management’s discussion and analysis - equinox gold · 2017-03-25 · jdl gold corp. (formerly...

JDL Gold Corp.

(formerly Lowell Copper Ltd.)

Management’s Discussion and Analysis

Third Quarter Report – September 30, 2016 (Expressed in U.S. dollars, unless otherwise noted)

November 29, 2016

For further information on the Company, reference should be made to its public filings on SEDAR at www.sedar.com. This Management’s

Discussion and Analysis (“MD&A”) should be read in conjunction with the audited consolidated financial statements and related notes for the year

ended December 31, 2015 and the unaudited interim consolidated financial statements and related notes for the period ended September 30, 2016, which have been prepared in accordance with International Financial Reporting Standards (‘IFRS”). All dollar amounts are expressed in United

States dollars unless otherwise noted. The MD&A contains certain forward looking statements. Readers are cautioned to the risks related to the

forward looking statements and are directed to page 12 of the MD&A.

OVERVIEW

JDL Gold Corp. (“JDL Gold” or the "Company”) was incorporated under the Business Corporations Act of British

Columbia on March 23, 2007. The Company changed its name on October 6, 2016 from Lowell Copper Ltd. to JDL

Gold Corp. upon completion of a transaction with Gold Mountain Mining and Anthem United Inc. discussed below.

The Company is in the business of mineral exploration and is actively engaged in the acquisition and exploration of

mineral properties. The Company is listed on the TSX Venture Exchange ("TSX-V") under the ticker “JDL”.

The Company’s historical documents are filed on SEDAR as JDL Gold Corp.

HIGHLIGHTS

On October 6, 2016, the Company completed the acquisition of Gold Mountain Mining Corp. (“Gold Mountain”) and

Anthem United Inc. (“Anthem”) to create a combined entity, JDL Gold Corp. (“JDL Gold”) (the “Transaction”). Gold

Mountain is an exploration company with its main asset being the 100% ownership of the 16,700-hectare Elk Gold

property located in southern British Columbia. Anthem’s main asset is its 75% interest in the Koricancha Mill in Peru,

with capacity of 350 tonnes per day. Anthem’s joint venture partner, EMC Green Group, S.A., owns the remaining

25% and is the operator of the Koricancha Mill. The Koricancha Mill produces gold for its own account by processing

gold-bearing material purchased from small scale and artisanal miners in Peru.

Pursuant to the Transaction, each Gold Mountain common share was exchanged for 1.032 pre-consolidated common

share of JDL Gold (the “Gold Mountain Exchange Ratio”) and each Anthem common share was exchanged for 0.774

pre-consolidated common share of JDL Gold (the “Anthem Exchange Ratio”). Holders of each outstanding Gold

Mountain convertible security are entitled to acquire that number of pre-consolidated common shares of JDL Gold

based on the Gold Mountain Exchange Ratio and the holders of Anthem convertible security are entitled to acquire that

number of pre-consolidated common share of JDL Gold based on the Anthem Exchange Ratio.

The outstanding common shares of the Company were consolidated on a 6.45 for 1 basis with corresponding

adjustments to its convertible securities. As at the date of this report, JDL Gold has 67,482,206 common shares,

37,091,226 share purchase warrants, and 1,562,209 incentive stock options outstanding (of which 1,209,517 are

exercisable).

Concurrently with the Transaction, the Company closed a private placement financing for 30,240,691 units at a price

of CAD$2.00 per unit (the “Concurrent Financing”) for gross proceeds of CAD$60,481,382, of which $34,384,918

(CAD$45,135,832) was received into escrow during the nine months ended September 30, 2016.

http://www.sedar.com/

Third quarter – September 30, 2016


Each unit issued under the Concurrent Financing entitles the holder to receive, without any further action on the part

of the holder and without payment of additional consideration, one post-consolidation common share and one post

consolidation share purchase warrant of JDL Gold. Each warrant entitles the holder to acquire one common share of

JDL Gold at a price of CAD$3.00 for a period of five years. The warrants are listed for public trading on the TSX

Venture Exchange.

