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Benz Mining Corp. Management Reports 2023
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Management Reports
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MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX-MONTH PERIOD ENDED OCTOBER 31, 2023
The following management's discussion and analysis of financial conditions and results of operations (the MD&A) has been prepared by management and provides a review of the activities, results of operations, and financial condition of Benz Mining Corp. (the Company or Benz). This discussion dated December 14, 2023, complements and supplements the Company's unaudited condensed interim financial statements and associated notes for the three and six-month periods ended October 31, 2023, and 2022. Please also refer to the cautionary statement of forward-looking information at the end of this document.
All financial information in this MD&A is prepared in accordance with International Financial Reporting Standards (IFRS) and reported in Canadian dollars unless otherwise noted. Additional information about the Company is available under the Company's profile at www.sedarplus.ca and www.asx.com.au.
1. COMPANY OVERVIEW AND OVERALL PERFORMANCE
Benz Mining Corp was incorporated under the BCBCA on November 9, 2011, and began trading as a capital pool company in September 2012 and was admitted to the TSX-V in April 2013 under the symbol "BZ" and on the Frankfurt Exchange in August 2017 under the symbol "1VU". The Company's shares are also traded on the restricted OTC Pink platform. On December 23, 2020, the Company announced that it had also commenced trading on the Australian Securities Exchange (ASX) under the symbol "BNZ" following a successful Initial Public Offering.
On August 7, 2019, the Company entered into an exclusive option agreement with Eastmain Resources Inc (Eastmain) (now named Fury Gold Mines Limited) to acquire a 100% interest in the former producing Eastmain Gold Project located in the James Bay District (Eastmain Project or the Project), Quebec for approximate consideration of C$5,000,000 (Option Agreement).
On April 30, 2020, the Company announced that it had entered into an agreement amending the Option Agreement to acquire an option to earn up to a 100% interest in the Ruby Hill West and Ruby Hill East properties (Amending Agreement).
Pursuant to the Option Agreement and Amendment Agreement, the Company retained the right and option to earn a 75% interest in the Eastmain Project and Ruby Hill East and Ruby Hill West properties by issuing the following cash and common shares payments to Eastmain:
| Option PaymentsPayable in Cash | Option PaymentsPayable in Cash or | |
|---|---|---|
| Shares | ||
| Option Agreement Effective date – October 23, 2019 (paid) | $75,000 | - |
| Amending Agreement approval date by TSX-V Exchange – May 21, | ||
| 2020 (paid) | $75,000 | - |
| On or before the 1st Anniversary of the Effective Date(paid) | $150,000 | $100,000 |
| On or before the 2nd Anniversary of the Effective Date(paid) | $150,000 | $110,000 |
| On or before the 3rd Anniversary of the Effective Date(paid) | $200,000 | $110,000 |
| On or before the 4th Anniversary of the Effective Date(paid) | $1,250,000 | $475,000 |
| Total Price* | $1,900,000 | $795,000 |
* Total in cash and shares is $2,695,000.
In addition to the Option Payments, the Company also issued Eastmain 3,000,000 common shares, with a value of C$255,000 on grant date. Per the terms of the Amending Agreement, Benz issued a further 2,000,000 common shares and 4,000,000 share purchase warrants, with a value of C$360,000 and C$539,078, respectively; each warrant enabling the holder to purchase one common share of Benz at a price of C$0.12 per share until April 27, 2023.
The Project property expenditure schedule, as defined in the Option Agreement and updated in the Amending Agreement totals $3,500,000 as follows:
| Cash Spend | |
|---|---|
| On or before the 1st Anniversary of the Effective Date | $- |
| On or before the 2nd Anniversary of the Effective Date(incurred) | $1,000,000 |
| On or before the 3rd Anniversary of the Effective Date(incurred) | $1,500,000 |
| On or before the 4th Anniversary of the Effective Date(Incurred) | $1,000,000 |
| Total Property Expenditure | $3,500,000 |
On October 23, 2023, the Company made the 4 th and final Option Payment to Eastmain of $1,725,000, comprising $1,350,000 in cash and $375,000 in shares (1,237,216 shares). Having issued all shares and warrants and incurred all the prerequisite property expenditures as described above, the Company exercised the options under the Option Agreement and Amendment Agreement and holds a 75% right, title and interest to the Project and Ruby Hill East and West properties.
Having exercised the options, the Company remains obligated to make the following additional payments to the Vendor on the occurrence of the following events:
- $1,000,000 within five (5) business days of the closing of project financing to place the Project or any part thereof into commercial production in accordance with a feasibility study completed by the Company within 24 months of the exercise of the option. With this payment, Benz will have acquired 100% of Eastmain's recorded and/or leasehold interest in the Project. If Benz fails to make this milestone payment, Eastmain will have the right to buy back Company's 75% interest in the Project for $3,500,000, of which up to $1,225,000 may be paid in common shares of Eastmain; and
- $1,500,000 within five (5) business days of the commencement of commercial production.
The Company may, at its election, pay up to 25% of this payment in common shares of the Company. The number of common shares required to be issued will be determined by the share equivalent of such payment on the date of issuance.
