JET METAL CORP.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED APRIL 30, 2015
(Expressed in Canadian Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of
Jet Metal Corp.
We have audited the accompanying consolidated financial statements of Jet Metal Corp., which comprise the consolidated statements of financial position as of April 30, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, cash flows, and changes in equity for the years ended April 30, 2015, 2014 and 2013, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards 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 consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Jet Metal Corp. as at April 30, 2015 and 2014 and its financial performance and its cash flows for the years ended April 30, 2015, 2014 and 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
“DAVIDSON & COMPANY LLP”
Vancouver, Canada
|
Chartered Professional Accountants
|
|
|
August 21, 2015
|
|
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com
JET METAL CORP.
|
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
(Expressed in Canadian Dollars)
|
|
APRIL 30, 2015
|
|
|
APRIL 30, 2014
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
2,350,202 |
|
|
$ |
78,541 |
|
Marketable securities (Note 4)
|
|
|
- |
|
|
|
55,159 |
|
Receivables
|
|
|
26,070 |
|
|
|
4,161 |
|
Prepaid expenses
|
|
|
32,258 |
|
|
|
34,470 |
|
|
|
|
2,408,530 |
|
|
|
172,331 |
|
|
|
|
|
|
|
|
|
|
Available-for-sale investment (Note 5)
|
|
|
200,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets (Note 7)
|
|
|
2,509,791 |
|
|
|
2,509,791 |
|
|
|
|
|
|
|
|
|
|
Deposit (Note 10)
|
|
|
100,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Property and equipment (Note 6)
|
|
|
75,588 |
|
|
|
91,016 |
|
|
|
|
|
|
|
|
|
|
Reclamation bonds (Note 7)
|
|
|
31,267 |
|
|
|
28,269 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,325,176 |
|
|
$ |
2,801,407 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Payables and accrued liabilities
|
|
$ |
203,055 |
|
|
$ |
256,201 |
|
Due to related parties (Note 10)
|
|
|
106,076 |
|
|
|
632,749 |
|
|
|
|
309,131 |
|
|
|
888,950 |
|
|
|
|
|
|
|
|
|
|
Due to related party (Note 10)
|
|
|
206,810 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Future reclamation provisions (Note 8)
|
|
|
20,807 |
|
|
|
19,267 |
|
|
|
|
536,748 |
|
|
|
908,217 |
|
Equity
|
|
|
|
|
|
|
|
|
Capital stock (Note 9)
|
|
|
90,663,999 |
|
|
|
87,411,032 |
|
Reserves
|
|
|
21,475,351 |
|
|
|
21,475,351 |
|
Deficit
|
|
|
(107,350,922 |
) |
|
|
(106,993,193 |
) |
|
|
|
4,788,428 |
|
|
|
1,893,190 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,325,176 |
|
|
$ |
2,801,407 |
|
Nature of operations and going concern (Note 1)
Subsequent event (Note 16)
Approved on August 21, 2015 on behalf of the Board of Directors:
“Ken Brophy”
|
Director
|
“Stewart Wallis”
|
Director
|
Ken Brophy
|
|
Stewart Wallis
|
|
The accompanying notes are an integral part of these consolidated financial statements.
JET METAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED APRIL 30,
(Expressed in Canadian Dollars)
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ITEMS
|
|
|
|
|
|
|
|
|
|
Audit and accounting
|
|
$ |
7,024 |
|
|
$ |
22,775 |
|
|
$ |
124,087 |
|
Consulting
|
|
|
3,415 |
|
|
|
- |
|
|
|
308,570 |
|
Depreciation (Note 6)
|
|
|
18,428 |
|
|
|
22,754 |
|
|
|
26,338 |
|
Director fees
|
|
|
- |
|
|
|
- |
|
|
|
39,467 |
|
Exploration and evaluation (Note 7)
|
|
|
21,481 |
|
|
|
34,225 |
|
|
|
2,835,066 |
|
Finance income
|
|
|
(17,599 |
) |
|
|
(314 |
) |
|
|
(22,158 |
) |
Foreign exchange loss (gain)
|
|
|
4,059 |
|
|
|
(1,097 |
) |
|
|
(465 |
) |
Impairment of exploration and evaluation asset (Note 7)
|
|
|
- |
|
|
|
3,160,618 |
|
|
|
6,043,241 |
|
Insurance
|
|
|
29,400 |
|
|
|
33,036 |
|
|
|
51,415 |
|
Interest (Note 8)
|
|
|
1,540 |
|
|
|
1,427 |
|
|
|
10,402 |
|
Investor relations
|
|
|
15,058 |
|
|
|
11,122 |
|
|
|
180,786 |
|
Legal
|
|
|
11,814 |
|
|
|
8,989 |
|
|
|
35,950 |
|
Management fees
|
|
|
- |
|
|
|
142,533 |
|
|
|
411,368 |
|
Office and administration
|
|
|
65,899 |
|
|
|
87,331 |
|
|
|
167,188 |
|
Project development costs
|
|
|
- |
|
|
|
- |
|
|
|
66,471 |
|
Rent
|
|
|
56,104 |
|
|
|
40,632 |
|
|
|
123,066 |
|
Share-based compensation (recovery) (Note 9)
|
|
|
- |
|
|
|
(45,250 |
) |
|
|
626,364 |
|
Transfer agent and filing fees
|
|
|
110,088 |
|
|
|
124,896 |
|
|
|
109,625 |
|
Travel
|
|
|
- |
|
|
|
252 |
|
|
|
48,547 |
|
Wages and salaries
|
|
|
213,310 |
|
|
|
252,999 |
|
|
|
705,024 |
|
|
|
|
(540,021 |
) |
|
|
(3,896,928 |
) |
|
|
(11,890,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on asset disposal (Note 6)
|
|
|
600 |
|
|
|
- |
|
|
|
(39,416 |
) |
Gain on forgiveness and settlement of related party debt (Note 10)
|
|
|
184,141 |
|
|
|
- |
|
|
|
- |
|
Impairment of reclamation bonds (Note 7)
|
|
|
- |
|
|
|
(41,852 |
) |
|
|
- |
|
Loss on marketable securities (Note 4)
|
|
|
(2,449 |
) |
|
|
(28,503 |
) |
|
|
(173,005 |
) |
Other income – flow through premium
|
|
|
- |
|
|
|
- |
|
|
|
428,712 |
|
|
|
|
182,292 |
|
|
|
(70,355 |
) |
|
|
216,291 |
|
Net loss and comprehensive loss for the year
|
|
$ |
(357,729 |
) |
|
$ |
(3,967,283 |
) |
|
$ |
(11,674,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share
|
|
$ |
(0.02 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.77 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common share outstanding
|
|
|
19,659,075 |
|
|
|
6,578,035 |
|
|
|
6,578,218 |
|
The accompanying notes are an integral part of these consolidated financial statements.
|
JET METAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30,
(Expressed in Canadian Dollars)
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
$ |
(357,729 |
) |
|
$ |
(3,967,283 |
) |
|
$ |
(11,674,061 |
) |
Items not affecting cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in future reclamation estimates
|
|
|
- |
|
|
|
(2,053 |
) |
|
|
- |
|
Depreciation
|
|
|
18,428 |
|
|
|
22,754 |
|
|
|
26,338 |
|
Forgiveness and settlement of related party debt
|
|
|
(184,141 |
) |
|
|
- |
|
|
|
- |
|
Impairment of exploration and evaluation assets
|
|
|
- |
|
|
|
3,160,618 |
|
|
|
6,043,241 |
|
Impairment of reclamation bonds
|
|
|
- |
|
|
|
41,852 |
|
|
|
- |
|
Interest
|
|
|
1,540 |
|
|
|
1,427 |
|
|
|
10,402 |
|
Loss (gain) on asset disposal
|
|
|
(600 |
) |
|
|
- |
|
|
|
39,416 |
|
Loss on marketable securities
|
|
|
2,449 |
|
|
|
28,503 |
|
|
|
173,005 |
|
Other income – flow through premium
|
|
|
- |
|
|
|
- |
|
|
|
(428,712 |
) |
Share-based compensation (recovery)
|
|
|
- |
|
|
|
(45,250 |
) |
|
|
626,364 |
|
Unrealized gain on foreign exchange
|
|
|
(2,998 |
) |
|
|
(5,669 |
) |
|
|
- |
|
Non-cash working capital item changes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(21,909 |
) |
|
|
16,669 |
|
|
|
80,431 |
|
Prepaid expenses
|
|
|
2,212 |
|
|
|
49,498 |
|
|
|
15,292 |
|
Payables and accrued liabilities
|
|
|
(53,146 |
) |
|
|
(68,697 |
) |
|
|
65,947 |
|
Due to related parties
|
|
|
190,604 |
|
|
|
264,915 |
|
|
|
188,185 |
|
Net cash used in operating activities
|
|
|
(405,290 |
) |
|
|
(502,716 |
) |
|
|
(4,834,152 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of available-for-sale investment
|
|
|
(200,000 |
) |
|
|
- |
|
|
|
- |
|
Acquisition of exploration and evaluation assets
|
|
|
- |
|
|
|
- |
|
|
|
(224,816 |
) |
Acquisition of property and equipment
|
|
|
(3,000 |
) |
|
|
- |
|
|
|
(45,554 |
) |
Proceeds from sale of marketable securities
|
|
|
52,710 |
|
|
|
2,075 |
|
|
|
- |
|
Proceeds from sale of property and equipment
|
|
|
600 |
|
|
|
- |
|
|
|
8,648 |
|
Reclamation costs incurred
|
|
|
- |
|
|
|
(17,268 |
) |
|
|
- |
|
Refund of reclamation bonds
|
|
|
- |
|
|
|
- |
|
|
|
292,507 |
|
Net cash from (used in) investing activities
|
|
|
(149,690 |
) |
|
|
(15,193 |
) |
|
|
30,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit
|
|
|
(100,000 |
) |
|
|
- |
|
|
|
- |
|
Proceeds from private placement
|
|
|
3,000,000 |
|
|
|
- |
|
|
|
- |
|
Repayment of related party term loan
|
|
|
(39,253 |
) |
|
|
- |
|
|
|
- |
|
Share issue costs
|
|
|
(34,106 |
) |
|
|
- |
|
|
|
(46,481 |
) |
Net cash from (used in) financing activities
|
|
|
2,826,641 |
|
|
|
- |
|
|
|
(46,481 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents during the year
|
|
|
2,271,661 |
|
|
|
(517,909 |
) |
|
|
(4,849,848 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of the year
|
|
|
78,541 |
|
|
|
596,450 |
|
|
|
5,446,298 |
|
Cash and cash equivalents, end of the year
|
|
$ |
2,350,202 |
|
|
$ |
78,541 |
|
|
$ |
596,450 |
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
127,202 |
|
|
$ |
55,541 |
|
|
$ |
556,070 |
|
Liquid short term investments
|
|
|
2,223,000 |
|
|
|
23,000 |
|
|
|
40,380 |
|
|
|
$ |
2,350,202 |
|
|
$ |
78,541 |
|
|
$ |
596,450 |
|
Cash (paid) received for
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
991 |
|
|
$ |
- |
|
|
$ |
- |
|
Taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Supplemental disclosures with respect to cash flows (Note 11)
The accompanying notes are an integral part of these consolidated financial statements.
JET METAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in Canadian Dollars)
|
|
Capital Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Reserves
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2012
|
|
|
6,578,218 |
|
|
$ |
87,457,513 |
|
|
$ |
20,894,237 |
|
|
$ |
(91,351,849 |
) |
|
$ |
16,999,901 |
|
Share issue costs - cash
|
|
|
- |
|
|
|
(46,481 |
) |
|
|
- |
|
|
|
- |
|
|
|
(46,481 |
) |
Share-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
626,364 |
|
|
|
- |
|
|
|
626,364 |
|
Loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(11,674,061 |
) |
|
|
(11,674,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2013
|
|
|
6,578,218 |
|
|
|
87,411,032 |
|
|
|
21,520,601 |
|
|
|
(103,025,910 |
) |
|
|
5,905,723 |
|
Common shares cancelled due to fractional rounding
|
|
|
(183 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Share-based compensation
(recovery)
|
|
|
- |
|
|
|
- |
|
|
|
(45,250 |
) |
|
|
- |
|
|
|
(45,250 |
) |
Loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,967,283 |
) |
|
|
(3,967,283 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2014
|
|
|
6,578,035 |
|
|
|
87,411,032 |
|
|
|
21,475,351 |
|
|
|
(106,993,193 |
) |
|
|
1,893,190 |
|
Private placement
|
|
|
20,000,000 |
|
|
|
3,000,000 |
|
|
|
- |
|
|
|
- |
|
|
|
3,000,000 |
|
Share issue costs - cash
|
|
|
- |
|
|
|
(34,106 |
) |
|
|
- |
|
|
|
- |
|
|
|
(34,106 |
) |
Common shares issued for debt
|
|
|
1,640,416 |
|
|
|
287,073 |
|
|
|
- |
|
|
|
- |
|
|
|
287,073 |
|
Loss for the year
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(357,729 |
) |
|
|
(357,729 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2015
|
|
|
28,218,451 |
|
|
$ |
90,663,999 |
|
|
$ |
21,475,351 |
|
|
$ |
(107,350,922 |
) |
|
$ |
4,788,428 |
|
The accompanying notes are an integral part of these consolidated financial statements.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN
Jet Metal Corp. (the "Company" or “Jet Metal”) is an exploration stage company whose common shares trade on the TSX Venture Exchange and the OTC Markets Group’s OTCQB Marketplace. The Company is in the business of acquiring, exploring and evaluating mineral resource properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. The Company is incorporated under the laws of British Columbia. All of the Company’s resource properties are currently located in North America. The address of the Company’s registered office is #1240 – 1140 West Pender Street, Vancouver, British Columbia, Canada V6E 4G1.
The Company is in the process of exploring and evaluating its exploration and evaluation assets and has not yet determined whether the properties contain mineral reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to complete the development of those mineral reserves and upon future profitable production.
The Company voluntarily delisted its common shares from the NYSE MKT and its common shares were transferred to and began trading July 1, 2013 on the OTC Markets Group’s OTCQB Marketplace. The Company also voluntarily delisted its common shares from the Toronto Stock Exchange and its common shares were transferred to and began trading January 20, 2014 on the TSX Venture Exchange.
During the year ended April 30, 2014, the Company consolidated its common shares on the basis of one post-consolidated share for every ten pre-consolidated common shares held (Note 9). All references to share and per share amounts have been retroactively restated to reflect this share consolidation.
These consolidated financial statements have been prepared using International Financial Reporting Standards (“IFRS”) on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. At present, the Company has no producing properties and consequently has no current operating income or cash flows. The continuing operations of the Company are dependent upon the Company’s ability to continue to raise adequate financing and to commence profitable operations in the future. The Company intends to finance its future requirements through a combination of debt and/or equity issuance. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms.
As at April 30, 2015, the Company had working capital of $2,099,399 (April 30, 2014 – working capital deficit of $716,619) and a deficit of $107,350,922 (April 30, 2014 – $106,993,193). Management has assessed that this working capital is sufficient for the Company to maintain its operations and activities for the upcoming fiscal year.
These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate. These adjustments could be material.
