EX-99.1 2 exhibit99-1.htm NEW PACIFIC METALS CORP. FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2023 Exhibit 99.1

Exhibit 99.1

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three months ended September 30, 2023 and 2022

(Expressed in US Dollars)

 

 

 

 

New Pacific Metals Corp.

Unaudited Condensed Consolidated Interim Statements of Financial Position

 

(Expressed in US dollars)

 

   Notes   September 30, 2023   June 30, 2023 
ASSETS            
Current Assets            
Cash       $28,017,686   $6,296,312 
Short-term investments        188,033    198,375 
Receivables        399,658    421,860 
Deposits and prepayments        642,041    631,402 
         29,247,418    7,547,949 
                
Non-current Assets               
Other tax receivable   3    5,584,718    5,530,422 
Equity investments        283,654    283,081 
Plant and equipment   5    1,404,273    1,339,839 
Mineral property interests   6    104,967,518    103,606,250 
TOTAL ASSETS       $141,487,581   $118,307,541 
                
LIABILITIES AND EQUITY               
Current Liabilities               
Accounts payable and accrued liabilities       $1,976,115   $2,280,553 
Due to a related party   7    213,712    56,102 
         2,189,827    2,336,655 
Total Liabilities        2,189,827    2,336,655 
                
Equity               
Share capital   8    180,822,323    155,840,052 
Share-based payment reserve        19,057,379    18,636,297 
Accumulated other comprehensive income        9,939,178    10,227,980 
Deficit        (70,369,322)   (68,623,306)
Total equity attributable to the equity holders of the Company        139,449,558    116,081,023 
Non-controlling interests   9    (151,804)   (110,137)
Total Equity        139,297,754    115,970,886 
                
TOTAL LIABILITIES AND EQUITY       $141,487,581   $118,307,541 

 

Approved on behalf of the Board:

 

(Signed) Maria Tang  
Director  
   
(Signed) Rui Feng  
Director  

 

See accompanying notes to the unaudited condensed consolidated interim financial statements

 

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New Pacific Metals Corp.

Unaudited Condensed Consolidated Interim Statements of Loss

 

(Expressed in US dollars)

 

      Three Months Ended
September 30,		 
   Notes  2023   2022 
Operating expense           
Project evaluation and corporate development     $(112,984)  $(108,536)
Depreciation  5   (50,613)   (55,011)
Filing and listing      (81,922)   (120,118)
Investor relations      (90,763)   (139,517)
Professional fees      (86,406)   (108,796)
Salaries and benefits      (450,139)   (329,170)
Office and administration      (332,786)   (366,876)
Share-based compensation  8(b)   (663,022)   (830,858)
       (1,868,635)   (2,058,882)
              
Other income (expense)             
Net income (loss) from investments  4  $20,274   $(41,674)
Gain on disposal of plant and equipment  5   51,418    - 
Foreign exchange gain      50,329    14,893 
       122,021    (26,781)
              
Net loss     $(1,746,614)  $(2,085,663)
Attributable to:             
Equity holders of the Company     $(1,746,016)  $(2,085,183)
Non-controlling interests  9   (598)   (480)
Net loss     $(1,746,614)  $(2,085,663)
Loss per share attributable to the equity holders of the Company             
Loss per share - basic and diluted     $(0.01)  $(0.01)
Weighted average number of common shares - basic and diluted      157,732,004    156,684,891 

 

See accompanying notes to the unaudited condensed consolidated interim financial statements

 

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New Pacific Metals Corp.

Unaudited Condensed Consolidated Interim Statements of Comprehensive (Loss) Income

 

(Expressed in US dollars)

 

      Three Month Ended
September 30,		 
   Notes  2023   2022 
Net loss           
Other comprehensive loss, net of taxes:     $(1,746,614)  $(2,085,663)
Items that may subsequently be reclassified to net income or loss:             
Currency translation adjustment, net of tax of $nil      (329,871)   (2,233,495)
Other comprehensive loss, net of taxes     $(329,871)  $(2,233,495)
              
Attributable to:             
Equity holders of the Company     $(288,802)  $(2,205,953)
Non-controlling interests  9   (41,069)   (27,542)
Other comprehensive loss, net of taxes     $(329,871)  $(2,233,495)
Total comprehensive loss, net of taxes     $(2,076,485)  $(4,319,158)
              
Attributable to:             
Equity holders of the Company     $(2,034,818)  $(4,291,136)
Non-controlling interests  9   (41,667)   (28,022)
Total comprehensive loss, net of taxes     $(2,076,485)  $(4,319,158)

 

See accompanying notes to the unaudited condensed consolidated interim financial statements

 

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New Pacific Metals Corp.