Eastmain would retain a 2% Net Smelter Return (NSR) royalty in respect of the Eastmain Project. The Company may, at any time, purchase one half of the NSR royalty, thereby reducing the NSR royalty to a 1% NSR royalty, for $1,500,000.
Benz will have the right to earn an additional 25% interest in the Ruby Hill East and West properties by paying an additional $100,000 to Eastmain by October 23, 2025, which can be paid in shares at the election of Eastmain based on the prevailing volume weighted average price (VWAP) of the Company's shares up to a maximum of 500,000 shares.
Following the acquisition of a 100% interest in the Ruby Hill and West properties, Eastmain will retain a 1% NSR royalty, of which one half may be purchased for $500,000 thereby reducing it to a 0.5% NSR royalty. The NSR royalty is also offset by any pre-existing royalties which may reduce the royalty burden.
In September 2022, the Company acquired an additional 124 claims on the Ruby Hill West property for cash totaling $19,840. As at October 31, 2023 the total number of claims held on the Eastmain and Ruby Hill Properties totaled 545, covering 28,731.9 hectares (287.32 km2 ).
In September 2022, the Company acquired an additional 5 claims on the Windy Mountain property for cash totaling $800. As at October 31, 2023, the total claims held on the property were 78, covering 4,109.7 hectares (41.10 km2 ).
2. GOING CONCERN UNCERTAINTY
The Company's condensed interim financial statements have been prepared on a going concern basis, which assumes that the Company will realize its assets and discharge its obligations in the normal course of operations. As at October 31, 2023, the Company has a working capital surplus of $4,309,396 (April 30, 2023 – $6,608,469). The Company's ability to continue as a going concern is dependent on being able to obtain the necessary financing to satisfy its liabilities as they become due.
To date, the Company has not earned significant revenues and is considered to be in the exploration phase. The investment in, and expenditures on, exploration and evaluation assets comprise a significant portion of the Company's activities. Mineral exploration and development is highly speculative and involves inherent risks.
Management believes the Company's cash position will support all of its financial obligations and expected expenditures during the next twelve months. However, the Company expects that it will need to obtain further financing in in order to continue exploration activities in the future. In addition, while the Company's future activities in relation to drilling on its mineral claims look promising, there can be no assurance that the results of its exploration activities will confirm the existence of economically viable quantities of ore or that the project will ultimately go into production. There can be no assurance that management will be successful in securing adequate financing. If adequate financing is not obtained, the Company may be required to delay or reduce the scope of any or all of its exploration and development projects.
The Company reported a net loss and total comprehensive loss in the six-month period ended October 31, 2023 of $2,750,818 (year ended April 30, 2023 - $4,776,962). These recurring losses and the need for continued financing to further successful exploration activities indicate the existence of a material uncertainty that may cast significant doubt as to the Company's ability to continue as a going concern.
The Company's financial statements do not give effect to any adjustments to the carrying values and classifications of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.
3. OPERATIONS
Eastmain Project Background
The Eastmain Project is located approximately 750km northeast of Montreal and 316km northeast of Chibougamau and comprises 155 contiguous mining claims each with an area of approximately 52.7 ha, covering a total of 8,172.71 ha plus one industrial lease permit. It is accessible by road via the Route 167 extension, a permanent all-season road, and is serviced by an existing camp, all season gravel roads, and an airstrip. The Eastmain Project benefits from access to Chibougamau (population of 7,541) that serves as the main centre of communications and supplies for the area.
The Eastmain Project has a history of significant exploration that has been undertaken intermittently since Placer Development Limited's initial discovery of the Eastmain deposit in 1969/1970. At this time the goldsilver-copper bearing A Zone was intersected while drill-testing an airborne geophysical conductor. Subsequent drill testing of airborne conductors in the 1980's defined two additional gold-rich zones known as the B and C Zones. In 1987, the Placer and MSV Resources Inc. joint venture completed underground development on the Eastmain deposit including an 826.2 m decline, 226.2 m of sub-level drifting, and 95.5m of raising. In 1994 to 1995, MSV Resources Inc. mined 118,356 tonnes grading 10.58 g/t Au and 0.3% Cu by room and pillar mining. The mineralization was processed at the Copper Rand Mine in Chibougamau, and 40,000 oz of Au was recovered. Eastmain Resources Inc. acquired a 100% interest in the Eastmain Project from Campbell Resources Inc. in 2007.
On August 7, 2019, Benz entered into the Option Agreement with Eastmain followed by the Amending Agreement on April 30, 2020. On October 23, 2023, the Company made the 4 th and final Option Payment to Eastmain and exercised the options under the Option Agreement and Amendment Agreement to hold a 75% interest in the Eastmain Project and the Ruby Hill East and West properties.
Ruby Hill Properties Background
The Ruby Hill East property is located within the upper Eastmain greenstone belt of James Bay, Québec where the Eastmain Gold deposit is located. The Stornoway diamond mine is located about 80 km north of the property. The Ruby Hill East property consists of 88 mineral claims (4,640 ha) in a single block contiguous to the west with the Eastmain Mine Project. Eastmain completed drill programs in 2008 and in 2016. In 2008, eight holes were drilled totalling 1,263m. In 2016, five diamond drill holes were completed totalling 1,044m.
