CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Thousands of United States Dollars)
FOR THE YEARS ENDED
DECEMBER 31, 2023, AND 2022
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Metalla Royalty & Streaming Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Metalla Royalty & Streaming Ltd. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of loss and comprehensive loss, cash flows, and equity for each of the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for each of the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
Chartered Professional Accountants
We have served as the Company's auditor since 2017.
Vancouver,
March 28, 2024
METALLA ROYALTY & STREAMING LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of United States dollars)
| As at | |||||||
| December 31, | December 31, | ||||||
| Notes | 2023 | 2022 | |||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | $ | |||||
| Accounts receivable | 3 | ||||||
| Derivative royalty asset | 5 | ||||||
| Prepaid expenses and other | |||||||
| Total current assets | |||||||
| Non-current assets | |||||||
| Royalty, stream, and other interests | 4 | ||||||
| Investment in Silverback | 6 | ||||||
| Deferred income tax assets | 11 | ||||||
| Total non-current assets | |||||||
| TOTAL ASSETS | $ | $ | |||||
| LIABILITIES AND EQUITY | |||||||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Trade and other payables | 7 | $ | $ | ||||
| Current acquisition payables | 4,8 | ||||||
| Total current liabilities | |||||||
| Non-current liabilities | |||||||
| Loans payable | 8 | ||||||
| Derivative loan liabilities | 8 | ||||||
| Acquisition payable | 4 | ||||||
| Deferred income tax liabilities | 11 | ||||||
| Total non-current liabilities | |||||||
| Total liabilities | |||||||
| EQUITY | |||||||
| Share capital | 12 | ||||||
| Reserves | |||||||
| Deficit | ( |
) | ( |
) | |||
| Total equity | |||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | |||||
These consolidated financial statements were authorized for issuance by the Board of Directors on March 28, 2024.
Approved by the Board of Directors
|
"Brett Heath" Director |
"Amanda Johnston" Director |
|
The accompanying notes are an integral part of these consolidated financial statements. |
- 2 -
METALLA ROYALTY & STREAMING LTD.
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in thousands of United States dollars, except for share and per share amounts)
| Year ended | |||||||
| December 31, | |||||||
| Notes | 2023 | 2022 | |||||
| Revenue from royalty interests | 9 | $ | $ | ||||
| Depletion on royalty interests | 4 | ( |
) | ( |
) | ||
| Gross profit | |||||||
| General and administrative expenses | 10 | ( |
) | ( |
) | ||
| Share-based payments | 12 | ( |
) | ( |
) | ||
| Royalty interest impairment | 4 | ( |
) | ( |
) | ||
| Loss from operations | ( |
) | ( |
) | |||
| Share of net income (loss) of Silverback | 6 | ( |
) | ||||
| Mark-to-market gain on derivative royalty asset | 5 | ||||||
| Mark-to-market gain on derivative loan liabilities | 8 | ||||||
| Interest expense | 8 | ( |
) | ( |
) | ||
| Finance charges | 8 | ( |
) | ( |
) | ||
| Gain (loss) on modification of loan payable | 8 | ( |
) | ||||
| Gain on sales of mineral claims | 4 | ||||||
| Foreign exchange gain (loss) | ( |
) | |||||
| Other income (expenses) | ( |
) | |||||
| Loss before income taxes | ( |
) | ( |
) | |||
| Current income tax expense | 11 | ( |
) | ( |
) | ||
| Deferred income tax recovery (expense) | 11 | ( |
) | ||||
| Net loss and comprehensive loss | $ | ( |
) | $ | ( |
) | |
| Earnings (loss) per share - basic and diluted | $ | ( |
) | $ | ( |
) | |
| Weighted average number of shares outstanding - basic and diluted | |||||||
|
The accompanying notes are an integral part of these consolidated financial statements. |
- 3 -
METALLA ROYALTY & STREAMING LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)
| Year ended | |||||||
| December 31, | |||||||
| Notes | 2023 | 2022 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net loss | $ | ( |
) | $ | ( |
) | |
| Items not affecting cash: | |||||||
| Gain on sales of mineral claims | 4 | ( |
) | ||||
| Share of net loss (income) of Silverback | 6 | ( |
) | ||||
| Mark-to-market gain on derivative royalty asset | 5 | ( |
) | ( |
) | ||
| Mark-to-market gain on derivative loan liabilities | ( |
) | |||||
| Depletion | |||||||
| Interest and accretion expense | |||||||
| Finance charges | |||||||
| Loss (gain) on modification of loan payable | 8 | ( |
) | ||||
| Royalty interest impairment | 4 | ||||||
| Share-based payments | |||||||
| Income tax expense | |||||||
| Unrealized foreign exchange loss (gain) | ( |
) | |||||
| Other | ( |
) | |||||
| ( |
) | ( |
) | ||||
| Payments received from derivative royalty asset | 5 | ||||||
| Income taxes paid | ( |
) | ( |
) | |||
| Changes in non-cash working capital items: | |||||||
| Accounts receivable | ( |
) | ( |
) | |||
| Prepaid expenses and other | ( |
) | |||||
| Trade and other payables | ( |
) | |||||
| Net cash provided by (used in) operating activities | ( |
) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Acquisitions of royalty and stream interests | 4, 8 | ( |
) | ( |
) | ||
| Dividends received from Silverback | 6 | ||||||
| Sale of mineral claims | 4 | ||||||
| Net cash used in investing activities | ( |
) | ( |
) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from Beedie subscription | 8 | ||||||
| Proceeds from exercise of stock options | |||||||
| Proceeds from ATM, net of share issue costs | |||||||
| Dividends paid | ( |
) | |||||
| Interest paid | 8 | ( |
) | ( |
) | ||
| Finance charges paid | 8 | ( |
) | ( |
) | ||
| Net cash provided by financing activities | |||||||
| Effect of exchange rate changes on cash and cash equivalents | ( |
) | ( |
) | |||
| Changes in cash and cash equivalents during period | |||||||
| Cash and cash equivalents, beginning of period | |||||||
| Cash and cash equivalents, end of period | $ | $ | |||||
Supplemental disclosure with respect to cash flows (Note 14)
|
The accompanying notes are an integral part of these consolidated financial statements. |
- 4 -
| METALLA ROYALTY & STREAMING LTD. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of United States dollars, except for share amounts) |
| Number of shares |
Share capital |
Reserves | Deficit | Total equity |
|||||||||||
| Balance as at December 31, 2021 | $ | $ | $ | ( |
) | $ | |||||||||
| Shares issued in ATM, net of issue costs | - | - | |||||||||||||
| Acquisition of royalty and other interests (Note 4) | - | - | |||||||||||||
| Exercise of stock options | ( |
) | - | ||||||||||||
| Shares issued on vesting of restricted share units | ( |
) | - | - | |||||||||||
| Share-based payments - stock options | - | - | - | ||||||||||||
