HUNT MINING CORP.
|
|
(Registrant)
|
|
Date: December 1, 2014
|
TIM HUNT
|
Tim Hunt, Executive Chairman, President, Principal
Executive Officer and Director
|
Exhibits
|
|
Unaudited Condensed Interim Consolidated Financial Statements for the period ending September 30, 2014
|
|
Management’s Discussion and Analysis for the period ending September 30, 2014
|
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Form 52-109FV2 CEO Certification of Interim Filings
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Form 52-109FV2 CFO Certification of Interim Filings
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Hunt Mining Corp.
|
||||||||||||
An Exploration Stage Enterprise
|
||||||||||||
Expressed in Canadian Dollars
|
||||||||||||
Condensed Interim Consolidated Statements of Financial Position (unaudited)
|
||||||||||||
September 30,
|
December 31,
|
|||||||||||
NOTE
|
2014
|
2013
|
||||||||||
(Audited)
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and equivalents
|
7 | $ | 21,195 | $ | 2,364,062 | |||||||
Marketable securities
|
8 | - | 47,828 | |||||||||
Accounts receivable
|
59,446 | 121,084 | ||||||||||
Prepaid expenses
|
22,560 | 26,531 | ||||||||||
Total Current Assets
|
103,201 | 2,559,505 | ||||||||||
NON-CURRENT ASSETS:
|
||||||||||||
Property and equipment
|
9 | 917,067 | 1,111,759 | |||||||||
Performance bond
|
12 | 420,848 | 340,183 | |||||||||
VAT receivable, net of discount
|
13 | 541,041 | 548,676 | |||||||||
Other deposit
|
17 | (c) | 90,830 | 80,085 | ||||||||
Minimal presumed income tax receivable
|
269,615 | 362,559 | ||||||||||
Total Non-Current Assets:
|
2,239,401 | 2,443,262 | ||||||||||
TOTAL ASSETS:
|
$ | 2,342,602 | $ | 5,002,767 | ||||||||
CURRENT LIABILITIES:
|
||||||||||||
Accounts payable and accrued liabilities
|
$ | 494,970 | $ | 274,364 | ||||||||
Taxes payable
|
27,919 | 317,582 | ||||||||||
Total Current Liabilities:
|
522,889 | 591,946 | ||||||||||
NON-CURRENT LIABILITIES:
|
||||||||||||
Provision
|
17 | (c) | 125,000 | 125,000 | ||||||||
Total Non-Current Liabilities:
|
125,000 | 125,000 | ||||||||||
TOTAL LIABILITIES:
|
$ | 647,889 | $ | 716,946 | ||||||||
SHAREHOLDERS' EQUITY:
|
||||||||||||
Share capital
|
10 | $ | 26,062,481 | $ | 26,062,481 | |||||||
Contributed surplus
|
11 | 9,415,624 | 9,358,217 | |||||||||
Deficit
|
(33,849,452 | ) | (31,176,283 | ) | ||||||||
Accumulated other comprehensive income (loss)
|
66,060 | 41,406 | ||||||||||
Total Shareholders' Equity:
|
$ | 1,694,713 | $ | 4,285,821 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:
|
$ | 2,342,602 | $ | 5,002,767 |
Going Concern (Note 3)
Subsequent Event (Note 19)
Commitments and Provision (Note 17)
|
Approved on behalf of the Board of Directors
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Signed "Tim Hunt"
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Signed "Alan Chan"
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The accompanying notes are an integral part of these condensed interim consolidated financial statements.
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Hunt Mining Corp.
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||||||||||||||||||||
An Exploration Stage Enterprise
|
||||||||||||||||||||
Expressed in Canadian Dollars
|
||||||||||||||||||||
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (unaudited)
|
||||||||||||||||||||
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||||||
NOTE
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2014
|
2013
|
2014
|
2013
|
||||||||||||||||
REVENUE:
|
||||||||||||||||||||
Operator's Fee
|
$ | - | $ | 6,238 | $ | - | $ | 107,797 | ||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||||||
Professional fees
|
96,553 | 74,136 | 253,511 | 276,318 | ||||||||||||||||
Directors fees
|
- | 30,574 | - | 91,878 | ||||||||||||||||
Exploration expenses
|
94,778 | 64,329 | 968,296 | 530,473 | ||||||||||||||||
Travel expenses
|
9,441 | 20,623 | 129,570 | 230,592 | ||||||||||||||||
Administrative and office expenses