Unaudited Condensed Consolidated Interim Statements of Cash Flows

 

(Expressed in US dollars)

 

      Three Month Ended
September 30,		 
   Notes  2023   2022 
Operating activities           
Net loss     $(1,746,614)  $(2,085,663)
Add (deduct) items not affecting cash:             
Net loss (income) from investments  4   (20,274)   41,674 
Depreciation  5   50,613    55,011 
Gain on disposal of plant and equipment  5   (51,418)   - 
Share-based compensation  8(b)   676,139    854,338 
Unrealized foreign exchange gain      (50,329)   (14,893)
Changes in non-cash operating working capital      588,528    (541,655)
Interest received  4   24,131    133,642 
Net cash used in operating activities      (529,224)   (1,557,546)
              
Investing activities             
Mineral property interest             
Capital expenditures      (2,142,489)   (4,089,344)
Proceeds on disposals Plant and equipment      -    2,986,188 
Plant and equipment             
Additions  5   (133,918)   (19,706)
Proceeds on disposals  5   69,461    - 
Changes in other tax receivable      (54,296)   (586,184)
Net cash used in investing activities      (2,261,242)   (1,709,046)
              
Financing activities             
Proceeds from issuance of common shares      24,510,141    26,903 
Net cash provided by financing activities      24,510,141    26,903 
Effect of exchange rate changes on cash      1,699    (1,580,535)
              
Decrease in cash      21,721,374    (4,820,224)
Cash, beginning of the period      6,296,312    29,322,504 
Cash, end of the period     $28,017,686   $24,502,280 
Supplementary cash flow information  13          

 

See accompanying notes to the unaudited condensed consolidated interim financial statements

 

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New Pacific Metals Corp.

Unaudited Condensed Consolidated Interim Statements of Change in Equity

 

(Expressed in US dollars)

 

      Share capital                        
      Number of
common		       Share-
based		   Accumulated
other		       Total equity
attributable to the		   Non-     
      shares       payment   comprehensive       equity holders of   controlling     
   Notes  issued   Amount   reserve   Income   Deficit   the Company   interests   Total equity 
Balance, July 1, 2022      156,631,827   $153,707,576   $15,395,486   $11,704,949   $(60,527,857)  $120,280,154   $(71,199)  $120,208,955 
Options exercised      30,000    41,691    (14,788)   -    -    26,903    -    26,903 
Restricted share units distributed      60,449    215,616    (215,616)   -    -    -    -    - 
Share-based compensation      -    -    1,218,477    -    -    1,218,477    -    1,218,477 
Net loss      -    -    -    -    (2,085,183)   (2,085,183)   (480)   (2,085,663)
Currency translation adjustment      -    -    -    (2,205,953)   -    (2,205,953)   (27,542)   (2,233,495)
Balance, September 30, 2022      156,722,276   $153,964,883   $16,383,559   $9,498,996   $(62,613,040)  $117,234,398   $(99,221)  $117,135,177 
Options exercised      415,000    851,275    (273,504)   -    -    577,771    -    577,771 
Restricted share units distributed      263,806    803,452    (803,452)   -    -    -    -    - 
Private placement      90,090    220,442    -    -    -    220,442    -    220,442 
Share-based compensation      -    -    3,329,694    -    -    3,329,694    -    3,329,694 
Net loss      -    -    -    -    (6,010,266)   (6,010,266)   (4,203)   (6,014,469)
Currency translation adjustment      -    -    -    728,984    -    728,984    (6,713)   722,271 
Balance, June 30, 2023      157,491,172   $155,840,052   $18,636,297   $10,227,980   $(68,623,306)  $116,081,023   $(110,137)  $115,970,886 
Options exercised  8(b)(i)   40,000    86,257    (22,202)   -    -    64,055    -    64,055 
Restricted share units distributed  8(b)(ii)   156,877    449,928    (449,928)   -    -    -    -    - 
Common shares issued through  8(c)   13,208,000    24,446,086    -    -    -    24,446,086    -    24,446,086 
Share-based compensation  8(b)   -    -    893,212    -    -    893,212    -    893,212 
Net loss      -    -    -    -    (1,746,016)   (1,746,016)   (598)   (1,746,614)
Currency translation adjustment      -    -    -    (288,802)   -    (288,802)   (41,069)   (329,871)
Balance, September 30, 2023      170,896,049   $180,822,323   $19,057,379   $9,939,178   $(70,369,322)  $139,449,558   $(151,804)  $139,297,754 

