Integra Resources Corp 6-K, filed Aug 14, 2024
Integra Resources Corp. (ITRG)
About this 6-K
Integra Resources Corp filed this 6-K on August 14, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2024.
Commission File Number 001-39372
INTEGRA RESOURCES CORP.
(Exact Name of Registrant as Specified in Charter)
1050-400 Burrard Street
Vancouver, British Columbia V6C 3A6
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F
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Form 20-F |
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Form 40-F |
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
EXPLANATORY NOTE
Exhibits 99.1, 99.2, and 99.5 submitted with this Form 6-K are hereby incorporated by reference into Integra Resources Corp's Registration Statement on Form F-10 (File No. 333-276530).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Integra Resources Corp. | |
| Date: August 14, 2024 | /s/ Andree St-Germain Andree St-Germain Chief Financial Officer |
INDEX TO EXHIBITS
Integra Resources Corp.
Management's Discussion and Analysis
For the Three and Six-Month Periods Ended
June 30, 2024 and 2023
Expressed in US Dollars
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
This portion of this quarterly report provides Management's Discussion and Analysis ("MD&A") of the financial condition and results of operations, to enable a reader to assess material changes in financial condition and results of operations as at, and for the three and six-month period ended June 30, 2024, in comparison to the corresponding prior-year periods. The MD&A is intended to help the reader understand Integra Resources Corp. ("Integra", "we", "our" or the "Company"), our operations, financial performance, and present and future business environment.
This MD&A has been prepared by management as at August 14, 2024 and should be read in conjunction with the unaudited interim condensed consolidated financial statements of Integra for the three and six-month periods ended June 30, 2024 and 2023 and the Company's audited consolidated financial statements of Integra for the years ended December 31, 2023 and 2022 prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (the "IASB"). Further information on the Company can be found on SEDAR+ at www.sedarplus.ca and the Company's website, www.integraresources.com.
For the purposes of preparing our MD&A, we consider the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. We evaluate materiality with reference to all relevant circumstances, including potential market sensitivity.
CORPORATE SUMMARY AND DESRIPTION OF THE BUSINESS
Integra Resources Corp. is one of the largest precious metals exploration and development companies in the Great Basin of the Western US. Integra is currently focused on advancing its two flagship oxide heap leach projects: the past producing DeLamar Project located in southwestern Idaho and the Nevada North Project, comprised of the Wildcat and Mountain View deposits, located in western Nevada. The Company also holds a portfolio of highly prospective early-stage exploration projects in Idaho, Nevada and Arizona. Integra's long-term vision is to become a leading US focused mid-tier high margin gold and silver producer.
As of August 14, 2024, the senior executives and directors of the Company were:
George Salamis Executive Chair
Jason Kosec President, CEO and Director
Andrée St-Germain Chief Financial Officer
Stephen de Jong Lead Director
Timo Jauristo Director
Anna Ladd-Kruger Director
C.L. "Butch" Otter Director
Carolyn Clark Loder Director
Sara Heston Director
Eric Tremblay Director
The Company is incorporated under the Business Corporations Act (British Columbia) (the "BCBCA").
The Company's head office is located at 1050 - 400 Burrard Street, Vancouver, BC V6C 3A6 and its registered office is located at 2200 HSBC Building, 885 West Georgia Street Vancouver, BC V6C 3E8.
The Company trades on the TSX Venture Exchange ("TSX-V"), under the trading symbol "ITR" and trades in the United States on the NYSE American under the stock symbol "ITRG". The Company's warrants trade on the TSX-V under the symbol MPM.WT and ITR.WT.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
The Company completed a 2.5 to 1 share consolidation on May 26, 2023 (the "Consolidation"). As a result, the share figures disclosed in this MD&A have been adjusted for the Consolidation.
The Company completed on May 4, 2023 a merger with Millennial Precious Metals Corp ("Millennial"), (the "Millennial Acquisition"). As a result of the transaction, Millennial has become a wholly-owned subsidiary of Integra.
Q2 2024 IN REVIEW AND RECENT EVENTS
CORPORATE
Merger with Florida Canyon Gold Inc ("FCGI")
The Company announced on July 29, 2024 that it has entered into a definitive arrangement agreement (the "Arrangement Agreement"), dated July 28, 2024, whereby Integra has agreed to acquire all of the issued and outstanding shares of FCGI pursuant to a court-approved plan of arrangement (the "Transaction").
Under the terms of the Transaction, FCGI shareholders will receive 0.467 of a common share of Integra (each whole share, an "Integra Share") for each common share of FCGI ("FCGI Share") held (the "Exchange Ratio"). Existing shareholders of Integra and FCGI will own approximately 60% and 40%, respectively, of the outstanding Integra Shares on closing of the Transaction (but prior to the completion of the private placement equity financing described below) on a fully-diluted in-the-money basis. The Exchange Ratio implies consideration of C$0.69 per FCGI Share based on the closing market price of the Integra Shares on the TSX-V on July 26, 2024 for total consideration of approximately C$95 million.
The Transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act, requiring the approval of (i) at least 66 ⅔% of the votes cast by the shareholders of FCGI voting in person or represented by proxy, (ii) if applicable, a simple majority of the votes cast by shareholders of FCGI, excluding for this purpose the votes of "related parties" and "interested parties" and other votes required to be excluded under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting of FCGI's shareholders to consider the Transaction, and (iii) the approval of the Ontario Superior Court of Justice.
In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals, including the approvals of the TSX-V and the satisfaction of certain other closing conditions customary in transactions of this nature as well as customary interim period covenants regarding the operation of each of the Companies' respective businesses. The Transaction is subject to the prior completion of the sale of FCGI's Mexican assets, as previously announced, and receipt of approval from the Federal Economic Competition Commission (Comisión Federal de Competencia Económica - COFECE), under the Federal Law of Economic Competition, to such sale. The transaction is also conditional upon binding arrangements being in place for the replacement of collateral supporting the FCGI Surety Bond and release of the Alamos Surety Bond Guarantee. The Arrangement Agreement contains customary provisions including fiduciary-out provisions in favour of FCGI, non-solicitation and right to match superior proposals in favour of Integra, and a $2.25 million termination fee payable to Integra under certain circumstances.
Subject to the satisfaction of these conditions, Integra and FCGI expect that the Transaction will be completed in the fourth quarter of 2024. Details regarding these and other terms of the Transaction are set out in the Arrangement Agreement, which is available under the SEDAR+ profiles of Integra and FCGI at www.sedarplus.ca.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Please refer to the press release dated July 29, 2024 for further details.
Bought Deal Private Placement Offering of Subscription Receipts
Concurrently with the Transaction (as described above), Integra has entered into an agreement with Stifel and Eight Capital, as co-lead underwriters and joint bookrunners (collectively, the "Co-Lead Underwriters"), on behalf of a syndicate of underwriters (the "Underwriters"), in connection with a bought deal private placement offering of 14,900,000 subscription receipts of Integra (the "Subscription Receipts") at a price of C$1.35 per Subscription Receipt (the "Issue Price") for gross proceeds to Integra of approximately C$20 million (the "Offering").
Each Subscription Receipt shall represent the right of a holder to receive, upon satisfaction or waiver of certain release conditions (including the satisfaction of all conditions precedent to the completion of the Transaction other than the issuance of the consideration shares to shareholders of FCGI) (the "Escrow Release Conditions"), without payment of additional consideration, one Integra Share, subject to adjustments and in accordance with the terms and conditions of a subscription receipt agreement to be entered into upon closing of the Offering (the "Subscription Receipt Agreement").
The gross proceeds from the sale of the Subscription Receipts will be deposited and held in escrow pending the satisfaction or waiver of the Escrow Release Conditions by TSX Trust Company, as subscription receipt and escrow agent under the Subscription Receipt Agreement. Integra will pay the Underwriters a cash commission and the expenses of the Underwriters incurred in connection with the Offering.
If a Termination Event (as defined below) occurs, the escrowed proceeds of the Offering will be returned on a pro rata basis to the holders of Subscription Receipts, together with the interest earned thereon, and the Subscription Receipts will be cancelled and have no further force and effect, all in accordance with the terms of the Subscription Receipt Agreement. For the purposes of the Brokered Offering, a "Termination Event" includes: (a) an event in which the Escrow Release Conditions are not satisfied or waived prior to December 15, 2024 (subject to extensions in limited circumstances); or (b) the termination of the Arrangement Agreement (as defined above) in accordance with its terms.
The Offering is expected to close on or about August 21, 2024 and is subject to TSXV and other necessary regulatory approvals. Following completion of the Transaction, the net proceeds from the Offering is expected to be used to fund mine optimization opportunities at Florida Canyon, for continued advancement of DeLamar and Nevada North, and for general corporate purposes.
The Subscription Receipts will be offered by way of: (a) private placement in each of the provinces of Canada pursuant to applicable prospectus exemptions under applicable Canadian securities laws; (b) in the United States or to, or for the account or benefit of U.S. persons, by way of private placement pursuant to the exemptions from registration provided by Rule 144A under the U.S. Securities Act and/or Rule 506(b) of Regulation D under the U.S. Securities Act and/or Section 4(a)(2) of the U.S. Securities Act, as applicable, and similar exemptions under applicable securities laws of any state of the United States; and (c) in jurisdictions outside of Canada and the United States as are agreed to by Integra and the Underwriters on a private placement or equivalent basis.
Amendments to the Beedie Capital Credit Facility
In connection with the closing of the Transaction (as described above), Integra announced that it has entered into a fourth supplemental credit agreement ("Fourth Supplemental Credit Agreement") with Beedie Capital to amend the convertible loan agreement dated July 28, 2022, as amended by a first supplemental credit agreement dated as of February 26, 2023, a second supplemental credit agreement dated as of May 4, 2023 and a third supplemental agreement dated as of February 20, 2024 (as amended by the Fourth Supplemental Credit Agreement (the "Credit Agreement"), pursuant to which Beedie Capital agreed to loan up to $20 million (the "Convertible Facility").
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Beedie Capital agreed to a second advance in the amount of $5 million subject to satisfying certain conditions under the Fourth Supplemental Credit Agreement, and to further amend the Convertible Facility to accommodate the assets of FCGI and its subsidiaries, each of which, following the closing of the Transaction, will be loan parties and provide guarantees and security for the obligations under the Credit Agreement.
Beedie Capital and Integra further agreed to, conditional upon closing of the Transaction, amend the terms of the Credit Agreement to provide for the following: (i) subject to TSX-V approval, modify the conversion price on the initial advance of $10 million (the "Initial Advance") from C$2.3625 (post-consolidation price) per Integra common share (the "Common Share") to a 25% premium to the Issue Price (as defined above), being C$1.6875; (ii) extension of the maturity date of the Credit Agreement from July 28, 2025 to July 31, 2027; (iii) extension of the period during which scheduled interest payments will be capitalized as principal from the current expiry date of October 31, 2024 to December 31, 2024; (iv) modification of the make-whole fee from the amount of interest Integra would have paid had the Convertible Facility continued for 36 months from the Initial Advance to 48 months from the Initial Advance; and (v) modification of the covenant requiring Integra to maintain a balance of unrestricted cash no less than $2 million to $5 million. Integra will also request to draw a second advance on the Convertible Facility in the principal amount of $5 million (the "Subsequent Advance") immediately following completion of the Transaction, with a conversion price equal to a 25% premium to the Issue Price. In the event that the amendment to the conversion price of the Initial Advance does not receive regulatory approval, Integra and Beedie Capital have agreed to a downward adjustment to the aforementioned premium in respect of the conversion price of the Subsequent Advance which would result in Beedie Capital receiving up to the same aggregate number of Integra Shares that Beedie Capital otherwise would have been entitled to receive upon conversion in full of the Initial Advance and Subsequent Advance had the conversion price of the Initial Advance been amended to equal a 25% premium to the Issue Price.
Wheaton Precious Metals 2nd Installment
The Company announced on July 12, 2024 that following the satisfaction of certain closing conditions, it has received the final cash installment of $4.875 million in connection with the previously announced royalty transaction between its wholly-owned subsidiary, DeLamar Mining Company, and Wheaton Precious Metals (Cayman) Co., a wholly-owned subsidiary of Wheaton Precious Metals Corp. ("Wheaton"). Wheaton acquired a 1.5% net smelter returns royalty on metal production from all claims of the DeLamar and Florida Mountain Deposit for an aggregate cash purchase price of US$9.75 million, paid in two installments. Integra received the first installment of $4.875 million on March 7, 2024.
The net proceeds from the Transaction will be used for the continued development of DeLamar, including work to support a Feasibility Study and the advancement of the National Environmental Policy Act permitting process in the United States.
Annual General Meeting
The Company held its Annual General Meeting of shareholders ("AGM") on June 21, 2024. A total of 41,654,580 common shares have been voted, representing 47.1% of the Company's outstanding shares. All of the directors were re-elected, and all other resolutions were approved by the Company's shareholders.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
DELAMAR PROJECT
Significant efforts were made to advance the feasibility study, especially to support the metallurgical results. The team is working on a "geo-metallurgical" model, incorporating knowledge from both geologists and metallurgists.
The geotechnical feasibility analysis was initiated in January and continued through out the quarter. Lab analyses were completed for most samples and rock mass characterization was commenced. Rigorous actions toward strategic mine planning, involving third party consultants including Whittle Consulting Inc., Respec and Forte Dynamic, are being conducted to generate a robust mine plan that ease execution, reduce technical, financial and execution risks and maximize project value. Discussions with major mining fleet manufacturers are being conducted to identify the innovative options available to the DeLamar Project.
Metallurgical test work and trade-off reviews continued through the 2nd quarter. An extensive permeability test campaign was conducted which yielded a blending strategy allowing the elimination of the agglomeration stage. Column, vat, and bottle rolls recovery and diagnostic tests will continue into the 3rd quarter. The trade-off review of truck haulage versus railveyor haulage concluded with the economic decision to remove the railveyor from the mine plan. A trade-off review of stacking methods, truck stack versus conveyor stack was conducted. The most economical and practical stacking option is currently a hybrid plan using trucks to stack the first two or three lifts followed by conveyor stacking for the remainder. The heap will be constructed in two separate stages. A smaller upper stage followed by a second lower stage that carries the bulk of the construction cost introduced in year four of the mine plan. Evaluations began to look at facility locations to confirm the most economical and constructable locations to include in the plan. The Company anticipates conclusions in the 3rd quarter. Solicitations for equipment and reagent costs have been sent to vendors to feed into capital expenditures and operating expenditures cost estimates.
Integra continues to coordinate monthly meetings with permitting agencies such as the Bureau of Land ("BLM"), Idaho Department of Environmental Quality ("IDEQ"), Idaho Department of Water Resources ("IDWR"), U.S. Army Corps of Engineers ("USACE"), and the third party National Environmental Policy Act ("NEPA") firm.
The Company submitted a revised MPO to the BLM in April and received a sufficiency determination from the BLM in May. The MPO sufficiency determination allows the mine plan to advance into the environmental review process as required by the NEPA. Primary critical path items continue to included development rock storage facilities ("DRSF") locations and configurations, and adding mine support features like growth media stockpiles and surface water runoff capture and storage facilities. Continued effort was placed on reclamation and closure. Integra continued its primary focus on the updated MPO to incorporate answers to initial BLM comments, including planning, source term modeling of groundwater conditions for mining and closure, backfill sequencing for closure, site wide water balance and sources of makeup water for mine operations. Integra is refining the surface water and groundwater adaptive water management plan strategy for effective water usage during operations. Integra completed the Q2 surface water and groundwater sampling event.
NEVADA NORTH PROJECT
The exploration team continue working on the planning and scoping for the upcoming 2024 Wildcat drilling program, with a focus on detail drilling campaign logistics and contractor selection. The drilling started on June 4th, and approximately 890 meters were drilled in June. No assay results have been received yet, and more information about the drilling program will be disclosed in late Q3 or during Q4.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Additional progress was achieved on the Wildcat Exploration Plan of Operations as the public comment period was initiated for the Project's environmental assessment, as required by NEPA. Completion of the Wildcat Environmental Assessment is anticipated by the end of the year.
OTHER PROJECTS
The Company announced on June 12, 2024 that Millennial Silver Nevada Inc. ("MSN"), a wholly-owned subsidiary of Integra, has entered into an option agreement (the "Option Agreement") dated June 11, 2024 with GreenLight Metals USA Corporation, a wholly-owned subsidiary of Green Light Metals Inc. ("GreenLight"), regarding the Cerro Colorado Property.
Pursuant to the terms of the Option Agreement, MSN granted GreenLight an exclusive option to purchase its interests in Millennial Arizona for a period of 12 months. In consideration for the grant of the option, GreenLight has agreed to deliver common shares of the company valued at no less than C$500,000 to Integra. The shares will be paid in two tranches: (i) the first tranche of shares, valued at no less than C$250,000, will be delivered within five days of the execution of the Option Agreement (received); and (ii) the second tranche of shares, valued at no less than C$250,000, will be delivered at the earlier of: 1) the time of a GreenLight go-public event, or 2) December 31, 2024. In order to exercise the option and acquire the interests in Millennial Arizona, GreenLight will pay Integra in cash or common shares of GreenLight, an amount equal to the total 2024 Cerro Colorado holding costs (other than exploration expenditures) incurred by Integra under the preexisting option through the closing date.
EXTERNAL AFFAIRS, SAFETY, ENVIRONMENTAL AND LAND
In Q2 2024, the External Affairs team engaged with over 5,000 stakeholders, with primary categories including community stakeholders, Tribal Nations, government/elected officials, and civic/non-profit organizations. In Idaho, the 3 months ending June 30th saw Integra involved with numerous community events including town hall meetings in Jordan Valley and Marsing, collaborative projects, and various initiatives advancing relationships with stakeholders. The team also met with Idaho's congressional delegation in Washington DC, as Integra advances towards NEPA and works to make the public aware of Integra's projects and the proposed pathway forward. In Nevada, several meetings with local elected officials and community groups were held, discussing the Nevada North Project and various exploration and permitting work plans underway. The External Affairs team remains focused on efforts that support the Company as it navigates permitting objectives on various fronts.
Integra DeLamar crews are experiencing a successful second quarter in 2024. There have been eight reported minor near-miss incidents, with no major or recordable incidents to date. The site's Total Recordable Injury Frequency Rate ("TRIFR") stands at 0.0 as of the end of Q2. The proactive reporting of near-misses and a sustained focus on safety have been instrumental in fostering a strong safety culture at the DeLamar site.
In addition to safety initiatives, Integra has continued its reclamation efforts and received positive feedback from the BLM regarding the activities completed in 2024. Site crews effectively managed a higher-than-normal spring melt and successfully initiated the Land Application Treatment ("LAT") for the 2024 season, while also addressing upland water management tasks.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
2024 OUTLOOK
DeLamar Project
Feasibility Study
A feasibility study on the heap leach project which will include the mineralized stockpiles is expected in Q4 2024. The feasibility study will incorporate multiple trade-off studies as well as detailed capital and operating expense analysis. The Company has also engaged Whittle Consulting Pty Ltd. to further optimize the strategic mine plan and economical outcome through maximizing mining and processing efficiencies.
Permitting
The Company submitted its Draft MPO to the BLM in April 2024. The BLM deemed the MPO sufficient to progress toward the Notice to Intent ("NOI"). The BLM has indicated that a scope freeze on the MPO will be required in Q3 2024 prior to their submission of the NOI for approvals through the various levels of government. Following the final approval of the NOI, the Draft Environmental Impact Statement ("DEIS") process will commence.
During the DEIS portion of the National Environmental Policy Act (“NEPA”) permitting process, the BLM will initiate a scoping period during which the BLM will conduct a more formal analysis on the environmental impacts proposed by the MPO at DeLamar.
Nevada North Project
The first phase of the 2024 exploration program at Wildcat is expected to be approximately 2,000 meters and will test the high-grade breccia targets, as well as focus on oxide expansion at several new mineralized targets outside the Preliminary Economic Assessment (“PEA”) pit area. The drilling activities started on June 4th, and approximately 890 meters were drilled in June. No assay results have been received yet, and more information about the drilling program will be disclosed in the second half of 2024.
Most of the holes drilled during June 2024 were targeting deep geophysical anomalies buried below the post-mineralization basalts (between 500 and 1,500 meters north of the Main Hill PEA pit). The Rhyolitic Tuff (the main mineralization host of Wildcat Deposit resources) was successfully intersected below the basalts, and significant amounts of clay and silicification alteration, as well as some hydrothermal breccia and veins (ranging from 1 to 30 cm), were encountered. These intersects validate the company's hypothesis that more mineralization might be occurring below the post-mineralization basalts. The holes intersected a large amount of altered material (clays), as well as some hydrothermal breccias, both indicators of significant hydrothermal activity. Drilling assay results expected in late Q3 or Q4 will indicate if these fluids were gold-bearing.
The next portion of the drilling program will target specific metallurgical and geotechnical areas at Wildcat. These drill holes will provide additional material to confirm and improve some of the assumptions used in the PEA. A few additional exploration holes will target potential PEA pit extensions west of Main Hill (Rhyolitic Ridge target).
Merger with Florida Canyon Gold Inc.
The Transaction (as described in the "Q2 2024 In Review and Recent Events" section above) is expected to close in Q4 2024.
The merger between FCGI and Integra creates a growth focused gold and silver producer in the Great Basin, providing balanced and transformational benefits to shareholders of both Integra and FCGI. The Transaction is strategically aligned with Integra’s long-term vision of becoming a leading US based mid-tier gold-silver producer and generating significant value for all shareholders and stakeholders. Following completion of the Transaction, Integra will hold a diversified and tactically sequenced portfolio of gold-silver production and development assets, all within the top tier mining jurisdiction of the Great Basin. Currently cash flowing Florida Canyon will serve as the foundational production asset, underpinned by two high-quality development projects in DeLamar and Nevada North. The combined portfolio provides a pathway for Integra to materially grow its production profile and become a mid-tier producer with the potential to deliver over 250kozs AuEq per annum from a top tier mining jurisdiction at a competitive all-in sustaining cost (“AISC”).
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
PROPERTIES
The Company's flagship projects are the gold-silver DeLamar Project (comprised of the DeLamar and Florida Mountain deposits), and the gold Nevada North Project (comprised of the Wildcat and Mountain View deposits). The Company also holds a portfolio of highly prospective early-stage exploration projects in Idaho, Nevada and Arizona.
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Idaho (all gold-silver projects): DeLamar Project - Development stage BlackSheep District - Exploration War Eagle Property - Exploration Nevada (all gold projects): Nevada North Project -Exploration/ Development stage Red Canyon Property - Exploration Ocelot Property - Exploration Marr Property - Exploration Eden Property - Exploration Dune Property - Exploration Arizona (copper project): Cerro Colorado Property - Exploration |
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(1) DeLamar Project, Idaho
The DeLamar Project consists of the neighboring DeLamar deposit and Florida Mountain deposit.
The bulk of the information in this section is derived from the "Technical Report for the DeLamar and Florida Mountain Gold - Silver Project, Owyhee County, Idaho, USA", dated October 31, 2023 with an effective date of August 25, 2023 (the "DeLamar Report"). The DeLamar Report is available for review under the Company's issuer profile on SEDAR+ at www.sedarplus.ca.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
The DeLamar Report also includes the results of a pre-feasibility study ("PFS") and mineral reserve statement on the DeLamar Project previously included in the National Instrument 43-101 - Standards of Disclosure for Mineral Projects ( "NI 43-101") technical report titled "Technical Report and Preliminary Feasibility Study for the DeLamar and Florida Mountain Gold - Silver Project, Owyhee County, Idaho, USA" dated March 22, 2022 with an effective date of January 24, 2022. The results of the PFS and the mineral reserve statement included therein and reproduced in the DeLamar Report remain unaffected by the updated mineral resource included in the DeLamar Report. The PFS and mineral reserve statement have an effective date of January 24, 2022. Sections 15, 16, 17, 18, 19, 21, 22, 23, and 24 have been reproduced in the DeLamar Report and have an effective date of January 24, 2022.
Mineral Resources and Reserves
Mineral Resource Estimate
Mineral resources have been estimated for both the Florida Mountain and DeLamar deposit areas of the DeLamar project.
