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Candelaria Mining Corp. — Management Reports 2025
Apr 1, 2025
47041_rns_2025-04-01_c4ee83ac-f31e-4bb2-a943-cb8dbd1f9175.pdf
Management Reports
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CANDELARIA
MINING CORPORATION
Management's Discussion and Analysis
Three and Nine Months Ended January 31, 2025
(Expressed in thousands of Canadian dollars, except where otherwise noted and per share amounts)
Dated: April 1, 2025
This Management's Discussion and Analysis ("MD&A") should be read in conjunction with the condensed interim consolidated financial statements of Candelaria Mining Corp. ("Candelaria" or the "Company"), for the three and nine months ended January 31, 2025, and the related notes contained therein (the "Financial Statements") which were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB"). Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca. All amounts are expressed in thousands of Canadian dollars except where otherwise noted, per share amounts, and tonnes and ounces. Certain amounts shown in this MD&A may not add exactly to total amounts due to rounding differences.
This MD&A contains "forward-looking statements" that are subject to risk factors set out in a cautionary note contained therein. All information contained in this MD&A is current and has been approved by the Board of Directors of the Company as of April 1, 2025, unless otherwise stated.
OVERVIEW AND COMPANY HISTORY
Candelaria is a Canadian-based gold-copper exploration company with a portfolio of tow highly prospective projects in Mexico, one of the world's best mining jurisdictions. Candelaria currently own 100% of the Caballo Blanco and the Pinos Gold Projects.
The Company is a publicly listed entity registered in British Columbia and trades on the TSX Venture Exchange ("TSXV") under the symbol "CAND." It was incorporated under the British Columbia Business Corporations Act on January 23, 2012. The Company's registered and records office is located at Suite 1200, 750 West Pender Street, Vancouver, BC, Canada, V6C 2T8. The head office address is 410 - 1111 Melville Street, Vancouver, BC, V6E 3V6.
Going Concern
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future which is at least, but not limited to, twelve months from the end of the reporting year.
The Company has not yet generated income or cashflow from operations. As at January 31, 2025, the Company had cash of $34 (April 30, 2024 - $282), a working capital deficit of $7,051 (April 30, 2024 - $5,959) and an accumulated deficit of $78,793 (April 30, 2024 - $77,086). For the period ended January 31, 2025, the Company incurred a net loss of $1,707 (January 31, 2024 – loss of $1,394). The Company will require additional financing, through various means including but not limited to equity financings, to continue with its
exploration and development programs and to meet its future obligations and administrative expenses. There is no assurance that the Company will be successful in raising the additional required funds.
The above noted conditions indicate the existence of material uncertainties that cast significant doubt about the Company's ability to continue as a going concern. These condensed interim consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, to the reported expenses and to the financial position classifications that would be necessary if the going concern assumption was inappropriate. These adjustments could be material.
CABALLO BLANCO DISTRICT, STATE OF VERACRUZ, MEXICO
Ownership: 100% Candelaria Mining Corp.
Background:
The Caballo Blanco licence area is located on the eastern coast of Mexico in the state of Veracruz, 65 kilometers northwest of the city of Veracruz. The most advanced project in the licence area, La Paila, was subject to a PEA in 2012 (refer NI43-101 Technical Report, May 2012, Goldgroup Mining Inc.) which envisaged a low CAPEX, conventional open pit / heap leach mining operation targeting approximately 100,000 ounces of gold production annually. Further geological and exploration works by the Company since acquiring Caballo Blanco have included an updated pit-constrained resource estimate for La Paila (refer Candelaria Mining Corp. NI43-101 Technical Report, April 2017), and additional exploration activities in the wider licence area, including at the seven additional high-priority targets in the Northern and Highway Zones.
The most recently reported activities included ongoing exploration in and around priority targets within the license area (see below), refurbishment and upgrades to core storage facilities and other infrastructure, and continued engagement with local community groups.