| Share-based payments - restricted share units | - | - | - | ||||||||||||
| Loss for the period | - | - | - | ( |
) | ( |
) | ||||||||
| Balance as at December 31, 2022 | $ | $ | $ | ( |
) | $ | |||||||||
| Shares issued in ATM, net of issue costs | - | - | |||||||||||||
| Acquisition of Nova Royalty Corp. (Note 4) | - | ||||||||||||||
| Acquisition of royalties and other interests (Note 4) | - | - | |||||||||||||
| Beedie subscription (Note 12) | - | - | |||||||||||||
| Conversion of loan payable (Note 8) | ( |
) | - | ||||||||||||
| Extinguishment of loan payable (Note 8) | - | ( |
) | - | |||||||||||
| Exercise of stock options | ( |
) | - | ||||||||||||
| Shares issued on vesting of restricted share units | ( |
) | - | - | |||||||||||
| Share-based payments - stock options | - | - | - | ||||||||||||
| Share-based payments - restricted share units | - | - | - | ||||||||||||
| Dividends paid | - | - | - | ( |
) | ( |
) | ||||||||
| Loss for the period | - | - | - | ( |
) | ( |
) | ||||||||
| Balance as at December 31, 2023 | $ | $ | $ | ( |
) | $ |
The accompanying notes are an integral part of these consolidated financial statements.
- 5 -
| METALLA ROYALTY & STREAMING LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023, AND 2022 (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
1. NATURE OF OPERATIONS
Metalla Royalty & Streaming Ltd. ("Metalla" or the "Company"), incorporated in British Columbia, Canada, is a precious metals royalty and streaming company, which engages in the acquisition and management of gold, silver, and copper royalties, streams, and similar production-based interests. The Company's common shares ("Common Shares") are listed on the TSX Venture Exchange ("TSX-V") under the symbol "MTA" and on the NYSE American ("NYSE") under the symbol "MTA". The head office and principal address is 501 - 543 Granville Street, Vancouver, British Columbia, Canada.
The Company has incurred a cumulative deficit to date of $
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES
(a) Statement of Compliance
The consolidated financial statements have been prepared using accounting policies in compliance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Company adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from January 1, 2023. The amendments require the disclosure of 'material', rather than 'significant', accounting policies. Although the amendments did not result in any changes to the accounting policies themselves, they impacted the accounting policy information disclosed in Note 2 in certain instances.
(b) Basis of Preparation and Measurement
These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments, which have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.
These consolidated financial statements are presented in United States dollars except as otherwise indicated.
(c) Foreign Currency Translation
The functional currency of the Company and its subsidiaries is the principal currency of the economic environment in which they operate. For the Company and its subsidiaries, the functional currency is the U.S. dollar. The presentation currency for the Company is the U.S. dollar.
Transactions in currencies other than the functional currency are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the reporting date while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in the consolidated statement of loss and comprehensive loss.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
(d) Principles of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including its principal subsidiaries Nova Royalty Corp. (Canada), Royalty & Streaming Mexico S.A. de C.V. (Mexico), Metalla America Ltd. (USA), Nova Royalty USA Corp. (USA), MTA Royalty & Streaming Pty Ltd. (Australia), ValGold Resources Ltd. (Canada), Geological Services Inc. (USA), Idaho Resources Corporation (USA), Genesis Gold Corporation (USA), and Metalla SEZC (Cayman Islands). All intercompany balances and transactions have been eliminated on consolidation.
Subsidiaries
Subsidiaries are all entities over which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company until the date on which control ceases.
(e) Business Combinations
A business combination is an acquisition of assets and liabilities that constitute a business. A business is an integrated set of activities and assets that consist of inputs and processes, including operational processes that, when applied to those inputs, have the ability to create outputs that provide a return to the Company and its shareholders. A business also includes those assets and liabilities that do not necessarily have all the inputs and processes required to produce outputs, but can be integrated with the inputs and processes of the Company to create outputs.
When acquiring a set of activities or assets in the exploration and development stage, which may not have outputs, the Company considers other factors to determine whether the set of activities or assets is a business.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is allocated to the identifiable assets acquired and liabilities assumed based on the acquisition-date fair value. The excess of the cost of acquisition over the fair value of the Company's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference, or gain, is recognized directly in the consolidated statement of operations. The results of businesses acquired during the period are included in the financial statements from the date of acquisition. Acquisition-related costs are expensed as incurred. Provisional fair values are finalized within 12 months of the acquisition date. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed at the acquisition date.
(f) Royalty, Stream, and Other Interests
Royalty, stream, and other interests consist of acquired royalty, stream, and other interests. These interests are recorded at cost and capitalized as tangible assets with finite lives. They are subsequently measured at cost less accumulated depletion and accumulated impairment losses, if any. Project evaluation costs that are not related to a specific royalty or stream asset are expensed in the period incurred. Borrowing costs attributed to the acquisition of qualifying assets are capitalized to royalty, stream, and other interests, and are included in the carrying amounts of related assets until the asset is available for use in the manner intended by management.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
Producing royalty and stream interests are depleted using the units-of-production method over the life of the property to which the interest relates, which is estimated using available information of proven and probable reserves and the portion of resources expected to be classified as mineral reserves at the mine corresponding to the specific agreement.
