UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Lion Copper and Gold Corp.
Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2023 and 2022
(Expressed in thousands of U.S. Dollars)
|
Lion Copper and Gold Corp. Condensed Interim Consolidated Balance Sheets As at September 30, 2023 and December 31, 2022 (Unaudited - In thousands of U.S. Dollars) |
| Note | September 30, 2023 |
December 31, 2022 |
|||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash | $ | $ | |||||
| Other receivables | |||||||
| Prepaid and deposit | |||||||
| Mineral properties | 4,14 | ||||||
| Reclamation bonds | |||||||
| Investment in associate | 5 | ||||||
| Total assets | $ | $ | |||||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | $ | |||||
| Accrued liabilities | |||||||
| Rio Tinto Deposit | 6 | ||||||
| SAFE Notes | 10 | ||||||
| Derivative liabilities | 8 | ||||||
| Convertible Debentures - current | 8,9,13 | ||||||
| Convertible debentures - long term | 8,9,13 | ||||||
| Total liabilities | |||||||
| Stockholders' equity | |||||||
| Share capital, |
11 | ||||||
| Additional paid-in capital | 12 | ||||||
| Deficit | ( |
) | ( |
) | |||
| Non-controlling interest | 7 | ||||||
| Total stockholders' equity | |||||||
| Total liabilities and stockholders' equity | $ | $ |
NATURE OF OPERATIONS AND GOING CONCERN (Note 1)
COMMITMENTS (Note 15)
CONTINGENCIES (Note 16)
SUBSEQUENT EVENTS (Note 18)
Approved on behalf of the Board of Directors on November 8, 2023:
| /s/ "Travis Naugle" | /s/ "Stephen Goodman" |
| Chief Executive Officer | President & Chief Financial Officer |
The accompanying notes form an integral part of these condensed interim consolidated financial statements.
|
Lion Copper and Gold Corp. Condensed Interim Consolidated Statements of Operations and Comprehensive Loss For the three and nine months ended September 30, 2023 and September 30, 2022 (Unaudited - In thousands of U.S. Dollars, except for shares and per share amounts) |
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| Note | 2023 | 2022 | 2023 | 2022 | |||||||||
| Operating expenses | |||||||||||||
| Exploration expenditures | 4 | $ | $ | $ | $ | ||||||||
| Rio Tinto Deposit | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| General office | |||||||||||||
| Interest | |||||||||||||
| Insurance | |||||||||||||
| Investor relations and corporate development | |||||||||||||
| Professional fees | |||||||||||||
| Rent | |||||||||||||
| Salaries and benefits | 13 | ||||||||||||
| Share-based payments | 12,13 | ||||||||||||
| Transfer agent and regulatory | |||||||||||||
| Travel | |||||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Non-operating Income/(expenses) | |||||||||||||
| Fair value gain on derivative liabilities | 8 | ||||||||||||
| Foreign exchange gain | |||||||||||||
| Gain on settlement of debt | 5 | ( |
) | ||||||||||
| Accretion expense | 9 | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Gain on sale of Butte Valley | 4,11 | ||||||||||||
| Gain on transfer of shares | 5 | ||||||||||||
| NSR buy-down | 4,11 | ||||||||||||
| Loss on revaluation of SAFE notes | 10 | ( |
) | ||||||||||
| Share of income (loss) in associate | 5 | ( |
) | ( |
) | ( |
) | ||||||
| Interest and other income | |||||||||||||
| Impairment of mineral properties | 4 | ( |
) | ||||||||||
| ( |
) | ( |
) | ||||||||||
| Net loss and comprehensive loss for the period | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Net loss and comprehensive loss attributed to: | |||||||||||||
| Stockholders of the Company | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Non-controlling interest | 7 | $ | ( |
) | $ | $ | ( |
) | $ | ||||
| loss per share, basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Weighted average number of shares outstanding - basic | |||||||||||||
| Weighted average number of shares outstanding - diluted | |||||||||||||
The accompanying notes form an integral part of these condensed interim consolidated financial statements.