Caballo Blanco is subjected to two separate underlying royalty commitments as defined below:
1) Almaden Minerals Limited retains a 1.5% NSR
2) An (arm's length) 3rd party retains an NSR as follows:
- 1.25% NSR up to 1,000 tonnes per day
- 1.00% NSR from 1,001 to 1,500 tonnes per day
- 0.75% NSR from 1,501 to 10,000 tonnes per day
- 0.5% NSR from 10,001 or more tonnes per day
Outlook:
Whilst the Company's exploration drilling permit application remains outstanding, the Company has continued surface exploration and reconnaissance throughout the licence area. This has identified further narrow vein gold targets west of La Paila, and extended knowledge of the regional geology within the licence for improved future targeting.
Further refinements have been made to the re-evaluation of the extensive geophysics dataset for the Caballo District, which identified extremely compelling potential for "giant" porphyry Cu-Au targets adjacent to and beneath the epithermal mineralisation and amended the drill program accordingly to also test these as a priority. The work demonstrates that the Caballo Blanco licence area most likely contains the core of a large, mineralised porphyry system, in addition to the range of low and high-sulphidation epithermal gold targets already defined.
The plan for subsequent drilling will depend on discoveries made during Phase 1 but will include resource expansion drilling of La Paila to the north-east and south.
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PINOS GOLD PROJECT, STATE OF ZACATECAS, MEXICO
Ownership: 100%
Background:
The Pinos mining property and historical mining district is located in the municipality of Pinos, Zacatecas state in north-central Mexico near the town of Pinos, Zacatecas. The property lies 405 air-kilometres northwest of Mexico City and is 67 km west-northwest of the city of San Luis Potosí, 113 km east-southeast of the city of Zacatecas, and 85 km northeast of the city of Aguascalientes. The project is located in one of the most prolific gold-silver mining trends of Mexico, the Zacatecas Trend, containing the current major mines of Minera Frisco, Fresnillo and Pan American Silver.
The Pinos Gold Project contains a compliant resource (NI43-101 Technical Report, September 2018) with significant expansion potential.
Royalties:
The Company granted a 1.5% NSR on the Apolo Property to the shareholders of Apolo. The Company will have a right of first refusal on the NSR.
On November 25, 2020, the Company sold a 0.5% net smelter return ("NSR") royalty on production from the Pinos Project to Empress Royalty Corp. ("Empress") for US$750,000. Empress also purchased an additional 0.5% NSR royalty from a previous royalty holder on the Pinos Project, for a total of a 1.0% NSR royalty. The Company can buyback 0.25% from Empress for US$937,500.
The Pinos Project is subject to total NSR royalties of 2.5%.
Project Progress:
During the reporting period, activities have focused on maintaining the project in a care and maintenance state while evaluating alternative options for future development. This has included assessing potential access to higher-grade ore veins through refurbishing existing mine shafts and considering new spiral declines into high-grade shoots. Detailed structural interpretations have also continued.
Outlook:
With the project currently on care and maintenance, the Company is revising its capital plan, construction schedule, and financial models to evaluate the feasibility of future development, aiming to improve project economics and reduce investment risk. However, on March 7, 2025, the Company reached an agreement with Goldgroup to fully settle enforcement proceedings related to the Debenture default (note 8 of its condensed interim consolidated financial statements as at January 31, 2025). As part of the agreement, Candelaria will transfer all issued and outstanding shares of its subsidiary, Apolo, which holds the Pinos Project, to Goldgroup. This agreement remains subject to TSXV approval.
