Consolidated Financial Statements
For the Years Ended
Expressed in US Dollars
Consolidated Financial Statements
For the Years Ended
2
| Independent Auditor's Report |  |
To the Shareholders of Integra Resources Corp.:
Opinion
We have audited the consolidated financial statements of Integra Resources Corp. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2021 and December 31, 2020, and the consolidated statements of operations and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2021 and December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
3
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits and significant audit findings, including any significant deficiencies in internal control that we identify during our audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is
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| Chartered Professional Accountants | |
| March 30, 2022 |
4
Consolidated Statements of Financial Position
(Expressed in US Dollars)
| December 31, 2021 |
December 31, 2020 (Note 21) |
January 1, 2020 (Note 21) |
|||||||
| Assets | |||||||||
| Current Assets | |||||||||
| Cash and cash equivalents (Note 5) | $ | $ | $ | ||||||
| Receivables and prepaid expenses (Note 6) | |||||||||
| Loan receivable - current portion (Note 6) | |||||||||
| Total Current Assets | |||||||||
| Long-Term Deposits (Note 6) | |||||||||
| Restricted Cash (Note 7) | |||||||||
| Loan receivable - non-current portion (Note 6) | |||||||||
| Property, Plant and Equipment (Note 8) | |||||||||
| Right-of-Use Assets (Note 9) | |||||||||
| Exploration and Evaluation Assets (Note 10) | |||||||||
| Total Assets | $ | $ | $ | ||||||
| Liabilities | |||||||||
| Current Liabilities | |||||||||
| Trade and other payables (Note 12) | $ | $ | $ | ||||||
| Current reclamation and remediation liability (Note 15) | |||||||||
| Current lease liability (Note 9) | |||||||||
| Current equipment financing liability (Note 13) | |||||||||
| Due to related parties (Note 11) | |||||||||
| Total Current Liabilities | |||||||||
| Long-Term Lease Liability (Note 9) | |||||||||
| Long-Term Equipment Financing Liability (Note 13) | |||||||||
| Reclamation and Remediation Liability (Note 15) | |||||||||
| Total Liabilities | |||||||||
| Shareholders' Equity | |||||||||
| Share Capital (Note 16) | |||||||||
| Reserves (Note 16) | |||||||||
| Accumulated Other Comprehensive Income | |||||||||
| Accumulated Deficit | ( |
) | ( |
) | ( |
) | |||
| Total Equity | |||||||||
| Total Liabilities and Equity | $ | $ | $ |
Nature of Operations (Note 1); Commitments (Note 14); Subsequent Events (Note 20)
These consolidated financial statements were authorized for issue by the Board of Directors on March 30, 2022. They are signed on the Company's behalf by:
"Stephen de Jong" , Director "Anna Ladd-Kruger" , Director
The accompanying notes are an integral part of these consolidated financial statements.
5
Consolidated Statements of Operations and Comprehensive Loss
(Expressed in US Dollars)
| Years Ended December 31, | ||||||
| 2021 | 2020 (Note 21) | |||||
| Operating Expenses | ||||||
| General and Administrative Expenses | ||||||
| Depreciation - Property, plant and equipment (Note 8) | $ | ( |
) | $ | ( |
) |
| Depreciation - Right-of-use assets (Note 9) | ( |
) | ( |
) | ||
| Compensation and benefits | ( |
) | ( |
) | ||
| Corporate development and marketing | ( |
) | ( |
) | ||
| Office and site administration expenses | ( |
) | ( |
) | ||
| Professional fees | ( |
) | ( |
) | ||
| Regulatory fees | ( |
) | ( |
) | ||
| Stock-based compensation (Note 16) | ( |
) | ( |
) | ||
| ( |
) | ( |
) | |||
| Exploration and Evaluation Expenses (Note 10) | ( |
) | ( |
) | ||
| Operating Loss | $ | ( |
) | $ | ( |
) |
| Other Income (Expense) | ||||||
| Interest income | $ | $ | ||||
| Interest income - Loan receivable (Note 6) | ||||||
| Lease interest expenses (Note 9) | ( |
) | ( |
) | ||
| Financing interest expenses (Note 13) | ( |
) | ( |
) | ||
| Rent income - sublease (Note 9) | ||||||
| Reclamation accretion expenses (Note 15) | ( |
) | ( |
) | ||
| Gain on equipment sold | ||||||
| Foreign exchange loss | ( |
) | ( |
) | ||
| Total Other Income (Expense) | $ | ( |
) | $ | ( |
) |
| Net Loss | $ | ( |
) | $ | ( |
) |
| Other Comprehensive Income (Loss) | ||||||
| Foreign exchange translation | $ | $ | ( |
) | ||
| Presentation currency translation difference | ||||||
| Other Comprehensive Income | $ | $ | ||||
| Comprehensive Loss | $ | ( |
) | $ | ( |
) |
| Net Loss Per Share (Note 19) | ||||||
| - basic and diluted | $ | ( |
) | $ | ( |
) |
| Weighted Average Number of Shares (000's) | ||||||
| - basic and diluted (000's) (Note 19) | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
Consolidated Statements of Changes in Equity
(Expressed in US Dollars, except share numbers)
| Share Capital | Reserves | ||||||||||||||||||||
| Number of Shares |
Amount | Equity Incentive Awards |
Warrants | Accumulated Other Comprehensive Income (Loss) |
Deficit | Total | |||||||||||||||
| Balance at December 31, 2019 (Note 21) | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Share issued for cash | - | - | - | - | |||||||||||||||||
| Share issue cost - cash | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Share-based payments - options | - | - | - | - | - | ||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Presentation currency translation difference | - | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance at December 31, 2020 (Note 21) | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||
| Shares issued for cash - ATM | - | - | - | - | |||||||||||||||||
| Shares issued for cash - financing | - | - | - | - | |||||||||||||||||
| Share issue cost - cash | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Share-based payments - equity incentive awards | - | - | - | - | - | ||||||||||||||||
| Options exercised | ( |
) | - | - | - | ||||||||||||||||
| RSUs vested - share issuance | ( |
) | - | - | - | ( |
) | ||||||||||||||
| RSU vested - cash redemption | - | - | - | - | - | ||||||||||||||||
| Presentation currency translation difference | - | - | - | - | - | ||||||||||||||||
| Other comprehensive income | - | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Consolidated Statements of Cash Flows
(Expressed in US Dollars)
| Years Ended December 31, | ||||||
| 2021 | 2020 (Note 21) | |||||
| Operations | ||||||
| Net loss | $ | ( |
) | $ | ( |
) |
| Adjustments to reconcile net loss to cash flow from operating activities: | ||||||
| Depreciation - Property, plant and equipment (Note 8) | ||||||
| Depreciation - Right-of-use assets (Note 9) | ||||||
| Lease interest expenses (Note 9) | ||||||
| Financing interest expenses (Note 13) | ||||||
| Reclamation accretion expenses (Note 15) | ||||||
| Reclamation expenditures (Note 15) | ( |
) | ( |
) | ||
| Unrealized foreign exchange loss | ||||||
| Share-based payment (Note 16) | ||||||
| Net change in non-cash working capital items: | ||||||
| Receivables, prepaid expenses and other assets | ( |
) | ( |
) | ||
| Loan receivable (Note 6) | ( |
) | ( |
) | ||
| Lease liabilities | ( |
) | ( |
) | ||
| Financing liabilities | ||||||
| Trade and other payables | ( |
) | ||||
| Due to related parties | ||||||
| Cash flow used in operating activities | ( |
) | ( |
) | ||
| Investing | ||||||
| Additions to property, plant and equipment | ( |
) | ( |
) | ||
| Long-term investments (Note 7) | ||||||
| Loan receivable - principal portion (Note 6) | ||||||
| Property acquisition costs | ( |
) | ( |
) | ||
| Cash flow provided by (used in) investing activities | ( |
) | ||||
| Financing | ||||||
| Issuance of common shares - ATM & financing (Note 16) | ||||||
| Issuance of common shares - Options & RSUs (Note 16) | ||||||
| Share issue costs | ( |
) | ( |
) | ||
| Lease principal payments (Note 9) | ( |
) | ( |
) | ||
| Financing principal payments (Note 13) | ( |
) | ( |
) | ||
| Cash flow provided by financing activities | ||||||
| Increase (Decrease) in cash and cash equivalents | ( |
) | ||||
| Cash and cash equivalents at beginning of year | ||||||
| Cash and cash equivalents at end of year | $ | $ | ||||
Supplemental disclosure of non-cash activities in Note 18
The accompanying notes are an integral part of these consolidated financial statements.
8
1. NATURE OF OPERATIONS
Integra Resources Corp. ("Integra" or the "Company"), formerly Mag Copper Limited, was incorporated on April 15, 1997 as Berkana Digital Studios Inc. On December 4, 1998, the name of the Company was changed to Claim Lake Resource Inc. and on March 31, 2005, the Company changed its name to Fort Chimo Minerals Inc. On January 1, 2009, the Company amalgamated with its wholly-owned subsidiary, Limestone Basin Exploration Ltd. The amalgamated company continued to operate as Fort Chimo Minerals Inc. On June 14, 2011, the Company changed its name to Mag Copper Limited and on August 11, 2017, the Company changed its name to Integra Resources Corp.
The Company's head office is located at 1050 - 400 Burrard Street, Vancouver, BC V6C 3A6 and its registered office is located at 2200 HSBC Building, 885 West Georgia Street Vancouver, BC V6C 3E8.
The Company trades on the TSX Venture under the trading symbol "ITR". The common shares of the Company began trading on the NYSE American under the ticker "ITRG" on July 31, 2020. The common shares ceased trading on the OTCQX concurrently with the NYSE American listing.
