United States. The amount of stock dividends paid to
non-residents of Canada will be subject to withholding tax at the same rate as
cash dividends. The amount of stock dividend (for tax purposes) would generally
be equal to the amount by which our stated capital has increased by reason of
the payment of such dividend. We will furnish additional tax information to
shareholders in the event of such a dividend. Interest paid or deemed to be paid
on our debt securities held by non-Canadian residents may also be subject to
Canadian withholding tax, depending upon the terms and provisions of such
securities and any applicable tax treaty. Under present legislation in the
United States, we are generally not subject to United States back up withholding
rules, which would require withholding at a rate of 20% on dividends and
interest paid to certain United States persons who have not provided us with a
taxpayer identification number.
Gains derived from a disposition of shares of the company by a
non-resident shareholder will be subject to tax in Canada only if not less than
25% of any class of our shares was owned by the nonresident shareholder and/or
persons with whom the nonresident did not deal at arm's length at any time
during the five-year period immediately preceding the disposition. In such cases
gains derived by a U.S. shareholder from a disposition of our shares would
likely be exempt from tax in Canada by virtue of the Canada-U.S. tax treaty.
|
10.6 |
United States Federal Income Tax Consequences to U.S.
Investors |
The following general discussion sets forth a summary of the
material United States federal income tax consequences that are applicable to
the following persons who invest in and hold our common shares as capital assets
("U.S. Shareholders"): (i) citizens or residents (as specially defined for
federal income tax purposes) of the United States, (ii) corporations or
partnerships created or organized in the United States or under the laws of the
United States or of any state and (iii) estates or trust the income of which is
subject to United States federal income taxation regardless of its source. This
discussion does not deal with (a) all aspects of federal income taxation that
may be relevant to a particular U.S. Shareholder based on such U.S.
Shareholder's particular circumstances (including potential application of the
alternative minimum tax, (b) certain U.S. Investors subject to special treatment
under federal income tax laws or foreign individuals or entities, (c) U.S.
Investors owning directly or by attribution 10% or more of our common shares, or
(d) any aspect of state, local or non-United States tax laws. Additionally, the
following discussion assumes that the Company will not be classified as a
"foreign personal holding company" under the Internal Revenue Code of 1986 as
amended (the "Code").
Passive Foreign Investment Company
For any of our taxable years, if 75% or more of our gross
income is "passive income" (as defined in the Code) or if at least 50% of our
assets, by average fair market value (or adjusted income basis if the Company
elects), are assets that produce or are held for the production of passive
income, we will be deemed to be a Passive Foreign Investment Company ("PFIC").
A U.S. Shareholder of a PFIC is subject to special U.S. federal
income tax rules in Section 1291 to 1297 of the Code. As described below, these
provisions set forth two alternative tax regimes at the election of each such
U.S. Shareholder, depending upon whether the U.S. Shareholder elects to treat us
as a "qualified electing fund" (a QEF election").
U.S. SHAREHOLDERS ARE STRONGLY URGED TO CONSIDER MAKING A
QEF ELECTION TO AVOID CERTAIN POTENTIALLY SIGNIFICANT ADVERSE U.S. TAX
CONSEQUENCES
The QEF Election Alternative
Each U.S. Shareholder is strongly urged to consider making a
QEF Election because of the potential benefits of such election that are
discussed below, and because we anticipate that we will not have any earnings
and profits (as computed for United States federal income tax purposes) for the
current taxable year and little, if any, earnings and profits for any future
taxable year in which we are a PFIC. There can be no assurance, however, that
this will be the case. Accordingly, the timely making of the QEF election, as
discussed below, generally should, subject to the discussion below under "Other
PFIC Rules", avoid any significant adverse United State federal income tax
consequences resulting from any classification of us as a PFIC, although this
may depend on a particular U.S. Shareholder's particular circumstances.
A U.S. Shareholder who elects in a timely manner to treat us as
a QEF (an "Electing U.S. Shareholder") will be subject, under Section 1293 of
the Code, to current federal income tax for any taxable year in which we are a
PFIC (or is treated as a PFIC with respect to the U.S. Shareholder) on such
Electing U.S. Shareholder's pro-rata share of our (i) "net capital gain" (the
excess of net long-term capital gain over short-term capital loss), which will
be taxed as long-term capital gain to the Electing U.S. Shareholder and (ii)
"ordinary earnings" (the excess of earnings and profits over net capital gain),
which will be taxed as ordinary income to the Electing U.S. Shareholder, in each
case, for the shareholder's taxable year in which, or with which, our taxable
year ends, regardless of whether such amounts actually are distributed. An
Electing U.S. Shareholder, however, would not take into account any income with
respect to any of our taxable years for which we have no earnings and profits.
Adjustments are provided generally to prevent double taxation at the time of
later distributions on or dispositions of Common Shares.
The QEF election also allows the Electing U.S. Shareholder
to:
(i) generally treat any gain realized on the disposition of our
common shares (or deemed to be realized on the pledge of such shareholder's
common shares) as capital gain;
(ii) treat such shareholder's share of our net capital gain, if
any, as long-term capital gain instead of ordinary income;
(iii) probably (although in the absence of regulations this
matter is not free from doubt) retain in the case of an individual Electing U.S.
Shareholder, the "step-up" in the tax basis of Common Shares to the fair market
value of such shares on the date of such Electing U.S. Shareholder's death
(which would otherwise not be retained); and (iv) generally avoid interest
charges resulting from PFIC status altogether.
In the event we are deemed a PFIC, we intend to comply with the
reporting requirements prescribed by Treasury regulations. In particular, we
will maintain information so that our ordinary earnings and net capital gain may
be determined. However, future regulations may contain reporting and
record-keeping requirements that are so onerous that it would not be practicable
for us to comply. If, after review of the requirements, we decide not to comply
with the PFIC record-keeping requirements, we will so notify our
shareholders.
A QEF Election must be made by attaching the following
documents to the timely filed U.S. federal income tax return for the first
taxable year of the U.S. Shareholder in which or with which our taxable year
during which we were a PFIC and the U.S. Shareholder held (or was considered to
have held) common shares ends: (i) a "Shareholder Section 1295 Election
Statement" executed by the U.S. Shareholder, (ii) a "PFIC Annual Information
Statement" received by the U.S. Shareholder from us, and (iii) a Form 8621. In
addition, the Electing U.S. Shareholder must file a copy of the Shareholder
Section 1295 Election Statement with the Internal Revenue Center, PO Box 21086,
Philadelphia, PA 19114. In the case of common shares owned through a U.S entity,
the election is made at the entity level.
The following six paragraphs apply to electing U.S.
shareholders:
(i) |
Dividends Paid on Common
Shares: |
Dividends paid on our common shares (including any Canadian
taxes withheld) to an Electing U.S. Shareholder will be treated as ordinary
dividend income for United States federal income tax purposes to the extent of
our current and accumulated earnings and profits (as computed for U.S. federal
income tax purposes) unless paid out of earnings and profits that were taxed to
the Electing U.S. Shareholder under the QEF rules. Such dividends generally will
not qualify for the dividends-received deduction available to corporations.
Amount in excess of such earnings and profits will be applied against the
Electing U.S. Shareholder's tax basis in the common shares, and to the extent in
excess of such tax basis, will be treated as gain from a sale or exchange of
such common shares.
(ii) |
Credit for Canadian Taxes Withheld:
|
Subject to the limitations set forth in Section 904 of the Code (which generally restricts the availability of foreign tax credits to a U.S. Shareholder's tax liability attributable to foreign-source income of the same type as the income with
respect to which the tax was imposed, as determined under complex U.S. tax rules), the Canadian tax withheld or paid with respect to dividends on the common shares generally may be taken as a foreign tax credit against United States federal income
taxes by an Electing U.S. Shareholder who chooses to claim such a credit for the taxable year. Electing U.S. Shareholders who do not choose to claim foreign tax credits for a taxable year may claim United States tax deduction for such Canadian tax
in such taxable year.
(iii) |
Disposition of Common Shares:
|
Any gain or loss on a sale or exchange of common shares by an Electing U.S. Shareholder will be capital gain or loss, which will be long-term capital gain or loss if the common shares have been held for more than one year, and otherwise will be
short-term capital or loss. The sale of common shares through certain brokers may be subject to the information reporting and back-up withholdings rules of the Code.
(iv) |
The Non-QEF Election Alternative
|
If a U.S. Shareholder does not timely make a QEF Election for the first taxable year during which he holds (or is considered to hold) the common shares in question and we are a PFIC (a "Non-electing U.S. Shareholder"), then special rules under
Section 1291 will apply to (i) gains realized on the disposition (or deemed to be realized by reason of a pledge) of common shares, and (ii) certain "excess distribution" (as defined in the Code) by us. We have never made any distributions with
respect to our common shares and we do not anticipate making any such distribution in the foreseeable future.
