British Columbia, Canada
|
1041
|
(State or other jurisdiction of incorporation or organization)
|
(Primary Standard Industrial Classification Code Number)
|
Large Accelerated Filer
|
☐
|
Accelerated Filer
|
☐
|
Non-accelerated Filer
|
☐
|
Smaller Reporting Company
|
☒
|
Six months ended June 30, 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 Consolidated Interim financial statements | 7 - 23 |
Hunt Mining Corp.
|
||||||||||||
Expressed in U.S. Dollars
|
||||||||||||
Interim Consolidated Balance Sheets
|
||||||||||||
June 30,
|
December 31,
|
|||||||||||
NOTE
|
2019
|
2018
|
||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash
|
17
|
$
|
41,136
|
$
|
115,372
|
|||||||
Accounts receivable
|
12,17,20
|
1,421,858
|
1,474,303
|
|||||||||
Prepaid expenses
|
7,924
|
57,672
|
||||||||||
Inventory
|
7
|
642,389
|
913,915
|
|||||||||
Total Current Assets
|
2,113,307
|
2,561,262
|
||||||||||
NON-CURRENT ASSETS:
|
||||||||||||
Mineral Properties
|
8
|
438,062
|
438,062
|
|||||||||
Property, plant and equipment
|
10
|
4,077,525
|
4,585,520
|
|||||||||
Performance bond
|
11,17
|
342,583
|
315,378
|
|||||||||
Total Non-Current Assets:
|
4,858,170
|
5,338,960
|
||||||||||
TOTAL ASSETS:
|
$
|
6,971,477
|
$
|
7,900,222
|
||||||||
CURRENT LIABILITIES:
|
||||||||||||
Accounts payable and accrued liabilities
|
13,16,17
|
$
|
8,412,003
|
$
|
6,328,861
|
|||||||
Bank indebtedness
|
21
|
400,000
|
330,000
|
|||||||||
Interest payable
|
16,17
|
-
|
320,669
|
|||||||||
Transaction taxes payable
|
17
|
-
|
129
|
|||||||||
Loan payable and current portion of long-term debt
|
14,16,17
|
550,183
|
3,198,569
|
|||||||||
Total Current Liabilities:
|
9,362,186
|
10,178,228
|
||||||||||
NON-CURRENT LIABILITIES:
|
||||||||||||
Long-term debt
|
14,16,17
|
3,310,123
|
1,253,017
|
|||||||||
Asset retirement obligation
|
9
|
1,361,292
|
1,308,399
|
|||||||||
Interest on debt
|
16,17
|
526,455
|
-
|
|||||||||
Total Non-Current Liabilities:
|
5,197,870
|
2,561,416
|
||||||||||
TOTAL LIABILITIES:
|
$
|
14,560,056
|
$
|
12,739,644
|
||||||||
STOCKHOLDERS' DEFICIENCY:
|
||||||||||||
Capital stock: Authorized- Unlimited No Par Value Issued and outstanding - 63,588,798 common shares (December 31, 2018 -
63,588,798 common shares)
|
15
|
$
|
24,695,186
|
$
|
24,695,186
|
|||||||
Additional paid in capital
|
9,696,520
|
9,696,520
|
||||||||||
Deficit
|
(42,098,480
|
)
|
(39,557,836
|
)
|
||||||||
Accumulated other comprehensive income (loss)
|
118,195
|
326,708
|
||||||||||
Total Stockholders' Deficiency:
|
(7,588,579
|
)
|
(4,839,422
|
)
|
||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
|
$
|
6,971,477
|
$
|
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 "Christopher van Tienhoven"
|
||||||||||||
Signed CFO "Cristian Lopez Saubidet"
|
||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
|
Hunt Mining Corp.
