CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED
MARCH 31, 2024
(EXPRESSED IN CANADIAN DOLLARS)
(UNAUDITED)
NOTICE TO READER
The accompanying unaudited condensed interim consolidated financial statements of Mega Uranium Ltd. (the "Company") have been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed by the Company's auditors.
MEGA URANIUM LTD.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
As at | As at | |||
March 31, | September 30, | |||
2024 | 2023 | |||
ASSETS | ||||
Current assets | $ | 616 | ||
Cash and cash equivalents (note 3) | $ | 347 | ||
Receivables and prepaid expenses (note 4) | 280 | 310 | ||
Marketable securities (note 5) | 32,349 | 25,281 | ||
Total current assets | 33,245 | 25,938 | ||
Non-current assets | - | |||
Restricted cash (note 6) | 305 | |||
Long-term investment (note 8) | 204,696 | 158,147 | ||
Property, plant and equipment | 58 | 64 | ||
Right-of-use asset (note 9) | 361 | 408 | ||
Total non-current assets | 205,115 | 158,924 | ||
Total assets | $ | 238,360 | $ | 184,862 |
EQUITY AND LIABILITIES | ||||
Current liabilities | $ | 1,987 | ||
Amounts payable and other liabilities (notes 10 and 13) | $ | 1,381 | ||
Due to broker (note 11) | 17,213 | 8,624 | ||
Lease liabilities (note 12) | 86 | 82 | ||
Total current liabilities | 19,286 | 10,087 | ||
Non-current liabilities | 295 | |||
Lease liabilities (note 12) | 339 | |||
Deferred tax liability | 6,021 | 259 | ||
Total non-current liabilities | 6,316 | 598 | ||
Total liabilities | 25,602 | 10,685 | ||
Equity | 284,320 | |||
Share capital (note 14) | 283,623 | |||
Share option reserve (note 15) | 68,002 | 67,795 | ||
Accumulated other comprehensive income | 169,313 | 128,938 | ||
Deficit | (308,877) | (306,179) | ||
Total equity | 212,758 | 174,177 | ||
Total equity and liabilities | $ | 238,360 | $ | 184,862 |
Commitments and obligations (note 18)
The notes to the interim consolidated financial statements are an integral part of these statements.
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MEGA URANIUM LTD.
Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
Three Months Ended | Six Months Ended | |||||||
March 31, | March 31, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Operating expenses | $ | 836 | $ | 1,861 | ||||
General and administrative expenses (note 17) | $ | 852 | $ | 1,943 | ||||
Exploration and evaluation expenditures (note 16) | 187 | 53 | 347 | 97 | ||||
Operating loss | (1,023) | (905) | (2,208) | (2,040) | ||||
Gain (loss) from equity investment (note 7) | - | 25 | - | (445) | ||||
Loss on deemed disposition of equity investment (note 7) | - | - | - | (52) | ||||
Unrealized gain (loss) on marketable securities | 584 | (1,578) | (2,044) | (3,467) | ||||
Realized gain on marketable securities | 403 | 84 | 442 | 95 | ||||
Finance expenses | (342) | (9) | (598) | (10) | ||||
Other income (expense) (note 16) | 420 | (46) | 1,287 | - | ||||
Foreign exchange gain (loss) | 10 | (5) | 17 | 6 | ||||
Net income (loss) before taxes | 52 | (2,434) | (3,104) | (5,913) | ||||
Deferred tax recovery (expense) | 254 | (2,039) | 406 | 387 | ||||
Net income (loss) for the period | 306 | (4,473) | (2,698) | (5,526) | ||||
Other comprehensive income (loss) | ||||||||
Item that will be reclassified subsequently to the | ||||||||
profit and loss: | 14 | (7) | ||||||
Exchange differences on translation of foreign operations | 3 | (6) | ||||||
Item that will not be reclassified subsequently to | ||||||||
the profit and loss: | ||||||||
Change in fair value of long-term investment, net of | ||||||||
tax expense of $3,303 and $6,167 (2023 - tax recovery | 21,627 | 40,382 | ||||||
$(2,039) and $387) (note 8) | (13,348) | 2,534 | ||||||
Other comprehensive income (loss) | 21,641 | (13,345) | 40,375 | 2,528 | ||||
Total comprehensive income (loss) for the period | $ | 21,947 | $ | (17,818) | $ | 37,677 | $ | (2,998) |
Income (loss) per common share - basic | $ | 0.00 | $ | (0.01) | $ | (0.01) | $ | (0.02) |
Income (loss) per common share - diluted | $ | 0.00 | $ | (0.01) | $ | (0.01) | $ | (0.02) |
Weighted average number of common shares | ||||||||
outstanding - basic | 366,315,581 | 359,685,636 | 365,041,920 | 359,323,823 | ||||
Weighted average number of common shares | ||||||||
outstanding - diluted | 382,493,561 | 367,732,115 | 380,195,209 | 367,548,196 |
The notes to the interim consolidated financial statements are an integral part of these statements.
