PROPHECY DEVELOPMENT CORP.
|
(Translation
of registrant’s name into English)
|
Suite 1610 – 409 Granville Street
Vancouver, British Columbia, Canada V6C 1T2
|
(Address
of principal executive offices)
|
|
Note: Regulation S-T Rule 101(b)(1) only permits
the submission in paper of a Form 6-K if submitted solely to
provide an attached annual report to security holders.
|
|
Note: Regulation S-T Rule 101(b)(7) only permits
the submission in paper of a Form 6-K if submitted to furnish
a report or other document that the registrant foreign private
issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or
legally organized (the registrant’s “home
country”), or under the rules of the home country exchange on
which the registrant’s securities are traded, as long as the
report or other document is not a press release, is not required to
be and has not been distributed to the registrant’s security
holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on
EDGAR.
|
|
PROPHECY DEVELOPMENT CORP.
|
|
/s/
Rocio
Echegaray
|
Date:
May 15, 2019
|
Rocio
Echegaray
Corporate
Secretary
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations for the three months ended March 31, 2019
|
|
|
Condensed Interim
Consolidated Financial Statements for the three months ended March
31, 2019 and 2018
|
|
|
Form 52-109F2
Certification of Interim Filings - CEO
|
|
|
Form 52-109F2
Certification of Interim Filings - CFO
|
1
|
INTRODUCTION
|
2
|
2
|
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
3
|
3
|
FIRST
QUARTER HIGHLIGHTS AND SIGNIFICANT EVENTS
|
4
|
4
|
PROPERTY
SUMMARY
|
5
|
5
|
SUMMARY
OF QUARTERLY RESULTS
|
24
|
6
|
DISCUSSION
OF OPERATIONS
|
25
|
7
|
PROPOSED
TRANSACTIONS
|
26
|
8
|
LIQUIDITY
AND CAPITAL RESOURCES
|
26
|
9
|
CONTINGENCIES
|
28
|
10
|
RELATED
PARTY DISCLOSURES
|
28
|
11
|
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
|
29
|
12
|
FINANCIAL
INSTRUMENTS AND RELATED RISKS
|
30
|
14
|
RISKS
AND UNCERTAINTIES
|
31
|
15
|
DISCLOSURE
CONTROLS AND PROCEDURES
|
32
|
16
|
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING
|
33
|
17
|
DISCLOSURE
OF OUTSTANDING SHARE DATA
|
33
|
18
|
OFF-BALANCE
SHEET ARRANGEMENTS
|
33
|
At March 31, 2019 and May 15, 2019, Prophecy had:
(i) 95,816,217
Shares issued and outstanding; (ii)
8,846,000 and 9,031,000 stock options for Shares outstanding,
respectively; (iii) 27,318,027 Share purchase warrants for Shares
outstanding.
|
Transfer
Agent and Registrar
Computershare
Trust Company of Canada
3rd
Floor, 510 Burrard
Street
Vancouver,
BC, Canada V6C 3B9
Tel:
+1 (604) 661-9400
|
|
|
Investor and Contact Information
All
financial reports, news releases and corporate information can be
accessed by visiting our website at: www.prophecydev.com,Tel: +1 (604) 569-3661 ext. 101 Email:
ir@prophecydev.com
|
Head Office and Registered Office
Suite
1610 - 409 Granville Street
Vancouver, BC,
Canada V6C 1T2
Tel: +1
(604) 569-3661
|
Directors
|
Officers
|
John
Lee, Executive Chairman
|
Michael
Doolin, COO and Interim Chief Executive Officer
|
Greg
Hall
|
Irina
Plavutska, Chief Financial Officer
|
Masa
Igata
|
Bekzod Kasimov, Vice-President,
Business Development
|
|
Michael
Drozd, Vice-President, Operations and Metallurgy
|
|
Danniel
Oosterman, Vice-President, Exploration
|
|
Ron
Espell, Vice-President, Environment and Sustainability
|
|
Rocio
Echegaray, Corporate Secretary
|
|
|
Audit Committee
|
Corporate Governance and Compensation Committee
|
Greg
Hall (Chair)
|
Greg
Hall (Chair)
|
Masa
Igata
|
Masa
Igata
|
John
Lee
|
|
The
Gibellini Project is situated on the east flank of the Fish Creek
Range in the Fish Creek Mining District, about 25 miles south of
Eureka, Nevada and is accessed by dirt road extending westward from
State Route 379.
The
Gibellini group of claims was acquired on June 22, 2017, through
lease from the claimant and current holder of the Gibellini mineral
claims (the “Gibellini
Lessor”) and includes an area of approximately 771
acres. Under the Gibellini mineral lease agreement dated June 22,
2017 (the “Gibellini
MLA”), Prophecy leased the Gibellini group of claims
which originally constituted the Gibellini Project by among other
things, agreeing to pay to the Gibellini Lessor, annual advance
royalty payments which will be tied, based on an agreed formula
(not to exceed USD$120,000 per year), to the average vanadium
pentoxide price of the prior year. Upon commencement of production,
Prophecy will maintain its acquisition through lease of the
Gibellini group of claims by paying to the Gibellini Lessor, a 2.5%
NSR until a total of USD$3 million is paid. Thereafter, the NSR
will be reduced to 2% over the remaining life of the mine (and
referred to thereafter, as “Production Royalty Payments”). All
advance royalty payments made, will be deducted as credits against
future Production Royalty Payments. The lease is for a term
of 10 years, which can be extended for an additional 10 years at
Prophecy’s option.
On
April 19, 2018, the Gibellini MLA was amended to grant Prophecy the
option, at any time during the term of the agreement, to require
the Gibellini Lessor to transfer their title over all of the leased
mining claims (excluding four claims which will be retained by the
Gibellini Lessor and which contain minimal resource) to Prophecy in
exchange for USD1,000,000, to be paid as an advance royalty
payment.
On July 10, 2017, the Company acquired (through lease) from the
holders (the “Former Louie Hill Lessors”) 10 unpatented lode claims totaling
approximately 207 gross acres that comprised the Louie Hill group
of claims located approximately 500 metres south of the
Gibellini group of claims. These claims were subsequently abandoned
by the Former Louie Hill Lessors, and on March 11 and 12, 2018, the
Company staked the area within and under 17 new claims totaling
approximately 340 gross acres which now collectively comprise the
expanded Louie Hill group of claims.
