Touchstone Gold Limited Reports Results for the Three Months Ended March 31, 2013 and 2012
TORONTO, ONTARIO -- (Marketwired) -- 05/15/13 -- Touchstone Gold (TSX: TCH)(AIM: TGL) ("Touchstone Gold" or the "Company") reported its financial results for the three months ended March 31, 2013 and 2012. The interim unaudited condensed consolidated financial statements for the three months ended March 31, 2013 and 2012 and notes thereto, as well as the Management's Discussion and Analysis are available at www.sedar.com and www.touchstonegold.com. Unless otherwise noted, all financial information is expressed in US dollars.
Highlights
-- At March 31, 2013, the Company had cash and cash equivalents of
$2,440,490.
-- For the three months ended March 31, 2013 the Company recorded a net
loss of $1,350,496 or $0.01 per share compared with a loss of $3,187,473
or $0.03 per share for the three months ended March 31, 2012.
-- During the first quarter of 2013, the Company commenced its Stage 4
drilling program as well as identified a new target zone (the "Bern"
zone). The program will focus on three zones; the 1141 Zone, Tagual Zone
and the Bern zone. Additionally, the Company achieved positive results
from metallurgical tests conducted on several samples, Pepas #1 and
Pepas #2. Initial results indicated recoveries from 87.9% to 95% gold in
floatation concentrate with Cyanide leaching providing recoveries
ranging from 40.5% to 90.7%.
"We remain sensitive to the current market environment and are working diligently to reduce our costs as we continue to advance our project forward." commented David Wiley, CEO of Touchstone Gold Limited. "The initial assay results from our current exploration program are expected to arrive imminently. We look forward to sharing our success with all of the supporters who have recognized the value of our high-grade Segovia Gold Project." commented David Wiley, CEO of Touchstone Gold Limited.
U.S. Dollars As at March 31, As at December
2013 31, 2012
Statements of financial position
Cash and cash equivalents $ 2,440,490 $ 4,087,940
Total current assets $ 2,576,909 $ 4,251,847
Total assets $ 17,742,483 $ 19,464,508
Total current liabilities $ 678,507 $ 1,044,485
Total liabilities $ 1,008,067 $ 1,520,337
Total equity attributable to common
shareholders $ 16,734,416 $ 17,944,171
Total liabilities and equity $ 17,742,483 $ 19,464,508
U.S. Dollars except per share
amounts For the three months ended March 31,
Statements of Operations 2013 2012
Exploration expenditures $ (664,083) $ (1,897,360)
Share-based payment expense (176,249) (339,913)
Depreciation (27,281) (4,696)
Professional and consulting fees (393,688) (805,656)
Travel (42,575) (39,200)
Office and sundry expenses (6,428) (30,664)
Salaries (107,574) (70,082)
Other operating costs (63,170) (61,268)
Other - -
Other financial income 130,552 61,366
Net loss $ (1,350,496) $ (3,187,473)
Net loss per share attributed to
common shareholders
Basic $ (0.01) $ (0.03)
Diluted $ (0.01) $ (0.03)
About Touchstone Gold Limited
Touchstone Gold Limited (TSX: TCH)(AIM: TGL) is a gold exploration company with a highly-prospective gold project in the Segovia District of Colombia. The Company's Segovia Gold Project hosts a high-grade near- surface gold deposit, Rio Pescado Deposit, which spans along more than 15km of potential strike length. Only 5% of the Company's property has been drilled to date and several identified target zones, which host high-grade gold geochemical anomalies are due to be drilled in the near-term. A maiden NI 43-101- compliant resource estimate on the Company's project is scheduled to be released by the end of 2013.
With a strategy of creating value through 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.
For additional technical information on the Rio Pescado Deposit, please refer to the Company's technical report (the "Technical Report") entitled "Technical Report on The Rio Pescado Gold Property, Republic of Colombia" dated June 30, 2012, prepared by Peter A. Christopher PhD., P.Eng. of PAC Geological consulting available on SEDAR at www.sedar.com and on the Company website at www.touchstonegold.com.
Canaccord Genuity Limited (Nominated Advisor and Joint Corporate Broker)
Andrew Chubb Tel. +44 20 7523 4609
Adam Miller Tel. +44 20 7523 8307
Cautionary Note Regarding Forward-Looking Information
Certain information set forth in this press release contains "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking information which includes the completion of the Acquisition, the drill program and management's assessment of Touchstone's future plans and operations and are based on Touchstone's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking information may be identified by words such as "expects", "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking information may necessarily involve known and unknown risks and uncertainties, which may cause Touchstone's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; Touchstone's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of resources and reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events which could disrupt exploration and development, including labour stoppages and severe weather conditions; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Touchstone undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward- looking information.
