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Fortune Bay Corp. Management Reports 2025
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Management Reports
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FORTUNE BAY
EXPLORATION & DEVELOPMENT
TSXV: FOR | FWB: 5QN | OTCQB: FTBYF
Fortune Bay Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Three-month period ended March 31, 2025
Dated: May 27, 2025
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Fortune Bay Corp.
Three-month period ended March 31, 2025
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management's Discussion and Analysis ("MD&A") provides a review of the performance of Fortune Bay Corp. (the "Company" or "Fortune Bay") and should be read in conjunction with the unaudited condensed interim consolidated financial statements of Fortune Bay (the "Financial Statements") for the period ended March 31, 2025 and the audited consolidated financial statements of Fortune Bay for the years ended December 31, 2024 and 2023, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Standards Board ("IFRS Accounting Standards").
The information presented in this MD&A is as of May 27, 2025. The reporting currency for the Company is the Canadian dollar. All of the financial information presented herein is expressed in Canadian dollars, unless otherwise stated. United States dollars are indicated by the symbol "US$".
This MD&A contains "forward-looking statements" and "forward-looking information" within the meaning of applicable Canadian securities laws that are subject to risk factors set out herein. For further details see the sections in this MD&A titled "Cautionary Note regarding Forward-Looking Statements and Information" and "Risk Factors".
COMPANY OVERVIEW
The Company was incorporated on February 4, 2016 as 9617337 Canada Limited under the laws of the Canada Business Corporations Act as part of the transaction (the "Transaction") between kneat.com, inc. ("kneat.com"), Kneat Solutions Limited and the Company. Fortune Bay began trading on the TSX Venture Exchange ("TSX-V") as a new public company on July 4, 2016 under the symbol FOR, and also currently trades on the Frankfurt Stock Exchange under the symbol 5QN and on the OTCQB under the symbol FTBYF.
Fortune Bay is an exploration and development company with 100% ownership in two advanced gold projects in Canada, Saskatchewan (Goldfields Project) and Mexico, Chiapas (Poma Rosa Project), both with exploration and development potential. The Company is also advancing seven uranium exploration projects with high-grade uranium potential on the northern rim of the Athabasca Basin, Saskatchewan. Other assets include the Huizopa Net Smelter Return ("NSR") royalty in Mexico, and the NSR royalty obtained from the sale of the Dominican Republic properties in 2014.
The Company has a goal of building a mid-tier exploration and development Company through the advancement of its existing projects and the strategic acquisition of new projects to create a pipeline of growth opportunities. The Company's corporate strategy is driven by a Board and Management team with a proven track record of discovery, project development and value creation.
As at March 31, 2025, the Company's principal activity is the acquisition, exploration and development of mineral interests. To date, the Company has not generated consequential revenues from operations and is considered to be in the exploration and evaluation stages.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
OVERVIEW OF THE COMPANY'S PROPERTIES
Goldfields Project, Canada
Overview
The $100\%$ owned Goldfields Project ("Goldfields") is the Company's most advanced property, located in northern Saskatchewan, approximately 13 kilometres south of Uranium City, and approximately 60 kilometres south of the Saskatchewan and Northwest Territories provincial boundary. Goldfields is host to the Box and Athona gold deposits and numerous other gold prospects and occurrences. Goldfields is comprised of 14 mineral dispositions, covering approximately 5,900 hectares, which are in good standing and protected from expiry with assessment credits until at least 2041.
Goldfields Location Map
Goldfields is located within a historical mining area and benefits from established infrastructure, including a road and hydro-powerline to the Box deposit. Nearby facilities and services in Uranium City include bulk fuel, civil contractors, and a commercial airport. Goldfields has a history of gold production (64,000 oz produced between 1939 and 1942), numerous exploration drilling campaigns (over 1,000 drill holes) and historical mining studies by previous owners.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
The Goldfields Project received Provincial Ministerial approval under the Environmental Assessment Act in May 2008 to proceed with the development of an open-pit mine at the Box deposit, including a mill with a processing capacity of 5,000 tonnes per day.
Mineral Resources
An updated open-pit constrained Mineral Resource Estimate ("MRE") was completed as part of a Preliminary Economic Assessment ("PEA") with an effective date of September 1, 2022. The mineral resources have been estimated by SRK Consulting (Canada) Inc. in accordance with the CIM "Estimation of Mineral Resource and Mineral Reserves Best Practices" guidelines (November 2019) and have been reported in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101").
Goldfields Mineral Resource Statement, effective date September 1, 2022.
| Deposit | Category | Tonnes (Mt) | Au Grade (g/t) | Total Au (000's oz) |
|---|---|---|---|---|
| Box | Indicated | 15.8 | 1.44 | 729.7 |
| Athona | Indicated | 7.4 | 1.06 | 250.2 |
| Total Indicated | 23.2 | 1.31 | 979.9 | |
| Box | Inferred | 3.3 | 1.08 | 112.8 |
| Athona | Inferred | 3.8 | 0.80 | 98.0 |
| Total Inferred | 7.1 | 0.92 | 210.8 |
Notes:
1) Mineral resources are not mineral reserves and do not have demonstrated economic viability.
2) Mineral resources are reported at a cut-off grade of 0.3 g/t gold, constrained within a conceptual open-pit shell.
3) Mineral resources are reported using a gold price of US$1,800/oz.
4) All figures are rounded to reflect the relative accuracy of the estimate.
5) Please refer to Current Mineral Resource Estimates provided toward the end of the MD&A.
Updated PEA
An Updated Preliminary Economic Assessment ("Updated PEA") was announced by the Company on April 30, 2025 and is expected to be completed in Q3 2025. A 2022 Preliminary Economic Assessment ("2022 PEA") completed by Ausenco Engineering Canada ULC ("Ausenco") produced robust economics using a base case gold price of US$1,650/oz. The dramatic increase in gold price since 2022 is expected to substantially enhance the project's economics, and could support an increased project scope through inclusion of additional deeper-seated resources below the extents of the 2022 PEA mine pit, providing opportunities for further optimizations related to mine scheduling and process plant throughput. These potential scope changes and optimizations would translate into project-wide adjustments in site infrastructure, capital and operational expenditure, and overall project economics. A refreshed PEA, by the same Ausenco team that carried out the 2022 PEA, provides a cost effective and efficient means to address these points and to incorporate key recommendations from a recently completed study by Fuse Advisors Inc. ("Fuse") that assessed the Goldfields Project's optimal path to production. The Updated PEA is expected to demonstrate the Goldfields Project's intrinsic value, and will ensure that the project is properly scoped, both in terms of optimized economics, and the most efficient development and permitting timeline, prior to initiating further derisking through a Pre-feasibility Study ("PFS") or a Feasibility Study ("FS").
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Permitting Activities
The Goldfields Project is endowed with an approved Environmental Impact Statement ("EIS") from 2008 for an open pit mine at the Box deposit and a 5,000 tonne per day mill. The legacy of an approved EIS, and the substantial repository of environmental baseline studies that supported it, is expected to facilitate and expedite Goldfield's path to production.
Fuse's recent study included review of the EIS and its supporting datasets. The outcomes highlighted subsequent changes to environmental legislation regarding Duty to Consult obligations, as well as the need for additional environmental assessment to (1) address the change in project footprint (as recommended in the 2022 PEA relative to that approved in the 2008 EIS), and (2) verify the acceptability of existing environmental baseline data from previous studies. As announced on April 30, 2025, Fortune Bay intends to commission a gap analysis to define optimal regulatory and community engagement strategies that are based on the updated project engineering and economics. To support these strategies, any additional environmental baseline studies and other technical Environmental Assessment work programs will be planned, with the longer lead-time studies to be initiated in summer 2025. Project development community consultation is also planned to commence in summer 2025, in accordance with the Company's social and environmental commitments. The Company has an existing Exploration Agreement with the Goldfields Project communities that provides consent for exploration and development activities up to and including a bankable feasibility stage.
During the three-month period ended March 31, 2025, the Company incurred resource property expenditures of $49,544 on the Goldfields Project (year ended December 31, 2024 - $112,326) primarily related to the independent study by Fuse, internal technical reviews and planning for the next phases of work.
Poma Rosa Project, Mexico
Fortune Bay has a 100% ownership interest in the Poma Rosa Project ("Poma Rosa", formerly know as the Ixhuatán Project), which consists of the 4,176 hectare Rio Negro concession in northern Chiapas State, Mexico. The Rio Negro concession is valid until May 10, 2051. The Poma Rosa Project is located immediately southwest of the historical Santa Fe mine and is accessible by roads running five kilometres east of the town of Rayon. Rayon is situated 120 kilometres south of Villahermosa, Tabasco State.
Management's Discussion and Analysis
March 31, 2025
FORTUNE BAY
Poma Rosa Location Map
Poma Rosa is an advanced exploration project which hosts the Campamento gold-silver deposit, the Cerro La Mina gold-copper-silver prospect, and numerous other exploration targets. Mineralization discovered to date is a result of gold-focused exploration programs.