On acquisition of a royalty or stream interest, an allocation of its fair value may be attributed to the exploration potential of the interest and is recorded as an exploration asset on the acquisition date. The carrying value of the exploration potential is accounted for in accordance with IFRS 6 Exploration and Evaluation of Mineral Resources ("IFRS 6") and is not depleted until such time as the technical feasibility and commercial viability have been established, at which point the value of the asset is accounted for in accordance with IAS 16 Property, Plant and Equipment ("IAS 16"). Upon demonstration of the technical and commercial feasibility of a project and a development decision, the carrying value related to that project is subject to an impairment test and is reclassified in accordance with IAS 16.
(g) Impairment of Royalty, Stream, and Other Interests
The carrying amounts of non-financial assets, excluding deferred income tax assets, are reviewed for impairment at each reporting date, or whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. If there are indicators of impairment, a review is undertaken to determine whether the carrying amounts are in excess of their recoverable amounts. Reviews are undertaken on an asset-by-asset basis, except where the recoverable amount for an individual asset cannot be determined, in which case the review is undertaken at the cash-generating unit ("CGU") level.
If the carrying amount of a CGU or non-financial asset exceeds the recoverable amount, being the higher of its fair value less costs to sell and its value-in-use, an impairment loss is recognized in net loss as the excess of the carrying amount over the recoverable amount. With respect to CGUs, impairment losses are allocated to reduce the carrying amounts of the assets of the CGU on a pro-rata basis. The future cash flows expected is derived using estimates of proven and probable reserves, a portion of resources that is expected to be converted into reserves and information regarding the Company's royalty, stream, and other production-based interests, respectively, that could affect the future recoverability of the Company's interests. Discount factors are determined individually for each asset and reflect their respective risk profiles. In certain circumstances, the Company may use a market approach in determining the recoverable amount which may include an estimate of (a) net present value of estimated future cash flows; (b) dollar value per ounce or pound of reserve/resource; (c) cash-flow multiples; and/or (d) market capitalization of comparable assets.
Non-financial assets that have previously been impaired are tested for a possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed, or may have partially reversed. In these instances, the impairment loss is reversed to the recoverable amount but not beyond the carrying amount, net of amortization, that would have arisen if the prior impairment loss had not been recognized.
(h) Revenue Recognition
Revenue is comprised of revenue earned in the year from royalty, stream, and other interests. The Company recognizes revenue upon the transfer of control of the relevant commodity to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those commodities.
For stream interests, revenue recognition occurs when the relevant commodity received from the stream operator is delivered by the Company to its third-party customers. Revenue is measured at the fair value of the consideration received or receivable when management can reliably estimate the amount, pursuant to the terms of the sales contract.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
For royalty interests, revenue recognition occurs when control of the relevant commodity is transferred to the end customer by the operator of the royalty property. Revenue is measured at the fair value of the consideration received or receivable when management can reliably estimate the amount, pursuant to the terms of the royalty agreement. In some instances, the Company will not have access to sufficient information to make a reasonable estimate of consideration to which it expects to be entitled and, accordingly, revenue recognition is deferred until management can make a reasonable estimate. Differences between estimates and actual amounts are adjusted and recorded in the period that the actual amounts are known.
(i) Financial Instruments
All financial instruments are initially recorded at fair value and designated as follows:
Cash includes cash on account and is subsequently measured at amortized cost.
Trade receivables relate to amounts received from sales of refined gold and silver and royalty revenue. These receivables are non-interest bearing and are recognized at fair value and are subsequently measured at amortized cost. The Company has applied the simplified approach to determining expected credit losses, which requires expected lifetime losses to be recognized upon initial recognition of the receivables.
Marketable securities are designated as fair value through profit and loss ("FVTPL") unless they are irrevocably designated, on an individual basis, as fair value through other comprehensive income ("FVOCI"). Investment transactions are recognized on the trade date with transaction costs included in the underlying balance. Fair values are determined by reference to quoted market prices at the statement of financial position date.
Derivative royalty assets and derivative loan liabilities are designated as FVTPL. Fair values are determined using a valuation model and inputs that are not based on observable market data.
Accounts payables, accrued liabilities, and loans payable are initially recorded at fair value, less transaction costs. These financial liabilities are subsequently measured at amortized cost, calculated using the effective interest rate method.
(j) Related Party Transactions
Parties are considered related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered related if they are subject to common control or significant influence. A transaction is considered a related party transaction when there is a transfer of resources or obligations between related parties.
(k) Share Capital
Common shares issued for non-monetary consideration are recorded at their fair value based on closing price on the measurement date and classified as equity. The measurement date is defined as the earliest of the date at which the commitment for performance by the counterparty to earn the common shares is reached or the date at which the counterparty's performance is complete.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
The proceeds from the issue of units are allocated between common shares and share purchase warrants on a pro-rata basis based on the relative fair values. The fair value of the common shares is based on the market closing price on the date of issuance and the fair value of the share purchase warrants is determined using the Black-Scholes option pricing model.
Transaction costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects.
(l) Earnings (loss) Per Share
The Company presents basic earnings (loss) per share data for its common shares, calculated by dividing the income (loss) attributable to equity holders of the Company by the weighted average number of common shares issued and outstanding during the period. Diluted earnings per share is calculated by adjusting the earnings attributable to equity holders and the weighted average number of common shares outstanding for the effects of all potentially dilutive common shares. The calculation of diluted earnings per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. In periods where a loss is reported, diluted loss per share is the same as basic loss per share as the effects of potentially dilutive common shares would be anti-dilutive.
