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Heritage Mining Ltd. Management Reports 2025
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Management Reports
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HERITAGE
MINING LTD
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2025
Suite 300, 1055 West Hastings Street, Vancouver,
British Columbia, V6C 2E9
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
May 29, 2025
OVERVIEW
The following is management’s discussion and analysis (“MD&A”) of Heritage Mining Ltd. (“Heritage” or the “Company”), prepared as of May 29, 2025. This MD&A should be read together with the unaudited condensed interim financial statements for the three months ended March 31, 2025 and audited financial statements for the year ended December 31, 2024 and related notes. Financial amounts are expressed in Canadian dollars unless otherwise specified.
Certain information included in this MD&A may constitute forward-looking statements. Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements.
The Company’s unaudited condensed interim financial statements for the three months ended March 31, 2025 have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
Additional information related to Heritage is available on SEDAR+ at www.sedarplus.ca.
DESCRIPTION OF COMPANY’S BUSINESS
The Company was incorporated on October 18, 2019, under the Business Corporations Act (British Columbia). The Company is engaged in the business of exploration of gold and other metals across Canada. The Company’s registered and head office is at Suite 300, 1055 West Hastings Street, Vancouver, British Columbia, V6C 2E9.
The Company’s continuation as a going concern is dependent upon the successful results from its mineral property exploration activities and its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations. These financial statements have been prepared with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. The operations of the Company were primarily funded by the issuance of share capital. The issuance of additional equity securities by the Company may result in significant dilution to the equity interests of current shareholders. The Company’s future capital requirements will depend on many factors, including operating costs, the current capital market environment and global market conditions.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
OVERALL PERFORMANCE
EXPLORATION PROJECTS
Overall, the industry is experiencing high demand on specialized labor such as geologists, drilling contractors etc., supporting a risk of higher than anticipated costs. Above average inflationary pressures further increase this risk of higher than expected costs. Furthermore, to the Company’s benefit, the price of gold and other precious and base metals remains strong, supporting the ability to raise sufficient capital to maintain and execute on operations. In order to mitigate this risk to an acceptably low level, the Company has taken proactive measures in its initial planning, budgeting and cost management to ensure the long term success of the Company and its ability to generate value to current and future stakeholders.
Drayton - Black Lake Project (Flagship Project)
The Drayton-Black Lake project is the consolidation of the Drayton Black Lake option agreement and Zarn Lake option agreement and Split Lake Property. On November 25, 2021, the Company entered into an option agreement to acquire a 90% interest in the Drayton – Black Lake Property. On January 6, 2022, the Company entered into an option agreement to acquire a 100% interest in the Zarn Lake property contiguous with the Drayton - Black Lake Project. On August 25, 2022, the Company entered into a definitive agreement for 100% of the Split Lake property from Bounty Gold Corp. The Property is located in the Kenora District in Northwestern Ontario approximately 25 km east of the town of Sioux Lookout, Ontario and approximately 350 km northwest of the city of Thunder Bay, Ontario. The property is approximately 15,257 ha. The property adjoins NexGold Mining Corp’s (“NexGold”) Goliath Gold Complex (Goliath, Goldlund and Miller Projects) and is along the Eagle-Wabigoon-Manitou Greenstone Belt with over 176 holes drilled on the property.
The property hosts multiple precious and base metal mineralized structural zones. The Company entered into the option agreements regarding Drayton Black Lake as the project characteristics align with the Company project evaluation criteria: project stage, commodity, region, exploration upside, technical simplicity, established historic mining jurisdiction.
Below is a description of the mentioned categories and how the project supported further work justification going forward.
Project Stage:
The project is at the exploration stage and along trend of significant, recent development projects (NexGold). We believe this is supportive to a trend continuation and will work systematically to develop what we believe to be an extension of the trend.
Commodity:
The project hosts gold, silver and base metal indicators, supporting our decision to enter into the agreements.
Region:
The project is located in a below geo-political risk jurisdiction (Ontario, Canada). Ontario is a mature mining district and globally recognized.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Drayton - Black Lake Project (Flagship Project), continued
Exploration Upside:
We believe there is prospective geologic terrane translating to strong expansion upside that could result in economic discovery.
Technical Simplicity:
In our opinion, the project has never been systematically developed on a consolidated basis with all of the available current data.
Established Historic Mining Jurisdiction:
The project is located close to infrastructure and skilled labour supporting the likelihood of future economic production.
