UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2015
Commission File Number: 001-35404
EURASIAN MINERALS INC.
(Translation of registrants name into English)
Suite 501 543 Granville Street
Vancouver,
British Columbia V6C 1X8
Canada
(Address of principal
executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
[X] Form 20-F
[ ] Form 40-F
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SUBMITTED HEREWITH
Exhibits:
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EURASIAN MINERALS INC.
(Registrant)
Date: April 1, 2015 |
By: |
/s/ Valerie Barlow |
|
|
|
|
Name: |
Valerie Barlow |
|
Title: |
Corporate Secretary
|
EURASIAN MINERALS INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
December 31, 2014
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Eurasian Minerals Inc.
We have audited the accompanying consolidated financial
statements of Eurasian Minerals Inc., which comprise the consolidated statements
of financial position as at December 31, 2014 and 2013 and the consolidated
statements of loss, comprehensive loss, changes in shareholders equity and cash
flows for the years then ended, and a summary of significant accounting policies
and other explanatory information.
Managements Responsibility for the Consolidated
Financial Statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of Eurasian Minerals
Inc. as at December 31, 2014 and 2013 and its financial performance and its cash
flows for the years then ended in accordance with International Financial
Reporting Standards.
"DAVIDSON & COMPANY LLP"
Chartered Accountants
Vancouver, Canada
March 26, 2015
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Expressed in Canadian Dollars)
ASSETS |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash
equivalents (Note 3) |
$ |
6,450,308
|
|
$ |
12,683,069
|
|
Investments (Note 4) |
|
743,786 |
|
|
1,229,085 |
|
Receivables (Note 5)
|
|
838,837 |
|
|
1,576,535 |
|
Prepaid expenses |
|
52,209 |
|
|
113,256 |
|
Total current assets |
|
8,085,140 |
|
|
15,601,945 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Restricted cash (Note 6) |
|
230,144 |
|
|
528,945 |
|
Property and equipment
(Note 7) |
|
751,229 |
|
|
1,185,414 |
|
Investment in associated companies
(Note 8) |
|
4,072,737 |
|
|
3,960,650 |
|
Strategic investments
(Note 4) |
|
299,524 |
|
|
200,000 |
|
Exploration and evaluation assets (Note
9) |
|
2,379,886 |
|
|
3,031,368 |
|
Royalty interest (Note
10) |
|
29,327,960 |
|
|
35,063,725 |
|
Reclamation bonds (Note 11) |
|
823,447 |
|
|
770,894 |
|
Goodwill (Note 12) |
|
8,217,542 |
|
|
9,625,795 |
|
Other assets |
|
104,484 |
|
|
104,484 |
|
Total non-current assets |
|
46,206,953 |
|
|
54,471,275 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
54,292,093 |
|
$ |
70,073,220 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable and accrued
liabilities (Note 13) |
$ |
559,049 |
|
$ |
649,843 |
|
Advances from joint venture partners (Note 14) |
|
429,175 |
|
|
734,103 |
|
Total current liabilities |
|
988,224 |
|
|
1,383,946 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Deferred income tax liability (Note 17) |
|
8,217,542 |
|
|
10,710,552 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
9,205,766 |
|
|
12,094,498 |
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Capital stock (Note 15) |
|
116,766,102 |
|
|
116,151,675 |
|
Commitment to issue
shares (Note 15) |
|
306,999 |
|
|
544,877 |
|
Reserves |
|
15,443,247 |
|
|
11,264,150 |
|
Deficit |
|
(87,430,021 |
) |
|
(69,981,980 |
) |
TOTAL SHAREHOLDERS' EQUITY |
|
45,086,327 |
|
|
57,978,722 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
54,292,093 |
|
$ |
70,073,220 |
|
Nature of operations (Note 1)
Approved on behalf of the Board of Directors on March 26,
2014
Signed: David M
Cole |
Director |
|
Signed: George
Lim |
Director |
The accompanying notes are an integral part of these
consolidated financial statements.
Page 2
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
LOSS
(Expressed in Canadian Dollars)
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
|
|
|
|
|
|
ROYALTY INCOME |
$ |
2,247,334
|
|
$ |
3,102,888
|
|
Cost of sales |
|
|
|
|
|
|
Gold tax |
|
(110,653 |
) |
|
(140,203 |
) |
Depletion (Note 10) |
|
(1,334,845 |
) |
|
(1,681,688 |
) |
Net royalty income |
|
801,836 |
|
|
1,280,997 |
|
|
|
|
|
|
|
|
EXPLORATION EXPENDITURES
(Note 9) |
|
6,866,714 |
|
|
9,616,402 |
|
Less: recoveries |
|
(2,878,346 |
) |
|
(5,797,295 |
) |
Net exploration expenditures |
|
3,988,368 |
|
|
3,819,107 |
|
|
|
|
|
|
|
|
GENERAL AND ADMINISTRATIVE
EXPENSES |
|
|
|
|
|
|
Administrative and office |
|
926,095 |
|
|
982,239 |
|
Depreciation (Note 7) |
|
139,806 |
|
|
129,104 |
|
Investor relations and shareholder
information |
|
292,017 |
|
|
310,203 |
|
Professional fees |
|
457,963 |
|
|
533,519 |
|
Salaries and consultants |
|
2,190,916 |
|
|
2,243,032 |
|
Share-based payments (Note
15) |
|
1,030,411 |
|
|
527,495 |
|
Transfer agent and filing fees |
|
100,512 |
|
|
118,770 |
|
Travel |
|
357,367 |
|
|
298,376 |
|
Total general and administrative expenses |
|
5,495,087 |
|
|
5,142,738 |
|
|
|
|
|
|
|
|
Loss from operations |
|
(8,681,619 |
) |
|
(7,680,848 |
) |
|
|
|
|
|
|
|
Change in fair value of fair value throught
profit or loss investments |
|
(254,637 |
) |
|
(425,066 |
) |
Gain (loss) on sale of
exploration and evaluation assets (Note 7) |
|
(154,533 |
) |
|
205,940 |
|
Equity loss in associated companies (Note 8)
|
|
(1,086,649 |
) |
|
(2,093,823 |
) |
Foreign exchange (loss) gain
|
|
(335,208 |
) |
|
187,498 |
|
Realized loss on sale of investments |
|
(19,049 |
) |
|
(51,114 |
) |
Interest income |
|
83,829 |
|
|
173,896 |
|
Impairment of royalty interest (Note 10) |
|
(7,371,765 |
) |
|
(4,765,511 |
) |
Write-off of exploration and
evaluation assets (Note 9) |
|
(707,567 |
) |
|
(1,780,890 |
) |
Write-off of other assets |
|
- |
|
|
(42,120 |
) |
Writedown of goodwill (Note
12) |
|
(2,248,057 |
) |
|
- |
|
Loss on derecognition and sale of property and equipment |
|
(29,257 |
) |
|
(103,519 |
) |
|
|
|
|
|
|
|
Loss before income taxes |
|
(20,804,512 |
) |
|
(16,375,557 |
) |
Deferred income tax recovery (Note 17) |
|
3,356,471 |
|
|
2,392,945 |
|
|
|
|
|
|
|
|
Loss for the year |
$ |
(17,448,041 |
) |
$ |
(13,982,612 |
) |
|
|
|
|
|
|
|
Basic and diluted loss per share |
$ |
(0.24 |
) |
$ |
(0.19 |
) |
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding |
|
73,154,139 |
|
|
72,509,793 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)
|
|
Year Ended |
|
|
Year Ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Loss for the year |
$ |
(17,448,041 |
)
|
$ |
(13,982,612 |
)
|
Other comprehensive gain (loss) |
|
|
|
|
|
|
Change in fair value of
available-for-sale investments |
|
(400,476 |
)
|
|
(280,000 |
)
|
Currency translation adjustment |
|
3,585,937 |
|
|
2,574,406 |
|
Comprehensive loss for the year |
$ |
(14,262,580 |
) |
$ |
(11,688,206 |
) |
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Expressed in Canadian Dollars)
|
|
Year ended |
|
|
Year ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Loss for the year |
$ |
(17,448,041 |
) |
$ |
(13,982,612 |
) |
Items not affecting operating activities: |
|
|
|
|
|
|
Interest income received |
|
(83,829 |
) |
|
(173,896 |
) |
Unrealized foreign exchange effect on cash and cash
equivalents |
|
159,158 |
|
|
(87,151 |
) |
Items not affecting cash: |
|
|
|
|
|
|
Change in fair value of fair value throught profit or
loss investments |
|
254,637 |
|
|
425,066 |
|
Commitment to issue shares |
|
376,549 |
|
|
641,357 |
|
Shares issued as performance bonuses |
|
- |
|
|
17,500 |
|
Share-based payments (Note 15) |
|
857,936 |
|
|
- |
|
Deferred income tax recovery |
|
(3,356,471 |
) |
|
(2,392,945 |
) |
Depreciation (Note 7) |
|
187,714 |
|
|
262,557 |
|
Depletion (Note 10) |
|
1,334,845 |
|
|
1,681,688 |
|
Impairment of royalty interest (Note
10) |
|
7,371,765 |
|
|
4,765,511 |
|
Writedown of goodwill (Note 12) |
|
2,248,057 |
|
|
- |
|
Realized loss on sale of investments
|
|
19,049 |
|
|
51,114 |
|
Loss on derecognition and sale of property and
equipment |
|
29,257 |
|
|
103,519 |
|
Derecognition of property and
equipment on sale of exploration and evaluation assets |
|
137,751 |
|
|
- |
|
Equity loss in associated companies (Note 8) |
|
1,086,649 |
|
|
2,093,823 |
|
Write-off of exploration and
evaluation assets (Note 9) |
|
707,567 |
|
|
1,780,890 |
|
Write-off of other assets |
|
- |
|
|
42,120 |
|
Unrealized foreign exchange (gain)
loss |
|
641,110 |
|
|
146,117 |
|
Shares received from joint venture partners included
in exploration recoveries |
|
(33,000 |
) |
|
(272,550 |
) |
Changes in non-cash working capital items:
|
|
|
|
|
|
|
Receivables (Note 5) |
|
737,698 |
|
|
(544,477 |
) |
Prepaid expenses |
|
61,047 |
|
|
91,235 |
|
Accounts payable and accrued liabilities (Note 13)
|
|
(90,794 |
) |
|
(954,534 |
) |
Advances from joint venture partners (Note 14) |
|
19,402 |
|
|
519,781 |
|
Total cash used
in operating activities |
|
(4,781,944 |
) |
|
(5,785,887 |
)
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Acquisition of exploration and
evaluation assets, net option payments received |
|
(56,085 |
) |
|
101,185 |
|
Interest received on cash and cash equivalents |
|
83,829 |
|
|
173,896 |
|
Proceeds from sale of other assets
|
|
- |
|
|
12,458 |
|
Purchase and sale of fair value through profit and
loss investments, net |
|
242,252 |
|
|
195,559 |
|
Purchase of available-for-sale
financial instruments |
|
(500,000 |
) |
|
(480,000 |
) |
Purchase of investments in associated companies |
|
(1,063,036 |
) |
|
(2,774,570 |
) |
Purchase of royalty interest |
|
- |
|
|
(200,000 |
) |
Restricted cash |
|
(25,529 |
) |
|
(451,426 |
) |
Purchase and sale of property and
equipment, net |
|
79,463 |
|
|
25,492 |
|
Reclamation
bonds |
|
(52,553 |
) |
|
(282,372 |
)
|
Total cash provided used in investing activities
|
|
(1,291,659 |
) |
|
(3,679,778 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from options exercised |
|
- |
|
|
361,600 |
|
Total cash
provided by financing activities |
|
- |
|
|
361,600 |
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(159,158 |
) |
|
87,151 |
|
Change in cash and cash equivalents
|
|
(6,232,761 |
) |
|
(9,016,914 |
) |
Cash and cash
equivalents, beginning |
|
12,683,069 |
|
|
21,699,983 |
|
Cash and cash equivalents, ending |
$ |
6,450,308 |
|
$ |
12,683,069 |
|
Supplemental disclosure with respect to cash flows (Note 20)
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Expressed in
Canadian Dollars)
|
|
|
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive
gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
Balance as at December 31, 2013 |
|
72,980,209
|
|
$ |
116,151,675 |
|
$ |
544,877 |
|
|
8,569,269$
|
|
$ |
2,694,881 |
|
$ |
(69,981,980 |
) |
$ |
57,978,722 |
|
Shares issued as incentive stock grants
|
|
391,501 |
|
|
614,427 |
|
|
(614,427 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Commitment to issue
shares |
|
- |
|
|
- |
|
|
376,549 |
|
|
- |
|
|
- |
|
|
- |
|
|
376,549 |
|
Equity investment share-based payments
|
|
- |
|
|
- |
|
|
- |
|
|
135,700 |
|
|
- |
|
|
- |
|
|
135,700 |
|
Share - based payments
|
|
- |
|
|
- |
|
|
- |
|
|
857,936 |
|
|
- |
|
|
- |
|
|
857,936 |
|
Foreign currency translation adjustment
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,585,937 |
|
|
- |
|
|
3,585,937 |
|
Change in fair value of
financial instruments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(400,476 |
) |
|
- |
|
|
(400,476 |
) |
Loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(17,448,041 |
) |
|
(17,448,041 |
) |
Balance as at December 31, 2014 |
|
73,371,710 |
|
$ |
116,766,102 |
|
$ |
306,999 |
|
|
9,562,905$ |
|
$ |
5,880,342 |
|
$ |
(87,430,021 |
) |
$ |
45,086,327 |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue
shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
Balance as at December 31, 2012 |
|
72,051,872
|
|
$ |
114,414,001 |
|
$ |
1,097,192
|
|
$ |
8,456,369
|
|
$ |
400,475
|
|
|
($55,999,368 |
) |
$ |
68,368,669
|
|
Shares issued as incentive stock grants
|
|
563,337 |
|
|
1,193,672 |
|
|
(1,193,672 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Shares issued on
exercise of stock options |
|
355,000 |
|
|
361,600 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
361,600 |
|
Share - based payments |
|
10,000 |
|
|
17,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
17,500 |
|
Reclassification of
fair value of options exercised |
|
- |
|
|
164,902 |
|
|
- |
|
|
(164,902 |
)
|
|
- |
|
|
- |
|
|
- |
|
Commitment to issue shares |
|
- |
|
|
- |
|
|
641,357 |
|
|
- |
|
|
- |
|
|
- |
|
|
641,357 |
|
Equity investment
share-based payments |
|
- |
|
|
- |
|
|
- |
|
|
277,802 |
|
|
- |
|
|
- |
|
|
277,802 |
|
Foreign currency translation adjustment
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,574,406 |
|
|
- |
|
|
2,574,406 |
|
Change in fair value of
financial instruments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(280,000 |
)
|
|
- |
|
|
(280,000 |
)
|
Loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(13,982,612 |
) |
|
(13,982,612 |
) |
Balance as at December 31, 2013 |
|
72,980,209 |
|
$ |
116,151,675 |
|
$ |
544,877 |
|
|
8,569,269$ |
|
$ |
2,694,881 |
|
$ |
(69,981,980 |
) |
$ |
57,978,722 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
Page 6
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
1. NATURE OF OPERATIONS
Eurasian Minerals Inc. (the Company or Eurasian) and its
subsidiaries are engaged in the acquisition, exploration and evaluation of
mineral assets in Turkey, Haiti, Europe, U.S.A. and the Asia Pacific region, and
the investment in a royalty income stream in Nevada, U.S.A. The Companys common
shares are listed on the TSX Venture Exchange (TSX-V) under the symbol of
EMX and on the NYSE MKT under the symbol of EMXX. The Companys head office
is located at 501 - 543 Granville Street, Vancouver, British Columbia, Canada
V6C 1X8.
These consolidated financial statements have been prepared
using International Financial Reporting Standards (IFRS) applicable to a going
concern, which assumes that the Company will be able to realize its assets,
discharge its liabilities and continue in operation for the following twelve
months.
Management believes it has sufficient funding for operations
for the ensuing year, which results in the going concern assumption being an
appropriate underlying concept for the preparation of these consolidated
financial statements.
Some of the Companys activities for exploration and evaluation
assets are located in emerging nations and, consequently, may be subject to a
higher level of risk compared to other developed countries. Operations, the
status of mineral property rights and the recoverability of investments in
emerging nations can be affected by changing economic, legal, regulatory and
political situations.
At the date of these consolidated financial statements, the
Company has not identified a known body of commercial grade mineral on any of
its exploration and evaluation assets. The ability of the Company to realize the
costs it has incurred to date on these exploration and evaluation assets is
dependent upon the Company identifying a commercial mineral body, to finance its
development costs and to resolve any environmental, regulatory or other
constraints which may hinder the successful development of the exploration and
evaluation assets.
These consolidated financial statements of the Company are
presented in Canadian dollars unless otherwise noted, which is the functional
currency of the parent company and its subsidiaries except as to Bullion Monarch
Mining, Inc., the holder of a royalty income stream whose functional currency is
the United States (US) dollar.
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Statement of Compliance
These consolidated financial statements have been prepared in
accordance with IFRS as issued by the International Accounting Standards Board
(IASB) and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC).
These consolidated financial statements have been prepared on a
historical cost basis, except for financial instruments classified as fair value
through profit or loss or available for sale, which are stated at their fair
value. In addition, these consolidated financial statements have been prepared
using the accrual basis of accounting except for cash flow information.
Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements comprise the accounts of
Eurasian, the parent company, and its controlled subsidiaries, after the
elimination of all significant intercompany balances and transactions.
Page 7
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Basis of Consolidation (Continued)
Subsidiaries
Subsidiaries are all entities over which the Company has
exposure to variable returns from its involvement and has the ability to use
power over the investee to affect its returns. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Company controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Company until the date on which control ceases.
The accounts of subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies.
Inter-company transactions, balances and unrealized gains or losses on
transactions are eliminated. The Companys principal operating subsidiaries are
as follows:
Name |
Place of Incorporation |
Ownership Percentage |
Bullion Monarch Mining, Inc |
Utah, USA |
100% |
EMX (USA) Services Corp. |
Nevada, USA |
100% |
Bronco Creek Exploration Inc. |
Arizona, USA |
100% |
AES Madencilik Ltd. Sirketi |
Turkey |
100% |
Eurasia Madencilik Limited Sirketi |
Turkey |
99% |
Georgian Minerals LLC |
Georgia |
100% |
Eurasian Minerals Cooperatief U.A. |
Netherlands |
100% |
EMX Georgia Cooperatief U.A. |
Netherlands |
100% |
Ayiti Gold Company S.A. |
Haiti |
100% |
Marien Mining Company S.A. |
Haiti |
100% |
Viad Royalties AB |
Sweden |
100% |
Eurasian Minerals Sweden AB |
Sweden |
100% |
EMX Australia Pty Ltd |
Australia |
100% |
Functional and Reporting Currency
The functional currency is the currency of the primary economic
environment in which the entity operates. The functional currency for the
Company and its subsidiaries is the Canadian dollar except the functional
currency of the operations of Bullion Monarch which is the US dollar. The
functional currency determinations were conducted through an analysis of the
consideration factors identified in IAS 21, The Effects of Changes in Foreign
Exchange Rates.
Translation of transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Monetary assets and
liabilities denominated in foreign currencies are re-measured at the rate of
exchange at each financial position date. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in profit or loss.
On translation of the entities whose functional currency is
other than the Canadian dollar, revenues and expenses are translated at the
exchange rates approximating those in effect on the date of the transactions.
Assets and liabilities are translated at the rate of exchange at the reporting
date. Exchange gains and losses, including results of re-translation, are
recorded in the foreign currency translation reserve.
Page 8
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Financial Instruments
All financial instruments are classified into one of the
following four categories:
|
(a) |
Financial assets and financial liabilities at fair value
through profit or loss (FVTPL) |
|
|
|
|
|
Financial assets and financial liabilities classified as
FVTPL are acquired or incurred principally for the purpose of selling or
repurchasing them in the near term. They are recognized at fair value
based on market prices, with any resulting gains and losses reflected in
profit or loss for the period in which they arise. |
|
|
|
|
(b) |
Held-to-maturity financial assets |
|
|
|
|
|
Held-to-maturity financial assets are non-derivative
financial assets with fixed or determinable payments and fixed maturity
that an entity has the positive intention and ability to hold to maturity.
They are measured at amortized cost using the effective interest rate
method less any impairment loss. A gain or loss is recognized in profit or
loss when the financial asset is derecognized or impaired, and through the
amortization process. |
|
|
|
|
(c) |
Available for sale financial assets |
|
|
|
|
|
Available for sale (AFS) financial assets are
non-derivative financial assets that are designated as available for sale,
or that are not classified as loans and receivables, held-to-maturity
investments, or FVTPL. They are measured at fair value. Fair value is
determined based on market prices. Equity instruments that do not have a
quoted market price in an active market are measured at cost. Gains and
losses are recognized directly in other comprehensive income (loss) until
the financial asset is derecognized, at which time the cumulative gain or
loss previously recognized in accumulated other comprehensive income
(loss) is recognized in profit or loss for the period. |
|
|
|
|
(d) |
Loans and receivables and other financial
liabilities |
|
|
|
|
|
Loans and receivables and other financial liabilities are
measured at amortized cost, using the effective interest rate method less
any impairment loss. |
The Companys financial instruments consist of cash and cash
equivalents, investments, receivables, restricted cash, reclamation bonds,
accounts payable and accrued liabilities, and advances from joint venture
partners. Unless otherwise noted the fair value of these financial instruments
approximates their carrying values.
Cash and cash equivalents are classified as financial assets as
loans and receivables and are accounted for at fair value. Cash equivalents are
held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
Warrants held through investments are classified as derivative
financial assets at FVTPL and are accounted for at fair value. For warrants that
are not traded on an exchange, no market value is readily available. When there
are sufficient and reliable observable market inputs, a valuation technique is
used; if no such market inputs are available, the warrants are valued at
intrinsic value, which is equal to the higher of the market value of the
underlying security less the exercise price of the warrant, or zero.
Marketable securities are classified FVTPL and are measured at
fair market value. Marketable securities transferred to the Company as part of
an acquisition are classified as AFS and are carried at fair market value.
Changes in fair value of FVTPL assets are reflected in profit or loss in the
period in which they occur. Changes in fair value of AFS assets are reflected in
accumulated other comprehensive income on the statement of financial position
until sold or if there is an other than temporary impairment in value.
Page 9
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Financial Instruments (continued)
Reclamation bonds are classified as financial assets
held-to-maturity.
Restricted cash is classified as financial assets at FVTPL.
The Company classifies its receivables as loans and receivables
and its accounts payable and accrued liabilities and advances from joint venture
partners as other financial liabilities.
Impairment of Financial Assets
Financial assets are assessed for indicators of impairment at
the end of each reporting period. Financial assets are impaired when there is
objective evidence that, as a result of one or more events that occurred after
the initial recognition of the financial assets, the estimated future cash flows
of the financial assets have been impacted.
For all financial assets, objective evidence of impairment
could include:
|
Significant financial difficulty of the issuer
or counterparty; |
|
Default or delinquency in interest or principal
payments; or, |
|
It becoming probable that the borrower will
enter bankruptcy or financial re-organization. |
For certain categories of financial assets, that are assessed
not to be impaired individually, are subsequently assessed for impairment on a
collective basis. The carrying amount of financial assets is reduced by the
impairment loss directly for all financial assets with the exception of
receivables, where the carrying amount is reduced through the use of an
allowance account. When a receivable is considered uncollectible, it is written
off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognized in profit or loss.
With the exception of FVTPL marketable securities, if in a
subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed through profit
or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortized cost would have been
had the impairment not been recognized. In respect of AFS marketable securities,
impairment losses previously recognized through profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment
loss is recognized directly in equity.
Investments in Associated Companies
The Company accounts for its long-term investments in
affiliated companies over which it has significant influence on the equity basis
of accounting, whereby the investment is initially recorded at cost, adjusted to
recognize the Companys share of earnings or losses and reduced by dividends
received.
The Company assesses its equity investments for impairment if
there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the equity investment and that the
event or events has an impact on the estimated future cash flow of the
investment that can be reliably estimated. Objective evidence of impairment of
equity investments includes:
Page 10
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
|
Significant financial difficulty of the
associated companies; |
|
Becoming probable that the associated companies
will enter bankruptcy or other financial reorganization; or, |
|
National or local economic conditions that
correlate with defaults of the associated companies. |
Exploration and evaluation assets and exploration
expenditures
Acquisition costs for exploration and evaluation assets, net of
recoveries, are capitalized on a property-by-property basis. Acquisition costs
include cash consideration and the value of common shares, based on recent issue
prices, issued for exploration and evaluation assets pursuant to the terms of
the agreement. Exploration expenditures, net of recoveries, are charged to
operations as incurred. After a property is determined by management to be
commercially feasible, subsequent development expenditures on the property will
be capitalized.
When there is little prospect of further work on a property
being carried out by the Company or its partners, when a property is abandoned,
or when the capitalized costs are no longer considered recoverable, the related
property costs are written down to managements estimate of their net
recoverable amount. The costs related to a property from which there is
production, together with the costs of production equipment, will be depleted
and amortized using the unit-of-production method.
An exploration and evaluation asset acquired under an option
agreement, where payments are made at the sole discretion of the Company, is
capitalized at the time of payment. Option payments received are treated as a
reduction of the carrying value of the related acquisition cost for the mineral
property until the payments are in excess of acquisition costs, at which time
they are then credited to profit or loss. Option payments are at the discretion
of the optionee and, accordingly, are accounted for when receipt is reasonably
assured.
Revenue recognition
The Company recognizes revenue in accordance with IAS 18
Revenue. Royalty revenue is recognized when persuasive evidence of an
arrangement exists, title and risk passes to the buyer, the amount of revenue
can be measured reliably, it is probable that the economic benefits associated
with the sale will flow to the entity and the costs incurred in respect of the
transaction can be measured reliably. Royalty revenue may be subject to
adjustment upon final settlement of estimated metal prices, weights, and assays.
Adjustments to revenue from metal prices are recorded monthly and other
adjustments are recorded on final settlement and are offset against revenue when
incurred.
Royalty interests
Royalty interests in mineral properties include acquired
royalty interests in production stage and exploration stage properties. In
accordance with IAS 38 Intangible Assets, the cost of acquired royalty
interests in mineral properties is capitalized as intangible assets.
Acquisition costs of production stage royalty interests are
depleted using the units of production method over the life of the related
mineral property, which is calculated using estimated reserves. Acquisition
costs of royalty interests on exploration stage mineral properties, where there
are no proven and probable reserves, are not amortized. At such time as the
associated exploration stage mineral interests are converted to proven and
probable reserves, the cost basis is amortized over the remaining life of the
mineral property, using proven and probable reserves. The carrying values of
exploration stage mineral interests are evaluated for impairment at such time as
information becomes available indicating that the production will not occur in
the future.
Page 11
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Goodwill
Goodwill represents the excess of the price paid for the
acquisition of a consolidated entity over the fair value of the net identifiable
tangible and intangible assets and liabilities acquired in a business
combination. Goodwill is allocated to the cash generating unit to which it
relates.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount.
Property and equipment
Property and equipment is recorded at cost. Equipment is
depreciated over its estimated useful life using the declining balance method at
a rate of 20% per annum. Depreciation on equipment used directly on exploration
projects is included in exploration expenditures for that mineral property.
Decommissioning liabilities
Decommissioning liabilities are recognized for the expected
obligations related to the retirement of long-lived tangible assets that arise
from the acquisition, construction, development or normal operation of such
assets. A decommissioning liability is recognized in the period in which it is
incurred and when a reasonable estimate of the fair value of the liability can
be made with a corresponding decommissioning cost recognized by increasing the
carrying amount of the related long-lived asset. The decommissioning cost is
subsequently allocated in a rational and systematic method over the underlying
assets useful life. The initial fair value of the liability is accreted, by
charges to profit or loss, to its estimated future value. The Company has no
known decommissioning liabilities as of December 31, 2014 and 2013.
Environmental disturbance restoration
During the operating life of an asset, events such as
infractions of environmental laws or regulations may occur. These events are not
related to the normal operation of the asset and are referred to as
environmental disturbance restoration provisions. The costs associated with
these provisions are accrued and charged to profit or loss in the period in
which the event giving rise to the liability occurs. Any subsequent adjustments
to these provisions due to changes in estimates are also charged to profit or
loss in the period of adjustment. These costs are not capitalized as part of the
long-lived assets carrying value.
Impairment of assets
Events or changes in circumstances can give rise to significant
impairment charges or reversals of impairment in a particular year. The Company
assesses its cash generating units annually to determine whether any indication
of impairment exists. Where an indicator of impairment exists, an estimate of
the recoverable amount is made, which is the higher of the fair value less costs
to sell and value in use. The determination of the recoverable amount for value
in use requires the use of estimates and assumptions such as long-term commodity
prices, discount rates, future capital requirements, exploration potential and
future operating performance. Fair value is determined as the amount that would
be obtained from the sale of the asset in an arms length transaction between
knowledgeable and willing parties.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, bank deposits
and short-term, highly liquid investments that are readily convertible to known
amounts of cash.
Page 12
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Share-based payments
Share-based payments include option and stock grants granted to
directors, employees and non-employees. The Company accounts for share-based
compensation using a fair value based method with respect to all share-based
payments measured and recognized, to directors, employees and non-employees. For
directors and employees, the fair value of the options and stock grants is
measured at the date of grant. For non-employees, the fair value of the options
and stock grants is measured on the earlier of the date at which the
counterparty performance is complete, or the date the performance commitment is
reached, or the date at which the equity instruments are granted if they are
fully vested and non-forfeitable. For directors, employees and non-employees,
the fair value of the options and stock grants is accrued and charged to
operations, with the offsetting credit to share based payment reserve for
options, and commitment to issue shares for stock grants over the vesting
period. If and when the stock options are exercised, the applicable amounts are
transferred from share-based payment reserve to share capital. When the stock
grants are issued, the applicable fair value is transferred from commitment to
issue shares to share capital. Option based compensation awards are calculated
using the Black-Scholes option pricing model while stock grants are valued at
the fair value on the date of grant.
Income taxes
Income tax expense consists of current and deferred tax. Income
tax expense is recognized in profit or loss except to the extent that it relates
to items recognized directly in equity. Current tax is the expected tax payable
on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of
previous years. Deferred tax is calculated providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is not recognized on the initial recognition of
assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable income nor loss. In addition,
deferred tax is not recognized for taxable temporary differences arising on the
initial recognition of goodwill. Deferred tax is measured at the tax rates that
are expected to be applied to temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is
probable that future taxable income will be available against which the
temporary difference can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
Income (loss) per share
Basic income or loss per share is calculated by dividing the
net income or loss for the year by the weighted average number of shares
outstanding during the year. Diluted income or loss per share is calculated
whereby the weighted average number of shares outstanding used in the
calculation of diluted income or loss per share assumes that the deemed proceeds
received from the exercise of stock options, share purchase warrants and their
equivalents would be used to repurchase common shares of the Company at the
average market price during the year, if they are determined to have a dilutive
effect.
Existing stock options and share purchase warrants have not
been included in the current year computation of diluted loss per share as to do
so would be anti-dilutive. For the years presented the basic and diluted losses
per share are the same.
Page 13
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Valuation of equity units issued in private placements
The Company has adopted a residual value method with respect to
the measurement of shares and warrants issued as private placement units. The
residual value method first allocates value to the more easily measurable
component based on fair value and then the residual value, if any, to the less
easily measurable component.
The fair value of the common shares issued in the private
placements was determined to be the more easily measurable component and were
valued at their fair value, as determined by the closing quoted bid price on the
day prior to the issuance date. The balance, if any, was allocated to the
attached warrants. Any fair value attributed to the warrants is recorded in
reserves.
Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segment, has been identified as the Chief
Executive Officer.
New and amended IFRS pronouncements effective January 1,
2014
The Company has adopted the following new and revised
standards, along with any consequential amendments, effective January 1, 2014.
These changes were made in accordance with the applicable transitional
provisions.
IAS 32 Financial Instruments: Presentation (Amended IAS 32)
was amended by the IASB in December 2011. The amendment clarifies that an entity
has a legally enforceable right to offset financial assets and financial
liabilities if that right is not contingent on a future event and it is
enforceable both in the normal course of business and in the event of default,
insolvency or bankruptcy of the entity and all counterparties. The adoption of
Amended IAS 32 did not have a significant impact on the Companys consolidated
financial statements.
IAS 36 Impairment of Assets (Amended IAS 36) was amended by
the IASB in May 2013. The amendments require the disclosure of the recoverable
amount of impaired assets when an impairment loss has been recognized or
reversed during the period and additional disclosures about the measurement of
the recoverable amount of impaired assets 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. The adoption of
Amended IAS 36 did not have a significant impact on the Companys consolidated
financial statements.
IFRIC 21 Levies (IFRIC 21), an interpretation of IAS 37
Provisions, Contingent Liabilities and Contingent Assets (IAS 37), on the
accounting for levies imposed by governments was issued by the IASB in May 2013.
IAS 37 sets out criteria for the recognition of a liability, one of which is the
requirement for the entity to have a present obligation as a result of a past
event (obligating event). IFRIC 21 clarifies that the obligating event that
gives rise to a liability to pay a levy is the activity described in the
relevant legislation that triggers the payment of the levy. IFRIC 21 is
effective prospectively for annual periods commencing on or after January 1,
2014. The adoption of IFRIC 21 did not result in an adjustment to the Companys
consolidated financial statements.
Accounting pronouncements not yet effective
In May 2014, the IASB issued IFRS 15 Revenue from Contracts
with Customers ("IFRS 15"), which supersedes IAS 11 Construction Contracts, IAS
18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the
Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and
SIC 31 Revenue - Barter Transactions involving Advertising Services. IFRS 15
establishes a single five-step model framework for determining the nature,
amount, timing and
Page 14
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Accounting pronouncements not yet effective (Continued)
uncertainty of revenue and cash flows arising from a contract
with a customer. The standard is effective for annual periods beginning on or
after January 1, 2017, with early adoption permitted. The Company is currently
evaluating the impact the final standard is expected to have on its consolidated
financial statements.
The IASB intends to replace IAS 39 Financial Instruments:
Recognition and Measurement in its entirety with IFRS 9 Financial Instruments
(IFRS 9) which is intended to reduce the complexity in the classification and
measurement of financial instruments. The IASB has determined that the revised
effective date for IFRS 9 will be January 1, 2018. The Company is currently
evaluating the impact the final standard is expected to have on its consolidated
financial statements.
Critical Accounting Judgments and Significant Estimates and
Uncertainties
The preparation of the consolidated financial statements
requires management to make judgments and estimates and form assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, and the reported revenue and expenses during the periods
presented therein. On an ongoing basis, management evaluates its judgments and
estimates in relation to assets, liabilities, royalty revenues and expenses.
Management bases its judgments and estimates on historical experience and on
other various factors it believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions and
conditions.
The Company has identified the following critical accounting
policies in which significant judgments, estimates and assumptions are made and
where actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results or the financial
position reported in future periods. Further details of the nature of these
assumptions and conditions may be found in the relevant notes to the
consolidated financial statements.
a) |
Royalty interest and related
depletion |
In accordance with the Companys accounting policy, royalty
interests are evaluated on a periodic basis to determine whether there are any
indications of impairment. If any such indication exists, a formal estimate of
recoverable amount is performed and an impairment loss recognized to the extent
that carrying amount exceeds recoverable amount. The recoverable amount of a
royalty asset is measured at the higher of fair value less costs to sell and
value in use. The determination of fair value and value in use requires
management to make estimates and assumptions about expected production and sales
volumes, the proportion of areas subject to royalty rights, commodity prices
(considering current and historical prices, price trends and related factors),
and reserves. These estimates and assumptions are subject to risk and
uncertainty; hence there is a possibility that changes in circumstances will
alter these projections, which may impact the recoverable amount of the assets.
In such circumstances, some or all of the carrying value of the assets may be
further impaired or the impairment charge reduced with the impact recorded in
profit or loss.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount. The assessment
of the recoverable amount used in the goodwill impairment analysis is subject to
similar judgments and estimates as described above for property and equipment
and royalty interests.
Page 15
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies (Continued)
Critical Accounting Judgments and Significant Estimates and
Uncertainties (Continued)
c) |
Exploration and Evaluation
Assets |
Recorded costs of exploration and evaluation assets are not
intended to reflect present or future values of exploration and evaluation
assets. The recorded costs are subject to measurement uncertainty and it is
reasonably possible, based on existing knowledge, that a change in future
conditions could require a material change in the recognized amount.
The Companys accounting policy for taxation requires
managements judgment as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgment is also required in assessing
whether deferred tax assets and certain deferred tax liabilities are recognized
on the statement of financial position.
Deferred tax assets, including those arising from unused tax
losses, capital losses and temporary differences, are recognized only where it
is considered probable that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences caused principally by the expected royalty
revenues generated by the royalty property are recognized unless expected
offsetting tax losses are sufficient to offset the taxable income and therefore,
taxable income is not expected to occur in the foreseeable future. Assumptions
about the generation of future taxable profits depend on managements estimates
of future cash flows. These depend on estimates of future production and sales
volumes, commodity prices, and reserves. Judgments are also required about the
application of income tax legislation in foreign jurisdictions. These judgments
and assumptions are subject to risk and uncertainty, hence there is a
possibility that changes in circumstances will alter expectations, which may
impact the amount of deferred tax assets and deferred tax liabilities recognized
on the statement of financial position and the amount of other tax losses and
temporary differences not yet recognized. In such circumstances, some or the
entire carrying amount of recognized deferred tax assets and liabilities may
require adjustment, resulting in a corresponding credit or charge to profit or
loss.
3. CASH AND CASH EQUIVALENTS
Cash consists of deposits at banks earning interest at floating
rates based on daily bank deposit rates and cash on hand. Cash equivalents
consist of short-term deposits with maturities less than 90 days.
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Cash |
$ |
3,311,196 |
|
$ |
3,519,309 |
|
Short-term
deposits |
|
3,139,112 |
|
|
9,163,760 |
|
Total |
$ |
6,450,308 |
|
$ |
12,683,069 |
|
Page 16
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
4. INVESTMENTS
At December 31, 2014, the Company had the following
investments:
|
|
|
|
|
Accumulated |
|
|
|
|
December 31, 2014 |
|
Cost |
|
|
unrealized loss |
|
|
Fair value |
|
Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Marketable securities |
$ |
1,952,424 |
|
$ |
(1,208,638 |
) |
$ |
743,786 |
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
Marketable securities |
|
980,000 |
|
|
(680,476 |
) |
|
299,524 |
|
Total investments |
$ |
2,932,424 |
|
$ |
(1,889,114 |
) |
$ |
1,043,310 |
|
At December 31, 2013, the Company had the following
investments:
|
|
|
|
|
Accumulated |
|
|
|
|
December 31, 2013 |
|
Cost |
|
|
unrealized loss |
|
|
Fair value |
|
Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
Marketable securities |
$ |
2,180,725 |
|
$ |
(951,640 |
) |
$ |
1,229,085 |
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
Marketable securities |
|
480,000 |
|
|
(280,000 |
) |
|
200,000 |
|
Total investments |
$ |
2,660,725 |
|
$ |
(1,231,640 |
) |
$ |
1,429,085 |
|
5. RECEIVABLES
The Companys receivables arise from royalty receivable, goods
and services tax and harmonized sales taxes receivable from government taxation
authorities, and recovery of exploration expenditures from joint venture
partners, as follows:
Category |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Royalty income receivable |
$ |
142,864
|
|
$ |
186,298
|
|
Refundable taxes |
|
243,503 |
|
|
999,869 |
|
Recoverable exploration
expenditures and advances |
|
274,085 |
|
|
248,597 |
|
Other |
|
178,385 |
|
|
141,771 |
|
Total |
$ |
838,837 |
|
$ |
1,576,535 |
|
The carrying amounts of the Companys receivables are
denominated in the following currencies:
Currency |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Canadian Dollars |
$ |
102,952
|
|
$ |
81,384 |
|
US Dollars |
|
588,829 |
|
|
1,329,075 |
|
Turkish Lira |
|
133,440 |
|
|
140,412 |
|
Swedish Krona |
|
12,574 |
|
|
22,418 |
|
Other |
|
1,042 |
|
|
3,246 |
|
Total |
$ |
838,837 |
|
$ |
1,576,535 |
|
Page 17
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
6. RESTRICTED CASH
At December 31, 2014, the Company classified $230,144 (2013 -
$528,945) as restricted cash. This amount is comprised of $148,334 (2013 -
$148,334) held as collateral for its corporate credit cards, $50,960 (2013 -
$50,960) held as a security deposit for the Companys Haiti exploration program,
and $30,850 (2013 - $329,651) cash held by wholly-owned subsidiaries of the
Company whose full amount is for use and credit to the Companys exploration
venture partners in USA and Haiti.
7. PROPERTY AND EQUIPMENT
During the year ended December 31, 2014 and 2013, depreciation
of $47,908 (2013 - $133,453) has been included in exploration expenditures.
|
|
Computer |
|
|
Field |
|
|
Office |
|
|
Vehicles |
|
|
Building |
|
|
Land |
|
|
Total |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2012 |
$ |
116,986 |
|
$ |
222,684 |
|
$ |
129,207 |
|
$ |
370,937 |
|
$ |
615,302 |
|
$ |
552,277 |
|
$ |
2,007,393 |
|
Additions |
|
- |
|
|
3,529 |
|
|
1,951 |
|
|
- |
|
|
- |
|
|
- |
|
|
5,480 |
|
Disposals and derecognition |
|
(25,273 |
) |
|
(48,861 |
) |
|
(125,135 |
) |
|
(62,049 |
) |
|
(42,859 |
) |
|
- |
|
|
(304,177 |
) |
As at December 31, 2013 |
$ |
91,713 |
|
$ |
177,352 |
|
$ |
6,023 |
|
$ |
308,888 |
|
$ |
572,443 |
|
$ |
552,277 |
|
$ |
1,708,696 |
|
Additions |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Disposals and derecognition |
|
- |
|
|
- |
|
|
- |
|
|
(224,237 |
) |
|
- |
|
|
(137,751 |
) |
|
(361,988 |
) |
As at December 31, 2014 |
$ |
91,713 |
|
$ |
177,352 |
|
$ |
6,023 |
|
$ |
84,651 |
|
$ |
572,443 |
|
$ |
414,526 |
|
$ |
1,346,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2012 |
$ |
71,416 |
|
$ |
118,771 |
|
$ |
65,594 |
|
$ |
88,764 |
|
$ |
85,866 |
|
$ |
- |
|
$ |
430,411 |
|
Additions |
|
25,718 |
|
|
32,119 |
|
|
8,295 |
|
|
79,628 |
|
|
116,797 |
|
|
- |
|
|
262,557 |
|
Disposals and derecognition |
|
(24,147 |
) |
|
(44,874 |
) |
|
(73,889 |
) |
|
(26,776 |
) |
|
- |
|
|
- |
|
|
(169,686 |
) |
As at December 31, 2013 |
$ |
72,987 |
|
$ |
106,016 |
|
$ |
- |
|
$ |
141,616 |
|
$ |
202,663 |
|
$ |
- |
|
$ |
523,282 |
|
Additions |
|
18,726 |
|
|
26,015 |
|
|
3,958 |
|
|
24,495 |
|
|
114,520 |
|
|
- |
|
|
187,714 |
|
Disposals and derecognition |
|
- |
|
|
- |
|
|
- |
|
|
(115,517 |
) |
|
- |
|
|
- |
|
|
(115,517 |
) |
As at December 31, 2014 |
$ |
91,713 |
|
$ |
132,031 |
|
$ |
3,958 |
|
$ |
50,594 |
|
$ |
317,183 |
|
$ |
- |
|
$ |
595,479 |
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2013 |
$ |
18,726 |
|
$ |
71,336 |
|
$ |
6,023 |
|
$ |
167,272 |
|
$ |
369,780 |
|
$ |
552,277 |
|
$ |
1,185,414 |
|
As at December 31, 2014 |
$ |
- |
|
$ |
45,321 |
|
$ |
2,065 |
|
$ |
34,057 |
|
$ |
255,260 |
|
$ |
414,526 |
|
$ |
751,229 |
|
During the year ended December 31, 2014, the Company sold
certain exploration and evaluation assets for a net loss of $154,533. Included
in this sale was land with a recorded value of $137,751.
8. INVESTMENTS IN ASSOCIATED COMPANIES
The Company has a 49% equity investment in a private Turkish
company with Chesser Resources Ltd, an Australian Stock Exchange listed
Exploration Company. At December 31, 2014, the Companys investment in the joint
venture was $Nil (2013 - $Nil). The Companys share of the net loss of the joint
venture for the year ended December 31, 2014 and 2013 was $Nil.
The Company also has a 42.34% equity investment in IG Copper,
LLC (IGC). At December 31, 2014, the Company has paid an aggregate of
$7,892,345 towards its investment (2013 - $6,829,309). At December 31, 2014, the
Companys investment less its share of accumulated equity losses was $4,072,737
(2013 - $3,960,650). The Companys share of the net loss for the year ended
December 31, 2014 was $1,086,649 (2013 - $2,093,823).
The Company has a minority position on the Boards of its
associated companies, and does not control operational decisions. The Companys
judgment is that it has significant influence, but not control and accordingly
equity accounting is appropriate.
Page 18
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
8. INVESTMENTS IN ASSOCIATED COMPANIES (Continued)
As at December 31, 2014, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31, 2014 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
101,315 |
|
$ |
4,841,462 |
|
Aggregate liabilities |
|
(271,424 |
) |
|
(809,260 |
) |
Income (loss) for the period |
|
(154,215 |
) |
|
(2,606,384 |
) |
The Company's ownership % |
|
49.00% |
|
|
42.34% |
|
The Company's share of loss for the period |
|
- |
|
|
(1,086,649 |
) |
As at December 31, 2013, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31, 2013 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
105,489 |
|
$ |
5,977,484 |
|
Aggregate liabilities |
|
(142,811 |
) |
|
(958,317 |
) |
Income (loss) for the year |
|
11,247 |
|
|
(5,297,700 |
) |
The Company's ownership % |
|
49.00% |
|
|
40.96% |
|
The Company's share of loss for the year |
|
- |
|
|
(2,093,823 |
) |
9. EXPLORATION AND EVALUATION ASSETS
Acquisition Costs
At December 31, 2014 and 2013, the Company has capitalized the
following acquisition costs on its exploration and evaluation assets:
Region |
Properties |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Asia Pacific |
Various |
$ |
81,124 |
|
$ |
81,124 |
|
Haiti |
Various |
|
56,085 |
|
|
- |
|
Sweden |
Various |
|
16,671 |
|
|
16,671 |
|
|
Viad royalties |
|
421,084 |
|
|
421,084 |
|
Turkey |
Alankoy |
|
153,960 |
|
|
153,960 |
|
|
Trab |
|
78,587 |
|
|
78,587 |
|
United States |
Jasper Canyon, Arizona |
|
- |
|
|
235,856 |
|
of America |
Silver Bell, Arizona |
|
- |
|
|
471,711 |
|
|
Superior West, Arizona |
|
1,179,280 |
|
|
1,179,280 |
|
|
Yerington, Nevada |
|
393,095 |
|
|
393,095 |
|
Total |
|
$ |
2,379,886 |
|
$ |
3,031,368 |
|
During the year ended December 31, 2014 the Company wrote-off
previously capitalized acquisition costs of $707,567 which related to the Jasper
Canyon and Silver Bell projects in the US. All claims for the Jasper Canyon and
Silver Bell are in good standing and held by the Company, but Management has
determined that there was little prospect of significant work on these claims
being carried out by the Company or its partners in the foreseeable future.
Page 19
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
During the year ended December 31, 2013 the Company wrote-off
previously capitalized acquisition costs of $1,780,890 of which $1,104,389
related to the Cathedral Well, Mineral Hill, Red Hills, and Richmond Mountain
projects in the US, $7,174 related to the Golcuk property in Turkey, and
$642,992 related to the Koonenberry project in Australia.
Geothermal Assets
In August 2013, the Company sold its geothermal energy assets
in Slovakia and Peru to Starlight Geothermal Ltd. (SGL), a private company,
for US$200,000 (received), 50 common shares of SGL (received and valued at $Nil)
amounting to a 5% ownership in SGL, and gross royalties from future geothermal
energy production, resulting in a gain on sale of $205,940.
Asia Pacific (Australia) exploration licenses
The Companys Australian properties are comprised of contiguous
exploration licenses along the Koonenberry gold belt in New South Wales,
Australia. The Australian properties are acquired either directly through
staking or through agreements with four key license holders.
