## 3. Summary of Significant Accounting Policies (Continued) 

## (m) Financial instruments (Continued) 

ii. Financial liabilities and equity 

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. 

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. 

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. 

(a) Other financial liabilities 

Other financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. 

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expenses over the corresponding period. The effective interest rate is the rate that exactly discounts estimated future cash payments over the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. 

The Company has classified trade and other payables, short-term financial liabilities and long-term financial liabilities as other financial liabilities. 

(b) Derecognition of financial liabilities 

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or expired. 

## (n) Unit offerings 

Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated first to common shares based on the quoted market price of the common shares at the time the units are priced, then to warrants based on the Black-Scholes option pricing model, with any remaining excess amount to the flow-through tax premium as a liability. 

## (o) Standards, amendments and interpretations affecting the 2013 and future year-ends 

The Company has not adopted the following revised standards and is currently assessing the impact that these standards will have on the financial statements. 

i. IFRS 9, “Financial Instruments” (2010), incorporates revised requirement for the classification and measurement requirement of financial liabilities, and carries over the existing de-recognition requirements from IAS 39, “Financial Instruments: Recognition and Measurement”. The revised financial liability provisions maintain the existing amortized cost measurement basis for most liabilities. New requirements apply where an entity chooses to measure a liability at FVPL; in these cases, the portion of the change in fair value related to changes in the entity's own credit risk is presented in other comprehensive income rather than within profit or loss. Applies to annual periods beginning on or after January 1, 2015, this standard supersedes IFRS 9 (2009). However, for annual reporting periods beginning before January 1, 2015, an entity may early-adopt IFRS 9 (2009) instead of applying this standard. 