On October 22, 2018, the Company entered into a royalty agreement
(the “Royalty
Agreement”) with the Former Louie Hill Lessors to
replace on substantially similar terms, the former Louie Hill
Mineral Lease Agreement dated July 10, 2017, wherein Prophecy will
pay an advance royalty and a net smelter royalty on vanadium
pentoxide produced from the area of the 10 unpatented lode claims
originally acquired through lease from the Former Louie Hill
Lessors that is now contained within 17 lode claims since staked by
the Company’s subsidiaries. The annual advance royalty
payments will be tied, based on an agreed formula (the total amount
not to exceed USD$28,000 per year), to the average vanadium
pentoxide price for the prior year.
|
Confidence Category
|
Domain
|
Cut-offV2O5 (%)
|
Tons(Mt)
|
GradeV2O5(%)
|
ContainedV2O5 (Mlb)
|
Measured
|
Oxide
|
0.101
|
3.96
|
0.251
|
19.87
|
|
Transition
|
0.086
|
3.98
|
0.377
|
29.98
|
Indicated
|
Oxide
|
0.101
|
7.83
|
0.222
|
34.76
|
|
Transition
|
0.086
|
7.19
|
0.325
|
46.73
|
Total Measured and Indicated
|
|
|
22.95
|
0.286
|
131.34
|
Inferred
|
Oxide
|
0.101
|
0.16
|
0.17
|
0.55
|
|
Transition
|
0.086
|
0.01
|
0.18
|
0.03
|
|
Reduced
|
0.116
|
14.8
|
0.175
|
51.72
|
Total Inferred
|
|
14.97
|
0.175
|
52.3
|
Confidence
Category
|
Cut-offV2O5 (%)
|
Tons(Mt)
|
GradeV2O5 (%)
|
ContainedV2O5 (Mlb)
|
Inferred
|
0.101
|
7.52
|
0.276
|
41.49
|
Internal rate of
return
|
50.8%
|
Net
present value (“NPV”)
|
$338.3
million at 7% discount rate
|
Payback
period
|
1.72
years
|
Average
annual production
|
9.65
million lbs V2O5
|
Average
V2O5 selling
price
|
$12.73
per lb
|
Operating cash
cost
|
$4.77
per lb V2O5
|
All-in
sustaining costs*
|
$6.28
per lb V2O5
|
Breakeven
price**
|
$7.76
per lb V2O5
|
Initial
capital cost including 25% contingency
|
$116.76
million
|
Average
grade
|
0.26%
V2O5
|
Strip
ratio
|
0.17
waste to leach material
|
Mining
operating rate
|
3.4
million tons (leach material and waste) per year
|
Average
V2O5 recovery
through Direct Heap Leaching
|
62%
|
Life of
mine
|
13.5
years
|
V2O5 price
change
|
V2O5 price
USD$/lb
|
After-taxIRR
|
After-tax
NPVUSD$M @ 7%
|
After-taxcashflowUSD$M
|
30%
|
16.55
|
69%
|
568.0
|
996.0
|
20%
|
15.28
|
63%
|
491.3
|
864.4
|
10%
|
14.00
|
57%
|
415.2
|
733.2
|
Base
price
|
12.73
|
51%
|
338.3
|
600.4
|
-10%
|
11.46
|
44%
|
261.0
|
467.2
|
-20%
|
10.18
|
36%
|
183.1
|
333.2
|
-30%
|
8.91
|
26%
|
103.9
|
196.9
|
V2O5 gradechange
|
V2O5grade
|
After-taxIRR
|
After-tax
NPVUSD$M @ 7%
|
After-taxcashflowUSD$M
|
30%
|
0.34%
|
68%
|
554.4
|
972.8
|
20%
|
0.31%
|
63%
|
482.4
|
849.0
|
10%
|
0.28%
|
57%
|
410.7
|
725.4
|
Base
grade
|
0.26%
|
51%
|
338.3
|
600.4
|
-10%
|
0.23%
|
44%
|
265.6
|
475.0
|
-20%
|
0.21%
|
37%
|
192.2
|
348.9
|
-30%
|
0.18%
|
28%
|
118.3
|
221.6
|
Capexchange
|
CapexUSD$M
|
After-taxIRR
|
After-tax
NPVUSD$M @ 7%
|
After-taxcashflowUSD$M
|
30%
|
151.8
|
40%
|
307.2
|
564.3
|
20%
|
140.1
|
43%
|
317.6
|
576.3
|
10%
|
128.4
|
47%
|
328.0
|
588.4
|
Base
Capex
|
116.8
|
51%
|
338.3
|
600.4
|
-10%
|
105.1
|
55%
|
348.6
|
612.5
|
-20%
|
93.4
|
61%
|
358.9
|
624.6
|
-30%
|
81.7
|
67%
|
369.3
|
636.8
|
Opexchange
|
OpexUSD$M
|
After-taxIRR
|
After-tax
NPVUSD$M @ 7%
|
After-taxcashflowUSD$M
|
30%
|
6.20
|
45%
|
257.9
|
450.2
|
20%
|
5.72
|
47%
|
284.8
|
500.3
|
10%
|
5.25
|
49%
|
311.6
|
550.4
|
Base
Capex
|
4.77
|
51%
|
338.3
|
600.4
|
-10%
|
4.29
|
53%
|
364.8
|
650.0
|
-20%
|
3.82
|
55%
|
390.7
|
698.4
|
-30%
|
3.34
|
56%
|
416.0
|
745.4
|
|
Oxide‘000
tons
|
Transition‘000
tons
|
Reduced‘000
tons
|
Grade%
V2O5
|
Metal
containedV2O5 (Mlb)
|
Metal
ProducedV2O5 (Mlb)
|
YR
1
|
2,600
|
400
|
—
|
0.291
|
17.440
|
10.633
|
YR
2
|
2,400
|
600
|
—
|
0.278
|
16.690
|
10.480
|
YR
3
|
1,760
|
1,240
|
—
|
0.310
|
18.580
|
12.067
|
YR
4
|
650
|
2,350
|
—
|
0.372
|
22.320
|
15.217
|
YR
5
|
310
|
2,680
|
10
|
0.366
|
21.950
|
15.185
|
YR
6
|
2,240
|
750
|
10
|
0.315
|
18.920
|
11.928
|
YR
7
|
3,000
|
—
|
—
|
0.316
|