|
||||||||||||||||||||
Expressed in U.S. Dollars
|
||||||||||||||||||||
Interim Consolidated Statements of Operations and Comprehensive Loss
|
||||||||||||||||||||
|
3 month period ended June 30,
|
6 month period ended June 30,
|
||||||||||||||||||
NOTE
|
2019
|
2018
|
2019
|
2018
|
||||||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||||||
Professional fees
|
16
|
340,644
|
214,171
|
466,385
|
336,264
|
|||||||||||||||
Directors fees
|
748
|
1,589
|
1,499
|
1,589
|
||||||||||||||||
Exploration expenses
|
-
|
111,997
|
-
|
260,947
|
||||||||||||||||
Travel expenses
|
13,702
|
72,043
|
66,938
|
117,510
|
||||||||||||||||
Administrative and office expenses
|
16
|
79,896
|
26,026
|
109,951
|
93,004
|
|||||||||||||||
Payroll expenses
|
16
|
79,163
|
93,978
|
148,641
|
201,876
|
|||||||||||||||
Interest expense
|
16
|
195,812
|
96,068
|
356,219
|
228,828
|
|||||||||||||||
Banking charges
|
17,577
|
22,364
|
29,397
|
41,983
|
||||||||||||||||
Depreciation
|
10
|
253,998
|
403,398
|
507,995
|
805,666
|
|||||||||||||||
Royalty expense
|
5,242
|
-
|
11,146
|
-
|
||||||||||||||||
Total operating expenses:
|
$
|
986,782
|
$
|
1,041,634
|
$
|
1,698,171
|
$
|
2,087,667
|
||||||||||||
OTHER INCOME/(EXPENSE):
|
||||||||||||||||||||
Silver and gold recovery (loss), net of expenses
|
20
|
(608,175
|
)
|
$
|
-
|
$
|
(490,116
|
)
|
$
|
202,614
|
||||||||||
Interest income
|
4,618
|
3,197
|
9,611
|
7,538
|
||||||||||||||||
Transaction taxes
|
(3,952
|
)
|
(5,665
|
)
|
(6,802
|
)
|
(10,259
|
)
|
||||||||||||
Gain (loss) on foreign exchange
|
4,133
|
(161,586
|
)
|
(290,073
|
)
|
(143,619
|
)
|
|||||||||||||
Accretion expense
|
9
|
(32,547
|
)
|
(18,659
|
)
|
(65,093
|
)
|
(37,318
|
)
|
|||||||||||
Total other income (expense):
|
$
|
(635,923
|
)
|
$
|
(182,713
|
)
|
$
|
(842,473
|
)
|
$
|
18,956
|
|||||||||
NET LOSS FOR THE PERIOD
|
$
|
(1,622,705
|
)
|
$
|
(1,224,347
|
)
|
$
|
(2,540,644
|
)
|
$
|
(2,068,711
|
)
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
|
||||||||||||||||||||
Change in value of performance bond
|
11
|
14,600
|
(56,378
|
)
|
27,205
|
(91,425
|
)
|
|||||||||||||
Foreign currency translation adjustment
|
(166,931
|
)
|
93,356
|
(235,718
|
)
|
193,182
|
||||||||||||||
TOTAL NET LOSS AND COMPREHENSIVE
|
||||||||||||||||||||
LOSS FOR THE PERIOD:
|
$
|
(1,775,036
|
)
|
$
|
(1,187,369
|
)
|
$
|
(2,749,157
|
)
|
$
|
(1,966,954
|
)
|
||||||||
Weighted average shares outstanding - basic and diluted
|
63,588,798
|
63,588,798
|
63,588,798
|
63,588,798
|
||||||||||||||||
NET LOSS PER SHARE - BASIC AND DILUTED:
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(0.03
|
)
|
||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
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
|
-
|
(2,068,711
|
)
|
-
|
-
|
(2,068,711
|
)
|
|||||||||||||
Other comprehensive income
|
-
|
-
|
101,757
|
-
|
101,757
|
|||||||||||||||
Balance - June 30, 2018
|
$
|
24,695,186
|
$
|
(38,062,367
|
)
|
$
|
159,046
|
$
|
9,696,520
|
$
|
(3,511,615
|
)
|
||||||||
Balance - July 1, 2018
|
$
|
24,695,186
|
$
|
(38,062,367
|
)
|
$
|
159,046
|
$
|
9,696,520
|
$
|
(3,511,615
|
)
|
||||||||
Net Income (loss)
|
-
|
(1,495,469
|
)
|
-
|
-
|
(1,495,469
|
)
|
|||||||||||||
Other comprehensive income
|
-
|
-
|
167,662
|
-
|
167,662
|
|||||||||||||||
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)
|
-
|
(2,540,644
|
)
|
-
|
-
|
(2,540,644
|
)
|
|||||||||||||
Other comprehensive income
|
-
|
-
|
(208,513
|
)
|
-
|
(208,513
|
)
|
|||||||||||||
Balance - June 30, 2019 (Note 22)
|
$
|
24,695,186
|
$
|
(42,098,480
|
)
|
$
|
118,195
|
$
|
9,696,520
|
$
|
(7,588,579
|
)
|
||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
|
Hunt Mining Corp.
