EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 EMX Royalty Corporation: Exhibit 99.1 - Filed by newsfilecorp.com

EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
 
 
September 30, 2018

NOTICE TO READER

The accompanying unaudited condensed consolidated interim financial statements of EMX Royalty Corporation (Formerly Eurasian Minerals Inc.) for the nine months ended September 30, 2018 have been prepared by management and approved by the Audit Committee and the Board of Directors of the Company. These condensed consolidated interim financial statements have not been reviewed by the Company’s external auditors.


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited - Expressed in Canadian Dollars)

  September 30, 2018     December 31, 2017  
ASSETS            
Current            
 Cash and cash equivalents $ 4,740,042   $ 3,533,611  
 Investments (Note3)   967,706     1,139,447  
 Trade and settlement receivables (Note 4)   2,182,660     3,376,411  
 Loan receivable from an associated entity (Note 14)   23,475,576     -  
 Prepaid expenses   77,699     45,194  
Total current assets   31,443,683     8,094,663  
Non-current            
 Restricted cash (Note 5)   959,408     771,434  
 Property and equipment (Note 6)   461,632     450,278  
 Notes receivable (Note 7)   465,973     429,973  
 Investment in an associated company (Note 8)   8,618,603     7,578,989  
 Strategic investments (Note 3)   32,738     2,199,199  
 Exploration and evaluation assets (Note 9)   1,711,210     1,841,966  
 Royalty interest (Note 10)   21,156,717     21,943,743  
 Reclamation bonds (Note 11)   420,225     515,748  
 Goodwill (Note 12)   957,974     1,820,307  
 Other assets   104,484     104,484  
Total non-current assets   34,888,964     37,656,121  
TOTAL ASSETS $ 66,332,647   $ 45,750,784  
LIABILITIES            
Current            
 Accounts payable and accrued liabilities $ 591,304   $ 749,865  
 Advances from joint venture partners (Note 13)   628,010     808,905  
 Loans payable (Note 14)   29,721,047     -  
Total current liabilities   30,940,361     1,558,770  
Non-current            
 Deferred income tax liability   957,974     1,820,307  
TOTAL LIABILITIES   31,898,335     3,379,077  
SHAREHOLDERS’ EQUITY            
 Capital stock (Note 15)   125,085,553     124,062,091  
 Commitment to issue shares (Note 15)   -     23,825  
 Reserves   23,900,022     22,668,535  
 Deficit   (114,551,263 )   (104,382,744 )
TOTAL SHAREHOLDERS’ EQUITY   34,434,312     42,371,707  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 66,332,647   $ 45,750,784  

Nature of operations and going concern (Note 1)
Events subsequent to the reporting date (Note 20)

Approved on behalf of the Board of Directors on November 9, 2018

Signed: “David M Cole” Director Signed: “Larry Okada” Director

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

Page 1


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS
(Unaudited - Expressed in Canadian Dollars)

    Three months     Three months     Nine months     Nine months    
    ended September      ended September      ended September       ended September    
    30, 2018     30, 2017     30, 2018     30, 2017  
                         
ROYALTY INCOME (Note 10) $ 560,042   $ 999,668   $ 1,602,323   $ 2,053,543    
Cost of sales                        
Gold tax   (27,952 )      (35,236 )    (73,509 )    (87,929 ) 
Depletion (Note 10)   (559,192 )   (542,490 )     (1,377,844 )    (1,415,437 ) 
Net royalty income   (27,102 )   421,942     150,970     550,177    
                         
EXPLORATION EXPENDITURES (Note 9)   3,428,479     1,954,990     6,650,485     4,679,973    
Less: recoveries   (924,088 )   (37,322 )    (1,734,119 )    (650,644 ) 
Net exploration expenditures   2,504,391     1,917,668     4,916,366     4,029,329    
                         
GENERAL AND ADMINISTRATIVE EXPENSES                        
Administrative and office   178,203     161,415     596,872     545,130    
Depreciation (Note 6)   1,603     -     1,603     28,622    
Investor relations and shareholder information   129,422     79,327     380,696     300,985    
Professional fees   141,535     203,612     242,337     517,155    
Salaries and consultants (Note 16)   336,290     239,133     839,392     773,675    
Share-based payments (Note 15)   807,010     445,888     811,976     504,274    
Transfer agent and filing fees   22,725     9,276     152,779     153,373    
Travel   12,086 36,805           59,401     73,454    
Total general and administrative expenses   1,628,874     1,175,456     3,085,056     2,896,668    
                         
Loss before income taxes   (4,160,367 )     (2,671,182 )     (7,850,452 )    (6,375,820 ) 
                         
Change in fair value of fair value throught profit or loss investments (Note 3)   (407,442 )   128,930     (1,383,906 )   345,265  
Gain on acquisition and sale of exploration and evaluation assets   (57,590 )   353,525     364,792     519,359  
Equity loss in an associated company (Note 8)   (322,250 )   (220,782 )   (1,472,261 )    (740,146 ) 
Foreign exchange (loss) gain   (55,518 )     (385,684 )   51,606     (719,773 )
Realized loss on sale of investments   -     -     (217,462 )   -    
Interest and finance charges on promissory note (Note 14)   (262,355 )   -     (501,112 )   -  
Interest and other gain (loss) on derivative instruments   37,363 71,305           20,484     191,498    
Writedown of goodwill (Note 12)   (465,972 )   (949,693 )   (910,651 )   (1,053,484 )  
                         
Loss before income taxes   (5,694,131 )   (3,673,581 )   (11,898,962 )   (7,833,101 )  
Deferred income tax recovery   406,729     775,849     989,758     762,408    
                         
Loss for the period $ (5,287,402 ) $ (2,897,732 ) $ (10,909,204 ) $ (7,070,693 )  
                         
Basic and diluted loss per share $ (0.07 ) $ (0.04 ) $ (0.14 ) $ (0.09 )  
                         
Weighted average number of common shares outstanding   79,926,066     79,474,247     79,784,530     77,468,069  

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

Page 2


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited - Expressed in Canadian Dollars)

    Three months     Three months     Nine months     Nine months  
    ended September     ended September     ended September     ended September    
    30, 2018     30, 2017     30, 2018     30, 2017  
Loss for the period $ (5,287,402 ) $ (2,897,732 ) $ (10,909,204 ) $ (7,070,693 )
                         
Other comprehensive income (loss)                        
Change in fair value of available-for-sale investments   (81,846 )   -     (49,108 )   (81,846 )
Currency translation adjustment   149,423     (786,002 )   515,603      (1,543,292 ) 
                         
Comprehensive loss for the period $ (5,219,825 ) $ (3,683,734 ) $ (10,442,709 ) $ (8,695,831 )

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

Page 3


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Expressed in Canadian Dollars)

    Nine month period      Nine month period   
    ended Sep 30, 2018      ended Sep 30, 2017   
Cash flows from operating activities            
Loss for the period $ (10,909,204 )  $ (7,070,693 ) 
Items not affecting operating activities:            
 Interest income received   (2,103 )   (6,784 )
 Unrealized foreign exchange effect on cash and cash equivalents   109,697     (118,579 )
Items not affecting cash:            
 Change in fair value of fair value throught profit or loss investments   1,383,906     (345,265 )
 Interest on notes receivable   (36,000 )   (37,321 ) 
 Interest and other gains on derivative instruments   89,257     (132,532 )
 Share-based payments   1,569,909     882,828  
 Deferred income tax recovery   (989,758 )   (762,408 )
 Depreciation   10,328     37,582  
 Depletion   1,377,844     1,415,437  
 Writedown of goodwill   910,651     1,053,484  
 Gain on sale of subsidiaries   (397,254 )   (519,359 )
 Realized loss on sale of investments   217,462     -  
 Accretion interest on credit facilities   104,724     -  
 Accretion interest on loan receivable   (71,354 )   -  
 Gain on sale of fully amortized equipment   -     (29,766 )
 Equity loss in an associated company   1,472,261     740,146  
 Shares received from operating partners included in exploration recoveries   -     (60,521 )
 Unrealized foreign exchange (gain) loss   36,800     6,599  
    (5,122,834 )   (4,947,152 )
Changes in non-cash working capital items (Note 19)   732,532     1,958,464  
Total cash used in operating activities   (4,390,302 )   (2,988,688 )
             