Koonenberry - Perry & Armstrong
On December 7, 2009, the Company entered into an agreement,
subsequently amended, to acquire a right to earn up to a 100% interest in an
exploration license. To acquire its interest, the Company was required to
provide consideration of A$100,000 (A$60,000 paid and A$40,000 in shares issued)
and work commitments totaling A$350,000 (incurred) over a period of three years.
In April 2013, the Company earned its 100% ownership of the
exploration license and the vendors interest has reverted to a 2% net smelter
returns royalty (NSR). The Company has the right to buy the 2% NSR (after
bankable feasibility study) for consideration equivalent to 10% of the Proved
Ore Reserves, as defined in the Code for Reporting of Mineral Resources and Ore
Reserves (the JORC Code) set by the Australasian Joint Ore Reserves Committee,
of gold contained within the tenement at a price of US$30 per ounce of gold.
Koonenberry - Arastra
On July 13, 2010, the Company entered into an agreement with
Rodinia Resources Pty Ltd, and wholly owned subsidiary of Arastra Explorations
Pty Ltd, to acquire a right to earn up to a 100% interest in four Exploration
Licenses in consideration of A$50,000 cash (paid) and by making a series of
advance minimum royalty payments (AMR) totaling A$2,020,000 (A$300,000 paid in
cash and A$70,000 in shares issued) and satisfying work commitments of
A$5,500,000 (A$1,300,000 incurred) over a period of five years. The Company had
earned a 50% interest in the four Exploration Licenses.
By mutual agreement in September 2013, the venture agreement
was terminated and the 50% interest earned by the Company was exchanged for a
100% ownership in one of the licenses (subject to a 2% NSR in favor of Arastra),
and a 1% NSR against the other three licenses.
Koonenberry - Rockwell
The Company entered into an agreement on March 2, 2011 to earn
a 100% interest in the Kayrunnera exploration license. Under this agreement, the
Company will make a series of payments totaling A$200,000 over two years through
a combination of A$150,000 cash (paid), A$50,000 in shares (issued), and
satisfying work commitments totaling A$1,100,000 ($600,000 incurred) over a
three year period.
In October 2013 the agreement was terminated and the Company
was granted a NSR of 0.5% in and over the tenement held by Rockwell Resources
Pty Ltd.
Page 20
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
Asia Pacific (Australia) exploration licenses
(Continued)
Koonenberry - Bates
The Company entered into an agreement on May 14, 2010 to earn a
100% interest in two New South Wales exploration license applications. Under
this agreement, the Company made a payment of A$15,000, and satisfied work
commitments totaling A$170,000 over a two year period.
In April 2013, the Company earned its 100% ownership of the two
exploration licenses and the vendors interest has reverted to a 2% NSR. The
Company has the right to buy the 2% NSR (after bankable feasibility study) for
consideration equivalent to 10% of the Proved Ore Reserves, as defined in the
Code for Reporting of Mineral Resources and Ore Reserves (the JORC Code) set
by the Australasian Joint Ore Reserves Committee, of gold contained within the
tenement at a price of US$30 per ounce of gold.
In February 2014, the Company signed an exploration and option
agreement with North Queensland Mining Pty Ltd. (NQM), a privately-held
Australian company, giving NQM the right to acquire the Companys Koonenberry
exploration licenses in New South Wales, Australia. NQM will bear responsibility
of satisfying all existing work commitments and honoring all underlying property
agreements during the term of the Agreement. NQM has the option to earn a 100%
interest in the EMX subsidiary that holds the licenses, with EMX retaining a 3%
production royalty.
Asia Pacific (New Zealand) exploration
licenses
On November 15, 2012, the Company signed an option agreement to
sell all of the issued share capital of EMX New Zealand (BVI) Inc. (EMX-NZ), a
wholly owned subsidiary of the Company to Glass Earth Gold Limited (GEG) a
TSX-V and New Zealand Alternative Exchange listed company. EMX-NZ is the owner
of all of the issued share capital of Hauraki Gold Limited (HGL), a company
incorporated in New Zealand and the registered holder of certain exploration
permits in New Zealand. The purchase and sale agreement included an execution
payment of US$85,567 (received) and a series of anniversary and milestone
payments equal to a certain amount of troy ounces of gold. On January 8, 2014,
the Company notified GEG their intentions to terminate the agreement due to
GEGs default of certain terms of the agreement.
On November 13, 2014, the Company signed an option agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, giving L&M the right to acquire HGL. The purchase and sale
agreement included an execution payment of $100,000 ($50,000 received) and a
series of anniversary and milestone payments equal to a certain amount of troy
ounces of gold.
Haiti exploration permits
Eurasian and joint venture partner Newmont Ventures Limited
(Newmont), a wholly owned subsidiary of Newmont Mining Corporation
(collectively, the JV), have the right to establish specific exploration areas
along the trend of Haitis Massif du Nord mineral belt. Newmont is funding and
managing six joint venture Designated Projects (DPs) across the exploration
areas. The JV is waiting for approval of Research Permits by the Government of
Haiti. The Companys work on the 100% controlled Grand Bois gold-copper project
is outside of the JV with Newmont.
In March 2013, the Haiti government placed the Mining
Convention process on hold while its parliament began working on a new mining
law. The Government deferred further consideration of the JVs request for the
Research Permits that would cover the six DPs, and request for an extension of
the Grand Bois Research Permit, while revisions to the mining law are pending.
As a result, Newmont placed the JVs on care and maintenance status. The Company
considered the deferral of its request for an extension of the Grand Bois
Research Permit to be a force majeure event and also placed its Grand Bois
project on care and maintenance status.
Page 21
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
Sweden licenses
The Company has certain exploration permits. There are no
specific spending commitments on the Swedish licenses and permits.
On February 17, 2011, the Company entered into a Strategic
Alliance and Earn-In Agreement (the Strategic Alliance) with Antofagasta
Minerals S.A., (Antofagasta). The Strategic Alliance includes a regional
strategic exploration alliance that covers all of Sweden (subject to certain
exclusions), and an agreement to designate certain properties as a designated
project (DP), with a right of Antofagasta to earn up to an undivided 70%
interest therein. On February 17, 2013, the Strategic Alliance reached the end
of its two year tenure. During the tenure of the Strategic Alliance, three DPs
were generated and funded by Antofagasta. On March 3, 2014 Antofagasta advised
the Company that they would be discontinuing further funding of the DPs. The
Company now has no commitments or obligations pursuant to the Strategic
Alliance.
Turkey exploration licenses
The Company has acquired numerous exploration licenses in
Turkey for which there are no specific spending commitments.
Sisorta Joint Venture
On October 26, 2007, Eurasian signed an agreement to joint
venture the Sisorta gold project with Chesser Resources Ltd, (Chesser).
Chesser earned a 51% interest in the JV by making payments of 3,000,000 common
shares, US$300,000 cash and funding US$4,000,000 in exploration expenditures.
On April 2, 2012, the Company and Chesser executed an agreement
to sell the Sisorta property to a privately owned Turkish company, Colakoglu
Ticari Yatirim A.S. (Colakoglu). The agreement requires Colakoglu to make an
up-front payment of 100 troy ounces of gold bullion or its cash equivalent
($80,216 received), and to undertake a US $500,000 work commitment over the
first year. After the first year, Colakoglu can exercise an option to purchase
the property for an additional 6,900 troy ounces of gold, or its cash
equivalent, with the payments binding on exercise of the option, but staged over
a period of four years after option exercise. A 2.5% NSR from any production on
the property will also be received. As the Company has a 49% interest in
Sisorta, its share of the above will comprise 3,381 troy ounces of gold bullion
and a 1.225% NSR. Colakoglu terminated the option effective March 21, 2013,
leaving Chesser and the Company with a 51% and 49% interest in the Sisorta
project, respectively. In March 2015, Chesser and the Company signed definitive
agreements pursuant to which the Company would acquire all of Chessers interest
in the Sisorta project.
Akarca Joint Venture
On December 23, 2008, the Company signed an option and joint
venture agreement on the Akarca, Samli, and Elmali properties in Turkey (the
"Properties"), with a subsidiary of Centerra Gold Inc. ("Centerra"), a Canadian
gold mining and exploration company. Centerra may earn a 50% interest by making
US$5,000,000 in exploration expenditures over 3 years (incurred) and making a
payment of US$1,000,000 within 30 days of earn-in (not paid).
On October 29, 2012, the parties signed a Termination of
Shareholders Agreement, and in return for relieving Centerra of certain
exploration and payment obligations Eurasian regained 100% control of
Akarca.
On June 30, 2013, the Company entered into an option agreement
to sell its 100% interest in AES Madencilik A.S. ("AES Turkey"), a Turkish
corporation that controls the Akarca property, for a combination of cash
payments, gold bullion, work commitments, and a royalty interest to Çolakoglu
Ticari Yatirim A.S. ("Çolakoglu"), a privately owned Turkish company.
Page 22
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
Turkey exploration licenses (Continued)
The agreement requires Çolakoglu to make an up-front payment of
US$250,000 (received). In order to exercise the option, Colakoglu must drill at
least 5,000 meters by the end of the first year (completed), pay US$500,000
within 18 months (subsequently extended to 24 months upon payment of $100,00 of
that amount) and, if the option is exercised, must pay a cumulative US$4,250,000
over a period of three years from the date of the agreement, must drill a
cumulative 20,000 meters over a period of four years from the date of the
agreement, and must produce a NI 43-101 compliant feasibility study between
years 6.5 and 9.5. In addition, Colakoglu must deliver up to 18,000 troy ounces
of gold under certain terms and conditions. The Company will retain a 3.5%
NSR.
Dedeman Agreement - Aktutan
On August 7, 2007, the Company entered into an agreement with
Dedeman Madencilik San.Vetic A.S. (Dedeman) for the sale of the Aktutan
exploration property. Dedeman is required to make a US$40,000 (received) advance
royalty payment to the Company prior to August 7, 2008, US$60,000 (received)
prior to August 7, 2009 and US$100,000 (received) prior to August 7, 2010 and
thereafter for as long as they hold the property. Dedeman has drilling and
expenditure commitments over the first three years of the agreement depending on
results. The Company will retain a 4% NSR and can re-acquire the property if
Dedeman decides to relinquish it. As of December 31, 2014, Dedeman is current
with respect to their advance royalty payments.
Dedeman Agreement Alankoy, Balya and Sofular
In November 2006, the Company through its wholly owned
subsidiary, Eurasia Madencilik Ltd. Sti, completed an exchange of mineral
properties with Dedeman. The Company transferred its Balya and Sofular lead-zinc
properties to Dedeman in exchange for the Alankoy gold-copper property. The
Company made a US$100,000 advance royalty payment to Dedeman for the Alankoy
property in May 2008. Dedeman retains a 3% NSR on the property and a
reversionary right to re-acquire the property should the Company decide to
relinquish the license. The Company retains the right to purchase Dedemans 3%
royalty for US$1,000,000 at any time. Dedeman is to make a US$100,000 advance
royalty payment (received) to the Company for the Balya property prior to the
first anniversary of the agreement. Dedeman is also committed to drill a minimum
of 12 exploration holes for a total of 3,000 meters during the first year
(completed) and incur expenditures of US$500,000 in year 2 (incurred) and
US$1,000,000 in year 3 (incurred). The Company retains a 4% NSR and a
reversionary right to re-acquire the property if Dedeman decides to relinquish
the license.
Dedeman also acquired the Sofular properties and the Company
retains a 3% NSR on the properties and a reversionary interest in the properties
should Dedeman decide to relinquish one or more of them. Dedeman has the right
to purchase the 3% NSR on Sofular at any time for US$1,000,000. In February
2015, Dedeman determined it would relinquish the Sofular properties, and the
Company declined to re-acquire them.
Ferrite Agreement - Alankoy
On December 20, 2013, the Company signed an Exploration and
Option Agreement (the Alankoy Agreement) with Ferrite Resources Ltd.
(Ferrite), a privately-held Australian company, whereby Ferrite has the option
to acquire the Companys subsidiaries that hold the Alankoy project, with the
Company retaining a 3% NSR. To do so, Ferrite paid US$35,000 upon signing and
must expend at least US$200,000 on exploration activities each year for the
three years after June 3, 2014 (the Effective Date). In addition, Ferrite is
required to make annual deliveries of gold bullion to the Company as Advanced
Annual Royalties (AARs) on each anniversary of the Effective Date. These will
consist of 75 troy ounces of gold (or cash equivalent thereof) delivered on each
of the first three anniversaries of the Effective Date, and AARs of 100 troy
ounces of gold (or cash equivalent) on all subsequent anniversaries until
commencement of commercial production. Ferrite is also to pay 500 troy ounces of
gold (or the cash equivalent) on completion of a NI 43-101 or JORC compliant
feasibility study.
Page 23
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
Turkey exploration licenses (Continued)
Tumad Agreement - Trab-23
The Trab-23 property is located in northeast Turkey. In
February 2013 Tumad Madencilik San.Ve TIC, A.S. (Tumad), executed an option
agreement (the Trab-23 Agreement) to acquire Trab-23 from the Company. The
Trab-23 Agreement provides an upfront transfer of the two licenses to Tumad,
in-ground spending requirements, a revenue stream of annual earn-in and
pre-production payments, and a revenue stream based upon production. The Trab-23
Agreement is contingent upon approval by Turkeys General Directorate of Mining
Affairs ("MIGEM") to combine the two licenses into a single exploitation
license. This license combination and transfer occurred on September 11, 2014
(the Transfer Date). Provided that Tumad has made the payments and performed
the work described in the Trab-23 Agreement, on or before September 11, 2017
Tumad may exercise its option to retain the property, and after such election,
shall pay annual minimum royalties of US$100,000 commencing upon the first
anniversary of such exercise. Upon production from the Trab-23 licenses, Tumad
will pay the Company a 3% NSR royalty from production. The annual minimum
royalties will be credited to 80% of the NSR royalty then payable.
Golcuk Transfer and Royalty Agreement
On July 17, 2012, the Company entered into an agreement with
Pasinex Resources Limited (PRL) to transfer 100% interest in the Golcuk
property in exchange for PRL issuing shares to the Company as follows,
i) |
500,000 PRL shares on the initial issuance date
(received); |
|
|
ii) |
An additional 500,000 PRL shares on or before the first
anniversary of the initial issuance date (received); |
|
|
iii) |
An additional 1,000,000 PRL shares on or before the
second anniversary of the initial issuance date (received subsequent to
year end); and, |
|
|
iv) |
An additional 1,000,000 PRL Shares on or before the third
anniversary of the initial issuance date. |
In addition to the transfer of shares, Pasinex will pay annual
minimum royalties of 50 troy ounces of gold on the fourth anniversary of the
effective date of the agreement, and 75 troy ounces of gold on the fifth
anniversary and each anniversary thereafter until commencement of production.
Pasinex will then pay the Company a 2.9% NSR royalty from production. Pasinex
has the option of purchasing 0.9% of the royalty for $1,000,000 USD prior to the
6th anniversary of the effective date of the agreement.
United States exploration licenses
Aguila de Cobre Property, Arizona
The Company holds a 100% interest in the Aquila de Cobre
property comprised of certain unpatented federal mining claims and one State of
Arizona exploration permit.
Copper Springs, Copper King, and Red Top Properties, Arizona
In September 2013, the Company, through its wholly owned
subsidiary Bronco Creek Exploration Inc. (BCE), entered into option agreements
to sell the Copper Springs, Copper King, and Red Top projects for a combination
of cash payments, work commitments, and common shares. The agreements grant
Desert Star Resources Ltd. (Desert Star), a TSX-V listed company, the option
to acquire a 100% interest in each of the projects.
Page 24
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
Desert Stars earn-in requirements for each of the three
projects consist of delivering 350,000 common shares of Desert Star (a total of
1,050,000 received) upon TSX-V approval, incurring a minimum of US$5,000,000 in
exploration expenditures by the seventh anniversary of the signing date, and
making additional milestone payments to the Company.
On September 1, 2014, the Copper King and Red Top agreements
were amended and during the remainder of 2014, the Company received payments
totaling US$62,974. The Copper Springs amendment extended the required payments
into 2015 and in January, 2015, Desert Star terminated its interest in the
Copper Springs project before any payments were received and the Company
regained 100% control of the project.
Buckhorn Creek, Frazier Creek, and Jasper Canyon Properties,
Arizona and Nevada
In October 2013, the Company, through its wholly owned
subsidiary BCE, entered into option agreements to sell the Frazier Canyon,
Buckhorn Creek, and Jasper Canyon projects for a combination of cash payments,
work commitments, and common shares. The agreements granted Savant Explorations
Ltd. (Savant), a TSX-V listed company, the option to acquire a 100% interest
in each of the projects. Upon execution of the agreement and TSX-V approval, the
Company received US$37,500 (US$12,500 per project) and 450,000 common shares at
a value of US$19,440 (150,000 common shares per project) of Savant as execution
payments, and payments totaling US$59,325 as reimbursement of amounts paid by
BCE to keep the respective claims in force for the 2013 assessment year.
During the year ended December 31, 2014, the Company received
US$140,000 (US$70,000 per project), and 200,000 common shares at a value of
$8,000 (100,000 common shares per project) as the work commitment and common
share requirements related to the Buckhorn Creek and Frazier Creek projects.
Both projects and agreements remain in good standing. On July 25, 2014 Savant
terminated its option to acquire the Jasper Canyon project and the Company
wrote-off $235,856 in capitalized exploration and evaluation costs.
Cathedral Well Property and Richmond Mountain Property,
Nevada
The Company holds a 100% interest in the Cathedral Well
property comprised of certain unpatented federal mining claims, located on
Bureau of Land Management (BLM) and National Forest lands subject to a 0.5%
NSR. The 100% owned Richmond Mountain property comprises certain unpatented
federal mining claims.
In June 2014, the Company signed an exploration and option
agreement through its wholly-owned subsidiary Bronco Creek Exploration, Inc.,
with Ely Gold and Minerals Inc. (Ely Gold) (TSX Venture: ELY) for the
Companys Cathedral Well gold project. Ely Gold can earn a 100% interest in the
project by paying EMX a total of US$100,000 as follows: US$25,000 (received)
upon execution of the agreement and US$75,000 over the next three years, after
which the Company will retain a 2.5% NSR royalty, inclusive of an underlying
0.5% NSR royalty.
Copper Basin Property, Arizona
The Company holds a 100% interest in the Copper Basin property
comprised of certain unpatented federal mining claims and one State of Arizona
exploration permit subject to the terms of an Earn-In Agreement dated September
27, 2011 with Vale Exploration (Vale). Vale may earn an initial 60% equity
interest in the project for consideration of cash payments and US$4,500,000 in
exploration expenditures within four years.
On July 19, 2014, Vale terminated its interest in the agreement
with the Company regaining 100% control of the project.
Page 25
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
Copper Warrior Property, Utah
The Company holds a 100% interest in the Copper Warrior
property comprised of certain unpatented federal lode mining claims.
French Bullion Property, Nevada
The Company holds a 100% interest in the French Bullion
property comprised of certain unpatented federal lode mining claims.
Hardshell Skarn Property, Arizona
The Company holds a 100% interest in the Hardshell Skarn
property comprised of certain unpatented federal lode mining claims.
Jasper Canyon Property, Globe-Miami District, Arizona
The Company holds a 100% interest in the Jasper Canyon property
comprised of certain unpatented federal lode mining claims.
Lomitas Negras Property, Arizona
The Company holds a 100% interest in the Lomitas Negras
property comprised of certain unpatented federal lode mining claims and certain
State of Arizona exploration permits.
In May 2014, the Company signed an exploration and option to
purchase agreement, through its wholly owned subsidiary Bronco Creek
Exploration, for the Lomitas Negras porphyry copper project with Kennecott
Exploration Company (Kennecott), part of the Rio Tinto Group. Kennecott can
earn a 100% interest in the project by completing US$4,500,000 in exploration
expenditures and paying escalating option payments totaling US$900,000 (US$
25,000 received) within five years after the date of the Agreement. Kennecott
relinquished its interest in the project, with the Company regaining 100%
control.
Mesa Well Property, Arizona
The Company holds a 100% interest in mineral rights held by
certain Arizona State Exploration Permits.
Mineral Hill Property, Wyoming
The Mineral Hill property is comprised of certain unpatented
mining claims staked by the Company on lands administered by the Black Hills
National Forest. The Company owns a 100% interest in the claims subject to a
Pooling Agreement dated July 31, 2009 whereby the Company pooled its interest
in the mining claims with Mineral Hill LP (MH) who owns a 100% interest in
certain patented mining claims and unpatented federal mining claims that adjoin
the Companys property. The Agreement stipulates that consideration received
from any third party, including lease payments, stock distribution, and
royalties be divided as to 40% to the Company and 60% to MH. Until such time as
a third party has paid a total of US$5,000,000 in proceeds to the Company and
MH, all further consideration will be divided as to 30% to the Company and 70%
to MH. An amendment was executed during fiscal 2013 whereby all future payments
are to be divided 50% to the Company and 50% to MH.
Page 26
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
Parks-Salyer Property, Arizona
The Company holds a 100% interest in the Parks-Salyer property
comprised of one State of Arizona exploration permit.
Red Hills Property, Arizona
The Red Hills property is comprised of certain federal
unpatented mining claims, and certain Arizona State exploration permits. The
Company owns a 100% interest in the mineral rights subject to a Mining Lease
dated August 4, 2008 and a subsequent Amended and Restated Mining Lease and an
Option Agreement dated November 12, 2009, whereby the Company granted Geo
Minerals Ltd (GEO) a 100% interest in the Red Hills property, for
consideration of advance royalty payments, common shares of GEO, and minimum
exploration expenditures. The Company retains a 2.5% NSR. The Company executed
an amendment assigning the GEO interest to GeoNovus Minerals Corp. (GEN),
after GEOs merger with New Gold Inc. on November 16, 2011. GEN terminated their
interest in the project on August 30, 2014 and the Company subsequently
relinquished all mineral rights. $156,825 in exploration and evaluation costs
related to the Red Hills project was written-off during the year ended December
31, 2013.
Rush Property, Colorado
Subsequent to year end, the Company staked federal mining
claims and now holds a 100% interest in the Rush property.
San Manuel Property, Arizona
The Company holds a 100% interest in the San Manuel property
comprised of certain State of Arizona exploration permits.
Silver Bell West, Silver Bell District, Arizona
The Company holds a 100% interest in mineral rights comprised
of certain federal unpatented mining claims subject to a Letter of Agreement
dated August 26, 2009 whereby, the Company granted GEO a 100% interest in the
Silver Bell West property, for consideration of advance royalty payments, common
shares of GEO, and warrants to purchase GEO common shares, and minimum
exploration expenditures. The Company retains a 2.5% NSR. On December 15, 2011,
the Company executed an amendment assigning the GEO interest to GEN, after GEOs
merger with New Gold Inc. In September 2014 the agreement with GEN was
terminated with the Company regaining 100% control of the project. As a result
of the termination of the agreement, the Company wrote-off $471,711 of
exploration and evaluation costs related to the project.
Sleeping Beauty Project, Globe-Miami District, Arizona
The Company holds a 100% interest in mineral rights comprised
of certain federal unpatented mining claims which were acquired by staking
during fiscal 2014.
Superior West Project, Arizona
The Company holds a 100% interest in the mineral rights
comprised of certain federal unpatented mining claims, located on Tonto National
Forest lands and unpatented federal mining claims under option. The Company may
earn a 100% interest in the claims for cash payments totaling US$1,000,000 on or
before July 31, 2014 and subject to a 2% NSR Royalty, 1% of which may be
purchased for US$2,000,000 in 0.5% increments.
By Earn-In Agreement dated July 31, 2009, the Company granted
Freeport-McMoran Mineral Properties, a wholly owned subsidiary of
Freeport-McMoran Exploration Corporation (FMEC) two separate rights to acquire
a 51% and a subsequent 19% interest. The initial interest in the Superior West
property may be acquired for cash consideration, making all property and option
payments on behalf of the Company to the original owners of the property and
minimum exploration expenditures. FMEC may acquire the additional 19% interest
by solely funding and delivering a feasibility study.
Page 27
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
On February 14, 2014 FMEC terminated its interest in the
Superior West property with the Company regaining 100% control of the project.
Yerington West Property, Nevada
The Yerington West property is comprised of certain unpatented
federal mining claims located on lands administered by the Bureau of Land
Management (BLM). By Option Agreement, dated September 24, 2009, the Company
granted Entrée Gold Inc. (ETG) the right to acquire an 80% interest in the
property, for consideration of US$140,000 in cash payments (received), common
shares of ETG valued at $85,000 (received), minimum exploration expenditures
of$1,900,000 (incurred), and delivery of a bankable feasibility study and
advanced production payments of $375,000 by the 10th anniversary
(2019).
In October 2014, the Company received a US$50,000 option
payment and verified that all exploration expenditures due on the property had
been met and that the agreement is in good standing.
Page 28
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION
ASSETS (Continued)
Exploration Expenditures
During the year ended December 31, 2014, the Company incurred
the following exploration expenditures by projects, which were expensed as
incurred:
|
|
|
|
|
USA |
|
|
Turkey |
|
|
Asia
Pacific |
|
|
|
|
|
|
|
|
|
Scandinavia |
|
|
|
|
|
Desert Star |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other * |
|
|
Total |
|
|
|
|
|
|
Vale |
|
|
|
|
|
Other USA |
|
|
Total |
|
|
Akarca |
|
|
Other |
|
|
Total |
|
|
New Zealand |
|
|
Other |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resources |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administration Cost |
$ |
98,160 |
|
$ |
441 |
|
$ |
532 |
|
$ |
127,290 |
|
$ |
128,263 |
|
$ |
3,205 |
|
$ |
44,006 |
|
$ |
47,211 |
|
$ |
7,464 |
|
$ |
5,677 |
|
$ |
13,141 |
|
$ |
160,164 |
|
$ |
446,939 |
|
Assays |
|
- |
|
|
1,150 |
|
|
6,762 |
|
|
2,561 |
|
|
10,473 |
|
|
92 |
|
|
1,201 |
|
|
1,293 |
|
|
1,476 |
|
|
- |
|
|
1,476 |
|
|
- |
|
|
13,242 |
|
Drilling / Trenching |
|
43,504 |
|
|
412,048 |
|
|
- |
|
|
325,803 |
|
|
737,851 |
|
|
- |
|
|
6,284 |
|
|
6,284 |
|
|
78,729 |
|
|
48 |
|
|
78,777 |
|
|
435 |
|
|
866,851 |
|
Logistics |
|
44,360 |
|
|
348,415 |
|
|
15,010 |
|
|
91,307 |
|
|
454,732 |
|
|
15,663 |
|
|
79,200 |
|
|
94,863 |
|
|
18,124 |
|
|
18,100 |
|
|
36,224 |
|
|
31,678 |
|
|
661,857 |
|
Personnel |
|
523,388 |
|
|
82,529 |
|
|
85,494 |
|
|
861,941 |
|
|
1,029,964 |
|
|
220,497 |
|
|
357,574 |
|
|
578,071 |
|
|
158,264 |
|
|
109,111 |
|
|
267,375 |
|
|
98,833 |
|
|
2,497,631 |
|
Property Cost |
|
110,008 |
|
|
166 |
|
|
128,424 |
|
|
549,580 |
|
|
678,170 |
|
|
160,045 |
|
|
17,395 |
|
|
177,440 |
|
|
35,593 |
|
|
18,209 |
|
|
53,802 |
|
|
1,877 |
|
|
1,021,297 |
|
Professional Services |
|
104,432 |
|
|
- |
|
|
495 |
|
|
19,088 |
|
|
19,583 |
|
|
26,148 |
|
|
90,656 |
|
|
116,804 |
|
|
108,600 |
|
|
37,225 |
|
|
145,825 |
|
|
90,827 |
|
|
477,471 |
|
Share Based Payments |
|
33,106 |
|
|
- |
|
|
- |
|
|
110,759 |
|
|
110,759 |
|
|
- |
|
|
6,973 |
|
|
6,973 |
|
|
- |
|
|
15,956 |
|
|
15,956 |
|
|
37,280 |
|
|
204,074 |
|
Technical Studies |
|
55,779 |
|
|
8,660 |
|
|
30,436 |
|
|
48,092 |
|
|
87,188 |
|
|
391 |
|
|
130,860 |
|
|
131,251 |
|
|
16,907 |
|
|
6,600 |
|
|
23,507 |
|
|
212,330 |
|
|
510,055 |
|
Travel |
|
79,750
|
|
|
- |
|
|
- |
|
|
17,032
|
|
|
17,032
|
|
|
- |
|
|
5,580
|
|
|
5,580
|
|
|
25,594
|
|
|
11,349
|
|
|
36,943
|
|
|
27,992
|
|
|
167,297 |
|
Total Expenditures |
|
1,092,487 |
|
|
853,409 |
|
|
267,153 |
|
|
2,153,453 |
|
|
3,274,015 |
|
|
426,041 |
|
|
739,729 |
|
|
1,165,770 |
|
|
450,751 |
|
|
222,275 |
|
|
673,026 |
|
|
661,416 |
|
|
6,866,714 |
|
Recoveries |
|
- |
|
|
(920,238 |
) |
|
(297,845 |
) |
|
(584,356 |
) |
|
(1,802,439 |
) |
|
(444,044 |
) |
|
- |
|
|
(444,044 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(2,246,483 |
) |
Operator fees |
|
- |
|
|
(72,725 |
) |
|
(29,938 |
) |
|
(54,853 |
) |
|
(157,516 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(157,516 |
) |
Option Payments |
|
- |
|
|
- |
|
|
(139,056 |
) |
|
(110,410 |
) |
|
(249,466 |
) |
|
- |
|
|
(110,410 |
) |
|
(110,410 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(359,876 |
) |
Other Property Income |
|
(7,121 |
) |
|
(9,233 |
) |
|
(1,292 |
) |
|
(1,716 |
) |
|
(12,241 |
) |
|
- |
|
|
(49,579 |
) |
|
(49,579 |
) |
|
(45,530 |
) |
|
- |
|
|
(45,530 |
) |
|
- |
|
|
(114,471 |
) |
Total Recoveries |
|
(7,121 |
) |
|
(1,002,196 |
) |
|
(468,131 |
) |
|
(751,335 |
) |
|
(2,221,662 |
) |
|
(444,044 |
) |
|
(159,989 |
) |
|
(604,033 |
) |
|
(45,530 |
) |
|
- |
|
|
(45,530 |
) |
|
- |
|
|
(2,878,346 |
) |
Net Expenditures |
$ |
1,085,366 |
|
$ |
(148,787 |
) |
$ |
(200,978 |
) |
$ |
1,402,118 |
|
$ |
1,052,353 |
|
$ |
(18,003 |
) |
$ |
579,740 |
|
$ |
561,737 |
|
$ |
405,221 |
|
$ |
222,275 |
|
$ |
627,496 |
|
$ |
661,416 |
|
$ |
3,988,368 |
|
* Significant components of Other exploration expenditures
for the year ended December 31, 2014 were Austria - $233,050; Haiti -
$184,777; and Georgia - $138,304.
Page 29
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
9. EXPLORATION AND EVALUATION
ASSETS (Continued)
Exploration Expenditures
(continued)
During the year ended December 31, 2013, the Company incurred
the following exploration expenditures by projects, which were expensed as
incurred:
|
|
Sweden |
|
|
USA |
|
|
Turkey |
|
|
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other * |
|
|
Total |
|
|
|
Antofagasta |
|
|
Other |
|
|
Total |
|
|
Vale |
|
|
Geonovus |
|
|
Alaska |
|
|
Other USA |
|
|
Total |
|
|
Akarca |
|
|
Other |
|
|
Total |
|
|
Koonenbury |
|
|
Other |
|
|
Total |
|
|
|
|
|
|
|
Administration Cost |
$ |
62,246 |
|
$ |
46,026 |
|
$ |
108,272 |
|
$ |
19,304 |
|
$ |
1,005 |
|
$ |
- |
|
$ |
107,275 |
|
$ |
127,584 |
|
$ |
64,644 |
|
$ |
38,969 |
|
$ |
103,613 |
|
$ |
5,113 |
|
$ |
5,468 |
|
$ |
10,581 |
|
$ |
119,318 |
|
$ |
469,368 |
|
Assays |
|
26,963 |
|
|
1,285 |
|
|
28,248 |
|
|
4,294 |
|
|
779 |
|
|
- |
|
|
1,561 |
|
|
6,634 |
|
|
37,963 |
|
|
9,823 |
|
|
47,786 |
|
|
10,211 |
|
|
229 |
|
|
10,440 |
|
|
8,007 |
|
|
101,115 |
|
Drilling / Trenching |
|
431,793 |
|
|
15,324 |
|
|
447,117 |
|
|
707,640 |
|
|
348,613 |
|
|
- |
|
|
88,122 |
|
|
1,144,375 |
|
|
109,321 |
|
|
7,424 |
|
|
116,745 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,708,237 |
|
Logistics |
|
58,089 |
|
|
49,951 |
|
|
108,040 |
|
|
572,999 |
|
|
24,887 |
|
|
- |
|
|
56,378 |
|
|
654,264 |
|
|
43,508 |
|
|
121,962 |
|
|
165,470 |
|
|
43,049 |
|
|
6,516 |
|
|
49,565 |
|
|
144,284 |
|
|
1,121,623 |
|
Personnel |
|
263,334 |
|
|
358,597 |
|
|
621,931 |
|
|
238,870 |
|
|
117,105 |
|
|
- |
|
|
801,007 |
|
|
1,156,982 |
|
|
379,594 |
|
|
438,863 |
|
|
818,457 |
|
|
141,572 |
|
|
56,839 |
|
|
198,411 |
|
|
176,022 |
|
|
2,971,803 |
|
Property Cost |
|
215,042 |
|
|
82,348 |
|
|
297,390 |
|
|
55,418 |
|
|
107,865 |
|
|
20,154 |
|
|
321,610 |
|
|
505,047 |
|
|
165,522 |
|
|
40,508 |
|
|
206,030 |
|
|
61,394 |
|
|
7,234 |
|
|
68,628 |
|
|
46,354 |
|
|
1,123,449 |
|
Professional Services |
|
69,955 |
|
|
44,138 |
|
|
114,093 |
|
|
463 |
|
|
- |
|
|
- |
|
|
40,000 |
|
|
40,463 |
|
|
92,982 |
|
|
186,620 |
|
|
279,602 |
|
|
58,973 |
|
|
31,107 |
|
|
90,080 |
|
|
101,997 |
|
|
626,235 |
|
Share Based Payments |
|
- |
|
|
37,474 |
|
|
37,474 |
|
|
- |
|
|
- |
|
|
- |
|
|
47,591 |
|
|
47,591 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
37,868 |
|
|
37,868 |
|
|
8,429 |
|
|
131,362 |
|
Technical Studies And |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consultants |
|
2,316 |
|
|
8,945 |
|
|
11,261 |
|
|
71,971 |
|
|
97,126 |
|
|
15,906 |
|
|
66,757 |
|
|
251,760 |
|
|
72,667 |
|
|
18,434 |
|
|
91,101 |
|
|
9,273 |
|
|
41,044 |
|
|
50,317 |
|
|
687,894 |
|
|
1,092,333 |
|
Travel |
|
52,185
|
|
|
63,938
|
|
|
116,123 |
|
|
354
|
|
|
45 |
|
|
- |
|
|
20,624
|
|
|
21,023
|
|
|
- |
|
|
37,235
|
|
|
37,235
|
|
|
14,628
|
|
|
20,406
|
|
|
35,034
|
|
|
61,462
|
|
|
270,877 |
|
Total Expenditures |
|
1,181,923 |
|
|
708,026 |
|
|
1,889,949 |
|
|
1,671,313 |
|
|
697,425 |
|
|
36,060
|
|
|
1,550,925 |
|
|
3,955,723 |
|
|
966,201 |
|
|
899,838 |
|
|
1,866,039 |
|
|
344,213 |
|
|
206,711 |
|
|
550,924 |
|
|
1,353,767 |
|
|
9,616,402 |
|
Recoveries |
|
(1,182,282 |
) |
|
(17,829 |
) |
|
(1,200,111 |
) |
|
(1,759,162 |
) |
|
(743,803 |
) |
|
- |
|
|
(211,665 |
) |
|
(2,714,630 |
) |
|
(325,631 |
) |
|
(18,227 |
) |
|
(343,858 |
) |
|
- |
|
|
(1,815 |
) |
|
(1,815 |
) |
|
(30,460 |
) |
|
(4,290,874 |
) |
Operator fees |
|
- |
|
|
(374,651 |
) |
|
(374,651 |
) |
|
(189,355 |
) |
|
(72,962 |
) |
|
- |
|
|
(7,588 |
) |
|
(269,905 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(644,556 |
) |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(154,470 |
) |
|
- |
|
|
(75,894 |
) |
|
(230,364 |
) |
|
- |
|
|
(346,124 |
) |
|
(346,124 |
) |
|
- |
|
|
- |
|
|
|
|
|
- |
|
|
(576,488 |
) |
Other Property Income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(285,377 |
) |
|
(285,377 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(285,377 |
) |
Total Recoveries |
|
(1,182,282 |
) |
|
(392,480 |
) |
|
(1,574,762 |
) |
|
(1,948,517 |
) |
|
(971,235 |
) |
|
- |
|
|
(295,147 |
) |
|
(3,214,899 |
) |
|
(325,631 |
) |
|
(649,728 |
) |
|
(975,359 |
) |
|
- |
|
|
(1,815 |
) |
|
(1,815 |
) |
|
(30,460 |
) |
|
(5,797,295 |
) |
Net Expenditures |
$ |
(359 |
) |
$ |
315,546 |
|
$ |
315,187 |
|
$ |
(277,204 |
) |
$ |
(273,810 |
) |
$ |
36,060 |
|
$ |
1,255,778 |
|
$ |
740,824 |
|
$ |
640,570 |
|
$ |
250,110 |
|
$ |
890,680 |
|
$ |
344,213 |
|
$ |
204,896 |
|
$ |
549,109 |
|
$ |
1,323,307 |
|
$ |
3,819,107 |
|
*Significant components of Other exploration expenditures for
the year ended December 31, 2013 include Brazil - $569,443, Georgia - $142,771,
Austria - $249,101, and Haiti - $275,281.
Page 30
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
10. ROYALTY INTEREST
Changes in royalty interest for the years ended December 31,
2014 and 2013:
Balance, December 31, 2012 |
$ |
38,738,592 |
|
Adjusted for: |
|
|
|
Additions |
|
200,000 |
|
Depletion |
|
(1,681,688 |
) |
Impairment charge |
|
(4,765,511 |
) |
Cumulative translation adjustments |
|
2,572,332 |
|
Balance, December 31, 2013 |
$ |
35,063,725 |
|
Adjusted for: |
|
|
|
Depletion |
|
(1,334,845 |
) |
Impairment charge |
|
(7,371,765 |
) |
Cumulative translation adjustments |
|
2,970,845 |
|
Balance, December
31, 2014 |
$ |
29,327,960 |
|
Carlin Trend Royalty Claim Block
The Company holds an interest in the Carlin Trend Royalty Claim
Block in Nevada which includes the following Royalty Properties:
Leeville Mine: Located in Eureka County, Nevada, the Company is
receiving a continuing 1% gross smelter return royalty (GSRR).
East Ore Body Mine: Located in Eureka County, Nevada, the
property is currently being mined and the Company is receiving a continuing 1%
GSRR.
North Pipeline: Located in Lander County, Nevada. Should the
property become producing, the Company will receive a production royalty of
US$0.50 per yard of ore processed or 4% of net profit, whichever is greater.
During the year ended December 31, 2014, $801,836 (2013 -
$1,280,997) in royalty income was included in operations offset by a 5% direct
gold tax and depletion.
Impairment of Non-Current Assets
The Companys policy for accounting for impairment of
non-current assets is to use the higher of the estimates of fair value less cost
of disposal of these assets or value in use. The Company uses valuation
techniques that require significant judgments and assumptions, including those
with respect to future production levels, future metal prices, foreign exchange
rates, discount rates, and Net Asset Value (NAV) multiples.
Non-current assets are tested for impairment when events or
changes in circumstances suggest that the carrying amount may not be
recoverable. As a result of the decline in the production of gold from the
Carlin Trend Royalty Claim Block, the Company revised its estimated annual gold
production over the expected 11 year mine life and updated the NAV and cash flow
multiples based on observed market conditions. As a result of these changes, the
Company recorded $7,371,765 (2013 - $4,765,511) in impairment charges for the
year ended December 31, 2014 related to the Carlin Trend Royalty Claim Block and
related assets that make up the same cash-generating unit (CGU). In addition,
due to the tax effects of the above-mentioned impairment, the Company recorded a
decrease in deferred tax liabilities of $2,493,010 (2013 - $1,779,707) with a
corresponding entry to deferred income tax recovery.
Page 31
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
11. RECLAMATION BONDS
Reclamation bonds are held as security towards future
exploration work and the related future potential cost of reclamation of the
Companys land and unproven mineral interests. Once reclamation of the
properties is complete, the bonds will be returned to the Company. Management
has determined that the Company has no decommissioning or restoration provisions
related to the properties for the periods presented.
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Australia - various properties |
$ |
75,864 |
|
$ |
57,881 |
|
Sweden - various properties |
|
7,984 |
|
|
7,884 |
|
Turkey - various properties |
|
273,097 |
|
|
238,356 |
|
U.S.A - various
properties |
|
466,502 |
|
|
466,773 |
|
Total |
$ |
823,447 |
|
$ |
770,894 |
|
12. GOODWILL
The Companys goodwill represents the excess of the purchase
price paid during fiscal 2012 for the acquisition of Bullion Monarch Mining Inc.
over the fair value of the net identifiable tangible and intangible assets and
liabilities acquired.
Change in goodwill for the years ended December 31, 2014 and
2013:
Balance, December 31, 2012 |
$ |
8,970,514 |
|
Adjusted for: |
|
|
|
Cumulative translation adjustment |
|
655,281 |
|
Balance, December 31, 2013 |
$ |
9,625,795 |
|
Adjusted for: |
|
|
|
Impairment charge |
|
(2,248,057 |
) |
Cumulative translation adjustment |
|
839,804 |
|
Balance, December
31, 2014 |
$ |
8,217,542 |
|
The Company applied a one-step approach and determined the
Carlin Trend Royalty Claim Block and the related assets within the same CGU to
be impaired (Note 10). The impairment loss is the amount by which the CGUs
carrying amount exceeds its recoverable amount. The loss is first applied to
reduce asset component and any excess to goodwill within CGU. As result, the
Company has written down the goodwill by $2,248,057 (2013 - $Nil).
13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Accounts payable |
$ |
267,214 |
|
$ |
395,523 |
|
Accrued
liabilities |
|
291,835 |
|
|
254,320 |
|
Total |
$ |
559,049 |
|
$ |
649,843 |
|
Page 32
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
14. ADVANCES FROM JOINT VENTURE PARTNERS
Advances from joint venture partners relate to unspent funds
received pursuant to approved exploration programs by the Company and its joint
venture partners. The Companys advances from joint venture partners consist of
the following:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
U.S.A. |
$ |
429,175 |
|
$ |
516,328 |
|
Sweden |
|
- |
|
|
212,225 |
|
Haiti |
|
- |
|
|
5,550 |
|
Total |
$ |
429,175 |
|
$ |
734,103 |
|
15. CAPITAL STOCK
Authorized
As at December 31, 2014, the authorized share capital of the
Company was an unlimited number of common and preferred shares without par
value.
Common Shares
For the year ended December 31, 2014, the Company issued:
|
391,501 shares valued at $614,427 pursuant to
an incentive stock grant program to employees of the Company applied to
commitment to issue shares. |
For the year ended December 31, 2013, the Company issued:
|
563,337 shares valued at $1,193,672 pursuant to
an incentive stock grant program to employees of the Company applied to
commitment to issue shares; |
|
355,000 common shares for gross proceeds of
$361,600 pursuant to the exercise of stock options; and |
|
10,000 common shares value at $17,500 as
employment compensation. |
Stock Options
The Company adopted a stock option plan (the Plan) pursuant
to the policies of the TSX-V. The maximum number of shares that may be reserved
for issuance under the plan is limited to 10% of the issued common shares of the
Company at any time. The vesting terms are determined at the time of the grant,
subject to the terms of the plan.
During the years ended December 31, 2014 and 2013, the change
in stock options outstanding is as follows:
|
|
|
|
|
Weighted Average |
|
|
|
Number |
|
|
Exercise Price |
|
Balance as at December 31, 2012 |
|
4,798,700 |
|
$ |
2.26 |
|
Exercised |
|
(355,000 |
) |
|
1.02 |
|
Cancelled/expired |
|
(448,000 |
) |
|
2.37 |
|
Balance as at December 31, 2013 |
|
3,995,700 |
|
|
2.36 |
|
Granted |
|
1,608,500 |
|
|
1.18 |
|
Cancelled
and expired unexercised |
|
(111,000 |
) |
|
1.62
|
|
Balance as at December 31, 2014 |
|
5,493,200 |
|
|
2.03 |
|
|
|
|
|
|
|
|
Number of options exercisable as at December 31, 2014 |
|
5,493,200 |
|
$ |
2.03 |
|
Page 33
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
15. CAPITAL STOCK (Continued)
Stock Options (Continued)
The following table summarizes information about the stock
options which were outstanding and exercisable at December 31, 2014:
Date Granted |
Number of Options |
Exercisable |
Exercise Price $ |
Expiry Date |
February 8, 2010 * |
150,000 |
150,000 |
1.74 |
February 8, 2015 |
May 7, 2010 |
917,500 |
917,500 |
2.18 |
May 7, 2015 |
June 7, 2010 |
23,000 |
23,000 |
2.05 |
June 7, 2015 |
September 2, 2010 |
38,200 |
38,200 |
2.21 |
September 2, 2015 |
November 10, 2010 |
177,500 |
177,500 |
2.51 |
November 10, 2015 |
February 1, 2011 |
50,000 |
50,000 |
3.21 |
February 1, 2016 |
March 18, 2011 |
150,000 |
150,000 |
2.91 |
March 18, 2016 |
July 19, 2011 |
1,218,000 |
1,218,000 |
2.80 |
July 19, 2016 |
August 3, 2011 |
10,000 |
10,000 |
2.70 |
August 3, 2016 |
August 29, 2011 |
50,000 |
50,000 |
2.66 |
August 29, 2016 |
September 9, 2011 |
40,000 |
40,000 |
2.70 |
September 9, 2016 |
December 11, 2011 |
20,000 |
20,000 |
2.10 |
December 11, 2016 |
July 5, 2012 |
80,000 |
80,000 |
1.96 |
July 5, 2017 |
August 22, 2012 |
951,500 |
951,500 |
1.94 |
August 22, 2017 |
October 16, 2012 |
67,000 |
67,000 |
2.44 |
October 16, 2017 |
April 25, 2014 |
1,473,000 |
1,473,000 |
1.20 |
April 24, 2019 |
June 26, 2014 |
17,500 |
17,500 |
0.88 |
June 26, 2019 |
December 22, 2014
|
60,000 |
60,000 |
0.87
|
December 22, 2019 |
|
|
|
|
|
Total |
5,493,200 |
5,493,200 |
|
|
* expired unexercised subsequent to December 31, 2014
The
weighted average remaining useful life of stock options is 2.27 years
Stock Grants
The Company has received TSX-V approval for the issuance of
certain stock grants as discretionary bonuses earned by the President and CEO,
Chairman, directors, officers, area managers and certain employees of the
Company pursuant to an annual compensation review.