2. BASIS OF PRESENTATION
a) Significant accounting judgements and estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, shareholders’ equity, and the disclosure of contingent assets and liabilities, as at the date of the financial statements, and expenses for the years reported.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
2. BASIS OF PRESENTATION (continued)
a) Significant accounting judgements and estimates (continued)
Critical Judgements
The preparation of these consolidated financial statements requires management to make judgements regarding the going concern of the Company, as previously discussed in Note 1, as well as the determination of functional currency. The functional currency is the currency of the primary economic environment in which an entity operates, and has been determined for each entity within the Company. The functional currency for the Company and its subsidiaries has been determined to be the Canadian dollar.
Key Sources of Estimation Uncertainty
Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates and such differences could be significant.
Significant estimates made by management affecting the consolidated financial statements include:
Share-based Payments
Estimating fair value for granted stock options and compensatory warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option or warrant, volatility, dividend yield, and rate of forfeitures and making assumptions about them.
Deferred Tax Assets and Liabilities
The estimation of income taxes includes evaluating the recoverability of deferred tax assets and liabilities based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets and liabilities will not be realized. The ultimate realization of deferred tax assets and liabilities is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management’s assessment of the Company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets or liabilities, and deferred income tax provisions or recoveries could be affected.
Recoverability of Exploration and Evaluation Assets
The Company is in the process of exploring and evaluating its exploration and evaluation assets and has not yet determined whether the properties contain mineral reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to complete the development of those mineral reserves and upon future production or proceeds from the disposition thereof.
Useful Life of Property and Equipment
Property and equipment is depreciated over its estimated useful life. Estimated useful lives are determined based on current facts and past experience, and take into consideration the anticipated physical life of the asset, the potential for technological obsolescence, and regulations.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
2. BASIS OF PRESENTATION (continued)
a) Significant accounting judgements and estimates (continued)
Key Sources of Estimation Uncertainty (continued)
Future Reclamation Provision
The Company assesses its provision for reclamation related to its exploration and evaluation activities at each reporting period or when new material information becomes available. Accounting for reclamation obligations requires management to make estimates of the future costs that will be incurred to complete the reclamation to comply with existing laws and regulations. Actual future costs that will be incurred may differ from those amounts estimated as a result of changes to environmental laws and regulations, timing of future cash flows, changes to future costs, technical advances, and other factors. In addition, the actual work required may prove to be more extensive than estimated because of unexpected geological or other technical factors. The measurement of the present value of the future obligation is dependent on selection of suitable discount rate and the estimate of future cash outflows. Changes to either of these estimates may materially affect the present value calculation of the obligation.
b) Approval of the consolidated financial statements
The consolidated financial statements of the Company for the year ended April 30, 2015 were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on August 21, 2015.
c) Basis of presentation
These consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries, and have been prepared on a historical cost basis, except for certain financial instruments classified as fair value through profit or loss, and available-for-sale, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for certain cash flow information.
d) Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Boards (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).
e) Basis of consolidation
These consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries, Target Exploration and Mining Corp. (“Target”), Crosshair Energy USA, Inc. (“Crosshair USA”), Gemini Metals Corp. (“Gemini”) as well as The Bootheel Project LLC (“BHP LLC”) in which the Company has a 81% interest. A wholly owned subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. All intercompany transactions and balances have been eliminated on consolidation.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
2. BASIS OF PRESENTATION (continued)
e) Basis of consolidation (continued)
Details of the Company’s subsidiaries are as follows:
Name
|
Place of incorporation
|
Interest %
|
Principal activity
|
Target Exploration and Mining Corp.
|
British Columbia, Canada
|
100% ownership by the Company
|
Exploration and evaluation of mineral properties
|
Crosshair Energy USA, Inc.
|
Nevada, United States
|
100% ownership by Target
|
Exploration and evaluation of mineral properties
|
Bootheel Project LLC
|
Colorado, United States
|
81% ownership by Crosshair USA
|
Exploration and evaluation of mineral properties
|
Gemini Metals Corp.
|
British Columbia, Canada
|
100% ownership by the Company
|
In-active subsidiary
|
3. SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents include cash, demand deposits and highly liquid interest bearing investments that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
Financial Instruments
All financial instruments are initially recognized at fair value on the statement of financial position. The Company has classified each financial instrument into one of the following categories: (1) financial assets or liabilities at fair value through profit or loss (“FVTPL”), (2) loans and receivables, (3) financial assets available-for-sale, (4) financial assets held-to maturity, and (5) other financial liabilities. Subsequent measurement of financial instruments is based on their classification.
Financial assets and liabilities at FVTPL are subsequently measured at fair value with changes in those fair values recognized in net earnings. Financial assets “available-for-sale” are subsequently measured at fair value with changes in fair value recognized in other comprehensive income (loss), net of tax. If fair value is not reliably measurable, available-for-sale financial assets are measured at amortized cost.
Financial assets “held-to-maturity”, “loans and receivables”, and “other financial liabilities” are subsequently measured at amortized cost using the effective interest method. The Company’s financial assets and liabilities are recorded and measured as follows:
Asset or Liability
|
Category
|
Measurement
|
Cash and cash equivalent
|
FVTPL
|
Fair value
|
Marketable securities
|
FVTPL
|
Fair value
|
Receivables
|
Loans and receivables
|
Amortized cost
|
Available-for-sale investment
|
Available-for-sale
|
Amortized cost
|
Reclamation bonds
|
Held to maturity
|
Amortized cost
|
Payables and accrued liabilities
|
Other liabilities
|
Amortized cost
|
Due to related parties
|
Other liabilities
|
Amortized cost
|
The Company determines the fair value of financial instruments according to the following hierarchy based on the amount of observable inputs used to value the instrument.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace.
Level 3 – Valuations in this level are those with inputs for the asset or liability that are not based on observable market
data.
Cash and cash equivalents and marketable securities have been measured at fair value using Level 1 inputs.
Exploration and Evaluation Assets
Costs incurred before the Company has obtained the legal rights to explore an area are expensed. Costs to acquire exploration and evaluation assets are capitalized as incurred. Costs related to the exploration and evaluation of exploration and evaluation assets are expensed as incurred. The Company considers mineral rights to be assets and accordingly, the Company capitalizes certain costs related to the acquisition of mineral rights. The Company considers each exploration and evaluation asset to be a separate cash generating unit.
Any option payments received by the Company from third parties or tax credits refunded to the Company are credited to the capitalized cost of the exploration and evaluation asset or shown as an expense recovery depending on the nature of the activity generating the refund. If payments received exceed the capitalized cost of the exploration and evaluation asset, the excess is recognized as income in the year received. The amounts shown for exploration and evaluation assets do not necessarily represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof.
Future Reclamation Provisions
The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of reclamation of mineral interests (exploration and evaluation assets). The net present value of future rehabilitation cost estimates is capitalized to the related assets along with a corresponding increase in the reclamation 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 Company’s estimates of reclamation 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 the related assets with a corresponding entry to the reclamation provision. The Company’s 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 Company’s estimates of reclamation costs, are charged to profit or loss for the period.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Equipment
Equipment is carried at cost, less accumulated depreciation and accumulated impairment losses.
The cost of an item of equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Depreciation is provided at rates calculated to write off the cost of equipment, less its estimated residual value, using the declining balance method at the following rates per annum:
Exploration equipment 20%
Storage containers 10%
Impairment
At each financial position reporting date the carrying amounts of the Company’s long-lived assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use, which is the present value of future cash flows expected to be derived from the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period.
For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
Flow-Through Shares
Canadian income tax legislation permits an enterprise to issue securities referred to as flow-through shares, whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures. The Company accounts for flow-through shares whereby the premium, if any, paid for the flow-through shares in excess of the market value of the shares without flow-through features at the time of issue is initially recorded to other liability and then included in income at the same time the qualifying expenditures are made.
Loss Per Share
Basic loss per share is computed by dividing the loss for the period by the weighted average number of common shares outstanding during the period.
For diluted per share computations, assumptions are made regarding potential common shares outstanding during the period. The weighted average number of common shares is increased to include the number of additional common shares that would be outstanding if, at the beginning of the period, or at time of issuance, if later, all options and warrants are exercised. Proceeds from exercise are used to purchase the Company’s common shares at their average market price during the period, thereby reducing the weighted average number of common shares outstanding. If these computations prove to be anti-dilutive, diluted loss per share is the same as basic loss per share.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
Share-Based Payments
The Company grants stock options to buy common shares of the Company to directors, officers, employees and service providers. The Company recognizes share-based compensation expense based on the estimated fair value of the options. A fair value measurement is made for each vesting instalment within each option grant and is determined using the Black-Scholes option-pricing model. The fair value of the options is recognized over the vesting period of the options granted as both share-based compensation expense and reserves. This includes a forfeiture estimate, which is revised for actual forfeitures in subsequent periods. The reserves account is subsequently reduced if the options are exercised and the amount initially recorded is then credited to capital stock.
In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods or services received.
Income Taxes
Income tax on profit or loss for the year comprises of current and deferred tax. Current tax is the expected tax paid or payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax paid or payable in respect of previous years.
Deferred tax is recorded by providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in the period that includes the date of the enactment or substantive enactment of the change. Deferred tax assets and liabilities are presented separately except where there is a right of set-off within fiscal jurisdictions.
Foreign Currency Translation
The functional currency of the Company and its subsidiaries is the Canadian dollar. The reporting currency of the Company is the Canadian dollar. Transactions denominated in foreign currency are translated into Canadian dollars at the rate of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies have been translated into Canadian dollars at the rate of exchange in effect at the statement of financial position date, while non-monetary assets and liabilities are translated at historical rates. Revenue and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Any gains or losses resulting from translation have been included in the statement of operations and comprehensive loss.
New Accounting Pronouncements Adopted
The following accounting standard was adopted as of May 1, 2014 and did not have a material impact on the consolidated financial statements of the Company.
Amendments to IAS 32, Financial Instruments: Presentation, were effective for annual periods beginning on or after January 1, 2014 and relate to offsetting financial assets and financial liabilities.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Pronouncement
The following accounting pronouncement has been made, but is not yet effective for the Company as at April 30, 2015. The Company is currently evaluating the impact of the amended standards on its consolidated financial statements.
In November 2009 and October 2010, the IASB issued IFRS 9, Financial Instruments (“IFRS 9”), which represents the completion of the first part of a three-part project to replace IAS 39, Financial Instruments: Recognition and Measurement, with a new standard. Per the new standard, an entity choosing to measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity’s own credit risk in the other comprehensive income or loss section of the entity’s statement of comprehensive loss, rather than within profit or loss. Additionally, IFRS 9 includes revised guidance related to the derecognition of financial instruments. IFRS 9 applies to financial statements for annual periods beginning on or after January 1, 2018, with early adoption permitted.
4. MARKETABLE SECURITIES
|
|
Canadian Zinc Corp.
(TSE: CZN)
|
|
|
Ausroc Metals Ltd. (formerly AusAmerican Mining Ltd.)
(ASX: ARK)
|
|
|
Expedition Mining Inc. (CVE: EXU)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2013
|
|
$ |
2,695,052 |
|
|
$ |
97,024 |
|
|
$ |
1,000,000 |
|
|
$ |
3,792,076 |
|
Dispositions
|
|
|
(236,716 |
) |
|
|
- |
|
|
|
- |
|
|
|
(236,716 |
) |
Balance at April 30, 2014
|
|
|
2,458,336 |
|
|
|
97,024 |
|
|
|
1,000,000 |
|
|
|
3,555,360 |
|
Dispositions
|
|
|
(2,458,336 |
) |
|
|
- |
|
|
|
(1,000,000 |
) |
|
|
(3,458,336 |
) |
Balance at April 30, 2015
|
|
|
- |
|
|
|
97,024 |
|
|
|
- |
|
|
|
97,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2013
|
|
|
(2,677,405 |
) |
|
|
(84,490 |
) |
|
|
(944,444 |
) |
|
|
(3,706,339 |
) |
Adjustment for the year
|
|
|
240,895 |
|
|
|
(12,534 |
) |
|
|
(22,223 |
) |
|
|
206,138 |
|
Balance at April 30, 2014
|
|
|
(2,436,510 |
) |
|
|
(97,024 |
) |
|
|
(966,667 |
) |
|
|
(3,500,201 |
) |
Adjustment for the year
|
|
|
2,436,510 |
|
|
|
- |
|
|
|
966,667 |
|
|
|
3,403,177 |
|
Balance at April 30, 2015
|
|
|
- |
|
|
|
(97,024 |
) |
|
|
- |
|
|
|
(97,024 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April 30, 2014
|
|
$ |
21,826 |
|
|
$ |
- |
|
|
$ |
33,333 |
|
|
$ |
55,159 |
|
At April 30, 2015
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
During the year ended April 30, 2015, the Company sold 54,565 common shares of Canadian Zinc Corporation and 2,222,222 common shares of Expedition Mining Inc. for net proceeds of $21,543 and $31,167, respectively.
During the year ended April 30, 2014, the Company exchanged 321,940 common shares of Messina Minerals Inc. for 54,565 common shares of Canadian Zinc Corporation as a result of the acquisition of Messina Minerals Inc. by Canadian Zinc Corporation. Prior to this exchange, the Company sold 31,000 common shares of Messina Minerals Inc. for net proceeds of $2,075.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
5. AVAILABLE-FOR-SALE INVESTMENT
On February 27, 2015, the Company purchased 1,000,000 common shares of Voleo, Inc. (“Voleo”) at a price of $0.20 per common share for an aggregate purchase price of $200,000. Voleo is developing mobile applications and software platforms to meet the investment expectations of millennial investors. It has built a functional prototype and designed a consumer version which is in development. Voleo expects to have its first product available for launch in 2016.
A director of Voleo is a significant shareholder of the Company.
6. PROPERTY AND EQUIPMENT
|
|
Exploration
Equipment
|
|
|
Storage
Containers
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2013 and 2014
|
|
$ |
298,586 |
|
|
$ |
- |
|
|
$ |
298,586 |
|
Additions
|
|
|
- |
|
|
|
3,000 |
|
|
|
3,000 |
|
Balance at April 30, 2015
|
|
|
298,586 |
|
|
|
3,000 |
|
|
|
301,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2013
|
|
|
184,816 |
|
|
|
- |
|
|
|
184,816 |
|
Depreciation
|
|
|
22,754 |
|
|
|
- |
|
|
|
22,754 |
|
Balance at April 30, 2014
|
|
|
207,570 |
|
|
|
- |
|
|
|
207,570 |
|
Depreciation
|
|
|
18,203 |
|
|
|
225 |
|
|
|
18,428 |
|
Balance at April 30, 2015
|
|
|
225,773 |
|
|
|
225 |
|
|
|
225,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April 30, 2014
|
|
$ |
91,016 |
|
|
$ |
- |
|
|
$ |
91,016 |
|
At April 30, 2015
|
|
$ |
72,813 |
|
|
$ |
2,775 |
|
|
$ |
75,588 |
|
During the year ended April 30, 2015, the Company sold property and equipment with a net book value of $Nil for proceeds of $600, resulting in a gain on disposal of $600.
