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Lancaster Resources Inc. — Management Reports 2025
Aug 30, 2025
47911_rns_2025-08-29_c59b53df-5092-43e6-9095-a4132d93626f.pdf
Management Reports
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LANCASTER RESOURCES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the Three Months Ended June 30, 2025 and 2024
August 29, 2025
This Management's Discussion and Analysis ("MD&A") relates to the financial position and financial performance of Lancaster Resources Inc. ("Lancaster") for three months ended June 30, 2025 and 2024. All references to "us", "we", the "Company", and "our" refer to Lancaster on a consolidated basis.
Except where otherwise indicated, the financial information contained in this MD&A was prepared in accordance with International Financial Reporting Standards ("IFRS"). This MD&A should be read in conjunction with our audited consolidated financial statements for the years ended March 31, 2025 and 2024 and the interim consolidated financial statements for the three months ended June 30, 2025 and 2024 (the "Financial Statements").
Financial information contained in this MD&A has been prepared on the basis that we will continue as a going concern, which assumes that we will be able to realize our assets and satisfy our liabilities in the normal course of business for the foreseeable future. Management is aware, in making its going concern assessment, of material uncertainties related to events and conditions that may cast significant doubt upon our ability to continue as a going concern.
During the three months ended June 30, 2025, the Company had no revenues, incurred a net loss of $253,177, and incurred negative cash flow from operations of $300,418. As at June 30, 2025, the Company has a working capital deficit of $872,036 and an accumulated deficit of $9,141,651. The continued operations of the Company are dependent on future profitable operations, management's ability to manage costs, and the future availability of equity or debt financing. Whether and when the Company can generate sufficient operating cash flows to pay for its expenditures and settle its obligations as they fall due is uncertain. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption be inappropriate. The impact of those adjustments to the consolidated financial statements could be material..
Except where otherwise indicated, all financial information is expressed in Canadian dollars.
CORPORATE OVERVIEW AND DEVELOPMENT
We were incorporated under British Columbia's provincial laws on July 12, 2019. We were initially engaged in psychedelic research projects which was discontinued in late 2022.
On December 14, 2022, we entered into a Letter Agreement for a merger with Lancaster Lithium Inc. ("Lancaster Lithium"). The merger was completed through a reverse takeover transaction on June 9, 2023. We are a mineral exploration company.
Lancaster Lithium:
- In September 2022, Lancaster Lithium identified the potential of the Alkali Flat Lithium Project. After several months of negotiations and due diligence, we entered into a definitive option agreement for the project on November 17, 2022. The Alkali Flat Lithium Project comprises 260 claims (~5200ac) with prospective lithium brine deposits in the Lordsburg area of southwestern New Mexico, USA. Subsequently, the Option Agreement was amended to extend the deadline for the initial payment, and the first option payment of USD $25,000 was made. Refer to "Mineral Properties" for further information.
- In February 2023, Lancaster Lithium closed a first tranche of private placement of $305,000 through the issuance of 1,525,000 units. Each unit consisted of one share and one warrant to purchase another share at $0.40 for 3 years. In connection with the private placement, we paid finders fees of $24,400 and issued 122,000 Broker Warrants to buy shares at $0.20 per share.
- On February 15, 2023, Lancaster Lithium entered a merger agreement with Tevera Energy Corp. ("Tevera"). The agreement was a related party agreement in that both companies had some officers, directors and shareholders in common. Subsequently, on February 28, 2023, we held our annual general meeting and a special shareholders' meeting to obtain approval for the merger with Tevera Energy. The attending shareholders unanimously voted in favour of the resolutions to approve the merger. The amalgamation with Tevera Energy was finalized on March 9, 2023.
- On April 4, 2023 a special meeting of the shareholders of Lancaster Lithium approved the merger and 100% of the shareholders in attendance at the meeting in person or by proxy voted in favour of the merger.
- In April 2023, Lancaster Lithium discontinued two subsidiaries that were not being used that had been wholly owned subsidiaries of Tevera Energy.