On November 25, 2021, the Company entered into an option agreement, amended on November 21, 2023, December 29, 2023, and October 23, 2024, to acquire a 90% interest in the Drayton - Black Lake Property. The Company paid $20,000 upon signing the letter of intent and is required to make staged option payments, common share issuances and minimum spend requirements over a four year period. To earn a 51% interest in the property, the Company must:
- Issue 2,800,000 shares within 10 business days upon a go public transaction (issued);
- Pay $150,000 cash (paid), issue 1,100,000 common shares (issued) and incur $500,000 in project expenditures on or before November 25, 2022 (incurred);
- Issue 1,350,000 common shares (issued) and incur $1,000,000 in project expenditures on or before November 25, 2023 (incurred);
- Issue 6,000,000 units on or before January 12, 2024, with each unit consisting of one common share and one warrant to purchase a common share in the capital of the Company at a price of $0.075 for a period of 24 months from the date of issue (issued); and
- Issue 1,100,000 common shares (issued), issue 3,000,000 units (issued), with each unit consisting of one common share and one warrant to purchase a common share in the capital of the Company at a price of $0.10 for a period of 36 months from the date of issue, and incur $1,000,000 in project expenditures (incurred) on or before January 25, 2025 to earn 51% interest in the property.
To earn an additional 39% interest (for an aggregate 90% interest in the Property), the Company must:
- Issue 1,100,000 common shares and incur $2,500,000 in project expenditures on or before November 25, 2026 to earn 90% interest in the property.
The optioner is also entitled to a cash payment upon the establishment of any mineral resources in the Drayton - Black Lake Project equal to $1.00 per ounce of gold equivalent capped at $10M.
The optioner has the option to maintain a 10% interest in the project through a joint venture agreement or take back a royalty described below upon the presentation of a feasibility study:
- 2% NSR on unincumbered land – Buyback 1% for $2M
- 1% NSR on Drayton - Black Lake Claims – Buyback 0.5% for $1M
The Company must spend a minimum of $500,000 per year through to the presentation of a feasibility study.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Drayton - Black Lake Project (Flagship Project), continued
Split Lake Property
The Company entered into a definitive asset purchase agreement with Bounty Gold Corp. (“Bounty”) dated August 25, 2022 (the “Agreement”) whereby it will acquire fifty (50) mining claims in the Split Lake zone (the “Split Lake Property”) adjacent to Heritage’s flagship Drayton-Black Lake Project. Pursuant to the terms of the Agreement, Heritage will acquire a 100% interest in the Split Lake Property in exchange for issuing Bounty 100,000 Common Shares (issued September 1, 2022), paying Bounty $5,000 in cash (paid) and granting Bounty a 1% net smelter return royalty (the “NSR”) on the Split Lake Property at closing, one-half (0.5%) of such NSR may be purchased for $500,000 by Heritage.
The Company is currently compliant with all option agreements.
On July 17, 2024, on www.sedarplus.ca, the Company announced that it received a report entitled Orientation Survey for Spatiotemporal Geochemical Hydrocarbon Interpretation (“SGH”). The results of the report show a very positive correlation to existing gold mineralization on the property (Alcona Area). Based on these positive results the Company will proceed in using SGH surveys to identify new targets as well as focus in on existing permitted drill target areas.
The Company is also pleased to announce SGH soil results are pending from Zone 3 and Zone 10.
Highlights:
- The overall precision of the SGH analysis for the samples at the Alcona Area Soil Survey was excellent. Mineralization exists at these locations as a vertical projection beneath these anomalies (Figure 3).
- The SGH confidence rating for the Alcona survey assigned to the anomalies averages 5.0 on a scale of 6.0. The rating for the Alcona Orientation Survey results indicates that there is a high probability that gold mineralization is present, thereby supporting a property wide survey.
- Predicted Gold Mineralization complemented by Halo anomaly illustrating possible presence of Redox Zone an environment associated with gold mineralization.
- Zone 3 SGH Soils results are expected within the next week.
For additional details, please see the July 17, 2024 news release on www.sedarplus.ca
On August 28, 2024, on www.sedarplus.ca, the Company provide an update on the completion of its 2024 drilling program at the Zone 3 prospect (additional detail can be seen on the news release). Highlights on the news release included:
- Visible Gold (“VG”) observed in hole one (HML24-001).
- The Company has intersected multiple zones of pyrite mineralization with local patchy galena and chalcopyrite. This style of mineralization is known to be associated with gold at the DBL project.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Drayton - Black Lake Project (Flagship Project), continued
On September 20, 2024, on www.sedarplus.ca, the Company announced the following highlights (additional detail can be seen on the news release).
- Drilling at Zone 3 has identified intrusion-related gold mineralization; a new style of gold mineralization not historically recognized at Drayton-Black Lake Project.
- Quartz – sulphide veins are associated with the gold mineralization at Zone 3, locally multi-meter wide veins cutting both the granitoid and metavolcanic rock types.
