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Affinity Metals Corp. — Management Reports 2025
Oct 29, 2025
44090_rns_2025-10-28_a11fcefd-95f9-4327-aec0-402664e867fb.pdf
Management Reports
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AFFINITY METALS CORP.
Management Discussion and Analysis
For the Year ended June 30, 2025
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INTRODUCTION
The following management discussion and analysis (MD&A) of the financial position of Affinity Metals Corp. ("Company") and results of operations should be read in conjunction with the audited financial statements and accompanying notes for the year ended June 30, 2025. The audited financial statements together with the following management discussion and analysis are intended to provide readers with a reasonable basis for assessing the financial performance of the Company as well as forward-looking statements relating to potential future performance. All statements, other than those of historical fact, included in this MD&A, including without limitation, statements regarding potential mineralization and reserves, exploration results and future plans and objectives of the Company, are forward-looking statements that involve various risks and uncertainties. There can be no assurance such statements will prove accurate and actual results and future events could differ materially from those anticipated in such statements.
DATE
This MD&A includes material occurring up to and including October 28, 2025.
FORWARD-LOOKING STATEMENTS
This MD&A contains certain statements that may constitute "forward-looking statements". Forward-looking statements include, but are not limited to, statements regarding future anticipated property acquisitions, the content, cost, timing and results of future anticipated exploration programs, the anticipated discovery and delineation of mineral resources/reserves, proposed business and financing plans (including private placements of equity securities), anticipated business trends and potential future operating revenues. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions or are those which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future performance, and that actual results may differ materially from those in forward-looking statements as a result of various factors, including, but not limited to, the Company's inability to negotiate successfully for the acquisition of interests in mineral properties, the Company's inability to identify one or more economic deposits on its properties, variations in the nature, quality and quantity of any mineral deposits that may be located, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies.
Historical results of operations and trends that may be inferred from this MD&A may not necessarily indicate future results from operations. In particular, the current state of the global securities markets may cause significant reductions in the price of the Company's securities and render it difficult or impossible for the Company to raise the funds necessary to continue operations.
All the Company's public disclosure filings, including its most recent management information circular, material change reports, press releases and other information, may be accessed via www.sedarplus.com under Affinity Metals Corp. and readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties.
DESCRIPTION OF BUSINESS
Affinity Metals Corp. is incorporated in the Province of British Columbia. The Company is a reporting issuer in British Columbia and its shares trade on the Canadian Securities Exchange (CSE). The Company is engaged in the acquisition, exploration and developing of mineral properties in British Columbia and Quebec. The Company is currently focusing on exploring and advancing its current properties, identifying new exploration opportunities and identifying potential joint ventures for its properties.
OVERALL PERFORMANCE
At this time, the Company does not own any operating mines and has no operating income/sales from mineral production. Funding for operations is raised primarily through public and private share offerings. Future operations are dependent on the Company's ability to raise sufficient funding through share offerings or operations to support current and future expenditures. At June 30, 2025, the Company had a loss for the year of $547,194 and a working capital deficit of $709,544.
Realization of the carrying value of mineral interests is dependent upon funding, the ability of the Company and third parties to bring mineral interests into profitable production, or recovery from sale.
The audited financial statements have been prepared on a going concern assumption which contemplates the Company will continue in operation and realize its assets and discharge its liabilities in the normal course of operations. Should the going concern assumption not continue to be appropriate, further adjustments to carrying values may be required.
RESULTS OF OPERATIONS – MINERAL PROPERTIES
During the year ended June 30, 2025, the Company incurred exploration and evaluation expenditures in the amount of $19,405. This included exploration expenditures for the year related to the Company’s maintenance of the Regal Property for storage of equipment and drill core from previous exploration programs in the amount of $14,400. Also included were re-staking costs for claims making up the Windfall North Property in the amount of $5,005. No other work was completed on the Regal property or any of the Company’s other properties due to poor equity market conditions and lack of working capital.
The most recent exploration on the Regal Property was in 2020 where 3,442 meters of diamond drilling were completed along with additional prospecting, mapping and sampling on key areas on the property. Information the Company’s Regal Property and Windfall North Property can be found on the Company’s website at www.affinity-metals.com.
During the last two years, the Company has minimized exploration activities due to the Company’s efforts to conserve capital and limit shareholder dilution in light of the difficult equity market conditions. In evaluating many companies across the industry, even very positive exploration results have not had a significant influence on respective share prices often leading to extreme share dilution of shareholder holdings as a reward for large exploration programs. The Company is continually monitoring equity market indicators including gold price and other similar junior exploration companies for an indication that investment is returning to the exploration sector. As the gold price has continued to increase and the exploration market conditions have shown signs of improvement, the Company plans to carry out an exploration program on the Regal Property and/or other properties in the coming year. The Company and its management continue to be very bullish on the properties held in its portfolio as well as the general exploration sector due to strong macroeconomic indicators, an increasing gold price, and favorable forecasts from prominent precious metals experts. As such, the Company continues to actively seek out further opportunities within the exploration sector that often arise when markets are down.