A non-electing U.S. Shareholder generally would be required to pro-rate all gains realized on the disposition of our common shares and all excess distributions over such shareholder's entire holding period for the common shares. All gains or excess
distributions allocated to prior years of the U.S. Shareholder (provided such U.S. Shareholder's holding period and beginning after December 31, 1986 for which it was a PFIC) would be taxed at the highest tax rates for each such prior year
applicable to ordinary income. Special foreign tax credit rules apply with respect to withholding taxes imposed on amounts that are treated as excess distributions. The Non-electing U.S. Shareholder also would be liable for interest on the foregoing
tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-electing U.S. Shareholder that is not a corporation must treat this interest charge as "personal interest" which is
non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution and no interest charge will be incurred with respect to such balance.
If we are a PFIC for any taxable year during which a non-electing U.S. Shareholder holds, or is considered to hold, our common shares, then we will continue to be treated as a PFIC with respect to such common shares, even if we no longer meet the
definition of a PFIC. A Non-electing U.S. Shareholder may determine this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-electing U.S. Shareholders) as if such common shares had been sold
on the last day of the last taxable year for which it was a PFIC. Certain other elections are also available to Non-Electing U.S. Shareholders.
Certain special, generally adverse, rules will apply with respect to our common shares while we are a PFIC, regardless of whether the common shares are held, or considered to be held, by an Electing or Non-electing U.S. Shareholder. For example,
under Section 1297(b)(6) of the Code, a U.S. Shareholder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such stock. In addition,
under Section 1291(f) of the Code, the Treasury has authority to issue regulations that would treat as taxable certain transfers that are generally not so treated, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at
death, although it is not clear that such authority extends to transfers by Electing U.S. Shareholders.
The foregoing discussion is based on existing provisions of the
Code, existing and proposed regulations thereafter, and current administrative
rulings and court decisions, all of which are subject to change. Any such
changes could affect the validity of this discussion. In addition, the
implementation of certain aspects of the PFIC rules requires the issuance of
regulations which in many such instances have not yet been promulgated and which
may have retroactive effect. Furthermore, legislation has been proposed which
would replace the PFIC provisions with a consolidated anti-deferral regime.
While this legislation was vetoed, it may be re-introduced in subsequent
years.
ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON
SHARES.
|
10.7 |
Statements by Experts |
We have placed reliance upon:
(i) our lawyer, Doug Eacrett, Barrister & Solicitor, Suite
203 - 409 Granville St, Vancouver BC, Canada V6C 1T2, as expert in Canadian
commercial law.
(ii) our consulting geologists, Ms Caitlin Jeffs and Mr Michael
Thompson, C/o Fladgate Exploration Consulting Corp., 195 Park Avenue,
Thunder Bay ON, Canada, P7B 1B9, and Mr. Andre M Pouwels, P. Geo., 4900 Mariposa
Court, Richmond BC, Canada V7C 2J9, as expert in mineral exploration geology of
precious and base metals.
(iii) our auditor, Dale Matheson Carr-Hilton Labonte LLP,
Chartered Accountants, Suite 1500 1140 West Pender Street, Vancouver BC,
Canada V6E 4G1, as expert in Canadian and US accounting, auditing and Canadian
income tax.
|
10.8 |
Documents on Display |
You may review a copy of our filings with the SEC, including
exhibits and schedules filed with it, at the SEC's public reference facilities
at 100 F Street NE, Washington, D.C. 20549. You may call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. The SEC
maintains a Web site (HTTP://www.sec.gov/edgar) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. We have made our filings with the SEC
electronically as a reporting foreign private issuer.
|
10.9 |
Subsidiary Information |
Not applicable
ITEM 11. |
Quantitative and Qualitative Disclosures
about Market Risk |
Market risk represents the risk of loss that may impact our
financial statements due to adverse changes in financial market prices and
rates, including credit risk, liquidity risk, foreign exchange risk, interest
rate risk and commodity price risk.
We are engaged in the mineral exploration business and manage
related industry risk directly. We are potentially at risk for environmental
reclamation and fluctuations in commodity-based market prices associated with
resource property interests. We are of the opinion that we address environmental
risk and compliance in accordance with industry standards and specific project
environmental requirements. At present, the Company is not required to provide
for restoration and environmental obligations. Accordingly, no provision has
been made. However, there is no certainty that all environmental risks and
contingencies have been addressed.
The Company is exposed in varying degrees to financial
instrument related risks. The Board of Directors approves and monitors the risk
management processes, inclusive of documented investment policies, counterparty
limits, and controlling and reporting structures. The type of risk exposure and
the way in which such exposure is managed is provided as follows:
Credit risk
Credit risk is the risk that one
party to a financial instrument will fail to discharge an obligation and cause
the other party to incur a financial loss. The Companys primary exposure to
credit risk is on its cash held in bank accounts and its credit card deposit.
The majority of cash is deposited in bank accounts held with one major bank in
Canada so there is a concentration of credit risk. This risk is managed by using
a major bank that is a high credit quality financial institution as determined
by rating agencies.
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 has a planning and budgeting process in place to help determine
the funds required to support the Companys normal operating requirements on an
ongoing basis. The Company attempts to ensure there is sufficient access to
funds to meet on-going business requirements, taking into account its current
cash position and potential funding sources.
Historically, the Company's source of funding has been either
the issuance of equity securities for cash through private placements or loans
from directors and officers. The Companys access to financing is always
uncertain and there can be no assurance of continued access to significant
funding from these sources.
Foreign exchange risk
Foreign currency risk is
the risk that the fair values of future cash flows of a financial instrument
will fluctuate because they are denominated in currencies that differ from the
Companys functional currency. The Company only operates in Canada and is
therefore not exposed to foreign exchange risk arising from transactions
denominated in a foreign currency.
Interest rate risk
Interest rate risk is the
risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Companys exposure to
interest rate risk relates to its ability to earn interest income on cash
balances at variable rates. Changes in short term interest rates will not have a
significant effect on the fair value of the Companys cash account.
Commodity Price Risk
The Companys ability to
raise capital to fund exploration or development activities is subject to risks
associated with fluctuations in the market price of precious metals. The Company
closely monitors commodity prices to determine the most appropriate course of
action.
ITEM 12. |
Descriptions of Securities Other than Equity
Securities |
Refer to Item 5.3 above.
|
12.2 |
Stock Purchase Warrants |
Refer to Item 5.3 above.
PART II
ITEM 13. |
Defaults, Dividend Arrearages and
Delinquencies |
None
ITEM 14. |
Material Modifications to the Rights of
Security Holders and Use of Proceeds |
None
ITEM 15. |
Controls and Procedures
|
|
15.1 |
Disclosure Controls and
Procedures |
Under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, we are responsible for conducting an evaluation of the effectiveness of
the design and operation of our internal controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of
the end of the fiscal year covered by this report. Disclosure controls and
procedures means that the material information required to be included in our
Securities and Exchange Commission (SEC) reports is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms
relating to our company, including any consolidating subsidiaries, and was made
known to us by others within those entities, particularly during the period when
this report was being prepared. Based on this evaluation, our principal
executive officer and principal financial officer concluded as of the evaluation
date that our disclosure controls and procedures were effective as of January
31, 2015.
|
15.2 |
Managements Annual Report on Internal Control over
Financial Reporting |
As of January 31, 2015, management assessed the effectiveness
of our internal control over financial reporting. The Company's management is
responsible for establishing and maintaining adequate internal control over
quarterly and annual financial reporting for the Company. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under
the Securities Exchange Act of 1934, as amended, as a process designed by, or
under the supervision of, the Companys Chief Executive Officer and Chief
Financial Officer and effected by the Companys Board of Directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS and includes those policies and procedures
that:
i) Pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect our transactions and dispositions of our
assets;
ii) Provide reasonable assurance that our transactions are
recorded as necessary to permit preparation of our financial statements in
accordance with IFRS, and that receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and
iii) Provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of our assets
that could have a material effect on the financial statements.
In evaluating the effectiveness of our internal control over
financial reporting, our management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control Integrated Framework. Based on that evaluation, completed by Linda
Smith, our President and Chief Executive Officer, and Ronald McGregor, our Chief
Financial Officer, management concluded that, during the period covered by this
report, such internal controls over financial reporting were operating
effectively notwithstanding the inherent weakness of a small company having a
very small staff. This lack of segregation of duties is overcome by heavy
reliance on senior management and directors during the review and approval
process of our quarterly and annual financial reporting.
|
15.3 |
Auditors Attestation
Report |
The Company is not required to provide an auditors attestation
report on its internal control over financial reporting for the fiscal year
ended January 31, 2015. In this annual report , the Companys independent
registered auditor, Dale Matheson Carr-Hilton Labonte LLP, Chartered
Accountants, has not given an opinion on the effectiveness of the Companys
internal control over financial reporting for the fiscal year ended January 31,
2015, and has not issued an attestation report on the Companys internal control
over financial reporting.
All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparations and presentations. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
|
15.4 |
Changes in Internal Control over Financial
Reporting |
There were no changes in the Companys internal control over
financial reporting that occurred during the fiscal year ended January 31, 2015
that have materially affected, or that are reasonably likely to materially
affect, the Companys internal control over financial reporting.