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MEGA URANIUM LTD.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
Six Months Ended | ||||
March 31, | ||||
2024 | 2023 | |||
Operating activities | $ | (2,698) | ||
Net loss for the period | $ | (5,526) | ||
Adjustment for: | - | |||
Loss on equity investment (note 7) | 445 | |||
Loss on deemed disposition of equity investment (note 7) | - | 52 | ||
Unrealized loss on marketable securities | 2,044 | 3,467 | ||
Realized gain on marketable securities | (442) | (95) | ||
Proceeds from sale of marketable securities | 683 | 186 | ||
Purchase of marketable securities | (8,550) | (1,009) | ||
Amortization | 53 | 40 | ||
Lease modification | - | (6) | ||
Stock-based compensation | 487 | 630 | ||
Finance expenses | 21 | 10 | ||
Deferred tax recovery | (406) | (387) | ||
Other income | (800) | - | ||
Non-cash working capital items: | 30 | |||
Receivables and prepaid expenses | 357 | |||
Amounts payable and other liabilities | 606 | 10 | ||
Due to broker | 8,589 | 1,790 | ||
Net cash used in operating activities | (383) | (36) | ||
Financing activities | 416 | |||
Proceeds from exercise of options and warrants | 157 | |||
Lease payments (note 12) | (60) | (43) | ||
Net cash provided by financing activities | 356 | 114 | ||
Investing activities | - | |||
Additional investment in equity investment (note 7) | (17) | |||
Purchase of property, plant and equipment | - | (8) | ||
Proceeds from restricted cash | 305 | - | ||
Net cash provided (used in) investing activities | 305 | (25) | ||
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies | (9) | (19) | ||
Net change in cash and cash equivalents | 269 | 34 | ||
Cash and cash equivalents, beginning of period | 347 | 510 | ||
Cash and cash equivalents, end of period | $ | 616 | $ | 544 |
The notes to the interim consolidated financial statements are an integral part of these statements.
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MEGA URANIUM LTD.
Condensed Interim Consolidated Statements of Equity
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
Accumulated | |||||||||||
Number of | Share | other | Total | ||||||||
common | Share | option | comprehensive | Shareholders' | |||||||
shares | capital | reserve | income | Deficit | equity | ||||||
Balance, September 30, 2022 | 358,935,636 | $ | 282,620 | $ | 67,204 | $ | 76,214 | $ | (310,600) | $ | 115,438 |
Exercise of stock options | 750,000 | 264 | (107) | - | - | 157 | |||||
Stock-based compensation | - | - | 630 | - | - | 630 | |||||
Net loss for the period | - | - | - | - | (5,526) | (5,526) | |||||
Other comprehensive income | - | - | - | 2,528 | - | 2,528 | |||||
Balance, March 31, 2023 | 359,685,636 | $ | 282,884 | $ | 67,727 | $ | 78,742 | $ | (316,126) | $ | 113,227 |
Balance, September 30, 2023 | 362,985,636 | $ | 283,623 | $ | 67,795 | $ | 128,938 | $ | (306,179) | $ | 174,177 |
Exercise of stock options | 3,750,000 | 697 | (280) | - | - | 417 | |||||
Stock-based compensation | - | - | 487 | - | - | 487 | |||||
Net loss for the period | - | - | - | - | (2,698) | (2,698) | |||||
Other comprehensive income | - | - | - | 40,375 | - | 40,375 | |||||
Balance, March 31, 2024 | 366,735,636 | $ | 284,320 | $ | 68,002 | $ | 169,313 | $ | (308,877) | $ | 212,758 |
The notes to the interim consolidated financial statements are an integral part of these statements. - 4 -
MEGA URANIUM LTD.
