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Magma Silver Corp. — Management Reports 2025
Apr 19, 2025
46472_rns_2025-04-18_6717045a-ed89-48c8-822f-6ffb39150300.pdf
Management Reports
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MAGMA SILVER CORP.
(formerly African Energy Metals Inc.)
MANAGEMENT DISCUSSION AND ANALYSIS
Years Ended December 31, 2024 and 2023
TABLE OF CONTENTS
Page
- DESCRIPTION OF BUSINESS 3.
- CORPORATE AND OPERATIONAL HIGLIGHTS 3.
- EXPLORATION AND EVALUATION ASSET 4.
- PROPOSED TRANSACTIONS 5.
- SELECTED ANNUAL RESULTS 7.
- LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN 7.
- RESULTS OF OPERATIONS 8.
- SUMMARY OF QUARTERLY FINANCIAL INFORMATION 10.
- TRANSACTIONS WITH RELATED PARTIES 10.
- SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS 11.
- RISKS RELATED TO THE COMPANY'S BUSINESS 11.
- OTHER MD&A DISCLOSURE REQUIREMENTS 15.
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This discussion and analysis should be read in conjunction with the audited consolidated financial statements and related notes thereto for the years ended December 31, 2024 and 2023 (the "Financial Statements"), which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by IASB. All amounts in the financial statements and this discussion and analysis are presented in United States dollars, unless otherwise indicated. This Management Discussion and Analysis ("MD&A") is dated April 17, 2025 and discloses specified information up to that date.
FORWARD LOOKING INFORMATION
This management discussion and analysis ("MD&A") contains certain forward-looking statements and information relating to Magma Silver Corp. (formerly African Energy Metals Inc.) ("Company") that are based on the beliefs of its management as well as assumptions made by and information currently available to the Company. When used in this document, the words "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital, the estimated cost and availability of funding for the continued exploration and development of the exploration projects. Such statements reflect the current views of management with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.
1. DESCRIPTION OF BUSINESS
On March 27, 2007, Magma Silver Corp. (formerly African Energy Metals Inc.) ("the Company"), was incorporated pursuant to the provisions of the Business Corporations Act (British Columbia). On August 25, 2020, the Company changed its name to Central African Gold Inc. On February 7, 2022, the Company changed its name to African Energy Metals Inc. and was trading on the TSX Venture Exchange ("TSX-V") under the symbol CUCO effective February 12, 2022. On April 15, 2025, the Company changed its name from African Energy Metals Corp. to Magma Silver Corp., and changed symbol from CUCO.H to MGMA.V
The Company is engaged in the acquisition, exploration, and development of mineral resources.
Previously completed Management Discussion and Analysis documents covering comments for earlier periods have been prepared and filed accordingly on www.sedarplus.ca.
2. CORPORATE AND OPERATIONAL HIGLIGHTS
4:1 Share Consolidation ("the Consolidation")
On October 22, 2024, the Company consolidated all its issued and outstanding common shares on the basis of 1 new share for every 4 old shares. All references herein to the number of shares, options, warrants, weighted average number of common shares and loss per share have been retrospectively restated for the Consolidation, including all such numbers presented for the prior periods.
Mink Narrows Acquisition
On April 5, 2024, the Company signed a definitive agreement with Voyageur Mineral Explorers Corp. ("Voyageur") (the "Definitive Agreement") to earn a 100% interest in the Mink Narrows Group high-grade polymetallic copper VMS project (the "Project") located in the prolific Flin Flon Manitoba VMS mining camp.
Termination of Mink Narrows Acquisition and Related Transactions.
On July 2, 2024, due to market conditions, the Company terminated the Definitive Agreement with Voyageur and the Compensation Agreement with Laser Gold.
On December 6, 2024, the Company completed a non-brokered private placement of 10,000,000 units at CDN $0.05 per unit for aggregate proceeds of $356,600 (CDN $500,000).
On December 6, 2024, the Company settled $42,556 (CDN$60,000) worth of debt with the issuance of 1,000,000 common shares with a fair value of $53,490 (CDN$75,000).
