Interim Consolidated Financial Statements
For the Nine Months Ended
September 30, 2023 and 2022
(Unaudited)
NOTICE OF NO AUDITOR REVIEW OF CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited consolidated interim financial statements of TVI Pacific Inc. for the interim reporting period ended September 30, 2023, have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board, and are the responsibility of the Company's management.
The Company's independent auditors, PricewaterhouseCoopers LLP, have not performed a review of these consolidated interim financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada ("CPA Canada") for a review of interim financial statements by an entity's auditor.
TVI Pacific Inc. | 2 | September 30, 2023 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Financial Position September 30, 2023
(in Canadian dollars)
Notes | September 30, 2023 | December 31, 2022 | ||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | 4 | $ | 403,882 | $ | 134,886 | |||||
Accounts receivable | 5 | 26,276 | 11,512 | |||||||
Due from related parties | 6(a) | 106,633 | 3,071 | |||||||
Prepaid expenses | 3,538 | 9,093 | ||||||||
Total current assets | 540,329 | 158,562 | ||||||||
Non-current assets: | ||||||||||
Investment in joint venture | 8 | 23,662,097 | 28,984,522 | |||||||
Property and equipment | 11,888 | 15,739 | ||||||||
Other assets | 5 | 5 | ||||||||
Total non-current assets | 23,673,990 | 29,000,266 | ||||||||
Total assets | $ | 24,214,319 | $ | 29,158,828 | ||||||
Liabilities and Shareholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | 9 | $ | 278,949 | $ | 350,894 | |||||
Due to related parties | 6(b) | 2,226,827 | 1,960,061 | |||||||
Total current liabilities | 2,505,776 | 2,310,955 | ||||||||
Non-current liabilities: | ||||||||||
Retirement benefit payable | 10 | 66,729 | 68,326 | |||||||
Deferred tax liability | 11 | 388,213 | 397,507 | |||||||
Total non-current liabilities | 454,942 | 465,833 | ||||||||
Total liabilities | 2,960,718 | 2,776,788 | ||||||||
Equity attributable to shareholders of the | ||||||||||
Company: | ||||||||||
Share capital | 12(b) | 34,374,277 | 33,016,445 | |||||||
Contributed surplus | 12(d) | 7,326,748 | 7,074,580 | |||||||
Deficit | (14,527,940) | (8,466,859) | ||||||||
Translation reserves | (5,919,484) | (5,242,126) | ||||||||
Total equity | 21,253,601 | 26,382,040 | ||||||||
Total liabilities and equity | $ | 24,214,319 | $ | 29,158,828 | ||||||
0 | ||||||||||
Commitment (note 18) | ||||||||||
Subsequent Events (note 19) |
The accompanying notes are an integral part of these interim consolidated financial statements.