Total DeLamar Project Gold and Silver Resources
| Type | Class | Tonnes | Au g/t | Au oz | Ag g/t | Ag oz |
| Measured | 6,313,000 | 0.36 | 74,000 | 16.9 | 3,427,000 | |
| Oxide | Indicated | 42,346,000 | 0.35 | 471,000 | 13.4 | 18,291,000 |
| Inferred | 11,132,000 | 0.28 | 99,000 | 7.8 | 2,795,000 | |
| Meas + Ind | 48,659,000 | 0.35 | 545,000 | 13.9 | 21,718,000 | |
| Measured | 10,043,000 | 0.42 | 136,000 | 21.8 | 7,032,000 | |
| Mixed | Indicated | 60,136,000 | 0.35 | 672,000 | 15.0 | 29,010,000 |
| Inferred | 8,533,000 | 0.27 | 74,000 | 8.4 | 2,302,000 | |
| Meas + Ind | 70,179,000 | 0.37 | 808,000 | 16.5 | 36,042,000 | |
| Measured | 21,056,000 | 0.51 | 345,000 | 32.8 | 22,198,000 | |
| NonOxide | Indicated | 65,486,000 | 0.45 | 943,000 | 22.2 | 46,640,000 |
| Inferred | 18,561,000 | 0.38 | 229,000 | 14.0 | 8,371,000 | |
| Meas + Ind | 86,542,000 | 0.46 | 1,288,000 | 24.7 | 68,838,000 | |
| Measured | - | - | - | - | - | |
| Stockpiles | Indicated | 42,455,000 | 0.22 | 296,000 | 11.8 | 16,149,000 |
| Inferred | 4,877,000 | 0.17 | 26,000 | 9.8 | 1,535,000 | |
| Meas + Ind | 42,455,000 | 0.22 | 296,000 | 11.8 | 16,149,000 | |
| Measured | 37,412,000 | 0.46 | 554,000 | 27.2 | 32,657,000 | |
| Total Resources | Indicated | 210,424,000 | 0.35 | 2,381,000 | 16.3 | 110,091,000 |
| Inferred | 43,101,000 | 0.31 | 428,000 | 10.8 | 15,002,000 | |
| Meas + Ind | 247,836,000 | 0.37 | 2,935,000 | 18.1 | 142,748,000 |
Notes:
1. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
2. In-situ oxide and mixed and all stockpile mineral resources are reported at a 0.17 and 0.1 g AuEq/t cut-off, respectively, in consideration of potential open-pit mining and heap-leach processing.
3. Non-oxide mineral resources are reported at a 0.3 g AuEq/t cut-off at DeLamar and 0.2 g AuEq/t at Florida Mountain in consideration of potential open pit mining and grinding, flotation, ultra-fine regrind of concentrates, and either Albion or agitated cyanide-leaching of the reground concentrates.
4. The mineral resources are constrained by pit optimizations.
5. Gold equivalent grades were calculated using the metal prices and recoveries presented in Table 14.18 and Table 14.19 of the DeLamar Report.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
6. Rounding as required by reporting guidelines may result in apparent discrepancies between tonnes, grades, and contained metal content.
7. The effective date of the mineral resources is August 25, 2023.
8. The estimate of mineral resources may be materially affected by geology, environment, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
The project mineral resources are inclusive of the mineral reserves discussed below. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Mineral Reserve Estimate
Mineral reserves have been calculated for both the Florida Mountain and DeLamar deposits of the DeLamar Project. The relevant author of the DeLamar Report has used measured and indicated mineral resources as the basis to define mineral reserves for both the DeLamar and Florida Mountain deposits. Mineral reserve definition was done by first identifying ultimate pit limits using economic parameters and pit optimization techniques. The resulting optimized pit shells were then used for guidance in pit design to allow access for equipment and personnel. The relevant author of the DeLamar Report then considered mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social, and governmental factors for defining the estimated mineral reserves.
Total proven and probable mineral reserves for the DeLamar Project from all pit phases are 123,483,000 tonnes at an average grade of 0.45 g Au/t and 23.27 g Ag/t, for 1,787,000 ounces of gold and 92,403,000 ounces of silver. The mineral reserves point of reference is the point where material is fed into the crusher.
Total Proven and Probable Mineral Reserves, DeLamar and Florida Mountain Deposits
| Classification | K Tonnes | g Au/t | K Ozs Au | g Ag/t | K Ozs Ag | Block Value | ||
| Oxide | Proven | 3,295 | 0.39 | 41 | 17.39 | 1,842 | 19.34 | |
| Probable | 31,486 | 0.37 | 375 | 15.24 | 15,426 | 17.93 | ||
| P&P | 34,782 | 0.37 | 416 | 15.44 | 17,268 | $ | 18.06 | |
| Mixed | Proven | 7,741 | 0.49 | 122 | 25.75 | 6,409 | 23.72 | |
| Probable | 49,718 | 0.40 | 637 | 17.29 | 27,632 | 18.29 | ||
| P&P | 57,459 | 0.41 | 759 | 18.43 | 34,042 | $ | 19.02 | |
| Non-oxide | Proven | 7,321 | 0.65 | 153 | 53.15 | 12,511 | 39.33 | |
| Probable | 23,921 | 0.60 | 459 | 37.16 | 28,582 | 33.81 | ||
| P&P | 31,243 | 0.61 | 612 | 40.91 | 41,093 | $ | 35.11 | |
| Total | Proven | 18,358 | 0.54 | 316 | 35.18 | 20,763 | $ | 29.16 |
| Probable | 105,126 | 0.44 | 1,471 | 21.20 | 71,640 | $ | 21.71 | |
| P&P | 123,483 | 0.45 | 1,787 | 23.27 | 92,403 | $ | 22.82 | |
Notes:
1. All estimates of mineral reserves have been prepared in accordance with NI 43-101 and are included within the current measured and indicated mineral resources.
2. Mineral reserves are based on prices of $1,650 per ounce Au and $21.00 per ounce Ag. The Mineral reserves were defined based on pit designs that were created to follow optimized pit shells created in Whittle.
3. Mineral reserves are reported using block value cutoff grades representing the cost of processing:
- Florida Mountain deposit oxide leach cutoff grade value of $3.55/t.
- Florida Mountain deposit mixed leach cutoff grade value of $4.20/t.
- Florida Mountain deposit non-oxide mill cutoff grade value of $10.35/t.
- DeLamar deposit oxide leach cutoff grade value of $3.65/t
- DeLamar deposit mixed leach cutoff grade value of $4.65/t.
- DeLamar deposit non-oxide mill cutoff grade value of $15.00/t.
4. The Mineral reserves point of reference is the point where is material is fed into the crusher.
5. The effective date of the mineral reserves estimate is January 24, 2022.
6. All ounces reported herein represent troy ounces, "g/t Au" represents grams per gold tonne and "g/t Ag" represents grams per silver tonne.
7. Columns may not sum due to rounding.
8. The estimate of mineral reserves may be materially affected by geology, environment, permitting, legal, title, taxation, sociopolitical, marketing or other relevant issues.
9. Energy prices of $2.50 per gallon of diesel and $0.065 per kWh were used.
The mineral reserve statement has an effective date of January 24, 2022 and is unaffected by the mineral resource update included in the DeLamar Report.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
(2) Nevada North Project, Nevada
The bulk of the information in this section is derived from the "NI 43-101 Technical Report Preliminary Economic Assessment for the Wildcat and Mountain View Projects, Pershing and Washoe Counties, Nevada, USA", dated July 30, 2023 with an effective date of June 28, 2023 (the "Nevada North Project Report"). The Nevada North Project Report is available for review under the Company's issuer profile on SEDAR+ at www.sedarplus.ca.
The Nevada North Project Report includes the results of the preliminary economic assessment ("PEA") for the combined Wildcat and Mountain View deposits and mineral resource statement for the Nevada North Project. The Nevada North Project Report PEA highlights include:
- After-tax Net Present Value ("NPV")(5%) of $309.6 million and 36.9% after-tax Internal Rate of Return ("IRR") using base case metal prices of $1,700/oz Au and $21.50/oz Ag
- Wildcat & Mountain View deposits generate combined annual production of ~94koz AuEq from year 1-5 with average annual production of 80koz AuEq over the 13 year Life-of-Mine ("LOM")
- LOM payable metals from Wildcat & Mountain View deposits of 1,043koz AuEq
- LOM site level cash costs of $882/oz AuEq on a co-product basis; LOM site level all-in sustaining cash costs ("AISC") of $973/oz AuEq on a co-product basis
- Year-1 initial capex of $115 million to begin operations at Wildcat
- Average oxide and transitional heap leach Au recovery of 71.4% at Wildcat deposit and 77.1% at Mountain View deposit
- Low combined LOM strip ratio of 1.21 (Wildcat deposit standalone strip ratio of 0.28)
- Total net free cash flow generated of $485 million over the LOM with average net annual free cash flow of $46 million from year 1-13
Mineral Resources
Wildcat Mineral Resource Estimate
The qualified persons have classified the Wildcat deposit mineral resource estimate as indicated, and inferred mineral resources, based on data density, search ellipse criteria and interpolation parameters. The resource estimate is considered to be a reasonable representation of the mineral resources of the Wildcat deposit, based on the currently available data and geological knowledge. The mineral resource estimate follows the 2014 CIM Definition Standards on Mineral Resources and Reserves. The effective date of the mineral resource estimate is June 28, 2023.
Wildcat Deposit Mineral Resource Estimate Statement
Notes:
1. Effective date of the mineral resource estimate is June 28, 2023.
2. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
3. The estimate is reported for an open-pit mining scenario, based upon reasonable assumptions. The cut-off grade of 0.15 g/t Au was calculated using a gold price of $1,800/oz, mining costs of $2.4/t, processing cost of $3.7/t, G&A costs of $0.5/t, and metallurgical gold recoveries varying from 73.0% to 52.0% and silver recoveries of 18%. The gold equivalent figures in the resource estimate are calculated using the formula (g/t Au + (g/t Ag ÷ 77.7)).
4. An average bulk density of 2.6 g/cm3 was assigned to all mineralized rock types.
5. The Inverse Distance cubed interpolation was used with a parent block size of 15.24 m x 15.24 m x 9.144 m.
6. Rounding as required by reporting guidelines may result in minor apparent discrepancies between tonnes, grades, and contained metal content.
7. The estimate of mineral resources may be materially affected by geological, environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
8. Neither the Company nor the qualified person responsible is aware of any known environmental, permitting, legal, title-related, taxation, socio-political, marketing or other relevant issue that could materially affect the mineral resource estimate other than any information already disclosed in the Nevada North Project Report.
Mountain View Mineral Resource Estimate
The qualified persons have classified the Mountain View deposit mineral resource estimate as indicated and inferred mineral resources based on data density, search ellipse criteria and interpolation parameters. The estimate is considered to be a reasonable representation of the mineral resources of the Mountain View deposit, based on the currently available data and geological knowledge. The mineral resource estimate follows the 2014 CIM Definition Standards on Mineral Resources and Reserves. The effective date of the mineral resource estimate is June 28, 2023.
Mountain View Deposit Mineral Resource Estimate Statement
Notes:
1. Effective date of the mineral resource estimate is June 28, 2023.
2. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
3. The estimate is reported for an open-pit mining scenario, based upon reasonable assumptions. The cut-off grade of 0.15 g/t Au was calculated using a gold price of $1,800/oz, mining costs of $1.67/t to $2.27/t, processing cost of $3.1/t, G&A costs of $0.4/t, and metallurgical gold recoveries varying from 30.0% to 86.0% with a silver recovery of 20%. Gold equivalent in the mineral resource estimate is calculated using the formula (g/t Au + (g/t Ag ÷ 77.7)).
4. An average bulk density of 2.6 g/cm³ was assigned to all mineralized rock types.
5. Inverse Distance cubed interpolation was used with a parent block size of 7.62 m x 7.62 m x 6.10 m.
6. Rounding as required by reporting guidelines may result in minor apparent discrepancies between tonnes, grades, and contained metal content.
7. The estimate of mineral resources may be materially affected by geological, environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
8. Neither the Company nor the qualified person responsible is aware of any known environmental, permitting, legal, title-related, taxation, socio-political, marketing, or other relevant issue that could materially affect the mineral resource estimate other than any information already disclosed in the Nevada North Project Report.
(3) BlackSheep District, Idaho
On February 14, 2019, Integra announced the acquisition of a highly prospective trend of multiple epithermal centers 6 km to the northwest of the DeLamar Project, a trend now referred to as the BlackSheep District ("BlackSheep" or the "District"). The District was identified in part during site visits and research by renowned epithermal geologists Dr. Jeff Hedenquist and Dr. Richard Sillitoe. Dr. Sillitoe and Dr. Hedenquist, along with Integra's exploration team led by Dr. Max Baker, mapped the area and interpreted the District to have undergone very limited erosion since the mid-Miocene mineralization event, suggesting the productive zone of mineralization is potentially located approximately 200 m beneath the surface. Minimal historical exploration did encounter gold-silver in BlackSheep; however, historic drilling was shallow, less than 100 m vertical on average, and did not enter the theorized productive zone.
The BlackSheep District to the northwest of the DeLamar deposit is comparable in geographical size to both the DeLamar and Florida Mountain deposits combined. The nature of the mineralization and alteration in BlackSheep includes extensive sinter deposits surrounding centers of hydrothermal eruption breccia vents associated with high-level coliform banded amorphous to chalcedonic silica with highly anomalous gold, silver arsenic, mercury, antimony and selenium values. In addition to some preliminary rock chip sampling, Integra completed an extensive soil geochemistry grid over the BlackSheep District showing highly anomalous gold and silver trends over significant lengths.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
(4) War Eagle Property, Idaho
On January 21, 2019, Integra announced that, through its wholly owned subsidiary, DeLamar Mining Company, it entered into an option agreement with Nevada Select Royalty, Inc. ("Nevada Select"), a wholly owned subsidiary of Gold Royalty Corp.to acquire Nevada Select's interest in a State of Idaho Mineral Lease encompassing the War Eagle gold-silver Deposit ("War Eagle") situated 3 km east of Integra's Florida Mountain deposit. Upon exercise of the option (exercised in December 2022), Nevada Select transferred its right, title and interest in the State Lease to DeLamar Mining Company.
In the War Eagle Mountain District, Integra had previously acquired the Carton Claim group comprising of six patented mining claims covering 45 acres and located 750 m north of the State Lease.
War Eagle Mountain has a rich history of high-grade gold-silver production dating back to the late 1800's. The War Eagle-Florida-DeLamar geological settings, all hosting low sulphidation epithermal gold-silver are genetically related to the same mineralization forming event that occurred roughly 16 million years ago. The local geology and ore mineralogy found within the low sulphidation epithermal veins on War Eagle Mountain are similar to the regimes found at DeLamar and Florida Mountain to the west. The key difference is the host rock. Historically mined gold and silver in high grade veins at War Eagle was predominately mined and hosted by late Cretaceous age granitic rock. It should be noted that historically, the veins of War Eagle Mountain were of far higher grade compared to any other mining operations in the district, including DeLamar and Florida Mountain. Past production on these high-grade vein systems has outlined strike lengths in excess of 1 km and depth extents of up to 750 meters or more.
Please refer to press release dated November 19, 2020 for drilling results.
(5) Red Canyon Property, Nevada
The Red Canyon property is located within the Antelope (Eureka) mining district in Nevada, 52 km northwest of Eureka. The property can be accessed from the town of Eureka by following US Highway 50 west for 40km to 3 Bar Road. This road is then followed north for approximately 50km to the intersection with the Red Canyon access road. Local roads and dirt tracks lead south and east to the main areas of interest on the Red Canyon property. The 6,650-acre land package consists of 348 unpatented claims. The claims are publicly owned lands administered by the U.S. BLM. Gold mineralization at Red Canyon is sediment-hosted, Carlin-style, including deeply oxidized bodies overlying sulfide mineralization. Currently there are no defined mineral resources at Red Canyon, but there are 10 drill-ready targets.
(6) Ocelot Property, Nevada
The Ocelot (historically known as Zeno) property is located within the Shoshone Mountains in Nevada, 57km southwest from the world class Au deposits at Pipeline/Cortez. The 3,515-acre land package consists of 172 unpatented claims on publicly owned lands administered by the U.S. Bureau of Land Management (BLM). Mineralization at Ocelot is strongly representative of a low sulfidation epithermal Au/Ag system, hosted in the Valmy Formation and volcano-sedimentary units overlying local quartzite basement rocks. Several target areas display broad zones of alteration including argilization (quartz-illite) and intense silicification with boiling textures, characteristic of the upper levels in epithermal systems. Several promising target zones at Ocelot display encouraging Au, As, Hg, and other pathfinder element data from previous sampling programs. Mapping reports broad zones of silicification and sinter on the property with assays up to 200 ppb Au. Historical shallow drilling reported intersections up to 0.01 opt Au associated with micro breccia veinlets.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
(7) Marr Property, Nevada
The Marr property is located within Antelope Valley, Nevada, located 60km southwest from the world-class Pipeline deposit. The 1,921-acre land package consists of 93 unpatented claims. The claims are publicly owned lands administered by the U.S. Bureau of Land Management (BLM). Mineralization at Marr is believed to be a low sulfidation, epithermal Au/Ag epithermal. The target area is covered, with historical drilling reporting zones of broad argillic alteration and high-level exposures of a low-sulfidation system, as characterized by chalcedony and opaline veining with sinter terraces. Anomalous Au and pathfinder elements in high-level quartz-chalcedony veins with boiling textures are common.
(8) Eden Property, Nevada
The Eden property is located on the northwestern side of the East Range in the western Nevada rift, along the Sleeper-Sandman trend. Eden is located 22km southwest of the Town of Winnemucca within Pershing and Humboldt Counties. The 1,223-acre land package consists of 68 unpatented claims. The claims are publicly owned lands administered by the U.S. Bureau of Land Management (BLM). Mineralization at Eden represents a low sulfidation, epithermal Au/Ag system. The property can be accessed by a frontage road along Interstate 80. The target is hosted in permeable Cenozoic volcanic and sedimentary rocks cut by basaltic dikes with quartz veins along through-going "plumbing structures".
(9) Dune Property, Nevada
The Dune property is located in the Humboldt River Valley in the western Nevada rift, along the Sleeper - Sandman trend. Dune is located 18km southwest of the Town of Winnemucca within Humboldt County. The 644-acre land package consists of 36 unpatented claims. The claims are publicly owned lands administered by the U.S. Bureau of Land Management (BLM). Mineralization at Dune consists of low sulfidation, epithermal Au-Ag typical of significant economic Au-Ag deposits of this region of Nevada. The property can be accessed via Jungo Road west from Winnemucca and then by an unimproved road approximately 3km to the south. The target concept is a structurally- and stratigraphically-controlled low sulfidation gold system, hosted by permeable Cenozoic volcanic and sedimentary rocks. A large part of the property is covered by quaternary gravels.
(10) Cerro Colorado Property, Arizona
The Cerro Colorado property is located within a historic silver mining district, 70km southwest of Tucson, Arizona and is situated along the Laramide porphyry copper belt. Cerro Colorado is located 26km southwest of the historical Pima Mining District, which contains several active porphyry copper and skarn mining operations. Seven distinct areas of interest comprise the combined 10,097-acre land package, consisting of 229 unpatented claims on lands administered by the BLM and 14 Arizona State Land Department (ASLD) mineral leases situated on State of Arizona Lands. Cerro Colorado hosts numerous historical mining operations that exploited Ag-Au (±Cu)-bearing veins hosted by Jurassic and early Laramide volcanic rocks. District-scale and local alteration patterns indicate potential for porphyry copper mineralization within intrusive units beneath the volcanic host rocks. Limited historical drilling in intrusive units adjacent to Integra's areas done by Phelps Dodge and Mine Finders reported weakly mineralized porphyry copper intrusions. Recent academic work in the area suggests a lack of Cenozoic extension and dismemberment in the district, preserving the Ag-Au veins and associated deeper porphyry copper systems upright and intact below older volcanic rocks.
The Company announced in June 2024 an Option Agreement between MSN and GreenLight regarding the Cerro Colorado Property. Pursuant to the terms of the Option Agreement, MSN granted GreenLight an exclusive option to purchase its interests in Millennial Arizona for a period of 12 months. Please refer to the "Q2 in Review and Recent Events" section above for more information.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated information of the Company as of June 30, 2024, December 31, 2023, and 2022, prepared in accordance with IFRS. The selected consolidated financial information should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three and six-month periods ended June 30, 2024 and the Company's audited annual consolidated financial statements for the years ended December 31, 2023 and 2022.
| Six-Months Ended June 30, 2024 (unaudited) $ |
Year Ended December 31, 2023 $ |
Year Ended December 31, 2022 $ |
|||||||
| Exploration and evaluation expenses | (7,486,717 | ) | (22,009,119 | ) | (13,467,035 | ) | |||
| Operating loss | (11,196,693 | ) | (28,430,663 | ) | (19,212,921 | ) | |||
| Other expense | (1,074,244 | ) | (585,606 | ) | (594,100 | ) | |||
| Net loss | (12,270,937 | ) | (29,016,269 | ) | (19,807,021 | ) | |||
| Net loss per share | (0.15 | ) | (0.52 | ) | (0.71 | ) | |||
| Other comprehensive income (loss) | 35,892 | 77,070 | (663,590 | ) | |||||
| Comprehensive loss | (12,235,045 | ) | (28,939,199 | ) | (20,470,611 | ) | |||
| Cash and cash equivalents | 10,585,717 | 8,815,290 | 15,919,518 | ||||||
| Exploration and evaluation assets | 58,679,168 | 68,402,183 | 40,801,924 | ||||||
| Total assets | 79,494,666 | 82,388,987 | 61,422,237 | ||||||
| Total current liabilities | 16,107,623 | 16,671,379 | 15,390,668 | ||||||
| Total non-current liabilities | 22,216,134 | 25,197,362 | 24,708,404 | ||||||
| Working capital (deficit) * | 905,658 | (6,803,922 | ) | 1,603,220 | |||||
| Working capital – excluding | |||||||||
| convertible debt liability | 12,053,471 | 3,839,810 | 11,651,434 |
*Working capital includes convertible debt liability. The convertible debt is required to be included under short term liabilities given that it is convertible at the option of the lender. The maturity of the convertible debt is August 2025 and the Company has the option to extend the term by an additional 12 months (see "Subsequent Events" section).
In the year ended December 31, 2023, the Company reclassified its site support costs from general and administration expenses to exploration and evaluation expenses. The new classification has not impacted the operating loss, as the Company expenses all exploration and evaluation costs. Comparative numbers have been reclassified to conform with the current period reclassification.
The operating losses for the six-month period ended June 30, 2024 and years ended December 31, 2023 and 2022 were mostly driven by exploration and evaluation expenses, as well as head office G&A expenses.
Other expenses for the six-month period ended June 30, 2024 was mostly driven by the interest and accretion expenses related to the convertible debt (non-cash), reclamation accretion expenses (non-cash), and foreign exchange loss, partly offset by interest and rent income and change in fair value of derivatives (non-cash). Other expenses for the years ended December 31, 2023 and 2022 was mostly driven by the interest and accretion expenses related to the convertible debt (non-cash), and reclamation accretion expenses (non-cash), partly offset by interest and rent income, change in fair value of derivatives (non-cash), and foreign exchange gain.
Other comprehensive income (loss) amounts are related to the foreign exchange translation adjustment.
Total assets as at June 30, 2024 decreased compared to as at December 31, 2023 mostly due the exploration and evaluation assets decrease resulting from the NSR Royalty sale and reclamation adjustment in the current six-month period. This decrease was partly offset by increased cash resulting from the March 2024 equity financing and the first instalment for the NSR Royalty sale received in March 2024. Total assets as at December 31, 2023 increased compared to as at December 31, 2022, mostly due to an increase in exploration and evaluation assets as a result of the Millennial Acquisition.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Working capital as at June 30, 2024 increased compared to the year ended December 31, 2023 mostly due to cash increase resulting from the March equity financing and the first instalment of the NSR Royalty received in March. Working capital in the year ended December 31, 2023 decreased compared to the year ended December 31, 2022 mostly due to cash expenditures on increased exploration and evaluation activities.
Total current liabilities slightly decreased as at June 30, 2024 compared to the year ended December 31, 2023, as a result of a decrease in trade and other payables and due to related parties. Total current liabilities slightly increased as at December 31, 2023 compared to as at December 31, 2022, as a result of an increase in convertible host liability (due to increased loan interest rate), increases in trade and other payables and due to related parties. These increases were partially offset by a decrease in the convertible derivative component (due to a decrease in share price).
Total non-current liabilities slightly decreased as at June 30, 2024 compared to the year ended December 31, 2023 mostly due to a decrease in long-term reclamation liability. Total non-current liabilities slightly increased as at December 31, 2023 compared to as at December 31, 2022 mostly due to the reclamation liability increase and an increase in long-term lease liability, due to the Millennial Acquisition in 2023.
Exploration and Evaluation Assets Summary:
| Idaho Properties | Nevada & Arizona Properties |
Total | |||||||
| Balance at December 31, 2022 | $ | 40,801,924 | $ | - | $ | 40,801,924 | |||
| Land acquisitions/option payments | 39,000 | 2,800,000 | 2,839,000 | ||||||
| Millennial acquisition | - | 24,523,830 | 24,523,830 | ||||||
| Legal fees | 93,882 | 12,014 | 105,896 | ||||||
| Reclamation adjustment* | 16,486 | - | 16,486 | ||||||
| Depreciation** | (7,403 | ) | - | (7,403 | ) | ||||
| Total | 40,943,889 | 27,335,844 | 68,279,733 | ||||||
| Advance minimum royalty | 97,450 | 25,000 | 122,450 | ||||||
| Balance at December 31, 2023 | 41,041,339 | 27,360,844 | 68,402,183 | ||||||
| Land acquisitions/option payments | 15,000 | 125,000 | 140,000 | ||||||
| Rich Gulch acquisition | 2,100,000 | - | 2,100,000 | ||||||
| Sale of NSR Royalty | (9,750,000 | ) | - | (9,750,000 | ) | ||||
| Millennial acquisition | - | 18,821 | 18,821 | ||||||
| Legal & accounting and tax fees | 405,790 | 51,304 | 457,094 | ||||||
| Reclamation adjustment* | (2,762,588 | ) | - | (2,762,588 | ) | ||||
| Depreciation** | (3,692 | ) | - | (3,692 | ) | ||||
| Total | 31,045,849 | 27,555,969 | 58,601,818 | ||||||
| Advance minimum royalty | 77,350 | - | 77,350 | ||||||
| Balance at June 30, 2024 | $ | 31,123,199 | $ | 27,555,969 | $ | 58,679,168 |
*Reclamation adjustment is the change in present value of the reclamation liability, mainly due to changes to inflation rate and discount rate. **A staff house building with a carrying value of $187,150 has been included in the DeLamar property. This building is being depreciated.