(m) Income Taxes
Income tax expense consists of current and deferred tax expense. Income tax expense is recognized in the consolidated statement of loss and comprehensive loss.
Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous periods.
Deferred tax assets and liabilities are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and losses carried forward. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability is settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
(n) Share-based Payments
The Company grants stock options and restricted share units ("RSUs") to directors, officers, employees and consultants to acquire common shares of the Company. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee. The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods or services received.
The fair value method of accounting is used for share-based payment transactions. Under this method, the cost of stock options and other equity-settled share-based payment arrangements are recorded based on the estimated fair value at the grant date and charged to earnings over the vesting period. Where awards are forfeited because non-market based vesting conditions are not satisfied, the expense previously recognized is proportionately reversed in the period the forfeiture occurs.
(o) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the Chief Executive Officer ("CEO").
The Company operates in a single segment, the acquisition and management of precious metal royalties, streams, and similar production-based interests. In addition, the Company has corporate activities, which include the evaluation and acquisition of new precious metal royalties, streams, and similar production-based interests, treasury and finance, regulatory reporting, and corporate administration.
(p) Critical Accounting Estimates and Judgments
The preparation of the Company's consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and judgments made by management in preparing the consolidated financial statements are described below. Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and include, but are not limited to, the following:
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
Royalty interests
The Company holds royalty interests in production stage mineral properties. The royalty interests are recorded initially at their costs and are being depleted using the units of production basis over the expected life of the related mineral property, which is determined using available estimates of future metal prices and future production. Proven and probable reserves and future production plans associated with the royalty interests as determined by the operators impact the measurement of the respective assets. These estimates affect the depletion of the royalty interests and the assessment of the recoverability of the carrying value of the royalty interests.
Management considers both external and internal sources of information in assessing whether there are any indications that the Company's royalty interests are impaired. External sources of information that management considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of its royalty interests. Internal sources of information that management considers include the indications of economic performance of the assets.
In determining the recoverable amounts of the Company's royalty interests, management makes estimates of the discounted net cash flows expected to be derived from the Company's royalty interests, costs of disposal, and the appropriate discount rates and discount multiples that apply to the specific asset. Reductions in metal price forecasts, increases in estimated future costs of production for the mine operators, reductions in the amount of recoverable mineral reserves, mineral resources, and exploration potential, and/or adverse current economics can result in a write-down of the carrying amounts of the Company's royalty interests.
Depletion
The Company's royalty, stream, and other production-based interests that generate economic benefits are considered depletable and are depleted on a unit-of-production basis over the ounces of production that are expected to generate the cash flows that will be attributable to the Company. These calculations require the use of estimates and assumptions, including the amount of contained metals, the recovery rates, and payable rates for the contained metals being treated through a milling or refining process. Changes to these assumptions may impact the estimated recoverable reserves, resources or exploration potential which could directly impact the depletion rates used. Changes to depletion rates are accounted for prospectively.
Derivative loan liabilities
The Company holds derivative loan liabilities which are carried at fair value at each period end. In order to calculate the fair value at period end the Company uses a valuation model and is required to make estimates and assumptions on the risk free interest rate, expected stock price volatility, and credit spread. Changes to these assumptions may impact the fair value of the liability at period end.
Income taxes
The interpretation of existing tax laws or regulations in Canada, Australia, Argentina, Mexico, the United States, or any of the countries in which our property interests are located requires the use of judgment. Differing interpretation of these laws or regulations could result in an increase in the Company's taxes, or other governmental charges, duties or impositions. In addition, the recoverability of deferred income tax assets, including expected periods of reversal of temporary differences and expectations of future taxable income, are assessed by management at the end of each reporting period and adjusted, as necessary, on a prospective basis.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont'd...)
Functional currency
The functional currency for each of the Company's subsidiaries and associates is the currency of the primary economic environment in which the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determine the primary economic environment.
Business combinations
The assessment of whether an acquisition meets the definition of a business or is considered an asset acquisition is an area of key judgment. For an acquisition to constitute a business acquisition, the Company should be acquiring inputs and processes which could deliver an output. Management would need to apply judgment to determine whether any processes were acquired as part of the acquisition of assets.
For both business combinations and asset acquisitions, the assumptions and estimates with respect to determining the fair values often require management to make assumptions and estimates about future events. The assumptions and estimates with respect to determining the fair value of assets acquired and liabilities assumed, those of mineral interests and other properties in particular, generally require a high degree of judgment and include estimates of mineral reserves and mineral resources acquired, future metal prices, discount rates and reserve/resource conversion. Changes in the judgments made or in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets and liabilities.
(q) New accounting standards issued but not yet effective which are applicable to the Company.
Amendment to IAS 1 - Non-current liabilities with covenants
These amendments clarify how conditions with which an entity must comply within 12 months after the reporting period affect the classification of a liability. The amendments also aim to improve the information an entity provides related to liabilities subject to these conditions. These amendments are effective for annual periods beginning on or after January 1, 2024, and are not expected to have a material impact on the Company's future reporting periods.