With the completion of the Transaction, JDL Gold is a financially strong, emerging gold-copper production and

development company focused on building shareholder value through the acquisition and development of precious

metal and copper assets. The near-term focus of the Company will be increasing production at the Koricancha Mill,

obtaining the social license and applicable permits to commence further mineral exploration at Warintza and assessing

potential business options for the Elk Gold project. Further, the Company is actively assessing growth opportunities to

further advance the long-term strategy to build a profitable producing gold and copper company.

WARINTZA PROJECT, ECUADOR

Overview

The Warintza Project is located in southeastern Ecuador, in the province of Morona Santiago, canton Limon Indanza.

It consists of three Metallic Mineral Concessions (“Warintza Concessions”) that cover a total of 10,000 hectares. It is

a 100% owned Cu-Mo porphyry deposit. It is 40km north of the Mirador Cu-Au development project, which is currently

owned by CRCC-Tongguan Investment (formerly owned by Corriente Resources). The Warintza Concessions are

subject to a 2% net smelter royalty held by Billiton Ecuador B.V.

Over the past number of months, the government of Ecuador has been increasing efforts to encourage sustainable and

responsible mining in the country. The Company has been involved in a number of discussions with government

officials about Warintza and the creation of plan to allow development of the project. Discussions are currently

underway with the Ecuadorian government and the Shuar Indian Community requesting permission to resume

exploration at Warintza. The Company will continue to deploy efforts in Ecuador in the coming months.

Warintza Resource Estimate (inferred, base case 0.30% Cu Eq%)

Cutoff

CuEq%

Tonnes Cu% Mo% CuEq%

0.30 194,994,000 0.42 0.031 0.61

0.40 164,102,000 0.46 0.031 0.65

0.50 119,852,000 0.53 0.032 0.73

0.60 87,580,000 0.59 0.034 0.79

0.70 56,867,000 0.66 0.036 0.87

The reported resource estimate uses a 0.30% copper equivalent cutoff. Copper equivalent assumes an in-situ

value ratio of 6 copper to 1 molybdenum.

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The estimated resource is based on 33 core holes.

Limits of the Warintza Central mineralization have not been defined and step-out drilling may result in a

significant expansion of the known resource based upon later geologic mapping and sampling.

Warintza West mapping and sampling indicates the potential to significantly increase resources; further work

required at Warintza South.

Significant zones of higher grade supergene chalcocite exist, with 12 of the drill holes intersecting significant

widths of supergene copper mineralization assaying > 1.0% copper.

A 43-101 report has been prepared by a qualified person independent of JDL Gold Corp.



Outlook

The Company is focusing its efforts on community relations at Warintza with the objective of accomplishing further

mineral exploration works on the project.

RICARDO PROPERTY, CHILE

Overview

The Company holds a 100% interest to the Ricardo Property, an exploration stage porphyry copper prospect located

near Calama, Chile in the Calama Mining District, Chile. The Ricardo Property is situated on the West Fissure Fault, a

structural trend that hosts a number of significant copper deposits including Chuquicamata (“Chuqui”), which has

produced more than 50 billion lbs of copper and been in production since 1915. Chuqui is owned by the Chilean state

mining company CODELCO. The Ricardo claim block consists of approximately 16,000 hectares and is 25-35 km

south of Chuqui and there is some evidence that missing segments of Chuquicamata may have been displaced

southward along the West Fissure into the vicinity of the Ricardo Property.

In October 2014, the Company received the drilling permit for the Ricardo Project. The drilling to date has tested two

deep targets, which are under a layer of post-mineral gravel.

Preliminary drill results

The Company encountered a number of drilling issues at the Ricardo project over the drill program. The first drill hole

was lost, however, hole HR-2 was completed to a depth of 1600 meters. Because of the difficulty near surface drilling

conditions it was decided to attempt a deflected hole at a depth of about 830 meters in Hole HR-2. The first deflection

proceeded 100 meters and was lost. The Company has set a window wedge with the intention of drilling a second

deflection at some point in the future. At this time, drilling has been halted with a view to assessing the current data.