The Company spent $7,486,717 in exploration and evaluation activities during the six-month period ended June 30, 2024 (June 30, 2023 - $10,666,135). In the 2023 fiscal year, the Company reclassified its site support costs to the Exploration and Evaluation expenses. These costs include all the support staff (such as site accounting team, site management, safety, equipment operators, etc) and project related G&A costs (such as fees on the surety bond, insurance, staff house, Boise office, rental apartment, software and other G&A fees). Historically, the Company has classified those costs as “General & Administration” expenses in the Consolidated statements of operations and comprehensive loss. The reclassification does not impact the operating loss, as the Company also expenses exploration and evaluation costs. Comparative numbers have been reclassified to conform with the current’s period reclassification. Recognizing that site support costs are integral to the exploration and development project activities, management has carefully evaluated this alignment and concluded that classifying these expenses under exploration and evaluation expenses offers a more accurate and transparent reflection of the nature of those costs. The site support expenses are now reported in the table below.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
The following tables outline the Company's exploration and evaluation expense summary for the six-month periods ended June 30, 2024 and 2023:
Exploration and Evaluation Expense Summary:
| Idaho Properties | ||||||||||||
| Six-Month Period Ended June 30, 2024 |
DeLamar Project |
Other Idaho Deposits |
Joint Expenses |
Total Idaho Properties |
||||||||
| Exploration drilling - other drilling labour & related costs | 29,999 | - | - | 29,999 | ||||||||
| Metallurgical drilling - other drilling labour & related costs | 5,568 | - | - | 5,568 | ||||||||
| Other exploration expenses* | 235,453 | - | - | 235,453 | ||||||||
| Other development expenses** | 929,630 | - | - | 929,630 | ||||||||
| Land*** | 190,915 | 22,602 | 39,804 | 253,321 | ||||||||
| Permitting | 1,340,904 | - | - | 1,340,904 | ||||||||
| Metallurgical test work | 282,937 | - | - | 282,937 | ||||||||
| Technical reports and engineering | 1,614,186 | - | - | 1,614,186 | ||||||||
| External affairs/Community engagement | 240,143 | - | - | 240,143 | ||||||||
| Site support expenses**** | 896,989 | - | - | 896,989 | ||||||||
| Total | $ | 5,766,724 | $ | 22,602 | $ | 39,804 | $ | 5,829,130 | ||||
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM and IDL annual fees, consulting, property taxes, legal, professional, etc. expenses
****Includes site G&A expenses
| Nevada & Arizona Properties | |||||||||
| Six-Month Period Ended June 30, 2024 |
Nevada North Project |
Other Nevada & Arizona |
Total Nevada & Arizona Properties |
||||||
| Contract exploration drilling | 319,958 | - | 319,958 | ||||||
| Exploration drilling - other drilling labour & related costs | 95,032 | - | 95,032 | ||||||
| Other exploration expenses* | 223,410 | 40,007 | 263,417 | ||||||
| Other development expenses** | 150,368 | - | 150,368 | ||||||
| Land*** | 229,951 | 304,316 | 534,267 | ||||||
| Permitting | 197,973 | - | 197,973 | ||||||
| Metallurgical test work | 3,800 | - | 3,800 | ||||||
| External affairs/Community engagement | 18,839 | - | 18,839 | ||||||
| Site support expenses**** | 73,933 | - | 73,933 | ||||||
| Total | $ | 1,313,264 | $ | 344,323 | $ | 1,657,587 | |||
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM and Arizona State Lands Department annual fees, consulting, property taxes, legal, professional,etc. expenses
****Includes site G&A expenses
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Exploration and Evaluation Expense Summary:
| Idaho Properties | ||||||||||||
| Six-Month Period Ended June 30, 2023 |
DeLamar Project |
Other Idaho Deposits |
Joint Expenses |
Total |
||||||||
| Contract exploration drilling | $ | 1,897,847 | $ | - | $ | - | $ | 1,897,847 | ||||
| Contract met drilling | 175,906 | - | - | 175,906 | ||||||||
| Contract condemnation drilling | 183,639 | - | - | 183,639 | ||||||||
| Contract geotech drilling | 231,334 | - | - | 231,334 | ||||||||
| Exploration drilling - other drilling labour & related costs | 946,948 | - | - | 946,948 | ||||||||
| Met drilling - other | 98,877 | - | - | 98,877 | ||||||||
| Condemnation drilling - other drilling - labour & related costs | 84,359 | - | - | 84,359 | ||||||||
| Other exploration expenses* | 493,728 | 1,376 | - | 495,104 | ||||||||
| Other development expenses** | 1,180,696 | - | - | 1,180,696 | ||||||||
| Land*** | 203,365 | 22,602 | 20,018 | 245,985 | ||||||||
| Permitting | 2,212,003 | - | - | 2,212,003 | ||||||||
| Metallurgical test work | 84,050 | 108,986 | - | 193,036 | ||||||||
| Technical reports and engineering | 668,608 | - | - | 668,608 | ||||||||
| External affairs / Community engagement | 168,748 | - | - | 168,748 | ||||||||
| Site support expenses**** | 1,013,710 | - | - | 1,013,710 | ||||||||
| Total | $ | 9,643,818 | $ | 132,964 | $ | 20,018 | $ | 9,796,800 | ||||
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM and IDL annual fees, consulting, property taxes, legal, etc. expenses
****Includes site G&A expenses
| Nevada & Arizona Properties (Post-Acquisition Period) |
|||||||||
| Six-Month Period Ended June 30, 2023 |
Nevada North Project |
Other Nevada & Arizona |
Total Nevada & Arizona Properties |
||||||
| Other exploration expenses* | 3,027 | 16,546 | 19,573 | ||||||
| Other development expenses** | 44,091 | - | 44,091 | ||||||
| Land*** | 214,889 | 243,736 | 458,625 | ||||||
| Permitting | 56,002 | - | 56,002 | ||||||
| Metallurgical test work | 3,454 | - | 3,454 | ||||||
| Technical reports and engineering | 99,614 | - | 99,614 | ||||||
| External affairs/Community engagement | 12,500 | - | 12,500 | ||||||
| Site support expenses**** | 175,476 | - | 175,476 | ||||||
| Total | $ | 609,053 | $ | 260,282 | $ | 869,335 | |||
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM and Arizona State Lands Department annual fees, consulting, property taxes, legal, etc. expenses
****Includes site G&A expenses
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
RESULTS OF OPERATIONS
SIX-MONTH PERIOD ENDED JUNE 30, 2024
Net loss for the six-month period ended June 30, 2024 was $12,270,937 and the comprehensive loss $12,235,045, compared to a net loss of $13,946,691 and a comprehensive loss of $13,547,013 for the six-month period ended June 30, 2023.
Overall, operating expenses were lower in the current six-month period mostly due to a decrease in exploration and evaluation expenses, partially off-set by greater general and administrative expenses. Other expenses were higher in the current six-month period comparing to the same period last year mostly due to higher convertible interest and accretion expenses, lower interest income, lower change in fair value of derivatives (non-cash), and foreign exchange loss vs foreign exchange gain in the comparative period. The variances between these two periods were primarily due to the following items:
- Exploration and evaluation expenses: the Company incurred $7,486,717 in exploration and evaluation expenses during the current six-month period (June 30, 2023 - $10,666,135). The difference is mostly due to decreased drilling activities in the current six-month period.
- Stock based compensation: these expenses amounted to $893,022 in the current six-month period (June 30, 2023 - $523,381). The variance is due to the timing of vesting of equity incentive awards granted from 2018 to 2023.
- Professional fees: the Company incurred $419,758 in expenses during the current six-month period (June 30, 2023 - $270,959). The difference is mostly due to higher legal, tax, and technical due diligence fees related to the FCGI acquisition in the current period.
THREE-MONTH PERIOD ENDED JUNE 30, 2024
Net loss for the three-month period ended June 30, 2024 was $6,776,360 and the comprehensive loss $6,784,380, compared to a net loss of $7,303,460 and a comprehensive loss of $6,887,883 for the three-month period ended June 30, 2023.
Overall, operating expenses were lower in the current three-month period mostly due to a decrease in exploration and evaluation expenses. Other expenses were higher in the current three-month period comparing to the same period last year mostly due to higher convertible interest and accretion expenses, lower interest income, higher change in fair value of derivatives (non-cash), and foreign exchange loss vs foreign exchange gain in the comparative period. The variances between these two periods were primarily due to the following items:
- Exploration and evaluation expenses: the Company incurred $4,177,304 in exploration and evaluation expenses during the current quarter (June 30, 2023 - $5,281,080). The difference is mostly due to decreased drilling activities in the current three-month period.
- Stock based compensation: these expenses amounted to $449,272 in the current three-month period (June 30, 2023 - $235,441). The variance is due to the timing of vesting of equity incentive awards granted from 2018 to 2023.
- Professional fees: the Company incurred $233,838 in expenses during the current three-month period (June 30, 2023 - $153,914). The difference is mostly due to higher legal, tax, and technical due diligence fees related to the FCGI acquisition fees in the current period.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
- Compensation and benefits: Company incurred $559,134 in expenses during the current three-month period (June 30, 2023 - $657,774). The difference is mostly due a slight reduction in staff.
Operating Activities
Net cash used by the Company in operating activities for the current six-month period ended June 30, 2024 was $11,965,770 (June 30, 2023 - $13,063,294). The variance between 2024 and 2023 quarters was mostly driven by lower exploration and evaluation expenses.
Investing Activities
Net cash provided by the investing activities for the current six-month period ended June 30, 2024 was $4,111,708 (June 30, 2023 (used in) - $3,667,421). The difference between 2024 and 2023 quarters was mostly due cash received from the sale of the net smelter return royalty in the current six-month period.
Financing Activities
Net cash provided by financing activities in the current six-month period ended June 30, 2024 was $9,588,596 (June 30, 2023 - $23,817,572). The difference between 2024 and 2023 quarters was mostly due to the higher equity financing completed in 2023. The Company raised gross proceeds of approximately $11 million in 2024 through a bought deal public offering vs $25.8 million in 2023.
The Company raised total net proceeds of approximately $19.6 million in March 2024 through a $9.9 million bought deal financing and $9.7 million via the sale of a 1.5% NSR to Wheaton (of which a first installment of $4.8mm was received in March 2024). The table below summarized the expected use of proceeds including:
| March 2024 Financing |
Expected Use of Proceeds ($M) (1) March 2024 to February 2025 |
Actual Use of Proceeds ($M) (2) March 2024 to February 2025 |
Variance ($M) (3) |
| DeLamar Project | |||
| Land Compliance and Site G&A | $2.4 | $2.5 | $0.1 |
| Development ( incl Engineering/Permitting) | $8.3 | $8.3 | $ - |
| Exploration | $0.4 | $0.4 | $ - |
| Ongoing Reclamation / Water Treatment | $0.9 | $1.0 | $0.1 |
| Nevada North | |||
| Land Compliance and Site G&A | $1.0 | $1.1 | $0.1 |
| Development ( incl Engineering/Permitting) | $1.7 | $1.4 | ($0.3) |
| Exploration | $1.8 | $1.8 | $ - |
| Corporate G&A | $3.1 | $2.9 | ($0.2) |
| Total | $19.6 | $19.4 | ($0.2) |
(1) Net proceeds disclosed in March 7, 2024 financing prospectus of C$26.4 million = US$19.6 million (March 7 exchange rate of 0.7422). Assumes full exercise of the over-allotment and both installments of the Wheaton royalty sale.
(2) Actual use of proceeds figures include March to June 30, 2024 actual expenditures and estimated expenditures from July 2024 to February 2025.
(3) Immaterial variance between disclosed expected use of proceeds and actual use of proceeds.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
SUMMARY OF SELECTED QUARTERLY INFORMATION
The following table sets forth selected quarterly financial information for each of the last eight quarters *.
| Quarter Ending | Revenue ($) |
Net Loss ($) |
Net Loss Per Share ($) |
| June 30, 2024 | Nil | (6,776,360) | (0.07) |
| March 31, 2024 | Nil | (5,494,577) | (0.08) |
| December 31, 2023 | Nil | (6,996,163) | (0.10) |
| September 30, 2023 | Nil | (8,073,415) | (0.12) |
| June 30, 2023 | Nil | (7,303,460) | (0.11) |
| March 31, 2023 | Nil | (6,643,231) | (0.19) |
| December 31, 2022 | Nil | (6,204,720) | (0.20) |
| September 30, 2022 | Nil | (3,305,706) | (0.11) |
*Previous quarters net loss per share data adjusted to reflect the 2.5 to 1 share consolidation completed in May 2023.
The net loss for last eight quarters was mostly driven by exploration and evaluation expenses, corporate G&A expenses (such as compensation, corporate development and marketing, office and administration, professional, and regulatory fees), and stock-based compensation expenses (non-cash item), partly offset by interest and rent income. A foreign exchange gain was recorded in the first, second, and fourth quarters of 2023 and third quarter of 2022. The net loss for all quarters also includes accretion expenses and interest expense accrual related to the convertible debt, as well as change in fair value of derivatives (all three are non-cash items).
LIQUIDITY AND CAPITAL RESOURCES
The Company does not have a mineral property in production and consequently does not receive revenue from the sale of precious metals. The Company currently has no operations that generates cash flow. The Company has financed its operations primarily through the issuance of share capital, convertible debt and just recently, the sale of an NSR. The continued operations of the Company are dependent on its ability to complete sufficient public equity financings, the availability of its convertible loan facility or generate profitable operations in the future.
The Company's working capital, including the convertible debt liability as of June 30, 2024 was $905,658 (December 31, 2023 - working capital deficit $6,803,922). The Company's working capital, excluding the convertible debt liability as of June 30, 2024 was $12,053,471 (December 31, 2023 - working capital $3,839,810). Working capital as at June 30, 2024 increased compared to as at December 31, 2023 mostly due to a cash increase resulting from an equity financing and a net smelter return royalty in Q1 2024.
The Company actively manages its liquidity using budgeting based on expected cash flows to ensure there are appropriate funds for meeting short-term obligations during the year.
The Company announced on July 29, 2024 that has entered into a definitive arrangement whereby Integra has agreed to acquire all of the issued and outstanding shares of Florida Canyon Gold Inc pursuant to a court-approved plan of arrangement (see Subsequent events section). The Company's capital management approach is most likely to change upon closing of the transaction.
FINANCIAL INSTRUMENTS
A description of financial instruments and their fair value is included in the audited consolidated financial statements for the years ended December 31, 2023 and 2022, filed on SEDAR+ at www.sedarplus.ca and on Integra's website at www.integraresources.com.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
COMMITMENTS AND CONTRACTUAL OBLIGATIONS
There are a number of net smelter returns, royalties, advance minimum royalties, annual claim filings, and work commitments on the Company's properties. Summaries of all those commitments are included in Note 14 of the Company's unaudited interim condensed consolidated financial statements for the three and six-month periods ended June 30, 2024 and 2023.
Other Commitments
The Company's other commitments at June 30, 2024 are as follows:
| Commitments and contractual obligations (in millions of $) (1) |
Less than one year commitment |
1 - 3 years commitment |
4 - 5 years commitment |
Over 5 years commitment |
Total | ||||||||||
| Convertible debenture (2) | $ | 0.5 | $ | 13.7 | $ | - | $ | - | $ | 14.2 | |||||
| Material land payments (3) | 1.3 | 7.6 | - | - | 8.9 | ||||||||||
| Total | $ | 1.8 | $ | 21.3 | $ | - | $ | - | $ | 23.1 |
(1) Undiscounted cash expenditures
(2) Includes interest payments (payable in cash or shares, at the Company's option) and principal repayment.
(3) Includes payments of $1.8 mm for Red Canyon and $2.2 mm for Cerro Colorado. Both are optional payments, and payable only if we decide to acquire the properties.
TRANSACTIONS WITH RELATED PARTIES
Related parties include the Board of Directors, CEO, CFO, and enterprises that are controlled by these individuals.
As June 30, 2024, $391,596 (December 31, 2023 - $1,158,454) was due to related parties for payroll expenses, consulting fees, bonuses accruals, vacation accruals and other expenses. Receivables from related parties (related to rent and office expenses) as of June 30, 2024 were $23,540 (December 31, 2023 - $20,643) and was recorded in receivables.
Key Management Compensation:
Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company's Board of Directors, Executive Chair, CEO, and CFO.
Remuneration attributed to executives and directors for the six-month periods ended June 30, 2024 and 2023 were as follows:
| June 30, 2024 | June 30, 2023 | |||||
| Short-term benefits* | $ | 708,822 | $ | 821,327 | ||
| Associate companies** | 22,540 | 4,081 | ||||
| Stock-based compensation | 513,098 | 325,407 | ||||
| Total | $ | 1,244,460 | $ | 1,150,815 |
*Short-term employment benefits include salaries, consulting fees, vacation accruals and bonus accruals for key management. It also includes directors' fees for non-executive members of the Company's Board of Directors.
**Mostly consulting services and rent expenses due to and from entities for which Integra's executives or directors are executives or directors.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
In the six-month period ended June 30, 2024, the Company issued 56,662 deferred share units to certain directors, in lieu of their directors' fees, as elected by those directors.
In the six-month period ended June 30, 2023, the Company issued 38,893 deferred share units to certain directors, in lieu of their directors' fees, as elected by those directors. The share-based payment related to these DSUs is included in the above table under stock-based compensation.
OUTSTANDING SHARE DATA
Share capital details are included in the Company's unaudited interim condensed consolidated financial statements for the three and six-month periods ended June 30, 2024 and 2023.
The following table outlines the outstanding share data as of the date of this MD&A:
| August 14, 2024 | |||
| Issued and outstanding common shares | 88,458,702 | ||
| Outstanding Options/RSUs/DSUs to purchase common shares | 4,921,094 | ||
| ITR Warrants | 8,305,874 | ||
| Issued and outstanding common shares (fully diluted) | 101,685,670 |
SUBSEQUENT EVENTS
Wheaton Precious Metals 2nd Installment
On July 8, 2024, the Company received $4.875 million as the second instalment of the Wheaton NSR Royalty purchase.
Merger with Florida Canyon Gold Inc ("FCGI")
The Company announced on July 29, 2024 that it has entered into a definitive arrangement agreement (the "Arrangement Agreement"), dated July 28, 2024, whereby Integra has agreed to acquire all of the issued and outstanding shares of FCGI pursuant to a court-approved plan of arrangement (the "Transaction").
Under the terms of the Transaction, FCGI shareholders will receive 0.467 of a common share of Integra (each whole share, an "Integra Share") for each common share of FCGI ("FCGI Share") held (the "Exchange Ratio"). Existing shareholders of Integra and FCGI will own approximately 60% and 40%, respectively, of the outstanding Integra Shares on closing of the Transaction (but prior to the completion of the private placement equity financing described below) on a fully-diluted in-the-money basis. The Exchange Ratio implies consideration of C$0.69 per FCGI Share based on the closing market price of the Integra Shares on the TSX-V on July 26, 2024 for total consideration of approximately C$95 million.
The Transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act, requiring the approval of (i) at least 66 ⅔% of the votes cast by the shareholders of FCGI voting in person or represented by proxy, (ii) if applicable, a simple majority of the votes cast by shareholders of FCGI, excluding for this purpose the votes of "related parties" and "interested parties" and other votes required to be excluded under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting of FCGI's shareholders to consider the Transaction, and (iii) the approval of the Ontario Superior Court of Justice.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals, including the approvals of the TSXV and the satisfaction of certain other closing conditions customary in transactions of this nature as well as customary interim period covenants regarding the operation of each of the Companies' respective businesses. The Transaction is subject to the prior completion of the sale of FCGI's Mexican assets, as previously announced, and receipt of approval from the Federal Economic Competition Commission (Comisión Federal de Competencia Económica - COFECE), under the Federal Law of Economic Competition, to such sale. The transaction is also conditional upon binding arrangements being in place for the replacement of collateral supporting the FCGI Surety Bond and release of the Alamos Surety Bond Guarantee. The Arrangement Agreement contains customary provisions including fiduciary-out provisions in favour of FCGI, non-solicitation and right to match superior proposals in favour of Integra, and a $2.25 million termination fee payable to Integra under certain circumstances.
Subject to the satisfaction of these conditions, Integra and FCGI expect that the Transaction will be completed in the fourth quarter of 2024. Details regarding these and other terms of the Transaction are set out in the Arrangement Agreement, which is available under the SEDAR+ profiles of Integra and FCGI at www.sedarplus.ca.
Bought Deal Private Placement Offering of Subscription Receipts
Concurrently with the Transaction (as described above), Integra has entered into an agreement with Stifel and Eight Capital, as co-lead underwriters and joint bookrunners (collectively, the "Co-Lead Underwriters"), on behalf of a syndicate of underwriters (the "Underwriters"), in connection with a bought deal private placement offering of 14,900,000 subscription receipts of Integra (the "Subscription Receipts") at a price of C$1.35 per Subscription Receipt (the "Issue Price") for gross proceeds to Integra of approximately C$20 million (the "Offering").
Each Subscription Receipt shall represent the right of a holder to receive, upon satisfaction or waiver of certain release conditions (including the satisfaction of all conditions precedent to the completion of the Transaction other than the issuance of the consideration shares to shareholders of FCGI) (the "Escrow Release Conditions"), without payment of additional consideration, one Integra Share, subject to adjustments and in accordance with the terms and conditions of a subscription receipt agreement to be entered into upon closing of the Offering (the "Subscription Receipt Agreement").
The gross proceeds from the sale of the Subscription Receipts will be deposited and held in escrow pending the satisfaction or waiver of the Escrow Release Conditions by TSX Trust Company, as subscription receipt and escrow agent under the Subscription Receipt Agreement. Integra will pay the Underwriters a cash commission and the expenses of the Underwriters incurred in connection with the Offering.
If a Termination Event (as defined below) occurs, the escrowed proceeds of the Offering will be returned on a pro rata basis to the holders of Subscription Receipts, together with the interest earned thereon, and the Subscription Receipts will be cancelled and have no further force and effect, all in accordance with the terms of the Subscription Receipt Agreement. For the purposes of the Brokered Offering, a "Termination Event" includes: (a) an event in which the Escrow Release Conditions are not satisfied or waived prior to December 15, 2024 (subject to extensions in limited circumstances); or (b) the termination of the Arrangement Agreement (as defined above) in accordance with its terms.
The Offering is expected to close on or about August 21, 2024 and is subject to TSX-V and other necessary regulatory approvals. Following completion of the Transaction, the net proceeds from the Offering is expected to be used to fund mine optimization opportunities at Florida Canyon, for continued advancement of DeLamar and Nevada North, and for general corporate purposes.
Amendments to the Beedie Capital Credit Facility
In connection with the closing of the Transaction (as described above), Integra announced that it has entered into a fourth supplemental credit agreement ("Fourth Supplemental Credit Agreement") with Beedie Capital to amend the convertible loan agreement dated July 28, 2022, as amended by a first supplemental credit agreement dated as of February 26, 2023, a second supplemental credit agreement dated as of May 4, 2023 and a third supplemental agreement dated as of February 20, 2024 (as amended by the Fourth Supplemental Credit Agreement (the "Credit Agreement"), pursuant to which Beedie Capital agreed to loan up to $20 million (the "Convertible Facility")).
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Beedie Capital agreed to a second advance in the amount of $5 million subject to satisfying certain conditions under the Fourth Supplemental Credit Agreement, and to further amend the Convertible Facility to accommodate the assets of FCGI and its subsidiaries, each of which, following the closing of the Transaction, will be loan parties and provide guarantees and security for the obligations under the Credit Agreement.
Beedie Capital and Integra further agreed to, conditional upon closing of the Transaction, amend the terms of the Credit Agreement to provide for the following: (i) subject to TSXV approval, modify the conversion price on the initial advance of $10 million (the "Initial Advance") from C$2.3625 (post-consolidation price) per Integra common share (the "Common Share") to a 25% premium to the Issue Price (as defined above), being C$1.6875; (ii) extension of the maturity date of the Credit Agreement from July 28, 2025 to July 31, 2027; (iii) extension of the period during which scheduled interest payments will be capitalized as principal from the current expiry date of October 31, 2024 to December 31, 2024; (iv) modification of the make-whole fee from the amount of interest Integra would have paid had the Convertible Facility continued for 36 months from the Initial Advance to 48 months from the Initial Advance; and (v) modification of the covenant requiring Integra to maintain a balance of unrestricted cash no less than $2 million to $5 million. Integra will also request to draw a second advance on the Convertible Facility in the principal amount of $5 million (the "Subsequent Advance") immediately following completion of the Transaction, with a conversion price equal to a 25% premium to the Issue Price. In the event that the amendment to the conversion price of the Initial Advance does not receive regulatory approval, Integra and Beedie Capital have agreed to a downward adjustment to the aforementioned premium in respect of the conversion price of the Subsequent Advance which would result in Beedie Capital receiving up to the same aggregate number of Integra Shares that Beedie Capital otherwise would have been entitled to receive upon conversion in full of the Initial Advance and Subsequent Advance had the conversion price of the Initial Advance been amended to equal a 25% premium to the Issue Price.
CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are based on historical experience and other factors considered to be reasonable and are reviewed on an ongoing basis. Revisions to estimates and the resulting effects on the carrying amounts of the Company's assets and liabilities are accounted for prospectively.
Measurement uncertainties are described in the Company's annual audited consolidated financial statements for the years ended December 31, 2023 and 2022 and the Company's unaudited interim condensed consolidated financial statements for the three and six-month periods ended June 30, 2024 and 2023.
CHANGES IN ACCOUNTING POLICIES
The Company's accounting policies are in accordance with IFRS and described in the Company's annual audited consolidated financial statements for the years ended December 31, 2023 and 2022 and the Company's unaudited interim condensed consolidated financial statements for the three and six-month periods ended June 30, 2024 and 2023.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
RISKS AND UNCERTAINTIES
The Company is subject to a number of risks and uncertainties due to the nature of its business. The Company's exploration activities expose it to various financial and operational risks that could have a significant impact on its level of operating cash flows in the future.
Readers are advised to study and consider risk factors disclosed in the Company's Form 20-F for the fiscal year ended December 31, 2023, dated March 28, 2024 and available under the Company's issuer profile on SEDAR+ at www.sedarplus.ca.
Limitations on the Mineral Resource and Reserve Estimates
The Company's Mineral Resources and Mineral Reserves are estimates only and are based on estimates of mineral content and quantity derived from limited information acquired through drilling and other sampling methods and require judgmental interpretations of geology, structure, grade distributions and trends and other factors. The Company's Mineral Resource and Mineral Reserve estimates may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing and other factors. There are numerous uncertainties inherent in estimating Mineral Resources and Mineral Reserves, including many factors beyond the Company's control. Estimation is a subjective process, and the accuracy of the Company's Mineral Resource or Mineral Reserve estimate is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation of that data and the level of congruence with the actual size and characteristics of the Company's deposits. No assurance can be given that the estimates are accurate or that the indicated level of metal will be produced. Actual mineralization or geological formations may be different from those predicted. Further, it may take many years before production is possible, and during that time the economic feasibility of exploiting a discovery may change. These estimates may, therefore, require adjustments or downward revisions based upon further exploration or development work, drilling or actual production experience.
Fluctuations in gold and silver prices, results of drilling, metallurgical testing and production, the evaluation of mine plans after the date of any estimate, permitting requirements or unforeseen technical or operational difficulties may require revision of the Company's Mineral Resource and Mineral Reserve estimates. Prolonged declines in the market price of gold or silver may render Mineral Reserves containing relatively lower grades of mineralization uneconomical to recover and could materially reduce the Company's Mineral Reserves. Mineral Resource estimates are based on drill hole information, which is not necessarily indicative of conditions between and around the drill holes. Accordingly, such Mineral Resource estimates may require revision as more geologic and drilling information becomes available and as actual production experience is gained. Mineral Resources and Mineral Reserves should not be interpreted as assurances of life of mine or of the profitability of future operations. There is a degree of uncertainty in estimating Mineral Resources and Mineral Reserves and of the grades and tonnages that are forecast to be mined and, as a result, the grade and volume of gold or silver that the Company mines, processes and recovers may not be the same as currently anticipated. Any material reductions in estimates of Mineral Resources and Mineral Reserves, or of the Company's ability to economically extract these Mineral Reserves, could have a material adverse effect on the Company's projects and the Company's business, financial condition, results of operations, cash flows or prospects.
Mineral Resources are not Mineral Reserves and have a greater degree of uncertainty as to their existence and feasibility. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There is no assurance that Mineral Resources will be upgraded to Proven or Probable Mineral Reserves. Inferred Mineral Resources have a substantial degree of uncertainty as to their existence, and economic and legal feasibility. Accordingly, there is no assurance that Inferred Mineral Resources reported herein will ever be upgraded to a higher category. Investors are cautioned not to assume that part or all of an Inferred Mineral Resource exists, or is economically or legally mineable.
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| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
CAUTIONARY NOTE TO US INVESTORS WITH RESPECT TO MINERAL RESOURCES
National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") is a rule of the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Technical disclosure contained in this MD&A has been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System. These standards differ from the requirements of the U.S. Securities and Exchange Commission ("SEC") and resource information contained in this MD&A may not be comparable to similar information disclosed by domestic United States companies subject to the SEC's reporting and disclosure requirements.
NON-IFRS MEASURES
Alternative performance measures in this MD&A such as "cash cost", "AISC" "free cash flow" are furnished to provide additional information. These non-IFRS performance measures are included in this MD&A because these statistics are used as key performance measures that management uses to monitor and assess performance of the Company's projects, and to plan and assess the overall effectiveness and efficiency of mining operations. These performance measures do not have a standard meaning within IFRS and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS. As the Company has yet to commence production, the equivalent historical non-IFRS financial measure is $0.
Cash Costs
Cash costs include site operating costs (mining, processing, site G&A), refinery costs and royalties. While there is no standardized meaning of the measure across the industry, the Company believes that this measure is useful to external users in assessing operating performance.
All-In Sustaining Cost ("AISC")
Site level AISC include cash costs and sustaining capital but excludes head office G&A and exploration expenses. The Company believes that this measure is useful to external users in assessing operating performance and the Company's ability to generate free cash flow from current operations.
Free Cash Flow
Free cash flows are revenues net of operating costs, royalties, capital expenditures and cash taxes. The Company believes that this measure is useful to the external users in assessing the Company's ability to generate cash flows from the Company's projects.
Working Capital
The Company has included a non-IFRS measure for "working capital" in this MD&A to supplement its financial statements, which are presented in accordance with IFRS. The Corporation believes that this measure provides investors with an improved ability to evaluate the performance of the Corporation. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore, such measures may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The following tables summarize the Company's working capital reconciliation as at June 30, 2024, December 31, 2023, and December 31, 2022.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
| Reconciliation for the period ended | June 30, 2024 | December 31, 2023 | December 31, 2022 | ||||||
| Current assets | $ | 17,013,281 | $ | 9,867,457 | $ | 16,993,888 | |||
| Less current liabilities | $ | 16,107,623 | $ | 16,671,379 | $ | 15,390,668 | |||
| Working capital (Deficit) | $ | 905,658 | ($6,803,922 | ) | $ | 1,603,220 | |||
| Reconciliation for the period ended | June 30, 2024 | December 31, 2023 | December 31, 2022 | ||||||
| Current assets | $ | 17,013,281 | $ | 9,867,457 | $ | 16,993,888 | |||
| Less current liabilities - Excluding Convertible Debenture | $ | 4,959,810 | $ | 6,027,647 | $ | 5,342,454 | |||
| Working capital - Excluding Convertible Debenture | $ | 12,053,471 | $ | 3,839,810 | $ | 11,651,434 |
TECHNICAL INFORMATION
The scientific and technical information contained in this MD&A has been reviewed and approved by Raphael Dutaut (Ph.D., P.Geo, OGQ Membership 1301), Vice President Geology and Mining, who is a "Qualified Person" ("QP") as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
CORPORATE GOVERNANCE
Management and the Board recognizes the value of good corporate governance and the need to adopt best practices. The Corporation is committed to continuing to improve its corporate governance practices in light of its stage of development and evolving best practices and regulatory guidance.
The Board has adopted a Board mandate outlining its responsibilities and defining its duties. The Board has five committees: the Audit Committee, the Compensation Committee, the Nomination and Corporate Governance Committee, the Technical and Safety Committee, and the Environmental Social Governance Committee. Each Committee has a committee charter, which outlines the Committee's mandate, procedures for calling a meeting, and provides access to outside resources.
The Board has also adopted a Code of Business Conduct and Ethics, which governs the ethical behavior of all employees, management, and directors. For more details on the Company's corporate governance practices, please refer to Integra's website (www.integraresources.com) and the statement of Corporate Governance contained in Integra's Management Information Circular dated June 21, 2024. The Management Information Circular is available on Integra's website (www.integraresources.com) and on SEDAR+ (www.sedarplus.ca).
The Corporation's Directors have expertise in exploration, metallurgy, mining, financial reporting and accounting, M&A, financing, permitting and government relations, mine development and mine operations, environmental considerations, human resources, governance, and relations with tribal nations and local communities. The Board meets at least four times per year.
CONTROL AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to management, as appropriate to allow for timely decisions about public disclosure. The Company has disclosure controls and procedures in place to provide reasonable assurance that any information required to be disclosed by the Company under securities legislation is recorded, processed, summarized, and reported within the applicable time periods and that required information is accumulated and communicated to the Company's management, so that decisions can be made about the timely disclosure of that information.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
Management has evaluated the effectiveness of the design and operation of the Company's disclosure controls as of June 30, 2024 and concluded that the disclosure controls and procedures were effective.
Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in the rules of the National Instrument 52-109 in Canada ("NI 52-109") and Rules 13a-15(f) and 15d-15(f) of the United States Securities Exchange Act of 1934, as amended. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company's financial reporting for external purposes in accordance with IFRS as issued by the IASB.
Based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, the Company's internal control over financial reporting include:
(a) Maintaining records, that in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of the Company;
(b) Providing reasonable assurance that transactions are recorded as necessary for preparation of the consolidated financial statements in accordance with IFRS as issued by the IASB;
(c) Providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and the directors of the Company; and
(d) Providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on the Company's consolidated financial statements would be prevented or detected on a timely basis.
Management has evaluated the effectiveness of the internal control over financial reporting as of June 30, 2024 and concluded that those controls were effective.
Limitation of Controls and Procedures
Management believes that any disclosure controls and procedures or internal control over financial reporting, no matter how well designed and operated, have their inherent limitations. Due to those limitations (resulting from unrealistic or unsuitable objectives, human judgment in decision making, human errors, management overriding internal control, circumventing controls by the individual acts of some persons, by collusion of two or more people, external events beyond the entity's control), internal control can only provide reasonable assurance that the objectives of the control system are met.
The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
There were no changes in internal controls of the Company during the six-month period ended June 30, 2024 that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Certain information set forth in this MD&A contains "forward-looking statements" and "forward-looking information" within the meaning of applicable Canadian securities legislation and applicable United States securities laws (referred to herein as forward-looking statements). Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which includes, but is not limited to, statements with respect to: the future financial or operating performance of the Company and the Company's mineral properties and project portfolio; the results from work performed to date; the estimation of mineral resources and reserves; the realization of mineral resource and reserve estimates; the development, operational and economic results of technical reports on mineral properties referenced herein; magnitude or quality of mineral deposits; the anticipated advancement of the Company' mineral properties and project portfolios; exploration expenditures, costs and timing of the development of new deposits; underground exploration potential; costs and timing of future exploration; the completion and timing of future development studies; estimates of metallurgical recovery rates; exploration prospects of mineral properties; requirements for additional capital; the future price of metals; government regulation of mining operations; environmental risks; the timing and possible outcome of pending regulatory matters; the realization of the expected economics of mineral properties; future growth potential of mineral properties; and future development plans.
Forward-looking statements are often identified by the use of words such as "may", "will", "could", "would", "anticipate", "believe", "expect", "intend", "potential", "estimate", "budget", "scheduled", "plans", "planned", "forecasts", "goals" and similar expressions. Forward-looking statements are based on a number of factors and assumptions made by management and considered reasonable at the time such information is provided. Assumptions and factors include: the Company's ability to complete its planned exploration programs; the absence of adverse conditions at mineral properties; no unforeseen operational delays; no material delays in obtaining necessary permits; the price of gold remaining at levels that render mineral properties economic; the Company's ability to continue raising necessary capital to finance operations; and the ability to realize on the mineral resource and reserve estimates. Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or result expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: integration risks; general business, economic and competitive uncertainties; the actual results of current and future exploration activities; conclusions of economic evaluations; meeting various expected cost estimates; benefits of certain technology usage; changes in project parameters and/or economic assessments as plans continue to be refined; future prices of metals; possible variations of mineral grade or recovery rates; the risk that actual costs may exceed estimated costs; geological, mining and exploration technical problems; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; the speculative nature of mineral exploration and development (including the risks of obtaining necessary licenses, permits and approvals from government authorities); title to properties; and management's ability to anticipate and manage the foregoing factors and risks. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Readers are advised to study and consider risk factors disclosed in Integra's annual report on Form 20-F dated March 28, 2024 for the fiscal year ended December 31, 2023.
Investors are cautioned not to put undue reliance on forward-looking statements. The forward-looking statements contained herein are made as of the date of this MD&A and, accordingly, are subject to change after such date. The Company disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. Investors are urged to read the Company's filings with Canadian securities regulatory agencies, which can be viewed online under the Company's profile on SEDAR+ at www.sedarplus.ca.
|
| MANAGEMENT’S DISCUSSION & ANALYSIS For the Three and Six-Month Periods Ended June 30, 2024 and 2023 |
MANAGEMENT'S RESPONSIBILITY
Management is responsible for all information contained in this MD&A. The audited consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and include amounts based on management's informed judgments and estimates. The financial and operating information included in this MD&A is consistent with that contained in the audited consolidated financial statements in all material aspects.
Management maintains internal controls to provide reasonable assurance that financial information is reliable and accurate, and assets are safeguarded.
The Audit Committee has reviewed the audited consolidated financial statements with management. The Board of Directors has approved these audited consolidated financial statements on the recommendation of the Audit Committee.
Jason Kosec
Chief Executive Officer
August 14, 2024
Integra Resources Corp.
Unaudited Interim Condensed Consolidated Financial Statements
For the Three and Six-Month Periods Ended
June 30, 2024 and 2023
Expressed in US Dollars
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying unaudited interim condensed consolidated financial statements of Integra Resources Corp. are the responsibility of the management and Board of Directors of the Company.
The unaudited interim condensed consolidated financial statements have been prepared by management, on behalf of the Board of Directors, in accordance with the accounting policies disclosed in the notes to the financial statements. Where necessary, management has made informed judgments and estimates in accounting for transactions which were not complete at the statement of financial position date. In the opinion of management, the financial statements have been prepared within acceptable limits of materiality and are in accordance with International Financial Reporting Standards using accounting policies consistent with International Financial Reporting Standards appropriate in the circumstances.
Management has established systems of internal control over the financial reporting process, which are designed to provide reasonable assurance that relevant and reliable financial information is produced.
The Board of Directors is responsible for reviewing and approving the financial statements together with other financial information of the Company and for ensuring that management fulfills its financial reporting responsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the unaudited interim condensed consolidated financial statements together with other financial information of the Company. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the unaudited interim condensed consolidated financial statements together with other financial information of the Company for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.
| Jason Kosec" (signed) | "Andrée St-Germain" (signed) |
| Jason Kosec, Chief Executive Officer | Andrée St-Germain, Chief Financial Officer |
Integra Resources Corp.
Unaudited Interim Condensed Consolidated Financial Statements
For the Three and Six-Month Periods Ended
June 30, 2024 and 2023
| Table of Contents |
Integra Resources Corp.
Unaudited Interim Condensed Consolidated Statements of Financial Position
(Expressed in US Dollars)
| |
June 30, 2024 |
December 31, 2023 |
|||||
| Assets | |||||||
| Current Assets | |||||||
| Cash and cash equivalents (Note 5) | $ | 10,585,717 | $ | 8,815,290 | |||
| Marketable securities (Note 14) | 181,871 | - | |||||
| Receivables and prepaid expenses (Notes 6 and 14) | 6,245,693 | 1,052,167 | |||||
| Total Current Assets | 17,013,281 | 9,867,457 | |||||
| Long-Term Deposits | 72,843 | 73,439 | |||||
| Restricted Cash | 89,790 | 61,989 | |||||
| Lease Receivable (Note 6) | 128,248 | 164,338 | |||||
| Property, Plant and Equipment (Note 7) | 1,914,279 | 2,198,927 | |||||
| Right-of-Use Assets (Note 8) | 728,780 | 824,764 | |||||
| Exploration and Evaluation Assets (Note 9) | 58,679,168 | 68,402,183 | |||||
| Deferred Transaction Costs - Convertible Debt (Note 13) | 868,277 | 795,890 | |||||
| Total Assets | $ | 79,494,666 | $ | 82,388,987 | |||
| Liabilities | |||||||
| Current Liabilities | |||||||
| Trade and other payables (Note 12) | $ | 2,698,345 | $ | 3,315,646 | |||
| Other liability (Note 14) | 363,465 | - | |||||
| Current lease liability (Note 8) | 379,069 | 361,877 | |||||
| Current equipment financing liability | 71,329 | 135,664 | |||||
| Convertible debt facility - liability component (Note 13) | 10,915,813 | 10,027,732 | |||||
| Convertible debt facility - derivative component (Note 13) | 232,000 | 616,000 | |||||
| Current reclamation and remediation liability (Note 15) | 1,056,006 | 1,056,006 | |||||
| Due to related parties (Note 11) | 391,596 | 1,158,454 | |||||
| Total Current Liabilities | 16,107,623 | 16,671,379 | |||||
| Long-Term Lease Liability (Note 8) | 586,296 | 718,489 | |||||
| Long-Term Equipment Financing Liability | 6,155 | 42,398 | |||||
| Reclamation and Remediation Liability (Note 15) | 21,623,683 | 24,436,475 | |||||
| Total Liabilities | 38,323,757 | 41,868,741 | |||||
| Shareholders' Equity | |||||||
| Share Capital (Note 16) | 182,841,411 | 176,941,597 | |||||
| Reserves (Note 16) | 9,670,875 | 8,853,808 | |||||
| Accumulated Other Comprehensive Income | 10,025,059 | 3,820,340 | |||||
| Accumulated Deficit | (161,366,436 | ) | (149,095,499 | ) | |||
| Total Equity | 41,170,909 | 40,520,246 | |||||
| Total Liabilities and Equity | $ | 79,494,666 | $ | 82,388,987 | |||
Commitments (Note 14); Subsequent events (Note 17)
These consolidated financial statements were authorized for issue by the Board of Directors on August 14, 2024. They are signed on the Company's behalf by:
| "Stephen de Jong" , Director | "Anna Ladd-Kruger" , Director |
| The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. |
Integra Resources Corp.
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
(Expressed in US Dollars)
| Three-Month Periods Ended June 30, | Six-Month Periods Ended June 30, | |||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Operating Expenses | ||||||||||||
| General and Administrative Expenses | ||||||||||||
| Depreciation - property, plant and equipment (Note 7) | $ | (150,788 | ) | $ | (146,029 | ) | $ | (302,971 | ) | $ | (286,412 | ) |
| Depreciation - right-of-use assets (Note 8) | (75,282 | ) | (148,132 | ) | (164,089 | ) | (239,875 | ) | ||||
| Compensation and benefits | (559,134 | ) | (657,774 | ) | (1,189,992 | ) | (1,144,780 | ) | ||||
| Corporate development and marketing | (100,848 | ) | (108,122 | ) | (243,699 | ) | (196,177 | ) | ||||
| Office administration expenses | (207,253 | ) | (224,717 | ) | (383,211 | ) | (374,978 | ) | ||||
| Professional fees | (233,838 | ) | (153,914 | ) | (419,758 | ) | (270,959 | ) | ||||
| Regulatory fees | (47,155 | ) | (43,004 | ) | (113,234 | ) | (102,958 | ) | ||||
| Stock-based compensation (Note 16) | (449,272 | ) | (235,441 | ) | (893,022 | ) | (523,381 | ) | ||||
| Total General and Administration Expenses | (1,823,570 | ) | (1,717,133 | ) | (3,709,976 | ) | (3,139,520 | ) | ||||
| Exploration and Evaluation Expenses (Note 9) | (4,177,304 | ) | (5,281,080 | ) | (7,486,717 | ) | (10,666,135 | ) | ||||
| Operating Loss | (6,000,874 | ) | (6,998,213 | ) | (11,196,693 | ) | (13,805,655 | ) | ||||
| Other Income (Expense) | ||||||||||||
| Interest income | 125,683 | 314,272 | 208,617 | 436,002 | ||||||||
| Rent income - sublease (Note 8) | 35,897 | 33,492 | 76,065 | 61,587 | ||||||||
| Right of first refusal interest | - | 37,101 | - | 37,101 | ||||||||
| Interest expenses - leases | (23,348 | ) | (24,861 | ) | (47,918 | ) | (46,598 | ) | ||||
| Interest expenses - equipment financing | (1,680 | ) | (5,481 | ) | (4,335 | ) | (11,872 | ) | ||||
| Interest expense - convertible debt (Note 13) | (267,409 | ) | (240,321 | ) | (528,807 | ) | (463,846 | ) | ||||
| Accretion expense - convertible debt (Note 13) | (186,084 | ) | (144,059 | ) | (359,308 | ) | (273,915 | ) | ||||
| Accretion expenses - reclamation (Note 15) | (229,955 | ) | (254,370 | ) | (485,742 | ) | (505,391 | ) | ||||
| Change in fair value of derivatives (Note 13) | (102,244 | ) | (30,118 | ) | 379,756 | 596,171 | ||||||
| Change in present value of host liability | - | (97,919 | ) | - | (97,919 | ) | ||||||
| Gain (loss) on equipment sold | (11,743 | ) | - | 49,827 | - | |||||||
| Foreign exchange income (loss) | (114,603 | ) | 107,017 | (362,399 | ) | 127,644 | ||||||
| Total Other Income (Expense) | (775,486 | ) | (305,247 | ) | (1,074,244 | ) | (141,036 | ) | ||||
| Net Loss | (6,776,360 | ) | (7,303,460 | ) | (12,270,937 | ) | (13,946,691 | ) | ||||
| Other Comprehensive Income (Loss) |
||||||||||||
| Items that will not be reclassified to profit or loss in subsequent periods: | ||||||||||||
| Foreign exchange translation | 1,852,049 | (3,548,782 | ) | 6,204,719 | (3,666,349 | ) | ||||||
| Presentation currency translation difference | (1,860,069 | ) | 3,964,359 | (6,168,827 | ) | 4,066,027 | ||||||
| Other Comprehensive Income (Loss) | (8,020 | ) | (415,577 | ) | 35,892 | 399,678 | ||||||
| Comprehensive Loss | $ | (6,784,380 | ) | $ | (6,887,883 | ) | $ | (12,235,045 | ) | $ | (13,547,013 | ) |
| Net Loss Per Share | ||||||||||||
| - basic and diluted | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.15 | ) | $ | (0.32 | ) |
| Weighted Average Number of Shares (000's) | ||||||||||||
| - basic and diluted (000's) | 88,459 | 55,406 | 80,797 | 43,721 | ||||||||
| The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. |
Integra Resources Corp.
