0001721716-19-000033.txt : 20190515 0001721716-19-000033.hdr.sgml : 20190515 20190515130119 ACCESSION NUMBER: 0001721716-19-000033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 70 CONFORMED PERIOD OF REPORT: 20190331 FILED AS OF DATE: 20190515 DATE AS OF CHANGE: 20190515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUNT MINING CORP CENTRAL INDEX KEY: 0001551206 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-182072 FILM NUMBER: 19826694 BUSINESS ADDRESS: STREET 1: 23800 EAST APPLEWAY AVE CITY: LIBERTY LAKE STATE: WA ZIP: 99019 BUSINESS PHONE: 509-290-5659 MAIL ADDRESS: STREET 1: 23800 EAST APPLEWAY AVE CITY: LIBERTY LAKE STATE: WA ZIP: 99019 10-Q 1 hmi10q-03312019.htm



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------

FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

Commission File Number: 333-182072
--------------------------
 
 
Hunt Mining Corp.
(Exact name of Registrant as specified in its charter)

British Columbia, Canada
1041
(State or other jurisdiction of incorporation or organization)
(Primary Standard Industrial Classification Code Number)

23800 East Appleway Ave. Liberty Lake, WA 99019 (509) 290-5659
(Address of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes No

Check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller Reporting Company

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  No

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:
As of May 15, 2019, the registrant's outstanding common stock consisted of 63,588,798 shares.
 

 
 




Hunt Mining Corp.
Consolidated Interim financial statements


Three months ended March 31, 2019 and year ended December 31, 2018
Page
   
Consolidated Balance Sheets
3
   
Consolidated Statements of Operations and Comprehensive Income (Loss)
4
   
Consolidated Statement of Changes in Stockholders' Deficiency
5
   
Consolidated Statements of Cash Flows
6
   
Notes to the Consolidate d Interim financial statements
7 - 22
 
 
 
 
 
 
 
 
 
 
 
 

 
 

- 2 -



Hunt Mining Corp.
                 
 Expressed in U.S. Dollars
                 
                   
 Interim Consolidated Balance Sheets
                 
         
March 31,
   
December 31,
 
   
NOTE
   
2019
   
2018
 
 CURRENT ASSETS:
                 
 Cash
   
17
   
$
188,150
   
$
115,372
 
 Accounts receivable
   
12,17,20
     
1,448,956
     
1,474,303
 
 Prepaid expenses
           
56,064
     
57,672
 
 Inventory
   
7
     
1,137,117
     
913,915
 
 Total Current Assets
           
2,830,287
     
2,561,262
 
 NON-CURRENT ASSETS:
                       
 Mineral Properties
   
8
     
438,062
     
438,062
 
 Property, plant and equipment
   
10
     
4,331,523
     
4,585,520
 
 Performance bond
   
11,17
     
327,983
     
315,378
 
 Total Non-Current Assets:
           
5,097,568
     
5,338,960
 
 TOTAL ASSETS:
         
$
7,927,855
   
$
7,900,222
 
                         
 CURRENT LIABILITIES:
                       
 Accounts payable and accrued liabilities
   
13,16,17
   
$
7,492,103
   
$
6,328,861
 
 Bank indebtedness
   
21
     
-
     
330,000
 
 Interest payable
   
16,17
     
378,867
     
320,669
 
 Transaction taxes payable
   
17
     
-
     
129
 
 Loan payable and current portion of long-term debt
   
14,16,17
     
3,376,443
     
3,198,569
 
 Total Current Liabilities:
           
11,247,413
     
10,178,228
 
 NON-CURRENT LIABILITIES:
                       
 Long-term debt
   
14,16,17
     
1,159,140
     
1,253,017
 
 Asset retirement obligation
   
9
     
1,334,845
     
1,308,399
 
 Total Non-Current Liabilities:
           
2,493,985
     
2,561,416
 
 TOTAL LIABILITIES:
         
$
13,741,398
   
$
12,739,644
 
                         
 STOCKHOLDERS' DEFICIENCY:
                       
 Capital stock: Authorized- Unlimited No Par Value Issued and outstanding - 63,588,798 common shares (December 31, 2017 - 63,588,798 common shares)
   
15
   
$
24,695,186
   
$
24,695,186
 
 Additional paid in capital
           
9,696,520
     
9,696,520
 
 Deficit
           
(40,475,775
)
   
(39,557,836
)
 Accumulated other comprehensive income (loss)
           
270,526
     
326,708
 
 Total Stockholders' Deficiency:
           
(5,813,543
)
   
(4,839,422
)
 TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
         
$
7,927,855
   
$
7,900,222
 
                         
 Going Concern (Note 3)
                       
 Commitments and Provision (Note 19)
                       
 Subsequent Events (Note 22)
                       
                         
 Approved on behalf of the Board of Directors
                       
                         
 Signed CEO "Tim Hunt"
                       
                         
 Signed CFO "Ken Atwood"
                       
                         
The accompanying notes are an integral part of these interim consolidated financial statements.
       
 
 
 

- 3 -




Hunt Mining Corp.
                 
 Expressed in U.S. Dollars
                 
 
Interim Consolidated Statements of Operations and Comprehensive Loss
       
  
 
3 month periode ended March 31,
 
   
NOTE
   
2019
   
2018
 
 OPERATING EXPENSES:
                 
 Professional fees
   
16
     
125,741
     
122,093
 
 Directors fees
           
751
     
-
 
 Exploration expenses
           
-
     
148,950
 
 Travel expenses
           
53,236
     
45,467
 
 Administrative and office expenses
   
16
     
30,055
     
66,978
 
 Payroll expenses
   
16
     
69,478
     
107,898
 
 Interest expense
   
16
     
160,407
     
132,760
 
 Banking charges
           
11,820
     
19,619
 
 Depreciation
   
10
     
253,997
     
402,268
 
 Royalty expense
           
5,904
     
-
 
 Total operating expenses:
         
$
711,389
   
$
1,046,033
 
 OTHER INCOME/(EXPENSE):
                       
 Silver and gold recovery (loss), net of expenses
   
20
     
118,059
   
$
202,614
 
 Interest income
           
4,993
     
4,341
 
 Transaction taxes
           
(2,850
)
   
(4,594
)
 Gain (loss) on foreign exchange
           
(294,206
)
   
(221,135
)
 Accretion expense
   
9
     
(32,546
)
   
(18,659
)
 Total other income (expense):
         
$
(206,550
)
 
$
(37,433
)
 NET LOSS FOR THE PERIOD
         
$
(917,939
)
 
$
(1,083,466
)
                         
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
                 
 Change in value of performance bond
   
11
     
12,605
     
(35,047
)
 Foreign currency translation adjustment
           
(68,787
)
   
99,826
 
 TOTAL NET LOSS AND COMPREHENSIVE
                       
 LOSS FOR THE PERIOD:
         
$
(974,121
)
 
$
(1,018,687
)
                         
Weighted average shares outstanding - basic and diluted
     
63,588,798
     
63,588,798
 
                         
 NET LOSS PER SHARE - BASIC AND DILUTED:
         
$
(0.02
)
 
$
(0.02
)
                         
The accompanying notes are an integral part of these consolidated financial statements.
 

 

- 4 -


 
 Hunt Mining Corp.
                             
 Expressed in U.S. Dollars
                             
                               
Interim Consolidated Statement of Changes in Stockholders' Deficiency
                   
                               
               
Accumulated
             
               
Other
   
Additional
       
   
Capital
         
Comprehensive
   
Paid in
       
   
Stock
   
Deficit
   
Income (Loss)
   
Capital
   
Total
 
                               
 Balance -January 1, 2018
 
$
24,695,186
   
$
(35,993,656
)
 
$
57,289
   
$
9,696,520
   
$
(1,544,661
)
 Net Income
   
-
     
(1,083,466
)
   
-
     
-
     
(1,083,466
)
 Other comprehensive income
   
-
     
-
     
64,779
     
-
     
64,779
 
 Balance - March 31, 2018
 
$
24,695,186
   
$
(37,077,122
)
 
$
122,068
   
$
9,696,520
   
$
(2,563,348
)
                                         
 Balance - April 1, 2018
 
$
24,695,186
   
$
(37,077,122
)
 
$
122,068
   
$
9,696,520
   
$
(2,563,348
)
 Net Income (loss)
   
-
     
(2,480,714
)
   
-
     
-
     
(2,480,714
)
 Other comprehensive income
   
-
     
-
     
204,640
     
-
     
204,640
 
 Balance - December 31, 2018
 
$
24,695,186
   
$
(39,557,836
)
 
$
326,708
   
$
9,696,520
   
$
(4,839,422
)
                                         
 Balance - January 1, 2019
 
$
24,695,186
   
$
(39,557,836
)
 
$
326,708
   
$
9,696,520
   
$
(4,839,422
)
 Net Income (loss)
   
-
     
(917,939
)
   
-
     
-
     
(917,939
)
 Other comprehensive income
   
-
     
-
     
(56,182
)
   
-
     
(56,182
)
 Capital stock issued, net
           
-
     
-
     
-
     
-
 
 Portion of units attributable to warrants issued
           
-
     
-
             
-
 
 Share based compensation
   
-
     
-
     
-
     
-
     
-
 
 Balance - March 31, 2019
 
$
24,695,186
   
$
(40,475,775
)
 
$
270,526
   
$
9,696,520
   
$
(5,813,543
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                       
The accompanying notes are an integral part of these interim consolidated financial statements.
                 
 

- 5 -




Hunt Mining Corp.
                 
 Expressed in U.S. Dollars
                 
                   
 Interim Consolidated Statements of Cash Flows
                 
    
3 month period ended March 31,
 
   
NOTE
   
2019
   
2018
 
                   
 CASH FLOWS FROM OPERATING ACTIVITIES:
                 
 Net income (loss)
       
$
(917,939
)
 
$
(1,083,466
)
 Items not affecting cash
                     
 Depreciation
   
10
     
253,997
     
402,268
 
 Gain (loss) on foreign exchange
           
(6,100
)
   
(2,100
)
 Accretion
   
9
     
32,546
     
18,659
 
 Net change in non-cash working capital items
                       
 Decrease (increase) in accounts receivable
           
25,347
     
749,569
 
 Decrease in prepaid expenses
           
1,239
     
2,694
 
 Decrease (increase) in inventory
           
(223,202
)
   
251,051
 
Increase (decrease) in accounts payable and accrued liabilities
     
1,460,272
     
(689,777
)
 Increase in interest payable
           
58,198
     
12,733
 
 Increase (decrease) in transaction taxes payable
           
(129
)
   
(40,349
)
             
684,229
     
(378,718
)
 CASH FLOWS FROM INVESTING ACTIVITIES:
                       
 Purchases of property and equipment
   
10
     
-
     
(62,909
)
             
-
     
(62,909
)
 CASH FLOWS FROM FINANCING ACTIVITIES:
                       
 Change in bank line of credit (net)
   
21
     
(330,000
)
   
34,999
 
 Proceeds from loans
   
14,16
     
750,276
     
1,200,000
 
 Repayment of loans
   
14,16
     
(537,076
)
   
(637,467
)
             
(116,800
)
   
597,532
 
                         
 NET INCREASE IN CASH:
           
567,429
     
155,905
 
                         
 EFFECT OF FOREIGN EXCHANGE ON CASH
           
(494,651
)
   
3,685
 
                         
 CASH, BEGINNING OF PERIOD:
           
115,372
     
78,145
 
                         
 CASH, END OF PERIOD:
         
$
188,150
   
$
237,735
 
                         
 Taxes paid
         
$
16,546
   
$
16,546
 
 Interest paid
         
$
32
   
$
73,610
 
                         
 SUPPLEMENTAL NON-CASH INFORMATION
                       
 Change in value of performance bond
         
$
12,605
   
$
(35,047
)
 PP&E included in AP
         
$
-
   
$
115,150
 
                         
The accompanying notes are an integral part of these interim consolidated financial statements.
 
 

- 6 -



 
 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018

 
1.
Nature of Business

Hunt Mining Corp. (the "Company" or "Hunt Mining"), is a mineral exploration and processing company incorporated on January 10, 2006 under the laws of Alberta, Canada and, together with its subsidiaries, is engaged in the exploration of mineral properties in Santa Cruz Province, Argentina.

Effective November 6, 2013, the Company relocated from the Province of Alberta to the Province of British Columbia. The Company's registered office is located at 25th Floor, 700 West Georgia Street, Vancouver, B.C. V7Y 1B3. The Company's head office is located at 23800 E Appleway Avenue, Liberty Lake, Washington, 99019 USA.

The consolidated financial statements include the accounts of the following subsidiaries after elimination of intercompany transactions and balances:

 
Corporation
 
Incorporation
Percentage
ownership
Business Purpose
Cerro Cazador S.A. ("CCSA")
Argentina
100%
Holder of Assets and Exploration Company
Ganadera Patagonia(1)
Argentina
40%
Land Holding Company
1494716 Alberta Ltd.
Alberta
100%
Nominee Shareholder
Hunt Gold USA LLC
Washington, USA
100%
Management Company

(1) The Company has determined that the subsidiary is a variable interest entity because the Company is the primary beneficiary of the land the subsidiary holds, and therefore consolidates the subsidiary in its financial statements.

The Company's activities include the exploration and processing of minerals from properties in Argentina including the Mina Martha project (Note 8) and the La Josefina project on a metallurgical test basis. On the basis of information to date, the Company has not yet determined whether the Exploration properties contain economically recoverable ore reserves. The underlying value of the mineral properties is entirely dependent upon the existence of reserves, the ability of the Company to obtain the necessary financing to complete development and upon future profitable production or a sale of these properties. The Mina Martha project was purchased in the second quarter of 2016 and refurbishing activities began in late 2016. The Company finished all refurbishments to the Mina Martha project in the first quarter of 2017 and began selling concentrate in the second quarter of 2017. In 2018, the Company continued the sale of concentrate from Martha as well as began metallurgical tests on the La Josefina project. Concentrate produced as a byproduct of this testing was sold in 2018.

Ongoing production at the Martha Project is being undertaken without established mineral resources or reserves and the Company has not established the economic viability of the operations on the Martha Project. As a result, there is increased uncertainty and economic risks of failure associated with these production activities

Despite the sale of concentrate, all projects remain in the exploration stage because management has not established proven or probable ore reserves required to be classified in either the development or production stage. As such, the sales of concentrate are classified as silver and gold recovery, net of expenses in profit and loss.

2. Basis of presentation

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America ("US GAAP").

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
 
 
 

- 7 -


 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


The Company's presentation currency is the US Dollar.

The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Judgments made by management in the application of US GAAP that have a significant effect on the consolidated financial statements and estimates with significant risk of material adjustment in the current and following periods are discussed in Note 6.

3. Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three months ended March 31, 2019, the Company had net loss of $917,939. As at March 31, 2019, the Company had an accumulated deficit of $40,475,775. The Company intends to continue funding operations through operation of the Martha mine, La Josefina project and equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending March 31, 2019.
These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
4. Significant Accounting Policies

The significant accounting policies used in the preparation of these consolidated financial statements are described below.

(a) Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial assets and financial liabilities to fair value.

(b) Consolidation

The Company's consolidated financial statements consolidate the accounts of the Company and its subsidiaries. All intercompany transactions, balances and unrealized gains or losses from intercompany transactions are eliminated on consolidation.

(c) Foreign currency translation

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rates of exchange prevailing at the reporting date. Non-monetary assets and liabilities are translated at the exchange rate prevailing at the transaction date. Revenues and expenses are translated at average exchange rates throughout the reporting period. Gains and losses on translation of foreign currencies are included in the consolidated statement of operations.

 

- 8 -




 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


The Company's functional currency is the Canadian dollar. All of the Company's subsidiaries have a US dollar functional currency. Financial statements are translated to their US dollar equivalents using the current rate method. Under this method, the statements of operations and comprehensive loss and cash flows for each period have been translated using the average exchange rates prevailing during each period. All assets and liabilities have been translated using the exchange rate prevailing at the balance sheet date. Translation adjustments are recorded as income or losses in other comprehensive income or loss. Transaction gains and losses resulting from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying consolidated statement of loss and comprehensive loss.

