UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
OR
[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission File Number: 001-35404
EURASIAN MINERALS INC.
(Exact name of Registrant as specified in its charter)
British Columbia, Canada
(Jurisdiction of
incorporation or organization)
Suite 501, 543 Granville Street, Vancouver, British
Columbia, Canada V6C 1X8
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the
Act:
Title of each class |
Name on each exchange on which registered |
Common Shares, without par value |
NYSE MKT LLC |
Securities to be registered pursuant to Section 12(g) of the
Act:
None
Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the
Companys classes of capital or common stock as of the close of the period
covered by the annual report. 73,371,710
Indicate by check mark if the registrant is a well-known
seasoned Company, as defined in Rule 405 of the Securities Act.
Yes
[ ] No [X]
If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.
Yes [
] No [X]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 12 or 15(d) of the Securities Exchange
Act of 1934 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 ninety days.
Yes
[X] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, 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 [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act.
Large accelerated filer [
]
Accelerated filer [
]
Non-accelerated filer [X]
Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:
U.S. GAAP [ ] |
International Financial Reporting
Standards as issued |
Other [ ] |
|
by the
International Accounting Standards Board [X] |
|
Indicate by check mark which financial statement item the
registrant has elected to follow:
Item 17
[X] Item 18
[ ]
If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
Yes [ ] No
[X] N/A
1
EURASIAN MINERALS INC.
FORM 20-F ANNUAL REPORT
TABLE OF CONTENTS
2
Glossary of Geological and Mining Terms
Certain terms used in this Form 20-F are defined as follows:
Aphanite: an igneous rock which is so fine-grained that
its component mineral crystals are not detectable by the unaided eye.
Alunite: a hydrated aluminium potassium, sulfate
mineral [(KAl3(SO4)2(OH)6].
Andesite: an extrusive igneous rock of intermediate
composition with aphanitic to porphyritic texture.
Argillic Alteration: hydrothermal alteration of wall
rock which introduces clay minerals including kaolinite, smectite and illite.
Assay: a quantitative chemical analysis of an ore,
mineral or concentrate to determine the amount of specific elements.
Breccia: a coarse-grained clastic rock, composed of
broken rock fragments held together by a mineral cement or in a fine-grained
matrix.
Dacite: an igneous extrusive rock with high iron
content.
Diorite: a grey to dark-grey intermediate intrusive
igneous rock composed principally of plagioclase feldspar, biotite, hornblende,
and/or pyroxene.
Dike: a tabular igneous intrusion that cuts across the
bedding or foliation of the country (host) rock, generally vertical in nature.
Doré: a mixture of predominantly gold and silver
produced by a mine, usually in a bar form, before separation and refining into
gold and silver by a refinery.
Epithermal: said of a hydrothermal mineral
deposit formed within about 1 kilometer of the Earths surface and in the
temperature range of 50oC to 200oC.
Foliation: repetitive layering in metamorphic rocks.
Footwall: the underlying side of a fault, ore body, or
mine working; particularly the wall rock beneath an inclined vein or fault.
Formation: a persistent body of igneous, sedimentary, or
metamorphic rock, having easily recognizable boundaries that can be traced in
the field without recourse to detailed paleontologic or petrologic analysis, and
large enough to be represented on a geologic map as a practical or convenient
unit for mapping and description.
Gneiss: a type of rock formed by high-grade regional
metamorphic processes from pre-existing formations of igneous or sedimentary
rocks.
Granitoid: pertaining to or composed of granite.
Granodiorite: a group of plutonic rocks intermediate in
composition between quartz diorite and quartz monzonite.
Greenfields: conceptual exploration; relying on the
predictive power of ore genesis models to search for mineralization in
unexplored virgin ground.
Hanging wall: the overlying side of an ore body, fault,
or mine working, especially the wall rock above an inclined vein or fault.
Hornfels: a fine-grained rock composed of a mosaic of
equidimensional grains without preferred orientation and typically formed by
contact metamorphism.
3
Hydrothermal: of or pertaining to hot water, to the
action of hot water, or to the products of this action, such as a mineral
deposit precipitated from a hot aqueous solution, with or without demonstrable
association with igneous processes.
Igneous rock: rock that is magmatic in origin.
Indicated mineral resource: is defined in NI 43-101 as
that part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration and test
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably assumed.
Inferred mineral resource: is defined in NI 43-101 as
that part of a mineral resource for which the quantity and grade or quality can
be estimated on the basis of geological evidence and limited sampling and
reasonably assumed, but not verified, geological and grade continuity. The
estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes.
Intercalated: said of layered material that exists or is
introduced between layers of a different character; especially said of
relatively thin strata of one kind of material that alternates with thicker
strata of some other kind, such as beds of shale intercalated in a body of
sandstone.
Kriging: a weighted, moving-average interpolation method
in which the set of weights assigned to samples minimizes the estimation
variance, which is computed as a function of the variogram model and locations
of the samples relative to each other, and to the point or block being
estimated.
Leach: to dissolve minerals or metals out of ore with
chemicals.
Lithocap: the shallow part of porphyry copper systems
typically above the main Cu-Au/-Mo zone; upper alteration zone.
Measured mineral resource: is defined in NI 43-101 as
that part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics are so well established that they can be
estimated with confidence sufficient to allow the appropriate application of
technical and economic parameters to support production planning and evaluation
of the economic viability of the deposit. The estimate is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and
grade continuity.
Meta: a prefix that, when used with the name of a
sedimentary or igneous rock, indicates that the rock has been metamorphosed.
Metamorphic rock: rock which has been changed from
igneous or sedimentary rock through heat and pressure into a new form of
rock.
Mineral reserve: is defined in NI 43-101 as the
economically mineable part of a measured or indicated mineral resource
demonstrated by at least a preliminary feasibility study. This study must
include adequate information on mining, processing, metallurgical, economic and
other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A mineral reserve includes diluting materials and
allowances for losses that may occur when the material is mined.
Mineral resource: is defined in NI 43-101 as a
concentration or occurrence (deposit) of natural, solid, inorganic or fossilized
organic material in or on the earths crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics and
continuity of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge.
Net smelter return royalty or NSR royalty: a type of
royalty based on a percentage of the proceeds, net of smelting, refining and
transportation costs and penalties, from the sale of metals extracted from
concentrate and doré by the smelter or refinery.
NI 43-101: National Instrument 43-101 Standards of
Disclosure for Mineral Projects of the Canadian Securities Administrators.
4
Oxide: a compound of ore that has been subjected to
weathering and alteration as a result of exposure to oxygen for a long period of
time.
Pegmatite: a very coarse-grained igneous rock that has a
grain size of 20 millimetres or more.
Phyllite: a regional metamorphic rock, intermediate in
grade between slate and schist. Minute crystals of sericite and chlorite impart
a silky sheen to the surfaces exposed by cleavage.
Plagioclase: a series of tectosilicate minerals within
the feldspar family.
Plutonic: intrusive igneous rock that is crystallized
from magma slowly cooling below the surface of the Earth.
Porphyry: igneous rock consisting of large-grained
crystals dispersed in a fine-grained matrix or groundmass.
Probable reserve: the economically mineable part of an
indicated and, in some circumstances, a measured mineral resource demonstrated
by at least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified.
Pyroclastic: pertaining to clastic rock material formed
by volcanic explosion or aerial expulsion from a volcanic vent; also, pertaining
to rock texture of explosive origin.
Run-of-mine: ore in its natural state as it is removed
from the mine that has not been subjected to additional size reduction.
Schist: a strongly foliated crystalline rock, which
readily splits into sheets or slabs as a result of the planar alignment of the
constituent crystals. The constituent minerals are commonly specified (e.g.
quartz-muscovite-chlorite schist).
Shear zone: a tabular zone of rock that has been crushed
and brecciated by parallel fractures due to shearing along a fault or zone of
weakness. These can be mineralized with ore-forming solutions.
Silicification: the introduction of, or replacement by,
silica, generally resulting in the formation of fine-grained quartz, chalcedony,
or opal, which may fill pores and replace existing minerals.
Spectrography: the process of using a spectrograph to
map or photograph a spectrum.
Stockwork: a complex system of structurally controlled
or randomly oriented veins.
Strata: layers of sedimentary rock with internally
consistent characteristics that distinguish them from other layers.
Strike: the direction, or course or bearing of a vein or
rock formation measured on a level surface.
Stratibound: confined to a particular stratigraphic
layer or unit.
Stratiform: occurring as or arranged in strata.
Strip (or stripping) ratio: the tonnage or volume of
waste material that must be removed to allow the mining of one tonne of ore in
an open pit.
Sulfides or sulphides: compounds of sulfur (or sulphur)
with other metallic elements.
Tailing: material rejected from a mill after the
recoverable valuable minerals have been extracted.
Tuff: a general term for consolidated pyroclastic rocks.
Vein: sheet-like body of minerals formed by fracture
filling or replacement of host rock.
Vuggy: containing small cavities in a rock or vein,
often with a mineral lining of different composition from that of the
surrounding rock.
5
Linear Measurements |
|
|
1 inch |
= |
2.54 centimeters |
1 foot |
= |
0.3048 meter |
1 yard |
= |
0.9144 meter |
1 mile |
= |
1.609 kilometers |
|
|
|
Area Measurements |
|
|
1 acre |
= |
0.4047 hectare |
1 hectare |
= |
2.471 acres |
1 square mile |
= |
640 acres or 259
hectares or 2.590 square kilometers |
|
|
|
Units of Weight |
|
|
1 short ton |
= |
2000 pounds or
0.893 long ton |
1 long ton |
= |
2240 pounds or
1.12 short tons |
1 metric tonne |
= |
2204.62 pounds or
1.1023 short tons |
1 pound (16 oz.) |
= |
0.454 kilograms
or 14.5833 troy ounces |
1 troy oz. |
= |
31.1035 grams |
1 troy oz. per short ton |
= |
34.2857 grams per
metric ton |
Analytical |
percent |
grams per metric tonne |
troy oz per short ton |
1% |
1% |
10,000 |
291.667 |
1 gram/tonne |
0.0001% |
1 |
0.029167 |
1 troy oz./short ton |
0.003429% |
34.2857 |
1 |
10 ppb |
nil |
0.01 |
0.00029 |
100 ppm |
0.01 |
100 |
2.917 |
Temperature Conversion Formulas |
|
Degrees Fahrenheit |
= |
(°C x 1.8) + 32 |
Degrees Celsius |
= |
(°F - 32) x 0.556
|
6
Frequently Used Abbreviations and Symbols
|
AA |
atomic absorption spectrometry |
Ag |
silver |
As |
arsenic |
Au |
gold |
°C |
degrees Celsius (centigrade) |
cm |
centimeter |
C.P.G. |
Certified Professional
Geologist |
CSAMT |
Controlled source audio-frequency
magnetotellurics |
Cu |
copper |
F |
fluorine |
°F |
degrees Fahrenheit |
g |
gram(s) |
g/t |
grams per tonne |
Hg |
mercury |
HSE |
high sulphidation epithermal |
ICP AES |
inductively coupled plasma atomic emission
spectroscopy |
ICP MS |
inductively coupled plasma mass
spectroscopy |
ICP MS/AAS |
inductively coupled plasma mass
spectroscopy/atomic absorption spectroscopy |
IOCG |
iron-oxide-copper-gold |
IP |
Induced polarization |
JORC |
Joint Ore Reserves Committee |
JV |
joint venture |
kg |
kilogram |
km |
kilometer |
m |
meter(s) |
Ma |
million years ago |
Mn |
manganese |
Mo |
molybdenum |
n |
number or count |
oz |
troy ounce |
opt |
ounce per short ton |
oz/ton |
ounce per short ton |
oz/tonne |
ounce per metric tonne |
Pb |
lead |
PGE |
platinum group element |
ppb |
parts per billion |
ppm |
parts per million |
QA |
quality assurance |
QC |
quality control |
sq |
square |
Sb |
antimony |
Tl |
thallium |
VMS |
volcanogenic massive sulfide |
7
Frequently Used Abbreviations and Symbols
|
Zn |
zinc |
8
INTRODUCTION
Eurasian Minerals Inc. (the Company or Eurasian or EMX)
was incorporated under the laws of the Yukon Territory of Canada on August 21,
2001 as 33544 Yukon Inc. and, on October 10, 2001, changed its name to Southern
European Exploration Ltd. On November 24, 2003, the Company completed the
reverse take-over of Marchwell Capital Corp., a TSX Venture Exchange (TSX-V)
listed company incorporated in Alberta on May 13, 1996 and which subsequently
changed its name to Eurasian Minerals Inc. On September 21, 2004, EMX continued
into British Columbia from Alberta under the
Business Corporations Act.
EMXs head office is located at Suite 501 543 Granville
Street, Vancouver, British Columbia V6C 1X8, Canada, and its registered and
records office is located at Northwest Law Group, Suite 704 595 Howe Street,
Vancouver, British Columbia V6C 2T5, Canada.
Eurasian is a reporting Company under the securities
legislation of British Columbia and Alberta and is listed on the TSX-V, as a
Tier 1 Company, and the NYSE MKT (formerly known as the American Stock Exchange
or AMEX). Eurasians common shares without par value (Common Shares) are
traded on the TSX-V under the symbol EMX and on the NYSE MKT under the symbol
EMXX.
BUSINESS OF EURASIAN MINERALS INC.
Eurasian is principally in the business of exploring for, and
generating royalties from, metals and minerals properties, as well as
identifying royalty opportunities for purchase. Eurasians business is carried
out as a royalty and prospect generator. Under the royalty and prospect
generation business model, it acquires and advances early-stage mineral
exploration projects and then options the projects to, and thereby forms
relationships with, other parties in consideration of a retained royalty
interest, as well as annual advanced royalty and other cash or share payments
and exploration carried out by the other parties. Through its various
agreements, Eurasian also provides technical and commercial assistance to such
companies as the projects advance. By optioning interests in its projects to
third parties for a royalty interest, Eurasian:
|
(a) |
reduces its exposure to the costs and risks associated
with mineral exploration and project development, |
|
|
|
|
(b) |
maintains the opportunity to participate in early-stage
exploration upside; and |
|
|
|
|
(c) |
develops a pipeline for potential production royalty
payments and associated greenfields discoveries in the
future. |
This approach helps preserve the Companys treasury, which can
be utilized for further project acquisitions and other business initiatives.
The Companys royalty and exploration portfolio consists of
properties in North America, Turkey, Europe, Haiti, Australia, and the
Asia-Pacific region. Eurasian started receiving royalty income as of August 17,
2012 when it acquired Bullion Monarch Mining, Inc. (Bullion or BULM). This
royalty cash flow serves to provide a foundation to support the Companys growth
over the long term.
Strategic investments are an important complement to the
Companys royalty and prospect generation initiatives. These investments are
made in unrecognized or under-valued exploration companies identified by
Eurasian. EMX helps to develop the value of these assets, with exit strategies
that can include royalty positions or equity sales.
FINANCIAL AND OTHER INFORMATION
In this Annual Report, unless otherwise specified, all dollar
amounts are expressed in Canadian Dollars (CDN$ or $). The Government of
Canada permits a floating exchange rate to determine the value of the Canadian
Dollar against the U.S. Dollar (US$).
9
FORWARD-LOOKING STATEMENTS
Eurasian Minerals Inc. (the Company or Eurasian or EMX)
is a Canadian issuer that is permitted, under the multijurisdictional disclosure
system adopted in the United States, to prepare this annual report on Form 20-F
(this Annual Report) pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the Exchange Act), in accordance with Canadian disclosure
requirements, which are different from those of the United States. The Company
is a foreign private issuer as defined in Rule 3b-4 under the Exchange Act and
Rule 405 under the Securities Act of 1933, as amended. Equity securities of the
Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16
of the Exchange Act pursuant to Rule 3a12-3 thereunder.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report, including the documents incorporated by
reference herein, may contain forward-looking statements. These forward-looking
statements may include statements regarding perceived merit of properties,
exploration results and budgets, mineral reserves and resource estimates, work
programs, capital expenditures, operating costs, cash flow estimates, production
estimates and similar statements relating to the economic viability of a
project, timelines, strategic plans, completion of transactions, market prices
for metals or other statements that are not statements of fact. These statements
relate to analyses and other information that are based on forecasts of future
results, estimates of amounts not yet determinable and assumptions of
management. Statements concerning mineral resource estimates may also be deemed
to constitute forward-looking statements to the extent that they involve
estimates of the mineralization that will be encountered if the property is
developed.
Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always, identified
by words or phrases such as expects, anticipates, believes, plans,
projects, estimates, assumes, intends, strategy, goals,
objectives, potential, possible or variations thereof or stating that
certain actions, events, conditions or results may, could, would,
should, might or will be taken, occur or be achieved, or the negative of
any of these terms and similar expressions) are not statements of historical
fact and may be forward-looking statements.
Forward-looking statements are based on a number of material
assumptions, including those listed below, which could prove to be significantly
incorrect:
- the Companys ability to achieve production at any of its mineral
properties;
- estimated capital costs, operating costs, production and economic returns;
- estimated metal pricing, metallurgy, mineability, marketability and
operating and capital costs, together with other assumptions underlying the
Companys resource and reserve estimates;
- the Companys expected ability to develop adequate infrastructure at a
reasonable cost;
- assumptions that all necessary permits and governmental approvals will be
obtained;
- assumptions made in the interpretation of drill results, the geology,
grade and continuity of the Companys mineral deposits;
- the Companys expectations regarding demand for equipment, skilled labor
and services needed for exploration and development of mineral properties; and
- the Companys activities will not be adversely disrupted or impeded by
development, operating or regulatory risks.
Forward-looking statements are subject to a variety of known
and unknown risks, uncertainties and other factors that could cause actual
events or results to differ from those reflected in the forward-looking
statements, including, without limitation:
- uncertainty of whether there will ever be production at the Companys
mineral exploration and development properties;
- uncertainty of estimates of capital costs, operating costs, production and
economic returns;
- uncertainties relating to the assumptions underlying the Companys
resource and reserve estimates, such as metal pricing, metallurgy,
mineability, marketability and operating and capital costs;
- risks related to the Companys ability to commence production and generate
material revenues or obtain adequate financing for its planned exploration and
development activities;
- risks related to the Companys ability to finance the development of its
mineral properties through external financing, joint ventures or other
strategic alliances, the sale of property interests or otherwise;
- risks related to the third parties on which the Company depends for its
exploration and development activities;
- dependence on cooperation of joint venture partners in exploration and
development of properties;
10
- credit, liquidity, interest rate and currency risks;
- risks related to market events and general economic conditions;
- uncertainty related to inferred mineral resources;
- risks and uncertainties relating to the interpretation of drill results,
the geology, grade and continuity of the Companys mineral deposits;
- risks related to lack of adequate infrastructure;
- mining and development risks, including risks related to infrastructure,
accidents, equipment breakdowns, labor disputes or other unanticipated
difficulties with or interruptions in development, construction or production;
- the risk that permits and governmental approvals necessary to develop and
operate mines on the Companys properties will not be available on a timely
basis or at all;
- commodity price fluctuations;
- risks related to governmental regulation and permits, including
environmental regulation;
- risks related to the need for reclamation activities on the Companys
properties and uncertainty of cost estimates related thereto;
- uncertainty related to title to the Companys mineral properties;
- uncertainty as to the outcome of potential litigation;
- risks related to increases in demand for equipment, skilled labor and
services needed for exploration and development of mineral properties, and
related cost increases;
- increased competition in the mining industry;
- the Companys need to attract and retain qualified management and
technical personnel;
- risks related to hedging arrangements or the lack thereof;
- uncertainty as to the Companys ability to acquire additional commercially
mineable mineral rights;
- risks related to the integration of potential new acquisitions into the
Companys existing operations;
- risks related to unknown liabilities in connection with acquisitions;
- risks related to conflicts of interest of some of the directors of the
Company;
- risks related to global climate change;
- risks related to adverse publicity from non-governmental organizations;
- risks related to political uncertainty or instability in countries where
the Companys mineral properties are located;
- uncertainty as to the Companys passive foreign investment company
(PFIC) status;
- uncertainty as to the Companys status as a foreign private issuer and
emerging growth company in future years;
- uncertainty as to the Companys ability to maintain the adequacy of
internal control over financial reporting; and
- risks related to regulatory and legal compliance and increased costs
relating thereto.
This list is not exhaustive of the factors that may affect any
of the Companys forward-looking statements. Forward-looking statements are
statements about the future and are inherently uncertain, and actual
achievements of the Company or other future events or conditions may differ
materially from those reflected in the forward-looking statements due to a
variety of risks, uncertainties and other factors, including, without
limitation, those referred to under the heading Key Information (as defined
below), which is incorporated by reference herein.
The Companys forward-looking statements are based on the
beliefs, expectations and opinions of management on the date the statements are
made, and the Company does not assume any obligation to update forward-looking
statements if circumstances or managements beliefs, expectations or opinions
should change, except as required by law. For the reasons set forth above,
investors should not place undue reliance on forward-looking statements.
11
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISORS 1.A.1. Directors Table No. 1 lists as of
04/29/2015 the names of the Directors of the Company.
Table No. 1
Directors
Name |
Age |
Date First Elected of Appointed |
|
|
|
Brian E. Bayley (1)(2)(3)(4) |
62 |
May 13, 1996 |
David M. Cole(6) |
53 |
November 24, 2003 |
George K.C. Lim(1)(3)(5) |
58 |
August 28, 2008 |
Brian K. Levet(2)(4) |
62 |
March 18, 2011 |
Larry M. Okada(1)(2)(7) |
66 |
June 11, 2013 |
Michael D. Winn
(8)(3) |
53
|
November 24, 2003 |
(1) |
Member of Audit Committee. |
(2) |
Member of the Compensation Committee |
(3) |
Member of Corporate Governance Committee |
(4) |
Suite 1703 595 Burrard Street, Vancouver, BC V7X
1S8 |
(5) |
Suite 501 543 Granville Street, Vancouver, BC V6C
1X8 |
(6) |
10001 W. Titan Road, Littleton, Colorado 80125 |
(7) |
Suite 520 800 West Pender Street, Vancouver, BC V6C
2V6 |
(8) |
Suite C 381 Forest Avenue, Laguna Beach, California
92651 |
1.A.2. Senior Management
Table No. 2 lists, as of 04/29/2015, the names of the Senior
Management of the Company.
Table No. 2
Senior Management
Name and Position |
Age |
Date of First Appointment |
|
|
|
David M. Cole |
53 |
November 24, 2003 |
Christina Cepeliauskas |
51 |
September 18, 2008 |
Valerie Barlow |
36 |
January 24, 2011 |
Mr. Coles business functions, as President of the Company and
Chief Executive Officer, include strategic planning, business development,
operations, liaison with lawyers-regulatory authorities-financial
community/shareholders, and reporting to the Board of Directors.
Ms. Cepeliauskas business functions, as Chief Financial
Officer, include responsibility for overseeing all of the Companys financial
administration, accounting, liaison with auditors-accountants and
preparation/payment/ organization of the expenses/taxes/ activities of the
Company, and reporting to the Board of Directors. Ms. Cepeliauskas may delegate
all or part of her duties as Chief Financial Officer to a nominee from time to
time.
Ms. Barlows business functions, as Corporate Secretary,
include attending and being the secretary of all meetings of the Board,
shareholders and committees of the Board and entering or causing to be entered
in records kept for that purpose minutes of all proceedings thereat; gives or
causes to be given, as and when instructed, all notices to shareholders,
Directors, officers, auditors and members of committees of the Board; is the
custodian of the stamp or mechanical device generally used for affixing the
corporate seal of the Company and of all books, records and instruments
belonging to the Company, except when some other officer or agent has been
appointed for that purpose; and in the future can have such other powers and
duties as the Board of the chief executive officer may specify.
Ms. Barlow may delegate all or part of her duties as Corporate Secretary to a
nominee from time to time.
12
1.B. Advisors
The Companys Canadian legal counsel: |
Northwest Law Group |
|
Contact: Michael Provenzano
|
|
595 Howe Street, Suite 701 |
|
Vancouver, British Columbia V6C
2T5 |
|
Telephone: 604-687-5792 |
|
Facsimile: 604-687-6650 |
|
|
The Companys bank is: |
Bank of Montreal |
|
First Bank Tower, Bentall 3
|
|
595 Burrard Street |
|
Vancouver, British Columbia V7X
1L7 |
|
Contact: Colleen Saimoto |
|
Telephone: 604-665-2692 |
|
Facsimile: 604-668-1450 |
1.C Auditors |
|
|
|
The Companys auditor is: |
Davidson and Company LLP |
|
609 Granville Street, Suite 1200
|
|
Vancouver, B.C. CANADA V7Y 1G6
|
|
Telephone: 604-687-0947 |
|
Facsimile: 604-687-6737
|
ITEM 2. OFFER STATISTICS AND EXPECTED
TIMETABLE.
--- No Disclosure Necessary ---
ITEM 3. KEY INFORMATION.
3.A.1. and 3.A.2 Selected Financial Data
The selected financial data of the Company for Fiscal 2014/2013
ended December 31st was derived from the financial statements of the
Company that have been audited by Davidson and Company LLP, Independent
Registered Public Accountants, as indicated in their audit report, which are
included elsewhere in this Annual Report.
The Company has not declared any dividends since incorporation
and does not anticipate that it will do so in the foreseeable future. The
present policy of the Company is to retain all available funds for use in its
operations and the expansion of its business.
Table No. 3 is derived from the financial statements of the
Company, which have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
13
Table No. 3
Selected Financial Data
(CDN$ in 000, except
per share data)
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
IFRS |
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
2,247,334 |
|
$ |
3,102,888 |
|
$ |
1,750,975 |
|
Exploration expenditures
(net) |
|
3,988,368 |
|
|
3,839,703 |
|
|
8,330,201 |
|
Net loss |
|
(17,448,041 |
) |
|
(13,982,612 |
) |
|
(20,916,730 |
) |
Net loss per share-basic and
diluted |
|
(0.24 |
) |
|
(0.19 |
) |
|
(0.35 |
) |
Wtd. Avg. Shares |
|
73,154,139 |
|
|
72,509,793 |
|
|
59,990,386 |
|
Period-end Shares |
|
73,371,710 |
|
|
72,980,209 |
|
|
72,051,872 |
|
Working capital |
|
7,096,916 |
|
|
14,217,999 |
|
|
22,702,855 |
|
Exploration and evaluation
assets (net) |
|
2,379,886 |
|
|
3,031,368 |
|
|
4,940,941 |
|
Royalty interest |
|
29,327,960 |
|
|
35,063,725 |
|
|
38,738,592 |
|
Total assets |
|
54,292,093 |
|
|
70,073,220 |
|
|
82,475,787 |
|
Share capital |
|
116,766,102 |
|
|
116,151,675 |
|
|
114,414,001 |
|
Deficit |
|
(87,430,021 |
) |
|
(69,981,980 |
) |
|
(55,999,368 |
) |
3.A.3. Exchange Rates
In this Annual Report, unless otherwise specified, all dollar
amounts are expressed in Canadian Dollars (CDN$). The Government of Canada
permits a floating exchange rate to determine the value of the Canadian Dollar
against the U.S. Dollar (US$).
Table No. 4 sets forth the exchange rates for the Canadian
Dollar at the end of five most recent fiscal years ended December
31st, the average rates for the period, and the range of high and low
rates for the period. The data for each month during the most recent six months
is also provided.
For purposes of this table, the exchange rate means the Bank of
Canada noon rate. The table sets forth the number of Canadian Dollars required
to buy one U.S. dollar. The average exchange rate means the average of the
exchange rates on the last day of each month during the period.
Table No. 4
U.S. Dollar/Canadian Dollar
Last 6 months ended |
Average |
High |
Low |
Close |
March 2015 |
1.2619 |
1.2803 |
1.2440 |
1.2683 |
February 2015 |
1.2500 |
1.2635 |
1.2403 |
1.2508 |
January 2015 |
1.2115 |
1.2717 |
1.1728 |
1.2717 |
December 2014 |
1.1533 |
1.1643 |
1.1344 |
1.1601 |
November 2014 |
1.1326 |
1.1427 |
1.1236 |
1.1427 |
October 2014 |
1.1213 |
1.1289 |
1.1136 |
1.1275 |
|
|
|
|
|
Last Quarter & Last 5 Years |
|
|
|
|
Quarter ended March 31, 2015 |
1.2412 |
1.2803 |
1.1728 |
1.2683 |
Year ended December 31, 2014 |
1.1045 |
1.1643 |
1.0614 |
1.1601 |
Year ended December 31, 2013 |
1.0299 |
1.0697 |
0.9839 |
1.0636 |
Year ended December 31, 2012 |
0.9996 |
1.0418 |
0.9710 |
0.9949 |
Year ended December 31, 2011 |
0.9891 |
1.0604 |
0.9449 |
1.0170 |
Year ended December 31, 2010 |
1.0299 |
1.0778 |
0.9946 |
0.9946 |
|
|
|
|
|
April 23, 2015 |
|
|
|
1.2147 |
3.B. Capitalization and Indebtedness
--- No Disclosure Necessary ---
3.C. Reasons For The Offer And Use Of Proceeds
14
--- No Disclosure Necessary ---
3.D. Risk Factors
Investment in the Common Shares involves a significant degree
of risk and should be considered speculative due to the nature of Eurasians
business and the present stage of its development. Prospective investors should
carefully review the following factors together with other information contained
in this Annual Report before making an investment decision.
Mineral Property Exploration Risks
The business of mineral exploration and extraction involves a
high degree of risk. Few properties that are explored ultimately become
producing mines. At present, none of the Companys properties has a known
commercial ore deposit. The main operating risks include ensuring ownership of
and access to mineral properties by confirmation that option agreements, claims
and leases are in good standing and obtaining permits for drilling and other
exploration activities.
Eurasian is currently earning an interest in some of its
properties through option agreements and acquisition of title to the properties
is only completed when the option conditions have been met. These conditions
generally include making property payments, incurring exploration expenditures
on the properties and can include the satisfactory completion of pre-feasibility
studies. If the Company does not satisfactorily complete these option conditions
in the time frame laid out in the option agreements, the Companys title to the
related property will not vest and the Company will have to write-off any
previously capitalized costs related to that property.
The market prices for precious and base metals can be volatile
and there is no assurance that a profitable market will exist for a production
decision to be made or for the ultimate sale of the metals even if commercial
quantities of precious and other metals are discovered.
Revenue and Royalty Risks
Eurasian cannot predict future revenues or operating results of
the area of mining activity. Management expects future revenues from the Carlin
Trend Royalty Claim Block, including the Leeville royalty property in Nevada, to
fluctuate depending on the level of future production and the price of gold.
Specifically, there is a risk that the operator of the property, Newmont Mining
Company (Newmont), will cease to operate in the Companys area of interest,
therefore there can be no assurance that ongoing royalty payments will
materialize or be received by Eurasian.
Financing and Share Price Fluctuation Risks
Eurasian has limited financial resources, and has no assurance
that additional funding will be available for further exploration and
development of its projects. Further exploration and development of one or more
of the Companys projects may be dependent upon the Companys ability to obtain
financing through equity or debt financing or other means. Failure to obtain
this financing could result in delay or indefinite postponement of further
exploration and development of its projects which could result in the loss of
one or more of its properties.
The securities markets can experience a high degree of price
and volume volatility, and the market price of securities of many companies,
particularly those considered to be development stage companies such as
Eurasian, may experience wide fluctuations in share prices which will not
necessarily be related to their operating performance, underlying asset values
or prospects. There can be no assurance that share price fluctuations will not
occur in the future, and if they do occur, the severity of the impact on
Eurasians ability to raise additional funds through equity issues.
Foreign Countries and Political Risks
The Company operates in countries with varied political and
economic environments. As such, it is subject to certain risks, including
currency fluctuations and possible political or economic instability which may
result in the impairment or loss of mineral concessions or other mineral rights,
opposition from environmental or other non-governmental organizations, and
mineral exploration and mining activities may be affected in varying degrees by
political stability and government regulations relating to the mineral
exploration and mining industry. Any changes in regulations or shifts in
political attitudes are beyond the control of the Company and may adversely
affect its business. Exploration and development may be affected in varying
degrees by government regulations with respect to restrictions on future
exploitation and production, price controls, export controls, foreign exchange
controls, income taxes, expropriation of property, environmental legislation and
mine and site safety.
15
Notwithstanding any progress in restructuring political
institutions or economic conditions, the present administration, or successor
governments, of some countries in which Eurasian operates may not be able to
sustain any progress. If any negative changes occur in the political or economic
environment of these countries, it may have an adverse effect on the Companys
operations in those countries. The Company does not carry political risk
insurance.
Competition
The Company competes with many companies that have
substantially greater financial and technical resources than it in the
acquisition and development of its projects as well as for the recruitment and
retention of qualified employees.
Return on Investment Risk
Investors cannot expect to receive a dividend on an investment
in the Common Shares in the foreseeable future, if at all.
No Assurance of Titles or Borders
The acquisition of the right to exploit mineral properties is a
very detailed and time consuming process. There can be no guarantee that the
Company has acquired title to any such surface or mineral rights or that such
rights will be obtained in the future. To the extent they are obtained, titles
to the Companys surface or mineral properties may be challenged or impugned and
title insurance is generally not available. The Companys surface or mineral
properties may be subject to prior unregistered agreements, transfers or claims
and title may be affected by, among other things, undetected defects. Such third
party claims could have a material adverse impact on the Companys operations.
Currency Risks
The Companys equity financings are sourced in Canadian dollars
but much of its expenditures are in local currencies or U.S. dollars. At this
time, there are no currency hedges in place. Therefore, a weakening of the
Canadian dollar against the U.S. dollar or local currencies could have an
adverse impact on the amount of exploration funds available and work
conducted.
Joint Venture and Exploration Funding Risk
Eurasians strategy is to seek exploration and joint venture
partners through options and joint ventures to fund exploration and project
development. The main risk of this strategy is that the funding parties may not
be able to raise sufficient capital in order to satisfy exploration and other
expenditure terms in a particular joint venture agreement. As a result,
exploration and development of one or more of the Companys property interests
may be delayed depending on whether Eurasian can find another party or has
enough capital resources to fund the exploration and development on its own.
Insured and Uninsured Risks
In the course of exploration, development and production of
mineral properties, the Company is subject to a number of risks and hazards in
general, including adverse environmental conditions, operational accidents,
labor disputes, unusual or unexpected geological conditions, changes in the
regulatory environment and natural phenomena such as inclement weather
conditions, floods, and earthquakes. Such occurrences could result in the damage
to the Companys property or facilities and equipment, personal injury or death,
environmental damage to properties of the Company or others, delays, monetary
losses and possible legal liability.
Although the Company may maintain insurance to protect against
certain risks in such amounts as it considers reasonable, its insurance may not
cover all the potential risks associated with its operations. The Company may
also be unable to maintain insurance to cover these risks at economically
feasible premiums or for other reasons. Should such liabilities arise, they
could reduce or eliminate future profitability and result in increased costs,
have a material adverse effect on the Companys results and a decline in the
value of the securities of the Company.
Some work is carried out through independent consultants and
the Company requires all consultants to carry their own insurance to cover any
potential liabilities as a result of their work on a project.
16
Environmental Risks and Hazards
The activities of the Company are subject to environmental
regulations issued and enforced by government agencies. Environmental
legislation is evolving in a manner that will require stricter standards and
enforcement and involve increased fines and penalties for non-compliance, more
stringent environmental assessments of proposed projects, and a heightened
degree of responsibility for companies and their officers, directors and
employees. There can be no assurance that future changes in environmental
regulation, if any, will not adversely affect Eurasians operations.
Environmental hazards may exist on properties in which the Company holds
interests which are unknown to the Company at present.
Fluctuating Metal Prices
Factors beyond the control of the Company have a direct effect
on global metal prices, which have fluctuated widely, particularly in recent
years, and there is no assurance that a profitable market will exist for a
production decision to be made or for the ultimate sale of the metals even if
commercial quantities of precious and other metals are discovered on any of
Eurasians properties. Consequently, the economic viability of any of the
Companys exploration projects and its ability to finance the development of its
projects cannot be accurately predicted and may be adversely affected by
fluctuations in metal prices.
Extensive Governmental Regulation and Permitting
Requirements Risks
Exploration, development and mining of minerals are subject to
extensive laws and regulations at various governmental levels governing the
acquisition of the mining interests, prospecting, development, mining,
production, exports, taxes, labor standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and
other matters. In addition, the current and future operations of Eurasian, from
exploration through development activities and production, require permits,
licenses and approvals from some of these governmental authorities. Eurasian has
obtained all government licenses, permits and approvals necessary for the
operation of its business to date. However, additional licenses, permits and
approvals may be required. The failure to obtain any licenses, permits or
approvals that may be required or the revocation of existing ones would have a
material and adverse effect on Eurasian, its business and results of operations.
Failure to comply with applicable laws, regulations and permits
may result in enforcement actions thereunder, including orders issued by
regulatory or judicial authorities requiring Eurasians operations to cease or
be curtailed, and may include corrective measures requiring capital
expenditures, installation of additional equipment or remedial actions. Eurasian
may be required to compensate those suffering loss or damage by reason of its
mineral exploration activities and may have civil or criminal fines or penalties
imposed for violations of such laws, regulations and permits. Any such events
could have a material and adverse effect on Eurasian and its business and could
result in Eurasian not meeting its business objectives.
Key Personnel Risk
Eurasians success is dependent upon the performance of key
personnel working in management and administrative capacities or as consultants.
The loss of the services of senior management or key personnel could have a
material and adverse effect on the Company, its business and results of
operations.
Conflicts of Interest
In accordance with the laws of British Columbia, the directors
and officers of a Company are required to act honestly, in good faith and in the
best interests of the Company. Eurasians directors and officers may serve as
directors or officers of other companies or have significant shareholdings in
other resource companies and, to the extent that such other companies may
participate in ventures in which the Company may participate, such directors and
officers may have a conflict of interest in negotiating and concluding terms
respecting the extent of such participation. If such a conflict of interest
arises at a meeting of the Companys directors, a director with such a conflict
will abstain from voting for or against the approval of such participation or
such terms.
Passive Foreign Investment Company
U.S. investors in common shares should be aware that based on
current business plans and financial expectations, Eurasian currently expects
that it will be a passive foreign investment company (PFIC) for the year
ending December 31, 2014 and expects to be a PFIC in future tax years. If
Eurasian is a PFIC for any year during a U.S. shareholders holding period, then
such U.S. shareholder generally will be required to treat any gain realized upon
a disposition of common shares, or any so-called excess distribution received
on its common shares, as ordinary income, and to pay an interest charge on a
portion of such gain or distributions, unless the shareholder makes a timely and
effective qualified electing fund election (QEF Election) or a mark-to-market election with respect to the
common shares. A U.S. shareholder who makes a QEF Election generally must report
on a current basis its share of Eurasians net capital gain and ordinary
earnings for any year in which Eurasian is a PFIC, whether or not Eurasian
distributes any amounts to its shareholders. For each tax year that Eurasian
qualifies as a PFIC, Eurasian intends to: (a) make available to U.S.
shareholders, upon their written request, a PFIC Annual Information Statement
as described in Treasury Regulation Section 1.1295 -1(g) (or any successor
Treasury Regulation) and (b) upon written request, use commercially reasonable
efforts to provide all additional information that such U.S. shareholder is
required to obtain in connection with maintaining such QEF Election with regard
to Eurasian. Eurasian may elect to provide such information on its website
www.EurasianMinerals.com.
17
Corporate Governance and Public Disclosure Regulations
The Company is subject to changing rules and regulations
promulgated by a number of United States and Canadian governmental and
self-regulated organizations, including the United States Securities and
Exchange Commission (SEC), the British Columbia and Alberta Securities
Commissions, the NYSE MKT and the TSX-V. These rules and regulations continue to
evolve in scope and complexity and many new requirements have been created,
making compliance more difficult and uncertain. The Companys efforts to comply
with the new rules and regulations have resulted in, and are likely to continue
to result in, increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities to compliance
activities.
Internal Controls over Financial Reporting
Applicable securities laws require an annual assessment by
management of the effectiveness of the Companys internal control over financial
reporting. The Company may, in the future, fail to achieve and maintain the
adequacy of its internal control over financial reporting, as such standards are
modified, supplemented or amended from time to time, and the Company may not be
able to ensure that it can conclude on an ongoing basis that it has effective
internal control over financial reporting. Future acquisitions may provide the
Company with challenges in implementing the required processes, procedures and
controls in its acquired operations. Acquired Corporations may not have
disclosure controls and procedures or internal control over financial reporting
that are as thorough or effective as those required by securities laws currently
applicable to the Company.
No evaluation can provide complete assurance that the Companys
internal control over financial reporting will detect or uncover all failures of
persons within the Company to disclose material information otherwise required
to be reported. The effectiveness of the Companys controls and procedures could
also be limited by simple errors or faulty judgments. In addition, should the
Company expand in the future, the challenges involved in implementing
appropriate internal control over financial reporting will increase and will
require that the Company continue to improve its internal control over financial
reporting.
ITEM 4. INFORMATION ON THE COMPANY
4.A. History and Development of the Company
Introduction
The Companys corporate office is located at:
Suite 501, 543 Granville Street
Vancouver, British Columbia, Canada V6C 1X8
Telephone: (604) 688-6390
Facsimile: (604) 688-1157
Website: www.EurasianMinerals.com
Email: valerie@eurasianminerals.com
The contact person is: Valerie Barlow, Corporate Secretary.
The Companys registered and records office is located at Suite
704, 595 Howe Street, Vancouver, British Columbia, V6C 2T5.
The Companys technical office is located at:
18
10001 W. Titan Road
Littleton,
Colorado
United States of America, 80125
Telephone: 303-973-8585
Facsimile: 303-973-0715
The Company's fiscal year ends December 31st.
The Company's Common Shares trade on the TSX-V under the symbol
EMX and on the NYSE Market LLC under the symbol EMXX.
At December 31, 2014, the end of the Company's most recent
fiscal year, there were 73,371,710 Common Shares issued and outstanding.
In this Annual Report, unless otherwise specified, all dollar
amounts are expressed in Canadian Dollars ("CDN$).
Incorporation and Name Changes
Eurasian Minerals Inc. (the Company or Eurasian or EMX)
was incorporated under the laws of the Yukon Territory of Canada on August 21,
2001 as 33544 Yukon Inc. and, on October 10, 2001, changed its name to Southern
European Exploration Ltd. On November 24, 2003, the Company completed the
reverse take-over of Marchwell Capital Corp., a TSX-V-listed company
incorporated in Alberta on May 13, 1996 and which subsequently changed its name
to Eurasian Minerals Inc. On September 21, 2004, EMX continued into British
Columbia from Alberta under the Business Corporations Act.
EMXs head office is located at Suite 501 543 Granville
Street, Vancouver, British Columbia V6C 1X8, Canada, and its registered and
records office is located at Northwest Law Group, Suite 704 595 Howe Street,
Vancouver, British Columbia V6C 2T5, Canada.
Eurasian is a reporting issuer under the securities legislation
of British Columbia and Alberta and is listed on the TSX-V, as a Tier 1 issuer,
and the NYSE MKT (formerly known as the American Stock Exchange or AMEX).
Eurasians Common Shares without par value are traded on the TSX-V under the
symbol EMX and on the NYSE MKT under the symbol EMXX.
Three-Year History
Fiscal Year Ended December 31, 2012
On January 24, 2012, Eurasian filed a registration statement on
Form 40-F with the SEC relating to the registration of its Common Shares under
the United States Securities and Exchange Act of 1934. On January 30, 2012, the
Common Shares were listed for trading on the NYSE MKT.
On February 9, 2012 but effective as of January 9, 2012,
Eurasian extended the expiration date of 678,611 warrants held by employees or
insiders of, or consultants to, BCE or Eurasian from January 9, 2012 to February
22, 2012. These warrants were issued on January 29, 2010 as part of the
consideration paid by Eurasian in connection with the acquisition of BCE. Due to
a trading blackout imposed by Eurasian relating to its acquisition of Bullion,
the warrant holders were unable to exercise the warrants until the blackout was
lifted subsequent to the public announcement of the BULM transaction on February
7, 2012. Each warrant entitled the holder to purchase one share of Eurasian
common stock at a price of $2.00. Each of the 678,611 warrants was exercised on
or before the expiration date, as extended, resulting in gross proceeds to
Eurasian of $1,357,222.
On April 2, 2012, a subsidiary of Eurasian and its joint
venture partner, Australian Securities Exchange (ASX) listed Chesser Resources
Limited (Chesser), signed an Option Agreement (the Sisorta Agreement) on
their jointly owned (EMX: 49% interest; Chesser: 51% interest) Sisorta gold
property located in north-central Turkey with Çolakoğlu Ticari Yatirim A.S.
(Çolakoğlu), a privately owned Turkish company. The Sisorta Agreement required
Çolakoğlu to make an up-front payment of 100 troy ounces of gold bullion, or its
cash equivalent, and to undertake a US$500,000 work commitment over the first
year. Çolakoğlu terminated its option on March 21, 2013.
In May 2012, Dr. Stephen Enders resigned as Executive Chairman
of the Board of Directors and was appointed Chief Operating Officer. Michael
Winn assumed the role of Chairman of the Board.
19
On August 15, 2012, the Company appointed Jan N. Steiert as
Chief Legal Officer of the Company.
On August 17, 2012, the Company completed its acquisition of
BULM following approval by BULMs shareholders at a special meeting held earlier
that day. Under the terms of the transaction, BULM shareholders received 0.45 of
a Common Share and US$0.11 in cash for each share of BULM common stock held as
of the record date. The value of the total consideration paid to BULM
shareholders was approximately US$36.4 million.
In connection with the closing of the merger, James A. Morris,
the former President of Bullion, joined Eurasians Board of Directors. In
addition, R. Don Morris, the former CEO of Bullion, was appointed to EMXs
advisory board. Both appointments were effective August 17, 2012.
On August 23, 2012, the Company announced that it intended to
pay discretionary bonuses through the issuance of an aggregate of 364,500 Common
Shares as a bonus to five officers and a director. The Common Shares would be
issued under the Companys Incentive Stock Grant Program of up to 300,000 Common
Shares available each year which was approved by disinterested shareholders at
the Companys Annual General Meeting held on August 24, 2010 and through an
additional one time issuance of up to 700,000 Common Shares as bonuses to
certain officers and directors which was approved by shareholders at the
Companys Annual General Meeting held on August 16, 2011. The Common Shares were
issued in three tranches over a period of two years. The first tranche was
issued on October 15, 2012 and the second tranche was issued on October 15, 2013
and October 14, 2014.
Fiscal Year ended December 31, 2013
Paul H. Zink ceased to be President of Eurasian Capital on
January 31, 2013.
On February 27, 2013, the Company announced that its
wholly-owned subsidiary, Eurasia Madencilik Ltd. Sti. (EMX Turkey), had
executed a definitive agreement with Tumad Madencilik Sanayi ve Ticaret A.S.
(Tumad), a private Turkish company, giving Tumad an option to acquire
Eurasians Trab-23 gold (copper-molybdenum) porphyry project in northeast Turkey
(the Trab-23 Agreement). The Trab-23 Agreement consists of: in-ground spending
requirements to further develop the assets value; a revenue stream of annual
earn-in and pre-production payments; and a revenue stream based upon production.
See Mineral Properties Turkey.
In April, 2013 the Company announced the selection of the
Iekelvare Designated Project in Sweden pursuant to the Alliance Agreement with
Antofagasta Minerals S.A., a wholly-owned subsidiary of Antofagasta Plc, a
Chilean mining company listed on the London Stock Exchange. Iekelvare joined
Kiruna South as a Designated Project in Sweden. In March, 2014 Antofagasta
advised Eurasian that it was discontinuing further funding of the Kiruna South
and Iekelvare Designated Projects.
Larry M. Okada was appointed to the Board of Directors on June
11, 2013.
On June 30, 2013, the Company announced the execution of an
Option Agreement (the Akarca Agreement) to sell the Akarca property in
northwest Turkey to Çolakoğlu for a combination of cash payments, gold bullion,
work commitments, and a royalty interest. The Akarca Agreement gives Çolakoğlu,
the option to acquire EMXs 100%-owned Turkish subsidiary, AES Madencilik A.S.
that controls the Akarca property. The Akarca Agreement required Çolakoğlu to
make an up-front payment of US$250,000 and in order to exercise the option,
drill up at least 5,000 meters by the end of the first year, and make a
US$500,000 payment on exercise of the option. See Mineral Properties Turkey.
In August, the Company sold its geothermal energy assets in
Slovakia and Peru to Starlight Geothermal Ltd. (SGL), an arms length private
company based in Houston, Texas, for cash payments, an equity position of
approximately 5% in SGLs issued and outstanding voting share capital, annual
advance minimum royalty payments until production commences and, once production
commences, a 1% gross royalty on its geothermal licenses in Slovakia and a 0.5%
gross royalty on its geothermal licenses in Peru.
On September 4, 2013, the Company announced that it had,
through its wholly-owned subsidiary, Bronco Creek Exploration Inc. (BCE or
Bronco Creek), entered into three option purchase agreements with Desert Star
Resources Ltd. (TSX-V: DSR), a public company based in Vancouver, British
Columbia (Desert Star), granting Desert Star options to acquire the Companys
Red Top, Copper Springs, and Copper King porphyry copper projects in Arizona.
See Mineral Properties North America.
In October 2013, Bronco Creek signed three exploration and
earn-in agreements, with Savant Explorations Ltd. (TSX-V: SVT), a public company
based in Vancouver, British Columbia (Savant), granting Savant options to earn
in to the Companys Jasper Canyon, Buckhorn Creek, and Frazier Creek
porphyry copper projects. See Mineral Properties North America.
20
Fiscal Year ended December 31, 2014
On January 7, 2014, the Company announced the signing of an
Exploration and Option Agreement (the Alankoy Agreement) with Ferrite
Resources Ltd. (Ferrite), a privately-held Australian company, for the
disposition, by option, of the Alankoy copper-gold property in northwestern
Turkey. Ferrite has the option to earn a 100% interest in the project through
work commitments, payments, and annual advance royalties. EMX will retain an
uncapped 3% production royalty that cannot be purchased in advance or otherwise
reduced. Under the Alankoy Agreement, Ferrite paid US$35,000 upon signing the
Alankoy Agreement and must expend at least US$200,000 on exploration activities
on the project each year for the three years. In addition, Ferrite is required
to make annual deliveries of gold bullion to EMX as advance royalties. These
will consist of 75 troy ounces of gold (or cash equivalent thereof) delivered on
each of the first three anniversaries and annual advance royalties of 100 troy
ounces of gold (or cash equivalent) on all subsequent anniversaries until
commencement of commercial production. See Mineral Properties Turkey.
