Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Trilogy Metals Inc. | form8k.htm |
| EX-23.1 - EXHIBIT 23.1 - Trilogy Metals Inc. | exhibit23-1.htm |
| EX-99.2 - EXHIBIT 99.2 - Trilogy Metals Inc. | exhibit99-2.htm |
| EX-99.1 - EXHIBIT 99.1 - Trilogy Metals Inc. | exhibit99-1.htm |
NovaCopper Inc.
(An Exploration-Stage
Company)
Pro-Forma Consolidated Financial Statements
February 28, 2015
Unaudited
(expressed in US dollars)
Table of Contents
2
February 28, 2015
Pro-Forma Consolidated Balance
Sheet
(Unaudited)
As at February 28, 2015
| In thousands of US dollars | |||||||||||||||
| NovaCopper | Sunward | NovaCopper | |||||||||||||
| Inc. | Resources Ltd. | Inc. | |||||||||||||
| February 28, | March 31, | Note 2 | Pro-forma | Pro-forma | |||||||||||
| 2015 | 2015 | adjustments | |||||||||||||
| $ | $ | $ | $ | ||||||||||||
| Assets | |||||||||||||||
| Current assets | |||||||||||||||
| Cash and cash equivalents | 3,988 | 20,490 | (d) | 610 | |||||||||||
| (c) | (1,470 | ) | 23,618 | ||||||||||||
| Accounts receivable | 57 | 5 | 62 | ||||||||||||
| Deposits and prepaid amounts | 423 | 154 | 577 | ||||||||||||
| 4,468 | 20,649 | (860 | ) | 24,257 | |||||||||||
| Plant and equipment | 272 | 450 | 722 | ||||||||||||
| Mineral properties and development costs | 30,586 | 2,710 | (e) | (648 | ) | 32,648 | |||||||||
| 35,326 | 23,809 | (1,508 | ) | 57,627 | |||||||||||
| Liabilities | |||||||||||||||
| Current liabilities | |||||||||||||||
| Accounts payable and accrued liabilities | 727 | 160 | 887 | ||||||||||||
| Deferred share unit liability | - | 111 | (e) | (111 | ) | - | |||||||||
| Equity tax liability | - | 2 | 2 | ||||||||||||
| 727 | 273 | (111 | ) | 889 | |||||||||||
| Shareholders’ equity | |||||||||||||||
| Share capital | 112,469 | 83,968 | (b) | 22,852 | |||||||||||
| (d) | 757 | ||||||||||||||
| (e) | (83,968 | ) | 136,078 | ||||||||||||
| Warrants | 2,163 | - | 2,163 | ||||||||||||
| Contributed surplus | 124 | 31,104 | (e) | (31,104 | ) | 124 | |||||||||
| Contributed surplus – options | 17,368 | - | 17,368 | ||||||||||||
| Contributed surplus – units | 1,375 | - | 1,375 | ||||||||||||
| Accumulated other comprehensive loss | - | (346 | ) | (e) | 346 | - | |||||||||
| Deficit accumulated during the exploration stage | (98,900 | ) | (91,190 | ) | (c) | (1,470 | ) | ||||||||
| (e) | 91,190 | (100,370 | ) | ||||||||||||
| 34,599 | 23,536 | (1,397 | ) | 56,738 | |||||||||||
| 35,326 | 23,809 | (1,508 | ) | 57,627 | |||||||||||
(See accompanying notes to the unaudited pro-forma consolidated financial statements)
3
February 28, 2015
Pro-Forma Consolidated
Statements of Loss and Comprehensive Loss
(Unaudited) For the year ended November 30, 2014
| in thousands of US dollars except per share amounts | ||||||||||||
| NovaCopper | Sunward | Pro-forma | NovaCopper | |||||||||
| Inc. | Resources Ltd. | adjustments | Inc. | |||||||||
| For the year ended | For the year ended | Note 2 | (c) | Pro-forma | ||||||||
| November 30, 2014 | December 31, 2014 | |||||||||||
| $ | $ | $ | $ | |||||||||
| Expenses | ||||||||||||
| Amortization | 750 | 233 | 983 | |||||||||
| Foreign exchange loss | 2 | 793 | 795 | |||||||||
| General and administrative | 1,484 | 1,425 | 2,909 | |||||||||
