Consolidated Financial Statements For the years ended
Consolidated Financial Statements For the years ended April 30, 2012 and 2011 Table of Contents
PAGE
Independent Auditor’s Report 1
Consolidated Balance Sheets 2
Consolidated Statements of (Loss) Earnings 3
Consolidated Statements of Comprehensive (Loss) Earnings 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Changes in Equity 6
Notes to the Consolidated Financial Statements 7 - 53
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Altius Minerals Corporation
We have audited the accompanying consolidated financial statements of Altius Minerals Corporation which comprise the consolidated balance sheets as at April 30, 2012, April 30, 2011 and May 1, 2010, and the consolidated statements of (loss) earnings, comprehensive (loss) earnings, cash flows and changes in shareholders’ equity for the years ended April 30, 2012 and April 30, 2011, and a summary of significant accounting policies and other explanatory information.
Management's 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, 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.
Auditor's 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. 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 auditor's 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 entity's 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 entity's 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, the consolidated financial statements present fairly, in all material respects, the financial position of Altius Minerals Corporation as at April 30, 2012, April 30, 2011 and May 1, 2010, and its financial performance and cash flows for the years ended April 30, 2012 and April 30, 2011 in accordance with International Financial Reporting Standards.
Chartered Accountants June 26, 2012 St. John’s, Newfoundland and Labrador
Consolidated Balance Sheets (In thousands of Canadian dollars)
As at
April 30, April 30, May 1, Note # 2012 2011 2010 (Note 25) (Note 25) $ $ $
ASSETS Current assets
| Cash and cash equivalents | 50,374 | 64,551 | 55,492 |
| Marketable securities | 111,640 | 124,766 | 112,018 |
| Accounts receivable and prepaid expenses | 1,548 | 1,397 | 302 |
| Income taxes receivable | 6,801 | - | 3,014 |
| 170,363 | 190,714 | 170,826 |
Non-current assets
| Mineral properties and deferred exploration costs | 5 | 3,238 | 3,398 | 7,588 |
| Royalty interest in mineral property | 6 | 9,182 | 10,366 | 11,199 |
| Property and equipment | 7 | 256 | 177 | 165 |
| Investments in associates | 8 | 79,906 | 83,400 | 3,065 |
| Mining and other investments | 9 | 32,079 | 25,764 | 30,715 |
| Deferred income taxes | 10 | 1,539 | 1,032 | 470 |
| 126,200 | 124,137 | 53,202 |
314,851 224,028
TOTAL ASSETS 296,563
LIABILITIES Current liabilities
| Accounts payable and accrued liabilities | 2,259 | 2,461 | 1,290 |
| Income taxes payable | - | 3,195 | - |
| 2,259 | 5,656 | 1,290 |
Non-current liabilities
| Other liabilities | 14 | 1,481 948 - |
| Deferred income taxes | 10 | 10,628 13,207 6,656 |
| 14,368 19,811 7,946 |
EQUITY
| Shareholders' equity | 280,204 | 291,094 | 216,082 |
| Non-controlling interest | 1,991 | 3,946 | - |
| 282,195 | 295,040 | 216,082 | |
| TOTAL LIABILITIES AND EQUITY | 296,563 | 314,851 | 224,028 |
Contingent liability (Note 24)
Consolidated Statements of (Loss) Earnings (In thousands of Canadian dollars, except per share amounts)
For the years ended April 30,
Note # 2012 2011 (Note 25) $ $
Revenue
Royalty 4,115 2,872 Interest and investment 2,722 2,606 Other 123
4,211
11,048 5,601
Expenses
| General and administrative | 11 | 3,731 | 5,473 |
| Amortization | 1,288 | 903 | |
| Mineral properties abandoned or impaired | 5 | 1,257 | 3,621 |
| Royalty tax | 823 | 598 | |
| Share-based compensation | 14 | 780 | 1,269 |
| Generative exploration | 402 | 713 |
12,577
8,281
| Earnings (loss) before the following | 2,767 | (6,976) | |
| (Loss) gain on disposal of investments | 8 & 9 | (1,157) | 4,987 |
| Gain on disposal of mineral property | 5 & 8 | - | 84,675 |
| Unrealized (loss) gain on fair value adjustment of derivatives | 9 | (1,894) | 1,422 |
| Dilution gain (loss) on issuance of shares by associate | 8 | 596 | (2,520) |
| Share of loss in associates | 8 | (6,719) | (2,159) |
| (Loss) earnings before income taxes | (6,407) | 79,429 |
Income tax (recovery) expense
Current 10 585 3,368 Deferred 10 5,461
(2,071)
(1,486) 8,829 Net (loss) earnings (4,921) 70,600
Net (loss) earnings attributable to:
Common shareholders (4,611) 70,313 Non-controlling interest 287
(310)
(4,921) 70,600
Net (loss) earnings per share 13
- basic 2.46
(0.17)
- diluted (0.17) 2.43
see accompanying notes to the consolidated financial statements
Consolidated Statements of Comprehensive (Loss) Earnings (In thousands of Canadian dollars)
For the years ended April 30,
2012 2011 (Note 25) $ $
Net (loss) earnings (4,921) 70,600
Other comprehensive (loss) earnings, net of tax
Currency translation adjustment (2012 net of income taxes of $nil (2011 - $234)) - 1,333 Net unrealized (loss) gain on available-for sale investments (2012 net of income taxes of $1,021 (2011 - $(206))) (6,670) 2,537 Realized losses (gains) on available-for-sale investments recognized in net earnings (2012 net of income taxes of $(7) (2011 - $(22)) (160)
Total comprehensive (loss) earnings (11,547) 74,310
Total comprehensive (loss) earnings attributable to:
Common shareholders (9,880) 73,291 Non-controlling interest 1,019
(1,667)
(11,547) 74,310
see accompanying notes to the consolidated financial statements
Consolidated Statements of Cash Flows (In thousands of Canadian dollars)
For the years ended April 30,
2012 2011 (Note 25) Note # $ $
Operating activities
Net (loss) earnings (4,921) 70,600 Adjustments for:
| Generative exploration | 402 | 713 |
| Mineral properties abandoned or impaired | 1,257 | 3,621 |
| Share-based compensation | 780 | 1,269 |
| Amortization | 1,288 | 903 |
| Loss (gain) on disposal of investments | 1,157 | (4,987) |
Unrealized loss (gain) on fair value adjustment of derivatives (1,422)
1,894
Non-cash other revenue 16 (3,979) - Gain on disposal of mineral property - (84,675) Share of loss in associates 2,159
6,719
Dilution (gain) loss on issuance of shares by associates (596) 2,520 Income tax (recovery) expense (1,486) 8,829 Income taxes (paid) received 2,841
(10,358)
(7,843) 2,371 Changes in non-cash operating working capital 16 (353) 76 2,447
(8,196)
Financing activities
Payment to non-controlling interest (288) (76) Repurchase of common shares -
(2,299)
Proceeds from exercise of stock options 1,042 1,399 (1,545) 1,323
Investing activities
Proceeds from sale of investments 8 & 9 4,857 38,188 Generative exploration (402) (713) Mineral properties and deferred exploration costs,
| net of recoveries | 5 & 16 | (1,779) | (1,606) |
| Decrease (increase) in marketable securities | 13,126 | (12,748) | |
| Acquisition of investments | 8 & 9 | (15,266) |
(20,055)
| Acquisition of property and equipment | (183) | (82) |
| Net cash acquired on business acquistion | 19 | - 3 |
| Payment of current liabilities | 17 | (2,487) |
- (4,436) 5,289 Net (decrease) increase in cash and cash equivalents (14,177) 9,059 Cash and cash equivalents, beginning of year 64,551 55,492 64,551
Cash and cash equivalents, end of year 50,374
Supplemental cash flow information (Note 16)
see accompanying notes to the unaudited condensed consolidated financial statements
1. NATURE OF OPERATIONS AND CORPORATE INFORMATION
Altius Minerals Corporation’s (“Altius” or the “Corporation”) principal business activities include the generation and acquisition of mineral properties, royalties, and investments. The Corporation prefers to generate alliances or corporate structures related to the mineral exploration and natural resource opportunities it generates, which results in the Corporation carrying minority and non-operating project or equity interests and/or royalty interests.
Altius Minerals Corporation is a publicly traded company, incorporated and domiciled in Canada. The address of its registered office is Suite 202, 66 Kenmount Road, St. John’s, Newfoundland and Labrador, Canada A1B 3V7.
These Consolidated Financial Statements were approved and authorized for issuance by the Board of Directors on June 26, 2012.
2. BASIS OF PRESENTATION
These consolidated financial statements present the Corporation’s initial financial results of operations and financial position under International Financial Reporting Standards ("IFRS") as at and for the twelve months ended April 30, 2012, including 2011 comparative periods. They have been prepared in accordance with IFRS 1, “First-time Adoption of International Financial Reporting Standards”, as issued by the International Accounting Standards Board ("IASB"). Previously, the Corporation prepared its interim and annual Consolidated Financial Statements in accordance with Canadian generally accepted accounting principles ("previous GAAP").
