Skeena(US:SKE)2023-08-10 20:17markdown [Condensed Interim Consolidated Financial Statements](index=2&type=section&id=Financial%20Statements%20Overview) This section presents the unaudited interim financial statements, including statements of financial position, loss, changes in equity, and cash flows for the specified periods [Condensed Interim Consolidated Statements of Financial Position](index=2&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20FINANCIAL%20POSITION) The Company's total assets increased by **21%** to **$203,150 thousand** as of June 30, 2023, from **$167,980 thousand** at December 31, 2022, primarily driven by a significant increase in cash and cash equivalents, while total liabilities decreased by **16%** and total shareholders' equity rose by **29%** Condensed Interim Consolidated Statements of Financial Position (in thousands of Canadian dollars) | Item | June 30, 2023 | December 31, 2022 | | :--------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $73,446 | $40,602 | | Marketable securities | $1,793 | $2,494 | | Receivables | $4,868 | $5,682 | | Prepaid expenses (current) | $2,239 | $1,346 | | Exploration and evaluation interests | $95,938 | $95,438 | | Capital assets | $22,439 | $20,236 | | **Total assets** | **$203,150** | **$167,980** | | **LIABILITIES** | | | | Accounts payable and accrued liabilities | $12,491 | $13,977 | | Current portion of lease liabilities | $569 | $545 | | Flow-through share premium liability | $3,439 | $4,557 | | Current portion of other liabilities | $427 | $1,806 | | Long-term lease liabilities | $2,730 | $3,017 | | Provision for closure and reclamation | $5,686 | $6,160 | | Other liabilities | $472 | $691 | | **Total liabilities** | **$25,814** | **$30,753** | | **SHAREHOLDERS' EQUITY** | | | | Capital stock | $537,949 | $464,029 | | Commitment to issue shares | $1,000 | $1,250 | | Reserves | $42,547 | $39,879 | | Deficit | $(404,160) | $(367,931) | | **Total shareholders' equity** | **$177,336** | **$137,227** | | **Total liabilities and shareholders' equity** | **$203,150** | **$167,980** | [Condensed Interim Consolidated Statements of Loss and Comprehensive Loss](index=3&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20LOSS%20AND%20COMPREHENSIVE%20LOSS) Skeena Resources reported a net loss of **$19,486 thousand** for Q2 2023 and **$36,229 thousand** for H1 2023, representing an improvement from prior year periods primarily due to reduced exploration and evaluation expenses and a lower flow-through share premium recovery Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (in thousands of Canadian dollars, except per share amounts) | Item | For the three months ended June 30, 2023 | For the three months ended June 30, 2022 | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Accretion | $58 | $16 | $121 | $34 | | Administrative compensation | $1,427 | $1,209 | $2,811 | $1,772 | | Communications | $337 | $649 | $624 | $1,202 | | Consulting | $376 | $128 | $514 | $254 | | Depreciation | $71 | $67 | $142 | $144 | | Exploration and evaluation | $14,677 | $22,955 | $25,729 | $42,959 | | Flow-through share premium recovery | $(921) | $(4,246) | $(1,118) | $(7,114) | | Insurance | $585 | $469 | $1,117 | $1,011 | | Interest income | $(438) | $(90) | $(680) | $(146) | | Loss (gain) on marketable securities | $188 | $1,023 | $553 | $(771) | | Office and administration | $316 | $251 | $701 | $446 | | Professional fees | $376 | $200 | $871 | $638 | | Share-based payments | $2,352 | $1,903 | $4,512 | $3,072 | | Transfer agent and listing fees | $82 | $153 | $332 | $202 | | **Loss and comprehensive loss for the period** | **$(19,486)** | **$(24,687)** | **$(36,229)** | **$(43,703)** | | **Loss per share – basic and diluted** | **$(0.24)** | **$(0.36)** | **$(0.45)** | **$(0.65)** | | Weighted average number of common shares outstanding – basic and diluted | 82,197,543 | 69,059,604 | 80,045,553 | 67,447,971 | [Condensed Interim Consolidated Statements of Changes in Shareholders' Equity](index=4&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS%27%20EQUITY) Shareholders' equity significantly increased to **$177,336 thousand** by June 30, 2023, primarily driven by a **$73,537 thousand** capital increase from a bought deal offering and **$5,778 thousand** in share-based payments, partially offset by the period's