Touchstone Gold Receives Conditional Approval to List on Toronto Stock Exchange
30.11.2012 | Marketwired
TORONTO, 11/30/12 - Touchstone Gold Limited ("Touchstone" or the "Company") (AIM: TGL) is pleased to announce that the Toronto Stock Exchange has conditionally approved the listing of the Company's common shares. Listing is subject to Touchstone fulfilling all of the requirements of the Toronto Stock Exchange on or before January 21, 2013. Once the listing conditions have been satisfied and its common shares are listed, Touchstone will be quoted on both the AIM market of the London Stock Exchange (AIM: TGL) and the Toronto Stock Exchange (TSX: TCH).In compliance with its reporting issuer obligations in Canada, Touchstone also announces that it has filed interim financial statements and management discussion and analysis for the three and nine months ended September 30, 2012, which are available on the Company's website at www.touchstonegold.com and under Touchstone's profile on SEDAR at www.sedar.com
About Touchstone
Touchstone is a gold exploration company and its primary assets, which collectively comprise its Segovia Gold Project, are the Rio Pescado, El Cinco, San Miguel, and Frontino Norte properties along the Segovia-Remedios Gold Belt in Colombia. Rio Pescado is comprised of four mining concessions, the El Cinco property is comprised of one mining concession, the San Miguel property is comprised of one mining concession and one proposed mining concession, and the Frontino Norte property is comprised of five mining concessions. Touchstone owns further options on the Santa Rosa Project, in the South Bolivar area of Colombia, comprised of four proposed mining concessions and one mining concession. With a philosophy of creating value by the systematic exploration and development of Touchstone's existing assets as well as the acquisition of suitable exploration and development mineral projects, Touchstone's long-term intention is to build a significant gold exploration and production company.
Touchstone Gold Limited
Unaudited Interim Condensed Consolidated Financial Statements
For the three and nine months ended 30 September 2012 and 2011
Management's Comments on Unaudited Interim Financial Statements
The accompanying unaudited interim condensed consolidated financial statements of Touchstone Gold Limited for the three and nine months ended September 30, 2012 have been prepared by management and approved by the Board of Directors of the Company. These statements have not been reviewed by the Company's external auditors.
MANAGEMENT'S RESPONSIBILITY
FOR CONSOLIDATED FINANCIAL STATEMENTS
All of the information in the accompanying unaudited interim condensed consolidated financial statements of Touchstone Gold Limited is the responsibility of management. The unaudited interim condensed consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards. Where necessary, management has made judgments and estimates in preparing the consolidated financial statements, and such statements have been prepared within acceptable limits of materiality.
Management maintains appropriate systems of internal control given its size to give reasonable assurance that its assets are safeguarded, and the financial records are properly maintained.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control and exercises this responsibility principally through the Audit Committee. The Audit Committee meets with management to review the unaudited interim condensed consolidated financial statements to satisfy itself that management is properly discharging its responsibilities to the Directors, who approve the consolidated financial statements.
