吉星新能源(03395) - 2025 - 中期业绩

Announcement Information Company Basic Information JX Energy Ltd., a limited liability company registered in Alberta, Canada (stock code 3395), has reviewed and approved its unaudited condensed interim financial results for the three and six months ended June 30, 2025 - Company Name: JX Energy Ltd. (吉星新能源有限責任公司)[2] - Registration Place: Alberta, Canada[2] - Stock Code: 3395[2] - The Board of Directors has reviewed and approved the unaudited condensed interim financial results for the three and six months ended June 30, 2025[2] Unaudited Results Announcement This announcement, published under HKEX Listing Rule 13.49(6), discloses the company's unaudited condensed interim financial results for the three and six months ended June 30, 2025 - Announcement Basis: Hong Kong Stock Exchange Listing Rule 13.49(6)[2] - Disclosure Content: Unaudited condensed interim financial results for the three and six months ended June 30, 2025[2] Condensed Interim Financial Statements Notice of No Auditor Review These unaudited condensed interim financial statements, prepared by management and approved by the Board, have not been reviewed by an independent auditor as per National Instrument 51-102 - Financial statements are unaudited by an independent auditor[4] - Financial statements were prepared by company management and approved by the Board of Directors[4] Statement of Financial Position As of June 30, 2025, total assets decreased to CAD 21.9 million from CAD 25.9 million, with a significant increase in total current liabilities expanding the shareholder equity deficit Key Financial Position Data (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Assets | | | | | Total Current Assets | 1,208,996 | 1,146,135 | 5.49% | | Exploration and Evaluation Assets | 1,536,087 | 3,884,949 | -60.45% | | Property, Plant and Equipment | 19,126,139 | 20,660,091 | -7.43% | | Total Assets | 21,923,917 | 25,888,120 | -15.31% | | Liabilities | | | | | Total Current Liabilities | 25,237,749 | 17,424,108 | 44.84% | | Total Liabilities | 51,469,964 | 47,349,095 | 8.70% | | Shareholders' Equity | | | | | Total Shareholders' Equity | (29,546,047) | (21,460,975) | -37.68% | - Total current liabilities increased significantly by 44.84%, primarily due to the current portion of long-term debt and an increase in convertible debentures[5] - Exploration and evaluation assets decreased by 60.45%, reflecting asset write-offs[5] Statement of Loss and Other Comprehensive Loss For the six months ended June 30, 2025, total net revenue increased by 30.5%, but increased operating costs, depreciation, and impairment led to an expanded loss of CAD 8.9 million Key Loss and Other Comprehensive Loss Data (for the six months ended June 30) | Indicator | 2025 (CAD) | 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Net Revenue | 4,689,745 | 3,593,719 | 30.50% | | Operating Costs | (8,188,178) | (6,973,605) | 17.41% | | Depletion, Depreciation and Amortization | (1,514,131) | (1,307,810) | 15.78% | | Impairment Recovery and Write-offs | (2,351,223) | (18,694) | 12476.00% | | Operating Loss | (7,825,387) | (5,543,159) | 41.17% | | Loss and Comprehensive Loss | (8,888,838) | (7,277,834) | 22.14% | | Basic Loss Per Share | (0.02) | (0.01) | -100.00% | - Impairment and write-offs of exploration and evaluation assets significantly increased from CAD 18,694 in 2024 to CAD 2,351,223 in 2025, a 12476% increase[6] - Basic loss per share expanded from CAD 0.01 in 2024 to CAD 0.02 in 2025[6] Statement of Changes in Shareholders' Equity As of June 30, 2025, total shareholders' equity deteriorated to a deficit of CAD 29.5 million, primarily due to a current period loss of CAD 8.9 million Key Shareholders' Equity Changes (as of June 30) | Indicator | June 30, 2025 (CAD) | January 1, 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Share Capital | 222,417,603 | 220,212,755 | 2,204,848 | | Contributed Surplus | 15,996,981 | 13,091,943 | 2,905,038 | | Accumulated Deficit | (267,960,631) | (238,804,683) | (29,155,948) | | Total Equity | (29,546,047) | (5,499,985) | (24,046,062) | - A current period loss of CAD 8,888,838 was the primary factor contributing to the expanded shareholders' equity deficit[7] - Fair value adjustment of long-term payables increased contributed surplus by CAD 800,210[7] Statement of Cash Flows For the six months ended June 30, 2025, operating cash flow turned into a net inflow of CAD 275,254, driven by improved non-cash working capital, despite increased investment outflows Key Cash Flow Data (for the six months ended June 30) | Indicator | 2025 (CAD) | 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Net Cash From (Used In) Operations | 275,254 | (2,111,481) | 2,386,735 | | Net Cash From (Used In) Investing | (619,576) | 1,587,241 | (2,206,817) | | Net Cash From Financing | 633,986 | 738,560 | (104,574) | | Increase in Cash and Cash Equivalents | 289,664 | 214,320 | 75,344 | | Cash and Cash Equivalents, End of Period | 501,047 | 577,677 | (76,630) | - Operating cash flow shifted from a net outflow in the prior period of 2024 to a net inflow in 2025, primarily due to the positive impact of non-cash working capital changes[8] - Cash outflow from investing activities increased, mainly due to higher expenditures on property, plant and equipment and exploration and evaluation assets, compared to proceeds from asset sales in the prior year[8] Notes to the Financial Statements 1. Company Information JX Energy Ltd., incorporated in Alberta, Canada in 2005, focuses on oil and gas exploration, listed on HKEX in 2017, and rebranded in 2022 - The company was incorporated in Calgary, Alberta, Canada in 2005[9] - Principal business activities involve oil and natural gas exploration and development in Alberta, Canada[9] - The company's shares were listed on the Hong Kong Stock Exchange (stock code: 3395) on March 10, 2017[9] - The company name changed from Persta Resources Inc. to JX Energy Ltd. on June 22, 2022[9] 2. Basis of Preparation These unaudited condensed interim financial statements are prepared in CAD, adhering to IAS 34 and HKEX Listing Rules, using consistent accounting policies as the 2024 annual statements - Prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the Hong Kong Stock Exchange Listing Rules[10] - Accounting policies are consistent with the audited annual financial statements for the year ended December 31, 2024[10] - Financial statements are presented in Canadian Dollars (CAD), which is the company's functional currency[11] 3. Going Concern The company faces going concern uncertainties with a CAD 24 million working capital deficit and expanded operating losses, relying on positive cash flow or additional financing - As of June 30, 2025, the company had a working capital deficit