|
62,389 | 81,807 | 193,807 | 431,498 | ||||||||||||||||
Payroll expenses
|
183,696 | 312,423 | 579,498 | 1,654,842 | ||||||||||||||||
Share based compensation
|
11 | 2,250 | 2,250 | 57,407 | 4,125 | |||||||||||||||
Banking charges
|
13,607 | 15,649 | 46,801 | 48,412 | ||||||||||||||||
Depreciation
|
9 | 59,423 | 76,567 | 195,730 | 225,227 | |||||||||||||||
Cost recovery
|
- | (339,188 | ) | - | (1,790,032 | ) | ||||||||||||||
Total operating expenses:
|
522,137 | 339,170 | 2,424,620 | 1,703,333 | ||||||||||||||||
OTHER INCOME/(EXPENSE):
|
||||||||||||||||||||
Interest income
|
3,106 | 12,626 | 15,514 | 40,433 | ||||||||||||||||
Bad debt expense
|
- | (114,408 | ) | - | (114,408 | ) | ||||||||||||||
Miscellaneous income (expense)
|
8 | 1,854 | - | (4,036 | ) | 450,000 | ||||||||||||||
VAT discount and accretion
|
13 | - | 13,465 | - | (23,541 | ) | ||||||||||||||
Loss on foreign exchange
|
(111,088 | ) | (60,808 | ) | (253,877 | ) | (133,678 | ) | ||||||||||||
Total other income:
|
(106,128 | ) | (149,125 | ) | (242,399 | ) | 218,806 | |||||||||||||
LOSS - before income tax
|
(628,265 | ) | (482,057 | ) | (2,667,019 | ) | (1,376,730 | ) | ||||||||||||
Income taxes
|
(4,950 | ) | (366,088 | ) | (6,150 | ) | (383,108 | ) | ||||||||||||
NET LOSS FOR THE PERIOD
|
$ | (633,215 | ) | $ | (848,145 | ) | $ | (2,673,169 | ) | $ | (1,759,838 | ) | ||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||||||
Items that may be reclassified subsequently to net loss
|
||||||||||||||||||||
Change in value of performance bond
|
12 | 105,790 | 57,957 | 80,665 | 102,375 | |||||||||||||||
Translation of foreign operations into Canadian dollar presentation
|
(20,479 | ) | (84,933 | ) | (56,011 | ) | (31,229 | ) | ||||||||||||
TOTAL NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD:
|
$ | (547,904 | ) | $ | (875,121 | ) | $ | (2,648,515 | ) | $ | (1,688,692 | ) | ||||||||
Weighted average shares outstanding - basic and diluted
|
121,494,823 | 121,494,823 | 121,494,823 | 113,845,924 | ||||||||||||||||
NET LOSS PER SHARE - BASIC AND DILUTED:
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
|
Hunt Mining Corp.
|
||||||||||||||||||||||||||||
An Exploration Stage Enterprise
|
||||||||||||||||||||||||||||
Expressed in Canadian Dollars
|
||||||||||||||||||||||||||||
Condensed Interim Consolidated Statement of Changes in Shareholders' Equity (unaudited)
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Comprehensive
|
Contributed
|
|||||||||||||||||||||||||||
Share Capital
|
Deficit
|
Loss |
Surplus
|
Warrants
|
Preferred Shares
|
Total
|
||||||||||||||||||||||
Balance - January 1, 2013
|
$ | 25,885,064 | $ | (28,496,195 | ) | $ | (278,245 | ) | $ | 3,491,659 | $ | 5,860,183 | $ | 177,417 | $ | 6,639,883 | ||||||||||||
Net Loss
|
- | (1,759,838 | ) | - | - | - | - | (1,759,838 | ) | |||||||||||||||||||
Other comprehensive income
|
- | - | 71,146 | - | - | - | 71,146 | |||||||||||||||||||||
Share based compensation
|
- | - | - | 4,125 | - | - | 4,125 | |||||||||||||||||||||
Conversion of preferred shares to common shares
|
177,417 | - | - | - | - | (177,417 | ) | - | ||||||||||||||||||||
Expiry of warrants
|
- | - | - | 3,331,620 | (3,331,620 | ) | - | - | ||||||||||||||||||||
Balance - September 30, 2013
|
$ | 26,062,481 | $ | (30,256,033 | ) | $ | (207,099 | ) | $ | 6,827,404 | $ | 2,528,563 | $ | - | $ | 4,955,316 | ||||||||||||
Balance - January 1, 2014
|
$ | 26,062,481 | $ | (31,176,283 | ) | $ | 41,406 | $ | 9,358,217 | $ | - | $ | - | $ | 4,285,821 | |||||||||||||
Net Loss
|
- | (2,673,169 | ) | - | - | - | - | (2,673,169 | ) | |||||||||||||||||||
Other comprehensive loss
|
- | - | 24,654 | - | - | - | 24,654 | |||||||||||||||||||||
Share based compensation
|
- | - | - | 57,407 | - | - | 57,407 | |||||||||||||||||||||
Balance - September 30, 2014
|
$ | 26,062,481 | $ | (33,849,452 | ) | $ | 66,060 | $ | 9,415,624 | $ | - | $ | - | $ | 1,694,713 | |||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
|
Hunt Mining Corp.