Share-based Payments
During the year ended December 31, 2014, the Company recorded
aggregate share-based payments of $1,234,485 (2013 - $658,857) as they
relate to the fair value of stock options granted, fair value of incentive stock
grants, and the accrual for the fair value of stock granted. Share-based
payments are allocated to expense accounts as follows:
|
|
General and |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Year
ended December 31, 2014 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue shares |
$ |
346,961 |
|
$ |
29,588 |
|
$ |
376,549 |
|
Fair value of
stock options granted |
|
683,450 |
|
|
174,486 |
|
|
857,936 |
|
|
$ |
1,030,411 |
|
$ |
204,074 |
|
$ |
1,234,485 |
|
Page 34
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
15. CAPITAL STOCK (Continued)
Share-based Payments (continued)
|
|
General and |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Year ended December 31, 2013 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue shares |
$ |
509,995 |
|
$ |
131,362 |
|
$ |
641,357 |
|
Shares issued as
performance bonuses |
|
17,500 |
|
|
- |
|
|
17,500 |
|
|
$ |
527,495 |
|
$ |
131,362 |
|
$ |
658,857 |
|
The weighted average fair value of the stock options granted
during the year ended December 31, 2014 was $0.53 per stock option (2013 - $Nil
per stock option). The fair value of stock options granted was estimated using
the Black-Scholes option pricing model with weighted average assumptions as
follows:
|
Year
ended |
Year
ended |
|
December 31, 2014 |
December 31, 2013 |
Risk free interest rate |
1.46% |
0.00% |
Expected life (years) |
5 |
- |
Expected volatility |
51.63% |
0.00% |
Dividend yield |
- |
-
|
Warrants
During the years ended December 31, 2014 and 2013, the change
in warrants outstanding is as follows:
|
|
|
|
|
Weighted Average |
|
|
|
Number |
|
|
Exercise Price |
|
Balance as at December 31, 2012 |
|
13,265,138 |
|
$ |
3.70 |
|
Expired |
|
(4,089,605 |
) |
|
3.10
|
|
|
|
|
|
|
|
|
Balance as at
December 31, 2013 and 2014 |
|
9,175,533 |
|
$ |
4.56 |
|
As at December 31, 2014, the following share purchase warrants
were outstanding and exercisable:
|
|
Number of Warrants |
|
|
Exercise Price |
|
|
|
Expiry Date |
|
Private placement, March 12, 2010 |
|
1,919,633 |
|
$ |
2.88 |
(1 |
) |
|
March 12, 2015 |
|
Private placement, November 8, 2010 |
|
6,200,000 |
|
|
5.00 |
(2 |
) |
|
November 8, 2015 |
|
Private placement, November 12, 2010 |
|
800,000 |
|
|
5.00 |
(3 |
) |
|
November 12, 2015 |
|
Finders warrants,
November 8, 2010 |
|
255,900 |
|
|
5.00
|
(2 |
)
|
|
November 8, 2015 |
|
Total |
|
9,175,533 |
|
|
|
|
|
|
|
|
(1) |
Expired unexcersed subsequent to Decmber 31,
2014 |
(2) |
$3.50 per share on or before November 8, 2011, and the
price escalates $0.50 per year on the anniversary date. |
(3) |
$3.50 per share on or before November 12, 2011, and the
price escalates $0.50 per year on the anniversary
date. |
Page 35
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
16. RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances
relating to key management personnel were as follows:
|
|
|
|
|
Share-based |
|
|
|
|
For the year
ended December 31, 2014 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
882,536 |
|
$ |
303,491 |
|
$ |
1,186,027 |
|
Outside directors |
|
168,496 |
|
|
183,513 |
|
|
352,009 |
|
Seabord Services Corp. * |
|
418,800 |
|
|
- |
|
|
418,800 |
|
Total |
$ |
1,469,832 |
|
$ |
487,004 |
|
$ |
1,956,836 |
|
|
|
|
|
|
Share-based |
|
|
|
|
For the year
ended December 31, 2013 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
881,120 |
|
$ |
374,120 |
|
$ |
1,255,240 |
|
Outside directors |
|
175,798 |
|
|
35,223 |
|
|
211,021 |
|
Seabord Services Corp. * |
|
447,900 |
|
|
- |
|
|
447,900 |
|
Total |
$ |
1,504,818 |
|
$ |
409,343 |
|
$ |
1,914,161 |
|
* Seabord Services Corp. (Seabord) is a management services
company controlled by the Chairman of the Board of Directors of the Company.
Seabord provides a Chief Financial Officer, a Corporate Secretary, accounting
and administration staff, and office space to the Company. The Chief Financial
Officer and Corporate Secretary are employees of Seabord and are not paid
directly by the Company.
Included in accounts payable and accrued liabilities is $8,064
(2013 - $2,599) owed to key management personnel and $29,612 (2013 - $39,183) to
other related parties.
17. INCOME TAXES
Deferred Income Tax Liability
The tax effects of temporary differences between amounts
recorded in the Companys accounts and the corresponding amounts as computed for
income tax purposes gives rise to deferred tax liabities as follows:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Royalty interest |
$ |
(9,933,985 |
) |
$ |
(12,901,876 |
) |
Tax loss carryforwards |
|
1,616,508 |
|
|
1,315,968 |
|
Other |
|
99,935 |
|
|
875,356 |
|
|
$ |
(8,217,542 |
) |
$ |
(10,710,552 |
)
|
As at December 31, 2014, no deferred tax assets are recognized
on the following temporary differences as it is not probabe that sufficient
future taxable profit will be available to realize such assets:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
Expiry Date Range |
|
Tax loss carry forwards |
$ |
36,586,000 |
|
$ |
29,433,000 |
|
|
2026-2034 |
|
Share issue costs |
|
65,000 |
|
|
327,000 |
|
|
2015 |
|
Exploration and evaluation assets |
|
9,183,007 |
|
|
10,538,794 |
|
|
No expiry |
|
Other |
$ |
7,937,261 |
|
$ |
6,244,171 |
|
|
No
expiry |
|
Page 36
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
17. INCOME TAXES (Continued)
Income Tax Expense
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Current tax expense |
$ |
- |
|
$ |
- |
|
Deferred tax
recovery |
|
(3,356,471 |
) |
|
(2,392,945 |
)
|
|
$ |
(3,356,471 |
) |
$ |
(2,392,945 |
) |
The provision for income taxes differs from the amount
calculated using the Canadian federal and provincial statutory income tax rates
of 26.0% (2013 - 25.75%) as follows:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Expected income tax (recovery) |
$ |
(5,409,173 |
) |
$ |
(4,212,703 |
) |
Effect of lower tax rates in foreign jurisdictions |
|
(1,217,191 |
) |
|
(890,053 |
) |
Permanent differences |
|
2,735,843 |
|
|
719,540 |
|
Change in unrecognized deductible temporary differences and
other |
|
751,860 |
|
|
1,064,418 |
|
Foreign exchange |
|
(217,810 |
) |
|
925,853 |
|
|
$ |
(3,356,471 |
) |
$ |
(2,392,945 |
)
|
18. SEGMENTED INFORMATION
The Company operates within the resource industry. At December
31, 2014 and 2013, the Company had equipment and exploration and
evaluation assets located geographically as follows:
EXPLORATION AND EVALUATION ASSETS |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Asia Pacific |
$ |
81,124 |
|
$ |
81,124 |
|
Haiti |
|
56,085 |
|
|
- |
|
Sweden |
|
437,755 |
|
|
437,755 |
|
Turkey |
|
232,547 |
|
|
232,547 |
|
U.S.A |
|
1,572,375 |
|
|
2,279,942 |
|
Total |
$ |
2,379,886 |
|
$ |
3,031,368 |
|
PROPERTY AND EQUIPMENT |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Asia Pacific |
$ |
12,694 |
|
$ |
110,769 |
|
Canada |
|
1,630 |
|
|
15,280 |
|
Georgia |
|
6,490 |
|
|
11,011 |
|
Haiti |
|
9,040 |
|
|
12,574 |
|
Sweden |
|
11,502 |
|
|
23,285 |
|
Turkey |
|
24,723 |
|
|
67,373 |
|
U.S.A |
|
685,150 |
|
|
945,122 |
|
Total |
$ |
751,229 |
|
$ |
1,185,414 |
|
The Companys royalty interest, goodwill, deferred income tax
liability and royalty income and depletion form a cash generating unit located
in the U.S.A, except $200,000 in a royalty interest held in Serbia.
19. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
The Company considers items included in shareholders equity as
capital. The Companys objective when managing capital is to safeguard the
Companys ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders.
Page 37
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
19. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
The Company currently has continuing royalty revenues to fund a
portion of ongoing costs. In order to fund future projects and pay for
administrative costs, the Company will spend its existing working capital and
raise additional funds as needed. As at December 31, 2014, the Company had
working capital of $7,096,916 (2013 - $14,217,999). Management will need
additional sources of working capital to continue its currently planned
programs beyond twelve months, by issuing new shares or the sale of assets. The
Company manages the capital structure and makes adjustments in light of changes
in economic conditions and the risk characteristics of the underlying
assets.
In order to maintain or adjust the capital structure, the
Company may issue new shares through public and/or private placements, sell
assets, or return capital to shareholders. The Company is not subject to
externally imposed capital requirements.
Fair Value
The Company characterizes inputs used in determining fair value
using a hierarchy that prioritizes inputs depending on the degree to which they
are observable. The three levels of the fair value hierarchy are as follows:
|
Level 1: inputs represent quoted prices 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 that are less observable,
unavoidable or where the observable data does not support the majority of
the instruments fair value. |
As at December 31, 2014, there were no changes in the levels in
comparison to December 31, 2013. Financial instruments measured at fair value on
the statement of financial position are summarized in levels of the fair value
hierarchy as follows:
Assets |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash equivalents |
$ |
6,450,308 |
|
$ |
- |
|
$ |
- |
|
$ |
6,450,308 |
|
Restricted cash |
|
230,144 |
|
|
- |
|
|
- |
|
|
230,144 |
|
Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
investments |
|
743,786 |
|
|
- |
|
|
- |
|
|
743,786 |
|
Available for sale investments |
|
299,524 |
|
|
- |
|
|
- |
|
|
299,524 |
|
Total |
$ |
7,723,762 |
|
$ |
- |
|
$ |
- |
|
$ |
7,723,762 |
|
The carrying value of receivables, reclamation bonds, accounts
payable and accrued liabilities, and advances from joint venture partners
approximate their fair value because of the short-term nature of these
instruments.
The Companys financial instruments are exposed to certain
financial risks, including credit risk, interest rate risk, market risk,
liquidity risk and currency risk.
Credit Risk
The Company is exposed to credit risk by holding cash and cash
equivalents and receivables. This risk is minimized by holding a significant
portion of the funds in Canadian banks. The Companys exposure with respect to
its receivables is primarily related to royalty streams and recovery of
exploration evaluation costs.
Page 38
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
19. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
Interest Rate Risk
The Company is exposed to interest rate risk because of
fluctuating interest rates. Management believes the interest rate risk is low
given the current low global interest rate environment. Fluctuations in market
rates is not expected to have a significant impact on the Companys operations
due to the short term to maturity and no penalty cashable feature of its cash
equivalents.
Market Risk
The Company is exposed to market risk because of the
fluctuating values of its publicly traded marketable securities and other
company investments. The Company has no control over these fluctuations and does
not hedge its investments. Based on the December 31, 2014 portfolio
values, a 10% increase or decrease in effective market values would increase or
decrease net shareholders equity by approximately $104,000.
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet
its financial obligations as they come due. The Company manages this risk by
careful management of its working capital to ensure the Companys expenditures
will not exceed available resources.
Commodity Risk
The Companys royalty revenues are derived from a royalty
interest and are based on the extraction and sale of precious and base minerals
and metals. Factors beyond the control of the Company may affect the
marketability of metals discovered. Metal prices have historically fluctuated
widely. Consequently, the economic viability of the Companys royalty interests
cannot be accurately predicted and may be adversely affected by fluctuations in
mineral prices.
Currency Risk
Foreign exchange risk arises when future commercial
transactions and recognized assets and liabilities are denominated in a currency
that is not the entitys functional currency. The Company operates in Canada,
Haiti, Turkey, Georgia, Sweden, Australia and the U.S.A. The Company funds cash
calls to its subsidiary companies outside of Canada in U.S. dollars (USD) and
a portion of its expenditures are also incurred in local currencies.
The exposure of the Companys cash and cash equivalents,
receivables, and accounts payable and accrued liabilities to foreign exchange
risk as at December 31, 2014 is as follows:
Accounts |
|
US dollars |
|
Cash and cash equivalents |
$ |
1,941,359 |
|
Receivables |
|
506,433 |
|
Accounts payable and accrued liabilities |
|
(543,983 |
) |
Net exposure |
|
1,903,809 |
|
Canadian dollar equivalent |
$ |
2,213,558 |
|
The balances noted above reflect the USD balances held within
the parent company and any wholly owned subsidiaries. Balances denominated in
another currency other than the functional currency held in foreign operations
are considered immaterial.
Page 39
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in Canadian Dollars) |
For the Year Ended
December 31, 2014 |
19. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
Currency Risk (continued)
Based on the above net exposure as at December 31, 2014, and
assuming that all other variables remain constant, a 1% depreciation or
appreciation of the Canadian dollar against the US dollar would result in an
increase/decrease of approximately $22,000 in the Companys pre-tax profit or
loss.
20. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
The significant non-cash investing and financing transactions
during the year period ended December 31, 2014 included:
a. |
Recorded a loss through accumulated other comprehensive
income of $400,476 related to the fair value adjustments on AFS financial
instruments; |
|
|
b. |
Issuance of 391,501 incentive stock grants valued at
$614,427 applied to commitment to issue shares; |
|
|
c. |
Reclassification of $324,330 of restricted cash to cash
and cash equivalents for joint venture partner advances expensed in the
year; |
|
|
d. |
Adjusted reserves and investment in associated companies
for $135,700 related to share-based payments made by an associated
company; and |
|
|
e. |
Adjusted non-current assets and liabilities for
$3,585,937 related to cumulative translation adjustments (CTA), of which
$2,970,845 relates to CTA gain on royalty interest, $839,804 relates to
CTA gain on goodwill, $504,327 relates to a CTA loss on deferred tax
liability and $279,615 relates to CTA gain in the net assets of a
subsidiary with a functional currency different from the presentation
currency. |
The significant non-cash investing and financing transactions
during the year ended December 31, 2013 included:
a. |
Reclassification of $164,902 of share based payment
reserve to share capital from the exercise of options; |
|
|
b. |
Received 500,000 common shares of Pasinex Resources
Limited valued at $27,500 or $0.06 per common share as consideration for
the transfer and royalty interest on the Golcuk property in
Turkey; |
|
|
c. |
Recorded a loss through accumulated other comprehensive
income of $280,000 related to the fair value adjustments on AFS financial
instruments; |
|
|
d. |
Issuance of 563,337 incentive stock grants valued at
$1,193,672 applied to commitment to issue shares; and |
|
|
e. |
Adjusted non-current assets and liabilities for
$2,574,406 related to CTA, of which $2,572,332 relates to CTA gain on
royalty interest, $655,281 relates to CTA gain on goodwill, $829,755
relates to CTA loss on deferred tax liability and $176,548 relates to CTA
gain in the net assets of a subsidiary with a functional currency
different from the presentation currency. |
Page 40
EURASIAN MINERALS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER
31, 2014
GENERAL
This Managements Discussion and Analysis (MD&A) for
Eurasian Minerals Inc. (the Company, EMX or Eurasian) has been prepared
based on information known to management as of March 26, 2015.
This MD&A is intended to help the reader understand the
consolidated financial statements and should be read in conjunction with the
audited consolidated financial statements of the Company for the year ended
December 31, 2014 prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB). All dollar amounts included therein and in the following MD&A are
in Canadian dollars except where noted.
FORWARD-LOOKING INFORMATION
This MD&A may contain forward-looking statements that
reflect the Companys current expectations and projections about its future
results. When used in this MD&A, words such as estimate, intend,
expect, anticipate and similar expressions are intended to identify
forward-looking statements, which, by their very nature, are not guarantees of
the Companys future operational or financial performance, and are subject to
risks and uncertainties and other factors that could cause Eurasians actual
results, performance, prospects or opportunities to differ materially from those
expressed in, or implied by, these forward-looking statements. These risks,
uncertainties and factors may include, but are not limited to: unavailability of
financing, failure to identify commercially viable mineral reserves,
fluctuations in the market valuation for commodities, difficulties in obtaining
required approvals for the development of a mineral project, increased
regulatory compliance costs and other factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this MD&A or
as of the date otherwise specifically indicated herein. Due to risks and
uncertainties, including the risks and uncertainties identified above and
elsewhere in this MD&A, and other risk factors and forward-looking
statements listed in the Companys most recently filed Annual Information Form
(AIF), actual events may differ materially from current expectations. More
information about the Company including its AIF and recent financial reports is
available on SEDAR at www.sedar.com. The Companys Annual Report on Form
20-F, including the AIF and recent financial reports, is available on SECs
EDGAR website at www.sec.gov and on the Companys website at
www.EurasianMinerals.com.
Cautionary Note to Investors Concerning Estimates of
Indicated and Inferred Resources
The MD&A may use the terms Inferred and Indicated
resources. Eurasian advises investors that although these terms are recognized
and required by Canadian regulations under National Instrument 43-101 (NI
43-101), the U.S. Securities and Exchange Commission (SEC) does not recognize
these terms. Investors are cautioned that inferred resources have a great
amount of uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of inferred mineral resources may not form the basis
of feasibility or prefeasibility studies. Investors are cautioned not to assume
that part or all of an inferred resource exists, or is economically or legally
mineable. Investors are further cautioned not to assume that any part or all of
an indicated mineral resource will be converted into reserves.
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COMPANY OVERVIEW
Eurasian is a Tier 1 company that trades on the TSX Venture
Exchange and the NYSE MKT. It is principally in the business of exploring for,
and generating royalties from, metals and minerals properties. The Companys
royalty and exploration portfolio mainly consists of properties in North
America, Turkey, Europe, Haiti, Australia, and New Zealand. The Company started
receiving royalty income as of August 17, 2012 when it acquired Bullion Monarch
Mining, Inc. (Bullion or BULM). This royalty cash flow helps to provide a
foundation to support the Companys growth over the long term.
Eurasian operates as a royalty and prospect generator. Under
the royalty and prospect generation business model, Eurasian acquires and
advances early-stage mineral exploration projects and then forms partnerships
with other parties for a retained royalty interest, as well as annual advanced
royalty and other cash or share payments. Through its various agreements,
Eurasian also provides technical and commercial assistance to partner companies
as the projects are advanced. By optioning interests in its projects to third
parties for a royalty interest, Eurasian a) reduces its exposure to the costs
and risks associated with mineral exploration and project development, while b)
maintaining the opportunity to participate in early-stage exploration upside,
and c) developing a pipeline for potential production royalty payments and
associated "brownfields" discoveries in the future. This approach helps preserve
the Companys treasury, which can be utilized for further project acquisitions
and other business initiatives.
Strategic investments are an important complement to the
Companys royalty and prospect generation initiatives. These investments are
made in unrecognized or under-valued exploration companies identified by
Eurasian. EMX helps to develop the value of these assets, with exit strategies
that can include royalty positions or equity sales.
HIGHLIGHTS FOR THE YEAR
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For the year ended December 31, 2014, the Company
received royalty income of $2,247,334 and recorded a loss from operations
of $8,681,619. The after tax loss for the year of $17,488,041 included a
$7,371,765 impairment charge related to the Leeville royalty. |
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Exploration expenditures totaled $6,866,714 of which
$2,878,346 was recovered from partners. In addition, projects were
advanced by partners where exploration expenditures in excess of $4
million do not flow through to our financial statements. |
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In North America, the Company received approximately US$2
million in revenue from the Carlin Trend Royalty Claim Block (Leeville")
that covers portions of Newmont Mining Corporation's (Newmont)
underground operations on the Northern Carlin Trend in Nevada. Newmont's
Turf No. 3 Vent Shaft Project, which will impact "greater Leeville" and
totals $400 million in estimated capital expenditures, is on schedule for
completion in late 2015 (see Newmont's10-Q and 10-K filings for 2014).
Also in North America, the Company executed new option royalty agreements
covering copper (molybdenum) and gold properties in Arizona and Nevada,
respectively, while staking additional ground in key mining districts.
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In Turkey, partner Çolakoglu Ticari Yatirim A.S. advised
that its 2014 Akarca exploration program further expanded and defined
known zones of epithermal gold and silver mineralization, and also
identified new targets for follow- up. At the Balya lead-zinc-silver
royalty property, where EMX holds an uncapped 4% net smelter return
(NSR) royalty interest, owner and operator Dedeman Madencilik San ve
Tic. A.S. advised that it re-initiated shaft sinking and underground
development work in January 2015. |
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In Europe, the Company has a 0.5% NSR royalty that covers
Reservoir Minerals Incs share of minerals and metals mined from the
Cukaru Peki discovery in Serbia, which is being advanced with Timok
Project joint venture partner Freeport (45% Reservoir, 55% Freeport). A
milestone was achieved in 2014 with a first time NI 43-101 copper-gold
resource, and in March, 2015 Reservoir announced that the project was
moving forward toward completion of a scoping study. In Scandinavia,
Eurasian initiated a program of project acquisition at minimal cost in
Norway, while reducing expenditures in Sweden. |
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In Australia, Eurasian executed an agreement with North
Queensland Mining Pty Ltd. to acquire EMXs Koonenberry exploration
licenses. All of EMXs interests in the Koonenberry gold project are now
being advanced by partner companies, with Eurasian retaining various
royalty interests that cover the entire project area. |
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In New Zealand, Eurasian executed a definitive agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, to acquire the Neavesville gold-silver project for work
obligations, staged payments, milestone payments based upon JORC reserves,
and commercial production payments. |
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EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the
Malmyzh copper-gold porphyry discovery in Far East Russia (51% IGC, 49%
Freeport). IGC completed drafts of project reports for review and approval
by the relevant Russian Federation agencies. As well, IGC advised it had
acquired the 260 square kilometer Salasinskaya property located 20
kilometers from IGC's 390 square kilometer Shelekhovo gold-silver-copper
project. The Salasinskaya and Shelekhovo properties are both outside of
the Malmyzh joint venture and 100% controlled by IGC.
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OUTLOOK
Eurasian Minerals has been generating exploration projects for
over eleven years, and is now focused on entering into agreements to convert
those assets into royalty interests, as well as directly acquiring new royalty
properties. In this time, EMX has built a portfolio of precious metal, base
metal, polymetallic, and geothermal property and royalty interests that spans
five continents and covers more than 1.7 million acres. These assets provide
revenue streams from royalty, advance royalty and success-based bonus payments,
while maintaining continual exposure to exploration upside as projects advance.
Eurasian supplements mineral property revenue streams and value creation by
leveraging its technical expertise to make timely strategic investments in other
companies or projects that could potentially provide shareholders with
additional upside.
As the year 2015 progresses, the Company is taking steps to
increase revenue, reduce expenditures, and identify new early-stage
opportunities to further build portfolio value. The Company is expecting that
production from the Leeville royalty will begin to increase in Q4 of 2015 as the
Turf Vent Shaft project comes online. The Leeville royalty stream will be
complemented by other sources of revenue, including advance royalty payments as
well as cash payments from existing agreements as projects continue to be
advanced by partners.
Recognizing a need to conserve capital given the current market
conditions, the Company has streamlined operations, closed or combined offices,
dropped low priority properties, and worked with our partners to optimize the
deployment of exploration capital. However, given that many of EMXs projects
are now being advanced as royalty properties or by partnerships, the Company is
also focusing on new generative initiatives. Opportunities are continuing to be
generated by market conditions that have adversely impacted the funding of
junior exploration companies, leading to a marked decrease in competition in the
exploration sector. Eurasian is actively reviewing new early-stage exploration
and royalty opportunities in addition to marketing its available projects.
The Company is working to build an income stream that offsets
all of its exploration expenditures. The ultimate goal is to sustain the Company
with royalty cash flows while fostering growth from a royalty pipeline of
quality properties that provide multiple opportunities for exploration success.
ROYALTY OVERVIEW
A key EMX asset is the Leeville royalty property that covers
portions of Newmonts Northern Carlin Trend underground gold mining operations.
The Leeville 1% gross smelter return royalty paid approximately US$2 million
during the twelve months ending December 31, 2014. These payments were
principally sourced from Newmonts Leeville mine, but also included minor
contributions from other operations. Newmont's Turf No. 3 Vent Shaft Project,
totaling approximately $400 million in capital expenditures, is on schedule,
with commercial production planned for late 2015 (see Newmont's 10-Q filings for
Q2 and Q3, 2014). Newmont has stated that the project will provide the
ventilation required to "increase production", "unlock" additional resources,
and impact "greater Leeville", which includes portions of EMX's royalty
position. Further Carlin Trend exploration upside is provided by EMXs Maggie
Creek 3% NSR royalty that covers nearly two square miles of prospective ground
situated approximately one kilometer from Newmonts Gold Quarry open pit mine.
In addition to EMX's Carlin Trend royalty properties, the
Company has royalty property interests elsewhere in the western U.S., as well as
in Turkey, Serbia, Sweden, Australia, Slovakia, and Peru. The Balya
lead-zinc-silver royalty property in Turkey resulted from an early prospect
generation success, and is undergoing underground development in a program that
commenced in January 2015. EMXs portfolio in Serbia represents a combination of
organically generated royalties complemented by a key royalty purchase that
covers Reservoir Minerals Inc.'s Cukaru Peki copper-gold discovery. The Viscaria
iron-copper royalty was acquired from the purchase of the Phelps Dodge
Exploration Sweden AB assets in 2010, and the project is being actively advanced
by Avalon Minerals Ltd. with ongoing drilling, to be followed by an updated JORC
resource estimate and "scoping" study (see Avalon Minerals Ltd. news releases
dated January 6 and 12, 2015). In Australia, the Koonenberry gold project is
being advanced by partner companies, with EMX retaining various royalty
interests that cover the entire project area.
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In addition, all of EMX's partnered exploration properties
include a royalty option. Many of these partnered properties provide Advance
Minimum Royalty ("AMR") or Advance Annual Royalty ("AAR") payments that may
generate an early revenue stream to EMX's benefit during earn-in. Additional
details on Eurasians property portfolio are included in the following sections.
PROPERTY OVERVIEW
TURKEY
Eurasian holds multiple mineral property interests in Turkeys
Western Anatolia and Eastern Pontides mineral belts. The properties include bulk
tonnage gold, gold-silver vein, and porphyry gold-copper targets. Six of the
seven EMX projects in Turkey are being advanced by partner companies, with the
portfolio consisting of two royalty properties and four properties optioned for
a retained royalty interest. A seventh property, the Sisorta epithermal gold
project, is 100% controlled by Eurasian and is currently available for sale or
partnership.
Akarca Property
The Akarca Property is a 2006 Eurasian exploration discovery in
Turkeys Western Anatolia region. The Akarca Property is currently wholly-owned
by EMX. An Option Agreement (the "Akarca Agreement") was executed in June 2013
with Çolakoglu Ticari Yatirim A.S. ("Çolakoglu"), a privately owned Turkish
company, for a combination of cash payments, work commitments, and an uncapped
3.5% NSR royalty interest to EMX's benefit (see EMX news release dated June 20,
2013). From June 2013 through December 2014, Çolakoglu conducted drilling,
trenching, geological mapping, geochemical sampling, and various project
studies.
The Akarca project area currently has six drill defined zones
of epithermal gold-silver oxide mineralization. Further, there are several
additional mineralized zones identified from reconnaissance level drilling and
surface sampling. Since its discovery, 244 core and reverse circulation holes
totaling about 26,400 meters have been drilled at the Akarca project, most with
partner funding. As exploration continues, it is clear that the continuity of
the near-surface oxide zones of higher grade vein and disseminated styles of
mineralization are being successfully defined at a 25 to 50 meter drill spacing.
Furthermore, ongoing reconnaissance and step-out drilling is demonstrating
potential for new discoveries within broad areas mineralized by the gold-silver
epithermal system(s) at Akarca. Exploration successes at Akarca since 2006 have
led to in-the-ground investments of over US$12 million by partner companies.
In February 2015, Çolakoglu requested, and was granted a six
month extension to August 2015 for exercise of their option as defined by the
Akarca Agreement. Çolakoglu paid EMX US$100,000 "earnest money" of the
US$500,000 payment due at the time of exercise, with the remaining US$400,000
due upon option exercise in August. Ongoing programs underway by Çolakoglu
include metallurgical and environmental assessment studies.
Sisorta Property
The Sisorta project, located in the Eastern Pontides mineral
belt, is an epithermal gold deposit with a NI 43-101 mineral resource at a 0.4
g/t cutoff of 91,000 indicated gold ounces from 3.17 million tonnes averaging
0.89 g/t, and 212,000 inferred gold ounces from 11.38 million tonnes averaging
0.58 g/t. An overview of the methodology used to estimate these resources are
described in EMXs news release dated June 26, 2009. It should be noted that
5,550 meters of drilling have been completed since the resource was SEDAR filed
in 2009, including the best intercept to date on the project (see discussion
below).
The major developments subsequent to the 2009 Sisorta Technical
Report resulted from an option granted to Çolakoglu to buy the Sisorta property
in 2012, but the agreement was terminated in 2013. Çolakoglu advised that it
completed a 46 hole, 5,500 meter diamond drill program and other work totaling
approximately US$2.5 million in expenditures before terminating its option.
Chesser Resources Ltd. (Chesser) reported highlights from Çolakoglus drilling
in a June 19, 2013 news release: a) the best drill intercept to date of 32.4
meters averaging 8.38 g/t gold and starting from the surface (true width
unknown), b) mineralized drill intercepts outside the current resource that
increase the gold zones lateral extent, and c) porphyry copper-gold targets
that remain to be tested.
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The Sisorta property had until recently been in a joint venture
with project manager Chesser (51%) and EMX (49%). In March 2015, EMX purchased
Chesser's interest in the property, and assumed management of the project. As
Sisorta is now a 100% controlled asset of EMX, the Company is evaluating the
property's exploration upside, while pursuing partnership opportunities with
third parties.
Balya Royalty Property
The Balya royalty property is located in the historic Balya
lead-zinc-silver mining district in northwestern Turkey. EMX holds an uncapped
4% NSR royalty that it retained from the sale of the property to private Turkish
mining company Dedeman Madencilik San ve Tic. A.S. (Dedeman) in 2006 (see EMX
news release dated November 14, 2006). EMX understands that since acquiring the
property, Dedeman drilled approximately 190 core holes totaling over 34,000
meters. Dedeman's drilling in 2014 consisted of eleven holes that in-filled and
extended the Hastanetepe zone's lead-zinc-silver mineralization to the
southeast. EMX has also been advised by Dedeman that they re-initiated shaft
sinking and underground development work at Hastanetepe in early 2015.
Other Property Interests
Eurasian has option agreements that include retained royalty
interests for the Golcuk, Trab-23, and Alankoy exploration properties:
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The Golcuk copper-silver property is located in northeast
Turkey. Pasinex Resources Ltd. (Pasinex) signed an agreement in 2012
granting it an option to acquire a 100% interest in the Golcuk property
for shares and work commitments over a four year period, with EMX
retaining a 2.9% NSR royalty interest. Pasinex completed five holes
totaling 994.4 meters at Golcuk in 2014 and is reviewing the results in
context of its recently-received report on the structural geology of the
targeted area. |
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The Trab-23 property hosts both porphyry gold
(copper-molybdenum) mineralization and epithermal quartz-barite- gold
veins. Tumad Madencilik Sanayi ve Ticaret A.S. ("Tumad"), a private
Turkish company, executed an option agreement (the Trab-23 Agreement) in
2013 granting it an option to acquire Trab-23 for in-ground spending
requirements, annual earn-in and pre-production payments, and payments
based upon production. Tumad has notified Eurasian of its intention to
conduct an initial reconnaissance drill program on the property in 2015.
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The Alankoy gold-copper property is located in the Biga
Peninsula of northwestern Turkey. An Exploration and Option Agreement with
Ferrite Resources Ltd. (Ferrite), a privately-held Australian company,
was executed in December 2013. Ferrite has the option to acquire the
Alankoy project for work commitments, advance annual royalty payments, a
milestone payment based upon completion of a NI 43-101 or JORC compliant
feasibility study, and 3% royalty payments to EMX upon commercial
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EMX has a royalty interest in the Aktutan polymetallic project
sold to Dedeman in 2007 for considerations that also include a 4% uncapped NSR.
The Sofular royalty property, also held by Dedeman, was dropped in Q1 2015 due
to a lack of encouraging exploration results.
Qualified Person
Michael P. Sheehan, CPG, a Qualified Person as defined by NI
43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Turkey.
NORTH AMERICA
Eurasians portfolio in North America, advanced through
wholly-owned subsidiary Bronco Creek Exploration (BCE), includes porphyry
copper-molybdenum, porphyry copper-gold, bulk tonnage gold, and high-grade
gold-silver vein projects. The BCE portfolio is comprised of 22 properties
covering more than 35,000 hectares in Arizona, Nevada, Utah, and Wyoming. EMX
currently has six properties partnered through BCE. In addition, there are five
properties acquired in the 2012 merger with Bullion Monarch. Of these, four are
EMX royalty properties, including the Northern Carlin Trend's Leeville royalty
(see Leeville and Royalty Property Overview section), and one is an exploration
project available for partnership.
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The Companys 2014 work focused on advancing partner funded
projects, executing new agreements for available projects, and balancing the
portfolio by acquiring new properties on open ground while dropping low priority
projects. Eurasian is in discussions with a number of potential partners for the
available North American properties.
Properties active through partner funded programs in 2014 are
summarized below.
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The Cathedral Well project is located at the southern end
of Nevada's Battle Mountain-Eureka gold trend and surrounds most of the
historic Green Springs mine. Eurasian announced the execution of an option
agreement with Ely Gold and Minerals (Ely Gold) in July 2014 (see EMX
news release dated July 7, 2014). Ely Gold may earn a 100% interest in the
property by making staged option payments and granting EMX a 2.5% NSR
royalty, inclusive of an underlying 0.5% NSR royalty. After earning 100%
interest in the project, Ely Gold will pay EMX annual advance royalties
until commencement of commercial production. |
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The Copper King, Red Top, and Copper Springs properties
are three porphyry copper-molybdenum projects located in the Globe-Miami
and Superior (Pioneer) mining districts of Arizona. EMX executed three
separate Option Purchase Agreements with Desert Star Resources Ltd.
(Desert Star), whereby Desert Star could acquire a 100% interest in each
of the projects for cash, shares, and work commitments, after which EMX
will retain a 2.5% NSR royalty (see EMX news release dated September 4,
2013). Desert Star funded drill permitting and completion of geophysical
surveys at Copper King and Red Top. In January 2015, Eurasian regained
100% control of the Copper Springs project after Desert Star elected to
terminate its option for the property. |
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The Buckhorn Creek and Jasper Canyon copper-molybdenum
projects are located in the Laramide porphyry copper belt of southern
Arizona and the Frazier Creek copper-molybdenum project is located in the
Battle Mountain-Eureka trend of north-central Nevada. These properties
were optioned to Savant Explorations Ltd. (Savant) in 2013 under three
separate Exploration and Earn-in Agreements for cash, shares, and work
commitments (see EMX news release dated October 30, 2013). Savant funded
various exploration programs at the three properties in 2014. In Q3 2014,
Eurasian regained 100% control of the Jasper Canyon project after Savant
elected to terminate its option for the property. |
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The Copper Basin copper-molybdenum property, located in
central Arizona, was acquired under a Regional Acquisition Agreement with
Vale and advanced under a Designated Project earn-in agreement. Surface
exploration and drill results confirmed the presence of a porphyry
copper-molybdenum system with nearly a kilometer of vertical extent within
a 1.5 square kilometer area of porphyry-style alteration, mineralization,
and related geophysical anomalies. In 2014, Vale funded a 1,140 meter
diamond drill program, with all three holes intersecting anomalous to low
grade copper (molybdenum) mineralization. Vale relinquished its Copper
Basin interest in July 2014 after spending more than $3.5 million on the
property by completing geologic mapping, geochemical sampling, geophysical
surveys, and 3,916 meters of drilling in two programs. The Copper Basin
project is available for partnership, with much of the original target
untested by drilling. |
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The Superior West project is located west of the historic
mining town of Superior, Arizona, and adjacent to Resolution Coppers
property. The project covers several porphyry copper targets, as well as
the interpreted western extension of the historic Magma Vein. EMX regained
100% control of the property, after joint venture partner Freeport-McMoRan
Exploration Corporation of Phoenix, Arizona (Freeport) terminated its
interest in the project in 2014 due to budget cut backs on all
"greenfields" exploration projects. Eurasian has been in discussions with
potential partners interested in the property. |
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The Lomitas Negras project is located in southeast
Arizona, approximately sixteen kilometers south of the San Manuel-
Kalamazoo deposit. An option agreement with Kennecott Exploration Company
(Kennecott) was announced in May 2014 (see EMX news release dated May
15, 2014). After completing a reconnaissance diamond drill program, and
subsequently acquiring additional mineral rights, Kennecott relinquished
its interest in the project. The property is available for partnership.
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The Yerington West joint venture property, located in the
Yerington mining district of west-central Nevada, is partnered with Entrée
Gold Inc. (TSX: ETG; NYSE: EGI) of Vancouver, British Columbia (Entrée).
The project hosts porphyry copper-molybdenum and copper-iron skarn targets
beneath cover rocks. Entrée continued their work on the adjacent Ann Mason
property, including a pre-feasibility drill program that commenced in
August 2014 (see ETG news release dated January 21, 2015). EMX has a 100%
interest in the Yerington West project until Entrée completes its initial
earn-in requirements. |
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In addition, EMX continued evaluation of property and royalty
acquisition opportunities in North America, and streamlined the portfolio by
dropping low priority projects. The generative work focused on gold
opportunities in the Great Basin and porphyry copper targets in Arizona. EMX
acquired the Sleeping Beauty and Águila de Cobre copper-molybdenum porphyry
projects in Arizona by staking open ground. EMX elected to drop the Red Hills
project after termination of the joint venture by GeoNovus, and also dropped the
100% EMX-controlled Cruiser Gold, Bullion Creek and Sand Pass projects located
in Nevada, Arizona, and Utah, respectively. Subsequent to year end, the Silver
Bell West option agreement with GeoNovus was terminated with EMX regaining 100%
interest in the project. In Alaska, the Company's Moran Dome and Liberty royalty
properties were dropped by Gold Canyon Partners, and EMX elected to not
reacquire the ground.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on North America.
AUSTRALIA AND NEW ZEALAND
The Company's programs in the Australia and New Zealand region
have a low burn rate, and continue to identify new early-stage opportunities.
The Koonenberry gold project in New South Wales, Australia is being advanced by
partner companies under favorable royalty agreements with EMX. In New Zealand,
Eurasian executed a definitive agreement to sell the Neavesville gold-silver
project, and submitted applications for two new gold-silver exploration
properties with historic resources.
Koonenberry Property
The Koonenberry project is positioned along the northwest
trending, regional-scale Koonenberry fault in southeastern Australia. This
deep-seated structural zone has multiple splays that project into, and through,
the project area. EMX recognized that the distribution of gold occurrences and
gold geochemical anomalies are coincident with these prominent structural
features.
In 2014, EMX announced the signing of an Exploration and Option
Agreement (the North Queensland Agreement) with North Queensland Mining Pty
Ltd. (NQM), a privately-held Australian company, to earn a 100% interest in
the subsidiary that holds the EMX licenses, with EMX retaining a 3% production
royalty upon earn-in (see EMX news release dated February 19, 2014 for more
details). Subsequently, EMX was granted a new exploration permit covering 88.5
square kilometers that were previously held under option by Eurasian. This newly
granted EMX tenement was added under the North Queensland Agreement. All of
EMXs interests in Koonenberry are being advanced by partner companies, with EMX
retaining various royalty interests that cover the entire project area totaling
over 1,400 square kilometers. The majority of the prospective ground covered by
this extensive royalty position remains unexplored.
Neavesville Property
The Neavesville project consists of a single exploration
permit, combined from two permits during 2014, totaling over 30 square
kilometers in the Hauraki goldfield of New Zealand's North Island. EMX acquired
Neavesville, which covers a historic JORC gold-silver resource, on open ground
with minimal cost. The property hosts epithermal gold-silver mineralization that
has geologic features similar to other deposits of the Hauraki goldfield,
including Newmont's Martha Hill gold-silver mine located 25 kilometers to the
southeast.
EMX has conducted reconnaissance geologic mapping, verification
rock sampling, a CSAMT geophysical survey, and reconnaissance reverse
circulation drilling at Neavesville. These programs not only helped to
independently confirm historic areas of mineralization, but also identified new
and untested gold-silver targets. EMX also concluded negotiations on a Joint
Venture and Access Agreement with landholders that will provide certainty and
clarity for ongoing exploration within the project area.
In November 2014, Eurasian announced a definitive agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, giving L&M the right to acquire Hauraki Gold Ltd. (Hauraki), the
wholly-owned EMX subsidiary that controls the Neavesville property. The
agreement with L&M provides for work obligations, staged payments, milestone
payments based upon JORC reserves, and commercial production payments, all to
the benefit of Eurasian (see EMX news release dated November 13, 2014). A
L&M funded drilling program is scheduled to commence in late March 2015.
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Qualified Person
Chris Spurway, MAIG, FAusIMM, a Qualified Person as defined by
NI 43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Australia and New Zealand.
EUROPE
Eurasian continues to emphasize Scandinavia as a highly
favorable jurisdiction for mineral exploration and development, and has
assembled a portfolio of 100% controlled projects in Sweden and Norway that are
available for partnership. The Company has significantly reduced expenditures in
Scandinavia, and is examining ways to continue adding value while pursuing
strategic partnerships. In addition to the exploration properties in Sweden and
Norway, EMX also maintains a royalty interest in northern Sweden's Viscaria
project, as well as a portfolio of royalty interests in Serbia that includes
Reservoir Mineral's Cukaru Peki copper-gold discovery.
Sweden
Eurasians portfolio in Sweden includes volcanogenic massive
sulfide ("VMS") and Iron-Oxide-Copper-Gold ("IOCG") properties, in addition to
known areas of copper, gold, and platinum group element-enriched styles of
mineralization. EMX has focused on retaining and advancing the most prospective
exploration projects, while reducing expenditures during the last year. In
February 2015, Eurasian closed its office in Kiruna with the intention of
relocating to a more accessible and cost effective location in southern Sweden,
where much of Eurasians exploration work is now focused.
Much of EMX's earlier exploration work in Sweden was funded by
a Strategic Alliance and Earn-In Agreement focused on copper exploration with
Antofagasta Minerals S.A. from 2011 to 2013. The Company has been in ongoing
discussions with potential partners regarding the available properties in Sweden
that are summarized below.
|
The Sakkek-Pikkujärvi and Puoltsa projects are located in
the Kiruna mining district of northern Sweden. The Sakkek- Pikkujärvi
property contains IOCG-type copper, iron and gold targets. Puoltsa is
amidst a cluster of past producing mines, and hosts a number of
prospective mineral occurrences including drill defined zones of copper
mineralization. |
|
|
|
The Iekelvare project has widespread IOCG-style
alteration/mineralization, and several untested targets. |
|
|
|
The Adak project is located in the Skellefte mining
district, and has a record of historic production from four small-scale
mines that exploited stratiform to stratabound chalcopyrite-rich VMS
mineralization that provide priority exploration targets along strike and
down dip. |
|
|
|
The Storåsen property is a mafic metavolcanic-hosted
Cu-PGE-Au system. Thirty-five shallow core holes were drilled by the SGU
(the Geological Survey of Sweden) from 1980 to 1989, and a historic
resource was defined by Popular Resources in 2002 based upon the SGU's
drilling. |
|
|
|
The Gumsberg polymetallic (lead-zinc-silver-copper-gold)
property occurs in the historic Bergslagen District of southern Sweden. In
January 2015, a winter geophysical program was executed that appears to
map extensions of known bodies of mineralization along strike, and has
identified new exploration targets. |
EMX holds a 1.0% NSR royalty interest in the Viscaria
iron-copper property acquired from the 2010 purchase of the Phelps Dodge
Exploration Sweden AB assets. The Viscaria project is an IOCG-style deposit
located in the Kiruna mining district in northern Sweden. Avalon Minerals Ltd.
(ASX:AVI) announced an updated Scoping Study for EMX's Viscaria royalty
property, including new JORC compliant resource estimates and open pit
optimization scenarios, in an August 28, 2014 news release. A Finnish company,
Outokumpu Oyj, is entitled to receive 0.5% NSR payable from EMXs royalty,
resulting in Eurasian receiving net 0.5% NSR royalties until Outokumpu has
received a total of $12 million in royalty payments, after which time EMX will
receive the full 1.0% NSR royalty.
Page 9
Norway
EMX initiated a program in 2014 to evaluate opportunities in
Norway, and initially acquired the Burfjord and Storbekken properties by
acquiring exploration permits across open ground. Burfjord contains IOCG-type
targets in northern Norway, and is marked by numerous small scale historic mines
and prospects, as well as outcropping copper and gold mineralization. Storbekken
hosts multiple exposures of gold-enriched VMS-style mineralization near the
historic Røros mining district in southern Norway. A winter geophysical program
was executed in January 2015 on the Storbekken project that identified new
exploration targets.
In January 2015, the Hatt, Vaddas, and Melkedalen VMS projects
were acquired by Eurasian after monitoring the status of these areas for several
years. These projects were available for direct acquisition with minimal cost.
The Vaddas and Melkedalen properties host small tonnage zinc and copper historic
resources.
Royalty Properties in Serbia
EMX's portfolio in Serbia initially resulted from early stage
prospect generation and organic royalty growth via the sale of its properties,
including the Brestovac West, Deli Jovan, and Plavkovo projects, to Reservoir
Minerals Inc. (Reservoir) in 2006. The terms of the sale included uncapped NSR
royalties payable to EMX at a rate of 2% for gold and silver, and 1% for all
other metals. Subsequently, Eurasian acquired an uncapped 0.5% NSR royalty
covering Reservoir's share of minerals and metals mined from the "Brestovac" and
"Jasikovo" properties (see EMX news release dated February 4, 2014). The
Brestovac, Brestovac West, and Jasikovo properties are included in the Timok
Project joint venture between Reservoir (45%) and Freeport McMoRan Exploration
Corp. (55%).
Brestovac hosts porphyry and epithermal copper-gold
mineralization at the Cukaru Peki deposit. Reservoir announced a NI 43-101
inferred resource estimate for Cukaru Pekis High Sulphidation Epithermal (HSE)
zone above a 1% copper equivalent (CuEq% = Cu% + (Au g/t x 0.6)) cut-off
as 65.3 million tonnes averaging 2.6% copper and 1.5 g/t gold, or 3.5% copper
equivalent, containing 3.8 billion pounds copper and 3.1 million ounces gold, or
5.1 billion pounds copper equivalent (see Reservoir news release dated January
27, 2014). Reservoir has stated that the discovery at Cukaru Peki demonstrates
the potential for additional blind discoveries within the Timok Magmatic
Complex.
Reservoir announced in a March 12, 2015 news release that a
2015 budget of US$ 18.7 million had been approved by the Timok Project joint
venture "to move the project forward toward the completion of a scoping study".
EMX's Timok Project royalty properties add strategic upside potential for
Eurasian in one of the richest copper-gold mineral belts in Europe.
Qualified Person
Eric P. Jensen, CPG, a Qualified
Person as defined by NI 43-101 and employee of the Company, has reviewed,
verified and approved the above technical disclosure on Europe.
HAITI
Eurasian and joint venture partner Newmont Ventures Limited, a
wholly owned subsidiary of Newmont, (collectively, the JV) have a land
position along a 130 kilometer trend of Haitis Massif du Nord mineral belt.
Newmont is funding and managing six joint venture Designated Projects across
northern Haiti. EMXs work on the 100% controlled Grand Bois gold-copper project
is outside of the JV with Newmont.
The Designated Projects with Newmont and EMX's Grand Bois
Project have been on care and maintenance status since 2013, when the Haitian
Government suspended its Mining Convention process while it began working on a
new Mining Law with the help of the World Bank. The Government's goal is to
reform the Mining Law to be more consistent with current international
standards.
There were ongoing consultation meetings between the World
Bank, the Government of Haiti, the JV and other mining companies, and business
community and civil society representatives to present comments on draft
versions of the new Haitian Mining Code. After the appointment of a new Prime
Minister and the dissolution of Parliament in late 2014-early 2015, the
government is now planning for legislative elections in late 2015. At this stage
the JV does not expect further progress on the new Mining Law until later in
2016.
Page 10
EMX remains committed to supporting the process of reforming
Haiti's Mining Law as a step towards developing the mining sector and
contributing to the country's economic growth.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Haiti.
STRATEGIC INVESTMENTS
IG Copper LLC
EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the Malmyzh
copper-gold porphyry project in Far East Russia. IGC has a 51% ownership
interest in the Malmyzh joint venture, with Freeport retaining a 49% interest.
IGC is operating and managing the project. The Salasinskaya and Shelekhovo
projects, 200 kilometers northeast of Malmyzh, are 100% controlled by IGC and
not subject to the joint venture with Freeport. Eurasian was an early investor
in IGC, and is its largest shareholder, with 42.3% of the issued and outstanding
shares (39.7% equity position on a fully-diluted basis) from investments
totaling US$7.8 million.
Malmyzh is a grassroots, district-scale discovery with fourteen
porphyry copper-gold prospects identified within a 16 by 5 kilometer intrusive
corridor. The property's 153 square kilometers of exploration and mining
licenses occur 220 kilometers northeast of the Russia-China border at
Khabarovsk. Malmyzh has excellent logistics and infrastructure, including high
voltage power lines, a natural gas pipeline, a paved national highway, the Amur
River, and a rail line that are all nearby to the property.
