INTEGRA GOLD CORP.
Transcrição
INTEGRA GOLD CORP.
INTEGRA GOLD CORP. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED NOV 30, 2013 AND 2012 (Expressed in Canadian dollars) NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS The accompanying unaudited financial statements of Integra Gold Corp. (“the Company”), for the six months ended November 30, 2013, have been prepared by management and have not been reviewed by the Company’s external independent auditors. 2 Integra Gold Corp. Condensed Interim Consolidated Financial Statements Six Months Ended November 30, 2013 and 2012 ____________________________________________________________________________________ Tables of Contents Page Condensed Interim Consolidated Statements of Financial Position 4 Condensed Interim Consolidated Statements of Operations and Comprehensive Loss 5 Condensed Interim Consolidated Statements of Changes in Equity 6 Condensed Interim Consolidated Statements of Cash Flows 7 Notes to Condensed interim Consolidated Financial Statements 8 – 22 3 INTEGRA GOLD CORP. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian dollars) (Unaudited) November 30, 2013 May 31, 2013 ASSETS Current Cash and cash equivalents Sales tax recoverable Accounts receivable Mining exploration tax credits recoverable Available-for-sale investments Prepaid expenses Total Current Assets $ 3,211,710 385,473 2,847 573,192 168,000 96,102 4,437,324 $ 1,632,791 657,482 52,743 1,498,826 675,862 19,848 4,537,552 Due From Related Parties (Note 8) Deposits Property, Plant and Equipment (Note 5) Exploration Advances Exploration and Evaluation Assets (Note 4) 37,894 38,500 942,901 33,620 18,968,815 37,894 37,500 887,874 12,500 15,462,416 Total Assets $ 24,459,054 $20,975,736 $ $ LIABILITIES Current Accounts payable Due to related parties (Note 8) Other financial liabilities Flow-through share premium liability Total Liabilities 857,975 22,627 111,973 545,861 1,538,436 142,691 69,099 204,038 719,655 1,135,483 EQUITY Share Capital (Note 6) Reserves Deficit Total Equity 59,451,203 4,416,126 (40,946,711) 22,920,618 Total Liabilities and Equity $ 24,459,054 56,214,507 4,022,203 (40,396,457) 19,840,253 $20,975,736 The accompanying notes are an integral part of these consolidated financial statements. 4 INTEGRA GOLD CORP. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in Canadian dollars) (Unaudited) Three Months Ended November 30 2012 2013 Expenses Administrative services (Note 8) Depreciation Compensation and benefits Consulting – related parties (Note 8) Consulting - others Management and directors’ fees (Note 8) Investor relations and promotion Office expenses Part XII.6 tax Professional fees Regulatory fees Property management expenses Share-based payments $ Loss Before Other Income (Expense) And Income Taxes 43,638 19,725 31,514 32,453 3,000 48,286 201,087 64,075 1,070 63,406 16,813 16,893 1,902 $ $ 86,465 31,829 95,121 64,940 (21,963) 164,693 270,580 126,100 6,913 86,434 39,065 23,038 48,750 76,261 20,342 41,121 34,875 8,000 416,492 112,090 116,447 2,045 77,674 40,395 76,562 238,600 (1,260,904) 14,337 45,730 60,067 19,958 (375,902) 20,967 (334,977) (527,235) (591,180) 590,564 125,000 806,688 420,661 63,329 (466,180) (550,254) (780,176) - (126,000) - - 318,173 - Deferred Income Tax Recovery Net Loss (Income) For The Period Other Comprehensive Loss Change in fair value of available-for-sale investments Reclassification of loss realized on sale of available-for-sale investments (96,000) - (1,200,837) (1,356,942) Comprehensive Loss For The Period $ (32,671) $ (466,180) $ (358,081) Loss (Income) Per Share, Basic Loss (Income) Per Share, Diluted (Note 6(f)) $ $ 0.00 0.00 $ $ (0.01) - $ $ (0.01) - Weighted Average Number Of Shares Outstanding, Basic Weighted Average Number Of Shares Outstanding, Diluted (Note 6(f)) $ (1,021,965) 7,107 45,730 52,837 16,627 16,627 Loss Before Income Taxes 27,136 10,485 20,234 24,863 8,000 42,406 71,963 66,951 2 53,749 18,175 61,453 238,600 (644,017) (543,862) Other Income (Expense) Interest and foreign exchange Loss on available-for-sale investments Rental income Six Months Ended November 30 2012 2013 $ (780,176) $ $ (0.01) - 111,205,722 73,681,097 100,978,587 69,212,321 111,205,722 - 100,978,587 - The accompanying notes are an integral part of these consolidated financial statements. 5 INTEGRA GOLD CORP. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in Canadian dollars) (Unaudited) Share Capital Number Reserves Share-based Available-forPayments sale Amount Balance, May 31, 2012 Issue of shares for mineral properties Private placements – Flow-through shares Private placements – Non flow-through shares Share issue costs Flow-through share premium Share-based payments Options exercised Option re-pricing Net loss for the period Balance, November 30, 2012 62,897,465 30,000 11,184,332 1,949,300 45,000 76,106,067 $ Balance, May 31, 2013 Issue of shares for mineral properties Private placements – Flow-through shares Private placements – Non flow-through shares Flow-through share premium Share issue costs Share-based payments – brokers’ warrants Share-based payments – options Reclassification of loss realized on sale of available-for-sale investments Other comprehensive loss Net loss for the period Balance, November 30, 2013 86,498,407 20,000 18,082,702 6,771,833 - 56,214,507 3,100 3,345,300 1,015,775 (632,895) (494,584) - 4,585,341 153,000 48,750 111,372,942 59,451,203 4,787,091 $ 50,669,642 6,600 3,523,064 526,311 (313,112) (492,111) 18,718 53,939,112 $ $ 4,155,366 205,600 (8,818) 33,000 4,385,148 $ - $ (38,808,676) - Total (780,176) (39,588,852) $ 16,016,332 6,600 3,523,064 526,311 (313,112) (492,111) 205,600 9,900 33,000 (780,176) 18,735,408 (563,138) - (40,396,457) - 19,840,253 3,100 3,345,300 1,015,775 (632,895) (494,584) 153,000 48,750 318,173 (126,000) $ (370,965) (550,254) $ (40,946,711) 318,173 (126,000) (550,254) $ 22,920,618 The accompanying notes are an integral part of these consolidated financial statements. 