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Magma Silver Corp. — Management Reports 2025
May 23, 2025
46472_rns_2025-05-22_76dcb731-a1ae-49f5-8163-a81d3b482e64.pdf
Management Reports
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MAGMA SILVER CORP.
(formerly African Energy Metals Inc.)
MANAGEMENT DISCUSSION AND ANALYSIS
Three Months Ended March 31, 2025 and 2024
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TABLE OF CONTENTS
Page
- DESCRIPTION OF BUSINESS
- CORPORATE AND OPERATIONAL HIGLIGHTS
- PROPOSED TRANSACTIONS
- LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN
- RESULTS OF OPERATIONS
- SUMMARY OF QUARTERLY FINANCIAL INFORMATION
- TRANSACTIONS WITH RELATED PARTIES
- MATERIAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
- RISKS RELATED TO THE COMPANY'S BUSINESS
- OTHER MD&A DISCLOSURE REQUIREMENTS
This discussion and analysis should be read in conjunction with the unaudited condensed consolidated interim financial statements and related notes thereto for the three months ended March 31, 2025 and 2024 (the "Financial Statements"), and the audited consolidated financial statements and related notes thereto for years ended December 31, 2024 and 2023 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 May 21, 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. (the "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.) The Company's registered office is located at 6th Floor, 905 West Pender Street, Vancouver, BC V6C 1L6. 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. On April 11, 2025, the Company changed its name to Magma Silver Corp. and was trading on the TSX Venture Exchange ("TSX-V") under the symbol MGMA.
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
Niñobamba Acquisition
On January 20, 2025, the Company signed an option agreement with Rio Silver Inc. to acquire a 100% interest in the "Niñobamba" gold & silver project in Peru for a consideration price of $2,180,000 in cash and the issuance of 5,000,000 common shares of the Company which will be fulfilled upon reaching certain milestones. The acquisition was approved by the TSX Venture Exchange ("TSX-V") on April 17, 2025.
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Finders Fees
In relation to this agreement, the Company issued 450,000 common shares to a arm's length party as a finder's fee. The securities issued pursuant to the finder's fees are subject to a hold period under applicable securities laws, which will expire four months plus one day from the date of closing of the acquisition.
Name Change
Concurrent with the closing of the acquisition the Company changed its name to Magma Silver Corp. The Company also changed its trading symbol on the TSXV- Exchange to MGMA, FSE to BC21, and the WKN to A411DV.
Private Placement
On April 15, 2025, the Company completed the first tranche of a non-brokered private placement of 9,021,500 units at CDN$0.10 per unit for proceeds of $647,445 (CDN$902,150). Each unit consists 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 15, 2027. In connection with the financing, the Company paid $38,370 (CDN$53,465) in finder's fees and issued 534,650 finder's warrants, exercisable at $0.20 per share expiring April 15, 2027.
Graduation to Tier 2
Concurrent with the closing of the Private Placement and the acquisition the Company graduated from TSX tier 3 (the "NEX") on the exchange to TSX tier 2 (the "Venture") and changed its trading symbol from "CUCO.H" to "MAGM.V"
Change of Directors
On May 7, 2025, Joe Sandberg resigned as a director. On the same day Michael Townsend was appointed as a director.
- PROPOSED TRANSACTIONS
Second Tranche of Private Placement
The Company intends to close the second tranche of its non-brokered private placement by May 25, 2025, of up to 5,978,500 units at CDN$0.10 per unit for proceeds of up to CDN$597,850. Each unit will consist of one common share and one-half of one common share purchase warrant at a price of CDN$0.20 per share. In connection with the financing the Company may pay finder's fees and may issue finder's warrants exercisable at $0.20 per share and expiring 2 years and one day from the closing date.
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4. LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN
As at March 31, 2025, the Company had current assets of $64,091 (December 31, 2024 - $32,702) and current liabilities of $112,667 (December 31, 2024 - $92,233). There is a working capital deficit of $48,576 as at March 31, 2025 (December 31, 2024 – $59,531).
As at March 31, 2025, the Company had $27,954 in exploration and evaluation assets.
| Ninobamba Peru | Total Amount | |
|---|---|---|
| Acquisition costs: | ||
| Balance at December 31, 2024 | $ - $ | - |
| Cash consideration | 27,954 | 27,954 |
| Balance, March 31, 2025 | $ 27,954 $ | 27,954 |
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.