On February 19, 2014, EMX signed an Exploration and Option
Agreement (the NQM Agreement) with North Queensland Mining Pty Ltd. (NQM), a
privately-held Australian company, respecting EMXs Koonenberry exploration
licenses in New South Wales, Australia. Under the NQM Agreement, Eurasian
granted NQM the option, exercisable until February 19, 2017, to acquire the EMX
subsidiary (EMX Exploration Pty Ltd.) that holds the Companys remaining
exploration licenses in the project area, with EMX retaining a 3% production
royalty. On or before the second anniversary of the NQM Agreement date, NQM can
reduce such 3% production royalty to 2.5%, by agreeing to pay annual advance
royalties in the following amounts:
-
75 troy ounces of gold (or cash equivalent thereof) on the first
anniversary of NQMs election to reduce the amount of the production royalty,
-
100 troy ounces of gold (or cash equivalent) on the earlier of the third
anniversary of the NQM Agreement date or the exercise of the election, and
-
100 troy ounces of gold (or cash equivalent) on all subsequent
anniversaries of the NQM Agreement date until commencement of commercial
production.
In February 2014, the Board of Directors adopted an Advance
Notice Policy in respect of the election of directors. The purpose of the Policy
is to provide shareholders, directors and management of the Company with a clear
framework for nominating persons for election as directors of the Company. No
person will be eligible for election unless nominated in accordance with the
Policy. The Policy was ratified by the Companys shareholders at its annual
general meeting on May 13, 2014 and subsequently incorporated into the Companys
articles.
On April 25, 2014, incentive stock options, exercisable to
purchase an aggregate of 1,531,000 Common Shares at a price of $1.20 per share
for a period of five years, were granted to officers, directors and employees
of, and consultants to, the Company.
On April 25, 2014, the Company announced that it intended to
issue an aggregate of 300,000 Common Shares in lieu of cash remuneration to two
non-executive employees and a consultant. An aggregate of 300,000 Common Shares
would be issued over a period of two years, with the initial tranche of 100,000
Common Shares being issued upon receipt of TSX-V and NYSE MKT approval, and a
further 100,000 Common Shares on each of the first and second anniversaries. The
first tranche was issued on May 30, 2014.
On May 13, 2014, James A. Morris resigned from the Board of
Directors.
On May 15, 2014, EMX announced the signing of an Exploration
and Option Agreement (the Lomitas Agreement), through its wholly-owned
subsidiary Bronco Creek, respecting the Lomitas Negras porphyry copper project
with Kennecott Exploration Company (Kennecott), part of the Rio Tinto Group.
Pursuant to the Lomitas Agreement, Kennecott can earn a 100% interest in the
project by completing US$4,500,000 in exploration expenditures and paying
escalating option payments totaling US$900,000 within five years after the date
of the Lomitas Agreement, after which EMX will retain a 2% NSR royalty.
In June 2014, Dr. Rael Lipson was appointed to the Companys
advisory board.
21
On July 4, 2014, EMX announced the signing of an Exploration
and Option Agreement (the Cathedral Well Agreement) by its wholly-owned
subsidiary Bronco Creek with Ely Gold and Minerals Inc. (Ely Gold), a
Vancouver-based mineral exploration company listed on the TSX-V, respecting
EMXs Cathedral Well gold project. Pursuant to the Cathedral Well Agreement, Ely
Gold can earn a 100% interest in the Project by paying EMX a total of US$100,000
as follows: US$25,000 upon execution of the Cathedral Well Agreement and
US$75,000 over the next three years, after which EMX will retain a 2.5% NSR
royalty, inclusive of an underlying 0.5% NSR royalty.
On November 13, 2014, the Company announced the execution of an
agreement with Land & Mineral Limited (L&M), a privately-held
Australian company, giving L&M the right to acquire Hauraki Gold Ltd.
(Hauraki), the wholly-owned EMX subsidiary that controls the Neavesville
gold-silver property (the Neavesville Property) located in the Hauraki
goldfield of New Zealands North Island. L&M also made an execution payment
of $100,000 to the Company. See Mineral Properties Australia and New
Zealand.
Subsequent to 2014
In February 2015, Mr. Paul H. Stephens was appointed to the
Companys advisory board.
In March 2015, Dr. Enders resigned from the position of Chief
Operating Officer and as a Director of the Board. Dr. Enders will continue as a
consultant and was appointed to the advisory board.
4.B. BUSINESS OVERVIEW
Historical Corporate Development
Eurasian Minerals Inc. (the Company or Eurasian or EMX)
was incorporated under the laws of the Yukon Territory of Canada on August 21,
2001 as 33544 Yukon Inc. and, on October 10, 2001, changed its name to Southern
European Exploration Ltd. On November 24, 2003, the Company completed the
reverse take-over of Marchwell Capital Corp., a TSX-V-listed company
incorporated in Alberta on May 13, 1996 and which subsequently changed its name
to Eurasian Minerals Inc. On September 21, 2004, EMX continued into British
Columbia from Alberta under the Business Corporations Act.
Eurasian is a reporting issuer under the securities legislation
of British Columbia and Alberta and is listed on the TSX-V, as a Tier 1 issuer,
and the NYSE MKT (formerly known as the American Stock Exchange or AMEX).
Eurasians common shares without par value (Common Shares) are traded on the
TSX-V under the symbol EMX and on the NYSE MKT under the symbol EMXX.
Eurasians is principally in the business of exploring for, and
generating royalties from, metals and minerals properties, as well as
identifying royalty opportunities for purchase. Eurasians business is carried
out as a royalty and prospect generator. Under the royalty and prospect
generation business model, it acquires and advances early-stage mineral
exploration projects and then options the projects to, and thereby forms
relationships with, other parties in consideration of a retained royalty
interest, as well as annual advanced royalty and other cash or share payments
and exploration carried out by the other parties. Through its various
agreements, Eurasian also provides technical and commercial assistance to such
companies as the projects advance. By optioning interests in its projects to
third parties for a royalty interest, Eurasian:
(a) |
reduces its exposure to the costs and risks associated
with mineral exploration and project development, |
(b) |
maintains the opportunity to participate in early-stage
exploration upside; and |
(c) |
develops a pipeline for potential production royalty
payments and associated greenfields discoveries in the
future. |
This approach helps preserve the Companys treasury, which can
be utilized for further project acquisitions and other business initiatives.
The Companys royalty and exploration portfolio consists of
properties in North America, Turkey, Europe, Haiti, Australia, and the
Asia-Pacific region. Eurasian started receiving royalty income as of August 17,
2012 when it acquired Bullion Monarch Mining, Inc. (Bullion or BULM). This
royalty cash flow serves to provide a foundation to support the Companys growth
over the long term.
Please see the Note 18 of the Financial Statements for royalty
revenue.
Strategic investments are an important complement to the
Companys royalty and prospect generation initiatives. These investments are
made in unrecognized or under-valued exploration companies identified by
Eurasian. EMX helps to develop the value of these assets, with exit strategies
that can include royalty positions or equity sales.
22
Government Regulation and Environmental Protection
Eurasian's current exploration activities are conducted in
North America, Turkey, Europe, Turkey, Haiti, Australia and New Zealand. Such
activities are affected in varying degrees by political stability and government
regulations relating to foreign investment and the mining industry. Changes in
these regulations or shifts in political attitudes are beyond Eurasian's control
and may adversely affect Eurasian's business. Operations may be affected in
varying degrees by government regulations with respect to restrictions on
production, income taxes, expropriation of property, repatriation of funds,
environmental legislation and mine safety.
The mining industry is also subject to extensive and varying
environmental regulations in each of the jurisdictions in which Eurasian
operates. Environmental regulations establish standards respecting health,
safety and environmental matters and place restrictions on toxins resulting from
mining activities. These regulations can have an impact on the selection of
mining projects and facilities, potentially resulting in increased capital
expenditures by Eurasian or its joint venture partners. In addition,
environmental legislation may require certain projects to be abandoned and sites
reclaimed to the satisfaction of local authorities. Eurasian is committed to
complying with environmental and operation legislation wherever it operates.
Eurasians current or future operations, including exploration
and development activities on its properties, require permits from various
governmental authorities, and such operations are, and will be, governed by laws
and regulations governing exploration, development, taxes, occupational health,
waste disposal, toxic substances, land use, environmental protection and other
matters. Compliance with these requirements may prove to be difficult and
expensive. While Eurasian has properties in numerous jurisdictions, its most
advanced projects are located in Turkey.
Governmental Regulation in Turkey
Mining Regulation
The legal mining regime in Turkey is principally governed by
the Mining Law No. 3213, as amended most recently in 2010 with the intent of
providing investors with a more investment-friendly environment.
Mining rights and minerals are exclusively owned by the Turkish
state, and the ownership of minerals in Turkey is not subject to the ownership
of the relevant land. The state, under the Turkish Mining Law and secondary
mining legislation, delegates its rights to explore and operate to Turkish
individuals or legal entities established under Turkish law by issuing licenses
for a determined period of time in return for the payment of a royalty. There is
no distinction between the mining rights that may be acquired by local investors
and those that may be acquired by foreign investors so long as foreign investors
establish a company in Turkey under Turkish law.
The General Directorate of Mining Affairs, a unit of the
Ministry of Energy and Natural Resources, is the authorized body to regulate
mining activities and to issue mining licenses in Turkey. In addition, local
administrative bodies also have a certain level of authority relating to
licenses and the regulation of mining facilities.
The Turkish Mining Law classifies underground resources in six
different groups, and the licensing procedure for each class differs slightly.
The classes are as follows: (1) sand and gravel, (2) marble and other similar
decorative stones, (3) mineral salts from seas, lakes and fresh waters, (4)
energy, metal and industrial minerals, (5) precious metals such as gold and
silver and gem stones and (6) radioactive minerals.
There are two types of licenses granted for the exploration and
operation of mines and one type of operation permit under the Turkish Mining
Law, as follows:
-
exploration license, enabling its holder to carry out exploration
activities (i.e., all mining activities other than those carried out for
production) in a specific area issued for a period of two years for gold
mining and one year for the other groups. If the license holder satisfies its
obligations, the license holder will have a right to an additional four years
of detailed exploration for certain classes of mines;
-
operation license, enabling its holder to carry out operational activities
within the same area as stated in the exploration license for the proved,
potential and feasible mine reserve area, which is generally issued for a
period of five or ten years depending on the mine type. The term of the
operation license may generally be extended for at least five years upon the
application of the holder of the exploration license and operation license
with a new operation project so long as a certain rate of production is
maintained; however, such term cannot exceed sixty years;
23
- operation permit, enabling its holder to operate a specific mine as
specified in the operation license and granted only for the proved mine
reserves area that is determined during the prospecting period. Operation
activities must commence within one year from the issuance of the operation
permit. The term of an operation permit is the same as the term of an
underlying operation license and in case an extension is granted to an
operation license, the term of a related operation permit is also extended
accordingly.
The Turkish Mining Law provides for different royalty
percentages for different groups of mines, which is 4 percent for gold, silver
and platinum. Royalties are calculated based on annual total sales. In the event
that mining activities are conducted on state-owned land, the license-holder is
obliged to pay an additional 30 percent royalty, but will not be required to pay
for leasing state-owned land for its mining activities.
Environmental Regulation
In Turkey, where Eurasians most advanced projects are located,
both the level of environmental regulation and its enforcement have become more
stringent in recent years. Mining operations are subject to environmental laws
and regulations promulgated by the Ministry of Environment and Urban Planning,
the Ministry of Forestry and Water Works and regional and local authorities. The
Regulation on Environmental Impact Assessments, for example, requires any entity
that is involved in activities that could have an environmental impact to
prepare a Report of Environmental Impact Assessment or a Project Information
File. No approvals, permits, incentives, or construction and occupancy licenses
may be granted, nor any investments made, nor any tenders awarded for these
projects unless and until the Ministry of Environment and Urban Planning issues
a positive assessment of the environmental impact of the subject activities. The
Turkish environmental laws and regulations also require certain businesses to
comply with ongoing requirements to reduce the environmental impact of certain
operations and activities, which also include mining activities. In addition, in
Turkey, the issue of allocation of environmentally sensitive areas such as
forest areas, hunting areas, special protection areas, national parks and
agriculture areas for the granting of licenses for activities to be carried out
in such areas is also regulated and is under the supervision of the Ministry of
Forestry and Water Works.
Under current Turkish environmental laws and regulations,
regulatory authorities may suspend or terminate non-compliant operations, levy
monetary penalties and require non-compliant entities to bear the cost of
related remediation programs. For example, under Turkish environmental and
criminal laws, non-compliant operations may be subject to private action and
liable for damages arising from their activities, as well as subject to criminal
penalties (such as imprisonment and monetary fines) for deliberately providing
regulatory authorities with false or misleading information regarding regulated
activities or otherwise failing to comply with certain regulations. In addition,
a property owner may be held liable for the cost of the removal or remediation
of hazardous or toxic wastes discovered on its property, the cost of which could
be substantial, where generally such liability attaches regardless of whether
the owner knew of, or was responsible for, the presence of such hazardous or
toxic substances.
Environmental laws, as they may be amended over time, can
impose restrictions on the manner of use of properties, and compliance with
these restrictions may require substantial expenditures. Environmental laws and
regulations impose sanctions for non-compliance and may be enforced by
governmental agencies. Third parties also may seek recovery from companies for
personal injury or property damage associated with exposure to the release of
hazardous substances.
Commercial Regulation
The new Turkish Commercial Code (the New Turkish Code),
adopted by the Turkish Parliament in January 2011, is expected to come into
force on July 1, 2012. The New Turkish Code is intended to provide for
institutionalisation, increased competitive power and the establishment of
increased public confidence and transparency, and permits joint stock companies
and limited liability companies to be established with only one shareholder.
Some of the key features of the New Turkish Code include the
following:
-
Companies are generally obliged to have a website online and to allocate a
part of this website to publish certain issues, documents, financial
statements and resolutions whether publicly traded or not.
-
For joint stock companies, it is sufficient for the board of directors to
consist of solely one member. Irrespective of the total number, at least one
member must reside in Turkey and be a Turkish citizen. A legal entity can also
be a board member; however in this case, a natural person must be designated
to represent the legal entity.
24
-
Board members of a joint stock company are no longer required to be a
shareholder in the company.
-
The financial tables of a joint stock company are to be prepared in
accordance with the financial reporting standards determined by the Turkish
Accounting Standards Board. These standards are expected to be amended to
comply with IFRS.
-
For a limited liability company, at least one of its managers must be
domiciled in Turkey and that manager must have the sole authority to represent
the company.
-
The manager(s) of a limited liability company must prepare and submit to
the attention of the general assembly the financial charts, appendices and the
activity report of the company for the preceding accounting period. This must
be done in accordance with the Turkish Accounting Standards and within the
first three months of the relevant accounting period (fiscal year) following
the balance sheet date. The relevant Turkish Accounting Standards are expected
to be applicable from January 1, 2013.
Eurasian cannot predict the outcome of each effect of the New
Turkish Code, and compliance with these requirements may prove to be difficult
and expensive.
Repatriation of Earnings
Currently, there are no restrictions on the repatriation of
earnings or capital to foreign entities from Turkey, where Eurasians most
advanced projects are located. However, there can be no assurance that any such
restrictions on repatriation of earnings or capital from Turkey or any other
country where we may invest will not be imposed in the future.
Governmental Regulation in the United States
Mining Regulation
Mining activities in the United States are subject to numerous
federal, state and local laws and regulations. At the federal level, mines are
subject to inspection and regulation by the Division of Mine Safety and Health
Administration of the Department of Labor (MSHA) under provisions of the
Federal Mine Safety and Health Act of 1977. The Occupation Safety and Health
Administration also has jurisdiction over certain safety and health standards
not covered by MSHA. Mining operations and all proposed exploration and
development will require a variety of permits. In addition, any mining
operations occurring on federal property are subject to regulation and
inspection by the Bureau of Land Management (BLM). Eurasian's current projects
are also subject to state and local laws and regulations in Alaska, Arizona,
Nevada and Wyoming.
Environmental Regulation
Eurasians exploration, mining and processing operations are
subject to various federal, state and local laws and regulations governing
prospecting, exploration, development, production, labor standards, occupational
health, mine safety, control of toxic substances, and other matters involving
environmental protection and employment. United States environmental protection
laws address the maintenance of air and water quality standards, the
preservation of threatened and endangered species of wildlife and vegetation,
the preservation of certain archaeological sites, reclamation, and limitations
on the generation, transportation, storage and disposal of solid and hazardous
wastes, among other things.
Legislation and implementation of regulations adopted or
proposed by the United States Environmental Protection Agency, the BLM and by
comparable agencies in various states directly and indirectly affect the mining
industry in the United States. These laws and regulations address the
environmental impact of mining and mineral processing, including potential
contamination of soil and water from tailings, discharges and other wastes
generated by mining process. In particular, legislation such as the Clean Water
Act, the Clean Air Act, the Federal Resource Conservation and Recovery Act and
the National Environmental Policy Act require analysis and/or impose effluent
standards, new source performance standards, air quality standards and other
design or operational requirements for various components of mining and mineral
processing. Mining projects also are subject to regulations under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
which regulates and establishes liability for the release of hazardous
substances. In addition, statutes may impose liability on mine developers for
remediation of waste they have created.
25
Specialized Skill and Knowledge
All aspects of Eurasian business require specialized skills and
knowledge. Such skills and knowledge include the areas of geology, finance,
accounting and law.
Competitive Conditions
Competition in the mineral exploration industry is intense.
Eurasian competes with other companies, many of which have greater financial
resources and technical facilities, for the acquisition and exploration of
mineral interests, as well as for the recruitment and retention of qualified
employees and consultants.
Raw Materials (Components)
Other than water and electrical or mechanical power all of
which are readily available on or near its properties Eurasian does not
require any raw materials with which to carry out its business.
Intangible Property
Eurasian does not have any need for nor does it use any brand
names, circulation lists, patents, copyrights, trademarks, franchises, licenses,
software (other than commercially available software), subscription lists or
other intellectual property in its business.
Business Cycle & Seasonality
Eurasians royalty and prospect generator business model is
cyclical and is impacted by commodity prices and cycles, however, its business
is not seasonal.
Economic Dependence
Eurasians business is not substantially dependent on any
contract such as a contract to sell the major part of its products or services
or to purchase the major part of its requirements for goods, services or raw
materials, or on any franchise or license or other agreement to use a patent,
formula, trade secret, process or trade name upon which its business
depends.
Renegotiation or Termination of Contracts
It is not expected that Eurasians business will be affected in
the current financial year by the renegotiation or termination of contracts or
sub-contracts.
Environmental Protection
All phases of Eurasians exploration are subject to
environmental regulation in the various jurisdictions in which it operates.
Environmental legislation is evolving in a manner which
requires stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their officers,
directors and employees. While manageable, Eurasian expects this evolution
(which affects most mineral exploration companies) might result in increased
costs.
Employees
At December 31, 2014, Eurasian had 43 employees and consultants
working at various locations throughout the world.
Foreign Operations
The majority of Eurasians properties are located outside of
North America and many are located in areas traditionally considered to be risky
from a political or economic perspective.
Bankruptcy Reorganizations
There has not been any voluntary or involuntary bankruptcy,
receivership or similar proceedings against Eurasian within the three most
recently completed financial years or the current financial year.
26
Material Reorganizations
Except as disclosed under the heading Three-Year History,
there has not been any material reorganization of Eurasian or its subsidiaries
within the three most recently completed financial years or the current
financial year.
Social or Environmental Policies
Eurasian has implemented various social policies that are
fundamental to its operations, such as policies regarding its relationship with
the communities where the Company operates.
Eurasian is committed to the implementation of a comprehensive
Health, Safety, Environment, Labor and Community Policy and a pro-active
Stakeholder Engagement Strategy (the Policies). These Policies will be
reviewed and updated on an annual or as needed basis. EMX ensures these
Policies are made known to all its managers, staff, contractors and exploration
and joint venture partners, and that the requirements contained therein are
adequately planned, resourced implemented and monitored wherever EMX is actively
managing the project and where EMX has obtained a formal commitment from its
exploration and joint venture partners to adopt the same Policies.
1.
Environmental Policy
The Company believes that good environmental management at
every project it manages, whether in the exploration phase, feasibility stage,
project construction or mine site operation, requires proactive health and
safety procedures, transparent interaction with local communities and
implementation of prudent expenditures and business performance standards that
constitutes the foundation for successful exploration and subsequent development
if the results warrant it.
Eurasian will develop and implement appropriate standard
operating procedures for different stages of its ground technical surveys,
prospecting and evaluation and development work which procedures will be
designed to meet all applicable environmental requirements and best
environmental practices in the mineral exploration industry.
2. Community
Relations, Communication and Notification Policy
Proactive interaction with the stakeholders on whom the
Companys exploration and development programs may impact is considered an
important part of the long-term investment that the Company is planning in its
exploration programs in North America, Turkey, Europe, Haiti, Australia, and the
Asia-Pacific region.
Eurasian recognizes that from the inception of exploration
activities or a new field work program, and as the exploration project
progresses towards development, it will be important to:
• |
communicate and proactively engage with all local
communities and other stakeholders that may be affected by its exploration
programs; |
• |
inform and obtain a consensus with the full range of
stakeholders that may be impacted upon by exploration, evaluation and
development; and |
• |
identify any vulnerable or marginalized groups within the
affected communities (e.g. women, elders or handicapped) and ensure they
are also reached by above information disclosure and consultation
activities. |
In these respects, Eurasian will work actively and
transparently with governmental authorities, other elected parties,
nongovernmental organizations, and the communities themselves to ensure that the
communities are aware of the activities of the Company, and that the impact and
benefits of such activities are a benefit to the communities.
When detailed or advanced exploration activities, including
drilling, evaluation and other such programs, are implemented, the Company will
endeavor to identify how the impacts of such work on communities can best be
managed, and how benefits can best be provided to communities through its
activities. This will be undertaken in consultation with the affected
communities.
3. Labour,
Health and Safety Policy
The health and safety of its employees, contractors, affected
communities and any other role players that may participate and be affected by
the activities of EMX are crucial to the long term success of the Company.
The Company will establish and maintain a constructive
work-management relationship, promote the fair treatment, non-discrimination,
and equal opportunity of workers in accordance with Performance Standards 2,
Labor and Working Conditions of the International Finance Company, a member of
the World Bank Group.
27
Every effort will be made through training, regular reviews and
briefings, and other procedures to ensure that best practice labor, health and
safety and good international industry practices are implemented and maintained
by Eurasian, including prompt and in-depth accident and incident investigation
and the implementation of the conclusions thereof. The Company will take
measures to prevent any child labor or forced labor.
The Companys aim is at all times to achieve zero lost-time
injuries and fatalities.
4. Development Stage
Environmental and Social Management Policy
Eurasian will communicate and consult with local communities
and stakeholders with a view to fostering mutual understanding and shared
benefits through the promotion and maintenance of open and constructive dialogue
and working relationships.
United States vs. Foreign Sales/Assets
At 12/31/2014, 12/31/2013, 12/31/2012, the Companys assets
were located in North America, Turkey, Europe, Haiti, Australia and New
Zealand.
4.C. Organization Structure
The corporate structure of Eurasian, its material (holding at
least 10% of EMXs assets) subsidiaries, the percentage ownership that Eurasian
holds or has contractual rights to acquire in such subsidiaries (if not
wholly-owned) and the jurisdiction of incorporation of such corporations is set
out in the chart below:
4.D. Property, Plant and Equipment
The Companys executive offices are located in rented premises
of approximately 4,200 sq. ft., shared by seven other companies at 543 Granville
Street, Suite 501, Vancouver, British Columbia Canada V6C 1X8. The Company began
occupying these facilities on May 1, 2011.
28
The Company owns a house in Littleton, Colorado which serves as
the Companys office.
The Companys royalty and exploration portfolio mainly consists
of properties in North America, Turkey, Europe, Haiti, Australia, and New
Zealand.
It is important to note that even if the Company completes its
exploration programs on its properties and is successful in identifying mineral
deposits, a substantial amount of capital will still have to be spent on each
deposit on further drilling and engineering studies before management will know
that the Company has a commercially viable mineral deposit (a reserve) on the
property.
The terms measured resource, indicated resource and
inferred resource used in this report are Canadian geological and mining terms
as defined in accordance with National Instrument 43-101, Standards of
Disclosure for Mineral Projects of the Canadian Securities Administrators using
the guidelines set out in the Canadian Institute of Mining, Metallurgy and
Petroleum (the CIM) Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council as may be amended from time to time by the CIM. We
advise U.S. investors that while such terms are recognized and permitted under
Canadian regulations, the SEC does not recognize them. U.S. investors are
cautioned not to assume that any part or all of the mineral deposits in the
measured and indicated categories will ever be converted into reserves.
Inferred resources have a greater amount of uncertainty as to
their existence, and greater uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian rules
estimates of inferred mineral resources may not form the basis of feasibility or
other economic studies. U.S. investors are cautioned not to assume that any part
or all of an inferred resource exists, or is economically or legally mineable.
Disclosure of gold and silver resources expressed in ounces in
the mineral resource categories in this document are in compliance with Canadian
National Instrument 43-101, but does not meet the requirements of Industry Guide
7, Description of Property by Corporations Engaged or to be Engaged in
Significant Mining Operations, of the SEC, which will accept only the disclosure
of tonnage and grade estimates for non-reserve mineralization.
Eurasian has been generating exploration projects for over
eleven years, and is now focused on entering into agreements to convert those
assets into royalty interests, as well as directly acquiring new royalty
properties. In this time, EMX has built a portfolio of precious metal, base
metal, polymetallic, and geothermal property and royalty interests that spans
five continents and covers more than 1.7 million acres. These assets provide
revenue streams from royalty, advance royalty and success-based bonus payments,
while maintaining continual exposure to exploration upside as projects advance.
Eurasian supplements mineral property revenue streams and value creation by
leveraging its technical expertise to make timely strategic investments in other
companies or projects that provide shareholders with additional investment
upside potential.
29
Leeville and Royalty Property
Overview
A key EMX asset is the Leeville royalty property that covers
portions of Newmont Mining Companys Northern Carlin Trend underground gold
mining operations. The Leeville 1% gross smelter return royalty paid
approximately US$2 million during the 12 months ending December 31, 2014. These
payments were principally sourced from Newmonts Leeville mine, but also
included minor contributions from other operations. Newmonts Turf No. 3 Vent
Shaft Project, totaling approximately $400 million in capital expenditures, is
on schedule, with commercial production planned for late 2015 (see Newmont
Mining Corps 10-K and 10-Q filings for Q2 and Q3, 2014). Newmont has stated
that the project will provide the ventilation required to increase production,
unlock additional resources, and impact greater Leeville, which includes
portions of EMXs royalty position. Further Carlin Trend exploration upside is
provided by EMXs 3% net smelter return royalty on the Maggie Creek property
that covers nearly two square miles of prospective ground situated less than one
mile from Newmonts Gold Quarry open pit mine.
In addition to EMXs Carlin Trend royalty properties, the
Company has royalty property interests elsewhere in the western U.S., as well as
in Turkey, Serbia, Sweden, Australia, Slovakia, and Peru. The Balya
lead-zinc-silver royalty property in Turkey resulted from an early prospect
generation success, and is undergoing renewed underground development in a
program that commenced in January 2015. EMXs portfolio in Serbia represents a
combination of organically generated royalties complemented by a key royalty
purchase that covers Reservoir Minerals Inc.s share of the Cukaru Peki
copper-gold discovery. The Viscaria iron-copper royalty was acquired from the
purchase of the Phelps Dodge Exploration Sweden AB assets in 2010, and the
project is being actively advanced by Avalon Minerals Ltd. with ongoing
drilling, to be followed by an updated JORC resource estimate and scoping
study (see Avalon Minerals Ltd. news releases dated January 6 and 12, 2015). In
Australia, the Koonenberry gold project is being advanced by other companies,
with EMX retaining various royalty interests that cover the entire project area.
EMXs geothermal interests in Slovakia and Peru provide royalty property
diversification into energy assets that complement the Companys mineral
property portfolio.
In addition, all of EMXs exploration properties optioned to,
or joint ventured with, third parties include a royalty option. Many of these
properties provide advance minimum royalty or advance annual royalty payments
that generate an early revenue stream to EMXs benefit during earn-in.
Additional details on Eurasians property portfolio are included in the
following sections.
Turkey
Eurasian holds multiple mineral property interests in Turkeys
Western Anatolia and Eastern Pontides mineral belts. The properties include bulk
tonnage gold, gold-silver vein, and porphyry gold-copper targets. Six of the
seven EMX projects in Turkey are being advanced by partner companies, with the
portfolio consisting of two royalty properties and four properties optioned for
a retained royalty interest. A seventh property, the Sisorta epithermal gold
project, is 100% controlled by Eurasian and is currently available for sale or
partnership.
30
Akarca Property
The Akarca Property is a 2006 grassroots exploration discovery
by Eurasian in Turkeys Western Anatolia region. The Akarca Property is
currently wholly-owned by EMX.
An Option Agreement (the "Akarca Agreement") was executed in
June 2013 with Çolakoğlu Ticari Yatirim A.S. ("Çolakoğlu"), a privately owned
Turkish company (see EMX news release dated June 20, 2013). The Akarca Agreement
with Çolakoğlu required an up-front payment of US$250,000 and drilling of at
least 5,000 meters by the end of the first year. Both of these conditions were
met. In January, 2015 Eurasian granted Çolakoğlu a six month extension from
February, 2015 to August, 2015 to exercise its option. As a condition of this
extension, Çolakoğlu paid EMX the first US$100,000 (non-refundable) from the
total US$500,000 payment required to exercise the option. After exercise of the
option, subject to a right to terminate the Agreement and return the Akarca
Property to EMX, Çolakoğlu must make additional cash payments of US$4,250,000
over a period of three years and drill a cumulative 20,000 meters over a period
of four years after the agreement date, must deliver up to 18,000 troy ounces of
gold under certain terms and conditions and, within 180 days after request by
EMX after the sixth anniversary of the agreement date, if commercial production
has not already commenced, deliver a feasibility study. The Company will retain
a 3.5% NSR royalty on any production from the property. This royalty is
uncapped, cannot be reduced, and none of the pre-production cash or bullion
payments count as advanced royalty payments. From June 2013 through December
2014, Çolakoğlu had conducted drilling, trenching, geological mapping,
geochemical sampling, and metallurgical, and environmental studies.
The Akarca project area currently has six drill defined zones
of epithermal gold-silver oxide mineralization. Since its discovery, 244 core
and reverse circulation holes totaling about 26,400 meters have been drilled,
most with partner funding. Summaries of the six zones are given below.
• |
Kucukhugla Tepe is a 600 meter long, northwest trending
zone of parallel vein systems that locally host higher grade
mineralization. Recent 2014 drilling by Çolakoğlu yielded an oxide
intercept in AKC-131 of 58.5 meters (31.5-90.0 m) averaging 2.00 g/t gold
and 15.3 g/t silver, with a high-grade sub-interval of 2.6 meters
averaging 35.31 g/t gold and 226.6 g/t silver (true widths are 45% of
reported interval lengths). The zone remains open along strike. |
|
|
• |
Fula Tepe is a broad corridor of veining and
silicification with a strike length of 800 meters and width of over 300
meters. Drill results include an oxide intercept in AKC-120 of 19.8 meters
(28.9-48.7 m) averaging 8.49 g/t gold and 60.3 g/t silver, with a
sub-interval of 1.0 meter assaying 155.50 g/t gold and 1060 g/t silver
(true widths are 64% of reported interval lengths). The system remains
open along strike to the northeast and southwest. |
|
|
• |
The Hugla Tepe prospect is a 650 meter long zone of oxide
gold-silver mineralization, quartz veining and IP-resistivity anomalies.
The zone is oriented along a northeast strike direction that is parallel
to and approximately 400 meters southeast of Fula Tepe. |
|
|
• |
A target halfway between Hugla and Fula Tepe was drilled
as a northeast aligned fence of holes at approximately 100 meter spacing.
This drilling intersected gold-silver mineralization along a 550 meter
northeast trend, and defines a newly recognized zone of concealed
mineralization lying between the Hugla and Fula Tepe prospects. |
|
|
• |
Sarikaya Tepe is the furthest west of the known zones of
mineralization on the property, and forms a distinctive north- south
trending topographic high held up by multiple vein sets and silicified
wall rocks. Sarikaya is notable for hosting higher-grade mineralization,
including an oxide intercept reported from AKC-70 of 36.4 meters (0-36.4
m) averaging 5.67 g/t gold and 53.31 g/t silver, with a sub-interval of
2.15 meters averaging 89.34 g/t gold and 835.16 g/t silver (true widths
interpreted as 60-75% of reported interval lengths). |
|
|
• |
Percem Tepe occurs on the east side of the property, and
hosts gold-silver mineralization in two bodies of silicified/replacement
brecciated and veined material that appear to be gently dipping to the
northeast. This style of mineralization is a distinctive feature of Percem
Tepe, in which broad zones of mineralized breccias and replacement bodies
have been encountered. Drill results include an oxide intercept in AKC-74
starting at 18.2 meters of 101.0 meters averaging 1.25 g/t gold and 7.95
g/t silver (true width interpreted as 65-75% of reported interval length).
|
|
|
• |
Arap Tepe hosts near-surface oxide gold-silver
mineralization developed in a series of east-west zones of mineralization.
Only one of these zones has been systematically drilled (Zone A), with the
other zones presenting upside exploration opportunities.
|
From all project drilling, 95% of the holes have at least one
interval of mineralization greater than 0.2 g/t gold. This success rate is
remarkable considering that many of the targets are concealed beneath cover, and
speaks to the broad areas mineralized by the gold-silver epithermal system(s) at
Akarca. As exploration continues, it is clear that the continuity of the
near-surface oxide zones of vein and disseminated styles of mineralization are
being successfully defined at a 25 to 50 meter drill spacing. Furthermore,
ongoing reconnaissance and step-out drilling is demonstrating potential for new
discoveries of gold-silver mineralized zones.
31
The exploration successes at Akarca since 2006 have led to
in-the-ground investments of over US$12 million by partner companies. In
addition to drilling, 3100 rock and 3200 soil geochemical samples, 74
line-kilometers of IP-resistivity surveys, more than 11 line kilometers of
trench sampling, and a property-wide gravity survey have been completed.
Refer to EMX's SEDAR filed Akarca Technical Report and news
releases dated July 19, 2012, January 18, 2013, March 1, 2013, June 20, 2013,
August 22, 2013, January 27, 2014, July 17, 2014, and March 2, 2015 for more
information on the Akarca exploration results and a description of the QA and QC
measures used for the project.
Sisorta Property
The Sisorta project, located in the Eastern Pontides mineral
belt, is an epithermal gold deposit with an NI 43-101 mineral resource at a 0.4
g/t cutoff of 91,000 indicated gold ounces from 3.17 million tonnes averaging
0.89 g/t, and 212,000 inferred gold ounces from 11.38 million tonnes averaging
0.58 g/t. An overview of the methodology used to estimate these resources is
described in EMX's SEDAR filed Sisorta technical report.
The Sisorta property had until recently been in a joint venture
with project manager Chesser Resources Ltd. (Chesser) (51%) and EMX (49%). In
March 2015, EMX purchased Chesser's interest in the property, and assumed
management of the project.
The principle technical developments subsequent to the Sisorta
technical report resulted from an option granted to Çolakoğlu to buy the Sisorta
property in 2012, but the agreement was terminated in 2013. Çolakoğlu advised
that it completed a 46 hole, 5,500 meter diamond drill program and other work
totaling approximately US$2.5 million in expenditures before terminating its
option. Chesser reported highlights from Çolakoğlus drilling in a June 19, 2013
news release: a) the best drill intercept to date of 32.4 meters averaging 8.38
g/t gold and starting from the surface (true width unknown), b) mineralized
drill intercepts outside the current resource that increase the gold zones
lateral extent, and c) porphyry copper-gold targets that remain to be tested.
As Sisorta is now a 100% controlled asset of EMX, the Company
is evaluating the property's exploration upside, while pursuing partnership
opportunities with third parties.
Balya Royalty Property
The Balya royalty property is located in the historic Balya
lead-zinc-silver mining district in northwestern Turkey. EMX holds an uncapped
4% NSR royalty that it retained from the sale of the property to private Turkish
mining company Dedeman Madencilik San ve Tic. A.S. (Dedeman) in 2006 (see EMX
news release dated November 14, 2006).
EMX understands that since acquiring the property, Dedeman
completed 190 core holes totaling over 34,000 meters. Dedemans drilling in 2014
consisted of eleven holes that in-filled and extended the Hastanetepe zones
lead-zinc-silver mineralization to the southeast. EMX has also been advised by
Dedeman that it re-initiated shaft sinking and underground development work at
the Hastanetepe zone in early 2015.
Golcuk Property
The Golcuk copper-silver property is located in the Eastern
Pontides metallogenic belt of northeast Turkey. The mineralization at Golcuk
primarily occurs as stacked, stratabound horizons with disseminated copper and
silver hosted in volcanic units, as well as in localized cross-cutting
fault-controlled veins and stockworks of bornite, chalcopyrite and
chalcocite.
Pasinex Resources Ltd. (CSE: PSE; FSE: PNX) of Vancouver,
British Columbia (Pasinex) signed an agreement in 2012 granting it an option
to acquire a 100% interest in the Golcuk property for shares and work
commitments over a four year period. EMX retains a 2.9% NSR royalty, which
Pasinex has the option of buying down to 2% within six years of the agreement
date for US$1 million.
Pasinexs Golcuk exploration work includes drilling, geologic
mapping, rock and channel sampling, and a ground magnetics survey. It has also
filed on SEDAR an NI 43-101 Technical Report. Pasinexs work programs have
identified a number of additional mineralized targets on the property. Pasinex
completed five holes totaling 994.4 m at Golcuk in 2014 and is reviewing the
results in context of its recently received report on the structural geology of
the targeted area.
32
Trab-23 Property
The Trab-23 property is located in northeast Turkey. The
project area hosts both porphyry gold (copper-molybdenum) mineralization and
epithermal quartz-barite-gold veins.
Tumad Madencilik Sanayi ve Ticaret A.S. (Tumad), a private
Turkish company, executed an option agreement (the Trab-23 Agreement) in
February 2013 granting it an option to acquire Trab-23 from EMX (see EMX news
release dated February 27, 2013). The Trab-23 Agreement provides for in-ground
spending requirements, a revenue stream of annual earn-in and pre-production
payments, and a revenue stream based upon production. The Trab-23 Agreement was
contingent upon approval by Turkeys General Directorate of Mining Affairs
(MIGEM) to combine the two EMX exploration licenses into a single exploitation
license. This license combination was completed in 2014.
Alankoy Property
The Alankoy gold-copper property is located in the Biga
Peninsula of northwestern Turkey, in an area noted for recent discoveries
characterized by alunite-rich epithermal alteration and the development of vuggy
silica lithocaps. EMX outlined a six square kilometer area of lithocaps and
quartzalunite and argillic alteration with gold-copper mineralization based
upon geologic mapping, rock and soil sampling, spectral analyses, ground
magnetics, and historic reconnaissance drill results.
An Exploration and Option Agreement (the Alankoy Agreement)
with Ferrite was executed in December 2013 (see EMX news release dated January
7, 2014). The Alankoy Agreement granted Ferrite the option to acquire EMX
subsidiaries that hold the Alankoy project for work commitments, cash payments,
advance annual royalty payments, a milestone payment based upon completion of an
NI 43-101 or JORC compliant feasibility study, and 3% royalty payments to EMX
upon commencement of commercial production from the property.
MIGEM approval of the transfer of the Alankoy project license
to the local EMX subsidiary that Ferrite acquired, which was a condition
precedent for the transaction, was obtained in 2014. Small scale iron production
was completed during Q3 2014 under the terms of the Alankoy operating license.
EMX understands that Ferrite is currently reviewing plans for its 2015 work
program.
Other Property Interests
EMX has a royalty interest in the Aktutan polymetallic project
sold to Dedeman in 2007 for considerations that also include a 4% uncapped NSR.
The Sofular royalty property, also held by Dedeman, was dropped in Q1 2015 due
to a lack of encouraging exploration results.
Qualified Person
Michael P. Sheehan, CPG, a Qualified Person as defined by NI
43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Turkey.
North America
Eurasians portfolio in North America, advanced through
wholly-owned subsidiary Bronco Creek, includes porphyry copper-molybdenum,
porphyry copper-gold, bulk tonnage gold, and high-grade gold-silver vein
projects. The BCE portfolio is comprised of 22 properties covering more than
35,000 hectares in Arizona, Nevada, Utah, and Wyoming. EMX currently has six
properties partnered through BCE. In addition, there are five properties
acquired in the 2012 merger with Bullion Monarch. Of these, four are EMX royalty
properties, including Leeville and Maggie Creek (see Leeville and Royalty
Property Overview section above), and one is an exploration project available
for partnership.
The Companys 2014 work focused on advancing partner funded
projects, executing new agreements for available projects, and balancing the
portfolio by acquiring new properties on open ground while dropping low priority
projects. Eurasian is in discussions with a number of potential partners for the
available North American properties, as well as for regional exploration
alliances.
33
Cathedral Well Property
The Cathedral Well project is located at the southern end of
the Battle Mountain-Eureka gold trend and surrounds most of the historic Green
Springs mine. Eurasian announced the execution of an option agreement with Ely
Gold for the Cathedral Well property early in June 2014 (see EMX news release
dated July 7, 2014). Ely Gold may earn a 100% interest in the property by making
staged option payments and granting EMX a 2.5% NSR royalty, inclusive of an
underlying 0.5% NSR royalty. After earning 100% interest in the project, Ely
Gold will pay EMX annual advance royalties until commencement of commercial
production.
Eurasian understands that Ely Gold is planning a drill program
to test multiple targets across the consolidated Green Springs property
position, including underlying sedimentary units that are important host rocks
elsewhere in the region and remain largely untested across the property.
Copper King, Red Top, and Copper Springs Properties
The Copper King, Red Top, and Copper Springs properties are
three porphyry copper-molybdenum projects located in the Globe-Miami and
Superior (Pioneer) mining districts. EMX executed three separate Option Purchase
Agreements with Desert Star, whereby Desert Star can acquire a 100% interest in
each of the projects for cash, shares, and work commitments, after which EMX
will retain a 2.5% NSR royalty (see EMX news release dated September 4, 2013).
In January 2015, Eurasian regained 100% control of the Copper Springs project
after Desert Star elected to not exercise its option for the property.
Desert Star funded permitting and completion of IP geophysical
surveys at Copper King and Red Top that further delineated concealed targets for
drill testing. At Copper King, strong chargeability and resistivity anomalies
support EMXs target concept of a tilted porphyry copper system lying beneath
less altered host rocks. At Red Top, the geophysical anomaly lies to the north
of the original target, and Desert Star staked additional mining claims covering
this new area. Drill permits for both properties are expected in Q2 2015.
Buckhorn Creek, Jasper Canyon, and Frazier Creek Properties
The Buckhorn Creek and Jasper Canyon copper-molybdenum projects
are located in the Laramide porphyry copper belt of southern Arizona and the
Frazier Creek copper-molybdenum project is located in the Battle Mountain-Eureka
trend of north-central Nevada. These properties were optioned to Savant in
2013 under three separate option agreements for cash, shares, and work
commitments (see EMX news release dated October 30, 2013). In Q3 2014, Eurasian
regained 100% control of the Jasper Canyon project after Savant elected to not
exercise its option for the property.
34
BCEs recognition of post-mineral structural relationships, and
the application of alteration and geochemical zoning patterns in that context,
has identified untested porphyry copper targets at the Buckhorn Creek and
Frazier Creek projects. Savant completed an IP geophysical survey at Buckhorn
Creek that highlighted two strong chargeability anomalies coincident with a
previously identified structural target, and continues to work on permitting for
a drill test. Savants geologic mapping and geochemical sampling at Frazier
Creek confirmed alteration and anomalous copper-molybdenum over a 1.8 by 0.8
kilometer area, and subsequently obtained drill permits. In October, Savant
attempted to drill two separate holes into the target area, but did not reach
target depths due to poor drilling conditions within 100 meters of the collar.
Eurasian has reviewed the Jasper Canyon exploration data
generated by Savants work, and believes that the target rocks remain untested
at shallow levels. Jasper Canyon is now available for partnership.
Copper Basin Property
The Copper Basin copper-molybdenum property, located in central
Arizona, was acquired under a Regional Acquisition Agreement with Vale S.A., a
publicly traded Brazilian multinational diversified metals and mining Company,
and advanced under a Designated Project earn-in agreement. Surface exploration
and drill results confirmed the presence of a porphyry copper-molybdenum system
with nearly a kilometer of vertical extent within a 1.5 square kilometer area of
porphyry-style alteration, mineralization, and related geophysical
anomalies.
Vale funded a three hole diamond drill program totaling 1,140.1
meters completed in June 2014. Two of the holes, CB-14-01 and CB-14-02 were
drilled in the western target area to test for sources of mineralized dikes and
igneous breccias encountered in the 2013 drill program, and both holes were
terminated in anomalous (~0.04 -0.20% Cu) to low-grade (0.2 -0.4% Cu)
mineralization. Hole CB-14-01 intercepted anomalous to low-grade copper
(molybdenum) mineralization at 240 meters that generally increased with depth
from 286 meters to the end-of-hole at 387.1 meters. Hole CB-14-02 intercepted
multiple structurally controlled zones (~3-5 m in width) of weakly anomalous
copper (molybdenum) mineralization. The third hole, CB-14-03 was collared in the
south-central portion of the central zone and intercepted strongly anomalous to
low-grade copper (molybdenum) mineralization along its entire 310.9 meter
length. Vale relinquished its Copper Basin interest in July 2014, with EMX
regaining 100% control of the project. Vale spent more than US $3.5 million
exploring the property by completing geologic mapping, sampling, geophysical
surveys, and 3,916 meters of drilling in two programs.
The Copper Basin project is available for partnership, with
much of the original target untested by drilling. This target is highlighted by
alteration and mineral zoning that vectors towards a magnetic low interpreted to
represent the shallower portion of the copper-molybdenum system concealed
beneath less altered host rocks. Refer to EMX news release dated July 27, 2013
and www.eurasianminerals.com for more information on Copper Basin exploration
results and a description of the QA and QC measures used for the project.
Superior West Property
The Superior West project is located west of the historic
mining town of Superior, Arizona, and adjacent to Resolution Coppers property.
The project covers several porphyry copper targets, as well as the interpreted
western extension of the historic Magma Vein. EMX regained 100% control of the
property, after joint venture partner Freeport-McMoRan Exploration Company
(Freeport) of Phoenix, Arizona terminated its interest in the project in Q2
2014 due to budget cut backs on all greenfields exploration projects.
EMXs review of geophysical data received from Freeports
earlier work identified a linear anomaly transecting a portion of the property
that coincides with the Companys interpreted structural offset of the Magma
Vein. Subsequently, EMXs ongoing geologic evaluation of the property resulted
in the staking of additional prospective ground and the recognition of another
porphyry target in the southern portion of the property. Eurasian has been in
discussions with several potential partners interested in the property.
Lomitas Negras Property
EMXs Lomitas Negras project is located in southeast Arizona,
approximately 16 kilometers south of the San Manuel-Kalamazoo deposit. The
project contains isolated altered outcrops with anomalous base metals
mineralization that occur within a broad area of post-mineral cover rocks. An
option agreement with Kennecott was announced in May 2014 (see EMX news release
dated May 15, 2014). After completing a reconnaissance diamond drill program
during the third quarter, and subsequently acquiring additional mineral rights, Kennecott
relinquished its interest in the project. The property is available for
partnership.
35
Yerington West Property
The Yerington West joint venture property, located in the
Yerington mining district of west-central Nevada, is partnered with Entrée Gold
Inc. (TSX: ETG; NYSE: EGI) of Vancouver, British Columbia (Entrée). The
project comprises a porphyry copper-molybdenum target, part of which was
intersected in a 2012 drill program, and a copper-iron skarn target beneath
cover rocks. Entrée continued their work on the adjacent Ann Mason property,
including a pre-feasibility drill program that commenced in August 2014 (see ETG
news release dated January 21, 2015).
EMX has a 100% interest in the Yerington West project until
Entrée completes its initial earn-in requirements.
Other Work Conducted by Eurasian in the U.S.
EMX continued evaluation of property and royalty acquisition
opportunities in North America, and streamlined the portfolio by dropping low
priority projects. The generative work focused on gold opportunities in the
Great Basin and porphyry copper targets in Arizona. EMX acquired the Sleeping
Beauty and Águila de Cobre copper-molybdenum porphyry projects in Arizona by
staking open ground. EMX elected to drop the Red Hills project after termination
of the joint venture by GeoNovus, and also dropped the 100% EMX-controlled
Cruiser Gold, Bullion Creek and Sand Pass projects located in Nevada, Arizona,
and Utah, respectively. In Alaska, the Companys Moran Dome and Liberty royalty
properties were dropped by Gold Canyon Partners, and EMX elected to not
reacquire the ground.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on North America.
Australia and New Zealand
EMX continued to execute the royalty generation and partnership
business model in Australia and New Zealand. The Koonenberry gold project in New
South Wales, Australia is being advanced by partner companies under favorable
royalty agreements with EMX. In New Zealand, Eurasian executed a definitive
agreement to sell the Neavesville gold-silver project, and submitted
applications for two new gold-silver exploration properties with historic
resources.
36
Koonenberry Property
The Koonenberry project is positioned along the northwest
trending, regional-scale Koonenberry fault in southeastern Australia. This
deep-seated structural zone has multiple splays that project into, and through,
the project area. EMX recognized that the distribution of gold occurrences and
gold geochemical anomalies are coincident with these prominent structural
features.
In 2014, EMX announced the signing of an Exploration and Option
Agreement (the NQM Agreement) with North Queensland Mining Pty Ltd. (NQM), a
privately-held Australian company, to earn a 100% interest in the subsidiary
that holds the EMX licenses, with EMX retaining a 3% production royalty upon
earn-in (see EMX news release dated February 19, 2014 for more details).
Subsequently, EMX was granted a new exploration permit covering 88.5 square
kilometers that were previously held under option by Eurasian. This newly
granted EMX tenement was added under the NQM Agreement. All of EMXs interests
in Koonenberry are being advanced by other companies, with EMX retaining various
royalty interests that cover the entire project area totaling over 1,400 square
kilometers. The majority of the prospective ground covered by this extensive
royalty position remains unexplored.
Neavesville Property
The Neavesville project consists of a single exploration
permit, resulting from the combination of two permits during 2014, totaling over
30 square kilometers in the Hauraki goldfield of New Zealands North Island. EMX
acquired Neavesville, which covers an historic JORC gold-silver resource, on
open ground with minimal cost. The property hosts epithermal gold-silver
mineralization that has geologic features similar to other deposits of the
Hauraki goldfield, including Newmonts Martha Hill gold-silver mine located 25
kilometers to the southeast.
EMX has conducted reconnaissance geologic mapping, verification
rock sampling, a CSAMT geophysical survey, and reconnaissance reverse
circulation drilling at Neavesville. These programs not only helped to
independently confirm historic areas of mineralization, but also identified new
and untested gold-silver targets. EMX also concluded negotiations on a Joint
Venture and Access Agreement with landholders that will provide certainty and
clarity for ongoing exploration within the project area.
