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Interim condensed consolidated financial statements (unaudited) March 31, 2016
Delrand Resources Limited
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: DRN ISIN Number: CA2472673052
(“Delrand” or the "Company")
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2016
(Expressed in Canadian dollars)
NOTICE TO READER
These interim condensed consolidated financial statements of Delrand Resources Limited (the “Company”) as at
and for the three and nine months ended March 31, 2016 have been prepared by and are the responsibility of the
Company's management. These interim condensed consolidated financial statements have not been audited or
reviewed by the Company?s auditors.
Page 2 of 16
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2016
Contents
Interim Condensed Consolidated Statements of Financial Position.....................................................4
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss.......................................5
Interim Condensed Consolidated Statements of Changes in Equity.....................................................6
Interim Condensed Consolidated Statements of Cash Flows.............................................................7
Notes to the Interim Condensed Consolidated Financial Statements...................................................8
1. Corporate Information and Continuation of the Business ..............................................................8
2. Basis of Preparation ...........................................................................................................8
3. Subsidiary .......................................................................................................................9
4. Exploration and Evaluation Assets ........................................................................................ 10
5. Accounts Payable and Accrued Liabilities ............................................................................... 10
6. Related Party Transactions ................................................................................................ 10
7. Convertible Debenture ..................................................................................................... 11
8. Share Capital ................................................................................................................. 11
9. Share-Based Payments ...................................................................................................... 12
10. Financial Risk Management Objectives and Policies ................................................................ 13
11. Commitments and Contingencies....................................................................................... 16
Page 3 of 16
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian dollars) (unaudited)
Notes March 31, 2016 June 30, 2015
$ $
Assets
Current Assets
Cash 53,659 9,163
Due from related parties 6 21,981 -
Prepaid expenses and other assets 25,707 24,968
Total Current Assets 101,347 34,131
Non-Current Assets
Exploration and evaluation 4 - -
Total Non-Current Assets - -
Total Assets 101,347 34,131
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities 5 477,895 1,750,913
Income taxes payable 5,420 5,420
Due to related parties 6 191,866 665,726
Total Current Liabilities 675,181 2,422,059
Note Payable 7 1,306,856 -
Shareholders' Equity
Share capital 8 118,065,802 117,345,802
Contributed surplus 8,183,615 8,183,615
Deficit (128,130,107) (127,917,345)
Total Shareholders' Equity/(Deficiency) (1,880,690) (2,387,928)
Total Liabilities and Shareholders' Equity 101,347 34,131
Continuation of Business 1
Commitments and Contingencies 11
Common shares
Authorized (Note 8a) Unlimited Unlimited
Issued and outstanding 8 15,390,825 10,890,791
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Page 4 of 16
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in Canadian dollars) (unaudited)
Notes Three months ended Three months ended Nine months ended Nine months ended
March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015
$ $ $ $
Expenses
Consulting and professional fees 34,064 17,039 114,601 1,395,863
General and administrative 93,633 59,978 50,307 360,934
Impairment of deferred exploration expenditures - - - 2,353,315
Foreign exchange loss/(gain) (11,097) 13,665 47,854 11,874
Total expenses (116,600) (90,682) (212,762) (4,121,986)
Net loss and comprehensive loss (116,600) (90,682) (212,762) (4,121,986)
Basic and diluted loss per share 8c (0.01) (0.00) (0.02) (0.19)
Headline loss per share 8c (0.01) (0.00) (0.02) (0.08)
Weighted average number of common shares outstanding 14,448,483 0,890,791 11,888,966 10,869,805
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Page 5 of 16
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in Canadian dollars) (unaudited)
Common shares Total
Contributed
Deficit Shareholders'
Notes Number of shares Amount Surplus
Equity /
(Note 8)
(Deficiency)
$ $ $ $
Balance at June 30, 2014 21,281,581 $ 117,128,346 $ 8,159,644 $ (123,542,174) $ 1,745,816
Net loss - - - (4,121,986) (4,121,986)
Share issuance (net of costs) 8a 500,000 217,456 23,971 - 241,427
1
Balance at March 31, 2015 21,781,581 $ 117,345,802 $ 8,183,615 $ (127,664,160) $ (2,134,743)