 

See accompanying notes to the unaudited condensed consolidated interim financial statements

 

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New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

1.CORPORATE INFORMATION

 

New Pacific Metals Corp. along with its subsidiaries (collectively, the “Company” or “New Pacific”) is a Canadian mining issuer engaged in exploring and developing mineral properties in Bolivia. The Company is in the stage of exploring and advancing the development of its mineral properties and has not yet determined if they contain economically recoverable mineral reserves. The underlying value and the recoverability of the amounts shown for mineral property interests are entirely dependent upon the existence of recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of the mineral properties, and future profitable production or proceeds from the disposition of the mineral property interests.

 

The Company is publicly listed on the Toronto Stock Exchange (“TSX”) under the symbol “NUAG” and on the NYSE American stock exchange (“NYSE-A”) under the symbol “NEWP”. The head office, registered address and records office of the Company are located at 1066 Hastings Street, Suite 1750, Vancouver, British Columbia, Canada, V6E 3X1.

 

2.MATERIAL ACCOUNTING POLICY INFORMATION

 

(a)Statement of Compliance and Basis of Preparation

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended June 30, 2023. These unaudited condensed consolidated interim financial statements follow the same accounting policies, estimates and judgements set out in Note 2 to the audited consolidated financial statements for the year ended June 30, 2023.

 

These unaudited condensed consolidated interim financial statements have been prepared on a going concern basis.

 

The unaudited condensed consolidated interim financial statements of the Company as at and for the three months ended September 30, 2023 were approved and authorized for issuance in accordance with a resolution of the Board of Directors (the “Board”) dated on November 6, 2023.

 

(b)Basis of Consolidation

 

These unaudited condensed consolidated interim financial statements include the accounts of the Company and its wholly or partially owned subsidiaries.

 

Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary; and has the ability to use its power to affect its returns. For non-wholly-owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the consolidated statements of financial position. Net income or loss for the period that is attributable to the non-controlling interests is calculated based on the ownership of the non-controlling interest shareholders in the subsidiary.

 

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New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

Balances, transactions, income and expenses between the Company and its subsidiaries are eliminated on consolidation.

 

Details of the Company’s significant subsidiaries which are consolidated are as follows:

 

         Proportion of ownership interest held    
Name of subsidiaries  Principal activity  Country of
incorporation		  September 30,
2023		   June 30,
2023		   Mineral properties
New Pacific Offshore Inc.  Holding company  BVI (i)   100%   100%   
SKN Nickel & Platinum Ltd.  Holding company  BVI   100%   100%   
Glory Metals Investment Corp. Limited  Holding company  Hong Kong   100%   100%   
New Pacific Investment Corp. Limited  Holding company  Hong Kong   100%   100%   
New Pacific Andes Corp. Limited  Holding company  Hong Kong   100%   100%   
Fortress Mining Inc.  Holding company  BVI   100%   100%   
New Pacific Success Inc.  Holding company  BVI   100%   100%   
New Pacific Forward Inc.  Holding company  BVI   100%   100%   
Minera Alcira S.A.  Mining company  Bolivia   100%   100%  Silver Sand
NPM Minerales S.A.  Mining company  Bolivia   100%   100%   
Colquehuasi S.R.L.  Mining company  Bolivia   100%   100%  Silverstrike
Minera Hastings S.R.L.  Mining company  Bolivia   100%   100%  Carangas
Qinghai Found Mining Co., Ltd.  Mining company  China   82%   82%   
(i)British Virgin Islands (“BVI”)

 

(c)Changes in Accounting Policies

 

The accounting policies applied in the preparation of these unaudited condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended June 30, 2023 with the exception of the mandatory adoption of certain amendments noted below:

 

i.Amendments to IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 -Making Materiality Judgments - Disclosure of Accounting Policies

 

The amendments change the requirements in IAS 1 with regard to disclosure of accounting policies. The amendments replace all instances of the term “significant accounting policies” with “material accounting policy information.” Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.

 

The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. The IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2.

 

The amendments were applied effective July 1, 2023 and did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements.

 

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New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

ii.Amendments to IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors— Definition of Accounting Estimates

 

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty.” The definition of a change in accounting estimates was deleted. However, the IASB retained the concept of changes in accounting estimates in the Standard with the following clarifications:

 

§A change in accounting estimate that results from new information or new developments is not the correction of an error; and

 

§The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors.