|
||||||||||||
Expressed in U.S. Dollars
|
||||||||||||
Interim Consolidated Statements of Cash Flows
|
||||||||||||
6 month period ended June 30,
|
||||||||||||
NOTE
|
2019
|
2018
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net Loss
|
$
|
(2,540,644
|
)
|
$
|
(2,068,711
|
)
|
||||||
Items not affecting cash
|
||||||||||||
Depreciation
|
10
|
507,995
|
805,666
|
|||||||||
Loss on foreign exchange
|
(12,200
|
)
|
(4,200
|
)
|
||||||||
Accretion
|
9
|
65,093
|
37,318
|
|||||||||
Net change in non-cash working capital items
|
||||||||||||
Decrease in accounts receivable
|
52,445
|
1,065,334
|
||||||||||
Decrease in prepaid expenses
|
49,495
|
9,717
|
||||||||||
Decrease (increase) in inventory
|
271,526
|
(1,181,658
|
)
|
|||||||||
Increase in accounts payable and accrued liabilities
|
2,289,119
|
189,408
|
||||||||||
Increase in interest payable
|
205,786
|
49,570
|
||||||||||
Decrease in transaction taxes payable
|
(129
|
)
|
(31,781
|
)
|
||||||||
888,486
|
(1,129,337
|
)
|
||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchases of property and equipment
|
10
|
-
|
(161,609
|
)
|
||||||||
-
|
(161,609
|
)
|
||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Change in bank line of credit (net)
|
21
|
70,000
|
49,999
|
|||||||||
Proceeds from loans
|
14,16
|
600,000
|
2,345,000
|
|||||||||
Repayment of loans
|
14,16
|
(1,085,560
|
)
|
(1,060,096
|
)
|
|||||||
(415,560
|
)
|
1,334,903
|
||||||||||
NET INCREASE IN CASH:
|
472,926
|
43,957
|
||||||||||
EFFECT OF FOREIGN EXCHANGE ON CASH
|
(547,162
|
)
|
25,484
|
|||||||||
CASH, BEGINNING OF PERIOD:
|
115,372
|
78,145
|
||||||||||
CASH, END OF PERIOD:
|
$
|
41,136
|
$
|
147,586
|
||||||||
Taxes paid
|
$
|
111,638
|
$
|
16,546
|
||||||||
Interest paid
|
$
|
21,301
|
$
|
-
|
||||||||
SUPPLEMENTAL NON-CASH INFORMATION
|
||||||||||||
Change in value of performance bond
|
$
|
27,205
|
$
|
(91,425
|
)
|
|||||||
PP&E included in AP
|
$
|
-
|
$
|
16,450
|
||||||||
Reclassification of loan payable to long-term debt
|
16,17
|
$
|
2,244,861
|
$
|
-
|
|||||||
Reclassification of current interest payable to long-term
|
16,17
|
$
|
526,455
|
$
|
-
|
|||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
|
1.
|
Nature of Business
|
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
|
2.
|
Basis of presentation
|
3.
|
Going Concern
|
4.
|
Significant Accounting Policies
|
5.
|
Recently Adopted Accounting Pronouncements
|
6.
|
Critical accounting judgments and estimates
|
7.