|
||||||||||||
An Exploration Stage Enterprise
|
||||||||||||
Expressed in Canadian Dollars
|
||||||||||||
Condensed Interim Consolidated Statements of Cash Flows (unaudited)
|
||||||||||||
Nine months ended September 30,
|
||||||||||||
NOTE
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2014
|
2013
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net loss
|
$ | (2,673,169 | ) | $ | (1,759,838 | ) | ||||||
Items not affecting cash
|
||||||||||||
Depreciation
|
9 | 195,730 | 225,227 | |||||||||
Loss of foreign exchange
|
(63,473 | ) | (126,454 | ) | ||||||||
Share based compensation
|
11 | 57,407 | 4,125 | |||||||||
Realized loss on marketable securities
|
8 | (7,619 | ) | - | ||||||||
Net change in non-cash working capital items
|
||||||||||||
Decrease (increase) in minimum presumed income tax receivable
|
93,700 | (90,435 | ) | |||||||||
Decrease (increase) in VAT receivable
|
6,063 | (31,525 | ) | |||||||||
Increase in other deposit
|
(11,217 | ) | - | |||||||||
Decrease (increase) in accounts receivable
|
62,422 | (7,978 | ) | |||||||||
Decrease (increase) in prepaid expenses
|
4,016 | (14,418 | ) | |||||||||
Increase (decrease) in accounts payable and accrued liabilities
|
221,365 | (586,382 | ) | |||||||||
Increase (decrease) in taxes payable
|
(294,576 | ) | 326,189 | |||||||||
Net cash used in operating activities
|
(2,409,351 | ) | (2,061,488 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchases of property and equipment
|
9 | - | (18,718 | ) | ||||||||
Purchases of marketable securities
|
(1,518,319 | ) | - | |||||||||
Redemption of marketable securities
|
1,510,700 | - | ||||||||||
Net cash used in investing activities
|
(7,619 | ) | (18,718 | ) | ||||||||
NET DECREASE IN CASH AND EQUIVALENTS:
|
$ | (2,416,970 | ) | $ | (2,080,206 | ) | ||||||
CHANGE DUE TO FOREIGN EXCHANGE
|
74,103 | (296,949 | ) | |||||||||
CASH AND EQUIVALENTS, BEGINNING OF PERIOD:
|
2,364,062 | 5,220,727 | ||||||||||
CASH AND EQUIVALENTS, END OF PERIOD:
|
$ | 21,195 | $ | 2,843,572 | ||||||||
Cash and cash equivalents consist of:
|
||||||||||||
Cash
|
21,195 | 367,611 | ||||||||||
Term deposits (less than 90 days)
|
- | 2,500,000 | ||||||||||
21,195 | 2,867,611 | |||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||||||
Taxes paid
|
(24,715 | ) | (389,015 | ) | ||||||||
Interest received
|
6,300 | 24,983 |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
|
1.
|
Nature of Business
|
Corporation
|
Incorporation
|
Percentage
ownership
|
Business Purpose
|
Cerro Cazador S.A.
|
Argentina
|
100%
|
Holder of Assets and Exploration Company
|
1494716 Alberta Ltd.
|
Alberta
|
100%
|
Nominee Shareholder
|
Hunt Gold USA LLC
|
Washington, USA
|
100%
|
Management Company
|
·
|
Disclosure of the recoverable amount of impaired assets; and
|
·
|
Additional disclosures about the measurement of the recoverable amount when the recoverable amount is based on fair value less costs of disposal, including the discount rate when a present value technique is used to measure the recoverable amount.
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Cash
|
$ | 21,195 | $ | 614,062 | ||||
Short-term investments
|
- | 1,750,000 | ||||||
$ | 21,195 | $ | 2,364,062 |
Vehicles and
|
||||||||||||
Land
|
equipment
|
Total
|
||||||||||
Cost
|
||||||||||||
Balance at December 31, 2013
|
$ | 759,274 | $ | 1,204,752 | $ | 1,964,026 | ||||||
Additions
|
- | - | - | |||||||||
Foreign exchange movement
|
(2,343 | ) | (3,566 | ) | (5,909 | ) | ||||||
Balance at September 30, 2014
|
$ | 756,931 | $ | 1,201,186 | $ | 1,958,117 | ||||||
Accumulated amortization
|
||||||||||||
Balance at December 31, 2013
|
$ | - | $ | 852,267 | $ | 852,267 | ||||||
Depreciation for the period
|
- | 195,730 | 195,730 | |||||||||
Foreign exchange movement
|
- | (6,947 | ) | (6,947 | ) | |||||||
Balance at September 30, 2014
|
$ | - | $ | 1,041,050 | $ | 1,041,050 | ||||||
Net book value
|
||||||||||||
At December 31, 2013
|
$ | 759,274 | $ | 352,485 | $ | 1,111,759 | ||||||
At September 30, 2014
|
$ | 756,931 | $ | 160,136 | $ | 917,067 |
a)
|
Authorized:
|
Common Shares
|
Nine months ended
|
|||||||
September 30, 2014
|
||||||||
Number
|
Amount
|
|||||||
Balance, beginning and end of period
|
121,494,823 | $ | 26,062,481 |
b)
|
Stock options:
|
Number
|
|||||
Weighted
|
exercisable on
|
||||
Range of
|
Number
|
Weighted average
|
average
|
September 30,
|
|
exercise prices
|
outstanding
|
life (years)
|
exercise price
|
2014
|
|
Stock options
|
$0.10 - $0.65
|
7,732,530
|
2.47
|
$0.24
|
7,582,530
|
|
|||||
Nine months ended | |||||
September 30, 2014 | |||||
Number of
|
Weighted
|
||||
options
|
Average Price
|
||||
Balance, beginning of period
|
6,882,530
|
$0.31
|
|||
Granted to officers and directors
|
2,850,000
|
$0.10
|
|||
Forfeiture of stock options
|
(2,000,000)
|
$0.29
|
|||
Balance, end of period
|
7,732,530
|
$0.24
|
April 23, 2013
|
|
Risk free interest rate | 1.13% |
Expected volatility
|
143.19%
|
Expected life (years)
|
5
|
Expected dividend yield
|
0%
|
Forfeiture rate
|
2.80%
|
April 4, 2014
|
|
Risk free interest rate | 1.52% |
Expected volatility
|
186.86%
|
Expected life (years)
|
5
|
Expected dividend yield
|
0%
|
Forfeiture rate
|
36.79%
|
September 30, 2014
|
||||
Balance, beginning of period
|
$ | 9,358,217 | ||
Share based compensation
|
57,407 | |||
Balance, end of period
|
$ | 9,415,624 |
Balance at December 31, 2013
|
$ | 548,676 | ||
Change
|
(7,635 | ) | ||
Discount and accretion
|
- | |||
Balance at September 30, 2014
|
$ | 541,041 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Salaries and benefits
|
$ | 44,560 | $ | 129,236 | $ | 130,937 | $ | 410,391 | ||||||||
Consulting fees
|
39,940 | 67,741 | 126,634 | 223,362 | ||||||||||||
Share based compensation
|
844 | 1,969 | 53,751 | 3,610 | ||||||||||||
$ | 85,345 | $ | 198,946 | $ | 311,322 | $ | 637,363 |
|
·
|
Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
·
|
Level 2: inputs, other than quoted prices, that are observable, either directly or indirectly. Level 2 valuations are based on inputs, including quoted forward prices for commodities, market interest rates, and volatility factors, which can be observed or corroborated in the market place.