The geologic results of drilling to date show that the near vertical 1600 meter HR-2 hole intersected a series of rock

types similar to wall rocks on the west end of the Chuquicamata orebody and intersected strong quartz sericite alteration.

The hole also intersected at a depth of about 600 meters a zone of weakly anomalous Zn in the range of 100 ppm Zn.

At a depth of about 900 and extending to about 1100 meters this was replaced by weakly anomalous Cu values ranging

from 100-200 ppm Cu. Weakly anomalous Zn reappeared from about 1100 meters to the bottom of the hole at 1600

meters. Sphalerite (the Zn mineral) and Chalcopyrite (the Cu mineral) were present in very sparse, and fine grains.

In porphyry copper systems metal zoning usually takes the form of an outer Zn zone surrounding an inner Cu zone and

the Company interprets that HR-2 might have intersected the outer part of a deep porphyry copper system. The West

Fissure Fault is several hundred meters east of HR-2 and the first and second deflected holes were aimed east at a (-)

60° inclination to intersect the West Fissure and possibly part of a faulted segment of the Chuquicamata orebody.

Outlook

Drilling results at the Company’s Ricardo project in Chile have been encouraging and the Company has gained valuable

geological insight at the project. The Company will assess further activities at Ricardo in the context of the market and

available capital.

KORICANCHA MILL AND ELK GOLD PROJECT

Subsequent to September 30, 2016, the Company acquired the Koricancha Mill and the Elk Gold Project as a result of

the previously described Transaction.

Koricancha Mill

On January 28, 2014, Anthem entered into an agreement with EMC Green Group S.A. (“EMC”), a private Peruvian

company, to develop, construct and operate the Koricancha Mill. The Koricancha Mill processes gold bearing material



purchased from legal small scale and artisanal miners in Peru at a discount to the prevailing market price. The Company

holds a 75% interest in the Koricancha Mill and is entitled to an 8% cost of goods sold royalty. Costs of goods sold

includes all direct and indirect costs associated with the operation of the Koricancha Mill. The remaining 25% interest

in the Koricancha Mill is held by EMC.

Construction of the Koricancha Mill was completed in June 2015 with all critical infrastructure and equipment in place.

The Koricancha Mill is authorized to operate pursuant to the small-scale mining formalization law in Peru.

Commissioning of the Koricancha plant commenced in late June 2015 and continued through September 2015.

With the operating capability of the plant established during the third quarter of 2015, Anthem commenced accounting

for operations at the Koricancha Mill on a commercial production basis as of October 1, 2015. Throughput and

associated production of gold and silver increased through the fourth quarter of 2015. However, as a result of a longer

than expected period to recover value added taxes in Peru, management reduced throughput through the first quarter of

2016 and conducted only de minimis processing activities during the second and third quarters of 2016.

In late September 2016 Anthem recommenced purchasing, crushing and stockpiling mineralized feed. In late

November the Company began processing mineralized feed. The Company intends to increase throughput at the

Koricancha Mill gradually over the coming months towards its installed capacity of 10,000 tonnes per month.

Elk Gold Project

On July 26, 2011 the Gold Mountain completed an acquisition from Almaden Minerals Ltd. of a 100% interest in the

Elk Gold Project located near Merritt, British Columbia (the “Elk Gold Project”). The Elk Gold Project is within the

Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease covering 16,566

hectares.

Fairfield Minerals investigated the area for gold in 1986. Approximately 51,500 ounces of gold were produced between

1992 and 1995 from a test pit and underground mining exploration.

Gold Mountain completed a total of 13,902 meters of core drilling in 117 holes during the 2012 exploration program.

In 2012 the Gold Mountain received regulatory permits for the extraction of a 10,000 tonne bulk sample and

commenced this work immediately. In 2014 a total of 6,597 tonnes of mineralized material with an average grade of

16.7 g/t gold was extracted from the bulk sample pit. A total of 3,696 troy ounces of gold was produced.