Located in a highly favourable geological setting that parallels most of the giant porphyry systems worldwide, the 100% owned Poma Rosa Project offers multiple exploration and development opportunities, including:
- Resource expansion and development of the epithermal gold-silver Campamento deposit, which includes a historical gold resource of 1,041,000 ounces in the Measured and Indicated categories (17.6 million tonnes at an average grade of 1.84 g/t gold) and 703,000 ounces of gold in the Inferred category (21.8 million tonnes at an average grade of 1.01 g/t gold).
- Numerous additional epithermal gold-silver zones, including historical drill intersections of mineralization, that warrant further exploration.
- Untested copper-gold potential associated with the large porphyry system that spans the entire concession, both in outcrop and beneath thin cover rocks. Historical exploration focused on near-surface epithermal gold in the cover rocks. The presence of a large copper-gold mineralizing system is evident from historical soil sampling results, historical drilling results and historical mining immediately to the north of Poma Rosa at Santa Fe.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Please refer to Historical Results and Historical Mineral Resource Estimates provided toward the end of this MD&A.
Community Consultation
Fortune Bay has been actively engaging in community consultations and meetings related to the Poma Rosa Project since November 2024. The aim of these consultations is to reach mutually beneficial agreements for exploration on private or common-use lands in accordance with the Company's social and environmental commitments.
The ongoing visits to the project area have included positive and supportive meetings with community leaders and important social and political stakeholders in the area. Further meetings are planned with the communities over the coming weeks with the aim of restarting exploration in late 2025.
Resource Review and Preparation for a Current Mineral Resource Estimate
The Company has engaged with Understood Mineral Resources Ltd. to carry out a desk-top data review of supporting datasets, historical mineral resources and growth potential for the Campamento deposit and Cerro La Mina prospect. The review will assess geological continuity, grade distribution, tonnage estimates, classification of the resources, and potential risks and opportunities associated with the historical Mineral Resource Estimate, and will also define methods and the overall approach for an updated National Instrument (NI) 43-101 mineral resource estimate for Poma Rosa.
The Company incurred $106,167 of expenditures on this property during the three-month period ended March 31, 2025 (December 31, 2024 - $281,358) related to title renewals, community consultations, and ongoing maintenance and other allocations.
Murmac Uranium Project, Canada
Overview
The 100% owned Murmac Uranium Project ("Murmac") comprises the western block of claims that originally formed part of the Company's Goldfields Project in northern Saskatchewan, which have been identified as having potential for high-grade unconformity-related, basement-hosted uranium deposits. Murmac currently comprises 17 mineral dispositions covering an area of 10,131 hectares, which includes additions from successful staking in 2022 and 2023. The mineral dispositions are in good standing and protected from expiry until at least 2040.
The northern portion of the Murmac project area has established infrastructure including a road and powerline. Nearby facilities and an airport are available in Uranium City located approximately 10 kilometres away by road.
Previous work (until the 1980's) identified numerous high-grade (>1% U₃O₈) uranium occurrences primarily through prospecting, trenching and drilling. Nearby significant past uranium producers include the Lorado, Gunnar and Beaverlodge (Eldorado) mines. The historical mining and prospecting was focused on Beaverlodge-style uranium mineralization, and Murmac is significantly underexplored for high-grade unconformity-related uranium deposits associated with the Athabasca Basin.
During the three-month period ended March 31, 2025, the Company incurred resource property expenditures of $55,896 on the Murmac Project, primarily related to personnel costs for work completed under the Option Agreement with Aero Energy Limited ("Aero"), as detailed below. In addition, the Company charged an operator fee of $56,886, recorded as a recovery of resource expenditures. During
Management's Discussion and Analysis
March 31, 2025
FORTUNE BAY
the year ended December 31, 2024, the Company incurred expenditures of $232,621, net of an operator fee of $139,111 and recoveries of $180,000 for share consideration and $160,000 for cash consideration received pursuant to the Option Agreement.
Murmac and Strike Uranium Projects
Initial Exploration Drilling
A total of 15 drill holes (3,168 metres) were completed at Murmac by Fortune Bay in 2022 to test regional targets along the Pitchvein, Armbruster and Howland Corridors. Drill holes targeted compelling geophysical features selected from VTEM™ (electromagnetic and magnetic) and ground gravity datasets, often associated with favourable structural settings and historical exploration results of interest. Laboratory uranium assay and geochemical results were reported in the Company's news release dated December 13, 2022. These results have been combined with structural analysis of drill core and detailed surface mapping, and follow-up drill targets were defined in addition to numerous other untested drill targets at Murmac.
Ongoing subsequent work, carried out under an Option Agreement with Aero, is detailed in the relevant section below.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Strike Uranium Project, Canada
Overview
The 100% owned Strike Uranium Project ("Strike") is located in northern Saskatchewan, approximately 25 kilometres west of Uranium City and the Company's flagship Goldfields Project. Strike comprises four mineral dispositions covering an area of 9,746 hectares. The mineral dispositions are in good standing until at least 2032.
Clean-energy hydro power is available within 10 kilometres of Strike to the north, and regional airports are available at Uranium City and Camsell Portage. Operations are based out of Uranium City where the Company has existing operational capabilities, including vehicles, field equipment, storage buildings and core logging and sampling facilities.
Previous work (from the 1950's to 2008) and historical datasets support Strike's potential for high-grade unconformity-related, basement-hosted uranium deposits in accordance with current exploration models for these types of deposits.
During the three-month period ended March 31, 2025, the Company incurred resource property expenditures of $4,349 on the Strike Uranium Project, primarily related to personnel costs for work completed under the Option Agreement with Aero, as detailed below (year ended December 31, 2024 - $27,756 in expenditures and recorded recoveries of $95,000 for share consideration and $40,000 for cash consideration received pursuant to the Aero Option Agreement).
Initial Exploration Drilling
An initial exploration drilling program was completed by Fortune Bay in 2022, comprising nine drill holes totalling 2,064 metres. This was the first drill program, historically or by the Company, to test regional targets on the project. Seven drill holes targeted discrete gravity lows located along prominent EM conductor corridors (named "J", "K" and "L") proximal to favourable geochemistry results and structural features. The other two holes were drilled at the Tena target, a historical prospect where over 1,000 tonnes of uranium ore were mined in the 1950's with reported grades of 0.6% to 3.5% U₃O₈.
Laboratory uranium assay and geochemical results were reported in the Company's news release dated December 7, 2022. These results have been combined with structural analysis of drill core and detailed surface mapping, and follow-up drill targets have been defined in addition to numerous other untested drill targets at Strike.
Murmac and Strike Option Agreement
On December 18, 2023, Fortune Bay announced that it had entered into an option agreement (the "Aero Option Agreement") whereby 1443904 B.C. Ltd., an arms-length private company, was granted the right to acquire up to a 70% interest in the Murmac and Strike Uranium Projects over a three-and-a-half-year period by funding $6.0 million in exploration expenditures, making cash payments totalling $1.35 million, and issuing $2.15 million in common shares following completion of a going public transaction. On February 8, 2024, Aero Energy Limited (TSXV: AERO) (OTC Pink: AAUGF) (FSE: 13L0) ("Aero") completed the acquisition of 1443904 B.C. Ltd. pursuant to the terms of a share purchase agreement, thereby completing the going public transaction.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Key Terms of the Option Agreement
| Cash (C$) | Consideration Shares (C$) | Exploration Expenditures (C$) | Interest Earned | |
|---|---|---|---|---|
| Signing of the Agreement (the “Execution Date”) | $200,000(1) | $200,000(2) | Nil | |
| 12 month anniversary of Execution Date | $200,000(1) | $200,000(2) | $1,000,000 | |
| 24 month anniversary of Execution Date | $250,000 | $250,000(3) | $2,000,000 | |
| Total (First Option) | $650,000 | $650,000 | $3,000,000 | 51% |
| 36 month anniversary of Execution Date | $300,000 | $300,000(3) | $3,000,000 | |
| Total (Second Option) | $300,000 | $300,000 | $3,000,000 | 60% |
| 42 month anniversary of Execution Date | $400,000 | $1,200,000(3) | Nil | |
| Total (Third Option) | $400,000 | $1,200,000 | Nil | 70% |
| Grand Total | $1,350,000 | $2,150,000 | $6,000,000 |
Notes:
(1) Paid to the Company.
(2) Issued to the Company at the Transaction Price of $0.15 per share
(3) Issuable to the Company at the Transaction Price of $0.15 per share.
The Company will act as the operator during the option period and will be entitled to charge a management fee of 10% of expenditures incurred on the Projects. During the three-month period ended March 31, 2025, the Company charged an operator fee of $56,886, which was recorded as a recovery of resource property expenditures (year ended December 31, 2024 - $139,111).
A participating Joint Venture ("JV") will be formed at the end of the option period, consistent with customary JV Terms, as defined in the Agreement, with mutual intent to negotiate and execute a definitive JV agreement. The JV will allow for dilution and should the Company's interest fall below 10% the Company will be granted (i) a 1% net smelter returns ("NSR") royalty on the Murmac Property (the "1% Royalty"), and (ii) a 2% NSR royalty on the Strike Property. One-half (0.5%) percent of the 1% Royalty may be repurchased at any time prior to commercial production for a cash payment of $1.5 million.
During the year ended December 31, 2024, the Company received cash consideration of $200,000 and Consideration Shares valued at $275,000. These considerations were recorded as recoveries against costs incurred on the Murmac and Strike Projects.