3. ACCOUNTS RECEIVABLE
| As at | ||||||
| December 31, | December 31, | |||||
| 2023 | 2022 | |||||
| Royalty, derivative royalty, and stream receivables | $ | $ | ||||
| GST and other recoverable taxes | ||||||
| Other receivables | ||||||
| Total accounts receivable | $ | $ | ||||
As at December 31, 2023, and December 31, 2022, the Company did not have any royalty, derivative royalty and stream receivables that were past due. The Company's allowance for doubtful accounts as at December 31, 2023, and December 31, 2022, was $.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
4. ROYALTY, STREAM, AND OTHER INTERESTS
|
Producing assets |
Development assets |
Exploration assets |
Total | |||||||||
| As at December 31, 2021 | $ | $ | $ | $ | ||||||||
| First Majestic portfolio acquisition | ||||||||||||
| Lac Pelletier acquisition | ||||||||||||
| Beaufor amendment | ||||||||||||
| Endeavor Silver Stream reclassification (2) | ( |
) | ||||||||||
| El Realito reclassification (3) | ( |
) | ||||||||||
| Joaquin and COSE impairments | ( |
) | ( |
) | ||||||||
| Depletion (1) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Other | ||||||||||||
| As at December 31, 2022 | $ | $ | $ | $ | ||||||||
| Nova portfolio acquisition | ||||||||||||
| Alamos portfolio acquisition | ||||||||||||
| Lama acquisition | ||||||||||||
| Del Carmen and Beaufor impairments | ( |
) | ( |
) | ||||||||
| Depletion (1) | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Reclassifications and other | ( |
) | ( |
) | ||||||||
| As at December 31, 2023 | $ | $ | $ | $ | ||||||||
| Historical cost | $ | $ | $ | $ | ||||||||
| Accumulated depletion and impairments | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
(1) Fixed royalty payments were received in relation to certain exploration and development assets. The depletion related to these payments was recorded based on the total fixed royalty payments expected to be received under each contract.
(2) The Endeavor mine was previously classified as production, however it was placed on care and maintenance in December 2019 and has not since restarted, as such the Company had reclassified it to development stage properties in 2022.
(3) The Company received its first royalty payments on El Realito in 2022 and reclassified it from a development asset to a producing asset.
(a) During the year ended December 31, 2023, the Company completed the following transactions:
Nova Royalty Acquisition
On December 1, 2023, the Company closed an arrangement agreement whereby the Company acquired all of the issued and outstanding shares of Nova Royalty Corp. (TSX-V: NOVR) ("Nova") pursuant to a plan of arrangement. Pursuant to the terms and conditions of the arrangement agreement between the Company and Nova dated September 7, 2023 (the "Arrangement Agreement"), Nova shareholders received
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
Upon completion of the Nova acquisition, existing Metalla and Nova shareholders owned approximately
For accounting purposes, the Company determined the acquisition of Nova did not meet the definition of business combination under IFRS 3 - Business Combinations. Accordingly, the transaction has been accounted for as an asset acquisition under relevant IFRS standards with a closing date of December 1, 2023. Under this method the Company is required to recognize identifiable assets and liabilities at their individual fair values and any transaction costs are capitalized as part of the acquisition, with no goodwill recognized.
To estimate the fair value of the mineral interest acquired, management used discounted cash flow models and a market-based approach. Management applied significant judgment in determining the fair value of the mineral interests, including the use of significant assumptions, such as discount rates, long-term forecast commodity prices, and future production of operator mineral reserves and resources information for the portfolio of mineral stream and royalty agreements. Future production and operator mineral reserves and resources information are based on information compiled by appropriately qualified persons. The assets and liabilities acquired included mineral interests of $
| Number of Metalla Shares issued to Nova shareholders | |||
| Number of Metalla Shares issued to Nova RSU holders | |||
| Total Number of Metalla Shares issued | |||
| Closing price of a Metalla Share on November 30, 2023, on TSXV | C$ |
||
| C$/US$ exchange rate on November 30, 2023 | |||
| Market value of Metalla Shares issued | $ | ||
| Value of Nova share options converted to Metalla share options | |||
| Nova long-term debt repaid as part of transaction | |||
| Transaction costs | |||
| Purchase consideration | $ | ||
| Cash and cash equivalents | $ | ||
| Accounts receivable | |||
| Mineral interests | |||
| Current liabilities | ( |
) |
|
| Total assets acquired, net of liabilities assumed | $ |
Details of some of the royalties the Company holds through Nova are discussed below, based on information publicly filed by the applicable owner.
Aranzazu
The Company acquired a
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
Taca Taca
The Company acquired a
Vizcachitas
The Company acquired a
NuevaUnión
The Company acquired a
Copper World Complex
The Company acquired a
Pine Valley Mineral Claims Sale
In June 2023, the Company sold the JR mineral claims that make up the Pine Valley property, which is part of the Cortez complex in Nevada, for $
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
Lama Royalties Acquisition
In March 2023, the Company acquired an existing
Alamos Portfolio Acquisition
In February 2023, the Company acquired one silver stream and three royalties from Alamos Gold Corp. ("Alamos") for aggregate consideration of $
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
(b) During the year ended December 31, 2022, the Company completed the following transaction:
First Majestic Portfolio Acquisition
In December 2022, the Company acquired a portfolio of eight royalties from First Majestic Silver Corp. ("First Majestic") for aggregate consideration of $