loss Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (in thousands of Canadian dollars, except shares) | Item | Balance December 31, 2022 | Bought deal offering | Acquisition of exploration and evaluation interests | Exercise of options | Vesting of Restricted Share Units | Tahltan Investment Rights | Exercise of warrants | Share issue costs | Share-based payments | Loss for the period | Balance June 30, 2023 | | :--------------------------------- | :------------------------ | :------------------- | :---------------------------------------- | :------------------ | :-------------------------------- | :------------------------ | :------------------ | :---------------- | :------------------- | :------------------ | :-------------------- | | Capital Stock (Amount) | $464,029 | $73,537 | $250 | $1,617 | $1,000 | $1,500 | $90 | $(4,074) | $— | $— | $537,949 | | Commitment to Issue Shares | $1,250 | $— | $(250) | $— | $— | $— | $— | $— | $— | $— | $1,000 | | Reserves (Options) | $29,640 | $— | $— | $(585) | $— | $— | $— | $— | $1,728 | $— | $30,783 | | Reserves (Restricted Share Units) | $4,804 | $— | $— | $— | $(1,000) | $— | $— | $— | $3,975 | $— | $7,779 | | Reserves (Share Units) | $— | $— | $— | $— | $— | $— | $— | $— | $75 | $— | $75 | | Reserves (Investment Rights) | $2,500 | $— | $— | $— | $— | $(1,500) | $— | $— | $— | $— | $1,000 | | Reserves (Warrants) | $2,935 | $— | $— | $— | $— | $— | $(25) | $— | $— | $— | $2,910 | | Deficit | $(367,931) | $— | $— | $— | $— | $— | $— | $— | $— | $(36,229) | $(404,160) | | **Total Shareholders' Equity** | **$137,227** | **$73,537** | **$—** | **$1,032** | **$—** | **$—** | **$65** | **$(4,074)** | **$5,778** | **$(36,229)** | **$177,336** | [Condensed Interim Consolidated Statements of Cash Flows](index=5&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash and cash equivalents substantially increased to **$73,446 thousand** by June 30, 2023, primarily due to **$70,292 thousand** from financing activities, largely a bought deal offering, offsetting cash used in operating and investing activities Condensed Interim Consolidated Statements of Cash Flows (in thousands of Canadian dollars) | Activity | For the three months ended June 30, 2023 | For the three months ended June 30, 2022 | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :---------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash used in operating activities | $(14,571) | $(25,652) | $(32,380) | $(41,231) | | Net cash provided by (used in) investing activities | $(3,095) | $5,329 | $(5,068) | $4,836 | | Net cash provided by (used in) financing activities | $69,410 | $(30) | $70,292 | $32,568 | | Change in cash and cash equivalents during the period | $51,744 | $(20,353) | $32,844 | $(3,827) | | Cash and cash equivalents, beginning of the period | $21,702 | $56,839 | $40,602 | $40,313 | | **Cash and cash equivalents, end of the period** | **$73,446** | **$36,486** | **$73,446** | **$36,486** | | Cash | | $23,129 | | $26,829 | | Cash equivalents | | $50,317 | | $9,657 | | **Cash and cash equivalents** | | **$73,446** | | **$36,486** | [Notes to the Condensed Interim Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Financial%20Statements) This section provides detailed explanatory notes to the condensed interim consolidated financial statements, covering accounting policies, financial instruments, and specific operational details [1. Nature of Operations](index=6&type=section&id=1.%20NATURE%20OF%20OPERATIONS) Skeena Resources Limited, an exploration-stage mineral property company in British Columbia, relies on share issuances to fund operations, with current cash and cash equivalents of **$73,446 thousand** expected to fund committed expenditures for at least the next twelve months, and long-term viability dependent on successful project execution and additional capital raising - Skeena Resources Limited is an exploration-stage mineral property company primarily operating in British Columbia, Canada, listed on TSX, NYSE (SKE), and Frankfurt Stock Exchange (RXF)[12](index=12&type=chunk) - As of June 30, 2023, the Company had **$73,446 thousand** in cash and cash equivalents, sufficient to fund committed exploration and general administrative costs for at least the next twelve months, but not current levels of exploration activities for the full twelve months[13](index=13&type=chunk) - The