|
|
·
|
Level 3: inputs are less observable, unavoidable or where the observable data does not support the majority of the instruments’ fair value.
|
September 30, 2014
|
December 31, 2013
|
|||||||||||||||
Carrying amount
|
Fair value
|
Carrying amount
|
Fair value
|
|||||||||||||
$ | $ | $ | $ | |||||||||||||
Financial Assets
|
||||||||||||||||
FVTPL
|
||||||||||||||||
Cash and equivalents (Level 1)
|
21,195 | 21,195 | 2,364,062 | 2,364,062 | ||||||||||||
Available for sale
|
||||||||||||||||
Performance bond (Level 1)
|
420,848 | 420,848 | 340,183 | 340,183 | ||||||||||||
Marketable securities (Level 1)
|
- | - | 47,828 | 47,828 | ||||||||||||
Loans and receivables
|
||||||||||||||||
Accounts receivable
|
59,446 | 59,446 | 121,084 | 121,084 | ||||||||||||
Financial Liabilities
|
||||||||||||||||
Other financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
494,970 | 494,970 | 274,364 | 274,364 |
i.
|
Currency risk
|
Cash and equivalents
|
$ | 6,490 | ||
Accounts payable and accrued liabilities
|
$ | 119,438 |
Cash and equivalents
|
$ | 13,123 | ||
Performance bond
|
$ | 420,848 | ||
Accounts receivable
|
$ | 53,976 | ||
Other credits
|
$ | 90,830 | ||
Accounts payable and accrued liabilities
|
$ | 339,605 |
Impact on net loss and
comprehensive loss
|
||||
U.S. Dollar Exchange rate – 10% increase
|
$ | (10,934 | ) | |
U.S. Dollar Exchange rate – 10% decrease
|
$ | 10,934 |
Impact on net loss and
comprehensive loss
|
||||
Argentine Peso Exchange rate – 10% increase
|
$ | (35,060 | ) | |
Argentine Peso Exchange rate – 10% decrease
|
$ | 35,060 |
iv.
|
Price risk
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Canada
|
$ | 18,793 | $ | 2,876,489 | ||||
Argentina
|
2,310,893 | 2,103,649 | ||||||
United States
|
12,916 | 22,629 | ||||||
$ | 2,342,602 | $ | 5,002,767 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Canada
|
$ | (77,069 | ) | $ | 125,524 | $ | (361,467 | ) | $ | 1,809,733 | ||||||
Argentina
|
(381,870 | ) | (765,725 | ) | (1,806,247 | ) | (2,857,501 | ) | ||||||||
United States
|
(174,276 | ) | (207,944 | ) | (505,455 | ) | (712,070 | ) | ||||||||
$ | (633,215 | ) | $ | (848,145 | ) | $ | (2,673,169 | ) | $ | (1,759,838 | ) |
|
a)
|
On March 27, 2007, the Company signed a definitive lease purchase agreement with FK Minera S.A. to acquire a 100% interest in the Bajo Pobré gold property located in Santa Cruz Province, Argentina. The Company may earn up to a 100% equity interest in the Bajo Pobré property by making cash payments and exploration expenditures over a five-year earn-in period. The required expenditures and ownership levels upon meeting those requirements were:
|
Year of the
Agreement
|
Payment to FK=
Minera SA
|
Exploration
Expenditures Required
|
Ownership
|
|
First year – 2007
|
US$50,000
|
PAID
|
US$250,000
|
0%
|
Second year – 2008
|
US$30,000
|
PAID
|
US$250,000
|
0%
|
Third year –2009
|
US$50,000
|
PAID
|
-
|
51%
|
Fourth year – 2010
|
US$50,000
|
PAID
|
-
|
60%
|
Fifth year – 2011
|
US$50,000
|
PAID
|
-
|
100%
|
|
b)
|
In March 2007, the Company was the successful bidder for the exploration and development rights to the La Josefina project from Fomicruz. On July 24, 2007, the Company entered into an agreement with Fomicruz pursuant to which the Company agreed to invest a minimum of US$6 million in exploration and development expenditures over a four year period, including US$1.5 million before July 2008. The agreement provides that, in the event that a positive feasibility study is completed on the La Josefina property, a Joint Venture Corporation (“JV Corporation”) would be formed by the Company and Fomicruz. A revised schedule for exploration and development of the La Josefina project was submitted in writing to Fomicruz and was adopted on May 3, 2011, mandating that an economic feasibility study and production decision be made by the Company for the La Josefina project by the end of 2013. The Company would own 91% of the joint venture company and Fomicruz would own the remaining 9%.