RESULTS OF OPERATIONS
| Three months ended January 31, | Nine months ended January 31, | ||||
|---|---|---|---|---|---|
| Note | 2025 ($) | 2024 ($) | 2025 ($) | 2024 ($) | |
| General and administration expenses | |||||
| Exploration expense | 14 | 92 | 93 | 192 | 558 |
| Consulting and professional fees | 11 | 123 | 52 | 258 | 305 |
| General and administrative | (38) | 19 | (1) | 141 | |
| Regulatory and filing fees | 1 | – | 5 | – | |
| Stock-based compensation | 10 | – | – | – | 57 |
| Other expense (income): | |||||
| Finance cost | 7 & 8 | 189 | 139 | 507 | 411 |
| Foreign exchange loss | 243 | (45) | 746 | (78) | |
| Net loss | 610 | 258 | 1,707 | 1,394 |
For the three and nine months ended January 31, 2025, the Company reported a net loss of $610 and $1,707, respectively, compared to a net loss of $258 and $1,394 for the same periods in 2024. The increase is primarily due to higher finance costs and foreign exchange losses. Finance costs include interest incurred on the Debenture and accretion expense related to the Caballo Blanco acquisition payable, both of which are denominated in U.S. dollars. The foreign exchange loss resulted from the depreciation of the Canadian dollar against the U.S. dollar compared to the prior period.
On a year-to-date basis, general and administrative expenses have been reduced by more than half compared to the previous year, as the Company continues to implement cost-saving measures to preserve cash.
Finance costs for the three and nine months ended January 31, 2025, were $189 and $507, respectively, compared to $139 and $411 in the prior year. The increase is due to the application of a default interest rate following the Debenture's default notice.
REGULATORY DISCLOSURES
Off balance sheet arrangements
The Company does not have any off-balance sheet arrangements as at January 31, 2025, and date of this report.
Proposed Transactions
The Company does not have any proposed transactions as at January 31, 2025, and date of this report other than as disclosed elsewhere in this document.
Financial instruments
As at January 31, 2025, the Company's financial instruments comprise cash, other receivables, accounts payable and accrued liabilities, debenture, and Caballo Blanco payable. The fair values of the Company's financial instruments approximate their carrying values due to their short-term maturity.
Fair value of financial instruments:
Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements.
The three levels of the fair value hierarchy are:
- Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
- Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly
- Level 3 – Inputs that are not based on observable market data.
The Company's activities expose it to financial risks of varying degrees of significance, which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principal financial risks to which the Company is exposed are credit risk, liquidity risk and currency risk. The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework and reviews the Company's policies on an ongoing basis.
Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and other receivables. The Company's cash is held through large Canadian and Mexican financial institutions, while the Company's other receivables primarily consist of trade receivables that the Company continues to collect. These trade receivables are primarily with government agencies and are not subject to significant credit risk.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure. To mitigate this risk, the Company has a planning and budgeting process in place to determine the funds required to support its ongoing operations and capital expenditures.
The Company ensures that sufficient funds are raised from equity offerings or debt financings to meet its operating requirements, after considering existing cash balances, expected exercise of share purchase warrants, and stock options. The Company's ability to continue as a going concern involves significant judgements and estimates while determining forecasted cashflows and is dependent on the Company's ability to obtain financing (note 1). Most of the Company's financial liabilities have contractual maturities of 30 days or less and are subject to normal trade terms.
Interest Rate Risk
Interest rate risk arises from changes in market rates of interest that could adversely affect the Company. The Company currently has interest-bearing financial instruments in relation to debt (note 8). The Company's exposure to interest rate risk is minimal as the interest rates are at a fixed percentage on the term of the loan.
Foreign Exchange Risk
The Company is exposed to currency risk by having balances and transactions in currencies that are different from its functional currency. The Company operates in foreign jurisdictions, which uses the Mexican pesos and U.S. dollars. The Company does not use derivative instruments to reduce upward, and downward risk associated with foreign currency fluctuations. The following are the Canadian dollar equivalents.
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| U.S. dollars | Mexican Peso | |
|---|---|---|
| Cash | $ 3 | $ 10 |
| Other receivables and prepaids expenses | - | 1,472 |
| Accounts payable and accrued liabilities | (1,021) | - |
| Debenture | (3,860) | - |
| Caballo Blanco acquisition payable | (1,797) | - |
| Net financial (liabilities) assets | $ (6,676) | $ 1,482 |
A 10% change in the U.S. dollar exchange rate relative to the Canadian dollar would change the Company's comprehensive loss by $668. A 10% change in the Mexican peso exchange rate relative to the Canadian dollar would change the Company's comprehensive loss by $148.