- Intrusion-related gold mineralization provides potential for large-tonnage, bulk mineable gold deposits at Drayton-Black Lake.
On November 19, 2024, on www.sedarplus.ca, the Company announced has leased an ODR 100 Drill and engaged Minotaur Drilling Inc. as drill operators with over 35 years of experience. Past drilling experience includes contracts at Hudson Bay Mining and Smelting in Flin Flon and Snow Lake, Rio Tinto, Nutrien, Mosaic, Placer Dome, Cogema, Cameco, as well as numerous smaller public and privately funded companies. The majority of the experience (+20 years) has been primarily in the greenstone regions of Northern Manitoba, Northern Ontario and Northern Saskatchewan. The Company looks forward to creating material efficiencies on a go forward basis under this arrangement towards and not limited to its Ontario Project Portfolio. The drill comes complete with all weather equipment set up.
Zone 3: New Areas of Interest Identified for Intrusion-Related Gold Mineralization based on industry experts Brett David and Dr. Gregg Morison Recent Reports from the 2024 site visit and analysis of drill results from September to November 2024, have resulted in an expanded land package totalling 18,907 Ha.
Below is the revised 2024 exploration program pertaining to Zone 3 and surrounding area:
- UAV magnetic survey completed November 2024 along the Lake of Bays Batholith Contact Zone – results pending o Prospecting program – 90% complete along the Lake of Bays Batholith Contact
- IP and Drill permit submitted on newly acquired claims – (Permit Pending)
- Planned Drilling to recommence in short order on permitted areas of Zone 3, Q4 2024
New Millennium area: Recommence Drilling targeting the intersection of two mineralized quartz vein systems in the immediate vicinity of the highest-grade sample on the project to date ~2330 g/t Au.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Zarn Lake Project
On January 6, 2022, the Company entered into an option agreement to acquire a 100% interest in the Zarn Lake property contiguous with the Drayton - Black Lake Project. To earn its 100% interest in the property, the Company paid $20,000 upon signing the option agreement and is required to make staged option payments, common share issuances and minimum spend requirements over a three-year period as follows:
- Issue $50,000 worth of common shares upon completion of a go public transaction (200,000 shares issued);
- Pay $10,000 cash (paid), issue $25,000 worth of common shares (333,333 shares issued) and incur $50,000 in project expenditures on or before January 6, 2023 (incurred);
- Pay $20,000 cash (paid), issue $25,000 worth of common shares (500,000 shares issued) and incur $100,000 in project expenditures on or before January 6, 2024 (incurred); and
- Pay $70,000 cash (paid subsequently), issue $50,000 worth of common shares (833,333 shares issued) and incur $250,000 in project expenditures on or before January 6, 2025 (incurred).
The optionor retains a 2% NSR on the property with a buy back of 1% for $1,000,000 and an advance royalty payment of $1,000 per year for each year following the commencement of commercial production after the Company earns 100% of the option agreement.
Contact Bay Project
During Q4 2021 the Company entered into multiple agreements consolidating the ~4,700 hectare property. The property is located approximately 14.5 km south for Dryden Ontario and borders KG Exploration (a wholly owned subsidiary of Kinross). The property is largely underexplored with limited data. However the property hosts multiple precious and base metal occurrences and was acquired at a favorable price.
The project was acquired as its characteristics align with the Company project evaluation criteria outlined below:
Project Stage:
Early exploration stage with little data provide significant project development upside.
Commodity:
Gold, Copper, Nickle, Platinum and Palladium occurrences align with high valued commodities.
Region:
The project is a low geo-political risk jurisdiction. Ontario is a mature mining district and globally recognized.
Exploration upside:
We believe there is prospective geologic terrane translating to strong expansion upside that could result in an economic discovery.
Technical Simplicity:
Significant early stage development work must be completed systematically to development this project.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Contact Bay Project, continued
Established historic mining jurisdiction:
The project is located close to infrastructure and skilled labour, supporting the likelihood of future economic production.
On October 15, 2021, the Company entered into an asset purchase agreement to acquire a 100% interest in the Contact Bay claims from Bounty Gold Corp. To earn its 100% interest in the property, the Company paid $2,000 upon signing the purchase agreement and is required to issue $8,000 worth of common shares upon the go public transaction (32,000 shares issued).
On October 22, 2021, the Company entered into an asset purchase agreement to acquire a 100% interest in the Contact Bay claims from Scott Woolhead. To earn a 100% interest in the property, the Company paid $2,500 upon signing the purchase agreement.