| Investor relations | 51 | 32 | 83 | |||||||||
| Mineral properties expense | 2,512 | 1,719 | 4,231 | |||||||||
| Professional fees | 952 | 138 | 1,470 | 2,560 | ||||||||
| Salaries | 3,012 | - | 3,012 | |||||||||
| Salaries – stock-based compensation | 887 | 588 | 1,475 | |||||||||
| Total expenses | 9,650 | 4,928 | 1,470 | 16,048 | ||||||||
| Other items | ||||||||||||
| Asset impairment | - | 23,002 | 23,002 | |||||||||
| Interest and other income | (2 | ) | (117 | ) | (119 | ) | ||||||
| Loss on disposal of equipment | - | 94 | 94 | |||||||||
| Loss for the year | 9,648 | 27,907 | 1,470 | 39,025 | ||||||||
| Foreign currency translation differences for foreign operations | - | (338 | ) | (338 | ) | |||||||
| Comprehensive loss for the year | 9,648 | 27,569 | 1,470 | 38,687 | ||||||||
| Basic and diluted loss per share (note 4) | $0.38 | |||||||||||
(See accompanying notes to the unaudited pro-forma consolidated financial statements)
4
February 28, 2015
Pro-Forma Interim Consolidated
Statements of Loss and Comprehensive Loss
(Unaudited)
For
the three months ended February 28, 2015
| in thousands of US dollars except per share amounts | ||||||||||||
| NovaCopper | Sunward | Pro-forma | NovaCopper | |||||||||
| Inc. | Resources Ltd. | adjustments | Inc. | |||||||||
| For the three | For the three | Note 2(a) | Pro-forma | |||||||||
| months ended | months ended | |||||||||||
| February 28, 2015 | March 31, 2015 | |||||||||||
| $ | $ | $ | $ | |||||||||
| Expenses | ||||||||||||
| Amortization | 143 | 47 | 190 | |||||||||
| Foreign exchange (gain) loss | (20 | ) | 11 | (9 | ) | |||||||
| General and administrative | 381 | 244 | 625 | |||||||||
| Investor relations | 6 | 3 | 9 | |||||||||
| Mineral properties expense | 327 | 281 | 608 | |||||||||
| Professional fees | 161 | 33 | 194 | |||||||||
| Salaries | 250 | - | 250 | |||||||||
| Salaries – stock-based compensation | 282 | 56 | 338 | |||||||||
| Total expenses | 1,530 | 675 | 2,205 | |||||||||
| Other items | ||||||||||||
| Asset impairment recovery | - | (2,710 | ) | 2,710 | - | |||||||
| Interest and other income | - | (16 | ) | (16 | ) | |||||||
| Loss on disposal of equipment | - | 25 | 25 | |||||||||
| Equity tax expense | - | 2 | 2 | |||||||||
| Loss (income) for the period | 1,530 | (2,024 | ) | 2,710 | 2,216 | |||||||
| Foreign currency translation differences for foreign operations | - | 81 | 81 | |||||||||
| Comprehensive loss (income) for the period | 1,530 | (1,943 | ) | 2,710 | 2,297 | |||||||
| Basic and diluted loss per share (note 4) | $0.02 | |||||||||||
(See accompanying notes to the unaudited pro-forma consolidated financial statements)
5
February 28, 2015
Notes to the Pro-Forma
Consolidated Financial Statements
(Unaudited)
| 1 |
Arrangement and basis of presentation |
NovaCopper Inc. (“NovaCopper” or the “Company”) is engaged in the exploration and development of mineral properties including the Arctic and Bornite Projects located in Northwest Alaska in the United States of America (“US”).
The accompanying unaudited pro-forma consolidated financial statements have been prepared for illustrative purposes to give effect to the acquisition by NovaCopper of all of the issued and outstanding shares of Sunward Resources Ltd. (“Sunward”).