Price risk
The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market.
The Company closely monitors individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.
Exploration expenses
The Company has not had revenue from operations. The Company is primarily involved in geological exploration and resources and project development. The table below shows the significant expenditures for the current period ended January 31, 2025:
| Caballo Blanco | Pinos | Total | |||
|---|---|---|---|---|---|
| Salary, consulting and administration | $ | - | $ | 65 | $ 65 |
| Equipment maintenance and rental | - | 40 | 40 | ||
| Concessions and permitting | 85 | 2 | 87 | ||
| Period ended January 31, 2025 | 85 | 107 | 192 | ||
| Project to date – January 31, 2025 | $ | 5,521 | $ | 4,338 | $ 9,859 |
Related Party Transactions
The Company's related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel which consists of senior executive management and directors. Transactions with related parties for goods and services are made on normal commercial terms and are considered to be at arm's length.
Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The key management personnel of the Company are the members of the Company's executive management team and Board of Directors. Compensation provided to key management personnel is as follows:
| Three months ended January 31, | Nine months ended January 31, | |||
|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |
| Professional fees | $ 39 | $ 34 | $ 122 | $ 69 |
| Stock based compensation | - | 11 | - | 21 |
Professional fees were paid and accrued to firms of which one of the partners has been the Chief Executive Officer, President or Chief Financial Officer of the Company.
As at January 31, 2025, the Company had amounts payable of $40 (April 30, 2024 – $12) to these parties. These amounts are unsecured and non-interest bearing, due on demand and included in accounts payable and accrued liabilities.
Capital Risk Management
The Company manages its capital structure and makes adjustments in light of changes in its economic environment and the risk characteristics of the Company's assets. To effectively manage the entity's capital requirements, the Company has in place a planning, budgeting and forecasting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. As at January 31, 2025, the Company will require to raise additional capital resources to support its normal operating requirements, planned development and exploration of its mineral properties. There are no externally imposed capital requirements to which the Company has not complied.
There has been no change to the Company's approach to capital management during the three and nine months ended January 31, 2025.
Internal controls and procedures
During the three and nine months ended January 31, 2025, there has been no significant change in the Company's internal control over financial reporting since last year.
The Chief Executive Officer and Chief Financial Officer of the Company are responsible for establishing and maintaining appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete, reliable and timely. They are also responsible for establishing adequate internal controls over financial reporting to provide sufficient knowledge to support the representations made in this MD&A and the Company's annual financial statements for the three and nine months ended January 31, 2025 (together the "Interim Filings"). The Chief Executive Officer and Chief Financial Officer of the Company have filed the Venture Issuer Basic Certificate with the Annual Filings on SEDAR+ at www.sedarplus.ca.
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the venture issuer basic certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"), as defined in NI 52-109. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency, and timeliness of interim and annual filings and other reports provided under securities legislation.
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Accounting estimates
The preparation of financial statements in conformity with IFRS, requires management to select accounting policies and make estimates and judgments that may have a significant impact on the condensed interim financial statements. Estimates are continuously evaluated and are based on management's experience and expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The Company's critical accounting judgements and estimates were presented in note 2 of the annual audited consolidated financial statements as at April 30, 2024, and have been consistently applied in the preparation of these condensed interim consolidated financial statements. No new estimates and judgements were applied for the period ended January 31, 2025.
Material Accounting Policies
Full disclosure of the Company's accounting policies in accordance with IFRS can be found in note 3 of its audited consolidated financial statements as at April 30, 2024, and have remained substantially unchanged and are still applicable to the Company unless otherwise indicated.
Risk and Uncertainties
The operations of the Company are speculative due to the nature of its business which is investment in the exploration and development of mining properties. These risk factors could materially affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.