Assignment Agreement
On January 3, 2023, the Company entered into an assignment agreement with AuClair ECC SASU ("AuClair") to acquire 100% interest in an agreement with Amur Sarl ("Amur") regarding a 60/40 joint venture on the project. The project is held 100% by Compagnie Miniere de Kalehe SA ("CMK") which is a joint venture between Amur and Societe Aurifere du Kivu et du Maniema SA ("Sakima"). The Company would acquire a 60% interest in CMK. In consideration of the assignment, the Company issued 750,000 common shares with a fair value of $177,963 (CDN $240,000) to AuClair, and will pay US$150,000 to Amur upon successful completion of due diligence and execution of formal agreements. The Company also paid a finder's fee of 75,000 common shares with a value of CDN $17,796 (CDN $24,000) to arm's length parties in accordance with TSX-V policies.
On August 11, 2023, the assignment agreement was terminated and the Company recorded the fair value of shares issued of $195,759 as project generation costs in the consolidated statement of loss and comprehensive loss.
3. PROPOSED TRANSACTIONS
Ninobamba Acquisition
On January 20, 2025, the Company entered into an option agreement with Rio Silver Inc. to acquire the 'Ninobambo' gold & silver project in Peru for a consideration price of $2,180,000 in cash and 5,000,000 common shares of the Company, which will be gradually fulfilled upon reaching each milestones.
The agreement has additional stipulations on the consideration price as follows:
With the exception of the first three payments amounting to $180,000 (CDN$260,000) which shall be paid in cash, the Company may elect to issue consideration Shares in lieu of cash with a value of up to 50% of any cash payment or advance royalty payment. The value of the consideration shares shall be based on the volume weighted average of the Optionee's shares for the 20 trading days immediately preceding the payment due date, subject to a floor price per consideration share that is equal or greater than the Company's discounted market price (as defined in the policies of the Exchange).
- This payment shall be used to pay the community surface access agreement through January 2026 and the first half of the following year.
- This payment shall be used to pay the 2025 property tax due to the government of Peru.
- These mandatory payments shall be made in Peru unless consideration shares are issued in lieu thereof, which shares can be issued in Canada.
Subsequent to the year-ended December 31, 2024, the Company has issued 2,500,000 consideration shares and cash payment of $6,950 (CDN$10,000). In relation to this agreement, the company issued 450,000 common shares to the finders.
Closing of Private Placement
On April 15, 2025, the Company completed the first tranche of a non-brokered private placement of 9,000,000 units at CDN$0.10 per unit for proceeds of $638,235 (CDN$900,000). Each unit consisted of one common share and one-half of one common share purchase warrant, where each one whole warrant entitles the holder to purchase an additional common share at an exercise price of CDN$0.20 per share until April 14, 2027. In connection with the Financing, the Company paid $53,465 in finder's fees and issued 534,650 finder's warrants, exercisable at $0.20 per share for 24 months.
Name Change
On April 15, 2025, the Company changed its name from African Energy Metals Corp. to Magma Silver Corp. The ticker also changed from CUCO.H to MGMA.V
4. SELECTED ANNUAL RESULTS
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| $ | $ | $ | |
| Financial results | |||
| Total revenue | Nil | Nil | Nil |
| Net gain (loss) for the year | 178,653 | (756,734) | (1,194,499) |
| Basic and diluted gain (loss) per share | 0.03 | (0.04) | (0.08) |
| Statement of financial position | |||
| Cash | 27,716 | 1,045 | 62,745 |
| Total assets | 32,702 | 7,937 | 93,844 |
| Shareholders' equity (deficiency) | (59,531) | (679,763) | (155,933) |
5. LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN
As at December 31, 2024, the Company had current assets of $32,702 (2023 - $7,937) and current liabilities of $92,233 (2023 - $687,700). As at December 31, 2024, there is a working capital deficit of $59,531 (2023 - $697,763).
On December 6, 2024, the Company completed a non-brokered private placement of 10,000,000 units at CDN $0.05 per unit for proceeds of $356,600 (CDN $500,000). Each unit consisted of one common share and one common share purchase warrant, where each warrant entitles the holder to purchase an additional common share at an exercise price of CDN$0.10 per share until December 6, 2025.