On December 6, 2021, the Company entered into an asset purchase agreement (the "EMX Agreement") to acquire a 100% interest in the Contact Bay claims from EMX Royalties. To earn a 100% interest in the property, the Company paid $15,000 upon signing the asset purchase agreement. EMX Royalties retains a 3% NSR with a 1% buyback provision for $1,500,000. Annual advance royalties are due to EMX Royalties beginning on the third anniversary of the EMX Agreement in the amount of $10,000 per year (common shares of the Company or cash at the Company's discretion) until a maiden resource is issued, after that time an annual advance royalty of $25,000 (common shares of the Company or cash at the Company's discretion) is payable by the Company until production occurs. EMX Royalties is entitled to milestone bonus payments in cash or shares at the Company's discretion following the announcements listed below:
- $100,000 on announcement of maiden resource
- $250,000 on announcement of preliminary economic assessment
- $350,000 on announcement pre-feasibility study
- $500,000 announcement on feasibility study
During the year ended December 31, 2024 the Company accrued $10,000 for the annual advance royalty payment to EMX. The Company has completed its obligations for the property to date and is in compliance with all agreements.
On November 19, 2024, the Company put out a news release on www.sedarplus.ca announcing:
Rognan Mine
- UAV magnetic survey completed October 2024 – interpretation report pending
- Multiple magnetic anomalies identified near past producing Rognan Mine (see news release)
- IP and Drilling permit approval for Rognan Mine Area anticipated by end of November 2024
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Scattergood Project
On May 31, 2024, the Company entered into an asset purchase agreement to acquire a 100% interest in certain unpatented claims from Shear Gold Exploration Corp. (“Vendor”). To earn its 100% interest in the property, the Company is required to issue $100,000 worth of common shares together with the Royalty grant of 1.5% NSR (0.5% buyback for $500,000) for 4,508.28 Ha. The Common Shares shall be issuable to the Vendor as follows:
- $15,000 Common Shares issuable on the Signing Date at a deemed price equal to the Market Price (300,000 shares issued);
- $35,000 in Common Shares issuable on or within ten (10) Business Days of the six-month anniversary of the Signing Date (the “Anniversary Date”) at a deemed price equal to the Market Price (583,333 shares issued); and
- $50,000 in Common Shares issuable on or within ten (10) Business Days of the Closing Date, which is either the 18 month anniversary of the Signing Date at a deemed price equal to the Market Price (recorded as commitment to issue shares).
The Company has an option to accelerate its payments by providing written notice to the vendor no less than ten (10) Business Days prior to the proposed accelerated payment date without incurring any penalty or additional fee.
On May 31, 2024, the Company entered into an asset purchase agreement to acquire a 100% interest in certain unpatented claims from South Timmins Mining Inc. (“Vendor”). To earn its 100% interest in the property, the Company is required to issue $100,000 worth of common shares together with the Royalty grant of 1.0% NSR (0.5% buyback for $500,000) for 1,888.72 Ha. The Common Shares shall be issuable to the Vendor as follows:
- $15,000 Common Shares issuable on the Signing Date at a deemed price equal to the Market Price (300,000 shares issued);
- $35,000 in Common Shares issuable on or within ten (10) Business Days of the six-month anniversary of the Signing Date (the “Anniversary Date”) at a deemed price equal to the Market Price (583,333 shares issued); and
- $50,000 in Common Shares issuable on or within ten (10) Business Days of the Closing Date, which is either the 18 month anniversary of the Signing Date at a deemed price equal to the Market Price (recorded as commitment to issue shares).
The Company has an option to accelerate its payments by providing written notice to the vendor no less than ten (10) Business Days prior to the proposed accelerated payment date without incurring any penalty or additional fee.