ITEM 16A. |
Audit Committee Financial Expert
|
Audit Committee of the Board
Our audit committee is
comprised of Linda Smith, Steven Chan and James Burns. They undertake reviews of
our companys financial statements and determine the adequacy of internal
controls and other financial reporting matters. Messrs. Chan and Burns are
independent as the term is used in Rule 10A-3 of the Securities Exchange Act
of 1934, as amended. Ms. Smith is the President and CEO of the Company and
therefore is not an independent member of the audit committee
Audit Committee Financial Expert
Our audit committee
does not have a member that qualifies as an audit committee financial expert
as defined in Item 401(e) of Regulation S-B. The members of our audit committee
have primarily gained their financial education and experience through their
participation in the management of other private and publicly traded companies.
Linda J. Smith, Steven J. Chan and James O. Burns consider themselves
financially literate, meaning that they have the ability to read and
understand a set of financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and
complexity of the issues that can be reasonably expected to be raised by the
Issuers financial statements. Ms. Smith has been a director and officer of the
Issuer since October 2000 and strengthens the continuity of the committee with
her knowledge of the Issuers financial and business history. Mr. Chan has and
continues to be active in the junior exploration and mining industry and has
gained much experience through his involvement as a director of a number of
public companies including, in some instances, as a member of audit committees.
Mr. Burns is a retired businessman and brings to the committee experience from
the private sector, including through his ownership and management of a fishing
and hunting lodge in Northern Ontario.
The Company has not adopted a code of ethics that applies to
its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions
because the Board had found that the fiduciary duties placed on individual
directors by the Companys governing corporate legislation, the common law, and
the restrictions placed by applicable corporate legislation on an individual
directors participation in decisions of the Board in which the director has an
interest have been sufficient to ensure that the Board operates independently of
management and in the best interests of the Company and its shareholders.
ITEM 16C. |
Principal Accountant Fees and Services
|
During the years ended January 31, 2015 and 2014, we accrued
fees of $10,000 and paid fees of $10,000 respectively to our independent
accountant for professional services rendered in connection with the audits of
our year-end financial statements and our annual report filed on Form 20-F, and
preparation of our corporate income tax returns.
During fiscal years ended January 31, 2015 and 2014, we did not
incur any fees for professional services rendered by our principal independent
accountant for any of the following:
(i) information technology services including, but not limited
to, operating or supervising or managing our information or local area network
or designing or implementing a hardware or software system that aggregate source
data underlying the financial statements.
(ii) other non-assurance services including, but not limited
to, actuarial services or valuation services.
ITEM 16D. |
Exemptions from the Listing Standards for
Audit Committees |
Not Applicable
ITEM 16E. |
Purchases of Equity Securities by the Issuer
and Affiliated Purchasers |
Not Applicable
ITEM 16F. |
Change in Registrants Certifying
Accountant |
Not Applicable
ITEM 16G. |
Corporate Governance
|
Not applicable.
ITEM 16H |
Mine Safety Disclosure
|
Not applicable
PART III
ITEM 17 |
Financial Statements
|
This Item is for presentation of financial statements with
fiscal years ended on or before December 15, 2011; whereas, Item 18 is for
presentation of financial statements with fiscal years ended on or after
December 15, 2011. Accordingly, our financial statements are presented under
Item 18.
ITEM 18. |
Financial Statements
|
Our financial statements for the years ended January 31, 2015,
2014 and 2013 were audited by Dale Matheson Carr-Hilton Labonte, Chartered
Accountants without reservation, as follows:
|
Audit report dated May 28, 2015 |
|
Statements of financial position as at January
31, 2015, 2014 and 2013 |
|
Statements for the years ended January 31,
2015, 2014 and 2013 |
|
Comprehensive Loss |
|
Changes in Equity |
|
Cash
Flows |
|
Notes to the financial statements for the years
ended January 31, 2015, 2014 and 2013 |
Our financial statements are expressed in Canadian dollars and
prepared in accordance with IFRS.
The unmarked exhibits below are attached to
this report.
* Previously filed with Form 20-F on September 16, 2003 **
Previously filed with Form 20-F on June 10, 2009
SIGNATURE
The registrant hereby certifies that it meets all of the
requirements for filing on Form 20F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
|
ROUGE RESOURCES LTD. |
Dated: May 28, 2015 |
By:
/s/ J. Ronald McGregor |
|
|
|
J. Ronald McGregor (CPA, CA) |
|
Chief Financial Officer |
ROUGE RESOURCES LTD.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 2015, 2014 AND 2013
(Expressed in Canadian Dollars)
INDEPENDENT AUDITORS REPORT
To the Shareholders of Rouge Resources Ltd.:
We have audited the accompanying financial statements of Rouge
Resources Ltd., which comprise the statements of financial position as at
January 31, 2015, 2014 and 2013, and the statements of comprehensive loss,
changes in equity and cash flows for the years then ended, and a summary of
significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair
presentation of these financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting
Standards Board, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards and the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of
the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all
material respects, the financial position of Rouge Resources Ltd. as at January
31, 2015, 2014 and 2013, and its financial performance and its cash flows for
the years then ended in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1 in
the financial statements which describes certain conditions that indicate the
existence of a material uncertainty that casts substantial doubt about Rouge
Resources Ltd.s ability to continue as a going concern.
|
DALE MATHESON CARR-HILTON LABONTE LLP |
|
CHARTERED ACCOUNTANTS |
Vancouver, Canada |
|
May 28, 2015 |
|
|
|
|
|
![](exhibit1x2x2.jpg)
ROUGE RESOURCES LTD. |
Statements of Financial Position |
(Expressed in
Canadian dollars) |
|
|
|
As at
January 31 |
|
|
Note |
|
2015 |
|
|
2014 |
|
|
2013 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
271 |
|
$ |
96,466 |
|
$ |
301,845
|
|
GST receivable |
|
|
749 |
|
|
1,425 |
|
|
4,122 |
|
Prepaid expenses |
|
|
- |
|
|
- |
|
|
1,625 |
|
|
|
|
1,020 |
|
|
97,891 |
|
|
307,592 |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
Credit card security deposit |
|
|
6,900 |
|
|
6,900 |
|
|
6,900 |
|
Equipment |
4 |
|
888 |
|
|
1,268 |
|
|
1,811 |
|
Exploration and evaluation assets |
5 |
|
277,341 |
|
|
291,007 |
|
|
268,574 |
|
|
|
|
285,129 |
|
|
299,175 |
|
|
277,285 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
286,149 |
|
$ |
397,066 |
|
$ |
584,877 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Trade payables and accrued liabilities |
6 |
$ |
27,308 |
|
$ |
25,607 |
|
$ |
38,883 |
|
Loan payable |
7 |
|
39,676 |
|
|
39,676 |
|
|
39,676 |
|
Related party payables |
8 |
|
120,485 |
|
|
46,555 |
|
|
11,466 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
187,469 |
|
|
111,838 |
|
|
90,025 |
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
9 |
|
3,953,590 |
|
|
3,953,590 |
|
|
3,953,590 |
|
Convertible debt reserve |
10 |
|
53,357 |
|
|
53,357 |
|
|
53,357 |
|
Deficit |
|
|
(3,908,267 |
) |
|
(3,721,719 |
) |
|
(3,512,095 |
) |
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
98,680 |
|
|
285,228 |
|
|
494,852 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
286,149 |
|
$ |
397,066 |
|
$ |
584,877 |
|
Going concern |
1 |
Subsequent event |
15 |
Approved on behalf of the Board of Directors:
Linda
Smith |
|
Ronald McGregor |
Director |
|
Director |
The accompanying notes are an integral part of these
financial statements |
3 |
ROUGE RESOURCES LTD. |
Statements of Comprehensive Loss |
(Expressed in
Canadian dollars) |
|
|
|
Years ended
January 31, |
|
|
Note |
|
2015 |
|
|
2014 |
|
|
2013 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Amortization |
4 |
$ |
380 |
|
$ |
543 |
|
$ |
776 |
|
Consulting services |
8 |
|
1,600 |
|
|
5,800 |
|
|
5,670 |
|
Interest expense
|
|
|
737 |
|
|
408 |
|
|
391 |
|
Listing application expenses |
|
|
- |
|
|
402 |
|
|
62,601 |
|
Management
services |
8 |
|
60,000 |
|
|
60,000 |
|
|
60,000 |
|
Office administration and travel
|
8 |
|
52,909 |
|
|
74,286 |
|
|
44,115 |
|
Professional
services |
8 |
|
20,731 |
|
|
44,368 |
|
|
47,705 |
|
Transfer agent and filing fees |
|
|
18,691 |
|
|
23,817 |
|
|
18,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss before other item |
|
|
(155,048 |
) |
|
(209,624 |
) |
|
(239,258 |
) |
Other item |
|
|
|
|
|
|
|
|
|
|
Impairment of exploration and evaluation assets |
5 |
|
(31,500 |
) |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Net and comprehensive loss |
|
$ |
(186,548 |
) |
$ |
(209,624 |
) |
$ |
(239,258 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss per share basic and diluted |
9 |
$ |
(0.01 |
) |
$ |
(0.01 |
) |
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
basic and diluted |
|
|
44,633,171 |
|
|
44,633,171 |
|
|
42,299,073 |
|
The accompanying notes are an integral part of these
financial statements |
4 |
ROUGE RESOURCES LTD. |
Statement of Changes in Equity |
(Expressed in
Canadian dollars) |
|
|
|
|
|
|
|
|
|
Convertible |
|
|
|
|
|
|
|
|
|
|
Share
capital |
|
|
Debt |
|
|
|
|
|
|
|
|
Note |
|
Number |
|
|
Amount |
|
|
Reserve |
|
|
Deficit |
|
|
Total |