Integra is a development stage company engaged in the acquisition, exploration, and development of mineral properties in the Americas. The primary focus of the Company is advancement of its DeLamar Project, consisting of the neighboring DeLamar and Florida Mountain Gold and Silver Deposits ("DeLamar" or the "DeLamar Project") in the heart of the historic Owyhee County mining district in southwestern Idaho. The Company is currently focused on resource growth through brownfield and greenfield exploration and the start of feasibility level studies designed to advance the DeLamar Project towards a potential construction decision.
The COVID-19 global outbreak may have an impact on the Company's business. Management has put in place all necessary measures to protect its employees' safety and to secure essential site activities. The Company continues to monitor the situation and the impact the virus may have on the DeLamar Project. Should the virus spread or/and travel restrictions re-instated, the Company's ability to advance the DeLamar Project may be impacted. Similarly, the Company's ability to obtain financing and the ability of the Company's vendors, suppliers, consultants, and partners to meet obligations may be impacted as a result of COVID-19 and efforts to contain the virus.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
These consolidated financial statements, including comparatives, have been prepared in accordance with and using accounting policies in full compliance with the International Financial Reporting Standards ("IFRS") and International Accounting Standards ("IAS") issued by the International Accounting Standards Board ("IASB") and Interpretations of the IFRS Interpretations Committee ("IFRIC"), effective for the Company's reporting for the year ended December 31, 2021.
These consolidated financial statements were authorized by the Board of Directors of the Company on March 30, 2022.
9
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies
(a) Basis of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Integra Resources Holdings Canada Inc., Integra Resources Holdings U.S. Inc., and DeLamar Mining Company. All intercompany balances and transactions are eliminated upon consolidation.
(b) Basis of Measurement
These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual accounting basis, except for cash flow information.
(c) Foreign Currency Translation
The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional currency of the Canadian parent company and its Canadian subsidiary is the Canadian dollar ("CAD"). The functional currency of the Company's two US subsidiaries is the US dollar ("USD"). The presentation currency of the Company was the Canadian dollar up to September 30, 2021. The Company changed its presentation currency to the US dollar as of December 31, 2021 (see Note 2.2 (d)).
Foreign currency transactions and balances
Foreign currency transactions are recorded initially at the exchange rates prevailing at the transactions' dates. At each subsequent reporting period:
- Foreign currency monetary items are reported at the closing rate at the date of the statement of financial position;
- Non-monetary items carried at historical rates are reported at the closing rate at transactions' dates;
- Non-monetary items carried at fair value are reported at the rates that existed when the fair values were determined.
When a foreign currency transaction involves an advance payment or receipt, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income is the date on which an entity initially recognized the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in net income (loss), with one exception. Exchange differences arising from the translation of the net investment in foreign entities are recognized in a separate component of equity, foreign currency translation reserve. When a foreign operation is sold, such exchange differences are recognized in net income (loss) as part of the gain or loss on sale.
10
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(c) Foreign Currency Translation (continued)
Translation of subsidiary results into the presentation currency
The operating results and statements of financial position of the parent's company and its Canadian subsidiary which have the Canadian dollar as a functional currency have been translated into US dollars as follows:
i) Assets and liabilities are translated at the closing rate at the date of the consolidated statement of financial position;
ii) Revenue and expenses are translated at the average exchange rates, unless there is significant fluctuation in the exchange rates. In that case revenue and expenses are translated at the exchange rate at the date of transaction, except depreciation, depletion, and amortization, which are translated at the exchange rates applicable to the related assets;
iii) All resulting translation differences are recognized in other comprehensive income (loss).
When a foreign operation is disposed of, the cumulative amount of the exchange differences recognized in other comprehensive income (loss) and accumulated in the separate component of equity relating to that foreign operation shall be recognized in profit or loss when the gain or loss on disposal is recognized.
(d) Presentation Currency Change
The Company has changed its presentation currency as of December 31, 2021 from the Canadian dollar to the US dollar, to better reflect the Company's business activities and most of the Company's assets and liabilities are held in its US subsidiaries hence denominated in US dollars. No changes were made to the Company's functional currencies, as per the management's assessment based on the IAS 21 recommendations, which will be performed on a quarterly basis.
The presentation currency change is regulated by IAS 8. Translation of the consolidated financial statements has been performed retroactively. The Company is not required to re-file previously filed financial statements or to revise its previous tax returns.
The comparative periods in these consolidated financial statements for the year ended December 31, 2021 have been restated from CAD to USD (see Note 21).
In order to satisfy the requirements of IAS 21 - The effects of changes in foreign exchange rates with respect to the change in presentation currency, these consolidated financial statements for the year ended December 31, 2021 have been translated from CAD to USD using the following procedures:
- Assets and liabilities for each consolidated statement of financial position presented (including comparatives) were translated at the closing rate at the date of that statement of financial position.
- Income and expenses for each statement presenting profit or loss and other comprehensive income (loss) (including comparatives) were translated at the average exchange rates.
11
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(d) Presentation Currency Change (continued)
- Consolidated statements of changes in equity: a) Share capital amounts were translated at the closing rate at the date of the statement of financial position, except for common shares issuance in USD dollars. All resulting differences were reported in the "presentation currency translation difference" line in the statements of changes in equity; b) Reserve items were translated at the average exchange rates; and c) Deficit amounts were translated at the average rates, and all resulting translation differences were reported in the other comprehensive income (loss) line.
- Consolidated statements of cash flows were translated at the average exchange rates.
(e) Cash and Cash Equivalents
Cash and cash equivalents are carried in the consolidated statements of financial position at fair value. Cash and cash equivalents consist of cash on deposit with banks and highly liquid investments that are readily convertible to known amounts of cash or have maturity dates at the date of purchase of three months or less.
Restricted cash is cash held in a bank account that is not available for the Company's general use.
(f) Exploration and Evaluation Properties, and Mineral Properties
Exploration and Evaluation Properties
Exploration expenditures are the costs incurred in the initial search for mineral deposits with economic potential or in the process of obtaining more information about existing mineral deposits. Exploration expenditures typically include costs associated with prospecting, sampling, mapping, drilling and other work involved in searching for minerals.
Evaluation expenditures are the costs incurred to establish the technical and commercial viability of developing mineral deposits identified through exploration activities or by acquisition. Evaluation expenditures include the cost of:
(i) establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable reserve;
(ii) determining the optimal methods of extraction and metallurgical and treatment processes;
(iii) studies related to surveying, transportation, and infrastructure requirements;
(iv) permitting activities; and
(v) economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.
12
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(f) Exploration and Evaluation Properties, and Mineral Properties (continued)
Exploration and Evaluation Properties (continued)
License costs paid in connection with a right to explore in an existing exploration area are expensed as incurred.
Once the legal right to explore has been acquired, exploration and evaluation expenditure is charged to profit or loss as incurred, unless it is concluded that a future economic benefit is more likely than not to be realized.
In evaluating if expenditures meet the criteria to be capitalized, several different sources of information are utilized. The information that is used to determine the probability of future benefits depends on the extent of exploration and evaluation that has been performed.
Exploration and evaluation expenditures incurred on a license where a NI 43-101 - Standards of Disclosure for Mineral Projects ("43-101") compliant resource has not yet been established are expensed as incurred until sufficient evaluation has occurred in order to establish a 43-101 compliant resource and on completion of a pre-feasibility study. Costs expensed during this phase are included in "exploration and evaluation expenses" in the consolidated statements of operations and comprehensive loss.
Costs of acquiring exploration and evaluation assets are capitalized. They are subsequently measured at cost less accumulated impairment.
Once development is sanctioned, exploration and evaluation assets are tested for impairment and transferred from "Exploration and Evaluation Assets" to "Mineral Properties and Deferred Development Costs" or "Property, Plant & Equipment" depending on the nature of the asset. No amortization is charged during the exploration and evaluation phase.
Mineral Properties
Mine development costs are capitalized if management determines that there is sufficient evidence to support probability of generating positive economic returns in the future. A mineral resource is considered to have economic potential when the technical feasibility and commercial viability of extraction of the mineral resource is demonstrable considering long-term metal prices.
Prior to capitalizing such costs, management determines if there is a probable future benefit that will contribute to future cash inflows, the Company can obtain the benefit and control access to it, and if the transaction or event giving rise to the benefit has already occurred.
If the Company does not have sufficient evidence to support the probability of generating positive economic returns in the future, mine development costs are expensed in the consolidated statements of operations and comprehensive loss.
13
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(f) Exploration and Evaluation Properties, and Mineral Properties (continued)
Mineral Properties (continued)
Amortization and Depletion
Exploration and evaluation assets and Mineral properties are not subject to depletion or amortization until a commercial production starts - they are tested for impairment when circumstances indicate that the carrying value may not be recoverable.
Disposal
At the disposal, gains or losses of an item within Exploration and Evaluation Properties, or Mineral Properties are calculated as the difference between the proceeds from disposal and the carrying amount. Those gains or losses are recognized net within other income in profit or loss.
(g) Plant, Property and Equipment
Equipment items are recorded at cost and depreciated over their estimated useful lives. The cost of an item includes the purchase price and directly attributable costs to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The Company's capitalization threshold is $2,500. Where an equipment item comprises major components with different useful lives, the components are accounted for as separate items of equipment.
Equipment items are depreciated on a straight-line basis over their estimated useful lives at the following rates:
Computers and software
Office furniture and equipment
Vehicles
Buildings and office improvements
Exploration building and water wells
Roads
Exploration equipment
Water treatment equipment
Permanent reclamation equipment
Development equipment
Land is not depreciated. When assets are retired or sold, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss.