 

The amendments were applied effective July 1, 2023 and did not have a material impact on the Company’s unaudited condensed consolidated interim financial statements.

 

3.OTHER TAX RECEIVABLE

 

Other tax receivable is composed of value-added tax (“VAT”) imposed by the Bolivian government. The Company had VAT outputs through its exploration costs and general expenses incurred in Bolivia. These VAT outputs are deductible against future VAT inputs that will be generated through sales.

 

4.INCOME FROM INVESTMENTS

 

Income from investments consist of:

 

   Three Month Ended
September 30,		 
   2023   2022 
Fair value change on equity investments  $6,485   $(171,722)
Fair value change on bonds   (10,342)   (3,600)
Interest income   24,131    133,648 
Net income from investments  $20,274   $(41,674)

 

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New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

5.PLANT AND EQUIPMENT

 

Cost  Land and
building		   Machinery   Motor vehicles   Office
equipment
and furniture		   Computer
software		   Total 
Balance, July 1, 2022  $630,000   $408,358   $579,032   $266,364   $193,774   $2,077,528 
Additions   -    77,259    -    15,576    -    92,835 
Disposals   -    -    -    (12,259)   (99,442)   (111,701)
Foreign currency translation impact   -    -    -    (2,406)   (817)   (3,223)
Balance, June 30, 2023  $630,000   $485,617   $579,032   $267,275   $93,515   $2,055,439 
Additions   115,237    -    -    18,681    -    133,918 
Disposals   -    -    (110,838)   (41,394)   -    (152,232)
Foreign currency translation impact   -    -    -    (2,035)   (1,937)   (3,972)
Balance, September 30, 2023  $745,237   $485,617   $468,194   $242,527   $91,578   $2,033,153 
                               
Accumulated depreciation and amortization                              
Balance, July 1, 2022  $-   $(113,640)  $(198,572)  $(156,000)  $(146,468)  $(614,680)
Depreciation   -    (57,272)   (98,338)   (35,170)   (22,751)   (213,531)
Disposals   -    -    -    12,259    99,442    111,701 
Foreign currency translation impact   -    -    -    1,627    (717)   910 
Balance, June 30, 2023  $-   $(170,912)  $(296,910)  $(177,284)  $(70,494)  $(715,600)
Depreciation   -    (15,240)   (23,571)   (8,962)   (2,840)   (50,613)
Disposals   -    -    110,837    23,352    -    134,189 
Foreign currency translation impact   -    -    -    1,662    1,482    3,144 
Balance, September 30, 2023  $-   $(186,152)  $(209,644)  $(161,232)  $(71,852)  $(628,880)
                               
Carrying amount                              
Balance, June 30, 2023  $630,000   $314,705   $282,122   $89,991   $23,021   $1,339,839 
Balance, September 30, 2023  $745,237   $299,465   $258,550   $81,295   $19,726   $1,404,273 

 

During the three months ended September 30, 2023, certain plant and equipment were disposed for proceeds of $69,461 (three months ended September 30, 2022 - $nil) and gain of $51,418 (three months ended September 30, 2022 - $nil).

 

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New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

6.MINERAL PROPERTY INTERESTS

 

The continuity schedule of mineral property acquisition costs and deferred exploration and development costs is summarized as follows:

 

Cost  Silver Sand   Silverstrike   Carangas   Total 
Balance, July 1, 2022  $76,568,598   $3,269,232   $5,460,946   $85,298,776 
Capitalized exploration expenditures                    
Reporting and assessment   1,008,174    -    88,558    1,096,732 
Drilling and assaying   1,925,695    977,881    8,289,678    11,193,254 
Project management and support   2,719,120    256,569    1,424,573    4,400,262 
Camp service   467,690    174,651    1,005,158    1,647,499 
Permit and license   195,821    -    9,389    205,210 
Foreign currency impact   (201,972)   (24,680)   (8,831)   (235,483)
                     
Balance, June 30, 2023  $82,683,126   $4,653,653   $16,269,471   $103,606,250 
Capitalized exploration expenditures                    
Reporting and assessment   152,549    -    113,565    266,114 
Drilling and assaying   40,065    -    8,227    48,292 
Project management and support   561,860    50,169    365,956    977,985 
Camp service   186,734    17,147    117,801    321,682 
Permit and license   24,691    -    9,308    33,999 
Foreign currency impact   (222,359)   (19,005)   (45,440)   (286,804)
Balance, September 30, 2023  $83,426,666   $4,701,964   $16,838,888   $104,967,518 

 

(a)Silver Sand Project

 

On July 20, 2017, the Company acquired the Silver Sand Project. The Project is located in the Colavi District of the Potosí Department, in Southwestern Bolivia, 33 kilometres (“km”) northeast of Potosí City, the department capital. The project covers an area of approximately 5.42 km2 at an elevation of 4,072 metres (“m”) above sea level.