18.980
|
11.394
|
YR
8
|
1,910
|
700
|
380
|
0.189
|
11.310
|
7.085
|
YR
9
|
690
|
1,220
|
1,090
|
0.216
|
12.940
|
8.023
|
YR
10
|
110
|
370
|
2,520
|
0.208
|
12.480
|
6.898
|
YR
11
|
450
|
360
|
2,180
|
0.182
|
10.910
|
6.103
|
YR
12
|
50
|
140
|
2,820
|
0.166
|
9.980
|
5.349
|
YR
13
|
390
|
10
|
2,600
|
0.183
|
10.970
|
5.839
|
YR
14
|
1,710
|
—
|
—
|
0.195
|
6.670
|
4.096
|
Totals:
|
18,290
|
10,830
|
11,590
|
0.258
|
210.15
|
130.297
|
Mill
Feed Material Type
|
Direct
Leaching Recovery
|
Oxide
|
60%
|
Transition
|
70%
|
Reduced
|
52%
|
Crush
Size 100%Passing
|
Test
Type
|
Time
(Days)
|
Head
Grade%V*
|
%
VanadiumRecovery
|
AcidConsumptionlbs/st
|
50 mm
(2”)
|
Column,
open circuit
|
123
|
0.299
|
76.6%
|
88
|
12.5 mm
(1/2”)
|
Column,
open circuit
|
123
|
0.313
|
80.2%
|
72
|
12.5 mm
(1/2”)
|
Column,
closed circuit
|
199
|
0.284
|
68.3%
|
84
|
12.5 mm
(1/2”)
|
Column,
closed circuit
|
Column,
closed circuit
|
0.313
|
74.0%
|
96
|
12.5 mm
(1/2”)
|
Bottle
Roll
|
4
|
0.286
|
67.1%
|
74
|
1.7 mm
(-10m)
|
Bottle
Roll
|
4
|
0.286
|
66.3%
|
66
|
-75µ
|
Bottle
Roll
|
4
|
0.279
|
67.6%
|
62
|
-75µ
|
Bottle
Roll
|
30
|
0.298
|
74.2%
|
54
|
V2O5 %
|
SI %
|
Fe %
|
P %
|
S %
|
As %
|
Na2O %
|
K2O %
|
Al %
|
U %
|
98.56
|
0.0078
|
0.88
|
0.058
|
0.47
|
0.0026
|
0.43
|
0.052
|
0.22
|
0.0001
|
Cost
Description
|
Total(USD$000s)
|
Open Pit Mine
|
|
Open
pit mine development
|
1,412
|
Gibellini
incremental WRSF
|
212
|
Mobile
equipment
|
111
|
Infrastructure-On Site
|
|
Site
prep
|
2,431
|
Roads
|
1,391
|
Water
supply
|
2,007
|
Sanitary
system
|
61
|
Electrical –
on site
|
2,052
|
Communications
|
165
|
Contact
water ponds
|
174
|
Non-process
facilities – buildings
|
7,583
|
Process Facilities
|
|
Mill
feed handling
|
15,380
|
Heap
leach system
|
20,037
|
Process
plant
|
14,441
|
Off-Site Infrastructure
|
|
Water
system
|
4,495
|
Electrical supply
system
|
3,227
|
First
fills
|
860
|
Subtotal Total Direct Cost
|
76,039
|
Construction
indirect costs
|
4,254
|
Sales
tax / OH&P
|
4,236
|
EPCM
|
8,879
|
Total
Before Contingency
|
93,409
|
Contingency
(25%)
|
23,352
|
Total
Project Cost
|
116,761
|
Total
Cash Operating Cost
|
USD$
per Ton Leached
|
USD$
per lb of V2O5
Produced
|
G&A
|
0.99
|
0.31
|
Mining
Cost
|
2.72
|
0.85
|
Total
Processing Cost
|
11.54
|
3.61
|
Total
|
15.26
|
4.77
|
V2O %
|
SI %
|
Fe %
|
P %
|
S %
|
As %
|
Na2O %
|
K2O %
|
Al %
|
U %
|
98.56
|
0.0078
|
0.88
|
0.058
|
0.47
|
0.0026
|
0.43
|
0.052
|
0.22
|
0.0001
|
Test
|
Leach Time
|
Vanadium Recovery %
|
Sulfuric Acid Consumed kg/t
|
Column
Test
|
21
days
|
70.74
|
100
|
Bottle
Roll Test - investigate the effect of the curing method and
increase of sulfuric acid addition on the vanadium
recovery
|
50
hours
|
62.8
|
150
|
Bottle
Roll Test - investigate addition of NWME prepared leaching agent on
the vanadium recovery
|
144
hours
|
66.5
|
100
|
Bottle
Roll Test - investigate the leaching of coarse feed (2mm) on the
vanadium recovery
|
216
hours
|
63.7
|
100
|
Size
|
Test
Type
|
Time
(Days)
|
Vanadium
Recovery %
|
Head Grade %
V2O5
|
Sulfuric Acid
Consumed kg/t
|
|
|||||
50 mm
(2”)
|
Column, open
circuit
|
123
|
76.6
|
0.53
|
39.9
|
12.5 mm
(1/2”)
|
Column, open
circuit
|
123
|
80.2
|
0.56
|
32.7
|
12.5 mm
(1/2”)
|
Column, closed
circuit
|
230
|
68.3
|
0.51
|
38.1
|
12.5 mm
(1/2”)
|
Column, closed
circuit
|
198
|
74.0
|
0.56
|
43.5
|
12.5 mm
(1/2”)
|
Bottle
Roll
|
4
|
67.1
|
0.51
|
33.6
|
1.7 mm
(-10m)
|
Bottle
Roll
|
4
|
66.3
|
0.51
|
29.9
|
-75µ
|
Bottle
Roll
|
4
|
67.6
|
0.50
|
28.1
|
-75µ
|
Bottle
Roll
|
30
|
74.2
|
0.53
|
24.5
|
Sample
Number
|
Sample
ID
|
Weight
kg
|
Head
Grade V2O5 (%)
|
1
|
18-L6-28
|
17.0
|
0.665
|
2
|
18-L6-29
|
17.0
|
0.885
|
3
|
18-L6-30
|
12.5
|
0.370
|
4
|
18-L6-31
|
18.0
|
0.210
|
5
|
18-L6-32
|
13.5
|
0.420
|
6
|
18-L6-33
|
22.5
|
0.280
|
7
|
18-L6-34
|
19.0
|
0.315
|
8
|
18-L6-35
|
20.0
|
0.185
|
9
|
18-L6-36
|
18.0
|
0.165
|
10
|
18-L6-37
|
20.0
|
0.195
|
Total
|
|
177.5
|
|
Mineral composition
|