|
Inventory
|
June 30, 2019
|
December 31, 2018
|
|||||||
Silver and gold concentrate
|
$
|
-
|
$
|
794,086
|
||||
Material stockpiles
|
445,820
|
-
|
||||||
Materials and supplies
|
196,569
|
119,829
|
||||||
$
|
642,389
|
$
|
913,915
|
8.
|
Mineral properties
|
9.
|
Asset retirement obligations
|
June 30,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Asset retirement obligation at beginning of year
|
$
|
1,308,399
|
$
|
773,436
|
||||
Additions
|
-
|
486,589
|
||||||
Foreign exchange
|
(12,200
|
)
|
(25,996
|
)
|
||||
Accretion expense
|
65,093
|
74,370
|
||||||
Asset retirement obligation at end of period
|
$
|
1,361,292
|
$
|
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 June 30, 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
|
-
|
217,717
|
6,078
|
284,200
|
507,995
|
|||||||||||||||
Balance at June 30, 2019
|
$
|
-
|
$
|
1,339,427
|
$
|
47,608
|
$
|
2,436,652
|
$
|
3,823,687
|
||||||||||
Net book value
|
||||||||||||||||||||
At December 31, 2018
|
$
|
1,035,397
|
$
|
2,788,580
|
$
|
75,970
|
$
|
685,573
|
$
|
4,585,520
|
||||||||||
At June 30, 2019
|
$
|
1,035,397
|
$
|
2,570,863
|
$
|
69,892
|
$
|
401,373
|
$
|
4,077,525
|
|
11.
|
Perfprmance bond
|
12.
|
Accounts Receivable
|
June 30,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Receivable from sale of concentrate
|
$
|
234,924
|
$
|
438,042
|
||||
Value added tax ("VAT") recoverable (Note 22)
|
1,126,033
|
986,014
|
||||||
Other receivables
|
60,901
|
50,247
|
||||||
Total accounts receivable
|
$
|
1,421,858
|
$
|
1,474,303
|
13.
|
Accounts payable
|
Note
|
June 30,
|
December 31,
|
||||||||||
2019
|
2018
|
|||||||||||
Accounts payables due to related parties
|
16
|
$
|
6,658,073
|
$
|
4,416,555
|
|||||||
Trade accounts payable and accrued liabilities
|
1,753,930
|
1,912,306
|
||||||||||
Total accounts payable and accrued liabilities
|
$
|
8,412,003
|
$
|
6,328,861
|
14.
|
Loan Payable and long-term debt
|
June 30,
|
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 20211 (Note 16)
|
994,861
|
994,861
|
||||||
Unsecured loan payable to related party at 7% interest per annum, due 20212 (Note 16)
|
1,250,000
|
1,250,000
|
||||||
Loan payable
|
-
|
591,280
|
||||||
$
|
3,860,306
|
$
|
4,451,586
|
|||||
Less current portion
|
(550,183
|
)
|
(3,198,569
|
)
|
||||
Long-term debt
|
$
|
3,310,123
|
$
|
1,253,017
|
Principal payments on long-term debt are due as follows.
|
||||
Year ending December 31,
|
||||
2019
|
$
|
362,428
|
||
2020
|
$
|
375,510
|
||
2021
|
$
|
2,639,451
|
||
2022
|
$
|
414,910
|
||
2023
|
$
|
68,007
|
1)
|
During the six months ended June 30, 2019 the maturity of loan payable date was extended to January 1, 2021. The modification of the loan payable did
not result in an extinguishment in accordance with ASC 470-50. During the six months ended June 30, 2019 the loan payable was re-classified as long-term debt. (Note 16)
|
2)
|
During the six months ended June 30, 2019 the maturity of loan payable date was extended to January 1, 2021. The modification of the loan payable did
not result in an extinguishment in accordance with ASC 470-50. During the six months ended June 30, 2019 the loan payable was re-classified as long-term debt. (Note 16)
|
15.