Company's long-term going concern is dependent on successfully executing its business plan, including bringing the Eskay Creek project to profitable operation, and raising additional capital, primarily through share issuances, with construction financing anticipated via debt, equity, and other instruments[13](index=13&type=chunk) - On June 1, 2022, Skeena acquired QuestEx Gold & Copper Ltd. for **$41,250 thousand** in cash and share consideration, and concurrently sold certain mineral properties to an affiliate of Newmont Corporation for **$25,598 thousand**[14](index=14&type=chunk) [2. Basis of Presentation](index=6&type=section&id=2.%20BASIS%20OF%20PRESENTATION) These unaudited condensed interim consolidated financial statements are prepared under IAS 34, consistent with prior annual statements, and should be read in conjunction with the audited annual financial statements for December 31, 2022 - The unaudited condensed interim consolidated financial statements are prepared in accordance with International Accounting Standard 34 (IAS 34) and should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2022[15](index=15&type=chunk) - The accounting policies applied and significant accounting estimates and judgments made by management are consistent with those disclosed in the Company's audited annual consolidated financial statements as of and for the year ended December 31, 2022[16](index=16&type=chunk)[18](index=18&type=chunk) [Significant Accounting Estimates and Judgments](index=7&type=section&id=Significant%20accounting%20estimates%20and%20judgments) Significant accounting estimates and judgments remain consistent with those applied in the Company's audited annual consolidated financial statements for the year ended December 31, 2022 - Significant judgments and key sources of estimation uncertainty are consistent with those applied to the annual consolidated financial statements as at and for the year ended December 31, 2022[18](index=18&type=chunk) [3. New Standards, Amendments and Interpretations Adopted](index=7&type=section&id=3.%20NEW%20STANDARDS%2C%20AMENDMENTS%20AND%20INTERPRETATIONS%20ADOPTED) Effective January 1, 2023, the Company adopted amendments to IAS 1 and IFRS Practice Statement 2 concerning material accounting policies, which had no material impact on its consolidated financial statements - Effective January 1, 2023, the Company adopted amendments to IAS 1 and IFRS Practice Statement 2, which replace the requirement to disclose 'significant' accounting policies with 'material' accounting policies[19](index=19&type=chunk) - The adoption of these amendments had no material impact on the Company's consolidated financial statements[20](index=20&type=chunk) [4. Financial Instruments and Risk Management](index=7&type=section&id=4.%20FINANCIAL%20INSTRUMENTS%20AND%20RISK%20MANAGEMENT) The Company manages credit, market, and liquidity risks associated with its financial instruments, including cash, marketable securities, and various payables, with marketable securities measured at FVTPL and others at amortized cost, noting increased costs from geopolitical events and inflation without material operational impact to date Financial Instrument Carrying Values (in thousands of Canadian dollars) | Financial Instrument | June 30, 2023 | December 31, 2022 | | :------------------- | :------------ | :---------------- | | Cash and cash equivalents | $73,446 | $40,602 | | Marketable securities | $1,793 | $2,494 | | Receivables | $644 | $35 | | Deposits | $2,405 | $2,128 | | Accounts payable | $4,006 | $10,209 | | Other liabilities | $899 | $2,497 | - Financial instruments measured at fair value (marketable securities and contingent consideration receivable) are classified into Level 1 (quoted prices in active markets) or Level 3 (unobservable market data) of the fair value hierarchy[21](index=21&type=chunk)[23](index=23&type=chunk) [Credit Risk](index=8&type=section&id=Credit%20risk) The Company measures expected credit losses using a probability-weighted model, with no material expected credit losses identified for its financial instruments held at amortized cost - Expected credit losses are measured using a present value and probability-weighted model, considering past defaults, current conditions, and forecasts[24](index=24&type=chunk) - There are no material