condensed consolidated interim financial statements for the … · 2016-12-21 · 5 thor...

Condensed Consolidated Interim Financial Statements

For the Three and Nine Months Ended September 30, 2014 and 2013

(in Canadian Dollars)

(Unaudited)

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THOR EXPLORATIONS LTD.

September 30, 2014 (Unaudited) Table of contents Condensed consolidated interim statements of financial position ............................................................... 4 Condensed consolidated interim statements of comprehensive loss ......................................................... 5 Condensed consolidated interim statements of cash flows......................................................................... 6 Condensed consolidated statements of changes in equity ......................................................................... 7 Notes to the condensed consolidated interim financial statements ....................................................... 8-29

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NOTICE TO READER Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor. The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of condensed consolidated interim financial statements by an entity’s auditor.

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CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

In Canadian dollars (unaudited)

September 30, December 31,Note 2014 2013

ASSETS

Current

Cash 149,324$ 306,580$

Amounts receivable 5 34,718 11,016

Prepaid expenses, advances and deposits 6 26,734 34,270

Total current assets 210,776 351,866

Investment 7 2 2

Prepaid expenses, advances and deposits 6 18,000 18,000

Property, plant and equipment 8 214,038 307,374

Exploration and evaluation assets 9 12,625,006 12,196,030

TOTAL ASSETS 13,067,822$ 12,873,272$

LIABILITIES

Current liabilities

Accounts payable and accrued liabilities 10 410,547$ 330,856$

Non-current liabilities

Deferred income tax liabilities 120,733$ 125,589$

SHAREHOLDERS' EQUITY

Common shares 11 18,021,126 17,459,714

Reserve 11 1,539,308 1,539,308

Currency translation reserve 825,482 813,671

Non-controlling interest 12 54,405 54,405

Deficit (7,903,779) (7,450,271)

Total shareholders' equity 12,536,542 12,416,827

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 13,067,822$ 12,873,272$

Nature of operations and going concern (note 2c).

(Signed) "David Cohen" (Signed) "Olusegun Lawson"

Director Director

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

These unaudited condensed consolidated interim financial statements were approved for issue by the Board

of Directors on November 24, 2014 and are signed on its behalf by:

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CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013


Note 2014 2013 2014 2013

Expenses:

Audit and legal 18,368$ 16,447$ 48,871$ 58,454$

Bank charges 1,687 2,815 6,897 9,045

Consulting fees 13 62,634 60,620 246,640 273,658

Depreciation 538 428 1,430 1,284

Foreign exchange loss (gains) (8,283) 1,849 (5,793) 5,563

Listing and filing fees - - 7,179 7,745

Office and miscellaneous 36,810 48,342 121,330 169,455

Salaries and benefits - 16,316 - 33,691 Shareholder information and

transfer agent fees 4,101 5,176 7,934 16,479

Travel 638 633 19,020 17,567

Write-off - 5 - 509

Gain on fixed assets disposal - (4,816) - (4,816)

Loss from operations (116,493)$ (147,815)$ (453,508)$ (588,634)$

Net loss (116,493)$ (147,815)$ (453,508)$ (588,634)$

Other comprehensive income

Foreign exchange differences on translating foreign operations (122,420)$ 241,492$ 11,811$ 278,653$

Total comprehensive income (loss)

for the period (238,913)$ 93,677$ (441,697)$ (309,981)$

Net loss per share - basic and

diluted (0.00)$ (0.00)$ (0.00)$ (0.01)$

Weighted average number of

common shares outstanding - basic and diluted 101,666,865 91,108,113 97,083,389 86,008,910

Non-controlling interest (Note 12).

Three Months Ended

September 30,

NIne Months Ended

September 30,


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CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013


Note 2014 2013 2014 2013

Cash flows from (used in):

Operating activities

Net loss (116,493)$ (147,815)$ (453,508)$ (588,634)$

Adjustments for:Foreign exchange loss (gain) (8,283) 1,849 (5,793) 5,563 Depreciation 538 428 1,430 1,284 Gain on fixed asset disposal - (4,816) - (4,816) Write off - 5 - 509

(124,238) (150,349) (457,871) (586,094)

Changes in non-cash working capital accountsAmounts receivable (6,948) 40,720 (25,231) 2,179 Prepaid expenses, advances and deposits 14,086 21,786 7,631 5,920 Accounts payable and accrued liabilities (36,198) (26,809) 58,860 (111,372)

Cash utilized in operations (153,298) (114,652) (416,611) (689,367) Adjustments to net loss for cash items

Realized foreign exchange (loss) gain - (573) 72 (2,164)

Net operating cash flows (153,298) (115,225) (416,539) (691,531)

Investing activitiesAcquisition of subsidiaries, net of cash

acquired 4(e) - - - (154,655) Prepaid expenses, advances and deposits - - - -

Purchases of property, plant and equipment 8 - (4,153) (1,750) (24,182) Proceeds on disposal of property, plant and

equipment - 18,515 - 18,515 Exploration and evaluation expenditures 9 (151,184) (412,527) (304,113) (831,801)

Net investing cash flows (151,184) (398,165) (305,863) (992,123)

Financing

Proceeds from issuance of equity securities - - 597,749 1,848,155 Shares subscription received - 406,701 - 414,201 Share issue costs - - (36,337) (52,540)

Net financing cash flows - 406,701 561,412 2,209,816

Effect of exchange rates on cash 5,522 (4,618) 3,734 (22,559)

Net change in cash (298,960) (111,307) (157,256) 503,603

Cash, beginning of the period 448,284 814,784 306,580 199,874

Cash, end of the period 149,324$ 703,477$ 149,324$ 703,477$

Supplemental cash flow information (Note 14)

Three Months Ended

September 30,

Nine Months Ended

September 30,


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CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY


Note

Number of

common

shares Amount

Share

subscription Reserves

Currency

translation

reserve

Non-

controlling

interest Deficit

Total

shareholders'

equity

Balance, January 1, 2013 77,890,479 15,007,341$ -$ 1,539,308$ 78,575$ -$ (6,627,822)$ 9,997,402$ Exercise of Constelor

Option Agreement 11 1,666,667 266,667 - - - - - 266,667 Private placements 11 11,550,967 1,848,155 - - - - - 1,848,155 Private placements

- Finder's Fee 11 - (36,730) - - - - - (36,730) Share issuance costs - (15,810) - - - - - (15,810) Share subscription received - - 414,201 - - - 414,201 Comprehensive income (loss) - - - - 278,653 - (588,634) (309,981)

Balance on September 30, 2013 91,108,113 17,069,623$ 414,201$ 1,539,308$ 357,228$ -$ (7,216,456)$ 12,163,904$

Private placements 11 2,588,759 414,202 - - - - - 414,202 Private placements

- Finder's Fee 11 - (22,369) - - - - - (22,369) Share issuance costs - (1,742) - - - - - (1,742) Non-controlling interest 12 - - - - 54,405 - 54,405 Share subscription received - - (414,201) - - - (414,201) Comprehensive income (loss) - - - - 456,443 - (233,815) 222,628

Balance on December 31, 2013 93,696,872 17,459,714$ -$ 1,539,308$ 813,671$ 54,405$ (7,450,271)$ 12,416,827$ Private placements 11 7,969,993 597,749 - - - - 597,749 Private placements

- Finder's Fee 11 - (32,599) - - - - - (32,599) Share issuance costs 11 - (3,738) - - - - - (3,738) Comprehensive income (loss) - - - - 11,811 - (453,508) (441,697)

Balance on September 30, 2014 101,666,865 18,021,126$ -$ 1,539,308$ 825,482$ 54,405$ (7,903,779)$ 12,536,542$

Issued capital



NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 In Canadian dollars, except where noted (unaudited)

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1. CORPORATE INFORMATION Thor Explorations Ltd. N.P.L. was incorporated on September 11, 1968 under certificate number 81705 as a specially limited company pursuant to the Company Act (British Columbia, Canada). On December 4, 2001, Thor Explorations Ltd. N.P.L. changed its name to Thor Explorations Ltd. (“Old Thor”). On March 28, 2006 Old Thor transitioned to the British Columbia Business Corporations Act and on August 24, 2007 Old Thor resolved to remove the pre-existing company provisions applicable to Old Thor. Effective on September 1, 2009, Old Thor amalgamated with Magnate Ventures Inc. The amalgamated entity continued as Thor Explorations Ltd. (“Thor” or the “Company”).Thor trades on the TSX Venture exchange under the symbol “THX-V”.

The Company is a junior natural resources company with no revenue, engaged in the acquisition, exploration and development of mineral properties, and is currently focused on early stage gold exploration projects located in West Africa.

The Company’s principal office is located at 250 – 1075 West Georgia Street, Vancouver, British Columbia, V6E 3C9, Canada.

2. BASIS OF PREPARATION a) Statement of compliance

These unaudited condensed consolidated interim financial statements, including comparatives, have been prepared using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, and in accordance with International Accounting Standards (“IAS”) 34 Interim Financial Reporting.

b) Basis of measurement

The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and assumptions are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the year of the change, if the change affects that year only, or in the year of the change and future years, if the change affects both. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are discussed in Note 4 of the Company’s audited consolidated financial statements for the year ended December 31, 2013. These unaudited condensed consolidated interim financial statements have been prepared on a historical cost basis, and are presented in Canadian dollars, unless otherwise indicated.




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2. BASIS OF PREPATION (continued)

c) Nature of operations and going concern

The Company is in the exploration stage and is in the process of exploring its resource properties and has not determined whether these properties contain reserves which are economically recoverable. The recoverability of amounts shown for mineral property costs is dependent upon the discovery of economically recoverable reserves, the ability to obtain the necessary financing to complete their exploration and development, as well as environmental regulations that may limit certain mining processes. These unaudited condensed consolidated interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. Accordingly, no adjustments to the carrying values of the assets and liabilities have been made in these consolidated financial statements. Should the Company no longer be able to continue as a going concern, certain assets and liabilities may require restatement on a liquidation basis which may differ materially from the going concern basis. The Company has incurred losses in the current period and prior years. For the nine months ended September 30, 2014, the Company has incurred a net loss of $453,508 (nine months ended September 30, 2013 – net loss of $588,634), and has an accumulated deficit including the currency translation adjustment of $7,078,297. As at September 30, 2014, the Company has a working capital deficit of $199,771 (December 31, 2013 – working capital surplus $21,010). Although the Company has been successful in securing additional financing in the past, the current market conditions raises material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. As the Company is in the exploration stage, the recoverability of the costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties and deferred exploration expenditures. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future.