On behalf of the Board:
"Clifford M. James" | "C. Brian Cramm" |
Clifford M. James, Director | C. Brian Cramm, Director |
TVI Pacific Inc. | 3 | September 30, 2023 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Comprehensive Income (Loss) September 30, 2023 and 2022
(in Canadian dollars)
Three months ended | Nine months ended | ||||||||
September 30 | September 30 | ||||||||
Notes | 2023 | 2022 | 2023 | 2022 | |||||
Expenses: | |||||||||
Depreciation expense | $ | 1,102 | $ | 1,383 | $ | 3,805 | $ | 4,207 | |
Administrative and general costs | 14 | 403,410 | 340,613 | 1,284,621 | 1,096,306 | ||||
Total expenses | 404,512 | 341,996 | 1,288,426 | 1,100,513 | |||||
Operating loss | (404,512) | (341,996) | (1,288,426) | (1,100,513) | |||||
Other income (expenses): | |||||||||
Interest income | 1,535 | 753 | 1,762 | 1,063 | |||||
Interest expense | (58,013) | (23,170) | (139,913) | (53,275) | |||||
Foreign exchange gain (loss) | 16 | 1,347 | 11,420 | 604 | 20,375 | ||||
Other gains | 17 | - | - | - | 200,610 | ||||
Share of income of joint venture | 8 | (1,763,613) | 337,885 | (4,635,108) | 3,677,048 | ||||
Other income (expenses), net | (1,818,744) | 326,888 | (4,772,655) | 3,845,821 | |||||
Net income (loss) before income tax | (2,223,256) | (15,108) | (6,061,081) | 2,745,308 | |||||
Net income (loss) | (2,223,256) | (15,108) | (6,061,081) | 2,745,308 | |||||
Other comprehensive income (loss): | |||||||||
Items that may be reclassified to profit or | |||||||||
loss in subsequent periods: | |||||||||
Foreign currency translation adjustment - | |||||||||
foreign operations | (5,765) | (5,440) | 9,959 | 29,492 | |||||
Foreign currency translation adjustment - | |||||||||
joint venture | (310,249) | (135,515) | (687,317) | (2,512,480) | |||||
Comprehensive income (loss) | $ | (2,539,270) | $ | (156,063) | $ | (6,738,439) | $ 262,320 | ||
Basic income (loss) per share | 13 | $ | (0.003) | $ | 0.000 | $ | (0.009) | $ | 0.004 |
Diluted income (loss) per share | 13 | (0.003) | 0.000 | (0.009) | 0.004 | ||||
Weighted average number of common shares, | 13 | 676,918,891 | 656,987,039 | 676,918,891 | 656,987,039 | ||||
basic | |||||||||
Weighted average number of common shares, | 13 | 687,055,462 | 678,718,289 | 687,055,462 | 678,718,289 | ||||
diluted |
The accompanying notes are an integral part of these interim consolidated financial statements.
TVI Pacific Inc. | 4 | September 30, 2023 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Changes in Equity September 30, 2023 and 2022
(in Canadian dollars)
Contributed | Accumulated | ||||||||||||||||||
Share capital | other | Total | |||||||||||||||||
surplus | Deficit | ||||||||||||||||||
(Note 12b) | comprehensive | equity | |||||||||||||||||
(Note 12d) | |||||||||||||||||||
income (loss) | |||||||||||||||||||
January 1, 2023 | $ | 33,016,445 | $ | 7,074,580 | $ | (8,466,859) | $ | (5,242,126) | $ | 26,382,040 | |||||||||
Transactions with owners | |||||||||||||||||||
Issued shares (note 12(b)) | 1,340,000 | 1,340,000 | |||||||||||||||||
Options exercised (note 12(c),(d)) | 17,832 | 252,168 | 270,000 | ||||||||||||||||
Total transaction with owners | 1,357,832 | 252,168 | 1,610,000 | ||||||||||||||||
Comprehensive income/(loss) | |||||||||||||||||||
Net income (loss) | (6,061,081) | (6,061,081) | |||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustment | (677,358) | (677,358) | |||||||||||||||||
Total comprehensive income (loss) | (6,061,081) | (677,358) | (6,738,439) | ||||||||||||||||
September 30, 2023 | 34,374,277 | 7,326,748 | (14,527,940) | (5,919,484) | 21,253,601 | ||||||||||||||
January 1, 2022 | $ | 33,016,445 | $ | 7,074,580 | $ | (8,973,285) | $ | (4,111,679) | $ | 27,006,061 | |||||||||
Comprehensive income (loss) | |||||||||||||||||||
Net income | - | - | 2,745,308 | - | 2,745,308 | ||||||||||||||
Other comprehensive income (loss): | - | - | - | - | - | ||||||||||||||
Foreign currency translation adjustment | - | - | - | (2,482,988) | (2,482,988) | ||||||||||||||
Total comprehensive income (loss) | - | - | 2,745,308 | (2,482,998) | 262,320 | ||||||||||||||
September 30, 2022 | $ | 33,016,445 | $ | 7,074,580 | $ | (6,227,977) | $ | (6,594,667) | $ | 27,268,381 | |||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
TVI Pacific Inc. | 5 | September 30, 2023 |
TVI Pacific Inc.