Net loss - - - (253,185) (253,185)
1
Balance at June 30, 2015 21,781,581 $ 117,345,802 $ 8,183,615 $ (127,917,345) $ (2,387,928)
Net loss - - - (212,762) (212,762)
Share issuance (net of costs) 8a 9,000,000 1
720,000 - - 720,000
Share consolidation (15,390,756) - - - -
Balance at March 31, 2016 $ 15,390,825 $ 118,065,802 $ 8,183,615 $ (128,130,107) $ (1,880,690)
1
Pre- share consolidation
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Page 6 of 16
Delrand Resources Limited
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars) (unaudited)
Three months ended Three months ended Nine months ended Nine months ended
Notes March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015
$ $ $ $
Cash flows from operating activities
Net loss (116,600) (90,682) (212,762) (4,121,986)
Adjustments to reconcile net loss to net cash used in
operating activities
Impairment of deferred exploration expeditures - - - 2,353,315
Changes in non-cash working capital
Prepaid expenses and other assets (193) (426) (739) (19,522)
Accounts payable and accrued liabilities 23,309 (23,204) 33,838 1,222,518
Net cash used in operating activities (93,484) (114,312) (179,663) (565,675)
Cash flows from investing activities
Expenditures on exploration and evaluation 4 - - - (19,859)
Net cash used in investing activities - - - (19,859)
Cash flows from financing activities
Net proceeds from issuance of shares 7a - - 720,000 217,456
Warrants issued - - - 23,971
Due from related parties 6 - (1,588) - -
Due to/(from) related parties 6 (591,210) 137,140 (495,841) 342,686
Net cash provided by financing activities (591,210) 135,552 224,159 584,113
Net increase (decrease) in cash during the period 35,306 21,240 44,496 (1,421)
Cash, beginning of the period 18,353 8,898 9,163 31,559
Cash, end of the period 53,659 30,138 53,659 30,138
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Page 7 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
1. CORPORATE INFORMATION AND CONTINUATION OF THE BUSINESS
Corporate Information
The principal business of Delrand Resources Limited (“Delrand” or the “Company”) is the acquisition and exploration of
mineral properties in the Democratic Republic of the Congo (“the DRC”).
These interim condensed consolidated financial statements as at and for the three and nine months ended March 31, 2016
include the accounts of the Company and of its wholly-owned subsidiary incorporated in the DRC, Delrand Resources Congo
SPRL.
The Company is a publicly traded company whose outstanding common shares were listed for trading on the Toronto Stock
Exchange (“TSX”) and are listed for trading on the JSE Limited in Johannesburg, South Africa. On September 11, 2015, the
Company voluntarily delisted its common shares from the TSX and on September 14, 2015 the Company's common shares
began trading on NEX, a separate board of the TSX Venture Exchange. The head office of the Company is located at 1 First
Canadian Place, 100 King Street West, Suite 7070, Toronto, Ontario, M5X 1E3, Canada.
Continuation of the business
The Company incurred a net loss of $116,600 and a net loss of $212,762 during the respective three month and nine month
periods ended March 31, 2016 (three and nine months ended March 31, 2015: $90,682 and $4,121,986) and as at March 31,
2016 had a working capital deficit of $573,834 and a deficit of $128,130,107 (June 30, 2015: $2,387,928 and $127,917,345
respectively). The Company does not currently have revenue-generating properties.
The Company's ability to continue operations in the normal course of business is dependent on several factors, including its
ability to secure additional funding. These material uncertainties may cast significant doubt upon the validity of the going
concern assumption. Management is exploring all available options to secure additional funding, including equity financing
and strategic partnerships. In the event the Company is unable to identify recoverable resources, receive the necessary
permitting, or arrange appropriate financing, the carrying value of the Company's assets could be subject to material
adjustment. During the year ended June 30, 2015, the Company wrote off the carrying value of its exploration and
evaluation assets.
These consolidated financial statements do not include any additional adjustments to the recoverability and classification of
certain recorded asset amounts, classification of certain liabilities and changes to the statements of loss and comprehensive
loss that might be necessary if the Company was unable to continue as a going concern.
2. BASIS OF PREPARATION
a) Statement of compliance
These interim condensed consolidated financial statements as at and for the three and nine month periods ended March
31, 2016, including comparatives, have been prepared in accordance with International Accounting Standards (“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”). Accordingly, certain information and
footnote disclosure normally included in the annual financial statements prepared in accordance with IFRS, have been
omitted or condensed.
b) Basis of measurement
These interim condensed consolidated financial statements have been prepared under the historical cost convention,
except for certain financial assets which are presented at fair value.
