BCN.L Regulatory News (BCN)

Bacanora Minerals Ltd.

("Bacanora" or the "Company")

Interim Results for the six months ended 31 December 2014

Bacanora, the London and Canadian listed (AIM: BCN and TSX-V: BCN) lithium and borates company focussed on Mexico, is pleased to announce its unaudited condensed consolidated interim financial statements for the period ended 31 December 2014, together with the accompanying notes.

Highlights

· Transitioning from the exploration phase into the development phase with fully funded pre-feasibility studies ongoing at both the Sonora Lithium Project and Magdalena Borate Project in Mexico

· At advanced stage of recruiting a CEO with technical experience of mine development and commercial production

· Pre-feasibility activities at the Sonora Lithium Project, included:

o working with key industry consultants to design a full scale lithium plant and mining operation, capable of producing up to 50,000 tonnes per annum of lithium carbonate

o 24 holes drilled at Buenavista during the period, with further drilling under consideration

o Ongoing infill drilling of 15 holes at La Ventana

· Assessing the feasibility of boric acid production with a pre-feasibility study underway at the El Cajon Borate concession at Magdalena

· Compelling market fundamentals for both lithium and borate due to their roles in innovative industries continue to support ongoing development

· Strong cash position on CAD$ 11.9 million and exploration expenditure of CAD$ 1.1 million

Commenting on the results, Colin Orr-Ewing, Chairman of Bacanora, said, "Bacanora is ideally positioned with two fully funded pre-feasibility studies ongoing across its core interests in Mexico. Work at the Sonora Lithium Project continues to demonstrate the potential world class nature of the project. Given the strong current and forecast demand for lithium, the Company is excited about advancing through the development phase. In tandem, the Company is advancing the Magdalena Borate Project pre-feasibility study. As a reflection ofthe strong progress across our asset base, we expect to appoint a CEO with the technical ability to propel our projects to the next phase in their development path and we look forward to providing updates in respect to this, as well as from our projects, over the coming months."

Chairman's Statement

During the period we have made excellent progress in advancing our Mexican focussed lithium and borate portfolio and as a result, we have reached a pivotal stage in the development of the Company as we look to advance from exploration to developmentand ultimately production.

Sonora Lithium - Operational Update

At the heart of the portfolio sits the high-grade Sonora Lithium Project, where the Company is focussed on advancing the project through pre-feasibility. The Sonora Lithium Project La Ventana concession has an estimated indicated lithium resource of 75,320,000 tonnes bearing an average grade of 3,174 ppm or 1.69% Lithium Carbonate Equivalent ("LCE") for 1,273,000 tonnes of LCE. The El Sauz and Fleur concessions have an estimated indicated lithium resource of 120,990,000 tonnes bearing an average grade of 3,120 ppm or 1.66% Lithium Carbonate Equivalent for 2,010,000 tonnes of LCE.

During the period, the Company continued advancing pre-feasibility studies, working with key industry consultants including Process Engineering LLC and work completed by Hatch Pty Ltd to design a full scale lithium plant and mining operation, capable of producing up to 50,000 tonnes per annum of lithium carbonate. The Company has started planning for bench scale testing for the recovery of lithium hydroxide. Both of these process design streams are being examined to meet any new industry requirements from the electric vehicle markets. The Company is actively working with a number of potential off-take customers for its lithium compound production.

As part of the pre-feasibility process, the Company has continued infill drilling to determine detailed open-pit design with an aim to upgrade the resource from the 'indicated' to the 'measured' resource category. This will underpin the mine design, and in particular, the open pit mine plan and production scheduling. The programme at La Ventana is comprised of 15 holes, ranging between 80 metres and 120 metres, results from which will be announced when completed and assessed.