During the year ended December 31, 2024, the Company assigned $162,106 worth of debt to a company controlled by a significant shareholder of the Company, of which $142,135 has been paid.
During the year ended December 31, 2024, the Company wrote-off $383,592 of accounts payable with agreements from creditors.
During the year ended December 31, 2023, the Company received loans from current and former related parties for an aggregate amount of $20,732.
The financial information presented in this MD&A is based on consolidated financial statements that have been prepared based on accounting principles applicable to a "going concern", which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
The Company has not generated any revenues or cash flows from operations to date. The Company expects that it will require additional debt or equity funding in the next 12 months to continue its planned exploration and evaluation activities and meet its business objectives. The Company plans to raise funds primarily through issuance of shares. The Company's ability to continue on a going concern basis is therefore dependent on its ability to successfully raise additional funds. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company.
6. RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2024, COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2023
For the quarter ended December 31, 2024, net gain was $23,713 compared to net loss of $302,596 recorded during the same period in 2023. Material variances from the prior year period are as follows:
- An increase in filing fees of $4,181 during the three months ended December 31, 2024, due to increased activity in the current reporting period.
- An increase in investor relations of $5,693 during the three months ended December 31, 2024, due to increased activity in the current reporting period.
- An increase in professional fees of $47,599 due to increased legal fees recorded in the current period.
- A decrease in project generation of $270,778 due to reduced activity in the reporting period.
- An increase in travel and accommodation of $4,733 due to increased expenses related to the private placement.
YEAR ENDED DECEMBER 31, 2024 COMPARED TO YEAR ENDED DECEMBER 31, 2023
For the year ended December 31, 2024, net profit was $178,653 compared to net loss of $756,734 recorded during the same period in 2023. Material variances from the prior year period are as follows:
- An increase in investor relations of $6,997 due to increased activities in business development and shareholder awareness in the current year.
- A decrease in management fees of $146,830 due to reduced consulting services utilized in the current year.
- A decrease in professional fees of $20,004 due to reduced legal fees recorded in the current year.
- A decrease in project generation of $313,482 due to reduced activity in the year.
- A decrease in share-based payments of $12,322 due to less share-based compensation transactions in the current year. There were no grants or vesting of stock options in the current year.
- A decrease in travel and accommodation of $61,427 due to reduced expenses for trips in the current year.
- An increase in net recovery from write off of accounts payable and accrued liabilities of $383,592, due to one-time settlement of amounts owing to creditors.
7. SUMMARY OF QUARTERLY FINANCIAL INFORMATION
The following Information is derived from the consolidated financial statements:
| Fiscal quarter ended | Net Income (loss) $ | Income (Loss) from continuing operations per share $ | Net comprehensive Income (loss) $ |
|---|---|---|---|
| December 31, 2024 | 12,779 | $ 0.00 | 32,076 |
| September 30, 2024 | 215,692 | 0.04 | 207,265 |
| June 30, 2024 | (19,459) | (0.00) | (12,723) |
| March 31, 2024 | (30,359) | (0.00) | (13,873) |
| December 31, 2023 | (302,596) | (0.02) | (325,720) |
| September 30, 2023 | (77,222) | (0.00) | (78,170) |
| June 30, 2023 | (127,790) | (0.01) | (132,709) |
| March 31, 2023 | (249,126) | (0.01) | (247,920) |
8. TRANSACTIONS WITH RELATED PARTIES
Related party transactions for the years ended December 31, 2024, and 2023 are as follows:
| Years ended | December 31, 2024 | December 31, 2023 |
|---|---|---|
| Management fees and consulting fees | $ 58,312 | $ 120,976 |
| $ 58,312 | $ 120,976 |
As at December 31, 2024, the Company owes $19,971 (2023 - $nil) to a company controlled by a significant shareholder of the Company, which was assumed through a debt assignment. The amount was included in accounts payable and accrued liabilities. During the year, the Company paid $142,135 (2023 - $nil) to that company.
As at December 31, 2024, the Company owes $7,649 (2023 - $117,203) to a company controlled by an officer and director of the Company. The amount was included in accounts payable and accrued liabilities, which is unsecured, non-interest bearing, and due on demand.