 

For the three months ended September 30, 2023, total expenditures of $965,899 (three months ended September 30, 2022 - $2,496,936) were capitalized under the project.

 

(b)Carangas Project

 

In April 2021, the Company signed an agreement with a private Bolivian company to acquire a 98% interest in the Carangas Project. The project is located approximately 180 km southwest of the city of Oruro and within 50 km from Bolivia’s border with Chile. The private Bolivian company is 100% owned by Bolivian nationals and holds title to the three exploration licenses that cover an area of 40.75 km2.

 

Under the agreement, the Company is required to cover 100% of the future expenditures on exploration, mining, development, and production activities for the project. The agreement has a term of 30 years and is renewable for an additional 15 years.

 

For the three months ended September 30, 2023, total expenditures of $614,857 (three months ended September 30, 2022- $2,976,908) were capitalized under the project.

 

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New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(c)Silverstrike Project

 

In December 2019, the Company acquired a 98% interest in the Silverstrike Project from a private Bolivian corporation. The project covers an area of approximately 13 km2 and is located approximately 140 km southwest of the city of La Paz, Bolivia.

 

For the three months ended September 30, 2023, total expenditures of $67,316 (three months ended September 30, 2022 - $442,651) were capitalized under the project.

 

7.RELATED PARTY TRANSACTIONS

 

Related party transactions are made on terms agreed upon by the related parties. The balances with related parties are unsecured, non-interest bearing, and due on demand. Related party transactions not disclosed elsewhere in the consolidated financial statements are as follows:

 

Due to a related party  September 30,
2023		   June 30,
2023		 
Silvercorp Metals Inc.  $213,712   $56,102 

 

(a)   Silvercorp Metals Inc. (“Silvercorp”) has two directors (June 30, 2023 – one director and one officer) in common with the Company. Silvercorp and the Company share office space and Silvercorp provides various general and administrative services to the Company. The Company expects to continue making payments to Silvercorp in the normal course of business. Office and administrative expenses rendered and incurred by Silvercorp on behalf of the Company for the three months ended September 30, 2023 were $216,191 (three months ended September 30, 2022 - $242,253).

 

(b)   Compensation of key management personnel

 

The remuneration of directors and other members of key management personnel for the three months ended September 30, 2023 and 2022 are as follows:

 

   Three months ended
September 30,		 
   2023   2022 
Director’s cash compensation  $15,220   $15,319 
Director’s share-based compensation   139,577    234,612 
Key management’s cash compensation   296,364    129,421 
Key management’s share-based compensation   482,623    566,271 
   $933,784   $945,623 

 

Other than as disclosed above, the Company does not have any ongoing contractual or other commitments resulting from transactions with related parties.

 

8.SHARE CAPITAL

 

(a)Share Capital - authorized share capital

 

The Company’s authorized share capital consists of an unlimited number of common shares without par value.

 

Page | 11

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(b)Share-based compensation

 

The Company has a share-based compensation plan (the “Plan”) under which the Company may issue stock options and restricted share units (“RSUs”). The maximum number of common shares to be reserved for issuance on any share-based compensation under the Plan is a rolling 10% of the issued and outstanding common shares from time to time.

 

For the three months ended September 30, 2023, a total of $663,022 (three months ended September 30, 2022 - $830,858) was recorded as share-based compensation expense.

 

For the three months ended September 30, 2023, a total of $13,117 (three months ended September 30, 2022 - $23,480) was included in the project evaluation and corporate development expense.

 

For the three months ended September 30, 2023, a total of $217,073 (three months ended September 30, 2022 - $364,139) was capitalized under mineral property interests.