14
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(h) Leased Assets
Lessees are required to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The right-to-use asset is initially measured at cost, which comprises the initial amount of the lease liability, adjusted for lease prepayments, lease incentives received, the lessee's initial direct cost (e.g., commissions) and an estimate of restoration, removal and dismantling costs. The lease liability is initially measured at the present value of the lease payments to be made over the lease term, using the implicit interest rate (if available) or incremental borrowing rate for the present value determination. Subsequently, lessees accrete the lease liability to reflect interest and reduce the liability to reflect lease payments made, and the related right-of-use asset is depreciated in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment. Right-of-use assets are subject to impairment testing under IAS 36 Impairment of Assets. Short-term leases and leases with low value underlying assets are recognized on a straight-line basis in the Company's consolidated statements of operations and comprehensive loss.
(i) Impairment of Non-Financial Assets
The Company's mineral properties and equipment are reviewed for any indication of impairment at each financial reporting date or at any time if any indications of impairment surface. If any such indication exists, an estimate of the recoverable amount is undertaken, being the higher of an asset's fair value less costs to sell and the asset's value in use. If the asset's carrying amount exceeds its recoverable amount, then an impairment loss is recognized in net income or loss for the period, and the carrying value of the asset on the consolidated statements of financial position is reduced to its recoverable amount. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. Fair value of mineral properties is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, discounted by an appropriate pre-tax discount rate to arrive at a net present value.
Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and from its ultimate disposal. Value in use is determined by applying assumptions specific to the Company's continued use which includes future development. As such, these assumptions may differ from those used in calculating fair value.
In testing for indicators of impairment and performing impairment calculations, assets are grouped in cash-generating units, which are identified as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets. The estimates of future discounted cash flows are subject to risks and uncertainties including estimated production, grades, recoveries, future metals prices, discount rates, exchange rates and operating costs.
Non-financial assets other than goodwill that have suffered an impairment are evaluated for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. When a reversal of a previous impairment is recorded, the reversal amount is adjusted for depreciation that would have been recorded had the impairment not been recorded.
15
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(j) Share Capital
Financial instruments issued by the Company are classified as equity only to the extend that they do not meet the definition of a financial liability or financial asset. The Company's common shares and share warrants are classified as equity instruments.
If the Company issues units as part of financing, consisting of both common shares and common share purchase warrants, the fair value of the warrants is determined using the Black-Scholes pricing model, and the remaining value is assigned to the common shares.
Equity-settled share-based compensation arrangements as per the Company's equity incentive plan (which includes stock options, restricted share units, and deferred share units) are measured at fair value at the date of grant and recorded within equity. The Company recognizes compensation expense for all stock options based on the fair value of the options on the date of grant which is determined using the Black-Scholes option pricing method. For equity settled restricted and deferred share units, compensation expense is recognized based on the quoted market value of the shares. The fair value at grant date of all share-based compensation is recognized as compensation expense over the vesting period, with a corresponding credit to shareholders' equity. The amount recognized as an expense is reversed to reflect stock options, restricted share units and deferred share units forfeited, so no expense will remain in the financial records in relation to the forfeited agreements.
(k) Reclamation and Remediation Provisions
The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Company recognizes the cost of future reclamation and remediation as a liability when: the Company has a legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reasonable estimate of the obligation can be made. The liability is measured initially by discounting expected costs to the net present value using pre-tax rates and risk assumptions specific to the liability. The resulting cost is capitalized to the carrying value of the related assets, or expensed to exploration, evaluation and development expenses where there is no carrying value of the related assets.
In subsequent periods, the liability is adjusted for accretion of the discount with the offsetting amount charged to the consolidated statements of operations and comprehensive loss as finance cost. Any change in the amount or timing of the underlying cash flows is adjusted to the carrying value of the liability, with the offsetting amount recorded as an adjustment to the reclamation and remediation provision cost included in mineral properties or exploration, evaluation and development expenses. Any amount charged to the carrying value of assets is depreciated over the remaining life of the relevant assets.
It is reasonably possible that the ultimate cost of remediation and reclamation could change in the future due to uncertainties associated with defining the nature and extent of environmental disturbance, the application of laws and regulations by regulatory authorities, changes in remediation technology and changes in discount rates. The Company reviews its reclamation and remediation provision at least annually and as evidence becomes available indicating that its remediation and reclamation liabilities may have changed. Any such changes in costs could materially impact the future amounts recorded as reclamation and remediation obligations.
16
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(l) Income Taxes
Income tax is recognized in net income or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized directly in equity. Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences), and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to be in effect when the temporary differences are likely to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is included in net income in the period in which the change is substantively enacted. The amount of deferred tax assets recognized is limited to the amount that is, in management's estimation, probable that future taxable profits will be available against which the asset can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off 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.
(m) Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Stock options and share purchase warrants are typically dilutive when the Company has net income for the period and the average market price of the common shares during the period exceeds the exercise price of the stock option and/or share purchase warrant.
The Company follows the treasury stock method for the calculation of diluted earnings per share. That method assumes that outstanding stock options and warrants with an average exercise price below the market price, are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market price of the common shares for the period. Under this method, diluted earnings per share are calculated by dividing net earnings for the period by the diluted weighted average shares outstanding during the period.
(n) Contingencies
Due to the size, complexity, and nature of the Company's operations, various legal and tax matters are outstanding from time to time. In case that management's estimate of the future resolution of these events changes, the Company will recognize the effects of those changes in the consolidated financial statements on the date such changes occur.
17
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(o) Financial Instruments
The classification and measurement of financial assets is based on the purpose for which the financial assets were acquired. The classification of investments in debt instruments is driven by the Company's business models for managing its financial assets and whether the contractual cash flows represent solely payments of principal and interest ("SPPI"). Investments in debt instruments are measured at amortized cost if the business model is to hold the instrument for collection of contractual cash flows and those cash flows are solely principal and interest. If the business model is not to hold the debt instrument, it is classified as FVTPL.
Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL. For other equity instruments, the Company can elect (on an instrument-by-instrument basis) to designate them as FVTOCI on the acquisition day.
Financial assets are initially measured at fair value and are subsequently measured at either (i) amortized cost; (ii) fair value through other comprehensive income, or (iii) at fair value through profit or loss.
• Amortized cost
Financial assets classified and measured at amortized cost are those assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and the contractual terms of the financial asset give rise to cash flows that are SPPI. Financial assets classified at amortized cost are measured using the effective interest method.
• Fair value through other comprehensive income ("FVTOCI")
Financial assets classified and measured at FVTOCI are those assets that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise to cash flows that are SPPI. This classification includes certain equity instruments for which an entity is allowed to make an irrevocable election to classify the equity instruments, on an instrument-by-instrument basis, that would otherwise be measured at fair value through profit or loss ("FVTPL") to present subsequent changes in FVTOCI.
• Fair value through profit or loss ("FVTPL")
Financial assets classified and measured at FVTPL are those assets that do not meet the criteria to be classified at amortized cost or at FVTOCI. This category includes debt instruments whose cash flow characteristics are not SPPI or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell the financial asset.
18
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(o) Financial Instruments (continued)
The expected credit loss impairment model is applicable to financial assets measured at amortized cost where any expected future credit losses are provided for, irrespective of whether a loss event has occurred as at the reporting date. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease is related to an event occurring after the impairment was recognized.
Loan receivable
This loan is regulated by the IFRS 9 - Financial instruments. The impairment test is based on the "expected credit loss" ("ECL") model. ECL is based on the evaluation of the range of possible outcomes, incorporating the time value of money (discount rate, based on the effective interest rate). It represents a probability-weighted estimate of the difference over the remaining life of the financial instrument between the present value of contractual cash flows and the present value of cash flows lenders expect to receive. It should be assessed for 12-month period (if there is no significant increase in credit risk since initial recognition) or for the whole term (if there is significant increase in credit risk since initial recognition). "12-month ECL" is the expected credit loss resulting from default events that are possible within 12 months after the reporting date. It is not the expected cash shortfalls over the 12-month period, but the entire credit loss on an asset weighted by the probability that the loss will occur in the next 12-month period.
Financial liabilities are generally classified and measured at fair value at initial recognition and subsequently measured at amortized cost.
Equipment Financing Liability
The equipment financing liability is initially measured at the present value of the payments to be made over the financing term, using the implicit interest rate (if available) or incremental borrowing rate for the present value determination. Subsequently, equipment financing liability is accreted to reflect interest and the liability is reduced to reflect financing payments.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Financial liabilities are derecognized when its contractual obligations are discharged or cancelled or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
19
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.2 Significant Accounting Policies (continued)
(p) Revenue from Contracts with Customers
The Company recognizes revenue from the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To recognize revenue, the Company should identify the contract with customers, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to each obligation, and recognize revenue when a performance obligation is satisfied by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service).
2.3 Adoption of New Standards
New Accounting Pronouncements
Certain pronouncements were issued by the International Accounting Standards Board (IASB) that are mandatory for accounting periods on or after January 1, 2021. Integra adopted the following amendments in 2021.
Interest Rate Benchmark Reform Phase II - IFRS 9 Financial Instruments, IAS 39 Financial Instruments, IFRS 7 Financial Instruments Disclosures, IFRS 4, Insurance Contracts, and IFRS 16, Leases - Amendments: In August 2020, IASB issued the second phase of this reform, addressing the effects of the reform on a company's financial statements that arise when an interest rate benchmark used to calculate interest on loans, leases, and hedge contracts is replaced with an alternative benchmark rate. It provides guidance on how to treat financial asserts and financial liabilities where the basis for determining the contractual cash flows changes due to the reform. The amendments are effective for annual periods beginning on or after January 1, 2021. No reinstatements of prior periods are required, except there could be some potential reinstatements of hedge relationships that were discontinued due to changes directly required by the reform.
