CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2021,
SEVEN MONTHS ENDED DECEMBER 31, 2020, AND
TWELVE MONTHS ENDED MAY 31, 2020
| KPMG LLP Chartered Professional Accountants PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada |
Telephone (604) 691-3000 Fax (604) 691-3031 Internet www.kpmg.ca |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Metalla Royalty & Streaming Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position as of December 31, 2021, December 31, 2020 and May 31, 2020, the related consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the twelve months ended December 31, 2021, the seven months ended December 31, 2020, and the twelve months ended May 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, December 31, 2020, and May 31, 2020 and the results of its financial performance and its cash flows for the twelve months ended December 31, 2021, the seven months ended December 31, 2020, and the twelve months ended May 31, 2020, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
|
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP. |
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
//s//
Chartered Professional Accountants
We have served as the Company's auditor since 2017.
Vancouver,
March 24, 2022
METALLA ROYALTY & STREAMING LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in United States dollars)
| As at | ||||||||||
| December 31, | December 31, | May 31, | ||||||||
| Notes | 2021 | 2020 | 2020 | |||||||
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||
| Accounts receivable | 3 | |||||||||
| Current portion of derivative royalty asset | 5 | |||||||||
| Prepaid expenses and other | ||||||||||
| Total current assets | ||||||||||
| Non-current assets | ||||||||||
| Royalty, stream, and other interests | 4 | |||||||||
| Derivative royalty asset | 5 | |||||||||
| Investment in Silverback | 6 | |||||||||
| Total non-current assets | ||||||||||
| TOTAL ASSETS | $ | $ | $ | |||||||
| LIABILITIES AND EQUITY | ||||||||||
| LIABILITIES | ||||||||||
| Current liabilities | ||||||||||
| Trade and other payables | 7 | $ | $ | $ | ||||||
| Total current liabilities | ||||||||||
| Non-current liabilities | ||||||||||
| Loans payable | 8 | |||||||||
| Deferred income tax liabilities | ||||||||||
| Total non-current liabilities | ||||||||||
| Total liabilities | ||||||||||
| EQUITY | ||||||||||
| Share capital | 12 | |||||||||
| Reserves | ||||||||||
| Deficit | ( |
) | ( |
) | ( |
) | ||||
| Total equity | ||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | $ | |||||||
Events after reporting date (Note 17)
These consolidated financial statements were authorized for issuance by the Board of Directors on March 24, 2022.
Approved by the Board of Directors
"Brett Heath" Director "Terry Krepiakevich" Director
The accompanying notes are an integral part of these consolidated financial statements.
- 4 -
(Expressed in United States dollars, except for share amounts)
| Twelve months | Seven months | Twelve months | ||||||||
| ended | ended | ended | ||||||||
| December 31, | December 31, | May 31, | ||||||||
| Notes | 2021 | 2020 | 2020 | |||||||
| Revenue from royalty interests | 9 | $ | $ | $ | ||||||
| Revenue from stream interest | 9 | |||||||||
| Total revenue | ||||||||||
| Cost of sales, excluding depletion | ( |
) | ||||||||
| Depletion on royalty and stream interests | 4 | ( |
) | ( |
) | ( |
) | |||
| Gross profit | ||||||||||
| General and administrative expenses | 10 | ( |
) | ( |
) | ( |
) | |||
| Share-based payments | 12 | ( |
) | ( |
) | ( |
) | |||
| Loss from operations | ( |
) | ( |
) | ( |
) | ||||
| Share of net income of Silverback | 6 | |||||||||
| Mark-to-market gain (loss) on derivative royalty asset | 5 | ( |
) | |||||||
| Interest expense | 8 | ( |
) | ( |
) | ( |
) | |||
| Finance charges | 8 | ( |
) | ( |
) | ( |
) | |||
| Fair value adjustment on marketable securities | ( |
) | ||||||||
| Foreign exchange gain (loss) | ( |
) | ( |
) | ||||||
| Other expenses | ( |
) | ( |
) | ( |
) | ||||
| Loss before income taxes | ( |
) | ( |
) | ( |
) | ||||
| Current income tax recovery (expense) | 11 | ( |
) | ( |
) | |||||
| Deferred income tax recovery (expense) | 11 | ( |
) | |||||||
| Net loss and comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Earnings (loss) per share - basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Weighted average number of shares outstanding - basic and diluted | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
- 5 -
METALLA ROYALTY & STREAMING LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
| Twelve months | Seven months | Twelve months | ||||||||
| ended | ended | ended | ||||||||
| December 31, | December 31, | May 31, | ||||||||
| Notes | 2021 | 2020 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Items not affecting cash: | ||||||||||
| Share of net income of Silverback | 6 | ( |
) | ( |
) | ( |
) | |||
| Mark-to-market loss (gain) on derivative royalty asset | 5 | ( |
) | |||||||
| Depletion and amortization | ||||||||||
| Interest and accretion expense | ||||||||||
| Finance charges | ||||||||||
| Share-based payments | ||||||||||
| Deferred income tax expense (recovery) | ( |
) | ( |
) | ||||||
| Fair value adjustment on marketable securities | ( |
) | ( |
) | ||||||
| Unrealized foreign exchange effect | ( |
) | ||||||||
| ( |
) | ( |
) | ( |
) | |||||
| Payments received from derivative royalty asset | 5 | |||||||||
| Changes in non-cash working capital items: | ||||||||||
| Accounts receivable | ( |
) | ||||||||
| Prepaid expenses and other | ( |
) | ||||||||
| Trade and other payables | ( |
) | ||||||||
| Net cash provided by (used in) operating activities | ( |
) | ( |
) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
| Acquisitions of royalty and stream interests | 4 | ( |
) | ( |
) | ( |
) | |||
| Acquisition of derivative royalty asset | 5 | ( |
) | |||||||
| Dividends received from Silverback | 6 | |||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
| Proceeds from exercise of stock options | ||||||||||
| Proceeds from exercise of share purchase warrants | ||||||||||
| Proceeds from ATM, net of share issue costs | ||||||||||
| Dividend paid | ( |
) | ||||||||
| Proceeds from convertible loans facility | 8 | |||||||||
| Repayment of loan principal | ( |
) | ||||||||
| Interest paid | 8 | ( |
) | ( |
) | ( |
) | |||
| Finance charges paid | 8 | ( |
) | ( |
) | ( |
) | |||
| Net cash provided by financing activities | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||||
| Changes in cash and cash equivalents during period | ( |
) | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||||
| Cash and cash equivalents, end of period | $ | $ | $ | |||||||
Supplemental disclosure with respect to cash flows (Note 14)
The accompanying notes are an integral part of these consolidated financial statements.