of CAD 24 million[12] - Operating losses for the three and six months ended June 30, 2025, were CAD 5.3 million and CAD 7.8 million, respectively[12] - Global economic uncertainties (e.g., war, global warming, tariff threats, supply chain disruptions) and natural gas price volatility significantly impact the company's operating results[12] - The company's ability to continue as a going concern depends on generating positive cash flow from operations, securing equity and/or additional financing, or disposing of assets[12] 4. Cash and Cash Equivalents As of June 30, 2025, cash and cash equivalents significantly increased to CAD 501,047, primarily due to improved non-cash working capital changes from operating activities Cash and Cash Equivalents (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Deposits with banks and other financial institutions | 499,042 | 209,486 | 138.23% | | Cash on hand | 2,005 | 2,005 | 0.00% | | Total | 501,047 | 211,491 | 137.87% | Non-Cash Working Capital Changes (for the six months ended June 30) | Indicator | 2025 (CAD) | 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Accounts Receivable | 493,709 | 701,438 | (207,729) | | Prepaid Expenses and Deposits | (267,014) | 571,008 | (838,022) | | Accounts Payable and Accrued Liabilities | 1,663,106 | (2,667,269) | 4,330,375 | | Non-cash working capital changes from operating activities | 4,336,788 | 2,692,699 | 1,644,089 | 5. Accounts Receivable As of June 30, 2025, total accounts receivable decreased significantly to CAD 198,621, mainly due to a reduction in trade receivables, with all trade receivables due within one month Accounts Receivable (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Accounts Receivable | 198,621 | 691,842 | -71.29% | | Other Receivables | – | 488 | -100.00% | | Total | 198,621 | 692,330 | -71.29% | - As of June 30, 2025, all trade accounts receivable were due within 1 month[16] - No significant impairment losses were recognized for trade or other accounts receivable for the three and six months ended June 30, 2025[17] 6. Exploration and Evaluation Assets As of June 30, 2025, exploration and evaluation assets decreased significantly to CAD 1.5 million, primarily due to CAD 2.35 million in asset write-offs from expiring land leases Changes in Exploration and Evaluation Assets (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Balance, beginning of period | 3,884,949 | 5,914,591 | (2,029,642) | | Additions/(Disposals) net | 2,361 | (1,881,306) | 1,883,667 | | Write-offs | (2,351,223) | (148,336) | (2,202,887) | | Balance, end of period | 1,536,087 | 3,884,949 | (2,348,862) | - For the three and six months ended June 30, 2025, the company wrote off CAD 2.4 million of exploration and evaluation assets due to expiring land leases[19] - The company sold five non-producing Basing assets for CAD 1.9 million on April 1, 2024[19] 7. Property, Plant and Equipment As of June 30, 2025, the net book value of property, plant and equipment decreased to CAD 19.1 million, mainly due to depletion and depreciation of CAD 1.37 million Changes in Property, Plant and Equipment (as of June 30) | Indicator | June 30, 2025 (CAD) | January 1, 2025 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Cost | 169,514,835 | 169,678,906 | (164,071) | | Accumulated Depletion, Depreciation and Impairment | (150,388,696) | (149,018,815) | (1,369,881) | | Net Book Value | 19,126,139 | 20,660,091 | (1,533,952) | - For the six months ended June 30, 2025, depletion and depreciation amounted to CAD 1,369,881[20] - As of June 30, 2025, the company did not record any impairment or recovery for cash-generating units[21] 8. Right-of-Use Assets and Leases As of June 30, 2025, right-of-use assets decreased significantly to CAD 52,695, primarily due to CAD 144,250 in amortization, with a corresponding reduction in lease liabilities Changes in Right-of-Use Assets (as of June 30) | Indicator | June 30, 2025 (CAD) | January 1, 2025 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Oil and Gas Production | 18,400 | 55,198 | (36,798) | | Office Space | 33,717 | 132,395 | (98,678) | | Vehicles | 578 | 9,352 | (8,774) | | Total | 52,695 | 196,945 | (144,250) | Changes in Lease Liabilities (as of June 30) | Indicator | June 30, 2025 (CAD) | January 1, 2025 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Total | 67,617 | 251,065 | (183,448) | | Due within 1 year | 57,070 | 240,519 | (183,449) | | Due in 1 to 2 years | 10,547 | 10,547 | 0 | - For the six months ended June 30, 2025, amortization expense was CAD 144,250[22] 9. Accounts Payable and Accrued Liabilities As of June 30, 2025, total current accounts payable and accrued liabilities decreased significantly to CAD 5.6 million, driven by reductions in trade, capital, and other payables Accounts Payable and Accrued Liabilities (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Accounts Payable | 1,688,921 | 2,233,327 | -24.38% | | Accrued Liabilities | 1,398,002 | 1,281,133 | 9.12% | | Capital Accounts Payable | – | 2,788,265 | -100.00% | | Other Payables | 386,671 | 2,586,764 | -85.05% | | Total Current Accounts Payable and Accrued Liabilities | 5,625,870 | 8,889,489 | -36.71% | - All trade accounts payable, accrued liabilities, capital accounts payable, and other payables are expected to be settled within one year or are payable on demand[23] - As of June 30, 2025, other payables included CAD 0.37 million owed under the shadow unit plan (2024: CAD 0.44 million)[23] 10. Long-Term Debt, Long-Term Payables and Convertible Debentures As of June 30, 2025, total long-term debt was CAD 14.4 million, with most reclassified as current due to default risks, while convertible debentures increased with significant fair value changes Long-Term Debt (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Shareholder Loans (net) | 11,197,333 | 10,331,024 | 8.39% | | Term Debt | 3,261,861 | 3,435,944 | -5.07% | | Total | 14,365,456 | 13,646,448 | 5.27% | | Current Portion | 13,669,903 | 4,544,566 | 200.80% | | Long-Term Portion | 695,553 | 9,101,882 | -92.36% | Convertible Debentures (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Debt Component | 4,750,824 | 2,372,260 | 100.27% | | Derivative Component | (201,478) | 41,714 | -583.90% | - The entire balances of the CIMC Loan and JX Loan were reclassified as current liabilities due to the expiration of the grace period and failure to repay overdue amounts[28] - As of June 30, 2025, the JX Loan was approximately USD 1.6 million in arrears, and the CIMC Loan was approximately USD 0.7 million in arrears[28] Term Debt The company's CIMC loan and JX loan, totaling CAD 4.7 million and CAD 10.8 million respectively, were reclassified as current due to a payment default - The company obtained a USD 3.5 million (CAD 4.7 