The Ruby Hill West property is located approximately 800 km north of Montreal, 320 km north-northeast of Chibougamau and 160 km north of Temiscamie, Québec. The Ruby Hill West property consists of 302 contiguous claim cells (15,919.18 ha) in a single block. The eastern boundary of the property is located approximately 18km west of the Eastmain Project and 10 km from highway 167 North. The Ruby Hill West property is helicopter accessible from the base camp on the Eastmain Project.
Eastmain commenced exploration in 2005, completed a drill program testing airborne geophysical targets in 2008 and a surface prospecting program in 2016. In 2008, 21 holes were drilled totalling 3,648 m. The 2016 work program consisted of geological mapping and prospecting. A total of 237 outcrops were described and 158 grab samples were collected. From the 158 collected samples, seven returned gold values >100 ppb, amongst which four assayed >1 g/t gold. The best gold value obtained is 18.15 g/t.
In the western part of the Ruby Hill West property, samples of a spodumene-bearing pegmatite dyke returned values of 0.50% to 2.19% lithium with very anomalous tantalum, cesium and rubidium values.
Exploration Activities at Eastmain Project
On May 23, 2023, the Company announced an updated independent Mineral Resource Estimate (MRE) on the Eastmain Project. The updated MRE has been possible following extensive drilling campaigns on the Eastmain Mine Shear Zone during 2021/22.
The updated MRE for the Eastmain Project, prepared by P&E Mining Consultants Inc. (P&E) has been estimated at 621 koz Inferred and 384 koz Indicated gold at respective grades of 5.1 and 9.0 g/t Au.
| Classification | Tonnes (Mt) | Au (g/t) | Au (koz) |
|---|---|---|---|
| Indicated | 1.3 | 9.0 | 384 |
| Inferred | 3.8 | 5.1 | 621 |
Table 1: Eastmain Project Updated Mineral Resources at 2.5 g/t Au Cut-off.
Notes:
3. The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
4. The underground Mineral Resources in this estimate have been reported using a 2.5 g/t lower cut-off based on US$1,800/oz Au, 0.77 US$ FX, 95% process recovery and costs of C$125/t mining, C$40/t processing and $15/t G&A. Up-dip cut-and-fill mining is envisioned for extracting mineralization at Eastmain.
5. The Eastmain Zones have been classified as Indicated and Inferred according to drill spacing and two grade estimation passes. Underground Mineral Resources have been classified manually within a constraining volume to remove isolated areas not satisfying reasonable prospects for eventual economic extraction ("RPEEE") and have been reported using an approximate 2 m minimum down hole intercept.
- 7. The bulk density of 2.95 t/m3 has been applied based on measurements taken on the drill core with Au values equal or greater than 2.0 g/t. This value was assigned to the block model.
- 8. The MRE is based on a block model with a parent block size in mineralized domains of 10 m x 10 m x 10 m with subcells as small as 0.5 m.
- 9. Tonnage and grades have been expressed in the metric system, and gold metal content has been expressed in troy ounces.
- 10. The tonnages have been rounded to the nearest 100 kt and the metal content has been rounded to the nearest 1 k ounces. Gold grades have been reported to one decimal place.
This MRE is an update from the previously reported NI 43-101 compliant MRE (2019) of 236.5 koz indicated and 139.3 koz of inferred at respective grades of 8.19 g/t Au and 7.48 g/t Au on the Eastmain Project. This updated MRE was prepared and is reported in accordance with NI 43-101 and JORC 2012 and is effective as of May 24, 2023. Benz engaged International Resource Solutions of Australia and P&E of Canada to prepare the updated MRE of the Eastmain Project. The updated MRE is based on 383 diamond drill holes totalling 103,444 m.
The Mineral Resource Estimate is sensitive to the selection of a reporting Au cut-off value, as demonstrated in Table 2.
1. The Mineral Resources described above have been prepared in accordance with the CIM Standards (Canadian Institute of Mining, Metallurgy, and Petroleum, 2014) and follow Best Practices outlined by CIM (2019).
2. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
6. Historical workings were depleted from the Mineral Resource model.
| Indicated | Inferred | |||||
|---|---|---|---|---|---|---|
| Cut-off Au (g/t) | Tonnes | Au | Au | Tonnes | Au | Au |
| (Mt) | (g/t) | (koz) | (Mt) | (g/t) | (koz) | |
| 4.5 | 1.0 | 10.5 | 351 | 1.6 | 7.4 | 370 |
| 4.0 | 1.1 | 10.0 | 362 | 2.1 | 6.6 | 444 |
| 3.5 | 1.2 | 9.6 | 371 | 2.6 | 6.0 | 510 |
| 3.0 | 1.3 | 9.3 | 380 | 3.3 | 5.5 | 576 |
| 2.5 | 1.3 | 9.0 | 384 | 3.8 | 5.1 | 621 |
| 2.0 | 1.4 | 8.6 | 392 | 4.7 | 4.6 | 685 |
| 1.5 | 1.5 | 8.4 | 393 | 5.5 | 4.1 | 733 |
| 1.0 | 1.5 | 8.3 | 394 | 6.0 | 3.9 | 755 |
Table 2: Mineral Resource Estimate Sensitivity to Au Cut-off Grade.