Copper-gold mineralization occurs in diorite porphyry
intrusives, as well as in hornfels-altered and stockworked sedimentary wall
rocks, and consists of near-surface zones (i.e., within 0.5 to 50 meters of the
surface) of variable chalcocite enrichment grading into chalcopyrite-rich and
chalcopyrite-bornite-magnetite mineralization to depth. The majority of
drilling, totaling more than 70,000 meters in over 200 core holes, has
concentrated on defining the Central, Freedom, Valley, and Flats prospects. Much
of the property has more than 15 meters of cover and is undrilled, thereby
providing considerable exploration potential for additional discoveries. IGC
advanced Malmyzh in 2014 by completing drafts of project reports in preparation
for review by the relevant Russian Federation agencies.
Also in 2014, IGC advised EMX that it had acquired the 260
square kilometer Salasinskaya property, located 20 kilometers from IGC's
Shelekhovo project. Salasinskaya and Shelekhovo are 100% controlled by IGC. At
Shelekhovo, historic government exploration surveys identified multiple
occurrences of gold, silver, and copper associated with quartz veining and
alunite (see EMX news release dated November 5, 2013). Salasinskaya is
considered to be the northern extension of the Shelekhovo anomaly cluster, and
is marked by the widespread occurrence of quartz-alunite alteration. The
Salasinskaya and Shelekhovo properties occur along trend to the northeast of
Malmyzh. Together, these three properties cover approximately 800 square
kilometers of exploration ground occurring along a 200 kilometer belt of
prospective Cretaceous-age arc terrane rocks.
Further discussion of IGCs exploration results can be found in
the Companys September 6, 2012 and November 5, 2013 news releases.
Revelo Resources Corp. (formerly Iron Creek Capital
Corp.)
EMX has a strategic investment in Revelo Resources Corp.
(TSX-V: RVL, Revelo), a company focused on the acquisition and exploration of
mineral properties in the prolific metallogenic belts of northern Chile. Revelo
was formed from the merger of Iron Creek Capital Corp. and Polar Star Mining
Corp. in December 2014. Revelo controls approximately 300,000 hectares of 100%
owned exploration tenements. The portfolio is comprised of 16 exploration
projects prospective for copper, gold and silver including three projects
already under option/JV agreements with Kinross Gold (Las Pampas Project),
Newmont Mining (Montezuma Project), and BHP Billiton (Block 2 project). In
addition, Revelo retains one royalty interest in the Victoria Project, an
important copper-gold-silver exploration project in northern Chile.
EMX's investment in Revelo recognizes the untapped value in the
property portfolio, as well as strong synergies with a management team that has
many decades of combined experience in Chile and Latin America.
Page 11
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Strategic Investments.
GEOTHERMAL ROYALTIES
EMX initiated a geothermal energy program in 2010, and acquired
assets in Slovakia and Peru. Eurasian subsequently sold its geothermal assets in
2013 to Starlight Geothermal Ltd. ("SGL") for cash payments, an equity position
in SGL, and gross royalties of 1.0% in Slovakia and 0.5% in Peru from future
geothermal energy production (see Company news release dated August 7, 2013).
SGL advised EMX that it had advanced the geothermal royalty assets in Slovakia
and Peru during 2014 by conducting technical, infrastructure, and market
studies. Slovakia and Peru have proactive stances toward geothermal energy
projects that foster a favorable business climate for development and potential
future revenue streams to EMX.
RESULTS OF OPERATIONS
Year ended December 31, 2014
The net loss for the year ended December 31, 2014
(FY14) was $17,488,041 compared to $13,982,612 for the prior year
(FY13). The loss for FY14 was made up of net royalty income of $801,836 (2013
- $1,280,997) after depletion and related tax, net exploration expenditures of
$3,988,368 (2013 - $3,819,107), general and administrative expenditures of
$5,495,087 (2013 - $5,142,738) and other losses totaling $12,122,893 (2013 -
$8,694,709) offset by a deferred income tax recovery of $3,356,471 (2013 -
$2,392,945). Included in other losses is $7,371,765 (2013 - $4,765,511) in
impairment charges related to the Carlin Trend Royalty Claim Block and related
assets. Some items to note are:
Revenues
In FY14, royalty income was earned for 1,578 (2013 1,912)
ounces of gold totaling $2,247,334 (2013 - $3,102,888) offset by gold tax and
depletion of $1,445,498 (2013 - $1,821,891) for net royalty income of $801,836
(2013 - $1,280,997). The decrease in royalty income was mainly due to a decrease
in ounces produced and a lower realized gold price per ounce in the current
period. In FY14 the average realized gold price was US$1,263 per ounce compared
to US$1,490 for 2013.
Exploration Expenditures
Exploration expenditures (gross) decreased by $2,749,688 in
FY14 and recoveries decreased by $2,918,949 in FY14 for a net increase in
exploration expenditures of $169,261 in 2014. Some of the differences between
2014 and 2013 are as follows:
|
|
In Scandinavia, net expenditures increased by $770,179
compared to the prior period. During FY14, the Company solely funded the
Swedish activities as Antofagasta was previously funding the programs. In
2014, the Company continued to support its exploration programs in
Scandinavia, encouraged by decreasing levels of competition in the
minerals sector, and increasing availability of prospective ground that
could be acquired at low cost. Eurasian spent 2014 filtering and upgrading
its portfolio of assets, adding key copper, gold and polymetallic
exploration projects in both Sweden and Norway while relinquishing less
prospective areas and project interests. At the same time, Eurasian has
continued to actively market its project interests in Scandinavia and will
continue to do so in 2015. Expenditures in 2014 were directed toward
sustaining costs for its offices and personnel, as well as conducting
reconnaissance exploration across the region and hosting potential
partners for site visits to various projects. In an effort to reduce its
operating costs, Eurasian has closed its field offices in Kiruna, Sweden,
where the cost of goods, services and rental properties has been steadily
rising in recent years. Eurasian will relocate its operations to southern
Sweden, where much of its current activities are now focused and operating
costs will be lower. Eurasians staff in Scandinavia is also being
retained on a consulting basis only, in order to keep costs low during
times of inactivity. In early 2015, Eurasian has been conducting winter
exploration programs on various properties, but expects lower expenditures
in comparison with 2014 due to closure of the offices in Kiruna and
overall streamlining of its operations. |
|
|
|
|
|
In the USA, gross expenditures decreased from $3,955,723
to $3,274,015 and recoveries decreased from $3,214,899 to $2,221,662. In
the prior year the Company and partners GeoNovus and Vale undertook active
programs at Silver Bell West, Red Hills, and Copper Basin while there were
no active programs for 2014. Gross expenditures on these three projects
decreased from US$2,300,192 to US$813,193. The decrease in expenditures
was offset by US$480,344 in expenditures related to Kennecott and Savant,
pursuant to the new exploration and option agreements on the Lomita
Negris, Buckhorn Creek, Fraser Creek, and Jasper Canyon properties. The
Americas continue to represent a potentially high value, low cost
exploration venue coupled with a large list of prospective partners to
conduct EMXs business model. Despite tough market conditions, base-metal
projects still appear to be sought after and BCE is in discussions with
several groups regarding its properties. A major focus of BCE for the year
will remain to partner available assets, reduce holding costs, and recover
a portion of its burn. |
Page 12
|
|
|
|
|
In Turkey, gross expenditures decreased by $700,269,
while net expenditures decreased by $328,943. In 2014, the Turkish
Business Unit continued to be a key value driver for Eurasian. Partner
funded programs continued to advance projects in the Eurasian portfolio,
with all 7 projects in Turkey operating under partnerships in 2014.
Eurasians share of expenditures in Turkey related only to sustaining
costs for the Ankara office, maintenance of the Turkish staff, and ongoing
reconnaissance exploration programs. In 2015, Eurasian will continue to
reduce expenditures. Given the stages of advancement for many of the
exploration projects in the Turkish portfolio, Eurasian will now change
its focus from early stage, grass-roots style generative work, to working
with partners on advancing its projects and monitoring its royalty
interests throughout the country. This work will be managed by Dama
Engineering (Dama), a well-respected consultant and engineering firm in
the Turkish mining community. Eurasian views its partnership with Dama as
a key step in the evolution of its business interests in Turkey. As a
result, Eurasian will close its exploration office in Ankara, with its
commercial enterprise now managed from the Dama office in Ankara.
|
|
|
|
|
|
In the Asia Pacific region, net expenditures for 2014
totaled $627,496 compared to $549,109 in 2013. As is the case with other
business units, Eurasian is effecting strategic changes to its business
approach in Australia and New Zealand. Largely as a result of the
challenging market conditions, Eurasian has been simultaneously acquiring
low cost exploration projects as other companies relinquish key land
positions, while at the same time enacting its own cost savings measures.
Key steps in 2014 were the consolidation of the Koonenberry project in
Australia to a royalty property (see Company News Release dated February
19, 2014), and the partnership of the Neavesville project in New Zealand
(see Company News Release dated November 13, 2014). Prior to partnership,
Eurasian had conducted drilling at Neavesville in early 2014, and had
negotiated a comprehensive access agreement with one of the local Maori
communities, providing ongoing access, and exploration and development
rights across much of the Neavesville license. Along with expenditures
related to its ongoing reconnaissance exploration efforts, these led to
outlays of approximately $650,000 for 2014. With partnership of the
Neavesville and Koonenberry projects, Eurasians projected expenditures
for Australia-New Zealand in 2015 will be markedly lower than 2014.
|
General and Administrative
General and administrative expenses
(G&A) of $5,495,087 were incurred. The Companys business model is people
intensive. Included in salaries and consultants of G&A are the Companys
technical services and GIS group, in-house legal counsel and deal flow marketing
team, senior management including the General Manger of Exploration, Chief
Geologist, and executive management. G&A costs (before share-based payments)
have decreased each year since 2012 and we continue to strive to find areas to
further streamline and reduce the expenses of our business.
|
|
Administrative and office expenses of $926,095 remained
consistent with FY13 ($982,239). The Company has a corporate office in
Vancouver which supports its finance, regulatory and administrative team.
It also has an office in Littleton, Colorado which supports the
exploration, technical, investor relations and deal flow aspects of the
business. |
|
|
|
|
|
Investor relations expenditures of $292,017 decreased
slightly from $310,203 in FY13. The Company attends select industry trade
shows and supports lines of communication to current and potential
investors. Costs in the coming year are expected to be lower as the
Company is more selective in its investor relations activities. |
|
|
|
|
|
Professional fees decreased by $105,556 to $457,963 and
cover mainly external legal and audit and tax fees. The company has been
able to decrease its external legal fees by the addition of its chief
legal officer included in salaries and consultants.
|
Page 13
|
|
Share-based payments include performance stock grants
issued and stock options granted. The current year saw an increase in
share-based payments from $527,495 to $1,030,411 as a result of the
granting of stock options in 2014, whereas there were no stock options
granted in 2013. |
|
|
|
|
|
Salaries and consultants are the largest expense in
G&A. This expense category encompasses a broad range of management,
technical and project development and marketing support. It should be
noted that many of our personnel expenditures companywide are denominated
in United States dollars (USD) and the increase in the value of the USD
compared to the Canadian dollar, which is our reporting currency, will
increase expenditures. |
A breakdown of this category is as
follows:
|
Salaries and consultants |
|
FY14 |
|
|
FY13 |
|
|
Senior management |
|
1,148,413 |
|
|
1,097,684 |
|
|
In-house legal and deal flow marketing |
|
436,428 |
|
|
397,443 |
|
|
Technical services |
|
321,911 |
|
|
264,918 |
|
|
Directors fees* |
|
168,496 |
|
|
175,798 |
|
|
Administrative support & other** |
|
115,668 |
|
|
307,189 |
** |
|
|
$ |
2,190,916 |
|
$ |
2,243,032 |
|
*Directors fees include $60,000 per
annum paid to the Company's non-Executive Chairman, who does not receive the
fees paid to the other independent directors **includes severance payments
relating to reduction in workforce
In the coming year, the Company will continue to closely
monitor all expenditure areas in the Company, and make changes proactively as
necessary.
Other
|
|
As a result of the decline in the production of gold from
the Carlin Trend Royalty Claim Block, the Company revised its estimated
annual gold production over the expected 11 year mine life and updated the
NAV and cash flow multiples based on observed market conditions. As a
result of these changes, the Company recorded $7,371,765 (2013 -
$4,765,511) in impairment charges related to the Carlin Trend Royalty
Claim Block and related assets that make up the same cash-generating unit
(CGU). |
|
|
|
|
|
As a result of the impairment noted above, the Company
applied a one-step approach and determined the Carlin Trend Royalty Claim
Block and the related assets within the same CGU to be impaired. The loss
was first applied to reduce the asset component and any excess to goodwill
within the CGU. As result, the Company has written down the goodwill by
$2,248,057 (2013 - $Nil). |
|
|
|
|
|
The Company recorded a deferred income tax recovery of
$3,356,471 compared to $2,392,945 in 2013, and a net decrease in deferred
tax liabilities of $2,493,010 (2013 - $1,779,707). A significant component
of the deferred tax recovery and decrease in the related liability was the
royalty impairment. |
|
|
|
|
|
The Companys share of the net loss related to its 42.34%
equity investment in IG Copper for the year ended December 31, 2014 was
$1,086,649 (2013 - $2,093,823). |
Three months ended December 31, 2014
The net loss for the three months ended December 31, 2014
(Q4-2014) was $11,140,366 compared to $2,140,328 for the prior years
comparative quarter (Q4-2013). The loss for Q4-2014 was made up of $930,717
(Q4-2013 - $942,488) in net exploration expenditures and $1,289,833 (Q4-2013 -
$1,092,920) in general and administrative expenses offset by other losses
totaling $11,594,359 (Q4-2013 loss of $1,088,352) and $127,331 (Q4-2013 -
$529,453) in net royalty income. The reasons for the significant changes in the
three months ended December 31, 2014 are consistent with the items noted above
for the year ended December 31, 2014 including the impairment to the royalty
interest of $7,371,765 (Q4-2013-$Nil) and write-down of goodwill of $2,248,057
(Q4-2013-$Nil).
Page 14
LIQUIDITY AND CAPITAL RESOURCES
The Companys working capital position at December 31, 2014
was $7,096,916 (December 31, 2013 - $14,217,999). With its current plans for
the year and the budgets associated with those plans, in order to continue
funding its administrative and exploration expenditures for beyond twelve months
from the date of this MD&A, the company will need to obtain additional cash
and anticipates either financing or selling one or more of its assets.
Historically, the Company obtains its cash requirements through the issuance of
shares, funding from joint venture partners, royalty income, attracting
additional joint venture partners and the sale of available investments and
marketable securities all of which are used to finance further property
acquisitions, explore and develop its mineral properties, and obtain strategic
investments.
Operating Activities
Cash used in operations was $4,781,944 for the year ended
December 31, 2014 (2013 - $5,785,887) and represents expenditures
primarily on mineral property exploration and general and administrative expense
for both periods, offset by royalty income received in the period.
Financing Activities
The Company received $Nil (2013 - $361,600) from the exercise
of stock options.
Investing Activities
Some of the significant investment activities during the year
ended December 31, 2014 are:
- |
The Company purchased strategic investments in
Revelo Resources Corp. for $500,000 (2013 - $480,000) |
- |
The Company invested $1,063,036 in IGC (2013 -
$2,774,570) |
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
ANNUAL INFORMATION
As at |
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
Financial positions |
|
|
|
|
|
|
|
|
|
Working capital |
$ |
7,096,916 |
|
$ |
14,217,999 |
|
$ |
22,702,855 |
|
Exploration and evaluation assets (net) |
|
2,379,886 |
|
|
3,031,368 |
|
|
4,940,941 |
|
Royalty interest |
|
29,327,960 |
|
|
35,063,725 |
|
|
38,738,592 |
|
Total assets |
|
54,292,093 |
|
|
70,073,220 |
|
|
82,475,787 |
|
Share capital |
|
116,766,102 |
|
|
116,151,675 |
|
|
114,414,001 |
|
Deficit |
|
(87,430,021 |
) |
|
(69,981,980 |
) |
|
(55,999,368 |
)
|
|
|
Year ended |
|
|
Year ended |
|
|
Year ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
Financial results |
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
2,247,334 |
|
$ |
3,102,888 |
|
$ |
1,750,975 |
|
Exploration expenditures (net) |
|
3,988,368 |
|
|
3,839,703 |
|
|
8,330,201 |
|
Net loss |
|
(17,448,041 |
) |
|
(13,982,612 |
) |
|
(20,916,730 |
) |
Net loss per
share - basic and diluted |
|
(0.24 |
) |
|
(0.19 |
) |
|
(0.35 |
) |
The year ended December 31, 2014 saw an impairment charge of
$7,371,765 (2013 - $4,765,511) on the royalty interests, a related write-down of
goodwill of $2,248,057 (2013 - $Nil), and a recovery of $3,356,471 (2013 -
$2,392,945) of deferred income taxes which significantly increased the net loss
for the current year.
Page 15
QUARTERLY INFORMATION
Fiscal quarter ended |
|
December 31, 2014 |
|
|
September 30, 2014 |
|
|
June 30, 2014 |
|
|
March 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
466,862 |
|
$ |
558,091 |
|
$ |
567,663 |
|
$ |
654,718 |
|
Exploration expenditures |
|
1,116,641 |
|
|
1,723,584 |
|
|
2,566,990 |
|
|
1,459,499 |
|
Exploration recoveries |
|
(185,924 |
) |
|
(609,039 |
) |
|
(1,651,157 |
) |
|
(432,226 |
) |
Share-based payments |
|
70,740 |
|
|
80,984 |
|
|
826,935 |
|
|
51,752 |
|
Net loss for the period |
|
(11,140,366 |
) |
|
(1,345,463 |
) |
|
(2,794,687 |
) |
|
(2,167,525 |
) |
Basic and
diluted net loss per share |
|
(0.15 |
) |
|
(0.02 |
) |
|
(0.04 |
) |
|
(0.03 |
) |
Fiscal quarter ended |
|
December 31, 2013 |
|
|
September 30, 2013 |
|
|
June 30, 2013 |
|
|
March 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
985,498 |
|
$ |
601,860 |
|
$ |
577,558 |
|
$ |
937,972 |
|
Exploration expenditures |
|
1,508,983 |
|
|
2,298,244 |
|
|
2,929,328 |
|
|
2,879,847 |
|
Exploration recoveries |
|
(545,899 |
) |
|
(1,446,828 |
) |
|
(2,109,651 |
) |
|
(1,674,321 |
) |
Share-based payments |
|
54,539 |
|
|
150,993 |
|
|
168,403 |
|
|
153,560 |
|
Net loss for the period |
|
(2,140,328 |
) |
|
(6,635,561 |
) |
|
(1,973,663 |
) |
|
(3,233,060 |
) |
Basic and
diluted net loss per share |
|
(0.03 |
) |
|
(0.09 |
) |
|
(0.03 |
) |
|
(0.04 |
) |
Factors that cause fluctuations in the Companys quarterly
results include the timing of stock option and share grants, foreign exchange
gains and losses related to the Companys holding of United States dollar
denominated working capital items, gains or losses on investments held in its
portfolio, along with varying levels of operations activities on its exploration
projects and due diligence undertaken on new prospects.
RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances
relating to key management personnel and directors were as follows:
|
|
|
|
|
Share-based |
|
|
|
|
For the year ended December 31, 2014 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
President, CEO and Director |
$ |
442,597 |
|
$ |
122,945 |
|
$ |
565,542 |
|
COO and Director |
|
221,298 |
|
|
63,922 |
|
|
285,220 |
|
CFO |
|
- |
|
|
38,895 |
|
|
38,895 |
|
Corporate Secretary |
|
- |
|
|
16,642 |
|
|
16,642 |
|
Chief Legal Officer |
|
218,641 |
|
|
61,086 |
|
|
279,726 |
|
Directors* |
|
168,496 |
|
|
183,513 |
|
|
352,009 |
|
Seabord Services Corp. (1) |
|
418,800 |
|
|
- |
|
|
418,800 |
|
Total |
$ |
1,469,832 |
|
$ |
487,004 |
|
$ |
1,956,835 |
|
*Directors fees include $60,000 per annum paid to the Companys
non-Executive Chairman, who does not receive the fees paid to the other
independent directors.
|
|
|
|
|
Share-based |
|
|
|
|
For the year ended December 31, 2013 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
President, CEO and Director
|
$ |
412,188
|
|
$ |
174,890
|
|
$ |
587,078
|
|
COO and Director |
|
256,957 |
|
|
65,479 |
|
|
322,436 |
|
CFO |
|
- |
|
|
35,126 |
|
|
35,126 |
|
Corporate Secretary |
|
- |
|
|
13,520 |
|
|
13,520 |
|
Chief Legal Officer |
|
211,975 |
|
|
85,104 |
|
|
297,079 |
|
Directors |
|
175,798 |
|
|
35,223 |
|
|
211,021 |
|
Seabord Services Corp. (1) |
|
447,900 |
|
|
- |
|
|
447,900 |
|
Total |
$ |
1,504,818 |
|
$ |
409,343 |
|
$ |
1,914,161 |
|
Page 16
Related Party Assets and Liabilities |
Service or Term |
|
31-Dec-14 |
|
|
31-Dec-13 |
|
Amounts due from (to): |
|
|
|
|
|
|
|
President, CEO and Director |
Expense Reimbursement |
$ |
7,713 |
|
$ |
1,130 |
|
COO and Director |
Expense Reimbursement |
|
186 |
|
|
526 |
|
Chief Legal Officer |
Expense Reimbursement |
|
165 |
|
|
943 |
|
Directors |
Fees and Expense |
|
|
|
|
|
|
|
Reimbursement |
|
29,612 |
|
|
36,584 |
|
Seabord Capital
Corp. |
Expense Reimbursement |
|
- |
|
|
- |
|
|
|
$ |
37,676 |
|
$ |
39,183 |
|
(1)Seabord Services Corp. (Seabord) is a
management services company controlled by the Chairman of the Board. Seabord
provides a Chief Financial Officer, a Corporate Secretary, accounting staff,
administration staff and office space to Eurasian. The Chief Financial Officer
and Corporate Secretary are employees of Seabord and are not paid directly by
Eurasian.
RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
The Company considers items included in shareholders equity as
capital. The Companys objective when managing capital is to safeguard the
Companys ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders.
The Company currently has continuing royalty revenues to fund a
portion of ongoing costs. In order to fund future projects and pay for
administrative costs, the Company will spend its existing working capital and
raise additional funds as needed. As at December 31, 2014, the Company had
working capital of $7,096,916 (2013 - $14,217,999). Management will need
additional sources of working capital to continue its currently planned programs
beyond twelve months, by issuing new shares or the sale of assets. The Company
manages the capital structure and makes adjustments in light of changes in
economic conditions and the risk characteristics of the underlying assets.
In order to maintain or adjust the capital structure, the
Company may issue new shares through public and/or private placements, sell
assets, or return capital to shareholders. The Company is not subject to
externally imposed capital requirements.
Fair Value
The Company characterizes inputs used in determining fair value
using a hierarchy that prioritizes inputs depending on the degree to which they
are observable. The three levels of the fair value hierarchy are as follows:
|
|
Level 1: inputs represent quoted prices 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 that are less observable, unavoidable or
where the observable data does not support the majority of the
instruments fair value. |
As at December 31, 2014, there were no changes in the levels in
comparison to December 31, 2013. Financial instruments measured at fair value on
the statement of financial position are summarized in levels of the fair value
hierarchy as follows:
Assets |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash equivalents |
$ |
6,450,308 |
|
$ |
- |
|
$ |
- |
|
$ |
6,450,308 |
|
Restricted cash |
|
230,144 |
|
|
- |
|
|
- |
|
|
230,144 |
|
Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
investments |
|
743,786 |
|
|
- |
|
|
- |
|
|
743,786 |
|
Available for sale investments |
|
299,524 |
|
|
- |
|
|
- |
|
|
299,524 |
|
Total |
$ |
7,723,762 |
|
$ |
- |
|
$ |
- |
|
$ |
7,723,762 |
|
Page 17
The carrying value of receivables, accounts payable and accrued
liabilities, and advances from joint venture partners approximate their fair
value because of the short-term nature of these instruments. The Company
assessed that there were no indicators of impairment for these financial
instruments.
The Companys financial instruments are exposed to certain
financial risks, including credit risk, interest rate risk, market risk,
liquidity risk and currency risk.
Credit Risk
The Company is exposed to credit risk by holding cash and cash
equivalents and receivables. This risk is minimized by holding a significant
portion of the funds in Canadian banks. The Companys exposure with respect to
its receivables is primarily related to royalty streams and recovery of
exploration evaluation costs.
Interest Rate Risk
The Company is exposed to interest rate risk because of
fluctuating interest rates. Management believes the interest rate risk is low
given the current low global interest rate environment. Fluctuations in market
rates is not expected to have a significant impact on the Companys operations
due to the short term to maturity and no penalty cashable feature of its cash
equivalents.
Market Risk
The Company is exposed to market risk because of the
fluctuating values of its publicly traded marketable securities and other
company investments. The Company has no control over these fluctuations and does
not hedge its investments. Based on the December 31, 2014 portfolio
values, a 10% increase or decrease in effective market values would increase or
decrease net shareholders equity by approximately $104,000.
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet
its financial obligations as they come due. The Company manages this risk by
careful management of its working capital to ensure the Companys expenditures
will not exceed available resources.
Commodity Risk
The Companys royalty revenues are derived from a royalty
interest and are based on the extraction and sale of precious and base minerals
and metals. Factors beyond the control of the Company may affect the
marketability of metals discovered. Metal prices have historically fluctuated
widely. Consequently, the economic viability of the Companys royalty interests
cannot be accurately predicted and may be adversely affected by fluctuations in
mineral prices.
Currency Risk
Foreign exchange risk arises when future commercial
transactions and recognized assets and liabilities are denominated in a currency
that is not the entitys functional currency. The Company operates in Canada,
Haiti, Turkey, Georgia, Sweden, Australia and the U.S.A. The Company funds cash
calls to its subsidiary companies outside of Canada in USD and a portion of its
expenditures are also incurred in local currencies.
Page 18
The exposure of the Companys cash and cash equivalents,
receivables, and accounts payable and accrued liabilities to foreign exchange
risk as at December 31, 2014 is as follows:
Accounts |
|
US dollars |
|
Cash and cash equivalents |
$ |
1,941,359 |
|
Receivables |
|
506,433 |
|
Accounts payable and accrued liabilities |
|
(543,983 |
) |
Net exposure |
|
1,903,809 |
|
Canadian dollar equivalent |
$ |
2,213,558 |
|
The balances noted above reflect the USD balances held within
the parent company and any wholly owned subsidiaries. Balances denominated in
another currency other than the functional currency held in foreign operations
are considered immaterial.
Based on the above net exposure as at December 31, 2014, and
assuming that all other variables remain constant, a 1% depreciation or
appreciation of the Canadian dollar against the US dollar would result in an
increase/decrease of approximately $22,000 in the Companys pre-tax profit or
loss.
Critical Accounting Judgments and Significant Estimates and
Uncertainties
The preparation of the consolidated financial statements
requires management to make judgments and estimates and form assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, and the reported revenue and expenses during the periods
presented therein. On an ongoing basis, management evaluates its judgments and
estimates in relation to assets, liabilities, royalty revenues and expenses.
Management bases its judgments and estimates on historical experience and on
other various factors it believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions and
conditions.
The Company has identified the following critical accounting
policies in which significant judgments, estimates and assumptions are made and
where actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results or the financial
position reported in future periods.
|
a) |
Royalty Interest and Related
Depletion |
In accordance with the Companys accounting policy, royalty
interests are evaluated on a periodic basis to determine whether there are any
indications of impairment. If any such indication exists, a formal estimate of
recoverable amount is performed and an impairment loss recognized to the extent
that carrying amount exceeds recoverable amount. The recoverable amount of a
royalty asset is measured at the higher of fair value less costs to sell and
value in use. The determination of fair value and value in use requires
management to make estimates and assumptions about expected production and sales
volumes, commodity prices (considering current and historical prices, price
trends and related factors), and reserves. These estimates and assumptions are
subject to risk and uncertainty; hence there is a possibility that changes in
circumstances will alter these projections, which may impact the recoverable
amount of the assets. In such circumstances, some or all of the carrying value
of the assets may be further impaired or the impairment charge reduced with the
impact recorded in profit or loss.
Goodwill represents the excess of the price paid for the
acquisition of a consolidated entity over the fair value of the net identifiable
tangible and intangible assets and liabilities acquired. Goodwill is allocated
to the cash generating unit to which it relates.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount. The assessment
of the recoverable amount used in the goodwill impairment analysis is subject to
similar judgments and estimates as described above for property, plant and
equipment and royalty properties.
|
c) |
Exploration and Evaluation
Assets |
Page 19
Recorded costs of exploration and evaluation assets are not
intended to reflect present or future values of exploration and evaluation
assets. The recorded costs are subject to measurement uncertainty and it is
reasonably possible, based on existing knowledge, that a change in future
conditions could require a material change in the recognized amount.
The Companys accounting policy for taxation requires
managements judgment as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgment is also required in assessing
whether deferred tax assets and certain deferred tax liabilities are recognized
on the statements of financial position.
Deferred tax assets, including those arising from unused tax
losses, capital losses and temporary differences, are recognized only where it
is considered probable that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences caused principally by the expected royalty
revenues generated by the royalty property are recognized unless expected tax
losses applicable to the royalty stream are sufficient to offset the taxable
income and therefore, taxable income is not expected to occur in the foreseeable
future. Assumptions about the generation of future taxable profits depend on
managements estimates of future cash flows. These depend on estimates of future
production and sales volumes, commodity prices, and reserves. Judgments are also
required about the application of income tax legislation in foreign
jurisdictions. These judgments and assumptions are subject to risk and
uncertainty, hence there is a possibility that changes in circumstances will
alter expectations, which may impact the amount of deferred tax assets and
deferred tax liabilities recognized on the balance sheet and the amount of other
tax losses and temporary differences not yet recognized. In such circumstances,
some or the entire carrying amount of recognized deferred tax assets and
liabilities may require adjustment, resulting in a corresponding credit or
charge to profit or loss.
The Company records its interest in associated companies as
equity investments. The Company has a minority position on the Boards of its
associated companies, and does not control operational decisions. The Companys
judgment is that it has significant influence, but not control and accordingly
equity accounting is appropriate.
RISKS AND UNCERTAINTIES
Mineral Property Exploration Risks
The business of mineral exploration and extraction involves a
high degree of risk. Few properties that are explored ultimately become
producing mines. At present, none of the Companys properties has a known
commercial ore deposit. The main operating risks include ensuring ownership of
and access to mineral properties by confirmation that option agreements, claims
and leases are in good standing and obtaining permits for drilling and other
exploration activities.
Eurasian is currently earning an interest in some of its
properties through option agreements and acquisition of title to the properties
is only completed when the option conditions have been met. These conditions
generally include making property payments, incurring exploration expenditures
on the properties and can include the satisfactory completion of pre-feasibility
studies. If the Company does not satisfactorily complete these option conditions
in the time frame laid out in the option agreements, the Companys title to the
related property will not vest and the Company will have to write-off any
previously capitalized costs related to that property.
The market prices for precious and base metals can be volatile
and there is no assurance that a profitable market will exist for a production
decision to be made or for the ultimate sale of the metals even if commercial
quantities of precious and other metals are discovered.
Revenue and Royalty Risks
Eurasian cannot predict future revenues or operating results of
the area of mining activity. Management expects future revenues from the Carlin
Trend Royalty Claim Block, including the Leeville royalty property in Nevada, to
fluctuate depending on the level of future production and the price of gold.
Specifically, there is a risk that the operator of the property, Newmont Mining
Corporation (Newmont), will cease to operate in the Companys area of
interest, therefore there can be no assurance that ongoing royalty payments will
materialize or be received by Eurasian.
Page 20
Financing and Share Price Fluctuation Risks
Eurasian has limited financial resources, and has no assurance
that additional funding will be available for further exploration and
development of its projects. Further exploration and development of one or more
of the Companys projects may be dependent upon the Companys ability to obtain
financing through equity or debt financing or other means. Failure to obtain
this financing could result in delay or indefinite postponement of further
exploration and development of its projects which could result in the loss of
one or more of its properties.
The securities markets can experience a high degree of price
and volume volatility, and the market price of securities of many companies,
particularly those considered to be development stage companies such as
Eurasian, may experience wide fluctuations in share prices which will not
necessarily be related to their operating performance, underlying asset values
or prospects. There can be no assurance that share price fluctuations will not
occur in the future, and if they do occur, the severity of the impact on
Eurasians ability to raise additional funds through equity issues.
Foreign Countries and Political Risks
The Company operates in countries with varied political and
economic environments. As such, it is subject to certain risks, including
currency fluctuations and possible political or economic instability which may
result in the impairment or loss of mineral concessions or other mineral rights,
opposition from environmental or other non-governmental organizations, and
mineral exploration and mining activities may be affected in varying degrees by
political stability and government regulations relating to the mineral
exploration and mining industry. Any changes in regulations or shifts in
political attitudes are beyond the control of the Company and may adversely
affect its business. Exploration and development may be affected in varying
degrees by government regulations with respect to restrictions on future
exploitation and production, price controls, export controls, foreign exchange
controls, income taxes, expropriation of property, environmental legislation and
mine and site safety.
Notwithstanding any progress in restructuring political
institutions or economic conditions, the present administration, or successor
governments, of some countries in which Eurasian operates may not be able to
sustain any progress. If any negative changes occur in the political or economic
environment of these countries, it may have an adverse effect on the Companys
operations in those countries. The Company does not carry political risk
insurance.
Competition
The Company competes with many companies that have
substantially greater financial and technical resources than it in the
acquisition and development of its projects as well as for the recruitment and
retention of qualified employees.
Return on Investment Risk
Investors cannot expect to receive a dividend on an investment
in the Common Shares in the foreseeable future, if at all.
No Assurance of Titles or Borders
The acquisition of the right to exploit mineral properties is a
very detailed and time consuming process. There can be no guarantee that the
Company has acquired title to any such surface or mineral rights or that such
rights will be obtained in the future. To the extent they are obtained, titles
to the Companys surface or mineral properties may be challenged or impugned and
title insurance is generally not available. The Companys surface or mineral
properties may be subject to prior unregistered agreements, transfers or claims
and title may be affected by, among other things, undetected defects. Such third
party claims could have a material adverse impact on the Companys operations.
Currency Risks
The Companys equity financings are sourced in Canadian dollars
but much of its expenditures are in local currencies or U.S. dollars. At this
time, there are no currency hedges in place. Therefore, a weakening of the
Canadian dollar against the U.S. dollar or local currencies could have an
adverse impact on the amount of exploration funds available and work conducted.
Page 21
Joint Venture and Exploration Funding Risk
Eurasians strategy is to seek exploration and joint venture
partners through options and joint ventures to fund exploration and project
development. The main risk of this strategy is that the funding parties may not
be able to raise sufficient capital in order to satisfy exploration and other
expenditure terms in a particular joint venture agreement. As a result,
exploration and development of one or more of the Companys property interests
may be delayed depending on whether Eurasian can find another party or has
enough capital resources to fund the exploration and development on its own.
Insured and Uninsured Risks
In the course of exploration, development and production of
mineral properties, the Company is subject to a number of risks and hazards in
general, including adverse environmental conditions, operational accidents,
labour disputes, unusual or unexpected geological conditions, changes in the
regulatory environment and natural phenomena such as inclement weather
conditions, floods, and earthquakes. Such occurrences could result in the damage
to the Companys property or facilities and equipment, personal injury or death,
environmental damage to properties of the Company or others, delays, monetary
losses and possible legal liability.
Although the Company may maintain insurance to protect against
certain risks in such amounts as it considers reasonable, its insurance may not
cover all the potential risks associated with its operations. The Company may
also be unable to maintain insurance to cover these risks at economically
feasible premiums or for other reasons. Should such liabilities arise, they
could reduce or eliminate future profitability and result in increased costs,
have a material adverse effect on the Companys results and a decline in the
value of the securities of the Company.
Some work is carried out through independent consultants and
the Company requires all consultants to carry their own insurance to cover any
potential liabilities as a result of their work on a project.
Environmental Risks and Hazards
The activities of the Company are subject to environmental
regulations issued and enforced by government agencies. Environmental
legislation is evolving in a manner that will require stricter standards and
enforcement and involve increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects, and a heightened
degree of responsibility for companies and their officers, directors and
employees. There can be no assurance that future changes in environmental
regulation, if any, will not adversely affect Eurasians operations.
Environmental hazards may exist on properties in which the Company holds
interests which are unknown to the Company at present.
Fluctuating Metal Prices
Factors beyond the control of the Company have a direct effect
on global metal prices, which have fluctuated widely, particularly in recent
years, and there is no assurance that a profitable market will exist for a
production decision to be made or for the ultimate sale of the metals even if
commercial quantities of precious and other metals are discovered on any of
Eurasians properties. Consequently, the economic viability of any of the
Companys exploration projects and its ability to finance the development of its
projects cannot be accurately predicted and may be adversely affected by
fluctuations in metal prices.
Extensive Governmental Regulation and Permitting
Requirements Risks
Exploration, development and mining of minerals are subject to
extensive laws and regulations at various governmental levels governing the
acquisition of the mining interests, prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and
other matters. In addition, the current and future operations of Eurasian, from
exploration through development activities and production, require permits,
licenses and approvals from some of these governmental authorities. Eurasian has
obtained all government licenses, permits and approvals necessary for the
operation of its business to date. However, additional licences, permits and
approvals may be required. The failure to obtain any licenses, permits or
approvals that may be required or the revocation of existing ones would have a
material and adverse effect on Eurasian, its business and results of operations.
Page 22
Failure to comply with applicable laws, regulations and permits
may result in enforcement actions thereunder, including orders issued by
regulatory or judicial authorities requiring Eurasians operations to cease or
be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment or remedial actions. Eurasian
may be required to compensate those suffering loss or damage by reason of its
mineral exploration activities and may have civil or criminal fines or penalties
imposed for violations of such laws, regulations and permits. Any such events
could have a material and adverse effect on Eurasian and its business and could
result in Eurasian not meeting its business objectives.
Key Personnel Risk
Eurasians success is dependent upon the performance of key
personnel working in management and administrative capacities or as consultants.
The loss of the services of senior management or key personnel could have a
material and adverse effect on the Company, its business and results of
operations.
Conflicts of Interest
In accordance with the laws of British Columbia, the directors
and officers of a corporation are required to act honestly, in good faith and in
the best interests of the corporation. Eurasians directors and officers may
serve as directors or officers of other companies or have significant
shareholdings in other resource companies and, to the extent that such other
companies may participate in ventures in which the Company may participate, such
directors and officers may have a conflict of interest in negotiating and
concluding terms respecting the extent of such participation. If such a conflict
of interest arises at a meeting of the Companys directors, a director with such
a conflict will abstain from voting for or against the approval of such
participation or such terms.
Passive Foreign Investment Company
U.S. investors in common shares should be aware that based on
current business plans and financial expectations, Eurasian currently expects
that it will be a passive foreign investment company (PFIC) for the year
ending December 31, 2014 and expects to be a PFIC in future tax years. If
Eurasian is a PFIC for any year during a U.S. shareholders holding period, then
such U.S. shareholder generally will be required to treat any gain realized upon
a disposition of common shares, or any so-called excess distribution received
on its common shares, as ordinary income, and to pay an interest charge on a
portion of such gain or distributions, unless the shareholder makes a timely and
effective qualified electing fund election (QEF Election) or a
mark-to-market election with respect to the common shares. A U.S. shareholder
who makes a QEF Election generally must report on a current basis its share of
Eurasians net capital gain and ordinary earnings for any year in which Eurasian
is a PFIC, whether or not Eurasian distributes any amounts to its shareholders.
For each tax year that Eurasian qualifies as a PFIC, Eurasian intends to: (a)
make available to U.S. shareholders, upon their written request, a PFIC Annual
Information Statement as described in Treasury Regulation Section 1.1295 -1(g)
(or any successor Treasury Regulation) and (b) upon written request, use
commercially reasonable efforts to provide all additional information that such
U.S. shareholder is required to obtain in connection with maintaining such QEF
Election with regard to Eurasian. Eurasian may elect to provide such information
on its website www.EurasianMinerals.com.
Corporate Governance and Public Disclosure Regulations
The Company is subject to changing rules and regulations
promulgated by a number of United States and Canadian governmental and
self-regulated organizations, including the United States Securities and
Exchange Commission (SEC), the British Columbia and Alberta Securities
Commissions, the NYSE MKT and the TSX-V. These rules and regulations continue to
evolve in scope and complexity and many new requirements have been created,
making compliance more difficult and uncertain. The Companys efforts to comply
with the new rules and regulations have resulted in, and are likely to continue
to result in, increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities to compliance
activities.
Internal Controls over Financial Reporting
Applicable securities laws require an annual assessment by
management of the effectiveness of the Companys internal control over financial
reporting. The Company may, in the future, fail to achieve and maintain the
adequacy of its internal control over financial reporting, as such standards are
modified, supplemented or amended from time to time, and the Company may not be
able to ensure that it can conclude on an ongoing basis that it has effective
internal control over financial reporting. Future acquisitions may provide the
Company with challenges in implementing the required processes, procedures and
controls in its acquired operations. Acquired corporations may not have
disclosure controls and procedures or internal control over financial reporting
that are as thorough or effective as those required by securities laws currently
applicable to the Company.
Page 23
No evaluation can provide complete assurance that the Companys
internal control over financial reporting will detect or uncover all failures of
persons within the Company to disclose material information otherwise required
to be reported. The effectiveness of the Companys controls and procedures could
also be limited by simple errors or faulty judgments. In addition, should the
Company expand in the future, the challenges involved in implementing
appropriate internal control over financial reporting will increase and will
require that the Company continue to improve its internal control over financial
reporting.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management is responsible for establishing and maintaining
disclosure controls and procedures, which provide reasonable assurance that
material information relating to the Company and its subsidiaries is accumulated
and communicated to management to allow timely decisions regarding required
disclosure. Management has evaluated the effectiveness of its disclosure
controls and procedures as of December 31, 2014 and believes its
disclosure controls and procedures are effective.
Internal Control over Financial Reporting
The Companys management, with the participation of its CEO and
CFO, are responsible for establishing a system of internal control over
financial reporting to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS as issued by the IASB. Management evaluated the
Companys internal control over financial reporting at December 31, 2014
and concludes that it is effective and that no material weaknesses were
identified.
OUTSTANDING SHARE DATA
At March 26, 2015, the Company had 73,419,710 common shares
issued and outstanding. There were also 5,343,200 stock options outstanding with
expiry dates ranging from May 7, 2015 to December 22, 2019, and 7,255,900
warrants outstanding with expiry dates ranging from November 8, 2015 to November
12, 2015.
Page 24
Form 52-109F1
Certification of Annual Filings
Full Certificate
I, David M. Cole, Chief Executive Officer of Eurasian
Minerals Inc., certify the following:
1. |
Review: I have reviewed the AIF, if any,
annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by
reference in the AIF (together, the annual filings) of Eurasian
Minerals Inc. (the issuer) for the financial year ended December
31, 2014. |
|
|
|
|
2. |
No misrepresentations: Based on my
knowledge, having exercised reasonable diligence, the annual 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 annual filings. |
|
|
|
|
3. |
Fair presentation: Based on my knowledge,
having exercised reasonable diligence, the annual financial statements
together with the other financial information included in the annual
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 annual filings. |
|
|
|
|
4. |
Responsibility: The issuers other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109 Certification of Disclosure in Issuers
Annual and Interim Filings, for the issuer. |
|
|
|
|
5. |
Design: Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuers other certifying
officer(s) and I have, as at the financial year end |
|
|
|
|
|
(a) |
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that |
|
|
|
|
|
|
(i) |
material information relating to the issuer is made known
to us by others, particularly during the period in which the annual
filings are being prepared; and |
|
|
|
|
|
|
(ii) |
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and |
|
|
|
|
|
(b) |
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuers GAAP. |
|
|
|
|
5.1 |
Control framework: The control framework
the issuers other certifying officer(s) and I used to design the issuers
ICFR is Internal Control Integrated Framework published by the Committee
of Sponsoring Organizations of the Treadway Commission. |
|
|
|
|
5.2 |
ICFR material weakness relating to design:
N/A |
|
|
|
|
5.3 |
Limitation on scope of design:
N/A |
|
|
|
|
6. |
Evaluation: The issuers other certifying
officer(s) and I have |
1
|
(a) |
evaluated, or caused to be evaluated under our
supervision, the effectiveness of the issuers DC&P at the financial
year end and the issuer has disclosed in its annual MD&A our
conclusions about the effectiveness of DC&P at the financial year end
based on that evaluation; and |
|
|
|
|
|
|
(b) |
evaluated, or caused to be evaluated under our
supervision, the effectiveness of the issuers ICFR at the financial year
end and the issuer has disclosed in its annual MD&A |
|
|
|
|
|
|
|
(i) |
our conclusions about the effectiveness of ICFR at the
financial year end based on that evaluation; and |
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(ii) |
for each material weakness relating to operation existing
at the financial year end |
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|
|
|
|
(A) |
a description of the material weakness; |
|
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|
(B) |
the impact of the material weakness on the issuers
financial reporting and its ICFR; and |
|
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|
(C) |
the issuers current plans, if any, or any actions
already undertaken, for remediating the material
weakness. |
7. |
Reporting changes in ICFR: The issuer has
disclosed in its annual MD&A any change in the issuers ICFR that
occurred during the period beginning on October 1, 2014 and ended
on December 31, 2014 that has materially affected, or is reasonably
likely to materially affect, the issuers ICFR. |
|
|
8. |
Reporting to the issuers auditors and board of
directors or audit committee: The issuers other certifying
officer(s) and I have disclosed, based on our most recent evaluation of
ICFR, to the issuers auditors, and the board of directors or the audit
committee of the board of directors any fraud that involves management or
other employees who have a significant role in the issuers
ICFR. |
Date: March 31, 2015
David M. Cole
_____________________________
David M. Cole
President and Chief Executive Officer
2
Form 52-109F1
Certification of Annual Filings
Full Certificate
I, Christina Cepeliauskas, Chief Financial Officer of
Eurasian Minerals Inc., certify the following:
1. |
Review: I have reviewed the AIF, if any,
annual financial statements and annual MD&A, including, for greater
certainty, all documents and information that are incorporated by
reference in the AIF (together, the annual filings) of Eurasian
Minerals Inc. (the issuer) for the financial year ended December
31, 2014. |
|
|
|
|
2. |
No misrepresentations: Based on my
knowledge, having exercised reasonable diligence, the annual 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 annual filings. |
|
|
|
|
3. |
Fair presentation: Based on my knowledge,
having exercised reasonable diligence, the annual financial statements
together with the other financial information included in the annual
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 annual filings. |
|
|
|
|
4. |
Responsibility: The issuers other
certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (DC&P) and internal
control over financial reporting (ICFR), as those terms are defined in
National Instrument 52-109 Certification of Disclosure in Issuers
Annual and Interim Filings, for the issuer. |
|
|
|
|
5. |
Design: Subject to the limitations, if any,
described in paragraphs 5.2 and 5.3, the issuers other certifying
officer(s) and I have, as at the financial year end |
|
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|
|
(a) |
designed DC&P, or caused it to be designed under our
supervision, to provide reasonable assurance that |
|
|
|
|
|
|
(i) |
material information relating to the issuer is made known
to us by others, particularly during the period in which the annual
filings are being prepared; and |
|
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|
|
|
|
(ii) |
information required to be disclosed by the issuer in its
annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation;
and |
|
|
|
|
|
(b) |
designed ICFR, or caused it to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with the issuers GAAP. |
|
|
|
|
5.1 |
Control framework: The control framework
the issuers other certifying officer(s) and I used to design the issuers
ICFR is Internal Control Integrated Framework published by the Committee
of Sponsoring Organizations of the Treadway Commission. |
|
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|
5.2 |
ICFR material weakness relating to design:
N/A |
|
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|
5.3 |
Limitation on scope of design:
N/A |
|
|
|
|
6. |
Evaluation: The issuers other certifying
officer(s) and I have |
1
|
(a) |
evaluated, or caused to be evaluated under our
supervision, the effectiveness of the issuers DC&P at the financial
year end and the issuer has disclosed in its annual MD&A our
conclusions about the effectiveness of DC&P at the financial year end
based on that evaluation; and |
|
|
|
|
|
|
(b) |
evaluated, or caused to be evaluated under our
supervision, the effectiveness of the issuers ICFR at the financial year
end and the issuer has disclosed in its annual MD&A |
|
|
|
|
|
|
|
(i) |
our conclusions about the effectiveness of ICFR at the
financial year end based on that evaluation; and |
|
|
|
|
|
|
|
(ii) |
for each material weakness relating to operation existing
at the financial year end |
|
|
|
|
|
|
|
|
(A) |
a description of the material weakness; |
|
|
|
|
|
|
|
|
(B) |
the impact of the material weakness on the issuers
financial reporting and its ICFR; and |
|
|
|
|
|
|
|
|
(C) |
the issuers current plans, if any, or any actions
already undertaken, for remediating the material
weakness. |
7. |
Reporting changes in ICFR: The issuer has
disclosed in its annual MD&A any change in the issuers ICFR that
occurred during the period beginning on October 1, 2014 and ended
on December 31, 2014 that has materially affected, or is reasonably
likely to materially affect, the issuers ICFR. |
|
|
8. |
Reporting to the issuers auditors and board of
directors or audit committee: The issuers other certifying
officer(s) and I have disclosed, based on our most recent evaluation of
ICFR, to the issuers auditors, and the board of directors or the audit
committee of the board of directors any fraud that involves management or
other employees who have a significant role in the issuers
ICFR. |
Date: March 31, 2015
Christina Cepeliauskas
_____________________________
Christina
Cepeliauskas
Chief Financial Officer
2
ANNUAL INFORMATION FORM
For the Year Ended
December 31, 2014
March 31, 2015
TABLE OF CONTENTS
3
FORWARD-LOOKING INFORMATION
This Annual Information Form (AIF) may contain
forward-looking statements that reflect the Companys current expectations and
projections about its future results. When used in this AIF, words such as
estimate, intend, expect, anticipate and similar expressions are
intended to identify forward-looking statements, which, by their very nature,
are not guarantees of the Companys future operational or financial performance,
and are subject to risks and uncertainties and other factors that could cause
the Companys actual results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these forward-looking
statements. These risks, uncertainties and factors may include, but are not
limited to: unavailability of financing, failure to identify commercially viable
mineral reserves, fluctuations in the market valuation for commodities,
difficulties in obtaining required approvals for the development of a mineral
project and other factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this AIF or as of
the date otherwise specifically indicated herein. Due to risks and
uncertainties, including the risks and uncertainties identified above and
elsewhere in this AIF, actual events may differ materially from current
expectations. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except in respect of events and circumstances that
occurred during the period to which its Managements Discussion and Analysis
relates that are reasonably likely to cause actual results to differ materially
from material forward-looking information for a period that is not yet complete
that the reporting issuer previously disclosed to the public.