expected credit losses with respect to the Company's financial instruments held at amortized cost[25](index=25&type=chunk) [Market Risk](index=8&type=section&id=Market%20risk) The Company is exposed to market risk on its marketable securities, where a **10%** decrease in share price at June 30, 2023, would result in a **$181 thousand** decrease in carrying value and an increase in unrealized loss - The Company is exposed to market risk on its marketable securities; a **10%** decrease in share price at June 30, 2023, would result in a **$181 thousand** decrease in carrying value and an increase in unrealized loss[26](index=26&type=chunk) [Liquidity Risk](index=8&type=section&id=Liquidity%20risk) Liquidity risk is managed through cash flow forecasting and anticipating financing activities to ensure sufficient funds to meet liabilities when due - Liquidity risk is managed by forecasting cash flows and anticipating investing and financing activities to ensure sufficient cash to meet liabilities when due[27](index=27&type=chunk) Undiscounted Financial Liabilities Maturity as of June 30, 2023 (in thousands of Canadian dollars) | | Less than 1 year | 1-5 years | Greater than 5 years | Total | | :----------------- | :--------------- | :-------- | :------------------- | :---- | | Accounts payable | $4,006 | $— | $— | $4,006 | | Other liabilities | $500 | $500 | $— | $1,000 | | **Total** | **$4,506** | **$500** | **$—** | **$5,006** | [Other Risks](index=9&type=section&id=Other%20risks) Geopolitical tensions and global inflation have led to increasing costs for material inputs in 2022 and 2023, though without material negative impact on the Company's operations to date - Geopolitical tensions, such as the Russia-Ukraine conflict, and global inflation have led to increasing costs for material inputs in 2022 and 2023[29](index=29&type=chunk)[31](index=31&type=chunk) - To date, the Company's operations have not been materially negatively affected by these events, but the future impact, severity, and duration remain unclear and cannot be reliably estimated[31](index=31&type=chunk) [5. Exploration and Evaluation Interests](index=9&type=section&id=5.%20EXPLORATION%20AND%20EVALUATION%20INTERESTS) Exploration and evaluation assets slightly increased to **$95,938 thousand** by June 30, 2023, primarily from Eskay Creek additions, while total expenses for H1 2023 decreased to **$25,729 thousand** due to reduced Eskay Creek spending Exploration and Evaluation Assets (in thousands of Canadian dollars) | Property | December 31, 2021 | December 31, 2022 | June 30, 2023 | | :--------- | :---------------- | :---------------- | :------------ | | Eskay | $74,444 | $78,488 | $79,107 | | KSP | $— | $7,872 | $7,872 | | Kingpin | $— | $3,936 | $3,936 | | Red Chris | $— | $2,871 | $2,871 | | Snip | $1,087 | $959 | $840 | | Sofia | $— | $1,312 | $1,312 | | **Total** | **$75,531** | **$95,438** | **$95,938** | Total Exploration and Evaluation Expenses (in thousands of Canadian dollars) | Period | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Three months ended June 30 | $14,677 | $22,955 | | Six months ended June 30 | $25,729 | $42,959 | [Exploration and Evaluation Assets](index=9&type=section&id=Exploration%20and%20evaluation%20assets) Total exploration and evaluation assets increased from **$95,438 thousand** at December 31, 2022, to **$95,938 thousand** at June 30, 2023, with **$1,011 thousand** in additions primarily at Eskay Creek - Total exploration and evaluation assets increased from **$95,438 thousand** at December 31, 2022, to **$95,938 thousand** at June 30, 2023[32](index=32&type=chunk) - Additions to exploration and evaluation assets for the six months ended June 30, 2023, totaled **$1,011 thousand**, primarily at Eskay Creek[32](index=32&type=chunk)[33](index=33&type=chunk) [Eskay Creek Property](index=9&type=section&id=Eskay%20Creek%20Property%2C%20British%20Columbia%2C%20Canada) The Company acquired the Eskay North mineral property in October 2022 and incurred **$1,011 thousand** for earthworks related to infrastructure at Eskay Creek during H1 2023 - In October 2022, the Company acquired the Eskay North mineral property from Tudor Gold Corp. for common shares and **$1,400 thousand** cash paid during the six months ended June 30, 2023[33](index=33&type=chunk) - During the six months ended