Unaudited Interim Consolidated Statements of Cash Flows September 30, 2023 and 2022
(in Canadian dollars)
Three months ended | Nine months ended | ||||||||||
September 30 | September 30 | ||||||||||
Notes | 2023 | 2022 | 2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) before income tax | $ | (2,223,256) | $ | (15,108) | $ | (6,061,081) | $ | 2,745,308 | |||
Adjustments for: | |||||||||||
Depreciation expense | 1,102 | 1,383 | 3,805 | 4,207 | |||||||
Unrealized foreign exchange (gain) loss | 16 | (3,365) | (11,443) | (2,620) | (20,450) | ||||||
Gain on sale of TG World (BVI) Corp | 17 | - | - | - | (200,610) | ||||||
Share of loss (gains) of joint venture | 8 | 1,763,613 | (337,885) | 4,635,108 | (3,677,048) | ||||||
Changes in working capital | 15 | (542,396) | 87,748 | 84,137 | 220,129 | ||||||
Distribution from investment in joint venture, net of tax | 8 | - | - | - | 684,446 | ||||||
Net cash used in operating activities | (1,004,302) | (275,306) | (1,340,651) | (244,018) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Shares issued - Private placement of PRHI | 12(b) | 1,340,000 | 1,340,000 | ||||||||
Shares issued - Options exercised | 12(c) | - | - | 270,000 | - | ||||||
Net cash used from financing activities | 1,340,000 | - | 1,610,000 | - | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Expenditures on property and equipment and | |||||||||||
other assets | - | 55 | - | (4,362) | |||||||
Net cash used from investing activities | - | 55 | - | (4,362) | |||||||
Effect of foreign exchange rates on cash | (192) | (335) | (353) | (1,770) | |||||||
Net decrease in cash and cash equivalents | 335,506 | (275,585) | 268,996 | (250,150) | |||||||
Cash and cash equivalents at beginning of the period | 68,376 | 523,160 | 134,886 | 497,725 | |||||||
Cash and cash equivalents at end of the period | $ | 403,882 | $ | 247,575 | $ | 403,882 | $ | 247,575 |
The accompanying notes are an integral part of these interim consolidated financial statements.
TVI Pacific Inc. | 6 | September 30, 2023 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2023 and 2022
(in Canadian dollars)
1. Corporate information, nature of operations and going concern:
TVI Pacific Inc. ("TVI" or "the Company") is a publicly listed resource company incorporated in Alberta, Canada on January 12, 1987, under the Alberta Business Corporations Act. TVI's shares are listed on the TSX Venture Exchange. TVI is focused on the acquisition of diversified resource projects in the Asia Pacific region and on evaluating and acquiring interests in resource projects that can be rapidly developed and put into production to generate revenue and cash flows. TVI does not presently have an active resource property but holds equity and joint venture investments in resource companies engaged in production, development and/or exploration activities in the Philippines.
TVI holds a 30.66% interest in TVI Resource Development Phils., Inc. ("TVIRD"). TVIRD's assets include the Balabag gold-silver mine, the Siana gold mine ("Siana"), a 60% interest in the Agata nickel laterite and Direct Shipping nickel/iron projects and interests in the Agata processing project, a 60% indirect interest in Mt. Labo Exploration and Development Corporation ("MLEDC") and the Mabilo project ("Mabilo") that MLEDC 100% owns and operates, and various other exploration properties in the Philippines. TVIRD holds the 60% indirect interest in MLEDC through its 100% ownership of SageCapital Partners, Inc. ("SageCapital"). At September 30, 2023, TVI also holds a 14.4% equity interest in Mindoro Resources Ltd. ("Mindoro"), an entity engaged in mining and exploration in the Philippines. TVI has established its principal business address at Suite 600, 505 2nd St. SW Calgary, Alberta, Canada T2P 1N8.