Notes to Condensed Interim Consolidated Financial Statements Three and Six Months Ended March 31, 2024
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
1. Nature of business
Mega Uranium Ltd. ("Mega" or the "Company") was incorporated in 1990 under the laws of the Province of Ontario and its shares are publicly traded on the Toronto Stock Exchange (the "TSX") under the symbol "MGA". The Company is domiciled in the Province of Ontario, Canada and its registered office is located at 217 Queen Street West, Suite 401, Toronto, Ontario, Canada, M5V 0R2.
Mega has a uranium resource project and interests in exploration properties in Australia and equity investments in uranium-focused companies.
Mega has not yet determined whether its resource property contains reserves that are economically recoverable. The recoverability of the amounts shown for mineral properties and related expenditures is dependent upon various factors, including the future selling price of uranium, the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete exploration and development, government permitting policies and regulations, and future profitable production or proceeds from property disposition.
In addition to the Company's own exploration and development activities, Mega participates indirectly in the uranium sector through its securities holdings in other companies, including its significant long-term investment in NexGen Energy Ltd. ("NexGen") (NXE:TSX), its equity accounted investment in Toro Energy Limited ("Toro") (TOE:ASX), and marketable securities of other uranium-focused issuers. NexGen is an exploration and development stage entity engaged in the acquisition, exploration and evaluation of uranium properties in Canada. Toro's principal activities include the development of the Wiluna Uranium Project and exploration and evaluation of its tenement holdings.
These interim consolidated financial statements ("interim consolidated statements") were approved by the Company's board of directors on May 13, 2024.
2. Basis of preparation
- Statement of compliance:
These interim consolidated statements have been prepared on a condensed basis in accordance with International Accounting Standard ("IAS") 34 - Interim Financial Reporting issued by IAS Board ("IASB") and interpretation of the International Financial Reporting Interpretations Committee using accounting policies consistent with International Financial Reporting Standards ("IFRS") and includes the accounts of Mega and its subsidiary entities.
The same significant accounting policies and methods of computation were followed in the preparation of these interim consolidated statements as were followed in the preparation and described in note 3 of the annual consolidated financial statements as at and for the year ended September 30, 2023. Accordingly, these interim consolidated statements for the three and six months ended March 31, 2024 should be read together with the annual consolidated financial statements as at and for the year ended September 30, 2023. Significant accounting estimates, judgments and assumptions used or exercised by management in the preparation of these interim consolidated statements are presented below.
- Basis of presentation:
These interim consolidated statements have been prepared using the historical cost convention, except for some financial instruments, which have been measured at fair value. All monetary references expressed in these notes are references to Canadian dollar amounts ("$") except as otherwise noted.
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MEGA URANIUM LTD.
Notes to Condensed Interim Consolidated Financial Statements Three and Six Months Ended March 31, 2024
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
2. Basis of preparation (continued)
- Basis of consolidation:
These interim consolidated statements include the accounts of Mega and its wholly owned subsidiaries: Maple Resources Inc., Uranium Mineral Ventures Inc. ("UMVI"), Mega Georgetown Pty Ltd., Mega Hindmarsh Holdings Pty Ltd. ("Hindmarsh")., Mega Redport Holdings Pty Ltd., Monster Copper Corporation ("Monster"), Nu Energy Uranium Corporation ("Nu Energy"), and Northern Lorena Resources Ltd. ("Lorena"). The Company has additional indirect subsidiaries that are wholly owned by its subsidiaries.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee, and the ability to use the power to affect the investor's returns.