On June 9, 2023, we completed a reverse takeover transaction (the "Transaction") pursuant to which it acquired all of the issued and outstanding common shares of Lancaster Lithium, a company incorporated in the province of British Columbia. On June 9, 2023, after obtaining all necessary approvals the merger with Lancaster Lithium was completed via a three-cornered amalgamation between the Company, Lancaster Lithium and the Company's wholly owned subsidiary. In this process, the Company acquired 100% of Lancaster Lithium's issued and outstanding common shares in exchange for common shares of the Company on a 1:1 basis. The Company's outstanding warrants and options were exchanged into warrants and options of Lancaster Lithium on an identical basis. Upon closing the transaction, the company resulting from the amalgamation of Lancaster Lithium and the Company's subsidiary became a wholly owned subsidiary of the Company, and the Company changed its name to Lancaster Resources Inc. and continues to advance the Lancaster Lithium exploration and development strategy.
On June 26, 2023, Andrew Watson, P.Eng., joined us as our Vice President of Engineering and Operations. Mr. Watson brings with him 21 years of rich technical leadership, operations, corporate strategy, and commercialization experience in lithium, hydrogen, and conventional oil and gas production. As the newly appointed Vice President of Engineering and Operations, Mr. Watson will spearhead Lancaster's Alkali Flat Lithium Project exploration operations in Lordsburg, New Mexico, USA along with Trans-Taiga.
On August 29, 2023, we entered into a definitive agreement (the "Agreement") to acquire 100% of the Trans-Taiga Lithium Project (the "Property") in the Eeyou Istchee James Bay region of Quebec. The Property, hosting several historical pegmatite samples, lies ~120 km west of Patriot Battery Metals' Corvette Project, ~74 km west of Winsome Resources' Cancet Project, and a few kilometres east of Loyal Lithium's Brisk Lithium Project. With the acquisition of the Property, we have diversified our exploration projects. Our focus expands from its existing lithium brine exploration at the Alkali Flat Project in New Mexico to include hard rock lithium exploration in Quebec's James Bay region. This strategic move enhances our exploration capabilities and geographical diversity, positioning it to unlock different types of lithium resources in varied geological settings all within Tier 1 mining jurisdictions. Refer to "Mineral Properties" for further information.
On December 15, 2023, we incorporated a wholly owned subsidiary, Nelson Lake Copper Corp. ("Nelson Lake"), as a British Columbia company. On December 18, 2023, Nelson Lake Copper Corp. directly staked claims covering an area of approximately 5,746 hectares in Saskatchewan, Canada.
On January 2, 2024, we entered into a spinoff agreement with our wholly owned subsidiary Nelson Lake to spin off the majority of its interest in Nelson Lake Copper to Lancaster shareholders.
In February 2024, we acquired two mineral claims, Catley Lake (3,036 hectares) and Centennial East (5,081 hectares), in the Athabasca Basin with aims to target high-grade uranium.
On April 2, 2024, we completed a transaction to spin off its wholly owned subsidiary Nelson Lake. We subscribed for 1,650,000 common shares of Nelson Lake at a price of $0.02 per common share with a payment of $33,000. On the same date, we also declared a dividend of 1,046,269 Nelson Lake shares on the basis of $0.02 common shares in Nelson Lake issued for each of the Company's common shares held by a shareholder of the Company as of the record date of February 5, 2024. On the same date, we issued 550,000 fully paid and non-assessable shares to Nelson Lake for a payment of $33,000.
On April 5, 2024, our wholly owned subsidiary 1466777 B.C. Ltd. directly staked a claim in Saskatchewan, the Piney Lake Gold Property, for staking costs of less than $10,000.
On April 10, 2024, the Company closed a non-brokered private placement of 1,000,000 units of the Company at a price of $0.05 per unit for proceeds of $30,000 and a conversion of debt of $20,000, which includes $2,560 owed to a director of the Company. Each unit consisted of one common share and one share purchase warrant; Each warrant entitles the holder to acquire one additional common share at an exercise price of $0.08 per share until April 10, 2027.
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On March 28, 2025, the Company issued 2,249,000 units of the Company at a price of $0.05 per unit for $28,000 and a conversion of an accounts payable amount of $84,450. Each unit consisted of one common share of the Company and one share purchase warrant, where in each warrant entitles the holder to acquire one additional common share of the Company for $0.05 per share until March 28, 2028.
On April 22, 2025, the Company reached an agreement to purchase 100% interest in the Lake Cargelligo Project located in New South Wales, Australia, for a total purchase price of $210,000 plus GST, payable in 10,000,000 shares of the Company at a deemed value of $0.02 per share and $10,000 cash and a net smelter royalty of 2%.