6 Deficit INTEGRA GOLD CORP. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Canadian dollars) (Unaudited) Three Months Ended November 30 2013 Operating Activities Net loss (Income) for the period Non-cash items: Depreciation Share-based payments Deferred income tax recovery Reversal of prior period expenses Changes in non-cash operating assets and liabilities: Accounts receivable Accounts receivable – related parties Sales taxes recoverable Prepaid expenses Accounts payable and other financial liabilities Due to related parties Cash Used In Operating Activities $ 63,329 19,725 34,902 (590,564) - Investing Activities Additions to property, plant and equipment Exploration advance Exploration costs, net of mining tax credits Cash Used In Investing Activities 2012 $ (466,180) $ (550,254) $ (780,176) 10,484 238,600 (912,772) - 31,829 201,751 (806,688) - 20,342 238,600 (420,661) 30,000 49,897 12,000 272,008 (77,255) 1,321,222 (45,703) (47,377) 53,009 (8,771) (438,003) 57,922 15,000 (127,578) (29,103) 366,552 167,438 298 21,113 (816,084) (46,815) (236,630) (23,747) (1,780,850) (84,908) 15,589 (2,253,601) (2,322,920) Financing Activities Issue of common shares for cash Share issue costs Cash Provided By Financing Activities 2012 Six Months Ended November 30 2013 856,716 (99,283) 757,433 Net (Decrease) Increase In Cash and Cash Equivalents (1,802,117) Cash and Cash Equivalents, Beginning Of Period 5,013,827 $ 3,211,710 $ Supplemental Cash Flow Information (Note 9) Cash paid for interest Shares issued for mineral properties Cash paid for Part XII.6 tax $ $ $ $ $ $ - (29,458) (13,050) (669,950) (712,458) (86,857) (21,120) (3,275,668) (3,383,645) (15,224) (13,050) (2,207,988) (2,236,262) 1,547,373 (52,479) 1,494,894 5,061,111 (494,584) 4,566,527 4,059,276 (313,112) 3,746,164 1,578,919 109,799 3,887,203 1,632,791 2,778,990 2,888,789 $ 3,211,710 $ 2,888,789 3,100 - $ $ $ 6,600 - (998,414) Cash and Cash Equivalents, End Of Period - $ $ $ The accompanying notes are an integral part of these consolidated financial statements. 7 (1,363) (1,400,103) (58,473) 396,037 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 1. NATURE OF OPERATION AND GOING CONCERN Integra Gold Corp. (the “Company”) was incorporated under the laws of the Province of British Columbia, Canada. The Company is a public company listed on the TSX Venture Exchange (the “TSX.V”) trading under the symbol “ICG.” The address of the Company’s corporate office and principal place of business is Suite 2270, 1055 West Georgia Street, Vancouver, British Columbia, V6E 3P3. The Company is an exploration stage resource company engaged in the acquisition and exploration of mineral properties and has not yet determined whether the properties contain ore reserves that are economically recoverable. The Company currently has no revenues from mineral producing operations. The operations of the Company have been funded by the issuance of common shares. The Company currently holds a number of properties in Canada: the Company’s flagship Lamaque Gold Project in Val d`Or, Québec, properties within the Abitibi Greenstone Belt in Québec and Ontario, and one property in British Columbia. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) on a going concern basis, which presume the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future. The ability of the Company to arrange additional financing in the future depends, in part, on the prevailing capital market conditions and mineral property exploration success. The Company incurred a net loss of $(550,254) and a comprehensive loss of $(358,081) for the period ended November 30, 2013 (November 30, 2012 – net and comprehensive loss of $(780,176)) and a deficit of $(40,946,711) (May 31, 2013 - $(40,396,457)). As at November 30, 2013 the Company had sufficient cash to meet its planned operating and investing activities for the year ended May 31, 2014. The Company has been successful in securing equity financing to date, plans to secure additional funds as required through future equity financings and also has the ability to scale back certain costs to balance spending to market conditions. 2. BASIS OF PRESENTATION Statement of Compliance These condensed interim financial statements of the Company for the six month period ending November 30, 2013 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), specifically, IAS 34 Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) These condensed interim financial statements should be read in conjunction with the Company’s May 31, 2013 audited annual financial statements. The significant accounting policies applied in these financial statements are based on the IFRS issued and outstanding policies as of January 28, 2014, the date the Board of Directors approved the financial statements. 