|
Balance at January 31,
2012 |
|
|
40,565,171 |
|
$ |
3,110,796
|
|
$ |
53,357 |
|
$ |
(3,272,837 |
) |
$ |
(108,684 |
) |
Net loss |
|
|
- |
|
|
- |
|
|
- |
|
|
(239,258 |
) |
|
(239,258 |
) |
Shares issued for cash |
9 |
|
4,068,000 |
|
|
1,017,000 |
|
|
- |
|
|
- |
|
|
1,017,000 |
|
Share issue costs |
9 |
|
- |
|
|
(174,206 |
) |
|
- |
|
|
- |
|
|
(174,206 |
) |
Balance at January 31,
2013 |
|
|
44,633,171 |
|
|
3,953,590 |
|
|
53,357 |
|
|
(3,512,095 |
) |
|
494,852 |
|
Net
loss |
|
|
- |
|
|
- |
|
|
- |
|
|
(209,624 |
) |
|
(209,624 |
) |
Balance at January 31,
2014 |
|
|
44,633,171 |
|
|
3,953,590 |
|
|
53,357 |
|
|
(3,721,719 |
) |
|
285,228 |
|
Net
loss |
|
|
- |
|
|
- |
|
|
- |
|
|
(186,548 |
) |
|
(186,548 |
) |
Balance at January 31, 2015 |
|
|
44,633,171 |
|
$ |
3,953,590 |
|
$ |
53,357 |
|
$ |
(3,908,267 |
) |
$ |
98,680 |
|
The accompanying notes are an integral part of these
financial statements |
5 |
ROUGE RESOURCES LTD. |
Statement of Cash Flows |
(Expressed in
Canadian dollars) |
|
|
Years ended
January 31, |
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Operating activities |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(186,548 |
) |
$ |
(209,624 |
) |
$ |
(239,258 |
) |
Adjustment for non-cash item: |
|
|
|
|
|
|
|
|
|
Amortization |
|
380 |
|
|
543 |
|
|
776 |
|
Impairment of exploration and
evaluation assets |
|
31,500 |
|
|
- |
|
|
- |
|
Changes in non-cash working
capital items: |
|
|
|
|
|
|
|
|
|
GST receivable |
|
676 |
|
|
2,697 |
|
|
(1,171 |
) |
Prepaid expenses
|
|
- |
|
|
1,625 |
|
|
(1,625 |
)
|
Trade payables and accrued liabilities |
|
1,701 |
|
|
(13,276 |
) |
|
(19,147 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash flows used in operating activities |
|
(152,291 |
) |
|
(218,035 |
) |
|
(260,425 |
) |
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
Exploration and evaluation expenditures |
|
(17,834 |
) |
|
(22,433 |
) |
|
(55,695 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash flows used in investing activities |
|
(17,834 |
) |
|
(22,433 |
) |
|
(55,695 |
) |
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Change in related party payables |
|
73,930 |
|
|
35,089 |
|
|
(242,652 |
) |
Shares issued for cash two
private placements |
|
- |
|
|
- |
|
|
1,017,000 |
|
Share issue costs brokered private placement |
|
- |
|
|
- |
|
|
(174,206 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash flows from financing activities |
|
73,930 |
|
|
35,089 |
|
|
600,142 |
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash |
|
(96,195 |
) |
|
(205,379 |
) |
|
284,022 |
|
Cash, beginning |
|
96,466 |
|
|
301,845 |
|
|
17,823 |
|
|
|
|
|
|
|
|
|
|
|
Cash, ending |
$ |
271 |
|
$ |
96,466 |
|
$ |
301,845 |
|
The accompanying notes are an integral part of these
financial statements |
6 |
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
|
1. |
Nature and continuance of operations
|
Rouge Resources Ltd. (the Company)
was incorporated on March 31, 1988 under the laws of the province of British
Columbia, Canada, and its principal activity is the acquisition and exploration
of mineral properties in Canada. The Companys shares are traded on the TSX
Venture Exchange (TSX-V) under the symbol ROU and quoted on the OTC:BB in the
United States. The Companys registered and records office is located at Suite
203 - 409 Granville St., Vancouver, British Columbia, V6C 1T2.
These financial statements have been
prepared on the assumption that the Company will continue as a going concern,
meaning it will continue in operation for the foreseeable future and will be
able to realize assets and discharge liabilities in the ordinary course of
business. As at January 31, 2015, the Company had not advanced any of its
properties to commercial production and is not able to finance day-to-day
activities through operations. The Companys continuation as a going concern is
dependent upon the successful results from its mineral property exploration
activities; its ability to attain profitable operations and generate funds
therefrom; and its ability to raise equity capital or borrowings sufficient to
meet current and future obligations. These factors indicate the existence of a
material uncertainty that casts substantial doubt about the Companys ability to
continue as a going concern. Management intends to finance operating costs over
the next twelve months with cash on hand, loans from directors and companies
controlled by directors, and/or private placement of common shares. Should the
Company be unable to continue as a going concern, the net realizable value of
its assets may be materially less than the amounts presented on its Statements
of Financial Position.
|
2. |
Significant accounting policies and basis of
preparation |
These financial statements were
authorized for issue on May 28, 2015 by the directors of the Company.
Statement of compliance with
International Financial Reporting Standards
These financial
statements comply 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).
Basis of preparation
These financial statements have been prepared on an accrual basis;
are based on historical costs, modified where applicable; and are presented in
Canadian dollars unless otherwise noted.
Significant estimates and
assumptions
The preparation of financial statements in
accordance with IFRS requires the Company to make estimates and assumptions
concerning the future. The Companys management reviews these estimates and
underlying assumptions on an ongoing basis, based on experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. Revisions to estimates are adjusted for
prospectively in the period in which the estimates are revised.
Estimates and assumptions where there
is significant risk of material adjustments to assets and liabilities in future
accounting periods include: the useful lives of equipment, the recoverability of
the carrying value of exploration and evaluation assets, fair value measurements
for financial instruments, the recoverability and measurement of deferred tax
assets, and provisions for restoration and environmental obligations and
contingent liabilities.
Significant judgments
The preparation of financial statements in accordance with IFRS
requires the Company to make judgments, apart from those involving estimates and
assumptions, in applying accounting policies. The most significant judgments in
preparing the Companys financial statements include:
|
- |
assessment of the Companys ability to continue
as a going concern and whether there are events or conditions that may
give rise to significant uncertainty; and |
|
- |
classification / allocation of expenditures as
exploration and evaluation assets or operating expenses.
|
7
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
Foreign currency translation,
transactions and balances
The functional currency of a Company is
measured using the currency of the primary economic environment in which it
operates. These financial statements are presented in Canadian dollars which is
the Companys functional and presentation currency.
Foreign currency transactions, where
applicable, are translated into the functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are
translated at the period-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the
exchange rate at the date when fair values were determined.
Exchange differences arising on the
translation of monetary items or on settlement of monetary items are recognized
in the Statement of Comprehensive Loss in the period in which they arise, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the
translation of non-monetary items are recognized in other comprehensive income
to the extent that gains and losses arising on those non-monetary items are also
recognized in other comprehensive income. Where the non-monetary gain or loss is
recognized in profit or loss, the exchange component is also recognized in
profit or loss.
Exploration and evaluation
expenditures
Costs incurred before the Company has obtained the legal
rights to explore an area are expensed as incurred.
Exploration and evaluation
expenditures include the costs of acquiring licenses and costs associated with
exploration and evaluation activity. Option payments are considered acquisition
costs provided that the Company has the intention of exercising the underlying
option.
Property option agreements are
exercisable entirely at the option of the optionee. Therefore, option payments
(or recoveries) are recorded when payment is made (or received) and are not
accrued.
Exploration and evaluation expenditures
are capitalized. The Company capitalizes costs to specific blocks of claims or
areas of geological interest. Government tax credits received are recorded as a
reduction to the cumulative costs incurred and capitalized on the related
property.
Exploration and evaluation assets are
tested for impairment if facts or circumstances indicate that impairment exists.
Examples of such facts and circumstances are as follows:
|
- |
the period for which the Company has the right to explore
in the specific area has expired during the period or will expire in the
near future, and is not expected to be renewed; |
|
|
|
|
- |
substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither budgeted
nor planned; |
|
|
|
|
- |
exploration for and evaluation of mineral resources in
the specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to discontinue
such activities in the specific area; and |
|
|
|
|
- |
sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying amount
of the exploration and evaluation asset is unlikely to be recovered in
full from successful development or by sale. |
After technical feasibility and
commercial viability of extracting a mineral resource are demonstrable, the
Company stops capitalizing expenditures for the applicable block of claims or
geological area of interest and tests the asset for impairment. The capitalized
balance, net of any impairment recognized, is then reclassified to either
tangible or intangible mine development assets according to the nature of the
asset.