Cash flows from investing activities            
 Acquisition and sale of exploration and evaluation assets, net of option payments received   130,756     105,100  
 Acquisition of property and equipment   (21,682 )   (24,784 ) 
 Interest received on cash and cash equivalents   2,103     6,784  
 Notes receivable   -     (1,005,277 )
 Proceeds from sale of fair value through profit and loss investments, net   1,084,980     -  
 Proceeds from credit facility, net (Note 14)   24,175,750     -  
 Loan receivable, net (Note 14)   (24,175,750 )      
 Investment in an associated entity   (1,781,642 )   (1,614,623 )
 Restricted cash   (187,974 )   126,763  
 Reclamation bonds   95,523     134,791  
Total cash used in investing activities   (677,936 )   (2,271,246 )
             
Cash flows from financing activities            
 Proceeds from credit facility, net (Note 14)   6,298,166     -  
 Proceeds received from private placement, net of share issue costs   -     6,988,260  
 Proceeds from exercise of options   86,200     85,700  
Total cash provided by financing activities   6,384,366     7,073,960  
             
 Effect of exchange rate changes on cash and cash equivalents   (109,697 )   118,579  
Change in cash and cash equivalents   1,206,431     1,932,605  
Cash and cash equivalents, beginning   3,533,611     3,199,686  
Cash and cash equivalents, ending $ 4,740,042   $ 5,132,291  

Supplemental disclosure with respect to cash flows (Note 19)

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

Page4


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited - Expressed in Canadian Dollars)

                     

Reserves

             
                            Accumulated other              
    Number of common           Commitment to     Share-based     comprehensive gain                
    shares     Capital stock     issue shares     payments     (loss)     Deficit     Total  
Balance as at December 31, 2017   79,725,187   $ 124,062,091   $ 23,825   $ 13,434,466   $ 9,234,069   $ (104,382,744 ) $ 42,371,707    
 Adoption of IFRS 9 (Note 2)   -     -     -     -     (740,685 )   740,685     -  
 Shares issued pursuant to a loan agreement   381,321     602,487     -     -     -     -     602,487  
 Share-based payments   226,047     290,277     (23,825 )   1,321,427     -     -     1,587,879  
 Shares issued for exercise of stock options   102,500     86,200     -     -     -     -     86,200  
 Reclass of reserves for exercise of options   -     44,498     -     (44,498 )   -     -     -  
 Reclass of reserves for options forfeited   -     -     -     (17,970 )   -     -     (17,970 )
 Equity investment share-based payments   -     -     -     246,718     -     -     246,718  
 Foreign currency translation adjustment   -     -     -     -     515,603     -     515,603  
 Change in fair value of financial instruments   -     -     -     -     (49,108 )   -     (49,108 )
 Loss for the period   -     -     -     -     -     (10,909,204 )   (10,909,204 ) 
Balance as at Sep 30, 2018   80,435,055   $ 125,085,553   $ -   $ 14,940,143   $ 8,959,879   $ (114,551,263 ) $ 34,434,312    

                      Reserves              
                            Accumulated other              
    Number of common           Commitment to     Share-based     comprehensive gain                
    shares     Capital stock     issue shares     payments     (loss)     Deficit     Total  
                                           
Balance as at December 31, 2016   74,089,710   $ 117,504,585   $ -   $ 11,607,230   $ 10,049,150   $ (96,989,360 ) $ 42,171,605    
 Shares issued for exercise of stock options   75,000     85,700     -     -     -     -     85,700  
 Shares issued for private placement   5,000,000     6,200,000     -     -     800,000     -     7,000,000  
 Finder’s fees in units   246,604     305,789     -     -     39,457     -     345,246  
 Shares issued for compensation   68,873     84,935     -     797,893     -     -     882,828  
 Share issuance costs in units   -     (345,246 )   -     -     -     -     (345,246 )
 Share issuance costs in cash   -     (11,740 )   -     -     -     -     (11,740 )
 Reclass of reserves for exercise of options   -     45,545     -     (45,545 )   -     -     -  
 Foreign currency translation adjustment   -     -     -     -     (1,543,292 )   -     (1,543,292 )
 Change in fair value of financial instruments   -     -     -     -     (81,846 )   -     (81,846 )
 Loss for the period   -     -     -     -     -     (7,070,693 )   (7,070,693 )
                                           
Balance as at Sep 30, 2017   79,480,187   $ 123,869,568   $ -   $ 12,359,578   $ 9,263,469   $ (104,060,053 ) $ 41,432,562    

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

Page5


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

1. NATURE OF OPERATIONS AND GOING CONCERN

EMX Royalty Corporation (the “Company” or “EMX”), together with its subsidiaries operates as a royalty and prospect generator engaged in the exploring for, and generating royalties from, metals and minerals properties. The Company’s royalty and exploration portfolio mainly consists of properties in North America, Turkey, Europe, Haiti, Australia, and New Zealand. The Company’s common shares are listed on the TSX Venture Exchange (“TSX-V”) and the NYSE American under the symbol of “EMX”. The Company’s head office is located at 501 - 543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8.

On July 19, 2017 the Company officially changed its name to EMX Royalty Corporation, formerly Eurasian Minerals Inc.

These condensed consolidated financial statements have been prepared using International Financial Reporting Standards (“IFRS”) applicable to a going concern, which assumes that the Company will be able to realize its assets, discharge its liabilities and continue in operation for the following twelve months.

In October 2018 EMX’s associated Company, IG Copper LLC notified EMX that the sale of the Malmyzh copper-gold porphyry project (“Malmyzh” or the "Project") to Russian Copper Company (“RCC”) for US $200 million has closed. Of this amount, US $190 million was released from escrow, with the remaining US $10 million to be held in escrow and released subject to certain conditions over the next 12 months. The initial cash distribution to EMX by IGC of US $65 million was received in October 2018. A second cash distribution to EMX (up to US $4 million) will be completed upon the remaining funds being released from escrow.

Management believes with the distribution received as part of the sale of Malmyzh, it will have sufficient working capital to undertake its current business and the budgets associated with those plans plan for the next twelve months and the foreseeable future.

Some of the Company’s activities for exploration and evaluation assets are located in emerging nations and, consequently, may be subject to a higher level of risk compared to other developed countries. Operations, the status of mineral property rights and the recoverability of investments in emerging nations can be affected by changing economic, legal, regulatory and political situations.

These condensed consolidated financial statements of the Company are presented in Canadian dollars unless otherwise noted, which is the functional currency of the parent company and its subsidiaries except as to Bullion Monarch Mining, Inc., the holder of a royalty income stream whose functional currency is the United States (“US”) dollar.

2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

These condensed consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit or loss and fair value through other comprehensive income, which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Page 6


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies

The accounting policies applied by the Company in these unaudited condensed consolidated interim financial statements are consistent with those applied in its audited consolidated financial statements as at and for the year ended December 31, 2017, except as described below, and should be read in conjunction with the annual audited financial statements of the Company for the year ended December 31, 2017.

Accounting Standards Adopted During the Period

Revenue recognition

Effective January 1, 2018, the Company has adopted IFRS 15 Revenue from Contracts with Customers (“IFRS 15”). IFRS 15 replaces all previous revenue recognition standards, including IAS 18, Revenue, and related interpretations. The standard sets out the requirements for recognizing revenue. Specifically, the new standard introduces a comprehensive framework with the general principle being that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduces more prescriptive guidance than was included in previous standards and may result in changes to the timing of revenue for certain types of revenues. The new standard will also result in enhanced disclosures about revenue that would result in an entity providing comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. As of January 1, 2018, the Company has adopted IFRS 15 on a full retrospective basis and as such, has revised its revenue recognition policy based on the requirements of IFRS 15. Management has concluded that, based on its current operations, the adoption of IFRS 15 had no significant impact on the Company’s consolidated financial statements.

