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Graycliff Exploration Limited — Management Reports 2025
Nov 29, 2025
47586_rns_2025-11-28_d7063351-5fea-41a2-b2f2-84f8dc3cc715.pdf
Management Reports
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GRAYCLIFF EXPLORATION LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025
FORM 51-102F1
The following Management Discussion & Analysis ("MD&A") is intended to assist in the understanding of the trends and significant changes in the financial condition and results of operations of Graycliff Exploration Limited (hereinafter "Graycliff" or the "Company") for the three and nine months ended September 30, 2025. The MD&A should be read in conjunction with the unaudited condensed interim financial statements for the period ended September 30, 2025 and audited financial statements and MD&A for the year ended December 31, 2024. The MD&A has been prepared effective November 25, 2025.
SCOPE OF ANALYSIS
The following is a discussion and analysis of Graycliff Exploration Limited. The Company reports its financial results in Canadian dollars and in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board. All reported interim financial information includes the financial results of Monterey and its subsidiaries.
FORWARD LOOKING STATEMENTS
The information set forth in this MD&A contains statements concerning future results, future performance, intentions, objectives, plans and expectations that are, or may be deemed to be, forward-looking statements. These statements concerning possible or assumed future results of operations of the Company are preceded by, followed by or include the words 'believes,' 'expects,' 'anticipates,' 'estimates,' 'intends,' 'plans,' 'forecasts,' or similar expressions. Forward-looking statements are not guarantees of future performance. These forward-looking statements are based on current expectations that involve numerous risks and uncertainties, including, but not limited to, those identified in the Risks Factors section. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. These factors should be considered carefully, and readers should not place undue reliance on forward-looking statements. The Company may not provide updates or revise any forward-looking statements, except those otherwise required under paragraph 5.8(2) of NI 51-102, whether written or oral that may be made by or on the Company's behalf.
TRENDS
Other than as disclosed in this MD&A, the Company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon its revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
GENERAL BUSINESS AND DEVELOPMENT
The Company is incorporated under the laws of British Columbia, Canada and is engaged in the acquisition, exploration, development and extraction of natural resources, specifically precious metals. Its head office is located at Suite 505, 133 Richmond Street West, Toronto, ON, M5H 2L3. The Company is listed on the Canadian Securities Exchange ("CSE"), trading under the symbol "GRAY" and on the OTCQB Venture Marketplace ("OTCQB") under the symbol "GRYCF".
On March 3, 2025, Graycliff announced that it signed a non-binding Letter of Intent ("LOI") to acquire 100% of the shares of Emergent Waste Solutions ("EWS") (the "Transaction"). As a term of the LOI, EWS advanced a non-refundable exclusivity deposit of $25,000 to the Graycliff. No other terms were completed and this LOI was terminated in the third quarter of 2025.
Subsequent to the quarter-end, the Company announced a proposed share consolidation of its issued and outstanding common shares (“Common Shares”) on a one post-consolidation Common Share for every four pre-consolidation Common Shares basis (the “Consolidation”). There is no proposed name change or stock symbol change in connection with the Consolidation. The Consolidation is subject to the approval of the Canadian Securities Exchange (the CSE). The Consolidation would reduce the number of outstanding Common Shares from 17,609,841 currently to approximately 4,402,460. It would also reduce the number of outstanding incentive options to purchase Common Shares from 900,000 currently to 225,000.
In addition, all remaining 1,605,000 warrants to purchase Common Shares expired during the quarter ended September 30, 2025.
All public filings for the Company on the SEDAR website www.sedar.com.
PROPERTIES
Shakespeare Project
The Shakespeare Project (“Shakespeare” or the “Project”) is located approximately 88 km west of Sudbury, Ontario. The Project originally consisted of 24 mineral claims covering 516.8 ha in two contiguous blocks. The Project surrounds the historic Shakespeare gold mine, which was in operation from 1903 to 1907. A total of 2,959 oz of Au were produced from six underground levels. Historic exploration was completed on the property intermittently between 1938 and 2014, including trenching, sampling and limited drilling.
The Project is located near the Murray Fault, a prominent regional fault, which strikes east-northeast. The mineralized zone of the historic mine was hosted by quartz-rich metasedimentary rocks and chlorite schists. Gold occurs as native metal and is associated with sulfides, including chalcopyrite, pyrrhotite and pyrite.