MANAGEMENT'S RESPONSIBILITY
FOR INTERIM UNAUDITED CONDENSED 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 unaudited interim condensed 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 consolidated financial statements to satisfy itself that management is properly discharging its responsibilities to the Directors, who approve the consolidated financial statements.
(signed) "David Wiley" (signed) "Brian Morales"
David Wiley Brian Morales
Chief Executive Officer Chief Financial Officer
Toronto, Canada
May 15, 2013
TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in U.S. Dollars)
ASSETS Note March 31, December 31,
2013 2012
--------------- ---------------
Current assets
Cash and cash equivalents 7 $ 2,440,490 $ 4,087,940
Accounts receivable 7 127,779 157,947
Prepaid expenses and other current
assets 8,640 5,960
--------------- ---------------
Total current assets 2,576,909 4,251,847
Property, plant and equipment, net 4 512,073 559,160
Mineral interests 14,653,501 14,653,501
--------------- ---------------
$ 17,742,483 $ 19,464,508
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable 7 $ 587,663 $ 804,938
Taxes payable 54,180 55,131
Accrued and other liabilities 7 36,664 177,441
Fair value of warrant liability 7 - 6,975
--------------- ---------------
Total current liabilities 678,507 1,044,485
--------------- ---------------
Fair value of warrant liability 329,560 475,852
--------------- ---------------
Total liabilities 1,008,067 1,520,337
--------------- ---------------
Shareholders' equity
Share capital 6 $ 33,857,857 33,857,857
Stock option reserve 6 5,053,007 4,876,758
Warrant reserve 6 212,722 212,722
Accumulated deficit (22,277,889) (20,927,393)
Accumulated other comprehensive loss (111,281) (75,773)
--------------- ---------------
16,734,416 17,944,171
--------------- ---------------
$ 17,742,483 $ 19,464,508
--------------- ---------------
--------------- ---------------
Commitments and contingent liabilities 10
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
TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
Three months ended March 31,
Note 2013 2012
--------------------------------
Costs and expenses
Exploration expenditures $ (664,083) $ (1,897,360)
Share-based payment expense (176,249) (339,913)
Depreciation (27,281) (4,696)
Professional and consulting fees 5 (393,688) (805,656)
Travel (42,575) (39,200)
Office and sundry expenses (6,428) (30,664)
Salaries 5 (107,574) (70,082)
Other operating costs (63,170) (61,268)
--------------------------------
(1,481,048) (3,248,839)
--------------------------------
Other income (expense)
Financial income 504 26,214
Change in fair value of derivative
liability 217,744 -
Bank fees, commissions and financial
fees (5,358) (8,628)
Foreign exchange (loss) gain (82,338) 43,780
--------------------------------
130,552 61,366
--------------------------------
Loss before income taxes (1,350,496) (3,187,473)
--------------------------------
Net loss $ (1,350,496) $ (3,187,473)
--------------------------------
--------------------------------
Net loss per share - basic and diluted 8 $ (0.01) $ (0.03)
Weighted average number of common shares
outstanding - basic and diluted 8 201,329,267 103,703,705
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)
Three months ended March 31,
2013 2012
------------------- -------------------
Net loss $ (1,350,496) $ (3,187,473)
Currency translation adjustments (35,508) (37,994)
------------------- -------------------
Comprehensive loss $ (1,386,004) $ (3,225,467)
------------------- -------------------
------------------- -------------------
See accompanying notes to the unaudited interim condensed consolidated financial statement
TOUCHSTONE GOLD LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in U.S. Dollars)
Common shares
---------------------------
Stock
Number of option
Shares Dollars reserve
Note
December 31, 2011 103,703,705 $ 17,371,890 $ 2,493,474
Net loss - - -
Share-based
compensation expense - - 339,913
Foreign currency
translation - - -
------------------------------------------
March 31, 2012 103,703,705 17,371,890 2,833,387
Common shares issued
in respect of the
acquisition of
Atlantis 59,108,300 11,406,764 -
Common shares issued
in respect of the
acquisition of El
Cinco 4,089,762 721,553 -
Units issued in
respect of private
placement, net of
cash transaction
costs 34,427,500 4,883,073 -
Warrants issued in
respect of private
placement - (525,423) -
Share-based
compensation expense - - 2,043,371
Foreign currency
translation - - -
Net loss - - -
------------------------------------------
December 31, 2012 201,329,267 33,857,857 4,876,758
Share-based
compensation expense - - 176,249
Foreign currency
translation - - -
