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MANAGEMENT’S DISCUSSION AND ANALYSIS
DRIVING GROWTH FROM WITHIN
d) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company
manages liquidity risk by continuing to monitor forecasted and actual cash flows. The Company has in place a planning
and budgeting process to help determine the funds required to support the Company’s normal operating requirements
on an ongoing basis and its development plans. The Company strives to maintain sufficient liquidity to meet its short
term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash, short
term investments, and its committed liabilities.
On April 23, 2013, the Company entered into an amended and restated credit agreement with the Bank of Nova Scotia
for a $40 million senior secured revolving credit facility (“credit facility”) to be refinanced or repaid on or within three
years or before April 22, 2016. The credit facility is secured by a first ranking lien on Bateas, Cuzcatlan, Continuum, and
Barbados, and their assets and bears interest and fees at prevailing market rates. In the event that utilization under the
credit facility is less than $10 million, a commitment fee of 1.0% per annum is payable quarterly on the unutilized portion
of the available credit facility. No funds were drawn from this credit facility.
Subsequent to December 31, 2014, the Company is proposing to enter into an amended and restated credit agreement
with the Bank of Nova Scotia for a $60 million senior secured financing (“credit facility”) consisting of a $40 million term
credit facility with a 4 year term and a $20 million revolving credit facility for a two year period. The credit facility is to be
secured by a first ranking lien on Bateas, Cuzcatlan, Continuum, and Barbados, and their assets and bears interest and
fees at prevailing market rates. In the event that utilization under the credit facility is less than $10 million, a commitment
fee of 1.0% per annum is payable quarterly on the unutilized portion of the available credit facility. No funds were drawn
from this credit facility.
(Refer to Contractual Obligations for the expected payments due as at December 31, 2014.)
Significant Changes, Including Initial Adoption of
Accounting Standards
The Company has adopted the following accounting standards along with any consequential amendments, effective
January 1, 2014:
IAS 32 Financial Instruments – Presentation in Respect of Offsetting (Amendment); IFRIC 21 – Levies; and, IAS 36 –
Impairment of Assets – Amendments for Recoverable Amount Disclosures for Non-Financial Asset.
The Company has adopted the following amendments, effective July 1, 2014:
IFRS 2 Share-based Payment – Definition of vesting condition (Amendment)
The amendment to IFRS 2 provides the definitions of vesting condition and market condition and adds definitions for
performance condition and service condition. The amendment is effective for transactions with a grant date on or after
July 1, 2014.
IFRS 3 Business Combinations – Contingent consideration (Amendment)
The amendment to IFRS 3 requires contingent consideration that is classified as an asset or a liability to be measured
at fair value at each reporting date. The amendment is effective for transactions with acquisition dates on or after July
1, 2014.
The Company has adopted the above amendments which did not have a significant impact on the Company’s Financial
Statements.
New Accounting Standards
IFRS 10, Consolidated Financial Statements, and IAS 28, Investments in Associates and Joint Ventures (2011) (Amendment)
On September 11, 2014, the IASB issued narrow-scope amendments to IFRS 10,
Consolidated Financial Statements,
and IAS 28,
Investments in Associates and Joint Ventures
(2011). The amendments address an acknowledged
inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution
of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a
full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A
partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these
assets are housed in a subsidiary. The amendments will be effective from annual periods commencing on or after January
1, 2016.