David Wiley, Chief Executive Officer
Brian
Morales, Chief Financial Officer
Toronto, Canada
November 29, 2012
Touchstone Gold Limited
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in U.S. Dollars)
September 30, December 31,
ASSETS Note 2012 2011
--------------------------------
Current assets (unaudited)
Cash and cash equivalents 7 $2,363,851 $9,704,345
Accounts receivable 7 122,836 42,699
Prepaid expenses and other
current assets 4,985 -
--------------------------------
Total current assets 2,491,672 9,747,044
Property, plant and equipment, net 4 592,286 469,339
Mineral interests 3 13,495,230
$16,579,188 $10,216,383
--------------------------------
--------------------------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Trade accounts payable 7 $1,864,919 $905,511
Taxes payable 53,483 60,222
Accrued and other liabilities 7 162,952 46,389
--------------------------------
Total current liabilities 2,081,354 1,012,122
--------------------------------
Fair value of warrant liability 28,363 -
--------------------------------
Total Liabilities 2,109,717 1,012,122
--------------------------------
Shareholders' equity
Share capital 6 $28,778,654 $17,371,890
Stock option reserve 6 4,052,107 2,493,474
Warrant reserve 6 161,920 161,920
Accumulated deficit (18,461,208) (10,755,828)
Accumulated other comprehensive
loss (62,002) (67,195)
--------------------------------
14,469,471 9,204,261
--------------------------------
$16,579,188 $10,216,383
--------------------------------
--------------------------------
Subsequent events 3,6
See accompanying notes to the unaudited interim condensed consolidated
financial statements
Signed on behalf of the Board of
Directors:
Fraser Buchan (signed), Director David Wiley (signed), Director
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TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
Three months ended Nine months ended September
September 30, 30,
Note 2012 2011 2012 2011
--------------------------------------------------------
Costs and
expenses
Exploration
expenditures $ (808,586) $ (1,110,031) $ (3,778,532) $ (2,400,015)
Share-based
payment
expense 6 (923,443) (329,439) (1,558,633) (2,153,561)
Depreciation (81,781) (49,109) (89,754) (70,176)
Professional
and
consulting
fees 5 (352,106) (512,377) (1,715,326) (1,506,932)
Travel (25,322) (26,015) (119,148) (159,536)
Office and
sundry
expenses (23,314) (21,381) (74,478) (39,496)
Salaries 5 (82,955) (54,376) (234,150) (113,147)
Other
operating
costs (74,254) (31,012) (189,224) (206,672)
--------------------------------------------------------
(2,371,761) (2,133,740) (7,759,245) (6,649,535)
--------------------------------------------------------
Other income
(expense)
Financial and
other income (941) 2,814 26,997 3,273
Bank fees,
commissions
and
financial
fees (7,742) (6,202) (26,076) (17,297)
Foreign
exchange
gain (loss) 7 47,306 (291,367) 52,944 (523,893)
--------------------------------------------------------
38,623 (294,755) 53,865 (537,917)
--------------------------------------------------------
Loss before
income taxes (2,333,138) (2,428,495) (7,705,380) (7,187,452)
--------------------------------------------------------
Net loss $ (2,333,138) $ (2,428,495) $ (7,705,380) $ (7,187,452)
--------------------------------------------------------
--------------------------------------------------------
Net loss per
share - basic
and diluted 8 $ (0.02) $ (0.02) $ (0.07) $ (0.09)
Weighted
average number
of common
shares
outstanding -
basic
and diluted 8 116,553,335 103,703,705 112,332,654 82,268,350
See accompanying notes to the unaudited interim condensed consolidated
financial statements
TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in U.S. Dollars)
For the three months ended For the nine months ended
September 30, September 30,
2012 2011 2012 2011
--------------------------------------------------------
Net loss $ (2,333,138) $ (2,428,495) $ (7,705,380) $ (7,187,452)
Currency translation
adjustments (10,140) (55,450) 5,193 (51,943)
--------------------------------------------------------
Comprehensive loss $ (2,343,278) $ (2,483,945) $ (7,700,187) $ (7,239,395)
--------------------------------------------------------
--------------------------------------------------------
See accompanying notes to the unaudited interim condensed consolidated
financial statements
TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in U.S. Dollars)
Common shares
---------------------------
Share
Number of premium Stock option
Note Shares Dollars reserve reserve
-----------------------------------------------------
December 31,
2010 124,919 $104 $3,000,001 $-
Capital re-
organisation 6 66,541,748 3,000,001 (3,000,001) -
Issuance of
common shares 37,037,038 14,371,785 - -
Share-based
compensation
expense - - - 2,153,561
Comprehensive
income - - - -