(d) Financial instruments

The Company measures the fair value of financial assets and liabilities based on US GAAP guidance, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions, which are accounted for at the transferor's carrying amount or exchange amount.
Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income.
See Note 17 to the Consolidated Financial Statements for fair value disclosures.
(e) Cash and equivalents
Cash and equivalents include cash on hand, deposits held with banks and other liquid short-term investments with original maturities of three months or less. The Company has no cash equivalents for all periods presented.
(f) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of an asset.
Repairs and maintenance costs are charged to the consolidated statement of operations and comprehensive loss during the period in which they are incurred.
Depreciation is calculated to amortize the cost of the property, plant and equipment over their estimated useful lives using the straight-line method. Plant, buildings, equipment and vehicles are stated at cost and depreciated straight line over an estimated useful life of three to eight years. Depreciation begins once the asset is in the state intended for use by management.
The Company allocates the amount initially recognized in respect of an item of property and equipment to its significant parts and depreciates separately each such part. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.\ains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains or losses in the consolidated statement of operations and comprehensive loss.

 

- 9 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


(g) Mineral properties and exploration and evaluation expenditures

All exploration expenditures are expensed as incurred. Expenditures to acquire mineral rights, to develop new mines, to define further mineralization in mineral properties which are in the development or operating stage, and to expand the capacity of operating mines, are capitalized and amortized on a units-of-production basis over proven and probable reserves.

Should a property be abandoned, its capitalized costs are charged to the consolidated statement of loss and comprehensive loss. The Company charges to the consolidated statement of loss and comprehensive loss the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

(h) Long-lived assets

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell.

 (i) Asset retirement obligations

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal constructive obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the long-lived assets. The Company also records a corresponding asset, which is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).

(j) Income taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be recognized.
 

- 10 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018

 
(k) Share-based compensation

The Company offers a share option plan for its directors, officers, employees and consultants. ASC 718 "Compensation – Stock Compensation" prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
 
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, "Equity Based Payments to Non-Employees." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

(l) Earnings (loss) per share

The calculation of earnings (loss) per share ("EPS") is based on the weighted average number of shares outstanding for each period. The basic EPS is calculated by dividing the earnings or loss attributable to the equity owners of the Company by the weighted average number of common shares outstanding during the period.

The computation of diluted EPS assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on the earnings per share. The treasury stock method is used to determine the dilutive effect of the warrants and share options. When the Company reports a loss, the diluted net loss per common share is equal to the basic net loss per common share due to the anti-dilutive effect of the outstanding warrants and share options.

(m) Silver and gold recovery (loss), net of expenses

Recovery of concentrate and other income is recognized when title and the risks and rewards of ownership to deliver concentrate and commodities pass to the buyer and collection is reasonably assured. Sale of concentrate is classified as silver and gold recovery, net of expenses in profit and loss because the Company has not established proven or probable ore reserves and remains in the exploration stage as defined by Industry guide 7.

Not all overhead costs are applied against Silver and gold recovery. Since the Company has no reserves, the Company is treated as an exploration company and as such, direct cost, portions of fixed costs and portions of variable costs are applied against Silver and gold recovery. Other administrative, office, professional fees, and travel are disclosed separately.

From time to time, some of the Company's sales of concentrate are made under provisional pricing arrangements where the final sale prices are determined by quoted market prices in a period subsequent to the date of sale. In these circumstances, sales are recorded at period end based on latest information about prices and quantities available to management for the expected date of final settlement. Under such arrangements, the Company's receivable changes as the underlying commodity market price varies, this component of the contract is an embedded derivative which is recognized at fair value with changes in fair value recognized in profit and loss and receivables. Subsequent variations in prices and metal quantities are recognized as they occur.

 

- 11 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


(n) Inventories

Mineral concentrate and mineralized material stockpiles are physically measured or estimated and valued at the lower of cost or net realizable value. Net realizable value is the estimated future sales price of the product the entity expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale. Where the time value of money is material, these future prices and costs to complete are discounted.

If the stockpile is not expected to be processed in 12 months after the reporting date, it is included in noncurrent assets and the net realizable value is calculated on a discounted cash flow basis.

Cost of silver concentrate and mineralized material stockpiles is determined by using the weighted average method and comprises direct costs and a portion of fixed and variable overhead costs incurred in converting materials into concentrate, based on the normal production capacity.

Materials and supplies are valued at the lower of cost or net realizable value. Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence.

5. Recently Adopted Accounting Pronouncements

Leases
 
In February 2016, ASU No. 2016-02 was issued related to leases. The new guidance modifies the classification criteria and requires lessees to recognize the assets and liabilities arising from most leases on the balance sheet. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018. The Company has evaluated all contracts which could be classified as leases under the new standards and determined that any impact as a result of adoption would not be material.

6. Critical accounting judgments and estimates
(a) Significant judgments

Preparation of the consolidated financial statements requires management to make judgments in applying the Company's accounting policies. Judgments that have the most significant effect on the amounts recognized in these consolidated financial statements relate to functional currency; income taxes; provisions and reclamation and closure cost obligations. These judgments have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Functional Currency

Management determines the functional currency for each entity. This requires that management assess the primary economic environment in which each of these entities operates. Management's determination of functional currencies affects how the Company translates foreign currency balances and transactions. Determination includes an assessment of various indicators. In determining the functional currency of the Company's operations in Canada (Canadian dollar) and Argentina (U.S. dollar), management considered the indicators of ASC 830.

 

- 12 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


Income Taxes and value-added taxes receivable

Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain and subject to judgment. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company's current understanding of the tax law in the various jurisdictions in which it operates. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

The Company has receivables due from the Argentinean government for value-added taxes. Significant estimates and judgments are involved in the assessment of recoverability of these receivables. Changes in management's impairment assumptions may result in an additional impairment provision, or a reduction to any previously recorded impairment provision, with the impact recorded in profit and loss.

Provisions

Management makes judgments as to whether an obligation exists and whether an outflow of resources embodying economic benefits of a liability of uncertain timing or amount is probable, not probable or remote. Management considers all available information relevant to each specific matter.

Reclamation and closure costs obligations

The Argentine mining regulations require that mine property be restored in accordance with specified standards and an approved reclamation plan. Significant reclamation activities include reclaiming refuse and slurry ponds, reclaiming the pit and support acreage at surface mines, and sealing portals at deep mines. The Company accrues for the cost of final mine closure reclamation over the estimated useful mining life of the property. At each period, the Company reviews the entire reclamation liability and makes necessary adjustments for revisions to cost estimates to reflect current experience.

The Company has adopted ASC 410, Asset Retirement and Environmental Obligations, which requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset.

Title to Mineral Property Interests

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

(b) Estimation uncertainty
The preparation of the consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company also makes estimates and assumptions concerning the future. The determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience and current and expected economic conditions. Actual results could differ from those estimates.

The more significant areas requiring the use of management estimates and assumptions relate to title to mineral property interests; asset retirement obligations and inventories. These estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

The Company is also exposed to legal risk. The outcome of currently pending and future proceedings cannot be predicted with certainty. Thus, an adverse decision in a lawsuit could result in additional costs that are not covered, either wholly or partly, under insurance policies and that could significantly influence the business and results of operations.
 
 
 

- 13 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Asset retirement obligation

Upon retirement of the Company's mineral properties, retirement costs will be incurred by the Company. Estimates of these costs are subject to uncertainty associated with the method, timing and extent of future decommissioning activities. The liability, the related asset and the expense are affected by estimates with respect to the costs and timing of retiring the assets.

Inventories

Net realizable value tests are performed at each reporting date and represent the estimated future sales price of the product the Company expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale. Where the time value of money is material, these future prices and costs to complete are discounted.

Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained mineral ounces is based on assay data, and the estimated recovery percentage is based on the expected processing method. Stockpile tonnages are verified by periodic surveys.

Silver and gold recovery (loss), net of expenses

From time to time, some of the Company's sales of concentrate are made under provisional pricing arrangements where the final sale prices are determined by quoted market prices in a period subsequent to the date of sale. In these circumstances, sales are recorded at period end based on latest information about prices and quantities available to management for the expected date of final settlement.

Change in estimates

During 2018, the Company conducted a review of its plant and buildings which resulted in changes in its expected use. It was determined that the renovation work performed in 2016 and 2017 on these assets was having greater success than originally anticipated in extending their useful life. Additionally, metallurgical studies performed throughout 2018 confirmed that the plant could be successfully used to process mineralized materials from other mineral properties of the Company. It is now expected that the useful life of these assets will be extended from an original estimate of 36 months in 2017 to 87 months from December 31, 2018.

 

- 14 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


7. Inventory

   
March 31,
2019
   
December 31, 2018
 
             
Silver and gold concentrate
 
$
966,141
   
$
794,086
 
Materials and supplies
   
170,976
     
119,829
 
   
$
1,137,117
   
$
913,915
 

Inventory at March 31, 2019 includes $616,253 (December 31, 2018 - $616,253) of gold concentrate which resulted from the metallurgical testing on the La Josefina project. The Company is currently working with, the local state agency, Fomicruz to establish a formal agreement for full production rights on the project, and in good faith does not plan to sell the gold concentrate until those terms can be finalized. As this process is expected to be resolved within the year, the gold concentrate has been classified as a current asset within inventory. Fomicruz will have rights to a 5% net smelter royalty on the sale of this inventory under the current agreements in place.

Subsequent to March 31, 2019, the Company reached an agreement with Fomicruz for the continued metallurgical testing and sale of gold concentrate produced from such testing.

8. Mineral properties
(a) Acquisition of Mina Martha project

On May 6, 2016, the Company acquired the assets of the Mina Martha project from Coeur Mining Inc. ("Coeur"). The Mina Martha project consists of land, mineral rights, a mine camp, offices, a warehouse, maintenance shop, mining facilities including a flotation mill and a tailings retention facility.

 (b) Acquisition of La Josefina project
In March 2007, the Company acquired the exploration and development rights to the La Josefina project from Fomento Minero de Santa Cruz Sociedad del Estado ("Fomicruz").

In July 2007, the Company entered into an agreement (subsequently amended) with Fomicruz which provides that, in the event that a positive feasibility study is completed on the La Josefina property, a Joint Venture Corporation ("JV Corporation") would be formed by the Company and Fomicruz. The Company would own 81% of the joint venture company and Fomicruz would own the remaining 19%. Fomicruz has the option to earn up to a 49% participating interest in the JV Corporation by reimbursing the Company an equivalent amount, up to 49%, of the exploration investment made by the Company. The Company has the right to buy back any increase in Fomicruz's ownership interest in the JV Corporation at a purchase price of USD$200,000 per each percentage interest owned by Fomicruz down to its initial ownership interest of 19%; the Company can also purchase 10% of the Fomicruz's initial 19% JV Corporation ownership interest by negotiating a purchase price with Fomicruz. Under the agreement, the Company has until the end of 2019 to complete cumulative exploration expenditures of $18 million and determine if it will enter into production on the property. At December 31, 2018, the Company had incurred approximately $20 million and is in current discussions with Fomicruz to develop a plan for production in early to mid-2019.
As at March 31, 2019 this project has a carrying amount of $Nil (2018 - $Nil) on the consolidated balance sheet.

 

- 15 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


(c) Acquisition of La Valenciana project

On November 1, 2012, the Company entered into an agreement for the exploration of the La Valenciana project in Santa Cruz province, Argentina. The agreement is for a total of 7 years, expiring on October 31, 2019. The agreement requires the Company to spend $5,000,000 in exploration on the project over 7 years. If the Company elects to exercise its option to bring the La Valenciana project into production, it must grant Fomicruz a 9% ownership in a new JV Corporation to be created by the Company to manage the project and the Company will have a 91% ownership interest in the JV Corporation.

As at March 31, 2019 this project has a carrying amount of $Nil (2018 - $Nil) on the consolidated balance sheet.

9. Asset retirement obligation
On May 6, 2016, the Company purchased the Mina Martha project (Note 8). The Company is legally required to perform reclamation on the site to restore it to its original condition at the end of its useful life. In accordance with FASB ASC 410-20, Asset Retirement Obligations, the Company recognized the fair value of that liability as an asset retirement obligation. The total amount of undiscounted cash flows required to settle the estimated obligation is $1,940,270 which has been discounted using a credit-adjusted rate of 10% (2018 – 10%) and an inflation rate of 2% (2018 – 2%).

The following table describes the changes to the Company's asset retirement obligation liability:

   
March 31,
   
December 31,
 
   
2019
   
2018
 
 Asset retirement obligation at beginning of year
 
$
1,308,399
   
$
773,436
 
 Additions
   
-
     
486,589
 
 Foreign exchange
   
(6,100
)
   
(25,996
)
 Accretion expense
   
32,546
     
74,370
 
 Asset retirement obligation at end of period
 
$
1,334,845
   
$
1,308,399
 

10. Property, Plant and Equipment

   
Land
   
Plant
   
Buildings
   
Vehicles and Equipment
   
Total
 
 Cost
                             
 Balance at December 31, 2017
 
$
1,035,397
   
$
3,423,701
   
$
117,500
   
$
2,824,466
   
$
7,401,064
 
 Additions
   
-
     
486,589
     
-
     
13,559
     
500,148
 
 Balance at December 31, 2018
   
1,035,397
     
3,910,290
     
117,500
     
2,838,025
     
7,901,212
 
 Additions
   
-
     
-
     
-
     
-
     
-
 
 Balance at March 31, 2019
 
$
1,035,397
   
$
3,910,290
   
$
117,500
   
$
2,838,025
   
$
7,901,212
 
                                         
 Accumulated depreciation
                                       
 Balance at December 31, 2017
 
$
-
   
$
753,391
   
$
29,375
   
$
1,584,808
   
$
2,367,574
 
 Depreciation for the year
   
-
     
368,319
     
12,155
     
567,644
     
948,118
 
 Balance at December 31, 2018
   
-
     
1,121,710
     
41,530
     
2,152,452
     
3,315,692
 
 Depreciation for the year
   
-
     
108,859
     
3,039
     
142,099
     
253,997
 
 Balance at March 31, 2019
 
$
-
   
$
1,230,569
   
$
44,569
   
$
2,294,551
   
$
3,569,689
 
                                         
 Net book value
                                       
 At December 31, 2018
 
$
1,035,397
   
$
2,788,580
   
$
75,970
   
$
685,573
   
$
4,585,520
 
 At March 31, 2019
 
$
1,035,397
   
$
2,679,721
   
$
72,931
   
$
543,474
   
$
4,331,523
 

 

- 16 -




 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


11. Performance bond
 
The performance bond, originally required to secure the Company's rights to explore the La Josefina property, is a step-up US dollar denominated 2.5% coupon bond, paying quarterly, issued by the Government of Argentina with a face value of $600,000 and a maturity date of 2035. The bond trades in the secondary market in Argentina. The bond was originally purchased for $247,487. As of the three months ended March 31, 2019, the value of the bond increased to $327,983 (December 31, 2018 - $315,378). The change in the face value of the performance bond of $12,605 for the three months ended March 31, 2019 (December 31, 2018- $119,261) is recorded as other comprehensive loss in the Company's consolidated statement of operations and comprehensive loss.

Since Cerro Cazador S.A. ("CCSA") fulfilled its exploration expenditure requirement mandated by the agreement with Fomento Minero de Santa Cruz Sociedad del Estado ("Fomicruz"), the performance bond was no longer required to secure the La Josefina project. Therefore, in September 2010 the Company used the bond to secure the La Valenciana project, an additional Fomicruz exploration project.
 
12. Accounts receivable
 
   
March 31,
   
December 31,
 
   
2019
   
2018
 
 Receivable from sale of concentrate
 
$
450,312
   
$
438,042
 
 Value added tax ("VAT") recoverable
   
944,408
     
986,014
 
 Other receivables
   
54,236
     
50,247
 
 Total accounts receivable
 
$
1,448,956
   
$
1,474,303
 

13. Accounts payable
   
Note
   
March 31,
   
December 31,
 
         
2019
   
2018
 
 Accounts payables due to related parties
   
16
   
$
5,792,165
   
$
4,416,555
 
 Trade accounts payable and accrued liabilities
           
1,699,938
     
1,912,306
 
 Total accounts payable and accrued liabilities
         
$
7,492,103
   
$
6,328,861
 

14. Loan Payable and long-term debt

The Following is a summary of all loans.