On April 25, 2025, the Company granted 1,600,000 RSUs to its directors and officers. These RSUs vested immediately after grant.
On May 1, 2025, Andrew Watson was appointed as the Chief Executive Officer of the Company.
On May 30, 2025, the Company issued 20,000,000 units of the Company at $0.02 per unit for gross proceeds of $400,000. Each unit consists of one common share of the Company and on share purchase warrant. Each warrant entitle the holder to acquire one common share in the capital of the Company at $0.05 until the date that is three years from the date of issuance.
In June 2025, the Company issued 438,000 shares through the exercise of warrants for gross proceeds of $30,660.
In June and August 2025, the Company acquired mineral claims in the James Bay area of Quebec directly from the province. The Lac Iris properties are ~694ha of 100% interest mineral claims.
Spin-off
On January 29, 2024, the Company entered into a plan of arrangement with its wholly-owned subsidiary, Nelson Lake Copper Corp. ("Nelson Lake") (the "Plan of Arrangement"). The Plan of Arrangement was approved by the Company's shareholders by special resolutions at a special meeting of the shareholders on March 15, 2024 and was approved by the British Columbia Supreme Court in a final order on March 25, 2024. On April 2, 2024, The Company subscribed for 1,650,000 common shares of Nelson Lake at a price of $0.02 per common share with a payment of $33,000. On the same date, the Company issued 550,000 fully paid and non-assessable shares to Nelson Lake for proceeds of $33,000.
On April 2, 2024, the Company declared a share dividend of 1,046,269 Nelson Lake shares based on $0.01 net assets per share in Nelson Lake for each of the common shares of the Company held as of the record date of February 5, 2024 (the "Spin-Off"). Following the spin-off transaction, the Company holds 703,731 common shares of Nelson Lake, representing approximately 40% of Nelson Lake's total issued and outstanding shares. Nelson Lake continues to meet the criteria for consolidation based on IFRS 10 as it has majority interest in Nelson Lake's Board of Directors and controls the day-to-day operations of Nelson Lake, and the Company continues to present Nelson Lake's financial results on a consolidated basis.
Mineral Properties
Lake Cargelligo Gold Project
On June 30, 2025, the Company completed its acquisition of 100% of the Lake Cargelligo Gold Project in the Cobar mining district of New South Wales, Australia. The acquisition was completed by Lancaster Gold Australia Pty Ltd., a wholly owned subsidiary established to lead exploration and development activities in the region.
The Lake Cargelligo Gold project, which encompasses over 28,768 hectares under a single exploration license, features multiple historical high-grade gold and silver occurrences, identified through rock chip and channel sampling, as well as historical drilling. It consists of a single contiguous claim with over 25 km of prospective strike and three primary target zones. Historical sampling includes results up to 204 g/t Au and 273 g/t Ag from rock chips, and up to 16m @ 5.83 g/t Au and 7.20 g/t Ag from channel sampling. The property is situated 60 km from the producing Mineral Hill Mine in one of Australia's most prolific gold regions. No modern geophysics has
been applied; Lancaster will launch the 2025 program focused on geophysics, geochemical sampling and drilling.
The Company paid $10,000 cash and 10,000,000 common shares in Lancaster subject to resale restrictions to be released over a 24-month period. The Company will also pay 2% NSR royalty (with repurchase provisions) and up to $3.68 million in contingent milestone payments.
Lac Iris Polymetallic Project
On June 2, August 20, and August 21, 2025, the Company acquired 13 mineral claims in the James Bay area of Quebec directly from the province. The Lac Iris properties are ~694 hectares of 100% interest mineral claims.
Nelson Lake Copper Project
On December 18, 2023, the Company directly staked 1 mining claim covering a contiguous block of 5,746 hectares in Saskatchewan (the "Nelson Lake Copper Property") for $3,447, which was paid to the Government of Saskatchewan, as administered through the Mineral Administration Registry Saskatchewan (MARS).
Other claims
The Company owns various mineral property claims pending further development including an Athabasca Basin uranium claim, a Piney Lake gold claim and a Charlot Lake uranium claim with an aggregated cost of $7,657.