|
Capital Stock
|
Common Shares
|
Six months ended
|
Year ended
|
||||||||||||||
June 30, 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
|
Range of Exercise prices (CAD)
|
Number outstanding
|
Weighted average life (years)
|
Weighted average exercise price (CAD)
|
Number exercisable on June 30, 2019
|
||||||||||||||||
Stock options
|
$
|
0.00
|
-
|
0.00
|
$
|
0.00
|
-
|
June 30, 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
|
(4,160,000
|
)
|
$
|
0.21
|
(220,000
|
)
|
$
|
0.23
|
||||||||
Balance, end of period
|
-
|
$
|
0.00
|
4,160,000
|
$
|
0.21
|
Range of Exercise prices (CAD)
|
Number outstanding
|
Weighted average life (years)
|
Weighted average exercise price (CAD)
|
|
Warrants
|
$0.00
|
-
|
0.00
|
$0.00
|
June 30, 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
|
(47,500,000
|
)
|
$
|
0.00
|
(1,362,500
|
)
|
$
|
0.40
|
||||||||
Balance, end of period
|
-
|
$
|
0.00
|
47,500,000
|
$
|
0.06
|
16.
|
Related Party Transactions
|
|
|
||||||||||||||||||||||||
Name and Principal Position
|
|
Remunera- tion, 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 June 30,
|
As at June 30, 2019 and December 31, 2018
|
||||||||||||||||||||||
A company controlled by a director
|
2019
|
377,636
|
1,697,288
|
-
|
-
|
6,047,617
|
-
|
||||||||||||||||||
- admin, office, and interest expenses
|
2018
|
217,185
|
-
|
-
|
-
|
3,972,693
|
-
|
||||||||||||||||||
Key executive person
|
2019
|
67,500
|
-
|
67,500
|
-
|
-
|
-
|
||||||||||||||||||
- salaries and wages
|
2018
|
62,500
|
-
|
31,250
|
-
|
-
|
-
|
||||||||||||||||||
Key executive person
|
2019
|
67,500
|
-
|
67,500
|
-
|
-
|
-
|
||||||||||||||||||
- salaries and wages
|
2018
|
62,500
|
-
|
31,250
|
-
|
-
|
-
|
||||||||||||||||||
Director
|
2019
|
189,669
|
-
|
-
|
-
|
610,456
|
3,860,306
|
1
|
|||||||||||||||||
-loans
|
2018
|
104,678
|
300,000
|
56,745
|
120,716
|
443,862
|
3,860,306
|
1)
|
The Company has two unsecured loans to related party at 8% interest per annum, with one loan of $994,861 due 2021 and the other loan of $1,615,445 due 2022. The Company has another unsecured loan of $1,250,000 to a related party at 7%
interest per annum due 2021 (Note 14).
|
17.
|
Financial Instruments
|
·
|
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 marketplace.
|
·
|
Level 3: inputs are less observable, unavoidable or where the observable data does not support the majority of the instruments' fair value.
|
June 30, 2019
|
June 30, 2018
|
|||||||||||||||
Carrying amount
|
Fair value
|
Carrying amount
|
Fair value
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Financial Assets
|
||||||||||||||||
FVTPL
|
||||||||||||||||
Cash (Level 1)
|
41,136
|
41,136
|
147,586
|
147,586
|
||||||||||||
Available for sale
|
||||||||||||||||
Performance bond (Level 1)
|
342,583
|
342,583
|
343,214
|
343,214
|
||||||||||||
Loans and receivables
|
||||||||||||||||
Accounts receivable
|
1,421,858
|
1,421,858
|
1,079,496
|
1,079,496
|
||||||||||||
Financial Liabilities
|
||||||||||||||||
Other financial liabilities
|
||||||||||||||||
Bank indebtedness
|
400,000
|
400,000
|
49,999
|
49,999
|
||||||||||||
Accounts payable and accrued liabilities
|
8,412,003
|
8,412,003
|
6,492,406
|
6,492,406
|
||||||||||||
Transaction taxes payable
|
-
|
-
|
15,407
|
15,407
|
||||||||||||
Interest on debt
|
526,455
|
526,455
|
200,594
|
200,594
|
||||||||||||
Loan payable
|
550,183
|
550,183
|
2,650,664
|
2,650,664
|
||||||||||||
Long-term debt
|
3,310,123
|
3,310,123
|
1,615,445
|
1,615,445
|
18.