   
March 31,
   
December 31,
 
   
2019
   
2018
 
Unsecured loan payable to related party at 8% interest per annum, due 2022 (Note 16)
 
$
1,615,445
   
$
1,615,445
 
                 
Unsecured loan payable to related party at 8% interest per annum, due on demand (Note 16)
   
994,861
     
994,861
 
                 
Unsecured loan payable to related party at 7% interest per annum, due on demand1(Note 16)
   
1,400,276
     
1,250,000
 
                 
Loan payable, repayable in monthly installments ranging between $3,000 and $15,000 per dry metric ton of concentrate, with interest at 6% per annum, secured by concentrate, due 20182
   
525,000
     
591,280
 
   
$
4,535,582
   
$
4,451,586
 
 Less current portion
   
(3,376,443
)
   
(3,198,569
)
 Long-term debt
 
$
1,159,140
   
$
1,253,017
 

Principal payments on long-term debt are due as follows.
     
 
Year ending December 31,
 
 2019
 
$
362,428
 
 2020
 
$
375,510
 
 2021
 
$
394,590
 
 2022
 
$
414,910
 
 2023
 
$
68,007
 

1Subsequent to March 31, 2019, additional funds of $187,500 were loaned to the Company. (Note 16 & Note 22)

2 Subsequent to March 31, 2019, principal payments of $225,000 were made. (Note 22)
 
 

- 17 -


 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


15. Capital Stock
Authorized:
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value

Issued:
Common Shares
 
Three months ended
   
Year ended
 
   
March 31, 2019
   
December 31, 2018
 
   
Number
   
Amount
   
Number
   
Amount
 
 Balance, beginning of period
   
63,588,798
   
$
24,695,186
     
63,588,798
   
$
24,695,186
 
 Balance, end of period
   
63,588,798
   
$
24,695,186
     
63,588,798
   
$
24,695,186
 

Common share issuances:

No common shares were issued during the three months ended March 31, 2019 (December 31, 2018 – None).
Stock options
Under the Company's share option plan, and in accordance with TSX Venture Exchange requirements, the number of common shares reserved for issuance under the option plan shall not exceed 10% of the issued and outstanding common shares of the Company, have a maximum term of 5 years and vest at the discretion of the Board of Directors. In connection with the foregoing, the number of common shares reserved for issuance to: (a) any individual director or officer will not exceed 5% of the issued and outstanding common shares; and (b) all consultants will not exceed 2% of the issued and outstanding common shares.

Range of Exercise prices (CAD)
Number outstanding
Weighted average life (years)
Weighted averageexercise price (CAD)
Number exercisable on
March 31, 2019
Stock options
$0.15 - $1.00
 4,160,000
2.29
$0.21
 4,160,000
 
 
   
March 31, 2019
December 31, 2018
   
 Number of options
 Weighted Average Price (CAD)
 Number of options
 Weighted Average Price (CAD)
 Balance, beginning of period
 4,160,000
$0.21
 4,380,000
$0.21
 Expiration of stock options
 -
 -
 (220,000)
$0.23
 Balance, end of period
 4,160,000
$0.21
 4,160,000
$0.21



 

- 18 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018

 
No options were granted during the three months ended March 31, 2019.

On April 23, 2018, 20,000 options with an exercise price of CAD $1.00 expired.
On April 26, 2018 200,000 stock options expired/cancelled as a result of an employee resigning from the Company.
As at March 31, 2019, the Company's outstanding and exercisable stock options had an aggregate intrinsic value of $Nil (December 31, 2018 - $Nil).
Subsequent to March 31, 2019, 285,000 stock options with an exercise price of CAD $1.00 expired.
Warrants:
 
 Range of Exercise prices (CAD)
 Number outstanding
 Weighted average life (years)
 Weighted average exercise price (CAD)
 Warrants
0.05 - 0.08
 47,500,000
1.43
$0.06

 
March 31, 2019
December 31, 2018
 
 Number of warrants
 Weighted Average Price (CAD)
 Number of warrants
 Weighted Average Price (CAD)
 Balance, beginning of period
 47,500,000
$0.06
 48,862,500
$0.07
 Warrants
 -
 -
 (1,362,500)
$0.40
 Balance, end of period
 47,500,000
$0.06
 47,500,000
$0.06

 

- 19 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018

 
16. Related Party Transactions
Name and Principal Position
 
 
Remuneration, fees, or interest expense
   
Loans or Advances
   
Remuneration, fees, or interest payments
   
Loan payments
   
Included in Accounts Payable
   
Included in Loan Payable and Long-term debt
 
 
  
 
Period ended March 31,
   
As at March 31, 2019 and December 31, 2018
 
A company controlled by a director
2019
   
156,385
     
1,136,301
     
-
     
-
     
5,265,379
     
-
 
 - admin, office, and interest expenses
2018
   
115,802
     
-
     
-
     
-
     
3,972,693
     
-
 
 Key executive person
2019
   
33,750
     
-
     
33,750
     
-
     
-
     
-
 
 - salaries and wages
2018
   
31,250
     
-
     
31,250
     
-
     
-
     
-
 
 Key executive person
2019
   
33,750
     
-
     
33,750
     
-
     
-
     
-
 
 - salaries and wages
2018
   
31,250
     
-
     
31,250
     
-
     
-
     
-
 
 Director
2019
   
82,924
     
150,276
     
-
     
-
     
526,786
     
4,010,582
1,2 
 -loans
2018
   
54,223
     
300,000
     
41,490
     
115,716
     
443,862
     
3,860,306
 


The Company has two unsecured loans payable to related party at 8% interest per annum, with one loan of $994,861 due on demand and the other loan of $1,615,445 due 2022. The Company has another unsecured loan payable of $1,400,276 to a related party at 7% interest per annum (Note 14).
Subsequent to March 31, 2019, additional funds of $187,500 were loaned to the Company.

17. Financial Instruments
The Company's financial instruments consist of cash, accounts receivable, performance bond, accounts payable and accrued liabilities, transaction taxes payable, loan payable, interest payable, and long-term debt.

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 fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

·
Level 1: inputs are quoted prices (unadjusted) 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 are less observable, unavoidable or where the observable data does not support the majority of the instruments' fair value.

 

- 20 -



 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


Fair value
 
As at March 31, 2019, there were no changes in the levels in comparison to December 31, 2018. The fair values of financial instruments are summarized as follows:

 
March 31, 2019
 
March 31, 2018
 
 
 Carrying amount
 Fair value
 Carrying amount
 Fair value
 
 $
 $
 $
 $
 Financial Assets
       
         
 FVTPL
       
    Cash (Level 1)
                188,150
    188,150
                115,372
    115,372
         
 Available for sale
       
    Performance bond (Level 1)
                327,983
    327,983
                315,378
    315,378
         
 Loans and receivables
       
    Accounts receivable
             1,448,956
  1,448,956
             1,474,303
  1,474,303
         
 Financial Liabilities
       
         
 Other financial liabilities
       
    Bank indebtedness
                           -
               -
                330,000
    330,000
    Accounts payable and accrued liabilities
             7,492,103
  7,492,103
             6,328,861
  6,328,861
    Transaction taxes payable
                         -
               -
                       129
           129
    Interest payable
                378,867
    378,867
                320,669
    320,669
    Loan payable
             3,376,443
  3,376,443
             3,198,569
  3,198,569
    Long-term debt
             1,159,140
  1,159,140
             1,253,017
  1,253,017
 
Cash and performance bond are measured based on Level 1 inputs of the fair value hierarchy on a recurring basis.
The carrying value of accounts receivable, accounts payable and accrued liabilities, bank indebtedness, loan payable, interest payable, and long-term debt approximate their fair value because of the short-term nature of these instruments and because long-term debt approximates a market rate of interest. The Company assessed that there were no indicators of impairment for these financial instruments.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with high quality financial institutions and limits the amount of credit exposure with any one institution. Accounts receivable consist of trade receivables and VAT recoverable and are not considered subject to significant risk, because the amounts are due from a government and a customer who is considered credit worthy.

The Company has concentrations of credit risk with respect to its trade receivables, the majority of which are concentrated geographically in Argentina amongst a small number of customers. As at December 31, 2018, the Company had one customer whose trade receivable of $450,312 (December 31, 2018 – $438,042) accounted for greater than 10% of the total trade receivables. The Company controls credit risk through monitoring procedures, and by performing credit evaluations of its customers, but generally does not require collateral to secure accounts receivable.

The Company has concentrations in the volume of sales it made to customers. For the year ended December 31, 2018, the Company made sales of $383,552 to one customer which accounted for greater than 10% of the total silver and gold recovery, net of expenses (2018 - $3,961,399).



 

- 21 -


 
 
 

Hunt Mining Corp.
Notes to the Consolidated Interim Financial Statements (Unaudited)
(Expressed in US Dollars)
Three month period ended March 31, 2019 and 2018


The Company currently maintains a substantial portion of its day-to-day operating cash balances at financial institutions. At December 31, 2018, the Company had total cash balances of $188,150 (December 31, 2018- $115,372) at financial institutions, where $Nil (December 31, 2018- $Nil) is in excess of federally insured limits.

18. Segmented Information

All of the Company's operations are in the mineral properties exploration industry with its principal business activity in mineral exploration. The Company conducts its activities primarily in Argentina. All of the Company's long-lived assets are located in Argentina. All of the Company's silver and gold recovery arose from sales made in Argentina.

19. Commitments and Provision

On October 31, 2011, the Company signed an agreement with the owners of the Piedra Labrada Ranch for the use and lease of facilities on the same premises as the Company's La Josefina facilities. The initial term was for three years beginning November 1, 2011 and ended on October 31, 2014, including annual commitments of $60,000. The Company extended this agreement on April 30, 2015 for three years with an option to renew for a second three-year term.

20. Silver and Gold Recovery
Silver and gold recovery include the sales from concentrate sold during the period ended March 31, 2019 from mining projects of $327,416 (2018 - $3,961,399) Silver and gold recovery revenues have been reported net of direct operating expenses of $209,357 for the period ended March 31, 2019 (2018 -$3,564,264). Accounts receivable include $438,042 (December 31, 2018 -$438,042) for the sales of concentrate.

21. Bank Indebtedness
The Company has a variable rate line of credit available for $330,000 with interest charged at the lender's Index Rate plus 1.0%, with a floor of 4.25%. As at March 31, 2019 the balance of bank indebtedness was $Nil (December 31, 2018- $330,000). Subsequent to March 31, 2019, the Company borrowed $250,000 on this line of credit (Note 22).

22. Subsequent Events

Subsequent to March 31, 2019, the Company had sales of silver concentrate of approximately $293,319. Funds from this shipment were used to repay $225,000 of loan payable (Note 14).

Subsequent to March 31, 2019, 285,000 stock options with an exercise price of CAD $1.00 expired (Note 15).

Subsequent to March 31, 2019, additional funds of $187,500 were loaned to the Company (Note 14 & Note 16).

Subsequent to March 31, 2019, the Company reached an agreement with Fomicruz for the continued metallurgical testing and sale of gold concentrate produced from such testing (Note 7).

Subsequent to March 31, 2019, the Company borrowed $250,000 on its line of credit (Note 21).


 

- 22 -



ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the operating results, corporate activities and financial condition of Hunt Mining Corp. (hereinafter referred to as "we", "us", "Hunt Mining", "HMX", or the "Company") and its subsidiaries provides an analysis of the operating and financial results between December 31, 2018 and March 31, 2019 and a comparison of the material changes in our results of operations and financial condition between the year ended December 31, 2018 and the three months ended March 31, 2019. This discussion should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2018.

This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under the heading "Risk Factors and Uncertainties" in our Annual Report on Form 10-K for the period ended December 31, 2018, and elsewhere in this Quarterly Report on Form 10-Q.

The interim statements have been prepared in accordance with US Generally Accepted Accounting Principles ("US GAAP") as required under U.S. federal securities laws applicable to the Company, and as permitted under applicable Canadian securities laws. The Company is a reporting company under applicable securities laws in Canada and the United States. The reporting currency used in our financial statements is the United States Dollar.

The information contained within this report is current as of May 15, 2019 unless otherwise noted.

Additional information relevant to the Company's activities can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates

The Company uses Canadian Institute of Mining, Metallurgy and Petroleum definitions for the terms "proven reserves", "probable reserves", "measured resources", "indicated resources" and "inferred resources". U.S. investors are cautioned that while these terms are recognized and required by Canadian regulations, including National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"), the U.S. Securities and Exchange Commission ("SEC") does not recognize them.

Canadian mining disclosure standards differ from the requirements of the SEC under SEC Industry Guide 7, and reserve and resource information referenced in this Form 10-Q may not be comparable to similar information disclosed by companies reporting under U.S. standards. In particular, and without limiting the generality of the foregoing, the term "resource" does not equate to the term "reserve". Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.

The SEC's disclosure standards normally do not permit the inclusion of information concerning "measured mineral resources" or "indicated mineral resources" or other descriptions of the amount of mineralization in mineral deposits that do not constitute "reserves" by U.S. standards in documents filed with the SEC. Disclosure of "contained ounces" in a resource estimate is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as tonnage and grade without reference to unit measures. The requirements of NI 43- 101 for identification of "reserves" are also not the same as those of the SEC, and reserves in compliance with NI 43-101 may not qualify as "reserves" under SEC standards.

 

- 23 -



Cautionary Note Regarding Forward-Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q may constitute "forward-looking statements about the Company and its business. Forward looking statements are statements that are not historical facts and include, but are not limited to, reserve and resource estimates, estimated value of the project, projected investment returns, anticipated mining and processing methods for the project, the estimated economics of the project, anticipated Hunt Mining recoveries, production rates, grades, estimated capital costs, operating cash costs and total production costs, planned additional processing work and environmental permitting. The forward-looking statements in this report are subject to various risks, uncertainties and other factors that could cause the Company's actual results or achievements to differ materially from those expressed in or implied by forward looking statements.

These risks, uncertainties and other factors include, without limitation:
 
·
risks related to uncertainty of Hunt Mining property valuation assumptions;
·
uncertainties related to raising sufficient financing to fund the project in a timely manner and on acceptable terms;
·
changes in planned work resulting from logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company's properties;
·
uncertainties involved in the estimation of Hunt Mining reserves and resources;
·
the possibility that required permits may not be obtained on a timely manner or at all;
·
the possibility that capital and operating costs may be higher than currently estimated and may preclude commercial development or render operations uneconomic;
·
the possibility that the estimated recovery rates may not be achieved;
·
risk of accidents, equipment breakdowns and labor disputes or other unanticipated difficulties or interruptions;
·
the possibility of cost overruns or unanticipated expenses in the work program;
·
risks related to projected project economics, recovery rates, estimated NPV and anticipated IRR; and
·
other factors identified in the Company's SEC filings and its filings with Canadian securities regulatory authorities.

Forward-looking statements are based on the beliefs, opinions and expectations of the Company's management at the time they are made, and other than as required by applicable securities laws, the Company does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances, should change.

Hunt Mining Corporation Corporate Overview

Hunt Mining Corp. (the "Company" or "Hunt Mining"), is a mineral exploration and processing company incorporated on January 10, 2006 under the laws of Alberta, Canada and, together with its subsidiaries, is engaged in the exploration of mineral properties in Santa Cruz Province, Argentina.

Effective November 6, 2013, the Company relocated from the Province of Alberta to the Province of British Columbia. The Company's registered office is located at 25th Floor, 700 West Georgia Street, Vancouver, B.C. V7Y 1B3. The Company's head office is located at 23800 E Appleway Avenue, Liberty Lake, Washington, 99019 USA.

The consolidated financial statements include the accounts of the following subsidiaries after elimination of intercompany transactions and balances:

 
Corporation
 
Incorporation
Percentage
ownership
Business Purpose
Cerro Cazador S.A. ("CCSA")
Argentina
100%
Holder of Assets and Exploration Company
Ganadera Patagonia(1)
Argentina
40%
Land Holding Company
1494716 Alberta Ltd.
Alberta
100%
Nominee Shareholder
Hunt Gold USA LLC
Washington, USA
100%
Management Company

(1)
The Company has determined that the subsidiary is a variable interest entity because the Company is the primary beneficiary of the land the subsidiary holds, and therefore consolidates the subsidiary in its financial statements.
 
 
 

- 24 -

 

 
The Company's activities include the exploration and processing of minerals from properties in Argentina including the Mina Martha project (Note 8) and the La Josefina project on a metallurgical test basis. On the basis of information to date, the Company has not yet determined whether the Exploration properties contain economically recoverable ore reserves. The underlying value of the mineral properties is entirely dependent upon the existence of reserves, the ability of the Company to obtain the necessary financing to complete development and upon future profitable production or a sale of these properties. The Mina Martha project was purchased in the second quarter of 2016 and refurbishing activities began in late 2016. The Company finished all refurbishments to the Mina Martha project in the first quarter of 2017 and began selling concentrate in the second quarter of 2017. In 2018, the Company continued the sale of concentrate from Martha as well as began metallurgical tests on the La Josefina project. Concentrate produced as a byproduct of this testing was sold in 2018.