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3. SIGNIFICANT ACCOUNTING POLICIES

The preparation of these unaudited condensed consolidated interim financial statements is based on accounting principles and practices consistent with those used in the preparation of the audited consolidated financial statements as at December 31, 2013. The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2013.

a) Consolidation principles

Assets, liabilities, revenues and expenses of the subsidiaries are recognized in accordance with the Company's accounting policies. Intercompany transactions and balances are eliminated upon consolidation. The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders’ proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.

b) Details of the group

In addition to the Company, these unaudited condensed consolidated interim financial statements include all subsidiaries of the Company. Subsidiaries are all corporations over which the Company is able, directly or indirectly, to control financial and operating policies, which is the authority usually connected with holding majority voting rights. Subsidiaries are fully consolidated from the date on which control is acquired by the Company. They are de-consolidated from the date that control by the Company ceases. The subsidiaries of the Company are as follows:

Company Location Incorporated Interest

Thor Investments (BVI) Ltd. (“Thor BVI”) British Virgin Islands June 30, 2011 100% African Star Resources Incorporated (“African Star”) British Virgin Islands March 31, 2011 100% African Star Resources SARL (“African Star SARL”) Senegal July 14, 2011 100% Argento Exploration BF SARL (“Argento BF SARL”) Burkina Faso September 15, 2010 100% AFC Constelor Panafrican Resources SARL (“AFC Constelor SARL”) Burkina Faso December 9, 2011 85%

c) Application of new and revised International Financial Reporting Standards

Effective January 1, 2014, the Company adopted the following new and revised International Financial Reporting Standards (“IFRSs”) that were issued by the International Accounting Standards Board (“IASB”).

(i) Amendment to IAS 32 Financial Instruments: Presentation The amendments to IAS 32 pertained to the application guidance on the offsetting of financial assets and financial liabilities. The application of this IAS did not have any material impact on the amounts reported for the current or prior years but may affect the presentation of future transactions or arrangements.




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3. SIGNIFICANT ACCOUNTING POLICIES (continued) c) Application of new and revised International Financial Reporting Standards (continued)

(ii) Amended standard IAS 36 Impairment of Assets

The amendments to IAS 36 outline the additional disclosures that will be required with regards to the recoverable amount of impaired assets. The application of this IAS did not have any material impact on the disclosures for the current or prior years but may affect the disclosures of future transactions or arrangements.

(iii) New interpretation IFRIC 21 Levies

This interpretation clarifies the accounting treatment for a liability to pay a levy, where a levy is an outflow of economic benefits imposed by governments on entities in accordance with legislation. The application of this IFRIC did not have any material impact on the amounts reported for the current or prior years but may affect the presentation of future transactions or arrangements.

d) Future accounting pronouncements

The following are the accounting standards issued but not yet effective, as of September 30, 2014.

(i) Effective for annual periods beginning on or after July 1, 2014

Amended standard IFRS 2 Share-based Payment The amendment to IFRS 2 re-defines the definition of “vesting condition.” Amended standard IFRS 3 Business Combinations

The amendment to IFRS 3 provides further clarification on the accounting treatment for contingent consideration, and provides a scope exception for joint ventures.

Amended standard IFRS 8 Operating Segments

The amendments to IFRS 8 provide further clarification on the disclosure required for the aggregation of segments and the reconciliation of segment assets.

Amended standard IFRS 13 Fair Value Measurement

The amendment to IFRS 13 provides further details on the scope of the portfolio exception.

Amended standard IAS 16 Property, Plant and Equipment

The amendment to IAS 16 deals with the proportionate restatement of accumulated depreciation on revaluation.

Amended standard IAS 24 Related Party Disclosures

The amendment to IAS 24 deals with the disclosure required for management entities.

Amended standard IAS 38 Intangible Assets

The amendment to IAS 38 deals with the proportionate restatement of accumulated depreciation on revaluation.




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3. SIGNIFICANT ACCOUNTING POLICIES (continued)

d) Future accounting pronouncements (continued)

(ii) Effective for annual periods beginning on or after January 1, 2015

IFRS 7 Financial Instruments Disclosures. Amended standard IFRS 7 Financial Instruments: The amendments outline the disclosures required when initially applying IFRS 9 Financial Instruments.

(ii) Effective for annual periods beginning on or after January 1, 2018

IFRS 9 Financial Instruments. Partial replacement of IAS 39 Financial Instruments: Recognition and Measurement. The mandatory effective date has been removed from the standard and will only be replaced when all sections of the standard have been completed.

The Company has not early adopted these new and amended standards and is currently assessing the impact that these standards will have on the consolidated financial statements.

4. ASSET ACQUISITION

a) Subsidiaries acquired

Principal

activity

Effective date of

acquisition

Proportion of

voting equity

interest

acquired

Consideration

transferred

Argento BF SARL

Mineral

Exploration May 21, 2013 100% 388,890$

AFC Constelor SARL Mineral

Exploration May 21, 2013 85% 308,293$

(i) Argento BF SARL

On May 21, 2013 the Company completed the acquisition of 100% of the shares of Argento BF SARL pursuant to a definitive share purchase agreement effective April 16, 2013, entered into with Argento BF SARL shareholders. Argento BF SARL was a company controlled by the Chief Executive and Chief Operating Officers of the Company. Argento BF holds a 100% interest in the Ouere gold permit, covering an area of approximately 241 km2, and forms part of the Company’s Central Houndé Project, located within the Houndé belt, 260 km southwest of the capital Ouagadougou, in western Burkina Faso.




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4. ASSET ACQUISITION (continued)

a) Subsidiaries acquired (continued) (ii) AFC Constelor SARL

On May 21, 2013 the Company also completed the acquisition of 85% of the shares of AFC Constelor SARL pursuant to an option agreement (“Constelor Option Agreement”) entered March 7, 2012 with AFC Constelor SARL and Constelor Panafrican Resources Holdings Ltd. (“Constelor Holdings”). Subsequent to the acquisition, the Company’s wholly owned subsidiary African Star is required to pay 100% of expenditures relating to the activity on the permits until 30 days following the drilling of the first exploration hole. AFC Constelor SARL holds a 100% interest in the Bongui and Legue gold permits. The two contiguous Bongui and Legue gold permits covering an area of 233 km2, form part of the Company’s Central Houndé Project, located within the Houndé belt, 260 km southwest of the capital Ouagadougou, in western Burkina Faso.

b) Consideration transferred

Argento BF SARL

(i)

AFC Constelor

SARL

(ii)

Cash 25,000$ 41,626$

Settlement of cash advances to closing of acquisition 363,890 - Shares - 266,667

388,890$ 308,293$ (i) Argento BF SARL

The Company acquired all of the shares in Argento BF SARL for an aggregate purchase price of $388,890, consisting of $363,890 in cash advances made by the Company to Argento BF SARL prior to the closing of the acquisition, and a payment of $25,000 to a minority shareholder. The Company made cash advances totaling $236,272 during 2013 prior to closing of the acquisition.