In November 2014, Eurasian announced a definitive agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, giving L&M the right to acquire Hauraki Gold Ltd. (Hauraki), the
wholly-owned EMX subsidiary that controls the Neavesville property. The
agreement with L&M provides for work obligations, staged payments, milestone
payments based upon JORC reserves, and commercial production payments, all to
the benefit of Eurasian (see EMX news release dated November 13, 2014).
The Neavesville exploration permit covers two main centers of
epithermal gold-silver mineralization. The principal target, named Trig Bluffs,
has a historic near-surface inferred resource of 3.2 million tonnes averaging
2.7 g/t gold and 8.9 g/t silver, and containing 289,000 ounces of gold and
944,000 ounces of silver (R. Brathwaite, IGNS report, 1999; 2001)1.
In addition, a separate higher-grade historic inferred mineral resource of
approximately 0.47 million tonnes at 7.1 g/t gold and 20.7 g/t silver, and
containing 107,000 ounces of gold and 312,000 ounces of silver, was reported for
mineralization at depth beneath Trig Bluffs (R. Brathwaite, IGNS report, 1999;
2001)2. The district has recorded historic small scale production
from the high-grade Ajax Vein system, the single largest producing historic mine
in the Neavesville camp, which will be the initial target of an L&M funded
drilling program slated for late March 2015.
See EMX news releases dated November 19, 2012 and November 13,
2014 for further details on the historic resource, EMXs exploration results,
and a description of the QA and QC measures used by Eurasian for the Neavesville
project.
1,2 A Qualified Person has not performed sufficient
work to classify the historic estimates as current mineral resources, and EMX is
not treating the estimates as current mineral resources. The historic estimates
should not be relied upon until they can be confirmed. However, the
drill-delineated Trig Bluffs gold-silver mineralization described by the IGNS
report is considered reliable and relevant.
The near-surface, historic resource estimate for the upper
zone was based upon a cut-off grade of 0.7 g/t gold. The historic inferred
mineral resource for the deeper mineralization assumed a cut-off grade of 10
gram-meters (i.e. the product of the gold grade and true width thickness of the
drill hole intercept).
37
Qualified Person
Chris Spurway, MAIG, FAusIMM, a Qualified Person as defined by
NI 43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Australia and the Asia-Pacific.
Europe
Eurasian continues to emphasize Scandinavia as a highly
favorable jurisdiction for mineral exploration and development, and has
assembled a portfolio of 100% controlled projects in Sweden and Norway that are
available for partnership. While acquiring new properties at minimal cost in
Norway, Eurasian is streamlining its portfolio of mineral properties in Sweden.
In addition, EMX also maintains royalty interests in its Viscaria project in
northern Sweden, as well as a portfolio of properties in Serbia that includes
the Cukaru Peki copper-gold discovery.
Sweden
Eurasians portfolio in Sweden includes VMS and IOCG
properties, in addition to known areas of copper, gold, and platinum group
element-enriched styles of mineralization. EMX holds a royalty interest in the
Viscaria iron-copper property acquired from the 2010 purchase of the assets of
Phelps Dodge Exploration Sweden AB.
Exploration Projects EMX focused on
retaining and advancing the most prospective exploration projects, while
reducing expenditures, during the year. Prior to 2014, much of EMXs exploration
work in Sweden was funded by a Strategic Alliance and Earn-In Agreement with
Antofagasta which focused on copper exploration from 2011-2013. The Company has
been in ongoing discussions with various parties regarding its available
properties in Sweden described below.
• |
The Sakkek-Pikkujärvi and Puoltsa projects are located in
the Kiruna mining district of northern Sweden. The Sakkek- Pikkujärvi
property contains multiple IOCG-type copper, iron and gold targets,
including a small historic copper resource defined in the 1980s. The
Puoltsa project is amidst a cluster of past producing mines, and hosts a
number of prospective mineral occurrences including drill defined zones of
copper mineralization. |
|
|
• |
The Iekelvare project has widespread IOCG-style
alteration/mineralization, and several untested targets. EMXs work
generated multiple targets of structurally focused, high-grade zones of
IOCG-style and porphyry-style copper-gold mineralization that are ready
for follow-up drilling. |
|
|
• |
The Adak project is located in the Skellefte mining
district, and has a record of historic production from four small-scale
mines that exploited stratiform to stratabound chalcopyrite-rich VMS
mineralization. Mineralization projected along strike and down dip from
the historic mines provides priority exploration targets. |
|
|
• |
The Storåsen property is a mafic metavolcanic-hosted
Cu-PGE-Au system. Thirty-five shallow core holes were drilled by the
Geological Survey of Sweden (SGU) from 1980-1989, and a historic
resource was defined by Popular Resources in 2002 based upon the SGUs
drilling. EMX has identified multiple prospective targets, including
extensions of the historic resource, untested soil and base-of-till copper
anomalies, and clusters of mineralized boulders. |
38
-
The Gumsberg polymetallic (lead-zinc-silver-copper-gold) property occurs in the historic Bergslagen District of southern Sweden. Gumsberg contains five historic mines that were active from the 1880s to 1920s, with production focused on
lead-zinc-silver mineralization from VMS-type deposits. In January 2015, a winter geophysical program was executed on the Gumsberg project. Self-potential and magnetic data collected appear to map extensions of known bodies of mineralization along
strike, and have also identified new exploration targets.
Viscaria Royalty Property Avalon Minerals Ltd., a public company traded on the Australian Securities Exchange, announced an updated scoping study for EMX’s Viscaria royalty property, including new JORC compliant resource
estimates and open pit optimization scenarios, in an August 28, 2014 news release. EMX holds a 1.0% net smelter return royalty over the Viscaria 101 Exploration Permit, which includes the Zone A, Zone B and Zone D copper-iron resources described in
Avalon’s updated report. A Finnish company, Outokumpu Oyj, is entitled to receive 0.5% NSR royalty payable from EMX’s royalty, resulting in Eurasian receiving net 0.5% NSR royalties until Outokumpu has received a total of $12 million
in royalty payments, after which time EMX will receive the full benefit of the 1.0% NSR royalty. The Viscaria project is an IOCG-style deposit located in the Kiruna mining district in northern Sweden.
Norway
EMX initiated a program in 2014 to evaluate opportunities in Norway, and initially acquired the Burfjord and Storbekken properties by acquiring open ground. Burfjord contains multiple IOCG-type targets in northern Norway, and is marked by numerous
small scale historic mines and prospects, as well as outcropping copper and gold mineralization. Storbekken hosts multiple exposures of gold-enriched VMS-style mineralization near the historic Røros mining district in southern Norway. A
winter geophysical program was executed in January 2015 on the Storbekken project. Self-potential and magnetic data collected appear to have identified new exploration targets.
In January 2015, the Hatt, Vaddas, and Melkedalen VMS projects were acquired by Eurasian after monitoring the status of these areas for several years. These projects were available for direct purchase with minimal cost. The Vaddas and Melkedalen
properties host small tonnage zinc and copper historic resources.
Royalty Properties in Serbia
EMX’s portfolio in Serbia initially resulted from early stage prospect generation and organic royalty growth from the sale of its properties, including the Brestovac West, Deli Jovan, and Plavkovo projects, to Reservoir Minerals Inc.
(“Reservoir”) in 2006. The terms of the sale included uncapped NSR royalties payable to EMX at a rate of 2% for gold and silver, and 1% for all other metals. Subsequently, Eurasian acquired an uncapped 0.5% NSR royalty covering
Reservoir’s share of minerals and metals mined from the Brestovac and Jasikovo properties (see EMX news release dated February 4, 2014). The Brestovac, Brestovac West, and Jasikovo properties are included in the Timok Project joint venture
between Reservoir (45%) and Freeport McMoRan Exploration Corp. (55%).
39
Brestovac hosts porphyry and epithermal copper-gold
mineralization at the Cukaru Peki deposit. In January 2014, Reservoir announced
an initial NI 43-101 resource estimate for the Cukaru Peki deposits High
Sulphidation Epithermal (HSE) zone of copper and gold mineralization (see
Reservoir news release dated January 27, 2014). According to Reservoir, the HSE
inferred resource above a 1% copper equivalent (CuEq% = Cu% + (Au g/t x
0.6)) cut-off was estimated to be 65.3 million tonnes at an average grade of
2.6% copper and 1.5 grams per tonne (g/t) gold, or 3.5% copper-equivalent,
containing 1.7 million tonnes (3.8 billion pounds) copper and 3.1 million ounces
gold or 2.3 million tonnes (5.1 billion pounds) copper-equivalent. Reservoir
stated in its news release that the discovery at Cukaru Peki demonstrates the
potential for additional blind discoveries within the Timok Magmatic Complex.
Reservoir announced in a March 12, 2015 news release that a
2015 budget of US$ 18.7 million had been approved by the Timok Project joint
venture "to move the project forward toward the completion of a scoping study".
EMX's Timok Project royalty properties add strategic upside potential for
Eurasian in one of the richest copper-gold mineral belts in Europe.
Qualified Person
Eric P. Jensen, CPG, a Qualified Person as defined by NI 43-101
and employee of the Company, has reviewed, verified and approved the above
technical disclosure on Europe.
Haiti
Eurasian and joint venture partner Newmont Ventures Limited, a
wholly owned subsidiary of Newmont, (collectively, the JV) have a land
position along a 130 kilometer trend of Haitis Massif du Nord mineral belt.
Newmont is funding and managing six joint venture Designated Projects across
northern Haiti. EMXs work on the 100% controlled Grand Bois gold-copper project
is not subject to the JV with Newmont.
40
The designated projects with Newmont and EMXs Grand Bois
Project have been on care and maintenance status since 2013, when the Haitian
government suspended its Mining Convention process while it began working on a
new mining law with the help of the World Bank. The Governments goal is to
reform the mining law to be more consistent with current international
standards.
There were ongoing consultation meetings between the World
Bank, the Government of Haiti, the JV and other mining companies, and business
community and civil society representatives to present comments on draft
versions of the new Haitian Mining Code. After the appointment of a new Prime
Minister and the dissolution of Parliament in late 2014-early 2015, the
government is now planning for legislative elections in late 2015. At this stage
the JV does not expect further progress on the new Mining Law until later in
2016.
EMX remains committed to supporting the process of reforming
Haiti's Mining Law as a step towards developing the mining sector and
contributing to the country's economic growth.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Haiti.
Strategic Investments
IG Copper LLC
EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the Malmyzh
copper-gold porphyry project in Far East Russia. IGC has a 51% ownership
interest in the Malmyzh joint venture, with Freeport retaining a 49% interest.
IGC is operating and managing the project. The Salasinskaya and Shelekhovo
projects, 200 kilometers northeast of Malmyzh, are 100% controlled by IGC and
not subject to the joint venture with Freeport. EMX is IGCs largest
shareholder, with 42.3% of the issued and outstanding shares (39.7% equity
position on a fully-diluted basis) from investments totaling US$7.8 million.
41
Malmyzh Project
Malmyzh is a grassroots, district-scale discovery with 14
porphyry copper-gold prospects identified within a 16 by 5 kilometer intrusive
corridor. The propertys 153 square kilometers of exploration and mining
licenses occur 220 kilometers northeast of the Russia-China border at
Khabarovsk. Malmyzh has excellent logistics and infrastructure, including high
voltage power lines, a natural gas pipeline, a paved national highway, the Amur
River, and a rail line that are all nearby to the property.
Copper-gold mineralization occurs in diorite porphyry
intrusives, as well as in hornfels-altered and stockworked sedimentary wall
rocks, and consists of near-surface zones (i.e., within 0.5 to 50 meters of the
surface) of variable chalcocite enrichment grading into chalcopyrite-rich and
chalcopyrite-bornite-magnetite mineralization to depth. Much of the property has
more than 15 meters of cover and is undrilled, thereby providing considerable
exploration upside potential for additional discoveries.
The majority of drilling, totaling more than 70,000 meters in
over 200 core holes, has concentrated on defining the Central, Freedom, Valley,
and Flats prospects at nominal 200 by 200 or 200 by 400 meter centers, and
generally to less than 500 meters depth. All four prospects remain open at
depth. Near-surface drill intercepts, starting at 1.0 to 43.9 meters,
include1:
|
Central (AMM-035): |
406.7 m @ 0.52% Cu & 0.29 g/t
Au (0.69% Cu eq) |
|
|
|
|
Freedom (AMM-056): |
459.3 m @ 0.36% Cu & 0.41 g/t
Au (0.61% Cu eq) |
|
|
including 111.6 m @ 0.80% Cu
& 1.01 g/t Au (1.41% Cu eq) |
|
|
|
|
Valley (AMM-089): |
459.2 m @ 0.47% Cu & 0.21 g/t
Au (0.59% Cu eq) |
|
|
including 99.4 m @ 0.69% Cu &
0.40 g/t Au (0.93% Cu eq) |
|
|
|
|
Flats (AMM-002): |
474.7 m @ 0.26% Cu & 0.28 g/t
Au (0.43% Cu eq) |
|
|
including 134.3 m @ 0.35% Cu
& 0.45 g/t Au (0.62% Cu eq) |
1 CuEq = Cu% + (Au g/t x 0.6). Metallurgical
recoveries and net smelter returns are assumed to be 100%. Reported intervals
are interpreted as true widths in porphyry style mineralization. See
Eurasian news releases dated September 6, 2012 and November 5, 2013 for more
information.
The copper-gold mineralization in these four deposits have
potential open-pit geometries with low stripping ratios. Mineralized zones
averaging ~1 to 1.5% copper equivalent (i.e., AMM-041, 43.9 m @ 1.23 Cu% and
0.53 g/t Au, 1.55% Cu eq) indicate the potential to delineate higher grade zones
within the prospects by in-filling the 200 meter drill grids.
42
IGC advanced Malmyzh in 2014 by completing drafts of project
reports in preparation for initial reviews by the relevant Russian Federation
agencies. As IGC continues to advance Malmyzh, several international mining
companies have expressed interest in the project.
Salasinskaya and Shelekhovo Projects
In 2014, IGC advised EMX that it had acquired the 260 square
kilometers Salasinskaya property, located 20 kilometers from IGCs Shelekhovo
project. Salasinskaya and Shelekhovo are 100% controlled by IGC. At Shelekhovo,
historic government exploration surveys identified multiple occurrences of gold,
silver, and copper associated with quartz veining and alunite (see EMX news
release dated November 5, 2013). Salasinskaya is considered to be the northern
extension of the Shelekhovo anomaly cluster, and is marked by the widespread
occurrence of quartz-alunite alteration. The Salasinskaya and Shelekhovo
properties occur along trend to the northeast of Malmyzh. Together, these three
properties cover approximately 800 square kilometers of exploration ground
occurring along a 200 kilometer belt of prospective Cretaceous-age arc terrane
rocks.
Further discussion of IGCs exploration results and EMXs due
diligence data verification and QA and QC procedures can be found in the
Companys September 6, 2012 and November 5, 2013 news releases.
Revelo Resources Corp.
EMX has a strategic investment in Revelo Resources Corp.
(TSX-V: RVL), a company focused on the acquisition and exploration of mineral
properties in the prolific metallogenic belts of northern Chile. Revelo was
formed from the merger of Iron Creek Capital Corp. and Polar Star Mining Corp.
in December 2014. Revelo has a corporate office in Vancouver (Canada), a
technical office in Santiago (Chile), and a strong shareholder base in Canada,
the United States and London.
Revelo controls approximately 300,000 hectares of 100% owned
exploration tenements. The portfolio is comprised of 16 exploration projects
prospective for copper, gold and silver including five projects already under
option or JV agreements with Kinross Gold Company (Las Pampas Project), Newmont
(Montezuma Project), and BHP Billiton (Block 2 Project). In addition, Revelo
retains one royalty interest in the Victoria Project, an important
copper-gold-silver exploration project in northern Chile.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Strategic Investments.
Geothermal Royalties
EMX initiated a geothermal energy program in 2010, and acquired
assets in Slovakia and Peru. Eurasian subsequently sold its geothermal assets in
2013 to Starlight Geothermal Ltd. (SGL), a private company based in
California, for cash payments, an equity position in SGL, and gross royalties of
1.0% in Slovakia and 0.5% in Peru from future geothermal energy production (see
EMX news release dated August 7, 2013).
Slovakia
EMXs geothermal royalty properties in Slovakia are located in
the Ziar Basin of west-central Slovakia and the Pannonian Basin in the eastern
part of the country. SGL conducted additional geophysical, geological, and
technical assessments of its geothermal concessions in 2014. Eurasian
understands that SGL is actively discussing project financing and power
purchasing agreements with various third parties in Europe.
Peru
EMX has royalties on four SGL geothermal licenses that occur in
prospective regions of Perus Western and Eastern Cordillera. SGL conducted
technical, infrastructure, and market assessments during 2014, and Eurasian
understands that SGL is considering follow-up geophysical surveys and technical
assessments for 2015.
ITEM 4A. UNRESOLVED STAFF COMMENTS
--- No Disclosure Necessary ---
43
ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS
Years Ended December 31, 2014, 2013 and 2012
GENERAL
This discussion and analysis of financial position and results
of operations is prepared as at April 30, 2015 and should be read in conjunction
with the audited annual consolidated financial statements of the Company for the
years ended December 31, 2014, 2013 and 2012 and the related notes thereto.
Those consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB) and interpretations of
the International Financial Reporting Interpretations Committee (IFRIC).
Eurasian and its subsidiaries are engaged in the acquisition,
exploration and evaluation of mineral assets in Turkey, Haiti, Europe, USA and
the Asia Pacific region, and the investment in a royalty income stream in
Nevada, USA. The Companys common shares are listed on the TSX-V under the
symbol of EMX and on the NYSE MKT under the symbol of EMXX. The Companys
head office is located at 501 - 543 Granville Street, Vancouver, British
Columbia, Canada V6C 1X8.
These consolidated financial statements have been prepared
using IFRS applicable to a going concern, which assumes that the Company will be
able to realize its assets, discharge its liabilities and continue in operation
for the following twelve months.
On August 17, 2012, the Company and its wholly-owned
subsidiary, EMX (Utah) Corp. completed an Agreement and Plan of Acquisition with
Bullion whereby the Company acquired 100% of the issued and outstanding shares
of Bullion.
The Company’s working capital position at December 31, 2014 was $7,096,916. With its current plans for the year and the budgets associated with those plans, in order to continue funding its administrative and exploration expenditures from the date of this Form 20-F, the Company will need to obtain additional cash and anticipates either financing or selling one or more of its assets.
Some of the Companys activities for exploration and evaluation
assets are located in emerging nations and, consequently, may be subject to a
higher level of risk compared to other developed countries. Operations, the
status of mineral property rights and the recoverability of investments in
emerging nations can be affected by changing economic, legal, regulatory and
political situations.
At the date of these consolidated financial statements, the
Company has not identified a known body of commercial grade mineral on any of
its exploration and evaluation assets. The ability of the Company to realize the
costs it has incurred to date on these exploration and evaluation assets is
dependent upon the Company identifying a commercial mineral body, to finance its
development costs and to resolve any environmental, regulatory or other
constraints which may hinder the successful development of the exploration and
evaluation assets.
These consolidated financial statements of the Company are
presented in Canadian dollars unless otherwise noted, which is the functional
currency of the parent company and its subsidiaries except as to Bullion, the
holder of a royalty income stream whose functional currency is the United States
(US) dollar.
DESCRIPTION OF BUSINESS
Eurasian is a Tier 1 company that trades on the TSX-V and the
NYSE MKT. It is principally in the business of exploring for, and generating
royalties from, metals and minerals properties. The Companys royalty and
exploration portfolio mainly consists of properties in North America, Turkey,
Europe, Haiti, Australia, and New Zealand. The Company started receiving royalty
income as of August 17, 2012 when it acquired Bullion. This royalty cash flow
helps to provide a foundation to support the Companys growth over the long
term.
Eurasian operates as a royalty and prospect generator. Under
the royalty and prospect generation business model, Eurasian acquires and
advances early-stage mineral exploration projects and then forms partnerships
with other parties for a retained royalty interest, as well as annual advanced
royalty and other cash or share payments. Through its various agreements,
Eurasian also provides technical and commercial assistance to partner companies
as the projects are advanced. By optioning interests in its projects to third
parties for a royalty interest, Eurasian a) reduces its exposure to the costs
and risks associated with mineral exploration and project development, while b)
maintaining the opportunity to participate in early-stage exploration upside,
and c) developing a pipeline for potential production royalty payments and
associated "brownfields" discoveries in the future. This approach helps preserve
the Companys treasury, which can be utilized for further project acquisitions
and other business initiatives.
44
Strategic investments are an important complement to the
Companys royalty and prospect generation initiatives. These investments are
made in unrecognized or under-valued exploration companies identified by
Eurasian. EMX helps to develop the value of these assets, with exit strategies
that can include royalty positions or equity sales.
EXPLORATION REVIEW
PROPERTY OVERVIEW
TURKEY
Eurasian holds multiple mineral property interests in Turkeys
Western Anatolia and Eastern Pontides mineral belts. The properties include bulk
tonnage gold, gold-silver vein, and porphyry gold-copper targets. Six of the
seven EMX projects in Turkey are being advanced by partner companies, with the
portfolio consisting of two royalty properties and four properties optioned for
a retained royalty interest. A seventh property, the Sisorta epithermal gold
project, is 49% controlled by Eurasian and is currently available for sale or
partnership.
Akarca Property
The Akarca Property is a 2006 Eurasian exploration discovery in
Turkeys Western Anatolia region. The Akarca Property is currently wholly-owned
by EMX. An Option Agreement (the "Akarca Agreement") was executed in June 2013
with Çolakoğlu Ticari Yatirim A.S. ("Çolakoğlu"), a privately owned Turkish
company, for a combination of cash payments, work commitments, and an uncapped
3.5% NSR royalty interest to EMX's benefit (see EMX news release dated June 20,
2013). From June 2013 through December 2014, Çolakoğlu conducted drilling,
trenching, geological mapping, geochemical sampling, and various project
studies.
The Akarca project area currently has six drill defined zones
of epithermal gold-silver oxide mineralization. Further, there are several
additional mineralized zones identified from reconnaissance level drilling and
surface sampling. Since its discovery, 244 core and reverse circulation holes
totaling about 26,400 meters have been drilled at the Akarca project, most with
partner funding. As exploration continues, it is clear that the continuity of
the near-surface oxide zones of higher grade vein and disseminated styles of
mineralization are being successfully defined at a 25 to 50 meter drill spacing.
Furthermore, ongoing reconnaissance and step-out drilling is demonstrating
potential for new discoveries within broad areas mineralized by the gold-silver
epithermal system(s) at Akarca. Exploration successes at Akarca since 2006 have
led to in-the-ground investments of over US$12 million by partner companies.
In February 2015, Çolakoğlu requested, and was granted a six
month extension to August 2015 for exercise of their option as defined by the
Akarca Agreement. Çolakoğlu paid EMX US$100,000 "earnest money" of the
US$500,000 payment due at the time of exercise, with the remaining US$400,000
due upon option exercise in August. Ongoing programs underway by Çolakoglu
include metallurgical and environmental assessment studies.
Sisorta Property
The Sisorta project, located in the Eastern Pontides mineral
belt, is an epithermal gold deposit with a NI 43-101 mineral resource at a 0.4
g/t cutoff of 91,000 indicated gold ounces from 3.17 million tonnes averaging
0.89 g/t, and 212,000 inferred gold ounces from 11.38 million tonnes averaging
0.58 g/t. An overview of the methodology used to estimate these resources are
described in EMXs news release dated June 26, 2009. It should be noted that
5,550 meters of drilling have been completed since the resource was SEDAR filed
in 2009, including the best intercept to date on the project (see discussion
below).
The major developments subsequent to the 2009 Sisorta Technical
Report resulted from an option granted to Çolakoğlu to buy the Sisorta property
in 2012, but the agreement was terminated in 2013. Çolakoğlu advised that it
completed a 46 hole, 5,500 meter diamond drill program and other work totaling
approximately US$2.5 million in expenditures before terminating its option.
Chesser Resources Ltd. (Chesser) reported highlights from Çolakoğlus drilling
in a June 19, 2013 news release: a) the best drill intercept to date of 32.4
meters averaging 8.38 g/t gold and starting from the surface (true width
unknown), b) mineralized drill intercepts outside the current resource that
increase the gold zones lateral extent, and c) porphyry copper-gold targets
that remain to be tested.
45
The Sisorta property had until recently been in a joint venture
with project manager Chesser (51%) and EMX (49%). In March 2015, EMX purchased
Chesser's interest in the property, and assumed management of the project. As
Sisorta is now a 100% controlled asset of EMX, the Company is evaluating the
property's exploration upside, while pursuing partnership opportunities with
third parties.
Balya Royalty Property
The Balya royalty property is located in the historic Balya
lead-zinc-silver mining district in northwestern Turkey. EMX holds an uncapped
4% NSR royalty that it retained from the sale of the property to private Turkish
mining company Dedeman Madencilik San ve Tic. A.S. (Dedeman) in 2006 (see EMX
news release dated November 14, 2006). EMX understands that since acquiring the
property, Dedeman drilled approximately 190 core holes totaling over 34,000
meters. Dedeman's drilling in 2014 consisted of eleven holes that in-filled and
extended the Hastanetepe zone's lead-zinc-silver mineralization to the
southeast. EMX has also been advised by Dedeman that they re-initiated shaft
sinking and underground development work at Hastanetepe in early 2015.
Other Property Interests
Eurasian has option agreements that include retained royalty
interests for the Golcuk, Trab-23, and Alankoy exploration properties:
• |
The Golcuk copper-silver property is located in northeast
Turkey. Pasinex Resources Ltd. (Pasinex) signed an agreement in 2012
granting it an option to acquire a 100% interest in the Golcuk property
for shares and work commitments over a four year period, with EMX
retaining a 2.9% NSR royalty interest. Pasinex completed five holes
totaling 994.4 meters at Golcuk in 2014 and is reviewing the results in
context of its recently-received report on the structural geology of the
targeted area. |
|
|
• |
The Trab-23 property hosts both porphyry gold
(copper-molybdenum) mineralization and epithermal quartz-barite-gold
veins. Tumad Madencilik Sanayi ve Ticaret A.S. ("Tumad"), a private
Turkish company, executed an option agreement (the Trab-23 Agreement) in
2013 granting it an option to acquire Trab-23 for in-ground spending
requirements, annual earn-in and pre-production payments, and payments
based upon production. Tumad has notified Eurasian of its intention to
conduct an initial reconnaissance drill program on the property in 2015.
|
|
|
• |
The Alankoy gold-copper property is located in the Biga
Peninsula of northwestern Turkey. An Exploration and Option Agreement with
Ferrite Resources Ltd. (Ferrite), a privately-held Australian company,
was executed in December 2013. Ferrite has the option to acquire the
Alankoy project for work commitments, advance annual royalty payments, a
milestone payment based upon completion of a NI 43-101 or JORC compliant
feasibility study, and 3% royalty payments to EMX upon commercial
production. |
EMX has a royalty interest in the Aktutan polymetallic project
sold to Dedeman in 2007 for considerations that also include a 4% uncapped NSR.
The Sofular royalty property, also held by Dedeman, was dropped in Q1 2015 due
to a lack of encouraging exploration results.
Qualified Person
Michael P. Sheehan, CPG, a Qualified Person as defined by NI
43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Turkey.
NORTH AMERICA
Eurasians portfolio in North America, advanced through
wholly-owned subsidiary Bronco Creek Exploration (BCE), includes porphyry
copper-molybdenum, porphyry copper-gold, bulk tonnage gold, and high-grade
gold-silver vein projects. The BCE portfolio is comprised of 22 properties
covering more than 35,000 hectares in Arizona, Nevada, Utah, and Wyoming. EMX
currently has six properties partnered through BCE. In addition, there are five
properties acquired in the 2012 merger with Bullion Monarch. Of these, four are
EMX royalty properties, including the Northern Carlin Trend's Leeville royalty
(see Leeville and Royalty Property Overview section), and one is an exploration
project available for partnership.
The Companys 2014 work focused on advancing partner funded
projects, executing new agreements for available projects, and balancing the
portfolio by acquiring new properties on open ground while dropping low priority
projects. Eurasian is in discussions with a number of potential partners for the
available North American properties.
46
Properties active through partner funded programs in 2014 are
summarized below.
• |
The Cathedral Well project is located at the southern end
of Nevada's Battle Mountain-Eureka gold trend and surrounds most of the
historic Green Springs mine. Eurasian announced the execution of an option
agreement with Ely Gold and Minerals (Ely Gold) in June 2014 (see EMX
news release dated July 7, 2014). Ely Gold may earn a 100% interest in the
property by making staged option payments and granting EMX a 2.5% NSR
royalty, inclusive of an underlying 0.5% NSR royalty. After earning 100%
interest in the project, Ely Gold will pay EMX annual advance royalties
until commencement of commercial production. |
|
|
• |
The Copper King, Red Top, and Copper Springs properties
are three porphyry copper-molybdenum projects located in the Globe-Miami
and Superior (Pioneer) mining districts of Arizona. EMX executed three
separate Option Purchase Agreements with Desert Star Resources Ltd.
(Desert Star), whereby Desert Star could acquire a 100% interest in each
of the projects for cash, shares, and work commitments, after which EMX
will retain a 2.5% NSR royalty (see EMX news release dated September 4,
2013). Desert Star funded drill permitting and completion of geophysical
surveys at Copper King and Red Top. In January 2015, Eurasian regained
100% control of the Copper Springs project after Desert Star elected to
terminate its option for the property. |
|
|
• |
The Buckhorn Creek and Jasper Canyon copper-molybdenum
projects are located in the Laramide porphyry copper belt of southern
Arizona and the Frazier Creek copper-molybdenum project is located in the
Battle Mountain-Eureka trend of north-central Nevada. These properties
were optioned to Savant Explorations Ltd. (Savant) in 2013 under three
separate Exploration and Earn-in Agreements for cash, shares, and work
commitments (see EMX news release dated October 30, 2013). Savant funded
various exploration programs at the three properties in 2014. In Q3 2014,
Eurasian regained 100% control of the Jasper Canyon project after Savant
elected to terminate its option for the property. |
|
|
• |
The Copper Basin copper-molybdenum property, located in
central Arizona, was acquired under a Regional Acquisition Agreement with
Vale and advanced under a Designated Project earn-in agreement. Surface
exploration and drill results confirmed the presence of a porphyry
copper-molybdenum system with nearly a kilometer of vertical extent within
a 1.5 square kilometer area of porphyry-style alteration, mineralization,
and related geophysical anomalies. In 2014, Vale funded a 1,140 meter
diamond drill program, with all three holes intersecting anomalous to low
grade copper (molybdenum) mineralization. Vale relinquished its Copper
Basin interest in July 2014 after spending more than $3.5 million on the
property by completing geologic mapping, geochemical sampling, geophysical
surveys, and 3,916 meters of drilling in two programs. The Copper Basin
project is available for partnership, with much of the original target
untested by drilling. |
|
|
• |
The Superior West project is located west of the historic
mining town of Superior, Arizona, and adjacent to Resolution Coppers
property. The project covers several porphyry copper targets, as well as
the interpreted western extension of the historic Magma Vein. EMX regained
100% control of the property, after joint venture partner Freeport-McMoRan
Exploration Company of Phoenix, Arizona (Freeport) terminated its
interest in the project in 2014 due to budget cut backs on all
"greenfields" exploration projects. Eurasian has been in discussions with
potential partners interested in the property. |
|
|
• |
The Lomitas Negras project is located in southeast
Arizona, approximately sixteen kilometers south of the San Manuel-
Kalamazoo deposit. An option agreement with Kennecott Exploration Company
(Kennecott) was announced in May 2014 (see EMX news release dated May
15, 2014). After completing a reconnaissance diamond drill program, and
subsequently acquiring additional mineral rights, Kennecott relinquished
its interest in the project. The property is available for partnership.
|
|
|
• |
The Yerington West joint venture property, located in the
Yerington mining district of west-central Nevada, is partnered with Entrée
Gold Inc. (TSX: ETG; NYSE: EGI) of Vancouver, British Columbia (Entrée).
The project hosts porphyry copper-molybdenum and copper-iron skarn targets
beneath cover rocks. Entrée continued their work on the adjacent Ann Mason
property, including a pre-feasibility drill program that commenced in
August 2014 (see ETG news release dated January 21, 2015). EMX has a 100%
interest in the Yerington West project until Entrée completes its initial
earn- in requirements. |
In addition, EMX continued evaluation of property and royalty
acquisition opportunities in North America, and streamlined the portfolio by
dropping low priority projects. The generative work focused on gold
opportunities in the Great Basin and porphyry copper targets in Arizona. EMX
acquired the Sleeping Beauty and Águila de Cobre copper-molybdenum porphyry
projects in Arizona by staking open ground. EMX elected to drop the Red Hills
project after termination of the joint venture by GeoNovus, and also dropped the
100% EMX-controlled Cruiser Gold, Bullion Creek and Sand Pass projects located
in Nevada, Arizona, and Utah, respectively. Subsequent to year end, the Silver
Bell West option agreement with GeoNovus was terminated with EMX regaining 100%
interest in the project. In Alaska, the Company's Moran Dome and Liberty royalty
properties were dropped by Gold Canyon Partners, and EMX elected to not
reacquire the ground.
47
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on North America.
AUSTRALIA AND NEW ZEALAND
The Company's programs in the Australia and New Zealand region
have a low burn rate, and continue to identify new early-stage opportunities.
The Koonenberry gold project in New South Wales, Australia is being advanced by
partner companies under favorable royalty agreements with EMX. In New Zealand,
Eurasian executed a definitive agreement to sell the Neavesville gold-silver
project, and submitted applications for two new gold-silver exploration
properties with historic resources.
Koonenberry Property
The Koonenberry project is positioned along the northwest
trending, regional-scale Koonenberry fault in southeastern Australia. This
deep-seated structural zone has multiple splays that project into, and through,
the project area. EMX recognized that the distribution of gold occurrences and
gold geochemical anomalies are coincident with these prominent structural
features.
In 2014, EMX announced the signing of an Exploration and Option
Agreement (the North Queensland Agreement) with North Queensland Mining Pty
Ltd. (NQM), a privately-held Australian company, to earn a 100% interest in
the subsidiary that holds the EMX licenses, with EMX retaining a 3% production
royalty upon earn-in (see EMX news release dated February 19, 2014 for more
details). Subsequently, EMX was granted a new exploration permit covering 88.5
square kilometers that were previously held under option by Eurasian. This newly
granted EMX tenement was added under the North Queensland Agreement. All of
EMXs interests in Koonenberry are being advanced by partner companies, with EMX
retaining various royalty interests that cover the entire project area totaling
over 1,400 square kilometers. The majority of the prospective ground covered by
this extensive royalty position remains unexplored.
Neavesville Property
The Neavesville project consists of a single exploration
permit, combined from two permits during 2014, totaling over 30 square
kilometers in the Hauraki goldfield of New Zealand's North Island. EMX acquired
Neavesville, which covers a historic JORC gold-silver resource, on open ground
with minimal cost. The property hosts epithermal gold-silver mineralization that
has geologic features similar to other deposits of the Hauraki goldfield,
including Newmont's Martha Hill gold-silver mine located 25 kilometers to the
southeast.
EMX has conducted reconnaissance geologic mapping, verification
rock sampling, a CSAMT geophysical survey, and reconnaissance reverse
circulation drilling at Neavesville. These programs not only helped to
independently confirm historic areas of mineralization, but also identified new
and untested gold-silver targets. EMX also concluded negotiations on a Joint
Venture and Access Agreement with landholders that will provide certainty and
clarity for ongoing exploration within the project area.
In November 2014, Eurasian announced a definitive agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, giving L&M the right to acquire Hauraki Gold Ltd. (Hauraki), the
wholly-owned EMX subsidiary that controls the Neavesville property. The
agreement with L&M provides for work obligations, staged payments, milestone
payments based upon JORC reserves, and commercial production payments, all to
the benefit of Eurasian (see EMX news release dated November 13, 2014). A
L&M funded drilling program is scheduled to commence in late March 2015.
Qualified Person
Chris Spurway, MAIG, FAusIMM, a Qualified Person as defined by
NI 43-101 and employee of the Company, has reviewed, verified and approved the
above technical disclosure on Australia and New Zealand.
EUROPE
Eurasian continues to emphasize Scandinavia as a highly
favorable jurisdiction for mineral exploration and development, and has
assembled a portfolio of 100% controlled projects in Sweden and Norway that are
available for partnership. The Company has significantly reduced expenditures in
Scandinavia, and is examining ways to continue adding value while pursuing strategic partnerships. In addition to the exploration
properties in Sweden and Norway, EMX also maintains a royalty interest in
northern Sweden's Viscaria project, as well as a portfolio of royalty interests
in Serbia that includes Reservoir Mineral's Cukaru Peki copper-gold
discovery.
48
Sweden
Eurasians portfolio in Sweden includes volcanogenic massive
sulfide ("VMS") and Iron-Oxide-Copper-Gold ("IOCG") properties, in addition to
known areas of copper, gold, and platinum group element-enriched styles of
mineralization. EMX has focused on retaining and advancing the most prospective
exploration projects, while reducing expenditures during the last year. In
February 2015, Eurasian closed its office in Kiruna with the intention of
relocating to a more accessible and cost effective location in southern Sweden,
where much of Eurasians exploration work is now focused.
Much of EMX's earlier exploration work in Sweden was funded by
a Strategic Alliance and Earn-In Agreement focused on copper exploration with
Antofagasta Minerals S.A. from 2011 to 2013. The Company has been in ongoing
discussions with potential partners regarding the available properties in Sweden
that are summarized below.
• |
The Sakkek-Pikkujärvi and Puoltsa projects are located in
the Kiruna mining district of northern Sweden. The Sakkek- Pikkujärvi
property contains IOCG-type copper, iron and gold targets. Puoltsa is
amidst a cluster of past producing mines, and hosts a number of
prospective mineral occurrences including drill defined zones of copper
mineralization. |
|
|
• |
The Iekelvare project has widespread IOCG-style
alteration/mineralization, and several untested targets. |
|
|
• |
The Adak project is located in the Skellefte mining
district, and has a record of historic production from four small-scale
mines that exploited stratiform to stratabound chalcopyrite-rich VMS
mineralization that provide priority exploration targets along strike and
down dip. |
|
|
• |
The Storåsen property is a mafic metavolcanic-hosted
Cu-PGE-Au system. Thirty-five shallow core holes were drilled by the SGU
(the Geological Survey of Sweden) from 1980 to 1989, and a historic
resource was defined by Popular Resources in 2002 based upon the SGU's
drilling. |
|
|
• |
The Gumsberg polymetallic (lead-zinc-silver-copper-gold)
property occurs in the historic Bergslagen District of southern Sweden. In
January 2015, a winter geophysical program was executed that appears to
map extensions of known bodies of mineralization along strike, and has
identified new exploration targets. |
EMX holds a 1.0% NSR royalty interest in the Viscaria
iron-copper property acquired from the 2010 purchase of the Phelps Dodge
Exploration Sweden AB assets. The Viscaria project is an IOCG-style deposit
located in the Kiruna mining district in northern Sweden. Avalon Minerals Ltd.
(ASX:AVI) announced an updated Scoping Study for EMX's Viscaria royalty
property, including new JORC compliant resource estimates and open pit
optimization scenarios, in an August 28, 2014 news release. A Finnish company,
Outokumpu Oyj, is entitled to receive 0.5% NSR payable from EMXs royalty,
resulting in Eurasian receiving net 0.5% NSR royalties until Outokumpu has
received a total of $12 million in royalty payments, after which time EMX will
receive the full 1.0% NSR royalty.
Norway
EMX initiated a program in 2014 to evaluate opportunities in
Norway, and initially acquired the Burfjord and Storbekken properties by
acquiring exploration permits across open ground. Burfjord contains IOCG-type
targets in northern Norway, and is marked by numerous small scale historic mines
and prospects, as well as outcropping copper and gold mineralization. Storbekken
hosts multiple exposures of gold-enriched VMS-style mineralization near the
historic Røros mining district in southern Norway. A winter geophysical program
was executed in January 2015 on the Storbekken project that identified new
exploration targets.
In January 2015, the Hatt, Vaddas, and Melkedalen VMS projects
were acquired by Eurasian after monitoring the status of these areas for several
years. These projects were available for direct acquisition with minimal cost.
The Vaddas and Melkedalen properties host small tonnage zinc and copper historic
resources.
Royalty Properties in Serbia
EMX's portfolio in Serbia initially resulted from early stage
prospect generation and organic royalty growth via the sale of its properties,
including the Brestovac West, Deli Jovan, and Plavkovo projects, to Reservoir
Minerals Inc. (Reservoir) in 2006. The terms of the sale included uncapped NSR
royalties payable to EMX at a rate of 2% for gold and silver, and 1% for all
other metals. Subsequently, Eurasian acquired an uncapped 0.5% NSR royalty
covering Reservoir's share of minerals and metals mined from the "Brestovac" and "Jasikovo" properties
(see EMX news release dated February 4, 2014). The Brestovac, Brestovac West,
and Jasikovo properties are included in the Timok Project joint venture between
Reservoir (45%) and Freeport McMoRan Exploration Corp. (55%).
49
Brestovac hosts porphyry and epithermal copper-gold
mineralization at the Cukaru Peki deposit. Reservoir announced a NI 43-101
inferred resource estimate for Cukaru Pekis High Sulphidation Epithermal (HSE)
zone above a 1% copper equivalent (CuEq% = Cu% + (Au g/t x 0.6)) cut-off
as 65.3 million tonnes averaging 2.6% copper and 1.5 g/t gold, or 3.5% copper
equivalent, containing 3.8 billion pounds copper and 3.1 million ounces gold, or
5.1 billion pounds copper equivalent (see Reservoir news release dated January
27, 2014). Reservoir has stated that the discovery at Cukaru Peki demonstrates
the potential for additional blind discoveries within the Timok Magmatic
Complex.
Reservoir announced in a March 12, 2015 news release that a
2015 budget of US$ 18.7 million had been approved by the Timok Project joint
venture "to move the project forward toward the completion of a scoping study".
EMX's Timok Project royalty properties add strategic upside potential for
Eurasian in one of the richest copper-gold mineral belts in Europe.
Qualified Person
Eric P. Jensen, CPG, a Qualified Person as defined by NI 43-101
and employee of the Company, has reviewed, verified and approved the above
technical disclosure on Europe.
HAITI
Eurasian and joint venture partner Newmont Ventures Limited, a
wholly owned subsidiary of Newmont, (collectively, the JV) have a land
position along a 130 kilometer trend of Haitis Massif du Nord mineral belt.
Newmont is funding and managing six joint venture Designated Projects across
northern Haiti. EMXs work on the 100% controlled Grand Bois gold-copper project
is outside of the JV with Newmont.
The Designated Projects with Newmont and EMX's Grand Bois
Project have been on care and maintenance status since 2013, when the Haitian
Government suspended its Mining Convention process while it began working on a
new Mining Law with the help of the World Bank. The Government's goal is to
reform the Mining Law to be more consistent with current international
standards.
There were ongoing consultation meetings between the World
Bank, the Government of Haiti, the JV and other mining companies, and business
community and civil society representatives to present comments on draft
versions of the new Haitian Mining Code. After the appointment of a new Prime
Minister and the dissolution of Parliament in late 2014-early 2015, the
government is now planning for legislative elections in late 2015. At this stage
the JV does not expect further progress on the new Mining Law until later in
2016.
EMX remains committed to supporting the process of reforming
Haiti's Mining Law as a step towards developing the mining sector and
contributing to the country's economic growth.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Haiti.
STRATEGIC INVESTMENTS
IG Copper LLC
EMX is a strategic investor in IG Copper LLC (IGC), a
privately held company that is in a joint venture with Freeport on the Malmyzh
copper-gold porphyry project in Far East Russia. IGC has a 51% ownership
interest in the Malmyzh joint venture, with Freeport retaining a 49% interest.
IGC is operating and managing the project. The Salasinskaya and Shelekhovo
projects, 200 kilometers northeast of Malmyzh, are 100% controlled by IGC and
not subject to the joint venture with Freeport. Eurasian was an early investor
in IGC, and is its largest shareholder, with 42.3% of the issued and outstanding
shares (39.7% equity position on a fully-diluted basis) from investments
totaling US$7.8 million.
Malmyzh is a grassroots, district-scale discovery with fourteen
porphyry copper-gold prospects identified within a 16 by 5 kilometer intrusive
corridor. The property's 153 square kilometers of exploration and mining
licenses occur 220 kilometers northeast of the Russia-China border at
Khabarovsk. Malmyzh has excellent logistics and infrastructure, including high
voltage power lines, a natural gas pipeline, a paved national
highway, the Amur River, and a rail line that are all nearby to the
property.
50
Copper-gold mineralization occurs in diorite porphyry
intrusives, as well as in hornfels-altered and stockworked sedimentary wall
rocks, and consists of near-surface zones (i.e., within 0.5 to 50 meters of the
surface) of variable chalcocite enrichment grading into chalcopyrite-rich and
chalcopyrite-bornite-magnetite mineralization to depth. The majority of
drilling, totaling more than 70,000 meters in over 200 core holes, has
concentrated on defining the Central, Freedom, Valley, and Flats prospects. Much
of the property has more than 15 meters of cover and is undrilled, thereby
providing considerable exploration potential for additional discoveries. IGC
advanced Malmyzh in 2014 by completing drafts of project reports in preparation
for review by the relevant Russian Federation agencies.
Also in 2014, IGC advised EMX that it had acquired the 260
square kilometer Salasinskaya property, located 20 kilometers from IGC's
Shelekhovo project. Salasinskaya and Shelekhovo are 100% controlled by IGC. At
Shelekhovo, historic government exploration surveys identified multiple
occurrences of gold, silver, and copper associated with quartz veining and
alunite (see EMX news release dated November 5, 2013). Salasinskaya is
considered to be the northern extension of the Shelekhovo anomaly cluster, and
is marked by the widespread occurrence of quartz-alunite alteration. The
Salasinskaya and Shelekhovo properties occur along trend to the northeast of
Malmyzh. Together, these three properties cover approximately 800 square
kilometers of exploration ground occurring along a 200 kilometer belt of
prospective Cretaceous-age arc terrane rocks.
Further discussion of IGCs exploration results can be found
in the Companys September 6, 2012 and November 5, 2013 news releases.
Revelo Resources Corp. (formerly Iron Creek Capital
Corp.)
EMX has a strategic investment in Revelo Resources Corp.
(TSX-V: RVL, Revelo), a company focused on the acquisition and exploration of
mineral properties in the prolific metallogenic belts of northern Chile. Revelo
was formed from the merger of Iron Creek Capital Corp. and Polar Star Mining
Corp. in December 2014. Revelo controls approximately 300,000 hectares of 100%
owned exploration tenements. The portfolio is comprised of 16 exploration
projects prospective for copper, gold and silver including three projects
already under option/JV agreements with Kinross Gold (Las Pampas Project),
Newmont Mining (Montezuma Project), and BHP Billiton (Block 2 project). In
addition, Revelo retains one royalty interest in the Victoria Project, an
important copper-gold-silver exploration project in northern Chile.
EMX's investment in Revelo recognizes the untapped value in the
property portfolio, as well as strong synergies with a management team that has
many decades of combined experience in Chile and Latin America.
Qualified Person
Dean D. Turner, CPG, a Qualified Person as defined by NI 43-101
and consultant to the Company, has reviewed, verified and approved the above
technical disclosure on Strategic Investments.
GEOTHERMAL ROYALTIES
EMX initiated a geothermal energy program in 2010, and acquired
assets in Slovakia and Peru. Eurasian subsequently sold its geothermal assets in
2013 to Starlight Geothermal Ltd. ("SGL") for cash payments, an equity position
in SGL, and gross royalties of 1.0% in Slovakia and 0.5% in Peru from future
geothermal energy production (see Company news release dated August 7, 2013).
SGL advised EMX that it had advanced the geothermal royalty assets in Slovakia
and Peru during 2014 by conducting technical, infrastructure, and market
studies. Slovakia and Peru have proactive stances toward geothermal energy
projects that foster a favorable business climate for development and potential
future revenue streams to EMX.
Operating Results
Year Ended December 31, 2014, 2013 and 2012
The net loss for the year ended December 31, 2014
(FY14) was $17,488,041 compared to $13,982,612 for the year ended December
31, 2013 (FY13) and $20,902,053 for year ended December 31, 2012 (FY12). The
loss for FY14 was made up of net royalty income of $801,836 (2013 - $1,280,997;
2012 - $537,035) after depletion and related tax, net exploration expenditures
of $3,988,368 (2013 - $3,819,107; 2012 - $8,330,201), general and administrative
expenditures of $5,495,087 (2013 - $5,142,738; 2012 - $9,393,196) and other
losses totaling $12,122,893 (2013 - $8,694,709; 2012 - $3,730,368) offset by a
deferred income tax recovery of $3,356,471 (2013 - $2,392,945; 2012 - $291,595).
Included in other losses is $7,371,765 (2013 - $4,765,511; 2012 - $Nil) in impairment
charges related to the Carlin Trend Royalty Claim Block and related assets. Some
items to note are:
51
Revenues
In FY14, royalty income was earned from $1,578 (2013 1,912;
2012 2,145) ounces of gold totaling $2,247,334 (2013 - $3,102,888; 2012 -
$1,750,975) offset by gold tax and depletion of $1,445,498 (2013 - $1,821,891;
2012 - $1,213,940) for net royalty income of $801,836 (2013 - $1,280,997; 2012
537,035). The decrease in royalty income was mainly due to a decrease in ounces
produced and a lower realized gold price per ounce in the current period. In
FY14 the average realized gold price was US$1,263 per ounce compared to US$1,490
for 2013 and US$1,676 for 2012.
Exploration Expenditures
Exploration expenditures (gross) decreased by $2,749,688 in
FY14 compared to FY13, and decreased by $3,871,904 in FY13 compared to FY12.
Recoveries decreased by $2,918,949 in FY14 compared to FY13, and increased by
$618,594 in FY13 compared to FY12 for a net increase in exploration expenditures
of $169,261 in 2014 (FY2013 decrease $4,511,094). Some of the differences
between 2014 and 2013 are as follows:
-
In Scandinavia, net expenditures increased by $770,179 compared to the
prior period. During FY14, the Company solely funded the Swedish activities as
Antofagasta was previously funding the programs. In 2014, the Company
continued to support its exploration programs in Scandinavia, encouraged by
decreasing levels of competition in the minerals sector, and increasing
availability of prospective ground that could be acquired at low cost.
Eurasian spent 2014 filtering and upgrading its portfolio of assets, adding
key copper, gold and polymetallic exploration projects in both Sweden and
Norway while relinquishing less prospective areas and project interests. At
the same time, Eurasian has continued to actively market its project interests
in Scandinavia and will continue to do so in 2015. Expenditures in 2014 were
directed toward sustaining costs for its offices and personnel, as well as
conducting reconnaissance exploration across the region and hosting potential
partners for site visits to various projects. In an effort to reduce its
operating costs, Eurasian has closed its field offices in Kiruna, Sweden,
where the cost of goods, services and rental properties has been steadily
rising in recent years. Eurasian will relocate its operations to southern
Sweden, where much of its current activities are now focused and operating
costs will be lower. Eurasians staff in Scandinavia is also being retained on
a consulting basis only, in order to keep costs low during times of
inactivity. In early 2015, Eurasian has been conducting winter exploration
programs on various properties, but expects lower expenditures in comparison
with 2014 due to closure of the offices in Kiruna and overall streamlining of
its operations.