Ongoing production at the Martha Project is being undertaken without established mineral resources or reserves and the Company has not established the economic viability of the operations on the Martha Project. As a result, there is increased uncertainty and economic risks of failure associated with these production activities

Despite the sale of concentrate, all projects remain in the exploration stage because management has not established proven or probable ore reserves required to be classified in either the development or production stage. As such, the sales of concentrate are classified as silver and gold recovery, net of expenses in profit and loss.

Principal Properties Review
 
Ongoing production at the Martha Project is being undertaken without established mineral resources or reserves and the Company has not established the economic viability of the operations on the Martha Project. As a result, there is increased uncertainty and economic risk of failure associated with these production activities. A NI 43-101 compliant technical report from 2010 does exist for the La Josefina project with measured, indicated and inferred resources. The Ailin vein is part of this resource estimate.

Donald J. Birak, an independent consultant, is the qualified person under National Instrument 43-101 who has approved the technical and scientific aspects of this report.
 
La Josefina Property
 
The La Josefina Project is situated about 450 km northwest of the city of Rio Gallegos, in the Santa Cruz province of Argentina within a scarcely populated steppe-like region known as Patagonia. The La Josefina property occupies 52,800 hectares and makes up approximately 90% of all meters drilled by the Company.

The La Josefina Project consists of mineral rights composed by an area of 528 square kilometers established in 1994 as a Mineral Reserve held by Fomicruz, an oil and mining company owned by the Santa Cruz provincial government. The La Josefina Project comprises 16 Manifestations of Discovery totaling 52,767 hectares which are partially covered by 399 pertenencias.

Mina Martha Property

Martha is located in the province of Santa Cruz, Argentina, at 48o , 41', 33.94" south latitude and 69o , 42', 00.79" west longitude (degrees, minutes, seconds) at approximately 350 meters elevation. The closest community is the town of Gobernador Gregores, situated approximately 50 road kilometers (km) to the west-southwest of Martha.

The property was purchased in 2016 by Cerro Cazador SA (CCSA), an Argentine subsidiary of the Company, from an Argentine subsidiary of Coeur Mining Inc. (Coeur). The intent to purchase was announced February 10, 2016 and closed May 11, 2016 as disclosed by the Company on its website (www.huntmining.com). See note 8 of the 2017 financial statements for details on the purchase of the Mina Martha property. The processing plant at the Martha Project has an estimated useful life of 8 years as it is anticipated that this plant will be used to process mineral from the Martha and the La Josefina projects.
 

 

- 25 -



 
The Martha property consists of approximately 7,850 hectares of concessions, various buildings and facilities, surface and underground mining and support equipment, a 480 tonne per day (tpd - maximum) crushing, grinding and flotation plant, tailings facility, various stockpiles and waste dumps, employee living and cafeteria quarters, and miscellaneous physical materials. The Company restored and repaired the physical assets acquired in the purchase during the latter part of 2016 and the first quarter of 2017. The In addition, the Company has access to surface ranch ("estancia") lands surrounding the mine and mill site that are approximately 35,700 hectares in size.

Royal Gold Inc. holds a 2% Net Smelter Return (NSR) royalty on all production from the Martha property; the obligation for which transferred from Coeur to the Company (www.royalgold.com). In addition, the provincial government holds a 3% pit-head royalty from future production

La Valenciana Property

La Valenciana is located on the central-north area of the Santa Cruz Province, Argentina. The project encompasses an area of approximately 29,600 hectares and is contiguous to the Company's La Josefina property to the east. The La Valenciana project is comprised of 11 Manifestations of Discovery covering segments of Estancia Canodon Grande, Estancia Flecha Negra, Estancia Las Vallas, Estancia La Florentina, Estancia La Valenciana and Estancia La Modesta (inactive ranches).

Bajo Pobre Property

The Bajo Pobre property covers 3,190 hectares and is mainly on the Estancia Bajo Pobre. The property is located 90 kilometers south of the town of Las Heras. No exploration activity has taken place on the Bajo Pobre Property and no exploration activity is planned for the immediate future.

El Gateado Property

In March 2006, CCSA acquired the right to conduct exploration on the El Gateado property through a claim staking process for a period of at least 1,000 days, commencing after the Government issues a formal claim notice, and retain 100% ownership of any mineral deposit found within. El Gateado is a 10,000-hectare exploration concession filed with the Santa Cruz Provincial mining authority. The El Gateado property is located in the north-central part of Santa Cruz province, contiguous to La Josefina on the east

The Company has not yet received a formal claim notice pertaining to the El Gateado property. Should a mineral deposit be discovered, CCSA has the exclusive option to file for mining rights on the property. The surface rights of the El Gateado claim are held by the following Ranches, Estancia Los Ventisqueros, Estancia La Primavera, Estancia La Virginia and Estancia Piedra Labrada. The El Gateado claims are filed with the government under file #406.776/DPS/06.

The El Gateado project is without known reserves as defined by SEC industry Guide No. 7. No exploration activity has taken place on El Gateado Property and no exploration activity is planned for the immediate future.

Operating results Revenues and Expenses

The Company's results have changed in all areas due to the purchase of the Mina Martha property in 2016. Start-up costs during January, February and a portion of March 2017 to refurbish the buildings, equipment and commission the mill for operations were offset by recording proceeds from the sale of tailing material to Triton during the first quarter of 2017 and recording the first shipment of concentrate from the mill as Cost Recovery which was included as part of the Silver Recovery during the three months ended September 2017. Management determined the mine, mill and other direct costs related to concentrate sales were to be an offset to the Silver Recovery revenues.

Recoveries can mostly be attributed to the recovery of gold and silver. During the three months ended March 31, 2019 the Company sold 37 ounces of gold at an average price of $1,287 and 22,205 ounces of silver at an average price of $15.11 for net proceeds of $327,136 (2018 – 79 ounces at an average price of $1,324 and 56,553 ounces of silver at an average price of $16.58). 33 tonnes of gold/silver concentrate were shipped during the three months ended March 31, 2019 with average grades of Au 64.6 g/mt and Ag 38,468 g/mt. (2018 – 33 tonnes of gold/silver concentrate at grades of 74.01 g/mt Au and 52,835 g/mt Ag)

 

- 26 -



Quarterly Results Summary

Company's quarterly results are shown below in the table below:

Hunt Mining - Financial Performance
 
2018
     
2017
 
Q1
Q4
Q3
Q2
Q1
Q4
Net Income (Loss)
      (917,939)
   (361,590)
 (1,133,879)
 (1,224,347)
    (844,364)
 1,213,121
Basic Net Income (Loss) per share 
           (0.02)
        (0.06)
         (0.05)
         (0.03)
         (0.02)
          0.02

Results of Operations for the three months ended March 31, 2019

   
 
   
 
   
Change
 
   
March 31,
2019
   
December 31,
2018
   
Favorable (Unfavorable)
 
Net loss for the year
   
(917,939
)
   
(3,564,180
)
   
2,646,241
 
Net income (loss) per share – basic and diluted:
   
(0.02
)
   
(0.06
)
   
0.04
 
Working capital
   
(8,417,126
)
   
(7,616,966
)
   
(800,160
)
Total assets
   
7,927,855
     
7,900,222
     
27,633
 
Total non-current liabilities
   
2,493,985
     
2,561,416
     
67,431
 
Total shareholders' equity
   
(5,813,543
)
   
(4,839,422
)
   
(974,121
)


The working capital and shareholders' equity unfavorable changes were primarily due to increased short-term borrowings to fund activities as first quarter sales were slower than anticipated because the Company was awaiting permission to ship concentrate produced from metallurgical testing on the La Josefina project.

Total assets and non-current liabilities favorable change were due to normal fluctuations in operations and because the company was able to repay some debt with funds from concentrate shipments.

 Hunt Mining Corp.
                 
 Expressed in U.S. Dollars
                 
Interim Consolidated Statements of Operations and Comprehensive Loss
 
    
3 month period ended March 31,
 
   
NOTE
   
2019
   
2018
 
 OPERATING EXPENSES:
                 
 Professional fees
   
16
     
125,741
     
122,093
 
 Directors fees
           
751
     
-
 
 Exploration expenses
           
-
     
148,950
 
 Travel expenses
           
53,236
     
45,467
 
 Administrative and office expenses
   
16
     
30,055
     
66,978
 
 Payroll expenses
   
16
     
69,478
     
107,898
 
 Interest expense
   
16
     
160,407
     
132,760
 
 Banking charges
           
11,820
     
19,619
 
 Depreciation
   
10
     
253,997
     
402,268
 
 Royalty expense
           
5,904
     
-
 
 Total operating expenses:
         
$
711,389
   
$
1,046,033
 
 OTHER INCOME/(EXPENSE):
                       
 Silver and gold recovery (loss), net of expenses
   
20
     
118,059
   
$
202,614
 
 Interest income
           
4,993
     
4,341
 
 Transaction taxes
           
(2,850
)
   
(4,594
)
 Gain (loss) on foreign exchange
           
(294,206
)
   
(221,135
)
 Accretion expense
   
9
     
(32,546
)
   
(18,659
)
 Total other income (expense):
         
$
(206,550
)
 
$
(37,433
)
 NET LOSS FOR THE PERIOD
         
$
(917,939
)
 
$
(1,083,466
)
                         
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
                 
 Change in value of performance bond
   
11
     
12,605
     
(35,047
)
 Foreign currency translation adjustment
           
(68,787
)
   
99,826
 
 TOTAL NET LOSS AND COMPREHENSIVE
                       
 LOSS FOR THE PERIOD:
         
$
(974,121
)
 
$
(1,018,687
)
 
 
 

- 27 -


 

 
Variance Analysis for Net Income

There were relatively few variations in the results of the three months ended March 31, 2019 and the three months ended March 31, 2018 other than that the company did not do any work on the La Josefina project while it was waiting for approvals to continue with metallurgical testing. In 2018, the company had incurred approximately 148,000 in exploration costs while in the same period for 2019, none were incurred. There were approximately $84,000 less in silver and gold recovery due to only having one shipment in this period compared to two shipments during the same period in 2018. The three months ended March 31, 2019 also had reduced from previous year's comparative period due to the change in accounting estimate disclosed in the 2018 audited consolidated financial statements.

Cash flow discussion for the three-month period ended March 31, 2019 compared to March 31, 2018

The cash from operating activities prior to items not affecting cash and non-cash items was $684,229 an increase of $1,062,947 compared with outflows of $378,718 for the 2018 period. This is mostly due to the company having increases in accounts payable during the first quarter 2019 of $1,460,272 to fund activities, while in the first quarter of 2018 it had reduced its accounts payable by $689,777. Other significant changes is that the company had cash inflows in 2018 from collections of accounts receivable of approximately $750,000 while in the current period receivables decreased by approximately $25,000. The result is that compared, compared to 2018, there was approximately $724,000 less cash from changes in receivable. Inventory levels at March 31, 2019 were significantly higher than those at March 31, 2018, resulting in approximately $475,000 more cash outlays than the comparative period. Other minor fluctuations in operating and working capital items resulted in variances from prior year's cash flows from operations of approximately $54,000 more cash outflows.

There were no investing activities in 2019.

Cash outflows from financing activities was a due to the repayment of the operating line of credit of $330,000, the principal repayments on loans of $537,076 and the acquisition of new debt of $750,276

Financial Position

Cash

The Company's cash position at March 31, 2019 remained relatively consistent with the levels at December 31, 2018, with only an increase of $72,778. The details of changes in cash are outlined above.

Accounts receivables

The accounts receivable balance decreased from December 31, 2018 by $25,347 due to collecting final payment on a 2018 shipment and awaiting final payment on a smaller shipment made in 2019.

Inventory

Inventory increased from December 31, 2018 for work related to a shipment of concentrate that took place subsequent to March 31, 2019.

Property Plant and equipment

Property and equipment only changed from prior period by depreciation expense in 2019.

Mineral interests

Mineral interests remained the same.

Accounts payable, accrued liabilities, bank indebtedness and accounts payable with related parties

Bank indebtedness balance at December 31, 2018 was $330,000 but during the first three months of 2019, the Company paid this balance off

Accounts payable, accrued liabilities, and transaction taxes payable increased considerably in the first quarter of 2019 as the company only had 1 sale and had significant inventory.
 
 
 

- 28 -


 

The company acquired $83,996 in new debt, net of principal payments, in 2019.

Capital Stock

There were no changes to capital stock.

Liquidity and Capital Resources

At March 31, 2019, the Company had a negative working capital of $8,417,126 as compared to a negative working capital of $7,616,966 at December 31, 2018. The unfavorable change in working capital were primarily due to increased payables and advances to fund activities as the Company was awaiting permission to ship concentrate produced from metallurgical testing on the La Josefina project.

Subsequent to March 31, 2019, the Company received approval to continue metallurgical testing on the La Josefina project and to export concentrate produced from this testing. The Company's current plan of processing of material at from Mina Martha and La Josefina plus exploration discoveries will provide sufficient cash flow to cover operating costs, repay loans in full and cover current liabilities. The Company has not determined any resources or reserves for Mina Martha, La Josefina or La Valenciana as defined in the SEC Industry Guide 7.

Off-balance sheet arrangements

At March 31, 2019, the Company had no material off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that trigger financing, liquidity, market or credit risk to the Company.

Transactions with related parties

Details of transactions with related parties are disclosed in Note 16 of these consolidate interim financial statements.

Recently issued Accounting Pronouncements
 
Details of recently issued accounting pronouncements are disclosed in Note 5 of these consolidated interim financial statements.

Critical Accounting Estimates

Details of critical accounting estimates are disclosed in Note 6 of these consolidate interim financial statements.
 
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
 
 
 

- 29 -


 
 
ITEM 4.
CONTROLS AND PROCEDURES

Disclosure controls and procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2019.

Our management, with the participation of our president (our principal executive officer, principal accounting officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on this evaluation, our president (our principal executive officer, principal accounting officer and principal financial officer) has concluded that, as of the end of such period, our disclosure controls and procedures were effective to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management, including our president (our principal executive officer and our principal accounting officer and principal financial officer), as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer and our principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted, with the participation of our president (our principal executive officer and our principal accounting officer and principal financial officer), an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2019 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control — Integrated Framework. Based on this assessment, management concluded that as of March 31, 2019, our company's internal control over financial reporting was effective based on present Company activity

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting identified in connection with the evaluation described above during the quarter ended March 31, 2019 that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.
 
 
 

- 30 -


 

PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
 
There are no proceedings to report.
 
ITEM 2. UNREGISTERED SALES OF EUITY SECURITIES AND USE OF PROCEEDS
 
None
 
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
 
There are no defaults to report.
 