3. AVAILABLE-FOR-SALE INVESTMENTS Available-for-sale investments consist of an investment in common shares of a publicly traded company on the Toronto Stock Exchange and therefore has no fixed maturity date or coupon rate. The fair value of the noted available-for-sale investment has been determined directly by reference to published price quotations in an active market. 8 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 4. EXPLORATION AND EVALUATION ASSETS November 30, 2013 ACQUISITION COSTS AND OPTION PAYMENTS Lamaque Property, Quebec (a) Roc d’Or Extension Property, Quebec (a) Bourlamaque Property, Quebec (a) MacGregor Property, Quebec (a) Donald Property, Quebec (a) Golden Valley Group, Quebec and Ontario (b) Morrisette Property, Ontario (staked property) Char Property, British Columbia (c) $ 979,083 48,750 14,000 67,500 78,000 130,483 30,400 $ 1,348,216 DEFERRED EXPLORATION COSTS (NOTE 11) TOTAL $ 17,311,592 97,328 2,778 29,795 27,275 96,425 2,329 53,077 $ 18,290,675 146,078 16,778 97,295 105,275 226,908 2,329 83,477 $ $ 18,968,815 17,620,599 May 31, 2013 ACQUISITION COSTS AND OPTION PAYMENTS Lamaque Property, Quebec (a) Roc d’Or Extension Property, Quebec (a) Bourlamaque Property, Quebec (a) MacGregor Property, Quebec (a) Donald Property, Quebec (a) Golden Valley Group, Quebec and Ontario (b) Morrisette Property, Ontario (staked property) Char Property, British Columbia (c) $ DEFERRED EXPLORATION COSTS (NOTE 11) TOTAL 979,083 48,750 14,000 44,400 78,000 130,483 30,400 $ 13,833,500 97,328 2,778 29,796 27,275 95,898 2,329 48,396 $ 14,812,583 146,078 16,778 74,196 105,275 226,381 2,329 78,796 $ 1,325,116 $ 14,137,300 $ 15,462,416 a) Lamaque Group, Quebec Lamaque By an Agreement with Teck Cominco (the “Optionor”) dated June 16, 2003, the Company had the option to acquire a 50.23% interest in the Tundra Gold Mines Limited (“Tundra”) mineral property and 53.07% interest in the Golden Pond Resources Ltd. (“Golden Pond”) mineral property (subject to a maximum 2% net smelter returns royalty (“NSR”) for consideration of: Cash payments totaling $269,000 (paid) as follows: - $44,000 within three business days of TSX Venture Exchange approval (paid); - annual payments of $25,000 per year commencing January 1, 2004 with the final payment made January 1, 2012 ($225,000 paid); Issuing 20,000 shares of the Company (issued); and Payment of property remediation services to the Optionor, in the amount of $250,000 (paid), as security to cover any environmental and reclamation liabilities and obligations associated with the Property. 9 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 4. EXPLORATION AND EVALUATION ASSETS (Continued) a) Lamaque Group, Quebec (Continued) Lamaque (Continued) In October 2009, the Company entered into agreements with Tundra and Golden Pond, on the properties located in Val d’Or, Quebec to consolidate ownership at a 100% interest. Pursuant to the agreements, the Company issued one share for every three shares that were then outstanding in the delisted companies. 1,249,599 shares were issued to Tundra and Golden Pond shareholders at a price of $0.30 per share. Roc d’Or East Extension On September 22, 2009 the Company entered into a property option agreement to earn 100% interest in the Roc d’Or East Extension mineral property in Quebec. There is a 2% NSR payable on the Property, of which one-half (1%) may be purchased for $1,000,000. In order to earn a 100% interest, the Company paid $25,000 and issued 50,000 shares. The Company has now earned its 100% interest, subject only to the NSR. Bourlamaque In December 2010, the Company acquired a 100% interest in the Bourlamaque property located in Bourlamaque Township, Quebec, adjacent to the Company’s flagship Lamaque property. Consideration for the property was $3,500 (paid) and 10,000 shares (issued). There was a 2% NSR payable, one-half (1%) of which it could have been purchased for $1,000,000.The Company purchased the NSR for $5,000 on April 30, 2013 (no outstanding NSR). MacGregor Property In June 2011, the Company enter into an agreement to acquire a 100% interest in the MacGregor property located in Bourlamaque Township, Quebec, adjacent to the Company’s flagship Lamaque property. Consideration for the property is $100,000 ($50,000 paid) and 150,000 shares (70,000 issued), all payable over a period of four years. There is also a 2% NSR payable, one-half (1%) of which may be purchased for $500,000. Donald Property In January 2012, the Company enter into an agreement to acquire a 100% interest in the Donald property located directly east of the Lamaque property. Consideration for the property is $175,000 ($45,000 paid) and 250,000 shares (100,000 shares issued), all payable over a period of four years. There is also a 3% GMR payable, one-third (1%) of which may be purchased for $750,000. b) Golden Valley Group, Quebec and Ontario The Company entered into an option agreement with Golden Valley Mines Ltd. “GZZ” of Val d’Or, Québec on February 1, 2005 whereby GZZ (as operator) could earn up to an 85% interest by funding $1,000,000 in exploration expenditures on a group of nine properties located in the Abitibi Greenstone Belt in Québec and Ontario. On December 9, 2008 GZZ chose to enter into a joint venture with the Company, at which time it had earned a 70% interest in the nine properties through the expenditure of $300,000 on exploration. In January 2012 the Company and GZZ entered into a mining option agreement with Golden Cariboo Resources Ltd. (“GCC”) wherein GCC wishes to acquire an undivided 70% interest in the properties for which it must incur $4.5 million in exploration expenditures over five years, subject to underlying NSRs. A minimum of $500,000 of this exploration work must be carried out on the properties jointly held by GZZ and the Company. The Company will no longer be obligated to incur any expenditure on the properties, but will retain a 7.5% carried interest. 