-
In the USA, gross expenditures decreased from $3,955,723 to $3,274,015 and
recoveries decreased from $3,214,899 to $2,221,662. In the prior year the
Company and partners GeoNovus and Vale undertook active programs at Silver
Bell West, Red Hills, and Copper Basin while there were no active programs for
2014. Gross expenditures on these three projects decreased from US$2,300,192
to US$813,193. The decrease in expenditures was offset by US$480,344 in
expenditures related to Kennecott and Savant, pursuant to the new exploration
and option agreements on the Lomita Negris, Buckhorn Creek, Fraser Creek, and
Jasper Canyon properties. The Americas continue to represent a potentially
high value, low cost exploration venue coupled with a large list of
prospective partners to conduct EMXs business model. Despite tough market
conditions, base-metal projects still appear to be sought after and BCE is in
discussions with several groups regarding its properties. A major focus of BCE
for the year will remain to partner available assets, reduce holding costs,
and recover a portion of its burn.
-
In Turkey, gross expenditures decreased by $700,269, while net expenditures
decreased by $328,943. In 2014, the Turkish Business Unit continued to be a
key value driver for Eurasian. Partner funded programs continued to advance
projects in the Eurasian portfolio, with all 7 projects in Turkey operating
under partnerships in 2014. Eurasians share of expenditures in Turkey related
only to sustaining costs for the Ankara office, maintenance of the Turkish
staff, and ongoing reconnaissance exploration programs. In 2015, Eurasian will
continue to reduce expenditures. Given the stages of advancement for many of
the exploration projects in the Turkish portfolio, Eurasian will now change
its focus from early stage, grass-roots style generative work, to working with
partners on advancing its projects and monitoring its royalty interests
throughout the country. This work will be managed by Dama Engineering
(Dama), a well-respected consultant and engineering firm in the Turkish
mining community. Eurasian views its partnership with Dama as a key step in
the evolution of its business interests in Turkey. As a result, Eurasian will
close its exploration office in Ankara, with its commercial enterprise now
managed from the Dama office in Ankara.
52
- In the Asia Pacific region, net expenditures for 2014 totaled $627,496
compared to $549,109 in 2013. As is the case with other business units,
Eurasian is effecting strategic changes to its business approach in Australia
and New Zealand. Largely as a result of the challenging market conditions,
Eurasian has been simultaneously acquiring low cost exploration projects as
other companies relinquish key land positions, while at the same time enacting
its own cost savings measures. Key steps in 2014 were the consolidation of the
Koonenberry project in Australia to a royalty property (see Company News
Release dated February 19, 2014), and the partnership of the Neavesville
project in New Zealand (see Company News Release dated November 13, 2014).
Prior to partnership, Eurasian had conducted drilling at Neavesville in early
2014, and had negotiated a comprehensive access agreement with one of the
local Maori communities, providing ongoing access, and exploration and
development rights across much of the Neavesville license. Along with
expenditures related to its ongoing reconnaissance exploration efforts, these
led to outlays of approximately $650,000 for 2014. With partnership of the
Neavesville and Koonenberry projects, Eurasians projected expenditures for
Australia-New Zealand in 2015 will be markedly lower than 2014.
General and Administrative
General and administrative expenses (G&A) of $5,495,087
were incurred in 2014 compared to $5,142,738 in 2013 and $9,393,196 in 2012. The
Companys business model is people intensive. Included in salaries and
consultants of G&A are the Companys technical services and GIS group,
in-house legal counsel and deal flow marketing team, senior management including
the General Manger of Exploration, Chief Geologist, and the executive
management. G&A costs (before share-based payments) have decreased each year
since 2012 and we continue to strive to find areas to further streamline and
reduce the expenses of our business.
-
Administrative and office expenses of $926,095 remained consistent with
FY13 ($982,239), however, a decrease from FY12 ($1,258,292). The Company is
headquartered in Vancouver and also has an office in Littleton, Colorado which
supports the exploration, technical, investor relations and deal flow aspects
of the business.
-
Investor relations expenditures of $292,017 decreased slightly from
$310,203 in FY13 and from $433,243 in FY12. The Company attends select
industry trade shows and supports lines of communication to current and
potential investors. Costs in the coming year are expected to be lower as the
Company is more selective in its investor relations activities.
-
Professional fees decreased by $105,556 to $457,963 in 2014 compared to
$533,519 in 2013 and $764,914 in 2012 and cover mainly external legal and
audit and tax fees. The company has been able to decrease its external legal
fees by the addition of its chief legal officer included in salaries and
consultants.
-
Share-based payments include performance stock grants issued and stock
options granted. The current year saw an increase in share-based payments from
$527,495 (FY13) to $1,030,411 (FY14) and decrease from $2,799,609 in (FY12) as
a result of the granting of stock options in 2014 and 2012, whereas there were
no stock options granted in 2013.
-
Salaries and consultants are the largest expense in G&A. This expense
category encompasses a broad range of management, technical and project
development and marketing support. It should be noted that many of our
personnel expenditures companywide are denominated in United States dollars
(USD) and the increase in the value of the USD compared to the Canadian
dollar, which is our reporting currency, will increase expenditures.
A breakdown of this category is as follows:
Salaries and consultants |
|
FY14 |
|
|
FY13 |
|
|
FY12 |
|
|
Senior management |
|
1,148,413 |
|
|
1,097,684 |
|
|
1,659,323 |
|
|
In-house legal and deal flow marketing |
|
436,428 |
|
|
397,443 |
|
|
616,029 |
|
|
Technical services |
|
321,911 |
|
|
264,918 |
|
|
433,525 |
|
|
Directors fees* |
|
168,496 |
|
|
175,798 |
|
|
102,000 |
|
|
Administrative support & other** |
|
115,668 |
|
|
307,189 |
|
|
312,389 |
|
** |
|
$ |
2,190,916 |
|
$ |
2,243,032 |
|
$ |
3,123,266 |
|
|
*Directors fees include $60,000 per annum paid to the Company's
non-Executive Chairman, who does not receive the fees paid to the other
independent directors
**includes severance payments relating to reduction in
work force
In the coming year, the Company will continue to closely
monitor all expenditure areas in the Company, and make changes proactively as
necessary.
53
Other
-
As a result of the decline in the production of gold from the Carlin Trend
Royalty Claim Block, the Company revised its estimated annual gold production
over the expected 11 year mine life and updated the NAV and cash flow
multiples based on observed market conditions. As a result of these changes,
the Company recorded $7,371,765 (2013 - $4,765,511; 2012 - $Nil) in impairment
charges related to the Carlin Trend Royalty Claim Block and related assets
that make up the same cash-generating unit (CGU).
-
As a result of the impairment noted above, the Company applied a one-step
approach and determined the Carlin Trend Royalty Claim Block and the related
assets within the same CGU to be impaired. The loss was first applied to
reduce the asset component and any excess to goodwill within the CGU. As
result, the Company has written down the goodwill by $2,248,057 (2013 - $Nil;
2012 - $Nil).
-
The Company recorded a deferred income tax recovery of $3,356,471 compared
to $2,392,945 in 2013 and 291,595 in 2012, and a net decrease in deferred tax
liabilities of $2,493,010 (2013 - $1,779,707). A significant component of the
deferred tax recovery and decrease in the related liability was the royalty
impairment.
-
The Companys share of the net loss related to its 42.34% equity investment
in IG Copper for the year ended December 31, 2014 was $1,086,649 (2013 -
$2,093,823; 2012 $1,144,407).
SIGNIFICANT INVESTMENTS ACCOUNTED FOR BY THE EQUITY
METHOD
The Company has a 49% equity investment in a private Turkish
company with Chesser Resources Ltd., an Australian Stock Exchange listed
Exploration Company. At December 31, 2014, the Companys investment in the joint
venture was $Nil (2013 - $Nil; 2012 - $Nil). The Companys share of the net loss
of the joint venture for the years ended December 31, 2014 and 2013 was $Nil
(share of net loss for 2012 - $81,171).
The Company also has a 42.34% (2013 40.96%; 2012 30.66%)
equity investment in IG Copper, LLC (IGC). At December 31, 2014, the Company
has paid an aggregate of $7,892,345 towards its investment (2013 - $6,829,309;
2012 - $4,054,739).
At December 31, 2014, the Companys investment less its share
of accumulated equity losses was $4,072,737 (2013 - $3,960,650; 2012 -
$3,002,101). The Companys share of the net loss for the year ended December 31,
2014 was $1,086,649 (2013 - $2,093,823; 2012 - $1,063,236).
The Company has a minority position on the Boards of its
associated companies, and does not control operational decisions. The Companys
judgment is that it has significant influence, but not control and accordingly
equity accounting is appropriate.
As at December 31, 2014, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31,
2014 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
101,315 |
|
$ |
4,841,462 |
|
Aggregate liabilities |
|
(271,424 |
) |
|
(809,260 |
) |
Income (loss) for the period
|
|
(154,215 |
) |
|
(2,606,384 |
) |
The Company's ownership% |
|
49.00% |
|
|
42.34% |
|
The Company's share of loss for the period |
|
- |
|
|
(1,086,649 |
) |
As at December 31, 2013, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31,
2013 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
105,489 |
|
$ |
5,977,484 |
|
Aggregate liabilities |
|
(142,811 |
) |
|
(958,317 |
) |
Income (loss) for the year
|
|
11,247 |
|
|
(5,297,700 |
) |
The Company's ownership% |
|
49.00% |
|
|
40.96% |
|
The Company's share of loss for the year |
|
- |
|
|
(2,093,823 |
) |
54
As at December 31, 2012, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31,
2012 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
104,210 |
|
$ |
4,954,888 |
|
Aggregate liabilities |
|
(88,617 |
) |
|
(343,378 |
) |
Income (loss) for the year
|
|
(249,627 |
) |
|
(3,467,829 |
) |
The Company's ownership% |
|
49.00% |
|
|
30.66% |
|
The Company's share of loss for the year |
|
(81,171 |
) |
|
(1,063,236 |
) |
SELECTED ANNUAL INFORMATION
As at |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
|
December 31,
2012 |
|
|
|
|
|
|
|
|
|
|
|
Financial
positions |
|
|
|
|
|
|
|
|
|
Working capital |
$ |
7,096,916 |
|
$ |
14,217,999 |
|
$ |
22,702,855 |
|
Exploration and
evaluation assets (net) |
|
2,379,886 |
|
|
3,031,368 |
|
|
4,940,941 |
|
Royalty interest |
|
29,327,960 |
|
|
35,063,725 |
|
|
38,738,592 |
|
Total assets |
|
54,292,093 |
|
|
70,073,220 |
|
|
82,475,787 |
|
Share capital |
|
116,766,102 |
|
|
116,151,675 |
|
|
114,414,001 |
|
Deficit |
|
(87,430,021 |
) |
|
(69,981,980 |
) |
|
(55,999,368 |
) |
|
|
Year
ended |
|
|
Year
ended |
|
|
Year
ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
Financial
results |
|
|
|
|
|
|
|
|
|
Royalty income |
$ |
2,247,334 |
|
$ |
3,102,888 |
|
$ |
1,750,975 |
|
Exploration
expenditures (net) |
|
3,988,368 |
|
|
3,819,107 |
|
|
8,330,201 |
|
Net loss |
|
(17,448,041 |
) |
|
(13,982,612 |
) |
|
(20,902,053 |
) |
Net loss per share-basic and diluted |
|
(0.24 |
) |
|
(0.19 |
) |
|
(0.35 |
) |
The year ended December 31, 2014 saw an impairment charge of
$7,371,765 (2013 - $4,765,511; 2012 - $Nil) on the royalty interests, a related
write-down of goodwill of $2,248,057 (2013 - $Nil; 2012 - $Nil), and a recovery
of $3,356,471 (2013 - $2,392,945; 2012 - $291,595) of deferred income taxes
which significantly increased the net loss for the current year.
OUTSTANDING SHARE DATA
At April 30, 2015, the Company had 73,444,710 common shares
issued and outstanding. There were also 5,343,200 stock options outstanding with
expiry dates ranging from May 7, 2015 to December 22, 2019, and 7,255,900
warrants outstanding with expiry dates ranging from November 8, 2015 to November
12, 2015.
Critical Accounting Policies and
Estimates
Statement of Compliance and Conversion to International
Financial Reporting Standards
Statement of Compliance
These consolidated financial statements have been prepared in
accordance with IFRS as issued by the International Accounting Standards Board
(IASB) and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC).
These consolidated financial statements have been prepared on a
historical cost basis, except for financial instruments classified as fair value
through profit or loss or available for sale, which are stated at their fair
value. In addition, these consolidated financial statements have been prepared
using the accrual basis of accounting except for cash flow information.
55
Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements comprise the accounts of
Eurasian, the parent company, and its controlled subsidiaries, after the
elimination of all significant intercompany balances and transactions.
Subsidiaries
Subsidiaries are all entities over which the Company has
exposure to variable returns from its involvement and has the ability to use
power over the investee to affect its returns. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Company controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Company until the date on which control ceases.
The accounts of subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies.
Inter-company transactions, balances and unrealized gains or losses on
transactions are eliminated. The Companys principal operating subsidiaries are
as follows:
Name |
Place of
Incorporation |
Ownership Percentage |
Bullion Monarch Mining, Inc
|
Utah, USA |
100% |
EMX (USA) Services Corp. |
Nevada, USA |
100% |
Bronco Creek Exploration Inc.
|
Arizona, USA |
100% |
AES Madencilik Ltd. Sirketi |
Turkey |
100% |
Eurasia Madencilik Limited
Sirketi |
Turkey |
99% |
Georgian Minerals LLC |
Georgia |
100% |
Eurasian Minerals Cooperatie
fU.A. |
Netherlands |
100% |
EMX Georgia Cooperatief U.A. |
Netherlands |
100% |
Ayiti Gold Company S.A. |
Haiti |
100% |
Marien Mining Company S.A. |
Haiti |
100% |
Viad Royalties AB |
Sweden |
100% |
Eurasian Minerals Sweden AB |
Sweden |
100% |
EMX Australia Pty Ltd |
Australia |
100% |
Business Combinations
The acquisition method of accounting is used to account for
business combinations by the Company. The consideration transferred for the
acquisition of a business is the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Company. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition-related costs
are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Company recognizes any non-controlling interest in the acquiree
either at fair value or at the non-controlling interests proportionate share of
the acquirees net assets. Subsequently, the carrying amount of non-controlling
interest is the amount of the interest at initial recognition plus the
non-controlling interests share of the subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interest even if this
results in the non-controlling interest having a deficit balance.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition-date fair value of
any previous equity interest in the acquiree over the fair value of the
identifiable net assets acquired is recorded as goodwill. If this is less than
the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognized directly in the statement of
loss.
The Company has made an earlier election in terms of IFRS 1 to
apply the requirements of IFRS 3 (Revised) Business Combinations to all
business combinations with effective dates on or after April 1, 2010. The
classification and accounting treatment of business combinations with effective
dates prior to April 1, 2010 have not been considered.
Functional and Reporting Currency
The functional currency is the currency of the primary economic
environment in which the entity operates. The functional currency for the
Company and its subsidiaries is the Canadian dollar except the functional
currency of the operations of Bullion Monarch which is the US dollar. The functional currency
determinations were conducted through an analysis of the consideration factors
identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.
56
Translation of transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Monetary assets and
liabilities denominated in foreign currencies are re-measured at the rate of
exchange at each financial position date. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in profit or loss.
On translation of the entities whose functional currency is
other than the Canadian dollar, revenues and expenses are translated at the
exchange rates approximating those in effect on the date of the transactions.
Assets and liabilities are translated at the rate of exchange at the reporting
date. Exchange gains and losses, including results of re-translation, are
recorded in the foreign currency translation reserve.
Financial Instruments
All financial instruments are classified into one of the
following four categories:
|
(a) |
Financial assets and financial liabilities at fair value
through profit or loss (FVTPL) |
|
|
|
|
|
Financial assets and financial liabilities classified as
FVTPL are acquired or incurred principally for the purpose of selling or
repurchasing them in the near term. They are recognized at fair value
based on market prices, with any resulting gains and losses reflected in
profit or loss for the period in which they arise. |
|
|
|
|
(b) |
Held-to-maturity financial assets |
|
|
|
|
|
Held-to-maturity financial assets are non-derivative
financial assets with fixed or determinable payments and fixed maturity
that an entity has the positive intention and ability to hold to maturity.
They are measured at amortized cost using the effective interest rate
method less any impairment loss. A gain or loss is recognized in profit or
loss when the financial asset is derecognized or impaired, and through the
amortization process. |
|
|
|
|
(c) |
Available for sale financial assets |
|
|
|
|
|
Available for sale (AFS) financial assets are
non-derivative financial assets that are designated as available for sale,
or that are not classified as loans and receivables, held-to-maturity
investments, or FVTPL. They are measured at fair value. Fair value is
determined based on market prices. Equity instruments that do not have a
quoted market price in an active market are measured at cost. Gains and
losses are recognized directly in other comprehensive income (loss) until
the financial asset is derecognized, at which time the cumulative gain or
loss previously recognized in accumulated other comprehensive income
(loss) is recognized in profit or loss for the period. |
|
|
|
|
(d) |
Loans and receivables and other financial
liabilities |
|
|
|
|
|
Loans and receivables and other financial liabilities are
measured at amortized cost, using the effective interest rate method less
any impairment loss. |
The Companys financial instruments consist of cash and cash
equivalents, investments, receivables, restricted cash, reclamation bonds,
accounts payable and accrued liabilities, and advances from joint venture
partners. Unless otherwise noted the fair value of these financial instruments
approximates their carrying values.
Cash and cash equivalents are classified as financial assets as
loans and receivables and are accounted for at fair value. Cash equivalents are
held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
Warrants held through investments are classified as derivative
financial assets at FVTPL and are accounted for at fair value. For warrants that
are not traded on an exchange, no market value is readily available. When there
are sufficient and reliable observable market inputs, a valuation technique is
used; if no such market inputs are available, the warrants are valued at
intrinsic value, which is equal to the higher of the market value of the
underlying security less the exercise price of the warrant, or zero.
57
Marketable securities are classified FVTPL and are measured at
fair market value. Marketable securities transferred to the Company as part of
an acquisition are classified as AFS and are carried at fair market value.
Changes in fair value of FVTPL assets are reflected in profit or loss in the
period in which they occur. Changes in fair value of AFS assets are reflected in
accumulated other comprehensive income on the statement of financial position
until sold or if there is an other than temporary impairment in value.
Reclamation bonds are classified as financial assets
held-to-maturity.
Restricted cash is classified as financial assets at FVTPL.
The Company classifies its receivables as loans and receivables
and its accounts payable and accrued liabilities and advances from joint venture
partners as other financial liabilities.
Impairment of Financial Assets
Financial assets are assessed for indicators of impairment at
the end of each reporting period. Financial assets are impaired when there is
objective evidence that, as a result of one or more events that occurred after
the initial recognition of the financial assets, the estimated future cash flows
of the financial assets have been impacted.
For all financial assets, objective evidence of impairment
could include:
- Significant financial difficulty of the issuer or counterparty;
- Default or delinquency in interest or principal payments; or,
- It becoming probable that the borrower will enter bankruptcy or financial
re-organization.
For certain categories of financial assets, that are assessed
not to be impaired individually, are subsequently assessed for impairment on a
collective basis. The carrying amount of financial assets is reduced by the
impairment loss directly for all financial assets with the exception of
receivables, where the carrying amount is reduced through the use of an
allowance account. When a receivable is considered uncollectible, it is written
off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognized in profit or loss.
With the exception of FVTPL marketable securities, if in a
subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed through profit
or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortized cost would have been
had the impairment not been recognized. In respect of AFS marketable securities,
impairment losses previously recognized through profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment
loss is recognized directly in equity.
Investments in Associated Companies
The Company accounts for its long-term investments in
affiliated companies over which it has significant influence on the equity basis
of accounting, whereby the investment is initially recorded at cost, adjusted to
recognize the Companys share of earnings or losses and reduced by dividends
received.
The Company assesses its equity investments for impairment if
there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the equity investment and that the
event or events has an impact on the estimated future cash flow of the
investment that can be reliably estimated. Objective evidence of impairment of
equity investments includes:
- Significant financial difficulty of the associated companies;
- Becoming probable that the associated companies will enter bankruptcy or
other financial reorganization; or,
- National or local economic conditions that correlate with defaults of the
associated companies.
Exploration and evaluation assets and exploration
expenditures
Acquisition costs for exploration and evaluation assets, net of
recoveries, are capitalized on a property-by-property basis. Acquisition costs
include cash consideration and the value of common shares, based on recent issue
prices, issued for exploration and evaluation assets pursuant to the terms of
the agreement. Exploration expenditures, net of recoveries, are charged to operations as incurred. After a property is
determined by management to be commercially feasible, subsequent development
expenditures on the property will be capitalized.
58
When there is little prospect of further work on a property
being carried out by the Company or its partners, when a property is abandoned,
or when the capitalized costs are no longer considered recoverable, the related
property costs are written down to managements estimate of their net
recoverable amount. The costs related to a property from which there is
production, together with the costs of production equipment, will be depleted
and amortized using the unit-of-production method.
An exploration and evaluation asset acquired under an option
agreement, where payments are made at the sole discretion of the Company, is
capitalized at the time of payment. Option payments received are treated as a
reduction of the carrying value of the related acquisition cost for the mineral
property until the payments are in excess of acquisition costs, at which time
they are then credited to profit or loss. Option payments are at the discretion
of the optionee and, accordingly, are accounted for when receipt is reasonably
assured.
Revenue recognition
The Company recognizes revenue in accordance with IAS 18
Revenue. Royalty revenue is recognized when persuasive evidence of an
arrangement exists, title and risk passes to the buyer, the amount of revenue
can be measured reliably, it is probable that the economic benefits associated
with the sale will flow to the entity and the costs incurred in respect of the
transaction can be measured reliably. Royalty revenue may be subject to
adjustment upon final settlement of estimated metal prices, weights, and assays.
Adjustments to revenue from metal prices are recorded monthly and other
adjustments are recorded on final settlement and are offset against revenue when
incurred.
Royalty interests
Royalty interests in mineral properties include acquired
royalty interests in production stage and exploration stage properties. In
accordance with IAS 38 Intangible Assets, the cost of acquired royalty
interests in mineral properties is capitalized as intangible assets.
Acquisition costs of production stage royalty interests are
depleted using the units of production method over the life of the related
mineral property, which is calculated using estimated reserves. Acquisition
costs of royalty interests on exploration stage mineral properties, where there
are no proven and probable reserves, are not amortized. At such time as the
associated exploration stage mineral interests are converted to proven and
probable reserves, the cost basis is amortized over the remaining life of the
mineral property, using proven and probable reserves. The carrying values of
exploration stage mineral interests are evaluated for impairment at such time as
information becomes available indicating that the production will not occur in
the future.
Goodwill
Goodwill represents the excess of the price paid for the
acquisition of a consolidated entity over the fair value of the net identifiable
tangible and intangible assets and liabilities acquired in a business
combination. Goodwill is allocated to the cash generating unit to which it
relates.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount.
Property and equipment
Property and equipment is recorded at cost. Equipment is
depreciated over its estimated useful life using the declining balance method at
a rate of 20% per annum. Depreciation on equipment used directly on exploration
projects is included in exploration expenditures for that mineral property.
Decommissioning liabilities
Decommissioning liabilities are recognized for the expected
obligations related to the retirement of long-lived tangible assets that arise
from the acquisition, construction, development or normal operation of such
assets. A decommissioning liability is recognized in the period in which it is
incurred and when a reasonable estimate of the fair value of the liability can
be made with a corresponding decommissioning cost recognized by increasing the
carrying amount of the related long-lived asset. The decommissioning cost is
subsequently allocated in a rational and systematic method over the underlying
assets useful life. The initial fair value of the liability is accreted, by
charges to profit or loss, to its estimated future value. The Company has no
known decommissioning liabilities as of December 31, 2014 and 2013.
59
Environmental disturbance restoration
During the operating life of an asset, events such as
infractions of environmental laws or regulations may occur. These events are not
related to the normal operation of the asset and are referred to as
environmental disturbance restoration provisions. The costs associated with
these provisions are accrued and charged to profit or loss in the period in
which the event giving rise to the liability occurs. Any subsequent adjustments
to these provisions due to changes in estimates are also charged to profit or
loss in the period of adjustment. These costs are not capitalized as part of the
long-lived assets carrying value.
Impairment of assets
Events or changes in circumstances can give rise to significant
impairment charges or reversals of impairment in a particular year. The Company
assesses its cash generating units annually to determine whether any indication
of impairment exists. Where an indicator of impairment exists, an estimate of
the recoverable amount is made, which is the higher of the fair value less costs
to sell and value in use. The determination of the recoverable amount for value
in use requires the use of estimates and assumptions such as long-term commodity
prices, discount rates, future capital requirements, exploration potential and
future operating performance. Fair value is determined as the amount that would
be obtained from the sale of the asset in an arms length transaction between
knowledgeable and willing parties.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, bank deposits
and short-term, highly liquid investments that are readily convertible to known
amounts of cash.
Share-based payments
Share-based payments include option and stock grants granted to
directors, employees and non-employees. The Company accounts for share-based
compensation using a fair value based method with respect to all share-based
payments measured and recognized, to directors, employees and non-employees. For
directors and employees, the fair value of the options and stock grants is
measured at the date of grant. For non-employees, the fair value of the options
and stock grants is measured on the earlier of the date at which the
counterparty performance is complete, or the date the performance commitment is
reached, or the date at which the equity instruments are granted if they are
fully vested and non-forfeitable. For directors, employees and non-employees,
the fair value of the options and stock grants is accrued and charged to
operations, with the offsetting credit to share based payment reserve for
options, and commitment to issue shares for stock grants over the vesting
period. If and when the stock options are exercised, the applicable amounts are
transferred from share-based payment reserve to share capital. When the stock
grants are issued, the applicable fair value is transferred from commitment to
issue shares to share capital. Option based compensation awards are calculated
using the Black-Scholes option pricing model while stock grants are valued at
the fair value on the date of grant.
Income taxes
Income tax expense consists of current and deferred tax. Income
tax expense is recognized in profit or loss except to the extent that it relates
to items recognized directly in equity. Current tax is the expected tax payable
on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of
previous years. Deferred tax is calculated providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is not recognized on the initial recognition of
assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable income nor loss. In addition,
deferred tax is not recognized for taxable temporary differences arising on the
initial recognition of goodwill. Deferred tax is measured at the tax rates that
are expected to be applied to temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realized simultaneously.
60
A deferred tax asset is recognized to the extent that it is
probable that future taxable income will be available against which the
temporary difference can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
Income (loss) per share
Basic income or loss per share is calculated by dividing the
net income or loss for the year by the weighted average number of shares
outstanding during the year. Diluted income or loss per share is calculated
whereby the weighted average number of shares outstanding used in the
calculation of diluted income or loss per share assumes that the deemed proceeds
received from the exercise of stock options, share purchase warrants and their
equivalents would be used to repurchase common shares of the Company at the
average market price during the year, if they are determined to have a dilutive
effect.
Existing stock options and share purchase warrants have not
been included in the current year computation of diluted loss per share as to do
so would be anti-dilutive. For the years presented the basic and diluted losses
per share are the same.
Valuation of equity units issued in private placements
The Company has adopted a residual value method with respect to
the measurement of shares and warrants issued as private placement units. The
residual value method first allocates value to the more easily measurable
component based on fair value and then the residual value, if any, to the less
easily measurable component.
The fair value of the common shares issued in the private
placements was determined to be the more easily measurable component and were
valued at their fair value, as determined by the closing quoted bid price on the
day prior to the issuance date. The balance, if any, was allocated to the
attached warrants. Any fair value attributed to the warrants is recorded in
reserves.
Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segment, has been identified as the Chief
Executive Officer.
New and amended IFRS pronouncements effective January 1,
2014
The Company has adopted the following new and revised
standards, along with any consequential amendments, effective January 1, 2014.
These changes were made in accordance with the applicable transitional
provisions.
IAS 32 Financial Instruments: Presentation (Amended IAS 32)
was amended by the IASB in December 2011. The amendment clarifies that an entity
has a legally enforceable right to offset financial assets and financial
liabilities if that right is not contingent on a future event and it is
enforceable both in the normal course of business and in the event of default,
insolvency or bankruptcy of the entity and all counterparties. The adoption of
Amended IAS 32 did not have a significant impact on the Companys consolidated
financial statements.
IAS 36 Impairment of Assets (Amended IAS 36) was amended by
the IASB in May 2013. The amendments require the disclosure of the recoverable
amount of impaired assets when an impairment loss has been recognized or
reversed during the period and additional disclosures about the measurement of
the recoverable amount of impaired assets when the recoverable amount is based
on fair value less costs of disposal, including the discount rate when a present
value technique is used to measure the recoverable amount. The adoption of
Amended IAS 36 did not have a significant impact on the Companys consolidated
financial statements.
IFRIC 21 Levies (IFRIC 21), an interpretation of IAS 37
Provisions, Contingent Liabilities and Contingent Assets (IAS 37), on the
accounting for levies imposed by governments was issued by the IASB in May 2013.
IAS 37 sets out criteria for the recognition of a liability, one of which is the
requirement for the entity to have a present obligation as a result of a past
event (obligating event). IFRIC 21 clarifies that the obligating event that
gives rise to a liability to pay a levy is the activity described in the
relevant legislation that triggers the payment of the levy. IFRIC 21 is
effective prospectively for annual periods commencing on or after January 1,
2014. The adoption of IFRIC 21 did not result in an adjustment to the Companys
consolidated financial statements.
61
Accounting pronouncements not yet effective
In May 2014, the IASB issued IFRS 15 Revenue from Contracts
with Customers ("IFRS 15"), which supersedes IAS 11 Construction Contracts, IAS
18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the
Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and
SIC 31 Revenue - Barter Transactions involving Advertising Services. IFRS 15
establishes a single five-step model framework for determining the nature,
amount, timing and uncertainty of revenue and cash flows arising from a contract
with a customer. The standard is effective for annual periods beginning on or
after January 1, 2017, with early adoption permitted. The Company is currently
evaluating the impact the final standard is expected to have on its consolidated
financial statements.
The IASB intends to replace IAS 39 Financial Instruments:
Recognition and Measurement in its entirety with IFRS 9 Financial Instruments
(IFRS 9) which is intended to reduce the complexity in the classification and
measurement of financial instruments. The IASB has determined that the revised
effective date for IFRS 9 will be January 1, 2018. The Company is currently
evaluating the impact the final standard is expected to have on its consolidated
financial statements.
Critical Accounting Judgments and Significant Estimates and
Uncertainties
The preparation of the consolidated financial statements
requires management to make judgments and estimates and form assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, and the reported revenue and expenses during the periods
presented therein. On an ongoing basis, management evaluates its judgments and
estimates in relation to assets, liabilities, royalty revenues and expenses.
Management bases its judgments and estimates on historical experience and on
other various factors it believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions and
conditions.
The Company has identified the following critical accounting
policies in which significant judgments, estimates and assumptions are made and
where actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results or the financial
position reported in future periods. Further details of the nature of these
assumptions and conditions may be found in the relevant notes to the
consolidated financial statements.
a) Royalty interest
and related depletion
In accordance with the Companys accounting policy, royalty
interests are evaluated on a periodic basis to determine whether there are any
indications of impairment. If any such indication exists, a formal estimate of
recoverable amount is performed and an impairment loss recognized to the extent
that carrying amount exceeds recoverable amount. The recoverable amount of a
royalty asset is measured at the higher of fair value less costs to sell and
value in use. The determination of fair value and value in use requires
management to make estimates and assumptions about expected production and sales
volumes, the proportion of areas subject to royalty rights, commodity prices
(considering current and historical prices, price trends and related factors),
and reserves. These estimates and assumptions are subject to risk and
uncertainty; hence there is a possibility that changes in circumstances will
alter these projections, which may impact the recoverable amount of the assets.
In such circumstances, some or all of the carrying value of the assets may be
further impaired or the impairment charge reduced with the impact recorded in
profit or loss.
b) Goodwill
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount. The assessment
of the recoverable amount used in the goodwill impairment analysis is subject to
similar judgments and estimates as described above for property and equipment
and royalty interests.
c) Exploration and
Evaluation Assets
Recorded costs of exploration and evaluation assets are not
intended to reflect present or future values of exploration and evaluation
assets. The recorded costs are subject to measurement uncertainty and it is
reasonably possible, based on existing knowledge, that a change in future
conditions could require a material change in the recognized amount.
d) Taxation
The Companys accounting policy for taxation requires
managements judgment as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgment is also required in assessing
whether deferred tax assets and certain deferred tax liabilities are recognized
on the statement of financial position. Deferred tax assets, including those
arising from unused tax losses, capital losses and temporary
differences, are recognized only where it is considered probable that they will
be recovered, which is dependent on the generation of sufficient future taxable
profits. Deferred tax liabilities arising from temporary differences caused
principally by the expected royalty revenues generated by the royalty property
are recognized unless expected offsetting tax losses are sufficient to offset
the taxable income and therefore, taxable income is not expected to occur in the
foreseeable future. Assumptions about the generation of future taxable profits
depend on managements estimates of future cash flows. These depend on estimates
of future production and sales volumes, commodity prices, and reserves.
Judgments are also required about the application of income tax legislation in
foreign jurisdictions. These judgments and assumptions are subject to risk and
uncertainty, hence there is a possibility that changes in circumstances will
alter expectations, which may impact the amount of deferred tax assets and
deferred tax liabilities recognized on the statement of financial position and
the amount of other tax losses and temporary differences not yet recognized. In
such circumstances, some or the entire carrying amount of recognized deferred
tax assets and liabilities may require adjustment, resulting in a corresponding
credit or charge to profit or loss.
62
ACQUISITION OF BULLION MONARCH MINING, INC.
On February 7, 2012, the Company and its wholly-owned
subsidiary, EMX (Utah) Corp. signed an Agreement and Plan of Merger (the
Acquisition) with Bullion Monarch Mining, Inc. (Bullion) whereby the Company
agreed to acquire 100% of the issued and outstanding shares of Bullion in
consideration for 0.45 of each of the Companys common shares and US$0.11 in
cash for each Bullion common share issued and outstanding. In addition,
outstanding Bullion warrants have been replaced by Eurasian warrants exercisable
upon the same terms and conditions as under the applicable agreement, except
that each replacement warrant shall be exercisable for 0.45 of each of
Eurasians common shares and US$0.11 in cash in lieu of one Bullion common
share.
On August 17, 2012, the acquisition of Bullion was completed
following approval by Bullion shareholders at a special meeting held on the same
day.
The transaction has been accounted for as a business
combination in accordance with IFRS 3, Business Combinations. As per IFRS
3, the Company has recognized, separately from goodwill, identifiable assets
acquired, and liabilities assumed in Bullion at their fair values on the
acquisition date. Accordingly, the Company has determined certain fair value
adjustments for the assets and liabilities of Bullion as of August 17, 2012, the
closing date of the Acquisition. Furthermore, to reflect the fair value
increment of $39,536,000 (US$40,000,000) to the royalty property held by Bullion
which generates royalty income, the Company engaged an independent valuator to
estimate the fair value of the royalty generating property. The independent
valuator applied the discounted cash flow model and estimated the fair value of
the royalty income stream at $39,536,000. Consequently, the assets and
liabilities in the Bullion purchase price allocation are based on their
estimated fair value as shown below.
Goodwill represents the excess of the purchase price over the
estimated fair value of assets acquired and liabilities assumed of Bullion. The
Goodwill is not deductible for tax purposes. The deferred tax liabilities are
recognized primarily due to temporary differences between the accounting value
and tax basis of the royalty property assets that may result in potential
taxable amounts in future years. Subsequent to the closing of the Acquisition,
the deferred income tax liabilities will be adjusted in the period of enactment
for the effect of an enacted change in tax laws or rates. The effect, which
could be significant, will be included in profit or loss from operations.
The aggregate amount of the total acquisition consideration is
$36,441,148, determined by taking into account the issuance of the Companys
17,712,289 common shares valued at $32,059,062, the obligation for 1,125,000
warrants valued at $102,653 to replace Bullions outstanding warrants and the
payment of $4,279,433.
The following summarizes the consideration transferred and the
recognized amounts of assets acquired and liabilities assumed at the acquisition
date.
63
PurchasePrice: |
|
|
|
Issuance of 17,712,189 Eurasian
common shares in exchange for 39,360,518 Bullion common shares |
$ |
32,059,062 |
|
Fair value of additional obligation for 1,125,000
replacement warrants |
|
102,653 |
|
Cash payment for 39,360,518 Bullion common shares
|
|
4,279,433 |
|
Total purchase
price |
$ |
36,441,148 |
|
Purchase
Price Allocation: |
|
|
|
Cash and cash equivalents |
$ |
318,378 |
|
Receivables |
|
541,226 |
|
Prepaid expenses |
|
167,879 |
|
Investments |
|
36,627 |
|
Property, plant and equipment, net
|
|
258,637 |
|
Royalty property |
|
39,536,000 |
|
Goodwill |
|
8,896,705 |
|
Accounts payable |
|
(734,290 |
) |
Deferred income tax liabilities |
|
(12,580,014 |
) |
Total purchase
price |
$ |
36,441,148 |
|
The value of the Companys common shares was calculated based
on the issuance of the Companys 17,712,189 common shares at a price per share
of $1.81 which was the TSX Venture Exchange closing price of the Companys
common share on August 17, 2012, the closing date of the Acquisition.
The cash payment of $4,279,433 is based on cash consideration
per share of US$0.11 for each of the 39,360,518 Bullion common shares
outstanding immediately prior to the completion of the Acquisition.
The assumption and replacement of Bullion warrants is valued
using the Black-Scholes option pricing model. The assumptions used in
Black-Scholes option pricing model are as follows: share price of $1.81,
adjusted exercise price of $2.39 less the warrant cash consideration of US$0.11,
dividend yield of 0%, expected life of 0.62 years, volatility of 44.66% and
risk-free interest rate of 1.21%. Volatility of 44.66% represents the
historical volatility that the Company has used to value similar equity
instruments. The fair value of the 1,125,000 replacement warrants is based on
Bullions outstanding 2,500,000 warrants adjusted by a factor of 0.45 of each of
the Companys common share per Bullion warrant.
5.B. Liquidity and Capital Resources
The Companys working capital position at December 31, 2014
was $7,096,916 (December 31, 2013 - $14,217,999; December 31, 2012 -
$22,702,855). With its current plans for the year and the budgets associated
with those plans, in order to continue funding its administrative and
exploration expenditures for beyond twelve months from the date of this Form
20-F, the Company will need to obtain additional cash and anticipates either
financing or selling one or more of its assets. Historically, the Company
obtains its cash requirements through the issuance of shares, funding from joint
venture partners, royalty income, attracting additional joint venture partners
and the sale of available investments and marketable securities all of which are
used to finance further property acquisitions, explore and develop its mineral
properties, and obtain strategic investments.
Operating Activities
Cash used in operations was $4,781,944 for the year ended
December 31, 2014 (2013 - $5,785,887; 2012 - $14,369,528) and represents
expenditures primarily on mineral property exploration and general and
administrative expense for both periods, offset by royalty income received in
the period.
Financing Activities
The Company received $Nil in 2014 (2013 - $361,600; 2012 -
$1,049,670) from the exercise of stock options and $Nil in 2014 (2013 - $Nil;
2012 - $1,898,995) from the exercise of warrants.
Investing Activities
Some of the significant investment activities during the year
ended December 31, 2014 are:
64
|
- |
The Company purchased strategic investments in Revelo
Resources Corp. for $500,000 (2013 - $480,000; 2012 - $Nil) |
|
- |
The Company invested $1,063,036 in IGC (2013 -
$2,774,570; 2012 - $2,061,551) |
5.C. Research and Development, Patents and Licenses,
etc.
See subtopic Exploration Expenditures under Item 5.A.,
Operating Results.
5.D. Trend Information
See Property Overview under ITEM 5, Operating and Financial
Review and Prospects, and Other under ITEM 5.A., Operating Results.
5.E. Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
5.F Tabular Disclosure of Contractual
Obligations
The Company has no Contractual Obligations.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT, AND
EMPLOYEES
6.A. Directors and Senior Management
Table No. 6
Directors and Senior Management
04/29/2015
|
|
|
Date of |
|
|
|
First Election |
Name |
Position |
Age |
Or
Appointment |
|
|
|
|
|
|
|
|
David M. Cole |
President, CEO, Director |
53 |
November 24, 2003 |
Brian E. Bayley (1)(2)(3) |
Director |
62 |
May 13, 1996 |
Brian K. Levet (2) |
Director |
62 |
March 18, 2011 |
George K.C. Lim (1)(2)(3) |
Director |
58 |
August 28, 2008 |
Larry Okada (1)(2) |
Director |
66 |
June 11, 2013 |
Michael D. Winn (3) |
Director and Chairman |
53 |
November 24, 2003 |
|
|
|
|
Christina Cepeliauskas |
Chief Financial Officer |
51 |
September 18, 2008 |
Valerie Barlow |
Corporate Secretary |
36 |
January 24, 2011
|
(1) |
Member of Audit Committee. |
(2) |
Member of the Compensation Committee |
(3) |
Member of Corporate Governance
Committee |
David M. Cole (President, CEO and
Director)
Mr. Cole has over 25 years of industry experience, coming to
Eurasian Minerals from Newmont Mining Company. At Newmont, he held a number of
management and senior geologic positions, gaining extensive global experience as
a project, mine, and generative exploration geologist in Nevada, Southeast Asia,
South America, Europe, and Central Asia. Mr. Cole's success as part of Newmont's
exploration team includes contributions at the world class Carlin Trend,
Yanacocha, and Minahasa mines. Subsequently, he established and managed
Newmont's exploration programs in Turkey while also identifying early-stage
acquisition targets in Eastern Europe. Mr. Cole specializes in developing new
exploration ideas and opportunities, based upon solid technical expertise
coupled with a keen business sense. He studied under Dr. Tommy Thompson at
Colorado State University, earning an M.S. in Geology.
65
Michael D. Winn(Director and
Chairman)
Mr. Winn is President of Seabord Capital Corp., which provides
investment analysis and financial services to companies operating in the energy
and mining sectors. He is also President of Seabord Services Corp., a Canadian
company that provides management, administrative, and regulatory services to
private and public mining companies. Prior to starting Seabord Capital in
January 2013, Mr. Winn was President of Terrasearch Inc. (1997 to 2012) a
predecessor company to Seabord Capital. He also worked as an analyst for Global
Resource Investments Ltd. (1993 to 1997) where he specialized in the evaluation
of emerging oil and gas and mining companies. Mr. Winn has worked in the oil and
gas industry since 1983 and the mining industry since 1992, and is currently a
director and officer of several companies operating in Canada, Latin America,
Europe and Africa. Mr. Winn received a B.Sc. in geology from the University of
Southern California.
Brian Bayley (Director)
Mr. Bayley is experienced in areas of natural resources and
real estate lending as well as corporate restructuring and the
management/administration of public companies. He is currently the President and
a Director of Ionic Management Corp. (a private management company). From June
2003 to July 2013, Mr. Bayley held various positions including CEO and President
and Director of Quest Capital Corp., a predecessor company to Sprott Resource
Lending Corp. (a previously publicly traded resource lending company). Mr.
Bayley has held active senior management positions in both private and public
natural resource companies and has over 30 years of public issuer experience
both as a director and officer. Mr. Bayley holds an MBA from Queens
University.
Brian Levet (Director)
Mr. Levet draws on over 35 years of diversified executive and
management experience in mineral exploration, project startup, and mine
development and operations. He began his career with Rio Tinto Rhodesia and
Zimbabwe Iron and Steel Company. The majority of Mr. Levet's career was with
Newmont Mining Company, most recently as the Group Executive for Worldwide
Exploration, and after 27 years of service he announced his retirement in early
2011. His distinguished career has been built upon a track record of
team-oriented discovery success, with a number of these discoveries currently in
production. He is recognized within the mining industry for exploration
expertise and team leadership that resulted in a number of major discoveries,
including the Batu Hijau and Elang copper-gold deposits in Indonesia, the North
Lanut gold deposit in North Sulawesi, Indonesia, the McPhillamys gold deposit in
New South Wales, Australia, as well as playing a significant role in the
identification of Yanacocha as a world-class gold mining camp. Mr. Levet has a
B.Sc. in Geology from the University of London.
George K.C. Lim (Director)
George Lim is a Chartered Accountant with over 38 years of
experience in accounting, finance, taxation and auditing of companies in the
mining and other industries. He was previously the Chief Financial Officer of
Dundarave Resources Inc. and Chief Financial Officer for Potash One Inc. and
Energy Metals Company. Mr. Lim has been involved in numerous financings, mergers
and acquisitions of public companies listed on the TSX and NYSE.
Larry Okada (Director)
Larry Okada is a Chartered Accountant in British Columbia and
Alberta, as well as a Certified Public Accountant in Washington State. He has
been in public practice with Deloitte's, his own firm, and
PricewaterhouseCoopers LLP for over 35 years. For more than 30 years, the
majority of Mr. Okada's clients have been public mining companies listed on the
TSX-V. He is currently the CFO of BCGold Corp., interim CFO for Africo Resources
Ltd. and sits on a committee with the Institute of Chartered Accountants of
British Columbia. As an independent director, Mr. Okada's extensive experience
in accounting, finance, and corporate governance will further strengthen the
Company's Board of Directors in these key areas.
Christina Cepeliauskas (Chief Financial
Officer)
Ms. Cepeliauskas is a CPA, CGA professional accountant with
more than 20 years of financial accounting and treasury experience in the
mineral exploration and mining industry. She is currently the Chief Financial
Officer of Eurasian Minerals Inc., Atico Mining Company and Reservoir Capital
and was formerly a Director and Chairperson of the Audit Committee of Revelo
Resources Corp. Ms. Cepeliauskas also hold the volunteer position of Treasurer
and Board member of Fraserside Community Services Society, an organization
committed to helping people overcome challenges.
66
Valerie Barlow (Corporate Secretary)
Ms. Barlow is currently Corporate Secretary for Eurasian
Minerals Inc. Previously, Ms. Barlow was the Corporate Secretary of Sierra
Geothermal Power Corp. and of Jinshan Gold Mines Inc. (now China Gold
International Resources Corp. Ltd.). She has over 12 years' experience working
in the mining industry. Ms. Barlow graduated with a Bachelor Degree in Economics
from Concordia University in Montreal, Quebec and has completed her Canadian
Securities Course.
The Directors have served in their respective capacities since
their election and/or appointment and will serve until the next Annual General
Meeting or until a successor is duly elected, unless the office is vacated in
accordance with the Articles/ByLaws of the Company.
No Director and/or Senior Management had been the subject of
any order, judgment, or decree of any governmental agency or administrator or of
any court or competent jurisdiction, revoking or suspending for cause any
license, permit or other authority of such person or of any Company of which he
is a Director and/or Senior Management, to engage in the securities business or
in the sale of a particular security or temporarily or permanently restraining
or enjoining any such person or any Company of which he is an officer or
director from engaging in or continuing any conduct/practice/employment in
connection with the purchase or sale of securities, or convicting such person of
any felony or misdemeanor involving a security or any aspect of the securities
business or of theft or of any felony.
There are no family relationships between any two or more
Directors or Senior Management.
There are no arrangements or understandings with major
shareholders, customers, suppliers or others, pursuant to which any person
referred to above was selected as a Director or member of senior management.
6.B. Compensation
The Compensation Committee of the Board is responsible for
ensuring that the Company has appropriate procedures for executive compensation
and making recommendations to the Board with respect to the compensation of the
Companys executive officers. The Compensation Committees mandate is to ensure
that total compensation paid to all executives is fair and reasonable and is
consistent with the Companys compensation philosophy.
The Compensation Committee is also responsible for recommending
compensation for the directors and officers, stock options grants to the
directors, officers, employees and consultants pursuant to the Companys Stock
Option Plan (the Option Plan) and issuances of Common Shares to directors and
officers pursuant to the Companys Incentive Stock Grant Program (the Stock
Grant Program).
The Compensation Committee is currently comprised of Brian
Bayley (Chairman), Brian Levet, and Larry Okada, all of whom are independent
directors. The board is satisfied that the composition of the Compensation
Committee ensures an objective process for determining compensation.
Philosophy
The philosophy used by the Board and the Compensation Committee
in determining compensation is that the compensation should (i) assist the
Company in attracting and retaining high caliber executives, (ii) align the
interests of executives with those of the Shareholders, (iii) reflect the
executives performance, expertise, responsibilities and length of service to
the Company, and (iv) reflect the Companys current state of development,
performance and financial status.
Compensation Components
The compensation of the Named Executive Officers (NEOs) (as
well as for other senior management and employees) is comprised primarily of (i)
base salary, (ii) annual short-term incentives in the form of cash bonuses and
stock grants under the Stock Grant Program, (iii) long-term incentives in the
form of stock grants and stock options granted in accordance with the Option
Plan and the Stock Grant Program, respectively, and (iv) benefits related to
health and pension plans, such as United States 401(k) plans.
To be competitive with industry rates, the Company may provide
additional compensation from time to time in the form of stock grants as part of
annual salaries. The Stock Grant Program assists the Company in employee
retention and cash preservation, while encouraging Common Share ownership and
entrepreneurship on the part of its executives (as well as the Board, and
management and other employees of the Company). The Compensation Committee
believes that annual and long term stock grant awards align the interests of such persons
with the interests of Shareholders by linking a component of compensation to the
longer term performance of the Common Shares.
67
To date, no formulas have been developed to assign a specific
weighting to each of these components. Instead, the Compensation Committee
considers the Companys performance and, based on its assessment, recommends
appropriate compensation levels to the Board. In establishing levels of cash and
equity-based compensation, the executives performance, level of expertise,
responsibilities, length of service to the Company and comparable levels of
remuneration paid to executives of other companies of comparable size and
development within the mining exploration and development industries are
considered as well as taking into account the financial and other resources of
the Company.
In March 2015, the Compensation Committee retained the services
of McDowall Associates Human Resource Consultants Ltd. (McDowall), a North
American external compensation consultant headquartered in Toronto, Ontario, to
provide an independent review of the compensation paid by the Company to its CEO
and CFO. McDowall benchmarked the Companys compensation arrangements against a
peer group of companies that included a mix of royalty companies and exploration
companies with assets greater than $30 million and less than $450 million to
reflect the Companys current business operations. McDowall used total assets as
the primary determinate of company size because it is more stable over time than
either revenue or market capitalization. The peer group of companies consisted
of:
Almaden Minerals Limited |
Altius Minerals Corporation |
Callinan Royalties Corporation |
Gold Standard Ventures Corporation |
Midway Gold Corporation |
Mirasol Resources Limited |
Osisko Gold Royalties Limited |
Pilot Gold Inc. |
Panoro Minerals Limited |
Sandstorm Gold Limited |
Seabridge Metals Limited |
Strategic Metals Limited
|
In addition to the peer group analysis, McDowall compared CEO
and CFO compensation against a broad group of 90 mining companies and 12 large
mining companies. With respect to the broad group of 90 mining companies, direct
comparisons were made to CEO and CFOs, while for the 12 large mining companies,
comparisons were made to an executive one or two levels below the CEO.