The Company earns revenue from royalty agreements and are based upon amounts contractually due pursuant to the underlying royalty agreements. For royalty agreements paid in cash or in kind, revenue recognition will depend on the related agreement. Revenue is measured at fair value of the consideration received or receivable when management can reliably estimate the amount pursuant to the terms of the royalty or other interest agreements. In some instances, the Company will not have access to sufficient information to make a reasonable estimate of revenue and, accordingly, revenue recognition is deferred until management can make a reasonable estimate. Royalty revenue may be subject to adjustment upon final settlement of estimated metal prices, weights, and assays. Adjustments to revenue from metal prices are recorded monthly and other adjustments are recorded on final settlement and are offset against revenue when incurred.

Financial instruments

Effective January 1, 2018, the Company adopted IFRS 9 – Financial Instruments (“IFRS 9”) which replaced IAS 39 – Financial Instruments: Recognition and Measurement. IFRS 9 provides a revised model for recognition and measurement of financial instruments and a single, forward-looking “expected loss” impairment model. IFRS 9 also includes significant changes to hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018. The Company adopted the standard retrospectively without restatement. As a result of the adoption of IFRS 9, the Company reclassified $740,685 from accumulated other comprehensive income (loss) to deficit on January 1, 2018 related to the reclassification of certain previously recognized available-for-sale marketable securities to fair value through profit or loss. The Company has also made an irrevocable election to present in other comprehensive income (loss) subsequent changes in the fair value of certain available-for-sale marketable securities classified as strategic investments.

IFRS 9 largely retains the existing requirements in IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) for the classification and measurement of financial liabilities. However, it eliminates the previous IAS 39 categories for financial assets of held to maturity, loans and receivables, and available-for-sale.

Page 7


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Under IFRS 9, on initial recognition, financial assets are recognized at fair value and are subsequently classified and measured at amortized cost, fair value through other comprehensive income (“FVOCI”), or fair value through profit or loss (“FVTPL”). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets at FVTPL where transaction costs are expensed. All financial assets not classified and measured at amortized cost or FVOCI are measured at FVTPL.

Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated, and instead the hybrid financial instrument as a whole is assessed for classification. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (loss). This election is made on an investment-by-investment basis.

The classification determines the method by which the financial assets are carried on the consolidated statement of financial position subsequent to initial recognition and how changes in value are recorded. The following accounting policies apply to the subsequent measurement of financial assets.

  a)

Financial assets at FVTPL - These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

     
  b)

Financial assets at amortized cost - These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

     
  c)

Financial assets at FVOCI - These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Gains or losses recognized on the sale of the equity investment are recognized in other comprehensive income (loss) and are never reclassified to profit or loss.

Financial liabilities are designated as either fair value through profit or loss, or other financial liabilities. All financial liabilities are classified and subsequently measured at amortized cost except for financial liabilities at FVTPL. The classification determines the method by which the financial liabilities are carried on the consolidated statement of financial position subsequent to inception and how changes in value are recorded. Other financial liabilities are carried on the consolidated statement of financial position at amortized cost.

Page 8


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company completed an assessment of its financial instruments as at January 1, 2018. The following table shows the new classification under IFRS 9 and the original classification under IAS 39:

    New (IFRS 9 )   Original (IAS 39 )
Financial assets            
Cash and cash equivalents   Amortized cost     Amortized cost  
Investments   FVTPL     FVTPL  
Trade receivables   Amortized cost     Amortized cost  
Settlement receivables   FVTPL     FVTPL  
Restricted cash   Amortized cost     Amortized cost  
Reclamation bonds   Amortized cost     Amortized cost  
Notes receivable   Amortized cost     Amortized cost  
Strategic investments   FVTOCI     Available-for-sale  
Finacial liabilities            
Promissory note payable   Amortized cost     Amortized cost  
Accounts payable and accrued liabilties   Amortized cost     Amortized cost  
Advances from joint venture partners   Amortized cost     Amortized cost  

IFRS 9 introduces a new three-stage expected credit loss model for calculating impairment for financial assets. IFRS 9 no longer requires a triggering event to have occurred before credit losses are recognized. An entity is required to recognize expected credit losses when financial instruments are initially recognized and to update the amount of expected credit losses recognized at each reporting date to reflect changes in the credit risk of the financial instruments. In addition, IFRS 9 requires additional disclosure requirements about expected credit losses and credit risk. There was no adjustment relating to the implementation of the expected credit loss model for the Company’s trade or settlement receivables.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

Derivative contracts are recognized at fair value on initial recognition. Subsequently, derivatives are remeasured at their fair value. The method of recognizing any resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged:

  a)

Changes in the fair values of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair values of the hedged assets or liabilities that are attributable to the hedged risk.

     
  b)

The effective portions of changes in the fair values of derivatives that are designated and qualify as cash-flow hedges are recognized in equity. The gain or loss relating to any ineffective portion is recognized immediately in profit or loss.

     
  c)

Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognized immediately in profit or loss.

Amounts accumulated in the hedge reserve are recycled in the consolidated statement of loss in the periods when the hedged items will affect profit or loss (for instance when the forecast sale that is hedged takes place). If a forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a liability, the gains and losses previously deferred in the hedge reserve are included in the initial measurement of the cost of the asset or liability.

Page 9


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

2. STATEMENT OF COMPLIANCE AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in the hedge reserve at that time remains in the reserve and is recognized when the forecast transaction is ultimately recognized in the consolidated statement of income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the consolidated statement of income.

The Company has not designated any derivative contracts as hedges and therefore has not applied hedge accounting in these consolidated financial statements.

Accounting Pronouncements not yet Effective

The following standards and pronouncements have been issued by the IASB and have not yet been adopted by the Company. The Company is currently evaluating the impact the new and amended standards are expected to have on its consolidated financial statements.

IFRS 16 Leases was issued in January 2016 (effective January 1, 2019) and provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.

Critical Accounting Judgments and Significant Estimates and Uncertainties

The critical judgments and estimates applied in the preparation of the Company’s unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2018 are consistent with those applied in the Company’s December 31, 2017 audited consolidated financial statements.

3. INVESTMENTS

At September 30, 2018 and December 31, 2017, the Company had the following investments:

          Accumulated        
September 30, 2018   Cost     unrealized loss     Fair value  
Fair value through profit or loss                  
 Marketable securities $ 1,682,327   $ (714,621 ) $ 967,706  
 Total fair value through profit or loss   1,682,327     (714,621 )   967,706  
Fair value through other comprehensive income                  
 Marketable securities   910,473     (877,735 )   32,738  
Total investments $ 2,592,800   $ (1,592,356 ) $ 1,000,444  

          Accumulated        
December 31, 2017   Cost     unrealized loss     Fair value  
Fair value through profit or loss                  
 Marketable securities $ 2,396,251   $ (1,256,804 ) $ 1,139,447  
 Total fair value through profit or loss   2,396,251     (1,256,804 )   1,139,447  
Fair value through other comprehensive income                  
 Marketable securities   2,287,141     (87,942 )   2,199,199  
Total investments $ 4,683,392   $ (1,344,746 ) $ 3,338,646  

Page 10


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

3. INVESTMENTS (Continued)

As a result of the adoption of IFRS 9 (Note 2), $1,376,667 and $740,685 previously recorded in cost and accumulated unrealized loss respectively and was previously classified as available-for-sale as at December 31, 2017 was reclassified to FVTPL as at January 1, 2018.

4. RECEIVABLES

The Company’s receivables are related to the sale of foreign subsidiaries, royalty receivable, goods and services tax and harmonized sales taxes receivable from government taxation authorities, and recovery of exploration expenditures from exploration partners.