The unaudited pro-forma consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and the accounting policies as disclosed in the financial statements of NovaCopper Inc. The unaudited pro-forma consolidated balance sheet and the unaudited pro-forma consolidated statements of loss and comprehensive loss have been prepared, for illustrative purposes only, to give effect to the acquisition of Sunward by NovaCopper pursuant to the assumptions described in note 2. These unaudited pro-forma consolidated financial statements have been numerically constructed from the following historical publicly-filed financial statements:
a) A pro-forma consolidated balance sheet combining:
i. The unaudited interim consolidated
balance sheet of NovaCopper as at February 28, 2015; and
ii. The audited
consolidated balance sheet of Sunward as at March 31, 2015.
b) A pro-forma annual consolidated statements of loss and comprehensive loss combining:
i. The audited consolidated statements
of loss and comprehensive loss of NovaCopper for the year ended November 30,
2014; and
ii. The audited consolidated statements of loss and comprehensive
loss for the year ended March 31, 2014 added to the unaudited interim
consolidated statements of loss and comprehensive loss of Sunward for the nine
month period ended December 31, 2014 less the unaudited interim consolidated
statements of loss and comprehensive loss of Sunward for the nine month period
ended December 31, 2013.
c) A pro-forma interim consolidated statements of loss and comprehensive loss combining:
i. The unaudited interim consolidated
statements of loss and comprehensive loss of NovaCopper for the three months
ended February 28, 2015; and
ii. The audited consolidated statements of loss
and comprehensive loss for the year ended March 31, 2015 less the unaudited
interim consolidated statements of loss and comprehensive loss of Sunward for
the nine months ended December 31, 2014.
In the opinion of management, the unaudited pro-forma consolidated balance sheet as at February 28, 2015, the unaudited pro-forma consolidated statements of loss and comprehensive loss for the year ended November 30, 2014, and the unaudited pro-forma interim consolidated statements of loss and comprehensive loss for the three months ended February 28, 2015 include the adjustments necessary for the fair presentation of the proposed transaction in accordance with US GAAP.
The unaudited pro-forma consolidated financial statements are not necessarily indicative of NovaCopper as at the time of the closing of the Arrangement and are not intended to reflect the financial performance or financial position of NovaCopper which would have resulted had the transaction been effected on the dates indicated. The unaudited pro-forma consolidated financial statements should be read in conjunction with the audited consolidated financial statements of NovaCopper Inc. for the years ended November 30, 2014, 2013 and 2012, and the unaudited consolidated interim financial statements of NovaCopper Inc. at February 28, 2015, all of which is available on SEDAR www.sedar.com.
6
February 28, 2015
Notes to the Pro-Forma
Consolidated Financial Statements
(Unaudited)
| 2 |
Pro-forma assumptions |
The unaudited pro-forma consolidated financial statements give effect to the accounting continuation of NovaCopper as described in the Business Acquisition Report, as if the acquisition of Sunward had occurred as at February 28, 2015 for the purposes of the unaudited pro-forma consolidated balance sheet and as of December 1, 2013 for the purposes of the unaudited pro-forma consolidated statements of loss and comprehensive loss and the following assumptions.
|
(a) |
The balances in the consolidated financial statements of Sunward are prepared in accordance International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. No material adjustments were identified to conform the consolidated financial statements of Sunward to US GAAP other than the reversal of an asset impairment recovery of $2,710,000 recorded during the three months ended March 31, 2015 which is prohibited under US GAAP. | |
|
|
| |
|
(b) |
On April 22, 2015, NovaCopper and Sunward jointly announced that they had entered into a definitive arrangement agreement pursuant to which NovaCopper agreed to acquire all of the issued and outstanding common shares of Sunward for consideration of 0.3 common shares of NovaCopper (the "Exchange Ratio") per common share of Sunward. Outstanding Sunward Deferred Share Units (“DSUs”) automatically vested and the holder thereof received consideration based on the Exchange Ratio for each Sunward common share subject to such Sunward DSU. | |
|
|
| |
|
43,116,312 NovaCopper common shares were exchanged for 143,721,053 Sunward common shares and DSUs outstanding as at June 19, 2015, the closing date of the acquisition. The value of the common shares issued was calculated based on the closing price of NovaCopper common shares on June 18, 2015 of $0.53, the date of last trading prior to the closing of the acquisition, resulting in total consideration of $23.0 million. | ||