Amendments to IAS 16 PP&E - Proceeds before intendent use: In May 2020, the International Accounting Standards Board (IASB) issued amendments to update IAS 16 PP&E. The Accounting Standards Board (AcSB) completed its endorsement process and incorporated the amendments into Part I of the CPA Canada Handbook - Accounting in September 2020. In the process of making an item of PP&E available for its intended use, a company may produce and sell items - e.g. minerals extracted in the process of constructing an underground mine or oil and gas from testing wells before starting production. These amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be available for use. Instead, the proceeds from selling such items, and the costs of producing those items, would be recognized in profit or loss. The amendments are effective for annual periods beginning on or after January 1, 2022. Integra has early adopted these amendments, as permitted.
The Company assessed that these amendments have no impact on its consolidated financial statements.
20
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.4 Significant Accounting Estimates and Judgments
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and other factors considered to be reasonable and are reviewed on an ongoing basis. Revisions to estimates and the resulting effects on the carrying amounts of the Company's assets and liabilities are accounted for prospectively. The Company has identified the following areas where estimates, assumptions and judgments are made and where actual results may differ from the estimates under different assumptions and conditions and may materially affect financial results of the Company's consolidated statements of financial position reported in future periods.
Significant Accounting Estimates
(a) Mineral Resource and Assessment of Impairment
The accuracy of resource estimates is a function of the quantity and quality of available data and assumptions made and judgments used in the geological and engineering interpretation and may be subject to revision based on various factors. Changes in resource estimates may impact the carrying value of mineral property, plant and equipment, the calculation of amortization and depletion, the capitalization of mine development costs, and the timing of cash flows related to reclamation and remediation provision.
The Company reviews each asset or cash generating unit at each reporting date to determine whether there are any indicators of impairment. If any such indication exists, a formal estimate of recoverable amount is performed, and an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating unit is measured at the higher of fair value less costs to sell and value in use.
The determination of fair value less costs to sell and value in use requires management to make estimates and assumptions about expected production and sales volumes, metal prices, ore tonnage and grades, recoveries, operating costs, reclamation and remediation costs, future capital expenditures and appropriate discount rates for future cash flows. The estimates and assumptions are subject to risk and uncertainty, and as such there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the assets may be further impaired or the impairment charge reduced with the impact recorded in the consolidated statements of operations and comprehensive loss.
(b) Share-Based Payments
The determination of the fair value of stock options or warrants using the Black-Scholes option pricing model, requires the input of highly subjective assumptions, including the expected price volatility. Changes in the subjective input assumptions could materially affect the fair value estimate.
21
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.4 Significant Accounting Estimates and Judgments (continued)
Significant Accounting Estimates (continued)
(c) Current and Deferred Taxes
Tax regulations are very complex and changing regularly. As a result, the Company is required to make judgments about the tax applications, the timing of temporary difference reversals, and the estimated realization of tax assets. Also, all tax returns are subject to further government's reviews, with the potential reassessments. All those facts can impact current and deferred tax provisions, deferred tax assets and liabilities, and operation results.
(d) Reclamation and Remediation Provision
The Company assesses its reclamation and remediation provisions annually or when new material information is available. The amounts recorded for reclamation and remediation provisions are based on estimates prepared by third party environmental specialists, if available, or by persons within the Company who have the relevant skills and experience. These estimates are based on remediation activities required by environmental laws, the expected timing of cash flows, and the pre-tax risk-free interest rates on which the estimated cash flows have been discounted. These estimates also include an assumption of the rate at which costs may inflate in future periods. Actual results could differ from these estimates. The estimates are related to the nature, cost and timing of the work to be completed, and may change with future changes to costs, environmental laws and regulations and remediation practices.
(e) Property, Plant and Equipment
Equipment items are recorded at cost and depreciated over their estimated useful lives. The cost of an item includes the purchase price and directly attributable costs to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Equipment items are depreciated on a straight-line basis over their estimated useful lives. Management reviews the estimated useful lives, residual values, and depreciation methods at the end of each financial year, and when circumstances indicate that such reviews should be made. Changes to estimated useful lives, residual values or depreciation methods resulting from such reviews are accounted for prospectively.
Significant Accounting Judgments
(a) Going Concern
These consolidated financial statements have been prepared on a going concern basis and 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. Management has applied judgment in the assessment of the Company's ability to continue as a going concern, considering all available information, and concluded that the going concern assumption is appropriate for a period of at least twelve months following the end of the reporting period.
Given the judgment involved, actual results may lead to a materially different outcome.
22
Integra Resources Corp. |
2. BASIS OF PREPARATION (continued)
2.4 Significant Accounting Estimates and Judgments (continued)
Significant Accounting Judgments (continued)
(b) Exploration and Evaluation Expenditures
The application of the Company's accounting policy for exploration and evaluation expenditure requires judgment to determine whether future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves.
(c) Assessment of Lease
The Company assessed whether a contract is or contains a lease. This assessment involves the exercise of judgment about whether it depends on a specific asset, whether the company obtains substantially all the economic benefits from the use of that asset, and whether the Company has the right to direct the use of the asset.
(d) Presentation Currency Change
Effective December 31, 2021, the Company changed its presentation currency from the Canadian dollar to the US dollar, to better reflect the Company's business activities. This change has been applied retrospectively (see Note 21).
3. CAPITAL MANAGEMENT
The Company's capital management goals are to: ensure there are adequate capital resources to safeguard the Company's ability to continue as a going concern; maintain sufficient funding to support the acquisition, exploration, and development of mineral properties and exploration and evaluation activities; maintain investors' and market confidence; and provide returns and benefits to shareholders and other stakeholders.
The Company's working capital as of December 31, 2021 was $
The Company's properties are in the exploration and development stage and, as a result, the Company currently has no source of operating cash flow. The Company intends to raise such funds as and when required to complete its projects. There is no assurance that the Company will be able to raise additional funds on reasonable terms. The only sources of future funds presently available to the Company are through the exercise of options, the sale of equity capital of the Company or the sale by the Company of an interest in any of its properties in whole or in part. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of the Company. There can be no assurance that the Company will be successful in its efforts to arrange additional financing, if needed, on terms satisfactory to the Company.
23
Integra Resources Corp. |
3. CAPITAL MANAGEMENT (continued)
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the year ended December 31, 2021.
4. FINANCIAL INSTRUMENTS
All financial instruments are initially measured at fair value plus or minus transaction costs (in case of a financial asset or financial liability not at fair value through profit or loss). Subsequent measurements are designed either at amortized costs or fair value (gains and losses are either recognized in profit or loss (fair value through profit or loss, FVTPL), or recognized in other comprehensive income (fair value through other comprehensive income, FVTOCI)).
Fair Value
IFRS requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 - Inputs that are not based on observable market data.
The Company's financial instruments are accounted for as follows under IFRS 9:
| FINANCIAL ASSETS: | CLASSIFICATION |
| Cash and cash equivalents | FVTPL |
| Receivables (excluding tax receivables) | Amortized cost, less any impairment |
| Loan receivable | Amortized cost, less any impairment |
| Restricted cash, long-term | Amortized cost, less any impairment |
| FINANCIAL LIABILITIES: | CLASSIFICATION |
| Trade and other payables | Other financial liabilities, measured at amortized cost |
| Due to related parties | Other financial liabilities, measured at amortized cost |
| Lease liability | Other financial liabilities, measured at amortized cost |
| Equipment financing liability | Other financial liabilities, measured at amortized cost |
The following table summarizes the Company's financial instruments classified as FVTPL as at December 31, 2021, December 31, 2020, and January 1, 2020:
| Level | December 31, 2021 |
December 31, 2020 |
January 1, 2020 |
|
| FINANCIAL ASSETS: | ||||
| Cash and cash equivalents | 1 | $ |
$ |
$ |
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Integra Resources Corp. |
4. FINANCIAL INSTRUMENTS (continued)
Fair value estimates of all financial instruments are made at a specific point in time, based on relevant market information and information about financial instruments. These estimates are subject to and involve uncertainties and matters of significant judgment, therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The Company's lease liability and equipment financing liability are recorded at amortized costs using effective interest rate method. Lease liability and equipment financing liabilities are initially measured at the present value of the payments to be made over the lease (financing) term, using the implicit interest rate (if available) or incremental borrowing rate for the present value determination. For restricted cash, lease liabilities and equipment financing liabilities, the carrying values approximate their fair values at the period end because the interest rates used to discount host contracts approximate market interest rates. The carrying values of other financial assets, trade and other payables and due to related parties approximate their fair values due to the short-term nature of these items.
A summary of the Company's risk exposures as it relates to financial instruments are reflected below:
i) Credit Risk
Credit risk is the risk of loss associated with a counter-party's inability to fulfill its payment obligations. The credit risk is attributable to various financial instruments, as noted below. The credit risk is limited to the carrying value amount carried on the consolidated statements of financial position.
a. Cash and cash equivalents - Cash and cash equivalents are held with major Canadian and U.S. banks and therefore the risk of loss is minimal.
b. Receivables (excluding tax receivables) - The Company is not exposed to significant credit risk as its receivables are insignificant.
c. Loan receivable - An impairment test based on the expected loss model is being performed quarterly, and management assessed that the credit risk related to the loan receivable is low (see Note 6).
ii) Liquidity Risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they become due. The Company intends on securing further financing to ensure that the obligations are properly discharged.