- 6 -
METALLA ROYALTY & STREAMING LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in United States dollars, except for share amounts)
| Number of | Share | Total | |||||||||||||
| shares | capital | Reserves | Deficit | equity | |||||||||||
| Balance as at May 31, 2019 | $ | $ | $ | ( |
) | $ | |||||||||
| Acquisition of royalty and other interests | - | - | |||||||||||||
| Exercise of stock options | ( |
) | - | ||||||||||||
| Exercise of share purchase and finder's warrants | ( |
) | - | ||||||||||||
| Share-based payments - stock options | - | - | - | ||||||||||||
| Share-based payments - restricted share units | - | ||||||||||||||
| Allocation of conversion feature net of taxes (Note 8) | - | - | - | ||||||||||||
| Elimination of historic foreign currency adjustments | - | - | - | ( |
) | ( |
) | ||||||||
| Dividend paid | - | - | - | ( |
) | ( |
) | ||||||||
| Loss for the period | - | - | - | ( |
) | ( |
) | ||||||||
| Balance as at May 31, 2020 | ( |
) | |||||||||||||
| Shares issued in ATM, net of issue costs | - | - | |||||||||||||
| Acquisition of royalty and other interests (Note 4) | - | - | |||||||||||||
| Committed shares not issued (Note 4) | - | - | - | ||||||||||||
| Conversion on loan payable (Note 8) | ( |
) | - | ||||||||||||
| Allocation of conversion feature net of taxes (Note 8) | - | - | - | ||||||||||||
| Exercise of stock options | ( |
) | - | ||||||||||||
| Exercise of share purchase warrants | ( |
) | - | ||||||||||||
| Share-based payments - stock options | - | - | - | ||||||||||||
| Share-based payments - restricted share units | - | ||||||||||||||
| Elimination of historic foreign currency adjustments | - | - | - | ( |
) | ( |
) | ||||||||
| Loss for the period | - | - | - | ( |
) | ( |
) | ||||||||
| Balance as at December 31, 2020 | ( |
) | |||||||||||||
| Shares issued in ATM, net of issue costs | - | - | |||||||||||||
| Issuance of committed shares (Note 4) | ( |
) | - | - | |||||||||||
| Conversion on loan payable (Note 8) | ( |
) | - | ||||||||||||
| Allocation of conversion feature net of taxes (Note 8) | - | - | - | ||||||||||||
| Exercise of stock options | ( |
) | - | ||||||||||||
| Shares issued on vesting of restricted share units | ( |
) | - | - | |||||||||||
| Share-based payments - stock options | - | - | - | ||||||||||||
| Share-based payments - restricted share units | - | - | - | ||||||||||||
| Loss for the period | - | - | - | ( |
) | ( |
) | ||||||||
| Balance as at December 31, 2021 | $ | $ | $ | ( |
) | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
- 7 -
|
METALLA ROYALTY & STREAMING LTD. |
1. NATURE OF OPERATIONS
Metalla Royalty & Streaming Ltd. ("Metalla" or the "Company"), incorporated in Canada, is a precious metals royalty and streaming company, which engages in the acquisition and management of precious metal royalties, streams, and similar production-based interests. The Company's common shares are listed on the TSX Venture Exchange ("TSX-V") under the symbol "MTA" and on the NYSE American ("NYSE") under the symbol "MTA". The head office and principal address is 501 - 543 Granville Street, Vancouver, British Columbia, Canada.
The Company has incurred a cumulative deficit to date of $
In order to better align the Company's reporting cycle with its peers and its royalty and stream partners, the Company changed its year-end from May 31 to December 31, beginning with December 31, 2020. As such, in addition to the audited financial statements for the twelve months ended December 31, 2021, the Company has provided comparative information for the seven months ended December 31, 2020 (a transition year) and the twelve months ended May 31, 2020.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of Compliance
The consolidated financial statements have been prepared using accounting policies in compliance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").
(b) Basis of Preparation and Measurement
These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments, which have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.
These consolidated financial statements are presented in United States Dollars except as otherwise indicated.
(c) Foreign Currency Translation
Functional currency
Commencing on September 1, 2020 (the "Effective Date"), the functional currency of the Company and its subsidiaries was reassessed as a result of a change in underlying transactions, events, and conditions. As a result of this reassessment the functional currency of the Canadian parent company and certain subsidiaries changed from the Canadian dollar to the United States dollar commencing on the Effective Date. The change in functional currency was accounted for on a prospective basis, with no impact of this change on prior year comparative information. Determination of functional currency may involve certain judgements to determine the primary economic environment.
| - 8 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
Presentation currency
On September 1, 2020, the Company elected to change its presentation currency from the Canadian dollar ("C$" or "CAD") to the United States dollar ("$" or "USD"). The change in presentation currency is to better reflect the Company's business activities and to improve investors' ability to compare the Company's financial results with other publicly traded businesses in comparable industries. The Company applied the change to the United States dollar presentation currency retrospectively, with prior period comparative information translated to the United States dollar at the foreign exchange rate of
From September 1, 2020, the United States dollar presentation currency is consistent with the functional currency of the Company. For periods prior to September 1, 2020, the statements of financial position for each period presented have been translated from the Canadian dollar presentation currency to the new United States dollar presentation currency at the rate of exchange prevailing on September 1, 2020.