(ii) AFC Constelor SARL

The Company acquired 85% of the shares in AFC Constelor SARL for a purchase price of $308,293, satisfied through the US$42,000 ($41,626) paid to Constelor Holdings on execution of the Constelor Option Agreement in 2012, and the issuance to Constelor Holdings of 1,666,667 common shares of the Company with an estimated fair value of $266,667 on exercise of the Constelor Option Agreement on March 6, 2013 (Note 9(b)).




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4. ASSET ACQUISITION (continued)

c) Assets acquired and liabilities recognized at the date of acquisition

Argento BF SARL

AFC Constelor

SARL

ASSETSCurrent

Cash 106,646$ (29)$

Amounts Receivables 33,658 2,014

Prepaid expenses and deposits 9,064 -

Total Current Assets 149,368 1,985

Property, plant and equipment 312 -

Exploration and evaluation assets 281,825 368,955

Total Assets 431,505$ 370,940$

LIABILITIES

Current

Accounts payable and accrued liabilities 42,615 8,242

Total Current Liabilities 42,615 8,242 -

Net Assets 388,890$ 362,698$

d) Purchase price allocation

Argento BF SARL

AFC Constelor

SARL

Consideration transferred 388,890$ 308,293$

Non-controlling interest acquired - 54,405 Less: Fair value of identifiable net assets acquired 388,890 362,698

-$ -$ The fair value of identifiable net assets acquired includes purchase price adjustments of $42,286 and $356,986 allocated to the fair value of exploration and evaluation assets of Argento BF SARL and AFC Constelor SARL respectively.

e) Net cash flows on acquisition of subsidiaries

Argento BF SARL

AFC Constelor

SARL Total

Cash balance acquired 106,646$ (29)$ 106,617$

Less: Cash advances in 2013 236,272 - 236,272

Less: Cash consideration in 2013 25,000 - 25,000

Acquisition of subsidiaries, net of

cash acquired (154,626)$ (29)$ (154,655)$




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5. AMOUNTS RECEIVABLE

September 30, December 31,

2014 2013

GST 782$ 1,778$

Employee advances for expenditures 33,936 8,658

Other - 580

34,718$ 11,016$

6. PREPAID EXPENSES, ADVANCES AND DEPOSITS


2014 2013

Current:

Prepaid insurance 8,136$ 5,125$

Other deposits 15,108 15,469

Other prepaids 3,490 13,676

26,734$ 34,270$

Non-current:

Sterling West Management Ltd. deposit 18,000$ 18,000$

18,000$ 18,000$

7. INVESTMENT


2014 2013

Sterling West Management Ltd. 2$ 2$

The Company has entered into a service relationship with a group of companies for the provision of administrative, office support and management services. The Company subscribed for one share at $2 per share in a management services entity. This entity is funded and owned by several participating companies and is managed by a board elected by the shareholders. The Company holds a 20% interest (year ended December 31, 2013 – 20% interest) in the entity and does not exert significant influence. This investment is recorded on a cost basis. Upon execution of the agreement, each participant was required to provide a deposit to the entity. The Company’s share of the deposit was determined to be $18,000 (paid). See Note 6.




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8. PROPERTY, PLANT AND EQUIPMENT

Motor

vehicles

Plant and

machinery Software

Office

furniture Total

Costs

Balance, January 1, 2013 116,591$ 325,976$ 18,103$ 38,584$ 499,254$

Additions 20,029 - - 5,810 25,839 Disposals (26,457) - - - (26,457)

Foreign exchange movement 15,498 35,302 1,622 4,297 56,719

Balance, December 31, 2013 125,661$ 361,278$ 19,725$ 48,691$ 555,355$ Additions - - - 1,750 1,750

Foreign exchange movement (4,858) (6,544) 616 (1,353) (12,139)

Balance, September 30, 2014 120,803$ 354,734$ 20,341$ 49,088$ 544,966$

Accumulated depreciation and

impairment losses

Balance, January 1, 2013 38,737$ 69,784$ 5,657$ 6,404$ 120,582$

Depreciation 29,393 69,737 4,525 8,590 112,245

Disposals (8,745) - - - (8,745)

Foreign exchange movement 6,071 15,199 913 1,716 23,899

Balance, December 1, 2013 65,456$ 154,720$ 11,095$ 16,710$ 247,981$

Depreciation 18,472 52,681 3,393 6,519 81,065

Foreign exchange movement (2,053) 3,039 768 128 1,882

Balance, September 30, 2014 81,875$ 210,440$ 15,256$ 23,357$ 330,928$

Carrying amounts

Carrying value at January 1, 2013 77,854$ 256,192$ 12,446$ 32,180$ 378,672$

Carrying value at December 31, 2013 60,205$ 206,558$ 8,630$ 31,981$ 307,374$

Carrying value at September 30, 2014 38,928$ 144,294$ 5,085$ 25,731$ 214,038$

During the three and nine months ended September 30, 2014, depreciation of $26,468 and $79,635 (three and nine months ended September 30, 2013 - $28,838 and $85,344) has been capitalized to exploration and evaluation assets. The accumulated depreciation capitalized to exploration expenditures to September 30, 2014 amounts to $312,554 (December 31, 2013 - $232,919).