The Company continued to drill across the entire Sonora Lithium Project with an aim to increase the overall resource base across the entire project. Results received from drilling at the Buenavista property have the potential to add further resources to what is already a major lithium deposit, and has increased management's confidence that the Company possesses a world class lithium asset. The latest drilling programme comprised 24 reverse circulation drill holes at Buenavista ranging between 30 metres and 50 metres. The programme identified three kilometres of strike length of lithium-bearing clays, with lithium values greater than 1,000 ppm Li found in 13 of the 24 holes, and confirmed that significant thicknesses and grades of lithium-bearing clays occur within the southern part of Buenavista. The programme cost approximately CAD $367,000.  The northern half of the concession remains untested and based on the Company's experience with similar mineralogy as on the balance of the property, Bacanora believes that it holds potential for similar lithium mineralisation. Management is currently assessing these results to determine whether further drilling is required on the northern part of Buenavista and the adjoining concessions.

The Company has been highly encouraged by the compelling fundamentals of the lithium market. Lithium is a critical component in the rapidly growing electric vehicle and rechargeable battery sector, with global demand expected to increase to 280,000 tonnes per annum of LCE by 2020 from 186,000 tonnes per annum recorded in 2013. Currently, 85 per cent. of production is provided by three companies, and notably, M&A activity in this sector is increasing. With these developments in mind, and considering the quality of the project portfolio, the Company believes that Bacanora is ideally positioned to take advantage of the forecast increase in demand.

Magdalena Borates - Operational Update

In tandem with the development of the lithium projects, the Company is also assessing the feasibility of boric acid production at the Magdalena Borate Project. As part of the project's on-going development, the Company has retained the services of Process Engineering LLC and work previously completed by Hatch Pty Ltd to design a plant capable of producing up to 25,000 tonnes of boric acid per year from borate minerals to be mined from the El Cajon deposit. This is the most advanced of the main borate zones on which the Company has estimated National Instrument 43-101 compliant drill-indicated borate resources of 11 million tonnes ("mt") averaging 10.6 per cent. B2O3.

The Company continues to perform metallurgical tests in order to refine and optimise the boric acid production at pilot scale. Initial work has indicated that a colemanite concentrate grading 38 per cent. - 42 per cent. B2O3 can be produced from an average feed of 10.5 per cent. B2O3 from El Cajon using a combination of scrubbing, de-sliming and flotation. The Company has constructed a pilot plant to conduct detailed metallurgy and improve the borate content of the concentrate, as well to finalise a full scale production flow sheet and produce samples for test marketing. Potential buyers have expressed an interest in purchasing colemanite should the Company be able to produce concentrates that meet these consumers' specifications. Alternatively, colemanite can be used as a feedstock in the production of boric acid, a more widely used boron compound.

Bacanora has added a boric acid line to the pilot plant and plant testing produced 99 per cent. boric acid purity. Recent metallurgical and process tests indicate that lower grade borate resources at and near surface are more amenable to the production of boric acid.

The Company has completed its drilling programme on the second borate bearing target (Unit B) of Cajon, which consisted of 1,292 metres of drilling and cost approximately CAD $497,000. The results are currently being evaluated and are expected to be announced in the coming weeks. In addition, laboratory test work is planned to test the shallow portion of Unit B in order to evaluate its potential for boric acid production. A mine plan for this unit is being constructed in conjunction with the previous mine plan for Unit A.

Outlook

The Company has an exciting portfolio of lithium and borate assets, operates in a stable jurisdiction and has a defined development path to production. Importantly, it already benefits from the ownership of a fully commissioned pilot plant, which includes a laboratory together with equipment and facilities to process and test up to 125 assays per day from samples sourced from the borate and lithium concessions. This control over its processing provides Bacanora with a strong advantage, particularly from a time and cost perspective.

Bacanora is in the advanced stages of securinga technically oriented CEO with mine development and production experience. This will add to an already highly experienced Board and technical team that it believes has the ability to deliver shareholder value. Demand for both lithium and borate is growing, particularly given their crucial roles in innovative industries. Considering the development status of both of Bacanora's high grade projects; the success experienced during the period; the Company's strong cash position of CAD$ 11.9 million; and the mining friendly jurisdiction of the projects, Bacanora is extremely wellplaced to become a quality supplier to these exciting growth markets going forward.