Notes 1 – 10 below Table 1 also above apply.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resource Estimates do not account for mineability, selectivity, mining loss and dilution. Inferred Mineral Resources are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is also no certainty that Indicated Mineral Resources will be converted into Mineral Reserves, once economic considerations are applied; or that Inferred Mineral Resources will be converted to Measured and Indicated classifications through further drilling, or into Mineral Reserves, once economic considerations are applied.
During July 2023, the Company reported that 45 diamond drill holes were drilled for a total of 17,965m. The drilling program was designed to extend the gold deposit to the northern part of the property and to explore outside of the known mine area and along the northwestern trend that includes the Suzanna, Michel and Julien prospects whilst the Company was waiting for assays from additional drilling done over the zones the subject of the May 2023 resource upgrade.
The drilling program followed a strategy of targeting previously identified time domain electromagnetic anomalies at the Eastmain Mine area and Induced Polarisation at the Julien, Suzanna and Michel prospect areas, to follow the best geophysical response, interpreted to be caused by sulphide rich gold mineralisation.
The Company was pleased to report new high-grade discoveries on the Suzanna and Michel prospects, including a new copper-gold discovery, including:
- 4.85m at 7.50 g/t and 1.91% Cu from 76.65m (EM22-272); and
- 3.40m at 9.32 g/t from 264.10m at Suzanna (EM22-260).
Both holes are located in a wide-open area with very few drill holes at Michel (EM22-272) and Suzanna (EM22-260).
In addition, drilling at Zone E yielded several positive intersections that should result in the expansion of the gold mineralisation in that area. It is also anticipated that Zone NW will continue to expand with the new results indicating continuance towards the northwest and the north that will be investigated by further drilling.
All the core samples from March 2023 onwards were sent to MSALABS located in Val d'Or for gold analysis by gamma-ray two-cycle analysis, a Chrysos PhotonAssay instrument, on a sample size of 500g. Multielement analysis is also done at MSA Labs by 4-acid ICP-AES/Ms, ultra trace levels with reanalysis of over the limit metals by 4-acid ICP-AES Ore grade.
Exploration Activities at Ruby Hill Properties
At Ruby Hill West, a study was commissioned with Dahrouge Geological Consultants engaged to complete a review of the Company's geological database to identify and target new potential pegmatite zones that may contain lithium. The data review identified that the northern portion of the greenstone belt was the preferred target zone for lithium-caesium-tantalum (LCT) pegmatites.
A soil and prospecting campaign was planned in May and June 2023 to follow-up on their report. Upon the commencement of this summer exploration program, Benz geologists identified the Mikisiw outcrop a few days prior to the suspension of all work programs and evacuation of this area due to the well publicised bushfires that ceased exploration across all of the James Bay region.
Analysis of the initial grab samples taken at Mikisiw confirmed the presence of high-grade lithium with samples of 5.57%, 3.66%, 3.13%, 1.5%, 1.39% and 1.26% Li2O. This work programme resumed at the end of July 2023 where the discovery of a new area of outcropping spodumene bearing pegmatites was discovered along the 25km LCT pegmatite trend. This new discovery, M-2, is located approximately 2km west of the recent Mikisiw discovery and 400m from a historical diamond drill hole (DDH 90-EM-003) drilled by Kingswood Explorations 1985 Limited in 1990 that intersected 30m of muscovite-bearing pegmatite from 140.5m – 171.7m depth and was not assayed for lithium.
Following the identification of the 25km pegmatite trend, the Company selected areas for soil sampling and further prospecting, including the Mikisiw M-1 and M-2 areas. All available datasets were compiled including historical drilling where the pegmatite intersections in DDH 90-EM-003 warranted further investigation in this area. The Company notes that the position of this drill hole is approximate
Drilling on selected targets at the Ruby Hill West property was completed in November 2023 with the use of a single diamond helicopter supported drill rig undertaking an approximate 2,967m drilling program. The program consisted of 19 holes, to an average depth of 150m each, targeting the outcropping spodumene bearing pegmatites that were identified during the summer exploration program. The Company currently awaits assays for this program.
Corporate Activities
On November 17, 2023, the Company appointed Mark Lynch-Staunton as its Chief Development Officer to drive expansion of the Eastmain Gold Project and Ruby Hill West Lithium projects.
The Company held its Annual General Meeting (AGM) on December 8, 2023. At the AGM, the following directors were re-elected: Evan Cranston, Mathew O'Hara, Nicholas Tintor and Peter Williams. In addition, shareholders of the Company re-approved the Company's Omnibus Equity Incentive Compensation Plan as described in the management information circular dated November 3, 20223 as well as the reappointment of Lancaster & David, Chartered Professional Accountants as the auditor of the Company for the ensuing fiscal year, the approval of the 10% Placement Facility and the ratification of the prior issue of Shares to Fury Gold Mines Limited, all as described in the management information circular.