Page 8 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
c) Summary of significant accounting policies
These interim condensed consolidated financial statements have been prepared using the same accounting policies and
methods of computation as presented in Note 3 of the annual consolidated financial statements of the Company as at
and for the year ended June 30, 2015, except for those newly adopted accounting standards noted below.
The Company has applied the following new and revised IFRSs in these interim condensed consolidated financial
statements: IFRS 8 Operating Segments (amendment) and IAS 24 Related Parties Disclosures (Amendments). The adoption
of these revised standards and interpretations did not have a significant impact on the Company's interim condensed
financial statements.
d) Use of estimates and judgments
The preparation of these interim condensed consolidated financial statements in conformity with IFRS as issued by the
IASB requires management to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
e) Accounting Standards Issued But Not Yet Effective
Certain pronouncements were issued by the IASB or the International Financial Reporting Interpretations Committee
(“IFRIC”) that are mandatory for accounting periods on or after January 1, 2015 or later periods. Many are not applicable
or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted
and are being evaluated to determine their impact on the Company.
IFRS 9 – Financial Instruments (“IFRS 9”) was issued by the IASB in November 2009 with additions in October 2010 and
May 2013 and will replace IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a single
approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules
in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its
business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39
for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9, except that an
entity choosing to measure a financial liability at fair value will present the portion of any change in its fair value due to
changes in the entity's own credit risk in other comprehensive income, rather than within profit or loss. The new
standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS
9 is effective for annual periods beginning on or after January 1, 2018. Earlier adoption is permitted.
IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in December 2014 in order to clarify, among other
things, that information should not be obscured by aggregating or by providing immaterial information, that materiality
consideration apply to all parts of the financial statements and that even when a standard requires a specific disclosure,
materiality considerations do apply. The amendments are effective for annual periods beginning on or after January 1,
2016. Earlier adoption permitted.
IAS 27 – Separate Financial Statements (“IAS 27”) was amended in August 2014 to reinstate the equity method as an
accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial
statements. The amendments are effective for annual periods beginning on or after January 1, 2016. Earlier adoption
permitted.
3. SUBSIDIARY
The table below sets out certain information in respect of the Company's DRC subsidiary:
Proportion of Ownership
Name of Subsidiary Place of Incorporation Business
Interest
Delrand Resources Congo SPRL Democratic Republic of the Congo 100% Mineral Exploration
Page 9 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
4. EXPLORATION AND EVALUATION ASSETS
The following table summarizes the Company's tangible exploration and evaluation expenditures with respect to properties in
the DRC:
Northern DRC
Project
Cost $
Balance as at June 30, 2014 2,331,238
Additions 22,077
Impairment (2,353,315)
Balance as at June 30, 2015 -
Additions -
Impairment -
Balance as at March 31, 2016 -
Northern DRC Project
The Northern DRC Project is located in Orientale Province of the DRC and had consisted of four exploration permits, two of
which were held by the Company directly through its DRC subsidiary and the balance of which were held through an option
agreement with the holder of the permits. During the year ended June 30, 2015, based on exploration results these four
exploration permits were relinquished by the Company and the Company recorded an impairment loss of $2,353,315 with
respect to the Northern DRC Project.
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are mainly comprised of amounts outstanding for purchases relating to exploration
activities and amounts payable for professional services and other general and administrative services. The credit period for
purchases typically ranges from 30 to 90 days.
6. RELATED PARTY TRANSACTIONS
a) Key Management Remuneration
The Company's related parties include key management. Key management includes executive directors. The remuneration
of the key management of the Company as defined above, during the three and nine month periods ended March 31, 2016
and 2015 was as follows:
Three months ended Three months ended Nine months ended Nine months ended
March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015
$ 25,000 $ 25,000 $ 75,000 $ 85,000
$ 25,000 $ 25,000 $ 75,000 $ 85,000
b) Other Related Parties
As at March 31, 2016, an amount of $191,866 (June 30, 2015 - $568,764) was owing to current directors and a former director
of the Company representing advances and consulting fees.