Work continues to demonstrate the Sonora Lithium Project's potential as a world-class deposit. In tandem with progressing this up the development curve, the Company is advancing the Magdalena Borate Project. Further developments will be announced over the coming months as Bacanora's skilled technical team advances pre-feasibility studies and undertakes drilling at both projects. The Board is excited about the potential of its project portfolio and looks forward to building shareholder value.

For further information please visit www.bacanoraminerals.com or contact:

ABOUT BACANORA:

Bacanora is a Canadian and London listed minerals explorer (TSX-V: BCN and AIM: BCN). The Company explores and develops industrial mineral projects, with a primary focus on lithium and borates. The Company's operations are based in Hermosillo in northern Mexico and it currently has two significant projects under development in the state of Sonora. The two main assets of Bacanora are: 

· The Sonora Lithium Project, which covers ten mining concession areas in North East Sonora state. The Company, through drilling work to date, has established a National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") compliant Indicated Resource of 3.28 mt of LCE at a 2,000 ppm cut-off grade; and 

· The Magdalena Borate Project in Sonora state, Mexico, where the Company's main borate zone, El Cajon, has a NI 43-101 compliant Indicated Resource of 1.17 mt of B2O3, at an eight per cent. cut-off grade. The Company has completed a number of measures to determine the geological and commercial potential of the project and is undertaking a pre-feasibility exercise to determine the economic benefit of developing the mine and constructing a processing plant on site in order to become a supplier of boric acid.

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Changes in Shareholders' Equity

See accompanying notes to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

1. CORPORATE INFORMATION

Bacanora Minerals Ltd. (the "Company" or "Bacanora") was incorporated under the Business Corporations Act of Alberta on September 29, 2008. The Company is listed on the TSX Venture Exchange as a Tier 2 issuer and its common shares trade under the symbol, "BCN". The Company's common shares are also traded on the AIM Market of the London Stock Exchange ("AIM"), under the symbol, "BCN". The address of the Company is 2204 6 AVE NW, Calgary, AB T2N 0W9.

The Company is a development stage mining company engaged in the identification, acquisition, exploration and development of mineral properties located in Mexico. The Company has not yet determined whether its mineral properties contain economically recoverable reserves. The recoverability of amounts capitalized is dependent upon the discovery of economically recoverable reserves, maintaining title in the properties and obtaining the necessary financing to complete the exploration and development of these projects and upon attainment of future profitable production. The amounts capitalized as mineral properties represent costs incurred to date, and do not necessarily represent present or future values.

The Company has generated accumulated losses of $1,319,310 (2013 - $1,281,794) and the shareholders' equity of its subsidiaries incorporated in Mexico have decreased to an amount less than one third of their share capital which, according to Mexican laws, may be a cause for dissolving a company at the request of any interested third party. If the Company is not able to generate income producing transactions through the identification and exploitation of ores, and continue to raise sufficient capital to continue exploration activities, there is a risk that the rights to the mining concessions could be challenged but the board considered this normal risk for exploration companies in the region.

2. BASIS OF PREPARATION

a) Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended June 30, 2014, which have been prepared in accordance with IFRS as issued by the IASB.

The Company uses the same accounting policies and methods of computation as in the annual consolidated financial statements for the year ended June 30, 2014.

These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on February 25, 2015. These statements have not been reviewed by the Company's external auditors.

b) Basis of measurement

These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments that have been measured at fair value. 

These consolidated financial statements are presented in Canadian dollars. The functional currency of the Company is Canadian dollars and for its subsidiaries is the US dollar.

c) New standards and interpretations not yet adopted

A number of new IFRS standards, and amendments to standards and interpretations, are not yet effective for the period ended December 31, 2014, and have not been applied in preparing these condensed consolidated interim financial statements. None of these standards are expected to have a significant effect on the condensed consolidated interim financial statements of the Company.