4. REVIEW OF FINANCIAL RESULTS
Oct. 31, 2023 Jul. 31, 2023 Apr. 30, 2023 Jan. 31, 2023 Oct. 31, 2022 Jul. 31, 2022 Apr. 30, 2022 Jan. 31, 2022 Interest Income $ 38,082 $ 60,079 $60,132 $53,094 $ 3,058 $ 2,734 $4,153 $6,856 Operating loss (2,542,805) (1,743,637) (3,561,977) (1,243,739) (717,977) (1,348,978) (5,798,739) (4,780,003) Net loss (1,360,372) (1,390,446) (2,190,019) (679,764) (558,748) (1,348,431) (3,064,935) (2,975,291) Basic and diluted loss per share (0.01) (0.01) (0.02) (0.01) (0.00) (0.01) (0.03) (0.03)
Summary of Quarterly Results
During the three-month periods ended October 31, 2023 and 2022, exploration and evaluation costs consisted of the following:
| October31, 2023 | October 31, 2022 | |
|---|---|---|
| Geology | 575,976 | 246,506 |
| Location/camp services | (74,159) | 20,715 |
| Drilling | 1,366,367 | 10,984 |
| Geochemical analysis | 98,922 | 25,956 |
| Geophysics | 221.470 | 40,000 |
| Environment | 22,680 | 11,241 |
| Health & safety | 88,401 | 6,030 |
| Property Maintenance | 1,447 | 22,100 |
| Total exploration and evaluation costs | 2,301,104 | 383,532 |
Explanation of quarterly results
During the three-months ended October 31, 2023, the Company recorded an operating loss of $2,542,805 and net loss of $1,360,372. Net loss was mainly comprised of exploration and evaluation costs of $2,301,104, management & consulting fees of $114,243, office and miscellaneous expenses of $54,714, foreign exchange loss of $35,484, offset by settlement of flow-through share premium liability of $1,179,835 and interest income of $38,082.
During the three-months ended July 31, 2023, the Company recorded an operating loss of $1,743,637 and net loss of $1,390,446. Net loss was mainly comprised of exploration and evaluation costs of $1,354,186, management & consulting fees of $129,846, share-based payments of $115,740, foreign exchange loss of $48,888, offset by settlement of flow-through share premium liability of $342,000 and interest income of $60,079.
During the three months ended April 30, 2023, the Company recorded an operating loss of $3,561,977 and net loss of $2,190,019. Net loss was mainly comprised of exploration and evaluation costs of $3,333,730, management & consulting fees of $136,376, foreign exchange loss of $54,026, offset by settlement of flow-through share premium liability of $1,365,852 and interest income of $60,132.
During the three months ended January 31, 2023, the Company recorded an operating loss of $1,243,739 and net loss of $679,764. Net loss was mainly comprised of exploration and evaluation costs of $897,318, management & consulting fees of $203,467, office and miscellaneous expense of $65,728, offset by settlement of flow-through share premium liability of $408,073, foreign exchange gain of $102,808 and interest income of $53,094.
During the three months ended October 31, 2022, the Company recorded an operating loss of $717,977 and net loss of $558,748. Net loss was mainly comprised of exploration and evaluation costs of $383,532, management & consulting fees of $203,279, office and miscellaneous expense of $71,273, offset by settlement of flow-through share premium liability of $124,688.
During the three months ended July 31, 2022, the Company recorded an operating loss of $1,348,978 and net loss of $1,348,431. Net loss was mainly comprised of exploration and evaluation costs of $1,030,396 and management & consulting fees of $186,908.
During the three months ended April 30, 2022, the Company recorded an operating loss of $5,798,739 and net loss of $3,064,935. Net loss was mainly comprised of exploration and evaluation costs of $5,376,547, management & consulting fees of $182,140, bad or doubtful debt expense of $116,184, offset by settlement of flow-through share premium liability of $2,734,704.
During the three months ended January 31, 2022, the Company recorded an operating loss of $4,780,003 and net loss of $2,975,291. Net loss was mainly comprised of exploration and evaluation costs of $4,442,430, management & consulting fees of $195,343, office and miscellaneous expense of $55,831, offset by settlement of flow-through share premium liability of $1,809,87.
5. LIQUIDITY AND CAPITAL RESOURCES
A summary of the Company's working capital balances is as follows:
| October31, 2023 | April 30, 2022 | |
|---|---|---|
| Cash and cash equivalents | 5,615,440 | 10,132,350 |
| Sales taxes recoverable | 429,661 | 537,616 |
| Other receivables | 492,928 | 69,837 |
| Prepaid expenses and deposits | 239,702 | 176,891 |
| Trade and other payables | (876,335) | (1,194,390) |
| Flow-through share premium liability | (1,592,000) | (3,113,835) |
| Working Capital | 4,309,396 | 6,608,469 |
The changes in working capital are primarily due to operating activities, as discussed in the previous section, and investing and financing activities as detailed below.