10 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 4. EXPLORATION AND EVALUATION ASSETS (Continued) Bogside/Perestroika Properties, Quebec In 2004, the Company acquired a 100% interest (subject to a 3% gross overriding royalty with respect to diamonds and a 3.5% NSR), in fourteen mineral claims located in the Courville and Cadillac Townships, Quebec for consideration of $80,000 cash and 74,167 shares. Additional staking costs incurred totaled $8,612. Acquisition costs were subsequently written down to $60,000. Cook Lake Property, Ontario By an Option Agreement dated June 3, 2002, the Company acquired a 100% interest (subject to a 3% NSR) in three mineral claims located in the Grenfell Township of Ontario for consideration of $5,000 cash and issued 36,667 shares. In addition, the Company acquired by staking a 100% interest in four additional mineral claims contiguous to the claims described above. Staking costs incurred total $1,976. Acquisition costs were written down to $15,000 in a prior year. Munro Property, Ontario By an Option Agreement dated June 3, 2002, the Company acquired a 100% interest (subject to a 3% NSR) in 17 mineral claims located in the Munro Township of Ontario for consideration of $10,000 cash and 42,222 shares. Acquisition costs were written down to $20,066 in a prior year. Claw Lake Property, Ontario By an Option Agreement dated June 3, 2002, the Company acquired a 100% interest (subject to a 3% NSR) in two mineral claims located in the Cabot Township of Ontario for consideration of $5,000 cash and 36,667 shares. Acquisition costs were written down to $15,417 in a prior year. Murdoch Creek Property, Ontario The Company acquired a 100% interest (subject to a 3% gross overriding royalty with respect to diamonds and a 3.5% NSR) in 64 mineral claims located in the Lebel, Morrisette and Arnold Townships, Ontario for consideration of $80,000 cash and 29,722 shares. Additional staking costs were incurred for a total $4,543. Acquisition costs were written down to $20,000 in a prior year. b) Char Property, British Columbia In April 2011 the Company entered into an option agreement to acquire a 100% interest in the Char Property located in British Columbia. In January 2012, the agreement was amended and in order to earn a 100% interest, the Company must make cash payment of $15,000 (paid) and issue 60,000 shares (40,000 issued). 11 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 5. PROPERTY, PLANT AND EQUIPMENT COMPUTER COST Balance, May 31, 2012 Additions Balance, May 31, 2012 Additions Balance, November 30, 2013 $ $ 18,434 12,794 31,228 5,576 36,804 $ $ ACCUMULATED DEPRECIATION Balance, May 31, 2012 Depreciation for the year Balance, May 31, 2012 Depreciation for the period Balance, November 30, 2013 $ 4,680 13,223 17,903 5,426 23,329 CARRYING AMOUNTS May 31, 2012 May 31, 2013 November 30, 2013 $ $ $ 13,754 13,325 13,475 $ OFFICE FURNITURE AND EQUIPMENT $ 1,355 10,455 11,810 81,280 93,090 $ 305 2,402 2,707 8,007 10,714 $ $ $ 1,050 9,103 82,376 VEHICLES $ $ $ 12 21,000 21,000 21,000 LAND $ $ $ 6,250 7,000 13,250 3,500 16,750 $ $ $ $ $ 14,750 7,750 4,250 $ $ $ BUILDINGS 270,983 270,983 270,983 - 270,983 270,983 270,983 $ $ $ 627,133 (4,183) 622,950 622,950 TOTAL $ 938,905 19,066 957,971 86,856 $ 1,044,827 $ 10,349 25,888 36,237 14,896 51,133 $ $ 21,584 48,513 70,097 31,829 101,926 $ $ $ 616,784 586,713 571,817 $ $ $ 917,321 887,874 942,901 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 6. SHARE CAPITAL a) Authorized: Unlimited number of shares without par value. b) Issued Period ended November 30, 2013: On September 4, 2013, 2013, the Company closed the third tranche of its non-brokered private placement announced on August 2, 2013 and issued 2,739,000 flow-through shares (the “FT shares”) at a price of $0.185 per FT share and 2,333,333 non-flow through units (the “NFT Units”) at a price of $0.15 per NFT Unit for proceeds of $856,715. Each FT Share consisted of one flow through common share and no warrant. Each NFT Unit consisted of one common share and one non-half of one non-transferable common share purchase warrant. Each whole NFT warrant entitled the holder to purchase one common share at an exercise price of $0.23 for 24 months following completion of the Offering. The Company paid $66,981 in commissions for this tranche and issued 355,063 compensation warrants at a price of $0.23 with the expiry date September 4, 2015. On August 26, 2013, the Company closed the second tranche of its non-brokered private placement announced on August 2, 2013 and issued 1,456,405 FT shares at a price of $0.185 per FT share and 1,818,500 NFT Units at a price of $0.15 per NFT Unit for proceeds of $542,210. Each FT Share consisted of one flow through common share and no warrant. Each NFT Unit