Transactions and balances
Transactions in currencies other than the functional currency are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the reporting date while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in the consolidated statement of loss and comprehensive loss.
(d) Principles of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including its principal subsidiaries Royalty & Streaming Mexico S.A. de C.V., Metalla America Ltd. (USA), MTA Royalty & Streaming Pty Ltd. (Australia), ValGold Resources Ltd. (Canada), Metalla S.A. (Argentina), Geological Services Inc. (USA), Idaho Resources Corporation (USA), Genesis Gold Corporation (USA), and Metalla SEZC (Cayman Islands). All intercompany balances and transactions have been eliminated on consolidation.
Subsidiaries
Subsidiaries are all entities over which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases.
(e) Royalty, Stream, and Other Interests
Royalty, stream, and other interests consist of acquired royalty, stream, and other interests. These interests are recorded at cost and capitalized as tangible assets with finite lives. They are subsequently measured at cost less accumulated depletion and accumulated impairment losses, if any. Project evaluation costs that are not related to a specific royalty or stream asset are expensed in the period incurred. Borrowing costs attributed to the acquisition of qualifying assets are capitalized to royalty, stream, and other interests, and are included in the carrying amounts of related assets until the asset is available for use in the manner intended by management.
| - 9 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
Producing royalty and stream interests are depleted using the units-of-production method over the life of the property to which the interest relates, which is estimated using available information of proven and probable reserves and the portion of resources expected to be classified as mineral reserves at the mine corresponding to the specific agreement.
On acquisition of a royalty or stream interest, an allocation of its fair value may be attributed to the exploration potential of the interest and is recorded as an exploration asset on the acquisition date. The carrying value of the exploration potential is accounted for in accordance with IFRS 6 Exploration and Evaluation of Mineral Resources ("IFRS 6") and is not depleted until such time as the technical feasibility and commercial viability have been established, at which point the value of the asset is accounted for in accordance with IAS 16 Property, Plant and Equipment ("IAS 16"). Upon demonstration of the technical and commercial feasibility of a project and a development decision, the carrying value related to that project is subject to an impairment test and is reclassified in accordance with IAS 16.
(f) Joint Operations
Under IFRS 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Company recognizes its direct right to the assets, liabilities, revenues, and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues, and expenses.
(g) Investments in Associates
Companies over which the Company has significant influence, but not control, are determined to be associates and accounted for using the equity basis of accounting, whereby the investment is initially recorded at cost, adjusted to recognize the Company's share of earnings or losses and reduced by dividends received. The Company assesses its equity investments for impairment if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the equity investment and if the event or events have an impact on the estimated future cash flow of the investment. Objective evidence of impairment of an equity investment includes:
- Significant financial difficulty of the associated companies;
- Becoming probable that the associated companies will enter bankruptcy or other financial reorganization; or
- National or local economic conditions that correlate with defaults of the associated companies.
(h) Impairment of Royalty, Stream, and Other interests
The carrying amounts of non-financial assets, excluding deferred income tax assets, are reviewed for impairment at each reporting date, or whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. If there are indicators of impairment, a review is undertaken to determine whether the carrying amounts are in excess of their recoverable amounts. Reviews are undertaken on an asset-by-asset basis, except where the recoverable amount for an individual asset cannot be determined, in which case the review is undertaken at the cash-generating unit ("CGU") level.
| - 10 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
If the carrying amount of a CGU or non-financial asset exceeds the recoverable amount, being the higher of its fair value less costs to sell and its value-in-use, an impairment loss is recognized in net loss as the excess of the carrying amount over the recoverable amount. With respect to CGUs, impairment losses are allocated to reduce the carrying amounts of the assets of the CGU on a pro-rata basis. The future cash flows expected is derived using estimates of proven and probable reserves, a portion of resources that is expected to be converted into reserves and information regarding the Company's royalty, stream, and other production-based interests, respectively, that could affect the future recoverability of the Company's interests. Discount factors are determined individually for each asset and reflect their respective risk profiles. In certain circumstances, the Company may use a market approach in determining the recoverable amount which may include an estimate of (a) net present value of estimated future cash flows; (b) dollar value per ounce or pound of reserve/resource; (c) cash-flow multiples; and/or (d) market capitalization of comparable assets.
Non-financial assets that have previously been impaired are tested for a possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed, or may have partially reversed. In these instances, the impairment loss is reversed to the recoverable amount but not beyond the carrying amount, net of amortization, that would have arisen if the prior impairment loss had not been recognized.
(i) Revenue Recognition
Revenue is comprised of revenue earned in the year from royalty, stream, and other interests. The Company recognizes revenue upon the transfer of control of the relevant commodity to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those commodities.
For stream interests, revenue recognition occurs when the relevant commodity received from the stream operator is delivered by the Company to its third-party customers. Revenue is measured at the fair value of the consideration received or receivable when management can reliably estimate the amount, pursuant to the terms of the sales contract.
For royalty interests, revenue recognition occurs when control of the relevant commodity is transferred to the end customer by the operator of the royalty property. Revenue is measured at the fair value of the consideration received or receivable when management can reliably estimate the amount, pursuant to the terms of the royalty agreement. In some instances, the Company will not have access to sufficient information to make a reasonable estimate of consideration to which it expects to be entitled and, accordingly, revenue recognition is deferred until management can make a reasonable estimate. Differences between estimates and actual amounts are adjusted and recorded in the period that the actual amounts are known.
(j) Financial Instruments
All financial instruments are initially recorded at fair value and designated as follows:
Cash includes cash on account and is subsequently measured at amortized cost.