In August 2019, the Company signed an option agreement to acquire a 100% undivided interest in the 24 mining claims associated with the Property from the Optionor, subject to paying 500,000 shares and spending and aggregate total of $300,000 in exploration expenditures over 24 months and an additional 500,000 shares in August 2021. The Optionor retained a 2% net smelter return (“NSR”) royalty, with a buy-back feature allowing Graycliff to reduce the NSR to 1% in return for a payment of $2 million. With all conditions met, the Project is wholly-owned by the Company, subject to the NSR.
In October 2020, the Company purchased an additional 15 mining claims, comprising 330 hectares, which resulted in the Company having one contiguous block of ground. Graycliff paid the vendor 975,000 common shares for a 100% undivided interest in these new mining claims.
In March 2021, Graycliff purchased a Crown Patented Lease, the two Crown Leases and a Mineral Claim, comprising 98 hectares of ground contiguous with the claims already controlled by the Company. Graycliff paid the vendor 250,000 common shares for a 100% undivided interest in this new ground.
In April 2021, the Company staked an additional 13 claims, comprising roughly 80 hectares that are connected to the Shakespeare Project, bringing the total land package to a Crown Patented Lease, two Crown Leases and 53 Mineral Claims, comprising 1,025 hectares.
The Company’s 2020 field study focused on testing the mineralized trend northwest of the historic gold mine. The completed field sampling discovered a new target area called the Harmer Zone, which returned copper values as high as 3.47%. The 1.0 metre (“m”) wide semi-massive to massive sulfide zone with quartz veining is mineralized along an east-west tending strike for 75 m.
The Company’s initial drill programs in 2020 and 2021, respectively consisted of 1,200 metres (‘m’) and 1,700 m. The results were released in 2021 and 13 of the 21 holes intersected anomalous gold values. The significant intervals were Hole 1, with 5.5 grams of gold per tonne (“g/t Au”) over 4.6 m; Hole 3, with 5.4 g/t Au over 5.0 m; Hole 7, with 8.6 g/t Au over 5.5 m; Hole 8 with 16.4 g/t Au over 16.0 m; Hole 9 with 13.3 g/t Au over 16.0 m, Hole 17 with 4.8 g/t Au over 3.0 m, and Hole 21 with 19.4 g/t Au over 4.2 m.
The Company’s third drill program consisted of 4,300 m and 13 of the 18 holes intersected anomalous gold values and the most significant intervals were: Hole 22 with 46.0 g/t Au over 4.8 m and 46.2 g/t Au over 2.7 m; Hole 31 with 20.52 grams of g/t Au over 2.0 m; and, Hole 36 with 6.23 g/t Au over 5.0 m. Holes 34 through 39 all contained anomalous intersections.
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Baldwin and Lunge Projects
In May 2021, Graycliff purchased the Baldwin Project ("Baldwin"), which is also located in the Sudbury Mining Division of Ontario and is approximately 88 km west of Sudbury, Ontario. The Baldwin consists of 68 mineral claims covering roughly 1,500 hectares in two contiguous blocks. The property is adjacent to the east of the Shakespeare Project. Graycliff paid the vendor 1,800,000 common shares for a 100% interest in this new ground. The Vendor retained a 2% net smelter return ("NSR") royalty, with a buy-back feature allowing Graycliff to reduce the NSR to 1% in return for a payment of $1 million.
On March 2, 2023, the Company signed an asset purchase agreement to acquire 100% of the Lunge Project in the Sudbury Basin of Ontario, subject to a 2% NSR royalty, with a buy-back feature allowing Graycliff to reduce the NSR to 1% in return for a payment of $1 million. The newly acquired project comprises 27 claim units covering 601 hectares. Under the terms of the acquisition, Graycliff issued 2,000,000 pre-consolidation common shares for the new claims.
On February 6, 2024, the Company signed a binding Letter of Intent ("LOI") for the sale of its Baldwin and Lunge Projects to EV Minerals Corporation ("EV Minerals"). Per the terms of the LOI, EV Minerals will purchase a 100% interest in two packages of claims known as the Baldwin and Lunge Projects for a total of 2,000,000 common shares in the capital of EV Minerals. EV Minerals made a one-time cash payment in the amount of $25,000 upon signing the LOI.
On February 26, 2024, the Company closed the sale of its Baldwin and Lunge Projects to EV Minerals, pursuant to the terms of the binding LOI announced on February 6, 2024.
