SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 SIGNIFICANT ACCOUNTING POLICIES Risks and Uncertainties COVID-19 On March 11, the World Health Organization (“WHO”) declared the COVID-19 virus a global pandemic. As a result of the pandemic, many jurisdictions, including the United States (“US”), some of its political subdivisions, Canada, Mexico and Argentina, instituted restrictions on travel, public gatherings and certain business operations. This lead to significant adverse effects on the Company’s operations. During late March and early April, all the Company’s operations were disrupted by temporary shutdowns to protect its workforce from the spread of the virus. During the shutdowns, rigorous policies and procedures were implemented at each site to minimize potential health and safety risks to the workforce. The temporary shutdowns will adversely impact the Company’s operations, cash flow, and liquidity in the second quarter of 2020. However, the full impact of the COVID-19 outbreak continues to evolve subsequent to the quarter ended March 31, 2020 and as of the date these unaudited consolidated financial statements were issued. As such, the full magnitude that the pandemic will have on the Company’s financial condition, liquidity and future results of operations is uncertain. There is a significant amount of uncertainty as to when operations will resume to normal capacity, and if achieved, whether normal capacity can be sustained and whether ongoing operating costs will be adversely affected. Depending on the length and severity of the outbreak, the Company’s liquidity and financial condition may be adversely affected and the Company may be at an increased risk of default under its debt agreements. Achieving normal operating capacity is also dependant on the continued availability of supplies, which is out of the Company’s control. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. As of May 18, 2020, the date on which these financial statements were authorized for issuance, the global situation remains uncertain. The governments of the US, Canada, Mexico and Argentina have enacted or proposed legislation to provide relief to companies and/or individuals affected by the enforced reduction in operations. The Company is in the process of applying for available relief. It is highly uncertain if the Company would qualify for funding under these relief programs, and if the Company does qualify, how much funding would be available. Going Concern In the preparation of the interim financial statements, management is required to identify when events or conditions indicate that substantial doubt may exist about the Company’s ability to continue as a going concern. Substantial doubt about the Company’s ability to continue as a going concern would exist when relevant conditions and events, considered in aggregate, indicate that the Company may not be able to meet its obligations as they become due for a period of at least, but not limited to, 12 months from the balance sheet date. When the Company identifies conditions or events that raise potential for substantial doubt about its ability to continue as a going concern, the Company considers whether its plans that are intended to mitigate those relevant conditions or events will alleviate the potential substantial doubt. The Company is in full compliance with financial covenants under its outstanding credit agreement as at March 31, 2020. However, as a result of the expected significant resource reduction at the Gold Bar mine, resulting in an initial revised mine plan which yields less cash flow coupled with the disruptions to operations caused by the COVID-19 pandemic, there is uncertainty about the Company’s ability to remain in compliance with certain of these financial covenants over the next twelve months. Non-compliance with these covenants would result in a breach under the Company’s debt agreement and the lender’s right to accelerate the balance due under the agreement. In response to this uncertainty, the Company is in discussions with its lenders to seek relief from certain of these financial covenants and evaluating options to re-finance the debt, raise additional equity, and curtail discretionary expenditures. The Company’s ability to continue as a going concern is dependent on the successful completion of one or more of these initiatives to ensure that it has sufficient liquidity available to satisfy these financial covenants and in order to fund its operations. After considering these plans, management has concluded that it has mitigated the risk of material uncertainties relating to events or conditions that may cast substantial doubt upon the Company’s ability to continue as a going concern for a period of 12 months from the consolidated balance sheet date. The estimates used by management in reaching this conclusion are based on information available as at the date these financial statements were authorized for issuance, and include internally generated cash flow forecasts. Accordingly, actual results could differ from these estimates and resulting variances may be material to management’s assessment. Recently Adopted Accounting Pronouncements Changes to the Disclosure Requirements for Fair Value Measurement: In August 2018, the FASB issued ASU 2018- 13, “Fair Value Measurement (ASC 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. This update modifies the disclosure requirements for fair value measurements by removing, modifying or adding disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019. The adoption of ASU 2018-13 did not have a material impact on the Company’s financial statements and related disclosures. Recently Issued Accounting Pronouncements Income Taxes: In December 2019, FASB issued ASU 2019-12 “Income Taxes (Topic 740).” ASU 2019-12 simplifies the accounting for income taxes by reducing complexity in accounting standards. The update to the accounting standard is effective for the Company for the fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effect of this amendment and the impact it may have on the Company’s consolidated financial statements. Reclassifications Certain amounts in the comparative Statement of Operations have been reclassified to conform to the 2020 presentation. Reclassified amounts were not material to the financial statements and relate to the presentation of Other Operating Expenses. Advanced projects in the Statement of Operations includes mine development costs, property holding and general and administrative costs associated with advanced stage projects. Exploration in the Statement of Operations includes exploration expenses, property holding and general and administrative costs associated with exploration stage projects. General and Administrative in the Statement of Operations include corporate (head office), general and administrative costs. |