On June 14, 2024, the Company disposed of its Robinson Lake gold claim for proceeds of $15,000 and settlement of accounts payable of $14,192 resulting in a gain on disposition of $29,192.
Summary of Investments in Mineral Properties
During the three months ended June 30, 2025, our investments in our mineral properties are as follows:
| Lake Cargelligo Gold $ | Nelson Lake Copper $ | Other Claims $ | Total $ | |
|---|---|---|---|---|
| Acquisition costs: | ||||
| Balance, March 31, 2025 | - | 3,447 | 7,657 | 11,105 |
| Addition | 611,000 | 3,302 | 614,302 | |
| Balance, June 30, 2025 | 611,000 | 3,447 | 10,959 | 625,407 |
| Exploration costs: | ||||
| Balance, March 31, 2025 | - | 27,765 | - | 27,765 |
| Balance, June 30, 2025 | - | 27,765 | - | 27,765 |
| Carrying values: | ||||
| March 31, 2025 | - | 31,212 | 7,657 | 38,870 |
| June 30, 2025 | 611,000 | 31,212 | 10,959 | 653,172 |
SELECTED ANNUAL INFORMATION
Management considers that the main indicators of our performance are the following: revenues, net income and loss, total assets, earnings or loss per share. The following information was derived from our financial statements for the years ended March 31, 2025 and 2024.
| 2025 | 2024 | |
|---|---|---|
| $ | $ | |
| Revenues | - | - |
| Net loss | (1,548,884) | (3,608,456) |
| Net loss per share attributable to the Company's shareholders | (1,535,100) | (3,608,456) |
| Net loss per share attributable to the non-controlling interest | (13,784) | - |
| Basic and diluted loss per shares from continuing operations | (0.03) | (0.08) |
| Total assets | 91,121 | 719,325 |
| Current liabilities | (1,997,464) | (1,332,217) |
| Dividends declared and paid out in cash | - | - |
OVERALL PERFORMANCE
As at June 30, 2025, we did not have any revenues. For three months ended June 30, 2025, we incurred a net loss of $253,177 as compared to $288,533 in the prior year. The increase in net loss was driven by the acquisition and operations of the lake Cargelligo gold project located in Australia.
DISCUSSION ON OPERATIONS
EXPENSES:
Consulting fees
We are a developing business, and we engage consultants and contractors regularly to obtain expertise in various business areas without having to commit to employment costs. For three months ended June 30, 2025, we incurred consulting fees of $95,125 compared to $95,925 in the prior year.
Investor relations
For the three months ended June 30, 2025, we incurred investor relations expenses of $nil as compared to $12,000 in the prior year.
Marketing, publicity and digital media
Marketing, publicity and digital media expenses included advertising media spent to promote our corporate brand. For the three months ended June 30, 2025, we incurred marketing, publicity and digital media expenses of $91,500 as compared to $94,523 in the prior year. We intended to gradually reduce our capital market promotional activities following the listing in the prior year.
Office and administrative expenses
Office and administrative expenses primarily included insurance fees, broker and filing fees, interest expense and other general office expenses. For three months ended June 30, 2025, we incurred office and administration expenses of $2,487 as compared to $7,394 in the prior year. The decrease in office and administrative expenses were driven by efficiencies from our administrative activities.
Professional fees
Professional fees include legal, accounting, audit and taxation fees. For the three months ended June 30, 2025, we incurred professional fees of $950 as compared to $6,560 in the prior year. The decrease in investor relations expenses was driven by efficiencies from our administrative activities.
Research and development
Research and development expenses are related to our cost in the study of early-stage projects. For the three months ended June 30, 2025, we incurred research and development costs of $nil as compared to $327 in the prior year. We intend to focus on developing existing properties and claims which will led to lower spend on research activities.
Share-based compensation
Share-based compensation expenses were related to the stock options granted our directors, advisors, officers, employees and consultants. For three months ended June 30, 2025, we incurred share-based compensation of $24,000 as compared to $60,997 in the prior year. We expect to continue to utilize stock options, and other forms of equity instruments, to incentivize our teams.
Transfer agent and filing fees
Transfer agent and filing fees were related to the application and ongoing fees for the listing of our common shares on the Canadian Securities Exchanges (CSE). For the three months ended June 30, 2025, we recorded listing fees of $5,669 as compared to $19,884 listing expenses in the prior year. The decrease in transfer agent and filing fees was driven by change in capital raise activities.