Trade receivables relate to amounts received from sales of refined gold and silver and royalty revenue. These receivables are non-interest bearing and are recognized at fair value and are subsequently measured at amortized cost. The Company has applied the simplified approach to determining expected credit losses, which requires expected lifetime losses to be recognized upon initial recognition of the receivables.
| - 11 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
Marketable securities are designated as fair value through profit and loss ("FVTPL") unless they are irrevocably designated, on an individual basis, as fair value through other comprehensive income ("FVOCI"). Investment transactions are recognized on the trade date with transaction costs included in the underlying balance. Fair values are determined by reference to quoted market prices at the statement of financial position date.
Derivative royalty assets are designated as FVTPL. Fair values are determine using a valuation model and inputs that are not based on observable market data.
Accounts payables, accrued liabilities, and loans payable are initially recorded at fair value, less transaction costs. These financial liabilities are subsequently measured at amortized cost, calculated using the effective interest rate method.
(k) Related Party Transactions
Parties are considered related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered related if they are subject to common control or significant influence. A transaction is considered a related party transaction when there is a transfer of resources or obligations between related parties.
(l) Share Capital
Common shares issued for non-monetary consideration are recorded at their fair value based on closing price on the measurement date and classified as equity. The measurement date is defined as the earliest of the date at which the commitment for performance by the counterparty to earn the common shares is reached or the date at which the counterparty's performance is complete.
The proceeds from the issue of units are allocated between common shares and share purchase warrants on a pro-rata basis based on the relative fair values. The fair value of the common shares is based on the market closing price on the date of issuance and the fair value of the share purchase warrants is determined using the Black-Scholes option pricing model.
Transaction costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects.
(m) Earnings (loss) Per Share
The Company presents basic earnings (loss) per share data for its common shares, calculated by dividing the income (loss) attributable to equity holders of the Company by the weighted average number of common shares issued and outstanding during the period. Diluted earnings per share is calculated by adjusting the earnings attributable to equity holders and the weighted average number of common shares outstanding for the effects of all potentially dilutive common shares. The calculation of diluted earnings per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. In periods where a loss is reported, diluted loss per share is the same as basic loss per share as the effects of potentially dilutive common shares would be anti-dilutive.
| - 12 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
(n) Income Taxes
Income tax expense consists of current and deferred tax expense. Income tax expense is recognized in the consolidated statement of loss and comprehensive loss.
Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous periods.
Deferred tax assets and liabilities are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and losses carried forward. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
(o) Share-based Payments
The Company grants stock options and restricted share units ("RSUs") to directors, officers, employees and consultants to acquire common shares of the Company. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee. The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods or services received.
The fair value method of accounting is used for share-based payment transactions. Under this method, the cost of stock options and other equity-settled share-based payment arrangements are recorded based on the estimated fair value at the grant date and charged to earnings over the vesting period. Where awards are forfeited because non-market based vesting conditions are not satisfied, the expense previously recognized is proportionately reversed in the period the forfeiture occurs.
| - 13 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
(p) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the Chief Executive Officer ("CEO").
The Company operates in a single segment, the acquisition and management of precious metal royalties, streams, and similar production-based interests. In addition, the Company has corporate activities, which include the evaluation and acquisition of new precious metal royalties, streams, and similar production-based interests, treasury and finance, regulatory reporting, and corporate administration.
(q) Critical Accounting Estimates and Judgments
The preparation of the Company's consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.
Information about significant areas of estimation uncertainty and judgments made by management in preparing the consolidated financial statements are described below. The preparation of consolidated financial statements in conformance with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue, and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and include, but are not limited to, the following:
Royalty interests
The Company holds royalty interests in production stage mineral properties. The royalty interests are recorded initially at their costs and are being depleted using the units of production basis over the expected life of the related mineral property, which is determined using available estimates of future metal prices and future production. Proven and probable reserves and future production plans associated with the royalty interests as determined by the operators impact the measurement of the respective assets. These estimates affect the depletion of the royalty interests and the assessment of the recoverability of the carrying value of the royalty interests.
Management considers both external and internal sources of information in assessing whether there are any indications that the Company's royalty interests are impaired. External sources of information that management considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its royalty interests. Internal sources of information that management considers include the indications of economic performance of the assets.
| - 14 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
In determining the recoverable amounts of the Company's royalty interests, management makes estimates of the discounted net cash flows expected to be derived from the Company's royalty interests, costs of disposal, and the appropriate discount rates and discount multiples that apply to the specific asset. Reductions in metal price forecasts, increases in estimated future costs of production for the mine operators, reductions in the amount of recoverable mineral reserves, mineral resources, and exploration potential, and/or adverse current economics can result in a write-down of the carrying amounts of the Company's royalty interests.
Estimation of depletion
The Company's royalty, stream, and other production-based interests that generate economic benefits are considered depletable and are depleted on a unit-of-production basis over the ounces of production that are expected to generate the cash flows that will be attributable to the Company. These calculations require the use of estimates and assumptions, including the amount of contained metals, the recovery rates, and payable rates for the contained metals being treated through a milling or refining process. Changes to these assumptions may impact the estimated recoverable reserves, resources or exploration potential which could directly impact the depletion rates used. Changes to depletion rates are accounted for prospectively.
Derivative royalty
The Company holds a derivative royalty asset which is carried at fair value at each period end. In order to calculate the fair value at period end the Company uses a valuation model and is required to make estimates and assumptions on the timing of delivery of gold ounces, future gold price, as well as future currency exchange rates. Changes to these assumptions may impact the fair value of the asset at period end, as well as the classification of the amount that is disclosed as current versus non-current.
Income taxes
The interpretation of existing tax laws or regulations in Canada, Australia, Argentina, Mexico, the United States, or any of the countries in which our property interests are located requires the use of judgment. Differing interpretation of these laws or regulations could result in an increase in the Company's taxes, or other governmental charges, duties or impositions. In addition, the recoverability of deferred income tax assets, including expected periods of reversal of temporary differences and expectations of future taxable income, are assessed by management at the end of each reporting period and adjusted, as necessary, on a prospective basis.