|
Lion Copper and Gold Corp. Condensed Interim Consolidated Statements of Changes in Equity For the nine months ended September 30, 2023 and year ended December 31, 2022 (Unaudited - In thousands of U.S. Dollars, except for shares) |
| Notes | Common shares | Share capital | Additional paid-in capital |
Deficit | Non-controlling interest |
Total stockholders' equity |
|||||||||||
| Balance at December 31, 2021 | $ | $ | $ | ( |
) | $ | $ | ||||||||||
| Shares issued for mineral properties | 4,11 | - | - | - | |||||||||||||
| Shares issued to settle debt | 11 | - | - | - | |||||||||||||
| Shares issued for warrants exercised | 11,12 | ( |
) | - | - | ||||||||||||
| BCRC issuance of preferred shares | 4, 7 | - | - | - | - | ||||||||||||
| Grant of RSUs | 11,12 | - | - | - | |||||||||||||
| Share issuance costs | - | ( |
) | - | - | - | ( |
) | |||||||||
| Share-based payments | 12 | - | - | - | - | ||||||||||||
| Net loss for the year | - | - | - | ( |
) | ( |
) | ( |
) | ||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | ||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | ||||||||||
| Share-based payments | 12 | - | - | - | - | ||||||||||||
| Exercise of options | ( |
) | - | - | |||||||||||||
| Issuance of common shares of BCRC | 7 | - | - | - | - | ||||||||||||
| Net loss for the period | - | - | - | ( |
) | ( |
) | ( |
) | ||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( |
) | $ | $ |
The accompanying notes form an integral part of these condensed interim consolidated financial statements.
|
Lion Copper and Gold Corp. Condensed Interim Consolidated Statements of Cash Flow For the nine months ended September 30, 2023 and 2022 (Unaudited - In thousands of U.S. Dollars) |
| For the nine months ended September 30, | ||||||
| 2023 | 2022 | |||||
| Cash flows provided (used) in operating activities | ||||||
| Loss for the period | $ | ( |
) | $ | ( |
) |
| Non-cash transactions: | ||||||
| Interest expense | ||||||
| Accretion expense | ||||||
| Loss on settlement of debt | ( |
) | ||||
| Fair value gain on derivative liabilities - warrants | ( |
) | ( |
) | ||
| Gain on Sale of Butte Valley | ( |
) | ||||
| Gain on transfer of investment shares | ( |
) | ||||
| Share of loss of investment in associate | ||||||
| Wages settled through transfer of investment shares | ||||||
| Share-based payments | ||||||
| Loss on revaluation of SAFE notes | ||||||
| Impairment of mineral properties | ||||||
| Changes in operating assets and liabilities: | ||||||
| Other receivables | ||||||
| Trade payables and other liabilities | ( |
) | ( |
) | ||
| Prepaid and deposit | ( |
) | ( |
) | ||
| Rio Tinto deposit | ||||||
| Net cash provided (used) by operating activities | ( |
) | ||||
| Cash flows used in investing activities | ||||||
| Capitalized expenditures on mineral properties | ( |
) | ( |
) | ||
| Sale of Butte Valley | ||||||
| Reclamation bond | ||||||
| Net cash provided (used) in investing activities | ( |
) | ||||
| Cash flows provided by financing activities | ||||||
| Proceeds from convertible debentures | ||||||
| Exercise of Warrants | ||||||
| Proceeds from SAFE notes | ||||||
| BCRC - Proceeds from private placement | ||||||
| Exercise of options | ||||||
| Net cash provided by financing activities | ||||||
| Increase in cash | ||||||
| Cash, beginning of period | ||||||
| Cash, end of period | $ | $ | ||||
| Supplemental cash flow information | ||||||
| Shares issued for conversion of SAFE notes | ||||||
| Shares issued for mineral properties | ||||||
| Shares issued to Settle Debt | ||||||
The accompanying notes form an integral part of these condensed interim consolidated financial statements.
|
Lion Copper and Gold Corp. |
1. NATURE OF OPERATIONS AND GOING CONCERN
Lion Copper and Gold Corp. (together with its subsidiaries, "Lion CG" or the "Company") is a Canadian-based Company advancing its 100% owned flagship copper projects at Yerington, Nevada subject to an option to earn-in agreement with Rio Tinto. The Company is incorporated in British Columbia, Canada. Its registered and records offices are located at 1200 - 750 West Pender Street, Vancouver, British Columbia, Canada, V6C 2T8. On November 22, 2021, the Company changed its name from Quaterra Resources Inc. to Lion Copper and Gold Corp. The shares of the Company commenced trading under the new name at the open of trading on November 23, 2021. The Company's common shares are listed on the TSX Venture Exchange ("TSXV") under the symbol "LEO" and trade on the OTCQB Market under the symbol "LCGMF".