These consolidated financial statements were authorized for issue by the Board of Directors on November 16, 2023.
Going Concern
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC") on the basis of accounting principles applicable to a going concern, which assume the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
For the nine months ended September 30, 2023, TVI reported a net loss of $6,061,081 (September 30, 2022 - $2,745,308 net income) resulting primarily from the share of loss from joint venture (note 8). TVI had a working capital deficit of $1,965,447 at September 30, 2023 (December 31, 2022 - $2,152,392 working capital deficit). As at September 30, 2023, the Company had accounts payable and accrued liabilities of $278,949 (December 31, 2022 - $350,894) and a payable to related parties of $2,226,827 (December 31, 2022 - $1,960,061) but has no other outstanding loans payable or any annual expenditure obligations.
During the nine months ended September 30, 2023, no dividend was received from TVIRD (September 30, 2022 - $684,446). The Company's ability to continue as a going concern is dependent upon possible distributions from its joint venture investment in TVIRD, which the Company does not control. This undertaking, while significant, is not sufficient in and of itself to enable the Company to fund all aspects of its operations and, accordingly, management is pursuing other financing alternatives to fund the Company's operations and to pursue interests in resource projects in the Asia Pacific region that can be rapidly developed and put into production to generate revenue and cash flows so it can continue as a going concern. Nevertheless, there is no assurance that these initiatives will be successful.
These material uncertainties lend significant doubt as to the ability of the Company to meet its obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.
The Company's ability to continue as a going concern is dependent upon its ability to fund its operations, distributions from its joint venture investment in TVIRD and the ability of TVI to develop its resource projects and generate positive cash flows from operations. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.
TVI Pacific Inc. | 7 | September 30, 2023 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2023 and 2022
(in Canadian dollars)
Going concern (continued):
On August 15, 2023, the Company has completed and closed its previously announced non-brokered private placement to Prime Resources Holdings, Inc. of 53,600,000 common shares in the capital of the Company, at a price of $0.025 per share, for gross proceeds of $1,340,000 (or approximately US$1,000,000).
2. Basis of preparation:
(a) Statement of compliance
These consolidated interim financial statements ("consolidated interim financial statements") have been prepared in accordance with IFRS issued by the IASB and interpretations of the IFRIC.
These consolidated interim financial statements do not include all the information required in annual financial statements in accordance with IFRS and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022. These consolidated interim financial statements have not been reviewed by the Company's auditor.
(b) Basis of measurement
These consolidated interim financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value (note 3b). In addition, these consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The consolidated interim financial statements are presented in Canadian Dollars which is the functional and reporting currency of TVI.
-
New standards, amendments and interpretations issued but not yet effective:
The following amendments and improvements to existing standards and interpretations are effective for the financial year beginning on January 1, 2022 which are relevant to the Company's financial statements. - Amendments to IAS 16, Property, Plant and Equipment - Proceeds before Intended Use: The amendment prohibits deducting from the cost of property, plant and equipment any proceeds from selling items produced while bringing an asset to the location and condition necessary for its intended use. Instead, the proceeds and related costs from such items shall be recognized in the Statements of Comprehensive Income (Loss). The amendment must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when an entity first applies the amendment.
There are no other new standards, amendments and interpretations that are not yet effective that would be expected to have a material impact on the Company.
TVI Pacific Inc. | 8 | September 30, 2023 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2023 and 2022
(in Canadian dollars)
3. Financial risk management:
The Company's activities expose it to a variety of financial risks: market risk (currency risk and interest rate risk), liquidity risk and credit risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Board of Directors has the overall responsibility for the establishment and oversight of the Company's risk management framework.
The consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements. The consolidated interim financial statements should be read in conjunction with TVI's audited consolidated financial statements for the year ended December 31, 2022.
- Financial risk management
i) Currency risk
For the nine months ended September 30, 2023:
- The impact on net income (loss) if the US Dollar moved by 5% against the Canadian Dollar, with all other variables held constant, would be $14,650.