7. EXPLORATION AND EVALUATION ASSETS
The following table illustrates acquisition costs:
|
|
Central Mineral Belt (“CMB”)
|
|
|
|
|
|
|
Moran Lake, Otter / Portage Lake
|
|
|
Silver Spruce
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2013
|
|
$ |
3,160,618 |
|
|
$ |
2,509,791 |
|
|
$ |
5,670,409 |
|
Impairment
|
|
|
(3,160,618 |
) |
|
|
- |
|
|
|
(3,160,618 |
) |
Balance at April 30, 2014 and 2015
|
|
$ |
- |
|
|
$ |
2,509,791 |
|
|
$ |
2,509,791 |
|
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
7. EXPLORATION AND EVALUATION ASSETS (continued)
The following table illustrates the exploration and evaluation expenditures incurred during the year ended April 30, 2015:
|
|
Bootheel Project
|
|
|
|
|
|
Administration
|
|
$ |
27,367 |
|
Reporting
|
|
|
1,925 |
|
Recovery – JV Partner
|
|
|
(7,811 |
) |
|
|
$ |
21,481 |
|
The following table illustrates the exploration and evaluation expenditures incurred during the year ended April 30, 2014:
|
|
CMB
|
|
|
Bootheel Project
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration (recovery)
|
|
$ |
560 |
|
|
$ |
34,673 |
|
|
$ |
(16 |
) |
|
$ |
35,217 |
|
Reclamation costs
|
|
|
- |
|
|
|
10,921 |
|
|
|
- |
|
|
|
10,921 |
|
Recovery – JV Partner
|
|
|
- |
|
|
|
(11,913 |
) |
|
|
- |
|
|
|
(11,913 |
) |
|
|
$ |
560 |
|
|
$ |
33,681 |
|
|
$ |
(16 |
) |
|
$ |
34,225 |
|
The following table illustrates the exploration and evaluation expenditures incurred during the year ended April 30, 2013:
|
|
Central Mineral Belt (“CMB”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moran Lake, Otter / Portage Lake
|
|
|
Silver Spruce
|
|
|
Bootheel Project
|
|
|
Golden Promise
|
|
|
Juniper Ridge
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration
|
|
$ |
10,434 |
|
|
$ |
- |
|
|
$ |
45,981 |
|
|
$ |
- |
|
|
$ |
44,902 |
|
|
$ |
101,317 |
|
Drilling & trenching
|
|
|
731,850 |
|
|
|
- |
|
|
|
13,433 |
|
|
|
- |
|
|
|
328,080 |
|
|
|
1,073,363 |
|
Geology
|
|
|
1,456,437 |
|
|
|
- |
|
|
|
35,816 |
|
|
|
24,524 |
|
|
|
339,683 |
|
|
|
1,856,460 |
|
Geophysics
|
|
|
11,591 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
44,918 |
|
|
|
56,509 |
|
Hydrology
|
|
|
- |
|
|
|
- |
|
|
|
271 |
|
|
|
- |
|
|
|
- |
|
|
|
271 |
|
Metallurgy
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,892 |
|
|
|
15,892 |
|
Permitting
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
37,395 |
|
|
|
37,395 |
|
Reclamation costs
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,741 |
|
|
|
- |
|
|
|
22,741 |
|
Recovery – JV Partner
|
|
|
- |
|
|
|
- |
|
|
|
(28,882 |
) |
|
|
- |
|
|
|
- |
|
|
|
(28,882 |
) |
JCEAP(1) grant received
|
|
|
(150,000 |
) |
|
|
(150,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(300,000 |
) |
|
|
$ |
2,060,312 |
|
|
$ |
(150,000 |
) |
|
$ |
66,619 |
|
|
$ |
47,265 |
|
|
$ |
810,870 |
|
|
$ |
2,835,066 |
|
(1) Junior Company Exploration Assistance Program
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
7. EXPLORATION AND EVALUATION ASSETS (continued)
Central Mineral Belt (“CMB”)
Moran Lake Property
Pursuant to an agreement dated October 14, 2004, the Company acquired an option to earn a 90% interest, subject to a 2% net smelter royalty (“NSR”) and a 10% carried interest to the vendor, in the Moran Lake Property, a uranium prospect located in Central Labrador, Newfoundland and Labrador, Canada. The agreement was amended on March 1, 2005 to include additional claims adjacent to the Moran Lake Property, known as Moran Heights.
The Company previously issued 40,000 common shares, made cash payments totaling $575,000 and spent more than the required minimum $3,000,000 on project expenditures. In connection with the option agreement to earn its 90% interest in the Moran Lake Property, the Company was involved in a dispute with the original vendor of the Moran Lake Property, Mr. Murphy, regarding the timing of advance royalty payments. On December 5, 2011, the Company settled the litigation. Under the terms of the settlement, the Company made a cash payment of $600,000 and issued 119,361 common shares. All litigation was discontinued and Mr. Murphy acknowledged that the Company’s 90% interest in the CMB Uranium/Vanadium Project vested and any requirement for a bankable feasibility study was irrevocably waived. The Company was required to make advance royalty payments of $200,000 per year commencing in November 2012. Accordingly, the Company paid an advance royalty payment of $200,000 in November 2012. Had the Company brought the Moran Lake Property into production, the advance royalty payments would have been deducted against any NSR owed to the original vendor of the property.
On November 1, 2013, the Company exercised its right to abandon those mineral claims that form the Moran Lake Property and terminated the related agreement to discharge the Company from any further obligations with respect to the Moran Lake Property. As a result, the Company recorded an impairment of $2,484,868 to operations during the year ended April 30, 2014.
Otter/Portage Lake Property
Pursuant to an agreement dated December 2, 2005, the Company acquired a 100% interest, subject to a 1.5% NSR, in the Otter and Portage Lake Properties located in the Central Mineral Belt of Labrador.
During the year ended April 30, 2014, the Company abandoned these properties and recorded an impairment of $675,750 to operations in relation to the Otter and Portage Lake Properties.
Silver Spruce Property Amalgamation
In July 2008, the Company entered into an agreement with Expedition Mining Inc. ("Expedition"), formerly known as Universal Uranium Ltd., and acquired all of Expedition's interest (60%) in its joint venture project with Silver Spruce Resources Inc. in Labrador. Currently the Company has a 100% interest in the property subject to a 2% net smelter royalty payable to Silver Spruce and a 2% net smelter royalty payable to Expedition Mining Inc. on 60% of any production from the Silver Spruce Property.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
7. EXPLORATION AND EVALUATION ASSETS (continued)
Bootheel Project
On March 31, 2009, the Company acquired an interest in the Bootheel Property in Wyoming, USA through the acquisition of Target. Under a series of agreements between UR-Energy USA Inc. (“URE”), several of its subsidiaries, Target and Crosshair USA, a wholly owned subsidiary of Target, the Company could earn a 75% interest in BHP LLC, subject to certain royalties, by completing expenditures totalling US$3,000,000 on or before June 7, 2011. The Company made these expenditures, and additional expenditures, which increased its holdings to 81%. The Company, through Target, has earned an 81% interest in BHP LLC, representing an 81% interest in the underlying Bootheel Property.
Under agreements dated February 5, 2008 between MJ Ranches Inc. and Crosshair USA as manager, BHP LLC leased MJ Ranches Inc.’s 75% ownership of certain minerals on fee land that adjoins the Bootheel Property. The initial term of the agreement was for five years with provision for two renewals. Payment for the initial five year term was US$252,651 paid in advance, increased for inflation for the renewal periods. The acquired mineral rights were subject to a sliding scale royalty tied to the sales price of uranium. The “Uranium Lease and Surface and Damage Agreement” and “Surface Impact Agreement” expired in February 2013. On June 7, 2013, the Company announced that BHP LLC has been unable to reach an agreement with MJ Ranches Inc. on terms which more accurately reflect current market conditions. Certain portions of the mineral resources included in the Technical Report issued by the Company, dated October 27, 2012, are located on those lands which were subject to the mineral lease with MJ Ranches Inc. Accordingly, during the year ended April 30, 2013, the Company recorded an impairment of $3,727,724 to operations.
Golden Promise
Golden Promise Property
On April 29, 2009, the Company acquired a 60% interest in the Golden Promise Gold Project in Central Newfoundland, Canada from Paragon Minerals Corp. (“Paragon”). On May 31, 2013, the Company and Paragon terminated the Golden Promise Option and Joint Venture Agreement and as a result, the Company recorded an impairment of $1,401,128 to operations during the year ended April 30, 2013.
Southern Golden Promise (Victoria Lake)
The Company had earned a 62.02% interest in mineral claims located in the Botwood Basin area of Central Newfoundland known as Southern Golden Promise in consideration for issuing a total of 10,000 common shares and incurring a minimum of $1,750,000 exploration expenditures within specified deadlines.
During the year ended April 30, 2014, the Company abandoned the Southern Golden Promise property.
Juniper Ridge Uranium Property
On October 29, 2010, the Company signed a definitive agreement with Strathmore Resources Ltd., a wholly owned subsidiary of Strathmore Minerals Corp., to acquire the Juniper Ridge Uranium Property. On November 30, 2012, the Company announced that it terminated this agreement and as a result, $914,389 of the capitalized costs were written off to operations during the year ended April 30, 2013.
Reclamation Bonds
As at April 30, 2015, the Company had outstanding reclamation bonds for the Bootheel Property of US$25,800 (April 30, 2014 - US$25,800) registered with the Wyoming Department of Environmental Quality and State Office of Lands and Investment.
During the year ended April 30, 2014, the Company recorded an impairment of reclamation bonds in the amount of $41,852 due to collectability concerns in relation to properties that have been abandoned.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
8. FUTURE RECLAMATION PROVISIONS
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$ |
19,267 |
|
|
$ |
37,161 |
|
Change in estimates1
|
|
|
- |
|
|
|
(2,053 |
) |
Interest
|
|
|
1,540 |
|
|
|
1,427 |
|
Reclamation expenses incurred
|
|
|
- |
|
|
|
(17,268 |
) |
Ending balance
|
|
$ |
20,807 |
|
|
$ |
19,267 |
|
1 The Company revised its prior estimates based on new information regarding potential future reclamation costs, and the estimated dates of abandonment of the interests in exploration and evaluation assets.
As of April 30, 2015 and 2014, the balance of future reclamation provisions relates to the Moran Lake Property which the Company abandoned during the year ended April 30, 2014 (Note 7). Although the Company no longer has title to the Moran Lake Property, it anticipates to incur cleanup costs in the future. The timing of the cleanup costs is uncertain.
The total undiscounted amount of estimated cash flows required to settle the obligations is approximately $20,000, which was adjusted for inflation at the rate of 2% and discounted at 8%.
9. CAPITAL STOCK AND RESERVES
Common share and share purchase warrant issuances
The Company issued the following common shares and share purchase warrants during the year ended April 30, 2015:
On December 9, 2014, the Company issued 612,500 common shares valued at $107,188 to settle amounts payable to MJM Consulting Corp. totaling $91,875 (Note 10). This resulted in a loss on settlement of debt in the amount of $15,313.
On December 9, 2014, the Company issued 1,027,916 common shares valued at $179,885 to settle amounts payable to King & Bay West Management Corp. totaling $154,187 (Note 10). This resulted in a loss on settlement of debt in the amount of $25,698.
On September 16, 2014, the Company closed a non-brokered private placement and issued 20,000,000 units at a price of $0.15 per unit for gross proceeds of $3,000,000. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant is exercisable to acquire one common share for a period of 5 years at an exercise price of $0.25. The Company paid cash commission to certain arm’s length parties in the amount of $6,450 and cash share issue costs in the amount of $27,656.
There were no common share or share purchase warrant issuances during the years ended April 30, 2014 or 2013.
During the year ended April 30, 2014, the Company consolidated its common shares on the basis of one post-consolidated share for every ten pre-consolidated common shares held (Note 1). All references to share and per share amounts have been retroactively restated to reflect this share consolidation.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
9. CAPITAL STOCK AND RESERVES (continued)
Share purchase warrants
The following is a summary of warrant activities during the years ended April 30, 2013, 2014 and 2015:
|
|
Number of Warrants
|
|
|
Weighted Average Exercise Price
|
|
|
|
|
|
|
|
|
Outstanding, April 30, 2012
|
|
|
2,242,246 |
|
|
$ |
8.71 |
|
Expired
|
|
|
(1,325,000 |
) |
|
$ |
10.04 |
|
Outstanding, April 30, 2013
|
|
|
917,246 |
|
|
$ |
6.79 |
|
Expired
|
|
|
(917,246 |
) |
|
$ |
6.79 |
|
Outstanding, April 30, 2014
|
|
|
- |
|
|
|
- |
|
Issued
|
|
|
20,000,000 |
|
|
$ |
0.25 |
|
Outstanding, April 30, 2015
|
|
|
20,000,000 |
|
|
$ |
0.25 |
|
As at April 30, 2015, the Company had the following share purchase warrants outstanding:
Outstanding
|
Exercise Price
|
Remaining Life (Years)
|
Expiry Date
|
|
|
|
|
20,000,000
|
$0.25
|
4.39
|
September 16, 2019
|
Stock options
The Company’s Stock Option Plan is a 10% rolling plan that allows a maximum 10% of the issued shares to be reserved for issuance under the plan. Options granted under the plan may not have a term exceeding 10 years and vesting provisions are at the discretion of the Board of Directors.
The following is a summary of stock option activities during the years ended April 30, 2013, 2014 and 2015:
|
|
Number of Stock Options
|
|
|
Weighted Average Exercise Price
|
|
|
|
|
|
|
|
|
Outstanding, April 30, 2012
|
|
|
660,012 |
|
|
$ |
11.03 |
|
Forfeited
|
|
|
(35,000 |
) |
|
$ |
7.39 |
|
Expired
|
|
|
(25,049 |
) |
|
$ |
30.42 |
|
Outstanding, April 30, 2013
|
|
|
599,963 |
|
|
$ |
10.43 |
|
Forfeited
|
|
|
(187,250 |
) |
|
$ |
6.75 |
|
Expired
|
|
|
(70,500 |
) |
|
$ |
12.55 |
|
Outstanding, April 30, 2014
|
|
|
342,213 |
|
|
$ |
12.01 |
|
Forfeited
|
|
|
(232,750 |
) |
|
$ |
12.70 |
|
Expired
|
|
|
(83,463 |
) |
|
$ |
10.10 |
|
Outstanding, April 30, 2015
|
|
|
26,000 |
|
|
$ |
11.95 |
|
At April 30, 2015, the following stock options were outstanding to directors, officers and employees:
Outstanding
|
|
Exercisable
|
|
Exercise Price
|
|
Remaining Life (Years)
|
|
Expiry Date
|
|
|
|
|
|
|
|
|
|
20,000
|
|
20,000
|
|
$14.40
|
|
0.64
|
|
December 21, 2015
|
6,000
|
|
6,000
|
|
$3.80
|
|
1.99
|
|
April 24, 2017
|
26,000
|
|
26,000
|
|
|
|
|
|
|
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
9. CAPITAL STOCK AND RESERVES (continued)
Share-based compensation
The Company recognizes compensation expense for all stock options granted using the fair value based method of accounting. For the year ended April 30, 2015, the Company recorded share-based compensation expense of $Nil (April 30, 2014 – recovery of $45,250; April 30, 2013 – expense of $626,364) for options forfeited or vesting during the period. No stock options were granted during the years ended April 30, 2014 or 2015.