Net loss - - - -
-----------------------------------------------------
September 30,
2011 103,703,705 17,371,890 - 2,153,561
Share-based
compensation
expense - - - 339,913
Foreign currency
translation - - - -
Net income - - - -
-----------------------------------------------------
December 31,
2011 103,703,705 17,371,890 - 2,493,474
Common shares
issued in
respect of
acquisitions 3 59,108,300 11,406,764 - -
Share-based
compensation
expense 6 - - - 1,558,633
Foreign currency
translation - - - -
Net loss - - - -
-----------------------------------------------------
September 30,
2012 162,812,005 $28,778,654 $- $ 4,052,107
-----------------------------------------------------
-----------------------------------------------------
Accumulated
other
Warrant comprehensive
Note reserve Deficit loss Total
-------------------------------------------------------
December 31,
2010 $- $ (927,079) $ (19,342) $2,053,684
Capital re-
organisation 6 - - - -
Issuance of
common shares 161,920 - - 14,533,705
Share-based
compensation
expense - - - 2,153,561
Comprehensive
income - - (51,943) (51,943)
Net loss - (7,187,452) - (7,187,452)
-------------------------------------------------------
September 30,
2011 161,920 (8,114,531) (71,285) 11,501,555
Share-based
compensation
expense - - - 339,913
Foreign currency
translation - - 4,090 4,090
Net income - (2,641,297) - (2,641,297)
-------------------------------------------------------
December 31,
2011 161,920 (10,755,828) (67,195) 9,204,261
Common shares
issued in
respect of
acquisitions 3 - - - 11,406,764
Share-based
compensation
expense 6 - - - 1,558,633
Foreign currency
translation - - 5,193 5,193
Net loss - (7,705,380) - (7,705,380)
-------------------------------------------------------
September 30,
2012 $ 161,920 $(18,461,208) $ (62,002) $ 14,469,471
-------------------------------------------------------
-------------------------------------------------------
See accompanying notes to the unaudited interim condensed consolidated
financial statements
TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
Three months ended Nine months ended
Note September 30, September 30,
2012 2011 2012 2011
--------------------------------------------------------
Cash flow from
operating
activities
Net loss $ (2,333,138) $ (2,428,495) $ (7,705,380) $ (7,187,452)
Non-cash
items:
Share-based
payment
expense 5 923,443 329,439 1,558,633 2,153,561
Depreciation 74,854 49,109 82,827 70,176
Foreign
exchange loss (47,306) 291,367 (52,944) 523,893
Change in fair
value of
warrants (7,363) - (7,363) -
Adjustments to
reconcile net
income (loss)
to net cash
used in
operating
activities
Changes in
non-cash
operating
assets and
liabilities
Accounts
receivable 3,451 (59,324) (32,645) (77,020)
Prepaid
expenses and
other
current
assets 2,412 2,500 (5,007) 7,226
Trade
accounts
payable and
accrued
liabilities 143,859 (310,465) (129,847) 601,216
--------------------------------------------------------
Net cash used
in operating
activities (1,239,788) (2,125,869) (6,291,726) (3,908,400)
--------------------------------------------------------
Cash flow from
investing
activities
Purchases of
property and
equipment - (148,368) (75,736) (459,922)
Asset
acquisitions
, net of
cash
acquired 3 (775,449) - (999,452) -
--------------------------------------------------------
Net cash used
in investing
activities (775,449) (148,368) (1,075,188) (459,922)
--------------------------------------------------------
Cash flow from
financing
activities
Issuance of
equity, net
of
transaction
costs - - - 14,533,705
--------------------------------------------------------
Net cash
provided by
financing
activities - - - 14,533,705
--------------------------------------------------------
Effect of
exchange rate
changes on
cash not held
in U.S.
dollars 37,045 (314,080) 26,420 (557,194)
Net (decrease)
increase in
Cash and Cash
Equivalents (1,978,192) (2,588,317) (7,340,494) 9,608,189
Cash and Cash
Equivalents,
beginning of
period 4,342,043 14,193,591 9,704,345 1,997,085
--------------------------------------------------------
Cash and Cash
Equivalents,
end of period $ 2,363,851 $ 11,605,274 $ 2,363,851 $ 11,605,274
--------------------------------------------------------
--------------------------------------------------------
See accompanying notes to the unaudited interim condensed consolidated
financial statements
TOUCHSTONE GOLD LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended 30 September 2012 and 2011
(Presented in U.S. dollars except per share amounts)
NOTE 1 - NATURE OF OPERATIONS
Touchstone Gold Limited ("Touchstone Gold") and its wholly-owned subsidiaries, Touchstone Gold Holdings S.A. and Touchstone Colombia (collectively "the Company") is an exploration stage company engaged in the exploration and development of gold properties in Colombia.