|
|
| |
|
(c) |
Payment of estimated transaction costs of NovaCopper and Sunward of $1,470,000 which are expensed for accounting purposes. | |
|
|
| |
|
(d) |
Each outstanding Sunward stock option was exchanged for an Arrangement stock option to acquire, on the same terms and conditions as were applicable under such Sunward stock option immediately prior to the Arrangement, such number of NovaCopper common shares based on the Exchange Ratio (“Arrangement Option”). All such Arrangement Options shall expire on September 17, 2015, 90 days following the close of the Arrangement. It is assumed all Arrangement Options in the money at the time of the closing will be exercised and receive NovaCopper Shares based on the Exchange Ratio prior to their expiry date. For the purposes of these unaudited pro-forma consolidated financial statements, 1,368,000 NovaCopper common shares are assumed to be exchanged for 4,560,000 Sunward stock options valued using black-scholes at the time of the closing of the Arrangement resulting in consideration paid of $147,000. It is assumed NovaCopper will receive estimated cash proceeds of $610,000 from such exercise. | |
|
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| |
|
(e) |
The transaction will be accounted for as a business combination under Accounting Standards Codification (“ASC”) 805. NovaCopper has estimated the fair value of the non-mining identifiable net assets to be equal to their carrying value. The fair value of the mineral property acquired, the Titiribi Project, has been assessed and recorded at $2,062,000 representing the remainder of the consideration paid over the estimated fair value of the non-mining identifiable net assets acquired of $20,937,000. NovaCopper is currently completing a full and detailed valuation of the fair value of the net assets acquired for financial reporting purposes. |
7
February 28, 2015
Notes to the Pro-Forma
Consolidated Financial Statements
(Unaudited)
The preliminary allocation of the consideration paid for the purposes of these unaudited pro-forma consolidated financial statements is summarized in the table below. The allocation will be finalized once management has gathered and reviewed all relevant information. The final allocation may be significantly different than outlined below.
| in thousands of US dollars | ||||
| $ | ||||
| Acquisition cost | ||||
| Common shares issued pursuant to the Arrangement (b) | 22,852 | |||
| Common shares issued pursuant to the exercise of Sunward stock options (d) | 147 | |||
| Total consideration | 22,999 | |||
| Fair value of net identifiable assets and liabilities | ||||
| Cash and cash equivalents | 20,490 | |||
| Accounts receivable | 5 | |||
| Deposits and prepaid amounts | 154 | |||
| Plant and equipment | 450 | |||
| Mineral property – Titiribi | 2,062 | |||
| Accounts payable and accrued liabilities | (160 | ) | ||
| Equity tax liability | (2 | ) | ||
| Fair value acquired | 22,999 | |||
The historical equity of Sunward is eliminated upon the recording of the acquisition consideration.
| 3 |
Share capital |
Authorized
unlimited common shares, no par value
unlimited
preferred shares, no par value
The following summarizes the changes in share capital that will occur pursuant to the Arrangement as outlined in Note 2.
| in thousands of US dollars except share amounts | ||||||
| February 28, 2015 | ||||||
| Number of shares | Share capital | |||||
| $ | ||||||
| Balance – February 28, 2015 | 60,633,701 | 112,469 | ||||
| Issued pursuant to the Arrangement | ||||||
| Common shares issued pursuant to the Arrangement (note 2(b)) | 43,116,312 | 22,852 | ||||
| Common shares issued pursuant to the exercise of Sunward stock options (note 2(d)) | 1,368,000 | 757 | ||||
| Pro-forma balance – February 28, 2015 | 105,118,013 | 136,078 | ||||
8
February 28, 2015
Notes to the Pro-Forma
Consolidated Financial Statements
(Unaudited)
| 4 |
Pro-forma loss per share |
Pro-forma basic and diluted loss per share for the three months ended February 28, 2015 and for the year ended November 30, 2014 have been calculated as if the common shares to be issued pursuant to the Arrangement had been outstanding as of December 1, 2013.
| in thousands of US dollars except share and per share amounts | ||||||
| For the three months | For the year | |||||
| ended | ended | |||||
| February 28, 2015 | November 30, 2014 | |||||
| Weighted-average number of common shares outstanding | 60,614,960 | 56,268,326 | ||||
| Common shares issued pursuant to the Arrangement (note 2(b)) | 43,116,312 | 43,116,312 | ||||
| Common shares issued pursuant to the exercise of Sunward stock options (note 2(d)) | 1,368,000 | 1,368,000 | ||||
| Pro-forma weighted-average number of common shares outstanding | 105,099,272 | 100,752,638 | ||||
| Pro-forma loss | 2,297 | 38,687 | ||||
| Pro-forma loss per share, basic and diluted | $0.02 | $0. 38 | ||||
9
February 28, 2015