Unaudited Interim Condensed Consolidated Statements of Changes in Equity
(Expressed in US Dollars, except share numbers)
| Share Capital | Reserves | ||||||||||||||||||||
| Accumulated | |||||||||||||||||||||
| Equity | Other | ||||||||||||||||||||
| Number of | Incentive | Comprehensive | |||||||||||||||||||
| Shares * | Amount | Awards | Warrants | Income (Loss) | Deficit | Total | |||||||||||||||
| Balance at December 31, 2022 | 31,905,476 | $ | 125,079,150 | $ | 7,639,768 | $ | 724,874 | $ | 7,958,603 | $ | (120,079,230 | ) | $ | 21,323,165 | |||||||
| Shares issued for cash - financing (Note 16) | 20,000,000 | 25,799,794 | - | - | - | - | 25,799,794 | ||||||||||||||
| Share issued - Millennial acquisition (Note 10) | 16,872,050 | 22,697,554 | - | - | - | - | 22,697,554 | ||||||||||||||
| Share issue cost - cash | - | (1,543,748 | ) | - | - | - | - | (1,543,748 | ) | ||||||||||||
| Share-based-payments - equity incentive awards | - | - | 523,381 | - | - | - | 523,381 | ||||||||||||||
| Share-based-payments (replacement options - | |||||||||||||||||||||
| merger) | - | - | 31,888 | - | - | - | 31,888 | ||||||||||||||
| RSU vested - cash redemption | - | - | (1,254 | ) | - | - | - | (1,254 | ) | ||||||||||||
| Share-based-payments - warrants (merger) | - | - | - | 44,630 | - | - | 44,630 | ||||||||||||||
| Presentation currency translation difference | - | 4,066,027 | - | - | - | - | 4,066,027 | ||||||||||||||
| Other comprehensive loss | - | - | - | - | (3,666,349 | ) | - | (3,666,349 | ) | ||||||||||||
| Net loss | - | - | - | - | - | (13,946,691 | ) | (13,946,691 | ) | ||||||||||||
| Balance at June 30, 2023 | 68,777,526 | $ | 176,098,777 | $ | 8,193,783 | $ | 769,504 | $ | 4,292,254 | $ | (134,025,921 | ) | $ | 55,328,397 | |||||||
| Balance at December 31, 2023 | 68,871,437 | $ | 176,941,597 | $ | 8,084,304 | $ | 769,504 | $ | 3,820,340 | $ | (149,095,499 | ) | $ | 40,520,246 | |||||||
| Shares issued for cash - financing (Note 16) | 16,611,750 | 11,097,517 | - | - | - | - | 11,097,517 | ||||||||||||||
| Shares issued - property acquisition (Note 9) | 2,959,769 | 2,100,000 | - | - | - | - | 2,100,000 | ||||||||||||||
| Share issue cost - cash | - | (1,157,255 | ) | - | - | - | - | (1,157,255 | ) | ||||||||||||
| Share-based-payments - equity incentive awards | - | - | 893,022 | - | - | - | 893,022 | ||||||||||||||
| RSU vested - share issuance | 15,746 | 28,379 | (32,318 | ) | - | - | - | (3,939 | ) | ||||||||||||
| RSU vested - cash redemption | - | - | (43,637 | ) | - | - | - | (43,637 | ) | ||||||||||||
| Presentation currency translation difference | - | (6,168,827 | ) | - | - | - | - | (6,168,827 | ) | ||||||||||||
| Other comprehensive income | - | - | - | - | 6,204,719 | - | 6,204,719 | ||||||||||||||
| Net loss | - | - | - | - | - | (12,270,937 | ) | (12,270,937 | ) | ||||||||||||
| Balance at June 30, 2024 | 88,458,702 | $ | 182,841,411 | $ | 8,901,371 | $ | 769,504 | $ | 10,025,059 | $ | (161,366,436 | ) | $ | 41,170,909 | |||||||
| The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. |
Integra Resources Corp.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Expressed in US Dollars)
| Six-Month Periods Ended June 30, | ||||||
| 2024 | 2023 | |||||
| Operations | ||||||
| Net loss | $ | (12,270,937 | ) | $ | (13,946,691 | ) |
| Adjustments to reconcile net loss to cash flow from operating activities: | ||||||
| Depreciation - property, plant and equipment (Note 7) | 302,971 | 286,412 | ||||
| Depreciation - right-of-use assets (Note 8) | 164,089 | 239,875 | ||||
| Lease interest expenses | 47,918 | 46,598 | ||||
| Convertible debt facility - accretion (Note 13) | 359,257 | 273,946 | ||||
| Deferred transaction costs - convertible debt (Note 13) | (72,387 | ) | (190,284 | ) | ||
| Convertible debt facility - interest (Note 13) | 528,824 | 463,920 | ||||
| Change in fair value of derivatives (Note 13) | (384,000 | ) | (595,000 | ) | ||
| Change in present value of host liability | - | 97,732 | ||||
| Reclamation accretion expenses (Note 15) | 485,742 | 505,391 | ||||
| Reclamation expenditures (Note 15) | (535,946 | ) | (590,306 | ) | ||
| Unrealized foreign exchange (income) loss | (31,457 | ) | 14,596 | |||
| Share-based payment (Note 16) | 893,022 | 523,381 | ||||
| Net changes in non-cash working capital items: | ||||||
| Receivables, prepaid expenses, and other assets | (137,927 | ) | (39,460 | ) | ||
| Marketable securities (Note 14) | (181,871 | ) | - | |||
| Other receivable (Notes 6 and 14) | (181,594 | ) | - | |||
| Lease receivables | 36,090 | 10,871 | ||||
| Lease liabilities | 5,681 | (47,653 | ) | |||
| Other liability (Note 14) | 363,465 | - | ||||
| Trade and other payables | (589,853 | ) | 43,152 | |||
| Due to related parties | (766,856 | ) | (159,774 | ) | ||
| Cash flow used in operating activities | (11,965,769 | ) | (13,063,294 | ) | ||
| Investing | ||||||
| Additions to property, plant and equipment | (65,582 | ) | (232,083 | ) | ||
| Proceeds from sale of equipment | 49,827 | - | ||||
| Long-term investments | (28,402 | ) | 27,209 | |||
| Property related costs (Notes 9, 10, and 14) | (719,135 | ) | (3,462,547 | ) | ||
| Sale of NSR royalty (Note 14) | 4,875,000 | - | ||||
| Cash flow provided by (used in) investing activities | 4,111,708 | (3,667,421 | ) | |||
| Financing | ||||||
| Issuance of common shares - financing (Note 16) | 11,097,517 | 25,799,794 | ||||
| Issuance of common shares - cash received from exercise of options and (used) in RSU redemption (Note 16) | (47,576 | ) | (1,254 | ) | ||
| Share issue costs | (1,157,255 | ) | (1,608,748 | ) | ||
| Lease principal payments and adjustments (Note 8) | (203,512 | ) | (172,892 | ) | ||
| Equipment financing principal payments | (100,578 | ) | (106,596 | ) | ||
| Convertible debt facility - transaction costs | - | (92,974 | ) | |||
| Deferred share issue costs - financing | - | 242 | ||||
| Cash flow provided by financing activities | 9,588,596 | 23,817,572 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 35,892 | 399,678 | ||||
| Increase in cash and cash equivalents | 1,770,427 | 7,486,535 | ||||
| Cash and cash equivalents at beginning of period | 8,815,290 | 15,919,518 | ||||
| Cash and cash equivalents at end of period | $ | 10,585,717 | $ | 23,406,053 | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
|
Integra Resources Corp |
1. NATURE OF OPERATIONS
Integra Resources Corp. ("Integra" or the "Company") was incorporated on April 15, 1997 as Berkana Digital Studios Inc. On December 4, 1998, the name of the Company was changed to Claim Lake Resource Inc. and on March 31, 2005, the Company changed its name to Fort Chimo Minerals Inc. On January 1, 2009, the Company amalgamated with its wholly-owned subsidiary, Limestone Basin Exploration Ltd. The amalgamated company continued to operate as Fort Chimo Minerals Inc. On June 14, 2011, the Company changed its name to Mag Copper Limited and on August 11, 2017, the Company changed its name to Integra Resources Corp. The Company acquired Millennial Precious Metals Corp ("Millennial" or "MPM") on May 4, 2023 (see Note 10).
Integra is one of the largest precious metals exploration and development companies in the Great Basin of the Western USA. Integra is currently focused on advancing its two flagship oxide heap leach projects: the past producing DeLamar Project (comprised of the DeLamar and Florida Mountain deposits) located in southwestern Idaho and the Nevada North Project (comprised of the Wildcat and Mountain View deposits) located in western Nevada. The Company also holds a portfolio of highly prospective early-stage exploration projects in Idaho, Nevada, and Arizona. Integra's long-term vision is to become a leading USA focused mid-tier high margin gold and silver producer.
The Company's head office is located at 1050 - 400 Burrard Street, Vancouver, BC V6C 3A6 and its registered office is located at 2200 HSBC Building, 885 West Georgia Street Vancouver, BC V6C 3E8.
The Company trades on the TSX Venture under the trading symbol "ITR". The common shares of the Company began trading on the NYSE American under the ticker "ITRG" on July 31, 2020.
The Company's warrants trade on the TSX Venture under the symbol MPM.WT and ITR.WT.
On May 26, 2023, the Company consolidated its common shares on the basis of one (1) new post-consolidation common share for every two and a half (2.5) existing pre-consolidation common share (the "Consolidation"). Proportionate adjustments have been made to the Company's outstanding stock options, restricted share units, deferred share units, and warrants. As required by IFRS (as defined below), all references to share capital, common shares outstanding and per share amounts in these unaudited interim condensed consolidated financial statements and the accompanying notes have been restated retrospectively to reflect the Consolidation.
The Company announced on July 29, 2024 that has entered into a definitive arrangement whereby Integra has agreed to acquire all of the issued and outstanding shares of Florida Canyon Gold Inc pursuant to a court-approved plan of arrangement (see Note 17).
2. BASIS OF PREPARATION
2.1 Statement of Compliance
These unaudited interim condensed consolidated financial statements, 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") and Interpretations of the International Financial Reporting Interpretations Committee.
These unaudited interim condensed consolidated financial statements were authorized by the Board of Directors of the Company on August 14, 2024.
|
Integra Resources Corp |
2. BASIS OF PREPARATION (continued)
2.2 Material Accounting Policies
These unaudited interim condensed consolidated financial statements have been prepared on the basis of accounting policies and methods of computation consistent with those applied in the Company's December 31, 2023 audited consolidated annual financial statements, except for the new pronouncements and accounting policy change, adopted in the current six-month period ended June 30, 2024 (see 2.3 New Accounting Pronouncements and Accounting Policy Change section).
Basis of Consolidation
These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Integra Resources Holdings Canada Inc., Integra Resources Holdings U.S. Inc., DeLamar Mining Company, Millennial Precious Metals Corp., Millennial Silver Corp., Millennial Silver Nevada Inc., Millennial NV LLC, Millennial Red Canyon LLC, Millennial Development LLC, and Millennial Arizona LLC. All intercompany balances and transactions are eliminated upon consolidation.
Foreign Currency Translation
The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity controlled by the Company. The functional currency of the Canadian parent company and all its Canadian subsidiaries is the Canadian dollar ("CAD"). The functional currency of all Company's US subsidiaries is the US dollar ("USD").
The Company has changed its presentation currency as of December 31, 2021 from the Canadian dollar to the US dollar, to better reflect the Company's business activities and most of the Company's assets and liabilities are held in its US subsidiaries hence denominated in US dollars. No changes were made to the Company's functional currencies, per the management's assessment based on the IAS 21 recommendations, which has been performed on a quarterly basis.
Foreign currency transactions are recorded initially at the exchange rates prevailing at the transactions' dates. At each subsequent reporting period:
- Foreign currency monetary items are reported at the closing rate at the date of the statement of financial position;
- Non-monetary items carried at historical rates are reported at the closing rate at transactions' dates;
- Non-monetary items carried at fair value are reported at the rates that existed when the fair values were determined.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in net income (loss), with one exception. Exchange differences arising from the translation of the net investment in foreign entities are recognized in a separate component of equity, foreign currency translation reserve. When a foreign operation is sold, such exchange differences are recognized in net income (loss) as part of the gain or loss on sale.
|
Integra Resources Corp |
2. BASIS OF PREPARATION (continued)
2.2 Material Accounting Policies (continued)
Foreign Currency Translation (continued)
The operating results and statements of financial position of the parent company and its Canadian subsidiary which have the Canadian dollar as a functional currency have been translated into US dollars as follows:
i) Assets and liabilities are translated at the closing rate at the date of the consolidated statement of financial position; Share capital amounts are translated at the same rate, except for common shares issuance in USD dollars and resulting differences are reported in the "presentation currency translation difference" line in the consolidated statements of changes in equity;
ii) Revenue and expenses are translated at the average exchange rates, unless there is significant fluctuation in the exchange rates. In that case revenue and expenses are translated at the exchange rate at the date of transaction, except depreciation, depletion, and amortization, which are translated at the exchange rates applicable to the related assets; Reserve items are also translated at the average exchange rates.
iii) All resulting translation differences are recognized in other comprehensive income (loss).
When a foreign operation is disposed of, the cumulative amount of the exchange differences recognized in other comprehensive income (loss) and accumulated in the separate component of equity relating to that foreign operation shall be recognized in profit or loss when the gain or loss on disposal is recognized.
2.3 New Accounting Pronouncements and Accounting Policy Change
Certain pronouncements were issued by IASB that are mandatory for accounting periods on or after January 1, 2024. Integra adopted the following amendments in Q1 2024:
IFRS 7 Financial Instruments: Disclosures and IAS 7 Statement of Cash Flows (Amendments)
In May 2023, IASB issued disclosure-only amendments to IFRS 7 Financial Instruments and IAS 7 Statement of Cash Flows, which were incorporated into Part I of the CPA Canada Handbook - Accounting in August 2023.
The amendments require entities to disclose sufficient information necessary for users of financial statements to understand the effect of supplier finance arrangements on an entity's liabilities and cash flows, as well as on its liquidity risk and risk management.
The amendments are effective for annual periods beginning on or after January 1, 2024. Even though Integra has some supplier finance arrangements that are subject to this new guidance ("equipment financing"), these new disclosure requirements have no impact on Integra's financial statements, as those arrangements are not material.
IFRS 16 Leases (Amendments)
In September 2022, IASB issued amendments to IFRS 16 Leases to add subsequent measurement requirement for sale and leaseback transactions that satisfy the requirements in IFRS 15 Revenue from Contracts with Customers to be accounted for as a sale. The Amendments were incorporated into Part I of the CPA Canada Handbook - Accounting in December 2022.
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Integra Resources Corp |
2. BASIS OF PREPARATION (continued)
2.3 New Accounting Pronouncements and Accounting Policy Change (continued)
IFRS 16 Leases (Amendments) (continued)
The amendments require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of gain or loss that relates to the right of use it retains. The IASB has not prescribed a particular method for measuring the lease liability. A seller-lessee must apply the amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
The amendments are effective for annual periods beginning on or after January 1, 2024 and have no impact on Integra's financial statements.
IAS 1 Presentation of Financial Statements (Amendments)
In October 2022, IASB issued amendments to IAS 1 which were incorporated into Part I of the CPA Canada Handbook - Accounting in December 2022.
The amendments require an entity to disclose, in specific circumstances, information in the notes that enables financial statement user to understand the risk that non-current liabilities with covenants could become repayable within 12 months after the reporting period. As part of the amendments, a provision was added to clarify that only covenants that an entity must comply with on or before the reporting date would affect a liability's classification as current or non-current, even if compliance with the covenant is only assessed after the entity's reporting date. Covenants which an entity must comply with after the reporting date would not affect classification of a liability as current or non-current at the reporting date. An entity that applies these amendments early is also required to apply the January 2020 amendments at the same time, and vice versa.
The amendments are effective for annual periods beginning on or after January 1, 2024. Integra has already addressed these requirements when the Company adopted these amendments in 2022, as a result these new amendments have no impact on Integra's financial statements.
Share Capital Accounting Policy Change
The Company changed its share capital accounting policy in Q1 2024.
According to the previous share capital accounting policy, in the event that the Company issued units (common shares and warrants) as part of financing, the fair value of the warrants was determined using the Black-Scholes pricing model, and the remaining value was assigned to the common shares.
The Company decided to change that policy, to simplify the warrants' valuation process. According to the new policy, the Company first allocates proceeds to the issued common shares based on the fair value of the common shares at the time the units are priced. Any residual value is allocated to the issued warrants.
This change has no impact on Integra's prior period financial statements, as the Company has not issued warrants as part of unit financing prior to the March 2024 financing.
|
Integra Resources Corp |
2. BASIS OF PREPARATION (continued)
2.4 Significant Accounting Estimates and Judgments
The preparation of the unaudited interim condensed consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions which affect the reported amounts of assets and liabilities, the 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. Estimates are based on historical experience and other factors considered to be reasonable and are reviewed on an ongoing basis. Revisions to estimates and the resulting effects on the carrying amounts of the Company's assets and liabilities are accounted for prospectively.
There have been material revisions to the nature and amount of judgments or estimates as reported in the Company's audited consolidated financial statements for the year ended December 31, 2023 in the current period, related to the following:
Accounting Treatment of the Rich Gulch Acquisition
The assessment of whether acquisitions are considered business combinations or asset acquisitions requires management judgement, the outcome of which may result in different accounting treatments.
The Company completed an analysis to determine whether the set of activities and assets acquired in the Rich Gulch LLC acquisition meet the definition of a business under IFRS 3. The Company concluded that the acquisition of the Rich Gulch LLC does not meet the definition of a business and therefore is accounted for as an asset acquisition (see Note 9).
Accounting Treatment of the Wheaton Precious Metals ("Wheaton") Net Smelter Return Royalty ("NSR Royalty")
Integra Resources Corp. sold an NSR Royalty to Wheaton in March 2024. The accounting treatment requires significant judgment and the Company considered available IFRS guidance and existing practice within the mining industry. Management concluded that this sale should be treated as a partial disposal of an existing asset in its nature (see Note 14).
3. CAPITAL MANAGEMENT
The Company's capital management goals are to: ensure there are adequate capital resources to safeguard the Company's ability to continue as a going concern; maintain sufficient funding to support the acquisition, exploration, and development of mineral properties and exploration and evaluation activities; maintain investors' and market confidence; and provide returns and benefits to shareholders and other stakeholders.
The Company classified the convertible debt liability as a current liability, in accordance with the IAS 1 Amendments even though the maturity of the loan is in 2025. This classification meaningfully impacts the Company's working capital.
The Company's working capital, including the convertible debt liability as of June 30, 2024 was $905,658 (December 31, 2023 - working capital deficit $6,803,922). The Company's working capital, excluding the convertible debt liability as of June 30, 2024 was $12,053,471 (December 31, 2023 - working capital $3,839,810).
|
Integra Resources Corp |
3. CAPITAL MANAGEMENT (continued)
The Company's capital structure is adjusted based on the funds available to the Company such that it may continue exploration and development of its properties for the mining of minerals that are economically recoverable. The Board of Directors does not establish quantitative return on capital criteria, but rather relies on the expertise of management and other professionals to sustain future development of the business.
The Company's properties are in the exploration and development stage and, as a result, the Company currently has no source of operating cash flow. The Company intends to raise such funds as and when required to complete its projects.
There is no assurance that the Company will be able to raise additional funds on reasonable terms. The only sources of future funds presently available to the Company are through the exercise of options, convertible debt facility, the sale of equity capital of the Company, the sale of a metal stream, the sale of a royalty or the sale by the Company of an interest in any of its properties in whole or in part. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of the Company. There can be no assurance that the Company will be successful in its efforts to arrange additional financing, if needed, on terms satisfactory to the Company.
The Company secured additional funds in the current period by selling a royalty on the DeLamar Project and by completing a bought deal public equity offering.
Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes in the Company's approach to capital management during the six-month period ended June 30, 2024.
The Company announced on July 29, 2024 that has entered into a definitive arrangement whereby Integra has agreed to acquire all of the issued and outstanding shares of Florida Canyon Gold Inc pursuant to a court-approved plan of arrangement (see Note 17). The Company's capital management approach is most likely to change upon closing of the transaction.
4. FINANCIAL INSTRUMENTS
All financial instruments are measured and reported according to the Company's accounting policy.
Fair Value
IFRS requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 - Inputs that are not based on observable market data.
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Integra Resources Corp |
4. FINANCIAL INSTRUMENTS (continued)
The Company's financial instruments are accounted for as follows under IFRS 9:
| FINANCIAL ASSETS: | CLASSIFICATION |
| Cash and cash equivalents | FVTPL |
| Marketable securities | FVOCI |
| Receivables (excluding tax receivables) | Amortized cost, less any impairment |
| Restricted cash, long-term | Amortized cost, less any impairment |
| FINANCIAL LIABILITIES: | CLASSIFICATION |
| Trade and other payables | Amortized cost |
| Due to related parties | Amortized cost |
| Convertible debt facility - liability component | Amortized cost |
| Convertible debt facility - derivative component | FVTPL |
| Equipment financing liability | Amortized cost |
The following table summarizes the Company's financial instruments classified as FVTPL as at June 30, 2024 and December 31, 2023:
| Level | June 30, 2024 | December 31, 2023 | |||||||
| FINANCIAL ASSETS: | |||||||||
| Cash and cash equivalents | 1 | $ | 10,585,717 | $ | 8,815,290 |
| Level | June 30, 2024 | December 31, 2023 | |||||||
| FINANCIAL LIABILITIES: | |||||||||
| Convertible debt facility - derivative component | 3 | $ | 232,000 | $ | 616,000 |
Fair value estimates of all financial instruments are made at a specific point in time, based on relevant market information and information about financial instruments. These estimates are subject to and involve uncertainties and matters of significant judgment, therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
For restricted cash, lease liabilities, equipment financing liability and non-derivative host liability of convertible debt, the carrying values approximate their fair values at the period end because the interest rates used to discount host contracts approximate market interest rates. The carrying values of other financial assets, trade and other payables and due to related parties approximate their fair values due to the short-term nature of these items.
A summary of the Company's risk exposures as it relates to financial instruments are reflected below:
|
Integra Resources Corp |
4. FINANCIAL INSTRUMENTS (continued)
i) Credit Risk
Credit risk is the risk of loss associated with a counter-party's inability to fulfill its payment obligations. The credit risk is attributable to various financial instruments, as noted below. The credit risk is limited to the carrying value amount carried on the consolidated statements of financial position.
a. Cash and cash equivalents - Cash and cash equivalents are held with major Canadian and U.S. banks and other financial institutions, and therefore the risk of loss is minimal.
b. Receivables, restricted cash, and lease receivable - these financial assets are material. Management analyzed all relevant factors (cash position and credit history of the parties involved) and considers the risk of loss minimal. The second instalment of the NSR sale to Wheaton was received in July 2024 (see Note 17).
ii) Liquidity Risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities as they become due. The Company intends on securing further financing to ensure that the obligations are properly discharged.
iii) Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, commodity prices and/or stock market movements (price risk).
a. Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. The Company has interest-bearing assets, where the risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with a chartered Canadian and US financial institutions. The Company's significant financial instruments valued using fluctuating risk-free interest rates is the derivative component of the convertible debt facility. The Company's operating cash flows are mostly independent of changes in market interest rates, which is impacted by economic uncertainties and current high inflationary environment. Management considers this risk immaterial.
b. Share Price Risk
At each reporting period, the convertible debt derivative liability is fair valued using the Finite Difference Method. The Company's share price is a key assumption used in this valuation, hence share price fluctuations can meaningfully impact the value of the derivative liability.
c. Foreign Exchange Risk
The Company's expenditures incurred in the US dollars and its convertible debt facility (denominated in the US dollars) are exposed to currency fluctuations. To manage this risk and mitigate its exposure to exchange rates fluctuation, the Company holds a portion of its cash and short-term investments in USD (see Note 5). No formal hedging arrangements are in place.
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Integra Resources Corp |
4. FINANCIAL INSTRUMENTS (continued)
During the six-month period ended June 30, 2024, the Company recognized a net foreign exchange loss of $362,399. Based on the Company's net foreign currency exposure at June 30, 2024, depreciation or appreciation of US dollar against the Canadian dollar would have resulted in the following increase or decrease in the Company's net loss:
|
At June 30, 2024 |
Possible exposure* |
Impact on net loss |
|
US dollar |
+/-5% |
$ 589,657 / $(589,657) |
*Possible exposure is based on management's best estimate of the reasonably possible fluctuations of foreign exchange rates in the next twelve months.
5. CASH AND CASH EQUIVALENTS
The balance at June 30, 2024 consists of $6,039,965 in cash and $4,545,752 held in short-term investments (December 31, 2023 - $2,755,497 in cash and $6,059,793 in short-term investments) on deposit with major Canadian and US banks and other financial institutions. Short-term investments are redeemable on a monthly basis, with the annual interest rates ranging between 4.80% and 5.15%. As of June 30, 2024, the Company held approximately 40% (December 31, 2023 - 25%) of its cash and short-term investments in US dollars.
6. RECEIVABLES, PREPAID EXPENSES, AND LEASE RECEIVABLE
Receivables and Prepaid Expenses
| Receivables and Prepaid Expenses As at | June 30, 2024 | December 31, 2023 | |||||
| Receivables | $ | 4,956,871 | $ | 153,512 | |||
| Other receivable - Marketable Securities (Note 14) | 181,594 | - | |||||
| Prepaid expenses | 1,107,228 | 898,655 | |||||
| Total Receivables and Prepaid Expenses | $ | 6,245,693 | $ | 1,052,167 | |||
| Lease Receivable | June 30, 2024 | December 31, 2023 | ||||
| Lease receivable - opening balance | $ | 164,338 | $ | 208,701 | ||
| Principal payments and adjustments | (36,090 | ) | (44,363 | ) | ||
| Total Lease Receivable | $ | 128,248 | $ | 164,338 |
Receivables of $5.0 million include the second installment of the Wheaton NSR purchase (see Note 14). The second installment of $4.875 million was received subsequent to the quarter-end (see Note 17).
Other receivable of $181,594 (C$250,000) relates to the second tranche of the marketable securities to be issued to the Company by GreenLight and is expected to be received before December 31, 2024 (see Note 14).
The Company's lease receivable is related to the long-term sublease of one of the Company's Nevada warehouses, reported in the non-current asset section of the consolidated statements of financial position.
At June 30, 2024 and December 31, 2023, the Company anticipates full recovery or full utilization of its receivables, prepaid expenses, and lease receivable and therefore no impairment has been recorded against these amounts. The Company holds no collateral for any receivable amounts outstanding as at June 30, 2024 and December 31, 2023.