consisted of one common share and one non-half of one non-transferable common share purchase warrant. Each whole NFT warrant entitled the holder to purchase one common share at an exercise price of $0.23 for 24 months following completion of the Offering. The Company paid $28,088 in commissions for this tranche and issued 175,000 compensation warrants at a price of $0.23 with the expiry date August 27, 2015. On August 9, 2013, the Company closed the first tranche of its non-brokered private placement announced on August 2, 2013 and issued 13,887,297 FT shares and 2,620,000 NFT Units for proceeds of $2,962,150. The Company paid $246,515 in commissions for this tranche and issued 1,136,602 compensation warrants at a price of $0.23 with the expiry date August 9, 2015. Year ended May 31, 2013: On January 11, 2013, the Company issued 5,000,000 NFT Shares at a price of $0.24 per NFT Share in exchange for 1,379,310 common shares of a publicly traded company on the Toronto Stock Exchange at $0.87 per common share, representing a value of $1,239,000, including transaction costs of $39,000. On December 19, 2012, the Company closed its non-brokered private placement announced on December 18, 2012 and issued 5,322,310 FT Shares at a price of $0.325 per FT Share for proceeds of $1,729,751. Each FT Share consisted of one common share and no warrants issued in conjunction with this private placement. The Company paid $84,525 in finder’s fees. Officers and directors of the Company participated in this private placement by purchasing a total of 30,000 FT Units for total proceeds of $9,750. 13 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 6. SHARE CAPITAL (Continued) b) Issued (Continued) On September 12, 2012, the Company closed the second tranche of its brokered private placement announced on August 2, 2012 and issued 2,380,000 FT Units at a price of $0.315 per FT Unit for proceeds of $749,700. Each FT Unit consisted of one common share and one half of one non-transferable common share purchase warrant exercisable for one common share at $0.45 until March 20, 2014. The Company paid $52,479 in commissions. On August 12, 2012, the Company closed the first tranche of its brokered private placement announced on August 2, 2012 and issued 8,804,332 FT Units at a price of $0.315 per FT Unit and 1,949,300 NFT Units at a price of $0.27 per NFT Unit for proceeds of $3,299,675. Each NFT Unit consisted of one common share and one non-transferable share purchase warrant, exercisable for one common share at $0.40 until February 20, 2014. Each FT Unit consisted of one common share and one half of one non-transferable common share purchase warrant exercisable for one common share at $0.45 until February 20, 2014. The Company paid $260,633 in commissions. c) Warrants A summary of the changes in warrants to acquire an equivalent number of shares as at November 30, 2013 and 2012 was as follows: WARRANTS Warrants outstanding, May 31, 2012 Expired Granted Warrants outstanding, May 31, 2013 Granted Expired Warrants outstanding, November 30, 2013 29,258,767 (11,937,500) 7,541,466 24,862,733 3,385,916 (12,984,045) 15,264,604 WEIGHTED AVERAGE EXERCISE PRICE $ $ 0.64 0.83 0.44 0.48 0.23 0.35 (0.55) The Company had outstanding share purchase warrants as at November 30, 2013 as follows: NUMBER OF WARRANTS 1,952,222 135,000 4,402,166 1,949,300 1,190,000 2,030,000 120,000 100,000 1,310,000 909,250 1,166,666 15,264,604 EXERCISE PRICE $ $ $ $ $ $ $ $ $ $ $ EXPIRY DATE 0.85 2.00 0.45 0.40 0.45 1.00 1.00 2.00 0.23 0.23 0.23 December 29, 2013* January 25, 2014/2015 February 20, 2014 February 20, 2014 March 20, 2014 September 30, 2014 October 27, 2014 December 28, 2014 August 9, 2015 August 27, 2015 September 4, 2015 * Subsequent to November 30, 2013, the expiry date of these warrants was extended to December 29, 2015 and 454,622 warrants were re-priced to $0.26. 14 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 6. SHARE CAPITAL (Continued) c) Warrants (Continued) As at November 30, 2013, the weighted average remaining contractual life of the share purchase warrants was 0.65 years (2012 – 0.89 years) and the weighted average exercise price was $0.55 (2012 - $0.51). d) Stock Options The Company has adopted an incentive stock option plan (the “Plan”). The essential elements of the Plan provide that the aggregate number of shares of the Company exercisable pursuant to options granted under the Plan may not exceed 10% of the issued and outstanding shares at the date of the grant. Options granted under the Plan may have a maximum term of ten years. The exercise price of options granted under the Plan will not be less than the discounted market price of the shares (defined as the last closing market price of the Company’s shares immediately preceding the grant date, less the maximum discount permitted by TSX-V policy), or such other price as may be agreed to by the Company and accepted by the TSX-V. Options vest on terms determined by the directors and may be vested immediately on the grant date. Stock options granted to consultants are subject to minimum vesting restrictions such that one-quarter of the option shall vest on each of the grant date and three, six and twelve months thereafter. A summary of the changes in stock options as at November 30, 2013 and 2012 as follows: STOCK OPTIONS WEIGHTED AVERAGE EXERCISE PRICE Options outstanding, May 31, 2012 Cancelled/expired Exercised Granted 5,252,000 (400,000) (45,000) 2,040,000 $ Options outstanding, May 31, 2013 6,847,000 0.28 Granted Cancelled/expired Options outstanding, November 30, 2013 300,000 (25,000) 7,122,000 0.20 0.30 0.28 $ 0.37 0.30 0.22 0.27 On August 2, 2013, the Company granted 300,000 incentive stock options to an employee of the Company for a period of five years to acquire common shares of the Company at $0.20 per share. The fair value of the stock based compensation options was estimated on the date of grant in the amount of $38,100 with the following assumptions: i) exercise price per share of $0.20; ii) expected share price volatility of 116.54%; iii) risk free interest rate of 1.75; iv) expected life of 5 years; and v) no dividend yield. 