10. RELATED PARTY TRANSACTIONS
Related parties and related party transactions impacting the consolidated financial statements not disclosed elsewhere in these consolidated financial statements are summarized below and include transactions with the following individuals or entities:
Key management personnel
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Company’s Board of Directors, corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, and Vice Presidents.
Remuneration attributed to key management personnel for the years ended April 30, 2015, 2014 and 2013 is summarized as follows:
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
$ |
- |
|
|
$ |
27,463 |
|
|
$ |
405,876 |
|
Short-term benefits(1)
|
|
|
50,751 |
|
|
|
207,723 |
|
|
|
933,802 |
|
|
|
$ |
50,751 |
|
|
$ |
235,186 |
|
|
$ |
1,339,678 |
|
(1)
|
include base salaries and directors’ fees, pursuant to contractual employment or consultancy arrangements, management and consulting fees
|
The Company had a consulting agreement with the former Executive Chairman of the Company that provided for a lump sum payment of $150,000 on termination by the Company or $450,000 in the event of a change of control of the Company. This agreement was terminated by the former Executive Chairman of the Company as of December 31, 2013 and as result, no termination payment was required to be paid by the Company.
Other related party transactions and balances
King & Bay West Management Corp. (“King & Bay West”): King & Bay West is an entity owned by the former Executive Chairman of the Company, who remains an insider of the Company, and provides administrative, management, geological, regulatory, tax, business development and corporate communications services to the Company.
Transactions entered into with related parties other than key management personnel during the years ended April 30, 2015, 2014 and 2013 include the following:
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
King & Bay West
|
|
$ |
299,470 |
|
|
$ |
303,832 |
|
|
$ |
1,234,170 |
|
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
10. RELATED PARTY TRANSACTIONS (continued)
Deposit as at April 30, 2015 consists of a security deposit in the amount of $100,000 (April 30, 2014 - $Nil) paid to King & Bay West in accordance with the management services agreement between King & Bay West and the Company (the “Management Services Agreement”). Upon termination of the Management Services Agreement, the security deposit will be applied to the final invoice rendered by King & Bay West to the Company.
Amounts due to related parties as at April 30, 2015 included the following:
·
|
King & Bay West, controlled by the former Executive Chairman and insider of the Company - $312,886 (April 30, 2014 - $540,874). The amount due to King & Bay West consists of current and non-current amounts payable of $106,076 (April 30, 2014 - $540,874) and $206,810 (April 30, 2014 - $Nil), respectively. The non-current amount payable to King & Bay West becomes due on September 16, 2016.
|
·
|
MJM Consulting Corp., controlled by the former Executive Chairman and insider of the Company - $Nil (April 30, 2014 - $91,875).
|
The amounts due to related parties are non-interest bearing.
Debt settlement
On September 16, 2014, the Company entered into a debt settlement agreement with King & Bay West and MJM Consulting Corp. (the “Debt Settlement Agreement”). Under the terms of the Debt Settlement Agreement, King & Bay West agreed to forgive $246,063, including Goods and Services Tax of $20,911, payable by the Company, restructure $246,063 payable by the Company into a non-interest bearing two year term loan, and convert $154,187 payable by the Company into 1,027,916 fully paid and non-assessable common shares of the Company. These common shares were valued at $179,885 and resulted in a loss on settlement of debt in the amount of $25,698. In addition, MJM Consulting Corp. agreed to convert $91,875 payable by the Company into 612,500 fully paid and non-assessable common shares of the Company. These common shares were valued at $107,188 and resulted in a loss on settlement of debt in the amount of $15,313. The common shares were issued on December 9, 2014 (Notes 9 and 11).
During the year ended April 30, 2015, the Company applied payments in the amount of $39,253 (April 30, 2014 - $Nil) to the non-interest bearing two year term loan due to King & Bay West.
11. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
The Company had the following significant non-cash transactions affecting cash flows from investing or financing during the year ended April 30, 2015:
·
|
On December 9, 2014, the Company issued 612,500 common shares valued at $107,188 to settle amounts payable to MJM Consulting Corp. totaling $91,875 (Notes 9 and 10).
|
·
|
On December 9, 2014, the Company issued 1,027,916 common shares valued at $179,885 to settle amounts payable to King & Bay West totaling $154,187 (Notes 9 and 10).
|
·
|
On September 16, 2014, the Company realized a gain on forgiveness and settlement of related party debt in the amount of $184,141 pursuant to the Debt Settlement Agreement (Note 10).
|
There were no significant non-cash transactions affecting cash flows from investing or financing activities during the years ended April 30, 2014 or 2013.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
The following is a reconciliation of income taxes attributable to operations computed at the statutory tax rates to income tax recovery.
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
April 30,
2013
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
$ |
(357,729 |
) |
|
$ |
(3,967,283 |
) |
|
$ |
(11,674,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax recoverable at statutory rate
|
|
|
(93,000 |
) |
|
|
(1,002,000 |
) |
|
|
(2,919,000 |
) |
Permanent differences
|
|
|
(47,000 |
) |
|
|
(8,000 |
) |
|
|
82,000 |
|
Share issuance costs
|
|
|
(9,000 |
) |
|
|
- |
|
|
|
(12,000 |
) |
Impact of different subsidiary tax rates and other
|
|
|
49,000 |
|
|
|
(614,000 |
) |
|
|
(513,000 |
) |
Change in unrecognized deductible temporary differences
|
|
|
125,000 |
|
|
|
1,565,000 |
|
|
|
2,713,000 |
|
Losses expired
|
|
|
19,000 |
|
|
|
- |
|
|
|
- |
|
Impact on flow-through shares
|
|
|
- |
|
|
|
- |
|
|
|
649,000 |
|
Adjustment to prior years provision versus statutory tax rates
|
|
|
(44,000 |
) |
|
|
59,000 |
|
|
|
- |
|
Total income tax recovery
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
The significant components of the Company’s unrecognized temporary differences and tax losses are as follows:
|
|
April 30, 2015
|
|
|
Expiry Date Range
|
|
|
April 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
Temporary Differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets
|
|
$ |
44,447,000 |
|
|
No expiry date
|
|
|
$ |
44,272,000 |
|
Investment tax credit
|
|
|
1,151,000 |
|
|
|
2028 |
|
|
|
1,151,000 |
|
Equipment
|
|
|
579,000 |
|
|
No expiry date
|
|
|
|
513,000 |
|
Canadian eligible capital (CEC)
|
|
|
1,000 |
|
|
No expiry date
|
|
|
|
1,000 |
|
Share issue costs
|
|
|
137,000 |
|
|
|
2036 - 2039 |
|
|
|
396,000 |
|
Future reclamation provision
|
|
|
21,000 |
|
|
No expiry date
|
|
|
|
19,000 |
|
Marketable securities
|
|
|
97,000 |
|
|
No expiry date
|
|
|
|
3,500,000 |
|
Allowable capital losses
|
|
|
1,703,000 |
|
|
No expiry date
|
|
|
|
- |
|
Non-capital losses available for future period – Canada
|
|
|
22,444,000 |
|
|
|
2016 - 2035 |
|
|
|
22,576,000 |
|
Non-capital losses available for future period – United States
|
|
|
2,035,000 |
|
|
|
2028 - 2033 |
|
|
|
1,559,000 |
|
Tax attributes are subject to review and potential adjustment by tax authorities.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
13. SEGMENTED INFORMATION
The Company operates in one reportable operating segment, being the acquisition, exploration and evaluation of mineral properties in North America.
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|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$ |
2,509,791 |
|
|
$ |
2,509,791 |
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$ |
2,002 |
|
|
$ |
2,502 |
|
Canada
|
|
|
73,586 |
|
|
|
88,514 |
|
|
|
$ |
75,588 |
|
|
$ |
91,016 |
|
|
|
|
|
|
|
|
|
|
Reclamation bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$ |
31,267 |
|
|
$ |
28,269 |
|
14. CAPITAL MANAGEMENT
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and evaluation of its exploration and evaluation assets, acquire additional mineral property interests and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. In the management of capital, the Company includes its components of equity.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets.
In order to maximize ongoing development efforts, the Company does not pay out dividends. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable given the relative size of the Company.
The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the year.
15. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
The fair value of the Company’s receivables, payables and accrued liabilities, and amounts due to related parties approximate carrying value, due to their short-term nature. The Company’s cash and cash equivalents and marketable securities are measured at fair value under the fair value hierarchy based on level one quoted prices in active markets for identical assets or liabilities. The Company’s available-for-sale investment is measured at amortized cost on the basis that the common shares do not have a quoted market price in an active market and the fair value cannot be reliably measured. The Company’s other financial instruments, being reclamation bonds, are measured at amortized cost.
The Company’s financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest rate risk and price risk.
JET METAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2015
(Expressed in Canadian Dollars)
15. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.
The Company is subject to credit risk on its cash and cash equivalents and receivables. The Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions. The Company has no investments in asset-backed commercial paper. The Company’s receivables consist mainly of Goods and Services Tax receivable due from the Government of Canada. The Company does not believe it is exposed to significant credit risk
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company manages liquidity risk through its capital management as outlined in Note 14. As a result of financing and debt restructuring completed during the year ended April 30, 2015, management believes the Company has sufficient funds to support ongoing operating expenditures and meet its liabilities as they fall due.
Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, commodity and equity prices, and foreign exchange rates.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The risk that the Company will realize a loss as a result of a decline in the fair value of any short-term investments included in cash and cash equivalents is minimal because these investments generally have a fixed yield rate.
The Company is exposed to price risk with respect to commodity prices, particularly uranium, and equity prices, since the Company possesses investments in publicly traded securities. The Company closely monitors those prices to determine the appropriate course of action to be taken by the Company. However, there can be no assurance that the Company can exit these positions if required, resulting in proceeds approximating the carrying value of these securities.
The Company’s expenditures are predominantly in Canadian dollars, and any future equity raised is expected to be predominantly in Canadian dollars. As at April 30, 2015, the Company has accounts payable denominated in US dollars of US$57,081, cash of US$8,249 and reclamation bonds of US$25,800. A 10% change in the Canadian dollar versus the US dollar would give rise to a gain/loss of approximately $2,791.
16. SUBSEQUENT EVENT
The following reportable event occurred subsequent to the year ended April 30, 2015:
·
|
On May 15, 2015, 5,000 stock options with an exercise price of $3.80 were forfeited.
|
GENERAL
This Management Discussion & Analysis (“MD&A”) is intended to supplement and complement the consolidated financial statements and accompanying notes of Jet Metal Corp. (the “Company” or “Jet Metal”) for the year ended April 30, 2015. The information provided herein should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the year ended April 30, 2015.
All dollar figures presented are expressed in Canadian dollars unless otherwise noted. Financial statements and summary information derived therefrom are prepared in accordance with International Financial Reporting Standards (“IFRS”).
Management is responsible for the preparation and integrity of the financial statements and MD&A, including the maintenance of appropriate information systems, procedures and internal controls and to ensure that information used internally or disclosed externally, including the financial statements and MD&A, is complete and reliable. The Company’s Board of Directors follows recommended corporate governance guidelines for public companies to ensure transparency and accountability to shareholders. The Board’s audit committee meets with management quarterly to review the financial statements including the MD&A and to discuss other financial, operating and internal control matters.
The reader is encouraged to review the Company’s statutory filings on www.sedar.com.
FORWARD LOOKING STATEMENTS
Certain of the statements made herein may constitute “forward-looking statements” or contain “forward-looking information” within the meaning of applicable Canadian and United States securities laws. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein are forward-looking statements including, without limitation; statements about the potential for additional mineralization at the Company’s properties, the estimation of mineral resource estimates, estimates of future administrative costs, statements about the Company’s future development of its properties and statements contained in the “Outlook” section of this MD&A. 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 and uncertainties relating to foreign currency fluctuations; risks inherent in mineral exploration and development including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; the potential for unexpected costs and expenses and commodity price fluctuations including the price of uranium; uncertain political and economic environments; changes in laws or policies, foreign taxation, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties, including those described under Risk Factors Relating to the Company’s Business in the Company’s Annual Report on Form 20-F and in each MD&A.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Forward-looking information and forward-looking statements are, in addition, based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of commodities; that the Company can access financing, appropriate equipment and sufficient labour and that the political environment will continue to support the development and operation of mining projects. 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. Accordingly, readers are advised not to place undue reliance on forward-looking statements. The Company does not intend to update forward-looking statements or information, except as may be required by applicable law.
NATIONAL INSTRUMENT 43-101 COMPLIANCE
C. Stewart Wallis, P.Geo., a director of the Company and a Qualified Person as defined by National Instrument 43-101 (“NI 43-101”), has reviewed and approved the technical information contained in this MD&A. Further information on the Company’s mineral properties can be found in the following NI 43-101 Technical Reports which are available on SEDAR at www.sedar.com and the Company’s website:
·
|
CMB Uranium Project: The Technical Report titled “Technical Report on the Central Mineral Belt (CMB) Property, Labrador Canada”, dated April 16, 2015.
|
·
|
Bootheel Uranium Project: The Technical Report titled “Technical Report on the Bootheel Project for Jet Metal Corp. and The Bootheel Project LLC”, dated May 20, 2015.
|
DESCRIPTION OF BUSINESS AND OVERVIEW
The Company is a mineral exploration company engaged in acquiring, exploring and developing mineral properties. The Company is currently focused on maintaining its uranium properties in North America, as well as investigating other mineral opportunities and opportunities outside of the mineral resource sector. The Company does not have any producing mineral properties at this time.
The Company’s common shares trade on the TSX Venture Exchange (the “TSX-V”) under the symbol “JET” and on the OTC Markets Group’s OTCQB Marketplace (the “OTCQB”) under the symbol “JETMF”. The common shares of the Company were voluntarily delisted from the NYSE MKT Stock Exchange prior to market opening on July 1, 2013. On the same day, the Company’s common shares were listed and began trading on the OTC Markets Group’s OTCQB Marketplace. The listing of the Company’s common shares in Canada was transitioned from the Toronto Stock Exchange (“TSX”) to the TSX-V on January 20, 2014.
In September 2013, the Company changed its name from Crosshair Energy Corporation to Jet Metal Corp. and completed a consolidation of its common shares on the basis of one post-consolidated share for every ten pre-consolidated shares. All references to share and per share amounts have been restated to reflect this share consolidation.