Touchstone Gold was incorporated under the laws of the British Virgin Islands on 29 June 2009 and existed under the provisions of British Virgin Islands Companies Act, 2004, as Company number 1536599. On 7 September 2012, after the approval of a resolution by the Company's shareholders, the Company was redomiciled via a continuance of the Company from the British Virgin Islands to the province of Ontario, Canada, where a majority of the Board of Directors and the Company's officers are located. The registered head office of the Company is #200-83 Yonge Street, Toronto, Ontario Canada.
As a result of the acquisition further described in note 3, the wholly-owned subsidiaries controlled by the Company are as follows:
Jurisdiction
--------------------
Touchstone Atlantis Mining Inc. Canada
Touchstone Gold Holdings S.A. Panama
Touchstone Colombia (foreign branch) Colombia
Placencia Corp. Panama
Saint Miguel Mining S.A.S Colombia
Concesiones United Gold S.A.S Colombia
On June 7, 2011, the Company's directors and shareholders approved a share re-organisation as a result, all per share amounts have been restated to reflect the share re-organisation.
On June 7, 2011, the Company completed a placing of new Ordinary Shares at a price of 27 pence per Ordinary Share, raising a total of approximately GBP 10,000,000 (U.S. $16,442,000). Additionally, 586,106 broker warrants were issued as part of the Placing.
These consolidated financial statements have been prepared using International Financial Reporting Standards ("IFRS") applicable to a going concern, which assumes that assets will be realized and liabilities will be settled in the normal course of business as they become due. Additionally, the consolidated financial statements have been prepared using the historical cost basis except for certain financial instruments, which are measured in accordance with the policies described below. The financial year-end for Touchstone Gold is December 31.
Statement of Compliance: These interim condensed consolidated financial statements are unaudited and have been prepared in accordance with IAS 34 "Interim Financial Reporting ("IAS 34") using accounting policies consistent with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). The unaudited interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended 31 December 2011.
The accounting policies applied in the preparation of these unaudited interim condensed consolidated financial statements are consistent with those applied and disclosed in the Company's consolidated financial statements for the year ended 31 December 2011, except as described in note 2.
The preparation of the unaudited interim condensed consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions about uncertain future events that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
The Company's interim results are not necessarily indicative of results for a full year.
The unaudited interim condensed consolidated financial statements of the Company for the three and nine months ended 30 September 2012 and 2011, have been prepared by management, reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on 29 November 2012.
NOTE 2 - ACCOUNTING CHANGES AND RECENT ACCOUNTING PRONOUNCEMENTS
On 1 January, 2012, the Company adopted the amendments required by IFRS 7 "Financial instruments - Disclosures" ("IFRS 7"). The amendments introduce new disclosure requirements for transfers of financial assets including disclosures for financial assets that are not derecognized in their entirety, and for financial assets that are derecognized in their entirety but for which continuing involvement is retained. The adoption of IFRS 7 did not have an impact on the Company's unaudited interim condensed consolidated financial statements.
Accounting pronouncements for the years beginning on 1 January 2013 and later are included in the Company's financial statements for the years ended 31 December 2011 and 2010.
NOTE 3 -ACQUISITIONS
Atlantis
On 10 September 2012, the Company completed the acquisition of all of the issued and outstanding common shares of Atlantis Gold Mines Corp. ("Atlantis"). Atlantis was the owner of certain gold exploration projects, located in Colombia.