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2025, the Company had a cash balance of $1,612 compared to a cash balance of $9,288 at December 31, 2024. The Company had negative working capital $470,827 at September 30, 2025 (December 31, 2024 - negative working capital of $387,303).
The continuation of the Company as a going-concern is dependent on its ability to raise additional capital or debt financing, including on reasonable terms, in order to meet business objectives towards achieving profitable business operations.
SHARE CAPITAL AND OUTSTANDING SHARE DATA
Common Shares
Authorized – Unlimited Common shares without par value; and
Issued and Outstanding as at September 30, 2025:
- Common Shares - 17,609,841 (December 31, 2024: 17,609,841)
- Share Purchase Warrants - Nil (December 31, 2024: 1,605,000)
- Incentive Stock Options - 900,000 (December 31, 2024: 1,387,500)
RESULTS OF OPERATIONS
SELECTED QUARTERLY INFORMATION
During the three and nine months ended September 30, 2025, the Company incurred a net loss of $41,691 and $91,929, respectively (three months and nine ended June 30, 2024 – losses of $129,397 and $175,337, respectively). Included in the loss for the first nine months of 2024 was a gain of $125,000 related to the sale of mining claims, $25,000 of which was in the form of cash received and $100,000 of which was in the form of 2,000,000 common shares of the acquirer, EV Minerals. During the nine months ended September 30, 2025, included as income was a $25,000 non-refundable deposit received from EWS as part of the transaction agreed to on March 3, 2025. This amount was received in the second quarter of 2025.
The Company decreased its exploration activities over the past few years.
SUMMARY OF FINANCIAL RESULTS FOR EIGHT MOST RECENTLY COMPLETED QUARTERS
The following table summarizes the financial results of operations for the eight most recent fiscal quarters:
| | Sep. 30, 2025
$ | Jun. 30, 2025
$ | Mar. 31, 2025
$ | Dec. 31, 2024
$ |
| --- | --- | --- | --- | --- |
| Expenses | 41,691 | 26,210 | 49,028 | 45,416 |
| Net loss | (41,691) | (26,210) | (24,028) | (50,408) |
| Loss per share - basic & diluted | (0.00) | (0.00) | (0.00) | (0.00) |
| | Sep. 30, 2024
$ | Jun. 30, 2024
$ | Mar. 31, 2024
$ | Dec. 31, 2023
$ |
| Expenses | 119,397 | 43,861 | 67,079 | 82,432 |
| Net loss | (129,397) | (103,861) | 57,921 | (82,427) |
| Loss per share - basic & diluted | (0.01) | (0.00) | 0.00 | (0.00) |
RELATED PARTY TRANSACTIONS
Related parties include the Board of Directors, close family members, other key management individuals and enterprises that are controlled by these individuals as well as certain persons performing similar functions.
Related party transactions conducted in the normal course of operations are measured at fair value and approved by the Board of Directors in strict adherence to conflict-of-interest law and regulations.
The Company incurred the following charges with directors and/or officers of the Company and/or companies controlled by them for the three and nine-month periods ended September 30, 2025 and 2024:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2024 | 2024 | 2024 | |
| $ | $ | $ | $ | |
| Consulting – President and CEO | 15,000 | 15,000 | 45,000 | 45,000 |
| Consulting – CFO | 10,500 | 10,500 | 31,500 | 31,500 |
| 25,500 | 25,500 | 76,500 | 76,500 |
At September 30, 2025, $148,500 was due to the Company's President and CEO and $85,000 was due to the Company's CFO on account of unpaid fees (December 31, 2024 - $103,500 and $53,500, respectively). This amount is accrued and included in accounts payable.
The Company signed secured promissory notes with its CEO and CFO, carrying an interest rate of 12% per annum. At September 30, 2025, $10,000 plus $790 of accrued interest was owed to the Company's CEO and $2,500 plus $43 of accrued interest was due to the Company's CFO. In October and November 2025, an additional $5,000 was borrowed from the Company's CEO in two tranches of $2,500.
CRITICAL JUDGMENTS AND ACCOUNTING ESTIMATES
Measurement Uncertainty
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of the accounting policies to financial information presented. Actual results may differ from the estimates, assumptions and judgments made. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes made to estimates are reflected in the period the changes are made.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the amounts recognized in the financial statements are:
Taxes
Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.