As at December 31, 2024, the Company owes a loan balance of $1,429 (2023 - $21,416) to a director of the Company, which is unsecured, bears interest at 8% per annum compounded semi-annually, and due on demand.
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10. MATERIAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported revenues and expenses during this year. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.
Significant area requiring the use of estimates include the recoverability of exploration and evaluation assets, fair value of share-based compensation, and unrecognized deferred income tax assets.
Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:
i) Going concern - The Company's assessment of its ability to continue as a going concern requires management to consider all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Material uncertainties related to events or conditions may cast significant doubt upon the Company's ability to continue as a going concern.
ii) The application of the Company's accounting policy for exploration and evaluation expenditures requires judgment in determining whether it is likely that 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. If information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in the consolidated statement of loss in the period when the new information becomes available.
11. RISKS RELATED TO THE COMPANY'S BUSINESS
Resource exploration is a speculative business and involves a high degree of risk. There is a probability that the expenditures made by the Company in exploring its properties will not result in discoveries of commercial quantities of minerals. A high level of ongoing expenditures is required to locate and estimate ore reserves, which are the basis to further the development of a property. Capital expenditures to support the commercial production stage are also very substantial.
The following sets out the principal risks faced by the Company:
Financing risks. Exploration and development of mineral deposits is an expensive process, and frequently the greater the level of interim stage success the more expensive it can become. As at December 31, 2024 the Company had not yet achieved profitable operations. During the year ended December 31, 2024, the Company incurred a net income of $178,653 (2023 - net loss of $756,734), a cash outflow from operating activities of $362,267 (2023 - $101,994) and, as of December 31, 2024, the Company had a working capital deficit (current assets minus current liabilities) of $59,531 (2023 - $679,763).
The Company has no producing properties and generates no operating revenues; therefore, for the foreseeable future, it will be dependent upon selling equity in the capital markets to provide financing for its continuing substantial exploration budgets. While the Company has been successful in obtaining financing from the capital markets for its projects in recent years, there can be no assurance that the capital markets will remain favourable in the future, and/or that the Company will be able to raise the
financing needed to continue its exploration programs on favourable terms, or at all. Restrictions on the Company's ability to finance could have a material adverse outcome on the Company and its securities.
Exploration risk. There can be no assurance that economic concentrations of minerals will be determined to exist on the Company's property holdings within existing investors' investment horizons or at all. The failure to establish such economic concentrations could have a material adverse outcome on the Company and its securities. The Company's planned programs and budgets for exploration work are subject to revision at any time to take into account results to date. The revision, reduction or curtailment of exploration programs and budgets could have a material adverse outcome on the Company and its securities.
Market risks. The Company's securities trade on public markets and the trading value thereof is determined by the evaluations, perceptions and sentiments of both individual investors and the investment community taken as a whole. Such evaluations, perceptions and sentiments are subject to change, both in short term time horizons and longer-term time horizons. An adverse change in investor evaluations, perceptions and sentiments could have a material adverse outcome on the Company and its securities.
Commodity price risks. The Company's exploration projects seek copper and cobalt in the DRC. While each of these minerals have recently been the subject of significant price increases from levels prevalent earlier in the decade, there can be no assurance that such price levels will continue, or that investors' evaluations, perceptions, beliefs and sentiments will continue to favour these target commodities. An adverse change in these commodities' prices, or in investors' beliefs about trends in those prices, could have a material adverse outcome on the Company and its securities.
Share Price Volatility and Price Fluctuations. In recent years, the securities markets in Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies, particularly junior mineral exploration companies like the Company, have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that these price fluctuations and volatility will not continue to occur.
Currency risks. The Company's exploration expenditures are predominately in US dollars and equity raised is predominately in Canadian dollars. The financial risk is the risk to the Company's operations that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. The Company is subject to fluctuations in foreign currency exchange rates and currently does not use derivative instruments to reduce its exposure to foreign currency risk.
Key personnel risks. The Company's exploration efforts are dependent to a large degree on the skills and experience of certain of its key personnel. The Company does not maintain "key man" insurance policies on these individuals. Should the availability of these persons' skills and experience be in any way reduced or curtailed, this could have a material adverse outcome on the Company and its securities.