The Company currently maintains exploration and evaluation properties in the province of Newfoundland and Labrador, Canada and the state of Wyoming, USA:
Ø
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Central Mineral Belt (“CMB”) Uranium Project in Labrador
|
Ø
|
Bootheel Uranium (“Bootheel”) Project with UR-Energy USA, Inc. in Wyoming
|
Central Mineral Belt (“CMB”) Project
The CMB Project currently consists of a total of 359 claims, located in central Labrador. These claims are subject to a 2% Net Smelter Return Royalty (“NSR”) payable to Silver Spruce Resources Inc. and also subject to a 2% NSR payable to Expedition Mining Inc. on 60% of any production from the property. The most prospective area within these claims is the Two Time Prospect, which contains an Indicated Mineral Resource estimate of 2.33 M pounds of U3O8 (1.82 M tonnes grading 0.058% U3O8) and an Inferred Mineral Resource estimate of 3.73 M pounds of U3O8 (3.16 M tonnes grading 0.053% U3O8). Further information on the CMB Project can be found in the NI 43-101 Technical Report dated April 8, 2015 which is available on SEDAR at www.sedar.com.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
During the year ended April 30 2015, the Company incurred acquisition costs of $Nil (2014 - $Nil) and exploration and evaluation expenses of $Nil (2014 - $560; 2013 - $1,910,312) related to the CMB Project. During the year ended April 30, 2014, the Company incurred only administrative costs as the Company abandoned various claims on the CMB Project. During the year ended April 30, 2013, the Company executed an exploration program on the CMB Project, incurring administrative costs of $10,434, drilling and trenching costs of $731,850, geology costs of $1,456,437 and geophysics costs of $11,591. These costs were offset by government grants received in the amount of $300,000 during the year ended April 30, 2013.
Due to the challenging economic environment, the Company does not plan to spend any additional funds on the remaining CMB Project claims until market conditions improve, with the exception of reclamation work which may be required.
Bootheel Uranium Project
The Bootheel properties are currently owned by the Bootheel Project LLC and consist of 81 Federal Mining claims and one State lease. The Company currently has an 81% interest in The Bootheel Project LLC, subject to certain royalties. The remaining 19% ownership of The Bootheel Project, LLC is held by UR-Energy USA Inc. (“URE”).
Project Summary
The Bootheel Project LLC acquired a database from Power Resources Inc. that includes reports, gamma logs, drill logs and other data which primarily cover the Federal mining claims but also include some historic data from the surrounding fee land.
These data, along with additional data acquired from Cameco Corporation, were compiled by the Company’s geological team and were combined with the results from over 50,000 feet of drilling completed by the Company at Bootheel during calendar year 2008. This compilation formed the basis for the Company’s 2011 drilling program which saw the completion of 76 bore holes, totaling 35,760 feet (10,900 metres).
A synthesis of all of these data enabled the Company to generate an Indicated Mineral Resource estimate of 1.12 million pounds of U3O8 (1.570M tons @0.036% eU3O8) and an Inferred Mineral Resource of 1.05 million pounds of U3O8 (1.315M tons @ 0.040% eU3O8) for the 81 Federal lode claims and single Wyoming State lease that currently comprise the Bootheel Property. Further details can be found in the NI 43-101 Technical Report dated May 20, 2015, available on SEDAR at www.sedar.com.
The continuing downward pressure on the uranium price, in addition to the overall poor state of the junior resource market, has led the Bootheel Project LLC to place the project on care and maintenance, allowing expenditures to remain at a minimum, while maintaining the integrity of the data and land package. To this end, during the year ended April 30, 2014, the Company released mineral claims that did not have any mineral resources identified on them or any significant prospectivity to contain such resources. This action reduced the total land package from 274 mineral claims and 2 state leases to the current level of 81 mineral claims and 1 state lease and allowed the Bootheel Project LLC to keep the most prospective ground in good standing. A reversal in the state of the uranium price specifically, as well as the junior resource market in general, may afford the Bootheel Project LLC the opportunity to further assess and evaluate its options for the future.
During the year ended April 30, 2015, the Company incurred acquisition costs of $Nil (2014 - $Nil) related to the Bootheel Uranium Project. During the year ended April 30, 2015, the Company continued to focus on maintaining the claims in good standing and incurred net costs of $21,481 (2014 - $33,681; 2013 - $66,619), including administrative costs of $27,367 (2014 - $34,673; 2013 - $45,981) for insurance and renewals of claims and leases, reporting costs of $1,925 (2014 - $Nil; 2013 - $Nil) related to updating technical reports, and reclamation costs of $Nil (2014 - $10,921; 2013 - $Nil). During the year ended April 30, 2013, the Company also incurred drilling and trenching of $13,433, geology of $35,816 and hydrology of $271 prior to the Bootheel Uranium Project being placed on care and maintenance.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
These exploration and evaluation expenses were partially offset by recoveries of $7,811 (2014 - $11,913; 2013 - $28,882) in relation to URE’s portion of exploration and evaluation expenditures incurred on the Bootheel Uranium Project. The decreased administrative costs incurred on the Bootheel Uranium Project is directly attributable to the land package reduction noted above.
OUTLOOK
The Company successfully completed equity financing for gross proceeds of $3 million on September 16, 2014 which will allow the Company to evaluate new opportunities in the mineral resource sector and in other sectors, as well as maintain its current mineral exploration properties, and meet general corporate and working capital requirements. In light of the current poor macroeconomic environment, the Company will continue to manage and closely monitor its discretionary costs and resources.
SELECTED ANNUAL INFORMATION
The following financial data are selected information for the Company for the three most recently completed financial years:
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
April 30, 2013
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Loss and comprehensive loss
|
|
|
(357,729 |
) |
|
|
(3,967,283 |
) |
|
|
(11,674,061 |
) |
Loss per share (basic and diluted)
|
|
|
(0.02 |
) |
|
|
(0.60 |
) |
|
|
(1.77 |
) |
Total assets
|
|
|
5,325,176 |
|
|
|
2,801,407 |
|
|
|
6,635,616 |
|
Net Loss
Net loss decreased significantly during the year ended April 30, 2015 compared to the two previous fiscal years as the Company attempted to maintain its level of expenditures at low levels to conserve cash. In addition, the Company incurred minimal exploration and evaluation expenses during the year ended April 30, 2015 which related to maintaining properties in good standing.
Net loss for the year ended April 30, 2014 in the amount of $3,967,283 includes an impairment loss for exploration and evaluation assets in the amount of $3,160,618 in relation to the CMB Moran Lake property. The increased net loss during the year ended April 30, 2014 is also attributable to increased overall corporate costs, as discussed further in “Review of Consolidated Financial Results”.
Net loss for the year ended April 30, 2013 in the amount of $11,674,061 includes an impairment loss for exploration and evaluation assets in the amount of $6,043,241 in relation to various abandoned properties. Prior to abandoning the properties at the end of the year, the Company had completed exploration programs on the CMB Uranium Project and the Juniper Ridge Property which commenced during fiscal 2012, attributing to a higher net loss compared to the years ended April 30, 2015 and 2014.
Total Assets
Total assets as at April 30, 2015 increased by $2,523,769 compared to total assets as at April 30, 2014 primarily as a result of the Company completing equity financing for net proceeds of $2,965,894 on September 16, 2014. The increase in cash and cash equivalents was partially offset by payment of current liabilities during the year ended April 30, 2015.
Total assets as at April 30, 2014 decreased by $3,834,209 compared to total assets as at April 30, 2013 due to exploration and evaluation impairment losses recognized in the amount of $3,160,618 and decreased cash and cash equivalents utilized to settle current liabilities.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
REVIEW OF CONSOLIDATED FINANCIAL RESULTS
Results of operations for the year ended April 30, 2015 compared to the year ended April 30, 2014:
For the year ended April 30, 2015, the Company reported a net loss of $357,729 or $0.02 per common share, compared to a net loss of $3,967,283 or $0.60 per common share for the previous year. The decrease in net loss of $3,609,554 is discussed in detail below.
Operating Items
Total operating items for the year ended April 30, 2015 totaled $540,021, representing a decrease of $3,896,928 compared to the prior year primarily as a result of an impairment of exploration and evaluation assets recorded during the year ended April 30, 2014. In addition, the Company experienced decreased overall activity during the year ended April 30, 2015.
The Company recorded audit and accounting fees of $7,024 for the year ended April 30, 2015 as a result of reversing professional fees amounting to $26,117 as previous invoices received by the Company were revised. This recovery of professional fees was offset by accruals for annual audit and tax preparation services. During the year ended April 30, 2014, the Company recorded audit and accounting fees of $22,775 relating to accruals for annual audit and tax preparation services.
Consulting expense of $3,415 (2014 - $Nil), management fees of $Nil (2014 - $142,533) and wages and salaries of $213,310 (2014 - $252,999) total $216,725 for the year ended April 30, 2015 (2014 - $395,532) which represents a total decrease of $178,807 compared to the prior year as a result of decreased Company activities and personnel providing services to the Company. During the year ended April 30, 2014, a consulting agreement between the Company and the former Chief Executive Officer and a consulting agreement between the Company and the former Executive Chairman were both terminated which also contributed to decreased personnel costs.
During the year ended April 30, 2015, the Company incurred exploration and evaluation expenses in the amount of $21,481 (2014 - $34,225), including $21,481 (2014 - $33,681) on the Bootheel Uranium Project, $Nil (2014 - $560) on the CMB Project and $Nil (2014 – recovery of $16) on other projects. The decrease in exploration and evaluation expense of $12,744 compared to the prior year is due to the Company pursuing fewer projects as well as the Bootheel Uranium Project land package being reduced. Details of exploration and evaluation activities are further discussed in “Description of Business and Overview”.
During the year ended April 30, 2014, the Company relinquished a number of mineral claims that had formed a portion of the Central Mineral Belt Project and recorded an impairment of exploration and evaluation assets in the amount of $3,160,618. No such impairment losses were recorded during the year ended April 30, 2015.
The Company earned finance income during the year ended April 30, 2015 in the amount of $17,599 (2014 - $314). The increase in finance income of $17,285 for the year ended April 30, 2015 is due the Company completing financing for gross proceeds of $3,000,000 on September 16, 2014 and investing excess cash on hand in short-term investments.
During the year ended April 30, 2015, the Company recorded a foreign exchange loss in the amount of $4,059 (2014 – gain of $1,097) in relation to transactions and balances denominated in US dollars and the effects of fluctuations in the US dollar relative to the Canadian dollar.
Insurance expense decreased from $33,036 for the year ended April 30, 2014 to $29,400 for the year ended April 30, 2015 as a result of the Company adjusting its insurance policy to reflect corporate changes such as property abandonments and the Company’s stock exchange listings as previously discussed.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Investor relations for the year ended April 30, 2015 increased to $15,058 from $11,122 incurred in the prior year. The increase in investor relations of $3,936 for the year ended April 30, 2015 was a result of business development initiatives undertaken during the year subsequent to completing equity financing. Investor relations expenses also include the cost of news releases, website maintenance and hosting, and printing.
During the year ended April 30, 2015, the Company incurred legal expenses of $11,814 compared to legal expenses of $8,989 during the prior year, an increase of $2,825. During the year ended April 30, 2015, the Company incurred legal costs in relation to US securities matters and procedures to list the Company’s warrants for trading. During the year ended April 30, 2014, the Company incurred legal costs in relation to the Company’s transition from the NYSE MKT to the OTC Markets Group’s OTCQB Marketplace.
Office and administration expenses for the year ended April 30, 2015 in the amount of $65,899 (2014 - $87,331), decreased by $21,432 compared to the prior year as a direct result of decreased overall Company activities.
Rent expense for the year ended April 30, 2015 amounted to $56,104 compared to $40,632 for the prior year. The increase in rent expense in the amount of $15,472 for the year ended April 30, 2015 is attributable to changes in the usage of shared office facilities.
During the year ended April 30, 2015, the Company recorded share-based compensation of $Nil as all outstanding stock options fully vested during the year ended April 30, 2014 and no stock options were issued during the current year. During the year ended April 30, 2014, the Company recorded a recovery of share-based compensation of $45,250 as a result of forfeitures of unvested stock options during the year. The recovery of share-based compensation expense had no effect on the Company’s cash flows.
Transfer agent and filing fees decreased to $110,088 for the year ended April 30, 2015 compared to $124,896 for the prior year, a decrease of $14,808. During the year ended April 30, 2014, the Company incurred increased costs as it transitioned from the NYSE MKT to the OTC Markets Group’s OTCQB Marketplace, changed its name and consolidated its common shares on a 10 for 1 basis.
Other Income (Expenses)
Other income for the year ended April 30, 2015 amounted to $182,292, compared to other expenses for the year ended April 30, 2014 of $70,355, as further detailed below.
The Company sold property and equipment with a net book value of $Nil for proceeds of $600, resulting in a gain on disposal of $600 for the year ended April 30, 2015.
During the year ended April 30, 2015, the Company realized a gain on forgiveness and settlement of debt in the amount of $184,141 as a result of a debt settlement agreement between King & Bay West Management Corp. (“King & Bay West”), MJM Consulting Corp. and the Company. The details of the debt settlement agreement are summarized in “Related Party Transactions”.
During the year ended April 30, 2015, the Company recorded a loss on marketable securities in the amount of $2,449 (2014 - $28,503) in relation to fair market value adjustments at year end.
During the year ended April 30, 2014, the Company recorded an impairment loss in the amount of $41,852 due to collectability concerns in relation to reclamation bonds for properties that have been abandoned.
Results of operations for the year ended April 30, 2014 compared to the year ended April 30, 2013:
For the year ended April 30, 2014, the Company reported a net loss of $3,967,283 or $0.60 per common share, compared to a net loss of $11,674,061 or $1.77 per common share for the year ended April 30, 2013.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Operating Items
Total operating items for the year ended April 30, 2014 were $3,896,928, representing a decrease of $7,993,424 compared to the year ended April 30, 2013 as a direct result of decreased overall Company activity. All administrative expenses for the year ended April 30, 2014 decreased compared to the previous year with the exception of transfer agent and filing fees and are discussed below.
Audit and accounting fees of $22,775 (2013 - $124,087) decreased for the year ended April 30, 2014 compared to the previous year due to the Company incurring additional fees in the prior period in relation to Sarbanes-Oxley (“SOX”) compliance and additional tax filings.
Consulting expense of $Nil (2013 - $308,570), management fees of $142,533 (2013 - $411,368) and wages and salaries of $252,999 (2013 - $705,024) total $395,532 for the year ended April 30, 2014 (2013 - $1,424,962) which represents a total decrease of $1,029,430 as a result of decreased Company activities and personnel providing services to the Company. During the year ended April 30, 2014, a consulting agreement between the Company and the former Chief Executive Officer and a consulting agreement between the Company and the former Executive Chairman were both terminated.
Director fees of $Nil (2013 - $39,467) decreased by $39,467 for the year ended April 30, 2014 compared to the year ended April 30, 2013 as a result of the Company cancelling its director compensation program in light of financial conditions faced by the Company.
During the year ended April 30, 2014, the Company spent a total of $34,225 (2013 - $2,835,066) on exploration and evaluation expenditures, including $560 (2013 - $1,910,312) on exploration of the CMB Project, $33,681 (2013 - $66,619) on the Bootheel Project, $Nil (2013 - $47,265) on the Golden Promise Project, recovered $392 (2013 - $810,870 expense) on the Juniper Ridge Project and $376 on other projects (2013 - $Nil). Exploration and evaluation expenses for the year ended April 30, 2014 primarily related to minimal administrative costs and recoveries to maintain claims and insurance policies on the Bootheel Project. In addition, the Company incurred reclamation costs to reclaim the land on which the Bootheel Project sits. The decrease in exploration and evaluation expense of $2,800,841 for the year ended April 30, 2014 compared to the previous year is due to the Company no longer pursuing the CMB, Golden Promise and Juniper Ridge projects as well as decreased activities on the Bootheel Project. Details of exploration and evaluation activities are further discussed in “Description of Business and Overview”.