 

(i)Stock options

 

The continuity schedule of stock options, as at September 30, 2023, is as follows:

 

   Number of options   Weighted average
exercise price (CAD$)		 
Balance, July 1, 2022   3,662,167    3.18 
Options Granted   1,186,000    3.47 
Options exercised   (445,000)   1.82 
Options forfeited   (446,000)   3.66 
Balance, June 30, 2023   3,957,167    3.37 
Options exercised   (40,000)   2.15 
Options forfeited   (64,334)   3.74 
Balance, September 30, 2023   3,852,833    3.37 

 

The following table summarizes information about stock options outstanding as at September 30, 2023:

 

Exercise prices   Number of options
outstanding as at		   Weighted
average remaining
contractual life		   Number of options
exercisable as at		   Weighted
average
exercise price		 
(CAD$)   2023-09-30   (years)   2023-09-30   (CAD$) 
$2.15    734,167    0.40    734,167   $2.15 
$3.33    708,000    3.35    354,000   $3.33 
$3.42    916,333    4.30    155,500   $3.42 
$3.67    120,000    4.32    20,000   $3.67 
$3.89    10,000    3.40    5,000   $3.89 
$3.92    50,000    4.54    -    - 
$4.00    1,314,333    3.68    446,998   $4.00 
$2.15 - $4.00    3,852,833    3.17    1,715,665   $3.01 

 

Subsequent to September 30, 2023, a total of 8,332 options with an exercise price ranging from CAD$3.42 to $4.00 were forfeited.

 

Page | 12

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(ii)RSUs

 

The continuity schedule of RSUs, as at September 30, 2023, is as follows:

 

   Number of shares   Weighted average
grant date closing
price per share (CAD$)		 
Balance, July 1, 2022   1,477,216   $4.11 
Granted   967,000    3.48 
Forfeited   (222,801)   4.01 
Distributed   (324,255)   4.20 
Balance, June 30, 2023   1,897,160   $3.79 
Forfeited   (47,333)   3.81 
Distributed   (156,877)   3.84 
Balance, September 30, 2023   1,692,950    3.78 

 

Subsequent to September 30, 2023, a total of 8,333 RSUs were vested and distributed.

 

(c)Bought deal financing

 

On September 29, 2023, the Company successfully closed a bought deal financing to issue a total of 13,208,000 common shares at a price of $1.96 (CAD $2.65) per common share for gross proceeds of $25,888,462. The underwriter’s fee and other issuance costs for the transaction were approximately $1,442,376.

 

9.NON-CONTROLLING INTEREST

 

   Qinghai
Found		 
Balance, July 1, 2022  $(71,199)
Share of net loss   (4,683)
Share of other comprehensive loss   (34,255)
Balance, June 30, 2023  $(110,137)
Share of net loss   (598)
Share of other comprehensive loss   (41,069)
Balance, September 30, 2023  $(151,804)

 

As at September 30, 2023 and June 30, 2023, the non-controlling interest in the Company’s subsidiary Qinghai Found was 18%.

 

10.FINANCIAL INSTRUMENTS

 

The Company manages its exposure to financial risks, including liquidity risk, foreign exchange rate risk, interest rate risk, credit risk, and equity price risk in accordance with its risk management framework. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.

 

Page | 13

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(a)Fair Value

 

The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of inputs used in making the measurements as defined in IFRS 13 – Fair Value Measurement (“IFRS 13”).

 

Level 1 – Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

 

Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3 – Unobservable inputs which are supported by little or no market activity.

 

The following table sets forth the Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy as at September 30, 2023 and June 30, 2023 that are not otherwise disclosed. As required by IFRS 13, financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

  

Fair value as at September 30, 2023

 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial Assets                
Cash  $28,017,686   $       -   $       -   $28,017,686 
Short-term investments   188,033    -    -    188,033 
Equity investments   283,654    -    -    283,654 

 

   Fair value as at June 30, 2023 
Recurring measurements  Level 1   Level 2   Level 3   Total 
Financial Assets                
Cash  $6,296,312   $      -   $     -   $6,296,312 
Short-term investments   198,375    -    -    198,375 
Equity investments   283,081    -    -    283,081 

 

Fair value of other financial instruments excluded from the table above approximates their carrying amount as of September 30, 2023, and June 30, 2023, respectively, due to the short-term nature of these instruments.

 

There were no transfers into or out of Level 3 during the three months ended September 30, 2023.

 

(b)Liquidity Risk

 

The Company has a history of losses and no operating revenues from its operations. Liquidity risk is the risk that the Company will not be able to meet its short term business requirements. As at September 30, 2023, the Company had a working capital position of $27,059,591 and sufficient cash resources to meet the Company’s short-term financial liabilities and its planned exploration and development expenditures on various projects in Bolivia for, but not limited to, the next 12 months.