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
|
•
|
a
|
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
4. ROYALTY, STREAM, AND OTHER INTERESTS (cont'd...)
(c) Impairment
On November 3, 2023, Monarch Mining Corporation ("Monarch") announced that one of its creditors, that is owed C$
The Company owned a royalty on the Del Carmen project that was owned and operated by Barrick. In July 2023, the Company was notified that Barrick has terminated its agreement to explore and exploit the Del Carmen property and as a result of the termination the
5. DERIVATIVE ROYALTY ASSET
In October 2020, the Company closed an agreement to acquire an existing
As the amount received by the Company will vary depending on changes in the London PM fix gold price and the changes in the exchange rate between the A$ and the US$, the Company has recognized the Higginsville PPR as a derivative asset carried at fair value through profit and loss. As per IFRS 9, the Higginsville PPR was recognized as a derivative asset upon inception at $
As at December 31, 2023, the maximum amount of deliverable ounces pursuant to the Higginsville PPR agreement had been delivered and the remaining net book value of the royalty was reduced to $
The changes in the derivative royalty asset for the year ended December 31, 2023, were as follows:
| Derivative royalty asset |
|||
| As at December 31, 2021 | $ | ||
| Payments received or due under derivative royalty asset | ( |
) | |
| Mark-to-market gain on derivative royalty asset | |||
| As at December 31, 2022 | $ | ||
| Payments received or due under derivative royalty asset | ( |
) | |
| Mark-to-market gain on derivative royalty asset | |||
| As at December 31, 2023 | $ |
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
6. INVESTMENT IN SILVERBACK
|
Year ended December 31, |
||||||
| 2023 | 2022 | |||||
| Opening balance | $ | $ | ||||
| Income (loss) in Silverback for the period | ( |
) | ||||
| Distribution | ( |
) | ( |
) | ||
| Ending balance | $ | $ | ||||
The Company, through its wholly-owned subsidiary Metalla SEZC, holds a
Summarized financial information for Silverback for the year ended December 31, 2023, was as follows:
|
Year ended December 31, |
||||||
| 2023 | 2022 | |||||
| Current assets | $ | $ | ||||
| Non-current assets | ||||||
| Total assets | ||||||
| Total liabilities | ( |
) | ( |
) | ||
| Revenue from stream interest | ||||||
| Depletion | ( |
) | ||||
| Net income and comprehensive income for the period | $ | $ | ||||
7. TRADE AND OTHER PAYABLES
| As at | ||||||
|
December 31, 2023 |
December 31, 2022 |
|||||
| Trade payables and accrued liabilities | $ | $ | ||||
| Taxes payable | ||||||
| Total trade and other payables | $ | $ | ||||
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
8. LOANS PAYABLE
| A&R Loan Facility | ||||||||||||
| Debt | Derivative | Castle | ||||||||||
| Portion | Portion | Mountain Loan | Total | |||||||||
| As at December 31, 2021 | $ | $ | $ | $ | ||||||||
| Interest expense | ||||||||||||
| Interest payments | ( |
) | ( |
) | ||||||||
| Foreign exchange adjustments | ( |
) | ( |
) | ||||||||
| Gain on extension of loan payable | ( |
) | ( |
) | ||||||||
| As at December 31, 2022 | $ | $ | $ | $ | ||||||||
| Additions | ||||||||||||
| Conversion | ( |
) | ( |
) | ||||||||
| Extinguishment of loan facility | ( |
) | ||||||||||
| Modification of loan facility | ( |
) | ( |
) | ||||||||
| Interest expense | ||||||||||||
| Interest payments | ( |
) | ( |
) | ( |
) | ||||||
| Principal repayment | ( |
) | ( |
) | ||||||||
| Fair value adjustment of derivative portion | ( |
) | ( |
) | ||||||||
| Foreign exchange adjustments | ||||||||||||
| As at December 31, 2023 | $ | $ | $ | $ | ||||||||
A&R Loan Facility
In March 2019, the Company entered into a convertible loan facility with Beedie to fund acquisitions of new royalties and streams which has subsequently been amended from time to time. The loan facility bears interest on amounts advanced and a standby fee on funds available. Funds advanced are convertible into Common Shares at Beedie's option, with the conversion price determined at the date of each drawdown or at the conversion date (in the case of the conversion of accrued and unpaid interest).
In August 2022, the Company and Beedie closed a first supplemental loan agreement to extend the maturity date of the loan facility from April 22, 2023, to January 22, 2024. In consideration for the extension the Company incurred a fee of C$
As at December 31, 2022, the Company had C$
In May 2023, the Company and Beedie closed an additional supplemental loan agreement to further amend the loan facility by:
i. extending the maturity date to May 10, 2027;
ii. increasing the loan facility by C$
iii. increasing the interest rate from
iv. amending the conversion price of the Fourth Drawdown from C$
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
8. LOANS PAYABLE (cont'd...)
v. amending the conversion price of C$
vi. amending the conversion price of the remaining C$
The amendment was considered a substantial modification of the loan facility, and for accounting purposes the existing debt instruments were extinguished and the new debt instruments were recognized at fair value on the amendment date. The difference in value between the amount that was retired for the old debt instrument and the amount recorded for the new debt instrument, taking into account the modification in conversion price to induce conversion of part of the old debt instrument, was recorded as a loss on extinguishment of loan payable of $
The conversion feature, prepayment options, and availability of credit under the new loan facility (together the "Derivative Loan Liabilities") have all been determined to be non-cash embedded derivatives that are not closely related to the principal amounts due under the loan facility, and as such are bifurcated from the loan facility and the Derivative Loan Liabilities will be accounted for at fair value through profit and loss. The debt portion of the loan facility along with any transaction costs and fees directly attributable to the loan facility will be included in the respective effective interest rate calculation for the debt portion and will be measured at amortized cost. Upon initial recognition on May 19, 2023, the Derivative Loan Liabilities were assigned a fair value of $
Effective December 1, 2023, Metalla and Beedie entered into an amended and restated convertible loan facility agreement (the "A&R Loan Facility") to further amend and restate the loan facility by:
i. increasing the maximum aggregate principal amount of the facility from C$
ii. amending the conversion price of the C$
iii. a further draw down of C$
iv. a draw down of C$
v. a draw down of C$
vi. establishing an 18-month period whereby the interest of
vii. incurring an amendment fee of C$
viii. updated the existing security arrangements to include security to be provided by Nova and certain other subsidiaries of Metalla and Nova for the A&R Loan Facility.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
8. LOANS PAYABLE (cont'd...)
On December 1, 2023, following the changes to the A&R Facility and the drawdown of the C$
The Derivative Loan Liabilities were calculated at December 1, 2023, and December 31, 2023, using a convertible debt and swaption pricing model with the following major market inputs and assumptions:
| December 31, | December 1, | |||||
| 2023 | 2023 | |||||
| Maturity date |
|
|
||||
| Risk free interest rate | ||||||
| Share price | C$ |
C$ |
||||
| Expected volatility | ||||||
| Dividend yield | $ | $ | ||||
| Conversion price | C$ |
C$ |
For the year ended December 31, 2023, the Company recognized finance charges of $
As at December 31, 2023, under the A&R Loan Facility, the Company had C$
Subsequent to December 31, 2023, on February 20, 2024, Beedie elected to convert C$
Castle Mountain Loan
In connection with the Castle Mountain acquisition in October 2021, the Company entered into a $
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
9. REVENUE
|
Year ended December 31, |
||||||
| 2023 | 2022 | |||||
| Royalty revenue | ||||||
| Wharf | $ |
|
$ | |||
| El Realito | ||||||
| Aranzazu | ||||||
| La Encantada | ||||||
| COSE | ||||||
| Joaquin | ||||||
| Total royalty revenue | ||||||
| Other fixed royalty payments | ||||||
| Total revenue | $ | $ | ||||
The Company operates in one industry and has one reportable segment, which is reviewed by the chief operating decision maker.
