(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
TSXV: ANF
The unaudited consolidated financial statements, and accompanying notes thereto, for the periods
ended September 30, 2010 and 2009 have not been reviewed by the Company’s external auditors.
ANFIELD NICKEL CORP.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
(expressed in Canadian dollars)
September 30,
2010
(Unaudited)
December 31,
2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 3)
Receivables
Advances to contractors
Prepaid expenses
Equipment held for sale (Note 4)
$
TOTAL CURRENT ASSETS
MINERAL PROPERTY (Note 5)
EQUIPMENT (Note 6)
TOTAL ASSETS
4,463,741
64,906
48,428
59,804
-
$
15,700,577
131,551
192,363
49,962
211,662
4,636,879
16,286,115
15,888,012
4,370,821
924,709
283,059
$
21,449,600
$
20,939,995
$
1,169,391
$
152,903
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities
PROVISION FOR SEVERANCE PAYMENTS (Note 7)
67,528
47,040
1,236,919
199,943
SHARE CAPITAL (Note 8)
22,196,100
22,026,630
CONTRIBUTED SURPLUS
1,232,582
535,711
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
(3,216,001)
TOTAL LIABILITIES
Commitments and contingencies (Note 14)
SHAREHOLDERS’ EQUITY
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
(1,822,289)
20,212,681
$
21,449,600
Nature of operations (Note 1)
Subsequent events (Notes 8 and 16)
APPROVED BY THE DIRECTORS
“David Strang”
Director
“Robert Pirooz”
Director
See Accompanying Notes to the Consolidated Financial Statements
20,740,052
$
20,939,995
ANFIELD NICKEL CORP.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
(Unaudited)
(expressed in Canadian dollars)
For the Three Months Ended
September 30,
September 30,
2010
2009
EXPENSES
Salaries and wages
Legal, audit and accounting
Investor relations
General and administrative
Property investigations
Travel
Regulatory and transfer agent fees
$
282,986
16,773
49,314
27,420
28,200
7,610
$
412,303
OTHER INCOME (EXPENSES)
Interest and other income
Foreign exchange (loss) gain
Write off of mineral property costs, net of
recoveries
(60,557)
883,523
175,400
168,656
101,102
63,631
56,663
27,296
$
1,476,271
3,378
(13)
-
DEFICIT, BEGINNING OF PERIOD
$
420,704
7,780
(68,337)
NET LOSS AND COMPREHENSIVE LOSS
FOR THE PERIOD
316,580
49,443
72,218
(61,204)
37,431
6,236
For the Nine Months Ended
September 30,
September 30,
2010
2009
317,841
68,385
72,218
172,501
48,284
15,756
694,985
42,920
39,639
19,241
(8,591)
-
-
(311,901)
3,365
82,559
(301,251)
(472,860)
(417,339)
(1,393,712)
(996,236)
(2,743,141)
(824,932)
(1,822,289)
(246,035)
DEFICIT, END OF PERIOD
$
(3,216,001)
$
(1,242,271)
$
(3,216,001)
$
(1,242,271)
LOSS PER SHARE – BASIC AND DILUTED
$
(0.01)
$
(0.02)
$
(0.04)
$
(0.05)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
31,796,666
25,590,870
31,409,914
See Accompanying Notes to the Consolidated Financial Statements
20,614,066
ANFIELD NICKEL CORP.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(expressed in Canadian dollars)
For the Three Months Ended
September 30,
September 30,
2010
2009
For the Nine Months Ended
September 30,
September 30,
2010
2009
$
$
CASH PROVIDED FROM (USED IN):
OPERATING ACTIVITIES
Net loss for the period
Items not involving cash:
Write off of mineral property costs
Stock based compensation
Accretion
Net changes in non-cash working capital
items:
Receivables
Advance to contractors
Prepaid expenses
Accounts payable and accrued liabilities
Provision for severance payments
FINANCING ACTIVITIES
Issuance of shares for cash, net of issue
costs
INVESTING ACTIVITIES
Equipment held for sale
Mineral property obligations
Acquisition of Mayaniquel S. A.