|
|
c)
|
On June 30, 2010, a former director and accounting consultant (“the Consultant”) to the Company severed his business relationship with the Company. On August 5, 2010 the Consultant claimed that since 2006, he was actually an employee of, not a consultant to, CCSA. On September 7, 2010, the Argentine Ministry of Labor, Employment and Social Security filed a Certificate of Notice on CCSA and the Company indicating that a representative from CCSA and the Company must appear before a mediator to address the Consultant’s claims. The certificates of notice stated the value of the Consultant’s claim against the Company at 500,000 pesos (US$126,811).
|
|
d)
|
On October 31, 2011, the Company signed an agreement with the owners of the Piedra Labrada Ranch for the use and lease of facilities on the same premises as the Company’s La Josefina facilities. The term is for three years beginning November 1, 2011 and ending on October 31, 2014, including annual commitments of $60,000. The Company’s total commitment for 2014 under this agreement is US$50,000.
|
|
e)
|
On April 1, 2012 the Company entered into a 9 month agreement with the surface rights holder of the Piedra Grande Ranch, located in Santa Cruz province, Argentina for access and use of their property. The agreement allows for the Company to engage in exploration activity as well as use the property and the facilities to house and store the Company’s equipment and personnel. The Company agreed to consideration of US$3,000 per month under this agreement. The initial term of the agreement ended on December 31, 2012. The Company was given an exclusive option to extend the agreement for 1 year, which it exercised. The agreement now ends on December 31, 2013. The Company’s total obligation under this new agreement for the year ended December 31, 2013 was US$36,000. The Company did not extend this agreement for another year.
|
|
f)
|
On May 3, 2012, the Company entered into an exploration agreement with Eldorado Gold Corp. (“Eldorado”) for the purpose of exploring the Company’s exploration projects in Santa Cruz province, Argentina. The agreement classifies projects into three stages: Stage I is an early exploration project that is not ready for exploration drilling; Stage II is a project that is drill ready, or being drilled; Stage III requires that the Company and its exploration partner jointly create a new company where by the Company will retain a 25% interest in the new company and Eldorado Gold Corp., or a nominee of their choice, will be granted a 75% interest in the new company. The Company had two Stage II projects, Bajo Pobré and La Valenciana, and one new Stage I project, La Josefina.
|
|
g)
|
On September 1, 2012, the Company moved into new office space. The Company signed a new office lease with a three-year term, which included the first four months for free. In December 2013, the Company moved out of the office space and terminated the lease. The Company included in accounts payable and accrued liabilities as at December 31, 2013 US$21,000 for settlement of a lease break fee.
|
|
h)
|
On October 1, 2012, the Company entered into an agreement with the surface owner of the Bajo Pobré Ranch in Santa Cruz province, Argentina. As consideration for access to the Bajo Pobré property and use of the Bajo Pobré Ranch, the Company agreed to pay the owner $5,000 per month over a period of 9 months ending on June 30, 2013. At the Company’s sole option it can extend the agreement for an additional year, ending June 1, 2014. The Company’s total commitment for 2013 under this agreement was US$30,000. The Company did not extend the lease for an additional year.
|
|
i)
|
On November 1, 2012, the Company entered into an agreement with Fomicruz for the exploration of the La Valenciana project in Santa Cruz province, Argentina. The agreement is for a total of 7 years, expiring on October 31, 2019. The 7 years is broken into 3 economic periods, at the end of each period the Company will have the option of reporting its results to Fomicruz or terminating the agreement.
|
|
The agreement with Fomicruz requires the Company to spend USD $5,000,000 in exploration on the project over 7 years. If the Company elects to exercise its option to bring the La Valenciana project into production it must grant Fomicruz a 9% ownership in a new JV Corporation to be created by the Company to manage the project. If Fomicruz elects to increase their ownership they can under the following formula up to a maximum of 49% interest.
|
|
·
|
To purchase an additional 10% in the JV corporation, Fomicruz must reimburse the Company for 10% of the exploration expenses made by the Company during the exploration period;
|
|
·
|
To purchase the next 10% interest in the JV corporation, Fomicruz must reimburse the Company for 20% of the exploration expenses made by the Company during the exploration period;
|
|
·
|
To purchase a final additional 20% interest in the JV Corporation, Fomicruz must reimburse the Company for 25% of the exploration expenses made by the Company during the exploration period; bringing Fomicruz’s total ownership interest in the JV Corporation to 49%.
|
|
j)
|
On October 3, 2013, the Tax Authorities of the Santa Cruz Province, started a claim requesting omitted stamp tax on a) the Exploration Agreement signed during fiscal year 2012 (Amendment of “La Josefina” and “La Valenciana” contract) and b) Loan Agreement signed between the parent Companies and CCSA. Request is in the amount of $209,460 (1,994,199 pesos), including interest. An accrual for this amount, less payments made during the three months ended June 30, 2014, has been included in taxes payable in the condensed interim consolidated statements of financial position.
|
|
k)
|
On March 26, 2014, the Company signed an agreement with the surface rights holder of the La Valenciana Ranch, located in Santa Cruz Province, Argentina for access and use of their property. The agreement allows for the Company to engage in exploration activity. The term is for five years, beginning April 1, 2014 and ending March 31, 2019, including annual commitments of $36,000. The Company’s total commitment for 2014 is US$24,000.