All inter-company transactions and balances have been eliminated upon consolidation.
- Critical accounting judgments, estimates and assumptions:
The preparation of the interim consolidated statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of income, expenses, assets, liabilities, and contingent liabilities and the accompanying note disclosures at the date of the interim consolidated statements. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
However, actual outcomes may differ from these estimates. The information about significant judgments, estimates and assumptions that have the most significant effect on the recognition and measurement of assets, liabilities, income and expenses are discussed below:
Judgments
- Determination of functional currency:
IAS 21, "The Effects of Changes in Foreign Exchange Rates" ("IAS 21"), defines the functional currency as the currency of the primary economic environment in which an entity operates. The determination of functional currency, which is performed on an entity by entity basis, is based on various judgmental factors outlined in IAS 21. Based on an assessment of the factors in IAS 21, primarily those that influence labour, material and other costs of goods or services received by the Company's subsidiaries, management determined that the functional currency for the parent is the Canadian dollar and the functional currency for the Company's subsidiaries in Australia is the Australian dollar.
- Significant influence:
Management determines its ability to exercise significant influence over an investment in shares of other companies by looking at its percentage interest and other qualitative factors including but not limited to its voting rights, representation on the board of directors, participation in policy-making processes, material transactions between the Company and the associate, managerial personnel in common, provision of essential technical information and operating involvement.
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MEGA URANIUM LTD.
Notes to Condensed Interim Consolidated Financial Statements Three and Six Months Ended March 31, 2024
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
2. Basis of preparation (continued)
- Critical accounting judgments, estimates and assumptions: (continued)
- Impairment of equity investment:
At the end of each financial reporting period, the Company's management assesses whether there are indications of impairment or impairment reversal of the Company's equity investment in Toro. The evaluation of external and internal sources of information to determine whether there is an indicator of impairment or, in particular, an impairment reversal involves significant management judgment, including in the case of a potential impairment reversal an assessment of whether there has been a sustained improvement in the service potential of the investment. To the extent that there is such an indicator, the recoverable amount of the Company's equity investment in Toro is estimated based on the applicable publicly available closing share price. The amount of any impairment reversal is limited to the difference between the current carrying amount and the amount that would have been the carrying amount had the earlier impairment not been recognized.
Estimates
- Share-basedpayments:
The Company uses the Black-Scholes option pricing model to calculate stock-based compensation expense. The Black-Scholes model requires six key inputs to determine a value for an option: risk-free interest rate, exercise price, market price at date of issue, expected dividend yield, expected life and expected volatility. Certain inputs are estimates, which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company's control.
- Deferred tax assets and liabilities:
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. The Company computes deferred tax assets and liabilities in respect of taxes that are based on taxable profit. Taxable profit is understood to be a net, rather than gross, taxable amount that gives effect to both revenues and expenses. Taxable profit will often differ from accounting profit and management may need to exercise judgment to determine whether some taxes are income taxes (subject to deferred tax accounting) or operating expenses.
Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the differences are expected to be recovered or settled. The determination of the ability of the Company to utilize tax loss carryforwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess whether it is "probable" that the Company will benefit from these prior losses and other deferred tax assets. Changes in economic conditions, commodity prices and other factors could result in revisions to the estimates of the benefits to be realized or the timing of utilizing the losses.
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MEGA URANIUM LTD.