The existing Bulk Sample Permit allows for the extraction of 11,000 tonnes of mineralized material. Thus far 6,710

tonnes have been removed, leaving a permitted allowance of 4,290 tonnes of mineralized material. In August 2016 an

updated resource estimate was completed for the project as follows:

Resource(1)

Mining Method Tonnes Grade(3)

(g/t) Oz

M&I(2)

Open Pit 1,031,000 6.24 206,800

M&I Underground 11,600 13.73 5,100

Inferred Open Pit 823,000 4.56 120,800

Inferred Underground 273,900 10.09 88,800

M&I Total 1,042,600 6.32 211,900

Inferred Total 1,096,900 5.94 209,600

(1) Resource estimate

(2) M+I refers to Measured & Indicated resources.

(3) Open Pit cut-off grade set at 1.0 g/t. Underground cut-off grade set at 5.0 g/t



LIQUIDITY AND CAPITAL RESOURCES

(tabled amounts are expressed in thousands of U.S.

dollars) September 30, 2016 December 31, 2015 December 31, 2014

Cash, restricted cash and cash equivalents 35,373 974 5,374

Accounts receivable and prepaid expenses 34 38 62

Loan receivable 762 - -

Accounts payable and accrued liabilities (949) (190) (166)

Working capital 35,220 822 5,270

During the nine months ended September 30,

(tabled amounts are expressed in thousands of U.S.

dollars) 2016 2015 2014

Cash outflows from operating activities (1,213) (4,421) (1,983)

Cash inflows from financing activities 36,139 - 559

Cash outflows from investing activities (556) (2) (261)

Effect of exchange rate change on cash and

cash equivalents 29 (194) (328)

Net cash flows 34,399 (4,617) (2,013)

The increase of approximately $34 million in working capital from December 31, 2015 to September 30, 2016 was due

to the financing associated with the Transaction which closed on October 6, 2016. Upon closing the Transaction, the

Company received an additional $11,690,235 in proceeds for the financing for total proceeds of $46,075,153

(CAD$60,481,382). The Company believes its current cash balance is sufficient to fund the ramp-up of the

Koricancha Mill, planned exploration and corporate overhead activities for the foreseeable future.



QUARTERLY RESULTS

(tabled amounts are expressed in thousands of U.S. dollars, except

for per share amounts) Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014

Depreciation (1) - (1) - (1) (1) (2) (1)

Exploration (226) (146) (431) (323) (1,629) (1,615) (621) (443)

General & administration (1) (137) (106) (122) (212) (152) (125) (249) (264)

Stock based compensation (67) (28) (24) 24 (102) (159) (176) (163)

(431) (280) (578) (511) (1,884) (1,900) (1,048) (871)

Other income 104 - - - 45 - - -

Change in fair value of share

purchase warrants (402) (572) (331) - - - - -

Finance (cost) income, net (5) (1) (43) (4) 30 - (1) -

Foreign exchange gain (loss) 39 2 4 165 (14) (30) 30 (361)

Impairment – evaluation and

exploration expense - - - - (114) - - (25)

Net loss before tax (695) (851) (948) (350) (1,937) (1,930) (1,019) (1,257)

Deferred tax recovery - - - (19) (73) 6 1 85

Net loss after tax (695) (851) (949) (369) (2,010) (1,924) (1,018) (1,172)

Other comprehensive income

(loss) (96) (8) 391 (370) (586) 180 (301) 358

Net loss and comprehensive loss (791) (859) (557) (739) (2,596) (1,744) (1,319) (814)

Basic & diluted loss per share (0.01) (0.01) (0.01) (0.01) (0.03) (0.03) (0.01) (0.01)

Total assets 38,055 3,131 3,516 1,868 1,799 4,447 5,824 7,069

(1) General and administration expense includes salary and wages, professional fees, marketing and travel.