15 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 6. SHARE CAPITAL (Continued) d) Stock Options (Continued) The Company had outstanding stock options as at November 30, 2013 as follows: NUMBER OF OPTIONS OUTSTANDING NUMBER OF OPTIONS EXERCISABLE EXERCISE PRICE 118,000 210,000 1,075,000 520,000 1,726,500 20,000 400,000 300,000 1,822,500 50,000 630,000 250,000 118,000 210,000 1,075,000 520,000 1,726,500 20,000 200,000 300,000 1,822,500 50,000 630,000 250,000 $ $ $ $ $ $ $ $ $ $ $ $ 0.30 0.30 0.30 0.21 0.30 0.24 0.25 0.20 0.22 0.275 0.40 0.39 7,122,000 6,922,000 $ 0.28 EXPIRY DATE September 22, 2016 March 1, 2017 November 7, 2017 January 22, 2018 January 23, 2018 January 28, 2018 March 20, 2018 August 2, 2018 September 11, 2018 November 3, 2018 December 14, 2018 March 6, 2019 As at November 30, 2013, the weighted average remaining contractual life of the options was 4.39 years (2012 – 5.4 years), and the weighted average exercise price was $0.28 (2012 - $0.29). e) Compensation Warrants On September 4, 2013, the Company granted 355,063 compensation warrants to brokers in connection with the third tranche of its August 2013 private placement. As a result, share issue costs and share-based payments reserves were increased by $33,000. The compensation warrants were measured using the Black-Scholes Model. The fair value of the compensation warrants was estimated on the issue date with the following assumptions: i) exercise price per share of $0.23; ii) expected share price volatility 73.02%,; iii) risk free interest rate of 1.21%; iv) expected life of 2 years; v) forfeiture rate of 0%; and vi) no dividend yield. On August 27, 2013, the Company granted 175,000 compensation warrants to brokers in connection with the second tranche of its August 2013 private placement. As a result, share issue costs and share-based payments reserves were increased by $16,000. The compensation warrants were measured using the Black-Scholes Model. The fair value of the compensation warrants was estimated on the issue date with the following assumptions: i) exercise price per share of $0.23; ii) expected share price volatility 72.90%,; iii) risk free interest rate of 1.21%; iv) expected life of 2 years; v) forfeiture rate of 0%; and vi) no dividend yield. On August 9, 2013, the Company granted 1,136,602 compensation warrants to brokers in connection with the first tranche of its August 2013 private placement. As a result, share issue costs and share-based payments reserves were increased by $104,000. The compensation warrants were measured using the Black-Scholes Model. The fair value of the compensation warrants was estimated on the issue date with the following assumptions: i) exercise price per share of $0.23; ii) expected share price volatility 72.61%,; iii) risk free interest rate of 1.21%; iv) expected life of 2 years; v) forfeiture rate of 0%; and vi) no dividend yield. 16 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 6. SHARE CAPITAL (Continued) e) Compensation Warrants (Continued) The Company had outstanding compensation warrants at November 30, 2013 as follows: NUMBER OF WARRANTS OUTSTANDING 424,745 95,200 1,136,602 175,000 355,063 EXERCISE PRICE $ $ $ $ $ 0.27 0.27 0.23 0.23 0.23 EXPIRY DATE February 20, 2014 March 20, 2014 August 9, 2015 August 27, 2015 September 4, 2015 2,186,610 As at November 30, 2013, the weighted average remaining contractual life of the compensation warrants was 1.36 years (2012 – Nil) and the weighted average exercise price was $0.24 (2012 Nil). f) Earnings per Share Basic Earnings per Share Basic earnings per share are calculated by dividing the net income by the weighted average number of fully paid common shares outstanding throughout the year. Diluted Earnings per Share In determining diluted earnings per share, the Company uses the Treasury Stock method and increases the average number of common shares outstanding by the following: Number of shares that would have been issued if all stock options with an exercise price below the average share price for the period had been exercised. Number of shares that would have been issued if all outstanding warrants with an exercise price below the average share price for the period had been exercised. Number of shares that would have been issued if all shares were issued pursuant to property option agreements. The Company also decreases the average number of common shares outstanding by the number of common shares that the Company could have repurchased if it used the proceeds from the above to repurchase shares on the open market at the average share price for the period. g) Flow-Through Commitments During the year ended May 31, 2013, the Company renounced $5,241,631 of qualifying Canadian exploration expenses (“CEE”) it was committed to incur on or before December 31, 2013. Commencing February 1, 2013, the Company is liable to pay Part XII.6 tax, at a specified rate per annum, calculated monthly on the unspent portion of the commitment. The Company had spent the required amount by November 2013, eliminating this obligation. If the Company pre-renounces the qualifying CEE for its August and December 2013 private placements as at December 31, 2013, it will be committed to incur $7,688,500 by the end of December 2014. 