ITEM 4. MINE SAFETY DISCLOSURES
N/A
 
ITEM 5. OTHER INFORMATION
 
None

ITEM 6. EXHIBITS
 

 
 
Incorporated by reference
 
Exhibit
Number
Document Description
Form
Date
Number
Filed
herewith
3.1
Articles of Incorporation – British Columbia
F-1/A-4
06/30/14
3.4
 
 
 
 
 
 
 
10.1
Exploration and Option Agreement between Cerro Cazador S.A. and FK Minera S.A. dated March 28, 2007
F-1/A-2
12/20/12
10.1
 
 
 
 
 
 
 
10.2
Agreement between Fomento Minero de Santa Cruz Sociedad del Estado and Hunt Mining Corp.'s subsidiary, Cerro Cazador, S.A., with respect to the La Josefina property, dated July 24, 2007
F-1/A-2
12/20/12
10.2
 
 
 
 
 
 
 
10.3
Share Purchase Agreement among Sinomar Capital Corp., Cerro Cazador S.A., HuntMountain Resources Ltd. and HuntMountain Investments, LLC, dated October 13, 2009
F-1/A-3
03/28/14
10.3
 
 
 
 
 
 
 
10.4
Executive Employment Agreement with Matthew J. Hughes dated January 1, 2012
F-1/A-3
03/28/14
10.4
 
 
 
 
 
 
 
10.5
Executive Employment Agreement with Timothy R. Hunt dated January 1, 2012
F-1/A-3
03/28/14
10.5
 
 
 
 
 
 
 
10.6
Executive Employment Agreement with Danilo P. Silva dated January 1, 2012
F-1/A-3
03/28/14
10.6
 
 
 
 
 
 
 
10.7
Executive Employment Agreement with Matthew A. Fowler dated January 1, 2012
F-1/A-3
03/28/14
10.7
 
 
 
 
 
 
 
10.8
Exploration Agreement Among Eldorado Gold Corporation, Hunt Mining Corp. and Cerro Cazador, S.A. dated May 3, 2012
F-1/A-3
03/28/14
10.8
 
 
 

- 31 -


 
 
 
 
 
 
 
 
10.9
Agreement between Fomento Minero de Santa Cruz Sociedad del Estado and Hunt Mining Corp.'s subsidiary Cerro Cazador, S.A. with respect to the La Josefina property, dated November 15, 2012
F-1/A-4
06/30/14
10.9
 
 
 
 
 
 
 
10.10
Amended Agreement between Fomento Minero de Santa Cruz Sociedad del Estado and Hunt Mining Corp.'s subsidiary, Cerro Cazador, S.A., with respect to the La Valenciana property, dated November 15, 2012
F-1/A-3
03/28/14
10.10
 
 
 
 
 
 
 
10.11
Buyer's Contract with Ocean Partners USA, Inc., Hunt Mining Corp and Huntwood Industries, Inc. dated September 28, 2016
10-K
05/22/17
10.11
 
 
 
 
 
 
 
10.12
Advance Payment Facility Agreement with Ocean Partners USA, Inc., Hunt Mining Corp and Huntwood Industries, Inc. dated October 28, 2016
10-K
05/22/17
10.12
 
 
 
 
 
 
 
14.1
Code of Ethics
10-K
05/19/17
14.1
 
 
 
 
 
 
 
21.1
List of Subsidiaries
10-K
05/22/17
21.1
 
 
 
 
 
 
 
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer
 
 
 
X
 
 
 
 
 
 
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Financial Officer
 
 
 
X
 
 
 
 
 
 
99.2
2011 Stock Option Plan of Hunt Mining Corp.
F-1/A-2
12/20/12
99.1
 
 
 
 
 
 
 
99.2
Audit Committee Charter
F-1
06/12/12
99.1
 
 
 
 
 
 
 
101.INS
XBRL Instance Document
 
 
 
 X
 
 
 
 
 
 
101.SCH
XBRL Taxonomy Extension – Schema
 
 
 
 X
 
 
 
 
 
 
101.CAL
XBRL Taxonomy Extension – Calculations
 
 
 
 X
 
 
 
 
 
 
101.DEF
XBRL Taxonomy Extension – Definitions
 
 
 
 X
 
 
 
 
 
 
101.LAB
XBRL Taxonomy Extension – Labels
 
 
 
 X
 
 
 
 
 
 
101.PRE
XBRL Taxonomy Extension – Presentation
 
 
 
 X


- 32 -

 
 

- 32 -



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, on this 15th day of May, 2019.

 
HUNT MINING CORPORATION
 
(the "Registrant")
     
 
BY:
TIMOTHY HUNT
   
Timothy Hunt
   
Principal Executive Officer and President
     
 
BY:
KEN ATWOOD
   
Ken Atwood
   
Principal Financial Officer and Principal Accounting Officer

 

- 33 -




EXHIBIT INDEX
 

 
 
Incorporated by reference
 
Exhibit
Number
Document Description
Form
Date
Number
Filed
herewith
3.1
Articles of Incorporation – British Columbia
F-1/A-4
06/30/14
3.4
 
 
 
 
 
 
 
10.1
Exploration and Option Agreement between Cerro Cazador S.A. and FK Minera S.A. dated March 28, 2007
F-1/A-2
12/20/12
10.1
 
 
 
 
 
 
 
10.2
Agreement between Fomento Minero de Santa Cruz Sociedad del Estado and Hunt Mining Corp.'s subsidiary, Cerro Cazador, S.A., with respect to the La Josefina property, dated July 24, 2007
F-1/A-2
12/20/12
10.2
 
 
 
 
 
 
 
10.3
Share Purchase Agreement among Sinomar Capital Corp., Cerro Cazador S.A., HuntMountain Resources Ltd. and HuntMountain Investments, LLC, dated October 13, 2009
F-1/A-3
03/28/14
10.3
 
 
 
 
 
 
 
10.4
Executive Employment Agreement with Matthew J. Hughes dated January 1, 2012
F-1/A-3
03/28/14
10.4
 
 
 
 
 
 
 
10.5
Executive Employment Agreement with Timothy R. Hunt dated January 1, 2012
F-1/A-3
03/28/14
10.5
 
 
 
 
 
 
 
10.6
Executive Employment Agreement with Danilo P. Silva dated January 1, 2012
F-1/A-3
03/28/14
10.6
 
 
 
 
 
 
 
10.7
Executive Employment Agreement with Matthew A. Fowler dated January 1, 2012
F-1/A-3
03/28/14
10.7
 
 
 
 
 
 
 
10.8
Exploration Agreement Among Eldorado Gold Corporation, Hunt Mining Corp. and Cerro Cazador, S.A. dated May 3, 2012
F-1/A-3
03/28/14
10.8
 
 
 

- 34 -


 
 
10.9
Agreement between Fomento Minero de Santa Cruz Sociedad del Estado and Hunt Mining Corp.'s subsidiary Cerro Cazador, S.A. with respect to the La Josefina property, dated November 15, 2012
F-1/A-4
06/30/14
10.9
 
 
 
 
 
 
 
10.10
Amended Agreement between Fomento Minero de Santa Cruz Sociedad del Estado and Hunt Mining Corp.'s subsidiary, Cerro Cazador, S.A., with respect to the La Valenciana property, dated November 15, 2012
F-1/A-3
03/28/14
10.10
 
 
 
 
 
 
 
10.11
Buyer's Contract with Ocean Partners USA, Inc., Hunt Mining Corp and Huntwood Industries, Inc. dated September 28, 2016
10-K
05/22/17
10.11
 
 
 
 
 
 
 
10.12
Advance Payment Facility Agreement with Ocean Partners USA, Inc., Hunt Mining Corp and Huntwood Industries, Inc. dated October 28, 2016
10-K
05/22/17
10.12
 
 
 
 
 
 
 
14.1
Code of Ethics
10-K
05/19/17
14.1
 
 
 
 
 
 
 
21.1
List of Subsidiaries
10-K
05/22/17
21.1
 
 
 
 
 
 
 
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
X
 
 
 
 
 
 
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer
 
 
 
X
 
 
 
 
 
 
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Financial Officer
 
 
 
X
 
 
 
 
 
 
99.2
2011 Stock Option Plan of Hunt Mining Corp.
F-1/A-2
12/20/12
99.1
 
 
 
 
 
 
 
99.2
Audit Committee Charter
F-1
06/12/12
99.1
 
 
 
 
 
 
 
101.INS
XBRL Instance Document
 
 
 
 X
 
 
 
 
 
 
101.SCH
XBRL Taxonomy Extension – Schema
 
 
 
 X
 
 
 
 
 
 
101.CAL
XBRL Taxonomy Extension – Calculations
 
 
 
 X
 
 
 
 
 
 
101.DEF
XBRL Taxonomy Extension – Definitions
 
 
 
 X
 
 
 
 
 
 
101.LAB
XBRL Taxonomy Extension – Labels
 
 
 
 X
 
 
 
 
 
 
101.PRE
XBRL Taxonomy Extension – Presentation
 
 
 
 X


- 35 -

EX-31.1 2 exh-31-1.htm

Exhibit 31.1
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
 
I, Tim Hunt, certify that:
 
1.
I have reviewed this Form 10-Q for the period ending March 31, 2019, of Hunt Mining Corp.;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant's other certifying officer and I are  responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting 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 generally accepted accounting principles;
 
 
c.
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d.
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date:
May 15, 2019
TIM HUNT
 
 
Tim Hunt
 
 
Principal Executive Officer
 
EX-31.2 3 exh-31-2.htm

SARBANES-OXLEY SECTION 302(a) CERTIFICATION
 
I, Ken Atwood, certify that:
 
1.
I have reviewed this Form 10-Q for the period ending March 31, 2019, of Hunt Mining Corp.:
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant's other certifying officer and I are  responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting 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 generally accepted accounting principles;
 
 
c.
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d.
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date:
May 15, 2019
KEN ATWOOD
 
 
Ken Atwood
 
 
Principal Financial Officer
 
 

EX-32.1 4 exh-32-1.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Hunt Mining Corp. (the "Company") on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date here of (the "report"), I, Tim Hunt, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated this 15th day of May, 2019.
 
 
TIM HUNT
 
Tim Hunt
 
Chief Executive Officer
 

EX-32.2 5 exh-32-2.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Hunt Mining Corp (the "Company") on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date here of (the "report"), I, Ken Atwood, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated this 15th day of May, 2019.
 
 
KEN ATWOOD
 
Ken Atwood
 
Chief Financial Officer
 

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Document And Entity Information - shares
3 Months Ended
Mar. 31, 2019
May 15, 2019
Document and Entity Information [Abstract]    
Entity Registrant Name Hunt Mining Corporation  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   63,588,798
Amendment Flag false  
Entity Central Index Key 0001551206  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business true  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
XML 14 R2.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Balance Sheets - USD ($)
Mar. 31, 2019
Dec. 31, 2018
CURRENT ASSETS:    
Cash $ 188,150 $ 115,372
Accounts receivable 1,448,956 1,474,303
Prepaid expenses 56,064 57,672
Inventory 1,137,117 913,915
Total Current Assets 2,830,287 2,561,262
NON-CURRENT ASSETS:    
Mineral Properties 438,062 438,062
Property, plant and equipment 4,331,523 4,585,520
Performance bond 327,983 315,378
Total Non-Current Assets 5,097,568 5,338,960
TOTAL ASSETS 7,927,855 7,900,222
CURRENT LIABILITIES:    
Accounts payable and accrued liabilities 7,492,103 6,328,861
Bank indebtedness 0 330,000
Interest payable 378,867 320,669
Transaction taxes payable 0 129
Loan payable and current portion of long-term debt 3,376,443 3,198,569
Total Current Liabilities 11,247,413 10,178,228
NON-CURRENT LIABILITIES:    
Long-term debt 1,159,140 1,253,017
Asset retirement obligation 1,334,845 1,308,399
Total Non-Current Liabilities 2,493,985 2,561,416
TOTAL LIABILITIES 13,741,398 12,739,644
STOCKHOLDERS' DEFICIENCY:    
Capital stock: Authorized- Unlimited No Par Value Issued and outstanding - 63,588,798 common shares (December 31, 2017 - 63,588,798 common shares) 24,695,186 24,695,186
Additional paid in capital 9,696,520 9,696,520
Deficit (40,475,775) (39,557,836)
Accumulated other comprehensive income (loss) 270,526 326,708
Total Stockholders' Deficiency (5,813,543) (4,839,422)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 7,927,855 $ 7,900,222
XML 15 R3.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Capital stock: Authorized Unlimited Unlimited
Capital stock: Par Value $ 0.00 $ 0.00
Capital stock: Issued 63,588,798 63,588,798
Capital stock: Outstanding 63,588,798 63,588,798
XML 16 R4.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
OPERATING EXPENSES:    
Professional fees $ 125,741 $ 122,093
Directors fees 751 0
Exploration expenses 0 148,950
Travel expenses 53,236 45,467
Administrative and office expenses 30,055 66,978
Payroll expenses 69,478 107,898
Interest expense 160,407 132,760
Banking charges 11,820 19,619
Depreciation 253,997 402,268
Royalty expense 5,904 0
Total operating expenses 711,389 1,046,033
OTHER INCOME/(EXPENSE):    
Silver and gold recovery (loss), net of expenses 118,059 202,614
Interest income 4,993 4,341
Transaction taxes (2,850) (4,594)
Gain (loss) on foreign exchange (294,206) (221,135)
Accretion expense (32,546) (18,659)
Total other income (expense) (206,550) (37,433)
NET INCOME (LOSS) FOR THE PERIOD (917,939) (1,083,466)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:    
Change in value of performance bond 12,605 (35,047)
Foreign currency translation adjustment (68,787) 99,826
TOTAL NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD $ (974,121) $ (1,018,687)
Weighted average shares outstanding - basic and diluted 63,588,798 63,588,798
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED $ (0.02) $ (0.02)
XML 17 R5.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statement of Changes in Stockholders' Equity (Deficiency) - USD ($)
Common Stock [Member]
Deficit [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Additional Paid-in Capital [Member]
Total
Balance, beginning at Dec. 31, 2017 $ 24,695,186 $ (35,993,656) $ 57,289 $ 9,696,520 $ (1,544,661)
Net income (loss)   (1,083,466)     (1,083,466)
Other comprehensive income     64,779   64,779
Balance, ending at Mar. 31, 2018 24,695,186 (37,077,122) 122,068 9,696,520 (2,563,348)
Net income (loss)   (2,480,714)     (2,480,714)
Other comprehensive income     204,640   204,640
Balance, ending at Dec. 31, 2018 24,695,186 (39,557,836) 326,708 9,696,520 (4,839,422)
Net income (loss)   (917,939)     (917,939)
Other comprehensive income     (56,182)   (56,182)
Balance, ending at Mar. 31, 2019 $ 24,695,186 $ (40,475,775) $ 270,526 $ 9,696,520 $ (5,813,543)
XML 18 R6.htm IDEA: XBRL DOCUMENT v3.19.1
Consolidated Statements of Cash Flows - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) $ (917,939) $ (1,083,466) $ (2,480,714)  
Items not affecting cash        
Depreciation 253,997 402,268   $ 948,118
Gain (loss) on foreign exchange (6,100) (2,100)    
Accretion 32,546 18,659    
Net change in non-cash working capital items        
Decrease (increase) in accounts receivable 25,347 749,569    
Decrease in prepaid expenses 1,239 2,694    
Decrease (increase) in inventory (223,202) 251,051    
Increase (decrease) in accounts payable and accrued liabilities 1,460,272 (689,777)    
Increase in interest payable 58,198 12,733    
Increase (decrease) in transaction taxes payable (129) (40,349)    
Net cash used in operating activities 684,229 (378,718)    
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property plant and equipment 0 (62,909)    
Net cash used in investing activities 0 (62,909)    
CASH FLOWS FROM FINANCING ACTIVITIES:        
Change in bank line of credit (net) (330,000) 34,999    
Proceeds from loan 750,276 1,200,000    
Repayment of loan (537,076) (637,467)    
Net cash from financing activities (116,800) 597,532    
NET INCREASE IN CASH 567,429 155,905    
EFFECT OF EXCHANGE RATE CHANGES ON CASH (494,651) 3,685    
CASH, BEGINNING OF PERIOD 115,372 78,145 237,735 78,145
CASH, END OF PERIOD 188,150 237,735 $ 115,372 $ 115,372
SUPPLEMENTAL CASH FLOW INFORMATION        
Taxes paid 16,546 16,546    
Interest paid 32 73,610    
SUPPLEMENTAL NON-CASH INFORMATION        
Change in value of performance bond 12,605 (35,047)    
PP&E included in AP $ 0 $ 115,150    
XML 19 R7.htm IDEA: XBRL DOCUMENT v3.19.1
NATURE OF BUSINESS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Nature of Business

Hunt Mining Corp. (the "Company" or "Hunt Mining"), is a mineral exploration and processing company incorporated on January 10, 2006 under the laws of Alberta, Canada and, together with its subsidiaries, is engaged in the exploration of mineral properties in Santa Cruz Province, Argentina.

 

Effective November 6, 2013, the Company relocated from the Province of Alberta to the Province of British Columbia. The Company's registered office is located at 25th Floor, 700 West Georgia Street, Vancouver, B.C. V7Y 1B3. The Company's head office is located at 23800 E Appleway Avenue, Liberty Lake, Washington, 99019 USA.

 

The consolidated financial statements include the accounts of the following subsidiaries after elimination of intercompany transactions and balances:

 

 

Corporation

 

Incorporation

Percentage

ownership

Business Purpose
Cerro Cazador S.A. ("CCSA") Argentina 100% Holder of Assets and Exploration Company
Ganadera Patagonia(1) Argentina 40% Land Holding Company
1494716 Alberta Ltd. Alberta 100% Nominee Shareholder
Hunt Gold USA LLC Washington, USA 100% Management Company

 

(1) The Company has determined that the subsidiary is a variable interest entity because the Company is the primary beneficiary of the land the subsidiary holds, and therefore consolidates the subsidiary in its financial statements.