Mineral content %
|
V content in minerals %
|
V distribution %
|
|
Independent
vanadium minerals
|
Kazakhstanite
|
0.15
|
40.91
|
19.77
|
45.2%
of vanadium content
|
Shubnelite
|
0.13
|
27.86
|
11.67
|
|
Sherwoodite
|
0.08
|
34.54
|
8.9
|
|
Bokite
|
0.03
|
36.51
|
3.53
|
|
Melanovanadite
|
0.01
|
41.27
|
1.33
|
Vanadium-bearing
layered aluminosilicate minerals
|
Sericite
|
8.59
|
0.57
|
14.63
|
20.8%
of vanadium content
|
Illite
|
5.58
|
0.28
|
5.03
|
|
Chlorite
|
0.81
|
0.44
|
1.14
|
|
Nacrite-palygorskite
|
0.7
|
-
|
-
|
Vanadium-bearing
layered iron oxide, sulfate 34% of vanadium content
|
Limonite
|
1.76
|
5.48
|
31.07
|
|
Strengite
|
0.64
|
0.49
|
1.01
|
|
Jarosite
|
0.48
|
1.24
|
1.92
|
Gangue
|
Quartz
|
75.88
|
-
|
-
|
|
Apatite
|
2.83
|
-
|
-
|
|
Potassium
feldspar
|
0.73
|
-
|
-
|
|
Dolomite
|
0.66
|
-
|
-
|
|
Carbonaceous
|
0.45
|
-
|
-
|
|
Rutile
|
0.25
|
-
|
-
|
|
Barite
|
0.04
|
-
|
-
|
|
Pyrite
|
0.2
|
-
|
-
|
Total
|
|
100
|
|
100
|
|
Gibellini Vanadium
Deposit
|
Black Shale Series Vanadium
Deposits
|
Host
Rock
|
Silica
State
|
Carbon Siliceous
Rocks with Mudstone
|
The Mineral
Composition
|
High Silica, Low
Aluminium and Low Carbonaceous. SiO2-78.40%; Al2O3 - 4.13%;
T(C) -
0.47%
|
High Silica, High
Aluminum and High Carbonaceous. SiO2-62-93%; Al2O3 > 7%;
T(C) >
10%
|
SAMPLE ID
|
Prospect
|
V2O5 %
|
301910
|
Big
Sky
|
0.261
|
301913
|
Big
Sky
|
0.223
|
301915
|
Big
Sky
|
0.346
|
301916
|
Big
Sky
|
0.400
|
301918
|
Big
Sky
|
0.712
|
301920
|
Big
Sky
|
0.264
|
301926
|
Big
Sky
|
0.580
|
301927
|
Big
Sky
|
2.008
|
301928
|
Big
Sky
|
0.848
|
301944
|
Big
Sky
|
0.264
|
301946
|
Big
Sky
|
0.280
|
301947
|
Big
Sky
|
0.218
|
301950
|
Big
Sky
|
0.261
|
302050
|
Big
Sky
|
0.214
|
302054
|
Big
Sky
|
0.787
|
302055
|
Big
Sky
|
1.982
|
SAMPLE ID
|
Prospect
|
V2O5 %
|
301951
|
Middle
Earth
|
0.350
|
301952
|
Middle
Earth
|
0.482
|
301968
|
Middle
Earth
|
0.628
|
301969
|
Middle
Earth
|
0.605
|
301970
|
Middle
Earth
|
0.634
|
301972
|
Middle
Earth
|
0.252
|
301973
|
Middle
Earth
|
0.687
|
301974
|
Middle
Earth
|
0.470
|
301975
|
Middle
Earth
|
0.612
|
301976
|
Middle
Earth
|
0.637
|
301978
|
Middle
Earth
|
0.559
|
301979
|
Middle
Earth
|
0.557
|
301980
|
Middle
Earth
|
0.259
|
301981
|
Middle
Earth
|
0.405
|
301983
|
Middle
Earth
|
0.255
|
301984
|
Middle
Earth
|
0.303
|
301985
|
Middle
Earth
|
0.434
|
301987
|
Middle
Earth
|
0.291
|
301988
|
Middle
Earth
|
1.294
|
301989
|
Middle
Earth
|
0.261
|
301991
|
Middle
Earth
|
0.314
|
301992
|
Middle
Earth
|
0.457
|
301993
|
Middle
Earth
|
0.380
|
301995
|
Middle
Earth
|
0.302
|
301998
|
Middle
Earth
|
0.539
|
301999
|
Middle
Earth
|
0.618
|
302000
|
Middle
Earth
|
0.532
|
SAMPLE ID
|
Prospect
|
V2O5 %
|
302004
|
NE
Trench
|
0.239
|
302005
|
NE
Trench
|
0.380
|
302016
|
NE
Trench
|
0.303
|
|
2019
|
2018
|
2018
|
2018
|
|
Q1
|
Q4
|
Q3
|
Q2
|
|
|
|
|
|
Operating
expense
|
$(794,098)
|
$(1,318,475)
|
$(636,172)
|
$(780,818)
|
Net
loss
|
(908,859)
|
(16,044,665)
|
(634,337)
|
(916,247)
|
Net
loss per share, basic and diluted
|
$(0.01)
|
$0.20
|
$(0.01)
|
$(0.01)
|
Comprehensive
loss
|
(908,859)
|
(15,975,825)
|
(610,797)
|
(966,787)
|
Comprehensive
loss per share, basic and diluted
|
$(0.01)
|
$0.20
|
$(0.01)
|
$(0.01)
|
|
2018
|
2017
|
2017
|
2017
|
|
Q1
|
Q4
|
Q3
|
Q2
|
|
|
|
|
|
Operating
expense
|
$(562,918)
|
$(1,277,507)
|
$(484,907)
|
$(336,028)
|
Net
loss
|
(589,219)
|
(17,869,936)
|
(176,793)
|
(516,243)
|
Net
loss per share, basic and diluted
|
$(0.01)
|
$(0.32)
|
$(0.00)
|
$(0.01)
|
Comprehensive
loss
|
(643,219)
|
(17,857,776)
|
(176,793)
|
(516,243)
|
Comprehensive
loss per share, basic and diluted
|
$(0.01)
|
$(0.32)
|
$(0.00)
|
$(0.01)
|
Operating Expenses
|
Three Months Ended March 31,
|
|
|
2019
|
2018
|
Advertising
and promotion
|
$134,048
|
$45,378
|
Consulting
and management fees
|
58,552
|
68,278
|
General
and administrative expenses
|
413,281
|
223,580
|
Professional
fees
|
58,330
|
56,495
|
Share-based
payments
|
51,085
|