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Shareholders' equity
|
$ | 1,694,713 | $ | 4,285,821 |
|
·
|
To purchase an additional 10% in the JV corporation, Fomicruz must reimburse the Company for 10% of the exploration expenses made by the Company during the exploration period;
|
|
·
|
To purchase the next 10% interest in the JV corporation, Fomicruz must reimburse the Company for 20% of the exploration expenses made by the Company during the exploration period;
|
|
·
|
To the purchase a final additional 20% interest in the JV Corporation, Fomicruz must reimburse the Company for 25% of the exploration expenses made by the Company during the exploration period; bringing Fomicruz’s total ownership interest in the JV Corporation to 49%.
|
Year ended
|
||||||||
December 31,
2013
|
December 31,
2012
|
|||||||
Net loss for the period
|
(2,680,088 | ) | (4,172,082 | ) | ||||
Net loss for the period – basic and diluted loss per share
|
$ | (0.02 | ) | $ | (0.04 | ) | ||
Total assets
|
5,002,767 | 7,701,979 | ||||||
Total non-current liabilities
|
125,000 | 125,000 | ||||||
Cash dividends
|
- | - |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Drilling expense
|
$ | - | $ | - | $ | 544,837 | $ | - | ||||||||
Assay expense
|
44,046 | 13,046 | 83,894 | 105,857 | ||||||||||||
Equipment rental expense
|
- | - | 33,069 | 48,713 | ||||||||||||
Fuel expense
|
11,695 | 4,148 | 61,839 | 90,607 | ||||||||||||
Property payments
|
1,164 | - | 2,864 | 104,401 | ||||||||||||
Property reports
|
- | - | 10,109 | 1,891 | ||||||||||||
Other
|
37,873 | 47,135 | 231,683 | 179,003 | ||||||||||||
$ | 94,778 | $ | 64,329 | $ | 968,296 | $ | 530,473 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Exploration expenses
|
$ | - | $ | 4,847 | $ | - | $ | 346,120 | ||||||||
Professional fees
|
- | 6,684 | - | 74,691 | ||||||||||||
Administrative and office expenses
|
- | 106,493 | - | 327,653 | ||||||||||||
Payroll expenses
|
- | 220,641 | - | 924,955 | ||||||||||||
Travel expenses
|
- | 523 | - | 116,613 | ||||||||||||
Exploration cost recovery
|
$ | - | $ | 339,188 | $ | - | $ | 1,790,032 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
La Josefina
|
$ | 32,765 | $ | 890 | $ | 350,283 | $ | 112,956 | ||||||||
La Valenciana
|
60,849 | 58,638 | 615,149 | 72,887 | ||||||||||||
Bajo Pobre
|
- | 497 | - | 150,226 | ||||||||||||
Other
|
1,164 | 4,304 | 2,864 | 194,404 | ||||||||||||
$ | 94,778 | $ | 64,329 | $ | 968,296 | $ | 530,473 |
Summary of Quarterly Results
|
||||||||||||||||
September 30,
|
June 30,
|
March 31,
|
December 31,
|
|||||||||||||
2014
|
2014
|
2014
|
2013
|
|||||||||||||
$ | $ | $ | $ | |||||||||||||
Net loss for the period
|
(633,215 | ) | (1,285,358 | ) | (754,596 | ) | (920,250 | ) | ||||||||
Net loss per share - basic and diluted:
|
(0.01 | ) | (0.01 | ) | (0.01 | ) | (0.00 | ) | ||||||||
Working capital
|
(419,688 | ) | 42,929 | 1,433,613 | 1,967,559 | |||||||||||
Total assets
|
2,342,602 | 3,088,286 | 4,021,807 | 5,002,767 | ||||||||||||
Total non-current liabilities
|
125,000 | 125,000 | 125,000 | 125,000 | ||||||||||||
Total shareholders' equity
|
1,694,713 | 2,240,367 | 3,480,069 | 4,285,821 |
September 30,
|
June 30,
|
March 31,
|
December 31,
|
|||||||||||||
2013
|
2013
|
2013
|
2012
|
|||||||||||||
$ | $ | $ | $ | |||||||||||||
Net loss for the period
|
(848,145 | ) | (301,615 | ) | (610,078 | ) | (1,470,203 | ) | ||||||||
Net loss per share - basic and diluted:
|
(0.01 | ) | (0.00 | ) | (0.01 | ) | (0.01 | ) | ||||||||
Working capital
|
2,656,074 | 3,504,456 | 3,807,880 | 4,426,615 | ||||||||||||
Total assets
|
5,781,467 | 6,745,334 | 6,822,824 | 7,701,979 | ||||||||||||
Total non-current liabilities
|
125,000 | 125,000 | 125,000 | 125,000 | ||||||||||||
Total shareholders' equity
|
4,955,316 | 5,828,187 | 6,146,573 | 6,639,883 |
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Salaries and benefits
|
$ | 44,560 | $ | 129,236 | $ | 130,937 | $ | 410,391 | ||||||||
Consulting fees
|
39,940 | 67,741 | 126,634 | 223,362 | ||||||||||||
Share based compensation
|
844 | 1,969 | 53,751 | 3,610 | ||||||||||||
$ | 85,345 | $ | 198,946 | $ | 311,322 | $ | 637,363 |
|
·
|
Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
·
|
Level 2: inputs, other than quoted prices, that are observable, either directly or indirectly. Level 2 valuations are based on inputs, including quoted forward prices for commodities, market interest rates, and volatility factors, which can be observed or corroborated in the market place.
|
|
·
|
Level 3: inputs are less observable, unavoidable or where the observable data does not support the majority of the instruments’ fair value.