During the year ended April 30, 2014, the Company recorded finance income of $314 compared to $22,158 in the previous year which relates to interest earned on excess cash on hand. The decrease in finance income is attributable to decreased cash and cash equivalents balance during the year ended April 30, 2014.
During the year ended April 30, 2014, the Company recorded an impairment of exploration and evaluation assets in the amount of $3,160,618 which relates to the CMB Project. During the year ended April 30, 2013, the Company recorded an impairment of exploration and evaluation assets in the amount of $6,043,241 relating to the Bootheel, Golden Promise and Juniper Ridge projects.
Insurance expense decreased from $51,415 for the year ended April 30, 2013 to $33,036 for the year ended April 30, 2014 as a result of the Company adjusting its insurance policy to reflect corporate changes such as property abandonments and the Company’s stock exchange listings as previously discussed.
Interest expense incurred during the year ended April 30, 2014 in the amount of $1,427 (2013 - $10,402) relates to non-cash accretion of the Company’s future reclamation provisions. The decrease in interest expense of $8,975 is a result of the balance of future reclamation provisions decreasing during the year ended April 30, 2014.
Investor relations expense of $11,122 (2013 - $180,786), legal costs of $8,989 (2013 - $35,950), office and administrative expenses of $87,331 (2013 - $167,188), project development costs of $Nil (2013 - $66,471), rent of $40,632 (2013 - $123,066) and travel expenses of $252 (2013 - $48,547) all decreased for the year ended April 30, 2014 compared to the previous year as a direct result of decreased overall Company activities.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
During the year ended April 30, 2014, the Company recorded a recovery of $45,250 related to share-based compensation as a result of forfeitures of unvested stock options during the year. During the year ended April 30, 2013, the Company recorded share-based compensation of $626,364 according to vesting schedules of certain grants issued in 2011 and 2012. This expense (recovery) had no effect on the Company’s cash flows.
Transfer agent and filing fees increased to $124,896 for the year ended April 30, 2014 compared to $109,625 for the year ended April 30, 2014 as a result of the Company voluntarily delisting its common shares from the NYSE MKT, transitioning from the TSX to the TSX Venture Exchange, changing its name and consolidating its common shares on a 10 for 1 basis during the year.
Other Income (Expenses)
Other expenses amounted to $70,355 for the year ended April 30, 2014 compared to other income of $216,291 for the year ended April 30, 2013.
During the year ended April 30, 2014, the Company recorded an impairment loss in the amount of $41,852 due to collectability concerns in relation to reclamation bonds for properties that have been abandoned. No such impairment loss was recorded during the previous year.
During the year ended April 30, 2014 the Company recorded an unrealized loss on marketable securities of $28,503 (2013 - $173,005) in relation to fair value adjustments for marketable securities the Company held.
During the year ended April 30, 2013, the Company recorded a flow through premium in the amount of $428,712 in relation to flow through shares issued in prior years and attributable to the qualified exploration expenditures incurred. The Company also recorded a loss on asset disposition of $39,416 during the year ended April 30, 2013. No such transactions occurred during the year ended April 30, 2014.
Working Capital
As at April 30, 2015, the Company had working capital of $2,099,399 compared to a working capital deficit of $716,619 as at April 30, 2014. The increase in working capital of $2,816,018 is explained by the Company completing financing for net proceeds of $2,965,894 and entering a debt settlement agreement with two related parties during the year ended April 30, 2015, as further discussed in “Capital Stock” and “Related Party Transactions”.
Refer to “Statement of Financial Position Information” for further details with respect to account balance changes for the year ended April 30, 2015.
Details of the Company’s plans with respect to its working capital are further discussed in “Outlook” and “Liquidity and Capital Resources”.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
SUMMARY OF QUARTERLY RESULTS
The following table summarizes the Company’s financial operations for the last eight quarters. For more detailed information, please refer to the consolidated financial statements.
Description
|
Q4
April 30, 2015
($)
|
Q3
January 31, 2015
($)
|
Q2
October 31, 2014
($)
|
Q1
July 31, 2014
($)
|
Total assets
Exploration and evaluation assets
Working capital (deficit)
Shareholders’ equity
Net income (loss)
Net income (loss) per share
Exploration and evaluation expenditures
|
5,325,176
2,509,791
2,099,399
4,788,428
(167,836)
(0.01)
5,727
|
5,483,797
2,509,791
2,419,670
4,915,253
(140,268)
(0.01)
7,953
|
5,575,424
2,509,791
2,312,585
4,809,459
6,689
0.00
3,695
|
2,772,281
2,509,791
(767,824)
1,836,876
(56,314)
(0.01)
4,106
|
Description
|
Q4
April 30, 2014
($)
|
Q3
January 31, 2014
($)
|
Q2
October 31, 2013
($)
|
Q1
July 31, 2013
($)
|
Total assets
Exploration and evaluation assets
Working capital (deficit)
Shareholders’ equity
Net loss
Loss per share
Exploration and evaluation expenditures
(recovery)
|
2,801,407
2,509,791
(716,619)
1,893,190
(110,365)
(0.02)
(13,639)
|
2,923,397
2,509,791
(633,068)
2,006,326
(159,468)
(0.02)
18,596
|
2,958,270
2,509,791
(482,034)
2,159,102
(3,404,522)
(0.52)
20,392
|
6,266,264
5,670,409
(255,927)
5,550,722
(292,928)
(0.04)
8,876
|
Historical quarterly results of operations and net loss per share data do not necessarily reflect any recurring expenditure patterns or predictable trends.
Net losses incurred in the quarters ended April 30, 2015, January 31, 2015, July 31, 2014, April 30, 2014, January 31, 2014 and July 31, 2013 reflect decreased overall Company activities as the Company attempted to maintain low levels of expenditures due to challenging market conditions.
The Company realized net income in the amount of $6,689 for the quarter ended October 31, 2014 primarily due to the Company recording a gain on forgiveness and settlement of debt in the amount of $184,141 as a result of entering into a debt settlement agreement with two related parties, as further discussed in “Related Party Transactions”. The gain on forgiveness of debt was mostly offset by general and administrative expenses for the three month period ended October 31, 2014.
The increased net loss reported for the quarter ended October 31, 2013 is explained by an impairment loss recorded with respect to the Company’s exploration and evaluation assets.
FOURTH QUARTER
Results of operations for the three month period ended April 30, 2015 compared to the three month period ended April 30, 2014:
For the three month period ended April 30, 2015, the Company incurred a net loss of $167,836 or $0.01 per common share, compared to a net loss of $110,365 or $0.02 per common share for the three month period ended April 30, 2014. The increase in net loss of $57,471 is discussed in detail below.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Operating Items
Total operating items for the three month period ended April 30, 2015 were $126,825 (2014 - $46,113), representing an increase of $80,712 compared to the same period of the prior year. The increase is primarily due to increased personnel costs and related administrative costs with respect to various corporate transactions and regulatory compliance.
Audit and accounting fees for the three month period ended April 30, 2015 increased by $1,499 compared to the same period of the prior year and relate to accruals for annual audit and tax preparation services.
During the three month period ended April 30, 2015, the Company incurred exploration and evaluation expenses on the Bootheel Uranium Project in the amount of $5,727 (2014 – recovery of $13,639). Exploration and evaluation expenses for the three month period ended April 30, 2015 consisted of claim maintenance, insurance and updates to technical reports. During the three month period ended April 30, 2014, the Company recorded a recovery of exploration and evaluation expenses in the amount of $13,639 as a result of reclassifying amounts paid for reclamation on the Bootheel Project as a decrease to future reclamation provisions. Details of exploration and evaluation activities are further discussed in “Description of Business and Overview”.
The Company earned finance income during the three month period ended April 30, 2015 in the amount of $6,982 (2014 - $275). The increase in finance income for the three month period ended April 30, 2015 is due the Company completing financing for gross proceeds of $3,000,000 in September 2014 and investing excess cash on hand in short-term investments.
During the three month period ended April 30, 2015, the Company recorded a foreign exchange gain in the amount of $1,867 (2014 – $309) in relation to transactions and balances denominated in US dollars and the effects of fluctuations in the US dollar relative to the Canadian dollar.
Insurance expense for the three month periods ended April 30, 2015 and 2014 amounted to $7,350 and related to premiums for directors’ and officers’ insurance.
During the three month period ended April 30, 2015, the Company incurred investor relation expenses in the amount of $5,603 (2014 - $858). The increase in investor relation expenses in the amount of $4,745 is attributable to business development initiatives during the period. Investor relation expenses also include the cost of news releases, website maintenance and hosting, and printing.
Office and administration expenses in the amount of $15,356 (2014 - $7,872) and rent expense in the amount of $12,918 (2014 - $2,120), increased by $7,484 and $10,798 respectively, which is attributable to both increased personnel costs as noted above and changes in the usage of shared office facilities. Rent expense consists of rent for the Vancouver office and secured storage space.
During the three month period ended April 30, 2015, the Company recorded share-based compensation of $Nil as all outstanding stock options fully vested during the year ended April 30, 2014 and no stock options were issued during the three month period ended April 30, 2015. During the three month period ended April 30, 2014, the Company recorded a recovery of share-based compensation of $2,771 as a result of forfeitures of unvested stock options during the period. The recovery of share-based compensation had no effect on the Company’s cash flows.
Transfer agent and filing fees increased slightly by $1,656 during the three month period ended April 30, 2015 compared to the same period of the prior year due to the costs associated with listing and maintaining the Company’s share purchase warrants issued in connection with the private placement which closed on September 16, 2014.
During the three month period ended April 30, 2015, the Company incurred wages and salaries of $65,667, representing an increase of $41,038 compared to the same period of the prior year as a result of various corporate transactions and regulatory compliance during the period.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Other Income
Other income for the three month period ended April 30, 2015 amounted to $41,011, compared to other income of $110,365 for the three month period ended April 30, 2014, as further detailed below.
During the three month period April 30, 2015, the Company recorded a gain on forgiveness and settlement of related party debt in the amount of $41,011 in relation to common shares issued for the settlement of related party debt. The details of the debt settlement are summarized in “Related Party Transactions”.
During the three month period April 30, 2014, the Company recorded an impairment loss in the amount of $41,852 due to collectability concerns in relation to reclamation bonds for properties that have been abandoned.
During the three month period ended April 30, 2014 the Company also recorded an unrealized loss on marketable securities of $22,400 in relation to fair value adjustments for marketable securities the Company held.
Results of operations for the three month period ended April 30, 2014 compared to the three month period ended April 30, 2013:
For the three month period ended April 30, 2014, the Company reported a net loss of $110,365 or $0.02 per common share, compared to a net loss of $5,267,909 or $0.80 per common share for the three month period ended April 30, 2013.
Operating Items
Operating items for the three month period ended April 30, 2014 were $46,113 compared to $5,216,975 for the three month period ended April 30, 2013, representing a decrease of $5,170,862 which is explained below.
Audit and accounting fees of $4,000 (2013 - $31,591) decreased for the three month period ended April 30, 2014 compared to the same period of the previous year due to the Company incurring additional fees in the prior period in relation to engaging the Company’s auditors to perform quarterly reviews of the consolidated interim financial statements.
Consulting expense of $Nil (2013 - $13,822), management fees of $Nil (2013 - $100,994) and wages and salaries of $24,629 (2013 - $107,897) total $24,629 for the three month period ended April 30, 2014 (2013 - $222,713) which represents a total decrease of $198,084 compared to the same period of the previous year as a result of decreased Company activities and personnel providing services to the Company. During the year ended April 30, 2014, a consulting agreement between the Company and the former Chief Executive Officer and a consulting agreement between the Company and the former Executive Chairman were both terminated.
During the three month period ended April 30, 2014, the Company recorded director fees of $Nil (2013 – recovery of $58,140) as a result of the Company cancelling its director compensation program in light of financial conditions faced by the Company. Previously accrued but unpaid director fees were reversed as of April 30, 2013 which explains the recovery of director fees for the three month period ended April 30, 2013.
During the three month period ended April 30, 2014, the Company recorded a recovery of exploration and evaluation expenses in the amount of $13,639 as a result of reclassifying amounts paid for reclamation on the Bootheel Project as a decrease to future reclamation provisions. During the three month period ended April 30, 2013, the Company recorded a recovery of exploration and evaluation expenses in the amount of $213,831 as a result of receiving Junior Company Exploration Assistance Program grants.
During the three month period April 30, 2014, the Company recorded finance income of $275 compared to $923 in the same period of the previous year which relates to interest earned on excess cash on hand. The decrease in finance income is attributable to the Company’s decreased cash and cash equivalents balance.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Interest expense incurred during the three month period ended April 30, 2014 in the amount of $356 (2013 - $2,600) relates to non-cash accretion of the Company’s future reclamation provisions. The decrease in interest expense of $2,244 is a result of the balance of future reclamation provisions decreasing during the three month period ended April 30, 2014.
Insurance of $7,350 (2013 - $11,250), investor relations expense of $858 (2013 - $7,663), office and administrative expenses of $7,872 (2013 - $9,417), rent of $2,120 (2013 - $24,556), transfer agent and filing fees of $9,992 (2013 - $15,161) and travel expenses of $Nil (2013 - $5,726) all decreased for the three month period ended April 30, 2014 compared to the same period of the previous year as a direct result of decreased Company activities.
The Company did not incur any project development costs during the three month period ended April 30, 2014 as the Company attempted to reduce costs and conserve cash during the period. Project development costs in the amount of $25,417 incurred during the same period of the previous year related to due diligence performed by the Company for prospective uranium properties in Argentina. The Company decided not to pursue the properties.
During the three month period ended April 30, 2014, the Company recorded a recovery of share-based compensation expense of $2,771 (2013 – expense of $24,317) as a result of forfeitures of unvested stock options and according to vesting schedules of certain stock option grants in 2011 and 2012. This item had no effect on the Company’s cash flows.
Other Income (Expenses)
As of April 30, 2014, the Company recorded an impairment loss in the amount of $41,852 due to collectability concerns in relation to reclamation bonds for properties that have been abandoned. No such impairment loss was recorded during the previous period.
During the three month period ended April 30, 2014 the Company recorded an unrealized loss on marketable securities of $22,400 (2013 - $51,399) in relation to fair value adjustments for marketable securities the Company holds.
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 2015, the Company had cash and cash equivalents of $2,350,202 (2014 - $78,541) and working capital of $2,099,399 (2014 – working capital deficit of $716,619). The increase in working capital is attributable to equity financing and debt restructuring completed during the year ended April 30, 2015, as detailed in “Capital Stock” and “Related Party Transactions”. Changes in current asset and current liabilities accounts are discussed in “Statement of Financial Position Information”.
At present the Company has no producing properties and consequently has no current operating income or cash flows. The Company intends to finance its future requirements through a combination of debt and/or equity issuance. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. See “Risk Factors”.
The Company estimates corporate and general costs to maintain the requirements of a listed company to be approximately $500,000 per year. Fixed costs to maintain the Company’s existing exploration and evaluation assets are estimated to be approximately $30,000 per year. Therefore, minimum working capital requirements are estimated at $530,000 per year. With the completion of equity financing for gross proceeds of $3 million and concurrent debt restructuring during the year ended April 30, 2015, the Company has sufficient funds to meet estimated annual corporate and general costs and property maintenance costs. The Company currently has no other material financial commitments, but may incur additional costs should the Company investigate or pursue a prospective mineral property.