Transaction costs for acquisition of
Mayaniquel S.A.
Cash acquired through acquisition of
Mayaniquel S.A
Expenditures on mineral properties
Equipment
Recovery of mineral property costs
(472,860)
$
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
(1,393,712)
$
(996,236)
186,115
1,335
292,721
-
628,325
10,351
311,901
293,982
-
(39,197)
95,503
(15,321)
50,562
3,679
(27,421)
41,282
429,735
-
66,645
143,935
(9,842)
14,704
10,137
(31,177)
(8,718)
402,028
-
(190,184)
318,978
(529,457)
(28,220)
-
14,881,508
104,998
609,879
-
-
211,662
1,001,784
-
(2,920,750)
-
(417,968)
-
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
(417,339)
(37,460)
18,429,430
(5,010,316)
(256,444)
-
(604,880)
-
(11,333,763)
(692,060)
-
272,264
(661,637)
16,057
(4,656,881)
(642,340)
(10,812,377)
(3,712,034)
(4,847,065)
14,558,146
(11,236,836)
14,689,176
9,310,806
3,285,063
15,700,577
3,154,033
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
4,463,741
$ 17,843,209
$
4,463,741
$ 17,843,209
Supplementary information relating to cash flows:
There were no non-cash financing and investing activities during the periods ended September 30, 2010 and 2009.
Other cash flow information:
Interest received:
Taxes paid:
$
$
30,061
-
$
$
16,767
-
$
$
See Accompanying Notes to the Consolidated Financial Statements
57,598
-
$
$
51,108
-
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
1.
NATURE OF OPERATIONS
Anfield Nickel Corp. (“Anfield” or “the Company”) is engaged in the acquisition, exploration and
development of mineral properties. On May 13, 2009, the Company acquired a 100% interest in
Mayaniquel, S.A. (“Mayaniquel”), a Guatemalan company that controls certain mineral exploration
licenses in the nickel laterite belt located in the eastern part of Guatemala (Note 5).
These unaudited consolidated financial statements have been prepared on the basis of
accounting principles applicable to a going concern which assumes that the Company will realize
its assets and discharge its liabilities in the normal course of business. Management has carried
out an assessment of the going concern assumption and has concluded that the going concern
basis of accounting is appropriate.
Accordingly, these unaudited consolidated financial
statements do not reflect the adjustments to the carrying value of assets and liabilities, or the
impact on the consolidated statement of loss and balance sheet classifications, that would be
necessary were the going concern assumption not appropriate.
However, continuance of the Company’s operations is dependent upon achieving profitable
operations and obtaining additional equity or debt financing. The recoverability of the carrying
values of the Company’s mineral properties is dependent upon the existence and discovery of
economically recoverable reserves, the ability of the Company to obtain the necessary financing
to complete the development of these properties and future profitable production from or
proceeds from disposition of mineral properties. The carrying value of the Company’s mineral
property interests does not reflect current or future values.
While the Company has been successful in obtaining financing in the past, there is no assurance
that such financing will continue to be available or be available on favourable terms in the future.
An inability to raise additional financing may impact the future assessment of the Company as a
going concern.
2.
SIGNIFICANT ACCOUNTING POLICIES
(a)
Principles of presentation
These unaudited consolidated financial statements include the accounts of Anfield Nickel
Corp. and, since May 13, 2009, its wholly-owned subsidiary, Mayaniquel, S.A.
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in Canada
(“Canadian GAAP”) with respect to the preparation of interim financial statements.