million) CIMC Loan from CIMC Leasing USA, Inc., with a 9.25% annual interest rate over 48 months[27] - The CIMC Loan takes precedence over all other debt and equity payments[27] - The company's failure to fully repay the underpaid amount within the grace period by April 25, 2025, resulted in the entire balances of the CIMC Loan and JX Loan being classified as current[28] Shareholder Loans The company received CAD 1.2 million from a shareholder, with various shareholder loans having extended terms, some classified as current due to maturity - For the six months ended June 30, 2025, the company received CAD 1.2 million from a shareholder, with the balance classified as current pending a long-term loan agreement[29] - The 2019 Shareholder Loan term was extended to December 23, 2026, with the entire balance classified as long-term[29] - The 2020 Shareholder Loan term was extended to June 2, 2026, with the entire balance classified as current[29] - The company received an USD 8 million (CAD 10.8 million) JX Loan from JX Company, with a 9.25% annual interest rate over 48 months[30] Long-Term Payables Long-term payables increased to CAD 25.6 million, with CAD 4.6 million in JX GHCA related costs and a CAD 0.8 million contributed surplus adjustment Changes in Long-Term Payables (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Carrying Value, beginning of period | 20,696,153 | 13,286,657 | 7,409,496 | | Additions | 5,002,996 | 8,207,778 | (3,204,782) | | Less: Repayments | (282,000) | (523,000) | 241,000 | | Carrying Value, end of period | 25,622,878 | 20,696,153 | 4,926,725 | | Current Portion | 644,112 | 644,112 | 0 | | Long-Term Portion | 24,978,766 | 20,052,041 | 4,926,725 | - For the six months ended June 30, 2025, JX GHCA related costs increased by CAD 4.6 million, and a contributed surplus adjustment of CAD 0.8 million was recognized[32] - The company classified CAD 0.64 million as the current portion of long-term payables[32] Convertible Debentures Convertible debentures increased to CAD 4.75 million (debt portion), with significant fair value changes in the derivative component, valued using the Black-Scholes model - As of June 30, 2025, the convertible debenture debt component was CAD 4,750,824, and the derivative component was (CAD 201,478)[34] - The company entered into a USD 1.52 million (approx. CAD 2.2 million) convertible debenture agreement on March 19, 2025, with a 9% annual interest rate, maturing on December 10, 2025[35] - The company entered into a USD 1.6 million (approx. CAD 2.1 million) convertible debenture agreement on July 24, 2024, with a 12% annual interest rate, maturing on July 24, 2025[35] - The fair value of the convertible debenture derivative component is calculated using the Black-Scholes valuation model[35] 11. Decommissioning Liabilities As of June 30, 2025, decommissioning liabilities decreased to CAD 1.24 million, primarily due to a CAD 240,090 reduction from changes in estimates Changes in Decommissioning Liabilities (as of June 30) | Indicator | June 30, 2025 (CAD) | December 31, 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Balance, beginning of period | 1,451,965 | 2,372,611 | (920,646) | | Changes in Estimates | (240,090) | (968,297) | 728,207 | | Accretion Expense | 26,922 | 47,651 | (20,729) | | Balance, end of period | 1,238,797 | 1,451,965 | (213,168) | | Current Portion | 691,448 | 691,448 | 0 | | Long-Term Portion | 547,349 | 760,517 | (213,168) | - The company estimates total undiscounted cash flows required to settle decommissioning obligations to be approximately CAD 1.6 million (2024: CAD 1.5 million), expected to occur between 2025 and 2072[37] - Decommissioning liabilities are calculated using an average risk-free interest rate of 3.19% (2024: 3.32%) and an inflation rate of 2.0% (2024: 3.32%)[37] 12. Share Capital As of June 30, 2025, the company had 522,886,520 ordinary shares issued for CAD 222.4 million, with 800,200 unexercised stock options Issued Ordinary Shares (as of June 30) | Indicator | June 30, 2025 | January 1, 2024 | | :--- | :--- | :--- | | Number of Ordinary Shares | 522,886,520 | 459,886,520 | | Amount (CAD) | 222,417,603 | 220,212,755 | Unexercised Share Options (as of June 30) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Options | 800,200 | 3,080,200 | | Exercise Price (HKD) | $0.48 | $0.51 | - As of June 30, 2025, the exercise price of remaining outstanding and exercisable share options exceeded the company's share price[41] Authorized Share Capital The company is authorized to issue an unlimited number of ordinary shares - The company is authorized to issue an unlimited number of ordinary shares[38] Issued Share Capital As of June 30, 2025, 522,886,520 ordinary shares were issued for CAD 222.4 million - As of December 31, 2024, and June 30, 2025, the number of issued ordinary shares was 522,886,520, with an amount of CAD 222,417,603[39] Share Options and Share-Based Payments The company's share option plan limits issuance to 10% of outstanding shares, with 800,200 unexercised options at a weighted average exercise price of HKD 0.48 - The company has a share option scheme where the number of ordinary shares that may be issued shall not exceed 10% of the total number of ordinary shares issued and outstanding on the date the option scheme was approved by shareholders[40] - As of May 15, 2025, 2.3 million share options expired unexercised[41] - As of June 30, 2025, 800,200 share options remained unexercised, with a weighted average exercise price of HKD 0.48[42] Contributed Surplus Contributed surplus includes fair value differences on shareholder loans and long-term payables, share-based payments, and share issuance allocations above market value - Contributed surplus includes the difference between the fair value and total value of shareholder loans and long-term payables at initial recognition, share-based payments during the period, and allocations for shares issued above market value during the year[43] 13. Revenue For the six months ended June 30, 2025, total revenue increased by 42% to CAD 5.04 million, driven by higher sales of natural gas, NGLs, and condensate Revenue Composition (for the six months ended June 30) | Revenue Source | 2025 (CAD) | 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Sales of Natural Gas, NGLs and Condensate | 4,523,012 | 2,884,484 | 56.80% | | Sales of Crude Oil | 509,972 | 657,514 | -22.44% | | Total Sales of Produced Commodities | 5,032,984 | 3,541,998 | 42.09% | | Total Trading Revenue (Loss) | 2,112 | 3,256 | -35.14% | | Total Other Revenue | 4,380 | 10,104 | -56.65% | | Total Revenue | 5,039,476 | 3,555,358 | 41.74% | - The company sells products under floating price contracts, with revenue typically collected on the 25th day of each month following