As at September 30, 2018 the current receivables were as follows:

Category   September 30, 2018     December 31, 2017    
Sale of Akarca $ 741,487   $ 2,447,595  
Loan to an associated entity   392,375     -  
Royalty income receivable   155,786     258,223  
Refundable taxes   146,062     151,163  
Recoverable exploration expenditures and advances   491,038     270,547  
Other   255,911     248,883  
As at September 30, 2018 $ 2,182,659   $ 3,376,411  

The carrying amounts of the Company’s current and non – current receivables are denominated in the following currencies:

Currency   September 30, 2018     December 31, 2017    
Canadian Dollars $ 448,463   $ 280,925  
US Dollars   1,645,484     3,040,347  
Turkish Lira   6,437     24,535  
Swedish Krona   82,276     29,575  
Other   -     1,029  
Total $ 2,182,660   $ 3,376,411  

5. RESTRICTED CASH

At September 30, 2018, the Company classified $959,408 (December 31, 2017 - $771,434) as restricted cash. This amount is comprised of $185,694 (December 31, 2017 - $179,502) held as collateral for its corporate credit cards, $273,725 (December 31, 2017 - $Nil) held in trust to be used to offset loan fees, and $499,989 (December 31, 2017 - $$591,932) cash held by wholly-owned subsidiaries of the Company whose full amount is for use and credit to the Company’s exploration venture partners in the USA, Sweden, Norway, and Finland pursuant to expenditure requirements for ongoing option agreements.

Page 11


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

6. PROPERTY AND EQUIPMENT

During the nine months ended September 30, 2018 depreciation of $8,725 (2017 - $6,681) has been included in exploration expenditures.

    Computer     Field     Office     Vehicles     Building     Land     Total  
Cost                                          
 As at December 31, 2017 $ 110,243   $ 60,177   $ 2,381   $ -   $ 598,955   $ 418,863   $ 1,190,619  
     Additions   -     21,682     -     -     -     -     21,682  
     Disposals and derecognition   -     -     -     -     -     -     -  
 As at September 30, 2018 $ 110,243   $ 81,859   $ 2,381   $ -   $ 598,955   $ 418,863   $ 1,212,301  
                                           
Accumulated depreciation                                          
 As at December 31, 2017 $ 110,243   $ 48,702   $ 2,381   $ -   $ 579,015   $ -   $ 740,341  
     Additions   -     9,312     -     -     1,016     -     10,328  
 As at September 30, 2018 $ 110,243   $ 58,014   $ 2,381   $ -   $ 580,031   $ -   $ 750,669  
Net book value                                          
 As at December 31, 2017 $ -   $ 11,475   $ -   $ -   $ 19,940   $ 418,863   $ 450,278  
 As at September 30, 2018 $ -   $ 23,845   $ -   $ -   $ 18,924   $ 418,863   $ 461,632  

7. NOTE RECEIVABLE

On October 16, 2017, the Company issued a note receivable to Revelo Resources Corp., a related party by way of a common director for the principal amount of $400,000. The note was due on December 31, 2017, together with accrued interest at a rate of 1% per month and a bonus of $20,000. As at September 30, 2018, the balance owed to the Company pursuant to the note was $465,973 including accrued interest and bonus fee. The Company is re - negotiating the terms of repayment.

8. INVESTMENT IN AN ASSOCIATED COMPANY

The Company has a 42% (December 31, 2017 - 41%) equity investment in IG Copper LLC (“IGC”). At September 30, 2018, including the conversion of convertible notes and related interest due from IGC, cash purchases of shares including the exercise of warrants, and loan fees received in shares, the Company has invested an aggregate of US$13,136,977 towards its investment (December 31, 2017 - US$11,354,977). At September 30, 2018, the Company’s investment including dilution gains, less its share of accumulated equity losses was $8,618,603 (December 31, 2017 - $7,578,989). The Company’s share of the net loss for the nine months ended September 30, 2018 was $1,472,261 (2017 - $740,146).

The Company has a minority position on the Board of IGC, and does not control operational decisions. The Company’s judgment is that it has significant influence, but not control and accordingly equity accounting is appropriate.

As at September 30, 2018, the associated Company’s aggregate assets, aggregate liabilities and net loss for the period ended are as follows:

September 30, 2018   IGC  
Aggregate assets $ 30,655,355  
Aggregate liabilities   (25,984,084 )
Loss for the period   (3,517,947 )
The Company’s ownership %   42%  
The Company’s share of loss for the period   (1,472,261 )

Page 12


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

8. INVESTMENT IN ASSOCIATED COMPANY (Continued)

As at December 31, 2017, the associated Company’s aggregate assets, aggregate liabilities and net loss for the period were as follows:

December 31, 2017   IGC  
Aggregate assets $ 6,127,735  
Aggregate liabilities   (1,108,694 )
Loss for the year   (2,713,490 )
The Company's ownership%   41%  
The Company's share of loss for the year   (994,548 )

9. EXPLORATION AND EVALUATION ASSETS

Acquisition Costs

At September 30, 2018 and December 31, 2017, the Company has capitalized the following acquisition costs on its exploration and evaluation assets:

Region   Properties     September 30, 2018     December 31, 2017  
Sweden   Various     16,671     16,671  
    Viad royalties     421,084     421,084  
Turkey   Ala nkoy     153,960     153,960  
    Trab     78,587     78,587  
United States   Superior West, Arizona     736,340     867,096  
of America   Yerington, Nevada     304,568     304,568  
Total       $ 1,711,210   $ 1,841,966  

During the nine months ended September 30, 2018, the Company received a $130,756 (US $100,000) annual option payment related to an exploration and option to purchase agreement for the Superior West project with Kennecott Exploration Company (“Kennecott”).

Sweden

Modum Project

In February 2018, the Company amended the sale agreement with Boreal Metals Corp. (“BMC”) closed during the year ended December 31, 2017 to include the Modum project in Norway in exchange for an additional 1,324,181 common shares of BMC.

Guldgruvan Cobalt Project

In March 2018, the Company closed a definitive agreement for the sale of the Guldgruvan cobalt project to Boreal Energy Metals Corporation (“BEMC”), a subsidiary of Boreal Metals Corp (“BMC”) in southern Norway. Pursuant to the agreement, BEMC acquired 100% interest in the project according to the following terms (all dollar amounts in USD):

In exchange for the transfer of its Guldgruvan exploration licence to BEMC, BEMC issued to EMX 2,979,798 common shares of BEMC representing a 5.9% equity ownership in BEMC. BEMC will have the continuing obligation to issue additional shares of BEMC to EMX to maintain its 5.9% interest, at no additional cost to EMX, until BEMC has raised $3,000,000 in equity. Thereafter, EMX will have the right to participate pro-rata in future financings at its own cost to maintain its 5.9% interest in BEMC.

Page 13


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

9. EXPLORATION AND EVALUATION ASSETS (Continued)

EMX will retain a 3% NSR royalty on the Project, of which 1% may be purchased by BEMC on or before the fifth anniversary of the closing date in 0.5% increments for a total of $2,500,000 in cash and common shares of BEMC stock. EMX will also receive AAR payments, with an initial $20,000 payment, commencing on the second anniversary of the closing, with each subsequent AAR payment increasing by $5,000 per year until reaching $60,000 per year. Once reaching $60,000, AAR payments will be adjusted each year according to the Consumer Price Index (as published by the U.S. Department of Labor, Bureau of Labor Statistics).

Njuggtraskliden and Mjovattnet Projects

In April 2018, EMX executed another agreement with BEMC to sell the Njuggträskliden and Mjövattnet nickel-copper-cobalt projects in Sweden. The terms of the agreement are consistent with the Guldgruvan sale agreement entered into with BEMC in March 2018.

At closing, BEMC issued to EMX that number of common shares of BEMC that represented a 4% equity ownership in BEMC, bringing EMX’s aggregate interest to 9.9% of BEMC’s issued and outstanding shares. BEMC has the continuing obligation to issue additional shares of BEMC to EMX to maintain its aggregate 9.9% interest in BEMC, at no additional cost to EMX, until BEMC has raised $3,000,000 in equity. Thereafter, EMX will have the right to participate pro-rata in future financings at its own cost to maintain its 9.9% interest in BEMC.

EMX will receive an uncapped 3% NSR royalty on each of the projects. Within five years of the closing date, BEMC has the right to buy down up to 1% of the royalty owed to EMX by paying EMX US$ 2,500,000 in cash and shares of BEMC for each project. For each project, EMX will also receive AAR payments, with an initial $20,000 payment, commencing on the second anniversary of the closing, with each subsequent AAR payment increasing by $5,000 per year until reaching $60,000 per year. Once reaching $60,000, AAR payments will be adjusted each year according to the Consumer Price Index (as published by the U.S. Department of Labor, Bureau of Labor Statistics). EMX will be also be reimbursed approximately US$37,000 for its acquisition costs and previous expenditures on the projects.