The Company’s cash and cash equivalents are held in a Schedule 1 Canadian financial institution and its affiliated brokerage house in highly liquid accounts and interest bearing investments. No amounts have been or are invested in asset-backed commercial paper.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
To date, the Company’s operations, including its exploration and evaluation activities, have been almost entirely financed from equity financings. The Company will continue to identify financing opportunities in order to provide additional financial flexibility and to continue the development of its property portfolio, meet land claim expenditure requirements and other commitments. While the Company has been successful raising the necessary funds in the past, there can be no assurance it can do so in the future.
Operating Activities
Cash used in operating activities for the year ended April 30, 2015 amounted to $405,290, which consisted of the net loss for the year of $357,729 and adjusted for depreciation of property and equipment of $18,428, forgiveness and settlement of related party debt of $184,141, gain on asset disposals of $600, non-cash interest expense of $1,540, an unrealized gain on foreign exchange of $2,998 and a loss on marketable securities of $2,449. Net loss for the year was further adjusted to determine cash used in operating activities for changes in non-cash working capital items, including an increase in receivables in the amount of $21,909 for Goods and Services Tax input tax credits and interest receivable; a decrease in prepaid expenses of $2,212 in relation to amortization of prepaid expenses, net of additions for renewing directors’ and officers’ insurance, incurring annual regulatory listing fees and maintaining annual claims for the Bootheel Uranium Project; a decrease of payables and accrued liabilities of $53,146 due to payments to third parties; and an increase in amounts due to related parties of $190,604 attributable to services provided by King & Bay West.
Cash used in operating activities for the year ended April 30, 2014 amounted to $502,716, which consisted of the net loss for the year of $3,967,283 and adjusted for changes in future reclamation estimates of $2,053, depreciation of property and equipment of $22,754, impairment of the Central Mineral Belt Project at Moran Lake for a loss of $3,160,618, impairment of reclamation bonds of $41,852, non-cash interest expense of $1,427, share-based compensation recovery of $45,250, an unrealized gain on foreign exchange of $5,669 and an unrealized loss on marketable securities of $28,503. Net loss for the year was further adjusted to determine cash used in operating activities for changes in non-cash working capital items, including a decrease in receivables in the amount of $16,669 for Goods and Services Tax refunds received; a decrease in prepaid expenses of $49,498 in relation to amortization of prepaid expenses, net of additions for renewing directors’ and officers’ insurance, incurring annual regulatory listing fees and maintaining annual claims for the Bootheel Uranium Project; a decrease of payables and accrued liabilities of $68,697 due to payments to third parties; and an increase in amounts due to related parties of $264,915.
Cash used in operating activities for the year ended April 30, 2013 amounted to $4,834,152, which consisted of the net loss for the year of $11,674,061 and adjusted for depreciation of property and equipment of $26,338, impairment of exploration and evaluation assets of $6,043,241, interest expense of $10,402, loss on disposal of equipment of $39,416, a flow-through share premium of $428,712, share-based compensation of $626,364, and an unrealized loss on marketable securities of $173,005. Net loss for the year was further adjusted to determine cash used in operating activities for changes in non-cash working capital items, including a decrease in receivables in the amount of $80,431 for Goods and Services Tax refunds received, a decrease in prepaid expenses of $15,292 for security deposits returned to the Company, an increase of payables and accrued liabilities of $65,947 and an increase in amounts due to related parties of $188,185.
Investing Activities
Cash used in investing activities for the year ended April 30, 2015 amounted to $149,690 and consisted of acquisition costs of $3,000 to purchase storage containers for the purpose of storing exploration equipment securely offsite and acquisition costs of $200,000 to purchase common shares of Voleo, Inc. (“Voleo”). These acquisition costs were offset by proceeds received from the sale of marketable securities in the amount of $52,710 and proceeds received from the sale of property and equipment of $600.
Cash used in investing activities for the year ended April 30, 2014 amounted to $15,193 and consisted of the costs to reclaim exploration and evaluation assets in the amount of $17,268 which were partially offset by proceeds received from the sale of marketable securities in the amount of $2,075.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Cash provided by investing activities for the year ended April 30, 2013 amounted to $30,785 and consisted of refunds of reclamation bonds previously paid of $292,507 and proceeds from the sale of equipment of $8,648 which were offset by the acquisition of exploration and evaluation assets and equipment of $224,816 and $45,554, respectively.
Financing Activities
Financing activities for the year ended April 30, 2015 consisted of net proceeds in the amount of $2,965,894 received by the Company upon closing equity financing for gross proceeds of $3,000,000, net of finders’ fees and share issue costs of $6,450 and $27,656, respectively. Refer to “Capital Stock” for additional details of the equity financing completed. The proceeds received were partially offset by a payment in the amount of $39,253 applied to a term loan payable and payment of a security deposit in the amount of $100,000 to King & Bay West.
There were no financing activities for the year ended April 30, 2014.
During the year ended April 30, 2013, the Company incurred share issue costs in the amount of $46,481 with respect to financing completed in the previous year.
STATEMENT OF FINANCIAL POSITION INFORMATION
|
|
As at
April 30, 2015
|
|
|
As at
April 30, 2014
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
2,350,202 |
|
|
$ |
78,541 |
|
Marketable securities
|
|
|
- |
|
|
|
55,159 |
|
Receivables
|
|
|
26,070 |
|
|
|
4,161 |
|
Available-for-sale investment
|
|
|
200,000 |
|
|
|
- |
|
Prepaid expenses
|
|
|
32,258 |
|
|
|
34,470 |
|
Deposit
|
|
|
100,000 |
|
|
|
- |
|
Exploration and evaluation assets
|
|
|
2,509,791 |
|
|
|
2,509,791 |
|
Property and equipment
|
|
|
75,588 |
|
|
|
91,016 |
|
Reclamation bonds
|
|
|
31,267 |
|
|
|
28,269 |
|
Total Assets
|
|
$ |
5,325,176 |
|
|
$ |
2,801,407 |
|
|
|
|
|
|
|
|
|
|
Payables and accrued liabilities
|
|
$ |
203,055 |
|
|
$ |
256,201 |
|
Due to related parties
|
|
|
312,886 |
|
|
|
632,749 |
|
Future reclamation provisions
|
|
|
20,807 |
|
|
|
19,267 |
|
Capital stock
|
|
|
90,663,999 |
|
|
|
87,411,032 |
|
Reserves
|
|
|
21,475,351 |
|
|
|
21,475,351 |
|
Deficit
|
|
|
(107,350,922 |
) |
|
|
(106,993,193 |
) |
Total Liabilities and Equity
|
|
$ |
5,325,176 |
|
|
$ |
2,801,407 |
|
Assets
Cash increased by $2,271,661 during the year ended April 30, 2015 which is primarily explained by the Company raising net proceeds of $2,965,894 from a private placement completed during the year. The net proceeds received were partially offset by payments for recurring administrative and regulatory expenses as well as for a security deposit for shared office facilities. The Company also acquired common shares in Voleo for an aggregate purchase price of $200,000. Transactions affecting cash and cash equivalents are further detailed in “Liquidity and Capital Resources”.
During the year ended April 30, 2015, marketable securities decreased by $55,159 which is explained by the sale of 54,565 common shares of Canadian Zinc Corporation and 2,222,222 common shares of Expedition Mining Inc. for net proceeds of $21,543 and $31,167, respectively. The Company also recorded an unrealized loss in the amount of $2,449 in relation to fair value adjustments.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Receivables increased by $21,909 during the year ended April 30, 2015 due to increased Goods and Services Tax input tax credits to be refunded to the Company and accrued interest income related to interest bearing short-term investments.
As at April 30, 2015, available-for-sale investment consists of 1,000,000 common shares of Voleo which have an aggregate purchase price of $200,000 and were purchased by the Company on February 27, 2015. Voleo is developing mobile applications and software platforms to meet the investment expectations of millennial investors. It has built a functional prototype and designed a consumer version which is in development.
As at April 30, 2015, prepaid expenses decreased by $2,212 compared to the balance as at April 30, 2014 due to amortization of prepaid expenses for the year, which was partially offset by the Company renewing directors’ and officers’ insurance, incurring annual regulatory listing fees and maintaining annual claims for the Bootheel Uranium Project.
The balance of the non-current deposit in the amount of $100,000 as at April 30, 2015 (April 30, 2014 - $Nil) consists of a security deposit in the amount of $100,000 in accordance with a management services agreement which is detailed in “Related Party Transactions”.
There was no change in the balance of exploration and evaluation assets during the year ended April 30, 2015.
Property and equipment decreased by $15,428 during the year ended April 30, 2015 due to the purchase of storage containers in the amount $3,000, net of depreciation expense in the amount of $18,428. The storage containers were purchased for the purpose of storing exploration equipment securely offsite.
During the year ended April 30, 2015, reclamation bonds increased by $2,998 as a result of an unrealized foreign exchange gain as the reclamation bonds are denominated in US dollars and registered with the Wyoming Department of Environmental Quality and State Office of Lands and Investment.
Liabilities
During the year ended April 30, 2015, payables and accrued liabilities decreased by $53,146 due to settling outstanding amounts due to various third parties. In addition, the Company recorded a recovery of audit and accounting fees during the year as a result of reversing professional fees amounting to $26,117 as previous invoices received by the Company were revised.
Amounts due to related parties decreased by $319,863 during the year ended April 30, 2015 primarily as a result of the Company entering into a debt settlement agreement with King & Bay West and MJM Consulting Corp. In accordance with the debt settlement agreement, King & Bay West forgave amounts owing of $246,063, including Goods and Services Tax of $20,911, which had been payable by the Company. In addition, the Company issued a total of 1,640,416 common shares to King & Bay West and MJM Consulting Corp. to settle aggregate amounts payable of $246,062 during the year ended April 30, 2015. The debt forgiveness and common share settlement were partially offset by further monthly shared office facilities and services provided by King & Bay West.
The non-current portion of amounts due to a related party as of April 30, 2015 consists of amounts payable to King & Bay West which were restructured into a non-interest bearing two year term loan in connection with the debt settlement agreement. During the year ended April 30, 2015, amounts due to King & Bay West of $246,063 were restructured into a term loan to which the Company applied payments of $39,253. For further details with respect to related party balances and transactions, refer to “Related Party Transactions”.
During the year ended April 30, 2015, future reclamation provisions increased by $1,540 due to non-cash accretion expense.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Equity
Capital stock increased by $3,252,967 during the year ended April 30, 2015 as a result of the Company completing equity financing for gross proceeds of $3,000,000, net of cash finders’ fees and share issue costs totaling $34,106 and issuing 1,640,416 common shares to settle amounts due to related parties which were valued at $287,073. The private placement and debt settlement agreement are discussed further in “Capital Stock” and “Related Party Transactions”, respectively.
Deficit increased by the net loss for the year ended April 30, 2015 in the amount of $357,729.
CAPITAL STOCK
The Company’s authorized capital consists of unlimited number of common shares without par value, and has securities outstanding as follows:
|
|
As At
|
|
Security Description
|
|
April 30, 2015
|
|
|
Date of Report
|
|
Common shares – issued and outstanding
|
|
|
28,218,451 |
|
|
|
28,218,451 |
|
Director, employee and contractor options – outstanding
|
|
|
26,000 |
|
|
|
21,000 |
|
Warrants to purchase shares
|
|
|
20,000,000 |
|
|
|
20,000,000 |
|
Common shares – fully diluted
|
|
|
48,244,451 |
|
|
|
48,239,451 |
|
Share and warrant issuances
The Company issued the following common shares and share purchase warrants during the year ended April 30, 2015:
On December 9, 2014, the Company issued 612,500 common shares valued at $107,188 to settle amounts payable to MJM Consulting Corp. totaling $91,875. This resulted in a loss on settlement of debt in the amount of $15,313.
On December 9, 2014, the Company issued 1,027,916 common shares valued at $179,885 to settle amounts payable to King & Bay West Management Corp. totaling $154,187. This resulted in a loss on settlement of debt in the amount of $25,698.
On September 16, 2014, the Company closed a non-brokered private placement and issued 20,000,000 units at a price of $0.15 per unit for gross proceeds of $3,000,000. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant is exercisable to acquire one common share for a period of 5 years at an exercise price of $0.25. The Company paid cash commission to certain arm’s length parties in the amount of $6,450 and cash share issue costs in the amount of $27,656.
There were no common share or share purchase warrant issuances during the years ended April 30, 2014 or 2013.
During the year ended April 30, 2014, the Company consolidated its common shares on the basis of one post-consolidated share for every ten pre-consolidated common shares held. All references to share and per share amounts have been retroactively restated to reflect this share consolidation.
RELATED PARTY TRANSACTIONS
Related parties and related party transactions impacting the accompanying consolidated financial statements are summarized below and include transactions with the following individuals or entities:
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Key management personnel
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Company’s Board of Directors, corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, and Vice Presidents.
Remuneration attributed to key management personnel for the years ended April 30, 2015 and 2014 are summarized as follows:
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
$ |
- |
|
|
$ |
27,463 |
|
|
$ |
405,876 |
|
Short-term benefits(1)
|
|
|
50,751 |
|
|
|
207,723 |
|
|
|
933,802 |
|
|
|
$ |
50,751 |
|
|
$ |
235,186 |
|
|
$ |
1,339,678 |
|
(1) include base salaries and directors’ fees, pursuant to contractual employment or consultancy arrangements, management and consulting fees
Other related parties
MJM Consulting Corp. is an entity that is owned by the former Executive Chairman, Mr. Mark J. Morabito. The Company had a consulting agreement with Mr. Morabito and MJM Consulting Corp. whereby MJM Consulting Corp. provided management services to the Company. This agreement was terminated by Mr. Morabito as of December 31, 2013 and as a result, no termination payment was required. The management fee was consistent with what a company of similar size and asset base would pay for such services.
King & Bay West Management Corp. is an entity that is owned by Mr. Mark J. Morabito, the former Executive Chairman, and employs or retains certain directors, officers and consultants of the Company. King & Bay West provides administrative, management, geological, regulatory, tax, business development and corporate communications services to the Company. These services are provided to the Company on an as-needed basis and are billed based on the cost or value of the services provided to the Company. The fees are consistent with what King & Bay West charges its clients for similar services. The amount set out in the table below represents amounts paid or accrued to King & Bay West for the services of King & Bay West personnel and for overhead and third party costs incurred by King & Bay West on behalf of the Company.