production[44] - For the six months ended June 30, 2025, the largest customer accounted for 71% of revenue, and the second largest for 14%[46] 14. Finance Costs For the six months ended June 30, 2025, total finance costs decreased by 36% to CAD 1.11 million, as foreign exchange gains offset increased interest and amortization expenses Finance Cost Composition (for the six months ended June 30) | Expense Item | 2025 (CAD) | 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Interest Expense and Financing Costs | 675,884 | 582,135 | 16.00% | | Total Accretion Expense | 1,162,277 | 708,366 | 64.08% | | Foreign Exchange Loss (Gain) | (739,372) | 404,175 | -283.00% | | Total Finance Costs | 1,108,833 | 1,734,675 | -36.08% | - For the six months ended June 30, 2025, convertible debentures generated CAD 234,752 in interest expense[49] - For the six months ended June 30, 2025, foreign exchange gains primarily resulted from the conversion of USD-denominated term debt, shareholder loans, and convertible debentures[49] 15. Income Tax For the six months ended June 30, 2025, the company's blended statutory tax rate was 23%, with approximately CAD 166 million in tax deductions, including CAD 56 million in loss carryforwards - The blended statutory tax rate for the six months ended June 30, 2025, was 23% (2024: 23%)[50] - The company has approximately CAD 166 million in tax deductions, including approximately CAD 56 million in loss carryforwards, which begin to expire in 2037[50] 16. Earnings (Loss) Per Share For the six months ended June 30, 2025, basic and diluted loss per share expanded to CAD 0.01, reflecting an increase in total comprehensive loss Loss Per Share (for the six months ended June 30) | Indicator | 2025 (CAD) | 2024 (CAD) | Change (CAD) | | :--- | :--- | :--- | :--- | | Loss and Comprehensive Loss | (8,888,838) | (7,277,834) | (1,611,004) | | Weighted Average Number of Ordinary Shares | 522,886,520 | 489,260,146 | 33,626,374 | | Basic Loss Per Share | (0.02) | (0.01) | (0.01) | | Diluted Loss Per Share | (0.01) | (0.01) | 0 | - Dilutive shares represent the maximum number of shares issuable related to convertible debentures, totaling 104,577,304 ordinary shares[51] - For the six months ended June 30, 2025, 800,000 share options were not included in the weighted average share calculation as they were anti-dilutive[52] 17. Dividends The Board did not recommend any dividends for the three and six months ended June 30, 2025 and 2024 - The Board of Directors did not recommend any dividends for the three and six months ended June 30, 2025 and 2024[53] 18. Related Party Transactions, Personnel Costs and Remuneration Policy For the six months ended June 30, 2025, key management personnel remuneration decreased significantly to CAD 267,372 due to reduced severance, while director remuneration increased Key Management Personnel Remuneration (for the six months ended June 30) | Remuneration Item | 2025 (CAD) | 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Directors' Fees | 54,507 | 20,000 | 172.54% | | Salaries, Allowances and Other Benefits | 197,604 | 209,585 | -5.72% | | Share-Based Payments and Shadow Unit Adjustments | 3,556 | 10,823 | -67.15% | | Severance Payments | – | 385,000 | -100.00% | | Total | 267,372 | 640,392 | -58.25% | - The company's remuneration and bonus policy is determined based on individual employee performance, with executive remuneration recommended by the Remuneration Committee[54] - For the six months ended June 30, 2025, total director remuneration was CAD 0.5 million (2024: CAD 20,000)[56] Transactions with Key Management Personnel Key management personnel remuneration for the six months ended June 30, 2025, decreased by 58.25% to CAD 267,372, mainly due to lower severance payments - For the six months ended June 30, 2025, total key management personnel remuneration was CAD 267,372, a 58.25% decrease from the prior year, primarily due to CAD 385,000 in severance payments in 2024[55] Transactions with Directors Director remuneration for the six months ended June 30, 2025, increased to CAD 0.5 million, with accrued compensation under the shadow unit plan totaling CAD 0.39 million - For the six months ended June 30, 2025, total director remuneration was CAD 0.5 million (2024: CAD 20,000)[56] - As of June 30, 2025, total accrued compensation under the shadow unit plan was CAD 0.39 million (2024: CAD 0.46 million)[57] Receipt of Shareholder Loans For the six months ended June 30, 2025, the company received CAD 1.2 million from a shareholder, with the loan agreement yet to be signed - For the six months ended June 30, 2025, the company received CAD 1.2 million from a shareholder, with the loan agreement yet to be signed[58] 19. Financial Instruments and Risk Management The company manages credit, liquidity, and market risks through high-credit-rated counterparties, cash flow monitoring, and assessing price, interest, and exchange rate fluctuations, without using derivatives for commodity price risk - The company is exposed to credit risk, liquidity risk, and market risk from its use of financial instruments[60] - The company manages liquidity by ensuring sufficient liquidity to meet liabilities as they fall due under normal and stressed conditions[63] - For the three and six months ended June 30, 2025 and 2024, the company did not enter into any financial derivative instruments to mitigate commodity price risk[69] Credit Risk The company mitigates credit risk by transacting with high-credit-rated financial institutions and has not recognized significant impairment provisions for accounts receivable - The company transacts only with financial institutions with high credit ratings to limit credit risk for cash transactions[61] - As of June 30, 2025, accounts receivable included CAD 0.2 million due from crude oil and natural gas purchasers (June 30, 2024: CAD 0.12 million)[61] - As of June 30, 2025, the company had not identified the need for impairment provisions and had not written off any accounts receivable[62] Liquidity Risk Liquidity risk, the inability to meet financial obligations, is managed by monitoring cash flows and ensuring sufficient liquidity for liabilities - Liquidity risk refers to the risk that the company will not be able to meet its financial obligations as they fall due[63] Contractual Maturities of Financial Liabilities (as of June 30, 2025) | Liability Type | Carrying Amount (CAD) | Total (CAD) | 1 Year or Less (CAD) | 1-2 Years (CAD) | | :--- | :--- | :--- | :--- | :--- | | Accounts Payable and Accrued Liabilities | 5,625,870 | 5,625,870 | 5,625,870 | – | | Long-Term Payables | 25,622,878 | 30,002,347 | 644,112 | 29,358,235 | | Lease Liabilities | 67,617 | 75,005 | 63,482 | 11,523 | | Shareholder Loans | 11,197,333 | 11,380,832 | 