134,928
|
Travel
and accommodation
|
78,802
|
34,259
|
|
$794,098
|
$562,918
|
Other Items
|
Three Months Ended March 31,
|
|
|
2019
|
2018
|
Costs
in excess of recovered coal
|
$21,002
|
$38,671
|
Foreign
exchange gain
|
(19,549)
|
(12,370)
|
Impairment
of mineral property
|
113,308
|
-
|
|
$114,761
|
$26,301
|
|
Three
Months Ended March 31,
|
|
|
2019
|
2018
|
Cash
Used in Operating Activities
|
$(923,503)
|
$(418,819)
|
Cash
Used in Investing Activities
|
(719,476)
|
(939,067)
|
Cash
Used in Financing Activities
|
(8,929)
|
-
|
Net
Decrease in Cash
|
(1,651,908)
|
(1,357,886)
|
Cash
- beginning of period
|
5,304,097
|
4,100,608
|
Cash
- end of period
|
$3,652,189
|
$2,742,722
|
|
2019
|
2020
|
2021
|
2022
|
Total
|
|
|
|
|
|
|
Office Lease
Obligations
|
$33,612
|
$45,489
|
$24,574
|
$9,540
|
$113,215
|
|
$33,612
|
$45,489
|
$24,574
|
$9,540
|
$113,215
|
|
Three
Months Ended March 31,
|
|
Related parties
|
2019
|
2018
|
Directors
and officers
|
$467,463
|
$117,163
|
Linx
Partners Ltd.
|
84,000
|
105,012
|
MaKevCo
Consulting Inc.
|
5,700
|
4,700
|
Sophir
Asia Ltd.
|
5,400
|
4,400
|
|
$562,563
|
$231,275
|
|
Three
Months Ended March 31,
|
|
Related parties
|
2019
|
2018
|
Consulting
and management fees
|
$106,950
|
$55,512
|
Directors'
fees
|
22,500
|
13,500
|
Mineral
properties
|
175,910
|
93,763
|
Salaries
|
257,203
|
68,500
|
|
$562,563
|
$231,275
|
|
Three
Months Ended March 31,
|
|
Key Management Personnel
|
2019
|
2017
|
Salaries
and short term benefits
|
$289,919
|
$70,912
|
Share-based
payments
|
121,096
|
132,544
|
|
$411,015
|
$203,456
|
|
Adoption of IFRS 16
|
Lease
commitments as at December 31, 2018
|
$124,556
|
Less
short-term commitments
|
(32,313)
|
|
92,243
|
Impact
of discounting
|
(37,246)
|
Lease
liability as of January 1, 2019
|
54,997
|
Condensed Interim Consolidated
Statements of Financial Position
|
4
|
Condensed Interim Consolidated
Statements of Operations and Comprehensive
Loss
|
5
|
Condensed Interim Consolidated
Statements of Changes in Equity
|
6
|
Condensed Interim Consolidated
Statements of Cash Flows
|
7
|
1
|
DESCRIPTION
OF BUSINESS AND NATURE OF OPERATIONS
|
8
|
2
|
BASIS
OF PRESENTATION
|
8
|
3
|
SEGMENTED
INFORMATION
|
10
|
4
|
CASH
AND CASH EQUIVALENTS
|
10
|
5
|
RIGHT-OF-USE
ASSET
|
11
|
6
|
PROPERTY
AND EQUIPMENT
|
11
|
7
|
MINERAL
PROPERTIES
|
13
|
8
|
ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES
|
18
|
9
|
LEASE
LIABILITY
|
18
|
10
|
SHARE
CAPITAL
|
18
|
11
|
FAIR
VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS
|
20
|
12
|
FINANCIAL
RISK MANAGEMENT DISCLOSURES
|
22
|
13
|
RELATED
PARTY DISCLOSURES
|
23
|
14
|
KEY
MANAGEMENT PERSONNEL COMPENSATION
|
24
|
15
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
24
|
16
|
CONTINGENCIES
|
24
|
17
|
EVENTS
AFTER THE REPORTING DATE
|
25
|
As at
|
March
31,
|
December
31,
|
|
2019
|
2018
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$3,652,189
|
$5,304,097
|
Receivables
|
39,583
|
36,399
|
Prepaid
expenses
|
57,185
|
123,272
|
|
3,748,957
|
5,463,768
|
Non-current
assets
|
|
|
Restricted cash
equivalents
|
34,500
|
34,500
|
Reclamation
deposits
|
21,055
|
21,055
|
Right-of-use
asset
|
49,675
|
-
|
Equipment
|
89,990
|
101,162
|
Mineral
properties
|
4,758,540
|
3,643,720
|
|
$8,702,717
|
$9,264,205
|
Liabilities
and Equity
|
|
|
Current
liabilities
|
|
|
Accounts payable
and accrued liabilities
|
$1,990,834
|
$1,636,786
|
|
1,990,834
|
1,636,786
|
Non-current
liabilities
|
|
|
Lease
liability
|
49,884
|
-
|
Provision for
closure and reclamation
|
265,239
|
265,239
|
Tax
provision
|
7,952,700
|
8,121,918
|
|
10,258,657
|
10,023,943
|
Equity
|
|
|
Share
capital
|
173,819,546
|
173,819,546
|
Reserves
|
23,526,487
|
23,413,830
|
Deficit
|
(198,901,973)
|
(197,993,114)
|
|
(1,555,940)
|
(759,738)
|
|
$8,702,717
|
$9,264,205
|
"John
Lee"
John Lee,
Director
|
"Greg Hall"
Greg Hall,
Director
|
|
Three Months Ended
March 31,
|
|
|
2019
|
2018
|
General
and Administrative Expenses