25
Integra Resources Corp. |
4. FINANCIAL INSTRUMENTS (continued)
iii) Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, commodity prices and/or stock market movements (price risk).
a. Interest Rate Risk
Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. There is no interest rate risk related to the Company's financing liability. Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with a chartered Canadian and US financial institutions. The Company considers this risk to be immaterial.
b. Foreign Exchange Risk
The Company is exposed to currency fluctuations given that most of its expenditures are incurred in the US. To manage this risk and mitigate its exposure to exchange rates fluctuation, the Company holds most of its cash and short-term investments in USD (see Note 5).
During the year ended December 31, 2021, the Company recognized a net foreign exchange loss of $
| At December 31, 2021 | Possible exposure* | Impact on net loss | Impact on net loss |
| US dollar | +/- |
$ |
$( |
*Possible exposure is based on management's best estimate of the reasonably possible fluctuations of foreign exchange rates in the next twelve months.
5. CASH AND CASH EQUIVALENTS
The balance at December 31, 2021 consists of $
26
Integra Resources Corp. |
6. RECEIVABLES, PREPAID EXPENSES, DEPOSITS, AND LOAN RECEIVABLE
| Receivables and Prepaid Expenses As at |
December 31, 2021 | December 31, 2020 | January 1, 2020 | ||||||
| Receivables | $ | $ | $ | ||||||
| Prepaid expenses | |||||||||
| Total Receivables and Prepaid Expenses | $ | $ | $ |
| Long-Term Deposits As at | December 31, 2021 | December 31, 2020 | January 1, 2020 | ||||||
| Long-term security deposit* | $ | $ | $ | ||||||
| Total Long-Term Deposits | $ | $ | $ |
*Long-term security deposit is related to the head-office lease, Boise office lease, utility, equipment rental, and the campground lease security deposits.
At December 31, 2021, December 31, 2020, and January 1, 2020, the Company anticipates full recovery or full utilization of these amounts and therefore no impairment has been recorded against these receivables, prepaid expenses, and long-term deposits. The Company holds no collateral for any receivable amounts outstanding as at December 31, 2021, December 31, 2020, and January 1, 2020.
Loan receivable
In August 2020, the Company extended a $
The first payment was originally due on January 31, 2021 but was subsequently deferred to April 30, 2021. A total of three repayments were made in 2021. This restaurant is now serving the local community and the Company's employees and contractors.
A summary of the changes in the loan receivable for the years ended December 31, 2021 and 2020 is as follows:
| Loan receivable | |||
| Balance, January 1, 2020 | $ | ||
| Loan receivable | |||
| Principal payments | |||
| Balance, December 31, 2020 | $ | ||
| Loan receivable - addition | |||
| Principal payments | ( |
) | |
| Balance, December 31, 2021 | $ |
27
Integra Resources Corp. |
Loan receivable (continued)
| December 31, 2021 | December 31, 2020 | |||||
| Current portion | $ | $ | ||||
| Non-current portion |
Interest income in the current year ended December 31, 2021 was $
An impairment test is being performed quarterly, based on the expected credit loss model. Management assessed the credit risk related to the loan as low (Note 4(i)). Integra is protected as the loan is fully secured on building and land, as per the Promissory Note agreement.
7. RESTRICTED CASH
The Company's restricted cash at December 31, 2021 consists of $
28
Integra Resources Corp. |
8. PROPERTY, PLANT AND EQUIPMENT
| Computers and software |
Office furniture and equipment |
Vehicles | Buildings, well, road, and buildings improvements |
Equipment | Total | |||||||||||||
| Cost | ||||||||||||||||||
| Balance at January 1, 2020 | $ | $ | $ | $ | $ | $ | ||||||||||||
| Additions (adjustments) | ||||||||||||||||||
| Translation difference | ||||||||||||||||||
| Balance at December 31, 2020 | ||||||||||||||||||
| Additions (adjustments) | ||||||||||||||||||
| Translation difference | ||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | $ | $ | $ | ||||||||||||
| Accumulated Depreciation | ||||||||||||||||||
| Balance at January 1, 2020 | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Depreciation | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||
| Translation difference | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| Balance at December 31, 2020 | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||
| Depreciation | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||
| Translation difference | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
| Balance at December 31, 2021 | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Carrying amounts | ||||||||||||||||||
| January 1, 2020 | $ | $ | $ | $ | $ | $ | ||||||||||||
| December 31, 2020 | $ | $ | $ | $ | $ | $ | ||||||||||||
| December 31, 2021 | $ | $ | $ | $ | $ | $ |
29
Integra Resources Corp. |
9. LEASES - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
A summary of the changes in right-of-use assets for the years ended December 31, 2021 and 2020 is as follows:
| Right-of-Use Assets | Head office rent (5-year term) |
Vehicles (3 & 4-year term) |
Equipment (3-year term) |
DeLamar office rent (3.7 and 5-year terms) |
Total | ||||||||||
| Balance, January 1, 2020 | $ | $ | $ | $ | $ | ||||||||||
| Additions | |||||||||||||||
| Depreciation | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Translation differences | |||||||||||||||
| Balance, December 31, 2020 | |||||||||||||||
| Additions | |||||||||||||||
| Depreciation | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Translation differences | |||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ |
A summary of the changes in lease liabilities for the years ended December 31, 2021 and 2020 is as follows:
| Lease Liabilities | Head office rent | Vehicles | Equipment | DeLamar office rent |
Total | ||||||||||
| Balance, January 1, 2020 | $ | $ | $ | $ | $ | ||||||||||
| Short-term lease liability at initial recognition | |||||||||||||||
| Long-term lease liability at initial recognition | ( |
) | |||||||||||||
| Payments - principal portion | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Adjustments | |||||||||||||||
| Translation differences | |||||||||||||||
| Balance, December 31, 2020 | |||||||||||||||
| Short-term lease liability at initial recognition | |||||||||||||||
| Long-term lease liability at initial recognition | |||||||||||||||
| Payments - principal portion | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||
| Adjustments (rent adjustments & final payment reconciliations) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||
| Translation differences | |||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ |
Right-of-use assets are initially measured at cost, which comprise the initial amount of lease liabilities, adjusted for lease prepayments, lease incentive received, lease initial direct costs, and an estimate of restauration, removal, and dismantling costs. Those right-of-use assets are depreciated on a straight-line basis, over the lease terms.
30
Integra Resources Corp. |
9. LEASES - RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (continued)
Lease liabilities are initially measured at the present value of the lease payments to be made over the lease terms, using the effective interest method for the present value determination. When the rate implicit in the lease cannot be readily determined, the Company applied an estimated incremental borrowing rate. The applied interest rates in these leases ranged between
Carrying lease liabilities amounts and the interest expense changes are as follows:
| Current lease liability |
Long-term lease liability |
Total lease liabilities |
Interest expenses |
|||||||||
| Balance, January 1, 2020 | $ | $ | $ | $ | ||||||||
| Balance, December 31, 2020 | ||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ |
The Company subleased a portion of its head office to three companies for a rent income of $
Operating Leases
The Company elected to apply recognition exemption under IFRS 16 on its short-term rent agreements related to its office and equipment rentals. For the year ended December 31, 2021, the Company expensed $
10. EXPLORATION AND EVALUATION ASSETS
The DeLamar Project consists of the neighbouring DeLamar and Florida Mountain Gold and Silver Deposits, located in the heart of the historic Owyhee County mining district in south western Idaho.
DeLamar Gold and Silver Deposit
On November 3, 2017, the Company acquired
31
Integra Resources Corp. |
10. EXPLORATION AND EVALUATION ASSETS (continued)
A portion of the DeLamar Project was subject to a
Florida Mountain Gold and Silver Deposit
Integra executed in December 2017 Purchase and Sale Agreements with two private entities (Empire and Banner) to acquire patented claims in the past-producing Florida Mountain Gold and Silver Deposit ("Florida Mountain") for a total consideration of $
War Eagle Gold-Silver Deposit
In December 2018, the Company has entered into an option agreement with Nevada Select Royalty Inc. ("Nevada Select"), a wholly owned subsidiary of Ely Gold Royalties Inc. ("Ely Gold") to acquire Nevada Select's interest in a State of Idaho Mineral Lease (the "State Lease") encompassing the War Eagle gold-silver Deposit ("War Eagle") situated in the DeLamar District, southwestern Idaho. Upon exercise of the option, Nevada Select will transfer its right, title and interest in the State Lease, subject to a
- $
- $
- $
- $
- $
- $
Integra has the right to accelerate the payments and exercise of the option at anytime prior to the fourth-year anniversary. The State Lease is subject to an underlying
On June 21, 2021, Gold Royalty Corp. ("GRC") and Ely Gold announced that they have entered into a definitive agreement pursuant to which GRC will acquire all of the issued and outstanding common shares of Ely Gold by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia). The transaction was subsequently completed on August 23, 2021, with no impact on the option agreement the Company signed with Nevada Select.
In the War Eagle Mountain District, Integra had previously acquired the Carton Claim group comprising of six patented mining claims covering 45 acres and located 750m north of the State Lease.
BlackSheep District
The Company staked a number of the BlackSheep claims in 2018. The staking was completed in early 2019.
32
Integra Resources Corp. |
10. EXPLORATION AND EVALUATION ASSETS (continued)
Exploration and Evaluation Assets Summary:
| Total | |||
| Balance at January 1, 2020 | $ | ||
| Land acquisitions/option payments | |||
| Claim staking | |||
| Legal expenses | |||
| Title review and environment | |||
| Reclamation adjustment* | |||
| Depreciation** | ( |
) | |
| Total | |||
| Advance minimum royalty | |||
| Balance at December 31, 2020 | |||
| Land acquisitions/option payments | |||
| Claim staking | |||
| Reclamation adjustment* | ( |
) | |
| Depreciation** | ( |
) | |
| Total | |||
| Advance minimum royalty | |||
| Balance at December 31, 2021 | $ |
*Reclamation adjustment is the change in present value of the reclamation liability, mainly due to changes to inflation rate and discount rate. Also see Note 15.