The Company’s quarterly results vary depending on its exploration activities. During the second and the third quarters

of fiscal 2015, the Company completed drilling at its Ricardo property, accounting for the significant increase in its

exploration costs during those quarters. The Company also grants stock options to its directors, officers, employees,

and consultants, which are valued using the Black-Scholes option pricing model and the related non-cash expense could

have a material impact on its quarterly operations.

Effective from fiscal 2016, as the reporting entity’s functional currency changed from the Canadian dollar to the US

dollar, the share purchase warrants issued as part of unit financing, the exercise price of which is denominated in

Canadian dollars, are considered to be derivatives. The change in the fair value of such share purchase warrants could

also have a significant impact on the Company’s quarterly operations.

Nine months ended September 30, 2016 compared to prior period in 2015

During 2016, the Company has sought to reduce its expenditures and conserve its cash position. As a result, the

Company’s general and administrative costs were significantly lower during the nine months ended September 30,

2016 (the “September 2016 Period”) compared to 2015 (the “September 2015 Period”). During the September 2015

Period, the Company commenced drilling at its Ricardo property accounting for the higher costs during the period. The

Company’s current focus is on its Warintza project, where it is negotiating with the government and the communities

in Ecuador to resume exploration activities.

During fiscal 2014 and 2015, the Company also granted significantly more stock options resulting in higher share-

based payments expense during the September 2015 Period due to the vesting of such stock options.

As noted above, the share purchase warrants issued by the Company in conjunction with its unit private placement

completed on March 24, 2016, are determined to be derivatives. The movement in the fair value of such share purchase



warrants are recorded through profit and loss which offset the overall lower expenses during the September 2016 Period

when compared to the September 2015 Period.

Three months ended September 30, 2016 compared to prior quarter in 2015

During the three months ended September 30, 2016 (the “September 2016 Quarter”), the Company continued its efforts

to conserve cash and reduced its overall expenditures when compared to the three months ended September 30, 2015

(the “September 2015 Quarter”), As noted above, the lower exploration and administrative expenditures during the

September 2016 Quarter were slightly offset by the increase in the fair value of the Company’s derivative liability from

its share purchase warrants issued in conjunction with the March 24, 2016 private placement.

Change in total assets

Total assets increased during the September 2016 Period primarily as a result of the cash received related to the private

placement financing completed on October 6, 2016.

SHAREHOLDERS’ EQUITY

During the first nine months of 2016, 1,825,000 stock options were issued. The Company also completed a private

placement in March 2016 for 28,779,399 units at a price of CAD$0.12 for gross proceeds of CAD$3,455,928. Each

unit consists of one common share and one-half of one common share purchase warrant. Subsequent to September 30,

2016, the Company completed a private placement financings for 30,240,691 units at a price of CAD$2.00 per unit for

gross proceeds of CAD$60,482,382. Each unit consisted of one common share and one common share purchase

warrant.

The Company is authorized to issue an unlimited number of common shares.

As of the date of this report, the Company had 67,482,206 common shares issued and outstanding and 106,135,641

common shares fully diluted, including:

1,562,209 stock options outstanding with exercise prices ranging from CAD$1.55 to CAD$3.48 per option

which expire between May 7, 2017 and August 2, 2021. Of these options, 1,209,517 are fully vested and

exercisable.

37,091,226 share purchase warrants outstanding with exercise prices ranging from CAD$0.83 to CAD$4.64

and expiring between March 26, 2017 and March 23, 2021.

Included in the common shares issued and outstanding are 2,265,753 common shares held in escrow.