McDowall compared base salary, total cash (base salary +
bonuses) and total direct compensation (total cash + long term incentives). In
making this comparison, McDowall used an average of the peer group companies and
the broad group of 90 mining companies to establish a benchmark for comparison
(Benchmark Companies).
McDowall concluded that the cash base salary of the CEO is
higher than the Benchmark Companies average and below the large mining group. It
also concluded, respect to total cash and total direct compensation, that the
Companys CEO is comparable to the Benchmark Companies average and substantially
below the large mining group. It should be noted that the CEOs cash salary is
paid in US dollars but converted to Canadian dollars for reporting purposes. The
Canadian equivalent was used in the comparison to the Benchmark Companies. The
higher base salary of the CEO to the Benchmark Companies is partly attributable
to the decline in the Canadian dollar against the US dollar in 2014.
McDowall concluded that the base salary, total cash, and total
direct compensation for the CFO was below the Benchmark Companies and
substantially below the larger mining group of companies.
In the Companys last two financial years, McDowall has not
provided any other services to the Company or its affiliates.
The fees charged by McDowall during the Companys 2014 and 2013
financial years were as follows:
Nature of Fee |
2014 |
2013 |
Executive Compensation-Related Fees |
$9,040 |
Nil |
All Other Fees |
Nil |
Nil |
The Compensation Committee also relies on the experience of its
members as officers and directors at other companies in similar lines of
business as the Company in assessing compensation levels. The purpose of this
process is to:
68
-
understand the competitiveness of current pay levels for each executive
position relative to companies with similar business characteristics;
-
identify and understand any gaps that may exist between actual compensation
levels and market compensation levels; and
-
establish a basis for developing salary adjustments and short-term and
long-term incentive awards for the Compensation Committees approval.
Base Salary
The Compensation Committee recommends, and the Board
establishes, the NEOs salary. The base salary review for each NEO is based on
assessment of factors such as changes to competitive market conditions,
compensation levels within the peer group and particular skills, such as
leadership ability and management effectiveness, experience, responsibility and
proven or expected performance of the particular individual. Using this
information, together with budgetary guidelines and other internally and
externally generated planning and forecasting tools, the Compensation Committee
performs an annual assessment of the compensation of the CEO and CFO. The
Company did not increase the base salaries of the CEO and CFO for 2013 and 2014
and do not have base salary increases planned for 2015.
Annual Bonuses
Annual bonuses are made by way of cash bonuses and the issuance
of stock grants based, in part, on the Companys success in reaching its annual
objectives and in part on individual performance and extraordinary effort and
achievement. Also, the Company may utilize bonuses to encourage retention of its
staff during periods of increased industry competition for its executive
officers and other employees.
The Board, together with the Compensation Committee, reviews
corporate performance objectives during the year to determine annual bonuses. In
2014, the principal performance factors and objectives included:
-
Exploration success;
-
Acquisition of new properties;
-
Sale and joint venture of properties;
-
Royalty creations and acquisitions;
-
Capital management;
-
Successful management of the Companys environmental, community, and safety
objectives;
-
Increasing market capitalization; and
-
Management of human resources.
The success of the NEOs contributions to the Company in
reaching its overall goals is a factor in the determination of their annual
incentive. The Compensation Committee assesses each NEOs performance on the
basis of his or her respective contribution to the achievement of corporate
goals as well as to needs of the Company that arise on a day-to-day basis. This
assessment is used by the Compensation Committee in developing its
recommendations to the Board with respect to the determination of annual
incentives for the NEOs.
Although a number of the corporate performance objectives were
achieved, the Company did not grant any annual bonuses by way of cash or stock
grants to NEOs for 2014.
Long-Term Incentives
Stock Options are generally granted on an annual basis subject
to the imposition of trading black-out periods, in which case options scheduled
for grant will be granted subsequent to the end of the black-out period. All
options granted to NEOs are recommended by the Compensation Committee and
approved by the Board. In monitoring stock option grants, the Compensation
Committee takes into account the level of options granted by comparable
companies for similar levels of responsibility and considers each NEO or employee based on
reports received from management, its own observations on individual performance
(where possible) and its assessment of individual contribution to Shareholder
value.
69
To determine the number of Common Shares issuable under options
granted pursuant to the methodology outlined above, the Compensation Committee
also makes the following determinations:
-
the exercise price for each option granted;
-
the date on which each option is granted;
-
the vesting terms for each stock option; and
-
the other materials terms and conditions of each stock option grant.
The Compensation Committee makes these determinations subject
to, and in accordance with, the provision of the Option Plan. The Company
granted stock options in April 2014.
Cash Compensation
Summary Compensation Table
|
|
|
|
|
Long-Term |
|
|
|
|
|
|
|
Compensation |
|
|
|
|
Annual Compensation |
|
|
|
|
|
|
|
|
|
Awards |
Payouts |
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
Position
|
Year
|
Salary
$
|
Bonus
|
Other
Annual Compensation
$
|
Securities Under
Options/SARs Granted
|
Restricted
Shares or Restricted Share
Units(1) |
LTIP
Payouts $
|
All
Other
Comp. $
|
|
|
|
|
|
|
|
|
|
David M. Cole, President & CEO
|
2014 2013 2012 |
464,040 427,772
385,524 |
Nil Nil Nil |
12,065(2)
17,110(2) 15,421(2) |
150,000 Nil 80,000 |
101,334 101,333
194,666 |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
Michael D. Winn(3), Chairman
& Director
|
2014 2013 2012 |
60,000 60,000 24,000 |
Nil Nil Nil |
Nil Nil Nil |
75,000 Nil 50,000 |
12,167 24,335 64,332 |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
Christina Cepeliauskas(4),
CFO |
2014 2013 2012 |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
55,000 Nil 50,000 |
15,000 23,000 23,000 |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
Brian E. Bayley, Director
|
2014 2013 2012 |
24,000 24,000 24,000 |
Nil Nil Nil |
Nil Nil Nil |
50,000 Nil 50,000 |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
Brian K. Levet Director
|
2014 2013 2012 |
24,000 24,000 24,000 |
Nil Nil Nil |
Nil Nil Nil |
50,000 Nil 50,000 |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
George K.C. Lim, Director
|
2014 2013 2012 |
24,000 24,000 24,000 |
Nil Nil Nil |
Nil Nil Nil |
50,000 Nil 50,000 |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
Larry Okada(5), Director
|
2014 2013 2012 |
24,000 6,000 Nil |
Nil Nil Nil |
Nil Nil Nil |
50,000 Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
|
|
|
|
|
|
|
|
|
Valerie Barlow(4), Corporate
Secretary |
2014 2013 2012 |
Nil Nil Nil |
Nil Nil Nil |
Nil Nil Nil |
24,000 Nil 20,000 |
6,000 8,000 8,000 |
Nil Nil Nil |
Nil Nil Nil |
70
(1) |
Common Shares issued as discretionary bonuses. The stock
grants are issued in three tranches over a period of two years. |
(2) |
For officers and employees in the United States, the
Company pays 4% of the annual salary each year to the officer or
employees 401(k) retirement plan effective January 1, 2012. |
(3) |
Mr. Winn became Chairman of the Company in May
2012. |
(4) |
Pursuant to a Management Services Agreement between the
Company and Seabord Services Corp. (Seabord), Ms. Cepeliauskas and Ms.
Barlows remuneration is paid by Seabord. |
(5) |
Mr. Okada became a director in June
2013. |
Table No. 7
Stock Option Grants in Fiscal 2014 Ended
12/31/2014
|
|
|
|
|
|
Mkt.
Value |
|
|
|
|
|
|
of |
|
|
% Of Total |
|
|
|
Securities |
|
Number of |
Options |
Exercise |
|
|
Underlying |
|
Options Granted |
Granted |
Price per |
Grant |
Expiration |
Options on |
Name |
|
|
Share |
Date |
Date |
Date of |
|
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
David M. Cole |
150,000 |
10.18% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
Michael D. Winn |
75,000 |
5.09% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
Christina Cepeliauskas |
55,000 |
3.73% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
Brian E. Bayley |
50,000 |
3.39% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
Brian K. Levet |
50,000 |
3.39% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
George K.C. Lim |
50,000 |
3.39% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
Larry Okada |
50,000 |
3.39% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
Valerie Barlow |
24,000 |
1.63% |
$1.20 |
04/25/2014 |
04/25/2019 |
$1.15 |
|
|
|
|
|
|
|
There were no stock option exercises by the directors and
management in fiscal 2014.
71
Table No. 8
Aggregated Stock Options Exercises in Fiscal
2014
Fiscal Yearend Unexercised Stock Options
Fiscal Yearend Stock
Option Values
Senior Management/Directors
Name
|
Number of
Shares Acquired on Exercise |
Aggregate
Value Realized
|
Number of Unexercised
Options at Fiscal Year-End
Exercisable/Unexercisable
|
Value of Unexercised In-
the-Money Options at Fiscal
Year-End Exercisable/Unexercisable(2) |
|
|
|
|
|
David M. Cole |
Nil |
Nil |
200,000/0 @
$2.18 |
$0 |
|
|
|
200,000/0 @ $2.80 |
$0 |
|
|
|
80,000/0 @ $1.94 |
$0 |
|
|
|
150,000/0 @ $1.20 |
$0 |
|
|
|
|
|
Michael D. |
Nil |
Nil |
100,000/0 @ $2.18 |
$0 |
Winn |
|
|
50,000/0 @ $2.80 |
$0 |
|
|
|
50,000/0 @ $1.94 |
$0 |
|
|
|
75,000/0 @ $1.20 |
$0 |
|
|
|
|
|
Christina |
Nil |
Nil |
75,000/0 @ $2.18 |
$0 |
Cepeliauskas |
|
|
75,000/0 @ $2.80 |
$0 |
|
|
|
50,000/0 @ $1.94 |
$0 |
|
|
|
55,000/0 @ $1.20 |
$0 |
|
|
|
|
|
Brian E. Bayley |
Nil |
Nil |
75,000/0 @ $2.18 |
$0 |
|
|
|
50,000/0 @ $2.80 |
$0 |
|
|
|
50,000/0 @ $1.94 |
$0 |
|
|
|
50,000/0 @ $1.20 |
$0 |
|
|
|
|
|
Brian K. Levet |
Nil |
Nil |
150,000 @ $2.91 |
$0 |
|
|
|
50,000/0 @ $1.94 |
$0 |
|
|
|
50,000/0 @ $1.20 |
$0 |
|
|
|
|
|
George K. C. |
Nil |
Nil |
75,000/0 @ $2.18 |
$0 |
Lim |
|
|
50,000/0 @ $2.80 |
$0 |
|
|
|
50,000/0 @ $1.94 |
$0 |
|
|
|
50,000/0 @ $1.20 |
$0 |
|
|
|
|
|
Larry Okada |
Nil |
Nil |
50,000/0 @ $1.20 |
$0 |
|
|
|
|
|
Valerie Barlow |
Nil |
Nil |
18,200/0 @ $2.21 |
$0 |
|
|
|
30,000/0 @ $2.80 |
$0 |
|
|
|
20,000/0 @ $1.94 |
$0 |
|
|
|
24,000/0 @ $1.20 |
$0 |
|
(1) |
Calculated using the closing market price of the common
shares on the date(s) of exercise less the exercise price of the stock
options multiplied by the number of shares acquired. |
|
(2) |
The closing price of the Companys common shares on the
TSX-V on December 31, 2014 was $0.88. |
Director Compensation.
The fees payable to the independent directors of the Company
are for their services as directors and as members of committees of the Board as
follows:
72
Board or
Committee Name |
Annual Retainer ($) |
Meeting Stipend ($) |
Per diem fees ($) |
Board of Directors |
24,000 |
Nil |
Nil
|
Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of the Board of Directors.
Stock Options. The Company may grant stock options to
Directors, Senior Management and employees. As at April 29, 2015, 5,343,200
stock options have been granted and there were no options exercised during
Fiscal 2014. Refer to ITEM #6.E., "Share Ownership" and Table No. 8 for
information about stock options outstanding.
Change of Control Remuneration.
Chief Executive Officer
The Company is a party to an employment agreement with David M.
Cole, President and CEO of the Company, effective October 1, 2010. Under the
agreement, Mr. Cole receives US$400,000 per year. The agreement may be
terminated by the Company without reason by written notice and a lump sum
payment equal to 12 months of salary and benefits. Mr. Cole may terminate the
agreement for any reason upon two months notice to the Company during which
time he will continue to receive his usual remuneration and benefits.
If Mr. Coles agreement is terminated or his duties and
responsibilities are materially changed within 12 months following a change in
control of the Company, he is entitled to receive a lump sum payment equal to 12
months of his salary and benefits and all unvested stock options and grants.
Other Executive Officers
The Company has not entered into another employment or
consulting contracts with its other
For the purposes of this section, the following terms have the
following meanings:
Change of control means an event occurring after the
effective date of this agreement pursuant to which:
|
a) |
a merger, amalgamation, arrangement, consolidation,
reorganization or transfer takes place in which securities of Eurasian
possessing more than 50% of the total combined voting power of the
Eurasians outstanding voting securities, respectively, are acquired by a
person or persons (other than one or more members of the Eurasian Group)
different from the person holding those voting securities immediately
prior to such event, and the composition of the Board of Directors of
Eurasian or following such event is such that their directors prior to the
transaction constitute less than 50% of the Board membership following the
event; |
|
|
|
|
b) |
any person (other than a member of the Eurasian Group),
or any combination of persons (none of which is a member of the Eurasian
Group) acting jointly or in concert by virtue of an agreement,
arrangement, commitment or understanding acquires, directly or indirectly,
50% or more of the voting rights attached to all outstanding voting
securities or the right to appoint a majority of the directors of
Eurasian; or |
|
|
|
|
c) |
Eurasian sells, transfers or otherwise disposes of all or
substantially all of its assets, except that no Change of Control will be
deemed to occur if such sale or disposition is made to a member of the
Eurasian Group. |
Termination of Employment means any voluntary,
involuntary or coerced resignation, retirement or other termination of
employment of any Covered Employee directly or indirectly resulting from a
Change of Control and includes the occurrence of any of the following events
after a Change of Control, if the Covered Employee does not consent thereto:
|
(a) |
a material change in office held or employment; |
|
|
|
|
(b) |
a material change in the nature or scope of
duties; |
|
|
|
|
(c) |
a requirement to change the place of employment by more
than 45 miles; |
|
|
|
|
(d) |
a reduction in remuneration; |
73
|
(e) |
a withdrawal of benefits or privileges of employment;
or |
|
|
|
|
(f) |
exclusion from any incentive compensation plans in which
the Covered Employee was a participant. |
Other Compensation. No Senior Management/Director
received other compensation in excess of the lesser of US$25,000 or 10% of
such officer's cash compensation, and all Senior Management/Directors as a group
did not receive other compensation which exceeded US$25,000 times the number of
persons in the group or 10% of the compensation.
Bonus/Profit Sharing/Non-Cash Compensation. Except for
the stock option program and stock grant program discussed in ITEM #6.E., the
Company had no material bonus or profit sharing plans pursuant to which cash or
non-cash compensation is or may be paid to the Company's Directors or Senior
Management.
Pension/Retirement Benefits. For the officers and
employees in the United States, the Company pays 4% of the annual salary each
year to the officer or employees 401(k) retirement plan effective January 1,
2012.
6.C. Board Practices
6.C.1. Terms of Office.
Refer to ITEM 6.A.1.
6.C.2. Directors Service Contracts.
--- No Disclosure Necessary ---
6.C.3. Board of Director Committees.
The Company has an Audit Committee, which recommends to the
Board of Directors the engagement of the independent auditors of the Company and
reviews with the independent auditors the scope and results of the Companys
audits, the Companys internal accounting controls, and the professional
services furnished by the independent auditors to the Company. The current
members of the Audit Committee are: George Lim (Chairman), Brian Bayley and
Larry Okada. The Audit Committee met four times during Fiscal 2014.
Compensation Committee: The Compensation Committee is
responsible for the review of all compensation paid (including stock options
granted under the Option Plan and Common Shares issued under the Stock Grant
Program) by the Company to the Board, officers and employees of the Company and
any subsidiaries, to report to the Board on the results of those reviews and to
make recommendations to the Board for adjustments to such compensation. The
current members of the Compensation Committee are: Brian Bayley (Chairman),
Brian Levet and Larry Okada.
Corporate Governance Committee: The Corporate Governance
Committee is responsible for advising the Board of the appropriate corporate
governance procedures that should be followed by the Company and the Board and
monitoring whether they comply with such procedures. The current members of the
Corporate Governance Committee are: Michael Winn (Chairman), Brian Bayley and
George Lim.
The Corporate Governance Committee evaluates the effectiveness
of the Board and its committees. To facilitate this evaluation, each committee
will conduct an annual assessment of its performance, consisting of a review of
its Charter, the performance of the committee as a whole and will submit a
Committee Annual Report to the Corporate Governance Committee, including
recommendations. In addition, the Board will conduct an annual review of its
performance.
6.D. Employees/ Consultants
As of April 29, 2015, the Chief Financial Officer, Corporate
Secretary, Controller, Payroll & Benefits Administrator and Accounts Payable
are all based in Vancouver, Canada. The President & CEO, Chief Legal
Officer, Chief Geologist, General Manager of Exploration, Investor Relations
Director, Manager of Project Marketing, two geologists and a senior
administrative assistant are all based in the Companys office in Littleton,
Colorado through the Companys wholly-owned subsidiary, EMX USA. There are nine
employees located in Arizona including seven geologists and one office manager.
The Company has one consultant in Haiti and one employee in Australia who will
be part time as of April 30, 2015. The Company has 8 employees in Turkey
including one senior geologist and seven local workers.
See ITEM 6 Directors, Senior Management & Employees for a
description of their job responsibilities.
74
6.E. Share Ownership
Table No. 9 lists, as of April 29, 2015, Directors and Senior
Management who beneficially own the Company's voting securities, consisting
solely of Common Shares, and the amount of the Company's voting securities owned
by the Directors and Senior Management as a group.
Table No. 9
Shareholdings of Directors and Senior Management
Shareholdings of 5% Shareholders
Title of Class |
Name of Beneficial Owner |
Amount
and Nature of |
Percent
of Class |
|
|
Beneficial Ownership |
|
|
|
|
|
Common |
David M. Cole (1)
|
1,605,351 |
2.19% |
Common |
Michael D. Winn (2) |
893,908 |
1.28% |
Common |
Christina
Cepeliauskas (3) |
344,000 |
0.47% |
Common |
Brian E. Bayley (4) |
411,375 |
0.56% |
Options |
Brian K. Levet
(5) |
250,000 |
0.34% |
Options |
George K. C. Lim (6) |
225,000 |
0.31% |
Options |
Larry Okada (7)
|
50,000 |
0.07% |
Common |
Valerie Barlow (8) |
98,200 |
0.13% |
|
(1) |
Of these shares, 630,000 are represented by currently
exercisable share purchase options. |
|
(2) |
Of these shares, 275,000 are represented by currently
exercisable share purchase options. |
|
(3) |
Of these shares, 255,000 are represented by currently
exercisable share purchase options. |
|
(4) |
Of these shares, 225,000 are represented by currently
exercisable share purchase options. |
|
(5) |
Of these shares, 250,000 are represented by currently
exercisable share purchase options. |
|
(6) |
Of these shares, 225,000 are represented by currently
exercisable share purchase options. |
|
(7) |
Of these shares, 50,000 are represented by currently
exercisable share purchase options. |
|
(8) |
Of these shares, 92,200 are represented by currently
exercisable share purchase options. |
Based on 73,444,710 shares outstanding as of 04/29/2015
Stock Options. The Board established the Option Plan to
attract and motivate the directors, officers and employees of the Company (and
any of its subsidiaries), employees of any management company and consultants to
the Company (collectively the Optionees) and thereby advance the Companys
interests by providing them an opportunity to acquire an equity interest in the
Company through the exercise of stock options granted to them under the Option
Plan.
Pursuant to the Option Plan, the Board, based on the
recommendation of the Compensation Committee, may grant options to Optionees in
consideration of them providing their services to the Company or a subsidiary.
The number of Common Shares subject to each option is determined by the Board
within the guidelines established by the Option Plan. The options enable the
Optionees to purchase Common Shares at a price fixed pursuant to such
guidelines. The options are exercisable by the Optionee giving the Company
notice and payment of the exercise price for the number of Common Shares to be
acquired.
The Option Plan authorizes the Board to grant stock options to
the Optionees on the following terms:
1. |
The number of Common Shares subject to issuance pursuant
to outstanding options, in the aggregate, cannot exceed 10% of the
outstanding Common Shares. |
|
|
|
|
2. |
The number of Common Shares subject to issuance upon the
exercise of options granted under the Option Plan by one Optionee or all
Optionees providing investor relations services is subject to the
following limitations |
|
|
|
|
|
(a) |
no Optionee can be granted options during a 12 month
period to purchase more than |
|
|
|
|
|
|
(i) |
5% of the issued Common Shares unless disinterested
Shareholder approval has been obtained (such approval has not been
sought), or |
75
|
(ii) |
2% of the issued Common Shares, if the Optionee is a
consultant, and |
|
(b) |
the aggregate number of Common Shares subject to options
held by all Optionees providing investor relations services cannot exceed
2% in the aggregate. |
3. |
Unless the Option Plan has been approved by disinterested
Shareholders (such approval has not been obtained), options granted under
the Option Plan, together with all of the Companys previously established
and outstanding stock options, stock option plans, employee stock purchase
plans or any other compensation or incentive mechanisms involving the
issuance or potential issuance of Common Shares, shall not result, at any
time, in |
|
|
|
|
(a) |
the number of Common Shares reserved for issuance
pursuant to stock options granted to insiders exceeding 10% of the
outstanding Common Shares at the time of granting, |
|
|
|
|
(b) |
the grant to insiders, within a one year period, of
options to purchase that number of Common Shares exceeding 10% of the
outstanding Common Shares, or |
|
|
|
|
(c) |
the issuance to any one insider and such insiders
associates, within a one year period, of Common Shares totaling in excess
of 5% of the outstanding Common Shares. |
|
|
|
4. |
The exercise price of the options cannot be set at less
than the greater of $0.10 per Common Share and the closing trading price
of the Common Shares on the day before the granting of the stock options.
If the Optionee is subject to the tax laws of the United States of America
and owns (determined in accordance with such laws) greater than 10% of the
Common Shares, the exercise price shall be at least 110% of the price
established as aforesaid. |
|
|
|
5. |
The options may be exercisable for up to 10
years. |
|
|
|
6. |
There are not any vesting requirements unless the
Optionee is a consultant providing investor relations services to the
Company, in which case the options must vest over at least 12 months with
no more than one-quarter vesting in any three month period. However, the
Board may impose additional vesting requirements and, subject to obtaining
any required approval from the Exchange, may authorize all unvested
options to vest immediately. If there is a potential change of control
of the Company due to a take-over bid being made for the Company or a
similar event, all unvested options, subject to obtaining any required
approval from the Exchange, shall vest immediately. |
|
|
|
7. |
The options can only be exercised by the Optionee (to the
extent they have already vested) for so long as the Optionee is a
director, officer or employee of, or consultant to, the Company or any
subsidiary or is an employee of the Companys management Company and
within a period thereafter not exceeding the earlier of: |
|
|
|
|
(a) |
the original expiry date; |
|
|
|
|
(b) |
90 days after ceasing to be a director, officer or
employee of, or consultant at the request of the Board or for the benefit
of another director or officer to, the Company unless the Optionee is
subject to the tax laws of the United States of America, in which case the
option will terminate on the earlier of the 90th day and the
third month after the Optionee ceased to be an officer or employee;
and |
|
|
|
|
(c) |
if the Optionee dies, within one year from the Optionees
death. |
|
|
|
|
|
If the Optionee is terminated for cause, involuntarily
removed or resigns (other than at the request of the Board or for the
benefit of another director or officer) from any such positions, the
option will terminate concurrently. |
|
|
|
8. |
The options are not assignable except to a wholly-owned
holding company. If the option qualifies as an incentive stock option
under the United States Internal Revenue Code, the option is not
assignable to a holding company. |
|
|
|
9. |
No financial assistance is available to Optionees under
the Option Plan. |
|
|
|
10. |
Any amendments to outstanding stock options are subject
to the approval of the TSX-V and NYSE MKT and, if required by either
exchange or the Option Plan, of the Shareholders of the Company, possibly
with only disinterested Shareholders being entitled to vote.
Disinterested Shareholder approval must be obtained for the reduction of
the exercise price of options (including the cancellation and re-issuance
of options within a one year period so as to effectively reduce the
exercise price) of options held by insiders of the Company. The amendment
to an outstanding stock option will also require the consent of the
Optionee. |
76
11. |
Any amendments to the Option Plan are subject to the
approval of the TSX-V and NYSE MKT and, if required by either exchange or
the Option Plan, of the Shareholders of the Company, possibly with only
disinterested Shareholders being entitled to
vote. |
No options have been granted under the Option Plan which are
subject to Shareholder approval.
The Option Plan does not permit stock options to be transformed
into stock appreciation rights.
Table No. 10
Stock Options Outstanding
|
Number of |
|
|
|
Name |
Shares of |
Exercise |
Grant |
Expiration |
|
Common |
Price |
Date |
Date |
|
Stock |
|
|
|
|
|
|
|
|
Officers/Directors: |
|
|
|
|
|
|
|
|
|
David M. Cole |
150,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
80,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
200,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
200,000 |
$2.18 |
05/07/2010 |
05/07/2015 |
|
|
|
|
|
Michael D. Winn |
75,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
50,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
50,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
100,000 |
$2.18 |
05/07/2010 |
05/07/2015 |
|
|
|
|
|
|
|
|
|
|
Christina Cepeliauskas |
55,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
50,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
75,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
75,000 |
$2.18 |
05/07/2010 |
05/07/2015 |
|
|
|
|
|
|
|
|
|
|
Brian E. Bayley |
50,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
50,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
50,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
75,000 |
$2.18 |
05/07/2010 |
05/07/2015 |
|
|
|
|
|
|
|
|
|
|
Brian K. Levet |
50,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
50,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
150,000 |
$2.91 |
03/18/2011 |
03/18/2016 |
|
|
|
|
|
George K. C. Lim |
50,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
50,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
50,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
75,000 |
$2.18 |
05/07/2010 |
05/07/2015 |
|
|
|
|
|
Larry Okada |
50,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
|
|
|
|
|
|
|
|
|
Valerie Barlow |
24,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
20,000 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
30,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
18,200 |
$2.21 |
09/02/2010 |
09/02/2015 |
|
|
|
|
|
Consultants/Employees |
60,000 |
$0.87 |
12/22/2014 |
12/22/2019
|
77
|
17,500 |
$0.88 |
06/26/2014 |
06/26/2019 |
|
969,000 |
$1.20 |
04/25/2014 |
04/25/2019 |
|
67,000 |
$2.44 |
10/16/2012 |
10/16/2017 |
|
601,500 |
$1.94 |
08/22/2012 |
08/22/2017 |
|
80,000 |
$1.96 |
07/05/2012 |
07/5/2017 |
|
20,000 |
$2.10 |
12/11/2011 |
12/11/2016 |
|
40,000 |
$2.70 |
09/09/2011 |
09/09/2016 |
|
10,000 |
$2.70 |
08/03/2011 |
08/03/2016 |
|
763,000 |
$2.80 |
07/19/2011 |
07/19/2016 |
|
50,000 |
$3.21 |
02/01/2011 |
02/01/2016 |
|
177,500 |
$2.51 |
11/10/2010 |
11/10/2015 |
|
20,000 |
$2.21 |
09/02/2010 |
09/02/2015 |
|
23,000 |
$2.05 |
06/07/2010 |
06/07/2015 |
|
392,500 |
$2.18 |
05/07/2010 |
05/07/2015 |
Total Officers/Directors |
2,002,200 |
|
Total Employees/Consultants |
3,291,000 |
|
Total Officers/Directors/Etc. |
5,293,200 |
|
Stock Grant Program.
The Board created the Incentive Stock Grant Program for the
benefit of the officers and directors of the Company in 2010, and expanded the
Program in 2011. The grants have a two-year vesting period.
The purpose of the Stock Grant Program is as follows. Firstly,
to reward and provide an incentive to such persons for the ongoing efforts
towards the continuing successes and goals of the Company as many of its
successes directly result from their very significant efforts. Secondly, to
provide such persons with a long-term incentive to remain with the Company.
Finally, from time to time, the Company may provide additional compensation in
the form of stock grants as part of annual salaries.
The Stock Grant Program provides that, following the approval
of the independent members of the Compensation Committee, up to 300,000 Common
Shares may be awarded in each year. The Common Shares awarded will vest and be
issued in three separate tranches over a two year period on the date of grant,
and on the first and second anniversaries of the initial grant. None of the
300,000 Common Shares not awarded in one year can be rolled over or awarded in
subsequent years. If the recipient ceases to be a director or officer of the
Company before the relevant anniversary, he or she will not be entitled to
receive any further Common Shares under the Stock Grant Program, including
Common Shares previously awarded for issuance on such anniversary (with the
exception of historical stock grants to Mr. Michael Winn, who shall receive the
Common Shares even if he ceases to the be director).
The actual number of Common Shares awarded in each year is that
number recommended and approved by the independent members of the Compensation
Committee or independent directors of the Company.
In addition to the Stock Grant Program, the Compensation
Committee can recommend the Board approve the issuance of up to 700,000 Common
Shares to certain officers and directors of the Company as performance based
discretionary bonuses. The purposes of the bonuses are to reward these
individuals for their extraordinary efforts and to provide them with a long term
incentive to remain with the Company. Any such share grants are subject to the
approval of by the TSX-V and NYSE MKT and, if required by either exchange, the
independent Shareholders of the Company.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS
7.A. Major Shareholders.
7.A.1.a. Holdings By Major Shareholders.
The Company is aware of one person who beneficially own 5% or
more of the Registrant's voting securities. The table below lists as of
04/30/2015, persons and/or companies holding 5% or more beneficial interest in
the Common Shares.
78
5% or Greater Shareholders
|
|
Amount and Nature of |
|
Title of Class
|
Name
of Owner |
Beneficial Ownership |
Percent of Class |
|
|
|
|
Common |
Paul H. Stephens |
7,761,647 |
10.6% |
Based on shares outstanding as of 04/29/2015.
7.A.1.b. Significant Changes in Major Shareholders
Holdings.
---No Disclosure Required---
7.A.1.c. Different Voting Rights.
The Companys major shareholders do not have different voting
rights.
7.A.2. Canadian Share Ownership.
On 04/29/2015, the Companys shareholders list showed
73,444,710 common shares outstanding and 327 registered shareholders. The
Company has researched the indirect holdings by depository institutions and
other financial institutions estimates that there are: 20 holders of record"
resident in Canada representing 35,314,429 Common Shares, 190 holders of
record" resident in the USA representing 37,740,422 Common Shares, and 27
holders of record resident internationally representing 389,859 Common Shares.
The Company is a foreign private issuer for its current fiscal
year. As of the last business day of the Companys second fiscal quarter, the
majority of the Companys executive officers and directors are not US citizens
or residents, the majority of the Companys assets are not in the United States,
and the Company is administered principally in Canada. The Companys major
shareholders in common shares have the same voting rights as other holders of
common shares. The Company is not directly or indirectly owned or controlled by
another corporation, a foreign government or any other natural or legal persons
severally or jointly. There are no arrangements known to the Company which may
result in a change of control of the Company.
7.A.3. Control of the Company
The Company is a publicly owned Canadian Company, the shares of
which are owned by U.S. residents, Canadian residents and other foreign
residents. The Company is not controlled by any foreign government or other
person(s) except as described in ITEM 4.A., History and Growth of the Company,
and ITEM 6.E., Share Ownership.
7.A.4. Change of Control of Company Arrangements.
--- No Disclosure Necessary ---
7.B. Related Party Transactions
The aggregate value of transactions and outstanding balances
relating to key management personnel and directors were as follows:
79
For the year ended
December 31, 2014
|
|
|
|
|
Share-based |
|
|
|
|
For
the year ended
December 31, 2014 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
882,536 |
|
$ |
303,491 |
|
$ |
1,186,027 |
|
Outside directors* |
|
168,496 |
|
|
183,513 |
|
|
352,009 |
|
Seabord Services Corp.** |
|
418,800 |
|
|
|
|
|
418,800 |
|
Total |
$ |
1,469,832 |
|
$ |
487,004 |
|
$ |
1,956,836 |
|
|
|
|
|
|
Share-based |
|
|
|
|
For
the year ended
December 31, 2013 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
881,120 |
|
$ |
374,120 |
|
$ |
1,255,240 |
|
Outside directors* |
|
175,798 |
|
|
35,223 |
|
|
211,021 |
|
Seabord Services Corp.** |
|
447,900 |
|
|
- |
|
|
447,900 |
|
Total |
$ |
1,504,818 |
|
$ |
409,343 |
|
$ |
1,914,161 |
|
|
|
|
|
|
Share-based |
|
|
|
|
For
the year ended
December 31, 2012 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
742,003 |
|
$ |
940,920 |
|
$ |
1,682,923 |
|
Outside directors* |
|
102,000 |
|
|
306,159 |
|
|
408,159 |
|
Seabord Services Corp.** |
|
477,600 |
|
|
- |
|
|
477,600 |
|
Total |
$ |
1,321,603 |
|
$ |
1,247,079 |
|
$ |
2,568,682 |
|
* Directors fees include $60,000 per annum paid to the
Companys non-Executive Chairman, who does not receive the fees paid to the
other independent directors.
** Seabord Services Corp. (Seabord) is a management services
company controlled by the Chairman of the Board of Directors of the Company.
Seabord provides a Chief Financial Officer, a Corporate Secretary, accounting
and administration staff, and office space to the Company. The Chief Financial
Officer and Corporate Secretary are employees of Seabord and are not paid
directly by the Company.
Shareholder Loans
---No Disclosure Required---
Amounts Owing to Senior Management/Directors
At 12/31/2014 $29,612 was owed to senior management and
directors for fees for services.
Other than as disclosed above, there have been no transactions
since 12/31/2014, or proposed transactions, which have materially affected or
will materially affect the Company in which any director, executive officer, or
beneficial holder of more than 5% of the outstanding common shares, or any of
their respective relatives, spouses, associates or affiliates has had or will
have any direct or material indirect interest. Management believes the
transactions referenced above were on terms at least as favorable to the Company
as the Company could have obtained from unaffiliated parties.
Other Related Party Transactions
Other than as disclosed above, there have been no transactions
or loans between the Company and (a) enterprises that directly or indirectly
through one or more intermediaries, control or are controlled by, or are under
common control with, the company; (b) associates; (c) individuals owning,
directly or indirectly, an interest in the voting power of the Company giving
them significant influence over the Company, and close members of any such
individuals family; (d) key management personnel and close members of such
individuals families; and (e) enterprises substantially owned or controlled,
directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence.
7.C. Interests of Experts and Counsel
--- No Disclosure Necessary ---
80
ITEM 8. FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial
Information
The Company's financial statements are stated in Canadian
Dollars (CDN$) and are prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
The financial statements as required under ITEM 17 are attached hereto and found
immediately following the text of this Annual Report. The audit reports of
Davidson and Company, LLP, Independent Registered Public Accountants, are
included herein immediately preceding the financial statements.
Audited Financial Statements:
Fiscal Year 2014, 2013 and 2012 Ended December 31st.
8.A.7. Legal/Arbitration Proceedings
The Directors and the management of the Company do not know of
any material active or pending, legal proceedings against them; nor is the
Company involved as a plaintiff in any material proceeding or pending
litigation.
The Directors and the management of the Company know of no
active or pending proceedings against anyone that might materially adversely
affect an interest of the Company.
8.B. Significant Changes
There have been no significant changes to the Companys
financial condition since the end of the fiscal year.
ITEM 9. THE OFFER AND LISTING
9.A. Common Share Trading Information
Eurasian was incorporated under the laws of the Yukon Territory
of Canada on August 21, 2001 as 33544 Yukon Inc. and, on October 10, 2001,
changed its name to Southern European Exploration Ltd. On November 24, 2003, the
Company completed the reverse take-over of Marchwell Capital Corp., a TSX-V
listed company incorporated in Alberta on May 13, 1996 and which subsequently
changed its name to Eurasian Minerals Inc. On September 21, 2004, EMX continued
into British Columbia from Alberta under the Business Corporations Act.
The Common Shares began trading on the TSX-V on November 23,
2003 and the Common Shares began trading on the NYSE MKT on January 30,
2012.
Table No. 13 lists the high and low sales prices on the TSX-V
for: the last six months; for the two most recent full financial years and
subsequent period, each full financial quarter; and the last five fiscal years.
Table No. 13
TSX Venture Exchange Common Shares Trading
Activity
- Sales -
|
|
NYSE MKT |
TSX-V |
Period |
|
High |
Low |
High |
Low |
|
|
(in
US$) |
(in
US$) |
(in
Cdn$) |
(in
Cdn$) |
Prior fiscal years |
|
|
|
|
|
Year ended |
December 31, 2014 |
$ 1.23 |
$ 0.63 |
$ 1.93 |
$ 0.90 |
Year ended |
December 31, 2013 |
$ 2.20 |
$ 0.78 |
$ 2.15 |
$ 0.86 |
Year ended |
December 31, 2012 |
$ 2.88 |
$ 1.61 |
$ 2.75 |
$ 1.66 |
Year ended |
December 31, 2011 |
N/A |
N/A |
$ 3.88 |
$ 1.66 |
Year ended |
December 31, 2010 |
N/A |
N/A |
$ 3.48 |
$ 1.67 |
|
|
|
|
|
|
Prior Quarters |
|
|
|
|
|
Quarter ended |
Q1 - March 31, 2015 |
$ 0.81 |
$ 0.67 |
$0.97 |
$ 0.83 |
Quarter ended |
Q4 - December 31, 2014 |
$ 0.89 |
$ 0.64 |
$ 0.98 |
$ 0.70 |
81
Quarter ended |
Q3 - September 30, 2014 |
$ 0.82 |
$ 0.63 |
$ 0.88 |
$ 0.68 |
Quarter ended |
Q2 - June 30, 2014 |
$ 1.08 |
$ 0.65 |
$ 1.19 |
$ 0.74 |
Quarter ended |
Q1 - March 31, 2014 |
$ 1.23 |
$ 0.96 |
$1.325 |
$ 1.05 |
Quarter ended |
Q4 - December 31, 2013 |
$ 1.30 |
$ 0.78 |
$ 1.30 |
$ 0.86 |
Quarter ended |
Q3 - September 30, 2013 |
$ 1.50 |
$ 1.18 |
$ 1.56 |
$ 1.21 |
Quarter ended |
Q2 - June 30, 2013 |
$ 2.08 |
$ 1.05 |
$ 2.10 |
$ 1.02 |
Quarter ended |
Q1 - March 31, 2013 |
$ 2.20 |
$ 1.86 |
$ 2.15 |
$ 1.90 |
|
|
|
|
|
|
Last 6 months |
|
|
|
|
|
Month ended |
March 31, 2015 |
$ 0.78 |
$ 0.67 |
$ 0.94 |
$ 0.85 |
Month ended |
February 28, 2015 |
$ 0.79 |
$ 0.70 |
$ 0.97 |
$ 0.85 |
Month ended |
January 31, 2015 |
$ 0.81 |
$ 0.71 |
$ 0.97 |
$ 0.83 |
Month ended |
December 31, 2014 |
$ 0.84 |
$ 0.69 |
$ 0.95 |
$ 0.87 |
Month ended |
November 30, 2014 |
$ 0.89 |
$ 0.64 |
$ 0.98 |
$ 0.70 |
Month ended |
October 31, 2014 |
$ 0.80 |
$ 0.65 |
$ 0.89 |
$ 0.72
|
The closing price of the Common Shares as reported by the TSX-V
on December 31, 2014 was Cdn$0.88. The closing price of the Common Shares as
reported by the NYSE MKT on December 31, 2014 was US$0.76.
9.C. Stock Exchanges Identified
Refer to ITEM 9.A.
ITEM 10. ADDITIONAL INFORMATION
10.A. Share Capital
--- No Disclosure Necessary ---
10.B. Memorandum and Articles of Association
New British Columbia Corporations Act
Background
Effective March 29, 2004, the Business Corporations Act
(British Columbia) (the New Act) replaced the previous Company Act (British
Columbia) (the Old Act). As a consequence, all British Columbia companies are
now governed by the New Act. The New Act is intended to modernize and streamline
company law in British Columbia.
Objects and Purposes
The Articles of Eurasian place no restrictions upon the type of
business that the Company may engage in.
Disclosure of Interest of Directors,
Part 17 of the
Articles
17.1 A director
or senior officer who holds a disclosable interest (as that term is used in the
Business Corporations Act) in a contract or transaction into which the
Company has entered or proposes to enter is liable to account to the Company for
any profit that accrues to the director or senior officer under or as a result
of the contract or transaction only if and the extent provided in the
Business Corporations Act.
17.2 A
director who holds a disclosable interest in a contract into which the Company
has entered or proposes to enter is not entitled to vote on any directors
resolution to approve that contract or transaction, unless all the directors
have a disclosable interest in that contract or transaction, in which case any
or all of those directors may vote on such resolution.
17.3 A director
who holds a disclosable interest in a contract or transaction into which the
Company has entered or proposes to enter and who is present at the meeting of
directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the
director votes on any or all of the resolutions considered at the meeting.
82
17.4 A
director of senior officer who holds any office or possesses any property, right
or interest that could result, directly or indirectly, in the creation of a duty
or interest that materially conflicts with that individuals duty or interest as
a director or senior officer, must disclose the nature and extent of the
conflict as required by the Business Corporations Act.
17.5 A
director may hold any office or place of profit with the Company, other than the
office of auditor of the Company, in addition to their office of director for a
period and on the terms (as to remuneration or otherwise)that the directors may
determine.
17.6 No
director or intended director is disqualified by their office from contracting
with the Company either with regard to the holding or any office or place of
profit the director holds with the Company or as vendor, purchaser or otherwise,
and no contract or transaction entered into by or on behalf of the Company in
which a director is in any way interested is liable to be voided for that
reason.
17.7 A
director or officer, or any person in which a director or officer has an
interest, may act in a professional capacity for the Company, except as auditor
of the Company, and the director or officer or such person is entitled to
remuneration for professional services as if that director or officer were not a
director or officer.
17.8 A
director or officer may be or become a director, officer or employee of, or
otherwise interested in, any person in which the Company may be interested as a
shareholder or otherwise, and the director or officer is not accountable to the
Company for any remuneration or other benefits received by them as director,
officer or employee of, or from their interest in, such other person.
Powers and Duties of Directors
Part 16 of the Articles
16.1 The
directors must, subject to the Articles, manage or supervise the management of
the business and affairs of the Company and have the authority to exercise all
such powers of the Company as are not, by the Business Corporations Act
or by the Articles, required to be exercised by the shareholders of the Company.
16.2 The
directors may from time to time, by power of attorney or other instrument, under
seal if so required by law, appoint any person to be the attorney of the Company
for such purposes, and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the directors under these Articles
and excepting the power to fill vacancies in the board of directors, to remove a
director, to change the membership of, or fill vacancies in, any committee of
the directors, to appoint or remove officers appointed by the directors and to
declare dividends)and for such period, and with such remuneration and subject to
such conditions as the directors may think fit. Any such power of attorney may
contain such provisions for the protection or convenience of persons dealing
with such attorney as the directors think fit. Any such attorney may be
authorized by the director to sub-delegate all or any of the powers, authorities
and discretions for the time being vested in them.
Borrowing Powers of Directors,
Part 8
of the Articles
8.1. |
The directors, if authorized by the directors, may: |
|
|
|
(1) borrow
money in such manner and amount, on the security, from the sources and
upon the terms and conditions as they consider appropriate; |
|
|
|
(2) issue
bonds, debentures, and other debt obligations either outright or as
security for any liability or obligation of the Company or any other
person and at such discounts or premiums and on such other terms as they
consider appropriate; |
|
|
|
(3) guarantee
the repayment of money by any other persons or the performance of any
obligation of any other person; and |
|
|
|
(4) mortgage,
charge, whether by way of specific or floating charge, grant a security
interest in, or give other security on, the whole or any part of the
present and future assets and undertaking of the
Company. |
83
Remuneration of Directors
Part 13 of
the Articles
13.5 The
directors are entitled to the remuneration for acting as directors, if any, as
the directors may from time to time determine. If they so decide, the
remuneration, if any, of the directors will be determined by the shareholders.
That remuneration may be in addition to any salary or other remuneration paid to
any officer of employee of the Company as such, who is also a director.
13.6 The
Company must reimburse each director for the reasonable expenses they may incur
in and about the business of the Company.
13.7 If any
director performs any professional or other services for the Company that in the
opinion of the directors are outside the ordinary duties of a director, or if
any director is otherwise specially occupied in or about the Companys business,
they may be paid remuneration fixed by the directors, or, at the option of that
director, fixed by ordinary resolution, and such remuneration may be either in
addition to, or in substitution for, any other remuneration that they may be
entitled to receive.
13.8 Unless
otherwise determined by ordinary resolution, the directors on behalf of the
Company may pay a gratuity or pension or allowance on retirement to any director
who has held any salaried office or place of profit with the Company or to their
spouse or dependants and may make contributions to any fund and pay premiums for
the purchase or provision of any such gratuity, pension or allowance.
Required Ownership of Capital by Directors
Part 13 of the Articles
13.4 . A
director is not required to hold a share in the capital of the Company as
qualification for their office but must be qualified as required by the
Business Corporations Act to become, act or continue to act as a
director.
Dividend Rights
Part 22 of the Articles
22.2 The
directors may from time to time declare and authorize payment of such dividends
as they may deem advisable.
Special Rights and Restrictions
Part 9
and 10 of the Articles
9.2 The Company
may by ordinary resolution:
(1) create special
rights or restrictions for, and attach those special rights or restrictions to,
the shares of any class or series of shares, unless any of those shares have
been issued in which case the Company may do so only be special resolution; or
(2) vary or delete
any special rights or restrictions attached to the shares of any class or series
of shares, unless any of those shares have been issued in which case the Company
may do so only be ordinary resolution.
Rules pertaining to annual general and special general meetings
of shareholders are described in Sections Ten of the Companys Articles. These
rules are summarized as follows:
10.1 The
Company must, unless an annual general meeting is deferred or waived in
accordance with the Business Corporations Act, hold its first annual
general meeting following incorporation, amalgamation or continuation within 18
months after the date on which it was incorporated or otherwise created and
recognized, and after that must hold an annual general meeting at least once in
each calendar year and not more than 15 months after the last annual reference
date at such time and place as may be determined by the directors; and
10.2 If all the
shareholders entitled to vote at an annual general meeting consent by unanimous
resolution under the Business Corporations Act to all of the business
required to be transacted at that annual general meeting, the meeting is deemed
to have been held on the date of the unanimous resolution. The shareholders
must, in any unanimous resolution passed under this Article 10.2, select the Companys annual
reference date a date that would be appropriate for the holding of the
applicable annual general meeting.
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10.3 The
directors may, whenever they think fit, call a meeting of shareholders to be
held in British Columbia, Calgary, Alberta or Toronto, Ontario or at such other
location as may be approved by the Registrar of Companies at such time and place
as may be determined by the directors.
10.4 The
Company must send notice of the date, time and location of any meeting of
shareholders, in the manner provided by these Articles, or in such other manner,
if any, as may be prescribed by ordinary resolution (whether previous notice of
the resolution has been give or not), to each shareholder entitled to attend the
meeting, to each director and to the auditor of the Company, unless these
Articles otherwise provide, at least the following number of days before the
meeting:
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(1) |
if and for so long the Company is a public company, 21
days; |
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(2) |
otherwise, 10 days. |
10.5 The
directors may set a date as the record date for the purpose of determining
shareholders entitled to notice of any meeting of shareholders. The record date
must not precede the date on which the meeting is to be held by more than two
months or, in the case of a general meeting requisitioned by shareholders under
the Business Corporations Act, by more than four months. The record date
must not precede the date on which the meeting is held by fewer than:
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(1) |
if and for so long as the Company is a public company, 21
days; |
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(2) |
otherwise, 10 days. |
If no record date is set, it is 5:00 p.m. on the business day
immediately preceding the first date on which the notice is sent or, if no
notice is sent, the beginning of the meeting.
10.6 The
directors may set a date as the record date for the purpose of determining
shareholders entitled to vote at any meeting of shareholders. The record date
must not precede the date on which the meeting is to be held by more than two
months or, in the case of a general meeting requisitioned by shareholders under
the Business Corporations Act, by more than four months. If no record
date is set, the record date is 5:00 p.m. on the day immediately preceding the
first date on which the notice is sent or, if no notice is sent, the beginning
of the meeting.
10.7 The
accidental omission to send notice of any meetings to, or the non-receipt of any
notice by, any of the persons entitled to notice does not invalidate any
proceedings at that meeting. Any person entitled to notice of such meeting of
shareholders may, in writing or otherwise, waive or reduce the period of notice
of such meeting.
10.8 If a
meeting of shareholders is to consider special business within the meaning of
Article 11.1, the notice of meeting must:
(1) state the
general nature of the special business; and
(2) if the
special business includes considering, approving, ratifying, adopting or
authorizing any document or the signing of or giving of effect to any document,
have attached to it a copy of the document or state that a copy of the document
will be available for inspection by shareholders:
(a) at the
Company records office, or at such other reasonably accessible location in
British Columbia as is specified in such notice; and
(b) during
statutory business hours o any one or more specified days before the day set for
the holding of the meeting.
Proceedings at Meetings of Shareholders
Part 11 of the
Articles
11.1 At a
meeting of shareholders, the following business is special business:
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(1) |
at a meeting of shareholders that is not an annual
general meeting, all business is special business except business relating
to the conduct of or voting at the meeting; |
85
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(2) |
at an annual general meeting, all business is special
business except for the following: |
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(a) |
business relating to the conduct or voting at the
meeting; |
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(b) |
consideration of any financial statements of the Company
presented to the meeting; |
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(c) |
consideration of any reports of the directors or
auditor; |
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(d) |
the setting or changing of the number of
directors; |
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(e) |
the election or appointment of directors; |
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(f) |
the appointment of an auditor; |
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(g) |
the setting of the remuneration of the auditor; |
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(h) |
business arising out of a report of the directors not
requiring the passing of a special resolution or an exceptional
resolution; and |
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(i) |
any other business under which, under these Articles or
the Business Corporations Act, may be transacted at a meeting of
shareholders without prior notice of the business being given to the
shareholders. |
11.2 The
majority of votes required for the Company to pass a special resolution at a
meeting of shareholders are two-thirds of the votes cast on the resolution.