**A staff house building with a carrying value of $
The Company spent $
The following tables outline the Company's exploration and evaluation expense summary for the years ended December 31, 2021 and 2020:
33
Integra Resources Corp. |
10. EXPLORATION AND EVALUATION ASSETS (continued)
Exploration and Evaluation Expense Summary:
| December 31, 2021 | DeLamar deposit |
Florida Mountain deposit |
War Eagle deposit |
Other deposits |
Joint expenses |
Total | ||||||||||||
| Contract exploration drilling | $ | $ | $ | $ | $ | $ | ||||||||||||
| Contract metallurgical drilling | ||||||||||||||||||
| Contract condemnation drilling | ||||||||||||||||||
| Exploration drilling - other drilling labour & related costs | ||||||||||||||||||
| Metallurgical drilling - other drilling labour & related costs | ||||||||||||||||||
| Condemnation drilling - other drilling labour & related costs | ||||||||||||||||||
| Other exploration expenses* | ||||||||||||||||||
| Other development expenses** | ||||||||||||||||||
| Land*** | ||||||||||||||||||
| Permitting | ||||||||||||||||||
| Metallurgical test work | ||||||||||||||||||
| Technical reports and studies | ||||||||||||||||||
| Community engagement | ||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ |
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM and IDL annual fees, consulting, property taxes, legal, etc. expenses
| December 31, 2020 | DeLamar deposit |
Florida Mountain deposit |
War Eagle deposit |
Other deposits |
Joint expenses |
Total | ||||||||||||
| Contract exploration drilling | $ | $ | $ | $ | $ | $ | ||||||||||||
| Contract metallurgical drilling | ||||||||||||||||||
| Exploration drilling - other drilling labour & related costs | ||||||||||||||||||
| Metallurgical drilling - other | ||||||||||||||||||
| drilling labour & related costs | ||||||||||||||||||
| Other exploration expenses* | ||||||||||||||||||
| Other development expenses** | ||||||||||||||||||
| Land*** | ||||||||||||||||||
| Permitting | ||||||||||||||||||
| Metallurgy test work | ||||||||||||||||||
| Technical reports and studies | ||||||||||||||||||
| Community engagement | ||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ |
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants.
**Includes development G&A expenses and payroll
***Includes BLM and IDL annual fees, consulting, property taxes, legal, etc. expenses
34
Integra Resources Corp. |
11. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
Related parties include the Board of Directors and officers and enterprises that are controlled by these individuals as well as certain consultants performing similar functions.
As December 31, 2021, $
Key Management Compensation:
Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company's Board of Directors and corporate officers.
Remuneration attributed to executives and directors for the years ended December 31, 2021 and 2020 were as follows:
| December 31, 2021 | December 31, 2020 | |||||
| Short-term benefits* | $ | $ | ||||
| Associate companies** | ( |
) | ( |
) | ||
| Stock-based compensation | ||||||
| Total | $ | $ |
*Short-term employment benefits include salaries, consulting fees, vacation accruals and bonus accruals for key management. It also includes directors' fees for non-executive members of the Company's Board of Directors.
**Net of payable/receivable/GST due to/from entities for which Integra's directors are executives, mostly related to rent and office expenses.
In the current year ended December 31, 2021, the Company issued
The Company did not issue DSUs in lieu of directors' fees in 2020. The option to receive DSUs in lieu of cash directors' fees was introduced in 2021 in order to encourage insiders' ownership.
12. TRADE AND OTHER PAYABLES
Trade and other payables of the Company are principally comprised of amounts outstanding for trade purchases relating to exploration activities and amounts payable for operating and financing activities. The usual credit period taken for trade purchases is 30 days. The majority of the Company's payables relates to development and exploration expenditures, legal and office expenses, and consulting fees.
35
Integra Resources Corp. |
12. TRADE AND OTHER PAYABLES (continued)
The following is a breakdown of the trade and other payables:
| As at | December 31, 2021 |
December 31, 2020 |
January 1, 2020 |
||||||
| Total Accounts Payable | $ | $ | $ | ||||||
| Accrued Liabilities | |||||||||
| Total Trade and Other Payables | $ | $ | $ |
Accrued liabilities at December 31, 2021, December 31, 2020, and January 1, 2020, include mostly accruals for project exploration and development expenditures, payroll, vacation, professional services, and office expenses.
13. EQUIPMENT FINANCING
During the previous fiscal year, the Company's wholly owned subsidiary, DeLamar Mining Company, purchased a dozer and two small excavators and entered into a 48-month mobile equipment financing agreement in the amount of $
During the second quarter of 2021, the Company's wholly owned subsidiary, DeLamar Mining Company, purchased a dozer and entered into a 48-month mobile equipment financing agreement in the amount of $
The equipment financing liability is initially measured at the present value of the payments to be made over the financing term, using the
A summary of the changes in the equipment financing liabilities and the interest expenses for the years ended December 31, 2021 and 2020 is as follows:
| Financing Liabilities Equipment | |||
| Balance, January 1, 2020 | $ | ||
| Financing liabilities at initial recognition | |||
| Principal payments | ( |
) | |
| Balance, December 31, 2020 | |||
| Addition | |||
| Principal payments | ( |
) | |
| Balance, December 31, 2021 | $ |
| December 31, 2021 | December 31, 2020 | |||||
| Current liability portion | $ | $ | ||||
| Long-term liability portion |
36
Integra Resources Corp. |
13. EQUIPMENT FINANCING (continued)
| Interest expenses | |||
| Balance, December 31, 2020 | $ | ||
| Balance, December 31, 2021 | $ |
14. COMMITMENTS AND CONTRACTUAL OBLIGATIONS
Net Smelter Return
A portion of the DeLamar Project is subject to a
Please see Note 10 for additional details.
Advance Minimum Royalties, Land Access Lease Payments, and Annual Claim Filings
The Company is required to make property rent payments related to its mining lease agreements with landholders and the Idaho Department of Lands ("IDL"), in the form of advance minimum royalties ("AMR"). There are multiple third-party landholders, and the royalty amounts due to each of them over the life of the Project varies with each property.
The Company's AMR obligation was $
The Company's obligation related to land and road access lease payments, option payments and IDL rent payments was $
The Company's obligation for BML claim fees was $
The increase in land related payments from 2020 to 2021 is mostly a result of the Company's increased land position and new land leases.
Other Commitments
The Company's commitments and contractual obligations at December 31, 2021 are as follows:
| Commitments and contractual obligations |
Less than one year commitment |
1 - 3 years commitment |
3 - 5 years commitment |
Over 5 years commitment |
Total | ||||||||||
| Contractual obligations* | |||||||||||||||
| Total | $ | $ | $ | $ | $ |
*Contractual obligations are related to various exploration and development commitments.
37
Integra Resources Corp. |
15. RECLAMATION AND REMEDIATION LIABILITIES
The Company conducts its operations so as to protect the public health and the environment, and to comply with all applicable laws and regulations governing protection of the environment. The site has been reclaimed by the former owner, Kinross, and the Company's environmental liabilities consist mostly of water treatment, general site maintenance and environmental monitoring costs.
The reclamation and remediation obligation represents the present value of the water treatment and environmental monitoring activities expected to be completed over the next 70 years. The cost projection has been prepared by an independent third party with expertise in mining site reclamation. Water treatment costs could be reduced in the event that mining at DeLamar resumes in the future. The Company's cost estimates do not currently assume any future mining activities. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual water treatment and environmental monitoring costs will ultimately depend upon future market prices for the required activities that will reflect market conditions at the relevant time.
For the year ended December 31, 2020, the Company reviewed and revised some of its December 31, 2019 assumptions and estimates. The discount rate assumption changed significantly in 2020 as it is based on the US Treasury rate. As a result, the discount rate
For the year ended December 31, 2021, the Company reviewed and revised some of its December 31, 2020 assumptions and estimates. The discount rate assumption changed in 2021 as it is based on the US Treasury rate. As a result, the discount rate
Changes resulting from the reclamation assumptions revision are recognized as a change in the carrying amount of the reclamation liability and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset (see Note 10).
38
Integra Resources Corp. |
The following table details the changes in the reclamation and remediation liability.
| Water Treatment, General Site Maintenance and Environmental Monitoring | $ | ||
| Liability balance at January 1, 2020 | |||
| Reclamation spending | ( |
) | |
| Accretion expenses | |||
| Reclamation adjustment | |||
| Liability balance at December 31, 2020 | |||
| Reclamation spending | ( |
) | |
| Accretion expenses | |||
| Reclamation adjustment | ( |
) | |
| Balance at December 31, 2021 |
| December 31, 2021 | December 31, 2020 | January 1, 2020 | |||||||
| Current portion | $ | $ | $ | ||||||
| Non-current portion |
As at December 31, 2021, the current portion of the reclamation and remediation obligation of $
Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated reclamation and remediation obligations.
The Company's reclamation and remediation bonds as of December 31, 2021 amount to $
| Reclamation and Remediation Bonds | December 31, 2021 | December 31, 2020 | ||||
| Idaho Department of Lands | ||||||
| Idaho Department of Environmental Quality | ||||||
| Bureau of Land Management - Idaho State Office | ||||||
| Total | $ | $ |
The Company's reclamation and remediation obligations are secured with surety bonds, which are subject to a
39
Integra Resources Corp. |
16. SHARE CAPITAL
As required by IFRS, all references to share capital, common shares outstanding and per share amounts in these consolidated financial statements and the accompanying notes have been restated retrospectively to reflect a
Share Capital
On July 9, 2020, the Company completed a share consolidation on a
The Company is authorized to issue an unlimited number of common shares without par value. As at December 31, 2021, the number of total issued and outstanding common shares is
Activities during the year ended December 31, 2021
At the Market ("ATM") Sales
In the first quarter of 2021, the Company sold
In the second quarter of 2021, the Company sold
In the third quarter of 2021, the Company sold
The Company did not sell shares under its ATM during the fourth quarter of 2021.