4
PRELIMINARY NOTES
Date of Information
Unless otherwise indicated, all information contained in this
AIF is as of December 31, 2014.
Currency and Exchange Rates
In this AIF, unless otherwise specified, all references to
dollars and to C$ are to Canadian dollars, references to U.S. dollars and
to US$ are to United States dollars. The Bank of Canada noon buying rates for
the purchase of one United States dollar using Canadian dollars were as follows
for the indicated periods:
|
Year Ended December 31 |
|
2014 |
2013 |
2012 |
End of period |
1.1601 |
1.0636 |
0.9949 |
High for the period |
1.1643 |
1.0697 |
1.0443 |
Low for the period |
1.0614 |
0.9839 |
0.9642 |
Average for the period |
1.1045 |
1.0299 |
0.9996 |
The Bank of Canada noon buying rate on March 31, 2015 for the
purchase of one United States dollar using Canadian dollars was C$1.2683 (one
Canadian dollar on that date equalled US$0.7885) .
Glossary of Geological and Mining Terms
Certain terms used in this AIF are defined as
follows:
Aphanite: an igneous rock which is so fine-grained that
its component mineral crystals are not detectable by the unaided eye.
Alunite: a hydrated aluminium potassium, sulfate mineral
[(KAl3(SO4)2(OH)6].
Andesite: an extrusive igneous rock of intermediate
composition with aphanitic to porphyritic texture.
Argillic Alteration: hydrothermal alteration of wall
rock which introduces clay minerals including kaolinite, smectite and illite.
Assay: a quantitative chemical analysis of an ore,
mineral or concentrate to determine the amount of specific elements.
Breccia: a coarse-grained clastic rock, composed of
broken rock fragments held together by a mineral cement or in a fine-grained
matrix.
Dacite: an igneous extrusive rock with high iron
content.
Diorite: a grey to dark-grey intermediate intrusive
igneous rock composed principally of plagioclase feldspar, biotite, hornblende,
and/or pyroxene.
Dike: a tabular igneous intrusion that cuts across the
bedding or foliation of the country (host) rock, generally vertical in nature.
Doré: a mixture of predominantly gold and silver
produced by a mine, usually in a bar form, before separation and refining into
gold and silver by a refinery.
5
Epithermal: said of a hydrothermal mineral
deposit formed within about 1 kilometer of the Earths surface and in the
temperature range of 50oC to 200oC.
Foliation: repetitive layering in metamorphic rocks.
Footwall: the underlying side of a fault, ore body, or
mine working; particularly the wall rock beneath an inclined vein or fault.
Formation: a persistent body of igneous, sedimentary, or
metamorphic rock, having easily recognizable boundaries that can be traced in
the field without recourse to detailed paleontologic or petrologic analysis, and
large enough to be represented on a geologic map as a practical or convenient
unit for mapping and description.
Gneiss: a type of rock formed by high-grade regional
metamorphic processes from pre-existing formations of igneous or sedimentary
rocks.
Granitoid: pertaining to or composed of granite.
Granodiorite: a group of plutonic rocks intermediate in
composition between quartz diorite and quartz monzonite.
Greenfields: conceptual exploration; relying on the
predictive power of ore genesis models to search for mineralization in
unexplored virgin ground.
Hanging wall: the overlying side of an ore body, fault,
or mine working, especially the wall rock above an inclined vein or fault.
Hornfels: a fine-grained rock composed of a mosaic of
equidimensional grains without preferred orientation and typically formed by
contact metamorphism.
Hydrothermal: of or pertaining to hot water, to the
action of hot water, or to the products of this action, such as a mineral
deposit precipitated from a hot aqueous solution, with or without demonstrable
association with igneous processes.
Igneous rock: rock that is magmatic in origin.
Indicated mineral resource: is defined in NI 43-101 as
that part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration and test
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably assumed.
Inferred mineral resource: is defined in NI 43-101 as
that part of a mineral resource for which the quantity and grade or quality can
be estimated on the basis of geological evidence and limited sampling and
reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes.
Intercalated: said of layered material that exists or is
introduced between layers of a different character; especially said of
relatively thin strata of one kind of material that alternates with thicker
strata of some other kind, such as beds of shale intercalated in a body of
sandstone.
6
Kriging: a weighted, moving-average interpolation method
in which the set of weights assigned to samples minimizes the estimation
variance, which is computed as a function of the variogram model and locations
of the samples relative to each other, and to the point or block being
estimated.
Leach: to dissolve minerals or metals out of ore with
chemicals.
Lithocap: the shallow part of porphyry copper systems
typically above the main Cu-Au/-Mo zone; upper alteration zone.
Measured mineral resource: is defined in NI 43-101 as
that part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics are so well established that they can be
estimated with confidence sufficient to allow the appropriate application of
technical and economic parameters to support production planning and evaluation
of the economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and
grade continuity.
Meta: a prefix that, when used with the name of a
sedimentary or igneous rock, indicates that the rock has been metamorphosed.
Metamorphic rock: rock which has been changed from
igneous or sedimentary rock through heat and pressure into a new form of
rock.
Mineral reserve: is defined in NI 43-101 as the
economically mineable part of a measured or indicated mineral resource
demonstrated by at least a preliminary feasibility study. This study must
include adequate information on mining, processing, metallurgical, economic and
other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A mineral reserve includes diluting materials and
allowances for losses that may occur when the material is mined.
Mineral resource: is defined in NI 43-101 as a
concentration or occurrence (deposit) of natural, solid, inorganic or fossilized
organic material in or on the earths crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics and
continuity of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge.
Net smelter return royalty or NSR royalty: a type of
royalty based on a percentage of the proceeds, net of smelting, refining and
transportation costs and penalties, from the sale of metals extracted from
concentrate and doré by the smelter or refinery.
NI 43-101: National Instrument 43-101 Standards of
Disclosure for Mineral Projects of the Canadian Securities Administrators.
Oxide: a compound of ore that has been subjected to
weathering and alteration as a result of exposure to oxygen for a long period of
time.
Pegmatite: a very coarse-grained igneous rock that has a
grain size of 20 millimetres or more.
Phyllite: a regional metamorphic rock, intermediate in
grade between slate and schist. Minute crystals of sericite and chlorite impart
a silky sheen to the surfaces exposed by cleavage.
Plagioclase: a series of tectosilicate minerals within
the feldspar family.
7
Plutonic: intrusive igneous rock that is crystallized
from magma slowly cooling below the surface of the Earth.
Porphyry: igneous rock consisting of large-grained
crystals dispersed in a fine-grained matrix or groundmass.
Probable reserve: the economically mineable part of an
indicated and, in some circumstances, a measured mineral resource demonstrated
by at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified.
Pyroclastic: pertaining to clastic rock material formed
by volcanic explosion or aerial expulsion from a volcanic vent; also, pertaining
to rock texture of explosive origin.
Run-of-mine: ore in its natural state as it is removed
from the mine that has not been subjected to additional size reduction.
Schist: a strongly foliated crystalline rock, which
readily splits into sheets or slabs as a result of the planar alignment of the
constituent crystals. The constituent minerals are commonly specified (e.g.
quartz-muscovite-chlorite schist).
Shear zone: a tabular zone of rock that has been crushed
and brecciated by parallel fractures due to shearing along a fault or zone of
weakness. These can be mineralized with ore-forming solutions.
Silicification: the introduction of, or replacement by,
silica, generally resulting in the formation of fine-grained quartz, chalcedony,
or opal, which may fill pores and replace existing minerals.
Spectrography: the process of using a spectrograph to
map or photograph a spectrum.
Stockwork: a complex system of structurally controlled
or randomly oriented veins.
Strata: layers of sedimentary rock with internally
consistent characteristics that distinguish them from other layers.
Strike: the direction, or course or bearing of a vein or
rock formation measured on a level surface.
Stratibound: confined to a particular stratigraphic
layer or unit.
Stratiform: occurring as or arranged in strata.
Strip (or stripping) ratio: the tonnage or volume of
waste material that must be removed to allow the mining of one tonne of ore in
an open pit.
Sulfides or sulphides: compounds of sulfur (or sulphur)
with other metallic elements.
Tailing: material rejected from a mill after the
recoverable valuable minerals have been extracted.
Tuff: a general term for consolidated pyroclastic rocks.
Vein: sheet-like body of minerals formed by fracture
filling or replacement of host rock.
Vuggy: containing small cavities in a rock or vein,
often with a mineral lining of different composition from that of the
surrounding rock.
8
Linear Measurements |
|
|
|
|
|
1 inch |
= |
2.54 centimeters |
|
|
|
1 foot |
= |
0.3048 meter |
|
|
|
1 yard |
= |
0.9144 meter |
|
|
|
1 mile |
= |
1.609 kilometers |
|
|
|
|
|
|
Area Measurements |
|
|
|
|
|
1 acre |
= |
0.4047 hectare |
|
|
|
1 hectare |
= |
2.471 acres |
|
|
|
1 square mile |
= |
640 acres or 259 hectares or
2.590 square kilometers |
|
|
|
|
|
|
Units of Weight |
|
|
|
|
|
1 short ton |
= |
2000 pounds or 0.893 long ton
|
|
|
|
1 long ton |
= |
2240 pounds or 1.12 short tons
|
|
|
|
1 metric tonne |
= |
2204.62 pounds or 1.1023 short
tons |
|
|
|
1 pound (16 oz.) |
= |
0.454 kilograms or 14.5833 troy
ounces |
|
|
|
1 troy oz. |
= |
31.1035 grams |
|
|
|
1 troy oz. per short ton |
= |
34.2857 grams per metric ton
|
Analytical |
percent |
grams per metric
tonne |
troy oz per short ton
|
1% |
1% |
10,000 |
291.667 |
1 gram/tonne |
0.0001% |
1 |
0.029167 |
1 troy oz./short ton |
0.003429% |
34.2857 |
1 |
10 ppb |
nil |
0.01 |
0.00029 |
100 ppm |
0.01 |
100 |
2.917 |
Temperature Conversion Formulas
Degrees Fahrenheit |
= |
(°C x 1.8) + 32 |
|
|
|
Degrees Celsius |
= |
(°F - 32) x 0.556
|
9
Frequently Used Abbreviations and Symbols
AA |
atomic absorption spectrometry
|
|
|
Ag |
silver |
|
|
As |
arsenic |
|
|
Au |
gold |
|
|
°C |
degrees Celsius (centigrade)
|
|
|
cm |
centimeter |
|
|
C.P.G. |
Certified Professional Geologist
|
|
|
CSAMT |
Controlled source audio-frequency
magnetotellurics |
|
|
Cu |
copper |
|
|
F |
fluorine |
|
|
°F |
degrees Fahrenheit |
|
|
g |
gram(s) |
|
|
g/t |
grams per tonne |
|
|
Hg |
mercury |
|
|
HSE |
high sulphidation epithermal
|
|
|
ICP AES |
inductively coupled plasma atomic
emission spectroscopy |
|
|
ICP MS |
inductively coupled plasma mass
spectroscopy |
|
|
ICP MS/AAS |
inductively coupled plasma mass
spectroscopy/atomic absorption spectroscopy |
|
|
IOCG |
iron-oxide-copper-gold |
|
|
IP |
Induced polarization |
|
|
JORC |
Joint Ore Reserves Committee
|
|
|
JV |
joint venture |
|
|
kg |
kilogram |
|
|
km |
kilometer |
|
|
m |
meter(s) |
|
|
Ma |
million years ago |
|
|
Mn |
manganese |
|
|
Mo |
molybdenum |
|
|
n |
number or count |
|
|
oz |
troy ounce |
|
|
opt |
ounce per short ton |
|
|
oz/ton |
ounce per short ton |
|
|
oz/tonne |
ounce per metric tonne |
|
|
Pb |
lead |
|
|
PGE |
platinum group element |
|
|
ppb |
parts per billion |
|
|
ppm |
parts per million |
|
|
QA |
quality assurance
|
10
Frequently Used Abbreviations and Symbols
QC |
quality control |
|
|
sq |
square |
|
|
Sb |
antimony |
|
|
Tl |
thallium |
|
|
VMS |
volcanogenic massive sulfide
|
|
|
Zn |
zinc |
11
CORPORATE STRUCTURE
Name, Address and Incorporation
Eurasian Minerals Inc. (the Company or Eurasian or EMX)
was incorporated under the laws of the Yukon Territory of Canada on August 21,
2001 as 33544 Yukon Inc. and, on October 10, 2001, changed its name to Southern
European Exploration Ltd. On November 24, 2003, the Company completed the
reverse take-over of Marchwell Capital Corp., a TSX Venture Exchange (TSX-V)
listed company incorporated in Alberta on May 13, 1996 and which subsequently
changed its name to Eurasian Minerals Inc. On September 21, 2004, EMX continued
into British Columbia from Alberta under the Business Corporations Act.
EMXs head office is located at Suite 501 543 Granville
Street, Vancouver, British Columbia V6C 1X8, Canada, and its registered and
records office is located at Northwest Law Group, Suite 704 595 Howe Street,
Vancouver, British Columbia V6C 2T5, Canada.
Eurasian is a reporting issuer under the securities legislation
of British Columbia and Alberta and is listed on the TSX-V, as a Tier 1 issuer,
and the NYSE MKT (formerly known as the American Stock Exchange or AMEX).
Eurasians common shares without par value (Common Shares) are traded on the
TSX-V under the symbol EMX and on the NYSE MKT under the symbol EMXX.
Inter-corporate Relationships
The corporate structure of Eurasian, its material (holding at
least 10% of EMXs assets) subsidiaries, the percentage ownership that Eurasian
holds or has contractual rights to acquire in such subsidiaries (if not
wholly-owned) and the jurisdiction of incorporation of such corporations is set
out in the chart below:
12
DESCRIPTION OF THE BUSINESS
Overview
Eurasians is principally in the business of exploring for, and
generating royalties from, metals and minerals properties, as well as
identifying royalty opportunities for purchase. Eurasians business is carried
out as a royalty and prospect generator. Under the royalty and prospect
generation business model, it acquires and advances early-stage mineral
exploration projects and then options the projects to, and thereby forms
relationships with, other parties in consideration of a retained royalty
interest, as well as annual advanced royalty and other cash or share payments
and exploration carried out by the other parties. Through its various
agreements, Eurasian also provides technical and commercial assistance to such
companies as the projects advance. By optioning interests in its projects to
third parties for a royalty interest, Eurasian
(a) |
reduces its exposure to the costs and risks associated
with mineral exploration and project development, |
|
|
(b) |
maintains the opportunity to participate in early-stage
exploration upside; and |
|
|
(c) |
develops a pipeline for potential production royalty
payments and associated greenfields discoveries in the
future. |
This approach helps preserve the Companys treasury, which can
be utilized for further project acquisitions and other business initiatives.
The Companys royalty and exploration portfolio consists of
properties in North America, Turkey, Europe, Haiti, Australia, and the
Asia-Pacific region. Eurasian started receiving royalty income as of August 17,
2012 when it acquired Bullion Monarch Mining, Inc. (Bullion or BULM). This
royalty cash flow serves to provide a foundation to support the Companys growth
over the long term.
Strategic investments are an important complement to the
Companys royalty and prospect generation initiatives. These investments are
made in unrecognized or under-valued exploration companies identified by
Eurasian. EMX helps to develop the value of these assets, with exit strategies
that can include royalty positions or equity sales.
Specialized Skill and Knowledge
All aspects of Eurasian business require specialized skills and
knowledge. Such skills and knowledge include the areas of geology, finance,
accounting and law.
Competitive Conditions
Competition in the mineral exploration industry is intense.
Eurasian competes with other companies, many of which have greater financial
resources and technical facilities, for the acquisition and exploration of
mineral interests, as well as for the recruitment and retention of qualified
employees and consultants.
Raw Materials (Components)
Other than water and electrical or mechanical power all of
which are readily available on or near its properties Eurasian does not
require any raw materials with which to carry out its business.
13
Intangible Property
Eurasian does not have any need for nor does it use any brand
names, circulation lists, patents, copyrights, trademarks, franchises, licenses,
software (other than commercially available software), subscription lists or
other intellectual property in its business.
Business Cycle & Seasonality
Eurasians royalty and prospect generator business model is
cyclical and is impacted by commodity prices and cycles, however, its business
is not seasonal.
Economic Dependence
Eurasians business is not substantially dependent on any
contract such as a contract to sell the major part of its products or services
or to purchase the major part of its requirements for goods, services or raw
materials, or on any franchise or licence or other agreement to use a patent,
formula, trade secret, process or trade name upon which its business
depends.
Renegotiation or Termination of Contracts
It is not expected that Eurasians business will be affected in
the current financial year by the renegotiation or termination of contracts or
sub-contracts.
Environmental Protection
All phases of Eurasians exploration are subject to
environmental regulation in the various jurisdictions in which it operates.
Environmental legislation is evolving in a manner which
requires stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. While manageable, Eurasian expects this evolution
(which affects most mineral exploration companies) might result in increased
costs.
Employees
At December 31, 2014, Eurasian had 43 employees and consultants
working at various locations throughout the world.
Foreign Operations
The majority of Eurasians properties are located outside of
North America and many are located in areas traditionally considered to be risky
from a political or economic perspective.
Bankruptcy Reorganizations
There has not been any voluntary or involuntary bankruptcy,
receivership or similar proceedings against Eurasian within the three most
recently completed financial years or the current financial year.
14
Material Reorganizations
Except as disclosed under the heading Three Year History,
there has not been any material reorganization of Eurasian or its subsidiaries
within the three most recently completed financial years or the current
financial year.
Social or Environmental Policies
Eurasian has implemented various social policies that are
fundamental to its operations, such as policies regarding its relationship with
the communities where the Company operates.
Eurasian is committed to the implementation of a comprehensive
Health, Safety, Environment, Labor and Community Policy and a pro-active
Stakeholder Engagement Strategy (the Policies). These Policies will be
reviewed and updated on an annual or as needed basis. EMX ensures these
Policies are made known to all its managers, staff, contractors and exploration
and joint venture partners, and that the requirements contained therein are
adequately planned, resourced implemented and monitored wherever EMX is actively
managing the project and where EMX has obtained a formal commitment from its
exploration and joint venture partners to adopt the same Policies.
1. Environmental Policy
The Company believes that good environmental management at
every project it manages, whether in the exploration phase, feasibility stage,
project construction or mine site operation, requires proactive health and
safety procedures, transparent interaction with local communities and
implementation of prudent expenditures and business performance standards that
constitutes the foundation for successful exploration and subsequent development
if the results warrant it.
Eurasian will develop and implement appropriate standard
operating procedures for different stages of its ground technical surveys,
prospecting and evaluation and development work which procedures will be
designed to meet all applicable environmental requirements and best
environmental practices in the mineral exploration industry.
2. Community Relations,
Communication and Notification Policy
Proactive interaction with the stakeholders on whom the
Companys exploration and development programs may impact is considered an
important part of the long-term investment that the Company is planning in its
exploration programs in North America, Turkey, Europe, Haiti, Australia, and the
Asia-Pacific region.
Eurasian recognizes that from the inception of exploration
activities or a new field work program, and as the exploration project
progresses towards development, it will be important to:
-
communicate and proactively engage with all local communities and other
stakeholders that may be affected by its exploration programs;
-
inform and obtain a consensus with the full range of stakeholders that may
be impacted upon by exploration, evaluation and development; and
-
identify any vulnerable or marginalized groups within the affected
communities (e.g. women, elders or handicapped) and ensure they are also
reached by above information disclosure and consultation activities.
15
In these respects, Eurasian will work actively and
transparently with governmental authorities, other elected parties,
non-governmental organizations, and the communities themselves to ensure that
the communities are aware of the activities of the Company, and that the impact
and benefits of such activities are a benefit to the communities.
When detailed or advanced exploration activities, including
drilling, evaluation and other such programs, are implemented, the Company will
endeavor to identify how the impacts of such work on communities can best be
managed, and how benefits can best be provided to communities through its
activities. This will be undertaken in consultation with the affected
communities.
3. Labour, Health and Safety
Policy
The health and safety of its employees, contractors, affected
communities and any other role players that may participate and be affected by
the activities of EMX are crucial to the long term success of the Company.
The Company will establish and maintain a constructive
work-management relationship, promote the fair treatment, non-discrimination,
and equal opportunity of workers in accordance with Performance Standards 2,
Labor and Working Conditions of the International Finance Corporation, a member
of the World Bank Group.
Every effort will be made through training, regular reviews and
briefings, and other procedures to ensure that best practice labour, health and
safety and good international industry practices are implemented and maintained
by Eurasian, including prompt and in-depth accident and incident investigation
and the implementation of the conclusions thereof. The Company will take
measures to prevent any child labour or forced labour.
The Companys aim is at all times to achieve zero lost-time
injuries and fatalities.
4. Development Stage Environmental and
Social Management Policy
Eurasian will communicate and consult with local communities
and stakeholders with a view to fostering mutual understanding and shared
benefits through the promotion and maintenance of open and constructive dialogue
and working relationships.
Risk Factors
Investment in the Common Shares involves a significant degree
of risk and should be considered speculative due to the nature of Eurasians
business and the present stage of its development. Prospective investors should
carefully review the following factors together with other information contained
in this AIF before making an investment decision.
Mineral Property Exploration Risks
The business of mineral exploration and extraction involves a
high degree of risk. Few properties that are explored ultimately become
producing mines. At present, none of the Companys properties has a known
commercial ore deposit. The main operating risks include ensuring ownership of
and access to mineral properties by confirmation that option agreements, claims
and leases are in good standing and obtaining permits for drilling and other
exploration activities.
Eurasian is currently earning an interest in some of its
properties through option agreements and acquisition of title to the properties
is only completed when the option conditions have been met. These conditions generally include making property payments,
incurring exploration expenditures on the properties and can include the
satisfactory completion of pre-feasibility studies. If the Company does not
satisfactorily complete these option conditions in the time frame laid out in
the option agreements, the Companys title to the related property will not vest
and the Company will have to write-off any previously capitalized costs related
to that property.
16
The market prices for precious and base metals can be volatile
and there is no assurance that a profitable market will exist for a production
decision to be made or for the ultimate sale of the metals even if commercial
quantities of precious and other metals are discovered.
Revenue and Royalty Risks
Eurasian cannot predict future revenues or operating results of
the area of mining activity. Management expects future revenues from the Carlin
Trend Royalty Claim Block, including the Leeville royalty property in Nevada, to
fluctuate depending on the level of future production and the price of gold.
Specifically, there is a risk that the operator of the property, Newmont Mining
Corporation (Newmont), will cease to operate in the Companys area of
interest, therefore there can be no assurance that ongoing royalty payments will
materialize or be received by Eurasian.
Financing and Share Price Fluctuation Risks
Eurasian has limited financial resources, and has no assurance
that additional funding will be available for further exploration and
development of its projects. Further exploration and development of one or more
of the Companys projects may be dependent upon the Companys ability to obtain
financing through equity or debt financing or other means. Failure to obtain
this financing could result in delay or indefinite postponement of further
exploration and development of its projects which could result in the loss of
one or more of its properties.
The securities markets can experience a high degree of price
and volume volatility, and the market price of securities of many companies,
particularly those considered to be development stage companies such as
Eurasian, may experience wide fluctuations in share prices which will not
necessarily be related to their operating performance, underlying asset values
or prospects. There can be no assurance that share price fluctuations will not
occur in the future, and if they do occur, the severity of the impact on
Eurasians ability to raise additional funds through equity issues.
Foreign Countries and Political Risks
The Company operates in countries with varied political and
economic environments. As such, it is subject to certain risks, including
currency fluctuations and possible political or economic instability which may
result in the impairment or loss of mineral concessions or other mineral rights,
opposition from environmental or other non-governmental organizations, and
mineral exploration and mining activities may be affected in varying degrees by
political stability and government regulations relating to the mineral
exploration and mining industry. Any changes in regulations or shifts in
political attitudes are beyond the control of the Company and may adversely
affect its business. Exploration and development may be affected in varying
degrees by government regulations with respect to restrictions on future
exploitation and production, price controls, export controls, foreign exchange
controls, income taxes, expropriation of property, environmental legislation and
mine and site safety.
Notwithstanding any progress in restructuring political
institutions or economic conditions, the present administration, or successor
governments, of some countries in which Eurasian operates may not be able to
sustain any progress. If any negative changes occur in the political or economic
environment of these countries, it may have an adverse effect on the Companys
operations in those countries. The Company does not carry political risk
insurance.
17
Competition
The Company competes with many companies that have
substantially greater financial and technical resources than it in the
acquisition and development of its projects as well as for the recruitment and
retention of qualified employees.
Return on Investment Risk
Investors cannot expect to receive a dividend on an investment
in the Common Shares in the foreseeable future, if at all.
No Assurance of Titles or Borders
The acquisition of the right to exploit mineral properties is a
very detailed and time consuming process. There can be no guarantee that the
Company has acquired title to any such surface or mineral rights or that such
rights will be obtained in the future. To the extent they are obtained, titles
to the Companys surface or mineral properties may be challenged or impugned and
title insurance is generally not available. The Companys surface or mineral
properties may be subject to prior unregistered agreements, transfers or claims
and title may be affected by, among other things, undetected defects. Such third
party claims could have a material adverse impact on the Companys operations.
Currency Risks
The Companys equity financings are sourced in Canadian dollars
but much of its expenditures are in local currencies or U.S. dollars. At this
time, there are no currency hedges in place. Therefore, a weakening of the
Canadian dollar against the U.S. dollar or local currencies could have an
adverse impact on the amount of exploration funds available and work conducted.
Joint Venture and Exploration Funding Risk
Eurasians strategy is to seek exploration and joint venture
partners through options and joint ventures to fund exploration and project
development. The main risk of this strategy is that the funding parties may not
be able to raise sufficient capital in order to satisfy exploration and other
expenditure terms in a particular joint venture agreement. As a result,
exploration and development of one or more of the Companys property interests
may be delayed depending on whether Eurasian can find another party or has
enough capital resources to fund the exploration and development on its own.
Insured and Uninsured Risks
In the course of exploration, development and production of
mineral properties, the Company is subject to a number of risks and hazards in
general, including adverse environmental conditions, operational accidents,
labour disputes, unusual or unexpected geological conditions, changes in the
regulatory environment and natural phenomena such as inclement weather
conditions, floods, and earthquakes. Such occurrences could result in the damage
to the Companys property or facilities and equipment, personal injury or death,
environmental damage to properties of the Company or others, delays, monetary
losses and possible legal liability.
Although the Company may maintain insurance to protect against
certain risks in such amounts as it considers reasonable, its insurance may not
cover all the potential risks associated with its operations. The Company may
also be unable to maintain insurance to cover these risks at economically
feasible premiums or for other reasons. Should such liabilities arise,
they could reduce or eliminate future profitability and result in increased
costs, have a material adverse effect on the Companys results and a decline in
the value of the securities of the Company.
18
Some work is carried out through independent consultants and
the Company requires all consultants to carry their own insurance to cover any
potential liabilities as a result of their work on a project.
Environmental Risks and Hazards
The activities of the Company are subject to environmental
regulations issued and enforced by government agencies. Environmental
legislation is evolving in a manner that will require stricter standards and
enforcement and involve increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects, and a heightened
degree of responsibility for companies and their officers, directors and
employees. There can be no assurance that future changes in environmental
regulation, if any, will not adversely affect Eurasians operations.
Environmental hazards may exist on properties in which the Company holds
interests which are unknown to the Company at present.
Fluctuating Metal Prices
Factors beyond the control of the Company have a direct effect
on global metal prices, which have fluctuated widely, particularly in recent
years, and there is no assurance that a profitable market will exist for a
production decision to be made or for the ultimate sale of the metals even if
commercial quantities of precious and other metals are discovered on any of
Eurasians properties. Consequently, the economic viability of any of the
Companys exploration projects and its ability to finance the development of its
projects cannot be accurately predicted and may be adversely affected by
fluctuations in metal prices.
Extensive Governmental Regulation and Permitting
Requirements Risks
Exploration, development and mining of minerals are subject to
extensive laws and regulations at various governmental levels governing the
acquisition of the mining interests, prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and
other matters. In addition, the current and future operations of Eurasian, from
exploration through development activities and production, require permits,
licenses and approvals from some of these governmental authorities. Eurasian has
obtained all government licenses, permits and approvals necessary for the
operation of its business to date. However, additional licences, permits and
approvals may be required. The failure to obtain any licenses, permits or
approvals that may be required or the revocation of existing ones would have a
material and adverse effect on Eurasian, its business and results of operations.
Failure to comply with applicable laws, regulations and permits
may result in enforcement actions thereunder, including orders issued by
regulatory or judicial authorities requiring Eurasians operations to cease or
be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment or remedial actions. Eurasian
may be required to compensate those suffering loss or damage by reason of its
mineral exploration activities and may have civil or criminal fines or penalties
imposed for violations of such laws, regulations and permits. Any such events
could have a material and adverse effect on Eurasian and its business and could
result in Eurasian not meeting its business objectives.
19
Key Personnel Risk
Eurasians success is dependent upon the performance of key
personnel working in management and administrative capacities or as consultants.
The loss of the services of senior management or key personnel could have a
material and adverse effect on the Company, its business and results of
operations.
Conflicts of Interest
In accordance with the laws of British Columbia, the directors
and officers of a corporation are required to act honestly, in good faith and in
the best interests of the corporation. Eurasians directors and officers may
serve as directors or officers of other companies or have significant
shareholdings in other resource companies and, to the extent that such other
companies may participate in ventures in which the Company may participate, such
directors and officers may have a conflict of interest in negotiating and
concluding terms respecting the extent of such participation. If such a conflict
of interest arises at a meeting of the Companys directors, a director with such
a conflict will abstain from voting for or against the approval of such
participation or such terms.
Passive Foreign Investment Company
U.S. investors in common shares should be aware that based on
current business plans and financial expectations, Eurasian currently expects
that it will be a passive foreign investment company (PFIC) for the year
ending December 31, 2014 and expects to be a PFIC in future tax years. If
Eurasian is a PFIC for any year during a U.S. shareholders holding period, then
such U.S. shareholder generally will be required to treat any gain realized upon
a disposition of common shares, or any so-called excess distribution received
on its common shares, as ordinary income, and to pay an interest charge on a
portion of such gain or distributions, unless the shareholder makes a timely and
effective qualified electing fund election (QEF Election) or a
mark-to-market election with respect to the common shares. A U.S. shareholder
who makes a QEF Election generally must report on a current basis its share of
Eurasians net capital gain and ordinary earnings for any year in which Eurasian
is a PFIC, whether or not Eurasian distributes any amounts to its shareholders.
For each tax year that Eurasian qualifies as a PFIC, Eurasian intends to: (a)
make available to U.S. shareholders, upon their written request, a PFIC Annual
Information Statement as described in Treasury Regulation Section 1.1295 -1(g)
(or any successor Treasury Regulation) and (b) upon written request, use
commercially reasonable efforts to provide all additional information that such
U.S. shareholder is required to obtain in connection with maintaining such QEF
Election with regard to Eurasian. Eurasian may elect to provide such information
on its website www.EurasianMinerals.com.
Corporate Governance and Public Disclosure Regulations
The Company is subject to changing rules and regulations
promulgated by a number of United States and Canadian governmental and
self-regulated organizations, including the United States Securities and
Exchange Commission (SEC), the British Columbia and Alberta Securities
Commissions, the NYSE MKT and the TSX-V. These rules and regulations continue to
evolve in scope and complexity and many new requirements have been created,
making compliance more difficult and uncertain. The Companys efforts to comply
with the new rules and regulations have resulted in, and are likely to continue
to result in, increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities to compliance
activities.
Internal Controls over Financial Reporting
Applicable securities laws require an annual assessment by
management of the effectiveness of the Companys internal control over financial
reporting. The Company may, in the future, fail to achieve and maintain the adequacy of its internal control over financial
reporting, as such standards are modified, supplemented or amended from time to
time, and the Company may not be able to ensure that it can conclude on an
ongoing basis that it has effective internal control over financial reporting.
Future acquisitions may provide the Company with challenges in implementing the
required processes, procedures and controls in its acquired operations. Acquired
corporations may not have disclosure controls and procedures or internal control
over financial reporting that are as thorough or effective as those required by
securities laws currently applicable to the Company.
20
No evaluation can provide complete assurance that the Companys
internal control over financial reporting will detect or uncover all failures of
persons within the Company to disclose material information otherwise required
to be reported. The effectiveness of the Companys controls and procedures could
also be limited by simple errors or faulty judgments. In addition, should the
Company expand in the future, the challenges involved in implementing
appropriate internal control over financial reporting will increase and will
require that the Company continue to improve its internal control over financial
reporting.
GENERAL DEVELOPMENT OF THE BUSINESS
Three Year History
Fiscal Year Ended December 31, 2012
On January 24, 2012, Eurasian filed a registration statement on
Form 40-F with the SEC relating to the registration of its Common Shares under
the United States Securities and Exchange Act of 1934. On January 30, 2012, the
Common Shares were listed for trading on the NYSE MKT.
On February 9, 2012 but effective as of January 9, 2012,
Eurasian extended the expiration date of 678,611 warrants held by employees or
insiders of, or consultants to, BCE or Eurasian from January 9, 2012 to February
22, 2013. These warrants were issued on January 29, 2010 as part of the
consideration paid by Eurasian in connection with the acquisition of BCE. Due to
a trading blackout imposed by Eurasian relating to its acquisition of Bullion,
the warrant holders were unable to exercise the warrants until the blackout was
lifted subsequent to the public announcement of the BULM transaction on February
7, 2012. Each warrant entitled the holder to purchase one share of Eurasian
common stock at a price of $2.00. Each of the 678,611 warrants was exercised on
or before the expiration date, as extended, resulting in gross proceeds to
Eurasian of $1,357,222.
On April 2, 2012, a subsidiary of Eurasian and its joint
venture partner, Australian Securities Exchange (ASX) listed Chesser Resources
Limited (Chesser), signed an Option Agreement (the Sisorta Agreement) on
their jointly owned (EMX: 49% interest; Chesser: 51% interest) Sisorta gold
property located in north-central Turkey with Çolakoğlu Ticari Yatirim A.S.
(Çolakoğlu), a privately owned Turkish company. The Sisorta Agreement required
Çolakoğlu to make an up-front payment of 100 troy ounces of gold bullion, or its
cash equivalent, and to undertake a US$500,000 work commitment over the first
year. Çolakoğlu terminated its option on March 21, 2013.
In May 2012, Dr. Stephen Enders resigned as Executive Chairman
of the Board of Directors and was appointed Chief Operating Officer. Michael
Winn assumed the role of Chairman of the Board.
On August 15, 2012, the Company appointed Jan N. Steiert as
Chief Legal Officer of the Company.
On August 17, 2012, the Company completed its acquisition of
BULM following approval by BULMs shareholders at a special meeting held earlier
that day. Under the terms of the transaction, BULM shareholders received 0.45 of
a Common Share and US$0.11 in cash for each share of BULM common stock held as of the record date. The value of the total
consideration paid to BULM shareholders was approximately US$36.4 million.
21
In connection with the closing of the merger, James A. Morris,
the former President of Bullion, joined Eurasians Board of Directors. In
addition, R. Don Morris, the former CEO of Bullion, was appointed to EMXs
advisory board. Both appointments were effective August 17, 2012.
On August 23, 2012, the Company announced that it intended to
pay discretionary bonuses through the issuance of an aggregate of 364,500 Common
Shares as a bonus to five officers and a director. The Common Shares would be
issued under the Companys Incentive Stock Grant Program of up to 300,000 Common
Shares available each year which was approved by disinterested shareholders at
the Companys Annual General Meeting held on August 24, 2010 and through an
additional one time issuance of up to 700,000 Common Shares as bonuses to
certain officers and directors which was approved by shareholders at the
Companys Annual General Meeting held on August 16, 2011. The Common Shares were
issued in three tranches over a period of two years. The first tranche was
issued on October 15, 2012 and the second tranche was issued on October 15,
2013.
Fiscal Year ended December 31, 2013
Paul H. Zink ceased to be President of Eurasian Capital on
January 31, 2013.
On February 27, 2013, the Company announced that its
wholly-owned subsidiary, Eurasia Madencilik Ltd. Sti. (EMX Turkey), had
executed a definitive agreement with Tumad Madencilik Sanayi ve Ticaret A.S.
(Tumad), a private Turkish company, giving Tumad an option to acquire
Eurasians Trab-23 gold (copper-molybdenum) porphyry project in northeast Turkey
(the Trab-23 Agreement). The Trab-23 Agreement consists of: in-ground spending
requirements to further develop the assets value; a revenue stream of annual
earn-in and pre-production payments; and a revenue stream based upon production.
See Mineral Properties Turkey.
In April, 2013 the Company announced the selection of the
Iekelvare Designated Project in Sweden pursuant to the Alliance Agreement with
Antofagasta Minerals S.A., a wholly-owned subsidiary of Antofagasta Plc, a
Chilean mining company listed on the London Stock Exchange. Iekelvare joined
Kiruna South as a Designated Project in Sweden. In March, 2014 Antofagasta
advised Eurasian that it was discontinuing further funding of the Kiruna South
and Iekelvare Designated Projects.
Larry M. Okada was appointed to the Board of Directors on June
11, 2013.
On June 20, 2013, the Company announced the execution of an
Option Agreement (the Akarca Agreement) to sell the Akarca property in
northwest Turkey to Çolakoğlu for a combination of cash payments, gold bullion,
work commitments, and a royalty interest. The Akarca Agreement gives Çolakoğlu,
the option to acquire EMXs 100% owned Turkish subsidiary, AES Madencilik A.S.
that controls the Akarca property. The Akarca Agreement required Çolakoğlu to
make an up-front payment of US$250,000 and in order to exercise the option,
drill up at least 5,000 meters by the end of the first year, and make a US$
500,000 payment on exercise of the option. See Mineral Properties Turkey.
In August, the Company sold its geothermal energy assets in
Slovakia and Peru to Starlight Geothermal Ltd. (SGL), an arms length private
company based in Houston, Texas, for cash payments, an equity position of
approximately 5% in SGLs issued and outstanding voting share capital, annual
advance minimum royalty payments until production commences and, once production
commences, a 1% gross royalty on its geothermal licenses in Slovakia and a 0.5%
gross royalty on its geothermal licenses in Peru.
22
On September 4, 2013, the Company announced that it had,
through its wholly-owned subsidiary, Bronco Creek Exploration Inc. (BCE or
Bronco Creek), entered into three option purchase agreements with Desert Star
Resources Ltd. (TSX-V: DSR), a public company based in Vancouver, British
Columbia (Desert Star), granting Desert Star options to acquire the Companys
Red Top, Copper Springs, and Copper King porphyry copper projects in Arizona.
See Mineral Properties North America.
In October 2013, Bronco Creek signed three exploration and
earn-in agreements, with Savant Explorations Ltd. (TSX-V: SVT), a public company
based in Vancouver, British Columbia (Savant), granting Savant options to earn
in to the Companys Jasper Canyon, Buckhorn Creek, and Frazier Creek porphyry
copper projects. See Mineral Properties North America.
Fiscal Year ended December 31, 2014
On January 7, 2014, the Company announced the signing of an
Exploration and Option Agreement (the Alankoy Agreement) with Ferrite
Resources Ltd. (Ferrite), a privately-held Australian company, for the
disposition, by option, of the Alankoy copper-gold property in northwestern
Turkey. Ferrite has the option to earn a 100% interest in the project through
work commitments, payments, and annual advance royalties. EMX will retain an
uncapped 3% production royalty that cannot be purchased in advance or otherwise
reduced. Under the Alankoy Agreement, Ferrite paid $35,000 upon signing the
Alankoy Agreement and must expend at least $200,000 on exploration activities on
the project each year for the three years. In addition, Ferrite is required to
make annual deliveries of gold bullion to EMX as advance royalties. These will
consist of 75 troy ounces of gold (or cash equivalent thereof) delivered on each
of the first three anniversaries and annual advance royalties of 100 troy ounces
of gold (or cash equivalent) on all subsequent anniversaries until commencement
of commercial production. See Mineral Properties Turkey.
On February 19, 2014, EMX signed an Exploration and Option
Agreement (the NQM Agreement) with North Queensland Mining Pty Ltd. (NQM), a
privately-held Australian company, respecting EMXs Koonenberry exploration
licenses in New South Wales, Australia. Under the NQM Agreement, Eurasian
granted NQM the option, exercisable until February 19, 2017, to acquire the EMX
subsidiary (EMX Exploration Pty Ltd.) that holds the Companys remaining
exploration licenses in the project area, with EMX retaining a 3% production
royalty. On or before the second anniversary of the NQM Agreement date, NQM can
reduce such 3% production royalty to 2.5%, by agreeing to pay annual advance
royalties in the following amounts:
-
75 troy ounces of gold (or cash equivalent thereof) on the first
anniversary of NQMs election to reduce the amount of the production royalty,
-
100 troy ounces of gold (or cash equivalent) on the earlier of the third
anniversary of the NQM Agreement date or the exercise of the election, and
-
100 troy ounces of gold (or cash equivalent) on all subsequent
anniversaries of the NQM Agreement date until commencement of commercial
production.
In February 2014, the Board of Directors adopted an Advance
Notice Policy in respect of the election of directors. The purpose of the Policy
is to provide shareholders, directors and management of the Company with a clear
framework for nominating persons for election as directors of the Company. No
person will be eligible for election unless nominated in accordance with the
Policy. The Policy was ratified by the Companys shareholders at its annual
general meeting on May 13, 2014 and subsequently incorporated into the Companys
articles.
23
On April 25, 2014, incentive stock options, exercisable to
purchase an aggregate of 1,531,000 Common Shares at a price of $1.20 per share
for a period of five years, were granted to officers, directors and employees
of, and consultants to, the Company.
On April 25, 2014, the Company announced that it intended to
issue an aggregate of 300,000 Common Shares in lieu of cash remuneration to two
non-executive employees and a consultant. An aggregate of 300,000 Common Shares
would be issued over a period of two years, with the initial tranche of 100,000
Common Shares being issued upon receipt of TSX-V and NYSE MKT approval, and a
further 100,000 Common Shares on each of the first and second anniversaries. The
first tranche was issued on May 30, 2014.
On May 13, 2014, James A. Morris resigned from the Board of
Directors.
On May 15, 2014, EMX announced the signing of an Exploration
and Option Agreement (the Lomitas Agreement), through its wholly owned
subsidiary Bronco Creek, respecting the Lomitas Negras porphyry copper project
with Kennecott Exploration Company (Kennecott), part of the Rio Tinto Group.
Pursuant to the Lomitas Agreement, Kennecott can earn a 100% interest in the
project by completing US $4,500,000 in exploration expenditures and paying
escalating option payments totalling US $900,000 within five years after the
date of the Lomitas Agreement, after which EMX will retain a 2% NSR royalty.
In June 2014, Dr. Rael Lipson was appointed to the Companys
advisory board.
On July 4, 2014, EMX announced the signing of an Exploration
and Option Agreement (the Cathedral Well Agreement) by its wholly-owned
subsidiary Bronco Creek with Ely Gold and Minerals Inc. (Ely Gold), a
Vancouver-based mineral exploration company listed on the TSX-V, respecting
EMXs Cathedral Well gold project. Pursuant to the Cathedral Well Agreement, Ely
Gold can earn a 100% interest in the Project by paying EMX a total of US
$100,000 as follows: US $25,000 upon execution of the Cathedral Well Agreement
and US $75,000 over the next three years, after which EMX will retain a 2.5% NSR
royalty, inclusive of an underlying 0.5% NSR royalty.
On November 13, 2014, the Company announced the execution of an
agreement with Land & Mineral Limited (L&M), a privately-held
Australian company, giving L&M the right to acquire Hauraki Gold Ltd.
(Hauraki), the wholly-owned EMX subsidiary that controls the Neavesville
gold-silver property (the Neavesville Property) located in the Hauraki
goldfield of New Zealands North Island. See Mineral Properties Australia and
New Zealand.
Subsequent to 2014
In February 2015, Mr. Paul H. Stephens was appointed to the
Companys advisory board.
On March 8, 2015, Dr. Enders resigned from the Board of
Directors and as Chief Operating Officer as the Company rebalances its business.
Dr. Enders was appointed to the advisory board and is a consultant for the
Company.
MINERAL PROPERTIES
Eurasian has been generating exploration projects for over
eleven years, and is now focused on entering into agreements to convert those
assets into royalty interests, as well as directly acquiring new royalty
properties. In this time, EMX has built a portfolio of precious metal, base
metal, polymetallic, and geothermal property and royalty interests that spans
five continents and covers more than 1.7 million acres. These assets provide
revenue streams from royalty, advance royalty and success-based bonus payments, while maintaining continual exposure to exploration
upside as projects advance. Eurasian supplements mineral property revenue
streams and value creation by leveraging its technical expertise to make timely
strategic investments in other companies or projects that provide shareholders
with additional investment upside potential.
24
Leeville and Royalty Property Overview
A key EMX asset is the Leeville royalty property that covers
portions of Newmont Mining Corporations Northern Carlin Trend underground gold
mining operations. The Leeville 1% gross smelter return royalty paid
approximately US $2 million during the 12 months ending December 31, 2014. These
payments were principally sourced from Newmonts Leeville mine, but also
included minor contributions from other operations. Newmonts Turf No. 3 Vent
Shaft Project, totalling approximately $400 million in capital expenditures, is
on schedule, with commercial production planned for late 2015 (see Newmont
Mining Corps 10-K and 10-Q filings for Q2 and Q3, 2014). Newmont has stated
that the project will provide the ventilation required to increase production,
unlock additional resources, and impact greater Leeville, which includes
portions of EMXs royalty position. Further Carlin Trend exploration upside is
provided by EMXs 3% net smelter return royalty on the Maggie Creek property
that covers nearly two square miles of prospective ground situated less than one
mile from Newmonts Gold Quarry open pit mine.