3. SIGNIFICANT ACCOUNTING POLICIES

The preparation of consolidated financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note4.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company, 70% of its subsidiary, Mexilit S.A. de C.V. ("Mexilit"), 70% of its subsidiary, Minera Megalit S.A de C.V. ("Megalit"), and through its wholly-owned subsidiary, Mineramex Limited, 99.9% of Minera Sonora Borax, S.A. de C.V. ("MSB"), and 60% of Minerales Industriales Tubutama, S.A. de C.V. ("MIT"). Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent company, using consistent accounting policies. All intercompany balances and transactions are eliminated in full. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the Company's financial statements in accordance with IFRS requires management to make certain judgments, estimates, and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results are likely to differ from these estimates. Information about the significant judgments, estimates, and assumptions that have the most significant effect on the recognition and measurement of assets, liabilities, income and expenses are discussed below.

a) Exploration and evaluation assets

The Company is in the process of exploring on its mineral properties and has not yet determined whether the properties contain economically recoverable mineral resource. The recoverability of carrying values for mineral properties is dependent upon the discovery of economically recoverable mineral resource, the ability of the Company to obtain the financing necessary to complete exploration and development, and the success of future operations.

The application of the Company's accounting policy for exploration and evaluation assets requires judgment in determining whether it is likely that costs incurred will be recovered through successful exploration and development or sale of the asset under review when assessing impairment. Furthermore, the assessment as to whether economically recoverable resource exist is itself an estimation process. Estimates and assumptions made may change if new information becomes available. If, after expenditures are capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in the statement of comprehensive loss in the period when the new information becomes available. The carrying value of these assets is detailed in Note 8.

b) Title to mineral property interests

Although the Company has taken steps to verify the title to the exploration and evaluation assets in which it has an interest, in accordance with industry practices for the current stage of exploration of such properties, these procedures do not guarantee the Company's title. Title may be subject to unregistered prior agreements or transfers and title may be affected by undetected defects.

c) Rehabilitation provision

Rehabilitation or similar liabilities are estimated based on the Company's interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations.

d) Contingencies

Contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.

e) Share-based payments

The Company utilizes the Black-Scholes Option Pricing Model to estimate the fair value of stock options granted to directors, officers and employees. The use of the Black-Scholes Option Pricing Model requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. Any changes in these assumptions could have a material impact on the share-based payment calculation value.

The same estimates are required for transactions with non-employees where the fair value of the goods or services received cannot be reliably determined.

f) Income taxes

The Company is subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. For the current year these transactions include the transfer of properties between Mexican subsidiaries. Transactions between the Company's Mexican subsidiaries are required by Mexican tax rules to be recorded on an arms' length basis and the Company made estimates as to the measurement of these transactions. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company's current understanding of the tax law. Despite the Company's belief that its tax return positions are supportable, the Company acknowledges that certain positions may potentially be challenged and may not be fully sustained upon review by tax authorities. The Company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretation of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities, and such differences will impact income tax expense in the period in which such determination is made.

5. FINANCIAL INSTRUMENTS

This note presents information about the Company's exposure to credit, liquidity and market risks arising from its use of financial instruments and the Company's objectives, policies and processes for measuring and managing such risks.

a) Credit risk

Credit risk arises from the potential that a counter party will fail to perform its obligations. Financial instruments that potentially subject the Company to concentrations of credit risk consist of accounts and related party receivables. The Company believes that the amount due from the related party is collectible, however as the amount has not been collected subsequent to year end its recoverability is uncertain as it is dependent on the outcome of future events which are inherently uncertain. Any changes in management's estimate of the recoverability of the amount due will be recognized in the period of determination and any adjustment may be significant. The carrying amount of accounts and related party receivables represents the maximum credit exposure.

The Company's cash is held in major Canadian and Mexican banks, and as such the Company is exposed to the risks of those financial institutions. Substantially all of the accounts receivables represent amounts due from the Canadian and Mexican governments and accordingly the Company believes them to have minimal credit risk.

The Board of Directors monitors the exposure to credit risk on an ongoing basis and does not consider such risk significant at this time. The Company considers all of its accounts receivables fully collectible.

b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they became due. The Company's approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses. Liquidity risk arises primarily from accounts payable and accrued liabilities and commitments, all with maturities of one year or less.

c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, commodity prices, and interest rates will affect the value of the Company's financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing long-term returns.