11.3 Subject to
the special rights and restrictions attached to the shares of any class or
series of shares, the quorum for the transaction of business at a meeting of
shareholders is two shareholders present in person or represented by proxy.
11.4 If there
is only one shareholder entitled to vote at a meeting of shareholders:
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(1) |
the quorum of one person who is, or who represents by
proxy, that shareholder; and |
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(2) |
that shareholder, present in person or by proxy, may
constitute the meeting. |
11.5 The
directors, the president (if any), the secretary (if any), the assistant
secretary (if any), any lawyer for the Company, auditor of the Company and any
other persons invited by the directors are entitled to attend any meeting of
shareholders, but if any of those persons does attend a meeting of shareholders,
that person is not to be counted in the quorum and is not entitled to vote at
the meeting unless that person is a shareholder or proxy holder entitled to vote
at the meeting.
11.6 No
business, other than the election of a chair of the meeting and the adjournment
of the meeting, may be transacted at any meeting of shareholders unless a quorum
of shareholders entitled to vote is present at the commencement of the meeting,
but such quorum need not be present throughout the meeting.
11.7 If,
within one-half hour from the time set for the holding of a meeting of
shareholders, a quorum is not present:
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(1) |
in the case of a general meeting requisitioned by
shareholders, the meeting is dissolved, and |
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(2) |
in the case of any other meeting of shareholders, the
meeting stands adjourned to the same day in the next week at the same time
and place. |
11.8 If,
at the meeting to which the meeting referred to in Article 11.7(2) was
adjourned, a quorum is not present within one-half hour from the time set for
the holding of the meeting, the person or persons present and being, or
representing by proxy, one or more shareholders entitled to attend and vote at
the meeting constitute a quorum.
11.9 The
following individuals are entitled to preside as chair at a meeting of
shareholders:
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(1) |
the chair of the board, if any; or |
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(2) |
if the chair of the board is absent or unwilling to act
as chair of the meeting, the first of the following individuals to agree
to act as chair: the president, if any. |
11.10 If, at any meeting of
shareholders, the chair of the board or president are not present within 15
minutes after the time set for holding the meeting, or if the chair of the board
an the president are unwilling to act as chair of the meeting, or if the chair
of the board and the president have advised the secretary, if any, or any
director present at the meeting, that they will not be present at the meeting,
one of the chief executive officer, the chief financial officer, a
vice-president, the secretary or the Companys legal counsel may act as chair of
the meeting and, failing them, the directors present must choose one of their
number to be chair of the meeting or if all of the directors present decline to
take the chair or fail to so choose of if no director is present, the shareholders entitled to vote at the meeting
who are present in person or by proxy may choose any person at the meeting to
chair the meeting.
86
11.11 The chair of a meeting of
shareholders may, and if so directed by the meeting must, adjourn the meeting
from time to time and from place to place, but no business may be transacted at
any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place.
11.12 It is not necessary to give
any notice of an adjourned meeting or of the business to be transacted at any
adjourned meeting of shareholders except that, when a meeting is adjourned for
30 days or more, notice of the adjourned meeting must be given as in the case of
the original meeting.
11.13 Every motion put to a vote
at a meeting of shareholders will be decided on a show of hands unless a poll,
before or on the declaration of the result of the vote by show of hands, is
directed by the chair or demanded by at least one shareholder entitled to vote
who is present in person or by proxy.
11.14 The chair of a meeting of
shareholders must declare to the meeting the decision on every question in
accordance with the result of the show of hands or the poll, as the case may be,
and that decision must be entered into the minutes of the meeting. A declaration
of the chair that a resolution is carried by the necessary majority or is
defeated is, unless a poll is directed by the chair or demanded under Article
11.13, conclusive evidence without proof of the number or proportion of the
votes recorded in favor of or against the resolution.
11.15 No motion proposed at a
meeting of shareholders need be seconded unless the chair of the meeting rules
otherwise, and the chair of any meeting of shareholders is entitled to propose
or second a motion.
11.16 In case of an equality of
votes, the chair of a meeting of shareholders does not, either on a show of
hands or on a poll, have a second or casting vote in addition to the vote or
votes to which the chair may be entitled as a shareholder.
11.17 Subject to Article 11.18,
if a poll is duly demanded at a meeting of shareholders:
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(1) |
the poll must be taken: |
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(a) |
at the meeting, or within seven days after the date of
the meeting, as the chair of the meeting directs; and |
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(b) |
in the manner, at the time and at the place that the
chair of the meeting directs; |
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(2) |
the result of the poll is deemed to be the decision of
the meeting at which the poll is demanded; and |
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(3) |
the demand for the poll may be withdrawn by the person
who demanded it. |
11.18 A poll demanded at a
meeting of shareholders on a question of adjournment must be taken immediately
at the meeting.
11.19 In the case of any dispute
as to the admission or rejection of a vote given on a poll, the chair of the
meeting must determine the dispute, and their determination made in good faith
is final and conclusive.
11.20 On a poll, a shareholder
entitled to more than one vote need not cast all the votes in the same way.
11.21 No poll may be demanded in
respect of the vote by which a chair of a meeting of shareholders is elected.
11.22 The demand for a poll at a
meeting of shareholders does not, unless the chair of the meeting so rules,
prevent the continuation of a meeting for the transaction of any business other
than the question on which a poll had been demanded.
11.23 The Company must, for at
least three months after a meeting of shareholders, keep each ballot cast on a
poll and each proxy voted at the meeting at its records office, and, during that
period, makes them available for inspection during normal business hours by any
shareholder or proxy holder entitled to vote at the meeting. At the end of such
three month period, the Company may destroy such ballots and proxies.
Votes of Shareholders
Part 12 of the
Articles
87
12.1 Subject to any
special rights or restrictions attached to any shares and to the restrictions
imposed on joint shareholders under Article 12.3:
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(1) |
on a vote by a show of hands, every person present who is
a shareholder or proxy holder and entitled to vote on the matter has one
vote; and |
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(2) |
on a poll, every shareholder entitled to vote on the
matter has one vote in respect of each share entitled to be voted on the
matter and held by that shareholder and may exercise that vote either in
person or by proxy. |
Other Issues
Neither the Companys articles nor British Columbia law permit:
staggered terms for Directors; cumulative voting; shareholder approval of
corporate matter by written consent; the adoption of various poison pill
measures precluding shareholders from realizing a potential premium over the
market value of their shares. Neither the Companys articles nor British
Columbia law require retirement or non-retirement of directors under an age
limit requirement.
There are no limitations on the rights to own securities.
There is no provision of the Companys articles that would have
an effect of delaying, deferring or preventing a change in control of the
Company and that would operate only with respect to a merger, acquisition or
corporate restructuring involving the Company (or any of its subsidiaries).
Shareholder ownership must be disclosed to the British Columbia
Securities Commission and the TSX Venture Exchange by any shareholder who owns
more than 10% of the Companys common stock.
10.C. Material Contracts
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(a) |
Registrar and Transfer Agency Agreement between the
Company and Montreal Trust Company dated August 12, 1996 appointing
Montreal Trust as the Companys registrar and the provision of transfer
agency services for the Common Shares.(1) |
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(b) |
Assignment of Agencies Agreement among the Company,
Montreal Trust Company of Canada and Computershare Trust Company of Canada
dated January 26, 2001 appointing Computershare as the Companys registrar
and transfer agent for the Common Shares.(1) |
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(c) |
Listing Agreement dated January 3, 2012 with the TSX-V,
pursuant to which the Common Shares are listed and traded on the
Exchange.(1) |
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(d) |
Listing Agreement dated January 17, 2012 with the NYSE
MKT, pursuant to which the Common Shares are listed and traded on the NYSE
MKT.(1) |
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(e) |
Services Agreement between the Company and Seabord
Services Corp. dated February 1, 2014 in respect of Seabord providing
various consulting, administrative, accounting, management and related
services.(2) |
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(1) |
Filed as an exhibit on Form 40-F Registration Statement
pursuant to Section 12 of the Securities Exchange Act of 1934 in January
2012. |
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(2) |
Filed as an exhibit on Form 20F Annual Report pursuant to
Section 12 of the Securities Exchange Act of 1934 in
2014. |
10.D. Exchange Controls
Canada has no system of exchange controls. There are no
Canadian restrictions on the repatriation of capital or earnings of a Canadian
public company to non-resident investors. There are no laws in Canada or
exchange restrictions affecting the remittance of dividends, profits, interest,
royalties and other payments to non-resident holders of the Companys
securities, except as discussed in ITEM 10, Taxation" below.
Restrictions on Share Ownership by Non-Canadians - There
are no limitations under the laws of Canada or in the organizing documents of
the Company on the right of foreigners to hold or vote securities of the
Company, except that the Investment Canada Act may require review and approval
by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for
acquisitions of control is generally defined as being one-third or more of the
voting shares of the Company. "Non-Canadian" generally means an individual who
is not a Canadian citizen, or a Company, partnership, trust or joint venture
that is ultimately controlled by non-Canadians.
88
10.E. Taxation
Canadian Federal Income Tax Considerations
The following is a brief summary of some of the principal
Canadian federal income tax consequences to a holder of common shares of the
Company (a "U.S. Holder") who deals at arm's length with the Company, holds the
shares as capital property and who, for the purposes of the Income Tax Act
(Canada) (the "Act") and the Canada United States Income Tax Convention (the
"Treaty"), is at all relevant times resident in the United States, is not and is
not deemed to be resident in Canada and does not use or hold and is not deemed
to use or hold the shares in carrying on a business in Canada. Special rules,
which are not discussed below, may apply to a U.S. Holder that is an insurer
that carries on business in Canada and elsewhere.
Under the Act and the Treaty, a U.S. Holder of common shares
will generally be subject to a 15% withholding tax on dividends paid or credited
or deemed by the Act to have been paid or credited on such shares. The
withholding tax rate is 5% where the U.S. Holder is a Company that beneficially
owns at least 10% of the voting shares of the Company and the dividends may be
exempt from such withholding in the case of some U.S. Holders such as qualifying
pension funds and charities.
In general, a U.S. Holder will not be subject to Canadian
income tax on capital gains arising on the disposition of shares of the Company
unless (i) at any time in the five-year period immediately preceding the
disposition, 25% or more of the shares of any class or series of the capital
stock of the Company was owned by (or was under option of or subject to an
interest of) the U.S. holder or persons with whom the U.S. holder did not deal
at arm's length, and (ii) the value of the common shares of the Company at the
time of the disposition derives principally from real property (as defined in
the Treaty) situated in Canada. For this purpose, the Treaty defines real
property situated in Canada to include rights to explore for or exploit mineral
deposits and other natural resources situated in Canada, rights to amounts
computed by reference to the amount or value of production from such resources,
certain other rights in respect of natural resources situated in Canada and
shares of a Company the value of whose shares is derived principally from real
property situated in Canada.
The US Internal Revenue Code provides special anti-deferral
rules regarding certain distributions received by US persons with respect to,
and sales and other dispositions (including pledges) of stock of, a passive
foreign investment company. A foreign Company, such as the Company, will be
treated as a passive foreign investment company if 75% or more of its gross
income is passive income for a taxable year or if the average percentage of its
assets (by value) that produce, or are held for the production of, passive
income is at least 50% for a taxable year. The Company believes that it was a
passive foreign investment company as at December 31, 2011.
Dividends
A Holder will be subject to Canadian withholding tax ("Part
XIII Tax") equal to 25%, or such lower rate as may be available under an
applicable tax treaty, of the gross amount of any dividend paid or deemed to be
paid on common shares. Under the Canada-U.S. Income Tax Convention (1980) as
amended by the Protocols signed on 6/14/1983, 3/28/1984, 3/17/1995, and
7/29/1997 (the "Treaty"), the rate of Part XIII Tax applicable to a dividend on
common shares paid to a Holder who is a resident of the United States and who is
the beneficial owner of the dividend, is 5%. If the Holder is a company that
owns at least 10% of the voting stock of the Company paying the dividend, and,
in all other cases, the tax rate is 15% of the gross amount of the dividend. The
Company will be required to withhold the applicable amount of Part XIII Tax from
each dividend so paid and remit the withheld amount directly to the Receiver
General for Canada for the account of the Holder.
Disposition of Common Shares
A Holder who disposes of a common share, including by deemed
disposition on death, will not normally be subject to Canadian tax on any
capital gain (or capital loss) thereby realized unless the common share
constituted "taxable Canadian property" as defined by the Tax Act.
Generally, a common share of a public Company will not constitute taxable
Canadian property of a Holder if the share is listed on a prescribed stock
exchange unless the Holder or persons with whom the Holder did not deal at arm's
length alone or together held or held options to acquire, at any time within the
five years preceding the disposition, 25% or more of the shares of any class of
the capital stock of the Company. The Canadian Venture Exchange is a prescribed
stock exchange under the Tax Act. A Holder who is a resident of the
United States and realizes a capital gain on a disposition of a common share
that was taxable Canadian property will nevertheless, by virtue of the Treaty,
generally be exempt from Canadian tax thereon unless (a) more than 50% of
the value of the common shares is derived from, or from an interest in, Canadian
real estate, including Canadian mineral resource properties, (b) the common
share formed part of the business property of a permanent establishment that the
Holder has or had in Canada within the 12 month period preceding the
disposition, or (c) the Holder is an individual who (i) was a resident of Canada
at any time during the 10 years immediately preceding the disposition, and for a
total of 120 months during any period of 20 consecutive years, preceding the
disposition, and (ii) owned the common share when he ceased to be resident in
Canada.
89
A Holder who is subject to Canadian tax in respect of a capital
gain realized on a disposition of a common share must include three quarters of
the capital gain (taxable capital gain) in computing the Holder's taxable income
earned in Canada. The Holder may, subject to certain limitations, deduct
three-quarters of any capital loss (allowable capital loss) arising on a
disposition of taxable Canadian property from taxable capital gains realized in
the year of disposition in respect to taxable Canadian property and, to the
extent not so deductible, from such taxable capital gains realized in any of the
three preceding years or any subsequent year.
United States Taxation
For federal income tax purposes, an individual who is a citizen
or resident of the United States or a domestic Company ("U.S. Taxpayer") will
recognize a gain or loss on the sale of the Company's common shares equal to the
difference between the proceeds from such sale and the adjusted tax basis of the
common shares. The gain or loss will be a capital gain or capital loss if the
Company's common shares are a capital asset in U.S. Taxpayer's hands.
For federal income tax purposes, a U.S. Taxpayer will be
required to include in gross income dividends received on the Company's common
shares. A U.S. Taxpayer who pays Canadian tax on a dividend on common shares
will be entitled, subject to certain limitations, to a credit (or alternatively,
a deduction) against federal income tax liability. A domestic Company that owns
at least 10% of the voting shares should consult its tax advisor as to
applicability of the deemed paid foreign tax credit with respect to dividends
paid on the Company's common shares.
Under a number of circumstances, a United States Investor
acquiring shares of the Company may be required to file an information return
with the Internal Revenue Service Center where they are required to file their
tax returns with a duplicate copy to the Internal Revenue Service Center,
Philadelphia, PA 19255. In particular, any United States Investor who becomes
the owner, directly or indirectly, of 10% or more of the shares of the Company
will be required to file such a return. Other filing requirements may apply, and
United States Investors should consult their own tax advisors concerning these
requirements.
The US Internal Revenue Code provides special anti-deferral
rules regarding certain distributions received by US persons with respect to,
and sales and other dispositions (including pledges) of stock of, a passive
foreign investment company. A foreign Company, such as the Company, will be
treated as a passive foreign investment company if 75% or more of its gross
income is passive income for a taxable year or if the average percentage of its
assets (by value) that produce, or are held for the production of, passive
income is at least 50% for a taxable year. The Company believes that it was a
passive foreign investment company for the taxable year ended 12/31/2014.
10.F. Dividends and Paying Agents
--- No Disclosure Necessary ---
10.G. Statement by Experts
--- No Disclosure Necessary ---
10.H. Documents on Display
Copies of the documents referenced in this annual report are
available at the Companys office located at Suite 501, 543 Granville Street,
Vancouver, British Columbia, Canada.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Credit Risk
The Company is exposed to credit risk by holding cash and cash
equivalents and receivables. This risk is minimized by holding a significant
portion of the funds in Canadian banks. The Companys exposure with respect to
its receivables is primarily related to royalty streams and recovery of
exploration evaluation costs.
90
Interest Rate Risk
The Company is exposed to interest rate risk because of
fluctuating interest rates. Management believes the interest rate risk is low
given the current low global interest rate environment. Fluctuations in market
rates is not expected to have a significant impact on the Companys operations
due to the short term to maturity and no penalty cashable feature of its cash
equivalents.
Market Risk
The Company is exposed to market risk because of the
fluctuating values of its publicly traded marketable securities and other
company investments. The Company has no control over these fluctuations and does
not hedge its investments. Based on the December 31, 2014 portfolio
values, a 10% increase or decrease in effective market values would increase or
decrease net shareholders equity by approximately $104,000.
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet
its financial obligations as they come due. The Company manages this risk by
careful management of its working capital to ensure the Companys expenditures
will not exceed available resources.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES
--- No Disclosure Necessary ---
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES
--- No Disclosure Necessary ---
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF
SECURITY HOLDERS AND USE OF PROCEEDS
--- No Disclosure Necessary ---
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Companys management is responsible for establishing and
maintaining disclosure controls and procedures to provide reasonable assurance
that material information related to the Company, including its consolidated
subsidiaries, is made known to senior management, including Chief Executive
Officer (CEO) and the Chief Financial Officer (CFO), by others within those
entities on a timely basis so that appropriate decisions can be made regarding
public disclosure.
We carried out an evaluation, under the supervision and with
the participation of our management, including our Principal Executive Officer
and our Principal Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as
amended) as of December 31, 2014. The Chief Executive Officer and Chief
Financial Officer concluded that the disclosure controls and procedures as of
December 31, 2014, were effective to give reasonable assurance that the
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is (i) recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms, and
(ii) accumulated and communicated to management, including the Chief Executive
Office and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
91
Managements Annual Report on Internal Control over
Financial Reporting
The Companys management is responsible for designing,
establishing and maintaining a system of internal controls over financial
reporting (as defined in Exchange Act Rule 13a-15(f)) to provide reasonable
assurance that the financial information prepared by the Company for external
purposes is reliable and has been recorded, processed and reported in an
accurate and timely manner in accordance with GAAP. The Board of Directors is
responsible for ensuring that management fulfills its responsibilities. The
Audit Committee fulfills its role of ensuring the integrity of the reported
information through its review of the interim and annual financial statements.
Management reviewed the results of their assessment with the Companys Audit
Committee.
Because of its inherent limitations, the Companys internal
control over financial reporting may not prevent or detect all possible
misstatements or frauds. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with policies
or procedures may deteriorate.
To evaluate the effectiveness of the Companys internal control
over financial reporting, Management has used the Internal Control - Integrated
Framework, which is a suitable, recognized control framework established by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Management has assessed the effectiveness of the Companys internal control over
financial reporting and concluded that such internal control over financial
reporting is effective as of December 31, 2014.
Limitations on the Effectiveness of Controls
The Company's management, including the CEO and CFO, does not
expect that our Disclosure Controls or our Internal Controls will prevent all
errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed achieving its stated goals under all potential future conditions; over
time, control may become inadequate because of changes in conditions, or the
degree of compliance with the policies or procedures may deteriorate. Because of
the inherent limitations in a cost-effective control system, misstatements due
to error or fraud may occur and not be detected.
Changes in Internal Controls Over Financial
Reporting
There has been no change in the Companys internal control over
financial reporting that occurred during the period covered by this Form 20-F,
that has materially affected or is reasonably likely to materially affect, the
Companys internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The Companys Board has determined that Messrs. Lim, Bayley and
Okada qualify as financial experts (as defined in Item 407(d)(5) of Regulation
S-K under the U.S. Exchange Act), are financially sophisticated (as determined
in accordance with Section 803B(2)(iii) of the NYSE MKT Company Guide), and are
independent (as determined under U.S. Exchange Act Rule 10A-3 and Section 803A
of the NYSE MKT Company Guide).
ITEM 16B. CODE OF ETHICS
The Board of Directors of the Company has responsibility for
the stewardship of the Company including responsibility for strategic planning,
identification of the principal risks of the Companys business and
implementation of appropriate systems to manage these risks, succession planning
(including appointing, training and monitoring senior management),
communications with investors and the financial community and the integrity of
the Companys internal control and management information systems. To facilitate
meeting this responsibility, the Board of Directors seeks to foster a culture of
ethical conduct by striving to ensure the Company carries out its business in
line with high business and moral standards and applicable legal and financial
requirements. In that regard, the Board has:
92
- adopted a written Code of Business Conduct and Ethics (the Code) for its
directors, officers, employees and consultants and a written Code of Business
Conduct and Ethics for Chief Executive Officer and Senior Financial Officers.
- established a whistleblower policy which details complaint procedures for
financial concerns.
Copies of the Code are available without charge to any person
upon request from the Companys Chief Financial Officer at http://www.eurasianminerals.com/s/governance.asp?ReportID=619295
or at Eurasians headquarters at Suite 501, 543 Granville Street, Vancouver,
British Columbia, Canada V6C 1X8.
The Board must also comply with the conflict of interest
provisions of the British Columbia Business Corporations Act, as well as
the relevant securities regulatory instruments, in order to ensure that
directors exercise independent judgment in considering transactions and
agreements in respect of which a director or Executive Officer has a material
interest.
ITEM 16C. PRINCIPAL ACCOUNTING FEES AND
SERVICES
The following table discloses the fees billed to the Company by
its external auditor during the last two financial years.
Financial Year Ending |
Audit Fees (1) |
Non-Audit Related Fees |
Tax Fees (3) |
All Other Fees |
|
|
(2)
|
|
|
December 31, 2014 |
$110,160 |
41,820 |
0 |
0 |
December 31, 2013 |
$141,372 |
102,000 |
0 |
0 |
|
(1) |
The aggregate fees billed by the Companys auditor for
audit fees. |
|
|
|
|
(2) |
The aggregate fees billed for assurance and related
services by the Companys auditor that are reasonably related to the
performance of the audit or review of the Companys financial statements
and are not disclosed in the Audit Fees column. These fees are related
to the auditors reviews of the Companys Form 20F and the Companys first
quarter interim financial statements in relation to the compliance and
conversion to International Financial Reporting Standards. |
|
|
|
|
(3) |
The aggregate fees billed for professional services
rendered by the Companys auditor for tax compliance, tax advice, and tax
planning. |
The audit committee has established policies and procedures
that are intended to control the services provided by the Companys external
auditors and to monitor their continuing independence. Under these policies, no
services may be undertaken by the auditors, unless the engagement is
specifically approved by the audit committee or the services are included within
a category which has been pre-approved by the audit committee. The maximum
charge for services is established by the audit committee when the specific
engagement is approved or the category of services pre-approved. Management is
required to notify the audit committee of the nature and value of pre-approved
services undertaken.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES
---Not Applicable---
ITEM 16E. PURCHASES OF EQUITY SECFURITIES BY THE
COMPANY/AFFILIATED PURCHASERS
---Not Applicable---
ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING
ACCOUNTANT
---Not Applicable---
ITEM 16G. CORPORATE GOVERNANCE
The Common Shares are listed on the NYSE MKT and the TSX-V.
Under the rules of the NYSE MKT, listed companies are generally required to have
a majority of their Board of Directors independent as defined by the MYSE MKT
Company Guide Rules. Currently, as permitted under applicable Canadian
regulations, the Companys Board consists of 6 directors, of which 4 are
considered to be independent.
93
Other than in the composition of the Board of Directors as
described above, in the opinion of management the Companys corporate governance
practices do not differ in any significant way from those required of U.S.
domestic companies listed on the NYSE MKT.
ITEM 16H. MINE SAFETY DISCLOSURE
---Not Applicable---
PART III
ITEM 17. FINANCIAL STATEMENTS
The Company's financial statements are stated in Canadian
Dollars (CDN$) and are prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
The financial statements as required under ITEM 17 are attached
hereto and found immediately following the text of this Annual Report. The audit
report of Davidson and Company LLP, is included herein immediately preceding the
audited financial statements.
Audited Financial Statements
Notes to Consolidated Financial Statements
ITEM 18. FINANCIAL STATEMENTS
The Company has elected to provide financial statements
pursuant to ITEM 17.
ITEM 19. EXHIBITS
1. |
Articles of the Company filed on Exhibit of Form 6-K
dated July 15, 2014 |
|
|
|
|
2. |
Material Contracts: |
|
|
|
|
|
(a) |
Registrar and Transfer Agency Agreement between the
Company and Montreal Trust Company dated August 12, 1996 appointing
Montreal Trust as the Companys registrar and the provision of transfer
agency services for the Common Shares.(1) |
|
|
|
|
|
(b) |
Assignment of Agencies Agreement among the Company,
Montreal Trust Company of Canada and Computershare Trust Company of Canada
dated January 26, 2001 appointing Computershare as the Companys registrar
and transfer agent for the Common Shares.(1) |
|
|
|
|
|
(c) |
Listing Agreement dated January 3, 2012 with the TSX-V,
pursuant to which the Common Shares are listed and traded on the
Exchange.(1) |
|
|
|
|
|
(d) |
Listing Agreement dated January 17, 2012 with the NYSE
MKT, pursuant to which the Common Shares are listed and traded on the NYSE
MKT.(1) |
|
|
|
|
|
(e) |
Services Agreement between the Company and Seabord
Services Corp. dated February 1, 2014 in respect of Seabord providing
various consulting, administrative, accounting, management and related
services.(2) |
|
|
|
|
|
|
(1) |
Filed as an exhibit on Form 40F Registration Statement
pursuant to Section 12 of the Securities Exchange Act of 1934 in January
2012. |
|
|
|
|
|
|
(2) |
Filed as an exhibit on this Form 20F Annual Report
pursuant to Section 12 of the Securities Exchange Act of
1934. |
94
3. |
List of Foreign Patents N/A |
|
|
4. |
Calculation of earnings per share N/A |
|
|
5. |
Explanation of calculation of ratios N/A |
|
|
6. |
List of Subsidiaries: |
095756 BC Ltd.
Incorporated
December 13, 2012
Owned 100% by Eurasian Minerals Inc.
Suite 704 595
Howe Street
Vancouver, BC V6C 2T5
Canada
Phone: 604-687-5792
Fax:
604-687-6650
EMX (USA) Services Corp.
Incorporated June 10, 2010
Owned 100% by Eurasian Minerals Inc.
C/O
Empire Stock Transfer Inc.
1859 Whitney Mesa Drive
Henderson, NV 89014
United States of America
Phone: 701-818-5898
Fax:
701-974-1444
Bullion Monarch Mining, Inc.
Incorporated March 19, 2007
Owned 100% by Eurasian Minerals Inc.
C/O
Dorsey and Whitney LLP
136 S Main Street, Suite 1000
Salt Lake City, UT
84101
United States of America
Phone: 801-933-7360
Fax:
801-933-7373
Bronco Creek Exploration Inc.
Incorporated June 12, 2002
Owned 100% by Eurasian Minerals Inc.
1815
E. Winsett Street
Tucson, AZ 85719-6547
United States of America
Phone:
520-624-4153
Fax:
520-624-4192
7. Statement pursuant
to the instructions to Item 8.A.4, regarding the financial statements filed in
registration statements for initial public offerings of securities N/A
8. Other documents:
95
EURASIAN MINERALS INC.
CONSOLIDATED FINANCIAL
STATEMENTS
(Expressed in Canadian Dollars)
December 31, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders and Directors of
Eurasian Minerals Inc.
We have audited the accompanying consolidated financial
statements of Eurasian Minerals Inc., which comprise the consolidated statements
of financial position as of December 31, 2014 and 2013, and the related
consolidated statements of loss, comprehensive loss, changes in shareholders
equity, and cash flows for the years ended December 31, 2014, 2013, and 2012 and
a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Consolidated
Financial Statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or
error.
Auditors Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors judgment, including
the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of Eurasian Minerals
Inc. as at December 31, 2014 and 2013 and its financial performance and its cash
flows for the years ended December 31, 2014, 2013 and 2012 in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board.
"DAVIDSON & COMPANY LLP"
Chartered Accountants
Vancouver, Canada
April 29, 2015
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Expressed in Canadian Dollars)
ASSETS |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents (Note 4) |
$ |
6,450,308 |
|
$ |
12,683,069 |
|
Investments (Note 5)
|
|
743,786 |
|
|
1,229,085 |
|
Receivables (Note 6) |
|
838,837 |
|
|
1,576,535 |
|
Prepaid expenses |
|
52,209 |
|
|
113,256 |
|
Total current assets |
|
8,085,140 |
|
|
15,601,945 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Restricted cash (Note
7) |
|
230,144 |
|
|
528,945 |
|
Property and equipment (Note 8) |
|
751,229 |
|
|
1,185,414 |
|
Investment in
associated companies (Note 9) |
|
4,072,737 |
|
|
3,960,650 |
|
Strategic investments (Note 5) |
|
299,524 |
|
|
200,000 |
|
Exploration and
evaluation assets (Note 10) |
|
2,379,886 |
|
|
3,031,368 |
|
Royalty interest (Note 3 and 11) |
|
29,327,960 |
|
|
35,063,725 |
|
Reclamation bonds (Note
12) |
|
823,447 |
|
|
770,894 |
|
Goodwill (Note 3 and 13) |
|
8,217,542 |
|
|
9,625,795 |
|
Othe rassets |
|
104,484 |
|
|
104,484 |
|
Total non-current assets |
|
46,206,953 |
|
|
54,471,275 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
54,292,093 |
|
$ |
70,073,220 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable and
accrued liabilities (Note 14) |
$ |
559,049 |
|
$ |
649,843 |
|
Advances from joint venture partners (Note 15) |
|
429,175 |
|
|
734,103 |
|
Total current liabilities |
|
988,224 |
|
|
1,383,946 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Deferred income tax liability (Note 18) |
|
8,217,542 |
|
|
10,710,552 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
9,205,766 |
|
|
12,094,498 |
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Capital stock (Note 16)
|
|
116,766,102 |
|
|
116,151,675 |
|
Commitment to issue shares (Note 16)
|
|
306,999 |
|
|
544,877 |
|
Reserves |
|
15,443,247 |
|
|
11,264,150 |
|
Deficit |
|
(87,430,021 |
) |
|
(69,981,980 |
) |
TOTAL SHAREHOLDERS'
EQUITY |
|
45,086,327 |
|
|
57,978,722 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
$ |
54,292,093 |
|
$ |
70,073,220 |
|
Nature of operations (Note 1)
Approved on behalf of the Board of Directors on April 29,
2015
Signed:
David M Cole |
Director |
Signed:
George Lim |
Director |
The accompanying notes are an integral part of these
consolidated financial statements.
Page 2
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
LOSS
(Expressed in Canadian Dollars)
|
|
Year
Ended |
|
|
Year Ended |
|
|
Year
Ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
ROYALTY
INCOME |
$ |
2,247,334 |
|
$ |
3,102,888 |
|
$ |
1,750,975 |
|
Cos t
ofsales |
|
|
|
|
|
|
|
|
|
Gold tax |
|
(110,653 |
)
|
|
(140,203 |
) |
|
(88,532 |
) |
Depletion (Note 11) |
|
(1,334,845 |
) |
|
(1,681,688 |
) |
|
(1,125,408 |
) |
Net royalty income |
|
801,836 |
|
|
1,280,997 |
|
|
537,035 |
|
|
|
|
|
|
|
|
|
|
|
EXPLORATION
EXPENDITURES (Note 10) |
|
6,866,714 |
|
|
9,616,402 |
|
|
13,488,306 |
|
Less:recoveries |
|
(2,878,346 |
) |
|
(5,797,295 |
) |
|
(5,158,105 |
) |
Net exploration expenditures |
|
3,988,368 |
|
|
3,819,107 |
|
|
8,330,201 |
|
|
|
|
|
|
|
|
|
|
|
GENERAL AND
ADMINISTRATIVE EXPENSES |
|
|
|
|
|
|
|
|
|
Administrative and office |
|
926,095 |
|
|
982,239 |
|
|
1,258,292 |
|
Depreciation (Note 8) |
|
139,806 |
|
|
129,104 |
|
|
85,643 |
|
Investor relations and shareholder
information |
|
292,017 |
|
|
310,203 |
|
|
433,243 |
|
Professional fees |
|
457,963 |
|
|
533,519 |
|
|
764,914 |
|
Salaries and consultants |
|
2,190,916 |
|
|
2,243,032 |
|
|
3,123,266 |
|
Share-based payments (Note
16) |
|
1,030,411 |
|
|
527,495 |
|
|
2,799,609 |
|
Transfer agent and filing fees |
|
100,512 |
|
|
118,770 |
|
|
348,079 |
|
Travel |
|
357,367 |
|
|
298,376 |
|
|
580,150 |
|
Total general and administrative expenses |
|
5,495,087 |
|
|
5,142,738 |
|
|
9,393,196 |
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(8,681,619 |
) |
|
(7,680,848 |
) |
|
(17,186,362 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of fair
value throught profit or loss investments |
|
(254,637 |
)
|
|
(425,066 |
)
|
|
(662,957 |
)
|
Gain (loss) on sale of exploration and
evaluation assets (Note 8) |
|
(154,533 |
) |
|
205,940 |
|
|
(38,299 |
) |
Equity loss in associated
companies (Note 9) |
|
(1,086,649 |
)
|
|
(2,093,823 |
)
|
|
(1,144,407 |
)
|
Foreign exchange (loss) gain |
|
(335,208 |
) |
|
187,498 |
|
|
(138,143 |
) |
Realized loss on sale of
investments |
|
(19,049 |
)
|
|
(51,114 |
)
|
|
30,178 |
|
Interest income |
|
83,829 |
|
|
173,896 |
|
|
360,791 |
|
Impairment of royalty
interest (Note 11) |
|
(7,371,765 |
)
|
|
4,765,511 |
) |
|
( - |
|
Write-off of exploration and evaluation
assets (Note 10) |
|
(707,567 |
) |
|
(1,780,890 |
) |
|
(1,362,723 |
) |
Write-off of other assets |
|
- |
|
|
(42,120 |
) |
|
- |
|
Writedownofgoodwill (Note13) |
|
(2,248,057 |
) |
|
|
|
|
- - |
|
Transaction costs related to
a business acquistion (Note 3) |
|
- |
|
|
|
|
|
- (940,591 |
)
|
Option payments received |
|
- |
|
|
|
|
|
- 165,783 |
|
Loss onderecognition and sale of property and equipment |
|
(29,257 |
) |
|
|
|
|
(103,519 |
) - |
|
|
|
|
|
|
|
|
|
|
Loss before
income taxes |
|
(20,804,512 |
)
|
|
(16,375,557 |
) |
|
(20,916,730 |
) |
IncomeTaxexpense |
|
- |
|
|
- |
|
|
(276,918 |
) |
Deferred income tax recovery (Note 18) |
|
3,356,471 |
|
|
2,392,945 |
|
|
291,595 |
|
|
|
|
|
|
|
|
|
|
|
Loss for the
year |
$ |
(17,448,041 |
) |
$ |
(13,982,612 |
) |
$ |
(20,902,053 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per share |
$ |
(0.24 |
) |
$ |
(0.19 |
) |
$ |
(0.35 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares
outstanding |
|
73,154,139 |
|
|
72,509,793 |
|
|
59,990,386 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS
(Expressed in Canadian Dollars)
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
Loss for
the year |
$ |
(17,448,041 |
) |
$ |
(13,982,612 |
) |
$ |
(20,902,053 |
) |
Other comprehensive
gain (loss) |
|
|
|
|
|
|
|
|
|
Change in fair value of
available-for-sale investments |
|
(400,476 |
) |
|
(280,000 |
) |
|
- |
|
Currency translation adjustment |
|
3,585,937 |
|
|
2,574,406 |
|
|
400,475 |
|
Comprehensive loss for the year |
$ |
(14,262,580 |
) |
$ |
(11,688,206 |
) |
$ |
(20,501,578 |
) |
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Expressed in Canadian Dollars)
|
|
Year
ended |
|
|
Year
ended |
|
|
Year
ended |
|
|
|
December 31, 2014
|
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
Cash flows
from operating activities |
|
|
|
|
|
|
|
|
|
Loss for the year |
$ |
(17,448,041 |
) |
$ |
(13,982,612 |
) |
$ |
(20,902,053 |
) |
Items not affecting operating
activities: |
|
|
|
|
|
|
|
|
|
Interest income received |
|
(83,829 |
) |
|
(173,896 |
) |
|
(360,791 |
) |
Unrealized foreign
exchange effect on cash and cash equivalents |
|
159,158 |
|
|
(87,151 |
)
|
|
53,368 |
|
Items not affecting cash: |
|
|
|
|
|
|
|
|
|
Change in fair value of
fair value through profit or loss investments |
|
254,637 |
|
|
425,066 |
|
|
662,957 |
|
Commitment to issue bonus shares |
|
376,549 |
|
|
641,357 |
|
|
2,198,031 |
|
Bonus shares issued as
performance bonuses |
|
- |
|
|
17,500 |
|
|
- |
|
Share-based payments (Note 16) |
|
857,936 |
|
|
- |
|
|
- |
|
Deferred income taxr
ecovery |
|
(3,356,471 |
)
|
|
(2,392,945 |
)
|
|
(291,595 |
)
|
Income tax expense |
|
- |
|
|
- |
|
|
276,918 |
|
Depreciation (Not e8)
|
|
187,714 |
|
|
262,557 |
|
|
203,121 |
|
Depletion (Note 11) |
|
1,334,845 |
|
|
1,681,688 |
|
|
1,125,408 |
|
Impairment of royalty
interest (Note 11) |
|
7,371,765 |
|
|
4,765,511 |
|
|
- |
|
Fair value of stock options granted |
|
- |
|
|
- |
|
|
1,464,293 |
|
Write down of goodwill
(Note 13) |
|
2,248,057 |
|
|
- |
|
|
- |
|
Realized loss on sale of investments
|
|
19,049 |
|
|
51,114 |
|
|
(30,178 |
) |
Loss on derecognition
and sale o fproperty and equipment |
|
29,257 |
|
|
103,519 |
|
|
- |
|
Derecognition of property and equipment on
sale of exploration and evaluation assets |
|
137,751 |
|
|
- |
|
|
- |
|
Equity loss in
associated companies (Note 9) |
|
1,086,649 |
|
|
2,093,823 |
|
|
1,144,407 |
|
Loss on sale of foreign licenses and
permits |
|
- |
|
|
- |
|
|
38,299 |
|
Write-off of
exploration and evaluation assets (Note 10) |
|
707,567 |
|
|
1,780,890 |
|
|
1,362,723 |
|
Write-off of other assets |
|
- |
|
|
42,120 |
|
|
- |
|
Unrealized foreign
exchange (gain) loss |
|
641,110 |
|
|
146,117 |
|
|
19,692 |
|
Shares received from joint venture
partners included in exploration recoveries |
|
(33,000 |
) |
|
(272,550 |
) |
|
(41,467 |
) |
Changes in non-cash working
capital items: |
|
|
|
|
|
|
|
|
|
Receivables (Note 6) |
|
737,698 |
|
|
(544,477 |
) |
|
67,870 |
|
Prepaid expenses |
|
61,047 |
|
|
91,235 |
|
|
82,750 |
|
Accounts payable and accrued
liabilities (Note 14) |
|
(90,794 |
) |
|
(954,534 |
) |
|
(60,898 |
) |
Income taxes payable
|
|
- |
|
|
- |
|
|
(48,833 |
)
|
Advances from joint venture partners (Note 15) |
|
19,402 |
|
|
519,781 |
|
|
(1,333,550 |
) |
Total cash used
in operating activities |
|
(4,781,944 |
) |
|
(5,785,887 |
) |
|
(14,369,528 |
) |
Cashflows from
investing activities |
|
|
|
|
|
|
|
|
|
Acquisition of
exploration and evaluation assets, net option payments received |
|
(56,085 |
)
|
|
101,185 |
|
|
(128,146 |
)
|
Acquisition of Bullion Monarch |
|
- |
|
|
- |
|
|
(4,279,433 |
) |
Cash acquired in
acquisition of Bullion Monarch (Note 4) |
|
- |
|
|
- |
|
|
318,378 |
|
Interest received on cash and cash
equivalents |
|
83,829 |
|
|
173,896 |
|
|
360,791 |
|
Proceeds from saleof
other assets |
|
- |
|
|
12,458 |
|
|
- |
|
Purchase and sale of fair value through
profit and loss investments, net |
|
242,252 |
|
|
195,559 |
|
|
(1,201,287 |
) |
Purchase of
available-for-sale financial instruments |
|
(500,000 |
)
|
|
(480,000 |
)
|
|
- |
|
Purchase of investments in associated
companies |
|
(1,063,036 |
) |
|
(2,774,570 |
) |
|
(2,061,551 |
) |
Purchase of royalty
interest |
|
- |
|
|
(200,000 |
)
|
|
- |
|
Restricted cash |
|
(25,529 |
) |
|
(451,426 |
) |
|
78,473 |
|
Purchase and sale of
property and equipment, net |
|
79,463 |
|
|
25,492 |
|
|
(1,236,022 |
)
|
Reclamation bonds |
|
(52,553 |
) |
|
(282,372 |
) |
|
(48,957 |
) |
Total cash provided
used in investing
activities |
|
(1,291,659 |
) |
|
(3,679,778 |
) |
|
(8,197,754 |
) |
Cash flows
from financing activities |
|
|
|
|
|
|
|
|
|
Proceeds fromoptions
exercised |
|
- |
|
|
361,600 |
|
|
1,049,670 |
|
Proceeds from warrants exercised |
|
- |
|
|
- |
|
|
1,898,995 |
|
Total cash provided
by financing activities |
|
- |
|
|
361,600 |
|
|
2,948,665 |
|
Effec tof exchange rate changes on cash and cash
equivalents |
|
(159,158 |
) |
|
87,151 |
|
|
(53,368 |
) |
Change in
cash and cash
equivalents |
|
(6,232,761 |
)
|
|
(9,016,914 |
)
|
|
(19,671,985 |
) |
Cash and cash
equivalents, beginning |
|
12,683,069 |
|
|
21,699,983 |
|
|
41,371,968 |
|
Cash and cash
equivalents, ending |
$ |
6,450,308 |
|
$ |
12,683,069 |
|
$ |
21,699,983 |
|
Supplemental disclosure with respect to cash flows (Note 21)
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Expressed in
Canadian Dollars)
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other |
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive
gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
Balanceas
at December 31,
2013 |
|
72,980,209 |
|
$ |
116,151,675 |
|
$ |
544,877 |
|
$ |
8,569,269 |
|
$ |
2,694,881 |
|
$ |
(69,981,980 |
) |
$ |
57,978,722 |
|
Shares issued as bonus shares |
|
391,501 |
|
|
614,427 |
|
|
(614,427 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Commitment to issue
shares |
|
- |
|
|
- |
|
|
376,549 |
|
|
- |
|
|
- |
|
|
- |
|
|
376,549 |
|
Equity investment share-based payments |
|
- |
|
|
- |
|
|
- |
|
|
135,700 |
|
|
- |
|
|
- |
|
|
135,700 |
|
Share-based payments |
|
- |
|
|
- |
|
|
- |
|
|
857,936 |
|
|
- |
|
|
- |
|
|
857,936 |
|
Foreign currency translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
3,585,937 |
|
|
- |
|
|
3,585,937 |
|
Change in fair value of
financial instruments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(400,476 |
) |
|
- |
|
|
(400,476 |
) |
Loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(17,448,041 |
) |
|
(17,448,041 |
) |
Balance as at
December 31, 2014 |
|
73,371,710 |
|
$ |
116,766,102 |
|
$ |
306,999 |
|
$ |
9,562,905 |
|
$ |
5,880,342 |
|
$ |
(87,430,021 |
) |
$ |
45,086,327 |
|
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
other |
|
|
|
|
|
|
|
|
|
Number
of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive
gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
Balance as
at December 31,
2012 |
|
72,051,872 |
|
$ |
114,414,001 |
|
$ |
1,097,192 |
|
$ |
8,456,369 |
|
$ |
400,475 |
|
$ |
(55,999,368 |
) |
$ |
68,368,669 |
|
Shares issued as bonus shares |
|
563,337 |
|
|
1,193,672 |
|
|
(1,193,672 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Shares issued on
exercise of stock options |
|
355,000 |
|
|
361,600 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
361,600 |
|
Share-based payments |
|
10,000 |
|
|
17,500 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
17,500 |
|
Reclassification of
fair value of options exercised |
|
- |
|
|
164,902 |
|
|
- |
|
|
(164,902 |
) |
|
- |
|
|
- |
|
|
- |
|
Commitment to issue shares |
|
- |
|
|
- |
|
|
641,357 |
|
|
- |
|
|
- |
|
|
- |
|
|
641,357 |
|
Equity investment
share-based payments |
|
- |
|
|
- |
|
|
- |
|
|
277,802 |
|
|
- |
|
|
- |
|
|
277,802 |
|
Foreign currency translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,574,406 |
|
|
- |
|
|
2,574,406 |
|
Change in fair value of
financial instruments |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(280,000 |
) |
|
- |
|
|
(280,000 |
) |
Loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(13,982,612 |
) |
|
(13,982,612 |
) |
Balance as at
December 31, 2013 |
|
72,980,209 |
|
$ |
116,151,675 |
|
$ |
544,877 |
|
$ |
8,569,269 |
|
$ |
2,694,881 |
|
$ |
(69,981,980 |
) |
$ |
57,978,722 |
|
Page 6
EURASIAN MINERALS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Expressed in
Canadian Dollars)
|
|
|
|
|
|
|
|
|
|
|
Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other |
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
Commitment |
|
|
Share-based |
|
|
comprehensive
gain |
|
|
|
|
|
|
|
|
|
common shares |
|
|
Capital stock |
|
|
to issue shares |
|
|
payments |
|
|
(loss) |
|
|
Deficit |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as
at December 31,
2011 |
|
51,875,118 |
|
$ |
77,122,016 |
|
$ |
495,645 |
|
$ |
7,258,987 |
|
$ |
- |
|
$ |
(35,097,315 |
) |
$ |
49,779,333 |
|
Shares issued on acquisition of Bullion Monarch |
|
17,712,189 |
|
|
32,059,062 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
32,059,062 |
|
Warrants issued for Bullion warrants |
|
- |
|
|
- |
|
|
- |
|
|
102,653 |
|
|
- |
|
|
- |
|
|
102,653 |
|
Shares issued as bonus shares |
|
813,670 |
|
|
1,596,483 |
|
|
(1,556,614 |
) |
|
- |
|
|
- |
|
|
- |
|
|
39,869 |
|
Shares issued on exercise of stock
options |
|
639,000 |
|
|
1,049,670 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,049,670 |
|
Shares issued on exercise of warrants |
|
949,497 |
|
|
1,898,995 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,898,995 |
|
Shares issued on acquisition of
exploration and evaluation assets |
|
62,398 |
|
|
128,122 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
128,122 |
|
Share-based payments |
|
- |
|
|
- |
|
|
- |
|
|
1,464,293 |
|
|
- |
|
|
- |
|
|
1,464,293 |
|
Reclassification of fair value of
options exercised |
|
- |
|
|
559,653 |
|
|
- |
|
|
(559,653 |
) |
|
- |
|
|
- |
|
|
- |
|
Commitment to issue shares |
|
- |
|
|
- |
|
|
2,158,161 |
|
|
- |
|
|
- |
|
|
- |
|
|
2,158,161 |
|
Equity investment share-based
payments |
|
- |
|
|
- |
|
|
- |
|
|
190,089 |
|
|
- |
|
|
- |
|
|
190,089 |
|
Foreign currency translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
400,475 |
|
|
- |
|
|
400,475 |
|
Loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(20,902,053 |
) |
|
(20,902,053 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at
December 31, 2012 |
|
72,051,872 |
|
$ |
114,414,001 |
|
$ |
1,097,192 |
|
$ |
8,456,369 |
|
$ |
400,475 |
|
$ |
(55,999,368 |
) |
$ |
68,368,669 |
|
Page 7
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
1. NATURE OF OPERATIONS
Eurasian Minerals Inc. (the Company or Eurasian) and its
subsidiaries are engaged in the acquisition, exploration and evaluation of
mineral assets in Turkey, Haiti, Europe, U.S.A. and the Asia Pacific region, and
the investment in a royalty income stream in Nevada, U.S.A. The Companys common
shares are listed on the TSX Venture Exchange (TSX-V) under the symbol of
EMX and on the NYSE MKT under the symbol of EMXX. The Companys head office
is located at 501 - 543 Granville Street, Vancouver, British Columbia, Canada
V6C 1X8.
These consolidated financial statements have been prepared
using International Financial Reporting Standards (IFRS) applicable to a going
concern, which assumes that the Company will be able to realize its assets,
discharge its liabilities and continue in operation for the following twelve
months.
On August 17, 2012, the Company and its wholly-owned
subsidiary, EMX (Utah) Corp. completed an Agreement and Plan of Acquisition with
Bullion Monarch Mining, Inc. (Bullion) whereby the Company acquired 100% of
the issued and outstanding shares of Bullion (Note 3).
Management believes it has sufficient funding for operations
for the ensuing year, which results in the going concern assumption being an
appropriate underlying concept for the preparation of these consolidated
financial statements.
Some of the Companys activities for exploration and evaluation
assets are located in emerging nations and, consequently, may be subject to a
higher level of risk compared to other developed countries. Operations, the
status of mineral property rights and the recoverability of investments in
emerging nations can be affected by changing economic, legal, regulatory and
political situations.
At the date of these consolidated financial statements, the
Company has not identified a known body of commercial grade mineral on any of
its exploration and evaluation assets. The ability of the Company to realize the
costs it has incurred to date on these exploration and evaluation assets is
dependent upon the Company identifying a commercial mineral body, to finance its
development costs and to resolve any environmental, regulatory or other
constraints which may hinder the successful development of the exploration and
evaluation assets.
These consolidated financial statements of the Company are
presented in Canadian dollars unless otherwise noted, which is the functional
currency of the parent company and its subsidiaries except as to Bullion Monarch
Mining, Inc. (Note 3), the holder of a royalty income stream whose functional
currency is the United States (US) dollar.
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Statement of Compliance
These consolidated financial statements have been prepared in
accordance with IFRS as issued by the International Accounting Standards Board
(IASB) and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC).
These consolidated financial statements have been prepared on a
historical cost basis, except for financial instruments classified as fair value
through profit or loss or available for sale, which are stated at their fair
value. In addition, these consolidated financial statements have been prepared
using the accrual basis of accounting except for cash flow information.
Page 8
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements comprise the accounts of
Eurasian, the parent company, and its controlled subsidiaries, after the
elimination of all significant intercompany balances and transactions.