June 30, 2023, **$1,011 thousand** was incurred for earthworks related to infrastructure at Eskay Creek[33](index=33&type=chunk) [Red Chris Properties](index=10&type=section&id=Red%20Chris%20Properties%2C%20British%20Columbia%2C%20Canada) Skeena acquired the Red Chris Properties in October 2022 for **$3,000 thousand**, making a **$250 thousand** cash payment and issuing 30,413 common shares in April 2023 - In October 2022, Skeena acquired the Red Chris Properties for **$3,000 thousand**, payable in six equal payments of **$250 thousand** cash and **$250 thousand** in common shares[35](index=35&type=chunk) - In April 2023, the Company paid **$250 thousand** in cash and issued **30,413** common shares to Coast Copper Corp. for the Red Chris Properties[35](index=35&type=chunk) [Snip Property](index=10&type=section&id=Snip%20Property%2C%20British%20Columbia%2C%20Canada) Hochschild Mining Holdings Limited terminated its right to earn **60%** of the Snip property in April 2023, after initiating the option in October 2021 - Hochschild Mining Holdings Limited terminated its right to earn **60%** of the Snip property in April 2023, having initiated the option in October 2021[36](index=36&type=chunk) [Exploration and Evaluation Expenses](index=10&type=section&id=Exploration%20and%20evaluation%20expenses) Exploration and evaluation expenses for Q2 and H1 2023 were primarily concentrated at the Eskay property, with no expenses incurred on KSP and Kingpin properties in the prior year Exploration and Evaluation Expenses by Property (Three Months Ended June 30, 2023, in thousands of Canadian dollars) | Category | Eskay | KSP | Kingpin | Red Chris | Snip | Sofia | Total | | :------------------------------ | :---- | :-- | :------ | :-------- | :--- | :---- | :---- | | Geology, geophysics, geochemical | $4,182 | $52 | $— | $— | $— | $1 | $4,235 | | Environmental studies | $3,924 | $— | $— | $— | $36 | $— | $3,960 | | Fieldwork, camp support | $1,803 | $7 | $8 | $2 | $(8) | $21 | $1,833 | | Drilling | $616 | $— | $— | $— | $— | $— | $616 | | **Total for the period** | **$14,400** | **$125** | **$27** | **$54** | **$56** | **$15** | **$14,677** | Exploration and Evaluation Expenses by Property (Six Months Ended June 30, 2023, in thousands of Canadian dollars) | Category | Eskay | KSP | Kingpin | Red Chris | Snip | Sofia | Total | | :------------------------------ | :---- | :-- | :------ | :-------- | :--- | :---- | :---- | | Geology, geophysics, geochemical | $7,915 | $52 | $— | $— | $— | $3 | $7,970 | | Environmental studies | $7,178 | $— | $— | $— | $111 | $— | $7,289 | | Fieldwork, camp support | $2,444 | $7 | $8 | $2 | $— | $64 | $2,525 | | Drilling | $616 | $— | $— | $— | $— | $2 | $618 | | **Total for the period** | **$25,223** | **$125** | **$27** | **$54** | **$156** | **$144** | **$25,729** | - No exploration and evaluation expenses were incurred on KSP and Kingpin properties during the three and six months ended June 30, 2022[41](index=41&type=chunk) [6. Related Party Transactions](index=12&type=section&id=6.%20RELATED%20PARTY%20TRANSACTIONS) Related party transactions primarily encompass key management compensation, including remuneration, termination benefits, and share-based payments, alongside minor receivables and payables with entities sharing common directors or officers Key Management Compensation (in thousands of Canadian dollars) | Compensation Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Director remuneration | $82 | $2 | $163 | $88 | | Officer & key management remuneration | $843 | $894 | $1,697 | $1,712 | | Termination benefits | $— | $— | $675 | $— | | Share-based payments | $2,424 | $1,851 | $4,054 | $2,943 | - Share-based payment expenses for related parties are allocated between exploration and evaluation expenses and general and administrative expenses[43](index=43&type=chunk) [Key Management Compensation](index=12&type=section&id=Key%20management%20compensation) Share-based payment expenses for related parties increased for Q2 2023 to **$2,424 thousand** (from **$1,851 thousand** in 2022) and for H1 2023 to **$4,054 thousand** (from **$2,943 thousand** in 2022), with **$675 thousand** in termination benefits recorded for H1 2023 - Share-based payment expenses for related parties increased for the three months ended June 30, 2023, to **$2,424 thousand** (from **$1,851 