Operating Hazards and Risks
Exploration and development of natural resources involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which the Company has a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of resources, any of which could result in work stoppages, damage to persons or property and possible environmental damage. Although the Company has or will obtain liability insurance in an amount which it considers adequate, the nature of these risks is such that liabilities might exceed policy limits, the liabilities and hazards might not be insurable against, or the Company might not elect to insure itself against such liabilities due to high premium costs or other reasons, in which event the Company could incur significant costs that could have a material adverse effect upon its financial condition.
Title to Assets
Although the Company has or will receive title options for any concessions in which it has or will acquire a material interest, there is no guarantee that title to such concessions will be not challenged or impugned. In some countries, the system for recording title to the rights to explore, develop and mine natural resources is such that a title opinion provides only minimal comfort that the holder has title. Also, in many countries, claims have been made and new claims are being made by aboriginal peoples that call into question the rights granted by the governments of those countries.
The successful exploration and development of the Company's properties is dependent on support from local communities. A community agreement may be required to permit the Company to conduct exploration activities on its projects. There is no assurance that such an agreement can be reached or, if reached, subsequently renewed or extended. The Company is committed to working in partnership with its local
communities in a manner which fosters active participation and mutual respect. The Company works towards minimizing negative project impacts, encouraging certain joint consultation processes, addressing certain decision-making processes and towards maintaining meaningful ongoing dialogue. The Company regularly consults with the communities close to its exploration and development activities.
Management
The Company is dependent on a relatively small number of key employees, the loss of any of whom could have an adverse effect on the Company.
Requirement of New Capital
As an early exploration/development company, the Company typically needs more capital than it has available to it or can expect to generate through the sale of its products. In the past, the Company has had to raise, by way of debt and equity financing, considerable funds to meet its capital needs. There is no guarantee that the Company will be able to continue to raise funds needed for its business. Failure to raise the necessary funds in a timely fashion will limit the Company's growth. It is the intention of the Company to invest in cash-flowing assets, to migrate the business into a situation where the need to raise capital on the markets for continued operation is reduced over time.
Metals Pricing Risk
The feasibility of the Company's mineral exploration and development is significantly affected by changes in the market price of gold and silver. Gold prices fluctuate widely and are affected by numerous factors beyond the Company's control. The level of interest rates, the rate of inflation, world supply of gold and stability of exchange rates can all cause significant fluctuations in gold prices. Such external economic factors are in turn influenced by changes in international investment patterns and monetary systems and political developments.
Risk of Foreign Operations
In Mexico, the jurisdiction in which the Company has its operations and mineral properties is subject to various political, economic and other uncertainties, including the risks of civil unrest, expropriation, nationalization, renegotiation or nullification of existing concessions, licenses, permits, approvals and contracts, and changing political conditions. In addition, in the event of a dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada. It is not possible for the Company to accurately predict such developments or changes in laws or policy or to what extent any such changes may have a material adverse effect on the Company's operations.
Other Significant Risks
In addition to the foregoing, the Company's business risks include operating hazards, environmental and other government regulations, collection risk related to IVA, competition in the marketplace, and the market for our securities. Its properties are located in Mexico and are subject to the laws and regulations of that country. The Company carries on its exploration activity outside of Canada. Accordingly, it is subject to the risks associated with the fluctuation of the rate of exchange of the Canadian dollar and foreign currencies, in particular the U.S. dollar and the Mexican pesos. Such fluctuations may materially affect the Company's financial position and results.
Also, please refer to the "Cautionary Statement on Forward-Looking Information" at the end of the MD&A.