Significant accounting judgments
The critical judgments that the Company's management has made in the process of applying the Company's accounting policies, apart from those involving estimations that have the most significant effect on the amounts recognized in the Company's financial statements, are related to the functional currency assessment, related parties, the provision for reclamation and obligation, when and if deferred taxes are recoverable and the assumption that the Company will continue as a going concern.
The Company made a determination that its functional currency and that of its subsidiaries is the Canadian dollar. Management considered all of the relevant factors in making this determination.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Set out below is a comparison, by category, of the carrying amounts and fair values of all of the Company's financial instruments that are carried in the financial statements and how the fair value of financial instruments is measured.
Fair values
Fair value represents the price at which a financial instrument could be exchanged in an orderly market, in an arm's length transaction between knowledgeable and willing parties who are under no compulsion to act.
The Company classifies the fair value of the financial instruments according to the following hierarchy based on the amount of observable inputs used to value the instrument.
The following table provides an analysis of the financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in the active market for identical assets or liabilities.
- Level 2 fair value measurements are those derived from inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. prices) or indirectly (derived from prices).
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
As at September 30, 2025 and December 31, 2024, the Company did not have any financial instruments measured at fair value.
| Categories of Financial Instruments | Sep. 30, 2025 | Dec. 31, 2024 |
|---|---|---|
| Financial Assets—other receivables | ||
| Cash | $ 1,612 | $ 9,288 |
| Amounts receivable | 555 | 901 |
| Financial Liabilities—other financial liabilities | ||
| Accounts payable and other liabilities | 465,009 | 378,111 |
The fair values of all the Company's financial instruments approximate the carrying value due to the short-term nature of the financial instruments. The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (currency fluctuations, interest rates and commodity prices). The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance.
Credit Risk
Credit risk is the risk of a financial loss to the Company if a customer is unable to meet its contractual obligations and arises principally from the Company's accounts receivable. The Company's cash is held with Canadian chartered banks.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company has established a standard of ensuring that it has enough resources available to withstand any downturn in the industry. As the Company's industry is very capital intensive, the majority of its spending is related to its capital programs. The Company prepares periodic capital expenditure budgets, which are regularly monitored and updated as considered necessary. Further, the Company utilizes authorizations for expenditures on both operated and non-operated projects to further manage capital expenditures. The Company's goal is to prudently spend its capital while maintaining its credit reputation amongst its suppliers.
Market Risk
Market risk is the risk that changes in interest rates, foreign exchange rates and commodity and equity prices will affect the Company's net earnings or the value of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns.
Interest rate risk
The Company has cash balances and no interest-bearing debt. The Company's current policy is to invest excess cash in certificates of deposit issued by a Canadian chartered bank with which it keeps its bank accounts. The Company periodically monitors the investments it makes and is satisfied with the creditworthiness of the Canadian chartered bank.
Commodity and equity risk
The Company is exposed to price risk with respect to commodity and equity prices. Commodity price risk is the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. Equity price risk is the potential adverse impact on the Company's comprehensive earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors commodity prices to determine the appropriate course of action to be taken by the Company. Commodity price risk could adversely affect the Company. In particular, the Company's future profitability and viability of development depend upon the world market price of certain precious and base metals. Precious and base metals have fluctuated widely in recent years. There is no assurance that, even if commercial quantities of precious and base metals are produced in the future, a profitable market will exist for them.
CAPITAL MANAGEMENT
The Company's objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying natural resource properties. The Company's objective is met by retaining adequate equity to guard against the possibility that cash flows from assets will not be sufficient to meet future cash flow requirements. The Company considers its capital structure to include cash and working capital. In order to maintain or adjust the capital structure, the Company may from time to time issue shares and adjust its capital spending to manage current and projected debt levels. To assess capital and operating efficiency and financial strength, the Company continually monitors its net cash and working capital.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
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MANAGEMENT'S RESPONSIBILITY
Management is responsible for all information contained in this report. The September 30, 2025 financial statements have been prepared in accordance with IFRS and include amounts based on management's informed judgments and estimates.
RISKS AND UNCERTAINTIES
An investment in the securities of the Company is highly speculative and involves numerous and significant risks. Only investors whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment should undertake such investment. Prospective investors should carefully consider the risk and uncertainties that have affected, and which in the future are reasonably expected to affect, the Company and its financial position.