10,618,832 | 762,000 | | Convertible Debentures | 4,750,824 | 4,597,672 | 4,597,672 | – | | Term Debt | 3,168,123 | 3,261,861 | 3,261,861 | – | | Total | 50,432,645 | 54,943,587 | 24,811,829 | 30,131,758 | Market Risk Market risk, affecting financial instrument valuations and operating profits, is influenced by commodity prices, exchange rates, and interest rates, with no commodity price hedging - Market risk refers to the risk that changes in commodity prices, exchange rates, and interest rates will affect the valuation of the company's financial instruments, debt levels, and operating profit and cash flows[68] - For the three and six months ended June 30, 2025 and 2024, the company did not enter into any financial derivative instruments to mitigate commodity price risk[69] - The company's debt bears interest at fixed rates, so changes in interest rates will not alter net loss[70] - A +/- USD 0.01 change in the USD to CAD exchange rate would increase/decrease foreign exchange gains by approximately CAD 0.1 million[71] Capital Management The company aims to maintain financial flexibility and optimize capital use, with a capital structure including equity, debt, and working capital, facing ongoing capital acquisition challenges - The company's objective in managing capital is to maintain financial flexibility, preserve its ability to meet financial obligations, and optimize capital use to provide an appropriate return on investment[73] - The company's capital structure comprises shareholders' equity, long-term payables, long-term debt, convertible debentures, and working capital[73] Capital Structure (as of June 30) | Indicator | 2025 (CAD) | 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Net Debt | 49,713,619 | 45,442,443 | 9.40% | | Shareholders' Equity | (29,546,047) | (21,460,975) | -37.68% | | Total | 20,167,572 | 23,981,468 | -15.90% | Performance Security Guarantee ("PSG") Facility The company's PSG facility from EDC, reduced to CAD 780,000, guarantees eligible letters of credit without cash collateral, with CAD 650,000 currently guaranteed - The company obtained a PSG loan from Export Development Canada (EDC), with the total amount reduced to CAD 0.78 million[76] - Under the PSG facility terms, EDC guarantees eligible letters of credit for the company without requiring cash collateral[76] - As of June 30, 2025, the company had CAD 0.65 million in letters of credit guaranteed by the PSG, maturing on March 16, 2026[76] - During the three months ended June 30, 2025, a CAD 80,000 letter of credit holder was called upon, which the company repaid to EDC on time[76] Fair Value Measurement of Financial Instruments Fair value measurements for financial liabilities, particularly convertible debenture derivatives, are determined using the Black-Scholes model based on various market parameters Fair Value of Financial Liabilities (as of June 30, 2025) | Financial Liability | Fair Value (CAD) | Fair Value Level | Valuation Technique and Data Used | | :--- | :--- | :--- | :--- | | Derivative component of July Debenture | (118,562) | Level 3 | Black-Scholes Model | | Derivative component of December Debenture | (82,916) | Level 3 | Black-Scholes Model | | Total | (201,478) | | | - Fair value estimates are based on time to maturity, share price, conversion price, risk-free interest rate, discount rate, expected volatility, and expected dividends[79] 20. Commitments As of June 30, 2025, total commitments were CAD 117.9 million, predominantly from the JX Agreement, with most obligations maturing in over five years Commitments Overview (as of June 30, 2025) | Commitment Type | Total (CAD) | Less than 1 Year (CAD) | 1-2 Years (CAD) | 3-5 Years (CAD) | After 5 Years (CAD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Transportation Commitments | 2,936,813 | 2,328,044 | 608,769 | – | – | | JX Agreement | 114,349,938 | 10,055,750 | 13,272,313 | 10,402,500 | 80,619,375 | | PSG Facility | 650,000 | 650,000 | – | – | – | | Total | 117,936,751 | 13,033,794 | 13,881,082 | 10,402,500 | 80,619,375 | - The JX Agreement commitments represent the vast majority of total commitments, with most maturing in over 5 years[82] - Transportation commitments are "take-or-pay" firm service transportation agreements, with a term extending to November 30, 2026[84] 21. Subsequent Events Post-period, the company issued 62.5 million ordinary shares on August 1, 2025, to convert a USD 1.6 million convertible debenture and announced a private placement to raise HKD 594,139 - On August 1, 2025, the company issued 62,548,866 ordinary shares to convert the principal portion of the USD 1.6 million convertible debenture that matured on July 24, 2025[85] - After the principal conversion, the remaining accrued and unpaid interest of USD 0.192 million will continue to accrue interest at an annual rate of 12%[85] - On August 14, 2025, the company announced a private placement of 7,775,884 ordinary shares at HKD 0.436 per share, raising approximately HKD 594,139.00 in total proceeds[85] Management Discussion and Analysis Forward-Looking Information This MD&A contains forward-looking statements about future expectations and performance, subject to significant risks and uncertainties, and investors are cautioned against undue reliance - Certain statements in the MD&A are forward-looking statements, subject to significant risks and uncertainties[89] - Forward-looking statements involve discussions of expectations, beliefs, plans, objectives, assumptions, or future events or performance[89] - The company strongly cautions investors not to place undue reliance on any such forward-looking statements and has no obligation to update them[90] Non-IFRS Financial Measures This MD&A uses non-IFRS measures like "Netback" and "Adjusted EBITDA" to assess operational performance and cash generation, acknowledging they may not be comparable to other companies - "Netback" and "Adjusted EBITDA" are non-IFRS financial measures and are not defined by IFRS[92] - Management believes Netback is an important indicator for evaluating the company's oilfield profitability[92] - Management uses Adjusted EBITDA to measure the company's efficiency and its ability to generate cash to fund future growth or repay debt[92] Outlook The company, primarily reliant on Basing region oil and gas, anticipates significant increases in Western Canadian natural gas prices in H2 2025 and plans a 9.6 MW gas power plant project - Approximately 90% of the company's revenue is derived from the Basing area[93] - Western Canadian natural gas prices are forecast to increase significantly in the second half of 2025 compared to the 2024 average price[93] - The company intends to pursue the construction of a 9.6 MW natural gas power plant project, with an estimated EPC phase