Cash Used in Investing Activities
Six-month period ended October 31, 2023 and 2022
During the six-month period ended October 31, 2022, Benz made cash payments of $1,350,000 pursuant to the terms of the Eastmain amended option agreement.
Six-month period ended October 31, 2022
During the six-month period ended October 31, 2022, Benz made cash payments of $310,000 pursuant to the terms of the Eastmain amended option agreement.
Cash from Financing Activities
Six-month periods ended October 31, 2023
During the six-month period ended October 31, 2023, the Company issued:
- 1,377,778 shares and 1,377,778 compensation warrants on the exercise of compensation units for proceeds of $234,222, and
- 7,162,122 shares on the exercise of warrants and 1,377,778 shares on the exercise of compensation warrants for total proceeds of $1,451,783.
Six-month periods ended October 31, 2022
On September 21, 2022, the Company completed the 2022 Private Placement of 16,434,000 common shares in the capital of the Company, consisting of (i) 7,929,317 charity flow-through common shares issued at a price of C$0.883 per Share and 3,945,813 flow through common shares issued at a price of $0.76 per Share (collectively, the "2022 FT Shares"), and (ii) 4,558,870 non-flow-through common shares (the "HD Shares") at a price of $0.42 per HD Share for aggregate gross proceeds of $11,914,728.
In connection with the completion of the 2022 Private Placement, the Company incurred issue costs totaling $567,406 comprising a cash commission in the amount of A$465,413 ($414,851) and other professional fees totaling $152,555.
During the six-month period ended October 31, 2022, the Company issued 800,000 shares on the exercise of warrants for proceeds of $96,000.
6. OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements other than those discussed above.
7. RELATED PARTY TRANSACTIONS
Key management personnel include the members of the Board of Directors and officers of the Company, who have the authority and responsibility for planning, directing, and controlling the activities of the Company. The remuneration of directors and officers for three and six-month periods ended October 31, 2023 and 2022 was as follows:
| Three-months ended | Six-months ended | |||||
|---|---|---|---|---|---|---|
| October 31, | October 31, | October 31, | October 31, | |||
| 2023 | 2022 | 2023 | 2022 | |||
| Salaries, bonuses, fees and benefitsManagement fees to the officersand directorsof the Company | 161,504 | $ | 206,638 | 325,445 | $ 407,811 | |
| Share-based paymentsOfficers and directors of theCompany | - | - | 38,580 | - | ||
| 161,504 | $ | 206,638 | 364,025 | $ 407,811 |
In the normal course of operations, the Company transacts with companies related to its directors or officers. The following amounts payable to related parties are unsecured, non-interest bearing, and due on demand:
| October31, 2023 | April 30, 2023 | ||
|---|---|---|---|
| Management fees | 49,621 | $ | 48,240 |
8. PROPOSED TRANSACTIONS
As is typical of the mining industry, the Company is continually reviewing potential merger, acquisition, investment and joint venture transactions and opportunities that could enhance shareholder value.
9. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents, other receivables, and trade and other payables. The fair value of these financial instruments approximates their carrying value due to the relatively short-term maturity of these instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant credit, liquidity, foreign exchange, interest and price risks arising from these financial instruments. For a summary of how the Company manages theses risks, please refer to Note 10 of the audited annual financial statements for the year ended April 30, 2023.
10. ADDITIONAL DISCLOSURES
Additional Disclosure for Venture Issuers without Significant Revenue
Detail regarding material items within general and administrative expenses has been provided throughout this document.
Outstanding Shares
Authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.
As at the date of this MD&A, the Company had the following issued and outstanding common shares and unexercised stock options, warrants and agent compensation options:
| Shares and Potential Shares | |
|---|---|
| Common shares outstanding | 169,138,794 |
| Stock options (weighted average exercise price $0.42) | 4,005,963 |
| Warrants (weighted average exercise price -$Nil) | - |
| Compensation units and warrants | |
| (weighted average exercise price $0.64) | 1,400,000 |
| Total common shares and potential common shares | 174,544,757 |
As at October 31, 2023, an amount of 222,857 common shares were held in escrow subject to an escrow agreement with Tusk Exploration Ltd. Due to unmet contractual obligations relating to the completion of an option purchase agreement that was relinquished in 2016, these shares continue to be held. The Company plans to cancel the shares held in escrow at a future date.
Internal Control over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. Any system of internal control over financial reporting, no matter how well
designed, has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Critical Judgements and Estimates
The financial statements are prepared in accordance with IFRS. The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
The critical judgments that the Company's management has made in the process of applying the Company's accounting policies that has the most significant effect on the amounts recognized in the Company's financial statements are the impairment of exploration and evaluation assets, the valuation of share-based payments and the valuation of deferred tax assets and liabilities.
For a summary of significant accounting judgements and estimates, please refer to Note 2 of the audited annual financial statements for the year ended April 30, 2023. Management believes it has made estimates that best reflect the facts and circumstances, however, actual results may differ from estimates.