Functional currency
The determination of an entity's functional currency requires judgment where the operations of the Company are changing, or currency indicators are mixed. Additionally, the timing of a change in functional currency is a judgment as the balance of currency indicators may change over time. The impact on the consolidated results from the change in functional currency is described in Note 2(c).
| - 15 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd...)
COVID-19 Uncertainty
Since March 2020, several measures have been implemented in Canada, Australia, Argentina, Mexico, the United States, and in other jurisdictions where we hold royalties and streams in response to the increased impact from the coronavirus ("COVID-19"). These measures, which include the implementation of travel bans, self-imposed quarantine periods, social distancing, vaccine or testing mandates, and in some cases mine closures or suspensions, have caused material disruption to business globally. Global financial markets have experienced significant volatility. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. There are significant uncertainties with respect to future developments and impact to the Company related to the COVID-19 pandemic, including the duration, severity and scope of the outbreak and the measures taken by governments and businesses to contain the pandemic. While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impact of COVID-19 on our business operations cannot be reasonably estimated at this time, such as the duration and impact on future production for our partner operators at their respective mining operations. However, the current situation has improved and is expected to have less of an adverse impact on the Company's business, results of operations, financial position and cash flows going forward.
3. ACCOUNTS RECEIVABLE
| As at | |||||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Royalty, derivative royalty, and stream receivables | $ | $ | $ | ||||||
| GST and other recoverable taxes | |||||||||
| Other receivables | |||||||||
| Total accounts receivable | $ | $ | $ | ||||||
As at December 31, 2021, December 31, 2020, and May 31, 2020, the Company did not have any royalty, derivative royalty and stream receivables that were past due. The Company's allowance for doubtful accounts as at December 31, 2021, December 31, 2020, and May 31, 2020, was $.
| - 16 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
4. ROYALTY, STREAM, AND OTHER INTERESTS
| Producing | Development | Exploration | ||||||||||
| assets | assets | assets | Total | |||||||||
| As at May 31, 2019 | $ | $ | $ | $ | ||||||||
| Alamos royalty portfolio acquisition | ||||||||||||
| Fifteen Mile Stream (FMS) acquisition | ||||||||||||
| NuevaUnión acquisition | ||||||||||||
| Idaho Resources Corp. acquisition | ||||||||||||
| Other additions | ||||||||||||
| Depletion | ( |
) | ( |
) | ||||||||
| Recoveries | ( |
) | ( |
) | ||||||||
| Reclassification (Joaquin and COSE) | ( |
) | ||||||||||
| Currency adjustments | ( |
) | ( |
) | ( |
) | ||||||
| As at May 31, 2020 | $ | $ | $ | $ | ||||||||
| Wharf acquisition | ||||||||||||
| Fosterville acquisition | ||||||||||||
| La Fortuna acquisition | ||||||||||||
| Genesis and GSI acquisitions | ||||||||||||
| Functional currency change adjustments | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Depletion (1) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| As at December 31, 2020 | $ | $ | $ | $ | ||||||||
| Amalgamated Kirkland acquisition | ||||||||||||
| Tocantinzinho acquisition | ||||||||||||
| CentroGold acquisition | ||||||||||||
| Del Carmen acquisition | ||||||||||||
| Côté-Gosselin acquisition | ||||||||||||
| La Fortuna acquisition | ||||||||||||
| Castle Mountain acquisition | ||||||||||||
| Depletion (1) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Other | ( |
) | ( |
) | ||||||||
| As at December 31, 2021 | $ | $ | $ | $ | ||||||||
| Historical cost | $ | $ | $ | $ | ||||||||
| Accumulated depletion | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
(1) Fixed royalty payments were received in relation to certain exploration and development assets. The depletion related to these payments was recorded based on the total fixed royalty payments expected to be received under each contract.
| - 17 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
(a) During the twelve months ended December 31, 2021, the Company had the following acquisitions:
Amalgamated Kirkland Acquisition
In February 2021, the Company closed an agreement to acquire an existing
Del Carmen Acquisition
In February 2021, the Company closed an agreement to acquire an existing
Tocantinzinho Acquisition
In March 2021, the Company closed an agreement to acquire an existing
CentroGold Acquisition
In March 2021, the Company closed an agreement to acquire an existing
The royalty is a
The $
- the Company will issue to Jaguar common shares with a value of $
- the Company will pay Jaguar $
As at December 31, 2021, none of the milestone payment triggers had been met, as such no amounts were accrued or payable to Jaguar for any related milestone payments.
| - 18 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
La Fortuna Acquisition
In April 2021, the Company acquired an existing
Côté-Gosselin Acquisition
In June 2021, the Company acquired an existing
Castle Mountain Acquisition
In October 2021, the Company acquired an existing
(b) During the seven months ended December 31, 2020, the Company had the following acquisitions:
Wharf Acquisition
In June 2020, the Company closed an agreement to acquire an existing
Fosterville Acquisition
In September 2020, the Company closed an agreement with NuEnergy Gas Limited to acquire an existing
| - 19 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
La Fortuna Acquisition
In October 2020, the Company exercised its option with Alamos Gold Corp. ("Alamos Gold") to acquire its
Genesis and GSI Acquisitions
In December 2020, the Company closed stock purchase agreements under which it acquired all outstanding common shares of Genesis Gold Corporation ("Genesis") and Geological Services Inc. ("GSI"). Under the terms of the stock purchase agreements, shareholders of Genesis and GSI received in aggregate $
The total consideration for the acquisitions is as follows:
| Consideration paid | |||
| Cash paid | $ | ||
| Common shares issued | |||
| Acquisition costs | |||
| Total consideration paid | $ | ||
| Net assets acquired | |||
| Genesis and GSI NSR interests | $ | ||
| Total net assets acquired | $ |
Collectively, Genesis and GSI held a portfolio of eleven NSR royalties. The aggregate purchase price of $
Big Springs
A
Caldera
A
| - 20 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
Golden Dome
A
Green Springs
A
Pine Valley
A
(c) During the twelve months ended May 31, 2020, the Company had the following acquisitions:
IRC Acquisition
In May 2020, the Company closed its stock purchase agreement under which it acquired all outstanding common shares of Idaho Resources Corp. ("IRC"), who held two gross overriding return ("GOR") royalties. Under the terms of stock purchase agreement, shareholders of IRC received in aggregate US$
| Consideration paid | |||
| Cash paid | $ | ||
| Common shares issued | |||
| Acquisition costs | |||
| Total consideration paid | $ | ||
| Net assets acquired | |||
| Cash | $ | ||
| Marketable securities | |||
| IRC NSR interests | |||
| Total net assets acquired | $ |
The Company acquired the following GOR interests:
Anglo/Zeke
A
| - 21 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
Red Hill
A
NuevaUnión Acquisition
In February 2020, the Company entered into a purchase agreement, jointly with Nova Royalty Corp. ("Nova") (formerly BatteryOne Royalty Corp.), to acquire a
Alamos Royalty Portfolio Acquisition
Biricu
In June 2019, the Company issued
Orion
In August 2019, the Company and Alamos amended the purchase and sale agreement dated April 2019 to remove one NSR royalty and include the purchase of the Orion NSR royalty for common shares of the Company, which is subject to closing conditions.