Accordingly, they do not include all of the information and note disclosures required by
Canadian GAAP in the preparation of annual consolidated financial statements. The
accounting policies used in the preparation of the accompanying unaudited interim
consolidated financial statements are the same as those described in the annual
consolidated financial statements and the notes thereto for the fiscal year ended
December 31, 2009. In the opinion of management, all adjustments considered
necessary for fair presentation have been included in these financial statements. These
unaudited interim consolidated financial statements should be read in conjunction with
the Company’s financial statements including the notes thereto for the fiscal year ended
December 31, 2009. Interim results are not necessarily indicative of the results expected
for the fiscal year.
-4-
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
2.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Management estimates and measurement uncertainty
The preparation of financial statements in conformity with Canadian GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Significant estimates
are made in the preparation of these financial statements regarding the fair values of
employee stock options and financial instruments, actuarial present value of provision for
severance payments, valuation of future income tax assets and valuation and
recoverable amounts of mineral properties.
(c)
Future accounting changes
Business Combinations (Section 1582)
CICA Handbook Section 1582 was issued in January 2009 to replace Section 1581,
“Business Combinations”.
Section 1582 establishes standards for accounting for
business combinations and will apply prospectively to business combinations for
acquisitions completed on or after January 1, 2011. The Company is not evaluating the
impact, if any, that this standard will have on its consolidated financial statements as the
Company is required to prepare its consolidated financial statements in accordance with
International Financial Reporting Standards (“IFRS”) for all fiscal periods beginning on or
after January 1, 2011. This standard is substantially harmonized with the comparable
IFRS standard so any impacts will be reflected in the adoption of IFRS.
Consolidated Financial Statements (Section 1601) and Non-Controlling Interests (Section
1602)
CICA handbook Sections 1601 and 1602 were issued in January 2009 and will replace
Section 1600, “Consolidated Financial Statements”, effective for fiscal years beginning on
or after January 1, 2011. Section 1601 establishes standards for the preparation of
consolidated financial statements. Section 1602 establishes standards for accounting for
non-controlling interests in consolidated financial statements. The Company is not
evaluating the impact, if any, that these standards will have on its consolidated financial
statements as the Company is required to prepare its consolidated financial statements in
accordance with IFRS for all fiscal periods beginning on or after January 1, 2011. This
standard is substantially harmonized with the comparable IFRS standard so any impacts
will be reflected in the adoption of IFRS.
-5-
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
3.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and liquid investments which are readily convertible
into cash with maturities of three months or less when purchased. The Company’s cash and
cash equivalents at September 30, 2010 consisted of cash of $3,153,235 and cash equivalents of
$1,310,506 (December 31, 2009 – cash of $1,411,129 and cash equivalents of $14,289,448).
4.
EQUIPMENT HELD FOR SALE
Equipment held for sale consisted of certain equipment held by Mayaniquel that was made
available for sale on the date of its acquisition by the Company. The equipment was recorded at
its fair value of $211,662. In February 2010, the equipment was sold for proceeds equal to its
recorded fair value.
5.
MINERAL PROPERTY
Mayaniquel Project
The Company owns a 100% interest in the Mayaniquel Project comprised of mineral exploration
licenses totaling approximately 60,000 hectares located within the nickel laterite belt that
surrounds Lake Izabal in northeastern Guatemala. The town of El Estor located on the northern
shore of Lake Izabal serves as the central location point to the district. The Mayaniquel Project is
subject to a 1.5% net smelter royalty payable to the vendor.
For the period ended September 30, 2010, the Company’s expenditures on the Mayaniquel
Project are as follows:
Balance, December 31, 2009
Additions during period
Exploration costs
Field office and administration
Wages and benefits
Transportation and accommodation
Geological and metallurgical
Concession fees
Consultants database
Supplies and equipment
Reports and maps
Social and community relations
Sample costs
Environmental
Drilling
Communications
Professional fees
Depreciation
Balance, September 30, 2010
-6-
$
Mayaniquel
4,370,821
$
1,019,368
2,440,056
657,896
1,940,821
466,540
67,189
649,089
221,637
402,503
88,749
17,283
3,478,168
14,600
2,882
50,410
15,888,012
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
5.