10. GENERAL AND ADMINISTRATIVE EXPENSES
|
Year ended December 31, |
||||||
| 2023 | 2022 | |||||
| Compensation and benefits | $ | $ | ||||
| Corporate administration | ||||||
| Professional fees | ||||||
| Listing and filing fees | ||||||
| Total general and administrative expenses | $ | $ | ||||
11. INCOME TAXES
Income tax expense differs from the amount that would result from applying Canadian income tax rates to earnings before income taxes. These differences result from the following items:
| Year ended | ||||||
| December 31, | ||||||
| 2023 | 2022 | |||||
| Loss before income taxes | $ | ( |
) | $ | ( |
) |
| Canadian federal and provincial income tax rates | ||||||
| Income tax recovery based on the above rates | ( |
) | ( |
) | ||
| Difference between Canadian and foreign tax rate | ( |
) | ||||
| Permanent differences | ||||||
| Changes in unrecognized deferred tax assets | ||||||
| Other adjustments | ( |
) | ||||
| Total income tax expense | $ | $ | ||||
| Current income tax expense | $ | $ | ||||
| Deferred income tax expense (recovery) | $ | $ | ( |
) | ||
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
11. INCOME TAXES (cont'd...)
The composition of the Company's net deferred income tax asset (liability) that has been recognized is as follows:
| As at | ||||||
| December 31, | December 31, | |||||
| 2023 | 2022 | |||||
| Deferred tax assets: | ||||||
| Mineral expenditures and capital assets | $ | $ | ||||
| Share issue costs | ||||||
| Non-capital losses and others | ||||||
| Unrecognized deferred tax assets | ( |
) | ( |
) | ||
| Deferred tax liabilities | ( |
) | ( |
) | ||
| Net deferred income tax liabilities | $ | ( |
) | $ | ( |
) |
| Deferred income tax assets | $ | $ | ||||
| Deferred income tax liabilities | $ | ( |
) | $ | ( |
) |
The Company's significant temporary differences, unused tax credits, and unused tax losses that have not been recognized as deferred income tax assets as at December 31, 2023, are as follows:
| Mineral expenditures and other capital assets |
Share issue costs |
Non-capital losses and others |
Total | |||||||||
| Expiry 2026 to 2043 | $ | $ | $ | $ | ||||||||
| No expiry date | $ | $ | $ | $ |
Tax attributes are subject to review, and potential adjustments, by tax authorities.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
12. SHARE CAPITAL
Authorized share capital consists of an unlimited number of Common Shares without par value.
(a) Issued Share Capital
As at December 31, 2023, the Company had
During the year ended December 31, 2023, the Company:
|
•
|
issued
|
|
|
•
|
issued
|
|
|
•
|
issued
|
|
|
•
|
issued
|
|
|
•
|
issued
|
|
|
•
|
issued
|
During the year ended December 31, 2022, the Company:
|
•
|
issued
|
|
|
•
|
issued
|
|
|
•
|
issued
|
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
12. SHARE CAPITAL (cont'd...)
(b) Stock Options
The Company has adopted a stock option plan approved by the Company's shareholders. The maximum number of shares that may be reserved for issuance under the plan is limited to
The continuity of stock options for the year ended December 31, 2023, was as follows:
|
Weighted average exercise price (C$) |
Number outstanding |
|||||
| As at December 31, 2021 | $ | |||||
| Granted | ||||||
| Exercised (1) | ( |
) | ||||
| Forfeited | ( |
) | ||||
| As at December 31, 2022 | $ | |||||
| Granted | ||||||
| Issued as part of Nova Transaction (Note 4) | ||||||
| Exercised (1) | ( |
) | ||||
| Expired | ( |
) | ||||
| Forfeited | ( |
) | ||||
| As at December 31, 2023 | $ | |||||
(1) During the year ended December 31, 2023,
During the year ended December 31, 2023, the Company granted
|
Year ended December 31, |
||||||
| 2023 | 2022 | |||||
| Risk free interest rate | ||||||
| Expected dividend yield | ||||||
| Expected stock price volatility | ||||||
| Expected life in years | ||||||
| Forfeiture rate | ||||||
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
12. SHARE CAPITAL (cont'd...)
For the year ended December 31, 2023, in accordance with the vesting terms of the stock options granted, the Company recorded charges to share-based payments expense of $
| Exercise | ||||||||||
| price | Number | Number | ||||||||
| Expiry date | (C$) | outstanding | exercisable | |||||||
| January 4, 2024 | $ | |||||||||
| March 1, 2024 | $ | |||||||||
| December 1, 2024 | $ | |||||||||
| December 1, 2024 | $ | |||||||||
| December 1, 2024 | $ | |||||||||
| December 1, 2024 | $ | |||||||||
| January 15, 2025 | $ | |||||||||
| November 6, 2025 | $ | |||||||||
| April 27, 2026 | $ | |||||||||
| August 16, 2027 | $ | |||||||||
| December 28, 2028 | $ | |||||||||
(c) Restricted Share Units
The Company has adopted an RSU plan approved by the Company's shareholders. The maximum number of RSUs that may be reserved for issuance under the plan is limited to
| Number | |||
| outstanding | |||
| As at December 31, 2021 | |||
| Granted | |||
| Settled | ( |
) | |
| Forfeited | ( |
) | |
| As at December 31, 2022 | |||
| Granted | |||
| Settled | ( |
) | |
| Forfeited | ( |
) | |
| As at December 31, 2023 |
For the year ended December 31, 2023, in accordance with the vesting terms of the RSUs granted, the Company recorded charges to share-based payments expense of $
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
13. RELATED PARTY TRANSACTIONS AND BALANCES
The aggregate value of transactions and outstanding balances relating to key management personnel were as follows:
| Year ended December 31, |
||||||
| 2023 | 2022 | |||||
| Salaries and fees | $ | $ | ||||
| Share-based payments | ||||||
| $ | $ | |||||
As at December 31, 2023, the Company had $
14. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Significant Non-Cash Investing and Financing Activities
During the year ended December 31, 2023, the Company:
a) issued
b) issued
c) issued
d) issued
e) reallocated $
f) reallocated $
During the year ended December 31, 2022, the Company:
a) issued
b) reallocated $
c) reallocated $
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
15. FINANCIAL INSTRUMENTS
The Company classified its financial instruments as follows:
| As at | ||||||
|
December 31, 2023 |
December 31, 2022 |
|||||
| Financial assets | ||||||
| Amortized cost: | ||||||
| Cash | $ | $ | ||||
| Royalty, derivative royalty, and stream receivables | ||||||
| Other receivables | ||||||
| Fair value through profit or loss: | ||||||
| Derivative royalty asset | ||||||
| Marketable securities | ||||||
| Total financial assets | $ | $ | ||||
| Financial liabilities | ||||||
| Amortized cost: | ||||||
| Trade and other payables | $ | $ | ||||
| Loans payable | ||||||
| Acquisition payables | ||||||
| Fair value through profit or loss: | ||||||
|
Derivative loan liabilities |
||||||
| Total financial liabilities | $ | $ | ||||
Fair value
Financial instruments recorded at fair value on the consolidated statement of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
a) Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
b) Level 2 - Inputs other than quoted prices that are observable for assets or liabilities, either directly or indirectly; and
c) Level 3 - Inputs for assets and liabilities that are not based on observable market data.
The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.
Cash, accounts receivables (royalty, derivative royalty, and stream receivables, and other receivables), and accounts payable (trade and other payables), are carried at amortized cost. Their carrying value approximated their fair value because of the short-term nature of these instruments or because they reflect amounts that are receivable to the Company without further adjustments. Marketable securities are carried at fair value and are classified within Level 1 of the fair value hierarchy. The derivative royalty asset is carried at fair value, and was valued using inputs that are not observable, including a gold forward price curve, US$/A$ foreign exchange rates based on forward curves, and an estimated discount rate (Note 5). Therefore, the derivative royalty asset is classified within Level 3 of the fair value hierarchy. There were no transfers between the levels of the fair value hierarchy during the year ended December 31, 2023, and the year ended December 31, 2022.
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
15. FINANCIAL INSTRUMENTS (cont'd...)
Loans payable and acquisition payables are carried at amortized cost. The fair values of the Company's loans payable are approximated by their carrying values as the interest rates are comparable to market interest rates. The derivative loan liabilities are carried at fair value and were valued using a Black-Scholes option pricing model and a swaption model, with inputs that are not observable (Note 8). Therefore, the derivative loan liabilities are classified within Level 3 of the fair value hierarchy.
Capital risk management
The Company's objectives when managing capital are to provide shareholder returns through maximization of the profitable growth of the business and to maintain a degree of financial flexibility relevant to the underlying operating and metal price risks while safeguarding the Company's ability to continue as a going concern. The capital of the Company consists of share capital. The Board of Directors does not establish a quantitative return on capital criteria for management. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company may issue new shares in order to meet its financial obligations. The management of the Company believes that the capital resources of the Company as at December 31, 2023, are sufficient for its present needs for at least the next twelve months. The Company is not subject to externally imposed capital requirements.
Credit risk
Credit risk arises from cash deposits, as well as credit exposures to counterparties of outstanding receivables and committed transactions. There is no significant concentration of credit risk other than cash deposits. The Company's cash deposits are primarily held with a Canadian chartered bank. Receivables include value added tax due from the Canadian government. The carrying amount of financial assets recorded in the financial statements represents the Company's maximum exposure to credit risk. The Company believes it is not exposed to significant credit risk and overall, the Company's credit risk has not declined from the prior year.
Liquidity risk
The Company strives to maintain sufficient liquidity to meet its short-term business requirements, taking into account its anticipated cash flows from royalty interests, its holdings of cash, and its committed liabilities. The maturities of the Company's non‐current liabilities are disclosed in Note 4 and Note 8. All current liabilities are settled within one year.
Currency risk
The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company primarily operates in Canada, Australia, Argentina, Mexico, and the United States and incurs expenditures in currencies other than United States dollars. Thereby, the Company is exposed to foreign exchange risk arising from currency exposure. The Company has not hedged its exposure to currency fluctuations. Based on the above net exposure, as at December 31, 2023, and assuming that all other variables remain constant, a
|
METALLA ROYALTY & STREAMING LTD. (Expressed in thousands of United States dollars, unless otherwise indicated, except for shares, per ounce, and per share amounts) |
16. COMMITMENTS
As at December 31, 2023, the Company had the following contractual obligations:
| Less than | 1 to | Over | ||||||||||
| 1 year | 3 years | 3 years | Total | |||||||||
| Trade and other payables | $ | $ | $ | $ | ||||||||
| Loans payable principal and interest payments | ||||||||||||
| Payments related to acquisition of royalties and streams | ||||||||||||
| Total commitments | $ | $ | $ | $ |
In addition to the commitments above, the Company could in the future have additional commitments payable in cash and/or shares related to the acquisition of royalty and stream interests. However, these payments are subject to certain triggers or milestone conditions that have not been met as of December 31, 2023.
| - 31 - |