Subsidiaries
Subsidiaries are all entities over which the Company has
exposure to variable returns from its involvement and has the ability to use
power over the investee to affect its returns. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Company controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Company until the date on which control ceases.
The accounts of subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies.
Inter-company transactions, balances and unrealized gains or losses on
transactions are eliminated. The Companys principal operating subsidiaries are
as follows:
Name |
Place of
Incorporation |
Ownership Percentage |
Bullion Monarch Mining, Inc
|
Utah, USA |
100% |
EMX (USA) Services Corp. |
Nevada, USA |
100% |
Bronco Creek Exploration Inc.
|
Arizona, USA |
100% |
AES Madencilik Ltd. Sirketi |
Turkey |
100% |
Eurasia Madencilik Limited
Sirketi |
Turkey |
99% |
Georgian Minerals LLC |
Georgia |
100% |
Eurasian Minerals Cooperatief
U.A. |
Netherlands |
100% |
EMX Georgia Cooperatief U.A. |
Netherlands |
100% |
Ayiti Gold Company S.A. |
Haiti |
100% |
Marien Mining Company S.A. |
Haiti |
100% |
Viad Royalties AB |
Sweden |
100% |
Eurasian Minerals Sweden AB |
Sweden |
100% |
EMX Australia Pty Ltd |
Australia |
100% |
Business Combinations
The acquisition method of accounting is used to account for
business combinations by the Company. The consideration transferred for the
acquisition of a business is the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Company. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition-related costs
are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Company recognizes any non-controlling interest in the acquiree
either at fair value or at the non-controlling interests proportionate share of
the acquirees net assets. Subsequently, the carrying amount of non-controlling
interest is the amount of the interest at initial recognition plus the
non-controlling interests share of the subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interest even if this
results in the non-controlling interest having a deficit balance.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition-date fair value of
any previous equity interest in the acquiree over the fair value of the
identifiable net assets acquired is recorded as goodwill. If this is less than
the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognized directly in the statement of
loss.
Page 9
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Business Combinations (Continued)
The Company has made an earlier election in terms of IFRS 1 to
apply the requirements of IFRS 3 (Revised) Business Combinations to all
business combinations with effective dates on or after April 1, 2010. The
classification and accounting treatment of business combinations with effective
dates prior to April 1, 2010 have not been considered.
Functional and Reporting Currency
The functional currency is the currency of the primary economic
environment in which the entity operates. The functional currency for the
Company and its subsidiaries is the Canadian dollar except the functional
currency of the operations of Bullion Monarch which is the US dollar. The
functional currency determinations were conducted through an analysis of the
consideration factors identified in IAS 21, The Effects of Changes in Foreign
Exchange Rates.
Translation of transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Monetary assets and
liabilities denominated in foreign currencies are re-measured at the rate of
exchange at each financial position date. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in profit or loss.
On translation of the entities whose functional currency is
other than the Canadian dollar, revenues and expenses are translated at the
exchange rates approximating those in effect on the date of the transactions.
Assets and liabilities are translated at the rate of exchange at the reporting
date. Exchange gains and losses, including results of re-translation, are
recorded in the foreign currency translation reserve.
Financial Instruments
All financial instruments are classified into one of the
following four categories:
|
(a) |
Financial assets and financial liabilities at fair value
through profit or loss (FVTPL) |
|
|
|
|
|
Financial assets and financial liabilities classified as
FVTPL are acquired or incurred principally for the purpose of selling or
repurchasing them in the near term. They are recognized at fair value
based on market prices, with any resulting gains and losses reflected in
profit or loss for the period in which they arise. |
|
|
|
|
(b) |
Held-to-maturity financial assets |
|
|
|
|
|
Held-to-maturity financial assets are non-derivative
financial assets with fixed or determinable payments and fixed maturity
that an entity has the positive intention and ability to hold to maturity.
They are measured at amortized cost using the effective interest rate
method less any impairment loss. A gain or loss is recognized in profit or
loss when the financial asset is derecognized or impaired, and through the
amortization process. |
Page 10
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Financial Instruments (Continued)
|
(c) |
Available for sale financial assets |
|
|
|
|
|
Available for sale (AFS) financial assets are
non-derivative financial assets that are designated as available for sale,
or that are not classified as loans and receivables, held-to-maturity
investments, or FVTPL. They are measured at fair value. Fair value is
determined based on market prices. Equity instruments that do not have a
quoted market price in an active market are measured at cost. Gains and
losses are recognized directly in other comprehensive income (loss) until
the financial asset is derecognized, at which time the cumulative gain or
loss previously recognized in accumulated other comprehensive income
(loss) is recognized in profit or loss for the period. |
|
|
|
|
(d) |
Loans and receivables and other financial
liabilities |
|
|
|
|
|
Loans and receivables and other financial liabilities are
measured at amortized cost, using the effective interest rate method less
any impairment loss. |
The Companys financial instruments consist of cash and cash
equivalents, investments, receivables, restricted cash, reclamation bonds,
accounts payable and accrued liabilities, and advances from joint venture
partners. Unless otherwise noted the fair value of these financial instruments
approximates their carrying values.
Cash and cash equivalents are classified as financial assets as
loans and receivables and are accounted for at fair value. Cash equivalents are
held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes.
Warrants held through investments are classified as derivative
financial assets at FVTPL and are accounted for at fair value. For warrants that
are not traded on an exchange, no market value is readily available. When there
are sufficient and reliable observable market inputs, a valuation technique is
used; if no such market inputs are available, the warrants are valued at
intrinsic value, which is equal to the higher of the market value of the
underlying security less the exercise price of the warrant, or zero.
Marketable securities are classified FVTPL and are measured at
fair market value. Marketable securities transferred to the Company as part of
an acquisition are classified as AFS and are carried at fair market value.
Changes in fair value of FVTPL assets are reflected in profit or loss in the
period in which they occur. Changes in fair value of AFS assets are reflected in
accumulated other comprehensive income on the statement of financial position
until sold or if there is an other than temporary impairment in value.
Reclamation bonds are classified as financial assets
held-to-maturity.
Restricted cash is classified as financial assets at FVTPL.
The Company classifies its receivables as loans and receivables
and its accounts payable and accrued liabilities and advances from joint venture
partners as other financial liabilities.
Page 11
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Impairment of Financial Assets
Financial assets are assessed for indicators of impairment at
the end of each reporting period. Financial assets are impaired when there is
objective evidence that, as a result of one or more events that occurred after
the initial recognition of the financial assets, the estimated future cash flows
of the financial assets have been impacted.
For all financial assets, objective evidence of impairment
could include:
- Significant financial difficulty of the issuer or counterparty;
- Default or delinquency in interest or principal payments; or,
- It becoming probable that the borrower will enter bankruptcy or financial
re-organization.
For certain categories of financial assets, that are assessed
not to be impaired individually, are subsequently assessed for impairment on a
collective basis. The carrying amount of financial assets is reduced by the
impairment loss directly for all financial assets with the exception of
receivables, where the carrying amount is reduced through the use of an
allowance account. When a receivable is considered uncollectible, it is written
off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognized in profit or loss.
With the exception of FVTPL marketable securities, if in a
subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed through profit
or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortized cost would have been
had the impairment not been recognized. In respect of AFS marketable securities,
impairment losses previously recognized through profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment
loss is recognized directly in equity.
Investments in Associated Companies
The Company accounts for its long-term investments in
affiliated companies over which it has significant influence on the equity basis
of accounting, whereby the investment is initially recorded at cost, adjusted to
recognize the Companys share of earnings or losses and reduced by dividends
received.
The Company assesses its equity investments for impairment if
there is objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the equity investment and that the
event or events has an impact on the estimated future cash flow of the
investment that can be reliably estimated. Objective evidence of impairment of
equity investments includes:
- Significant financial difficulty of the associated companies;
- Becoming probable that the associated companies will enter bankruptcy or
other financial reorganization; or,
- National or local economic conditions that correlate with defaults of the
associated companies.
Exploration and evaluation assets and exploration
expenditures
Acquisition costs for exploration and evaluation assets, net of
recoveries, are capitalized on a property-by-property basis. Acquisition costs
include cash consideration and the value of common shares, based on recent issue
prices, issued for exploration and evaluation assets pursuant to the terms of
the agreement. Exploration expenditures, net of recoveries, are charged to
operations as incurred. After a property is determined by management to be
commercially feasible, subsequent development expenditures on the property will
be capitalized.
Page 12
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Exploration and evaluation assets and exploration
expenditures (Continued)
When there is little prospect of further work on a property
being carried out by the Company or its partners, when a property is abandoned,
or when the capitalized costs are no longer considered recoverable, the related
property costs are written down to managements estimate of their net
recoverable amount. The costs related to a property from which there is
production, together with the costs of production equipment, will be depleted
and amortized using the unit-of-production method.
An exploration and evaluation asset acquired under an option
agreement, where payments are made at the sole discretion of the Company, is
capitalized at the time of payment. Option payments received are treated as a
reduction of the carrying value of the related acquisition cost for the mineral
property until the payments are in excess of acquisition costs, at which time
they are then credited to profit or loss. Option payments are at the discretion
of the optionee and, accordingly, are accounted for when receipt is reasonably
assured.
Revenue recognition
The Company recognizes revenue in accordance with IAS 18
Revenue. Royalty revenue is recognized when persuasive evidence of an
arrangement exists, title and risk passes to the buyer, the amount of revenue
can be measured reliably, it is probable that the economic benefits associated
with the sale will flow to the entity and the costs incurred in respect of the
transaction can be measured reliably. Royalty revenue may be subject to
adjustment upon final settlement of estimated metal prices, weights, and assays.
Adjustments to revenue from metal prices are recorded monthly and other
adjustments are recorded on final settlement and are offset against revenue when
incurred.
Royalty interests
Royalty interests in mineral properties include acquired
royalty interests in production stage and exploration stage properties. In
accordance with IAS 38 Intangible Assets, the cost of acquired royalty
interests in mineral properties is capitalized as intangible assets.
Acquisition costs of production stage royalty interests are
depleted using the units of production method over the life of the related
mineral property, which is calculated using estimated reserves. Acquisition
costs of royalty interests on exploration stage mineral properties, where there
are no proven and probable reserves, are not amortized. At such time as the
associated exploration stage mineral interests are converted to proven and
probable reserves, the cost basis is amortized over the remaining life of the
mineral property, using proven and probable reserves. The carrying values of
exploration stage mineral interests are evaluated for impairment at such time as
information becomes available indicating that the production will not occur in
the future.
Goodwill
Goodwill represents the excess of the price paid for the
acquisition of a consolidated entity over the fair value of the net identifiable
tangible and intangible assets and liabilities acquired in a business
combination. Goodwill is allocated to the cash generating unit to which it
relates.
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount.
Page 13
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Property and equipment
Property and equipment is recorded at cost. Equipment is
depreciated over its estimated useful life using the declining balance method at
a rate of 20% per annum. Depreciation on equipment used directly on exploration
projects is included in exploration expenditures for that mineral property.
Decommissioning liabilities
Decommissioning liabilities are recognized for the expected
obligations related to the retirement of long-lived tangible assets that arise
from the acquisition, construction, development or normal operation of such
assets. A decommissioning liability is recognized in the period in which it is
incurred and when a reasonable estimate of the fair value of the liability can
be made with a corresponding decommissioning cost recognized by increasing the
carrying amount of the related long-lived asset. The decommissioning cost is
subsequently allocated in a rational and systematic method over the underlying
assets useful life. The initial fair value of the liability is accreted, by
charges to profit or loss, to its estimated future value. The Company has no
known decommissioning liabilities as of December 31, 2014 and 2013.
Environmental disturbance restoration
During the operating life of an asset, events such as
infractions of environmental laws or regulations may occur. These events are not
related to the normal operation of the asset and are referred to as
environmental disturbance restoration provisions. The costs associated with
these provisions are accrued and charged to profit or loss in the period in
which the event giving rise to the liability occurs. Any subsequent adjustments
to these provisions due to changes in estimates are also charged to profit or
loss in the period of adjustment. These costs are not capitalized as part of the
long-lived assets carrying value.
Impairment of assets
Events or changes in circumstances can give rise to significant
impairment charges or reversals of impairment in a particular year. The Company
assesses its cash generating units annually to determine whether any indication
of impairment exists. Where an indicator of impairment exists, an estimate of
the recoverable amount is made, which is the higher of the fair value less costs
to sell and value in use. The determination of the recoverable amount for value
in use requires the use of estimates and assumptions such as long-term commodity
prices, discount rates, future capital requirements, exploration potential and
future operating performance. Fair value is determined as the amount that would
be obtained from the sale of the asset in an arms length transaction between
knowledgeable and willing parties.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, bank deposits
and short-term, highly liquid investments that are readily convertible to known
amounts of cash.
Share-based payments
Share-based payments include option and stock grants granted to
directors, employees and non-employees. The Company accounts for share-based
compensation using a fair value based method with respect to all share-based
payments measured and recognized, to directors, employees and non-employees. For
directors and employees, the fair value of the options and stock grants is
measured at the date of grant. For non-employees, the fair value of the options
and stock grants is measured on the earlier of the date at which the
counterparty performance is complete, or the date the performance commitment is
reached, or the date at which the equity instruments are granted if they are
fully vested and non-forfeitable. For directors, employees and non-employees,
the fair value of the options and stock grants is accrued and charged to
operations, with the offsetting credit to share based payment reserve for
options, and commitment to issue shares for stock grants over the vesting period. If and when
the stock options are exercised, the applicable amounts are transferred from
share-based payment reserve to share capital. When the stock grants are issued,
the applicable fair value is transferred from commitment to issue shares to
share capital. Option based compensation awards are calculated using the
Black-Scholes option pricing model while stock grants are valued at the fair
value on the date of grant.
Page 14
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies (Continued)
Income taxes
Income tax expense consists of current and deferred tax. Income
tax expense is recognized in profit or loss except to the extent that it relates
to items recognized directly in equity. Current tax is the expected tax payable
on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of
previous years. Deferred tax is calculated providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes.
Deferred tax is not recognized on the initial recognition of
assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable income nor loss. In addition,
deferred tax is not recognized for taxable temporary differences arising on the
initial recognition of goodwill. Deferred tax is measured at the tax rates that
are expected to be applied to temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is
probable that future taxable income will be available against which the
temporary difference can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
Income (loss) per share
Basic income or loss per share is calculated by dividing the
net income or loss for the year by the weighted average number of shares
outstanding during the year. Diluted income or loss per share is calculated
whereby the weighted average number of shares outstanding used in the
calculation of diluted income or loss per share assumes that the deemed proceeds
received from the exercise of stock options, share purchase warrants and their
equivalents would be used to repurchase common shares of the Company at the
average market price during the year, if they are determined to have a dilutive
effect.
Existing stock options and share purchase warrants have not
been included in the current year computation of diluted loss per share as to do
so would be anti-dilutive. For the years presented the basic and diluted losses
per share are the same.
Valuation of equity units issued in private placements
The Company has adopted a residual value method with respect to
the measurement of shares and warrants issued as private placement units. The
residual value method first allocates value to the more easily measurable
component based on fair value and then the residual value, if any, to the less
easily measurable component.
The fair value of the common shares issued in the private
placements was determined to be the more easily measurable component and were
valued at their fair value, as determined by the closing quoted bid price on the
day prior to the issuance date. The balance, if any, was allocated to the
attached warrants. Any fair value attributed to the warrants is recorded in
reserves.
Page 15
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Summary of Significant Accounting Policies
(Continued)
Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segment, has been identified as the Chief
Executive Officer.
New and amended IFRS pronouncements effective January 1,
2014
The Company has adopted the following new and revised
standards, along with any consequential amendments, effective January 1, 2014.
These changes were made in accordance with the applicable transitional
provisions.
IAS 32 Financial Instruments: Presentation (Amended IAS 32)
was amended by the IASB in December 2011. The amendment clarifies that an entity
has a legally enforceable right to offset financial assets and financial
liabilities if that right is not contingent on a future event and it is
enforceable both in the normal course of business and in the event of default,
insolvency or bankruptcy of the entity and all counterparties. The adoption of
Amended IAS 32 did not have a significant impact on the Companys consolidated
financial statements.
IAS 36 Impairment of Assets (Amended IAS 36) was amended by
the IASB in May 2013. The amendments require the disclosure of the recoverable
amount of impaired assets when an impairment loss has been recognized or
reversed during the period and additional disclosures about the measurement of
the recoverable amount of impaired assets when the recoverable amount is based
on fair value less costs of disposal, including the discount rate when a present
value technique is used to measure the recoverable amount. The adoption of
Amended IAS 36 did not have a significant impact on the Companys consolidated
financial statements.
IFRIC 21 Levies (IFRIC 21), an interpretation of IAS 37
Provisions, Contingent Liabilities and Contingent Assets (IAS 37), on the
accounting for levies imposed by governments was issued by the IASB in May 2013.
IAS 37 sets out criteria for the recognition of a liability, one of which is the
requirement for the entity to have a present obligation as a result of a past
event (obligating event). IFRIC 21 clarifies that the obligating event that
gives rise to a liability to pay a levy is the activity described in the
relevant legislation that triggers the payment of the levy. IFRIC 21 is
effective prospectively for annual periods commencing on or after January 1,
2014. The adoption of IFRIC 21 did not result in an adjustment to the Companys
consolidated financial statements.
Accounting pronouncements not yet effective
In May 2014, the IASB issued IFRS 15 Revenue from Contracts
with Customers ("IFRS 15"), which supersedes IAS 11 Construction Contracts, IAS
18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the
Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and
SIC 31 Revenue - Barter Transactions involving Advertising Services. IFRS 15
establishes a single five-step model framework for determining the nature,
amount, timing and uncertainty of revenue and cash flows arising from a contract
with a customer. The standard is effective for annual periods beginning on or
after January 1, 2017, with early adoption permitted. The Company is currently
evaluating the impact the final standard is expected to have on its consolidated
financial statements.
The IASB intends to replace IAS 39 Financial Instruments:
Recognition and Measurement in its entirety with IFRS 9 Financial Instruments
(IFRS 9) which is intended to reduce the complexity in the classification and
measurement of financial instruments. The IASB has determined that the revised effective
date for IFRS 9 will be January 1, 2018. The Company is currently evaluating the
impact the final standard is expected to have on its consolidated financial
statements.
Page 16
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Critical Accounting Judgments and Significant Estimates and
Uncertainties
The preparation of the consolidated financial statements
requires management to make judgments and estimates and form assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements, and the reported revenue and expenses during the periods
presented therein. On an ongoing basis, management evaluates its judgments and
estimates in relation to assets, liabilities, royalty revenues and expenses.
Management bases its judgments and estimates on historical experience and on
other various factors it believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions and
conditions.
The Company has identified the following critical accounting
policies in which significant judgments, estimates and assumptions are made and
where actual results may differ from these estimates under different assumptions
and conditions and may materially affect financial results or the financial
position reported in future periods. Further details of the nature of these
assumptions and conditions may be found in the relevant notes to the
consolidated financial statements.
a) Royalty interest and related depletion
In accordance with the Companys accounting policy, royalty
interests are evaluated on a periodic basis to determine whether there are any
indications of impairment. If any such indication exists, a formal estimate of
recoverable amount is performed and an impairment loss recognized to the extent
that carrying amount exceeds recoverable amount. The recoverable amount of a
royalty asset is measured at the higher of fair value less costs to sell and
value in use. The determination of fair value and value in use requires
management to make estimates and assumptions about expected production and sales
volumes, the proportion of areas subject to royalty rights, commodity prices
(considering current and historical prices, price trends and related factors),
and reserves. These estimates and assumptions are subject to risk and
uncertainty; hence there is a possibility that changes in circumstances will
alter these projections, which may impact the recoverable amount of the assets.
In such circumstances, some or all of the carrying value of the assets may be
further impaired or the impairment charge reduced with the impact recorded in
profit or loss.
b) Goodwill
Goodwill is evaluated for impairment annually or more often if
events or circumstances indicate there may be impairment. Impairment is
determined by assessing if the carrying value of a cash generating unit,
including the allocated goodwill, exceeds its recoverable amount. The assessment
of the recoverable amount used in the goodwill impairment analysis is subject to
similar judgments and estimates as described above for property and equipment
and royalty interests.
c) Exploration and Evaluation Assets
Recorded costs of exploration and evaluation assets are not
intended to reflect present or future values of exploration and evaluation
assets. The recorded costs are subject to measurement uncertainty and it is
reasonably possible, based on existing knowledge, that a change in future
conditions could require a material change in the recognized amount.
d) Taxation
The Companys accounting policy for taxation requires
managements judgment as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgment is also required in assessing
whether deferred tax assets and certain deferred tax liabilities are recognized
on the statement of financial position.
Page 17
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
Critical Accounting Judgments and Significant Estimates and
Uncertainties (Continued)
d) Taxation (Continued)
Deferred tax assets, including those arising from unused tax
losses, capital losses and temporary differences, are recognized only where it
is considered probable that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences caused principally by the expected royalty
revenues generated by the royalty property are recognized unless expected
offsetting tax losses are sufficient to offset the taxable income and therefore,
taxable income is not expected to occur in the foreseeable future. Assumptions
about the generation of future taxable profits depend on managements estimates
of future cash flows. These depend on estimates of future production and sales
volumes, commodity prices, and reserves. Judgments are also required about the
application of income tax legislation in foreign jurisdictions. These judgments
and assumptions are subject to risk and uncertainty, hence there is a
possibility that changes in circumstances will alter expectations, which may
impact the amount of deferred tax assets and deferred tax liabilities recognized
on the statement of financial position and the amount of other tax losses and
temporary differences not yet recognized. In such circumstances, some or the
entire carrying amount of recognized deferred tax assets and liabilities may
require adjustment, resulting in a corresponding credit or charge to profit or
loss.
3. ACQUISITION OF BULLION MONARCH MINING, INC.
On February 7, 2012, the Company and its wholly-owned
subsidiary, EMX (Utah) Corp. signed an Agreement and Plan of Merger (the
Acquisition) with Bullion Monarch Mining, Inc. (Bullion) whereby the Company
agreed to acquire 100% of the issued and outstanding shares of Bullion in
consideration for 0.45 of each of the Companys common shares and US$0.11 in
cash for each Bullion common share issued and outstanding. In addition,
outstanding Bullion warrants have been replaced by Eurasian warrants exercisable
upon the same terms and conditions as under the applicable agreement, except
that each replacement warrant shall be exercisable for 0.45 of each of
Eurasians common shares and US$0.11 in cash in lieu of one Bullion common
share.
On August 17, 2012, the acquisition of Bullion was completed
following approval by Bullion shareholders at a special meeting held on the same
day.
The transaction has been accounted for as a business
combination in accordance with IFRS 3, Business Combinations. As per IFRS
3, the Company has recognized, separately from goodwill, identifiable assets
acquired, and liabilities assumed in Bullion at their fair values on the
acquisition date. Accordingly, the Company has determined certain fair value
adjustments for the assets and liabilities of Bullion as of August 17, 2012, the
closing date of the Acquisition. Furthermore, to reflect the fair value
increment of $39,536,000 (US$40,000,000) to the royalty property held by Bullion
which generates royalty income, the Company engaged an independent valuator to
estimate the fair value of the royalty generating property. The independent
valuator applied the discounted cash flow model and estimated the fair value of
the royalty income stream at $39,536,000. Consequently, the assets and
liabilities in the Bullion purchase price allocation are based on their
estimated fair value as shown below.
Goodwill represents the excess of the purchase price over the
estimated fair value of assets acquired and liabilities assumed of Bullion. The
Goodwill is not deductible for tax purposes. The deferred tax liabilities are
recognized primarily due to temporary differences between the accounting value
and tax basis of the royalty property assets that may result in potential
taxable amounts in future years. Subsequent to the closing of the Acquisition,
the deferred income tax liabilities will be adjusted in the period of enactment
for the effect of an enacted change in tax laws or rates. The effect, which
could be significant, will be included in profit or loss from operations.
The aggregate amount of the total acquisition consideration is
$36,441,148, determined by taking into account the issuance of the Companys
17,712,289 common shares valued at $32,059,062, the obligation for 1,125,000
warrants valued at $102,653 to replace Bullions outstanding warrants and the
payment of $4,279,433.
Page 18
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
3. ACQUISITION OF BULLION MONARCH MINING, INC.
(Continued)
The following summarizes the consideration transferred and the
recognized amounts of assets acquired and liabilities assumed at the acquisition
date.
Purchase
Price: |
|
|
|
Issuance of 17,712,189 Eurasian
common shares in exchange for 39,360,518 Bullion common shares |
$ |
32,059,062 |
|
Fair value of additional obligation for 1,125,000
replacement warrants |
|
102,653 |
|
Cash payment for 39,360,518 Bullion common shares
|
|
4,279,433 |
|
Total purchase
price |
$ |
36,441,148 |
|
Purchase
Price Allocation: |
|
|
|
Cash and cash equivalents |
$ |
318,378 |
|
Receivables |
|
541,226 |
|
Prepaid expenses |
|
167,879 |
|
Investments |
|
36,627 |
|
Property, plant and equipment, net
|
|
258,637 |
|
Royalty property |
|
39,536,000 |
|
Goodwill |
|
8,896,705 |
|
Accounts payable |
|
(734,290 |
) |
Deferred income taxl iabilities |
|
(12,580,014 |
) |
Total purchase
price |
$ |
36,441,148 |
|
The value of the Companys common shares was calculated based
on the issuance of the Companys 17,712,189 common shares at a price per share
of $1.81 which was the TSX Venture Exchange closing price of the Companys
common share on August 17, 2012, the closing date of the Acquisition.
The cash payment of $4,279,433 is based on cash consideration
per share of US$0.11 for each of the 39,360,518 Bullion common shares
outstanding immediately prior to the completion of the Acquisition.
The assumption and replacement of Bullion warrants is valued
using the Black-Scholes option pricing model. The assumptions used in
Black-Scholes option pricing model are as follows: share price of $1.81,
adjusted exercise price of $2.39 less the warrant cash consideration of US$0.11,
dividend yield of 0%, expected life of 0.62 years, volatility of 44.66% and
risk-free interest rate of 1.21%. Volatility of 44.66% represents the
historical volatility that the Company has used to value similar equity
instruments. The fair value of the 1,125,000 replacement warrants is based on
Bullions outstanding 2,500,000 warrants adjusted by a factor of 0.45 of each of
the Companys common share per Bullion warrant.
4. CASH AND CASH EQUIVALENTS
Cash consists of deposits at banks earning interest at floating
rates based on daily bank deposit rates and cash on hand. Cash equivalents
consist of short-term deposits with maturities less than 90 days.
|
|
December 31,
2014 |
|
|
December 31,
2013 |
|
|
|
|
|
|
|
|
Cash |
$ |
3,311,196 |
|
$ |
3,519,309 |
|
|
|
|
|
|
|
|
Short-term deposits |
|
3,139,112 |
|
|
9,163,760 |
|
|
|
|
|
|
|
|
Total |
$ |
6,450,308 |
|
$ |
12,683,069 |
|
Page 19
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
5. INVESTMENTS
At December 31, 2014, the Company had the following
investments:
|
|
|
|
|
Accumulated |
|
|
|
|
December 31, 2014 |
|
Cost |
|
|
unrealized loss |
|
|
Fair value |
|
Fair value
through profit or
loss |
|
|
|
|
|
|
|
|
|
Marketable securities |
$ |
1,952,424 |
|
$ |
(1,208,638 |
) |
$ |
743,786 |
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
Marketable securities |
|
980,000 |
|
|
(680,476 |
) |
|
299,524 |
|
Total investments |
$ |
2,932,424 |
|
$ |
(1,889,114 |
) |
$ |
1,043,310 |
|
At December 31, 2013, the Company had the following
investments:
|
|
|
|
|
Accumulated |
|
|
|
|
December 31, 2013 |
|
Cost |
|
|
unrealized loss |
|
|
Fair value |
|
Fair value
through profit or
loss |
|
|
|
|
|
|
|
|
|
Marketable securities |
$ |
2,180,725 |
|
$ |
(951,640 |
) |
$ |
1,229,085 |
|
Available-for-sale |
|
|
|
|
|
|
|
|
|
Marketable securities |
|
480,000 |
|
|
(280,000 |
) |
|
200,000 |
|
Total investments |
$ |
2,660,725 |
|
$ |
(1,231,640 |
) |
$ |
1,429,085 |
|
6. RECEIVABLES
The Companys receivables arise from royalty receivable, goods
and services tax and harmonized sales taxes receivable from government taxation
authorities, and recovery of exploration expenditures from joint venture
partners, as follows:
Category |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
Royalty income receivable |
$ |
142,864 |
|
$ |
186,298 |
|
Refundable taxes |
|
243,503 |
|
|
999,869 |
|
Recoverable exploration
expenditures and advances |
|
274,085 |
|
|
248,597 |
|
Other |
|
178,385 |
|
|
141,771 |
|
Total |
$ |
838,837 |
|
$ |
1,576,535 |
|
The carrying amounts of the Companys receivables are
denominated in the following currencies:
Currency |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
Canadian Dollars |
$ |
102,952 |
|
$ |
81,384 |
|
US Dollars |
|
588,829 |
|
|
1,329,075 |
|
Turkish Lira |
|
133,440 |
|
|
140,412 |
|
Swedish Krona |
|
12,574 |
|
|
22,418 |
|
Other |
|
1,042 |
|
|
3,246 |
|
Total |
$ |
838,837 |
|
$ |
1,576,535 |
|
Page 20
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
7. RESTRICTED CASH
At December 31, 2014, the Company classified $230,144 (2013 -
$528,945) as restricted cash. This amount is comprised of $148,334 (2013 -
$148,334) held as collateral for its corporate credit cards, $50,960 (2013 -
$50,960) held as a security deposit for the Companys Haiti exploration program,
and $30,850 (2013 - $329,651) cash held by wholly-owned subsidiaries of the
Company whose full amount is for use and credit to the Companys exploration
venture partners in USA, Haiti and Sweden.
8. PROPERTY AND EQUIPMENT
During the year ended December 31, 2014, 2013 and 2012,
depreciation of $47,908 (2013 - $133,453; 2012 - $117,478) has been included in
exploration expenditures.
|
|
Computer |
|
|
Field |
|
|
Office |
|
|
Vehicles |
|
|
Building |
|
|
Land |
|
|
Total |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
December 31, 2011 |
$ |
87,132 |
|
$ |
172,935 |
|
$ |
102,980 |
|
$ |
281,655 |
|
$ |
- |
|
$ |
- |
|
$ |
644,702 |
|
Additions |
|
31,846 |
|
|
56,175 |
|
|
42,924 |
|
|
196,135 |
|
|
615,302 |
|
|
552,277 |
|
|
1,494,659 |
|
Disposals and derecognition |
|
(1,992 |
) |
|
(6,426 |
) |
|
(16,697 |
) |
|
(106,853 |
) |
|
- |
|
|
- |
|
|
(131,968 |
) |
As at December 31, 2012 |
$ |
116,986 |
|
$ |
222,684 |
|
$ |
129,207 |
|
$ |
370,937 |
|
$ |
615,302 |
|
$ |
552,277 |
|
$ |
2,007,393 |
|
Additions |
|
- |
|
|
3,529 |
|
|
1,951 |
|
|
- |
|
|
- |
|
|
- |
|
|
5,480 |
|
Disposals and derecognition |
|
(25,273 |
) |
|
(48,861 |
) |
|
(125,135 |
) |
|
(62,049 |
) |
|
(42,859 |
) |
|
- |
|
|
(304,177 |
) |
As at
December 31, 2013 |
$ |
91,713 |
|
$ |
177,352 |
|
$ |
6,023 |
|
$ |
308,888 |
|
$ |
572,443 |
|
$ |
552,277 |
|
$ |
1,708,696 |
|
Additions |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Disposals and derecognition |
|
- |
|
|
- |
|
|
- |
|
|
(224,237 |
) |
|
- |
|
|
(137,751 |
) |
|
(361,988 |
) |
As at December 31, 2014 |
$ |
91,713 |
|
$ |
177,352 |
|
$ |
6,023 |
|
$ |
84,651 |
|
$ |
572,443 |
|
$ |
414,526 |
|
$ |
1,346,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
December 31, 2011 |
$ |
50,055 |
|
$ |
100,064 |
|
$ |
49,149 |
|
$ |
144,533 |
|
$ |
- |
|
$ |
- |
|
$ |
343,801 |
|
Additions |
|
22,885 |
|
|
25,133 |
|
|
33,142 |
|
|
36,095 |
|
|
85,866 |
|
|
- |
|
|
203,121 |
|
Disposals and derecognition |
|
(1,524 |
) |
|
(6,426 |
) |
|
(16,697 |
) |
|
(91,864 |
) |
|
- |
|
|
- |
|
|
(116,511 |
) |
As at December 31, 2012 |
$ |
71,416 |
|
$ |
118,771 |
|
$ |
65,594 |
|
$ |
88,764 |
|
$ |
85,866 |
|
$ |
- |
|
$ |
430,411 |
|
Additions |
|
25,718 |
|
|
32,119 |
|
|
8,295 |
|
|
79,628 |
|
|
116,797 |
|
|
- |
|
|
262,557 |
|
Disposals and derecognition |
|
(24,147 |
) |
|
(44,874 |
) |
|
(73,889 |
) |
|
(26,776 |
) |
|
- |
|
|
- |
|
|
(169,686 |
) |
As at
December 31, 2013 |
$ |
72,987 |
|
$ |
106,016 |
|
$ |
- |
|
$ |
141,616 |
|
$ |
202,663 |
|
$ |
- |
|
$ |
523,282 |
|
Additions |
|
18,726 |
|
|
26,015 |
|
|
3,958 |
|
|
24,495 |
|
|
114,520 |
|
|
- |
|
|
187,714 |
|
Disposals and derecognition |
|
- |
|
|
- |
|
|
- |
|
|
(115,517 |
) |
|
- |
|
|
- |
|
|
(115,517 |
) |
As at December 31, 2014 |
$ |
91,713 |
|
$ |
132,031 |
|
$ |
3,958 |
|
$ |
50,594 |
|
$ |
317,183 |
|
$ |
- |
|
$ |
595,479 |
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2012 |
$ |
45,570 |
|
$ |
103,913 |
|
$ |
63,613 |
|
$ |
282,173 |
|
$ |
529,436 |
|
$ |
552,277 |
|
$ |
1,576,982 |
|
As at Decembe r31, 2013 |
$ |
18,726 |
|
$ |
71,336 |
|
$ |
6,023 |
|
$ |
167,272 |
|
$ |
369,780 |
|
$ |
552,277 |
|
$ |
1,185,414 |
|
As at December 31, 2014 |
$ |
- |
|
$ |
45,321 |
|
$ |
2,065 |
|
$ |
34,057 |
|
$ |
255,260 |
|
$ |
414,526 |
|
$ |
751,229 |
|
During the year ended December 31, 2014, the Company sold
certain exploration and evaluation assets for a net loss of $154,533. Included
in this sale was land with a recorded value of $137,751.
9. INVESTMENTS IN ASSOCIATED COMPANIES
The Company has a 49% equity investment in a private Turkish
company with Chesser Resources Ltd, an Australian Stock Exchange listed
Exploration Company. At December 31, 2014, the Companys investment in the joint
venture was $Nil (2013 - $Nil; 2012 - $Nil). The Companys share of the net loss
of the joint venture for the years ended December 31, 2014 and 2013 was $Nil
(share of net loss for 2012 - $81,171).
Page 21
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
9. INVESTMENTS IN ASSOCIATED COMPANIES (Continued)
The Company also has a 42.34% equity investment in IG Copper,
LLC (IGC). At December 31, 2014, the Company has paid an aggregate of
$7,892,345 towards its investment (2013 - $6,829,309; 2012 - $4,054,739).
At December 31, 2014, the Companys investment less its share
of accumulated equity losses was $4,072,737 (2013 - $3,960,650; 2012 -
$3,002,101). The Companys share of the net loss for the year ended December 31,
2014 was $1,086,649 (2013 - $2,093,823; 2012 - $1,063,236).
The Company has a minority position on the Boards of its
associated companies, and does not control operational decisions. The Companys
judgment is that it has significant influence, but not control and accordingly
equity accounting is appropriate.
As at December 31, 2014, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31, 2014 |
|
Turkish Co |
|
|
IGC |
|
Aggregat eassets |
$ |
101,315 |
|
$ |
4,841,462 |
|
Aggregate liabilities |
|
(271,424 |
) |
|
(809,260 |
) |
Income (loss) for the period |
|
(154,215 |
) |
|
(2,606,384 |
) |
The Company's ownership% |
|
49.00% |
|
|
42.34% |
|
The Company's share of loss for the period |
|
- |
|
|
(1,086,649 |
) |
As at December 31, 2013, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December 31, 2013 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
105,489 |
|
$ |
5,977,484 |
|
Aggregate liabilities |
|
(142,811 |
) |
|
(958,317 |
) |
Income (loss) for the year |
|
11,247 |
|
|
(5,297,700 |
) |
The Company's ownership% |
|
49.00% |
|
|
40.96% |
|
The Company's share of loss for the year |
|
- |
|
|
(2,093,823 |
) |
As at December 31, 2012, associated companies aggregate
assets, aggregate liabilities and net loss for the period are as follows:
December31,2012 |
|
Turkish Co |
|
|
IGC |
|
Aggregate assets |
$ |
104,210 |
|
$ |
4,954,888 |
|
Aggregate liabilities |
|
(88,617 |
) |
|
(343,378 |
) |
Income (loss) for the year |
|
(249,627 |
) |
|
(3,467,829 |
) |
The Company's ownership% |
|
49.00% |
|
|
30.66% |
|
The Company's share of loss for the year |
|
(81,171 |
) |
|
(1,063,236 |
) |
Page 22
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS
Acquisition Costs
At December 31, 2014, 2013 and 2012, the Company has
capitalized the following acquisition costs on its exploration and evaluation
assets:
Region |
Properties |
|
December 31, 2014
|
|
|
December 31, 2013
|
|
|
December 31, 2012 |
|
Asia Pacific |
Various |
$ |
81,124 |
|
$ |
81,124 |
|
$ |
698,124 |
|
Haiti |
Various |
|
56,085 |
|
|
- |
|
|
- |
|
Sweden |
Various |
|
16,671 |
|
|
16,671 |
|
|
16,671 |
|
|
Viad royalties |
|
421,084 |
|
|
421,084 |
|
|
421,084 |
|
Turkey |
Alankoy |
|
153,960 |
|
|
153,960 |
|
|
153,960 |
|
|
Golcuk Property |
|
- |
|
|
- |
|
|
34,674 |
|
|
Trab |
|
78,587 |
|
|
78,587 |
|
|
78,587 |
|
United States |
Cathedral Well, Nevada |
|
- |
|
|
- |
|
|
419,300 |
|
of America |
Jasper Canyon,
Arizona |
|
- |
|
|
235,856 |
|
|
235,856 |
|
|
Mineral Hill, Wyoming |
|
- |
|
|
- |
|
|
262,062 |
|
|
Red Hills,
Arizona |
|
- |
|
|
- |
|
|
314,475 |
|
|
Richmond Mountain, Nevada |
|
- |
|
|
- |
|
|
262,062 |
|
|
Silver Bell,
Arizona |
|
- |
|
|
471,711 |
|
|
471,711 |
|
|
Superior West, Arizona |
|
1,179,280 |
|
|
1,179,280 |
|
|
1,179,280 |
|
|
Yerington, Nevada |
|
393,095 |
|
|
393,095 |
|
|
393,095 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,379,886 |
|
$ |
3,031,368 |
|
$ |
4,940,941 |
|
During the year ended December 31, 2014 the Company wrote-off
previously capitalized acquisition costs of $707,567 which related to the Jasper
Canyon and Silver Bell projects in the US. All claims for the Jasper Canyon and
Silver Bell are in good standing and held by the Company, but Management has
determined that there was little prospect of significant work on these claims
being carried out by the Company or its partners in the foreseeable future.
During the year ended December 31, 2013 the Company wrote-off
previously capitalized acquisition costs of $1,780,890 of which $1,104,389
related to the Cathedral Well, Mineral Hill, Red Hills, and Richmond Mountain
projects in the US, $7,174 related to the Golcuk property in Turkey, and
$642,992 related to the Koonenberry project in Australia.
During the year ended December 31, 2012 the Company wrote-off
previously capitalized acquisition costs of $1,362,723 related to the Copper
Springs, Mesa Well, and Middle Mountain projects in the US.
Geothermal Assets
In August 2013, the Company sold its geothermal energy assets
in Slovakia and Peru to Starlight Geothermal Ltd. (SGL), a private company,
for US$200,000 (received), 50 common shares of SGL (received and valued at $Nil)
amounting to a 5% ownership in SGL, and gross royalties from future geothermal
energy production, resulting in a gain on sale of $205,940.
Asia Pacific (Australia) exploration licenses
The Companys Australian properties are comprised of contiguous
exploration licenses along the Koonenberry gold belt in New South Wales,
Australia. The Australian properties are acquired either directly through
staking or through agreements with four key license holders.
Page 23
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
Asia Pacific (Australia) exploration licenses
(Continued)
Koonenberry - Perry & Armstrong
On December 7, 2009, the Company entered into an agreement,
subsequently amended, to acquire a right to earn up to a 100% interest in an
exploration license. To acquire its interest, the Company was required to
provide consideration of A$100,000 (A$60,000 paid and A$40,000 in shares issued)
and work commitments totaling A$350,000 (incurred) over a period of three years.
In April 2013, the Company earned its 100% ownership of the
exploration license and the vendors interest has reverted to a 2% net smelter
returns royalty (NSR).
The Company has the right to buy the 2% NSR (after bankable
feasibility study) for consideration equivalent to 10% of the Proved Ore
Reserves, as defined in the Code for Reporting of Mineral Resources and Ore
Reserves (the JORC Code) set by the Australasian Joint Ore Reserves Committee,
of gold contained within the tenement at a price of US$30 per ounce of gold.
Koonenberry - Arastra
On July 13, 2010, the Company entered into an agreement with
Rodinia Resources Pty Ltd, and wholly owned subsidiary of Arastra Explorations
Pty Ltd, to acquire a right to earn up to a 100% interest in four Exploration
Licenses in consideration of A$50,000 cash (paid) and by making a series of
advance minimum royalty payments (AMR) totaling A$2,020,000 (A$300,000 paid in
cash and A$70,000 in shares issued) and satisfying work commitments of
A$5,500,000 (A$1,300,000 incurred) over a period of five years. The Company had
earned a 50% interest in the four Exploration Licenses.
By mutual agreement in September 2013, the venture agreement
was terminated and the 50% interest earned by the Company was exchanged for a
100% ownership in one of the licenses (subject to a 2% NSR in favor of Arastra),
and a 1% NSR against the other three licenses.
Koonenberry - Rockwell
The Company entered into an agreement on March 2, 2011 to earn
a 100% interest in the Kayrunnera exploration license. Under this agreement, the
Company will make a series of payments totaling A$200,000 over two years through
a combination of A$150,000 cash (paid), A$50,000 in shares (issued), and
satisfying work commitments totaling A$1,100,000 ($600,000 incurred) over a
three year period.
In October 2013 the agreement was terminated and the Company
was granted a NSR of 0.5% in and over the tenement held by Rockwell Resources
Pty Ltd.
Koonenberry - Bates
The Company entered into an agreement on May 14, 2010 to earn a
100% interest in two New South Wales exploration license applications. Under
this agreement, the Company made a payment of A$15,000, and satisfied work
commitments totaling A$170,000 over a two year period.
In April 2013, the Company earned its 100% ownership of the two
exploration licenses and the vendors interest has reverted to a 2% NSR. The
Company has the right to buy the 2% NSR (after bankable feasibility study) for
consideration equivalent to 10% of the Proved Ore Reserves, as defined in the
Code for Reporting of Mineral Resources and Ore Reserves (the JORC Code) set
by the Australasian Joint Ore Reserves Committee, of gold contained within the
tenement at a price of US$30 per ounce of gold.
Page 24
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
Asia Pacific (Australia) exploration licenses
(Continued)
In February 2014, the Company signed an exploration and option
agreement with North Queensland Mining Pty Ltd. (NQM), a privately-held
Australian company, giving NQM the right to acquire the Companys Koonenberry
exploration licenses in New South Wales, Australia. NQM will bear responsibility
of satisfying all existing work commitments and honoring all underlying property
agreements during the term of the Agreement. NQM has the option to earn a 100%
interest in the EMX subsidiary that holds the licenses, with EMX retaining a 3%
production royalty.
On November 15, 2012, the Company signed an option agreement to
sell all of the issued share capital of EMX New Zealand (BVI) Inc. (EMX-NZ), a
wholly owned subsidiary of the Company to Glass Earth Gold Limited (GEG) a
TSX-V and New Zealand Alternative Exchange listed company. EMX-NZ is the owner
of all of the issued share capital of Hauraki Gold Limited (HGL), a company
incorporated in New Zealand and the registered holder of certain exploration
permits in New Zealand. The purchase and sale agreement included an execution
payment of US$85,567 (received) and a series of anniversary and milestone
payments equal to a certain amount of troy ounces of gold. On January 8, 2014,
the Company notified GEG their intentions to terminate the agreement due to
GEGs default of certain terms of the agreement.
On November 13, 2014, the Company signed an option agreement
with Land & Mineral Limited (L&M), a privately-held Australian
company, giving L&M the right to acquire HGL. The purchase and sale
agreement included an execution payment of $100,000 ($50,000 received) and a
series of anniversary and milestone payments equal to a certain amount of troy
ounces of gold.
Haiti exploration permits
Eurasian and joint venture partner Newmont Ventures Limited
(Newmont), a wholly owned subsidiary of Newmont Mining Corporation
(collectively, the JV), have the right to establish specific exploration areas
along the trend of Haitis Massif du Nord mineral belt. Newmont is funding and
managing six joint venture Designated Projects (DPs) across the exploration
areas. The JV is waiting for approval of Research Permits by the Government of
Haiti. The Companys work on the 100% controlled Grand Bois gold-copper project
is outside of the JV with Newmont.
In March 2013, the Haiti government placed the Mining
Convention process on hold while its parliament began working on a new mining
law. The Government deferred further consideration of the JVs request for the
Research Permits that would cover the six DPs, and request for an extension of
the Grand Bois Research Permit, while revisions to the mining law are pending.
As a result, Newmont placed the JVs on care and maintenance status. The Company
considered the deferral of its request for an extension of the Grand Bois
Research Permit to be a force majeure event and also placed its Grand Bois
project on care and maintenance status.
Gezart, Kyrgyz Republic
On July 2012, the Company sold its wholly owned subsidiary,
Altyn Minerals (BVI) Ltd, and its related Kyrgyz Republic subsidiaries, Altyn
Minerals, LLC, and Montex for net proceeds of US$30,000 (received) and a 2.5%
NSR. All related balances have been removed from the Companys consolidated
financial statements and a loss of $38,299 has been recorded on the sale.
Sweden licenses
The Company has certain exploration permits. There are no
specific spending commitments on the Swedish licenses and permits.
On February 17, 2011, the Company entered into a Strategic
Alliance and Earn-In Agreement (the Strategic Alliance) with Antofagasta
Minerals S.A., (Antofagasta). The Strategic Alliance includes a regional
strategic exploration alliance that covers all of Sweden (subject to certain
exclusions), and an agreement to designate certain properties as a designated
project (DP), with a right of Antofagasta to earn up to an
undivided 70% interest therein. On February 17, 2013, the Strategic Alliance
reached the end of its two year tenure. During the tenure of the Strategic
Alliance, three DPs were generated and funded by Antofagasta. On March 3, 2014
Antofagasta advised the Company that they would be discontinuing further funding
of the DPs. The Company now has no commitments or obligations pursuant to the
Strategic Alliance.
Page 25
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
Turkey exploration licenses
The Company has acquired numerous exploration licenses in
Turkey for which there are no specific spending commitments.
Sisorta Joint Venture
On October 26, 2007, Eurasian signed an agreement to joint
venture the Sisorta gold project with Chesser Resources Ltd, (Chesser).
Chesser earned a 51% interest in the JV by making payments of 3,000,000 common
shares, US$300,000 cash and funding US$4,000,000 in exploration expenditures.
On April 2, 2012, the Company and Chesser executed an agreement
to sell the Sisorta property to a privately owned Turkish company, Colakoglu
Ticari Yatirim A.S. (Colakoglu). The agreement requires Colakoglu to make an
up-front payment of 100 troy ounces of gold bullion or its cash equivalent
($80,216 received), and to undertake a US$500,000 work commitment over the first
year. After the first year, Colakoglu can exercise an option to purchase the
property for an additional 6,900 troy ounces of gold, or its cash equivalent,
with the payments binding on exercise of the option, but staged over a period of
four years after option exercise. A 2.5% NSR from any production on the property
will also be received. As the Company has a 49% interest in Sisorta, its share
of the above will comprise 3,381 troy ounces of gold bullion and a 1.225% NSR.
Colakoglu terminated the option effective March 21, 2013, leaving Chesser and
the Company with a 51% and 49% interest in the Sisorta project, respectively. In
March 2015, Chesser and the Company signed definitive agreements pursuant to
which the Company would acquire all of Chessers interest in the Sisorta
project.
Akarca Joint Venture
On December 23, 2008, the Company signed an option and joint
venture agreement on the Akarca, Samli, and Elmali properties in Turkey (the
"Properties"), with a subsidiary of Centerra Gold Inc. ("Centerra"), a Canadian
gold mining and exploration company. Centerra may earn a 50% interest by making
US$5,000,000 in exploration expenditures over 3 years (incurred) and making a
payment of US$1,000,000 within 30 days of earn-in (not paid).
On October 29, 2012, the parties signed a Termination of
Shareholders Agreement, and in return for relieving Centerra of certain
exploration and payment obligations Eurasian regained 100% control of
Akarca.
On June 30, 2013, the Company entered into an option agreement
to sell its 100% interest in AES Madencilik A.S. ("AES Turkey"), a Turkish
corporation that controls the Akarca property, for a combination of cash
payments, gold bullion, work commitments, and a royalty interest to Çolakoglu
Ticari Yatirim A.S. ("Çolakoglu"), a privately owned Turkish company.
The agreement requires Çolakoglu to make an up-front payment of
US$250,000 (received). In order to exercise the option, Colakoglu must drill at
least 5,000 meters by the end of the first year (completed), pay US$500,000
within 18 months (subsequently extended to 24 months upon payment of $100,000 of
that amount) and, if the option is exercised, must pay a cumulative US$4,250,000
over a period of three years from the date of the agreement, must drill a
cumulative 20,000 meters over a period of four years from the date of the
agreement, and must produce a NI 43-101 compliant feasibility study between
years 6.5 and 9.5. In addition, Colakoglu must deliver up to 18,000 troy ounces
of gold under certain terms and conditions. The Company will retain a 3.5%
NSR.