|
September 30, 2014
|
December 31, 2013
|
|||||||||||||||
Carrying amount
|
Fair value
|
Carrying amount
|
Fair value
|
|||||||||||||
$ | $ | $ | $ | |||||||||||||
Financial Assets
|
||||||||||||||||
FVTPL
|
||||||||||||||||
Cash and equivalents (Level 1)
|
21,195 | 21,195 | 2,364,062 | 2,364,062 | ||||||||||||
Available for sale
|
||||||||||||||||
Performance bond (Level 1)
|
420,848 | 420,848 | 340,183 | 340,183 | ||||||||||||
Marketable securities (Level 1)
|
- | - | 47,828 | 47,828 | ||||||||||||
Loans and receivables
|
||||||||||||||||
Accounts receivable
|
59,446 | 59,446 | 121,084 | 121,084 | ||||||||||||
Financial Liabilities
|
||||||||||||||||
Other financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
494,970 | 494,970 | 274,364 | 274,364 |
i.
|
Currency risk
|
Cash and equivalents
|
$ | 6,490 | ||
Accounts payable and accrued liabilities
|
$ | 119,438 |
Cash and equivalents
|
$ | 13,123 | ||
Performance bond
|
$ | 420,848 | ||
Accounts receivable
|
$ | 53,976 | ||
Other credits
|
$ | 90,830 | ||
Accounts payable and accrued liabilities
|
$ | 339,605 |
Impact on net loss and
comprehensive loss
|
|
U.S. Dollar Exchange rate – 10% increase
|
$ (10,934)
|
U.S. Dollar Exchange rate – 10% decrease
|
$ 10,934
|
Impact on net loss and
comprehensive loss
|
|
Argentine Peso Exchange rate – 10% increase
|
$ (35,060)
|
Argentine Peso Exchange rate – 10% decrease
|
$ 35,060
|
iv.
|
Price risk
|
·
|
Disclosure of the recoverable amount of impaired assets; and
|
·
|
Additional disclosures about the measurement of the recoverable amount when the recoverable amount is based on fair value less costs of disposal, including the discount rate when a present value technique is used to measure the recoverable amount.
|
|
a)
|
On March 27, 2007, the Company signed a definitive lease purchase agreement with FK Minera S.A. to acquire a 100% interest in the Bajo Pobré gold property located in Santa Cruz Province, Argentina. The Company may earn up to a 100% equity interest in the Bajo Pobré property by making cash payments and exploration expenditures over a five-year earn-in period. The required expenditures and ownership levels upon meeting those requirements were:
|
Year of the
Agreement
|
Payment to FK
Minera SA
|
Exploration
Expenditures Required
|
Ownership
|
|
First year – 2007
|
US$50,000
|
PAID
|
US$250,000
|
0%
|
Second year – 2008
|
US$30,000
|
PAID
|
US$250,000
|
0%
|
Third year –2009
|
US$50,000
|
PAID
|
-
|
51%
|
Fourth year – 2010
|
US$50,000
|
PAID
|
-
|
60%
|
Fifth year – 2011
|
US$50,000
|
PAID
|
-
|
100%
|
|
b)
|
In March 2007, the Company was the successful bidder for the exploration and development rights to the La Josefina project from Fomicruz. On July 24, 2007, the Company entered into an agreement with Fomicruz pursuant to which the Company agreed to invest a minimum of US$6 million in exploration and development expenditures over a four year period, including US$1.5 million before July 2008. The agreement provides that, in the event that a positive feasibility study is completed on the La Josefina property, a Joint Venture Corporation (“JV Corporation”) would be formed by the Company and Fomicruz. A revised schedule for exploration and development of the La Josefina project was submitted in writing to Fomicruz and was adopted on May 3, 2011, mandating that an economic feasibility study and production decision be made by the Company for the La Josefina project by the end of 2013. The Company would own 91% of the joint venture company and Fomicruz would own the remaining 9%.
|
|
c)
|
On June 30, 2010, a former director and accounting consultant (“the Consultant”) to the Company severed his business relationship with the Company. On August 5, 2010 the Consultant claimed that since 2006, he was actually an employee of, not a consultant to, CCSA. On September 7, 2010, the Argentine Ministry of Labor, Employment and Social Security filed a Certificate of Notice on CCSA and the Company indicating that a representative from CCSA and the Company must appear before a mediator to address the Consultant’s claims. The certificates of notice stated the value of the Consultant’s claim against the Company at 500,000 pesos (US$126,811).
|
|
d)
|
On October 31, 2011, the Company signed an agreement with the owners of the Piedra Labrada Ranch for the use and lease of facilities on the same premises as the Company’s La Josefina facilities. The term is for three years beginning November 1, 2011 and ending on October 31, 2014, including annual commitments of $60,000. The Company’s total commitment for 2014 under this agreement is US$50,000.
|
|
e)
|
On April 1, 2012 the Company entered into a 9 month agreement with the surface rights holder of the Piedra Grande Ranch, located in Santa Cruz province, Argentina for access and use of their property. The agreement allows for the Company to engage in exploration activity as well as use the property and the facilities to house and store the Company’s equipment and personnel. The Company agreed to consideration of US$3,000 per month under this agreement. The initial term of the agreement ended on December 31, 2012. The Company was given an exclusive option to extend the agreement for 1 year, which it exercised. The agreement now ends on December 31, 2013. The Company’s total obligation under this new agreement for the year ended December 31, 2013 was US$36,000. The Company did not extend this agreement for another year.