Net loss - - -
------------------------------------------
March 31, 2013 201,329,267 $ 33,857,857 $ 5,053,007
------------------------------------------
------------------------------------------
Accumulated
other
Warrant comprehensive
reserve Deficit loss Total
December 31, 2011 $ 161,920 $ (10,755,828) $ (67,195) $ 9,204,261
Net loss - (3,187,473) - (3,187,473)
Share-based
compensation expense - - - 339,913
Foreign currency
translation - - 29,416 29,416
------------------------------------------------------
March 31, 2012 161,920 (13,943,301) (37,779) 6,386,117
Common shares issued
in respect of the
acquisition of
Atlantis - - - 11,406,764
Common shares issued
in respect of the
acquisition of El
Cinco - - - 721,553
Units issued in
respect of private
placement, net of
cash transaction
costs 50,802 - - 4,933,875
Warrants issued in
respect of private
placement - - - (525,423)
Share-based
compensation expense - - - 2,043,371
Foreign currency
translation - - (37,994) (37,994)
Net loss - (6,984,092) - (6,984,092)
------------------------------------------------------
December 31, 2012 212,722 (20,927,393) (75,773) 17,944,171
Share-based
compensation expense - - - 176,249
Foreign currency
translation - - (35,508) (35,508)
Net loss - (1,350,496) - (1,350,496)
------------------------------------------------------
March 31, 2013 $ 212,722 $ (22,277,889) $ (111,281) $ 16,734,416
------------------------------------------------------
------------------------------------------------------
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)
Note Three months ended March 31,
2013 2012
----------------- ---------------
Cash flow from operating activities
Net loss $ (1,350,496) $ (3,187,473)
Non-cash items:
Share-based payment expense 176,249 339,9113
Depreciation 27,281 4,696
Foreign exchange loss 82,338 (43,780)
Change in fair value of warrants (217,744) -
Adjustments to reconcile net income (loss)
to net cash used in operating activities
Changes in non-cash operating assets and
liabilities
Accounts receivable (51,284) 7,273
Prepaid expenses and other current assets (2,930) -
Trade accounts payable and taxes payable (78,724) 133,667
Accrued liabilities (140,777) 33,924
----------------- ---------------
Net cash used in operating activities (1,556,087) (2,711,780)
----------------- ---------------
Cash flow from investing activities
Purchases of property and equipment - (35,285)
----------------- ---------------
Net cash used in investing activities - (35,285)
----------------- ---------------
Cash flow from financing activities
Issuance of equity, net of transaction
costs - -
----------------- ---------------
Net cash provided by financing activities - -
----------------- ---------------
Effect of exchange rate changes on cash not
held in U.S. dollars (91,363) 44,028
Net (decrease) increase in Cash and Cash
Equivalents (1,647,450) (2,703,037)
Cash and Cash Equivalents, beginning of
period 4,087,940 9,704,345
----------------- ---------------
Cash and Cash Equivalents, end of period $ 2,440,490 $ 7,001,308
----------------- ---------------
----------------- ---------------
See accompanying notes to the unaudited interim condensed consolidated financial statements
CONSOLIDATED FINANCIAL STATEMENTS / For the years ended December 31, 2012 and 2011
NOTE 1 - NATURE OF OPERATIONS
Touchstone Gold Limited ("Touchstone Gold") and its wholly-owned subsidiaries, which are noted below, (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 September 7, 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.
The wholly-owned direct and indirect 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
These interim condensed 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.
These interim condensed 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 Internationa l 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 years ended December 31, 2012 and 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 December 31, 2012, 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 months ended March 31, 2013 and 2012, have been prepared by management and approved and authorized for issue by the Board of Directors on May 15, 2013.
NOTE 2 -ACCOUNTING CHANGES AND RECENT ACCOUNTING PRONOUNCEMENTS
ACCOUNTING CHANGES
On January 1, 2013, the Company adopted the following standards and amended standards
-- IFRS 10 Consolidated Financial Statements,
-- IFRS 11 Joint Arrangements,
-- IFRS 12 Disclosure of Interests in Other Entities,
-- IAS 27 Separate Financial Statements, and
-- IAS 28 Investments in Associates and Joint Ventures
The adoption of these standards did not have an impact on the Company's statement of financial position, statement of operations and statement of cash flows.
