EX-99.3 4 marigoldinterimfs.htm EXHIBIT Marigold Interim FS



Marigold Mine
Condensed Interim Financial Statements
For the three months ended March 31, 2014 and 2013
(unaudited)








Marigold Mine
Condensed Interim Financial Statements for the three months ended March 31, 2014
 

CONTENTS
 
Financial Statements
 
 
 
 
 
 
 
 
 
Notes to the Financial Statements
 
 
 
 
 
 
 
Statements of Financial Position
 
 
 
 
 
 
 
 
Statements of Comprehensive (Loss) Income
 
 
 
 
Additional Disclosures
 
 
 


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Marigold Mine
Condensed Interim Statements of Financial Position
(expressed in thousands of United States dollars)
 
Note
March 31

December 31

 
 
2014

2013

 
 
$ 

$

Current assets
 
 
 
Cash and cash equivalents
 
25,529

11,605

Prepaid expenses and other current assets
3
10,742

8,749

Inventory
4
96,029

106,084

 
 
132,300

126,438

Non-current assets
 
 
 
Property, plant and equipment
 
197,097

196,954

Related party receivable
5
—

63,180

Total assets
 
329,397

386,572

 
 
 
 
Current liabilities
 
 
 
Trade and other payables
6
20,127

21,546

Related party payable
5
9,097

—

 
 
29,224

21,546

Non-current liabilities
 
 
 
Deferred income tax liabilities
 
1,335

1,348

Close down and restoration provision
 
27,025

25,873

Total liabilities
 
57,584

48,767

 
 
 
 
Shareholder's and venturer's equity
 
 
 
Share capital
7
2,216

2,216

Contributed surplus
7
19,700

19,700

Retained earnings
7
249,897

315,889

Total shareholder's and venturer's equity
 
271,813

337,805

Total liabilities and equity
 
329,397

386,572

 
 
 
 
Events after the reporting date (note 11)
 
 
 
The accompanying notes are an integral part of the financial statements
Approved by the Board of Directors of Marigold Mining Company and authorized for issue on June 18, 2014
“John Smith”
 
“Gregory Martin”
John Smith, Director
 
Gregory Martin, Director

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Marigold Mine
Condensed Interim Statements of Comprehensive (Loss) Income
(expressed in thousands of United States dollars, except per share amounts)

 
Note
Three months ended March 31
 
 
 
2014

2013

 
 
$

$

 
 
 
 
Revenue
 
44,725

77,204

Cost of sales
8
(49,640
)
(45,508
)
(Loss) income from mine operations
 
(4,915
)
31,696

 
 
 
 
Administration expenses
 
(187
)
(492
)
Exploration and evaluation expenses
 
(98
)
(274
)
Operating (loss) income
 
(5,200
)
30,930

 
 
 
 
Accretion expense
 
(258
)
(189
)
Other (expense)
 
(710
)
(392
)
(Loss) before tax
 
(6,168
)
30,349

 
 
 
 
Income tax recovery (expense)
 
3,006

(4,404
)
 
 
 
 
Net (loss) income and net (loss) income attributable to shareholder and venturer
 
(3,162
)
25,945

Total comprehensive (loss) income
 
(3,162
)
25,945

The accompanying notes are an integral part of the financial statements

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Marigold Mine
Condensed Interim Statements of Changes in Shareholder's and Venturer's Equity
(expressed in thousands of United States dollars)

 
 
Common Shares
Contributed

Retained

Total shareholder's

 
 
Shares

Amount

surplus

earnings

and venturer's equity

 
 
 
$

$

$

$

Balance, January 1, 2013
 
625

2,216

19,700

338,781

360,697

Total comprehensive income for the period
 
—

—

—

25,945

25,945

Balance, March 31, 2013
 
625

2,216

19,700

364,726

386,642

 
 
 
 
 
 
 
Balance January 1, 2014
 
625

2,216

19,700

315,889

337,805

Dividend
 
—

—

—

(61,739
)
(61,739
)
Venturer distributions - Barrick
 
—

—

—

(1,091
)
(1,091
)
Total comprehensive (loss) for the period
 
—

—

—

(3,162
)
(3,162
)
Balance, March 31, 2014
 
625

2,216

19,700

249,897

271,813

The accompanying notes are an integral part of the financial statements

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Marigold Mine
Condensed Interim Statements of Cash Flows
(expressed in thousands of United States dollars)

 
Note
Three months ended March 31
 
 
 
2014

2013

 
 
$

$

Cash flows from operating activities
 
 

 

Net (loss) income for the period
 
(3,162
)
25,945

Adjustments for:
 
 

 