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9. EXPLORATION AND EVALUATION ASSETS The Company’s exploration and evaluation assets costs are as follows:

Douta Gold

Project,

Senegal

Central

Houndé

Project,

Burkina Faso Total

CostsBalance, January 1, 2013 9,654,830$ 52,568$ 9,707,398$

Acquisition costs - 598,211 598,211

Exploration costs 566,347 576,782 1,143,129

Foreign exchange movement 672,603 74,689 747,292

Balance, December 31, 2013 10,893,780$ 1,302,250$ 12,196,030$

Exploration costs 262,922 144,712 407,634

Foreign exchange movement 52,668 (31,326) 21,342

Balance, September 30, 2014 11,209,370$ 1,415,636$ 12,625,006$

Accumulated depletion and

impairment losses

Balance, January 1, 2013 -$ -$ -$

Balance, December 31, 2013 -$ -$ -$

Balance, September 30, 2014 -$ -$ -$

Carrying amounts

Carrying value at January 1, 2013 9,654,830$ 52,568$ 9,707,398$

Carrying value at December 31, 2013 10,893,780$ 1,302,250$ 12,196,030$

Carrying value at September 30, 2014 11,209,370$ 1,415,636$ 12,625,006$

a) Douta Gold Project, Senegal:

The Douta Gold Project consists of an early stage gold exploration license located in southeastern Senegal, approximately 700km east of the capital city Dakar.

The Company is party to an option agreement (the “Option Agreement”) with International Mining Company (“IMC”), by which the Company has acquired a 70% interest in the Douta Gold Project located in southeast Senegal. The option was exercisable by payment to IMC of US$2,250,000 (the “Option Payment”) which will be satisfied in shares of the Company (“Thor Shares”), or with the mutual agreement of the parties, in cash.




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9. EXPLORATION AND EVALUATION ASSETS (continued) a) Douta Gold Project, Senegal: (continued)

In the event that the option payment is satisfied through the issuance of Thor Shares, the deemed price per share of the Thor Shares so issued will be equal to the greater of: (i) the volume weighted average trading price (“VWAP”) of the Thor Shares for the 20-day period following the date thereof; and (ii) the VWAP of the Thor Shares for the 20-day period preceding the Exercise Date (as defined below). However, should the foregoing calculation result in IMC being entitled to receive in excess of 11,250,000 Thor Shares, then in such circumstances IMC will instead receive: (i) 11,250,000 Thor Shares; and (ii) a cash payment equal to the difference between US$2,250,000 and (11,250,000 multiplied by the deemed issue price per Thor Share), to an aggregate maximum cash payment of US$506,250.

The option was exercisable until November 25, 2011 (the “Exercise Date”), however, the Company exercised the option to extend the Exercise Date to February 25, 2012, subject to payment of an additional US$100,000 payable in Thor Shares on the Exercise Date (“Option Extension Payment”). Effective February 24, 2012, the Company exercised its option to acquire a 70% interest in the Douta Gold Project pursuant to the terms of the Option Agreement between the Company and IMC. As consideration for the exercise of the option, the Company issued to IMC 11,646,663 common shares, based on a VWAP for the 20 trading days preceding the option exercise date of $0.2014 (or US$0.2018) per share, valued at $2,678,732 based on the Company’s closing share price on February 24, 2012. The share payment includes consideration paid to IMC for extending the time period for exercise of the option. Pursuant to the terms of the Option Agreement, IMC’s 30% interest will be a “free carry” interest until such time as the Company announces probable reserves on the Douta Gold Project (the “Free Carry Period”). Following the Free Carry Period, IMC must either elect to sell its 30% interest to African Star at a purchase price determined by an independent valuator commissioned by African Star or fund its 30% share of the exploration and operating expenses.

b) Central Houndé Project, Burkina Faso:

(i) Bongui and Legue gold permits, Burkina Faso:

Effective March 7, 2012, the Company entered into the Constelor Option Agreement with AFC Constelor SARL and Constelor Holdings, to acquire an 85% interest in the Bongui and Legue gold permits located in Houndé greenstone belt, southwest Burkina Faso. The two contiguous Bongui and Legue gold permits covering an area of 233 km2, form part of the Company’s Central Houndé Project, located within the Houndé belt, 260 km southwest of the capital Ouagadougou, in western Burkina Faso. In consideration of AFC Constelor and Constelor Holdings granting the Constelor Option to the Company, the Company paid US$42,000 to Constelor Holdings on execution of the Constelor Option Agreement. The Constelor Option was exercisable within a twelve month period with the payment to Constelor Holdings of an additional US$250,000 in cash or equivalent value of the Company’s shares at the greater of $0.15 and the VWAP for the 20 trading days preceding the exercise date, subject to the approval of the TSX Venture Exchange.




19

9. EXPLORATION AND EVALUATION ASSETS (continued) b) Central Houndé Project, Burkina Faso (continued)

(i) Bongui and Legue gold permits, Burkina Faso (continued):

Subsequent to exercising the Constelor Option, the Company will be required to pay 100% of expenditures relating to the activity on the permits until 30 days following the drilling of the first exploration hole. On March 6, 2013, the Company exercised the Constelor Option to acquire an 85% interest in the Bongui and Legue gold permits through the acquisition of 85% of the issued shares of AFC Constelor. As consideration for the exercise of the Constelor Option, the Company issued to Constelor Holdings 1,666,667 common shares for the value of $266,667 (US$250,000) at $0.16 per share. On May 21, 2013, the Company completed the acquisition of the 85% of AFC Constelor SARL.