EXPLORATION EXPENDITURES
Regal Property, BC
The Company's Regal Property is located in the prolific Kootenay Arc near Revelstoke, BC. On November 15, 2017, the Company entered into a four-year option agreement to purchase 100% interest in the property which is now completed. All payments have been made and the claims are now owned by the Company subject to the 3% NSR detailed below. The extensive property package hosts three former past-producing mines and in 2011 the property had an extensive airborne geophysical survey conducted that defined high-potential linear targets correlating with the mineralization of the three past-producing mines.
The vendor retains a 3% NSR which can be fully bought out anytime for $500,000 cash and 100,000 shares per each 1%.
Windfall North Property, QC
The Company acquired, through staking, a mineral property in Quebec, Canada. The property has been named the Windfall North Property. The property originally consisted of 96 mineral tenures and straddles the very prospective main lithological contact and structural trend along strike 9 km northeast of Osisko’s rapidly growing Windfall Lake deposit within the prolific Abitibi Greenstone Belt. Exploration plans were canceled for 2023 as forest fires forced the Quebec Government to restrict exploration in the surrounding region. In 2024, the Company allowed the claims to lapse as the renewal fees that would have been required to keep these claims would have been in excess of $200,000, recognizing an impairment of $20,000. The Company deemed this excessive but later had the opportunity to re-stake 45 of the original claims for $5,005 that appear to include the same targets as the original set of claims.
FINANCIAL SUMMARY
During the year ended June 30, 2025, the Company maintained ongoing expenses with existing cash from a private placement with proceeds of $180,000 and a $400,000 loan from a Company controlled by some common directors. No exploration programs were carried out during this past summer due to difficult market conditions for raising capital and unfavorable exploration conditions including fire activity and inclement weather near the Company’s Regal property. Other operational expenses were in the normal course of
operations for the Company and were minimized where possible to conserve working capital and share capital dilution. Management has also deferred payment of management fees to further conserve working capital.
Other components of the Company's operations for the year ended June 30, 2025 included business development and property investigation costs of $36,150 which were up substantially due to the offsetting effect of a write-down of a past vendor invoice in the comparative year, accrued consulting fees accrued totaled $360,000, interests of $30,426, office and miscellaneous expenses of $29,653 which was down substantially due to large filing fees for the transition to the Canadian Stock Exchange in the comparative year, decreased professional fees of $38,254 due to the reversal of a previous accrual, and transfer agent and filing fees of $4,711. The Company also recorded an unrealized loss on marketable securities of $48,000.
During the year ended June 30, 2025, there was a net increase in cash and cash equivalents of $48,407. The Company will need to raise additional capital to continue operations and carry out exploration in the coming year.
As the Company has no revenues, increased exploration activity and/or operations cause an increase in losses. Other losses can be caused by write-downs or write-offs of the carrying value of impaired mineral assets.
SELECTED ANNUAL INFORMATION
| June 30, 2025 | June 30, 2024 | June 30, 2023 | |
|---|---|---|---|
| Total Revenues | NIL | NIL | NIL |
| Net loss | ($547,194) | ($579,389) | ($505,949) |
| Net loss per share (basic and diluted) | (0.01) | ($0.01) | ($0.01) |
| Total assets | $2,123,613 | $2,096,829 | $2,123,823 |
| Total long-term financial liabilities | $349,716 | NIL | $121,077 |
RESULTS OF OPERATIONS
The net loss for the year ended June 30, 2025 was $547,194 compared to a net loss of $562,483 in the comparative year reflecting an overall decrease in net loss of $15,289. Significant variances included an increase in business development and property investigation in the amount of $16,274. This amount included a write-down adjustment in the comparative year of accrued expenses from a previous year which offset regular expenditures in this category. Management and other consulting fees accrued held consistent despite inflationary pressures however, $605,108 have not been paid out in order to conserve operating capital. Interest costs increased by $10,768 due to the additional loans payable in the last quarter 2025. Office and miscellaneous expenses decreased by $1,365 due to one-time filing fees for moving the Company's listing to the Canadian Stock Exchange (CSE). Professional fees also decreased as compared to 2024 due to a reversal of previous year accrual. Stock-based compensation from options granted in the previous year resulted in a decreased expense in the current year by $72,434. No impairment costs were incurred during the current year as compared to the previous year where an impairment of exploration assets was recorded in the amount of $20,447.