|
|
|
Advertising and
promotion
|
$134,048
|
$45,378
|
Consulting and
management fees
|
58,552
|
68,278
|
Depreciation and
accretion
|
10,690
|
1,923
|
Director
fees
|
22,500
|
13,500
|
Insurance
|
21,966
|
13,073
|
Office and
administration
|
16,527
|
34,793
|
Professional
fees
|
58,330
|
56,495
|
Salaries and
benefits
|
296,237
|
90,253
|
Share-based
payments
|
51,085
|
134,928
|
Stock exchange and
shareholder services
|
45,361
|
70,038
|
Travel and
accommodation
|
78,802
|
34,259
|
|
(794,098)
|
(562,918)
|
Other
Items
|
|
|
Costs in excess of
recovered coal
|
(21,002)
|
(38,671)
|
Foreign exchange
gain
|
19,549
|
12,370
|
Impairment of
mineral property
|
(113,308)
|
-
|
|
(114,761)
|
(26,301)
|
Net
Loss for Period
|
(908,859)
|
(589,219)
|
Fair value
gain/(loss) on marketable securities
|
-
|
(54,000)
|
Comprehensive
Loss for Period
|
$(908,859)
|
$(643,219)
|
Loss Per Common Share, basic and
diluted
|
$(0.01)
|
$(0.01)
|
Weighted
Average Number of Common Shares Outstanding
|
94,257,059
|
74,721,790
|
|
Number of
Shares
|
Share
Capital
|
Reserves
|
AccumulatedOtherComprehensive
Income
|
Deficit
|
Total
|
Balance, December
31, 2017
|
74,721,790
|
$165,862,805
|
$22,621,202
|
$12,160
|
$(179,808,646)
|
$8,687,521
|
Share-based
payments
|
-
|
-
|
184,665
|
-
|
-
|
184,665
|
Warrants issued for
mineral property
|
|
|
89,944
|
-
|
-
|
89,944
|
Loss for the
year
|
-
|
-
|
-
|
-
|
(589,219)
|
(589,219)
|
Unrealized loss on
marketable securities
|
-
|
-
|
-
|
(54,000)
|
-
|
(54,000)
|
Balance, March 31,
2018
|
74,721,790
|
$165,862,805
|
$22,895,811
|
$(41,840)
|
$(180,397,865)
|
$8,318,911
|
Balance, December
31, 2018
|
95,316,217
|
$173,819,546
|
$23,413,830
|
$-
|
$(197,993,114)
|
$(759,738)
|
Share-based
payments
|
-
|
-
|
112,657
|
-
|
-
|
112,657
|
Loss for the
year
|
-
|
-
|
-
|
-
|
(908,859)
|
(908,859)
|
Balance, March 31,
2019
|
95,316,217
|
$173,819,546
|
$23,526,487
|
$-
|
$(198,901,973)
|
$(1,555,940)
|
|
Three Months Ended
March 31,
|
|
|
2019
|
2018
|
|
|
|
Operating
Activities
|
|
|
Net loss for
period
|
$(908,859)
|
$(589,219)
|
Adjustments to
reconcile net loss to net cash flows:
|
|
|
Depreciation and
accretion
|
10,690
|
1,923
|
Share-based
payments
|
51,085
|
134,928
|
Unrealized foreign
exchange (gain)/loss
|
(169,218)
|
148,218
|
Impairment of
mineral property
|
113,308
|
-
|
|
(902,994)
|
(304,150)
|
Working capital
adjustments
|
|
|
Receivables
|
(3,184)
|
(943)
|
Prepaid
expenses
|
66,087
|
(4,800)
|
Accounts payable
and accrued liabilities
|
(83,412)
|
(108,926)
|
|
(20,509)
|
(114,669)
|
Cash
Used in Operating Activities
|
(923,503)
|
(418,819)
|
|
|
|
Investing
Activities
|
|
|
Net purchases of
marketable securities
|
-
|
(60,940)
|
Mineral property
expenditures
|
(719,476)
|
(878,127)
|
Cash
Used in Investing Activities
|
(719,476)
|
(939,067)
|
|
|
|
Financing
Activities
|
|
|
Lease
payments
|
(8,929)
|
-
|
Cash
Used in Financing Activities
|
(8,929)
|
-
|
Net Decrease in
Cash
|
(1,651,908)
|
(1,357,886)
|
Cash - beginning of
period
|
5,304,097
|
4,100,608
|
Cash - end of
period
|
$3,652,189
|
$2,742,722
|
|
Adoption of IFRS
16
|
Lease
commitments as at December 31, 2018
|
$124,556
|
Less
short-term commitments
|
(32,313)
|
|
92,243
|
Impact
of discounting
|
(37,246)
|
Lease
liability as of January 1, 2019
|
54,997
|
|
March 31, 2019
|
||||
|
Canada
|
USA
|
Mongolia
|
Bolivia
|
Total
|
Reclamation
deposits
|
$-
|
$-
|
$21,055
|
$-
|
$21,055
|
Equipment
|
14,070
|
21,577
|
26,585
|
27,757
|
89,990
|
Mineral
properties
|
-
|
4,758,540
|
-
|
-
|
4,758,540
|
|
$14,070
|
$4,780,117
|
$47,640
|
$27,757
|
$4,869,585
|
|
December
31, 2018
|
||||
|
Canada
|
USA
|
Mongolia
|
Bolivia
|
Total
|
Reclamation
deposits
|
$-
|
$-
|
$21,055
|
$-
|
$21,055
|
Equipment
|
14,839
|
22,713
|
33,440
|
30,170
|
101,162
|
Mineral
properties
|
-
|
3,643,720
|
-
|
-
|
3,643,720
|
|
$14,839
|
$3,666,433
|
$54,495
|
$30,170
|
$3,765,937
|
|
March
31,
2019
|
December
31,
2018
|
Cash
|