REGULATORY DISCLOSURES

Financial instruments

i. Fair values of financial instruments

The fair values of financial instruments are summarized as follows:

September 30, 2016 December 31, 2015 (tabled amounts are expressed in thousands of U.S.

dollars) Carrying value Fair value Carrying value Fair value

Financial assets

Loans and receivables

Cash, restricted cash and cash equivalents 35,373 35,373 974 974

Short-term loan 762 762 - -

Available for sale

Investments 584 584 400 400

Financial liabilities

Other financial liabilities

Accounts payable & accrued liabilities (949) (949) (190) (190)

Fair value through profit and loss

Share purchase warrant liability (3,155) (3,155) - -

ii. Management of financial risks

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Senior

management is actively involved in the review and approval of planned expenditures. Management believes that

the ability to fund operations through financing activities should be sufficient to meet the ongoing capital and

operating requirements. As at September 30, 2016, the Company had a working capital balance of $35,219,642

(December 31, 2015 - $821,930). The Company deems its cash position as at the date of these financial statements

to be sufficient to meet its short-term business requirements.

In the normal course of business, the Company enters into contracts and conducts business activities that give rise

to commitments for future minimum payments.

Currency risk

The Company operates in Canada, Chile, Ecuador, Peru, Mexico and the United States and is exposed to foreign

exchange risk arising from transactions denominated in foreign currencies.

The operating results and the financial position of the Company are reported in US dollars. Fluctuations of the

operating currencies in relation to the US dollar have an impact upon the reported results of the Company and may

also affect the value of the Company’s assets and liabilities.

At September 30, 2016, the Company is exposed to currency risk through assets and liabilities denominated in

Canadian Dollars, Peruvian Nuevo Sol, Chilean Pesos, and Mexican Pesos.

Based on the net exposures as at September 30, 2016, and assuming that all other variables remain constant, a 10%

depreciation/appreciation of the US dollar against the Canadian dollar would result in a decrease/increase of

$3,293,211 in the Company’s loss for the period. A 10% depreciation/appreciation of the US dollar against the

Peruvian Nuevo Sol would result in an increase/decrease of $1,102 in the Company’s loss for the period. A 10%

depreciation or appreciation of the US dollar against the Chilean Peso would result in a decrease/increase of $1,928

in the Company’s loss for the period. A 10% depreciation or appreciation of the US dollar against the Mexican

Peso would result in a decrease/increase of $1,344 in the Company’s loss for the period.

The Company has not entered into any agreements or purchased any instruments to hedge possible currency risk.



Credit risk

The Company’s credit risk is primarily attributable to its liquid financial assets and would arise from the non-

performance by counterparties of contractual financial obligations. The Company limits its exposure to credit risk

on liquid assets by maintaining its cash with high-credit quality financial institutions. Management believes the risk

of loss of the Company’s liquid financial assets to be nominal.

Interest risk

The Company invests its cash in instruments that are redeemable at any time without penalty, thereby reducing its

exposure to interest rate fluctuations. Interest rate risks arising from the Company’s operations are not considered

material.

Related Party Transactions

Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation and are not

disclosed in this note. Details of the transactions between the Company and other related parties are disclosed below.

a) Services provided by related parties

Certain of the Company’s officers and directors render services to the Company through companies in which they are

a director or part owner.

Related Parties Relationship Nature of transactions

Pathway Capital Ltd. President is a director Salaries, Office & administrative

Avisar Chartered Accountants Former CFO is a principal Accounting fees

Samina Capital Ltd. Former CFO is a principal Accounting fees

The Company incurred the following fees and expenses in the normal course of operations in connection with related

parties:

Three months ended Nine months ended

September 30

2016

($000’s)

September 30

2015

($000’s)

September 30

2016

($000’s)

September 30

2015

($000’s)

Accounting fees – Samina Capital - 12 - 36

Accounting fees – Avisar Chartered Accountants 12 - 34 -

Tax fees – Avisar Chartered Accountants 5 - 5 -

Deferred transaction costs – Avisar Chartered

Accountants 24 - 25 -

Administrative salaries and costs – Pathway Capital

Ltd. 21 18 67 69

62 30 131 105

Transactions with related parties for goods and services are made on commercial terms. Amounts due to related parties

are unsecured, non-interest bearing and due on demand. Accounts payable at September 30, 2016 included $43,698

(December 31, 2015 - $17,129) which were due to related parties.



b) Compensation of key management personnel

The remuneration of the directors, president and the chief executive and other officers (collectively, the key

management personnel) was as follows:

Three months ended Nine months ended

September 30

2016

September 30

2015

September 30

2016

September 30

2015

Salaries 35 56 107 176

Share-based compensation 32 71 63 300

67 127 170 476

c) Advance Subscriptions

During the year ended December 31, 2015, the Company’s chairman and CEO advanced $760,000 to the Company

pursuant to his subscription of the private placement units. The Company closed such private placement on March 24,

2016 and issued 8,694,400 units to the chairman.