SUMMARY OF QUARTERLY RESULTS
The following table sets forth a comparison of revenues and earnings for the previous eight quarters ending with June 30, 2025. Financial information is presented in Canadian dollars and is prepared in accordance with IFRS.
| Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sept 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sept 30, 2023 | |
|---|---|---|---|---|---|---|---|---|
| $ Net income (loss) | (226,935) | (106,048) | (107,979) | (106,232) | (185,005) | (176,368) | (117,347) | (100,669) |
| Net income (loss) per share (Basic and diluted) | (0.004) | (0.002) | (0.002) | (0.002) | (0.002) | (0.002) | (0.002) | (0.002) |
Discussion
The Company is an exploration company without revenues.
The operating results of junior exploration companies are capable of demonstrating wide variations from period to period and year to year due to variances in exploration expenditures and write-downs of mineral properties. Other than the descriptions regarding
administrative costs already discussed, management of Affinity Metals does not believe that meaningful information about the Company’s operations can be derived from an analysis of quarterly fluctuations in any more detail than presented herein.
A complete list of significant accounting policies can be found in the annual audited financial statements for the year ended June 30, 2024. All financial amounts are in Canadian dollars.
The audited financial statements for the year ended June 30, 2025 have been prepared on a going concern assumption which contemplates the Company will continue in operation and realize its assets and discharge its liabilities in the normal course of operations as disclosed in Note 1 of the audited financial statements.
LIQUIDITY AND CAPITAL RESOURCES
A promissory note totaling $150,000 is payable to a company controlled by a director of the Company. The interest rate of 2.5% was fixed until the maturity date of February 8, 2023. The Company estimated that the market interest rate for a similar loan is 16% and recognized at the inception $17,455 in the debt discount reserve as a discount of the promissory note. The carrying value of the promissory note payable was then carried at amortized costs. The Promissory note agreement was amended on February 8, 2023 extending the maturity date to June 30, 2025 and the fixed interest rate to 3.5%. The amendment was accounted for as an extinguishment of debt and a discount of $39,768 was recorded in the equity reserve. This promissory note was not repaid on June 30, 2025 and is currently due on demand. The carrying value of this promissory note as at June 30, 2025 was $162,557 (2024: $140,502).
During the year ended June 30, 2025 the Company received an additional promissory note of $400,000 from American Creek Resources Ltd.. The interest rate of 10% was fixed until the maturity date of December 31, 2027. The Company estimated that the market interest rate for a similar loan is 16% and recognized at the inception $58,654 in the debt discount reserve as a discount of the promissory note. The carrying value of the promissory note payable was then carried at amortized costs. The carrying value of this promissory note June 30, 2025 was $349,716.
The Company recognized during the year ended June 30, 2025 interest expenses of $30,426 for these promissory notes (2024 - $19,658).
On May 9, 2025, the Company issued 12,000,000 units in a non-brokered private placement at a price of $0.015 per unit. Each unit consisted of one common share of the Company and one non-transferable common share purchase warrant. Each warrant may be exercised for one additional common share for a period of 3 years from the closing date at a price of $0.05 per share.
In that the Company has no revenues, additional cash will be required to continue funding its operations including current property maintenance and administrative costs presumably within this fiscal year. The Company will also need to raise further funds should it decide to undertake future exploration programs and/or acquire additional exploration assets.
The Company periodically seeks additional financing through the issuance of equity. While the Company has been successful in raising capital in the past, there can be no assurance it will be able to do so in the future.
The Company has no material debt obligations, other than short-term liabilities to related and unrelated parties as well as the promissory note to a related party which were incurred in normal business activities.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements that would potentially affect current or future operations, or the financial condition of the Company.
TRANSACTIONS WITH RELATED PARTIES
The Company incurred the following related party transactions with companies that are controlled by a director of the Company, CEO and CFO.
| Year Ended | ||
|---|---|---|
| June 30, 2025 | June 30, 2024 | |
| Accrued Interest expense – Promissory note from a company controlled by director and from a company with common directors | $ 30,426 | $ 19,658 |
Key management personnel compensation
| Year Ended | ||
|---|---|---|
| June 30, 2025 | June 30, 2024 | |
| Consulting fees – accrued or paid to a company controlled by the CEO | $ 180,000 | $ 180,000 |
| Consulting fees – accrued or paid to a company controlled by the CFO | 180,000 | 180,000 |
| Consulting fees – accrued or paid to officers | $ 360,000 | $ 360,000 |
Related party balances
Included in trade payables and accrued liabilities at June 30, 2025 is $605,108 (June 30, 2024 - $656,000) owed to companies owned by officers of the Company for accrued consulting fees.