The Company acquires its mineral properties through option or lease agreements and capitalizes all acquisition costs related to the properties. The underlying value of the amounts recorded as mineral properties does not reflect current or future values. The Company's continued existence depends on discovering economically recoverable mineral reserves and obtaining the necessary funding to complete the development of these properties.
These condensed interim consolidated financial statements are prepared on a going concern basis, which contemplates that the Company will be able to meet its commitments, continue operations and realize its assets and discharge its liabilities in the normal course of business for at least twelve months from the date of approval from the Board of Directors. The Company has incurred ongoing losses and expects to incur further losses in the advancement of its business activities. For the nine months ended September 30, 2023 and 2022, the Company incurred a net loss of $
The Company continues to incur losses, has limited financial resources, and has no current source of revenue or cash flow generated from operating activities. To address its financing requirements, the Company plans to seek financing through, but not limited to, debt financing, equity financing and strategic alliances. However, there is no assurance that such financing will be available. If adequate financing is not available or cannot be obtained on a timely basis, the Company may be required to delay, reduce the scope of or eliminate one or more of its exploration programs or relinquish some or all of its rights under the existing option and acquisition agreements. The above factors give rise to material uncertainties that cast substantial doubt on the Company's ability to continue as a going concern.
If the going concern assumptions were not appropriate for these condensed interim consolidated financial statements, then adjustments would be necessary to the carrying values of assets, liabilities, the reported expenses, and the condensed interim consolidated statement of financial position classifications used. Such adjustments could be material.
Lion Copper and Gold Corp. For the three and nine months ended September 30, 2023 and 2022 (Unaudited - In thousands of U.S. Dollars except for shares and per share amounts) |
2. BASIS OF PRESENTATION
Statement of compliance
Under U.S. federal securities laws, issuers must assess their foreign private issuer status as of the last business day of their second fiscal quarter. It was announced that more than 50% of the Company's common shares are held by U.S. stockholders, and the Company no longer meets the definition of a foreign private issuer under the United States securities laws. As a result, commencing in 2023, the Company is required to use forms and rules prescribed for U.S. domestic companies, including the requirement that condensed interim consolidated financial statements be presented in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") instead of International Financial Reporting Standards ("IFRS") as issued by the IAASB. The Company's common shares will continue to be listed on the TSX Venture Exchange and quoted on the OTCQB. These condensed interim consolidated financial statements have been prepared in accordance with U.S. GAAP.
These condensed interim consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the "SEC"), effective for the nine months ended September 30, 2023. Certain information or footnote disclosures normally included in condensed interim consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying condensed interim consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying condensed interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2022. The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
Comparative figures, which were previously presented in accordance with IFRS as issued by the International Accounting Standards Board have been adjusted as necessary to be compliant with the Company's policies under U.S. GAAP.
These condensed interim consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for the cash flow information.
The Company consolidates an entity when it has power over that entity, is exposed, or has rights, to variable returns from its involvement with that entity and can affect those returns through its control over that entity. All material intercompany transactions, balances and expenses are eliminated on consolidation. These condensed interim consolidated financial statements include the condensed interim consolidated financial statements of Lion Copper and Gold Corp., and its subsidiaries:
Lion Copper and Gold Corp. For the three and nine months ended September 30, 2023 and 2022 (Unaudited - In thousands of U.S. Dollars except for shares and per share amounts) |
2. BASIS OF PRESENTATION (continued)
Statement of compliance (continued)
| Percentage ownership | |||
| Subsidiaries | September 30, 2023 | December 31, 2022 | Country of incorporation |
| Quaterra Alaska Inc. ("Quaterra Alaska") | USA | ||
| Singatse Peak Services, LLC ("SPS") | USA | ||
| Blue Copper Resources Corp ("BCRC") | USA | ||
| Blue Copper LLC |
through BCRC |
through BCRC |
USA |
| Blue Copper Royalties LLC ("BCR LLC") |
USA |
||
On March 30, 2022, Six Mile was dissolved, and its assets were transferred to Quaterra Alaska.
On December 13, 2022, Quaterra Alaska assigned and transferred 100% of its outstanding interest held in Blue Copper LLC to BCRC.
On August 25, 2023, BCR LLC was incorporated and on September 6, 2023, BCRC carried out a re-organization of its assets and capital structure through an assignment transaction with BCR LLC. The Company assessed the impact of the re-organization and concluded the Company still has common control over BCRC and BCR LLC. As such, the re-organization is a transaction between entities under common control and the assets transferred are accounted for at their carrying values. See Notes 4 and 7.
For partially owned subsidiaries, the interest attributable to non-controlling stockholders is reflected in non-controlling interest.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of these condensed interim consolidated financial statements are consistent with the accounting policies disclosed in Note 3 of the Company's audited consolidated financial statements for the year ended December 31, 2022.
In preparing these condensed interim consolidated financial statements, management has made judgements, estimates and assumptions that affect the applicability of the Company's accounting policies. In preparing these condensed interim consolidated financial statements, the significant estimates and critical judgments were the same as those applied to the audited consolidated financial statements as at and for the year ended December 31, 2022, other than noted below;
During the nine months ended September 30, 2023, the Company's ownership in BCRC dropped from
Lion Copper and Gold Corp. For the three and nine months ended September 30, 2023 and 2022 (Unaudited - In thousands of U.S. Dollars except for shares and per share amounts) |
4. MINERAL PROPERTIES
Total mineral property acquisition costs are listed in the table below:
| Singatse Peak Services ("SPS") | Lion CG ("LCG") |
Quaterra Alaska ("QTA") |
Blue Copper Resources Corp ("BCRC") |
||||||||
| (In thousands of U.S dollars) | MacArthur | Yerington | Bear | Wassuk | Copper Canyon |
Chaco Bear & Ashton |
Butte Valley |
Blue Copper |
Groundhog | Blue Copper | Total |
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Balance December 31, 2021 | |||||||||||
| Acquisition costs | |||||||||||
| Assignment of Butte Valley | ( |
( |
|||||||||
| Transfer to BCRC | ( |
||||||||||
| Paid by Rio Tinto | ( |
( |
|||||||||
| Total additions (disposals) for the year | ( |
||||||||||
| Balance December 31, 2022 | |||||||||||
| Acquisition costs | |||||||||||
| Impairment | ( |
( |
|||||||||
| Paid by Rio Tinto | ( |
( |
|||||||||
| Total additions (disposals) for the period | ( |
( |
|||||||||
| Balance September 30, 2023 | |||||||||||
The Company owns a
During the nine months ended September 30, 2023 and year ended December 31, 2022, the Company:
- On December 13, 2022, the Company transferred its
- On April 5, 2022, the Company sold and assigned the Butte Valley option agreements to Falcon Butte Minerals Corp. (Note 4(e));
Lion Copper and Gold Corp. For the three and nine months ended September 30, 2023 and 2022 (Unaudited - In thousands of U.S. Dollars except for shares and per share amounts) |
4. MINERAL PROPERTIES (continued)
- On February 10, 2023 the Company announced the commencement of its 2023 exploration program. The exploration program is composed of
- On April 18, 2023, BCRC entered into a lease for a Montana property and paid an initial cash payment of $
- On May 12, 2023, BCRC made a payment of $
- On June 1, 2023, Lion CG and Houston terminated the option agreement surrounding the Chaco Bear and Ashton Properties. (Note 4, (g))
- On August 21, 2023, SPS acquired the Copper Canyon Prospect. The terms of the acquisition require SPS to pay the BLM claim fees and reimburse Convergent
- On September 6, 2023, BCRC carried out a re-organization of its assets and capital structure by transferring the Butte Valley Royalty and the Nieves Royalty assets to Blue Copper Royalties, LLC. (Note 7)
Total exploration expenditures recorded on the condensed interim consolidated statements of operations and comprehensive Loss are listed in the tables below:
Exploration expenditures incurred for the nine months ended September 30, 2023
| Singatse Peak Services | Lion CG | Blue Copper Resources Corp | |||||||||||
| (In thousands of U.S dollars) | MacArthur | Yerington | Bear | Wassuk | Prospects | Copper Canyon |
Chaco Bear & Ashton |
Groundhog | Blue Copper |
Recon | Nevada |
Arizona | Total |
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |
| Property maintenance | |||||||||||||
| Assay & Labs | |||||||||||||
| Drilling | |||||||||||||
| Environmental | |||||||||||||
| Geological & mapping | |||||||||||||
| Geophysical surveys | |||||||||||||
| Technical study | |||||||||||||
| Field support | |||||||||||||
| Total expenses incurred | |||||||||||||
| Total Expenditures funded by Rio Tinto | ( |
( |
( |
||||||||||