The related parties of the Company, in total, subscribed to 22,877,733 units in the March 24, 2016 private placement.

Capital Risk Management

The Company’s objective of capital management is to ensure that it will be able to continue as a going concern, continue

the exploration of mineral properties, and identify, evaluate, and acquire additional resource properties. The capital of

the Company consists of shareholders’ equity. The Company is meeting its capital risk objectives by successfully

raising, from time to time, the required funds through debt and equity.

Future changes in accounting policies

The following new standards and amendments to standards have been issued and are effective for future periods:

IAS 12 Income Taxes was amended to clarify the determination of future taxable profit for the recognition of

deferred tax assets. The amendments are effective for annual periods beginning on or after January 1, 2017. The

Company is currently evaluating the impact of this Standard.

IFRS 9 Financial Instruments addresses the classification, measurement and recognition of financial assets and

financial liabilities. It replaces the guidance in IAS 39 that relates to the classification and measurement of

financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary

measurement categories for financial assets: amortized costs, fair value through other comprehensive income and

fair value through profit or loss. The basis of classification depends on entity’s business model and the contractual

cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at

fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other

comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred

loss impairment model used in IAS 39. For financial liabilities, there were no changes to classification and

measurement except for the recognition of changes in own credit risk in other comprehensive income, for

liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness

by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged

item and hedging instrument and for the hedged ratio to be the same as the one management actually use for risk

management purposes. Contemporaneous documentation is still required but is different to that currently

prepared under IAS 39. The Standard is effective for accounting periods beginning on or after January 1, 2018.

Early adoption is permitted. The Company is currently evaluating the impact of this Standard.

IFRS 15 Revenue from Contracts with Customers deals with revenue recognition and establishes principles of

reporting useful information to users of financial statements about the nature, amount, timing, and uncertainty of

revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognized when the

customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits



from the good or service. The Standard replaces IAS 18 Revenue, and IAS 11 Construction Contracts and related

interpretations. It is effective for annual periods beginning on or after January 1, 2018 and earlier application is

permitted. The Standard is not expected to have an impact on the Company in its present form.

IFRS 16 Leases is a new standard that sets out the principles for recognition, measurement, presentation, and

disclosure of leases including guidance for both parties to a contract, the lessee and the lessor. The new standard

eliminates the classification of leases as either operating or finance leases as is required by IAS 17 and instead

introduces a single lessee accounting model. The amendments are effective for annual periods beginning on or

after January 1, 2019. The Company is currently evaluating the impact of this Standard.

Accounting estimates

The preparation of financial statements in accordance with IFRS requires management to make estimates and

assumptions about future events that affect the amounts reported in the financial statements and related notes to the

financial statements. Estimates and assumptions are continuously evaluated and are based on management’s experience

and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Actual results may differ from those estimates. Significant areas where management’s judgment is applied are the

recognition and impairment of exploration and evaluation assets, share-based payments charges, and deferred income

taxes. Actual results may differ from those estimates.

Risk and uncertainties

The operations of the Company are speculative due to the nature of its business which is the investment in the

exploration and development of mining properties. These risk factors could materially affect the Company’s future

operating results and could cause actual events to differ materially from those described in forward-looking statements

relating to the Company.