Riddarhyttan Project

In April 2018, the Company executed an option agreement with diversified global miner South32 Limited ("South32") for the Riddarhyttan project in Sweden. Pursuant to the Agreement, South32 can earn 100% interest in the Project by: (a) making option and cash payments that total approximately US$ 210,600, (b) making a one-time option exercise payment of US$ 500,000, and (c) completing US$ 5,000,000 of exploration work on the Project within five years of the execution date. Upon exercise of the option, EMX will retain a 3% NSR royalty, 0.75% of which may be purchased by South32 for US$ 1,900,000 within five years of executing the Agreement.

Upon exercise of the option, EMX will retain a 3% NSR royalty, 0.75% of which may be purchased by South32 for $1,900,000 within five years of executing the agreement. After exercising the option, annual advance royalty payments of 50,000 pounds of copper (or the cash equivalent) will be due to EMX, but will be deductible from future royalty payments. In addition, South32 will make milestone payments of: (a) 350,000 pounds of copper (or the cash equivalent) upon publication of a maiden resource on the project, and (b) 750,000 pounds of copper (or the cash equivalent) upon delivery of a feasibility study.

United States

Buckhorn Creek Property

In February 2018, the Company executed an Option Agreement with Kennecott Exploration Company (Kennecott”) whereby Kennecott can earn a 100% interest in the project by: a) making annual option payments totaling US $550,000, and b) completing US$4,500,000 in exploration expenditures before the fifth anniversary of the agreement. Upon exercise of the option, EMX will retain a 2% NSR royalty on the project which is not capped or purchasable. After exercise of the option, annual advance minimum payments and milestone payments will be due to EMX. The Company also received US $30,000 ($38,615) as an execution payment to the agreement.

Page 14


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

9. EXPLORATION AND EVALUATION ASSETS (Continued)

Exploration Expenditures

During the nine months ended September 30, 2018, the Company incurred the following exploration expenditures by projects, which were expensed as incurred:

          USA           Australia and              
    Scandinavia     Kennecott     Anglo                       Turkey           Other     Total  
          Exploration     American     Antofagasta      Other USA     Total           New Zealand              
Administration Cost $ 122,597   $  165   $ –   $  617   $ 178,096   $ 178,878   $ 123,800   $  16,833   $ 2,279   $ 444,387  
Assays   40,307     –     –     1,364     17,846     19,210     15,436     –     –     74,953  
Drilling/ Trenching   901     3,347     –     284,298     –     287,645     –     –     –     288,546  
Land and Legal   86,056     –     –     –     142,906     142,906     20,886     9,102     2,993     261,943  
Logistics   548,931     3,865     –     40,592     100,978     145,435     –     –     –     694,366  
Personnel   754,533     30,366     1,071     55,768     1,303,308     1,390,513     117,006     112,494     26,570     2,401,116  
Property Cost   179,951     9,699     15,458     1,287     854,941     881,385     13,883     32,809     –     1,108,028  
Professional Services   94,386     –     –     –     7,859     7,859     163,000     16,735     14,353     296,333  
Share Based Payments   205,580     –     –     –     451,742     451,742     64,610     22,231     13,770     757,933  
Technical Studies   4,111     3,578     –     –     655     4,233     –     2,181     –     10,525  
Travel   151,045     –     –     –     124,279     124,279     12,495     19,076     5,460     312,355  
Total Expenditures   2,188,398     51,020     16,529     383,926     3,182,610     3,634,085     531,116     231,461     65,425     6,650,485  
Recoveries   (986,054 )   (37,530 )   (15,737 )   (412,186 )   –     (465,453 )   –     –     –     (1,451,507 )
Operator fees   (57,085 )   (3,754 )   –     (28,441 )   –     (32,195 )   –     –     –     (89,280 )
Option Payments & Shares Received   –     (102,973 )   (51,487 )   –     –     (154,459 )   –     –     (12,904 )   (167,363 )
Other Property Income   (13,667 )   –     –     (12,061 )   –     (12,061 )   –     (241 )   –     (25,969 )
Total Recoveries   (1,056,806 )   (144,257 )   (67,224 )   (452,688 )   –     (664,168 )   –     (241 )   (12,904 )   (1,734,119 )
Net Expenditures $ 1,131,592   $ (93,237)   $ (50,695)   $ (68,762)   $ 3,182,610   $ 2,969,917   $ 531,116   $ 231,220   $ 52,521   $ 4,916,366  

During the nine months ended September 30, 2018, the Company:

  •

Received or accrued $343,652 in expenditures recovered and operator fees from Boreal in Sweden;

  •

Received or accrued $699,487 in expenditures recovered and operator fees from South32 in Sweden;

  •

Received a $38,615 (US$30,000) execution payment related to an exploration and option to purchase agreement for the Buckhorn Creek project with Kennecott;

  •

Received a $64,358 (US$50,000) anniversary payment related to an exploration and option to purchase agreement for the Copper King project with Kennecott, and

  •

Received a $51,487 (US$40,000) anniversary payment related to an exploration and option to purchase agreement for the Copper Springs project with Anglo American.

Page 15


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

9. EXPLORATION AND EVALUATION ASSETS (Continued)

During the nine months ended September 30, 2017, the Company incurred the following exploration expenditures by projects, which were expensed as incurred:

          USA           Asia Pacific              
    Scandinavia     Kennecott     Anglo                 Turkey                       Other     Total  
          Exploration     American     Other USA     Total           New Zealand     Other     Total              
Administration Cost $ 90,709   $ 73   $  272   $  231,888   $  232,233   $  78,937   $  38,512   $  23,831   $  62,343   $ 9,919   $  474,141  
Assays   19,232     7,783     –     3,533     11,316     –     –     –     –     –     30,548  
Drilling/ Trenching   11,818     373     –     –     373     –     –     –     –     –     12,191  
Land and Legal   63,807     –     –     147,004     147,004     11,896     3,177     14,304     17,481     7,093     247,281  
Logistics   11,035     8,307     5,678     141,738     155,723     –     –     3,366     3,366     –     170,124  
Personnel   387,375     34,588     14,169     1,079,236     1,127,993     65,971     9,959     80,425     90,384     29,899     1,701,622  
Property Cost   372,801     183     32,072     752,641     784,896     33,955     3,965     8,168     12,133     –     1,203,785  
Professional Services   58,167     –     –     4,995     4,995     –     –     73,934     73,934     7,594     144,690  
Share Based Payments   61,491     –     –     225,279     225,279     24,949     3,062     17,830     20,892     45,943     378,554  
Technical Studies   17,920     10,446     –     2,413     12,859     3,931     –     42,272     42,272     32,103     109,085  
Travel   112,785     740     –     77,723     78,463     5,413     1,439     6,476     7,915     3,376     207,952  
Total Expenditures   1,207,140     62,493     52,191     2,666,450     2,781,134     225,052     60,114     270,606     330,720     135,927     4,679,973  
Recoveries   (82,964 )   (68,630 )   (160,811 )   –     (229,441 )   (21,759 )   (26,586 )   (6,080 )   (32,666 )   –     (366,830 )
Operator fees   –     (7,336 )   –     –     (7,336 )   –     –     –     –     –     (7,336 )
Option Payments & Shares Received – (93,651 ) – – (93,651 ) (122,326 ) – – – – (215,977 )
Other Property Income   –     (2,105 )   (719 )   (52,295 )   (55,119 )   –     (5,382 )   –     (5,382 )   –     (60,501 )
Total Recoveries   (82,964 )   (171,722 )   (161,530 )   (52,295 )   (385,547 )   (144,085 )   (31,968 )   (6,080 )   (38,048 )   –     (650,644 )
Net Expenditures $ 1,124,176   $ (109,229)   $   (109,339)   $   2,614,155 $ 2,395,587   $ 80,967   $ 28,146   $ 264,526   $ 292,672   $ 135,927   $ 4,029,329  

Page 16


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

10. ROYALTY INTERESTS

Changes in royalty interest for the nine months ended September 30, 2018:

Balance, December 31, 2017 $ 21,943,743  
Adjusted for:      
     Depletion   (1,377,844 )
     Cumulative translation adjustments   590,818  
Balance, September 30, 2018 $ 21,156,717  

Carlin Trend Royalty Claim Block

The Company holds an interest in the Carlin Trend Royalty Claim Block in Nevada which includes the following Royalty Properties:

Leeville Mine: Located in Eureka County, Nevada, the Company is receiving a continuing 1% gross smelter return royalty (“GSRR”).