Highly prospective, significant land position along strike of Dynasty Gold’s Thundercloud – Pelham Deposit totaling (260,000 oz Au NI 43-101 Resource) totaling ~ 6,397Ha:
- Numerous intrusives with mineralized contacts in mineralized volcanic host rock effected by complex structural features
- Discovery potential for Au, Cu, Ni, Zn, PGE
- Excellent Access by paved highway and logging roads
9
HERITAGE MINING LTD.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
SUMMARY OF PROJECT EXPENDITURES
The exploration and evaluation expenses for the Company for the period ended March 31, 2025 and year ended December 31, 2024 are summarized as follows:
| Period ended March 31, 2025 | Drayton – Black Lake | Contact Bay | Zarn Lake | Scattergood | Other | Total |
|---|---|---|---|---|---|---|
| Acquisition cost | $ 246,000 | $ - | $ 70,000 | $ - | $ - | $ 316,000 |
| Drilling | 218,034 | 75,797 | - | - | - | 293,831 |
| Field work and supplies | 144,777 | - | - | - | - | 144,777 |
| Geological and geophysical | 100,272 | 4,229 | - | 10,585 | 2,371 | 117,457 |
| Travel | 18,019 | - | - | - | - | 18,019 |
| Exploration expenditures | $ 727,102 | $ 80,026 | $ 70,000 | $ 10,585 | $ 2,371 | $ 890,084 |
| Year ended December 31, 2024 | Drayton – Black Lake | Contact Bay | Zarn Lake | Scattergood | Other | Total |
| --- | --- | --- | --- | --- | --- | --- |
| Acquisition cost | $ 300,750 | $ 10,000 | $ 95,000 | $ 200,000 | $ - | $ 605,750 |
| Assay | 99,337 | - | - | - | - | 99,337 |
| Drilling | 128,423 | - | 319 | - | - | 128,742 |
| Field work and supplies | 269,102 | 1,980 | 9,768 | - | - | 280,850 |
| Geological and geophysical | 341,069 | 42,318 | 1,164 | 10,707 | 48,444 | 443,702 |
| Travel | 32,473 | 3,033 | - | - | - | 35,506 |
| Cost recoveries – Government grant | (340,000) | - | - | - | - | (340,000) |
| Exploration expenditures | $ 831,154 | $ 57,331 | $ 106,251 | $ 210,707 | $ 48,444 | $ 1,253,887 |
SUMMARY OF QUARTERLY RESULTS
The Company’s operating results from the last eight quarters are summarized as follows:
| Three months ended | ||||
|---|---|---|---|---|
| 31-Mar-25 | 31-Dec-24 | 30-Sep-24 | 30-June-24 | |
| Revenue | $ - | $ - | $ - | $ - |
| Net and comprehensive loss | (1,053,187) | (1,283,155) | (722,484) | (509,160) |
| Loss per share | (0.01) | (0.01) | (0.01) | (0.01) |
| Three months ended | ||||
| 31-Mar-24 | 31-Dec-23 | 30-Sep-23 | 30-Jun-23 | |
| Revenue | $ - | $ - | $ - | $ - |
| Net and comprehensive loss | (499,629) | (627,016) | (1,313,092) | (543,956) |
| Loss per share | (0.01) | (0.01) | (0.03) | (0.01) |
Over the past eight quarters comprehensive losses ranged from a high of $1,313,092 in the third quarter of 2023 to a low of $499,629 in the first quarter of 2024. Expenses increased significantly in the third quarter of 2023 due to property acquisition payments in both cash and shares incurred as well as an increased exploration program. Variance between quarters is based on the timing of project advancement, due diligence on potential projects, share capital structure changes, and professional/management services.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
During the three months ended March 31, 2025, net and comprehensive loss decreased to $1,053,187 (December 31, 2024 - $1,283,155) primarily due to other income of $131,238 (December 31, 2024 – $Nil), and share based payments of $Nil (December 31, 2024 – $156,451).
As an exploration stage company, the Company has not generated any revenue from its projects and does not anticipate it will do so for the foreseeable future. These costs are expected to increase during the next few quarters as the Company closed an equity financing subsequently pending the anticipated capital raise.
The Company is currently in the process of developing its flagship project, Drayton – Black Lake, provided the Company meets all its cash and minimum spend requirements on the Drayton Black Lake project. The Company notes this is subject to change pending future exploration results.
LIQUIDITY AND CAPITAL RESOURCES
As the Company is a start-up and its mineral exploration activities are at its infancy stage, the Company has to depend on its ability to procure sufficient funding through share offerings to support current and future expenditures. The Company has demonstrated its ability to raise capital given the current economic environment through the initial public offering on the Canadian Securities Exchange. The Company notes that additional capital will be required to significantly advance exploration initiative, however the Company remains well capitalized for current budgeted expenditures for the foreseeable future. The Company anticipates additional capital requirements driven from cash payment and minimum spend requirements under recent options agreements.
As at March 31, 2025, the Company had net working capital deficit of $117,502 (December 31, 2024 – working capital of $404,474) and a cumulative deficit of $10,393,856 (December 31, 2024 – $9,340,669). The cash component of working capital as at March 31, 2025, was $250,536 (December 31, 2024 – $558,277). As the Company will not generate funds from operations for the foreseeable future, the Company is primarily reliant upon the sale of equity securities and debt in order to fund operations.
Since inception, the Company has funded limited operations through the issuance of equity securities on a private placement basis. This has permitted the Company to carry out limited exploration and ongoing expenses. The Common Shares started trading on the Exchange on August 26, 2022, under the symbol "HML".