 

Page | 14

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following summarizes the remaining contractual maturities of the Company’s financial liabilities:

 

   September 30, 2023   June 30, 2023 
   Due within a year   Total   Total 
Accounts payable and accrued liabilities  $1,976,115   $1,976,115   $2,280,553 
Due to a related party   213,712    213,712    56,102 
   $2,189,827   $2,189,827   $2,336,655 

 

(c)Foreign Exchange Risk

 

The Company is exposed to foreign exchange risk when it undertakes transactions and holds assets and liabilities denominated in foreign currencies other than its functional currencies. The functional currency of the head office, Canadian subsidiaries and all intermediate holding companies is CAD. The functional currency of all Bolivian subsidiaries is USD. The functional currency of the Chinese subsidiary is RMB. The Company currently does not engage in foreign exchange currency hedging. The Company’s exposure to foreign exchange risk that could affect net income is summarized as follows:

 

Financial assets denominated in foreign currencies other than relevant functional currency  September 30,
2023		   June 30,
2023		 
United States dollars  $1,348,198   $320,994 
Bolivianos   1,456,639    869,869 
Total  $2,804,837   $1,190,863 
           
Financial liabilities denominated in foreign currencies other than relevant functional currency          
United States dollars  $142,676   $73,970 
Bolivianos   677,039    1,543,889 
Total  $819,715   $1,617,859 

 

As at September 30, 2023, with other variables unchanged, a 1% strengthening (weakening) of the USD against the CAD would have increased (decreased) net income by approximately $12,000.

 

As at September 30, 2023, with other variables unchanged, a 1% strengthening (weakening) of the Bolivianos against the USD would have increased (decreased) net income by approximately $8,000.

 

(d)Interest Rate Risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company holds a portion of cash in bank accounts that earn variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have significant impact on the fair values of the financial instruments as of September 30, 2023. The Company, from time to time, also owns guaranteed investment certificates (“GICs”) and bonds that earn interest payments at fixed rates to maturity. Fluctuation in market interest rates usually will have an impact on bond’s fair value. An increase in market interest rates will generally reduce bond’s fair value while a decrease in market interest rates will generally increase it. The Company monitors market interest rate fluctuations closely and adjusts the investment portfolio accordingly.

 

Page | 15

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(e)Credit Risk

 

Credit risk is the risk of financial loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposure to credit risk is primarily associated with cash, bonds, and receivables. The carrying amount of financial assets included on the statement of financial position represents the maximum credit exposure.

 

The Company has deposits of cash that meet minimum requirements for quality and liquidity as stipulated by the Board. Management believes the risk of loss to be remote, as the majority of its cash is held with major financial institutions. Bonds by nature are exposed to more credit risk than cash. The Company manages its risk associated with bonds by only investing in large globally recognized corporations from diversified industries. As at September 30, 2023, the Company had a receivables balance of $399,658 (June 30, 2023 - $421,860). There were no material amounts in receivables which were past due on September 30, 2023 (June 30, 2023 - $nil).

 

(f)Equity Price Risk

 

The Company holds certain marketable securities that will fluctuate in value as a result of trading on global financial markets. Based upon the Company’s portfolio at September 30, 2023, a 10% increase (decrease) in the market price of the securities held, ignoring any foreign exchange effects would have resulted in an increase (decrease) to net income of approximately $28,000.

 

11.CAPITAL MANAGEMENT

 

The objectives of the capital management policy are to safeguard the Company’s ability to support exploration and operating requirements on an ongoing basis, continue the investment in high quality assets along with safeguarding the value of its mineral properties, and support any expansionary plans.

 

The capital of the Company consists of the items included in equity less cash and short term investments. Risk and capital management are primarily the responsibility of the Company’s corporate finance function and is monitored by the Board. The Company manages the capital structure and makes adjustments depending on economic conditions. Significant risks are monitored and actions are taken, when necessary, according to the Company’s approved policies.

 

12.SEGMENTED INFORMATION

 

As at and for the three months ended September 30, 2023, the Company operates in four (as at and for the three months ended September 30, 2022 – four) reportable operating segments, one being the corporate segment; the other three being the exploration and development segments based on mineral properties in Bolivia. These reportable segments are components of the Company where separate financial information is available that is evaluated regularly by the Company’s Chief Executive Officer, the chief operating decision maker (“CODM”).