The Company conducts exploration projects in Mexico. As a result, a portion of the Company's expenditures, accounts receivables, accounts payables and accrued liabilities are denominated in US dollars and Mexican pesos and are therefore subject to fluctuation in exchange rates.

d) Fair values

The carrying value approximates the fair value of the financial instruments due to the short term nature of the instruments.

6. CAPITAL MANAGEMENT

The Company's objectives in managing capital are to safeguard its ability to operate as a going concern while pursuing exploration and development and opportunities for growth through identifying and evaluating potential acquisitions or businesses. The Company defines capital as the Company's shareholders equity excluding contributed surplus, of $23,172,867 at December 31, 2014 (2013 - $12,429,837), The Company sets the amount of capital in proportion to risk and corporate growth objectives. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company is not subject to any externally imposed capital requirements other than those disclosed in Note 1. The Company does not expect to enter into any debt financing at this time. The Board of Directors does not establish a quantitative return on capital criteria for management; but rather promotes year over year exploration and development growth. The Company will be meeting its objective of managing capital through its detailed review and preparation of both short-term and long-term cash flow analysis and monthly review of financial results.

7. PROPERTY AND EQUIPMENT

8. EXPLORATION AND EVALUATION ASSETS

The Company's mining claims consist of mining concessions located in the State of Sonora, Mexico. The specific descriptions of such properties are as follows:

a) Tubutama Borate property

The Tubutama Borate project consists of six mining concessions with a total area of 1,661 hectares. The concessions are located 15 kilometers from the town of Tubutama, and are 100% owned by MIT. The project is borate focused, although there is potential for development of gypsum resources on the concessions. The Tubutama property is subject to a 3% gross overriding royalty payable to an arm's length party, and a 3% gross overriding royalty payable to Mr. Colin Orr-Ewing, Chairman of the Company, on sales of mineral products produced from this property.

For the year ended June 30, 2014 an impairment charge of $1,220,826 was recognized in respect of the Tubutama Borate property. As a result of the Company's decision to let certain of the Tubutama concessions lapse and the Company's focus on the other mining claims an impairment test was performed. The recoverable amount is its value in use and is determined to be $nil as the Company expects no cash inflows to arise related to this property despite the potential for development of gypsum resources on the concessions.

b) Magdalena Borate property

The Magdalena Borate project consists of seven concessions, with a total area of 16,503 hectares. The concessions are located 15 kilometers from the cities of Magdalena and Santa Ana, and are 100% owned by MSB. The Magdalena property is subject to a 3% gross overriding royalty payable to an arm's length party, and a 3% gross overriding royalty payable to Mr. Colin Orr-Ewing, Chairman of the Company, on sales of mineral productsproduced from this property.

c) Sonora Lithium property

The Sonora Lithium Project consists of ten contiguous mineral concessions. The Company, through its wholly-owned Mexican subsidiary, MSB, has a 100% interest in two of these concessions: La Ventana and La Ventana 1, covering 1,775 hectares. Of the remaining concessions, five are owned 100% by Mexilit. The Mexilit concessions consist of El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 2 and cover, in total 5,325 hectares. Mexilit is owned 70% by Bacanora and 30% by Rare Earth Minerals PLC ("REM"). REM made payment of $2,384,775 to acquire the 30% interest in Mexilit. REM's option to negotiate an interest of up to 49.9% of Mexilit under terms yet to be agreed upon expired during the period ended September 30, 2014. The remaining three concessions, Buenavista, Megalit and San Gabriel, cover 87,086 hectares, and are subject to a separate agreement between the Company and REM. At December 31, 2014, REM owns 30% of the common shares of Megalit. REM has the option to negotiate an increase to its interest of up to 49.9% of Megalit under terms and consideration yet to be agreed upon. This option is valid until January 12, 2016. The Sonora Lithium property is subject to a 3% gross overriding royalty payable to Mr. Colin Orr-Ewing, Chairman of the Company, on sales of mineral productsproduced from this property.