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SUMMARY OF QUARTERLY RESULTS
| | Jan 31, 2025
Q3-2025 | Oct 31, 2024
Q2-2025 | Jul 31, 2024
Q1-2025 | Apr 30, 2024
Q4-2024 | Jan 31, 2024
Q3-2024 | Oct 31, 2023
Q2-2024 | Jul 31, 2023
Q1-2024 | Apr 30, 2023
Q4-2023 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Exploration expense | $ (92) | $ (47) | $ (53) | $ (121) | $ (93) | $ (116) | $ (349) | $ (246) |
| Stock-based compensation | - | - | - | 127 | - | (28) | (29) | (84) |
| General and administration (1) | 38 | (19) | (18) | (116) | (71) | (257) | (118) | (320) |
| Finance cost, and other (2)
(expense) income | (189) | (159) | (159) | (834) | (139) | (135) | (137) | (140) |
| Foreign exchange | (243) | (533) | 30 | (173) | 45 | (61) | 94 | (146) |
| Net loss | (610) | (832) | (265) | (12,852) | (258) | (597) | (539) | (915) |
| Other comprehensive income (loss) | (68) | 216 | 183 | 429 | 246 | (413) | 789 | 1,382 |
| Total comprehensive (loss) income | (678) | (616) | (82) | (12,423) | (12) | (1,010) | 250 | 467 |
| Basic & diluted earnings (loss) per share | 0.00 | 0.01 | 0.00 | (0.10) | 0.00 | 0.00 | 0.00 | (0.01) |
(1) General and administration includes all administration expense including salary and wages, investor relations and development, regulatory and filing fees, travel, professional fees and management fees, etc.
(2) Finance costs and other includes foreign exchange and other expenses that are not categorized.
Three months ended January 31, 2025, compared to all historical quarters
The net loss of $610 for the quarter ended January 31, 2025, was slightly higher than the average of the previous two quarters, primarily due to foreign exchange losses resulting from the Company's U.S. dollar-denominated debentures and other significant debt. However, general and administrative expenses continued to decline as the Company maintains a cash preservation strategy while seeking financing. Despite the slight increase, the net loss for the current quarter remains consistent with the average reported in prior-year quarters.
Stock-based compensation expenses fluctuate based on the timing of vesting periods for stock options and RSUs. During the three and nine months ended January 31, 2025, the Company did not grant any new stock options or RSUs, and all prior grants were fully expensed.
Foreign exchange gains and losses fluctuate based on the strength of the U.S. dollar and Mexican peso relative to the Canadian dollar. The Canadian dollar is the functional currency of the Company and its subsidiaries.
Other comprehensive income resulted from the cumulative translation adjustment due to foreign exchange impacts on the Company's foreign subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
A summary of the Company's cash position and changes in cash is as follows:
| Nine months ended January 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Cash used in operating activities | $ (856) | $ (1,012) |
| Cash used in investing activities | - | - |
| Cash provided by financing activities | - | - |
| Increase in cash | (248) | (1,010) |
| Cash, end of the period | 34 | 79 |
As of January 31, 2025, the Company's net working capital deficit was $7,051 million, compared to a net working capital deficit of $5.959 million as of April 30, 2024. These amounts remain relatively consistent, as the Company currently lacks the cash to improve its working capital position and debt continues accumulating. The Company is actively exploring options to secure funding to support its business objectives.
Cash outflows from operating activities for the period ended January 31, 2025, were slightly lower compared to the same period in 2024. While the net loss for the current period is higher, cash outflows from operating activities are lower compared to the prior period. The higher net loss is primarily due to increased foreign exchange losses, influenced by the strength of the U.S. dollar and Mexican peso relative to the Canadian dollar, offset by lower general and administration expenses. Additionally, accrued finance costs reported in the condensed interim consolidated statement of cash flows were higher than in the comparative period, driven by the application of a default interest rate following the Debenture's default notice in the current ye.
The Company's ability to continue as a going concern is dependent on its success in raising additional funds.
As at January 31, 2025, and as at the date of this report
Candelaria's authorized capital stock consists of an unlimited number of common shares without par value.