 

Page | 16

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(a)Segment information for assets and liabilities are as follows:

 

   September 30, 2023 
       Exploration and Development     
   Corporate   Silver Sand   Carangas   Silverstrike   Total 
Cash  $26,905,992   $318,775   $533,361   $259,558   $28,017,686 
Short-term investments   188,033    -    -    -    188,033 
Equity investments   283,654    -    -    -    283,654 
Plant and equipment   226,782    475,409    45,036    657,046    1,404,273 
Mineral property interests   -    83,426,666    16,838,888    4,701,964    104,967,518 
Other assets   1,168,793    3,365,304    1,882,305    210,015    6,626,417 
Total Assets  $28,773,254   $87,586,154   $19,299,590   $5,828,583   $141,487,581 
                          
Total Liabilities  $(2,013,878)  $(166,656)  $(8,598)  $(695)  $(2,189,827)

 

   June 30, 2023 
       Exploration and Development     
   Corporate   Silver Sand   Carangas   Silverstrike   Total 
                     
Cash  $6,232,985   $58,497   $260   $4,570   $6,296,312 
Short-term investments   198,375    -    -    -    198,375 
Equity investments   283,081    -    -    -    283,081 
Plant and equipment   104,450    517,065    58,212    660,112    1,339,839 
Mineral property interests   -    82,683,126    16,269,471    4,653,653    103,606,250 
Other assets   908,823    3,563,256    1,888,293    223,312    6,583,684 
Total Assets  $7,727,714   $86,821,944   $18,216,236   $5,541,647   $118,307,541 
                          
Total Liabilities  $(1,307,795)  $(228,966)  $(795,379)  $(4,515)  $(2,336,655)

 

Page | 17

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

(b)Segment information for operating results are as follows:

 

   Three months ended September 30, 2023 
       Exploration and Development     
   Corporate   Silver Sand   Carangas   Silverstrike   Total 
Project evaluation and corporate development  $(112,984)  $-   $-   $-   $(112,984)
Salaries and benefits   (450,139)   -    -    -    (450,139)
Share-based compensation   (663,022)   -    -    -    (663,022)
Other operating expenses   (570,003)   (56,782)   (12,257)   (3,448)   (642,490)
Total operating expense   (1,796,148)   (56,782)   (12,257)   (3,448)   (1,868,635)
                          
Net Income from investments   20,274    -    -    -    20,274 
(Loss) gain on disposal of plant and equipment   (488)   51,906    -    -    51,418 
Foreign exchange gain (loss)   40,015    (2)   10,317    (1)   50,329 
Net loss  $(1,736,347)  $(4,878)  $(1,940)  $(3,449)  $(1,746,614)
                          
Attributed to:                         
Equity holders of the Company  $(1,735,749)  $(4,878)  $(1,940)  $(3,449)  $(1,746,016)
Non-controlling interests   (598)   -    -    -    (598)
Net loss  $(1,736,347)  $(4,878)  $(1,940)  $(3,449)  $(1,746,614)

 

   Three months ended September 30, 2023 
       Exploration and Development     
   Corporate   Silver Sand   Carangas   Silverstrike   Total 
Project evaluation and corporate development  $(108,536)   -   $-   $-   $(108,536)
Salaries and benefits   (329,170)   -    -    -    (329,170)
Share-based compensation   (830,858)   -    -    -    (830,858)
Other operating expenses   (695,276)   (76,069)   (14,329)   (4,644)   (790,318)
Total operating expense   (1,963,840)   (76,069)   (14,329)   (4,644)   (2,058,882)
                          
Net loss from investments   (41,674)   -    -    -    (41,674)
Foreign exchange gain   14,893    -    -    -    14,893 
Net loss  $(1,990,621)  $(76,069)  $(14,329)  $(4,644)  $(2,085,663)
                          
Attributed to:                         
Equity holders of the Company  $(1,990,141)  $(76,069)  $(14,329)  $(4,644)  $(2,085,183)
Non-controlling interests   (480)   -    -    -    (480)
Net loss  $(1,990,621)  $(76,069)  $(14,329)  $(4,644)  $(2,085,663)

 

Page | 18

 

 

New Pacific Metals Corp.

Notes to Unaudited Condensed Consolidated Interim Financial Statements for the three months ended September 30, 2023 and 2022

 

(Expressed in US dollars)

 

13.SUPPLEMENTARY CASH FLOW INFORMATION

 

  Three Month Ended
September 30,		 
Changes in non-cash operating working capital:  2023   2022 
Receivables  $21,217   $(104,823)
Deposits and prepayments   (19,304)   (70,958)
Accounts payable and accrued l iabilities   426,589    (67,234)
Due to a related party   160,026    (298,640)
   $588,528   $(541,655)

 

  Three Month Ended
September 30,		 
Non-cash capital transactions:  2023   2022 
Reduction of capital expenditures of mineral property interest in accounts payable and accrued liabilities  $(722,175)  $(785,913)

 

Page | 19