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Integra Resources Corp |
7. PROPERTY, PLANT AND EQUIPMENT
| Computers and software |
Office furniture and equipment |
Vehicles |
Buildings, well, road, and buildings improvements |
Equipment |
Total |
|||||||||||||
| Cost | ||||||||||||||||||
| Balance at December 31, 2022 | 239,863 | 42,505 | 295,685 | 1,458,936 | 1,683,143 | 3,720,132 | ||||||||||||
| Additions (adjustments) | 34,083 | - | 110,090 | 33,524 | 121,561 | 299,258 | ||||||||||||
| Additions - merger (Note 10) | - | 11,252 | 119,513 | 58,947 | 74,663 | 264,375 | ||||||||||||
| Translation difference | 1,575 | 890 | - | 3,930 | - | 6,395 | ||||||||||||
| Balance at December 31, 2023 | 275,521 | 54,647 | 525,288 | 1,555,337 | 1,879,367 | 4,290,160 | ||||||||||||
| Additions (adjustments) | - | - | 19,565 | 15,000 | 50,510 | 85,075 | ||||||||||||
| Disposals | - | - | - | (150,657 | ) | - | (150,657 | ) | ||||||||||
| Translation difference | (2,260 | ) | (1,275 | ) | - | (1,825 | ) | - | (5,360 | ) | ||||||||
| Balance at June 30, 2024 | $ | 273,261 | $ | 53,372 | $ | 544,853 | $ | 1,417,855 | $ | 1,929,877 | $ | 4,219,218 | ||||||
| Accumulated Depreciation | ||||||||||||||||||
| Balance at December 31, 2022 | (210,202 | ) | (37,804 | ) | (138,687 | ) | (263,943 | ) | (853,009 | ) | (1,503,645 | ) | ||||||
| Depreciation | (27,654 | ) | (3,855 | ) | (104,711 | ) | (131,660 | ) | (317,286 | ) | (585,166 | ) | ||||||
| Translation difference | (1,398 | ) | (792 | ) | - | (232 | ) | - | (2,422 | ) | ||||||||
| Balance at December 31, 2023 | (239,254 | ) | (42,451 | ) | (243,398 | ) | (395,835 | ) | (1,170,295 | ) | (2,091,233 | ) | ||||||
| Depreciation | (10,750 | ) | (1,534 | ) | (24,090 | ) | (107,855 | ) | (155,028 | ) | (299,257 | ) | ||||||
| Disposals | - | - | - | 81,786 | - | 81,786 | ||||||||||||
| Translation difference | 2,168 | 1,195 | - | 402 | - | 3,765 | ||||||||||||
| Balance at June 30, 2024 | $ | (247,836 | ) | $ | (42,790 | ) | $ | (267,488 | ) | $ | (421,502 | ) | $ | (1,325,323 | ) | $ | (2,304,939 | ) |
| Carrying amounts |
||||||||||||||||||
| December 31, 2022 | $ | 29,661 | $ | 4,701 | $ | 156,998 | $ | 1,194,993 | $ | 830,134 | $ | 2,216,487 | ||||||
| December 31, 2023 | $ | 36,267 | $ | 12,196 | $ | 281,890 | $ | 1,159,502 | $ | 709,072 | $ | 2,198,927 | ||||||
| June 30, 2024 | $ | 25,425 | $ | 10,582 | $ | 277,365 | $ | 996,353 | $ | 604,554 | $ | 1,914,279 |
8. LEASES - OPERATING LEASES, RIGHT-OF-USE ASSETS, AND LEASE LIABILITIES
Right-of-Use Assets ("ROU")
Integra amended its head office lease agreement on December 15, 2023, reducing the lease space and extending the lease term to February 28, 2029. This amendment has been accounted for as a lease modification under IFRS 16. Lease liability was remeasured at the modification date, to reflect revised discounted payments, and corresponding adjustments were made to the carrying amount of the ROU asset.
DeLamar renewed its Boise office lease agreement on March 1, 2024, extending the lease term from July 31, 2024 to July 30, 2025. This exercise of renewal option from the original agreement has been accounted for as change of estimate of lease liabilities under IFRS 16.
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Integra Resources Corp |
8. LEASES - OPERATING LEASES, RIGHT-OF-USE ASSETS, AND LEASE LIABILITIES (continued)
A summary of the changes in ROU assets for the six-month period ended June 30, 2024 and the year ended December 31, 2023 is as follows:
| Right-of-Use Assets | Vancouver Head Office |
Vehicless | DeLamar Boise Office and JV Mining Camp |
Nevada Warehouses and Rental Property |
Total |
||||||||||
| Balance, December 31, 2022 | 592,097 | 111,548 | 120,378 | - | 824,023 | ||||||||||
| Additions (change of estimate and | (24,148 | ) | 52,928 | 24,850 | - | 53,630 | |||||||||
| lease modification) | |||||||||||||||
| Additions - merger (Note 10) | - | - | - | 377,071 | 377,071 | ||||||||||
| Depreciation | (119,279 | ) | (110,937 | ) | (102,598 | ) | (111,383 | ) | (444,197 | ) | |||||
| Translation differences | 14,237 | - | - | - | 14,237 | ||||||||||
| Balance, December 31, 2023 | 462,907 | 53,539 | 42,630 | 265,688 | 824,764 | ||||||||||
| Additions (change of estimate) | - | - | 81,754 | 81,754 | |||||||||||
| Depreciation | (43,289 | ) | (23,805 | ) | (43,238 | ) | (51,815 | ) | (162,147 | ) | |||||
| Translation differences | (15,591 | ) | - | - | - | (15,591 | ) | ||||||||
| Balance, June 30, 2024 | $ | 404,027 | $ | 29,734 | $ | 81,146 | $ | 213,873 | $ | 728,780 |
Lease Liabilities
A summary of the changes in lease liabilities for the six-month period ended June 30, 2024 and the year ended December 31, 2023 is as follows:
| Lease Liabilities | Vancouver Head Office |
Vehicles | DeLamar Boise Office and JV Mining Camp |
Nevada Warehouses and Rental Property |
Total | ||||||||||
| Balance, December 31, 2022 | 608,924 | 109,445 | 135,952 | - | 854,321 | ||||||||||
| Additions (change of estimate and | (42,948 | ) | 52,928 | 103,529 | - | 113,509 | |||||||||
| lease modification) | |||||||||||||||
| Additions (merger) (Note 10) | - | - | - | 542,293 | 542,293 | ||||||||||
| Payments - principal portion | (57,996 | ) | (106,252 | ) | (194,730 | ) | (87,823 | ) | (446,801 | ) | |||||
| Adjustments | - | 678 | - | 1,725 | 2,403 | ||||||||||
| Translation differences | 14,641 | - | - | - | 14,641 | ||||||||||
| Balance, December 31, 2023 | 522,621 | 56,799 | 44,751 | 456,195 | 1,080,366 | ||||||||||
| Additions (change of estimate) | - | - | 106,114 | - | 106,114 | ||||||||||
| Payments - principal portion | (36,011 | ) | (23,119 | ) | (42,032 | ) | (79,136 | ) | (180,298 | ) | |||||
| Adjustments | - | (733 | ) | (25,893 | ) | 3,412 | (23,214 | ) | |||||||
| Translation differences | (17,603 | ) | - | - | - | (17,603 | ) | ||||||||
| Balance, June 30, 2024 | $ | 469,007 | $ | 32,947 | $ | 82,940 | $ | 380,471 | $ | 965,365 |
The applied interest rates in these leases ranged between 6.34% and 10.00%. Lease liability calculations were based on the assumption that no purchase option will be exercised at the end of the lease terms.
|
Integra Resources Corp |
8. LEASES - OPERATING LEASES, RIGHT-OF-USE ASSETS, AND LEASE LIABILITIES (continued)
Carrying lease liabilities amounts are as follows:
| |
Current lease liability |
Long-term lease liability |
Total lease liabilities |
||||||
| Balance, December 31, 2023 | 361,877 | 718,489 | 1,080,366 | ||||||
| Balance, June 30, 2024 | $ | 379,069 | $ | 586,296 | $ | 965,365 |
The Company subleases on a short-term basis a portion of its Vancouver head office to four companies for a rent income of $76,065, in the six-month period ended June 30, 2024 (June 30, 2023 - $61,587). The total rent income is recognized in the consolidated statement of operations and comprehensive loss, under the "Rent income - sublease". The lease receivable related to the sublease of one of the Company's Nevada warehouses, is reported in the consolidated statements of financial position (see Note 6).
9. EXPLORATION AND EVALUATION ASSETS
DeLamar Project
The DeLamar Project comprises of the DeLamar and Florida Mountain deposits.
DeLamar Deposit
On November 3, 2017, the Company acquired 100% of interest in Kinross DeLamar Mining Company, a wholly-owned subsidiary of Kinross Gold Corporation ("Kinross"), which owned the DeLamar Deposit for $5.9 million ("mm") in cash and the issuance of 2,218,395 common shares of the Company that is equal to 9.9% of all of the issued and outstanding shares of the Company upon closing of the October 2017 $21.3mm financing. The 2,218,395 common shares issued were valued at $3.7mm on the closing date. The Company paid $2.4mm cash at closing of the acquisition transaction and issued a $3.5mm promissory note, which was originally due in May 2019. In February 2019, the maturity date of the promissory note was extended to November 3, 2019, and the promissory note was paid in full on October 31, 2019.
As a result, Kinross USA Inc. has released its security on 25% of the shares of DeLamar Mining Company.
The DeLamar Deposit is subject to multiple royalties (see Note 14 for details).
Florida Mountain Deposit
Integra executed in December 2017 Purchase and Sale Agreements with two private entities (Empire and Banner) to acquire patented claims in the past-producing Florida Mountain Gold and Silver Deposit ("Florida Mountain") for a total consideration of $2.0mm in cash. The Company completed the purchase of the Florida Mountain Empire claims in January 2018 and paid $1.6mm at closing. The Company completed the acquisition of the Florida Mountain Banner claims in the second quarter of 2018 and paid $0.4mm at closing.
|
Integra Resources Corp |
9. EXPLORATION AND EVALUATION ASSETS (continued)
Florida Mountain Deposit (continued)
On March 8, 2024, Integra completed the acquisition of Rich Gulch, LLC, acquiring seventeen patented claims located adjacent to the Florida Mountain Deposit. The Company acquired all of the interest in Rich Gulch LLC in exchange for $2.1 million, which was satisfied through the issuance of 2,959,769 common shares in the capital of Integra. Subsequent to the acquisition, Rich Gulch LLC was liquidated, and the land titles were transferred to DeLamar Mining Company. This transaction was accounted for as an asset acquisition, as per management's assessment under IFRS 3.
Nevada North Project (Wildcat, Mountain View), Marr, Ocelot, Eden and Dune Properties
On December 11, 2020, Millennial (which was acquired by Integra on May 4, 2023) entered into a definitive agreement with a subsidiary of Waterton Global Resource Management ("Waterton") pursuant to which Millennial acquired Waterton's interest in Nevada North Project (Wildcat and Mountain View deposits), Marr, Ocelot, Eden and Dune properties located in Nevada ("the Nevada Properties"). The agreement was subsequently amended on May 25, 2022.
The Nevada Properties are subject to multiple royalties (see Note 14 for details). Franco-Nevada Corporation ("Franco-Nevada") acquired the Waterton royalties in June 2023.
The Company paid the final land purchase payment of $2.5 million in June 2023.
Red Canyon Property
On October 30, 2020, Millennial Red Canyon LLC ("Millennial Red Canyon"), a wholly owned subsidiary of Integra, entered into an agreement, pursuant to which Red Canyon Corporation will lease to Millennial Red Canyon, and grant Millennial Red Canyon the sole and exclusive right to acquire a 100% undivided legal and beneficial interest in, 254 unpatented lode mining claims located in Eureka County, Nevada. The agreement was subsequently amended on January 4, 2024, and 94 new claims were added to the agreement for a new total of 348 claims.
.
Under the terms of the agreement, Millennial Red Canyon will have an option to acquire a 100% undivided interest in the Red Canyon Property by completing the following:
• Total advance cash payments of $475,000 ("Red Canyon Advance Payments") to Red Canyon Corporation payable as follows:
o $25,000 due on signing of the agreement - October 30, 2020 (paid);
o $25,000 due on or prior to 6 months from October 30, 2020 (paid);
o $50,000 due on or prior to the first anniversary (paid);
o $75,000 due on or prior to the second anniversary (paid);
o $100,000 due on or prior to the third anniversary (paid);
o $100,000 due in 2024 within 30 days after an equity financing; (paid) and
o $100,000 due in 2025 within 30 days after an equity financing.
• Reimburse $44,970 due for federal annual mining claim maintenance (paid);
|
Integra Resources Corp |
9. EXPLORATION AND EVALUATION ASSETS (continued)
Red Canyon Property (continued)
• On or before the 6th anniversary, Millennial Red Canyon shall pay Red Canyon Corporation $2,000,000 less aggregate amount of the 2020 to 2024 Red Canyon Advance Payments paid by Millennial Red Canyon.
• Issuing common shares to Red Canyon Corporation as follows:
o On or prior to the completion of Millennial's going public transaction by way of reverse take-over ("RTO"), issuing an amount of common shares to ensure Red Canyon owns 2% of the outstanding common shares immediately following completion of the RTO (issued);
o 1,000,000 common shares on or prior to the first anniversary (issued);
o 1,000,000 common shares on or prior to the second anniversary (issued); and
o 1,000,000 common shares on or prior to the third anniversary (issued).
• Millennial Red Canyon to spend an aggregate $1,500,000 in exploration expenditures as follows:
o $500,000 on or prior to the second anniversary (incurred);
o $500,000 on or prior to the third anniversary (incurred); and
o $500,000 on or prior to the fourth anniversary (incurred).
Please refer to Note 14 for details on royalty commitments.
Cerro Colorado District
On July 26, 2021 (the "Effective Date") Millennial Arizona LLC ("Millennial Arizona"), a wholly-owned subsidiary of Integra, entered into an agreement with Tri Minerals Holdings Corp. ("Tri Minerals"), to grant Millennial Arizona the sole and exclusive right to acquire from Tri Minerals a 100% undivided legal and beneficial interest in and to the Silver Hill, Mina del Tajo-west, La Colorada, Nuevo Colorado, Waterman, and Cyanide projects situated in the Cerro Colorado Mining District in Pima County, Arizona (together the "Arizona Properties"). The agreement was subsequently amended on February 20, 2024.
Pursuant to the terms of the agreement, Tri Minerals will lease the Arizona Properties to Millennial Arizona (the "Arizona Lease") through December 31, 2026 and grant Millennial Arizona the sole and exclusive right to acquire a 100% undivided legal and beneficial interest in and to the Arizona Properties (the "Arizona Option"), subject to the following advance payments (the "Arizona Advance Payments"):
o $25,000 on the date that the letter of intent was executed by the Parties (the "Initial Payment"). (paid);
o $25,000 on or prior to the earlier of (i) the date that initial operations permits are received in respect of any of the Properties and (ii) the date that is six months after the Effective Date (the "Subsequent Payment") (paid);
o $50,000 on or prior to the 1st anniversary of the Effective Date (the "First Anniversary Payment') (paid);
o $200,000 on or before the 2nd anniversary of the Effective Date (the "Second Anniversary Payment') (paid);
|
Integra Resources Corp |
9. EXPLORATION AND EVALUATION ASSETS (continued)
Cerro Colorado District (continued)
o $25,000 on or prior to February 29, 2024 (first instalment of the Lease Extension Payment) (paid);
o $75,000 on or prior to July 26, 2024 (second instalment of the Lease Extension Payment); and,
o $100,000 on or prior to July 26, 2025 (third instalment of the Lease Extension Payment).
Option Exercise Payment: On or before the termination of the Lease, but no later than December 31, 2026, Millennial Arizona may exercise the Arizona Option and, in such event, shall pay Tri Minerals $2,500,000, less the aggregate amount of the Arizona Advance Payments paid by Millennial Arizona to Tri Minerals.
Work Commitment: During the Term and provided all necessary State of Arizona (ASLD), BLM approvals, as appropriate, for exploration activities (including drilling) on the Arizona Properties have been obtained, Millennial Arizona shall conduct exploration activities in accordance with all permit requirements and shall incur exploration expenditures on the Arizona Properties as follows:
o A minimum of $1,500,000 in exploration expenditures on or prior to the fifth anniversary of the Effective Date ($633,247 has been incurred to date and $866,753 remains outstanding).
The Company announced on June 12, 2024 that Millennial Silver Nevada entered into an option agreement (the "GreenLight Option Agreement") dated June 11, 2024 with GreenLight Metals USA Corporation, a wholly-owned subsidiary of Green Light Metals Inc. ("GreenLight"), regarding the Cerro Colorado Property. Pursuant to the terms of the GreenLight Option Agreement, Millennial Silver Nevada granted GreenLight an exclusive option to purchase its interests in Millennial Arizona for a period of 12 months.
Please refer to Note 14 for details on royalty commitments and option to purchase deal.
War Eagle Gold-Silver Deposit
In December 2018, the Company has entered into an option agreement with Nevada Select Royalty Inc. ("Nevada Select"), now a wholly owned subsidiary of Gold Royalty Corp. to acquire Nevada Select's interest in a State of Idaho Mineral Lease (the "State Lease") encompassing the War Eagle gold-silver Deposit ("War Eagle") situated in the DeLamar District, southwestern Idaho. Under the option agreement, Integra paid Nevada Select $200,000 over a period of four years in annual payments.
Upon exercise of the option (exercised in December 2022), Nevada Select transferred its right, title and interest in the State Lease, subject to a 1.0% net smelter royalty on future production from the deposit payable to Gold Royalty Corp.
Integra made the final option payment of $70,000 in December 2022. The State Lease is subject to an underlying 5.0% net smelter royalty payable to the State of Idaho. In the War Eagle Mountain District, Integra had previously acquired the Carton Claim group comprising of six patented mining claims covering 45 acres and located 750m north of the State Lease.
BlackSheep District
The Company staked a number of the BlackSheep claims in 2018. The staking was completed in early 2019. Certain claims are IDL leases.
|
Integra Resources Corp |
9. EXPLORATION AND EVALUATION ASSETS (continued)
Exploration and Evaluation Assets Summary:
| Idaho Properties | Nevada & Arizona Properties |
Total | |||||||
| Balance at December 31, 2022 | $ | 40,801,924 | $ | - | $ | 40,801,924 | |||
| Land acquisitions/option payments (cash) | 39,000 | 2,800,000 | 2,839,000 | ||||||
| Millennial acquisition (Note 10) | - | 24,523,830 | 24,523,830 | ||||||
| Legal fees | 93,882 | 12,014 | 105,896 | ||||||
| Reclamation adjustment* | 16,486 | - | 16,486 | ||||||
| Depreciation** | (7,403 | ) | - | (7,403 | ) | ||||
| Total | 40,943,889 | 27,335,844 | 68,279,733 | ||||||
| Advance minimum royalty (Note 14) | 97,450 | 25,000 | 122,450 | ||||||
| Balance at December 31, 2023 | 41,041,339 | 27,360,844 | 68,402,183 | ||||||
| Land acquisitions/option payments | 15,000 | 125,000 | 140,000 | ||||||
| Rich Gulch acquisition | 2,100,000 | - | 2,100,000 | ||||||
| Sale of NSR Royalty (Note 14) | (9,750,000 | ) | - | (9,750,000 | ) | ||||
| Millennial acquisition (Note 10) | - | 18,821 | 18,821 | ||||||
| Legal & professional & regulatory fees | 405,790 | 51,304 | 457,094 | ||||||
| Reclamation adjustment* | (2,762,588 | ) | - | (2,762,588 | ) | ||||
| Depreciation** | (3,692 | ) | - | (3,692 | ) | ||||
| Total | 31,045,849 | 27,555,969 | 58,601,818 | ||||||
| Advance minimum royalty (Note 14) | 77,350 | - | 77,350 | ||||||
| Balance at June 30, 2024 | $ | 31,123,199 | $ | 27,555,969 | $ | 58,679,168 |
*Reclamation adjustment is the change in present value of the reclamation liability, mainly due to changes to inflation rate and discount rate. Also see Note 15.
**A staff house building with a carrying value of $187,150 has been included in the DeLamar property. This building is being depreciated.
The Company spent $7,486,717 in exploration and evaluation activities during the six-month period ended June 30, 2024 (June 30, 2023 - $10,666,135). In the year ended December 31, 2023, the Company reclassified its site support costs to Exploration and Evaluation expenses. These costs include all the support staff (such as accounting team, site management, safety, equipment operators, etc) and project related G&A costs (such as fees on the surety bond, insurance, staff house, mobile equipment rental, equipment maintenance and repairs, Boise office, rental apartment, software, and other site G&A expenses).
Historically, the Company has classified those costs as "General & Administration" expenses in the consolidated statements of operations and comprehensive loss. The reclassification does not impact the operating loss, as the Company also expenses exploration and evaluation costs. Comparative numbers have been reclassified to conform with the current period reclassification.
Recognizing that site support costs are integral to the exploration and development project activities, management has carefully evaluated this alignment and concluded that classifying these expenses under Exploration and Evaluation Expenses offers a more accurate and transparent reflection of the nature of those costs. The site support expenses are now reported in the table below.
|
Integra Resources Corp |
9. EXPLORATION AND EVALUATION ASSETS (continued)
The following tables outline the Company's exploration and evaluation expense summary for the six and three-month periods ended June 30, 2024 and 2023:
Exploration and Evaluation Expense Summary:
| Six-Month Period Ended June 30, 2024 |
Idaho Properties | Nevada & Arizona Properties | ||||||||||||||||
| DeLamar Project |
Other Idaho Deposits |
Joint Expenses |
Nevada North Project |
Other Nevada & Arizona |
Total |
|||||||||||||
| Contract exploration drilling | - | - | - | 319,958 | - | 319,958 | ||||||||||||
| Exploration drilling - other drilling labour & related costs |
29,999 | - | - | 95,032 | - | 125,031 | ||||||||||||
| Metallurgical drilling - other drilling labour & related costs | 5,568 | - | - | - | - | 5,568 | ||||||||||||
| Other exploration expenses* | 235,453 | - | - | 223,410 | 40,007 | 498,870 | ||||||||||||
| Other development expenses** | 929,630 | - | - | 150,368 | - | 1,079,998 | ||||||||||||
| Land*** | 190,915 | 22,602 | 39,804 | 229,951 | 304,316 | 787,588 | ||||||||||||
| Permitting | 1,340,904 | - | - | 197,973 | - | 1,538,877 | ||||||||||||
| Metallurgical test work | 282,937 | - | - | 3,800 | - | 286,737 | ||||||||||||
| Technical reports and engineering | 1,614,186 | - | - | - | - | 1,614,186 | ||||||||||||
| External affairs / Community engagement | 240,143 | - | - | 18,839 | - | 258,982 | ||||||||||||
| Site support expenses**** | 896,989 | - | - | 73,933 | - | 970,922 | ||||||||||||
| Total | $ | 5,766,724 | $ | 22,602 | $ | 39,804 | $ | 1,313,264 | $ | 344,323 | $ | 7,486,717 | ||||||
| Three-Month Period Ended June 30, 2024 |
Idaho Properties | Nevada & Arizona Properties | ||||||||||||||||
| DeLamar Project |
Other Idaho Deposits |
Joint Expenses |
Nevada North Project |
Other Nevada & Arizona |
Total |
|||||||||||||
| Contract exploration drilling | - | - | - | 319,958 | - | 319,958 | ||||||||||||
| Exploration drilling - other drilling labour & related costs |
28,350 | - | - | 95,032 | - | 123,382 | ||||||||||||
| Other exploration expenses* | 78,318 | - | - | 140,291 | 26,665 | 245,274 | ||||||||||||
| Other development expenses** | 468,841 | - | - | 81,034 | - | 549,875 | ||||||||||||
| Land*** | 87,878 | - | 2,916 | 213,885 | 298,995 | 603,674 | ||||||||||||
| Permitting | 659,754 | - | - | 76,660 | - | 736,414 | ||||||||||||
| Metallurgical test work | 213,513 | - | - | 2,700 | - | 216,213 | ||||||||||||
| Technical reports and engineering | 792,876 | - | - | - | - | 792,876 | ||||||||||||
| External affairs / Community engagement | 121,198 | - | - | 9,375 | - | 130,573 | ||||||||||||
| Site support expenses**** | 420,083 | - | - | 38,982 | - | 459,065 | ||||||||||||
| Total | $ | 2,870,811 | - | $ | 2,916 | $ | 977,917 | $ | 325,660 | $ | 4,177,304 | |||||||
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM, IDL and ASDL annual fees, consulting, property taxes, legal, professional, etc. expenses
****Includes site G&A expenses
|
Integra Resources Corp |
9. EXPLORATION AND EVALUATION ASSETS (continued)
Exploration and Evaluation Expense Summary:
| Six-Month Period Ended June 30, 2023 |
Idaho Properties | Nevada & Arizona Properties | ||||||||||||||||
| DeLamar Project |
Other Idaho Deposits |
Joint Expenses |
Nevada North Project |
Other Nevada & Arizona |
Total |
|||||||||||||
| Contract exploration drilling | 1,897,847 | - | - | - | - | 1,897,847 | ||||||||||||
| Contract metallurgical drilling | 175,906 | - | - | - | - | 175,906 | ||||||||||||
| Contract condemnation drilling | 183,639 | - | - | - | - | 183,639 | ||||||||||||
| Contract geotech drilling | 231,334 | - | - | - | - | 231,334 | ||||||||||||
| Exploration drilling - other drilling labour & related costs | 946,948 | - | - | - | - | 946,948 | ||||||||||||
| Metallurgical drilling - other drilling labour & related costs | 98,877 | - | - | - | - | 98,877 | ||||||||||||
| Condemnation drilling - other drilling labor & related costs | 84,359 | - | - | - | - | 84,359 | ||||||||||||
| Other exploration expenses* | 493,728 | 1,376 | - | 3,027 | 16,546 | 514,677 | ||||||||||||
| Other development expenses** | 1,180,696 | - | - | 44,091 | - | 1,224,787 | ||||||||||||
| Land*** | 203,365 | 22,602 | 20,018 | 214,889 | 243,736 | 704,610 | ||||||||||||
| Permitting | 2,212,003 | - | - | 56,002 | - | 2,268,005 | ||||||||||||
| Metallurgical test work | 84,050 | 108,986 | - | 3,454 | - | 196,490 | ||||||||||||
| Technical reports and engineering | 668,608 | - | - | 99,614 | - | 768,222 | ||||||||||||
| External affairs / Community engagement | 168,748 | - | - | 12,500 | - | 181,248 | ||||||||||||
| Site support expenses**** | 1,013,710 | - | - | 175,476 | - | 1,189,186 | ||||||||||||
| Total | $ | 9,643,818 | $ | 132,964 | $ | 20,018 | $ | 609,053 | $ | 260,282 | $ | 10,666,135 | ||||||
|
Three-Month Period Ended |
Idaho Properties | Nevada & Arizona Properties | ||||||||||||||||
| DeLamar Project |
Other Idaho Deposits |
Joint Expenses |
Nevada North Project |
Other Nevada & Arizona |
Total |
|||||||||||||
| Contract exploration drilling | 411,102 | - | - | - | - | 411,102 | ||||||||||||
| Contract metallurgical drilling | 175,906 | - | - | - | - | 175,906 | ||||||||||||
| Contract condemnation drilling | 60,599 | - | - | - | - | 60,599 | ||||||||||||
| Exploration drilling - other drilling labour & related costs | 262,108 | - | - | - | - | 262,108 | ||||||||||||
| Metallurgical drilling - other drilling labour & related costs | 98,877 | - | - | - | - | 98,877 | ||||||||||||
| Condemnation drilling - other drilling labor & related costs | 43,099 | - | - | - | - | 43,099 | ||||||||||||
| Other exploration expenses* | 238,950 | 1,376 | - | 3,027 | 16,546 | 259,899 | ||||||||||||
| Other development expenses** | 631,612 | - | - | 44,091 | - | 675,703 | ||||||||||||
| Land*** | 105,626 | - | 6,401 | 214,889 | 243,736 | 570,652 | ||||||||||||
| Permitting | 1,284,043 | - | - | 56,002 | - | 1,340,045 | ||||||||||||
| Metallurgical test work | 29,718 | 90,949 | - | 3,454 | - | 124,121 | ||||||||||||
| Technical reports and engineering | 381,971 | - | - | 99,614 | - | 481,585 | ||||||||||||
| External affairs / Community engagement | 83,155 | - | - | 12,500 | - | 95,655 | ||||||||||||
| Site support expenses**** | 506,253 | - | - | 175,476 | - | 681,729 | ||||||||||||
| Total | $ | 4,313,019 | $ | 92,325 | $ | 6,401 | $ | 609,053 | $ | 260,282 | $ | 5,281,080 | ||||||