The Company paid $
Tower Mountain Acquisition
The Tower Mountain project located in Ontario, Canada was wholly-owned by ValGold Resources Ltd. ("ValGold"), who completed an Independent Mineral Resource Estimation report in February 2006 indicating
Fifteen Mile Stream Acquisition
In August 2019, the Company entered into an agreement to acquire a
| - 22 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
5. DERIVATIVE ROYALTY ASSET
In October 2020, the Company closed an agreement to acquire an existing
The royalty is a 27.5% PPR royalty on the difference between the average London PM fix gold price for the quarter and A$
At December 31, 2021, the key inputs used in the Company's valuation model for the Higginsville PPR derivative asset were:
- Gold price estimates ranging from $
- U.S. dollar to Australian dollar exchange rate of A$
Based on the valuation model the Company estimated the fair value at December 31, 2021, was $
The changes in the derivative royalty asset for the twelve months ended December 31, 2021, were as follows:
| Derivative | |||
| royalty asset | |||
| As at May 31, 2020 | $ | ||
| Acquisition | |||
| Payments received or due under derivative royalty asset | ( |
) | |
| Mark-to-market gain on derivative royalty asset | |||
| As at December 31, 2020 | $ | ||
| Payments received or due under derivative royalty asset | ( |
) | |
| Mark-to-market loss on derivative royalty asset | ( |
) | |
| As at December 31, 2021 | $ | ||
| Current portion | $ | ||
| Long-term portion | $ |
| - 23 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
6. INVESTMENT IN SILVERBACK
| Period ending | |||||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Opening balance | $ | $ | $ | ||||||
| Income in Silverback for the period | |||||||||
| Distribution | ( |
) | ( |
) | |||||
| Ending balance | $ | $ | $ | ||||||
The Company, through its wholly-owned subsidiary, holds a
| Twelve months ended December 31, 2021 |
Seven months ended December 31, 2020 |
Twelve months ended May 31, 2020 |
|||||||
| Current assets | $ | $ | $ | ||||||
| Non-current assets | |||||||||
| Total assets | |||||||||
| Total liabilities | ( |
) | ( |
) | ( |
) | |||
| Revenue from stream interest | |||||||||
| Depletion | ( |
) | ( |
) | ( |
) | |||
| Net income and comprehensive income for the period | $ | $ | $ |
7. TRADE AND OTHER PAYABLES
| As at | |||||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Trade payables and accrued liabilities | $ | $ | $ | ||||||
| Payables on acquisitions | |||||||||
| Lease liability | |||||||||
| Taxes payable | |||||||||
| Total trade and other payables | $ | $ | $ | ||||||
| - 24 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
8. LOANS PAYABLE
| Convertible loan facility |
Other loans |
Total | |||||||
| As at May 31, 2019 | $ | $ | $ | ||||||
| Additions | |||||||||
| Allocation of conversion feature | ( |
) | ( |
) | |||||
| Interest expense | |||||||||
| Repayments | ( |
) | ( |
) | ( |
) | |||
| Currency translation adjustments | ( |
) | ( |
) | |||||
| As at May 31, 2020 | $ | $ | $ | ||||||
| Additions | |||||||||
| Allocation of conversion feature | ( |
) | ( |
) | |||||
| Conversion | ( |
) | ( |
) | |||||
| Interest expense | |||||||||
| Interest payments | ( |
) | ( |
) | |||||
| Foreign exchange adjustments | |||||||||
| As at December 31, 2020 | $ | $ | $ | ||||||
| Additions | |||||||||
| Allocation of conversion feature | ( |
) | ( |
) | |||||
| Conversion | ( |
) | ( |
) | |||||
| Interest expense | |||||||||
| Interest payments | ( |
) | ( |
) | |||||
| Foreign exchange adjustments | |||||||||
| As at December 31, 2021 | $ | $ | $ |
Convertible Loan Facility
On August 6, 2020, the Company completed an amendment with Beedie on its Loan Facility (the "Loan Amendment"). As part of the Loan Amendment: (i) Beedie converted C$
| - 25 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
8. LOANS PAYABLE (cont'd...)
In August 2020, the Company drew down $
In August 2020, as per the terms of the Loan Amendment, Beedie converted C$
Following this conversion and draw down, under the Loan Facility and the Loan Amendment (together the "Amended Loan Facility") the Company had C$
In October 2020, Beedie converted the remaining C$
In March 2021, the Company drew down $
In March 2021, as per the terms of the Loan Amendment, Beedie converted the entire C$
In October 2021, the Company drew down $
| - 26 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
8. LOANS PAYABLE (cont'd...)
As at December 31, 2021, the Company had C$
For the twelve months ended December 31, 2021, the Company recognized finance charges of $
Other Loans
In connection with the Castle Mountain acquisition in October 2021 (Note 4), the Company entered into a $
9. REVENUE
| Twelve months ended December 31, 2021 |
Seven months ended December 31, 2020 |
Twelve months ended May 31, 2020 |
|||||||
| Royalty revenue | |||||||||
| Wharf | $ | $ | $ | ||||||
| COSE | |||||||||
| Joaquin | |||||||||
| Total royalty revenue | |||||||||
| Stream revenue - Endeavor | |||||||||
| Other fixed royalty payments | |||||||||
| Total revenue | $ | $ | $ |
The Company operates in one industry and has one reportable segment, which is reviewed by the chief operating decision maker.