$552,189
|
$804,097
|
Cash
equivalents
|
3,100,000
|
4,500,000
|
Restricted
cash equivalents
|
34,200
|
34,500
|
|
$3,686,689
|
$5,338,597
|
Initial
recognition, January 1, 2019
|
$54,997
|
Additions
|
-
|
Depreciation
|
(5,322)
|
Balance
at March 31, 2019
|
$49,675
|
|
Computer
|
Furniture
&
|
Computer
|
|
Mining
|
|
|
Equipment
|
Equipment
|
Software
|
Vehicles
|
Equipment
|
Total
|
Cost
|
|
|
|
|
|
|
Balance,
December 31, 2017
|
$100,074
|
$276,830
|
$197,813
|
$172,692
|
$1,314,829
|
$2,062,238
|
Additions/Disposals
|
3,180
|
2,015
|
-
|
-
|
24,476
|
29,671
|
Impairment
charge
|
-
|
-
|
-
|
-
|
(1,314,829)
|
(1,314,829)
|
Balance,
December 31, 2018
|
$103,254
|
$278,845
|
$197,813
|
$172,692
|
$24,476
|
$777,080
|
Accumulated depreciation
|
|
|
|
|
|
|
Balance,
December 31, 2017
|
$96,695
|
$217,073
|
$197,813
|
$129,842
|
$888,904
|
$1,530,327
|
Depreciation
for period
|
1,316
|
16,351
|
-
|
13,337
|
3,491
|
34,495
|
Impairment
charge
|
-
|
-
|
-
|
-
|
(888,904)
|
(888,904)
|
Balance,
December 31, 2018
|
$98,011
|
$233,424
|
$197,813
|
$143,179
|
$3,491
|
$675,918
|
Carrying amount
|
|
|
|
|
|
|
At
December 31, 2017
|
$3,379
|
$59,757
|
$-
|
$42,850
|
$425,925
|
$531,911
|
At
December 31, 2018
|
$5,243
|
$45,421
|
$-
|
$29,513
|
$20,985
|
$101,162
|
Cost
|
|
|
|
|
|
|
Balance,
December 31, 2018
|
$103,254
|
$278,845
|
$197,813
|
$172,692
|
$24,476
|
$777,080
|
Additions/Disposals
|
-
|
-
|
-
|
-
|
-
|
-
|
Balance,
March 31, 2019
|
$103,254
|
$278,845
|
$197,813
|
$172,692
|
$24,476
|
$777,080
|
Accumulated depreciation
|
|
|
|
|
|
|
Balance,
December 31, 2018
|
$98,011
|
$233,424
|
$197,813
|
$143,179
|
$3,491
|
$675,918
|
Depreciation
for period
|
3,630
|
3,456
|
-
|
3,037
|
1,049
|
11,172
|
Balance,
March 31, 2019
|
$101,641
|
$236,880
|
$197,813
|
$146,216
|
$4,540
|
$687,090
|
Carrying amount
|
|
|
|
|
|
|
At
December 31, 2018
|
$5,243
|
$45,421
|
$-
|
$29,513
|
$20,985
|
$101,162
|
At
March 31, 2019
|
$1,613
|
$41,965
|
$-
|
$26,476
|
$19,936
|
$89,990
|
|
Gibellini
|
Chandgana
Tal
|
Khavtgai
Uul
|
Pulacayo
Paca
|
Total
|
Balance, December 31, 2017
|
$490,356
|
$-
|
$-
|
$12,809,550
|
$13,299,906
|
Additions:
|
|
|
|
|
|
Acquisition
cost
|
$425,605
|
$-
|
$-
|
$-
|
$425,605
|
Deferred
exploration costs:
|
|
|
|
|
|
Licenses,
tax, and permits
|
387,149
|
1,271
|
261,168
|
-
|
649,588
|
Geological
and consulting
|
1,509,587
|
-
|
-
|
51,112
|
1,560,699
|
Personnel,
camp and general
|
831,023
|
20,590
|
3,741
|
847,538
|
1,702,892
|
|
2,727,759
|
21,861
|
264,909
|
898,650
|
3,913,179
|
Impairment
|
-
|
(21,861)
|
(264,909)
|
(13,708,200)
|
(13,994,970)
|
Balance, December 31, 2018
|
$3,643,720
|
$-
|
$-
|
$-
|
$3,643,720
|
Additions:
|
|
|
|
|
|
Acquisition
cost
|
$-
|
$-
|
$-
|
$-
|
$-
|
Deferred
exploration costs:
|
|
|
|
|
|
Licenses,
tax, and permits
|
-
|
|
|
-
|
$-
|
Geological
and consulting
|
779,770
|
-
|
-
|
5,128
|
$784,898
|
Personnel,
camp and general
|
335,050
|
-
|
-
|
108,180
|
$443,230
|
|
1,114,820
|
-
|
-
|
113,308
|
$1,228,128
|
Impairment
|
-
|
-
|
-
|
(113,308)
|
$(113,308)
|
Balance, March 31, 2019
|
$4,758,540
|
$-
|
$-
|
$-
|
$4,758,540
|
|
March
31,
2019
|
December
31,
2018
|
Trade
accounts payable
|
$1,990,834
|
$1,536,786
|
Accrued
liabilities
|
-
|
100,000
|
|
$1,990,834
|
$1,636,786
|
IFRS
16 adoption as at January 1, 2019
|
$54,997
|
Cash
flows:
|
|
Lease
payments for period
|
(8,929)
|
Non-cash
changes:
|
|
Accretion
expense for period
|
3,816
|
Balance
at March 31, 2019
|
$49,884
|
|
Number
of Options
|
Weighted
Average Exercise Price
|
Outstanding,
December 31, 2017
|
8,248,340
|
$0.46
|
Granted
|
4,040,000
|
$0.31
|
Expired
|
(349,720)
|
$1.21
|
Cancelled
|
(1,815,120)
|
$0.45
|
Forfeited
|
(445,000)
|
$1.04
|
Exercised
|
(87,500)
|
$0.28
|
Outstanding,
December 31, 2018
|
9,591,000
|
$0.34
|
Cancelled
|
(745,000)
|
$0.28
|
Outstanding,
March 31, 2019
|
8,846,000
|
$0.35
|
Exercise
|
Expiry
|
Options
Outstanding
|
Exercisable
|
Unvested
|