MINERAL PROPERTY (continued)
At December 31, 2009, the Company’s expenditures on its mineral properties were as follows:
Balance, December 31, 2008
Additions during period
Acquisition costs
Exploration costs
Field office and administration
Wages and benefits
Transportation and
accommodation
Geological
Concession fees
Supplies and equipment
Reports and maps
Social and community
relations
Sample costs
Environmental
Drilling
Communications
Depreciation
Expense recoveries
Mineral property costs written-off
Balance, December 31, 2009
6.
Mayaniquel
-
$
Eureka
327,958
Total
327,958
$
2,787,191
-
2,787,191
268,195
277,439
-
268,195
277,439
241,694
272,369
209,535
74,005
112,918
-
241,694
272,369
209,535
74,005
112,918
56,842
27,418
11,358
11,165
10,897
9,795
4,370,821
$
$
$
(16,057)
(311,901)
- $
56,842
27,418
11,358
11,165
10,897
9,795
(16,057)
(311,901)
4,370,821
EQUIPMENT
September 30, 2010
Leasehold improvements
Furniture and equipment
Machinery
Automotive
Cost
Net Book
Value
$
462,385 $
282,787
233,668
13,080
15,218
27,171
23,802
1,020
$
447,167
255,616
209,866
12,060
$
991,920 $
67,211
$
924,709
December 31, 2009
Leasehold improvements
Furniture and equipment
Machinery
Automotive
Accumulated
Amortization
Cost
Accumulated
Amortization
Net Book
Value
$
121,995 $
81,342
86,999
2,518
1,104
8,649
42
$
121,995
80,238
78,350
2,476
$
292,854 $
9,795
$
283,059
-7-
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
7.
PROVISION FOR SEVERANCE PAYMENTS
A provision has been recorded to recognize certain severance obligations vesting with employees
of Mayaniquel, pursuant to the Labour Code in Guatemala. The provision of $67,528 is measured
at management’s best estimate of the actuarial present value of the amounts required to be paid
out in the event of the future termination of any of its employees.
As the fair value of the provision was determined using a discounted cash flows approach,
accretion of the liability due to the passage of time is recognized each period until the estimated
time of payment.
8.
SHARE CAPITAL
Authorized: an unlimited number of common shares, without par value
Issued and outstanding:
Number of
Shares
Amount
Balance, December 31, 2009
Shares issued for cash on exercise of stock options
Fair value of stock options exercised
31,130,000
666,666
-
$ 22,026,630
104,998
64,472
Balance, September 30, 2010
31,796,666
$ 22,196,100
Shares in escrow
As at September 30, 2010 there were 1,512,300 shares held in escrow, which are being released
in six equal tranches every six months for a period of 36 months from November 8, 2007. These
escrow shares may not be transferred, assigned or otherwise dealt with without the consent of
the regulatory authorities.
Subsequent to September 30, 2010, on November 8, 2010 the final tranche of 1,512,300 shares
held in escrow were released. No shares are currently held in escrow.
9.
STOCK OPTIONS
The Company has adopted a stock option plan (“the Plan”) whereby it may grant options to
directors, officers, employees, and consultants of the Company. The maximum number of shares
that may be reserved for issuance under the Plan is limited to 3,100,000. The vesting period for
all options is at the discretion of the board of directors.
A summary of the Company’s stock options as at September 30, 2010 and 2009 and the changes
for the three and nine month periods then ended is as follows:
-8-
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
9.