8
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
Development expenditures
Costs arising from the construction, installation or completion of
infrastructure facilities are capitalized within mine development assets until
the mine achieves commercial production at which point accumulated costs are
transferred to producing mine assets.
Share-based payments
The Company has a stock option plan. Share-based payments to
employees are measured at the fair value of the instruments issued and amortized
over the vesting periods. Share-based payments to non-employees are measured at
the fair value of goods or services received or the fair value of the equity
instruments issued, if it is determined the fair value of the goods or services
cannot be reliably measured, and are recorded at the date the goods or services
are received. Compensation expense is recognized and the corresponding amount is
recorded in the share option reserve. The fair value of options is determined
using the BlackScholes Option Pricing Model. The number of shares and options
expected to vest is reviewed and adjusted at the end of each reporting period
such that the amount recognized for services received as consideration for the
equity instruments granted shall be based on the number of equity instruments
that eventually vest. When the options are exercised, share capital is credited
for the consideration received and the related share option reserve is
decreased.
Loss per share
Basic
loss per share is calculated by dividing the loss attributable to common
shareholders by the weighted average number of common shares outstanding in the
period. For all periods presented, the loss attributable to common shareholders
equals the reported loss attributable to owners of the Company. Diluted loss per
share is calculated by the treasury stock method. Under this method, the
weighted average number of common shares outstanding for the calculation of
diluted loss per share assumes that the proceeds to be received on the exercise
of dilutive share options and warrants are used to repurchase common shares at
the average market price during the period. Any stock options or share purchase
warrants outstanding cause the calculation of diluted loss per share to be
anti-dilutive and are therefore not included in the calculation.
Financial instruments
The Company classifies its financial instruments in the following
categories: fair value through profit or loss , loans and receivables,
held-to-maturity investments, available-for-sale and financial liabilities. The
classification depends on the purpose for which the financial instruments were
acquired. Management determines the classification of its financial instruments
at initial recognition.
Fair value through profit or loss
investments are either held-for-trading for the purpose of short-term profit
taking, derivatives not held for hedging purposes, or held on a fair value basis
in accordance with a documented risk management or investment strategy when
designated as such to avoid an accounting mismatch or to enable performance
evaluation where a group of financial assets is managed by key management
personnel. Such assets are subsequently measured at fair value with unrealized
changes in carrying value being included in profit or loss.
Loans and receivables are
non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are subsequently measured at amortized cost. They
are included in current assets except for maturities greater than 12 months
after the end of the reporting period. These are classified as non-current
assets.
Held-to-maturity investments are
non-derivative financial assets that have fixed maturities and fixed or
determinable payments with Companys intention to hold these investments to
maturity. They are subsequently measured at amortized cost. Held-to-maturity
investments are included in non-current assets, except for those instruments
that are expected to mature within 12 months after the end of the reporting
period.
Available-for-sale investments are
non-derivative financial assets that are designated as available-for-sale or are
not suitable to be classified as financial assets at fair value through profit
or loss, loans and receivables or held-to-maturity investments and are
subsequently measured at fair value. These are included in current assets to the
extent they are expected to be realized within 12 months after the end of the
reporting period. Unrealized gains and losses are recognized in other
comprehensive income, except for impairment losses and foreign exchange gains
and losses on monetary financial assets which are recognized in profit or
loss.
9
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
Non-derivative financial liabilities
(excluding financial guarantees) are subsequently measured at amortized cost.
Regular purchases and sales of financial assets are recognized on the
trade-date, being the date when the Company commits to purchase the asset.
Financial assets are derecognized when
the rights to receive cash flows from the investments have expired or have been
transferred and the Company has transferred substantially all risks and rewards
of ownership.
At each reporting date, the Company
assesses whether there is objective evidence that a financial instrument has
been impaired. In the case of available-for-sale financial instruments, a
significant and prolonged decline in the value of the instrument is considered
to determine whether an impairment has arisen.
Transaction costs related to financial
instruments include professional, consulting, regulatory, agency commissions and
other costs that are incremental to the acquisition, issuance or disposition of
financial assets, liabilities or equity instruments. Transaction costs are
initially charged to the related financial instrument or equity instrument,
except where the financial instrument is classified as fair value through profit
or loss, in which case transaction costs are expensed to the Statement of
Comprehensive Loss immediately.
The Company does not have any
derivative financial assets and liabilities.
Impairment of assets
The carrying amount of the Companys non-current assets, which
include equipment and exploration and evaluation assets, is reviewed at each
reporting date to determine whether there is an indication of impairment. If
such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss. An impairment loss is
recognized in the Statement of Comprehensive Loss whenever the carrying amount
of the asset, or its cash-generating unit, exceeds its recoverable amount.
The recoverable amount is the greater
of an assets fair value less costs to sell and its value in use. In assessing
value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. For an asset that
does not generate cash flows largely independent of those from other assets, the
recoverable amount is determined for the cash-generating unit to which the asset
belongs.
A cash-generating unit is the smallest
identifiable group of assets that generates cash inflows largely independent of
the cash flows from other assets or groups of assets. Impairment losses
recognized in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the cash-generating unit and then
to reduce the carrying amount of the other assets in the unit on a pro-rata
basis.
An impairment loss is only reversed if
there is an indication that the impairment loss may no longer exist and there
has been a change in the estimates used to determine the recoverable amount.
However, any reversal of impairment cannot increase the carrying value of the
asset to an amount higher than the carrying amount that would have been
determined had no impairment loss been recognized in previous years. An
impairment loss with respect to goodwill is never reversed.
Assets that have an indefinite useful
life are not subject to amortization and are tested annually for impairment.
Cash
Cash includes
cash on hand and deposits held at call with banks.
10
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
Income taxes
Current income tax
Current income tax
assets and liabilities for the current period are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date, in the countries where the Company
operates and generates taxable income.
Current income tax relating to items
recognized directly in other comprehensive income or equity is recognized in
other comprehensive income or equity and not in profit or loss. Management
periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred income tax
Deferred income tax is recognized using the asset and liability method
on temporary differences at the reporting date arising between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes.
The carrying amount of deferred income
tax assets is reviewed at the end of each reporting period and recognized only
to the extent that it is probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be
utilized.
Deferred income tax assets and
liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realized or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
Deferred income tax assets and deferred
income tax liabilities are offset, if a legally enforceable right exists to set
off current tax assets against current income tax liabilities and the deferred
income taxes relate to the same taxable entity and the same taxation
authority.
Flow-through shares
On the issuance of flow-through shares, any premium received in excess
of the closing market price of the Companys common shares is initially recorded
as a liability (flow-through tax liability). Provided that the Company has
renounced the related expenditures, or that there is a reasonable expectation
that it will do so, the flow-through tax liability is reduced on a pro-rata
basis as the expenditures are incurred. If such expenditures are capitalized, a
deferred tax liability is recognized. To the extent that the Company has
suitable unrecognized deductible temporary differences, an offsetting recovery
of deferred income taxes would be recorded.
Restoration and environmental
obligations
The Company recognizes liabilities for statutory,
contractual, constructive or legal obligations associated with the retirement of
long-term assets, when those obligations result from the acquisition,
construction, development or normal operation of the assets. The net present
value of future restoration cost estimates arising from the decommissioning of
plant and other site preparation work is capitalized to the related asset along
with a corresponding increase in the restoration provision in the period
incurred. Discount rates using a pre-tax rate that reflects the time value of
money are used to calculate the net present value.
The Companys estimates of restoration
costs could change as a result of changes in regulatory requirements, discount
rates and assumptions regarding the amount and timing of the future
expenditures. These changes are recorded directly to exploration and evaluation
assets with corresponding entries to the related asset and the restoration
provision. The Companys estimates are reviewed annually for changes in
regulatory requirements, discount rates, effects of inflation and changes in
estimates.
Changes in the net present value,
excluding changes in the Companys estimates of restoration costs, are charged
to the Statement of Comprehensive Loss for the period. The net present value of
restoration costs arising from subsequent site damage that is incurred on an
ongoing basis during production are charged to the Statement of Comprehensive
Loss in the period incurred. These changes are recorded directly to the related
asset with a corresponding entry to the provision. The increase in the
restoration provision due to the passage of time is recognized as interest
expense.
11
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
The net present value of restoration
costs arising from subsequent site damage that is incurred on an ongoing basis
during production are charged to the Statement of Comprehensive Loss in the
period incurred.
The costs of restoration projects that
were included in the provision are recorded against the provision as incurred.
The costs to prevent and control environmental impacts at specific properties
are capitalized in accordance with the Companys accounting policy for
exploration and evaluation assets.
At present, the Company has not
identified any significant restoration and environmental obligations in its
operations. Accordingly, no provision has been made.
Equipment
Equipment
is stated at historical cost less accumulated amortization and accumulated
impairment losses.
Subsequent costs are included in the
asset's carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably. The
carrying amount of the replaced part, if applicable, is derecognized. All other
repairs and maintenance are charged to the Statement of Comprehensive Loss
during the financial period in which they are incurred.
Gains and losses on disposals are
determined by comparing the proceeds with the carrying amount and are recognized
in the Statement of Comprehensive Loss.