|
Price
|
Date
|
March
31,
|
December
31,
|
March
31,
|
March
31,
|
|
|
2019
|
2018
|
2019
|
2019
|
$0.65
|
November
14, 2023
|
200,000
|
200,000
|
25,000
|
175,000
|
$0.33
|
October
17, 2023
|
808,750
|
940,000
|
101,094
|
707,656
|
$0.26
|
October
10, 2023
|
68,750
|
550,000
|
8,594
|
60,155
|
$0.22
|
July
23, 2023
|
400,000
|
400,000
|
100,000
|
300,000
|
$0.31
|
May
1, 2023
|
200,000
|
200,000
|
75,000
|
125,000
|
$0.28
|
April
6, 2023
|
1,150,000
|
1,225,000
|
431,250
|
718,750
|
$0.31
|
February
20, 2023
|
200,000
|
200,000
|
100,000
|
100,000
|
$0.35
|
September
1, 2022
|
1,212,500
|
1,250,000
|
909,375
|
303,125
|
$0.33
|
June
12, 2022
|
1,205,000
|
1,225,000
|
1,054,375
|
150,625
|
$0.49
|
January
12, 2022
|
820,000
|
820,000
|
820,000
|
-
|
$0.20
|
June
2, 2021
|
1,420,000
|
1,420,000
|
1,420,000
|
-
|
$0.50
|
June
22, 2020
|
311,000
|
311,000
|
311,000
|
-
|
$0.50
|
April
7, 2020
|
535,000
|
535,000
|
535,000
|
-
|
$0.65
|
May
1, 2019
|
315,000
|
315,000
|
315,000
|
-
|
|
8,846,000
|
9,591,000
|
6,205,688
|
2,640,312
|
|
Number of Warrants
|
Weighted Average Exercise Price
|
Outstanding,
December 31, 2017
|
25,758,030
|
$0.44
|
Issued
|
5,061,417
|
$0.40
|
Exercised
|
(3,445,420)
|
$0.39
|
Expired
|
(56,000)
|
$0.40
|
Outstanding,
December 31, 2018
|
27,318,027
|
$0.44
|
Outstanding,
March 31, 2019
|
27,318,027
|
$0.44
|
Exercise
Price
|
Expiry
Date
|
Number
of Warrants at March 31, 2019
|
$0.50
|
June
13, 2022
|
596,590
|
$0.50
|
April
12, 2022
|
1,032,500
|
$0.40
|
January
13, 2022
|
499,990
|
$0.44
|
August
29, 2021
|
1,013,670
|
$0.40
|
August
13, 2021
|
198,237
|
$0.40
|
July
6, 2021
|
3,863,180
|
$0.40
|
June
2, 2021
|
7,500,000
|
$0.30
|
April
23, 2021
|
100,000
|
$0.50
|
February
15, 2021
|
500,000
|
$0.40
|
January
25, 2021
|
650,000
|
$0.40
|
December
18, 2020
|
211,250
|
$0.70
|
November
13, 2020
|
625,000
|
$0.40
|
October
16, 2020
|
2,533,020
|
$0.70
|
September
30, 2020
|
1,112,000
|
$0.40
|
September
20, 2020
|
4,534,920
|
$0.60
|
June
24, 2020
|
1,147,670
|
$0.50
|
May
22, 2020
|
1,200,000
|
|
27,318,027
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Financial
assets
|
|
|
|
|
Cash,
March 31, 2019
|
$3,652,189
|
$-
|
$-
|
$3,652,189
|
Cash,
December 31, 2018
|
$5,304,097
|
$-
|
$-
|
$5,304,097
|
|
March
31,
2019
|
December
31,
2018
|
Fair
value through profit or loss
|
|
|
Cash
|
$3,652,189
|
$5,304,097
|
Amortized
cost
|
|
|
Receivables
|
$39,583
|
$36,399
|
Restricted
cash equivalents
|
$34,500
|
$34,500
|
|
$3,726,272
|
$5,374,996
|
Amortized
cost
|
|
|
Accounts payable
and accrued liabilities
|
$1,990,834
|
$1,636,786
|
|
$1,990,834
|
$1,636,786
|
|
Three
Months Ended March 31,
|
|
Related parties
|
2019
|
2018
|
Directors
and officers
|
$467,463
|
$117,163
|
Linx
Partners Ltd.
|
84,000
|
105,012
|
MaKevCo
Consulting Inc.
|
5,700
|
4,700
|
Sophir
Asia Ltd.
|
5,400
|
4,400
|
|
$562,563
|
$231,275
|
|
Three
Months Ended March 31,
|
|
Related parties
|
2019
|
2018
|
Consulting
and management fees
|
$106,950
|
$55,512
|
Directors'
fees
|
22,500
|
13,500
|
Mineral
properties
|
175,910
|
93,763
|
Salaries
|
257,203
|
68,500
|
|
$562,563
|
$231,275
|
|
Three
Months Ended March 31,
|
|
Key Management Personnel
|
2019
|
2017
|
Salaries
and short term benefits
|
$289,919
|
$70,912
|
Share-based
payments
|
121,096
|
132,544
|
|
$411,015
|
$203,456
|
|
Three
months ended March,
31
|
|
|
2019
|
2018
|
Supplementary
information
|
|
|
Non-Cash Financing
and Investing Activities
|
|
|
Warrants issued for
mineral property
|
$-
|
$89,944
|
Depreciation
included in mineral property
|
$9,621
|
$26,616
|
Property and
equipment expenditures included in accounts payable
|
$489,890
|
$546,471
|
Fair value
loss/gain on marketable securities
|
$-
|
$54,000
|
Mineral property
expenditures included in accounts payable
|
$1,505,207
|
$613,666
|
Share-based
payments capitalized in mineral properties
|
$61,572
|
$49,737
|
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