STOCK OPTIONS (continued)
Outstanding, beginning of period
Granted
Exercised
Forfeited
Outstanding, end of period
Three Months Ended September 30,
2010
2009
Weighted
Weighted
Average
Average
Number of
Exercise
Number of
Exercise
Options
Price
Options
Price
1,403,334 $
2.49
850,000 $
0.31
555,000
2.40
(33,334)
2.40
1,370,000 $
2.49
1,405,000 $
1.14
Outstanding, beginning of period
Granted
Exercised
Forfeited
Outstanding, end of period
Nine Months Ended September 30,
2010
2009
Weighted
Weighted
Average
Average
Number of
Exercise
Number of
Exercise
Options
Price
Options
Price
1,435,000 $
1.17
1,000,000 $
0.28
635,000
3.02
555,000
2.40
(666,666)
0.15
(150,000)
0.10
(33,334)
2.40
1,370,000 $
2.49
1,405,000 $
1.14
At September 30, 2010, the Company had outstanding stock options, with a weighted average
remaining contractual life of 4 years, to purchase an aggregate of 1,370,000 common shares as
follows:
Options Outstanding
Number
of Shares
200,000
505,000
30,000
635,000
Expiry Date
November 1, 2012
August 18, 2014
December 18, 2014
June 8, 2015
Exercise
Price
$1.00
$2.40
$2.85
$3.02
1,370,000
$2.49
-9-
Options Exercisable
Number
Exercise
of Shares
Price
150,000
$1.00
336,662
$2.40
10,000
$2.85
203,340
$3.02
700,002
$2.29
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
9.
STOCK OPTIONS (continued)
Pursuant to the Company’s accounting policy for stock-based compensation, the fair value of
options vesting during the nine months ended September 30, 2010 in the amount of $761,344
(2009 - $315,641) has been recorded. Of this amount, $628,325 (2009 - $293,982) been included
in expenses and $133,019 (2009 - $21,659) has been capitalized to mineral properties.
The fair value used to calculate the compensation expense related to the stock options granted in
the nine months ended September 30, 2010, is estimated using the Black-Scholes Option Pricing
Model with the following assumptions:
Risk-free interest rate
Expected dividend yield
Expected stock price volatility
Expected option life in years
Expected rate of forfeiture
1.71%
106% - 122%
2-3
0 - 5%
Option pricing models require the input of highly subjective assumptions including the expected
price volatility. Changes in the subjective input assumptions can materially affect the fair value
estimate, and therefore the existing models do not necessarily provide a reliable single measure
of the fair value of the Company’s stock options.
10.
CAPITAL DISCLOSURES
It is the Company’s objective when managing capital to safeguard its ability to continue as a
going concern in order that it may continue to explore and develop its mineral properties and
continue its operations for the benefit of its shareholders. The Company objectives when
managing capital are to:
(a)
(b)
(c)
continue the exploration and development of its mineral properties;
continue to evaluate mineral properties for acquisition; and
maintain a capital structure which optimises the cost of capital at acceptable risk.
The Company manages its common shares as capital. The Company intends to expend existing
working capital by carrying out its planned acquisition, exploration and development activities on
its mineral properties and continuing to pay administrative costs.
The Company is not subject to any externally imposed capital requirements.
- 10 -
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
11.
FINANCIAL INSTRUMENTS
(a)
Categories of financial assets and financial liabilities
Under Canadian GAAP financial instruments are classified into one of the following five
categories: held for trading, held-to-maturity investments, loans and receivables,
available-for-sale financial assets and other financial liabilities. The carrying values of the
Company’s financial instruments, which are the same as their fair values, are classified
into the following categories:
Cash and cash
equivalents
Receivables
Advances to contractors
Accounts payable and
accrued liabilities
Category
Designated held for
trading
Loans and receivables
Loans and receivables
Other liabilities
September 30, 2010
December 31, 2009
$
4,463,741
64,906
48,428
$
15,700,577
131,551
192,363
$
(1,169,391)
$
(152,903)
The recorded amounts for cash and cash equivalents, receivables, advances to
contractors and accounts payable and accrued liabilities approximate their fair value due
to their short-term nature. The Company has designated its cash and cash equivalents,
as held for trading assets. Income earned on the Company’s cash and cash equivalents
has been disclosed in the consolidated statements of loss under the caption “interest and
other income.”