cost of approximately CAD 5.84 million, and plans to raise funds through equity financing[94] - The company entered into convertible debenture agreements for USD 1.5 million on March 19, 2025, and USD 1.6 million on July 24, 2024[95][96] Selected Quarterly Information Total production is seasonal, with natural gas prices falling in Q2 2025 leading to temporary well closures, while net losses were higher in Q4 2024 and Q4 2023 due to impairments Average Daily Production (barrels of oil equivalent/day) | Indicator | Q2 2025 | Q1 2025 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Production | 1,297 | 1,807 | 280 | 1,461 | | Average Daily Sales Volume | 1,300 | 1,820 | 284 | 1,492 | Financial Data (CAD thousands) | Indicator | Q2 2025 | Q1 2025 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | | Production Revenue | 2,125 | 2,908 | 715 | 2,827 | | Net Loss | (5,313) | (3,576) | (3,848) | (3,430) | | Adjusted EBITDA | 137 | 574 | (726) | 574 | | Net Working Capital | (24,029) | (16,261) | (13,307) | (12,177) | - In late Q2 2025, natural gas commodity prices significantly declined, leading the company to temporarily shut in natural gas production in June and July due to uneconomic conditions[101] - Low natural gas prices in Q1 2024 resulted in an overall decrease in the company's revenue and net loss, leading to the shut-in of gas wells in April[102] Daily Production and Sales Volumes For the three months ended June 30, 2025, total sales volumes increased significantly by 358% due to the resumption of natural gas production, despite a decline in oil output Daily Production and Sales Volume Changes (for the three months ended June 30) | Indicator | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Natural Gas (Mcf/day) | 7,194 | 1,361 | 429% | | Oil (Bbls/day) | 31 | 36 | (14%) | | Total Production (Boe/day) | 1,297 | 280 | 364% | | Total Sales Volume (Boe/day) | 1,300 | 284 | 358% | - Total sales volumes for the three and six months ended June 30, 2025, were 429% and 86% higher, respectively, than the comparative periods, primarily due to the resumption of full natural gas production in Q1 2025 after well shut-ins in Q2 2024[105] - Oil production was 14% and 20% lower than the comparative periods in 2024 due to natural decline and maintenance impacting optimal production[107] Revenue For the three months ended June 30, 2025, production revenue increased by 197% due to higher natural gas prices and increased production, while crude oil revenue declined Revenue Changes (for the three months ended June 30) | Revenue Source | 2025 (CAD thousands) | 2024 (CAD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Natural Gas | 1,502 | 193 | 678% | | Crude Oil | 237 | 352 | (33%) | | Total Production Revenue | 2,125 | 715 | 197% | | Total Revenue | 2,118 | 724 | 193% | - Production revenue for the three and six months ended June 30, 2025, increased by 197% and 42%, respectively, compared to the 2024 comparative periods, mainly due to higher natural gas prices and increased production[108] - Crude oil production revenue decreased due to a decline in overall production and lower average sales prices[109] Commodity Prices For the three months ended June 30, 2025, realized natural gas prices increased by 39%, while average selling prices for crude oil, NGLs, and condensate decreased Average Commodity Sales Prices (for the three months ended June 30) | Commodity | 2025 (CAD) | 2024 (CAD) | Change (%) | | :--- | :--- | :--- | :--- | | Natural Gas (per Mcf) | 2.15 | 1.55 | 39% | | Crude Oil (per Bbl) | 82.50 | 99.88 | (17%) | | NGLs (per Bbl) | 21.41 | 28.32 | (24%) | | Condensate (per Bbl) | 95.63 | 145.79 | (34%) | - For the three months ended June 30, 2025, realized natural gas sales prices increased by 39% compared to the prior period in 2024, primarily due to higher average market prices[110] - Average sales prices for crude oil, NGLs, and condensate all decreased[110] Royalties For the three months ended June 30, 2025, royalties shifted from a recovery to an expense, with the effective average royalty rate changing from (10%) to 7% Royalty Expense/(Recovery) (CAD thousands, for the three months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Natural Gas, NGLs and Condensate | 71 | (212) | (134%) | | Crude Oil | 80 | 142 | (44%) | | Total Royalty Expense/(Recovery) | 151 | (70) | (316%) | | Effective Average Royalty Rate | 7% | (10%) | (173%) | - For the three months ended June 30, 2025, royalty expense shifted from a recovery in the prior period of 2024 to an expense, with the effective average royalty rate changing from (10%) to 7%[112] - Alberta royalties are determined by a sliding scale formula, with rates fluctuating based on changes in production, market prices, and cost allowances[113] Operating Costs For the three months ended June 30, 2025, total operating costs for natural gas, NGLs, and condensate increased by 24% due to higher production, but unit costs decreased due to efficiency Operating Cost Changes (CAD thousands, for the three months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Natural Gas, NGLs and Condensate | 3,912 | 3,159 | 24% | | Crude Oil | 78 | 159 | (51%) | | Total Operating Costs | 3,990 | 3,318 | 20% | | Average Unit Cost (CAD/Boe) | 33.80 | 130.41 | (74%) | - For the three and six months ended June 30, 2025, total operating costs (OPEX) for natural gas, NGLs, and condensate were 24% higher than the comparative period in 2024, reflecting increased production during the period[114] - On a unit cost basis, OPEX was lower than the comparative period due to operational efficiencies from increased production[114] - Total OPEX for crude oil decreased by 51% and 39%, respectively, compared to the comparative periods, primarily due to reduced trucking expenses[116] General and Administrative Costs For the six months ended June 30, 2025, total G&A costs decreased by 45%, primarily due to reduced personnel expenses and office costs following management changes and office relocation General and Administrative Cost Changes (CAD thousands, for the six months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Personnel Expenses | 209 | 610 | (66%) | | Directors' Fees | 55 | 20 | 175% | | Accounting, Legal and Consulting Fees | 207 | 302 | (31%) | | Total General and Administrative Expenses | 462 | 837 | (45%) | - For the six months ended June 30, 2025, the reduction in staff costs and shadow unit expenses reflects changes in the CEO and Board of Directors[117] - Office expenses decreased, primarily due to the company's headquarters relocation and sublease ending in February 2025[118] Finance Costs For the six months ended June 30, 2025, total finance costs decreased by 36%, driven by foreign exchange gains offsetting increased interest and amortization