*Includes mapping, IP, sampling, payroll, exploration G&A expenses, consultants
**Includes development G&A expenses and payroll
***Includes BLM, IDL and ASDL annual fees, consulting, property taxes, legal, etc. expenses
****Includes site G&A expenses
|
Integra Resources Corp |
10. ACQUISITION OF MILLENNIAL PRECIOUS METALS CORP.
On February 26, 2023, the Company entered into a definitive plan of arrangement (the "Plan of Arrangement") with MPM pursuant to which Integra acquires all of the issued and outstanding common shares of MPM (the "Transaction"). Each MPM shareholder was entitled to receive 0.092 common share (post Consolidation) of Integra for each share of MPM held. Each stock option of MPM was exchanged in accordance with the Plan of Arrangement. The Transaction was approved by the securityholders of MPM on April 26, 2023 and closed on May 4, 2023. In connection with the Plan of Arrangement, the Company issued 16,872,050 common shares in exchange of MPM common shares, 764,704 stock options to replace MPM stock options and assumed 21,903,504 MPM warrants (convertible into 2,015,122 Integra shares). Based on the closing share price of Integra on May 4, 2023, the fair value of the consideration, including transaction costs, was $23,996,732.
The transaction is accounted for as an asset acquisition and the allocation of the purchase price to the assets acquired and liabilities assumed is based on estimated fair values at the time of acquisition, following the requirements of IFRS 2.
May 4, 2023 purchase price allocation ("PPA") to the estimated fair value of the assets and liabilities of MPM is as follows:
Purchase price:
| May 4, 2023 | |||
| Issuance of 16,872,050 shares of Integra to Millennial's shareholders | $ | 22,697,554 | |
| Issuance of 764,704 options of Integra to Millennial's option holders | 31,888 | ||
| Fair value of Millennial warrants assumed by Integra | 44,630 | ||
| Transaction costs | 1,222,660 | ||
| $ | 23,996,732 | ||
| Fair value of assets and liabilities acquired: |
|||
| Cash | $ | 323,884 | |
| Receivables | 103,234 | ||
| Prepaids | 19,278 | ||
| Restricted cash | 154,630 | ||
| Security and reclamation deposits | 45,395 | ||
| Lease receivable | 208,701 | ||
| Right of use assets | 377,071 | ||
| Property, plant and equipment | 264,375 | ||
| Exploration and evaluation assets | 24,484,463 | ||
| Accounts payable and accrued liabilities | (1,328,458 | ) | |
| Lease liability | (542,293 | ) | |
| Provision for site reclamation and remediation | (113,548 | ) | |
| $ | 23,996,732 |
Subsequent to the acquisition date, the exploration and evaluation assets balance was adjusted for some reversals and invoices related to the merger, received post-closing, and amounted to $24,542,651.
|
Integra Resources Corp |
11. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
Related parties include the Board of Directors, Executive Chair, CEO, CFO, and enterprises that are controlled by these individuals.
As June 30, 2024, $391,596 (December 31, 2023 - $1,158,454) was due to related parties for payroll expenses, consulting fees, bonuses accruals, vacation accruals and other expenses. Receivables from related parties (related to rent and office expenses) as of June 30, 2024 were $23,540 (December 31, 2023 - $20,643) and was recorded in receivables.
Key Management Compensation:
Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company's Board of Directors, Executive Chair, CEO, and CFO.
Remuneration attributed to executives and directors for the six-month periods ended June 30, 2024 and 2023 were as follows:
| June 30, 2024 | June 30, 2023 | |||||
| Short-term benefits* | $ | 708,822 | $ | 821,327 | ||
| Associate companies** | 22,540 | 4,081 | ||||
| Stock-based compensation | 513,098 | 325,407 | ||||
| Total | $ | 1,244,460 | $ | 1,150,815 |
*Short-term employment benefits include salaries, consulting fees, vacation accruals and bonus accruals for key management. It also includes directors' fees for non-executive members of the Company's Board of Directors.
**Mostly consulting services and rent expenses due to and from entities for which Integra's executives or directors are executives or directors.
In the six-month period ended June 30, 2024, the Company issued 56,662 deferred share units to certain directors, in lieu of their directors' fees, as elected by those directors.
In the six-month period ended June 30, 2023, the Company issued 38,893 deferred share units to certain directors, in lieu of their directors' fees, as elected by those directors. The share-based payment related to these DSUs is included in the above table under stock-based compensation.
12. TRADE AND OTHER PAYABLES
Trade and other payables of the Company are principally comprised of amounts outstanding for trade purchases relating to exploration activities and amounts payable for operating and financing activities. The usual credit period taken for trade purchases is 30 days.
The following is a breakdown of the trade and other payables:
| As at |
June 30, 2024 |
December 31, 2023 |
||||
| Total Accounts Payable | $ | 1,827,000 | $ | 2,426,556 | ||
| Accrued Liabilities | 871,345 | 889,090 | ||||
| Total Trade and Other Payables | $ | 2,698,345 | $ | 3,315,646 |
|
Integra Resources Corp |
13. CONVERTIBLE DEBT FACILITY
On July 28, 2022, the Company executed a credit agreement with Beedie Investment Ltd. (the "Lender"), for the issuance of a non-revolving term convertible debt facility (the "Convertible Facility") in the principal amount up to $20 million. Maturity date of the loan is set as 36 months following the closing date (August 4, 2022), which could be extended for an additional 12 months, if certain conditions are met. On August 4, 2022, an initial advance of $10 million was drawn under this facility, with the Company having the option to draw "subsequent advances" in increments of at least $2.5 million, up to an additional $10 million, subject to certain conditions. The Convertible Facility is secured by the Company's material assets and guaranteed by the Company's subsidiaries at that time.
In connection with the closing of the Merger with Millennial, the original Convertible Facility was amended on May 4, 2023 to accommodate the assets of Millennial and its subsidiaries, each of which, following the closing of the Merger, are loan parties and provide guarantees and security for the obligations under the loan agreement. The amended agreement modified the conversion price on the initial advance from $2.25 (adjusted for the Consolidation) to $1.73 (adjusted for the Consolidation) and increased the coupon interest rate from 8.75% to 9.25% per annum on the loan outstanding. The interest continues to be accrued for the first twenty-four (24) months from the date of the original Loan Agreement, payable quarterly either in shares or in cash, at Integra's election.
Prior to July 31, 2024, interest will be accrued and shall be compounded quarterly and added to the principal at the end of each quarterly interest period. Commencing with the quarterly interest period ending September 30, 2024, interest shall be paid quarterly either in cash or shares, at the Company's election.
The Company is required to pay standby fees at a rate of 2% per annum, calculated on the undrawn portion of the Convertible Facility, calculated on a daily basis, compounded quarterly, and payable in arrears on each interest payment date (quarterly) following the effective date commencing September 30, 2022. Those fees are deferred in full (and included in deferred transaction costs).
If for a period of 30 consecutive trading days, the Company's volume weighted average trading price ("VWAP") of the common shares measured on the close of the trading on each such day equals or exceeds a 50% premium above the initial advance conversion price or the subsequent advance conversion price for any subsequent advance, the Company shall, provided no event of default occurred and be continuing, be entitled to have a one-time right to elect to cause the lender to convert up to 50% of the outstanding principal amount.
The Company may, at any time so long as an event of default has not occurred and it is continuing, make a prepayment of the outstanding advances, a make whole fee equal to the interest that would have accrued on such principal amount being prepaid from the date such advance was made up to the earlier of the date that is 30 months following the date of such advance and the maturity date then in effect at the rate of interest applicable thereto less the amount of interest paid to date on such outstanding principal amount being prepaid; if the prepayment of any advance occurs after the date that is 30 months following the date such advance, a prepayment fee equal to 2% of the principal amount of such advance being prepaid; and all of other outstanding obligations if the Convertible Facility is prepaid in full.
At any time prior to repayment of the outstanding principal amount, the lender is entitled to elect to convert all or any portion of the principal amount (together with all outstanding standby fees and interest) into such number of common shares in the capital of the Company at a conversion price of a) for the initial advance $1.73 (adjusted for Consolidation) b) for the subsequent advance conversion price (equal to the higher of i) closing price on the trading day immediately prior to the date of the advance or ii) a 20% premium on the 30-day VWAP immediately prior to the date of the advance).
|
Integra Resources Corp |
13. CONVERTIBLE DEBT FACILITY (continued)
Subsequent to the quarter-end, the Company announced amendments to its Convertible Facility and a subsequent draw of $5.0 million. The amendments and the subsequent draw will be effective upon close of the announced transaction with Florida Canyon Gold Inc (Note 17).
The assumptions used in this valuation model and the resulting fair value of the embedded derivatives at June 30, 2024 and December 31, 2023 were as follows:
| June 30, 2024 | December 31, 2023 | |
| Maturity date | August 4, 2025 | August 4, 2025 |
| Risk-free rate | 5.25% - 4.86% | 5.24% - 4.33% |
| Exchange rate (USD$ to CAD$) | 1.3687 | 1.3226 |
| Share price | $0.93 | $1.05 |
| Expected volatility | 53.6% | 61.3% |
| Dividend yield | %Nil | %Nil |
| Annual interest rate | 9.25% | 9.25% |
| Conversion price (per share) | $1.73425 | $1.73425 |
| Conversion price cap | $2.60138 | $2.60138 |
| Credit spread | 11.68% | 10.75% |
A summary of the changes in the convertible facility for the six-month period ended June 30, 2024 and the year ended December 31, 2023 is as follows:
| |
Convertible facility - liability component |
Convertible facility - derivative component |
Total convertible debt facility |
||||||
| Balance, December 31, 2022 | $ | 8,463,214 | $ | 1,585,000 | $ | 10,048,214 | |||
| Transaction costs amortization | (95,313 | ) | (95,313 | ) | |||||
| Interest expense accrual | 974,534 | 974,534 | |||||||
| Accretion | 587,565 | 587,565 | |||||||
| Change in PV of host liability* | 97,732 | 97,732 | |||||||
| Change in fair value of derivatives | - | (969,000 | ) | (969,000 | ) | ||||
| Balance, December 31, 2023 | 10,027,732 | 616,000 | 10,643,732 | ||||||
| Interest expense accrual | 528,824 | 528,824 | |||||||
| Accretion | 359,257 | 359,257 | |||||||
| Change in fair value of derivatives | - | (384,000 | ) | (384,000 | ) | ||||
| Balance, June 30, 2024 | $ | 10,915,813 | $ | 232,000 | $ | 11,147,813 |
*Management analyzed the accounting treatment of the May 4, 2023 loan amendment completed in connection with the closing of the merger with Millennial in accordance to IFRS 9. Management concluded that the original terms and new terms of the convertible debt facility are not "substantially different" and therefore, the loan amendment would be accounted for as a modification and not as an extinguishment. The adjustments to the carrying amount of the financial liability due to the modification is recognized as "Change in fair value of host liability" on the consolidated statements of operations and comprehensive loss.
|
Integra Resources Corp |
13. CONVERTIBLE DEBT FACILITY (continued)
Upon the occurrence of an event of default which is continuing, all obligations shall at the option of the lender be accelerated and become immediately due and payable. As of June 30, 2024 the Company was in compliance with the covenants.
14. COMMITMENTS AND CONTRACTUAL OBLIGATIONS
Net Smelter Return ("NSR")
DeLamar Project: Most of the DeLamar deposit is subject to a 2.5% NSR payable to Triple Flag Precious Metals Corp ("Triple Flag"). The NSR will be reduced to 1.0% once Triple Flag has received a total cumulative royalty payment of C$10 million ($7.4 million). Other NSRs ranging from 2.0% to 5.0% are also payable to third-party landholders on certain claims.
Integra Resources Corp. entered into a binding agreement with Wheaton Precious Metals (Cayman) Co., a wholly-owned subsidiary of Wheaton Precious Metals Corp. ("Wheaton"), pursuant to which Wheaton acquired a 1.5% net smelter returns royalty ("NSR Royalty") on metal production from all claims of the DeLamar Project (comprised of the DeLamar and Florida Mountain Deposits) for an aggregate cash purchase price of $9.75 million, to be paid in two installments.
The first installment of $4.875 million has been received by Integra on March 7, 2024 upon closing of the transaction. The second installment of $4.875 million was received subsequent to quarter-end (Note 17).
Nevada North Project: A 0.5% NSR on production from the Wildcat property is payable to Franco-Nevada*. Other NSRs ranging from 0.4% to 1.0% are also payable to third-party landholders on certain claims. A 0.5% NSR on gold production from the Mountain View property is payable to Franco-Nevada*. Certain claims on the property are also subject to a 1.0% NSR to Franco-Nevada and a 1.5% NSR to Triple Flag. Other NSRs ranging from 0.05% to 1.5% are also payable to third-party landholders on certain claims.
War Eagle Property: a 1.0% net smelter royalty on future production from the deposit is payable to Gold Royalty Corp. and a 5.0% net smelter royalty payable to the State of Idaho on certain claims. A 2% NSR on production from the Chadwick leased patented claims, with an option to purchase 1% NSR royalty for the payment of $500,000 with credit from prior payments made to lessor.
Marr, Ocelot, Eden and Dune Properties: Franco-Nevada* also has a 2.0% NSR on production from the Marr, Ocelot, Eden and Dune properties. Integra shall have an option at any time to buy down one-half of each royalty, thereby reducing the royalty to a 1.0% NSR royalty per property, for $1,500,000 per property.
Red Canyon Property: The Red Canyon property is subject to a 2.0% NSR royalty to Red Canyon Corporation. A 0.5% NSR is also payable to a third-party landholder.
Cerro Colorado District: The Cerro Colorado property is subject to a 1.0% NSR to Tri Minerals Holding Corp. For a period of five (5) years from the date the option is exercised, and the royalty is granted, Integra shall have the option to buy back the royalty for a payment $1,500,000. The Company has until July 26, 2026 to exercise the option.
|
Integra Resources Corp |
14. COMMITMENTS AND CONTRACTUAL OBLIGATIONS (continued)
Millennial Arizona - Option to Purchase Agreement
The Company announced on June 12, 2024 that Millennial Silver Nevada ("MSN") entered into an option agreement (the "GreenLight Option Agreement") dated June 11, 2024 with GreenLight Metals USA Corporation, a wholly-owned subsidiary of Green Light Metals Inc. ("GreenLight"), regarding the Cerro Colorado Property. Pursuant to the terms of the GreenLight Option Agreement, MSN granted GreenLight an exclusive option to purchase its interests in its wholly-owned subsidiary Millennial Arizona LLC for a period of 12 months.
In consideration for the grant of the option, GreenLight has agreed to deliver common shares of the company valued at no less than C$500,000 (US$363,465) to Integra. The shares will be paid in two tranches: (i) The first tranche of shares, valued at no less than C$250,000 (US$181,871), will be delivered within five days of the execution of the Agreement (received); and (ii) the second tranche of shares, valued at no less than C$250,000 (US$181,594) will be delivered at the earlier of: 1) the time of a go-public event, or 2) December 31, 2024.
In order to exercise the option and acquire the Interests in Millennial Arizona, GreenLight will pay Integra in cash or common shares of GreenLight, an amount equal to the total 2024 holding costs (other than exploration expenditures) incurred by Integra under the preexisting option through the closing date. GreenLight has until June 2025 to exercise the option and acquire the Interests in Millennial Arizona.
Blacksheep Property: a 5.0% net smelter royalty payable to the State of Idaho on certain claims.
* Franco-Nevada Corporation ("Franco-Nevada") acquired these royalties from Waterton in June 2023.
In May 2023, Wheaton Precious Metals Corp. acquired from Integra a Right of First Refusal ("ROFR") on all future precious metals royalties, streams and pre-pays transactions on all properties owned by the Company as of May 4, 2023. The Company received compensation of $37,101 (C$50,000) in exchange for the ROFR. This has been recorded under the Statements of Operations and Comprehensive Loss as income from right of first refusal interest.
Advance Minimum Royalties ("AMR")
The Company's AMR obligation totalled $122,450 for 2024 (December 31, 2023 - $122,450), of which $77,350 was paid in the current six-month period.
Annual Claim Filings Fees
The Company's obligation related to the Idaho Department of Lands ("IDL") rent payments totalled $30,907 for 2024 (December 31, 2023 - $30,907), which was paid in full in the current six-month period.
The Company's obligation related to the Arizona State Lands Dept ("ASLD") rent payments totalled $129,000 for 2024 (December 31, 2023 - $75,140), which was paid in full in the current six-month period.
The Company's obligation for BLM claim fees totalled $685,450 for 2024 (December 31, 2023 - $569,565), of which $377,340 was paid in the current six-month period.
|
Integra Resources Corp |
14. COMMITMENTS AND CONTRACTUAL OBLIGATIONS (continued)
Land Access Lease Payments
The Company's obligation related to land and road access lease payments totalled $289,997 for 2024 (December 31, 2023 - $284,744), of which $128,883 was paid in the current six-month period.
15. RECLAMATION AND REMEDIATION LIABILITIES
The Company conducts its operations so as to protect public health and the environment, and to comply with all applicable laws and regulations governing protection of the environment.
DeLamar Project
The site has been reclaimed by the former owner, Kinross, and the Company's environmental liabilities consist mostly of water treatment, general site maintenance and environmental monitoring costs.
The reclamation and remediation obligation represents the present value of the water treatment and environmental monitoring activities expected to be completed over the next 75 years. The cost projection has been prepared by an independent third party with expertise in mining site reclamation. Water treatment costs could be reduced in the event that mining at DeLamar resumes in the future. The Company's cost estimates do not currently assume any future mining activities. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual water treatment and environmental monitoring costs will ultimately depend upon future market prices for the required activities that will reflect market conditions at the relevant time.
The Company reviewed and revised some of its assumptions and estimates. The following table summarizes those estimates for June 30, 2024 and December 31, 2023.
|
DeLamar Project ARO |
June 30, 2024 |
December 31, 2023 |
|
Discount Rate |
4.51% |
4.03% |
|
Long Term Annual Inflation Rate |
2.0% |
2.0% |
|
Undiscounted Estimated Future Costs |
$104.2 mm |
$104.2 mm |
Changes resulting from the reclamation assumptions revision are recognized as a change in the carrying amount of the reclamation liability and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset (see Note 9).
|
Integra Resources Corp |
15. RECLAMATION AND REMEDIATION LIABILITIES (continued)
Nevada North Project (Mountain View and Wildcat) and Red Canyon Property
The provision was calculated using a weighted average risk-free interest rate of 4.36% (December 31, 2023 - 1.72%) and a weighted average inflation rate of 2.3% (December 31, 2023 - 2.5%).
Summary of Obligations
The following table details the changes in the reclamation and remediation liability.
| DeLamar Project | Nevada North Project |
Red Canyon Property |
Total | |||||||||
| Liability balance at December 31, 2022 | $ | 25,531,111 | $ | - | $ | - | $ | 25,531,111 | ||||
| New reclamation liability (Note 10) | - | 87,266 | 26,282 | 113,548 | ||||||||
| Reclamation spending | (1,195,703)) | - | - | (1,195,703 | ) | |||||||
| Accretion expenses | 1,022,592 | 3,418 | 1,029 | 1,027,039 | ||||||||
| Reclamation adjustment | 16,486 | - | - | 16,486 | ||||||||
| Liability balance at December 31, 2023 | 25,374,486 | 90,684 | 27,311 | 25,492,481 | ||||||||
| Reclamation spending | (535,946 | ) | - | - | (535,946 | ) | ||||||
| Accretion expenses | 509,898 | (18,565 | ) | (5,591 | ) | 485,742 | ||||||
| Reclamation adjustment | (2,762,588 | ) | - | - | (2,762,588 | ) | ||||||
| Liability balance at June 30, 2024 | $ | 22,585,850 | $ | 72,119 | $ | 21,720 | $ | 22,679,689 |
| June 30, 2024 | December 31, 2023 | |||||
| Current reclamation and remediation liability | $ | 1,056,006 | $ | 1,056,006 | ||
| Non-current reclamation and remediation liability | 21,623,683 | 24,436,475 | ||||
| Total reclamation and remediation liability | $ | 22,679,689 | $ | 25,492,481 |
Reclamation Deposits
Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated reclamation and remediation obligations.
The Company's reclamation and remediation bonds as of June 30, 2024 amount to $4.5mm.
| Reclamation and Remediation Bonds | June 30, 2024 | December 31, 2023 | ||||
| Idaho Department of Lands* | 3,431,978 | 3,431,978 | ||||
| Idaho Department of Environmental Quality* | 100,000 | 100,000 | ||||
| Bureau of Land Management - Idaho State Office* | 714,400 | 714,400 | ||||
| Bureau of Land Management - Nevada State Office* | 250,000 | 250,000 | ||||
| Arizona State Land Department** | 15,000 | 15,000 | ||||
| Total | $ | 4,511,378 | $ | 4,511,378 |
*Secured with surety bonds, which are subject to a 2.5% management fee. No cash collateral is required.
**Secured with restricted cash.
|
Integra Resources Corp |
16. SHARE CAPITAL
Share Capital
On May 26, 2023, the Company consolidated its common shares on the basis of one (1) new post-consolidation common share for every two and a half (2.5) existing pre-consolidation common share (the "Consolidation"). Proportionate adjustments have been made to the Company's outstanding stock options, restricted share units, and deferred share units. As required by IFRS, all references to share capital, common shares outstanding and per share amounts in these unaudited interim condensed consolidated financial statements and the accompanying notes have been restated retrospectively to reflect the Consolidation.
The Company is authorized to issue an unlimited number of common shares without par value. As at June 30, 2024, the number of total issued and outstanding common shares was 88,458,702 (December 31, 2023 - 68,871,437).
Activities during the six-month period ended June 30, 2024
Equity Financings:
The Company completed on March 13, 2024 a bought deal public offering, pursuant to which the Company issued a total of 16,611,750 units at a price of C$0.90 (US$0.67) per unit for aggregate gross proceeds of C$15 (US$11) million. Each unit consists of one common share of the Company and one-half of one common share purchase warrant. Each warrant entitles the holder thereof to purchase one common share at an exercise price of C$1.20 (US$0.89) for a period of 36 months from the closing of the offering.
The Company paid ~$0.6 million in brokers' fee and ~$0.6 million for various other expenses (mostly legal and filing fees) in connection with the equity financings.