5. RESULTS OF OPERATIONS
The information for the three months ended March 31, 2025 and 2024 is based on the condensed consolidated interim financial statements:
| | Three months
ended March 31, 2025 | | Three months
ended March 31, 2024 |
| --- | --- | --- | --- |
| Expenses | | | |
| Consulting fees | $ | 383 | $ 3,268 |
| Filing fees | | 19,101 | 3,063 |
| Investor relations | | 5,269 | - |
| Management fees | | 40,072 | 14,828 |
| Office expense | | 6,639 | 1,047 |
| Professional fees | | 29,850 | 4,043 |
| Project generation | | - | 1,145 |
| Share-based payments | | - | - |
| Travel and accommodation | | 24,344 | 1,417 |
| Total expenses | | 125,658 | 28,811 |
| Net loss before other expense | | (125,658) | (28,811) |
| Other expense | | | |
| Interest expense | | (134) | (397) |
| Write off of payables | | 18,428 | - |
| Loss on foreign exchange | | 100 | (1,151) |
| Total other expense | | 18,394 | (1,548) |
| Net loss | $ | (107,264) | $ (30,359) |
THREE MONTHS ENDED MARCH 31, 2025, COMPARED TO THREE MONTHS ENDED MARCH 31, 2024
For the quarter ended March 31, 2025, net loss was $107,264 compared to net loss of $30,359 recorded during the same period in 2024. Material variances from the prior year period are as follows:
- A decrease in consulting fees of $2,885 during the three months ended March 31, 2025, due to consultants shifting to management positions.
- An increase in filing fees of $16,038 during the three months ended March 31, 2025, due to increased activity related to the tier graduation and Niñobamba acquisition.
- An increase in investor relations of $5,269 during the three months ended March 31, 2025, due to increased activity in the current reporting period related to news dissemination.
- An increase in management fees of $25,244 during the three months ended March 31, 2025, due to new agreements.
- An increase in professional fees of $25,807 due to increased legal fees recorded in the current period.
- A decrease in project generation of $1,145 due to no issuance of shares and no payment of finder's fee in the current reporting period.
- An increase in travel and accommodation of $22,927 due to increased expenses for trips in the current quarter.
6. 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^{1} $ | Net comprehensive loss $ |
|---|---|---|---|
| March 31, 2025 | (107,264) | (0.01) | (107,852) |
| 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) |
7. TRANSACTIONS WITH RELATED PARTIES
Related party transactions for the three months ended March 31, 2025, and 2024 are as follows:
| Period ended | March 31, 2025 | March 31, 2024 | |
|---|---|---|---|
| Management fees and consulting fees | $ | 33,103 | $ 7,414 |
| $ | 33,103 | $ 7,414 |
As at March 31, 2025, the Company owes $11,271 (December 31, 2024 - $19,077) to a company controlled by a significant shareholder of the Company. The amount was included in accounts payable and accrued liabilities.
As at March 31, 2025, the Company owes a loan balance of $1,429 (December 31, 2024 - $1,429) to a director of the Company, which is unsecured, bears interest at 8% per annum compounded semi-annually, and due on demand.
As at March 31, 2025, the Company owes a loan balance of $5,085 (December 31, 2024 - $Nil) to a significant shareholder of the Company, which is unsecured, bears interest at 8% per annum compounded semi-annually, and due on demand.
- 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.
- 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 March 31, 2025 the Company had not yet achieved profitable operations. During the three months ended March 31, 2025, the Company incurred a net loss of $107,264 (March 31, 2024–$30,359), a cash outflow from operating activities of $100,235 (March 31, 2024 - $4,056) and, as of March 31, 2025, the Company had a working capital deficit (current assets minus current liabilities) of $48,575 (December 31, 2024 – deficit of $59,531).
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
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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 silver and gold in Peru. 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
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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, 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 a venture located in Peru. 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.
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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 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 deficit as of March 31, 2025, was $29,083,960. 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.
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10. 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 15,045,400 warrants outstanding at exercise prices ranging from CDN $0.10 per share to $0.20 per share and 1,500,000 stock options outstanding at an exercise price of CDN $0.16 per share.
| Outstanding Warrants | Exercise Price (CDN$) | Expiry Date |
|---|---|---|
| 10,000,000 | 0.10 | December 6. 2025 |
| 5,045,400 | 0.20 | April 15, 2027 |
| 15,045,400 | ||
| Outstanding Options | Vested Options | Exercise Price (CDN$) |
| --- | --- | --- |
| 1,500,000 | - | 0.16 |
| 1,500,000 | - |
Off Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Vancouver, British Columbia
May 21, 2025