The balance of investment in mining claims as of December 31, 2014 and June 30, 2014 corresponds to concession payments to the federal government, deferred costs of exploration and paid salaries, and consists of the following:

9. SHARE CAPITAL

a) Authorized

The authorized share capital of the Company consists of an unlimited number of voting common shares without nominal or par value.

b) Common Shares Issued

(1)On July 25, 2014, the Company's Common Shares were admitted to the AIM Market. Concurrent with the admission, the Company also completed a brokered financing of 14,393,940 common shares at a price of $0.605 Canadian dollar equivalent per share for aggregate gross proceeds of $8,708,334. Upon completion of this offering, the Company paid cash commissions to its broker, in the amount of approximately $367,717, and issued 90,909 common shares at an ascribed price of $0.605 per share, and 390,874 non-transferrable warrants ("Broker Warrants"). In addition, the Company paid its Nominated Advisor, a corporate finance fee in the amount of approximately $146,720, and issued 390,874 Broker Warrants. Each Broker Warrant entitles the holder to purchase one common share at a price of $0.605 until expiry on the date that is five years from the date of issuance, being July 25, 2019.

c) Stock options

The following tables summarize the activities and status of the Company's stock option plan as at and during the year ended June 30, 2014, and the period ended December 31, 2014.

(1) All options outstanding at these dates were exercisable.

d) Warrants

The following tables summarize the activities and status of the Company's warrants.

e) Contributed surplus

The following table presents changes in the Company's contributed surplus.

f) Stock-based compensation expense

During the period ended December 31, 2014, the Company recognized $55,000 (2013 - $280,869) of stock-based compensation expense for options granted under the Company's stock option plan. The fair value of stock options granted during the year was estimated on the dates of grant using the Black-Scholes option pricing model with the following weighted average assumptions, risk-free interest rate of 1.37%, expected volatility of 90%, and expected life of 5 years. The fair value of each stock option was $0.21. Expected volatility is based on historical volatility of the Company's stock prices and comparable peers.

g) Per share amounts

Basic loss per share is calculated using the weighted average number of shares of 77,031,759 for the period ended December 31, 2014 (2013 - 63,290,812). Options and warrants were excluded from the dilution calculation as they were anti-dilutive.

10. GENERAL AND ADMINISTRATIVE EXPENSES

The Company's general and administrative expenses include the following:

11. SEGMENTED INFORMATION

The Company currently operates in one operating segment, the exploration and development of mineral properties in Mexico. Management of the Company makes decisions about allocating resources based on the one operating segment. Summary of identifiable assets by operating segment is as follows:

12. RELATED PARTY TRANSACTIONS

a) Related party expenses

The Company's related parties include directors and officers and companies which have directors in common. Transactions made with related parties are made in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

During the six month period ended December 31, 2014, director's, management fees and salaries in the amount of $323,730 (2013 - $186,050) were paid to directors, officers, and employee of the Company. Of this amount, $50,400 (2013 - $76,050) was capitalized to exploration and evaluation assets, and $273,300 (2013 - $110,000) was expensed as general and administrative costs. Of the total amount paid, $45,178 (2013 - $24,000) remains in accounts payables and accrued liabilities.

During the six month period ended December 31, 2014, the Company paid $307,304 (2013 - $332,525) to Grupo Ornelas Vidal S.A. de C.V., a consulting firm of which Martin Vidal, director and president of Bacanora, is a partner. These services were incurred in the normal course of operations for geological exploration and pilot plant operation services. As of December 31, 2014, $64,927 (2013 - $29,055) remains in accounts payable and accrued liabilities.

b) Key management personnel compensation

Key management of the Company are directors, officers and an employee of the Company and their remuneration includes the following:

(1) Mr. Conroy resigned his positions as Director and VP, Special Projects on June 20, 2014. He remained with the Company as a consultant until October 31, 2014.

13. COMMITMENTS AND CONTINGENCIES

The Company has commitments for lease payments for the field office and camp in Mexico, and an office in London, UK with no specific expiry dates. The total annual financial commitment resulting from these agreements is $75,500.

The properties in Mexico are subject to spending requirements in order to maintain title of the concessions. The capital spending requirement for 2015 is $135,700. The properties are also subject to semi-annual payments to the Mexican government for concession taxes.