In addition to EMXs Carlin Trend royalty properties, the
Company has royalty property interests elsewhere in the western U.S., as well as
in Turkey, Serbia, Sweden, Australia, Slovakia, and Peru. The Balya
lead-zinc-silver royalty property in Turkey resulted from an early prospect
generation success, and is undergoing renewed underground development in a
program that commenced in January 2015. EMXs portfolio in Serbia represents a
combination of organically generated royalties complemented by a key royalty
purchase that covers Reservoir Minerals Inc.s share of the Cukaru Peki
copper-gold discovery. The Viscaria iron-copper royalty was acquired from the
purchase of the Phelps Dodge Exploration Sweden AB assets in 2010, and the
project is being actively advanced by Avalon Minerals Ltd. with ongoing
drilling, to be followed by an updated JORC resource estimate and scoping
study (see Avalon Minerals Ltd. news releases dated January 6 and 12, 2015). In
Australia, the Koonenberry gold project is being advanced by other companies, with EMX retaining various
royalty interests that cover the entire project area. EMXs geothermal interests
in Slovakia and Peru provide royalty property diversification into energy assets
that complement the Companys mineral property portfolio.
25
In addition, all of EMXs exploration properties optioned to,
or joint ventured with, third parties include a royalty option. Many of these
properties provide advance minimum royalty or advance annual royalty payments
that generate an early revenue stream to EMXs benefit during earn-in.
Additional details on Eurasians property portfolio are included in the
following sections.
Turkey
Eurasian holds multiple mineral property interests in Turkeys
Western Anatolia and Eastern Pontides mineral belts. The properties include bulk
tonnage gold, gold-silver vein, and porphyry gold-copper targets. Six of the
seven EMX projects in Turkey are being advanced by partner companies, with the
portfolio consisting of two royalty properties and four properties optioned for
a retained royalty interest. A seventh property, the Sisorta epithermal gold
project, is 100% controlled by Eurasian and is currently available for sale or
partnership.
Akarca Property
The Akarca Property is a 2006 grassroots exploration discovery
by Eurasian in Turkeys Western Anatolia region. The Akarca Property is
currently wholly-owned by EMX.
An Option Agreement (the "Akarca Agreement") was executed in
June 2013 with Çolakoğlu Ticari Yatirim A.S. ("Çolakoğlu"), a privately owned
Turkish company (see EMX news release dated June 20, 2013). The Akarca Agreement
with Çolakoğlu required an up-front payment of US$250,000 and drilling of at
least 5,000 meters by the end of the first year. Both of these conditions were
met. In January, 2015 Eurasian granted Çolakoğlu a six month extension from
February, 2015 to August, 2015 to exercise its option. As a condition of this
extension, Çolakoğlu paid EMX the first US$100,000 (non-refundable) from the
total US$500,000 payment required to exercise the option. After exercise of the
option, subject to a right to terminate the Agreement and return the Akarca
Property to EMX, Çolakoğlu must make additional cash payments of US$4,250,000
over a period of three years and drill a cumulative 20,000 meters over a period of four years after the agreement date,
must deliver up to 18,000 troy ounces of gold under certain terms and conditions
and, within 180 days after request by EMX after the sixth anniversary of the
agreement date, if commercial production has not already commenced, deliver a
feasibility study. The Company will retain a 3.5% NSR royalty on any production
from the property. This royalty is uncapped, cannot be reduced, and none of the
pre-production cash or bullion payments count as advanced royalty payments. From
June 2013 through December 2014, Çolakoğlu had conducted drilling, trenching,
geological mapping, geochemical sampling, and metallurgical, and environmental
studies.
26
The Akarca project area currently has six drill defined zones
of epithermal gold-silver oxide mineralization. Since its discovery, 244 core
and reverse circulation holes totaling about 26,400 meters have been drilled,
most with partner funding. Summaries of the six zones are given below.
|
Kucukhugla Tepe is a 600 meter long, northwest trending
zone of parallel vein systems that locally host higher grade
mineralization. Recent 2014 drilling by Çolakoğlu yielded an oxide
intercept in AKC-131 of 58.5 meters (31.5-90.0 m) averaging 2.00 g/t gold
and 15.3 g/t silver, with a high-grade sub-interval of 2.6 meters
averaging 35.31 g/t gold and 226.6 g/t silver (true widths are 45% of
reported interval lengths). The zone remains open along strike. |
|
|
|
Fula Tepe is a broad corridor of veining and
silicification with a strike length of 800 meters and width of over 300
meters. Drill results include an oxide intercept in AKC-120 of 19.8 meters
(28.9-48.7 m) averaging 8.49 g/t gold and 60.3 g/t silver, with a
sub-interval of 1.0 meter assaying 155.50 g/t gold and 1060 g/t silver
(true widths are 64% of reported interval lengths). The system remains
open along strike to the northeast and southwest. |
|
|
|
The Hugla Tepe prospect is a 650 meter long zone of oxide
gold-silver mineralization, quartz veining and IP-resistivity anomalies.
The zone is oriented along a northeast strike direction that is parallel
to and approximately 400 meters southeast of Fula Tepe. |
|
|
|
A target halfway between Hugla and Fula Tepe was drilled
as a northeast aligned fence of holes at approximately 100 meter spacing.
This drilling intersected gold-silver mineralization along a 550 meter
northeast trend, and defines a newly recognized zone of concealed
mineralization lying between the Hugla and Fula Tepe prospects. |
|
|
|
Sarikaya Tepe is the furthest west of the known zones of
mineralization on the property, and forms a distinctive north-south
trending topographic high held up by multiple vein sets and silicified
wall rocks. Sarikaya is notable for hosting higher-grade mineralization,
including an oxide intercept reported from AKC-70 of 36.4 meters (0-36.4
m) averaging 5.67 g/t gold and 53.31 g/t silver, with a sub-interval of
2.15 meters averaging 89.34 g/t gold and 835.16 g/t silver (true widths
interpreted as 60-75% of reported interval lengths). |
|
|
|
Percem Tepe occurs on the east side of the property, and
hosts gold-silver mineralization in two bodies of silicified/replacement
brecciated and veined material that appear to be gently dipping to the
northeast. This style of mineralization is a distinctive feature of Percem
Tepe, in which broad zones of mineralized breccias and replacement bodies
have been encountered. Drill results include an oxide intercept in AKC-74
starting at 18.2 meters of 101.0 meters averaging 1.25 g/t gold and 7.95
g/t silver (true width interpreted as 65-75% of reported interval length).
|
|
|
|
Arap Tepe hosts near-surface oxide gold-silver
mineralization developed in a series of east-west zones of mineralization.
Only one of these zones has been systematically drilled (Zone A), with the
other zones presenting upside exploration opportunities.
|
From all project drilling, 95% of the holes have at least one
interval of mineralization greater than 0.2 g/t gold. This success rate is
remarkable considering that many of the targets are concealed beneath cover, and
speaks to the broad areas mineralized by the gold-silver epithermal system(s) at
Akarca. As exploration continues, it is clear that the continuity of the
near-surface oxide zones of vein and disseminated styles of mineralization are being successfully
defined at a 25 to 50 meter drill spacing. Furthermore, ongoing reconnaissance
and step-out drilling is demonstrating potential for new discoveries of
gold-silver mineralized zones.
27
The exploration successes at Akarca since 2006 have led to
in-the-ground investments of over US$12 million by partner companies. In
addition to drilling, 3100 rock and 3200 soil geochemical samples, 74
line-kilometers of IP-resistivity surveys, more than 11 line kilometers of
trench sampling, and a property-wide gravity survey have been completed.
Refer to EMX's SEDAR filed Akarca Technical Report and news
releases dated July 19, 2012, January 18, 2013, March 1, 2013, June 20, 2013,
August 22, 2013, January 27, 2014, July 17, 2014, and March 2, 2015 for more
information on the Akarca exploration results and a description of the QA and QC
measures used for the project.
Sisorta Property
The Sisorta project, located in the Eastern Pontides mineral
belt, is an epithermal gold deposit with an NI 43-101 mineral resource at a 0.4
g/t cutoff of 91,000 indicated gold ounces from 3.17 million tonnes averaging
0.89 g/t, and 212,000 inferred gold ounces from 11.38 million tonnes averaging
0.58 g/t. An overview of the methodology used to estimate these resources is
described in EMX's SEDAR filed Sisorta technical report.
The Sisorta property had until recently been in a joint venture
with project manager Chesser Resources Ltd. (Chesser) (51%) and EMX (49%). In
March 2015, EMX purchased Chesser's interest in the property, and assumed
management of the project.
The principle technical developments subsequent to the Sisorta
technical report resulted from an option granted to Çolakoğlu to buy the Sisorta
property in 2012, but the agreement was terminated in 2013. Çolakoğlu advised
that it completed a 46 hole, 5,500 meter diamond drill program and other work
totaling approximately US$2.5 million in expenditures before terminating its
option. Chesser reported highlights from Çolakoğlus drilling in a June 19, 2013
news release: a) the best drill intercept to date of 32.4 meters averaging 8.38
g/t gold and starting from the surface (true width unknown), b) mineralized
drill intercepts outside the current resource that increase the gold zones
lateral extent, and c) porphyry copper-gold targets that remain to be tested.
As Sisorta is now a 100% controlled asset of EMX, the Company
is evaluating the property's exploration upside, while pursuing partnership
opportunities with third parties.
Balya Royalty Property
The Balya royalty property is located in the historic Balya
lead-zinc-silver mining district in northwestern Turkey. EMX holds an uncapped
4% NSR royalty that it retained from the sale of the property to private Turkish
mining company Dedeman Madencilik San ve Tic. A.S. (Dedeman) in 2006 (see EMX
news release dated November 14, 2006).
EMX understands that since acquiring the property, Dedeman
completed 190 core holes totalling over 34,000 meters. Dedemans drilling in
2014 consisted of eleven holes that in-filled and extended the Hastanetepe
zones lead-zinc-silver mineralization to the southeast. EMX has also been
advised by Dedeman that it re-initiated shaft sinking and underground
development work at the Hastanetepe zone in early 2015.
28
Golcuk Property
The Golcuk copper-silver property is located in the Eastern
Pontides metallogenic belt of northeast Turkey. The mineralization at Golcuk
primarily occurs as stacked, stratabound horizons with disseminated copper and
silver hosted in volcanic units, as well as in localized cross-cutting
fault-controlled veins and stockworks of bornite, chalcopyrite and
chalcocite.
Pasinex Resources Ltd. (CSE: PSE; FSE: PNX) of Vancouver,
British Columbia (Pasinex) signed an agreement in 2012 granting it an option
to acquire a 100% interest in the Golcuk property for shares and work
commitments over a four year period. EMX retains a 2.9% NSR royalty, which
Pasinex has the option of buying down to 2% within six years of the agreement
date for US$1 million.
Pasinexs Golcuk exploration work includes drilling, geologic
mapping, rock and channel sampling, and a ground magnetics survey. It has also
filed on SEDAR an NI 43-101 Technical Report. Pasinexs work programs have
identified a number of additional mineralized targets on the property. Pasinex
completed five holes totaling 994.4 m at Golcuk in 2014 and is reviewing the
results in context of its recently received report on the structural geology of
the targeted area.
Trab-23 Property
The Trab-23 property is located in northeast Turkey. The
project area hosts both porphyry gold (copper-molybdenum) mineralization and
epithermal quartz-barite-gold veins.
Tumad Madencilik Sanayi ve Ticaret A.S. (Tumad), a private
Turkish company, executed an option agreement (the Trab-23 Agreement) in
February 2013 granting it an option to acquire Trab-23 from EMX (see EMX news
release dated February 27, 2013). The Trab-23 Agreement provides for in-ground
spending requirements, a revenue stream of annual earn-in and pre-production
payments, and a revenue stream based upon production. The Trab-23 Agreement was
contingent upon approval by Turkeys General Directorate of Mining Affairs
(MIGEM) to combine the two EMX exploration licenses into a single exploitation
license. This license combination was completed in 2014.
Alankoy Property
The Alankoy gold-copper property is located in the Biga
Peninsula of northwestern Turkey, in an area noted for recent discoveries
characterized by alunite-rich epithermal alteration and the development of vuggy
silica lithocaps. EMX outlined a six square kilometer area of lithocaps and
quartzalunite and argillic alteration with gold-copper mineralization based
upon geologic mapping, rock and soil sampling, spectral analyses, ground
magnetics, and historic reconnaissance drill results.
An Exploration and Option Agreement (the Alankoy Agreement)
with Ferrite was executed in December 2013 (see EMX news release dated January
7, 2014). The Alankoy Agreement granted Ferrite the option to acquire EMX
subsidiaries that hold the Alankoy project for work commitments, cash payments,
advance annual royalty payments, a milestone payment based upon completion of an
NI 43-101 or JORC compliant feasibility study, and 3% royalty payments to EMX
upon commencement of commercial production from the property.
MIGEM approval of the transfer of the Alankoy project license
to the local EMX subsidiary that Ferrite acquired, which was a condition
precedent for the transaction, was obtained in 2014. Small scale iron production
was completed during Q3 2014 under the terms of the Alankoy operating license.
EMX understands that Ferrite is currently reviewing plans for its 2015 work
program.
29
Other Property Interests
EMX has a royalty interest in the Aktutan polymetallic project
sold to Dedeman in 2007 for considerations that also include a 4% uncapped NSR.
The Sofular royalty property, also held by Dedeman, was dropped in Q1 2015 due
to a lack of encouraging exploration results.
Qualified Person
Michael P. Sheehan, CPG, a Qualified Person as defined by NI
43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Turkey.
North America
Eurasians portfolio in North America, advanced through
wholly-owned subsidiary Bronco Creek, includes porphyry copper-molybdenum,
porphyry copper-gold, bulk tonnage gold, and high-grade gold-silver vein
projects. The BCE portfolio is comprised of 22 properties covering more than
35,000 hectares in Arizona, Nevada, Utah, and Wyoming. EMX currently has six
properties partnered through BCE. In addition, there are five properties
acquired in the 2012 merger with Bullion Monarch. Of these, four are EMX royalty
properties, including Leeville and Maggie Creek (see Leeville and Royalty
Property Overview section above), and one is an exploration project available
for partnership.
The Companys 2014 work focused on advancing partner funded
projects, executing new agreements for available projects, and balancing the
portfolio by acquiring new properties on open ground while dropping low priority
projects. Eurasian is in discussions with a number of potential partners for the
available North American properties, as well as for regional exploration
alliances.
30
Cathedral Well Property
The Cathedral Well project is located at the southern end of
the Battle Mountain-Eureka gold trend and surrounds most of the historic Green
Springs mine. Eurasian announced the execution of an option agreement with Ely
Gold for the Cathedral Well property early in June 2014 (see EMX news release
dated July 7, 2014). Ely Gold may earn a 100% interest in the property by making
staged option payments and granting EMX a 2.5% NSR royalty, inclusive of an
underlying 0.5% NSR royalty. After earning 100% interest in the project, Ely
Gold will pay EMX annual advance royalties until commencement of commercial
production.
Eurasian understands that Ely Gold is planning a drill program
to test multiple targets across the consolidated Green Springs property
position, including underlying sedimentary units that are important host rocks
elsewhere in the region and remain largely untested across the property.
Copper King, Red Top, and Copper Springs Properties
The Copper King, Red Top, and Copper Springs properties are
three porphyry copper-molybdenum projects located in the Globe-Miami and
Superior (Pioneer) mining districts. EMX executed three separate Option Purchase
Agreements with Desert Star, whereby Desert Star can acquire a 100% interest in
each of the projects for cash, shares, and work commitments, after which EMX
will retain a 2.5% NSR royalty (see EMX news release dated September 4, 2013).
In January 2015, Eurasian regained 100% control of the Copper Springs project
after Desert Star elected to not exercise its option for the property.
Desert Star funded permitting and completion of IP geophysical
surveys at Copper King and Red Top that further delineated concealed targets for
drill testing. At Copper King, strong chargeability and resistivity anomalies
support EMXs target concept of a tilted porphyry copper system lying beneath
less altered host rocks. At Red Top, the geophysical anomaly lies to the north
of the original target, and Desert Star staked additional mining claims covering
this new area. Drill permits for both properties are expected in Q2 2015.
Buckhorn Creek, Jasper Canyon, and Frazier Creek Properties
The Buckhorn Creek and Jasper Canyon copper-molybdenum projects
are located in the Laramide porphyry copper belt of southern Arizona and the
Frazier Creek copper-molybdenum project is located in the Battle Mountain-Eureka
trend of north-central Nevada. These properties were optioned to Savant in 2013
under three separate option agreements for cash, shares, and work commitments
(see EMX news release dated October 30, 2013). In Q3 2014, Eurasian regained
100% control of the Jasper Canyon project after Savant elected to not exercise
its option for the property.
BCEs recognition of post-mineral structural relationships, and
the application of alteration and geochemical zoning patterns in that context,
has identified untested porphyry copper targets at the Buckhorn Creek and
Frazier Creek projects. Savant completed an IP geophysical survey at Buckhorn
Creek that highlighted two strong chargeability anomalies coincident with a
previously identified structural target, and continues to work on permitting for
a drill test. Savants geologic mapping and geochemical sampling at Frazier
Creek confirmed alteration and anomalous copper-molybdenum over a 1.8 by 0.8
kilometer area, and subsequently obtained drill permits. In October, Savant
attempted to drill two separate holes into the target area, but did not reach
target depths due to poor drilling conditions within 100 meters of the collar.
Eurasian has reviewed the Jasper Canyon exploration data
generated by Savants work, and believes that the target rocks remain untested
at shallow levels. Jasper Canyon is now available for partnership.
31
Copper Basin Property
The Copper Basin copper-molybdenum property, located in central
Arizona, was acquired under a Regional Acquisition Agreement with Vale S.A., a
publicly traded Brazilian multinational diversified metals and mining
corporation, and advanced under a Designated Project earn-in agreement.
Surface exploration and drill results confirmed the presence of a porphyry
copper-molybdenum system with nearly a kilometer of vertical extent within a 1.5
square kilometer area of porphyry-style alteration, mineralization, and related
geophysical anomalies.
Vale funded a three hole diamond drill program totalling
1,140.1 meters completed in June 2014. Two of the holes, CB-14-01 and CB-14-02
were drilled in the western target area to test for sources of mineralized dikes
and igneous breccias encountered in the 2013 drill program, and both holes were
terminated in anomalous (~0.04 -0.20% Cu) to low-grade (0.2 -0.4% Cu)
mineralization. Hole CB-14-01 intercepted anomalous to low-grade copper
(molybdenum) mineralization at 240 meters that generally increased with depth
from 286 meters to the end-of-hole at 387.1 meters. Hole CB-14-02 intercepted
multiple structurally controlled zones (~3-5 m in width) of weakly anomalous
copper (molybdenum) mineralization. The third hole, CB-14-03 was collared in the
south-central portion of the central zone and intercepted strongly anomalous to
low-grade copper (molybdenum) mineralization along its entire 310.9 meter
length. Vale relinquished its Copper Basin interest in July 2014, with EMX
regaining 100% control of the project. Vale spent more than US $3.5 million
exploring the property by completing geologic mapping, sampling, geophysical
surveys, and 3,916 meters of drilling in two programs.
The Copper Basin project is available for partnership, with
much of the original target untested by drilling. This target is highlighted by
alteration and mineral zoning that vectors towards a magnetic low interpreted to
represent the shallower portion of the copper-molybdenum system concealed
beneath less altered host rocks. Refer to EMX news release dated July 27, 2013
and www.eurasianminerals.com for more information on Copper Basin exploration
results and a description of the QA and QC measures used for the project.
Superior West Property
The Superior West project is located west of the historic
mining town of Superior, Arizona, and adjacent to Resolution Coppers property.
The project covers several porphyry copper targets, as well as the interpreted
western extension of the historic Magma Vein. EMX regained 100% control of the
property, after joint venture partner Freeport-McMoRan Exploration Corporation
(Freeport) of Phoenix, Arizona terminated its interest in the project in Q2
2014 due to budget cut backs on all greenfields exploration projects.
EMXs review of geophysical data received from Freeports
earlier work identified a linear anomaly transecting a portion of the property
that coincides with the Companys interpreted structural offset of the Magma
Vein. Subsequently, EMXs ongoing geologic evaluation of the property resulted
in the staking of additional prospective ground and the recognition of another
porphyry target in the southern portion of the property. Eurasian has been in
discussions with several potential partners interested in the property.
Lomitas Negras Property
EMXs Lomitas Negras project is located in southeast Arizona,
approximately 16 kilometers south of the San Manuel-Kalamazoo deposit. The
project contains isolated altered outcrops with anomalous base metals
mineralization that occur within a broad area of post-mineral cover rocks. An
option agreement with Kennecott was announced in May 2014 (see EMX news release
dated May 15, 2014). After completing a reconnaissance diamond drill program during the
third quarter, and subsequently acquiring additional mineral rights, Kennecott
relinquished its interest in the project. The property is available for
partnership.
32
Yerington West Property
The Yerington West joint venture property, located in the
Yerington mining district of west-central Nevada, is partnered with Entrée Gold
Inc. (TSX: ETG; NYSE: EGI) of Vancouver, British Columbia (Entrée). The
project comprises a porphyry copper-molybdenum target, part of which was
intersected in a 2012 drill program, and a copper-iron skarn target beneath
cover rocks. Entrée continued their work on the adjacent Ann Mason property,
including a pre-feasibility drill program that commenced in August 2014 (see ETG
news release dated January 21, 2015).
EMX has a 100% interest in the Yerington West project until
Entrée completes its initial earn-in requirements.
Other Work Conducted by Eurasian in the U.S.
EMX continued evaluation of property and royalty acquisition
opportunities in North America, and streamlined the portfolio by dropping low
priority projects. The generative work focused on gold opportunities in the
Great Basin and porphyry copper targets in Arizona. EMX acquired the Sleeping
Beauty and Águila de Cobre copper-molybdenum porphyry projects in Arizona by
staking open ground. EMX elected to drop the Red Hills project after termination
of the joint venture by GeoNovus, and also dropped the 100% EMX-controlled
Cruiser Gold, Bullion Creek and Sand Pass projects located in Nevada, Arizona,
and Utah, respectively. In Alaska, the Companys Moran Dome and Liberty royalty
properties were dropped by Gold Canyon Partners, and EMX elected to not
reacquire the ground.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on North America.
Australia and New Zealand
EMX continued to execute the royalty generation and partnership
business model in Australia and New Zealand. The Koonenberry gold project in New
South Wales, Australia is being advanced by partner companies under favourable
royalty agreements with EMX. In New Zealand, Eurasian executed a definitive
agreement to sell the Neavesville gold-silver project, and submitted
applications for two new gold-silver exploration properties with historic
resources.
33
Koonenberry Property
The Koonenberry project is positioned along the northwest
trending, regional-scale Koonenberry fault in southeastern Australia. This
deep-seated structural zone has multiple splays that project into, and through,
the project area. EMX recognized that the distribution of gold occurrences and
gold geochemical anomalies are coincident with these prominent structural
features.
In 2014, EMX announced the signing of an Exploration and Option
Agreement (the NQM Agreement) with North Queensland Mining Pty Ltd. (NQM), a
privately-held Australian company, to earn a 100% interest in the subsidiary
that holds the EMX licenses, with EMX retaining a 3% production royalty upon
earn-in (see EMX news release dated February 19, 2014 for more details).
Subsequently, EMX was granted a new exploration permit covering 88.5 square
kilometers that were previously held under option by Eurasian. This newly
granted EMX tenement was added under the NQM Agreement. All of EMXs interests
in Koonenberry are being advanced by other companies, with EMX retaining various
royalty interests that cover the entire project area totalling over 1,400 square
kilometers. The majority of the prospective ground covered by this extensive
royalty position remains unexplored.
Neavesville Property
The Neavesville project consists of a single exploration
permit, resulting from the combination of two permits during 2014, totalling
over 30 square kilometers in the Hauraki goldfield of New Zealands North
Island. EMX acquired Neavesville, which covers an historic JORC gold-silver
resource, on open ground with minimal cost. The property hosts epithermal
gold-silver mineralization that has geologic features similar to other deposits
of the Hauraki goldfield, including Newmonts Martha Hill gold-silver mine
located 25 kilometers to the southeast.
34
EMX has conducted reconnaissance geologic mapping, verification
rock sampling, a CSAMT geophysical survey, and reconnaissance reverse
circulation drilling at Neavesville. These programs not only helped to
independently confirm historic areas of mineralization, but also identified new
and untested gold-silver targets. EMX also concluded negotiations on a Joint
Venture and Access Agreement with landholders that will provide certainty and
clarity for ongoing exploration within the project area.
In November 2014, Eurasian announced a definitive agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, giving L&M the right to acquire Hauraki Gold Ltd. (Hauraki), the
wholly-owned EMX subsidiary that controls the Neavesville property. The
agreement with L&M provides for work obligations, staged payments, milestone
payments based upon JORC reserves, and commercial production payments, all to
the benefit of Eurasian (see EMX news release dated November 13, 2014).
The Neavesville exploration permit covers two main centers of
epithermal gold-silver mineralization. The principal target, named Trig Bluffs,
has a historic near-surface inferred resource of 3.2 million tonnes averaging
2.7 g/t gold and 8.9 g/t silver, and containing 289,000 ounces of gold and
944,000 ounces of silver (R. Brathwaite, IGNS report, 1999; 2001)1.
In addition, a separate higher-grade historic inferred mineral resource of
approximately 0.47 million tonnes at 7.1 g/t gold and 20.7 g/t silver, and
containing 107,000 ounces of gold and 312,000 ounces of silver, was reported for
mineralization at depth beneath Trig Bluffs (R. Brathwaite, IGNS report, 1999;
2001)2. The district has recorded historic small scale production
from the high-grade Ajax Vein system, the single largest producing historic mine
in the Neavesville camp, which will be the initial target of an L&M funded
drilling program slated for late March 2015.
See EMX news releases dated November 19, 2012 and November 13,
2014 for further details on the historic resource, EMXs exploration results,
and a description of the QA and QC measures used by Eurasian for the Neavesville
project.
1,2 A Qualified Person has not performed sufficient
work to classify the historic estimates as current mineral resources, and EMX is
not treating the estimates as current mineral resources. The historic estimates
should not be relied upon until they can be confirmed. However, the
drill-delineated Trig Bluffs gold-silver mineralization described by the IGNS
report is considered reliable and relevant.
The near-surface, historic resource estimate for the upper
zone was based upon a cut-off grade of 0.7 g/t gold. The historic inferred
mineral resource for the deeper mineralization assumed a cut-off grade of 10
gram-meters (i.e. the product of the gold grade and true width thickness of the
drill hole intercept).
Qualified Person
Chris Spurway, MAIG, FAusIMM, a Qualified Person as defined by
NI 43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Australia and the Asia-Pacific.
Europe
Eurasian continues to emphasize Scandinavia as a highly
favourable jurisdiction for mineral exploration and development, and has
assembled a portfolio of 100% controlled projects in Sweden and Norway that are
available for partnership. While acquiring new properties at minimal cost in
Norway, Eurasian is streamlining its portfolio of mineral properties in Sweden.
In addition, EMX also maintains royalty interests in its Viscaria project in
northern Sweden, as well as a portfolio of properties in Serbia that includes
the Cukaru Peki copper-gold discovery.
35
Sweden
Eurasians portfolio in Sweden includes VMS and IOCG
properties, in addition to known areas of copper, gold, and platinum group
element-enriched styles of mineralization. EMX holds a royalty interest in the
Viscaria iron-copper property acquired from the 2010 purchase of the assets of
Phelps Dodge Exploration Sweden AB.
Exploration Projects EMX focused on
retaining and advancing the most prospective exploration projects, while
reducing expenditures, during the year. Prior to 2014, much of EMXs exploration
work in Sweden was funded by a Strategic Alliance and Earn-In Agreement with
Antofagasta which focused on copper exploration from 2011-2013. The Company has
been in ongoing discussions with various parties regarding its available
properties in Sweden described below.
|
The Sakkek-Pikkujärvi and Puoltsa projects are located in
the Kiruna mining district of northern Sweden. The Sakkek-Pikkujärvi
property contains multiple IOCG-type copper, iron and gold targets,
including a small historic copper resource defined in the 1980s. The
Puoltsa project is amidst a cluster of past producing mines, and hosts a
number of prospective mineral occurrences including drill defined zones of
copper mineralization. |
|
|
|
The Iekelvare project has widespread IOCG-style
alteration/mineralization, and several untested targets. EMXs work
generated multiple targets of structurally focused, high-grade zones of
IOCG- style and porphyry-style copper-gold mineralization that are ready
for follow-up drilling. |
|
|
|
The Adak project is located in the Skellefte mining
district, and has a record of historic production from four small-scale
mines that exploited stratiform to stratabound chalcopyrite-rich VMS
mineralization. Mineralization projected along strike and down dip from
the historic mines provides priority exploration targets. |
|
|
|
The Storåsen property is a mafic metavolcanic-hosted
Cu-PGE-Au system. Thirty-five shallow core holes were drilled by the
Geological Survey of Sweden (SGU) from 1980-1989, and a historic
resource was defined by Popular Resources in 2002 based upon the SGUs
drilling. EMX has identified multiple prospective targets, including
extensions of the historic resource, untested soil and base-of-till copper
anomalies, and clusters of mineralized boulders.
|
36
|
The Gumsberg polymetallic (lead-zinc-silver-copper-gold)
property occurs in the historic Bergslagen District of southern Sweden.
Gumsberg contains five historic mines that were active from the 1880s to
1920s, with production focused on lead-zinc-silver mineralization from
VMS-type deposits. In January 2015, a winter geophysical program was
executed on the Gumsberg project. Self-potential and magnetic data
collected appear to map extensions of known bodies of mineralization along
strike, and have also identified new exploration targets.
|
Viscaria Royalty Property Avalon Minerals Ltd., a
public company traded on the Australian Securities Exchange, announced an
updated scoping study for EMXs Viscaria royalty property, including new JORC
compliant resource estimates and open pit optimization scenarios, in an August
28, 2014 news release. EMX holds a 1.0% net smelter return royalty over the
Viscaria 101 Exploration Permit, which includes the Zone A, Zone B and Zone D
copper-iron resources described in Avalons updated report. A Finnish company,
Outokumpu Oyj, is entitled to receive 0.5% NSR royalty payable from EMXs
royalty, resulting in Eurasian receiving net 0.5% NSR royalties until Outokumpu
has received a total of $12 million in royalty payments, after which time EMX
will receive the full benefit of the 1.0% NSR royalty. The Viscaria project is
an IOCG-style deposit located in the Kiruna mining district in northern
Sweden.
Norway
EMX initiated a program in 2014 to evaluate opportunities in
Norway, and initially acquired the Burfjord and Storbekken properties by
acquiring open ground. Burfjord contains multiple IOCG-type targets in northern
Norway, and is marked by numerous small scale historic mines and prospects, as
well as outcropping copper and gold mineralization. Storbekken hosts multiple
exposures of gold-enriched VMS-style mineralization near the historic Røros
mining district in southern Norway. A winter geophysical program was executed in
January 2015 on the Storbekken project. Self-potential and magnetic data
collected appear to have identified new exploration targets.
In January 2015, the Hatt, Vaddas, and Melkedalen VMS projects
were acquired by Eurasian after monitoring the status of these areas for several
years. These projects were available for direct purchase with minimal cost. The
Vaddas and Melkedalen properties host small tonnage zinc and copper historic
resources.
37
Royalty Properties in Serbia
EMXs portfolio in Serbia initially resulted from early stage
prospect generation and organic royalty growth from the sale of its properties,
including the Brestovac West, Deli Jovan, and Plavkovo projects, to Reservoir
Minerals Inc. (Reservoir) in 2006. The terms of the sale included uncapped NSR
royalties payable to EMX at a rate of 2% for gold and silver, and 1% for all
other metals. Subsequently, Eurasian acquired an uncapped 0.5% NSR royalty
covering Reservoirs share of minerals and metals mined from the Brestovac and
Jasikovo properties (see EMX news release dated February 4, 2014). The
Brestovac, Brestovac West, and Jasikovo properties are included in the Timok
Project joint venture between Reservoir (45%) and Freeport McMoRan Exploration
Corp. (55%).
Brestovac hosts porphyry and epithermal copper-gold
mineralization at the Cukaru Peki deposit. In January 2014, Reservoir announced
an initial NI 43-101 resource estimate for the Cukaru Peki deposits High
Sulphidation Epithermal (HSE) zone of copper and gold mineralization (see
Reservoir news release dated January 27, 2014). According to Reservoir, the HSE
inferred resource above a 1% copper equivalent (CuEq% = Cu% + (Au g/t x
0.6)) cut-off was estimated to be 65.3 million tonnes at an average grade of
2.6% copper and 1.5 grams per tonne (g/t) gold, or 3.5% copper-equivalent,
containing 1.7 million tonnes (3.8 billion pounds) copper and 3.1 million ounces
gold or 2.3 million tonnes (5.1 billion pounds) copper-equivalent. Reservoir
stated in its news release that the discovery at Cukaru Peki demonstrates the
potential for additional blind discoveries within the Timok Magmatic Complex.
Reservoir announced in a March 12, 2015 news release that a
2015 budget of US$ 18.7 million had been approved by the Timok Project joint
venture "to move the project forward toward the completion of a scoping study".
EMX's Timok Project royalty properties add strategic upside potential for
Eurasian in one of the richest copper-gold mineral belts in Europe.
Qualified Person
Eric P. Jensen, CPG, a Qualified Person as defined by NI 43-101
and employee of the Company, has reviewed, verified and approved the above
technical disclosure on Europe.
38
Haiti
Eurasian and joint venture partner Newmont Ventures Limited, a
wholly owned subsidiary of Newmont, (collectively, the JV) have a land
position along a 130 kilometer trend of Haitis Massif du Nord mineral belt.
Newmont is funding and managing six joint venture Designated Projects across
northern Haiti. EMXs work on the 100% controlled Grand Bois gold-copper project
is not subject to the JV with Newmont.
The designated projects with Newmont and EMXs Grand Bois
Project have been on care and maintenance status since 2013, when the Haitian
government suspended its Mining Convention process while it began working on a
new mining law with the help of the World Bank. The Governments goal is to
reform the mining law to be more consistent with current international
standards.
There were ongoing consultation meetings between the World
Bank, the Government of Haiti, the JV and other mining companies, and business
community and civil society representatives to present comments on draft
versions of the new Haitian Mining Code. After the appointment of a new Prime
Minister and the dissolution of Parliament in late 2014-early 2015, the
government is now planning for legislative elections in late 2015. At this stage
the JV does not expect further progress on the new Mining Law until later in
2016.
EMX remains committed to supporting the process of reforming
Haiti's Mining Law as a step towards developing the mining sector and
contributing to the country's economic growth.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Haiti.
Strategic Investments IG Copper LLC
EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the Malmyzh
copper-gold porphyry project in Far East Russia. IGC has a 51% ownership interest in the Malmyzh joint venture, with Freeport
retaining a 49% interest. IGC is operating and managing the project. The
Salasinskaya and Shelekhovo projects, 200 kilometers northeast of Malmyzh, are
100% controlled by IGC and not subject to the joint venture with Freeport. EMX
is IGCs largest shareholder, with 42.3% of the issued and outstanding shares
(39.7% equity position on a fully-diluted basis) from investments totalling US
$7.8 million.
39
Malmyzh Project
Malmyzh is a grassroots, district-scale discovery with 14
porphyry copper-gold prospects identified within a 16 by 5 kilometer intrusive
corridor. The propertys 153 square kilometers of exploration and mining
licenses occur 220 kilometers northeast of the Russia-China border at
Khabarovsk. Malmyzh has excellent logistics and infrastructure, including high
voltage power lines, a natural gas pipeline, a paved national highway, the Amur
River, and a rail line that are all nearby to the property.
Copper-gold mineralization occurs in diorite porphyry
intrusives, as well as in hornfels-altered and stockworked sedimentary wall
rocks, and consists of near-surface zones (i.e., within 0.5 to 50 meters of the
surface) of variable chalcocite enrichment grading into chalcopyrite-rich and
chalcopyrite-bornite-magnetite mineralization to depth. Much of the property has
more than 15 meters of cover and is undrilled, thereby providing considerable
exploration upside potential for additional discoveries.
The majority of drilling, totalling more than 70,000 meters in
over 200 core holes, has concentrated on defining the Central, Freedom, Valley,
and Flats prospects at nominal 200 by 200 or 200 by 400 meter centers, and
generally to less than 500 meters depth. All four prospects remain open at
depth. Near-surface drill intercepts, starting at 1.0 to 43.9 meters,
include1:
|
Central (AMM-035): |
406.7 m @ 0.52% Cu & 0.29 g/t Au (0.69% Cu
eq) |
|
|
|
|
Freedom (AMM-056): |
459.3 m @ 0.36% Cu & 0.41 g/t Au (0.61% Cu eq)
including 111.6 m @ 0.80% Cu & 1.01 g/t Au (1.41% Cu eq) |
|
|
|
|
Valley (AMM-089): |
459.2 m @ 0.47% Cu & 0.21 g/t Au (0.59% Cu
eq)
including 99.4 m @ 0.69% Cu &
0.40 g/t Au (0.93% Cu eq)
|
40
|
Flats (AMM-002):
|
474.7 m @ 0.26% Cu & 0.28 g/t
Au (0.43% Cu eq) including 134.3 m @ 0.35% Cu & 0.45 g/t Au (0.62%
Cu eq) |
1 CuEq = Cu% + (Au g/t x 0.6) . Metallurgical
recoveries and net smelter returns are assumed to be 100%. Reported intervals
are interpreted as true widths in porphyry style mineralization. See
Eurasian news releases dated September 6, 2012 and November 5, 2013 for more
information.
The copper-gold mineralization in these four deposits have
potential open-pit geometries with low stripping ratios. Mineralized zones
averaging ~1 to 1.5% copper equivalent (i.e., AMM-041, 43.9 m @ 1.23 Cu% and
0.53 g/t Au, 1.55% Cu eq) indicate the potential to delineate higher grade zones
within the prospects by in-filling the 200 meter drill grids.
IGC advanced Malmyzh in 2014 by completing drafts of project
reports in preparation for initial reviews by the relevant Russian Federation
agencies. As IGC continues to advance Malmyzh, several international mining
companies have expressed interest in the project.
Salasinskaya and Shelekhovo Projects
In 2014, IGC advised EMX that it had acquired the 260 square
kilometer Salasinskaya property, located 20 kilometers from IGCs Shelekhovo
project. Salasinskaya and Shelekhovo are 100% controlled by IGC. At Shelekhovo,
historic government exploration surveys identified multiple occurrences of gold,
silver, and copper associated with quartz veining and alunite (see EMX news
release dated November 5, 2013). Salasinskaya is considered to be the northern
extension of the Shelekhovo anomaly cluster, and is marked by the widespread
occurrence of quartz-alunite alteration. The Salasinskaya and Shelekhovo
properties occur along trend to the northeast of Malmyzh. Together, these three
properties cover approximately 800 square kilometers of exploration ground
occurring along a 200 kilometer belt of prospective Cretaceous-age arc terrane
rocks.
Further discussion of IGCs exploration results and EMXs due
diligence data verification and QA and QC procedures can be found in the
Companys September 6, 2012 and November 5, 2013 news releases.
Revelo Resources Corp.
EMX has a strategic investment in Revelo Resources Corp.
(TSX-V: RVL), a company focused on the acquisition and exploration of mineral
properties in the prolific metallogenic belts of northern Chile. Revelo was
formed from the merger of Iron Creek Capital Corp. and Polar Star Mining Corp.
in December 2014. Revelo has a corporate office in Vancouver (Canada), a
technical office in Santiago (Chile), and a strong shareholder base in Canada,
the United States and London.
Revelo controls approximately 300,000 hectares of 100% owned
exploration tenements. The portfolio is comprised of 16 exploration projects
prospective for copper, gold and silver including five projects already under
option or JV agreements with Kinross Gold Corporation (Las Pampas Project),
Newmont (Montezuma Project), and BHP Billiton (Block 2 Project). In addition,
Revelo retains one royalty interest in the Victoria Project, an important
copper-gold-silver exploration project in northern Chile.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Strategic Investments.
41
Geothermal Royalties
EMX initiated a geothermal energy program in 2010, and acquired
assets in Slovakia and Peru. Eurasian subsequently sold its geothermal assets in
2013 to Starlight Geothermal Ltd. (SGL), a private company based in
California, for cash payments, an equity position in SGL, and gross royalties of
1.0% in Slovakia and 0.5% in Peru from future geothermal energy production (see
EMX news release dated August 7, 2013).
Slovakia
EMXs geothermal royalty properties in Slovakia are located in
the Ziar Basin of west-central Slovakia and the Pannonian Basin in the eastern
part of the country. SGL conducted additional geophysical, geological, and
technical assessments of its geothermal concessions in 2014. Eurasian
understands that SGL is actively discussing project financing and power
purchasing agreements with various third parties in Europe.
Peru
EMX has royalties on four SGL geothermal licenses that occur in
prospective regions of Perus Western and Eastern Cordillera. SGL conducted
technical, infrastructure, and market assessments during 2014, and Eurasian
understands that SGL is considering follow-up geophysical surveys and technical
assessments for 2015.
DESCRIPTION OF CAPITAL STRUCTURE
Eurasians authorized capital consists of two classes of equity
securities, the Common Shares, of which there are an unlimited number, and an
unlimited number of preferred shares without par value.
As of March 31, 2015, Eurasian had 73,419,710 Common Shares and
no preferred shares issued and outstanding. All of the issued Common Shares are
fully paid and not subject to any future call or assessment. The Common Shares
rank equally as to voting rights, participation and distribution of Eurasians
assets upon liquidation, dissolution or winding-up and the entitlement to
dividends. Holders of Common Shares are entitled to receive notice of, attend
and vote at all meetings of shareholders of Eurasian. Each Common Share carries
one vote at such meetings. Holders of Common Shares are also entitled to
dividends if and when declared by the directors and, upon liquidation, to
receive such portion of the assets of Eurasian as may be distributable to such
holders.
DIVIDENDS
Eurasian has not, since its incorporation, paid any dividends
on any of its Common Shares. Eurasian has no present intention to pay dividends,
but Eurasians Board of Directors will determine any future dividend policy on
the basis of earnings, financial requirements and other relevant factors. See
General Development of Business Risk Factors. The Company is prohibited from
paying any dividend which would render it insolvent.
MARKET FOR SECURITIES
The Common Shares are traded in Canada on the TSX-V under the
symbol EMX and on the NYSE MKT under the symbol EMXX.
42
The following sets forth the high and low market prices and the
volume of the Common Shares traded on the TSX-V during the periods indicated:
|
High |
Low |
Volume |
January 2014 |
$1.23 |
$1.05 |
382,700 |
February 2014 |
$1.26 |
$1.10 |
355,700 |
March 2014 |
$1.23 |
$1.10 |
406,000 |
April 2014 |
$1.19 |
$0.98 |
355,000 |
May 2014 |
$1.04 |
$0.74 |
221,700 |
June 2014 |
$0.93 |
$0.76 |
467,400 |
July 2014 |
$0.88 |
$0.80 |
354,200 |
August 2014 |
$0.85 |
$0.80 |
400,600 |
September 2014 |
$0.83 |
$0.68 |
771,200 |
October 2014 |
$0.89 |
$0.72 |
1,033,900 |
November 2014 |
$0.97 |
$0.70 |
232,600 |
December 2014 |
$0.95 |
$0.81 |
1,497,800
|
DIRECTORS AND OFFICERS
The name, province or state and country of residence and
position with the Company of each director and executive officer of the Company,
and the principal business or occupation in which each director or executive
officer has been engaged during the immediately preceding five years, effective
on the date of this AIF, is as follows:
Name, Place of Residence and
Position with Company(1) |
Present and Principal Occupation
during the last five years |
Positions Held and Date of
Appointment as Director |
Brian E. Bayley (2)
(3) (4) British Columbia Canada |
President of Ionic Management Corp. (private management company)
December 1996 to
Director and officer of various public companies. |
Director May 13, 1996 |
Valerie A. Barlow British Columbia
Canada |
Corporate Secretary of |
Corporate Secretary |
the Company, January 2011
to present, |
|
Sundance Minerals Ltd.
(publicly traded (TSX-V) mineral
exploration company), September 15, 2011 to June 30, 2014, and |
|
Seabord Services
Corp., August 2010 to present, Formerly |
|
Acting Corporate
Secretary of Sierra Geothermal Power Corp.
(publicly traded (TSX-V) energy
company), September 2009 to
August 2010; |
|
Corporate Secretary
of Jinshan Gold Mines Inc.(publicly
traded (TSX) mining
company), May 2009 to September 2009; |
|
Assistant Corporate Secretary of Jinshan Gold Mines
Inc., May 2008 to May 2009. |
|
43
Name, Place of Residence and
Position with Company(1) |
Present and Principal Occupation
during the last five years |
Positions Held and Date of
Appointment as Director |
Christina Cepeliauskas |
Chief Financial Officer of |
Chief Financial Officer |
British Columbia |
the Company,
September 2008 to present; |
|
Canada |
Atico Mining
Corporation (publicly traded (TSX- |
|
|
V)
mineral exploration company), May 2011 to present, |
|
|
Reservoir Capital
Corp. (publicly traded (TSX-V) |
|
|
mineral
exploration company), May 2009 to present, and |
|
|
Reservoir Minerals Inc.(publicly traded (TSX-V)
mineral exploration company), October 2011 to May 22, 2012 |
|
David M. Cole Colorado United States of America
|
President and CEO of the Company, March 2003 to
present. |
President, CEO and Director November 24 , 2003
|
George K. C. Lim (2)(4) British
Columbia Canada |
Retired, March 2015 to present.
Chief Financial
Officer of Dundarave Resources Inc. (publicly traded (TSX-V) mineral
exploration company), November 2006 to March 2015. |
Director August 28, 2008
|
Brian K. Levet (3) Western
Australia Australia |
Retired, January 2011 to present.
Various executive
and management positions at Newmont, 1983 to December 2010. |
Director March 18, 2011
|
Larry M. Okada(2)(3) British
Columbia, Canada |
Chief Financial Officer of Africo Resources Ltd.
(TSX: ARL). |
Director June 11, 2013 |
Michael D. Winn(4) California
United States of America |
President of Seabord Capital Corp. (private
consulting company).
President of Seabord Services Corp.
(private management, administrative, and regulatory services company).
Director and officer of various public resource companies. |
Chairman May 23, 2012
Director November
24 , 2003
|
1. |
The information as to country of residence and principal
occupation has been furnished by the respective directors and officers
individually. |
|
|
2. |
Denotes member of the Audit Committee. |
|
|
3. |
Denotes member of the Compensation and Benefits
Committee. |
|
|
4. |
Denotes member of the Nominating and Corporate Governance
Committee. |
Each directors term of office expires at the next annual
general meeting of Eurasians shareholders.
44
Shareholdings of Directors and Senior Officers
As at March 31, 2015, the directors and executive officers, as
a group, beneficially owned, directly or indirectly, or exercised control or
direction over, 1,933,234 Common Shares representing approximately 2.63 % of the
outstanding Common Shares.
Corporate Cease Trade Orders, Bankruptcies, Penalties or
Sanctions
Other than as described below, no director or executive officer
of Eurasian are, or within the last 10 years have been:
|
(i) |
a director, chief executive officer or chief financial
officer of any reporting issuer that, while such person was acting in that
capacity or after the director or executive officer ceased to be a
director, chief executive officer or chief financial officer of the issuer
but which resulted from an event while the director or executive officer
was a director, chief executive officer or chief financial officer of that
issuer, was the subject of a cease trade or similar order or an order that
denied access to any statutory exemption for a period of more than 30
consecutive days or was declared bankrupt or made a voluntary assignment
in bankruptcy, made a proposal under any legislation relating to
bankruptcy or been subject to or instituted any proceedings, arrangement
or compromise with creditors or had a receiver, receiver-manager or
trustee appointed to hold the assets of that person; |
|
|
|
|
(ii) |
bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or became subject to or instituted any
proceedings, arrangement or compromise with creditors or had a receiver,
receiver manager or trustee appointed to hold their assets; |
|
|
|
|
(iii) |
subject to any penalties or sanctions imposed by a court
or securities regulatory authority relating to securities legislation or
has entered into a settlement agreement with a securities regulatory
authority; or |
|
|
|
|
(iv) |
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
investor in making an investment decision. |
Brian E. Bayley was a director from June 15, 2001 to
November 30, 2010 of American Natural Energy Corp. (TSX-V listed) which was
issued cease trading orders by the British Columbia Securities Commission
(BCSC) in July 2007, Autorité des marchés financiers de Québec
(AMF) in August 2007, Ontario Securities Commission (OSC) in
August, 2007, Alberta Securities Commission (ASC) in November 2007 and
Manitoba Securities Commission (MSC) in March 2008 for failing to file
financial statements and Managements Discussion & Analysis. The orders were
rescinded on October 29, 2008 when it filed the financial statements and
Managements Discussion & Analysis.
