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Northern Vertex Files Amended Financial Statements Due To Reversal Of Receivables

Jul. 31, 2013 2:59 PM ETEVGDF
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Northern Vertex Mining Corp. (CVE:NEE)(OTCQX:NHVCF) has filed amended third quarter interim financial statements to reflect a reversal of US$2.9 million in deferred cash payments tied to the sale of its majority stake in the Lemhi property earlier this year, citing industry-wide reductions in property expenditures.

The company has filed amended statements for the three and nine month period ending March 31. In February of this year, Northern Vertex closed the sale of its 51 per cent interest in the Lemhi gold joint venture to Idaho State Gold company for US$7.65 million, allowing it to focus exclusively on its Moss gold-silver mine in Arizona.

"Given the current market environment of industry-wide reductions in property expenditures and that future spending decisions by Idaho State Gold Company, are not under the company's control, the probability and timing of receiving the US$2.9 million (based on 3% of future property expenditures made by ISGC) is too uncertain for the amount to be accounted for as a receivable at this time under International Financial Reporting Standards (IFRS)," said Northern Vertex in a statement released late Tuesday.

As a result, the company is amending and refiling financials to reflect the reversal of the US$2.9 million as a long-term receivable, and will instead disclose its entitlement to the contingent consideration in the notes. The statements will now show a reduction in total assets by this amount, the company said, and an increase in the deficit for the period of US$2.9 million.

Any cash received in future in respect of the deferred consideration arrangement will now be treated as income in the period in which it is received.

Northern Vertex's loss per share has increased by $0.056 to $0.079 per share for the three months that ended March 31, and increased $0.062 to $0.137 per share for the nine month period ending on the same date.

Earlier this month, the company filed a preliminary short form prospectus with provincial regulatory authorities in Canada relating to its equity offering to raise proceeds of up to $10 million. The new funds will be used to advance the exploration and development of its Moss gold-silver project, including the pilot plant operations, which is designed to confirm test mining, heap leach processing and gold and silver recoveries. In conjunction with the equity offering, the junior explorer also plans to complete a private placement financing of up to $5 million.

Northern Vertex recently provided an update on its construction plans for its Moss gold-silver mine project, saying the first phase of the three-stage development process is progressing on time and on budget.

Phase II of the project is estimated to show an IRR of almost 118 per cent pre-tax and before royalties, and a net present value of US$110 million, at a 5 per cent discount rate. The phase II, or full operation, economics were calculated using gold prices of US$1,500 an ounce and $30 per ounce of silver. The payback period was seen at 15 months, with capex costs estimated at US$26.6 million. Cash costs were projected at just US$490 an ounce.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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