(b)
Fair Value Measurements
The fair value of financial instruments is measured within a ‘fair value hierarchy’ which
has the following levels:
(i)
(ii)
(iii)
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable
for the asset of liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
Level 3: inputs for the asset or liability that are not based on observable market
data (unobservable inputs).
The Company’s cash and cash equivalent financial instruments have been measured as
Level 1 items.
- 11 -
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
11.
FINANCIAL INSTRUMENTS (continued)
(c)
Credit Risk
The Company considers that its cash and cash equivalents (which total $4,463,741 at
September 30, 2010) are exposed to credit risk. Credit risk is the risk that one party to a
financial instrument will fail to discharge an obligation and cause the other party to incur a
financial loss. The Company’s exposure to credit risk on its Canadian and U.S. dollar
cash and cash equivalents is minimized by maintaining these assets with high-credit
quality financial institutions. The Company is exposed to the credit risk of its banks in
Guatemala which hold cash for the Company’s Guatemalan operations. The Company
seeks to limit its exposure to this risk by maintaining cash balances in Guatemala
sufficient only to fund the short-term needs of its Mayaniquel subsidiary. At September
30, 2010, the Company’s cash and cash equivalents were invested in three financial
institutions.
(d)
Liquidity Risk
Liquidity risk is the risk that the Company will be unable to meet its financial obligations
as they become due. The Company manages liquidity risk by ensuring that it has
sufficient cash available to meet its obligations. The Company forecasts cash flows for a
period of twelve months to identify financial requirements. These requirements are met
through a combination of cash on hand, disposition of assets and accessing the capital
markets.
At September 30, 2010 and December 31, 2009, the Company’s current liabilities
consisted of trade and other payables of $1,169,391 and $152,903, which are due
primarily within the next quarter. The Company’s cash and cash equivalents of
$4,463,741 at September 30, 2010 and $15,700,577 at December 31, 2009 were more
than sufficient to pay these current liabilities.
(e)
Market Risks
The significant market risk exposures to which the Company is exposed are interest rate
risk, currency risk and price risk.
Interest Rate Risk
Interest rate risk is the risk that the future cash flows and fair values of the
Company will fluctuate because of changes in market interest rates. Generally,
the Company’s interest income will be reduced during sustained periods of lower
interest rates as higher yielding cash equivalents mature and the proceeds are
invested at lower interest rates.
Included in net loss for the nine months ended September 30, 2010 is interest
income earned on the Company’s cash and cash equivalents. If interest rates
throughout the period had been 25 basis points (0.25%) higher (or lower) the net
loss would have been approximately $27,000 lower (higher).
- 12 -
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
11.
FINANCIAL INSTRUMENTS (continued)
(e)
Market Risks (continued)
Currency Risk
The functional currency of the Company and its subsidiaries is the Canadian
dollar. The carrying amounts of monetary assets and liabilities denominated in
currencies other than the Canadian dollar are subject to fluctuations in the
underlying foreign currency exchange rates. Gains and losses on such items are
included as a component of net loss for the period.
The Company is exposed to currency risks arising from fluctuations in foreign
exchange rates among the Canadian dollar, U.S. dollar and Guatemalan
quetzals and the degree of volatility of these rates. The Company raises funds
from equity financings primarily in Canadian dollars and pays for a significant
amount of expenditures relating to the exploration activities on its mineral property
interests in U.S. dollars and Guatemalan quetzals. The Company does not use
derivative instruments to reduce its exposure to foreign exchange and currency
risks. At September 30, 2010 the Company’s cash and cash equivalents consist
of $1,718,893 held in Canadian dollars, $2,601,928 held in U.S. dollars and
$142,920 held in Guatemalan quetzals. The Company’s exposure to foreign
currency risks on cash balances held in foreign currencies is not expected to be
significant.
Financial Instrument Type
Cash and cash equivalents
$
Receivables
Advances to contractors
Accounts payable and accrued
liabilities
Total
$
Canadian
Dollar
1,718,893
2,601,928
142,920
53,971
10,935
48,428
(98,468)
(827,616)
(243,307)
3,407,684
Currency
CAD dollar
U.S. dollar
Quetzals
CAD dollar
Quetzals
Quetzals
CAD dollar
U.S. dollar
Quetzals
$
$
+/- 1%
Fluctuation
26,019
1,429
109
484
(8,276)
(2,433)
17,332
Price Risk
The Company is exposed to price risk with respect to commodity and equity
prices. Equity price risk is defined as the potential adverse impact on the
Company’s earnings due to movements in individual equity prices or general
movements in the level of the stock market. Commodity price risk is defined as the
potential adverse impact on earnings and economic value due to commodity price
movements and volatilities. The Company closely monitors commodity price of
nickel, individual equity movements, and the stock market to determine the
appropriate course of action to be taken by the Company.
- 13 -
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
12.
SEGMENTED DISCLOSURE
The Company has one operating segment, mineral exploration, and all costs related to its mineral
property and equipment are located in Guatemala, as disclosed in notes 4, 5 and 6. The Company
operates in two geographical segments: Canada and Guatemala. Corporate administrative activities
are conducted in Canada.
13.
RELATED PARTY TRANSACTIONS
The Company paid $5,395 (2009 – $100,000) for the rental of office premises and $103,081 (2009 –
$9,673) for management and administrative services to companies with certain directors in common.
There were no amounts payable to these companies at September 30, 2010 and 2009.
Related party transactions are recorded at the exchange amount which is the amount of
consideration paid or received and agreed to between the parties.
14.
COMMITMENTS AND CONTINGENCIES
(a)
The Company has entered into agreements for the rental of office and warehouse facilities
and for the rental of surface rights on certain of its mineral exploitation licenses that
require minimum payments in the aggregate as follows:
Fiscal 2010
Fiscal 2011
Fiscal 2012
Fiscal 2013
Fiscal 2014
Fiscal 2015
$
$
(b)
63,000
96,000
57,000
56,000
56,000
28,000
356,000
Prior to the acquisition of Mayaniquel by the Company, the Guatemalan Ministry of
Environment (“MOE”) brought an administrative action against Mayaniquel in January 2009
alleging a failure to comply with the country’s environmental legislation as it relates to
surface disturbance. The MOE has taken the position that Mayaniquel was required to
complete, and receive approval of, an Environmental Impact Study (“EIS”) prior to
initiating certain exploration activities and issued an order requiring Mayaniquel to cease
all exploration activities until the EIS had been accepted and approved by the MOE.
Mayaniquel has received legal advice that the MOE is not correct and the company is
entitled to undertake mineral exploration activities without the completion and acceptance
of an EIS.
Mayaniquel has filed a legal action against the MOE in the Guatemalan courts seeking
judicial clarification. While the courts are reviewing the case, Mayaniquel is permitted to
continue exploration activities on its mineral exploration licenses. Mayaniquel’s legal
counsel has estimated that the courts could take as long as two to five years to review
the case. In the event the judicial clarification results in the MOE action being upheld,
Mayaniquel will be required to pay a fine of approximately US$87,500, which has not
been accrued for, and will also be required to complete an EIS. No concessions will be
forfeited should the action be upheld.
- 14 -
ANFIELD NICKEL CORP.
(a development stage enterprise)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)
(expressed in Canadian dollars)
15.
COMPARATIVE AMOUNTS
Certain comparative amounts have been reclassified to conform with the current period’s
presentation.
16.
SUBSEQUENT EVENT
Subsequent to September 30, 2010, the Company completed a non-brokered private placement
whereby 6,160,300 common shares were issued at a price of $3.75 per share for total gross cash
proceeds of $23,101,125. Cash finder’s fees totalling $629,750 were paid in relation to the private
placement resulting in net proceeds of $22,471,375.
- 15 -