As at March 31, 2016, an amount of $nil was owed to Banro Corporation (“Banro”) related to shared expenses (June 30, 2015
- $93,928 was owed to Banro). Banro has a director in common with the Company and during part of the reporting period had
owned common shares of the Company representing a 7.07% interest in the Company. As at March 31, 2016, Banro no longer
owns any shares of the Company.
As at March 31, 2016, an amount of $8,823 was owed from Gentor Resources Inc. and $13,158 was owed from Loncor
Resources Inc., companies with common directors, related to shared expenses.
March 31, 2016 June 30, 2015
$ $
Due from related parties 21,981 -
Due to related parties 191,866 665,726
All amounts due to/from related parties are unsecured, non-interest bearing and due on demand.
7. CONVERTIBLE DEBENTURE
In January 2016, the Company issued a $1,300,000 unsecured convertible debenture to Norton Rose Fulbright Canada LLP.
The debenture, which settled indebtedness to the creditor in the amount of $1,300,000, has a maturity date of June 18, 2018
and interest on the principal outstanding from time to time accrues at an interest rate of 2.5% per annum and is payable by
Delrand on the maturity date. The principal (and all interest accrued and unpaid thereon) is due and payable on the maturity
date, provided, however, that Delrand may prepay the principal and accrued interest earlier, without penalty, at its
discretion.The terms of the debenture also provide that (i) the holder thereof shall have the option to convert the
outstanding principal into common shares of Delrand at a price of $0.50 per share (the “Conversion Price”), and (ii) within 30
days of the maturity date, Delrand may elect to repay the outstanding principal in common shares of Delrand at the
Conversion Price, provided that the 5 day per share volume-weighted average trading price of Delrand's shares at that time is
at least $0.50.
8. SHARE CAPITAL
a) Authorized
The Company's authorized share capital consists of an unlimited number of common shares with no par value.
The holders of the common shares are entitled to receive notice of and to attend all meetings of the shareholders of the
Company and shall have one vote for each common share held at all meetings of the shareholders of the Company. The
holders of the common shares are entitled to (a) receive any dividends as and when declared by the Board of Directors,
out of the assets of the Company properly applicable to the payment of dividends, in such amount and in such form as
the board of directors may from time to time determine, and (b) receive the remaining property of the Company in the
event of any liquidation, dissolution or winding-up of the Company.
In February 2016, the Company consolidated its outstanding common shares on a two to one basis. Immediately prior to
the consolidation, the Company had 30,781,581 common shares outstanding. Upon effecting the consolidation, and as of
March 31, 2016, the Company had 15,390,825 common shares outstanding. Unless otherwise indicated, all share and
warrant numbers have been adjusted to reflect the share consolidation to provide more comparable information.
In January 2016, the Company closed a non-brokered private placement of an aggregate of 4,500,000 common shares of
the Company at a price of $0.16 per share for gross proceeds of $720,000 (Arnold Kondrat, the Chief Executive Officer
and a director of the Company, acquired 3,550,000 of such shares).
In July 2014, the Company closed a non-brokered arm's length private placement of 250,000 units of the Company at a
price of $1.00 per unit for gross proceeds to the Company of $250,000. Each such unit was comprised of one common
share of the Company and one-half of one warrant of the Company, with each full warrant entitling the holder to
purchase one common share of the Company at a price of $1.50 for a period of two years.
Page 11 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
Number of
shares Amount
Balance at June 30, 2015 21,781,581 1
$ 117,345,802
Shares issued for:
Cash - -
1
Balance at December 31, 2015 21,781,581 $ 117,345,802
Shares issued for:
Cash 9,000,000 1
720,000
Share Consolidation (15,390,756) -
Balance at March 31, 2016 15,390,825 $ 118,065,802
1
Pre- share consolidation
b) Share purchase warrants
In July 2014, the Company issued 125,000 warrants, with each such warrant entitling the holder to purchase one common
share of the Company at a price of $1.50 until July 2016. As at March 31, 2016, all 125,000 warrants were outstanding.
c) Loss per share
Loss per share was calculated on the basis of the weighted average number of common shares outstanding for the three
and nine month periods ended March 31, 2016, amounting to 14,448,483 and 11,888,966 (three and nine month periods
ended March 31, 2015: 10,890,791 and 10,869,805) common shares. Diluted loss per share was calculated using the
treasury stock method. For the three and nine month periods ended March 31, 2016, total stock options of nil (three and
nine months ended December 31, 2014: nil) and warrants of 125,000 (three and nine month periods ended December 31,
2014: 125,000) were excluded from the calculation of diluted loss per share as their effect would have been anti-
dilutive. Items that are adjusted in the reconciliation to be excluded from the Company's headline loss per share are
impairment of exploration and evaluation assets.
Three months ended Three months ended Nine months ended Nine months ended
March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015
Loss for the period (116,600) (90,682) (212,762) (4,121,986)
Adjustments for headline loss - - - 2,353,315
Headline loss for the period (116,600) (90,682) (212,762) (1,768,671)
Basic and diluted loss per share (0.01) (0.00) (0.02) (0.19)
Headline loss per share (0.01) (0.00) (0.02) (0.08)
9. SHARE-BASED PAYMENTS
The Company has a stock option plan (the “Plan”), pursuant to which non-transferable options to purchase common
shares of the Company may be granted by the Company?s Board of Directors to any director, officer, employee or
consultant of the Company or any subsidiary of the Company. The Plan contains provisions providing that the term of an
option may not be longer than ten years and the exercise price of an option shall not be lower than the last closing price
of the Company's shares on NEX prior to the date the stock option is granted. The total number of common shares of the
Company issuable upon the exercise of all outstanding stock options granted under the Plan shall not at any time exceed
12% of the total number of outstanding common shares of the Company, from time to time.
As at March 31, 2016, the Company had no stock options outstanding.
Page 12 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
10. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
a) Fair value of financial assets and liabilities
The consolidated statements of financial position carrying amounts for cash, prepaid expenses and other assets and
accounts payable and accrued liabilities approximate fair value due to their short-term nature. Due to the use of
subjective judgments and uncertainties in the determination of fair values, these values should not be interpreted as
being realizable in an immediate settlement of the financial instruments.
Fair value hierarchy
The following provides a description of financial instruments that are measured subsequent to initial recognition at fair
value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
There were no transfers between Level 1 and Level 2 during the reporting periods. The fair values of financial assets and
liabilities carried at amortized cost are approximated by their carrying values. Cash is ranked Level 2 as it is based on
similar loans in the market.
b) Risk Management Policies
The Company is sensitive to changes in commodity prices and foreign-exchange. The Company's Board of Directors has
overall responsibility for the establishment and oversight of the Company?s risk management framework. Although the
Company has the ability to address its price-related exposures through the use of options, futures and forward contacts,
it does not generally enter into such arrangements.
c) Foreign Currency Risk
Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar and United States dollar
or other foreign currencies will affect the Company's operations and financial results. A portion of the Company's
transactions are denominated in United States dollars, Congolese francs and South African rand. The Company is also
exposed to the impact of currency fluctuations on its monetary assets and liabilities. The Company's functional currency
is the Canadian dollar. The majority of major expenditures are transacted in US dollars. The Company maintains the
majority of its cash in Canadian dollars but it does hold balances in US dollars. Significant foreign exchange gains or
losses are reflected as a separate component of the consolidated statement of comprehensive loss. The Company does
not use derivative instruments to reduce its exposure to foreign currency risk.
The following table indicates the impact of foreign currency exchange risk on net working capital as at March 31, 2016.
The table below also provides a sensitivity analysis of a 10 percent strengthening of the Canadian dollar against foreign
currencies as identified which would have increased (decreased) the Company's net loss by the amounts shown in the
table below. A 10 percent weakening of the Canadian dollar against the same foreign currencies would have had the
equal but opposite effect as at March 31, 2016.
Page 13 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
U.S. dollar South African rand
$ ZAR
Cash 1,246 -
Prepaids and other assets - -
Accounts payable and accrued
liabilities (17,583) (627,578)
Total foreign currency financial
assets and liabilities (16,337) (627,578)
Foreign exchange rate at
March 31, 2016 1.2987 0.0882
Total foreign currency financial
assets and liabilities in CDN $ (21,217) (55,321)
Impact of a 10% strengthening
or weakening of the CDN $ on
net loss (2,122) (5,532)
d) Credit Risk
Financial instruments which are potentially subject to credit risk for the Company consist primarily of cash. Cash is
maintained with several financial institutions of reputable credit in Canada, the DRC and South Africa and may be
redeemed upon demand. It is therefore the Company's opinion that such credit risk is subject to normal industry risks
and is considered minimal.
e) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The
Company attempts to ensure that there is sufficient cash to meet its liabilities when they are due and manages this risk
by regularly evaluating its liquid financial resources to fund current and long-term obligations and to meet its capital
commitments in a cost-effective manner. The key to success in managing liquidity is the degree of certainty in the cash
flow projections. If future cash flows are fairly uncertain, the liquidity risk increases. The Company's liquidity
requirements are met through a variety of sources, including cash, and equity capital markets. In light of market
conditions, the Company initiated a series of measures to bring its spending in line with the projected cash flows from its
operations and available project specific facilities in order to preserve its financial position and maintain its liquidity
position. As at March 31, 2016, accounts payable and accrued liabilities of $477,895 and amounts due to related parties
of $191,866 are due within one year and represent all significant contractual commitments, obligations, and interest and
principal repayments on financial liabilities. Please refer to Note 1, Continuation of the Business.
f) Mineral Property Risk
The Company's activities in the DRC are exposed to various levels of political risk and uncertainties, including political
and economic instability, government regulations relating to exploration and mining, military repression and civil
disorder, all or any of which may have a material adverse impact on the Company?s activities or may result in
impairment in or loss of part or all of the Company's assets.
g) Market Risk
Market risk is the potential for financial loss from adverse changes in underlying market factors, including foreign-
exchange rates, commodity prices, interest rates and stock based compensation costs.
h) Interest rate risk
Interest rate risk is the potential impact on any Company earnings due to changes in bank lending rates and short-term
deposit rates. The Company is not exposed to significant interest rate risk other than cash flow interest rate risk on its
cash. The Company does not use derivative instruments to reduce its exposure to interest rate risk. A fluctuation of
interest rates of 1% would not affect significantly the fair value of cash.
i) Country risk
The DRC is a developing country and as such, the Company's activities in the DRC could be adversely affected by
uncertain political or economic environments, war, civil or other disturbances, and a changing fiscal regime and by DRC?s
underdeveloped industrial and economic infrastructure.
The Company's activities in the DRC may be affected by economic pressures on the DRC. Any changes to regulations or
shifts in political attitudes are beyond the control of the Company and may adversely affect its business. Operations may
be affected in varying degrees by factors such as DRC government regulations with respect to foreign currency conversion,
production, price controls, export controls, income taxes or reinvestment credits, expropriation of property,
environmental legislation, land use, water use and mine safety.
There can be no assurance that policies towards foreign investment and profit repatriation will continue or that a change
in economic conditions will not result in a change in the policies of the DRC government or the imposition of more
stringent foreign investment restrictions. Such changes cannot be accurately predicted.
j) Capital Management
The Company manages its cash, common shares, warrants and any stock options as capital. The Company's main
objectives when managing its capital are:
- to maintain a flexible capital structure which optimizes the cost of capital at acceptable risk while providing an
appropriate return to its shareholders;
- to maintain a sufficient capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business;
- to safeguard the Company's ability to obtain financing; and
- to maintain financial flexibility in order to have access to capital in the event of future acquisitions.
The Company manages its capital structure and makes adjustments to it in accordance with the objectives stated above,
as well as responds to changes in economic conditions and the risk characteristics of the underlying assets.
There were no significant changes to the Company's approach to capital management during the nine-month period
ended March 31, 2016.
Page 15 of 16
Delrand Resources Limited
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the three and nine months ended March 31, 2016
(Expressed in Canadian dollars) (unaudited)
Neither the Company nor its subsidiary is subject to externally imposed capital requirements.
As at As at
March 31, 2016 June 30, 2015
Cash $ 53,659 $ 9,163
Share Capital $ 118,065,802 $ 117,345,802
Deficit $ (128,130,107) $ (127,917,345)
Contributed Surplus $ 8,183,615 $ 8,183,615
11. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiary are subject to routine legal proceedings and tax audits. The Company does not believe that
the outcome of any of these matters, individually or in aggregate, would have a material adverse effect on its consolidated
losses, cash flow or financial position.
For further information, please contact:
Arnold T. Kondrat, CEO, (416) 366-2221 or 1-800-714-7938.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of
the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Johannesburg
18 May 2016
Sponsor
Arbor Capital Sponsors Proprietary Limited
Page 16 of 16
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