|
Segmented Information
|
19.
|
Commitments and Provision
|
20.
|
Silver and Gold Recovery (loss)
|
21.
|
Bank Indebtedness
|
22.
|
Subsequent Events
|
a)
|
On May 31, 2019, the boards of directors of Hunt Mining Corp. ("Hunt") and Patagonia Gold, PLC ("Patagonia") announced that they had
reached agreement on the terms of a recommended share for share exchange offer to be made by Hunt for all the issued shares of common stock of Patagonia in exchange for the common shares of Hunt on the basis of 10.76 Hunt Shares for each
Patagonia Share. Hunt would issue 254,355,192 Common Shares to the shareholders of Patagonia representing an ownership interest of approximately 80% in Hunt in exchange for all of the issued and outstanding shares of Patagonia.
|
b)
|
Subsequent to June 30, 2019, the company received payment of approximately $270,000 for the recovery value added tax.
|
ITEM 2. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
·
|
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.
|
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.
|
Hunt Mining - Financial Performance
|
2018
|
2017
|
||||||
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
|
Net Income (Loss)
|
(917,939)
|
(361,590)
|
(1,133,879)
|
(1,224,347)
|
(844,364)
|
1,213,124
|
(168,266)
|
|
Basic Net Income (Loss) per share
|
(0.02)
|
(0.06)
|
(0.05)
|
(0.03)
|
(0.02)
|
0.03
|
(0.01)
|
June 30,
|
December 31,
|
Change
|
|
2019
|
2018
|
Favorable (Unfavorable)
|
|
Net loss for the year
|
(2,540,644)
|
(3,564,180)
|
1,023,536
|
Net income (loss) per share – basic and diluted:
|
(0.03)
|
(0.06)
|
0.03
|
Working capital
|
(7,248,879)
|
(7,616,966)
|
368,087
|
Total assets
|
6,971,477
|
7,900,222
|
(928,745)
|
Total non-current liabilities
|
5,197,870
|
2,561,416
|
(2,636,454)
|
Total shareholders' equity
|
(7,588,579)
|
(4,839,422)
|
(2,749,157)
|
|
|
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
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
10.13 |
Court Order issued on July 22, 2019 by the UK Court under Part 26 of the Companies Act of 2006.
|
10-QA | 08/22/2019 | 10.13 | |
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
|
Patagonia Gold Corp.
|
||
(the "Registrant")
|
||
BY:
|
TIMOTHY HUNT
|
|
Timothy Hunt
|
||
Former Principal Executive Officer and President
|
||
BY:
|
KEN ATWOOD
|
|
Ken Atwood
|
||
Former Principal Financial Officer and Principal Accounting Officer
|
||
BY: | CHRISTOPHER VAN TIENHOVEN | |
Christopher van Tienhoven | ||
Principal Executive Officer | ||
BY: | CRISTIAN LOPEZ SAUBIDET | |
Cristian Lopez Saubidet | ||
Principal Financial Officer and Principal Accounting Officer |
1.
|
I have reviewed this Form 10-Q for the period ending June 30, 2019 of Patagonia Gold 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:
|
August 22, 2019
|
CRISTIAN LOPEZ SAUVIDET |
|
|
Cristian Lopez Sauvidet
|
|
|
Principal Financial Officer
|
|
(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.
|
|
CHRISTOPHER VAN TIENHOVEN |
|
Christopher van Tienhoven
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Form 10-Q for the period ending June 30, 2019 of Patagonia Gold 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:
|
August 22, 2019
|
CHRISTOPHER VAN TIENHOVEN |
|
|
Christopher van Tienhoven
|
|
|
Principal Executive Officer
|
|
(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.
|
|
CRISTIAN LOPEZ SAUBIDET |
|
Cristian Lopez Saubidet
|
|
Chief Financial Officer
|
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