expenses Finance Cost Changes (CAD thousands, for the six months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Interest Expense and Financing Costs | 675 | 582 | 16% | | Accretion Expense | 1,162 | 708 | 64% | | Foreign Exchange (Gain)/Loss | (739) | 404 | (283%) | | Total Finance Costs | 1,109 | 1,735 | (36%) | - For the six months ended June 30, 2025, total finance costs decreased by 36%, primarily due to foreign exchange gains offsetting increased interest expense and accretion expense[120] - Foreign exchange gains primarily resulted from the conversion of USD-denominated term debt, shareholder loans, and convertible debentures[122] Depletion, Depreciation and Amortization For the six months ended June 30, 2025, total DD&A increased by 16%, but DD&A per barrel of oil equivalent decreased by 35% due to reduced reserves and asset retirement adjustments Depletion, Depreciation and Amortization Changes (CAD thousands, for the six months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Depletion | 1,369 | 1,002 | 37% | | Amortization of Right-of-Use Assets | 144 | 303 | (53%) | | Total | 1,514 | 1,308 | 16% | | Per Barrel of Oil Equivalent | 5.31 | 8.17 | (35%) | - For the six months ended June 30, 2025, total depletion, depreciation, and amortization increased by 16%, but DD&A per barrel of oil equivalent decreased by 35%, primarily due to reduced proved reserves and asset retirement obligation adjustments[124] Impairment and Write-offs For the six months ended June 30, 2025, impairment and write-offs increased significantly by 12476% to CAD 2.35 million, primarily due to expiring land leases in the Voyager CGU Impairment and Write-off Changes (CAD thousands, for the six months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Exploration and Evaluation Write-offs | 2,351 | 19 | 12476% | | Total | 2,351 | 19 | 12476% | - For the three months ended June 30, 2025, the company wrote off the value of expired leases related to its exploration and evaluation assets, primarily due to six leases in the Voyager CGU expiring and not being renewed[126] - For the three and six months ended June 30, 2025 and 2024, the company did not identify any impairment of exploration and evaluation and PP&E assets[126] Loss and Comprehensive Loss For the six months ended June 30, 2025, loss and comprehensive loss increased by 22%, mainly due to write-offs of exploration and evaluation assets, partially offset by foreign exchange gains Total Loss and Comprehensive Loss Changes (CAD thousands, for the six months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Loss and Comprehensive Loss | (8,889) | (7,278) | (22%) | - Loss and comprehensive loss for the six months ended June 30, 2025, increased by 22% compared to the 2024 comparative period, primarily due to the write-off of exploration and evaluation asset values and severance payments incurred in 2024, partially offset by foreign exchange gains[127] Capital Expenditures For the six months ended June 30, 2025, PP&E capital expenditures increased by 139% due to power plant project spending, while E&E expenditures decreased due to asset sales Capital Expenditure Changes (CAD thousands, for the six months ended June 30) | Item | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total PP&E | 76 | 32 | 139% | | Total Exploration and Evaluation | 2 | 19 | (89%) | | Total PP&E and Exploration and Evaluation | 78 | 50 | 54% | | Total (including non-cash working capital changes) | (517) | (231) | 124% | - For the six months ended June 30, 2025, PP&E capital expenditures increased by 139%, primarily due to expenditures on the power plant project[128] - Drilling, completion, and workover costs for exploration and evaluation assets were written off due to the asset sale on April 1, 2024[129] Capital Management The company aims to maintain financial flexibility and optimize capital use, with a capital structure including equity, debt, and working capital, facing ongoing capital acquisition challenges - The company's objective in managing capital is to maintain financial flexibility, preserve its ability to meet financial obligations, and optimize capital use to provide an appropriate return on investment[130] - The company's capital structure comprises shareholders' equity, shareholder loans, term debt, long-term payables, convertible debentures, other liabilities, lease liabilities, and working capital[130] Capital Structure (CAD thousands, as of June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Net Debt | 49,715 | 45,443 | | Shareholders' Equity | (29,546) | (21,461) | | Total Capital | 20,169 | 23,981 | | Debt-to-Capital Ratio | 246% | 189% | - The company's future viability depends on its ability to obtain additional capital on acceptable terms[130] Capital Resources The company's funding sources include debt, equity, shareholder loans, and operating cash flow, but faces significant going concern uncertainty due to working capital deficits and loan defaults - The company's primary sources of funding are proceeds from debt financing, equity financing, shareholder loans, and cash generated from operations[134] - For the six months ended June 30, 2025, the company received CAD 1.2 million from a shareholder[134] - The company entered into convertible debenture agreements for USD 1.5 million on March 19, 2025, and USD 1.6 million on July 24, 2024[134] - The company's failure to repay the overdue amounts within the grace period for the CIMC Group and JX Loans by April 25, 2025, creates significant uncertainty regarding its ability to continue as a going concern[136][137][138] Use of Proceeds from March 2024 Subscription The net proceeds of CAD 1.26 million from the March 2024 subscription were fully utilized for general working capital purposes Use of Proceeds from March 2024 Subscription (CAD millions) | Business Objective | Planned Use of Net Proceeds | Actual Use of Net Proceeds | | :--- | :--- | :--- | | General Working Capital | 1.26 | 1.26 | - The March 2024 subscription closed on May 29, 2024[140] Use of Proceeds from November 2023 Subscription The net proceeds of CAD 1.20 million from the November 2023 subscription were fully utilized for general working capital purposes Use of Proceeds from November 2023 Subscription (CAD millions) | Business Objective | Planned Use of Net Proceeds | Actual Use of Net Proceeds | | :--- | :--- | :--- | | General Working Capital | 1.20 | 1.20 | - The November 2023 subscription closed on February 8, 2024[142] Issued Shares, Warrants, Convertible Debentures and Share Options As of August 1, 2025, 62.5 million ordinary shares were issued to convert a USD 1.6 million convertible debenture, with 522.9 million ordinary shares outstanding and 800,000 unexercised options as of June 30, 2025 - On August 1, 2025, the