The preparation of these consolidated financial statements resulted in selected changes to the Corporation’s accounting policies as compared to those disclosed in the Corporation's annual audited consolidated financial statements for the period ended April 30, 2011 issued under previous GAAP. A summary of the significant changes to the accounting policies is disclosed in Note 25 along with reconciliations presenting the impact of the transition to IFRS for the comparative periods as at May 1, 2010, as at and for the twelve months ended April 30, 2011.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements include the financial statements of the Corporation and the entities controlled by the Corporation (its subsidiaries). Control exists when the Corporation has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All significant intercompany transactions and balances have been eliminated.
The consolidated financial statements included in the accounts of the Corporation for the periods presented are as follows:
| Altius Minerals Corporation | 100% | Parent company |
| Altius Resources Inc. | 100% | Exploration company |
| Altius Investments Limited | 100% | Holding Company |
| 2260761 Ontario Inc. | 72.8% | Holding Company |
Non-controlling interests in the net assets of 2260761 Ontario Inc. are identified separately from the Corporation’s equity. The non-controlling interest consists of the non-controlling interest’s portion of net assets, earnings, and other comprehensive earnings.
Investments in associates are accounted for using the equity method. Under this method, the Corporation’s share of the investment’s earnings or losses is included in the statement of earnings (loss) and the carrying amount of the investment is adjusted by a like amount.
Investments in joint operations or jointly controlled assets are accounted for using the proportionate consolidation method whereby the Corporation records its share of any revenues, expenses, assets, and liabilities of the joint operations.
Financial instruments
Financial assets The Corporation classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Corporation's accounting policy for each category are as follows:
Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortized cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.
Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Corporation's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in the consolidated statement of earnings (loss) in the period of determination.
Fair value through profit or loss - This category includes derivatives and investments acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the consolidated balance sheet at fair value with changes in fair value recognized in the consolidated statement of earnings (loss).
Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for-sale. They are carried at fair value with changes in fair value recognized directly in other comprehensive earnings or loss. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from other comprehensive earnings (loss) and recognized in the statement of earnings or loss.
All financial assets except for those classified as fair value through earnings or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is objective evidence that a financial asset or a group of financial assets are impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described above.
Financial liabilities The Corporation classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Corporation's accounting policy for each category is as follows:
Fair value through profit or loss - This category comprises derivatives or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the balance sheet at fair value with changes in fair value recognized in the consolidated statement of earnings or loss.
Other financial liabilities - This category includes accounts payables and accrued liabilities, all of which are recognized at amortized cost.
Cash and cash equivalents
Cash and cash equivalents consists of amounts on deposit with banks and short-term investments in money market instruments that are readily convertible to cash with maturities of three months or less at the time of purchase. Cash and cash equivalents are classified as loans and receivables and carried at their fair market value.
Marketable securities
Marketable securities consist of Canadian government guaranteed and corporate backed commercial paper, bonds and marketable securities with maturities of greater than three months at the time of purchase. All marketable securities are classified as fair value through earnings or loss and are adjusted to fair market value at each balance sheet reporting date, with the corresponding adjustment going to current period earnings. Transactions are recorded on a trade date basis.
Investments
Investments in associates over which the Corporation exercises significant influence are accounted for using the equity method. Mining and other investments under which the Corporation cannot exert significant influence are recorded initially at cost and adjusted to reflect changes in the fair value in subsequent periods. For mining and other investments classified as available for sale, any subsequent changes in the fair value are recorded in other comprehensive earnings (loss). If in the opinion of management there has been a decline in value of the investment below the carrying value that is considered to be other than temporary, the valuation adjustment is recorded in net earnings (loss) in the period of determination. The fair value of the investments is based on the quoted market price on the closing date of the period.
Mineral properties and deferred exploration costs
The Corporation defers costs for mineral properties and deferred exploration costs when the Corporation has in its possession the legal right to explore for mineral deposits on a given property. General prospecting and exploration costs incurred prior to the staking of specific mineral claims are expensed immediately (“Genex”). Mineral properties and deferred exploration costs include the direct costs of acquiring, maintaining, exploring and developing properties, an allocation of geologists and propectors salaries based on time spent, and other costs directly related to specific properties. Mineral properties acquired for share consideration are recorded at the fair value of the mineral properties received.