The acquisition was completed pursuant to a three-cornered amalgamation, whereby a wholly-owned subsidiary of the Company amalgamated with Atlantis to form Touchstone Atlantis Mining Inc. All of the holders of Atlantis Shares received one common share of the Company for each Atlantis Share held. The Company issued a total of 59,108,300 shares in respect of the acquisition. Additionally, the Company assumed 6,975,000 Atlantis warrants outstanding. The warrants are exercisable for one common share of the Company at an exercise price of C$0.60 and expire on 15 November 2013.
The transaction resulted in the creation of a Colombian focused gold exploration company with an enlarged land package in a region with a history of high-grade gold discoveries and production.
The Atlantis portfolio encompasses a similar geological setting to Touchstone's Rio Pescado project and has shown numerous large gold anomalies with promising initial results. Previous exploration has identified several prospective targets for gold mineralization, an important addition to the existing exploration programme and upside potential, which Touchstone intends to explore further in the months ahead.
The cost of the acquisition is noted in the table below.
----------------------------------------------------------------------------
Consideration
----------------------------------------------------------------------------
Common shares issued $ 11,406,764
Payables funded 691,626
Transaction costs 1,130,000
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Total consideration $ 13,228,390
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Net assets acquired
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Cash and cash equivalents $ 4,637
Other current assets 44,425
Equipment 94,711
Mineral interests 13,495,230
Accounts payable (374,887)
Fair value of warrants assumed (35,726)
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Total consideration $ 13,228,390
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Bolivar
On 5 March 2012, the Company entered into an option agreement with a private company to acquire a 90% interest in four mining concessions, over a total area of 57 square kilometres that together comprise the important Santa Rosa Project located in the well-known gold mining district in the south of the Bolivar Department, Colombia.
The material terms of the Agreement are summarised below:
-- Initial payment of US$59,000 to the current concession holders, a non-
related private company, upon signing the option agreement;
-- An additional payment of US$50,000 upon the mining concessions being
registered to Touchstone Colombia on the National Mining Registry of
Colombia;
-- Four annual payments of US$327,750 that will commence one year after the
mining concessions have been registered;
-- US$1,000,000 in exploration expenditures on the property before earning
the 90% interest;
-- The Company has secured a right of first refusal to acquire the
remaining 10% of the Santa Rosa Project.
El Cinco
Subsequent to 30 September 2012, on 5 November 2012, the Company completed the acquisition of a 60% interest in the El Cinco property, through a wholly-owned subsidiary of the Company, which took effect on 2 November 2012, through the issue of 4,089,762 shares and an issue of a short-term convertible unsecured promissory note to the vendor for C$250,000.
NOTE 4 -PROPERTY, PLANT AND EQUIPMENT, NET
Machinery Computer and Fleet and
and Office communication transportation
Cost equipment equipment equipment equipment Total
--------------------------------------------------------------
Balance at
December 31,
2010 $26,518 $ - $22,259 $60,722 $109,499
Additions 81,458 84,517 53,833 280,472 500,280
Foreign
exchange and
other (4,001) (3,909) (2,686) (13,508) (24,104)
--------------------------------------------------------------
Balance at
December 31,
2011 $103,975 $80,608 $73,406 $327,686 $585,675
Additions 3,261 28,667 43,230 578 75,736
Acquisition 6,140 4,454 17,545 66,572 94,711
Foreign
exchange 7,803 9,196 6,056 24,650 47,705
--------------------------------------------------------------
Balance at
September 30,
2012 $121,179 $122,925 $140,237 $419,486 $803,827
--------------------------------------------------------------
--------------------------------------------------------------
Machinery Computer and Fleet and
Accumulated and Office communication transportation
depreciation equipment equipment equipment equipment Total
--------------------------------------------------------------
Balance at
December 31,
2010 $ (1,316) $ - $ (3,685) $ (5,914) $ (10,915)
Depreciation (12,216) (23,816) (26,863) (47,739) (110,634)
Foreign
exchange and
other 576 1,101 1,275 2,261 5,213
--------------------------------------------------------------
Balance at
December 31,
2011 $ (12,956) $ (22,715) $ (29,273) $ (51,392) $ (116,336)
Depreciation (8,261) (12,668) (12,460) (56,365) (89,754)
Foreign
exchange (938) (1,653) (2,147) (713) (5,451)
--------------------------------------------------------------
Balance at
September 30,
2012 $ (22,155) $ (37,036) $ (43,880) $ (108,470) $ (211,541)
--------------------------------------------------------------
--------------------------------------------------------------
Plant, and equipment, net
December 31,
2011 $91,019 $57,893 $44,133 $276,294 $469,339
Balance at
September 30,
2012 $99,024 $85,889 $96,357 $311,016 $592,286
NOTE 5 - RELATED PARTY TRANSACTIONS
Compensation of Directors and management
For the three and nine months ended 30 September 2012, and 2011 the Company paid $63,366 and $191,221, respectively, in salaries and consulting costs to the Chief Executive Officer and Chief Financial Officer of the Company. For the three and nine months ended 30 September 2011, the Company paid $54,376 and $113,147, respectively.