Equity Financings
On September 17, 2021, the Company completed a public bought deal of
Equity Incentives
In February 2021, the Company issued
In March 2021, the Company issued
In May 2021, the Company approved a cash redemption of
40
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Activities during the year ended December 31, 2021 (continued)
In June 2021, the Company issued
In July 2021, the Company issued
In September 2021, the Company issued
In December 2021, the Company issued
In December 2021, the Company approved cash redemption of
Activities during the year ended December 31, 2020
In February 2020, the Company announced that it had graduated to Tier 1 of the TSX-V and the remaining
On September 14, 2020, the Company completed a public bought deal of
In December 2020, the Company established an At-The-Market ("ATM") offering and filed a prospectus supplement on December 30, 2020. In the second quarter of 2021, the Company issued its first shares under the ATM.
Equity Incentive Awards
The Company has an equity incentive plan ("the Equity Incentive Plan") whereby the Company's Board of Directors, within its sole discretion, can grant to directors, officers, employees and consultants, stock options to purchase shares of the Company, restricted share units ("RSU") and deferred share units ("DSU") (together the "Awards"). The Equity Incentive Plan provides for the issuance of Awards to acquire up to
In addition, the aggregate number of shares that may be issued and issuable under this Equity Incentive Plan (when combined with all of the Company's other security-based compensation arrangements, as applicable):
41
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Equity Incentive Awards (continued)
(a) to any one participant, within any one-year period shall not exceed
(b) to any one consultant (who is not otherwise an eligible director), within a one-year period shall not exceed
(c) to eligible persons (as a group) retained to provide investor relations activities, within a one-year period shall not exceed
(d) to insiders (as a group) shall not exceed
(e) to insiders (as a group) within any one-year period shall not exceed
(f) to any one insider and his or her associates or affiliates within any one-year period shall not exceed
In no event will the number of shares that may be issued to any one participant pursuant to Awards under this Equity Incentive Plan (when combined with all of the Company's other security-based compensation arrangement, as applicable) exceed
Stock Options
A summary of the changes in stock options for the years ended December 31, 2021 and 2020 is as follows:
| December 31, 2021 | December 31, 2020 | |||||||||||
| Weighted | Weighted | |||||||||||
| Average | Average | |||||||||||
| Options | Exercise Price | Options | Exercise Price | |||||||||
| Outstanding at the beginning of year | $ | $ | ||||||||||
| Granted | ||||||||||||
| Exercised | ( |
) | - | - | ||||||||
| Forfeited/Expired | ( |
) | ( |
) | ||||||||
| Outstanding at the end of year | $ | $ | ||||||||||
*The weighted average share price on the date stock options were exercised during the year ended December 31, 2021 was $
42
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Stock Options (continued)
The following table provides additional information about outstanding stock options as December 31, 2021:
| No. of options outstanding |
Weighted average remaining life (Years) |
Exercise price | No. of options currently exercisable |
Expiration date | |
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| $ |
|||||
| Total | $ |
Share-based payments - stock options
A summary of the changes in the Company's reserve for share-based payments related to the stock options for the years ended December 31, 2021 and 2020 is set out below:
| December 31, 2021 | December 31, 2020 | |||||
| Balance at beginning of year | $ | $ | ||||
| Share-based payments - options | ||||||
| Share-based payments - options exercised | ( |
) | ||||
| Balance at the end of year | $ | $ |
Total share-based payments related to the stock options included in the statements of operations and comprehensive loss and the statements of changes in equity in the year ended December 31, 2021 was $
During the current year ended December 31, 2021,
43
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Share-based payments - stock options (continued)
On December 16, 2021, the Company granted
On February 24, 2021, the Company granted
On December 15, 2020, the Company granted
On October 5, 2020, the Company granted
On September 22, 2020, the Company granted
On March 16, 2020, the Company granted
The following assumptions were used for the Black-Scholes valuation of stock options granted during the years ended December 31, 2021 and 2020:
|
|
December 31, 2021 |
December 31, 2020 |
|
Dividend rate |
||
|
Expected annualized volatility |
|
|
|
Risk free interest rate |
|
|
|
Expected life of options |
|
|
|
Weighted average of strike price of options granted |
$ |
$ |
44
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Restricted Share Units
Restricted share units are the equity settled units, granted under the Company's Equity Incentive Plan and are accounted for based on the market value of the underlying shares on the date of grant and vest in equal installments annually over three years. The aggregate maximum number of shares available for issuance from treasury underlying restricted share units under the Equity Incentive Plan was increased in the current year ended December 31, 2021 from
A summary of the changes in restricted share units for the years ended December 31, 2021 and 2020 is as follows:
| Restricted share units |
Weighted average grant date FV |
|||||
| Outstanding at beginning of year | $ | |||||
| Granted | $ | |||||
| Outstanding, December 31, 2020 | $ | |||||
| Vested - shares issued | ( |
) | $ | |||
| Vested - cash redemption (no shares issued) | ( |
) | $ | |||
| Forfeited/Expired | ( |
) | $ | |||
| Granted | $ | |||||
| Outstanding, December 31, 2021* | $ |
*Included in the outstanding RSUs are
Share-based payments - restricted share units
A summary of the changes in the Company's reserve for share-based payments related to the restricted share units for the years ended December 31, 2021 and 2020 is set out below:
| December 31, 2021 | December 31, 2020 | |||||
| Balance at beginning of year | $ | $ | ||||
| Share-based payments - RSUs | ||||||
| Share-based payments - RSUs vested | ( |
) | ||||
| Balance at the end of year | $ | $ |
Total share-based payments related to the restricted share units included in the statements of operations and comprehensive loss and the statements of changes in equity in the year ended December 31, 2021 was $
During the current year ended December 31, 2021, a total of
45
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Restricted Share Units (continued)
On December 16, 2021, the Company granted
On December 15, 2020, the Company granted
The Company did not issue RSUs prior to 2020.
Deferred Share Units
Deferred share units are equity settled units, granted under the Company's Equity Incentive Plan and are accounted for based on the market value of the underlying shares on the date of grant. DSUs granted before Q4 2021 vested immediately. DSUs granted from Q4 2021 onward will vest one year post grant. The aggregate maximum number of shares available for issuance from treasury underlying deferred share units under the Equity Incentive Plan was increased in the current year ended December 31, 2021 from
A summary of the changes in deferred share units for the years ended December 31, 2021 and 2020 is as follows:
| Deferred share units |
Weighted averag grant date FV |
Vested | Not vested | |||||||||
| Outstanding at beginning of year | $ | |||||||||||
| Granted | $ | |||||||||||
| Outstanding, December 31, 2020 | $ | |||||||||||
| Granted | $ | |||||||||||
| Outstanding, December 31, 2021 | $ |
46
Integra Resources Corp. |
16. SHARE CAPITAL (continued)
Share-based payments - deferred share units
A summary of the changes in the Company's reserve for share-based payments related to the deferred share units for the years ended December 31, 2021 and 2020 is set out below:
| December 31, 2021 | December 31, 2020 | |||||
| Balance at beginning of year | $ | $ | ||||
| Share-based payments - DSUs | ||||||
| Balance at the end of year | $ | $ |
Total share-based payments related to the deferred share units included in the statements of operations and comprehensive loss and the statements of changes in equity in the year ended December 31, 2021 was $
In the current year ended December 31, 2021, the Company issued
On December 16, 2021, the Company granted
On December 15, 2020, the Company granted
The Company did not issue DSUs prior to 2020.
Share-based payments - summary
A summary of the changes in the Company's reserve for all share-based payment arrangements for the years ended December 31, 2021 and 2020 is set out below:
| December 31, 2021 | December 31, 2020 | |||||
| Balance at beginning of year | $ | $ | ||||
| Share-based payments - options | ||||||
| Share-based payments - RSUs | ||||||
| Share-based payments - DSUs | ||||||
| Options exercised | ( |
) | ||||
| RSUs vested | ( |
) | ||||
| Balance at the end of year | $ | $ |
Total share-based payments related to the stock options, RSUs, and DSUs included in the statements of operations and comprehensive loss and the statements of changes in equity in the year ended December 31, 2021 was $
47
Integra Resources Corp. |
17. CURRENT AND DEFERRED TAX
The Company reported current and deferred tax expense of $ during the year ended December 31, 2021 in the consolidated statements of operations and comprehensive loss.
The income tax expense differs from that computed by applying the applicable Canadian federal and provincial statutory rates before taxes as follows:
| December 31, 2021 | December 31, 2020 | |||||
| Income/(loss) before income taxes | $ | ( |
) | $ | ( |
) |
| Applicable statutory rate | ||||||
| Income tax expense at statutory rate | ( |
) | ( |
) | ||
| Increase/(decrease) attributable to: | ||||||
| Change in deferred tax assets not recognized | ||||||
| Change in tax rate | ||||||
| Rate differential due to foreign operations | ||||||
| Share-based compensation | ||||||
| Reclamation | ( |
) | ( |
) | ||
| Non-deductible items | ||||||
| Income tax expense | $ | $ | ||||
| Effective tax rate |
In the consolidated statements of financial position, deferred tax assets and liabilities have been offset where they relate to income taxes within the same taxation jurisdiction and where the Company has the legal right and intent to offset. The composition of deferred tax assets (liabilities) recognized in the consolidated statements of financial position is as follows:
| December 31, 2021 | December 31, 2020 | |||||
| Exploration and development expenditures | $ | ( |
) | $ | ( |
) |
| Non-capital losses | ||||||
| Right-of-use assets | ( |
) | ( |
) | ||
| Total | $ | $ |
Management believes that sufficient uncertainty exists regarding the realization of certain deferred tax assets such that they have not been recognized. The tax benefits not recognized reflect management's assessment regarding the future realization of Canadian and foreign tax assets and estimates of future earnings and taxable income in these jurisdictions as of December 31, 2021.