Conflicts of Interest
Directors and officers of Eurasian may, from time to time, be
involved with the business and operations of other mining issuers, in which case
a conflict may arise. See Development of Business Risk Factors for more
details.
Audit Committee Information
Information Concerning the Audit Committee of the Company, as
required by National Instrument 52-110 Audit Committees of the Canadian
Securities Administrators., is provided in Schedule A to this AIF.
45
INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Eurasian is unaware of any material interest, direct or
indirect, by way of beneficial ownership of securities or otherwise, of (i) any
director or executive officer of Eurasian, (ii) a person or company that is, as
of the date hereof, the direct or indirect beneficial owner of, or who exercises
control or direction over, more than 10% of any class or series of Eurasians
outstanding securities, and (iii) any associate or affiliate of any person or
company referred to in either (i) or (ii) above, in any transaction within the
three most recently completed financial years or during the current financial
year which has materially affected or would materially affect Eurasian or any of
its subsidiaries.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for Eurasian is Computershare
Investor Services Inc., Vancouver, British Columbia, Canada.
MATERIAL CONTRACTS
Material contracts under National Instrument 51-102
Continuous Disclosure Obligations of the Canadian Securities
Administrators are contracts, other than contracts entered into in the ordinary
course of the Companys business that are material to the Company. The following
is a list of material contracts entered into prior to the commencement of the
Companys last financial year on January 1, 2014 and that remain in effect and
material contracts entered into since January 1, 2014.
|
1. |
Registrar and Transfer Agency Agreement between the
Company and Montreal Trust Company dated August 12, 1996 appointing
Montreal Trust as the Companys registrar and the provision of transfer
agency services for the Common Shares. |
|
|
|
|
2. |
Assignment of Agencies Agreement among the Company,
Montreal Trust Company of Canada and Computershare Trust Company of Canada
dated January 26, 2001 appointing Computershare as the Companys registrar
and transfer agent for the Common Shares. |
|
|
|
|
3. |
Listing Agreement dated January 3, 2012 with the TSX-V,
pursuant to which the Common Shares are listed and traded on the
Exchange. |
|
|
|
|
4. |
Listing Agreement dated January 17, 2012 with the NYSE
MKT, pursuant to which the Common Shares are listed and traded on the NYSE
MKT. |
|
|
|
|
5. |
Services Agreement between the Company and Seabord
Services Corp. dated February 1, 2014 in respect of Seabord providing
various consulting, administrative, accounting, management and related
services. |
INTERESTS OF EXPERTS
Names of Experts
The following persons, firms and companies are names as having
prepared or certified a report, valuation statement or opinion described or
included in a filing, or referred to in a filing, made under National Instrument
51-102 Continuous Disclosure Obligations of the Canadian Securities
Administrators by the Company during or relating to, its most recently completed
financial year and whose profession or business gives authority to the report,
valuation statement or opinion made by the person, firm or company.
46
Name |
Description |
Davidson and Company LLP, Chartered Accountants
|
Independent Auditors, Report of Independent Registered
Public Accounting Firm dated March 26, 2015 for the consolidated financial
statements as at and for the years ended December 31, 2014 and 2013.
|
Interests of Experts
Davidson and Company LLP have advised the Company that it is
independent of the Company within the rules of professional conduct of the
Institute of Chartered Accountants of British Columbia.
To the Companys knowledge, none of the other experts named in
the foregoing section had, at the time they prepared or certified such report,
valuation statement or opinion, received after such time or will receive any
registered or beneficial interest, directly or indirectly, in any securities or
other property of the Company.
None of such experts nor director, officer or employee of such
experts is or is expected to be elected, appointed or employed as a director,
officer or employee of the Company or of any associated or affiliate of the
Company.
ADDITIONAL INFORMATION
Additional information, including directors and officers
remuneration and indebtedness, principal, is holders of the Companys
securities, securities authorized for issuance under equity compensation plans,
where applicable, is contained in the Companys Managements Information
Circular for its most recent annual meeting of shareholders.
Additional financial information is provided in the Companys
financial statements and Managements Discussion and Analysis for its most
recently completed financial year, all of which are filed on SEDAR. See
Schedules A and B for the Audit Committees charter and particulars of related
matters.
Other additional information related to the Company may be
found on SEDAR at www.sedar.com.
SCHEDULE A - AUDIT COMMITTEE CHARTER
I.
MANDATE
The Audit Committee (the Committee) of the Board of
Directors (the Board) of Eurasian Minerals Inc. (the Company)
shall assist the Board in fulfilling its financial oversight responsibilities by
overseeing the accounting and financial reporting processes of the Company and
the audits of the financial statements of the Company. The Committees primary
duties and responsibilities under this mandate are to serve as an independent
and objective party to monitor:
1. |
The quality and integrity of the Companys financial
statements and other financial information; |
|
|
2. |
The compliance of such statements and information with
legal and regulatory requirements; |
|
|
3. |
The qualifications and independence of the Companys
independent external auditor (the Auditor); and |
|
|
4. |
The performance of the Companys internal accounting
procedures and Auditor. |
II.
STRUCTURE AND OPERATIONS
A.
Composition
The Committee shall be comprised of at least three members,
each of whom is a director of the Company who meets the independence, financial
literacy and other requirements set out below.
B.
Qualifications
No member of the Committee may, other than in his or her
capacity as a member of the Committee, the Board, or any other committee of the
Board, accept directly or indirectly any consulting, advisory, or other
compensatory fee (as such term is defined under applicable United States
securities laws and stock exchange rules (collectively, the U.S.
Rules)) from, or be an affiliated person (as such term is defined under
applicable U.S. Rules) of, the Company or any subsidiary of the Company unless
an exemption or exception under applicable U.S. Rules is available.
A member of the Committee must not have participated in the
preparation of the financial statements of the Company or any current subsidiary
of the Company at any time during the past three years unless an exemption or
exception under applicable U.S. Rules is available.
Each member of the Committee must be able to read and
understand fundamental financial statements, including the Companys balance
sheet, income statement, and cash flow statement.
At least one member of the Committee must be:
|
1. |
Financially sophisticated, in that he or she has past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or
background which results in the individuals financial sophistication,
including but not limited to being or having been a chief executive
officer, chief financial officer, other senior officer with financial
oversight responsibilities. |
- 2 -
|
2. |
An audit committee financial expert (as such term is
defined under applicable U.S. Rules). |
C.
Appointment and Removal
In accordance with the Companys Articles, the members of the
Committee shall be appointed by the Board and shall serve until such members
successor is duly elected and qualified or until such members earlier
resignation or removal. Any member of the Committee may be removed, with or
without cause, by a majority vote of the Board.
D.
Chair
Unless the Board shall appoint a Chair, the members of the
Committee shall designate a Chair by the majority vote of all of the members of
the Committee. The Chair shall call, set the agendas for, and chair all meetings
of, the Committee.
E.
Sub-Committees
The Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to
grant pre-approvals of audit and permitted non-audit services, provided that a
decision of such subcommittee to grant a pre-approval shall be presented to the
full Committee at its next scheduled meeting.
F.
Meetings
The Committee shall meet as often as is necessary to fulfil its
duties respecting the Companys quarterly and annual financial statements but
not less than on a quarterly basis as provided in this Charter. The Committee
should meet with the Auditor and management annually to review the Companys
financial statements in a manner consistent with, and to discharge its duties
under, Section III of this Charter.
The Auditor shall be given reasonable notice of, and be
entitled to attend and speak at, each meeting of the Committee concerning the
Companys annual financial statements and, if the Committee feels it is
necessary or appropriate, at every other meeting. On request by the Auditor, the
Chair shall call a meeting of the Committee to consider any matter that the
Auditor believes should be brought to the attention of the Committee, the Board
or the shareholders of the Company.
At each meeting, a quorum shall consist of a majority of the
members comprising the Committee.
As part of its goal to foster open communication, the Committee
may periodically meet separately with each of management and the Auditor to
discuss any matters that the Committee believes would be appropriate to discuss
privately.
The Committee may invite to its meetings any director, any
manager of the Company, and any other person whom it deems appropriate to
consult in order to carry out its responsibilities. The Committee may also
exclude from its meetings any person it deems appropriate to exclude in order to
carry out its responsibilities.
- 3 -
III. DUTIES
A. Introduction
The following functions shall be the common recurring duties of
the Committee in carrying out its purposes outlined in Section I of this
Charter. These duties should serve as a guide with the understanding that the
Committee may fulfill additional duties and adopt additional policies and
procedures as may be appropriate in light of changing business, legislative,
regulatory or other conditions. The Committee shall also carry out any other
responsibilities and duties delegated to it by the Board from time to time
related to the purposes of the Committee outlined in Section I of this Charter.
The Committee, in discharging its oversight role, is empowered
to study or investigate any matter of interest or concern which the Committee in
its sole discretion deems appropriate for study or investigation by the
Committee.
The Committee shall be given full access to the Companys
internal accounting staff, managers, other staff and Auditor as necessary to
carry out these duties. While acting within the scope of its stated purpose, the
Committee shall have all the authority of, but shall remain subject to, the
Board. Notwithstanding the foregoing, the Committee is directly responsible for
the appointment, compensation, retention and oversight of the work of the
Auditor and any other registered public accounting firm engaged for the purpose
of preparing or issuing an audit or performing other audit, review or attest
services for the Company.
The Company must provide appropriate funding, as determined by
the Committee, for payment of (i) compensation to any registered public
accounting firm engaged for the purpose of preparing or issuing an audit report
or performing other audit, review or attest services for the Company, (ii)
compensation to any independent counsel or other advisors employed by the
Committee, and (iii) ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out the Committees duties.
B.
Powers and Responsibilities
The Committee will have the following responsibilities and, in
order to perform and discharge these responsibilities, will be vested with the
powers and authorities set forth below, namely, the Committee shall:
Independence of Auditor
1). |
Actively engage in a dialogue with the Auditor with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the Auditor and, obtain a formal written
statement from the Auditor setting forth all relationships between the
Auditor and the Company. |
|
|
2). |
Take, or recommend that the Board take, appropriate
action to oversee the independence of the Auditor. |
|
|
3). |
Require the Auditor to report directly to the
Committee. |
|
|
4). |
Review and approve the Companys hiring policies
regarding partners, employees and former partners and employees of the
Auditor and former independent external auditor of the
Company. |
- 4 -
Performance & Completion by Auditor of its Work
5) |
. Be directly responsible for the appointment,
compensation, retention and oversight of the work of the Auditor and any
other registered public accounting firm engaged (including resolution of
disagreements between management and the Auditor or such public accounting
firm regarding financial reporting) for the purpose of preparing or
issuing an audit report or performing other audit, review or attest
services for the Company. |
|
|
|
6) |
. Review annually the performance of the Auditor, and
either appoint a new Auditor or recommend to shareholders that the
existing Auditor be re-elected. |
|
|
|
7) |
. Pre-approve all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed
for the Company by the Auditor; provided, however, that pre-approval of
services other than audit, review or attest services is not required if
such services: |
|
|
|
|
(a) |
constitute, in the aggregate, no more than 5% of the
total amount of revenues paid by the Company to the Auditor during the
fiscal year in which the services are provided; |
|
|
|
|
(b) |
were not recognized by the Company at the time of the
engagement to be non-audit services; and |
|
|
|
|
(c) |
are promptly brought to the attention of the Committee
and approved prior to the completion of the audit by the Committee or by
one or more members of the Committee to whom authority to grant such
approvals has been delegated by the Committee. |
Preparation of Financial Statements
8). |
Discuss with management and the Auditor significant
financial reporting issues and judgments made in connection with the
preparation of the Companys financial statements, including any
significant changes in the Companys selection or application of
accounting principles, any major issues as to the adequacy of the
Companys internal controls and any special steps adopted in light of
material control deficiencies. |
|
|
|
9). |
Discuss with management and the Auditor any
correspondence with regulators or governmental agencies and any employee
complaints or published reports which raise material issues regarding the
Companys financial statements or accounting policies. |
|
|
|
10). |
Discuss with management and the Auditor the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Companys financial statements. |
|
|
|
11). |
Discuss with management the Companys major financial
risk exposures and the steps management has taken to monitor and control
such exposures, including the Companys risk assessment and risk
management policies. |
|
|
|
12). |
Discuss with the Auditor the matters required to be
discussed relating to the conduct of any audit, in particular: |
|
|
|
|
a) |
The adoption of, or changes to, the Companys significant
auditing and accounting principles and practices as suggested by the
Auditor or management. |
- 5 -
|
b) |
Any difficulties encountered in the course of the audit
work, including any restrictions on the scope of activities or access to
requested information, and any significant disagreements with
management. |
Public Disclosure by the Company
13). |
Review the Companys annual and quarterly financial
statements, management discussion and analysis (MD&A) and press
releases respecting earnings before the Board approves and the Company
publicly discloses this information. |
|
|
14). |
Review the Companys financial reporting procedures and
internal controls to be satisfied that adequate procedures are in place
for the review of the Companys public disclosure of financial information
extracted or derived from its financial statements, other than disclosure
described in the previous paragraph, and periodically assessing the
adequacy of those procedures. |
|
|
15). |
Review any disclosures made to the Committee by the
Companys Chief Executive Officer and Chief Financial Officer during their
certification process of the Companys financial statements and public
disclosure about any significant deficiencies in the design or operation
of internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant role in the
Companys internal controls. |
Related Party Transactions
16). |
Review and approve related party transactions if
required under applicable U.S. Rules. |
Manner of Carrying Out its Mandate
17). |
Consult, to the extent it deems necessary or
appropriate, with the Auditor but without the presence of management,
about the quality of the Companys accounting principles, internal
controls and the completeness and accuracy of the Companys financial
statements. |
|
|
18). |
Request any officer or employee of the Company or the
Companys outside counsel or Auditor to attend a meeting of the Committee
or to meet with any members of, or consultants to, the
Committee. |
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|
19). |
Have the authority, to the extent it deems necessary or
appropriate, to retain independent legal counsel, and accounting or other
consultants to advise the Committee. |
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|
20). |
Meet separately, to the extent it deems necessary or
appropriate, with management and the Auditor. |
|
|
21). |
Make periodic reports to the Board as is necessary or
required. |
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|
22). |
Review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for
approval. |
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|
23). |
Annually review the Committees own
performance. |
|
|
24). |
Provide an open avenue of communication between the
Auditor and the Board. |
- 6 -
25). |
Not delegate these responsibilities other than to one
or more independent members of the Committee the authority to pre-approve,
which the Committee must ratify at its next meeting, audit and permitted
non-audit services to be provided by the Auditor. |
C. Whistle-Blower
Policy
The Committee shall establish and annually review the
procedures for (i) the receipt, retention and treatment of complaints received
by the Company regarding accounting, internal accounting controls, or auditing
matters, and (ii) the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing matters.
D.
Limitation of Audit Committees Role
While the Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Committee to plan or conduct
audits or to determine that the Companys financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the Auditor.
This Charter, as amended, was approved by the Board of
Directors on November 12, 2014.
- 7 -
SCHEDULE B - AUDIT COMMITTEE MATTERS
Overview
The Audit Committee of the Board is principally responsible
for
-
recommending to the Board the external auditor to be nominated for election
by the Companys shareholders at each annual general meeting and negotiating
the compensation of such external auditor.
-
overseeing the work of the external auditor.
-
reviewing the Companys annual and interim financial statements, MD&A
and press releases regarding earnings before they are reviewed and approved by
the Board and publicly disseminated by the Company.
-
reviewing the Companys financial reporting procedures and internal
controls to ensure adequate procedures are in place for the Companys public
disclosure of financial information extracted or derived from its financial
statements, other than disclosure described in the previous paragraph.
Composition of the Audit Committee
The Audit Committee consists of three directors all of whom are
independent and financially literate. In addition, the Companys governing
corporate legislation requires the Company to have an Audit Committee composed
of a minimum of three directors, all of whom are not officers or employees of
the Company. The Audit Committee complies with these requirements.
The following table sets out the names of the members of the
Audit Committee and whether they are independent and financially
literate.
Name of Member |
Independent (1) |
Financially Literate
(2) |
Brian E. Bayley |
Yes |
Yes |
George K. C. Lim (Chairman) |
Yes |
Yes |
Larry M. Okada |
Yes |
Yes |
(1) |
To be considered to be independent, a member of the
Committee must not have any direct or indirect material relationship
with the Company. A material relationship is a relationship which could,
in the view of the Board reasonably interfere with the exercise of a
members independent judgment. |
|
|
(2) |
To be considered financially literate, a member of the
Committee must have the ability to read and understand a set of financial
statements that present a breadth and level of complexity of accounting
issues that are generally comparable to the breadth and complexity of the
issues that can reasonably be expected to be raised by the Companys
financial statements. |
Relevant Education and Experience
The education and experience of each member of the Audit
Committee relevant to the performance of his responsibilities as an Audit
Committee member and, in particular, any education or experience that would
provide the member with:
1. |
an understanding of the accounting principles used by the
Company to prepare its financial statements; |
- 8 -
2. |
the ability to assess the general application of such
accounting principles in connection with the accounting for estimates,
accruals and reserves; |
|
|
3. |
experience preparing, auditing, analyzing or evaluating
financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by the
Companys financial statements, or experience actively supervising one or
more persons engaged in such activities; and |
|
|
4. |
an understanding of internal controls and procedures for
financial reporting, |
are as follows:
Name of Member |
Education |
Experience |
Brian E. Bayley |
|
|
|
B.A. (Hon) 1977 University of Victoria
Victoria, BC |
Director and officer of numerous publicly traded
companies (1986 present) and investor in numerous publicly traded
companies during which time and as a result of such investments has
reviewed and analyzed numerous financial statements. Held active senior
management positions in both private and public natural resource companies
and has over 30 years of public issuer experience both as a director and
officer. Also experienced in areas of natural resources and real estate
lending as well as corporate restructuring and the
management/administration of public companies. |
|
M.B.A. 1979 Queens University
Kingston, ON |
George K. C. Lim |
|
|
|
Member of Institute of Chartered Accountants
of B.C. 1985
Member of Certified General Accountants of B.C.
- 1985 |
CFO of various publicly traded companies and has worked
in the mining industry since 1999. Prior to that was in public practice
for 24 years. Also worked with Audit Committees and Boards of Directors on
matters relating to audits for numerous years. |
Larry M. Okada |
Member of Institute of Chartered Accountants
of B.C. 1976
Member of Institute of Chartered Accountants of
Alberta 1976
Certified Public Accountant Washington State
- 2000 |
Has been in public accounting practice with Deloitte,
PricewaterhouseCoopers LLP and his own firm for over 35 years. Majority of
his clients have been public mining companies listed on the TSX-V. He is a
director and Audit Committee Chair for Revett Mining Inc. (TSX: RVM; NYSE
MKT: RVM), Forum Uranium Corp (TSX-V: FDC) and Rokmaster Resources Corp.
(TSX-V: RKR). |
- 9 -
Complaints
The Audit Committee has established a Whistleblower Policy
which outlines procedures for the confidential, anonymous submission by
employees regarding the Companys accounting, auditing and financial reporting
obligations, without fear of retaliation of any kind. If an applicable
individual has any concerns about accounting, audit, internal controls or
financial reporting matters which they consider to be questionable, incorrect,
misleading or fraudulent, the applicable individual is urged to come forward
with any such information, complaints or concerns, without regard to the
position of the person or persons responsible for the subject matter of the
relevant complaint or concern.
The applicable individual may report their concern in writing
and forward it to the Chairman of the Audit Committee in a sealed envelope
labelled To be opened by the Chairman of the Audit Committee only. Further, if the applicable individual wishes to discuss any
matter with the Audit Committee, this request should be indicated in the
submission. Any such envelopes received by the Company will be forwarded
promptly and unopened to the Chairman of the Audit Committee.
Promptly following the receipt of any complaints submitted to
it, the Audit Committee will investigate each complaint and take appropriate
corrective actions.
The Audit Committee will retain as part of its records, any
complaints or concerns for a period of no less than seven years. The Audit
Committee will keep a written record of all such reports or inquiries and make
quarterly reports on any ongoing investigation which will include steps taken to
satisfactorily address each complaint.
The Whistleblower Policy is reviewed by the Audit Committee
on an annual basis.
Audit Committee Oversight
Since the commencement of the Companys most recently completed
financial year, there has not been a recommendation of the Audit Committee to
nominate or compensate an external auditor which was not adopted by the
Board.
Reliance on Exemptions in NI 52-110
Since the commencement of the Companys most recently completed
financial year, the Company has not relied on:
o |
the exemption in section 2.4 (De Minimis Non-audit
Services) of NI 52-110 (which exempts all non-audit services provided
by the Companys auditor from the requirement to be pre-approved by the
audit committee if such services are less than 5% of the auditors annual
fees charged to the Company, are not recognized as non-audit services at
the time of the engagement of the auditor to perform them and are
subsequently approved by the audit committee prior to the completion of
that years audit); |
|
|
o |
the exemption in section 3.5 (Death, Disability or
Resignation of Audit Committee Member) of NI 52-110 (which exempts a
replacement member of the Audit Committee from being independent until the
later of the next annual general meeting of shareholders or the six month
anniversary of the date on which the vacancy filled by the member was
created, if the vacancy resulted from the death, disability or resignation
of an audit committee member; or |
- 10 -
o |
an exemption from NI 52-110, in whole or in part, granted
by a securities regulator under Part 8 (Exemptions) of NI 52-110.
|
Pre-Approval Policies and Procedures
The Audit Committee has adopted specific policies and
procedures for the engagement of non-audit services as described in section
III.B Powers and Responsibilities Performance & Completion by Auditor of
its Work of the Charter.
External Auditor Service Fees (By Category)
The following table discloses the fees billed to the Company by
its external auditor during the last two financial years.
Financial Year Ending
|
Audit Fees (1)
($) |
Audit Related Fees (2)
($) |
Tax Fees (3)
($) |
All Other Fees (4)
($)
|
December 31, 2014 |
110,160 |
41,820 |
Nil |
Nil |
December 31, 2013 |
141,372 |
102,000 |
Nil |
Nil |
(1) |
The aggregate fees billed by the Companys auditor for
audit fees. |
|
|
(2) |
The aggregate fees billed for assurance and related
services by the Companys auditor that are reasonably related to the
performance of the audit or review of the Companys financial statements
and are not disclosed in the Audit Fees column. |
|
|
(3) |
The aggregate fees billed for professional services
rendered by the Companys auditor for tax compliance, tax advice, and tax
planning. These services involved the preparation of the Companys
corporate tax returns. |
|
|
(4) |
The aggregate fees billed for professional services other
than those listed in the other three columns. |
|
Eurasian Minerals Inc.
|
|
MANAGEMENT INFORMATION CIRCULAR
(As at March 27, 2015 (the Record Date), and in
Canadian dollars, except where indicated)
PERSONS MAKING THIS SOLICITATION OF PROXIES
This Management Information Circular
(Circular) is provided in connection with the
solicitation by the management of Eurasian Minerals Inc. (the Corporation) of
proxies (Proxies) from registered shareholders and voting
instruction forms (VIFs) from the beneficial shareholders
(collectively, Shareholders) of common shares without par
value of the Corporation (Common
Shares) in respect of the annual general meeting of
Shareholders (the Meeting) to be held at the time and
place and for the purposes set out in the notice of meeting (the
Notice of Meeting).
Although it is expected that the solicitation of Proxies and
VIFs will be primarily by mail, Proxies and VIFs may also be solicited
personally or by telephone, facsimile or other solicitation services. The costs
of the solicitation of Proxies and VIFs will be borne by the Corporation.
The Corporation has given notice of the Meeting in accordance
with the Notice and Access procedures of National Instrument 54-101
Communication with Beneficial Owners of Securities of a Reporting Issuer
of the Canadian securities administrators (NI 54-101). In
accordance with NI 54-101, the Corporation has sent the Notice of Meeting and
the Proxy or VIF, but not this Circular, directly to its registered
Shareholders. Instead of mailing this Circular to Shareholders, the Corporation
has posted the Circular on its website pursuant to the Notice and Access
procedures of NI 54-101. Shareholders may request a paper copy of this Circular
be sent to them by contacting the Corporation as set out under Additional
Information at the end of this Circular.
Pursuant to NI 54-101, arrangements have been made with
brokerage houses and clearing agencies, custodians, nominees, fiduciaries,
banks, trust companies, trustees and their agents, nominees and other
intermediaries (Intermediaries) to forward the Notice of Meeting and a
VIF the unregistered (beneficial) owners of the Common Shares held of record by
Intermediaries that have consented to allow their addresses to be provided to
the Corporation (NOBOs). The Corporation may reimburse the
Intermediaries for reasonable fees and disbursements incurred by them in doing
so.
The Corporation does not intend to pay Intermediaries to
forward the Notice of Meeting and VIF to those beneficial Shareholders that have
refused to allow their address to be provided to the Corporation
(OBOs). Accordingly, OBOs will not receive the Notice of Meeting and
VIF unless their respective Intermediaries assume the cost of forwarding such
documents to them.
None of the directors of the Company have informed the Company’s management in writing that they intend to oppose the approval of any of the matters set out in the Notice of Meeting.
REGISTERED SHAREHOLDERS
Only persons registered as Shareholders in the Corporations
Central Security Register maintained by its registrar and transfer agent or duly
appointed proxyholders of registered Shareholders (Proxyholders) will
be recognized, make motions or vote at the Meeting.
BENEFICIAL SHAREHOLDERS
The information set forth in this section is of significant
importance as many Shareholders do not hold Common Shares in their own
name.
If Common Shares are listed in an account statement provided to
a Shareholder (a Beneficial Shareholder) by a broker, those Common
Shares, in all likelihood, will not be registered in the
Shareholders name. It is more likely that such Common Shares will be registered
under the name of an Intermediary. Common Shares held by Intermediaries on
behalf of a brokers client can only be voted (for or against resolutions) at
the direction of the Beneficial Shareholder. Without specific instructions,
Intermediaries are prohibited from voting shares for the Beneficial
Shareholders. Therefore, each Beneficial Shareholder should ensure that
voting instructions are communicated to the appropriate party well in advance of
the Meeting.
As provided for NI 54-101, the Corporation has elected to
obtain a list of its NOBOs from Intermediaries, and deliver proxy-related
materials directly to its NOBOs. As a result, NOBOs can expect to receive a
scannable VIF instead of a Proxy. A VIF enables a Shareholder to provide
instructions to the registered holder of its Common Shares as to how those
shares are to be voted at the Meeting and allows the registered Shareholder of
those Common Shares to provide a Proxy voting the Common Shares in accordance
with those instructions. VIFs should be completed and returned in accordance
with its instructions. As indicated in the VIF, Internet voting is also allowed.
The results of the VIFs received from NOBOs will be tabulated and appropriate
instructions respecting voting of Common Shares to be represented at the Meeting
will be provided to the registered Shareholders.
The forms of VIF requesting voting instructions supplied to
Beneficial Shareholders are substantially similar to the Proxy provided directly
to the registered Shareholders by the Corporation, however, their purpose is
limited to instructing the registered Shareholder how to vote on behalf of the
Beneficial Shareholder. A VIF has its own return instructions, which should be
carefully followed by Beneficial Shareholders to ensure their Common Shares are
voted at the Meeting.
Most brokers now delegate responsibility for obtaining
instructions from OBOs to Broadridge Investor Communications in Canada and the
United States of America. Broadridge prepares a machine-readable VIF, mails the
VIFs and other proxy materials for the Meeting to OBOs and asks them to return
the VIFs to Broadridge. It then tabulates the results of all instructions
received and provides appropriate instructions respecting the voting of shares
to be represented at the Meeting.
A Beneficial Shareholder may use their VIF to vote their own
Common Shares directly at the Meeting if the Beneficial Shareholder inserts
their own name as the name of the person to represent them at the Meeting. The
VIF must be returned to Computershare, Broadridge or other Intermediary well in
advance of the meeting in order to have the Common Shares voted. Beneficial
Shareholders should carefully follow the instructions set out in the VIF
including those regarding when and where the VIF is to be delivered.
Shareholders with any questions respecting the voting of Common
Shares held through a broker or other Intermediary, should contact that
broker or other Intermediary for assistance.
2
UNITED STATES SHAREHOLDERS
This solicitation of Proxies and VIFs involves securities of a
company located in Canada and is being effected in accordance with the corporate
and securities laws of the province of British Columbia, Canada. The proxy
solicitation rules under the United States Securities Exchange Act of 1934, as
amended, are not applicable to the Corporation or this solicitation.
Shareholders should be aware that disclosure and proxy solicitation requirements
under the securities laws of British Columbia, Canada differ from the disclosure
and proxy solicitation requirements under United States securities laws.
The enforcement by Shareholders of civil liabilities under
United States federal securities laws may be affected adversely by the fact that
the Corporation is incorporated under the Business Corporations Act
(British Columbia), some of its directors and its executive officers are
residents of Canada and a substantial portion of its assets and the assets of
such persons are located outside the United States. Shareholders may not be able
to sue a foreign Corporation or its officers or directors in a foreign court for
violations of United States federal securities laws. It may be difficult to
compel a foreign Corporation and its officers and directors to subject
themselves to a judgment by a United States court.
APPOINTMENT OF PROXYHOLDERS
AND COMPLETION AND
REVOCATION OF PROXIES AND VIFS
Only persons registered as Shareholders in the Corporations
Central Security Register maintained by its registrar and transfer agent or duly
appointed proxyholders of registered Shareholders will be recognized or may make
motions or vote at the Meeting.
The persons named (the Management Designees) in the
Proxy or VIF have been selected by the board of directors of the Corporation
(the Board) and have agreed to represent as Proxyholder the
Shareholders appointing them.
A Shareholder has the right to designate a person (who need
not be a Shareholder and, for a VIF, can be the appointing Shareholder) other
than the Management Designees as their Proxyholder to represent them at the
Meeting. Such right may be exercised by inserting in the space provided for that
purpose on the Proxy or VIF the name of the person to be designated and by
deleting therefrom the names of the Management Designees or, if the Shareholder
is a registered Shareholder, by completing another proper form of Proxy and
delivering the Proxy or VIF in accordance with its instructions. Such
Shareholder should notify the nominee of the appointment, obtain the nominees
consent to act as Proxyholder and provide instructions on how their Common
Shares are to be voted. The nominee should bring personal identification with
them to the Meeting.
A Shareholder may indicate the manner in which the Proxyholders
are to vote on behalf of the Shareholder, if a poll is held, by marking an X
in the appropriate space of the Proxy. If both spaces are left blank, the
Proxy will be voted as recommended by management for any matter requiring a
For or Against vote, and in favour of the matter for any matter requiring a
For or Withhold vote.
The Proxy, when properly signed, confers discretionary
authority with respect to amendments or variations to the matters identified in
the Notice of Meeting. As at the date of this Circular, the Companys
management is not aware that any amendments or variations are to be presented at
the Meeting. If any amendments or variations to such matters should properly
come before the Meeting, the Proxies hereby solicited will be voted as
recommended by management.
3
To be valid, the Proxy or VIF must be dated and executed by the
Shareholder or an attorney authorized in writing, with proof of such
authorization attached (where an attorney executed the Proxy or VIF). The
completed Proxy or VIF must then be returned in accordance with its
instructions. Proxies (but not VIFs, unless the VIF was has Computershares name
and address on the top right corner of the first page) and proof of
authorization can also be delivered to the Corporations transfer agent,
Computershare Investor Services Inc. (Attn: Proxy Department), by fax within
North America at 1-866-249-7775, outside North America at (+1) 416-263-9524, by
mail to 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1,
Canada or by hand delivery to 2nd Floor, 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9, at least 48 hours, excluding Saturdays,
Sundays and holidays, before the Meeting or any adjournment thereof. Proxies and
VIFs received after that time may be accepted or rejected by the Chairman of the
Meeting in the Chairmans discretion, and the Chairman is under no obligation to
accept or reject late Proxies.
A Proxy will be revoked by a Shareholder personally attending
at the Meeting and voting their Common Shares or the Shareholder may revoke
their Proxy in respect of any matter upon which a vote has not already been cast
pursuant to the authority conferred by the Proxy. A Proxy may also be revoked by
depositing an instrument in writing (which includes an Proxy bearing a later
date) executed by the Shareholder or by their authorized attorney in writing,
or, if the Shareholder is a company, under its corporate seal by an officer or
attorney thereof duly authorized, either at the office of the transfer agent at
one of Computershares addresses set out above or the registered office of the
Corporation at Northwest Law Group (Attn: Michael F. Provenzano), Suite 704, 595
Howe Street, Vancouver, British Columbia V6C 2T5, Canada or by fax to (+1)
604-687-6650) or to the Corporations head office (Eurasian Minerals Inc. (Attn:
Valerie Barlow) at Suite 501, 543 Granville Street, Vancouver, British Columbia
V6C 1X8, Canada or by fax to (+1) 604-688-1157), at any time up to and including
the last business day preceding the date of the Meeting, or any adjournment
thereof, or by depositing the instrument in writing with the Chairman of such
Meeting, or any adjournment thereof. VIFs may only be revoked in accordance with
their specific instructions.
VOTING OF PROXIES AND VIFS
Voting at the Meeting will be by a show of hands, each
registered Shareholder and each Proxyholder having one vote, unless a poll is
required (if the number of Common Shares represented by Proxies and VIFs that
are to be voted against a motion are greater than 5% of the votes that could be
cast at the Meeting) or requested, whereupon each registered Shareholder and
Proxyholder is entitled to one vote for each Common Share held or represented,
respectively.
Each Shareholder may instruct their Proxyholder how to vote
their Common Shares by completing the blanks on the Proxy or VIF. All Common
Shares represented at the Meeting by properly executed Proxies and VIFs will be
voted or withheld from voting when a poll is required or requested and, where a
choice with respect to any matter to be acted upon has been specified in the
Proxy or VIF, such Common Shares will be voted in accordance with such
specification. In the absence of any such specification on the Proxy or VIF
as to voting, the Management Designees, if named as Proxyholder, will vote in
favour of the matters set out therein.
The Proxy or VIF confers discretionary authority upon the
Management Designees, or other person named as Proxyholder, with respect to
amendments to or variations of matters identified in the Notice of Meeting. As
of the date hereof, the Corporation is not aware of any amendments to,
variations of or other matters which may come before the Meeting.
4
In order to approve a motion proposed at the Meeting a majority
of greater than 50% of the votes cast will be required (an ordinary
resolution) unless the motion requires a special resolution in
which case a majority of 66-2/3% of the votes cast will be required.
QUORUM
The Articles of the Corporation provide that a quorum for the
transaction of business at any meeting of Shareholders shall be two Shareholders
present in person or represented by Proxy.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Corporation is authorized to issue an unlimited number of
Common Shares, which are the only shares entitled to be voted at the Meeting. As
at the Record Date, the Corporation had 73,419,710 Common Shares issued and
outstanding. Shareholders are entitled to one vote for each Common Share
held.
To the knowledge of the directors and executive officers of the
Corporation, no person, firm or company beneficially owned, or exercised control
or direction over directly or indirectly, voting securities carrying 10% or more
of the voting rights attached to the Common Shares as at the Record Date except
as indicated below:
Name |
Number of Common
Shares Owned
or Controlled at the Record Date |
Percentage
of
Outstanding Common Shares |
Paul H. Stephens |
7,761,647 |
10.4% |
STATEMENT OF EXECUTIVE COMPENSATION
Unless otherwise noted the following information is for the
Corporations last completed financial year (which ended December 31, 2014) and,
since the Corporation has subsidiaries, is prepared on a consolidated basis.
Named Executive Officers
For the purposes of this Circular, a Named Executive Officer
(NEO) means each of the following individuals:
|
(a) |
the chief executive officer (CEO) of the
Corporation; |
|
|
|
|
(b) |
the chief financial officer (CFO) of the
Corporation; and |
|
|
|
|
(c) |
each of the Corporations three most highly compensated
executive officers, or individuals acting in a similar capacity, other
than the CEO and CFO, during the most recently completed financial year if
their individual total compensation was more than $150,000 for that
financial year. |
Compensation Discussion and Analysis
The Compensation Committee of the Board is responsible for
ensuring that the Corporation has appropriate procedures for executive
compensation and making recommendations to the Board with respect to the compensation of the Corporations executive
officers. The Compensation Committees mandate is to ensure that total
compensation paid to all executives is fair and reasonable and is consistent
with the Corporations compensation philosophy.
5
The Compensation Committee is also responsible for recommending
compensation for the directors and officers, stock options grants to the
directors, officers, employees and consultants pursuant to the Corporations
Stock Option Plan (the Option Plan) and issuances of Common Shares to
directors and officers pursuant to the Corporations Incentive Stock Grant
Program (the Stock Grant Program).
The Compensation Committee is currently comprised of Brian
Bayley (Chairman), Brian Levet, and Larry Okada, all of whom are independent
directors. The board is satisfied that the composition of the Compensation
Committee ensures an objective process for determining compensation.
Philosophy
The philosophy used by the Board and the Compensation Committee
in determining compensation is that the compensation should (i) assist the
Corporation in attracting and retaining high caliber executives, (ii) align the
interests of executives with those of the Shareholders, (iii) reflect the
executives performance, expertise, responsibilities and length of service to
the Corporation, and (iv) reflect the Corporations current state of
development, performance and financial status.
Compensation Components
The compensation of the NEOs (as well as for other senior
management and employees) is comprised primarily of (i) base salary, (ii) annual
short-term incentives in the form of cash bonuses and stock grants under the
Stock Grant Program, (iii) long-term incentives in the form of stock grants and
stock options granted in accordance with the Option Plan and the Stock Grant
Program, respectively, and (iv) benefits related to health and pension plans,
such as United States 401(k) plans.
To be competitive with industry rates, the Corporation may
provide additional compensation from time to time in the form of stock grants as
part of annual salaries. The Stock Grant Program assists the Corporation in
employee retention and cash preservation, while encouraging Common Share
ownership and entrepreneurship on the part of its executives (as well as the
Board, and management and other employees of the Corporation). The Compensation
Committee believes that annual and long term stock grant awards align the
interests of such persons with the interests of Shareholders by linking a
component of compensation to the longer term performance of the Common Shares.
To date, no formulas have been developed to assign a specific
weighting to each of these components. Instead, the Compensation Committee
considers the Corporations performance and, based on its assessment, recommends
appropriate compensation levels to the Board. In establishing levels of cash and
equity-based compensation, the executives performance, level of expertise,
responsibilities, length of service to the Corporation and comparable levels of
remuneration paid to executives of other companies of comparable size and
development within the mining exploration and development industries are
considered as well as taking into account the financial and other resources of
the Corporation.
In March 2015, the Compensation Committee retained the services
of McDowall Associates Human Resource Consultants Ltd. (McDowall), a
North American external compensation consultant headquartered in Toronto,
Ontario, to provide an independent review of the compensation paid by the
Corporation to its CEO and CFO. McDowall benchmarked the Corporations
compensation arrangements against a peer group of companies that included a mix
of royalty companies and exploration companies with assets greater than $30
million and less than $450 million to reflect the Companys current business
operations. McDowall used total assets as the primary
determinate of company size because it is more stable over time than either
revenue or market capitalization. The peer group of companies consisted of:
6
Almaden Minerals Limited |
Altius Minerals Corporation |
Callinan Royalties Corporation |
Gold Standard Ventures Corporation |
Midway Gold Corporation |
Mirasol Resources Limited |
Osisko Gold Royalties Limited |
Pilot Gold Inc. |
Panoro Minerals Limited |
Sandstorm Gold Limited |
Seabridge Metals Limited |
Strategic Metals Limited
|
In addition to the peer group analysis, McDowall compared CEO
and CFO compensation against a broad group of 90 mining companies and 12 large
mining companies. With respect to the broad group of 90 mining companies, direct
comparisons were made to CEO and CFOs, while for the 12 large mining companies,
comparisons were made to an executive one or two levels below the CEO.
McDowall compared base salary, total cash (base salary +
bonuses) and total direct compensation (total cash + long term incentives). In
making this comparison, McDowall used an average of the peer group companies and
the broad group of 90 mining companies to establish a benchmark for comparison
(Benchmark Companies).
McDowall concluded that the cash base salary of the CEO is
higher than the Benchmark Companies average and below the large mining group. It
also concluded, respect to total cash and total direct compensation, that the
Corporations CEO is comparable to the Benchmark Companies average and
substantially below the large mining group. It should be noted that the CEOs
cash salary is paid in US dollars but converted to Canadian dollars for
reporting purposes. The Canadian equivalent was used in the comparison to the
Benchmark Companies. The higher base salary of the CEO to the Benchmark
Companies is partly attributable to the decline in the Canadian dollar against
the US dollar in 2014.
McDowall concluded that the base salary, total cash, and total
direct compensation for the CFO was below the Benchmark Companies and
substantially below the larger mining group of companies.
In the Corporations last two financial years, McDowall has not
provided any other services to the Corporation or its affiliates.
The fees charged by McDowall during the Corporations 2014 and
2013 financial years were as follows:
Nature of Fee |
2014 |
2013 |
Executive Compensation-Related Fees |
$9,040 |
Nil |
All Other Fees |
Nil |
Nil |
The Compensation Committee also relies on the experience of its
members as officers and directors at other companies in similar lines of
business as the Corporation in assessing compensation levels. The other
companies of which they are currently a director are identified under the
heading Disclosure of Corporate Governance Practices Other Directorships of
this Circular. The purpose of this process is to:
- understand the competitiveness of current pay levels for each executive
position relative to companies with similar business characteristics;
7
-
identify and understand any gaps that may exist between actual compensation
levels and market compensation levels; and
-
establish a basis for developing salary adjustments and short-term and
long-term incentive awards for the Compensation Committees approval.
Base Salary
The Compensation Committee recommends, and the Board
establishes, the NEOs salary. The base salary review for each NEO is based on
assessment of factors such as changes to competitive market conditions,
compensation levels within the peer group and particular skills, such as
leadership ability and management effectiveness, experience, responsibility and
proven or expected performance of the particular individual. Using this
information, together with budgetary guidelines and other internally and
externally generated planning and forecasting tools, the Compensation Committee
performs an annual assessment of the compensation of the CEO and CFO. The
Corporation did not increase the base salaries of the CEO and CFO for 2013 and
2014 and do not have base salary increases planned for 2015.
Annual Bonuses
Annual bonuses are made by way of cash bonuses and the issuance
of stock grants based, in part, on the Corporations success in reaching its
annual objectives and in part on individual performance and extraordinary effort
and achievement. Also, the Corporation may utilize bonuses to encourage
retention of its staff during periods of increased industry competition for its
executive officers and other employees.
The Board, together with the Compensation Committee, reviews
corporate performance objectives during the year to determine annual bonuses. In
2014, the principal performance factors and objectives included:
-
Exploration success;
-
Acquisition of new properties;
-
Sale and joint venture of properties;
-
Royalty creations and acquisitions;
-
Capital management;
-
Successful management of the Corporations environmental, community, and
safety objectives;
-
Increasing market capitalization; and
-
Management of human resources.
The success of the NEOs contributions to the Corporation in
reaching its overall goals is a factor in the determination of their annual
incentive. The Compensation Committee assesses each NEOs performance on the
basis of his or her respective contribution to the achievement of corporate
goals as well as to needs of the Corporation that arise on a day-to-day basis.
This assessment is used by the Compensation Committee in developing its
recommendations to the Board with respect to the determination of annual
incentives for the NEOs.
8
Although a number of the corporate performance objectives were
achieved, the Corporation did not grant any annual bonuses by way of cash or
stock grants to NEOs for 2014.
Long-Term Incentives
Stock Options are generally granted on an annual basis subject
to the imposition of trading black-out periods, in which case options scheduled
for grant will be granted subsequent to the end of the black-out period. All
options granted to NEOs are recommended by the Compensation Committee and
approved by the Board. In monitoring stock option grants, the Compensation
Committee takes into account the level of options granted by comparable
companies for similar levels of responsibility and considers each NEO or
employee based on reports received from management, its own observations on
individual performance (where possible) and its assessment of individual
contribution to Shareholder value.
To determine the number of Common Shares issuable under options
granted pursuant to the methodology outlined above, the Compensation Committee
also makes the following determinations:
-
the exercise price for each option granted;
-
the date on which each option is granted;
-
the vesting terms for each stock option; and
-
the other materials terms and conditions of each stock option grant.
The Compensation Committee makes these determinations subject
to, and in accordance with, the provision of the Option Plan. The Corporation
granted stock options in April 2014.
9
Summary Compensation Table
The following table contains a summary of the compensation paid
to the NEOs during the three most recently completed financial years.
Name and
principal position |
Year Ended Dec. 31 |
Salary ($) |
Share-
based awards ($) |
Option-
based awards ($) |
Non-equity incentive plan
compensation
|
Pension value ($) |
All
Other Compensation ($) |
Total Compensation
($) |
Annual
incentive
plans ($) |
Long term
incentive plans ($) |
David M. Cole
President & CEO
|
2014 2013 2012 |
464,040(1)
427,772(2) 385,524(3) |
41,648(4)
174,890(4) 370,059(4) |
81,000(5) Nil 79,720
(6) |
Nil Nil Nil |
Nil Nil Nil |
12,065 17,110 15,421 |
Nil Nil Nil |
598,753 619,772 850,724 |
Christina Cepeliauskas(8)(9)
CFO
|
2014 2013 2012 |
86,520 86,520 86,520 |
9,087(4)
35,126(4) 66,797(4) |
29,700(5) Nil
49,825(6) |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil 15,900(7) |
125,307 121,646 219,042 |
M. Stephen Enders(10)(11)
Chief
Operating Officer
|
2014 2013 2012 |
232,020(1)
267,358(2) 273,597(3) |
15,144(4)
65,479(4) 195,570(4) |
48,600(5) Nil
39,860(6) |
Nil Nil Nil |
Nil Nil Nil |
9,280 10,694 10,984 |
Nil Nil Nil |
305,044 343,531 589,570 |
(1) |
As Messrs. Cole and Enders are paid in U.S dollars, the
salaries were converted to Canadian dollars on December 31, 2014 at
$1.1601. |
(2) |
As Messrs. Cole and Enders are paid in U.S dollars, the
salaries were converted to Canadian dollars on December 31, 2014 at
$1.0694. |
(3) |
As Messrs. Cole and Enders are paid in U.S dollars, the
salaries were converted to Canadian dollars on December 31, 2014 at
$0.9638. |
(4) |
The grant date fair value of share based awards granted
was determined by using the closing market price of Common Shares on the
date of grant. The share based awards will be issued in three equal
installments over a two year period. |
(5) |
The grant date fair value of options granted during the
year ended December 31, 2014 was determined by using the Black- Scholes
model, as described below, and the following weighted average assumptions:
stock price $1.20 exercise price - $1.20, an option life of 5 years, a
risk-free interest rate of 1.5% and a volatility of 51.75%. |
(6) |
The grant date fair value of options granted during the
year ended December 31, 2012 was determined by using the Black- Scholes
model, as described below, and the following weighted average assumptions:
stock price $1.20 exercise price - $1.20, an option life of 5 years, a
risk-free interest rate of 1.2% and a volatility of 60.28%. |
(7) |
Discretionary cash bonus related to 2011. |
(8) |
Pursuant to a Management Services Agreement between the
Corporation and Seabord Services Corp., Ms. Cepeliauskas remuneration is
paid by Seabord. See Management Contracts for a description of the
material terms of the Management Services Agreement. |
(9) |
Since the Corporations CFO is employed by Seabord, the
amounts disclosed include any compensation paid by the management company
for services rendered to the Corporation as a CFO. Such compensation has
been attributed to the Corporation on the basis of the work commitments to
the Corporation. |
(10) |
Mr. Enders resigned as Executive Chairman and was
appointed Chief Operating Officer on May 23, 2012. |
(11) |
Mr. Enders ceased to be Chief Operating Officer and as a
director of the Company on March 8, 2015. |
The Corporation has calculated the grant date fair value
amounts in the Option-based Awards column using the Black-Scholes model, a
mathematical valuation model that ascribes a value to a stock option based on a
number of factors in valuing the option-based awards, including the exercise
price of the options, the price of the underlying security on the date the
option was granted, and assumptions with respect to the volatility of the price
of the underlying security and the risk-free rate of return. Calculating the value of stock options using this methodology is very
different from a simple in-the-money value calculation. Stock options that are
well out-of-the-money can still have a significant grant date fair value
based on a Black-Scholes valuation. Accordingly, caution must be exercised in
comparing grant date fair value amounts with cash compensation or an
in-the-money option value calculation. The total compensation shown in the
last column is the total compensation of each NEO reported in the other columns.
The value of the in-the-money options currently held by each NEO (based on
share price less option exercise price) is set forth in the Value of
Unexercised in-the-money Options column of the Outstanding Share-Based and
Option-based Awards table below.