For the three and nine months ended 30 September 2012, the Company incurred $226,633 and $1,092,277, respectively in geologic consulting costs to a Company owned by and controlled by an officer of the Company. For the three and nine months ended 30 September 2011, the Company incurred, $375,279 and $1,006,427, respectively. These transactions were in the normal course of operations and all transactions are measured at the exchange amount, which is the amount agreed to by the related parties and is recorded in professional and consulting fees.
For the three and nine months ended 30 September 2011, the Company paid $nil and $54,028, respectively in consulting fees to the former Chief Executive Officer of the Company.
For the three and nine months ended 30 September 2012, the Company paid $34,688 and $82,728, respectively in fees to a Director of the Company. The Company paid $28,121 for the three and nine months ended 30 September 2011.
A total of $542,776 and $1,027,097 in share-based payment expense was recognized in respect of options granted to Officers, Directors and employees of the Company for the three and nine months ended 30 September 2012, respectively. A total of $251,766 and $323,118 was recognized for the three and nine months ended 30 September 2011, respectively.
Commitments
In 2009, the Company entered into a contract with an employee of the Company for the purchase of a mining interest payable over a five year period as of the date of the registration of the mining interest on behalf of the Company. The total payable under the contract is $587,500.
Under the contract, the Company reserves the right to continue the agreement based on the results obtained from exploration, economical assessment and construction. At any time while the contract is in force the agreement may be terminated by the Company with no further payments required.
NOTE 6 - SHARE CAPITAL AND CAPITAL MANAGEMENT, STOCK OPTIONS AND SHARE-BASED PAYMENTS
Share capital
The Company is authorized to issue an unlimited number of shares with no par value.
In June 2011, the shareholders of the Company passed a written resolution to approving the following:
-- consolidation of all of the issued and outstanding Ordinary shares of
the Company on the basis of one post consolidation share for each 40
pre-consolidation shares. The result of the resolution was that the
issued and outstanding shares was reduced from 124,919 to 3,123;
-- immediately following the consolidation, reclassification of the 3,123
ordinary shares into 2,630 A shares and 493 B shares;
-- immediately following the share consolidation and reclassification, the
issue of 13,307 bonus A shares for each existing A share held and 64,218
bonus B shares for each existing B share, the result of which was that
the aggregate number of shares issued and outstanding was then
66,666,667;
-- immediately following the bonus issue, the reclassification of both the
A shares and B shares into 66,666,667 Ordinary Shares; and
-- cancellation of the warrants issued in October 2010.
As a result of the resolution described above, the share reserve premium made of $2,109,324 on the shares issued in October 2011 and $890,677 allocated to the warrants issued in October 2011 was reclassified to share capital.
In October 2010, the Company issued 19,724 warrants which had a term of one year, exercisable into one common share of the Company at an exercise price of $190.13. In valuing the warrants the Company used an interest rate of 0.21%, a volatility of 95% and a dividend yield of nil. As noted above, these warrants were cancelled in June 2011.
The following tables denote the movement in share capital and warrants to 30 September 2012.