Share transactions for the period ended March 31, 2025:
On January 17, 2025 the Company issued 1,100,000 common shares at a value of $66,000 and 3,000,000 units at a value of $180,000 as part of the exercise of its option to acquire a 51% ownership interest in the Drayton - Black Lake Project. Each unit consists of one common share and one warrant entitling the holder to purchase an additional common share at an exercise price of $0.10 until January 17, 2028. (Note 4)
On January 17, 2025, the Company issued 879,375 common shares valued at $52,763 for debt settlements.
11
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Share transactions subsequent to the period ended March 31, 2025:
Subsequent to period ended March 31, 2025, the Company:
i) completed the first tranche of a non-brokered private placement by issuing 1,870,000 units at a price of $0.05 per unit for gross proceeds of $93,500. The Company also issued 14,050,000 flow-through units at a price of $0.05 per flow-through unit for gross proceeds of $702,500. Each unit consists of one common share and one warrant entitling the holder to purchase an additional common share at an exercise price of $0.10 until April 4, 2030. The Company paid $46,975 in finders’ fees and issued 729,500 compensation warrants entitling the holder to purchase one additional common share at an exercise price of $0.05 until April 4, 2028.
ii) completed the second tranche of a non-brokered private placement by issuing 3,650,000 units at a price of $0.05 per unit for gross proceeds of $182,500. The Company also issued 1,000,000 flow-through units at a price of $0.05 per flow-through unit for gross proceeds of $50,000. Each unit consists of one common share and one warrant entitling the holder to purchase an additional common share at an exercise price of $0.10 until April 17, 2030. The Company paid $1,450 in finders’ fees and issued 28,000 compensation warrants entitling the holder to purchase one additional common share at an exercise price of $0.05 until April 17, 2028.
iii) completed the third tranche of a non-brokered private placement by issuing 3,000,000 flow-through units at a price of $0.05 per flow-through unit for gross proceeds of $150,000. Each unit consists of one common share and one warrant entitling the holder to purchase an additional common share at an exercise price of $0.10 until May 14, 2030. The Company paid $12,000 in finders’ fees and issued 240,000 compensation warrants entitling the holder to purchase one additional common share at an exercise price of $0.05 until May 14, 2028.
iv) issued 1,700,000 common shares pursuant to debt settlements.
v) Issued 2,180,000 common shares to officers and directors pursuant to bonuses.
RESULTS OF OPERATIONS
For the three months ended March 31, 2025 and 2024
The Company had net and a comprehensive loss of $1,053,187 for the three months ended March 31, 2025 (2024 – $499,629). The change in loss is mainly due to:
- Exploration expenditures $890,084 (2024 - $272,423) increased due to increased exploration expenditures in the current period.
- Capital market advisory of $35,000 (2024 - $Nil) increased due to Company’s effort to increase market awareness.
- Share-based payments of $6,950 (2024 - $24,293) decreased due to fewer stock options granted and vested during the current period.
- Other income of $131,238 (2024 - $Nil) increased due to drilling services provided in the current period.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
CAPITAL RESOURCES
The Company relies on its ability to procure capital via equity issuances as none of their projects generate revenue. The Company has no fixed expenditure commitments. The Company has entered into option agreements requiring share issuances, cash payments, and minimum spend requirements on its projects to maintain its exploration mining claims in good standing. The Company notes that pending exploration results, capital requirements and allocated expenditures are subject to change based on management judgement.
OFF-BALANCE SHEET ARRANGEMENTS
The Company had no off-balance sheet arrangements as at March 31, 2025, or as of the date of this report.
TRANSACTIONS BETWEEN RELATED PARTIES
Related party balances
As at March 31, 2025, there were amounts owing to a company controlled by Peter Schloo, the CEO of the Company, in the amount of $Nil (December 31, 2024 – $Nil). The amount due to related parties are unsecured, non-interest bearing and due on demand. As at March 31, 2025, there were prepaid amounts to a company controlled by Peter Schloo, the CEO of the Company, in the amount of $43,595 (December 31, 2024 – $26,148) that will be used for future services.
Related party transactions and key management compensation
During the three months ended March 31, 2025 and 2024, the Company incurred the following amounts through transactions with the directors and officers of the Company:
| March 31, 2025 | March 31, 2024 | |
|---|---|---|
| Management fees, consulting fees, professional fees, and general and administrative | $ 50,139 | $ 48,482 |
| Share-based payments | 4,325 | 15,551 |
| $ 54,465 | $ 64,033 |
During the period ended March 31, 2025, the Company incurred $47,139 (2024 – $39,375) with Great White Capital Ltd. ("GWC"), a company controlled by the CEO for executive and administrative services and rent. The Company entered into a service agreement with GWC for an annual compensation of $126,000 effective February 1, 2021; effective August 1, 2023, the annual compensation was amended to $157,500; effective October 1, 2024, the annual compensation was amended to $175,500 and common shares with market value of $50,000.