Travel and entertainment
For the three months ended June 30, 2025, we incurred travel and entertainment cost of $nil as compared to $1,719 in the prior year. The travel expense incurred in the prior year was related to participation in industry trade show events and we have reduced such activities during the current year.
Accretion
Accretion expense was related to our convertible debentures. For the three months ended June 30, 2025, we recorded accretion expense of $4,322 as compared to $21,063 in the prior year.
On June 1, 2025, 46 debentures out of 50 from the November 29, 2021 issuance in the amount of $690,000 in principal out of $745,000 of the remaining total principal of the November 29, 2021 issuance were amended to a new debentures. The principal of the new debentures also include interest accrued to May 31, 2024 in the amount of $149,833. The Company paid a 2% financing fee to the debenture holders which is also included in the principal of the new debentures.
The new debentures mature on December 31, 2026. The new debentures bear interest of 12% per annum calculated annually on may 31 of each year on an accrual basis payable until maturity unless otherwise converted in accordance with the debentures.
Interest expense
Interest expense was related to our convertible debentures. For the three months ended June 30, 2025, we recorded interest expense of $47,273 as compared to $24,860 in the prior year. The increase in interest expense was driven by amendment to debenture terms resulting in higher debenture principal, annual interest rates and a one-time financing fee.
Unrealized loss on marketable securities
As at June 30, 2025, the Company owns the following marketable securities: 240,257 (2024 – 240,257) common shares of Komo Plant Based Foods Inc., 550,000 (2024 – 550,000) of the Company's shares held by its subsidiary Nelson Lake Copper Corp., and 61,500 (2024 – 125,000) stock options of Greenridge Exploration Inc. The fair values and adjustments to the marketable securities are shown below:
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Fair value, March 31, 2024
| | Common shares $ | Stock options $ | Total $ |
| --- | --- | --- | --- |
| Fair value, March 31, 2024 | 4,805 | 78,378 | 83,183 |
| Additions | 33,000 | - | 33,000 |
| Cash paid for the exercise of stock options | - | 40,005 | 40,005 |
| Other | - | 119 | 119 |
| Proceeds from the sale of marketable securities | - | (65,953) | (65,953) |
| Realized gain from the sale of marketable securities | - | (24,205) | (24,205) |
| Unrealized gain (loss) | (29,553) | (22,642) | (52,195) |
| Fair value, March 31, 2025 | 8,252 | 5,702 | 13,954 |
| Unrealized gain (loss) | 4,167 | 24,750 | 28,917 |
| Fair value, June 30, 2025 | 12,419 | 30,452 | 42,871 |
Other income (expense)
For the three months ended June 30, 2025, the Company recorded an other expense of $10,768 as compared to other income of $18,906 in the prior year.
Net and comprehensive loss
We incurred a net loss of $253,177 for the three months ended June 30, 2025 as compared to $288,533 in the prior year. Loss per share from continuing operations on basic and fully diluted basis was $nil for the three months ended June 30, 2025, compared to $0.01 in the prior year.
Dividends
On April 2, 2024, we declared a dividend of 1,046,269 Nelson Lake shares ("Dividend Shares") on a basis of 0.02 common shares of Nelson Lake for each common shares of the Company as of the record date of February 5, 2024. The Dividend Shares represented 59.8% of the total issued and outstanding shares of Nelson Lake. We did not declare or pay any dividends in the prior year.