17 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 7. CAPITAL MANAGEMENT The Company includes cash and equity, comprised of issued common shares and reserves, in the definition of capital. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The properties in which the Company currently has an interest are in the exploration stage; as such the Company is dependent upon external financings to fund activities. In order to carry out planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company’s approach to capital management during the quarter. The Company is not subject to externally imposed capital requirements. 8. DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS All related party transactions were within the normal course of business and have been recorded at amounts agreed to by the transacting parties. Amounts due to and due from related parties do not bear interest, are unsecured, and have no fixed payment terms. As at November 30, 2013, $22,626 (2012 - $18,158) was owed to related parties and $37,894 (2012 $47,377), included within accounts receivable, was due from related parties. Included in administrative and consulting expenses are fees charged by a private company wholly owned by the Company’s Corporate Secretary for the provision of corporate and accounting services for the current period of $23,689 (2012 - $33,933). Key Management Compensation: Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. Remuneration attributed to key management personnel was as follows: SIX MONTHS ENDED NOVEMBER 30, 2013 Short-term employment benefits, including administrative, consulting, directors’ and management fees Termination benefits Share-based payments Total 18 2012 $ 395,129 - $ 302,379 270,000 186,727 $ 395,129 $ 759,106 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 9. SUPPLEMENTAL CASH FLOW INFORMATION Non-cash activities conducted by the Company during the six-month periods ended November 30, 2013 and 2012 are as follows: SIX MONTHS ENDED NOVEMBER 30, 2013 2012 Non-cash investing activities: Shares issued for mineral properties $ $ 6,600 Non-cash financing activities: Broker compensation warrants granted $ 153,000 3,100 $ 47,000 10. SUBSEQUENT EVENTS On January 28, 2014 the Company announced that it had completed mineral resource estimations on two additional targets for its Lamaque gold project located in Val-d’Or, Québec. The new resource calculations were completed by Geopointcom and will be included in an NI 43-101 Technical Report currently being updated by Geologica Inc. On January 22, 2014 the Company paid $30,000 and issued 50,000 shares as part of its agreement to acquire a 100% interest in the Donald property located directly east of the Lamaque property. Consideration for the property is $175,000 ($75,000 paid) and 250,000 shares (150,000 shares issued). On January 22, 2014, the Company closed the third and final tranche of its private placement announced on December 9, 2013 and issued 4,132,352 NFT Units at a price of $0.17 for gross proceeds of $702,499.84. Each NFT Unit consisted of one common share and one-half of one nontransferable common share purchase warrant (“NFT Warrant”). Each whole NFT Warrant entitled the holder to purchase one common share at an exercise price of $0.26 for 18 months following completion of the offering. For this tranche, the Company paid $6,545.00 in commissions and issued 38,500 compensation warrants at a price of $0.26, with an expiry date of June 22, 2015. For all tranches of this private placement, should the Company’s Shares trade on the TSX Venture Exchange at a weighted average price of greater than $0.45 for any ten consecutive trading day period the Company may, on written notice to the holders of the Warrants, reduce the exercise period of the Warrants to a date that is not less than 30 days from the date of the notice. On December 31, 2013, the Company closed the second tranche of its private placement announced on December 9, 2013 and issued 769,230 Quebec flow through shares (“Quebec FT Shares”) at a price of $0.26, 1,250,000 National flow through shares (“National FT Shares”) at a price of $0.20 and 288,000 NFT Units at a price of $0.17 for a total of 2,307,230 shares or units and gross proceeds of $498,960. Each Quebec or National FT Share consisted of one flow through common share and no warrant. Each NFT Unit consisted of one common share and one-half of one non-transferable NFT Warrant. Each whole NFT Warrant entitled the holder to purchase one common share at an exercise price of $0.26 for 18 months following completion of the Offering. For this tranche, the Company paid $38,427 in commissions and issued compensation warrants at a price of $0.26 with an expiry date of June 30, 2015 (161,506); July 1, 2015 (53,846) and July 1, 2015 (107,660). 