East Ore Body Mine: Located in Eureka County, Nevada, the property is currently being mined and the Company is receiving a continuing 1% GSRR.

North Pipeline: Located in Lander County, Nevada. Should the property become producing, the Company will receive a production royalty of US$0.50 per yard of ore processed or 4% of net profit, whichever is greater.

During the nine months ended September 30, 2018, $1,602,323 (2017 - $2,053,543) in royalty income was included in operations offset by a 5% direct gold tax and depletion which is applied only against the Carlin Trend Royalty Claim Block components of Royalty income.

Impairment of Non-Current Assets

The Company’s policy for accounting for impairment of non-current assets is to use the higher of the estimates of fair value less cost of disposal of these assets or value in use. The Company uses valuation techniques that require significant judgments and assumptions, including those with respect to future production levels, future metal prices and discount rates.

Non-current assets are tested for impairment when events or changes in circumstances suggest that the carrying amount may not be recoverable. For the nine months ended September 30, 2018 and 2017, these assumptions remained reasonable and no revisions were considered necessary.

11. RECLAMATION BONDS

Reclamation bonds are held as security towards future exploration work and the related future potential cost of reclamation of the Company’s land and unproven mineral interests. Once reclamation of the properties is complete, the bonds will be returned to the Company.

    September 30, 2018     December 31, 2017  
Sweden–various properties   12,385     12,625  
Turkey–various properties   5,783     5,669  
U.S.A–various properties   402,057     497,454  
Total $ 420,225   $ 515,748  

Page 17


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

12. GOODWILL

The Company’s goodwill represents the excess of the purchase price paid during fiscal 2012 for the acquisition of Bullion Monarch Mining Inc. over the fair value of the net identifiable tangible and intangible assets and liabilities acquired.

Changes in goodwill for the nine months ended September 30, 2018:

Balance, December 31, 2017 $ 1,820,307  
Adjusted for:      
     Impairment charge   (910,651 )
     Cumulative translation adjustment   48,318  
Balance, September 30, 2018 $ 957,974  

The Company applies a one-step approach to determine if the Carlin Trend Royalty Claim Block and the related assets within the same Cash Generating Unit (“CGU”) are impaired (Note 10). The impairment loss is the amount by which the CGU’s carrying amount exceeds its recoverable amount. There was no impairment for the royalty interest and goodwill has been written down in conjunction with the decline of $862,333 (2017 - $165,834) of the related deferred income tax liability.

13. ADVANCES FROM JOINT VENTURE PARTNERS

Advances from joint venture partners relate to unspent funds received pursuant to approved exploration programs by the Company and its joint venture partners. The Company’s advances from joint venture partners consist of the following:

    September 30, 2018     December 31, 2017  
U.S.A. $ 355,669   $ 808,905  
Sweden   272,341     –  
Total $ 628,010   $ 808,905  

14. CREDIT ARRANGEMENTS

Sprott Private Resource Lending (Collector), LP (“Sprott”) – US$ 5,000,000

In May of 2018, the Company entered into a credit facility agreement with Sprott providing the Company with a US$ 5,000,000 senior secured credit facility (“Credit Facility”). The loan made under the Credit Facility will mature on May 2, 2019 and carries an annual interest rate of 12%, payable monthly. In consideration of the Credit Facility, EMX paid to Sprott a fee of US$ 100,000, and legal fees of $69,402. The credit facility is covered by a general security agreement against the Company’s assets.

During the nine months ended September 30, 2018, using an annual effective interest rate of 14.14%, the Company recorded interest expense of $372,983 (US$ 289,755), and made $397,245 in payments including interest and principal. The loan was fully repaid subsequent to September 30, 2018 and the full amount has been included in current liabilities.

Sprott Private Resource Lending (Collector), LP – US$ 18,500,000

Subsequent to September 30, 2018, IGC notified EMX that the sale of the Malmyzh project in Russia (“Malmyzh” or the "Project") to Russian Copper Company (“RCC”) for US $200 million had closed. In support of the sale of Malmyzh, on September 27, 2018, EMX borrowed US $18.5 million from Sprott and then loaned the US $18.5 million to IGC. The loan made under the Credit Facility will mature on January 31, 2019 and carries an annual interest rate of 12%, payable monthly. In connection with the Sprott Loan, EMX issued 381,321 common shares valued at $602,487 (US $465,212) or $1.58 per share, paid cash fees of US$550,000, and legal fees of US$194,224. Included in restricted cash as at September 30, 2018 is $273,725 placed in the trust account and applied against the fees incurred.

Page 18


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

14. CREDIT ARRANGEMENTS (Continued)

During the nine months ended September 30, 2018, using an annual effective interest rate of 31.67%, the Company recorded interest expense of $58,737 (US$ 46,631). The loan was fully repaid subsequent to September 30, 2018. As the loan was fully repaid in October 2018, the full amount has been included in current liabilities.

IG Copper LLC – US$ 18,500,000

Concurrent with the Sprott credit facility for US$ 18,500,000, on September 27, 2018 EMX loaned US$ 18,500,000 to IGC to facilitate the Malmyzh property sale. The terms of the arrangement were identical to the Sprott Loan to EMX. As such, in connection with the EMX Loan, IGC issued to EMX 37,000 membership units in IGC at US$10/membership unit, reimbursed EMX for fees, interest payments, and reimbursement of all legal costs. IGC further agreed to pay EMX an additional fee of US$550,000 to EMX.

During the nine months ended September 30, 2018, using an annual effective interest rate of 39.51%, the Company recorded interest income of $71,354 (US$55,433). The loan was fully repaid subsequent to to September 30, 2018. As the loan was fully repaid in October 2018, the full amount has been included in current assets.

15. CAPITAL STOCK

Authorized

As at September 30, 2018, the authorized share capital of the Company was an unlimited number of common and preferred shares without par value.

Common Shares

During the nine months ended September 30, 2018, the Company:

  •

Issued 21,084 shares valued at $23,825 pursuant to an employment and consulting agreement of which the full amount has been included in exploration expenditures for the year ended December 31, 2017 and recorded as a commitment to issue shares.

   

•

Issued 204,963 shares valued at $266,452 pursuant to an incentive stock grant program to employees of the Company of which $166,476 has been included in exploration expenditures.

   

  •

Issued 102,500 shares valued at $86,200 pursuant to the exercise of stock options.

   

  •

Issued 381,321 shares valued at $602,487 or $1.58 per share pursuant to a credit facility (Note 14).

During the nine months ended September 30, 2017, the Company:

  • Completed a non-brokered private placement raising $7,000,000 by the issuance of 5,000,000 units at a price of $1.40 per Unit. Each Unit was comprised of one common share and one-half of one non-transferable common share purchase warrant. Each whole warrant entitles the holder to purchase an additional common share for $2.00 until April 12, 2019.
     
  The Company paid finder’s fees totaling $356,986. Included in this amount was 246,604 Units (6% of the Units sold to investors introduced by finders) valued at $345,246 and $11,740 in cash. The Units paid as finders fees included the same terms as the private placement Units.

15. CAPITAL STOCK (Continued)

Pursuant to the Company’s accounting policy, the gross proceeds of the private placement were allocated using a residual value method with respect to the measurement of shares and warrants issued as private placement units.

Page 19


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

 

This resulted in $6,200,000 recorded as share capital and $800,000 being allocated to reserves. For the finder’s fees paid in Units, $305,789 was allocated to share capital and $39,457 being allocated to reserves.