thousand** in 2022) and for the six months ended June 30, 2023, to **$4,054 thousand** (from **$2,943 thousand** in 2022)[42](index=42&type=chunk) - Termination benefits of **$675 thousand** were recorded for the six months ended June 30, 2023[42](index=42&type=chunk) [Recoveries](index=13&type=section&id=Recoveries) The Company recovered **$2 thousand** (Q2 2023) and **$6 thousand** (H1 2023) from a company with a common officer for employee services, recorded in administrative compensation expense - The Company recovered **$2 thousand** (Q2 2023) and **$6 thousand** (H1 2023) from a company with a common officer for employee time used to provide services, recorded in administrative compensation expense[44](index=44&type=chunk) [Receivables](index=13&type=section&id=Receivables) Receivables at June 30, 2023, included **$5 thousand** (December 31, 2022 – **$6 thousand**) due from companies with common directors or officers - Included in receivables at June 30, 2023, is **$5 thousand** (December 31, 2022 – **$6 thousand**) due from companies with common directors or officers[45](index=45&type=chunk) [Accounts payable and accrued liabilities](index=13&type=section&id=Accounts%20payable%20and%20accrued%20liabilities) Accounts payable and accrued liabilities at June 30, 2023, included **$798 thousand** (December 31, 2022 – **$708 thousand**) due to key management personnel for compensation - Included in accounts payable and accrued liabilities at June 30, 2023, is **$798 thousand** (December 31, 2022 – **$708 thousand**) due to key management personnel for compensation[46](index=46&type=chunk) [7. Capital Stock and Reserves](index=13&type=section&id=7.%20CAPITAL%20STOCK%20AND%20RESERVES) Capital stock significantly increased due to a **$73,537 thousand** bought deal public offering in May 2023, alongside share-based payment activities under the 2023 Omnibus Equity Incentive Plan, involving grants of stock options, RSUs, and DSUs - The Company has an unlimited number of authorized voting common shares without par value[48](index=48&type=chunk) - The 2023 Omnibus Equity Incentive Plan was adopted, governing stock options, RSUs, PSUs, and DSUs[53](index=53&type=chunk) [Private placements and bought deal offerings](index=13&type=section&id=Private%20placements%20and%20bought%20deal%20offerings) The Company closed a bought deal public offering on May 24, 2023, issuing **10,005,000** common shares for **$73,537 thousand** gross proceeds, with **$4,074 thousand** in issuance costs - On May 24, 2023, the Company closed a bought deal public offering, issuing **10,005,000** common shares at **$7.35** per share, raising gross proceeds of **$73,537 thousand**[49](index=49&type=chunk) - Share issuance costs related to the bought deal offering totaled **$4,074 thousand**[49](index=49&type=chunk) [Tahltan Investment Rights](index=13&type=section&id=Tahltan%20Investment%20Rights) Milestone 1 for Tahltan Investment Rights was met during H1 2023, converting **119,785** Rights into common shares valued at **$1,500 thousand**, with only Milestone 4 remaining by June 30, 2023 - During the six months ended June 30, 2023, Milestone 1 for the Tahltan Investment Rights was met, converting **119,785** Rights into common shares valued at **$1,500 thousand**[52](index=52&type=chunk) - As of June 30, 2023, only Milestone 4 of the Tahltan Investment Rights remains to be achieved, with a vesting date of April 16, 2024[52](index=52&type=chunk)[57](index=57&type=chunk) [Share-Based Payments](index=14&type=section&id=Share-based%20payments) Share-based payment activities include grants of stock options, RSUs, and DSUs with varying vesting schedules, and a summary of transactions for warrants, RSUs, DSUs, and stock options is provided - Stock options have a maximum expiry period of **5** years from the grant date[54](index=54&type=chunk) - RSUs and DSUs can vest into common shares, cash payment, or a combination, at the Board's discretion[55](index=55&type=chunk) - DSUs are granted to independent directors, vest immediately, but are redeemable only after the participant ceases all offices/employment with the Company[56](index=56&type=chunk) Share Purchase Warrant, RSU, DSU, and Stock Option Transactions Summary | | Warrants (Number) | RSUs (Number) | DSUs (Number) | Stock Options (Number) | | :-------------------------- | :---------------- | :------------ | :------------ | :--------------------- | | Outstanding, Dec 31, 2022 | 12,823 | 1,835,821 | — | 5,033,425 | | Granted (H1 2023) | — | 607,750 | 11,755 | 155,151 | | Exercised (H1 2023) | (9,657) | (76,923) | — | (267,108) | | Cancelled (H1 2023) | (3,166) | (187,960) | — | (287,137) | | Outstanding, June 30, 2023 | — | 2,178,688 | 11,755 | 4,634,331 | | Exercisable, June 30, 2023 | — | — | — | 3,961,941 | - Weighted average share price at exercise for stock options was **$7.46** (H1 2023) vs. **$15.51** (H1 2022), and for warrants was **$7.69** (H1 2023) vs. **$15.78** (H1 2022)[58](index=58&type=chunk) Share-Based Payment Grants (Six Months Ended June 30, 2023) | Grant Date | Type | Number Granted | Fair Value (CAD thousands) | Vesting | | :--------- | :--- | :------------- | :------------------------- | :------ | | Feb 14, 2023 | RSUs | 145,000 | **$1,056** | 1/3 after 12, 24, 36 months | | May 15, 2023 | Stock Options | 155,151 | **$631** | 1/3 after 12, 24, 36 months | | May 15, 2023 | RSUs | 462,750 | **$3,896** | 1/3 after 12, 24, 36 months | | June 22, 2023 | DSUs | 11,755 | **$75** | Immediately | Share-Based Payment Grants (Six Months Ended June 30, 2022) | Grant Date | Type | Number Granted | Fair Value (CAD thousands) | Vesting | | :--------- | :--- | :------------- | :------------------------- | :------ | | April 21, 2022 | Stock Options | 103,264 | **$675** | 34% after 12, 33% after 24, 33% after 36 months | | April 21, 2022 | RSUs | 291,285 | **$3,787** | April 21, 2024 | | April 21, 2022 | RSUs | 230,769 | **$3,000** | 1/3 on April 21, 2023, Oct 21, 2023, April 21, 2024 | | June 1, 2022 | Replacement Options | 77,158 | **$267** | Immediately | | June 1, 2022 | Replacement Warrants | 150,691 | **$61** | Immediately | Weighted Average Inputs for Option Pricing Models | Input | Warrants (2023) | Warrants (2022) | Stock Options (2023) | Stock Options (2022) | | :------------------ | :-------------- | :-------------- | :------------------- | :------------------- | | Expected life (years) | — | 0.3 | 3.5 | 3.2 | | Annualized volatility | — | **35.00%** | **65.00%** | **65.00%** | | Dividend rate | — | **0.00%** | **0.00%** | **0.00%** | | Risk-free interest rate | — | **2.74%** | **3.86%** | **2.65%** | [8. Supplemental Disclosure with Respect to Cash Flows](index=17&type=section&id=8.%20SUPPLEMENTAL%20DISCLOSURE%20WITH%20RESPECT%20TO%20CASH%20FLOWS) Non-cash transactions for H1 2023 included **$1,138 thousand** in capital asset additions and **$1,686 thousand** in reclassified deposits, with no interest or income tax payments made during the period Non-Cash Transactions (in thousands of Canadian dollars) | Transaction | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Capital asset additions in accounts payable | $1,138 | $208 | $1,138 | $208 | | Deposits reclassified to capital assets | $1,686 | $— | $1,686 | $— | | Proceeds from sale of equipment in receivables | $— | $16 | $— | $16 | | Share issue costs in accounts payable | $138 | $— | $138 | $— | - The Company did not make any payments towards interest or income taxes during the three and six months ended June 30, 2023, and 2022[72](index=72&type=chunk) [9. Contingencies](index=18&type=section&id=9.%20CONTINGENCIES) The Company accrues liabilities for legal and tax matters when the amount can be reasonably estimated and settlement is probable to require an outflow of future economic benefits - The Company accrues liabilities for legal and tax matters when the amount can be reasonably estimated and settlement is probable to require an outflow of future economic benefits[74](index=74&type=chunk) [10. Subsequent Event](index=18&type=section&id=10.%20SUBSEQUENT%20EVENT) On July 7, 2023, the Company acquired five mineral claims near Eskay Creek for **$4,000 thousand** cash, subject to a **2%** net smelter return royalty with an option to purchase **1%** for **$2,000 thousand** - On July 7, 2023, the Company acquired five mineral claims surrounding Eskay Creek for **$4,000 thousand** cash, with **$2,000 thousand** paid on closing and the remainder due by December 31, 2023[75](index=75&type=chunk) - The acquired mineral claims are subject to a **2%** net smelter return (NSR) royalty, with an option to purchase **1%** of the NSR for **$2,000 thousand**[75](index=75&type=chunk)