Competition. Significant and increasing competition exists for the limited number of mineral property acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than the Company, the Company may be unable to acquire additional attractive mineral properties on terms it considers acceptable.
Cyber Security Risks. As the Company continues to increase its dependence on information technologies to conduct its operations, the risks associated with cyber security also increase. The Company relies on management information systems and computer control systems. Business and supply chain disruptions,
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plant and utility outages and information technology system and network disruptions due to cyber-attacks could seriously harm its operations and materially adversely affect its operation results, Cyber security risks include attacks on information technology and infrastructure by hackers, damage or loss of information due to viruses, the unintended disclosure of confidential information, the issue or loss of control over computer control systems, and breaches due to employee error. The Company's exposure to cyber security risks includes exposure through third parties on whose systems it places significant reliance for the conduct of its business. The Company has implemented security procedures and measures in order to protect its systems and information from being vulnerable to cyber-attacks.
The Company believes these measures and procedures are appropriate. To date, it has not experienced any material impact from cyber security events. However, it may not have the resources or technical sophistication to anticipate, prevent, or recover from rapidly evolving types of cyber-attacks. Compromises to its information and control systems could have severe financial and other business implications.
Foreign Countries and Regulatory Requirements. Currently, the Company has joint-ventures located in the DRC. Consequently, the Company is subject to certain risks associated with foreign ownership, including currency fluctuations, inflation, and political risk. Both mineral exploration and mining activities and production activities in foreign countries may be affected in varying degrees by political stability and government regulations relating to the mining industry. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Operations may be affected in varying degrees by government regulations with respect to community rights, restrictions on production, price controls, export controls, restriction of earnings, taxation laws, expropriation of property, environmental legislation, water use, labour standards and workplace safety. The Company maintains the majority of its funds in Canada and only forwards sufficient funds to meet current obligations.
Environmental and Other Regulatory Requirements. The current or future operations of the Company, including development activities and commencement of production on its properties, require permits from various governmental authorities and such operations are and will be subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. There can be no assurance that approvals and permits required to commence production on its properties will be obtained on a timely basis, or at all. Additional permits and studies, which may include environmental impact studies conducted before permits can be obtained, may be necessary prior to operation of the properties in which the Company has interests and there can be no assurance that the Company will be able to obtain or maintain all necessary permits that may be required to commence construction, development or operation of mining facilities at these properties on terms which enable operations to be conducted at economically justifiable costs.
Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions there under, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining or extraction operations may be required to compensate those suffering loss or damage by reason of such activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.
Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the
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Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or abandonment or delays in development of new mineral exploration properties. To the best of the Company's knowledge, it is currently operating in compliance with all applicable environmental regulations.
History of Net Losses; Accumulated Deficit; Lack of Revenue from Operations. The Company has incurred net losses to date. Its accumulated deficit as of December 31, 2024, was $28,976,696. Even if the Company commences development of certain properties, the Company may continue to incur losses. There is no certainty that the Company will produce revenue, operate profitably, or provide a return on investment in the future.
Uninsurable risks. The Company and its subsidiaries may become subject to liability for pollution, fire, explosion, against which it cannot insure or against which it may elect not to insure. Such events could result in substantial damage to property and personal injury. The payment of any such liabilities may have a material, adverse effect on the Company's financial position.
12. OTHER MD&A DISCLOSURE REQUIREMENTS
Information available on SEDAR
As specified by National Instrument 51-102, the Company advises readers of this MD&A that important additional information about the Company is available on the SEDAR+ website http://www.sedarplus.ca/
Outstanding Share Data
As at the date of this MD&A, the Company had 27,988,470 shares outstanding. As at the same date there were 10,000,000 warrants outstanding at exercise prices of CDN $0.10 per share and 0 stock options outstanding.
| Outstanding Warrants | Exercise Price (CDN$) | Expiry Date |
|---|---|---|
| 10,000,000 | 0.10 | December 6, 2025 |
| 10,000,000 |
Off Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Vancouver, British Columbia
April 17, 2025