Transactions entered into with related parties other than key management personnel during the years ended April 30, 2015 and 2014 include the following:
|
|
April 30, 2015
|
|
|
April 30, 2014
|
|
|
April 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
King & Bay West
|
|
$ |
299,470 |
|
|
$ |
303,832 |
|
|
$ |
1,234,170 |
|
Deposit as at April 30, 2015 consists of a security deposit in the amount of $100,000 (April 30, 2014 - $Nil) paid to King & Bay West in accordance with the management services agreement between King & Bay West and the Company (the “Management Services Agreement”). Upon termination of the Management Services Agreement, the security deposit will be applied to the final invoice rendered by King & Bay West to the Company.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Amounts due to related parties as at April 30, 2015 included the following:
·
|
King & Bay West, controlled by Mr. Morabito - $312,886 (April 30, 2014 - $540,874). The amount due to King & Bay West consists of current and non-current amounts payable of $106,076 (April 30, 2014 - $540,874) and $206,810 (April 30, 2014 - $Nil), respectively. The non-current amount payable to King & Bay West becomes due on September 16, 2016.
|
·
|
MJM Consulting Corp., controlled by Mr. Morabito - $Nil (April 30, 2014 - $91,875).
|
The amounts due to related parties are non-interest bearing.
Debt settlement
On September 16, 2014, the Company entered into a debt settlement agreement with King & Bay West and MJM Consulting Corp. (the “Debt Settlement Agreement”). Under the terms of the Debt Settlement Agreement, King & Bay West agreed to forgive $246,063, including Goods and Services Tax of $20,911, payable by the Company, restructure $246,063 payable by the Company into a non-interest bearing two year term loan, and convert $154,187 payable by the Company into 1,027,916 fully paid and non-assessable common shares of the Company. These common shares were valued at $179,885 and resulted in a loss on settlement of debt in the amount of $25,698. In addition, MJM Consulting Corp. agreed to convert $91,875 payable by the Company into 612,500 fully paid and non-assessable common shares of the Company. These common shares were valued at $107,188 and resulted in a loss on settlement of debt in the amount of $15,313. The common shares were issued on December 9, 2014.
During the year ended April 30, 2015, the Company applied payments in the amount of $39,253 (April 30, 2014 - $Nil) to the non-interest bearing two year term loan due to King & Bay West.
Transactions with related parties were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed by the related parties.
GOING CONCERN
The Company is in the process of exploring and developing its exploration and evaluation properties and has not yet determined whether the properties contain mineral reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation properties and related deferred exploration costs are dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to complete the development of those mineral reserves and upon future profitable production.
The consolidated financial statements of the Company have been prepared using IFRS on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. At present, the Company has no producing properties and consequently has no current operating income or cash flows. The continuing operations of the Company are dependent upon the Company’s ability to continue to raise adequate financing and to commence profitable operations in the future. The Company intends to finance its future requirements through a combination of debt and/or equity issuance. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms.
As at April 30, 2015, the Company had working capital of $2,099,399 (April 30, 2014 – working capital deficit of $716,619) and an accumulated deficit of $107,350,922 (April 30, 2014 – $106,993,193). With the completion of equity financing for gross proceeds of $3 million and concurrent debt restructuring during the year ended April 30, 2015, the Company has sufficient funds to meet future estimated annual corporate and general costs and property maintenance costs, as detailed in “Liquidity and Capital Resources”.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
CRITICAL ACCOUNTING ESTIMATES
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, shareholders’ equity, and the disclosure of contingent assets and liabilities, as at the date of the financial statements, and expenses for the years reported. Actual results could differ from those estimates.
Critical Judgements
The preparation of the consolidated financial statements requires management to make judgements regarding the going concern of the Company, as previously discussed, as well as the determination of functional currency. The functional currency is the currency of the primary economic environment in which an entity operates, and has been determined for each entity within the Company. The functional currency for the Company and its subsidiaries has been determined to be the Canadian dollar.
Key Sources of Estimation Uncertainty
Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting years. Actual results could differ from those estimates and such differences could be significant.
Significant estimates made by management affecting the consolidated financial statements include:
Share-based Payments
Estimating fair value for granted stock options and compensatory warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option or warrant, volatility, dividend yield, and rate of forfeitures and making assumptions about them.
Deferred Tax Assets and Liabilities
The estimation of income taxes includes evaluating the recoverability of deferred tax assets and liabilities based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets and liabilities will not be realized. The ultimate realization of deferred tax assets and liabilities is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management’s assessment of the Company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets or liabilities, and deferred income tax provisions or recoveries could be affected.
Recoverability of Exploration and Evaluation Assets
The Company is in the process of exploring and evaluating its exploration and evaluation assets and has not yet determined whether the properties contain mineral reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to complete the development of those mineral reserves and upon future production or proceeds from the disposition thereof.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
Useful Life of Equipment
Equipment is depreciated over its estimated useful life. Estimated useful lives are determined based on current facts and past experience, and take into consideration the anticipated physical life of the asset, the potential for technological obsolescence, and regulations.
Future Reclamation Provision
The Company assesses its provision for reclamation related to its exploration and evaluation activities at each reporting period or when new material information becomes available. Accounting for reclamation obligations requires management to make estimates of the future costs that will be incurred to complete the reclamation to comply with existing laws and regulations. Actual future costs that will be incurred may differ from those amounts estimated as a result of changes to environmental laws and regulations, timing of future cash flows, changes to future costs, technical advances, and other factors. In addition, the actual work required may prove to be more extensive than estimated because of unexpected geological or other technical factors. The measurement of the present value of the future obligation is dependent on selection of suitable discount rate and the estimate of future cash outflows. Changes to either of these estimates may materially affect the present value calculation of the obligation.
ACCOUNTING POLICIES
The accounting policies followed by the Company are set out in Note 3 to the accompanying consolidated financial statements for the year ended April 30, 2015.
New Accounting Pronouncement Adopted
The following accounting standard was adopted as of May 1, 2014 and did not have a material impact on the consolidated financial statements of the Company.
Amendments to IAS 32, Financial Instruments: Presentation, were effective for annual periods beginning on or after January 1, 2014 and relate to offsetting financial assets and financial liabilities.
New Accounting Pronouncement
The following accounting pronouncement has been made, but is not yet effective for the Company as at April 30, 2015. The Company is currently evaluating the impact of the amended standards on its consolidated financial statements.
In November 2009 and October 2010, the IASB issued IFRS 9, Financial Instruments (“IFRS 9”), which represents the completion of the first part of a three-part project to replace IAS 39, Financial Instruments: Recognition and Measurement, with a new standard. Per the new standard, an entity choosing to measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity’s own credit risk in the other comprehensive income or loss section of the entity’s statement of comprehensive loss, rather than within profit or loss. Additionally, IFRS 9 includes revised guidance related to the derecognition of financial instruments. IFRS 9 applies to financial statements for annual periods beginning on or after January 1, 2018, with early adoption permitted.
RISK FACTORS
The exploration of mineral deposits involves significant risks and uncertainties, which even a combination of careful evaluation, experience and knowledge may not eliminate. Certain of the more prominent risk factors that may materially affect the Company’s future performance, in addition to those referred to above, are listed hereunder.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
The successful start of mining development and operations into a commercially viable mine cannot be assured.
There are numerous activities that need to be completed in order to successfully commence development and production, including, without limitation: completing a formal feasibility study that demonstrates an economic operation could exist on the Company’s mineral properties; optimizing the mine plan; recruiting and training personnel; having available funds to finance construction and development activities; avoiding potential increases in costs; negotiating contracts for the supply of power, shipping and for the sale of commodities; updating, renewing and obtaining, as required, all necessary permits, including, without limitation, environmental permits; and handling any other infrastructure issues. There is no certainty that the Company will be able to successfully complete these activities, since most of these activities require significant lead times, and the Company will be required to manage and advance these activities concurrently in order to begin production. A failure or delay in the completion of any one of these activities may delay production, possibly indefinitely, and will have a material adverse effect on the Company’s business, prospects, financial position, results of operations and cash flows.
As such, there can be no assurance that the Company will be able to complete development of its projects at all, on time or in accordance with any budgets due to, among other things, the delivery and installation of plant and equipment and cost overruns, or that the current personnel, systems, procedures and controls will be adequate to support operations. Failure to successfully complete these events as expected would have a material adverse effect on the Company’s business, prospects, financial position, results of operations and cash flows.
There is no assurance that the Company will ever achieve production or that the Company will ever be profitable if production is achieved.
The Company may experience difficulty attracting and retaining qualified management and technical personnel to meet its needs for growth.
The Company is dependent on the services of key executives and other highly skilled and experienced executives and personnel focused on managing the Company's interests and the advancement of projects and on identifying new opportunities for growth and funding. Due to the Company’s relatively small size, the loss of these persons or its inability to attract and retain additional highly skilled employees required for the development of the Company’s activities may have a material adverse effect on its business or future operations.
Titles and other rights to the Company’s projects cannot be guaranteed and may be subject to prior unregistered agreements, transfers or claims and other defects.
The Company cannot guarantee that title to its projects will not be challenged. The Company may not have, or may not be able to obtain, all necessary surface rights to develop its projects. Title insurance generally is not available for mineral properties, and its ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severely constrained. The Company’s projects may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. The Company has not conducted surveys of all of the claims in which it holds direct or indirect interests. A successful challenge to the precise area and location of these claims could result in the Company being unable to operate on all or part of its projects as permitted or being unable to enforce our rights with respect to all or part of the Company’s projects.
The Company needs to enter into contracts with external service and utility providers.
Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. In order to develop a mine, the Company will need to negotiate and conclude various agreements with external service and utility providers for shipping and power access, and these are important determinants that affect capital and operating costs. The inability to conclude any such agreements could have a material adverse effect on the Company’s financial position, results of operations and cash flows and render the development of a mine unviable.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
The Company's activities are subject to environmental laws and regulations that may increase the Company's costs of doing business and restrict the Company’s operations.
All of the Company’s exploration, potential development and production activities are subject to regulation by governmental agencies under various environmental laws, including with respect to air emissions, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species and reclamation of lands disturbed by mining operations. Compliance with environmental laws and regulations may require significant capital outlays on behalf of the Company and may cause material changes or delays in our intended activities. There can be no assurance that future changes in environmental regulations will not adversely affect the Company’s business, and it is possible that future changes in these laws or regulations could have a significant adverse impact on some portion of its business, causing it to re-evaluate those activities at that time. Failure to comply with applicable environmental laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulator or judicial authorities, causing operations to cease or to be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions.
The Company has a history of losses and expects to incur losses for the foreseeable future.
The Company has incurred losses since its inception and expects to incur losses for the foreseeable future. The Company expects to continue to incur losses unless and until such time as a project enters into commercial production and generates sufficient revenues to fund continuing operations. The development of the Company’s projects will require the commitment of substantial financial resources. The amount and timing of expenditures will depend on a number of factors, including the progress of ongoing exploration, evaluation and development, the results of consultant analysis and recommendations, the rate at which operating losses are incurred, the execution of any agreements with strategic partners and our acquisition of additional properties. Some of these factors are beyond the Company’s control. There can be no assurance that the Company will ever achieve profitability.
The Company’s securities are subject to price volatility.
In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies have experienced wide fluctuations that have not been necessarily related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that fluctuations in the Company’s share price will not occur. It may be anticipated that any quoted market for our common shares will be subject to market trends generally, notwithstanding any potential success in creating revenues, cash flows or earnings. The value of the Company’s common shares will be affected by such volatility.
FINANCIAL INSTRUMENTS
The Company’s financial assets and liabilities are recorded and measured as follows:
Asset or Liability
|
Category
|
Measurement
|
Cash and cash equivalent
|
FVTPL
|
Fair value
|
Marketable securities
|
FVTPL
|
Fair value
|
Receivables
|
Loans and receivables
|
Amortized cost
|
Available-for-sale investment
|
Available-for-sale
|
Amortized cost
|
Reclamation bonds
|
Held to maturity
|
Amortized cost
|
Payables and accrued liabilities
|
Other liabilities
|
Amortized cost
|
Due to related parties
|
Other liabilities
|
Amortized cost
|
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
The fair value of the Company’s receivables, payables and accrued liabilities, and due to related parties approximate carrying value, due to their short-term nature. The Company’s cash and cash equivalents and marketable securities are measured at fair value under the fair value hierarchy based on level one quoted prices in active markets for identical assets or liabilities. The Company’s available-for-sale investment is measured at cost on the basis that the common shares do not have a quoted market price in an active market and the fair value cannot be reliably measured. The Company’s other financial instruments, being reclamation bonds, are measured at amortized cost.
The Company’s financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest rate risk and price risk.
Credit risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.
The Company is subject to credit risk on its cash and cash equivalents, and receivables. The Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions. The Company has no investments in asset-backed commercial paper. The Company’s receivables consist mainly of Goods and Services Tax receivable due from the Government of Canada. The Company does not believe it is exposed to significant credit risk.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company manages liquidity risk through its capital management as outlined in Note 14 of the consolidated financial statements. As a result of financing and debt restructuring completed during the year ended April 30, 2015, management believes the Company has sufficient funds to support ongoing operating expenditures and meet its liabilities as they fall due.
Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, commodity and equity prices, and foreign exchange rates.
(a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The risk that the Company will realize a loss as a result of a decline in the fair value of any short-term investments included in cash and cash equivalents is minimal because these investments generally have a fixed yield rate.
(b) Price risk
The Company is exposed to price risk with respect to commodity prices, particularly uranium, and equity prices, since the Company possesses investments in publicly traded securities. The Company closely monitors those prices to determine the appropriate course of action to be taken by the Company. However, there can be no assurance that the Company can exit these positions if required, resulting in proceeds approximating the carrying value of these securities.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
(c) Currency risk
The Company’s expenditures are predominantly in Canadian dollars, and any future equity raised is expected to be predominantly in Canadian dollars. As at April 30, 2015, the Company has accounts payable denominated in US dollars of US$57,081, cash of US$8,249 and reclamation bonds of US$25,800. A 10% change in the Canadian dollar versus the US dollar would give rise to a gain/loss of approximately $2,791.
OFF BALANCE SHEET ARRANGEMENTS
The Company has not entered into any off balance sheet financing arrangements.
DISCLOSURE CONTROLS AND PROCEDURES
At the end of the period covered by this report, an evaluation of the effectiveness of the design and operations of our “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) of the United States Securities Exchange Act of 1934 (the “Exchanged Act”)) was carried out by our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer have concluded as of the end of the period covered by this report that the design and operation of our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.
Notwithstanding the foregoing, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that our disclosure controls and procedures will detect or uncover every situation involving the failure of persons within our company and our subsidiaries to disclose material information otherwise required to be set forth in our periodic reports. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objective of ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act is communicated to management to allow timely decisions regarding required disclosure.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed 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.
Management conducted an evaluation of the effectiveness of company level internal controls over financial reporting on a risk based approach using elements of the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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.
There were no changes in the Company’s internal controls over financial reporting during the year ended April 30, 2015 that have affected, or which are reasonably likely to materially affect, its internal control over financial reporting.
Management’s internal control report was not subject to attestation by the Corporation’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Corporation to provide only management’s report.
Jet Metal Corp.
Management Discussion & Analysis
For the Year Ended April 30, 2015
Date Prepared: August 21, 2015
SUBSEQUENT EVENT
The following reportable event occurred subsequent to the year ended April 30, 2015:
·
|
On May 15, 2015, 5,000 stock options with an exercise price of $3.80 were forfeited.
|
ADDITIONAL INFORMATION
Additional information relating to the Company, including the Company’s Annual Report on Form 20-F, is on SEDAR at www.sedar.com.
APPROVAL
The Board of Directors of the Company has approved the disclosures contained in this MD&A.