Amortization is calculated on a
declining balance method to write-off the cost of the equipment to its residual
value over its estimated useful life at the rate of 30% per year.
Comparative figures
Certain comparative figures have been reclassified to conform to the
current years presentation.
|
3. |
Accounting standards issued but not yet
effective |
New standard IFRS 9 Financial
Instruments
This new standard is a partial
replacement of IAS 39 Financial Instruments: Recognition and Measurement. IFRS
9 introduces new requirements for the classification and measurement of
financial assets, additional changes relating to financial liabilities, a new
general hedge accounting standard which will align hedge accounting more closely
with risk management. The new standard also requires a single impairment method
to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is
effective for annual periods beginning on or after January 1, 2018 with early
adoption permitted.
New standard IFRS 15 Revenue
from Contracts with Customers
This new standard contains a single
model that applies to contracts with customers and two approaches to recognizing
revenue: at a point in time or over time. The model features a contract-based
five-step analysis of transactions to determine whether, how much and when
revenue is recognized. New estimates and judgmental thresholds have been
introduced, which may affect the amount and/or timing of revenue recognized.
IFRS 15 is effective for annual periods beginning on or after January 1, 2017
with early adoption permitted.
The Company has not early adopted these
standards and is currently assessing the impact that these standards will have
on its financial statements.
Other accounting standards or
amendments to existing accounting standards that have been issued but have
future effective dates are either not applicable or are not expected to have a
significant impact on the Companys financial statements.
12
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
|
|
|
|
|
|
Accumulated |
|
|
Net book |
|
|
|
|
Cost |
|
|
amortization |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 31, 2012 |
$ |
8,710 |
|
$ |
(6,123 |
) |
$ |
2,587 |
|
|
Amortization expense |
|
- |
|
|
(776 |
) |
|
(776 |
)
|
|
Balance at January 31, 2013 |
|
8,710 |
|
|
(6,899 |
) |
|
1,811 |
|
|
Amortization expense |
|
- |
|
|
(543 |
) |
|
(543 |
)
|
|
Balance at January 31, 2014 |
|
8,710 |
|
|
(7,442 |
) |
|
1,268 |
|
|
Amortization expense |
|
- |
|
|
(380 |
) |
|
(380 |
)
|
|
Balance at January 31, 2015 |
$ |
8,710 |
|
$ |
(7,822 |
) |
$ |
888 |
|
|
5. |
Exploration and evaluation
assets |
The following table summarizes the
amounts expended on exploration and evaluation assets as at and for the years
ended January 31:
|
|
|
North-Central Ontario |
|
|
Totals for years ended January 31, |
|
|
|
|
Dotted |
|
|
Lampson |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lake mining |
|
|
Lake mining |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
|
|
claims |
|
|
claims |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property acquisition costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
$ |
24,607 |
|
$ |
49,533 |
|
$ |
74,140 |
|
$ |
61,640 |
|
$ |
36,294 |
|
|
Expenditures |
|
4,400 |
|
|
12,500 |
|
|
16,900 |
|
|
12,500 |
|
|
25,346 |
|
|
Impairment |
|
(24,607 |
) |
|
(2,820 |
) |
|
(27,427 |
) |
|
- |
|
|
- |
|
|
Balance,
ending |
|
4,400 |
|
|
59,213 |
|
|
63,613 |
|
|
74,140
|
|
|
61,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning
|
|
216,867 |
|
|
- |
|
|
216,867 |
|
|
206,934 |
|
|
176,585 |
|
|
Expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Field and camp costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
21,477 |
|
|
Geological consulting
and reporting |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,488 |
|
|
Geo-referencing |
|
- |
|
|
- |
|
|
- |
|
|
9,933 |
|
|
- |
|
|
Project administration |
|
934 |
|
|
- |
|
|
934 |
|
|
- |
|
|
3,606 |
|
|
Soil sample analysis |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,778 |
|
|
Impairment |
|
(4,073 |
) |
|
- |
|
|
(4,073 |
) |
|
- |
|
|
- |
|
|
|
|
(3,139 |
) |
|
- |
|
|
(3,139 |
) |
|
9,933
|
|
|
30,349
|
|
|
Balance, ending |
|
213,728 |
|
|
- |
|
|
213,728 |
|
|
216,867 |
|
|
206,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total balance, ending |
$ |
218,128 |
|
$ |
59,213 |
|
$ |
277,341 |
|
$ |
291,007 |
|
$ |
268,574 |
|
13
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
On April 20, 2010, a director of the
Company entered into an exclusive option agreement with local prospectors
(Optionors) on behalf of the Company in order to acquire 100% interest in two
additional claims adjacent to the Dotted Lake Property, known as the Lampson
Lake Property. Option payments totaling $60,000 were required as follows: $7,000
payment when the agreement was signed on April 20, 2010 (paid); $12,000 payment
on April 20, 2011 (paid); $16,000 payment on April 20, 2012 (paid); and a final
payment of $25,000 on April 20, 2013. However on March 1, 2013, the Company
agreed with the optionors to split the final payment into two equal amounts of
$12,500. The first was paid on April 20, 2013 and the second was paid on April
20, 2014.
These claims are subject to a 2% net
smelter royalty (NSR) in favour of the optionors on one claim and with respect
to the other, a combination of a 2% NSR in favour of the optionors and a 1% NSR
on any metals and/or a 1% NSR payable to Ontario Exploration Company (OEC) on
any precious metals recovered from the property. The Company has the right to
buy back 1% of the NSR in favour of the optionors for $1,000,000 and to buy back
three-quarters of 1% of the royalty vested with OEC over 10 years on an
increasing scale from $15,000 to $750,000.
In addition and primarily due to
continuing uncertainty in the market conditions of the junior mining exploration
sector, the Company started a claims reconfiguration plan on its Dotted Lake
Property and adjacent Lampson Lake Property during the year ended January 31,
2015 and completed it subsequent to the year end in May 2015. The plan was
designed to focus entirely on claims of merit and resulted in certain claims
being allowed to lapse, certain claims being partially re-staked, and certain
land positions were modified or increased. As a result of these changes, the
Company paid $4,400 during the year ended January 31, 2015 and $7,000 subsequent
to January 31, 2015 (Note 15). The Company recorded an impairment charge of
$31,500 representing the portion of lapsed claims.
|
6. |
Trade payables and accrued
liabilities |
Trade payables and accrued liabilities
included in the Statement of Financial Position are as follows:
|
|
|
As at January
31,
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
$ |
16,943 |
|
$ |
10,367 |
|
$ |
17,958 |
|
|
Accrued
liabilities |
|
10,365 |
|
|
15,240 |
|
|
20,925 |
|
|
|
$ |
27,308 |
|
$ |
25,607 |
|
$ |
38,883 |
|
This $39,676 debt to a former
professional advisor is unsecured and non-interest bearing is a current
liability but to date there has been no demand for repayment.
|
8. |
Related party payables and
transactions |
Related party payables included in the
Statement of Financial Position are as follows:
|
|
|
As at January
31,
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
Payable to Company directors or companies controlled by its directors |
$ |
120,485 |
|
$ |
46,555 |
|
$ |
11,466 |
|
These amounts are non-interest bearing
and unsecured with no fixed term of repayment.
14
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
The Company had the following
transactions with its directors or companies controlled by its directors during
the years:
|
|
|
Years ended January 31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
Consulting services |
$ |
1,600 |
|
$ |
2,800 |
|
$ |
4,500 |
|
|
Management services |
|
60,000 |
|
|
60,000 |
|
|
60,000 |
|
|
Office rent |
|
30,000 |
|
|
30,000 |
|
|
30,000 |
|
|
Professional
services |
|
8,113
|
|
|
16,170 |
|
|
16,322 |
|
|
|
$ |
99,713 |
|
$ |
108,970 |
|
$ |
110,822 |
|
Key management personnel compensation:
|
|
|
Years ended January 31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
Management services |
$ |
60,000 |
|
$ |
60,000 |
|
$ |
60,000 |
|
|
Professional
services |
|
8,113
|
|
|
16,170 |
|
|
16,322 |
|
|
|
$ |
68,113 |
|
$ |
76,170 |
|
$ |
76,322 |
|
Authorized share capital
The Companys authorized share capital consisted of an unlimited
number of common shares without par value.
Issued share capital
As at January 31, 2015, there were 44,633,171 issued and fully paid
common shares outstanding (January 31, 2014 and 2013 44,633,171) of which
1,894,800 shares remained in escrow (January 31, 2014 and 2013 3,789,600),
subject to release following regulatory approval.
Private placements
No
shares were issued during the years ended January 31, 2015 and 2014.
During the year ended January 31, 2013,
the Company completed two private placements, one brokered and the other
non-brokered, of 4,068,000 units for combined gross proceeds of $1,017,000.
Share issuance costs of $174,206 were incurred in relation to the brokered
private placement.
Basic and diluted loss per
share
The calculation of basic and diluted loss per share for
year ended January 31, 2015 was based on the net loss attributable to common
shareholders of $186,548 (January 31, 2014 - $209,624; January 31, 2013 -
$239,258) and the weighted average number of common shares outstanding of
44,633,171 (January 31, 2014 44,633,171 and January 31, 2013 42,299,073).