A promissory note originally totaling $150,000 at the rate of 3.5% per annum, currently due on demand, is due to a company controlled by a director of the Company.
A promissory note originally totaling $400,000 at the rate of 10% per annum, currently maturing on December 31, 2027, is due to American Creek Resources Ltd. which is a company with common directors.
As at June 30, 2025, the Company holds 800,000 (June 2024 – 800,000) common shares of American Creek Resources Ltd. and 90,592 (June 2024 – 90,592) common shares of Stinger Resources Inc., companies with common directors.
On May 9, 2025, directors and family members of directors subscribed 12,000,000 units in a non-brokered private placement at a price of $0.015 per unit
PROPOSED TRANSACTIONS
The Company does not currently have any proposed transactions approved by the Board of Directors. All current transactions are fully disclosed in the audited financial statements for the year ended June 30, 2025.
ACCOUNTING POLICIES
Basis of preparation
A complete list of material accounting policy information can be found in Note 2 of the audited annual financial statements for the year ended June 30, 2025 which should be read in conjunction with this MD&A. The financial statements of the Company have been prepared on an accrual basis and are based on historical costs, modified where applicable. The financial statements are presented in Canadian dollars unless otherwise noted.
The audited financial statements for Affinity Metals Corp. have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize its assets and discharge its
liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at June 30, 2025, the Company had not advanced its exploration and evaluation assets to commercial production and is not able to finance day-to-day activities through operations. The Company's continuation as a going concern is dependent upon the successful results from its exploration activities and its ability to attain profitable operations and generate funds therefrom and/or raise equity capital or borrowings sufficient to meet current and future obligations. These conditions raise significant doubt about the Company's ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with cash on hand, loans from directors and companies controlled by directors, and or private placement of common shares.
The financial statements of the Company have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
RISKS AND UNCERTAINTIES
Resource exploration is a speculative business and involves a high degree of risk. There is no certainty that the expenditures made by the Company in the exploration of properties will result in discoveries of commercial quantities of minerals. Exploration for mineral deposits involves risks which even a combination of professional evaluation and management experience may not eliminate. Significant expenditures are required to locate and estimate ore reserves, and further the development of a property. Capital expenditures to bring a property to a commercial production stage are also significant. There is no assurance the Company has, or will have, commercially viable ore bodies. There is no assurance that the Company will be able to arrange sufficient financing to bring ore bodies into production. The following are some of the risks to the Company, recognizing that it may be exposed to other additional risks from time to time:
- Dependence on key management personnel
- Reliance on the availability and performance of independent contractors
- Challenges by other unknown parties to property title
- Environmental issues
- Federal and provincial political risk
- Commodity price risk
- Financial markets
The Company is diligent in minimizing exposure to business risk, but by the nature of its activities and size, will always have some risk. These risks are not always quantifiable due to their uncertain nature. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, then actual results may vary materially from those described on forward-looking statements.
OUTSTANDING SHARE CAPITAL
At October 28, 2025, the Company had the following number of securities outstanding:
| Securities | Number | Exercise Price | Expiry Date |
|---|---|---|---|
| Common shares issued and outstanding | 65,858,165 | N/A | N/A |
| Warrants | 6,000,000 | 0.05 | March 30, 2028 |
| Warrants | 12,000,000 | 0.05 | May 8, 2028 |
| Share purchase options | 1,670,000 | 0.05 | March 6, 2027 |
| Share purchase options | 3,690,000 | 0.05 | February 15, 2034 |
| Fully diluted share Capital | 89,218,165 | N/A | N/A |
ADDITIONAL INFORMATION
Additional information relating to the Company's news releases and filings can be found on the SEDAR website: www.sedar.com.
DISCLOSURE BY ISSUER WITHOUT SIGNIFICANT REVENUE
In addition to the analysis included in this MD&A, a breakdown of the material components of the Company's general and administrative expenses is disclosed in the audited financial statements for the year ended June 30, 2025 to which this MD&A relates. Additionally, a
breakdown of the material components of the acquisition and deferred exploration costs of the Company’s mineral property is disclosed in Note 4 to the audited financial statements for the year ended June 30, 2025 to which this MD&A relates.
DISCLAIMER
The information provided in this document is not intended to be a comprehensive review of all matters concerning the Company. The users of this information, including but not limited to investors and prospective investors, should read it in conjunction with all other disclosure documents provided including but not limited to all documents filed on SEDAR (www.SEDARPLUS.com) No securities commission or regulatory authority has reviewed the accuracy or adequacy of the information presented herein.
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