| - 27 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
10. GENERAL AND ADMINISTRATIVE EXPENSES
| Twelve months ended December 31, 2021 |
Seven months ended December 31, 2020 |
Twelve months ended May 31, 2020 |
|||||||
| Compensation and benefits | $ | $ | $ | ||||||
| Corporate administration | |||||||||
| Professional fees | |||||||||
| Listing and filing fees | |||||||||
| Total general and administrative expenses | $ | $ | $ |
11. INCOME TAXES
Income tax expense differs from the amount that would result from applying Canadian income tax rates to earnings before income taxes. These differences result from the following items:
| Twelve months | Seven months | Twelve months | |||||||
| ended | ended | ended | |||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Loss before income taxes | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Canadian federal and provincial income tax rates | |||||||||
| Expected income tax recovery at statutory income tax rate | ( |
) | ( |
) | ( |
) | |||
| Difference between Canadian and foreign tax rate | ( |
) | ( |
) | ( |
) | |||
| Permanent differences | |||||||||
| Changes in unrecognized deferred tax assets | |||||||||
| Other adjustments | |||||||||
| Total income tax expense (recovery) | $ | ( |
) | $ | $ | ( |
) | ||
| Current income tax expense (recovery) | $ | $ | $ | ( |
) | ||||
| Deferred income tax expense (recovery) | $ | ( |
) | $ | $ | ( |
) |
| - 28 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
11. INCOME TAXES (cont'd...)
The composition of the Company's net deferred income tax asset (liability) that has been recognized is as follows:
| As at | |||||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Deferred tax assets: | |||||||||
| Mineral expenditures and capital assets | $ | $ | $ | ||||||
| Share issue costs | |||||||||
| Non-capital losses and others | |||||||||
| Unrecognized deferred tax assets | ( |
) | ( |
) | ( |
) | |||
| Deferred tax liabilities | ( |
) | ( |
) | ( |
) | |||
| Net deferred income tax liabilities | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The Company's significant temporary differences, unused tax credits, and unused tax losses that have not been recognized as deferred income tax assets as at December 31, 2021, are as follows:
| Mineral expenditures and other capital assets |
Share issue costs |
Non-capital losses and others |
Total | |||||||||
| Expiry 2026 to 2040 | $ | $ | $ | $ | ||||||||
| No expiry date |
Tax attributes are subject to review, and potential adjustments, by tax authorities.
12. SHARE CAPITAL
Authorized share capital consists of an unlimited number of common shares without par value.
(a) Issued Share Capital
As at December 31, 2021, the Company had
During the twelve months ended December 31, 2021, the Company:
- Issued
- issued
- issued
- issued
| - 29 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
12. SHARE CAPITAL (cont'd...)
During the seven months ended December 31, 2020, the Company:
- issued
- issued
- issued
- issued
- issued
During the twelve months ended May 31, 2020, the Company:
- issued
- issued
- issued
(b) Stock Options
The Company has adopted a stock option plan approved by the Company's shareholders. The maximum number of shares that may be reserved for issuance under the plan is limited to
The continuity of stock options for the twelve months ended December 31, 2021, was as follows:
| Weighted average exercise price (C$) |
Number outstanding |
|||||
| As at May 31, 2019 | $ | |||||
| Granted | ||||||
| Exercised | ( |
) | ||||
| Cancelled/Expired | ( |
) | ||||
| As at May 31, 2020 | $ | |||||
| Granted | ||||||
| Exercised | ( |
) | ||||
| As at December 31, 2020 | $ | |||||
| Granted | ||||||
| Exercised | ( |
) | ||||
| As at December 31, 2021 | $ |
| - 30 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
12. SHARE CAPITAL (cont'd...)
During the twelve months ended December 31, 2021, the Company granted
| Twelve months | Seven months | Twelve months | |||||||
| ended | ended | ended | |||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Risk free interest rate | |||||||||
| Expected dividend yield | |||||||||
| Expected stock price volatility | |||||||||
| Expected life in years | |||||||||
| Forfeiture rate |
For the twelve months ended December 31, 2021, in accordance with the vesting terms of the stock options granted, the Company recorded a charge to share-based payments expense of $
As at December 31, 2021, the weighted average remaining life of the stock options outstanding was
| Expiry date | Exercise price (C$) |
Number outstanding |
Number exercisable |
|||||||
| March 6, 2022 | $ | |||||||||
| July 31, 2022 | $ | |||||||||
| March 1, 2023 | $ | |||||||||
| September 17, 2023 | $ | |||||||||
| January 4, 2024 | $ | |||||||||
| January 15, 2025 | $ | |||||||||
| November 6, 2025 | $ | |||||||||
| April 27, 2026 | $ | |||||||||
(c) Share Purchase Warrants
On August 6, 2020, pursuant to the terms of the underlying agreements, the Company announced the acceleration of the expiry dates of certain warrants to September 4, 2020, in prior periods these warrants had expiry dates of December 31, 2020, and January 4, 2021. During the seven months ended December 31, 2020, all outstanding share purchase warrants were exercised or expired and as at December 31, 2020, and subsequent periods, the Company has no share purchase warrants outstanding.