Management Changes
On September 30, 2021, Carlos Escribano resigned as Chief Financial Officer of the Company. He was replaced as CFO, effective October 1, 2021, by Simon Sharp.
On March 1, 2022, Christine Pankiw resigned as Corporate Secretary (Canada) and was replaced by Mathew O'Hara.
On September 30, 2022, Paul Fowler resigned as Head of Corporate Development (Canada).
On January 27, 2023, Xavier Braud resigned from his role as Chief Executive Officer and Head of Corporate Development (Australia). Evan Cranston, Executive Chairman, agreed to act as the Interim Chief Executive Officer until the Board makes a permanent appointment to the position.
On February 1, 2023, Daniella Tintor was appointed Corporate Secretary (Canada) replacing Mathew O'Hara who filled the role in an interim position.
On November 17, 2023, Mark Lynch-Staunton was appointed Chief Development Officer.
11. RISKS AND UNCERTAINTIES
Our business, operating, and financial condition could be harmed due to any of the following risks. The risks described below are not the only ones facing our Company. Additional risks not presently known, or that Benz currently deems immaterial, may also impair our business operations. If any such risks actually occur, the financial condition, liquidity, and results of operations of the Company as well as the ability of the Company to implement its growth plans could be materially adversely affected.
The following is a description of certain risks and uncertainties that may affect the business of the Company.
Limited Operating History
Benz is a relatively new company with limited operating history and no history of business or mining operations, revenue generation, or production history. Benz was incorporated on November 9, 2011 and has yet to generate a profit from its activities. The Company is subject to all the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its growth objective. The Company anticipates that it may take several years to achieve positive cash flow from operations.
Exploration, Development, and Operating Risks
The exploration for and development of minerals involves significant risks, which even a combination of careful evaluation, experience, and knowledge may not eliminate. Few properties, which are explored, are ultimately developed into producing mines. There can be no guarantee that the estimates of quantities and qualities of minerals disclosed will be economically recoverable. With all mining operations there is uncertainty and, therefore, risk associated with operating parameters and costs resulting from the scaling up of extraction methods tested in pilot conditions. Mineral exploration is speculative in nature, and there can be no assurance that any minerals discovered will be discovered in sufficient quantities to warrant commercial exploitation. The Company's operations will be subject to all of the hazards and risks normally encountered in the exploration, development, and production of minerals. These include unusual and unexpected geological formations, rock falls, seismic activity, flooding, and other conditions involved in the extraction of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage, and possible legal liability. Although precautions to minimize risk will be taken, operations are subject to hazards that may result in environmental pollution and consequent liability that could have a material adverse impact on the business, operations, and financial performance of the Company.
Substantial Capital Requirements and Liquidity
Substantial additional funds will be required and there can be no assurances given that the Company will be able to raise the necessary funds. To meet such funding requirements, the Company may undertake additional equity financing, which would be dilutive to shareholders. There is no assurance that additional financing will be available on terms acceptable to the Company, or at all. If the Company is unable to obtain additional financing as needed, it may be required to discontinue operations.
Competition
There is competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The Company will compete with other mining companies, many of which have greater financial, technical, and other resources than the Company, for, among other things, the acquisition of minerals claims, leases, and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.
Reliance on Management and Dependence on Key Personnel
The success of the Company is currently largely dependent upon the performance of its directors and officers, and the ability to attract and retain its key personnel. The loss of the services of these persons may have a material adverse effect on the Company's business and prospects. Benz will compete with numerous other companies for the recruitment and retention of qualified employees and contractors. There is no assurance that the Company can maintain the service of its directors and officers or other qualified personnel required to operate its business. Failure to do so could have a material adverse effect on the Company and its prospects.
Fluctuating Mineral Prices and Marketability of Minerals
The market price of any mineral is volatile and affected by many factors beyond the Company's control, including but not limited to: international supply and demand, consumer product demand levels, international economic trends, commodity prices, operations costs, variations in mineral grade, fluctuations in the market price of minerals, currency exchange rate fluctuations, the level of interest rates, the rate of inflation, global or regional political events, and international events as well as a range of other market forces. Depending on the price of certain minerals, the Company may determine that it is impractical to continue its mineral exploration or development operations, if any. Sustained downward movements in mineral market prices could render less economic, or uneconomic, some or all of the mineral extraction and/or exploration activities to be undertaken by the Company. The marketability of minerals is affected by factors such as government regulation of mineral prices, royalties, allowable production, and the importation and exportation of minerals, the effect of which cannot be accurately predicted. There is no assurance that a profitable market will exist for the sale of minerals found, if any, on the Company's properties.
No Mineral Reserves or Mineral Resources
Mineral resources are estimates of the size and grade of deposits based on limited sampling and on certain assumptions and parameters. No assurance can be given that the anticipated tonnages and grades will be achieved or realized. Prolonged declines in the market price of silver, copper, lead or zinc may render mineral resources containing relatively lower grades of mineralization uneconomic and could materially reduce any estimate of resources. Should such declines occur, the Company could be required to take a material write-down of its investment in mining properties or the development of new projects, resulting in increased net losses.