   

  •

Issued 75,000 shares valued at $85,700 pursuant to the exercise of stock options.

   

  •

Issued 68,873 shares valued at $84,935 pursuant to employment and consulting agreements, of which $36,025 has been included in exploration expenditures.

Stock Options

The Company adopted a stock option plan (the “Plan”) pursuant to the policies of the TSX-V. The maximum number of shares that may be reserved for issuance under the plan is limited to 10% of the issued common shares of the Company at any time. The vesting terms are determined at the time of the grant, subject to the terms of the plan.

During the nine months ended September 30, 2018, the change in stock options outstanding is as follows:

          Weighted Average  
    Number     Exercise Price  
             
Balance as at December 31, 2017   5,247,500   $ 1.10  
  Granted   1,715,000     1.31  
  Exercised   (102,500 )   (0.84 )
  Forfeited   (40,000 )   (1.09 )
Balance as at September 30, 2018   6,820,000     1.15  
             
Number of options exercisable as at September 30, 2018   6,801,250   $ 1.15  

The following table summarizes information about the stock options which were outstanding and exercisable at September 30, 2018:

Date Granted   Number of Options     Exercisable     Exercise Price $     Expiry Date  
                         
April  25, 2014   1,258,000     1,258,000     1.20     April  25, 2019  
June 26, 2014   17,500     17,500     0.88     June 26, 2019  
December 22, 2014   60,000     60,000     0.87     December 22, 2019  
June 8, 2015   1,087,500     1,087,500     0.66     June 8, 2020  
October 18, 2016   1,219,500     1,219,500     1.30     October 18, 2021  
August 28, 2017*   1,462,500     1,462,500     1.20     August 28, 2022  
July 20, 2018*   1,640,000     1,621,250     1.30     July 20, 2023  
September 20, 2018   75,000     75,000     1.42     September 20, 2023  
                         
Total   6,820,000     6,801,250              

The weighted average remaining useful life of exercisable stock options is 2.97 years (2017 – 2.42 years).

Page 20


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

15. CAPITAL STOCK (Continued)

Restricted share units

In 2017, the Company introduced a long-term restricted share unit plan (“RSUs”). The RSUs entitle employees, directors, or officers to common shares of the Company upon vesting based on vesting terms determined by the Company’s Board of Directors at the time of grant.

Expiry Date   December 31, 2017     Granted     Vested     Expired/ Cancelled     September 30, 2018  
December 31, 2019   312,500     –     –     –     –  
December 31, 2020  

–

    312,500     –     –     312,500  

Share-based Payments

During the nine months ended September 30, 2018, the Company recorded aggregate share-based payments of $1,569,909 (2017 - $882,828) as they relate to the fair value of stock options granted or vested during the period and the fair value of incentive stock grants. Share-based payments for the nine months ended September 30, 2018 and 2017 are allocated to expense accounts as follow:

    Genera land              
    Administrative     Exploration        
Nine months ended September 30, 2017   Expenses     Expenditures     Total  
Fair value of stock options granted or vested $ 729,970   $ 591,457   $ 1,321,427  
Fair value of stock options forfeited   (17,970 )   –     (17,970 )
Shares issued for services   99,976     166,476     266,452  
  $ 811,976   $ 757,933   $ 1,569,909  

    Genera land              
    Administrative     Exploration        
Nine months ended September 30, 2017   Expenses     Expenditures     Total  
Fair value of stock options granted $ 455,364   $ 342,529   $ 797,893  
Shares issued for services   48,910     36,025     84,935  
  $ 504,274   $ 378,554   $ 882,828  

The weighted average fair value of the stock options granted during the nine months ended September 30, 2018 was $0.84 per stock option (2017 - $0.54). The fair value of stock options granted was estimated using the Black-Scholes option pricing model with weighted average assumptions as follows:

    Nine months ended     Nine months ended  
    September 30, 2018     September 30, 2017  
Risk free interest rate   2.31%     1.53%  
Expected life (years)   5     5  
Expected volatility   70.09%     66.28%  
Dividend yield   –     –  

Warrants

During the nine months ended September 30, 2018, there were no changes in warrants outstanding.

Page 21


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

16. RELATED PARTY TRANSACTIONS

The aggregate value of transactions and outstanding balances relating to key management personnel were as follows:

          Share–based        
For the nine months ended September 30, 2018   Salary or Fees     Payments     Total  
Management $ 544,668   $ 331,895   $ 876,563  
Outside directors *   111,923     76,430     188,353  
Seabord Services Corp.   322,971     –     322,971  
Total $ 979,562   $ 408,325   $ 1,387,887  

          Share–based        
For the nine months ended September 30, 2017   Salary or Fees     Payments     Total  
Management $ 566,471   $ 204,978   $ 771,449  
Outside directors *   112,831     175,310.00     288,141  
Seabord Services Corp.   268,200     –     268,200  
Total $ 947,502   $ 380,288   $ 1,327,790  

* Directors fees include US$5,000 per month paid to the Company’s non-Executive Chairman, who does not receive the fees paid to the other independent directors.

Seabord Services Corp. (“Seabord”) is a management services company controlled by the Chairman of the Board of Directors of the Company. Seabord provides a Chief Financial Officer, a Corporate Secretary, accounting and administration staff, and office space to the Company. The Chief Financial Officer and Corporate Secretary are employees of Seabord and are not paid directly by the Company.

Included in accounts payable and accrued liabilities at September 30, 2018 is $1,313 (2017 - $7,177) owed to key management personnel and $18,562 (2017 - $23,567) to other related parties. By way of a common director, included in Notes receivable (Note 7) are certain balances owing from a related party.

17. SEGMENTED INFORMATION

The Company operates within the resource industry. At September 30, 2018 and December 31, 2017, the Company had equipment and exploration and evaluation assets located geographically as follows:

EXPLORATION AND EVALUATION ASSETS   September 30, 2018     December 31, 2017  
Sweden   437,755     437,755  
Turkey   232,547     232,547  
U.S.A   1,040,908     1,171,664  
Total $ 1,711,210   $ 1,841,966  
             
PROPERTY AND EQUIPMENT   September 30, 2018     December 31, 2017  
Sweden   24,619     26,159  
U.S.A   437,013     424,119  
Total $ 461,632   $ 450,278  

The Company’s royalty interest, goodwill, deferred income tax liability and royalty income and depletion are from a CGU located in the U.S.A, except for a $200,000 royalty interest held in Serbia.

Page 22


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

18. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS

The Company considers items included in shareholders’ equity as capital. The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.

As at September 30, 2018, the Company had working capital of $503,322 ( December 31, 2017 - $6,535,893). The Company has continuing royalty income that will vary depending on royalty ounces received, the price of gold, and foreign exchange rates on US royalty payments. The Company manages the capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through public and/or private placements, sell assets, or return capital to shareholders. In October 2018 EMX’s associated entity, IG Copper LLC notified EMX that the sale of the Malmyzh project for US $200 million has closed. The initial cash distribution to EMX by IGC of US $65 million was received in October 2018. A second cash distribution to EMX (up to US $4 million) will be completed upon the remaining funds being released from escrow. Management believes with the distribution received as part of the sale of Malmyzh, it will have sufficient working capital to undertake its current business plan for the next twelve months and the budgets associated with those plans.

Fair Value

The Company characterizes inputs used in determining fair value using a hierarchy that prioritizes inputs depending on the degree to which they are observable. The three levels of the fair value hierarchy are as follows:

  •

Level 1: inputs represent quoted prices in active markets for identical assets or liabilities. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

  •

Level 2: inputs other than quoted prices that are observable, either directly or indirectly. Level 2 valuations are based on inputs, including quoted forward prices for commodities, market interest rates, and volatility factors, which can be observed or corroborated in the market place.

  •

Level 3: inputs that are less observable, unavoidable or where the observable data does not support the majority of the instruments’ fair value.

As at September 30, 2018, there were no changes in the levels in comparison to December 31, 2017. Financial instruments measured at fair value on the statement of financial position are summarized in levels of the fair value hierarchy as follows:

Assets   Level 1     Level 2     Level 3     Total  
Investments   967,706     –     –     967,706  
Strategic investments   32,738     –     –     32,738  
Settlement receivables   –     741,487     –     741,487  
Total $ 1,000,444   $ 741,487   $ –   $ 1,741,931  

The carrying value of receivables (excluding settlement receivables), notes receivable, accounts payable and accrued liabilities, advances from joint venture partners, and note payable approximate their fair value because of the short-term nature of these instruments.

Settlement receivables, including both long and current portions relate to the sale of certain Turkish subsidiaries were valued using a pricing model which require a variety of inputs, such as expected gold prices and foreign exchange rates. These receivables are valued using observable market commodity prices and thereby classified within Level 2 of the fair value hierarchy. Changes in fair value are recorded through income or loss for the period.

The Company’s financial instruments are exposed to certain financial risks, including credit risk, interest rate risk, market risk, liquidity risk and currency risk.

Page 23


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

18. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS (Continued)

Credit Risk

The Company is exposed to credit risk by holding cash and cash equivalents and receivables. This risk is minimized by holding a significant portion of the funds in Canadian banks. The Company’s exposure with respect to its receivables is primarily related to royalty streams, recovery of exploration evaluation costs, and the sale of assets.

Interest Rate Risk

The Company is exposed to interest rate risk because of fluctuating interest rates. Management believes the interest rate risk is low given interest rates on promissory notes is fixed and the current low global interest rate environment. Fluctuation in market rates is not expected to have a significant impact on the Company’s operations due to the short term to maturity and no penalty cashable feature of its cash equivalents.

Market Risk

The Company is exposed to market risk because of the fluctuating values of its publicly traded marketable securities and other company investments. The Company has no control over these fluctuations and does not hedge its investments. Based on the September 30, 2018 portfolio values, a 10% increase or decrease in effective market values would increase or decrease net shareholders’ equity by approximately $100,000.

Liquidity Risk

Liquidity risk is the risk that the Company is unable to meet its financial obligations as they come due. The Company manages this risk by careful management of its working capital to ensure the Company’s expenditures will not exceed available resources.

Commodity Risk

The Company’s royalty revenues are derived from a royalty interest and are based on the extraction and sale of precious and base minerals and metals. Factors beyond the control of the Company may affect the marketability of metals discovered. Metal prices have historically fluctuated widely. Consequently, the economic viability of the Company’s royalty interests cannot be accurately predicted and may be adversely affected by fluctuations in mineral prices.

Currency Risk

Foreign exchange risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the entity’s functional currency. The Company operates in Canada, Turkey, Sweden, Australia, Norway, and the U.S.A. The Company funds cash calls to its subsidiary companies outside of Canada in US dollars and a portion of its expenditures are also incurred in local currencies.

Page 24


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

18. RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS (Continued)

The exposure of the Company’s cash and cash equivalents, restricted cash, receivables, convertible notes receivable, loans receivable, accounts payable and accrued liabilities, and loans payable to foreign exchange risk as at September 30, 2018 is as follows:

Accounts   US dollars  
Cash and cash equivalents $ 2,577,448  
Restricted cash   531,534  
Trade receivables   727,433  
Settlement receivables   575,000  
Loan receivable from an associated entity (Note 14)   18,500,000  
Accounts payable and accrued liabilities   (256,594 )
Advances from joint venture partners   (275,810 )
Loans payable (Note 14)   (23,500,000 )
Net exposure   (1,120,989 )
Canadian dollar equivalent $ (1,445,562 )

The balances noted above reflect the US dollar balances held within the parent company and any wholly owned subsidiaries. Balances denominated in another currency other than the functional currency held in foreign operations are considered immaterial. Based on the above net exposure as at September 30, 2018, and assuming that all other variables remain constant, a 10% depreciation or appreciation of the Canadian dollar against the US dollar would result in an increase/decrease of approximately $145,000 in the Company’s pre-tax profit or loss.

19. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

    September 30, 2018     December 31, 2017  
Cash $ 4,554,348   $ 3,354,109  
Short–term deposits   185,694     179,502  
Total $ 4,740,042   $ 3,533,611  

The short-term deposits are used as collateral for the Company’s credit cards.

Changes in non-cash working capital

    Nine month period     Nine month period  
    ended Sep 30, 2018     ended Sep 30, 2017  
             
Accounts receivable $ 1,104,494   $ 1,993,545  
Prepaid expenses   (32,505 )   (55,599 )
Accounts payable and accrued liabilities   (158,562 )   185,678  
Advances from joint venture partners   (180,895 )   (165,160 )
             
  $ 732,532   $ 1,958,464  

The significant non-cash investing and financing transactions during the nine months ended September 30, 2018 included:

  a.

Recorded a loss through accumulated other comprehensive income of $49,108 related to the fair value adjustments on FVTPL investments;

     
  b.

Adjusted reserves and investment in associated companies for $246,718 related to share-based payments made by an associated company;

     
  c.

Adjusted non-current assets and liabilities for $516,603 related to cumulative translation adjustments (“CTA”), of which $590,818 relates to CTA gain on royalty interest, $48,318 relates to CTA gain on goodwill, $127,425 relates to a CTA loss on deferred tax liability and $3,892 relates to CTA gain in the net assets of a subsidiary with a functional currency different from the presentation currency;

Page 25


EMX ROYALTY CORPORATION (FORMERLY EURASIAN MINERALS INC.)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited-Expressed in Canadian Dollars)
For the Nine Months Ended September 30, 2018

19. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Continued)

  d.

Included in the investment in IGC $483,515 (US$370,000) for the value of shares received from IGC as part of a loan fee (Note 14);

     
  e.

Reclass of $44,498 from reserves to share capital for options exercised;

     
  f.

Reclass of $23,825 from commitment to issue shares to share capital for share issued during the period; and

     
  g.

Issued 381,321 shares valued at $602,487 or $1.58 per share pursuant to a credit facility (Note 14).

The significant non-cash investing and financing transactions during the nine months ended September 30, 2017 included:

  a.

Recorded a loss through accumulated other comprehensive income of $81,846 related to the fair value adjustments on AFS financial instruments;

   

 

b.

Adjusted non–current assets and liabilities for $757,290 related to cumulative translation adjustments (“CTA”), of which $839,240 relates to CTA loss on royalty interest, $158,119 relates to CTA loss on good will, $275,351 relates to a CTA gain on deferred tax liability and $35,282 relates to CTA loss in the net assets of a subsidiary with a functional currency different from the presentation currency;

   

 

  c.

Recorded a $79,220 charge to convertible loan and related increase in investments through profit and loss for the conversion feature on convertible debt (Note 7);

   

 

  d.

Reclass of reserves on exercise of options for $45,545; and

   

 

  e.

Recorded through reserves $39,457 related to value of warrants issued as finders fees as part of a private placemenet(Note14).

20. EVENTS SUBSEQUENT TO THE REPORTING DATE

Subsequent to September 30, 2018,

  a.

The Company entered into a purchase agreement for the Kimberley Copper Project in Western Australia with Enfield Exploration Corporation (“Enfield”). The Agreement provides EMX with 500,000 common shares of Enfield, and a commitment from Enfield to raise US$ 1,000,000 for an initial drill test of the project. EMX will also receive a graduated net smelter return (“NSR”) royalty on the project, annual advance royalty payments, and an additional 1,750,000 shares of Enfield upon the achievement of certain milestones;

     
  b.

The Company was notified by its associated entity IGC (Note 8) that the sale of the Malmyzh project to Russian Copper Company for US $200 million had closed. Of this amount, US $190 million was released from escrow, with the remaining US $10 million to be held in escrow and released subject to certain conditions over the next 12 months. The initial cash distribution to EMX by IGC of US $65.15 million has been received. A second cash distribution to EMX (up to US $4 million) will be completed upon the remaining funds being released from escrow. The US$ 18.5 million credit facility with Sprott (Note 14) and loan receivable from IGC were repaid in connection with the receipt of proceeds from the sale; and

     
  c.

The Company settled its remaining US$ 5 million credit facility with proceeds received from IGC (Note 14).

Page 26