| - 31 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
12. SHARE CAPITAL (cont'd...)
(d) Restricted Share Units
The Company has adopted an RSU plan approved by the Company's shareholders. The maximum number of RSUs that may be reserved for issuance under the plan is limited to
| Number | |||
| outstanding | |||
| As at May 31, 2019 | |||
| Granted | |||
| Settled | ( |
) | |
| As at May 31, 2020 | |||
| Granted | |||
| Settled | ( |
) | |
| As at December 31, 2020 | |||
| Granted | |||
| Settled | ( |
) | |
| As at December 31, 2021 |
For the twelve months ended December 31, 2021, in accordance with the vesting terms of the RSUs granted, the Company recorded a charge to share-based payments expense of $
13. RELATED PARTY TRANSACTIONS AND BALANCES
The aggregate value of transactions and outstanding balances relating to key management personnel were as follows:
| Twelve months ended December 31, 2021 |
Seven months ended December 31, 2020 |
Twelve months ended May 31, 2020 |
|||||||
| Salaries and fees | $ | $ | $ | ||||||
| Share-based payments | |||||||||
| $ | $ | $ |
As at December 31, 2021, the Company had $
| - 32 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Significant Non-Cash Investing and Financing Activities
During the twelve months ended December 31, 2021, the Company:
a) issued
b) issued
c) reallocated $
d) reallocated $
During the seven months ended December 31, 2020, the Company:
a) issued
b) issued
c) issued
d) issued
e) recognized $
f) reallocated $
g) reallocated $
h) reallocated $
During the twelve months ended May 31, 2020, the Company:
a) issued
b) issued
c) recognized $
d) entered into an agreement to sell the Tower Mountain project for $
e) issued
f) reallocated $
g) reallocated $
| - 33 - |
METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
15. FINANCIAL INSTRUMENTS
The Company classified its financial instruments as follows:
| As at | |||||||||
| December 31, | December 31, | May 31, | |||||||
| 2021 | 2020 | 2020 | |||||||
| Financial assets | |||||||||
| Amortized cost: | |||||||||
| Cash | $ | $ | $ | ||||||
| Royalty, derivative royalty, and stream receivables | |||||||||
| Other receivables | |||||||||
| Fair value through profit or loss: | |||||||||
| Derivative royalty asset | |||||||||
| Marketable securities | |||||||||
| Total financial assets | $ | $ | $ | ||||||
| Financial liabilities | |||||||||
| Amortized cost: | |||||||||
| Trade and other payables | $ | $ | $ | ||||||
| Loans payable | |||||||||
| Total financial liabilities | $ | $ | $ |
Fair value
Financial instruments recorded at fair value on the consolidated statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
a) Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
b) Level 2 - Inputs other than quoted prices that are observable for assets or liabilities, either directly or indirectly; and
c) Level 3 - Inputs for assets and liabilities that are not based on observable market data.
The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.
The carrying value of cash, receivables, and accounts payable and accrued liabilities approximated their fair value because of the short-term nature of these instruments. Marketable securities are classified within Level 1 of the fair value hierarchy. Royalty, derivative royalty, and stream receivables that reflect amounts that are receivable to the Company without further adjustments are classified as amortized cost. The fair value of the Company's loans payable is approximated by its carrying value as its interest rates are comparable to market interest rates. The derivative royalty asset was valued using inputs that are not observable, including a gold forward price curve, US$/A$foreign exchange rates based on forward curves, and an estimated discount rate (Note 5). Therefore, the derivate royalty asset is classified within Level 3 of the fair value hierarchy.
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METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
15. FINANCIAL INSTRUMENTS (cont'd...)
Capital risk management
The Company's objectives when managing capital are to provide shareholder returns through maximization of the profitable growth of the business and to maintain a degree of financial flexibility relevant to the underlying operating and metal price risks while safeguarding the Company's ability to continue as a going concern. The capital of the Company consists of share capital. The Board of Directors does not establish a quantitative return on capital criteria for management. 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. The Company may issue new shares in order to meet its financial obligations. The management of the Company believes that the capital resources of the Company as at December 31, 2021, are sufficient for its present needs for at least the next twelve months. The Company is not subject to externally imposed capital requirements.
Credit risk
Credit risk arises from cash deposits, as well as credit exposures to counterparties of outstanding receivables and committed transactions. There is no significant concentration of credit risk other than cash deposits. The Company's cash deposits are primarily held with a Canadian chartered bank. Receivables include value added tax due from the Canadian government. The carrying amount of financial assets recorded in the financial statements represents the Company's maximum exposure to credit risk. The Company believes it is not exposed to significant credit risk and overall, the Company's credit risk has not declined from the prior year.
Liquidity risk
The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from royalty interests, its holdings of cash, and its committed liabilities. The maturities of the Company's non-current liabilities are disclosed in Note 8. All current liabilities are settled within one year.
Currency risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company primarily operates in Canada, Australia, Argentina, Mexico, and the United States and incurs expenditures in currencies other than United States dollars. Thereby, the Company is exposed to foreign exchange risk arising from currency exposure. The Company has not hedged its exposure to currency fluctuations. Based on the above net exposure, as at December 31, 2021, and assuming that all other variables remain constant, a
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METALLA ROYALTY & STREAMING LTD. TWELVE MONTHS ENDED MAY 31, 2020 |
As at December 31, 2021, the Company had the following contractual obligations:
| Less than 1 year |
1 to 3 years |
Over 4 years |
Total | |||||||||
| Trade and other payables | $ | $ | $ | $ | ||||||||
| Loans payable principal and interest payments | ||||||||||||
| Payments related to acquisition of royalties and streams | ||||||||||||
| Total commitments | $ | $ | $ | $ |
In addition to the commitments above, the Company could in the future have additional commitments payable in cash and/or shares related to the acquisition of royalty and stream interests as disclosed in Note 4. However, these payments are subject to certain triggers or milestone conditions that have not been met as of December 31, 2021.
17. EVENTS AFTER REPORTING DATE
Subsequent to December 31, 2021, the Company amended an existing
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