SUMMARY OF QUARTERLY RESULTS
The summary of our quarterly results are as follows. For the quarters ended:
| Jun.31, 2025 | Mar.31, 2025 | Dec.31, 2024 | Sep.30, 2024 | |
|---|---|---|---|---|
| $ | $ | $ | $ | |
| Operating Expenses | 219,731 | 480,590 | 183,837 | 100,328 |
| Net Loss | (253,177) | (826,874) | (214,913) | (218,564) |
| Basic and diluted loss per share | (0.00) | (0.02) | (0.00) | (0.00) |
| Weighted average shares outstanding | 67,453,795 | 56,745,505 | 55,703,872 | 55,703,872 |
| Jun.30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | |
| --- | --- | --- | --- | --- |
| $ | $ | $ | $ | |
| Operating Expenses | 299,329 | 448,283 | 388,060 | 309,417 |
| Net Loss | (288,533) | (412,489) | (450,984) | (438,092) |
| Basic and diluted loss per share | (0.01) | (0.00) | (0.01) | (0.01) |
| Weighted average shares outstanding | 54,633,323 | 45,074,151 | 46,609,318 | 42,956,894 |
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LIQUIDITY
| June 30, 2025 | March 31, 2025 | |
|---|---|---|
| Current ratio(1) | 0.24 | 0.01 |
| Cash | $ 167,904 | $ 27 |
| Working capital deficit (2) | ($ 872,036) | ($ 1,945,213) |
| Debt (3) | $ 1,162,915 | $ 1,193,446 |
| Total shareholders’ deficit | ($ 994,734) | ($ 1,906,343) |
(1) Current ratio is current assets divided by current liabilities.
(2) Working capital is current assets minus current liabilities
(3) Debt refers to commercial loans and convertible debentures
Cash Position
As at June 30, 2025, we had $167,904 in cash.
During three months ended June 30, 2025, we spent $300,481 of cash in operating activities, to finance operating expenses, wages, and consulting fees, as compared to $63,798 in the prior year. Cash used in investing activities for three months ended June 30, 2025 was $14,302 for the acquisition of mineral property and subsequent development costs. Cash provided by financing activities was $482,660 for the three months ended June 30, 2025 from issuing new shares in private placements and exercise of warrants, as compared to $24,750 from issuance of new shares in the prior year, which was primarily from proceeds received from the issuance of common shares and exercise of warrants and stock options.
We aim to issue more common shares through private placements and listing processes to obtain funding needed for the future development of our business.
Working Capital
We had a working capital deficit of $872,036 as at June 30, 2025, which primarily consists of cash, marketable securities and prepaid expense and deposits offset by accounts payable and accrued liabilities, flow-through premium, and convertible debentures, as compared to working capital deficit of $1,945,213 as at March 31, 2025. The increase in working capital was mainly due to additional funding from private placement.
CAPITAL RESOURCES AND MANAGEMENT
We are authorized to issue an unlimited number of common shares. As at June 30, 2025, there were 91,440,872 common shares issued and outstanding. We had 49,810,794 share purchase warrants outstanding with a weighted average exercise price of $0.19. We had 6,810,000 stock options outstanding with a weighted average exercise price of $0.15 per share of which 6,747,500 are exercisable with a weighted average exercise price of $0.15 per share.
Our principal business is to acquire, explore, and develop mineral properties and ultimately seek earnings by exploiting mineral claims. Currently, we are evaluating and reviewing potential resource properties and other business opportunities as possible options or joint ventures. Once we acquire an interest in a resource property or other business opportunity, we anticipate that we will require more funds to further our business.
OFF-BALANCE SHEET ARRANGEMENTS
As at June 30, 2025 and 2024, we had no off-balance sheet arrangements.
RELATED PARTY TRANSACTIONS
During the three months ended June 30, 2025 and 2024, compensation of key management personnel were as follows:
| Three months ended June 30, | ||
|---|---|---|
| 2025 | 2024 | |
| $ | $ | |
| Consulting fees | 44,500 | 51,000 |
| Development costs | 50,625 | 23,325 |
| Share-based compensation | - | 42,822 |
| Wages and benefits | - | - |
| 95,125 | 117,147 |
As at June 30, 2025, the Company owed $121,335 (March 31, 2025 – $120,273) to a director of the Company, of which $124,655 (March 31, 2025 – $105,299) is included in accounts payable and $3,320 (March 31, 2025 – $14,973) in due from related parties. These amounts are unsecured, non-interest-bearing, and due on demand.
As at June 30, 2025, the Company owed $76,506 (March 31, 2025 -$44,376) to the CEO of the Company, which is included in accounts payable and accrued liabilities. The amounts owed are unsecured, non-interest bearing, and due on demand.
As at June 30, 2025, the Company owed $54,275 (March 31, 2025 -$54,275) to the CFO of the Company, which is included in accounts payable and accrued liabilities. The amounts owed are unsecured, non-interest bearing, and due on demand.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Significant areas requiring the use of estimates include the carrying value of marketable securities, fair value of convertible debenture and share-based compensation, and measurement of unrecognized deferred income tax assets.