 

The Company's activities include the exploration and processing of minerals from properties in Argentina including the Mina Martha project (Note 8) and the La Josefina project on a metallurgical test basis. On the basis of information to date, the Company has not yet determined whether the Exploration properties contain economically recoverable ore reserves. The underlying value of the mineral properties is entirely dependent upon the existence of reserves, the ability of the Company to obtain the necessary financing to complete development and upon future profitable production or a sale of these properties. The Mina Martha project was purchased in the second quarter of 2016 and refurbishing activities began in late 2016. The Company finished all refurbishments to the Mina Martha project in the first quarter of 2017 and began selling concentrate in the second quarter of 2017. In 2018, the Company continued the sale of concentrate from Martha as well as began metallurgical tests on the La Josefina project. Concentrate produced as a byproduct of this testing was sold in 2018.

 

Ongoing production at the Martha Project is being undertaken without established mineral resources or reserves and the Company has not established the economic viability of the operations on the Martha Project. As a result, there is increased uncertainty and economic risks of failure associated with these production activities

 

Despite the sale of concentrate, all projects remain in the exploration stage because management has not established proven or probable ore reserves required to be classified in either the development or production stage. As such, the sales of concentrate are classified as silver and gold recovery, net of expenses in profit and loss.

 

XML 20 R8.htm IDEA: XBRL DOCUMENT v3.19.1
BASIS OF PRESENTATION
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Basis of presentation

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America ("US GAAP").

 

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

 

The Company's presentation currency is the US Dollar.

 

The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

 

Judgments made by management in the application of US GAAP that have a significant effect on the consolidated financial statements and estimates with significant risk of material adjustment in the current and following periods are discussed in Note 6.

 

XML 21 R9.htm IDEA: XBRL DOCUMENT v3.19.1
GOING CONCERN
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three months ended March 31, 2019, the Company had net loss of $917,939. As at March 31, 2019, the Company had an accumulated deficit of $40,475,775. The Company intends to continue funding operations through operation of the Martha mine, La Josefina project and equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending March 31, 2019.

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

XML 22 R10.htm IDEA: XBRL DOCUMENT v3.19.1
SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Significant Accounting Policies

The significant accounting policies used in the preparation of these consolidated financial statements are described below.

 

(a) Basis of measurement

 

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial assets and financial liabilities to fair value.

 

(b) Consolidation

 

The Company's consolidated financial statements consolidate the accounts of the Company and its subsidiaries. All intercompany transactions, balances and unrealized gains or losses from intercompany transactions are eliminated on consolidation.

 

(c) Foreign currency translation

 

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rates of exchange prevailing at the reporting date. Non-monetary assets and liabilities are translated at the exchange rate prevailing at the transaction date. Revenues and expenses are translated at average exchange rates throughout the reporting period. Gains and losses on translation of foreign currencies are included in the consolidated statement of operations.

The Company's functional currency is the Canadian dollar. All of the Company's subsidiaries have a US dollar functional currency. Financial statements are translated to their US dollar equivalents using the current rate method. Under this method, the statements of operations and comprehensive loss and cash flows for each period have been translated using the average exchange rates prevailing during each period. All assets and liabilities have been translated using the exchange rate prevailing at the balance sheet date. Translation adjustments are recorded as income or losses in other comprehensive income or loss. Transaction gains and losses resulting from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying consolidated statement of loss and comprehensive loss.

 

(d) Financial instruments

 

The Company measures the fair value of financial assets and liabilities based on US GAAP guidance, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions, which are accounted for at the transferor's carrying amount or exchange amount.

Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income.

See Note 17 to the Consolidated Financial Statements for fair value disclosures.

(e) Cash and equivalents

Cash and equivalents include cash on hand, deposits held with banks and other liquid short-term investments with original maturities of three months or less. The Company has no cash equivalents for all periods presented.

(f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of an asset.

Repairs and maintenance costs are charged to the consolidated statement of operations and comprehensive loss during the period in which they are incurred.

Depreciation is calculated to amortize the cost of the property, plant and equipment over their estimated useful lives using the straight-line method. Plant, buildings, equipment and vehicles are stated at cost and depreciated straight line over an estimated useful life of three to eight years. Depreciation begins once the asset is in the state intended for use by management.

The Company allocates the amount initially recognized in respect of an item of property and equipment to its significant parts and depreciates separately each such part. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.\ains and losses on disposals of property, plant and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains or losses in the consolidated statement of operations and comprehensive loss.

(g) Mineral properties and exploration and evaluation expenditures

 

All exploration expenditures are expensed as incurred. Expenditures to acquire mineral rights, to develop new mines, to define further mineralization in mineral properties which are in the development or operating stage, and to expand the capacity of operating mines, are capitalized and amortized on a units-of-production basis over proven and probable reserves.

 

Should a property be abandoned, its capitalized costs are charged to the consolidated statement of loss and comprehensive loss. The Company charges to the consolidated statement of loss and comprehensive loss the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

 

(h) Long-lived assets

 

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell.

 

 (i) Asset retirement obligations

 

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal constructive obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the long-lived assets. The Company also records a corresponding asset, which is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).

 

(j) Income taxes

 

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be recognized.

(k) Share-based compensation

 

The Company offers a share option plan for its directors, officers, employees and consultants. ASC 718 "Compensation – Stock Compensation" prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, "Equity Based Payments to Non-Employees." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

 

(l) Earnings (loss) per share

 

The calculation of earnings (loss) per share ("EPS") is based on the weighted average number of shares outstanding for each period. The basic EPS is calculated by dividing the earnings or loss attributable to the equity owners of the Company by the weighted average number of common shares outstanding during the period.

 

The computation of diluted EPS assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on the earnings per share. The treasury stock method is used to determine the dilutive effect of the warrants and share options. When the Company reports a loss, the diluted net loss per common share is equal to the basic net loss per common share due to the anti-dilutive effect of the outstanding warrants and share options.

 

(m) Silver and gold recovery (loss), net of expenses

 

Recovery of concentrate and other income is recognized when title and the risks and rewards of ownership to deliver concentrate and commodities pass to the buyer and collection is reasonably assured. Sale of concentrate is classified as silver and gold recovery, net of expenses in profit and loss because the Company has not established proven or probable ore reserves and remains in the exploration stage as defined by Industry guide 7.

 

Not all overhead costs are applied against Silver and gold recovery. Since the Company has no reserves, the Company is treated as an exploration company and as such, direct cost, portions of fixed costs and portions of variable costs are applied against Silver and gold recovery. Other administrative, office, professional fees, and travel are disclosed separately.

 

From time to time, some of the Company's sales of concentrate are made under provisional pricing arrangements where the final sale prices are determined by quoted market prices in a period subsequent to the date of sale. In these circumstances, sales are recorded at period end based on latest information about prices and quantities available to management for the expected date of final settlement. Under such arrangements, the Company's receivable changes as the underlying commodity market price varies, this component of the contract is an embedded derivative which is recognized at fair value with changes in fair value recognized in profit and loss and receivables. Subsequent variations in prices and metal quantities are recognized as they occur.

(n) Inventories

 

Mineral concentrate and mineralized material stockpiles are physically measured or estimated and valued at the lower of cost or net realizable value. Net realizable value is the estimated future sales price of the product the entity expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale. Where the time value of money is material, these future prices and costs to complete are discounted.

 

If the stockpile is not expected to be processed in 12 months after the reporting date, it is included in noncurrent assets and the net realizable value is calculated on a discounted cash flow basis.

 

Cost of silver concentrate and mineralized material stockpiles is determined by using the weighted average method and comprises direct costs and a portion of fixed and variable overhead costs incurred in converting materials into concentrate, based on the normal production capacity.

 

Materials and supplies are valued at the lower of cost or net realizable value. Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence.

 

XML 23 R11.htm IDEA: XBRL DOCUMENT v3.19.1
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Recently Issued Accounting Pronouncements

Leases

 

In February 2016, ASU No. 2016-02 was issued related to leases. The new guidance modifies the classification criteria and requires lessees to recognize the assets and liabilities arising from most leases on the balance sheet. This update is effective in fiscal years, including interim periods, beginning after December 15, 2018. The Company has evaluated all contracts which could be classified as leases under the new standards and determined that any impact as a result of adoption would not be material.

XML 24 R12.htm IDEA: XBRL DOCUMENT v3.19.1
CRITICAL ACCOUNTING JUDGMENT AND ESTIMATES
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Critical accounting judgments and estimates

(a) Significant judgments

 

Preparation of the consolidated financial statements requires management to make judgments in applying the Company's accounting policies. Judgments that have the most significant effect on the amounts recognized in these consolidated financial statements relate to functional currency; income taxes; provisions and reclamation and closure cost obligations. These judgments have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

Functional Currency

 

Management determines the functional currency for each entity. This requires that management assess the primary economic environment in which each of these entities operates. Management's determination of functional currencies affects how the Company translates foreign currency balances and transactions. Determination includes an assessment of various indicators. In determining the functional currency of the Company's operations in Canada (Canadian dollar) and Argentina (U.S. dollar), management considered the indicators of ASC 830.


Income Taxes and value-added taxes receivable

 

Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain and subject to judgment. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company's current understanding of the tax law in the various jurisdictions in which it operates. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

 

The Company has receivables due from the Argentinean government for value-added taxes. Significant estimates and judgments are involved in the assessment of recoverability of these receivables. Changes in management's impairment assumptions may result in an additional impairment provision, or a reduction to any previously recorded impairment provision, with the impact recorded in profit and loss.

 

Provisions

 

Management makes judgments as to whether an obligation exists and whether an outflow of resources embodying economic benefits of a liability of uncertain timing or amount is probable, not probable or remote. Management considers all available information relevant to each specific matter.

 

Reclamation and closure costs obligations

 

The Argentine mining regulations require that mine property be restored in accordance with specified standards and an approved reclamation plan. Significant reclamation activities include reclaiming refuse and slurry ponds, reclaiming the pit and support acreage at surface mines, and sealing portals at deep mines. The Company accrues for the cost of final mine closure reclamation over the estimated useful mining life of the property. At each period, the Company reviews the entire reclamation liability and makes necessary adjustments for revisions to cost estimates to reflect current experience.

 

The Company has adopted ASC 410, Asset Retirement and Environmental Obligations, which requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset.

 

Title to Mineral Property Interests

 

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

 

(b) Estimation uncertainty

The preparation of the consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company also makes estimates and assumptions concerning the future. The determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience and current and expected economic conditions. Actual results could differ from those estimates.

 

The more significant areas requiring the use of management estimates and assumptions relate to title to mineral property interests; asset retirement obligations and inventories. These estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

The Company is also exposed to legal risk. The outcome of currently pending and future proceedings cannot be predicted with certainty. Thus, an adverse decision in a lawsuit could result in additional costs that are not covered, either wholly or partly, under insurance policies and that could significantly influence the business and results of operations.


Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Asset retirement obligation

 

Upon retirement of the Company's mineral properties, retirement costs will be incurred by the Company. Estimates of these costs are subject to uncertainty associated with the method, timing and extent of future decommissioning activities. The liability, the related asset and the expense are affected by estimates with respect to the costs and timing of retiring the assets.

 

Inventories

 

Net realizable value tests are performed at each reporting date and represent the estimated future sales price of the product the Company expects to realize when the product is processed and sold, less estimated costs to complete production and bring the product to sale. Where the time value of money is material, these future prices and costs to complete are discounted.

 

Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained mineral ounces is based on assay data, and the estimated recovery percentage is based on the expected processing method. Stockpile tonnages are verified by periodic surveys.

 

Silver and gold recovery (loss), net of expenses

 

From time to time, some of the Company's sales of concentrate are made under provisional pricing arrangements where the final sale prices are determined by quoted market prices in a period subsequent to the date of sale. In these circumstances, sales are recorded at period end based on latest information about prices and quantities available to management for the expected date of final settlement.

 

Change in estimates

 

During 2018, the Company conducted a review of its plant and buildings which resulted in changes in its expected use. It was determined that the renovation work performed in 2016 and 2017 on these assets was having greater success than originally anticipated in extending their useful life. Additionally, metallurgical studies performed throughout 2018 confirmed that the plant could be successfully used to process mineralized materials from other mineral properties of the Company. It is now expected that the useful life of these assets will be extended from an original estimate of 36 months in 2017 to 87 months from December 31, 2018.

XML 25 R13.htm IDEA: XBRL DOCUMENT v3.19.1
INVENTORY
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Inventory
    September 30, 2018     December 31, 2017  
             
Silver and gold concentrate   $ 1,880,861     $ 128,894  
Ore stockpiles     -       98,210  
Materials and supplies     115,887       106,216  
    $ 1,996,748     $ 333,320  
XML 26 R14.htm IDEA: XBRL DOCUMENT v3.19.1
MINERAL PROPERTIES
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Mineral properties

(a) Acquisition of Mina Martha project

 

On May 6, 2016, the Company acquired the assets of the Mina Martha project from Coeur Mining Inc. ("Coeur"). The Mina Martha project consists of land, mineral rights, a mine camp, offices, a warehouse, maintenance shop, mining facilities including a flotation mill and a tailings retention facility.

 

 (b) Acquisition of La Josefina project

In March 2007, the Company acquired the exploration and development rights to the La Josefina project from Fomento Minero de Santa Cruz Sociedad del Estado ("Fomicruz").

 

In July 2007, the Company entered into an agreement (subsequently amended) with Fomicruz which provides that, in the event that a positive feasibility study is completed on the La Josefina property, a Joint Venture Corporation ("JV Corporation") would be formed by the Company and Fomicruz. The Company would own 81% of the joint venture company and Fomicruz would own the remaining 19%. Fomicruz has the option to earn up to a 49% participating interest in the JV Corporation by reimbursing the Company an equivalent amount, up to 49%, of the exploration investment made by the Company. The Company has the right to buy back any increase in Fomicruz's ownership interest in the JV Corporation at a purchase price of USD$200,000 per each percentage interest owned by Fomicruz down to its initial ownership interest of 19%; the Company can also purchase 10% of the Fomicruz's initial 19% JV Corporation ownership interest by negotiating a purchase price with Fomicruz. Under the agreement, the Company has until the end of 2019 to complete cumulative exploration expenditures of $18 million and determine if it will enter into production on the property. At December 31, 2018, the Company had incurred approximately $20 million and is in current discussions with Fomicruz to develop a plan for production in early to mid-2019.

As at March 31, 2019 this project has a carrying amount of $Nil (2018 - $Nil) on the consolidated balance sheet.


(c) Acquisition of La Valenciana project

 

On November 1, 2012, the Company entered into an agreement for the exploration of the La Valenciana project in Santa Cruz province, Argentina. The agreement is for a total of 7 years, expiring on October 31, 2019. The agreement requires the Company to spend $5,000,000 in exploration on the project over 7 years. If the Company elects to exercise its option to bring the La Valenciana project into production, it must grant Fomicruz a 9% ownership in a new JV Corporation to be created by the Company to manage the project and the Company will have a 91% ownership interest in the JV Corporation.

 

As at March 31, 2019 this project has a carrying amount of $Nil (2018 - $Nil) on the consolidated balance sheet.

 

XML 27 R15.htm IDEA: XBRL DOCUMENT v3.19.1
ASSET RETIREMENT OBLIGATION
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Asset retirement obligation

On May 6, 2016, the Company purchased the Mina Martha project (Note 8). The Company is legally required to perform reclamation on the site to restore it to its original condition at the end of its useful life. In accordance with FASB ASC 410-20, Asset Retirement Obligations, the Company recognized the fair value of that liability as an asset retirement obligation. The total amount of undiscounted cash flows required to settle the estimated obligation is $1,940,270 which has been discounted using a credit-adjusted rate of 10% (2018 – 10%) and an inflation rate of 2% (2018 – 2%).