During the period ended March 31, 2025, the Company incurred $3,000 (2024 – $3,000) with Rachel Chae, CFO, for professional services rendered.
During the year ended December 31, 2024, the Company issued 1,800,000 common shares, fair valued at $143,000 to directors of the Company.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
During the year ended December 31, 2024, related parties participated in private placements acquiring 4,770,000 common shares in exchange for $238,500.
Detailed discussions related to the Company’s cash flows
Cash balances decreased to $250,536 during the period ended March 31, 2025 (December 31, 2024 – $558,277).
During the period ended March 31, 2025, cash used in the operating activities was $504,358 compared to cash used by operating activities of $135,711 during the period ended March 31, 2024. The cash used in operating activities in 2025 increased as there was a increase in the Company’s operating expenses, namely, exploration and capital market advisory.
During the period ended March 31, 2025, cash provided by financing activities amounted to $196,617 (2024 - $23,020), relating to subscription received, shares issued for cash, net of issue costs and lease payments made during the respective periods.
CHANGES IN ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
For a detailed summary of the Company’s significant accounting policies and critical accounting estimates, the readers are directed to Note 3 of the Notes to the condensed interim financial statements for the period ended March 31, 2025 that are available on SEDAR+ at www.sedarplus.ca.
RISKS AND UNCERTAINTIES
The Company believes that the following risks and uncertainties may materially affect its success.
Limited Operating History
The Company has no history of business or mining operations, revenue generation or production history. The Company is subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that it will not achieve its growth objective. The Company anticipates that it may take several years to achieve positive cash flow from operations.
Exploration, Development and Operating Risks
The exploration for and development of minerals involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. There can be no guarantee that the estimates of quantities and qualities of minerals disclosed will be economically recoverable. With all mining operations there is uncertainty and, therefore, risk associated with operating parameters and costs resulting from the scaling up of extraction methods tested in pilot conditions. Mineral exploration is speculative in nature and there can be no assurance that any minerals discovered would result in an increase in the Company’s resource base.
The Company’s operations are subject to all of the hazards and risks normally encountered in the exploration, development and production of minerals. These include unusual and unexpected geological formations, rock falls, seismic activity; flooding and other conditions involved in the extraction of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although precautions to minimize risk
14
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
will be taken, operations are subject to hazards that may result in environmental pollution and consequent liability that could have a material adverse impact on the business, operations and financial performance of the Company.
Fluctuating Mineral Prices
The economics of mineral exploration is affected by many factors beyond the Company’s control, including commodity prices, the cost of operations, variations in the grade of minerals explored and fluctuations in the market price of minerals. Depending on the price of minerals, it may be determined that it is impractical to continue the mineral exploration operation.
Mineral prices are prone to fluctuations and the marketability of minerals is affected by government regulation relating to price, royalties, allowable production and the importing and exporting of minerals, the effect of which cannot be accurately predicted. There is no assurance that a profitable market will exist for the sale of any minerals found on the Property.
Substantial Capital Requirements and Liquidity
Substantial additional funds for the establishment of the Company’s current and planned mining operations will be required. No assurances can be given that the Company will be able to raise the additional funding that may be required for such activities, should such funding not be fully generated from operations. Mineral prices, environmental rehabilitation or restitution, revenues, taxes, transportation costs, capital expenditures, operating expenses and geological results are all factors which will have an impact on the amount of additional capital that may be required. To meet such funding requirements, the Company may be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company or at all.
If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion and pursue only those development plans that can be funded through cash flows generated from its existing operations.
Financing Risks and Dilution to Shareholders
The Company will have limited financial resources, no operations and no revenues. If the Company’s exploration program on its properties is successful, additional funds will be required for the purposes of further exploration and development. There can be no assurance that the Company will be able to obtain adequate financing in the future or that such financing will be available on favourable terms or at all. It is likely such additional capital will be raised through the issuance of additional equity, which will result in dilution to the Company’s shareholders.
Title to Properties
Acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral properties may be disputed. The Company cannot give an assurance that title to the Property will not be challenged or impugned. Mineral properties sometimes contain claims or transfer histories that examiners cannot verify. A successful claim that the Company, as the case may be, does not have title to the properties could cause the Company to lose any rights to explore, develop and mine any minerals on that property, without compensation for its prior expenditures relating to such property.
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
No Mineral Reserves or Mineral Resources
The properties in which the Company holds an interest are considered to be an early exploration stage property, however no mineral reserve or mineral resource estimates have been prepared in respect of the properties. Mineral reserves are, in the large part, estimates and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized. Reserve estimates for properties that have not yet commenced production may require revision based on actual production experience. Market price fluctuations of metals, as well as increased production costs or reduced recovery rates, may render mineral reserves containing relatively lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. Moreover, short-term operating factors relating to the mineral reserves, such as the need for orderly development of the ore bodies and the processing of new or different mineral grades may cause a mining operation to be unprofitable in any particular accounting period.
Environmental Risks
The Company’s exploration and appraisal programs will, in general, be subject to approval by regulatory bodies. Additionally, all phases of the mining business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and federal, provincial and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with mining operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs.
FORWARD-LOOKING STATEMENTS
This MD&A may include certain "forward-looking statements" within the meaning of applicable securities legislation. All statements, other than statements of historical facts, included in this MD&A that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future business strategy, competitive strengths, goals, expansion and growth of the Company’s businesses, operations, plans and other such matters are forward-looking statements. When used in this MD&A, the words "estimate", "plan", "anticipate", "expect", "intend", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks that actual results of current exploration activities will differ, changes in project parameters as plans continue to be refined, unavailability of financing, fluctuations in precious and/or base metals prices and other factors, as outlined in the Company’s preliminary long form prospectus filed on SEDAR+. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
16
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
DIRECTORS
Certain directors of the Company are also directors, officers and/or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploring natural resource properties. Such associations may give rise to conflicts of interest from time to time. The directors of the Company are required to act in good faith with a view to the best interests of the Company and to disclose any interest they may have in any project opportunity of the Company. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict will disclose his/her interest and abstain from voting in the matter(s). In determining whether or not the Company will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.
Current Directors and Officers of the Company are as follows:
Peter Schloo, CEO, President and Director
Rachel Chae, CFO
Patrick Mohan, Chairman and Director
Thomas Reid, Director
Wray Carvelas, Director
Patrick Sullivan, Corporate Secretary
OUTLOOK
The Company's primary focus for the foreseeable future will be on continuing exploration and development activities on its mineral projects.
OUTSTANDING SHARE DATA
As of the date of this MD&A there were:
Shares
142,912,890 shares issued and outstanding.
Stock Options
| Outstanding | Exercisable | Exercise Price $ | Expiry Date |
|---|---|---|---|
| 821,666 | 821,666 | 0.075 | August 29, 2025 |
| 1,240,000 | 1,240,000 | 0.15 | December 23, 2025 |
| 2,065,000 | 1,032,500 | 0.09 | September 1, 2026 |
| 1,385,000 | 1,385,000 | 0.05 | April 12, 2027 |
| 1,920,000 | 1,920,000 | 0.05 | July 30, 2027 |
| 2,685,000 | 2,685,000 | 0.075 | October 22, 2029 |
| 10,116,666 | 9,084,166 |
HERITAGE MINING LTD.
MANAGEMENT'S DISCUSSION & ANALYSIS
For the three months ended March 31, 2025
Warrants
| Outstanding and Exercisable | Exercise Price $ | Expiry Date |
|---|---|---|
| 10,293,790 | 0.40 | August 25, 2025 |
| 8,780,000 | 0.075 | January 12, 2026 |
| 3,928,333 | 0.15 | April 12, 2026 |
| 4,552,777 | 0.15 | June 19, 2026 |
| 5,204,441 | 0.15 | August 18, 2026 |
| 11,090,066 | 0.075 | June 20, 2027 |
| 2,973,334 | 0.075 | June 28, 2027 |
| 9,720,000 | 0.100 | October 18, 2027 |
| 940,000 | 0.100 | November 8, 2027 |
| 3,000,000 | 0.10 | January 17, 2028 |
| 15,920,000 | 0.10 | April 4, 2030 |
| 4,650,000 | 0.10 | April 17, 2030 |
| 3,000,000 | 0.10 | May 14, 2030 |
| 84,052,741 |
Agent Options/Warrants
| Outstanding and Exercisable | Exercise Price $ | Expiry Date |
|---|---|---|
| 677,136 | 0.25 | August 25, 2025 |
| 32,000 | 0.05 | January 12, 2026 |
| 258,177 | 0.09 | April 12, 2026 |
| 258,000 | 0.09 | June 19, 2026 |
| 400,806 | 0.05 | June 20, 2026 |
| 76,000 | 0.09 | August 18, 2026 |
| 41,666 | 0.075 | June 28, 2027 |
| 817,202 | 0.05 | October 18, 2027 |
| 332,400 | 0.05 | November 8, 2027 |
| 729,500 | 0.05 | April 4, 2028 |
| 28,000 | 0.05 | April 17,2028 |
| 240,000 | 0.05 | May 14,2028 |
| 3,890,887 |