The diluted loss per share will not include the effect of any share purchase
warrants outstanding in the future since the effect would be
anti-dilutive.
Stock options
The
Company has adopted an incentive stock option plan which provides that the Board
of Directors of the Company may from time to time, in its discretion and in
accordance with the TSX-V requirements, grant to directors, officers, employees
and technical consultants to the Company, non-transferable stock options to
purchase common shares, provided that the number of common shares reserved for
issuance in any twelve month period will not exceed 10% of the Companys issued
and outstanding common shares. Such options will be exercisable for a period of
up to 10 years from the date of grant at a price not less than the closing price
of the Companys shares on the last trading day before the grant of such options
less any discount, if applicable, but in any event not less than $0.10 per
share. In connection with the foregoing, the number of common shares reserved
for issuance to any one optionee insider in any twelve month period will not
exceed ten percent (10%) of the issued and outstanding common shares and the
number of common shares reserved for issuance to any one employee or consultant
will not exceed two percent (2%) of the issued and outstanding common shares.
Options may be exercised no later than 90 days following cessation of the
optionees position with the Company or 30 days following cessation of an
optionee conducting investor relations activities.
15
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
As at January 31, 2015, 2014 and 2013,
there were no stock options outstanding.
Share purchase warrants
Share purchase warrants outstanding are as follows:
|
|
|
|
|
|
|
|
|
Years ended January 31, |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
|
|
Number
of |
|
|
Exercise |
|
|
Number of |
|
|
Exercise |
|
|
Number of |
|
|
Exercise |
|
|
|
|
warrants |
|
|
price |
|
|
warrants |
|
|
price |
|
|
warrants |
|
|
price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning |
|
- |
|
|
- |
|
|
4,068,000 |
|
$ |
0.40 |
|
|
30,000,000 |
|
$ |
0.10 |
|
|
Warrants issued |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
4,068,000 |
|
|
0.40 |
|
|
Warrants expired |
|
- |
|
|
- |
|
|
(4,068,000 |
) |
|
0.40 |
|
|
(30,000,000 |
) |
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, ending |
|
- |
|
|
- |
|
|
- |
|
$ |
- |
|
|
4,068,000 |
|
$ |
0.40 |
|
|
10. |
Convertible debt reserve |
The convertible debt reserve records
the fair value of equity component until such time the debt is converted to
common shares, at which time the corresponding amount is transferred to share
capital.
|
11. |
Income tax recovery and deferred tax
assets |
A reconciliation of the expected income
tax recovery to the actual income tax recovery is as follows:
|
|
|
Years ended January 31, |
|
|
|
|
2015 |
|
2014 |
|
|
2013 |
|
|
Loss before income taxes |
$ |
186,548 |
|
$ |
209,624 |
|
$ |
239,258 |
|
|
Combined
statutory tax rate |
|
26.0% |
|
|
26.0% |
|
|
25.0% |
|
|
Expected income tax recovery at the
statutory tax rate |
|
(48,502 |
) |
|
(54,502 |
) |
|
(59,815 |
) |
|
Adjustments resulting from: |
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
1,158 |
|
|
- |
|
|
(43,549 |
) |
|
Impact of change in tax rates |
|
(21,784 |
) |
|
2,096 |
|
|
- |
|
|
Change in valuation allowance |
|
69,128 |
|
|
52,406 |
|
|
103,364 |
|
|
Income tax
recovery |
$ |
- |
|
$ |
-
|
|
$ |
- |
|
The Companys deferred income tax
assets are estimated as follows:
|
|
|
Years ended January 31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
Non-capital losses carried-forward |
$ |
535,023 |
|
$ |
468,048 |
|
$ |
406,934 |
|
|
Share issuance costs |
|
18,118 |
|
|
26,265 |
|
|
35,109 |
|
|
Equipment |
|
395 |
|
|
285 |
|
|
149 |
|
|
Resource
development and exploration costs |
|
60,190 |
|
|
50,000 |
|
|
50,000 |
|
|
Net potential deferred income tax asset |
|
613,726 |
|
|
544,598 |
|
|
492,192 |
|
|
Valuation
allowance |
|
(613,726 |
) |
|
(544,598 |
) |
|
(492,192 |
) |
|
Net deferred income tax asset |
$ |
- |
|
$ |
- |
|
$ |
- |
|
16
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
A valuation allowance has been used to
offset the net potential benefit related to the future tax assets due to the
uncertainty associated with the ultimate realization of the non-capital losses
and resources pool before expiry.
The tax pools relating to these
deductible temporary differences expire as follows:
|
|
|
Canadian non- |
|
|
Resources |
|
|
|
|
|
Share |
|
|
|
|
capital losses |
|
|
Pool |
|
|
Equipment |
|
|
issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
$ |
83,521 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
2026 |
|
132,052 |
|
|
- |
|
|
- |
|
|
- |
|
|
2027 |
|
175,837 |
|
|
- |
|
|
- |
|
|
- |
|
|
2028 |
|
152,040 |
|
|
- |
|
|
- |
|
|
- |
|
|
2029 |
|
182,808 |
|
|
- |
|
|
- |
|
|
- |
|
|
2030 |
|
105,295 |
|
|
- |
|
|
- |
|
|
- |
|
|
2031 |
|
243,513 |
|
|
- |
|
|
- |
|
|
- |
|
|
2032 |
|
278,811 |
|
|
- |
|
|
- |
|
|
- |
|
|
2033 |
|
273,858 |
|
|
- |
|
|
- |
|
|
- |
|
|
2034 |
|
240,001 |
|
|
- |
|
|
- |
|
|
- |
|
|
2035 |
|
190,044 |
|
|
|
|
|
|
|
|
|
|
|
No
expiry |
|
- |
|
|
508,841 |
|
|
2,407
|
|
|
69,683 |
|
|
|
$ |
2,057,780 |
|
$ |
508,841 |
|
$ |
2,407 |
|
$ |
69,683 |
|
|
12. |
Financial instruments and financial risk
management |
The Company is exposed in varying
degrees to financial instrument related risks. The Board of Directors approves
and monitors the risk management processes, inclusive of documented investment
policies, counterparty limits, and controlling and reporting structures. The
type of risk exposure and the way in which such exposure is managed is provided
as follows:
Credit risk
Credit
risk is the risk that one party to a financial instrument will fail to discharge
an obligation and cause the other party to incur a financial loss. The Companys
primary exposure to credit risk is on its cash held in bank accounts and its
credit and security deposit. The Companys cash and credit card deposit are
deposited in bank accounts held with one major bank in Canada so there is a
concentration of credit risk. This risk is managed by using a major bank that is
a high credit quality financial institution as determined by rating
agencies.
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 has a planning and
budgeting process in place to help determine the funds required to support the
Companys normal operating requirements on an on-going basis. The Company
ensures there are sufficient funds to meet short-term business requirements,
taking into account its current cash position and potential funding sources.
Historically, the Company's source of
funding has been either the issuance of equity securities for cash through
private placements or loans from Company directors and officers. The Companys
access to financing is always uncertain and there can be no assurance of
continued access to significant funding from these sources.
Foreign exchange
risk
Foreign currency risk is the risk that the fair values of future
cash flows of a financial instrument will fluctuate because they are denominated
in currencies that differ from the Companys functional currency. The Company
only operates in Canada and is therefore not exposed to foreign exchange risk
arising from transactions denominated in a foreign currency.
17
ROUGE RESOURCES LTD. |
Notes to the Financial Statements |
(Expressed in Canadian dollars) |
For the years
ended January 31, 2015, 2014 and 2013 |
Interest rate risk
Interest rate risk is the risk that the fair value of future cash
flows of a financial instrument will fluctuate because of changes in market
interest rates. The Companys exposure to interest rate risk relates to its
ability to earn interest income on cash balances at variable rates. Changes in
short term interest rates will not have a significant effect on the fair value
of the Companys cash account.
Classification of financial
instruments
Financial assets included in the Statements of Financial
Position are as follows:
|
|
|
As at January 31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
Loans and receivables: |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
271 |
|
$ |
96,466 |
|
$ |
301,845 |
|
|
Credit card security deposit |
|
6,900
|
|
|
6,900
|
|
|
6,900
|
|
|
|
$ |
7,171 |
|
$ |
103,366 |
|
$ |
308,745 |
|
Financial liabilities included in the
Statements of Financial Position are as follows:
|
|
|
As at January 31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|
Non-derivative financial liabilities: |
|
|
|
|
|
|
|
|
|
|
Trade payables |
$ |
16,943 |
|
$ |
10,367 |
|
$ |
17,958 |
|
|
Loan payable |
|
39,676 |
|
|
39,676 |
|
|
39,676 |
|
|
Related party payables |
|
120,485 |
|
|
46,555 |
|
|
11,466 |
|
|
|
$ |
177,104 |
|
$ |
96,598 |
|
$ |
69,100 |
|
Fair value
The fair
value of the Companys financial assets and liabilities approximate the carrying
amounts.