 

The following table describes the changes to the Company's asset retirement obligation liability:

    March 31,     December 31,  
    2019     2018  
 Asset retirement obligation at beginning of year   $ 1,308,399     $ 773,436  
 Additions     -       486,589  
 Foreign exchange     (6,100 )     (25,996 )
 Accretion expense     32,546       74,370  
 Asset retirement obligation at end of period   $ 1,334,845     $ 1,308,399  

 

XML 28 R16.htm IDEA: XBRL DOCUMENT v3.19.1
PROPERTY, PLANT AND EQUIPMENT
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Property, Plant and Equipment

 

    Land     Plant     Buildings     Vehicles and Equipment     Total  
 Cost                              
 Balance at December 31, 2017   $ 1,035,397     $ 3,423,701     $ 117,500     $ 2,824,466     $ 7,401,064  
 Additions     -       486,589       -       13,559       500,148  
 Balance at December 31, 2018     1,035,397       3,910,290       117,500       2,838,025       7,901,212  
 Additions     -       -       -       -       -  
 Balance at March 31, 2019   $ 1,035,397     $ 3,910,290     $ 117,500     $ 2,838,025     $ 7,901,212  
                                         
 Accumulated depreciation                                        
 Balance at December 31, 2017   $ -     $ 753,391     $ 29,375     $ 1,584,808     $ 2,367,574  
 Depreciation for the year     -       368,319       12,155       567,644       948,118  
 Balance at December 31, 2018     -       1,121,710       41,530       2,152,452       3,315,692  
 Depreciation for the year     -       108,859       3,039       142,099       253,997  
 Balance at March 31, 2019   $ -     $ 1,230,569     $ 44,569     $ 2,294,551     $ 3,569,689  
                                         
 Net book value                                        
 At December 31, 2018   $ 1,035,397     $ 2,788,580     $ 75,970     $ 685,573     $ 4,585,520  
 At March 31, 2019   $ 1,035,397     $ 2,679,721     $ 72,931     $ 543,474     $ 4,331,523  
XML 29 R17.htm IDEA: XBRL DOCUMENT v3.19.1
PERFORMANCE BOND
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Performance bond

The performance bond, originally required to secure the Company's rights to explore the La Josefina property, is a step-up US dollar denominated 2.5% coupon bond, paying quarterly, issued by the Government of Argentina with a face value of $600,000 and a maturity date of 2035. The bond trades in the secondary market in Argentina. The bond was originally purchased for $247,487. As of the three months ended March 31, 2019, the value of the bond increased to $327,983 (December 31, 2018 - $315,378). The change in the face value of the performance bond of $12,605 for the three months ended March 31, 2019 (December 31, 2018- $119,261) is recorded as other comprehensive loss in the Company's consolidated statement of operations and comprehensive loss.

 

Since Cerro Cazador S.A. ("CCSA") fulfilled its exploration expenditure requirement mandated by the agreement with Fomento Minero de Santa Cruz Sociedad del Estado ("Fomicruz"), the performance bond was no longer required to secure the La Josefina project. Therefore, in September 2010 the Company used the bond to secure the La Valenciana project, an additional Fomicruz exploration project.

 

XML 30 R18.htm IDEA: XBRL DOCUMENT v3.19.1
ACCOUNTS RECEIVABLE
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Accounts receivable
    March 31,     December 31,  
    2019     2018  
 Receivable from sale of concentrate   $ 450,312     $ 438,042  
 Value added tax ("VAT") recoverable     944,408       986,014  
 Other receivables     54,236       50,247  
 Total accounts receivable   $ 1,448,956     $ 1,474,303  
XML 31 R19.htm IDEA: XBRL DOCUMENT v3.19.1
ACCOUNTS PAYABLE
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Accounts payable
    Note     March 31,     December 31,  
          2019     2018  
 Accounts payables due to related parties     16     $ 5,792,165     $ 4,416,555  
 Trade accounts payable and accrued liabilities             1,699,938       1,912,306  
 Total accounts payable and accrued liabilities           $ 7,492,103     $ 6,328,861  
XML 32 R20.htm IDEA: XBRL DOCUMENT v3.19.1
LOAN PAYABLE AND LONG-TERM DEBT
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Loan Payable and long-term debt

The Following is a summary of all loans.

 

    March 31,     December 31,  
    2019     2018  
Unsecured loan payable to related party at 8% interest per annum, due 2022 (Note 16)   $ 1,615,445     $ 1,615,445  
                 
Unsecured loan payable to related party at 8% interest per annum, due on demand (Note 16)     994,861       994,861  
                 
Unsecured loan payable to related party at 7% interest per annum, due on demand1(Note 16)     1,400,276       1,250,000  
                 
Loan payable, repayable in monthly installments ranging between $3,000 and $15,000 per dry metric ton of concentrate, with interest at 6% per annum, secured by concentrate, due 20182     525,000       591,280  
    $ 4,535,582     $ 4,451,586  
 Less current portion     (3,376,443 )     (3,198,569 )
 Long-term debt   $ 1,159,140     $ 1,253,017  

 

Principal payments on long-term debt are due as follows.      
  Year ending December 31,  
 2019   $ 362,428  
 2020   $ 375,510  
 2021   $ 394,590  
 2022   $ 414,910  
 2023   $ 68,007  

 

1Subsequent to March 31, 2019, additional funds of $187,500 were loaned to the Company. (Note 16 & Note 22)

 

2 Subsequent to March 31, 2019, principal payments of $225,000 were made. (Note 22)

XML 33 R21.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Capital Stock

Authorized:

Unlimited number of common shares without par value

Unlimited number of preferred shares without par value

 

Issued:

Common Shares   Three months ended     Year ended  
    March 31, 2019     December 31, 2018  
    Number     Amount     Number     Amount  
 Balance, beginning of period     63,588,798     $ 24,695,186       63,588,798     $ 24,695,186  
 Balance, end of period     63,588,798     $ 24,695,186       63,588,798     $ 24,695,186  

 

Common share issuances:

 

No common shares were issued during the three months ended March 31, 2019 (December 31, 2018 – None).

Stock options

Under the Company's share option plan, and in accordance with TSX Venture Exchange requirements, the number of common shares reserved for issuance under the option plan shall not exceed 10% of the issued and outstanding common shares of the Company, have a maximum term of 5 years and vest at the discretion of the Board of Directors. In connection with the foregoing, the number of common shares reserved for issuance to: (a) any individual director or officer will not exceed 5% of the issued and outstanding common shares; and (b) all consultants will not exceed 2% of the issued and outstanding common shares.

 

  Range of Exercise prices (CAD) Number outstanding Weighted average life (years) Weighted averageexercise price (CAD)

Number exercisable on

March 31, 2019

Stock options $0.15 - $1.00  4,160,000 2.29 $0.21  4,160,000

 

 

    March 31, 2019 December 31, 2018
     Number of options  Weighted Average Price (CAD)  Number of options  Weighted Average Price (CAD)
 Balance, beginning of period  4,160,000 $0.21  4,380,000 $0.21
 Expiration of stock options  -  -  (220,000) $0.23
 Balance, end of period  4,160,000 $0.21  4,160,000 $0.21

 

No options were granted during the three months ended March 31, 2019.

 

On April 23, 2018, 20,000 options with an exercise price of CAD $1.00 expired.

On April 26, 2018 200,000 stock options expired/cancelled as a result of an employee resigning from the Company.

As at March 31, 2019, the Company's outstanding and exercisable stock options had an aggregate intrinsic value of $Nil (December 31, 2018 - $Nil).

Subsequent to March 31, 2019, 285,000 stock options with an exercise price of CAD $1.00 expired.

Warrants:

   Range of Exercise prices (CAD)  Number outstanding  Weighted average life (years)  Weighted average exercise price (CAD)
 Warrants 0.05 - 0.08  47,500,000 1.43 $0.06

 

  March 31, 2019 December 31, 2018
   Number of warrants  Weighted Average Price (CAD)  Number of warrants  Weighted Average Price (CAD)
 Balance, beginning of period  47,500,000 $0.06  48,862,500 $0.07
 Warrants  -  -  (1,362,500) $0.40
 Balance, end of period  47,500,000 $0.06  47,500,000 $0.06

 

XML 34 R22.htm IDEA: XBRL DOCUMENT v3.19.1
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Related Party Transactions

Name and Principal Position     Remuneration, fees, or interest expense     Loans or Advances     Remunera- tion, fees, or interest payments     Loan payments     Included in Accounts Payable     Included in Loan Payable and Long-term debt  
      Period ended March 31,     As at March 31, 2019 and December 31, 2018  
A company controlled by a director 2019     156,385       1,136,301       -       -       5,265,379       -  
 - admin, office, and interest expenses 2018     115,802       -       -       -       3,972,693       -  
 Key executive person 2019     33,750       -       33,750       -       -       -  
 - salaries and wages 2018     31,250       -       31,250       -       -       -  
 Key executive person 2019     33,750       -       33,750       -       -       -  
 - salaries and wages 2018     31,250       -       31,250       -       -       -  
 Director 2019     82,924       150,276       -       -       526,786       4,010,582 1,2 
 -loans 2018     54,223       300,000       41,490       115,716       443,862       3,860,306  

 

 

The Company has two unsecured loans payable to related party at 8% interest per annum, with one loan of $994,861 due on demand and the other loan of $1,615,445 due 2022. The Company has another unsecured loan payable of $1,400,276 to a related party at 7% interest per annum (Note 14).

Subsequent to March 31, 2019, additional funds of $187,500 were loaned to the Company.

 

XML 35 R23.htm IDEA: XBRL DOCUMENT v3.19.1
FINANCIAL INSTRUMENTS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Financial Instruments

The Company's financial instruments consist of cash, accounts receivable, performance bond, accounts payable and accrued liabilities, transaction taxes payable, loan payable, interest payable, and long-term debt.

 

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 fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

 

· Level 1: inputs are quoted prices (unadjusted) 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 are less observable, unavoidable or where the observable data does not support the majority of the instruments' fair value.


Fair value

 

As at March 31, 2019, there were no changes in the levels in comparison to December 31, 2018. The fair values of financial instruments are summarized as follows:

 

  March 31, 2019   March 31, 2018  
   Carrying amount  Fair value  Carrying amount  Fair value
   $  $  $  $
 Financial Assets        
         
 FVTPL        
    Cash (Level 1)                 188,150     188,150                 115,372     115,372
         
 Available for sale        
    Performance bond (Level 1)                 327,983     327,983                 315,378     315,378
         
 Loans and receivables        
    Accounts receivable              1,448,956   1,448,956              1,474,303   1,474,303
         
 Financial Liabilities        
         
 Other financial liabilities        
    Bank indebtedness                            -                -                 330,000     330,000
    Accounts payable and accrued liabilities              7,492,103   7,492,103              6,328,861   6,328,861
    Transaction taxes payable                          -                -                        129            129
    Interest payable                 378,867     378,867                 320,669     320,669
    Loan payable              3,376,443   3,376,443              3,198,569   3,198,569
    Long-term debt              1,159,140   1,159,140              1,253,017   1,253,017

 

Cash and performance bond are measured based on Level 1 inputs of the fair value hierarchy on a recurring basis.

The carrying value of accounts receivable, accounts payable and accrued liabilities, bank indebtedness, loan payable, interest payable, and long-term debt approximate their fair value because of the short-term nature of these instruments and because long-term debt approximates a market rate of interest. The Company assessed that there were no indicators of impairment for these financial instruments.

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with high quality financial institutions and limits the amount of credit exposure with any one institution. Accounts receivable consist of trade receivables and VAT recoverable and are not considered subject to significant risk, because the amounts are due from a government and a customer who is considered credit worthy.

 

The Company has concentrations of credit risk with respect to its trade receivables, the majority of which are concentrated geographically in Argentina amongst a small number of customers. As at December 31, 2018, the Company had one customer whose trade receivable of $450,312 (December 31, 2018 – $438,042) accounted for greater than 10% of the total trade receivables. The Company controls credit risk through monitoring procedures, and by performing credit evaluations of its customers, but generally does not require collateral to secure accounts receivable.

 

The Company has concentrations in the volume of sales it made to customers. For the year ended December 31, 2018, the Company made sales of $383,552 to one customer which accounted for greater than 10% of the total silver and gold recovery, net of expenses (2018 - $3,961,399).


The Company currently maintains a substantial portion of its day-to-day operating cash balances at financial institutions. At December 31, 2018, the Company had total cash balances of $188,150 (December 31, 2018- $115,372) at financial institutions, where $Nil (December 31, 2018- $Nil) is in excess of federally insured limits.

 

XML 36 R24.htm IDEA: XBRL DOCUMENT v3.19.1
SEGMENT INFORMATION
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Segmented Information

All of the Company's operations are in the mineral properties exploration industry with its principal business activity in mineral exploration. The Company conducts its activities primarily in Argentina. All of the Company's long-lived assets are located in Argentina. All of the Company's silver and gold recovery arose from sales made in Argentina.

XML 37 R25.htm IDEA: XBRL DOCUMENT v3.19.1
COMMITMENTS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Commitments and Provision

On October 31, 2011, the Company signed an agreement with the owners of the Piedra Labrada Ranch for the use and lease of facilities on the same premises as the Company's La Josefina facilities. The initial term was for three years beginning November 1, 2011 and ended on October 31, 2014, including annual commitments of $60,000. The Company extended this agreement on April 30, 2015 for three years with an option to renew for a second three-year term.

 

XML 38 R26.htm IDEA: XBRL DOCUMENT v3.19.1
SILVER AND GOLD RECOVERY
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Silver and Gold Recovery

Silver and gold recovery include the sales from concentrate sold during the period ended March 31, 2019 from mining projects of $327,416 (2018 - $3,961,399) Silver and gold recovery revenues have been reported net of direct operating expenses of $209,357 for the period ended March 31, 2019 (2018 -$3,564,264). Accounts receivable include $438,042 (December 31, 2018 -$438,042) for the sales of concentrate.

XML 39 R27.htm IDEA: XBRL DOCUMENT v3.19.1
BANK INDEBTEDNESS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Bank Indebtedness

The Company has a variable rate line of credit available for $330,000 with interest charged at the lender's Index Rate plus 1.0%, with a floor of 4.25%. As at March 31, 2019 the balance of bank indebtedness was $Nil (December 31, 2018- $330,000). Subsequent to March 31, 2019, the Company borrowed $250,000 on this line of credit (Note 22).

XML 40 R28.htm IDEA: XBRL DOCUMENT v3.19.1
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2019
Disclosure Text Block [Abstract]  
Subsequent Events

Subsequent to March 31, 2019, the Company had sales of silver concentrate of approximately $293,319. Funds from this shipment were used to repay $225,000 of loan payable (Note 14).

 

Subsequent to March 31, 2019, 285,000 stock options with an exercise price of CAD $1.00 expired (Note 15).

 

Subsequent to March 31, 2019, additional funds of $187,500 were loaned to the Company (Note 14 & Note 16).

 

Subsequent to March 31, 2019, the Company reached an agreement with Fomicruz for the continued metallurgical testing and sale of gold concentrate produced from such testing (Note 7).

 

Subsequent to March 31, 2019, the Company borrowed $250,000 on its line of credit (Note 21).