Common shares
---------------------------------------------
Share premium
Shares Share capital reserve
---------------------------------------------
31 December 2010 124,919 $104 $ 2,109,324
Share re-organisation 66,541,748 3,000,001 (2,109,324)
Issuance of common shares 37,037,038 14,371,785 -
---------------------------------------------
December 31, 2011 103,703,705 $17,371,890 $ -
Issued in respect of the
acquisition of Atlantis 59,108,300 11,406,764
---------------------------------------------
September 30, 2012 162,812,005 $28,778,654
---------------------------------------------
---------------------------------------------
Warrants
------------------------------
Warrant
Warrants reserve
------------------------------
31 December 2010 19,724 890,677
Share re-organisation (19,724) (890,677)
Issuance of warrants 586,106 161,920
------------------------------
December 31, 2011 586,106 $ 161,920
Assumed as part of the acquisition of Atlantis 6,975,000 -
------------------------------
September 30, 2012 7,561,106 $161,920
------------------------------
------------------------------
The warrants assumed as part of the acquisition of Atlantis are denominated in Canadian dollars. As the Company's functional currency is the US dollar, the fair value of the warrants is reflected as a derivative liability in the statement of financial position. The warrants were valued using a Black-Scholes valuation with a risk free interest rate of 0.5% an expected life of 1.2 years, a share price of 12.05p and a volatility of 65%. Changes in the fair value of the warrants are reflected in the statement of operations.
Stock options
A total of nil and 20,000 options were granted during the three and nine months ended 30 September 2012. The options have an expiry of June 2021, vest over a period ended June 2014 and have an exercise price of GBP 0.27.
During the three months and nine months ended 30 September 2012, a total of 7,404,023 were cancelled. As a result, the associated expense with the options that had not been previously recognized was recognized in the statement of operations during the three and nine months ended 30 September 2012.
As at 30 September 2012, the following options were outstanding.
Number of Options Exercise Price Expiration Date
----------------------------------------------------------------------------
5,380,020 GBP 0.27 June 2014
--------------------------
5,380,020
The remaining 5,380,020 options were cancelled subsequent to 30 September 2012.
Prior to the cancellation, during the three and nine months ended 30 September 2011, the Company issued 3,175,000 and 6,841,666 options.
Capital management
The Company includes equity, comprised of issued Ordinary Shares, options and warrants and deficit, in the definition of capital. The Company's primary objectives when managing capital are to safeguard the Company's ability to fund the exploration and development of its gold properties in Colombia.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size and stage of the Company is reasonable. The Company is not subject to other externally imposed capital requirements.
NOTE 7 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS
The Company has exposure to liquidity risk and foreign currency risk. The Company's risk management objective is to protect cash flow and, ultimately, shareholder value. Risk management strategies, as discussed below, are designed and implemented to ensure the Company's risks and the related exposure are consistent with the business objectives and risk tolerance.
Liquidity Risk: Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity by ensuring that there is sufficient capital to meet short and long-term business requirements, after taking into account cash flows from operations and the Company's holdings of cash, cash equivalents, and short-term investments. The Company also strives to maintain sufficient financial liquidity at all times in order to participate in investment opportunities as they arise, as well as to withstand sudden adverse changes in economic circumstances.
Management forecasts cash flows for its current and subsequent fiscal years to predict future financing requirements. Future requirements may be met through a combination of credit and access to capital markets. At 30 September 2012, the Company had $2,363,851 (December 31, 2011 - $9,704,345) in cash and cash equivalents
Currency risk: The Company's expenditures are incurred in Colombian peso, British pounds, U.S. dollars and Canadian dollars. The results of the Company's operations are subject to currency transaction risk. As the Company's reporting currency is the U.S. dollar, fluctuations in the Colombian peso, British pound and Canadian dollar relative to the U.S. dollar will affect the results of the Company. A 10% change in foreign exchange rates would have an impact of approximately $67,500.
Credit risk: Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. As at September 30, 2012 the Company's credit risk is primarily attributable to cash. At September 30, 2012, the majority of the Company's cash was held with a reputable bank with a Standard and Poor's investment rating of AA-.