On January 1, 2013, the Company adopted IFRS 13 Fair Value Measurement on a prospective basis, which provides guidance on how fair value should be applied where its use is already required or permitted by other IFRS standards, and includes a definition of fair value and is a single source of guidance on fair value measurement and disclosure requirements or use with all IFRS standards. This standard also requires additional disclosure about fair value measurement. The adoption of IFRS 13 did not require any adjustments to the valuation techniques used by the Company to measure fair value and did not result in any re-measurement adjustments as at January 1, 2013. However, the Company has provided the additional disclosures in these unaudited interim condensed consolidated financial statements.
NOTE 3 -ACQUISITIONS
Bolivar
On March 5, 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.
NOTE 4 -PROPERTY, PLANT AND EQUIPMENT, NET
Computer
and Fleet
Machinery commu- and trans-
and Office nication portation
Cost equipment equipment equipment equipment Total
-------------------------------------------------------
Balance at December
31, 2011 $ 103,975 $ 80,608 $ 73,406 $ 327,686 $ 585,675
Additions 3,256 28,609 43,150 583 75,598
Acquisitions - 6,140 21,999 66,572 94,711
Foreign exchange and
other 9,411 11,213 1,023 19,987 41,634
-------------------------------------------------------
Balance at December
31, 2012 $ 116,642 $ 126,570 $ 139,578 $ 414,828 $ 797,618
-------------------------------------------------------
Additions - - - - -
-------------------------------------------------------
Foreign exchange and
other (1,995) (4,122) (4,545) (48,067) (58,729)
-------------------------------------------------------
Balance at March 31,
2013 $ 114,647 $ 122,448 $ 135,033 $ 366,761 $ 738,889
-------------------------------------------------------
Computer
and Fleet and
Machinery commu- trans-
Accumulated and Office nication portation
depreciation equipment equipment equipment equipment Total
-------------------------------------------------------
Balance at December
31, 2011 $ (12,956) $ (22,715) $ (29,273) $ (51,392)$(116,336)
Depreciation (11,054) (14,894) (15,200) (71,460) (112,608)
Foreign exchange and
other (1,432) (2,436) (1,572) (4,074) (9,514)
-------------------------------------------------------
Balance at December
31, 2012 $ (25,442) $ (40,045) $ (46,045) $(126,926)$(238,458)
-------------------------------------------------------
Depreciation (2,825) (2,255) (8,206) (13,995) (27,281)
-------------------------------------------------------
Foreign exchange 883 1,347 205 36,488 38,923
-------------------------------------------------------
Balance at March 31,
2013 $ (27,384) $ (40,953) $ (54,046) $(104,433)$(226,816)
-------------------------------------------------------
Plant, and equipment,
net
December 31, 2012 $ 91,200 $ 86,525 $ 93,533 $ 287,902 $ 559,160
-------------------------------------------------------
Balance at March 31,
2013 $ 87,263 $ 81,495 $ 80,987 $ 262,328 $ 512,073
NOTE 5 - RELATED PARTY TRANSACTIONS
Compensation of Directors and management
For the three months ended March 31, 2013 and 2012, the Company paid $69,954 and $70,082, respectively, in salaries and consulting costs to the Chief Executive Officer and Chief Financial Officer of the Company.
For the three months ended March 31, 2013 and 2012, the Company incurred $209,633 and $502,946 in geologic consulting costs and supply reimbursements to a Company owned by and controlled by an officer of the Company. 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. A total of $208,090 was owing at March 31, 2013 (December 31, 2012 - $55,723).
For the three months ended March 31, 2013 and 2012, the Company paid $27,784 and $18,859, respectively in fees to a Director of the Company.
A total of $106,873 and $339,913 in share-based payment expense was recognized in respect of options granted to Officers and Directors of the Company for the three months ended March 31, 2013 and 2012.
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. Approximately $50,000 has been paid under this contract.
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.
The following tables denote the movement in share capital and warrants to March 31, 2013.