Environmental Risks
All phases of the mining business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions, local laws, and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with mining operations. The legislation also requires that operations be operated, maintained, abandoned, and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability, and potentially increased capital expenditures and operating costs.
Governmental Regulations and Processing Licenses and Permits
The activities of the Company are subject to government approvals, various laws governing prospecting, development, land resumptions, production taxes, labour standards, and occupational health, mine safety, toxic substances, and other matters. Although the Company believes that its activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted, or that existing rules and regulations will not be applied in a manner, which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities of exploration and mining, or more stringent implementation thereof, could have a material adverse impact on the business, operations, and financial performance of the Company. Further, the mining licenses and permits issued in respect of its projects may be subject to conditions which, if not satisfied, may lead to the revocation of such licenses. In the event of revocation, the value of the Company's investments in such projects may decline.
Conflicts of Interest
Certain directors and officers of the Company will be engaged in, and will continue to engage in, other business activities on their own behalf and on behalf of other companies (including mineral resource companies) and, as a result of these and other activities, such directors and officers of the Company may become subject to conflicts of interest. The Business Corporations Act of British Columbia ("BCBCA") provides that in the event that a director has a material interest in a contract or proposed contract or agreement that is material to the issuer, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement, subject to and in accordance with the BCBCA. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of the BCBCA.
Markets for Securities
There can be no assurance that an active trading market in the Company's shares will be established and sustained. The market price for the Company's shares could be subject to wide fluctuations. Factors such as commodity prices, government regulation, interest rates, share price movements of the Company's peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of the securities of Company. The stock market has from time-to-time experienced extreme price and volume fluctuations, particularly in the mining sector.
Uninsurable Risks
Exploration, development, and production operations on mineral properties involve numerous risks, including unexpected or unusual geological operating conditions, rock bursts, cave-ins, fires, floods, earthquakes, and other environmental occurrences. It is not always possible to obtain insurance against all such risks, and the Company may decide not to insure against certain risks as a result of high premiums or other reasons. Should such liabilities arise, they could have an adverse impact on the Company's results of operations and financial condition and could cause a decline in the value of the Company's shares. The Company does not intend to maintain insurance against environmental risks.
Risks Relating to Infectious Diseases or Outbreaks of Viruses
Global markets have been adversely impacted by emerging infectious diseases and/or the threat of outbreaks of viruses, other contagions or epidemic diseases, including the novel COVID-19. A significant outbreak could result in a widespread crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn which could adversely affect the Company's business and the market price of the Common Shares. Many industries, including the mining industry, have been impacted by these market conditions. If increased levels of volatility continue or in the event of a rapid destabilization of global economic conditions, it may result in a material adverse effect on commodity prices, availability of credit, investor confidence, and general financial market liquidity, all of which may adversely affect the Company's business and the market price of the Company's securities. In addition, there may not be an adequate response to emerging infectious diseases. There are potentially significant economic and social impacts, including labour shortages and shutdowns, delays and disruption in supply chains, social unrest, government or regulatory actions or inactions, including permanent changes in taxation or policies, decreased demand, declines in the price of commodities, delays in permitting or approvals, governmental disruptions or other unknown but potentially significant impacts. At this time, the Company cannot accurately predict what effects these conditions will have on its operations or financial results, including due to uncertainties relating to the ultimate geographic spread, the duration of the outbreak, and the length of restrictions or responses that have been or may be imposed by the governments. Given the global nature of the Company's operations, the Company may not be able to accurately predict which operations will be impacted. Any outbreak or threat of an outbreak of a contagions or epidemic disease could have a material adverse effect on the Company, its business and operational results.
12. APPROVAL
The Board of Directors of the Company has approved the disclosure contained in this MD&A.
13. FORWARD LOOKING INFORMATION
This MD&A is based on a review of the Company's operations, financial position, and plans for the future based on facts and circumstances as of December 14, 2023.
Certain statements contained in this MD&A may constitute "forward looking information" as such term is used in applicable Canadian securities laws. Forward-looking information is based on plans, expectations and estimates of management at the date the information is provided and is subject to certain factors and assumptions, including, that the Company's financial condition and development plans do not change as a result of unforeseen events and that the Company obtains regulatory approval. Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that occurrences such as those referred to above are realized and result in delays, or cessation in planned work, that the Company's financial condition and development plans change, and delays in regulatory approval, as well as the other risks and uncertainties applicable to the Company as set forth in the Company's continuous disclosure filings filed under the Company's profile at www.sedarplus.ca and www.asx.com.au. The Company undertakes no obligation to update these forward-looking statements, other than as required by applicable law.
14. COMPETENT PERSON'S STATEMENT
The information in this announcement that relates to the Mineral Resource Estimate was first reported under the JORC Code by the Company on May 24, 2023. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and confirms that all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
The information in this announcement that relates to historical exploration results was first reported to the ASX in accordance with ASX Listing Rule 5.7 on December 21, 2020 (Prospectus), February 3, 2022, June 7, 2022, October 27, 2022, July 27, 2023, August 3, 2023, August 28, 2023 and 11 September 2023. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements.