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Grit Metals Corp. Management Reports 2025
48274_rns_2025-09-29_711c01ab-6e4f-4f52-ae20-be6133cf3ab6.pdf
Management Reports
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MANAGEMENT DISCUSSION AND ANALYSIS
Grit Metals Corp. (formerly European Energy Metals Corp.)
For the year ended May 31, 2025
As of September 29, 2025
This Management Discussion and Analysis ("MD&A") of Grit Metals Corp. (formerly European Energy Metals Corp.) (the "Company") provides a review of activities, results of operations and financial condition of the Company for the year ended May 31, 2025, and is prepared by management using information available as of September 29, 2025. We have also prepared this MD&A with reference to National Instrument 51-102 Continuous Disclosure Obligations of the Canadian Securities Administrators.
The MD&A should be read in conjunction with the Company's audited financial statements for the year ended May 31, 2025. The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). All monetary amounts, unless otherwise indicated, are expressed in Canadian dollars.
Forward-Looking Statements
Except for statements of historical fact, this MD&A contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar terms, or statements that certain events or conditions "might", "may", "could" or "will" occur. In particular, forward-looking information in this MD&A includes, but is not limited to, statements with respect to future events and is subject to certain risks, uncertainties and assumptions. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information. Forward-looking statements in this MD&A include, but are not limited to, statements relating to resource estimates, the likelihood of discovering mineralization or resources, and our ability to raise additional capital required to operate the business.
Forward-looking information is based on the opinions and estimates of management at the date the forward-looking statements are made, and is subject to a variety of risks, uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking statements include, but are not limited to: general economic conditions in Canada, Europe, the United States and globally; industry conditions, including fluctuations in commodity prices; governmental regulation of the mining industry, including environmental regulation; geological, technical and drilling problems; unanticipated operating events; competition for and/or inability to retain qualified personnel, competition for drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for commodities; liabilities inherent in mining operations; changes in tax laws and incentive programs relating to the mining industry; and the other factors described herein under Risk Factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this MD&A is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information, to conform such information to actual results or to changes in our expectations, except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
BUSINESS OVERVIEW
Grit Metals Corp. (formerly European Energy Metals Corp.) was incorporated on February 2, 2021 under the laws of British Columbia. The Company trades on the TSX Venture Exchange under the symbol "FIN". The address of the Company's corporate office and its principal place of business is 503 - 905 West Pender Street, Vancouver, British Columbia, Canada, V6C 1L6.
Grit Metals Corp. is a junior mining exploration company currently focussed on its 100 percent owned Lithium-Cesium-Tantalum Finnish Pegmatite mineral claims in central Finland.
Governing bodies in Europe, including in Finland are legislating environmentally friendly and energy independent laws and policies. One of the key components is access to rare earth elements ("REE") and, specifically, lithium. The company's exploration licenses are located within 1 km of the Keliber mine and production complex, currently under construction and expected to begin production in Q2 2025.
On April 6, 2023, the Company entered into a definitive earn-in agreement with Capella Minerals Ltd. ("Capella") to earn up to an 80-per-cent interest in a portfolio of lithium (lithium-cesium-tantalum (LCT)) and REE pegmatite reservations held by Capella in central Finland. On April 5, 2024, the Company amended its agreement with Capella and acquired a 100% interest in the Capella Property. This property consists of five lithium and REE pegmatite reservations in central Finland.
On September 1, 2023, the Company acquired the shares of BB Gold Inc., a company existing under the laws of Newfoundland and Labrador and its wholly owned Finnish subsidiary Sisu Exploration.
On May 22, 2024, the Company incorporated Grit Exploration Oy, a wholly owned Finnish subsidiary, to secure and manage various reservations and exploration permits in Finland.
The Company will need additional funding in the future through equity financing to acquire new projects and further develop its existing assets (See Liquidity and Capital Resources below). Many factors influence the Company's ability to raise funds, including the health of the capital markets, the climate for mineral exploration investment and the Company's track record. Actual funding requirements may vary from those planned due to a number of factors, including the funding of new projects. Management is considering all identifiable sources of equity capital, but there is no assurance that the Company will be able to secure additional financings in the future, and if secured, at terms that are favourable.
HIGHLIGHTS FOR THE YEAR ENDED MAY 31, 2025, AND SUBSEQUENT TO THE YEAR END
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In September 2024, the Company completed a non-brokered private placement offering in two tranches. The Company issued a total of 16,465,000 Units at a price of $0.125 per Unit, raising gross proceeds of $2,058,125. Each Unit consists of one common share and one-half of a common share purchase warrant, with each whole warrant exercisable to acquire one additional share at an exercise price of $0.20. The warrants issued in the First Tranche expire on September 9, 2026, while those from the Second Tranche expire on September 23, 2026. In connection with the placements, the Company has paid cash commissions of $132,432 and has also issued 1,157,000 shares and 249,550 non-transferable warrants with the same terms as the warrants issued to the subscribers in the first and second tranche above. The net proceeds are being used for exploration work and working capital as per the original intended use of proceeds.
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On October 30, 2024, the Company announced the filing of a Notice of Alteration to change its name from "European Energy Metals Corp." to "Grit Metals Corp." The Company's common shares commenced trading on a post-name basis at the opening of the market on November 4, 2024, under the same trading symbol "FIN".
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The Company submitted five new Exploration Licenses (ELs) during the quarter, expanding its extensive land holdings in Finland. The five new EL applications cover 10,220 hectares (ha) with geological terrane considered highly prospective for Lithium-Cesium-Tantalum (LCT) Pegmatites in the Kaustinen region of Central Finland.
Upon completion of the 2024 field program, the Company reported new widespread LCT pegmatite mineralization areas at its Central Finland Lithium Project. The exploration team identified multiple spodumene-bearing pegmatite boulder clusters, some extending over 1,200
meters, and collected 450 rock samples for analysis. Assay results have now been received, confirming lithium mineralization and supporting the identification of new prospects across the project area.
- Management evaluated the exploration activities undertaken on the BB Gold properties in Northern Finland during the year and decided not to proceed with filing exploration permit applications. As a result, the Company no longer holds any active projects or mineral claims in Northern Finland. Accordingly, management concluded that the BB Gold property is not expected to generate future economic benefits, and a non-cash impairment charge of $1,068,091 was recorded, reducing its carrying value to $Nil.
PROPERTIES AND EXPLORATION
Capella Property
On April 6, 2023, the Company entered into a definitive earn-in agreement with Capella Minerals Ltd. ("Capella") to earn up to an 80% interest in the Capella Property, a portfolio of lithium (lithium-cesium-tantalum (LCT)) and rare earth element (REE) pegmatite reservations held by Capella in central Finland. Further, on April 5, 2024, the Company announced it had amended its agreement with Capella Minerals Ltd. to acquire a 100% interest in the project. Whereas the original agreement was a two stage 51/80% earn-in agreement, the revised agreement granted the Company an immediate 100% interest in the project with no further commitments due to Capella.
Under the terms of the amended agreement, the Company paid Capella $250,000 in cash and issue 1,100,000 common shares of the Company. Capella also received a 2% net smelter royalty on the Project, half of which may be repurchased by the Company at any time in exchange for 1,000,000 Euro.
The portfolio consists of multiple lithium and REE pegmatite reservations and exploration licenses in central Finland, covering approximately 250,000 hectares (2,500 square kilometres). These holdings target LCT (lithium-cesium-tantalum) pegmatite complexes within the Jarvi-Pohjanmaa and Seinajoki lithium-permissive tracts, as defined by the Geological Survey of Finland (GTK). Four of the original reservations (Nabba, Lappajarvi West, Lappajarvi East, and Kaatiala) lie immediately adjacent to, and to the south of, Keliber Oy's spodumene mine development project in Finland's Kaustinen district. The Company commenced exploration on these holdings on May 30, 2023, and completed a successful Phase I field program on November 21, 2023. Phase II of exploration concluded in November 2024, and the Company is currently reviewing and integrating its final assay results to guide further drilling and target definition.
Finland Pegmatite Project ("FPP") Exploration
The Geological Survey of Finland (GTK) has been conducting regional studies in the country since the 1960s, including till geochemistry, airborne magnetics and radiometrics, and rock sampling. GTK combined its own data with that from Keliber Oy and other companies to complete a predictive model for LCT (lithium-cesium-tantalum) pegmatites in Finland, which identified several permissive tracts with the potential to host LCT pegmatite deposits. The Company's Finland Pegmatite Project (FPP) lies within two of these tracts: the 255-square-kilometre Kaustinen tract, which hosts Keliber Oy's developing LCT lithium project, and the 3,672-square-kilometre Jarvi-Pohjanmaa tract.
GTK's exploration work in the Kaustinen tract included detailed geochemical till sampling between 2003 and 2023, with samples collected at 100-metre intervals along lines spaced approximately 1,000 metres apart, oriented perpendicular to the regional ice-flow direction at 240 degrees. One of the anomalies identified through this work is located on the Company's Nabba concession, indicating a high potential for LCT pegmatites.
All of the Company's tenements lie within the Pohjanmaa belt, comprising mica schists and mica gneisses intercalated with metavolcanic rocks. The Pohjanmaa belt, which encompasses the Kaustinen and Jarvi-Pohjanmaa tracts, hosts numerous rare-element pegmatites in the north, proximal to the Nabba reservation. Lithium pegmatites of the Kaustinen province are classified as "albite-spodumene-type," as defined by Černý and Ercit (2005). These pegmatites intruded post-metamorphism and crosscut the metavolcanic and metasedimentary rocks at the northern edge of the belt.
In Finland, mineral reservations are valid for two years, allowing the holder to evaluate the geological potential before applying for more advanced exploration rights called Exploration Licenses.
On November 14, 2023, the Company announced that it had submitted applications for two Exploration Licenses (ELs) covering a total area of 4,550 hectares within the broader 11,690-hectare Nabba Reservation. The Nabba EL (2,812 hectares) and Nabba 2 EL (1,738 hectares), situated on the northern half of the Nabba Reservation, lie adjacent to Sibanye-Stillwater/Keliber's advanced lithium projects. Under an EL, the Company can pursue detailed base-of-till (BoT) sampling, trenching, and diamond drilling. These ELs lie less than eight kilometres west of Keliber's Spodumene Concentrator Plant and are also within one kilometre of several Li-spodumene pegmatite prospects/deposits, including the Emmes deposit, which hosts NNW-SSE trending spodumene pegmatites containing 1.08 Mt grading $1.22\%$ $\mathrm{Li}_2\mathrm{O}$ (Geological Survey of Finland). Historical BoT surveys indicate lithium anomalies on the Nabba ELs that the Company interprets as being relatively close to their bedrock source (see Company News Release dated May 30, 2023).
Further to these two initial licenses, on August 15, 2024, the Company announced the submission of five additional EL applications covering 10,220 hectares. These applications bring the Company's total EL holdings at its Central Finland Lithium Project to approximately 15,770 hectares, all located within the same highly prospective Kaustinen-Seinajoki region identified by GTK.
Figure 1. Nabba Exploration Licence Applications
On November 21, 2023, the Company announced the completion of its Phase I exploration program on its Central Finland lithium project. This field program ran from early July through the end of October 2023 and involved reconnaissance prospecting and geological mapping to follow up on known pegmatite occurrences documented by the Geological Survey of Finland (GTK), as well as investigation of granitic complexes with potential to host lithium-cesium-tantalum (LCT) pegmatites. Prospecting for pegmatite boulders in areas of overburden cover was also undertaken, leading to the identification of numerous individual pegmatites and occasional pegmatite swarms. Notably, local discoveries included pegmatite boulders containing the
lithium-bearing mineral spodumene. A total of 1,106 rock-chip (grab) samples were collected across the >250,000-hectare project area during Phase I, with the assay results being released on December 7, 2023.
The initial success from Phase I encouraged the Company to submit its first applications for Exploration Licenses (ELs) covering 4,550 hectares within the 11,690-hectare Nabba Reservation. The Nabba EL (2,812 ha) and Nabba 2 EL (1,738 ha) occupy the northern half of the Nabba Reservation, adjacent to Sibanye-Stillwater/Keliber's advanced lithium projects. Securing an EL allows for more advanced exploration activities, such as detailed base-of-till (BoT) sampling, trenching, and diamond drilling. The Nabba ELs lie less than eight kilometres west of Keliber's Spodumene Concentrator Plant and within one kilometre of several Li-spodumene pegmatite prospects/deposits, including the Emmes deposit, which hosts north-northwest to south-southeast trending spodumene pegmatites with a resource of 1.08 million tonnes grading 1.22% Li₂O (source: GTK).
On December 7, 2023, the Company announced the results of its inaugural Phase I exploration program, confirming multiple spodumene-bearing pegmatite boulders and boulder fields across the broader Central Finland Lithium Project. Among the most significant findings were several clusters on the Nabba Reservation—particularly at Kyrola (a 350 m by 110 m spodumene-bearing boulder field where 49 samples ranged from 3.84% to 0.003% Li₂O, with 15 samples >0.50% Li₂O) and Kaitnabba (a spodumene-bearing boulder cluster returning assays of 1.57% and 1.01% Li₂O). Glacial history suggests that the boulder-field sources may be within a few hundred metres of their present locations.
Building on these Phase I successes, the Company undertook a Phase II exploration program in 2024, which concluded in November 2024. This follow-up work encompassed additional sampling, prospecting, and preliminary geophysical surveys at new and existing targets, including areas where five new Exploration License applications (totalling 10,220 hectares) were submitted on August 15, 2024. These applications, combined with the previously announced Nabba ELs, expanded the Company's total EL holdings in Central Finland to approximately 15,770 hectares. The results of Phase II are currently being analyzed and integrated with Phase I data to refine targets for base-of-till testing, trenching, and potential drilling in 2025.
Figure 2. Nabba 2023 Results
Kyrola
The most significant discovery during the Phase I program remained the Kyrola Prospect on the Nabba Reservation. Initially mapped as a 350-metre by 110-metre, northwest-southeast trending spodumene-bearing pegmatite boulder field, subsequent follow-up work in late 2023 and 2024 extended this corridor to approximately 850 metres in length. The boulder field's extent is constrained only by low-lying overburden and farm fields.
A total of forty-nine (49) rock-chip grab samples were collected from the boulder field, returning assays from $0.003\%$ to $3.84\%$ $\mathrm{Li}_2\mathrm{O}$ , with a mean assay of $0.53\%$ $\mathrm{Li}_2\mathrm{O}$ . Fifteen samples exceeded $0.50\%$ $\mathrm{Li}_2\mathrm{O}$ , eleven samples were above $1.00\%$ $\mathrm{Li}_2\mathrm{O}$ , four surpassed $2.00\%$ $\mathrm{Li}_2\mathrm{O}$ , and one sample exceeded $3.00\%$ $\mathrm{Li}_2\mathrm{O}$ . The boulders, which range in size from small hand cobbles to over 1.5 metres in diameter, are generally angular and display weak anomalies in cesium (Cs), tantalum (Ta), beryllium (Be), and tin (Sn).
Subsequent prospecting in 2024 identified additional spodumene-bearing boulder clusters up to 2.3 kilometres west of the original Kyrola field. Another new occurrence was discovered approximately six kilometres northwest, associated with a boulder that assayed $0.36\%$ $\mathrm{Li}_2\mathrm{O}$ in 2023. These follow-up discoveries reinforce the interpretation that Kyrola's boulder field likely sits within a few hundred metres of its bedrock source and confirms the broader prospectivity of the Nabba area for near-surface lithium mineralization.
Table 1: Best results from Kyrola Prospect
| Sample_# | Li2O_Pct | Li_ppm | Cs_ppm | Ta_ppm | Be_ppm | Sn_ppm |
|---|---|---|---|---|---|---|
| D056277 | 3.84 | 17850 | 14.8 | 17.7 | 87.2 | 107 |
| F920052 | 2.62 | 12150 | 53.3 | 49.7 | 230 | 136 |
| D056274 | 2.26 | 10500 | 46.8 | 40.9 | 96 | 91 |
The boulders are mineralogically comprised of albite-spodumene-quartz-muscovite pegmatite with lesser accessory minerals such as tourmaline, garnet and beryl. They are typically massive to weakly zoned. They appear to be mineralogically similar to the known Keliber deposits in the region, and as such may be part of the same mineralizing event.
Based on the known glacial history of the area and glacial dispersion of pegmatite boulders at the nearby Keliber deposits (Ahtola et al, 2015), it is interpreted that the source of the boulders is likely to be to the northwest of the boulder field, and possibly within $300 - 500\mathrm{m}$ . Further studies will be required to confirm and define targets for drilling.
Kaitnabba
Another cluster of spodumene bearing pegmatite boulders were discovered approximately 9 km southwest of the Kyrola prospect, and also occurring on the Nabba Reservation. Two boulders assayed $1.57\%$ and $1.01\%$ $\mathrm{Li}_2\mathrm{O}$ respectively. The boulders range in size from 0.2 to $0.4\mathrm{m}$ diameter and are also mineralogically similar to the Keliber deposits. They are also anomalous in Cs, Ta, Be and Sn.
Table 2: Best results from Kaitnabba Prospect
| Sample_# | Li2O_Pct | Li_ppm | Cs_ppm | Ta_ppm | Be_ppm | Sn_ppm |
|---|---|---|---|---|---|---|
| F920426 | 1.57 | 7300 | 45.3 | 62.4 | 224 | 143 |
| F920094 | 1.00 | 4670 | 52 | 39.7 | 282 | 97 |
Kaatiala
Located $100\mathrm{km}$ south of Nabba, the 3,200 ha property is host to a $40\mathrm{m}$ wide quartz-feldspar-muscovite-tourmaline $(+/-$ spodumene) pegmatite body that was mined from 1942 to 1968 for quartz and feldspar. Rock chip sampling of the waste piles around the old mine revealed the presence of Li. The highest Li values obtained were $0.09\%$ , $0.20\%$ and $0.25\%$ $\mathrm{Li}_2\mathrm{O}$ .
Table 3: Best results from Kaatiala Prospect
| Sample_# | Li2O_Pct | Li_ppm | Cs_ppm | Ta_ppm | Be_ppm | Sn_ppm |
|---|---|---|---|---|---|---|
| F920411 | 0.25 | 1170 | 93.1 | 28.6 | 16.7 | 193 |
| F920081 | 0.20 | 940 | 49.3 | 13.45 | 12.7 | 64 |
| F920413 | 0.09 | 440 | 39 | 34.6 | 10.3 | 39 |
Finland Pegmatite Exploration Completed During and Subsequent to the Year Ended May 31, 2025.
During the year ended May 31, 2025, the Company made significant progress on its Finland Pegmatite Project, building on the successes of the 2023 field season. On June 6, 2024, the Company announced that new field programs had commenced, with teams of prospectors and geologists carrying out follow-up work on discoveries made in 2023 and undertaking reconnaissance prospecting and geological mapping on recently secured Exploration Licenses (ELs).
Through the summer, crews focused on identifying new lithium-cesium-tantalum (LCT) pegmatite boulder fields and pegmatite outcrops, as well as refining previously known occurrences. These efforts culminated in an announcement on August 15, 2024, that five new EL applications, totaling 10,220 hectares, had been submitted to Finnish regulators. With the addition of these applications, the Company's total EL holdings in the Kaustinen region of Central Finland increased to approximately 15,770 hectares.
The new ELs are largely contiguous with those of Sibanye-Stillwater/Keliber (SK), which hosts several LCT spodumene pegmatite deposits in the immediate vicinity with an aggregate published resource of roughly 17 million tonnes grading 1% Li₂O (based on SK annual reports and the Geological Survey of Finland). SK is currently constructing a centralized spodumene concentrator mill near Kaustinen to process ore from multiple deposits. The Company's new ELs lie within one kilometre of several known lithium-rich spodumene pegmatite deposits and within one kilometre of SK's concentrator plant, underscoring the strategic importance of these licenses.
As the field season proceeded into the autumn months, the Company broadened its exploration footprint beyond the initial EL applications, collecting additional rock-chip samples and carrying out preliminary geophysical surveys. Field activities concluded by November 2024, with results indicating multiple new spodumene-bearing LCT pegmatite clusters across the expanded license area. These findings, combined with ongoing data analysis, are expected to guide the selection of priority targets for base-of-till sampling, trenching, and potential drilling in the upcoming exploration season.
Figure 3. New Exploration License Applications
On August 22, 2024 the Company announced that it had identified additional new areas of widespread Lithium-Cesium-Tantalum (LCT) pegmatite mineralization on its exploration licenses at its Central Finland Lithium Project.
Key Takeaways:
- Multiple new spodumene-bearing LCT-type pegmatite boulder clusters and trends have been identified and sampled during the first two months of the 2024 campaign
- A total of 450 rock chip grab samples have been collected and submitted to ALS Laboratory for analysis, with assays pending
- Pegmatite boulder trains individually traced over 1200 m
Large individual boulders/blocks of spodumene pegmatite locally up to $+4\mathrm{m}$ diameter
- Five new Exploration License (ELs) applications totaling 10,220 hectares (ha) were recently submitted bringing the Company's total holdings to 15,770 ha (see Aug 15, 2024 press release)
- New ELs largely contiguous with Keliber's licenses and within 1 km of known lithium pegmatite deposits and the Keliber Spodumene Concentrator Plant
Figure 4. New Spodumene Mineralization
On November 12, 2024 the Company announced impressive assay results from several newly identified areas of lithium-cesium-tantalum (LCT) pegmatite mineralization on its exploration licences at its Central Finland lithium project.
Key Takeaways:
- Multiple new spodumene-bearing LCT-type pegmatite boulder clusters and trends have been identified and sampled during the summer 2024 campaign
A total of 600 rock chip grab samples were collected and submitted to ALS Laboratories for assaying; assays are pending for approximately 150 samples - Pegmatite boulder trains individually traced over several hundred metres
- Jylhä North: 34 large boulders up to $3\mathrm{m}$ diameter with visible spodumene discovered over $700\mathrm{m}$ distance assayed from $0.01\%$ to $2.80\%$ $\mathrm{Li}_2\mathrm{O}$ , averaging $0.86\%$ $\mathrm{Li}_2\mathrm{O}$ ( $\mathrm{Li}_2\mathrm{O} =$ lithium oxide)
- Mörkylä: 15 large boulders up to $4\mathrm{m}$ diameter with visible spodumene discovered over a 275 distance assayed from $0.004\%$ to $2.46\%$ $\mathrm{Li}_2\mathrm{O}$ , ave raging $0.54\%$ $\mathrm{Li}_2\mathrm{O}$
- Five new Exploration License (ELs) applications totaling 10,220 hectares (ha) were recently submitted bringing the Company's total holdings to 15,770 ha (see Aug 15, 2024 press release)
- New ELs largely contiguous with Keliber's licenses and within 1 km of known lithium pegmatite deposits and the Keliber Spodumene Concentrator
- Prospecting and boulder sampling to continue to end of October 2024
Figure 5. The Finland Lithium Pegmatite Project – New Spodumene Mineralization at 2024-Nov-12
Jylhä and Tastula Prospects
Jylhä discovery boulder Figure 7 (left); course spodumene crystals in same boulder assayed $2.33\%$ $\mathrm{Li}_2\mathrm{O}$ (Figure 7 right) The Mörkylä Prospect, which lies approximately $1.5\mathrm{km}$ west of Keliber's Levikangas Lithium Pegmatite deposit (0.47 million tonnes grading $1.00\%$ $\mathrm{Li}_2\mathrm{O}$ ), is a 275 long Northwest-Southeast trend of 15 large boulders and blocks of spodumene-bearing pegmatite. Individual boulders are over $4\mathrm{m}$ in diameter and contain course visible spodumene (see Figure 7) The boulders assayed from $0.004\%$ to $2.46\%$ $\mathrm{Li}_2\mathrm{O}$ , averaging $0.54\%$ $\mathrm{Li}_2\mathrm{O}$ .
Figure 6. Jylhä North Prospect
Mörkylä Prospect (Jylhä Southwest)
Situated approximately 1.5 kilometres west of the Levikangas Lithium Pegmatite deposit (which hosts 0.47 million tonnes grading 1.00% Li₂O), the Mörkylä Prospect is characterized by a cluster of large spodumene-bearing boulders. Several of these boulders exceed four metres in diameter and exhibit coarse visible spodumene crystals. Preliminary sampling has returned assays of up to 2.46% Li₂O, underscoring the robust lithium potential within this region.
Figure 7. Morkyla Prospect
Morkyla discovery boulder (left); course spodumene crystals in same boulder (right)
Tastula Prospects
During the 2024 field season, the Company identified at least three distinct clusters of spodumene-bearing LCT pegmatite boulders at the Tastula Prospects. These clusters span an approximately two-by-four-kilometre area, with numerous individual boulders exceeding 1.5 metres in diameter. Preliminary sampling in mid-2024 confirmed the presence of course-grained spodumene, indicating strong potential for additional near-surface lithium mineralization. Thirty-two pegmatite boulders were sampled across the EL assaying 0.0004% to 1.59% Li₂O with five samples assaying >0.30% Li₂O.
Nabba Prospects
The highlight of 2023 was the discovery of the Kyrola prospect on the Nabba EL, where prospecting teams outlined an 850-metre by 110-metre spodumene-bearing boulder field. Forty-nine rock-chip grab samples from this area returned assays ranging from $0.003\%$ to $3.84\%$ $\mathrm{Li}_2\mathrm{O}$ , with 15 samples exceeding $0.50\%$ $\mathrm{Li}_2\mathrm{O}$ . Follow-up work in 2024 expanded these findings, identifying additional spodumene-bearing LCT pegmatite boulder clusters. One such cluster was located approximately 2.3 kilometres west of Kyrola and contained three large boulders bearing $30 - 40\%$ visible spodumene. Another zone, discovered about 6 kilometres northwest of Kyrola, traced a series of LCT pegmatite boulders—with one initially assaying $0.36\%$ $\mathrm{Li}_2\mathrm{O}$ in 2023—over a distance greater than 1.2 kilometres. These continued discoveries reinforce the strong potential for near-surface lithium mineralization within the Nabba area.
On January 6, 2025, the Company reported additional high grade assay results from Lithium-Cesium-Tantalum (LCT) pegmatite mineralization on its exploration licenses at its Central Finland Lithium Project.
Key Takeaways:
- All assay results now received including the final batch of 150/660 total samples
- Grab sample from spodumene bearing pegmatite assayed of $5.60\%$ $\mathrm{Li}_2\mathrm{O}$ at Tarikko Prospect
- Jylhä South-Southwest: Several large boulders up to 1.5 m diameter with visible spodumene discovered adjacent to the Mörkylä Prospect where 15 large boulders up to 4 m diameter with visible spodumene discovered over a 275 metre (m") distance assayed from 0.004% to 2.46% Li₂O
Figure 8. The Finland Lithium Pegmatite Project – New Spodumene Mineralization at 2025-Jan-06
Jylhä South-Southwest
Three areas of new spodumene bearing pegmatite mineralization have been identified in the southern portion of the Jylhä license.
Approximately 225 m east of the Mörkylä Prospect, a $1.2 \times 1.0 \times 0.7$ m boulder assayed $0.94\%$ Li2O. Mörkylä is a 275 m long Northwest-Southeast trend of 15 large boulders and blocks of spodumene-bearing pegmatite. Individual boulders are over 4 m in diameter and contain course visible spodumene (see Figure 10). The boulders assayed from $0.004\%$ to $2.46\%$ Li2O, averaging $0.54\%$ Li2O.
Figure 9. New Spodumene Mineralization in Jylha South
Approximately $1.7\mathrm{km}$ southwest of Morkyla a couple of spodumene bearing boulders assayed $0.11\%$ and $2.13\%$ $\mathrm{Li}_2\mathrm{O}$ . These boulders occur approximately $300\mathrm{m}$ southeast of a $3\mathrm{m}$ diameter boulder that assayed $1.47\%$ $\mathrm{Li}_2\mathrm{O}$ . These boulders form another trend of mineralization that potentially has an up-ice source within the Jylha license.
Approximately 1.6 km south of Morkyla another cluster of spodumene pegmatite boulders occurs. The highlight of this cluster is a 1.5x1.5x1.0m boulder that assayed $0.62\%$ $\mathrm{Li}_2\mathrm{O}$ .
Tarikko Prospect
At the companies Koura Project located in the Seinajoki Lithium-Tin Belt a grab sample of an outcrop of an LCT pegmatite assayed $5.60\%$ $\mathrm{Li}_2\mathrm{O}$ . The width and strike length of the pegmatite are unknown at this time. Koura occurs approximately $100\mathrm{km}$ south of the companies main group of licenses in the Kaustinen Lithium Tract.
Discussion
The Company's projects are in the Kaustinen-Seinajoki region, which is highly prospective for LCT pegmatite deposits, as evidenced by the success of the Geological Survey of Finland (GTK) and subsequently Keliber Oy in discovering significant Li-bearing spodumene pegmatite prospects and deposits in the region. The Company's success in identifying widespread spodumene-rich LCT pegmatitic boulders is very encouraging, as the area is topographically flat and extensively covered by a thin veneer of glacial overburden.
It is important to note that all the significant deposit and prospect discoveries (with one exception) in the belt were found by tracing boulders back to source and identifying the source ultimately through drilling. The GTK/Keliber Oy discoveries demonstrate that boulders are generally located within $300 - 500\mathrm{m}$ of their source suggests excellent potential for discovery on the Company's licenses.
Grit Metals cautions investors grab samples are selective samples by their nature and are not necessarily indicative of mineralization on the property. The Company further cautions the presence of lithium mineralization on Keliber Oy's properties is not necessarily indicative of similar mineralization on the Company's mineral reservations.
Finland Pegmatite Project QA/QC Statement
Samples were submitted to ALS Laboratories in Sodankyla Finland. ALS inserted internal standards, blanks and pulp duplicates within each sample batch as part of their own internal monitoring of quality control protocols. Grit Metals monitors precision and bias performance by inserting certified lithium standards (CDN-LI-01 and GTA-05) as well as blanks into each batch submitted to ALS at a rate of 1:20.
The major element oxides and trace elements including Li, Cs, Ta and Be were analyzed by ALS analytical package ME-MS89L involving digestion by Na2O2 fusion followed by ALS's super trace ICP-MS methodology. QAQC results to date do not indicate any analytical accuracy issues with all standards returning values Li values within 3 standard deviations of their certified mean and blanks returning expected values.
Finland Gold Exploration Completed During the year ended May 31, 2025
The Company acquired the 7 exploration concessions comprising the Northern Finland Gold project in late 2023, and subsequently undertook reconnaissance exploration during the summer and fall of 2024, collecting 466 rock-chip (grab) samples along a 25-kilometre corridor of interpreted faults and geological contacts. Forty of the grab samples returned gold values in excess of 0.1 grams per tonne gold to a maximum of 2.84 grams per tonne gold and also included a highlight copper value of 1.67%.
Grit Metals cautions investors grab samples are selective samples by their nature and are not necessarily indicative of mineralization on the property.
Management evaluated the exploration activities undertaken during the year and decided not to proceed with filing exploration permit applications. As a result, the Company no longer holds any active projects or mineral claims in the region. Accordingly, management concluded that the BB Gold property is not expected to generate future economic benefits, and a non-cash impairment charge of $1,068,091 was recorded, reducing its carrying value to $Nil.
The technical content of this Management Discussion and Analysis has been reviewed and approved by R. Tim Henneberry. P.Geo (BC) a Director of the Company and a Qualified Person under National Instrument 43-101.
OUTLOOK
Following the successful completion of financings in September 2024, Grit Metals remains focused on systematically advancing its portfolio of highly prospective lithium-cesium-tantalum (LCT) pegmatite projects. Management continues to aggregate exploration data, refine geological models, and prioritize high-potential targets for further evaluation. The Company has integrated results from its recent exploration campaigns into a comprehensive targeting framework and identified a number of high-priority drill-ready targets. Grit Metals also continues to evaluate strategic partnerships and financing opportunities to optimize project advancement and maximize shareholder value.
Given the global demand for critical minerals, particularly lithium for battery technology, Grit Metals is well positioned to benefit from the growing interest in European-based lithium supply chains. With a strong technical team and an expanding geological dataset, Grit Metals remains committed to unlocking the value of its Finnish exploration portfolio and advancing towards resource definition and potential development.
SELECT ANNUAL INFORMATION
The following table sets forth selected financial information for the fiscal year ended May 31, 2025 ("Fiscal 2025"), comparable fiscal year ended May 31, 2024 ("Fiscal 2024") and fiscal year ended May 31, 2023 ("Fiscal 2023"). The selected financial information set out below has been derived from the audited annual financial statements and accompanying notes, in each case prepared in accordance with IFRS. The selected financial information set out below may not be indicative of the Company's future performance. The following discussion should be read in conjunction with the audited financial statements.
| Fiscal 2025 $ | Fiscal 2024 $ | Fiscal 2023 $ | |
|---|---|---|---|
| Total revenue | - | - | - |
| Net loss for the fiscal year | (2,011,239) | (2,211,569) | (593,480) |
| Loss per share, basic and fully diluted | (0.04) | (0.07) | (0.05) |
| Total assets | 4,794,266 | 4,779,306 | 1,509,606 |
| Total current liabilities | (77,006) | (241,474) | (158,903) |
OVERALL PERFORMANCE AND RESULTS OF OPERATIONS
Year ended May 31, 2025, compared to the year ended May 31, 2024
During the year ended May 31, 2025, the Company incurred an operating loss of $2,011,239 compared to a loss of $2,211,569 for year ended 2024. This represents a reduction in the loss of $200,330. The improvement is primarily attributable to a substantial decrease in investor relations and communications expenditures, which declined from $680,121 in the year ended May 31, 2024, to $77,600 for year end 2025. Additionally, share based compensation fees decreased by $258,862, and Marketing and advertising fees decreased by $63,659 in year ended May 31, 2025.
As the Company does not yet generate revenue from its operations, changes in its financial performance are driven solely by changes in the Company's expenses. Significant items affecting expenses are as follows:
- Investor relations and communications expenses dropped significantly to $77,600 for the year ended May 31, 2025, compared to $680,121 in the same period in 2024, representing a decrease of $602,521. During the comparable period, the Company was running a European awareness campaign which was no longer in place during the 2025 fiscal period.
- Marketing expense decreased to $20,930 during the year ended May 31, 2025, compared to $84,589 in the same period in 2024, representing a decrease of $63,659. In 2024 the company had a marketing campaign which was no longer in place during the 2025 fiscal period.
- Share-based payments totaled $231,228 for the year ended May 31, 2025, compared to $490,090 in the same period in 2024, a decrease of $258,862. The decline reflects the fact that no new stock options were granted in 2025, with the amounts recognized relating solely to the vesting of options issued in prior years.
- The Company recognized an impairment of $1,068,091 (2024 – $311,231) related to the write-off of its Northern Finland property portfolio, as management elected to withdraw the associated exploration licenses following an assessment that results did not support further investment.
FOURTH QUARTER ENDED MAY 31, 2025
Three months May 31, 2025, compared to the three months ended May 31, 2024
During the three months ended May 31, 2025, the Company had a loss of $172,355 from operations as compared to loss of $284,988 in the same period of the prior year.
As the Company does not yet generate revenue from its operations, the operating loss of the Company during the quarter was driven solely by changes in the Company's expenses. Significant items affecting expenses are as follows:
- Investor relations and communication expense decreased to $15,000 (2024 - $30,327). The decrease was as a result of a 2024 awareness campaign which was no longer taking place in 2025.
- Marketing and advertising expenses decreased to $10,508 (2024 - $12,824). The decrease is attributable to the completion of major marketing initiatives in 2024, with the current year focusing on maintaining existing programs.
- Share-based payments totaled $34,496 (2024 - $106,344). There were no new share-based compensation grants during the period, and the amounts expensed represent the fair value of vested share-based compensation during the period.
- The Company recognized an impairment of $1,068,091 (2024 – $311,231) related to the write-off of its Northern Finland property portfolio, as management elected to withdraw the associated exploration licenses following an assessment that results did not support further investment.
SUMMARY OF QUARTERLY RESULTS
| For the quarter ended | Revenue $ | Net loss $ | Net comprehensive loss $ | Basic and diluted loss per common share $ | |
|---|---|---|---|---|---|
| Q4/25 | May 31, 2025 | - | (1,236,427) | (1,236,427) | (0.02) |
| Q3/25 | February 28, 2025 | - | (151,676) | (151,676) | (0.02) |
| Q2/25 | November 30, 2024 | - | (342,667) | (342,667) | (0.01) |
| Q1/25 | August 31, 2024 | - | (280,469) | (280,469) | (0.01) |
| Q4/24 | May 31, 2024 | - | (603,143) | (603,143) | (0.02) |
| Q3/24 | February 29, 2024 | - | (327,439) | (327,439) | (0.01) |
| Q2/24 | November 30, 2023 | - | (511,536) | (511,536) | (0.01) |
| Q1/24 | August 31, 2023 | - | (769,451) | (769,451) | (0.03) |
| Q4/23 | May 31, 2023 | - | (396,524) | (396,524) | (0.02) |
| Q3/23 | February 28, 2023 | - | (77,815) | (77,815) | (0.01) |
During the quarter ended May 31, 2025, saw an increase in the net and comprehensive loss over the previous quarter of $1,084,751. The quarter increase was due to recognition of a non cash impairment of $1,068,091 to reduce the carrying value of the BB Gold property to nil.
The third quarter of fiscal 2025 ended February 28, 2025, saw a decrease in the net and comprehensive loss over the previous quarter of $190,991. The third quarter decrease is mainly due to a decrease in professional fees as the Company completed the annual audit of the financial statements, decrease in Share based payments as no new share-based compensation grants during the quarter, and a decrease in transfer agent and filing fees.
The second quarter of fiscal 2025 ended November 30, 2024, saw an increase in the net and comprehensive loss over the previous quarter of $62,198. This was mainly due to an increase in professional fees as the Company completed the annual audit of the financial statements during the quarter.
The first quarter of fiscal 2025 ended August 31, 2024, saw a decrease in the net and comprehensive loss over the previous quarter of $322,674. This decrease is attributable to the impairment recorded on the Champ property totaling $311,231 in the prior quarter.
OUTSTANDING SHARE DATA
The Company's authorized share capital consists of an unlimited number of common shares without par value. As of the date of this MD&A, the Company has:
- 55,207,148 common shares issued and outstanding (May 31, 2024 – 36,966,816)
- 2,550,000 stock options outstanding (May 31, 2024 – 2,550,000)
- 0 Restricted share units (May 31, 2024 – 400,000)
- 14,244,177 share purchase warrants (May 31, 2024 – 12,361,677)
588,419 brokers' warrants outstanding (May 31, 2024 - 1,257,688)
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 2025, the Company had a cash balance of $1,086,317 (May 31, 2024 - $1,742,720) and working capital of $1,071,097 (May 31, 2024 - $1,577,677).
Whether and when the Company can obtain profitability and positive cash flows from operations is uncertain and not expected in the foreseeable future given the nature of the exploration and development industry. The Company intends to finance its future funding requirements through equity share issuances. There is no assurance that the Company will be able to obtain such financings or obtain them on favorable terms. These uncertainties cast doubt on the Company's ability to continue as a going concern.
Net cash used in operating activities for the year ended May 31, 2025 was $861,743 (2024 - $1,278,424). The decrease in cash outflow from operating activities over the comparable period resulted from reduced spending on investor relations, professional fees and share based compensation.
Net cash used in investing activities for the year ended May 31, 2025, was $1,754,099, compared to $1,928,675 in the same period of 2024. The decrease of $174,576 primarily reflects lower expenditures as Management moderated its investment activities during the year.
Net cash provided by financing activity for the year ended May 31, 2025, was $1,959,439 (2024 - $4,057,108). The Company closed two tranches of a private placement first announced on August 23, 2024, raising total gross proceeds of $2,058,125. On September 9, 2024, the Company completed the first tranche by issuing 15,795,000 units at $0.125 per unit for gross proceeds of $1,974,375. Each unit consisted of one common share and one-half of a share purchase warrant, with each whole warrant exercisable at $0.20 until September 9, 2026. In connection with this tranche, the Company paid a cash commission of $131,119 and issued 1,157,000 common shares plus 239,050 non-transferable broker warrants. On September 23, 2024, the Company issued an additional 670,000 units for gross proceeds of $83,750, paying a cash commission of $1,313 and issuing 10,500 non-transferable broker warrants. The resulting net proceeds from both tranches reflect the share issuance costs incurred in the period.
The Company's ability to continue its operations is dependent on its success in raising equity through share issuances and/or other financing arrangements. While the Company's management has been successful in raising equity in the past, there can be no guarantee that it will be able to raise sufficient funds to fund its activities and general and administrative costs in the next twelve months and in the future.
RELATED PARTY TRANSACTIONS AND BALANCES
During the year ended May 31, 2025, the Company had the following related party transactions and balances:
| Year ended | May 31, 2025 | May 31, 2024 |
|---|---|---|
| $ | $ | |
| Management fees | 283,000 | 287,408 |
| Office and accounting | 5,333 | 9,143 |
| Share-based payments | 90,194 | 313,915 |
All transactions are incurred in the normal course of business and are negotiated on terms between the parties which are believed to represent fair market value for all services rendered.
- The Company entered into a month-to-month office sublease agreement on February 1, 2022 with a director and officer of the Company with a rate of $762 per month, which is recognized in office and accounting expense. As of January 1, 2025, this lease arrangement has been terminated.
- At May 31, 2025, $8,500 (2024 - $8,925) related to management fees and professional fees remained in accounts payable and accrued liabilities.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts receivable and accounts payable.
IFRS 13 Fair Value Measurement establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. IFRS 13 prioritizes the inputs into three levels that may be used to measure fair value:
- Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities.
- Level 2 – Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs (i.e., quoted prices for similar assets or liabilities).
- Level 3 – Prices or valuation techniques that are not based on observable market data and require inputs that are both significant to the fair value measurement and unobservable.
The fair values of the Company's financial instruments approximate their carrying values due to their current nature.
OFF BALANCE SHEET ARRANGEMENTS
The Company has not entered into any off-balance sheet arrangements.
PROPOSED TRANSACTIONS
At the date of this MD&A, there are no transactions outstanding that have been proposed, but not approved, by either the Company or regulatory authorities.
SIGNIFICANT ACCOUNTING ESTIMATES, JUDGMENTS AND NEW POLICIES
In applying the Company's accounting policies, management makes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. Actual results may differ from the judgments, estimates and assumptions made by management and will seldom equal the estimated results. Please refer to the audited Financial Statements for the year ended May 31, 2024, for a full list of policies and financial statement Note 2 therein dealing specifically with significant accounting estimates and judgments.
There were no new policies adopted during the year ended May 31, 2025.
The financial statements and information include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
Critical accounting estimates
The inputs used in valuing share-based payments.
The Company uses the fair-value method of accounting for share-based payments (related to incentive stock options and compensation warrants granted, modified or settled). Under this method compensation costs attributable to stock option awards granted are measured at fair value at the issue or grant date and
are expensed over the vesting period. In determining the fair value for share-based payments, the Company uses option pricing models and makes estimates of the expected volatility of the stock, the expected life and risk-free rate. The expected volatility is based on historical volatility of the Company's stock over a period commensurate with the expected life of the option. Changes to these estimates could result in the fair value of share-based payments expense being less than or greater than the amount recorded.
Significant accounting judgments
The evaluation of the Company's ability to continue as a going concern.
The Company's management has made an assessment of the Company's ability to continue as a going concern. This assessment considered the Company's current financial position, planned expenditures, and fundraising efforts. The Company has successfully raised funds, which are expected to cover operational and project expenditures for the next twelve months, consistent with the financial strategies implemented in the previous year.
Valuation of exploration and evaluation assets
The Company is required to review the carrying value of its exploration and evaluation properties at each reporting date for potential impairment. Impairment is indicated if the carrying value of the Company's exploration and evaluation assets is not recoverable. If impairment is indicated, the amount by which the carrying value of exploration and evaluation assets exceeds their estimated fair value is charged to the statements of loss and comprehensive loss.
Evaluating for recoverability during the exploration and evaluation phase requires judgment in determining whether future economic benefits from future exploitation, sale or otherwise are likely. Evaluations may be more complex where activities have not reached a stage which permits a reasonable assessment of the existence of reserves or resources. Management must make certain estimates and assumptions about future events or circumstances including, but not limited to, the interpretation of geological, geophysical and seismic data, the Company's financial ability to continue exploration and evaluation activities, contractual issues with joint venture partners, the impact of government legislation and political stability in the region, and the impact of current and expected future metal prices on potential reserves.
RISK FACTORS
The Company is in the mineral exploration and development business and is exposed to a number of operational, financial, regulatory, and other risks and uncertainties that are typical in the natural resource industry and common to other companies in the exploration and development stage. These risks may not be the only risks faced by the Company. Additional risks and uncertainties not presently known by the Company, or which are presently considered immaterial could adversely impact the Company's business, results of operations and financial performance in future periods.
Exploration and Development of its Mineral Properties
The exploration for and development of mineral properties involves significant risks, which even a combination of careful evaluation, experience and knowledge of management, key employees and contractors of the Company may not eliminate. Exploration for minerals and development of mining projects is a highly speculative venture necessarily involving substantial risk. The exploration expenditures made by the Company may not result in discoveries of commercial quantities of minerals. The long-term commercial success of the Company depends on its ability to explore, discover, develop and commercially produce minerals from its exploration and evaluation assets and to locate and acquire additional properties worthy of exploration and development.
None of the properties in which the Company has an interest have any Mineral Resources or Reserves.
Mineral exploration is speculative in nature and there can be no assurance that any minerals discovered will result in the definition of a Mineral Resource or Mineral Reserves (within the meaning of NI 43-101). Currently, there are no Mineral Resources or Mineral Reserves on any of the properties in which the Company has an interest. The failure of the Company to discover and establish Mineral Resources or Mineral Reserves could restrict the Company's ability to successfully implement its strategies for long-term growth.
Title Risks
The acquisition of title to exploration and evaluation assets or interests therein is a very detailed and time-consuming process. The exploration and evaluation assets may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects. Any challenge to the title or access to any of the properties in which the Company has an interest may have a negative impact on the Company as the Company will incur delay and expenses in defending such challenge and, if the challenge is successful, the Company may lose any interest it may have in the subject property.
Limited Operating History
The Company has a history of losses since its inception, and the values attributed to the Company's exploration and evaluation assets may not be realizable. The Company has not yet commenced mining operations, and therefore, has no history of earnings or of a return on investment, and there is no assurance that our asset will generate earnings, operate profitably or provide a return on investment in the future. The likelihood of success of the Company must also be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. The Company's proposed business strategies incorporate its management's best analysis of potential markets, opportunities and difficulties that it may face. No assurance can be given that the underlying assumptions will be achieved.
Disclosure Controls and Internal Control Over Financial Reporting
Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to senior management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to permit timely decisions regarding public disclosure.
The Company's management is responsible for establishing and maintaining adequate internal controls over financial reporting. Any system of internal controls over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Canadian Securities Administrators do not require any certification by the Company or its senior officers on the effectiveness of these controls at this time.
Government Laws, Regulation and Permitting
Exploration and development activities of the Company are subject to both domestic and foreign laws and regulations governing prospecting, development, production, taxes, labour standards, occupational health, mine safety, waste disposal, toxic substances, the environment and other matters. The operations of the Company will require licenses and permits from various governmental authorities to carry out exploration and development at any of its properties. There can be no assurance that the Company will be able to obtain the necessary licenses and permits on acceptable terms, in a timely manner or at all. Any failure to comply with permits and applicable laws and regulations, even if inadvertent, could result in the interruption or closure of operations or material fines, penalties or other liabilities.
Additional Financings
The Company expects to be substantially dependent upon the equity capital markets to carry out its business objectives and to pursue additional investments. There can be no assurance that such financing will be available to the Company on acceptable terms or at all.
Additional equity financings may significantly dilute shareholdings of its shareholders. If the Company is not able to obtain such financing, it may not be able to expand its portfolio of assets and may not be able to execute on its business strategy.
There is no assurance that the Company will be successful in raising sufficient funds to meet its obligations or to complete proposed exploration programs or acquisitions. If the Company does not raise the necessary capital to meet its obligations under current contractual obligations, the Company may have to forfeit its interest in properties or prospects earned or assumed under such contracts.
Going Concern Assumption
The Company's ability to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. There are no assurances that the Company will be able to obtain additional financial resources and/or achieve positive cash flows or profitability. These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.
Key Management and Competition
The success of the Company will be largely dependent upon the performance of its key officers, consultants and employees. Locating mineral deposits depends on a number of factors, not the least of which is the technical skill of the exploration personnel involved. Failure to retain key individuals or to attract or retain additional key individuals with necessary skills could have a materially adverse impact upon the Company's success.
While employment agreements are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. Any loss of the services of such individuals could have a material adverse effect on the Company's business, operating results or financial condition.
Commodity Prices
Metal prices, including the price for lithium, fluctuate widely and are affected by numerous factors beyond the control of the Company. The prices of metal and mineral commodities have fluctuated widely in recent years. The Company's liquidity and long term ability to raise the capital required to execute its business plans may be affected by market volatilities.
Foreign Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company does not hold financial instruments in a foreign currency. The Company considered the foreign currency risk as insignificant.
Conflicts of Interest
The Company's directors and officers may serve as directors or officers of other companies or have significant shareholdings in other resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of the Company's directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with the laws of British Columbia, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at that time.
The Company will be Reliant on Third-party Reporting
The Company may rely on public disclosure and other information regarding the properties in which it has an interest that it receives from the owners, operators and independent experts of such operations. Such information is necessarily imprecise as it depends upon the judgment of the individuals who operate the properties, as well as those who review and assess the geological and/or engineering information. If the information provided by such third parties to the Company contains material inaccuracies or omissions, the
Company's disclosure may be inaccurate and its ability to accurately forecast or achieve its stated objectives may be materially impaired, which may have a material adverse effect on the Company.
CAPITAL MANAGEMENT
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the sourcing and exploration of resource properties. The Company does not have any externally imposed capital requirements to which it is subject.
The Company considers the aggregate of its share capital, reserves and deficit as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or dispose of assets or adjust the amount of cash.
EFFECTIVENESS OF DISCLOSURE CONTROLS
The Company has internal controls over financial reporting to provide reasonable assurance as to the reliability of financial reporting and that preparation of financial statements for external purposes are in accordance with IFRS. There is an inability to totally segregate duties due to the small size of the Company, but management believes these weaknesses have been mitigated through management's and directors' involvement.
APPROVAL
The Board of Directors of the Company has approved the disclosure contained in this MD&A. The Company's Audit Committee has also approved the disclosures contained in this MD&A. A copy of this MD&A will be provided to anyone who requests it and is available on the Company's website and www.sedar.com.