Common
shares
----------------------------
Shares Share capital
----------------------------
December 31, 2011 103,703,705 $ 17,371,890
Issued in respect of the acquisition of Atlantis 59,108,300 11,406,764
Issued in respect of the acquisition of El Cinco 4,089,762 721,553
Private placement - December 6, 2012 34,427,500 4,357,650
----------------------------
December 31, 2012 and March 31, 2013 201,369,267 $ 33,857,857
----------------------------
----------------------------
Warrants
Warrant
Expiry Warrants reserve
------------- ------------
December 31, 2011 Jun.- 2014 586,106 $ 161,920
Assumed as part of the acquisition of
Atlantis Nov. - 2013 6,975,000 -
Broker warrants issued in respect of
private
placement Dec. -2014 1,664,375 50,802
Issued in respect of the private
placement Dec. - 2014 17,213,750 -
------------- ------------
December 31, 2012 and March 31, 2013 26,439,231 $ 212,722
------------- ------------
------------- ------------
Stock options
No stock options were granted during the three months ended March 31, 2013 and 2012.
As at March 31, 2013, the following options were outstanding.
Exercise Price per Fair value
Number of Options Option per Option Expiration Date
------------------------------------------------------------------------
16,066,840 11p 6p December 2022
------------------
16,066,840
A total of 8,033,420 options were exercisable at March 31, 2013.
The Company has recorded a warrant reserve on the statement of financial position, which represents the allocated fair value of the stock options, which are determined to be equity instruments.
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.
The Company's primary source of additional liquidity is financing transactions. The Company's primary use of cash to March 31, 2013 was exploration and evaluation expenses at the Rio Pescado project as well as general and administrative expenses.
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. The Company's cash requirements are dependent on the level of operating activity, a large portion of which is discretionary. Should management decide to increase its operating activity more funds, then what is currently in place would be required. It is not possible to predict whether financing efforts will be successful or sufficient in the future. At March 31, 2013 the Company had $2,440,490 (December 31, 2012 - $4,087,940) 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. The Company mitigates foreign exchange risk through forecasting its foreign currency denominated expenditures and maintaining an appropriate balance of cash in each currency to meet the expenditures. 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.
Credit risk: Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. As at December 31, 2012 the Company's credit risk is primarily attributable to cash. At March 31, 2013, 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. As at March 31, 2013, the Company had $1,000,000 in Banker's Acceptances.
Fair Values: The Company's cash and cash equivalents, receivables and accounts payables and accrued liabilities all had fair values which approximate their carrying values, are expected to be realized within the next financial year and are considered Level 2 in the fair value hierarchy. The fair value of the warrant liability is based on quoted market prices for comparable contracts and represents the amount the Company would have received from, or paid to, a counterparty for an equivalent contract. The warrant liability is considered Level 2 in the fair value hierarchy.
The following financial instruments which are re-measured to fair value at March 31, 2013 are determined based on the observable market prices for foreign exchange rates.
-- Cash and cash equivalents; and
-- Trade accounts payable
The fair value of the warrant liability is re-measured to fair value at March 31, 2013 based on the market prices for the Company's share price, interest rates and foreign exchange rates.
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 months ended March 31, 2013 and 2012.
For the three months ended March 31,
-------------------------------------
2013 2012
------------------ ------------------
Weighted average shares outstanding -
basic 201,329,267 103,703,705
Dilutive effect of share options and
warrants - -
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Weighted average shares outstanding -
diluted 201,329,267 103,703,705
Net loss $ (1,350,496) $ (3,187,473)
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Net loss per share - basic $ (0.01) $ (0.03)
Net loss per share - diluted $ (0.01) $ (0.03)
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As a result of the losses for the years ended December 31, 2012 and 2011, there is no dilutive effect of options and warrants.
NOTE 9 - SEGMENT INFORMATION
The Company 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. Currently the Company's reportable segment is geographic. The Company has provided information regarding unallocated assets and net loss as supplemental information.
As at
Total assets March 31, December 31,
2013 2012
--------------------------------------
Colombia $ 14,332,342 $ 14,440,020
Corporate 3,410,141 5,024,488
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Total $ 17,742,483 $ 19,464,508
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Three months ended March 31,
Net loss 2013 2012
--------------------------------------
Colombia $ (765,012) $ (1,100,893)
Corporate (585,484) (2,086,580)
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Total $ (1,350,496) $ (3,187,473)
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As at March 31, 2013, the total corporate liabilities amounted to $806,625 (December 31, 2012 - $1,363,473).
The amounts reported above are allocated based on the location where the amounts are incurred.
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 of which approximately $50,000 has been paid by December 31, 2012.
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 of which approximately $250,000 has been paid by December 31, 2012.
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 Limited
Elina Chow
VP, IR & Corporate Communications
+1.416.845.8495
info@touchstonegold.com
www.touchstonegold.com