10
See Employment and Consulting Agreements for a description of
the material terms of the employment and consulting agreements with the
NEOs.
Incentive Plan Awards
Outstanding Share-Based and Option-Based Awards held by NEOs
The following table sets out, for each NEO, the incentive stock
options to purchase Common Shares (option-based awards) held as of December 31,
2014. The closing price of the Common Shares on the TSX-V on December 31, 2014
was $0.88.
Name |
Option-based Awards |
Share-based Awards |
Number of
securities underlying unexercised
options (vested-unvested) |
Option
exercise price ($ per share) |
Option
expiration date (m/d/y) |
Value of
unexercised in-the-money options
($) |
Number of
shares or units of shares that have not
vested (#) |
Market or
payout value of share-based awards that
have not vested ($) |
Market or
Payout Value of Shares vested but not
paid out ($) |
David M. Cole CEO |
150,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
80,000 |
1.94 |
8/22/2016 |
0 |
0 |
0 |
0 |
200,000 |
2.80 |
7/19/2016 |
0 |
0 |
0 |
0 |
200,000 |
2.18 |
5/7/2015 |
0 |
0 |
0 |
0 |
Christina Cepeliauskas CFO |
55,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
50,000 |
1.94 |
8/22/2016 |
0 |
0 |
0 |
0 |
75,000 |
2.80 |
7/19/2016 |
0 |
0 |
0 |
0 |
75,000 |
2.18 |
5/7/2015 |
0 |
0 |
0 |
0 |
M. Stephen Enders(1) COO |
90,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
40,000 |
1.94 |
8/22/2016 |
0 |
0 |
0 |
0 |
100,000 |
2.80 |
7/19/2016 |
0 |
0 |
0 |
0 |
100,000 |
2.18 |
5/7/2015 |
0 |
0 |
0 |
0 |
|
(1) |
Mr. Enders ceased to be Chief Operating Officer and a
Director of the Company on March 8, 2015. |
The Compensation Committees approach to recommending options
to be granted is consistent with prevailing practice in the mineral exploration
industry. Grants of options depend on the length of service of the NEO. There
are, therefore, no formulae followed or performance goals or significant
conditions which must be met before options will be granted. Options are
always granted at the prevailing market price of the Common Shares.
11
Value of Share-Based and Option-Based Awards Vested or
Earned During the Year by NEOs
The following table sets forth, for each NEO, the values of all
incentive plan awards which vested or were earned during the year ended December
31, 2014.
Name & Position |
Value vested during the year |
Option-based awards
($) |
Share-based awards
($) |
Value earned during the year
Non-equity incentive plan compensation awards
($) |
David M. Cole CEO |
0
|
0
|
Nil
|
Christina Cepeliauskas CFO |
0
|
0
|
Nil
|
M. Stephen Enders(1) COO |
0
|
0
|
Nil
|
(1) |
Mr. Enders ceased to be Chief Operating Officer and a
Director of the Company on March 8, 2015. |
Defined Contribution Plans
The following table sets forth the particulars of the defined
contribution plan for NEOs during the Corporations last completed financial
year.
Name |
Accumulated value
at
start of year |
Compensatory ($) |
Accumulated value at
year
end ($) |
David M. Cole CEO |
0
|
12,065
|
12,065
|
Christina Cepeliauskas CFO |
0
|
0
|
0
|
M. Stephen Enders(1) COO |
0
|
9,280
|
9,280
|
(1) |
Mr. Enders ceased to be Chief Operating Officer and a
Director of the Company on March 8, 2015. |
Employment and Consulting Agreements
Chief Executive Officer
The Corporation is a party to an employment agreement with
David M. Cole, President and CEO of the Corporation, effective October 1, 2010.
Under the agreement, Mr. Cole receives US$400,000 per year. The agreement may be
terminated by the Corporation without reason by written notice and a lump sum
payment equal to 12 months of salary and benefits. Mr. Cole may terminate the
agreement for any reason upon two months notice to the Corporation during which time he
will continue to receive his usual remuneration and benefits.
12
If Mr. Coles agreement is terminated or his duties and
responsibilities are materially changed within 12 months following a change in
control of the Corporation, he is entitled to receive a lump sum payment equal
to 12 months of his salary and benefits and all unvested stock options and
grants.
Chief Operating Officer
The Corporation was a party to an employment agreement with M.
Stephen Enders, Chief Operating Officer of the Corporation, effective October 1,
2010. Under the agreement, Mr. Enders received US$200,000 per year. Mr. Enders
ceased to be Chief Operating Officer on March 8, 2015 and the position was
eliminated. In consideration thereof, Mr. Enders shall receive a lump sum
payment equal to 12 months of his salary and benefits. Mr. Enders will continue
with the Company as a consultant and a member of the advisory board.
Other Named Executive Officers
The Corporation has not entered into another employment or
consulting contracts with its other NEOs.
Pension Plan Benefits
For the officers and employees in the United States, the
Corporation pays 4% of the annual salary each year to the officer or employees
401(k) retirement plan effective January 1, 2012.
Termination and Change of Control Benefits
Other than described above under Employment and Consulting
Agreements, the Corporation does not have written contracts with any of its
NEOs respecting the resignation, retirement or other termination of employment
resulting from a change of control.
Director Compensation
The following table describes director compensation for
directors (other than the NEOs) for the year ended December 31, 2014.
Name |
Fees
(1) earned ($) |
Awards |
Non-equity
incentive plan compensation ($) |
Pension
value ($) |
All other
Compensation ($) |
Total
($) |
Share-based ($) |
Option-based (2)
($) |
Brian E. Bayley |
24,000 |
0 |
27,000 |
0 |
0 |
0 |
51,000 |
Michael D. Winn |
60,000(3) |
7,370 |
40,500 |
0 |
0 |
0 |
107,870 |
George K. C. Lim(4) |
24,000 |
0 |
27,000 |
0 |
0 |
0 |
51,000 |
Brian K. Levet |
24,000 |
0 |
27,000 |
0 |
0 |
0 |
51,000 |
Larry M. Okada |
24,000 |
0 |
27,000 |
0 |
0 |
0 |
51,000 |
|
(1) |
Compensation paid as directors fees. Each of the
Corporations non-employee directors receives an annual retainer equal to
$24,000 with no additional meeting or per diem
fees. |
13
|
(2) |
The stock benefit is the grant date fair value using the
Black-Scholes option pricing model using the following weighted average
assumptions: stock price - $1.20, exercise price - $1.20, an option life
for 5 years, a risk-free interest rate of 1.5% and a volatility of
51.75%. |
|
(3) |
Mr. Winn receives additional compensation as the
non-executive Chairman of the Board. |
|
(4) |
Mr. Lim will not be standing for
re-election. |
The Corporation has calculated the grant date fair value
amounts in the Option-based Awards column using the Black-Scholes model, a
mathematical valuation model that ascribes a value to a stock option based on a
number of factors in valuing the option-based awards, including the exercise
price of the options, the price of the underlying security on the date the
option was granted, and assumptions with respect to the volatility of the price
of the underlying security and the risk-free rate of return. Calculating the
value of stock options using this methodology is very different from a simple
in-the-money value calculation. Stock options that are well out-of-the-money
can still have a significant grant date fair value based on a Black-Scholes
valuation. Accordingly, caution must be exercised in comparing grant date fair
value amounts with cash compensation or an in-the-money option value
calculation. The total compensation shown in the last column is the total
compensation of each director reported in other columns. The value of the
in-the-money options currently held by each director (based on share price
less option exercise price) is set forth in the Value of Unexercised
in-the-money Options column of the Outstanding Share-Based and
Option-Based Awards table below.
The methodology used for determining the remuneration of the
Board is similar to that used for the remuneration of NEOs. Remuneration of
committee chairmen is determined based on their own merits and circumstances
after being considered in light of prevailing economic conditions both on a
corporate level and on national and international levels and industry norms
for such remuneration. Levels of remuneration of directors, committee members
and committee chairmen are usually first informally discussed among the members
of the Compensation Committee before being formally considered and approved by
the Board.
Schedule of Director Fees
The fees payable to the independent directors of the
Corporation for their services as director of the Board are as follows:
Annual Retainer
($) |
Meeting Stipend
($) |
Per diem fees
($) |
24,000 |
Nil |
Nil |
Outstanding Share-based and Option-based Awards held by
Directors
The following table sets out, for each independent director,
the incentive stock options (option-based awards) to purchase Common Shares held
as of December 31, 2014. The closing price of the Corporations shares on the
TSX-V on December 31, 2014 was $0.88.
14
Name |
Option-based Awards |
Share-based Awards |
Number of
securities underlying unexercised
options (# vested-unvested) |
Option
exercise price ($) |
Option
expiration date (m/d/y) |
Value of
unexercised in-the-money options
($) |
Number of
shares or units of shares that have not
vested (#) |
Market or
payout
value of share- based awards that
have not vested ($) |
Market
or Payout
Value of Shares vested but not
paid out ($) |
Brian E. Bayley |
50,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
50,000 |
1.94 |
8/22/2017 |
0 |
0 |
0 |
0 |
50,000 |
2.80 |
7/19/2016 |
0 |
0 |
0 |
0 |
75,000 |
2.18 |
5/7/2015 |
0 |
0 |
0 |
0 |
Michael D. Winn |
75,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
50,000 |
1.94 |
8/22/2017 |
0 |
0 |
0 |
0 |
50,000 |
2.80 |
7/19/2016 |
0 |
0 |
0 |
0 |
100,000 |
2.18 |
5/7/2015 |
0 |
0 |
0 |
0 |
George K. C. Lim(1) |
50,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
50,000 |
1.94 |
8/22/2017 |
0 |
0 |
0 |
0 |
50,000 |
2.80 |
7/19/2016 |
0 |
0 |
0 |
0 |
75,000 |
2.18 |
5/7/2015 |
0 |
0 |
0 |
0 |
Brian K. Levet |
50,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
50,000 |
1.94 |
8/22/2017 |
0 |
0 |
0 |
0 |
150,000 |
2.91 |
5/21/2016 |
0 |
0 |
0 |
0 |
Larry M. Okada |
50,000 |
1.20 |
4/25/2019 |
0 |
0 |
0 |
0 |
|
(1) |
Mr. Lim will not be standing for
re-election. |
Value of Share-Based and Option-Based Awards Vested or
Earned During the Year by Directors
The following table sets forth, for each director, the values
of all incentive plan awards which vested or were earned during the year ended
December 31, 2014.
|
Value vested during the year |
Value earned during the year |
|
|
|
Non-equity incentive plan |
|
Option-based awards |
Share-based awards |
compensation |
Name |
($) |
($) |
($) |
Brian E. Bayley |
0 |
0 |
0 |
Michael D. Winn |
0 |
0 |
0 |
George K. C. Lim(1) |
0 |
0 |
0 |
Brian K. Levet |
0 |
0 |
0 |
|
(1) |
Mr. Lim will not be standing for
re-election. |
15
Management Contracts
Pursuant to a management service agreement dated February 13,
2014 between the Corporation and Seabord Services Corp. of Suite 501, 543
Granville Street, Vancouver, British Columbia, the Corporation pays $34,900 per
month to Seabord in consideration of Seabord providing the services of the CFO
and Corporate Secretary and office, reception, secretarial, accounting and
corporate records services to the Corporation.
Seabord is a private company wholly-owned by Michael D. Winn, a
director of the Corporation.
Stock Option Plan
The Board established the Option Plan to attract and motivate
the directors, officers and employees of the Corporation (and any of its
subsidiaries), employees of any management company and consultants to the
Corporation (collectively the Optionees) and thereby advance the
Corporations interests by providing them an opportunity to acquire an equity
interest in the Corporation through the exercise of stock options granted to
them under the Option Plan.
Pursuant to the Option Plan, the Board, based on the
recommendation of the Compensation Committee, may grant options to Optionees in
consideration of them providing their services to the Corporation or a
subsidiary. The number of Common Shares subject to each option is determined by
the Board within the guidelines established by the Option Plan. The options
enable the Optionees to purchase Common Shares at a price fixed pursuant to such
guidelines. The options are exercisable by the Optionee giving the Corporation
notice and payment of the exercise price for the number of Common Shares to be
acquired.
The Option Plan authorizes the Board to grant stock options to
the Optionees on the following terms:
1. |
The number of Common Shares subject to issuance pursuant
to outstanding options, in the aggregate, cannot exceed 10% of the
outstanding Common Shares. |
|
|
|
|
2. |
The number of Common Shares subject to issuance upon the
exercise of options granted under the Option Plan by one Optionee or all
Optionees providing investor relations services is subject to the
following limitations |
|
|
|
|
|
(a) |
no Optionee can be granted options during a 12 month
period to purchase more than |
|
|
|
|
|
|
(i) |
5% of the issued Common Shares unless disinterested
Shareholder approval has been obtained (such approval has not been
sought), or |
|
|
|
|
|
|
(ii) |
2% of the issued Common Shares, if the Optionee is a
consultant, and |
|
|
|
|
|
(b) |
the aggregate number of Common Shares subject to options
held by all Optionees providing investor relations services cannot exceed
2% in the aggregate. |
|
|
|
|
3. |
Unless the Option Plan has been approved by disinterested
Shareholders (such approval has not been obtained), options granted under
the Option Plan, together with all of the Corporations previously
established and outstanding stock options, stock option plans, employee
stock purchase plans or any other compensation or incentive mechanisms
involving the issuance or potential issuance of Common Shares, shall not
result, at any time, in |
16
|
(a) |
the number of Common Shares reserved for issuance
pursuant to stock options granted to insiders exceeding 10% of the
outstanding Common Shares at the time of granting, |
|
|
|
|
(b) |
the grant to insiders, within a one year period, of
options to purchase that number of Common Shares exceeding 10% of the
outstanding Common Shares, or |
|
|
|
|
(c) |
the issuance to any one insider and such insiders
associates, within a one year period, of Common Shares totalling in excess
of 5% of the outstanding Common Shares. |
4. |
The exercise price of the options cannot be set at less
than the greater of $0.10 per Common Share and the closing trading price
of the Common Shares on the day before the granting of the stock options.
If the Optionee is subject to the tax laws of the United States of America
and owns (determined in accordance with such laws) greater than 10% of the
Common Shares, the exercise price shall be at least 110% of the price
established as aforesaid. |
|
|
|
5. |
The options may be exercisable for up to 10
years. |
|
|
|
6. |
There are not any vesting requirements unless the
Optionee is a consultant providing investor relations services to the
Corporation, in which case the options must vest over at least 12 months
with no more than one-quarter vesting in any three month period. However,
the Board may impose additional vesting requirements and, subject to
obtaining any required approval from the Exchange, may authorize all
unvested options to vest immediately. If there is a potential change of
control of the Corporation due to a take-over bid being made for the
Corporation or a similar event, all unvested options, subject to obtaining
any required approval from the Exchange, shall vest immediately. |
|
|
|
7. |
The options can only be exercised by the Optionee (to the
extent they have already vested) for so long as the Optionee is a
director, officer or employee of, or consultant to, the Corporation or any
subsidiary or is an employee of the Corporations management corporation
and within a period thereafter not exceeding the earlier of: |
|
|
|
|
(a) |
the original expiry date; |
|
|
|
|
(b) |
90 days after ceasing to be a director, officer or
employee of, or consultant at the request of the Board or for the benefit
of another director or officer to, the Corporation unless the Optionee is
subject to the tax laws of the United States of America, in which case the
option will terminate on the earlier of the 90th day and the
third month after the Optionee ceased to be an officer or employee;
and |
|
|
|
|
(c) |
if the Optionee dies, within one year from the Optionees
death. |
|
|
|
|
If the Optionee is terminated for cause, involuntarily
removed or resigns (other than at the request of the Board or for the
benefit of another director or officer) from any such positions, the
option will terminate concurrently. |
|
|
|
8. |
The options are not assignable except to a wholly-owned
holding company. If the option qualifies as an incentive stock option
under the United States Internal Revenue Code, the option is not
assignable to a holding company. |
|
|
|
9. |
No financial assistance is available to Optionees under
the Option Plan. |
17
10. |
Any amendments to outstanding stock options are subject
to the approval of the TSX-V and NYSE MKT and, if required by either
exchange or the Option Plan, of the Shareholders of the Corporation,
possibly with only disinterested Shareholders being entitled to vote.
Disinterested Shareholder approval must be obtained for the reduction of
the exercise price of options (including the cancellation and re-issuance
of options within a one year period so as to effectively reduce the
exercise price) of options held by insiders of the Corporation. The
amendment to an outstanding stock option will also require the consent of
the Optionee. |
|
|
11. |
Any amendments to the Option Plan are subject to the
approval of the TSX-V and NYSE MKT and, if required by either exchange or
the Option Plan, of the Shareholders of the Corporation, possibly with
only disinterested Shareholders being entitled to
vote. |
No options have been granted under the Option Plan which are
subject to Shareholder approval.
The Option Plan does not permit stock options to be transformed
into stock appreciation rights.
Stock Grant Program
The Board created the Incentive Stock Grant Program for the
benefit of the officers and directors of the Corporation in 2010, and expanded
the Program in 2011. The grants have a two year vesting period.
The purpose of the Stock Grant Program is as follows. Firstly,
to reward and provide an incentive to such persons for the ongoing efforts
towards the continuing successes and goals of the Corporation as many of its
successes directly result from their very significant efforts. Secondly, to
provide such persons with a long term incentive to remain with the Corporation.
Finally, from time to time, the Corporation may provide additional compensation
in the form of stock grants as part of annual salaries.
The Stock Grant Program provides that, following the approval
of the independent members of the Compensation Committee, up to 300,000 Common
Shares may be awarded in each year. The Common Shares awarded will vest and be
issued in three separate tranches over a two year period on the date of grant,
and on the first and second anniversaries of the initial grant. None of the
300,000 Common Shares not awarded in one year can be rolled over or awarded in
subsequent years. If the recipient ceases to be a director or officer of the
Corporation before the relevant anniversary, he or she will not be entitled to
receive any further Common Shares under the Stock Grant Program, including
Common Shares previously awarded for issuance on such anniversary (with the
exception of historical stock grants to Mr. Michael Winn, who shall receive the
Common Shares even if he ceases to the be director).
The actual number of Common Shares awarded in each year is that
number recommended and approved by the independent members of the Compensation
Committee or independent directors of the Corporation.
In addition to the Stock Grant Program, the Compensation
Committee can recommend the Board approve the issuance of up to 700,000 Common
Shares to certain officers and directors of the Corporation as performance based
discretionary bonuses. The purposes of the bonuses are to reward these
individuals for their extraordinary efforts and to provide them with a long term
incentive to remain with the Corporation. Any such share grants are subject to
the approval of by the TSX-V and NYSE MKT and, if required by either exchange,
the independent Shareholders of the Corporation.
18
Performance Graph
The following graph shows the Corporations cumulative total
return on the Common Shares compared with the cumulative total return of the
Standards & Poors TSX Venture Composite Index (assuming
reinvestment of dividends) during the Corporations last five financial years if
$100 were invested in each at the start of such five year period.
(1) |
Amounts shown in parentheses are the closing price of the
Common Shares and the Standard & Poors TSX Venture Index value,
respectively, on such dates. |
|
|
(2) |
For the purposes of this graph, it is assumed that $100
had been invested in the Common Shares and in such index on the first day
of such five year period. |
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
National Policy 58-101 Disclosure of Corporate Governance
Practices of the Canadian securities administrators requires the Corporation
to annually disclose certain information regarding its corporate governance
practices. That information is disclosed below.
The Board of Directors
The Board has responsibility for the stewardship of the
Corporation including responsibility for strategic planning, identification of
the principal risks of the Corporations business and implementation of
appropriate systems to manage these risks, succession planning (including
appointing, training and monitoring senior management), communications with
investors and the financial community and the integrity of the Corporations
internal control and management information systems.
The Board sets long term goals and objectives for the
Corporation and formulates the plans and strategies necessary to achieve those
objectives and to supervise senior management in their implementation. The Board delegates the responsibility for managing the day-to-day
affairs of the Corporation to senior management but retains a supervisory role
in respect of, and ultimate responsibility for, all matters relating to the
Corporation and its business. The Board is responsible for protecting
Shareholders interests and ensuring that the incentives of the Shareholders and
of management are aligned.
19
As part of its ongoing review of business operations, the Board
reviews, as frequently as required, the principal risks inherent in the
Corporations business, including financial risks, through periodic reports from
management of such risks, and assesses the systems established to manage those
risks. Directly and through the Audit Committee, the Board also assesses the
integrity of internal control over financial reporting and management
information systems.
In addition to those matters that must, by law, be approved by
the Board, the Board is required to approve any material dispositions,
acquisitions and investments outside the ordinary course of business, long-term
strategy, and organizational development plans. Management of the Corporation is
authorized to act without Board approval, on all ordinary course matters
relating to the Corporations business.
The Board also monitors the Corporations compliance with
timely disclosure obligations and reviews material disclosure documents prior to
distribution.
The Board is responsible for the appointment of senior
management and monitoring of their performance.
The Board has not adopted a written mandate or code setting out
the foregoing obligations, since it believes it is adequately governed by the
requirements of applicable corporate and securities common and statute law which
provide that the Board has responsibility for the stewardship of the
Corporation. That stewardship includes responsibility for strategic planning,
identification of the principal risks of the Corporations business and
implementation of appropriate systems to manage these risks, succession planning
(including appointing, training and monitoring senior management),
communications with investors and the financial community and the integrity of
the Corporations internal control and management information systems.
More than half of the Board is independent under both
applicable Canadian securities law and the rules of the NYSE MKT in that they
are independent and free from any interest and any business or other
relationship which could or could reasonably be perceived to, materially
interfere with the directors ability to act with the best interests of the
Corporation, other than interests and relationships arising from shareholding.
The Board considers that the following directors are independent: Brian E.
Bayley, George K. C. Lim, Brian K. Levet, and Larry M. Okada. The Board
considers that David M. Cole, the President and CEO of the Corporation, is not
independent because he is a member of management, and that Michael D. Winn,
Chairman of the Corporation, is not independent because of his ownership of
Seabord and the payment by the Corporation of consulting fees to a company owned
by him.
The Board facilitates its exercise of independent supervision
over the Corporations management through regular meetings of the Board.
The Board does not hold regularly scheduled meetings without
the non-independent directors and members of management. Since the beginning of
the Corporations last financial year, the independent directors did not hold
any ad hoc meetings without the non-independent directors and management.
When a matter being considered involves a director, that
director does not vote on the matter. As well, the directors regularly and
independently confer amongst themselves and thereby keep apprised of all
operational and strategic aspects of the Corporations business.
20
The Chairman of the Board is responsible for presiding over all
meetings of the directors and Shareholders. He is not an independent director,
however, the independent directors either have significant experience as
directors and officers of publicly traded companies or as members of the
financial investment community and, therefore, do not require the guidance of an
independent Chairman of the Board in exercising their duties as directors.
The attendance record of the current directors at meetings of
the Board since the beginning of the Corporations last financial year to the
Record Date is as follows:
Director |
Number of Meetings
Attended /
Held |
David M. Cole |
4 of 6 |
Brian E. Bayley |
5 of 6 |
George K. C. Lim |
5 of 6 |
Michael D. Winn |
6 of 6 |
Brian K. Levet |
6 of 6 |
Larry M. Okada |
6 of 6 |
Descriptions of Roles
The Board has not established written descriptions of the
positions of Chairman of the Board, CEO or chair of any of the committees of the
Board (except as may be set out in a charter applicable to a committee) as it
feels they are unnecessary and would not improve the function and performance of
the Board, CEO or committee. The role of chair is delineated by the nature of
the overall responsibilities of the Board (in the case of the Chairman of the
Board) or the committee (in the case of a chair of a committee).
The Board has not set limits on the objectives to be met by the
CEO, but believes that such limits and objectives should depend upon the
circumstances of each situation and that to formalize these matters would be
restrictive and unproductive.
Other Directorships
Certain of the directors are presently a director of one or
more other reporting issuers (public companies), as follows:
Director |
Other Issuer |
David M. Cole |
Gold Standard Ventures Corp.
|
Brian E. Bayley
|
American Vanadium Corp. (formerly
Rocky Mountain Resource Corp.) Cypress Hills Resource Corp. Kramer
Capital Corp. Legend Gold Corp. TransAtlantic Petroleum Corp.
|
George K. C. Lim |
N/A |
21
Director |
Other Issuer |
Michael D. Winn
|
Alexco Resource Corp. Atico
Mining Corporation Lara Exploration Ltd. Legend Gold Corp.
Nebo Capital Corp. Reservoir Capital Corp. Reservoir Minerals
Inc. Revelo Resource Corp. |
Brian K. Levet |
N/A |
Larry M. Okada
|
Forum Uranium Corp. Revett
Mining Inc. Rokmaster Resources Corp. |
Orientation and Continuing Education
The Board takes the following measures to ensure that all new
directors receive a comprehensive orientation regarding their role as a member
of the Board, its committees and its directors, and the nature and operation of
the Corporation.
The first step is to assess a new directors set of skills and
professional background since each new director brings a different skill set and
professional background. Once that assessment has been completed, the Board is
able to determine what orientation to the nature and operations of the
Corporations business will be necessary and relevant to each new director
The second step is taken by one or more existing directors, who
may be assisted by the Corporations management, to provide the new director
with the appropriate orientation through a series of meetings, telephone calls
and other correspondence.
The Corporation has a Board Policy Manual which provides a
comprehensive introduction to the Board and its committees.
The Board takes the following measures to provide continuing
education for its directors to maintain the skill and knowledge necessary for
them to meet their obligations as directors:
- the Board Policy Manual is reviewed on an annual basis and a revised copy
will be given annually to each director; and
- there are technical presentations from time to time or as necessary at
Board meetings, focusing on either a particular property or a summary of
various properties. The question and answer portions of these presentations
are a valuable learning resource for the non-technical directors.
Ethical Business Conduct
To comply with its legal mandate, the Board seeks to foster a
culture of ethical conduct by striving to ensure the Corporation carries out its
business in line with high business and moral standards and applicable legal and
financial requirements. In that regard, the Board
22
-
has adopted a written Code of Business Conduct and Ethics for its
directors, officers, employees and consultants. A copy of the Code has been
filed on SEDAR and EDGAR (see Additional Information at the end of this
Circular). Compliance with the Code is achieved as follows. Each director is
responsible for ensuring that they individually comply with the terms of the
Code, while the Board is responsible for ensuring that the directors, as a
group, and all officers comply with the Code and the executive officers of the
Corporation are responsible for ensuring compliance with the Code by
employees. Since the beginning of the Corporations last financial year, it
has not filed a Material Change Report relating to any conduct of a director
or executive officer that constitutes a departure from the Code.
-
has established a Corporate Governance Committee, as described below under
Board Committees, and adopted a Charter for the Committee;
-
has established a Whistleblower Policy which details complaint procedures
for financial concerns.
-
has created a Disclosure Policy which details when directors, officers and
employees should not engage in trading in the Corporations securities.
-
has adopted a Disclosure Policy to ensure fair, accurate and timely
disclosure of material information regarding the Corporation and its business.
-
encourages management to consult with legal and financial advisors to
ensure the Corporation is meeting those requirements.
-
is cognizant of the Corporations timely disclosure obligations and reviews
material disclosure documents such as financial statements and the
Managements Discussion & Analysis (MD&A) prior to
distribution.
-
relies on its Audit Committee to annually review the systems of internal
financial control and discuss such matters with the Corporations external
auditor.
-
actively monitors the Corporations compliance with the Boards directives
and ensures that all material transactions are thoroughly reviewed and
authorized by the Board before being undertaken by management.
The Board must also comply with the conflict of interest
provisions of the British Columbia Business Corporations Act, as well as
the relevant securities regulatory instruments, to ensure that directors
exercise independent judgment in considering transactions and agreements in
respect of which a director or executive officer has a material interest.
Complaints
The Audit Committee has established a Whistleblower Policy
which outlines procedures for the confidential, anonymous submission by
employees regarding the Corporations accounting, auditing and financial
reporting obligations, without fear of retaliation of any kind. If an applicable
individual has any concerns about accounting, audit, internal controls or
financial reporting matters which they consider to be questionable, incorrect,
misleading or fraudulent, the applicable individual is urged to come forward
with any such information, complaints or concerns, without regard to the
position of the person or persons responsible for the subject matter of the
relevant complaint or concern.
23
The applicable individual may report their concern in writing
and forward it to the Chairman of the Audit Committee in a sealed envelope
labelled To be opened by the Chairman of the Audit Committee only.
Further, if the applicable individual wishes to discuss any matter with the
Audit Committee, this request should be indicated in the submission. Any such
envelopes received by the Corporation will be forwarded promptly and unopened to
the Chairman of the Audit Committee.
Promptly following the receipt of any complaints submitted to
it, the Audit Committee will investigate each complaint and take appropriate
corrective actions.
The Audit Committee will retain as part of its records, any
complaints or concerns for a period of no less than seven years. The Audit
Committee will keep a written record of all such reports or inquiries and make
quarterly reports on any ongoing investigation which will include steps taken to
satisfactorily address each complaint.
The Whistleblower Policy is reviewed by the Audit Committee
on an annual basis.
Nomination of Directors
To identify new candidates for nomination for election as
directors, the Board considers the advice and input of the Corporate Governance
Committee, the members of which are listed under Particulars of Matters to be
Acted Upon 4. Election of Directors and which is composed of majority
independent directors, regarding:
-
the appropriate size of the Board,
-
the necessary competencies and skills of the Board as a whole and the
competencies and skills of each director individually; and
-
the identification and recommendation of new individuals qualified to
become new Board members. New nominees must have a track record in general
business management, special expertise in an area of strategic interest to the
Corporation, the ability to devote the time required and a willingness to
serve as directors.
Other Board Committees
In addition to the Audit Committee, the Board has established a
Compensation Committee, and a Corporate Governance Committee. The details of the
Corporations Audit Committee and related information are contained in the
Corporations Annual Information Form.
See Particulars of Matters to be Acted Upon - 4. Election of
Directors for the members of the committees. The functions of these committees
are described below.
Compensation Committee: The Compensation Committee is
responsible for the review of all compensation paid (including stock options
granted under the Option Plan and Common Shares issued under the Stock Grant
Program) by the Corporation to the Board, officers and employees of the
Corporation and any subsidiaries, to report to the Board on the results of those
reviews and to make recommendations to the Board for adjustments to such
compensation.
24
Corporate Governance Committee: The Corporate Governance
Committee is responsible for advising the Board of the appropriate corporate
governance procedures that should be followed by the Corporation and the Board
and monitoring whether they comply with such procedures.
Assessments
The Corporate Governance Committee evaluates the effectiveness
of the Board and its committees. To facilitate this evaluation, each committee
will conduct an annual assessment of its performance, consisting of a review of
its Charter, the performance of the committee as a whole and will submit a
Committee Annual Report to the Corporate Governance Committee, including
recommendations. In addition, the Board will conduct an annual review of its
performance.
AUDIT COMMITTEE
National Instrument 52-110 Audit Committees (NI
52-110) of the Canadian securities administrators and Rule 10A-3 under the
U.S. Securities Exchange Act of 1934, as amended, require the Audit Committee of
the Board to meet certain requirements. NI 52-110 also requires the Corporation
to disclose certain information regarding the Audit Committee. That information
has been disclosed in the Corporations Annual Information Form for the last
financial year which has been filed on SEDAR and EDGAR (see Additional
Information at the end of this Circular).
INDEBTEDNESS OF DIRECTORS AND OFFICERS
No individual who is or who at any time during the last
financial year was a director or executive officer or employee of the
Corporation, a proposed nominee for election as a director of the Corporation or
an associate of any such director, officer or proposed nominee is, or at any
time since the beginning of the last completed financial year has been, indebted
to the Corporation or any of its subsidiaries and no indebtedness of any such
individual to another entity is, or has at any time since the beginning of such
year been, the subject of a guarantee, support agreement, letter of credit or
other similar arrangement or understanding provided by the Corporation or any of
its subsidiaries.
SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY
COMPENSATION PLANS
The following table sets out, as at the end of the
Corporations last completed financial year, information regarding outstanding
options, warrants and rights (other than those granted pro rata to all
Shareholders) granted by the Corporation under its equity compensation plans.
25
Equity Compensation Plan Information
Plan Category |
Number of shares
issuable upon
exercise of outstanding options, warrants and rights
(1) |
Weighted average
exercise price
of outstanding options, warrants and rights |
Number of shares
remaining
available for issuance under equity compensation
plans (2) |
Equity compensation plans approved by
Shareholders |
5,493,200 |
$2.03 |
1,843,971 |
Equity compensation plans not approved by
Shareholders |
N/A |
N/A |
N/A |
Total |
5,493,200 |
$2.03 |
1,843,971
|
(1) |
Assuming outstanding options, warrants and rights are
fully vested. |
|
|
(2) |
Excluding the number of Common Shares issuable upon
exercise of outstanding options, warrants and rights shown in the first
column. |
INTEREST OF CERTAIN PERSONS
AND COMPANIES IN
MATTERS TO BE ACTED UPON
The Corporation is not aware of any substantial or material
interest, directly or indirectly, by way of beneficial ownership of securities
or otherwise, of any director, nominee for election as a director, or executive
officer, anyone who has held office as such since the beginning of the
Corporations last financial year or any associate or affiliate of any of such
person in any matter to be acted on at the Meeting (other than the election of
directors) except for the current and future directors and executive officers of
the Corporation, inasmuch as, in the following year, they may be granted options
to purchase Common Shares pursuant to the Option Plan, ratification and approval
of which will be sought at the Meeting.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Other than as disclosed herein and the Corporations MD&A
for the last financial year, a copy of which is filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov and which, upon request, the Corporation
will promptly provide free of charge (see Additional Information below), there
are no material interests, direct or indirect, of current directors, executive
officers, any persons nominated for election as directors, or any Shareholder
who beneficially owns, directly or indirectly, more than 10% of the outstanding
Common Shares, or any known associates or affiliates of such persons, in any
transaction within the last financial year or in any proposed transaction which
has materially affected or would materially affect the Corporation.
PARTICULARS OF MATTERS TO BE ACTED UPON
To the knowledge of the Board, the only matters to be brought
before the Meeting are those matters set forth in the accompanying Notice of
Meeting.
26
1. Report of Directors
The Board will provide a report on the events of its last
financial year at the meeting. No approval or other action needs to be taken at
the Meeting in respect of this matter.
2. Financial Statements, Auditors Report & Management
Discussion & Analysis
The Board has approved the financial statements of the
Corporation, the auditor's report thereon, and the MD&A for the year ended
December 31, 2014, all of which will be tabled at the Meeting. No approval or
other action needs to be taken at the Meeting in respect of these documents.
3. Set Number of Directors to be Elected
Shareholders of the Corporation will be asked to pass an
ordinary resolution at the Meeting setting the number of directors to be
elected.
At the Meeting, it will be proposed that five directors be
elected to hold office until the next annual general meeting or until their
successors are elected or appointed. Unless otherwise directed, it is the
intention of the Management Designees, if named as Proxyholder, to vote in
favour of the ordinary resolution setting the number of directors to be elected
at five.
4. Election of Directors
The Corporation currently has six directors and all of these
directors are being nominated for re-election with the exception of Mr. George
K.C. Lim. The following table sets forth the name of each of the persons
proposed to be nominated for election as a director, all positions and offices
in the Corporation presently held by such nominee, the nominee's province or
state and country of residence, principal occupation at the present and during
the preceding five years (unless shown in a previous management information
circular), the period during which the nominee has served as a director, and the
number of Common Shares that the nominee has advised are beneficially owned by
the nominee, directly or indirectly, or over which control or direction is
exercised, as of the Record Date.
Unless otherwise directed, it is the intention of the
Management Designees, if named as Proxyholder, to vote for the election of the
persons named in the following table to the Board.
Management does not contemplate that any of such nominees will
be unable to serve as directors. Each director elected will hold office
until the next annual general meeting of Shareholders or until their successor
is duly elected, unless their office is earlier vacated in accordance with the
Articles of the Corporation or the provisions of the corporate law to which the
Corporation is subject.
Name and Province or State
& Country of Residence
|
Present Office
and
Date First Appointed a Director
|
Principal Occupation
and Positions Held During the Past Five Years
(unless previously disclosed)
|
Number of
Common Shares (4)
|
Brian E. Bayley (1) (2)
(3) British Columbia Canada
|
Director May 13, 1996
|
President of Ionic Management
Corp. (private management company).
Director and officer of
various public companies |
186,375
|
David M. Cole Colorado United States of
America |
President, CEO and Director November
24, 2003 |
President and CEO of the
Corporation.
|
972,951
|
27
Name and Province or
State & Country of Residence |
Present Office
and
Date First Appointed a Director |
Principal Occupation
and Positions Held During the Past Five Years
(unless previously disclosed) |
Number of
Common Shares (4) |
Brian K. Levet(2) Western
Australia Australia |
Director March 18, 2011 |
Retired mining
executive |
Nil |
Larry M. Okada(1)(2) British
Columbia, Canada |
Director June 11, 2013 |
Chief Financial
Officer of Africo Resources Ltd. (TSX: ARL). |
Nil |
Michael D. Winn (3) California
United States of America |
Chairman & Director May 23, 2012
Director November 24, 2003
|
President of Seabord Capital Corp. (private consulting
company providing analysis of mining and energy companies).
President of Seabord Services Corp. (a private company that
management, administrative, and regulatory services to private and public
mining companies).
Director and officer of various public
companies. |
618,908
|
(1) |
Member of the Audit Committee. See the Corporations
Annual Information Form for particulars of the Audit Committees members,
its charter and related matters. |
|
|
(2) |
Member of the Compensation Committee. |
|
|
(3) |
Member of the Corporate Governance Committee. |
|
|
(4) |
Number of Common Shares beneficially owned directly or
indirectly as at the Record Date. No director, together with the
directors associates and affiliates beneficially owns, directly or
indirectly, or exercises control or direction over more than 10% of the
Common Shares. |
Pursuant to the provisions of the Business Corporations
Act (British Columbia) the Corporation is required to have an Audit
Committee whose members are indicated above. The Corporation does not have an
Executive Committee.
No proposed director:
(a) |
is, as at the date of this Circular, or has been, within
10 years before the date of this Circular, a director, chief executive
officer or chief financial officer of any company (including the
Corporation) that was the subject of a cease trade or similar order or an
order that denied the relevant company access to any exemption under
securities legislation, for a period of more than 30 consecutive days that was issued |
|
|
|
|
(i) |
while the proposed director was acting as a director,
chief executive officer or chief financial officer of that company, or |
|
|
|
|
(ii) |
after the proposed director ceased to be a director,
chief executive officer or chief financial officer of that company but resulted from an
event that occurred while acting in such capacity; |
|
|
|
(b) |
is, as at the date of this Circular, or has been, within
the 10 years before the date of this Circular, a director or executive
officer of any company (including the Corporation) that while acting in
that capacity or within a year of ceasing to act in that capacity, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or was subject to or instituted any proceedings, arrangement
or compromise with creditors, or had a receiver, receiver manager or
trustee appointed to hold the assets of the proposed director; |
28
(c) |
has, within the 10 years before the date of this
Circular, become bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold their assets; |
|
|
|
(d) |
has entered into, at any time, a settlement agreement
with a securities regulatory authority; or |
|
|
|
(e) |
has been subject to, at any time, any penalties or
sanctions imposed by |
|
|
|
|
(i) |
a court relating to securities legislation or a
securities regulatory authority, or |
|
|
|
|
(ii) |
a court or regulatory body that would likely be
considered important to a reasonable securityholder in deciding whether to
vote for a proposed director. |
other than Brian E. Bayley, who was a director of
American Natural Energy Corp. (TSX-V listed) from June 15, 2001 to November 30,
2010 which was issued cease trading orders by the BCSC in July 2007, Autorité
des marchés financiers de Québec in August 2007, Ontario Securities Commission
in August, 2007, Alberta Securities Commission in November 2007 and Manitoba in
March 2008 for failing to file financial statements and MD&A. The orders
were rescinded on October 29, 2008 when it filed the financial statements and
MD&A.
5. Appointment and Remuneration of Auditor
Davidson & Company LLP, Chartered Accountants, of Suite
1200, 609 Granville Street, Vancouver, British Columbia, is currently the
Auditor of the Corporation. Unless otherwise directed, it is the intention of
the Management Designees to vote the Proxies in favour of an ordinary resolution
reappointing Davidson & Company LLP, as the Auditor and authorizing the
Board to approve the compensation of the Auditor.
6. Ratification of Stock Option Plan
The Board has established the Option Plan as described under
Statement of Executive Compensation Stock Option Plan.
The policies of the TSX-V require stock option plans which
reserve for issuance up to 10% (instead of a fixed number) of a listed companys
shares be approved annually by its Shareholders. That approval is being sought
at the Meeting by way of an ordinary resolution. The persons named in the
accompanying Proxy intend to vote in favour of this proposed resolution.
Following approval of the Option Plan by the Shareholders, any
options granted pursuant to the Option Plan will not require further Shareholder
or Exchange approval unless the exercise price is reduced or the expiry date is
extended for an option held by an insider of the Corporation.
Unless otherwise directed, it is the intention of the
Management Designees, if named as Proxyholder, to vote in favour of the ordinary
resolution approving the Option Plan.
29
OTHER BUSINESS
While there is no other business other than that business
mentioned in the Notice of Meeting to be presented for action by the
Shareholders at the Meeting, it is intended that the Proxies hereby solicited
will be exercised upon any other matters and proposals that may properly come
before the Meeting or any adjournment or adjournments thereof, in accordance
with the discretion of the persons authorized to act thereunder.
ADDITIONAL INFORMATION
Additional information relating to the Corporation is on SEDAR
at www.sedar.com and on EDGAR at the SECs
website at www.sec.gov. Shareholders may
contact the Corporation at Suite 501, 543 Granville Street, Vancouver, British
Columbia V6C 1X8, Canada by mail, telecopier (1-604-688-1157), telephone
(1-604-688-6390; collect calls accepted) or e-mail (valerie@eurasianminerals.com) to request copies of the
Corporations financial statements and MD&A.
Financial information for the Corporations most recently
completed financial year is provided in its comparative financial statements and
MD&A which are filed on SEDAR and with the SEC.
DATED this 31st day of March, 2015
ON BEHALF OF THE BOARD OF DIRECTORS
(signed) VALERIE BARLOW
Corporate Secretary
30
|
Eurasian Minerals
Inc. |
|
NOTICE OF ANNUAL GENERAL MEETING OF
SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual and
a Special General Meeting (the Meeting) of the holders (Shareholders) of
common shares (Shares) of Eurasian Minerals Inc. (the Corporation) will be
held at Suite 501, 543 Granville Street, Vancouver, British Columbia, on
Wednesday, May 13, 2015 at 10:00 a.m. (local time), for the following purposes
(which are further described in the Corporations information circular
(Circular) available on its website at www.eurasianminerals.com and on SEDAR
at www.sedar.com):
1. |
To receive and consider the Report of the Directors to
the Shareholders. See Particulars of Matters to be Acted Upon Financial
Statements, Auditors Report & Management Discussion & Analysis in
the Circular. |
|
|
2. |
To receive and consider the financial statements of the
Corporation for the year ended December 31, 2014 together with the
auditors report thereon. See Particulars of Matters to be Acted Upon
Financial Statements, Auditors Report & Management Discussion &
Analysis in the Circular. |
|
|
3. |
To appoint an auditor for the ensuing year and to
authorize the directors to approve the remuneration to be paid to the
auditor. See Particulars of Matters to be Acted Upon Appointment and
Remuneration of Auditor in the Circular. |
|
|
4. |
To set the number of directors for the ensuing year at
five. See Particulars of Matters to be Acted Upon Set Number of
Directors to be Elected in the Circular. |
|
|
5. |
To elect directors for the ensuing year. See Particulars
of Matters to be Acted Upon Election of Directors in the
Circular. |
|
|
6. |
To ratify the Corporations Stock Option Plan (the
Plan) and to authorize the directors to make such changes to the Plan as
may be required by the securities regulatory authorities without further
Shareholder approval. See Particulars of Matters to be Acted Upon
Ratification of Stock Option Plan in the
Circular. |
The Board of Directors has fixed March 27, 2015 as the Record
Date for determining the Shareholders entitled to receive notice of and vote at
the Meeting. Shareholders are requested to read the Circular and, if unable to
attend the meeting in person, to complete and return the enclosed Proxy (or
Voting Instruction Form, a VIF) in accordance with its instructions.
Unregistered Shareholders must return their complete VIFs in accordance with the
instructions given by their financial institution or other intermediary that
sent it to them. Shareholders are reminded to review the Circular before voting.
DATED at Vancouver, British Columbia this 31st
day of March, 2015.
ON BEHALF OF THE BOARD OF DIRECTORS
(signed) Valerie Barlow
Corporate Secretary
These securityholder materials are being sent to both
registered and non-registered owners of the securities. If you are a
non-registered owner, and the issuer or its agent has sent these materials
directly to you, your name and address and information about your holdings of
securities, have been obtained in accordance with applicable securities
regulatory requirements from the intermediary holding on your behalf. By
choosing to send these materials to you directly, the Corporation (and not the
intermediary holding on your behalf) has assumed responsibility for (i)
delivering these materials to you, and (ii) executing your proper voting
instructions. Please return your voting instructions as specified in the request
for voting instructions.
As permitted by the Notice and Access provisions of the
Canadian securities administrators, the Circular is available on the
Corporations website and on SEDAR and has not been mailed to
Shareholders. Shareholders may obtain, without any charge to them, a paper copy
of the Circular (and the audited financial statements and related managements
discussion and analysis for the Corporations last financial year and any
documents referred to in the Circular) and further information on Notice and
Access by contacting the Corporation as follows:
e-mail: |
telecopier: |
telephone: |
valerie@eurasianminerals.com |
(+1) 604-688-1157 |
(+1) 604-688-6390 (collect calls accepted)
|
mail:
Suite 501, 543 Granville Street, Vancouver,
British Columbia V6C 1X8, Canada
Requests for paper copies of the Circular (and any other
related documents) must be received by no later than 12:00 noon (Vancouver time)
on Friday, April 24, 2015 in order for Shareholders to receive paper copies of
such documents and return their completed Proxies or VIFs by the deadline for
submission of 10:00 a.m. on Monday, May 11, 2015.
March 31, 2015 |
|
Dear Fellow Shareholders,
|
Eurasian has steadily advanced and refined our Royalty and
Prospect Generation business model. The three-pronged approach of 1) organic
prospect and royalty generation, 2) royalty purchases, and 3) strategic
investments provides a solid foundation for sustainability and growth. This
diversified strategy, supported by a drive to increase revenues and reduce
costs, leads to long term value creation.
The core of our business is organic growth, and we are taking
advantage of the current down cycle by acquiring prospective, yet inexpensive
mineral property interests. A focus of new generative growth is Northern Europe
and Western North America, where Eurasian has been staking open ground in key
mining districts. A demonstration of long term value creation via organic growth
is the Akarca project in Turkey, an EMX discovery with over $12 million of
partner funded investment. Another example in Turkey is the Balya polymetallic
royalty property, where a new shaft is being sunk in anticipation of near term
production.
Royalty interests provide perpetual exposure to exploration
upside and discovery. To augment our portfolio of organically grown assets,
Eurasian selectively purchases royalties. An excellent example is the purchase
of the Leeville royalty in the Carlin trend of Nevada. Newmont's $400 million
Turf Vent Shaft project will impact "greater Leeville" starting in late 2015.
Another example is EMX's royalty interest covering Reservoir Minerals' share of
the exciting discovery at Cukaru Peki in the Bor District of Serbia, which is
being aggressively advanced by Reservoir and their Joint Venture partner
Freeport McMoRan.
Strategic investments are also an important component of our
long term value creation strategy. Eurasian leverages its global network of
technical expertise to identify investment opportunities as an outgrowth of its
generative efforts. A preeminent example is our approximate 40% share ownership
in IG Copper, and their district-scale Malmyzh copper-gold joint venture in Far
East Russia. We see potential for substantial upside in this investment.
The vital ingredient for Eurasian's success is our people.
EMX's core group of entrepreneurial geologists and support personnel are
seasoned and accomplished industry professionals. Their hard work, perseverance,
and passion built our portfolio of over 1.7 million acres of mineral property
interests on five continents. An achievement of this magnitude requires great
effort by many individuals and costs real money. We are confident that the
continued growth of Eurasian's portfolio has positioned us for success, as
highlighted by the examples above.
None of this would have been possible without our loyal
shareholders. I am grateful for your support, and look forward to continuing to
work towards making each and every Eurasian share more valuable to you in the
future.
On behalf of the Board of Directors,
David M. Cole
President and Chief Executive Officer
EMX Royalty (AMEX:EMX)
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