(ii) Ouere Permit, Central Houndé Project, Burkina Faso:

On April 16, 2013, the Company entered into a definitive share purchase agreement with the shareholders of Argento BF SARL to acquire 100% of the outstanding shares of Argento BF SARL. Argento BF was a company controlled by the Chief Executive and Chief Operating Officers of the Company. On May 21, 2013, the Company acquired all of the shares in Argento BF SARL for an aggregate purchase price of $388,890, consisting of $363,890 in cash advances made by the Company to Argento BF SARL prior to the closing of the acquisition, and a payment of $25,000 to a minority shareholder. Argento BF SARL holds a 100% interest in the Ouere gold permit, covering an area of approximately 241 km2, and forms part of the Company’s Central Houndé Project, located within the Houndé belt, 260 km southwest of the capital Ouagadougou, in western Burkina Faso.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


2014 2013

Trade payables 71,329$ 103,452$ Accrued liabilities 339,218 227,404

410,547$ 330,856$




20

11. CAPITAL AND RESERVES

a) Authorized

Unlimited common shares without par value.

b) Issued Private Placement – June 2014 On June 6, 2014, the Company closed a non-brokered private placement pursuant to which it has issued an aggregate of 7,969,993 common shares at a price of $0.075 per common share to raise gross proceeds of $597,749. The Company has also agreed to pay a cash finder’s fee of $32,599 to a third party finder. The common shares issued pursuant to the private placement are subject to a 4-month hold period in Canada expiring October 7, 2014. Private Placement – October 2013 On October 2, 2013, the Company closed a non-brokered private placement pursuant to which the Company has issued an aggregate of 2,588,759 common shares at a price of $0.16 per common share to raise gross proceeds of $414,202. The Company paid a cash finder’s fee of $22,369 to a third party finder. The common shares issued pursuant to the private placement are subject to a 4-month hold period in Canada expiring February 3, 2014. Private Placement – May 2013 On May 1, 2013, the Company closed a non-brokered private placement pursuant to which it has issued an aggregate of 9,713,583 common shares at a price of $0.16 per common share to raise gross proceeds of $1,554,173 The Company has also agreed to pay a cash finder’s fee of $28,480 to third party finders. The common shares issued pursuant to the private placement are subject to a 4-month hold period in Canada expiring September 2, 2013. Exercise of Constelor Option Agreement On March 6, 2013, the Company exercised its Option to acquire an 85% interest in the Bongui and Legue gold permits located in Houndé greenstone belt, southwest Burkina Faso, pursuant to the terms of the option agreement between the Company and AFC Constelor and Constelor Holdings. As consideration for the exercise of the Option, the Company issued to Constelor Holdings 1,666,667 common shares for the value of $266,667 (US$250,000) at $0.16 per share. Private Placement – February 2013 On February 28, 2013, the Company closed a non-brokered private placement pursuant to which it has issued an aggregate of 1,837,384 common shares at a price of $0.16 per common share to raise gross proceeds of $293,982. The Company has also agreed to pay a cash finder’s fee of $8,250 to a third party finder. The common shares issued pursuant to the private placement are subject to a 4-month hold period in Canada expiring July 1, 2013.




21

11. CAPITAL AND RESERVES (continued)

c) Share-based compensation

The Company has granted employees, consultants, directors and officers share purchase options. These options were granted pursuant to the Company’s stock option plan. Prior to the Company’s 2013 annual shareholder meeting held July 7, 2013, options were issued under a rolling plan that allowed the Company to reserve up to 10% of the issued and outstanding common shares of the Company (“2012 Share Option Plan”). At the Company’s 2013 annual shareholder meeting, the shareholders approved, subject to regulatory approval, the termination of the 2012 Share Option Plan and the replacement thereof with a new and amended fixed number option plan (the “2013 Share Option Plan”). Under the 2013 Share Option Plan, 9,110,811 common shares of the Company are reserved for issuance upon exercise of options. The above amendment to the stock option plan remains subject to regulatory approval. No options were granted during the three and nine months ended September 30, 2014 and 2013.




22

11. CAPITAL AND RESERVES (continued)

c) Share-based compensation (continued)

The following is a summary of changes in options from January 1, 2014 to September 30, 2014 and the outstanding and exercisable options at September 30, 2014:

Contractual

Lives

January 1,

2014

September 30,

2014

Grant

Date

Expiry

Date

Exercise

Price

Remaining

(Years)

Opening

Balance Granted Exercised

Expired /

Forfeited

Closing

Balance

Vested and

Exercisable Unvested

12/14/2009 11/29/2014 $0.21 0.16 15,000 - - - 15,000 15,000 -

12/14/2009 12/14/2014 $0.21 0.21 455,000 - - (5,000) 450,000 450,000 -

04/01/2011 11/29/2014 $0.16 0.16 8,500 - - - 8,500 8,500 -

04/01/2011 04/01/2016 $0.16 1.50 129,000 - - (3,500) 125,500 125,500 -

08/29/2011 08/29/2016 $0.15 1.92 600,000 - - - 600,000 600,000 -

11/17/2011 11/17/2016 $0.16 2.13 575,000 - - - 575,000 575,000 -

Totals 1.50 1,782,500 - - (8,500) 1,774,000 1,774,000 -

$0.17 - - $0.19 $0.17 $0.17 -

September 30, 2014

Number of Options During the year

Weighted Average Exercise Price

The following is a summary of changes in options from January 1, 2013 to December 31, 2013 and the outstanding and exercisable options at December 31, 2013:

Contractual

Lives

January 1,

2013

December 31,

2013

Grant

Date

Expiry

Date

Exercise

Price

Remaining

(Years)

Opening

Balance Granted Exercised

Expired /

Forfeited

Closing

Balance

Vested and

Exercisable Unvested

12/14/2009 12/12/2013 $0.21 - 10,000 - - (10,000) - - -

12/14/2009 12/14/2014 $0.21 0.95 475,000 - - (5,000) 470,000 470,000 -

04/01/2011 12/12/2013 $0.16 - 3,500 - - (3,500) - - -

04/01/2011 04/01/2016 $0.16 2.25 141,000 - - (3,500) 137,500 137,500 -

08/29/2011 08/29/2016 $0.15 2.66 600,000 - - - 600,000 600,000 -

11/17/2011 11/17/2016 $0.16 2.88 575,000 - - - 575,000 575,000 -

Totals 2.25 1,804,500 - - (22,000) 1,782,500 1,782,500 -

$0.17 - - $0.19 $0.17 $0.17 -

December 31, 2013

Number of Options During the year

Weighted Average Exercise Price

THOR EXPLORATIONS LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS


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11. CAPITAL AND RESERVES (continued) d) Nature and purpose of equity and reserves

The reserves recorded in equity on the Company’s statement of financial position include ‘Reserves’, ‘Currency translation reserve’, and ‘Deficit’.

‘Reserves’ is used to recognize the value of stock option grants and share purchase warrants prior to exercise.

‘Currency translation reserve’ is used to recognize the exchange differences arising on translation of the assets and liabilities of foreign branches and subsidiaries with functional currencies other than Canadian dollars. ‘Deficit’ is used to record the Company’s accumulated deficit.

12. NON-CONTROLLING INTEREST The non-controlling interest is comprised of the following:


2014 2013

Balance, beginning of the period 54,405$ -$

Non-controlling interests' share of AFC Constelor - 54,405

Balance, end of the period 54,405$ 54,405$

13. RELATED PARTY DISCLOSURES A number of key management personnel, or their related parties, hold or held positions in other entities that result in them having control or significant influence over the financial or operating policies of the entities outlined below. A number of these entities transacted with the Company during the current or comparative reporting periods.

a) Trading transactions

The Company’s related parties consist of companies owned by executive officers and directors as follows:

Nature of transactions

Argento BF SARL Prepaid advances for exploration expenditures

Helm Financial Management Ltd. Management

Isis Resource Partners Ltd. Management

Northam Exploration & Consulting Ltd. Management

The Company incurred the following advances in the normal course of operations in connection with companies controlled by key management and directors.



24

13. RELATED PARTY DISCLOSURES (continued)

a) Trading transactions (continued) The Company made cash advances totaling approximately $236,272 during 2013 prior to the closing of the acquisition (Note 4e) to Argento BF SARL, a company previously controlled by the Chief Executive and Chief Operating Officers of the Company, pursuant to a letter agreement (as amended) that was superseded by a share purchase agreement dated April 16, 2013, for the payment of exploration expenditures in Burkina Faso prior to the closing of the acquisition of Argento BF SARL.

b) Compensation of key management personnel

The remuneration of directors and other members of key management during the three and nine months ended September 30, 2014 and 2013 were as follows:

2014 2013 2014 2013

Consulting fees

current directors and officers 33,000$ 36,600$ 159,000$ 169,400$

33,000$ 36,600$ 159,000$ 169,400$

Nine Months Ended

September 30,

Three Months Ended

September 30,

(i) Key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the three and nine months ended September 30, 2014 and 2013.

(ii) The Company paid consulting and director fees to private companies controlled by directors

and officers of the Company for services. Accounts payable and accrued liabilities at September 30, 2014 include $63,010 (December 31, 2013 - $2,006) due to private companies controlled by an officer and director of the Company. Amounts due to or from related parties are unsecured, non-interest bearing and due on demand.

14. SUPPLEMENTAL CASH FLOW INFORMATION

a) Changes in non-cash working capital are as follows:

2014 2013 2014 2013

Amounts receivable (6,948)$ 40,720$ (25,231)$ 2,179$

Prepaid expenses and deposits 14,086 21,786 7,631 5,920 Accounts payable and accrued liabilities (96,109) (213,491) 82,747 (164,117)

Change in non-cash working capital

accounts (88,971)$ (150,985)$ 65,147$ (156,018)$

Relating to:

Operating activities (29,060)$ 35,697$ 41,260$ (103,273)$

Investing activities (59,911) (186,682) 23,887 (52,745)

(88,971)$ (150,985)$ 65,147$ (156,018)$

Three Months Ended

September 30,

Nine Months Ended

September 30,

Accounts payable and accrued liabilities includes $176,161 (December 31, 2013 - $152,274) related to exploration and acquisition costs.



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14. SUPPLEMENTAL CASH FLOW INFORMATION (continued)

b) The Company has no outlays in respect of interest and income taxes for the three and nine months ended September 30, 2014 and 2013.

c) Other non-cash transactions excluded from the cash flow statement that occurred during the three and

nine months ended September 30, 2014 and 2013 are:

2014 2013 2014 2013

Issue of common shares on exercise of

Constelor Option Agreement -$ -$ -$ 266,667$

Nine Months Ended

September 30,

Three Months Ended

September 30,

15. FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, amounts receivable, investment, and accounts payable and accrued liabilities. Fair value of financial assets and liabilities Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. The carrying amount for cash, amounts receivable, and accounts payable and accrued liabilities on the statement of financial position approximate their fair value because of the limited term of these instruments. The investment is carried at cost as it is not traded on an active market. Fair value hierarchy Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; and

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company did not have any financial instruments in Level 1, 2 and 3. Financial risk management objectives and policies The Company has exposure to the following risks from its use of financial instruments

• Credit risk • Liquidity and funding risk • Market risk

In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements.