48
Integra Resources Corp. |
17. CURRENT AND DEFERRED TAX (continued)
The amounts of deductible temporary differences and unused tax losses for which the Company has not recognized a deferred tax asset in the consolidated statements of financial position are as follows:
| December 31, 2021 | December 31, 2020 | |||||
| Exploration and development expenditures | $ | $ | ||||
| Non-capital losses | ||||||
| Share-issuance costs | ||||||
| Reclamation and remediation liabilities | ||||||
| Finance leases under IFRS 16 | ||||||
| Unrealized foreign exchange losses | ||||||
| Charitable contributions | ||||||
| Accrued liabilities | ||||||
| Total temporary differences and losses for which no deferred tax asset is recognized | $ | $ |
As of December 31, 2021, and included in the above table, the Company and its subsidiaries had available Canadian non-capital loss carry forwards of approximately $
18. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash activities conducted by the Company during the years ended December 31, 2021 and 2020 are as follows:
Year ended December 31, 2021:
- No significant non-cash activities
Year ended December 31, 2020:
- No significant non-cash activities
49
Integra Resources Corp. |
19. NET LOSS PER SHARE
| December 31, 2021 | December 31, 2020 | |||||
| Net loss for the year | $ | ( |
) | $ | ( |
) |
| Basic weighted average numbers of share outstanding (000's) | ||||||
| Diluted weighted average numbers of shares outstanding (000's) | ||||||
| Loss per share: | ||||||
| Basic | $ | ( |
) | $ | ( |
) |
| Diluted* | $ | ( |
) | $ | ( |
) |
*Basic loss per share is computed by dividing net loss (the numerator) by the weighted average number of outstanding common shares for the period (the denominator). Options, RSUs, and DSUs outstanding have been excluded from computing diluted loss per share because they are anti-dilutive or not in the money.
20. SUBSEQUENT EVENTS
- Subsequent to the year-end, the Company sold
21. CHANGE IN PRESENTATION CURRENCY
For comparative purposes, the consolidated statements of financial position as of December 31, 2020 and January 1, 2020 include adjustments to reflect the change in presentation currency from Canadian to US dollars. The amounts previously reported in Canadian dollars as shown below have been translated in US dollars at December 31, 2020 and January 1, 2020 (Note 2.2).
The effect of the translation on the Company's Consolidated Statement of Financial Position as of December 31, 2020 and January 1, 2020 and the Company's Consolidated Statement of Operations and Comprehensive Loss and Consolidated Statement of Cash Flows for the year ended December 31, 2020 is as follows:
50
Integra Resources Corp. |
21. CHANGE IN PRESENTATION CURRENCY (continued)
Consolidated Statements of Financial Position
| December 31, 2020 | January 1, 2020 | |||||||||||
| Previously reported |
Translated | Previously reported |
Translated | |||||||||
| Canadian $ | US $ | Canadian $ | US $ | |||||||||
| Assets | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents (Note 5) | $ | $ | $ | $ | ||||||||
| Receivables and prepaid expenses (Note 6) | ||||||||||||
| Loan receivable - current portion (Note 6) | ||||||||||||
| Total Current Assets | ||||||||||||
| Long-Term Deposits (Note 6) | ||||||||||||
| Restricted Cash (Note 7) | ||||||||||||
| Loan receivable - non-current portion (Note 6) | ||||||||||||
| Property, Plant and Equipment (Note 8) | ||||||||||||
| Right-of-Use Assets (Note 9) | ||||||||||||
| Exploration and Evaluation Assets (Note 10) | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||
| Liabilities | ||||||||||||
| Current Liabilities | ||||||||||||
| Trade and other payables (Note 12) | $ | $ | $ | $ | ||||||||
| Current reclamation and remediation liability (Note 15) | ||||||||||||
| Current lease liability (Note 9) | ||||||||||||
| Current equipment financing liability (Note 13) | ||||||||||||
| Due to related parties (Note 11) | ||||||||||||
| Total Current Liabilities | ||||||||||||
| Long-Term Lease Liabilities (Note 9) | ||||||||||||
| Long-Term Equipment Financing Liability (Note 13) | ||||||||||||
| Reclamation and Remediation Liabilities (Note 15) | ||||||||||||
| Total Liabilities | ||||||||||||
| Shareholders' Equity | ||||||||||||
| Share Capital (Note 16) | ||||||||||||
| Reserves (Note 16) | ||||||||||||
| Accumulated Other Comprehensive Loss | ( |
) | ( |
) | ||||||||
| Accumulated Deficit | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Total Equity | ||||||||||||
| Total Liabilities and Equity | $ | $ | $ | $ | ||||||||
51
Integra Resources Corp. |
21. CHANGE IN PRESENTATION CURRENCY (continued)
Consolidated Statements of Operations and Comprehensive Loss
| Year ended December 31, 2020 | ||||||
| Previously reported | Translated | |||||
| Canadian $ | US $ | |||||
| Operating Expenses | ||||||
| General and Administrative Expenses | ||||||
| Depreciation - Property, plant and equipment (Note 8) | $ | ( |
) | $ | ( |
) |
| Depreciation - Right-of-use assets (Note 9) | ( |
) | ( |
) | ||
| Compensation and benefits | ( |
) | ( |
) | ||
| Corporate development and marketing | ( |
) | ( |
) | ||
| Office and site administration expenses | ( |
) | ( |
) | ||
| Professional fees | ( |
) | ( |
) | ||
| Regulatory fees | ( |
) | ( |
) | ||
| Stock-based compensation (Note 16) | ( |
) | ( |
) | ||
| ( |
) | ( |
) | |||
| Exploration and Evaluation Expenses (Note 10) | ( |
) | ( |
) | ||
| Operating Loss | $ | ( |
) | $ | ( |
) |
| Other Income (Expense) | ||||||
| Interest income | $ | $ | ||||
| Lease interest expenses (Note 9) | ( |
) | ( |
) | ||
| Financing interest expenses (Note 13) | ( |
) | ( |
) | ||
| Rent income - sublease (Note 9) | ||||||
| Reclamation accretion expenses (Note 15) | ( |
) | ( |
) | ||
| Gain on equipment sold | ||||||
| Foreign exchange loss | ( |
) | ( |
) | ||
| Total Other Income (Expense) | $ | ( |
) | $ | ( |
) |
| Net Loss | $ | ( |
) | $ | ( |
) |
| Other Comprehensive Income (Loss) | ||||||
| Foreign exchange translation | $ | ( |
) | $ | ( |
) |
| Presentation currency translation difference | ||||||
| Other Comprehensive Income (Loss) | $ | ( |
) | $ | ||
| Comprehensive Loss | $ | ( |
) | $ | ( |
) |
|
Net Loss Per Share |
||||||
| - basic and diluted (Note 19) | $ | ( |
) | $ | ( |
) |
|
Weighted Average Number of Shares (000's |
||||||
| - basic and diluted (000's) (Note 19) | ||||||
52
Integra Resources Corp. |
21. CHANGE IN PRESENTATION CURRENCY (continued)
Consolidated Statements of Cash Flows
| Year ended December 31, 2020 | ||||||
| Previously reported | Translated | |||||
| Canadian $ | US $ | |||||
| Operations | ||||||
| Net loss | $ | ( |
) | $ | ( |
) |
| Adjustments to reconcile net loss to cash flow from operating activities: | ||||||
| Depreciation - Property, plant and equipment (Note 8) | ||||||
| Depreciation - Right-of-use assets (Note 9) | ||||||
|
Lease interest expenses (Note 9) |
||||||
|
Financing interest expenses (Note 13) |
||||||
|
Reclamation accretion expenses (Note 15) |
||||||
|
Reclamation expenditures (Note 15) |
( |
) | ( |
) | ||
|
Unrealized foreign exchange loss |
||||||
|
Share-based payment (Note 16) |
||||||
| Net change in non-cash working capital items: | ||||||
| Receivables, prepaid expenses and other assets | ( |
) | ( |
) | ||
| Loan receivable (Note 6) | ( |
) | ( |
) | ||
|
Lease liabilities |
( |
) | ( |
) | ||
|
Financing liabilities |
||||||
|
Trade and other payables |
||||||
|
Due to related parties |
||||||
| Cash flow used in operating activities | ( |
) | ( |
) | ||
| Investing | ||||||
| Additions to property, plant and equipment | ( |
) | ( |
) | ||
|
Short and long-term investments (Note 7) |
||||||
|
Property acquisition costs |
( |
) | ( |
) | ||
| Cash flow provided by (used in) investing activities | ||||||
| Financing | ||||||
| Issuance of common shares (Note 16) | ||||||
| Share issue costs (Note 16) | ( |
) | ( |
) | ||
| Lease principal payments (Note 9) | ( |
) | ( |
) | ||
| Financing principal payments (Note 13) | ( |
) | ( |
) | ||
| Cash flow provided by financing activities | ||||||
| Increase in cash and cash equivalents | ||||||
| Cash and cash equivalents at beginning of year | ||||||
| Cash and cash equivalents at end of year | $ | $ | ||||
53