Work Completed under the Aero Option Agreement
Geophysics
A helicopter-borne geophysical survey, including electromagnetics and magnetics, was completed during April 2024. The survey was undertaken by Geotech Ltd. using the VTEM™ Plus geophysical system. The survey covered the entire Murmac project on a 100-metre line spacing, apart from the area that was surveyed in 2022 using VTEM™ where the 200-metre spaced lines were infilled to complete a 100-metre spacing. The high-resolution dataset underwent geophysical interpretation and modelling during May 2024, followed by drill target selection and prioritization.
Drilling
A total of eight drill holes (1,685 m) were completed at Murmac during June and July 2024 to test targets along the Pitchvein, Armbruster and Howland Corridors. The completed drill holes encountered highly
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
favorable geological settings for high-grade basement-hosted deposits associated with the Athabasca Basin. This included:
- Thick and strongly graphitic target units (up to an estimated ~30 metres in true thickness) often in contact with quartzites, providing favorable competency/rheological contrast.
- Brittle faulting and brecciation were observed within, or proximal to, the graphitic units and were typically associated with favorable hydrothermal alteration including abundant hematite, chlorite, sulphides, and clays.
- Anomalous radioactivity (>300 cps) was intersected in five of the eight holes completed, associated with cataclastic or mylonitic structured and altered graphitic pelites.
The drill program was highlighted by a high-grade intersection in drill hole M24-017 that included 0.3% U₃O₈ over 8.4 m with individual assay grades up to 13.8% U₃O₈. The intersection was hosted in favorable structured graphitic rocks at their intersection with a pronounced cross fault. Based on this result, an additional three holes were drilled, including a down-dip hole from the same drill pad (M24-018) and two along-strike 50 m step-out holes (M24-019 and -020) from M24-017. Anomalous uranium was intersected in all of these holes, indicating the presence of a larger mineralizing system and highlighting the potential of this EM conductor for a meaningful discovery.
On February 20, 2025, the Company announced winter drill targets for Murmac supported by the completion of a radon-in-water survey at Howland Lake, which produced strong anomalies along strike of the high-grade uranium drill intersections obtained during summer 2024. A winter drilling program to test these targets commenced in March 2025. The Company is awaiting geochemical analysis of drill core before reporting results from the winter drilling program.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Murmac Summary of Drilling and Highlight Drill Results
During the three-month period ended March 31, 2025, the Company received $720,000 from Aero for exploration expenditures on the Murmac and Strike Projects (December 31, 2024 - $1,385,000). Expenditures of $530,081 were incurred pursuant to the Aero Option Agreement during the three-month period ended March 31, 2025 (year ended December 31, 2024 - $1,353,568), of which $312,328 is included in accounts payable as at March 31, 2025 (December 31, 2024 - $44,949). The balance of restricted cash held by Fortune Bay as at March 31, 2025 is $533,679 (December 31, 2024 - $76,381).
The Woods Uranium Projects, Canada
The Woods Uranium Projects ("The Woods"), including the Spruce, Pine, Aspen, Birch and Fir Projects, are early-stage Athabasca Basin exploration projects located on the northern margin of the Athabasca Basin in northern Saskatchewan. The 100% owned Projects collectively cover an area of 40,958 hectares located approximately 40 kilometers northwest of Stony Rapids (connected to the regional Saskatchewan road network) and approximately 25 kilometres north of an active SaskPower hydro-electricity power line. The mineral dispositions are in good standing with claims expiring earliest August 1, 2025 and latest April 29, 2026. The Company plans to keep the title in good standing by either agreeing to a suitable transaction, or otherwise paying deficiency deposits or undertaking work during summer 2025.
The Woods Uranium Projects were acquired through staking between August 2023 and January 2024, apart from a single claim of 595 hectares, forming part of the Aspen Project, that was acquired from a third-party, arm's-length vendor for a small cash payment and a 2% Net Smelter Returns ("NSR") royalty. One-half of the NSR royalty can be purchased from the vendor at any time for $500,000.
Management's Discussion and Analysis
March 31, 2025
FORTUNE BAY
Highlights for The Woods include:
- District-scale opportunity, including five projects covering approximately 40,000 hectares.
- A dominant land position along the Grease River Shear Zone ("GRSZ") within 30 kilometres of the northern Athabasca Basin margin.
- The GRSZ is significantly underexplored relative to other major Athabasca Basin structures (less than 20 historical drill holes northeast of Fond du Lac, and only three (3) historical drill holes on the Projects).
- Geological settings and structural features are prospective for; 1) unconformity-related basement-hosted uranium deposits, 2) magmatic intrusive uranium deposits and 3) rare earth element ("REE") deposits.
- Abundant historical uranium and REE showings, and the highest lake sediment uranium anomalies in Saskatchewan.
During the three-month period ended March 31, 2025, the Company incurred resource property expenditures of $13,472 on the Woods Uranium Project (December 31, 2024 - $50,757), related to initial exploration expenditures and personnel costs related to the property.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Royalty Interests
The Huizopa Project is located in the Sierra Madres in Chihuahua, Mexico. The Company has a 2% NSR over future production from the Huizopa Project. The Company also has the right to a production bonus of US$4.0 million payable over two years from the date commercial production commences at Huizopa, as well as the right to 20% of the proceeds of disposal of Huizopa if it is disposed of prior to reaching commercial production. All consideration is contingent on the future development of the property. The Company considers the fair value of this consideration to be $nil. There is no value assigned to the NSR in the financial statements of the Company.
The Company also holds an NSR on exploration properties in the Dominican Republic: the Ampliación Pueblo Viejo, Ponton and La Cueva properties. These properties were sold by the Company to an unrelated third party in 2014. The NSR is equal to 1.0% when the price of gold is less than US$1,000 per ounce, 1.5% when the price of gold is between US$1,000 and USD$1,400 per ounce, and 2% when the price of gold is above US$1,400 per ounce. The Company has assigned a value of $nil to the NSR.
In connection with the sale of these properties in the Dominican Republic, the Company also received a promissory note equal to the greater of $5.0 million or 1 million common shares of the purchaser. The promissory note is subject to the completion of a NI 43-101 compliant measured and indicated resource estimate on these concessions of a minimum of one million ounces of gold equivalent (at an average grade of 2.5 g/t or higher for Ampliación Pueblo Viejo and 1.5 g/t or higher for Ponton and La Cueva) or actual gold production from these concessions plus a NI 43-101 compliant measured and indicated resource estimate on these concessions (at an average grade of 2.5 g/t gold equivalent for Ampliación Pueblo Viejo and 1.5 g/t gold equivalent or higher for Ponton and La Cueva) exceeding one million ounces of gold equivalent. The Company has assigned a value of $nil to the promissory note.
RECENT ANNOUNCEMENTS
On January 10, 2024, the Company announced the acquisition of the Spruce Uranium Project through staking. The Spruce Uranium Project is located within the north-central margin of the Athabasca Basin, near the community of Fond du Lac, and comprises four mineral claims covering 6,855 hectares.
On January 22, 2024, the Company announced the acquisition of the Pine Uranium Project through staking. The Pine Uranium Project is located within the north-central margin of the Athabasca Basin, proximal to the Spruce Uranium Project.
On January 26, 2024, the Company announced the grant of 1,230,000 stock options to directors, officers, contractors, and employees. Directors and officers were awarded 1,010,000 of the options granted. The options are exercisable at $0.23 per share, expire on January 25, 2029 and vest over a three-year period.
On February 5, 2024, the Company announced the acquisition of the Aspen Uranium Project. The Aspen Uranium Project is located within the north-central margin of the Athabasca Basin, proximal to the Spruce Uranium Project and the Pine Uranium Project.
On February 21, 2024, the Company announced the acquisition of two additional uranium projects, named the Birch and Fir projects, through staking on the north-central margin of the Athabasca Basin, in proximity to the Spruce, Pine and Aspen Uranium Projects. In addition, the Company reported on progress for its Murmac and Strike Uranium Projects under the Aero Option Agreement.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
On June 4, 2024, the Company announced drill targets for its Murmac Project, with the potential to discover high-grade, basement-hosted uranium mineralization related to the Athabasca Basin. The drilling program will be funded by Aero and operated by the Company under the Option Agreement. Updates on the progress of the drilling program were announced on June 12, 2024 and June 25, 2024.
On June 25, 2024, the Company announced the intersection of highly elevated radioactivity in the second drill hole of the Murmac drilling program. An average of 1,309 counts per second was intersected over 8.7 metres in graphitic pelite, with up to 33,600 counts per second (using handheld RS-125 Spectrometer) associated with visible uranium mineralization. The completion of the Murmac drilling program was announced on July 24, 2024, outlining highlights from the eight drill holes completed.
On July 17, 2024, the Company announced its intention to complete a non-brokered private placement financing for aggregate gross proceeds of up to $500,000 through the issuance of 2,272,727 units at $0.22 per unit. On August 2, 2024, the Company announced it had increased and closed the financing. Aggregate gross proceeds of $600,000 were raised by issuing 2,727,272 units at a price of $0.22 per unit. Each unit is comprised of one common share and one-half common share purchase warrant, with each whole warrant exercisable into one common share of Fortune Bay at an exercise price of $0.30 per share for a period of two years.