As at January 31, 2025, and the date of this report, the Company has share purchase warrants outstanding as follows:
| Warrants outstanding ('000) | Weighted average exercise price | ||
|---|---|---|---|
| Outstanding, April 30, 2023 and 2024 | 27,380 | $ 0.29 | |
| Issued | - | - | |
| Expired | (9,380) | 0.65 | |
| Exercised | - | - | |
| Outstanding, January 31, 2024 and April 1, 2025 | 18,000 | $ 0.94 | |
| Outstanding | |||
| Expiry date | Number of warrants ('000) | Exercise price | Remaining contractual life (years) |
| 28-Jun-25 | 18,000 | 0.11 | 0.24 |
| 18,000 | $ 0.11 |
Stock options
The Company and did not grant any stock options during the three and nine months ended January 31, 2025, and the date of this report. The current number of stock options outstanding and exercisable are:
| Number of stock options ('000) | Weighted average exercise price | |
|---|---|---|
| Outstanding, April 30, 2023 | 8,035 | $ 0.25 |
| Issued | - | 0.00 |
| Expired | (75) | 1.00 |
| Cancelled | (7,480) | 0.25 |
| Outstanding, April 30, 2024, January 31, 2025 and Apr 1, 2025 | 480 | $ 0.23 |
| Outstanding | ||
| --- | --- | --- |
| Expiry date | Number of stock options ('000) | Exercise price |
| 27-Jul-25 | 280 | $ 0.30 |
| 27-Apr-27 | 200 | 0.14 |
| 480 | $ 0.23 |
SUBSEQUENT EVENTS
On March 7, 2025, the Company reached an agreement with Goldgroup to fully resolve the enforcement proceedings related to the default under the Debenture (Note 8). Under the agreement, Candelaria will transfer 780,571,140 shares, representing all issued and outstanding shares of its subsidiary, Apolo, to Goldgroup. The deemed value of these shares is MXN$78,057,114. This transfer constitutes full and final settlement of the Debenture.
In addition, Goldgroup has agreed to provide Candelaria with additional consideration, including:
- A cash payment of US$89,000 within five days of receiving all necessary approvals from the TSX Venture Exchange (TSXV) required by both parties to complete the transaction.
- A cash payment of US$89,000 on the later of (i) the transfer of Apolo shares to Goldgroup or (ii) six months after receiving TSXV approvals, provided the Apolo shares have been delivered by that date.
- The issuance of 716,667 common shares of Goldgroup at a price of $0.30 per share to Candelaria.
Upon completion of the transaction, all claims against Candelaria related to the Debenture will be released.
The agreement remains subject to TSXV approval.
FORWARD-LOOKING STATEMENT
This MD&A contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made, including those factors discussed in filings made by us with the Canadian securities regulatory authorities. Should one or more of these risks and uncertainties, such as the
actual results of current exploration and development programs, the general risks associated with the mining industry, the price of gold and other metals, reduced funding, currency and interest rate fluctuations, increased competition and general economic and market factors, occur or should assumptions underlying the forward-looking financial statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. We do not intend and do not assume any obligation to update these forward-looking statements, except as required by law. Shareholders are cautioned not to put undue reliance on such forward-looking statements.
This MD&A has been approved by the Board of Directors of the Company and contains certain information that is current to the date of the report. Events occurring after that date could render the information contained herein inaccurate or misleading in a material respect. The Company may, but is not obligated to, provide updates to forward-looking statements, including in subsequent news releases and its annual and interim MD&A as filed with regulatory authorities. Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca.
Qualified persons
Mr. Jim Cuttle, B. Sc, P. Geo. a qualified person as defined in National Instrument 43-101, has reviewed, and approved the technical information related to Caballo Blanco in this report.
Mr. Jose Antonio Olmedo, Eng. Geol. MSc. is an Independent Consultant, located in Mexico City, Mexico, who is an "Independent Qualified Person" as defined by NI 43-101 and the lead person responsible for completing the Pinos resource and has reviewed this report as it relates to the Pinos project.
Mr. David Salari, P.Eng. of DENM Engineering Ltd. located in Oakville, Ontario, Canada who is an "Independent Qualified Person" as defined by NI 43-101 and the lead person responsible for reviewing the metallurgical work for the Pinos resource and has reviewed this report as it relates to the Pinos project and has overseen the metallurgical and recovery methods and infrastructure.
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