company issued 62,548,866 ordinary shares to repay the principal portion of the USD 1.6 million convertible debenture that matured on July 24, 2025[143] - As of June 30, 2025, the company had 522,886,520 ordinary shares issued[143] - As of June 30, 2025, accrued and unpaid interest for the company's December and July debentures totaled CAD 0.23 million[145] - As of June 30, 2025, the company had 800,000 unexercised share options[146] Commitments The company has various agreements, business commitments, and contingencies in its normal course of business, detailed in Notes 20 and 28 of the financial statements - The company has various agreements, business commitments, and contingencies in its normal course of business[147] - Details regarding commitments are disclosed in Note 20 of the interim statements and Note 28 of the financial statements[147] Dividends The Board did not approve any dividends for the three and six months ended June 30, 2025 and 2024 - The Board of Directors did not approve any dividends for the three and six months ended June 30, 2025 and 2024[148] Related Party Transactions Disclosures regarding the company's related party transactions are provided in Notes 10, 18, and 20 of the interim statements, and Notes 13, 19, and 26 of the financial statements - Disclosures regarding the company's related party transactions are provided in Notes 10, 18, and 20 of the interim statements, and Notes 13, 19, and 26 of the financial statements[149] Off-Balance Sheet Transactions The company was not involved in any off-balance sheet transactions for the three and six months ended June 30, 2025, or for the full year - For the three and six months ended June 30, 2025, and for the full year, the company was not involved in any off-balance sheet transactions[150] Pledged Assets All physical property, plant, and equipment assets with a cost of approximately CAD 5.2 million are pledged to support the company's debt arrangements, with remaining assets unpledged - All physical property, plant, and equipment assets with a cost of approximately CAD 5.2 million are pledged to support the company's debt arrangements[151] - The company's remaining assets are unpledged[151] Contingent Liabilities As of June 30, 2025, and the date of this MD&A, the company had no significant undisclosed contingent liabilities - As of June 30, 2025, and the date of this Management Discussion and Analysis, the company had no significant undisclosed contingent liabilities[152] Material Investments, Acquisitions and Disposals of Subsidiaries Except as disclosed in this MD&A, the company had no other material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures during the period - Except as disclosed in this MD&A, the company had no other material investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures[153] Future Plans for Material Investments and Capital Assets Except as disclosed in this MD&A, the company has no other future plans for material investments or capital assets as of the date of this MD&A - Except as disclosed in this MD&A, the company has no other future plans for material investments or capital assets[154] Subsequent Events Post-period, the company issued 62.5 million ordinary shares on August 1, 2025, to convert a USD 1.6 million convertible debenture and announced a private placement to raise approximately CAD 0.54 million - On August 1, 2025, the company issued 62,548,866 ordinary shares to convert the principal portion of the USD 1.6 million convertible debenture that matured in July 2025[155] - As of July 24, 2025, unpaid accrued interest related to the July convertible debenture was USD 0.192 million[155] - On August 14, 2025, the company announced a private placement of 7,775,884 ordinary shares at HKD 0.436 per share, raising approximately CAD 0.54 million in total proceeds[155] Financial Risk Management The Board oversees the risk management framework for credit, liquidity, and market risks, monitoring foreign exchange exposure without a formal hedging policy - The Board of Directors is fully responsible for establishing and overseeing the company's risk management framework[156] - The company holds various financial instruments, including accounts receivable, accounts payable, cash and cash equivalents, long-term payables, loans, convertible debentures, and shareholder loans[157] - For the six months ended June 30, 2025, the company recorded an unrealized foreign exchange gain of CAD 0.74 million (2024: loss of CAD 0.4 million)[158] - The company currently has no foreign currency hedging policy, but management closely monitors foreign exchange risk[158] Relationship with Stakeholders The company actively maintains good relationships with Indigenous communities, local stakeholders, and government bodies, ensuring regulatory compliance, and had 3 employees as of June 30, 2025 - The company actively fosters, builds, and maintains good relationships with Indigenous peoples, all individuals near or interested in the company's projects, and other businesses[159] - The company works closely with municipal, provincial, and federal stakeholders to ensure regulatory authorities are aware of its compliance with all necessary rules, regulations, and laws[159] - As of June 30, 2025, the company had 3 employees (2024: 5 employees)[160] - Employee remuneration (including directors' fees) for the six months ended June 30, 2025, totaled CAD 0.27 million (2024: CAD 0.67 million, including CAD 0.39 million in severance payments)[160] Application of Critical Accounting Estimates Financial statement preparation requires management judgments, estimates, and assumptions that influence accounting policies and reported amounts, with continuous review and recognition of revisions - The preparation of financial statements requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, and income and expenses[161] - Estimates and underlying assumptions are reviewed on an ongoing basis, and revisions to accounting estimates are recognized in the period in which the estimate is revised and in any affected future periods[161] Changes in Accounting Policies The financial statements are prepared under applicable IFRS, and the company has adopted all new and revised IFRS effective for the period ended June 30, 2025 - The financial statements are prepared in accordance with all applicable International Financial Reporting Standards issued by the International Accounting Standards Board[162] - The company has adopted all new and revised IFRS applicable for the period ended June 30, 2025[162] Disclosure Controls and Procedures and Internal Control Over Financial Reporting The interim CEO and CFO designed and oversee DC&P and ICFR to ensure accurate and timely information, which management deems effective as