19 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 10. SUBSEQUENT EVENTS (Continued) On December 18, 2013, the Company closed the first tranche of its private placement announced on December 9, 2013 and issued 14,031,539 Quebec FT Shares at a price of $0.26, 1,225,000 National flow through shares (the “National FT Shares”) at a price of $0.20 and 1,112,350 NFT Units at a price of $0.17 for a total of 16,368,889 shares or units and gross proceeds of $4,082,300. Each Quebec or National FT Share consists of one flow through common share and no warrant. Each NFT Unit consists of one common share and one-half of one non-transferable NFT Warrant. Each whole NFT Warrant will entitle the holder to purchase one common share at an exercise price of $0.26 for 18 months following completion of the offering. For this tranche, the Company paid $273,604 in commissions and issued 1,116,526 compensation warrants at a price of $0.26 with an expiry date of June 18, 2015. On December 13, 2013, the Company extended and re-priced warrants originally issued on December 29, 2010 (with a previous expiry date of December 29, 2013). The warrants have been extended to December 29, 2015. As insiders hold greater than 10% of these warrants, only 10% of the warrants held by insiders were re-priced. Of 1,952,222 existing warrants, 454,622 warrants were re-priced to $0.26 and the balance of 1,497,600 warrants remain at the original exercise price of $0.85. 20 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 11. SCHEDULE OF EXPLORATION AND EVALUATION COSTS – PERIOD ENDED NOVEMBER 30, 2013 Acquisition Costs Opening balance-acquisition Staking costs Option payments cash Option payments shares Royalty transfer Ending balance – acquisition costs Exploration Costs Opening balance-exploration Consulting Payroll Drilling Geological Line cutting Mapping and sampling Surveys Field costs and road construction Site administration, taxes Government assistance* Ending balance, exploration costs Balance, November 30, 2013 LAMAQUE GROUP QUEBEC GOLDEN VALLEY GROUP QUEBEC ONTARIO BRITISH COLUMBIA PROPERTIES $ 1,164,233 20,000 3,100 1,187,333 $ 60,000 60,000 $ 70,483 70,483 $ 13,990,676 331,788 1,462,805 860,087 291,932 33,738 545,625 (47,883) 17,468,768 18,656,101 35,862 59 35,921 $ 95,921 62,366 417 50 62,833 $ 133,316 $ $ 30,400 30,400 48,396 4,020 661 53,077 83,477 TOTAL $ $ 1,325,116 20,000 3,100 1,348,216 14,137,300 332,264 1,462,805 864,157 291,932 33,738 546,286 (47,883) 17,620,599 18,968,815 * On July 15, 2013, the Company received $162,823 for its 2012 Quebec tax credit. The balance of $74,680 was received on November 13, 2013; total 2012 Quebec tax credit was $237,503. * On August 29, 2013, the Company received $736,013 for its 2011 Quebec tax credit. * Subsequent to this period (January 2, 2014), the Company received $35,714 for its 2010 Quebec mining credit & $40,309 for its 2011 mining credit. Final 2010, 2011, and 2012 mining credit adjustments were $49,692 (included in the “Government assistance” line), leaving the outstanding 2012 mining credit in the amount of $33,997. * The Company claimed $440,279 Quebec tax credit and $22,894 Quebec mining credit for its May 2013 fiscal year – these credits are expected to be received by the end of 2014. 21 INTEGRA GOLD CORP. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED NOVEMBER 30, 2013 AND 2012 (Expressed in Canadian dollars) (Unaudited) 11. SCHEDULE OF EXPLORATION AND EVALUATION COSTS – YEAR ENDED MAY 31, 2013 Acquisition Costs Opening balance-acquisition Staking costs Option payments cash Option payments shares Royalty transfer Ending balance – acquisition costs Exploration Costs Opening balance-exploration Consulting Payroll Drilling Geological Line cutting Mapping and sampling Surveys Field costs and road construction Site administration, taxes QST retroactive claim* Government assistance* Ending balance, exploration costs Balance, May 31, 2013 LAMAQUE GROUP QUEBEC GOLDEN VALLEY GROUP QUEBEC ONTARIO BRITISH COLUMBIA PROPERTIES $ 1,095,633 45,000 18,600 5,000 1,164,233 $ 60,000 60,000 $ 70,483 70,483 $ 10,653,321 277,048 34,776 58 59,028 870 12,101 - 10,759,226 277,976 900 128 35,862 $ 95,862 699 1,433 336 62,366 $ 132,849 23,499 3,555 9,241 48,396 78,796 232,539 1,296,927 1,039,249 1,027,244 5,860 225,642 2,832 (138,536) (591,659) 14,137,300 15,462,416 $ 232,539 1,296,927 1,015,051 1,023,689 5,860 214,068 2,368 (138,536) (591,659) 13,990,676 15,154,909 $ 17,200 10,000 3,200 30,400 TOTAL $ $ 1,243,316 55,000 21,800 5,000 1,325,116 * During the period, the Company was registered for the Quebec Sales Tax (QST) and claimed the following retroactive amounts (prior periods were not restated): $138,536 for the period November 22, 2010 to December 31, 2011. This claim covered past expenditures not renounced as flow-through obligations and is adjusted in the schedule above. Funds from the claim were received in June 2013. $356,348 for the period January 1 – December 31, 2012. This claim increased the Company’s 2013 flow-through obligation. Funds from the claim were received in June 2013. The Company has also reduced its expected tax ($123,168) and mining ($17,345) credit receivable due to these retroactive QST claims (included in the “Government assistance” line). 22