XML 41 R29.htm IDEA: XBRL DOCUMENT v3.19.1
INVENTORY (Tables)
3 Months Ended
Mar. 31, 2019
Inventory Disclosure [Abstract]  
Schedule of inventory
   

March 31,

2019

    December 31, 2018  
             
Silver and gold concentrate   $ 966,141     $ 794,086  
Materials and supplies     170,976       119,829  
    $ 1,137,117     $ 913,915  
XML 42 R30.htm IDEA: XBRL DOCUMENT v3.19.1
ASSET RETIREMENT OBLIGATION (Tables)
3 Months Ended
Mar. 31, 2019
Asset Retirement Obligation Disclosure [Abstract]  
Schedule of change in asset retirement obligation
    March 31,     December 31,  
    2019     2018  
 Asset retirement obligation at beginning of year   $ 1,308,399     $ 773,436  
 Additions     -       486,589  
 Foreign exchange     (6,100 )     (25,996 )
 Accretion expense     32,546       74,370  
 Asset retirement obligation at end of period   $ 1,334,845     $ 1,308,399  
XML 43 R31.htm IDEA: XBRL DOCUMENT v3.19.1
PROPERTY, PLANT AND EQUIPMENT (Tables)
3 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
Property, plant, and equipment
    Land     Plant     Buildings     Vehicles and Equipment     Total  
 Cost                              
 Balance at December 31, 2017   $ 1,035,397     $ 3,423,701     $ 117,500     $ 2,824,466     $ 7,401,064  
 Additions     -       486,589       -       13,559       500,148  
 Balance at December 31, 2018     1,035,397       3,910,290       117,500       2,838,025       7,901,212  
 Additions     -       -       -       -       -  
 Balance at March 31, 2019   $ 1,035,397     $ 3,910,290     $ 117,500     $ 2,838,025     $ 7,901,212  
                                         
 Accumulated depreciation                                        
 Balance at December 31, 2017   $ -     $ 753,391     $ 29,375     $ 1,584,808     $ 2,367,574  
 Depreciation for the year     -       368,319       12,155       567,644       948,118  
 Balance at December 31, 2018     -       1,121,710       41,530       2,152,452       3,315,692  
 Depreciation for the year     -       108,859       3,039       142,099       253,997  
 Balance at March 31, 2019   $ -     $ 1,230,569     $ 44,569     $ 2,294,551     $ 3,569,689  
                                         
 Net book value                                        
 At December 31, 2018   $ 1,035,397     $ 2,788,580     $ 75,970     $ 685,573     $ 4,585,520  
 At March 31, 2019   $ 1,035,397     $ 2,679,721     $ 72,931     $ 543,474     $ 4,331,523  
XML 44 R32.htm IDEA: XBRL DOCUMENT v3.19.1
ACCOUNTS RECEIVABLE (Tables)
3 Months Ended
Mar. 31, 2019
Accounts Receivable, Net [Abstract]  
Schedule of receivables
    March 31,     December 31,  
    2019     2018  
 Receivable from sale of concentrate   $ 450,312     $ 438,042  
 Value added tax ("VAT") recoverable     944,408       986,014  
 Other receivables     54,236       50,247  
 Total accounts receivable   $ 1,448,956     $ 1,474,303  
XML 45 R33.htm IDEA: XBRL DOCUMENT v3.19.1
ACCOUNTS PAYABLE (Tables)
3 Months Ended
Mar. 31, 2019
Accounts Payable  
Schedule of payables
    Note     March 31,     December 31,  
          2019     2018  
 Accounts payables due to related parties     16     $ 5,792,165     $ 4,416,555  
 Trade accounts payable and accrued liabilities             1,699,938       1,912,306  
 Total accounts payable and accrued liabilities           $ 7,492,103     $ 6,328,861  
XML 46 R34.htm IDEA: XBRL DOCUMENT v3.19.1
LOAN PAYABLE AND LONG-TERM DEBT (Tables)
3 Months Ended
Mar. 31, 2019
Loans Payable [Abstract]  
Summary of all loans
    March 31,     December 31,  
    2019     2018  
Unsecured loan payable to related party at 8% interest per annum, due 2022 (Note 16)   $ 1,615,445     $ 1,615,445  
                 
Unsecured loan payable to related party at 8% interest per annum, due on demand (Note 16)     994,861       994,861  
                 
Unsecured loan payable to related party at 7% interest per annum, due on demand1(Note 16)     1,400,276       1,250,000  
                 
Loan payable, repayable in monthly installments ranging between $3,000 and $15,000 per dry metric ton of concentrate, with interest at 6% per annum, secured by concentrate, due 20182     525,000       591,280  
    $ 4,535,582     $ 4,451,586  
 Less current portion     (3,376,443 )     (3,198,569 )
 Long-term debt   $ 1,159,140     $ 1,253,017  
Principal payments on long-term debt
Principal payments on long-term debt are due as follows.      
  Year ending December 31,  
 2019   $ 362,428  
 2020   $ 375,510  
 2021   $ 394,590  
 2022   $ 414,910  
 2023   $ 68,007  
XML 47 R35.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK (Tables)
3 Months Ended
Mar. 31, 2019
Stockholders' Equity Note [Abstract]  
Schedule of common stock outstanding
Common Shares   Three months ended     Year ended  
    March 31, 2019     December 31, 2018  
    Number     Amount     Number     Amount  
 Balance, beginning of period     63,588,798     $ 24,695,186       63,588,798     $ 24,695,186  
 Balance, end of period     63,588,798     $ 24,695,186       63,588,798     $ 24,695,186  
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding
  Range of Exercise prices (CAD) Number outstanding Weighted average life (years) Weighted averageexercise price (CAD)

Number exercisable on

March 31, 2019

Stock options $0.15 - $1.00  4,160,000 2.29 $0.21  4,160,000
Schedule of Share-based Compensation, Stock Options, Activity
    March 31, 2019 December 31, 2018
     Number of options  Weighted Average Price (CAD)  Number of options  Weighted Average Price (CAD)
 Balance, beginning of period  4,160,000 $0.21  4,380,000 $0.21
 Expiration of stock options  -  -  (220,000) $0.23
 Balance, end of period  4,160,000 $0.21  4,160,000 $0.21
Schedule of Warrants Outstanding
   Range of Exercise prices (CAD)  Number outstanding  Weighted average life (years)  Weighted average exercise price (CAD)
 Warrants 0.05 - 0.08  47,500,000 1.43 $0.06
Schedule of warrant activity
  March 31, 2019 December 31, 2018
   Number of warrants  Weighted Average Price (CAD)  Number of warrants  Weighted Average Price (CAD)
 Balance, beginning of period  47,500,000 $0.06  48,862,500 $0.07
 Warrants  -  -  (1,362,500) $0.40
 Balance, end of period  47,500,000 $0.06  47,500,000 $0.06
XML 48 R36.htm IDEA: XBRL DOCUMENT v3.19.1
RELATED PARTY TRANSACTIONS (Tables)
3 Months Ended
Mar. 31, 2019
Related Party Transactions [Abstract]  
Schedule of related party transactions
Name and Principal Position     Remuneration, fees, or interest expense     Loans or Advances     Remunera- tion, fees, or interest payments     Loan payments     Included in Accounts Payable     Included in Loan Payable and Long-term debt  
      Period ended March 31,     As at March 31, 2019 and December 31, 2018  
A company controlled by a director 2019     156,385       1,136,301       -       -       5,265,379       -  
 - admin, office, and interest expenses 2018     115,802       -       -       -       3,972,693       -  
 Key executive person 2019     33,750       -       33,750       -       -       -  
 - salaries and wages 2018     31,250       -       31,250       -       -       -  
 Key executive person 2019     33,750       -       33,750       -       -       -  
 - salaries and wages 2018     31,250       -       31,250       -       -       -  
 Director 2019     82,924       150,276       -       -       526,786       4,010,582 1,2 
 -loans 2018     54,223       300,000       41,490       115,716       443,862       3,860,306  
XML 49 R37.htm IDEA: XBRL DOCUMENT v3.19.1
FINANCIAL INSTRUMENTS (Tables)
3 Months Ended
Mar. 31, 2019
Financial Instruments, Owned, at Fair Value [Abstract]  
Schedule of Assumptions for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement
  March 31, 2019   March 31, 2018  
   Carrying amount  Fair value  Carrying amount  Fair value
   $  $  $  $
 Financial Assets        
         
 FVTPL        
    Cash (Level 1)                 188,150     188,150                 115,372     115,372
         
 Available for sale        
    Performance bond (Level 1)                 327,983     327,983                 315,378     315,378
         
 Loans and receivables        
    Accounts receivable              1,448,956   1,448,956              1,474,303   1,474,303
         
 Financial Liabilities        
         
 Other financial liabilities        
    Bank indebtedness                            -                -                 330,000     330,000
    Accounts payable and accrued liabilities              7,492,103   7,492,103              6,328,861   6,328,861
    Transaction taxes payable                          -                -                        129            129
    Interest payable                 378,867     378,867                 320,669     320,669
    Loan payable              3,376,443   3,376,443              3,198,569   3,198,569
    Long-term debt              1,159,140   1,159,140              1,253,017   1,253,017
XML 50 R38.htm IDEA: XBRL DOCUMENT v3.19.1
GOING CONCERN (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]      
Net loss $ (917,939) $ (1,083,466) $ (2,480,714)
Accumulated deficit $ (40,475,775)   $ (39,557,836)
XML 51 R39.htm IDEA: XBRL DOCUMENT v3.19.1
INVENTORY (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Inventories $ 1,137,117 $ 913,915
Silver concentrate    
Inventories 966,141 794,086
Materials and supplies    
Inventories $ 170,976 $ 119,829
XML 52 R40.htm IDEA: XBRL DOCUMENT v3.19.1
ASSET RETIREMENT OBLIGATION (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Asset Retirement Obligation Disclosure [Abstract]    
Asset retirement obligation at beginning of year $ 1,308,399 $ 773,436
Additions 0 486,589
Foreign exchange (6,100) (25,996)
Accretion expense 32,546 74,370
Asset retirement obligation at end of year $ 1,334,845 $ 1,308,399
XML 53 R41.htm IDEA: XBRL DOCUMENT v3.19.1
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Property, plant, and equipment, cost, beginning $ 7,901,212 $ 7,401,064 $ 7,401,064
Additions 0   500,148
Property, plant, and equipment, cost, ending 7,901,212   7,901,212
Accumulated amortization, beginning 3,315,692 2,367,574 2,367,574
Depreciation for the year 253,997 402,268 948,118
Accumulated amortization, ending 3,569,689   3,315,692
Net book value 4,331,523   4,585,520
Land      
Property, plant, and equipment, cost, beginning 1,035,397 1,035,397 1,035,397
Additions 0   0
Property, plant, and equipment, cost, ending 1,035,397   1,035,397
Accumulated amortization, beginning 0 0 0
Depreciation for the year 0   0
Accumulated amortization, ending 0   0
Net book value 1,035,397   1,035,397
Plant      
Property, plant, and equipment, cost, beginning 3,910,290 3,423,701 3,423,701
Additions 0   486,589
Property, plant, and equipment, cost, ending 3,910,290   3,910,290
Accumulated amortization, beginning 1,121,710 753,391 753,391
Depreciation for the year 108,859   368,319
Accumulated amortization, ending 1,230,569   1,121,710
Net book value 2,679,721   2,788,580
Buildings      
Property, plant, and equipment, cost, beginning 117,500 117,500 117,500
Additions 0   0
Property, plant, and equipment, cost, ending 117,500   117,500
Accumulated amortization, beginning 41,530 29,375 29,375
Depreciation for the year 3,039   12,155
Accumulated amortization, ending 44,569   41,530
Net book value 72,931   75,970
Vehicles and Equipment      
Property, plant, and equipment, cost, beginning 2,838,025 2,824,466 2,824,466
Additions 0   13,559
Property, plant, and equipment, cost, ending 2,838,025   2,838,025
Accumulated amortization, beginning 2,152,452 $ 1,584,808 1,584,808
Depreciation for the year 142,099   567,644
Accumulated amortization, ending 2,294,551   2,152,452
Net book value $ 543,474   $ 685,573
XML 54 R42.htm IDEA: XBRL DOCUMENT v3.19.1
ACCOUNTS RECEIVABLE (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Accounts receivable $ 1,448,956 $ 1,474,303
Receivable from sale of concentrate    
Accounts receivable 450,312 438,042
Value added tax ("VAT") recoverable    
Accounts receivable 944,408 986,014
Other receivables    
Accounts receivable $ 54,236 $ 50,247
XML 55 R43.htm IDEA: XBRL DOCUMENT v3.19.1
ACCOUNTS PAYABLE (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Accounts Receivable Details Abstract    
Accounts payables due to related parties $ 5,792,165 $ 4,416,555
Trade accounts payable and accrued liabilities 1,699,938 1,912,306
Accounts payable $ 7,492,103 $ 6,328,861
XML 56 R44.htm IDEA: XBRL DOCUMENT v3.19.1
LOAN PAYABLE AND LONG-TERM DEBT (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Loans Payable [Abstract]    
Unsecured loan payable to related party at 8% interest per annum, due 20221 (Note 16) $ 1,615,445 $ 1,615,445
Unsecured loan payable to related party at 8% interest per annum, due on demand (Note 16) 994,861 994,861
Unsecured loan payable to related party at 7% interest per annum, due on demand1(Note 16) 1,400,276 1,250,000
Loan payable, repayable in monthly installments ranging between $3,000 and $15,000 per dry metric ton of concentrate, with interest at 6% per annum, secured by concentrate, due 20182 525,000 591,280
Loans 4,535,582 4,451,586
Less current portion (3,376,443) (3,198,569)
Long-term debt $ 1,159,140 $ 1,253,017
XML 57 R45.htm IDEA: XBRL DOCUMENT v3.19.1
LOAN PAYABLE AND LONG-TERM DEBT (Details 1)
Mar. 31, 2019
USD ($)
Loans Payable [Abstract]  
2019 $ 362,428
2020 375,510
2021 394,590
2022 414,910
2023 $ 68,007
XML 58 R46.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Stockholders' Equity Note [Abstract]    
Shares issued 63,588,798 63,588,798
Value of shares issued $ 24,695,186 $ 24,695,186
XML 59 R47.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK (Details 1) - Stock options - $ / shares
3 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Range of exercise prices (CAD) $0.15 - $1.00    
Number oustanding 4,160,000 4,160,000 4,380,000
Weighted average life (years) 2 years 3 months 14 days    
Weighted average exercise price (CAD) $ 0.21 $ 0.21 $ 0.21
Number exercisable on March 31, 2019 4,160,000    
XML 60 R48.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK (Details 2) - Stock options - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Number of options outstanding, beginning 4,160,000 4,380,000
Number of options expired 0 (220,000)
Number of options outstanding, ending 4,160,000 4,160,000
Weighted average exercise price outstanding, beginning $ 0.21 $ 0.21
Weighted average exercise price expired 0.00 0.23
Weighted average exercise price outstanding, ending $ 0.21 $ 0.21
XML 61 R49.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK (Details 3) - Warrants - $ / shares
3 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Range of exercise prices (CAD) 0.05 - 0.08  
Number outstanding 47,500,000 47,500,000
Weighted average life (years) 1 year 5 months 5 days  
Weighted average exercise price $ 0.06 $ 0.06
XML 62 R50.htm IDEA: XBRL DOCUMENT v3.19.1
CAPITAL STOCK (Details 4) - Warrants - $ / shares
Mar. 31, 2019
Dec. 31, 2018
Number of warrants outstanding 47,500,000 47,500,000
Weighted average exercise price outstanding $ 0.06 $ 0.06
XML 63 R51.htm IDEA: XBRL DOCUMENT v3.19.1
RELATED PARTY TRANSACTIONS (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
A company controlled by a director    
Remuneration, fees or interest expense $ 156,385 $ 115,802
Loans or Advances 1,136,301 0
Remuneration, fees, or interest payments 0 0
Loan payments 0 0
Included in Accounts Payable 5,265,379 3,972,693
Included in Loan Payable and Long-term debt 0 0
Key executive person - salaries and wages    
Remuneration, fees or interest expense 33,750 31,250
Loans or Advances 0 0
Remuneration, fees, or interest payments 33,750 31,250
Loan payments 0 0
Included in Accounts Payable 0 0
Included in Loan Payable and Long-term debt 0 0
Former Key Executive person - salaries and wages    
Remuneration, fees or interest expense 33,750 31,250
Loans or Advances 0 0
Remuneration, fees, or interest payments 33,750 31,250
Loan payments 0 0
Included in Accounts Payable 0 0
Included in Loan Payable and Long-term debt 0 0
Director - loans    
Remuneration, fees or interest expense 82,924 54,223
Loans or Advances 150,276 300,000
Remuneration, fees, or interest payments 0 41,490
Loan payments 0 115,716
Included in Accounts Payable 526,786 443,862
Included in Loan Payable and Long-term debt $ 4,010,582 $ 3,860,306
XML 64 R52.htm IDEA: XBRL DOCUMENT v3.19.1
FINANCIAL INSTRUMENTS (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Mar. 31, 2018
Other financial liabilities      
Interest payable $ 378,867 $ 320,669  
Loan payable 1,615,445 1,615,445  
Long-term debt 3,376,443 $ 3,198,569  
Fair Value [Member]      
Financial Assets      
Cash (Level 1) 188,150   $ 115,372
Available for sale      
Performance bond (Level 1) 327,983   315,378
Loans and receivables      
Accounts receivable 1,448,956   1,474,303
Other financial liabilities      
Bank indebtedness 0   330,000
Accounts payable and accrued liabilities 7,492,103   6,328,861
Transaction taxes payable 0   129
Interest payable 378,867   320,669
Loan payable 3,376,443   3,198,569
Long-term debt 1,159,140   1,253,017
Carrying Amount [Member]      
Financial Assets      
Cash (Level 1) 188,150   115,372
Available for sale      
Performance bond (Level 1) 327,983   315,378
Loans and receivables      
Accounts receivable 1,448,956   1,474,303
Other financial liabilities      
Bank indebtedness 0   330,000
Accounts payable and accrued liabilities 7,492,103   6,328,861
Transaction taxes payable 0   129
Interest payable 378,867   320,669
Loan payable 3,376,443   3,198,569
Long-term debt $ 1,159,140   $ 1,253,017
XML 65 R53.htm IDEA: XBRL DOCUMENT v3.19.1
FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Financial Instruments, Owned, at Fair Value [Abstract]    
Cash $ 188,150 $ 115,372
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