The Company's policy is to maintain a
sufficient capital base so as to maintain investor and creditor confidence,
safeguard the Companys ability to support its exploration and development
expenditures and to sustain future development of its business. The capital
structure of the Company consists of share and working capital. There were no
changes in the Company's approach to capital management during the year and the
Company is not subject to any restrictions on its capital.
|
14. |
Segmented information |
The Company operates in a single
reportable operating segment being the exploration and development of mineral
properties, currently all located in Canada.
The Company paid $7,000 subsequent to
the year end in order to complete its claims reconfiguration plan of the Dotted
Lake-Lampson Lake Property and thereby keep its new claims in good standing
until January, March and May 2017.
18
Exhibit 12.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Linda Smith of Rouge Resources Ltd., certify that:
1. I have reviewed this annual report on Form 20-F of
Rouge Resources Ltd. for the fiscal year ended January 31, 2015;
2. Based on my knowledge, this report does not contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The companys other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a) designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared;
b) designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles;
c) evaluated the effectiveness of
the registrant's disclosure controls and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any
change in the registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter (the registrants
fourth quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrants internal control
over financial reporting; and
5. The registrants other certifying officer and I have
disclosed, based on our most recent evaluation of internal controls over
financial reporting, to the companys auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies
and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and reporting financial
information; and
(b) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrants internal control over financial reporting.
Date: May 28, 2015 |
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ROUGE RESOURCES LTD. |
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/s/ Linda
Smith |
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Linda Smith, |
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President and Chief Executive Officer |
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Exhibit 12.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Ronald McGregor, of Rouge Resources Ltd., certify that:
1. I have reviewed this annual report on Form 20-F of
Rouge Resources Ltd. for the fiscal year ended January 31, 2015;
2. Based on my knowledge, this report does not contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The companys other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a) designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this
report is being prepared;
b) designed such internal control
over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles;
c) evaluated the effectiveness of
the registrant's disclosure controls and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any
change in the registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter (the registrants
fourth quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrants internal control
over financial reporting; and
5. The registrants other certifying officer and I have
disclosed, based on our most recent evaluation of internal controls over
financial reporting, to the companys auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies
and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
registrants ability to record, process, summarize and reporting financial
information; and
(b) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the registrants internal control over financial reporting.
Date: May 28, 2015 |
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ROUGE RESOURCES LTD. |
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/s/ Ronald
McGregor |
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Ronald McGregor (CPA, CA) |
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Chief Financial Officer and Director |
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Exhibit 13.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Rouge Resources Ltd. on
Form 20-F for the fiscal year ended January 31, 2015 as filed with the
Securities and Exchange Commission on the date hereof (the Report), the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to her knowledge:
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1. |
The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and |
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2. |
The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company. |
Date: May 28, 2015 |
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ROUGE RESOURCES LTD. |
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/s/ Linda
Smith |
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Linda Smith, |
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President and Chief Executive Officer. |
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Exhibit 13.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Rouge Resources Ltd. on
Form 20-F for the fiscal year ended January 31, 2015 as filed with the
Securities and Exchange Commission on the date hereof (the Report), the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
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1. |
The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and |
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2. |
The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company. |
Date: May 28, 2015 |
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ROUGE RESOURCES LTD. |
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/s/ Ronald
McGregor |
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Ronald McGregor (CPA, CA) |
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Chief Financial Officer and Director |
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EXHIBIT 14: THE AUDIT COMMITTEE'S CHARTER
Mandate
The primary function of the audit committee (the "Committee")
is to assist the Companys Board of Directors in fulfilling its financial
oversight responsibilities by reviewing the financial reports and other
financial information provided by the Company to regulatory authorities and
shareholders, the Companys systems of internal controls regarding finance and
accounting and the Companys auditing, accounting and financial reporting
processes. Consistent with this function, the Committee will encourage
continuous improvement of, and should foster adherence to, the Companys
policies, procedures and practices at all levels. The Committees primary duties
and responsibilities are to:
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serve as an independent and objective party to
monitor the Companys financial reporting and internal control system and
review the Companys financial statements; |
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review and appraise the performance of the
Companys external auditors; and |
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provide an open avenue of communication among
the Companys auditors, financial and senior management and the Board of
Directors. |
Composition
The Committee shall be comprised of a minimum three directors
as determined by the Board of Directors. If the Company ceases to be a venture
issuer (as that term is defined in Multilateral Instrument 52-110), then all of
the members of the Committee shall be free from any relationship that, in the
opinion of the Board of Directors, would interfere with the exercise of his or
her independent judgment as a member of the Committee.
If the Company ceases to be a venture issuer (as that term is
defined in Multilateral Instrument 52-110), then all members of the Committee
shall have accounting or related financial management expertise. All members of
the Committee that are not financially literate will work towards becoming
financially literate to obtain a working familiarity with basic finance and
accounting practices. For the purposes of the Company's Audit Committee Charter,
the definition of financially literate is the ability to read and understand a
set of financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
the issues that can presumably be expected to be raised by the Company's
financial statements.
The members of the Committee shall be elected by the Board of
Directors at its first meeting following the annual shareholders meeting.
Unless a Chair is elected by the full Board of Directors, the members of the
Committee may designate a Chair by a majority vote of the full Committee
membership.
Meetings
The Committee shall meet at least twice annually, or
more frequently as circumstances dictate. As part of its job to foster open
communication, the Committee will meet at least annually with the Chief
Financial Officer and the external auditors in separate sessions.
Responsibilities and Duties
To fulfill its responsibilities and duties, the Committee
shall:
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Documents/Reports Review |
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(a) |
review and update this Audit Committee Charter annually;
and |
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(b) |
review the Company's financial statements, MD&A and
any annual and interim earnings press releases before the Company publicly
discloses this information and any reports or other financial information
(including quarterly financial statements), which are submitted to any
governmental body, or to the public, including any certification, report,
opinion, or review rendered by the external auditors.
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(a) |
review annually, the performance of the external auditors
who shall be ultimately accountable to the Companys Board of Directors
and the Committee as representatives of the shareholders of the
Company; |
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(b) |
obtain annually, a formal written statement of external
auditors setting forth all relationships between the external auditors and
the Company, consistent with Independence Standards Board Standard
1; |
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(c) |
review and discuss with the external auditors any
disclosed relationships or services that may impact the objectivity and
independence of the external auditors; |
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(d) |
take, or recommend that the Companys full Board of
Directors take appropriate action to oversee the independence of the
external auditors, including the resolution of disagreements between
management and the external auditor regarding financial
reporting; |
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(e) |
recommend to the Companys Board of Directors the
selection and, where applicable, the replacement of the external auditors
nominated annually for shareholder approval; |
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(f) |
recommend to the Companys Board of Directors the
compensation to be paid to the external auditors; |
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(g) |
at each meeting, consult with the external auditors,
without the presence of management, about the quality of the Companys
accounting principles, internal controls and the completeness and accuracy
of the Company's financial statements; |
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(h) |
review and approve the Company's hiring policies
regarding partners, employees and former partners and employees of the
present and former external auditors of the Company; |
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(i) |
review with management and the external auditors the
audit plan for the year-end financial statements and intended template for
such statements; and |
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(j) |
review and pre-approve all audit and audit-related
services and the fees and other compensation related thereto, and any
non-audit services, provided by the Companys external auditors. The
pre-approval requirement is waived with respect to the provision of
non-audit services if: |
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the aggregate amount of all such non-audit services
provided to the Company constitutes not more than five percent of the
total amount of revenues paid by the Company to its external auditors
during the fiscal year in which the non- audit services are
provided, |
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(ii) |
such services were not recognized by the Company at the
time of the engagement to be non-audit services, and |
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(iii) |
such services are promptly brought to the attention of
the Committee by the Company and approved prior to the completion of the
audit by the Committee or by one or more members of the Committee who are
members of the Board of Directors to whom authority to grant such
approvals has been delegated by the Committee.
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Provided the pre-approval of the
non-audit services is presented to the Committee's first scheduled meeting
following such approval such authority may be delegated by the Committee to one
or more independent members of the Committee.
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3. |
Financial Reporting Processes |
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(a) |
in consultation with the external auditors, review with
management the integrity of the Company's financial reporting process,
both internal and external; |
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(b) |
consider the external auditors judgments about the
quality and appropriateness of the Companys accounting principles as
applied in its financial reporting; |
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(c) |
consider and approve, if appropriate, changes to the
Companys auditing and accounting principles and practices as suggested by
the external auditors and management; |
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(d) |
review significant judgments made by management in the
preparation of the financial statements and the view of the external
auditors as to appropriateness of such judgments; |
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(e) |
following completion of the annual audit, review
separately with management and the external auditors any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required
information; |
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(f) |
review any significant disagreement among management and
the external auditors in connection with the preparation of the financial
statements; |
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(g) |
review with the external auditors and management the
extent to which changes and improvements in financial or accounting
practices have been implemented; |
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(h) |
review any complaints or concerns about any questionable
accounting, internal accounting controls or auditing matters; |
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(i) |
review certification process; |
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(j) |
establish a procedure for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters; and |
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(k) |
establish a procedure for the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters. |
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(a) |
review any related-party transactions; |
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(b) |
engage independent counsel and other advisors as it
determines necessary to carry out its duties; and |
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(c) |
to set and pay compensation for any independent counsel
and other advisors employed by the Committee. |
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