On October 8, 2024, the Company reported high-grade uranium assays in the first batch of analytical results from its 2024 exploration drilling program at the Murmac Project. The drilling program was funded under the Aero Option Agreement.
On November 20, 2024, the Company announced that it would be further advancing the Goldfields Project by engaging Fuse Advisors Inc. ("Fuse") to define a project development roadmap to advance the project toward the next stage of engineering and design. The objective of the study is to define the optimal path to production by evaluating permitting scenarios and various mine design, flowsheet and throughput cases, building upon the 2022 PEA and the approved 2008 Environmental Impact Statement that remains valid today.
On December 10, 2024, the Company announced plans for a winter 2025 drilling program on the Murmac Project to follow up on the high-grade uranium intersected during the 2024 drilling program.
On February 20, 2025, the Company announced winter drill targets for the Murmac Project following completion of a radon-in-water survey at Howland Lake.
On March 19, 2025, the Company announced the commencement of drilling at Howland Lake on the Murmac Uranium Project to further test the Howland Lake electromagnetic ("EM") conductors.
On April 7, 2025, the Company announced that it intends to increase the non-brokered private placement, that it had previously announced on April 2, 2025, to aggregate gross proceeds of up to $3,000,000. The Company intends to issue up to 9,375,000 units. Each unit will be issued at a price of $0.32 per unit, with each unit comprised of one common share and one-half common share purchase warrant. Each whole warrant will be exercisable into one common share of the Company at an exercise price of $0.45 per share for the first year from the date of issuance and $0.55 per share for the second year from the date of issuance.
On April 23, 2025, completed its previously announced private placement for aggregate gross proceeds of $3,000,000 at a price per unit of $0.32. Each unit is comprised of one common share and one-half common share purchase warrant. Each whole warrant is exercisable into one common share of the
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Company at an exercise price of $0.45 per share for the first year from the date of issuance and $0.55 per share for the second year from the date of issuance. Directors, officers and other non-arm's length parties of the Company subscribed for an aggregate of 1,531,250 units.
Numus Capital Corp., a company that a director and officer of the Company has ownership interest in, acted as a finder for a portion the private placement. Finder's fees of $17,500 were paid in cash and a total of 54,688 non-transferable finder's warrants were issued, having an exercise price of $0.45 per share for the first year from the date of issuance and $0.55 per share for the second year from the date of issuance. Each finder's warrant entitles the finder to purchase one common share at the applicable exercise price for two years from the date of issue.
On April 30, 2025, the Company announced its plans for its gold properties in Canada (the Goldfields Project) and in Mexico (the Poma Rosa Project, formerly know as the Ixhuatán). The plans are designed to materially advance the projects, demonstrate their intrinsic value and deliver key value drivers for the Company as it embarks on the process of unlocking value for these two significant gold assets.
SELECTED ANNUAL INFORMATION
Expressed in thousands of Canadian dollars and prepared in accordance with IFRS Accounting Standards:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| $ | $ | $ | |
| Net loss and comprehensive loss for the year | (1,490) | (1,387) | (1,371) |
| Total assets | 24,173 | 24,105 | 23,734 |
| Total liabilities | 2,211 | 1,574 | 850 |
| Cash dividends per common share | N/A | N/A | N/A |
The Company expects to record losses until such time as an economic mineral resource is developed and exploited on one or more of the Company's exploration properties, or a suitable transaction is achieved for one or more of the Company's projects. The Company's net loss could be significantly affected by any impairment, reversal of impairment or abandonment of any resource property.
RESULTS OF OPERATIONS
Three-month period ended March 31, 2025
The Company recorded a net loss before income tax of $246,025 during the three-month period ended March 31, 2025, a decrease of $48,897 from the three-month period ended March 31, 2024. Salaries and benefits increased by $10,987 due to changing staffing levels and salary costs being allocated to the active exploration programs in Saskatchewan and Mexico. Professional fees increased $9,466 for the current period, as the Company incurred higher legal and consulting fees in 2025. In addition, office, travel and general costs decreased $3,749 as the Company incurred higher travel costs in the comparable period. Share-based compensation expense during the current period was $34,312 compared to the prior period of $84,367, a decrease of $50,055 based on share-based compensation earned during the periods and share-based compensation that has been capitalized to resource properties. The Company also incurred property investigation costs of $12,983 during the three-month period ended March 31, 2024. Property investigation expenses relate to costs incurred as the Company assesses new property exploration opportunities.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Finance fees and interest were $38,758 during the three-month period ended March 31, 2025, which related primarily to the loan agreement as described in note 8 of the unaudited condensed interim consolidated financial statements. During the three-month period ended March 31, 2025, the Company renewed the loan at a fee of $21,757 and incurred interest of $16,994 (period ended March 31, 2024 – renewal fee of $19,968 and interest of $15,111). The balance of the loan, including all interest, has been repaid in full as of the date of this report.
During the three-month period ended March 31, 2025, the Company recognized rental income of $39,622 related to the rental of certain fixed assets. In addition, an unrealized loss on marketable securities of $26,667 was recognized for the change in the fair value of the marketable securities received pursuant to the Aero Option Agreement in 2024.
During the three-month period ended March 31, 2025, the Company recorded a deferred income tax expense of $132,027, compared to a deferred income tax recovery of $18,379 in the comparable period. Deferred income taxes relate to the difference between the book value and the tax value of the Company's exploration and development properties in Mexico and Canada.
A foreign exchange loss of $1,509 was recorded for the three-month period ended March 31, 2025, compared to a foreign exchange gain of $3,269 during the three-month period ended March 31, 2024. The Company expects to continue incurring foreign exchange gains and losses arising from fluctuations in the value of the United States dollar and the Mexican peso relative to the Canadian dollar.
SUMMARY OF QUARTERLY RESULTS
Expressed in thousands of Canadian dollars, except per share amounts:
| Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | |
|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Net loss for the period | (378) | (409) | (464) | (340) | (277) | (212) | (366) | (351) |
| Basic & diluted net loss per share | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | 0.00 | 0.01 | (0.01) |
| Total assets | 24,538 | 24,173 | 24,352 | 25,040 | 24,090 | 24,105 | 23,717 | 23,567 |
| Total liabilities | 2,914 | 2,211 | 2,056 | 2,955 | 1,745 | 1,574 | 1,672 | 1,233 |
| Cash dividends per common share | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
Quarterly results are not cyclical or seasonal, with fluctuations in net loss related primarily to changes in professional fees, salaries or administrative costs, as well as foreign exchange.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity depends on existing cash reserves, supplemented as necessary by asset dispositions, equity and/or debt financings. As of March 31, 2025, the Company had cash and cash equivalents on-hand of $136,226, excluding restricted cash pursuant to the Aero Option Agreement of $533,679, compared to cash and cash equivalents of $456,661, excluding restricted cash of $76,381 as at December 31, 2024.
During the three-month period ended March 31, 2025, the Company used cash of $172,841 to fund operating activities and $146,000 to fund exploration and evaluation asset expenditures. In addition, the Company purchased equipment for $1,594. During the three-month period ended March 31, 2024, the
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Company used cash of $144,301 to fund operating activities and $162,864 to fund exploration and evaluation asset expenditures.
On August 2, 2024, the Company completed a non-brokered private placement for aggregate gross proceeds of $600,000. The Company issued 2,727,272 units at a price of $0.22 per unit. Each unit is comprised of one common share and one-half common share purchase warrant, with each whole warrant exercisable into one common share of the Company at an exercise price of $0.30 per share for a period of two years. The value allocated to the common shares issued through the unit financing was $492,000, and the value allocated to the common share purchase warrants was $108,000. A director and officer of the Company subscribed for 1,000,000 of the units. Total costs associated with the private placement, primarily consisting of professional and regulatory fees, were $7,077. The Company is using the proceeds of the financing to fund exploration and project development at Fortune Bay's Saskatchewan projects, and for general operating costs.
During the year ended December 31, 2024, 310,000 stock options with a weighted-average exercise price of $0.41 expired unexercised. No warrants or stock options were exercised during the period ended March 31, 2025 or the year ended December 31, 2024.
The Company has a loan agreement with a company that is jointly controlled by an officer and director of the Company. The loan is for up to $700,000 and can be drawn in tranches as needed to fund operations. The loan carries an interest rate of 12% annually based on the amount drawn on the loan. In addition, a loan fee of 4% is paid as amounts are down on the loan. The loan is payable on demand with a term of six months, which was extended until July 2025 for an additional lender fee of $21,757 incurred during the three-month period ended March 31, 2025. The Company is using the loan to fund ongoing operations and to maintain its exploration and evaluation assets. During the three-month period ended March 31, 2025, the Company incurred a renewal fee of $21,757 and interest of $16,994. During the year ended December 31, 2024, the Company drew $104,000 on the loan, including a lender fee of $4,000, made a repayment of $100,000, and recorded interest of $64,608, in addition to the renewal fees of $40,735. As at March 31, 2025, the balance of the loan payable, including interest, was $651,704 (December 31, 2024 - $612,956). As of the date of this report, the Company has repaid the loan and interest in full.
On April 23, 2025, the Company completed a non-brokered private placement for aggregate gross proceeds of $3,000,000 at a price of $0.32 per unit. Each unit is comprised on one common share and one-half common share purchase warrant. Each whole warrant is exercisable into one common share of the Company at an exercise price of $0.45 per share for the first year from the date of issuance and $0.55 per share for the second year from the date of issuance. Directors, officers and other non-arm's length parties of the Company subscribed for 1,531,250 of the units issued. The Company intends to use the proceeds of the offering to fund advancement of the Company's projects in Canada and Mexico, and for general corporate purposes.
Numus Capital Corp., a company that a director and office of the Company has ownership interest in, acted as a finder for a portion of the private placement. Finder's fees of $17,500 were paid in cash and a total of 54,688 non-transferable finder's warrants were issued, having an exercise price of $0.45 per share for the first year from the date of issuance of $0.55 per share for the second year from the date of issuance.
The Company does not have sufficient financial resources to undertake the complete development of its exploration properties without further inputs of financial resources. Development of the exploration properties will therefore depend on the Company's existing cash on-hand and its ability to obtain
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
additional financing through means such as joint ventures, debt financings, equity financings, or other means. The reader should refer to the "Going Concern" disclosure under the Risk Factors section of this MD&A and Note 1 of the audited consolidated financial statements for the years ended December 31, 2024 and 2023.
COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the remaining contractual maturities of the Company's financial liabilities. The amounts included in this table may not result in an actual obligation of the Company, as the requirement to settle certain of these amounts is contingent on the occurrence of certain events that may or may not transpire:
| Payments due by period as of March 31, 2025 | |||||
|---|---|---|---|---|---|
| Within 1 year | 2-3 years | 4-5 years | Over 5 years | Total | |
| $ | $ | $ | $ | $ | |
| Accounts payable and accrued liabilities | 1,295,329 | - | - | - | 1,295,329 |
| Loan payable | 565,692 | - | - | - | 565,692 |
| Total | 1,861,021 | - | - | - | 1,861,021 |
As at March 31, 2025, the Company has a services agreement with Numus Financial Inc. ("Numus") for the provision of controller services, rent and other offices costs at a fee of $32,400 per year, continuing until both parties mutually agree to terminate the agreement or either party provide at least six months notice.
The Company has employment arrangements with the Chief Executive Officer and Chief Financial Officer of the Company which provide that, should a change in control event occur, the Chief Executive Officer will receive a lump sum payment equal to between 18 and 36 months of his then current base salary and the Chief Financial Officer will receive a lump sum payment equal to 12 months of her then current base salary. In the event of a change of control, the Executive Chairman will receive a lump sum payment of 72 months of his original base compensation.
OFF-BALANCE SHEET ARRANGEMENTS
At March 31, 2025, the Company had no off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that trigger financing, liquidity, market, or credit risk to the Company.
OUTSTANDING SHARE INFORMATION
The Company has authorized an unlimited number of common shares without par value. As of March 31, 2025, the Company had 48,684,522 common shares outstanding. As of May 27, 2025, the Company had 58,059,522 common shares outstanding due to the private placement financing completed subsequent to the period ended March 31, 2025.
As of March 31, 2025 and May 27, 2025, the Company had 3,835,000 stock options outstanding, exercisable into common shares of the Company at a weighted-average exercise price of $0.50. 500,000 of the outstanding stock options expire on June 15, 2025, 20,000 expire on September 18, 2025, 305,000
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
expire on March 4, 2026, 820,000 expire on December 17, 2026, 960,000 expire on January 25, 2028, and 1,230,000 expire on January 25, 2029.
As at March 31, 2025, the Company had 4,563,639 warrants outstanding, with a weighted-average exercise price of $0.30. 3,200,003 warrants expire on October 30, 2025, and 1,363,636 warrants expire on August 2, 2026. On April 23, 2025, the Company granted an additional 4,687,500 warrants and 54,688 finders warrants having an exercise price of $0.45 per share for the first year from the date of issuance and $0.55 per share for the second year from the date of issuance. Total warrants outstanding at May 27, 2025 were 9,305,827.
As at March 31, 2025 and May 27, 2025, the Company had 1,319,442 deferred share units ("DSU") outstanding, of which 845,884 had vested as at March 31, 2025. The DSUs vest over three years from the date of grant.
RELATED PARTY TRANSACTIONS
Amounts payable to officers, directors and companies owned thereby were $1,068,828 as at March 31, 2025 (December 31, 2024 - $999,391), including a loan and interest payable to a related party of $651,704 as at March 31, 2025 (December 31, 2024 - $612,953). During the three-month period ended March 31, 2025, the Company incurred costs for controller services from a company that a director and officer of the Company has ownership interest in, Numus, in the amount of $3,000, incurred rent and office costs in the amount of $10,015 and incurred digital marketing costs of $11,385. During the year ended December 31, 2024, the Company incurred costs for controller services from Numus of $12,000, incurred rent and office costs in the amount of $41,794 and incurred digital marketing costs of $43,440. As at March 31, 2025, the net amount payable by the Company to Numus was $161,826 (December 31, 2024 - $143,639).
During the year ended December 31, 2024, the Company completed a non-brokered private placement financing of $600,000 by issuing 2,727,272 units at a price of $0.22 per unit. A director of the Company subscribed for 1,000,000 of the units issued for this financing. On April 23, 2025, the Company completed a private placement financing of $3,000,000 with 9,375,000 units issued at a price of $0.32 per unit. Directors, officers and other non-arm's length parties of the Company subscribed for an aggregate of 1,531,250 of the units issued.
During the year ended December 31, 2024, the Company issued 1,230,000 stock options, of which 1,010,000 were issued to directors and officers. The options issued in 2024 are exercisable at $0.23 per share and vest over three years from the date of grant. No stock options or deferred share units were issued during the three-month period ended March 31, 2025.
The Company has a loan agreement with a company that is co-owned by a director and officer of the Company. Refer to note 8 of the unaudited condensed interim consolidated financial statements for details of the loan terms and transactions. As at March 31, 2025, the balance of the loan payable, including interest, is $651,704 (December 31, 2024 - $612,953). As of the date of this report, the loan and interest has been repaid in full.
The key management of the Company includes the Executive Chairman, the CEO, the CFO and the Company's Directors.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Credit Risk
Credit risk on financial instruments arises from the potential for counterparties to default on their obligations to the Company. The Company's maximum exposure to credit risk is represented by the carrying amount of the Company's cash and cash equivalents. Cash and cash equivalents are placed with high-credit quality financial institutions. There are no material financial assets that the Company considers to be past due. At each reporting date, the Company assesses whether there has been an impairment of financial assets. The Company has not recorded an impairment on any financial assets during the three-month period ended March 31, 2025 or the year ended December 31, 2024.
Liquidity Risk
Liquidity risk is the risk that the Company will not meet its financial obligations as they become due. The Company has a planning and budgeting process to monitor operating cash requirements, including amounts projected for the existing capital expenditure program and plans for expansion, which are adjusted as input variables change. These variables include, but are not limited to, funding requirements of exploration and evaluation assets, general and administrative requirements of the Company and the availability of capital markets. As these variables change, liquidity risks may necessitate the need for the Company to issue equity or obtain debt financing. Accounts payable and accrued liabilities are paid in the normal course of business generally according to their terms.
Currency Risk
The Company is exposed to currency risk on its United States dollar and Mexican peso cash and accounts payable and accrued liabilities, in addition to certain of its operating costs. For the three-month period ended March 31, 2025, changes in the exchange rate between the aforementioned currencies and the Canadian dollar would not have impacted the Company's net loss by a material amount, as the balance of funds held, receivable, or owing in these currencies was not material. The Company does not hedge its currency risk, as the currency risk is considered minimal.
Market Risk
Gold prices are affected by various forces, including global supply and demand, interest rates, exchange rates, inflation or deflation and worldwide political and economic conditions. The ability of the Company to capitalize on its current exploration and evaluation assets is impacted by the market price of gold.
RISK FACTORS
Mineral exploration companies face many and varied risks. The principal activity of the Company is mineral exploration, which is inherently risky. Exploration is also capital intensive, and the Company currently has no source of income other than interest income.
The following are the risk factors which the Company's management believes are most important in the context of the Company's business. It should be noted that this list is not exhaustive and that other risk factors may apply.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Limited Business History
Fortune Bay has a short history of operations and has no history of earnings. The likelihood of success of Fortune Bay must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. Fortune Bay has limited financial resources and there is no assurance that funding will be available to it when needed. There is also no assurance that Fortune Bay can generate revenues, operate profitably, provide a return on investment, or that it will successfully implement its plans.
Going Concern
The Company's ability to continue as a going concern is dependent upon its ability to fund its working capital and exploration requirements and eventually to generate positive cash flows, either from operations or sale of properties. The Company will actively seek financing from time to time to finance its operations, however the ability, availability and timing of such financing is not certain. The Company's financial statements do not reflect the adjustments to the carrying value of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary were the going concern assumption inappropriate, and these adjustments could be material.
Unknown Environmental Risks for Past Activities
Exploration and mining operations incur risks of releases to soil, surface water and groundwater of metals, chemicals, fuels, liquids having acidic properties and other contaminants. In recent years, regulatory requirements and improved technology have significantly reduced those risks. However, those risks have not been eliminated, and the risk of environmental contamination from present and past exploration or mining activities exists for mining companies. Companies may be liable for environmental contamination and natural resource damages relating to properties that they currently own or operate or at which environmental contamination occurred while or before they owned or operated the properties. No assurance can be given that potential liabilities for such contamination or damages caused by past activities at Fortune Bay's exploration properties do not exist.
Acquisitions and Joint Ventures
Fortune Bay will evaluate from time to time opportunities to acquire or joint venture mining assets and businesses. These acquisitions and joint ventures may be significant in size, may change the scale of Fortune Bay's business and may expose it to new geographic, political, operating, financial and geological risks. Fortune Bay's success in its acquisition and joint venture activities will depend on its ability to identify suitable acquisition and joint venture candidates and partners, acquire or joint venture them on acceptable terms and integrate their operations successfully with those of Fortune Bay. Any acquisitions or joint ventures would be accompanied by risks, such as the difficulty of assimilating the operations and personnel of any acquired companies; the potential disruption of Fortune Bay's ongoing business; the inability of management to maximize the financial and strategic position of Fortune Bay through the successful incorporation of acquired assets and businesses or joint ventures; additional expenses associated with amortization of acquired intangible assets; the maintenance of uniform standards, controls, procedures and policies; the impairment of relationships with employees, customers and contractors as a result of any integration of new management personnel; dilution of Fortune Bay's present shareholders or of its interests in its subsidiaries or assets as a result of the issuance of shares to pay for acquisitions or the decision to grant earning or other interests to a joint venture partner; and the potential unknown liabilities associated with acquired assets and businesses. There can be no assurance that Fortune Bay would be successful in overcoming these risks or any other problems encountered in
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
connection with such acquisitions or joint ventures. There may be no right for shareholders to evaluate the merits or risks of any future acquisition or joint venture undertaken except as required by applicable laws and regulations.
Exploration Stage Risks
Exploration for mineral resources involves a high degree of risk, the cost of conducting programs may be substantial and the likelihood of success is difficult to assess. Resource exploration and development is a highly speculative business, characterized by a number of significant risks including, but not limited to, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production. Few exploration projects successfully achieve development due to factors that cannot be predicted or anticipated, and even one such factor may result in the economic viability of a project being detrimentally impacted such that it is neither feasible nor practical to proceed. The Company closely monitors its activities and those factors that could negatively impact it and employs experienced consultants and key management to assist in its risk management and to make timely decisions regarding future property expenditures. Other risks associated with projects in the exploration and development stage which could cause delays or prohibit the progress of the overall project include delays in obtaining required government approvals and permits and the inability to obtain suitable or adequate machinery, equipment, road access, power or labour.
Uncertainty of Mineral Resource Estimates
Mineral resource figures are only estimates. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results, and industry practices. While Fortune Bay believes that the mineral resource estimates included are established and reflect management's best estimates, the estimating of mineral resources is a subjective process, and the accuracy of mineral resource estimates is a function of the quantity and quality of available data, the accuracy of statistical computations, and the assumptions used and judgments made in interpreting available engineering and geological information. There is significant uncertainty in any mineral resource estimate, and the actual deposits encountered and the economic viability of a deposit may differ materially from Fortune Bay's estimates. Estimated mineral resources may have to be re-estimated based on changes in gold prices, further exploration or development activity, understanding of the geology of the deposits, or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence mineral resource estimates. Mineral resources are not mineral reserves and there is no assurance that any mineral resource estimate will ultimately be reclassified as proven or probable mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability.
Economics of Developing Mineral Properties
Mineral exploration and development is speculative and involves a high degree of risk. While the discovery of mineral resources may result in substantial rewards, few properties which are explored are commercially mineable and ultimately developed into producing mines. There is no assurance that Fortune Bay's gold deposits are commercially mineable.
Should any mineral resources and reserves exist, substantial expenditures will be required to confirm mineral reserves which are sufficient to commercially mine and to obtain the required environmental approvals and permitting required to commence commercial operations. The decision as to whether a property contains a commercial mineral deposit and should be brought into production will depend upon
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
the results of exploration programs and/or feasibility studies, and the recommendations of duly qualified engineers and/or geologists, all of which involves significant expense. This decision will involve consideration and evaluation of several significant factors including, but not limited to: (a) costs of bringing a property into production, including exploration and development work, preparation of production feasibility studies and construction of production facilities; (b) availability and costs of financing; (c) ongoing costs of production; (d) gold prices, which are historically cyclical; (e) environmental compliance regulations and restraints (including potential environmental liabilities associated with historical exploration activities); and (f) political climate and/or governmental regulation and control. Development projects are also subject to the successful completion of engineering studies, issuance of necessary governmental permits, and availability of adequate financing. Development projects have no operating history upon which to base estimates of future cash flow.
The ability to sell and profit from the sale of any eventual mineral production from any property will be subject to the prevailing conditions in the minerals marketplace at the time of sale. The global minerals marketplace is subject to global economic activity and changing attitudes of consumers and other end-users' demand for mineral products. Many of these factors are beyond the control of a mining company and therefore represent a market risk which could impact the long-term viability of the Company and its operations.
Factors Beyond the Control of Fortune Bay
The potential profitability of mineral properties is dependent upon many factors beyond Fortune Bay's control. For instance, world prices of and markets for minerals are unpredictable, highly volatile, potentially subject to governmental fixing, pegging and/or controls and respond to changes in domestic, international, political, social and economic environments. Another factor is that rates of recovery of minerals from mined ore (assuming that such mineral deposits are known to exist) may vary from the rate experienced in tests and a reduction in the recovery rate will adversely affect profitability and, possibly, the economic viability of a property. Profitability also depends on the costs of operations, including costs of labour, equipment, electricity, environmental compliance or other production inputs. Such costs will fluctuate in ways Fortune Bay cannot predict and are beyond Fortune Bay's control, and such fluctuations will impact on profitability and may eliminate profitability altogether. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for development and other costs have become increasingly difficult, if not impossible, to project. These changes and events may materially affect the financial performance of Fortune Bay.
Regulatory Requirements
The current or future operations of Fortune Bay, including exploration and development activities and possible commencement of production on its properties, requires permits from various federal and local governmental authorities, and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the exploration, development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with the applicable laws, regulations and permits. There can be no assurance that all permits which Fortune Bay may require for exploration, development and construction of mining facilities, and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any exploration or mining project which Fortune Bay might undertake.
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed upon them for violation of applicable laws or regulations.
Amendments or changes to current laws, regulations, government policies, and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on Fortune Bay and cause increases in costs or require abandonment or delays in the exploration or development of new mining properties.
Mineral exploration and the development of mines and related facilities is contingent upon governmental approvals that are complex and time consuming to obtain and which, depending upon the location of the project, may involve multiple governmental agencies. The duration and success of such approvals are subject to many variables outside Fortune Bay's control. Any significant delays in obtaining or renewing such permits or licenses in the future could have a material adverse effect on Fortune Bay.
Insurance
Fortune Bay's business is capital intensive and subject to a number of risks and hazards, including environmental pollution, accidents or spills, industrial and transportation accidents, labour disputes, changes in the regulatory environment, natural phenomena (such as inclement weather conditions, earthquakes, pit wall failures and cave-ins) and encountering unusual or unexpected geological conditions. Many of the foregoing risks and hazards could result in damage to, or destruction of: Fortune Bay's mineral properties or future processing facilities, personal injury or death, environmental damage, delays in or interruption of or cessation of their exploration or development activities, delay in or inability to receive regulatory approvals to transport their gold concentrates, or costs, monetary losses and potential legal liability and adverse governmental action. Fortune Bay may be subject to liability or sustain loss for certain risks and hazards against which they do not or cannot insure or which it may reasonably elect not to insure because of the cost. This lack of insurance coverage could result in material economic harm to Fortune Bay.
Environmental Risks and Hazards
All phases of Fortune Bay's operations are subject to environmental regulation in the jurisdictions in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the general, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect Fortune Bay's operations. Environmental hazards may exist on the properties which are unknown to Fortune Bay at present and which have been caused by previous or existing owners or operators of the properties. Reclamation costs are uncertain and planned expenditures estimated by management may differ from the actual expenditures required. Fortune Bay is not insured against most environmental risks. Insurance against environmental risks (including potential liability for pollution and other hazards as a result of the disposal of waste products occurring from exploration and production) has not been generally available to companies within the
Management's Discussion and Analysis March 31, 2025
FORTUNE BAY
industry. Fortune Bay will periodically evaluate the cost and coverage of the insurance against certain environmental risks that is available to determine if it would be appropriate to obtain such insurance.
Without such insurance, and if Fortune Bay becomes subject to environmental liabilities, the payment of such liabilities would reduce or eliminate its available funds or could exceed the funds Fortune Bay has to pay such liabilities and result in bankruptcy. Should Fortune Bay be unable to fund fully the remedial cost of an environmental problem, Fortune Bay might be required to enter into interim compliance measures pending completion of the required remedy.
Costs of Land Reclamation Risk
It is difficult to determine the exact amounts which will be required to complete all land reclamation activities in connection with the properties in which Fortune Bay holds an interest. Reclamation bonds and other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation activities over the life of a mine. Accordingly, it may be necessary to revise planned expenditures and operating plans in order to fund reclamation activities. Such costs may have a material adverse impact upon the financial condition and results of operations of Fortune Bay.
No Assurance of Title to Property
There may be challenges to title to the mineral properties in which Fortune Bay holds a material interest. If there are title defects with respect to any properties, Fortune Bay might be required to compensate other persons or perhaps reduce its interest in the affected property. Also, in any such case, the investigation and resolution of title issues would divert management's time from ongoing exploration and development programs.
Risk of Amendments to Laws
Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on Fortune Bay and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.
Commodity Prices
The price of the Company's shares, Fortune Bay's financial results and exploration, development and mining activities may in the future be significantly adversely affected by declines in the price of gold or other minerals. The price of gold or other minerals fluctuates widely and is affected by numerous factors beyond Fortune Bay's control, such as the sale or purchase of commodities by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and other foreign currencies, global and regional supply and demand, the political and economic conditions of major mineral-producing countries throughout the world, and the cost of substitutes, inventory levels and carrying charges. Future serious price declines in the market value of gold or other minerals could cause continued development of and commercial production from Fortune Bay's properties to be impracticable. Depending on the price of gold and other minerals, cash flow from mining operations may not be sufficient and Fortune Bay could be forced to discontinue production and may lose its interest in, or may be forced to sell, some of its properties. Economic viability of future production from Fortune Bay's mining properties, if any, is dependent upon the prices of gold and other minerals.
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In addition to adversely affecting any reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.
Foreign Countries and Regulatory Requirements
Fortune Bay has investments in properties and projects located in foreign countries, including Mexico. The carrying values of these properties and Fortune Bay's ability to advance development plans or bring the projects to production may be adversely affected by whatever political instability and legal and economic uncertainty might exist in such countries. These risks may limit or disrupt Fortune Bay's projects, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization, expropriation or other means without fair compensation.
There can be no assurance that industries which are deemed of national or strategic importance in countries in which Fortune Bay has operations or assets, including mineral exploration, production and development, will not be nationalized. The risk exists that further government limitations, restrictions or requirements, not presently foreseen, will be implemented. Changes in policy that alter laws regulating the mining industry could have a material adverse effect on Fortune Bay. There can be no assurance that Fortune Bay's assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate or not, by an authority or body.
In addition, in the event of a dispute arising from foreign operations, Fortune Bay 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. Fortune Bay also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for Fortune Bay to accurately predict such developments or changes in laws or policy or to the extent to which any such developments or changes may have a material adverse effect on Fortune Bay's operations.
Acquisitions and Integration
From time to time, it can be expected that Fortune Bay will examine opportunities to acquire additional exploration and/or mining assets and/or businesses. Any acquisition that Fortune Bay may choose to complete may be of a significant size, may change the scale of Fortune Bay's business and operations, and may expose Fortune Bay to new geographic, political, operating, financial and geological risks. Fortune Bay's success in its acquisition activities depends upon its ability to identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of Fortune Bay. Any acquisitions would be accompanied by risks. In the event that Fortune Bay chooses to raise debt capital to finance any such acquisitions, Fortune Bay's leverage will be increased. If Fortune Bay chooses to use equity as consideration for such acquisitions, existing shareholders may suffer dilution. Alternatively, Fortune Bay may choose to finance any such acquisitions with its existing resources. There can be no assurance that Fortune Bay would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.
Management's Discussion and Analysis March 31, 2025
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Internal Controls
Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.
Conflicts of Interest
Some of the directors and officers of Fortune Bay are directors and officers of other companies, some of which are in the same business as Fortune Bay. Some of Fortune Bay's directors and officers will continue to pursue the acquisition, exploration and, if warranted, the development of mineral resource properties on their own behalf and on behalf of other companies, and situations may arise where they will be in direct competition with Fortune Bay. Fortune Bay's directors and officers are required by law to act in the best interests of Fortune Bay. They may have the same obligations to the other companies in respect of which they act as directors and officers. Discharge of their obligations to Fortune Bay may result in a breach of their obligations to the other companies and, in certain circumstances, this could expose Fortune Bay to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of Fortune Bay. Such conflicting legal obligations may expose Fortune Bay to liability to others and impair its ability to achieve its business objectives.
Influence of Third-Party Stakeholders
The lands in which Fortune Bay holds an interest, or the exploration equipment and roads or other means of access which Fortune Bay intends to utilize in carrying out its work programs or general business mandates, may be subject to interests or claims by third party individuals, groups or companies. In the event that such third parties assert any claims, Fortune Bay's work programs may be delayed even if such claims are not meritorious. Such delays may result in significant financial loss and loss of opportunity for Fortune Bay.
Fluctuation in Market Value of Common Shares
The market price of the common shares can be affected by many variables not directly related to the corporate performance of Fortune Bay, including the market in which it is traded, the strength of the economy generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of common shares in the future cannot be predicted. The lack of an active public market could have a material adverse effect on the price of common shares.
Cybersecurity Risks
The Company relies on information technology systems including, without limitation, its networks, equipment, hardware, software, telecommunications, and other information technology (collectively, "IT systems"), and the IT systems of its vendors and third-party service providers, to operate its business as a whole including its exploration projects. IT systems are subject to an increasing threat of continually evolving cybersecurity risks including, without limitation, computer viruses, security breaches, and cyberattacks. In addition, the Company is subject to the risk of unauthorized access to its IT systems or its information through fraud or other means. Any cybersecurity incidents or other IT systems disruption
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could result in operational delays, destruction or corruption of data, security breaches, financial losses from remedial actions, the theft or other compromising of confidential or otherwise protected information, fines and lawsuits, or damage to the Company's reputation. Any such occurrence could have an adverse impact on the Company's financial condition and results of operations.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure Controls and Procedures
Disclosure controls and procedures (as such term is defined in Multilateral Instrument 52-109 – Certification of Disclosure in Issuers' Annual and Interim Filings) have been designed by the Company to provide reasonable assurance that:
(a) material information relating to the Company is made known to the CEO and the CFO by others, particularly during the period in which the annual filings are being prepared; and
(b) information required to be disclosed by the Company in its annual filings, interim filings or other reports that it files or submits under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation, and is accumulated and communicated to management, including the CEO and CFO, to allow timely decisions regarding required disclosures.
The CEO and CFO have concluded that as of the end of the period covered by this MD&A, the design and operation of the disclosure controls and procedures are effective to ensure that information required to be disclosed in reports that it files or submits to regulatory authorities is recorded, processed, summarized and reported within the time periods specified by regulation, and is accumulated and communicated to management, including our CEO and CFO, to allow timely decisions regarding required disclosures.
Internal Control over Financial Reporting
The Company's management, with the participation of its CEO and CFO, has designed, established and is maintaining a system of internal control over financial reporting. Under the supervision of the CFO, as at March 31, 2025, the Company's internal control over financial reporting is a process designed to provide reasonable assurance that the financial information prepared by the Company for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner and in accordance with IFRS Accounting Standards.
Management, with the participation of its CEO and CFO, has used the Internal Control - Integrated Framework to evaluate the effectiveness of internal control over financial reporting, which is a recognized and suitable framework issued by the Committee of Sponsoring Organizations (COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company's controls include policies and procedures that:
- pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
- provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS Accounting Standards; and
Management's Discussion and Analysis March 31, 2025
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- provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the annual financial statements or interim financial statements.
There have been no changes to the controls during the year that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.
Limitations of Controls and Procedures
The Company's management, including the CEO and CFO, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CRITICAL ACCOUNTING POLICIES
The preparation of the Financial Statements in conformity with IFRS Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. The Company's significant accounting policies are disclosed in Note 2, Summary of Material Accounting Policy Information, to the December 31, 2024 audited consolidated financial statements.
The Company has identified certain accounting policies that the Company believes are most critical in understanding the judgments that are involved in producing the consolidated financial statements and the estimates made that could impact results of the operations, which are discussed below.
Impairment of long-lived assets
At the end of each reporting period, the Company reviews the carrying amounts of its long-lived assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit ("CGU") to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.
The recoverable amount of an asset is the higher of fair value less costs to dispose and value in use. Value in use is determined by discounting the estimated future cash flows to their present value using a
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pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized immediately in the consolidated statement of loss and comprehensive loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a CGU) is increased to the revised estimate of its recoverable amount, however the revised carrying amount cannot exceed the asset's (or CGU's) original cost before impairment calculated as if no impairment loss had been previously recognized.
During the three-month period ended March 31, 2025 and the year ended December 31, 2024, there were no other indicators of impairment or impairment reversals on the Company's long-lived assets.
Long-lived assets - Exploration and evaluation expenditures
Exploration and evaluation expenditures include costs such as exploratory drilling, sample testing and the costs of pre-feasibility studies. These costs are capitalized on a project-by-project basis pending determination of the technical feasibility and commercial viability of the project. The technical feasibility and commercial viability of a project is considered to be determinable when the proposed efficiency and viability of the project is assessed and the costs are expected to be recovered in full through the successful development and exploration of the identified property. All capitalized exploration and evaluation expenditures are monitored for indications of impairment, to ensure that commercial quantities of reserves exist or that exploration activities related to the property are continuing or planned for the future. If an exploration property does not prove viable, all unrecoverable costs associated with the project are expensed.
Exploration and evaluation assets are not depreciated. These amounts are reclassified from exploration and evaluation assets to mine development costs once the work completed to date supports the future development of the property and such development receives the appropriate approval. All subsequent expenditures to ready the property for production are capitalized within mine development costs, other than those costs related to the construction of property and equipment. Once production has commenced, all assets included in mine development costs are reclassified to mining properties. Exploration and evaluation expenditures incurred prior to the Company obtaining the right to explore are recorded as expense in the period in which they are incurred.
Option-out agreements are accounted for as farm-out arrangements. The Company, as the farmor, does not record any expenditures made by the optionee on its behalf, does not recognize any costs previously capitalized in relation to the whole interest as relating to the partial interest retained. Any cash or share consideration received is credited against costs previously capitalized in relation to the whole interest, with any excess accounted for by the Company as a gain on disposal.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the consolidated financial statements requires that the Company's management make estimates and judgments about future events that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Actual results may differ from those estimates. Estimates and judgments are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates are accounted for prospectively.
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The significant assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of the Company's assets and liabilities are outlined in Note 3, Critical Accounting Estimates and Judgments, to the December 31, 2024 audited consolidated financial statements of the Company.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This MD&A contains "forward-looking information", as such term is defined in applicable Canadian securities legislation. Forward-looking information is necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. All statements other than statements which are reporting results as well as statements of historical fact set forth or incorporated herein by reference, are forward looking information that may involve a number of known and unknown risks, uncertainties and other factors, many of which are beyond the Company's ability to control or predict. Forward-looking information can be identified by the use of words such as "may," "should," "expects," "plans," "aims", "anticipates," "believes," "estimates," "predicts," "intends," "continue," or the negative of such terms, or other comparable terminology.
This information includes, but is not limited to comments regarding:
- the Company's exploration and development plans for the exploration properties;
- liquidity to support operations;
- completion of a NI 43-101 report for any of the exploration properties;
- the establishment and estimates of additional mineral resources;
- anticipated expenditures for development, exploration and corporate overhead;
- timing and issuance of any permits;
- estimates of closure costs and reclamation liabilities;
- the Company's ability to continue as a going concern;
- the Company's ability to obtain financing to fund future expenditure and capital requirements; and
- the impact of adoption of new accounting standards.
Although the Company believes that the plans, intentions and expectations reflected in this forward-looking information are reasonable, the Company cannot be certain that these plans, intentions or expectations will be achieved. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking information contained in this report. Disclosure of important factors that could cause actual results to differ materially from the Company's plans, intentions or expectations is included in this report under the heading "Risk Factors".
Forward-looking information inherently involves risks and uncertainties that could cause actual results to differ materially from the forward-looking information. Factors that could cause or contribute to such differences include, but are not limited to unexpected changes in business and economic conditions, including the global financial and capital markets; significant increases or decreases in commodity prices; changes in interest and currency exchange rates; changes in operating costs; results of current and future exploration and development activities; results of future feasibility studies; joint venture relationships; political or economic instability, either globally or in the countries in which the Company operates; local and community impacts and issues; timing of receipt of government approvals; accidents and labour disputes; environmental costs and risks; competitive factors, including competition for property acquisitions; availability of external financing at reasonable rates or at all; and the factors discussed in this MD&A under the heading "Risk Factors".
Many of these factors are beyond the Company's ability to control or predict. These factors are not intended to represent a complete list of the general or specific factors that may affect the Company. The
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March 31, 2025
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Company may note additional factors elsewhere in this MD&A. All forward-looking statements and information speak only as of the date made. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements. Readers are cautioned not to put undue reliance on forward-looking information due to the inherent uncertainty therein. Fortune Bay disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise except as required by securities legislation.
CURRENT MINERAL RESOURCE ESTIMATES AND PRELIMINARY ECONOMIC ANALYSIS
The 2022 PEA for Goldfields was prepared in accordance with NI 43-101 by Ausenco Engineering Canada Inc., in collaboration with Moose Mountain Technical Services for the mine design, and SRK Consulting (Canada) Inc. for the updated Mineral Resource Estimate and Environmental, Permitting and Social aspects of the Goldfields Project plan. The PEA NI 43-101 Technical Report is available on SEDAR+ (www.sedarplus.ca) and Fortune Bay's website.
For further 2022 PEA details and important technical & financial disclosures refer to the Company's news release dated November 1, 2022. An NI 43-101 2022 PEA Technical Report was filed on SEDAR+ (www.sedarplus.ca) on November 25, 2022 and is available on the Company's website.
HISTORICAL RESULTS AND HISTORICAL MINERAL RESOURCE ESTIMATES
Disclosure of Historical Mineral Resource Estimates
The mineral resource estimate for the Poma Rosa project is considered historical in accordance with NI 43-101. A Qualified Person has not done sufficient work to classify the historical estimate as current mineral resources, and the Company is not treating the historical estimate as current mineral resources. While the estimate was prepared in accordance with NI 43-101, and CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines in effect at the time, there is no guarantee that it would be consistent with current standards and it should not be regarded as such. Fortune Bay has not undertaken any independent verification of the data upon which the historical estimate is based. The historical estimate is considered relevant to assess the mineralization and economic potential of the Poma Rosa project.
In accordance with Section 2.4 NI 43-101, and despite section 2.2, an issuer may disclose an historical estimate, using the original terminology, if the disclosure identifies the following:
| Poma Rosa (formerly “Ixhuátán”) – Campamento Deposit | |
|---|---|
| Source and date of the historical estimate, including any existing technical report | NI 43-101 Technical Report 2006 Resource Estimation, Campamento Gold Project on the Ixhuátán Property, Chiapas State, Mexico (the “2006 Resource Estimate Report”) for Linear Gold Corp. by G. H. Giroux, MASc, PEng. with an effective date of June 22, 2006. |
| Relevance and reliability of the historical estimate | The 2006 Resource Estimate Report was compiled in accordance with Canadian Institute of Mining (2005) standards and best practices for Mineral Resources, adhering to the NI 43-101 Standards of Disclosure for Mineral Projects. Supporting resource data were subjected to quality control by the responsible Qualified Person. |
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| Key assumptions, parameters, and methods used to prepare the historical estimate | Supporting resource data included 94 drill holes totalling 17,956 m with 8,372 gold assay results. Composited (5 m) gold grade (g/t) was interpolated into a block model further constrained by a 3-D model of the mineralization extent using semivariogram and search parameters that were optimized to fit known structural controls on mineralization. Resource classification (confidence) was assigned based on distance to drill coverage and interpretations of grade continuity based on semivariogram analysis. |
|---|---|
| Resource categories used | In accordance with NI 43-101 Ixhuátan historical mineral resource estimates use the terms “mineral resource”, “inferred mineral resource” and “indicated mineral resource” having the same meanings ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council, as amended. |
| More recent estimates or data available to the issuer | No relevant drilling or assay work has been conducted since 2006 on the Campamento Deposit. |
| Work that needs to be done to upgrade or verify the historical estimate as current mineral resources or mineral reserves; | An independent Qualified Person will be required to review and validate the historical data and historical estimates and compile an updated current Technical Report in accordance with NI 43-101. |
Disclosure of Historical Results
Unless otherwise noted, historical results have not been verified and there is a risk that any future confirmation work and exploration may produce results that substantially differ from the historical results. The Company considers these results relevant to assess the mineralization and economic potential of the respective property.
Historical results for Poma Rosa drill hole IXCM08-51 can be referenced in the NI 43-101 2011 Summary Report, with an effective date of May 18, 2011, prepared by Philip K. Seccombe, PhD, MAIG of Equity Exploration Consultants Ltd. and Gary H. Giroux, Peng. The 2011 Summary Report is filed on SEDAR+ under Cangold's issuer profile and available on Fortune Bay's website.
A description of the historical mining at Santa Fe, to the north of Poma Rosa, is referenced in the publication by Consejo de Recursos Minera ("CRM") (2000) - Geological-Mining Monograph of the State of Chiapas: Compiled and Prepared by Jesus Castro-Mora and Luis Enrique Ortiz-Hernández: ISBN 968-6710-89-2.
QUALIFIED PERSON
NI 43-101 requires, among other things, that issuers ensure that all written disclosure of a scientific or technical nature concerning a mineral project on a property material to the issuer identifies and discloses the relationship to the issuer of the qualified person who prepared or supervised the preparation of the technical report or other information that forms the basis for the written disclosure. A "qualified person" for purposes of NI 43-101 means an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation and/or mineral project assessment, has experience relevant to the subject matter of the disclosure and is a member in good standing of a specified professional association. The technical and scientific information in this MD&A has been
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reviewed and approved by Dale Verran, M.Sc., P.Geo., Chief Executive Officer for Fortune Bay Corp., who is a Qualified Person as defined by NI 43-101. Mr. Verran is an employee of Fortune Bay and is not independent of the Company under NI 43-101.
OTHER INFORMATION
Additional information regarding the Company is available on SEDAR+ at www.sedarplus.ca and on the Company's website at www.fortunebaycorp.com.