Judgments made by management in the application of IFRS that have a significant effect on the consolidated financial statements include:
- the factors that are used in determining whether we have significant influence over another entity, and the application of the going concern assumption which requires management to consider all available information about the future, which is at least but not limited to 12 months from the end of the reporting period;
- the determination of whether a set of assets acquired and liabilities assumed in an acquisition constitutes a business may require the Company to make certain judgments, considering all facts and circumstances. A business is presumed to be an integrated set of activities and assets capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or economic benefits; and
- judgment in determining whether it is likely that the future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The deferral policy requires management to make certain estimates and
assumptions about future events or circumstances, in particular, whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available.
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
Certain pronouncements have been issued by the IASB or the IFRS Interpretations Committee that are not mandatory for the current period and have not been early adopted. Management has assessed that there are no future accounting pronouncements that are expected to have a material impact on the Company in the current or future reporting periods.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Fair Values
Assets and liabilities measured at fair value on a recurring basis were presented on the consolidated statement of financial position as at June 30, and March 31, 2025 and 2024, as follows:
| Fair Value Measurements Using | Balance, March 31, 2024 | |||
|---|---|---|---|---|
| Quoted prices in active markets for identical instruments (Level 1) $ | Significant other observable inputs (Level 2) $ | Significant unobservable inputs (Level 3) $ | ||
| Marketable securities | 12,419 | - | 30,452 | 42,871 |
| Fair Value Measurements Using | Balance, March 31, 2025 | |||
| Quoted prices in active markets for identical instruments (Level 1) $ | Significant other observable inputs (Level 2) $ | Significant unobservable inputs (Level 3) $ | ||
| Marketable securities | 8,252 | - | 5,702 | 13,954 |
The fair values of other financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, amounts due to related parties, and convertible debentures approximate their carrying values due to the relatively short-term maturity of these instruments.
Credit Risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counter-party default on its obligation. The Company's credit risk is primarily attributable to cash and cash equivalents. The Company minimizes its credit risk associated with its cash and cash equivalents balance by dealing with major financial institutions in Canada and has no other significant concentration of credit risk arising from operations. The carrying amount of financial assets represents the maximum credit exposure.
Foreign Exchange Rate and Interest Rate Risk
The Company is exposed to foreign exchange rate due to funds required for the development activities of its mineral property in Australia. Management expects to settle its expenditure in foreign currency timely and such foreign exchange risks are manageable.
Interest Rate Risk
The Company is not exposed to material interest rate risk.
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Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting financial obligations due to a shortage of funds. All of the Company's obligations are due within one year. The Company manages liquidity risk by maintaining sufficient cash balances and adjusting its operating budget and expenditure. Liquidity requirements are managed based on expected cash flows to ensure that there are sufficient funds to meet short-term and specific obligations.
Price Risk
The Company is exposed to price risk with respect to commodity prices and publicly traded market prices for marketable securities. The Company's ability to raise capital to fund exploration and development activities is subject to risks associated with fluctuations in the market price of commodities.
SUBSEQUENT EVENTS
On August 13, 2025, the Company granted a total of 1,800,000 RSUs to its directors and an officer, of which 200,000 vested immediately, 640,000 will vest on January 1, 2026 and 320,000 will vest March 1, 2026 and 640,000 will vest on April 1, 2026. The Company also granted a total of 1,800,000 stock options to advisors and consultants. All of the stock options vested immediately with an exercise price of $0.10 expiring in 5 years after grant.
On August 18, 2025, the Company issued 609,000 shares for the exercise of warrants at $0.05 per share for proceeds of $30,450.
QUALIFIED PERSON
Andrew Watson, P. Eng., who is a Qualified Person as defined by NI 43-101, and member in good standing with the Association of Professional Engineers and Geoscientists of Alberta (member number 75486) has reviewed and approved the technical information in this MD&A. Mr. Watson is President & Chief Executive Officer and a Director and holds shares, options and RSUs in the Company. Mr. Watson consents to the inclusion in this MD&A of the matters based on his information in the form and context in which it appears.
ADDITIONAL INFORMATION
Additional information can be found on the Company's website at https://lancaster-resources.com and on the Company's profile on SEDAR+ at www.sedarplus.ca.