Depreciation, depletion and amortization
 
6,210

6,889

Accretion expense
 
258

189

Other (income) loss
 
(37
)
374

Pad inventory write-down to net realizable value
 
5,697

—

Income tax (recovery) expense
 
(3,006
)
4,404

Net changes in non-cash working capital items
10
17,193

(484
)
Cash generated in operating activities before income taxes paid
 
23,153

37,317

Income taxes paid
 
(2,071
)
(1,542
)
Cash generated in operating activities
 
21,082

35,775

Cash flows from investing activities
 
 

 

Mineral property expenditures
 
(6,067
)
(32,338
)
Cash (used) by investing activities
 
(6,067
)
(32,338
)
Cash flows from financing activities
 
 

 

Venturer distributions
 
(1,091
)
—

Cash generated (used) by financing activities
 
(1,091
)
—

Increase in cash and cash equivalents
 
13,924

3,437

Cash and cash equivalents, beginning of period
 
11,605

56,627

Cash and cash equivalents, end of period
 
25,529

60,064


Supplemental cash flow information (note 10)
The accompanying notes are an integral part of the financial statements

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Marigold Mine
Notes to the Condensed Interim Financial Statements
For the three months ended March 31, 2014
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)


1.
NATURE OF OPERATIONS

The Marigold Mine constitutes the Marigold Mining Company (“MMC”), and the 100% beneficial interest in the assets and liabilities of the Marigold Venture. Goldcorp Inc. (“Goldcorp”) owned all of the issued and outstanding shares of MMC which in turn had a 66 2/3% interest in the Marigold Venture, and Barrick Gold Corporation (“Barrick”) owned a 33 1/3% interest in the Marigold Venture. These financial statements comprise the assets, liabilities, and results of operations of the Marigold Mine. Certain costs relating to the Marigold Mine are borne by the shareholder and are not refunded by the Marigold Mine. The financial statements do not include these costs.

The Marigold Mine ("we", "us" or "our") is a venture arranged and domiciled in Nevada, U.S.A. We are principally engaged in the operation of an open-pit gold mine located in Humboldt County, Nevada, U.S.A. that has been in continuous production since 1988. Our strategic focus is to optimize gold production from the mine.

On April 4, 2014, Silver Standard Resources Inc. (“Silver Standard”) acquired all of the issued and outstanding shares of MMC from Goldcorp as well as Barrick’s 33 1/3% interest in the Marigold Venture, thereby obtaining full legal and beneficial ownership of the Marigold Mine (note 11).

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these condensed interim financial statements are set out below.
a)
Basis of preparation
These condensed interim financial statements should be read in conjunction with our audited annual financial statements for the year ended December 31, 2013.
These condensed interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the IFRS Interpretations Committee ("IFRIC"). The comparative information has also been prepared on this basis.
The policies applied in these condensed interim financial statements are based on International Financial Reporting Standards ("IFRS") and were approved as of June 18, 2014, the date the Board of Directors of MMC approved the statements.
b)Pronouncements affecting our financial statements presentation or disclosure
The following new and amended IFRS pronouncement were adopted during the three months ended March 31, 2014:

Levies imposed by governments
IFRIC 21, Levies (“IFRIC 21”), an interpretation of IAS 37, Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”), on the accounting for levies imposed by governments, was effective for annual periods beginning on January 1, 2014. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (“obligating event”). IFRIC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. This did not have any significant impact on our current accounting for levies imposed by governments.
Impairment of assets
IAS 36, Impairment of assets, was amended to clarify disclosure requirements when recoverable amount is determined based on fair value less costs of disposal. The amendment was effective for annual periods beginning on January 1, 2014 and does not have a material impact on our financial statements.

Revenue from contracts with customers
The IASB has replaced IAS 18 - Revenue in its entirety with IFRS 15 - Revenue from contracts with customers (“IFRS 15”) which is intended to establish a new control-based revenue recognition model and change the basis for deciding whether revenue is to be recognized over time or at a point in time. IFRS 15 is effective for annual periods commencing on or after January 1, 2017. We are currently evaluating the impact the standard is expected to have on our financial statements.

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Marigold Mine
Notes to the Condensed Interim Financial Statements
For the three months ended March 31, 2014
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Significant accounting judgments and estimates
The preparation of financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the condensed interim financial statements and related notes. There have been no significant changes to our significant accounting judgments and estimates from those disclosed in note 2 of the audited annual financial statements for the year ended December 31, 2013.


3.
PREPAID EXPENSES AND OTHER CURRENT ASSETS

 
March 31, 2014

December 31, 2013

 
$

$ 

Prepaid expenses
10,687

8,681

Other current assets
55

68

 
10,742

8,749



4.
INVENTORY

 
March 31, 2014

December 31, 2013

 
$ 

$

Bullion finished goods
3,145

5,790

Materials and supplies
18,737

20,625

Pad inventory
74,147

79,669

 
96,029

106,084


As at March 31, 2014, we assessed that the carrying value of our inventory exceeded its Net Realizable Value ("NRV"), and recorded a NRV write-down of pad inventory of $5,697,000 (2013 - $nil). Inventory held at NRV at March 31, 2014 was $74,147,000 (December 31, 2013 - $nil).


5.
RECEIVABLE FROM AND PAYABLE TO RELATED PARTY

As at March 31, 2014 we had a balance payable to Goldcorp of $9,097,000 (December 31, 2013 - balance receivable from Goldcorp of $63,180,000). The balance is unsecured and without interest or fixed terms of repayment. During the three months ended March 31, 2014, the balance receivable as at December 31, 2013 was settled in full through a dividend of $61,739,000.


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Marigold Mine
Notes to the Condensed Interim Financial Statements
For the three months ended March 31, 2014
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

6.
TRADE AND OTHER PAYABLES

 
March 31, 2014

December 31, 2013

 
$

$

Trade payables
9,149

6,094

Accrued liabilities
12,122

13,427

Income taxes (receivable) payable
(1,475
)
1,821

Derivative liabilities
8

56

Current portion of close down and restoration provision
323

148

 
20,127

21,546



7.
COMMON SHARES AND VENTURER'S EQUITY

The equity presented in these financial statements represents the share capital, contributed surplus, and retained earnings of MMC (including accumulated distributions to Goldcorp and its predecessors which are reflected as distributions and dividends from retained earnings) as well as 100% of the net assets of the Marigold Venture (including accumulated distributions to Barrick and its predecessors which are reflected as venturer’s distributions).

The authorized capital of the Marigold Mining Company consists of 2,500 shares with no par value and 2,500,000 shares with a par value of $1. All or any of the par value shares may be designated as common shares or preferred shares at the discretion of the board of directors.

The issued capital of the Marigold Mining Company consists of 625 shares as at March 31, 2014 and December 31, 2013.


8.
COST OF SALES

 
Three months ended March 31
 
 
2014

2013

 
$ 

$

Cost of inventory
37,733

38,619

Depletion, depreciation and amortization
6,210

6,889

Inventory write-down to NRV (note 4)
5,697

—

 
49,640

45,508



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Marigold Mine
Notes to the Condensed Interim Financial Statements
For the three months ended March 31, 2014
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

9.
FAIR VALUE MEASUREMENTS

The carrying values of cash and cash equivalents, related party receivables and other current assets, and trade and other payables, approximate their fair values due to their short maturity.

Assets and liabilities that are held at fair value are categorized based on a valuation hierarchy which is determined by the valuation methodology utilized:
 
Fair value at March 31, 2014
Fair value at December 31, 2013
 
Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

 
$ 

$

$

$

$ 

$

$

$

Recurring measurements
 
 
 
 
 
 
 
 
Derivative asset
—

8

—

8

—

56

—

56

Derivative liabilities
—

(8
)
—

(8
)
—

(56
)
—

(56
)
 
—

—

—

—

—

—

—

—

 
 
 
 
 
 
 
 
 
Non-recurring measurements
 
 
 
 
 
 
 
 
Property, plant and equipment
—

—

—

—

—

—

196,954

196,954

 
—

—

—

—

—

—

196,954

196,954

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3 – inputs for an asset or liability that are not based on observable market data (unobservable inputs)
There were no transfers between Level 1 and Level 2 or transfers into and out of Level 3 during the three months ended March 31, 2014 or 2013.


10.
SUPPLEMENTAL CASH FLOW INFORMATION

Changes in working capital items during the three months ended March 31, 2014 and 2013 are as follows:

 
Three months ended March 31
 
 
2014

2013

 
$ 

$

Prepaid expenses and other current assets
78

(3,508
)
Inventory
6,085

5,202

Related party receivable and payable
10,537

(129
)
Trade and other payables
493

(2,049
)
 
17,193

(484
)


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Marigold Mine
Notes to the Condensed Interim Financial Statements
For the three months ended March 31, 2014
(tabular amounts expressed in thousands of United States dollars unless otherwise stated)

11.
EVENTS AFTER THE REPORTING DATE

On April 4, 2014, Silver Standard acquired the Marigold Mine from subsidiaries of Goldcorp and Barrick for a purchase price of $275,000,000 subject to a net working capital adjustment. As a result of the acquisition, Silver Standard became our ultimate parent, and our financial position, results of operations, and cash flows will be reflected in Silver Standard’s consolidated financial statements as of April 4, 2014, subject to fair value adjustments as required by purchase accounting.



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