Notes to Condensed Interim Consolidated Financial Statements Three and Six Months Ended March 31, 2024
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
3. Cash and cash equivalents
As at | As at | |||
March 31, | September 30, | |||
2024 | 2023 | |||
Cash | $ | 606 | $ | 337 |
Short-term deposits in bank | 10 | 10 | ||
Cash and cash equivalents | $ | 616 | $ | 347 |
4. Receivables and prepaid expenses
As at | As at | ||||
March 31, | September 30, | ||||
2024 | 2023 | ||||
Sundry receivables | $ | 176 | $ | 256 | |
Sales tax receivables | 86 | 49 | |||
Prepaid expenses | 18 | 5 | |||
$ | 280 | $ | 310 | ||
As at March 31, 2024, no receivables are past due. | |||||
5. | Marketable securities |
Marketable securities consist of equity investments in junior or small cap mining companies for the following periods indicated:
As at | As at | |||
March 31, | September 30, | |||
2024 | 2023 | |||
Investments at fair value | $ | 32,349 | $ | 25,281 |
Cost | $ | 32,524 | $ | 23,378 |
The Company has classified its investments in marketable securities as financial assets at FVTPL and unrealized gains and losses or changes in fair value are recorded at FVTPL.
6. Restricted cash
As at March 31, 2024, AUD$nil (CAD$nil) (September 30, 2023 - AUD$350 (CAD$305)) of pledged cash remained held in a guaranteed investment certificate as collateral for a letter of guarantee issued to the State of Queensland, Australia, related to the mining leases for the Ben Lomond property, which the Company sold to Consolidated Uranium Inc. ("CUR") during 2022 fiscal year. Upon closing of the sale of the property, CUR became obligated to assume the guarantee obligation and reimburse Mega for the underlying amount. During the six months ended March 31, 2024, the AUD$350 was returned to the Company.
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MEGA URANIUM LTD.
Notes to Condensed Interim Consolidated Financial Statements Three and Six Months Ended March 31, 2024
(Unaudited - In thousands of Canadian dollars, except for securities and per share amounts)
7. Equity investment
An associate is an entity over which the Company has significant influence, and is not a subsidiary or joint venture. Significant influence is presumed to exist when the Company has the power to be actively involved and influential in financial and operating policy decisions of the associate.
The Company accounts for its investment in an associate using the equity method. Under the equity method, the Company's investment in an associate is initially recognized at cost and subsequently increased or decreased to recognize the Company's share of profit and loss of the associate and for impairment losses after the initial recognition date. The Company's share of comprehensive earnings or losses of associates is recognized in comprehensive income (loss) during the period. Distributions received from an associate are accounted for as a reduction in the carrying amount of the Company's investment.
During the six months ended March 31, 2024, Toro shares were consolidated on the basis of 50 pre-consolidation shares for one post-consolidation share. As at March 31, 2024, Mega held 9,226,256 shares of Toro, representing an equity interest of 7.67% in the company (September 30, 2023 - 9.65%).
The following is a summary of the Company's investment in Toro:
Toro | ||
Investment as at September 30, 2022 | $ | 760 |
Additional investment | 17 | |
Mega's share of the loss | (727) | |
Loss on deemed disposition of equity investment in Toro | (50) | |
Investment as at September 30, 2023 and March 31, 2024 | $ | - |
The fair value of the equity investment in Toro is $4,072 as at March 31, 2024 (September 30, 2023 - $5,231) based on the applicable closing share price. Such fair value is categorized as level 1 within the fair value hierarchy.
As at March 31, 2024 and September 30, 2023, the Company determined that there were no indicators of impairment or impairment reversal on the equity investment in Toro.
8. Long-term investment
Mega holds 19,476,265 shares of NexGen as at March 31, 2024 (September 30, 2023 - 19,476,265). The change in the investment in NexGen is detailed as follows:
Six Months Ended | Year Ended | |||
March 31, | September 30, | |||
2024 | 2023 | |||
Opening balance | $ | 158,147 | $ | 97,381 |
Unrealized gain for the period recorded in other comprehensive income | 46,549 | 60,766 | ||
Closing balance | $ | 204,696 | $ | 158,147 |
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Mega Uranium Ltd. published this content on 12 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 May 2024 09:12:07 UTC.