Equity Incentives:
On January 5, 2024, the Company approved a cash redemption of 7,775 vested RSUs, and as a result, no shares have been issued related to this transaction.
On January 10, 2024, the Company issued 15,746 shares as a result of vesting RSUs (32,458 units vested of which 19,958 units were redeemed/settled).
On April 30, 2024, the Company approved a cash redemption of 17,500 vested RSUs, and as a result, no shares have been issued related to this transaction.
On June 3, 2024, the Company approved a cash redemption of 6,977 vested RSUs, and as a result, no shares have been issued related to this transaction.
On June 30, 2024, the Company approved a cash redemption of 17,500 vested RSUs, and as a result, no shares have been issued related to this transaction.
Property Acquisition:
Integra completed on March 8, 2024, the acquisition of seventeen patented claims in the Rich Gulch area of the DeLamar Project. Under the terms of the purchase agreement, the Company acquired all of the interests in exchange for $2.1 million, which was satisfied through the issuance of 2,959,769 common shares in the capital of the Company. The shares issued are subject to trading restrictions.
|
Integra Resources Corp |
16. SHARE CAPITAL (continued)
Activities during the year ended December 31, 2023
Millennial Acquisition:
The Company acquired all outstanding shares of Millennial on May 4, 2023. In aggregate, 16,872,050 Integra shares were issued to former Millennial shareholders as consideration for their Millennial shares, at a price of $1.35 for a total of $22,697,554 included in the PPA (see Note 10).
Equity Financings:
In connection with the closing of the acquisition of Millennial, 20,000,000 subscription receipts of Integra issued on March 16, 2023 at a price of C$1.75 per subscription receipt were converted into one Integra share for no additional consideration. The gross proceeds amounted to $25.8 million (C$35 million). The Company paid ~$1 million in brokers' fee and ~$0.5 million for various other expenses (mostly legal and filing fees) in connection with the equity financings.
Equity Incentives:
In April 2023, the Company approved a cash redemption of 938 vested RSUs, and as a result, no shares have been issued related to this transaction.
In December 2023, the Company issued 93,911 shares as a result of vesting RSUs.
In December 2023, the Company approved cash redemption of 24,935 vested RSUs, and as a result, no shares have been issued for these RSUs.
Equity Incentive Awards
The Company has an equity incentive plan ("the Equity Incentive Plan") whereby the Company's Board of Directors, within its sole discretion, can grant to directors, officers, employees and consultants, stock options to purchase shares of the Company, restricted share units ("RSU") and deferred share units ("DSU") (together the "Awards"). The Equity Incentive Plan provides for the issuance of Awards to acquire up to 10% of the Company's issued and outstanding capital. The Equity Incentive Plan is a rolling plan as the number of shares reserved for issuance pursuant to the grant of Awards will increase as the Company's issued and outstanding share capital increases. As at June 30, 2024, the Company had 3,823,296 (December 31, 2023 - 1,689,467) awards available for issuance.
In addition, the aggregate number of shares that may be issued and issuable under this Equity Incentive Plan (when combined with all of the Company's other security-based compensation arrangements, as applicable):
(a) to any one participant, within any one-year period shall not exceed 5% of the Company's outstanding issue, unless the Company has received disinterested shareholder approval;
(b) to any one consultant (who is not otherwise an eligible director), within a one-year period shall not exceed 2% of the Company's outstanding issue;
(c) to eligible persons (as a group) retained to provide investor relations activities, within a one-year period shall not exceed 2% of the Company's outstanding issue;
(d) to insiders (as a group) shall not exceed 10% of the Company's outstanding issue from time to time;
|
Integra Resources Corp |
16. SHARE CAPITAL (continued)
Equity Incentive Awards (continued)
(e) to insiders (as a group) within any one-year period shall not exceed 10% of the Company's outstanding issue; and
(f) to any one insider and his or her associates or affiliates within any one-year period shall not exceed 5% of the Company's outstanding issue from time to time.
In no event will the number of shares that may be issued to any one participant pursuant to Awards under this Equity Incentive Plan (when combined with all of the Company's other security-based compensation arrangement, as applicable) exceed 5% of the Company's issued and outstanding shares from time to time.
Stock Options
A summary of the changes in stock options for the six-month period ended June 30, 2024 and the year ended December 31, 2023 is as follows:
| Options | June 30, 2024 Weighted Average Exercise Price |
Options | December 31, 2023 Weighted Average Exercise Price |
|||||||||
| Outstanding at the beginning of period | 3,300,083 | $ | 3.06 | 1,478,773 | $ | 5.35 | ||||||
| Granted | - | - | 2,559,979 | 1.98 | ||||||||
| Expired | (100,689 | ) | 4.70 | (738,669 | ) | 3.90 | ||||||
| Outstanding at the end of period | 3,199,394 | $ | 3.01 | 3,300,083 | $ | 3.06 |
The following table summarizes outstanding stock options as June 30, 2024:
| No. of options outstanding |
Weighted average remaining life (Years) |
Exercise price |
No. of options currently exercisable |
Expiration date |
|
| 40,000 | $6.18 | 40,000 | September 16, 2024 | ||
| 521,027 | $5.46 | 521,027 | December 17, 2024 | ||
| 32,000 | $3.49 | 32,000 | March 16, 2025 | ||
| 16,000 | $8.33 | 16,000 | October 5, 2025 | ||
| 113,264 | $9.26 | 113,264 | December 15, 2025 | ||
| 40,000 | $8.45 | 40,000 | February 24, 2026 | ||
| 239,844 | $4.00 | 239,844 | May 28, 2026 | ||
| 156,604 | $5.10 | 122,004 | December 16, 2026 | ||
| 36,800 | $5.29 | 36,800 | January 5, 2027 | ||
| 164,680 | $5.29 | 164,680 | January 5, 2027 | ||
| 13,800 | $4.16 | 13,800 | April 5, 2027 | ||
| 30,100 | $1.59 | 10,033 | December 15, 2027 | ||
| 191,904 | $1.63 | 85,973 | January 10, 2028 | ||
| 1,603,371 | $1.04 | 73,570 | December 20, 2028 | ||
| Total | 3,199,394 | 3.09 | $3.01 | 1,508,995 |
|
Integra Resources Corp |
16. SHARE CAPITAL (continued)
Share-based payments - stock options
A summary of the changes in the Company's reserve for share-based payments related to the stock options for the six-month periods ended June 30, 2024 and 2023 is set out below:
| June 30, 2024 | June 30, 2023 | |||||
| Balance at beginning of period | $ | 6,187,868 | $ | 5,902,436 | ||
| Share-based payments - replacement options | - | 31,888 | ||||
| Share-based payments - options | 229,371 | 122,698 | ||||
| Balance at the end of period | $ | 6,417,239 | $ | 6,057,022 |
On December 20, 2023, the Company granted 1,603,371 stock options to its directors, officers, employees and contractors at an exercise price of $1.04 per option, with the expiry date December 20, 2028. The options were granted in accordance with the Company's Equity Incentive Plan and are subject to vesting provisions. The share-based payment related to these options was calculated as $909,007, to be amortized over the options vesting period.
On May 4, 2023, the Company granted 764,704 replacement stock options to Millennial's employees and consultants (see Note 10), at the price range of $2.40 - $5.29. Of these replacement options, 207,000 expired on the following day, 62,100 expired on August 4, 2023, and 40,480 expired on May 4, 2024. The share-based payment related to those replacement stock options was calculated as $31,888 and included in the PPA (see Note 10).
On January 10, 2023, the Company granted 191,904 stock options to its directors and officers, at an exercise price of $1.63 per option, with the expiry date January 10, 2028. The options were granted in accordance with the Company's Equity Incentive Plan and are subject to vesting provisions. The share-based payment related to these options was calculated as $137,900, to be amortized over the options vesting period.
The following assumptions were used for the Black-Scholes valuation of stock options granted during the six-month periods ended June 30, 2024 and 2023:
| June 30, 2024 | June 30, 2023 | |||||
| Dividend rate | - | 0% | ||||
| Expected annualized volatility | - | 51.99% - 61.47% | ||||
| Risk free interest rate | - | 3.15% - 4.43% | ||||
| Expected life of options | - | 1 - 3.5 yr | ||||
| Weighted average of strike price of options granted | - | $3.56 |
Restricted Share Units
Restricted share units are the equity settled units, granted under the Company's Equity Incentive Plan and are accounted for based on the market value of the underlying shares on the date of grant and vest in equal installments annually over three years. The aggregate maximum number of shares available for issuance from treasury underlying restricted share units under the Equity Incentive Plan is 4,000,000 shares. These units are exercisable into one common share once vested, for no additional consideration. They can be redeemed in cash, at the Company's discretion.
|
Integra Resources Corp |
16. SHARE CAPITAL (continued)
Restricted Share Units (continued)
A summary of the changes in restricted share units for the six-month period ended June 30, 2024 and the year ended December 31, 2023 is as follows:
| Restricted share units |
Weighted average grant date FV |
|||||
| Outstanding, December 31, 2022 | 292,046 | $ | 5.60 | |||
| Vested - shares issued | (110,602 | ) | $ | 5.81 | ||
| Vested - cash redemption (no shares issued) | (25,873 | ) | $ | 5.81 | ||
| Forfeited/Expired | (48,474 | ) | $ | 2.57 | ||
| Granted | 1,058,022 | $ | 1.10 | |||
| Outstanding, December 31, 2023 | 1,165,119 | $ | 1.35 | |||
| Vested - shares issued | (32,458 | ) | $ | 2.20 | ||
| Vested - cash redemption (no shares issued) | (49,752 | ) | $ | 2.20 | ||
| Cancelled (unvested) | (61,366 | ) | $ | 1.33 | ||
| Outstanding, June 30, 2024 | 1,034,043 | $ | 1.27 |
Outstanding balances include all vested RSUs for which settlement has been deferred.
Share-based payments - restricted share units
A summary of the changes in the Company's reserve for share-based payments related to the restricted share units for the six-month periods ended June 30, 2024 and 2023 is set out below:
| June 30, 2024 | June 30, 2023 | |||||
| Balance at beginning of period | $ | 753,263 | $ | 898,463 | ||
| Share-based payments - RSUs | 435,071 | 260,315 | ||||
| Share-based payments - RSUs redemptions | (75,955 | ) | (1,254 | ) | ||
| Balance at the end of period | $ | 1,112,379 | $ | 1,157,524 |
During the six-month period ended June 30, 2024 total of 82,210 RSUs vested (including 12,500 RSUs for which the settlement was deferred to future years) and 61,366 RSUs were canceled.
During the year ended December 31, 2023, a total of 131,541 RSUs vested (including 10,000 RSUs for which the settlement was deferred to future years) and 48,474 RSUs were canceled.
On December 20, 2023, the Company granted 941,898 RSUs to its officers and employees as a long-term incentives grant. The share-based payment related to these units was calculated as $970,044, to be amortized over the unit three-year vesting period.
On January 10, 2023, the Company granted 116,124 RSUs to its officers as a long-term incentives grant. The share-based payment related to these units was calculated as $188,884, to be amortized over the unit three-year vesting period.
|
Integra Resources Corp |
16. SHARE CAPITAL (continued)
Deferred Share Units
Deferred share units are equity settled units, granted under the Company's Equity Incentive Plan and are accounted for based on the market value of the underlying shares on the date of grant. DSUs granted before Q4 2021 vested immediately. DSUs granted from Q4 2021 onward will vest one year post grant. The aggregate maximum number of shares available for issuance from treasury underlying deferred share units under the Equity Incentive Plan is 3,000,000 shares. These units are exercisable into one common share during the period commencing on the business day immediately following the retirement date and ending on the ninetieth day following the retirement date providing a written redemption notice to the Company, for no additional consideration. In the event a participant resigns or is otherwise no longer an eligible participant during the year, then any grant of DSUs that are intended to cover such year, the participant will only be entitled to a pro-rated DSU payment. These units can be redeemed in cash, at the Company's discretion.
A summary of the changes in deferred share units for the six-month period ended June 30, 2024 and the year ended December 31, 2023 is as follows:
| Deferred share units |
Weighted average grant date FV |
Vested | Not vested | |||||||||
| Outstanding, December 31, 2022 | 194,610 | $ | 4.73 | 126,267 | 68,343 | |||||||
| Granted | 537,865 | $ | 1.15 | - | 537,865 | |||||||
| Vested | - | $ | 1.80 | 68,343 | (68,343 | ) | ||||||
| Outstanding, December 31, 2023 | 732,475 | $ | 2.05 | 194,610 | 537,865 | |||||||
| Granted | 56,662 | $ | 0.71 | - | 56,662 | |||||||
| Vested | - | $ | 1.52 | 137,893 | (137,893 | ) | ||||||
| Outstanding, June 30, 2024 | 789,137 | $ | 1.94 | 332,503 | 456,634 |
Share-based payments - deferred share units
A summary of the changes in the Company's reserve for share-based payments related to the deferred share units for the six-month periods ended June 30, 2024 and 2023 is set out below:
| June 30, 2024 | June 30, 2023 | |||||
| Balance at beginning of period | $ | 1,143,173 | $ | 838,869 | ||
| Share-based payments - DSUs | 228,580 | 140,368 | ||||
| Balance at the end of period | $ | 1,371,753 | $ | 979,237 |
In the current six-month period ended June 30, 2024, the Company issued 56,662 deferred share units to certain directors, in lieu of their directors' fees, as elected by those directors. Each DSU has been fair valued at Integra's closing share price at the end of quarter. These DSUs will vest 12 months post grant. The share-based payment related to these DSUs was calculated as $40,334, to be amortized over 12 months.
In the year ended December 31, 2023, the Company issued 74,865 deferred share units to certain directors, in lieu of their directors' fees, as elected by those directors. Each DSU has been fair valued at Integra's closing share price at the end of quarter. The Company also granted 99,000 DSUs in January 2023 as long-term incentives grant for the fiscal year 2022 and 364,000 DSUs in December 2023 as long-term incentives grant for the fiscal year 2023. These DSUs will vest 12 months post grant. The share-based payment related to these DSUs was calculated as $616,750, to be amortized over 12 months.
|
Integra Resources Corp |
16. SHARE CAPITAL (continued)
Share-based payments - summary
A summary of the changes in the Company's reserve for all share-based payment arrangements for the six-month periods ended June 30, 2024 and 2023 is set out below:
| June 30, 2024 | June 30, 2023 | |||||
| Balance at beginning of period | $ | 8,084,304 | $ | 7,639,768 | ||
| Share-based payments - replacement options | - | 31,888 | ||||
| Share-based payments - options | 229,371 | 122,698 | ||||
| Share-based payments - RSUs | 435,071 | 260,315 | ||||
| Share-based payments - DSUs | 228,580 | 140,368 | ||||
| RSUs redemptions | (75,955 | ) | (1,254 | ) | ||
| Balance at the end of period | $ | 8,901,371 | $ | 8,193,783 |
Warrant reserve
The Company completed on March 13, 2024 a bought deal public offering, pursuant to which the Company issued a total of 16,611,750 units. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant. As a result, the Company issued 8,305,874 warrants related to this financing. Each warrant entitles the holder thereof to purchase one common share at an exercise price of C$1.20 (US$0.89) for a period of 36 months from the closing of the offering.
The Company assumed 21,903,504 warrants as a result of the Millennial acquisition (see Note 10). Each warrant can be exercised for 0.092 Integra shares. As a result, a maximum of 2,015,122 Integra shares would be issuable upon exercise of the warrants. Those warrants expired on June 16, 2024.
The following warrants were outstanding as at June 30, 2024:
| Description | # of warrants | # of Integra Shares Issuable |
Issue date | Expiry date | Exercise price |
||||||||||
| March 2024 Financing | 8,305,874 | 8,305,874 | March 13, 2024 | March 13, 2027 | C$1.20 | ||||||||||
| Total | 8,305,874 | 8,305,874 | C$1.20 |
17. SUBSEQUENT EVENTS
Wheaton Precious Metals 2nd Instalment
On July 8, 2024, the Company received $4.875 million as the second instalment of the Wheaton NSR Royalty purchase.
Merger with Florida Canyon Gold Inc ("FCGI")
The Company announced on July 29, 2024 that it has entered into a definitive arrangement agreement (the "Arrangement Agreement"), dated July 28, 2024, whereby Integra has agreed to acquire all of the issued and outstanding shares of FCGI pursuant to a court-approved plan of arrangement (the "Transaction").
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Integra Resources Corp |
17. SUBSEQUENT EVENTS (continued)
Merger with Florida Canyon Gold Inc ("FCGI") (continued)
Under the terms of the Transaction, FCGI shareholders will receive 0.467 of a common share of Integra (each whole share, an "Integra Share") for each common share of FCGI ("FCGI Share") held (the "Exchange Ratio"). Existing shareholders of Integra and FCGI will own approximately 60% and 40%, respectively, of the outstanding Integra Shares on closing of the Transaction (but prior to the completion of the private placement equity financing described below) on a fully-diluted in-the-money basis. The Exchange Ratio implies consideration of C$0.69 per FCGI Share based on the closing market price of the Integra Shares on the TSX Venture Exchange (the "TSXV") on July 26, 2024 for total consideration of approximately C$95 million.
The Transaction will be effected by way of a court-approved plan of arrangement under the Canada Business Corporations Act, requiring the approval of (i) at least 66 ⅔% of the votes cast by the shareholders of FCGI voting in person or represented by proxy, (ii) if applicable, a simple majority of the votes cast by shareholders of FCGI, excluding for this purpose the votes of "related parties" and "interested parties" and other votes required to be excluded under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, all at a special meeting of FCGI's shareholders to consider the Transaction, and (iii) the approval of the Ontario Superior Court of Justice.
In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals, including the approvals of the TSXV and the satisfaction of certain other closing conditions customary in transactions of this nature as well as customary interim period covenants regarding the operation of each of the Companies' respective businesses. The Transaction is subject to the prior completion of the sale of FCGI's Mexican assets, as previously announced, and receipt of approval from the Federal Economic Competition Commission (Comisión Federal de Competencia Económica - COFECE), under the Federal Law of Economic Competition, to such sale. The transaction is also conditional upon binding arrangements being in place for the replacement of collateral supporting the FCGI Surety Bond and release of the Alamos Surety Bond Guarantee. The Arrangement Agreement contains customary provisions including fiduciary-out provisions in favour of FCGI, non-solicitation and right to match superior proposals in favour of Integra, and a US$2.25 million termination fee payable to Integra under certain circumstances.
Subject to the satisfaction of these conditions, Integra and FCGI expect that the Transaction will be completed in the fourth quarter of 2024. Details regarding these and other terms of the Transaction are set out in the Arrangement Agreement, which is available under the SEDAR+ profiles of Integra and FCGI at www.sedarplus.ca.
Bought Deal Private Placement Offering of Subscription Receipts
Concurrently with the Transaction (as described above), Integra has entered into an agreement with Stifel and Eight Capital, as co-lead underwriters and joint bookrunners (collectively, the "Co-Lead Underwriters"), on behalf of a syndicate of underwriters (the "Underwriters"), in connection with a bought deal private placement offering of 14,900,000 subscription receipts of Integra (the "Subscription Receipts") at a price of C$1.35 per Subscription Receipt (the "Issue Price") for gross proceeds to Integra of approximately C$20 million (the "Offering").
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Integra Resources Corp |
17. SUBSEQUENT EVENTS (continued)
Bought Deal Private Placement Offering of Subscription Receipts (continued)
Each Subscription Receipt shall represent the right of a holder to receive, upon satisfaction or waiver of certain release conditions (including the satisfaction of all conditions precedent to the completion of the Transaction other than the issuance of the consideration shares to shareholders of FCGI) (the "Escrow Release Conditions"), without payment of additional consideration, one Integra Share, subject to adjustments and in accordance with the terms and conditions of a subscription receipt agreement to be entered into upon closing of the Offering (the "Subscription Receipt Agreement").
The gross proceeds from the sale of the Subscription Receipts will be deposited and held in escrow pending the satisfaction or waiver of the Escrow Release Conditions by TSX Trust Company, as subscription receipt and escrow agent under the Subscription Receipt Agreement. Integra will pay the Underwriters a cash commission and the expenses of the Underwriters incurred in connection with the Offering.
If a Termination Event (as defined below) occurs, the escrowed proceeds of the Offering will be returned on a pro rata basis to the holders of Subscription Receipts, together with the interest earned thereon, and the Subscription Receipts will be cancelled and have no further force and effect, all in accordance with the terms of the Subscription Receipt Agreement. For the purposes of the Brokered Offering, a "Termination Event" includes: (a) an event in which the Escrow Release Conditions are not satisfied or waived prior to December 15, 2024 (subject to extensions in limited circumstances); or (b) the termination of the Arrangement Agreement (as defined above) in accordance with its terms.
The Offering is expected to close on or about August 21, 2024 and is subject to TSXV and other necessary regulatory approvals. Following completion of the Transaction, the net proceeds from the Offering is expected to be used to fund mine optimization opportunities at Florida Canyon, for continued advancement of DeLamar and Nevada North, and for general corporate purposes.
Amendments to the Beedie Capital Credit Facility
In connection with the closing of the Transaction (as described above), Integra announced that it has entered into a fourth supplemental credit agreement ("Fourth Supplemental Credit Agreement") with Beedie Capital to amend the convertible loan agreement dated July 28, 2022, as amended by a first supplemental credit agreement dated as of February 26, 2023, a second supplemental credit agreement dated as of May 4, 2023 and a third supplemental agreement dated as of February 20, 2024 (as amended by the Fourth Supplemental Credit Agreement (the "Credit Agreement"), pursuant to which Beedie Capital agreed to loan up to $20 million (the "Convertible Facility")).
Beedie Capital agreed to a second advance in the amount of $5 million subject to satisfying certain conditions under the Fourth Supplemental Credit Agreement, and to further amend the Convertible Facility to accommodate the assets of FCGI and its subsidiaries, each of which, following the closing of the Transaction, will be loan parties and provide guarantees and security for the obligations under the Credit Agreement.
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Integra Resources Corp |
17. SUBSEQUENT EVENTS (continued)
Amendments to the Beedie Capital Credit Facility (continued)
Beedie Capital and Integra further agreed to, conditional upon closing of the Transaction, amend the terms of the Credit Agreement to provide for the following: (i) subject to TSXV approval, modify the conversion price on the initial advance of $10 million (the "Initial Advance") from C$2.3625 (post-consolidation price) per Integra common share (the "Common Share") to a 25% premium to the Issue Price (as defined above), being C$1.6875; (ii) extension of the maturity date of the Credit Agreement from July 28, 2025 to July 31, 2027; (iii) extension of the period during which scheduled interest payments will be capitalized as principal from the current expiry date of October 31, 2024 to December 31, 2024; (iv) modification of the make-whole fee from the amount of interest Integra would have paid had the Convertible Facility continued for 36 months from the Initial Advance to 48 months from the Initial Advance; and (v) modification of the covenant requiring Integra to maintain a balance of unrestricted cash no less than $2 million to $5 million. Integra will also request to draw a second advance on the Convertible Facility in the principal amount of $5 million (the "Subsequent Advance") immediately following completion of the Transaction, with a conversion price equal to a 25% premium to the Issue Price. In the event that the amendment to the conversion price of the Initial Advance does not receive regulatory approval, Integra and Beedie Capital have agreed to a downward adjustment to the aforementioned premium in respect of the conversion price of the Subsequent Advance which would result in Beedie Capital receiving up to the same aggregate number of Integra Shares that Beedie Capital otherwise would have been entitled to receive upon conversion in full of the Initial Advance and Subsequent Advance had the conversion price of the Initial Advance been amended to equal a 25% premium to the Issue Price.
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Jason Kosec, Chief Executive Officer of Integra Resources Corp., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Integra Resources Corp. (the "issuer") for the interim period ended June 30, 2024.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (2013) (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 ICFR - material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2024 and ended on June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: August 14, 2024
| /s/ Jason Kosec |
|||
| Jason Kosec | |||
| Chief Executive Officer |
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Andree St-Germain, Chief Financial Officer of Integra Resources Corp., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Integra Resources Corp. (the "issuer") for the interim period ended June 30, 2024.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (2013) (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 ICFR - material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2024 and ended on June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: August 14, 2024
| /s/ Andree St-Germain |
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| Andree St-Germain | |||
| Chief Financial Officer |
CONSENT OF RAPHAEL DUTAUT
The undersigned hereby consents to:
(1) the inclusion in this Current Report on Form 6-K of Integra Resources Corp. (the "Company") of the scientific and/or technical information contained in the Company's Management's Discussion and Analysis dated August 14, 2024 (the "Technical Information") being filed with the United States Securities and Exchange Commission (the "SEC") under cover of Form 6-K; and
(2) the filing of this consent under cover of Form 6-K with the SEC and of the incorporation by reference of this consent, the use of my name and the Technical Information into the Company's Registration Statement on Form F-10 (File No. 333-276530), and any amendments thereto, filed with the SEC.
| /s/ Raphael Dutaut | |
| Name: Raphael Dutaut (Ph.D., P.Geo, OGQ Membership 1301) | |
| Title: Vice President Geology and Mining, Integra Resources Corp. | |
| Date: August 14, 2024 |