Regulus Resources : Financials and MD&A Q4-2024

Published: 2025-02-18 20:58:04 ET REG.V

(the "Company")

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2024 AND 2023

(Expressed in Canadian Dollars)

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of

Regulus Resources Inc.

Opinion

We have audited the accompanying consolidated financial statements of Regulus Resources Inc. (the "Company"), which comprise the consolidated statements of financial position as at September 30, 2024 and 2023, and the consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2024 and 2023, and its financial performance and its cash flows for the years then ended, in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Assessment of Impairment Indicators of Exploration and Evaluation Assets ("E&E Assets")

As described in Note 5 to the consolidated financial statements, the carrying amount of the Company's E&E Assets was $54,811,319 as of September 30, 2024. As more fully described in Notes 2 and 3 to the consolidated financial statements, management assesses E&E Assets for indicators of impairment at each reporting period.

The principal considerations for our determination that the assessment of impairment indicators of the E&E Assets is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the E&E Assets, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the E&E Asset.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Stephen Hawkshaw.

Vancouver, Canada

Chartered Professional Accountants

January 28, 2025

Regulus Resources Inc.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

As at

September 30, 2024

September 30, 2023

ASSETS

Current

Cash and cash equivalents

13,347,664

18,423,544

Receivables (Note 4)

119,938

154,225

Prepaid expenses and deposits

103,532

90,757

Due from related party (Note 7)

29,727

4,190

13,600,861

18,672,716

Long-term investments (Note 8)

502,250

273,500

Property and equipment

581,088

633,106

Exploration and evaluation assets (Note 5)

54,811,319

51,723,583

69,495,518

71,302,905

LIABILITIES AND EQUITY

Current

Accounts payable and accrued liabilities (Notes 7)

546,135

855,423

Decommissioning liability (Note 9)

356,000

103,000

902,135

958,423

Long term portion of decommissioning liability (Note 9)

257,000

902,135

1,215,423

Equity

Capital stock (Note 6)

137,937,764

137,721,097

Accumulated other comprehensive loss

(5,516,450)

(5,612,177)

Share compensation reserve (Note 6)

20,278,315

17,873,116

Deficit

(84,106,246)

(79,894,554)

68,593,383

70,087,482

69,495,518

71,302,905

Nature and continuance of operations (Note 1)

Approved by the Board:

Director:

"John Black"

"Mark Wayne"

John Black

Mark Wayne

The accompanying notes are an integral part of these consolidated financial statements.

Regulus Resources Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)

For the Years Ended September 30,

2024

2023

EXPENSES

Accounting and audit

195,900

185,950

Amortization

52,835

105,671

Bank charges and interest

11,829

24,886

Insurance

20,550

26,056

Investor relations and shareholder information

246,766

302,418

Legal (Note 7)

188,427

176,906

Management fees (Note 7)

761,062

761,725

Office and administration

673,751

461,265

Share-based compensation (Notes 6, 7)

2,476,866

1,102,246

Transfer agent and listing fees

84,120

130,455

Travel

50,158

76,964

(4,762,264)

(3,354,542)

OTHER ITEMS

Gain (loss) on foreign exchange

5,744

(50,302)

Write-off of receivables (Note 4)

(263,582)

(607,623)

Recovery of prior year's provision

248,306

Interest income

808,410

695,266

LOSS FOR THE YEAR

(4,211,692)

(3,068,895)

Items that may be reclassified subsequently to

profit and loss:

Change in fair market value of long-term

investment

228,750

(101,250)

Items that will not be reclassified subsequently

to profit and loss:

Translation adjustment

Comprehensive loss for the year

Loss per common share - basic and diluted

Weighted average number of common shares outstanding - basic and diluted

(133,023)

(1,477,794)

(4,115,965)

(4,647,939)

(0.03)

124,587,916

116,935,134

The accompanying notes are an integral part of these consolidated financial statements.

Regulus Resources Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian Dollars)

Accumulated

Other

Number of

Capital

Comprehensive

Compensation

Stock

Loss

Reserve

Deficit

Total

Balance, September 30, 2022

101,849,844

$ 114,707,360

(4,033,133)

16,770,870

(76,825,659)

50,619,438

Shares issued on private placement, net of share issue cost

22,658,974

23,013,737

Share-based compensation

1,102,246

Fair value adjustment to long-term investment

(101,250)

Foreign exchange adjustment

(1,477,794)

Loss for the year

(3,068,895)

Balance, September 30, 2023

124,508,818

137,721,097

(5,612,177)

17,873,116

(79,894,554)

70,087,482

Shares issued on exercise of options

150,000

216,667

(71,667)

145,000

Share-based compensation

2,476,866

Fair value adjustment to long-term investment

228,750

Foreign exchange adjustment

(133,023)

Loss for the year

(4,211,692)

Balance, September 30, 2024

124,658,818

$ 137,937,764

(5,516,450)

20,278,315

(84,106,246)

68,593,383

The accompanying notes are an integral part of these consolidated financial statements.

Regulus Resources Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

For the Years Ended September 30,

2024

2023

Cash Flows from Operating Activities

Loss for the year

(4,211,692)

(3,068,895)

Items not affecting cash:

Amortization

52,835

105,671

Share-based compensation

2,476,866

1,102,246

Write-off of receivables

263,582

607,623

Recovery of prior year's provision

(248,306)

Changes in non-cash working capital items:

Receivables

(228,754)

(654,467)

Prepaid expenses and deposits

(12,582)

325,129

Accounts payable and accrued liabilities

(27,295)

(224,141)

Due from related party

(25,537)

(5,112)

Net cash and cash equivalents used in operating activities

(1,712,577)

(2,060,252)

Cash Flows from Investing Activities

Acquisition of property and equipment

(482)

Lease payments

(4,800)

(160,529)

Exploration and evaluation assets

(3,260,620)

(8,554,093)

Decommissioning liability payments

(103,000)

(20,780)

Sale of mineral property interest

6,903,000

Net cash and cash equivalents used in investing activities

(3,368,420)

(1,832,884)

Cash Flows from Financing Activities

Shares issued in private placement, net of share issue cost

23,013,737

Shares issued on exercise of options

145,000

Loan repayments

(678,760)

Net cash and cash equivalents provided by financing activities

145,000

22,334,977

Effect of foreign exchange on cash and cash equivalents

(139,883)

(267,464)

Change in cash and cash equivalents for the year

(5,075,880)

18,174,377

Cash and cash equivalents, beginning

18,423,544

249,167

Cash and cash equivalents, ending

13,347,664

18,423,544

Cash and cash equivalents consisted of:

Cash

3,055,978

278,933

Redeemable guaranteed investment certificates

10,291,686

18,144,611

Total cash and cash equivalents

13,347,664

18,423,544

Supplemental disclosures with respect to cash flows (Note 10)

Regulus Resources Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

For the Years Ended September 30, 2024 and 2023

Regulus Resources Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

For the Years Ended September 30, 2024 and 2023

2. BASIS OF PREPARATION (cont'd…) Impairment of exploration and evaluation assets

Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and interpretations. Determining whether to test for impairment of exploration and evaluation assets requires management's judgment, and consideration of whether the period for which the Company has the right to explore in the specific area has expired or will expire in the near future, and is not expected to be renewed; substantive expenditure on further exploration and evaluation of mineral resources in a specific area is neither budgeted nor planned; exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable quantities of mineral resources and the Company has decided to discontinue such activities in the specific area; or sufficient data exists to indicate that, although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Estimates

Significant estimates, made by management, about the future and other sources of estimation uncertainty at the end of the reporting period that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made relate to, but are not limited to, the following:

Carrying value and recoverability of exploration and evaluation assets

The carrying amount of Company's exploration and evaluation assets does not necessarily represent present or future values and the Company's exploration and evaluation assets have been accounted for under the assumption that the carrying amount will be recoverable. Recoverability is dependent on various factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development and upon future profitable production or disposition of the mineral properties. Additionally, there are numerous geological, economic, environmental and regulatory factors and uncertainties that could affect management's assessment of the overall viability of its properties or to the likelihood of generating future cash flows necessary to recover the carrying value of the Company's exploration and evaluation assets.

To the extent that any of management's assumptions change there could be a significant effect on the Company's future financial position, operating results and cash flows.

Fair value of stock options and warrants

Determining the fair value of warrants and stock options requires judgments related to the choice of a pricing model, the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could result in a significant effect on the Company's future operating results or on other components of shareholders' equity.

Income taxes

The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company's ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development or commercialization of mineral reserves. To the extent that management's assessment of the Company's ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets and deferred income tax provisions or recoveries could be affected.

Decommissioning costs

Upon retirement of the Company's exploration and evaluation assets, decommissioning costs will be incurred by the Company. Estimates of these costs are subject to uncertainty associated with the method, timing and extent of future decommissioning activities. The liability, the related asset and the corresponding expense are affected by estimates with respect to the costs and timing of decommissioning.

Disclaimer

Regulus Resources Inc. published this content on February 19, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 19, 2025 at 01:57:09.803.