An investment in securities of the Company involves a high degree of risk and must be considered highly speculative

due to the nature of the Company’s business and the present stage of exploration and development of its mineral

properties. In addition to information set out or incorporated by reference in this MD&A, prospective investors should

carefully consider the risk factors set out below. Readers are encouraged to thoroughly review the risks factors detailed

in the Company’s annual MD&A for 2015 and the Joint Information Circular dated August 26, 2016. Any one of such

risk factors could materially affect the Company’s financial condition and future operating results and could cause

actual events to differ materially from those described in forward looking statements relating to the Company. Risks

and uncertainties of importance to the Company and its operation include (but are not limited to) those related to:

No history of revenue

Market price of the common shares

Financing risk

Corruption and Bribery Risk

Commodity prices

Conflicts of interest

Property access at the Warintza Property

Governmental regulation

Permitting

Infrastructure

Exploration and geological report

Land title

Additional capital

Foreign exchange rate fluctuations

Property exploration and development risk

Force Majeure



Forward-Looking Statements

This MD&A includes certain statements that constitute “forward-looking statements”, and “forward-looking

information” within the meaning of applicable securities laws (“forward-looking statements” and “forward-looking

information” are collectively referred to as “forward-looking statements”, unless otherwise stated). These statements

appear in a number of places in this MD&A and include statements regarding our intent, or the beliefs or current

expectations of our officers and directors. Such forward-looking statements involve known and unknown risks and

uncertainties that may cause our actual results, performance or achievements to be materially different from any future

results, performance or achievements expressed or implied by such forward-looking statements. When used in this

MD&A, words such as “believe”, “anticipate”, “estimate”, “project”, “intend”, “expect”, “may”, “will”, “plan”,

“should”, “would”, “contemplate”, “possible”, “attempts”, “seeks” and similar expressions are intended to identify

these forward-looking statements. Forward-looking statements may relate to the Company’s future outlook and

anticipated events or results and may include statements regarding the Company’s assets and the Company’s future

financial position, business strategy, budgets, litigation, projected costs, financial results, taxes, plans and objectives.

We have based these forward-looking statements largely on our current expectations and projections about future events

and financial trends affecting the financial condition of our business. These forward-looking statements were derived

utilizing numerous assumptions regarding expected growth, results of operations, performance and business prospects

and opportunities that could cause our actual results to differ materially from those in the forward-looking statements.

While the Company considers these assumptions to be reasonable, based on information currently available, they may

prove to be incorrect. Accordingly, you are cautioned not to put undue reliance on these forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results. To the extent any

forward-looking statements constitute future-oriented financial information or financial outlooks, as those terms are

defined under applicable Canadian securities laws, such statements are being provided to describe the current

anticipated potential of the Company and readers are cautioned that these statements may not be appropriate for any

other purpose, including investment decisions. Forward-looking statements are based on information available at the

time those statements are made and/or management's good faith belief as of that time with respect to future events, and

are subject to risks and uncertainties that could cause actual performance or results to differ materially from those

expressed in or suggested by the forward-looking statements. To the extent any forward-looking statements constitute

future-oriented financial information or financial outlooks, as those terms are defined under applicable Canadian

securities laws, such statements are being provided to describe the current anticipated potential of the Company and

readers are cautioned that these statements may not be appropriate for any other purpose, including investment

decisions. Forward-looking statements speak only as of the date those statements are made. Except as required by

applicable law, we assume no obligation to update or to publicly announce the results of any change to any forward-

looking statement contained or incorporated by reference herein to reflect actual results, future events or developments,

changes in assumptions or changes in other factors affecting the forward-looking statements. If we update any one or

more forward-looking statements, no inference should be drawn that we will make additional updates with respect to

those or other forward-looking statements. You should not place undue importance on forward-looking statements and

should not rely upon these statements as of any other date. All forward-looking statements contained in this MD&A

are expressly qualified in their entirety by this cautionary statement.

Other technical information

J. David Lowell, the Company’s Chairman, is the Qualified Person as defined under National Instrument 43-101

responsible for the technical disclosure in this MD&A.

management’s discussion and analysis - equinox gold · 2017-03-25 · jdl gold corp. (formerly...

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