Page 26
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
Turkey exploration licenses (Continued)
Dedeman Agreement - Aktutan
On August 7, 2007, the Company entered into an agreement with
Dedeman Madencilik San.Vetic A.S. (Dedeman) for the sale of the Aktutan
exploration property. Dedeman is required to make a US$40,000 (received) advance
royalty payment to the Company prior to August 7, 2008, US$60,000 (received)
prior to August 7, 2009 and US$100,000 (received) prior to August 7, 2010 and
thereafter for as long as they hold the property. Dedeman has drilling and
expenditure commitments over the first three years of the agreement depending on
results. The Company will retain a 4% NSR and can re-acquire the property if
Dedeman decides to relinquish it. As of December 31, 2014, Dedeman is current
with respect to their advance royalty payments.
Dedeman Agreement Alankoy, Balya and Sofular
In November 2006, the Company through its wholly owned
subsidiary, Eurasia Madencilik Ltd. Sti, completed an exchange of mineral
properties with Dedeman. The Company transferred its Balya and Sofular lead-zinc
properties to Dedeman in exchange for the Alankoy gold-copper property. The
Company made a US$100,000 advance royalty payment to Dedeman for the Alankoy
property in May 2008. Dedeman retains a 3% NSR on the property and a
reversionary right to re-acquire the property should the Company decide to
relinquish the license. The Company retains the right to purchase Dedemans 3%
royalty for US$1,000,000 at any time. Dedeman is to make a US$100,000 advance
royalty payment (received) to the Company for the Balya property prior to the
first anniversary of the agreement. Dedeman is also committed to drill a minimum
of 12 exploration holes for a total of 3,000 meters during the first year
(completed) and incur expenditures of US$500,000 in year 2 (incurred) and
US$1,000,000 in year 3 (incurred). The Company retains a 4% NSR and a
reversionary right to re-acquire the property if Dedeman decides to relinquish
the license.
Dedeman also acquired the Sofular properties and the Company
retains a 3% NSR on the properties and a reversionary interest in the properties
should Dedeman decide to relinquish one or more of them. Dedeman has the right
to purchase the 3% NSR on Sofular at any time for US$1,000,000. In February
2015, Dedeman determined it would relinquish the Sofular properties, and the
Company declined to re-acquire them.
Ferrite Agreement - Alankoy
On December 20, 2013, the Company signed an Exploration and
Option Agreement (the Alankoy Agreement) with Ferrite Resources Ltd.
(Ferrite), a privately-held Australian company, whereby Ferrite has the option
to acquire the Companys subsidiaries that hold the Alankoy project, with the
Company retaining a 3% NSR. To do so, Ferrite paid US$35,000 upon signing and
must expend at least US$200,000 on exploration activities each year for the
three years after June 3, 2014 (the Effective Date). In addition, Ferrite is
required to make annual deliveries of gold bullion to the Company as Advanced
Annual Royalties (AARs) on each anniversary of the Effective Date. These will
consist of 75 troy ounces of gold (or cash equivalent thereof) delivered on each
of the first three anniversaries of the Effective Date, and AARs of 100 troy
ounces of gold (or cash equivalent) on all subsequent anniversaries until
commencement of commercial production. Ferrite is also to pay 500 troy ounces of
gold (or the cash equivalent) on completion of a NI 43-101 or JORC compliant
feasibility study.
Tumad Agreement - Trab-23
The Trab-23 property is located in northeast Turkey. In
February 2013 Tumad Madencilik San.Ve TIC, A.S. (Tumad), executed an option
agreement (the Trab-23 Agreement) to acquire Trab-23 from the Company. The
Trab-23 Agreement provides an upfront transfer of the two licenses to Tumad,
in-ground spending requirements, a revenue stream of annual earn-in and
pre-production payments, and a revenue stream based upon production. The Trab-23
Agreement is contingent upon approval by Turkeys General Directorate of Mining
Affairs ("MIGEM") to combine the two licenses into a single exploitation
license. This license combination and transfer occurred on September 11, 2014
(the Transfer Date). Provided that Tumad has made the payments and performed
the work described in the Trab-23 Agreement, on or before September 11, 2017
Tumad may exercise its option to retain the property, and after such election,
shall pay annual minimum royalties of US$100,000 commencing upon the first
anniversary of such exercise. Upon production from the Trab-23 licenses, Tumad
will pay the Company a 3% NSR royalty from production. The annual minimum
royalties will be credited to 80% of the NSR royalty then payable.
Page 27
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
Turkey exploration licenses (Continued)
Golcuk Transfer and Royalty Agreement
On July 17, 2012, the Company entered into an agreement with
Pasinex Resources Limited (PRL) to transfer 100% interest in the Golcuk
property in exchange for PRL issuing shares to the Company as follows,
|
i) |
500,000 PRL shares on the initial issuance date
(received); |
|
|
|
|
ii) |
An additional 500,000 PRL shares on or before the first
anniversary of the initial issuance date (received); |
|
|
|
|
iii) |
An additional 1,000,000 PRL shares on or before the
second anniversary of the initial issuance date (received subsequent to
year end); and, |
|
|
|
|
iv) |
An additional 1,000,000 PRL Shares on or before the third
anniversary of the initial issuance date. |
In addition to the transfer of shares, Pasinex will pay annual
minimum royalties of 50 troy ounces of gold on the fourth anniversary of the
effective date of the agreement, and 75 troy ounces of gold on the fifth
anniversary and each anniversary thereafter until commencement of production.
Pasinex will then pay the Company a 2.9% NSR royalty from production. Pasinex
has the option of purchasing 0.9% of the royalty for $1,000,000 USD prior to the
6th anniversary of the effective date of the agreement.
United States exploration licenses Aguila de
Cobre Property, Arizona
The Company holds a 100% interest in the Aquila de Cobre
property comprised of certain unpatented federal mining claims and one State of
Arizona exploration permit.
Copper Springs, Copper King, and Red Top Properties, Arizona
In September 2013, the Company, through its wholly owned
subsidiary Bronco Creek Exploration Inc. (BCE), entered into option agreements
to sell the Copper Springs, Copper King, and Red Top projects for a combination
of cash payments, work commitments, and common shares. The agreements grant
Desert Star Resources Ltd. (Desert Star), a TSX-V listed company, the option
to acquire a 100% interest in each of the projects.
Desert Stars earn-in requirements for each of the three
projects consist of delivering 350,000 common shares of Desert Star (a total of
1,050,000 received) upon TSX-V approval, incurring a minimum of US$5,000,000 in
exploration expenditures by the seventh anniversary of the signing date, and
making additional milestone payments to the Company.
On September 1, 2014, the Copper King and Red Top agreements
were amended and during the remainder of 2014, the Company received payments
totaling US$62,974. The Copper Springs amendment extended the required payments
into 2015 and in January, 2015, Desert Star terminated its interest in the
Copper Springs project before any payments were received and the Company
regained 100% control of the project.
Page 28
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
Buckhorn Creek, Frazier Creek, and Jasper Canyon Properties,
Arizona and Nevada
In October 2013, the Company, through its wholly owned
subsidiary BCE, entered into option agreements to sell the Frazier Canyon,
Buckhorn Creek, and Jasper Canyon projects for a combination of cash payments,
work commitments, and common shares. The agreements granted Savant Explorations
Ltd. (Savant), a TSX-V listed company, the option to acquire a 100% interest
in each of the projects. Upon execution of the agreement and TSX-V approval, the
Company received US$37,500 (US$12,500 per project) and 450,000 common shares at
a value of US$19,440 (150,000 common shares per project) of Savant as execution
payments, and payments totaling US$59,325 as reimbursement of amounts paid by
BCE to keep the respective claims in force for the 2013 assessment year.
During the year ended December 31, 2014, the Company received
US$140,000 (US$70,000 per project), and 200,000 common shares at a value of
$8,000 (100,000 common shares per project) as the work commitment and common
share requirements related to the Buckhorn Creek and Frazier Creek projects.
Both projects and agreements remain in good standing. On July 25, 2014 Savant
terminated its option to acquire the Jasper Canyon project and the Company
wrote-off $235,856 in capitalized exploration and evaluation costs.
Cathedral Well Property and Richmond Mountain Property,
Nevada
The Company holds a 100% interest in the Cathedral Well
property comprised of certain unpatented federal mining claims, located on
Bureau of Land Management (BLM) and National Forest lands subject to a 0.5%
NSR. The 100% owned Richmond Mountain property comprises certain unpatented
federal mining claims.
In June 2014, the Company signed an exploration and option
agreement through its wholly-owned subsidiary Bronco Creek Exploration, Inc.,
with Ely Gold and Minerals Inc. (Ely Gold) (TSX Venture: ELY) for the
Companys Cathedral Well gold project. Ely Gold can earn a 100% interest in the
project by paying EMX a total of US$100,000 as follows: US$25,000 (received)
upon execution of the agreement and US$75,000 over the next three years, after
which the Company will retain a 2.5% NSR royalty, inclusive of an underlying
0.5% NSR royalty.
Copper Basin Property, Arizona
The Company holds a 100% interest in the Copper Basin property
comprised of certain unpatented federal mining claims and one State of Arizona
exploration permit subject to the terms of an Earn-In Agreement dated September
27, 2011 with Vale Exploration (Vale). Vale may earn an initial 60% equity
interest in the project for consideration of cash payments and US$4,500,000 in
exploration expenditures within four years.
On July 19, 2014, Vale terminated its interest in the agreement
with the Company regaining 100% control of the project.
Cruiser Gold Property, Nevada
The Company holds a 100% interest in the Cruiser Gold property
comprised of certain unpatented federal lode mining claims.
Copper Warrior Property, Utah
The Company holds a 100% interest in the Copper Warrior
property comprised of certain unpatented federal lode mining claims.
Page 29
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
French Bullion Property, Nevada
The Company holds a 100% interest in the French Bullion
property comprised of certain unpatented federal lode mining claims.
Hardshell Skarn Property, Arizona
The Company holds a 100% interest in the Hardshell Skarn
property comprised of certain unpatented federal lode mining claims.
Liberty Property, Alaska
The Company holds a 100% interest in the Liberty property
comprised of certain State of Alaska prospecting sites.
Jasper Canyon Property, Globe-Miami District, Arizona
The Company holds a 100% interest in the Jasper Canyon property
comprised of certain unpatented federal lode mining claims.
Lomitas Negras Property, Arizona
The Company holds a 100% interest in the Lomitas Negras
property comprised of certain unpatented federal lode mining claims and certain
State of Arizona exploration permits.
In May 2014, the Company signed an exploration and option to
purchase agreement, through its wholly owned subsidiary Bronco Creek
Exploration, for the Lomitas Negras porphyry copper project with Kennecott
Exploration Company (Kennecott), part of the Rio Tinto Group. Kennecott can
earn a 100% interest in the project by completing US$4,500,000 in exploration
expenditures and paying escalating option payments totaling US$900,000
(US$25,000 received) within five years after the date of the Agreement.
Kennecott relinquished its interest in the project, with the Company regaining
100% control.
Mesa Well Property, Arizona
The Company holds a 100% interest in mineral rights held by
certain Arizona State Exploration Permits.
Middle Mountain Property, Arizona
The Company held a 100% interest in certain federal unpatented
mining claims and certain Arizona State Exploration Permits subject to a Mining
Lease dated March 4, 2008 and a subsequently amended and Restated Mining Lease
and Option Agreement dated November 12, 2009. In August 2013, all mineral rights
in the Middle Mountain property have been dropped.
Mineral Hill Property, Wyoming
The Mineral Hill property is comprised of certain unpatented
mining claims staked by the Company on lands administered by the Black Hills
National Forest. The Company owns a 100% interest in the claims subject to a
Pooling Agreement dated July 31, 2009 whereby the Company pooled its interest
in the mining claims with Mineral Hill LP (MH) who owns a 100% interest in
certain patented mining claims and unpatented federal mining claims that adjoin
the Companys property. The Agreement stipulates that consideration received
from any third party, including lease payments, stock distribution, and royalties be divided as to 40% to the Company and 60% to MH.
Until such time as a third party has paid a total of US$5,000,000 in proceeds to
the Company and MH, all further consideration will be divided as to 30% to the
Company and 70% to MH. An amendment was executed during fiscal 2013 whereby all
future payments are to be divided 50% to the Company and 50% to MH.
Page 30
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
Moran Dome Property, Alaska
The Company holds a 100% interest in the Moran Dome property
comprised of certain State of Alaska mining claims and certain State of Alaska
prospecting sites.
Parks-Salyer Property, Arizona
The Company holds a 100% interest in the Parks-Salyer property
comprised of one State of Arizona exploration permit.
Red Hills Property, Arizona
The Red Hills property is comprised of certain federal
unpatented mining claims, and certain Arizona State exploration permits. The
Company owns a 100% interest in the mineral rights subject to a Mining Lease
dated August 4, 2008 and a subsequent Amended and Restated Mining Lease and an
Option Agreement dated November 12, 2009, whereby the Company granted Geo
Minerals Ltd (GEO) a 100% interest in the Red Hills property, for
consideration of advance royalty payments, common shares of GEO, and minimum
exploration expenditures.
The Company retains a 2.5% NSR. The Company executed an
amendment assigning the GEO interest to GeoNovus Minerals Corp. (GEN), after
GEOs merger with New Gold Inc. on November 16, 2011. GEN terminated their
interest in the project on August 30, 2014 and the Company subsequently
relinquished all mineral rights. $156,825 in exploration and evaluation costs
related to the Red Hills project was written-off during the year ended December
31, 2013.
Rush Property, Colorado
Subsequent to year end, the Company staked federal mining
claims and now holds a 100% interest in the Rush property.
San Manuel Property, Arizona
The Company holds a 100% interest in the San Manuel property
comprised of certain State of Arizona exploration permits.
Sand Pass Property, Utah
The Company holds a 100% interest in the Sand Pass property
comprised of certain unpatented federal mining claims.
Sleeping Beauty Project, Globe-Miami District, Arizona
The Company holds a 100% interest in mineral rights comprised
of certain federal unpatented mining claims which were acquired by staking
during fiscal 2014.
Page 31
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION ASSETS (Continued)
United States exploration licenses
(Continued)
Silver Bell West, Silver Bell District, Arizona
The Company holds a 100% interest in mineral rights comprised
of certain federal unpatented mining claims subject to a Letter of Agreement
dated August 26, 2009 whereby, the Company granted GEO a 100% interest in the
Silver Bell West property, for consideration of advance royalty payments, common
shares of GEO, and warrants to purchase GEO common shares, and minimum
exploration expenditures. The Company retains a 2.5% NSR. On December 15, 2011,
the Company executed an amendment assigning the GEO interest to GEN, after GEOs
merger with New Gold Inc. In September 2014 the agreement with GEN was
terminated with the Company regaining 100% control of the project. As a result
of the termination of the agreement, the Company wrote-off $471,711 of
exploration and evaluation costs related to the project.
Superior West Project, Arizona
The Company holds a 100% interest in the mineral rights
comprised of certain federal unpatented mining claims, located on Tonto National
Forest lands and unpatented federal mining claims under option. The Company may
earn a 100% interest in the claims for cash payments totaling US$1,000,000 on or
before July 31, 2014 and subject to a 2% NSR Royalty, 1% of which may be
purchased for US$2,000,000 in 0.5% increments.
By Earn-In Agreement dated July 31, 2009, the Company granted
Freeport-McMoran Mineral Properties, a wholly owned subsidiary of
Freeport-McMoran Exploration Corporation (FMEC) two separate rights to acquire
a 51% and a subsequent 19% interest. The initial interest in the Superior West
property may be acquired for cash consideration, making all property and option
payments on behalf of the Company to the original owners of the property and
minimum exploration expenditures. FMEC may acquire the additional 19% interest
by solely funding and delivering a feasibility study.
On February 14, 2014 FMEC terminated its interest in the
Superior West property with the Company regaining 100% control of the project.
Yerington West Property, Nevada
The Yerington West property is comprised of certain unpatented
federal mining claims located on lands administered by the Bureau of Land
Management (BLM).
By Option Agreement, dated September 24, 2009, the Company
granted Entrée Gold Inc. (ETG) the right to acquire an 80% interest in the
property, for consideration of US$140,000 in cash payments (received), common
shares of ETG valued at $85,000 (received), minimum exploration expenditures of
$1,900,000 (incurred), and delivery of a bankable feasibility study and advanced
production payments of $375,000 by the 10th anniversary (2019).
In October 2014, the Company received a US$50,000 option
payment and verified that all exploration expenditures due on the property had
been met and that the agreement is in good standing.
Page 32
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION
ASSETS (Continued)
Exploration Expenditures
During the year ended December 31, 2014, the Company incurred
the following exploration expenditures by projects, which were expensed as
incurred:
* Significant components of Other exploration expenditures
for the year ended December 31, 2014 were Austria - $233,050; Haiti -
$184,777; and Georgia - $138,304.
Page 33
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION
ASSETS (Continued)
Exploration Expenditures
(continued)
During the year ended December 31, 2013, the Company incurred
the following exploration expenditures by projects, which were expensed as
incurred:
*Significant components of Other exploration expenditures for
the year ended December 31, 2013 include Brazil - $569,443, Georgia - $142,771,
Austria - $249,101, and Haiti - $275,281.
Page 34
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
10. EXPLORATION AND EVALUATION
ASSETS (Continued)
Exploration Expenditures
(continued)
During the year ended December 31, 2012, the Company incurred
the following exploration expenditures by projects, which were expensed as
incurred:
*Significant components of Other exploration expenditures for
the year ended December 31, 2012 include Brazil - $538,123, Georgia - $211,763,
Kyrgyz Republic - $100,513, and Geothermal activities - $301,594.
Page 35
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
11. ROYALTY INTEREST
Changes in royalty interest for the years ended December 31,
2014, 2013 and 2012:
Opening Balance, August 17, 2012 |
$ |
39,536,000 |
|
Adjusted for: |
|
|
|
Depletion |
|
(1,125,408 |
) |
Cumulative translation adjustments |
|
328,000 |
|
Balance, December 31, 2012 |
$ |
38,738,592 |
|
Adjusted for: |
|
|
|
Additions |
|
200,000 |
|
Depletion |
|
(1,681,688 |
) |
Impairment charge |
|
(4,765,511 |
) |
Cumulative translation adjustments |
|
2,572,332 |
|
Balance, December 31, 2013 |
$ |
35,063,725 |
|
Adjusted for: |
|
|
|
Depletion |
|
(1,334,845 |
) |
Impairment charge |
|
(7,371,765 |
) |
Cumulative translation adjustments |
|
2,970,845 |
|
Balance, December
31, 2014 |
$ |
29,327,960 |
|
Carlin Trend Royalty Claim Block
On August 17, 2012, the Company and its wholly-owned
subsidiary, EMX (Utah) Corp. completed the acquisition of Bullion (Note 3). As
part of the acquisition, the Company acquired the Carlin Trend Royalty Claim
Block in Nevada which includes the following Royalty Properties:
Leeville Mine: Located in Eureka County, Nevada, the Company is
receiving a continuing 1% gross smelter return royalty (GSRR).
East Ore Body Mine: Located in Eureka County, Nevada, the
property is currently being mined and the Company is receiving a continuing 1%
GSRR.
North Pipeline: Located in Lander County, Nevada. Should the
property become producing, the Company will receive a production royalty of
US$0.50 per yard of ore processed or 4% of net profit, whichever is greater.
The Company capitalized $39,536,000 (US$40,000,000) for the
Carlin Trend Royalty Claim Block which represents the fair value on the
acquisition date (Note 3).
During the year ended December 31, 2014, $801,836 (2013 -
$1,280,997; 2012 - $537,035) in royalty income was included in operations offset
by a 5% direct gold tax and depletion.
Brestovac/Jasikovo East Royalty
In September 2013, the Company purchased a 0.5% NSR royalty
from Euromax Resources Ltd. for $200,000 covering Reservoir Mineral Inc.s (a
public company listed on the TSX-V) (Reservoir) share of minerals and metals
mined from the Brestovac and Jasikovo East properties in Serbia. These two
properties are included in Reservoirs Timok Project which is in joint venture
with Freeport-McMoran Exploration Corporation (Freeport). The 0.5% NSR royalty
is proportionately reduced to Reservoirs interest in the properties as Freeport
earns-in by making exploration expenditures under the circumstances provided in
the NSR agreement. Freeport has thus far earned a 55% interest in the Timok
Project.
Page 36
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
11. ROYALTY INTEREST (Continued)
Impairment of Non-Current Assets
The Companys policy for accounting for impairment of
non-current assets is to use the higher of the estimates of fair value less cost
of disposal of these assets or value in use. The Company uses valuation
techniques that require significant judgments and assumptions, including those
with respect to future production levels, future metal prices, foreign exchange
rates, discount rates, and Net Asset Value (NAV) multiples.
Non-current assets are tested for impairment when events or
changes in circumstances suggest that the carrying amount may not be
recoverable. As a result of the decline in the production of gold from the
Carlin Trend Royalty Claim Block, the Company revised its estimated annual gold
production over the expected 11 year mine life and updated the NAV and cash flow
multiples based on observed market conditions. As a result of these changes, the
Company recorded $7,371,765 (2013 - $4,765,511; 2012 - $Nil) in impairment
charges for the year ended December 31, 2014 related to the Carlin Trend
Royalty
Claim Block and related assets that make up the same
cash-generating unit (CGU). In addition, due to the tax effects of the
above-mentioned impairment, the Company recorded a decrease in deferred tax
liabilities of $2,493,010 (2013 - $1,779,707; 2012 - $Nil) with a corresponding
entry to deferred income tax recovery.
12. RECLAMATION BONDS
Reclamation bonds are held as security towards future
exploration work and the related future potential cost of reclamation of the
Companys land and unproven mineral interests. Once reclamation of the
properties is complete, the bonds will be returned to the Company. Management
has determined that the Company has no decommissioning or restoration provisions
related to the properties for the periods presented.
|
|
December 31,
2014 |
|
|
December 31,
2013 |
|
Australia-various properties
|
$ |
75,864 |
|
$ |
57,881 |
|
Sweden-various properties |
|
7,984 |
|
|
7,884 |
|
Turkey-various properties |
|
273,097 |
|
|
238,356 |
|
U.S.A-various properties |
|
466,502 |
|
|
466,773 |
|
Total |
$ |
823,447 |
|
$ |
770,894 |
|
13. GOODWILL
The Companys goodwill represents the excess of the purchase
price paid during fiscal 2012 for the acquisition of Bullion Monarch Mining Inc.
over the fair value of the net identifiable tangible and intangible assets and
liabilities acquired.
Change in goodwill for the years ended December 31, 2014, 2013
and 2012:
Opening Balance, August 17, 2012 |
$ |
8,896,705 |
|
Adjusted for: |
|
|
|
Cumulative translation adjustment |
|
73,809 |
|
Balance, December 31, 2012 |
$ |
8,970,514 |
|
Adjusted for: |
|
|
|
Cumulative translation adjustment |
|
655,281 |
|
Balance, December 31, 2013 |
$ |
9,625,795 |
|
Adjusted for: |
|
|
|
Impairment charge |
|
(2,248,057 |
) |
Cumulative translation adjustment |
|
839,804 |
|
Balance,December31,2014 |
$ |
8,217,542 |
|
Page 37
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
13. GOODWILL (Continued)
The Company applied a one-step approach and determined the
Carlin Trend Royalty Claim Block and the related assets within the same CGU to
be impaired (Note 11). The impairment loss is the amount by which the CGUs
carrying amount exceeds its recoverable amount. The loss is first applied to
reduce asset component and any excess to goodwill within CGU. As result, the
Company has written down the goodwill by $2,248,057 (2013 - $Nil; 2012 - $Nil).
14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
December 31,
2014 |
December 31,
2013 |
Accounts payable |
$267,214 |
$395,523 |
Accruedliabilities |
291,835 |
254,320 |
Total |
$559,049 |
$649,843 |
15. ADVANCES FROM JOINT VENTURE PARTNERS
Advances from joint venture partners relate to unspent funds
received pursuant to approved exploration programs by the Company and its joint
venture partners. The Companys advances from joint venture partners consist of
the following:
|
December 31,
2014 |
December 31,
2013 |
U.S.A. |
$429,175 |
$516,328 |
Sweden |
- |
212,225 |
Haiti |
- |
5,550 |
Total |
$429,175 |
$734,103 |
16. CAPITAL STOCK
Authorized
As at December 31, 2014, the authorized share capital of the
Company was an unlimited number of common and preferred shares without par
value.
Common Shares
For the year ended December 31, 2014, the Company issued:
- 391,501 shares valued at $614,427 pursuant to an incentive stock grant
program to employees of the Company applied to commitment to issue shares.
For the year ended December 31, 2013, the Company issued:
- 563,337 shares valued at $1,193,672 pursuant to an incentive stock grant
program to employees of the Company applied to commitment to issue shares;
- 355,000 common shares for gross proceeds of $361,600 pursuant to the
exercise of stock options; and
- 10,000 common shares value at $17,500 as employment compensation.
Page 38
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
16. CAPITAL STOCK (Continued)
Common Shares (Continued)
For the year ended December 31, 2012, the Company issued:
- 17,712,189 common shares valued at $32,059,062 as part consideration for
the Bullion acquisition (Note 3).
- 813,670 bonus shares valued at $1,596,483 to officers, employees and
consultants of the Company.
- 639,000 common shares for gross proceeds of $1,049,670 pursuant to the
exercise of stock options.
- 949,497 common shares for gross proceeds of $1,898,995 pursuant to the
exercise of warrants.
- 62,398 common shares valued at $128,122 towards the acquisition of the
Koonenbury property.
Stock Options
The Company adopted a stock option plan (the Plan) pursuant
to the policies of the TSX-V. The maximum number of shares that may be reserved
for issuance under the plan is limited to 10% of the issued common shares of the
Company at any time. The vesting terms are determined at the time of the grant,
subject to the terms of the plan.
During the years ended December 31, 2014, 2013 and 2012, the
change in stock options outstanding is as follows:
|
|
|
|
|
Weighted Average |
|
|
|
Number |
|
|
Exercise Price |
|
Balanceas at December 31,
2011 |
|
4,142,867 |
|
$ |
2.24 |
|
Granted |
|
1,361,500 |
|
|
2.04 |
|
Exercised |
|
(639,000 |
) |
|
1.63 |
|
Cancelled/expired |
|
(66,667 |
) |
|
2.45
|
|
Balanceas at December 31,
2012 |
|
4,798,700 |
|
$ |
2.26 |
|
Exercised |
|
(355,000 |
) |
|
1.02 |
|
Cancelled/expired |
|
(448,000 |
) |
|
2.37 |
|
Balanceas at December 31, 2013 |
|
3,995,700 |
|
|
2.36 |
|
Granted |
|
1,608,500 |
|
|
1.18 |
|
Cancelled and expired unexercised |
|
(111,000 |
) |
|
1.62
|
|
Balanceas at December 31, 2014 |
|
5,493,200 |
|
|
2.03 |
|
|
|
|
|
|
|
|
Number of options exercisable as at December 31, 2014 |
|
5,493,200 |
|
$ |
2.03 |
|
Page 39
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
16. CAPITAL STOCK (Continued)
Stock Options (Continued)
The following table summarizes information about the stock
options which were outstanding and exercisable at December 31, 2014:
Date Granted |
Number of
Options |
Exercisable |
Exercise Price
$ |
Expiry Date |
February 8, 2010* |
150,000 |
150,000 |
1.74 |
February8,2015 |
May 7, 2010 |
917,500 |
917,500 |
2.18 |
May7,2015 |
June 7, 2010 |
23,000 |
23,000 |
2.05 |
June7,2015 |
September 2, 2010 |
38,200 |
38,200 |
2.21 |
September2,2015 |
November 10, 2010 |
177,500 |
177,500 |
2.51 |
November10,2015 |
February 1, 2011 |
50,000 |
50,000 |
3.21 |
February1,2016 |
March 18, 2011 |
150,000 |
150,000 |
2.91 |
March18,2016 |
July 19, 2011 |
1,218,000 |
1,218,000 |
2.80 |
July19,2016 |
August 3, 2011 |
10,000 |
10,000 |
2.70 |
August3,2016 |
August 29, 2011 |
50,000 |
50,000 |
2.66 |
August29,2016 |
September 9, 2011 |
40,000 |
40,000 |
2.70 |
September9,2016 |
December 11, 2011 |
20,000 |
20,000 |
2.10 |
December11,2016 |
July 5, 2012 |
80,000 |
80,000 |
1.96 |
July5,2017 |
August 22, 2012 |
951,500 |
951,500 |
1.94 |
August22,2017 |
October 16 ,2012 |
67,000 |
67,000 |
2.44 |
October16,2017 |
April 25, 2014 |
1,473,000 |
1,473,000 |
1.20 |
April 24,2019 |
June 26, 2014 |
17,500 |
17,500 |
0.88 |
June26,2019 |
December 22, 2014
|
60,000 |
60,000 |
0.87
|
December22,2019 |
|
|
|
|
|
Total |
5,493,200 |
5,493,200 |
|
|
*expired unexercised subsequent to December 31, 2014
The
weighted average remaining useful life of stock options is 2.27 years
Stock Grants
The Company has received TSX-V approval for the issuance of
certain stock grants as discretionary bonuses earned by the President and CEO,
Chairman, directors, officers, area managers and certain employees of the
Company pursuant to an annual compensation review.
Share-based Payments
During the year ended December 31, 2014, the Company recorded
aggregate share-based payments of $1,234,485 (2013 - $658,857; 2012 -
$3,662,324) as they relate to the fair value of stock options granted, fair
value of incentive stock grants, and the accrual for the fair value of stock
granted. Share-based payments are allocated to expense accounts as follows:
|
|
Generaland |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Year ended December
31, 2014 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue shares
|
$ |
346,961 |
|
$ |
29,588 |
|
$ |
376,549 |
|
Fair
value of stock options granted |
|
683,450 |
|
|
174,486 |
|
|
857,936 |
|
|
$ |
1,030,411 |
|
$ |
204,074 |
|
$ |
1,234,485 |
|
Page 40
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
16. CAPITAL STOCK (Continued)
|
|
Generaland |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Year
ended December 31,
2013 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue shares |
$ |
509,995 |
|
$ |
131,362 |
|
$ |
641,357 |
|
Shares issued as
performance bonuses |
|
17,500 |
|
|
- |
|
|
17,500 |
|
|
$ |
527,495 |
|
$ |
131,362 |
|
$ |
658,857 |
|
|
|
Generaland |
|
|
|
|
|
|
|
|
|
Administrative |
|
|
Exploration |
|
|
|
|
Year
ended December 31,
2012 |
|
Expenses |
|
|
Expenditures |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
Commitment to issue bonus shares |
$ |
1,780,846 |
|
$ |
377,315 |
|
$ |
2,158,161 |
|
Shares issued as performance bonuses |
|
- |
|
|
39,870 |
|
|
39,870 |
|
Fair value of options granted |
|
1,018,763 |
|
|
445,530 |
|
|
1,464,293 |
|
|
$ |
2,799,609 |
|
$ |
862,715 |
|
$ |
3,662,324 |
|
The weighted average fair value of the stock options granted
during the year ended December 31, 2014 was $0.53 per stock option (2013 - $Nil
per stock option; 2012 - $1.07 per stock option). The fair value of stock
options granted was estimated using the Black-Scholes option pricing model with
weighted average assumptions as follows:
|
|
Year
ended |
|
|
Year
ended |
|
|
Year
ended |
|
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
Risk free interest rate |
|
1.46% |
|
|
0.00% |
|
|
1.17% |
|
Expected life (years) |
|
5 |
|
|
- |
|
|
5 |
|
Expected volatility |
|
51.63% |
|
|
0.00% |
|
|
60.34% |
|
Dividend yield |
|
- |
|
|
- |
|
|
- |
|
Warrants
During the years ended December 31, 2014, 2013 and 2012, the
change in warrants outstanding is as follows:
|
|
|
|
|
Weighted Average |
|
|
|
Number |
|
|
Exercise Price |
|
Balance as at December 31, 2011 |
|
13,457,629 |
|
$ |
3.38 |
|
Granted |
|
1,125,000 |
|
|
2.42 |
|
Exercised |
|
(949,497 |
) |
|
2.00 |
|
Expired |
|
(367,994 |
) |
|
2.45
|
|
Balance as at December 31, 2012 |
|
13,265,138 |
|
$ |
3.70 |
|
Expired |
|
(4,089,605 |
) |
|
3.10
|
|
|
|
|
|
|
|
|
Balance as at
December 31, 2013 and 2014 |
|
9,175,533 |
|
$ |
4.56
|
|
Page 41
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
16. CAPITAL STOCK (Continued)
As at December 31, 2014, the following share purchase warrants
were outstanding and exercisable:
|
|
Number of
Warrants |
|
|
Exercise Price |
|
|
Expiry Date |
|
Private placement, March 12, 2010 |
|
1,919,633 |
|
$ |
2.88 |
|
(1) |
March 12, 2015 |
|
Private placement, November 8, 2010 |
|
6,200,000 |
|
|
5.00 |
|
(2) |
November 8, 2015 |
|
Private placement, November 12, 2010 |
|
800,000 |
|
|
5.00 |
|
(3) |
November 12, 2015 |
|
Finders warrants,
November 8, 2010 |
|
255,900 |
|
|
5.00
|
|
(2) |
November 8, 2015 |
|
Total |
|
9,175,533 |
|
|
|
|
|
|
|
(1) |
Expired unexcersed subsequent to December 31,
2014 |
(2) |
$3.50 per share on or before November 8, 2011, and the
price escalates $0.50 per year on the anniversary date. |
(3) |
$3.50 per share on or before November 12, 2011, and the
price escalates $0.50 per year on the anniversary
date. |
17. RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances
relating to key management personnel were as follows:
|
|
|
|
|
Share-based |
|
|
|
|
For the year
ended December 31,
2014 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
882,536 |
|
$ |
303,491 |
|
$ |
1,186,027 |
|
Outside directors |
|
168,496 |
|
|
183,513 |
|
|
352,009 |
|
Seabord Services Corp.* |
|
418,800 |
|
|
- |
|
|
418,800 |
|
Total |
$ |
1,469,832 |
|
$ |
487,004 |
|
$ |
1,956,836 |
|
|
|
|
|
|
Share-based |
|
|
|
|
For the year
ended December 31,
2013 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
881,120 |
|
$ |
374,120 |
|
$ |
1,255,240 |
|
Outside directors |
|
175,798 |
|
|
35,223 |
|
|
211,021 |
|
Seabord Services Corp.* |
|
447,900 |
|
|
- |
|
|
447,900 |
|
Total |
$ |
1,504,818 |
|
$ |
409,343 |
|
$ |
1,914,161 |
|
|
|
|
|
|
Share-based |
|
|
|
|
For the year
ended December 31,
2012 |
|
Salary or Fees |
|
|
Payments |
|
|
Total |
|
Management |
$ |
742,003 |
|
$ |
940,920 |
|
$ |
1,682,923 |
|
Outside directors |
|
102,000 |
|
|
306,159 |
|
|
408,159 |
|
Seabord Services Corp.* |
|
477,600 |
|
|
- |
|
|
477,600 |
|
Total |
$ |
1,321,603 |
|
$ |
1,247,079 |
|
$ |
2,568,682 |
|
* Seabord Services Corp. (Seabord) is a management services
company controlled by the Chairman of the Board of Directors of the Company.
Seabord provides a Chief Financial Officer, a Corporate Secretary, accounting
and administration staff, and office space to the Company. The Chief Financial
Officer and Corporate Secretary are employees of Seabord and are not paid
directly by the Company.
Included in accounts payable and accrued liabilities is $8,064
(2013 - $2,599; 2012 - $11,400) owed to key management personnel and $29,612
(2013 - $39,183; 2012 - $38,620) to other related parties.
Page 42
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
18. INCOME TAXES
Deferred Income Tax Liability
The tax effects of temporary differences between amounts
recorded in the Companys accounts and the corresponding amounts as computed for
income tax purposes gives rise to deferred tax liabities as follows:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
Royalty interest |
$ |
(9,933,985 |
) |
$ |
(12,901,876 |
) |
Tax loss carry forwards |
|
1,616,508 |
|
|
1,315,968 |
|
Other |
|
99,935 |
|
|
875,356 |
|
|
$ |
(8,217,542 |
) |
$ |
(10,710,552 |
) |
As at December 31, 2014, no deferred tax assets are recognized
on the following temporary differences as it is not probabe that sufficient
future taxable profit will be available to realize such assets:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
Expiry Date Range |
|
Taxlosscarryforwards |
$ |
36,586,000 |
|
$ |
29,433,000 |
|
|
2026-2034 |
|
Shareissuecosts |
|
65,000 |
|
|
327,000 |
|
|
2015 |
|
Explorationandevaluationassets |
|
9,183,007 |
|
|
10,538,794 |
|
|
No expiry |
|
Other |
$ |
7,937,261 |
|
$ |
6,244,171 |
|
|
No
expiry |
|
Income Tax Expense
|
|
December 31, 2014 |
|
|
December 31 ,2013 |
|
|
December 31, 2012 |
|
Current tax expense |
$ |
- |
|
$ |
- |
|
$ |
276,918 |
|
Deferred tax
recovery |
|
(3,356,471 |
) |
|
(2,392,945 |
) |
|
(291,595 |
) |
|
$ |
(3,356,471 |
) |
$ |
(2,392,945 |
) |
$ |
(14,677 |
) |
The provision for income taxes differs from the amount
calculated using the Canadian federal and provincial statutory income tax rates
of 26.0% (2013 - 25.75%; 2012 25.0%) as follows:
|
|
December 31, 2014 |
|
|
December 31, 2013 |
|
|
December 31, 2012 |
|
Expected income tax (recovery) |
$ |
(5,409,173 |
) |
$ |
(4,212,703 |
) |
$ |
(5,229,182 |
) |
Effect of lower tax rates in foreign jurisdictions |
|
(1,217,191 |
) |
|
(890,053 |
) |
|
(706,374 |
) |
Permanent differences |
|
2,735,843 |
|
|
719,540 |
|
|
3,232,117 |
|
Change in unrecognized deductible temporary differences and
other |
|
751,860 |
|
|
1,064,418 |
|
|
2,651,517 |
|
Foreign exchange |
|
(217,810 |
) |
|
925,853 |
|
|
37,245 |
|
|
$ |
(3,356,471 |
) |
$ |
(2,392,945 |
) |
$ |
(14,677 |
) |
19. SEGMENTED INFORMATION
The Company operates within the resource industry. At December
31, 2014 and 2013, the Company had equipment and exploration and evaluation
assets located geographically as follows:
EXPLORATION AND EVALUATION
ASSETS |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
|
December 31,
2012 |
|
Asia Pacific |
$ |
81,124 |
|
$ |
81,124 |
|
$ |
698,124 |
|
Haiti |
|
56,085 |
|
|
- |
|
|
- |
|
Sweden |
|
437,755 |
|
|
437,755 |
|
|
437,755 |
|
Turkey |
|
232,547 |
|
|
232,547 |
|
|
267,221 |
|
U.S.A |
|
1,572,375 |
|
|
2,279,942 |
|
|
3,537,841 |
|
Total |
$ |
2,379,886 |
|
$ |
3,031,368 |
|
$ |
4,940,941 |
|
Page 43
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
19. SEGMENTED INFORMATION (Continued)
PROPERTY AND EQUIPMENT |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
Asia Pacific |
$ |
12,694 |
|
$ |
110,769 |
|
Canada |
|
1,630 |
|
|
15,280 |
|
Georgia |
|
6,490 |
|
|
11,011 |
|
Haiti |
|
9,040 |
|
|
12,574 |
|
Sweden |
|
11,502 |
|
|
23,285 |
|
Turkey |
|
24,723 |
|
|
67,373 |
|
U.S.A |
|
685,150 |
|
|
945,122 |
|
Total |
$ |
751,229 |
|
$ |
1,185,414 |
|
The Companys royalty interest, goodwill, deferred income tax
liability and royalty income and depletion form a cash generating unit located
in the U.S.A, except $200,000 in a royalty interest held in Serbia.
20. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
The Company considers items included in shareholders equity as
capital. The Companys objective when managing capital is to safeguard the
Companys ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders.
The Company currently has continuing royalty revenues to fund a
portion of ongoing costs. In order to fund future projects and pay for
administrative costs, the Company will spend its existing working capital and
raise additional funds as needed. As at December 31, 2014, the Company had
working capital of $7,096,916 (2013 - $14,217,999). Management will need
additional sources of working capital to continue its currently planned
programs beyond twelve months, by issuing new shares or the sale of assets.
The Company manages the capital structure and makes adjustments
in light of changes in economic conditions and the risk characteristics of the
underlying assets.
In order to maintain or adjust the capital structure, the
Company may issue new shares through public and/or private placements, sell
assets, or return capital to shareholders. The Company is not subject to
externally imposed capital requirements.
Fair Value
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 three levels of the fair value hierarchy are as follows:
-
Level 1: inputs represent quoted prices 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 that are less observable, unavoidable or where the
observable data does not support the majority of the instruments fair value.
As at December 31, 2014, there were no changes in the levels in
comparison to December 31, 2013. Financial instruments measured at fair value on
the statement of financial position are summarized in levels of the fair value
hierarchy as follows:
Page 44
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
20. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
Assets |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash equivalents |
$ |
6,450,308 |
|
$ |
- |
|
$ |
- |
|
$ |
6,450,308 |
|
Restrictedcash |
|
230,144 |
|
|
- |
|
|
- |
|
|
230,144 |
|
Fair value through profit or loss
investments |
|
743,786 |
|
|
- |
|
|
- |
|
|
743,786 |
|
Available for sale
investments |
|
299,524 |
|
|
- |
|
|
- |
|
|
299,524 |
|
Total |
$ |
7,723,762 |
|
$ |
- |
|
$ |
- |
|
$ |
7,723,762 |
|
The carrying value of receivables, reclamation bonds, accounts
payable and accrued liabilities, and advances from joint venture partners
approximate their fair value because of the short-term nature of these
instruments.
The Companys financial instruments are exposed to certain
financial risks, including credit risk, interest rate risk, market risk,
liquidity risk and currency risk.
Credit Risk
The Company is exposed to credit risk by holding cash and cash
equivalents and receivables. This risk is minimized by holding a significant
portion of the funds in Canadian banks. The Companys exposure with respect to
its receivables is primarily related to royalty streams and recovery of
exploration evaluation costs.
Interest Rate Risk
The Company is exposed to interest rate risk because of
fluctuating interest rates. Management believes the interest rate risk is low
given the current low global interest rate environment.
Fluctuations in market rates is not expected to have a
significant impact on the Companys operations due to the short term to maturity
and no penalty cashable feature of its cash equivalents.
Market Risk
The Company is exposed to market risk because of the
fluctuating values of its publicly traded marketable securities and other
company investments. The Company has no control over these fluctuations and does
not hedge its investments. Based on the December 31, 2014 portfolio
values, a 10% increase or decrease in effective market values would increase or
decrease net shareholders equity by approximately $104,000.
Liquidity Risk
Liquidity risk is the risk that the Company is unable to meet
its financial obligations as they come due. The Company manages this risk by
careful management of its working capital to ensure the Companys expenditures
will not exceed available resources.
Commodity Risk
The Companys royalty revenues are derived from a royalty
interest and are based on the extraction and sale of precious and base minerals
and metals. Factors beyond the control of the Company may affect the
marketability of metals discovered. Metal prices have historically fluctuated
widely. Consequently, the economic viability of the Companys royalty interests
cannot be accurately predicted and may be adversely affected by fluctuations in
mineral prices.
Page 45
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
20. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
(Continued)
Currency Risk
Foreign exchange risk arises when future commercial
transactions and recognized assets and liabilities are denominated in a currency
that is not the entitys functional currency. The Company operates in Canada,
Haiti, Turkey, Georgia, Sweden, Australia and the U.S.A. The Company funds cash
calls to its subsidiary companies outside of Canada in U.S. dollars (USD) and
a portion of its expenditures are also incurred in local currencies.
The exposure of the Companys cash and cash equivalents,
receivables, and accounts payable and accrued liabilities to foreign exchange
risk as at December 31, 2014 is as follows:
Accounts |
|
US dollars |
|
Cash and cash equivalents |
$ |
1,941,359 |
|
Receivables |
|
506,433 |
|
Accounts payable and accrued liabilities |
|
(543,983 |
) |
Net exposure |
|
1,903,809 |
|
Canadian dollar equivalent |
$ |
2,213,558 |
|
The balances noted above reflect the USD balances held within
the parent company and any wholly owned subsidiaries. Balances denominated in
another currency other than the functional currency held in foreign operations
are considered immaterial.
Based on the above net exposure as at December 31, 2014, and
assuming that all other variables remain constant, a 1% depreciation or
appreciation of the Canadian dollar against the US dollar would result in an
increase/decrease of approximately $22,000 in the Companys pre-tax profit or
loss.
21. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
The significant non-cash investing and financing transactions
during the year period ended December 31, 2014 included:
|
a. |
Recorded a loss through accumulated other comprehensive
income of $400,476 related to the fair value adjustments on AFS financial
instruments; |
|
b. |
Issuance of 391,501 incentive stock grants valued at
$614,427 applied to commitment to issue shares; |
|
c. |
Reclassification of $324,330 of restricted cash to cash
and cash equivalents for joint venture partner advances expensed in the
year; |
|
d. |
Adjusted reserves and investment in associated companies
for $135,700 related to share-based payments made by an associated
company; and |
|
e. |
Adjusted non-current assets and liabilities for
$3,585,937 related to cumulative translation adjustments (CTA), of which
$2,970,845 relates to CTA gain on royalty interest, $839,804 relates to
CTA gain on goodwill, $504,327 relates to a CTA loss on deferred tax
liability and $279,615 relates to CTA gain in the net assets of a
subsidiary with a functional currency different from the presentation
currency. |
The significant non-cash investing and financing transactions
during the year ended December 31, 2013 included:
|
a. |
Reclassification of $164,902 of share based payment
reserve to share capital from the exercise of options; |
|
b. |
Received 500,000 common shares of Pasinex Resources
Limited valued at $27,500 or $0.06 per common share as consideration for
the transfer and royalty interest on the Golcuk property in
Turkey; |
|
c. |
Recorded a loss through accumulated other comprehensive
income of $280,000 related to the fair value adjustments on AFS financial
instruments; |
|
d. |
Issuance of 563,337 incentive stock grants valued at
$1,193,672 applied to commitment to issue shares;
and |
Page 46
EURASIAN MINERALS INC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(Expressed in
Canadian Dollars) |
21. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
(Continued)
|
e. |
Adjusted non-current assets and liabilities for
$2,574,406 related to CTA, of which $2,572,332 relates to CTA gain on
royalty interest, $655,281 relates to CTA gain on goodwill, $829,755
relates to CTA loss on deferred tax liability and $176,548 relates to CTA
gain in the net assets of a subsidiary with a functional currency
different from the presentation currency. |
The significant non-cash investing and financing transactions
during the year ended December 31, 2012 included:
|
a. |
Reclassification of $559,653 of share based payment
reserve to share capital from the exercise of options; |
|
b. |
Issuance of 62,398 common shares valued at $128,122 for
the acquisition of mineral properties; |
|
c. |
Issuance of 773,330 bonus shares valued at $1,556,614
applied to commitment to issue shares; |
|
d. |
Acquisition of Bullion as described in Note 3;
and |
|
e. |
Adjusted non-current assets and liabilities for $400,475
related to cumulative translation adjustments. |
Page 47
SECTION 302 CERTIFICATION
I, David M. Cole, certify that:
1. I have reviewed this annual report on Form 20-F of Eurasian
Minerals Inc. (the "company");
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
company as of, and for, the periods presented in this report;
4. The company's other certifying officer(s) 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)) tor the company 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 company, 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 company'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 company's internal control over
financial reporting that occurred during the period covered by the annual report
that has materially affected, or is reasonably likely to materially affect, the
company's internal control over financial reporting; and
5. The company's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the company's auditors and the audit committee of the
company'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 company'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
company's internal control over financial reporting.
Date: April 29, 2015 |
/s/ David M. Cole |
|
David M. Cole |
|
President and Chief Executive Officer |
SECTION 302 CERTIFICATION
I, Christina Cepeliauskas, certify that:
1. I have reviewed this annual report on Form 20-F of Eurasian
Minerals Inc. (the "company");
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
company as of, and for, the periods presented in this report;
4. The company's other certifying officer(s) 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)) tor the company 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 company,
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 company'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
company's internal control over financial reporting that occurred during the
period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company's internal control over
financial reporting; and
5. The company's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the company's auditors and the audit committee of the
company'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 company'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
company's internal control over financial reporting.
Date: April 29, 2015 |
/s/ Christina Cepeliauskas |
|
Christina Cepeliauskas |
|
Chief
Financial Officer |
SECTION 906 CERTIFICATION
In connection with the annual report of Eurasian Minerals Inc.
(the "Company") on Form 20-F for the fiscal year ending December 31, 2014 (the
Report) I, David M. Cole, 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 of2002, that to the best of my knowledge:
|
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 the Report fairly presents,
in all material respects, the financial condition and results of operation
of the Company. |
Date: April 29, 2015 |
/s/ David M. Cole |
|
David M. Cole |
|
President and Chief Executive Officer |
|
|
SECTION 906 CERTIFICATION
In connection with the annual report of Eurasian Minerals Inc.
(the "Company") on Form 20-F for the fiscal year ending December 31, 2014 (the
Report) I, Christina Cepeliauskas, 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 of2002, that to the best of my knowledge:
|
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 the Report fairly presents,
in all material respects, the financial condition and results of operation
of the Company. |
Date: April 29 , 2015 |
/s/ Christina Cepeliauskas |
|
Christina Cepeliauskas |
|
Chief
Financial Officer |
|
|
CONSENT OF ERIC JENSEN
In connection with the filing of the annual report on Form 20-F
for the year ended December 31, 2014 (the Annual Report) of Eurasian Minerals
Inc. (the Company) with the U.S. Securities and Exchange Commission, I hereby
consent to the references to my name in the Annual Report.
Dated: April 29, 2015
Eric
Jensen |
|
Eric Jensen |
|
CONSENT OF MICHAEL P. SHEEHAN
In connection with the filing of the annual report on Form 20-F
for the year ended December 31, 2014 (the Annual Report) of Eurasian Minerals
Inc. (the Company) with the U.S. Securities and Exchange Commission, I hereby
consent to the references to my name in the Annual Report.
Dated: April 29, 2015
Michael P.
Sheehan |
|
Michael P. Sheehan |
|
CONSENT OF CHRIS SPURWAY
In connection with the filing of the annual report on Form 20-F
for the year ended December 31, 2014 (the Annual Report) of Eurasian Minerals
Inc. (the Company) with the U.S. Securities and Exchange Commission, I hereby
consent to the references to my name in the Annual Report.
Dated: April 29, 2015
Chris
Spurway |
|
Chris Spurway |
|
CONSENT OF DEAN TURNER
In connection with the filing of the annual report on Form 20-F
for the year ended December 31, 2014 (the Annual Report) of Eurasian Minerals
Inc. (the Company) with the U.S. Securities and Exchange Commission, I hereby
consent to the references to my name in the Annual Report.
Dated: April 29, 2015
Dean
Turner |
|
Dean Turner |
|
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