26

15. FINANCIAL INSTRUMENTS (continued) Financial risk management objectives and policies (continued) There have been no substantive changes in the Company’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in these notes. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below. Credit risk Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its contractual obligations. The credit risk associated with cash and receivables is believed to be minimal. Cash consists of cash on deposit in Canadian, British and Senegalese Chartered banks that are believed to be creditworthy. Amounts receivable are comprised primarily of amounts due from the Government of Canada related to General Sales Tax, and the Government of Senegal and Burkina Faso related to Value Added Tax. The Company does not believe it is exposed to significant credit risk and counterparty risks. Liquidity and funding risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company’s holdings of cash. The Company’s cash is held in business accounts and are available on demand. Funding risk is the risk that the Company may not be able to raise equity financing in a timely manner and on terms acceptable to management. There are no assurances that such financing will be available when, and if, the Company requires additional equity financing. The following table summarizes the Company's significant remaining contractual maturities for financial liabilities at September 30, 2014 and December 31, 2013.

Contractual maturity analysis as at September 30, 2014

Less than 3 - 12 1 - 5 Longer than 3 months months years 5 years Total

Accounts payable 71,329$ -$ -$ -$ 71,329$

Accrued liabilities 278,185$ 61,033$ -$ -$ 339,218$

349,514$ 61,033$ -$ -$ 410,547$

Contractual maturity analysis as at December 31, 2013

Less than 3 - 12 1 - 5 Longer than 3 months months years 5 years Total

Accounts payable 103,452$ -$ -$ -$ 103,452$

Accrued liabilities 155,629$ 71,775$ -$ -$ 227,404$

259,081$ 71,775$ -$ -$ 330,856$



27

15. FINANCIAL INSTRUMENTS (continued) Market risk The Company is subject to normal market risks including fluctuations in foreign exchange rates and interest rates. Interest rate risk is the risk arising from the effect of changes in prevailing interest rates on the Company’s financial instruments. While the Company manages its operations in order to minimize exposure to these risks, the Company has not entered into any derivatives or contracts to hedge or otherwise mitigate this exposure. a) Interest rate risk

The Company has minimal exposure to interest rate fluctuations on its cash balances due to current low market interest rates.

b) Foreign currency risk

The Company’s exploration expenditures, certain acquisition costs and other operating expenses are denominated in United States Dollars, UK Pounds Sterling and West African CFA Francs. The Company’s exposure to foreign currency risk arises primarily on fluctuations between the Canadian dollar and the United States Dollars, UK Pounds Sterling and West African CFA Francs. The Company has not entered into any derivative instruments to manage foreign exchange fluctuations. The Company is exposed to currency risk through the following financial assets and liabilities denominated in currencies other than the Canadian dollar at September 30, 2014 and December 31, 2013:

US

Dollars

UK Pounds

Sterling

CFA

Francs

Cash 114,784$ 2,928$ 28,862$

Amounts Receivable - - 33,936 Deposits - 3,490 11,618 Accounts payable and accrued liabilities (406) (38,612) (255,112)

114,378$ (32,194)$ (180,696)$

September 30, 2014

US

Dollars

UK Pounds

Sterling

CFA

Francs

Cash 8,058$ 21,012$ 92,188$

Amounts Receivable - 580 8,659 Deposits - 3,384 12,129 Accounts payable and accrued liabilities (77) (28,918) (228,826)

7,981$ (3,942)$ (115,850)$

December 31, 2013



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15. FINANCIAL INSTRUMENTS (continued)

Market risk (continued)

b) Foreign currency risk (continued) The following table discusses the Company’s sensitivity to a 5% increase or decrease in the Canadian Dollar against the United States Dollars, UK Pounds Sterling and West African CFA Francs denominated financial assets and liabilities above. The sensitivity analysis measures the effect from recalculation of these items as at the balance sheet date by using adjusted foreign exchange rates.

September 30, 2014

Canadian

Dollar

appreciation

by 5%

Canadian

Dollar

depreciation

by 5%

Comprehensive income (loss)Financial assets and liabilities 4,926$ (4,926)$

December 31, 2013

Comprehensive income (loss)Financial assets and liabilities 5,591$ (5,591)$

16. CAPITAL MANAGEMENT The Company manages, as capital, the components of shareholders’ equity. The Company’s objectives, when managing capital, are to safeguard its ability to continue as a going concern in order to explore its unproven mineral interests and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Company manages its capital structure, and makes adjustments to it, in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may attempt to issue common shares, borrow, acquire or dispose of assets or adjust the amount of cash. The Company’s policy is to invest its cash in highly liquid, short-term, interest-bearing investments with maturities of a year or less from the date of acquisition. The Company is not subject to externally imposed capital requirements. There has been no change in the Company’s approach to capital management during the nine months ended September 30, 2014.



29

17. SEGMENTED DISCLOSURES

Geographic Information

The Company’s operations comprise one reportable segment, being the exploration of mineral resource properties. The carrying value of the Company’s assets on a country-by-country basis is as follows:

September 30, 2014 Senegal

Burkina

Faso

British Virgin

Islands Canada Total

Current assets 23,851$ 50,564$ 13,485$ 122,876$ 210,776$

Investment - - - 2 2 Prepaid expenses and

deposit - - - 18,000 18,000 Property, plant and equipment 209,373 4,665 - - 214,038 Exploration and evaluation assets 11,209,370 1,415,636 - - 12,625,006 Total assets 11,442,594$ 1,470,865$ 13,485$ 140,878$ 13,067,822$

December 31, 2013 Senegal

Burkina

Faso

British Virgin

Islands Canada Total

Current assets 37,008$ 75,968$ 42,107$ 196,783$ 351,866$

Investment - - - 2 2 Prepaid expenses and

deposit - - - 18,000 18,000 Property, plant and equipment 302,195 5,179 - - 307,374 Exploration and evaluation assets 10,893,780 1,302,250 - - 12,196,030 Total assets 11,232,983$ 1,383,397$ 42,107$ 214,785$ 12,873,272$

condensed consolidated interim financial statements for the … · 2016-12-21 · 5 thor...

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