Interest rate risk: Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company's most significant interest rate risk arises from its investments in cash equivalents. However, the maturity on these investments is less than ninety days, thereby mitigating the exposure to the impact of changing interest rates.
Fair Values: The Company's cash and cash equivalents, receivables and payables all had fair values which approximate their carrying values and are considered Level 2 in the fair value hierarchy.
NOTE 8 -LOSS PER SHARE
The following table details the weighted average number of outstanding common shares for the purposes of computing basic and diluted loss per common share for the three and nine months ended 30 September 2012 and 2011.
As noted previously, as a result of the share re-organisation, the Company has re-stated basic and diluted shares outstanding.
For the three months ended For the nine months ended
September 30, September 30,
------------------------------------------------------------
2011 2010 2012 2011
------------------------------------------------------------
Weighted average
shares
outstanding -
basic 116,553,335 103,703,705 112,332,654 82,268,350
Dilutive effect
of share
options and
warrants - - - -
------------------------------------------------------------
Weighted average
shares
outstanding -
diluted 116,553,335 103,703,705 112,332,654 82,268,350
Net loss $ (2,333,138) $ (2,428,495) $ (7,705,380) $ (7,187,452)
------------------------------------------------------------
Net loss per
share - basic $ (0.02) $ (0.02) $ (0.07) $ (0.09)
Net loss per
share - diluted $ (0.02) $ (0.02) $ (0.07) $ (0.09)
------------------------------------------------------------
------------------------------------------------------------
As a result of the losses for the three and nine months ended 30 September 2012 and 2011, there is no dilutive effect of options and warrants.
NOTE 9 - SEGMENT INFORMATION
The Company primarily operates in one reportable operating segment, being the development of mineral properties in Colombia. The Company also has an administrative office in Toronto, Canada. In order to determine reportable operating segments, the chief operating decision maker reviews various factors including geographical location, quantitative thresholds and managerial structure. Segmented information on a geographic basis is as follows:
As at September 30 As at December 31,
Total assets 2012 2011
----------------------------------------------------------------------------
Colombia $14,290,811 $635,227
Corporate 2,288,377 9,581,156
----------------------------------------
Total $16,579,188 $10,216,383
----------------------------------------
----------------------------------------
For the three months ended For the nine months ended
September 30, September 30,
Net loss 2012 2011 2012 2011
----------------------------------------------------------------------------
Colombia $ (882,305) $ (851,376) $ (3,115,993) $ (2,341,155)
Corporate (1,450,833) (1,577,119) (4,589,387) (4,846,297)
------------------------------------------------------------
Total $ (2,333,138) $ (2,428,495) $ (7,705,380) $ (7,187,452)
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NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES
In 2009, the Company entered into a contract with an employee of the Company for the purchase of a mining interest payable over a five year period as of the date of the registration of the mining interest on behalf of the Company. The total payable under the contract is $587,500.
In 2009, the Company entered into a contract for the purchase of a mining interest payable over a five year period as of the date of the registration of the mining interest on behalf of the Company. The total payable under the contract is $2,000,000.
Under the contract, the Company reserves the right to continue the agreement based on the results obtained from exploration, economical assessment and construction. At any time while the contract is in force the agreement may be terminated by the Company with no further payments required.
Contacts:
Touchstone Gold
David Wiley, Chief Executive Officer
+1 647 260 1247
Canaccord Genuity Limited (Joint Broker
and Nominated Adviser)
Andrew Chubb
+44 20 7523 8350
Canaccord Genuity Limited (Joint Broker and Nominated Adviser)
Adam Miller
+44 20 7523 8350
Northland Capital Partners Limited (Joint Corporate Broker)
Gavin Burnell
+44 20 7796 8800
Northland Capital Partners Limited (Joint Corporate Broker)
Edward Hutton
+44 20 7796 8800
Northland Capital Partners Limited (Joint Corporate Broker)
John-Henry Wicks
+44 20 7796 8800
College Group
David Simonson
+44 20 7457 2020
College Group
Anca Spiridon
+44 20 7457 2020