- The impact on net income (loss) if the Philippine Peso moved by 5% against the Canadian Dollar, with all other variables held constant, would be $564.
The impact on net income (loss) of other currencies with all other variables held constant is not material for disclosure.
The following significant exchange rates have been applied during the current year and prior year:
Average rate | Spot rate | |||||||
Nine months ended | Year ended | September 30, | December 31, | |||||
September 30, 2023 | December 31, 2022 | 2023 | 2022 | |||||
Canadian Dollar/US Dollar | 1.3456 | 1.3013 | 1.3520 | 1.3544 | ||||
Canadian Dollar/ Philippine Peso | 0.0242 | 0.0239 | 0.0237 | 0.0242 |
ii) 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 Company started to accrue interest in October 2020 on unpaid Management and directors' fees (note 6(b)) that is calculated on total unpaid fees. This rate was set at four percent (4%) per annum, calculated daily and compounded annually and revised commencing July 2022 to Canada Prime Rate plus 2%. No payment of interest on unpaid Management and directors' fees has been made in the nine months ended September 30, 2023 (December 31, 2022 - nil). The Company has no other significant interest-bearing assets or liabilities for which the interest rate fluctuates and may thereby significantly impact the Company's income (loss) and operating cash flows.
iii) Liquidity risk
As at September 30, 2023, the Company has a $2.0 million working capital deficit (December 31, 2022 - working capital deficit of $2.2 million).
The table below summarizes the Company's financial liabilities by relevant maturity groupings based on contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances, as the impact of discounting is not considered to be significant.
TVI Pacific Inc. | 9 | September 30, 2023 |
TVI Pacific Inc.
Notes to the Unaudited Interim Consolidated Financial Statements September 30, 2023 and 2022
(in Canadian dollars)
3. Financial risk management (continued):
September 30, 2023 | December 31, 2022 | |||
Due within 12 months: | ||||
Accounts payable and accrued liabilities | $ | 278,949 | $ | 350,894 |
Due to related parties | 2,226,827 | 1,960,061 | ||
$ | 2,505,776 | $ | 2,310,955 |
The Company remains focused upon conserving cash through reducing expenditures but to continue operations and to fund expenses and settle liabilities the Company is presently dependent on possible distributions from its joint venture investment in TVIRD, which the Company does not control.
Note 9 includes a further breakdown and explanation of accounts payable and accrued liabilities.
iv) Credit risk
Credit risk arises from the potential that a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company's cash and cash equivalents, accounts receivable, due from related parties and other assets.
The Company manages credit risk associated with cash by maintaining its cash deposits in accounts with creditworthy banks, which were approved by the Board of Directors.
-
Fair value measurements recognized in the statement of financial position
The analysis of financial instruments that are measured subsequent to initial recognition at fair value can be classified into Levels 1 to 3 based on the degree to which fair value is observable. - Level 1- fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities.
- Level 2- fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
- Level 3- fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
During the nine months ended September 30, 2023, there were no transfers between levels in the fair value hierarchy of any fair value measurements. There were no changes in valuation techniques.
The carrying value of the Company's financial assets and liabilities consisting of cash and cash equivalents, accounts receivable, due from and to related parties and accounts payable and accrued liabilities, approximate their fair values at September 30, 2023 and December 31, 2022 due to their short-term nature.
-
Capital risk management
The Company monitors capital on the basis of the debt-to-equity and the debt-to-assets ratios. Debt is composed of accounts payable and accrued liabilities and due to related parties. Equity comprises all components of equity other than amounts in accumulated other comprehensive income (loss). Assets are defined as the Company's total current and non-current assets. The Company's strategy is to improve the debt-to-equity ratio in order to secure access to financing at a reasonable cost by maintaining a good credit rating.
TVI Pacific Inc. | 10 | September 30, 2023 |
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TVI Pacific Inc. published this content on 16 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2023 02:18:59 UTC.