|
|
f)
|
On May 3, 2012, the Company entered into an exploration agreement with Eldorado Gold Corp. (“Eldorado”) for the purpose of exploring the Company’s exploration projects in Santa Cruz province, Argentina. The agreement classifies projects into three stages: Stage I is an early exploration project that is not ready for exploration drilling; Stage II is a project that is drill ready, or being drilled; Stage III requires that the Company and its exploration partner jointly create a new company where by the Company will retain a 25% interest in the new company and Eldorado Gold Corp., or a nominee of their choice, will be granted a 75% interest in the new company. The Company had two Stage II projects, Bajo Pobré and La Valenciana, and one new Stage I project, La Josefina.
|
|
g)
|
On September 1, 2012, the Company moved into new office space. The Company signed a new office lease with a three-year term, which included the first four months for free. In December 2013, the Company moved out of the office space and terminated the lease. The Company included in accounts payable and accrued liabilities as at December 31, 2013 US$21,000 for settlement of a lease break fee.
|
|
h)
|
On October 1, 2012, the Company entered into an agreement with the surface owner of the Bajo Pobré Ranch in Santa Cruz province, Argentina. As consideration for access to the Bajo Pobré property and use of the Bajo Pobré Ranch, the Company agreed to pay the owner $5,000 per month over a period of 9 months ending on June 30, 2013. At the Company’s sole option it can extend the agreement for an additional year, ending June 1, 2014. The Company’s total commitment for 2013 under this agreement was US$30,000. The Company did not extend the lease for an additional year.
|
|
i)
|
On November 1, 2012, the Company entered into an agreement with Fomicruz for the exploration of the La Valenciana project in Santa Cruz province, Argentina. The agreement is for a total of 7 years, expiring on October 31, 2019. The 7 years is broken into 3 economic periods, at the end of each period the Company will have the option of reporting its results to Fomicruz or terminating the agreement.
|
|
The agreement with Fomicruz requires the Company to spend USD $5,000,000 in exploration on the project over 7 years. If the Company elects to exercise its option to bring the La Valenciana project into production it must grant Fomicruz a 9% ownership in a new JV Corporation to be created by the Company to manage the project. If Fomicruz elects to increase their ownership they can under the following formula up to a maximum of 49% interest.
|
|
·
|
To purchase an additional 10% in the JV corporation, Fomicruz must reimburse the Company for 10% of the exploration expenses made by the Company during the exploration period;
|
|
·
|
To purchase the next 10% interest in the JV corporation, Fomicruz must reimburse the Company for 20% of the exploration expenses made by the Company during the exploration period;
|
|
·
|
To purchase a final additional 20% interest in the JV Corporation, Fomicruz must reimburse the Company for 25% of the exploration expenses made by the Company during the exploration period; bringing Fomicruz’s total ownership interest in the JV Corporation to 49%.
|
|
j)
|
On October 3, 2013, the Tax Authorities of the Santa Cruz Province, started a claim requesting omitted stamp tax on a) the Exploration Agreement signed during fiscal year 2012 (Amendment of “La Josefina” and “La Valenciana” contract) and b) Loan Agreement signed between the parent Companies and CCSA. Request is in the amount of $209,460 (1,994,199 pesos), including interest. An accrual for this amount, less payments made during the three months ended June 30, 2014, has been included in taxes payable in the condensed interim consolidated statements of financial position.
|
|
k)
|
On March 26, 2014, the Company signed an agreement with the surface rights holder of the La Valenciana Ranch, located in Santa Cruz Province, Argentina for access and use of their property. The agreement allows for the Company to engage in exploration activity. The term is for five years, beginning April 1, 2014 and ending March 31, 2019, including annual commitments of $36,000. The Company’s total commitment for 2014 is US$24,000.
|
Securities
|
Outstanding
|
Voting equity securities issued and outstanding(1)
|
146,494,823 common shares
|
Securities convertible or exercisable into voting equity securities – stock options
|
Stock options to acquire up to 7,732,530 common shares(2) (3) (4)
|
Securities convertible or exercisable into voting equity securities – warrants
|
25,000,000 warrants to acquire 25,000,000 common shares at an exercise price of $0.05 per share before October 31, 2015(5)
|
|
(1)
|
On April 10, 2013, 20,881,493 convertible preferred shares were converted into 20,881,493 common shares on the basis of one common share for each convertible preferred share held. The convertible preferred shares were all issued to HuntMountain, CCSA’s former parent corporation, on December 23, 2009 in partial consideration for the Qualifying Transaction.
|
|
(2)
|
On February 27, 2012, the Company granted 1,250,000 stock options at an exercise price of $0.30 per share to certain directors, officers, employees and consultants of the Company. The options granted vested immediately and expire on February 27, 2017.
|
|
(3)
|
On April 23, 2013, the Company granted 400,000 stock options at an exercise price of $0.10 per share to certain officers and employees of the Company. Of the options granted, 200,000 vested on April 23, 2014 with the remainder vesting on April 23, 2015. The options expire on April 23, 2018.
|
|
(4)
|
On April 4, 2014, the Company granted 2,850,000 stock options at an exercise price of $0.10 per share to certain directors and officers of the Company. The options granted vest immediately and expire on April 4, 2019.
|
|
(5)
|
On October 31, 2014, the Company issued 25,000,000 units pursuant to a non-brokered private placement. Each unit consisted of one common share and one common share purchase warrant exercisable at $0.05 per warrant before October 31, 2015.
|
1.
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Hunt Mining Corp. (the “issuer”) for the interim period ended September 30, 2014.
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the interim filings.
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
|
1.
|
Review: I have reviewed interim financial report and interim MD&A (together, the “interim filings”) of Hunt Mining Corp. (the “issuer”) for the interim period ended September 30, 2014.
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the interim filings.
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
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